Expert Humans or Expert Organizations?

Organization Studies, Spring, 1999 by Frank Mueller, Romano Dyerson

Problems of Appropriability: Developing a Taxonomy

From the organization's perspective, we can distinguish between differing aspects of appropriability that have to be recognized and controlled. At one level, the organization has to mediate between arguments that arise over how rewards should be divided between contesting rent-seeking claimants: we can label this as essentially a distributive appropriability problem. This takes two main forms: internal and external. Internal appropriability problems (IAP) arise from the organization's inability to fully appropriate all the knowledge, skills and abilities that it stores (Kay 1993; Mueller 1996). External appropriability problems (EAP) arise from an organization's inability to 'own' people, making it problematic to secure its interface with the external environment - people can simply walk away. We argue that in contrast to the disjointed and separate discussion of these issues in the literature they, in fact, pose a management problem that requires simultaneous consideration of both dimensions.

Arguably, problems of distribution are complicated by the 'ephemeral and organic' nature of organizational knowledge (Quinn 1992: 259) making it susceptible to withering and to becoming out-dated. This can be played out at both the individual and organizational level. The effects of atrophy are most visible at the individual level, for example very few gaslighters today find gainful employment. In other words, individual skills can become obsolete. Less visibly, the effects of atrophy can also strike the organization. For example, in the Public Sector several government departments found their manual processing of volume transactions increasingly outdated by advances in computer technology. We propose calling such problems arising from the up-to-dateness of organizational knowledge structural appropriability problems (SAP). According to Dierickx and Cool (1989), strategic asset stocks are threatened by decay unless proportionate maintenance expenditure is directed at nurturing and sustaining them. To put it differently, complacency and neglect of maintenance efforts can turn competencies into incompetence (Kamoche 1996). Where there is an SAP, which remains un-addressed, it is likely or perhaps even certain that all distributive claimants will lose out. Arguably, in order to perceive and address the SAP, organizations need to conceive of themselves as 'open systems'. Flowing into and out of this open system are consultants and employees. In order to address the SAP, continuing additions to organizational knowledge, skills and abilities from inside and outside the organization are necessary, and organizations therefore have to manage this flow as a strategically important activity (Ginsberg and Abrahamson 1991). The desired outcome of this process is an internally coherent, tightly integrated and protected base of knowledge; the unintended outcome is often an internally incoherent, loosely integrated and leaking base of knowledge.