Handbook of Organizational Learning and Knowledge Management, Second Edition

Abstract

Knowledge assets such as technical and organizational know-how undergird each firm’s competitive position. Such assets are generally embedded in routines, the well-established and largely uncodified patterns that firms have developed for finding solutions to particular problems. Learning, the maintenance and development of these assets, is an inherently collective, organizational process that is grounded in, but surpasses, the experience and expertise of individuals.

Effective organizational learning—a continuous process in most industries—requires dynamic capabilities. These capabilities are activities that can usefully be thought of in three clusters: sensing opportunities (building new knowledge), seizing those opportunities to capture value, and transforming the organization as needed to adapt to the requirements of new business models and the competitive environment.

As sources of knowledge have become more organizationally and geographically diffuse, the coordination skills of managers are particularly important. Many of the resources to be coordinated can lie outside the boundaries of the firm as easily as inside; the extent of vertical integration must be carefully calibrated to reflect an array of strategic factors.

The economic ‘theory of the firm,’ currently dominated by the contracting perspective, needs to be augmented to account for these new factors, particularly the superiority of the firm over markets for the creation, transfer, and protection of intangible ...