Knowledge, Strategic Problems, and The Theory of The Firm

J.-C. Spender

New York Institute of Technology

Abstract

I believe the knowledge management field holds considerable promise in its ability to embrace phenomena and problems that have been persistently under-considered in economic and organization theory. In this essay my principal purpose is to help sharpen the field's methods by exploring the assumptions that underpin it. In particular I distinguish two principal domains of knowledge management work. One that assumes knowledge is an organizational asset, and focuses on the management implications of differences between knowledge assets and other organizational assets. The second focuses on uncertainty, most particularly the uncertainties arising from the management's lack of knowledge about how to integrate what they do know into a coherent body of knowledge. The development of an integrated body of knowledge produces the firm's sense of itself and its place in the world. This is the principal outcome of the strategy making process.

I argue that the key to integrating the different kinds of knowledge relevant to the firm is 'common knowledge'. This is knowledge of a different type than has been previously considered in the KM literature. Yet, paradoxically, all of us know this type of knowledge well and have experienced it as we joined organizations and learned to find our way around and get our jobs done. My assumption is that common knowledge grows - emerges - out of the interactions between the firm's parts and context.

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