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Toward a Knowledge-Based Theory of the Firmby: Robert M. Grant
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Notes for this article4 stars out of five. One of the key articles for KBV. Good overview of various theories of the firm. Overview of characteristics of knowledge. - K as a rational for the existence of the firm: "the existence of the firm represents a response to a fundamental asymmetry in the economics of knowledge: knowledge acquisition requires greater specialization than is needed for its utilization". - Author dispenses with the concept of organizational knowledge (Nonaka, Spender) in favor of emphasizing the role of the individual in creating and storing knowledge. The firm is an institution for knowledge application. - Coordination within the firm: rules, sequencing, routines and group problem solving. Common k: language, symbolic comm, specialised k, shared meaning. - Author finishes by implications for hierarchy and decision-making.
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AbstractGiven assumptions about the characteristics of knowledge and the knowledge requirements of production, the firm is conceptualized as an institution for integrating knowledge. The primary contribution of the paper is in exploring the coordination mechanisms through which firms integrate the specialist knowledge of their members. In contrast to earlier literature, knowledge is viewed as residing within the individual, and the primary role of the organization is knowledge application rather than knowledge creation. The resulting theory has implications for the basis of organizational capability, the principles of organization design (in particular, the analysis of hierarchy and the distribution of decision-making authority), and the determinants of the horizontal and vertical boundaries of the firm. More generally, the knowledge-based approach sheds new light upon current organizational innovations and trends and has far-reaching implications for management practice.
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