Does Organizational Forgetting Affect Vendor Quality Performance? An Empirical Investigation

The development of organizational knowledge and the depreciation of knowledge within organizations are processes that invariably occur concurrently. In the quality domain, many researchers have examined how the development of organizational knowledge (organizational learning) enhances quality performance. We build on this literature and investigate how the depreciation of organizational knowledge (organizational forgetting) affects quality performance. We analyze information on 2,732 quality improvement initiatives implemented by 295 vendors of a car manufacturer and find that organizational forgetting affects quality gains obtained from both learning-by-doing (autonomous learning) and quality improvement initiatives (induced learning); more than 16% of quality gains from autonomous learning and 13% of quality gains from induced learning depreciate every year. Furthermore, the impact of organizational forgetting (i) differs across the types of quality improvement efforts (quality gains from process improvement initiatives depreciate, whereas those from quality assurance initiatives do not), and (ii) depends on where quality knowledge was embedded (depreciation is lower for knowledge embedded in technology than for knowledge embedded in organizational routines or organizational members). Our results highlight the ubiquity of organizational forgetting and suggest the need for continued attention to sustain and enhance quality performance in supply chains.