This research explores this topic by developing the links between a firm’s organizational memory, counter-knowledge, the process of knowledge application, and organizational agility. This study addresses the following two questions: Does the enhancement of organizational memory result in the development of both counter-knowledge and the process of knowledge application? Does the development of both counter-knowledge and the process of knowledge application at the same time hinder the enhancement of organizational agility? The above relationships are examined through an empirical investigation of 112 companies listed on the Spanish Stock Exchange. The results are calculated using a SEM approach based on components (PLS). Results support that organizational memory not only supports the understanding of routines, processes, and procedures of the company (i.e. knowledge application), but also allows the spreading of rumours, gossip, unsupportable explanations and justifications, and inappropriate or false beliefs (i.e. counter-knowledge). Furthermore, the knowledge derived as a result of developing in parallel or simultaneously both counter-knowledge and the process of knowledge application provides bad references, which in turn lead to a natural deterioration or depreciation of organizational agility. The considerations discussed above allow us to put forward the argument that counter-knowledge plays an important role in the relationship between organizational memory and organizational agility. Findings from this study reinforces the literature which claims that measures to counteract the effects of counter-knowledge on knowledge structures are urgently needed otherwise personal relations are prone to suffer from misunderstandings or wrong assumptions.