An organisation's ability to exploit outside knowledge depends on related knowledge it already holds, so learning capacity is itself a function of prior learning.
Cohen and Levinthal argued in 1990 that research and development produces two things: the innovation, and the capacity to recognise and use what others have discovered. The second is often the larger return. It implies the cumulative and path-dependent pattern of who can adopt what, and explains why buying in expertise rarely substitutes for having some.
In practice
- A firm that outsourced all its engineering cannot evaluate the engineering it is buying.
- A team that stopped reading the literature cannot tell which of the new methods is worth trying.
- Further reading
- Wikipedia
- Subject
- Organizations & Bureaucracy
- Essay
- Why organisations learn, harden and decline