Khanna (2016)

Question 1

Small failures in experimentation provide opportunities for learning in multiple ways.

Answer 1

• First, frequency and scale of small failures provide firms with valuable feedback that helps shape the direction of the R&D portfolio.
• Second, small failures encourage learning by initiating a search for the causes of such failures without threatening the existence of the firm or the decision makers, as larger, more visible failures may do.

Small failures lead to a decrease in R&D output amount (patents nr.), but they increase the overall quality of the R&D portfolio (citations)