Shared knowledge and organizational capabilities

This work quantifies the importance of shared knowledge to product development capabilities and examines impediments to knowledge sharing. The resource-based view is the dominant perspective in business strategy. Yet, empirical research on resources and capabilities is proceeding slowly. This work studies the product development capabilities of a scientific software company. Product development ordinarily involves contributions from diverse functional areas. Functional departments are useful because they allow individuals to specialize their learning. Yet, for specialized functional knowledge to be effectively used, it needs to be combined with other classes of specialized knowledge (other functional departments). Combining functional knowledge for design or problem solving can be accomplished through sharing (individuals learn about functional areas other than their own) or concatenating (efficient interfaces are developed so that the different functional areas can work independently). I argue that a lack of interfunctional shared knowledge is the source of significant inefficiency in product development. I show in a single firm study the costs of insufficient interfunctional shared knowledge. I then examine the impediments to sharing knowledge. I find that using a serial product development process instead of a stage overlapping process causes glitches. Yet, even while using the stage overlapping process glitches occur. Conflicting objectives and insufficient hierarchical shared knowledge can both lead to glitches. Understanding the costs and impediments to knowledge sharing furthers understanding of resource use, organizational capabilities, coordination, and the role of managerial decision-making.