Abstract
Near-misses—situations where an accident or a failure is avoided by chance—are frequent organizational phenomena (e.g. airline incidents). Interpreting near-misses as signs of vulnerability (i.e. near-failure) fosters organization’s ability to learn from such experiences. Conversely, when near-misses are interpreted as signs of resilience (i.e. near-success), organizational learning is limited. Our baseline argument suggests that ceteris-paribus, prior near-miss experience will increase the likelihood of future failure as risky behaviors become normalized in the absence of salient adverse consequences. We further explore how firm’s prior failure experience, industry near-miss experience, and industry competitive intensity influence organizational learning from near-misses. We employ data on drug recalls and inspections conducted by the US Food and Drug Administration (FDA) in pharmaceutical plants to test our hypotheses. The expected contributions of this study to research on organizational learning and change are discussed.