Knowledge Specialization, Organizational Coupling, and the Boundaries of the Firm: Why Do Firms Know More than They Make?

By Stefano Brusoni, Andrea Prencipe, Keith Pavitt. 2001

1,516 citations recorded by the source corpus.

This paper uses an analysis of developments in aircraft engine control systems to explore the implications of specialization in knowledge production for the organization and the boundaries of the firm. We argue that the definition of boundaries of the firm in terms of the activities performed in house does not take into account that decisions to outsource production and other functions are different from decisions to outsource technological knowledge. We show that multitechnology firms need to have knowledge in excess of what they need for what they make, to cope with imbalances caused by uneven rates of development in the technologies on which they rely and with unpredictable product-level interdependences. By knowing more, multitechnology firms can coordinate loosely coupled networks of suppliers of equipment, components, and specialized knowledge and maintain a capability for systems integration. Networks enable them to benefit from the advantages of both integration and specialization. Examples from other industries extend to other contexts the model we develop.

Subfields: Management of Technology and Innovation, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/1d2d05b6d4646f9370d222834724e814d51db2e0

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In Management of Technology and Innovation

In Strategy and Management

Citations in the corpus

Absorptive capacity, learning processes and combinative capabilities as determinants of strategic innovation (2012, background): “Camisón and Forés (2010) even extend that perspective on transformative learning.”
Finding the Right Partners: Institutional and personal modes of governance of university-industry interactions (2013, background): “Similarly, firms that outsource more of their production and development processes may be more likely to experience greater organizational challenges in integrating learning and production activities developed in other locations (Wang and von Tunzelmann, 2000; Brusoni et al., 2001).”
Value Creation in Innovation Ecosystems: How the Structure of Technological Interdependence Affects Firm Performance in New Technology Generations (2010, background): “In such cases, both firms and their suppliers may face considerable challenges in developing and integrating these new components into the focal offer (Fine, 1998; Iansiti, 1998; Brusoni et al., 2001).”
The nature of SME co-operation and innovation: A multi-scalar and multi-dimensional analysis (2013, positive): “…a firm’s capacity to innovate was very much associated with their ability to combine and exchange knowledge resources through inter-firm networks.5 Brusoni et al. (2001) found that firms invest in the creation of knowledge not only for their own direct use, but so that they may also more easily…”
Outsourcing and financial performance: A negative curvilinear effect (2009, neutral): “integration and assembly (Brusoni et al., 2001).”
Managing technological change in the digital age: the role of architectural frames (2014, background): “As an area of considerable attention in the literature (Sanchez and Mahoney, 1996), this relationship, referred to as the ‘ fundamental isomorphism ’ (Baldwin and Clark, 2000) or the ‘ mirroring hypothesis ’ (Baldwin, 2008), has been examined with particular attention to alignments and misalignments”
External Partnerships in Employee Education and Development as the Key to Facing Industry 4.0 Challenges (2019, background): “In this open network configuration, subjects can build relationships with several unrelated actors and explore external knowledge resources [23,72].”
Knowledge sharing, knowledge leaking and relative innovation performance: An empirical study (2015, background): “…centrally located parties tend to receive earlier warnings of upcoming promising results when compared to players located in the periphery (Clarysse et al., 1996) and have the opportunity to draw on the depth and breadth of a range of innovation capabilities and processes (Brusoni et al., 2001).”