Effects of Business Experience on Knowledge Retention and Decision Performance

This study examines the effects of business experience on knowledge retention and decision performance. We use a control group (undergraduate business students with no business experience) and an experimental group (managers with an average of 15 years of business experience). To explore the effects of business experience on knowledge retention and decision performance, we use only students with a similar level of declarative knowledge as managers in the control group. Both groups respond to two structurally equivalent capital investment cases immediately after and two weeks after receiving class instruction on relevant cost-based decision-making. The results show that immediately after the class instruction, managers possess more procedural knowledge and make better investment decisions than students. Also, two weeks after the instruction, while managers show improved declarative and procedural knowledge and better investment decisions, students exhibit deterioration in each of the three performance measures. Our additional analyses reveal that differences between students' and managers' performance can be attributed to their different ways of using relevant and irrelevant information.