Bart Nooteboom. New York: Oxford University Press, 2000. 343 pp. $74.00.

Nooteboom's book undertakes to answer one key central question: How does novelty emerge in organizations? The author also restates his question as How can continuity and change, or--borrowing March's terms--exploitation and exploration be combined? The stated ambition of the book is of the "grand theory" variety: how to create an integrative theory (the author calls it a "general logic") that would underlie both innovation and learning and explain the interactions between the two. After articulating no fewer than twenty-two research questions that contribute to the central one and that the author uses to set his agenda, he embarks on a systematic review of various theoretical schools as they relate to his questions. He also clearly adopts an evolutionary economics perspective in this review.

In part 1, Nooteboom makes a number of interesting points as he moves through management and organization, various streams of economics (from neoclassical to the resource-based view of the firm and game theory), evolutionary models, knowledge (computational or situational), and language. His survey is rather comprehensive and clearly rooted in his perspective and interests: he critically reviews that vast literature to identify "building blocks" he can retain for building his theory. Besides relatively well-known criticisms, such as arguing that economics lacks a theory of learning and knowledge, or faulting the management literature for being conceptually repetitive and not having developed a consistent language on which to build cumulatively, he makes a number of insightful contributions. For instance, he argues convincingly that to think of "institutionalizing" rather than "institutions," and therefore to consider various levels of "institutionalization" and to see institutionalization as a continuous variable is useful in understanding social norms and rules and the more or less structured contexts of innovation. There are many more nuggets of insight strung through the various chapters, and they would clearly make the book useful reading for Ph.D. students and researchers, almost independently from the book's own theoretical developments.

It is not always clear, though, whether this extended literature review and selective critique remains sufficiently closely focused on the motivating question. Focus varies somewhat between chapters: some are pointed discussions of the particular literature's contribution to the research question. Others sometimes appear excessively broadly gauged, more the author's overall critique of a particular subfield. The outline is not always obvious, nor does the author guide the reader carefully through the argument.

Part 2, titled "Construction" and starting with chapter 8, is essentially the exposition of Nooteboom's theory. In short, its core argument revolves around the suggestion that, as it diffuses (following a phase of convergence toward what Abernathy would call a dominant design) an innovation--product, process, business system--spreads into more and more different contexts, is adapted to these contexts, and becomes increasingly differentiated. At some point, such differentiation becomes so extensive that the innovation loses consistency, its materialization in diverse contexts diverges, compatibility is no longer maintained, and its value decreases. (Although the author makes scant use of examples, and does not use this one, one cannot but be reminded of the experience of Unix, and of the discipline of Linux, contrasted to the disorder of Unix, in reading these chapters.) According to the author, this differentiation and fragmentation of the original innovation across contexts leads to the reconfiguration and selection of bits and pieces from these various contexts into a new radical innovation, and the cycle of context variation and content differentiation starts anew. The author sees in the alternation of these the answer to his initial question.

Although an intriguing conceptualization, the theory does not fully answer the central question convincingly. How radical innovation emerges from growing content variety and context dispersion in some recombination process is not explained. Such an explanation, though, would constitute the cornerstone of the theory. No detailed examples are provided either. Indeed, the use of examples is a weakness of the book: it is not a purely theoretical treatment, yet the examples are often so simple as to fail to illustrate the potential richness of the theory. They add little to it. A chapter advocating the use of scripts as a way to conceptualize the process does not answer the central question either. It stresses the usefulness of scripts but does not really explain clearly why they allow the emergence of a new whole from the fragmented old, which is critical to an understanding of the theory. The discussion of what organizational form and innovation systems, and their evolution, are likely to be most suited at which phase of the innovation cycle is a useful extension of the core theory but does not really explain the genesis of novelty either and will not be new to scholars of innovations in the context of organizations.

Despite its limitations, understandable given the very ambitious nature of the undertaking, this is a book well worth reading carefully. It provides a thoughtful review and critique of several major bodies of literature from the standpoint of evolutionary economics and a fascinating discussion of the dynamics of innovation diffusion. As such, it is a stimulating and insightful contribution to the innovation literature.

Yves Doz

INSEAD

Boulevard de Constance

77305 Fontainebleau Cedex France

Bibliography for: "Learning and Innovation in Organizations and Economies - Book Review"

Yvez Doz "Learning and Innovation in Organizations and Economies - Book Review". Administrative Science Quarterly. FindArticles.com. 26 Jun, 2011. http://findarticles.com/p/articles/mi_m4035/is_4_47/ai_107762252/