The Role of Virtual Design Tools on Knowledge Replication and Recombination: An Empirical Investigation.

This paper analyzes the contribution of Virtual Design Tools (VDTs) to the processes of knowledge replication and recombination in the context of product innovation. On the basis of an in depth case study of two automotive firms engaged in two comparable new product development projects, we show that knowledge replication can occur in two distinct ways, namely through simplification and deepening of existing knowledge. By knowledge simplification we mean the selection and isolation of a specific part of the body of technological knowledge associated with the architectural functions of a multi- component system. By knowledge deepening we mean the decomposition of a knowledge packet in units of smaller dimension. We argue that the processes of knowledge simplification and knowledge deepening drive to very different innovation approaches that in turn have different competitive implications for small and large firms.