Handbook of Knowledge and Economics
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Handbook of Knowledge and Economics

Edited by Richard Arena, Agnès Festré and Nathalie Lazaric

By illuminating the philosophical roots of the various notions of knowledge employed by economists, this Handbook helps to disentangle conceptual and typological issues surrounding the debate on knowledge amongst economists. Wide-ranging in scope, it explores fundamental aspects of the relationship between knowledge and economics – such as the nature of knowledge, knowledge acquisition and knowledge diffusion.
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Chapter 17: Tacit Knowledge

Paul Nightingale


Paul Nightingale 17.1 INTRODUCTION What is tacit knowledge and why should economists care about it? This chapter explains what tacit knowledge is – basically a category of unconscious neurophysiological causation that provides the basis and context to actions and conscious mental states – and why the concept is both useful and potentially dangerous. This emphasis on the negative features of the concept is needed because tacit knowledge has recently become extremely fashionable in a range of policy debates and academic disciplines, where its usefulness can, and often is, overplayed. The concept of tacit knowledge has been around for many years, particularly within the technical change and innovation literature (Nelson and Winter, 1982; Dosi, 1982, 1988a, 1988b; Freeman, 1982; Pavitt, 1987; Senker, 1995; Nightingale, 1998) that draws heavily on Polanyi’s (1969) work to conceptualize the empirically robust finding that technological knowledge involves knowledge that cannot be codified or reduced to information. Because knowledge contains an element that cannot be reduced to information, it cannot be traded like information, and requires face-to-face interaction to transfer. As a result, it can be used to explain the localized, uncertain and path-dependent nature of technical learning within people (Pavitt, 1987; Freeman, 1982). Since the routines that firms use to produce technologies depend on these tacit skills, tacit knowledge can be used to explain why firms and nations have persistently different performance over time (Nelson and Winter, 1982; Pavitt, 1984, p. 343; Dosi et al., 1989; Nelson, 1991; Dosi, 1988a, p. 224). Within this literature, tacit knowledge is...

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