How does Team Learning from Failure Facilitate New Product Performance? The Double-edged Moderating Effect of Collective Efficacy

Learning from failure can foster innovation, but how a new product development (NPD) team’s learning from failure affects new product performance requires more insights. In particular, the question remains on how collective efficacy, which discerns team members’ belief to achieve desired goals, affects team learning from failure towards improving new product performance. Using social cognitive theory complemented by sensemaking and attribution theories, we examine the effects of NPD teams’ (experiential and vicarious) learning from failure on new product performance and the moderating effects of collective efficacy on these relationships. With survey data collected from 398 responses within 152 NPD teams in Chinese high-tech small and medium-sized enterprises, we find that both experiential and vicarious learning from failure enhance new product performance in terms of speed to market and product innovativeness. Further, as collective efficacy increases, the positive effect of experiential learning from failure on speed to market is strengthened. However, the positive effect of vicarious learning from failure on product innovativeness is weakened. Our results suggest that NPD teams can benefit from experiential and vicarious learning from failure to improve new product performance but must pay attention to the double-edged effect of collective efficacy.