Sainio Henri
Sainio Henri
Sainio Henri
University of Tampere
Department of Computer Sciences
M. Sc. Program in Information Systems
Master of Science -thesis
December 2007
University of Tampere
Department of Computer Sciences
M. Sc. Program in Information Systems
Author: Henri Sainio
Master of Science -thesis, 117 pages, 2 appendices
December 2007
Contents
1.
2.
3.
4.
5.
Introduction............................................................................................................. 1
Research window ................................................................................................... 5
2.1. Introduction ................................................................................................... 5
2.2. Research questions........................................................................................ 5
2.3. Research approaches and methods ............................................................ 6
2.4. Thesis mindset ............................................................................................. 10
Strategic management context............................................................................ 13
3.1. Strategic alliances - look at the past.......................................................... 13
3.2. Business relationship .................................................................................. 16
3.3. Typology of strategic alliances.................................................................. 18
3.4. Motivation for strategic alliances.............................................................. 20
3.5. Strategic alliances and technology-life-cycle models............................. 22
3.6. Prospective strategic alliance -analysis .................................................... 25
3.6.1. Strategic alliance potential evaluation ......................................... 25
3.6.2. Innovation potential........................................................................ 26
3.6.3. Strategic management choices....................................................... 28
Epistemological dimension - foundations for knowledge transfer............... 31
4.1. Data, information, knowledge .................................................................. 31
4.2. Tacit knowledge and its criticism ............................................................. 34
4.3. Understanding tacit knowledge ............................................................... 35
4.4. Other dimensions of knowledge............................................................... 37
4.5. Knowledge-based theory of the firm ....................................................... 38
4.6. Prior research on knowledge transfer...................................................... 39
4.7. Knowledge in a software company.......................................................... 43
4.7.1. Software business knowledge ....................................................... 43
4.7.2. Software development process knowledge................................. 45
4.7.3. Software technologies knowledge ................................................ 46
4.7.4. Market knowledge .......................................................................... 46
4.7.5. Alliance competence know-how................................................... 46
4.8. Summary ...................................................................................................... 46
Ontological dimension crossing boundaries ................................................. 49
5.1. Ontology vs. ontological dimension......................................................... 49
5.2. Interorganizational learning...................................................................... 53
5.3. Strategies for interorganizational learning.............................................. 56
5.4. Organizational knowledge creation ......................................................... 57
5.4.1. Knowledge conversion ................................................................... 58
6.
7.
8.
Appendices
Appendix I: Positional and modal coding in the 4-Tier Tube -model
Appendix II (non-public): Alliance Network Information System (ANIS)
1. Introduction
The thesis at hand provides a theoretical framework for knowledge transfer in
cross-border strategic alliances in the software industry - focusing on East-West
crossing partnerships. Knowledge transfer between strategic alliance partners
has peculiar challenges tracing back to different sources, such as properties of
knowledge to be transferred, organizational attributes and the dynamics of an
evolving alliance relationship. A common knowledge pool of an alliance
enables nurturing the shared knowledge.
Cultural distance is something to pay special attention to in East-West
crossing relations where, the other member hails from collective vertical culture
and the other one from individualist horizontal culture. Such is the case, for
example, between Finland (or other Nordic countries) and India or China.
My purpose with this thesis is - along with answering the research
questions - to provide theoretical base for the 'Asia Software Competence
Project' (ASCP) that I have initiated. The ASCP project has practical and
research interests side by side it aims to facilitate strategic alliances between
Finnish and Asian software companies and conduct research on Asian
Software Competence on the levels of company, strategic alliance and
industry. The objective of this venture is to support the emergence of FinnishAsian collaboration in the software industry. Software industries in Finland
and Asia could potentially benefit from the strategic cooperation, but these
cross-border alliances are being established slowly. The reasons might include
geographical and cultural distance at both - national and organizational level.
Indeed, both the previous are challenges from the knowledge transfer view:
geographical distance necessitates IT mediated communication along with
frequent on-site partner visits and team or team member exchanges. Cultural
distance requires double-checking that a piece of information has been
understood similarly on both sides.
Why have I selected the particular topic? Firstly, it converges in a
fascinating way the three threads of interest, the dimensions of epistemology,
ontology and culture into the Skein of Alliance Learning. The 'skein' forms the
core of the model 'Innovation Tube' within the 4-Tier Tube -model that is the
principal result of this research. In this work, the academic streams of strategic
management and knowledge management are being converged into one: this
allows one to perceive how different strategic choices relate to 'knowledge
transfer challenge' and further, to innovation. For me, this research can be seen
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as one image that has beauty as a whole and fascinating details to zoom in. For
example, it would be nave to claim that the cultural dimension could be
explored in one chapter of a Master's thesis thoroughly. To understand another
culture and how cultures shape an individual personality and thinking, is more
like a lifetime challenge than just a Master's thesis project.
Knowledge transfer can be examined on different levels: between
individuals, organizations, and industries, to name a few. The flow of data and
information forms the foundation for the knowledge transfer process itself, but
is not the primary level of study in this thesis. The total knowledge transferred
from an organization to another consists of the cumulated knowledge
transferred from any two employees of these organizational entities, but is
supposedly very difficult to measure. Knowledge may be transferred through
personal communication or may be facilitated by the use of information
systems.
Why to study knowledge transfer? Firstly, knowledge transfer, in my
opinion is an atomic determinant of joint-innovation in strategic alliances. By
atomic determinant I refer to all those conditions and factors that must be
present in order for a strategic alliance to emerge as a platform for innovation.
For example, without knowledge transfer between organizations, there will be
hardly any joint learning; without joint learning there is not much scope for the
development of interorganizational competence that could lead to a series of
joint-innovations. Another reason to study knowledge transfer is more
personal: if a person needs to select one topic to immerse oneself a bit more in
depth in his university education, knowledge transfer may be a good bet: at
least it has application possibilities all through the professional and personal
life regardless of the domain.
Ontological, epistemological and cultural factors that influence knowledge
transferability in cross-border strategic alliances are examined (Figure 1) in
their own chapters. The ontological dimension (or thread) refers to the levels of
interaction that are present in interorganizational learning: individual, team
organization, and alliance. Epistemology is a field of philosophy that examines
knowledge and its characteristics, creation and acquisition of knowledge.
Cultural thread is a significant contributor to the knowledge transfer challenge:
individuals are conditioned by their native culture to the extent that the
individuals may not even be aware. The threads of epistemology, ontology and
culture are integrated into one skein of alliance learning in Chapter Seven.
The research pool of Figure 1 depicts the focal problem domain in which
ontological, epistemological and cultural factors raise a wide variety of
challenges of research interest.
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2. Research window
2.1. Introduction
The purpose of this Masters thesis is to provide foundations for a PhD
dissertation. The theoretical review of the Master's thesis is more meaningful
when it is seen as the groundwork to help define the framework and
constraints for a software system innovation (Figure 2). Epistemological,
ontological and cultural dimensions identified in the first part of the research
(M.Sc) contribute to the system constraints of a MIS1 -product (ANIS, Appendix
II).
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3.
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completely new theory can be created based on gathered raw data [Jrvinen,
2004].
in the case of material model, a real system, such as electric switching system can
be a concrete physical analogue to the propositional calculus [Bunge, 1998].
Thus, the 4-Tier Tube -model presented in this thesis seems to fit the category
of theoretical model and being a factual interpretation of the problem domain of
knowledge transfer and alliance learning.
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Resource
similarity
Similar resources
Dissimilar
resources
Resource utilization
Performing resources
Nonperforming resources
Supplementary [SimilarPerforming]
Complementary [DissimilarPerforming]
Surplus [SimilarNonperforming]
Wasteful [DissimilarNonperforming]
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compatible and pressed into effective service as Das and Teng [2000] put it in
words.
3.2. Business relationship
While we have to understand the strategic management context of this thesis
research interest, knowledge transfer, we also have to understand and define
the context for strategic alliances - a business relationship. Holmlunds and
Trnrooss [1997] definition of a business relationship is following: an
interdependent process of continuous interaction and exchange between at
least two actors in a business network context. This definition clearly
emphasizes the process nature and continuity aspects of the relationship.
common vision and goals. The simplest case is when there is a partnership
between two organizations and one strategic alliance in the chosen
collaboration area (Figure 9). In the case of multinational companies (later
briefly MNCs) there can be dozens of strategic alliances that cover a certain area
of the collaboration that are independent from each other [Spekman et al., 2000;
Ohmae, 1989].
Although a strategic alliance can be a contract between more than two
companies, in this thesis, by default, alliances involving a company dyad, i.e.
two companies, are studied. Involvement of more complicated alliance
arrangements could raise important issues as how to manage conflicts in an
alliance network in which the firm's most crucial alliance partners are allied
also with the firm's serious competitors (Figure 10). This kind of arrangement
would impact knowledge transfer between the two companies if the third party
would impose restrictions for transparency of its partner towards its
competitors.
Figure 10. An alliance network of two MNCs and one SME company.
Outsourcing relationships have been very much in the focus of academics
and practitioners in the recent years [see Kishore et al., 2004; Kern and
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Willcocks, 2002]. Some of the research, such as the ones examining cultural
impacts on a relationship, is perfectly applicable to symmetrical strategic
alliance context. However, outsourcing relations differ from R&D alliances in
two important dimensions: most important is the distinction between parallel
and intertwining processes. The former one being the mode most commonly
in outsourcing and the latter one in R&D alliances. In the software
development, implementation with well-known technologies is the most likely
target for outsourcing. Alternatively, the vendor may be given the total
responsibility of the process from the requirements specification stage onwards
[Messerschmitt, 2003]. Finally, it should be noted that outsourcing is the term
used only in the context where something that is conducted by the organization
earlier is acquired through outsourcing from the outsider, a vendor, through
outsourcing contracts. Thus, there exists resource leverage relationships which
resemble outsourcing relationships, but which aim at new growth, not
outsourcing some existing operations.
3.3. Typology of strategic alliances
Kishore et al. [2004] classify four different relationship types: reliance, alliance,
support, and alignment. This model is dynamic in nature; relationship may
evolve over time and shift from, e.g. 'support' to 'alliance' quadrant. Das and
Teng [2000] divide alliance types into four categories: (1) joint ventures, (2)
minority equity alliances, (3) bilateral contract-based alliances and (4) unilateral
contract-based alliances. Broader classification is possible by distinguishing
equity and non-equity alliances from each other. Equity alliances refer to equity
joint ventures (EJVs) in which a new jointly financed and managed entity is
created; and minority equity alliances in which one partner invests in the other.
However, in the typology of Das and Teng [2000], equity agreements such as
joint ventures are considered a subclass of strategic alliances, contrary to
Duysters et al. [1999].
Koza and Lewin [2000] categorize strategic alliances based on March's
[1991] distinction between exploration and exploitation in three categories of
alliances: learning, business and hybrid alliances (Figure 11).
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acquisitions [Das and Teng, 2000]. They are preferred over mergers and
acquisitions especially when not all the resources of a target company are
valuable to the acquirer: non-desired resources can just be bypassed. Thus, in
the previously described circumstances, strategic alliances provide more
precise and effective means of accessing the critical competence and knowledge
than the other possible forms of corporate arrangements [Das and Teng, 2000].
The effectiveness of strategic alliances from the perspective of new product
development and cross-border knowledge transfer is debated in the literature.
Kotabe and Swan [1995] examined the impact of cooperating firms, firm size,
industry, strategic linkages, temporal aspects and nationality on innovativeness
of new product development. Along with other results, the authors concluded
that small single firms with cross-industry cooperation and horizontal linkages
indicated more innovative products [Kotabe and Swan, 1995]. Another study
by Almeida et al. [2002] implied superiority of MNCs compared to alliances
and markets in facilitating the flow of knowledge across the borders. This may
result from the MNC's ability to use flexibly different mechanisms to transfer,
integrate and develop technical knowledge.
Prahalads and Hamels [1990] view at a firm as a portfolio of core
competences provided an alternative to the prevailing view of a firm as a set
of product-market entities in the early 1990s. According to this view inter-firm
competition is essentially about acquisition of new skills, not a race of new
product introductions. Further, global competitiveness is seen as a function of
the firms pace, efficiency, and extent of knowledge accumulation. Hamel
[1991] considers the classic competitive strategy paradigm by Porter (1980)
incomplete in a sense that it focuses only on the very late stage of productmarket positioning, which is only the culmination point of long-term skillbuilding. Dyer and Singh [1999] expand Porters competitive advantage of a
firm to alliance level and identify four different sources of interorganizational
competitive advantage: relation-specific assets, complementary resources and
capabilities, effective governance and interfirm knowledge sharing routines
the last being more of an interest in this thesis. Knowledge sharing routines
refer to those deliberately developed inter-firm processes aimed at facilitating
knowledge exchanges between alliance partners [Dyer and Singh, 1999].
Dyer and Singh [1999] examine two dominating views about the source of
competitive advantage, industry structure (by Porter) and resource-based view.
In the former, 'supernormal' returns are explained by the firm's membership in
the industry whereas in the latter, the unique resources held by the firm are the
distinguishing factor. By referring to the earlier research implying that
productivity gains in the value chain are possible if participants are willing to
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MIT Sloan Management Review, 2001, VOL 43; PART 1, pages 26-35
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technology are desired. In the mature stage, manufacturing joint ventures are
used to control costs while marketing alliances are for targeting the latent
market and expanding into new geographical markets. Non-core operations of
the companies may be divested to improve profitability. In general, the mature
stage is the platform for making wide variety of strategic decisions such as
making equity investments and acquisitions, forming alliances for R&D,
marketing and manufacturing [Roberts and Liu, 2001].
The phase of discontinuities is entered when existing technologies are
rendered obsolete by the introduction of novel technologies. New markets
develop decreasing the demand for old market products. Barriers to entry have
been practically removed and new players can enter the markets easily. In this
stage, quick actions of the 'first player' can result in 'near-monopoly rents'.
Financially stronger companies may acquire financially weaker competitors
and thus strengthen their competitive position [Roberts and Liu, 2001].
Roberts and Liu [2001] propose that the decision of whether to engage in an
alliance or acquire (Figure 13) depends - in addition to company-specific
competencies - on market development and the competitive position of the firm
compared to its rivals. Alliances tend to be favored when technology is
becoming better defined and competitive pressure increases (mature stage), but
less so in the discontinuities phase in which consolidation of the companies
decreases the number of the companies. Mergers and acquisitions are favored
over alliances in transitional stage in which companies need to enhance their
technology portfolios [Roberts and Liu, 2001].
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4.
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Figure 20. The tacit and explicit knowledge and their relation to
conscious and unconscious content.
In the following Figure 21, I am building on the previous understanding of
the nature of tacit and explicit knowledge and depicting a working model for
knowledge transfer process between individuals. The model may be oversimplifying and incomplete in numerous ways, but is presented here to fill the
gap of individual level knowledge transfer since it lays obviously the
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(Meschi8), strengthened trust [Gulati, 1995] and gaining more in-depth view of
partners expertise and idiosyncrasies [Simonin, 1999]. The increasing level of
trust is a favorable direction, but in practice cannot be taken for granted. Trust
is dealt later in conjunction with the representation of the Innovation Tube.
Asset specificity refers to durable investments that are undertaken in
support of particular transactions. Complexity is a function of interdependent
technologies, routines, individual and resources linked to a particular
knowledge: greater complexity contributes to increased ambiguity.
Organizational distance refers to differences in organizational culture, business
practices and institutional heritage [Simonin, 1999].
Simonin [1999] conducted a large scale empirical study with a sample of 147
companies (complete answers out of all 192 respondents and out of 1000
approached companies) to investigate the significance of the proposed
antecedents of knowledge ambiguity. The questionnaire included specific
questions about the alliance partner, collaborative objectives and experience,
and other knowledge transfer related issues. The conclusion from the research
is that knowledge ambiguity can be considered as an important factor in
knowledge transfer and it acts as a full mediator of several hypothetically
proposed antecedents, including tacitness, experience, complexity, and cultural
and organizational distance. Surprisingly, specificity and partner protectiveness
were not found significant.
In the context of the moderating effects of alliance duration, impact of
ambiguity and tacitness are found to be lasting. Some differences were found
between young and older alliances: In the case of older alliances - the effects of
prior experience and complexity on ambiguity will vanish eventually. In regard
to younger alliances, cultural and organizational distance disappears [Simonin,
1999]. However, total disappearance of the organizational distance is unlikely
as long as organizations collaborate on the alliance contract level, not being
merged into one organizational unit. Also, if the firms hail from drastically
different cultures, I would be very doubtful whether cultural gap can ever be
totally bypassed. Despite this, the gap might be narrowed to the extent that it
ceases to have any major impact on organizational collaboration.
Meschi, P., Longevity and cultural differences of international joint ventures: Toward
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partitioning for the software industry (Figure 24). Industry consultants play an
important role in crystallization of vertical industry domain knowledge or
horizontal business application needs into software requirements and features.
Application software suppliers implement the software, market the software for
multiple end-user organizations and specialize in certain technical competences
and processes for maximizing operational efficiency and quality of software.
Infrastructure software supplier provides software for application developers and
operators.
Several independent software suppliers may team-up with one
infrastructure software supplier. System integrators acquire and integrate
software of several vendors, install and test the interoperability and
functionality of the newly combined system. System integration may require
implementation of custom modules and middleware bridging the portfolio of
the software components. While system integrators concentrate on technical
aspects, business consultants facilitate the adaptation of software in a particular
firm addressing the special organizational issues and needs [Messerschmitt and
Szyperski, 2004].
Two kinds of service providers should be distinguished from each other in
software industry: application service providers that license and operate
applications and infrastructure service provider purchases and operates the
hardware and software infrastructure. Information content suppliers process and
aggregate information to correspond to the needs of customers [Messerschmitt
and Szyperski, 2004].
Strategic alliances of this thesis context are assumed to be formed between
application software suppliers that conduct research and development
activities jointly. Software business knowledge is prerequisite for a software
company to operate successfully as a part of the software eco-system. The
transfer of software business knowledge between the alliance partners occurs
informally and as a side-product in a R&D alliance. Such knowledge is
characterized as less-articulated, rather simple (not complex as technological
knowledge) and possessed by humans (not structured, nor codified).
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Figure 26. Spiral of Organizational knowledge creation adopted to EastWest cultural context.
In strategic alliances two distinct ways of acquiring skills should be
distinguished from each other: a company can gain access to relevant skills by
licensing, subcontracting or by utilizing partners employees for specific goals.
On the other hand, the company may decide to opt to internalize desired skills.
Hamel [1991] coins terms quasi-internalization and de facto internalization,
respectively. The previous distinction is relevant since only internalized skills
can be utilized outside of the boundaries of the contract confining the business
relationship. Grant and Baden-Fuller [2004] argue that the value of alliances
over firms and markets lies in accessing knowledge and thus acquiring
knowledge should not necessarily be seen as an ultimate goal of an alliance.
When strategic alliances are used to pursue those strategic objectives that they
are endogenously most suitable for, we have taken one step towards genuine
alliance thinking as depicted in Figure 8 earlier.
In Figure 27, I have depicted three major levels of ontological dimension
that contribute to knowledge transfer challenge: (1) team level, (2) interorganizational level and (3) cross-border level. From the knowledge transfer
aspect, the team level is the platform for knowledge transfer between the
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individuals. The latter two levels build on the top of the team level both raising
one more source of uncertainty and complexity to the team level interaction.
In a single-organization context, only the first level of ontological challenge,
the team level, is present. Suitable conditions for knowledge creation in teams
were discussed in the chapter of Epistemological dimension (based on
Nonakas work [1994]).
When two organizations collaborate within a single-culture context, the two
ontological dimensions are present: team and inter-organizational level. In this
case, different corporate cultures discussed in the chapter of Cultural
dimension (based on Schein [1992]) may raise difficulties or misunderstandings
in the team level interaction.
In cross-border context, all the three ontological dimensions are present.
The interacting ontological entities examined, Culture A and Culture B, are
recognized as contributing to the ontological challenge, but are not analyzed in
qualitative terms in this context focusing on the ontological dimension.
made learning difficult and the parent corporate culture did not support
alliance learning. Inkpen's [1998] 'alliance knowledge' includes different
perspectives: (1) knowledge about how to design and manage alliances, (2)
knowledge that the partner wishes to gain access to, but needs not to
internalize and (3) knowledge that a partner can use to enhance its own
performance (e.g. strategy and operations).
Hamels [1991] theory of inter-partner learning consists of core propositions
that are briefly characterized in the following. In the case of competitive
collaboration, partners may view strategic alliances as transitional devices
aiming at internalization of partners skills. Termination of a learning alliance
should not be considered necessarily as a failure, but more as a statement that
the learning goals of the alliance have been achieved. From the perspective of
well-being of a relationship, it is beneficial if partners motivation for value
gaining from the relationship is of slightly differing nature, for example one
organization may aim at short term economic benefits while the other one in
learning skills for long-term benefit. This division of value motivations will
lessen the need to engage in time-consuming value-sharing discussions [Hamel,
1991].
Learning and bargaining power are in relation to each other since successful
learning may result in making the initial bargain obsolete and thus potentially
leading to unilateral dependence. Because of natural avoidance of this kind of
one-side dependence, partner may view the alliance as a race-to-learn; as stated
by a manager in Hamels study: If they learn what we know before we learn
what they know, we become redundant.
The objectives of an alliance partner, intent, may be internalization, resource
concentration or substitution. Asymmetry in either transparency or receptivity
results in asymmetric learning. Transparency is influenced, not only by
protectiveness of employees, but through design of organizational interfaces
and the structure of joint tasks. Receptivity is constrained by the skills and
absorptiveness of receptors among others [Hamel, 1991].
Interorganizational learning occurs when existing knowledge is transferred
from one partner to another or when completely new knowledge is developed
jointly. In interorganizational learning, transparency of knowledge holder and
receptivity of knowledge absorber must be present in order to transfer
knowledge and learn jointly. Interorganizational learning is essentially: a joint
outcome of the interacting organizations choices and abilities to be more or less
transparent and receptive [Larsson et al., 1998].
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Avoid
ance
Accommodation
B-> A
+c >a
Collaboration
B -> A
Competition
+c
-> a
b -> a
Compromise
Accommodation
Compromise
Competition
b -> a
a -> b
+ c -> a&b
A->B
+c -> b
b -> a
b -> a
a -> b
+ c -> a & b
a -> b
a -> b
A -> B
+ c -> b
Collaboration
B -> A
A -> B
+ C -> A&B
B -> A
+ c -> a
b -> a
a -> b
+ c -> a & b
A -> B
+ c -> b
Avoidance
Sample
legend:
A -> B : High transfer of existing knowledge from A to B
b -> a : moderate transfer of existing knowledge from B to A
+ c -> a&b : moderate creation of new knowledge c that is appropriated by both A and B
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The best alliance outcome, i.e. greater amount of new knowledge is created
when both organizations are using collaboration strategy. Any other
combinations of individual strategies will result in less knowledge transferred
from one partner to another and thus less new knowledge created. Assumption
here is the notion by Larsson et al. (influenced by Schumpeter, 1943) in which
the potential for new knowledge created through collaboration is proposed to
be a function of the total amount of knowledge that is disclosed and absorbed
among the organizations.
Larsson et al. [1998] recognize the dynamic fluctuation of chosen individual
learning strategies. The shift occurs often towards decreased transparency and
receptivity through adoption of competition or avoidance strategies.
Compromise strategy is suggested by Larsson et al. [1998] as a possible
solution to the interorganizational learning dilemma. Weakness of the
compromise strategy is that not all learning potential can be realized through it,
because of avoidance of competitive vulnerability in the case of total
transparency. Two organizations adopting accommodating strategies may not
accomplish great overall results, but the alliance itself can be relatively stable. A
combination of collaborative competitive strategies is unlikely to be longlasting since the exploited collaborative partner will sooner or later adopt a
competitive strategy too resulting in exacerbated relations [Larsson et al., 1998].
5.4. Organizational knowledge creation
The organizational learning perspective of the previous sub-chapters
emphasizes absorption of existing knowledge. We should not restrict to this,
but also examine how completely new knowledge is created in a partnership.
Organizational knowledge creation is in its essence a dynamic process, in
which tacit and explicit knowledge are in perpetual, never-ending, dialogue
[Nonaka, 1994]. This process and its peculiarities are presented in the following.
In this review, necessary remarks are raised to update the theory to crossculture, cross-organization -context.
Nonaka [1994] considers individual commitment as one of the crucial
components in promoting the creation of new knowledge in an organization.
Commitment itself is induced by three factors that Nonaka has named
intention, autonomy and environmental fluctuation. Intention has two
facets: how individuals form their approach to the world and, on the other
hand, how they make sense of their environment. Intention plays a role in how
the value of information and knowledge is perceived and created. Autonomy
applies to levels of individual, group and organization. Autonomy of
individuals in organization may induce unexpected opportunities and provides
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ACT stands for Adaptive Control of Thought. Later, the model in its updated form
Press, 1983.
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11
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12
The conceptualization term by Nonaka is not interchangeable with the one used by
Nicole Guarino (as defined in his paper Formal Ontology and Information Systems).
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[1994]
raises
some
important
considerations
regarding
the
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6. Cultural dimension
This chapter explores how culture can influence knowledge transfer between
strategic alliance partners hailing from different cultural orientations. Culture
here is inspected from the three points of views culture as containing different
levels, culture as manifested in communication and social interaction and
culture as seen through different dimensions of Hofstede [2005].
6.1. Levels of culture
In this chapter the influence of culture on knowledge transfer is recognized to
occur in different levels (Table 3), such as national culture [Hofstede, 2005;
Bhagat et al., 2002], organizational (corporate) and occupational culture [Schein,
1992]. More recently, Karahanna et al. [2005] have coined the term
supranational for pointing to the cultural differences that cross national
boundaries (or exist in more than one nation). Regional, ethnic and linguistic
subcultures belong to the level of supranational [Karahanna et al., 2005].
Religion could be thought as fitting the definition of supranational culture as
well.
Schein [1992] defines the culture of a group as follows: "A pattern of shared
basic assumptions that the group learned as it solved its problems of external
adaptation and internal integration, that has worked well enough to be
considered valid and, therefore, to be taught to new members as the correct
way to perceive, think, and feel in relation to those problems". The definition
stresses "shared, taken-for-granted" assumptions of the group members.
Schein's [1992] acknowledges that any social group with a 'stable membership'
and shared learning history has developed a culture of its own.
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Definition
Supranational
National
Professional
Loyalty
towards
employing
organization vs. industry (Gouldner,
195714)
Organizational
Group
13
Siehl, C., Martin, J., Organizational culture: A key to financial performance? In:
Organizational climate and culture, ed. by B. Schneider, Jossey-Bass: San Francisco, 1990.
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strive for striking out of the crowd [Bhagat et al., 2002]. In the following
synthesis, the horizontal vs. vertical distinction is included as one of the
significant contributors of culture-based challenges to the knowledge transfer.
Figure 32 depicts the proposed culture-based knowledge transfer challenge
of strategic alliances. The perspective of the figure is horizontal-individualistic
culture (HI). The side face depicts national culture and the upper face
organizational culture.
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7. Integrative framework
This chapter aims at integrating the threads of epistemology (Chapter Four),
ontology (Chapter Five) and culture (Chapter Six) into the Skein of Alliance
Learning. The very same chapters contribute the three dimensions of the
Knowledge Challenge Cubicle (Figure 34). The Challenge and Support cubicles
are inputs for the Knowledge Transfer Outcome (Figure 36). Further, the latter
contributes to the Y-axis of the actual 4-Tier Tube model of the next subchapter 7.2. Other significant contributors to the 4-Tier Tube model are March
[1991] and Larsson et al. [1998]. The previous chains of influences and
contributions are summarized in Figure 33.
The 4-Tier Tube -model of knowledge transfer and alliance learning in
software R&D context is abstracted carefully based on the theoretical review of
this thesis and the consequent conceptual development of this chapter.
Figure 33. The heritage and contribution (Cs in figure) of the thesis.
7.1. Cubicles for Knowledge Transfer
Next I will analyze the knowledge transfer challenge and support through the
use of cubicles as cognitive tools (Figure 34 and Figure 35).
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ontological dimension was based on the works by Nonaka and Takeuchi [1995],
Cohen and Levinthal [1990], Dyer and Singh [1999] and Larsson [1998] among
others. Finally, the cultural dimension followed in the footsteps of Hofstede
[2005], Schein [1992] and Bhagat et al. [2002].
7.1.2. Knowledge Transfer Support Cubicle
In the cubicle of Knowledge Transfer Support (Figure 35) I have identified (1)
evolutionary factors, (2) relational factors and (3) supporting systems.
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7.2. 4-Tier Tube model for Knowledge Transfer and Alliance Learning
Based on the previously presented three dimensions of interorganizational
learning, a model for knowledge transfer in cross-border R&D alliances of
software companies will be introduced: 4-Tier Tube model (simplified in
Figure 37, full in Figure 38). The 4-Tier Tube model in its essence is designed
to be a tool for strategic thinking. On a higher level, the model helps to perceive
the connection between knowledge transfer and attainment of strategic
objectives.
The 4-Tier Tube consists of four nested tubes: Innovation Tube, Strategic
Alliance tube (SA-tube), Information System tube (IS-tube) and Strategic
management tube (SM-tube). The SA-tube folds the Innovation Tube and
firms F-1 and F-2. The skein of alliance learning around Knowledge Bus twines
further inside the Innovation Tube.
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Proper timing for sharing certain knowledge assets: not too early,
neither too late
Right allocation of resources for knowledge transfer: avoiding
wastefulness of resources or lack of resources
Appropriate (knowledge) targets and involved persons for
knowledge transfer
During the alliance life cycle, the 4-Tier Tube traverses from the origin
towards the right periphery on X-dimension and towards the back wall of the
cubicle on Z-dimension as the alliance objectives are met one by one. Besides
the tube having a certain angle at any given time X-i, it has a certain position
[X-i, K-n, S-n] determined by the very central point of the Tube.
In the upper face are depicted the four possible outcomes of the 4-Tier Tube
model (the product of two dimensions: time and the reach of strategic
objectives):
1.
2.
3.
4.
Figure 39 is the cross-section of the 4-Tier Tube. The details of the diagram
will be clarified gradually as the discourse proceeds (e.g. Figure 40 and Figure
41 depict the content of the innermost tube which is not very clear in this
picture).
For now it is enough to perceive the overall structure of the model along
with its different tubes and corresponding modes. The direction of a Tube
implies the assigned value of the mode of the respective layer. At any given
time, all the modes are in use (in contrast to being exclusive to each other): they
indicate the current, prevailing mode for each tube.
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The order of the SA tube and IS tube could be thought as being reverse to
what I have depicted in the 4-Tier Tube model. However, later on I have
visualized how information system is a cohesive belt that supports the strategic
alliance on different levels. As IS-tube folds the SA-tube and the rest of the
tubes, this highlights the crucial importance of an appropriate information
system that answers the needs of all the inner layers of the model.
Modal and positional coding
To understand the next few subchapters, it is important to acknowledge how
the 4-Tier Tube model is interpreted. In the 4-Tier Tube model there are two
possible alternatives for codifying information:
1. Modal coding
2. Positional coding
The direction of a tube (or learning skein) implies the mode: for example,
the direction of the learning skein inside the Innovation Tube implies the
current learning mode of a particular alliance (modal coding). The modes of the
4-Tier Tube model are depicted in Figure 39: (1) learning mode, (2) innovation
mode, (3) alliance mode, (4) IS support mode and (5) strategic mode. Each of
the modes is assigned a value at any given time. Possible values for the modes
are called flags and are presented later.
Secondly, the position of an entity inside the tube may codify information:
for example, the positions of entities, firms F-1 and F-2, inside a tube depict the
chosen strategy in relation to the other. The entity can also be the strategic
alliance as whole or an inner tube. These all are examples of positional coding.
Modal and positional coding are presented both in Figure 53 of Appendix I.
The 4-Tier Tube model is evolving dynamically: at any given time the
status of the 4-Tier Tube can be determined by checking the flags of the modes
and the entity positions (the combinatory product of these is the number of all
the possible states of the model).
In the following, the 4-Tier Tube model is described starting from the very
core and gradually progressing towards outer layers. I call this approach
systemic layering. Each of the nested tubes represents a unique domain of
interest that is described in the following sections.
7.2.2. Innovation Tube
The strategic management chapter of this thesis sheds light on the motivation
of strategic alliance use. Figure 40 depicts how a business driver (1A) brings
together the complementary competences (2A) and pooled resources (2B) of the
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Figure 40. Innovation Tube and the Skein of Alliance Learning (across
cultures).
If we go beyond the black box metaphor and shift to the core of the
Innovation Tube we perceive the intertwining skein consisting of
epistemology, ontology and culture threads. The cultural thread of the skein is
relatively static in the alliance relationship: The cultural dyad is determined
when alliance partners have engaged in the alliance. Evidently, the national
cultures of the partners will remain same all through the relationship.
However, a special negotiated culture, alliance culture, may be developed
through long-term interaction of partners [Spekman et al., 2000]. As alliance
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learning skein twines further, one of the threads may be in turns more in the
surface than others, i.e. the knowledge transfer challenge of the particular
phase manifests more through one dimension than others16.
Similarly, the general quality and properties of knowledge transferred in
the alliance is determined to a high extent according to strategic collaboration
area. For example, in technology R&D alliances it is more likely that the
knowledge transferred is technological, not marketing knowledge. The model
does not imply that technological alliances are restricted to transferring only
technological knowledge, but by definition that is the most common form of
knowledge exchanged.
The inner core the Skein of Alliance Learning - evolves on limited range as
depicted in the picture and as shown in examples. The interorganizational
knowledge transfer and learning is supported by the inter-organizational
information systems in use.
Turbulence factors
Turbulence factors within the Innovation Tube include human and
organizational factors, and communication gaps resulting from cultural
differences and differing cognitive styles.
Interorganizational trust is needed for supporting knowledge transfer and
protecting the alliance from a wide variety of turbulence factors that in the most
severe cases threaten the stability of the partnership. Two dimensions can be
distinguished in regard to trust: structural or calculative and behavioural pure
trust. The former is based on rational motivation such as potential gains and
reputation effects, the latter on optimistic expectations of partner behaviour.
Calculative trust is often in a greater role in strategic alliances [Larsson et al.,
1998].
Larsson et al. [1998] define interorganizational trust as "...the mutual
confidence among the members of two or more organizations in the
forbearance of opportunistic exploitation of one organization by another based
on both calculation and good intentions.
Long-term time orientation of the alliance has a positive influence to the
development of interorganizational trust along with prior related interaction.
Prior experience with the same partner can pave the way for communicating
tacit knowledge more clearly, since partners are familiar with each other and
their respective communication styles. Long-term orientation coupled with
16
However, the order of the three threads in the Figure 40 (from left to right:
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The learning skein is situated within the Knowledge Pool which is the venue
for developing and nurturing deep expertise in the area of R&D collaboration.
Here we come close or even converge with the concept of Ba from Nonaka et
al. [2001] that was reviewed earlier.
Knowledge transferred to the Knowledge Bus is the fuel of alliance
learning. As long as the alliance partners transfer knowledge to the Knowledge
Bus, the learning skein keeps twining further approaching the learning
objectives. Figure 42 zooms into Knowledge Bus to provide a view to the very
innermost core of the 4-Tier Tube model.
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maintaining the balance between exploration and exploitation is critical for the
survival and prosperity of a system. In strategic alliance context, explorative
and exploitative learning occurs on different levels that may overlap with each
other: in individuals cognition, team or project level and alliance level. In an
organization, regardless of the important function that both, exploration and
exploitation phase individually have, they nevertheless need to compete for the
same scarce resources [March, 1991].
March [1991] points to the vulnerability of exploration by stating that the
returns are less certain, more remote in time and more distant from the locus of
action in an organization. Presumably, explorative activities, such as search for
new ideas, markets or relations, has uncertain outcomes, but on the other hand
may lead to occasional breakthroughs that result in significant economic gains.
In a strategic alliance, either of the alliance partners may be less risk-taking, and
thus avoiding engaging excessively in the explorative mode. If the willingness
to take risks, to explore a wide variety of options, differs greatly between the
alliance partners, it may result in dysfunctional alliance learning.
The Innovation Tube is depicted in the following picture in the context of
Strategic Alliance tube (SA-tube, Figure 4417). The alliance partners are
represented as F-1 and F-2.
17
The Z-axis is not visible in this picture for the sake of clarity.
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Innovation Mode
Figure 46 depicts the same SA-tube as in Figure 45, but has other content now,
and to avoid confusion is presented as a separate diagram. It visualizes the
Innovation mode (modal coding) that is a product of two dimensions: radical
vs. incremental innovation and technological innovation vs. non-technological
innovation (business models, process improvements, etc). The default flag for
the R&D alliances innovation mode is the lower left-hand corner of incremental
technological innovation. Occasional shifts to the other quadrants occur in the
emergence of radical innovation or non-technological innovations, the latter
being often incidental by-products of R&D alliances.
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The cardinal point of alliance: the system should support decision making
in the alliance level.
The round arrows in Figure 47 depict the relation of different cardinal
points to each other: knowledge transfer is the prerequisite for alliance learning,
as the latter is for the innovation. All these three can be supported by right
decisions on the alliance level (in this respect there could be two-way arrows
between alliance and the rest of the tree). Prospering in innovation fulfills the
objectives of the alliance level (assuming that the alliance has been formed as a
platform of innovation) and thus completes the cycle.
The four different cardinal points should be taken into account equally
when designing an interorganizational information system. I designate this
view as a balanced design approach.
System level concepts
The purpose next is to introduce the important underlying system level
concepts relevant to the IS -tube. From system point of view, two different cases
of interrelationships can be distinguished: interfacing and integration [Waring
and Wainwright, 2000]. Interfacing is described as interaction and
communication between two elements or subsystems - whereas integrating
refers to a process, where various traits, attitudes and behaviors are organized
into one entity. In general, integration is needed when heterogeneous
information system environment has become a burden for an organization and
standardization is desirable for the improved efficiency [Waring and
Wainwright, 2000].
Information system interfacing on an abstract level can be divided further to
semantic and syntactic interoperability [Park and Ram, 2004].
Semantic interoperability is defined as knowledge-level interoperability that
provides cooperating businesses with the ability to bridge semantic conflicts
arising from differences in implicit meanings, perspectives, and assumptions.
Idealistically the information environment should be semantically compatible
resulting from commonly agreed rules and concepts by different business units
[Park and Ram, 2004].
Syntactic interoperability is an application-level interoperability that allows
different software components to interact with each other, even though their
implementation is different [Park and Ram, 2004]. Hasselbring [2000] states that
that syntactical level is addressed by middleware, while Enterprise application
integration (EAI) addresses the semantic level also.
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8. Conclusion
8.1. Revival of research questions
The research questions set in the very beginning are revived in the following
coupled with a short summary of how this research has addressed them.
Research question 1: What are the challenges in knowledge transfer in (East-west)
cross-border strategic alliances of software companies?
The challenges were in the beginning categorized into epistemological,
ontological and cultural. This classification proved to be feasible for the
purpose of this thesis.
Epistemological challenges: knowledge is seen as a valuable asset to a
company and is shared with the partner only in the presence of appropriate
levels of trust, commitment and collaborative learning strategy. Knowledge in a
software company can be highly complex and systemic requiring sufficient
absorptive capacity from the receiving party and transparency from the side of
the possessing party.
Ontological challenges: the partners need to develop interorganizational
learning practices. Without shared ontologies, knowledge sharing is not
possible. Crossing the borders of entities (individual, team and organization),
causes discontinuity of underlying assumptions of knowledge and raises the
need to validate the used ontology again.
Cultural challenges: those dimensions of culture that restrict the flow of
information and knowledge in an organization are the ones affecting
knowledge transfer most (e.g. verticalness of a culture). Similarly as above,
culture, as perceived as an ontological entity, demands that representatives of
different cultural orientations ensure the use of shared ontology, i.e. all
communication should be double-checked so that misunderstandings are
avoided.
Research question 2: What kind of model is best suited to describe the 'knowledge
transfer challenge'?
The Knowledge Transfer Challenge Cubicle was created as the draft model
for knowledge transfer challenge for this thesis context. However, it does not
take into account the dynamics of an alliance relationship by any means. For
this purpose a more sophisticated model, the 4-Tier Tube model, was created.
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Figure 50. Summary of the thesis - arrival in the starting point for a case
study research.
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Significance
Reasoning
Scientific
Knowledge
Transfer
Challenge Cubicle
Academic
Knowledge
Transfer Support
Cubicle
Academic
Innovation
Potential Cubicle
Practical
Alliance Pay-off
Potential vs.
Alliance
Challenge
Practical
Strategic
Management
Choices Cubicle
Practical
A 'rough' model
for knowledge
transfer process
of tacit knowledge
Academic
Updated spiral of
organizational
knowledge
creation
Academic
Culture-based
challenge
Academic
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- 111 -
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