We begin with the relationship between organization strategy and knowledge-base differentiation. As organizations expand into new locations, do the differences in localized knowledge environments contribute to not just physical differentiation of the knowledge-base but also to distinctive development along localized trajectories? Further, following Brown and Duguid’s (2001) development of the ideas of communities of practice it appears likely that the differences between functional perspectives should lead to greater differentiation of knowledge-bases in more complex functionally specialized corporations. If so, the current trends of outsourcing key functions may be leading to unintended consequences on their knowledge-bases. Not only are they losing expertise in the outsourced area (a ‘budgeted for’ effect), they may also be reducing the differentiation in their knowledge-bases which may lead to ‘unbudgeted’ and subtle deleterious effects in their innovation capability. More generally, how organizational boundaries affect the process of developing an integrated knowledge-base has not been investigated. For instance, what are the consequences of M&A among companies with different cognitive maps and how may the combination of elements from the different cognitive maps affect innovation?
Although some of the embeddedness of a knowledge-base is likely to be a function of its content—the nature of technologies and skills it includes—other factors such as organizational strategy are also likely to influence the degree of embeddedness of a knowledge-base. For instance the degree to which knowledge is eventually explicit or not is also partially a function of strategic context; the explication of knowledge may require substantial resources and is far more likely to be taken up when such efforts entail significant payoffs for the firm. Thus, it appears likely that organizations that seek to grow their business across distinct geographical settings may invest more in making knowledge explicit than single location firms in the same industry. However, direct evidence on this ‘endogeneity of knowledge tacitness’ is yet to emerge.
The concept of knowledge-base integration also draws attention to the possibilities of the opposite process—knowledge-base disintegration or fissibility. Research suggests that the size of a firm’s knowledge-base influences the likelihood that the firm will generate spin-outs that will inherit the knowledge of the parent. For instance, Agarwal et al. (2004) show that an incumbent’s capabilities at the time of a spin-out’s founding positively affect the spin-out’s knowledge capabilities and its probability of survival. However, study of the detailed effects of such fission processes remains limited, with a focus on the offspring knowledge-bases and far less work has outlined what effects such spin-outs have on the parent firm’s knowledge-base and inventive fecundity. The public good characteristics of knowledge would suggest that fission processes should not hurt the parent knowledge-base. Yet, research has established that knowledge is not a true public good. The boundaries of these competing effects still need to be established in the context of knowledge-base fissibility. Relatedly, the implications of the diffusion of the content of a knowledge-base need to be studied. As the actual content of a knowledge-base becomes more widely diffused, does the value of the diffused knowledge, in terms of its inventive fecundity, decline? What trade-offs are there between using unique pieces of knowledge and pervasive elements of knowledge?
The vertical boundaries of firms are also likely to influence the contents of an organization’s knowledge-base. Reduction in the vertical scope of a firm may lead to a broadening of its search scope as the stand-alone unit faces fewer coordination constraints now that it no longer has to restrict itself to the choices offered by its captive unit (Ahuja and Lahiri, 2010). However, direct evidence on the question is lacking. Future research may also look at how different interest groups associated with the firm (e.g. shareholders, managers, customers, etc.) may control the organization’s working representation of the environment.
Examining the reverse set of relationships, i.e. how knowledge-bases might influence organization structure, is also important. For instance, researchers have shown that embeddedness has implications for organizational structure (Birkinshaw, Nobel, and Ridderstråle, 2002). Similarly, the pattern of knowledge-base differentiation may well lead to information reaching managers in certain ways that in turn influence strategy and scope decisions.
Finally, an intriguing area of potential investigation is to look at how organizations handle the trade-offs between the different dimensions of a knowledge-base. For instance, organizing a knowledge-base for innovation implies facilitating recombination. However, an organization that is structured in a way that maximizes recombination may face a challenge in producing reliably as the latter implies standardization of processes.
In summary, the field of knowledge structuring, having expanded significantly during the last decade, is nevertheless a fecund ground for many interesting and important questions. It combines the promise of theoretical advancement with practical relevance. The opportunity for organizational researchers now is to take up this challenge.
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a We gratefully acknowledge the financial support of the University of Michigan and Bocconi University—Kites Research Center. The authors are listed in alphabetical order.
b Making a distinction between different types of organizational knowledge has a long tradition in the literature. For instance, in a distinction similar to the distinction between procedural and declarative knowledge (Rogers, 1983; Winter, 1987; Kogut and Zander, 1992; Moorman and Miner, 1998; Tippins and Sohi, 2003), Kogut and Zander (1992) categorize organizational knowledge into information and know-how based knowledge. Information, as declarative knowledge, consists of a statement that provides a state description and know-how, like procedural knowledge, is a description of what defines current practice inside a firm. Cohen and Bacdayan (1994) emphasize the importance of organizational routines as a crucial component of organizations’ knowledge in determining their performance and identify organizational routines as being part of what they define ‘procedural memory,’ i.e. memory for how things are done that encompasses cognitive as well as motor activities (Cohen and Bacdayan, 1994).