Knowledge systematisation, reconfiguration and the organisation of firms and industry: The case of design

•Focus on the conversion and formalisation of novel practices within existing firm and industry.•Analyses knowledge systematisation and reconfiguration involved in design routines.•Development of a firm's business function stemming from diverse sets of knowledge.•Understanding of the interplay across individual skills, routines, and changing firm and industry organisation.•Institutional dimension incorporated to analysis of firm-level technological change.

The paper explores two pathways that are crucial for making knowledge economically useful – knowledge systematisation and knowledge reconfiguration – and analyses how their interplay enables the emergence of a new business function or activity. Knowledge systematisation is the abstraction and diffusion of operative principles to the effect of expanding to broader remits practices that had been initially conceived for a narrow purpose. Knowledge reconfiguration involves the conversion and formalisation of these novel practices within existing firm and industry organisation. Using the design activity as a lens, and drawing on primary and secondary interviews and archival data on the home furnishing sectors in Italy, our case study articulates the processes that facilitate the abstraction of general rules from novel practices and the changes that are necessary, both within firm and industry organisation, to foster their diffusion.