The Impact of Organizational Memory On

The Impact of Organizational Memory on New Product Performance and Creativity
Author(s): Christine Moorman and Anne S. Miner

Source: Journal of Marketing Research , Feb., 1997, Vol. 34, No. 1, Special Issue on
Innovation and New Products (Feb., 1997), pp. 91-106
Published by: Sage Publications, Inc. on behalf of American Marketing Association
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CHRISTINE MOORMAN and ANNE S. MINER*
Arguing that organizational memory affects key new product develop-

ment processes by influencing the (1) interpretation of incoming informa-
tion 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 pro-
jects indicate that higher organizational memory levels enhance the short-
term financial performance of new products, whereas greater memory dis-
persion increases both the performance and creativity of new products.
They also find, however, that under some conditions of high environmen-
tal turbulence, high memory dispersion actually detracts from creativity
and has no effect on financial performance. Under conditions of low turbu-
lence, high memory dispersion promotes higher levels of creativity and
short-term financial performance. These findings provide some initial evi-
dence 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 devel-
opment, they may fail to harvest the full value of organizational learning.
The Impact of Organizational Memory on

New Product Performance and Creativity
The past ten years have seen an explosion of experiments especially interested in discovery and creation processes, or
and insights into new product development approaches. generative learning (Dougherty 1992; Imai, Nonaka, and
Many of the new viewpoints argue that knowledge assets Takeuchi 1985). Therefore, considerable work has focused
(Winter 1987) can be leveraged to achieve competitive ad- on ways organizations can acquire better information as a
vantage (Barabba and Zaltman 1991; Day 1994; Garvin means to discover new knowledge. We argue that an equal-
1993; Glazer 1991; Prahalad and Hamel 1990; Sinkula ly important issue is the role of stored knowledge, or orga-
1994). Even more important, because it requires the use of
nizational memory, in new product development activities.1
knowledge assets in a dynamic setting, scholars have As in-Starbuck (1992, p. 176) suggests, "A knowledge-inten-
creasingly envisioned product development as a process siveoffirm may not be information intensive ... knowledge is
organizational learning involving the acquisition, dissemi-a stock of expertise, not a flow of information."
nation, and utilization of information (Day 1994; Dickson The traditional business strategy and marketing strategy
1992; Imai, Nonaka, and Takeuchi 1985; Leonard-Barton literature has long emphasized the role of organizational ex-
1992; Moorman 1995; Nonaka 1991). Understandably, re- perience or familiarity with products and markets. This lit-
searchers exploring the creation of new products have been erature has suggested that firms are likely to be more suc-
cessful if they stick to developing products and markets that
reflect their core competencies (Ansoff 1988; Montoya-
*Christine Moorman is Associate Professor of Marketing, and Anne S.
Miner is Associate Professor of Management, Graduate School of Busi- Weiss and Calatone 1994; Rumelt 1974; Varadarajan 1983).
ness, University of Wisconsin-Madison. This research has benefited fromOne resulting framework of this view, termed the prod-
National Science Foundation Grant #SBR-9410419. The authors thank the uct/market matrix, is limited to examining the effect of
editor, and appreciate the helpful comments of Jan Heide; Aric Rindfleisch; memory level on the financial performance of marketing
Thekla Rura; participants of the Wharton Conference on Innovation in New
Product Development; seminar participants at Dartmouth College, Harvard
University, Indiana University, Ohio State University, University of South IThere are, as we discuss throughout this article, models of organiza-
Carolina, and University of Cincinnati; and three anonymous JMR tional information processing that include the influence of organizational
reviewers. memory (Burgelman 1983; Cohen and Levinthal 1990, 1994; Cyert and
March 1963; Leonard-Barton 1992).
Journal of Marketing Research

91 Vol. XXXIV (February 1997), 91-106

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92 JOURNAL OF MARKETING RESEARCH, FEBRUARY 1997
strategies. There are, however, other organizational memory ORGANIZATIONAL MEMORY

dimensions that exist, as well as additional marketing strat- The Organizational View of Memory
egy outcomes that could be considered. Moreover, the view
Envisioning memory as an organizational phenomenon is
of experience offered by the strategy literature is also a main
consistent with a growing body of literature that suggests
effects view that does not consider how the impact of orga-
organizations process, use, and store information, and that
nizational experience is influenced by rapidly changing en- these collective activities can be seen as distinct from indi-
vironments. Specifically, it has tended to view experience
vidual manager activities (Cohen and Levinthal 1990, 1994;
and knowledge as unconditionally helpful to organizations Cyert and March 1963; Daft and Weick 1984; Huber 1991;
(Day 1994; Montoya-Weiss and Calatone 1994; Zirger and Kohli and Jaworski 1990; Moorman 1995; Sandelands and
Maidique 1990). Stablein 1987; Sinkula 1994; Weick 1979). In this organiza-
Recent work has begun to explore in more detail the var- tional view, organization members' actions may lead to
ious mechanisms through which stored information or mem- organizational interactions with the world, which results in
ory may affect product development. For example, Garud outcomes that are interpreted by people and shared among
and Nayyar (1994) suggest that organizations should devel- members, creating organizational memory in the form of
op routines for reactivating previously acquired knowledge shared beliefs, values, assumptions, norms, and behaviors
in new product development. Likewise, Cohen and (Argyris and Schon 1978; Dutton and Duncan 1987; Hed-
Levinthal (1990, 1994) find that high levels of previous berg 1981; Levitt and March 1988; Sinkula 1994).
learning increase a firm's absorptive capacity, which permits The notion of collective mental processes has been ap-
more effective use of extramural knowledge. Moreover, Day propriately criticized as encouraging reification and gener-
(1994, p. 38) describes new product development as a "key alizations of individual phenomena to group actions. How-
ever, organizational memory, as embodied in organizational
firm capability involving complex bundles of skills and ac-
artifacts and procedures, seems to clearly distinguish orga-
cumulated knowledge."
nizational from individual memory. For example, standard
In addition to postulating how memory may enhance new
operating procedures can drive behavior even when people
product development outcomes, recent work also highlights
within the system no longer have individual memory of the
the possibility that memory actually may detract from new
experiences that generated the routines (Levitt and March
product development in some situations. Work by Burgel- 1988). Moreover, in some cases, groups may develop col-
man (1983), Leonard-Barton (1992), and Dougherty (1992), lective processes to accomplish tasks, even when individual
for example, suggest that competencies may turn into barri- members are not aware of the process (Hutchins 1991). Or-
ers when organizations strive to develop creative new prod- ganizational memory, then, is not simply the sum of the
ucts. More generally, research on organizational learning memories of organizational members, because it may in-
and technological change highlight the possibility that volve the interaction of several people, or even reside out-
stored memory may prove a liability when organizational side the awareness of specific people.
environments are changing rapidly (Miner 1990; Tushman
and Anderson 1986). Organizational Memory Forms, Roles, and Characteristics
Recent work, then, suggests a complex and even contin- Forms. We propose that organizational memory may be
gent role for organizational memory in product develop- manifested in three basic forms (Garud and Rappa 1994;
ment. We seek to explore and expand the field's understand- Hedberg 1981; Walsh and Ungson 1991). First, memory is
ing of memory's role in three ways. First, focusing on two found in organizational beliefs, knowledge, frames of refer-
specific dimensions in our empirical study, we develop a ence, models, values, and norms (Day and Nedungadi 1994;
multifaceted conceptualization of organizational memory Deshpande, Farley, and Webster 1993; Deshpande and Web-
and suggest that memory's impact depends on which mem- ster 1989; Lyles and Schwenk 1992; Nelson and Winter
ory dimension is at work. Second, we propose that memo- 1982; Starbuck 1992), as well as organizational myths, leg-
ry's impact depends on whether the product outcome is ends, and stories (Martin 1982). For example, Epson pro-
short-term financial performance or product creativity. moted the shared value of aiming for "40% improvement" in
Third, drawing on fundamental concepts in theories of orga- its new product development activities (Imai, Nonaka, and
Takeuchi 1985).
nizational learning, we propose that memory's impact de-
Second, organizations learn from experience particular
pends on the degree of exogenous turbulence faced by the
ways of doing things that become encoded in formal and
firm. To explore these issues, we develop eight propositions
informal behavioral routines, procedures, and scripts (Cyert
about the specific impact of memory level and memory dis-
and March 1963). Formal routines may be reflected in stan-
persion on new product short-term financial performance
dard operating procedures (Winter 1987) or in managerial
and creativity. We test our hypotheses with data from 92 new and technical systems and capabilities (Brown and Eisen-
product development projects. Our results point to distinct hardt 1995; Leonard-Barton 1992); informal routines may
roles for memory level and dispersion, as well as to impor- involve scripted interactions (Orr 1990; Seeley Brown
tant interactions between turbulence and memory disper- 1993). New product development routines may, for exam-
sion. Our arguments and results imply, we believe, that if ple, guide the types of information-sharing mechanisms
firms fail to understand the subtle ways in which different used (Eisenhardt and Tabrizi 1995) or specific project steps
features of organizational memory influence product devel- such as prototype production. They may also direct the over-
opment, they may fail to harvest the full value of organiza- all development process itself, such as when key go-no-go
tional learning. decision points become required steps or when the ISO

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Organizational Memory 93
(International Organization for Standardization) 9000 rou- tional buyers, the less likely they were to engage in infor-
tines for documentation become standard procedures. Imai, mation search activities.
Nonaka, and Takeuchi (1985), for example, describe the Organizational memory also varies in the degree to which
"rugby approach" used by Honda teams, which involves the it is dispersed, or shared, throughout the organization. As
entire team running the full length of the new product devel- Walsh and Ungson (1991, p. 62) note, "organizational mem-
opment process, in contrast to a "relay approach," which ory is not centrally stored, but distributed across different
involves functions handing off the product at distinct times. retention facilities." Organizational memory by its nature
Likewise, Orr (1990) observes informal information sharing involves some degree of dispersion throughout the organiza-
routines among Xerox service representatives who repeat- tion. However, there may still exist variance in the degree to
edly gather around a communal coffee machine to share which organizational members adopt firm knowledge and
their field experience. skills, which is determined, in part, by how firm activities
Third, memory is found in an organization's physical ar- are designed and structured to facilitate diffusion across the
tifacts, which embody, to varying degrees, the results of pri- organization (Nonaka and Nicosia 1979; Webster and Wind
or learning (Epple, Argote, and Devadas 1991; Garud and 1972). The presence of distinct organizational subcultures
Rappa 1994; Leonard-Barton 1992). For example, Epple, suggests that memory is not necessarily shared by all mem-
Argote, and Devadas (1991) provide evidence from an in- bers (Cohen and Levinthal 1990; Deshpande and Webster
vestigation of a truck plant that knowledge may become em- 1989; Martin and Siehl 1983; Smircich 1983).2
bodied in tooling, programming, and assembly line layout. Organizational memory also varies in accessibility, or the
Others have suggested that memory is reflected in organiza- extent to which it can be retrieved for use (Day 1994; Garud
tional structure and ecology (Argote 1995; Leonard-Barton and Nayyar 1994; Walsh and Ungson 1991). As Day (1991,
1992; Levitt and March 1988; March 1991; Walsh and Ung- p. 8) notes, "Organizations without practical mechanisms to
son 1991). Furthermore, in new product development, Imai, 'remember' what worked and why have to repeat their fail-
Nonaka, and Takeuchi (1985, p. 354-58) describe "a special ures and rediscover their success formulas over and over
corner within the factory where workers could experiment," again. Memory mechanisms are needed to ensure that useful
"holding meetings in a large room with glass walls," and the lessons are captured, conserved, and can be readily retrieved
use of a system in which "all the team members are located when needed."
in one large room." Features of products and product lines Finally, the content of organizational memory refers to the
(such as product design, materials, packaging, and logos) meaning of collectively stored information (Walsh and Ung-
are also important physical artifacts associated with organi- son 1991). Increasing evidence points to memory as consist-
zational memory. ing of two types of knowledge: procedural and declarative
Roles. In all three forms, organizational memory is likely (Cohen 1991; El Sawy, Gomes, and Gonzalez 1986; Sinku-
to perform two fundamental roles: interpretation and action la 1994). Procedural memory refers to process memory or
guidance. Organizational memory performs an interpreta- memory of underlying skills for performing tasks (Nelson
tion role by filtering the way in which information and ex- 1982). An organization may know, for example, how to de-
perience are categorized and sorted (Cohen and Levinthal velop prototypes. Declarative memory refers to the memory
1990; Daft and Weick 1984; Day 1994; Day and Nedungadi of concepts, facts, or events. Memory here might consist of
1994; Dutton and Jackson 1987; Jackson and Dutton 1988; knowledge about customer preferences, or the technical fea-
Sinkula 1994; Walsh and Ungson 1991). Organizational tures of a firm's product line (Day and Nedungadi 1994).
memory also performs an action guidance role by dictating Another type of memory content could be found in the dis-
or influencing individual and group action (Amburgey and tinct cultural characteristics of an organization. For example,
Miner 1992; Cyert and March 1963; March and Simon memory content may reflect more clan, market, bureaucra-
1968; Suchman 1994; Walsh and Ungson 1991). Memory, cy, or adhocracy characteristics (Deshpande, Farley, and
for example, may contain a protocol for a new product de- Webster 1993). Memory content is therefore likely to be re-
velopment stage that guides team members' actions. The ac- vealed, in part, in an organization's culture.3
tion guidance role represents one of the most powerful fea-
A Definition of Organizational Memory
tures of organizational memory in much traditional research.
Cyert and March (1963), for example, emphasize the power Using this review as a basis, we define organizational
of standard operating procedures in driving organizational memory as collective beliefs, behavioral routines, or physi-
action, whereas Nelson and Winter (1982) stress the overar- cal artifacts that vary in their content, level, dispersion, and
ching impact of organizational routines. accessibility. This view of memory is consistent with that of
Characteristics. In addition to memory forms and roles,
organizational memory can be viewed as having several 2Although our approach focuses on the degree of dispersion, dispersion
dimensions or characteristics: amount, dispersion, accessi- could be further conceptualized as a multidimensional construct that also
bility, and content. The level, or amount, of organizational reflects the structure of that sharing. The structure of information distribu-
memory refers to the amount of stored information an orga- tion may include, for example, one-way or two-way transmissions and hor-
izontal or vertical structures. Hence, we include a variable in our model that
nization has about a particular phenomenon. High levels of may partially control for the effects of the structure of information-sharing
experience in a product category or the accumulation of activities within the firms we studied.
knowledge or skills indicate higher levels of memory. An 3Following Deshpand6 and Webster (1989), culture is reflected in an
abundance of memory has been theorized to influence a organization's values and norms. Therefore, if culture is the source, mem-
ory content will have a value or norm component. However, as conceptual-
firm's demand for new market information (Dickson 1992;
ized, organizational memory is much broader than organizational culture,
Sinkula 1994). Regarding this point, Weiss and Heide because, in addition to values and norms, memory includes behavioral rou-
(1993) find that the greater the prior experience of organiza- tines and physical artifacts that reflect prior learning.

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Day (1994, p. 44), who defines organizational memory as "a Figure 1

repository for collective insights contained within policies, THE INFLUENCE OF ORGANIZATIONAL MEMORY ON NEW
procedures, routines, and rules that can be retrieved when PRODUCT CREATIVITY AND PERFORMANCE
needed;" but is more circumscribed than that of Walsh and
Ungson (1991), who suggest that organizational memory is
composed of the structure of its retention facility, the infor-
mation contained in it, its effects, and the information acqui-
sition and retrieval processes.
CONCEPTUAL FRAMEWORK
Our conceptual framework focuses on how two organiza-

tional memory dimensions, level and dispersion, influence
the success of new products. These dimensions were
selected because, as we subsequently suggest, both have
been described in the literature as having a positive effect on
new product development activities. However, our frame-
work suggests that the effect of these memory factors
depends on what type of new product outcomes is being
examined and on whether the firm operates within a turbu-
lent environment.
In discussing this framework, we first introduce the two uct is part of the firm's longstanding repertoire, the length
focal new product outcomes investigated here. Second, we team members' service is high, or a particular new produ
present the effect of organizational memory level and dis-development phase-such as prototype development-is a
persion on each new product outcome. Third, we discuss thewell-developed competency.
moderating effects of environmental turbulence on the orga- Previous research has observed that change becomes
nizational memory-new product outcome relationships. more difficult as memory in a particular domain increases.
This effect has been referred to as a competency trap (Levitt
Focal New Product Outcomes and March 1988; March 1991), a core rigidity (Leonard-
Barton 1992), routine rigidity, or functional fixedness (Dick-
The two new product outcomes that we investigate are
son 1992) for the organization. In the area of new product
new product creativity and new product short-term financial
development, observers also have reported from qualitative
performance. New product creativity refers to the degree to
studies that higher levels of memory inhibit any actions out-
which a new product is novel and has generative capacity
side preexisting action patterns (Ghemawat 1991; McDo-
(i.e., the potential to change thinking and practice)
nough 1993). Likewise, both Leonard-Barton (1992) and
(Andrews and Smith 1996; Wilton and Myers 1986; Zalt-
Dougherty (1992) describe instances in which groups with
man, Heffring, and LeMasters 1983). New product short-
strong memories are least able or likely to deviate from prior
term financial performance is defined as the level of new
action patterns during new product development (see also
product profitability and sales that occur within the first year
March 1979).
of introduction (Griffin and Page 1993; Montoya-Weiss and
An important alternative possibility is that memory actu-
Calantone 1994). These outcomes were selected because
ally could enhance creativity. For example, research on re-
others have suggested that they are influenced by organiza-
lated topics suggests that some forms of creativity thrive in
tional-level information processes (Day 1991; Dickson
1992; Glazer 1991; Jaworski and Kohli 1993; Imai, Nonaka, the presence of memory. For example, organizational impro-
visation, which involves firms acting extemporaneously
and Takeuchi 1985; Moorman 1995; Narver and Slater
without a plan, has been described as involving the recombi-
1990; Sinkula 1994). Moreover, there is often a tension
nation of routines to produce novel outcomes (Weick 1993a,
between the creativity and the short-term financial perfor-
b). More generally, research on adaptation has stressed the
mance of new products, because highly creative products
recombination of prior routines as a crucial source of novel
may have greater potential for short-term performance prob-
activities (Holland 1975). Likewise, Cohen and Levinthal
lems due to the difficulty of changing consumer or retailer
(1990) find that organizational memory-as reflected in pri-
acceptance of the product, while offering the possibility of
or research investments-can enhance an organization's
greater long-term financial gain given the possibility of their
ability to assess and import new outside information, which
revolutionizing a product category (Adams and Lacugna
1994; Andrews and Smith 1996; Kleinschmidt and Cooper could promote creativity. Specifically, Cohen and Levinthal
(1994, p. 237) suggest that "fortune favors the prepared
1991). These tensions are played out in the hypotheses that
firm" (see also Feldman 1989). Taken together, these ideas
are depicted in Figure 1.
and data imply that high organizational memory could actu-
The Effects of Organizational Memory on the Performance ally enhance creativity in new product development.
and Creativity of New Products Empirical research on new product development itself, on
balance, has tended to support the potentially negative im-
The effect of organizational memory level. A high level of
pact of memory on new product development creativity,
organizational memory would typically be present when a however. This leads us to hypothesize:
new product project or action phase represents familiar ter-
ritory, a new product represents a modest change in an old Hi: The greater the level of organizational memory for a new
project, the technological or customer basis for a new prod- product domain, the lower the level of new product creativity.

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The next question concerns the impact of organizational addition, some researchers have suggested that much orga-
memory level on the financial performance of new products. nizational innovation comes from recombining routines or
Theory and current research imply that high levels of mem- ideas in new ways or by mixing routines that were previ-
ory, while inhibiting new product creativity, may enhance ously separate (Nelson 1982; Nonaka 1990). This line of
their short-term financial performance by increasing effi- reasoning implies that high memory dispersion could inhib-
ciencies and the likelihood that previous successes will be it creativity because it would reduce heterogeneity in the or-
repeated (Cyert and March 1963; Duncan and Weiss 1979; ganization, which, in turn, restricts the number of routines,
Walsh and Ungson 1991). Much new product development ideas, and competencies available for recombining or for
research shows that for many products, strong memory generating new actions. The early marginalized roles of
reduces the chances of poor outcomes by increasing effi- product champions for Post-It notes or Hitachi lasers em-
ciency and decreasing the chances of costly errors (Cooper body this idea (Garud and Nayyar 1994; Peters 1988).
and Kleinschmit 1986). This line of reasoning is consistent One way to reconcile these conflicting perspectives and
with the finding that higher performing new products typi- findings is to propose a curvilinear relationship between
cally have higher levels of marketing and technological syn- memory dispersion and new product creativity, in which
ergy between the new product and the firm's existing com- moderate levels of dispersion promote the highest levels of
petencies (Montoya-Wiess and Calatone 1994; Varadarajan new product creativity. Moderate levels are predicted to pro-
1983; Zirger and Maidique 1990). Therefore, together with mote the greatest creativity because organizations have both
Hl, this suggests that organizational memory level is likely the breadth and cross-fertilization that dispersion provides
to reduce the creativity of new products while increasing while maintaining some heterogeneity among members.
their short-term financial performance. Under these circumstances, members share a language and
understanding of problems and solutions but retain some
H2: The greater the level of organizational memory for a new
product domain, the greater the new product short-term fi-
distinctive skills and knowledge. This view is supported by
nancial performance. conceptual literature on group performance that suggests
that too much diversity restricts communication but too
The effect of organizational memory dispersion. The much similarity may restrict the range of observations avail-
effect of memory dispersion on new product outcomes is able for recombination (Katz and Allen 1982), and by Fiol
less clear on the basis of a review of the extant literature. (1994), who suggests that team diversity and unity jointly
Recall that memory dispersion refers to the extent to which promote higher levels of collective learning. Under this form
organizational members share an understanding of organiza- of the relationship, moderate levels of dispersion have ele-
tional beliefs, behavioral routines, and physical artifacts. ments of both heterogeneity and homogeneity and therefore
One stream of literature suggests that greater dispersion maximize new product creativity.4
leads to more creative and better financially performing new
H3: There exists a curvilinear relationship between dispersion of
products. For example, Hutt, Reingen, and Ronchetto (1988)
organizational memory for a new product domain and new
find that creative new product initiatives are more likely to
product creativity such that moderate levels of dispersion
be characterized by a greater number of communication produce the highest levels of new product creativity and
links between organizational functions. Others point to the high and low levels of dispersion result in lower levels of
critical role of dispersing information across organizational new product creativity.
functions, such as marketing and research and development
(R&D), in the success of new product innovations (Gupta, Although a curvilinear relationship is expected for the
Raj, and Wilemon 1986; Moenaert and Souder 1990a, b). effect of memory dispersion on new product creativity,
This research suggests that the dispersion of memory memory dispersion is expected to have a positive linear rela-
enables functions to understand one another, improves theirtionship with the short-term financial performance of new
ability to cooperate, facilitates cross-fertilization, and mayproducts, because high levels of dispersion increase the
reduce the tendency of individual functions to become con- effectiveness and efficiency of decision making and imple-
fined by their own thought-worlds (Dougherty 1992; Soudermentation. In fact, as dispersion levels increase, the team's
1987). As lmai, Nonaka, and Takeuchi (1985, p. 544, mental model becomes unified, which results in timely, cost-
emphasis added) note, "Project members are expected to effective decisions that help realize a firm's new product
interact with each other extensively, to share everything financial goals. Moreover, as was reviewed previously, the
from risk, responsibility, information, to decision making, literature on information-sharing mechanisms in cross-func-
and to acquire breadth of knowledge and skills." How mem- tional efforts, such as total quality management and quality
ory gets dispersed is not the subject of the present research function deployment, suggests that shared knowledge and
(see Griffin and Hauser 1992, 1993, 1994; Hutt, Reingen, vision improve the short-term financial performance of
and Ronchetto 1988). However, when dispersed, collectively product development activities by enhancing cross-func-
held knowledge appears to improve both the creativity and tional understanding and cooperation (Day 1994; Griffin
financial performance of new products. and Hauser 1993; Hauser and Clausing 1988; Imai, Nonaka,
Another stream of research suggests that lack of memory and Takeuchi 1985), as well as by improving team efficien-
dispersion or heterogeneity within organizations should
have a positive effect on innovation and creativity (Burgel- 4It would also be reasonable to argue that the form of this curvilinear
man 1983; March 1991; Quinn 1986). From this perspec- relationship should be a U-shaped curve, in which high and low levels of
tive, groups with similar values, identical information, or dispersion promote the highest levels of creativity. Nevertheless, we chose
to integrate both of the literatures and in so doing, believe the best repre-
overlapping competencies should be less capable of produc-
sentation of the relationship is an inverted-U. This form suggests that mod-
ing actions that deviate from their prior activities than would erate dispersion has elements of both heterogeneity and homogeneity, and
more heterogeneous groups (Gigone and Hastie 1993). In therefore maximizes new product creativity.

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cies in making decisions and taking action. This does not organizational memory (a) level and (b) dispersion and new
mean that the team is making the most creative decisions, product short-term financial performance.
which we believe will happen under moderate dispersion H6: The greater the market turbulence associated with the envi-
ronment, the weaker the positive relationship between orga-
levels (H3). Therefore, the creativity-dampening risks of too
nizational memory (a) level and (b) dispersion and new
much dispersion will not have the same impact on short-
product short-term financial performance.
term financial performance, because cross-functional effi-
ciencies are maximized, not compromised, in high disper- Although environmental turbulence may reduce the value
sion level groups. of organizational memory for performance, there is a poten-
H4: The greater the dispersion of organizational memory for a
tially positive effect of environmental turbulence for the
new product domain, the greater the new product short-term effect of memory levels on the development of creative new
financial performance. products. Specifically, if high organizational memory levels
reduce the potential for creative new products (Hi), a fast-
The Moderating Effect of Environmental Turbulence changing environment may attenuate this possibility
The turbulence associated with an organization's environ- because high levels of environmental change may act as trig-
ment is expected to moderate the effect of organizational gers to "unlearn" current new product routines (Cyert and
memory on new product outcomes. One of the most funda- March 1963; Hedberg 1981; Starbuck 1976).
mental tenets in theories of organizational learning holds Considering the relationship between memory dispersion
that the value of organizational memory is contingent on the and new product creativity (H3), we suggest that organiza-
setting in which the organization operates (Argote and Epple tions may be better off with internal heterogeneity under tur-
1990; Cyert and March 1963; Levitt and March 1988). bulent conditions (Aldrich 1979; Lawrence and Lorsch 1967;
Memory, after all, reflects learning from experience, and March 1991). Under conditions of internal heterogeneity (low
that experience occurs at a specific time in a specific setting. dispersion), firms can draw on previously marginal ideas or
This insight is consistent with contingency theory's argu- competencies that may act as crucial creative engines in times
ment that bureaucratic structures-which rigidly institution- of high turbulence (Burgelman 1983; Feldman 1989; Miner
alize lessons from prior experience-can enhance perfor- 1990). For example, a firm producing vacuum tubes that has
mance under stable conditions, whereas more organic struc- a well-dispersed technical memory (about vacuum tube tech-
tures are needed for turbulent conditions (Lawrence and nology) would be worse off when transistors are discovered,
Lorsch 1967; Mintzberg 1979). than another firm that has a less dispersed memory, but in-
Several important mechanisms may produce such envi- cludes a small deviant group of engineers who are interested
ronmental effects. At a minimum, the value and impact of in transistor technology. This reasoning implies that under
stored prior learning may deteriorate with environmental conditions of high turbulence, we might expect high memory
change (Achrol 1991; Glazer 1991). As Weiss and Heide dispersion (high homogeneity) to have a negative effect on
(1993, p. 221) note, "a rapid pace of technological change creativity. Under conditions of low turbulence, however, high
creates uncertainty that can be competency destroying" dispersion may have a positive effect on creativity. This posi-
(Tushman and Nelson 1990; see also Anderson and Tush- tive effect may accrue from a new product team's ability to re-
man 1990; Tushman and Anderson 1986). Even more im- combine shared knowledge into creative new products (Borko
portant, memory may stand in the way of effective action in and Livingston 1989; Dougherty 1990, 1992; Nelson 1982;
a turbulent environment, which restricts the organization to Nonaka 1990; Weick 1993a, b). We therefore hypothesize,
inappropriate actions.
H7: The greater the technological turbulence associated with the
We focus on technological turbulence, that is, the degree environment, (a) the weaker the negative relationship be-
of change associated with new product technologies (Glazer tween organizational memory level and new product creativ-
and Weiss 1993; Jaworski and Kohli 1993; Weiss and Heide ity and (b) the weaker the positive relationship between or-
1993), and market turbulence, that is, the rate of change in ganizational memory dispersion and new product creativity.
the composition of customers and their preferences (Jawors- H8: The greater the market turbulence associated with the envi-
ki and Kohli 1993, p. 57). Both types of turbulence may ronment, (a) the weaker the negative relationship between
have a potentially disruptive effect on memory's positive ef- organizational memory level and new product creativity and
fect on new product short-term financial performance, be- (b) the weaker the positive relationship between organiza-
tional memory dispersion and new product creativity.
cause turbulence is likely to reduce the value of prior learn-
ing, which forces the organization to search for and process
METHOD
more information about the environment (Lawrence and
Lorsch 1967; Sinkula 1994; Weiss and Heide 1993). Rapid Sample and Procedure
environmental change also may stimulate metalearning, in
The initial sample consisted of 396 firms in the 1992
which the people in organizations learn to identify patterns
Advertising Age list of top 200 advertisers. After eliminating
of environmental behavior, but organizations in turbulent en-
firms for which the questionnaire was inappropriate (i.e., no
vironments generally find it difficult to cope and survive.
new product development occurred), the overall sample was
Given this view, we expect the positive effect of organiza-
reduced from 396 to 300. Of the eligible sample, 92 firms
tional memory level (H2) and dispersion (H4) on the short- (31%) responded. In terms of process, three weeks follow-
term financial performance of new products to be weakened
ing the first mailing, nonrespondents were telephoned,
under conditions of high technological or market turbulence:
reminded of the questionnaire, and encouraged to complete
H5: The greater the technological turbulence associated with the and return it. Two weeks following the calls, a second mail-
environment, the weaker the positive relationship between ing was sent to nonrespondents. No systematic differences

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were found between those who responded before and after variables: the two organizational memory measures, the two
the second mailing (Armstrong and Overton 1977).5 new product outcomes, and the two environmental modera-
Vice presidents of marketing were used as informants be- tors. Because of the small sample size, this approach was
cause of their organizational knowledge and access to strate- chosen over examining all variables in a six-factor model,
gic and financial information (Aguilar 1967). Informant which violates the recommendations made by Bentler and
firm tenure levels averaged 18 years, which is comparable to Cho (1988) to not exceed a five-to-one ratio of sample size
other samples of informants at this level (Larwood et al. to parameter estimates. Results suggest that the three mod-
1995).6 When completing the survey, informants were asked els fit well: the memory variables (X2(26) = 28.74, p = .323,
to focus on the most recent product development project that goodness-of-fit index [GFI] = .938), the two new product
had been in the market for a minimum of 12 months for outcomes (X2(19) = 26.60, p = . 114, GFI = .930), and the two
which their division was responsible. If new products did environmental moderators (X2(34) = 58.16, p = .006, GFI =
not fall under their purview, informants were asked to for- .900).
ward the questionnaire to the appropriate vice president in Within these three models, discriminant validity was as-
their division. All questions regarding the organization, then, sessed by constraining and freeing the phi coefficient. The
focused on the division as the unit of analysis. model with the free coefficient was found to be superior to
the fixed coefficient for the two organizational memory
Measurement
variables AX2(l) = 9.18, the two new product outcomes
Appendix A contains all of the measures and their AX2(1) = 11.34, and the two environmental moderators AX2(l)
sources. Memory level was operationalized by measuring = 13.42, suggesting independent constructs. In addition, be-
the amount of knowledge, experience, and familiarity an cause the memory measures are new, discriminant validity
organization has in a product category. Memory dispersion was assessed and found between the memory variables and
level was measured by the degree of consensus or shared measures of individual manager use of information (Desh-
knowledge among new product participants. The assump- pande and Zaltman 1982), organizational use of information
tion underlying this approach is that when organizational (Moorman 1995), and different forms of organizational cul-
memory is dispersed, members' beliefs would intersect or ture (Deshpand6, Farley, and Webster 1993).7 Finally, the re-
converge on a particular topic. If, for example, informants liability of the measures was found to exceed standards for
noted that there was little consensus among people working acceptance.8 In Table 1, we present psychometric informa-
on the product, a reasonable conclusion would be that team tion and a correlation matrix of all measures.
members' beliefs were based on different assumptions,
experiences, and information. Note that this approach to General Theory Testing Approach
measuring memory dispersion reflects the collective under- The hypotheses were examined in two regression models,
pinnings of organizational memory. That is, the defining ele- with the two new product outcomes as dependent variables.
ment-degree of convergence-is assessed as a property of Following accepted guidelines for examining interactions,
the collective. for each model, the main effects associated with the two
Technological and market turbulence were measured with organizational memory variables and turbulence were
Jaworski and Kohli's (1993) operationalizations, which fo- entered in addition to their interaction effects (the product of
cus on the pace of technological change and customer the memory variables and the moderators). Following the
changes in the industry (see also Glazer and Weiss 1993; conceptual framework, a quadratic form of the memory dis-
Weiss and Heide 1993). Finally, organizational bureaucrati- persion variable also was entered in the model with new
zation, which will be entered in the model to control for the product creativity as the dependent variable. The main effect
structure of information dispersion, is defined as the degree variables were mean-centered before we constructed the
to which an organization is managed through formalized re- interactions and quadratic versions to reduce the potential
lationships and centralized authority (John and Martin 1984) effects of collinearity (Cronbach 1987). Significant interac-
and is measured with Deshpand6's (1982) scales. tions were investigated with the slope analysis procedures
Following the data collection, measures were subjected to specified in Aiken and West (1991) to improve understand-
a purification process involving undimensionality, reliabili- ing of the coefficients. These procedures enable significant
ty, and discriminant validity assessments (see Anderson relationships to be understood at different levels of the con-
1987; Bagozzi and Phillips 1982; Churchill 1979; Gerbing tinuous moderator variables without creating categorical
and Anderson 1988). To assess unidimensionality, the mea-
sures were divided into three subsets of theoretically related
7Results indicate that the critical value (AX2(i) = 3.84) was exceeded in
all tests: memory level and individual instrumental use of information
5The results of these tests are the following (where ER = early respon- (AX2(1) = 32.18); memory dispersion and individual instrumental use of
ders and LR = late responders): memory level (ER = 5.29, LR = 5.17, t(91) information (Ax2(i) = 26.52); memory level and organizational instrumen-
= .34), memory dispersion (ER = 5.50, LR = 5.37, t91) = .69), technologi- tal use of information (Ax2(I) = 5.06); memory dispersion and organiza-
cal turbulence level (ER = 3.98, LR = 4.23, t(91) = -.76), new product per- tional instrumental use of information (AX2(I) = 9.79); memory level and
formance (ER = 4.90, LR = 4.65, t(91) = .71), and new product creativity clan cultures (Ax2(I) = 21.58), market cultures (AX2(I) = 4.46), adhocracy
(ER = 5.18, LR =4.65, t(91) = .71). cultures (AX2(I) = 11.82), and bureaucracy cultures (AX2(} = 14.58); as well
61nformant tenure levels were not collected during the initial administra- as memory dispersion and clan cultures (AX2(i) = 9.65), market cultures
tion of the questionnaire. However, half of the organizations were subse- (Ax2(i) = 10.16), adhocracy cultures (Ax2(I) = 26.04), and bureaucracy cul-
quently telephoned and this information was gathered as a safeguard to tures (AX2(l) = 35.05).
ensure that respondents had enough organizational experience to be capa- 8The only exception, memory dispersion, also could be argued to be a
ble of assessing organizational memory, though recent evidence has found reflective, rather than a formative, scale. This status would suggest that con-
an insignificant relationship between firm tenure levels and executives' ceptual considerations regarding construct space coverage, and not reliabil-
articulation of their corporate visions (Larwood et al. 1995). ity assessments, should be the evaluative criteria.

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Table 1
MEASUREMENT INFORMATION
Mean S.D. (1) (2) (3) (4) (5) (6) (7)

(1) Organizational Memory Level 5.26 1.62 .96
(2) Organizational Memory Dispersion 5.46 .82 .33* .62
(3) Technological Turbulence 4.06 1.44 -.06 -.01 .84
(4) Market Turbulence 4.01 1.17 .09 .13 .17 .70
(5) New Product Short-Term Financial Performance 4.82 1.51 .40* .43* -.01 .11 .95
(6) New Product Creativity 5.12 1.24 -.02 .27* .19 .16 .13 .78
(7) Organizational Bureaucratization 3.21 1.24 .12 -.39* -.03 .08 -.19 -.28* .85
*p < .05.
Note: The coefficient alpha for each measure is on the diagonal (and in italics) and the
versions. For both models, variance inflation factors were effect on new product creativity (b = .204, t = 2.286) but no
estimated to examine collinearity and found to be below effect on new product short-term financial performance.
harmful levels (Mason and Perreault 1991). In addition to Market turbulence has no main effects. Finally, the control
these predicted effects, organizational bureaucratization also variable, organizational bureaucratization, has no effect on
was entered as a control variable in the models for the rea- the short-term financial performance of new products and a
sons described previously. Table 2 presents model estima- marginal negative effect on their creativity (b = -.200, t =
tion results. 1.837)
RESULTS
The Impact of Organizational Memory Level
Overview
The first two hypotheses examine the effect of organiza-
Results show that, overall, the two models were signifi- tional memory level on new product outcomes. Hl predicts
cant: new product short-term financial performance (R2 =that higher levels of organizational memory reduce new
.310, F(9,83) = 4.135, p = .0001) and new product creativityproduct creativity. Results indicate a nonsignificant relation-
(R2 = .255, F(10,82) = 2.816, p = .0001). As was noted pre- ship between memory level and new product creativity,
viously, in testing the interaction hypotheses, the main which fails to support Hi, though the relationship is in the
effects associated with the moderator variables (market and expected direction (b = -.089, t = -1.123). H2 predicts a pos-
technological turbulence) must be entered into the regres- itive effect for organizational memory level on new product
sion model (Pedhazur 1982). Therefore, several nonhypoth- performance, which the results support (b = .258, t = 2.787).
esized main effects also are noted. Results indicate that Considering the effect of technological turbulence, H5a
technological turbulence has a significant positive main and H6a predict that the greater the technological and market
Table 2
STANDARDIZED ESTIMATES OF HYPOTHESIZED RELATIONSHIPS
Dependent Variables
New Product Short-Term New Product
Independent Variables Financial Performance Creativity
Prediction Actual Prediction Actual

Organizational Memory Level (H2, + ) .258* (.092) (Hi, -) -.089 (.080)
Organizational Memory Dispersion (H4, + ) .582* (.196) .418* (.184)a
Memory Dispersion x Memory Dispersion (H3, nc) .086 (.126)
Memory Level x Technological Turbulence (Hsa, -) -.025 (.061) (H7a, -) -.013 (.053)
Memory Level x Market Turbulence (H6a, -) .007 (.069) (Ha, -) -.017 (.060)
Memory Dispersion x Technological Turbulence (H5b, -) .054 (.150) (H7b, -) -.402* (.135)
Memory Dispersion x Market Turbulence (H6b, -) -.351* (.165) (H8b,-) -.156 (.145)
Technological Turbulencea -.093 (.104) .204* (.089)
Market Turbulencea .044 (.125) .062 (.109)
Organizational Bureaucratizationb -.064 (.125) -.200t (.108)
Adjusted R2 .310 .255

F-statistic 4.135* 2.816*
Note: The degrees of freedom for the new product short-term financial performance model were (9,83), whereas they were (10,82) for the new product
ativity model. Standard errors are in parentheses.
*p < .05.
tp <.10.
aFollowing Pedhazur (1982), the main effects associated with both the interactions and the quadratic terms must be entered into models examining int
action and quadratic hypotheses.
bOrganizational bureaucratization is a control variable reflecting the structure of organizational information sharing activities.
cH3 predicts an inverted-U relationship.

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turbulence, respectively, the weaker the positive relationship The Nature of Organizational Memory
between organizational memory level and new product An important first contribution of this work is the fine-
short-term financial performance. Results indicate no signif-
grained description of organizational memory forms, roles,
icant interactions between memory level and either type of
and characteristics. Although many of these issues have
turbulence on financial performance (see Table 2), which
been discussed in other research (e.g., Walsh and Ungson
suggests that memory level positively influences new prod-
1991), we systematically integrate these concepts into a def-
uct performance in this sample regardless of environmental
inition of organizational memory, which results in several
turbulence. These results fail to support H5a and H6a. important advances. First, we describe three ways in which
Likewise, H7a and H8a predict that technological and mar- memory may be manifested: as shared beliefs, behavioral
ket turbulence, respectively, weaken any negative effect of routines, and physical artifacts. Second, two distinct mem-
memory levels on the development of creative new products.
ory roles were identified-both interpretive and action guid-
Results indicate no interaction between memory level and
ance roles. Third, four distinct dimensions of organizational
turbulence on creativity in these data. memory were identified, two of which were examined
empirically in this research. Fourth, this view of memory
The Impact of Organizational Memory Dispersion
extends prior work by Walsh and Ungson (1991). On the one
The second set of hypotheses focuses on the effect of hand, it reaffirms their emphasis on the multidimensional
organizational memory dispersion on new product out- character of memory, and the subtle processes involved in
comes. H3 predicts that a moderate level of memory disper- creating and sustaining it. On the other hand, our framework
sion promotes the highest levels of new product creativity. diverges from their emphasis on memory as part of an inter-
Results do not support this prediction but instead find a non- pretive system. Specifically, our approach gives memory
significant quadratic dispersion term (b = .086, t = .680) and standing as an organizational feature that can be deliberately
a positive main effect dispersion term (b = .418, t = 2.266), created and modified, and whose features can materially
which suggests there is a positive linear relationship affect firm outcomes.
between memory dispersion and creativity. H4 predicts that Further research could fruitfully assess the effects of oth-
greater dispersion of organizational memory increases newer memory characteristics on new product activities. For ex-
product short-term financial performance. Results support ample, further work could examine the competitive implica-
this prediction (b = .582, t = 2.965). tions of different levels of procedural and declarative mem-
Results also suggest, however, that the impact of memoryory content. The contrasting possibilities can be seen in the
dispersion on the short-term financial performance of new classic example of the early development of the VCR, when
products is weakened by market turbulence, which supportsAmpex held crucial tape recording patents (declarative
H6b (b = -.351, t = -2.124). Specifically, as market turbu- memory) but lacked crucial product development skills
lence increases, the relationship between memory disper- (procedural memory) for the mass market. In contrast, Sony,
sion and short-term financial performance decreases. A fol-JVC, and others had relatively weak scientific (declarative)
low-up slope analysis examining this interaction (Aiken and memory regarding some key aspects of tape technology
West 1991) indicates that the relationship between memory (Lurie 1987). However, these firms used powerful electron-
dispersion and financial performance is insignificant under ic product development skills (procedural memory) to de-
conditions of high market turbulence (b = -.012), becomes velop commercial VCR products after gaining access to
positive at moderate market turbulence (b = .436), and is Ampex's knowledge. Because the procedural memory con-
even stronger at low market turbulence (b = .885). In short, tent was less easy to imitate than the declarative memory
memory enhanced short-term financial performance whencontent, U.S. firms were not able to replicate quickly the
there was little turbulence but had no effect on short-term fi- content of the memories of the Japanese firms, which re-
nancial performance in the presence of high turbulence. No sulted in U.S. firms' inability to compete successfully in this
support for a similar effect for technological turbulence wasproduct market (Lurie 1987; Teece 1987).
found, however, which fails to support H5b.
Technological turbulence did, however, have a significant The Link Between Memory and New Product Development
negative interaction with memory dispersion on new productOutcomes
creativity (b = -.402, t = -2.964). A follow-up slope analy- In our empirical study, we explore how two dimensions of
sis examining this interaction (Aiken and West 1991) indi- memory-level and dispersion-affect two different new
cates that the relationship between memory dispersion andproduct outcomes: financial performance and product creativ-
new product creativity is negative under conditions of highity. Two broad findings emerge. First, memory may influence
turbulence (b = -.385), becomes positive at moderate turbu-financial performance and creativity in different ways. Second,
lence (b = .298), and is strong and positive at low turbulence environmental turbulence appears to moderate memory's
(b = .981). These results support H7b. Market turbulenceimpact on performance. In particular, higher memory disper-
does not, however, moderate the impact of memory dispersion did not enhance financial performance under conditions of
sion on new product creativity, which fails to support H8bmarket turbulence, whereas it actually harmed creativity under
(see Table 2).
conditions of technological turbulence. These broad findings,
along with more specific features of these relationships, point
DISCUSSION
to important priorities for practitioners seeking to improve
We provide an initial attempt to fill arr important gapdevelopment
product in processes by enhancing organizational
the new product literature by expanding our vision of orga- memory, and suggest fruitful areas for further research.
nizational memory in the new product context and exploring Before considering these issues, however, it is important
some of its effects using systematic quantitative data. to note the aspects of this study that should be kept in mind

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while interpreting these results. For this initial empirical to in-house designers and even vendors. Some firms also
study, we used single informants at high levels of the orga- seek to institutionalize the new product development
nization to achieve a broad organizational view. Although process itself through efforts to achieve ISO 9000 certifica-
the use of multiple informant designs remains the exception tion. Other organizations are experimenting with new orga-
in most marketing studies, such an approach would provide nizational structures that affect the nature and availability of
a better test in some respects, though such designs are not organizational memory (Womack, Jones, and Roos 1990).
without their methodological concerns. Despite these con- Our results support the importance of identifying which
cerns, future studies might profit from seeking multiple in- product outcomes the firm seeks to enhance and attempting
formants to enhance the validity of organizational memory to link these activities to memory in order to enhance spe-
measures (Bagozzi and Phillips 1982). cific outcomes over time.
In addition, that our informants assessed new product de- The results also support the importance of careful atten-
velopment projects after their completion raises the poten- tion to the multiple dimensions of new product outcomes in
tial of a retrospective justification bias. This would occur if theoretical research. They are consistent with predictions
informants, knowing the outcome of projects, tended to give that memory may have different effects on different out-
responses for the independent variables consistent with comes, which reduces the likelihood that we will find a sim-
their knowledge of the outcome. Our informants provided ple formula linking memory to new product outcomes. For
their assessments of these variables in the context of other example, research linking memory dimensions with key ad-
measures, thus making it less likely they would pay atten- ditional outcomes, such as timeliness, long-range financial
tion to the congruence of their assessments with new prod- outcomes, and whether a product becomes a dominant de-
uct outcomes. Moreover, survey questions were designed to sign, may offer potentially important frontiers for such
focus informant attention on the appropriate time period for work (Foster 1986; Schoonhoven, Eisenhardt, and Lyman
each variable, in part to help avoid this effect. Nonetheless, 1990).
further work could fruitfully seek to measure memory vari-
ables before project outcomes are known to alleviate such The Effect of Organizational Memory Level
concerns. Our research augments previous work concerned with the
Finally, our data show meaningful variance in terms of or-relationship between new products and a firm's existing
ganizational memory and project outcomes, which reduces competencies, which has often viewed knowledge assets as
concerns about limited scope in our sample. However, as- having unconditionally positive effects. For practitioners,
suming our sample of projects is representative of productour results support a great deal of the marketing strategy lit-
development projects in general, it is likely to contain aerature and practice by finding that a reliance on memory
large proportion of projects involving the modification of(which represents stored information and competencies) in
existing products. Therefore, our results may not be gener-new product development increases new product financial
alizable to more radical projects. Hence, an important av- performance (Ansoff 1988; Montoya-Weiss and Calatone
enue for further work would be to determine if our results 1994; Rumelt 1974; Varadarajan 1983). However, we did
are replicated in samples with higher proportions of morenot find active support for the prediction that high memory
radical projects. These issues notwithstanding, the study's levels would detract from product creativity, but we did find
results offer interesting implications for both practitionersthat high memory levels failed to enhance creativity.
and marketing theorists, which we next consider. Our finding that high memory level enhanced financial re-
turn but did not enhance creativity also reinforces practi-
New Product Outcomes
tioner concern about the possible dangers of formalizing
The effects of memory differ between the two new prod- new product development processes. Specifically, many
uct development outcome dimensions studied here. In par- firms are now formalizing new product development proce-
ticular, memory level enhances relatively short-term (one dures, sometimes in pursuit of ISO 9000 certification or sup-
plier qualification programs. Yet, to the degree a firm seeks
year) financial performance, but not creativity. Market tur-
bulence moderates the impact of memory dispersion on to enhance new product creativity, formal procedures aimed
financial performance, whereas technological turbulence at increasing the level of memory may have little or no val-
moderates the impact of memory dispersion on creativity, ue. These firms might want to look to other dimensions of
but not on short-term financial performance. This pattern their organizational memory (beyond just trying to capture
the most information possible) in seeking to institutionalize
highlights that memory may have varied effects on different
their best practices.
features of product performance. There are additional indi-
cators of success in new product activities, including cus- Turning to theoretical issues, that high memory levels nei-
tomer measures and time-to-market measures (Griffin and ther enhances nor detracts from product creativity in our
Page 1993). By implication, the effect of memory level andstudy leads us to speculate that memory level may be less
dispersion may vary for these other outcome indicators as important than how flexibly or inflexibly a firm holds its
well. knowledge (March 1979). Further research could consider
One implication of our work for practitioners, then, is tomoderating factors in the firm's culture or structure that may
underscore the importance of sensitivity to organizational reflect a flexible approach to what has been learned in the
memory's potentially distinct impact on different new prod- past or that encourage careful reconsideration of current
uct outcomes. Many firms are in the process of creating in- routines and knowledge (Barabba and Zaltman 1991; Olson,
creasingly sophisticated organizational memory systems in Walker, and Ruekert 1995). In addition, the relationship be-
which they make engineering drawings, parts specifications, tween memory level and creative product outcomes may be
influenced by stage of the new product development
costs, and other concrete features of prior products available

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process, whether the organization uses a team approach, and (Anderson and Tushman 1990). This variety can be achieved
the nature of the product itself. In addition, we believe it will through differences among team members in terms of func-
be important to begin to study more systematically the actu- tional background, product category experiences, firm-level
al processes through which memory level affects outcomes, tenure, or individual traits and perhaps even can be shaped
through, for example, longitudinal study of the creation and by the information provided to the team by senior manage-
deployment use of specific organizational routines. ment (Cox 1993; Katz and Allen 1982; Nemeth 1986).
Second, under conditions of low technological turbu-
The Effect of Organizational Memory Dispersion lence, high dispersion (or homogeneity) actually enhances
Memory dispersion had a positive effect on both the creativity. This finding implies that, in some settings, cre-
financial performance and creativity of new products in this ativity may not require the addition of variation or disagree-
sample. Moreover, the impact of our measure of memory ment among participants. Specifically, creativity in these
dispersion on new product outcomes was stronger than the settings may arise from either creative firm-level goals or
impact of the measure of memory level. This implies that the development processes that permit participants to make cre-
degree to which knowledge and skills are shared among ative use of their shared knowledge, such as when they re-
organizational members may be more important than the combine shared ideas into new forms (Nelson 1982; Nona-
sheer amount of organizational memory in some settings. ka 1990).
Recall that we had predicted a positive effect for memory These results also imply that practices involving the uti-
dispersion on product financial performance and a curvilin- lization of stored information may need to vary when at-
ear effect for dispersion on product creativity. Our results tempting to achieve creative outcomes in different environ-
support the former and show only a simpler linear effect for ments. For example, in turbulent environments, creativity
dispersion impact on creativity. The question of whether dis- may be achieved by infusing varied knowledge into the
persion has a linear curvilinear effect merits further study, product development process. Therefore, mechanisms for
however. We utilize a simple measure of dispersion and do accessing specialized and divergent knowledge from inter-
not attempt to characterize the structure of such dispersion. nal or external sources, as well as processes for ensuring its
If memory is dispersed in a hierarchical manner (as opposed usage, represent important challenges for organizations
to a network fashion), its impact may vary. In addition, the seeking creative new product development. On the other
lack of a curvilinear effect may arise from the scope limita- hand, we speculate that shared memory may result in new
tions of our sample. For example, the maximum point in the product creativity by recombining shared knowledge (Hol-
curvilinear relationships may shift to some degree depend- land 1975). For example, Dougherty (1990, 1992) finds that
ing on whether a product is more incremental or radical. successful new product groups were able to combine their
perspectives, but only when they operated in a highly inter-
Environmental Contingencies and the Effect of Memory active and iterative fashion by participating in concrete tasks
Dispersion together and violating routines.
Following previous theory and research that environmen- Environmental turbulence also moderated dispersion's
tal turbulence has the potential to affect the value of memory, impact on financial performance. Specifically, when market
we introduce market and technological turbulence as moder- turbulence was moderate or low, dispersion enhanced finan-
ator variables into our study. Although these factors did not cial performance. However, when market turbulence was
moderate the impact of memory level, they did influence the high, dispersion had no effect on financial performance.
way memory dispersion affects product outcomes. This result, like the previous one, may imply that building
We find that technological turbulence has an important ef- valuable memory systems is harder under conditions of en-
fect on dispersion's impact on product creativity. In the pres- vironmental turbulence. Specifically, if market turbulence
ence of high technological turbulence, high levels of mem- reduces the value of organizational memory for financial
ory dispersion-which involves shared understanding and performance, organizations may need to turn to additional
homogeneous knowledge-actually detract from creativity. information mechanisms to supplement the value of memo-
This significant interaction provides a partial explanation ry. Formal experimentation, rapid prototyping, and improvi-
for the conflicting literature on dispersion, suggesting that sation, for example, may represent processes that create new
both high and low levels of dispersion foster creativity. working knowledge in situations for which long-term orga-
Specifically, it implies that organizations may be better off nizational memory provides insufficient guidance (Eisen-
with internal heterogeneity under conditions of high turbu- hardt and Tabrizi 1995; Moorman and Miner 1996; Weick
lence, because diverse pockets of knowledge and skills en- 1993a).
able them to increase their probability of exploiting emerg- Finally, we turn to the theoretical implications of our find-
ing opportunities. ings on the interaction of dispersion and turbulence. In gen-
This finding has two important implications for new prod- eral, the results reaffirm that turbulence can reduce the value
uct development practice. First, it provides further support of shared knowledge within organizations. However, we note
for the commonly held view that in the presence of turbu- that technological and market turbulence does not uniformly
lence, heterogeneity may provide value (Burgelman 1983; affect outcomes. Technological turbulence does not moderate
Miner 1994; Tushman and Romanelli 1985). In this case, the dispersion-financial relationship, for example, nor does
heterogeneity of views among the team members enhanced market turbulence moderate the dispersion-creativity rela-
new product creativity. This finding, then, supports the view tionship. These findings suggest it may be time to address
that early in the S-curve of technological evolution, or dur- links between specific aspects of environmental turbulence
ing periods of radical transition, it makes sense to have some and memory, rather than assume broad environmental fea-
level of variety on teams to enhance the creative process tures with uniform impact on organizational memory's value.

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Overall, these results extend thinking that has tended to which new, interactive information systems and new organi-
advocate either homogeneity or heterogeneity in organiza- zational designs affect the balance between heterogeneity
tional knowledge. For many decades, for example, it was as- and homogeneity in product development projects. Further
sumed that specialization, which can be seen as fragmented research should also probe how these dispersion effects are
organizational memory, was an efficient way to capture and influenced by their occurrence during certain stages of the
use knowledge (Scott 1987). Today, popular wisdom has re- new product development process. For example, it is widely
versed that assumption, often calling for shared knowledge assumed that heterogeneity is more useful in the early stages
and redundancy as a simple answer to produce new product of the process, when new knowledge appears to be more
success (e.g., Griffin and Hauser 1994; Nonaka 1990). Both necessary; however, we lack systematic empirical data sup-
our theoretical development and empirical results point to a porting this view.
more complex world. Further research could explore more Finally, in considering the effect of memory dispersion,
carefully the precise mechanisms through which consensus further research would benefit from accounting for its spe-
and heterogeneity affect outcomes in different new product cific content. We speculate that if a firm's memory is dis-
development environments (Guzzo and Salas 1995; Watch- persed, but contains primarily procedural knowledge about
er 1983). More broadly, researchers may want to explore how to innovate, it could produce successful products even
factors beyond variation among persons, such as the ways in under turbulent conditions. However, we speculate that de-
Appendix A
STUDY MEASURES
I. Independent Variables 1!. Dependent Variables
Organizational Memory Level Rate the extent to which the product has achieved the following outcomes
(Seven-point scale, where 7 = strongly agree and I = strongly di during the first 12 months of its life in the marketplace.
ionmy
Prior to the project, compared to firms in our industry, had: New Product Performance
divisi Moorman (1995)
*a great deal of knowledge about this category. (Seven-point scale, where 7 = high and 1 = low)
*a great deal of experience in this category.
*Sales relative to objective
*a great deal of familiarity in this category.
*Profit margin relative to objective
*invested a great deal of R&D in this category.
*Return on assets relative to objective
Organizational Memory Dispersion New scale -Return on investment relative to objective
(Seven-point scale, where 7 = high and I = low)
New Product Creativity Moorman (1995)
project
Rate the degree of consensus among the people working on for
the (Seven-point scale, where 7 = high and I = low)
the following new product areas:
*Challenged existing ideas for this category-Did not challenge existing
*product design
ideas for this category*
*brand name
*Offered new ideas to the category-Did not offer new ideas to the category*
-packaging *Creative-Not creative*
*promotional content
*Spawned ideas for other products-Did not generate ideas for other
*product quality level
products*
11. Moderator Variables

IV Control Variables
Technological Turbulence Jaworski and Kohli (1993)
Organizational Bureaucratization Adaptedfrom Deshpande (1982)
(Seven-point scale, where 7 = strongly agree and I = strongly disagree)
(Seven-point scale, where 7 = strongly agree and I = strongly disagree)
*The technology in this product area is changing rapidly.
*Whenever employees have a problem, they are supposed to go to the same
*Technological changes provide big opportunities in this product area.
person for an answer.
*It is very difficult to forecast where the technology in this product area will
*There is little action taken until a superior approves the decision.
be in the next five years.
*If employees wished to make their own decisions, they would be quickly
*A large number of new product ideas in this area have been made possible
discouraged.
through technological breakthroughs.
*Going through the proper channels in getting a job done is constantly
*Technological developments in this product area are rather minor.* stressed.
Market Turbulence Jaworski and Kohli (1993) *Employees have to ask their boss before they do almost anything
*Any decision
(Seven-point scale, where 7 = strongly agree and I = strongly employees make has to have their boss' approval.
disagree)
*There is no specific rule manual detailing what employees should do.*
*In our kind of business, customers' product preferences change quite a bit
*In this organization, everyone has a specific job to do.
over time.
*Our customers tend to look for new products all the time.
*We are witnessing demand for our products and services from customers V Discriminating Variables
who never bought them before.
(These variables were used only in discriminant validity exercises, not in
*New customers tend to have product-related needs that are different from
the model testing.)
those of our existing customers.
*We cater to much the same customers that we used to in the past.* Organizational Culture D )eshpande, Farley, and Webster (1993)
Organizational Instrumental Use of
Market Information Moorman (1995)
Individual Manager Instrumental

Use of Market Information Deshpande and Zaltman (1982)
*These items were reverse-coded prior to scale construction.

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The Impact of Organizational Memory on New Product Performance and Creativity

Author(s): Christine Moorman and Anne S. Miner

Stable URL: https://www.jstor.org/stable/3152067

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Arguing that organizational memory affects key new product develop-