Strategy and Globalization
Latest research knowledge from the Department of Strategic Management and Globalization, Copenhagen Business School
Why a Central Network Position Isn’t Enough
Knowledge sharing in employee networks is a complex task. From a managerial perspective, the work is not done by just establishing formal network ties. If employees are not adequately motivated or lack the ability to make use of network ties, the investments made in designing knowledge sharing mechanisms and networks may be a waste of resources.
”The purpose of our paper is to address a central dilemma raised in the extant network literature on knowledge sharing, namely that network positions fostered by large and open networks provide knowledge access benefits in terms of access to new and nonredundant while at the same time entailing a knowledge sharing problem, because such networks lack the needed trust and feelings of reciprocity for knowledge sharing to thrive. We argue that while an employee’s network position represents the opportunity to engage in knowledge sharing, the employee needs adequate motivation and ability to seize that opportunity”.
The last 2011 issue of Academy of Management Journal features the article Why a Central Network Position Isn’t Enough: The Role of Motivation and Ability for Knowledge Sharing in Employee Networks, written by three SMG faculty members: Assistant Professor Mia Reinholt, Professor Torben Pedersen and Professor Nicolai J. Foss. The article explores the roles of a number of important factors on knowledge sharing in employee network. This is done by focusing on the relationship between network centrality, autonomous motivation, and ability.
The extant literature on the subject shows contrasting views regarding how specific network characteristics influences knowledge sharing. The authors of this article argue that in order to leverage the full potential of knowledge sharing, management need not only attend to network building activities, but also make sure that the employees possess adequate motivation and ability.
From a theoretical perspective the framework presented in the paper builds on motivation-opportunity-ability theories of behavior. The challenge is to move beyond the dilemma that large, open egocentric networks provide both knowledge sharing opportunities and problems. The core argument is that while an employee’s network position creates the opportunity to engage in knowledge sharing with colleagues, employees need adequate motivation and ability to fully exploit this opportunity. The hypotheses developed through this argument are tested empirically by data collected among 705 employees in a large Danish consultancy firm.
“Our research has important implications for both network research on knowledge sharing and the management of knowledge in organizations. Future research needs to consider important contingency factors such as motivation and ability and provide nuanced analyses of their impact. Our study for instance reveals that it matters how employees are motivated if they are to take full advantage of their network positions. For managers, who wish to stimulate knowledge sharing in their organizations, an important lesson of our study is that it is not enough to focus on and invest in network building devices, which has grown increasingly popular over the last few years. They also need to invest resources into stimulating the right type of motivation and build the ability to engage in knowledge sharing”.
Knowledge in MNCs – a search for tipping points
The next issue of the Journal of Management (Vol. 38, Forthcoming), showcases a new research study by three SMG faculty members, Associate Professor Christian Geisler Asmussen and Professors Nicolai J. Foss and Torben Pedersen. In their paper titled “Knowledge Transfer and Accommodation Effects in Multinational Corporations: Evidence from European Subsidiaries”, the authors explore how knowledge possessed by foreign subsidiaries in Multinational Corporations (MNCs) have different sources, and what the implications are for the subsequent transfer to other MNC units.
The article builds on two key ideas. The first one is that there is a meaningful distinction between knowledge in MNC subsidiaries that mainly stems from internal sources and knowledge that mainly stems from external sources, and that these two kinds of knowledge may interact. The second key idea is the distinction between “assimilation” (where recipients incorporate the learned knowledge into their existing knowledge stocks, leaving these largely intact) and “accommodation” (where the acquisition of new knowledge makes the recipients alter some of their existing knowledge structures) effects from cognitive psychology. Christian Geisler Asmussen explains: “Until now it has largely been assumed in the management literature that organizational knowledge is cumulative, implying that more knowledge is always better. We argue that knowledge interacts in a more complex way, and that more knowledge may therefore actually be detrimental, if it makes the composite knowledge stocks of the subsidiary diverge too much from that those of the parent firm.”
Using a unique data set on European subsidiaries of MNCs, including information on stocks and flows of technological knowledge, the findings of the study suggest that subsidiary knowledge stocks that are balanced in terms of their origins tend to be more valuable, congruous, and fungible, and therefore more likely to be transferred to other MNC units. It is shown that a sufficiently high level of internal knowledge increases the likelihood that the marginal benefits of external knowledge will be positive and also the likelihood that they will outweigh the marginal costs of that knowledge. This also implies the existence of a tipping point, that is, a level of internal knowledge in a subsidiary that must be exceeded if the (rest of the) MNC is to benefit from knowledge that originates from that subsidiary’s external environment.
“In the paper we present an empirical estimate of such a tipping point,” elaborates Asmussen. “Surprisingly, the majority of the subsidiaries in our sample have levels of internal knowledge below this tipping point, implying that for these subsidiaries, more external knowledge actually leads to less transfer of knowledge to other MNC units. This suggests that obtaining the right balance in subsidiary knowledge development is a difficult and, perhaps, underestimated task faced by internationalizing firms.”
Managing Joint Production Motivation
Much research in strategic management, organization and strategic human resource management assert that human resources are the ultimate foundation of sustained value creation and competitive advantages. In this context, much research has explored the question of how to best realize collaborative activities.
“However,” says SMG Professor Nicolai Foss, “generally the various research streams address either the motivational or the cognitive aspects of collaborative activities (e.g., in teams), and fail to consider the interplay of cognitive and motivational processes.” This is highly problematic, Foss explains, because many converging insights (e.g., in experimental social psychology, experimental and behavioral economics, and evolutionary anthropology) suggest that these processes are highly intertwined. ”This is exactly the point of much of Siegwart Lindenberg’s recent research,” Foss adds, “and we thought it would interesting to apply this research in the context of firm organization.”
The July issue of The Academy of Management Review published the article Managing Joint Production Motivation: The Role of Goal Framing and Governance Mechanisms, by professor Siegwart Lindenberg and professor Nicolai Foss. The article explores the motivational and cognitive microfoundations of organizational performance. The point of departure is the fundamentally collaborative nature of work in organizations and the fact that humans are biologically predisposed, under the right circumstances, to cooperate.
The fundamental question of the article is how to tap into the special kind of motivation where the collaboration of organizational members gives the organization a performance advantage. The authors focus on what they call the “normative goal frame” which entails the adoption of joint goals and the means to reach such goals as the crucial precondition of “joint production motivation.” However, the normative goal frame is in constant danger of being displaced by different kinds of more narrow, short-term and individual goals. Since we are always dealing with multiple goals, it is important which are in the cognitive foreground and which in the background. This insight enables the article to discuss a range of governance instruments necessary to establish and maintain the kind motivation that underlies superior performance.
From a more managerial perspective, the implications of the article concern how the manager stabilizes the normative goal frame of the organization. “We develop a number of implications of potentially high managerial relevance,” says Foss. “However, it is also clear that although the theory is strongly inspired by much solid empirical work, it has not been directly tested. In future work, we want to do empirical work that directly tests our ideas about joint production motivation.”
Organizational Design for Knowledge Absorption
The role in the innovation process of knowledge sources that are external to the firm has drawn increasing research attention, as witness much work on “absorptive capacity”, “user innovation” and “open innovation.”
“However,” notes Professor Nicolai Foss, SMG, “virtually no-one have examined the role that organizational design plays for knowledge absorption. One would expect that this matters. For example, how much decision power middle managers have may be expected to influence their ability to engage with knowledge sources outside the firm, such as customers, suppliers, universities and so on. It is exactly this organizational design dimension that Keld Laursen, Torben Pedersen and I examine in this recent paper”.
The July/August issue of the highly influential journal Organization Science brings an article by the three CBS professors, Linking Customer Interaction and Innovation: The Mediating Role of New Organizational Practices. The article explores the notion that firms can improve their innovativeness by tapping users and customers for knowledge as it has been suggested in both the innovation and marketing literature. The main contribution to this discussion is to introduce the dimension of firm organization into the user innovation literature.
The article argues that firms that attempt to leverage user and customer knowledge in the context of innovation must design their internal organization appropriate to support this goal. A number of new organizational practices can be used, notably, intensive vertical and lateral communication, rewarding employees for sharing and acquiring
knowledge, and high levels of delegation of decision rights.
From a theoretical perspective, the study develops a model that highlights the role of certain organizational practices as mediators between firm’s interactions with customers and their innovation performance. This model is tested on an empirical data set of 169 Danish firms from a 2001 survey of the 1,000 largest firms in Denmark. A key result is that the link from customer knowledge to innovation is completely mediated by organizational practices. The implication is, that firms can only leverage the full potential of their interaction with customers by taking into account the organizational contexts of these encounters.
“What is really striking in the study,” says, Nicolai Foss, “is that the influence from external knowledge to innovation performance is fully mediated by organizational practices. We hadn’t expected the organizational dimension to be this important. To us, this strongly suggests that firms need to think very consciously about they gear their organization for the absorption and use of externally held knowledge”.
