Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources

Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources

Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources

Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources

Synopsis

The rise of the knowledge economy has far-reaching implications for the nature of economic organization as well as firm strategy. Not surprisingly, thinking in management studies as well as in economics has been profoundly affected by these changes. Thus, management thinking in particular hasbeen increasingly characterized by a schism between those who advocate 'knowledge' or 'capabilities-based' approaches in the strategy and organization fields and those who adopt more economics-influenced approaches, notably the economics of organization. This book is a sustained attempt to overcome this schism. Its basic argument is that knowledge-based and organizational economics approaches are not substitutes but complements. In particular, organizational economics has much to contribute with respect to furthering the understanding of efficientorganization and strategy in the emerging knowledge economy. This theme is taken through several theoretical as well as empirical variations. Themes such as the incentive liabilities of flat, 'knowledge-based' organizations and the role of complementary HRM practices for fostering knowledge sharingand creation are extensively treated. The book thus contains important implications for knowledge management, organizational design, and firm strategy." The book encompasses nine chapters which critically examine current thinking on strategy, and organization. The reasoning is non-technical. While primarily aimed at a management studies audience, economists and other social scientists will also benefit from it, including Advanced Students,Academics, and Researchers.

Excerpt

As discussed in Chapter 2 , knowledge-based views (henceforth 'KBV') of the firm have become very influential in a host of disciplines and sub-disciplines in business administration, notably in the strategy, organization, and international-business fields (Kogut and Zander 1993 ; Grant 1996 ; Spender 1998). It has also made some headway into economics (Hodgson 1998) and economic geography (Maskell et al. 1998). a conclusion in that chapter was that knowledge-based views of the firm are trying to capture some important, perhaps essential, aspects of economic organization that have been imperfectly theorized in other theories, or have not been addressed at all (Holmström and Roberts 1998 ; Williamson 1999). a case was made for 'integrationism'. However, an important prerequisite for successful integrationism may well be a disciplined dialog between proponents of governance (organizational economics) perspectives and proponents of knowledge-based views based on shared insights and terminology. However, so far there has not been much dialog between these, communication being limited to proponents of knowledge-based views criticizing governance perspectives. It is also questionable to what extent there exists a body of shared insights and terminology, a 'pfefferdigm' (Pfeffer 1993). Partly because of this, not much concrete integrative work has actually emerged (e.g. Argyres 1996 ; Silverman 1999 ; Heimann and Nickerson 2002).

One reason for the relative lack of dialog is that different disciplinary and institutional backgrounds (economics and universities vs. business administration and business schools) are involved. Another one is that the sources of the kbv are many more and more diverse than the sources of organizational-economics approaches. Whereas organizational economics is mainly a continuation of mainstream economics, its theoretical core essentially consisting of game-theoretical information economics (Williamson's brand of transaction cost economics being an exception), the kbv is an amalgam of ideas from evolutionary economics (Nelson and Winter 1982), Austrian economics (Hayek 1964), organizational-learning theory (March 1991), the behavioral theory of the firm (Cyert and March 1963), the resource-based view of strategy (Barney 1991), Penrose's work (1959), and epistemology (Spender 1996).

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