Organizational learning with forgetting: Reconsidering the exploration-exploitation tradeoff

Prior exploration-exploitation models of organizational learning generally neglect forgetting. This study models organizational learning with forgetting and derives some novel implications. Most noteworthy, our findings point out limits to the contention that promoting rapid learning undermines long-run knowledge. Slower learning is not always better. When agents are subject to forgetting, raising the rate of interpersonal learning often enhances the diversity of beliefs within an organization, as well as the number and range of aspects of the environment that organizational members come to know. The rate of learning that maximizes organizational knowledge or diversity varies with the rate of forgetting. Organizations need not sacrifice diversity as they gain knowledge. Analyses of our model indicate that knowledge and diversity are positively correlated across organizations. Implications of forgetting redirect theorists, empirical researchers, and managers toward alternatives to some conclusions from prior exploration-exploitation modeling studies.