Organizational Learning through Rule Adaptation: From the Behavioral Theory to Transactive Organizational Learning

This paper deals with organizational rules as storages for organizational knowledge and media for organizational learning. The discussion starts with a revisiting of the first rule based theory of organizational learning, the Behavioral Theory of the Firm, that was developed by Richard Cyert and Jim March. It will be shown that this concept has been - and still is - highly influential and prolific for the developments of theories on organizational learning. In a number of models it is assumed that in-depth mutual learning between members of specialized departments is a precondition for organizational learning. As we show in this chapter, such a conceptualization is impracticable under the condition of specialization and bounded rationality. The concept which we develop for the analysis of organizational cooperation for innovation and learning takes organizational specialization and limited rationality into account. We concentrate on organizational rules which provide a means by which specialized knowledge, even tacit knowledge, from different specialized departments can be re-combined without the actors in this process having to share their specialized knowledge bases. Our conceptualization of this process of re-combining specialized knowledge across departments integrates a number of elements that have so far been identified as facilitators of interdepartmental interaction such as a minimum stock of overlapping common knowledge, transactive memory and trial-and-error processes. The transactive memory concept assumes a division of work in building up memories in groups or organizations. For organizational learning through the design of new rules this means that members of a department which initiate change need not extensively exchange knowledge with members of other departments. They just need to know who is in possession of relevant knowledge and needs to be consulted. Of course, the consultation has to be organized in effective ways. Specialists from different departments can contribute to and evaluate revised or changed rules that affect their departments without going into great details when feeding back their views on whether a proposed rule or rule revision works or does not work. We suggest to describe this type of knowledge integration as organizational prototyping. Organizational members from different specialized departments can jointly construct organizational rules by fitting together elements of work processes which they do not have to explain in detail to the representatives of the other departments. Just like engineers can fit elements of a car together in their joint design without the engineer of the gear box being able to fully understand the technology of the back axle.