Page - (000040) - in Knowledge and Networks

30 such a strategy often prompt fi rms to look instead for expertise among external sources (Grant, 1998 ). From the vantage point of structural hole theory, linkages to an increasingly broad range of organizations increase social capital, provide a means by which individual fi rms can overcome structural gaps (Burt, 1992 ; Burt, Hogarth, & Michaud, 2000 ; Garrigos- Simon, Alcami, & Ribera, 2012 ), and enhance innovative capacity based on increasingly diverse knowledges (Frey, Lüthje, & Haag, 2011 ; Poetz & Schreier, 2012 ). Agility, defi ned in this context as the capacity of fi rms to tap external resources effi ciently and rapidly, is a key asset of organiza- tions (Goldman et al., 1995 ; Greis & Kasarda, 1997 ). 7 Outsourcing in the context of open innovation, even if exploitative, is prompted at the outset not by lowest cost of labor and products in externalized production, as in a Coase ( 1937 )-inspired model of economic activity, but rather by the need to incorporate expertise external to a fi rm in projects that crosscut fi rms, as in a Hayek ( 1945 )-inspired conceptualization. Per Hayek ( 1945 ), the world constantly changes, requiring an effective means of culling dispersed knowledges. Assuming all individuals possess unique knowledge, a central problem for Hayek was how dispersed knowledges might be accessed. The contemporary answer to Hayek’s problem regarding innovation is open networks, in contrast to the tradition of relatively closed organizational forms (Lazega, in this volume). Whereas just-in-time manufacturing networks associated with fl exible production tended to evolve as relatively closed with “strategic bridges” (Burt, 1992 , 2005 ) forged between networks to facilitate fl ows of new information, Web 2.0 information and communications technologies (ICTs) have facilitated the devel- opment of open networks that draw from dispersed knowledges across fi rms (Garrigos-Simon et al., 2012 ). Crucially, fi rms have opened their boundaries in the realm of innovation not only to other fi rms, both small and large, but also to freelancers “on the street,” who may not necessarily be associated with fi rms and conceivably may even be unemployed. The governing apparatus of this labor market is crowdsourcing, which is one of several short-run avenues by which fi rms ensure fast profi tability to complement long-term investment strategies and meet the demands of shareholders. Other short- run avenues include licensing in ready-to-go innovations to avoid their expense as well as time to invention and innovation; licensing out warehoused inventions that 7 The concept of agility was fi rst developed in U.S. defense-related production and eventually became wedded with the concept of the virtual enterprise in the early 1990s (Goldman et al., 1995 ; Goranson, 1999 ). The Advanced Research Projects Agency (ARPA) and the Pentagon created a program managed by several military services (especially the Air Force) and the National Science Foundation (NSF) to develop an organizational strategy to respond to unexpected problems in a post-Cold War environment; the research fi rm Sirius-Beta developed a key role in the program, connecting the idea of effectively and rapidly tapping external resources (agility) with the idea of ephemeral networks (the virtual enterprise). The NSF supported research centers at universities, pilot production programs, and information networks regarding the new paradigm. In 1991 the NSF supported a workshop at Lehigh University in Pennsylvania. Political support and thus defense dollars eventually diminished, although the NSF continued its support for programs, con- ferences, workshops, and publications to disseminate the new paradigm to the private sector. N. Ettlinger