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This paper explores the implications of specialisation in knowledge production for the organisation and the boundaries of the firm. It argues that the definition of the boundaries of the firm in terms of the activities performed in-house does not recognise that decisions to outsource production and other functions are different from decisions to outsource technological knowledge. In particular, multitechnology firms need to 'know more than they do', in order to cope with uneven rates of development in the technologies they rely on, and with complex product-level interdependencies. By knowing more than they do, multitechnology firms co-ordinate loosely coupled networks of suppliers of equipment, components and specialised knowledge. These networks enable them to benefit from the advantages of both integration and specialisation. Recent developments in aircraft engine control systems confirm these propositions. pdf no longer available - this paper has now been published as 'Knowledge specialisation, organizational coupling and the boundaries of the firm: why do firms know more than they make?'
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