ORGANIZATIONAL KNOWLEDGE AND INNOVATION IN BUSINESS SERVICES

Abstract

This study builds a typology of organizational knowledge in business services and empirically examines the effects of knowledge on innovation performance. A conceptual framework of knowledge assets with degrees of tacitness and collectiveness as the principal axes is used to ground the empirical analysis. We find that innovation in business services is associated with both tacit and explicit collective knowledge, and with explicit individual knowledge. In contrast, relying on tacit knowledge held by individuals may hamper innovation. These empirical results shed new light on the debate concerning the strategic effects of tacitness and collectiveness of knowledge. Innovation benefits may be gained from codifying knowledge and making it appropriable at the collective level, as opposed to the individual one. Additionally, our results indicate that tacit collective knowledge is more closely associated with new service introductions while explicit collective knowledge is associated with service improvements. Thus, tacit collective knowledge may be conducive to significant departures from existing capabilities while explicit collective knowledge appears conducive to incremental improvements. Key words: Organizational knowledge, innovation, business services, supply relationship