The transfer of experience in groups of organizations: Implications for performance and competition

Groups of organizations are pervasive, although there is little systematic knowledge about how theyaffect their members. We examine one dimension of the operation of organization groups, the transfer of experience. Our core argument is that organization groups maycreate benefits for their members, but problems for those outside the group. Within the group theycan facilitate the transfer of experience among their members bycreating mechanisms for communication, incentives for helping, and bypromoting understanding. The predicted pattern of experience transfer should improve performance of those within the group, but also has implications for those outside it. Experience accumulated in one organization group strengthens the competitiveness of its organizations, and therebyharms competitors outside the group. Thus, organization groups are fundamental both for the functioning of their members and the competitive dynamics of their industries. Our longitudinal analysis of the profitability of kibbutz agriculture supports both these claims. Between 1954 and 1965 (the years of this study), almost all kibbutzim were part of organization groups. Kibbutzim became more profitable as a function of the experience of others in their group. Their profitabilitywas reduced, however, as a function of experience of others outside their group.

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