Academic journal article Journal of Economic Issues

Learning and Routines in High-Tech SMEs: Analyzing Rich Case Study Material

Academic journal article Journal of Economic Issues

Learning and Routines in High-Tech SMEs: Analyzing Rich Case Study Material

Article excerpt

Institutional economics is concerned with the cultural embeddedness of economic institutions. A key institution is the firm, which, like other institutions, is analyzed in a world in which historical time matters and the rationality of the firm is one of process rather than maximization. In studying processes, evolutionary economists have likened the biological concept of the gene or trait to routine behavior adopted by firms [Nelson and Winter 1982], and routines are hypothesized to be systematic and enduring using, for example, analogies of chreodic development [Hodgson 1993].

Routines are acquired by organizations in the same manner as skills are acquired by individuals. Organizations learn and become skillful. Consequently, they do not make decisions so much as undertake processes of action. Three different categories of routines are distinguished by Nelson and Winter: those relating to short-term operating characteristics; those determining the capital stock, i.e., investment and innovation; and those modifying operating characteristics. The more successful organizations survive, rather as in natural selection, through the interplay of their "genes" and their environments. The metaphor is powerful partly because it has an applied focus and yet is sufficiently abstract to generate explanations across many organizations.

This paper reports on research that is trying to provide a manageable base from which to discover whether or not "routines" are a useful concept for empirical work; to consider whether routines can be identified empirically to help generate useful or effective understanding of the evolutionary change of actual firms. The research involves studies of working patterns in four firms in the same local economy, and in particular the way in which changing electronic systems relate to firms' behavior. Electronic systems have the ability to transform the organizational patterns of firms [Zuboff 1988]. It is often claimed that these systems have heralded a new industrial revolution. They should provide a rich site in which to examine the ways in which firms are able to, or wish to, change their routines and the ways in which firms check routines to ensure that they continue to match the firms' needs.

The focus of the study is on the dynamic aspects of firms' behavior, not on a comparative series of static pictures. The goal is to try to discover the ways in which firms generate and deal with change. Time is not simply elapsed time, but has a chronology and a history. Events are essentially historical and influence activities in a path dependent way. This is true theoretically [Nelson and Winter 1982], and as Thomas [1991] shows, was a problem with which Marshall struggled in writing his Principles. There are also very clear practical implications, frequently at a detailed, technical level, well demonstrated, for example, by the history of the QWERTY keyboard [David 1985].

The research focuses on the different perceptions of individuals in different structural positions within the four case study companies. In looking through their eyes, the objective is to find the key events, beliefs, and symbols they use in making sense of the organization. There is a need to look at events and processes as the subjects perceive them [Boland 1985; Johnson 1987; Walsham 1993]. The organization is the output of the processes under study and is not an entity that has opinions of its own or one that can carry out its own actions. In order to understand the organization, it is crucial to gain an understanding of the perspectives of the members of the organization. Their combined understandings are essentially the organization's understandings. Such a focus is an interpretative one. The idea that there is a positive identifiable reality that is accessible independently of the observer's perceptions is rejected by use of this approach.

Economic and Social Theory

A hermeneutic or interpretive approach emphasizes the impossibility of finding objective knowledge. …

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