Knowledge Depreciation Research Articles

The half-life of knowledge and strategic human capital

The strategic human capital literature has largely overlooked the fact that knowledge stocks depreciate and that the speed of depreciation varies across settings and over time. We argue that the value of knowledge has a half-life and that numerous core predictions from the conventional human capital analysis change as the half-life shortens. This applies to the ability to extract rents from human capital, employee mobility patterns, employees' disincentive to invest in firm-specific human capital, and more. We also show that, at the limit, a sufficiently rapid rate of knowledge depreciation eliminates the importance of the distinction between general and firm-specific human capital for appropriation and employee mobility.

Heterogeneous technology and specialization for economic growth beyond the middle-income stage

Many middle-income countries are caught in the middle-income trap, facing a slowdown in growth. Although they are undergoing a structural transformation from labor-intensive to capital-intensive sectors, existing literature does not provide theoretical guidance on which capital-intensive sectors to enter first. This study builds on Schumpeterian sectoral heterogeneity to develop a two sector, two country trade model. A static model shows the comparative advantage of an emerging economy in a sector with a short cycle time of technology (CTT), which is associated with high rates of depreciation of knowledge embodied in capital and thus, low entry barriers for an emerging economy. The dynamic model then shows that as an emerging economy accumulates more capital stock, it eventually loses its comparative advantage in short CTT sectors, and it becomes optimal to specialize in the long CTT sectors as many advanced economies do.

Characterizing health care provider knowledge: Evidence from HIV services in Kenya, Rwanda, South Africa, and Zambia.

BackgroundIdentifying approaches to improve levels of health care provider knowledge in resource-poor settings is critical. We assessed level of provider knowledge for HIV testing and counseling (HTC), prevention of mother-to-child transmission (PMTCT), and voluntary medical male circumcision (VMMC). We also explored the association between HTC, PMTCT, and VMMC provider knowledge and provider and facility characteristics.MethodsWe used data collected in 2012 and 2013. Vignettes were administered to physicians, nurses, and counselors in facilities in Kenya (66), Rwanda (67), South Africa (57), and Zambia (58). The analytic sample consisted of providers of HTC (755), PMTCT (709), and VMMC (332). HTC, PMTCT, and VMMC provider knowledge scores were constructed using item response theory (IRT). We used GLM regressions to examine associations between provider knowledge and provider and facility characteristics focusing on average patient load, provider years in position, provider working in another facility, senior staff in facility, program age, proportion of intervention exclusive staff, person-days of training in facility, and management score. We estimated three models: Model 1 estimated standard errors without clustering, Model 2 estimated robust standard errors, and Model 3 estimated standard errors clustering by facility.ResultsThe mean knowledge score was 36 for all three interventions. In Model 1, we found that provider knowledge scores were higher among providers in facilities with senior staff and among providers in facilities with higher proportions of intervention exclusive staff. We also found negative relationships between the outcome and provider years in position, average program age, provider working in another facility, person-days of training, and management score. In Model 3, only the coefficients for provider years in position, average program age, and management score remained statistically significant at conventional levels.ConclusionsHTC, PMTCT, and VMMC provider knowledge was low in Kenya, Rwanda, South Africa, and Zambia. Our study suggests that unobservable organizational factors may facilitate communication, learning, and knowledge. On the one hand, our study shows that the presence of senior staff and staff dedication may enable knowledge acquisition. On the other hand, our study provides a note of caution on the potential knowledge depreciation correlated with the time staff spend in a position and program age.

Identifying the technological knowledge depreciation rate using patent citation data: a case study of the solar photovoltaic industry

Technological knowledge can be created via RD especially if it comes to questions regarding how to “recharge” knowledge production processes within an ever changing global system. In this study, we use patent citation data to identify technological knowledge depreciation rates by adjusting for exogenous citation inflation and by disentangling the preferential-attachment dynamics of citation growth. Solar photovoltaic (PV) technology is employed as a case study. The rates calculated with our method are comparable to the few available estimates on technology depreciation rates in the PV industry. One of the advantages of the proposed method is that its underlying data are more readily available, and thus more replicable for the study of the knowledge depreciation rates in other relevant technology fields.

Knowledge accumulation in US agriculture: research and learning by doing

We investigate the role of public research investment (R&D) and learning by doing (LBD) in improving productivity through an empirical examination of the US agricultural production sector. We construct a dual model and track R&D and LBD impacts on returns to scale, production cost, and input demand utilizing data for more than a century. A Bayesian approach is used to maintain regularity conditions implied by economic theory. We find that US agriculture shows significant evidence of increasing returns to scale when both R&D and LBD are included in the production process. R&D and LBD are complementary in reducing cost as an increase in one stock significantly strengthens the cost-reducing effect of the other. The direct impacts of R&D and LBD on scale economies, cost, and input demands are sensitive to choices of R&D lag structure, LBD proxy, LBD knowledge depreciation rate, and data period. But input demand price elasticities are highly robust across model specification.

Organizational forgetting Part II: a review of the literature and future research directions

Purpose The purpose of this two-part paper is to provide a summary of current research opportunities in organizational forgetting literature and a future research agenda. Design/methodology/approach The summary of current research opportunities and future research agenda is drawn from the systematic literature review and synthesis reported in Part I. Findings Two broad areas for future research are proposed: A first area that highlights a need to address integrative theoretical challenges that include issues of temporality, history, power dynamics, and organizational context. A second area that highlights a need to reconcile contradicting explanations – such as whether technological sophistication and codification practices versus social networks prevent knowledge depreciation and loss – through a multilevel perspective. Research limitations/implications Limitations relate to time span coverage and journal article accessibility. Originality/value This Part II paper provides a summary of current research opportunities and offers directions for future research on organizational forgetting.

An Examination of the Pass Rates on the CPA Exam: A Suggested Redesign of the Accounting Curriculum 2013 – 2017

The purpose of this study is to examine the pass rates of certified public accountant examinations from 2013 – 2017 examination periods, and to suggest a redesign of the accounting curriculum. The study examined whether requiring 150 credit hours of accounting education, increasing intermediate accounting course deliveries to at least eight credit hours, as well as having auditing and advanced accounting to have six credit hours, respectively. Also, the study examines the inclusion of governmental accounting, regulations, and business environment and concepts as part of the accounting curriculum. Finally, the study inquired about the effects of computer-based format and knowledge depreciation on CPA candidate pass rates. Despite the publication of the Bedford Committee’s finding on the quality of accounting education, and the cosmetic changes that have been made to the accounting curriculum, the success rates of candidates continue to be dismal. In light of these concerns, it is obligatory for U.S. colleges and universities to embrace emergent accepted accounting curriculum findings to better position future certification examinations.

Depreciation of human capital: a sectoral analysis in OECD countries

PurposeThe purpose of this paper is to investigate which sectors are more vulnerable to human capital depreciation, with an emphasis on potential differences in skills and in ICT intensities.Design/methodology/approachThe authors estimate an extended Mincerian earnings equation based on Neuman and Weiss’s (1995) model using the EU-KLEMS international database for 15 sectors for the period from 1980 to 2005. The authors also test structural ruptures in earnings and human capital depreciation in the labor market per decade controlling by technological intensity.FindingsHuman capital depreciation ranges from 1 to 6 percent. It is mainly significant in skill-intensive sectors regardless of the sector’s technological intensity. The analysis of structural breaks shows that human capital value indeed changed from decade to decade. It even appreciated in low skill-intensive sectors in the 1980s and in the high skill-intensive during the 1990s. Appreciation though, was mainly skill-biased.Research limitations/implicationsInformation about on-the-job-training and non-cognitive skills that can also affect human capital depreciation are not included due to lack of data.Practical implicationsTo prevent human capital from depreciating in particular sectors and periods educational systems should provide the tools for ongoing lifelong learning at all skills levels. Education is subject to dynamic effects that should be addressed to increase the potential benefits of technological change.Originality/valueFirst, instead of using cross-section analysis which is considered to be a pitfall in studying the depreciation of knowledge, the authors observe its dynamic on a longitudinal basis. Second, the international macro-sectoral approach goes beyond limited micro-sectoral analysis in certain countries.

The contribution of the University of California Cooperative Extension to California's agricultural production

ABSTRACTPurposeThis paper is concerned with the impact of the University of California Cooperative Extension (UCCE) on regional productivity in California agriculture. UCCE is responsible for agricultural research and development (R&D), and dissemination of agricultural know-how in the state.Method/methodology/approachWe estimate the effect of UCCE on county-level agricultural productivity for the years 1992–2012, using an agricultural production function with measures of agricultural extension inputs alongside the traditional agricultural production inputs at the county level.FindingsResults show a positive impact of UCCE through its stock of depreciated expenditures. For an additional dollar spent on UCCE expenditures stock, agricultural productivity, measured as value of sales at the county level, improves by $1–9 per acre of farmland for knowledge/expenditure depreciation rates between 0 and 20 percent.Practical implicationsResults suggest that county differences in productivity could affect extension expenditures. The high level of contribution found in the results would be especially useful during a period of political pressure to reduce public spending for agricultural extension in the state.Theoretical implicationsTheoretical implications suggest that agricultural systems with higher level of knowledge depreciation are associated with higher resulting incremental agricultural productivity per an additional dollar spent on UCCE expenditures stock. This suggests that extension policy should consider also the agricultural system (crop mix).OriginalityWe use original budgetary data that was collected especially for answering our research questions from archives of UCCE. We estimate impact of extension at the county level in California, on the value of agricultural sales (of crops and livestock). We developed an extension expenditure stock, using current and past expenditures data, and different depreciation rates, following the theory of Knowledge Production Function.

Managers and organizational forgetting: a synthesis

PurposeThis paper aims to evaluate how managers influence accidental and intentional organizational forgetting, i.e. knowledge depreciation, knowledge loss and unlearning.Design/methodology/approachThe literature was reviewed based on predetermined search terms to identify peer-reviewed articles published in English and available in full-text format from the EBSCOhost and Google Scholar databases. Empirical and theoretical contributions were included. Additional articles, books and book chapters were manually selected and included based on recent reviews and syntheses of organizational forgetting work.FindingsFindings revealed that managers contributed to preventing accidental knowledge depreciation and loss and preserving organizational memory. With respect to intentional forgetting, findings revealed contradictory positions: on the one hand, managers contributed to the disbandment of existing beliefs and frames of reference, but on the other hand, they preserved existing knowledge and power structures.Research limitations/implicationsThe study was limited by the accessibility of subscribed journals and databases, research scope and time span.Practical implicationsThis paper provides useful guidelines to managers who need to reduce the disruptive effects of accidental forgetting or plan intentional forgetting, i.e. managed unlearning.Originality/valueThis paper represents a first attempt to review and define the influence of managers on organizational forgetting.

Product and process innovation with knowledge accumulation in monopoly: A dynamic analysis

In this paper, we investigate monopolist optimal investment levels using a dynamic model under knowledge accumulation. We show that (i) investment decisions in product and process innovation are independent of each other; (ii) under both the monopolist and the social optimum, there exist the saddle stable steady state equilibria; (iii) Optimal investment levels in product and process innovation positive response to learning rate and knowledge accumulation rate, inversely response to knowledge depreciation rate.

Variety and Experience: Learning and Forgetting in the Use of Surgical Devices

We use a unique, hand-collected data set to examine learning and forgetting in hip replacement surgery as a function of a surgeon’s experience with specific surgical device versions and the time between their repeat uses. We also develop a generalizable method to correct for the left censoring of device-version-specific experience variables that is a common problem in highly granular experience data, using maximum simulated likelihood estimation with simulation over unobservables conditional on observables. Even for experienced surgeons, the first use of certain device versions can result in at least a 32.4% increase in surgery duration, hurting quality and productivity. Furthermore, with the passage of time, surgeons can forget knowledge gained about the use of particular devices. For certain devices, when the time gap between repeat uses increases from its median to its 75th percentile, surgery duration increases by about 3.4%. The high productivity and quality costs associated with device variety suggest that the gain from a new device design needs to be large enough to compensate for the short-term disadvantages of starting up on a new learning curve and of increasing the chances of knowledge depreciation over time. The online appendix is available at https://doi.org/10.1287/mnsc.2016.2721 . This paper was accepted by Serguei Netessine, operations management.

Integration of learning and forgetting processes with the SHERPA model.

The present paper is targeted to address the impact of the learning and forgetting processes on the system performance during the working activities in combination with the human error quantification. The Learning and Forgetting Curves Model (LFCM) has been implemented as a new module in the SHERPA simulator, developed for the human error assessment. The LFCM module assumes, according to the literature, that human performance improves with the increase in cumulative production, leading to a progressive reduction of the processing times. On the contrary, the performance deteriorates when learning sessions are separated by rest breaks that cause knowledge depreciation or forgetting. The paper provides a different model to measure the system performance when the learning and forgetting processes are present, considering at the same time the productivity and the error probability. The model has been applied to a case study showing interesting results in terms of learning and forgetting processes effects on the system performance.

The influence of experience and knowledge on reactor safety in Germany

After five decades of nuclear power generation in Germany, the government decided to phase out nuclear power plants until 2022 as a consequence of the Fukushima disaster in 2011. Electricity generation is accompanied by human and technical errors, which questions if the nuclear phase-out has an influence on reactor safety. Past errors, available as so-called reportable events of nuclear power plants, can be approximated with experience measured in cumulated electricity generation by applying the Duffey–Saull method with a high coefficient of determination (R² = 0.84). Errors are declining with growing experience, which means the reportable events per TWh are declining over time. Today, approximately 0.9 reportable events per generated TWh occur and, given unchanging operational conditions, it is expected to remain at this magnitude in the near future. Moreover, knowledge induced by public Research and Development expenditures may supplement experience in reducing reportable events. Thus, the cumulative fission knowledge stock of Germany was added to the Duffey–Saull method for the first time. By adjusting the knowledge depreciation rate within this extended method, the prediction of reportable events is more accurate. Best results were obtained with 10.8% depreciation rate, which is also in line with the literature.

Does Organizational Forgetting Affect Vendor Quality Performance? An Empirical Investigation

The development of organizational knowledge and the depreciation of knowledge within organizations are processes that invariably occur concurrently. In the quality domain, many researchers have examined how the development of organizational knowledge (organizational learning) enhances quality performance. We build on this literature and investigate how the depreciation of organizational knowledge (organizational forgetting) affects quality performance. We analyze information on 2,732 quality improvement initiatives implemented by 295 vendors of a car manufacturer and find that organizational forgetting affects quality gains obtained from both learning-by-doing (autonomous learning) and quality improvement initiatives (induced learning); more than 16% of quality gains from autonomous learning and 13% of quality gains from induced learning depreciate every year. Furthermore, the impact of organizational forgetting (i) differs across the types of quality improvement efforts (quality gains from process improvement initiatives depreciate, whereas those from quality assurance initiatives do not), and (ii) depends on where quality knowledge was embedded (depreciation is lower for knowledge embedded in technology than for knowledge embedded in organizational routines or organizational members). Our results highlight the ubiquity of organizational forgetting and suggest the need for continued attention to sustain and enhance quality performance in supply chains.

Variety and Experience: Learning and Forgetting in the Use of Surgical Devices

We use a unique, hand-collected dataset to examine learning and forgetting in hip replacement surgery as a function of a surgeon’s experience with specific surgical device versions and the time between their repeat uses. We also develop a generalizable method to correct for the left-censoring of device-version-specific experience variables that is a common problem in highly granular experience data, using Maximum Simulated Likelihood Estimation (MSLE) with simulation over unobservables conditional on observables. Even for experienced surgeons, the first usage of certain device versions can result in at least a 32.4% increase in surgery duration, hurting quality and productivity. Furthermore, with the passage of time, surgeons can forget knowledge gained about the use of particular devices. For certain devices, when the time gap between repeat uses increases from its median to its 75th percentile, surgery duration increases by about 3.4%. The high productivity and quality costs associated with device variety suggest that the gain from a new device design needs to be large enough to compensate for the short term disadvantages of starting up on a new learning curve and of increasing the chances of knowledge depreciation over time.

Intra-network knowledge roles and division performance in multi-business firms

Purpose– The purpose of this study is to deal with the performance consequences of business units that adopt varying knowledge roles within the internal multi-business network. Multi-business firms are distributed knowledge systems in which business units are extensively involved in internal knowledge transfer processes. Business units play different roles within their respective corporate knowledge networks as knowledge providers, knowledge receivers, both or neither.Design/methodology/approach– Survey data from a sample of 225 business divisions were analyzed using a multivariate analysis of covariance (ANCOVA).Findings– Results indicate that divisions which occupy knowledge roles that reveal the possession of unique knowledge (knowledge signaling) or guarantee the accumulation of new knowledge (knowledge learning) outperform those divisions that have access to spilled knowledge (knowledge depreciation) or have no access to any kind of knowledge (knowledge insulation).Practical implications– Four knowledge roles are distinguished according to the extent to which a business division provides the rest of the corporation with knowledge or receives knowledge from the rest of the corporation, thus exploring the issue of internal knowledge transfer from an integrated perspective that takes the directionality of knowledge flows and the position within the knowledge network into account.Originality/value– This study contributes to existent research on knowledge transfer and performance outcomes by demonstrating the usefulness of the knowledge role as an integrating concept within this literature. It also extends the four-role framework to the prescriptive domain and tests its normative implications in an intensive internal knowledge transfer setting which has to date gone relatively unnoticed, as is that of multi-business firms.

Exploring knowledge appreciation and depreciation effects in technology alliance portfolios

Conducting analyses on a multi-industry sample of 494 firms that engage in technology alliances over 15 years, we examine to what extent the age of alliances within firms’ alliance portfolio influe...

Bite Off What You Can Chew? Knowledge Acquisition Strategy and the Evolution of Absorptive Capacity

I present a computational study to examine a common assumption in organizational learning, that an exploitative knowledge acquisition strategy will accumulate less diverse knowledge than an explorative strategy. I show that this is not always the case: When taking into account factors that influence the ease of knowledge acquisition, such as sensitivity of absorptive capacity to knowledge distance, requirement for repeated engagements with particular knowledge, and depreciation of knowledge due to forgetting, sometimes an exploitative strategy can outperform an explorative strategy both in terms of acquisition success rate and diversity of the resulting knowledge stock.

Understanding key issues in designing and using knowledge flow networks: An optimization-based managerial benchmarking approach

There is an increasing recognition that knowledge can be an organization's source of competitive advantage. Hence, knowledge management (KM) has been extensively researched. Prior knowledge management research has recognized the importance of making individual knowledge available throughout the organization. Most KM research, however, has thus far focused on a technology-based KM strategy with relatively little discussion on how knowledge can be effectively shared using organizational social relationships. This paper focuses on how knowledge-intensive organizations can design and use “knowledge flow networks (KFNs)” in order to facilitate knowledge sharing. Designing and using KFNs to maximize knowledge sharing is a complex problem. We formulate a mixed integer programming model (MIP), and present a heuristic in order to facilitate systematic analysis and understanding of effective KFNs. We consider organizations that support multiple skills and have workers with varying levels of competence who are connected through IT-facilitated organizational social relationships. Our results, based on computational experiments, provide several interesting insights and intelligence into the design of an effective KFN. First, our results highlight that average workers play a vital bridging role in knowledge sharing. Second, social networking concepts of ties and cohesiveness are used to better understand the dynamics of knowledge sharing. The importance of indirect relationships between expert workers and the network effects due to indirect relationships are illustrated. For effective KM, we also illustrate how organizations can reduce the total number of ties required in a multi-skill environment. In our model extensions, we study the impact of worker turnover and knowledge depreciation on the design and use of effective KFNs. Managerial implications of these results are discussed. The model and solution procedure proposed in this paper can serve as a managerial benchmarking framework for effective management of KFNs.