KNOWLEDGE-INTENSIVE WORK AND THE (RE)EMERGENCE OF DEMOCRATIC GOVERNANCE

This paper examines the efficiency rationale for democratic governance in economic organization. In addition to markets, hierarchies, and clans (the standard repertoire), democracy should be added as a viable and efficient form of organization, particularly for the modern knowledge-intensive economy. In fact, even using established organization theory and organizational economics, democratic governance would constitute a superior structural alternative under such conditions. Based on this theoretical argument and more than a decade of empirical research on the organization of new knowledge- based firms, as well as the governance of innovative activities in established firms, this paper advances a set of propositions articulating the efficient mix of governance mechanisms defining such democratic structural alternative; they include partnership rather than exchange employment contracts, democratic allocation of decision and control rights, negotiated rent-sharing, and open boundaries. The potential and due applications of these practices to situations where knowledge contributions are present but not prominent are highlighted.