The senses and memory of a firm – implications of autopoiesis theory for knowledge management

Firms can be regarded as autopoietic systems that continuously reproduce themselves. This paper regards the firm itself as an autopoietic entity. This approach helps identify: the “sensory function” (“interactive openness”) that enables the continual co‐evolution with the environment; and “memory function” (“self‐referentiality”, “organisational closure”) that enables the firm’s effective functioning. The integration of these two functions helps utilise the major knowledge flows and facilitates the firm’s continual learning and renewal in its changing business environment. The analysis of case companies that represent the management consulting industry indicates that very different firms can be described as autopoietic, self‐producing systems. The case firms have built sophisticated, interconnected organisational solutions and information and communication systems to support interactive openness and self‐referentiality. Aligning the two major knowledge functions and flows with other organisational solutions helps build successful and sustainable knowledge management solutions that support the firm’s continuous renewal.