ACCY 302 RoleofKnowledge -...

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The Role of Knowledge in Organizational  Structure and Control
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Turner Problem Turner Company has three divisions, A, B, and C.  Each  division manufactures and sells a different product.   Central management is currently debating how it  desires to restructure decision-making authority  within the firm.  Currently, decision-making is highly  centralized.  Jensen and Meckling (1990) provide  insight into this debate.
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Decision Rights and Rights Systems A key decision for management is whether retain the  right make a particular decisions (i.e., to centrally  manage) or delegate the right to employees (i.e.,                             ).  This choice is largely dependent on the  role of knowledge in each organization.  
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               knowledge is knowledge that is costly to transfer  among agents Knowledge that is considered costly is typically knowledge that is  costly in either effort , time  and/or money  to transfer                 knowledge is inexpensive to transfer So what?  Decision rights  (the rights to decide on and take actions) are transferred  to the location of specific knowledge when relevant  knowledge is expensive to  transfer. General and Specific Knowledge
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Kinds of knowledge ___________ Refers to knowledge that assist the decision-maker in predicting the outcome of alternative  courses of action. Because it is typically costly to transfer between agents, it is considered  specific  in nature. ___________ Refers to knowledge of specific skills or preferences of an individual, or the peculiarities of  specific machines, or of particular circumstances of time and place.  Because it is typically  costly to transfer between agents, it is considered specific  in nature.   ___________ Refers to knowledge acquired through data acquisition (statistical methods) or through  experience and training.  Assembled knowledge gathered through statistical means is  typically consider general  knowledge while assembled knowledge gathered through  experience or training is consider specific  knowledge.
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This note was uploaded on 11/08/2011 for the course ACCY 301 taught by Professor Staff during the Fall '08 term at University of Illinois, Urbana Champaign.

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ACCY 302 RoleofKnowledge -...

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