Turnover-induced forgetting and its impact on productivity

Abstract

In this paper we investigate organizational forgetting, the notion that a firm’s knowledge does not persist over time, exploring knowledge depreciation caused by changes in human capital. We first conduct an in-depth exploratory case study to identify organizational forgetting. The empirical evidence suggests that organizational forgetting occurs when abrupt personnel turnover takes place. The data reveal a forgetting pattern that is entirely episodic in nature. Thereupon we conduct a confirmatory piece, using multiple regression models, to measure the impact of organizational forgetting on overall productivity. We find that, as a result of repeated forgetting processes, productivity falls in spite of continued output accumulation because of changes in the characteristics of the resource where experience resides