Tacitness, codification of technological knowledge and the organisation of industry

This paper investigates the wave of codification of technological knowledge which has occurred over the last two decades due to the availability at low cost of electronic automation and measurement instruments. During this process, traditional tacit skills of workers have become largely obsolete and modern operators on the shop floor are mainly process controllers and low-level problem solvers. Alongside this, the acceleration of innovation has made high-level problem solvers increasingly important. Tacit knowledge has thus remained crucial, but it has become complementary to a codified knowledge base and concerns problem solving heuristic, interpretation of data, etc. After illustrating the benefits and costs of codification and the nature of tacit skills, three case studies are presented regarding the steel, semiconductor and mechanical sectors. The last part of the paper discusses the impact of codification/automation/ complexity and increased burden of fixed costs on industrial organisation. A story of co-evolution of technological knowledge, cost structures, transaction costs and social division of labour emerges.