Diagnosing the Experience Curve

Abstract

Few strategy concepts are more likely to give misleading insights than the experience curve. As a result there is considerable disenchantment with the simplistic market share prescriptions that marked the early applications. Nonetheless, the experience curve remains an extremely useful organizing framework when scale, technology and learning effects are influential forces in the environment. This article reviews the measurement and interpretation problems that have to be overcome before the experience curve can be productively applied. Conclusions provide rewarding topics for further research.