Knowledge Strategy and Knowledge Divisions

Manpower, as a resource, is often believed to be homogeneous. If one accepts that experience adds to the quality of manpower, one can also accept that experience always gets an added enhancing quality. Information on quality is, however, primarily private and any contract or negotiation would remain incomplete in the absence of shared and commonly believed and accepted standard of quality (Kennan and Wilson, 1993). Moreover, the holder of private information is an egotist and an opportunist (Williamson, 1981, 1993). This further adds to the vitiated measure of quality. One problem is how exactly quality can act as a signal. Further, a signal is weak and cannot reach distant corners of a market. Firm-internal information on quality, even when it trickles down, reaches only a small local quarter, which often includes only a small number of other firms which are situated in the same strategic milieu as the incumbent holder of that quality manpower. Such a market remains ‘uncleared’ (Benassy, 1993; Fishback, 1998). There is an additional problem too. Commonly believed theories on wage settlements or valuation of manpower treat a manpower signal quantitatively. Supply-and-demand quantity positions, à la Keynes (Leijonhufvud, 1968; Patinkin, 1965), constitute the quantity signals. Such signals are macro by nature. The incumbent firm or the incumbent individual resource-holder acts in the micro domain, and for them, while the quantity signals constitute an important backdrop, the micro quality information remains more important and deciding.