Bruce Kogut

The network as knowledge: generative rules and the emergence of structure

The imputation problem is how to account for the sources of the value of the firm. I propose that part of the value of the firm derives from its participation in a network that emerges from the operation of generative rules that instruct the decision to cooperate. Whereas the value of firm-level capabilities is coincidental with the firm as the unit of accrual, ownership claims to the value of coordination in a network pit firms potentially in opposition with one another. We analyze the work on network structure to suggest two types of mechanisms by which rents are distributed. This approach is applied to an analysis of the Toyota Production System to show how a network emerged, the rents were divided to support network capabilities, and capabilities were transferred to the United States. Copyright

The Stability of Joint Ventures: Reciprocity and Competitive Rivalry

The focus of the following empirical analysis is the influence of reciprocity and long-term relationships on the stability of joint ventures. These cooperative incentives are offset by industry structural conditions, which may promote competitive rivalry among the partners. To separate these effects on joint venture survival, the hypothesized relationships are proxied by variables drawn from industry and questionnaire data, and estimated under a hazard model specification. A theoretical implication of the findings is to suggest a shift of attention from the transaction to the economic relationship as the unit of analysis. Copyright 1989 by Blackwell Publishing Ltd.

Technological Capabilities and Japanese Foreign Direct Investment in the United States

This article examines the effect of relative technological capabilities on Japanese direct investment into the United States by looking simultaneously at industry conditions in the two markets. A negative binomial regression model is specified to estimate the effects of R & D capability and industry structure on a count measure of Japanese entries across 297 industries. The results indicate that Japanese direct investment in the United States is drawn to industries intensive in R & D expenditures summed across both countries; voluntary restraints on Japanese exports encourage direct investment. When the entries are disaggregated by mode (e.g., new plant or acquisition), there is a significant indication that joint ventures are used for the sourcing and sharing of U.S. technological capabilities. Copyright 1991 by MIT Press.

Does Good Science Lead to Valuable Knowledge? Biotechnology Firms and the Evolutionary Logic of Citation Patterns

This study looks at the United States biotechnology industry as a community of practice caught between two evolutionary logics by which valuable scientific knowledge and valuable innovations are selected. We analyze the publications and patents of 116 biotechnology firms during the period 1988--1995. In models that link scientific capabilities to patent citations, we show that scientific ideas are not simply inputs into inventions; important scientific ideas and influential patents follow different and conflicting selection logics. Publication, collaboration, and science intensity are associated with patented innovations; however, important scientific papers are negatively associated with high-impact innovations. These results point to conflicting logics between science and innovation, and scientists must contribute to both while inhabiting a single epistemic community. We identify individuals listed on patents and scientific papers and find they effectively integrate science with innovation, leading to more successful innovations. Our findings suggest that the role of the small, research-intensive firm is to create a repository of knowledge; to act as an organizational mechanism to combine the capabilities of versatile scientists within and outside the boundaries of the firm; and to manage the selection of scientific ideas to produce valuable technical innovations.

Options Thinking and Platform Investments: Investing in Opportunity

There are many factors which bias managers towards a myopic view of the world: pressures from financial markets, strategy techniques, and incomplete rules of financial evaluation. A major casualty of myopic rules is the underinvestment in new capabilities, such as increasing the speed to the market, or the quality delivery of product and services. Investments in new capabilities are investments in opportunity: to be a player in new but uncertain markets requires learning new ways of doing things. This article analyzes the costs of myopic rules and proposes an evaluation technique based on option pricing theory as a way to demonstrate the value of long-term investments in new capabilities as platforms into new markets. It examines investments in core technologies, joint ventures, flexible manufacturing, and entry into foreign markets in terms of their platform value.

The Exploration of Technological Diversity and Geographic Localization in Innovation: Start-Up Firms in the Semiconductor Industry

This paper examines the innovative ability of small firms in the semiconductor industry regarding their exploration of technological diversity and their integration within local knowledge networks. Through the analysis of patent data, we compare the innovative activity of start-up firms and larger firms. We find that small firms explore new technological areas by innovating in less ‘crowded’ areas. The analysis of patent citation data reveals that small firms are tied into regional knowledge networks to a greater extent than large firms. These findings point to the role of entrepreneurial firms in the exploration of new technological spaces and in the diffusion of their accumulated knowledge through local small firm networks.

Platform Investments and Volatility Exchange Rates: Direct Investment in the U.S. by Japanese Electronic Companies

This study examines the effects of previous entry on the subsequent decisions of Japanese electronics companies to invest in the United States. By gathering data at the firm level, the empirical analysis provides a fine-grain sorting out of firm and industry effects on foreign direct investment decisions. The findings show that investment behavior is highly heterogeneous across firms and reflects their individual technological capabilities and their history of previous investments in the United States. Real exchange rate levels are also important. The results suggest that initial investments serve as platforms for subsequent entry, with the timing of entry triggered by movements in real exchange rates. Copyright 1996 by MIT Press.

Dialogue on Organization and Knowledge

Preface In lieu of writing an introduction that runs the risk of adding more smoke than fire, the guest editors elected to engage in a dialogue with one another. Its purpose is to give readers a sense of the thinking behind the special issue, of the debates that ensued, and of the possible directions for further work. We met for lunch in a cafe-bar in Greenwich Village in April 2001 to discuss the special issues introduction. Through a series of exchanges, the discussion emerged. What follows is a dialogue about Knowledge, Knowing, and Organizations.

Did socialism fail to innovate? A natural experiment of the two Zeiss companies

Two Carl Zeiss companies provide a natural experiment for analyzing the effects of socialist versus market systems on innovation. By analyzing patent records from 1950 to 1990, we trace the technological contributions of Zeiss Jena in the German Democratic Republic and Zeiss Oberkochen in the Federal Republic of Germany. We show that Zeiss Jena gradually developed considerable technological competence, but a deficiency of innovative potential within the socialist system led to political pressures on key firms to innovate by plan. These findings on Zeiss Jena imply that technologically viable firms can fail during the initial period of transition from socialism to capitalism. The diagnosis of a lack of innovation and faulty managerial incentives as the disease that is cured by market reforms should be balanced by an understanding of the actual capabilities of socialist firms and the difficulties of radical change mandated by brutal shocks to the macroeconomic system

Agency and Institutions: National Divergences in Diversification Behavior

A fundamental theme in comparative crosscountry research is the convergence of organizational forms in diverse national settings. In this paper we examine a special instance of this theme: the pattern of diversification across industries. A common argument is that technical and market forces compel firms to adopt ?coherent? strategies of diversification. This thesis implies that there should be a convergence in the patterns of interindustry diversification in all market-based economies. An institutional approach offers an alternative view. From this perspective, when diversification across industries is seen as subject to nation-specific governance and resource constraints, countries should vary widely in their interindustry diversification patterns.To test these alternative views, we analyze the diversification patterns of large corporations from five countries: France, Germany, Japan, the United Kingdom, and the United States. Our results do not support the hypothesis of a common pattern of diversification across countries, and thus reject the technological thesis. By comparing two case studies in which entrepreneurs attempted to diversify by acquisition in France and the United States, we examine how institutions and agents interact to permit different diversification patterns to arise in diverse national environments.The statistical results and case studies imply that, given the fixity of certain institutions, even if countries are subject to globalization, convergence in diversification patterns is not necessary. The results cast doubt upon the merits of stylizing the debate as a choice between technical and institutional theories of organizational choice. Rather, the study points to the importance of two theoretical statements. The first is to inquire under what conditions there is likely to be consensus on a given ?means-end? rationality for a specific managerial decision (e.g., diversification). The second is to understand the structural opportunities available to entrepreneurs for diversifying through acquisitions. Iterating between these cognitive and structural considerations shifts the focus from the false debate between technological and institutional arguments to the study of entrepreneurship situated in historically given national environments.