24: Learning by Knowledge-Intensive Firms

Bill Starbuck

For the second episode of season 3 we shall discuss another of the classics from the Journal of Management Studies, a paper from 1992 by William Starbuck, entitled “Learning by knowledge-intensive firms”. This time, we are very happy to be joined by the author of the work, Professor William Starbuck, one of the leading experts in Organization Theory, whose research covers an incredible number of areas of expertise, as shown in his biography.

This paper is the first to discuss knowledge intensive firms, concept based on the economists’ notions of capital and labour intensive firms, and which are defined as those firms where “knowledge has more importance than other inputs” (p.715).

This work starts off with the description of a manufacturing company called Garden company, where the author along with a colleague was called in by the manager because of what he thought was a “lot size problem”. After careful observations the author realised that there were many peculiarities of this business due to the characteristic of being knowledge intensive. These reflections triggered further discussions and led to the development of the paper.

Interestingly, five are the conclusions which the author came to as a result of that work, and which have been discussed in greater detail in this work are as follows:

a KIF is not necessarily information intensive;
a KIF is such because of “esoteric expertise”, and not because of widely shared knowledge;
we need to decide how broadly to define expertise;
an expert may not be a professional and a KIF may not be a professional firm;
the knowledge in KIFs may not be in individuals.

The following sections of the paper discuss the peculiarities of knowledge intensive firms and define the idea of experts. The author then focuses more specifically on issues related to organizational learning and strategic development of these kinds of firms. Among the many interesting observations made, the author emphasizes the importance of the role of the environment, and how these kinds of firms reflect and take advantage of the characteristics of their environments strategically.

The importance of this work lies in the interest it has generated around the issue of knowledge intensive firms, as testified by the number of works which built upon it in later years. Also, throughout the work it is clear that it is very much grounded in reality. As a matter of fact, all considerations and arguments are enriched by a number of observations taken from specific examples of knowledge intensive firms which the author had the chance to study in greater depth.