Chapter 3: What do Firms Learn? Capabilities, Distribution and the Division of Labour
3. What do ﬁrms learn? Capabilities, distribution and the division of labour1 Paolo Ramazzotti INTRODUCTION The aim of this chapter is to investigate the relation between the learning processes of ﬁrms and their industrial specialization.2 Its point of departure is recent research in the theory of the ﬁrm – namely the capabilities- (or competence-) based approach3 – which has stressed how codiﬁed and tacit knowledge jointly account for the existence of diﬀerences in individual and organizational capabilities within and among ﬁrms. Following this approach, the variety of capabilities accounts for inter- and intra-ﬁrm division of labour so that specialization – the activities that a ﬁrm becomes ﬁt to carry out – would seem to be an almost natural outcome. The capabilities approach raises a range of issues, which will be discussed in the sections that follow. First, despite the many insights that the approach has provided, there still are some problems in deﬁning and appropriately accounting for the origin of capabilities as well as in understanding the key features of the division of labour. Capabilities are often assumed to exist a priori or they are claimed to be part of an ongoing, yet not adequately outlined, process. As for the division of labour, it is treated as a technical issue rather than as a strategic variable. The chapter contends that this approach is unsatisfactory and it stresses that capabilities depend on the division of labour that management devises (see: ‘Whence capabilities?’, below). A related set of issues focuses on...
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