The Negative Performance Implications of Industry Dynamism on Organizational Knowledge

Abstract

Organizational knowledge is a key component of organizational efficiency and effectiveness, and ultimately success. The use of organizational knowledge is not always a conscious endeavor, and this can lead to the use of knowledge at inappropriate times or in inappropriate ways, particularly under changing conditions. To investigate the potential for ineffectual knowledge use, this study examines how organizational knowledge influences organizational performance when there is a high degree of industry dynamism. Using a sample of 105 U.S. firms from 46 industries, this study finds that industry dynamism moderates the relationship between organizational knowledge and organizational performance. Specifically, higher levels of dynamism weaken the positive effect of organizational knowledge on organizational performance. Implications for researchers and practitioners of this finding are discussed.