MASTER THESIS
Organizational Distance and
the process of Reversed Knowledge Transfer
A comparative case study
By
Caressa S.J.S. Baldew
First Supervisor: Dr.F.Becker-Ritterspach
Second Supervisor: Prof.dr.L Karsten
“Deep cultural undercurrents structure life in subtle but highly consistent ways that are not consciously formulated. Like the invisible jet streams in the skies that determine the course of a storm, these currents shape our lives; yet, their influence is only beginning to be identified”
ABSTRACT
TABLE OF CONTENTS ABSTRACT………. 3 1. INTRODUCTION... 6 1.1 Problem indication... 8 1.2 Aim of Thesis………. 9 1.3 Significance of Thesis……….... 9 1.4 Research Question ……… 10 1.5 Structure of Thesis………... 10 2. THEORETICAL BACKGROUND... 11
2.1 Conceptualization of Knowledge transfer in MNEs………. 11
2.2 Sender-Receiver perspective & Reversed Knowledge Transfer…. 14 2.3 The Sender – Receiver model………. 15
2.3.1 The model……….. 16 2.3.2 Typology of knowledge………. 18 2.3.3 Absorptive Capacity………... 21 2.3.4 Motivational Disposition……… 23 2.3.5 Transmission channels……….. 26 2.4 Organisational Distance……… 28 2.5 Proposition………. 31 3. METHODOLOGY……… 33 3.1 Research Design……… 33 3.2 Interview Design……… 35 3.3 Data Analysis………. ….. 36
4. RESULTS………. 39
4.1 Explicit knowledge & organisational distance in RKT……… 39
4.2 Tacit knowledge & organisational distance in RKT………. 45
5. DISCUSSION AND LIMITATIONS………. 48
6. CONCLUSION………. 51
7. RESEARCH AND MANAGERIAL IMPLICATIONS……… 52
REFERENCES……….. 53 ANNEX:
1. INTRODUCTION
MNCs and their subsidiaries are an important part of the global world today. As a consequence, international management teams operating across cultures and languages are a key feature of today’s business environment. Communication among the headquarter and subsidiaries is then a necessary condition for the transfer of complex and often tacit knowledge (Rasmussen and Bjorkman, 2005; Szulanski 1996; Gupta and Govindarajan 2000). Today, the relevance of knowledge is well recognized in the management literature (cf. Conner &Prahalad, 1996; Davenport, 1998; Drucker, 1992; Grant, 1996; Kogut&Zander, 1993; Nonaka & Takeuchi, 1995; Tsoukas & Vladimirou, 1996). A major competitive advantage of MNCs is their ability to exploit locally created knowledge worldwide (Gupta & Govindarajan, 2000; Kogut & Zander, 1995; Nohria & Ghoshal, 1997; Ambos & Schlegelmilch, 2002). In the resource based view of the firm, knowledge is been regarded as a valuable asset. It has been argued to occupy a central place in the development of sustainable competitive advantage for the MNE (Bartlett and Goshal, 1998). This is because tacit knowledge is argued to be difficult to imitate, to substitute, and to transfer and it is rare (Bowman and Ambrosini, 2003). However, knowledge transfer within MNCs is compounded by factors of distance and diversity between units (Hedlund 1986; Marschan-Piekkari, Welch, and Welch 1999; Welch, Welch, and Marschan-Piekkari 2001).
I will argue that organisational distance impacts the reversed knowledge transfer process to a different extent for tacit and explicit knowledge. As MNCs aim to replicate their success across borders, they “...will need to focus not just on ‘what’ they know, but ‘how’ they gain that knowledge and diffuse it throughout the enterprise” (Riesenberger, 1998). The discrepancy between explicit and tacit knowledge is based upon the way knowledge can or cannot be codified and transmitted in a formal systematic language or representation and has been well documented (Choi and Lee, 1997). Both categories of knowledge, explicit and tacit, are regarded to be influenced by distance between units in the transfer process (Piekkari and Welch 1999; Henderson and Rasmussen, 2003; Foss and Pedersen, 2002); to what extent is a matter of the degree of tacitness (Ambrosini, 2001). I will use the sender-receiver perspective to investigate how organisational distance affects the process of RKT regarding different types of knowledge. In the case of RKT, the sender unit is the subsidiary and the receiving unit, the HQ. The sender – receiver model is widely recognized in the knowledge management literature and used as an explanatory model for approaching difficulties in the transfer of knowledge between units (Szulanski 1996; Gupta and Govindarajan, 2000).
across dispersed organisational units are seen as vital to the success of MNEs, especially in the process of reversed knowledge transfer (Bartlett and Goshal, 1989; Kogut and Zander, 1992, Ambos and Ambos, 2009).
1.1 PROBLEM INDICATION
According to Grant (1996), knowledge ranks first in the hierarchy of strategically relevant resources. In the resource based view of the firm it is regarded as a valuable asset for the competitive advantage and strategy of the MNE. Subsidiaries as sources of valuable information have to be coordinated and managed in a manner within the HQ-subsidiary relationship to be at use for the whole MNE.
Ambos et al (2006) pointed out in their research about the benefit of reversed knowledge transfer, that the least transferred knowledge is the most valuable and beneficial knowledge to a HQ namely, know how, being categorized as tacit knowledge (Simonin, 1999). This type of knowledge has been transferred mostly from reverse knowledge transfers, meaning from subsidiaries to HQ: It appears that the occurrence of knowledge flows does by no means equal the benefit generated for the recipient. Especially striking is the fact that headquarters seem to benefit most from the type of knowledge they get least. Market data on customers and market data on competitors, in turn, were transferred less frequently, but generated more benefit for the recipient. It is important to investigate the ‘benefit from reverse knowledge transfers’ instead of focusing (only) on the existence of knowledge flows.
Moreover in the study of Ambos et al. in 2009, they found out that valuable knowledge generated in subsidiaries might be ignored because it does not slip through headquarters’ filters. In addition: Following Doz and Santos (1997, p. 12): “Perhaps even more critically, this flow reversal seems difficult to accomplish once the MNC has matured into a set pattern of relationships, typically with a strong centre which muffles peripheral voices or with autonomous dispersed units which become increasingly self-sufficient.
quantitative survey instruments have been used to investigate the impact of organisational distance or other type of distances. Also in the research of Ambos et al (2006, 2009), a quantitative survey method was used to investigate the impact of organisational distance upon reversed knowledge transfer. In the research of Ambos et al. (2006) also no real significant relationship of organisational distance was found to impact the transfer process. They stated that it is plausible that it is related with the fact that reversed knowledge transfer will be harder to transfer. Especially within RKT, the transfer is challenging under the condition of the power/dependency relationship between the HQ and subsidiaries, surrounded by hierarchy level within a MNE (Kostova, 2002). I am interested to investigate to what extent different type of knowledge, tacit versus explicit knowledge, is impacted by organisational distance in the process of RKT. The underlying concepts that are play between the sender and receiver within the sender-receiver model might be able to explain better and understand more in depth the concept of organisational distance and the process of reversed knowledge transfer and will be the subject of the thesis.
1.2 AIM OF THESIS
The aim of the thesis is to explore the underlying concepts of organisational distance in the process of reversed knowledge transfer for different types of knowledge. I will use the perspective of the sender and receiver model to look into the underlying concept in how a distant relationship is impacted by organisational distance. Within the sender-receiver model I will focus on a few concepts that are of major importance and proven to be of impact according to the knowledge management literature. I will be able to give more insights in the influence of organisational distance upon the extent of reversed knowledge transfer for tacit and explicit knowledge that is being shared between the subsidiaries and headquarter. I will investigate this by a case study within one MNE.
1.3 SIGNIFICANCE OF THESIS
knowledge transfer studies and empirical research have focused on the organisational level. And many authors indeed acknowledge the need to further understand and research the extent of distance that impacts the knowledge transfer process. It responds to the call for a more differentiated investigation of distance (Nachum and Zaheer, 2005; Friedland and Boden, 1994). According to Ambos (2006) there is still no clear answer to what extent organizational distance is a factor of influence on the knowledge transfer process in RKT.
I will be able to add up to this research stream by conducting a qualitative research; exploring the underlying concepts of RKT by the perspective of the sender-receiver model; and applying it into a case study. I will be able to add up to the existing knowledge management literature, international marketing literature, HQ-subsidiary relationships with the concept of organisational distance, reversed knowledge process and the characteristics of knowledge, tacit versus explicit.
1.4 RESEARCH QUESTION
The discussion above leads to the following research question of the thesis: HOW AND WHY ARE DIFFERENT TYPES OF KNOWLEDGE IN THE PROCESS OF REVERSED KNOWLEDGE TRANSFER IMPACTED BY ORGANISATIONAL DISTANCE?
1.5 STRUCTURE OF THESIS
In chapter two I will discuss the theoretical background that will lead to the
2. THEORETICAL BACKGROUND
In this chapter I investigate in the theory how and why reversed knowledge transfer is impacted by organisational distance regarding different types of knowledge. I start by conceptualizing the importance of knowledge transfer within MNEs from the resource and knowledge based view of the firm that argue that knowledge is a competitive advantage for the MNE and acknowledge the importance for investigating the subject. Following, the reversed knowledge transfer process from the sender – receiver perspective will be discussed. Then I will discuss the sender – receiver model in relation to several theoretical concepts that can explain the underlying concepts within reversed knowledge transfer in a distant relationship. After that, the concept of organisational distance that impacts the process of reversed knowledge transfer is defined by several variables. Subsequently, this will lead to my proposition.
2.1. Conceptualization of knowledge transfer within MNEs
Organizational knowledge as a foundation for global competitiveness is of significant theoretical importance (Bhagat, 2002). Knowledge management literature mostly refers to the knowledge-based view of the firm (c.f. Conner & Prahalad, 1996; Kogut & Zander, 1993). This theoretical view points out that knowledge is a primary resource for the firm and that social networks facilitate knowledge sharing within a company. Knowledge as a resource, however, requires organizational capabilities or competences in order to be productive (Grant, 1995). Core competencies are the collective learning in the organization, especially how to coordinate diverse multiple streams of productions skills, good leadership, know how and business practises. Competencies and capabilities need to be nurtured and protected and are the ‘glue’ that binds existing business (Prahalad and Hamel, 1990). To develop core competence within a firm, there is need for communication, involvement, and a deep commitment to working across organizational boundaries. It involves many levels of people and all functions.
asset. In 1984 Wernerfelt wrote “organizational knowledge is valuable, scarce, path dependent, causally ambiguous, and hard to imitate and substitute by third parties”. Because the sharing of knowledge between HQ and subsidiaries is a consequence of the position ‘knowledge’ has in the MNE, it should provide the MNE a competitive advantage. This leads to knowledge transfer being a valuable asset in the HQ-subsidiary relationship from the resource based and knowledge based view of the firm (Goshal and Bartlett, 1995). Though, knowledge transfer itself doesn’t create the value for the firm, the way knowledge is been treated afterwards is the main issue as we discuss in this thesis regarding a distant relationship between a sender and receiver unit.
The international strategy literature also views knowledge as a corporate asset. Contributions by Perlmutter and Heenan (1979), Porter (1980), Bartlett and Ghoshal (1987), Prahalad and Doz (1987), Asakawa (1995) and many others have all focused on intra-company transfers and how MNCs attempt to optimize sourcing strategies in terms of location advantages and economies of scale. Any knowledge management strategy, and subsequently also the strategy behind transferring knowledge, should draw a parallel to a company’s overall strategy (Doz & Schlegelmilch, 1999; Hansen, Nohria, & Tierney, 1999).
Gupta and Govindarajan (1991) conceptualize multinational corporations as networks of transactions that are engaged in knowledge flows. This is a common conceptualization in international business research. In addition, an organization’s capability to search for and find new knowledge depends on its ability to effectively monitor, integrate, and take in newly acquired knowledge within its existing knowledge base (Cohen & Levinthal, 1990; Hamel, 1991; Hansen, Nohria, & Tierney, 1999). Although positions differ in a ‘network’ or MNE, the corporate circumstance of all subsidiaries provides a basic social context which is common for all units (Schlegelmich and Chini, 2003). Kogut and Zander (1993) come to the same logic, regarding the MNC as a knowledge integration institution. Building an evolutionary theory of the firm, they state that knowledge exists in social relations among members of a community without fixed boundaries. In their perspective the MNC is seen as a social community whose productive knowledge defines a comparative advantage.
domestic firms. The argument is that a differentiated MNC is in a more favourably position then a non-differentiated MNC regarding mobilizing, creating and renewal of knowledge by the availability of external as well as internal networks. Because foreign subsidiaries have access to critical local market knowledge, their headquarters must be capable of not only assimilating knowledge through their subsidiaries (Sydow and Windeler 1998, Lee et al., 2008) but also integrating the acquired knowledge throughout the entire corporation (Hult and Ferrell, 1997; Kogut and Zander, 1993)
This had led to a renewed conceptualization in the international management strategy literature, of the understanding and appreciation of subsidiaries, within the RBV of the firm, which are now validated as potential sources of MNC-wide strengths (Bartlett and Ghoshal, 1986, 1989; Birkinshaw, 1996; Forsgren et al., 1999). Moreover, subsidiaries are also viewed as “centers of excellence” (CoE) (Moore and Birkinshaw, 1998; Holm and Pedersen, 2000a). In this perspective, subsidiaries control heterogeneous stocks of knowledge and that competitive advantages can be achieved from organizing knowledge flows between subsidiaries and HQ in such a way that it will increase value (Foss and Pedersen, 2002).
The HQ can benefit from the subsidiaries as sources of valuable knowledge in different manners; local knowledge can help HQ to fine tune and coordinate global strategy, improve processes in their own unit or whole MNE, help provide the development of new product outcomes, help in becoming market leader in local market, profit from the country’s competitive strength and advantage from the geographic location and economic development of the market (Ambos et al., 2006). Being regarded as a ‘CoE’ depends on the position or role a subsidiary possess within the MNE. According to Gupta and Govindarajan (1991,1994) a subsidiary can be categorized into four subsidiary roles: integrated player, global innovator, implementer and local innovator. Especially the role of integrated player is assumed to be most beneficial for the HQ (Ambos et al., 2006).
knowledge transfer between headquarters and subsidiaries. Their research is in line with the RBV of the firm and confirms the value of knowledge transfers for the MNE. Moreover, Lee et al. (2008) noted that the influence of the strength between organizational units has an altering impact on the outcome of the transfer.The outcome contains the development of new products and discovering and sharing information about new trends in the market. In order to exploit an organization’s knowledge stock and to support knowledge creation, functional units of MNCs have to share knowledge across organizational entities. In this regard, organizations as a whole, and in particular functional units such as marketing departments, are increasingly dependent on internal sources of knowledge (Roth et al., 2009).
2.2 Sender – Receiver perspective and Reversed Knowledge Transfer
The Sender – Receiver perspective is acknowledged and adopted by many studies about knowledge transfer. This perspective is rooted in the information-processing approach in organization theory, which in turn has its basics in more general communication and information theories (Harzing and Noorderhaven, 2009). The transfer of knowledge is composed of five elements: source (sender), channel, message (type of knowledge), recipient and context. Transfer of knowledge is defined by Suzlanski (1996) and used by many other authors as: dyadic exchanges of organizational knowledge between a source and a recipient unit.
apparent. The dependence relationship that exists between the HQ and the subsidiary is a dependence relationship regarding the hierarchical position subsidiaries have in the MNE and is the same condition for all subsidiaries. The subsidiaries are dependent on the HQ for support and major various resources like capital, promotion to higher positions and technology, especially in a centralized, HQ-dominated strategy (Doz and Prahalad, 1984).
The extent to which reversed knowledge is transferred is measured by the amount of knowledge that is used by the recipient after the sharing. Knowledge transfer and movement is not a gradual process, but more an experience within in the organisation and depend on everyone involved (Szulanski, 1996). The key issue with transfer reversed knowledge is the extent to which the receiver acquires potentially useful knowledge and uses this knowledge in operations, and not the underlying original knowledge. Therefore, both the sender and receiver play an active role in the communication process. Successful communication requires not only that the message is transmitted but also that it is understood and used (Thomas, 2002:116). The difference between tacit and explicit knowledge can have a different impact on the process of RKT within the distance relationship. The discussed ‘transnational’ model of the MNC or ‘differentiated network view’ is in favour of RKT; but coordinating and collaborating among the headquarters and subsidiaries are key to the management of the HQ. Subsidiaries, being active in other countries then the HQ, posses and control heterogeneous stocks of knowledge and organizing a knowledge flow between them can increase value (Foss and Pedersen, 2002). Within the MNE, management has to deal with the aspect of distance between the sender and receiver unit.
2.3 The Sender – Receiver model
non appearance of knowledge transfer or failure in the process of knowledge transfer. In the thesis the focus lies on the relationship between the sender and receiver, the type of knowledge that is transferred and the context of organisational distance upon the process of reversed knowledge transfer. In the rest of this paragraph, the main factors which are likely to influence the ability to transfer RKT within the HQ- subsidiary relationship will be discussed (in an organisational distant relationship perspective). Based upon the sender – receiver model literature, I focus on these factors of the model, namely typology of reversed knowledge, absorptive capacity, motivational disposition and type of transmission channels. The factors are widely recognized and discussed in the prevailing knowledge management literature as part of the sender-receiver model (Kogut and Zander, 1995; Szulanski 1996; Gupta and Govindarajan, 2000; Foss and Pedersen, 2002; Minbaeva et al., 2002; Dinur et al., 2009)
2.3.1 The model
cultural field
SENDER - > encoding
cultural field
decoding < - RECEIVER Channel
Figure 1: Cross-Cultural Communication Process
From: David C Thomas, Essentials of International Management p.117 (Source: based on Schramm, 1980) The message is encoded (converted in symbolic form) and sent by some means (channel) to the receiver, who then interprets (decodes) the message.
The message must be encoded (converted to symbolic form), sent by a channel, then the receiver interprets, decodes the message. The effectiveness of communication depends on lack of distortion or failure that can occur at all stages of the communication process between a sender and receiver. Cross-cultural communication is significantly more demanding than communicating in a single culture because culturally different individuals have less common information. They have less ‘grounding’ because of differences in their field of experience (Schramm, 1980). Consequently is has an impact on the extent of transfer between units who differ in some respect. In addition the symbols individuals use to express an idea vary within a cultural field. Language is used as a symbolic code of communication and consists of sounds and rules constructing messages. This has not only to do with language as being a driver of difficulties and misunderstandings within the cross-cultural communication process, but also the style of communication can be considered as a major influence in the process and the communication skills one another has. That is, culturally based rules govern the style, conventions and practises of language usage between individuals (From: Thomas, 2002).
Organizational units require access to other units’ knowledge and have to possess certain internal capabilities in order to engage in knowledge transfer (Tsai, 2001). In addition, the knowledge actually transferred is likely to be influenced by the attractiveness of a unit’s knowledge stock in relation to other units as well as the absorptive capacity of a unit
(Simonin, 1999). Normally, each organizational unit pursues a dual task: It sends knowledge to others (source unit) and it receives knowledge from others (target unit). The attractiveness of a source unit’s knowledge stock strongly determines a unit’s propensity to engage in knowledge transfer. If a unit’s knowledge is not attractive, it might not be asked to share its knowledge (Ambos et al., 2006). Furthermore, the available knowledge has to be non-duplicative and useful for other units’ purposes. Looking at an organizational unit as a recipient of knowledge, its absorptive capacity is likely to affect a unit’s ability to handle the incoming knowledge (Gupta & Govindarajan, 2000).
2.3.2 Typology of Knowledge
The process of RKT occurs between units that carry different types of knowledge originating from different functional areas. In the thesis I argue that different types of RKT will be affected by organisational distance. Now I will discuss the different types of reversed knowledge and make the distinction between explicit and tacit knowledge.
* Differences between Explicit and Tacit Knowledge *
Explicit Knowledge Tacit Knowledge
Knowing about (objective knowledge) Knowing how (subjective knowledge) Rationalization of facts & formal models System of ideas, perceptions & experience Easy to codify, transfer & reuse Difficult to transfer
Table 1, source: Bolisani & Scarso, 1999: 211
Any study of intrafirm knowledge flows must take the distinction between these different types of knowledge into account (Harzing and Noorderhaven, 2009). Non-codifiable and tacit knowledge is not easy to transmit within a firm, and especially across the border between the HQ and subsidiaries. Codified and explicit knowledge can be transferred more easily, within as well as across organizational and national boundaries (Kogut & Zander, 1993). Whereas effective transfer of knowledge between organizational units of MNCs located in different cultures is characterized by a high degree of complexity (Bhagat et al., 2002). The discussion in the research focuses on the differences between knowledge that is more explicit in nature and knowledge that is more tacit in nature related to the process of reversed knowledge transfer in an organisational distant perspective. The organizational structure and culture determines the extent in which the knowledge between locations is been transferred (Cabrera et al., 2006).
commitment to a specific context - a craft or a profession, a particular technology or product market, or the activities of a work group or team' (p. 98).
Knowledge is created through the interaction amongst individuals or between individuals and their environment (Nonaka et al. 1998; Nonaka and Takeuchi 1995; Nonaka et al. 2000). This counts especially for tacit knowledge, since explicit knowledge can be codified, objectified and technically be transferred by statements via electronic documents or reports without senders to transfer via direct contact with the receiver. According to Becker-Ritterspach (2006), tacit knowledge is basically embedded in the practical consciousness of actors (From: Giddens, 1984); as such it cannot be transferred without the actors who carry it. He states that it probably can not be codified since it is the context embedded practical competence of humans and compares it with the ‘knowing in practise’ of Orlikowski (2002). He points out the fact that tacit knowledge has to be transferred across time and space by humans as carriers. This emphasizes the importance of the relationship between the HQ-subsidiary within the process of reversed knowledge transfer, especially regarding tacit reversed knowledge. Tacit knowledge, which is often difficult to articulate and codify, is less amenable to transfer and use (Grant, 1996a). Within the distant relationship, there has to be contact between sender and receiver to interpret and absorb tacit knowledge in comparison to more explicit reversed knowledge transfer.
Regarding the characteristics of the knowledge transferred and the relationship between units, by a study of Hansen (2002), it was found that direct relationships (distinguished from indirect relationships) between units were helpful for the transfer of non-codified knowledge, but not for the transfer of non-codified knowledge. This is line with the research of Dhanaraj, Lyles, Steensma, and Tihanyi (2004) who compare the flow of tacit and explicit knowledge between a parent firm and an international joint venture. These authors find that trust between parent firms and international joint ventures are significantly more important for the transfer of tacit knowledge than for that of explicit knowledge. In addition, Kogut and Zander (1995) carried out an empirical study on the transfer of manufacturing capabilities. They found that the degree to which capabilities are codifiable and teachable significantly influence the speed of transfer.
formal systematic language or representation and has been well documented (Choi and Lee, 1997). The difficulty of the organisational distance aspect in the knowledge transfer process is assumed to be of greater importance for tacit than for explicit knowledge. This is explained by the tacitness of knowledge (Ambrosini and Bowman, 2001) and the amount of direct contact between the sender and receiver. In an organisational distant relationship more complexity and difficulty appear in the process of reversed knowledge transfer of tacit knowledge than for explicit knowledge.
Previous research of knowledge use in MNEs has typically focused on knowledge sharing at the organizational level (Simonin 1999; Singh, 2007). As Menon and Varadarajan (1992) note, organizational-level focus on knowledge use is qualitatively different from that of functional areas. Only a few studies (Simonin, 1999; Kogut and Zander, 1995; Asawaka, 2001; Birkinshaw, Nobel, and Ridderstrale, 1998) have, when researching knowledge transfer, focused on functional knowledge flows of areas like R&D, or manufacturing. Although it is widely believed that using knowledge from other locations provides an MNE with competitive advantage (Bartlett and Ghoshal, 2003), researchers have yet to explain the explicit outcomes from this advantage. Thus, there is a need to emphasize the benefit all parties, in specific all functional areas, can have within the MNE, especially regarding an organisational distant relationship between HQ and subsidiaries.
2.3.3 Absorptive capacity
addition, employees at the HQ are more able to asses the knowledge in a critical manner as they are well-known with the topic (Ambos et al., 2006). The value of the knowledge stock of the sender can be a condition for the receiver to absorb the RKT in a systematic manner. And the perception of the sender about its knowledge stock is of importance to engage in RKT. The personal networks are seen as of vital to the transmission of expertise from one unit to another within the organisation (Dhir, 2005; Cabrera et al., 2006) in the network perspective.
Minbaeva et al. (2003) define employees’ ability and motivation as the key aspects of absorptive capacity facilitating intra MNC knowledge transfer. Their research focused on intra MNC knowledge transfer within MNCs. The motivation of the source and receiving unit is also referred to in the literature as motivational disposition which I discuss in the next paragraph. According to Minbaeva et al. (2003), there is overall support for the argument that the absorptive capacity of the subsidiary facilitates transfer of knowledge from other parts of the MNC. The greater the absorptive capacity, the higher the level of knowledge transfer. Moreover, and perhaps the most important finding of this study, they find that both aspects of absorptive capacity (ability and motivation) need to be present in order to optimally facilitate the absorption of knowledge from other parts of the MNC. Employee ability or motivation alone does not alone lead to knowledge transfer. Though, it is of importance for the HQ-subsidiary relationship and the extent of transfer of knowledge. This is in line with behavioural science that argues that both employees’ ability and motivation are of importance for organisational behaviour (Baldwin, 1959). Employees who are motivated want to participate in increasing organisational performance, effectiveness and competitiveness (Minbaeva et al., 2003).
In the research of Bjorkmann et al (2007) several factors which influence the relationship between absorptive capacity and a distant relationship between units or between HQ and subsidiaries are pointed out. One aspect of organisational distance is organisational and national culture. The greater the cultural differences between the sender and receiving unit, the less likely it is that they search for possible knowledge with each other. The search for possibilities for knowledge sharing is more likely to occur between units that are more closely related to each other in terms of their culture. (Bjorkmann et al, 2007). Another issue is that the more distant units are, the more difficult it is to value the knowledge for its advantages within its own unit. In other words, in what way can we use the knowledge, acquired from a cultural distant unit, and adapt the organisational practises into the receiving unit (Kostova, 1999). Next, with regard to organisational practises, even if it is valued by the receiving unit and they want to adopt it, there are costs involved when they are located in distant countries (Kostova, 1999). This has to do with lack of foreign language proficiency, differences in cognitive structures, value systems and behavioural norms. Consequently, less willingness to engage in using and implementing newly acquired knowledge occurs. Further, units located in distant countries are less likely to have an earlier collaboration in which they had time to develop organisational routines to deal with the other unit (Bjorkmann et al, 2007). This is in line with the work of Zahra and George (2002) who point out that complementarity of knowledge is essential in the sender – receiver model.
Thus, an organisational distant relationship has an impact on the extent of reverse knowledge transfer due to the absorptive capacity of the HQ and as a consequence the benefits of reversed knowledge transfer for the MNE.
2.3.4 Motivational disposition
Whereas absorptive capacity relates to the receiving unit, motivational disposition relates to the receiver unit as well as the sender unit. On the hand, the sender unit needs to have motivational reasons and commitment to share knowledge with the HQ (Bhagat et al., 2002). On the other hand, the receiving unit has to be motivated to recognize, interpret and maybe implement the incoming knowledge (Kostova, 1999).
Pedersen, 2002). When employees within the receiving unit don’t see the benefits of the incoming knowledge or see it at a disadvantage, they might be less motivated or willing to use the knowledge. This symptom is also referred to as the “Not- Invented-Here” syndrome. And there are two drivers who facilitate this (Gupta and Govindarajan, 2000): ego defence mechanisms, which can lead some individuals to block information that might suggest that they are more competent than they are and power struggles within organisations which can lead some individuals to try to diminish the potential power of other units by pretending that that the knowledge stock posses by these units is not valuable and unique. These factors are influenced and can be moderated by incentives that increase the willingness for learning, coercive pressures from the corporate HQ towards the subsidiaries, and trying to incorporate the concept of knowledge sharing and organizational learning & participation into the organisational culture throughout the MNE (Cabrera et al., 2006; Lucas and Ogilvie, 2006 ). Secondly, the HQ has a coordinating position within the MNE and therefore has to motivate the subsidiaries to share knowledge and transfer knowledge that might be useful to the HQ or other subsidiaries or come up with new fresh input regarding for example, the preparation of a new product launch (Foss & Pedersen, 2002). And the subsidiary and HQ are in a hierarchal dependent relationship to each other, which make to flow of RKT so challenging (Kostova, 2002).
From the point of the sender or source unit, the subsidiary in the reversed knowledge transfer case, motivational reasons have to do with how the subsidiary’s knowledge outflows influence the performance and affect the benefit of RKT. Gupta and Govindarajan (2000) posit that the extent to which the subsidiary is rewarded for improvements in the MNE relates to the extent of motivation of individuals. The sender unit has to view the sharing of knowledge as an advantage for the subsidiary and the whole MNE. This concerns the ‘monopoly knowledge’ issue in which the subsidiary controls a bargaining power due to valuable knowledge and transferring this is, might be equal as giving up this power ( Holm and Pedersen, 2000). The perception of being dependent may be the source of motivation to engage actively in the RKT process and fulfil requests of the HQ. This relates to do the motivational disposition that can exist from the sender-receiver perspective between the sender and receiver.
behavioural science (Ulrich, 1998), is a predictor of knowledge sharing and that the most important effect had to do with normative pressures, meaning perceptions of support from colleagues and supervisors towards knowledge sharing. This is related to the culture of the organisation which can promote or stimulates to engage in knowledge sharing. People need to regard knowledge as a valuable asset. Organisational culture serves as a function within a firm to encourage and stimulate participation of employees to share knowledge; organisational culture represents the core values of the firm (Lucas and Ogilvie, 2006). Intrinsic rewards of motivation make individuals engage more in knowledge sharing than their counterparts. This is in line with the expectancy theory that states intentions to perform are in part determined by consequence expectations. If people associate certain actions with positive outcomes, they are more willing to work to achieve that action (Cabrera et al, 2006).
The attractiveness of a source unit’s knowledge stock strongly determines a unit’s propensity to engage in knowledge transfer; a unit’s knowledge must be attractive (Ambos et al, 2006); available knowledge has to be non-duplicative and useful for other units’ purposes in relation to other units as well as the absorptive capacity of a unit (Simonin, 1999). Holm
and Pedersen (2000) write about subsidiary capabilities instead of knowledge stock. Capabilities relate more the expertise, skills and creativity. Harzing and Noorderhaven (2009) investigated the influence of capabilities and found out that subsidiaries with strong capabilities are more engaged in knowledge transfer within MNEs, no specific knowledge or flow were incorporated. This is argued upon the perception the sender has and also the perception the receiver has in mind.
Problems of sharing knowledge in MNEs also arise because the incentive for subsidiaries to provide their knowledge is ambiguous (Cerny, 1996). This is so because managers in various subsidiaries of MNEs than HQ, do not necessarily need to share their knowledge and coordinate their activities in the normal course of work like HQ personnel, who have a more coordinating role in this (Roth et al., 2009). The success is largely influenced by who employees see as their partners in this process, how well they know one another and whether or not they view knowledge as something to be shared with their colleagues (Lucas and Ogilvie, 2006).
willingness to engage in knowledge outflow depends on antecedents explaining cost and benefit of knowledge outflows. For units who are more distant to each other, it is more difficult to value the benefits of the transferring of knowledge. It will take more time and cost to correctly interpret the knowledge, compared to more closely linked units (Bjorkman et al., 2007; Kostova 1999). A self-interested subsidiary in the MNC shares knowledge with the HQ to the extent it expects benefits greater than costs. Engaging in knowledge outflows allows a subsidiary to receive reciprocating knowledge inflows from other units, which if effectively applied contribute to the local subsidiary’s performance. This research finds that knowledge inflows significantly affect knowledge outflows both because knowledge inflows are an input for knowledge outflow and because the subsidiaries are engaged in a joint game where knowledge senders also gain knowledge from other MNC units. In addition, acknowledgement of the HQ of valuable subsidiary knowledge significantly increases its tendency to share knowledge within the MNC. Reputation gained might also contribute to a subsidiary’s performance because reputation aids in acquiring favourable positions in the MNC’s allocation process. This research highlights the importance of the HQ- subsidiary relationship and the organisational distant relationship between units.
2.3.5 Transmission channels
Although the availability of transmission channel can be the same between units and it most of the time the same within in a MNE, to what extent which channel is used and for what purposes is a different story. The success of such exchanges depends to some extent on the ease of communication (Simonin, 2000) and on the other hand, on the ‘intimacy’ of the relationship between the sender and receiver. Knowledge transfer is not a socially neutral process. Knowledge transfer is a social activity occurring within a social context (Bailey, 2004).
HQ and other subsidiaries and able to share and have contact with others. According to communication theory, transmission channels can be formal and informal.
Gupta and Govindarajan (2000) make a further distinction between informal and formal channels. Formal channels refer to formal integrative mechanisms and informal channels refer to socialization mechanisms. Formal integrative mechanisms include liaison positions, task forces, and permanent committees for example. When it comes to informal mechanisms or socialization process, it refers to personal familiarity, personal affinity and convergence in cognitive maps among employees from a subsidiary and HQ. Greater existence of personal familiarity/affinity implies an increase in the interaction between subsidiaries and HQ (Schein, 1979). It is argued that more personal and open communication increases the richness of communication channels.
In social psychology there is extensive evidence that perceived similarity tends to result in higher attraction towards the other person (Byrne, 1971). This has to do with the creation of a shared identity and the emergence of trust between units. Bjorkmann et al. (2007) label this as ‘social integration’. Through the use of social integration mechanisms, like short term visits, personnel rotation, cross- unit teams and joint training, people are more able to build up open and positive attitudes towards other nationalities and cultures. Especially when greater cultural differences exist between HQ and subsidiaries, social integration is more difficult to occur and manage. Consequently, less effective communication, potential for conflicts and mistrust can happen and less knowledge will be transferred between units or persons. Kostova and Roth (2002) argue that the level of practise adoption is affected by the constructs, trust, dependence and social identity. Social integration (mechanisms) can reduce the difficulties in a distant relationship. Through the use of social integration mechanisms, like short term visits, personnel rotation, cross- unit teams and joint training, people are more able to build up open and positive attitudes towards other nationalities and cultures.
documented per se and will presumably only be transferred then in an informal manner (Roth et al., 2009).
In the empirical study of Gupta and Govindarajan (2000), formal channels show a significant influence on the knowledge transfer process between the subsidiary and the HQ and between peer subsidiaries. The results are only significant in the knowledge transfer process between peer subsidiaries with regard to the informal channels. But within this study no specific differentiation was made when it comes to knowledge flow data items in terms of type of functional knowledge flows like marketing/production/technical/financial knowledge or with regard to explicit/tacit knowledge.
2.4 Organizational Distance
In the thesis I focus on the organisational distance that can exist between the sender and receiver; the relationship between the HQ and subsidiary in the case of reversed knowledge transfer. Now we will discuss how the concept of organisational distance is defined and relates to the context in which the relation between the sender and receiver of RKT plays. The social interaction between the sender and receiver is impacted by the context (Kostova, 1999). The relationship between the sender and receiver is in that respect important for the process of reversed knowledge transfer. Organisational distance is embedded by the context in which is exist. The relationship between the sender and receiver is very important and is affected by the context in which it is embedded. This perspective has been used by Kostova (1999), pointing out that the process of transfer is contextually embedded. This is based upon the embeddedness perspective (Granovetter, 1992) stating that transfers occur in a multifaceted context and that transfer extent is affected by this context.
2009; Dinur et al.; Schlegelmich and Chini, 2003). Organisational distance as a variable relates to the degree of dissimilarity between a sender and receiver in their business’ practises, institutional background and organisational culture (Ambos et al, 2006). This can relate to differences in their coordination mechanisms, decision making procedures, development of the country, history of the unit and size of the unit; all relates to differences that can exist between two organisational units (Simonin, 1999; Schlegelmich and Chini, 2003; Ambos et al., 2006). The transfer of knowledge from one (cultural) context to another is likely to fail, unless the system of underlying conventions fits the system of meaning of those expected to implement these procedures or, alternatively, unless organizational routines are transformed so that they conform to existing cultural expectations (Schlegelmich and Chini, 2003). Or as Doz and Santos (1997) put it: “...effective transfer of knowledge is a dialogue between the sender and the receiver about their own contexts and about the object of knowledge”. A large organisational distance may lead to a ‘lack of understanding’ between actions, outcomes and interpretations of mostly tacit knowledge.
Each subsidiary of a MNC is embedded in a local culture that is different from the HQ or transmitting subsidiary. The local culture needs to be understood and accommodated so that when knowledge is transferred from one member to another, the transfer process will not be hindered by cultural conflicts between concerned members from the culturalist perspective in knowledge transfer (Bhagat et al., 2002). The interaction of national and organizational cultures can either facilitate or hinder communication effectiveness making these elements critical to consider when assessing communication in international business relationships (Griffith, 2002; Javidan et al., 2002). Differences in organizational culture can lead to miscommunications and the deterioration of joint efforts (Veiga e.a. 2000). Organisational culture has played a central role in organizational studies for several decades. It has been argued that it is a reflection of an industry (Gordon, 1991), alters employee motivation (O'Reilly, 1989) affects job satisfaction, (Kirkman and Shapiro, 2001) and ultimately affects firm performance (Sorensen, 2002). Kilman et al. (1986) asserted that organizational processes, structure and corporate culture are all interconnected.
combine their knowledge (Argote et al., 2003; Kogut and Zander, 1992).” For culture to contribute to knowledge transfer, it must have a strong set of core values and norms that encourage the sharing of information and active participation of employees in the process. According to the research of Lucas and Ogilvie (2006) organisation culture and active involvement in the decisionmaking procedures are essential elements of an organisational culture that supports willingness to sharing. When people are involved they develop a sense of ownership. Sense of ownership can make people feel more responsible for making transfers successful (Barrett et al., 2004). History, prior success and expectation of future success, also called the ‘accumulated advantage perspective’ (Alison et al., 1982) between units, are critical for transferring knowledge to each other. This relates to earlier collaboration experience between organisational units that can differ in the length of time and in the extent and intensity. If units have had prior success and collaboration on several issues, this can be of influence of the extent of a distant relationship (Choi and Lee, 1997). Building close links between actors in different countries takes time, often arising from a lengthy process of coalition building and cross-national learning (Birkinshaw, 2000). Experience at collaborating is necessary to manage a diverse portfolio of collaborative ties as well as to increase the capability to see benefits from the relationship (Simonin, 1999). This will be of influence of the absorptive capacity and the motivational reasons one has to interpret the transferred knowledge and to send knowledge.
In the research of Nelson and Gopalan (2003) it has been identified that development and modernization does not lead to homogenous organizational cultures. With regard to knowledge transfer, it is assumed that organizational distance amplifies ambiguity and leaves room for differences in values between organisational units. Even though units can be distant in national cultural aspect, this doesn’t mean the organisational culture is to the same extent distant to each other. In addition within in MNEs differences in organisational culture can exist between units. There is still scope for self development and meaning of the institutional background of the organization and the country in which it is embedded in the process of labelling the culture. North (1990) broadly defines institutions as ‘the formal and informal rules governing human interactions.’
concepts like structure of firms, business systems theory (Whitley, 2000), and level of development of a country that is concerned with RKT. In their study about reverse diffusion in US multinationals, it does not appear that centralized nor do highly decentralized approaches promote RD. On the other hand, another very important implication is that transferring practises developed in foreign subsidiaries is more difficult to realize than assumed. Main reason for this relates to structural factors, also called by Bartlett and Goshall ‘administrative heritage’. Organisational units are embedded by the institutional background. This can differ to a different extent between countries. In addition, the concept of country of origin effect has an influence upon RKT. Attitudes and values differ across countries and these differences are part of the distinct contexts across which practises are transferred (Edwards and Ferner, 2005). This is impacted by the ‘way of doing things’ in a MNE. There can be a distortion between the values of one unit and another unit; deviations can exist to the corporate values. This validates to the concept of organisational distance as an influential variable of importance in the RKT process within the RBV of the firm.
A large organizational distance may lead to a “lack of understanding of the logical linkages between (marketing) actions and outcomes, inputs and outputs, and causes and effects that characterize a broadly defined marketing-based competency and its transferability” (Simonin, 1999). This clarifies why organisational distance is apparent in the reversed knowledge transfer process. Moreover, distance may prohibit the identification of market opportunities and understanding of market mechanism Simonin (1999b).
2.5 PROPOSITION
As discussed, a distant relationship can complicate the communication process and therefore the amount of sharing of knowledge and ideas, in other words, the amount of reversed knowledge (between the HQ and subsidiaries). The extent of the distance relationship between the sender and receiver can differ; low organisational distance or high organisational distance relationship towards the HQ can be present. The difficulty of the organisational distance aspect in the knowledge transfer process is assumed to be of greater importance for tacit than for explicit knowledge. This is explained by the tacitness of knowledge (Ambrosini and Bowman, 2001) and the use of transmission channel types for the transfer of tacit or explicit knowledge between the sender and receiver. Both aspects of absorptive capacity (ability and motivation) and motivational disposition at the sender unit and the receiver unit need to be present in order to optimally facilitate the absorption of knowledge from other parts of the MNC (Minbaeva et al., 2003). Organisational distance impact the propensity to share by the motivation of the sender and the willingness of the sender to share and the motivational reasons of the receiver to interpret and absorb the information. Organisational distance impacts the extent of RKT by the absorptive capability of the sender to value the incoming knowledge. Therefore I argue that;
Proposition:
3 METHODOLOGY 3.1 Research design
Following Gill and Johnson (2002), my research question indicates the use of inductive research, by means of an open research question. It aims at investigating new concepts and broadening the understanding of the concepts in order to add to the research area. In this thesis I conduct a qualitative research. According to Marschan-Piekkari and Welch, (2005), it is applicable because of the aim of getting new in-depth insights of a concept, focusing on how and why this happens and trying to build upon and contribute to the already known knowledge management literature about the research subject. The findings from the case study can be used as a theoretical framework for further research, which gives the research external validity (Yin, 1994).
The research question is explored by the form of a case-study methodology. According to Eisenhardt (1989), a case study is a useful method in order to understand the dynamic present within single settings. According to Eisenhardt (1989), 2-4 cases are valid for a case study methodology. In addition, because the aim is to gain in-depth insight into organizational process, and when the phenomenon of interest is of a broad and complex nature and, hence, is best studied within the context in which it occurs ( Dubé, Paré and Rigor, 2003; Yin, 1994). In this specific area, international business, case studies are well suited when cross-border or cross-cultural issues are involved and the need for case studies, given the state of MNC knowledge integration is encouraged (Becker-Rittspach, 2006). On top micro–level analysis is suggested to be carried out by collecting ethnographic data (Marsschan-Piekkari and Welch, 2005). In sum, the thesis is an explanatory, qualitative case study.
typically focused on knowledge sharing at the organizational level (Simonin 1999; Singh, 2007). But organizational-level focus on knowledge use is qualitatively different from that of functional areas. I will focus on flows from functional areas in a comparative study. I argue that explicit knowledge can be operationalized to knowledge in the functional area of finance since it is in principal: objective knowledge, rationalization of facts and models, easy to codify, reuse and transfer. On the other hand, due to its social complex nature, marketing knowledge is characterized be a high degree of tacitness, since it is; subjective knowledge, system of ideas, perceptions and experience and difficult to transfer. The transfer of marketing knowledge is the knowledge acquired in the process of marketing its products to customers and can be about: consumers, competition, price, package, place (distribution channels), product (assortment), and the overall brand strategy. This is also referred to as the 4Ps (price, place, product, promotion) of marketing. I will not predefine or investigate exactly a marketing transfer between units, since I would like to get more insights in the extent of and the process of reversed knowledge transferred to the HQ. Therefore the focus will be on the transfer process of marketing knowledge between, and not mere on a specific transfer process within the marketing department. The same counts for financial knowledge. Financial knowledge consists of controlling, administration and accounting like profit & loss accounts, cash flow statements and balance sheet. I will like to get more insights to what extent and why reversed knowledge transfer process is affected by organisational distance. Both functional area flows must be operationalized in the case study.
process (Nelson and Gopalan, 2003). In addition, according to Björkman et al. (2007), a merger or acquisition provides the most differences in organizational culture, as the subsidiaries already had its own prior organizational culture before it was acquired. Hence, (organizational) cultures are hard to change. Organisational culture is one aspect that captures organisational distance. Differences can be found in cultural zones, in order to investigate to what extent differences influence the knowledge transfer process (Javidan et al., 2005). A subsidiary is embedded in a context which is impacted by their institutional background. This background must differ between subsidiaries to control for distance to occur.
According to Gill and Johnson (2002), in a business context to investigate attitudes and perception of employees related to a phenomenon, qualitative surveys are sufficient. The source of the information will be interviews with employees at two subsidiaries and headquarter. In this way I can collect insights in and the effects of how and why organisational distance impacts the reversed knowledge transfer process. This method allows me to check to what extent organizational distance impacts the way explicit and tacit knowledge is transferred with regard to explicit and tacit knowledge. No predefined variables will be tested in this research to be able to investigate the organizational phenomena in-depth and broadening the existing concept by a qualitative manner.
4.2. Interview Design
Data were collected using semi-structured interviews to find out new themes and focus on the insights of the research question (Gill and Johnson, 2002). The source unit in this research is the subsidiaries and the recipient unit, the HQ. The participants were contacted by
email to participate in an interview. All interviews were tape recorded and write-up followed
lasted about 45-60 minutes. All data collected were labelled as anonymous and will be held confidential. The language to be used in the interview guide was English, my second language and also for the interviewee. I conduct about 12-16 interviews. To conceptualize the process of reversed knowledge transfer, I interview the sender and units and the receiving unit. This means in practise, interviews with the HQ, receiving unit and interviews with the two subsidiaries, the sender units in the case study. I have done this for the marketing reversed knowledge flow and for the financial knowledge flow. The interviewguide is attached as annex I.
4.3 Data Analysis
The data collected from the interviews will be categorized in items with regard to the
theoretical concepts of the sender – receiver model and relating to the reversed knowledge transfer process which have been discussed in the theoretical background and the extent of organisational distance (low versus high organisational distance regarding to the HQ). Next to that, the concepts will be related to the type of knowledge (tacit versus explicit knowledge). Those categories will be used to structure new insights in order to gain more knowledge of the underlying concepts of the reversed knowledge transfer process in an organizational distant and close context between the HQ and subsidiaries. Furthermore, the data is based upon the perceptions of the interviewee and will provide insights of the effectiveness’ of reversed transferred knowledge related to the type of knowledge.
4.4 Case study & data gathering
The MNE under study is Henkel, a Germany based company with subsidiaries in 125 countries. Henkel is organized into four business sectors: Laundry & Home Care, Cosmetics/Toiletries, Consumer and Craftsmen Adhesives, and Henkel Technologies. In the company history there is a track record of take-overs in all sub sectors of the company in all regions of the world. Henkel’ headquarter is located in Dusseldorf and employs over 55,000 people. Since it is an international firm, with units over the whole world, it fits the criterion for the case study.
present in every subsidiary. Within the marketing departments, as argued the tacit knowledge flow in the thesis, subsidiaries are depended on the HQ for (many) communication materials, assortment of products, brand identity and advertisements. On the other hand, for financial knowledge, as argued the explicit knowledge, we focus on the business controlling department, which relates to profit & loss accounts and balance sheets, also here a standardized strategy is enrolled by the HQ towards the subsidiaries in reporting. Since Henkel applies a HQ - dominated strategy throughout the firm, it is suited for the case study. Both departments are in the same dependency relationship with the HQ. From the marketing department I have interviewed brand managers and marketing managers, since they position the functions who are (mostly) involved in the RKT process for marketing knowledge. From the finance department there was contact with the business controllers since they position the functions who are (mostly) involved in RKT for financial knowledge. The selection of key people within RKT has been based upon the exploratory interviews about RKT flows within Henkel.
In general we can state that next to general requests for information, which is related to obligatory needs from the HQ or relates to specific topics, within Henkel no standardized structure to reversed knowledge sharing exists in a so called knowledge management function. Henkel does aim to focus on knowledge, encourage sharing and acknowledging the importance in their corporate values. ‘We are successful of our people’ and ‘We value and respect our people. Their talents and skills are our strength. Our success is founded on the knowledge, creativity, social competence, and high commitment of our personnel.’ Also it is stated in the corporate values ‘We live out a culture of trust, mutual respect and openness – both within the company and to the outside. We communicate openly and actively, even when we have made mistakes.’ Also a performance driven culture is carried out by their values ‘We constantly benchmark our performance with the best in the market worldwide.’
of organisational distance in the literature and have applied several concepts of organisational distance.
4 RESULTS & ANALYSIS
In the case of reversed knowledge transfer within the marketing department, I found evidence for the presence of motivational disposition, absorptive capacity and the intensity of transmission channels to be of influence in a distant relationship between the HQ and the high OD unit and the influence of the factors upon the relationship with the low OD unit. Now I will discuss my findings of the interviews in relation to the concepts and illustrate by quotes from the interviews. First I will discuss the case of marketing knowledge and organisational distance. In the next paragraph I will examine the findings of financial knowledge and organisational distance in relation to the theoretical concepts. This will also be illustrated by quotes of the interviewees.
4.1 Tacit knowledge & organisational distance in RKT
The type of marketing knowledge shared For marketing knowledge primarily
Motivational Disposition One of the motivational reasons for sharing or not sharing
marketing knowledge is impacted by the perceived benefit for the sender. In high OD, one interviewee said: “If you are not asked, you don’t send it. The work that you send can be seen as something good, but it can also be seen as something bad in the eyes of the HQ. It has to with the approach of the HQ, both CEE and HQ. If you criticize the ideas of countries too much, don’t understand them, we are less willing to share ideas in the future. And otherwise if we are doing very well, the HQ will see it in our net sales and ask us anyway.” This relates to the dependency relationship subsidiaries have with the HQ. They are in a lower hierarchal level then the HQ. According to the HQ, subsidiaries are sometimes afraid to share with us, since what they are doing might not be in line with the corporate guide lines. ‘They are afraid to get a penalty from the HQ’. This causes a lack of RKT, because they are afraid to lose their extent of autonomy. The perceived benefit is in that case not so visible; the motivation is being diminished by the negative perception of the sender towards the HQ regarding or valuing their ideas.
This relates to the Not-Invented-Here syndrome, the HQ might be less willing or able to value the knowledge stock of the sender as being valuable and unique. They look at the knowledge from their perspective and background and might block the good ideas which are sent by units who differ in their market development, net sales and size. This is in the minds of people. From the interviews it shows that the HQ is more focused on the low OD country, since; “For important, strategic workshops we invite countries that are quite similar to us. They are more actively involved and of course there is much more information to share between a Western-European country and us, since the market is much more developed than a growing market”. In the perspective of the HQ, the low OD owns an attractive knowledge stock. This determines the propensity to share and absorb the knowledge from the unit (Ambos et al., 2006). On the other hand, the person in the high OD is less willing to share in the future when he or she thinks it is a good idea. His perception of its knowledge stock is negatively influenced.
the HQ and support them with ideas and convince them of your ideas”. This can be explained by the fact that the HQ and low OD unit have a long history of collaboration. They have experience with each other, not necessarily the persons who position the function of brand manager at the moment, but the units have a history. Trust between the units is present, so the perceived benefit of their effort to make a presentation of their ideas will presumably be appreciated and they are willing to share. The low OD already has received appraisal about good ideas in the past, this gives the sender intrinsic rewards. This relates with the expectancy theory, that if people associate certain actions with positive outcomes they are more willing to achieve that action (Cabrera et al., 2006).
Next to that, I found that, even though, the importance of knowledge sharing is visible in the corporate values, the support towards sharing is very much influenced by the organisational culture within the subsidiary itself. It was mentioned in the literature that organisational cultures are not homogenous within one MNE (Nelson and Gopalan, 2003) and differences can exist that influence the knowledge transfer process. One interviewee from the high OD said: I am not inspired to share more when we see a peer perform very well and the HQ shows it to everybody. We rather see them as a ‘spy’; he wants to be the best in class. You do not care much about it and does not motivate us. I am more loyal to my colleagues then to the HQs’. People share information with the employees who they see as their partners in their work process. As mentioned, within behavioural science, support from colleagues and peers increases the culture of knowledge sharing within a unit and across boundaries. Within the high OD, less willingness to share exists towards the HQ. Another finding is that high OD is more open and willing to share with other peers. Peers are in the same position than the high OD is; we understand each other and have the same struggles within conquering the market. At this stage, the peers units in the CEE go through the same stage and build up a history. Similarity in development state of the market between units seems to be a major driver in the process of sharing within the units and also valuing the knowledge stock. “Knowledge from peers is more accepted than from HQ, because it needs less translation, we are similar, we understand each other.”
