Globally distributed knowledge

1. Globally distributed knowledge By Frans van den Heuvel,  Niek den Teuling and  Esther Verhoef

2. Problem statement What type of strategy is best used for a multinational corporation?

3. Overview • MNCs • Knowledge management on a global scale • Knowledge management strategies • Storing and managing knowledge • Managing knowledge at different levels • Case study: an international pharmaceutical company • Conclusion • Questions • Discussion

4. MNCs Advantages on the developed countries: • Generating tax revenues • Lower prices • Products do not so much on price of materials Advantages on the developing countries: • Greater level of employment • Provide access to management and organizational skills • Training and skill creation • Provide host country with foreign exchange

5. MNCs Disadvantage on the developed country • Decreasing employment • Decreasing bargaining power of labor Disadvantage on the developing country • Hurt domestic firms by eliminating competition • Worsen balance between rustic and urban areas • Environment costs • Avoid tax by practicing transfer pricing

6. Knowledge management on a global scale • Key issues that companies need to address in global knowledge capture and management (Klahr, 1996): • Knowledge distribution • Localizing knowledge • Maintaining knowledge • Organizing and managing knowledge • Distributed authoring

7. Knowledge management on a global scale Problems regarding global companies (Desouza and Evaristo, 2002): • Knowledge is shared between two persons, leaving the rest of the company out • People might not share the same language, place and behavior (Kiesler and Sproull, 1992) • Culture • Time zones • Language • Redundancy

8. Strategies for storing and managing knowledge • Two strategies for storing and exchanging knowledge (Martin Schulz and Lloyd A. Jobe, 1998): • Codification strategy • Tacitness strategy • Two knowledge management strategies (Martin Schulz and Lloyd A. Jobe, 1998): • Focused knowledge management strategy • Unfocused knowledge management strategy • Combining the strategies

9. Codification strategy Codification strategy • Advantages • Codify your knowledge • Codified knowledge can easily be stored and exchanged between subunits • Maintaining knowledge becomes easier • Disadvantages • Information overload (Horton, 1989; Stuller, 1996) • Cost • Knowledge leakage

10. tacitness strategy Tacitness strategy • Advantages • Keep your knowledge tacit • Less costs than the codification strategy • Stimulates creativity (Nonaka and Takeuchi, 1995) • Disadvantages • Knowledge loss • Slower flow of knowledge

11. Focused and unfocused KM strategies Focused knowledge management strategy: • Focus on a few forms of codification • Carefully choose and plan which forms to used Unfocused knowledge management strategy: • Do not focus on specific forms of codification • The forms of codification used are a result of other decisions 

12. Unfocused strategy Focused strategy Codification strategy Increase the level of codification across all forms For each type of knowledge, increase the level of codification only on those forms which transfer knowledge fastest and most accurately Tacitness strategy Decrease the level of codification across all forms For each type of knowledge, decrease the level of codification on those forms that pose the greatest risks of involuntary transfer of knowledge Combining the strategies

13. Managing the global distribution of knowledge • 3 Common strategies (Kevin C. Desouza et al. 2002) • Headquarter Commissioned & Executed • Headquarter Commissioned & Regionally Executed • Regionally Commissioned & Locally Executed

14. HeadquarterCommissioned & Executed • All the knowledge management initiatives come from the head office • Knowledge exchange goes "through" the head office • Good for standardizing 1 product across countries

15. HeadquarterCommissioned & RegionallyExecuted • Knowledge exchange guidelines are being commissioned by the head office • Each regional head office uses these guidelines and can adapt them a little • Focus on sharing the knowledge regionally but through compatibility international knowledge exchange still possible

16. RegionallyCommissioned & LocallyExecuted • Each region decides their own way of knowledge exchange • Most of the knowledge exchange locally • Very fast knowledge exchange • NOT really global knowledge exchange

17. Questions that can help you to choose a strategy • How beneficial is it to codify (too expensive/difficult/much time)? • How important is the distributed knowledge flow? • What type of knowledge do you have? • How important is it that everybody has exactly the same knowledge? • What are the consequences and how high is the possibility of knowledge leak age? • How big is the threat of competitors? • At what scale is the exchange of knowledge most important? • How uniform does your product have to be?

19. Case study: an international pharmaceutical company • Everybody has to have the exact same knowledge • Competitors are not a big threat • Knowledge flow is important • Type of knowledge is recipes • Differences in the product cannot be tolerated • Having the facilities working with each other is very important internationally.

20. Conclusions The best strategies for an international pharmaceutical company are: • The focused, codification strategy • Headquarter Commissioned & Executed  But in general, it is better to use a combination of strategies.

21. Questions ?

22. Discussion • It is better to use a combination of strategies than one strategy

23. Discussion • The tacitness strategy has too much disadvantages compared to advantages to use that strategy as the only strategy

24. Discussion • Why would company's use a Regionally Commissioned & Locally Executed strategy often ?