Knowledge that Transforms

This paper introduces the concept of knowledge networks to explain why some business units are able to benefit from knowledge residing in other parts of the company while others are not. The core premise of this concept is that a proper understanding of effective interunit knowledge sharing in a multiunit firm requires a joint consideration of relatedness in knowledge content among business units and the network of lateral interunit relations that enables task units to access related knowledge. Results from a study of 120 new product development projects in 41 business units of a large multiunit electronics company showed that project teams obtained more existing knowledge from other units and completed their projects faster to the extent that they had short interunit network paths to units that possessed related knowledge. In contrast, neither network connections nor extent of related knowledge alone explained the amount of knowledge obtained and project completion time. The results also showed a contingent effect of having direct interunit relations in knowledge networks: While established direct relations mitigated problems of transferring noncodified knowledge, they were harmful when the knowledge to be transferred was codified, because they were less needed but still involved maintenance costs. These findings suggest that research on knowledge transfers and synergies in multiunit firms should pursue new perspectives that combine the concepts of network connections and relatedness in knowledge content.

Where should the boundaries of knowledge between economic actors be located in order to maximize the efficiency of their interactions? In particular, what circumstances determine whether it makes sense for adjacent stages in the value chain to invest in the development of common understanding, and when does it make sense for them to operate in mutual ignorance? To address these questions, it is necessary to construct a kind of production function which takes different forms of knowledge—specialist capability and trans-specialist understanding—as inputs and relates them to problem-solving output. Using a simple model of product design as a template, it is possible to derive such a production function. One can then use its properties in conjunction with plausible assumptions about the cost of acquiring different kinds of knowledge to develop general principles that explain when efficiency requires costly learning across specialties and when it is better to allow specialties to operate in mutual ignorance of one another's domains. The derived production function, contrary to some intuition and previous literature, implies that specialist capability can substitute for knowledge shared across specialties. This result in turn implies that the nature of learning costs, rather than the shape of knowledge benefits, plays the predominant role in determining when mutual ignorance is a good idea. The analysis also helps resolve the following paradox: The economy depends for its efficiency upon a drastic separation of knowledge across individuals and organizational units, yet studies of product development find that greater knowledge commonality is associated with better firm performance. An implication of the substitutability of specialized and trans-specialty knowledge is that situations where learning across specialties is desirable seem relatively rare in the economy as a whole. These situations are disproportionately common, however, in those areas where important managerial activity takes place. A key role of management is to attend to the strategic, operational, and governance needs of these “islands of shared knowledge in a sea of mutual ignorance.”

This study explores the premise that knowledge in new product development proves both a barrier to and a source of innovation. To understand the problematic nature of knowledge and the boundaries that result, an ethnographic study was used to understand how knowledge is structured differently across the four primary functions that are dependent on each other in the creation and production of a high-volume product. A pragmatic view of 'knowledge in practice' is developed, describing knowledge as localized, embedded, and invested within a function and how, when working across functions, consequences often arise that generate problematic knowledge boundaries. The use of a boundary object is then described as a means of representing, learning about, and transforming knowledge to resolve the consequences that exist at a given boundary. Finally, this pragmatic view of knowledge and boundaries is proposed as a framework to revisit the differentiation and integration of knowledge.

Drawing on an empirical study on automakers' management of supplier involvement in product development in Japan, this paper shows that when the design of a component is outsourced to a supplier, how much automakers know about the component matters for them to gain a better outcome. While the actual tasks of designing and manufacturing components could be out-sourced, automakers should retain the relevant knowledge to obtain better component design quality. The paper argues that knowledge partitioning should be distinguished from task partitioning, and provides some implications for the knowledge-based theory of the firm. The results indicate that effective pattern of knowledge partitioning differs by the nature of component development project in terms of technological newness. For regular projects, it is more important for the automaker to have a higher level of architectural knowledge (how to coordinate various components for a vehicle) than of component-specific knowledge, which is supposed to be provided by the supplier. However, when the project involves new technology for the supplier, it is important for the automaker to have a higher level of component-specific knowledge to solve unexplored engineering problems together with the supplier. In innovative projects, effective knowledge partitioning seems to demand some overlap between an automaker and a supplier, rather than efficient and clear-cut boundaries that are optimal for regular projects. Such “fluid” nature of knowledge boundaries contingent on the project types poses a challenge for firms seeking both technological leadership and efficiency in established products. Developing and maintaining knowledge about an outsourced component is by no means easy. When the actual design tasks are outsourced, automakers miss substantial opportunities to gain relevant knowledge through learning by doing. Also, obtained knowledge may be diffused among competitors through shared suppliers. Another problem for automakers is that component-specific knowledge is important for only limited cases (innovative projects). Even worse, component-specific knowledge has a trade off relationship with architectural knowledge. Such an inherent dilemma of managing knowledge, however, may provide some automakers with the opportunity to achieve sustainable competitive advantage. Additional analysis shows that one automaker managed both types of knowledge better than others in a manner that deals effectively with the dilemma. Its organizational mechanisms include career development policies, extensive documentation of technological information, internal training programs, and incentive schemes. The difficulty in implementing those mechanisms in a consistent and complementary manner seems to explain why there was a significant variance among automakers in knowledge level, even when the actual tasks were carried out by a shared supplier.

Recent perspectives have focused on the role of the firm in the generation and use of knowledge. These perspectives suggest that, while knowledge is “owned” at the individual level, the integration of this knowledge to a collective level is necessary. This integration of knowledge typically takes place in groups. In our experimental study, we examine how individuals in groups engage in micro-level interactions to effectively integrate knowledge by examining the effects of using three formal interventions: Information Sharing, Questioning Others, and Managing Time. In particular, we observe that simple formal interventions can improve knowledge integration when they lead to “windows of opportunity” for group members to consider ways to improve their work process that go beyond the formal intervention instructions. The most effective groups used these formal interventions to focus their attention into organized clusters of activity, during which they significantly changed their work process and improved their subsequent knowledge integration. In particular, groups in the Questioning Others and Managing Time conditions exhibited greater knowledge integration than groups in the Information Sharing and Control conditions. Groups with high-knowledge integration paced their attention to both adaptive improvements to their process and task execution. Overall, this study identifies simple structures, interruptions, and time pacing as central to the emerging concept of group flexibility by which members enhance their performance on novel and/or ambiguous tasks. We note links to complexity theory and knowledge-based thinking as well.

Drawing on neoclassical economic, internal labor market, and devaluation theories, we examine how the sex composition of jobs and the sex of individual workers affect earnings, depending upon the formalization of the pay type. Using personnel data for over 8,000 employees, we confirm the existence of a negative relationship between earnings and the proportion female in a job. We also find that for less-formalized pay types (cash incentive bonuses), sex-composition and individual-sex effects are larger than for more formalized pay (merit raises and base salary). Together, these findings support devaluation explanations, suggest that incentive bonuses may widen the earnings gap between women and men, and have implications for the design of pay structures in organizations.

A group's tendency to protect its identity often inhibits it from initiating radical change. For this reason, external interventions are typically needed to engage a group in reexamining and moving beyond its current identity. If threatened by these external interventions, however, identity beliefs can become emotionally heated and resistant to the cognitively rational efforts of outsiders. At the same time, the insider group's emotional energy is essential to mobilize and sustain radical change. This paper draws on community development theories and practices, as well as identity theories, to develop a model that traces the dynamic processes by which hot emotional interpretations and relatively colder cognitive interpretations interact to initiate, mobilize, and sustain radical change. It highlights the roles that emotion and cognition play as both barriers and essential facilitators of the change at different stages of the process, and proposes a set of strategies for managing them.

This paper focuses on the perceived pattern of alignment between a manager's words and deeds, with special attention to promise keeping, and espoused and enacted values. It terms this perceived pattern of alignment“Behavioral Integrity.” The literatures on trust, psychological contracts, and credibility combine to suggest important consequences for this perception, and literatures on hypocrisy, social accounts, social cognition, organizational change, and management fashions suggest key antecedents to it. The resulting conceptual model highlights an issue that is problematic in today's managerial environment, has important organizational outcomes, and is relatively unstudied.

Organizations are evolving from the bureaucratic form based upon hierarchy to the new-form or radix organization that has the value chain as its relatively fluid foundation. This article explores the relationship between the radix organization and leadership, viewed through an organization-environment coevolution framework. It explicates the changes in the leader–s role-sets and relationships brought about with the evolution from bureaucracy to the radix organization, developing a model of leadership that is referred to as the stakeholder model of organizational leadership. Stakeholder theory provides the appropriate theoretical basis for this model, as it offers the flexibility to accommodate various leader relationships. The stakeholder model of organizational leadership helps to predict leader effectiveness in organizations characterized by fuzzy organizational boundaries, flattened hierarchies, and work relationships sometimes brought about through contracts instead of employment.

Drawing on work from transfer theory at the individual unit of analysis, this study examines positive and negative transfer effects in organization acquisitions. Data from 96 organizations reveal that, consistent with theories on positive transfer of industry knowledge, similar acquisitions are positively related to acquisition performance. In addition, consistent with theory on negative transfer of past acquisition knowledge, second acquisitions underperform first acquisitions, particularly when first and second targets are from different industries. In combination, these findings suggest that the routines and practices established in prior situations transfer to new situations, and that the effect of such transfer depends on the similarity of industrial environments.