Table of contents
2. Knowledge transfer in multinational companies
2.1. Core definitions
2.2. Different types ofknowledge
2.2.2. Explicit Knowledge
2.3. The knowledge-based view of the firm
2.4. Exploring different methods of transferring knowledge
2.4.1. The importance ofknowledge transfer
2.4.2. Nonaka’s knowledge Matrix
2.4.3. Methods of transferring knowledge
126.96.36.199. Information Technology
188.8.131.52. Center ofExcellence
184.108.40.206. Multinational Teams
3. Multinational Teams
3.1. Different types of multinational teams
3.2. Formation of multinational teams
3.2. Staffing of multinational teams
3.3. Goals of multinational teams
3.4. Potential drawbacks of multinational teams
4. Knowledge transfer through multinational teams
4.1. Creation and sharing of knowledge in multinational teams
4.1.2. Transferring explicitknowledge in a multinational team
4.1.3. Transferring tacit knowledge in a multinational team
4.1.4. Applying Nonaka’s knowledge matrix to multinational teams
4.1.5. Mental models shared by a team
4.2. Obstacles of transferring knowledge through multinational teams
4.2.1. Stickiness of knowledge
4.2.2. Free rider problem
4.2.3. Lack of common language
Index of Tables and Figures
Figure 1: Nonaka’s Knowledge Matrix, page 8.
Retrieved from: http://www.knowledgenurture.com/downloads/NONAKA.pdf, date of retrieval: 24.11.2011
The purpose of this dissertation is to analyze different theoretical approaches of research about knowledge and multinational teams to determine, whether multinational teams can be a way of transferring knowledge in a multinational corporation.
According to the research that has already been conducted in this field, multinational teams can indeed be one way of transferring knowledge between dispersed multinational units in order to leverage its competitive advantage of sharing knowledge. This is mostly done by means of interaction between different team members who share knowledge in continuously communicating and working together, therefore benefiting from explicit and tacit knowledge of team members. Teams can create synergetic effects and not only share knowledge within a team, but also create new knowledge. This dissertation recognizes multinational teams as a suitable way of transferring knowledge. However, due to reasons of language barriers, lack of motivation and costs, a multinational team should not be used as the only means of transferring knowledge through multinational organizations.
Due to the recent trend of globalization, it has become important for companies to engage in multinational trade and to expand into different markets. This has led to a dispersion of different divisions all over the world. Therefore, it can be concluded that organizations have become multinational.
“The multinational organization is an organization made up of geographically dispersed units, engaged in various activities necessary for meeting different market demands” (Lagerström and Andersson, 2003, p.85; also see Nohria and Ghoshal, 1997). “To perform successfully, multinational organizations must strive to achieve worldwide innovation, global integration and local differentiation simultaneously” (Haas, 2006, p.2; also see Bartlett and Ghoshal, 2002; Nohria and Ghoshal, 1997).
In order to address those challenges, strategy and international management scholars increasingly view the creation and the management of knowledge as critical (Haas, 2006). Furthermore, researchers view knowledge as one of the most important strategic resources of the firm (Grant, 1996) and “the ability to share knowledge between units of the organization is an important basis of competitive advantage of firms” (Noorderhaven, Harzing, 2008, p.1; also see Nonaka and Takeuchi, 1995). Gupta and Govindarajan (1994) even state that sharing knowledge across geographically dispersed units is the main reason for the existence of the multinational organization.
Regardless of its importance, knowledge sharing within the multinational company is regarded as difficult because the units are geographically and culturally dispersed (Kostova, 1999).
One way of overcoming those challenges of transferring knowledge is through the use of multinational teams. Lagerström and Andersson (2003, p.86) define multinational teams as “a cross-border organizational unit composed of individuals of different nationalities, working in different cultures, business units and functions, thereby possessing specialized knowledge for solving a common task in the multinational company”.
Although much research has paid attention to the importance of sharing knowledge in multinational organizations and many researchers have dedicated work to the research topic of multinational teams, the question of how knowledge can be transferred with the help of multinational teams remains a question that has been discussed by only few researchers to date.
This paper aims to address that research gap by providing an in-depth review of the research that has already been conducted in this field of study, explaining important concepts and thus giving an outlook on possible research gaps which may be examined by further studies.
The first part of this paper provides a further understanding of the general concept of knowledge in presenting different types of knowledge and further exploring different methods of transferring this knowledge. The second part explains the idea behind the formation of multinational teams. Furthermore, knowledge and multinational teams are combined to determine how knowledge can be transferred through multinational teams and what obstacles exist in this transfer. The paper is concluded by a discussion and an outlook of some research gaps, which have been neglected by many authors to date.
2. Knowledge transfer in multinational companies
2.1. Core definitions
According to Birkinshaw (2001), the knowledge of employees and the knowledge which is built into a corporation’s structures and systems is argued to be a corporation’s only enduring source of advantage. Regarding the increasing trend of the dispersion of organizational units throughout the world, it has become much more difficult for an organization to successfully make use of this source of advantage and to gather and utilize the knowledge that has not only spread in the organization itself, but also all around the world. As Gupta and Govindarajan (2000, p.474) state, “multinational companies can be regarded as a differentiated network with excess to internal and external knowledge networks, which makes it possible to continuously strengthen their competitive advantage”. This means that multinational companies consist of dispersed units all over the world with different knowledge that can be made available through the network of a multinational organization.
Knowledge in general can be defined as “a dynamic human process of justifying a personal belief towards the truth” (Nonaka and Takeuchi, 1995, p.58). Today, many multinational companies have become increasingly aware of the importance of knowledge management (KM) and are looking for opportunities to convert this widespread knowledge into a competitive advantage.
In the following section, the most important concepts of knowledge, namely tacit and explicit knowledge are explained, followed by the economic concept of the knowledge-based company. Furthermore, an analysis of the Nonaka matrix of knowledge sharing is presented while in the end, this paper explains the different ways of transferring knowledge.
2.1.1 Tacit Knowledge
An important concept of knowledge is that of tacit knowledge. Adenfelt and Lagerström (2006, p.323) define tacit knowledge as “inextricably interwoven with experiences and situational contexts which is difficult to articulate and put into print”. Nonaka (2000, p.16) simply characterizes tacit knowledge as “subjective, experimental and hard to formulize”.
Tacit knowledge can be viewed as knowledge that an organization or an individual possesses, which is not easily accessible or even visible but which has to be developed over a certain period of time. Grant (1996, p.111; see also Kogut and Zander, 1992) state that tacit knowledge is applied and acquired through practice and its transfer between people is slow, costly and uncertain. In a group or an organization, tacit knowledge evolves through social interaction or shared practices. If people communicate with each other, they develop a personal relationship which makes them share pre-existing and develop new knowledge, which can only be understood or shared if one is part of that specific group.
However, tacit knowledge is also extremely hard to transfer within a multinational organization. Gupta and Govindarajan (2000, p.474; also see Kogut and Zander 1993) find that “the tacitness of knowledge is one of the most widely recognized barriers to its transfer and replication”. It cannot be transferred without the exchange of key personnel and all the technical systems that are involved in the knowledge process (Nonaka, 2000).
This is due to the fact that tacit knowledge always depends upon the context in which it was acquired or shared. Headquarters, for example, cannot simply demand knowhow from its subsidiary, because this know-how has been acquired in the specific context with the specific employees in a specific culture that might differ from the culture of which headquarters are in. One example of tacit knowledge is the knowledge of strengths and weaknesses of a person that can be used in a production process to allocate a job to the most qualified person. Cannon-Bowers and Salas (2001) call this type of tacit knowledge “knowledge of teammates”.
2.1.2. Explicit Knowledge
The second important concept of knowledge is called explicit knowledge. In contrast to tacit knowledge, “explicit knowledge is objective and rational and can be expressed in such forms as data, scientific formulas, specific actions and manuals” (Nonaka, 2000, p.16). Hansen et al. (1999) state that explicit knowledge can be transferred through more technology-driven, structured processes, such as information systems, Lotus Notes and similar mechanisms such as a shared best practice database.
Explicit knowledge is easier to acquire and to share than tacit knowledge, because it is revealed by its communication as it is something that can be recognized even by people that do not belong in a specific group or context. One way of sharing explicit knowledge is through the use of information technology, because it is easily codifiable. This means that it can be put into concrete letters or numbers and can be understood by others without any personal contact involved.
Although tacit and explicit knowledge have been identified as the two most important concepts of knowledge, researchers have identified concepts, namely local and global knowledge that go beyond the concepts of tacit and explicit knowledge and expand into the geographical context (Birkenshaw, 2001). However, due to the limitation in space in this dissertation, the concepts are only mentioned but not explained in further depth.
2.2. The knowledge-based view of the firm
The knowledge-based view of the firm is a modification of the resource-based view (RBV) of the firm. The RBV was introduced by Wernerfelt (1984) and has emerged to be one of the most important economic theories of our times. The transferability of the firm’s resources and capabilities is recognized as an important aspect to confer sustainable competitive advantage (Grant, 1996; see also Barney, 1986). Since according to Grant (1996), knowledge can be viewed as the most important strategic resource of the firm, the theory of the knowledge-based view has evolved out of the RBV.
One of the reasons for the existence of a multinational firm is the transfer of knowledge (Gupta and Govindarajan, 1994). This raises the questions, why markets cannot be involved in the transaction of knowledge. Grant (1996) lists two main reasons why markets are unable to undertake this coordinating role. The first reason is the immobility of tacit knowledge. Due to the fact that tacit knowledge is not easily transferrable because it cannot be put into concrete numbers or letters, it has to be transferred inside the organization by people that share the tacit knowledge, or it has to be converted into explicit knowledge before being transferred.
The second reason why markets cannot be involved in the transaction of knowledge is the risk of expropriation of explicit knowledge by the potential buyer in the market. Compared to tacit knowledge, explicit knowledge can be expressed in words or data and is therefore not protected from expropriation. If explicit knowledge is transferred by a market, it is then lost without any compensation because anybody can to get hold of the explicit knowledge once revealed. Furthermore, Arrows (1984) explains knowledge as a public good whose value is difficult to evaluate since the buyer needs to know the content of the knowledge to determine the value of that knowledge. Once he/she knows the content of the knowledge, he/she has already acquired it without paying for it.
The only measure how explicit knowledge can be protected is through patents or copyrights. However, “a lack of clear property rights results in ambiguity over the ownership of knowledge” (Grant, 1996, p.111). As most knowledge is created within the firm and is firm-specific, most explicit and all tacit knowledge is stored within individuals. This however creates problems because the allocation of the return of knowledge cannot be easily determined (Grant, 1996).
Allocating the explicit and tacit knowledge to the locations where it is most needed in a process, which is called knowledge management, can be seen as one of the major tasks of the multinational firm. Meso and Smith (2000, p.225) define knowledge management as “the process of capturing the collective expertise and intelligence in an organization and using them to foster innovation through continued organizational learning”. Lagerström and Andersson (2003) found that the most important aspect of knowledge management is social interaction and that information technology only has an underlying role. Noorderhaven and Harzing (2008) hypothesize that “knowledge exchange will be positively correlated to social interaction between a subsidiary and other parts of the multinational company. Social interaction can be seen as any kind of interaction between two or more individuals. This varies from simply spending time together to verbal or non-verbal communication. Noorderhaven and Harzing (2008) further mention that knowledge flows will only be achieved when individuals working in different subsidiaries engage in social interaction.
If employees from different units do not engage in any kind of interaction, knowledge exchange will not be possible. However, interaction does not only have to take place on a face-to-face basis. Information technology also plays an important part in knowledge transfer. Since many organizational units in multinational organizations are geographically dispersed, direct contact may not be possible due to monetary or time reasons. Information technology can take place through various instruments such as the telephone or e-mail, but also through online databases. Nevertheless, “information technology can only serve as a mechanism of sharing explicit knowledge, since it is only suitable for codified knowledge, while tacit knowledge, which resides within individuals- and is essential for knowledge creation- is inherently shared through social interaction” (Lagerström and Andersson, 2003, p.94).
According to Foss and Pedersen (2004), one of the strategic challenges for multinational corporations today is that of choosing, designing and establishing organizational mechanisms that support and increase knowledge processes across subsidiaries. The following chapter will present possible solutions for choosing, designing and establishing methods ofknowledge transfer.
2.4. Transferring Knowledge
2.4.1. The importance ofknowledge transfer
One of the main tasks of a multinational corporation is the transfer of knowledge within dispersed multinational units. “Knowledge transfer is a process through which one organization (or unit) identifies and learns specific knowledge that resides in
another organization (or unit) and reapplies this knowledge in other contexts” (Oshri et al., 2008, p.595; also see Hansen et al., 1999).
There are many different ways for a multination corporation to transfer knowledge. However, as Foss and Pedersen (2002) mention, knowledge with different characteristics needs different organizational mechanisms to facilitate the transfer of knowledge. Subchapter 2.4.3. explains the different methods of transferring knowledge while also acknowledging difficulties concerning the transfer of knowledge.
As previously stated, knowledge in a multinational organization contains both, tacit and explicit knowledge. One of the key challenges for such an organization is to translate tacit knowledge into explicit knowledge to make it available for everyone in that organization. Nevertheless, cooperations' also want to transfer explicit knowledge into organization-specific tacit knowledge and therefore broaden the organization’s span of knowledge. A framework by Nonaka (1994) tries to explore differentmodes of knowledge conversion.
2.4.2. Nonaka’s knowledge matrix
Nonaka (1994) provides a theoretical framework for the different possibilities to convert knowledge (See figure 1). According to him, knowledge can be converted in four different ways: (1) from tacit to tacit knowledge, (2) from explicit to explicit knowledge, (3) from tacit to explicit knowledge, and (4) from explicit to tacit knowledge.
illustration not visible in this excerpt
The first mode of knowledge conversion enables us to convert tacit knowledge through interaction between individuals (Nonaka, 1994). One person can gain tacit knowledge by interacting with individuals or a group, who already possess that kind of tacit knowledge. However, no language needs to be involved in the acquisition of tacit knowledge. Since tacit knowledge is subjective and hard to formulize (Nonaka, 1994), it can also be transferred through “observation, imitation and practice” (Nonaka, 1994, p.19). This type of knowledge conversion is called “Socialization” because it is created by any kind of social interactions, between two or more individuals.
The second mode of knowledge conversion is called “Combination”. “It involves the use of social processes to combine different bodies of explicit knowledge held by individuals” (Nonaka, 1994, p.19). Explicit knowledge can be combined by use of technical instruments such as the telephone or e-mail, but also through electronic databases or simple communication.
Nonaka (1994) defines the third and fourth modes of knowledge conversion as related patterns. “Tacit and explicit knowledge are complementary and can expand over time through a process of mutual interaction” (Nonaka, 1994, p.19). The concept of the conversion of tacit knowledge into explicit knowledge is a concept, which has not been well developed. Nevertheless, it can be assumed that tacit knowledge can be converted into explicit knowledge by means of observation, imitation and practice. If, for example, when a “way of doing” in an organization is formulized into concrete language, tacit knowledge is converted into explicit, concrete language. Nonaka calls this process “externalization” and in a further article, changes its name to “articulation” (Nonaka, 2007, p.166). The fourth mode of knowledge conversion is called internalization and can be explained as the conversion of explicit knowledge into tacit knowledge. In this process, explicit knowledge is elevated and expanded into something that is hardly tangible and firm- specific. For example, the tacit knowledge of how to build a car can help a firm to develop firm-specific and perhaps more efficient adjustments that are again only tangible by the specific unit.
In the following subchapter, different methods of transferring knowledge are explained. There are many different methods that facilitate the transfer of knowledge in an organization.
- Quote paper
- Dennis Schiedat (Author), 2011, Knowledge Transfer through multinational teams, Munich, GRIN Verlag, https://www.grin.com/document/191400