Balancing Stability and Innovation in Knowledge-Intensive Firms: The Role of Management Control Mechanisms

Balancing Stability and Innovation in Knowledge-Intensive Firms: The Role of Management Control Mechanisms

Angelo Ditillo (Universita Bocconi, Italy)
Copyright: © 2009 |Pages: 16
DOI: 10.4018/978-1-60566-176-6.ch015
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Abstract

Knowledge-intensive firms are composed of various communities, each characterized by specialized knowledge. These communities operate as critical agents in the organizational action because the relevant processes and the variety/variability of environment and technology are too complex for a single individual to understand in their entirety. They generate new models for interpreting reality and responding to customer needs thanks to the integration of knowledge taking place within and between them. The objective of this chapter is to provide some criteria for evaluating the comparative effectiveness and efficiency of combinations of control mechanisms in the regulation of these knowledge integration processes. On the basis of the characteristics of knowledge (level of complexity and diversity), a different set of control mechanisms is proposed, with a variation in their specific features to guarantee that the resulting modes of communication and cognition can guarantee the required level innovation, without however preventing a certain level of stability.
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Existence And Organization Of Knowledge-Intensive Firms

A recent approach that helps to shed some light on the reasons for the existence and organization of knowledge-intensive firms, and to some extent for all firms in general, is represented by the knowledge-based theory of the firm (Zander and Kogut, 1995; Kogut and Zander, 1996; Conner and Prahalad, 1996; Grant, 1996a; 1996b; 1997). Even if this approach has been criticized (Foss, 1996a; 1996b), and refers to any kind of firm, it may help explain the emergence of knowledge-intensive firms and the way in which they are organized. Central to the knowledge-based theory of the firm is the argument that increasing turbulence in the external business environment has focused attention on resources and organizational capabilities as the principal sources of sustainable competitive advantage and the foundation for strategy formulation (Peteraf, 1993; Teece and Pisano, 1994; Kim and Mauborgne, 1999; Morris et al., 2006). As the markets for resources have become subject to the same dynamically competitive conditions that have afflicted product markets, so knowledge has emerged as the most strategically significant resource of the firm (Vicari, 1992; Drucker, 1993).

Key Terms in this Chapter

Control Mechanisms: They refer to a set of integrated tools for steering an organization toward the achievement of its objectives, by influencing managers’ behaviour.

Knowledge Complexity: It is the characteristic of knowledge that derives from the fact that either a high number of actors and activities are involved in a knowledge process or knowledge is differentiated among agents or, finally, neither inputs nor outputs of knowledge processes can be observed.

Innovation: It is the process through which new ideas, goods, services, processes and activities are created, developed or redefined.

Codification: It is the process of defining perceptual and conceptual categories that facilitate the classification of phenomena and of linking these phenomena to categories, once they have been developed.

Knowledge-Based Theory of the Firm: It is the theory of the firm that focuses attention on the resources and organizational capabilities as the principal sources of sustainable competitive advantage and the foundation for strategy formulation.

Communities of Practice: They are the teams that are linked to the environment and that aim at finding a match with it by means of interpretive sense-making and congruence finding.

Knowledge-Intensive Firms: They are the firms that employ mainly the knowledge of people to develop and trade immaterial solutions for customers.

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Editorial Advisory Board
Table of Contents
Foreword
Dariusz Jemielniak, Jerzy Kociatkiewicz
Acknowledgment
Dariusz Jemielniak, Jerzy Kociatkiewicz
Chapter 1
Davydd J. Greenwood
This chapter questions the clarity of the concepts of “knowledge society” and “knowledge-intensive organization”. In particular, the author asserts... Sample PDF
Are Research Universities Knowledge-Intensive Learning Organizations?
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Chapter 2
Juha Kettunen
The aims of knowledge management are to create knowledge and stimulate innovation. Knowledge management allows the knowledge of an organization to... Sample PDF
Construction of Knowledge-Intensive organizations in Higher Education
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Chapter 3
Jeff Gold, Richard Thorpe
Continuing Professional Development (CPD) is usually conceived as a planned and formulated process for individual members of professional... Sample PDF
Collective CPD: Professional Learning in a Law Firm
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Chapter 4
Paul Trott, Andreas Hoecht
The United States and European economies have witnessed an enormous increase in the amount of specialized business services, which now provide... Sample PDF
Innovation Risks of Outsourcing within Knowledge Intensive Business Services (KIBS)
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Chapter 5
Lars Steiner
A new knowledge management perspective and tool, ANT/AUTOPOIESIS, for analysis of knowledge management in knowledge-intensive organizations is... Sample PDF
Actor-Network Theory and Autopoiesis: A New Perspective on Knowledge Management
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Chapter 6
Jo A. Tyler, David M. Boje
This chapter fits the theme, the interplay between creativity and control in organizations. Story is often claimed to be a way to elicit tacit... Sample PDF
Sorting the Relationship of Tacit Knowledge to Story and Narrative Knowing
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Chapter 7
Louise Grisoni
The central discussion in this chapter is that poetry can be used to provide a bridge between tangible, rational and explicit knowledge and tacit or... Sample PDF
Exploring Organizational Learning and Knowledge Exchange through Poetry
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Chapter 8
Ester Barinaga
“How do we define our project goal?” “How are we going to coordinate our independent national studies?” “Who is responsible for what?” “How are... Sample PDF
Vagueness: The Role of Language in the Organizing Process of Knowledge Intensive Work
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Chapter 9
Stephen Sheard
In this chapter the author offers an argument towards the resurgence of a proto-alphabetic imagination in electronic and mobile communications. It... Sample PDF
Tyranny of the Eye? The Resurgence of the Proto-Alphabetic Sensibility in Contemporary Electronic Modes of Media (PC/Mobile Telephony); and its Significance for the Status of Knowledge
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Chapter 10
Krzysztof Klincewicz
The chapter discusses the role of IT Research & Analysis firms in the diffusion of knowledge management. The research is based on content analysis... Sample PDF
Knowledge Management and IT Research and Analysis Firms: Agenda-Setters, Oracles and Judges
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Chapter 11
Fatima Guadamillas-Gomez, Mario J. Donate-Manzanares
This chapter analyses the implementation of knowledge management strategies (KMS) in technologyintensive firms. Firstly, a review of KMS in the... Sample PDF
Knowledge Management Strategies Implementation in Innovation Intensive Firms
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Chapter 12
Arla Juntunen
This chapter focuses on the development of the Knowledge Management (KM) platform, and, more generally, the knowledge- and resource based view (RBV)... Sample PDF
Developing a Corporate Knowledge Management Platform in a Multibusiness Company
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Chapter 13
Jonathan D. Owens
Success in new product development (NPD) can be considered a general aim for any company wishing to survive in the 21st Century. It has been found... Sample PDF
Modeling the New Product Development Process: The Value of a Product Development Process Model Approach as a Means for Business Survival in the 21st Century
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Chapter 14
Anders Örtenblad
The ambition of this chapter is to pay some attention to more obvious, as well as more subtle, methods for organizations to become independent of... Sample PDF
Achieving Organizational Independence of Employees' Knowledge Using Knowledge Management, Organizational Learning, and the Learning Organization
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Chapter 15
Angelo Ditillo
Knowledge-intensive firms are composed of various communities, each characterized by specialized knowledge. These communities operate as critical... Sample PDF
Balancing Stability and Innovation in Knowledge-Intensive Firms: The Role of Management Control Mechanisms
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Chapter 16
Aino Kianto, Jianzhong Hong
Nowadays knowledge and competencies are the key productive factors, and the organizational capability for continuous learning, development and... Sample PDF
The Knowledge-Based Approach to Organizational Measurement: Exploring the Future of Organizational Assessment
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Chapter 17
Vidar Hepsø
In knowledge management literature, common information spaces (CIS) are believed to be instrumental in the development and sharing of knowledge.... Sample PDF
Common Information Spaces in Knowledge-Intensive Work: Representation and Negotiation of Meaning in Computer-Supported Collaboration Rooms
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Chapter 18
Agnieszka Postula
This chapter presents and discusses two factors – creativity and control – which correspond to every organizational reality. IT specialists’... Sample PDF
Creativitiy and Control in IT Professionals' Communities
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Chapter 19
Patrocinio Zaragoza-Saez, Enrique Claver-Cortes, Diego Quer-Ramon
Knowledge is one of the basic production factors owned by enterprises, and knowledge management is one of the main dynamic capabilities on which... Sample PDF
A Qualitative Study of Knowledge Management: The Multinational Firm Point of View
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Chapter 20
Cliff Bowan, Pauline Gleadle
The chapter addresses a central dilemma from the viewpoint of dynamic capabilities and the resource based view of the firm: how to manage creativity... Sample PDF
Culture as a Dynamic Capability: The Case of 3M in the United Kingdom
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Chapter 21
Maria E. Burke
The purpose of this chapter is to consider an original way of improving Knowledge Management relationships. This is done within the context of an... Sample PDF
Cultural Issues, Organizations and Information Fulfillment: An Exploration Towards Improved Knowledge Management Relationships
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Chapter 22
Darius Mehri
The author worked in the research and design department at a large Toyota company in the late 1990s and experienced an innovative process where... Sample PDF
Engineering Design at a Toyota Company: Knowledge Management and the Innovative Process
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Chapter 23
Federica Ricceri, James Guthrie
The shift towards a knowledge based economy is at the core of the debate of contemporary management and accounting literature and organisations are... Sample PDF
Critical Analysis of International Guidelines for the Management of Knowledge Resources
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Chapter 24
Christiane Prange
Internationalization has accelerated the speed of knowledge generation and innovation. Thus, companies increasingly need to pool and create new... Sample PDF
Strategic Alliance Capability: Bridging the Individual Back into Inter-Organizational Collaboration
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Chapter 25
Meryem Sevinc, Lawrence Locker, John D. Murray
In the contemporary context of knowledge discovery, the amount of information and the process itself has increased in complexity. Relevant to the... Sample PDF
Automation vs. Human Intervention: Is There any Room Left for the Analyst in the Data Mining Process?
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Chapter 26
Joanna Shih
The hi-tech firms that predominate in Silicon Valley contain a large proportion of knowledge workers—employees with high levels of education and... Sample PDF
Temporality and Knowledge Work
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Chapter 27
Alice MacGilivray
Knowledge management is often associated with the need for change and related shifts in ontologies, ways of knowing and ways of working. Combine the... Sample PDF
Knowledge Intensive Work in a Network of Counter-Terrorism Communities
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Chapter 28
Tatiana Andreeva
Contemporary literature usually views knowledge creation and knowledge sharing as either independent or positively related processes. However, based... Sample PDF
Tensions between Knowledge Creation and Knowledge Sharing: Individual Preferences of Employees in Knowledge-Intensive Organizations
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Chapter 29
Steffen Boehm, Chris Land
Knowledge is implicitly assumed to form an increasingly important, or even the dominant source of values for today’s knowledge based organizations.... Sample PDF
The 'Value' of Knowledge: Reappraising Labour in the Post-Industrial Economy
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Chapter 30
Alexander Styhre
This chapter discusses the use of media in knowledge-intensive organizations. Media is defined here as the integration of technologies, practices... Sample PDF
New Media and Knowledge Work
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Chapter 31
Ben Tran
This chapter examines knowledge and innovation as invaluable factors affecting the longevity of large organizations. It presents the history and... Sample PDF
Knowledge Management: The Construction of Knowledge in Organizations
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Chapter 32
Premilla D’Cruz, Ernesto Noronha
Scholars researching the area of the sociology of professions had earlier predicted that as occupations seek to improve their public image... Sample PDF
Redefining Professional: The Case of India's Call Center Agents
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Chapter 33
Dariusz Jemielniak, Jerzy Kociatkiewicz
Knowledge management and knowledge-intensive work are two of today’s hot buzzwords, though both already have a history of managerial usage. While... Sample PDF
Knowledge Management: Fad or Enduring Organizational Concept?
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About the Contributors