Organizing Knowledge Production Teams Within Firms for Innovation

Vikas A. Aggarwal (), David H. Hsu () and Andy Wu ()
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Vikas A. Aggarwal: INSEAD, 77305 Fontainebleau, France
David H. Hsu: The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104
Andy Wu: Harvard Business School, Harvard University, Boston, Massachusetts 02163

Strategy Science, 2020, vol. 5, issue 1, 1-16

Abstract: How should firms organize their pool of inventive human capital for firm-level innovation? Although access to diverse knowledge may aid knowledge recombination, which can facilitate innovation, prior literature has focused primarily on one way of achieving that: diversity of inventor-held knowledge within a given knowledge production team ( within-team knowledge diversity ). We introduce the concept of across-team knowledge diversity , which captures the distribution of inventor knowledge diversity across production teams, an overlooked dimension of a firm’s internal organization design. We study two contrasting forms of organizing the firm-level knowledge diversity environment in which a firm’s inventors are situated: diffuse (high within-team diversity and low across-team diversity) versus concentrated (low within-team diversity and high across-team diversity). Using panel data on new biotechnology ventures founded over a 21-year period and followed annually from inception, we find that concentrated structures are associated with higher firm-level innovation quality, and with more equal contributions from their teams (and the opposite for diffuse structures). Our empirical tests of the operative mechanisms point to the importance of within-team coordination costs in diffuse structures and across-team knowledge flows in concentrated knowledge structures. We end with a discussion of implications for future research on organizing for innovation.

Keywords: knowledge recombination; organization design; teams; diversity; innovation; human capital (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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