Learning Against the Wind: Diversity and Performance on the Ships of the Dutch East India Company

Abstract

Learning is of paramount importance to organizations, often hinging on the accumulation of experience among workers. The returns from experience, however, are far from certain in large groups, marked by complex interdependencies and composed of a demographically diverse workforce. How do organizations manage to learn and improve their performance under these conditions? We claim that the standardization of work practices and procedures provides two key advantages. First, it magnifies the positive returns that a unit reaps from the experience of its workers. Second, standardization anchors the accumulated experience of workers to organizational routines that transcend the individual units in which they have worked. Increasing experience eases coordination among workers and attenuates the negative effects of diversity on a unit's performance. We test these arguments using data tracking the composition of ship crews in the Dutch East India Company, an organization that witnessed significant efforts at standardizing work practices and procedures in the face of increasing national diversity. We find preliminary support for our hypotheses from analyses of the time to completion of 2,200 voyages to Asia during the period between 1700 and 1796.