ABSTRACT
This chapter aims to develop a set of hypotheses about the process of technological innovation and its relationship to specific outcomes. It emphasizes the role of the firm's structure of formal and informal contracts – what J. A. Kay describes as the firm's architecture – as key to the development of competitive advantage through the creation and enhancement of firm-specific know-how. The chapter focuses on centrality, firm-specific knowledge and the contractual structure of the firm. It indicates how a concern with organizational knowledge and capacity for change arose from our empirical work. The chapter deals with the relatively stable and long-term features of organization which sustain innovation streams. In any firm there may be tensions between the generation and enhancement of the knowledge base on the one hand, which may imply extension of involvement in process or product redesign, and appropriability on the other.
