10.5465/AMBPP.2015.224 PRE-ENTRY EXPERIENCE, POST-ENTRY ORGANIZATIONAL LEARNING, AND NEW ENTRANTS' PERFORMANCE ZHI CAO University of Wisconsin-Madison Madison, WI, 53706 HART E POSEN University of Wisconsin-Madison INTRODUCTION In seeking to understand the performance of new entrants, strategy literature starts with the assumption that entrants are heterogeneously endowed with founders’ human capital and, potentially, knowledge and routines from parent firms. In particular, scholars conventionally think of entrants’ pre-entry experience as an asset that can be directly leveraged to enhance post- entry performance (Agarwal, Echambadi, Franco, & Sarkar, 2004; Buenstorf, 2006; Chatterji, 2009; Chen, Williams, & Agarwal, 2012; Helfat & Lieberman, 2002; Klepper & Sleeper, 2005; Klepper & Simons, 2000). We suggest that pre-entry experience not only influences new entrants’ performance directly, but also indirectly through post-entry experiential learning. In this paper, we consider the implications of the dual effects of pre-entry experience for new entrants’ performance. Recognition of this second role of pre-entry experience suggests that differences across environments (industries, geographies, etc.) will both limit the applicability of pre-entry experience and condition the rate of experiential learning post entry. Consequently, contrary to the traditional understanding that pre-entry experience is of limited value when it is not directly applicable in an entrant’s environment, we find that it can be value enhancing because of its effect on the entrant’s capacity to engage in experiential learning post entry. Scholars have recognized that new entrants leverage pre-entry experience to improve post-entry experiential learning. Dencker, Gruber, and Shaw (2009: 518), for example, argued that an important mechanism by which pre-entry experience influences new entrants’ performance is to “moderate the effects of subsequent learning activities”. Balasubramanian (2011: 552) argued that “ventures need to learn after start-up, not all of them can learn at the same rate”, and Chen et al. (2012) argued pre-entry experience facilitates strategic renewal. Accordingly, we argue that while pre-entry experience may influence new entrants’ performance directly via an “endowment effect”, it also enhances the rate of new entrants’ experiential learning post-entry via a “generative effect”. The generative effect reflects the impact of pre- entry experience on a firm's capacity to engage in experiential learning post-entry, as it faces problems, performs experiments to identify potential solutions, and implements the identified solutions, and in doing so, accumulates new knowledge (e.g., Posen & Chen, 2013). The extant literature has focused a dominant share of attention on the performance implications of the endowment effect. An important question in this work is the fungibility and applicability of pre-entry experience. Scholars examining pre-entry experience typically assume it as an asset, like a technology or brand, that can be “leveraged” to add value in the new environment (Agarwal et al., 2004; Bayus & Agarwal, 2007; Helfat & Lieberman, 2002). As a consequence, a central theoretical question has been how differences across environments,