A Knowledge-Based Theory of the Firm - a Problem-Solving Perspective

36 Pages Posted: 7 Mar 2004

See all articles by Jackson A. Nickerson

Jackson A. Nickerson

Washington University in St. Louis - John M. Olin Business School

Todd Zenger

University of Utah

Date Written: January 2004

Abstract

Knowledge-based theorists have developed two primary arguments to explain the existence of firms: one based on avoiding knowledge transfer and the other based on facilitating knowledge transfer. These arguments are not only contradictory, but also fail to predict when hierarchies supplant markets and when markets prevail. This paper develops a knowledge-based theory of governance choice that addresses these shortcomings by explaining how knowledge formation needs, described by various solution landscapes, dictate governance selection. Governance modes of market, authority-based hierarchy, and consensus-based hierarchy are prominently featured in the theoretical analysis.

Keywords: theory of the firm, knowledge management, organizational economics, innovation, organization theory

JEL Classification: D23, L22, L23, O32, O31, L21, L20, J41, L10

Suggested Citation

Nickerson, Jackson A. and Zenger, Todd R., A Knowledge-Based Theory of the Firm - a Problem-Solving Perspective (January 2004). Available at SSRN: https://ssrn.com/abstract=502282 or http://dx.doi.org/10.2139/ssrn.502282

Jackson A. Nickerson

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-6366 (Phone)
314-935-6359 (Fax)

Todd R. Zenger (Contact Author)

University of Utah ( email )

David Eccles School of Business
1655 East Campus Center Drive
Salt Lake City, UT 84112
United States
801 585-3981 (Phone)
801 581-7939 (Fax)

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