Zur Shapira
Sridhar Seshadri

There are different perspectives on the study of knowledge in organizations, developed in economics, sociology, anthropology and organization theory. Several authors followed Schumpeter’s idea that innovations are new combinations of existing knowledge and incremental learning. Kogut and Zander (1992) further developed this idea and defined knowledge as a portfolio of options, and emphasized the importance of combinative capacities in knowledge creation. In a similar vein Garud and Nayyar (1994) developed a notion of the transformative capacitiy of a firm in analyzing technological innovations. This paper follows in this tradition by pointing at the effects of different organizational structures on the flow of ideas and on the possibility of combining projects into larger projects in organizations. Communication structures, span of control and timing of evaluation are shown, using computer simulations, to have a large impact on the degree to which commonalities and complementarities among ideas and projects can be detected and the eventual combination of projects for knowledge creation. Implications for organizational design are discussed.