Organizational knowledge actions and the evolution of knowledge environment: a micro-foundations perspective

Abstract

This study proposes a new theoretical approach to conceptualizing the knowledge environment as a mosaic of knowledge components stemming from organizational knowledge actions. The pieces of this imaginary mosaic are the novel knowledge components incorporated in organizational knowledge actions and their sizes are determined by the extent of their influence on subsequent knowledge actions. I use the variation-selection-retention (VSR) and social mechanisms models to build my approach and I employ the patented knowledge environment as an exemplar. The deconstruction of the knowledge environment into its organization-level knowledge components embedded in organizational knowledge actions could provide scholars, managers, and policy-makers with a simple perspective to view the contribution of each organization to its knowledge environment.

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Evolutionary and Institutional Economics Review
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ARTICLE
Organizational knowledge actions andtheevolution
ofknowledge environment: amicro‑foundations
perspective
MichalisE.Papazoglou1
Received: 13 August 2021 / Accepted: 20 March 2022
© Japan Association for Evolutionary Economics 2022
Abstract
This study proposes a new theoretical approach to conceptualizing the knowledge
environment as a mosaic of knowledge components stemming from organizational
knowledge actions. The pieces of this imaginary mosaic are the novel knowledge
components incorporated in organizational knowledge actions and their sizes are
determined by the extent of their influence on subsequent knowledge actions. I use
the variation-selection-retention (VSR) and social mechanisms models to build my
approach and I employ the patented knowledge environment as an exemplar. The
deconstruction of the knowledge environment into its organization-level knowledge
components embedded in organizational knowledge actions could provide scholars,
managers, and policy-makers with a simple perspective to view the contribution of
each organization to its knowledge environment.
Keywords Knowledge environment· Organizational actions· VSR· Social
mechanisms
JEL Classification B52· L20· O30
1 Introduction
Organizations function in certain, dynamic environments by which they are determined
and on which they have the ability to exert an influence. The issue of how an organiza-
tion’s actions and decisions affect and shape its environment is always a topic of great
interest for management and organizational researchers. Although there exist theoretical
perspectives that focus on the ability of organizations to shape their environment (e.g.,
institutional entrepreneurship, strategic choice), there is a gap in our understanding of
* Michalis E. Papazoglou
papazoglou@aueb.gr
1 Athens University ofEconomics andBusiness, Athens, Greece

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how this shaping is realized. What are the mechanisms that transform organizational
actions into environmental characteristics; how the organizations’ environment is built
step-by-step by organizational actions?
Taking an evolutionary, micro-foundations perspective, Nelson and Winter (1982),
in one of the most influential works in social sciences, stressed the importance of this
topic by positing that “the core concern of evolutionary theory is with the dynamic
process by which firm behavior patterns and market outcomes are jointly determined
over time” (1982, p. 18) and hoping that “perhaps in the future it will become possible
to build and comprehend models of industry evolution that are based on detailed and
realistic models of individual firm behavior” (1982, p. 36). Inspired by this view, this
article endeavors to conceptually connect organizational-level actions with their result-
ing consequences on the evolution of a specific aspect of the organizational environ-
ment, namely the knowledge environment.
I use the social mechanisms approach to model the interactions between an organi-
zation and its environment (Hedstrom and Swedberg 1998) and I employ the VSR
processes of evolutionary change to model the pattern of the knowledge environ-
ment’s shaping by organizational actions (Campbell 1965; Zollo and Winter 2002). In
particular, I propose that in their effort to adapt and respond to the perceived environ-
mental conditions, organizations make certain actions using existing knowledge from
their environment. The consequences of these organizational knowledge actions con-
cern not only the organizations that generated these actions, but also their knowledge
environment.
According to my proposal, the effect of organizational knowledge actions on knowl-
edge environment follows the VSR pattern. More specifically, organizational knowl-
edge actions, as potentially including novel knowledge components, add variations to
the environment and, as using existing knowledge components, they alter their impor-
tance. These processes drive me to view knowledge environment as a mosaic of knowl-
edge components whose pieces are the novel knowledge components incorporated in
organizational knowledge actions and their sizes are determined by the extent of their
influence on subsequent knowledge actions.
By viewing knowledge environment as a mosaic created by organizational knowl-
edge actions, this paper advances theorizing on the organizations’ ability to shape their
knowledge environment. From my perspective, each organizational knowledge action
inevitably affects the knowledge environment and it does so in two distinct ways; either
by adding new knowledge components or by altering the importance of the existing
knowledge components that are reproduced by each knowledge action. This perspec-
tive could stimulate a stream of research that will focus on the quantification of the
impact of each organization on the evolution of its knowledge environment. The exem-
plar presented in Sect.3, which analyzes how a subset of knowledge environment—the
patented knowledge—is shaped by organizational knowledge actions, offers an initial
step in this direction.

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2 Theory
2.1 Co‑evolution oforganizations andtheir environment
The co-evolution of a unit and its environment is a fundamental issue that concerns
the entire spectrum of social sciences. Management and organization studies are
actively involved in the adoption and the development of co-evolutionary syllogism,
a fact which is manifested by the application of this logic (explicitly or implicitly) in
various co-evolving pairs either across different levels, such as individual–organiza-
tion, group–organization, or organization–environment, or on the same level such as
organization–organization, industry–industry and so forth (Rosenkopf and Tushman
1994; Dijksterhuis etal. 1999; Flier etal. 2003; Murmann 2013).
Focusing on the co-evolution of organizations and their environment, there
appears to be a broad consensus around the view that organizations shape and are
shaped by their environment in a permanent, co-evolutionary manner. For example,
Lewin and Volberda (1999), major proponents of the co-evolutionary logic, elo-
quently described change within the organizational realm as the joint outcome of
managerial intentionality and environmental effects. In the same vein, Barley and
Tolbert (1997) argued that although institutions set bounds on rationality by restrict-
ing the perceived alternatives, individuals and organizations, through choice and
action, can deliberately modify, create and even eliminate them. Moreover, Car-
ney and Gedajlovic (2002) highlighted that actors are often capable of influencing
institutional arrangements, but are nevertheless subject to constraints that limit their
range of feasible and conceivable action. Finally, I refer to the work of Murmann
(2013, p. 61) who stressed that “causality does not only run from the environment
to the evolving entity but it also runs from the entity to the environment” and high-
lighted the case of the Internet where firms are not only dramatically affected by
Internet technologies, but also certain firms like Microsoft, Apple, or Google have a
huge impact on how Internet technologies evolve.
2.2 Organizations’ Impact ontheir Environment
In general, micro-foundations research in social sciences investigates potential micro
explanations of heterogeneous macro outcomes, locating the causes of a phenome-
non at a level of analysis lower than that of the phenomenon itself (Felin etal. 2015;
Liagouras 2017; Zilber 2020). Under this view, the explanations for the conditions
of organizations’ environment at time t must involve the organizational actions at
time t − 1.
Continuing with this line of reasoning, a constant complaint of the micro-founda-
tions movement is that studies of how organizations influence their environment are
rarer than studies of how they adapt to it (Stern and Barley 1996; Felin etal. 2015).
The extant literature primarily has focused on how and why organizations tend to
become isomorphic with their environments, whereas questions of how organiza-
tions systematically influence their environments are studied less (Baum and Singh

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1994; Lewin and Volberda 1999; Felin etal. 2015). Attempting to explain this gap,
Dieleman and Sachs (2008) stressed that scholars often assume that corporations are
too insignificant to have an impact on their environment, while Barley and Tolbert
(1997) underscored the difficulties of detecting and collecting data for documenting
the effect of an organization’s activities on its context.
Despite the lack of empirical investigations on the influence of organizations on
their environment, important management and organizational theories acknowl-
edge and build on the ability of organizations to shape their environment in their
effort to adapt to it (organization-level adaptation). The extent to which each theory
focuses on the organizations’ capacity to affect their social landscape varies substan-
tially. For example, the behavioral theory of the firm, although primarily focuses
on the organizations’ capability to change their goals, attention, and search proce-
dures, secondarily suggests that firms can affect the external environment in which
they operate (Lewin etal. 2004). Furthermore, both evolutionary economics and
dynamic capabilities approaches accept the organizations’ power to influence their
environment. Evolutionary economics views firms as vehicles of innovation and
drivers of change at the industry level (Lewin etal. 2004), while the firms’ capa-
bility of manipulating their external context is a constituent part of dynamic capa-
bilities (Teece 2009). In addition, the strategic choice approach explicitly assumes
that firms, on the basis of managerial intentionality, have the ability to reshape their
environment, rather than simply being passive recipients of environmental forces
(Flier etal. 2003). Finally, the most representative approach on the shaping role of
organizations is the concept of institutional entrepreneurship within the structure-
agency debate (DiMaggio 1988; Garudet al. 2002; Smith and Cao 2007; Heugens
and Lander 2009), which analyzes how actors can contribute to changing institu-
tions, despite pressures toward isomorphism (Battilana etal. 2009). However, none
of these theoretical perspectives goes inside the black box of transformational mech-
anisms. We have no clears insights about the mechanisms that transform organiza-
tional actions into environmental characteristics? This is exactly the research ques-
tion that the proposed perspective attempts to address.
2.3 Organizations’ knowledge environment
In this study, the focus is on a specific aspect of organizations’ environment, the
knowledge environment. Following Van Den Bosch etal. (1999), I define knowledge
environment as the knowledge related to products, services, production processes,
management, marketing, and markets, which is embedded in a wider world environ-
ment (Carney and Gedajlovic 2002). Knowledge environment consists of knowledge
components and constantly changes as new knowledge components are being added
while the importance (in terms of usefulness) of the existing ones is being altered.
2.4 Organizational knowledge actions
I define organizational knowledge actions as the making of organizational deci-
sions by applying existing knowledge to solve specific problems (Vincenti 1994;

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Brooks 1995; Lichtenthaler and Lichtenthaler 2009). Organizational knowledge
actions inevitably generates novelty by reinterpreting, recombining, and transform-
ing prior knowledge and by applying it to diverse contexts that constantly change at
the firm, industry, and country-level (Dijksterhuis etal. 1999; Weeks and Galunic
2003; Nooteboom 2008). The degree of novelty varies from extremely low (e.g.,
repetitive organizational knowledge actions characterized by automaticity in the
decision-making process (Zollo and Winter 2002)) to extremely high (e.g., radical
innovations).
2.5 Proposed perspective
The main proposal of this paper is that the knowledge environment is formed exclu-
sively by the knowledge actions of organizations (private or public), following the
classic evolutionary paradigm of variation-selection-retention (VSR) (Campbell
1965; Zollo and Winter 2002; Weeks and Galunic 2003; McDonagh 2020). Accord-
ing to the VSR model, within an evolving population, the variation mechanism
explains how novelty occurs within the population (e.g., novel artifacts or ideas),
selection refers to the mechanism that causes the survival of some variations rather
than others (e.g., dominance of a new technology over competing alternatives), and
retention mechanism ensures that some useful information to particular problems is
retained, passed on and reproduced (e.g., innovation adoption) (Hodgson and Knud-
sen 2006; Aldrich etal. 2008; Hodgson 2013; McDonagh 2020).
In particular, each organizational knowledge action, as creating novel knowl-
edge components, adds variations into the population of knowledge environment. In
addition, because every organizational knowledge action draws upon and uses prior
knowledge, it selects and reproduces certain, existing knowledge components from
the pool of knowledge environment, changing their importance and their reproduc-
tive success. These arguments lead us to imagine the knowledge environment as a
changing mosaic whose pieces are the novel knowledge components generated by
organizational knowledge actions while their sizes in the mosaic are determined by
the extent of their impact on subsequent knowledge actions.
Although the broader institutional environment (e.g. regulations, industry stand-
ards, IP rights) does influence the knowledge environment, it does this indirectly,
by influencing the organizations which are capable of taking knowledge actions.
Broader institutional environment suggests which knowledge elements should be
selected and used by organizations, but actually, only organizations, through their
actions, can directly interact with the knowledge environment. For example, indus-
try standards force organizations to use certain knowledge elements (instead of
other alternatives) from the current knowledge environment when taking knowl-
edge actions, substantially affecting, albeit indirectly, the evolution of knowledge
environment.
In addition to the VSR, the proposed perspective is inspired by the concept of
social mechanisms (Hedstrom and Swedberg 1996, 1998; Hanelt et al. 2020).
Social mechanisms, rooted in James Coleman’s macro–micro-macro model (Cole-
man 1986; Felin etal. 2015; Distel 2019), endeavors to conceptualize how a social

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entity’s actions are formed and how these actions are transformed into a collective
outcome, given certain environmental conditions (Hedstrom and Swedberg 1998).
According to Social Mechanisms, instead of analyzing relationships between phe-
nomena on the macro level, social scientists should try to figure out the mechanisms
that explain how macro-level conditions affect the individual (macro-to-micro), how
the individual assimilates the impact of these macro-level events (micro-to-micro),
and how the individual generate macro-level outcomes, as a result of its actions and
interactions (micro-to-macro) (Hedstrom and Swedberg 1996).
An organization at any point in time is exposed to specific knowledge, market,
and social conditions affecting it in a certain way (the phase of Situational Mecha-
nisms according to the Social Mechanisms model). Trying to adjust and adapt to the
perceived environmental conditions in the most appropriate way, the organization
makes certain decisions and actions using existing knowledge from its environment
(Chia and King 1998; Carney and Gedajlovic 2002; Hodgson 2013). Organizational
knowledge actions are actually the responses and efforts to adapt to continuous
changes in the knowledge environment (the phase of Action-Formation Mechanisms
according to the Social Mechanisms model).
However, an organizational knowledge action has consequences not only for the
organization that generated it. An organizational knowledge action also produces
macro-level outcomes, as it transforms the knowledge environment by adding novel
knowledge components and by altering the importance of the prior knowledge com-
ponents that were used by the organizational knowledge action [the phase of Trans-
formational Mechanisms according to the Social Mechanisms model (Reinecke and
Ansari 2016)]. At this point, a new cycle of the evolution of knowledge environment
starts, as the organizations now need to adapt to the new, transformed knowledge
environment (again the phase of situational mechanisms).
The phase of Transformational Mechanisms is exactly where the VSR approach
is applied, using the knowledge component as the unit of analysis. The logical point
of departure for analyzing evolutionary change is the variation mechanism (Zollo
and Winter 2002). For Astley (1985), variation is the primary evolutionary force
and the direct cause of change, as is the one that creates diversity and determines the
direction in which evolution progresses. As eloquently stated by the same author in
his study on organizational evolution (Astley 1985, p. 239), “Strictly speaking, there
is only one source of change, namely, organizational variation”. In the same vein,
organizational knowledge actions add variations into the knowledge environment
by generating novel knowledge components, as a consequence of the reinterpreta-
tion, recombination, and application of the existing knowledge on the ever-changing
environment.
Apart from contributing variations to the knowledge environment, organiza-
tional knowledge actions also redefine the importance of the existing knowledge
components by selecting (i.e., selection mechanism) and reproducing (i.e., retention
mechanism) some and rejecting others. Organizational knowledge actions actual-
ize the environmental selection pressures by favoring the selection of certain prior
knowledge components from the knowledge environment. Organizations choose
among almost infinite prior knowledge components the most suitable for them and

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reproduce them according to their purposes and needs, while rejecting the alterna-
tive ones (Grodal etal. 2015).
By selecting and reproducing certain prior knowledge components, organiza-
tional knowledge actions contribute to their diffusion and legitimacy (Dijksterhuis
etal. 1999). In evolutionary terms, they act as their technological offspring, increas-
ing their chances for survival and prevalence in the knowledge population (Weeks
and Galunic 2003). From the perspective of the selection and retention mechanism,
organizational knowledge actions reshape the knowledge environment, on the one
hand, by increasing the visibility of the selected knowledge components, thereby
improving their possibilities of being noticed, selected, and reproduced again by
future knowledge actions, and on the other hand, by letting the rest knowledge com-
ponents unaffected in obscurity, increasing the likelihood of disappearing into obliv-
ion (Weeks and Galunic 2003).
A similar conceptual connection between the extent to which prior knowledge
has been selected and retained and the extent of its value and importance has been
described by Vincenti (1994). More specifically, viewing new management practices
as variations, he noted that the extent of variations’ selection and retention (i.e., the
extent of their diffusion) “affects the value that change agents such as managers,
management consultants, and academics attribute to existing solutions” (Vincenti
1994, p. 1253).
Summarizing, by responding and adjusting to continuous environmental changes,
organizations make certain knowledge actions. Among all possible options and alter-
natives—options that are determined and constrained by the organizations’ broader
environment and characterized by different probabilities of realization, organizations
make certain choices concerning what actions to make and upon which prior knowl-
edge to build. These knowledge actions reshape the knowledge environment by add-
ing new variations into the population of knowledge components and by reevaluat-
ing the importance of the existing knowledge components that were selected and
retained by these knowledge actions. After each organizational knowledge action, a
new cycle of knowledge evolution initiates that includes the new variations and the
new values of the prior knowledge components. As such, the evolution of knowledge
environment can be conceptualized as a mosaic of knowledge elements whose con-
stituent parts are the novel knowledge components incorporated in organizational
knowledge actions and their sizes and visibility are determined by the extent of their
influence on subsequent knowledge actions.
3 Patented knowledge asanexemplar
To offer a better understanding of the proposed conceptualization of the micro-foun-
dations of knowledge environment, I use the patented knowledge as an exemplar. I
attempt to explain the evolution of the patented knowledge environment through the
lens of our perspective, considering that the set of all technological knowledge com-
ponents that are incorporated in patented inventions actually constitute the whole
“path” of patented knowledge evolution.

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The patent system is probably the most suitable knowledge system to which our
model can be applied because each process of knowledge variation, selection, and
retention is documented and guaranteed by patent offices. In particular, patents can
be viewed as organizational knowledge actions that include one or more knowledge
variations whose novelty is guaranteed by the examiners of the patent offices. In
addition, patent citations (i.e., a list of references to all “prior art” upon which pat-
ented inventions are based) can be viewed as manifestations of the selection and
retention mechanisms. They reveal the prior patented knowledge that an organi-
zation selected and reproduced in its effort to develop a new patented invention
(Podolny and Stuart 1995). The reliability of the citation procedure is corroborated
by the patent examiners, who guarantee that relevant patents will be cited and irrel-
evant patents will be omitted (Stuart 1998; Hoetker and Agarwal 2007).
More generally, organizations and their technological environment (i.e., the set
of all technological knowledge components) are two co-evolutionary partners that
interact from different levels, that is to say, the micro-level (organizations) and the
macro-level (technological environment). Following the Social Mechanisms model,
each inventing organization at any point in time, as being nested with a specific
technological environment, is exposed to certain technological knowledge (i.e., Sit-
uational Mechanisms). In its effort to adapt, survive, and prevail, an organization
has to make certain decisions either concerning what technology to adopt or what
technology to develop (i.e., Action-Formation Mechanisms). Adopting an existing
or developing a new technology is not only a step in the organization’s evolutionary
path, but at the same time, it is a step in the evolutionary path of the technological
environment (i.e., Transformational Mechanisms). The causality does not only run
from the technological environment to the evolving organization (i.e., all the exist-
ing knowledge upon which an organization can potentially be based to develop new
technological inventions) but it also runs from the organization to the technological
environment (i.e., the new technological inventions developed by the organization
and the prior knowledge selected and reproduced) (Murmann 2013).
As our perspective proposes, the effect of organizations on the evolution of pat-
ented knowledge environment follows the VSR pattern. In particular, the event of
a patent grant can be viewed as a manifestation of the variation mechanism. Every
time a patent is granted, one or more new variations are introduced into the popu-
lation of technological knowledge components. More specifically, each patent con-
tains a set of claims, which are the list of the specific technological developments for
which the patent assignee is claiming exclusive rights (Harhoff and Wagner 2006).
Patent claims actually declare the specific novelties that are claimed to have been
achieved by a particular patent (Markman et al. 2004). Consequently, each claim
can be considered as a new piece of knowledge for which the patent assignee asks
for protection, or as a new variation in the population of technological knowledge
components. Its novelty is guaranteed by the patent examiners and its contribution
is explicitly and precisely defined within the patent document. The set of all claims
that are included within the patented technological inventions constitute the set of
all variations of patented technological evolution and, thus, the “raw material” on
which the selection mechanism operates. Although some scholars have already
stressed that, in general, novel ideas or artifacts can be viewed as manifestations of

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the variation mechanism in the social sphere (Cordes 2006; Murmann 2013), those
variations cannot provide the guarantees of novelty and the precision of contribu-
tion, in the way the patents can.
Proceeding with the mechanism of selection, I argue that the event of a patent
citation can be viewed as a manifestation of the selection mechanism. When a patent
cites another patent, it increases the longevity, the fecundity, and the degree of adap-
tation of the knowledge components of the cited patent (i.e., patent claims), which
are selected by the citing patent as a basis to draw upon. Whenever a patent citation
takes place, a new patented technological invention explicitly declares the knowl-
edge upon which it was built, or, using the evolutionary terminology, it declares its
technological ancestors (Martinelli and Nomaler 2014). The event of patent cita-
tion enlarges the presence of particular knowledge components within the patented
knowledge environment. The selected knowledge components exist in more tech-
nological inventions after the citation. Or, in other words, the selected knowledge
components heighten their fitness in the population of patented knowledge compo-
nents, as their technological offspring increases (i.e., new patents that incorporate
the selected knowledge).
In the same vein, Murmann (2013) argued that in the academic realm the selec-
tion process comes about because researchers adopt in their work only a subset of
the ideas available at a given moment in time, meaning that each idea always com-
petes with other ideas for the attention of researchers who are willing to incorporate
certain ideas into their work. It would also be useful to refer to Nooteboom (2008,
p. 77) who noted that “ideas are subjected to survival or death in selection, by adop-
tion, citation, rejection, or neglect by scientific and policy communities”. By anal-
ogy, each piece of novel knowledge within a patented invention competes with other
pieces of novel knowledge from different patented inventions for the attention of the
inventors who are willing to incorporate the appropriate for them knowledge compo-
nents into their work.
It is necessary to emphasize that each inventing organization operates in a cer-
tain institutional environment and in given market conditions that certainty affect the
organization’s decisions concerning which prior knowledge to rely upon. By this, I
mean that the institutional or the market effect is to some extent embedded in the
organization’s decision with regard to which knowledge to draw upon.
Relatedly, and in agreement with Knudsen and Hodgson’s (2006) view that the
outcomes of the selection process are not necessarily optimal, technological evolu-
tion does not always move on the basis of the optimal technological solutions, but
various non-technological, sociopolitical factors play a critical role in the dominance
or rejection of a technology (Rosenkopf and Tushman 1994; Tushman and Mur-
mann 1998; Munir and Jones 2004). As Astley (1985, p. 231) puts it, “the triumph
of a technological breakthrough over competing adaptations depends on its timing
and the resources available to its champions rather than on its intrinsic superiority”.
This phenomenon can be captured in the patent system in cases where a technologi-
cally superior patent receives less patent citations compared to a competing, techno-
logically inferior patent.
Finally, the event of a patent citation also can be viewed as a manifestation of
the retention mechanism. Each citation denotes the transfer of knowledge from the

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cited to the citing patent. The citing patent replicates and reproduces one or more
knowledge components from the novel knowledge components of the cited patent.
A patent citation reveals that certain knowledge components of the cited patent are
copied and passed on, through learning, to the organization of the citing patent, even
though it cannot reveal the degree of exactness of the replication. The organiza-
tion of the citing patent copies successfully knowledge components from the cited
patent, and by combining them with different knowledge components from other
cited patents, it achieves to create a new technological invention. A patent citation
declares that the copied knowledge component has become rooted in the knowledge
base of the follower organization and has been used in the development of a new
technological variation. Buenstorf (2006) stressed that the imitation of technologies
among organizations can be framed as a form of the retention mechanism, giving the
example of the patent license, in which a substantial amount of transfer of techno-
logical knowledge among firms takes place.
So, the event of a patent citation incorporates simultaneously both the selec-
tion and the retention mechanism. It is an event that manifests that the organization
that owns the citing patent has already chosen and reproduced some certain knowl-
edge components from the cited patent. There cannot be a patent citation without
a selected knowledge component or a reproduced knowledge component. On the
one side, a patent citation declares that the organization of the citing patent selected
some knowledge components included in the cited patent as the most suitable piece
of knowledge to draw upon, among the whole population of knowledge components
that are included within the patented inventions. On the other side, a patent citation
discloses that the organization of the citing patent assimilated knowledge compo-
nents from the knowledge that is incorporated within the cited patent and achieved
to reproduce them in such a way that, in combination with other knowledge compo-
nents, resulted in the creation of a new patented invention.
Summarizing, each time a new invention is patented, a series of events set pat-
ented technological evolution into motion. First, one or more new variations (i.e.,
patent claims), whose novelty is guaranteed by the patent examiner, are added to
the population of knowledge components included in patented inventions. Second,
patent citations change the importance and the degree of adaptation of the existing
technological variations and redistribute the size of their presence. The cited techno-
logical variations increase their fecundity since they have been used as seeds for the
creation of new variations. Third, each patent citation is a declaration of the repro-
duction of certain knowledge components that took place during the development of
the new invention. Knowledge components (i.e., the replicator) that were incorpo-
rated in the cited patent were replicated by the patent assignee (i.e., the interactor),
and they were used as a basis for new technological variations.
It is important to emphasize that our concept is applied to the knowledge compo-
nents created by organizations and included within patents and not on the organiza-
tions. I do not examine the competitive selection of the organizations but the com-
petitive selection of the knowledge that is developed by organizations. However, it
is reasonable to believe that the organizations that prevail in the arena of knowledge
have an advantage over the competitors in the final arena, where firms compete for
market shares, growth, and profits.

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This particular relation between the prevalence of knowledge and the prevalence
of firms can be viewed as a multi-level evolutionary relation, where the competi-
tion at the level of knowledge components affects the competition at the level of
organizations. Firms that own the knowledge components that prevail over compet-
ing knowledge components are in a better position to prevail over rivals, mainly by
developing innovations that are based on the prevailing knowledge components,
which, in turn, can lead to powerful competitive advantages in the market arena
(Tywoniak 2007; Kim etal. 2020).
4 Conclusion
The goal of this paper is to propose a conceptual approach that would be able to
explain how the knowledge environment is dynamically shaped by organizations.
Employing the Social Mechanisms concept to analyze the interactions of organi-
zations and their environment, I conceptualized the knowledge environment as a
population of knowledge components that evolves through processes of variation,
selection, and retention, where organizational knowledge actions add new variations
while altering the importance of the existing ones. Schematically, the knowledge
environment is likened to a mosaic of knowledge components whose pieces are the
novel knowledge components incorporated in organizational knowledge actions and
their sizes are determined by the extent of their influence on subsequent knowledge
actions.
The ability of an organization to shape its knowledge environment can determine
its survival and growth (Hagedoorn etal. 2017; Shu and Lewin 2017). Our theory
could offer a theoretical approach to explain how organizational actions transform
into environmental characteristics and to evaluate the contribution of each organi-
zation to its knowledge environment, either by measuring its variations and their
impact or by measuring its actions of selection and retention among existing varia-
tions. Organizations that introduce variations into their knowledge environment that
are selected and reproduced to a large extent by future organizational knowledge
actions are in a more advantageous position to succeed in the market compared to
organizations that introduce variations that are selected and reproduced to a lesser
extent. As their knowledge components prevail, so do the products, services, proce-
dures, or practices that have resulted from these components.
By viewing the knowledge environment as a mosaic of knowledge components
generated by organizational actions, we reject to view the knowledge evolution as
a mechanical, endlessly repeated process (i.e., a repetition of the variation, selec-
tion, and retention mechanisms), but we make an effort to better understand the cer-
tain directions that knowledge takes (i.e., why does knowledge move toward this
direction and not other?). Despite environmental pressures toward certain variations
and selections, I assume the presence of choice within organizational knowledge
actions (Nelson 2006; Tywoniak 2007). Incorporating choice in our theorizing, the
exclusion of the determinism and blindness of knowledge evolution’s direction is
emphasized while the “organizational responsibility” is stressed. What I mean by
the phrase “organizational responsibility” is that different choices, decisions, and

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actions lead to different knowledge environments. The responsibility for the fact that
the knowledge environment is in a given state and not in another, alternative state
can be attributed to the organizations that are capable of taking decisions.
In the previous section, I employed patented knowledge as an exemplar to facili-
tate the understanding of the proposed perspective. However, I must emphasize
that the proposed approach can be applied not only to technological knowledge
but to non-technological knowledge, such as management or marketing knowledge
(Damanpour 2014; Volberda et al. 2014). That is to say, organization knowledge
actions can generate novel knowledge components concerning administrative issues
(e.g., new business practices, organizational structures, administrative systems, and
types of corporate governance) and alter the importance of the existing administra-
tive knowledge by selecting and reproducing certain knowledge elements and reject-
ing others. Although they do not view knowledge evolution in the exact same way
as I do, there exist studies that acknowledge and analyze the ability of organiza-
tions to shape their administrative environment. For example, Huygens etal. (2001)
demonstrated how firms in the music industry develop new competitive regimes by
introducing new practices that replaced the existing business models and Cantwell
etal. (2009) researched how multinational enterprises influence local organizational
routines by transferring their best practices across countries.
In conclusion, this article tackled a general but important issue in organizational
science concerning the dynamic construction of organizations’ environment on
the basis of organizational actions. Adopting the VSR and the Social Mechanisms
frameworks and using patented knowledge as an exemplar, this study focused on the
deconstruction of the knowledge environment into its organization-level knowledge
components embedded in organizational knowledge actions, aiming at providing
scholars, managers, and policy-makers with a simple perspective to view the contri-
bution of each organization to its knowledge environment.
Funding The author has not received any funding for this study.
Declarations
Conflict of interest The author declares that he has no conflict of interest.
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