The effect of organizational memory on organizational agility

Purpose: Intellectual capital includes what employees know and the agility to search and retrieve knowledge (organizational agility). Organizational agility could be seen as the result of using validated routines and protocols (knowledge application), but also as the result of using unproven theories, rumors, colloquial expressions, or sayings (counter-knowledge), which means that organizational memory may enable both the application of good knowledge and the mitigation of counter-knowledge. This study examines the links between a firm's organizational memory, counter-knowledge, knowledge application, and organizational agility. Design/methodology/approach: Using SmartPLS 3.2.8 in a sample of 112 companies, the following questions were addressed: Does the improvement of organizational memory result in the growth of organizational agility? Does the growth of counter-knowledge and knowledge application at the same time hinder the enhancement of organizational agility? Findings: The results support that organizational memory not only enhances the application of gained knowledge but also allows the spreading of rumors, gossip, and inappropriate or false beliefs (counter-knowledge). Furthermore, results support that the knowledge that emerges from the development in parallel or simultaneous of counter-knowledge and knowledge application provides bad references, which will lead to a degradation of organizational agility. Practical implications: When supporting organizational agility, managers should be conscious of the urgency of counteracting the misuse of counter-knowledge. Originality/value: These findings make an important contribution to what is potentially a barrier to innovation and creativity, helping managers overcome the problems associated with misunderstandings or wrong assumptions derived from counter-knowledge.