Shouts or Whispers : How Communication Transparency Affects Organizational Learning

Knowledge in an organization is distributed across different individuals, who may share their insights at public, group, or private meetings. This knowledge sharing process is central to organizational learning. The type of meeting defines the communication protocol with varied information transparency. Due to heterogeneous individual incentives, transparency of the communication protocol can affect truth telling and trust, thus influencing the effectiveness of learning and value creation at the organization. To elucidate these effects, we modify the seminal “cheap talk” theory to describe strategic communication in an organization. The modification allows us to design a laboratory experiment to test causal relationships predicted by the theory. Our lab results show that, while the general trends confirm the model’s predictions, there exist behavioral nuances that deviate from the formalized theory: Communication under intermediate transparency (i.e., group meeting) has advantages over other protocols under high or low transparency (i.e., public or private meeting) in truth telling, trust, and total payoff. Our results shed new lights on how communication transparency affects organizational learning