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Submitted to:
Organization Development & Change
c/o Caren J. Siehl, Thunderbird Business School, 15249 N. 59th Ave.,
Glendale AZ 85306-6000 602-978-7150 siehlc@t-bird.edu

ABSTRACT

Communities of practice consist of people who are informally as well as contextually bound by a shared interest in learning and applying a common practice. Their focus on learning, competence, and performance bridges the gap between organizational learning and strategy topics and generates new insights for theory and practice. This paper outlines the rationale for a competence-based view of organizations and proposes a community-of-practice approach to address a number of important business challenges: mergers and acquisitions, leveraging and stretching competence across functions and SBUs, accelerating innovation, business-unit disaggregation, and outsourcing.

Globalization and emergent challenges to theory and practice

Globalization is one of several powerful worldwide forces that are transforming the basis of business competition, paradoxically harkening an era in which small, local "communities of practice" may become a preeminent structural form (Wenger, 1990). Communities of practice (CPs) enable organizations to build, share, and apply the deep levels of competence required to compete in a "knowledge-based" (Drucker, 1993) global economy.

Globalization and related trends--deregulation, privatization, increased customer sophistication--have raised the competence standards for businesses competing in a wide array of industries (Quinn, 1992). The breakdown of protective country, regulatory, and information barriers mean that businesses must increase their abilities to deliver value, or face bankruptcy or acquisition. Profitability, meanwhile, increasingly depends on the capacity to provide products and services with high "knowledge premiums" by embedding knowledge in products (there are 150,000 lines of code in the typical washing machine [De Leo, 1995]), or by combining high-value services with traditional products (e.g., the highly profitable service departments at car dealerships) (Davis & Botkin, 1994; Quinn, 1992). Moore’s Law has correctly predicted over the last decade that the memory capacity of computer chips would double every 18 months, continuously reducing the costs and raising the number of information-technology applications. Thus, technological and related organization changes have accelerated in recent years (Zuboff, 1988). Furthermore, knowledge depreciation and accumulation rates have been increasing exponentially for decades (half of what a freshman computer scientist knows is obsolete by her senior year; the number of scientific journals has grown ten-fold every fifty years since 1800) (Badaracco, 1991). Finally, many organization members now demand opportunities for meaningful work that builds skills and a sense of professional identity, especially in work environments where job requirements constantly change and lifetime employment is unlikely (Bartlett & Ghoshal, 1995; Pinchot, 1985).

These interrelated trends are producing a sea-change that calls for significantly new theories and practical guidelines for business firms. Scholars have responded with research on organization learning (OL) and competence-based strategies, but have not adequately integrated these two perspectives. OL research has focused on descriptions of learning activities and the organization conditions (ON) that support them (Argyris & Schon, 1978; Huber, 1990; Senge, 1990; Ulrich, Von Glinow, & Jick, 1993), but it has not clearly linked OL to organization competence (OC) or organization performance (OP) (Kogut & Zander, 1992; Snyder, 1996). Strategy research has described the relationship between OC and firm performance (Amit & Schoemaker, 1993; Barney, 1991; Hamel & Prahalad, 1994; Leonard-Barton, 1992, 1995; Prahalad & Hamel, 1990; Stalk, Evans, & Shulman, 1992), but it has neither sufficiently operationalized the nature of OC nor explained how it is developed and renewed in organizations (Leonard-Barton, 1995; Nonaka & Takeuchi, 1995). Apparently, these research streams are running in parallel despite the obvious benefits of convergence.

Ethnographic research has identified a promising candidate for a unit of analysis that may provide the conceptual bridge needed to span the exasperating, persistent gap between OL and strategy research. This integration of the literatures is especially timely because even strategists state that organization-theory innovation is driven mainly by research on human cognition and behavioral variables (Rumelt, 1995); they have concluded that successful strategies depend largely on internal organization factors (Barney, 1995; Bartlett & Ghoshal, 1995; Collins & Porras, 1994; Hamel & Prahalad, 1994). The more general observations that research gets insufficient attention from practitioners (Hambrick, 1994) and that research unconnected to outcomes does not sustain interest (Staw, 1984) conversely argue that unless OL scholars learn to connect their research to OC and OP variables, they aren’t likely to get far in theory or practice.

Communities of practice: Definition and research opportunities

Ethnographic research defines communities of practice as people bound by informal relationships who share a common practice (Brown & Duguid, 1991; Lave & Wenger, 1990; Wenger, 1990; 1991). The two key words in the term provide a convenient way to unpack the meaning of this complex, emergent construct. "Community" refers to the informality and personal basis of many relationships in typical CPs; it also suggests that CP boundaries do not correspond to typical geographic, SBU, or functional boundaries in organizations but rather to practice- and person-based networks. A less obvious connotation of this word is the inclusion of community-based artifacts--e.g., equipment, forms, and policies--which have little independent influence in the organization apart from their context-specific interpretation and enactment by community members (Wenger, 1990). "Practice" indicates that CPs are centered on a shared practice, which may or may not correspond to an established function in the organization. The term suggests that community "practitioners" identify with their work in personal ways, often in ways that recall a typical professional’s sense of calling (Argyris, Putnam, & Smith, 1987; Leonard-Barton, 1995; Schon, 1987). A less obvious point is that "practice" connotes "knowledge-in-action" (Schon, 1987), or "knowing" (Cook & Brown, 1996), and implies that practice is as much about learning as it is about doing. In sum, communities of practice consist of people who are informally as well as contextually bound by a shared interest in learning and applying a common practice.

The ethnographic research at Xerox Parc in the late 1980s that identified CPs recalls earlier research at Western Electric in the 1930s that discovered groups as an important unit of analysis (Roethlisberger & Dickson, 1939). Groups subsequently became a fruitful focus for decades of research, leading to streams of research on group leadership, group dynamics, and team-based structures (Hackman, 1976). Communities of practice differ from groups in many ways (Brown & Duguid, 1991), but they may also augur fresh streams of research on new concepts such as network leadership, individual-community dynamics, and "virtual" organization structures. Early group studies addressed the paucity of research on social factors in organizations, and later corrected technology-driven efforts that threatened to hyper-fragment both production tasks and natural work groups (Trist, 1981). Analogously, CP studies now address research deficiencies related to learning and competence and may soon help organizations avoid or minimize the loss of valuable competencies and relationships as they disaggregate and outsource major business functions. Finally, group research argued that leaders should move organizations from "control to commitment" (Walton, 1985), whereas CP research implies that organizations must convert commitment to capability.

This research seeks to build on the groundbreaking work on CPs by Wenger (1990), Orr (1990), Lave & Wenger (1990), Brown & Duguid (1991), and others by linking the insights of early ethnographic studies and related theoretical work on the dynamic, social nature of OL and OC to the burgeoning research by strategists on the relationship between OC and OP. It is easier to imagine how highly developed and formally legitimized CPs (vs. the relatively immature and noncanonical ones described in current research) might broadly and effectively influence organization performance when the CP construct is placed in a larger, performance-based theoretical context. (Similarly, group research began by focusing on informal groups and then evolved towards research on fully legitimized groups with clear performance aspirations--e.g., "high performance

teams" [Katzenbach & Smith, 1993] at all levels of team-based organizations.) Applying CP research to an OC-based theory of the firm suggests what the community-of-practice perspective can contribute and is a first step towards establishing a foundation for rigorous and generative research in this area.

The debate about the "theory of the firm" was thought to be relatively settled until Demetz’ milestone work in 1988 (Connor & Prahalad, 1996). Since then, a number of studies have argued that the principles that explain the existence, scope, and sources of competitive advantage in firms should be reconsidered (Connor, 1991; Connor & Prahalad, 1996; Ghoshal & Moran, 1996; Kogut & Zander, 1996; Madhok, 1996). A growing body of research argues that competence-based considerations, not transaction costs (TC), are the key to distinguishing firms from markets. OC research makes three main arguments to explain the crucial role of competencies as opposed to transaction costs to distinguish firm boundaries. Each of these arguments is significantly enriched by the CP perspective.

1. The enacted "embedded assets" problem. OC theory argues that "embedded" (Madhok, 1996) or "impacted" (Williamson, 1975) firm assets define firm boundaries not because of the inherent transaction costs associated with these assets, but rather because the value of the assets is determined by the people who enact them (a piano in one person’s hands is a nuisance; in another’s a pleasure). Assets’ value consists largely of the competencies and attitudes of the people who use those assets (Barney, 1995; Wenger, 1990), and practice communities are inherently unique--thus hard to transfer or imitate; thus "embedded."

CP research explains in rich detail how community members enact the meaning of community-based artifacts, drawing on structuration research in organizations (Brown & Duguid, 1991; Giddens, 1976; Orlikowski, 1992; Pentland, 1992; Riley, 1983; Tenkasi & Boland, 1993; Wenger, 1990). The methods by which embedded assets get enacted is critical to understand in order to evaluate the extent to which tacit knowledge associated with embedded assets can be transferred across boundaries, even within organizations--a huge concern for multidivisional, multinational firms trying to leverage core competencies as fully as possible (Bartmess & Cerny, 1993; Nelson & Winter, 1982). But this is only part of the problem: How transfer tacit competencies within the firm without risking imitation by competing firms? Both issues require detailed analysis of the processes by which CPs develop and apply tacit and explicit knowledge in firms.

2. The "culture and coordination" problem. OC theory argues that firms exist and define their scope to ensure that there exists a broad platform of trust and shared language within the firm. This cultural platform enables disparate members to coordinate, communicate, and combine skills, information, and other assets in order to achieve performance outcomes (Ghoshal & Moran, 1996; Kogut & Zander, 1996). This view contrasts with TC theory, which asserts that firms define their scope of activity by calculating and comparing the costs of managing behavioral issues inside the firm (i.e., "shirking"), vs. the risk of being charged exorbitant prices by market vendors (i.e., "cheating").

CP research explains that the cultural platform in organizations is not as undifferentiated and global as many organization-culture scholars have implied and emphasizes that micro-cultures in organizations are often organized around distinct organization "practices" or competencies (Wenger, 1990, 1991). Schein reinforced this point in his description of several types of "occupational cultures"; he argued that researchers have "misconceived the . . . problem by focusing on organizational learning, when, in fact, it is the . . . communities that must begin their own learning" (his italics; 1996: 9). Thus, OC theorists who argue for the facilitative role of shared culture to promote communication, coordination, and combination may overlook frictions that occur across micro-cultures--e.g., between those associated with typical engineering and marketing practitioners. Moreover, micro-culture CPs, like professional groups, are not constrained by intra- or inter-organizational boundaries, which suggests that aligning firm boundaries with culture-based boundaries could be problematic. These points do not refute the OC emphasis on the importance of culture as a key factor in firm-boundary formation, but they provide important, additional perspectives to consider in this debate.

3. The "cost versus value" problem. OC theory argues that TC theory focuses too exclusively on comparing the relative costs of managing competencies as either internal functions or market relationships, while focusing not enough on the dynamic nature of competencies and the importance of fully leveraging the potential value of competencies (Connor & Prahalad, 1996; Ghoshal & Moran, 1996; Kogut & Zander, 1996; Madhok, 1996). For example, while K-Mart outsourced its distribution function in order to save costs (administrative costs were greater than the risk of market cheating--a classic TC calculation), Wal-Mart decided to invest millions in its distribution function in order to create a complex, hard-to-imitate "cross-docking" warehousing system (a classic competency-based approach) that enabled it later to dominate K-Mart on product cost and availability outcomes--both critical success factors in their markets (Stalk, Evans, & Shulman, 1992).

Wal-Mart’s abilities to leverage the potential value of its distribution system and to develop and disseminate a wide variety of store-based innovations (e.g., the "greeters" at the front door) depend on communities of practitioners who have established a strong platform of trust and commitment to common goals. For example, Wal-Mart’s community of store managers spans the country; they meet regularly by video-conference to barter inventories in order to reduce costs (while leveraging their distinctive distribution system) and to share ideas about store management. CP research provides a variety of perspectives to analyze the nature of both the conditions and the learning processes in communities that enable them to capture the value in competencies, not merely control the costs.

This brief review shows that the CP perspective significantly enhances the three main arguments for an OC-based view of the firm. These contributions are especially important because multinational firms face a spate of important business problems that are related to issues of firm boundaries, scope, and competence, including: mergers and acquisitions, joint ventures and alliances, leveraging core competencies and core products, disaggregating business units, and outsourcing. All these have a huge impact on firm performance, and all require that organization leaders understand how to define firm macro-structure boundaries and how to manage the related competency issues, including: How do we capture the value of the competencies we paid for when we bought company xyz? How do we manage an alliance that was formed to combine complementary competencies with a foreign firm whose culture clashes with our own? How can we increase employee ownership by disaggregating business units and still leverage our core competencies--now scattered across business unit boundaries? If we outsource this competence, how do we know it won’t become a competitors’ platform for considerable innovation and growth five years from now (the IBM-Microsoft problem)?

All these are issues where firm boundaries, scope, and related competence-based, cost-value calculations are critical to assess correctly. Moreover, these issues are expected to become only more important as globalization and other trends intensify in the years ahead. A number of academic centers and large firms have launched efforts to divine the nature of the "21st Century Organization" or the "Corporation of the Future." Generally, these efforts have focused on issues related to organizations as networks, virtual organizations, or "chaords" (chaotic organizations)--all concepts that portray firms as dynamic, distributed, and democratic (Malone, 1995). Perhaps the most salient feature of these imagined structural forms is that they organize themselves primarily for competence-based objectives; various conventional, quasi-monopolistic sources of advantage--dominant market share, economies of scale, regulatory advantages, and country-based barriers--are considered to be relatively unimportant in comparison.

Competence-based evaluations of how to define and manage firm boundaries will require a richly-textured understanding of the nature of communities in organizations and how they relate to organization competencies (Kogut & Zander, 1996). Insights from CP research inform and complicate our understanding of an OC-based theory of the firm and suggest different issues and approaches than can be generated at a less discrete unit of analysis (i.e., firm-level versus CP-level). Rousseau (1985) warned of the "cross-level fallacy" where researchers confuse levels of analysis, thus distorting results. Much of OL research has focused on the tension between individual and organization learning (Shrivastava, 1983; Snyder, 1996), with some emphasis on small-group learning (Crossan, 1991; Edmondson, 1996). The CP perspective argues that OL research will generate more interesting and useful results by focusing on communities of practice as the focal unit of analysis (Brown & Duguid, 1991; Schein, 1996; Snyder, 1996; Wenger, 1990).

Progress in theory and practice related to an OC-based theory of the firm will require the development of both new concepts and propositions that link independent, mediating, and dependent variables in a performance-based model of OL. Currently, the definitions of basic concepts--e.g., organization competence and capability--are ambiguous (Teece, Pisano, & Shuen, 1990) or unsystematic (Stalk, Evans, & Shulman, 1992), and the meaning of CPs is still emerging (Wenger, 1990). Yet it appears that these concepts are foundational constructs for research in OL and OC. Clear, complementary definitions of organization competence and capability help operationalize the notion of CPs, which in turn establishes the conceptual platform for preliminary propositions that may guide future research.

Although there are a number of competing definitions for organizational knowledge, competence, and capability, a review of the literature suggests that the following related definitions capture key findings and distinctions (see Figure 1):

1. Organization capability consists of a configuration of coordinated competencies, which are generally applied in combination to enact recognized business processes (e.g., distribution, production, product development) (Merino, 1996; Stalk, Evans, & Shulman, 1992).

2. Organization competence consists of a "bundle of skills and technologies" (Prahalad & Hamel, 1990) or a "knowledge set" (Leonard-Barton; 1995)--including explicit know-that ("information"), tacit know-that ("values"), explicit know-how ("routines"), and tacit know-how ("expertise") (Snyder, 1996). Organization competence includes the ability to integrate all four dimensions within specific organization contexts to meet task requirements.

3. Each of the four components of organization competence--information, values, routines, and expertise--exist at individual, group, and organization levels; they are highly interrelated so it is difficult to separate them in practice. Know-that elements include what we know about (information, values), while know-how elements include both behavioral and "intellective" (Zuboff, 1988) abilities to perform a task (routines, expertise). Tacit components (values, expertise) are more difficult to codify, explain, or transfer than explicit components (information, routines) (Brown & Duguid, 1991; Nonaka & Takeuchi, 1995; Snyder, 1996).

--Figure 1 about here--

While these particular definitions and the distinctions between them may be argued, several general conclusions have received cumulative, convergent support in the literature: 1) capability consists of an "architecture" of competencies (Grant, 1996; Henderson & Cockburn, 1995; Merino, 1996; Stalk, Evans, & Shulman, 1992); 2) competencies in turn include elements of know-that and know-how, both tacit and explicit (Kogut & Zander, 1992; Leonard-Barton, 1992, 1995; Nonaka & Takeuchi, 1995; Snyder, 1996); and 3) both capabilities and competencies require much coordination and integration during application in highly specific, often unique organization contexts (Cook & Brown, 1996; Leonard-Barton, 1995; Prahalad & Hamel, 1990; Snyder, 1996).

CP research argues that organization competencies are dynamic social abilities (not static or abstract) that are generally distributed among a community of members, each of whom makes unique contributions. Communities of practice are the embodiment of competence in the organization (Wenger, 1990). For example, the competence to evaluate the viability of insurance claims (part of a broader firm capability to process and pay claims) may depend on an assortment of specific skills, information bases, routines, and personal values, which may be more or less broadly shared in the community of members who do claim-evaluation work. Hence, CPs consist of the people and related artifacts that together enact particular competencies; that do work related to a specific "competence domain."

CP research provides an additional concept to explain how competencies are combined to produce capabilities: "constellations of communities of practice" (Brown & Duguid, 1991; Wenger, 1990). These constellations of interacting and overlapping CPs coordinate with each other to enact capabilities that depend on multiple competencies. These constellations may include several "technical" competencies (e.g., claims evaluation, underwriting, and customer service) as well as "administrative" competencies (e.g., general management, quality control, and marketing) (Snyder, 1996). The similarity of the distinctions in the strategy literature between capability and competence and in the CP literature between CPs and CP constellations indicates that the community of practice may serve as an integrative unit of analysis that combines insights from OL and strategy literatures and generates new ones (see Figure 1).

CPs can be further understood by seeing them in relation to conventional functional and project-based groups in organizations. Due to global socio-economic turbulence and uncertainty, organizations are moving increasingly from rigid and well-defined function-based structures, towards project-intensive approaches where in some firms--especially knowledge-intensive firms such as Hughes Aircraft, Honeywell, Microsoft, or McKinsey & Company--a great number of members have no functional home (Malone & Rockart, 1991). Their work is defined by a series of (sometimes concurrent) short- and long-term project assignments (Peters, 1992). These organizations, however, depend on members who can continuously refresh and transfer skills and knowledge throughout the firm; but this becomes difficult when there are no "homerooms" where members can periodically gather to share stories and find partners with whom to collaborate. Hence, a number of these firms (e.g., McKinsey & Company) have made explicit efforts in the past decade to develop communities of practice (or "practices") (Peters, 1992; Quinn, Anderson, & Finkelstein, 1996). More recently, firms in diverse industries--e.g., National Semiconductor, Chrysler, Colgate-Palmolive, and the Veterans Administration--have all made efforts to deploy communities of practice.

Nonaka & Takeuchi (1995) explain that the three types of organization structures--functions, projects, and practices--are highly compatible; even complementary. They explain that members in a "hypertext" organization can concurrently participate in all three types of structures: Members are accountable to functional areas for production and financial outcomes; they work much of the time on project assignments to develop a product, improve a process, or scope a new market; and they participate in communities of practice in order to share skills and knowledge, develop relationships, and lobby for assignments on future projects that will help them meet professional-development goals. (See Figure 2.)

--Figure 2 about here--

Communities of practice are not only the embodiment of competence, but also "learning embodied" (Wenger, 1990: 218). Competencies in the current environment are rarely static, so high-performance CPs engage in continuous learning activities to ensure that competencies are built, shared, and applied effectively. For example, a community of industry and technical specialists in a chemical company used groupware and informal communication to leverage the expertise of members scattered worldwide to attack specific customer problems with the requisite combination of chemical and customer-industry expertise (Linn & Snyder, 1997). CPs in a Colgate-Palmolive plant have recruited core members and community-of-practice "mayors" to initiate practice-based improvement projects and to foster the development and coordination of competencies across the value chain, across shifts, and eventually across plant boundaries. A community of globally distributed product specialists at National Semiconductor have significantly increased their effectiveness by using groupware to document and access chip-specification information that was previously rarely captured or applied (Manville & Snyder, 1995).

There are two principal reasons why the emphasis on learning is so closely related to competence--and why communities of practice must focus on both. First, in dynamic task environments it is difficult to separate learning and competence because much of competence consists of the ability to "learn on-line" (Snyder, 1996), to "reflect in action" (Schon, 1983b), or to be "knowing," not merely knowledgeable (Cook & Brown, 1996). Second, learning is deeply entangled with competence because much of competence is tacit (especially the most valuable aspects [Prahalad & Hamel, 1990]). The most effective way to manage tacit competence is not to codify it, but rather to engage members in continuous, informal learning processes that provide competence components as required, through story-telling, dialogue, peer coaching, and shared practice (Brown & Duguid; Nonaka & Takeuchi, 1995; Raelin, 1997; Shank & Morson, 1995; Schon, 1987; Snyder, 1996; Wenger, 1990). Tacit knowledge and informal learning activities are the hallmarks of communities of practice, "where the visible rests in the invisible" (Wenger, 1990: 227).

A number of case studies demonstrate that learning occurs most effectively within communities that have developed trust, shared understanding of problems, and a language to communicate new and old solutions (Brown & Gray, 1995; Cook & Yanow, 1993; Orr, 1990; Snyder, 1996; Wenger, 1996). These cases also show--as in the chemical company and Colgate-Palmolive examples mentioned earlier--that constellations of communities can collaborate to create high-value learning. These findings suggest that OL research has made halting progress in the past 15 years for 2 reasons: 1) OL work has been insufficiently linked with both OC and OP; and 2) OL research has not focused on phenomena at a sufficiently discrete unit of analysis, i.e., at the level of communities of practice where learning takes place (Brown & Duguid, 1991; Schein, 1996; Snyder, 1996; Wenger, 1990, 1991).

Discussion thus far has established that CPs are aligned with competencies--that they both enact competencies (alone or in constellations) and develop and renew competencies through a variety of learning activities. CPs also constitute influential organization conditions, including: tools and procedures that scaffold expertise; motivation and trust, and policies and structural conditions that influence learning; and facilities and technologies (e.g., "open" office designs, groupware) that influence communication and coordination. (Of course, many of the conditions that interactively influence CPs are not specific to individual communities, but are applied firm-wide, e.g., conventional compensation systems.) CPs are aligned, therefore, with several of the factors associated with a performance-based model of OL (see Figure 3). On one level, this model represents a simplified view of the relationships between organization conditions (ON), OL, OC, and OP. That is, ON influences OL by facilitating or hindering communication, coordination, and collaboration; OL activities develop and disseminate OC and interact with OC to adjust competencies on-line in dynamic situations; and OC addresses task requirements directly to create related performance outcomes.

--Figure 3 about here--

A more complex representation of the OL model (indicated by recursive arrows) shows that: (a) competence "platforms" (Cohen & Levinthal, 1990) and "core rigidities" (Leonard-Barton, 1995) affect OL absorption rates; (b) highly-developed components of OC, e.g., shared trust and enacted community artifacts, can become influential organization conditions despite their origin in specific competencies; and (c) OP will directly influence OL and (d) affect OC because it highlights strengths and weaknesses; OP affects both OL and OC indirectly (through ON) because the availability of slack resources is a prime condition for learning and innovation (Singh, 1986). An inclusive model that links ON, OL, OC, and OP places community-of-practice research in a broader, theory-based context, and provides the foundation for a number of related propositions that may guide future research on how CPs influence performance-based learning in organizations.

A number of preliminary propositions are listed below, segmented by the three principal relationships described in the performance-based model of OL: 1) OC to OP; 2) OL to OC; and 3) ON to OL. Although the scope of this research does not allow for supporting explanations for each hypothesis, these propositions draw on the mainstream OL literature, and in many cases have high face validity. (Representative citations are included with each proposition [except the first three] to identify related OL research that supports it.) These propositions suggest how to develop a systematic set of OL hypotheses that are integrated both by the overarching OL model and by a common unit of analysis that lends itself to research in this area.

1. Propositions on the relationship between OC and OP. These propositions describe how the competence of a community of practice is related to performance outcomes. Outcomes include performance in "talent markets" as well as conventional stakeholder markets because the firm’s ability to attract talent is so critical to long-term performance (Moody, 1996).

Competence proposition 1.1: Highly developed CPs related to a competence domain will perform better on relevant performance outcomes than comparable, less-developed CPs.

Competence proposition 1.2: Highly developed CP constellations related to a configuration of competencies (a k a "capability") will perform better on relevant performance outcomes than comparable, less developed CP constellations.

Competence proposition 1.3: Highly developed CPs will perform better in talent markets than less developed CPs--attracting and recruiting a higher percentage of the most desirable candidates.

2. Propositions on the relationship between OL and OC. These propositions include several representative propositions related to each of the principal organization learning processes--discovery, invention, production, and generalization--as described by various researchers (Argyris & Schon, 1978; Bennis, 1987; Dewey, 1933; Handy, 1990; Senge, 1990; Shewart, 1939). Discovery refers to the identification of the general scope and content of firm-related problems and opportunities; Invention means the development of ideas and approaches to solve problems; Production refers to the application of ideas and approaches to meet task requirements; Generalization means the documentation, interpretation, and dissemination of competence through groupware, training, apprenticeships, and other transfer methods.

Learning (Discovery) Proposition 2.1: When Discovery is done effectively, the CP will be more competent.

Learning (Discovery) Proposition 2.1.1 When the scope of the CP domain is developed and defined through intense discussion among members and with stakeholders inside and outside the firm, then the CP will be more competent (Lyles & Mitroff, 1985).

Learning (Discovery) Proposition 2.1.2 When shared understanding among CP members is developed through shared discovery processes appropriate to understanding "messy" (Ackoff, 1974) problems--i.e., "rich" (Daft & Lengel, 1984) communication media such as case study/story-telling, dialogue and debate, and shared experience on projects--then the CP will be more competent.

Learning (Discovery) Proposition 2.1.3 When the CP scope of issues is "T-shaped," i.e., covers a broad range of relevant issues at the "identification" stage (Dutton, Fahey, & Naraynan, 1983), but goes deep on high-interest issues with promise for significant impact, then the CP will be more competent.

Learning (Invention) Proposition 2.2: When Invention is done effectively, then the CP will be more competent.

Learning (Invention) Proposition 2.2.1: When CP members are highly familiar with available knowledge platforms (Cohen & Levinthal, 1990) related to their domain, then the CP will be more inventive and competent.

Learning (Invention) Proposition 2.2.2: When CP members make time for intensive discussions to build a foundation of mutual understanding and trust, then the CP will be more inventive and competent (Snyder, 1996; Wenger, 1990).

Learning (Invention) Proposition 2.2.3: When CP members create a "cognitive map" (Eden, 1988; Huff, 1990) of issues related to a domain, and explicitly organize internal firm thinking and external thinking according to the map, then the CP will be more inventive and competent.

Learning (Invention) Proposition 2.2.4: When CP members combine their ideas with ideas from other CPs (crossing intra- and inter-organizational boundaries), then the CP will be more inventive and competent (Weick, 1979).

Learning (Production) Proposition 2.3: When Production is done effectively, then the CP is more likely to be competent.

Learning (Production) Proposition 2.3.1: When CPs apply ideas systematically under a variety of conditions in order to meet performance demands and produce knowledge concomitantly, then the CP will be more competent (March, Sproull, & Tamuz, 1991).

Learning (Production) Proposition 2.3.2: When CPs use "intermediate" application methods to test ideas and approaches--e.g., "thought experiments" (Schon, 1983a), simulations (Chew, Leonard-Barton, & Bohn, 1991), scenario planning (de Geus, 1988), prototypes (Schrage, 1993), and "learning laboratories" (Senge, 1990) in client sites--then the CP will be more competent.

Learning (Production) Proposition 2.3.3: When inter-CP application efforts are interdependent, then the CP will be more competent when it coordinates effectively with other, relevant CPs (Levitt & March, 1988).

Learning (Generalization) Proposition 2.4: When Generalization is done effectively, then the CP will be more competent.

Learning (Generalization) Proposition 2.4.1: When reflection on action is done soon after experience and shared by diverse CP members, then the CP will be more competent (Schon, 1983b).

Learning (Generalization) Proposition 2.4.2: When members avoid "superstitious learning" (Levitt & March, 1988) by systematically analyzing relevant, influencing factors, then the CP will more effectively generalize from experience and be more competent

Learning (Generalization) Proposition 2.4.3: When ideas, approaches, results, and information about people are systematically captured and stored via broadly accessible media, then the CP will more effectively generalize from experience and be more competent (Ackerman & Malone, 1990; Boland & Tenkasi, 1995).

Learning (Generalization) Proposition 2.4.4: When CP members leverage trust-based relationships to enhance informal learning approaches--e.g., story-telling, dialogue, coaching, mentoring--then the CP will more effectively generalize from experience and be more competent (Brown & Duguid, 1991; Snyder, 1996; Wenger, 1990).

Learning (Interactivity) Proposition 2.5: When learning methods are combined effectively, then CPs will be more competent.

Learning (Interactivity) Proposition 2.5.1: When CP learning efforts are focused enough to "round the learning cycle" on urgent problems and ripe ideas, then the CP will be more competent (Argyris & Schon, 1978).

Learning (Interactivity) Proposition 2.5.2: When CPs combine formal and informal learning approaches (Marsick & Watkins, 1990) that are both action- and cognition-based (Revans, 1982), then the CP will be more competent (Snyder, 1996).

3. Propositions on the relationship between ON and OL. Organization conditions include both firmwide and CP-specific conditions. It may be ideal to organize these hypotheses by firm and CP design elements, such as those suggested by Galbraith (1977) for organizations. These preliminary propositions do not systematically cover all possible design elements and are not organized as such. The propositions, nevertheless, suggest the types of conditions that may support performance-based learning in communities of practice.

Firm-wide Condition Propositions 3.1: When firm-wide conditions support CP learning activities, then CPs will be more competent.

Firm-wide Condition Propositions 3.1.1: When the organization helps align member interests with participation in CP activities and projects, then CPs will learn better and be more competent (Pinchot, 1985).

Firm-wide Condition Propositions 3.1.2: When new roles are created in the firm to support multiple dimensions of a competence architecture--e.g., "webmasters" who manage on-line groupware tools (Orlikowski, Yates, Okamura, & Fujimoto, 1995); "boundary spanners" (Galbraith, 1977) who coordinate competencies and problems across CP and firm boundaries; "specialists" within CPs who are funded to drive innovation and learning within CPs--then CPs will learn better and be more competent.

Firm-wide Condition Propositions 3.1.3: When continuous efforts are made to develop and maintain a shared sense of "one Firm" so members feel trust across functional, geographic, and CP boundaries, then CPs will learn better and be more competent (Collins & Porras, 1994).

CP-specific Conditions Proposition 3.2: When CP-specific conditions support CP learning activities, then CPs will be more competent.

CP-specific Conditions Proposition 3.2.1: When there is high level of competence-specific personal interest, aptitude, and ambition among CP members, then members will learn better and the CP will be more competent (Senge, 1990).

CP-specific Conditions Proposition 3.2.2: When there is "configuration" of different perspectives, skills, aptitudes, and experience levels among members, then members will learn better and the CP will be more competent (Weick, 1979; Wenger, 1990).

CP-specific Conditions Proposition 3.2.3: When members have developed their learning skills fully by assessing learning preferences (Hermann, 1995) and strengths and weaknesses (Argyris & Schon, 1978) and by creating development plans to "learn to learn" more effectively, then members will learn better and the CP will be more competent.

CP-specific Conditions Proposition 3.2.4: When the sense of connectedness within the community is built by "fractals" (Wheatley, 1994), or "networks of networks" (Lipnack & Stamps, 1994)--i.e., many strong, tight personal network groups that are connected through boundary-spanner members--then members will learn better and the CP will be more competent.

CP-specific Conditions Proposition 3.2.5: When members see personal development not merely in individual terms--i.e., when they see that professional capability results from one’s ability to draw on the expertise of colleagues--then members will learn better and the CP will be more competent (Kelley & Caplan, 1993).

These propositions are offered primarily as "seeds of contemplation" (Merton, 1949) that may be extended, edited, or extrapolated to create a more definitive and complete set of testable hypotheses about how communities of practice influence performance, how they learn competence, and what conditions facilitate competence development. This set of propositions makes two contributions: 1) it sets disparate learning propositions clearly in the context of CPs as the focal, perhaps most appropriate unit of analysis; and 2) it links propositions related to the three main variables in a performance-based model of OL. The learning model provides a useful integrating structure for the propositions, especially because it bridges the gap between OL and strategy literatures by linking OL to OP through OC (Snyder, 1996).

Many of these propositions, of course, are as interrelated as the main variables in the OL model. For example, proposition 3.2.1 states that when members are highly interested in an area of competence, they will learn it more effectively. This CP-specific condition is more likely to occur when proposition 3.1.1 is true, i.e, when the organization enables members firmwide to affiliate themselves with CPs in which they have the most personal interest. Both of these propositions are more likely to be true when proposition 1.3 is true, i.e., when firm CPs have been historically strong and have been able to attract members to the firm who have high interests, aptitudes, and ambitions related to their competence domains. Finally, CPs are more likely to be highly competent over time when learning propositions 2.1 through 2.4 are true, because their long-term competence depends largely on the effectiveness of all four types of learning activities.

The preliminary propositions reviewed here demonstrate the value of using the CP unit of analysis to investigate issues related to OL and OC. They describe the relationships of key variables in the OL model at the CP level of analysis, creating a clear line of sight between conditions, learning activities, competence, and performance. The consistency and focus provided by the CP unit of analysis may significantly reduce the confounding influence of extraneous variables on research results. Recent work on culture argues that researchers and practitioners must distinguish the multiple "occupational cultures" (Schein, 1996) in organizations to understand how culture influences learning. Innovation research has long argued that without better distinctions between types of innovation outcomes, it is very difficult to draw conclusions about influencing factors, even from a meta-analysis of 23 empirical studies (Damanpour, 1991). Similarly, if OL work is to escape its current state as a "murky" (Garvin, 1993), "maddeningly abstract or vague" (Peters, 1992) research domain, it must differentiate between CPs within organizations, and must pay more attention to all four core variables in a performance-based model of OL.

An important measure of the value of research is its usefulness in practice (Bennis, 1987; Miles & Huberman, 1994; Mohrman, Cummings, & Lawler, 1983), so it is worth briefly considering the implications of this research for practitioners faced with the daunting task of building competencies. The sequential questions outlined in Figure 4 suggest a practical approach by which managers can link related strategy, CP-development, and organization-development issues. The questions aligned with each of the main variables in the performance-based OL model suggest action-oriented analyses that could guide CP-development initiatives.

--Figure 4 about here--

Scholars who want to apply ideas to address genuine organizational problems could use these questions to help managers implement an "action-research" approach (Morgan & Ramirez, 1983; Revans, 1982) that would build specific competencies through communities of practice. Researchers could design these initiatives rigorously and systematically in order to test many of the propositions listed above, or to generate new "grounded" (Glaser & Strauss, 1967) hypotheses from experience. The model in Figure 4 is compatible with the performance-based OL model (it is oriented in reverse, based on the principle of "planning with the end in mind"); it suggests how practical approaches can be clearly aligned with the theoretical issues described in this research. The complementary practical and theoretical OL models provide a bridge between theory and practice that helps align manager actions with theoretical propositions, thus serving scholars’ objectives to find additional ways to test theory and serving practitioners’ objectives to find new ideas to address real-world challenges. Such a scholar-practitioner partnership becomes itself a kind of community of practice, in which "all parties speak with tongues" (Trist, 1981: 49).

The community of practice serves as an integrating unit of analysis to link the principal variables in a performance-based model of organization learning. This model, moreover, spans a long-standing gap between OL and strategy literatures and by combining them magnifies the explanatory power and pragmatic usefulness of both streams of research. The community-of-practice perspective informs emergent, controversial arguments for an OC-based theory of the firm. These arguments must be enhanced to address a number of important theoretical and pragmatic business problems that have become urgent due to globalization and related worldwide socio-economic trends: managing acquisitions; leveraging and stretching competencies across firm boundaries; accelerating rates of product, process, and administrative innovation; and outsourcing and business-unit disaggregation. Academic and practitioner leaders have begun urgent calls for research on the "corporation of the future" in order to find integrated approaches to these challenges. OL research suggests that they share a common theme: the demand for an OL "meta-competence," i.e., the organizational ability to learn and apply competencies effectively. This paper further argues that because the community of practice is the natural context for organization learning and creates a bridge between OL and strategy perspectives, it may become the preeminent structural form in the 21st century.

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