Blackboxes, hostages and prisoners

This paper uses empirical evidence drawn from a sample of IT-based innovation projects to examine theoretical models of the organization of technical knowledge. It suggests that Williamson's transaction cost account is incomplete, in that it fails to take account of the role of social action in communicating technical knowledge and organizing transactions. As an alternative model, it describes the 'strategies of social closure' developed by IT experts to achieve effective knowledge trading and a mutually acceptable division of the economic gains of innovation. Empirical data is used to describe three such strategies: 'blackboxing', 'hostage' and 'prisoner' strategies.