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Scholars of the theory of the firm have begun to emphasize the sources and conditions of what has been described as "the organizational advantage," rather than focus on the causes and consequences of market failure. Typically, researchers see such organizational advantage as accruing from the particular capabilities organizations have for creating and sharing knowledge. In this article we seek to contribute to this body of work by developing the following arguments: (1) social capital facilitates the creation of new intellectual capital- (2) organizations, as institutional settings, are conducive to the development of high levels of social capital; and (3) it is because of their more dense social capital that firms, within certain limits, have an advantage over markets in creating and sharing intellectual capital. We present a model that incorporates this overall argument in the form of a series of hypothesized relationships between different dimensions of social capital and the main mechanisms and processes necessary for the creation of intellectual capital.
Kogut and Zander recently have proposed "that a firm be understood as a social community specializing in the speed and efficiency in the creation and transfer of knowledge" (1996: 503). This is an important and relatively new perspective on the theory of the firm currently being formalized through the ongoing work of these (Kogut & Zander, 1992, 1993, 1995, 1996; Zander & Kogut, 1995) and several other authors (Boisot, 1995; Conner & Prahalad, 1996; Loasby, 1991; Nonaka & Takeuchi, 1995; Spender, 1996). Standing in stark contrast to the more established transaction cost theory that is grounded in the assumption of human opportunism and the resulting conditions of market failure (e.g., Williamson, 1975), those with this perspective essentially argue that organizations have some particular capabilities for creating and sharing knowledge that give them their distinctive advantage over other institutional arrangements, such as markets. For strategy theory, the implications of this emerging perspective lie in a shift of focus from the historically dominant theme of value appropriation to one of value creation (Moran & Ghoshal, 1996).
The particular capabilities of organizations for creating and sharing knowledge derive from a range of factors, including the special facility organizations have for the creation and transfer of tacit knowledge (Kogut & Zander, 1993, 1996; Nonaka & Takeuchi, 1995;...