Transcript of UPPSALA PAPERS IN ECONOMIC HISTORY
1989
I
Interest in the role of knowledge in societal development is
growing fast.* Towards the end of the 1970s the importante of human
capita1 in economic growth was already the subjett of lively
discussion, and today a knowledge perspective is being applied to
even more wide- ranging changes. The knowledge society is a term
now frequently adopted to describe this development.
Growing Service Input There are several signs that the foundations
of the industrial mode of production are beginning to fail;
traditional goods production is being automated, the service sector
is growing, and “human capital” is coming to mean more for the
economic system than real capital. More people tend to be engaged
in services, i.e. in an economic exchange that involves immediate
consumption and precludes the kind of stock-kee- ping
characteristic of the trade in goods.
Fint, the production of services itself has expanded substantially.
Many tasks previously performed in the home have been transferred
to the open labor market. Medieal care, education and social
welfare are activities which engage avery largesegment of the labor
forte today. Setondly, large companies have been investing
increasingly in know- ledge-intensive services, R&D activities,
banking operations, market- ing, education and training. Thirdly,
the service element is increasing even on the shop floor. The
borderline between what is manual labor and what is services is
becoming blurred. Those who work closest to production are
responsible for supervision and control, servicing, re- adjustments
and programming. FourthEy, the presence of “knowledge
*This article is based on Eskil Ekstedt’s book Human Copiful in M
Age of Tranifion - showledge Development and Corporate RenavaL
Allmänna Förlaget 1988. Dr. EskilEkstedt is a researcher at the
Swedish Council for Management and Work Life Issues (FA-rådet) and
lecturer at the University of Uppsala.
1
I 2
companies” is becoming increasingly important in the production ap-
paratus. These companies supply the large torporations and the
various publit agencies and other institutions with the knowledge
they need to solve problems of various kinds.
The growing element of services often means that the knowledge
factor becomes increasingly important and also changes in
character. Things have gone so far that the knowledge factor, the
human capita& Will gradually take over the influential position
previously enjoyed by real capita1 when it comes to designing the
organization of production - a tendency that is being reinforced by
the greater flexibility of real capita1 today. Machines such as
computers can be increasingly control- led by the user. And the
user’s knowledge is becoming more important to production planning
than the knowledge built into the machine by the design engineer.
Real capita1 is losing its “work-scheduling” role. The implications
of this shift in forms are considerable: the size of workplaces is
being affected, ownership arrangements Will change, leadership and
reward systems Will be altered to fit the new conditions. The
substantial element of human capita1 Will also affect the corporate
capacity for adaptation and renewal. How is the build-up and
develop- ment of knowledge organized? What is its direction and
focus? These and similar questions Will greatly affect the process
of renewal.
The growing element of service talls for changes in the nature and
structure of knowledge. When most service functions (chicfly educa-
tion and care) were performed in the home, the knowledge involved
was based on experience; the younger generation learned from the
older. Now that most of the traditional domestic tasks have been
transferred to the labor market where they are run on institutional
lines, the knowledge has also become institutional. There has been
a massive increase in education for the “caring professions” -
child care, nursing, teaching, etc.
Evolution of the Knowledge-Intensive Company How do companies
maintain and develop their knowledge in this new situation. This is
the question to be addressed below. The expansion of the modern
knowledge Company is an important feature in this picture. Any
discussion is complicated, however, by the loose way in which the
concept of the knowledge company has been used. By comparing
the
I 3
knowledge Company with other types of companies, 1 hope to be able
to remove some of the uncertainty. However, we can consider some of
the general characteristics of the knowledge companies, before
trying to establlsh their boundaries more exactly.
Naturally all companies possess and have access to knotledge. But
the extent of this knowledge (its intensity), its direction and
focus, and the way in which it is embedded in the Company all
differ considerably. We thus have good grounds for classifying
companies by reference to the knowledge factor.
People are the core of the knowledge Company, much as they are in
certain traditional institutions such as theaters or universities.
The “real” value of the knowledge Company cannot be inferred from a
traditional balante-sheet: its employees represent its value. They
hold the real power in the Company, and are frequently offered
part-owner- ship in recognition of this fatt.
Capita1 requirements may be quite modest in the knowledge com- pany
to begin with. In the long run, however, a great deal of capita1
may be needed for activities such as R&D, training and
marketing. The necessary development of various kinds of overhead
functions may also explain why some knowledge companies grow very
big indeed. In order to maintain and develop knowledge, special
departments have to be created. This is more difficult in small
companies in which everybody is engaged in the running of
day-to-day operations. An underlying conflict between short-term
and long-term requirements can be glimpsed here. For long-term
survival large comprehensive invest- ments may be necessary. A
certain preparedness must be built into the organization. The kind
of market-oriented organizational arrange- ments commonly
prevailing in small companies have to make way for the
administrative arrangements that have a much greater role in large
companies.
The knowledge companies which have been first to expand are those
which supply services to industrial companies and publit agencies.
They often start as the offshoot of an industrial company. People
with special knowledge, perhaps in the computer field, establish a
consult- ancy firm of their own. It thus becomes possible for them
to use their knowledge in several companies at the same time. The
possession of ample human capita1 is inherent to the very concept
of the knowledge company. The main and almost exclusive value of
these companies lies in the knowledge possessed by their members.
The knowledge compan-
4
ies are so idiosyncratic as to be quite distinct from other kinds
of companies: their special nature obviously distinguishes them
from industrial companies, but they differ from other service
companies as well.
If we tontent ourselves with defining the knowledge company as a
company possessing a lot of knowledge, then the category Will be
extremely capacious. It Will range from craft shops and skilled
trades, such as hairdressing salons and carpet layers, to
professional firms such as lawyers and architects. And given such a
broad definition, it is no longer so certain that the “knowledge
sector” has expanded greatly in recent years: there have always
been craftsmen and professionals of various kinds who have
established units of their own.
In Ihnskx.zpsf~retaget (The Knowledge Company), Sveiby and Ries-
ling suggest that traditional ownership based on finantial capita1
Will decline as an instrument of power. It is my view, however,
that new “game rules” or new ways of controlling the knowledge
capita1 Will be discovered on the financing side. But what is
certain is that control over the knowledge capita1 Will become
increasingly important.
The knowledge companies differ from other service-producingcom-
panies. In some companies such as hamburger chains, for example,
the service itself has become an industry. This type of Company is
charac- terized by the large scale and mass-production techniques
of industrial production. Manual production has been routinized. In
banks, on the other hand, developments have moved in another
direction. Routine impersonal tasks have been taken over by plastic
cards and machines, leaving the banks with more time to attend to
their customers. Each tustomer can benefit from the knowledge
possessed by the staff, and the bank thus qualifies as a knowledge
company. It is characteristic of the knowledge company that it
solves complex and often varied prob- lems. Characteristic of the
“service company” is that it solves simple and often identical
problems.
Consequently the staff of a knowledge company is always know-
ledgeable, which need not be the case in a service cumpany. The
service company provides a limited number of services and depends
on its well-functioning organization. The knowledge company sells a
more differentiated range of solutions, which must necessarily be
customer- specific. An excellent example of this is medieal
treatment. The cus- tomer/patient visits the doctor with a problem.
Not until the doctor has
made a diagnosis can there by any question of offering a service or
a good - and even then usually in a unique tustomer- specific
form.
Many companies and organizations (such as banks, hospitals and
insurance companies) are engaged in the production of both services
and knowledge. At the same time a combination of service, goods and
knowledge production is also becoming more tommon in the large
industrial torporations. Obviously this must make heavy demands on
control and management, sinte the production of knowledge is hardly
likely to be successful in a formal industrial organization. A
division of labor is sometimes introduced, whereby certain people
are engaged in increasingly routinized short-term tasks, while
others concentrate on unique long-term problems. It is this
division that often provides the basis for a breakaway and the
establishment of a separate Company.
The knowledge company also differs quite clearly from theindustrial
Company. In industrial companies real capita1 always counts fora
great deal, although naturally this does not mean that knowledge is
lacking in these companies. On the contrary. Sometimes the human
capita1 may be more extensive and above all more advanced than in
the knowledge companies. But in the industrial companies the
knowledge is always tied up with large amounts of real
capital.
The knowledge companies also differ in some respects from the high-
technology companies. Common to both types of Company is their high
knowledge intensity. But in the high-technology companies the
knowledge is always associated in some way or another with advanced
technology. Thus the knowledge in the high-technology companies is
very largely embedded in real capital, to use an expression which
Will be explained more fully below.
It is not easy to describe the high-technology Company or the high-
technology industry in unequivocal terms. The main problem is that
what is regarded as high technology at one time may be regarded
later as “mature” or even obsolete. Computers and electronics are
regarded as a high-tech industry today, but may not be tomorrow. It
must be possible to find a more general definition of high
technology, however. We could perhaps start by saying that a
high-technology Company (or industry) is an organization constantly
in need of a rich flow of new technical knowledge. By “new
knowledge” 1 mean knowledge close to the frontiers of science. Once
a company’s constant need for new knowledge disappears, it no
longer qualifies as high-tech. This defini- tion implies that in
the high-technology Company basic research (pub-
6
lic or private) and practical application must always be very close
to one another. It is also typical of the present-day high-tech
company that its advanced technology is associated with the
production of both services and goods. An obvious example of this
intertwining is provided by the information sector.
Thus knowledge-handling is of great importante to the high-tech-
nology companies. They must be able to develop, receive and exploit
knowledge. The corporate organization must allow for research,
development work, and the scanning and monitoring of new tech-
nology, so that the company can retain its position on the
technological frontier. It must also permit investment in training
and development or a recruitment system that promotes the rapid
spread and expioita- tion of the new technology. In other words
these companies must be constantly and actively prepared for
change, maintaining a capacity to hold their own in the future.
They must be able to understand and adapt to developments that lie
beyond the bounds of the generally known and to deal with
uncertainty of a very complicated kind.
The high-technology companies must also have access to advanced
real capital, i.e. advanced knowledge embedded in machines. Thus
our definition of different types of companies takes account of
knowledge- intensity and capital-intensity. The knowledge-intensive
companies thus include high-technology companies in which a large
proportion of the knowledge is embedded in real capita1 (and its
technology), and knowledge companies in which the knowledge is
embedded in human capita1 (the individual and/or the organization).
The definitions dis- cussed above are summarized in the following
figure.
Figure 1. ‘löpes of companies
Low real capita1 tntensity High ren1 capita1 intensity
Low knowledge intensity
7
The knowledge structure differs quite dramatically in the various
types of companies, largely due to the way in which the knowledge
is embedded in the company. For the sake of simplicity we can
envisage three ways in which knowledge can be attached to a
Company: it can be embedded in the real capita1 (the machines), in
the organization (the company as such) or in the individuals who
make up the Company.
In the knowledge companies, knowledge is embedded in the organi-
zation and/or the individuals. Knowledge accumulates partly as a
result of experience gained from the work itself and partly through
knowledge transfer. In traditional craft shops, where the knowledge
consists of advanced skills, experiental knowledge predominates.
Here the cus- tomer is often also the final tonsumer. In modern
knowledge compan- ies such as computer and engineering firms much
of the knowledge is institutionally acquired through knowledge
transfer. In this case the customers are generally other companies
or institutions. In service companies knowledge is almost
exclusively embedded in the organiza- tion, whereas in traditional
industrial companies and high-technology companies it is largely
embedded in real capita1 (machines).
Thus the knowledge company can be characterized as follows: first,
its capita1 consists predominantly of human capital; setondly,
there are heavy demands on the knowledge of those who work in it;
thirdly, the company sells or deals in unique services, or possibly
goods in combi- nation with services.
It is extremely difficult to determine the number of knowledge
companies, partly because of the vagueness of the concept and
partly because of the lack of statistics. In the official
statistior present-day knowledge companies are probably included
under the rather indeter- minate heading “business services”,
although this also includes busi- nesses such as banks. In Sweden
the number employed in this sector as a whole has risen by a good 4
% in the last few years. Between 1970 and 1982 growth in the
“consultancy sector” was 4.2 % per year, in the R&D sector 4.1
%, and in the culture and information sector 3.5 %. At the same
time of course the number engaged in industry has been falling.
During the same period the number of data centers, which are
included under “business services”, has increased by 206 %.
There is also some indication that traditional knowledge companies
(craft-oriented, experience-based) have begun to expand. Consump-
tion patterns have changed in favor of esthetic and person-specific
consumption (see Solveig Wiktrom; Ulf Elg & Ulf Johansson
“From
8
the Consumption of Necessities to Experience-Seeking tion).
Study of Companies in Three Industries In my book Human Capita1 in
an Age of i’Yansition -
Consump-
fiowledge Development and Corporute Renewal 1 studied the direction
and organ- ization of the acquisition and development of knowledge
in three industries. 1 started with the capital-intensive and
traditional forest industry. 1 then compared these
capital-intensive companies with the computer companies which have
been springing up everywhere over the last few years. A typical
feature of this setond industry is its heterogeneity. Products and
organization can both vary enormously. But what is interesting in
our present tontext is the high knowledge intensity, or the new
forms of knowledge.
Lastly 1 studied building firms. These exist in a traditional
branch of industry that is characterized by low capita1 intensity.
What is the role of the knowledge dimension in corporate renewal in
this labor-inten- sive industry? Is there no knowledge-development
unless something is done to change the technical conditions, or
does it assume quite other forms? Is another kind of knowledge
being developed?
It can be seen from the extensive empiri& investigation
reported in the book that the organization and direction of
knowledge-develop- ment differ greatly between these three
industries. Common to them all, however, is the prime importante of
knowledge-development aimed at influencing existing processes.
Perhaps the direct finantial control systems adopted in most
companies today serve to reinforce this type of investment for
immediate returris. ‘Raining and instruction in coping with new
machines and new technology also appear to be a major factor. The
introduction of computers seems to have been particularly
important. The large forestry companies are characterized by highly
diversified knowledge-development, which has been institu-
tionalized in various ways. Companies invest in R&D, they
cultivate contacts with the state educational system, they
encourage personnel development, they stan their environment, and
so on.
The builders are fairly single-minded in their focus on the
concrete work process. That is where knowledge is generated and
where person- nel development occurs; knowledge based on experience
is valued most
9
highly. Many people in the building industry are still somewhat
skep- tieal about any general learning that smacks of the
classroom.
In the computer companies the more general and formalized type of
teaching is combined with learning on the job. In these companies
there is an evident conflict between the short-term profit
perspective and the desire to acqulre more knowledge.
The computer firms definitely qualify as knowledge companies. Here
institutionally acquired knowledge predominates. Even the building
firms (contractors), however, have quite a high knowledge
intensity, but in their case it is largely based on experience.
Adiscussion of knowledge-development in building firms can
therefore help to illustrate the operation of this process in
traditional knowledge com- panies.
How Knowledge is Embedded in the Company The organization of
production also has a decisive impact on the way the knowledge is
embedded in the company. It may be embedded in the real capita1
(Le. the machines), in the organization itself, or in the
individuals of which this is composed. In most companies examples
of all these arrangements can be found, but the emphasis on one or
the other varies greatly between the capital-intensive, the
labor-intensive and the knowledge-intensive companies. This is the
most important reason why the knowledge structure assumes such
different shapes in the companies studied.
In the traditional industrial companies and particularly in the
for- estry companies, a large proportion of the knowledge is
embedded in the machines. The production result is much the same,
whoever is “running” the machines. “Preprogrammed knowledge”
determines most of these companies’ operations. There has been some
modifica- tion in this picture over the last few years, as the
emphasis on market and environmental knowledge, and on personnel
development, has grown.
In the building industry the emphasis is quite different. Real
capita1 plays an insignificant role here, and knowledge tends
rather to be embedded in the organization. People have access to
the relevant knowledge exclusively through their ties with the
organization, and ties of this sort are acquired only after several
years spent working in the
10
industry and learning how the different bits of the process hang
to- gether. Not until then do people become fully fledged members
of the “gang”. People working in the building industry generally
have to start by doing the simplest tasks at the lowest levels in
the hierarchy, whence they can gradually rise. A great deal of
organized knowledge is unar- ticulated and mute (tacit) knowledge,
that outsiders often cannot even see. But for the initiates this
knowledge provides guidarme and moti- vation. Perhaps we can
campare it with the kind that used to exist in the medieval guilds,
and that made that system so strong and enduring. The individual’s
knowledge was an intrinsic part of an organization, in which the
individual himself could easily be replaced. Recently, how- ever, a
certain fragmentation can be observed in the building organi-
zation with a consequent shift in the location of knowledge, which
is now more often associated with the individual. This means that
some people can break away from the organization to establish their
own companies. The number of consultancy firms in the industry has
grown.
In computer companies knowledge is largely embedded in the in-
dividual. As organizations these companies are thus rather weak;
they have to make themselves attractive in order to keep their
members, who also represent their knowledge capital. One reason for
their weakness is that a great deal of their knowledge has been
accumulated and developed outside the Company. Recruits are very
well-educated. They rarely have any difficulty in finding work
somewhere else. And they can easily take their knowledge with them.
For this reason the computer companies try in various ways to embed
the knowledge in their own organizations. Employees are sent on
long courses, which include a major portion of indoctrination. The
companies also try to “take possession of’ their products, so as to
link them with the Company rather than the programmer or tonsultant
who does the job. Manage- ment also tries to standardize certain
tasks so that these can be some division of labor: if several
people are involved in a job together, a dependence relationship is
established between them and the organi- zation gains in strength.
Reorganization along project limes, rather like the building
industry, also helps to tie knowledge into the organization in a
way that is not possible so long as each employee performs his
tasks independently.
Very little knowledge is embedded in the actual machines (the
computers) because these are so flexible in themselves. The prepro-
gramming is substitutable, and the flexibility of the software is
also
11
often considerable. The computer is thus largely controlled by the
programmer and the user. It is their knowledge that is vital.
Thus, over time we can observe a shift from machine-embedded to
organization- embedded knowledge. There is also evidente of a
further step, from organization-embedded to individual-embedded
know- ledge. The location of the knowledge in the three industries
- forestry, building and computers - can be summarized as
follows.
Figure 2. How Knowledge is Embedded in Companies
FORESTRY COMPANY
COMPUTER COMPANY
BUILDING COMPANY
Corporate Renewal and How Knowledge is Embedded in the Company The
different ways in which the companies studied attached their
knowledge to themselves also affect their capacity for renewal. In
the traditional industrial companies a large share of the knowledge
is embedded in real capital, and the capacity for renewal is
closely con-
12
nected with opportunities for making this capita1 work more
efficient- ly. Machines can be replaced by others which are more
effective. Generally, however, a certain running-in-period is
required before the efficiency of the new machines exceeds that of
the old ones they are replacing. Moreover investment in machines
often involves heavy costs and long depreciation periods, which
makes it impossible to keep continuously up-to-date with the latest
and most efficient technology. This is very noticeable in the basic
industries such as paper and pulp. Plant has very long depreciation
periods; at the same it has proved possible to introduce certain
improvements successively in already existing equipment.
Nonetheless technological development provides a continual impe-
tus to renewal. Companies and publit institutions such as
universities, research institutes and so on are constantly involved
in developing technology. In the forestry companies a great deal of
knowledge is acquired through the purchase of technology. Replacing
a machine almost always means increasing the supply of knowledge.
And it is a question of stable knowledge, reflecting the designer’s
leve1 of know- ledge. Those who use the machines need only a
limited amount of knowledge; it is perfectly possible to drive a
tar, for instance, without knowing how to design or manufacture
cars.
Knowledge embedded in real capita1 thus has considerable renewal
cap: city. It is easy to develop, to disseminate, to store, to use
and to replace. Now that many big industrial companies are
beginning to cancern themselves with other activities apart from
the manufacture of goods, they are also finding it more difficult
to cape with renewal. This may well be because their knowledge is
no longer embedded in the machines as it used to be. A growing
number of well-educated people are engaged in tasks not directly
connected with the products and production processes. Knowledge
about markets, customers, pub- lic authorities -in fatt the whole
environment - is becoming increas- ingly important. Moreover
companies are trying to exploit knowledge about their employees’
development capacity more efficiently.
In the labor-intensive building companies a great deal of knowledge
is embedded in the organization. The conditions for generating or
promoting renewal are quite different from those prevailing in the
capital-intensive companies. “lb build” means assembling and
combin- ing work and materials in time and space; in other words
coordinating an enormous quantity of factors in a process whose
tontent Will always
13
be slightly varied. Machines or individual people carry out certain
parts only of the whole process. But it is important that each
person under- stands the functional tontext to which their
knowledge belongs. Much of this knowledge is mute; there are tacit
norms and rules about the way the work is to be done. There is also
tacit knowledge about the workings of the relevant knowledge
network.
Organization-embedded knowledge is associated with the company and
its surrounding network. Individual people can be replaced and the
knowledge Will not disappear with them. lb gain access to organiza-
tion-embedded knowledge it is necessary to work in the organization
concerned. This is why builders are so enthusiastic about knowledge
based on experience. They know that it is in work that
organization- embedded knowledge can be released.
It is difficult to replace and improve organization-embedded know-
ledge. It is like a social culture: those who live in it do not
even see it. It is therefore necessary to make those involved aware
of the ingre- dients of the knowledge: only when these have been
released can they be reshaped. The biggest problem, however, is to
disseminate the new knowledge to the different parts of the
organizations. And spreading knowledge to different companies or to
other organizations can take a good deal of time. It is often much
simpler to introduce new real capital. Old machines are dumped. Old
organization-embedded knowledge can live on, long after new
knowledge has been introduced, which can lead to uncertainty and
inefficiency in the organization.
The fundamental differente between the different ways of attaching
knowledge to the organization cancerns the methods for storing it.
Knowledge embedded in machines is very stable. Machines can per-
form exactly the same taska great many times, and the products Will
be identical. It is therefore easy to link them up and combine them
with other parts of the production process. It is possible to
create a homo- genous and consistent logistic system, which is
necessaty for efficient mass production.
Organization-embedded knowledge is not as stable. The work tempo
and functional capacity of the organization varies with human moods
and motivations, with the team spirit. Sometimes the work goes
well, and then the tempo is high and the quality of the products is
good. At other times the opposite applies. It is therefore
difficult to base advanced mass production solely on
organization-embedded know- ledge. We found, for instance, that the
degree of industrialization (use
14
of machines) in the building industry in Sweden increased during
the mass production of the “million homes” program of the
1960s.
Thus the renewal capacity of knowledge is connected with the way in
which it is embedded in the Company: methods for developing,
diffusing, retrieving and discountinuing knowledge all depend on
this, as the following figure shows. It has to be remembered,
however, that the different phases of renewal appear in parallel,
and that develop- ment builds very largely on existing
experience.
Figure 3. Renewal and How Knowledge is Embedded in the
Company.
Knowledge embedded in
Capita1 Organisation Individual
Storing (Rettieving)
Job rotation Information: press, data banks, internal training
etc
Norms, vaks, rules, coporate spirit,professinal codes (often tacit
hnowledge)
Dismissals Transfers
On-the-job training
Training Scanning
Individual’s memoxy
Forgetting Unleaming Retraining
The renewal methods for capital-embedded knowledge are largely
institutionalized and familiar. Up to a point this applies to
individual- embedded knowledge as well. The methods for renewing
organization- embedded knowledge are by no means as unequivocal.
They are often
15
tacit, and yet they are present in the internal conceptual world of
the companies - in their culture.
Obviously all companies possess a combination of capital- embedded,
organization-embedded and individual-embedded knowl- edge. The
types of company studied here are fairly extreme and have of course
been chosen to illustrate the differentes clearly. On the other
hand it is usually - and to an increasing extent - organization-
embedded knowledge that makes the differente between a company’s
success and failure, especially sinte capital-embedded or machine-
embedded knowledge is available to all.
The Problems of Renewal Organization-embedded knowledge is becoming
increasingly more crucial, as the service functions of companies
become more significant. The ties with real capita1 are also losing
in importarme, as this capita1 becomes more flexible. Modern
machines such as computers give the user plenty of opportunny to
exercise continual control and influence. Thus theproblem of
corporate renewalcan be increasingly associated with the renewal of
organization-embedded knowledge. How to make organi-
zation-embedded knowledge moreflexible Will be an even more
important issue in the future.
One solution to this problem has been the frequent breakaways and
the subsequent creation of knowledge companies (consultancyfims).
We have observed this development in the building industry, and the
computer companies studied in the empirmal investigation are in
themselves evidente of this phenomenon. In these newly formed com-
panies knowledge is embedded to a great extent in the individual
employees. The Company is a loose organization whose input consists
of certain necessaty overhead functions. Actual production (the
serv- ice) is carried out by the employee at the customer’s
workplace.
What renewal capacity does this type of company possess? Up to now
most of its new knowledge has been acquired through the recruit-
ment of well-educated people from the publit education system. But,
as we have seen, other ways of building up knowledge have also been
used. The greatest advantage of individual-embedded knowledge is of
course that it can be used in a vevflexible way. It therefore plays
a crucial role in periods of transition, e.g. during technological
revolu-
16
tions like computerization. It is good at solving bottlenecks in
big companies. Individual-embedded knowledge is probably also
fairly easy to disseminate. On the other hand there is a natural
restriction as regards storage: the human memory appears to be
limited.
In a composite organization the total sum of knowledge possessed by
many individuals is utilized. In a well-functioning organization we
could therefore expect synergy effects: the total supply of
knowledge Will be greater (of higher quality) than the sum of the
knowledge possessed by the separate individuals. Thus
individual-embedded knowledge is at its best when it is utilized
and transformed into organ- ization-embedded knowledge.
Organization-embedded knowledge systematizes capital-embedded and
individual- embedded knowledge.
Broadening the Scope of Knowledge Build-up A changeover to
organization-embedded knowledge also changes the conditions for
renewal in another respect. When the emphasis is on
capital-embedded knowledge, renewal starts from a few individuals
who account for technical innovations. Knowledge in the company can
then easily become polarized, with some people responsible for
advan- ced development and others for the routine maintenance of
the ma- chines. Renewal can occur despite a two-tier knowledge
structure.
T te demands are quite different when organization-embedded
knowledge is predominant. If change or renewal are to be possible
in such a case, the whole organization has to be on the alert. The
main- tenance and development of knowledge must cancern everyone.
Each individual’s behavior must be accessible to change. Thus if a
production system is increasingly dependent on
organization-embedded know- ledge, it Will be necessary to extend
the scope of investment in training and knowledge-development. It
must be possible to disseminate knowledge continually and
widely.
Iraditionally the build-up of organization-embedded knowledge has
been almost entirely based on the experience of the corporate mem-
bers. In rapidly changing systems, however, this learning method
has its drawbacks. If all members of the organization (the company)
are to be able to acquire new knowledge quickly, tacit knowledge
has to be articulated and/or written down.
17
Such problems often arise in knowledge companies. These compan- ies
have generally been started by a small group of people with expert
knowledge of a particular field. When the companies later begin to
grow, their long-term survival has to be considered. Specialization
and the division of labor increase. Some people are assigned to
strategic and development issues. Individual-embedded knowledge has
to be developed, released and transformed into
organization-embedded knowledge. In large organizations this Will
hardly be possible unless experiential knowledge is transformed
into transferred knowledge. What should then be done to exploit
this transferred knowledge in the cause of developing
organization-embedded knowledge, and what learning Will be
required, Will thus be the great challange for the future.
References Kunskapsföretaget (1986) Sveiby, Karl-Erik &
Riesling, Anders. Mal-
In the Wake of the Future. Swedish perspectives on the problems of
structuruf change (1987) De Geer, Hans; Ekstedt, Eskil; Elvander,
Nils; Henning, Roger; Lyttkens, Lorentz; Norgren, Lennart; Sjö-
lund, Maivor & Wikström, Solveig. Aldershot, Hampshire: Gower
Publishing Company Ltd.
From the Consumption of Necessities to Experience-Seeking Consump-
tion (article) Wikström, Solveig; Elg, Ulf & Johansson,
Ulf.
mö: Liber förlag.
Uppsala Papers in Economic History consists of the following
series:
RESEARCH REPORTS
10. Bo Gustafsson:
11. Mats Morell:
The Causes of the Expansion of the Publit Sector in Sweden during
the 20th Centuty. 1983.
Food Consumption and Standard of Living: Studies on Food
Consumption among Diffe- rent Strata of the Swedish Population
1686- 1933.1983.
Gammelstilla stångjamssmedja - en manu- fakturindustri. 1984.
Market, Nature and Work: The basics of work organization in a
nineteenth-century ex- port sawmill. 1984.
Strukturomvandling och yrkessammansatt- ning: Ala sågverk under
mellankrigstiden. 1985.
Nationalekonomi och ekonomisk historia. Inställningen hos
nationalekonomer till am- net ekonomisk historia
1929-1947.1985.
International Firms and the Need for an Historital Perspective.
1985.
Economic Policies in Interwar East Europe: Freedom and Constraints
of Action. 1985.
Kvinnoarbete och könssegregering i svensk industri 1870-1950: Tre
uppsatser. 1985.
Det antika slaveriets nedgång: En ekonomisk teori. 1985.
Eli E Heckscher, utspisningsstaterna och den svenska
livsmedelskonsumtionen från 1500- talet till 1800-talet.
Sammanfattning och komplettering av en lång debatt. 1986.
12. Ragnhild Lundström & Kersti Ullenhag:
13. Kersti Ulienhag (editor):
Methodological Problems in Business Histo- ty: Two Papers.
1986.
Books and Articles from the Department of Economic History at
Uppsala University. 1986.
14. Georg Peteri: The Role of State and Market in the Regula- tion
of Capita1 Imports: Hungaty 1924-1931. 1987.
15. Håkan Lindgren: Banking Group Investments in Swedish In-
dustry: On the emergence of banks and asso- ciated holding
companies exercising shareholder influence on Swedish industry in
the first half of the 20th century. 1987.
16. Mats Moreii:
17. Juergen Salay:
19. Maurits Nystrom:
20. Lars Magnusson:
21. Hans Sjögren:
22. Eskil Ekstedt:
Om mått- och viktsystemens utveckling i Sve- rige sedan 1500-talet.
Vikt- och rymdmått fram till metersystemets införande. 1988.
The Soviet Union River Diversion Project. From Plan to Cancellation
1976-1986. 1988.
Kreditens jattekraft. Svenskt bankvasende i brytningstid och
genombrottstid vid 1800-ta- lets mitt. 1988.
En spegel av ett sekel. Riksdagens resor i Norrbotten 1880-1988.
1988.
Korruption och borgerlig ordning - naturratt och ekonomisk diskurs
i Sverige under Fri- hetstiden. 1989.
Kreditforbindelser under mellankrigstiden. Krediter i svenska
affärsbanker 1924-1944 fordelade på ekonomiska sektorer och regio-
ner. 1989.
Knowledge Renewal and Knowledge Gom- paniies. 1989.
WORKING PAPERS
4. Volker Wellhöner & Harald Wiiorth:
5. Ragnhild Lundstram & Jan Ottosson:
6. Agnes Pogany & György Kover:
7. Ulla Wikander (ed.):
Rivals and Partners. Banking and Industry in Europe in the First
Decades of the Twentieth Century. (Report from the Viennu Banking -
Zndustry Symposium 1988.) 1988.
Banking and Bank Legislation in Europe 1880-1970. (Report from the
Vienna Banking -Zndustry Symposium 1988.) 1989.
Bank-Industty Connections in Hungaty and Sweden. lXvo Studies.
(Report from the Vienna Banking-Zndustry Symposium 1988.)
1989.
Bank-Industty Relations in Theory and Prac- tise. Two Studies.
(Report from the Vienna Banking -Zndushy Symposium 1988.)
1989.
Bank-Industry Relations in Sweden: Owners- hip and Interlocking
Directorates. (Reports from the Bienna Banking - Zndustry Symposi-
um 1988.) 1989.
Banking and Industry In Hungary. (Reports from the Bienna Banking -
Zndustry Symposi- um 1988.) 1989.
The Sexual Division of Labour, 19th & 20th Centuries. Six
essays presented at the Ninth International Economic History
Congress, Berne 1986.1989.
BASIC READINGS
1. Håkan Lindgren & Kersti Ullenhag (eds.):
Teorier och teoretisk tillampning i företagsbis torisk forskning.
Med bidrag av Herman Da- ems, Erik Dahmen, Håkan Lindgren och
Kersti Uiienhag. 1985.
2. Britta Jonell-Ericsson: Skinnare i Malung. 1987.
3. Håkan Lindgren & The Swedish Match Company in the Interwar
Hans Modig: Years. An International Perspective. 1987.
4. Bo Gustafsson: Den ekonomiska vetenskapens utveckling. Del I:
Från Aristoteles till Adam Smith. 1988.
5. Bob Engelbertsson & Seminarieuppsatsen. En genomgång av for-
Lynn Karlsson: mella krav. 1989.
6. Mats Larsson & Håkan Lindgren:
Risktagandets gr&ser. Utvecklingen av det svenska bankvaendet
1850-1980.1989.