The Impact of Organizational Memory on New Product Performance and Creativity

Abstract

Arguing that organizational memory affects key new product development processes by influencing the (1) interpretation of incoming information and (2) the performance of new product action routines, the authors introduce four dimensions of organizational memory, including the amount and dispersion of memory. Data from 92 new product development projects indicate that higher organizational memory levels enhance the short-term financial performance of new products, whereas greater memory dispersion increases both the performance and creativity of new products. They also find, however, that under some conditions of high environmental turbulence, high memory dispersion actually detracts from creativity and has no effect on financial performance. Under conditions of low turbulence, high memory dispersion promotes higher levels of creativity and short-term financial performance. These findings provide some initial evidence that knowledge is not an unconditionally positive asset and suggest that developing and sustaining valuable organizational memory may require attention not only to the appropriate levels of memory but also to managing subtle aspects of memory dispersion and deployment. These results imply that if organizations fail to understand the subtle ways in which different features of organizational memory influence product development, they may fail to harvest the full value of organizational learning.