The Effect of Information Technology on Knowledge Acquisition, Retention, and Transfer

Our work integrates organizational learning research with information systems research and empirically tests whether new information technology (IT) contributes to an organization's ability to retain knowledge accumulated through experience as well as to transfer knowledge between firm locations. We conducted a cross-sectional time series analysis of sixty months of data at multiple financial institution payment processing facilities where the same new technology was implemented at different times over the study period. Learning is analyzed in terms of productivity and quality improvements occurring as a function of experience, and IT is shown to have an immediate positive impact on both types of outcomes. In addition to these first-order effects, IT has second-order effects yielding a significant decrease in the rate of knowledge deprecation while increasing the rate at which the organizational units improve their productivity and quality with experience. Knowledge transfer occurs across the facilities with regard to productivity as well as quality improvements, and IT is found to significantly enhance the ability of each organizational unit to learn from the experience of other units with regard to productivity but not quality. Theoretical implications of these results for the role of technology in organizational learning and knowledge transfer are developed.