We use patent data from the worldwide semiconductor industry from 1984 to 1994 to study the effect of the structure of organizational knowledge bases, or the patterns of coupling between their elements of technical knowledge, on the usefulness of inventions and knowledge-base malleability. We argue that organizational variations in coupling patterns between knowledge elements can be reflected in a spectrum of knowledge-base structures—varying from fully decomposable (the knowledge base is composed of distinct clusters of knowledge elements coupled together with no significant ties between clusters) through nearly decomposable (knowledge clusters are discernable but are connected through cross-cluster couplings) to non-decomposable (no knowledge clusters emerge, as the couplings are pervasively distributed)—and that organizations may differ in the way they use their knowledge because of variations in their knowledge-base structure, rather than because of differences in the knowledge elements themselves. Results show that a nearly decomposable knowledge base increases the usefulness of the inventions generated from it, as measured by patent citations, and also the knowledge base's malleability or capacity for change.
Research Summary: The literature on technological alliances emphasizes that search for knowledge drives alliance formation. However, in conceptualizing technological knowledge, prior work on alliances has not made a distinction between domain knowledge—knowledge that firms possess in distinct technological domains—and architectural knowledge—knowledge that firms possess about how to combine elements from different technological domains. We argue that firms seek partners that are similar in domain knowledge to deepen their knowledge, and partners that are dissimilar in architectural knowledge to broaden their knowledge. Our results indicate that the likelihood of alliance formation increases when two firms are similar in domain knowledge and dissimilar in architectural knowledge. Further, our results show that these effects are positively moderated by the degree of decomposability of a firm's knowledge base.
Managerial Summary: In dynamic environments, companies need to continually deepen and broaden their technological knowledge, and they often look for alliance partners who can provide them that knowledge. For knowledge deepening, companies are more likely to form alliances with those companies that have expertise in similar technological fields. For knowledge broadening, they are more likely to form alliances with those companies that have expertise in the same technological fields, but have different recipes for combining knowledge from those fields. Furthermore, a company with a modular knowledge base is more likely to seek a partner that has expertise in similar technological fields or whose recipes for combining knowledge from different technological fields are different from the recipes it has.
R esearch in strategy has identified and tried to explain four types of rents: monopolistic rents, efficiency rents, quasi rents, and Schumpeterian rents. Building on previous work on political and institutional strategies, we add a fifth type of rent: influence rents. Influence rents are the extra profits earned by a firm because the rules of the game (laws, regulations, and informal rules) are designed or changed to suit it. To aid the analysis of the relationship between institutional context and firm performance and to provide a structure to guide research, we develop a framework with five key components: (a) an identification of the five fundamental problems of a market economy, (b) a typology that describes the five different types of institutions that emerge to solve these problems, (c) the market-ordering mechanisms used by institutions to solve these problems, (d) the common causes of weak institutional performance, and (e) generic strategies used by firms to exploit these weaknesses of an institutional context to enhance firm performance. We highlight potential applications of the framework as well as an illustrative research agenda that can advance the development of theory to explain the emergence and persistence of influence rents.
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