Tacit Knowledge, Organisational Learning and Innovation A Societal Perspective

Knowledge and competence are increasingly regarded as the most critical resources of firms and economies. Much recent attention has focused, in particular, on the importance of 'tacit knowledge' for sustaining firms’ competitiveness, and its role in technological innovation and organisational learning. This paper argues that the extent to which tacit knowledge constitutes the knowledge base of the firm, and how it is formed and used are powerfully shaped by the broader social and institutional context. It builds upon the premise that the knowledge of the firm is socially embedded. It is rooted in organisational coordination mechanisms and routines which, in turn, are heavily influenced by societal institutions. Societal level factors such as education and training systems, the structures of the labour market and social relationships between different occupational groups are important factors shaping organisational structures and processes within which the knowledge of the firm is embedded. The paper develops a four-fold typology, at the individual, organisational and societal levels, as an analytical framework to explain the links between knowledge types, patterns of work organisation and societal institutions. It shows how the three levels interact to shape the learning and innovative capabilities of firms. The theory developed in this paper represents the first attempt to integrate the diverse strands of literature and different levels of analysis into a single coherent framework. It holds promise for interpreting and understanding the sources of differences in learning and innovation practices between firms, industries and countries.