The Impact of Organizational Knowledge on Organizational Technologies: Evidence from Patent Data

Abstract

Organization theorists have long claimed that organizational knowledge is nontechnological, in part, because it is unpatentable. The claim rests on the assumption that organizational knowledge is embodied in persons and contexts rather than in context-free practical tools. However, over the last three decades information and communication technologies gradually expanded the universe of tools for embodying organizational knowledge which, in principle, can be patented. To provide the first empirical evidence regarding the patentability of organizational knowledge, we trained two machine learning algorithms to identify a population of 205,434 patent applications for organizational technologies (OrgTech) and, among them, 141,285 applications that use organizational knowledge accumulated over the 20th century. Our event history analysis of the probability of patenting an OrgTech invention shows that the presence of organizational knowledge decreases the probability of patent allowance unless it includes a practical tool in addition to abstract ideas about organizing. We frame these findings as the embodiment problem: The present-day digital transformation places organizational innovations in the realm of high tech and turns the debate about organizational technologies into the challenge of designing practical organizational tools that embody big ideas about organizing. We outline an agenda for patent-based research on OrgTech as an emerging phenomenon.