Relatedness through experience: On the importance of collected worker experiences for plant performance

The present article aims to show that multiple cognitive dimensions exist between employees in plants and that these multiple forms of potential cognitive relatedness interact in their influence on learning and plant performance. Because the success of a firm has come to be strongly associated with its ability to use the available resources (Penrose 1959), it has become increasingly important for firms to have just the right mix of competences. In the article, the knowledge and cognitive distance between employees in knowledge-intensive business services (KIBS) is measured in multiple ways – as formal knowledge, industry experience and past knowledge exposure. The different forms of cognitive distance are entered into pooled OLS regressions with year-, industry-, region-fixed effects and interaction terms to estimate the effects of various forms of cognition on plant performance. The results suggest that past knowledge experiences and formal education offer multiple channels for knowledge integration at the workplace and that the specific labor force knowledge characteristics present at a plant condition learning. It has been further shown that the organizational structure and flexibility associated with single-plant and multi-plant firms, respectively, generate different plant performance outcomes of knowledge variety. Moreover, we conclude that the commonly found negative effects of similarity in formal education on plant performance may be reduced by high levels of similarity in historical knowledge exposure or industry experience. These effects are stronger in multi-plant firms than in single-plant firms. We also find that high levels of human capital exert a reducing influence on the negative effects of high levels of cognitive similarity.