The Influence of Network Form on Inter-organizational Knowledge Transfer Difficulty: Does Form Matter?

1. The Influence of Network Form on Inter-organizational Knowledge Transfer Difficulty: Does Form Matter? DSI Conference Jennifer Lewis Priestley Subhashish Samaddar November 23, 2003

2. Presentation Outline • Why study knowledge transfer? • Network forms • Factors influencing knowledge transfer • Proposed model • Research Limitations and Implications

3. Why is knowledge important? • Knowledge is a source of competitive advantage “…the essence of economic growth…” – Teece (1998) “…the underpinning of competencies…” (KBV) – Grant (1996) “…quickly displacing capital and labor as a firm’s basic economic resource…” – Drucker (1995)

4. Alliances/partnerships and networks provide a channel to access incremental knowledge in an effort to manage environmental uncertainty. – Madhavan (1998) Why is knowledge transfer important? • Organizations cannot know all that is knowable (TCE) - Williamson (1973, 1975); • “Second-hand” knowledge is often cheaper and faster to obtain than “first-hand” knowledge; • “…Factors of production cannot become mobile unless they are known…” - Lippman and Rumelt (1982)

5. Network Type Knowledge Transfer Difficulty Inter-organizational Network Forms Specific examples of knowledge transfer studies within networks: • Powell et al., 1996 – study of biotech firms • Darr et al., 1995 – study of pizza franchises • Ingram and Simons, 2002 – study of kibbutzim • Postrel, 2002 – recounting of the 1999 Mars Climate Orbiter Factors of Knowledge Transfer

6. High Centrality of Authority High Competition Low Scope High Inter-organizational Network Forms F V C I

7. Inter-organizational Network Forms How do each of these specific network types influence knowledge transfer difficulty? Network Type Factors of Knowledge Transfer Knowledge Transfer Difficulty • Franchise • Value Chain • Innovative • Co-opetive

8. Factors of Knowledge Transfer Several factors have been shown in the KM literature to influence knowledge transfer: Absorptive Capacity “…the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. We label this capability as a firm’s absorptive capacity.” (Cohen and Levinthal, 1990) Causal Ambiguity “…ambiguity is an intermediate state between ignorance and risk…the level of causal ambiguity refers to the number of distributions that are not ruled out by one’s knowledge of the situation.” (Mosakowski, 1997) Outcome Ambiguity

9. Factors of Knowledge Transfer Outcome Ambiguity • “The inability of the knowledge source to identify the possible outcome associated with knowledge transfer.” (Samaddar and Priestley, 2003) • Szulanski (1996) identifies “unprovenness” of knowledge as a factor of knowledge transfer difficulty. • Simonin (1999), Szulanski (1996) and Hamel (1991) all identified different aspects of the relationship between the source and the recipient as a factor of knowledge transfer difficulty.

10. Known Recipient Actions Bounded Recipient Action Set: [RA1, RA2, RA3] Unknown Recipient Actions Unbounded Recipient Action Set: [RA1, RA2, RA3…RA∞] Proven Knowledge Bounded Knowledge Usage Set: [KU1, KU2, KU3] Unproven Knowledge Unbounded Knowledge Usage Set: [KU1, KU2, KU3…KU∞] Factors of Knowledge Transfer Outcome Ambiguity Framework: Type 3 (Med Outcome Ambiguity) Outcome Set: [O1, O2, O3…O∞] Type 1 (Low Outcome Ambiguity) Outcome Set: [O1, O2, O3] Type 2 (Med Outcome Ambiguity) Outcome Set: [O1, O2, O3…O∞] Type 4 (High Outcome Ambiguity) Outcome Set: [O1, O2, O3…O∞]

11. Factors of Knowledge Transfer How are each of these factors of knowledge transfer difficulty influenced by network type? Network Type Factors of Knowledge Transfer Knowledge Transfer Difficulty • Absorptive Capacity • Causal Ambiguity • Outcome Ambiguity • Franchise • Value Chain • Innovative • Co-opetive

12. Absorptive Capacity Knowledge Transfer Difficulty Causal Ambiguity - + + Outcome Ambiguity Proposed Model RQ1: What factors influence inter-organizational knowledge transfer difficulty?

13. Proposed Model RQ2: How does network type affect the factors of inter-organizational knowledge transfer difficulty? Franchise Absorptive Capacity Value Chain Causal Ambiguity Innovative Outcome Ambiguity Co-opetive

14. Absorptive Capacity Knowledge Transfer Difficulty Causal Ambiguity - + + Outcome Ambiguity Proposed Model Comprehensive Research Model: Franchise Value Chain Innovative Co-opetive

15. Proposed Model - Hypotheses

16. Proposed Model – Hypotheses Detailed hypothesis - The Franchise Network will be associated with a high state of absorptive capacity. The Franchise Network will be associated with a low state of causal ambiguity. The Franchise Network will be associated with a low state of outcome ambiguity. The Franchise Network will be associated with low knowledge transfer difficulty.

17. Proposed Model – Hypotheses Detailed hypothesis - The Innovative Network will be associated with a low state of absorptive capacity. The Innovative Network will be associated with a high state of causal ambiguity. The Innovative Network will be associated with a high state of outcome ambiguity. The Innovative Network will be associated with mixed knowledge transfer difficulty.

18. Proposed Model – Hypotheses Detailed hypothesis - The Value Chain Network will be associated with a low state of absorptive capacity. The Value Chain Network will be associated with a low state of causal ambiguity. The Value Chain Network will be associated with a low state of outcome ambiguity. The Value Chain Network will be associated with low knowledge transfer difficulty.

19. Proposed Model – Hypotheses Detailed hypothesis - The Co-opetive Network will be associated with a high state of absorptive capacity. The Co-opetive Network will be associated with a high state of causal ambiguity. The Co-opetive Network will be associated with a high state of outcome ambiguity. The Co-opetive Network will be associated with high knowledge transfer difficulty.

20. “…there is a growing realization that the variables which are most theoretically Interesting are those which are least identifiable and measurable.” Spender and Grant (1996)

21. Limitations • Data Collection • Unit of Analysis • Sample Size

22. Implications For practice – • Enable management of organizations currently outside of a network (or considering the formation of a network) to determine which form will most effectively support its knowledge-based objectives. • Enable management of organizations currently operating within a network to determine how they can manage their relationships within the network to minimize knowledge transfer difficulty.

23. Implications For Research – • Introduces a new factor of inter-organizational knowledge transfer difficulty for further research and refinement (outcome ambiguity). • Introduces a unique framework through which to address the issues associated with inter-organizational knowledge transfer difficulty. Further research could pursue a network-oriented focus or a factor-oriented focus.

24. Questions? Comments? Discussion?