Research
 
Applying an Economic Calculus to Knowledge

THREE SHAPES OF ORGANIZATIONAL KNOWLEDGE

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Publication:

van den Berg H. 2013. Three Shapes of Organizational Knowledge. Journal of Knowledge Management 17(2): 159-174.

Abstract:

This research responds to Simon’s (1999) challenge to apply “an economic calculus to knowledge”. The paper examines the extant literature and extracts a typology of knowledge that may be fruitful in facilitating research in a knowledge-based view of production. This paper reviews the enduring literature on the knowledge-based view of the firm (KBV) and gleans three classifications of organizational knowledge that may be recognized as distinct factors of production: tacit, codified, and encapsulated knowledge. Differences between tacit, codified, and encapsulated shapes of knowledge carry strategic implications for the firm along six important dimensions. Defining organizational knowledge as a meta-resource and distinguishing between its three shapes sets the stage for measurement of knowledge as a factor of production. The distinctions between the three classifications of knowledge may be less defined in practice than in theory. In practice, the classification in which a specific assemblage of knowledge falls is dependent on the tacit knowledge being applied by the user. A software program may be encapsulated to a retail user, but codified to its creator. Recognition of the differences between the three shapes of organizational knowledge may help managers a) determine the most economic combination of knowledge to use in production, b) transfer knowledge more effectively within and across organizational boundaries, c) determine the most economic location of firm boundaries, and d) ensure value is appropriated for the firm. The research suggests that encapsulated or embedded knowledge is an important and distinct configuration of knowledge that has until recently received insufficient attention.