So to bring this example to bear on the debate between Bo and Nicolai, I would point to the need for the challenger to secure the explicit knowledge that is the necessary condition for entry to the targeted industry – without the minimum of explicit knowledge, there can be no prospect of entry. This is knowledge that resides in explicit and codified routines, in designs, and in processes that are embodied in equipment that can be purchased and sometimes in patents and other forms of intellectual property. But to be implemented in anything like competitive time, in a way that can result in anything like a competitive product, of course the explicit knowledge has to be complemented by the tacit knowledge in engineers’ heads. This is why Samsung was prepared to pay such high salaries to integrated circuit engineers when it was setting up its operations in the mid-1980s – salaries up to twice those paid to the senior executives. If there is a measure of the value of tacit knowledge, then what a company is prepared to pay for it must rank as a good one. Samsung was in a race to turn this tacit knowledge into some form of explicit codified knowledge that could be passed from one group of engineers to another. At one stage Samsung had engineers working on three generations of memory chip simultaneously – the 64K DRAM (outgoing chip in 1985), the 256K DRAM (current chip) and 1M DRAM (next generation chip) – and rotating the engineers from one group to another to ensure the build-up of codified routines for trouble-shooting the immense complexity of moving a chip from pilot production to the intensity of mass production.

So I agree with Nicolai that firm-level knowledge can be explicit – indeed, for the challenger, that is the entire object of the game, to turn the tacit knowledge recruited from ‘slack’ resources into competitive, codified knowledge. But I also agree with Bo that it is not the knowledge in individuals’ heads that is of prime significance, but the speed with which that idiosyncratic knowledge can be converted into organizational knowledge that counts. With all respect to agency theory Nicolai, I suggest you ask Samsung whether they respected the ‘private’ knowledge in people’s heads or whether they saw their goal as moving it into codified form as fast as possible. This after all is the supreme challenger goal – to master what the incumbents do as fast as possible and to do so with some advantage such as lower costs. If there were no firms able to succeed in this, there would be no diffusion of innovations and no economic progress.

KBV versus RBV is a longer discussion which we may have to start a new string to discuss separately if need be. Perhaps this will be one of your fallacies as well? :)

Bo

Frankly, you are the one who argue things are “black and white” here: Ttacit knowledge is a management problem. Period. There is a paradox. Period. Tacit knolwedge is primarily firm-level. Period. The KBV is really the same as the RBV. Period. And so on. I am trying to an analytical approach and ask, Is it really so?

Nevertheless, KBV to me does not seem to add much to the discussion and seem little different than RBV in its core arguments. I will read all your self-citations (again because I must have read some of these before) and see if this convinces me that this issue is as black or white as you seem to suggest. Thanks.