Patents disclose at least part of your know-how. They are expensive to file and expensive to maintain. They can be difficult to police and can be problematical in a court challenge. With every invention there is the option on non-disclosure with a preference for relying on know-how.

In operation of highly capital intensive industries there is rarely a need to patent an invention of an improvement in operation. The invention is best kept as know-how within the company.

The position with a consumer item is rather different. A new-comer can buy, examine, and copy the latest CPAP device and mask. He can not copy the software for its operation, nor evaluate how and why the software was developed to do the job it does. Management must exercise its “gut feel” for whether this knowledge should be protected by patent, or copyright, or left as undisclosed “know-how”.

Again, technology is changing quite rapidly. The success of new designs relies heavily on the know-how of how the current designs arose. Without that knowledge an intending competitor might “reinvent the wheel”. Know-how can extend to apparently quite small detail. For example, why does CPAP tubing have the dimensions in common use. A new entrant might see benefit in less cumbersome tubing.

Know-how extends beyond the production of a good. The good must be marketed. The more sophisticated and more specialised the market, the more know-how is required to set up a marketing infrastructure.

An example of how an experienced and successful manufacturing company acquired know-how in the specialist area of CPAP manufacture is given in Origins. I am not suggesting that Fisher & Paykel deliberately set out to acquire know-how of the CPAP industry. As contractors for the supply of humidifiers they could not help but obtain know-how that gave them a firm basis on which to build on their own technology to become a competitor.

I believe a classic example in management circles is given by Honda. They had the engineering expertise in motorcycle production to build mechanically superb small cars. They lacked design expertise to make them attractive to the European market. In this case I have read that they deliberately sought contracts to build a small car badged as a Rover, to get access to European design expertise.

In summary, know-how can not be measured. Whether you have it or not determines whether or not you will succeed.

.05 http://professor-murmann.info/index.php/weblog/teaching

Create a copy of this weblog, call the url
http://professor-murmann.info/index.php/courses/sm

Please replace on the page

Teaching > Weblog

with
Teaching > Courses > AGSM MBA (Executive) Strategic Management Year

Question: Is this going to be a single entry or a classic weblog? I’ve created the blog, but what about archives, etc.?

Answer: yes
Please documentexactly how I would do this so that I can do it next time.

1. There is a error with the display of profiles
a. Go to working paper page.
http://www.economic-evolution.net/index.php/weblog/workingpapers/
b. click on the linked name of the first paper.

Joonas

It takes you to

http://www.economic-evolution.net/index.php/member/profile/170/
but should take you to

http://www.economic-evolution.net/index.php/member/170/

Please fix the same problem at etss.net

This is still a problem with EE 1.6’s version of the wiki.

5. EEpedia.no
For To-do on Norwegian wiki, see its sandbox.

Sekou, please enter here your material.

• Organizational change and development
• Sketch of a framework

Organizational change and development

Evolutionary economists have approached the question of regularly appearing patterns of growth and development by considering how firm organizations coordinate and combine resources in a dynamic market environment (Nelson and Winter 1982; Langlois and Robertson 1995; Teece, Pisano and Shuen 1997; Rathe and Witt 2001). Entrepreneurs play an important role in this process. They are one crucial source of novelty as they define innovative ways of using the available resources (Witt 1998). Developing a business conception is a cognitive process in which the entrepreneurs build an understanding of the products or services to be offered, and of how to coordinate their making. Considering this entrepreneurial function, the evolutionary approach explicitly acknowledges that firms differ with respect to the accumulated knowledge and competences (Penrose 1959; Nelson 1991). This also explains the heterogeneity across firms, even if they operate under very similar market conditions. While some firms continuously grow over a long period of time and become large corporations, many firms stagnate at a certain level, or even fail in their attempt to grow and go bankrupt.

Yet research has also shown that, despite all differences, there are some patterns in the development process that most firms have in common. For example, Witt (2000) argues that companies regularly reach a critical phase as they grow. A growing number of employees render it increasingly difficult for an entrepreneur to maintain a sufficient level of communication and interaction among the firm members. Consequently, the entrepreneurs and employees increasingly diverge in their understanding of the firm’s business conception. Developing different cognitive frames about the meaning of the business conception, in turn, increases the variations of the employees’ behavior. Thus, effective coordination declines. Such growth thresholds are a fundamental problem because the entrepreneurs have not only to retain cognitive coherence within the established organizational structure. In addition, they have to transform the growing firm toward another organizational structure to operate profitably. This pressure to change the prevalent mode of coordination produces specific patterns of development. Witt (2000) argues that the newly adopted organizational structure, i.e. the mode of coordination, is contingent on the mode of coordination in the early, pre-threshold phase of the firm. The existence of these contingencies may explain the emergence of specific developmental pattern.

This line of arguments suggests that the organizational structure is systematically affected throughout various phases of the firm’s development. Yet it is still unclear to what extent the firm growth affects the transformation of the organizational structure, and how the transformation process occurs. It is even more unclear whether there is any regularity in a firm’s development process. Therefore, the following questions may be considered in a research agenda in evolutionary economics. What exactly happens to the organizational structure when a firm grows? Does growth systematically change some organizational features? Why and how do firms differ in their development patterns? Examining the transformation processes along these questions may detect the regularities of organizational change that occur during the firm’s life span.

Sketch of a framework

To address these research questions, an analytical framework needs to specify different aspects of six categories that are central in the development process of firms: 1) the growth, 2) the growth thresholds, 3) the initial mode of coordination, 4) the post-threshold mode of coordination, 5) organizational change, and 6) the business conception. The starting point for an empirical investigation of the developmental process is to conceptualize and measure firm growth and emerging growth thresholds. Different variables to identify growth and growth crises are listed in the table below.

The mode of coordination in the start-up phase and the post-threshold mode of coordination constitute the next two important conceptualization categories. To analyze the mode of coordination, data are required for two specific aspects of the coordination regime. These are the cognitive coherence on the one hand and the organizational structure on the other hand. First, cognitive coherence is difficult to identify directly. It is also difficult to specify the degree of coherence within an organizational context. However, this conceptualization category is central to understand the emergence of the organizational crisis and the firms’ transformation into another organizational phase of the development process. Cognitive coherence may be approximated by identifying the characteristics of the human resource management practices, e.g. the extensive involvement of employees in problem-solving, the regular labor-management communication and information sharing, and job security pledges vs. close supervision, strict work rules, narrow job responsibility, and no practice of information and frequent communication. Another way to measure the degree to which firm members share the business conception is to closely assess the relationship between the entrepreneurs and the firm members, or the relationship among the members of the top management. Second, considering the organizational structure, the number of hierarchies or the extent to which the entrepreneurs delegates responsibilities to other firm members are variables that would be relevant to understand the mode of coordination in the entrepreneurial phase.
Variables to identify organizational change are closely connected to the conceptualization of the initial and post-threshold mode of coordination. For example, changes in the number of hierarchies, the extent of responsibilities delegated to organizational subunits, or changes in the number of divisions indicate organizational change. After adopting a post-threshold mode of coordination, a firm may also experience further events in its development process. Thus, an analysis of the firms’ development process may include variables such as post-threshold growth and performance, and mergers and acquisitions.

Finally, assessing the development process of firms needs a conceptualization of the entrepreneur’s business conception. Understanding the business conception requires to collect information on the content of the business conception. This includes data on the entrepreneurs’ innovative ideas, and on how they plan to allocate and coordinate the resources within their firms to provide innovative products or services. The table below gives an overview for conceptualizing and measuring the six categories central in the firms’ development process.

Variables for Comparing Firms

Download Tables as Word File File:Table 2.doc

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