Introduction

That organizations, broadly defined, are cognitive structures is an observation at once trivial and profoundly complex. It is trivial because, at some level, it is a commonplace that organizations can (or at least should) learn, in something quite analogous to the sense in which people learn. That organizations “process information” is a staple of organizational-behavior theory. When examined in detail, however, the identification of organizations with cognitive structures raises more questions than it answers. In exactly what sense does an organization learn or perceive? This chapter will not attempt to resolve all these complexities; ultimately, it may not even stray far from the trivial. But it will attempt to frame the issue of organizational cognition in a general way and to apply that idea to the problem of “organizational perception” that is, to the problem of why organizations seize, or fail to seize, profitable opportunities.

The chapter proceeds as follows. Relying on some perhaps idiosyncratic sources in cybernetics, the theory of information, and cognitive theory, Section 2 sets forth a general – indeed, rather abstract – picture of knowledge, information, and learning. Section 3 applies that picture to the issue of organizational perception: Why are some organizations, again broadly defined, able to notice and seize opportunities for profitable innovation while other organizations are not? Drawing on the evolutionary theory of economic capabilities, that section goes on to work up a typology of the causes of innovative success and failure. Section 4 canvasses the history of the computer industry for examples to fit the typology.