Research Policy 38 (2009) 736–745

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Research Policy
journal homepage: www.elsevier.com/locate/respol

Professional guilds, tension and knowledge management

Ram Mudambi a , Tim Swift b,∗
a
Department of Strategic Management, Fox School of Business, Speakman Hall (006-00), Temple University, Philadelphia, PA 19122, USA
b
Management Department, Mandeville 380, Haub School of Business, St. Joseph’s University, 5600 City Avenue, Philadelphia, PA 19131, USA

a r t i c l e i n f o a b s t r a c t

Article history: Scientific research is a crucial success factor for knowledge intensive firms and is often a joint effort
Received 4 April 2007 of scientists and managers. However, scientists and managers belong to different “professional guilds,”
Received in revised form 22 January 2009 subscribing to different belief systems and valuing different types of incentives. These differences give
Accepted 23 January 2009
rise to tension between scientists and managers. We integrate a large body of literature from knowledge
Available online 24 February 2009
management to develop a new theoretical model predicting that this organizational tension is affected by
environmental factors such as the degree of industry munificence, firm-specific factors like knowledge-
Keywords:
management policies, and the individual roles of boundary spanners within the firm. Further, we argue
Knowledge management
R&D
that this tension can lead to positive or negative outcomes.
Professional guilds © 2009 Elsevier B.V. All rights reserved.
Tension

1. Introduction
It is not uncommon to observe tension in even the most suc-
cessful organizations regarding the management of R&D. Today,
famous scientists working in high-performing firms understand
that R&D must be conducted in order to create valuable commercial
knowledge in order to acquire sustainable competitive advantage.
For example, Nobel laureate Arno A. Penzias, as he was serving as
vice-president of Research at AT&T Bell Laboratories, emphasized
the importance of conducting research for commercially valuable
purposes:
I want to still do fundamental research, but I also want people to
understand that they are doing it for a purpose. I said to every-
one, if you don’t like it, please leave (Buderi and Carey, 1993, p.
79).
In some industries, the creation of knowledge is critical to
acquiring sustainable competitive advantage. Much of this knowl-
edge creation depends on successful collaboration between firm
management and R&D scientists–on the mingling of the profit
motive that attracts investment capital, and the opportunity for
great scientific advancement that draws the world’s best scientists.
A recent report from congressional hearings on the pharmaceuti-
cal industry, where R&D intensity levels are almost 8% (National
Science Foundation, 2005) states:
∗ Corresponding author. Tel.: +1 215 499 7973; fax: +1 610 660 1229.
E-mail addresses: ram.mudambi@temple.edu (R. Mudambi), tim.swift@sju.edu
(T. Swift).
The drug industry is a success story. . . . Unless the drug industry
was given an opportunity to reap the harvests of its successes
and to invest large portions of it in the development of its facil-
ities and its research, this phenomenal success would not have
been possible. Without the profit motive, and without the profits
being reinvested in the industry, the state of the American phar-
maceutical industry today would not be what it is (emphasis
added) (El Feki, 2005, p. 4).
Scientists and management may be said to belong to different
“professional guilds,” in the sense that they subscribe to different
belief systems and recognize different measures of excellence.1 The
different value systems of the two guilds lead to tension between
R&D scientists and management because their goals overlap only
partially (Barnard, 1938; Mayo, 1945; Shephard, 1956; Ouchi, 1980,
p. 130). This tension can drive inferior R&D policy decisions, or it can
contribute to a rich, diverse perspective that drives well-informed,
superior decisions.
1
American Heritage Dictionary formally defines a guild as “An association or
corporation of persons of the same trade, pursuits, or interests formed for their
mutual aid and protection, the maintenance of standards, or the furtherance of some
purpose.” This term is different from other related labels used in the literature. A pro-
fessional guild is not an epistemic community (Gittelman and Kogut, 2003) because
scientists from different scientific disciplines are viewed as being members of sepa-
rate epistemic communities, yet they belong to the same guild. A professional guild
is not a community of practice (Brown and Duguid, 1991) because communities of
practice are comprised of individuals from many different areas of the firm (e.g.,
accounting, marketing, engineering or science) that come together to work on a
common task. Members of the same community of practice can be members of
different guilds.

0048-7333/$ – see front matter © 2009 Elsevier B.V. All rights reserved.
doi:10.1016/j.respol.2009.01.009
 R. Mudambi, T. Swift / Research Policy 38 (2009) 736–745
In this paper, our objective is threefold. First, to identify the
sources of tension between R&D scientists and R&D managers. Sec-
ond, to propose conditions under which that level of tension will
vary. Third, to provide insights into how tension can be managed
to minimize its deleterious effects and harness its positive poten-
tial.
Most bodies of research on knowledge management do not
address this intra-organizational tension directly. We extend
these perspectives to show how the firm’s level of absorptive
capacity (Cohen and Levinthal, 1989), the industry’s level of knowl-
edge appropriability (Jaffe, 1986; Cohen and Levinthal, 1990),
and the firm’s position within social and professional networks
(Granovetter, 1973; Burt, 1992) can influence the level of tension
between the professional guilds within the firm. We show how the
level of tension can vary with environmental and firm-specific fac-
tors, and explain ways in which the presence of this tension can
yield positive or negative firm outcomes.
In the middle of the last century, many argued that govern-
ment and academia must take the lead in conducting basic research
because the free market does not provide adequate opportunity
and incentive for it (Nelson, 1959). However, theory and practice
have evolved, and there is evidence that valuable basic research
is conducted in industry, as well as in collaborative relationships
between academia and industry (Arrow, 1962; Cohen and Levinthal,
1989; Cockburn and Henderson, 1998; Cockburn et al., 2004;
Nelson, 1959; Tijssen, 2004). The firm is the nexus of opportu-
nity for investors and scientists. Value-seeking investors provide
capital to scientists so that they can create valuable knowledge.
These scientists receive satisfaction and prestige from creating new
knowledge.
The formation of different factions within the firm forming along
the lines of scientific and management objectives is particularly
pronounced in research intensive firms. To management, knowl-
edge is a means to an end and excellence is measured in terms
of market performance (Dasgupta and David, 1994; Gittelman and
Kogut, 2003, p. 367). To the scientist, knowledge can be an end
in itself and excellence is measured in terms of the advancement
of human understanding (Duncan, 1974, p. 523). In R&D intensive
firms, market performance is critically dependent on the perfor-
mance of R&D scientists, and important interactions exist between
the work of R&D scientists and managers.
Much of the existing research on knowledge management
provides clues on how tension between R&D scientists and manage-
ment originates and how it varies. We suggest that at the industry
level, the level of knowledge appropriability, the presence and den-
sity of knowledge networks, and resource availability influence
the level of tension between management and R&D scientists. At
the firm level, the effectiveness of boundary-spanning managers
(Tushman, 1977) influences the level of tension, as well as the
impact such tension has on firm performance.
While tension has been characterized as a negative force in the
firm (La Porte, 1965; Shephard, 1956), we argue that this tension has
beneficial as well as adverse aspects. The negative aspect is related
to the “frustration” (Shephard, 1956), and to traditional conflicts
as described by agency theory (Bernardo et al., 2001); the positive
aspect is related to the increased insight that is gained from bring-
ing multiple perspectives to problem-solving (Eisenhardt, 1989;
Simons et al., 1999; Zaheer et al., 1998). Understanding the nature
and sources of intra-organizational tension enables us to mini-
mize the costs while fostering the benefits. Whether this tension
enhances or damages firm performance depends critically on the
capabilities and effectiveness of the boundary-spanning function
in the firm that brokers relationships between R&D scientists and
management.
Section 2 reviews the relevant literature in an effort to under-
stand the current state of knowledge management theory. Section
737
3 offers new research propositions. Section 4 discusses the ramifi-
cations of these propositions. Section 5 concludes.
2. Major perspectives
Extant theory in knowledge management does not address
adequately the tension between R&D scientists and management.
However, by drawing upon the literature in three major areas
(absorptive capacity, social network theory, and knowledge appro-
priability), we can uncover the sources of this tension. The key
contributions in each area are integrated below. We build upon
these important findings to develop a new understanding of intra-
organizational tension.
Research shows that firms performing only applied research
underperform those conducting basic as well as applied research
(Cohen and Levinthal, 1989). Further, firms that prohibit or discour-
age their scientists from engaging in scholarly dialogue with their
professional peers outside the firm perform less efficient and effec-
tive research (e.g., Cockburn and Henderson, 1998; Stern, 2004).2
By discouraging scientists from conducting basic research or inter-
acting with professional colleagues outside the firm, the firm’s
management can frustrate its scientists. Such discouragement can
lead to situations where tension between management and R&D
scientists is high.
There is a substantial body of literature concerned with various
aspects of knowledge management in the firm. Both appropri-
ating value from knowledge (Jaffe, 1986; Youndt et al., 2004)
and the motivations of the firm’s scientists have received atten-
tion (Osterloh and Frey, 2000; Stern, 2004). However, there has
been little explicit recognition that these two pursuits within
knowledge-intensive firms may be potentially incompatible and
hence give rise to intra-organizational tension.
2.1. Professional guilds
Scholars have long recognized that two different value systems
exist within a single firm, having some shared goals but also some
conflicting objectives (Hayek, 1945). Scientists and managers often
have incompatible goals and differing criteria for success, due to
the fact that they belong to different professional guilds. We use the
term professional guild to refer to an association of people that are
joined together by the common bonds of their profession. Members
of the same professional guild can have different educational back-
grounds (e.g., biochemistry vs. physics; accounting vs. marketing)
but subscribe to the same professional values.
That tension exists between R&D scientists and management is
not a new observation. Shephard (1956) observed “frustration” in
the relationship between managers and scientists: “Management
is frustrated by its inability to determine whether progress on a
project is as good as could be expected; the research staff is frus-
trated by management’s inability to understand the nature of the
technical problem” (299). La Porte (1965) identifies the “sources of
strain and tension between scientists and managers” (22) as “those
personal and organizational relationships which increase the per-
ceived or recognized incompatibility of organization and scientific
goals” (25).
Professional bonds develop as part of a common accultura-
tion process. Members of the same professional guild form similar
personal and business judgments on the basis of their shared pro-
fessional values. They solve problems using the same paradigms,
which influences the way they perceive issues and process infor-
2
Efficient R&D is research that maximizes outputs given the inputs to the pro-
cess (Zander and Kogut, 1995). Effective R&D is research that meets important goals
(Kostova, 1999).
738 R. Mudambi, T. Swift / Research Policy 38 (2009) 736–745
mation (Kuhn, 1962). As a result, high levels of tension may exist
between corporate constituencies that are affiliated with different
professional guilds. In this paper, we develop a conceptual model
and a set of propositions that will improve our ability to identify and
understand the sources of tension between the professional guilds
of management and scientists, how this level of tension can change,
and how the presence of this tension can enhance or damage firm
performance. Such an understanding will enable us to recognize
opportunities to foster symbiosis between the two professional
guilds.
We now proceed to discuss the “tension” that exists and the
“tradeoffs” that managers are forced to make between market and
scientific performance. In order to do so, we describe the conflicting
objectives of scientists and managers that can give rise to tension.
2.1.1. Scientists’ objectives
Prior research generally recognized two reward systems for sci-
entists. Both of these incent scientists to disseminate the knowledge
that they create widely. Some researchers observe that members of
the scientists’ professional guild are motivated by creating knowl-
edge for knowledge’s sake. They have a “taste for science” (Merton,
1973; Dasgupta and David, 1994; Stern, 2004). New knowledge,
whether it translates into commercially valuable innovations or
not, is valuable as long as it advances scientific understanding
(Shephard, 1956; Kuhn, 1962; Duncan, 1974).
Osterloh and Frey (2000) help us to understand that the intrinsic
motivation of R&D workers can be more powerful than monetary
rewards. They argue that intrinsic motivation is particularly valu-
able when tacit knowledge must be transferred. Consistent with
this argument, survey work done by Dhawan et al. (2002) indicates
that knowledge workers believe that writing research papers is an
“energy-generating” activity within the firm.
Other researchers point to the formal reward system that
exists in scientific communities. This system encourages scien-
tists to share important discoveries and innovations rather than
hoard them. Researchers recognize that a “winner-take-all” reward
(Sorenson and Fleming, 2004, p. 1616) system exists for those
who are first to place a new discovery in a peer-reviewed domain
(Merton, 1957; Dasgupta and David, 1994). Primacy is a key com-
ponent of the scientific guild’s measures of excellence. Scientists
that are recognized for making important discoveries receive indi-
rect and direct rewards such as citations, prizes, research grants,
endowed chairs and even fame (Merton, 1957; Dasgupta and David,
1994; Sorenson and Fleming, 2004). Thus, ceteris paribus, firms that
permit their scientists to publish their research findings should
observe less tension between scientists and managers.
Among the first substantive findings that show that enabling
R&D workers to publish is a good motivator is Henderson and
Cockburn’s research (1994) showing that firms that promote scien-
tists on the basis of their publication activity generate higher R&D
output. Similarly, Cockburn and Henderson (1998) show that the
relationship between research productivity and co-authorship is
positive and statistically significant. Research continues to emerge
revealing productivity advantages by permitting scientists to pub-
lish. Stern (2004) finds empirical evidence that scientists pay to be
scientists. He shows that the salaries of non-academic scientists
that are provided relatively little research freedom are statistically
significantly higher than the salaries of non-academic scientists
that are provided relatively greater research freedom. Further, this
salary differential represents a significant percentage of scientists’
annual earnings.
2.1.2. Managers’ objectives
The professional guild of management stresses market out-
comes. To a manager, knowledge is a means to an end (Dasgupta and
David, 1994; Gittelman and Kogut, 2003). The ultimate objective is
to improve the market performance of the firm. Whether research
yields scientifically valuable knowledge is strictly secondary. The
specific focus of this discussion is on research and development
being conducted in profit-seeking firms. Setting aside the impact
that knowledge appropriability, absorptive capacity, and the pres-
ence of knowledge networks may have on the level and quality of
research conducted by the firm, the level of financial pressure under
which the firm operates is also an important determinant of R&D
investment.
In countries that follow U.S. Generally Accepted Accounting
Practices (GAAP), investment in tangible assets is capitalized and
depreciated over the useful life of the asset, but R&D expenditures
are expensed currently by the firm (Financial Accounting Standards
Board, SFAS No. 2). R&D expenses reduce current operating income
sharply, but capital investments reduce operating income modestly
in each accounting period over the useful life of the investment. It
follows that firm managers perceive a greater impact to short-term
earnings performance when spending a dollar on R&D than when
spending one on capital. An R&D manager may make sub-optimal
R&D expenditure decisions if he or she is faced with severe pressure
to meet short-term earnings targets.
Indeed, Baber et al. (1991) find support for the assertion that
“decisions to invest in R&D are influenced by managers’ concern
about reported earnings” (828). Perry and Grinaker (1994) find
that managers reduce R&D expenditures when expected near-term
earnings will deviate from analysts’ earnings expectations. Bushee’s
(1998) findings are quite precise and informative; he offers evi-
dence that firms that have high levels of institutional investors with
high portfolio turnover and engage in momentum trading are more
likely to reduce R&D to reverse an earnings decline. Firms with a
greater propensity to cut R&D are likely to possess higher levels of
tension between managers and scientists because they are forced
to make more difficult choices between R&D and current earnings
performance.
In addition to implementing budgetary control, management
may restrict R&D scientist activities in other ways. In contrast to
the scientists’ desire for primacy, managers prefer secrecy (Cyert
and March, 1963). Such restrictions can arise from the firm’s envi-
ronmental conditions. For example, McGaughey (2002) asserts:
“Network centrality enhances awareness of threats to intellectual
asset (IA) scarcity, and, thus, the likelihood of an IA owner’s engag-
ing in strategic interventions” that can enhance or defend the rents
appropriable from that IA (263). Earlier, we noted that Burt (1992)
shows that a firm’s position in a knowledge network enhances its
ability to appropriate value. By locating itself centrally within net-
works, a firm can become more aware of threats to its IA’s, and
therefore become better prepared to defend them. In the process of
placing stronger protections on the firm’s IA’s, managers can frus-
trate R&D scientists who value sharing their scientific work with
professional colleagues.
2.2. Knowledge appropriability and R&D intensity
This literature seeks to understand how knowledge appropri-
ability affects the firm’s R&D intensity. Intuitively, it may seem
that R&D intensity and knowledge appropriability would be posi-
tively related. We might expect that R&D intensity would be higher
(lower) in markets where appropriability is higher (lower), because
the firm is able (unable) to protect the knowledge it creates through
its own R&D. However, empirical research has provided evidence
of a negative relationship between knowledge appropriability and
R&D intensity: industries with lower knowledge appropriability are
characterized by higher R&D intensity (Cohen and Levinthal, 1990;
Jaffe, 1986).
Cohen and Levinthal (1990) find that highly interdependent
industries, which can be characterized by the ease with which
 R. Mudambi, T. Swift / Research Policy 38 (2009) 736–745
competitors learn from each other, have lower appropriability and
higher R&D. Jaffe (1986) confirms empirically that “the existence
of technologically related research efforts of other firms . . . allow
a given firm to achieve results with less research effort than oth-
erwise” (984). He finds that a firm’s patents per dollar of R&D, and
the firm’s accounting profits, are positively related to the level of
R&D of competing firms in the industry. This provides evidence that
it is knowledge spillovers that underpin the negative relationship
between knowledge appropriability and R&D intensity; firms that
are able to leverage knowledge created by competitor firms are able
to conduct more efficient R&D.
Intuitively, we can extend these insights to see how the level of
industry knowledge appropriability is linked to the organizational
tension in R&D intensive firms. Firms that compete in indus-
tries characterized by low knowledge appropriability are either
unable or not incented to protect their proprietary knowledge
from competitors. However, firms that compete in high knowledge
appropriability industries are able to protect their valuable pro-
prietary knowledge. Such firms in markets characterized by high
levels of knowledge appropriability should implement knowledge-
management policies that defend their knowledge base from
competitors (McGaughey, 2002). These restrictions can increase
tension between management and R&D scientists.
2.3. Absorptive capacity
Cohen and Levinthal (1989) introduced the concept of “absorp-
tive capacity.” They suggest that R&D not only generates new
information, but also enhances the firm’s ability to assimilate and
exploit existing information. A firm’s absorptive capacity refers to
the firm’s ability to capture and leverage publicly available infor-
mation. They find that the relationship between appropriability,
technological opportunity (the ability to capitalize on new technol-
ogy in commercially valuable ways) and R&D intensity is moderated
by the firm’s ability “to recognize, assimilate and exploit informa-
tion” (593).
Currently, no one has linked the concept of absorptive capacity
to the level of tension between R&D scientists and management. Yet
firms that recognize the inherent value of basic research in creating
absorptive capacity can avoid unnecessary tension. By funding basic
research, management not only fulfills scientists’ desire to pursue
pure science, but also provides scientists with the experience that
enables them to be value-adding applied scientists.
2.4. Knowledge spillovers and social network theory
A key aspect of knowledge management in firms is the role of
knowledge spillovers. Should the firm “share” or “hoard” knowl-
edge? Permitting or encouraging knowledge workers to publish
their findings allows them to share knowledge with professional
colleagues, and become members of knowledge networks. How-
ever, such publication activity could disclose sensitive competitive
information, thereby imposing costs to the firm (Mudambi, 2008).
Assessing the cost-benefit tradeoffs of firm R&D policy with respect
to publication incentives requires an understanding of how pub-
lished research travels through knowledge networks.
Gulati et al. (2000) tell us that the “. . . image of atomistic actors
competing for profits against each other in an impersonal mar-
ketplace is increasingly inadequate in a world in which firms are
embedded in networks of social, professional, and exchange rela-
tionships with other organizational actors” (203). Entities that are
located more centrally in networks tend to benefit by having more
social capital (Walker et al., 1997). The theory of social networks
helps us to understand how R&D scientists benefit from participa-
tion in certain networks of relationships.
739
Zucker et al. (1998) find that biotech firms are clustered near uni-
versities with “star scientists.” Further, Zucker et al. (2002) detect
a research productivity boost—those co-located firms have statisti-
cally significantly higher levels of patents and patent citations. It is
reasonable to conclude that firms centrally located within knowl-
edge networks are better able to appropriate critical information
from their environment, and combine it with their own internally
generated knowledge to create valuable innovations. Since such
firms generally conduct more efficient and effective R&D, man-
agers see a more direct link between basic research and market
performance. This serves to align the interests of firm managers
and scientists.
While literature on the theory of social networks helps us to
understand the fundamental social forces that enable knowledge to
travel, research on knowledge spillovers provides insights on how
knowledge travels. By bringing together these two literatures, we
can develop a holistic view of the dynamics of knowledge transfer
and how it relates to the tension between scientists and managers
within knowledge-intensive firms.
Cockburn and Henderson (1998) use co-authoring as evidence
of real collaboration between entities. They argue that co-authoring
is a more rigorous form of collaboration, as citations become ritu-
alized and are, in the age of the word processor and internet “cheap
and easy” (165). Yet co-authorship represents a real, tangible shar-
ing of information and effort, and is found to significantly affect
research productivity. They offer a compelling finding: the extent
to which firms are linked to the public sector by co-authorships is an
important determinant of the firms’ creation of important patents.
Cohen and Levinthal (1989) also apply this theory well; they found
firms linked to the public sector through co-authorships create
more important patents. These findings highlight the importance
of structural holes (Burt, 1992; Granovetter, 1973) in our study. A
structural hole exists in a network when two entities are not con-
nected via the existing network. Firms that occupy structural holes
in knowledge networks have better access to the knowledge con-
tained within those networks, because all information that flows
between these unconnected firms must pass through the entity that
occupies the structural hole.
Gittelman and Kogut (2003) tie knowledge management
research to network theory in a profound way. They find that
useful scientific innovation is generated by a subset of scientists
that is active in creating both scientific publications and patented
research. In other words, these scientists occupy structural holes in
knowledge networks and have the unique ability to translate pure
science into commercially valuable innovations.
We can build upon the findings regarding knowledge spillovers
and social network theory to provide important insights into the
origins of the tension between management and R&D scientists. A
higher likelihood that a firm’s proprietary knowledge can spill over
to competitors is associated with a higher level of tension between
firm management and R&D scientists. In markets where knowledge
spillovers are more likely, firm management is compelled to take
a more active role in protecting the firm’s proprietary knowledge.
Thus, firm management is more likely to manage the activities of
R&D scientists closely, thereby increasing tension.
2.5. Tension and boundary spanners
Certain individuals are well-placed to be able to influence the
impact that tension has on firm decision-making. While research
generally implies that boundary spanners (Tushman, 1977; Kostova
and Roth, 2003) are individuals that facilitate relationships between
firms (Friedman and Podolny, 1992), we suggest that boundary
spanners exist within the firm–brokering relationships between
different constituencies inside the firm. Such individuals have the
special insights required to skillfully balance the needs of the
740 R. Mudambi, T. Swift / Research Policy 38 (2009) 736–745
Fig. 1. Tension and boundary spanning in knowledge-intensive firms.
scientific and management guilds within the firm (Kostova and
Roth, 2003).
Previous research supports the assertion that boundary span-
ners in the firm can improve R&D performance. McMillan et al.
(1995) show that a higher the percentage of science Ph.D.’s in top
management is associated with more productive the R&D activi-
ties. Boundary spanners are particularly effective individuals when
it comes to mitigating tension. Highly effective boundary spanners
may be able to leverage tension to create superior outcomes. The
tension experienced by individuals in learning organizations can
lead to “a sustained sense of energy and enthusiasm, which . . .
produces . . . tangible results, which can then make the energy and
enthusiasm stronger” (Senge, 1994, p. 426).
Boundary spanners’ crucial contribution is the creation of trust
between organizations (Richter et al., 2006; Casson and Cox, 1993).
When boundary-spanning individuals foster the creation of trust,
negotiations have been found to proceed more easily (Currall and
Judge, 1995). “Negotiations are less costly under conditions of high
interorganizational trust because agreements are reached more
quickly and easily as parties are more readily able to arrive at a
‘meeting of the minds”’ (Zaheer et al., 1998, p. 144). Further, research
suggests that decisions that involve diverse viewpoints drive supe-
rior results (Simons et al., 1999). Eisenhardt (1989) shows that
teams that are highly effective at decision-making in fast-paced
environments utilize the entire team to reach decisions, without
permitting conflict to slow the decision: “Every team making fast
decisions took an active approach to conflict . . . a team attempts to
reach consensus by involving everyone” (562). Since R&D-related
decisions necessarily involve input from both professional guilds,
internal boundary spanners are uniquely able to mitigate the ten-
sion between these constituencies.
2.6. Fitting it all together: implications for knowledge creation
Previously, we have identified two professional guilds within the
knowledge-intensive firm: R&D scientists and management. Mem-
bers of firm management are those that create and maintain the
environments within which R&D is conducted, and provide incen-
tives for R&D production. The tools that the firm manager uses to
influence the work of scientists are the amount of funding allo-
cated to discrete research efforts, the rules and practices that govern
scientists’ work and the incentives made available to those scien-
tists. The R&D scientists are those that conduct basic and/or applied
research and create new knowledge. Their activities can influence
both the state of scientific knowledge, and the performance of the
firms within which they operate. Boundary spanners are individu-
als that balance the conflicting objectives of each constituency and
work to find common ground. These constituencies, and their rela-
tionships to one another, are represented in a comprehensive way
in Fig. 1.
The managers’ professional guild and the scientists’ professional
guild are represented as fairly dense knowledge networks, with
very few ties between them. The firm’s managers and scientists
occupy nodes within the business and scientific professional guilds,
respectively. Relatively few individuals reside in both networks.
Boundary spanners serve the critical role of brokering ties
between the scientific and management professional guilds
(Friedman and Podolny, 1992; Kostova and Roth, 2003; Tushman,
1977). Such individuals are critically important to the relationships
between the business community, the scientific community, and
the firm (Gittelman and Kogut, 2003). For example, Shephard (1956)
recognizes that the effective R&D manager will understand the
needs of multiple constituencies within the firm simultaneously. He
can be the special person who can “interpret” the needs of a team at
the operational level to higher levels of management, and help such
teams understand management’s requirements (Shephard, 1956, p.
303). Whether tension in the R&D investment decision-making pro-
cess results in a superior outcome rests on the effectiveness of the
boundary-spanning function in the firm.
3. Towards a new predictive model
In general, the tension between scientists and managers is influ-
enced by industry, firm, and role-specific forces. In our research
 R. Mudambi, T. Swift / Research Policy 38 (2009) 736–745 741

Table 1
Relevant literature on knowledge management.

Category Author(s) Key Takeaways

Knowledge • Jaffe (1986) Firms conduct more productive R&D in industries where
appropriability R&D • Zucker et al. (2002) knowledge appropriability is lower.
intensity
• Cohen and Levinthal (1989) Firms that conduct more basic research are more capable of
Absorptive capacity • Cohen and Levinthal (1990) identifying and leveraging publicly available information
• Tijssen (2004) into valuable innovations.

• Burt (1992)
Firms that are centrally located in knowledge networks are
• Granovetter (1973)
Social and professional more capable of acquiring valuable knowledge from the
• Gulati et al. (2000)
networks network. Entities that occupy structural holes in networks
• Powell et al. (1996)
are more capable of capturing information.
• Walker et al. (1997)

• Cockburn and Henderson (1998)

• Gittelman and Kogut (2003) Firms that link their R&D to the public sector perform
Knowledge spillovers
• Jaffe et al. (1993) generate more valuable scientific innovations.
• Zucker et al. (1998)

• Cockburn et al. (2004)

The intrinsic motivation to conduct “pure science” can be
• Dhawan et al. (2002)
more powerful than monetary rewards for R&D scientists.
• Henderson and Cockburn (1994)
Implications for firm Permitting scientists to publish while employed by a firm
• McGaughey (2002)
strategy drives more productive R&D. Firms are likely to make
• McMillan et al. (1995)
“strategic interventions” to protect the value of their
• Osterloh and Frey (2000)
intellectual assets under certain conditions.
• Stern (2004)

propositions, we identify the factors that influence the level of ten-
sion between R&D scientists and management. Further, we will
suggest that certain individuals within the firm are well-placed
to mitigate this tension, or even channel it to generate superior
outcomes.
We can leverage the cited literatures (Table 1) to frame
research propositions about the interactions between the firm’s
R&D managers and scientists. Research Propositions 1 through 5
are summarized in the following graphic (Fig. 2).
Absorptive capacity may be particularly important in industries
where knowledge appropriability is low, since in such industries,
more publicly available information exists. Therefore, firms can
benefit by conducting research that internalizes and leverages that
external information. In industries with low knowledge appropri-
ability, two phenomena can drive the same outcome. First, because
there is more publicly available information to leverage, R&D man-
agers are more likely to invest in research. Second, since firm
management recognizes that knowledge appropriability is low, it
realizes that restricting firm scientists from interacting with the
scientific community (e.g., publishing) has little effect on the firm’s
market performance.
Proposition 1. In industries where knowledge appropriability is low,
less tension will exist between R&D management and scientists.

Fig. 2. The interaction of tension and individual, firm and industry contexts.
742 R. Mudambi, T. Swift / Research Policy 38 (2009) 736–745
As noted in the accounting literature, ceteris paribus, firms fac-
ing earnings pressure are less willing to sustain investments in basic
research (Baber et al., 1991; Bushee, 1998; Elliot et al., 1984; Perry
and Grinaker, 1994). There are several situations in which a firm
is more likely to face difficult financial conditions. Each of these
industry situations is addressed by the concept of “munificence.”
Munificence is “generally seen as the extent to which an environ-
ment can provide sufficient resources for the firms present in it”
(Sharfman and Dean, 1991, p. 685). A fast growing industry is not
necessarily munificent if it holds many firms; and a slow grow-
ing industry may be munificent if it has high barriers to entry and
few firms (Bain and Qualls, 1987). Therefore, the munificence con-
cept captures the aspects of industry competitiveness, growth and
maturity.
Previous research posits that firms in munificent industries
place a higher emphasis on innovation (Dess and Beard, 1984;
Sharfman and Dean, 1991; Castrogiovanni, 1991). Aragon-Correa
and Sharma (2003) argued that “conditions of scarcity in the gen-
eral business environment make it more difficult to establish the
organizational and managerial processes, resources, and capabili-
ties necessary for developing the dynamic capability of a proactive
environmental strategy” (81). Firms in munificent industries are
more likely to be able to acquire the resources necessary for devel-
oping capabilities (Decarolis and Deeds, 1999).
In highly munificent industries, the relative availability of
resources, low competitive pressures and less pressure on finan-
cial performance means that R&D managers will be less stringent
in reviewing and approving R&D investments. This, in turn, gives
R&D scientists more freedom to pursue the R&D projects they find
appealing.
Proposition 2. Firms in more munificent industries will experience
less tension than firms in less munificent industries.
Network centrality can be an important determinant of a firm’s
absorptive capacity. Jaffe et al. (1993) find that knowledge travels
locally—local networks matter. Powell et al. (1996) posit that firms
more centrally located within knowledge networks generate higher
subsequent growth. A strong body of research shows that firm man-
agers seek to place their scientists within important knowledge
networks. A firm that is centrally located in a knowledge network
may be more aware of threats to its intellectual assets, thereby tak-
ing more proactive steps to protect their value (McGaughey, 2002).
Because firms that are centrally located in a knowledge network
have greater and faster access to the information contained within
the network, such firms will perceive competitive threats more
astutely than firms less centrally located. As a result, they can do a
better job at undertaking only those management actions that serve
to prevent spillover to competitors, and avoid frustrating scientists
unnecessarily. This managerial ‘light touch,’ in turn, leads to more
commercially productive knowledge creation (i.e., more intellec-
tual assets) and less tension between scientists and management.
In contrast, a firm located less centrally will have inferior access to
information on competitive threats, and is more likely to undertake
ineffective strategic interventions that lower scientists’ morale.
However, this role of knowledge networks depends upon the
level of absorptive capacity (Cohen and Levinthal, 1989) possessed
by the firm. In order to be able to recognize and assimilate the
knowledge available from knowledge networks, firms must possess
absorptive capacity.
Proposition 3. In firms more centrally located within knowledge net-
works, less tension will exist between R&D scientists and managers.
This relationship is moderated by the level of the firm’s absorptive
capacity.
A review of the literature also indicates support for the value
of occupying structural holes within social networks (Burt, 1992;
Granovetter, 1973). If a firm occupies a structural hole in a knowl-
edge network, it can appropriate more knowledge than other firms
in the same network that do not occupy structural holes. In the
same way that network centrality should lead to less tension, occu-
pying structural holes should enable the firm to exploit external
information well, and to align the interests of R&D scientists and
managers.
Proposition 4. Firms occupying structural holes within knowledge
networks have less tension between R&D management and scientists.
The ability to balance effectively the concerns of scien-
tists and management is a special and rare skill. Often, the
boundary-spanning function resides within the R&D management
function—those individuals charged with administering the day-
to-day R&D team activities. It has been suggested that this unique
ability to bridge the gap between two organizational sub-groups
that are sometimes at odds make boundary spanners valuable
(Kostova and Roth, 2003, p. 304). Boundary spanners that identify
with the logic of both the managerial and scientific professional
guilds can be particularly effective at crafting agreements that can
translate tension into effective R&D decision-making.
Proposition 5. Boundary-spanning managers can mitigate the ten-
sion in between R&D scientists and management.
If boundary spanners fail to foster consensus between manage-
ment and R&D scientists, they fail to increase the level of trust
between the professional guilds, and firm performance suffers. Lack
of trust increases the likelihood of opportunism, rent-seeking and
drawn-out, costly negotiations (Williamson, 1975; Mudambi and
Navarra, 2004). Alternatively, if trust does exist between the guilds,
each side is more likely to be open-minded (Zaheer et al., 1998).
The diverse viewpoints brought to the decision-making processes
can result in superior results. Breakthrough innovations occur more
often when firms reach beyond familiar sources of ideas (Ahuja
and Lampert, 2001). Utilizing multiple points of view can enhance
the firm’s ability to find groundbreaking solutions. For example,
Simons et al. (1999) find that decision-making teams that have
higher inter-member diversity, and engage in more debate, have
a strong positive effect on firm performance.
Proposition 6. The trust that can be created by boundary span-
ners positively moderates the relationship between intraorganizational
tension between R&D scientists and managers and firm performance.
4. Discussion
A significant body of research finds that higher R&D output is
associated with non-financial incentives (Cockburn and Henderson,
1998; McMillan et al., 1995; Mudambi et al., 2007). Osterloh and
Frey (2000) knit together a broad base of theory and research to
argue for the power of intrinsic motivators to drive the performance
of R&D scientists. It has been shown that scientists accept less pay
in order to conduct quality science on the job (Stern, 2004) and that
they produce superior research outcomes when they are allowed
greater control of their environment (Mudambi et al., 2007). This
literature reminds us of the tenuous influence that the R&D man-
agement exercises over the scientists upon which it depends for
knowledge creation. Tension exists between R&D scientists and firm
management; the primacy-based motives of scientists are often in
direct conflict with the secrecy-based motives of managers.
This paper directly confronts the challenge of this tension. We
find that the major schools of thought in knowledge management
provide valuable insights into the sources and the nature of ten-
sion. We offer ways to predict how tension will change, and make
several new recommendations for either mitigating the tension, or
for channeling it into positive outcomes. Our research propositions,
 R. Mudambi, T. Swift / Research Policy 38 (2009) 736–745
based on solid theoretical foundations, provide a framework for a
new line of research on normative R&D management.
4.1. Managing and mitigating tension
As discussed, the mitigation of tension between these profes-
sional guilds can be achieved through individual or organizational
means. At the organizational level, a firm can proactively manage its
participation in social networks. In situations where the firm is not
centrally located, or does not occupy structural holes in the right
knowledge networks, R&D management can support policies that
will increase the firm’s interaction with such networks. Increased
publication from R&D scientists (Henderson and Cockburn, 1994)
and co-authorships between the firm’s R&D scientists and public
sector scientists (Cohen and Levinthal, 1998; Gittelman and Kogut,
2003) are two examples offered by previous scholars for improving
network ties.3 While management may view work hours devoted
to the preparation of published research as lost time (Shephard,
1956), or worse as aiding competitors (Nelson, 2004), investing
R&D resources into such efforts can create other important bene-
fits. Firms can receive more valuable tacit knowledge than they give
away by permitting their scientists to engage in public scholarly dia-
logue with scientists from other organizations. It may be wise for
firms to permit scientists to trade some of their time spent solving
the firm’s near-term problems for time spent building knowledge
networks outside the firm.
At the individual level, firms can place boundary spanners in
roles that enable them to build trust between the two professional
guilds. Boundary spanners may not only mitigate tension, but also
may be able to leverage tension to generate superior outcomes. By
increasing the level of trust between R&D scientists and managers
(Zaheer et al., 1998), boundary spanners enable the two guilds to
reach agreement more quickly (Williamson, 1975). When decision-
making units that have highly diverse viewpoints work together
in a trusting way, they are able to move rapidly and generate real
synergies (Eisenhardt, 1989; Simons et al., 1999).
Carlile (2002) posits that effective boundary spanners achieve
three objectives. First, they establish a “shared syntax,” (Carlile,
2002, p. 451), which enables both constituencies to share their
knowledge with each other. Second, they provide individuals from
each constituency with a way to understand the “differences and
dependencies” Carlile, 2002, p. 452) that exist across the bound-
ary. Third, they provide members from both guilds an opportunity
to jointly transform their knowledge in order to achieve superior
outcomes.
It has been pointed out that boundary spanners need to build
bridges not only across functions but also across levels within the
firm. It has been shown that successful organizational teams build
ties to top management as well as to teams in other functional areas
(Ancona and Caldwell, 1992). These teams contain individuals that
are able to communicate their core values to gain the attention of
non-members and shape their beliefs and behaviors (Bouquet and
Birkinshaw, 2008). Teams that remain isolated within functional
silos are less successful. This suggests that boundary spanning is
composed of developing and sustaining an external rather than an
internal orientation. Boundary spanners are able to negotiate and
coordinate with members of other professional guilds. It is often
necessary for them act as a buffer between the guilds by “filtering”
out troubling information from outsiders and delivering a smaller
3
It is important to note that improvements to firm policies can be effective only if
the firm also has competent R&D management and marketing. If marketing is unable
to exploit great research, or if R&D does not yield anything of commercial value, then
no change in the amount of participation in knowledge networks can improve the
situation.
743
amount to the group (Ancona and Caldwell, 1992, p. 638). This
requires sufficient immersion in each professional guild to recog-
nize its values and strengths as well as to gain the acceptance of its
members.
Boundary spanners utilize a range of tools to resolve conflict
and provide the two guilds with shared understanding, values and
goals. The guilds’ value systems typically coalesce around specific
use of language, jargon and mental models. Boundary spanners can
help in developing and implementing firm-specific language, rou-
tines (including standardized forms and knowledge recording) and
operating procedures that are sensitive to the value systems of both
guilds, thereby serving as integrating devices (Carlile, 2002).
Recent case study research provides an exemplar of a boundary-
spanning member of executive management who improved the
performance of the R&D function within the division that he man-
ages (Hill et al., 2009). This executive works for a diversified
manufacturing firm and holds a Ph.D. in the same discipline as most
of his R&D scientists. For the first two years after he assumed this
position, he conducted R&D project reviews personally, “rolling up
his sleeves” and immersing himself in the details of many R&D
projects. Over time, his interaction with the R&D project teams
created an in-depth understanding of how the R&D teams could
conduct top-notch research whilst at the same time meeting the
division’s financial targets.
In this role, he was able not only to communicate relentlessly
the division’s business objectives, but also to help R&D scientists to
understand how reasonable revisions to their efforts could support
the division’s overall business success. Thus by being able to pro-
vide valuable technical feedback and advice to R&D scientists while
also communicating the tangible aspects of the division’s busi-
ness objectives, this executive vice-president became an effective
boundary spanner.
4.2. Incentive systems
The tension between the managers’ objectives of secrecy and the
scientists’ objectives of primacy may be related to the incentives
faced by the two guilds. Managers are offered increasingly lucra-
tive financial incentives based on firm performance (Pekkarinen
and Riddell, 2008). This focuses their attention almost solely on
capturing financial returns from the firm’s R&D expenditure, with
the underlying knowledge creation merely a means to an end.
In contrast, the scientists’ guild face an incentive system
composed of relatively modest (fixed) pecuniary and variable non-
pecuniary payoffs. Therefore the non-pecuniary payoffs in the
form of prizes, acclaim and research grants became dominant
(Scotchmer, 2004). This desire for primacy and consequent acclaim
has a long history. It has been documented that Galileo limited
access to his telescope in order to preserve his primacy and to
ensure credit for subsequent discoveries (Biagioli, 2006).
It is interesting to consider the extent to which the different
incentive structures explain the differing value systems of the two
professional guilds. There is evidence that in fields like biomedicine,
where R&D work has significant and direct commercial value, scien-
tists are less willing to publicize their findings (Cohen and Walsh,
2008). It is possible that this “privatization of the scientific com-
mons” (Nelson, 2004, p. 456) may serve to align the interests of
managers and scientists. In the case of young biotechnology ven-
tures, increasing the financial incentives available to R&D scientists
has been shown to make the objectives and scientists and managers
more compatible (Argyres and Liebskind, 2000). Incentive align-
ment may serve as an organizational tool to reconcile the objectives
of the two professional guilds, by increasing the pool of boundary
spanners. This is a fruitful avenue for future research.
The findings presented here remind us that knowledge-
intensive firms must not only recruit talented senior managers and
744 R. Mudambi, T. Swift / Research Policy 38 (2009) 736–745
gifted R&D scientists, but also individuals that are uniquely able
to enhance trust and communication between professional guilds.
These boundary spanners need not possess the impressive creden-
tials of seasoned executives or “star scientists” (Zucker et al., 2002).
However, without such individuals, the negative consequences of
the tension between the professional guilds described in this paper
may be insurmountable.
5. Conclusion
The purpose of this article is to develop a framework that can
be used to identify the sources of tension between R&D scientists
and managers within the firm, the factors that cause this tension to
vary, and to identify the ways that tension can benefit or damage
firm knowledge creation. This framework draws upon the literature
on absorptive capacity, knowledge spillovers, knowledge appropri-
ability and social network theory. We use this framework to develop
several propositions.
The level of knowledge appropriability and munificence in the
industry, as well as key characteristics of the knowledge networks
in which the firm operates, will impact the level of tension between
R&D scientists and managers. Firms occupying structural holes in
knowledge networks will experience lower tension, as will firms
that are centrally located in knowledge networks. Boundary span-
ners that help to integrate knowledge from both the scientific and
management professional guilds into decisions can mitigate ten-
sion effectively, or even leverage tension for superior results.
The tension between R&D scientists and management is a
double-edged sword. Permitting R&D scientists to interact with
professional colleagues outside of the firm can lead to the disclo-
sure of proprietary information to firm competitors; it can also
place firm scientists within valuable knowledge networks. Group
decision-making involving diverse viewpoints can result in lack of
consensus and strategic drift; it can also lead to more informed
decisions that result in breakthrough innovations that would not
be discovered by a homogenous group. Yet the best firms strike a
balance. They permit scientists to create valuable knowledge while
engaging in worthwhile scientific pursuit. Management shapes the
R&D process to ensure that shareholder value is created. Boundary
spanners bridge the chasm between these divergent objectives.
Acknowledgements
We would like to thank Mark Casson, Arun Kumaraswamy, Sara
McGaughey, Magnus Persson, David Reeb, Steven Tallman and the
session participants at the 2006 Academy of Management meeting
for helpful comments.
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