Can Organizations Learn to Be Better at Forecasting Under Uncertainty: What Experience Matters?

Drawing on the behavioral and organizational learning theories, this study examines how success and failure experience shapes organizational forecast accuracy. We test our hypotheses on a unique data-set of venture capital firms predicting the types of exit from their 57 newly made early-stage investments. Our results reveal that while both successful and failure experience advance venture capital firms' forecast accuracy, it only happens up to a point of prior success. Moreover, experience does not have positive impact on successful outcomes that were inaccurately forecast. We thereby contribute to the organizational learning literature by revealing the importance of forecasting capability for organizational performance. Second, we provide new insights to the debate on whether venture capital firms select or build winners by illustrating a greater role of initial selection on performance. [ABSTRACT FROM AUTHOR]