The firm as an epistemic community: the knowledge-based view revisited

Based on a sociological conceptualization of knowledge as residing in groups of practitioners, epistemic communities, this article proposes a new perspective within the knowledge-based view of the firm. It argues that the cost of governing knowledge processes depends as much on the cognitive background of the exchange partners as on the tacitness of their knowledge. The perspective supports and explicates previous arguments regarding the ability of firms to enable and support integration and combination of tacit knowledge across the epistemic boundaries of professional expertise, but suggests that knowledge transactions that take place within such epistemic communities-articulation and replication-can be accommodated equally well, and often better, in other institutional settings, such as those of markets, guilds, or universities. Firms often become epistemic communities in their own right, providing them with superior enabling and motivational conditions for the combination and integration of tacit functional or occupational expertise. The establishment of a firm as an epistemic community requires transaction-specific investments on part both of the owners, managers, and employees which is why these conditions are difficult to create under market and other non-firm modes of governance. In the case of codified knowledge, the problems associated with the crossing of epistemic boundaries can be overcome by the definition of clear interfaces between knowledge domains.