Cited by 12,939Innovation and Knowledge ManagementEconomic Theory and InstitutionsOutsourcing and Supply Chain Management

Knowledge of the firm, combinative capabilities, and the replication of technology

Kogut, Bruce, Zander, Udo·1992·Organization Science

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.”

Integrity signals

Registry

Crossref · 10.1287/orsc.3.3.383

Cites

Statistics

Recomputing p-values needs the paper’s full text.

Claims the paper makes

This paper’s full text isn’t openly available, so its claims and self-check weren’t run. The registry and citation checks still apply.

Claims other papers make about this one

Each is checked against this paper’s own text: does it say what the citing paper says it does?

  • 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

Cited by

Sorted by citations

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

About these checks

Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.

Statistics and arithmetic are recomputed, not judged.

Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.

What counts as a claim ›How we measure confidence ›How we check this ›

Are you an author, or do you see a problem with this page? Request a review