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Keeping Big Firms on the Innovation Track

NSF Award:

Platform-Driven Innovation Within and Across Firms  (Tulane University)

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Combining lessons from economics, operations research, service and information management, organizational theory and engineering design, an NSF-supported research team has shown how large companies can use internal knowledge markets to harness expertise that may be widely spread throughout the firm.

Internal knowledge markets are electronic platforms within organizations that use price mechanisms and other incentives to facilitate information sharing, so that knowledge seekers can efficiently and quickly find appropriate information sources.

While simple in theory, implementing an effective knowledge market in a large organization has proven to be a significant challenge. Existing organizational hierarchies and management structures can sometimes run up against the rules and management systems necessary to run an internal market.

However, principles developed from this work are assisting large firms as well as regulators and policymakers who need effective guidance on how to create environments that foster innovation. Continuing research by this team documents productivity gains of as much as 10 percent via the use of knowledge markets.

Geoffrey Parker of Tulane University, Marshall Van Alstyne of Boston University and Edward Anderson of the University of Texas at Austin have powerfully advanced our understanding of how large companies can use internal knowledge markets to innovate. These researchers used extensive case studies, data collection, and tool development at both an industry level and within firms.

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  • diagram shows traditional knowledge management vs. internal knowledge markets
Centralized knowledge management versus a market-based approach.
Reprinted courtesy of MIT Sloan Management Review

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