Knowledge acquisition and transfer among engineers: effects of network structure

This paper examines the association between the structure of formal intra-firm networks and productivity. We focus on two network structure components-department centralization and centrality, within a four department engineering organization. Centrality indicates the number of connections between one department and others within the organization, while centralization captures how much of those connections are concentrated among the workers within the department. Both of these represent specific managerial decisions in a formal network structure. We use learning curve theory to measure accumulated organizational knowledge, its depreciation and intra-firm transfers. We hypothesize that the departments are more productive, experience less depreciation and realize more knowledge transfer if they have more intra-firm connections among more workers. The findings suggest a significant yet moderate association between the formal network structure and productivity.