“The Learning Effects of Targets” by Professor Jan Bouwens
Professor Jan Bouwens
Professor of Accounting
Amsterdam Business School
University of Amsterdam
The learning literature puts forward that experience is an important determinant of learning. In this paper, we argue that targets are an important factor to incite agents to start looking out for innovations so as to increase the likelihood for them to achieve their targets. Our findings are consistent with that idea. That is, we find that subsidiaries of a big firm that are exposed to targets that are either easy to achieve or are challenging compared to their peers show lower learning rates than do subsidiaries that are set moderate targets.