Knowledge creation in professional service firms: Institutional effects

This article presents an analysis of institutional influences upon knowledge creation within professional service firms, whose main business is the provision of specialized consultancy. Such firms, we argue, provide an important setting for examining such influences because their survival depends on their ability to mobilize and synthesize professional bodies of knowledge. They, therefore, directly confront the constraints that institutionalized professions pose for processes of knowledge creation. By exploring the influence of the institutional context, the article extends earlier work on professional service and knowledge-intensive firms which has tended to adopt a more micro, organizational-level focus on knowledge creation and to neglect both the heterogeneous nature of knowledge and its embeddedness in institutional contexts. A comparative analysis of two firms located in different institutional contexts (science and the law) establishes some of the major mechanisms through which professional institutions influence knowledge-creation processes. Specifically, the analysis highlights three major arenas, related to the processes of knowledge creation within organizations, in which institutional influences are seen to operate. These are: the relative work autonomy of professional groups; the means of knowledge legitimation; and the social identity formation of professional practitioners. While institutional influences were found in these different arenas across both cases, significant differences in knowledge-creating practices were also observed. These include different emphases on experimentation versus interpretation, different forms of personal networking, and significant differences in the relative importance of codifying knowledge in documentary forms. These differences are explained in terms of institutionally embedded means of legitimating knowledge across scientific and legal contexts. In observing institutional influences on micro work practices, however, our study also highlights the role and influence of management. Specifically, in the arena of social identity, managers sought to accommodate professional norms through firm-specific arrangements, which shaped and mobilized a social identity geared toward corporate ends. Management effort thus focused on developing a collective identity, based on elitism, which was used as a means of leveraging individual creativity and expertise as an organizational resource.