Managing Public and Private Firm Knowledge
Within the Context of Flexible Firm Boundaries

Sharon F. Matusik

Rice University
Houston, Texas

Abstract

The continued growth of interfirm partnering, from strategic alliances to contingent work use in core value creation activities to network-based competition, presents a host of complex issues surrounding how these arrangements affect firm knowledge and, ultimately, firm competitiveness. On the one hand, more porous boundaries present the firm with easier access to public knowledge resident outside of its boundaries. However, these more porous boundaries also make it easier for private knowledge that is proprietary to the firm to seep out into the external environment. This dissemination may have negative consequences particularly for firms that seek to appropriate supernormal returns from this private knowledge.

This chapter focuses on three issues. First, it draws attention to the different roles of public vs. private knowledge within the firm. Second, it discusses how flexible firm boundaries affect the ability of the firm to assimilate public knowledge as well as its ability to generate and safeguard private knowledge. Third, this chapter highlights factors in the competitive landscape that influence whether the firm should strive to maximize the creation and collection of knowledge or rather safeguard its existing knowledge stocks.

To appear in "Strategic Management of Intellectual Capital and Organizational Knowledge" edited by Nick Bontis & Chun Wei Choo (Oxford University Press).