Learning and Innovation in Organizations and Economies.

AuthorOstas, Daniel T.
PositionBook Review

by Bart Nooteboom. New York: Oxford University Press. 2000. Paper, ISBN: 0199241007, $30.00. 343 pages.

Professor Nooteboom constructs and defends a general theory of innovation and learning applicable at the individual, organizational, and societal levels. His book proceeds in three parts. Part 1 reviews several relevant literatures, including works from institutional economics, management and organizations, and cognitive science. Part 2 presents his formal model. Part 3 offers applications.

The book explores a central puzzle or paradox that manifests itself in a variety of settings and at a variety of levels of abstraction. The paradox involves the simultaneous need for and presence of both stability and change. This paradox is addressed under various rubrics within differing literatures. For example, within the management literature one finds the language of exploitation and exploration. Organizations, people, and societies succeed in the short run by exploiting current practices (doing what they currently do efficiently). To thrive in the long run, by contrast, they must explore new practices and adapt to new challenges. Combining exploitation (efficiency) and exploration (innovation) presents a paradox: exploitation is not innovative, and exploration is not efficient. Yet, somehow organizations, people, and societies are able to serve both masters: they simultaneously exploit and explore. Exploring this paradox provides a unifying theme to the book.

The author's theory of innovation and learning is articulated most directly in chapter 9. Borrowing heavily from his discussion of the hermeneutic circle in an earlier chapter and sounding themes consistent with institutional theory, Nooteboom depicts learning and innovation as a cyclical process with no singular beginning or end. The process is motivated when a dominant practice or institution encounters a context to which it is not well suited. When this occurs, new ideas and practices ("novel combinations") emerge. Some novel combinations have no value and are discarded. The most valuable coalesce into a new dominant practice or institution ("consolidation"). This new institution is then applied to a variety of contexts ("generalization"). These applications generate new ideas and insights ("differentiation") which are used to refine the dominant practice ("reciprocation"). As the new dominant...

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