ICC Advance Access originally published online on February 2, 2006
Industrial and Corporate Change 2006 15(1):41-75; doi:10.1093/icc/dtj002
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Transfer learning in ongoing and newly acquired components of multiunit chains: US nursing homes, 1991–1997
Correspondence: Jane Banaszak-Holl, University of Michigan School of Public Health, 109 S. Observatory Drive, Ann Arbor, MI 48109-2029, USA. e-mail: janebh{at}umich.edu
Correspondence: Will Mitchell, Fuqua School of Business, Duke University, Box 90120, Durham, NC 27708-0120, USA. e-mail: will.mitchell{at}duke.edu
Correspondence: Joel A. C. Baum, Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, Ontario M5S 3E6, Canada. e-mail: baum{at}rotman.utoronto.ca
Correspondence: Whitney B. Berta, Department of Health Policy, Management and Evaluation, University of Toronto, 155 College Street, Toronto, Ontario M5T 3M6, Canada. e-mail: whit.berta{at}utoronto.ca
Multiunit chains proliferated rapidly during the twentieth century and now dominate much of the service sector landscape, often growing by acquiring components from other owners. Transfer learning plays a central but only partially understood role in chain strategy, in both ongoing and newly acquired components. Multiunit chains gain potential benefits of reliability and accountability when they standardize activities by transferring capabilities among their components. Moreover, with the importance of acquisition in chain growth, transfer learning plays a key role both in bringing the activities of newly acquired components in line with others in the chain, as well as offering the potential to infuse new capabilities into established units of a chain. We develop a model of chain-to-component and component-to-chain transfer learning in which the levels and similarity of a chain and its components’ capabilities have direct and interactive effects on transfer learning across the ongoing and newly acquired components. We test the model using data on changes in capabilities at the facilities of all federally registered nursing home chains operating in the United States between 1991 and 1997. In contrast to past research in the learning curve tradition that uses changes in performance to infer how transfer learning influences components’ capabilities, we operationalize transfer learning by measuring changes in service characteristics that lie closer to the underlying capabilities themselves. Our findings suggest that transfer learning among a chain’s components tends to be localized within its established and newly-acquired components, providing new insights into the dynamics of chain capabilities. In particular, new acquisitions commonly lead to only limited changes at a chain’s established components while chains may find it difficult to bring their newly acquired components in line with chain standards. In turn, this shows that acquisitions tend to change a chain’s capabilities more by changing its portfolio of components and less through diffusion of new capabilities throughout the chain.