The dynamics of abandoned innovation activities: Learning from failure or learning to prevent failure?

Abstract

We contribute to the literature on abandonment and innovation by showing the dynamic nature of the linkage between abandoned innovation activities and subsequent innovation outcomes at firm level. Based on a balanced panel of Spanish manufacturing firms from 2008 to 2016, we demonstrate that abandoning innovation not only leads to more successful innovation, but that there is an explicit time dimension to this. Firms which have prior experience of abandonment have stronger positive effects of more recent abandoned innovation activities on innovation output. However, these effects are largely restricted to prior experience from – and implementation in – the early (conception) phases of the innovation process. While firms systematically develop abilities to prevent failure, there is little evidence of learning from failure in terms of innovation abandonment.