Knowledge of the firm, combinative capabilities, and the replication of technology
Abstract
How should we understand why firms exist? A prevailing view has been that they serve to keep in check the transaction costs arising from the self-interested motivations of individuals. We develop in this article the argument that what firms do better than markets is the sharing and transfer of the knowledge of individuals and groups within an organization. This knowledge consists of information (e.g., who knows what) and of know-how (e.g., how to organize a research team). What is central to our argument is that knowledge is held by individuals, but is also expressed in regularities by which members cooperate in a social community (i.e., group, organization, or network). If knowledge is only held at the individual level, then firms could change simply by employee turnover. Because we know that hiring new workers is not equivalent to changing the skills of a firm, an analysis of what firms can do must understand knowledge as embedded in the organizing principles by which people cooperate within organizations. Based on this discussion, a paradox is identified: efforts by a firm to grow by the replication of its technology enhances the potential for imitation. By considering how firms can deter imitation by innovation, we develop a more dynamic view of how firms create new knowledge. We build up this dynamic perspective by suggesting that firms learn new skills by recombining their current capabilities. Because new ways of cooperating cannot be easily acquired, growth occurs by building on the social relationships that currently exist in a firm. What a firm has done before tends to predict what it can do in the future. In this sense, the cumulative knowledge of the firm provides options to expand in new but uncertain markets in the future. We discuss at length the example of the make/buy decision and propose several testable hypotheses regarding the boundaries of the firm, without appealing to the notion of “opportunism.”
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Firms are efficient means by which knowledge is created and transferred.
“In our view, firms are efficient means by which knowledge is created and transferred.8”
From Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation (1993) · cites this paper as Kogut and Zander 1992
Homing costs usually arise from the adaptation, coordination, and communication requirements associated with joining a new platform.
“Nevertheless, research suggests that homing costs usually arise from the adaptation, coordination, and communication requirements (Kogut and Zander 1992) associated with joining a new platform (Cennamo et al. 2018;Kapoor and Lee 2013).”
From Smart Timing for Smart Products? Complementor Multihoming in Nascent Platform Markets (2026) · cites this paper as Kogut and Zander 1992
Knowledge can be characterized along various dimensions, from explicit knowledge to tacit knowledge.
“Knowledge can be characterized along various dimensions (Windhager et al., 2013), from explicit knowledge to tacit knowledge (Kogut & Zander, 1992;Nonaka & Von Krogh, 2009;Nonaka, 1994;Polanyi, 1962).”
From Linking knowledge management, organizational learning and memory (2020) · cites this paper as Kogut & Zander, 1992
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“However, in the context of the dynamic capability discussed in this section, the ability to integrate and combine assets including knowledge is a core skill (Kogut and Zander, 1992; Grant, 1996).”
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“Information includes facts, axiomatic propositions, and symbols" ( Kogut & Zander, 1992: 386).”
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Burt, R. S. (2004) · American Journal of Sociology · doi:10.1086/421787 · Cited by 5,642 · see citing works
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“In distinguishing between the resource-sharing and knowledge-spillover benefits of collaboration, it is important to distinguish between know-how and information (Kogut and Zander, 1992).”
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“1 Syntactic Boundary: Transferring Knowledge The most common label used to describe the movement of knowledge in organizations is “knowledge transfer” (Winter, 1987; Kogut and Zander, 1992; Nonaka, 1994; Szulanski, 1996; Argote, 1999).”
BackgroundWhat Firms Do? Coordination, Identity, and Learning
Kogut, B., & Zander, U. (1996) · Organization Science · doi:10.1287/orsc.7.5.502 · Cited by 3,078 · see citing works
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Recombinant Uncertainty in Technological Search
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Wang, C. L., & Ahmed, P. K. (2007) · International Journal of Management Reviews · doi:10.1111/j.1468-2370.2007.00201.x · Cited by 2,819 · see citing works
“1969; Selznick 1957), organizational routine (Nelson and Winter 1982), architectural knowledge (Henderson and Clark 1990), core competence (Prahalad and Hamel 1990), core capability and rigidity (Leonard-Barton 1992), combinative capability (Kogut and Zander 1992) and architectural competence (Henderson and Cockburn 1…”
InfluentialThe Strength of Weak Ties You Can Trust: The Mediating Role of Trust in Effective Knowledge Transfer
Levin, D. Z., & Cross, R. (2004) · Management Science · doi:10.1287/mnsc.1030.0136 · Cited by 2,740 · see citing works
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Autio, E., Sapienza, H. J., & Almeida, J. G. (2000) · Academy of Management Journal · doi:10.2307/1556419 · Cited by 2,748 · see citing works
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“Such ability has been termed ‘combinative capability’ (Kogut and Zander, 1992), ‘dynamic capability’ (Teece, Pisano, and Shuen, 1997), and ‘architectural competence’ (Henderson and Cockburn, 1994).”
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“According to this theory inventions are very commonly the result of combining or recombining existing elements of knowledge into new syntheses (Henderson and Clark, 1990; Kogut and Zander, 1992; Tushman and Rosenkopf, 1992; Fleming 1999).”
BackgroundModularity, flexibility, and knowledge management in product and organization design
Sanchez, R., & Mahoney, J. T. (1996) · Strategic Management Journal · doi:10.1002/smj.4250171107 · Cited by 2,491 · see citing works
“…with those of an extensive network of component developers, thereby increasing the absorptive capacity of the firm (Cohen and Levinthal , 1990) and its potential for realizing the full combinative capabilities (Bartlett, 1993; Kogut and Zander, 1992) of the firm's current architectural knowledge.”
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“Disadvantages A further point relates to the similarity of knowledge bases and ow they facilitate the integration of ideas from distant realms Kogut and Zander, 1992), because shared languages, common orms and cognitive configurations enable communication (Cohen nd Levinthal, 1990). Incorporating knowledge bases too c…”
BackgroundTechnological acquisitions and the innovation performance of acquiring firms: a longitudinal study
Ahuja, G., & Katila, R. (2001) · Strategic Management Journal · doi:10.1002/smj.157 · Cited by 2,413 · see citing works
“Elements of similar knowledge facilitate the integration of the acquired and acquiring knowledge bases (Kogut and Zander, 1992; Grant, 1996).”
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Jansen, J. J. P., Bosch, F. A. J. V. D., & Volberda, H. (2005) · Academy of Management Journal · doi:10.5465/amj.2005.19573106 · Cited by 2,240 · see citing works
“…addition to prior knowledge resources (e.g., Verona, 1999), units need to develop organizational capabilities, defined as combinative capabilities (Kogut & Zander, 1992), that enable them to synthesize and apply current and newly acquired external knowledge (Eisenhardt & Martin, 2000; Kogut &…”
Organizational Ambidexterity: Balancing Exploitation and Exploration for Sustained Performance
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“At the same time, however, externally acquired knowledge has to be absorbed and integrated to realize its potential (Cohen and Levinthal 1990, Kogut and Zander 1992).”
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Zack, M. H. (1999) · California Management Review · doi:10.2307/41166000 · Cited by 2,181 · see citing works
Perspective: Complexity Theory and Organization Science
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“Subsequently, a great deal of theoretical work began to emerge regarding the types of processes to which resources must be subjected in order to exploit their latent value, such as core capabilities (LeonardBarton, 1992), competences (Fiol, 1991; Reed and DeFillippi, 1990), combinative capabilities (Kogut and Zander,…”
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Wasko, M., & Faraj, S. (2000) · Journal of strategic information systems · doi:10.1016/s0963-8687(00)00045-7 · Cited by 2,267 · see citing works
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Resource Orchestration to Create Competitive Advantage
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Gertler, M. S. (2002) · Journal of Economic Geography · doi:10.1093/jeg/3.1.75 · Cited by 1,974 · see citing works
Ambiguity and the process of knowledge transfer in strategic alliances
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“Winter's (1987) and Kogut and Zander's (1992) work initiated a line of inquiry in strategic management often referred to as the " knowledge-based view of the firm " (e.g., von Krogh et al. 1994, Spender and Grant 1996, Tsoukas 1996, Spender 1996, Szulanski 1996, Gupta and Govindarajan…”
BackgroundInfluentialOrganizational Learning: From Experience to Knowledge
Argote, L., & Miron‐Spektor, E. (2011) · Organization Science · doi:10.1287/orsc.1100.0621 · Cited by 1,995 · see citing works
“An important research question in the area of knowledge transfer is how to manage the tension between facilitating the internal transfer of knowledge within organizations while preventing is external leakage or spillover outside the organization (Kogut & Zander, 1992).”
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“These primarily include perspectives from the resource-based view (Wernerfelt, 1984; Barney, 1991), dynamic capabilities (Teece, Pisano, and Shuen, 1997), evolutionary economics (Nelson and Winter, 1982), and the emerging literature on organizational learning and the knowledge-based view of the firm ( Kogut and Zander…”
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Social Networks, the Tertius Iungens Orientation, and Involvement in Innovation
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“Despite the advantages to moving knowledge inside the firm rather than across firm boundaries (Kogut and Zander, 1992), exchanging, integrating, and creating knowledge can be extraordinarily difficult (Dougherty, 1992; Carlile, 2002).”
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Szulanski, G. (2000) · Organizational Behavior and Human Decision Processes · doi:10.1006/obhd.2000.2884 · Cited by 1,789 · see citing works
“Complex and causally ambiguous knowledge could be inert in which case its transfer will require re-construction and adaptation at the receiving end of the transfer (e.g., Attewell 1992; Kogut & Zander 1992).”
BackgroundOrchestrating Innovation Networks
Dhanaraj, C., & Parkhe, A. (2006) · Academy of Management Review · doi:10.5465/amr.2006.21318923 · Cited by 1,803 · see citing works
“Organizational networks for innovation challenge the conventional wisdom on the boundaries of the firm (Pisano, 1990), given the complexity of sharing tacit knowledge across firm boundaries while developing effective antidotes for opportunistic behavior (Ahuja, 2000; Kogut & Zander, 1992).”
BackgroundA Knowledge Accessing Theory of Strategic Alliances
Grant, R., & Baden-Fuller, C. (2004) · Journal of Management Studies · doi:10.1111/j.1467-6486.2004.00421.x · Cited by 1,936 · see citing works
“(5) Producing a good or service typically requires the application of many types of knowledge (Kogut and Zander, 1992).”
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“While tacit knowledge is clearly an element of the work of occupational communities (Polanyi 1958, 1967; Kogut and Zander 1992), this study demonstrates that the manner in which people communicated impacted the incorporation of knowledge into the work of others.”
BackgroundOvercoming Local Search Through Alliances and Mobility
Rosenkopf, L., & Almeida, P. (2003) · Management Science · doi:10.1287/mnsc.49.6.751.16026 · Cited by 1,651 · see citing works
“Organizations innovate, in part, through combinations of existing and new knowledge ( Kogut and Zander 1992 ).”
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Kraaijenbrink, J., Spender, J., & Groen, A. (2010) · Journal of Management · doi:10.1177/0149206309350775 · Cited by 1,723 · see citing works
“The proposition that the RBV could be considered a new theory of the firm was put on the agenda by Conner (1991) and Kogut and Zander (1992).”
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Knowledge sharing in organizations: A conceptual framework
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“Some authors distinguished between the two terms (e.g., Blackler, 1995; Davenport & Prusak, 1998; Nonaka & Takeuchi, 1995; Pemberton, 1998), whereas others used both terms synonymously (e.g., Kogut & Zander, 1992; Stewart, 1997).”
BackgroundSimilarities and contradictions in the core logic of three strategy research streams
Lengnick-Hall, C., & Wolff, J. A. (1999) · Strategic Management Journal · doi:10.1002/(sici)1097-0266(199912)20:12 · Cited by 265 · see citing works
A model of knowledge management and the N-form corporation
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“Integrative capabilities allow firms to absorb knowledge from external sources and blend the different technical competencies developed in various company departments (Cohen & Levinthal, 1990; Grant, 1996; Henderson & Clark, 1990; 00042.p65 09/29/2001, 4:40 PM379 Kogut & Zander, 1992; Pisano, 1997).”
BackgroundInnovation, organizational learning, and performance
Jiménez, D. J., & Sanz-Valle, R. (2010) · Journal of Business Research · doi:10.1016/j.jbusres.2010.09.010 · Cited by 1,604 · see citing works
“…knowledge, are antecedents of innovation (Baker and Sinkula, 1999; Cohen and Levinthal, 1990; Coombs and Hull, 1998; Darroch and McNaugton, 2002; Hage, 1999; Kogut and Zander, 1992; Leonard-Barton, 1999; Nonaka and Takeuchi, 1995; Nooteboom, 1999; Sørensen and Stuart, 2000; Stata, 1989).”
BackgroundPeng, M. W., & Heath, P. S. (1996) · Academy of Management Review · doi:10.5465/amr.1996.9605060220 · Cited by 1,776 · see citing works
The Future of Resource-Based Theory
Barney, J., Ketchen, D., & Wright, M. (2011) · Journal of Management · doi:10.1177/0149206310391805 · Cited by 1,878 · see citing works
“Landmark work published in 1992 and 1993 further advanced and delineated key elements of the RBV (Amit & Schoemaker, 1993; Kogut & Zander, 1992; Mahoney & Pandian, 1992; Peteraf, 1993).”
BackgroundCorporate Governance and Competitive Advantage in Family–Controlled Firms
Carney, M. (2005) · Entrepreneurship Theory and Practice · doi:10.1111/j.1540-6520.2005.00081.x · Cited by 1,512 · see citing works
Resolving the Capability–Rigidity Paradox in New Product Innovation
Atuahene‐Gima, K. (2005) · Journal of Marketing · doi:10.1509/jmkg.2005.69.4.61 · Cited by 1,513 · see citing works
Knowledge management, innovation and firm performance
Darroch, J. (2005) · Journal of Knowledge Management · doi:10.1108/13673270510602809 · Cited by 1,623 · see citing works
“A widely held view has been that intangible knowledge is likely to be harder for competitors to access and copy and so this type of knowledge provides greater potential for developing competitive advantages (Foss, 1996; Kogut and Zander, 1992; Nonaka and Takeuchi, 1995).”
BackgroundStrategic flexibility in product competition
Sanchez, R. (1995) · Strategic Management Journal · doi:10.1002/smj.4250160921 · Cited by 1,519 · see citing works
Chen, C., & Huang, J. (2008) · Journal of Business Research · doi:10.1016/j.jbusres.2007.11.016 · Cited by 1,542 · see citing works
The institutional environment for multinational investment
Henisz, W. (2000) · Journal of Law, Economics, and Organization · doi:10.1093/jleo/16.2.334 · Cited by 1,476 · see citing works
“In this case, in countries with relatively low political hazards, the dominant effect of high technological capabilities is to provide incentives for partnering with other Žsimilar firms so as to foster learning and capability development Kogut and Zander, 1992, .1993, 1996 .”
BackgroundArriving at the high-growth firm
Delmar, F., Davidsson, P., & Gartner, W. B. (2003) · Journal of Business Venturing · doi:10.1016/s0883-9026(02)00080-0 · Cited by 1,481 · see citing works
Tacit Knowledge, Organizational Learning and Societal Institutions: An Integrated Framework
Lam, A. (2000) · Organization Studies · doi:10.1177/0170840600213001 · Cited by 1,448 · see citing works
Unpacking Organizational Ambidexterity: Dimensions, Contingencies, and Synergistic Effects
Cao, Q., Gedajlovic, E. R., & Zhang, H. P. (2009) · Organization Science · doi:10.1287/orsc.1090.0426 · Cited by 1,461 · see citing works
“One result of such a deeper understanding is that the firm will become more capable of initiating various reconfigurations of existing knowledge and resources already under its control, capabilities associated with novel discoveries in products and markets (Fleming, 2001; Kogut & Zander, 1992).”
BackgroundInvestigating the factors that diminish the barriers to university–industry collaboration
Bruneel, J., D’Este, P., & Salter, A. (2010) · Research Policy · doi:10.1016/j.respol.2010.03.006 · Cited by 1,400 · see citing works
“14 which is by definition difficult to communicate and to trade in markets (Kogut and Zander, 1992).”
BackgroundGalunic, D. C., & Rodan, S. (1998) · Strategic Management Journal · doi:10.1002/(sici)1097-0266(1998120)19:12 · Cited by 1,434 · see citing works
Entrepreneurship and Economic Growth
Audretsch, D. B., Keilbach, M., & Lehmann, E. E. (2006) · doi:10.1093/acprof:oso/9780195183511.001.0001 · Cited by 1,411 · see citing works
Hitt, M. A., Dacin, M. T., Levitas, E., Arrègle, J.-L., & Borza, A. (2000) · Academy of Management Journal · doi:10.2307/1556404 · Cited by 1,361 · see citing works
A knowledge-based theory of the firm—The problem-solving perspective
Nickerson, J. A., & Zenger, T. R. (2004) · Organization Science · doi:10.1287/orsc.1040.0093 · Cited by 1,342 · see citing works
“essentially avoid knowledge transfer (Demsetz, 1988; Conner, 1991; Conner 1996), emphasizing the firm’s capacity to exercise authority in directing others’ other view claims that hierarchies exist instead to facilitate knowledge transfer ( Kogut and Zander, 1992; 1996; Nahapiet and Ghoshal, 1998), emphasizing th”
BackgroundInnovation objectives, knowledge sources, and the benefits of breadth
Leiponen, A., & Helfat, C. E. (2010) · Strategic Management Journal · doi:10.1002/smj.807 · Cited by 1,341 · see citing works
“Most arguments regarding the benefit of complementary knowledge sources for innovation success have to do with the idea that innovation proceeds through recombination of existing knowledge (see e.g., Kogut and Zander 1992; Nonaka 1994).”
BackgroundRodan, S. A., & Galunic, D. C. (2004) · Strategic Management Journal · doi:10.1002/smj.398 · Cited by 1,320 · see citing works
Smith, K. G., Collins, C. J., & Clark, K. D. (2005) · Academy of Management Journal · doi:10.5465/amj.2005.16928421 · Cited by 1,327 · see citing works
“The second stream has been more dynamic, emphasizing how knowledge, and especially new knowledge, leads to the generation of novel organizational outcomes, such as new products (Kogut & Zander, 1992).”
BackgroundVan Wijk, R., Jansen, J. J. P., & Lyles, M. A. (2008) · Journal of Management Studies · doi:10.1111/j.1467-6486.2008.00771.x · Cited by 1,335 · see citing works
- Authors
- Kogut, B., & Zander, U.
- Affiliations
- University of Pennsylvania (US)
- Stockholm School of Economics (SE)
- Venue
- Organization Science
- Published
- 1992-08
- Volume
- 3
- Issue
- 3
- Pages
- 383-397
- ISSN
- 1047-7039 (ISSN-L)
- 1526-5455
- OpenAlex
- W2179492332
- Cited by
- 12,939
- References
- 0
- Citations by year
- 2026: 312 · 2025: 276 · 2024: 330 · 2023: 350 · 2022: 467 · 2021: 499 · 2020: 524 · 2019: 459 · 2018: 559 · 2017: 539 · 2016: 541 · 2015: 667 · 2014: 630 · 2013: 770 · 2012: 740
- FWCI
- 127.03
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Organization Science (publishedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Innovation and Knowledge Management
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Theory and Institutions
- Social Sciences › Business, Management and Accounting › Management Information Systems › Outsourcing and Supply Chain Management
- Keywords
- embedded knowledge, transaction costs, imitation, firm boundaries, organizational learning, know-how, employee turnover, innovation, cumulative knowledge
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