Knowledge Creation and Control in Organizations

46 Pages Posted: 30 Aug 2002 Last revised: 5 Jun 2022

See all articles by Diego Puga

Diego Puga

IMDEA Social Sciences; University of Toronto - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Daniel Trefler

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

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Date Written: August 2002

Abstract

The incremental innovations that underly much of modern economic growth typically involve changes to one or more components of a complex product. This creates a tension. On the one hand, a principal would like an agent to contribute innovative components. On the other hand, ironing out incompatibilities between interdependent components can be a drain on the principal's energies. The principal can conserve her energies by tightly controlling the innovation process, but this may inadvertently stifle the agent's incentive to innovate. We show precisely how this tension between creating knowledge and controlling knowledge shapes organizational forms. The novel concepts introduced are illustrated with case studies of the flat panel cathode ray tube industry and Boeing's recent location decisions.

Suggested Citation

Puga, Diego and Trefler, Daniel, Knowledge Creation and Control in Organizations (August 2002). NBER Working Paper No. w9121, Available at SSRN: https://ssrn.com/abstract=327147

Diego Puga (Contact Author)

IMDEA Social Sciences ( email )

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University of Toronto - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

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Daniel Trefler

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-4190 (Phone)
416-978-6713 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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