Adaptation in the Production Process

Abstract

The paper presents a new type of learning function useful in describing how firms improve their performances in new processes. The function, termed the “adaptation function,” is shown to be capable of being related to variables that may affect a firm's rate of learning. Next, these variables are discussed, and the adaptation function is fitted to some actual sets of data. Finally, the paper turns to some normative implications of the function. Specifically, the adaptation function is shown to be useful to firms in their budgeting of training and in aiding their equipment replacement decisions.