Managerial Authority When Knowledge is Distributed: A Knowledge Governance Perspective

SMG Working Paper No. 1/2008

41 Pages Posted: 20 May 2008

See all articles by Kirsten Foss

Kirsten Foss

Copenhagen Business School - Department of Industrial Economics & Strategy (IVS)

Nicolai J. Foss

Copenhagen Business School - Department of Strategy and Innovation

Date Written: January 3, 2008

Abstract

A critical knowledge governance problem concerns the consequences for the use of the authority if the knowledge that is essential in a work setting is partially unknown to the person who is to exercise authority. Is it possible to rationally direct work and activities and efficiently utilize knowledge under such conditions? Recently, many scholars have given negative answers to this question, arguing that authority relations are becoming strained by the increasingly distributed nature of knowledge in and between firms. We analyze this argument on the basis of definitions of authority and distributed knowledge. This allows us to show that - while intuitively appealing - the argument that authority cannot be an efficient coordination mechanism in the presence of distributed knowledge is at best problematic. The argument is based on the flawed inference that because the holder of authority is ignorant about some of the knowledge held by employees, he cannot rationally direct them. However, it is correct that the quality of centralized direction (planning, authority) may be compromised by distributed knowledge, leading to choices of other governance mechanisms and structures.

Keywords: Distributed knowledge, authority, knowledge governance, problem-solving

Suggested Citation

Foss, Kirsten and Foss, Nicolai J., Managerial Authority When Knowledge is Distributed: A Knowledge Governance Perspective (January 3, 2008). SMG Working Paper No. 1/2008, Available at SSRN: https://ssrn.com/abstract=1080179 or http://dx.doi.org/10.2139/ssrn.1080179

SI CBS (Contact Author)

Copenhagen Business School - Department of Strategic Management and Globalization ( email )

Kilevej 14
Frederiksberg, 2000
Denmark
+45 3815 3030 (Phone)

Kirsten Foss

Copenhagen Business School - Department of Industrial Economics & Strategy (IVS) ( email )

Howitzvej 60, 6
Frederiksberg, DK-2000
Denmark

Nicolai J. Foss

Copenhagen Business School - Department of Strategy and Innovation ( email )

Kilen
Frederiksberg, 2000
Denmark

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