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  • March 2020
  • Article
  • Strategy Science

Organizing Knowledge Production Teams Within Firms for Innovation

By: Vikas A. Aggarwal, David H. Hsu and Andy Wu
  • Format:Print
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Abstract

How should firms organize their pool of inventive human capital for firm-level innovation? While 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; Team Boundary; Innovation; Knowledge Sharing; Diversity; Innovation and Invention; Groups and Teams; Human Capital; Organizational Design

Citation

Aggarwal, Vikas A., David H. Hsu, and Andy Wu. "Organizing Knowledge Production Teams Within Firms for Innovation." Art. 1. Strategy Science 5, no. 1 (March 2020): 1–16. (Lead article.)
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About The Author

Andy Wu

Strategy
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