and organizational learningThe sensory order

Abstract

Purpose – To show how Hayek's work on cognitive theory can inform our understanding of the operation of the firm, more specifically the ability of firms to engage in organizational learning.

Methodology/approach – After reviewing Hayek's cognitive theory, the paper provides a brief overview of modern organization theory, focusing on the post-Coasean literature and the “resource-based view” of the firm specifically. I then offer several analogies between the two theories, arguing that the “map” and “model” of Hayek's work on cognition can be analogized to the balance sheet and the current budget/business plan of the firm.

Findings – I find that the “map” and “model” of Hayek's work on cognition can be analogized to the balance sheet and the current budget/business plan of the firm. The feedback between the model's encounters with the external world and the map's structuring of the classificatory process of the mind parallels the way in which firms' success or failure feedback to the evaluation of their assets. The paper also discusses the way in which the competitiveness of the individual's and the firm's environment might matter for the speed and effectiveness of learning processes.

Research limitations/implications – I conclude with some suggestions for further research, focusing on questions of political economy and how a more politicized marketplace might undermine organizational learning when seen through the lens of Hayek's work. Specifically, the paper argues for comparative explorations of different organizational structures in similar institutional environments and similar structures in different institutional environments to see which sort of factors matter for organization learning. One implication of the paper is that less competitive environments should demonstrate weaker and slower organizational learning.

Originality/value of paper – Hayek's work on cognitive theory has never been applied to organizational learning in any sustained way before. In doing so, this paper draws out some original research questions and political economy implications.

Citation

Horwitz, S. (2010), " and organizational learningThe sensory order", Butos, W.N. (Ed.) The Social Science of Hayek's ‘The Sensory Order’ (Advances in Austrian Economics, Vol. 13), Emerald Group Publishing Limited, Leeds, pp. 263-284. https://doi.org/10.1108/S1529-2134(2010)0000013013