Towards a Knowledge Theory of the Firm-Memo on Grant 1996

Topics: Knowledge, Management, Learning Pages: 4 (1281 words) Published: August 30, 2013
Toward a knowledge-based theory of the firm
Presentation of the article
The different theories of the firm when applied to the field of strategic management help explain firm performance and the determinants of strategic choice from different perspectives. The knowledge-based view, through its focus upon knowledge as the most strategically important firm resource, is seen here as an extension of the resource-based view. The issues with which the KBV concerns itself extend beyond the traditional concerns of strategic management and tap into the domain of the theory of the firm – the nature of coordination within the firm, organizational structure, the role of management, the allocation of decision-making rights, firm boundaries, and innovation. In this article, 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. Grant avoids defining knowledge and concentrates on establishing those characteristics of knowledge which have critical implications for management. He looks at several features from the RBV with specific meaning when applied to the concept of knowledge. First, Transferability is used to make a distinction between tacit and explicit knowledge and the cost implications following. This distinction on the nature of knowledge, in turn, affects the Aggregation of knowledge and hence the results of the transfer of knowledge. Continuing with the concepts from RBV, Grant poses that Appropriability – or the return received from a resource – is with small exceptions impossible in the case of knowledge due to unclear property rights. Furthermore, Specialization of knowledge is inevitable due to biological and...
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