Exploring the dynamics of project failure and organizational learning in project-based firms: A study in the US film industry

Abstract

Project-based firms operate in industries with high uncertainty and innovation demands, where transient teams and short-term routines often limit learning from project failures. Building on project management and organizational learning literature, this study examines the conditions under which project-based firms can leverage project failures as opportunities for exploration, emphasizing firm-specific capabilities that help overcome structural and behavioral barriers inherent to project-based settings. Using a longitudinal analysis of the U.S. film industry, we find that project failure generally inhibits exploration; however, specialist operational experience and accumulated project experience significantly attenuate this negative relationship. Specialization facilitates the precise identification of inefficiencies, while extensive project experience enhances adaptability. Theoretically, our research advances dynamic capability perspectives within project-based environments, clarifies the barriers and enablers of deep learning following failure, and extends models of reflective practices in project management research. Practically, our study offers actionable insights for managers seeking to transform failure into a catalyst for innovation, highlighting the strategic importance of cultivating specialist expertise alongside broad project portfolios.