A Cognitive Theory of the Firm
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A Cognitive Theory of the Firm

Learning, Governance and Dynamic Capabilities

Bart Nooteboom

In this important and timely book, Bart Nooteboom develops and applies a social cognitive theory of firms and organizations with a focus on learning and innovation.
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Chapter 3: Organizational Focus

Bart Nooteboom


INTRODUCTION This chapter forms the core of this book, with the main argument for the firm as a ‘cognitive focusing device’. First comes a discussion of the need for focus, features of focus, and the resulting role of organizations. Second, the relation between organizational focus and culture. Third, for a more formal treatment the notions of cognitive distance and optimal cognitive distance. Fourth, an analysis of the origins and stability of focus and implications for limits to size and growth of the firm. THE NEED FOR FOCUS This section sets up the argument for ‘organization as a cognitive focusing device’. It starts with a definition of organization and an overall characterization of organizational focus. It proceeds with an analysis of issues of governance, next to competence, and with features and properties of organizational focus. It ends with a specification of the role of organization, and an example. A Definition of Organizations The term ‘organization’ has been given a wide meaning, as the opposite of chaos, and as more or less synonymous with ‘system’, that is a set of elements that are connected to some extent and in some way. This would include stones, crystals, cells, plants, animals, people and universes (Boulding, 1961). Here, the focus is on organizations of people. As indicated in the introduction (Chapter 1), using elements from definitions from McKelvey (1982) and Aldrich (1999), I define organizations as follows: Organizations are myopically goal-directed, socially constructed, more or less focused systems of coordinated activities or capabilities. The notion...

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