Innovation and Efficiency - A Knowledge-Based Approach to Organizing Industrial Firms

Doctoral thesis, 2000

This thesis deals with the organizing of industrial firms that face the challenge of achieving high levels of both innovation and efficiency, taking a knowledge-based approach to this classical trade-off. With a constructionist perspective as a point of departure, knowledge, which contains tacit and explicit components, is seen to exist at both the individual and the organizational level. Different types of knowledge coexist and act together in practice as they are exploited to generate value, whereby new knowledge is also generated. This leads to the proposal of a theoretical framework that conceives of the firm as an entity comprising both knowledge and practice, connected by the interdependent processes of knowledge creation and knowledge exploitation. Based on the developed framework, a number of issues stand out as important for managers to focus on. A few such challenges are where the boundaries of the firm should be drawn, how parts-whole relationships with respect to both products and value chains are to be handled, and how to deal simultaneously with both future and present businesses. Taking managerial practice as a starting point, the issues of internal venturing, outsourcing, and modularization are elaborated upon in four appended papers. Common to all the mentioned problem areas is that they contain an inherent tension between innovation and efficiency. Previously suggested guidelines for organizing have, looking predominantly, or exclusively, at either efficiency or innovation, focused on reducing or removing this tension, thereby simplifying the issue of organizing, but also limiting their usefulness as guidelines in settings characterized by high demands for both innovation and efficiency. Significant for the organizing guidelines suggested in this thesis is that they address the need to maintain and continuously handle the tension between innovation and efficiency by managing central knowledge processes in a holistic manner, thereby creating prerequisites for sustainable competitiveness. At a general level this points to the need to generate useful organizing solutions by applying comprehensive constructivist frameworks that allow for the simultaneous coexistence of multiple, theoretically incommensurable goals to practice-centered problems.