American Marketing Association

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

Source: Journal of Marketing Research, Vol. 34, No. 1, Special Issue on Innovation and New
Products (Feb., 1997), pp. 91-106
Published by: American Marketing Association
Stable URL: http://www.jstor.org/stable/3152067 .
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CHRISTINEMOORMANand 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 interestedin 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 organizationscan acquire better informationas 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 importantissue is the role of stored knowledge, or orga-
1994). Even more important,because it requiresthe use of nizationalmemory,in new productdevelopmentactivities.1
knowledge assets in a dynamic setting, scholars have in- As Starbuck(1992, p. 176) suggests, "A knowledge-inten-
creasingly envisioned productdevelopment as a process of sive firm may not be informationintensive ... knowledge is
organizationallearning involving the acquisition, dissemi- a stock of expertise, not a flow of information."
nation, and utilization of information(Day 1994; Dickson The traditionalbusiness strategy and marketingstrategy
1992; Imai, Nonaka, and Takeuchi 1985; Leonard-Barton literaturehas long emphasizedthe role of organizationalex-
1992; Moorman 1995; Nonaka 1991). Understandably,re- perience or familiaritywith productsand markets.This lit-
searchersexploring the creation of new productshave been eraturehas suggested that firms are likely to be more suc-
cessful if they stick to developing productsand marketsthat
reflect their core competencies (Ansoff 1988; Montoya-
*ChristineMoorman is Associate Professor of Marketing,and Anne S.
Miner is Associate Professor of Management,GraduateSchool of Busi- Weiss and Calatone 1994; Rumelt 1974; Varadarajan1983).
ness, University of Wisconsin-Madison.This researchhas benefited from One resulting framework of this view, termed the prod-
National Science FoundationGrant#SBR-9410419. The authorsthankthe uct/market matrix, is limited to examining the effect of
editor,and appreciatethe helpful comments of Jan Heide;Aric Rindfleisch; memory level on the financial performance of marketing
Thekla Rura;participantsof the WhartonConferenceon Innovationin New
ProductDevelopment;seminarparticipantsat DartmouthCollege, Harvard
University, IndianaUniversity,Ohio State University,Universityof South IThere are, as we discuss throughoutthis article, models of organiza-
Carolina, and University of Cincinnati; and three anonymous JMR tional informationprocessing that include the influence of organizational
reviewers. memory (Burgelman 1983; Cohen and Levinthal 1990, 1994; Cyert and
March 1963; Leonard-Barton1992).
Journal of MarketingResearch
91 Vol. XXXIV(February 1997), 91-106

92 JOURNAL OF MARKETINGRESEARCH, FEBRUARY 1997
strategies.There are, however,otherorganizationalmemory ORGANIZATIONAL MEMORY

dimensions that exist, as well as additionalmarketingstrat- The OrganizationalViewof Memory
egy outcomes that could be considered.Moreover,the view
of experienceoffered by the strategyliteratureis also a main Envisioningmemory as an organizationalphenomenonis
consistent with a growing body of literaturethat suggests
effects view that does not consider how the impact of orga-
organizationsprocess, use, and store information,and that
nizationalexperience is influenced by rapidlychanging en- these collective activities can be seen as distinct from indi-
vironments. Specifically, it has tended to view experience vidual manageractivities (Cohen and Levinthal 1990, 1994;
and knowledge as unconditionallyhelpful to organizations Cyert and March 1963; Daft and Weick 1984; Huber 1991;
(Day 1994; Montoya-Weissand Calatone 1994; Zirger and Kohli and Jaworski 1990; Moorman 1995; Sandelandsand
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 mechanismsthroughwhich storedinformationor mem- organizationalinteractionswith the world, which results in
ory may affect product development. For example, Garud outcomes that are interpretedby people and sharedamong
and Nayyar (1994) suggest that organizationsshould devel- members, creating organizationalmemory in the form of
op routines for reactivatingpreviously acquiredknowledge 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).
learningincreasea firm's absorptivecapacity,which permits The notion of collective mental processes has been ap-
more effective use of extramuralknowledge. Moreover,Day propriatelycriticized as encouraging reification and gener-
(1994, p. 38) describes new productdevelopmentas a "key alizations of individualphenomenato group actions. How-
firm capability involving complex bundles of skills and ac- ever, organizationalmemory,as embodied in organizational
cumulatedknowledge." artifactsand procedures,seems to clearly distinguish orga-
nizational from individual memory. For example, standard
In additionto postulatinghow memorymay enhance new
operatingprocedurescan drive behavior even when people
productdevelopmentoutcomes, recent work also highlights within the system no longer have individualmemory of the
the possibility that memory actually may detractfrom 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 thatcompetencies may turn into barri- membersare not aware of the process (Hutchins 1991). Or-
ers when organizationsstrive to develop creative new prod- ganizational memory, then, is not simply the sum of the
ucts. More generally, research on organizational learning memories of organizationalmembers, because it may in-
and technological change highlight the possibility that volve the interactionof several people, or even reside out-
stored memory may prove a liability when organizational side the awarenessof specific people.
environmentsare changing rapidly (Miner 1990; Tushman
and Anderson 1986). OrganizationalMemoryForms,Roles, and Characteristics
Recent work, then, suggests a complex and even contin- Forms.We propose that organizationalmemory may be
gent role for organizationalmemory in product develop- manifested in three basic forms (Garud and Rappa 1994;
ment. We seek to explore and expandthe 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 organizationalbeliefs, 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 Webster1993; DeshpandeandWeb-
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; Starbuck1992), as well as organizationalmyths, 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 sharedvalue of aiming for "40%improvement"in
Third,drawingon fundamentalconcepts in theories of orga- its new productdevelopment activities (Imai, Nonaka, and
nizational learning, we propose that memory's impact de- Takeuchi 1985).
Second, organizations learn from experience particular
pends on the degree of exogenous turbulencefaced by the
firm. To explore these issues, we develop eight propositions ways of doing things that become encoded in formal and
informalbehavioral routines,procedures,and scripts (Cyert
about the specific impactof memory level and memory dis- and March 1963). Formalroutinesmay be reflected in stan-
persion on new product short-termfinancial performance dard operating procedures(Winter 1987) or in managerial
and creativity.We test our hypotheseswith datafrom 92 new and technical systems and capabilities (Brown and Eisen-
productdevelopment projects. Our results point to distinct hardt 1995; Leonard-Barton1992); 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 argumentsand results imply, we believe, that if ple, guide the types of information-sharingmechanisms
firms fail to understandthe subtle ways in which different used (Eisenhardtand Tabrizi 1995) or specific projectsteps
featuresof organizationalmemory influence productdevel- such as prototypeproduction.They may also directthe over-
opment, they may fail to harvestthe 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

Organizational Memory 93
(InternationalOrganizationfor Standardization)9000 rou- tional buyers, the less likely they were to engage in infor-
tines for documentationbecome standardprocedures.Imai, mation search activities.
Nonaka, and Takeuchi (1985), for example, describe the Organizationalmemoryalso varies in the degree to which
"rugbyapproach"used by Hondateams, which involves the it is dispersed, or shared, throughoutthe organization.As
entire team runningthe full length of the new productdevel- Walshand Ungson (1991, p. 62) note, "organizationalmem-
opment process, in contrast to a "relay approach,"which ory is not centrally stored, but distributedacross different
involves functions handingoff the productat distinct times. retention facilities." Organizationalmemory by its nature
Likewise, Orr(1990) observes informalinformationsharing involves some degree of dispersionthroughoutthe organiza-
routines among Xerox service representativeswho repeat- tion. However,there may still exist variancein the degree to
edly gather around a communal coffee machine to share which organizationalmembers adopt firm knowledge and
their field experience. skills, which is determined,in part, by how firm activities
Third, memory is found in an organization'sphysical ar- are designed and structuredto facilitate diffusion across the
tifacts, which embody, to varyingdegrees, the resultsof pri- organization(Nonaka and Nicosia 1979; Websterand Wind
or learning (Epple, Argote, and Devadas 1991; Garud and 1972). The presence of distinct organizationalsubcultures
Rappa 1994; Leonard-Barton1992). For example, Epple, suggests that memory is not necessarily sharedby all mem-
Argote, and Devadas (1991) provide evidence from an in- bers (Cohen and Levinthal 1990; Deshpande and Webster
vestigationof a truckplantthatknowledge may become em- 1989; Martinand Siehl 1983; Smircich 1983).2
bodied in tooling, programming,and assembly line layout. Organizationalmemoryalso varies in accessibility, or the
Othershave suggested that memory is reflected in organiza- extent to which it can be retrievedfor use (Day 1994; Garud
tional structureand ecology (Argote 1995; Leonard-Barton and Nayyar 1994; Walshand Ungson 1991). As Day (1991,
1992; Levitt and March 1988; March 1991; Walshand Ung- p. 8) notes, "Organizationswithoutpracticalmechanismsto
son 1991). Furthermore,in new productdevelopment,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 workerscould experiment," again. Memorymechanismsare needed to ensurethat useful
"holdingmeetings in a large room with glass walls,"and the lessons are captured,conserved,and can be readilyretrieved
use of a system in which "all the team membersare located when needed."
in one large room." Featuresof productsand productlines Finally,the contentof organizationalmemoryrefersto the
(such as product design, materials, packaging, and logos) meaningof collectively storedinformation(Walshand Ung-
are also importantphysical artifactsassociated with organi- son 1991). Increasingevidence points to memoryas consist-
zational memory. ing of two types of knowledge: proceduraland declarative
Roles. In all three forms, organizationalmemory is likely (Cohen 1991; El Sawy, Gomes, and Gonzalez 1986; Sinku-
to performtwo fundamentalroles: interpretationand action la 1994). Proceduralmemory refers to process memory or
guidance. Organizationalmemory performs an interpreta- memory of underlying skills for performingtasks (Nelson
tion role by filtering the way in which informationand ex- 1982). An organizationmay know, for example, how to de-
perience are categorized and sorted (Cohen and Levinthal velop prototypes.Declarativememoryrefers 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 aboutcustomerpreferences,or the technical fea-
Sinkula 1994; Walsh and Ungson 1991). Organizational tures of a firm's product line (Day and Nedungadi 1994).
memory also performsan action guidance role by dictating Anothertype of memory content could be found in the dis-
or influencing individual and group action (Amburgeyand tinct culturalcharacteristicsof an organization.Forexample,
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 productde- Webster1993). Memorycontent is thereforelikely to be re-
velopment stage that guides team members'actions.The ac- vealed, in part,in an organization'sculture.3
tion guidance role representsone of the most powerful fea-
turesof organizationalmemoryin much traditionalresearch. A Definition of OrganizationalMemory
Cyert and March(1963), for example, emphasize the power Using this review as a basis, we define organizational
of standardoperating proceduresin driving organizational memoryas collective beliefs, behavioralroutines, or physi-
action, whereas Nelson and Winter(1982) stress the overar- cal artifactsthat vary in their content, level, dispersion, and
ching impact of organizationalroutines. accessibility.This view of memory is consistent with thatof
Characteristics. In addition to memory forms and roles,
organizational memory can be viewed as having several 2Althoughour approachfocuses on the degree of dispersion, dispersion
dimensions or characteristics:amount, dispersion, accessi- could be furtherconceptualized as a multidimensionalconstruct that also
bility, and content. The level, or amount, of organizational reflects the structureof that sharing.The structureof informationdistribu-
tion may include, for example, one-way or two-way transmissionsand hor-
memory refers to the amountof stored informationan orga- izontalor verticalstructures.Hence, we includea variablein our model that
nization has about a particularphenomenon. High levels of may partiallycontrol for the effects of the structureof 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'svalues and norms.Therefore,if culture is the source, mem-
firm's demand for new marketinformation(Dickson 1992; ory content will have a value or normcomponent.However,as conceptual-
ized, organizationalmemory is much broaderthan organizationalculture,
Sinkula 1994). Regarding this point, Weiss and Heide because, in additionto values and norms, memory includes behavioralrou-
(1993) find that the greaterthe priorexperience of organiza- tines and physical artifactsthat reflect priorlearning.

Day (1994, p. 44), who defines organizationalmemoryas "a Figure 1

repositoryfor collective insights contained within policies, THEINFLUENCE ON NEW
MEMORY
OF ORGANIZATIONAL
procedures,routines, and rules that can be retrieved when ANDPERFORMANCE
PRODUCTCREATIVITY
needed;"but is more circumscribedthan that of Walsh and
Ungson (1991), who suggest that organizationalmemory is
composed of the structureof its retentionfacility, the infor-
mationcontainedin it, its effects, and the informationacqui-
sition and retrievalprocesses.
CONCEPTUALFRAMEWORK
Ourconceptualframeworkfocuses 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 describedin the literatureas 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 whetherthe firm operates within a turbu-
lent environment.
In discussing this framework,we first introducethe two uct is partof the firm's longstandingrepertoire,the length of
focal new productoutcomes investigatedhere. Second, we team members'service is high, or a particularnew product
present the effect of organizationalmemory level and dis- development phase-such as prototypedevelopment-is a
persionon each new productoutcome. Third,we discuss the well-developed competency.
moderatingeffects of environmentalturbulenceon the orga- Previous research has observed that change becomes
nizationalmemory-newproductoutcome relationships. more difficult as memory in a particulardomain increases.
This effect has been referredto as a competencytrap (Levitt
Focal New ProductOutcomes and March 1988; March 1991), a core rigidity (Leonard-
The two new product outcomes that we investigate are Barton 1992), routinerigidity,orfunctionalfixedness (Dick-
new productcreativityand new productshort-termfinancial son 1992) for the organization.In the area of new product
performance.New productcreativityrefers to the degree to development,observers also have reportedfrom qualitative
which a new product is novel and has generative capacity studies thathigher levels of memory inhibitany actions out-
side preexisting action patterns (Ghemawat 1991; McDo-
(i.e., the potential to change thinking and practice)
(Andrews and Smith 1996; Wilton and Myers 1986; Zalt- nough 1993). Likewise, both Leonard-Barton(1992) and
man, Heffring, and LeMasters 1983). New product short- Dougherty (1992) describe instances in which groups with
termfinancial performance is defined as the level of new strongmemoriesare least able or likely to deviate from prior
action patternsduring new product development (see also
productprofitabilityand sales thatoccur within the first year
of introduction(Griffinand Page 1993; Montoya-Weissand March 1979).
Calantone 1994). These outcomes were selected because An importantalternativepossibility is that memory actu-
others have suggested that they are influenced by organiza- ally could enhance creativity.For example, researchon re-
tional-level information processes (Day 1991; Dickson lated topics suggests that some forms of creativitythrive in
the presenceof memory.For example, organizationalimpro-
1992; Glazer 1991; Jaworskiand Kohli 1993; Imai, Nonaka,
and Takeuchi 1985; Moorman 1995; Narver and Slater visation, which involves firms acting extemporaneously
withouta plan, has been describedas involving the recombi-
1990; Sinkula 1994). Moreover, there is often a tension
between the creativity and the short-termfinancial perfor- nationof routinesto producenovel outcomes (Weick 1993a,
mance of new products, because highly creative products b). More generally, researchon adaptationhas stressed the
recombinationof priorroutinesas a crucial source of novel
may have greaterpotentialfor short-termperformanceprob-
lems due to the difficulty of changing consumer or retailer activities (Holland 1975). Likewise, Cohen and Levinthal
acceptance of the product,while offering the possibility of (1990) find thatorganizationalmemory-as reflected in pri-
or research investments-can enhance an organization's
greaterlong-termfinancialgain given the possibility of their
revolutionizing a product category (Adams and Lacugna ability to assess and importnew outside information,which
could promotecreativity.Specifically, Cohen and Levinthal
1994; Andrews and Smith 1996; Kleinschmidtand Cooper
1991). These tensions are played out in the hypotheses that (1994, p. 237) suggest that "fortune favors the prepared
are depicted in Figure 1. firm"(see also Feldman 1989). Takentogether,these ideas
and data imply that high organizationalmemory could actu-
The Effects of OrganizationalMemoryon the Performance ally enhance creativityin new productdevelopment.
and Creativityof New Products Empiricalresearchon new productdevelopmentitself, on
balance, has tended to supportthe potentially negative im-
The effect of organizationalmemorylevel. A high level of
pact of memory on new product development creativity,
organizationalmemory would typically be present when a however.This leads us to hypothesize:
new productproject or action phase representsfamiliarter-
ritory,a new productrepresentsa modest change in an old memoryfor a new
Hi:The greaterthe level of organizational
project,the technological or customerbasis for a new prod- productdomain,thelowerthelevelof newproductcreativity.

The next question concerns the impact of organizational addition, some researchershave suggested that much orga-
memorylevel on the financialperformanceof new products. nizational innovation comes from recombiningroutines or
Theory and currentresearchimply 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-termfinancial performanceby increasing effi- reasoningimplies that high memorydispersioncould inhib-
ciencies and the likelihood that previous successes will be it creativitybecause it would reduceheterogeneityin the or-
repeated(Cyert and March 1963; Duncan and Weiss 1979; ganization, which, in turn, restrictsthe numberof routines,
Walsh and Ungson 1991). Much new productdevelopment 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 (Garudand 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 performingnew productstypi- findings is to propose a curvilinear relationship between
cally have higher levels of marketingand technological syn- memory dispersion and new product creativity, in which
ergy between the new productand the firm's existing com- moderatelevels of dispersion promotethe highest levels of
petencies (Montoya-Wiess and Calatone 1994; Varadarajan new productcreativity.Moderatelevels are predictedto pro-
1983; Zirger and Maidique 1990). Therefore, together with mote the greatestcreativitybecause organizationshave both
Hl, this suggests that organizationalmemory level is likely the breadthand cross-fertilizationthat dispersion provides
to reduce the creativity of new products while increasing while maintaining some heterogeneity among members.
their short-termfinancial performance. Under these circumstances,members share a language and
understandingof problems and solutions but retain some
H2:The greater the level of organizationalmemory for a new
distinctive skills and knowledge. This view is supportedby
productdomain, the greaterthe new product short-termfi-
nancial performance. conceptual literature on group performancethat suggests
that too much diversity restricts communication but too
The effect of organizational memory dispersion. The much similaritymay restrictthe rangeof observationsavail-
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 promotehigher levels of collective learning.Underthis form
organizationalmemberssharean understandingof organiza- of the relationship,moderatelevels of dispersion have ele-
tional beliefs, behavioralroutines,and physical artifacts. ments of both heterogeneityand homogeneity and therefore
One stream of literaturesuggests that greater dispersion maximize new productcreativity.4
leads to more creativeand betterfinanciallyperformingnew
products.Forexample, Hutt,Reingen,and Ronchetto(1988) H3:Thereexists a curvilinearrelationshipbetween dispersionof
find that creative new productinitiatives are more likely to organizationalmemory for a new productdomain and new
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 organizationalfunctions. Others point to the high and low levels of dispersion result in lower levels of
critical role of dispersing informationacross organizational new productcreativity.
functions, such as marketingand researchand 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 memorydispersionis expected to have a positive linearrela-
enables functions to understandone another,improvestheir tionship with the short-termfinancial performanceof new
ability to cooperate, facilitates cross-fertilization,and may products, because high levels of dispersion increase the
reduce the tendency of individualfunctions to become con- effectiveness and efficiency of decision making and imple-
fined by theirown thought-worlds(Dougherty 1992; Souder mentation.In fact, as dispersion levels increase, the team's
1987). As lmai, Nonaka, and Takeuchi (1985, p. 544, mentalmodel becomes unified, which resultsin 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, literatureon information-sharingmechanismsin cross-func-
and to acquirebreadthof knowledgeand skills." How mem- tional efforts, such as total quality managementand quality
ory gets dispersed is not the subject of the presentresearch 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 appearsto improve both the creativity and tional understandingand cooperation (Day 1994; Griffin
financial performanceof new products. and Hauser 1993; Hauserand Clausing 1988; Imai, Nonaka,
Another streamof researchsuggests that lack of memory and Takeuchi 1985), as well as by improvingteam efficien-
dispersion or heterogeneity within organizations should
have a positive effect on innovationand creativity (Burgel- 4It would also be reasonable to argue that the form of this curvilinear
man 1983; March 1991; Quinn 1986). From this perspec- relationshipshould 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 integrateboth of the literaturesand in so doing, believe the best repre-
overlappingcompetencies should be less capable of produc- sentationof the relationshipis an inverted-U.This form suggests that mod-
ing actions thatdeviate from theirprioractivities thanwould erate dispersion has elements of both heterogeneityand homogeneity, and
more heterogeneous groups (Gigone and Hastie 1993). In thereforemaximizes new productcreativity.

cies in making decisions and taking action. This does not organizationalmemory (a) level and (b) dispersionand new
mean that the team is making the most creative decisions, productshort-termfinancialperformance.
which we believe will happen under moderate dispersion H6:The greaterthe marketturbulenceassociated with the envi-
levels (H3).Therefore,the creativity-dampeningrisks of too ronment,the weakerthe positive relationshipbetween orga-
nizational memory (a) level and (b) dispersion and new
much dispersion will not have the same impact on short-
productshort-termfinancialperformance.
term financial performance,because cross-functional effi-
ciencies are maximized, not compromised, in high disper- Althoughenvironmentalturbulencemay reduce the value
sion level groups. of organizationalmemoryfor performance,there is a poten-
H4:The greater the dispersion of organizationalmemory for a tially positive effect of environmentalturbulence for the
new productdomain,the greaterthe new productshort-term effect of memory levels on the developmentof creativenew
financialperformance. products.Specifically, if high organizationalmemory levels
reduce the potential for creative new products(Hi), a fast-
The ModeratingEffect of EnvironmentalTurbulence changing environment may attenuate this possibility
The turbulenceassociatedwith an organization'senviron- becausehigh levels of environmentalchange may act as trig-
ment is expected to moderate the effect of organizational gers to "unlearn"currentnew productroutines (Cyert and
memory on new productoutcomes. One of the most funda- March 1963; Hedberg 1981; Starbuck1976).
mental tenets in theories of organizationallearning holds Consideringthe relationshipbetween memory dispersion
thatthe value of organizationalmemoryis contingenton the and new productcreativity(H3), we suggest that organiza-
setting in which the organizationoperates(Argote and Epple tions may be betteroff with internalheterogeneityundertur-
1990; Cyert and March 1963; Levitt and March 1988). bulentconditions(Aldrich 1979; Lawrenceand Lorsch 1967;
Memory, after all, reflects learning from experience, and March1991). Underconditionsof internalheterogeneity(low
thatexperienceoccurs at a specific time in a specific setting. dispersion),firms can draw on previouslymarginalideas or
This insight is consistent with contingency theory's argu- competenciesthatmay act as crucialcreativeengines in times
ment thatbureaucraticstructures-which rigidly institution- of high turbulence(Burgelman1983; Feldman 1989; Miner
alize lessons from prior experience-can enhance perfor- 1990). For example, a firm producingvacuumtubes thathas
mance understable conditions,whereasmore organic struc- a well-dispersedtechnicalmemory(aboutvacuumtube tech-
tures are needed for turbulentconditions (Lawrence and nology) would be worse off when transistorsare discovered,
Lorsch 1967; Mintzberg 1979). than anotherfirm that has a less dispersedmemory,but in-
Several importantmechanisms may produce such envi- cludes a small deviantgroupof engineerswho are interested
ronmentaleffects. At a minimum, the value and impact of in transistortechnology. This reasoning implies that under
stored prior learning may deteriorate with environmental conditionsof 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.Underconditionsof low turbulence,however,high
creates uncertainty that can be competency destroying" dispersionmay have a positive effect on creativity.This posi-
(Tushmanand Nelson 1990; see also Anderson and Tush- tive effect may accruefroma new productteam'sabilityto re-
man 1990; Tushman and Anderson 1986). Even more im- combinesharedknowledgeinto creativenew products(Borko
portant,memory may standin the way of effective action in and Livingston 1989; Dougherty 1990, 1992; Nelson 1982;
a turbulentenvironment,which restrictsthe organizationto Nonaka 1990;Weick 1993a, b). We thereforehypothesize,
inappropriateactions.
H7:The greaterthe technological turbulenceassociatedwith the
We focus on technological turbulence,that is, the degree environment,(a) the weaker the negative relationship be-
of change associated with new producttechnologies (Glazer tween organizationalmemorylevel and new productcreativ-
and Weiss 1993; Jaworskiand Kohli 1993; Weiss and Heide ity and (b) the weaker the positive relationshipbetween or-
1993), and marketturbulence,that is, the rate of change in ganizationalmemorydispersionand new productcreativity.
the composition of customersand theirpreferences(Jawors- H8:The greaterthe marketturbulenceassociated with the envi-
ki and Kohli 1993, p. 57). Both types of turbulence may ronment, (a) the weaker the negative relationshipbetween
have a potentiallydisruptiveeffect on memory'spositive ef- organizationalmemory level and new productcreativityand
fect on new product short-termfinancial performance,be- (b) the weaker the positive relationshipbetween organiza-
cause turbulenceis likely to reduce the value of priorlearn- tional memorydispersion and new productcreativity.
ing, which forces the organizationto search for and process
more information about the environment (Lawrence and METHOD
Lorsch 1967; Sinkula 1994; Weiss and Heide 1993). Rapid Sample and Procedure
environmentalchange also may stimulate metalearning,in The initial sample consisted of 396 firms in the 1992
which the people in organizationslearn to identify patterns
AdvertisingAge list of top 200 advertisers.After eliminating
of environmentalbehavior,butorganizationsin turbulenten- firms for which the questionnairewas inappropriate(i.e., no
vironments generally find it difficult to cope and survive. new productdevelopmentoccurred),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 financialperformanceof new productsto be weakened
ing the first mailing, nonrespondents were telephoned,
underconditionsof high technologicalor marketturbulence: remindedof the questionnaire,and encouragedto complete
associatedwiththe
turbulence
H5:Thegreaterthetechnological and returnit. Two weeks following the calls, a second mail-
environment,the weaker the positive relationshipbetween ing was sent to nonrespondents.No systematic differences

were found between those who respondedbefore and after variables:the two organizationalmemorymeasures,the two
the second mailing (Armstrongand Overton 1977).5 new productoutcomes, and the two environmentalmodera-
Vice presidentsof marketingwere used as informantsbe- tors. Because of the small sample size, this approachwas
cause of theirorganizationalknowledge and access to strate- chosen over examining all variables in a six-factor model,
gic and financial information (Aguilar 1967). Informant which violates the recommendationsmade by Bentler and
firm tenurelevels averaged 18 years, which is comparableto Cho (1988) to not exceed a five-to-one ratio of sample size
other samples of informants at this level (Larwood et al. to parameterestimates. Results suggest that the three mod-
1995).6When completing the survey,informantswere asked els fit well: the memory variables(X2(26)= 28.74, p = .323,
to focus on the most recentproductdevelopmentprojectthat 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 environmentalmoderators(X2(34)= 58.16, p = .006, GFI =
not fall under their purview, informantswere asked to for- .900).
ward the questionnaireto the appropriatevice president in Within these three models, discriminantvalidity was as-
theirdivision. All questions regardingthe organization,then, sessed by constrainingand freeing the phi coefficient. The
focused on the division as the unit of analysis. model with the free coefficient was found to be superiorto
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 environmentalmoderatorsAX2(l)
sources. Memory level was operationalizedby measuring = 13.42, suggesting independentconstructs.In addition,be-
the amount of knowledge, experience, and familiarity an cause the memory measures are new, discriminantvalidity
organizationhas in a productcategory. Memory dispersion was assessed and found between the memory variablesand
level was measured by the degree of consensus or shared measures of individualmanageruse of information(Desh-
knowledge among new product participants.The assump- pandeand Zaltman1982), organizationaluse of information
tion underlying this approach is that when organizational (Moorman 1995), and differentforms of organizationalcul-
memory is dispersed, members' beliefs would intersect or ture(Deshpand6,Farley,and Webster1993).7Finally,the re-
converge on a particulartopic. If, for example, informants liability of the measureswas found to exceed standardsfor
noted that there was little consensus among people working acceptance.8In Table 1, we presentpsychometricinforma-
on the product,a reasonableconclusion would be that team tion and a correlationmatrixof all measures.
members' beliefs were based on different assumptions,
experiences, and information. Note that this approach to General TheoryTestingApproach
measuringmemory dispersion reflects the collective under- The hypotheses were examinedin two regressionmodels,
pinningsof organizationalmemory.That is, the defining ele- with the two new productoutcomes as dependentvariables.
ment-degree of convergence-is assessed as a propertyof Following accepted guidelines for examining interactions,
the collective. for each model, the main effects associated with the two
Technologicaland marketturbulencewere measuredwith organizational memory variables and turbulence were
Jaworskiand Kohli's (1993) operationalizations,which fo- enteredin additionto their interactioneffects (the productof
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 quadraticform of the memorydis-
Weiss and Heide 1993). Finally, organizationalbureaucrati- persion variable also was entered in the model with new
zation, which will be entered in the model to control for the productcreativityas the dependentvariable.The main effect
structureof informationdispersion, is defined as the degree variables were mean-centered before we constructed the
to which an organizationis managedthroughformalizedre- interactionsand quadraticversions to reduce the potential
lationshipsand centralizedauthority(Johnand Martin1984) effects of collinearity (Cronbach1987). Significant interac-
and is measuredwith Deshpand6's(1982) scales. tions were investigated with the slope analysis procedures
Following the datacollection, measureswere subjectedto specified in Aiken and West (1991) to improve understand-
a purificationprocess involving undimensionality,reliabili- ing of the coefficients. These proceduresenable significant
ty, and discriminant validity assessments (see Anderson relationshipsto be understoodat differentlevels 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 theoreticallyrelated
7Results indicate that the critical value (AX2(i)= 3.84) was exceeded in
all tests: memory level and individual instrumentaluse of information
5The results of these tests are the following (where ER = early respon- (AX2(1)= 32.18); memory dispersion and individual instrumentaluse of
ders and LR = late responders):memory level (ER = 5.29, LR = 5.17, t(91) information(Ax2(i) = 26.52); memory level and organizationalinstrumen-
= .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 turbulencelevel (ER = 3.98, LR = 4.23, t(91)= -.76), new productper- tional instrumentaluse of information(AX2(I) = 9.79); memory level and
formance (ER = 4.90, LR = 4.65, t(91)= .71), and new productcreativity clan cultures (Ax2(I)= 21.58), marketcultures (AX2(I)= 4.46), adhocracy
(ER = 5.18, LR =4.65, t(91)= .71). cultures(AX2(I)= 11.82), and bureaucracycultures(AX2(}= 14.58); as well
61nformanttenurelevels were not collected duringthe initial administra- as memory dispersion and clan cultures (AX2(i)= 9.65), marketcultures
tion of the questionnaire.However, half of the organizationswere subse- (Ax2(i) = 10.16), adhocracycultures(Ax2(I)= 26.04), and bureaucracycul-
quently telephoned and this information was gathered as a safeguard to tures (AX2(l)= 35.05).
ensure that respondentshad enough organizationalexperience to be capa- 8The only exception, memory dispersion, also could be argued to be a
ble of assessing organizationalmemory,though recent evidence has found reflective, ratherthana formative,scale. This statuswould suggest thatcon-
an insignificant relationship between firm tenure levels and executives' ceptual considerationsregardingconstructspace coverage, and not reliabil-
articulationof their corporatevisions (Larwoodet al. 1995). ity assessments, should be the evaluativecriteria.

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

(1) OrganizationalMemory Level 5.26 1.62 .96
(2) OrganizationalMemory Dispersion 5.46 .82 .33* .62
(3) TechnologicalTurbulence 4.06 1.44 -.06 -.01 .84
(4) MarketTurbulence 4.01 1.17 .09 .13 .17 .70
(5) New ProductShort-TermFinancialPerformance 4.82 1.51 .40* .43* -.01 .11 .95
(6) New ProductCreativity 5.12 1.24 -.02 .27* .19 .16 .13 .78
(7) OrganizationalBureaucratization 3.21 1.24 .12 -.39* -.03 .08 -.19 -.28* .85
*p < .05.
Note: The coefficient alpha for each measureis on the diagonal (and in italics) and the intercorrelationsamong the measuresare on the off-diagonal.
versions. For both models, variance inflation factors were effect on new productcreativity(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 Perreault1991). In addition to Marketturbulencehas no main effects. Finally, the control
these predictedeffects, organizationalbureaucratizationalso variable,organizationalbureaucratization,has no effect on
was entered as a control variablein the models for the rea- the short-termfinancial performanceof new productsand a
sons described previously.Table 2 presents model estima- marginalnegative effect on their creativity (b = -.200, t =
tion results. 1.837)
RESULTS The Impactof OrganizationalMemoryLevel
Overview The first two hypotheses examine the effect of organiza-
Results show that, overall, the two models were signifi- tional memory level on new productoutcomes. Hl predicts
cant: new product short-termfinancial performance(R2 = that higher levels of organizational memory reduce new
.310, F(9,83)= 4.135, p = .0001) and new productcreativity productcreativity.Results indicatea nonsignificantrelation-
(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 relationshipis in the
effects associated with the moderatorvariables(marketand expecteddirection(b = -.089, t = -1.123). H2predictsa pos-
technological turbulence)must be entered into the regres- itive effect for organizationalmemory level on new product
sion model (Pedhazur1982). Therefore,several nonhypoth- performance,which the resultssupport(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 H6apredictthat the greaterthe technologicaland market
Table 2
ESTIMATES
STANDARDIZED OF HYPOTHESIZED
RELATIONSHIPS
Dependent Variables
New ProductShort-Term New Product
IndependentVariables Financial Performance Creativity
Prediction Actual Prediction Actual
OrganizationalMemory Level (H2, + ) .258* (.092) (Hi, -) -.089 (.080)
OrganizationalMemory Dispersion (H4, + ) .582* (.196) .418* (.184)a
Memory Dispersionx Memory Dispersion (H3, nc) .086 (.126)
Memory Level x TechnologicalTurbulence (Hsa,-) -.025 (.061) (H7a,-) -.013 (.053)
Memory Level x MarketTurbulence (H6a,-) .007 (.069) (Ha, -) -.017 (.060)
Memory Dispersion x TechnologicalTurbulence (H5b, -) .054 (.150) (H7b,-) -.402* (.135)
Memory Dispersion x MarketTurbulence (H6b,-) -.351* (.165) (H8b,-) -.156 (.145)
TechnologicalTurbulencea -.093 (.104) .204* (.089)
MarketTurbulencea .044 (.125) .062 (.109)
OrganizationalBureaucratizationb -.064 (.125) -.200t (.108)
Adjusted R2 .310 .255

F-statistic 4.135* 2.816*
Note: The degrees of freedom for the new productshort-termfinancialperformancemodel were (9,83), whereasthey were (10,82) for the new productcre-
ativity model. Standarderrorsare in parentheses.
*p < .05.
tp <.10.
aFollowing Pedhazur(1982), the main effects associated with both the interactionsand the quadraticterms must be entered into models examining inter-
action and quadratichypotheses.
bOrganizationalbureaucratizationis a control variablereflecting the structureof organizationalinformationsharingactivities.
cH3predictsan inverted-Urelationship.

turbulence,respectively,the weaker the positive relationship The Nature of OrganizationalMemory

between organizational memory level and new product An importantfirst contributionof this work is the fine-
short-termfinancialperformance.Results indicateno signif-
grained descriptionof organizationalmemory forms, roles,
icant interactionsbetween memory level and either type of and characteristics.Although many of these issues have
turbulenceon 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 systematicallyintegratethese concepts into a def-
uct performancein this sample regardlessof environmental inition of organizationalmemory, which results in several
turbulence.These results fail to supportH5aand H6a.
importantadvances. First, we describe three ways in which
Likewise, H7aand H8apredictthattechnologicaland 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-
memorylevels on the developmentof creativenew products. ory roles were identified-both interpretiveand action guid-
Results indicate no interactionbetween memory level and ance roles. Third,four distinct dimensions of organizational
turbulenceon creativityin these data. memory were identified, two of which were examined
The Impactof OrganizationalMemoryDispersion empirically in this research. Fourth, this view of memory
extends priorworkby Walshand 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- characterof memory, and the subtle processes involved in
comes. H3 predicts that a moderatelevel of memorydisper- creatingand sustainingit. On the otherhand,our framework
sion promotes the highest levels of new productcreativity. diverges from theiremphasison memory as partof an inter-
Results do not supportthis predictionbut insteadfind a non- pretive system. Specifically, our approach gives memory
significantquadraticdispersionterm (b = .086, t = .680) and standingas an organizationalfeaturethatcan 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.H4predictsthat Furtherresearchcould fruitfullyassess the effects of oth-
greaterdispersion of organizationalmemory increases new er memorycharacteristicson new productactivities. For ex-
product short-termfinancial performance.Results support ample, furtherwork could examine the competitiveimplica-
this prediction(b = .582, t = 2.965). tions of differentlevels of proceduraland declarativemem-
Results also suggest, however,that the impactof memory ory content. The contrastingpossibilities can be seen in the
dispersion on the short-termfinancial performanceof new classic example of the early developmentof the VCR, when
productsis weakened by marketturbulence,which supports Ampex held crucial tape recording patents (declarative
H6b (b = -.351, t = -2.124). Specifically, as marketturbu- memory) but lacked crucial product development skills
lence increases, the relationship between memory disper- (proceduralmemory)for the mass market.In contrast,Sony,
sion and short-termfinancial performancedecreases.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 relationshipbetween memory (Lurie 1987). However,these firms used powerful electron-
dispersion and financial performanceis insignificantunder ic product development skills (proceduralmemory) to de-
conditions of high marketturbulence(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 proceduralmemory con-
even strongerat low marketturbulence(b = .885). In short, tent was less easy to imitate than the declarative memory
memory enhanced short-termfinancial performancewhen content, U.S. firms were not able to replicate quickly the
therewas little turbulencebut had no effect on short-termfi- content of the memories of the Japanese firms, which re-
nancial performancein the presence of high turbulence.No sulted in U.S. firms' inabilityto compete successfully in this
supportfor a similar effect for technologicalturbulencewas productmarket(Lurie 1987; Teece 1987).
found, however, which fails to supportH5b.
Technologicalturbulencedid, however,have a significant The LinkBetweenMemoryand New ProductDevelopment
negativeinteractionwith memorydispersionon new product Outcomes
creativity (b = -.402, t = -2.964). A follow-up slope analy- In our empiricalstudy,we explore how two dimensionsof
sis examining this interaction(Aiken and West 1991) indi- memory-level and dispersion-affect two different new
cates that the relationshipbetween memory dispersion and productoutcomes:financialperformanceand productcreativ-
new productcreativity is negative underconditions of high ity. Two broadfindingsemerge.First,memorymay influence
turbulence(b = -.385), becomes positive at moderateturbu- financialperformanceandcreativityin differentways. Second,
lence (b = .298), and is strong and positive at low turbulence environmentalturbulence appears to moderate memory's
(b = .981). These results support H7b. Market turbulence impacton performance.In particular,highermemorydisper-
does not, however, moderatethe impact of memory dispersion did notenhancefinancialperformanceunderconditionsof
sion on new product creativity, which fails to supportH8b marketturbulence,whereasit actuallyharmedcreativityunder
(see Table 2). conditionsof technologicalturbulence.These broadfindings,
along with more specific featuresof these relationships,point
DISCUSSION to importantprioritiesfor practitionersseeking to improve
We provide an initial attemptto fill arrimportantgap in productdevelopmentprocesses by enhancingorganizational
the new productliteratureby expandingour vision of orga- memory,and suggestfruitful for
areas further research.
nizationalmemory in the new productcontext and exploring Before considering these issues, however, it is important
some of its effects using systematic quantitativedata. to note the aspects of this study that should be kept in mind

while interpretingthese results. For this initial empirical to in-house designers and even vendors. Some firms also
study, we used single informantsat high levels of the orga- seek to institutionalize the new product development
nization to achieve a broad organizationalview. Although process itself throughefforts to achieve ISO 9000 certifica-
the use of multipleinformantdesigns remainsthe exception tion. Otherorganizationsare experimentingwith new orga-
in most marketingstudies, such an approachwould provide nizationalstructuresthataffect the natureand availabilityof
a better test in some respects, though such designs are not organizationalmemory (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- productoutcomes the firm seeks to enhance and attempting
formantsto enhance the validity of organizationalmemory to link these activities to memory in order to enhance spe-
measures(Bagozzi and Phillips 1982). cific outcomes over time.
In addition,thatour informantsassessed new productde- The results also supportthe importanceof careful atten-
velopment projects after their completion raises the poten- tion to the multiple dimensionsof new productoutcomes in
tial of a retrospectivejustification bias. This would occur if theoretical research. They are consistent with predictions
informants,knowingthe outcome of projects,tendedto give that memory may have different effects on different out-
responses for the independent variables consistent with comes, which reducesthe likelihood thatwe will find a sim-
their knowledge of the outcome. Our informantsprovided ple formula linking memory to new productoutcomes. For
their assessments of these variables in the context of other example, researchlinking memorydimensions with key ad-
measures, thus making it less likely they would pay atten- ditional outcomes, such as timeliness, long-range financial
tion to the congruenceof their assessments with new prod- outcomes, and whethera productbecomes a dominantde-
uct outcomes. Moreover,survey questions were designed to sign, may offer potentially important frontiers for such
focus informantattentionon the appropriatetime period for work (Foster 1986; Schoonhoven, Eisenhardt,and Lyman
each variable,in partto help avoid this effect. Nonetheless, 1990).
furtherwork could fruitfullyseek to measurememory vari-
ables before project outcomes are known to alleviate such The Effect of OrganizationalMemoryLevel
concerns. Our researchaugmentspreviousworkconcernedwith the
Finally,our datashow meaningfulvariancein termsof or- relationship between new products and a firm's existing
ganizationalmemory 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 representativeof product our results supporta greatdeal of the marketingstrategylit-
development projects in general, it is likely to contain a eratureand practice by finding that a reliance on memory
large proportionof projects involving the modification of (which representsstored informationand 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 importantav- performance(Ansoff 1988; Montoya-Weiss and Calatone
enue for furtherwork would be to determine if our results 1994; Rumelt 1974; Varadarajan1983). However, we did
are replicated in samples with higher proportionsof more not find active supportfor the predictionthat high memory
radical projects. These issues notwithstanding,the study's levels would detractfrom productcreativity,but we did find
results offer interesting implications for both practitioners that high memory levels failed to enhancecreativity.
and marketingtheorists,which we next consider. Ourfindingthathigh memorylevel enhancedfinancialre-
turn but did not enhance creativity also reinforces practi-
New ProductOutcomes 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 developmentoutcome dimensions studied here. In par- firms are now formalizingnew productdevelopmentproce-
ticular, memory level enhances relatively short-term(one dures,sometimes in pursuitof ISO 9000 certificationor sup-
year) financial performance,but not creativity.Markettur- plier qualificationprograms.Yet, to the degree a firm seeks
bulence moderates the impact of memory dispersion on to enhance new productcreativity,formalproceduresaimed
financial performance, whereas technological turbulence at increasingthe 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-termfinancial performance.This pattern their organizationalmemory (beyond just trying to capture
highlights thatmemory may have variedeffects on different the most informationpossible) in seeking to institutionalize
features of productperformance.There are additionalindi- their best practices.
cators of success in new product activities, including cus- Turningto theoreticalissues, thathigh memorylevels nei-
tomer measures and time-to-marketmeasures (Griffin and ther enhances nor detracts from product creativity in our
Page 1993). By implication,the effect of memory level and study leads us to speculate that memory level may be less
dispersion may vary for these other outcome indicators as importantthan how flexibly or inflexibly a firm holds its
well. knowledge (March 1979). Furtherresearchcould consider
One implicationof our work for practitioners,then, is to moderatingfactorsin the firm'scultureor structurethatmay
underscore the importanceof sensitivity to organizational reflect a flexible approachto what has been learned in the
memory's potentiallydistinct impact on differentnew prod- past or that encourage careful reconsiderationof current
uct outcomes. Many firms are in the process of creating in- routinesand knowledge(Barabbaand Zaltman1991; Olson,
creasingly sophisticatedorganizationalmemory systems in Walker,and Ruekert1995). In addition,the relationshipbe-
which they make engineeringdrawings,partsspecifications, tween memory level and creative productoutcomes may be
costs, and otherconcrete featuresof priorproductsavailable influenced by stage of the new product development

process, whetherthe organizationuses a team approach,and (AndersonandTushman1990). This varietycan be achieved

the natureof the productitself. In addition,we believe it will throughdifferencesamong team membersin terms of func-
be importantto begin to study more systematicallythe actu- tional background,productcategory experiences, firm-level
al processes throughwhich memory level affects outcomes, tenure, or individualtraits and perhapseven can be shaped
through,for example, longitudinalstudy of the creationand by the informationprovidedto the team by senior manage-
deployment use of specific organizationalroutines. ment (Cox 1993; Katz and Allen 1982; Nemeth 1986).
Second, under conditions of low technological turbu-
The Effect of OrganizationalMemoryDispersion 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 performanceand creativityof new productsin this ativity may not requirethe additionof variationor disagree-
sample. Moreover, the impact of our measure of memory ment among participants.Specifically, creativity in these
dispersion on new productoutcomes was strongerthan the settings may arise from either creative firm-level goals or
impactof the measureof memorylevel. This implies thatthe developmentprocesses that permitparticipantsto 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 importantthan the combine sharedideas into new forms (Nelson 1982; Nona-
sheer amountof organizationalmemory in some settings. ka 1990).
Recall that we had predicteda positive effect for memory These results also imply that practices involving the uti-
dispersion on productfinancial performanceand 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 differentenviron-
supportthe formerand show only a simpler lineareffect for ments. For example, in turbulentenvironments,creativity
dispersionimpacton creativity.The questionof whetherdis- may be achieved by infusing varied knowledge into the
persion has a linear curvilineareffect merits furtherstudy, product development process. Therefore, mechanisms for
however.We utilize a simple measureof dispersion and do accessing specialized and divergent knowledge from inter-
not attemptto characterizethe structureof such dispersion. nal or externalsources, as well as processes for ensuringits
If memory is dispersedin a hierarchicalmanner(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 curvilineareffect may arise from the scope limita- hand, we speculate that shared memory may result in new
tions of our sample. For example, the maximumpoint in the productcreativity by recombiningshared knowledge (Hol-
curvilinearrelationshipsmay shift to some degree depend- land 1975). Forexample, Dougherty(1990, 1992) finds that
ing on whethera productis more incrementalor radical. successful new productgroups were able to combine their
perspectives,but only when they operatedin a highly inter-
EnvironmentalContingenciesand the Effectof Memory active and iterativefashion by participatingin concrete tasks
Dispersion togetherand violating routines.
Following previous theory and researchthat environmen- Environmentalturbulence also moderated dispersion's
tal turbulencehas the potentialto affect the value of memory, impact on financialperformance.Specifically, when market
we introducemarketand technologicalturbulenceas moder- turbulencewas moderateor low, dispersionenhancedfinan-
ator variablesinto our study.Although these factors did not cial performance.However, when market turbulence was
moderatethe impactof memorylevel, they did influence the high, dispersion had no effect on financial performance.
way memorydispersionaffects productoutcomes. This result, like the previous one, may imply that building
We find thattechnological turbulencehas an importantef- valuable memory systems is harderunderconditions of en-
fect on dispersion'simpacton productcreativity.In the pres- vironmental turbulence. Specifically, if market turbulence
ence of high technological turbulence,high levels of mem- reduces the value of organizationalmemory for financial
ory dispersion-which involves shared understandingand performance,organizationsmay need to turn to additional
homogeneous knowledge-actually detractfrom creativity. informationmechanismsto supplementthe value of memo-
This significant interaction provides a partial explanation ry. Formalexperimentation,rapidprototyping,and improvi-
for the conflicting literatureon dispersion, suggesting that sation, for example, may representprocesses thatcreate new
both high and low levels of dispersion foster creativity. working knowledge in situationsfor which long-termorga-
Specifically, it implies that organizationsmay be better off nizational memory provides insufficient guidance (Eisen-
with internalheterogeneityunder conditions of high turbu- hardtand Tabrizi 1995; Moorman and Miner 1996; Weick
lence, because diverse pockets of knowledge and skills en- 1993a).
able them to increase their probabilityof exploiting emerg- Finally,we turnto the theoreticalimplicationsof our find-
ing opportunities. ings on the interactionof dispersionand turbulence.In gen-
This finding has two importantimplicationsfor new prod- eral, the resultsreaffirmthat turbulencecan reducethe value
uct development practice. First, it provides furthersupport of sharedknowledgewithinorganizations.However,we note
for the commonly held view that in the presence of turbu- thattechnologicaland marketturbulencedoes not uniformly
lence, heterogeneity may provide value (Burgelman 1983; affect outcomes.Technologicalturbulencedoes not moderate
Miner 1994; Tushman and Romanelli 1985). In this case, the dispersion-financialrelationship,for example, nor does
heterogeneityof views among the team membersenhanced market turbulencemoderate the dispersion-creativityrela-
new productcreativity.This finding, then, supportsthe 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 environmentalturbulence
ing periodsof radicaltransition,it makessense to have some and memory, ratherthan assume broad environmentalfea-
level of variety on teams to enhance the creative process tureswith uniformimpacton organizationalmemory'svalue.

Overall, these results extend thinking that has tended to which new, interactiveinformationsystems and new organi-
advocate either homogeneity or heterogeneityin organiza- zational designs affect the balance between heterogeneity
tional knowledge. For manydecades, for example, it was as- and homogeneity in productdevelopment projects. Further
sumed that specialization,which can be seen as fragmented researchshould also probe how these dispersioneffects are
organizationalmemory,was an efficient way to captureand influenced by their occurrenceduring certain stages of the
use knowledge (Scott 1987). Today,popularwisdom has re- new productdevelopmentprocess. For example, it is widely
versed that assumption,often calling for sharedknowledge assumedthatheterogeneityis more useful in the early stages
and redundancyas a simple answer to producenew product of the process, when new knowledge appears to be more
success (e.g., Griffinand Hauser 1994; Nonaka 1990). Both necessary;however,we lack systematic empiricaldata sup-
our theoreticaldevelopmentand empiricalresults point to a portingthis view.
more complex world. Furtherresearchcould explore more Finally, in considering the effect of memory dispersion,
carefully the precise mechanismsthroughwhich consensus furtherresearchwould benefit from accounting for its spe-
and heterogeneityaffect outcomes in differentnew product cific content. We speculate that if a firm's memory is dis-
developmentenvironments(Guzzo and Salas 1995; Watch- persed, but contains primarilyproceduralknowledge about
er 1983). More broadly, researchersmay want to explore how to innovate, it could produce successful productseven
factorsbeyond variationamong persons,such as the ways in under turbulentconditions. However, we speculate that de-
Appendix A
STUDY MEASURES
I. IndependentVariables 1!. Dependent Variables

OrganizationalMemoryLevel Rate the extent to which the producthas achieved the following outcomes
(Seven-pointscale, where 7 = strongly agree and I = stronglydi duringthe first 12 monthsof its life in the marketplace.
Priorto the project,comparedto firms in our industry,my divisiion had: New ProductPerformance Moorman(1995)
*a great deal of knowledge about this category. (Seven-pointscale, where 7 = high and 1 = low)
*a great deal of experience in this category.
*Sales relativeto objective
*a great deal of familiarityin this category. *Profitmarginrelativeto objective
*investeda greatdeal of R&D in this category.
*Returnon assets relativeto objective
OrganizationalMemoryDispersion New scale -Returnon investmentrelative to objective
(Seven-point scale, where 7 = high and I = low) New ProductCreativity Moorman(1995)
Rate the degree of consensus among the people workingon the projectfor (Seven-pointscale, where 7 = high and I = low)
the following new productareas:
*Challengedexisting ideas for this category-Did not challenge existing
*productdesign ideas for this category*
*brandname
*Offerednew ideas to the category-Did not offer new ideas to the category*
-packaging *Creative-Notcreative*
*promotionalcontent
*Spawned ideas for other products-Did not generate ideas for other
*productquality level products*
11.ModeratorVariables IV ControlVariables
TechnologicalTurbulence Jaworskiand Kohli (1993)
OrganizationalBureaucratization AdaptedfromDeshpande(1982)
(Seven-pointscale, where 7 = strongly agree and I = stronglydisagree) (Seven-pointscale, where 7 = strongly agree and I = stronglydisagree)
*Thetechnology in this productarea is changing rapidly. *Wheneveremployees have a problem,they are supposedto go to the same
*Technologicalchanges provide big opportunitiesin this productarea.
person for an answer.
*Itis very difficultto forecast where the technology in this productareawill *Thereis little action taken until a superiorapprovesthe decision.
be in the next five years. *If employees wished to make their own decisions, they would be quickly
*A large numberof new productideas in this area have been made possible
discouraged.
throughtechnological breakthroughs.
*Going through the proper channels in getting a job done is constantly
*Technologicaldevelopmentsin this productarea are ratherminor.* stressed.
MarketTurbulence Jaworskiand Kohli (1993) *Employeeshave to ask their boss before they do almost anything
(Seven-point scale, where 7 = strongly agree and I = stronglydisagree) *Any decision employees make has to have their boss' approval.
*Thereis no specific rule manualdetailing what employees should do.*
*Inour kind of business, customers'productpreferenceschange quite a bit *In this organization,everyone has a specific job to do.
over time.
*Ourcustomers tend to look for new productsall the time.
*We are witnessing demand for our productsand services from customers V DiscriminatingVariables
who never bought them before.
(These variableswere used only in discriminantvalidity exercises, not in
*New customers tend to have product-relatedneeds that are differentfrom the model testing.)
those of our existing customers.
*Wecater to much the same customers that we used to in the past.* OrganizationalCulture D)eshpande,Farley,and Webster(1993)
OrganizationalInstrumentalUse of
MarketInformation Moorman(1995)
IndividualManager Instrumental
Use of MarketInformation Deshpandeand Zaltman(1982)
*These items were reverse-codedpriorto 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

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Arguing that organizational memory affects key new product develop-

The Impact of Organizational

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strategies.There are, however,otherorganizationalmemory ORGANIZATIONAL MEMORY

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Day (1994, p. 44), who defines organizationalmemoryas "a Figure 1

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

Adjusted R2 .310 .255

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turbulence,respectively,the weaker the positive relationship The Nature of OrganizationalMemory

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process, whetherthe organizationuses a team approach,and (AndersonandTushman1990). This varietycan be achieved

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I. IndependentVariables 1!. Dependent Variables

*These items were reverse-codedpriorto scale construction.

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clarative memory would not retain its value in turbulent REFERENCES

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tional Routine:EmergingConnections,"OrganizationScience, 2 History as an OrganizationalResource,"Academy of Manage-

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Hutchins,Edwin (1991), "OrganizingWorkby Adaptation,"Orga- Miner,Anne S. (1994), "Seeking AdaptiveAdvantage:Evolution-

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