Investigating The Effect of Organizational Amnesia on The Performance of Small And Medium-Sized Enterprises

Abstract

This research aims to investigate organizational amnesia as the failure of organizations to learn reliably at the organizational level, and it is hypothesized to influence the SMEs' performance. The authors examined indicators obtained from focus group discussion for representing organizational amnesia, then performed exploratory factor analysis based on a data survey of 200 participants from SMEs "Batik Trusmi" Cirebon in West Java to explore factors and retain firmed indicators. The empirical results found that all items representing organizational amnesia were formed into three factors: Undistributed Information, Employee Incompetence, and Knowledge Utilization. The first two factors are positively correlated to organizational performance, while the latter is negatively correlated. Those findings are expected to contribute significantly to the concept of organizational amnesia, particularly in SMEs. Conclusion and direction for future research are provided.