Small Steps that Matter: Incremental Learning, Slack Resources and Organizational Performance


  • The authors would like to thank Michael Barrett, Sandra Dawson, Alan Hughes, Matthew Jones and Rajiv Kohli for their comments on earlier versions of this manuscript. We are also grateful for the feedback offered by participants of the Cambridge Doctoral Conference (2008), the IRSPM in Copenhagen (2009) and in Dublin (2011), the Academy of Management Annual Meeting in Chicago (2009) and the British Academy of Management Conference in Brighton (2009). All remaining errors and omissions are of course entirely the authors’ own. The authors are also indebted to the Department of Health, the NHS, the Healthcare Commission and the individual NHS Acute Trusts for their time and effort invested in supporting this research project. Torsten Oliver Salge would also like to acknowledge the excellent research assistance provided by Patrick Cichy as well as the financial support received from the Economic and Social Research Council (ESRC), St Catharine's College and the Cambridge European Trust during his doctoral studies at the University of Cambridge.

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This paper examines the antecedents, consequences and moderators of incremental learning capabilities, understood as an organization's ability to gradually adapt and expand its knowledge base. Conceptualized as a dynamic capability, incremental learning is expected to be a vital driver of organizational adaptation. As dynamic capabilities consist of bundles of relatively stable routines, it is proposed that an organization's level of incremental learning capabilities will be highly persistent over time. It is also argued that building and exercising incremental learning capabilities is resource intensive and will as such tend to rely on the availability of sufficient slack resources. Last, it is suggested that incremental learning will be positively related to organizational performance, especially when the underlying business model is labour rather than capital intensive. To test these theoretical ideas, the authors draw on extensive panel data from all public non-specialist hospitals in England and find broad support for their hypotheses.