How Knowledge Transfer Impacts Performance : A Multi-Level Model of Benefits and Liabilities

When does knowledge transfer benefit performance? Combining field data from a global consulting firm with agent-based model, we examine how efforts to supplement one’s knowledge from co-workers interact with individual, organizational and environmental characteristics to impact organizational performance. We find that once cost and interpersonal exchange are included in the analysis, the impact of knowledge transfer is highly contingent. Depending on specific characteristics and circumstances, knowledge transfer can better performance, matter little or even harm. Three illustrative studies clarify puzzling past results and offer specific boundary conditions: 1) At the individual level, better organizational support for employee learning diminishes the benefit of knowledge transfer for organizational performance; 2) At the organization level, broader access to organizational memory makes global knowledge transfer less beneficial to performance; 3) When the organizational environment becomes more turbulent, the organizational performance benefits of knowledge transfer decrease. The findings imply that organizations may forego investments in both organizational memory and knowledge exchange; that wide-ranging knowledge exchange may be unimportant or even harmful for performance; and that organizations operating in turbulent environments may find that investment in knowledge exchange undermines performance, not enhances it. At a time when practitioners are urged to make investments in facilitating knowledge transfer and collaboration, appreciation of the complex relationship between knowledge transfer and performance will help reaping benefits while avoiding liabilities. An electronic companion detailing the fieldwork and the modeling effort is available at: http://ssrn.com/abstract=1865484