Managerial Authority When Knowledge is Distributed: A Knowledge Governance Perspective

Abstract

A critical knowledge governance problems concern the consequences the use of the governance mechanism of 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 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, providing 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.2

The Organizational Economics of Organizational Capability and Heterogeneity: A Research Agenda

“…Specifically, it is a denial of a meaningful shared domain of application. Instead, the additive nature of the respective theories suggests that they address different explanandum, heterogeneity and boundaries respectively, and thus they are not really theoretical rivals (Foss and Foss, 2000;Masten, 1993).…”

Organizational Routines

“…How things are done in organizational settings, both in terms of structure and overall efficiency or creativeness, is a function of who is doing. Even in highly "routinized" environments, the origins of heterogeneous routines are fundamentally individual-level (Foss and Foss 2000). While capabilities-based work focuses on exogenous sources of advantage -environment, situation etc.…”

“…Brennan and Buchanan, 1985;Elster, 2000). This gives way to a two-stage process where (for example) standard operating procedures and rules of interaction are first created and specified by organizational founders or managers, and then individuals interact given these collective structures or constraints, perhaps gradually changing those procedures and rules (Foss and Foss 2000). 15 We have argued that capabilities work in general rules out a priori the possibility that heterogeneity is located at the individual level.…”

“…previously (e.g.,; Foss and Foss, 2000;Foss, 2003;Williamson, 1999). In fact, proponents of the notion of routines have often admitted to the definitional difficulties (e.g., Cohen et al, 1996) and terminological anarchy (e.g., Dosi, Nelson and Winter, 2000b) that surround the concept.…”

Deciding who’s in charge

“… 4. Foss and Foss (2009) discuss the many and varied uses of the term “distributed knowledge” in the management literature and as a result, the inconsistent claims as to its effects. …”