Multinationals and Cross-Cultural Management : The Transfer of Knowledge Within Multinational Corporations [1 ed.] 9780203846759, 9780415449311

Citation preview

Multinationals and Cross-Cultural Management

Globalization makes our world appear smaller: it is easier to connect, communicate and do business with people all over the world. But cultural differences remain and challenge globalized knowledge communication and transfer. This book examines cross-cultural management within multinational enterprises (MNEs), focusing in particular on how cultural differences influence the transfer of knowledge between different units within individual corporations. Based on detailed empirical analysis of 155 companies in Germany and Japan, it considers the relative effectiveness of intercultural and intracultural knowledge transfer; identifies the factors that inhibit or facilitate successful knowledge transfer; and suggests how management processes of MNEs can be improved. It demonstrates that although cultural differences do not necessarily influence the selection and transmission of knowledge overseas, they do have a strong impact on how that knowledge is received, integrated and put into practice locally. The book shows how knowledge is accepted differently in Europe and Asia and which factors have the strongest impact on efficient knowledge transfer. It suggests that to improve cross-cultural management, MNEs should focus less on upgrading the technology that allows knowledge transfer, and more on the capabilities and beliefs of individual employees. Parissa Haghirian is Associate Professor of International Management at the Faculty of Liberal Arts at Sophia University in Tokyo, and adjunct professor at Temple University, Japan. Her recent publications include Innovation and Change in Japanese Management and J-Management: Fresh Perspectives on the Japanese Firm in the 21st Century.

Routledge International Business in Asia Series Series editor: Hafiz Mirza Bradford University School of Management

The primary aim of this series is to publish original, high-quality, researchlevel work, by both new and established scholars in the West and East, on all aspects of international business in Asia. Works of synthesis, reference books and edited collections will also be considered. Submissions from prospective authors are welcomed, and should in the first instance be sent to the series editor: Professor Hafiz Mirza, Bradford University School of Management, Emm Lane, Bradford BD9 4JL. Email: [email protected]

1. The Future of Foreign Investment in Southeast Asia Edited by Nick J. Freeman and Frank L. Bartels 2. Multinationals and Asia Organizational and institutional relationships Edited by Axele Giroud, Alexander T. Mohr and Deli Yang 3. Multinationals and Economic Growth in East Asia Foreign direct investment, corporate strategies and national economic development Edited by Shujiro Urata, Chia Siow Yue and Fukunari Kimura 4. Changes in Japanese Employment Practices Beyond the Japanese model Arjan B. Keizer 5. Corporate Social Responsibility in Asia Edited by Kyoko Fukukawa 6. Multinationals and Cross-Cultural Management The transfer of knowledge within multinational corporations Parissa Haghirian

Multinationals and Cross-Cultural Management The transfer of knowledge within multinational corporations

Parissa Haghirian

First published 2011 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Avenue, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business

This edition published in the Taylor & Francis e-Library, 2011. To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk. © 2011 Parissa Haghirian All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Haghirian, Parissa, 1970– Multinationals and cross-cultural management : the transfer of knowledge within multinational corporations / Parissa Haghirian. p. cm. – (Routledge international business in Asia series) Includes bibliographical references and index. 1. International business enterprises–Management. 2. Management– Cross-cultural studies. 3. Intercultural communication. I. Title. HD62.4.H34 2010 658.4'038–dc22 2010003756

ISBN 0-203-84675-3 Master e-book ISBN

ISBN 978-0-415-44931-1 (hbk) ISBN 978-0-203-84675-9 (ebk)

In memory of my father Gholamali Haghirian

Contents

List of illustrations Preface Acknowledgements

ix xi xxi

PART I

Theoretical foundations of knowledge management and transfer in multinational corporations

1

1

The nature of knowledge

3

2

Managing knowledge within organizations

16

3

Western knowledge management and Japanese knowledge management

27

4

Knowledge management in multinational corporations

46

5

Knowledge transfer across cultures

66

PART II

Research questions and results

75

6

The research project

77

7

Do knowledge transfer processes differ between cultures?

83

8

Is knowledge transfer between two cultures less successful than knowledge transfer within one culture?

102

Which factors influence cross-cultural knowledge transfer?

118

9

viii

Contents

PART III

Effectiveness of cross-cultural knowledge transfer in multinational corporations

133

10 How successful is cross-cultural knowledge transfer?

135

11 The future of knowledge transfer in multinational corporations

140

Appendix Bibliography Index

149 156 165

Illustrations

Figures 2.1 3.1 4.1 5.1 7.1 7.2 8.1 8.2 9.1 A1 A2

Knowledge management within a corporation High-context cultures and low-context cultures Knowledge transfer within multinational corporations Cross-cultural communication process Cross-cultural knowledge transfer process Research question 1 Differences in communication content Research question 2 Research question 3 German industry sample Japanese industry sample

20 28 52 72 85 97 106 111 128 154 154

Tables 1.1 1.2 1.3 3.1 3.2 3.3 3.4 4.1 4.2 4.3 5.1 6.1 6.2 6.3 6.4

Data, information, knowledge, know-how and wisdom Knowledge types Knowledge locations Cultural dimensions according to Edward T. Hall Knowledge in the West and in Japan Knowledge creation in Western and Japanese organizations Strengths and weaknesses of knowledge management in the West and Japan Knowledge required in internationalization processes What knowledge is transferred within multinational corporations? Contextual influences on knowledge transfer processes European and Asian communication patterns Types of cross-cultural management studies Research design Overview sample in Germany and Japan Biases in cross-cultural interviews

8 13 14 27 35 42 44 47 55 63 68 78 78 79 81

x 7.1 7.2 7.3 7.4 7.5 7.6

Illustrations

Knowledge transfer instruments German managers’ choice of knowledge Japanese managers’ choice of knowledge Results of hypothesis 1 Knowledge transfer instruments used by German managers Knowledge transfer instruments preferred by Japanese managers 7.7 Results of hypothesis 2 8.1 Receiving knowledge from a low-context country 8.2 Receiving knowledge from a high-context country 8.3 Results of hypotheses 3–5 9.1 Influence factors of cross-cultural knowledge transfer (German managers) 9.2 Influence factors of cross-cultural knowledge transfer (Japanese managers) 9.3 Results of hypotheses 6–9 10.1 Summary of hypotheses results A1 Summary of the variables tested A2 Questionnaire A3 Head office and subsidiaries

91 97 97 98 98 99 100 112 112 114 129 129 130 137 149 151 155

Preface

My first encounters with cross-cultural knowledge transfer I had my very first encounter with cross-cultural knowledge management issues when I was living in Japan in the early 1990s. At that time, I was a student of Japanese Studies and International Management and had come to Japan for three years to improve my Japanese language skills and gain international experience. Since I attended a very expensive Japanese language school, I needed money, and found a job as a German teacher in the subsidiary of a German manufacturing company in Tokyo. I was the only German native speaker among the 30 Japanese employees and taught three evenings a week. It was the first real job I had ever held, and I enjoyed the experience of a Japanese working environment. One afternoon when I was preparing my classes, the phone rang. I picked it up and I got to talk to a German-speaking manager from the head office who had dialled the wrong extension number. He was very surprised to find that somebody at the Japanese subsidiary could speak fluent German, and asked me to clarify a question he intended to ask one of my Japanese colleagues. I answered his question and he seemed very happy about my help. Usually for him, communicating with Japanese colleagues on the phone was a very complicated and frustrating task, because both parties would speak English and misunderstandings were frequent. The news of my presence in the Japanese subsidiary spread quickly within the head office and from that day on I had a second job – I became an crosscultural knowledge manager. Despite the fact that I had neither business experience nor a university degree I was soon finding myself involved in most communication processes between the German headquarters and the Tokyo subsidiary, simply because I was the only person who could speak German, English and some Japanese. As a result, besides teaching German to all Japanese employees, I was assigned numerous new tasks. My colleagues in Tokyo would ask me to call the head office or to translate documents. Managers at the headquarters called me from Germany to explain documents they had sent to Tokyo to my Japanese colleagues or to clarify some cross-cultural misunderstandings. I was in charge of explaining Japanese thinking to visitors

xii

Preface

from the head office and of preparing my Japanese colleagues for their business trips to Germany. Rapidly, my job got really interesting. I enjoyed my new status very much and was getting very excited about my new career and insights. However, as my tasks grew, I went through an experience that showed me how important culture is when communicating or transferring knowledge within a multinational corporation. This event would also become the foundation of the research project I would conduct a decade later, the results of which I am going to present in this book. One day, my Japanese boss – let’s call him Mr Suzuki – asked me to come to his office to translate a German letter for him. Mr. Suzuki was a typical Japanese boss (shachô) of the late bubble economy era. He ruled with an iron fist and his employees, including me, had a great deal of respect for him. He spoke German quite well because he had lived a few years in Düsseldorf. Mr Suzuki was in charge of the company’s business in Japan and responsible for all 30 Japanese employees in the subsidiary. His experience in Europe indicated an extensive intercultural knowledge and he was acknowledged of as a manager with understanding for German and Japanese business ways alike. However, after I entered his office, he showed me a handwritten letter in German and asked me to translate it. Handwritten letters were nothing unusual in Japan at that time. There were no computer programs for the very complex Japanese writing system yet, and handwritten notes, faxes and letters were quite common. It was much faster writing documents by hand than using one of the complicated Japanese typewriters, which were huge machines with more than a thousand different characters. I would frequently find handwritten notes on my desk. But the letter Mr Suzuki showed me was not in Japanese. It was written in German by the company’s president in Germany. This was a bit of a surprise. In Germany handwritten business letters were quite unusual and were only used for private messages. A handwritten letter by the president therefore indicated a serious situation. Mr Suzuki, however, did not seem to realize the importance and showed me the letter which he could not decipher, with some excitement. Western handwriting is as difficult to read for many Asians as are handwritten Chinese characters for Westerners, even if they speak Japanese or Chinese very well. I started to read the letter. Its content was, as I had already assumed, quite serious. The president was obviously extremely upset about Mr Suzuki’s way of managing the firm in Japan. The language of the letter was direct and not very polite. The president was telling my boss that his actions were the cause of great concern at the head office and that if Mr Suzuki was planning to continue managing the Japanese subsidiary as he had done so far, he would be fired very soon. As I read the letter, Mr Suzuki was becoming quite impatient and asked me to explain its contents. I started to feel very nervous. I began to wonder whether being a cross-cultural knowledge manager was such a great idea after all. I tried to think what to do. I could not simply tell my Japanese boss that he was about to be sacked. If Mr Suzuki had been a Western boss, I would have simply translated the content of the message. But I had already been in Japan

Preface xiii for a few years and knew that communicating a message like this would be not only a very embarrassing experience for both of us, but also be considered very impolite. So I decided to be ‘Japanese’ and did not translate the message exactly as it was, hoping that he would read between the lines. I remember saying something like the president sounded quite worried and suggested that Mr Suzuki should try to meet him in person and discuss the problem with him. This was far from the exact message of the letter, but Mr Suzuki nodded, agreeing while I went on. After listening to my clumsy explanations for a few minutes, Mr Suzuki finally sent me back to work and I was relieved to be dismissed from this stressful task. I stayed another three months at this job and by the time I left and went back to my country, Mr Suzuki was still in charge of the Japanese subsidiary. To this day, I do not know whether he realized how serious the letter really was. I later learned that his employment was terminated about two years after this incident. This episode was my first encounter with cross-cultural issues in corporate communication. Today I have worked in Japanese organizations for more than ten years and have had a number of experiences that I would call culturally more challenging, but no experience was as stressful and memorable as this one. Even a decade later, when I started my research project on knowledge transfer within multinational corporations, this event was the first that came to mind. I found knowledge management theory very interesting, but I could not relate any of the theoretical explanations of knowledge transfer to what I had experienced working in Japanese multinational companies. I remembered my experience translating the message for Mr Suzuki and how I had successfully kept the perhaps most important message of his career from him. I further remembered that even without any formal education in business or experience in working in a business environment I had quite easily developed into a very valuable participant of knowledge transfer processes within my company simply because I had language skills and cultural competence. I started to wonder how this could be explained by knowledge management literature. What I found was that in knowledge management literature organizational units seemed to be senders and receivers of knowledge, whereas in real business life people within these organizational units are in charge of managing intellectual assets. In subsidiaries which have a higher geographical distance to their head office (just as the company that I worked for), and therefore in most cases a high level of cultural difference as well, the problem of knowledge transfer is a major challenge in sometimes even communicating the easiest messages. In my experience, cultural differences, personal preferences and attitudes, prejudices against other cultures and many other factors often hindered or limited knowledge transfer within the firm. Being in the middle of all these knowledge transfer processes between a German head office and a Japanese subsidiary I spent most of my time explaining German intentions and ideas to my Japanese colleagues and Japanese intentions and

xiv Preface communication styles to managers in Germany. Knowledge management scientists, however, leave us with the impression that organizational units communicate with each other. This may seem logical for management researchers; managers, on the other hand, know that knowledge transfer and communication is performed by individuals, who also often have very individual ways of executing these tasks. The situation I had experienced in Japan indicated that intercultural knowledge transfer is a topic worth researching and that people are the most important players in it. They may be interested in transferring knowledge or they may not. They may gain power by transferring and sharing knowledge or they may loose it. They may have affinity for the sender or they may be entirely uninterested about the sender and prefer to keep the message to themselves. On top of this, individuals managing knowledge may lack the skills or qualifications to properly process the knowledge they receive. They may not use and apply the knowledge in a way the sender intended, or they may interpret it individually and reuse and apply it in a completely new way. In any case, individuals are the main actors in any knowledge transfer process. In fact, every knowledge management-related business process, whether it is knowledge creation, sharing or application, is related to the individual performing it and therefore strongly connected to this individual’s intentions or personal strategies. Ability and intentions further impinge on the way knowledge is transferred and managed within an organization. Knowledge is never rationally managed. Individuals do not live in a vacuum; they react and interact with their environment,which may further influence their activities. On top of this, they are all located in their individual culture, which also impinges on work processes and consequently on the management of knowledge. In another research project I investigated market entry processes of European small and medium-sized companies into the Japanese market. During the qualitative phase of the project managers where asked about the biggest hurdles they had had to overcome when establishing their businesses in Japan. The results were remarkable. Instead of referring mostly to cultural and linguistic challenges when dealing with Japanese suppliers and customers while establishing their business in Japan, every single one of my ten interviewees named communication and knowledge sharing with the head office as one of the major challenges when entering the Japanese market. In every stage of the internationalization process, communicating with their head offices was considered a serious problem. All interviewees expected market entry in Japan to be culturally challenging; what they were not prepared for, however, was a cultural challenge when communicating market information, requirements and development to their former colleagues in their home country. The surprised interviewees reported misunderstandings and mistranslations, lack of language skills on both sides and problems transferring knowledge from the headquarters to the Japanese subsidiary (Haghirian 2007). All of them agreed that transferring knowledge from the

Preface xv headquarters to a culturally different subsidiary and vice versa, only works if all participants own high cultural competence, have excellent language skills and are willing to invest a lot of time in transferring knowledge between the organizational units. These results of this project strengthened my impression that effective intercultural knowledge transfer is not only vital for multinational corporations, but can also – if it is inefficient – present a serious threat to corporate success. International and cross-cultural knowledge transfer processes have a great influence on the overall corporate success of an enterprise. Multinational corporations often gain and sustain their main competitive advantages by moving product knowledge from one company unit or market to another. Making knowledge accessible to all their members all over the globe is therefore a prerequisite for organizational survival and strategic management. As globalization continues and speed in sharing knowledge and information globally becomes a major issue, these challenges increase. But even if the questions on the topic increase, research results about culture and knowledge management is still scant (Awazu 2007). Major aspects of knowledge transfer – namely the actors in the process, their cultural background, language skills, emotional states, etc. – have not yet been intensively investigated in the scientific discussion about communicating knowledge within multinational corporations. In fact, cultural aspects of transfer and communication of corporate knowledge within multinational corporations have not yet been fully explored by scientific research. This book therefore aims to fill this gap and attempts to investigate the relevance of culture in knowledge transfer processes within multinational corporations. It is based on the premise that knowledge transfer processes within multinational corporations involve two or more individuals and that knowledge is not being transferred between two organizational units. All participants in the knowledge transfer process are located in their organizational and cultural context. Both contexts hardly overlap. Despite this they try to communicate knowledge and reuse it at a separate location within the organization. Both participants may view knowledge very differently, may have other preferences in sharing it or may not consider the same types of knowledge relevant or useful in their organizational contexts. This can lead to misunderstandings or the wrong application of the knowledge sent. Cross-cultural knowledge transfer is therefore as complex and often more complicated and problematic as cross-cultural communication processes. My book will investigate how culture influences knowledge transfer within multinational corporations. I base the analysis in this book on the premise that knowledge transfer processes happen between individuals and not between corporate units. Sharing or transferring knowledge is, in any event, a communication process between two individuals. Even if they communicate with the use of a database or by e-mail, at the beginning and at the end of every knowledge management or knowledge transfer process is a human being, who communicates in a certain way. But if communication is influenced by culture,

xvi

Preface

knowledge transfer may be influenced by it as well. The first research question investigated in this book is therefore. Research Question 1: Do knowledge transfer processes differ between cultures? Organizational knowledge is useless if individuals do not receive it, interpret it and make further use of it. Even managing knowledge efficiently within a single company is by no means a trivial process. In a multinational corporation, however, things get even more complicated. International teams are often formed within one department or one corporate unit, as well as globally. Individuals involved in the knowledge sharing process hardly share the same context. The corporation is not located in one single place, but spread around the globe. Employees and company units are separated by geographical distance, linguistic and cultural differences, time differences and in many cases employees have never met in person. All these aspects make cross-cultural knowledge transfer processes far more complicated than knowledge-sharing processes within a single company unit, department or country. The knowledge transfer process is therefore communication between two members of an organization who intend to share knowledge but who may be hindered in doing this effectively. It can be easily interrupted by communication problems, different cultural perceptions or the inability to understand the information which is received from overseas. Implementing and reusing knowledge within multinational corporations can become a problem as well. In many cases information and knowledge from an overseas unit cannot be used locally: it may be misinterpreted, or used in a different way. In my example I showed that a handwritten letter has a highly personal meaning in Germany and indicates importance, since the sender spent time and effort writing it. In Japan, however, handwritten notes used to be quite common because they were easier and faster to write than letters written with huge Japanese typewriters that were still used until the 1980s (today this is of course different). When Mr Suzuki received a handwritten letter from his superior he judged it – not surprisingly – from a very Japanese perspective. The only thing he saw was a letter, as he would usually get, which was difficult to read and asked his German-speaking assistant to translate it. In his cultural context a handwritten letter was a normal means of communication and nothing else. For me, on the other hand, acting in my cultural context, a handwritten letter was something very personal and important and in a company surrounding clearly contained a confidential and extremely serious message. Being confronted with a handwritten letter from our company’s president, I did not even have to read it to know that it meant trouble. The handwritten letter itself already contained a lot of knowledge. It was a symbol and communicated the seriousness of the situation beyond words; but could not be correctly interpreted by its Japanese recipient. Part of its content – namely the fact that the company president considered the situation as very

Preface

xvii

serious and was very concerned – was not communicated at all. It is obvious that a major part of the message – the seriousness of the issue and the anger of the president – was not correctly communicated, which leads to the question whether knowledge can be transferred between different cultures at all. The second research question presented in this book, will investigate whether knowledge transfer within one culture (intracultural knowledge transfer) is more successful than knowledge transfer between two different cultures (intercultural knowledge transfer). Research Question 2: Is knowledge transfer between two cultures less successful than knowledge transfer within one or two similar cultures? The concept of culture, however, is very complex and interferes with a lot of other aspects. Language skills for instance also impinge on the success of knowledge transfer in global organizations. In the story above the fact that the sender and the receiver spoke different languages had a major influence on the transfer of knowledge between the head office and the subsidiary. Even though Mr Suzuki spoke German fluently, he had problems deciphering the letter and needed a translation. Mr Suzuki could not access the relevant knowledge himself because his written language skills were insufficient to understand this particular message. He needed assistance in accessing the knowledge sent. Transferring knowledge within multinational corporations can also be improved if both participants show cultural expertise. If both sender and receivers do understand each other’s culture better or have experiences in communicating with members of the other culture, interpretation becomes easier and understanding of each other increases. They can package and send knowledge in a way which eases its interpretation at the target subsidiary and so make it more efficient. This leads to the final research question which I will investigate in this book. Do cultural differences change, hinder or promote the effectiveness of knowledge transfer? And which aspects of culture are particularly important when transferring knowledge? The last research question to be discussed in this book examines which culture-related influence factors hinder or promote the success of knowledge transfer processes. Research Question 3: Which factors improve the success of knowledge transfer within multinational corporations? Finally, the most important question is on how the results of the research presented in this book can support business and management activities in multinational corporations. The book therefore closes with implication for managers in multinational corporations on how to improve knowledge transfer processes within their organization. Here I will focus on the discussion of what attributes are requested by future knowledge managers and which

xviii

Preface

challenges multinational corporations may face in their knowledge management future.

Structure of this book This book is composed of 11 chapters and is divided into three parts. Part I: theoretical foundations of knowledge management and transfer in multinational corporations The first part of the book is dedicated to the theoretical discussion of knowledge and knowledge management in multinational firms. Chapter 1 includes a discussion about the nature of knowledge. As knowledge management becomes an increasingly popular topic in management research, the number of definitions and classification of knowledge have increased. Knowledge categories and repositories are presented and discussed, in its various definitions and forms. Chapter 2 discusses the theoretical foundations of knowledge management in the modern firm. Here, I will discuss the differences between data, information, knowledge and wisdom and knowledge types, such as explicit or tacit, organizational and individual knowledge. This chapter also focuses on locations in which knowledge can be stored. Chapter 3 deals with knowledge management in Japan and in Western countries. Germany and Japan were chosen as main countries in which the research was conducted. Both countries show a similar economic development, but show significant cultural differences. The chapter shows how the role of knowledge differs in East and West and how this impinges on diverse approaches on knowledge management. Weaknesses and strengths of both approaches are also discussed. Chapter 4 then focuses on knowledge management within multinational corporations. It first discusses internationalization processes and the knowledge needed for each step. I will show the relevance of knowledge management in multinational corporations, which knowledge is being transferred and also what factors influence those processes. Chapter 5 presents theoretical foundations of knowledge transfer processes across cultures. The base of knowledge transfer, a communication process is described and the cultural influences on the knowledge transfer processes are being discussed. Part II: research questions and results In the second part of this book I will present the questions which are investigated and their research results. Chapter 6 includes an overview on the methodology used in the research project presented.

Preface xix Chapter 7 investigates whether knowledge transfer processes differ according to culture. Since we know that individual with differing cultural background communicate differently we would further like to know whether they also differ in transferring knowledge. This question is analysed along the several stages of knowledge transfer, namely the choice of knowledge, the choice of instruments and the reception of knowledge. A German and Japanese sample is investigated to show whether differences in the knowledge process occurs or not. Chapter 8 examines the question whether cross-cultural knowledge transfer can be successful. Here, I will investigate whether intracultural knowledge transfer (i.e. knowledge transfer between two cultures which are strongly related to each other) is more successful than intercultural knowledge transfer (i.e. knowledge transfers between two cultures which show no or little relations with each other). Chapter 9 examines which culture-related influence factors are hindering and which are promoting the reception of knowledge in an overseas unit. In this chapter culture-related factors, such as language skills, international experience, cultural openness as well as perceived cultural distance are examined on how they may hinder or promote successful knowledge transfer processes. Part III: effectiveness of cross-cultural knowledge transfer in multinational corporations Part III presents conclusive thoughts about the research results presented in this book as well as implications that the results may have for managers and researchers. Chapter 10 presents a summary of the results. In Chapter 11 I will discuss implications for international management and future research agendas in the field of knowledge management, but also challenges of knowledge management for multinational corporations in the twenty-first century. Finally, I present suggestions for future research in international and cross-cultural knowledge management and transfer. Information on how the survey was conducted can be found in the appendix. It contains an overview on the question scales used in this investigation. Also included in the appendix is a description of the sample of this research project.

Who Should Read This Book? Cross-cultural issues have accompanied me all through my life. Having a cross-cultural background myself I have been easing communication (or transferring knowledge) between my Austrian and Iranian family members as long as I can remember. This has certainly increased my interest in the topic and is one of the reasons why I wrote this book. My long involvement in cross-cultural issues also impinges on this book, which differs from a ‘classic’ research monograph. Its aim is to present

xx

Preface

empirical results on the success of intercultural knowledge transfer as well as insights into the daily practice of it. The research results presented in this book are partly based results of a research project, partly on my experiences working in Japanese organizations over the past years. Living in Japan and working in a Japanese organization gave me the opportunity to experience knowledge management in Japanese organizations and improve my insights into Japanese culture as well as my intercultural knowledge. As I gained more experience in transferring knowledge between cultures myself, my research results gained a completely new perspective. The book is based on an extensive literature review, which I connected with accounts of my personal experiences and observations in a multicultural workplace. Accordingly, this book targets practitioners and researchers in the field of knowledge management alike. The results of the book are of interest for management researchers, especially researchers in the field of knowledge management, but also in the field of culture-related communication studies and cross-cultural management studies. The results allow insights into multicultural workplaces and the difficulties of managing knowledge between their members. My observations may also be of interest for researchers in Japanese studies or cultural anthropology. Furthermore, managers engaged in international and cross-cultural business relationships and international human resource management may find interesting insights in this book. Practical implications of these findings presented at the end of this book may support them understand their relevance for successful knowledge transfer processes and to help them to identify culture-related influence factors in their own organizations. Dr Parissa Haghirian Tokyo

Acknowledgements

I owe all my knowledge about Japan and Japanese managers to my colleagues and mentors in Tokyo and Fukuoka. My first two years in Japan at Kyushu Sangyo University in Fukuoka were great years. I did not only experience what being a sensei (professor) is about, I could also experience the harmony and care that a Japanese work environment can provide. I will never forget the patience and friendliness of my senpais at Kyushu Sangyo University and how they spent hours explaining Japanese attitudes and behaviours to me. Here I want to thank Professor Kazuo Doi, Professor Hideki Ikenouchi, Professor Yoshitomo Izawa, Professor Hiroshi Oyachi, Professor Osamu Kikima, Professor Masaki Kanezaki, Professor Norihira Urano, Professor Hee-tak Ahn, Professor Tadao Kabayama, Professor Kazuo Kanekawa, Professor Shigeyuki Itô, Professor Seiichi Kon and my dear friend Professor Ryôko Umezu for their wonderful support. They have prepared me very well for my career in Japan and I am very grateful for their friendship. Another important person I want to thank at this point is Rudolf Sinkovics, at the time of writing professor at the Manchester Business School. The fact that this book was finally written is partly thanks to Rudolf, who is not only a great motivator and a very clever man but also a wonderful friend. I would further like to thank the Dr Alois Mock Foundation for receiving the Dr. Alois Mock Förderpreis der Europa-Stiftung, which partly funded this project. Last but not least I would like to thank the people who guided this work and believed in this project. Peter Sowden at Routledge Publishing supported this project very professionally and patiently. Professor Hafiz Mirza, the editor of this series, has shown great interest from the very beginning despite his busy schedule during the last few years. I am very grateful that he considered my book worth publishing in the Asian Management Series. This book is dedicated to the memory of my father Gholamali Haghirian, who passed away during the writing process of this book.

Part I

Theoretical foundations of knowledge management and transfer in multinational corporations

1

The nature of knowledge

The research of knowledge is not a new science. It derives from a long philosophical tradition that started millenniums ago. Since then philosophers have tried to find out what knowledge really is and what meaning it has for humankind. In traditional Western philosophy, the quest for the understanding of the nature of knowledge began with Plato and his student Aristotle and suggests that Western thinking is based on the fundamental split between mind and body (Nonaka and Takeuchi 1995). Over the centuries two main Western traditions developed, discussing knowledge from a philosophical perspective. The first of these traditions is rationalism, which supports the belief that reason alone, without any reliance on experience, can reveal the nature of reality. The second tradition is empiricism, which refers to the idea that all knowledge is based on experience and that the human mind is not equipped with a set of concepts in advance of experience. In the nineteenth century attempts were made to reconcile these two philosophical streams, the leading protagonists being Immanuel Kant, Georg Hegel and Karl Marx. Their beliefs laid the foundations for philosophical discussion about the relationship between the self and the outside world, which is manifested by society (Holden 2002). These streams form the background of the knowledge management discussion of today. From the notion of knowledge as truth or meaning a change towards notions of knowledge as practice or action took place. Knowledge became technology, which strongly influenced the process of industrialization. Accordingly, the concept of knowledge and its role in production changed dramatically and traditional knowledge institutions like the church or universities were sidelined by profit-oriented organizations (Maasdorp 2001). Knowledge suddenly was not some exclusive good anymore that entertained and challenged only the intellects of a certain class; knowledge suddenly became societal, a social good and a common good. By becoming available to many more members of society, the nature of knowledge itself therefore changed. It developed because it was being used and applied by different people, not only by the clergy and philosophers, which led to numerous new and alternative ideas and thus to changes in politics and society. As knowledge developed into a public good, it became an object of interest for organizations too. Corporations started to recognize the value of

4

Theoretical foundations of knowledge management

knowledge. Knowledge helps organizations develop faster than their rivals and create or sustain corporate advantages. In organizations knowledge becomes more valuable when it is shared. Knowledge is a very complex and subjective concept and the management of knowledge proves to be more difficult than the management of traditional organizational assets such as money, people, land and other assets.

Researching knowledge Knowledge is the main material of our work as researchers. Our work therefore includes all aspects of knowledge management. It consists of identifying interesting questions in life or to picture a reality (knowledge creation or knowledge discovery); to teach our findings to students or to communicate them to the interested public (knowledge sharing); or to be taught, informed or lectured about the newest research results by experts, colleagues, mentors or practitioners (knowledge reception). On top of this, knowledge does not only form the bases of our work, we also want to find out how to use knowledge more efficiently. Today knowledge is a ‘fashionable’ research topic and is being discussed in a number of disciplines. Traditionally, knowledge and its meaning have been investigated by philosophers over the centuries. Nowadays social sciences have also discovered knowledge as a point of interest. Knowledge is a major topic in information systems research, where the focus lies on data and its storage and analysis and transmission. Quite recently knowledge has also become a topic of interest for management researchers. Here, the premise is that knowledge is a means of increasing organizational profit. It is an equivalent to tangible assets, such as people, money and land or buildings, which need to be managed in an efficient way to increase the company’s profits. Knowledge management researchers therefore investigate knowledge manageability and its role within organizations. It is obvious that dealing with organizational information, knowledge and other intellectual assets are of major importance for the success of today’s enterprises. Businesses have internationalized and can only deal with increasing competitive pressure by managing their intellectual assets as efficiently as possible. Management researchers are required to support these processes by developing solutions on how to handle the complex issue of knowledge efficiently.

Defining knowledge But what makes knowledge management, its theory and its practice, so very challenging? The answer can be found in knowledge itself. Most management publications are focusing on the idea that knowledge can be managed like an object. Knowledge is considered an asset, an item which can be bought, sold, transferred, stored and basically used just like a product. Accordingly, the discussion focuses on the consistency of knowledge, factors increasing or inhibiting knowledge sharing, and how to use knowledge in the most effective

The nature of knowledge

5

way. But in reality the management of knowledge is a lot more complex, because knowledge is a very subjective concept. Knowledge is often intangible and can therefore not easily be bought and sold or moved around like other organizational assets or products. It is strongly connected to its holder and his or her intellectual skills. Defining it is already a challenging task. Using it is even more difficult. Sometimes knowledge is difficult to find, as it often resides in objects and in some cases it does not even exist yet. Finally, knowledge is often personal or tacit knowledge stored inside people and therefore not visible. In any event knowledge, its definition, its creation and its management and usage are strongly connected to the individuals performing these processes. But knowledge is not only personal because it is owned, created and used by individuals, it is also interpreted and communicated by them. Knowledge is therefore a difficult concept to understand, to research and to investigate. It can neither be clearly defined nor strictly considered an object. All these aspects make the management of knowledge a very challenging task. Data The knowledge hierarchy starts with the smallest item: data. Data represent raw numbers or signs. In their raw form they may be devoid of context, meaning or intent (Becerra-Fernandez et al. 2004). They are the raw material to be further processed (Rehäuser and Krcmar 1996). A sign, for example a single Chinese character, is considered data. The number of how many items of a product sold every day is an example for sales data. Data are treated isolated from a context and need further interpretation by an individual to become useful or to be further processed. Accordingly, data are considered carriers of knowledge and information (Kock et al. 1997) and represent observations or facts, which are not directly meaningful without context (Zack 1999). To make use of data, it needs to be converted into information. This can happen with the help of a computer system, which allows data input to be changed into information output (Becerra-Fernandez et al. 2004). Information The term information refers to details about an event or situation in the past or simply to a scientific fact (Wikström and Normann 1994). It results from placing data within some meaningful context, often in the form of a message (Zack 1999). Pure data cannot be used by itself; it needs to be transformed into information. When converting data into information you need to set it against a background, making comparisons and adding other supplementary items (Bennett and Gabriel 1999). In contrast to data, information can describe a current situation, it allows reality or a certain situation to be pictured. It does not yet include an interpretation. Information is therefore objective and purely descriptive and explicit and does not enable one to decide or act, nor does it trigger new questions (Kriwet 1997). Sales data for example tell us how

6

Theoretical foundations of knowledge management

many products or items were sold during a certain period of time. They only become useful if compared with sales data of another period or if we compare with sales data of another corporation. To produce information you need to compare or connect data such as entering different sales figures into a computer program and finally calculating an increase or a decrease in corporate sales. Information itself does not yet contain any interpretation yet. Placing data into a certain context allows conclusions or further interpretations about why sales are moving up or down or which products are successful and which are not. It presents a theoretical base on which managers make decisions and develop company processes. Information is therefore simply considered a flow of messages, whereas knowledge provides links between different information plus an interpretation and a sense-making process (Kriwet 1997). Since information is different data connected with each other, it can be transferred rather easily. Knowledge In most cases, information is the base of knowledge, because it is mostly the foundation of decision-making and further actions. This asks for an interpretation, which leads to knowledge. Although the terms ‘information’ and ‘knowledge’ are often used interchangeably, there is a clear distinction between information and knowledge (Nonaka and Takeuchi 1995). As shown above, information basically just consists of raw material in the form of data which is put together in a way which makes sense for the organization. Knowledge is created by interpretation of information. Zack (1999) refers to is as ‘what we come to believe and value on the basis of the meaningfully organized accumulation of information (messages) through experience, communication, or interference’. Interpretation is an individual action. This is the reason why it enables the individual to decide, act and trigger new questions (Kriwet 1997). Machlup (1983) distinguishes knowledge from information very clearly. Information is piecemeal and fragmented, whereas knowledge is structured and coherent. Information is timely and transitory, whereas knowledge is long-lasting and of enduring significance; information a flow of messages, whereas knowledge can be restructured and changed easily (Machlup 1983). Knowledge can be viewed as a thing to be stored and manipulated and as a process of simultaneously knowing and acting (Zack 1999). However, in an organizational context knowledge cannot be compared to other physical assets, such as people, facilities or financial assets. Physical and knowledge assets show differences. Whereas physical assets have a real value because they are scarce and have limited utility, knowledge assets have a higher potential value because they are unlimited and their utility is extensive. Know-how Knowledge can change its form and become know-how, which is knowledge that is internalized and defines the ability to perform a task. Know-how refers

The nature of knowledge

7

to knowledge which is embedded in the individual and so becomes the base of the capacity to act (Wikström and Normann 1994). It requires to be accumulated over time. Know-how is based on repeatedly performing a certain activity or business process. Know-how can be divided into explicit and tacit know-how. Explicit know-how refers to procedures, product specifications, codified systems, manuals, software or scientific formula. Tacit know-how refers to embedded individual or organizational know-how, which cannot be easily documented and codified. Examples of tacit know-how are skills, capabilities and expertise (Soo et al. 2000). In an organizational context, know-how refers to operational knowledge, which is knowledge on how to perform a certain operation in a very efficient way. Know-how also refers to the surroundings of the operations, such as industry experience or expertise in a certain field. For organizations their members’ know-how plays a significant role. Such know-how often decides on what level operations and processes are performed and whether they are successful or not. Know-how is also difficult to share, because it is highly tacit and only builds up after a long time of trial and error when performing a certain task. Wisdom Knowledge is perishable, but, properly harnessed, can result in wisdom that may be directed to support operational tasks (Bennett and Gabriel 1999). Whereas know-how defines knowledge which is internalized and explains how processes are performed well, wisdom refers to tacit knowledge which accumulates over a long period of time and is influenced by the knowledge owner’s personality. Wisdom is therefore implicit knowledge which not only deals with performance and operations, but all aspects of life. Unlike know-how it is strongly related to its owner’s life experience and therefore wisdom cannot be acquired easily and is not accumulated quickly. The more experience the owner of wisdom gains in a certain field, the stronger wisdom becomes. Wisdom is therefore very strongly connected to its holder and his or her personality and attitudes. It cannot be made explicit very easily. Table 1.1 provides and overview on the definitions of knowledge. All concepts are strongly related to each other. Some authors even assume that there is a hierarchy between these three concepts, starting from data through information and knowledge to wisdom. This development is accompanied by some dimensions such as content, structure or accuracy (Alavi and Leidner 2002).

Knowledge categories Reviewing knowledge management literature one may get the impression that there are as many classifications of knowledge as there are publications about it. As explained above the concept of knowledge is difficult to capture, since knowledge is not only tangible but also a very subjective organizational asset. In the following section I will try to summarize the most relevant types of knowledge for the field.

8

Theoretical foundations of knowledge management

Table 1.1 Data, information, knowledge, know-how and wisdom Definitions of knowledge Data Information Knowledge Know-how Wisdom

Data are facts that are presented in the form of numbers or signs Stand-alone data do not represent any meaning or interpretation Information consists of data that are put into a certain context with other data by comparing it, contrasting it with other data or by sequencing it Knowledge refers to information which is interpreted and given a subjective meaning by an individual Know-how refers to tacit knowledge about how to perform a certain task. Know-how builds up over time and with experience Wisdom is knowledge which has been acquired over a long period of time and which is strongly based on an individual’s personal experience, attitude and personality

Explicit and tacit knowledge The most relevant distinction of knowledge is its division into tacit and explicit knowledge. Maasdorp (2001) considers this a distinction between focal (explicit) and background (tacit) knowledge. Explicit knowledge is the most articulable and most context-free type of knowledge. It exhibits the highest degree of fit between the knowledge and its representation to others (Doz and Santos 1997) and is knowledge that can be separated from its owner and is expressed in a formal and systematic language (Nonaka et al. 2000), learned by observation and study (Doz and Santos 1997) and is shared in the form of data, scientific formulas, specifications, manuals (Nonaka et al. 2001), patents, technical blueprints, computer software, etc. (Doz and Santos 1997). Because of its explicit form it can easily be processed, transmitted and stored (Nonaka et al. 2001, Nonaka 1994). Explicit knowledge plays an increasingly larger role in organizations and is considered the most important factor of production in the knowledge economy (Zack 1999). Explicit knowledge is mainly based on the separation of the individual that holds knowledge and the known. This, however, does not mean that explicit knowledge is simple to handle. Articulation and codification of explicit knowledge may require rather specific languages and codes. Tacit knowledge in contrast is based on the unity of the person who knows and the object of knowledge (Scharmer 2000). It is deeply rooted in action, commitment and involvement in a specific context (Nonaka 1994). Polanyi (1985) puts it like this: ‘We know more than we can say’. He observed the fact that although people may be able to perform certain tasks, they may not be able to articulate the way they managed to perform these. Being able to perform an activity does not imply that it is also possible to explain the very same action (Polanyi 1985). Tacit knowledge is therefore not only strongly connected to its knowledge owner, but also located within an individual. It refers to knowledge that is not easily articulated and is defined as ‘non-codified,

The nature of knowledge

9

disembodied, know-how that is acquired via the informal take-up of learned behaviour and procedures’ (Howells 1996). In fact, knowledge can never be fully explicit and always shows a certain degree of tacitness. Even if knowledge can be separated from its owner and put down in words or other explicit ways, there is still a part of it which stays tacit and cannot be extracted and therefore cannot be easily shared. Its intangible form makes tacit knowledge very personal and hard to formalize. Subjective insights, intuitions and hunches fall into this category of knowledge (Snowden 1999). For example, salespeople’s knowledge about customers is often very personal, anecdotal and depends on the situation prescribed (Bennett and Gabriel 1999). It is tacit in the form of skills possessed by individuals, their experiences and intuition, their relationships and their understanding (Snowden 1999). Tacit dimensions of knowledge build up over time in people’s heads, hands and relationships. Knowledge management is challenged by tacit knowledge. As with explicit knowledge corporations try to access and manage tacit knowledge. The overall aim is to gain access to tacit knowledge and make it useful in differing organizational contexts. However, tacit knowledge is created within organizations through dynamic, unstructured and often subtle processes. These processes cannot be codified into explicit entities such as formal training programmes or captured in information systems (Swap et al. 2001). Individual and organizational knowledge Knowledge can be further categorized into individual and organizational knowledge. As the term already suggests, individual knowledge is owned by an individual. In a corporate environment it refers to knowledge owned employees. Individual knowledge can be a source of varied interpretations of shared experience with others (Nonaka 1994) and is manifested in skills and expertise. Usually it combines both explicit and tacit knowledge. Individual knowledge is expanded through its interaction with experience and rationality, which are perspectives that are based on individual belief and value systems. Since individual knowledge is located in an individual, it can also be personal (De Long and Fahey 2000). These individual abilities of corporate employees are the basis for successful corporate action (Probst et al. 1998). Organizations consequently often support their members in developing individual skills and abilities. Individual knowledge has to become organizational knowledge to improve the overall goals of the company, because the success of projects and strategies does not depend on individual knowledge alone, but on the combination of employees and how they apply it (Probst et al. 1998). However, organizational knowledge is not simply the sum of all individuals’ knowledge within a firm. It is based on all individuals’ knowledge and expertise, but is created by their interaction and knowledge sharing processes. Organizational knowledge is the result of a continuous interaction by individuals and their expectations,

10

Theoretical foundations of knowledge management

shared norms, procedures and organizational mechanisms, and can only be made manageable when it can be captured by an organization’s systems, processes, products, rules and culture (Myers 1996). Nonaka and Takeuchi (1995) even extend their definition of organizational knowledge to corporate culture and expertise that goes across all parts and individuals of a corporation. For the company this does not only involve the interaction between all members of the organization but also the possibility to store knowledge for longer periods of time. Knowledge that provides an organization with a sustainable competitive advantage has to become independent from any given individual (Myers 1996) and an organization has to concentrate not only on an individual but also on collective or organizational knowledge. Formal and informal knowledge Knowledge can be further divided into formal and informal knowledge. In particular, Western organizations clearly distinguish between formal and informal knowledge and so attempt to focus their employees’ attention solely upon formal knowledge. Formal knowledge is knowledge which is directly related to organizational strategies or processes. It refers to all knowledge which is thought to support corporate success, e.g. process knowledge, best practices, knowledge about corporate culture, strategic goals or visions. Formal knowledge is knowledge that a company wants to be managed, because it assumes that by managing it competitive advantages can be achieved. Informal knowledge on the other hand is knowledge about private or noncompany-related matters. These matters can include information about the personal lives of company members, rumours about market and company performance, and about assumptions or fears of individuals related to the organization. It refers to rumours, gossip, private conversation and other communication contents which do not support company goals. Informal knowledge affects formal knowledge management by distracting members of an organization or by encouraging them to use knowledge management channels in an inappropriate manner. Informal knowledge is not officially managed or shared within the company. Declarative and procedural knowledge Another category of knowledge is presented by Corsini (1987), who divides into two types: declarative knowledge and procedural knowledge. Declarative knowledge is about describing something (Zack 1999); it is knowledge about facts and concepts (Chi 1981). It deals with information about a situation, which includes predictions about appropriate actions to take in order to achieve goals as well as suggestions for efficient problem-solving strategies (Turner 1994), but does not describe the exact process to do so. Declarative knowledge is relevant for organizations because it helps to present complex issues in a simplified form. Claiming to know a complex subject will in fact

The nature of knowledge

11

only refer to a fraction of the knowledge that makes up all the techniques and nuances of a certain topic. Soo et al. (2000) give the following example: a person may know what cubism is, but maybe cannot describe all the techniques and nuances of the art. Procedural knowledge, on the other hand, deals with information about how something occurs or is performed (Zack 1999). It is based on distinct systems and derives from past planning of action sequences that were successful. It can also derive from experience (Turner 1994). Procedural knowledge is also used to remember activities and to develop cognitive skills (Nonaka 1994). Skills or procedural knowledge are more easily remembered than declarative knowledge or facts, because it is easier to memorize modules than to figure out new ways to recombine many propositions (Zander and Kogut 1995). Procedural knowledge may be used to assist novices in the organizations, because it can be effectively used to describe intentions and goals of the corporation as well as the means and so far applied procedures to reach these goals. This includes knowledge about the appropriate sequence of events in common situations or behavioural rules for specific events. Applying this knowledge causes people to take certain actions (Nishida 1999). Procedural knowledge can therefore be recognized as the basis of interaction with other individuals (Kogut and Zander 1996). Sinkula (1994) describes the importance of procedural knowledge in an example: A market research unit’s endorsed policy could be to review systematically at least three proposals prior to awarding a contract to an external research vendor. But it could be procedural knowledge that such contracts are warded only to vendors with whom company managers have had considerable experience. (Sinkula 1994, p. 38) This example shows that shared explicit procedural knowledge lays the foundation for efficiently coordinated action in organizations (Zack 1999). Strategic, tactical and operational knowledge Managers perform different types of activities depending on their position within their companies. A higher position in a corporation requires more strategic decisions, whereas lower hierarchical positions include more operational and routine decisions and processes. These business processes require different types of knowledge. Organizational knowledge can therefore also be categorized according to the strategic level on which it is used within an organization. We can divide it into strategic, tactical and operational knowledge. Strategic knowledge deals with the long-term positioning of the corporation (Becerra-Fernandez et al. 2004) and helps to define an overall company vision and strategic goals. Strategic knowledge can be found in company mission statement. Tactical knowledge combines strategic and operational goals.

12

Theoretical foundations of knowledge management

Tactical activities plan operations which support the achievement of strategic management goals. Tactical knowledge is knowledge on how to plan corporate activities and aids in selecting the right procedures. It thus is the base of successful project management. Operational knowledge is knowledge on how to perform routine corporate activities and operations, such as how to operate a computer program or a machine. Operational knowledge can be found in manuals or work regulations. It includes company standards such as quality requirements or detailed descriptions on how particular operations are to be performed. All knowledge categories presented above cannot be discussed in isolation. Most of them overlap. Operational knowledge such as knowledge on how to operate a machine can be explicit in the form of a manual, but also tacit, such as the knowledge of a worker about the flaws of a certain machine. Table 1.2 gives an overview of the knowledge types discussed.

Knowledge locations One major activity when managing knowledge is uncovering it within an organization. Uncovering knowledge is a complex task, because it is located in often countless of different sites. The following sections will provide an overview of knowledge locations. Knowledge located in people Knowledge can be found in tacit form in all employees of a corporation. This is most obvious in the case in knowledge-intensive industries such as consultancies, market research agencies or educational institutions. Becerra-Fernandez et al. (2004) also name groups as locations of knowledge. In working together group members develop an understanding for each other’s thinking. On top of this, they also create group-oriented knowledge on work processes, corporate strategies and goals. Wenger (2000) refers to communities of practice as examples of groups storing a large quantity of knowledge. Communities of practices form over certain tasks and develop processes on how to solve problems and develop solutions. When doing so groups develop specific knowledge in a certain field and a higher understanding. Often these processes are strongly group related and can only be communicated to non-members with difficulty. Knowledge located in objects and artefacts Knowledge can be also stored in physical objects. Physical objects mostly refer to traditional knowledge locations such as books, documents, blueprints, plans or other theoretical material. Knowledge can also be found in other objects. Most important knowledge carriers are products, which are the final result of applied knowledge within an organization. Knowledge can be further

The nature of knowledge

13

Table 1.2 Knowledge types Knowledge type

Definition

Example

Explicit knowledge Explicit knowledge can be easily Company reports, blueprints, articulated or written down. It is best practices, technical drawings, videos, tapes not strongly connected to its holder and can be easily transferred Tacit knowledge Tacit knowledge cannot easily be Knowledge about how to articulated or written down. It is perform intercultural negotiations or how to best strongly connected to its holder repair a certain machine and cannot be easily transferred Procedural Procedural knowledge describes Knowledge about which knowledge how a task is to be performed market entry strategy is the most appropriate Declarative Declarative knowledge describes Knowledge about which knowledge the expected outcome of a profit goals can be expected certain task from an overseas subsidiary Knowledge about work Formal knowledge Knowledge that is officially related to work and which is processes, work content and supposed to increase competitive corporate goals advantages when being shared and reused in an organizational context Informal Informal knowledge is not Knowledge about personal knowledge considered related to work and is attitudes of employees, not directly seen as to increasing managers or company owners. Unofficial reports competitive advantages of the on the status of the corporation corporations Strategic Knowledge about the company Knowledge about which knowledge vision, mission and strategic markets are will be goals profitable for the corporation Knowledge on how to plan a Tactical knowledge Knowledge on how to plan market research project in a operations in the most effective foreign market manner or on how to react correctly in a certain situation Operational Operational knowledge deals with Knowledge about how wages knowledge how to effectively fulfil tasks are calculated

stored in symbols, brands, signs and logos. It can also be found in artefacts located inside the organization, such as status symbols, architecture, the company location or the design of company interiors. Knowledge located in processes Knowledge can also be located in processes and operations. Process knowledge refers to any kind of process performed within an organization, such as production processes or organizational routines. These can be the foundation of competitive advantages or the creation of new business ventures. In all these processes

14

Theoretical foundations of knowledge management

the application of technology and innovation play a major role. Knowledge is located in all of them and most companies, especially if they apply modern production methods, to protect this knowledge to strengthen their strategic position. Expertise in a certain field also belongs to this type of knowledge. Knowledge located in relationships Groups do not only create knowledge by sharing knowledge and by improving their processes, but also in their relationships. McKenzie and Van Winkelen (2004) consider external relationships with customers or suppliers as vital for the performance of organizations. They identify various assets that are being exchanged between members of two organizations: traditional assets such as goods, services and revenues, knowledge and intangibles. Knowledge in this case refers to knowledge about products and services, whereas intangibles are the result of repeated interactions, such as brand awareness and product loyalty (McKenzie and Van Winkelen 2004). The most important relationships for a company, however, are the relationships between the organization and its customers. These relationships provide a great amount of knowledge for the corporations. Consumers are users of corporate products and can provide insights and feedback on their usability, flaws and provide feedback on possible improvement. Other human knowledge locations are suppliers, who store information and knowledge about products, market trends and manufacturing. Relationship-based knowledge can be further found in relationships with suppliers, who can hold information about products, manufacturing processes and the newest developments in product development. Additionally, companies hold more relationships with other market stakeholders. These relationships include external experts such as lawyers, consultants, market researchers or other researchers, but also with their shareholders. All these relationships develop and improve over a long time and contain knowledge on the external perception of company performance and provide a feedback loop which can be used to increase company processes. Table 1.3 gives an overview on the locations of knowledge discussed. Table 1.3 Knowledge locations Knowledge locations

Examples

People Objects and artefacts

Employees, teams, communities of practice Books, reports, theoretical material, products, status symbols Organizational routines, business processes, manufacturing processes Relationships between employees, customer relationships, cooperation with suppliers, cooperation with external experts, such as lawyers, market researchers or consultants, relationships with shareholders

Processes Relationships

The nature of knowledge

15

Summary In this chapter I have given an overview of the categories of knowledge currently used in management literature. In an organizational context, knowledge is divided into data, information, knowledge, know-how and wisdom. Data is knowledge in its rawest form and refers to numbers or signs. When it is connected, the raw material becomes information. In the next step, knowledge is created by interpreting information. The term ‘know-how’ refers to knowledge about processes or operations, which is strongly internalized by the knowledge holder. Know-how only builds up over a long period performing a certain task. Wisdom goes a step further. Wisdom can be defined as tacit knowledge, which is also developed over a long period of time and builds up by using personal insights and life experience. Knowledge itself can be categorized into different groups. The most prominent category is the distinction between explicit and tacit knowledge. Explicit knowledge refers to knowledge which can be separated from its owner quite easily by documenting it in form of text, graphical materials or as information or as data in a database. It can be transferred in these forms as well. Tacit knowledge, in contrast, resides inside its knowledge owner. Tacit knowledge can be described as insights, hunches (Snowden 1999) and knowledge which is personal and emotional. Its transfer is therefore more challenging than transferring explicit knowledge. Declarative knowledge is knowledge which communicates facts and goals, whereas procedural knowledge describes processes and how they should be performed. To summarize these definitions, we can say that declarative knowledge deals with ‘knowing what’ (facts and information) whereas procedural knowledge deals with ‘knowing how’ (know-how and application) (Corsini 1987). The distinction between these two types of knowledge is explained by Nishida (1999) with the following example: knowing the rules and traditions of baseball is not the same as being able to play baseball. Individual knowledge refers to knowledge of an individual, whereas organizational knowledge is held by the whole organization or most members of a corporation. We can further divide knowledge into formal and informal knowledge. Formal knowledge is company-related knowledge. The communication of this type of knowledge is supported by the management, whereas informal knowledge is related to private issues. Managing it is not considered to support corporate goals. Organizations therefore try to limit its influence. Knowledge can be further divided into operational, tactical and strategic knowledge. Strategic knowledge describes how to develop organizational goals and visions, tactical knowledge about how to plan the achievement of these goals. Operational knowledge refers to the performance of processes within the corporation. Corporate knowledge can be found in a number of locations. It can be located in people in the form of tacit knowledge or personal experiences, as well as in physical objects such as products or other artefacts. It can also be found in processes such as manufacturing or in technologies, as well as in relationships, for instance relationships between the company and suppliers, customers, shareholders or other external experts.

2

Managing knowledge within organizations

The role of knowledge in organizations Today knowledge is playing an important role in organizations. Companies find it increasingly difficult to achieve and sustain competitive advantages through the reallocation of capital alone (Bresman et al. 1999). The speed and complexity of decision-making and technology have increased and have led to numerous challenges such as reshaped industries, radical diversification, alliances and increasing competition from smaller companies (Leipold et al. 2002). Pressure on corporations to adapt to new markets as fast as possible is steadily increasing. There is less and less time to react to competitors. This, as well as globalization, shorter product life cycles and demanding customers, do not allow companies to focus merely on their main resources such as land, labour and capital anymore. These factors do not disappear, but become second-ranked in the modern economy. The most import asset of a corporation today are its intellectual assets; its knowledge (Drucker 1992). Spender (1996) puts it like this: the origin of all tangible resources lies outside the firm. It follows that competitive advantage is more likely to arise from the intangible firm-specific knowledge which enables it to add value to the incoming factors of production in a relatively unique manner (Spender 1996). Knowledgebased approaches in management research therefore consider organizations primarily to be vehicles producing, transferring and combining knowledge (Kogut and Zander 1996; Nonaka 1994) and basically see firms as social communities that serve as efficient mechanisms for the creation and transformation of knowledge into economically rewarded products and services (Kogut and Zander 1993).

The need for knowledge management The reason why the management has become the centre of attention in the last years can be explained by a more competitive market environment. The base of knowledge management has thus shifted towards a market orientation. Kotler et al. (1999) define the shift from local to global marketing, the shift from buyer needs to consumer wants and the shift from price to non-price

Managing knowledge within organizations

17

competition as the three major developments that challenge international corporations. The shift from local to global marketing: Companies expanding their geographical marketing coverage need more information on new markets than before (Kotler et al. 1999). The more globalized this world becomes, the more local differences need consideration. Global consumers get more wealthy and become more sophisticated in their tastes and interests. Local differences reflect in product development as well as in international marketing. Even if corporations are attempting to standardize and generalize their product and communication policies, they still need to know about preferences of their global consumer groups. The shift from buyer needs to consumer wants: As buyers’ incomes increase they become more selective in their choice of goods. This is difficult for companies, who need to predict buyers’ responses to different product or service features, styles and attributes (Kotler et al. 1999). Consumers also find more information on the web and are better informed about products and services. This increases competition and the need to exchange knowledge within corporations increases. Scientific literature confirms empirical results for the often assumed or implied relationship between a market orientation and corporate performance (Jarworski and Kohli 1993). Because customer awareness and expectations continually evolve over time, delivering consistently highquality products and services requires ongoing tracking and responsiveness to changing marketplace needs (Kohli and Jaworski 1990). The shift from price to non-price competition: Sellers are increasing their use of branding, product differentiation, advertising and sales promotion. Corporations require information on the effectiveness of these marketing tools (Kotler et al. 1999). Companies want and need to produce better products. They are mainly focused on selling as many products as possible to potential consumers. A newer approach to marketing shifts the focus from the products towards the consumer and the context of the broader external environment. The customer market orientation presents a shift in an organization’s way of dealing with its customers. ‘Customers become co-producers’ and the whole process of product development has altered. Production is flexible and adapted to the customer’s requirements. The needs and preferences of the consumers are taken into consideration (Wikström and Normann 1994). Companies must try to activate their inside sources as effectively as possible. Relying on outside sources and traditional company assets alone is not enough, since the competition and international business are changing. This also results in uncertainty for organizations and puts pressure upon them to change and renew their existing practices (Choi and Lee 1997). These internal resources are intangible assets such as the organization’s ability to recognize consumer wishes and expectations, which are not used to develop ideas. The organization’s intellectual resources, its knowledge, is not only a better way of increasing competitive advantage, it also allows organizations to differentiate themselves more strongly from their rivals.

18

Theoretical foundations of knowledge management

But even if a strong market orientation requires focusing on the external environment of the firm, knowledge management must also focus on the internal resources of the corporation. According to Kohli and Jaworski (1990), market orientation leads to three sets of knowledge-oriented activities: (1) organization-wide generation of market intelligence pertaining to current and future customer needs; (2) dissemination of the intelligence across departments; (3) organization-wide responsiveness to intelligence (Kohli and Jaworski 1990).

What is knowledge management? Knowledge-based theory of the firm refers to knowledge as the main source to develop and sustain competitive advantages (Grant 1996). To make use of it in a most effective manner, knowledge needs to be managed successfully. It can only become profitable if it is identified and used in the most efficient way. Managers should find the relevant knowledge and make it accessible to other employees who are supposed to use it, create new knowledge and thus increase the competitive advantages of corporations. This viewpoint is quite new, because companies concentrated mainly on their traditional resources up until about 20 years ago. However, globalization, increasing competition and an increasingly complex environment have changed these attitudes and have brought intellectual assets – knowledge – to popular attention. Researchers as well as managers have recognized knowledge as a primary resource of organizations (Drucker 1992). Some authors even propose that knowledge is a company’s only enduring source of advantage in an increasingly competitive world (Birkinshaw 2001) and that dealing with knowledge creation, transfer and exploitation will be increasingly critical to the survival and success of corporations and of societies (Hedlund and Nonaka 1993). Knowledge-based theory of the firm sees knowledge as the most important resource within a firm and argues that it is the base of long-lasting competitive advantages. Knowledge is considered a strategic asset and a valuable resource of the company (Holden 2002). Hence a firm can also be understood as an organization that specializes in the fast and efficient creation and sharing of knowledge and regards managing knowledge a profit-increasing activity, even if complexity and subjectivity of knowledge naturally challenges these attempts. To keep and sustain its competitive advantages the firm needs to find and access knowledge within it, then share it with all members who need it and make further use of it. Knowledge management revolves around the concept of the firm as a social institution and its attempt to use intellectual assets as effectively as possible. Knowledge is accumulated in organizations as a result of research and development and the kind of problem solving that accompanies day-to-day operations (Wikström and Normann 1994). To harvest all the advantages that the efficient use of knowledge can offer, an organization or rather its members have to develop mechanisms and rules to do so. It is essential for the company to create structures and systems that enable

Managing knowledge within organizations

19

knowledge sharing (Birkinshaw 2001). Knowledge management can thus be seen as methods, instruments and tools that contribute to the promotion of core knowledge processes. In a corporate context this refers to generate, to store, to distribute and to apply knowledge in all areas and levels of the organization (Mertins et al. 2001). Accordingly, knowledge management research mainly investigates the efficient creation, transfer and implementation of knowledge and also examines the determinants of knowledge flows in organizations (Szulanski 1994; Hedlund and Nonaka 1993; Nonaka 1994). Like other corporate assets knowledge can be and should be multiplied in the organization. In this book I refer to knowledge management as all corporate activities which support the creation, sharing, application knowledge and information within an organization with the overall aim of increasing the competitive advantages of the firm. To make most effective use of its knowledge, an organization needs to perform the following processes: (1) finding knowledge, (2) sharing knowledge and (3) receiving and (4) applying knowledge. The results of these achievements should increase competitive advantages of the firm. In a first step knowledge that is relevant for the overall corporate success has to be identified. After this knowledge needs to be shared with other individuals in the corporation who need the knowledge to improve their own management processes. This sharing or transfer process can happen via communication between employees, via training programmes or other teaching activities. Finally, the recipient of knowledge accepts the knowledge and, next, interprets and applies it further. The expected outcomes of all these processes should lead to a higher competitive advantage and more efficient business processes. Figure 2.1 shows knowledge management processes within an organization. To manage knowledge effectively a corporation must make good use of all the knowledge that is already available. Knowledge can either be found inside or outside the corporation. Some knowledge within multinational corporations is internally produced and other knowledge is strongly based on external knowledge inputs. Foss (2002) distinguishes between knowledge that is produced mainly by investing in the internal production of knowledge (e.g. much R&D) or by learning by doing, using, etc., and knowledge that is to a large extent created on the basis of knowledge inputs from network relations to external partners (customer, suppliers, etc.) and knowledge that is to a large extent created on the basis of knowledge inputs from a local cluster, such as a well-educated work force or high-quality research institutions. There are numerous outside knowledge sources. Knowledge can be obtained from consultancies, market research agencies, strategic partners, rivals and external experts. The most important source however is the market in which the corporation operates in. It provides information about consumer attitudes, trends and competitors’ actions. If knowledge is located outside the company it needs to be internalized in order to be used within the organization.

20

Theoretical foundations of knowledge management

Figure 2.1 Knowledge management within a corporation

Knowledge which is found outside the company is sometimes more easily obtained, because it is often offered as a product by the sources mentioned above. Furthermore, knowledge is also more readily available. As such it is mostly explicit knowledge which exists in form of a tangible and buyable product. The advantages for the firm are that knowledge that is purchased is often more specific and can solve corporate problems more effectively. But corporations also store knowledge within to make it accessible to its members over a longer period of time. This knowledge can be stored in different forms and locations as explained in the previous chapter. The organization and the employees also need the abilities to identify or create knowledge. In many cases it is not quite clear what knowledge the organization really possesses. Many organizations are so complex that knowledge is fragmented and very difficult to locate. This makes it very complicated to share knowledge efficiently and a big part of the knowledge accumulated is redundant and not used at all (Zack 1999). Accordingly, an organization has to develop structures to meet the need of knowledge management issues to overcome these obstacles (Probst et al. 1998), so employees can easily access the knowledge that already exists. The employee’s ability to assess knowledge and consequently choose the most profitable and shareable knowledge strongly impinges on the overall knowledge management activities. Once relevant knowledge is identified, an evaluation takes place by the employee. When choosing knowledge the employee or knowledge manager has to decide which knowledge is shareable and reusable in other locations inside the corporation. It must be of further value either for the individual or for the organization. As technology advances and market demands rapidly change, evaluating and consequently choosing relevant knowledge become more difficult. Knowledge rapidly becomes old and unusable. Organizations

Managing knowledge within organizations

21

need to identify knowledge which needs to be destroyed because it is unusable. Unlearning or organizational forgetting is therefore a prerequisite to create competitive advantage (Nystrom and Starbuck 2004). Many companies are caught up in their past activities and prefer to stick to their existing routines and processes, even if they no longer apply (Tiwana 2000). But unlearning not only means dismissing procedures and technologies which are no longer in use, it also means constantly updating and informing employees about relevant knowledge, and supporting them when choosing relevant knowledge to share. Often knowledge is created by researchers or employees to solve an existing problem of a firm. If knowledge does not yet exist in the firm, it must be created or searched for by knowledge workers. Creating knowledge does not refer to finding knowledge only but assumes that at the same time an interpretation process takes place by the individual, who already transforms it and thus creates new knowledge. Knowledge creation is similar to a learning process and can happen in the form of face-to-face interactions, mentoring, job rotation or staff development (Alavi and Leidner 2002). An individual is learning by performing a task and while doing so is already changing this knowledge and so creating new knowledge. But even when identifying knowledge, creation takes place. Individual evaluation transforms existing knowledge and information and so creates new knowledge. After identifying or creating it, knowledge which is considered valuable is shared with other members of the organization. Knowledge sharing is the most important operation in knowledge management, because once knowledge is shared its value increases. Companies try to increase knowledge sharing by inducing employees to find and access more knowledge available within the organization. Sharing increases the value of knowledge. When one person transfers knowledge to another, both access it. This process allows all participants of this process to look at knowledge from a different perspective and also enables them to combine the new knowledge with that already gained at an earlier stage (McKenzie and van Winkelen 2004) or under different circumstances. Knowledge thus becomes more valuable. Sharing knowledge is the most critical process within knowledge management, because it can also be most easily interrupted. Employees in a corporation are not always willing to share. When being shared, knowledge is communicated between two members of an organization. Human beings however have a strong knowledge-hoarding propensity, which may not harmonize with the company’s goals. They use it to improve their position inside a corporation. Often this reluctance is related to the idea that knowledge is power and that employees do not want to share it because they fear losing their personal competitive advantage within the corporation (Tiwana 2000). A further obstacle to knowledge sharing is the actual means of knowledge sharing. Knowledge management tools are often difficult to understand and time consuming to use and do not provide incentives to increase sharing intellectual assets within corporations. Knowledge managers try to develop

22

Theoretical foundations of knowledge management

solutions on how these obstacles can be overcome and employees motivated to share intellectual assets. The value of knowledge can only be increased if it is used more than once, in multiple organizational contexts. It can be reused in a new environment or under different conditions, for example another corporate unit or a different corporate member. In this given case, knowledge is being applied in the new environment. Becerra-Fernandez et al. (2004) call this process knowledge application and describe it as ‘using relevant knowledge that has been discovered, captured, or shared to make decisions and perform tasks’ (p. 372). Holsapple and Joshi (2002) refer to the use of knowledge as the process of ‘manipulating existing knowledge to generate new knowledge or produce an externalization of knowledge’. If the new environment strongly differs knowledge is adapted to it. In doing so, firms evolve and learn through the opportunities and influences of the external environment (Kogut and Zander 1996). Successful knowledge management enables the recipient to apply it according to the company objectives. Organizational learning is the process which underlines all stages of knowledge management. Knowledge is closely linked to learning (Fiol and Lyles 1985), it is the result of learning, because it is used through interpretation, which is the very process of making sense of the environment during action (Dupouet and Laguecir 2002). In the organizational context, learning leads to cognitive development and change (Fiol and Lyles 1985), because in the interaction with the environment, new structures can emerge and be added to the existing ones (Dupouet and Laguecir 2002). For the organization to constantly learn and to improve, knowledge workers need to undertake ongoing educational activities. It is not possible to consider learning as a diversified action without any connection to business action. Organizational learning refers to the process of improving actions via better knowledge and understanding (Fiol and Lyles 1985). Learning is therefore considered ‘a result of the accumulation of knowledge’ and refers to the insights, knowledge and associations between past actions, the effectiveness of those actions and future actions (Fiol and Lyles 1985). Therefore it can be seen as a vital part of all organizational structures and processes, although learning itself is a very personal and individual-based process (Moilanen 2001). Learning bears a strong connection to strategy and is considered valuable for the success of the organization (Moilanen 2001). Organizational learning happens via the learning process of the individual. This learning takes place through the following steps: observing data in terms of own experience, selecting suitable data, adding meanings, making assumptions, drawing conclusions, adapting beliefs and finally taking actions based on these beliefs (Lähteenmäki et al. 2001). Nevertheless, organizational learning is not simply the mere sum of individual learning. It results from the interactions of the individuals involved. As a consequence of these interactions, knowledge emerges which is not bound to individuals but with their actions (Richter 1996). Still, organizational learning is to be distinguished

Managing knowledge within organizations

23

from individual learning (Lähteenmäki et al. 2001). Individual learning is the acquisition of new knowledge, skills or attitudes and competencies that enhance an individual’s capacity for action, such as decision-making, finding solutions or improving the effectiveness of ones work. Organizations can only learn when the members of the organizations are constantly learning too. It follows that there is no organizational learning without individual learning, and that individual learning is a necessary but insufficient condition for organizational learning (Argyris and Schoen 1978). Companies that stifle learning often hinder application of new skills and risk individual and organizational stagnation. Knowledge management is closely related to organizational learning and is even thought to have evolved from the concept of organizational learning by some authors (Encarnacao 2000). Most knowledge management processes are supported by learning processes. When locating knowledge an individual has to select knowledge which seems to be most suitable, an evaluation process which is often based on prior experience. Sharing or transferring knowledge can also be considered a learning process. Here knowledge is being communicated between two individuals and both profit from this. Once the receiver of knowledge is reapplying or reusing knowledge within an organizational context the learning process moves from an individual level to an organizational level. Learning also plays an important role in the knowledge transfer process and also differs very strongly according to the cultural learning tradition. Learners need to reflect on and observe the learning experiences and create concepts to integrate the observations they make into logically sound theories. On top of that, they need to use these theories to make decisions and solve the problems they encounter (Lähteenmäki et al. 2001).

Benefits of knowledge management The main objective of knowledge management is to create value for the organizations through its application by all the members of an organization. Knowledge management within corporations happens for numerous reasons. Businesses increasingly recognize that knowledge accumulated by their employees represents a valuable asset (Bennett and Gabriel 1999) and scientific research also shows a focus on the link between knowledge management and competitiveness (Holden 2002). Generally we can speak of successful knowledge management if all the members of an organization are able to implement new knowledge successfully. Success measures fall into two general categories: economic and personal outcomes. Knowledge evaluation does not only refer to financial meanings of knowledge, but the degree by which knowledge management goals have been achieved (Probst and Romhardt 1997). Overall, corporations expect the knowledge management described above to support their profit goals by creating long-lasting competitive advantages. The foundation of competition becomes increasingly knowledge based, with the focus on developing

24

Theoretical foundations of knowledge management

valuable and hard-to-imitate knowledge that yields sustainable competitive advantages (Soo et al. 2000). Whenever a company faces uncertainty in the market, it can use its potential to create and maintain profitable applications of physical and human resources by being better informed than its competitors (Buckley 1976). Tiwana (2000) argues that leveraging intellectual assets of a company may also increase its market value. Technology as a source of competitive advantage is dead, because it can be copied too easily and quickly. Knowledge on the other hand is more difficult to copy, because it is located in a certain context which cannot always be duplicated by competitors. Beside this, goods and services become more sophisticated in content and production, which forces the company to become more competitive. To sum it up, we can say that successful knowledge management leads to the following advantages for a multinational corporation. Knowledge management enables new product development Knowledge is essential for the successful idea creation within a corporation. Leipold et al. (2002) draw a comparison between the industrial age and the knowledge age, and argue that the main goal of managing knowledge is the development of knowledge-based and innovative products. Companies always run the risk of being too slow in the market and of losing business (Leipold et al. 2002). To satisfy increasingly sophisticated customers in numerous markets, new products have to be developed faster. However, time to develop new products and innovations is often scarce. The best and easiest way to find them is to investigate markets in which the organization is already present. In these markets ideas can be generated and then introduced to other profitable markets. Here, knowledge helps to develop and improve new products. This not only happens by collecting ideas on new products all over the world, but also by improving manufacturing or other organizational processes that spur new product development and idea creation (Becerra-Fernandez et al. 2004). Knowledge management improves decision-making Today’s businesses face many more challenges than businesses just 20 years ago. Companies internationalize quickly and are confronted with diverse consumer groups, culturally and economically different markets, and constantly changing demands and trends. These changes create a high degree of uncertainty. Besides having to react to these challenges as fast as possible, businesses face a highly complex environment which presents more questions than answers. Processing knowledge efficiently helps reduce the risk of making wrong decisions. Knowledge management can provide answers and thus lower the risks of making wrong decisions. It improves competent decision-making and helps to develop solutions.

Managing knowledge within organizations

25

Knowledge management saves costs The overall goal of an organization undertaking knowledge management activities is to improve the performance of individuals, teams and organizations in order to create new assets and to stimulate new ideas, innovation and creativity. Knowledge management can therefore be summarized as improving the capability of an organization and the individuals in it (TFLP 1999). The use and application of knowledge within an organization increases its value. The more an organization uses its knowledge the more knowledgeable it will become (McKenzie and van Winkelen 2004). The more people that use it, the more profitable it becomes. Knowledge management allows the corporation to avoid mistakes such as unnecessary work duplication or repeated mistakes (Tiwana 2000). All these factors reduce cost and consequently increase the profits of the organization. Knowledge management improves corporate processes Knowledge management does support the strategic goals of an organization, and also impinges on its operations and processes. Operational knowledge, for example the knowledge about a manufacturing process, also supports company goals in a very effective way as well. Knowledge about production operations or processes can create competitive advantages for the firm, and effective application of knowledge has helped companies to improve their efficiency and reduce costs (Davenport and Prusak 1998). According to Tiwana (2000), it also allows corporations to compress delivery schedules and speed up delivery and logistic processes. This may improve the company’s strategic position compared with rivals. Knowledge also impinges on the way operations and processes are performed. Becerra-Fernandez et al. (2004, p. 55) refer to effectiveness and efficiency as two key management dimensions which profit from knowledge management. Managing knowledge can help performing the most suitable processes and making the best possible decisions and so increases the effectiveness of the organization’s business processes. It further supports efficiency by performing these processes in the best possible manner and in a low-cost fashion. Knowledge management focuses on market orientation To generate ideas internationally and profit from experiences in overseas markets, organizations need to focus more on market-orientated attitude and become closer to their customers. Market orientation forces organizations to collect information about target customers and their needs continuously, as well as to gain information on their competitor’s capabilities and actions. It helps organizations to anticipate the developing needs of the consumers and responds to them by developing innovative products and services. This gives advantages in speed and effectiveness when reacting to business opportunities

26

Theoretical foundations of knowledge management

and threats. Being strongly focused on the market the corporation creates superior customer value (Slater and Narver 1995). The overall reason to do this is to lead to greater customer satisfaction and to increase the organizational commitment of the employees. Knowledge management identifies international business opportunities Today’s markets change rapidly. The World Wide Web and increasing travel activities do not only increase the mobility of people, but also of ideas. In a multinational corporation, identifying international business opportunities is vital to sustain long-term competitive advantages. Knowledge management supports these attempts by locating knowledge within a widespread international organization or in foreign markets. Effective knowledge management processes allow the firm to recognize business opportunities, locate and retrieve knowledge and to transfer it to units or employees within the multinational corporation. Marketing issues like relationship marketing, integrated marketing communications, customer support programmes, including database marketing and new product development, are also increasingly dependent on successful internal knowledge flows (Bennett and Gabriel 1999).

Summary In this chapter I have focused on the managerial aspects of knowledge. Knowledge management attempts to use knowledge in a most profitable way for the organization. There are four stages in the knowledge management process: knowledge creation or discovery, knowledge sharing, knowledge reception and application. These finally lead to knowledge management outcomes that support the competitive position of the firm. At the beginning of the knowledge creation process it needs to be found or created within the corporation. There is no clear distinction between knowledge discovery and creation. Knowledge which is recognized as valuable is shared with other employees who are supposed to reuse it further. The sharing process happens between two individuals and is conducted via a number of means. The recipient is using it and applying it in his or her environment. Knowledge management further intensifies organizational learning. Organizational learning is the sum of all individual knowledge sharing and learning processes. By increasing the learning processes of its individuals an organization is also improving its overall ability to leverage its intellectual assets. The overall goal of managing knowledge within organizations is therefore to increase competitive advantages of the firm. Outcomes expected enables new product development, decreases uncertainty, saves costs, improves corporate processes and allows corporations to increase their market orientation.

3

Western knowledge management and Japanese knowledge management

This book focuses on the knowledge transfer between different cultures. To illustrate the challenges of cultural differences in knowledge management, I will outline the difference in managing knowledge in two different cultures. The book’s main focus lies on knowledge transfer between organizational units in Germany and Japan. These two countries were chosen because they show a similar level of economic development but strong cultural differences according to the framework of Edward T. Hall. Edward T. Hall (1990b) distinguishes cultures according to their way of communicating and bases his analysis of culture on communication processes (Hall and Hall 1990b). Members of a culture do not only share information, but also the way they codify information, store and reuse knowledge. Communication includes all aspects of communication, like language and words, material artefacts representing status and power, as well as behaviour (Salzberger 1999). When talking about communication Hall focuses on formal aspects. It is more important how people communicate than what they communicate. Table 3.1 shows the most relevant cultural dimensions according to Hall and Hall (1990b). The speed of a message refers to the relationship between the content of information and the size of the message. Information can therefore be communicated at slow or high speed. Media like books transport slow messages, TV and cartoons are fast media (Salzberger 1999). Another aspect where cultures differ is the structure of personal space. This space surrounds people. The way other people enter this space depends on the culture of the person. People from northern European countries keep a greater Table 3.1 Cultural dimensions according to Edward T. Hall Dimensions

Characteristic

Speed of messages Structure of space Structure of time Context orientation

Fast–slow Open–closed Monochron–polychron Low context–high context

Source: Hall and Hall (1990b).

28

Theoretical foundations of knowledge management

distance than people from southern Europe. This ‘closeness’ is also interpreted from the personal point of view and the person’s cultural background. Hall also refers to differences in structuring and understanding time within cultures. Time can be measured in polychronic and monochronic time. This relates to the number of activities that can be performed at the same time. Monochronic cultures concentrate on one activity that is pursued consequently. In contrast, polychronic cultures allow more activities at the same time. The focus is on interpersonal relations, which are considered more important than time schedules. The last dimension discussed here is the dimension most relevant for this book. Hall distinguishes cultures via the concept of high-context cultures and low-context cultures. Context is the information that surrounds an event; it is inextricably bound up with the meaning of that event. The elements that combine to produce a given meaning – events and context – are in different proportions depending on the culture. The cultures of the world can be compared on a scale from high-context to low-context. (Hall and Hall 1990b; p. 6) In a high-context culture, like Japan, information is contained in the physical environment or within the person, but not mainly in the verbal part of a message. A person does not primarily communicate via talking, because very little informationis in the coded, explicit part of the message. In contrast in a low-context culture, like Germany, the information is transferred via the explicit code. Much more reliance is placed on the words used. Things that must be said in a low-context culture are often self-evident in a high-context culture. Low-context communication tends to predominate in individualistic cultures, whereas highcontext communication predominates in collectivistic cultures (Rosengren 2000). Figure 3.1 shows the continuum from high-context to low-context countries. The countries at the extreme ends of the continuum are Japan, China, and Switzerland and Germany.

Knowledge management in the West and in Japan In this book I will use Hall and Hall’s framework to investigate the issue of cross-cultural knowledge transfer. The investigation will be conducted among

Figure 3.1 High-context cultures and low-context cultures (Thomas 2002)

Western and Japanese knowledge management

29

German and Japanese knowledge managers. German knowledge managers have low-context cultural background; Japanese have a high-context background. Both are placed on the extreme sides of the continuum developed by Hall and Hall. Not surprisingly, cultural differences can be also observed in knowledge management in both cultures. In the following chapter I will give an overview on the major differences between German and Japanese knowledge management. German knowledge management, however, is often not explicitly mentioned in knowledge management literature. I therefore quote Western knowledge management literature in this context. Ever since knowledge management has become a topic of interest in management science, Japanese management has been considered the ‘pioneer’ in managing and especially in creating knowledge. Japanese corporations seemed unbeatable in their growth and their rapid international expansion. Western researchers and managers found this difficult to explain. The interest in Japanese knowledge management grew; it seemed to be the most successful model and interesting for Western knowledge management researchers and practitioners. The Japanese firm combines a very hierarchical and procedure-oriented corporate structure with flexible communication and knowledge management activities. These two systems are connected via a very strong corporate culture that constitutes the knowledge base of the company (Lam 2000). The result is a flexible and communication-oriented approach in knowledge management which is at the same time supported by a rigid hierarchy and a high level of organizational bureaucracy. From a Western perspective this seems like a contradiction. How can a company be flexible and hierarchical at the same time? The answer can be found in Japanese group formation. Japanese groups as well as organizations have very strong boundaries and only allow new members to enter after they have been screened rigidly. There is a clear distinction between insiders and outsiders in a Japanese firm. Once an employee enters a new firm, he or she is expected to stay for many years, sometimes even a lifetime. Inside, Japanese organizations have rigid hierarchical structures. The position of each organizational member is clearly defined and based on seniority. However, cooperation and harmony play the most important role, and relationships with other members have to be managed very carefully. Open conflict and competition should be avoided and a harmonious work environment has the highest priority. A high degree of trust between organizational members is developed at the same time. This also impinges on communication styles and consequently on knowledge management. Within the firm, communication flows freely. Since organizational members do not come or leave easily, knowledge can be shared and used to improve the competitive advantage of the firm. Even the high number of hierarchical levels, which often has a negative influence on communication within a Western organization, does not inhibit the communication flows within the corporations. Communication flows freely. Superiors in Japan can be accessed

30

Theoretical foundations of knowledge management

any time and tend to involve many more people in their decision-making processes than in the West. In this chapter I will give an overview on the differences of knowledge management in Germany and Japan based on a literature review of the topic but also using my experiences in Japanese organizations.

The role of knowledge Knowledge as a source of power Employees in a Japanese organization are expected to work with each other for a long period of time, in many cases they will spend many years in the same firm. Accordingly, communication processes in a Japanese firm are more group oriented, sharing knowledge is risk-free and benefits all members of the organization. Knowledge and information are common goods and owned by all members of the group. Knowledge can therefore be shared, because all members of the group are supposed to be equal and have a common goal. Informing every member of the group, even about the smallest events or company-related gossip, is most important. Knowledge can be shared without fear of loosing one position or power within the organization. In contrast, knowledge shared with other members of a Japanese organization increases group power (everybody’s power), strengthens the relationship between members of the organization, and ultimately supports the organization in accessing all the knowledge its members hold. In a Western organization, however, these processes do not work in the same way. Organizations certainly differ from Japanese organizations. The boundaries of Western groups are not as solid as of Japanese groups. Group members, for example employees, may leave a group or an organization. Inside a Western group, members are also individually responsible for the success (role and position) and therefore compete with each other. Inside the organizations Western employees prefer to differentiate from their colleagues. Knowledge is very useful in showing individuality. Owning a specific type of knowledge can increase individual competitive advantage and reduce the risk of being laid off. By acquiring and keeping knowledge, employees strengthen their position inside their organization. Knowledge therefore becomes a powerful tool for the individual, but sharing knowledge with other members of the organization is often a risk. Knowledge within a Western organization is therefore not shared this easily; employees even refuse to exchange information and knowledge with their colleagues. Tiwana (2000, p. 37) puts it like this: ‘Most of us, because of the limitations of our very human nature, have a strong knowledge-hoarding propensity.’ Cultural differences lead to very differing approaches in knowledge management. Whereas in a Japanese organization sharing and communicating knowledge is an everyday task and strongly integrated in managerial activities at all levels, in a Western firm sharing of knowledge is often promoted and

Western and Japanese knowledge management

31

required by the top management, but not always supported by employees of the firm. Employees show very different reactions to knowledge in the East and the West. In a Western firm, they have to search for knowledge more actively. If information is needed, employees are supposed to be creative in finding it. In Japan, however, employees are more passive when it comes to knowledge searching. Of course, employees ask each other if they need information, but in most cases they are being informed anyway. A normal Japanese office produces and distributes an enormous amount of information. But a lot of it is still communicated in the form of memos and letters. Frequent meetings are another form of keeping everybody informed.

Preferred knowledge types The differences between collectivism and individualism also influence which knowledge is managed in Western and Japanese companies. Japanese companies prefer tacit knowledge to explicit knowledge. They accept knowledge being owned by their employees, whereas Western corporations prefer to extract knowledge from their employees and store it independently. Scientific literature has a number of explanations for these differences. Doi (1981) points out that there is a general difference in philosophical traditions between the West and Japan. Western tradition emphasizes the importance of words. In contrast, Japanese tradition thinks that words do not reach and show reserve over eloquence. This approach is influenced by the Japanese philosophical tradition, which has itself been strongly influenced by Chinese thinking, as well as Confucianism and Indian religious systems, notably Buddhism. At the root of Japanese philosophical thinking is the quest for oneness and harmony (Holden 2002). The tradition of communication without language, which the Japanese call isshin denshin, has been strongly influenced by Zen Buddhism. This influence originated in China in the early Tang Period (AD 618–907) and has had a major impact on the tradition of thinking about communication; it is believed that the most important things cannot be communicated in language, that language is only useful for somewhat secondary and trivial messages (Scollon and Wong-Scollon 1995). Accordingly, there is a difference between the Japanese and the Western approach to knowledge (Doi 1981) and between Japanese companies and Western companies in how they manage knowledge. One of the most important is the emphasis on tacit knowledge in Japanese companies and the focus on explicit knowledge in the West. Such differences lead to different strengths and weaknesses of Japanese and Western companies (Nonaka et al. 2000). Numerous researchers have pointed out the focus of non-verbal communication in Japanese society. Not everything has to be said explicitly, many things may stay unsaid. The reason for this is not only that non-verbal communications, such as hints and innuendos, are considered an important part

32

Theoretical foundations of knowledge management

of information, but also that communication refers to trying to understand the counterpart on various levels, not only on a verbal one. Accordingly, it is very important to watch and observe carefully one’s counterpart during a communication process. Thus, it is ensured that the outcome of the conversation is understood without explicitly communicating it. Japanese managers therefore put more emphasis on tacit knowledge (Takeuchi 2001). A Japanese company requires employees to understand without being told exactly what to do. Business practices rely more on tacit understanding, e.g. written contracts are kept simple or do not even exist in cases where a Western firm expects such articulation. Social situations must be ‘read’ with great precision. Tacitness and the talent for working with tacit knowledge are important (Hedlund and Nonaka 1993). This strongly influences the way knowledge is perceived in Japanese management. Japanese knowledge management does not only consist of data or information that can be stored in the computer, it also involves emotions, values and hunches (Takeuchi 2001). The major difference to Western knowledge management approaches is the management of procedural knowledge. In many Japanese companies knowledge on how to perform certain tasks or events is communicated personally, but often not documented in explicit form. This can be explained with a historical affinity for tacit knowledge, and, to date, with the tendency for lifetime employment. Unlike their Western counterparts Japanese organizations can allow their employees to gain and keep a lot of personalized knowledge. In many cases these employees are even available after they retire. It is quite common, to call former employees of a corporation who are already retired. Tacit knowledge even if it contains important procedural knowledge within employees is therefore not regarded as a risky thing but valuable for the corporation. It is important to maintain a body of staff that has a shared basic understanding about work-related issues, knowledge about their industry and about the particular company (Melville 2000). Western epistemology, in contrast, has traditionally viewed knowledge as explicit (Nonaka et al. 2001) and a Western corporation on the other hand cannot rely on tacit knowledge this much. Knowledge is believed to be unchanging and true regardless of social circumstances (von Krogh et al. 2000). Hence Western firms are uncomfortable with purely tacit knowledge as is the Western individual (Hedlund and Nonaka 1993). Nonaka (1994) calls the Western explicit-knowledge orientated approach ‘Knowledge of Rationality’. Western companies are effective in creating knowledge concerning facts. Knowledge of rationality tends to ignore the importance of commitment, and instead centres a reinterpretation of existing explicit knowledge (Nonaka 1994). Employees in Western organizations hardly ever stay for decades in companies anymore. Allowing them to gain too much tacit knowledge may improve company procedures, but does become problematic if employees owning a high degree of tacit knowledge decide to change their jobs or leave the company for any other reason. The Western corporation therefore focuses on explicit knowledge, which makes work processes and results independent of individuals.

Western and Japanese knowledge management

33

It usually emphasizes the extraction of knowledge and develops and promotes mechanisms to store knowledge in a corporation’s knowledge tools. Another major difference between Western and Japanese approaches to knowledge management is the importance of informal knowledge and information. To keep harmony and a feeling of belongingness within the group the exchange of informal knowledge is essential. Most Japanese companies therefore implement a number of operations to allow employees to meet and communicate in a relaxed manner. These activities include nomikai (dinners with co-workers after work), gasshuku (short excursions with co-workers) or frequent tea or coffee breaks. During these events employees do not necessarily only exchange work-related knowledge and information. Most of the conversations do naturally involve work, but during these events participants can also criticize their organizations or superiors. In any event, they do support knowledge sharing within the corporation. Nonaka and Takeuchi (1995) in their book The Knowledge Creating Company refer to a story in which managers during a nomikai came up with a new idea on how to develop a new product. The main idea here is that the course of informal knowledge exchange leads to an increased exchange of formal knowledge which leads to competitive advantages. Western companies, in contrast, do not always value the exchange of personal or non-work-related information and knowledge at the workplace. Informal information is strongly related to gossip or rumours and these are not welcome in a Western business environment. Employees are requested to focus on their work and to the communication and sharing of work-related information. Even if there are company events which allow employees in a Western organization to build better relationships with each other, the main focus here lies on team building and not so much on knowledge transfer. In the past years there have been a number of attempts to introduce alternative methods of knowledge communication, such as storytelling, to improve the interest in sharing knowledge. Despite this, exchanging informal information is not yet the focus. Even if a number of practitioners attempt to encourage the exchange of personal information and stress its value and argue that business relationships flourish when personal details are shared and that workrelated information is only a small part of communication processes in a company (Collison and Parcell 2004), the value of personal and people-related knowledge is not yet recognized in the Western firm.

Knowledge locations Japanese corporations still rely on people as locations of their corporate knowledge, for example business processes. This is especially the case for procedural knowledge. This particular type of knowledge is shared in the form of personal communication between older and younger employees. Learning on how to perform a task is in most cases done by experience or on-the-job training. Despite the fact that Japanese companies are said to store every kind

34

Theoretical foundations of knowledge management

of information and knowledge in form of tacit knowledge within their people, Japanese companies do also have extensive explicit storage systems. Storing and processing all this information is a time-consuming process. In most Japanese offices one or two employees are busy storing information or updating databases. A Japanese organization owns much more information about its employees than a Western one: private details of employee lives, such as age, financial situation, family status and income, and medical conditions are known to the employer. The enormous flood of information being sent and communicated to all employees is quite challenging. Western corporations, on the other hand, prefer explicit knowledge location and make strong attempts to extract tacit knowledge from their employees and store it in external knowledge locations. Knowledge stored in explicit knowledge locations leads to easier sharing processes. This allows all members of the organization to access it and share it after this. Table 3.2 presents the differences between Western and Japanese approaches to knowledge.

Knowledge creation and sharing The differences in attitudes towards knowledge between East and West also reflect in diverging objectives when managing knowledge. Japanese corporations show a stronger focus on knowledge management operations and sharing processes. Knowledge management operations are a part of corporate processes and do not need to be promoted or motivated by top managers. The main goal here is to keep every member of the organization informed and perform knowledge-sharing processes as smoothly as possible. However, since knowledge management processes are interwoven with daily business routines, they are often not necessarily connected to strategic goals of the corporation. All kinds of knowledge and information are being shared; in many cases these are not relevant for the corporate success at all. This makes knowledge management processes time consuming and costly. In a Western organization, on the other hand, managing knowledge only has the target to improve corporate performance. As shown above knowledge is already evaluated right after it is being created. The evaluation criterion is the question whether the knowledge is increasing organizational profitability. Western corporations concentrate on strategic aspects of managing knowledge and attempt to adapt their business processes to their knowledge management objectives. In Japan differences in group orientation further lead to diverging attitudes towards knowledge management. Unlike Westerners, Japanese do not question or pass judgement on the usefulness of this information (March 1990). In Japan every type of information or knowledge is interesting and managed, without considering its profitability for the future. Managing it refers to bringing it from an individual to the group level. It is then discussed further within the group who decides about further processes. Bringing knowledge from an

Western and Japanese knowledge management

35

Table 3.2 Knowledge in the West and in Japan Western knowledge management Japanese knowledge management Knowledge as a power source

Preferred knowledge types

Knowledge locations

Individual knowledge improves Group knowledge improves the group’s or organization’s power an individual’s position or and consequently its members’ future in the company power as well Employees attempt to gain Employee do not attempt to gain specialized and individual specialized and individual knowledge to increase their knowledge to increase their personal competitive advantages within the company personal competitive advantages within the company or on the job market Employees share knowledge Employees are encouraged to share by management, but may voluntarily. Sharing and transferring knowledge is a be reluctant to do so Employees are self-reliant when major part of the daily work Employees rely on the acquiring knowledge. They actively search and investigate organization to be presented with new knowledge. They new knowledge (sometimes passively wait to receive also for their personal use) knowledge from their team members or organization Focus on tacit knowledge and on Focus on explicit knowledge informal knowledge and on formal knowledge Company promotes the Company promotes the management (sharing) of any management (sharing) of kind of knowledge profit-related knowledge Company does not distinguish Company tries to minimize between formal and informal or the exchange of unprofitable personal knowledge (personal or informal) Company promotes management knowledge of informal knowledge and in many cases even promotes it (nomikai) Knowledge is preferably stored Knowledge is preferably stored tacitly explicitly Organization develop Organizations must provide mechanisms to allow tacit and promote explicit knowledge sharing (e.g. on-the-job knowledge archives training, job rotation, social and (e.g. databases) sports events organized by the company)

individual to a group level indicates that knowledge is not at all managed or evaluated by an individual but by the group right from the beginning. These complex operations further lead to cost and time-consuming knowledge management operations. During the knowledge creation process within the group, any knowledge is discussed, a lot more knowledge than in the West. Nonaka and Takeuchi (1995) call this overflow of knowledge redundancy. Redundancy allows Japanese

36

Theoretical foundations of knowledge management

manager to use more information and knowledge than their Western counterparts. The main focus lies on examining a problem from several viewpoints and finding a solution which integrates ideas and attitudes of all team members discussing the problem. Not surprisingly, collecting information without giving any away is considered the key to the strength of Japanese business. Information gathering is institutionalized within Japanese culture and Japanese business. Crossan and Inkpen (1995) refer in their work on learning in a Japanese–American alliance to an American manager who supports these impressions: The Japanese people are not afraid to ask questions and they spend a lot of time doing that. There are always Japanese people visiting, both from Japanese parent divisions and from Japanese parent world headquarters, and it is not always clear what they are here for. Sometimes they just observe, other times they ask a lot of questions. (Crossan and Inkpen 1995, p. 77) In a Japanese organization this leads to an excess of knowledge and information. Western corporations on the other hand judge knowledge and information right after its creation or discovery. In a Western organization only ‘useful or profitable’ knowledge can be used. The main evaluation criterion is future profitability for the company. In cases where knowledge is not recognized as valuable for the corporation, it is not shared further but neglected or destroyed. The usefulness, however, is often decided by an individual and not by a group. Redundancy as described by Nonaka is considered costly and time-consuming and should be avoided. The Japanese group orientation plays a major role in knowledge creation as well. McKenzie and van Winkelen (2004) state that the density of a group or the interconnections between various members of the group affect knowledge flow speed and efficiency. A dense network increases knowledge flow speed and efficiency. The higher the number of connections between members of a group the easier it is to develop shared routines for managing and transferring knowledge. Group formations like these increase trust, shared norms and develop a number of accepted ways and re-enforce and thus become more effective (McKenzie and van Winkelen 2004, p. 188) The creation of knowledge in Japan is circular (Nonaka 1994, Nonaka et al. 2001). Knowledge embodied in people is extracted and then communicated to other members of a group. In doing so, knowledge can be made accessible to all organizational members. Then, it is internalized and the circle starts again. The core of this theory is therefore not just describing knowledge creation, but that knowledge management is actually knowledge sharing. These interactions are referred to as conversions. The four modes of conversion are socialization, externalization, combination and internalization. The model derived from these four types of conversion is called the SECI (socialization externalization, combination and internalization) model. The SECI model describes

Western and Japanese knowledge management

37

the four conversion modes from tacit to tacit, tacit to explicit, explicit to explicit and explicit to tacit knowledge, first by individuals, then by the group and finally by the organization. These four conversions are the basis of knowledge creation (Nonaka et al. 2000). The first step in this process is called socialization, in which existing tacit knowledge is changed into new tacit knowledge through shared experiences by individuals. An example would be how to gain experience in sales negotiation. This could be easily achieved by accompanying an experienced salesperson for a certain period of time, observing how these negotiations are performed. In the socialization phase individuals are attempting to identify new knowledge by learning from their peers or mentors, and tacit learning happens by organizational practices such as mentoring and on-the-job training. Observation, imitation and practice are other ways of transferring tacit knowledge to tacit knowledge (Nonaka 1994). By watching colleagues and imitating their behaviour, business practices which may not be easily explained can be learned. Sharing experiences is here considered to be the key to understanding others’ ways of thinking and feeling. This is especially important because tacit knowledge such as experience in negotiating prices is difficult to formalize and often time- and space-specific (Nonaka et al. 2001). In gaining ‘real life’ experience, a young sales assistant can gain practical insights into the job, explore its particularities and develop sensitivity for dealing with customers. Solutions for critical situations may also be developed during on-the-job training. As a result, performances can be improved and staff made more self-confident. In order to share this experience with other young salespeople in a corporation, this tacit and experience-based knowledge needs to be externalized. Accordingly, Nonaka calls the process of articulating tacit knowledge and transforming it into explicit knowledge externalization. Here, tacit knowledge is being made explicit to be shared with others (Nonaka et al. 2001). Externalization can be achieved by involving techniques that help to express ideas or images as words, concepts or figurative language like metaphors, analogies and narratives (Nonaka 1994). Trainees for example could process the experience during the on-the-job training by writing a presentation or a diary. Making tacit knowledge explicit, however, is not always easy. As described above, tacit knowledge is highly personal and strongly reflects attitudes, feelings or assumptions about a certain topic, and as such is often very difficult to externalize. Despite the difficulties of externalizing tacit knowledge it is extremely useful for organizations. Once knowledge is made explicit, it can be distributed further. This process is called combination by Nonaka. This phase captures the idea that tacit knowledge and explicit knowledge are complementary, but can expand over time through a process of mutual interaction (Nonaka 1994). During the combination process explicit knowledge is created from explicit knowledge. Explicit knowledge is collected from inside or outside the organization and then processed into a new form of knowledge (Nonaka et al. 2001). Individuals exchange and combine knowledge through exchange mechanisms

38

Theoretical foundations of knowledge management

such as meetings and telephone conversations (Nonaka 1994). The experiences of a young sales representative for example could be used to train other young salespeople. After listening to a presentation about the experience they can form expectations on what to expect and prepare themselves better. Their knowledge published in the form of a report may also be used in a manual for other future sales representatives and can address the key questions and concerns about their future careers. The final step in the SECI process is the conversion of explicit knowledge into tacit knowledge, which is referred to as internalization (Nonaka 1994). Here explicit knowledge which is being communicated throughout the organization is shared and converted into tacit knowledge again (Nonaka et al. 2001). Salespeople who jobs trainings or read company manuals which point out the major challenges when experiencing a critical sales situations, may use this information on the job. By doing so, they internalize it and make it tacit again. The internalization process therefore bears some similarity to the traditional notion of learning (Nonaka 1994), and training programmes are a very popular means of internalization. Knowledge which is internalized by the members of the organization in the form of shared mental models or technical knowledge is a valuable asset (Nonaka et al. 2001). I have experienced similar activities in Japanese organizations. Tacit and explicit knowledge constantly interact. When working in a Japanese corporation, I was once assigned to organize an annual corporate event. My task was to take over the task from an experienced colleague who had organized it for a number of years, and after this improve and modernize it. All knowledge was tacit. My older colleague had not documented any processes. I had to meet him a few times to find out about how to organize the event. I took notes and tried to outline what to do. After getting all the information and planning out the event, I informed other colleagues about what I planned to do. They gave me feedback and so improved the overall activity. At the same time I informed all the members of my department about my plans and get their agreement for it. These group-oriented processes, dialogue and communication within the group, are the base of knowledge creation in a Japanese organization. The circular, dialogue-based knowledge creation process shows special features. First of all it involves as many members as possible. At first all participants of the process are informed individually. This is called nemawashi and has the intention to get everybody acquainted with the ideas, questions and proposed solutions. In particular, older members of the team or organization need to be involved here. They are not only shown respect by being consulted, but also have more experience in their field and can provide valuable input. Usually, almost every member of the group is involved. Younger members also state their opinion. The main goal is to find a solution for a problem and to create some new ideas. In doing so it is very important to make sure every member of the group feels comfortable with the conclusion of the dialogue. The process can therefore not be called democratic in a Western sense (Tanaka 2007), where the majority wins. In a Japanese knowledge dialogue, every member should win. .

Western and Japanese knowledge management

39

During these nemawashi meetings I did not gain a lot of knowledge only, but also could announce the changes that I had planned and inform many members of the team or organizational unit about them. After nemawashi I can present my ideas and changes to the whole organization. At this stage most organizational members have already been informed or contributed to the plan and there is usually no resistance towards its implementation. After the group has voted on the new idea or plan, usually there is little disagreement and the idea can be processed right away. Takeuchi (2004) sees this dialogue as an interactive process, which allows all members to create and articulate new meanings. He points out the discipline that is needed by the participants in this process, because it brings out assumptions and suspends judgements at the same time. The Japanese way of knowledge creating can therefore be a ‘specialized form of discussion’ (Takeuchi 2004). The dialogue can be imagined in the form of a circle. As shown above knowledge in a Japanese corporation is stored without evaluating its usability right away. During the knowledge-creating process within groups this knowledge is constantly referred on. Redundancy here describes the fact that during a Japanese solution or knowledge creation processes all kinds of knowledge; information is used, even if its relevance and profitability is not obvious right away and the information may only be useful at a later stage. For Westerners this is often quite difficult to understand. I vividly remember my first team meetings in Japan, where I at some point always had to ask one of my neighbours whether we were still discussing the same topic or had already moved on to something else. The arguments presented in the dialogue that I heard were not directly connected to the problems we discussed from my Western point of view. I soon realized that in Japan many more aspects are considered. The argumentation is different as well. In a Japanese knowledge-creating process very personal accounts, experiences from the fields, hearsay and outside opinions are also presented. Data, statistics or theoretical material are not as often used to back up arguments as in Western corporations. Japanese firms encourage the use of judgement and knowledge formed by interaction with customers and by personal bodily experience rather than by ‘objective’, scientific conceptualization. Social interactions between individuals, groups and organizations are fundamental to organizational knowledge creation in Japan (Nonaka 1994). From a Western perspective this is an extremely time- and money-consuming personal knowledge communication. This discipline and suspension is one of the most relevant aspects of the Japanese way of managing knowledge. During the knowledge creation process, judgement of the relevance and profitability of the knowledge and ideas discussed is avoided. This stands in great contrast with Western knowledge creation, where judgement is a major part of the creation process. Any idea or proposal which is considered too costly, too little related to the overall company goals or simply seems too difficult to achieve is often ruled out at a very early stage of the dialogue. The Japanese knowledge creation process is therefore very long. Given the long periods in coming to a conclusion, however, the implementation phases after this are very short.

40

Theoretical foundations of knowledge management

Knowledge creation processes look very different in a Western corporation. In this case an individual perspective is predominant, which is also obvious in knowledge management processes. Had I been assigned a similar task in a Western organization, the chances are high that I will be assigned a task also means working on it alone. In most Western organizations there would also be some documentation process. I would only consult colleagues if the tasks were too difficult, or if I needed special information. Compared with a Japanese organization where employees spend a major part of their day consulting and communicating with other members of the organization, it can sometimes be difficult to find older or more experienced co-workers who have the time and interest to share their knowledge. Western management literature strongly focuses on the location of knowledge and on the interpretation. This indicates that individuals starting the knowledge-sharing or -transferring processes need to evaluate this knowledge right away and decide about its further usability. In a Western knowledge creation process, evaluating the new idea (or knowledge) happens at a very early stage and on an individual level. After getting all the relevant information and knowledge I would have to develop some new ideas and to improve the concept. This could happen in cooperation with co-workers, although I would still be in charge of the project. The main reason for this is that I am responsible for the task, but I am not only responsible for it, my performance evaluation and promotion and consequently my future in the corporation depend on my individual performance. In contrast to the knowledge creation process in a Japanese organization, I would therefore not spend my time communicating about my task with other members of the organization, but to research information on my task alone and also develop most of my ideas on how to improve the event by myself. Only after the concept or idea is well thought of and developed, is knowledge moved to the group level. At this point the new idea is presented at a meeting. During a meeting, for which I have prepared a presentation I have to introduce my ideas to other team members. To be successful during this meeting, I would present ‘hard’ material, e.g. statistics, data, theories to strengthen my points. The meeting itself is not like a Japanese meeting were the final approval is officially given, but a meeting where the decision about the whole endeavour is actually made. Most participants have not heard the content of my presentation before and I need to convince them of my idea. I would have to present my ideas in the most rational way and my colleagues would try to test whether they were good or not. In comparison to the Japanese circular group discussion, this Western equivalent is linear. Arguments and discussion are held in a conclusive form. Arguments and discussion are presented in a very unemotional and scientific manner; conclusions and solutions are based on them (Tanaka 2007). The group is finally trying to test the relevance and the applicability of the idea. After this, Western groups often come to a conclusion, often in the form of a vote. In many cases the results reflect the power division within the group.

Western and Japanese knowledge management

41

The majority wins. If the majority agrees I can fulfil my plans and implementation can start. Not all members of the group support the decision. Since not all members always agree there may be group members who are opposed to the results of the group vote and then delay or block the further implementation of ideas. Implementing the new idea or knowledge is often connected with many difficulties in Western corporations. Table 3.3 provides an overview on knowledge creation in Western and Japanese organizations.

Strengths and weaknesses of both approaches Both approaches show strengths and weaknesses. For many years the focus of Japanese companies on tacit knowledge has been considered a major strength. Their approach was not only very people oriented, but also very efficient in sharing and especially in creating new knowledge. The degree of trust within corporations is very high, knowledge therefore flows freely and many different ideas can be implemented. New knowledge is created within the group, which allows many more ideas and different viewpoints to be brought in. Japanese knowledge management has a strong operational focus, because all these processes need to be managed. Western knowledge management, on the other hand, has a more strategic viewpoint. Knowledge is used to increase competitive advantages. Right from the very first step in the knowledge management process, it is therefore evaluated according to its profitability. Knowledge is often created on an individual level. After an idea is fully developed it is presented to a group or organizational level to be used further. Here the individuals involved can bring in their own judgement or viewpoints, but can also use knowledge in accordance with their individual strategies. Both approaches have strengths and weaknesses. Japanese companies can make use of all their employees’ tacit knowledge and can further increase the number of ideas which are implemented in organizational processes. Organizations spend little effort in motivating their employees to share knowledge, since knowledge management processes are already strongly implemented into organizational processes in Japan. The Japanese approach further promotes bottom-up knowledge communication. All members can easily participate in knowledge management activities regardless of their hierarchical position. However, Japanese corporations often miss a strategic outlook when managing knowledge and concentrate mainly on their operations. Knowledge shared is often not evaluated or screened for its profitability. Japanese knowledge management therefore often involves a high degree of knowledge which is useless in increasing competitive advantages for the corporations. Because of this, Japanese knowledge management is not as effective as it should be. The extensive knowledge management operations also mean that Japanese employees are overwhelmed with information. A lot of this information is not directly related to work content and is only meant to keep everybody

42

Theoretical foundations of knowledge management

Table 3.3 Knowledge creation in Western and Japanese organizations Western knowledge management

Japanese knowledge management

Knowledge is already evaluated during the knowledge creation process or right after the discovery

Knowledge is neither evaluated during the knowledge creation process nor right after the discovery

Knowledge must be relevant for either the individual’s personal advantage or the corporation’s competitive advantage or profits

Knowledge does not need to be relevant for the individual’s personal advantage nor the corporation’s competitive advantage or profits

The relevance of knowledge is evaluated by the individual

The relevance of knowledge is evaluated by the group

Only ‘profitable’ knowledge is further processed and managed

Any type of knowledge is further processed and managed

Knowledge which is not considered ‘profitable’ is neglected or destroyed

Even knowledge without evident value is managed

Knowledge creation, sharing and application are separate processes and which happen sequentially

Knowledge creation, sharing and application are interwoven and overlap

Individual knowledge is more valued than group or organizational knowledge Knowledge is mainly created by individuals

Group and organizational knowledge more valued than individual knowledge Knowledge is mainly created within the group

informed. Japanese knowledge management thus becomes time consuming and costly. Employees often cannot process all the information they constantly receive. Another effect of this approach is that Japanese employees often do not actively look for knowledge, but show a more passive approach because they are used to well-organized and intensive knowledge management operations. Japanese employees do not need to take a personal responsibility to find and access new knowledge and many corporate practices in Japan support this. Japanese organizations offer numerous training and educational activities; employees do not even have to take responsibility for their professional education within the corporation. Western organizations, on the other hand, focus on strategic aspects of knowledge management and use knowledge in the most effective way by making it independent from its holders. A Western organization can keep knowledge resources for a longer time and use them even if employees are leaving or have decided not to share. This is not always easy and many Western organizations struggle to develop adequate knowledge management operations and to reach knowledge management goals.

Western and Japanese knowledge management

43

Another challenge that Japanese corporations face is the long-term effect of the focus on tacit knowledge. Since 2007 Japanese baby boomers have started to retire. Japanese baby boomers were born between 1947 and 1949. Their number is very high; current calculations assume that more than 6.8 million Japanese or about 10 per cent of the Japanese workforce fall into this category (Haghirian 2006). They are the classic Salarymen and the backbone of the Japanese post-war economic development. Many of them are living examples of the lifetime employment system and have worked in the same corporation for more than 30 years. Thus, they have become the knowledge stock of their organizations. The fact that they are leaving the companies now creates major problems for their companies. The retiring baby boomer will take major knowledge with them, which creates serious problems for Japanese corporations. In many cases no knowledge has been stored, because employees were available for the company for the last 40 years (Haghirian 2006). With the beginning of the new millennium, many Japanese companies realized the need for transition and tried to reorganize their organizations. Concentrating on tacit knowledge obviously has a high price and many Japanese organizations have started to develop mechanisms to extract knowledge from their long-serving employees. Western companies have more experience in extracting knowledge from their employees and can be an interesting role model for Japanese organizations. Japanese companies like Mazda are now trying to store their knowledge and have started to develop a number of mechanisms to share and transfer implicit baby boomer knowledge. Baby boomers are being rehired or retrained as trainers and coaches for younger employees (Ohnishi 2009). Individual knowledge management has its price too. In a Western corporation knowledge is evaluated at a very early stage of the knowledge management process. The idea that a single person, as is often the case, evaluates the relevance of knowledge for the corporation is not very efficient from a Japanese point of view. One single person can misjudge the relevance and profitability of knowledge more easily. In a Western organization this, however, happens quite often. Many valuable ideas are thus not recognized in time and valuable knowledge may be lost. Western companies use knowledge more efficiently and profit oriented, but have to improve their operations in this field. Western knowledge management operations are more cost oriented and less time-consuming. They are, however, not always performed voluntarily, because employees may choose not to share and manage knowledge for numerous reasons. Western corporations spend enormous efforts and time to improve knowledge management operations. Table 3.4 presents an overview on the goals, strengths and weaknesses of Western and Japanese knowledge management.

Summary In this chapter I have outlined the differences between Western and Japanese knowledge management. In Japan knowledge and its management starts and

44

Theoretical foundations of knowledge management

Table 3.4 Strengths and weaknesses of knowledge management in the West and Japan Western knowledge management Japanese knowledge management Knowledge management goals

Focus on strategic knowledge management Top managers want to motivate or enforce knowledge management processes to improve competitive advantages (top-down) Knowledge management is not implemented in management processes but needs to be introduced and promoted by top management

Focus on operational knowledge management Top managers want knowledge management processes and operations to run smoothly to keep all members informed Knowledge management is a core management process in Japanese organizations and is not being promoted by top management (bottom-up) Knowledge management is accepted by employees and considered an everyday management activity

Strengths

Preference of explicit knowledge makes company independent from employees Knowledge management processes are faster and improve competitive advantage of the firm Knowledge is seen as a strategic asset and used accordingly Individual knowledge can be created and used by the corporation Only ‘profitable’ knowledge is managed within the firm

Company can rely on employees’ tacit knowledge Knowledge management processes are performed very professionally Easy knowledge flows within an organization leads to competitive advantages Knowledge is seen as an operational asset, which is access able to all members of the firm Group knowledge can be created and used by the firm Even knowledge, which is not profitable at first sight, is managed and may prove to be valuable later

Weaknesses

Knowledge management and sharing is not always supported by employees Top management has to promote knowledge management activities within the firm (incentives) High investments in knowledge storage systems Employees do not always use knowledge in the company’s interest

Preference for tacit knowledge makes company dependent from employees Knowledge management is time consuming and costly Employees also share unprofitable kind of knowledge Information overflow in Japanese corporations Employees are not actively searching for knowledge

ends with a group. Knowledge is a means to empower a group; it therefore becomes group property. In a Western society, on the other hand, knowledge is regarded an individual asset and can support each member in an organization to achieve his or her goals.

Western and Japanese knowledge management

45

Differences in the relevance of knowledge can also be observed. Whereas in a Japanese firm all kinds of knowledge and information are being processed and managed, in a Western firm only knowledge which is supposed to increase the overall competitive position of the firm is of interest. Knowledge in a Western firm is thus evaluated at an early stage of the knowledge management process, mostly by company individuals who decide whether it is useful or profitable or not. In a Japanese firm, this process is not judged but managed in each case. East and West further differ in the types of knowledge they prefer. Japanese knowledge management is strongly dependent on tacit knowledge embedded in individuals. For Japanese companies this is not a problem, since many companies still practise lifetime employment and can expect their employees to stay with them for many years. This leads to the fact that in many Japanese companies business processes are not documented at all and can only be managed by involving experienced staff members. Western firms, on the other hand, do not expect their employees to spend a lifetime with them. They prefer explicit knowledge or knowledge which is extracted from people and can be stored easily in databases and other forms. Western knowledge management activities focus on the individual as a knowledge creator. This individuality leads to a preference of explicit knowledge storage, such as databases. The corporation so becomes independent from their employees, who may leave and take their knowledge with them. Both types of knowledge management show strengths and weaknesses. Western knowledge management has a more strategic approach. Top managers have to promote knowledge management activities in their firms, and employees should be encouraged to share and use knowledge according to the company’s wishes. Japanese knowledge management on the other hand has a higher group orientation. Knowledge is communicated and shared within the firm. This is a risk-free process, because Japanese employees have a lower tendency to change jobs and therefore stay in a firm for many years. Knowledge management in Japan is therefore more process oriented and operative than in the West. This often leads to information overflow and also to more passive behaviour towards knowledge. Employees are not used to actively searching for information and knowledge.

4

Knowledge management in multinational corporations

Internationalization of the firm Today’s corporations face a number of challenges. Global competition has increased. To sustain their competitive advantages, companies need to find new markets. They cannot purely rely on the local market to maintain their profitability and sustain growth. Internationalization is therefore a must for most modern corporations. To stay profitable, they need to grow and globalize (Leipold et al. 2002). Even small organizations or corporations operating in the niche market can hardly afford to stay local but become multinational corporations. A multinational corporation is defined as a single organization with a need to coordinate its operations across multiple environments and which operates across cultural boundaries (Thomas 2002). Parhizgar (2000) defines the multinational corporation as: a highly developed organisation with deep worldwide involvement in obtaining the factors of production from multiple countries around the world, and manufactures its products and markets them in specific international markets. (Parhizgar 2000) The global distribution of company units leads to a greater diversity in management processes. Multinational corporations are confronted with higher complexity because there is a geographic and cultural difference among subsidiaries and between subsidiaries and the headquarters (Thomas 2002). Management decisions in multinational corporations consequently become more challenging. Not only are their key resources and capabilities geographically dispersed, they also have to deal with markets and consumers who mostly have local preferences when it comes to products or management styles. On top of this, they need to integrate a diverse workforce into their management processes. These decisions, however, are not made in a well-known environment, but in an environment where the corporation has little or no experience. Customer reactions are unknown and difficult to predict. Rivals and their market

Knowledge management in multinational corporations

47

activities need to be investigated. Market trends and developments are difficult to anticipate. Internationalization processes therefore present ongoing challenges for corporations. Information and knowledge play an important role in reducing the risk of making wrong decisions in a complex and diverse environment. The more knowledge the corporation manages to access and use during its decision-making, the higher the success of an internationalization process (Table 4.1). Even before entering a new market, knowledge becomes really important because there are several potential markets to choose from. First, the economic, legal and political conditions of the prospective markets have to be assessed. This often poses a major challenge for corporations. Entering markets that have a culturally different environment proves especially difficult because of language differences, problematic access to information and little comparable data. When cultural and linguistic barriers are too high, as for example in the Japanese market, companies often do not obtain enough information to justify market entry because no or little information is available in English or in the company’s language (Haghirian 2007). The more information on market conditions that is available to the organization, the lower the risk of choosing the wrong market. And even after having decided on a market or having already entered it, the range of decisions in international marketing is much more diverse than in domestic marketing because all

Table 4.1 Knowledge required in internationalization processes Decisions to be made during the internationalization process

Knowledge applied during internationalization stage

Which market?

SWOT analysis Information about economic, political, legal and cultural conditions of markets Comparisons with home market Competitive analysis

Which market entry strategy?

Information on import barriers to the market Legal aspects when entering the market Cost evaluation of different market entry strategies

How to perform the market entry process?

Information on local support such as legal services, accountants, subventions of the host country government, etc. Best practices for market entry processes

Which marketing mix?

Competitive analysis Local market information International marketing mix

Which long-term goals can and should be developed?

International and local market research Market comparisons

48

Theoretical foundations of knowledge management

decisions have to be made in an ‘unknown’ or foreign context. This increases the need for knowledge. After having decided which market to enter, the organization decides on the market entry strategy. Once again knowledge acquisition becomes vital for the profitability of the endeavour. In this case legal information on market entry processes and market entry barriers, such as import limits or subventions, is necessary. Reviewing best practices of other companies can help to develop ideas on how to go about the procedure. The market entry itself is guided by information on how to set up a new business in the host market and on how to get support by local authorities or experts, such as lawyers, consultants, market researchers or tax accountants. Once the organization has set up an overseas unit, the need for knowledge does not decrease. After setting up a subsidiary in the host market, the company starts to market their products actively in the host market and must develop a local marketing mix. The product and communication strategy has to be adapted in most cases, whether it is for legal reasons or consumer preferences. Distribution and price issues also often differ. Here, the corporation needs information to make the right decision on how to adapt its marketing mix to local market requirements. If the market has been successful, the corporation may establish a local subsidiary and start developing long-term marketing goals; differences between local markets and the home market require the adaptation of products and operations to local conditions. Host country governments make incompatible demands on different parts of the company. Global competition requires development of standardized responses. At the same time increasing global competition requires the exploitation of economies of scale on a global basis. To manage these different requirements multinational corporations have to develop efficient transaction processes between their head offices and subsidiaries. The multinational company can be seen as a network of three types of intersubsidiary transactions:  Capital flows: Investment into or dividend repatriations from various subsidiaries  Product flows: Intracorporate exports to or imports from various subsidiaries  Knowledge flows: Technology and/or skill transfer to and from various subsidiaries (Gupta and Govindarajan 1993). However, in the past knowledge transfer mainly described a head office’s attempts to train overseas subsidiaries in manufacturing or to share the newest product developments with them. Knowledge transfer was strongly connected to control mechanisms and centralized organizational structures. A company can produce significant value by making its knowledge available corporationwide. If new knowledge is used from an early stage, it can lead to a long-term advantage for the firm (McKenzie and van Winkelen 2004, p. 138). Subsidiaries, on the other hand, report back to their headquarters. In fact their role was to

Knowledge management in multinational corporations

49

react to headquarters’ orders and ideas and fulfil them in the host market. However, as companies become more transnational, the role of subsidiaries as knowledge providers is becoming stronger. Owing to the increase in competition and changes in consumers’ expectations, the firm’s long-term survival and growth depend on its ability to develop new products and to improve management processes. Frequently underemphasized is that the success of innovations depends upon the ability to replicate the idea corporation-wide. The company therefore has to be constantly aware that the knowledge accumulated in various subsidiaries needs to be localized and examined, because it can possibly be reused at another location within the organization. Knowledge is now gathered from all subsidiaries and the capability of multinational corporations to efficiently combine knowledge from different locations around the world is vital for their survival. Consequently, knowledge and the performance of knowledge management practices need to be formatted to suit and to allow easy usage by all organizational members. This is mainly achieved by transferring knowledge from one unit to another. In particular, market-related knowledge needs to be exchanged frequently, since marketing knowledge deals with information about development requirements as well as the monitoring and evaluation of the host markets. The company thus faces the challenge of finding this information in the appropriate locations and of establishing suitable channels of communication for all the participants involved in the processes (Buckley and Carter 2002).

Defining knowledge transfer in multinational corporations As shown in the previous chapter, knowledge management in a multinational corporation mainly deals with managing knowledge flows between members of the global organization. This process of transferring knowledge is similar to knowledge sharing, but over longer distances. And as knowledge sharing it is a major activity in knowledge management. If knowledge could not be transferred, it could not be managed within an multinational corporation. The transfer process may therefore be regarded as a more conscious process of knowledge sharing. Since knowledge is being transferred over a long distance, the sender needs to consider what exactly to communicate and how to do so. Some authors state, that the concept of knowledge transfer is difficult to capture because there is no clear distinction between the transfer of knowledge and the creation of new knowledge (Bresman et al. 1999). By sending it to another location and knowledge is exposed to different interpretations and integration in a different context. In doing so new knowledge can be created. Knowledge management literature presents numerous definitions of knowledge transfer. Knowledge transfer within multinational corporations refers to the transfer of either expertise (e.g. skills and capabilities) or external market data of strategic value within the organization. The type of knowledge

50

Theoretical foundations of knowledge management

transferred could refer to input processes (e.g. purchasing skills), throughout processes (e.g. product designs, process designs and packaging designs) or output processes (e.g. marketing know-how, distribution expertise) (Gupta and Govindarajan 1991). This process is time and cost consuming, which makes the knowledge even more valuable. Knowledge flows or knowledge transfer within multinational corporations refer to the transfer of either expertise or external market information of global relevance, but not to the transfer of internal administrative information (Gupta and Govindarajan 1991). Knowledge transfer is mostly happening over longer distances. During its attempt to increase competitive advantages, a company can access knowledge resources inside and outside the corporation. An organization can create competitive advantages by the usage of internal or external knowledge (Stock 2000). International transfer of knowledge between units may occur under a hierarchical mode of governance between two units of the same firm; in contrast, it can occur through a pure market transaction between two independent firms (Bresman et al. 1999). The knowledge transfer mechanisms depend on the location and the context of the potential users of knowledge (e.g. the potential market) (Doz et al. 1997) and effective knowledge transfer depends on how easily knowledge can be transported, interpreted and absorbed (Hamel et al. 1989). However, the term knowledge transfer is not only used for knowledge transfer processes within firms, but also for knowledge which is integrated or transferred into the company from outside sources. Welge and Holtbrügge (2000) showed in a survey, where they asked companies that had a foreign headquarter as well as subsidiaries abroad, to name knowledge sources that influence corporate decisions. Their results showed that subsidiaries had the greatest importance, influencing 75.9 per cent of decisions, followed by headquarters with 47.4 per cent. External sources, for example, management consultancies were only responsible for 27.1 per cent of the management decisions (Welge and Holtbrügge 2000). Knowledge transfer can therefore be divided into internal and external knowledge transfer. Gupta and Govindarajan (1993) state that knowledge can be transferred more effectively and efficiently through internal organizational rather than external market mechanism. Internal knowledge transfer takes place among people, groups or communities, departments, company units and subunits. In the case of multinational corporations this also involves transfer beyond national borders (von Krogh und Köhne 1998). The importance of internal knowledge transfer is higher than external knowledge transfer. But as shown before, organizations and their sub-units are increasingly dependent on external sources of knowledge. This is especially the case for marketing knowledge. The availability of marketing knowledge increases the likelihood of success in marketing decisions, like advertising, distribution, product design, product development, marketing strategies, etc. (Bennett and Gabriel 1999). The transfer of external market data into the corporation refers to the transfer of globally relevant information about key customers,

Knowledge management in multinational corporations

51

competitors or suppliers (Gupta and Govindarajan 1991). External knowledge transfer involves knowledge that is received from sources outside the company and so connects the corporation to external partners and their knowledge. These partners can be competitors or partner corporations, universities, R&D organizations or consultants (Leonard-Barton 1995). External knowledge can take place in different ways. The company may search (e.g. market research), borrow (e.g. asking consultants), graft (e.g. acquisition of another organization with already developed market information) and collaborate with other organizations (e.g. in the form of joint ventures). External knowledge transfers are sensitive to several market imperfections, such as recognition problems and disclosure problems (Gupta and Govindarajan 1993). Knowledge transfer can further be divided into voluntary and involuntary knowledge transfer. Voluntary knowledge transfer refers to intentionally transferring knowledge within, from or to the corporation. Involuntary knowledge transfer on the other hand occurs without the consent of the organization. Corporate knowledge as a strategic asset is often difficult to secure and control. Attempts to restrain involuntary knowledge transfer often also inhibit voluntary transfer and attempts to ease voluntary transfer also facilitate the transfer of involuntary knowledge transfer (Winter 1987). In this book the author adheres to the term knowledge transfer only. Knowledge transfer in this context refers to Voluntary, internal transfer of knowledge within a multinational corporation, which is performed by members of the organization with the overall goal to improve or sustain the competitive position of the firm. Knowledge flows within multinational corporations happen in various directions: from the headquarters to the subsidiary, from the subsidiary to the headquarters and between subsidiaries (Figure 4.1). Depending on the direction of knowledge transfer, the content of knowledge transferred differs.

Knowledge transfer from headquarters to subsidiaries Knowledge of corporate goals One major aspect is to communicate organizational culture and expectations of the headquarters concerning the output and work processes in overseas units. Knowledge sent from head offices to corporate subsidiaries includes knowledge on the company vision, mission and corporate goals. This knowledge is especially important, for it is often not easy for employees in the subsidiary to understand the overall intentions of the head office. Corporate goals mostly refer to profit or sales goals in the local subsidiary. In these cases the corporation uses information and data from other markets to develop

52

Theoretical foundations of knowledge management

Figure 4.1 Knowledge transfer within multinational corporations

reasonable sales expectations. Multinational corporations also export the corporate culture of their home country by sending expatriates to and training personnel of their overseas subsidiaries. Product knowledge Product knowledge refers to explanations on how the product is designed, produced, used and maintained. Local employees dealing with customers in the host markets need to be experts on the product and services that the company produces. Product knowledge also includes information on new products and the products which the company intends to produce in the near future. In case the subsidiary is a sales subsidiary this type of knowledge is dominant in internal knowledge transfer processes. Manufacturing knowledge The transfer of production processes is also one of the key transfers within multinational corporations. Many corporations expand internationally because they want to exploit lower factor costs in less developed markets. Setting up production sites has a major impact on the overall competitiveness of a firm. This is made more difficult by the fact that all production knowledge needs to be transferred from the head office to the local manufacturing unit. Training and education of overseas staff plays a major role in the success

Knowledge management in multinational corporations

53

of the market entry. Local hires are trained in production processes and learn about the products, their applications and brands. Process knowledge Process knowledge accompanies product and manufacturing knowledge. Process knowledge refers to knowledge on how to perform certain activities according to corporate standards, such as performing a service or producing a product according to a certain standards. Such standards mainly comprise quality or safety standards. Maintaining the same quality standards worldwide helps the company to stay competitive and to develop a stronger global brand image.

Knowledge transfer from subsidiaries to head offices Adaptation processes to local markets Subsidiaries have to share information and knowledge with their headquarters about the markets they operate in. Headquarters certainly know that foreign markets differ from their home country market. However, the consequences of these differences are not always obvious. Subsidiaries therefore have to access a lot of market knowledge, interpret it and adapt their operations to these market conditions. Successful market entries strongly depend on the local management’s ability to comprehend and organize these adaptations. Product adaptations are another important topic. Expectations of local customers, legal or infrastructural requirements need to be communicated to the headquarters. If a product usually needs to be adapted to a local market, headquarters do not only have to change their profit and cost calculations, but also provide experts, assets and financial support. Managers at a local subsidiary therefore often find themselves explaining or justifying their activities and decisions to the head office. The organization can so develop products which fit the local market and increase the corporation’s competitive advantage. Local market and marketing knowledge Local market knowledge refers to knowledge about markets in which the corporations operate in. Examples of local market knowledge are market data, such as market potential or sales figure and customer information. Local market knowledge can also include knowledge on the particularities of a certain market, such as special import barriers, legal issues of marketing or information on how to adapt the marketing mix to local needs. The generation of market knowledge to be transferred does not simply rely on customer surveys, but on a lot of complementary mechanisms, which can be formal as well as informal (Kohli and Jaworski 1990), for example company

54

Theoretical foundations of knowledge management

statistics or opinions. Marketing knowledge can be gained by collecting primary data or consulting secondary sources. The mechanisms applied include meetings and discussion with consumers and trade partners, analyses of sales reports, analyses of worldwide customer databases and formal market research such as consumer attitude surveys or sales response in test markets (Kohli and Jaworski 1990). This knowledge is integrated into the existing knowledge base of the organization and is transferred to other corporate units that need it. In some cases these new products or processes prove to be extremely successful in the host market and also hold the promise of increasing competitive advantages in the corporation’s home market. Especially in consumer product industries, transferring knowledge on market trends and new product development back home has shown to increase competitive advantages. Consequently, corporations do not need to invent new products, but can rely on existing developments and ideas from subsidiaries. Risk of failure can be lowered, because the organization can refer to existing and already successful ideas. In recent years trend scouting is another aspect which has gained relevance in international business. Consumer trends or changes in attitudes are investigated locally, worldwide. Multinational corporations increasingly urge their subsidiaries to screen and identify local market trends which may be exported other markets the corporation operates in. Subsidiaries have thus acquired a new role. They are not only accepting and integrating knowledge from the head office, but are also becoming a source of knowledge themselves.

Knowledge transfer between subsidiaries Best practices Within a multinational corporation markets are often divided into regions. Within these regions market differences are thought to be lower. Successful market strategies and operations can be reapplied in similar markets, and experiences in one market transferred to another market. These experiences could refer to cross-cultural issues or special strategies in accessing foreign distribution channels or to increasing customer awareness of the products. Because of cultural differences not every product idea or market strategy can be reintroduced to the home market. Not all knowledge that subsidiaries may be able to transfer is really useful for business operations at the head office. But in many cases the transfer of knowledge to a culturally or economically similar market saves cost and time. Knowledge transfer between subsidiaries therefore increasingly influences the competitive advantages of organizations. Some overseas markets are not only very profitable within all the markets accessed by a multinational corporation, they are sometimes also considered a ‘regional champion’. For example, for many multinational corporations, Japan is considered the leading market among all their East Asian markets. Many trends developed in Japan can easily and successfully be copied to other East Asian markets. Quality standards in Japan are much higher than

Knowledge management in multinational corporations

55

in other markets. Many multinational corporations therefore use Japanese standards as an internal benchmark and try to apply them also in their other markets in the region. Table 4.2 provides an overview on the content of knowledge transfer processes within multinational corporations.

Influence factors on knowledge transfer Becerra-Fernandez et al. (2004) suggest that in knowledge management we can decide between a universalistic view and a contingency view of knowledge management. The universalistic view of knowledge management refers to the idea that there is a single best approach in managing knowledge. This single best path to successful knowledge management does not correspond correctly to the variety of knowledge management issues and challenges. It limits individuals’ possibilities to share knowledge and to react to changes or sudden requirement in knowledge management processes. The contingency view implies that solutions in knowledge management always need to be adapted to the specific situation in which they happen. This situation can be influenced by the characteristics of the task, the type of knowledge, the organizations and its environment (Becerra-Fernandez et al. 2004). The contingency view of knowledge stresses the relevance of the environment in which business processes take place. A key to understanding the success and failure of knowledge management within organizations is the identification and assessment of preconditions that are necessary for the effort to flourish (Gold et al. 2001) and the context in which knowledge transfer takes place. Business procedures are always related to the context it is taking place in. Context describes the extent to which actions and utterances are embedded in a given situation and can be considered a very important dimension in knowledge transfer issues (Rosengren 2000). Tiwana (2000) refers to these contexts as a fact, which makes it difficult to copy or multiply knowledge. Attitudes about it, strategies and procedures how to use and share it are very subjective and depend on numerous factors.

Table 4.2 What knowledge is transferred within multinational corporations? Knowledge transfer from head office to subsidiaries Knowledge of corporate goals Product knowledge Process knowledge Manufacturing knowledge Knowledge transfer from subsidiaries to head office Adaptation processes in local markets Local market and marketing knowledge Knowledge transfer between subsidiaries Best practices

56

Theoretical foundations of knowledge management

Context has to be considered on the side of the sender as well as on the side of the receiver. It is part of the shared knowledge of individuals that helps to interpret meanings if the conventional sequences in which things happen are known. On the other hand it is part of the ability to create meanings, to be able to manipulate the sequences of events to achieve the greatest effectiveness (Scollon and Wong-Scollon 1995). Knowledge management activities, such as the transfer of knowledge within the firm, are therefore far from trivial (Kogut and Zander 1993), because in general knowledge as an asset being generated from different sources is associated with different degrees of ease of transfer. This transfer is a process that can be easily hindered by different organizational means and conditions (Foss and Pedersen 2002). The degree of difficulty of knowledge transfer clearly depends on the situation characteristics of the knowledge transfer process (Szulanski 1994). Organizations may not be equally predisposed for successful launch and maintenance of knowledge management initiatives. The transfer of knowledge therefore always takes place in a surrounding that can also share several dimensions of context at the same time, where these dimensions are responsible for the success or failure of the knowledge transfer process. The primary matter when attempting to transfer knowledge is its transformation or representation in some manageable form. This is contingent not only to the nature of knowledge, but also to understanding how that transformation is dependent on the settings of the people or organizations involved (Doz and Santos 1997). Knowledge transfers within multinational corporations are influenced by a number of factors, such as the type of knowledge sent, corporate structure, size and relevance of the subsidiary.

Transferability of knowledge The nature of knowledge is the major factor which influences its manageability. Successful implementation of knowledge can be influenced by the kind of knowledge transferred and by the ambiguity of the knowledge. As said before, this book regards all knowledge consisting of both tacit and explicit dimensions. These different types of knowledge may impinge on the success of the knowledge transfer process, because they need to be transferred in the most efficient way to be received at the end of the process and implemented accordingly. Tacit knowledge is highly valuable for the organization, but difficult to access, because it is held deeply down within the individual that it is hard to express, write down (Birkinshaw 2001) or codify it in another way to be transferred to other individuals or organizational units. Articulating tacit knowledge successfully, however, the organization can increase its value. It can so be shared and reused. But transferring it is a challenging task, because its value is strongly connected to the knowledge holder. To transfer tacit knowledge an individual has to codify into forms, which allows another individuals to successfully implement it in other circumstances. The ability to transform tacit capabilities into a comprehensible code understood by a large number of people derives

Knowledge management in multinational corporations

57

from the collective experiences of members of a firm organized by persisting rules of coordination and cooperation (Zander and Kogut 1995). But not all tacit knowledge can be articulated in an efficient way. Learning or reading about company procedures in a overseas subsidiary for example is a very efficient way to give employees impressions of modern intercultural workplaces and what challenges they may face when working overseas. Working in a Japanese or Chinese overseas unit on the other hand is a different story. Work attitudes, procedures and ideas in overseas differ and can be experienced first hand. Mistakes need to be made and new solutions to be find to create tacit knowledge on how to success in such a different environment. Tacit knowledge is therefore strongly connected to real-life experiences and problem solutions. But making these experiences also takes time. Tacit knowledge therefore has a very important time dimension. It needs time to build up over a certain time span and to deepen. Since tacit knowledge is highly related to experience and the time span in which it is created, its transferability is limited. Transferring recipients need time and possibility to gain experience and to reflect on them. Recommended instruments of transferring tacit knowledge are social interaction between company members, storytelling, traditions, routines and learning-by-doing (von Krogh 1998). Increasing or creating tacit knowledge is supported by allowing employees to get first-hand experiences and experiment with ideas and assumptions. If ways can be found for transferring that knowledge to others in the firm, either by personal interaction or by recording it explicitly, then tacit knowledge becomes an asset of the firm, and a key source of advantage (Birkinshaw 2001). Explicit knowledge, on the other hand, is knowledge which can be easily articulated. Its nature allows us to put it into data, words or signs, which can be moved around, reinterpreted and reused. Explicit knowledge can be codified in a database, handbooks, etc. It can be easily formulated by the means of symbols and can be digitalized. Explicit knowledge can therefore more easily be transferred and moved from one place to another. There are various means to do so such as information technology (Johannessen et al. 2001). Another aspect is the ambiguity of knowledge. Ambiguity is, according to the theory of uncertain imitability, a fundamental factor which hinders the precise replication of results (Lippman and Rumelt 1982). Ambiguity of knowledge is defined by resistance to clear communication, embeddedness in context and idiosyncrasy (Simonin 1999), and obscures how the features of the new context affect the results of the replication effort and successful implementation at the receiver’s unit (Szulanski 1994). Kogut and Zander (1996) pointed out that the ambiguity of knowledge needs to be considered as an influential factor in knowledge transfer.

Organizational aspects Most of the empirical research on the topic of knowledge transfer focuses on the characteristics of knowledge and the characteristics of senders and

58

Theoretical foundations of knowledge management

receivers of knowledge than on the organizational means of transferring knowledge (Foss and Pedersen 2002). Despite this, organizational aspects have a major impact on knowledge management outcomes. The characteristics of the organization either inhibit or facilitate utilization of corporate knowledge (Beyer and Trice 1982). Deshpande and Zaltman (1982) showed that organizational factors are among the most important to influence the use of market research information within an organization. The most important aspects of organizational influences on marketing knowledge transfer are corporate culture and organizational structure. Corporate or organizational culture refers to the values and views that are rooted in a company, and how they influence attitudes and behaviour there. Many of these attitudes are taken for granted, and people are hardly aware of them. But they can also represent more conscious views and values. Manifestations of these values and views can be the design of the workplace, personnel policy, advertising campaigns, organizational structure, product design, logo, jargon and so on (Schein 1985, Wikström and Normann 1994). Organizational culture consists of shared behaviours. Members of the organizations are only partly involved in it and are gradually, after entering the organization, socialized into the organizational culture of the corporation (Thomas 2002). Organizational culture is different to national culture. Individuals are only partly involved in their organizations, but they are extremely involved in their national culture. Membership in an organization can be regarded as conditional and relies on the relationship between the individual and the firm. Membership in a national culture, on the other hand, is unconditional and cannot be exchanged (Thomas 2002). In any event, culture is the base of any kind of human activity and the methods of knowledge transfer are always related to the culture of an organization. But in comparison to national culture corporate culture differs according to organization. After entering an organization employees adapt their knowledge management operations to the rules and norms of a certain corporate culture. Knowledge transfer is closely connected with the readiness of an organization’s employees to share and distribute knowledge. This is why all members need to be encouraged and motivated to create, transfer and apply corporate knowledge (Davenport and Prusak 1998). Accordingly, organizations can support knowledge management activities by creating environments in which intellectual assets do not only play an important role but also easily and freely shared, because a knowledge oriented corporate culture is one of the most influential factors of successful knowledge transfer (Davenport and Prusak 1998). An organizational context which supports knowledge management allows employees to create a ‘context for people who interpret their shared purpose and work effectively with the knowledge resources of the organizations’ (McKenzie and Van Winkelen 2004, p. 254). Employees are eager to gain more knowledge. Their activities to gain knowledge are supported by the management. Barriers of knowledge management are missing. Employees are trustful in sharing knowledge; they do not expect disadvantages for their own job in doing so (Davenport and Prusak 1998).

Knowledge management in multinational corporations

59

The degree of control which is executed by the headquarters also plays an important role when managing knowledge within a multinational corporation. Traditionally, headquarters tried to have tight control mechanism supervising their overseas subsidiaries. Markets which are geographically distant were perceived as very exotic and this attitude increased head offices’ inclination to control the local subsidiaries. Companies with an ethnocentric attitude tend not only to control their subsidiaries more, but also send more information and knowledge to them. In doing so the head office tries to influence local business processes and introduce the top management vision to all member of the organization. The size of the subsidiary is another factor which may influence knowledge transfer. Modern multinational corporations may have hundreds of thousands of employees. This fact does not ease knowledge transfer. Communicating with a subsidiary with 100 employees is therefore a much easier task than communicating with a subsidiary that has more than 1,000 employees. Organizational structure is the basis for organizational action and may be a result of central management dictate or have evolved over time. To carry out processes effectively, firms require some degree of structural organization (Buckley and Carter 2002). Structural elements of organizations are intended to rationalize individual functions or units within an organization (Gold et al. 2001). Structure provides the frame in which employees within an organization act and perform their duties. Structures are represented by hierarchies. They provide a guideline on how the corporation is organized, and also provide clear avenues of communication structure within the organization. Structures can formally indicate and facilitate connections and communications between individuals, both within and across these boundaries, although connections may also arise spontaneously and informally. Structures may also place limits on communications or create intentional or unintentional obstacles (Buckley and Carter 2002). This is especially the case in Western organizations. Here hierarchy and organizational structures do not only indicate relationships between members of the organization, they strongly control communication and consequently knowledge flows. Hierarchical structure in an organization has an impact on how employees are communicating to and consequently with whom they are sharing knowledge (Becerra-Fernandez et al. 2004) and has influence on the collaboration and sharing of knowledge within organizations (O’Dell and Grayson 1998) as well as on inhibiting these activities (Gold et al. 2001). Lam (2000) argues that there is an interactive relationship between dominant knowledge types and organizational forms. The knowledge of the firm is socially embedded. It is rooted in a firm’s coordination mechanisms and organizational routines, which, in turn, are heavily influenced by societal institutions. However, the importance of knowledge types within organizations can differ. Organizations may be dominated by explicit or tacit knowledge. Organizations characterized by an explicit knowledge base tend to have formal structures of control and coordination, and exhibit highly standardized tasks

60

Theoretical foundations of knowledge management

and work roles. In contrast, organizations with tacit knowledge will exhibit a decentralized structure and use informal coordination mechanisms (Lam 2000). When an organization is rigidly structured, utilization of research is lowered and any use is more likely to be symbolic (Menon and Varadarajan 1992). Individualistic behaviour, in which locations, divisions and functions are rewarded for keeping information to themselves, is thus promoted (Gold et al. 2001). Structures like this are always likely to inhibit innovativeness and the creation of new knowledge. A formalistic atmosphere is promoted in which it is more important to follow the book than to solve problems in a more individualistic way. Employees in this organization become cautious and frightened always trying to avoid mistakes and penalties. Like this, nothing new can be attempted and nothing new can happen (Wikström and Normann 1994). Many companies attempt to flatten their hierarchies in order to eliminate organizational layers and to placing more responsibility with individuals or increasing the size of the group in which individuals share knowledge (BecerraFernandez et al. 2004). A decentralized organizational structure on the other hand has been found to create an environment to encourage managers to use more research (Deshpande and Zaltman 1982). The creation of new knowledge always implies uncertainty and risk-taking (Wikström and Normann 1994). A decentralized organization tries not to reduce this uncertainty too much and therefore motivates the creation and transfer of knowledge tremendously. Drawing on Mintzberg’s (1979) classic typology of organizational forms and the work of Aoki (1986) and Nonaka and Takeuchi (1995), Lam (2000) distinguishes between four organizational forms: professional bureaucracy, machine bureaucracy, operating adhocracy and J-form organization. In machine bureaucracy the key organizing principles are specialization, standardization and control. This is an organizational form designed to achieve efficiency and stability. The organization relies heavily on management information systems. In contrast, operating adhocracy is a highly organic form of organization with little standardization of knowledge or work processes. It relies not only on the formal knowledge of its members, but draws its capability from the diverse know-how and practical problem-solving skills embodied in individual experts. Coordination in the operating adhocracy is achieved via direct interaction and mutual adjustment among the individual experts operating in market-based project teams. Professional bureaucracy derives its capability from highly trained individual experts. Coordination is achieved primarily by the standardization of knowledge and skills through the individual’s formal education and training. The formal knowledge constitutes an important basis of internal work rules, job boundaries and status. Although the professional bureaucracy accords a high degree of autonomy to individual professionals, its structure is primarily bureaucratic. The individual professionals are the key knowledge agents of professional bureaucracy. They are authorized experts (Lam 2000). The J-form type of company is modelled on the ‘Japanese Type’ of organizations Nonaka and Takeuchi (1995) describe as ‘knowledge creating

Knowledge management in multinational corporations

61

companies’. It combines the stability and efficiency of a bureaucracy with the flexibility and team dynamics of an adhocracy. The organizational structure of an organization naturally impinges on the way knowledge is transferred. Machine bureaucracy transfers knowledge by codifying it in most abstract forms using information systems. Operating adhocracy codifies knowledge in people and direct interaction. Professional bureaucracy also uses codification forms that are less abstract. J-form as an organization is adaptive and innovative. It transfers knowledge through ‘learning-by-doing’ and interaction (Lam 2000). Another important aspect influencing knowledge management and transfer is organizational routines. Organizations and their members have different choices of operational modes of knowledge transfer, depending on the various conditions and factors of competition and cooperation (Choi and Lee 1997). Almost every organization has an official organizational chart which indicates communication structures. But it is often the case that unofficial lines of communication also exist within an organization (Scollon and Wong-Scollon 1995). Institutionalization can often transform these informal relationships and procedures into habits, routines and rituals (Choi and Lee 1997). The more frequently a company carries out its knowledge management processes, the more routine it has in doing so. This is also the same for individuals within an organization. The process of knowledge integration at the recipient’s unit becomes more efficient (Gold et al. 2001). Experience and routines in handling the knowledge in question increase the level of familiarity with the information content and context, and consequently favour the transferability of knowledge (Simonin 1999). Therefore, firms rely on routinized behaviours because they are efficient ways of doing things given what they already know how to do. New skills are more quickly learned the more the share elements with already acquired knowledge. Routines are the base for organizational reliability and performance; therefore, organizations are likely to behave in future according to routines they applied in the past (Nelson and Winter 1982; Hannan and Freeman 1989). But the more variable the knowledge management processes, the more a company has to handle exceptions and the less efficient the integration of transferred knowledge at the recipient’s unit (Gold et al. 2001). Positive experience eases current and future knowledge transfers and encourages individuals to transfer even more corporate knowledge. Positive experience in transferring knowledge might even increase motivation openness and motivation for future transfers and improve the ability of company members to deal with efficient knowledge transfer (von Krogh and Köhne 1998). However, experience and routines may also influence the way knowledge is negatively codified in intra-organizational knowledge transfer. They can hinder employees from using new or innovative strategies in transferring knowledge. If tasks are usually fulfilled in a certain way, the sender is also very likely to apply the ‘usual’ methods without considering any methods that might be more efficiently used. Experience might therefore cause an organization to

62

Theoretical foundations of knowledge management

have a false sense of security with its current routines and inhibit experiments with new and superior practices (Sinkula 1994). These routines can also inhibit the successful implementation of knowledge at the receiver’s unit. Other aspects which may influence knowledge flows within multinational corporations are the relevance of the market in which the subsidiary is located, its profitability and size. A major reason to internationalize are lower cost factors and access to cheap labour in less developed markets. Consequently, many subsidiaries are production sites under the guidance of the headquarters or home country managers. Knowledge transfer is mostly related to technological issues, such as production reports or constructions plans. Sales subsidiaries on the other side receive knowledge on products, company visions, brand management and the head office expectations for the local market. This knowledge is more strategic than knowledge sent to local production units.

Individual aspects when transferring knowledge The theory of human capital asserts that people possess skills, experience and knowledge that have economic value to firms, because knowledge within the company originates from personal intuition, networking and chance encounters (Graham and Pizzo 1996). Bowman and Ambrosini (2000) found differences between managers in their actions and routines. The way knowledge is transferred is therefore strongly dependent on the individual. The ability to share knowledge is influenced by the social behaviour and the ability of the individual to communicate (Probst et al. 1998). Furthermore situation-specific cognitive, motivational and emotional judgements of tasks and contexts have significant influence on the transfer of knowledge. Personal intentions are a major barrier of successful knowledge transfer. People may not want to share for numerous reasons. These reasons can be strategic: thinking of knowledge as a tool to increase one’s power within the corporation such as the fear of power or authority loss and territorial thinking. But they can be more personal, such as the fear – as in my case described above – of losing one’s job. Sometimes transferring knowledge is a tiring and time-consuming task, and might not be perceived as rewarding or there is little interest in taking the effort of transferring. When working in multinational corporations I have observed that the knowledge source also plays a major role. A knowledge receiver may not sympathize with the sender and therefore finds it difficult to accept knowledge. Another factor which has been neglected in knowledge management research so far is individual abilities and skills. They may not be able to distinguish relevant knowledge from irrelevant or which is another aspect needing more consideration, they may not have the communication skills to share it with others. Even if knowledge workers intend to share and apply knowledge, they may not own the intellectual skills to do so. They may misunderstand or misinterpret knowledge. They may integrate and apply it in an inefficient or even dangerous manner.

Knowledge management in multinational corporations

63

Often employees do not have adequate training to manage knowledge proficiently. Knowledge workers are usually trained in using databases or other media to share knowledge. In cases where the training is not successful, knowledge managers may not be able to share and manage knowledge according to their organization’s wishes. Individual power positions within a corporation can have a major impact on the knowledge transfer processes. If power is a means of strengthening the standing of an individual within a corporation, knowledge becomes a powerful tool. Knowledge transfer might be hindered to avoid sharing knowledge with other members of the corporation and keeping the individual’s own position (von Krogh and Köhne 1998). Since knowledge transfer is always induced by individuals, these individuals always have personal aims to transfer knowledge. These aims are not necessarily in line with organizational goals and strategy. Effective transfer of knowledge can also cause power structures to shift both in the providing as well as in the receiving units (Kriwet 1997). This can create fear of endangering the positions within the organization by sharing knowledge and consequently hindering or inhibiting successful knowledge transfer (Probst et al. 1998). Culture is another person-related factor when managing knowledge. Here differences in cultural background influence the way knowledge is being sent and received by knowledge workers. The people responsible for encoding (sending) and decoding (receiving) must have similar backgrounds or operate in a similar environment, otherwise misunderstandings will arise because the implicit assumptions of the sender differs from those of the receiver (Buckley and Casson 1976). Cultural differences may therefore influence knowledge management activities. In the next chapters of this book, their influences on knowledge transfer processes will be discussed in greater detail. Table 4.3 gives an overview of the factors influencing knowledge transfer within multinational corporations.

Table 4.3 Contextual influences on knowledge transfer processes Environments of knowledge management Transferability of knowledge Organizational aspects

Individual aspects

Tacitness of knowledge Explicitness of knowledge Ambiguity of knowledge Corporate culture Corporate structure Organizational routines Size of corporation Strategic position of local market Personal strategies and preferences Skills and abilities Power position National culture of sender or receiver

64

Theoretical foundations of knowledge management

Summary In this chapter I have given an overview on knowledge management within multinational corporations. As companies internationalize, they are confronted with numerous decision in new and complex environments. Their risk of making wrong or inefficient decisions grows. To decrease this risk, knowledge is needed in all stages of the market entry process. In a first step, after the decision to internationalize has been taken, the most profitable market must be chosen. Here the company is performing SWOT analysis to gain information about the economic, political, legal and cultural conditions of markets. Comparisons with the home market and an analysis of local rivals are vital during this stage. Once the market is chosen, knowledge is needed on import barriers of the market, legal issues of several market entry strategies and cost evaluation of several market entry strategies. Next the corporation decides on a market entry process and searches for information on local support, such as legal services, accountants, subventions of the host country governments as well as best practices on market entry processes. But also once the corporation has entered the market, knowledge helps to improve its performance. To increase sales in local market products, corporate communication must be adapted. This is supported by local market information, for example customer information, an analysis of local rivals. To develop long-term goals for the local market, more market information is needed. The biggest challenge is transferring knowledge within an organization. Knowledge cannot be moved around as easily as other objects, partly because it is often tacit and can therefore not easily be communicated, partly because sharing knowledge effectively also requires both individuals to share a similar context. Only if the knowledge receiver understands and appreciates its relevance can knowledge be reused in an appropriate way. Sharing knowledge becomes the biggest challenge for a modern knowledge-based organization. However, knowledge is not usually transferred from headquarters to subsidiaries any more. Global markets become more competitive and need to survive on gathering knowledge from sources all over the globe. Subsidiaries therefore gain a new role in providing information about new markets and products. Knowledge transfer processes within multinational corporations refer to knowledge being transferred from either the headquarters to subsidiaries overseas or from subsidiaries to the headquarters. Another possibility is the knowledge exchange between subsidiaries within the organization. The content of knowledge transferred differs according to which organizational unit is exchanging it. The establishment of a subsidiary in a foreign market strongly depends on the corporation’s ability to access and interpret information on these markets. Many management decisions on how to perform in these new markets, however, are taken in head offices and not in the local subsidiaries. Particularly during the early stages of market entry, headquarters attempt to control the expansion processes in a host market very strongly and supervise market

Knowledge management in multinational corporations

65

research activities, because the success of market entry often depends on how objectively market opportunities can be recognized. Once the corporation has gained some experience in the new market and developed more confidence in dealing with its customers and their particularities, more and more decisions are made in local units. This also impinges on knowledge transfer within corporations. As market know-how develops in local subsidiaries their managers need more freedom to react to market requirements. Local market knowledge then gains more importance, not only for the management of the subsidiary, but also for the rest of the organization. Knowledge which is transferred from headquarters to subsidiaries mostly includes process and manufacturing knowledge, knowledge on products and corporate mission and goals. The transfer of knowledge from its headquarters was until recently considered to be the most important knowledge flow within multinational corporations. As the pressure of reacting to global market changes increases the role of subsidiaries as knowledge providers does too. When communicating knowledge back to headquarters, subsidiaries focus on local market knowledge and adaptation processes. The complexity and ambiguity of knowledge as a managerial asset provide challenges for organizations. Knowledge management and transfer do in any case not happen in a vacuum, but in a certain environment or context. These contexts are influencing the knowledge management processes and their effectiveness. One influential context is the nature of knowledge itself. Explicit knowledge can be shared and managed more easily, whereas tacit or personal knowledge cannot be communicated like this. Knowledge may further be ambiguous and thus difficult to transfer. Other factors reflecting on the success of knowledge management activities are organizational structure and organizational culture. Both are the basis for organizational routines that also include knowledge management operations. The final aspect influencing knowledge management processes is knowledge workers themselves. As individuals they strongly influence the success of these management processes. Personal strategies impinge on how and if knowledge is being managed. Knowledge workers’ personal intentions, whether they are career oriented or personal, may develop into barriers. Individuals may also not be able to manage knowledge because they lack the intellectual skills to understand it correctly or to interpret and apply it in the intended manner. Another individual factor is the power position of a knowledge worker within the corporation. Hierarchical positions generally limit or ease communication processes and this is also the case for knowledge management and transfer processes.

5

Knowledge transfer across cultures

The major intention of this book is to investigate how cultural differences within multinational corporations influence their internal knowledge transfer processes. This chapter discusses culture, it relevance in management and how it impinges on knowledge transfer.

What is culture? Within multinational corporations culture and cultural difference strongly impinge on the transfer of knowledge. The word culture offers a mere sum of definitions in scientific literature. Culture can be defined as ‘the form of things people have in their mind’ and their model for perceiving, integrating and interpreting new ideas (Sackmann 1991). Hofstede (1984) defines culture as ‘the collective programming of the mind which distinguishes members of one human group from another’ (Hofstede 1984). Kluckhohn (1951) defines culture as follows: Culture consists in patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by the symbols, constituting the distinctive achievements of human groups, including their embodiments in artefacts; the essential core of culture consists of traditional (i.e. historically derived and selected) ideas and especially their attached values. (Kluckhohn 1951) The word culture is usually reserved for societies and nations or for ethnic or regional groups. Talking about culture, ‘we want to talk about large groups of people and what they have in common, from their history and worldview to their language or languages or geographical location’ (Scollon and WongScollon 1995). There is some meaning to such constructs as ‘the Chinese’, ‘the Japanese’, etc., that is recognized by most, if not all, members of these groups. This common meaning often emphasizes what members of these groups have in common and at the same time ‘play down possible differences among members’ (Scollon and Wong-Scollon 1995). Culture is not just there; culture is lived by human beings. They think up something and create adequate social situations. Culture defines the way

Knowledge transfer across cultures

67

human beings live together and how they communicate with other (Osiander 1999). As such, culture is an important force, determining managerial attitudes and practices. Adler (1986) refers to culture as the base of value, attitudes and behaviour of human beings. Values refer to are general beliefs within a certain cultures and help us define what is right or wrong. Attitudes articulate culture and lead people to act in a certain way. They further define the relationship between individuals and their surroundings. Behaviour is based on values and attitudes and can be describes as human activities (Adler 1986). Culture is the foundation of all our actions. These actions include thinking processes, decision-making and solving problems. Naturally, culture also shapes our professional activities. It influences the practices of management and can be considered an essential tool for understanding the process of doing business (Williams et al. 1998). In the context of this book, culture is considered the foundation of people’s and companies’ actions. Culture itself has also been a topic of research in various disciplines. Traditionally, cultural differences have been the focus of anthropologists and ethnologists. Their approach towards researching cultures is a descriptive one. Cultures have to investigated and understood. To do so, qualitative approaches are dominant in cultural studies. Researchers assume that cultures differ and focus on the questions on how they differ. Management researchers have a different approach. Their idea of understanding cultures is based on simple classifications of cultures and their differences. Accordingly, there have been several attempts to cluster national cultures. Researchers have tried to employ common national cultural patterns to classify cultures to ascertain how they influence organizational practices. In this book the definitions proposed by Edward T. Hall that differentiate Asian and European cultures by the way of communicating are used. Since Hall’s concept is mainly based on communication differences between cultures, it is considered the most appropriate for this research endeavour.

Communicating across cultures Communication is the activity which is mostly influenced by national culture. In fact, culture cannot be separated from communication. Both terms are strongly connected to each other. On the one hand, communication is the main transmitter of culture; on the other hand, communication is the human activity most strongly influenced by culture. Hall (1981) even refer to communication as being the content of culture: ‘Culture is a technical term used by anthropologists to refer to a system for creating, sending, storing and processing information developed by human beings, which differentiates them from other life forms’. Communication supports human beings to communicate culture-related issues, such as values and attitudes, and can also teach operations and behaviours. Communications are ‘events or interactions which take place between individual human beings or human beings in groups, as together they build

68

Theoretical foundations of knowledge management

identities, societies, cultures or institutions for their continued existence and growth in a common socio/cultural environment’ (Casrnir 1999) and is therefore the main transmitter of culture. The communication of culture and its characteristics takes place in the form of socialization processes in little groups, usually within the family (Kroeber-Riel 1992). Apart from being a transmitter of culture, communication can also be a very distinctive feature of a culture. Culture defines the way individuals communicate and what they communicate. Culture can improve or inhibit communication processes and decide who we are talking to. But also the content communicated is culture related (Salzberger 1999). Expressions and directness of communication may differ. Especially when talking about cross-cultural communication between European and Asian company units, scientific literature points out the communication styles very clearly. The two continents differ greatly in their way of communication. A bipolar dichotomy of high-context and low-context cultures (Asian and European) is shown in Table 5.1. In Western cultures the main focus when communicating lies on the message transmitted, in Asian cultures the focus lies on the relationship between the people communicating. The function of communication is to improve or deepen a relationship. When communicating the relationship between both communicators is further influencing the way they communicate, for example which words they choose and how politely they speak to each other. The content of the message comes second and is very implicit. In Asia the relationships between people communicating are asymmetric and vertical. This means the rank in the hierarchy as well as the age of the person talking strongly influences the style of communication. This is not the case in Western cultures, where the relationships are symmetric and the differences in rank or hierarchy between partners does not influence the style of communication strongly. Accordingly, the degree of directness in the West is very high. Issues are addressed directly and without fear of embarrassing the receiver of messages. In contrast, in Asia indirect and complicated forms of communication Table 5.1 European and Asian communication patterns

Main focus Function Form of relationship Degree of directness Focuses on

Northwest Europe, North America

East and Southeast Asia

Message

Relationship

Communication instrument Symmetric

Development and maintenance of relationships Asymmetric, complementary

Direct

Indirect

Sender

Receiver

Source: Axel and Prümper (1997).

Knowledge transfer across cultures

69

dominate. In a Western country the sender is also formulating his or her message as exact and sufficient as possible. The sender is the main actor in the communication process. In the Asian communication process the context in which communication takes place has a prominent role and the focus lies on the receiver of messages (Axel and Prümper 1997). Western communicators are considered to be low context: a message communicated is not surrounded by context. In Asia, however, the message itself does not communicate the whole message. The context and the way in which the message is communicated are as important or in some cases even more important than the message itself. The differences in communication patterns in Asian and European cultures also show consequences when individuals of both cultures communicate with each other. Successful communication is based on sharing the assumptions individuals make about what others mean. Shared assumptions and expectations are strongly related to the personality of the individuals exchanging knowledge, but also to their context. This context is usually the surroundings in which participants perform, such as social or educational surroundings. One of the most influential contexts and influential factors is national culture. If the contexts of both parties differ the communication process can be interrupted. When people are communicating with people who are very different from them, it is very difficult to know how to draw conclusions about what they mean, and so it is impossible to depend on shared knowledge and backgrounds for confidence in interpretations (Scollon and Wong-Scollon 1995). When members of two different cultures communicate we speak of crosscultural communication. Participants in a cross-cultural communication process do not share a common context, which prevents them from interpreting the content of communication in a similar way. Misunderstandings and miscommunication can occur. Cross-cultural communication is significantly more demanding than communication within a single cultural context, because people living and operating in a culturally different background have less common information since they do not share the same context. Culture provides a very powerful context, not only in business communication, but also in our everyday lives. Different cultural backgrounds lead to communication problems. But this not only happens when two individuals speak to each other but also when knowledge or information is communicated between two corporate units. The greater the diversity between them, the more difficulties management will encounter in attempting to communicate among these units. If the cultural framework of individuals communicating with each other does not have sufficient commonality, the communication may be less effective than when the cultural foundation is consistent (Griffith and Harvey 2001). However, the term cross-cultural communication is a bit misleading. There is a tendency to use a construct of culture that does not apply correctly. ‘From an interactional sociolinguistic perspective, discourse is communication between individuals. Cultures however, are large, super ordinate categories, they are not individuals. Cultures do not talk to each other; individuals do. In

70

Theoretical foundations of knowledge management

that sense, all communication is interpersonal communication and can never be intercultural communication. “Chinese culture” cannot talk to “Japanese culture” except through the discourse of individual Chinese and Japanese people’ (Scollon and Wong-Scollon 1995). In fact, cross-cultural communication happens between individuals. Basically, cross-cultural communication is the same as the usual communication process, but influenced by the two cultural fields that the communicators are placed in. The cultural field refers to the culturally based elements of a person’s background. These elements may be the education, values or attitudes of the person sending or receiving knowledge and they influence the communication process. As in the basic communication model the cross-cultural communication process involves the sender of the message, the message channel and the receiver of the message. Many cross-cultural business processes suffer from the fact that there are always gaps in understanding. Even simple activities like writing letters, greetings somebody, etc., can be culturally completely different. These gaps maybe gaps in understanding the counterpart’s language correctly, reading his or her body language or understanding hidden meanings. All members involved in cross-cultural activities therefore mostly manage differences in understanding. This is very difficult if one does not have high intercultural skills and often leads to stressful situations or a culture shock. Once individuals have acquired more expertise in communicating with members of other cultures these communication and understanding gaps narrow.

Transferring knowledge across cultures The cultural background is another point we need to discuss when talking about knowledge management within multinational corporations. Adler (1986) refers to culture as the base of management activities. Culture also shapes the idea of what knowledge and knowledge management is about and which knowledge is worth managing. Culture also influences who is managing knowledge and in which way, and defines how knowledge is used in specific situations. Generally, we can assume that culture shapes all knowledge management operations in an organization (De Long and Fahey 2000). We can further conclude that culture also impinges on the success of knowledge transfer processes. However, knowledge management literature gives the impression that knowledge management operates in a kind of unitary vacuum, in which diversity in terms of language, cultural and ethical background, gender and professional affiliation are compressed into one giant independent variable, which is in any case pushed to the side. This approach may be convenient for conceptualizing, but is very limited for practical purposes in the modern international business world with its complex forms of cross-cultural learning, interactive networking, and knowledge acquisition and sharing (Holden 2002). Thomas (2002) calls the cultural background of the sender and receiver a cultural field. In a cross-cultural communication process both participants are acting within their cultural field. As in every communication process, the

Knowledge transfer across cultures

71

message is encoded by the sender and sent via the channel to the receiver, who decodes the message. The effectiveness of the communication depends on the lack distortion, which can occur at all the stages of the communication process. But the two cultural fields involved are very likely a source of great distortion, because individuals with differing cultural backgrounds prefer different communication styles (Thomas 2002). Both the sender and the receiver of a message are acting within their own cultural context, codify and interpret them accordingly. Since the contexts differ, this may lead to miscommunication, or in the organizational context to unsuccessful knowledge transfer. Figure 5.1 shows the cross-cultural communication process. The cross-cultural knowledge transfer processes within multinational corporations differs slightly from the cross-cultural communication process. At first the sender is accumulating knowledge from sources inside his organization and chooses which knowledge and what type to transfer, just as at the intention stage in the communication process. After this the message is encoded according to cultural context and sent indirectly (e.g. email, phone, etc.) over a given physical and cultural distance. The receiver on the other end receives the message, decodes it according to his cultural context and formulates a reaction (gives feedback). Then knowledge is potentially filtered and passed on again to other individuals in the organization. Moreover, the model illustrates that the cultural context is dependent on the agents home and host culture at the same time, and the overall cultural setting is, in turn, subject to the interaction (acculturation and deculturation) between the two (Bargstädt 2007). The main aspect is that the cultural fields do not overlap. The sender and the receiver both stay in their cultural fields while participating in the process. At the same time the sender and the receiver are also separated by a geographical distance. This geographical distance increases communication problems. Knowledge managers are required to adapt to the specific requirements of the knowledge transferring context to increase its success. The definition of cross-cultural knowledge transfer which I will use in this book is: Voluntary, internal transfer of knowledge within a multinational corporations, which is performed by members of the organizations which are located in geographical diverse company units and (in many cases) have different cultural backgrounds and language skills with the overall goal to improve and sustain the competitive position of the firm. In a well-known environment this may be an easy task to undertake, whereas adapting the transfer processes to the requirements of an unknown foreign subsidiary and the receivers in it may be more difficult. Geographical distance and the fact that participants in the cross-cultural knowledge transfer process often never meet each other lead to gaps in the process. In an intercultural knowledge transfer process, things get even more complicated because it is often not possible to communicate directly with one counterpart. Differences are

72

Theoretical foundations of knowledge management

Figure 5.1 Cross-cultural communication process Source: Haghirian (2009)

getting more obvious, when misunderstanding occur during the process. Participants cannot see each other’s reactions and therefore cannot adapt their communication to ease the transfer process. Since reactions cannot be seen, crosscultural knowledge transfer activities cannot be adapted. The individual is mostly tempted to perform his or her knowledge transfer processes in his or her culturally acceptable way. We can therefore hardly speak of a contingency approach,

Knowledge transfer across cultures

73

but only of a universalistic view. Even if cross-cultural knowledge transfer processes are more complex than transfer processes within one department of a corporation, a contingency view approach is barely taken into account.

Summary Culture is a patterned way of thinking or a collective programming of the mind which distinguishes members of one human group from another (Hofstede 1984). Management scientists have, in contrast to anthropologists and other social scientists, a tendency to classify cultures and compare different cultural groups with each other. Hall and Hall mainly distinguish cultures by their context orientation and their communication styles. Germans and Japanese are the most extreme on their scale. The Japanese are considered high-context individuals: messages they send are surrounded by a certain context and can only be fully understood if the receiver of the message also understands the context the same way. Germans on the other hand are low-context individuals. A message focuses on the words and content and has no invisible context surrounding it. Culture not only influences our values and beliefs, it is also the base of our actions. This is also the case of managerial actions and of course knowledge management activities. Here culture plays an important role. The way and how knowledge is communicated is based on a cultural routine that seems normal and obvious for the sender or transmitter of knowledge. If the receiver, however, is not from the same cultural background his or her understanding of the message may differ. This can lead to misunderstandings and cross-cultural conflict. Knowledge transfer within a multinational corporation is related to crosscultural communication processes. As in a cross-cultural communication processes, two individuals with differing cultural background and communication styles exchange messages or in the case of cross-cultural knowledge transfer share knowledge and information. Both communicators are surrounded by numerous culture-related variables which may influence their knowledge choice, knowledge codification instruments and acceptance of new knowledge. Different communication styles can lead to misunderstanding and interrupt communication processes. On top of this, participants in the knowledge communication process often do not share a similar cultural background and communication style. Accordingly, the process may be easily interrupted by the different perceptions of the communicators. The intercultural knowledge transfer process however faces the same challenges, but is even more complicated because both individuals are mostly located in different cultures. This limits the ability to interact directly and react to misunderstandings or misinterpretations. Cross-cultural knowledge transfer is therefore a very challenging task and can be easily interrupted or disturbed. Within in a multinational corporation additional factors, such as geographical distance between knowledge managers and linguistic misunderstanding, can impede the success of international knowledge transfer even further.

Part II

Research questions and results

6

The research project

Cross-cultural management research In this book I compare the ways knowledge is transferred between members of a high-context culture (Japan) and members of a low-context culture (German). A cross-cultural comparative study tries to find both the similarities and the differences that exist across cultures regarding a particular management issue (Thomas 2002). Conducting cross-cultural management research, the researcher has to be as objective as possible. It is important not to present one cultural perspective as dominant (Adler 1983). Before starting the investigation, the researcher needs to choose relevant theories, concepts and constructs and decides on how data about the phenomenon under investigation are to be collected. A detailed process for the collection of data is necessary, especially on an international level (Usunier 1998). Data collection can be conducted via qualitative and quantitative research methods. Thomas (2002) defined six types of cross-cultural management research (Table 6.1). In this book I will present the result of an intercultural study comparing knowledge transfer processes in two different cultures and also investigate the results of these processes.

Qualitative and quantitative research in a cross-cultural context To investigate the differences between German and Japanese managers when it comes to knowledge management the research design in Table 6.2 was developed. In a first step, relevant literature on knowledge management was analysed. The literature review ended in a overview on knowledge management. Since the issues of knowledge transfer within multinational corporations is mostly covered in a descriptive way, a qualitative research design helped to develop hypotheses on cultural influences on knowledge transfer. The focus of this book lies on the question of how culture influences knowledge transfer within multinational corporations. This work aims at moving beyond merely treating culture as a descriptive variable in knowledge transfer processes and business relationships. Emphasis is placed on establishing testable

78

Research questions and results

Table 6.1 Types of cross-cultural management studies Category

Description

Domestic

Management studies in a single country Replication Management study repeated in another country Indigenous Individual management studies conceived and executed in one or many cultures Comparative Management study conducted in two or more countries International Studies of multinational organizations Intercultural Studies of intercultural interactions in organizations

Cultural Assumption

Research Questions

Culture is ignored or universality of theory is assumed Universality is questioned, there is not a theory available to predict the effect of culture Cultural differences assumed to exist, indigenous theory behaviour

How can we explain and predict the behaviour of people in organizations? Does this theory that applies to culture A also apply to culture B? How can we explain and predict the behaviour of people in organizations in country X?

What similarities and differences exist in the behaviour of people in organizations? Is this theory universal? How do organizations that operate in multiple countries function? Specific aspects of culture How this theory is are part of the theoretical influenced by cultural framework underlying the differences and how is it universal? study Similarities and differences exist, there may or may not be a theory available to predict the effect of culture Similarities and differences exist or culture is ignored

Sources: Thomas (2000); Adler (1986). Table 6.2 Research design Research design Literature research and analysis Development of research Design development of hypotheses Qualitative data collection Quantitative data collection Data analysis Interpretation and discussion of results

hypotheses that serve as a foundation of a theoretical framework to explain culture’s impact on knowledge transfer processes within organizations. The analysis is based on a research project which included qualitative and quantitative approaches. Qualitative research is mainly conducted via nonstructured interviews on a certain topic. They give the interviewer the possibility to gain in-depth information on topics that cannot be investigated via standardized research methods. Qualitative interviews are therefore a common data collection method in cross-cultural management research. The advantages

The research project

79

of these interviews include the ability to give feedback to respondents, probe for clearer answers and deal with complex topics. However, there are disadvantages too. There can be a strong interaction between the interviewer and respondent. Characteristics of the interviewer, such age, gender, personal appearance, can influence the answers of the respondent. The interview technique (e.g. question phrasing, tone of voice) can bias responses. The possibility of errors is heightened, if the interviewer and respondent differ culturally (Thomas 2002). Owing to the explorative nature of our propositions a qualitative research design was used to develop the hypotheses presented. A qualitative research approach was found appropriate when the examined phenomenon requires an explorative investigation (Rubin 1995), which provides the flexibility for identifying new variables and new relationships among them. The first stage of the study involved personal interviews conducted with ten individuals of several German and Japanese multinational companies. The interviews were based on uniform interview guidelines dealing with questions of intercultural communication between Germany and Japan. The results of these interviews were used to develop hypotheses on cross-cultural knowledge transfer presented in the following chapters. Quantitative research methods picture the attributes investigated in the form of numbers. After picturing the attributes this way, they can be analysed using statistical methods (Scheuch 1993). The project investigated 155 German and Japanese multinational corporations. The study focused on Japanese and German managers who are responsible for knowledge transfer activities in their firm. The managers interviewed were interviewed on all aspects of the knowledge transfer processes, as senders and as receivers. All managers were in contact with company units of a similar cultural background and of a different cultural background. (1) Japanese knowledge managers (high context) receive knowledge from Germany (low context) and from Korea (high context). (2) German (low context) knowledge managers receive knowledge from Japan (high context) and Austria (low context). A total of 155 individuals were interviewed by means of a standardized questionnaire (Table 6.3). Collection of quantitative data in Asia may also be confronted with the lack of sampling lists (Kotler 2001). In the case of Japan this was not the case. Table 6.3 Overview sample in Germany and Japan Country

Number of interviewees

German managers Japanese managers

83 72

80

Research questions and results

The data received from JETRO (Japan External Trade Organization) were easily available within a few days and included all the Japanese subsidiaries in Korea and Germany. Information on Japanese headquarters was received from the Nikkei Database (Nihon Keizai) on CD. Surprisingly, receiving sample lists on German companies was a lot more complicated. Data were received from the German Chamber of Commerce in Austria. Compared with the Japanese data, the German data were outdated and not fully usable (addresses were wrong and some companies did not exist anymore).

Comparability The main aspect in cross-cultural research is the comparability between the data gained in various countries, because the data and research procedures implemented are considered to be of general application (Usunier 2000). Therefore, it is extremely relevant to establish equivalence between the differing countries taking part in the investigation. Equivalence is considered one of the main concerns in cross-cultural research. Equivalence means – among others – that interview partners with differing cultural backgrounds understand the concept of the study in the same way. Cross-cultural equivalence must be established at three key points: conceptual equivalence, data collection equivalence and measurement equivalence (Usunier 2000). Conceptual equivalence refers to apparently identical concepts that might have different meanings in different cultures (Usunier 1998). Without conceptual equivalence, comparisons are impossible (Thomas 2002). The questionnaire used in this book dealt with the knowledge transfer between employees located in differing cultures. Therefore, conceptual equivalence is of very great importance. Since Germans are members of an individualistic culture and Japanese of collectivistic culture, hierarchic levels in German and Japanese organizations differ. This became very evident when translating the questionnaire into Japanese. The German and English versions of the questionnaire investigated the communication styles with ‘colleagues’ (Kollegen) in foreign subsidiaries. This term can be applied to most of one’s colleagues regardless what age they are, when they entered the company or at what hierarchical level they stand. This is not the case in collectivistic cultures like Japan. The literal translation was dôryô, which went well with my retranslation from Japanese into German. However, after discussing the questionnaire with Japanese researchers and professionals, it became clear, that this term could only be used for colleagues who are at the exact same stage in their careers and had entered the organization at the same time as the interviewees. Colleagues that were a lot older, even when at the same career level or colleagues who had entered the company at an earlier or later stage than the interviewee were not considered dôryô. The solution was to add more words describing co-workers or colleagues to decrease uncertainty about the content of the questionnaire and to establish a conceptual equivalence between the questionnaires in all countries.

The research project

81

Data collection equivalence is trying to avoid discrepancy in response patterns across countries that may cause data unreliability and limit direct comparisons (Usunier 2000). One of the major hurdles facing researchers in Japan is obtaining access to people who have the required information. Not only must one identify the appropriate people, but one must also have the appropriate introductions to meet them. Teachers and also university professors are viewed in a much more favourable light. It is therefore easier for academics to meet appropriate people and thus gain privileged information (Williams 1995). Carrying out cross-cultural research might confront the researcher with acquiescence or an extremity bias. Acquiescence is the tendency of some cultural groups to agree (or disagree) with all or most questions asked (Thomas 2002). For example, Japanese interview partners tend to avoid contradiction (Kotler et al. 1999). This leads to more positive answers. Extremity bias involves the way different cultures use particular response scale formats (Thomas 2002). Table 6.4 introduces different types of biases that can occur. To avoid cross-cultural biases the questionnaire was first developed in English and then translated and retranslated into German and Japanese. After this, both versions were tested with five managers, who volunteered to fill in the first versions of the questionnaires. Their feedback was integrated in the final version, which was then used in the investigation. Measurement equivalence deals with the variations in the reliability of research instruments when using them in a cross-cultural context, because measurement unreliability is a threat to cross-cultural comparability of data (Usunier 2000). Measurement equivalence furthermore refers to the extent that questions in a survey have similar measurement properties across groups with differing cultural backgrounds (Thomas 2002). During the qualitative stage of this research project, ten managers were interviewed about their experiences in cross-cultural knowledge transfer in German and Japanese multinational corporations. The interviews were transcribed and the final text analysed. Based on the literature review and the qualitative analysis, research hypotheses were developed. The main objective of this research endeavour was to provide empirical evidence on the differences in knowledge Table 6.4 Biases in cross-cultural interviews Capability bias Courtesy bias

Giving answers to any question regardless of knowledge

Providing the interviewer with the answer the respondent thinks the interviewer wants Sucker bias Giving ridiculous answer to make fun of the interviewer Reticent–loquacious bias Members of some cultures (also depends on the situation) are quiet and reserved in interviews while others are outgoing Individual-group bias Difficulty in obtaining responses from individuals in some group-oriented cultures, or in obtaining different responses when group members are present Source: Thomas (2002).

82

Research questions and results

transfer. To provide results a set of hypotheses was developed and tested. The results of these tests can be found in the following chapters.

Limitations of the study Before discussing the results I would like to point out some of the limitations of this study. Despite the interesting findings and implications that derive from this investigation, it is important to recognize its limitations and the need for additional research. The study presented shows limitations facing any cross-cultural research endeavour. This addresses comparability of the investigated samples, cultural differences in interpreting the survey items and possible biases in response styles. As many research projects deal with intracorporate knowledge transfer, only one individual receiving knowledge was interviewed. To investigate differences between headquarters and subsidiaries and their transfer mechanism and strategies, future research projects need to examine more members of the same organization. In doing so differences in satisfaction, usage and decisionmaking confidence with knowledge received from overseas can be investigated more reliably. Even though this research project started with a series of qualitative interviews with Japanese and German managers, these interviews were mainly used to develop the hypotheses. The main analysis took place by means of a quantitative survey, which leaves many questions concerning the cultural influences within German and Japanese multinational corporations unanswered. Questions about the personal feelings of the respondents, their attitudes and recommendations could not be included in the results of this project. The sample size between countries differed. This means that the representativeness of the samples is not the same for all of them and the expressiveness of the results presented decreases. Furthermore, the investigation of knowledge recipients in only two countries creates numerous questions on the validity of this study. It is necessary to also test the hypotheses on samples that represent knowledge recipients in other cultures, not only companies with a German or Japanese background. These cultures are very suitable for a comparison of their management and transfer of knowledge, and their cultural differences provide a good setting to study culture-related influences on interorganizational knowledge transfer. However, these findings should be tested in other cultural settings which may differ in their attitudes towards knowledge and its management.

7

Do knowledge transfer processes differ between cultures?

Management literature generally talks about cultural differences of unit and the cultural distance between the units to explain cultural distance as an obstacle in international knowledge transfer (Simonin 1999). However, there is a very evident gap in the literature examining this issue from an interpersonal aspect (Williams et al. 1998). Organizations cannot be considered to have a cultural background; their employees do. Scientific management literature does not differentiate here either when talking about cultural distance as hindering knowledge transfer (e.g. Simonin 1999). There is no specification whether this cultural distance applies to different units or to two different individuals. The basis for knowledge sharing is a simple communication model, in which information is passed on from one individual to another. Two components of the communication are essential: the source (or sender) that sends the message, and a receiver to receive the message. Communication is the whole process of communicating the message from sender to receiver and is also used to share knowledge. It is also considered the basis for the socialization of knowledge. In a first step the sender of the knowledge intends to send it and has to choose what kind of knowledge to share. Generally, knowledge needs to be codified to be shared with receivers. Here the means of communication plays a major role. In contrast to a communication process, a knowledge-sharing process also includes a learning process. To improve and speed up this process the right choice of medium is very important. Knowledge can be coded via more abstract forms such as data, or reports and objects. In a final step the recipient accepts it and interprets it. Receiver B receives the knowledge in its codified form, has to decodify it and has to implement it in the working environment. The receiver reacts to the knowledge by starting activities based on it. When transferring knowledge within multinational corporations the communication model has to be extended to integrate contextual influences as well (Figure 7.1). Consequently the transfer of knowledge can be divided into three stages. At first the relevant knowledge has to be selected. The sender has to select relevant knowledge. In the next step the sender further decides in which way to transfer knowledge. The third part of the process concentrates on the receiver

84

Research questions and results

of knowledge at the other unit. He or she receives knowledge, interprets it and then reuses it in the local context of the unit. People are, whether they are aware of it or not, resistant to change or doing things differently than they are used to (Hall and Hall 1990a). Therefore culture plays a major role in knowledge transfer, which basically means communicating with company units located in geographically dispersed locations. Culture influences people’s and individuals’ actions and consequently also creates the context for the managerial practices necessary to transfer knowledge, such as knowledge codification (codification style) and the selection of relevant knowledge (procedural and declarative knowledge). Knowledge management differs in East and West. Japanese knowledge management focuses on tacit knowledge and operational knowledge management. Knowledge management in the West, on the other hand, has a more strategic approach, a need to deal with individualistic perspectives of their knowledge managers at the same time. The differences in knowledge management imply that Japanese employees and their Western counterparts do have a differing understanding of sharing knowledge with their colleagues and among partners (Inkpen 1996). But can differences between Western and Japanese knowledge management also be found in knowledge transfer within Japanese or German multinational corporations? In a modern business environment communication with individuals in geographical distant locations is a common activity. Employees are in daily contact with members of cultures and other groups from all around the world. These interacting individuals are strongly stamped by the national cultures they live in. Employees bring the assumptions of their culture to work and thereby establish and modify the ways of their organizations (Griffith and Harvey 2001). The first research question investigated in this book will therefore deal with the whether knowledge is being transferred differently according to the cultural background of sender and receiver of knowledge. The investigation that I present is based on a survey among Japanese and German knowledge managers. Japanese and Germans, being on the extremes of the high-context and low-context continuum, communicate in very different ways. On top of this, Japanese knowledge management processes are supposed to be very different from Western processes. I therefore assume that knowledge transfer processes of German and Japanese managers also differ. I assume that all steps in this process are strongly influenced by the cultural background of the knowledge manager performing them and will differ from each other. In the following sections I will explain the first two steps in more detail and present the results of the comparison.

Knowledge choice The first step, in which knowledge workers choose the knowledge to be transferred. In this part the sender needs to decide what kind of knowledge he or

Do knowledge transfer processes differ between cultures?

85

Figure 7.1 Cross-cultural knowledge transfer process Source: Haghirian (2009)

she plans to send. In this case not only the content of knowledge is of importance, but also the type of knowledge. The sender either sends procedural or declarative knowledge. Procedural knowledge refers to ‘know-how’ to perform a certain task or activity. A procedure represents embedded experience and successful solutions to complex tasks, as

86

Research questions and results

well as a coordination of solutions among various tasks in the organization. It is also the directing of communication, the definition of planning steps and the setting of performance measures (von Krogh et al. 2000) to make operations in organizations more effective and efficient. Declarative knowledge defines the goals and refers to the expected outcome or facts to be communicated to the receiver. Procedural knowledge refers to the way of achieving results and the way procedures and routines are to be administered. Culture shapes assumptions about which knowledge is important. Culture has a strong influence on what is perceived as useful, important or valid knowledge in an organization. Culture shapes what a group defines as relevant knowledge, and this will directly affect which knowledge a unit focuses on (De Long and Fahey 2000). Cultures do not only communicate differently, they also differ in the type of knowledge they send. Dodd (1997) states that ‘In high-context cultures, members are also expected to know how to perform, so information and cultural rules remain implicit. The context is supposed to be the cue for human behaviour. Expectations are inferred by the context. One is expected to know appropriate behaviours. Meanings are not explained but implicit.’ (Dodd 1997). The Japanese, who are very high context, expect other people to be similarly contexted and informed about everything, including office procedures. The Japanese do not need knowledge gathering procedures because they are expected to inform themselves. Furthermore, they expect other people to be similarly contexted – informed about everything (Hall and Hall 1990a). In contrast, members of low-context culture (e.g. Germans) make meanings and information available and explain expectations. Information in these low-context cultures is explicit. Meanings are not in the context but in the verbal explanations provided. Procedures are explained and expectations discussed (Dodd 1997). A member of a low-context culture like Germany needs a lot more information on what exactly is expected of him. He needs procedures and explicit directions. Individuals with a high-context background deliver only a limited amount of information, but a large amount of context that surrounds the information sent. Members of low-context cultures communicate via expressing a large amount of information surrounded by almost no or very little context. The amount of meaning sent is the same for both groups (Hall 1981). Hall and Hall (1990b) refer to this as a source of misunderstandings: ‘Highcontext people are apt to become impatient and irritated when low-context people insist on giving them information they don’t need. Conversely, lowcontext people are at a loss when high-context people do not provide enough information’ (Hall and Hall 1990b). One of the great communications challenges is to find the appropriate level of contexting which is customary both at home and abroad. Too much information frequently leads people to feel they are being talked down to, whereas too little information can mystify them or make them feel left out. Generally people make these adjustments automatically in their own country, but in other countries their messages frequently miss the target (Hall and Hall 1990a), which can lead to misunderstandings.

Do knowledge transfer processes differ between cultures?

87

Germans provide much more detailed information than most people from other cultures require. In comparison to Japan, in Germany virtually everything is low context and compartmentalized. Information in the office is not shared except with a select few, the exact antithesis of the Japanese high-context approach, which places them in a sea of information. Germans produce and work with islands of information (Hall and Hall 1990a, 1990b). We therefore conclude that Germans are more explicit and detailed in the knowledge they send, which means they are not only sending declarative but also a high degree of procedural knowledge, to be more exact in their messages. Japanese managers as members of high-context cultures send less procedural knowledge, because they assume the context to be understood and act accordingly. They send declarative knowledge and no or very little procedural knowledge, because they expect their partners to know how to interpret the messages and perform accordingly. I therefore state the following hypothesis. Hypothesis 1: German and Japanese managers differ in the type of knowledge they send overseas.

Knowledge transfer instruments Knowledge located within the organization needs to be made accessible to the individuals who need it (Bennett and Gabriel 1999). So after choosing what knowledge to send, the sender must decide which transfer instrument to use. Knowledge needs to be codified to be sent to overseas units, but codification can take various forms. The sender has to consider the knowledge to be transferred and to find the right way of making it understandable for the receiver (codifying it in a way the receiver can decodify it). But it cannot simply be transferred from one person (sender) to another (receiver). It has to be pictured in symbols and comprised in messages, which means that information and knowledge held by a person can only be communicated to another person after they are encoded (Kock et al. 1997). Codification is therefore defined as the selection and compression of data into stable structures (Shannon 1948). After deciding what knowledge to send, the sender must codify it to transfer it as efficiently as possible. Knowledge located within the organization needs to be made accessible to the individuals who need it (Bennett and Gabriel 1999), it needs to be shared. Sharing refers to transporting knowledge from one individual to another. Within multinational corporations this means overcoming long geographical distances to make knowledge transferable and consequently globally accessible. Signs, and especially symbols, tend to be organized in systems called codes. These are systems of signs and rules for their use, relating signs (icons, indices, signals and/or symbols) to each other and to various aspects of reality. By means of codes reality may be represented, understood, evaluated, explained and sometimes changed (Rosengren 2000). Knowledge being transferred into a code (not necessarily a

88

Research questions and results

computer code) is made organized, explicit, portable and understandable (Nohr 1999). When organizations codify their knowledge they package it into formats that enable the organization to transmit it to other parts and thus facilitate knowledge transfer (Schulz and Jobe 2001). Codification of knowledge is therefore a means of representing it (Nohr 1999) and enables all members of the organization who need knowledge to access it. Codification gives permanence to knowledge that might be lost otherwise (Davenport and Prusak 1998) and can therefore be an important strategic variable for an organization (Singh and Zollo 1998). Codification of knowledge is a key activity in the conversion of individual into organizational learning. It facilitates the diffusion of information within the firm and supports the process of knowledge sharing (Dutrénit 2000). By codifying knowledge becomes ‘truly institutionalized and truly organizational’. Other than that, the inventor or creator can use it and change it to suit new organizational realities (Jelinek 1979). The codification of knowledge can also ease the communication and relationship between communities (Dupouet and Laguecir 2002) and intensify the knowledge flows between subsidiaries as well as knowledge flows between subsidiaries and the headquarters (Schulz 2001). There are a number of ways to codify knowledge within an organization, such as the encoding of organizational knowledge in formulas, codes, expert systems, or budget information; expressing knowledge in natural language formats, such as reports, memos or policies, embedding knowledge in physical objects, such as prototypes or technologies, or even depositing it in employees who visit or rotate between different units (Schulz and Jobe 2001). Knowledge can be embedded in documents, files, databases, directories, competencies, experiences, processes or relationships (Nohr 1999). Knowledge workers and managers can categorize knowledge, describe it, and put it in cognitive maps and models. It can be simulated or put down in rules and manuals (Davenport and Prusak 1998). Codification processes will so lead to the development of knowledge and information artefacts (Sorensen and Snis 2001). Codification has costs and benefits for multinational corporations and is not an easy task to fulfil. The codification of knowledge can happen in various forms and like in every field of professional communication, it is important to choose the form of the message carefully (Scollon and Wong-Scollon 1995). Boisot gives the following example: ‘Zen masters trade in the kind of tacit knowledge that is hard to codify and that can only be imparted slowly and face to face to a limited number of disciples, bond traders, by contrast, deal in well-codified prices that can be diffused worldwide in seconds by electronic means’ (Boisot and Child 1996). It is not always clear to companies, under which conditions the costs or the benefits of codification prevail. Knowledge management in multinational corporations therefore involves difficult choices because the costs and benefits of codification most likely depend on the kind of knowledge to be codified, the forms of codification used and on the strategic context of the organization.

Do knowledge transfer processes differ between cultures?

89

Some knowledge is easier to codify in certain forms than others, some forms of codification facilitate flows of some knowledge more than flows of other knowledge, and some forms of codification might be more or less effective inhibitors of undesired knowledge transfers to competitors (Schulz and Jobe 2001). Codification can facilitate involuntary transfer of strategic knowledge to competitors (e.g. leakage of databases, formulas, specifications etc. to competitors) and thereby hurt the MNC or its local operations in given markets. Codification also involves considerable cost of creating and maintaining locations of organizational knowledge (e.g. creating expert systems and updating web pages) (Schulz and Jobe 2001). Codification styles are further based on company routines and very difficult to change. Preferences in certain codification styles may therefore prevail for many years even if they are not reliable anymore or long outdated by better and more efficient technologies. On the other hand, codification can also facilitate flows of organizational knowledge between subsidiaries, and thereby help to identify new opportunities or emerging threats across markets and geographical regions. One quality of codification is, that it provides robustness against the loss of knowledge embedded in individuals, who may leave the company (Kogut and Zander 1996). Codification can also be a source of error (Kogut and Zander 1996). If firms differ in their codes by which information is transferred, then they differ in their capability to understand and apply knowledge as well (Kogut and Zander 1993). Zander and Kogut (1995) proved that the codifiability of knowledge (the degree to which it can be codified) also has a significant influence on the speed of transfer (Zander 1991). It is evident that codification is an important aspect in the field of knowledge management and internal knowledge transfer. The way in which knowledge is codified influences the flow of knowledge as well as the final success of the knowledge transfer. This puts the codification process in a very important position and the choice of how to codify knowledge becomes decisive in the attempt to transfer corporate knowledge. It is extremely important in which way the knowledge to be transferred is codified and made ready to be sent to other company units, because the knowledge codified must be de-contextualized in a way that will be meaningfully and unequivocally understood when the receiver unpacks and re-contextualizes it (Doz and Santos 1997). Transfer instrument gained a more important role in knowledge management as internationalization continues. Generally, knowledge can be transferred via different methods. There are methods that are especially suitable for the transfer of tacit knowledge and methods that are more suitable to transfer explicit knowledge (von Krogh and Köhne 1998). Traditionally, knowledge management activities have been performed through various means, such as face to face interaction, mentoring or other staff development actions. But markets become more global and corporations more virtual and knowledge management is adopting management methods which are faster, more effective (Alavi and Leidner 2002). These changes are most obvious in knowledge transfer within multinational corporations. There is a general assumption that

90

Research questions and results

electronic means of knowledge transfer are increasing speed and success of knowledge sharing activities. Making knowledge accessible to all members of organization’s is supposedly leading to more knowledge sharing. Codification and the transfer of knowledge go hand in hand. Choosing a transfer medium means to codify it in the most suitable way and ease its reusage at the recipient’s corporate unit. The tools underlying knowledge codification can take various forms (Singh and Zollo 1998). Schulz and Jobe (2001) identified three types of codification. According to them numbers and codes represent the most abstract form of knowledge codification, whereas words and text are a semi-abstract form of knowledge codification. Finally codifying knowledge in people and objects is the non-abstract category. In this book I expand this typology and divide codification methods as follows: codification via electronic devices, codification via text, codification via human interaction and codification via artefacts (Table 7.1). In some cases the forms overlap.

Knowledge codification via electronic devices Groupware programs Groupware programs are information and communication systems that support and administer team work routine actions (Hannig 2002). They help work groups or interest groups attached to a local area network to communicate and exchange information and organize events (Becerra-Fernandez et al. 2004). Groupware offers a platform for communication within a firm and between employees and the knowledge management in work groups and teams. This software application includes: electronic group support systems, shared screen systems, groups calendars and workflow automation. A groupware platform offers support for collecting, organizing and sharing information within a certain group of people like work or project groups. This can happen via corporate networks and the internet. The most popular platform is Lotus Notes which combines data base, group calendar, email and workflow automation (Watson 1999). Decision support systems Decision support systems (DDS) offer solutions of multidimensional databases (Hannig 2002). This system is an interactive system that combines communication, computer and decision technologies to support the formulation and solution of organizations. It integrates technologies to support the communications in groups, the structuring of processes by which groups interact (e.g. agenda setting, facilitation) and information processing (e.g. aggregating, evaluating or structuring information) (Zigurs and Buckland 1998). Decision support systems are classified into three levels. Level 1 removes communication barriers, level 2 provides decision modelling and group decision

Do knowledge transfer processes differ between cultures?

91

techniques and level 3 provides expert advice on the selecting and arranging of rules of a meeting and thus leads to machine-induced group communication patterns (DeSanctis and Gallupe 1987). Web pages (intranet, extranet and internet) The World Wide Web has become a major aspect of modern corporate communication (Heinrich and Schmidt 2002). An intranet is a comprehensive computer network which is based on internet technology. Within the organization employees can access this network worldwide (Hannig 2002). The unified surface and access to various sources of information make this technology perfect for the distribution of knowledge throughout the company. The development of an intranet improves the fluidity of the internal flow of information, which branches out horizontally as well as vertically into all parts of the business. Employees can publish information on their personal homepages as well as gather information continuously from a multitude of sources (Bennett and Gabriel 1999). Intranets are only accessible from inside the company, therefore only members of the organization can access the knowledge provided. Until the internet as a public medium intranet installed in mainly bigger organizations allowed them a contemporary competitive advantage. Today the internet allows smaller organizations to communicate internally via webpages (Tiwana 2000).

Table 7.1 Knowledge transfer instruments Knowledge codification via electronic devices Groupware programs Decision support systems Webpages (internet and intranet) Databases Knowledge codification via text Theoretical models Documentation, manuals, publications, reports, best practices Handbooks Postal mail E-mails Learning-by-theory Knowledge codification via human interaction Narrative, storytelling Learning-by-doing Telephone calls Trainings and seminars Face-to-face meetings and visits Sending expatriates to other countries Knowledge codification via artefacts Examining products or product components

92

Research questions and results

In contrast to this, an extranet has the same features as an intranet, but additionally offers access to all users that are registered within the system. It can also be accessed from outside the organization (Hannig 2002). Extranets are farther reaching and more expansive than intranets. They refer to transorganizational versions of intranets, and connect not only company members, but also the corporations with the knowledge-based resources of their corporate partners (Tiwana 2000), suppliers or customers. Databases Databases are knowledge locations and store data for an organization. The data stored usually derives from internal and external sources of the organization (Hannig 2002). They can make knowledge available to all members of the organization. Databases should have the following properties: data has to be found easily via different criteria, and should be able to be deleted, substituted and renewed quickly (Gabler 1995). Within databases knowledge can also be stored in form of texts or documents.

Knowledge codification via text Theoretical models Theoretical models refer to technical drawings or blueprints. They are usually used to transfer theoretical information on construction and other technical details. Documentation, Manuals, Publications, Reports, Best Practices Documents are central means of storing and spreading knowledge. Other means are manuals that explain particular activities and instruments, publications and reports dealing with the organizations goals and practices. Company handbooks Company handbooks are used to explain procedures and routines used in a company. Postal mail Postal mail is used to transfer written documents, which cannot be transferred via electronic mail, but are send to another unit through postal mail instead. Electronic mail systems Electronic mail systems are computer aided communication systems, that allow the electronic transmission of text messages (Heinrich und Schmidt 2002). The effects of e-mail systems are that they allow the sender to craft a unique

Do knowledge transfer processes differ between cultures?

93

message for the recipient and time the delivery of the message (Rizzi 2001) in a written form. Electronic mail systems simplify sending, distributing and receiving text messages and therefore became the most popular and wide-spread technical means of modern communication (Heinrich and Schmidt 2002). Electronic mail systems allow asynchronous message exchange and facilitate new forms of communication in organizations. Learning-by-theory Learning-by-theory refers to learning by using textbooks and theoretical material. The learner is analysing this material, memorizes it and then uses and applies what was learned during work processes.

Knowledge codification via human interaction Narrative, storytelling Stories and narratives are reports about company related incidents, that happened in the past and that have a special meaning for the company (Kasper and Mühlbacher 2002). According to Davenport and Pruzak (1998) the most efficient way of transferring knowledge is through a convincing narrative (Davenport and Pruzak 1998). People prefer to talk to their colleagues on their latest ideas (Birkinshaw 2001). They tell stories to exchange knowledge. So narratives are used in order to transfer the complex contents of tacit knowledge (Snowden 2002). An organizational story is defined as a detailed narrative of past management actions, employee interactions, or other intra- or extraorganizational events. These stories are usually communicated informally within the organization. Normally, such stories consist of a plot, major characters and an outcome (Swap et al. 2001). Purposeful stories will be able to capture and hold the attention of the audience. They are rooted in truth and are self-propagating (Snowden 1999). Snowden (1999) distinguishes between two kinds of storytelling: Storytelling as a knowledge disclosure mechanism and storytelling to create meaning and understanding that can be a helpful tool in getting hold of the valuable tacit knowledge of members within the organization. It creates a self-sustaining, low cost means by which knowledge can be captured on an ongoing basis. Storytelling to create meaning and understanding creates metaphors to transfer knowledge in a more transparent way (Snowden 1999). Storytelling so becomes a very powerful tool for sharing knowledge. A good story includes a lot of possibilities for the listener to apply the stories to their own situation and create an understanding of new situation or a new way of thinking (McKenzie and van Winkelen 2004). Learning-by-doing Learning-by-doing refers to the process of learning a skill or a capability by performing it at the same time. ‘Learning-by-doing’ is a mechanism to

94

Research questions and results

augment a firm’s capability. Learning-by doing in the context of knowledge transfer relates to internships, visiting the subsidiary or headquarter to work there, or substituting a colleague during his or her holidays (Götz and Bleher 2002). Telephone calls Telephone calls allow direct and reciprocal communication between two individuals. There are certain rules or manners that have to be followed, when talking to another individual on the phone. Telephone conversations can only take place among people who have the language ability to converse with each other without any visual contact. Training, seminars Trainings are attempts to develop any combination of physical and cognitive skills in order to achieve new or more effective ways of behaving (Taylor 1989). Training includes the development of technical and managerial skills as well as decision making and control. Training instruments are lectures, group discussions, role playing; assigned reading, case studies, videotapes and computer based training. Meetings and visits Visits and meetings take place between two parties. Visits and meetings are face-to-face interactions lasting from less than a day to a couple of weeks and are undertaken to address specific tasks or problems (Bresman et al. 1999). Davenport and Prusak (1998) argue that face-to-face transfer of knowledge is the most productive way of transferring knowledge. This interaction still does not only happen at meeting and visits, but also in the more casual encounters in company corridors (Davenport and Prusak 1998). Job rotation Job rotation describes an intentional change of different jobs or tasks within a corporation. Employees change their tasks within a certain time interval. This enriches the quality of work content and reduces the monotony of work (Steyrer 1990). Job rotation can also be used to transfer explicit and implicit knowledge within the corporation. Project groups Project groups work as a team and are therefore considered very important in the conversion of tacit and personal knowledge into organizational knowledge (Nonaka and Takeuchi 1995). Dynamic interaction enables project

Do knowledge transfer processes differ between cultures?

95

groups to play a prominent role in not only knowledge creation, but also knowledge transfer within the organization. Sending expatriates to other countries Expatriates are employees that are sent to the local units by the headquarters for a certain period of time. Sending expatriates to a geographically dispersed unit of the organization enables to ensure that corporate practices and aims are adhered to by employees in this unit.

Knowledge codification via artefacts Products and component of products For thousands of years people have communicated with each other through the exchange of things. Sailors, merchants, soldiers and travellers have always brought home valuable foreign and exotic objects, and rulers have exchanged gifts. Cultures have influenced each other directly or indirectly through their products. Innovations that are adopted (and adapted) from other cultures have regularly caused culture change in the recipient cultures. Products components of products or other objects can therefore be regarded as artefacts that hold a lot of knowledge and expertise (Roth 2001, p. 159). However, products and components of products are also instruments to codify knowledge. Even machines, production lines or company plants are bodies of knowledge (Doz and Santos 1997). Today products are widely used as an efficient tool in knowledge management and influence cross-cultural production, international trade and technology transfer. Objects are symbols that establish a communicative relationship between two or more human beings. They can be used as quasi-verbal communication and convey direct messages or obtain encoded messages (Roth 2001). Codification process play a major role in the success of knowledge transfer within multinational corporations. If they are performed in an inefficient way or in a form that the receiver cannot decipher or decode knowledge successfully, they may even present a barrier to knowledge transfer processes within the firm. But knowledge codification is, as all other stages of the knowledge transfer process a very subjective activity. Schulz and Jobe (2001) argue that there are different forms of codifying knowledge, before sending it to another company unit. The cultural background of the sender further plays an important role. According to Inkpen (1996) cultural difference can also be seen in knowledge transferring processes. According to Hall and Hall (1990b) cultures differ in their communication styles and codification styles. This leads to the conclusion that knowledge the choice of knowledge transfer instruments differs between managers of dissimilar cultural backgrounds. I therefore assume that managers from high-context countries (like Japan) differ in their codification style from managers of low-context

96

Research questions and results

countries like Germany. Based on these comparisons I propose the following hypothesis. Hypothesis 2: German and Japanese managers differ in the knowledge transfer instruments (codification) they choose for knowledge transfer processes.

Research results The hypotheses were answered by analysing the German and Japanese data set. All interviewees communicated directly with their overseas unit. They were asked what kind of knowledge they transfer to the German or Japanese unit, which instrument they use to transfer it and how they received this knowledge from their either German or Japanese partners. There was no distinction whether the recipients were located in the headquarters or in a subsidiary. More information on the scales used to investigate the research questions can be found in the appendix. The results of the hypotheses tests described in the following sections. I compared the German and the Japanese sample about their cross-cultural knowledge sending process (Figure 7.2). Tables 7.2 and 7.3 gives an overview on the variables investigated in hypothesis 1 (means, standard deviation and variance of German and Japanese knowledge managers when choosing knowledge). The results (Table 7.4) show that Japanese managers transfer more procedural knowledge than German managers. Germans seem to prefer declarative knowledge in their knowledge transfer processes. However, the independent Sample test applied shows that there are no significant differences between the amount of procedural and declarative knowledge transferred. Hypothesis 2 investigated whether German and Japanese managers differed in their choice of knowledge transfer instruments. Tables 7.5 and 7.6 give a descriptive overview on the knowledge transfer preferred by German and Japanese managers. A t-test was applied to the hypotheses. Table 7.7 shows the results of the hypotheses tests applied to compare the German and the Japanese sample. The results show that only one out of 19 knowledge transfer instruments showed significant difference between German and Japanese managers. Japanese respondents state that their companies send employees overseas to work more often than German respondents. The only significant difference to be observed is the Japanese preference for sending expatriates overseas. These results are not surprising, but confirm Rosalie Tung’s findings from 1982, who already showed that Japanese corporations prefer to send more expatriates to other countries than companies in other industrialized countries. The fact that more expatriates are exchanged may be explained by a preference for tacit knowledge, which Japanese

Figure 7.2 Research question 1 Table 7.2 German managers’ choice of knowledge When working with our colleagues in the Japanese branch … (strongly agree = 1)

Mean

Standard deviation

Variance

… we provide them with knowledge on existing procedures and practices (procedural knowledge) … we usually tell them which results we aim to achieve and do not interfere with their procedures (declarative knowledge)

2.80

0.83

0.69

2.64

0.86

0.74

Source: Based on the Process Knowledge Scale by Ramaswamy (1996). Table 7.3 Japanese managers’ choice of knowledge When working with our colleagues in the German branch … (strongly agree = 1)

Mean

Standard deviation

Variance

… we provide them with knowledge on existing procedures and practices (procedural knowledge) … we usually tell them which results we aim to achieve and do not interfere with their procedures (declarative knowledge)

2.56

0.82

0.68

2.75

0.75

0.57

Source: Based on the Process Knowledge Scale by Ramaswamy (1996).

98

Research questions and results

Table 7.4 Results of hypothesis 1: German and Japanese managers differ in the type of knowledge they send overseas Nr. hypothesis

Test applied

Results

Supported/rejected

Procedural knowledge

Independent Sample Test Independent Sample Test

0.88

Rejected

0.39

Rejected

Declarative Knowledge

Table 7.5 Knowledge transfer instruments used by German managers (very frequently = 5) When sending knowledge to our Japanese colleagues …

Mean

Standard deviation

Variance

… we use groupware programs … we use a database to exchange information … we communicate via web pages (intranet and internet) … we use decision support systems … we send them information on best practices and lessons learned … we send them reports … we send our colleagues handbooks on our procedures … we send them theoretical material on different topics … we communicate via postal mail … we communicate via e-mail … we have regular face to face meetings with our colleagues … we call them on the phone to discuss relevant issues … we organize seminars with/for our colleagues from Japan … we send them employees for training … our colleagues come here for training … we visit the branch/subsidiary on a regular basis … we send employees to work in Japan for a certain period … we form project groups with our colleagues from Japan … we exchange product samples

2.67 3.03 3.85

1.49 1.35 1.30

2.23 1.81 1.68

2.19 2.88

1.08 1.00

1.16 1.01

3.81 2.61

0.93 1.20

0.86 1.43

3.04

1.38

1.90

2.74 4.52 3.06

1.27 1.14 1.27

1.61 1.31 1.62

3.56

1.32

1.74

2.83

1.05

1.09

2.81 3.02 3.02

1.28 1.25 1.16

1.63 1.57 1.35

2.33

1.48

2.17

2.73

1.15

1.31

2.70

1.30

1.70

companies are famous for. Even if Japanese knowledge showed significant differences in this one aspect we cannot say that strong cultural differences between the two groups could be observed. So even if scientific literature indicates that communication differences among cultures, these differences cannot be observed when knowledge is sent to other company units. One reason for the lack of difference may be organizational

Do knowledge transfer processes differ between cultures?

99

Table 7.6 Knowledge transfer instruments preferred by Japanese managers (very frequently = 5) When sending knowledge to our German colleagues …

Mean

Standard deviation

Variance

… we use groupware programs … we use a database to exchange information … we communicate via web pages (intranet and internet) … we use decision support systems … we send them information on best practices and lessons learned … we send them reports … we send our colleagues handbooks on our procedures … we send them theoretical material on different topics … we communicate via postal mail … we communicate via e-mail … we have regular face to face meetings with our colleagues … we call them on the phone to discuss relevant issues … we organize seminars with/for our colleagues from Germany … we send them employees for training … our colleagues come here for training … we visit the branch/subsidiary on a regular basis … we send employees to work in Germany for a certain period … we form project groups with our colleagues from Germany … we exchange product samples

3.77 3.28 3.57

1.41 1.46 1.42

1.99 2.12 2.01

2.28 3.09

1.13 0.95

1.27 0.90

3.57 2.60

1.29 1.25

1.66 1.55

2.77

1.22

1.49

2.81 4.70 3.14

1.45 0.74 1.36

2.09 0.54 184

3.51

1.39

1.92

2.68

1.30

1.69

3.36 3.26 3.00

1.19 1.42 1.37

1.42 2.02 1.87

3.08

1.38

1.91

2.44

1.26

1.58

3.33

1.45

2.09

routines which define how knowledge is being sent and which knowledge transfer instrument are to be used when communicating with overseas company units.

Summary Knowledge transfer within multinational corporations refers to ‘the sharing of knowledge between two members of company units within a multinational corporation’. A knowledge transfer process is similar to any communication process. When communicating a sender of a message (or the knowledge he or she intends to send) first shows an intention to send the message, then codifies and transmits it. He or she needs to consider what type of knowledge to send and how to deal with its complexity. After this the sender needs to decide how to transfer the selected knowledge or how to codify it into a transferable form. After this the message is sent off and received by another individual,

Table 7.7 Results of hypothesis 2 Hypothesis 2 German and Japanese managers differ in the knowledge transfer instruments they choose for knowledge transfer processes … we use groupware programs … we use a database to exchange information … we communicate via web pages (Intranet and Internet) … we use decision support systems … we send them information on best practices and lessons learned … we send them reports

Paired samples t-test Paired samples t-test Paired samples t-test

0.17

Rejected

0.48

Rejected

0.36

Rejected

Paired samples t-test Paired samples t-test

0.80

Rejected

0.36

Rejected

Paired samples t-test Paired samples t-test

0.35

Rejected

0.98

Rejected

samples

0.37

Rejected

samples

0.81

Rejected

samples

0.39

Rejected

samples

0.78

Rejected

samples

0.87

Rejected

samples

0.59

Rejected

samples

0.053

Rejected

samples

0.41

Rejected

samples

0.94

Rejected

samples

0.021

Supported

samples

0.29

Rejected

samples

0.059

Rejected

… we send our colleagues handbooks on our procedures … we send them theoretical Paired material on different topics t-test … we communicate via Paired postal mail t-test … we communicate via Paired e-mail t-test … we have regular face to Paired face meetings with our t-test colleagues … we call them on the phone Paired to discuss relevant issues t-test Paired … we organize seminars t-test with/for our colleagues from Japan/Germany … we send them employees Paired for training t-test … our colleagues come here Paired for training t-test … we visit the branch/ Paired subsidiary on a regular t-test basis … we send employees to Paired work in Japan/Germany t-test for a certain period … we form project groups Paired with our colleagues from t-test Japan/Germany … we exchange product Paired samples t-test

Do knowledge transfer processes differ between cultures?

101

who decodes and interprets it and then reacts to it in the form of an answer or an action. In the case of knowledge transfer the receiver is reusing the knowledge in his or her environment. In a first step the sender has to decide which knowledge to choose. Here he or she has to choose whether to send declarative and procedural knowledge. In a second step the transfer medium is chosen. Here a knowledge sender how to codify this knowledge and then transfer it to the overseas unit. Knowledge can be codified in four different forms. It can either be codified via electronic devices, via text, via human interaction or via artefacts. In this chapter I compared the first two stages of knowledge transfer process between German and Japanese managers. Hypothesis 1 assumed that German and Japanese managers would choose different types of knowledge to be sent to their overseas units. This hypothesis could not be supported by the data analysis. In a second hypothesis I tried to investigate whether German and Japanese knowledge managers would choose different transfer instruments. I investigated about 19 different transfer instruments. Significant differences could only be found in one case. Japanese managers send more expatriates overseas than their German counterparts. Hypothesis 2 was only partly supported. The results show that the actual knowledge transfer activities only differ when receiving knowledge. Choosing and sending knowledge (apart from the fact that the Japanese prefer to send expatriates) do not differ culturally.

8

Is knowledge transfer between two cultures less successful than knowledge transfer within one culture?

Effective cross-cultural knowledge transfer Successful knowledge management and transfer is considered key to the success of contemporary organizations (Becerra-Fernandez et al. 2004). When transferring knowledge to other operating units of a multinational company, the overall goal is to implement the knowledge sent successfully at the receiver’s unit (Sorensen and Snis 2001). Therefore, a shared, explicit understanding of concepts, categories and descriptors lays the foundation for effective communication and knowledge transfer in organizations (Zack 1999). Sustainable advantages of a company depend less on having correct and valuable information, but on the efficient use of this information (Porter 1985). The use of knowledge is often a complex process involving many people and organizational units. The ‘correct’ knowledge needs to be accessible to the receiver at the ‘right’ time, at the ‘right’ place, in the ‘right’ form and in the ‘right’ quality. The receiver considers knowledge as ‘right’, if he or she can understand the knowledge received easily and use it accordingly (Stock 2000). We can also assume that knowledge from a culturally close source will lead to higher usage in the receptive unit. After being transferred to a geographically distant unit of the corporation the codified knowledge is decodified and deployed and dissemination of the knowledge into the existing knowledge base of the receiver’s unit takes place (Hedlund and Nonaka 1993). The receiver makes sense of the knowledge in his or her own setting or context. But the meaning that is given to the transferred knowledge is not necessarily the meaning of the knowledge sent (Doz and Santos 1997) and the knowledge after decodification may not be the same as before codification. Knowledge is used through interpretation. Interpretation is the very process of making sense of the environment during action (Dupouet and Laguecir 2002). Firms have to make sense of the accumulated knowledge through interpretative codification processes, called decodification processes (Singh and Zollo 1998). After the decodification process knowledge reaches the wider environment of the organization. The result is the output of the organization, which can take the form of statements (such as patents), action (starting manufacturing) or tangible products (Hedlund

Knowledge transfer between two cultures and within one culture

103

and Nonaka 1993). From an organizational point of view the implementation of knowledge is the most important step in knowledge transfer. Even if the right knowledge is chosen and the sharing process is taking place without hindrances, the main objective of transferring knowledge is its reusage at the target location. If not being reapplied, knowledge transfer becomes obsolete. Expectations play an important role when talking about successful knowledge transfer. From a headquarters point of view successful knowledge transfer therefore refers to knowledge first being sent away and then being implemented in exactly the way headquarter official expect. In the subsidiary on the other hand, a lot of knowledge and expectations cannot be fulfilled, knowledge needs to be adapted to local standards. This happens via reinterpretations, adaptation or simply in only using the parts of knowledge which are applicable in the new context. In fact, successful knowledge transfer can be called a dialogue between the sender and the receiver about their contexts and the object of knowledge (Doz and Santos 1997). Successes in knowledge transfer are therefore extremely difficult to measure. Implementing knowledge management and financing knowledge management tools can therefore often be problematic. It is hardly possible to relate knowledge management measures to financial results of an organization. Another difficult aspect is defining knowledge transfer success. Scientific literature shows many attempts to identify meaningful and dependent variables to explain the success of knowledge transfer (von Krogh 1998) and has widely addressed the issue of how to define the success of knowledge transfer and its measurement (Lähteenmäki et al. 2001, Moilanen 2001). As I discussed in at the beginning of this book, a single person can have a very strong impact hindering or promoting knowledge transfers. The main player influencing successful knowledge transfer without interruption is therefore the recipient of knowledge. He or she decides how to react to knowledge received from overseas, by either accepting it or not. The recipient further interprets and – most importantly – reuses knowledge at the local subsidiary. So far, we have developed arguments indicating that the degree of abstractness and the type of knowledge sent are influenced by national culture. Accordingly, we presume that the successful implementation of knowledge at the receivers’ units is also influenced by national culture. Successful knowledge management and transfer is considered to be the key to the success of contemporary organizations (Becerra-Fernandez et al. 2004). When transferring knowledge to other operating units of a multinational corporation, the overall goal is to implement the knowledge sent successfully (Sorensen and Snis 2001). Therefore, a shared, explicit understanding of concepts, categories and descriptors lays the foundation for effective communication and knowledge transfer in organizations (Zack 1999). The knowledge needs to be sent in a format that can be understood by the receiver (Thomas 2002). But most of the time the encoded messages cannot be considered universal, they are culture specific and arbitrary (Roth 2001). This

104

Research questions and results

might not always be obvious during the communication process. Messages received from individuals of other cultures might have an outward similarity to home culture messages; their culture-specific differences are often ignored. This might also influence the transfer of knowledge negatively. Successful transfer of knowledge must thus be based on a collaboratively established consensus among the participants (Sorensen and Snis 2001) and can improve relationships among organizational communities if there is a commonly acknowledged context in which the signification given by the users to the symbols are unique (Dupouet and Laguecir 2002). Considering the differences in knowledge management and communication between Japanese and German managers, we can therefore assume that there will be differences in knowledge implementation also. In detail, we talk about knowledge that is being transferred but can only be implemented when the receivers are able to interpret the knowledge accordingly. Successfully interpreting the knowledge requires prior acquisition of considerable specialized knowledge, since not all people in the world possess the knowledge needed to interpret the knowledge sent properly. So context factors as described above do become an important consideration in any discussion of knowledge transfer (Cowan et al. 1999). Individuals prefer to share information with similar people. Consequently, communication between people who have the same background is generally more effective than communication with people who do not share a similar background (Dodd 1997). Sender and receiver of messages share the same context and may have similar goals. Codification and decodification happen in similar surroundings. The effectiveness of communication processes is therefore higher and more satisfying for all participants. If the context of sender and receiver differ, this may not always be the case. Human communication implies that what is said by the speaker is not always received, comprehended or retrieved by the listener and miscommunication arises because of the differences in patterns of discourse (Scollon and Wong-Scollon 1995). If individuals with differing cultural backgrounds communicate, there is a very big chance of misunderstanding due to their differences in communication patterns. This is not only true for communication aspects, but also for knowledge transfer. Williams et al. (1998) come to the conclusion that cultural differences across countries affect the probability of cross-national business relationships. Individuals willingly participate in knowledge transfer, if they share a sense of identity with their colleagues (Bresman et al. 1999). In multinational corporations a shared identity may be an organizational goal, but is often missing in corporate reality. An individual has a uniquely structured view of the world. This view is influenced by the individuals experience and embedded in mental models. It leads to a strong perception that one’s own thinking is correct: individuals feel strongly about their views and tend to defend their positions even if they are not compatible with those of others (McKenzie and van Winkelen 2004).

Knowledge transfer between two cultures and within one culture

105

‘In high-context cultures, members are also expected to know how to perform, so information and cultural rules remain implicit. The context is supposed to be the cue for human behaviour. Expectations are inferred by the context. One is expected to know appropriate behaviours. Meanings are not explained but are implicit’ (Dodd 1997). The Japanese, who are very high context, expect other people to be similarly contexted, informed about everything, including office procedures. The Japanese do not need procedures because they are expected to inform themselves. Furthermore, they expect other people to be similarly contexted – informed about everything (Hall and Hall 1990a). Members of low-context culture make meanings and information available and explain expectations. Information in these low-context cultures is explicit. Meanings are not in the context but in the verbal explanations provided. Procedures are explained and expectations discussed (Dodd 1997). A member of a low-context culture like Germany needs a lot more information on what exactly is expected of him or her and needs procedures and explicit directions. When these two mindsets interact, e.g. in the form of knowledge transfer, misunderstandings might arise. The most frequent communication difficulty, when considering high-context and low-context communication systems, occurs when one person assumes a high-context mind-set, while the other one expects explanations looking for a low-context condition (Dodd 1997). Expectations of both individuals involved in the knowledge transfer processes therefore differ. The same accounts for an intercultural knowledge transfer process. Participants expectations are a integral part of their culture and can in some cases be effective in understanding cultural aspects (Evaristo 2007). However, in a cross-cultural process these expectations cannot always be fulfilled. Figure 8.1 shows the difference between the knowledge provided in highcontext and low-context cultures (Hall 1981). Individuals with a high-context background deliver only a limited amount of information, but a large amount of context that surrounds the information sent. In contrast, members of lowcontext cultures communicate via expressing a large amount of information surrounded by almost no or very little context. The amount of meaning sent is the same for both groups. Figure 8.1 shows the importance of contexts in the process of knowledge transfer. The model assumes that sender and receiver are informed about each other’s contexts and accordingly codify their knowledge to be sent. In reality this might not always be the case. Individuals in geographically dispersed units of an organization do not always know details about the context of the other’s unit. The way knowledge is codified is dependent on the context in which the sender is located. Employees working in a subsidiary certainly know that they do not work in a local firm. Still, in many cases the number of local employees is usually high. Japanese subsidiaries have mostly Japanese employees, because business requirements in Japan ask for Japanese language skills and a Japanese way of dealing with customers. Many subsidiaries therefore perceive themselves as a local company. Communication with the head office can thus become a real

106

Research questions and results

Figure 8.1 Differences in communication content Source: Hall (1981)

challenge, because it might be perceived as being as foreign and as different as any other overseas company. In the Japanese–German corporate environment, which I describe in this book, communication problems with head offices are very common. Knowledge transfer is often hindered by a feeling of estrangement from company units in another culture. Knowledge transfer between high-context (Japan and Korea) and low-context (Germany and Austria) company units seem to be a particular challenge. Li (1999) showed that communication between individuals in high-context countries and low-context countries differs significantly in the amount of information transferred. Within knowledge transfer relationships between members of differing cultures interlocutors communicated less information than between members of the same cultural background. He also showed that low-context/low-context communication relationships do not differ from high-context/high-context relationships in this term. These differences in the communication between high-context and low-context cultures lead to tremendous losses of relevant knowledge within the transfer process between these groups (Li 1999). These findings also lead to the following assumption that intracultural knowledge transfer (e.g. knowledge transfer between two high-context cultures or two low-context cultures) is more effective than intercultural knowledge transfer (e.g. knowledge transfer between a high-context culture and a low context culture). Casrnir (1994, p. 94) refers to communication as ‘events or interactions that take place between individual human being or human beings in groups’. This includes codification of the messages sent. Hall and Hall (1990a, 1990b) state

Knowledge transfer between two cultures and within one culture

107

that cultures differ in their communication styles and divided these styles into high-context and low-context communication styles. A cultural difference can also be seen in knowledge transferring processes (Inkpen 1996). Li (1999) showed that communication between individuals of a high-context and low-context culture differs compared with intracultural knowledge transfer. We therefore conclude that knowledge transfer differs when taking place in an intercultural scenario compared with an intracultural scenario. Based on this assumption the second research question investigated in this chapter is: Is knowledge transfer between two European and two Asian countries more effective than between an Asian and a European company?

Satisfaction with knowledge One relevant factor when talking about the success of knowledge transfer is the construct of satisfaction of the receiver with the knowledge transferred. Satisfaction is the result of a mental comparison of the target expected the actual experience of it. This refers to the fact that individuals do have certain expectations about for instance a product or a service and compare their expectation with the actual experience of the product or the consumed service. In case this experience is perceived as better than expected, consumers are satisfied, in case their expectations are not met, dissatisfaction occur, which may lead to negative consumer reactions. Satisfaction levels are following expectation and so become a very flexible and vulnerable concept. If expectancies increase, satisfaction decreases because the expectations cannot be met (Kardes 2002). Satisfaction can also be described as the sum of one’s feelings or attitudes towards a variety of factors affecting a situation (Bailey and Pearson 1983). In the case of knowledge transfer, satisfaction applies to perception and attitudes toward the knowledge transfer process (Galleta and Lederer 1989). The receiver of knowledge has certain expectations about the type and form of knowledge he or she requires but is confronted with the actual knowledge sent from the other unit. If the expectations are higher than the knowledge received, dissatisfaction occurs that might hinder the successful implementation of the knowledge sent. Satisfaction with knowledge transfer can be defined as a comparison between expectations of a knowledge recipient with the experience of receiving this knowledge and also refers to the impression on how and to which extent knowledge received can be reused locally and increase the local unit profitability. In the case of knowledge transfer, satisfaction applies to perception and attitudes about the knowledge transfer process (Galleta and Lederer 1989). As shown before, communication styles and accordingly knowledge transfer styles are expected to differ in different cultures. Therefore the knowledge ‘expected’ and the actual knowledge ‘received’ might differ greatly and lead to

108

Research questions and results

dissatisfaction. On the other hand, if the knowledge sent fits the expectations of the receiver, the chances of successful implementation are higher. We therefore conclude that knowledge transfer between members of two similar cultures leads to more satisfaction than knowledge between two different cultures. We therefore present the following hypothesis: Hypothesis 3a: German (low-context) and Japanese (high-context) knowledge managers differ in their satisfaction when receiving knowledge from a low-context country. Hypothesis 3b: German (low-context) and Japanese (high-context) knowledge managers differ in their satisfaction when receiving knowledge from a high-context country.

Usage of knowledge As knowledge is being transferred to increase competitive advantages, it also needs to be used at the receiving unit. However, the concept of knowledge usage is one more knowledge-related definition which is allows different interpretations. A majority of scholars agree upon the multidimensional nature of this concept and it seems that there is consensus on the measurement of knowledge usage in scientific literature. Moorman (1995), when investigating marketing knowledge, distinguished between two different knowledge utilization processes: the conceptual utilization process and the instrumental utilization process. The conceptual usage of knowledge uses information to make a current problem understandable and clearer (Deshpande and Zaltman 1982). Knowledge is being used theoretically and to find explanations for problems or changes which an organization confronts. Another way to implement conceptual knowledge is to use it to find solutions for problems or base the development of company goals and strategy on them. The enactment of conceptual utilization processes often involves behaviours, the focus in these behaviours is on influencing the way organizations process information or their commitment to it, which are more cognitive and affective in nature and, therefore, more indirect in their influence on strategies than instrumental utilization (Moorman 1995). An example of conceptual knowledge would be the interpretation of market research results to explain changes in sales numbers. Instrumental usage of knowledge refers to the direct application and implementation of the received knowledge to solve a particular problem (Deshpande and Zaltman 1982). Here knowledge is used for application in work processes. The overall goal of using knowledge instrumentally is the improvement of business operations. Knowledge can here be used to learn from previous experience in performing a task, saving time during operation, but also to increase safety and quality standards. In a marketing department these processes refer to the extent to

Knowledge transfer between two cultures and within one culture

109

which an organization directly applies marketing information to influence marketing strategy-related actions (Moorman 1995). An example of instrumental knowledge usage is information and knowledge on how to perform a market survey in a culturally different market. This knowledge would include recommendations on how to avoid cross-cultural biases or which aspects need to be considered while analysing data from a culturally different market. To there is little consensus on the measurement of knowledge usage in scientific literature. Regarding the findings we can also assume that knowledge from a culturally close source will lead to higher usage in the receptive unit. We therefore present the following hypothesis. Hypothesis 4a: German (low-context) and Japanese (high-context) knowledge managers differ in their usage when receiving knowledge from a low-context country. Hypothesis 4b: German (low-context) and Japanese (high-context) knowledge managers differ in their usage when receiving knowledge from a high-context country.

Decision-making confidence The third factor which will be used in this book to define successful implementation of knowledge is the confidence with making decisions based on knowledge received from overseas units. Corporate performance is a function of managerial decisions. The organizational learning process is based on mainly individual decision-making (Lomi et al. 1997), which focuses on the individual and his or her decisionmaking behaviour as being crucial for an organization to succeed. Managerial decisions in turn are a function of the knowledge processed by decisionmakers within an organization. The main purpose of using knowledge in decision-making is to reduce risk of failed decisions. As shown above knowledge thus forms the basis for decisions to be taken in international management and is used to analyse markets, define goals and finally operationalize, realize and control these goals. Using knowledge in decision-making refers to the process involving the integration of knowledge sources and the selection among strategy alternatives (Moorman 1995). Knowledge allows less effective solutions to be ruled out. Accordingly, the quality of decisions that managers make influences their effectiveness as managers. The effectiveness of managers, in turn, impacts the success or failure of the organizations (Leonard-Barton 1995). Thus decision-making can be seen as a fundamental process in organizations. The process of decision-making is influenced by organizational context, subjective utility, the recognition and evaluation of alternatives and the manner

110

Research questions and results

in which data are presented (Goslar et al. 1986). However, decision styles are very individual and the decision-making process differs considering the needs, values and self-concept of individuals (Clark 1993). Lomi et al. (1997) describes the process of decision-making as follows: ‘local (i.e. new solutions emerge as marginal modifications of pre-existing routines); sequential (i.e. alternatives are considered one at a time); and driven by experience, i.e., learning results in an updating of current routines on the basis of interpretation (or recollection) of past experiences’ (Lomi et al. 1997). In the organizational context decision-making is also a political activity. Decisions change organizations and affect the standing of their members, including, of course, those members who initiated the decision. From a political point of view individual decision-making involves risk not merely for the firm but also for the decision-maker. The risks involved for the firm are that the decision-maker may be unable to persuade their nominal subordinates to follow their orders, and that he or she may be biased or dishonest. The risk for the decision-maker him/herself is that if they make a mistake, they alone will be responsible for the consequence and that even if their decisions are right they may be accused of tyranny, dishonesty or bias (Clark 1993). These approaches of problem solving and decision-making represent components that often separate one culture from another. There are vast cultural differences in how people think and make decisions (Stefani et al. 1997). In the inductive Western view, truth and the ‘correct’ conclusions can be reached if correct steps in the method of reaching a solution are applied. Asians, in contrast, are strongly influenced by Taoist thoughts, that the truth and not the individual is the active agent and that the way of reaching a decision can take various forms (Stefani et al. 1997). Germans tend to prefer explicit and detailed information because of a preference for formality. This also reflects in their decision-making processes, which are evident through the presence of constraining rules (Usunier 2000). The knowledge provided is very detailed and clearly formulated. The Japanese process of collective decision-making on the other hand allows everyone involved a chance to review, evaluate, discuss and approve or disapprove the proposal. This process is absolutely essential in a society where individuals need to be fully informed about everything (Hall and Hall 1990a). The knowledge provided is therefore not this detailed and surrounded by a lot of context. In Japan, as in the West, decision-making can be more or less collective according to what is being decided and in what context. But where in the West managers perhaps tend to emphasize those decisions and parts of the process of deciding, which are carried out by individuals, Japanese managers emphasize and extol the establishment of consensus. In Japanese companies decision-making takes place collectively via a dissemination of information. Apparently, interaction between members of the organization is a very important fact when analysing decision-making within Japanese organizations. The Japanese process of collective decision-making allows everyone involved a chance to review, evaluate, discuss and approve or disapprove the proposal.

Knowledge transfer between two cultures and within one culture

111

This process is absolutely essential in a society where individuals need to be fully informed about everything (Hall and Hall 1990a). The knowledge provided is therefore not this detailed and surrounded by a lot of context. Based on this the following hypotheses were developed: Hypothesis 5a: German (low-context) and Japanese (high-context) knowledge managers differ in their decision-making confidence when receiving knowledge from a low-context country. Hypothesis 5b: German (low-context) and Japanese (high-context) knowledge managers differ in their decision-making confidence when receiving knowledge from a high-context country.

Research results This section illustrates one of the research questions of this book graphically by showing the possible scenarios of knowledge transfer between Asia and Europe and vice versa. This will be examined by a comparison of knowledge reception from each: a high-context culture and a low-context culture (Figure 8.2). German managers who are responsible for knowledge transfer processes within their companies were interviewed on how they perceived knowledge from Austria (low-context) and how they perceive knowledge received from Japan (low-context). At the same time Japanese knowledge managers (highcontext) were asked about their perception of knowledge from a high-context country (Korea) and a low-context country (Germany).

Figure 8.2 Research question 2

112

Research questions and results

All managers sending knowledge are usually also receivers of knowledge and were interviewed on how they evaluate knowledge from overseas units. As shown above, the investigation was performed with the help of three variables: satisfaction with knowledge received, usage of knowledge received and decision-making confidence based on knowledge received from overseas. Tables 8.1 and 8.2 present an overview of the results of the hypotheses test, which were performed via an independent sample t-test. We showed that communication between high-context/high-context and low-context/low-context individuals differs from communication between high-context/low-context individuals in its amount of knowledge transferred. We also showed that communication and accordingly knowledge transfer between similar partners (i.e. partners with a similar cultural background) is generally preferred to communication between partners who differ strongly in their background. We therefore assume that knowledge transfer between actors of a similar cultural background is more successful than knowledge transfer between partners whose cultural backgrounds differ strongly from each other. All the hypotheses presented were tested via independent t-tests. Hypothesis 3a indicates that knowledge from a low-context country will lead to higher satisfaction among German managers than among Japanese managers, assuming that the same cultural context will lead to higher satisfaction. This hypothesis could not be supported (p = 0.73). The satisfaction means show that Germans perceive knowledge from a low-context country as more satisfying, but the differences are not significant. Hypothesis 4a predicted that knowledge from a low-context country will be used at a higher degree by German managers than by Japanese managers. This hypothesis could not be supported (p = 0.75). The results show that knowledge received from

Table 8.1 Receiving knowledge from a low-context country (e.g. Austria, Germany) (1= strongly agree)

German managers Japanese managers Hypothesis test result

Satisfaction

Usage

Decision-making confidence

2.70 2.86 p = 0.73

2.98 2.82 p = 0.755

3.64 3.40 p = 0.122

Table 8.2 Receiving knowledge from a high-context country (e.g. Japan, Korea) (1 = strongly agree)

German managers Japanese managers Hypothesis test result

Satisfaction

Usage

Decision-making confidence

3.36 2.76 p = 0.026

3.25 2.82 p = 0.002

3.55 3.43 p = 0.074

Knowledge transfer between two cultures and within one culture

113

a low-context unit is not being treated and implemented differently by Germans and Japanese. A similar result was produced by the hypothesis test on decision-making confidence from low-context countries. Also here significant differences were not recognizable (p = 0.122). We can see that knowledge which is being transferred from a low-context country (e.g. from Austria or Germany) is perceived equally by managers from both cultural backgrounds. The results however, differ when knowledge is sent from a high-context country, such as Japan or Korea. Here the results of hypothesis 4b show that there are differences in satisfaction. Here we can observe a significant difference (p = 0.026) between both samples. Japanese knowledge managers show a higher satisfaction when receiving knowledge from a high-context country (in this case Korea) than Germans when they do so (in this case from Japan). A similar result was observed when it comes to usage of knowledge from a high-context country. Also in this case Japanese use knowledge more than the German sample (p = 0.002). The differences between the two samples in this case are striking. German managers show a very low acceptance when it comes to knowledge from overseas. Decision-making confidence was the third factor investigated in this chapter. Here we can also observe similar differences; however, the differences are not significant (p = 0.074). Table 8.3 gives an overview of the hypotheses tests and their results. The results show that cross-cultural knowledge transfer is only partly successful. Knowledge received from a low-context source does not lead to differences in acceptance, no matter where the manager who receives it is from. However, knowledge being sent from a high-context source leads to differences. Japanese managers show a higher acceptance when receiving this knowledge than German managers. How can we interpret these differences? In the last chapter I showed that sending processes hardly differ. The choice of knowledge and knowledge transfer instruments do not differ in Japan and Germany. German and Japanese managers show no particular preferences when choosing knowledge to be sent overseas. When receiving knowledge, however, cultural differences became evident. German managers showed a higher satisfaction with knowledge received from a similar culture and they also used it more. Japanese respondents showed a high satisfaction and usage of knowledge, wherever it came from. So why do German managers find it more difficult to accept knowledge from Asia? The first explanation which comes to mind is the fact that knowledge received from Austria is very likely transmitted in German. This eases all transfer processes, and also allows all members of the German firm to use and implement it further, regardless of their language skills. Knowledge from Japan may often be transferred in English or even Japanese, which may inhibit successful implementation at the German unit. Another aspect is the geographical location of both countries which share a common border.

114

Research questions and results

Table 8.3 results of hypotheses 3–5 Hypothesis

Test applied

Results

Accepted/rejected

Hypothesis 3a: German (low-context) and Japanese (high-context) knowledge managers differ in their satisfaction when receiving knowledge from a low-context country Hypothesis 3b: German (low-context) and Japanese (high-context) knowledge managers differ in their satisfaction when receiving knowledge from a high-context country Hypothesis 4a: German (low-context) and Japanese (high-context) knowledge managers differ in their usage when receiving knowledge from a low-context country Hypothesis 4b: German (low-context) and Japanese (high-context) knowledge managers differ in their usage when receiving knowledge from a high-context country Hypothesis 5a: German (low-context) and Japanese (high-context) knowledge managers differ in their decision-making confidence when receiving knowledge from a low-context country Hypothesis 5b: German (low-context) and Japanese (high-context) knowledge managers differ in their decision-making confidence when receiving knowledge from a high-context country

Independent sample t-test

0.073

Rejected

Independent sample t-test

0.026

Accepted

Independent sample t-test

0.755

Rejected

Independent sample t-test

0.002

Accepted

Independent sample t-test

0.122

Rejected

Independent sample t-test

0.074

Rejected

Perceived cultural distance becomes lower and may have a positive effect on the acceptance of knowledge. I will investigate the influence of these factors in my next chapter. When investigating Korea and Japan, we cannot see many similarities. There is no common border between Korea and Japan, nor do these countries speak the same language. These countries do have a very troubled history

Knowledge transfer between two cultures and within one culture

115

(Japan occupied Korea for 35 years at the beginning of the last century), which is, perhaps not well known in the West, still the foundation of feelings of distrust or even antipathy on both sides. These conflicts may hinder communication flows between company units located in these countries. Therefore, it may advisable to treat these two nations (although both are high-context nations) separately when talking about communication and cultural issues. Another aspect rarely considered is the fact that even if Korea and Japan are labelled high-context cultures, both countries show significant differences in language, cultural background and communication styles. As for Japanese, Korea may be geographically nearer than Germany but is still considered a foreign country with a completely different culture. Most Westerners perceive Asian cultures to be very similar to each other, and many Asians think that all Europeans behave and think almost the same. The reality is different. Even cultures that may look very similar from an outside perspective can show great differences which can influence cross-cultural communication and knowledge transfer processes. So, even if Korea and Japan might be very near to each other on the high-context/ low-context scale, we can hardly speak of the same or even a similar culture. This might lead to the conclusion that Germany and Korea are both perceived as culturally very different and that there should be no distinction between them. We can also see, however, that the Japanese have a high capability to integrate and accept knowledge, without being too influenced by its origin. Japanese managers, as knowledge management literature has long pointed out, have a very open approach to knowledge (Nonaka and Takeuchi 1995). The origin of knowledge may not play such a very important role at all. Inkpen and Crossan showed that Japanese corporations are more willing to invest into the creation and the transfer of knowledge from overseas partners and may be better fitted to assess the cost–benefit trade-off of knowledge transfer processes (Inkpen 1996). Miesing et al. (2004) see the Eastern Confucian focus on knowledge also in strong contrast to the Western approach. It is more concentrated on the know-who and not as in the West on the ‘what’ and ‘how’. They state that, according to Nonaka and Takeuchi (1995), it is intuitive to envision the knowledge in control of the knowledge giver, but point out that it is the knowledge recipient who decides the value of the information. Furthermore, implementing knowledge of foreign origin has a long historical tradition in Japan, starting with the integration of Chinese characters into the Japanese language system. When Japan opened its border to the West after the arrival of Commodore Perry in 1853, the interest in foreign knowledge led to a metamorphosis from a mediaeval empire into a modern state, an endeavour unprecedented in history (Buruma 2003). The Japanese know the value of foreign knowledge and do not dismiss any kind of knowledge without prior examination and evaluation. It is therefore not surprising that Japanese interviewees do not distinguish between knowledge from Korea and knowledge from Germany.

116

Research questions and results

Another explanation of the differences between knowledge reception may be found in Hall’s theory itself. Knowledge from low-context countries is supposed to be less contexted and may therefore be easier to understand, even in a culturally very different surrounding. Another aspect not often mentioned in management literature is the fact that the cultural distance toward Japan is often perceived as very high by Westerners. Japan, as well as other Asian countries, are considered to have very exotic cultures and rules are difficult to understand for Europeans. Japanese on the other hand are not only exposed to Western language and information when in high school, the Japanese media also very strongly focus on news from Korea as well as from Western countries. This may lead to a more open approach towards information and knowledge from abroad. However, even today Japan is seen as an exotic business place, with management practices which are difficult to understand and based on Asian mental models. This attitude may decrease the acceptance of knowledge received from Japan. Japan on the other hand does not always perceive Western ideas as so distant and has always shown a great interest in the West. As I explained above this attitude has played a major role in the country’s development after the Second World War, but the great interest and acceptance of foreign ideas and technologies can still be observed in modern Japanese corporations. Being exposed to Western media, products and having a tradition of integrating those into a Japanese environment may decrease cultural distance and lead to a higher acceptance of overseas knowledge. Perceived cultural distance and its influence on knowledge management will be discussed in the following chapter.

Summary The second research question investigated the effectiveness of the knowledge transfer process in an intercultural versus an intracultural setting. The base of this comparison was Hall and Hall’s concepts of high-context and low-context cultures. In our case intracultural knowledge was investigated between high-context and low-context cultures, such as Germany and Japan. In my investigation I compared how knowledge from high-context and low-context sources are being accepted by German and Japanese managers. Three hypotheses were tested in German and in Japanese multinational corporations. I assumed that satisfaction, usage and decision-making processes between Germany and Austria or between Japan and Korea are more successful than between Germany and Japan. The results showed that knowledge being received from a low-context source (such as Austria or Germany) was received in the same way from Japanese and German knowledge managers. Knowledge from a high-context source (Korea or Japan), however, led to higher satisfaction and usage and was not

Knowledge transfer between two cultures and within one culture

117

effectively transferred to German managers and their corporation. The reasons for these differences may be found in the cultural closeness between the low-context countries investigated (Germany and Austria), but might also be explained by a greater openness of Japanese managers toward overseas knowledge.

9

Which factors influence cross-cultural knowledge transfer?

In the last chapter I showed that knowledge transfer is more efficient when knowledge is being received from a low-context culture. Knowledge from a high-context culture is more successfully integrated in high-context cultures such as Japan. But why is this so? Can we assume that Japanese managers have been more exposed to Western knowledge and therefore have a more positive attitude towards it? Does this mean that more intercultural experience will lead to a more successful knowledge transfer process in German organizations as well? Knowledge management scientists have investigated various influence factors when sharing knowledge. Culture has so far been considered to influence knowledge transfer, but is often treated as a single variable in these investigations. However, working in a cross-cultural business environment culture becomes a more complex concept. Being of different cultural heritage alone is not enough to explain differences in management processes; personality and personal history as well as other factors have a major influence on an individual’s behaviour too. In fact, every knowledge worker does not only have his or her national culture, but also a different exposure to other cultures and a different level of intercultural skills and experiences. Today’s workforce is very mobile; many employees in multinational corporations have a history of studying or living in a different culture for a longer while. The development of cultural knowledge mainly takes place via experiencing intercultural communication challenges and conflicts. When interacting with members from other cultures, individuals develop experience in how to communicate effectively with them. Higher experience in intercultural communication also leads to higher knowledge of possible misunderstandings and possible solutions. ‘In the process of adaptation to new situations and their requirements, human beings have always found ways to deal with differences. Results are mutually beneficial, demonstrating the fact that change and adjustment are taking place’ (Casrnir 1999). Once individuals come into prolonged contact with individuals from other cultures in a shared environment, the ‘other’ as well as the related concepts of difference and change come to the foreground of any individual’s perception (Casrnir 1999) and can improve the flow of intercultural communication. The interviews conducted with experts support this

Which factors influence cross-cultural knowledge transfer?

119

view. One of the German interviewees stated: ‘The first time I asked my Japanese secretary to write a table, it did not work very well. It took her two days to come to the conclusion to construct the tables using Excel, and which aspects to consider. Things that I took for granted, were not obvious to her at all. So I have started to give very detailed information about what I need and how the things were supposed to be done, to reduce the uncertainty of the orders’. Knowledge transfer across cultures has the aim to integrate knowledge at another corporate unit and increase its value by applying it in a new environment. Effective knowledge in multinational corporations is, according to Doz et al. (1997), facing two main challenges: the location challenge (knowledge originates from geographically dispersed parts of the world) and the knowledge complexity challenge. There has to be a balance between blindly applying rules developed at home to the new environment and failing under adaptation versus playing entirely by rules of the local environment and thereby failing to leverage the home-base knowledge (Doz et al. 1997). Effective knowledge transfer happens between people who share social capital with each other. The bases are the structure and configuration of the connections between members and the cognitive compatibility which develops out of a social interaction around a shared language, narrative and common communication codes and protocols as well as the quality of the relationship between the individuals exchanging knowledge (Adler and Kwon 2002). In the case of knowledge, management within a single company unit developing social capital is easy. People share the same context, language and often also the same cultural background. In the case of intercultural knowledge transfer this social capital is difficult to develop because participants in the knowledge transfer process do not share the same context, have often never met and are separated by geographical distance. We can see that national culture does lead to difference in how knowledge is being accepted and reused, but we still need to ask which facets of culture are the most relevant when transferring knowledge. The third research question to be answered in this book is therefore the following: Which culture-related factors improve or inhibit cross-cultural knowledge transfer? In this chapter I will try to investigate whether factors such as language skills, international experience, cultural openness and perceived cultural distance hinder or promote the effectiveness of cross-cultural knowledge transfer.

Cultural openness The first factor to be discussed is cultural openness towards the sender’s culture. Cultural openness consists of a set of abilities. It includes cultural knowledge, primarily based on past experience, which enables a person to engage in appropriate and meaningful interactions with people of divergent

120

Research questions and results

national and organizational cultures (Griffith and Harvey 2001). Cultural openness can thus be defined as the ability to understand that communication processes are surrounded by culture-related contexts and that these contexts need to be recognized and included when interpreting messages in a crosscultural communication process. People who develop cultural openness also improve the overall cultural interaction (i.e. national culture adjustments over time due to the intercultural communication between relationship partners) (Griffith and Harvey 2001). Enhanced cultural openness helps to develop a basic insight into communications patterns (i.e. skills necessary for intercultural communication). Thus, cultural openness leads to a more interactive communication between individuals from different cultural backgrounds and to higher communication competence. People who develop cultural openness also improve their skill necessary for intercultural communication and develop new ways of communication (Griffith and Harvey 2001). Cultural openness improves crosscultural communication. Communicators with a higher cultural openness are able to interpret their counterparts’ messages as well as their surrounding contexts. Knowing about different contexts allows them to understand the intention of the sender and interpret the content of the message accordingly. Communicators can therefore understand each other better. When transferring knowledge the recipient of knowledge is required to show cultural openness to interpret the message in an appropriate manner. If he or she does not, misinterpretations and misunderstanding may decrease the usage and application of knowledge in the recipients’ unit. I therefore assume that cultural openness also influences the success of knowledge integration in multinational corporations and present the following hypothesis. Hypothesis 6: The higher the cultural openness of the knowledge receiver the higher the effectiveness (satisfaction, usage and decision-making confidence) with knowledge transfer within multinational corporations.

Perceived cultural distance In a cross-cultural knowledge transfer process, knowledge is received from and sent to units that operate in a culturally differing environment. Accordingly, the cultural distance between the units influences the knowledge transfer process within a multinational corporation. As shown above, knowledge which was chosen and codified in one unit can be interpreted and reused in a culturally different one. The recipient’s attitude towards the sender’s culture plays a dominant role in this process. The degree to which his or culture is perceived as different reflects on the recipient’s ability to interpret knowledge and information received and to reuse it in the local context. Perceived cultural distance can be considered a major influence on the effectiveness of knowledge transfer. The concept of cultural distance is trying to measure the extent to which different cultures are similar or different from each other, and has been applied

Which factors influence cross-cultural knowledge transfer?

121

to a multitude of research questions especially in the area of foreign direct investment (Shenkar 2001). Concerning companies it shows the degree to which the norms and the values of two firms differ because of their separate national characteristics. The degree of cultural distance is considered one of the major obstacles in successful performance in cross-cultural business relationships (Williams et al. 1998). One of the main assumptions concerning multinational corporations is that the higher the cultural distance between cultures, the worse the performance of foreign subsidiaries (Shenkar 2001). The extent to which cultural fields of individuals overlap influences the opportunity for distortion in the communication process. The intercultural communication process is therefore strongly influenced and complicated by the cultural distance (i.e. the cultural novelty) between partners (Griffith and Harvey 2001). The reason for this is that communication competencies do vary by cultural distance and develop differently based on a person’s level and frequency of past interactions, the past success of intercultural communications and the level of internationalization (Kim 1988). The greater the cultural distance between people who are attempting to communicate effectively, and thus the less consistent the communication environment, the less likely there will be sufficient social bonding among individuals to facilitate effective communication (Griffith and Harvey 2001). When it comes to knowledge transfer, cultural distance matters because it raises barriers for understanding other members of the corporation (Simonin 1999). Johanson and Vahlne (1997) define cultural distance as the resulting factor of culture-based factors that impede the flow of information between the firm and its partners. But perceived cultural distance is not a static concept (Shenkar 2001). It will decrease over time if the individuals are confronted with the unknown culture on a regular basis. In many cases individuals working in an organization concerned with international communication do gain experience in communicating with partners of a differing cultural background. As one of the German interview partners stated about communicating with Japanese colleagues: ‘In the beginning it is very hard, but after a lot of trial-and-error you do find out how to talk to people to get the things you want’. Cross-cultural understanding greatly depends on the way the distance between one’s own culture and the culture observed or the culture of other members of the organizations is perceived. This is also the case in knowledge transfer processes. The more each party understands the other’s situation, perspectives and culture, the easier it is to use symbols that will be codified and decodified in a similar way (Thomas 2002). The smaller the perceived cultural distance the less difficult is the knowledge transfer process. Small cultural differences ease the intercultural and interpersonal communication process. People can communicate easily and faster, and articulate more freely. This leads to the following hypothesis: Hypothesis 7: The higher the perceived cultural distance of the knowledge receiver the lower the effectiveness (satisfaction, usage and decision-making confidence) of knowledge transfer within multinational corporations.

122

Research questions and results

International experience Communication of two organizational units can be influenced by the degree of consistency of core elements among the national cultures of its members (Fox 1997; Li 1999). The knowledge recipient needs to be aware of the context of the knowledge sender. The development of cultural knowledge mainly takes place via experiencing intercultural communication challenges and conflicts. When interacting with members from other cultures, individuals develop experience in how to communicate effectively with them. Higher experience in intercultural communication also leads to higher knowledge of possible misunderstandings and possible solutions. ‘In the process of adaptation to new situations and their requirements, human beings have always found ways to deal with differences. Results are mutually beneficial, demonstrating the fact that change and adjustment are taking place’ (Casrnir 1999). Experiences of having lived in a foreign country and interacting with individuals of a different nationality and lifestyle can improve intercultural skills and cultural openness. Improving intercultural skills mainly takes place via experiencing intercultural communication challenges and conflicts. Higher experience in intercultural communication leads to higher knowledge of possible misunderstandings and possible solutions. Since individual cross-cultural communication is the base for knowledge transfer, we assume that intercultural knowledge transfer is also positively influenced by a high degree of international experience. Hypothesis 8: The higher the degree of international experience of the knowledge receiver the higher the effectiveness (satisfaction, usage and decision-making confidence) of knowledge transfer within multinational corporations.

Language skills Language is the most clearly recognizable part of culture (Hofstede 1984). ‘History, worldview, beliefs, values, religions, and social organizations may all be reflected through different languages and linguistic varieties in a culture’ (Scollon and Wong-Scollon 1995, p. 137). Language is defined as: ‘a symbolic code of communication consisting of a set of sounds with understood meanings and a set of rules for constructing messages’ (Thomas 2002, p.118), which is accompanied by ‘bodily icons, indices or signals (visual and aural mimicry, physiological indices or signals such as laughing, blushing or crying)’ (Rosengren 2000, p. 33). Language is very evidently a learned characteristic, which means it is not inherited, and people are able to learn additional languages beyond their first. It seems that the second language is most difficult to master; once people have learned to switch their minds between two languages they more easily absorb additional ones. Some people demonstrate that the human mind can master up to ten or more languages more or less fluently (Hofstede 1984).

Which factors influence cross-cultural knowledge transfer?

123

Language skills play an important role in transferring knowledge within multinational corporations. Managers in multinational corporations repeatedly report of language skills as a major hurdle when communicating with head offices and other subsidiaries (Haghirian 2007). Despite this, language skills and their influence on international management processes are a topic which is neglected in modern management research. The reasons for this are not clear; that most researchers have not really experienced a truly intercultural workplace, in which employees of different national backgrounds and mother tongues are working together. I also got the impression that in management research the idea that everybody working in a multinational company speaks English well seems to be prominent. In real business life, however, linguistic misunderstandings are quite common. And even if all members of an intercultural workplace speak the official company language, which is mostly English, communication problems hardly decrease. On the contrary, in these cases many employees do not use their mother tongue to express themselves and also to communicate knowledge. Misunderstandings are frequent and have a negative effect on corporate culture and team work. Corporate performance and effectiveness are negatively influenced by communication problems. Language skills play a major role in multinational corporations and can create a filter for which knowledge is being transferred and by whom. It also limits access to knowledge to only individuals who have adequate language skills. A lack of language skills can thus hinder or block knowledge transfer. Employees may want to communicate and share knowledge but cannot do it because they do not speak or understand a foreign language well enough or do not understand hints and hidden messages. Multinational corporations certainly try to hire local employees for their subsidiaries who are able to communicate fluently in either English or the language of the headquarters. Investment banks or international consultancies may not have a problem finding internationally educated staffs in most markets, manufacturers on the other hand are often looking for employees with very specific technical skills. They often hire local engineers who do not speak foreign languages very well. Thus, in many subsidiaries numerous employees do not speak English or the language of the headquarters very well, because market requirements stress special technical skills or expertise in the local market but not language skills. These difficulties also reflect in the corporations’ ability to share knowledge internationally. A low number of multilingual staff leads to a few company members becoming communication or knowledge sharing agents, even if they (as shown in my example above) are neither educated in transferring knowledge nor experts in a certain field. One obvious consideration in cross-cultural knowledge transfer is language as an instrument being used by the partners communicating. Language is man’s most important tool of communication and an instrument for transferring cognitive, affective and conative information (Rosengren 2000). This implies the sender and receiver must own a certain language ability to do so. Language ability refers to the ability to speak, read, listen and understand

124

Research questions and results

another culture’s language and allows verbal messages to be communicated (Li 1999). It reflects the ability to interact and empathize with members of other cultures and, if necessary, resolve occurring communication problems. Speaking of knowledge transfer the language abilities of both the individual in the subsidiary and the individual in the headquarters generally have to be satisfactory, because a lack of language ability may make even well-codified knowledge inaccessible (Simonin 1999). Knowledge transfer in a surrounding, which implies a common language, increases the probability of understanding, but also the shared fund of knowledge and a shared system of meanings (Doz and Santos 1997). In international business however, this is still not a common scenario. Westerners from English-speaking nations have in general felt little need to develop abilities in other languages. English is considered the de facto international language (Melville 2000), and organizations generally assume that the language factor can be overcome ‘because most people do speak some English anyway’. This attitude might explain the complete lack of the language factor when discussing knowledge transfer processes. Language differences are not considered a barrier in international knowledge transfer processes. Generally, it is very naive to regard foreign employees’ ability to speak English sufficiently to support the knowledge transfer of an organization efficiently. In the case of Japanese companies, it might be very possible that members of big organizations have received English language training over many years and therefore are able to communicate with their foreign colleagues. Still this is not always the case; many companies do not offer any language classes at all to their employees. According to all the interview partners, Japanese business people prefer using Japanese in any case. Some of them, who have spent a longer period overseas, might be proud of showing their language ability and enjoy using English, but this is considered an exception. In all cases language is considered the crucial aspect in communicating within the subsidiary and in communicating with overseas departments. ‘Even though all the other members of my headquarters speak English, I am the bottleneck in the communication with our German headquarter, because I speak German, English and Japanese’, said a German expatriate in Tokyo. Another German interviewee working in Japan stated: ‘Our German colleagues of the headquarters have met my Japanese boss more than 10 times and he speaks English very well. Still if they need something they will talk to me first, because I am the only native speaker of German in my department. I am lucky this does not cause any problems within our department, because my boss knows German ways. But in other Japanese companies leaving out my boss in the communication process would be considered very rude, because he is much higher in rank than I am and should be addressed first by the headquarters’. Despite these obvious problems, language skills are a topic which has so far been neglected in international management research. Only Simonin

Which factors influence cross-cultural knowledge transfer?

125

(1999) refers to language differences as a factor increasing cultural distance, and Richter (1996) found in his working paper that when the subsidiaries’ employees lacked a satisfying level of English or any other appropriate language to communicate with the headquarters, the company was not able to gain learning successes by communicating with the headquarters and thus gaining new knowledge. Communication within the multinational company is obviously strongly influenced by the language ability of the individuals. This may not be such a serious problem when communicating with partners that have a similar mother tongue or a Western language. But Japanese is a special case. It takes a minimum of two or three years of intensive study to master this language at a conversation level. In Japanese, language reading and writing systems are separate, and there are ‘few Westerners who have systematically learned both – realistically, doing so requires a university-level intensity of study’ (Melville 2000, p. 122). This statement is supported by the author’s experience of trying to reach a satisfying level of business Japanese. Although holding a university degree in Japanese studies plus attending a two-year intensive language course in Tokyo, every discussion or conversation in Japanese addressing special topics needs intensive preparation. In contrast, for Japanese people English is relatively easy to read (Melville 2000), and they prefer written statements when communicating with Western counterparts if they do not perceive their language skills to be satisfying. In one German multinational company managers communicate with their Japanese counterparts mainly via letters, faxes and e-mails, to make sure the content is understood. Attempts to call and meet with their Japanese partners failed because of language problems. The following situation described by another European expatriate shows how miscommunication and misunderstandings are quite frequent: ‘People from the German headquarter came to the Japanese subsidiary, conducted a meeting explaining the new company strategies to the Japanese staff in English. There was no resistance in the meeting and the German managers where very satisfied with the “fast and easy” outcome of the meeting. No one from the Japanese subsidiary was holding anything against it, which was considered a sign of consent. They did not realize that the Japanese managers participating in the meeting only spoke English about once a year and did not want to embarrass themselves by using their bad English. So they did not react during the meeting, but also did not understand the outcome of the meeting either. The whole meeting was finally completely useless’. In any event, language ability strongly influences the knowledge transfer process. The higher the language ability of the sender the more likely he will prefer to interact verbally and to talk directly to his or her counterpart. If language ability is limited, the sender or receiver prefers to communicate via means that reduce the possibilities of misunderstandings. Codification methods like databases and decision support systems are expected to allow more direct and clear communication and reduce the risk of miscommunication.

126

Research questions and results

English language skills Speaking English is often regarded a prerequisite for employees in a multinational company. English can easily be considered ‘the world language’, because it is being routinely used in about 75 countries. This leads to the fact that about two billion people, or a third of the world’s population is exposed to English in their daily life (Crystal 1997 cited in Kameda 2000). Westerners from English-speaking countries often do not speak any other language than English, since English is considered the de facto international language (Melville 1999) and organizations generally assume that the language factor can be overcome ‘because most people do speak some English anyway’. Not surprisingly, English is mostly prescribed as a common language within many multinational companies in Europe (Kameda 2000). We can therefore assume that also in multinational corporations English is commonly used to communicate with overseas subsidiaries. Accordingly, good English skills may positively influence the transfer of knowledge within the multinational corporation. Hypothesis 9a: The higher the receiver’s English skills, the higher the effectiveness (satisfaction, usage and decision-making confidence) of knowledge transfer within multinational corporations.

Head office language skills In a Japanese multinational firm communication within naturally not only happens in English but also in Japanese. It might be very possible that members of big Japanese organizations have received English language training over many years and are very skilled in communicating with their foreign colleagues. Still this is not always the case. English language skills of Japanese managers might therefore often not be very satisfying when communicating with foreigners. Often an interpreter is used for important meetings because many Japanese lack confidence in their language ability and are embarrassed about their English (Melville 1999). Hayashi (2003) argues that Japanese managers have insufficient grammatical and social competencies in English. Richter (1995) reports of a case where not one member at a Tokyo subsidiary of a German multinational corporation could speak English or German well enough to communicate with the headquarters. In any event, Japanese business people prefer using Japanese when discussing business issues. Some of them, who have spent a longer period overseas, might be proud of showing their language ability and enjoy using English, but this is considered an exception. In all cases the language is considered the crucial aspect in communicating within the subsidiary and in communicating with overseas departments (Haghirian 2003). We can therefore conclude that the interaction and knowledge transfer between overseas subsidiaries with

Which factors influence cross-cultural knowledge transfer?

127

their headquarters will be improved if local knowledge recipients show a high proficiency of the head office’s language. The same is the case in a German multinational corporation. Multinational corporations tend to send expatriates to the host market to improve the efficiency of the subsidiary. Richter (1996) showed in his series of qualitative interviews with German subsidiaries in Japan that German companies deliberately send German expatriates to the subsidiary in Japan to employ them as a transmitter of knowledge. These expatriates belong, in most cases, to the second management level and are in some cases employed as an assistant to the Japanese general manager. Apparently, expatriates have less trouble transferring knowledge towards their headquarters than their Japanese colleagues because they encounter less resistance within the headquarters (Richter 1996). Another aspect of expatriates as knowledge transmitters is the fact that they are native speakers of German, which, according to one interview partner, decreases difficulties in communicating with the headquarters: ‘Of course there are no communication problems, if there are Germans talking to the headquarter. If a German talks to a German about what to do, there are no misunderstandings’. On the contrary, subsidiaries without German expatriates were found to have serious problems in communicating with their headquarters and to have a weaker position in negotiating with the headquarters (Richter 1996). Hypothesis 9b: The higher the receiver’s language skills in the senders language, the higher the effectiveness (satisfaction, usage and decisionmaking confidence) of knowledge transfer within multinational corporations.

Results of hypotheses tests In the following section I will present several factors and discuss their relevance for conducting knowledge transfer processes successfully. Again I will look at the samples separately. Both samples, the German and the Japanese one, will be analysed to see whether cultural variables such as cultural openness, perceived cultural distance towards sender country, international experience and language skills influence the effectiveness (satisfaction, usage and decision-making confidence) when receiving knowledge from either Japan or Germany (Figure 9.1). The investigation of language skills differed. In the German case, English skills and Japanese skills were investigated, in the case of the Japanese sample English skills and German skills were the focus of interest.

Research results To identify which influence factors reflect on all the dependent variables (satisfaction, usage and decision-making confidence with knowledge) I conducted a

128

Research questions and results

Figure 9.1 Research question 3

multivariate analysis of covariances. The results of the analysis can be found in Tables 9.1 and 9.2. Hypothesis 6 predicts that cultural openness of the knowledge receiver in the overseas unit will be positively correlated to the effectiveness of intercultural knowledge transfer. This hypothesis could not be supported. Cultural openness does not influence the satisfaction with the knowledge received, nor its usage nor decision-making confidence within the subsidiary. This is quite surprising, since scientific literature considers cultural openness to be influential on knowledge sharing. A mindset that favours no change in local activities is supposed to influence knowledge transfer processes in a negative way (Crossan and Inkpen 1995). It may result in an ingrained attitude of ‘this is how we do it here’ and may therefore be a barrier for the usage (Gieskes, et al. 2002). In any event, before the significant impact of this variable can be dismissed in general, more research on the issue would be warranted. Hypothesis 7 deals with perceived cultural distance of the knowledge receiver and its influence on effective knowledge transfer. This hypothesis was supported by the data. We can therefore conclude that the attitude towards sender country play a crucial role for knowledge transfer processes. These results are supported by the work of Hamada (1996), who showed that the a perceived cultural barriers of Americans when communicating with Japanese colleagues can create problems in transmitting informal information. Even if Hamada

Which factors influence cross-cultural knowledge transfer?

129

Table 9.1 Influence factors of cross-cultural knowledge transfer (German managers) Influence factor

Significance

Cultural openness Perceived cultural distance International experience English language skills Japanese language skills

0.55 0.015 0.198 0.538 0.440

Table 9.2 Influence factors of cross-cultural knowledge transfer (Japanese managers) Influence factor

Significance

Cultural openness Perceived cultural distance International experience English language skills German language skills

0.202 0.004 0.532 0.727 0.237

only refers to personal interaction within one single company, we can conclude that cultural barriers when communicating knowledge between units in Japan and Europe may be even perceived as higher and therefore hinder knowledge transfer even more. Crossan and Inkpen (1995) also point out that cultural differences inhibit knowledge sharing. Interactors perceive each other as very different and do not intend to learn from each other or to exchange information. They refer to too great differences between the knowledge exchange partners as one of the main obstacles to organizational learning. Hypothesis 8 deals with the international experience of the knowledge receiver, and could not be supported either. The results of the analysis show that the experience of the knowledge receiver shows a significant negative influence on satisfaction with the knowledge received as well as on the usage. We assumed that knowledge receivers need to know the sender’s context to interpret knowledge correctly and integrate it into their daily activities and routines. Knowledge receivers who have spent a long time abroad are more used to understanding knowledge from other countries and to using it. But the results of the survey show that international experience of the knowledge recipient does not directly reflect on effectiveness of cross-cultural knowledge transfer. Hypothesis 9a and 9b indicates that language skills will be positively related to the effectiveness of intercultural knowledge transfer. Both parts of the hypothesis could not be supported. Table 9.3 presents a summary of the hypothesis tested. These outcomes are quite surprising. We assumed that, when transferring knowledge across cultures, e.g. within a Japanese multinational corporation, the success of knowledge transfer heavily depends on the interpretation of

130

Research questions and results

Table 9.3 Results of hypotheses 6–9 Hypothesis

Test applied Results

Supported/rejected

Hypothesis 6: The higher the cultural openness of the knowledge receiver the higher the effectiveness (satisfaction, usage and decision making confidence) of knowledge transfer Hypothesis 7: The higher the perceived cultural distance of the knowledge receiver the higher the effectiveness (satisfaction, usage and decision making confidence) of knowledge transfer Hypothesis 8: The higher the international experience of the knowledge receiver the higher the effectiveness (satisfaction, usage and decision making confidence) of knowledge transfer Hypothesis 9a: The better the receiver’s English skills, the higher the effectiveness (satisfaction, usage, and decision making confidence) of knowledge transfer Hypothesis 9b: The better the receiver’s language skills in the sender’s language, the higher the effectiveness (satisfaction, usage, and decision making confidence) of knowledge transfer

Mancova

0.55/0.202

Rejected

Mancova

0.015/0.004

Supported

Mancova

0.198/0.532

Rejected

Mancova

0.538/0.727

Rejected

Mancova

0.440/0.237

Rejected

subtle meanings and the context surrounding the knowledge message itself. Also, language skills and openness are very convincing influence factors. The results show, however, that there is only one major influence on crosscultural knowledge transfer: perceived cultural distance towards the sender country. This means that if the knowledge receiver has a positive attitude towards the origin of the knowledge, it is perceived as more satisfying, it is used more and leads to a higher decision-making confidence. In both cases, the German and the Japanese samples perceived cultural distance was the only significant independent variable, which strengthens the impression that personal attitudes, preferences and experience play a major part when transferring knowledge across cultures. It is understandable that a positive attitude toward the sender or the sender culture improves knowledge transfer processes within multinational firms. In many cases knowledge received from overseas is difficult to understand, lacks context and is not very welcome. Many of my interview partners in subsidiaries referred to ignorant head offices that are not familiar with local customs and market particularities. A lot

Which factors influence cross-cultural knowledge transfer?

131

of information from other subsidiaries causes problems at the recipient’s unit and is often not perceived as an asset to improving corporate success, but creates more pressure and complications. Knowledge transferred within a multinational firm therefore needs a lot of interpretation and explanation, and these are more successful if the receiver of knowledge has a positive attitude towards sender and sender culture. Misunderstandings which are very likely to occur can be clarified more easily, the barrier to ask questions is lower and helps integrate knowledge at the final destination. Perceived cultural distance can also explain why Japanese managers showed a higher satisfaction and usage when receiving knowledge from Germany than German managers receiving it from Japan. Growing up in a culture which readily embraces outside ideas leads to a more positive attitude towards foreign knowledge in general and in some ways also to lower cultural distance towards Western countries. This attitude supports the integration of knowledge in the Japanese workplace and has been a successful factor in the development of the Japanese economy over the past decades.

Summary This chapter set out to investigate which factors influence knowledge transfer within multinational corporations. Among these the recipient’s perceived cultural distance towards the knowledge sender’s country proved to be the highest barrier to sending knowledge overseas within a multinational corporation. Surprisingly, a knowledge recipient’s experience of living abroad, cultural openness and language skills do not have an influence on the effectiveness of knowledge transfer.

Part III

Effectiveness of cross-cultural knowledge transfer in multinational corporations

10 How successful is cross-cultural knowledge transfer?

By the early 1990s, multinational corporations’ international production had surpassed international trade as the main mechanism for servicing international markets. Trade itself was increasingly conducted within and between multinational corporations. The characteristics and management styles of these companies have changed dramatically over time. Still, international business researchers’ interest has tended to be on foreign direct investment flows rather than on firm level behaviour of multinational corporations and their new agendas. One of the fields that clearly needs to be researched in greater detail is the relationship between headquarters and subsidiaries of a multinational corporation (Young 2000). One main aspect in this relationship has been and is the transfer and the communication of corporate knowledge from headquarters to subsidiaries of a multinational corporation located in differing cultural and geographical settings and vice versa. This book aims to investigate whether the national culture of employees influences knowledge transfer processes within multinational corporations. The focus of attention is German and Japanese multinational corporations. The research results presented are based on the theoretical background developed by Edward T. Hall, which states that cultural background shapes the way people communicate with each other. This assumption is strongly supported by the existing literature on the topic and by qualitative interviews conducted to develop the underlying model. The main premise of the book was that even if knowledge is being transferred between two different organizational units, two individuals communicate knowledge. Intercultural knowledge transfer is considered a communication process and therefore faces the same challenges as an intercultural communication process. It is not happening in a vacuum, but is surrounded by a cultural context. I therefore concluded that cultural differences in communication between two members of corporations also account for knowledge transfer processes between them. The main problem is that the sender and receiver are operating in two different cultural contexts, which may lead to hindrances in the knowledge transfer process. Besides this, knowledge transfer in multinational corporations takes place via the interaction of an international workforce and often overcomes long geographical distances. This means that the knowledge

136

Effectiveness of cross-cultural knowledge transfer

sender and receiver often have differing cultural backgrounds and do not speak each other’s language either, which may hinder successful knowledge transfer between company units of multinational corporations. So how do cultural differences influence knowledge transfer? Can they be ignored assuming that two members of the same organizations will share knowledge freely even across borders? Or do cultural differences present a serious barrier for corporate knowledge flows and consequently for a corporation’s success. To investigate these issues I have defined three research questions. (1) Do knowledge transfer processes differ between cultures? (2) Is knowledge transfer across cultures less successful than knowledge transfer within one culture? (3) Which culture-related factors improve or hinder successful knowledge transfer? These questions were investigated via a set of hypotheses, which are summarized below. I chose two samples, German and Japanese managers, responsible for knowledge transfer in their respective firms. All interviewees exchanged knowledge with members from a high-context and a low-context country. The results (Table 10.1) of the investigation can be summarized in the following statements.  The process of sending knowledge (choice of knowledge and of knowledge instruments) does not differ between German and Japanese managers.  The reception of knowledge differs across national culture.  Japanese managers show a higher satisfaction and usage of knowledge from overseas than German managers.  A high perceived cultural distance towards the sender country has a negative effect on cross-cultural knowledge transfer.

Are the Japanese doing it better? The Germans and Japanese do not differ in their operational processes, such as choosing knowledge, and only differ in deciding on the transfer instruments in the number of expatriates they send overseas. But they do differ in their reception of knowledge from overseas. Both samples, however, show higher satisfaction and usage if they perceive the sender culture or country as culturally closer and geographically nearer. We can easily see that the final stage of the knowledge transfer process, the reception of knowledge at the overseas unit, is the most important one. At this step, an individual has to receive knowledge, interpret or decodify it and then apply its content to the local environment. The overall goal of the transfer processes is to improve the competitive situation of the firm. As I have already showed before, the receiver is an individual and may have numerous reasons not to accept overseas knowledge nor applying it in the intended way. His or her reasons may be very individual, starting from not

Table 10.1 Summary of hypotheses results Hypothesis Hypothesis 1 Hypothesis 2

Hypothesis 3a

Hypothesis 3b

Hypothesis 4a

Hypothesis 4b

Hypothesis 5a

Hypothesis 5b

Hypothesis 6

Hypothesis 7

Hypothesis 8

Hypothesis 9a Hypothesis 9b

Supported/ rejected German and Japanese managers differ in the type of knowledge they send overseas German and Japanese managers differ in the knowledge transfer instruments they choose

Hypothesis 3a: German (low-context) and Japanese (high-context) knowledge managers differ in their satisfaction when receiving knowledge from a low-context country Hypothesis 3b: German (low-context) and Japanese (high-context) knowledge managers differ in their satisfaction when receiving knowledge from a high-context country. Hypothesis 4a: German (low-context) and Japanese (high-context) knowledge managers differ in their usage when receiving knowledge from a low-context country Hypothesis 4b: German (low-context) and Japanese (high-context) knowledge managers differ in their usage when receiving knowledge from a high-context country Hypothesis 5a: German (low-context) and Japanese (high-context) knowledge managers differ in their decision-making confidence when receiving knowledge from a low-context country Hypothesis 5b: German (low-context) and Japanese (high-context) knowledge managers differ in their decision-making confidence when receiving knowledge from a high-context country The higher the cultural openness of the knowledge receiver the higher the effectiveness (satisfaction, usage and decision making confidence) of knowledge transfer The higher the perceived cultural distance of the knowledge receiver the higher the effectiveness (satisfaction, usage and decision making confidence) of knowledge transfer The higher the international experience of the knowledge receiver the higher the effectiveness (satisfaction, usage and decision making confidence) of knowledge transfer The better the receiver’s English skills, the higher the effectiveness (satisfaction, usage, and decision making confidence) of knowledge transfer The better the receiver’s language skills in the sender’s language, the higher the effectiveness (satisfaction, usage, and decision making confidence) of knowledge transfer

Rejected Partly supported (only differing when sending expatriates overseas) Rejected

Supported

Rejected

Supported

Rejected

Rejected

Rejected

Supported

Rejected

Rejected Rejected

138

Effectiveness of cross-cultural knowledge transfer

understanding the information received, not recognizing its value or simply not being able to reuse it in an effective way. Another aspect is personal feeling, likes and dislikes or attitudes towards sender or the sender’s organizational unit. National culture is only one aspect when looking at the knowledge receiver’s personality, but in a multinational and multicultural workplace it can become a very influential factor. Looking at the results above we can see the actual sending processes of knowledge do not differ across cultures. German and Japanese managers do not show special tendencies on what knowledge to send nor how to send it. This can be explained by organizational routines of sending knowledge and the fact that attitudes towards the receiver of knowledge may not play such an important role. Knowledge is always being sent for a reason. It is either needed by the recipient or it comes in the form of an order and gives the recipient clear instructions on what to do or how to perform. But even if the sending processes are almost the same, there are obvious differences between German and Japanese managers when accepting knowledge from overseas. We can see from the results of the survey that the Japanese show a higher tendency to accept and integrate knowledge and information from overseas into their local work processes. For the Japanese economy this has been a beneficial and vital aspect, and these result also support the general impression of Japanese knowledge management as being more advanced, more people oriented and with a strong focus on free communication, knowledge flows and integration of new ideas. But the results of my investigation also allow another interpretation. Receiving knowledge is strongly undermined by personal attitudes, and the acceptance of knowledge is a more personal and individual process. And even if we assume that Japanese knowledge managers generally accept more knowledge because there are Japanese, the fact that cultural distance plays such a major role also leads to the conclusion that a positive attitude and interest in new knowledge may be more powerful than national culture. In Japan we can observe a general interest in Western ideas and experiences. The Japanese have a long history of accepting outside ideas and adjusting them to their own environment. They have a long history and more than a century of experience in making use of Western knowledge. The Japanese are much more exposed to Western news, information and knowledge in their daily life than Germans are when it comes to information from Asian countries. Receiving it seems a natural process, its usability and profitability something which is not decided by the individual receiver but at a later stage at the group or organizational level. Germans, on the other hand, often do not have experience in receiving knowledge from foreign sources. Scepticism towards knowledge from an exotic source such as Japan may be another reason why knowledge from the Japanese corporate unit is not accepted as positively. Ethnocentric views towards outside knowledge may increase a critical attitude when receiving it and decrease its usage at a German unit. Knowledge which does not seem beneficial or leads to higher profits would not be explored or sometimes even listened too. In a company setting, however, this

How successful is cross-cultural knowledge transfer?

139

attitude may lead to a lot of lost opportunities. Not only may the recipient of knowledge not always be in the right position to judge whether it is useful or not, some good ideas may be lost forever. My experiences in Japan only support the findings of the study. From the first day of working in Japan, I was impressed by the interest my Japanese colleagues, friends and students have in not only Western ideas and opinions, but in many other areas of modern life. What still strikes me most is the fact that all information is listened to and considered interesting, even if it is not useful from my point of view. As a Westerner I was used to getting the information I needed or I considered useful, especially in a work environment. But I have learned in the past years working in Japan not to judge too quickly when it comes to new ideas and knowledge. I have also adopted other local knowledge management techniques, such as learning and teaching more via experiences and also sharing more knowledge with my colleagues than I used to in Europe. So individuals can learn how to manage knowledge more efficiently and how to change their attitudes towards knowledge from overseas company units. The results of my investigation show that there are cultural differences between German and Japanese knowledge managers, but the cultural distance they perceive has the strongest impact on the success of knowledge transfer. The more distant the sender is perceived the less knowledge is integrated into the local business processes. However, cultural distance is a flexible concept and can change. Intercultural skills and experience may help to decrease perceived cultural distance and allow more successful knowledge flows. Successfully transferring knowledge across cultures thus becomes an activity which can be learned and taught within corporations.

11 The future of knowledge transfer in multinational corporations

Implications for practitioners In the last chapter of this book, I would like to discuss which aspect of crosscultural knowledge transfer will be most challenging for multinational corporations in the coming years. Creating an awareness for knowledge transfer across cultures The first step to improve intercultural knowledge transfer processes is the creation of awareness for the issue among knowledge workers and knowledge managers. They should not only be informed about the relevance of sharing knowledge but also receive more training and information on how to share knowledge effectively across cultures. The importance of culturally appropriate codification of knowledge and differences in interpreting overseas knowledge are often not obvious to all members of an organization. An increased awareness will reflect in more knowledge shared and higher profitability of multinational corporations. Developing incentives for sharing knowledge internationally One fundamental challenge for multinational corporations is the development of incentive systems to increase voluntary knowledge transfer among employees. It is obvious that the intellectual assets of a corporation can increase in value when being shared within it. To improve these processes, incentives for their participants must be developed. This already proves to be a challenging task within one department or a single company unit. When is comes to international knowledge transfer incentives are even more difficult to develop. Setting international knowledge management goals In this book I have shown that knowledge management goals in Japan and Germany differ strongly. These cultural differences in developing objectives are certainly also relevant and visible in organizations. Japanese corporations

The future of knowledge transfer in multinational corporations

141

focus on operational knowledge management, trying to keep every member of the organization informed. Their main goal is to smoothe and improve knowledge operations, and not to motivating people to share knowledge. Knowledge management goals may have a more collectivistic approach and target everybody involved in a department or organization. A German organization, on the other hand, has mainly a profitable application of knowledge in mind. Western knowledge management shows a higher strategy orientation and focuses on motivating employees to share and use knowledge to support company success. These differences show us that knowledge goals are therefore strongly related to culture and may hinder effective knowledge transfer. Knowledge goals defined by headquarters often contradict knowledge goals developed in overseas subsidiaries and should only be developed by the headquarters or by one organizational unit. It is vital for modern multinational corporations to include all members in developing goals on how to use knowledge within their organization. A first step is the company’s dedication to the topic of sharing knowledge across cultures and to develop strategic knowledge management goals. These goals should be relevant for all company units. The importance and measurability are factors which should be developed by a multicultural team and not – as it often happens – by knowledge managers who are located in the company headquarters. They are embedded in its corporate and national culture and may develop goals which are only applicable and relevant for the headquarters. The rapid changes of market conditions and an increasing demand of consumers, however, show that strategic knowledge management goals also have to take the corporation’s diversity into consideration. Increase personal contact between employees within the organization The reasons for ineffective knowledge transfer are often culture related, but in many cases the personal relationship between communicators also plays an important role. Knowledge managers are believed to be task oriented and focusing on business processes. Personal relationships and emotions are neglected. Not knowing one counterpart when working or sharing knowledge with each other, decreases trust and hinders communication and knowledge flows. Even if knowledge managers have met via video or online, personal relationships can only deepen when individuals also meet in person. Japanese companies have traditionally shown a stronger focus on personal relationships in business. Informal meetings are institutionalized and a major feature of their business success. Employees spend more time together exchanging informal information and getting to know each other better. Trust develops, which decreases barriers in sharing knowledge. In a Japanese organization knowledge flows freely because employees often work together for very many years. Another indicator of positive attitude towards knowledge sharing is the fact that job rotation between company units and departments

142

Effectiveness of cross-cultural knowledge transfer

has always been a prominent feature of Japanese management in general. This was also obvious in Japanese multinational corporations, which have always send a higher number of expatriates overseas than their Western counterparts (Tung 1982). This frequent change of workplace also allows a higher number of personal relationships between knowledge managers, another reason why the Japanese are more willing to share knowledge. Knowing and trusting increases sharing of knowledge. Reconsidering the relevance of informal knowledge Up to now, Western corporations have focused on the management of useful knowledge. Useful knowledge refers to knowledge which increases the company’s competitive advantages or profitability. Because of this, Western corporations prefer their employees to manage formal knowledge or knowledge which is strongly connected to company operations and strategies. Japanese knowledge management differs in this point as well. Knowledge management does not only include formal, but also a high degree of informal knowledge. Sharing a high degree of personal or emotional knowledge is considered a very efficient way to increase trust and harmony within a group. But this is not the only effect of exchanging informal knowledge. It also increases communication of formal knowledge. If employees feel comfortable with each other and trust each other, they are also more willing to exchange knowledge and information. In Japanese companies as well as in most Asian companies, the exchange of formal knowledge is therefore implemented in organizational operations. Frequent meetings, dinners or karaoke parties ease communication processes between team members and are regarded a very important part of Asian business life. Western corporations thus far mostly try to reduce the exchange of informal information within the company and thus may also inhibit or block other knowledge flows. They also fear that the ‘management’ of informal knowledge mainly consists of gossip or rumours. It is therefore important to channel the flows of informal information and knowledge and by doing so increase the flow of company-relevant knowledge. Tools to support this are storytelling, narrative and the use of qualitative knowledge transfer methods such as participant observations. Decreasing cultural distance Even if we cannot really say that cultural differences are hindering knowledge transfer, it is clear that perceived cultural distance has a negative effect on knowledge transfer. If the knowledge receiver perceives the sender culture as very distant he or she will find it very difficult to accept and use knowledge from him or her. Prejudices and stereotypes easily increase negative feelings and may lead to an interruption of the cross-cultural knowledge transfer process. Multinational corporations will need to pay more attention to these

The future of knowledge transfer in multinational corporations

143

attitudes and feelings. Often they are not communicated openly, but can create serious damage for the firm.

Research fields in cross-cultural knowledge transfer Multinational corporations will increasingly face the challenges and complexity of intercultural knowledge transfer. As globalization continues and the number of people communicating within or across businesses all over the world increases, cultural aspects of knowledge transfers and flows will need further research. What happens after knowledge has been transferred? The research project presented in this book only dealt with the knowledge transfer process between units of a global organization. It did not investigate in which way knowledge is used after knowledge managers have received it and how they use it further. Knowledge managers mostly do not use the knowledge received alone, but need to communicate it further to their colleagues within their unit. Knowledge sharing therefore does not stop once a recipient has accepted knowledge, but is the start of managing knowledge in a – quite often – multicultural team. In many multinational corporations expatriates receive knowledge from the head office first. They speak the official language head of the office and often know the knowledge senders personally. Thus they become knowledge brokers and are expected to communicate information and knowledge from the headquarters further into the subsidiary. But expatriates do not always speak the local language nor do they know about local communication styles. Many ideas from the head office are not applicable in the local context and must be dismissed, even if they are communicated ‘successfully’ to an expatriate at the subsidiary. Even if the transfer of knowledge to an overseas unit is successful, further usage and implementation of corporate knowledge is not guaranteed. These issues have so far not been investigated. Subsequent studies should focus on knowledge management, sharing and transfer within multicultural teams. Can bilingual and bicultural managers improve knowledge management? The assumption that most members in a multinational corporation speak English is wrong. In many cases all employees in the subsidiary only speak the local language. The reasons for this are simple. Not every country has the same education system. In Japan, for example, there are no apprenticeships or other education models that give people a very operational technical education, which poses a serious problem for finding suitable staff with a specialized background.

144

Effectiveness of cross-cultural knowledge transfer

One of my interview partner stated: ‘It is extremely difficult to find a technician in a specialized area’. A foreign company needs to have a very famous name to be able to attract employees with a very specialized background, because even after the economic crisis many Japanese consider Japanese employers as more reliable. If we find a specialist in most cases he or she cannot speak English, because in the Japanese market this is not a necessary skill. Still we are happy if we find people who are switching to a gaishikei (foreign company) and as long as this employee only deals with Japanese customers everything is fine. The problem starts if we want this person to visit the headquarters or to enter some company-wide seminars or training programs. The lack of English skills then becomes a serious problem. If the corporate language is a bit more exotic than English, e.g. German, communication and knowledge transfer become a real challenge. In many cases expatriates become communication managers, because they are the only ones who can communicate with the headquarters. In many cases companies have already reacted to the new requirements. The number of managers with a bilingual and/or bicultural background is increasing. In the past, headquarters have mostly assigned English-speaking managers who had been successful at the headquarters to manage subsidiaries, but in culturally different markets this has often proven to be counterproductive. The numbers of expatriates who speak languages like Japanese or Chinese is increasing, which allows multinationals to find bilingual managers for their overseas units. Companies have realized that intercultural knowledge cannot be picked up along the way, but needs many years to develop. The same is true for language skills. One may be able to learn English within a few years. Learning Japanese or Mandarin poses a greater challenge. Many multinational corporations are therefore increasing their number of bicultural or bilingual staff. They are supposed to help intercultural challenges and support free information flow with the firm. But biculturalism is a very complex concept. Having a bicultural background does not guarantee superior intercultural skills nor the ability to deal with intercultural conflict. Bicultural and bilingual managers may also have prejudices about other or their own cultures and show a high cultural distance. So far, there is little evidence on how biculturalism or bilingual skills support or hinder knowledge management. Knowledge as a cultural artefact Knowledge is located, interpreted and managed in a cultural context, and it is in fact a cultural artefact itself. Its management and transfer is not only influenced by culture, knowledge itself is an expression of a particular corporate or national culture as well. This is an aspect which deserves further investigation. Local knowledge or knowledge which is located in a particular organizational unit and is strongly connected to its market conditions, communication pattern and national culture may therefore be more difficult to transfer and reuse than we think. It may not

The future of knowledge transfer in multinational corporations

145

be recognized as valuable when located by members of another culture and not leveraged. And even if recognized and leveraged, it may not be applicable in another cultural context at all or not without major losses or adaptations. Future research projects will need to investigate the question of what culturerelated knowledge as an organizational asset is and the implications this has for multinational organizations. Knowledge transfer between multinational corporations and other market stakeholders Knowledge sharing in an international context does not only happen within the company, but also with partners outside the corporation. A market-oriented corporation, however, cannot afford just to find knowledge within itself, but also needs to access outside sources. Local knowledge is not only to be found in overseas subsidiaries, but also in other external resources. In this book I have only focused on the transfer of knowledge within one organization. This transfer happens under special conditions. All participants are working for the same organization and supposedly have the same goals. Even though there may be cultural differences between knowledge transfer participants as described in this book, the transfer processes happened in a closed company environment. Outside sources could be market research agencies, consultancies, trend scouts or other external experts. They can further be found in alliances or research projects, universities or other research institutions. Another factor which will gain importance is the access to knowledge owned by customers who are the most important source of information on trends and market developments. As cooperation between companies located in different countries increases, the findings of this work will be essential for managers involved in M&A activities or cross-cultural strategic alliances. When investigating intraorganizational knowledge transfer processes, culture may also play an important role, but other factors such as trust, length of relationship, dependencies need to be investigated also. Multinational corporations need to improve and adapt their knowledge acquisition processes and tools to sustain their competitive advantages. Knowledge transfer will increasingly include external players and add a number of new variables to the already quite complicated knowledge transfer processes. Future research in this field will have to include more variables such as the competitive or power position of all players involved or whether knowledge flows inside corporations are more successful than knowledge flows between corporations or between corporations and other market shareholders. Qualitative approaches in cross-cultural knowledge transfer research The research results presented in this book are based on a qualitative interview series and an extensive quantitative survey. The main object was to find

146

Effectiveness of cross-cultural knowledge transfer

differences and influence factors in and on knowledge transfer processes. A quantitative research design was therefore considered most suitable. But even if a quantitative approach is still quite popular in international management studies when investigating cultural issues, explorative approaches are neglected. Since the relationship between culture and knowledge transfer is not yet fully investigated, many aspects of intercultural communication exchange such as trust, attitude towards the sender, personal interest in the success of knowledge transfer, which may influence the communication process between individuals as well as between company units, are still unexplored. Apart from culture there may be other factors influencing cross-cultural knowledge transfer. The nature and content of knowledge transfer is still a topic for which detailed research results are missing. Knowledge transfer processes may refer to different types of knowledge. Size, relevance and type of subsidiary have an impact on the type of knowledge transferred. What different types of knowledge are really being transferred within modern multinational corporations? Is every type of knowledge transferable? Which knowledge is not transferable? There a numerous questions which need to be answered by future research. Quantitative investigation misses out on other influence factors that may hinder or foster intercultural knowledge transfer. Cross-cultural knowledge transfer processes should therefore also become the topic of qualitative research projects. Researchers working in this field not only investigate the challenges and barriers of managing knowledge in the international and intercultural workplace, but also develop solutions to increase understanding within organizations.

The future of cross-cultural knowledge transfer Cross-cultural knowledge management is becoming easier through modern technology. Codifying knowledge by technological means seems to increase speed and efficiency of knowledge transfer and information exchange. Employees all over the globe can speak to each other via video-conferencing or other easily available technologies. One may therefore assume that it is easier to share knowledge within a multinational corporation and apply it worldwide. But this is not always the case. Despite this, misunderstandings and problems with knowledge sharing frequently occur. It seems that even if managers can communicate with each other constantly by mail or video conferencing, successful communication processes do not develop easily. Globalization, the internet and its accompanying media allow not only easy access to information all over the world, but also increase worldwide connectivity. This leads us to believe that the world has become smaller and that distances and culture true that that we can travel more and can stay in touch with people around the globe more conveniently. We can also access a lot more information nowadays and our ways of working have changed completely. But as technological advances allow us to connect with individuals all over the world, cultural differences still remain. And they still play a very important

The future of knowledge transfer in multinational corporations

147

role in our daily lives. Cultural differences make life interesting and exciting, and also challenge us when we are confronted with people who show other behaviour and perform other processes. Culture and cultural differences have mostly been seen as a hindrance or a barrier that needs to be overcome or avoided. International and intercultural management researchers try to develop tools and processes to form and improve operations in intercultural workplaces. National culture is and will stay a major topic in international management studies, because it influences how we interpret and understand the world. Communication and knowledge management processes are most obviously related to culture. When communicating, learning or interpreting cultural differences become most evident, because they may lead to misunderstanding and wrong interpretations. Complications often arise. For companies these problems may decrease competitive advantages and lead to additional management efforts. Intercultural issues will become more relevant in the near future. Culture will therefore become an even more important issue than ever and knowledge management in the twenty-first century will not only deal with cultural issues alone, but with many more other challenges. As businesses and work processes become more diverse, the modern workforce will not only include individuals of different cultures, but also individuals of different age, gender, political attitude or work ethics. McKenzie and van Winkelen (2004) state that companies need to be willing to bring people with new and challenging ideas into organizations. These people are supposed to be non-conformist and have the purpose of initiating thinking processes and challenging tight and inflexible routines and processes. In terms of knowledge, this means that the variety of approaches and ideas on what knowledge is and how it should be shared and transferred increases. This presents challenges for modern corporations, but also opportunities. As the diversity of the workforce increases, the number of diverse solutions for work processes will rise as well. Employees working in a multinational corporation may show a higher interest in intercultural questions or be multilingual, but are not always aware of the challenges they face when transferring knowledge internationally. Working in one’s own country and in a well-known cultural context, it is often difficult to understand that knowledge and information can be understood in a completely different way or not understood at all in other cultures. It is obvious that the culture and activities of individuals raised in different countries differ from each other. It is further clear that these differences lead to diverse management styles and can also be observed in knowledge management. However, instead of investigating what differences we observe and how to avoid or overcome them, we need to ask what to learn from them? International management research should not only point out differences between management styles, as it mostly does but to investigate culture from a more qualitative and ethnographic perspective. The results of this book show that culture shapes our attitude towards knowledge, knowledge that we find relevant and which we dismiss. Culture

148

Effectiveness of cross-cultural knowledge transfer

impinges on our decisions on whether and how we use it. This also means that we can change and develop more interest and openness towards knowledge from other cultures or from sources that we do not feel familiar with. We have to learn more from each other and may get inspiration from knowledge management approaches all around the globe. Each management system, whether Eastern or Western, has its strong points as well as its flaws, whether it is based on cultural foundations or on personal attitude. Knowledge managers therefore need to integrate different approaches, learn to know them well and then ask which aspects of these approaches are interesting and suitable to be copied, used or adapted for further application in their own organization. In doing this they become knowledge managers of the twenty-first century, not only managing profit-related company knowledge, but also managing ideas, investigating international approaches of managing knowledge and making them usable and profitable. The challenge will be to encourage them to channel their energy and be provocative and productive, or profitable for the organization at the same time (McKenzie and van Winkelen 2004). Awareness is not only needed in headquarters, but also in subsidiaries. Many aspects of company life that are obvious to employees at the headquarters are totally unknown to their colleagues in overseas units. Creating awareness for different attitudes towards knowledge and information will remain an important future task for multinational corporations. We need to learn more about different approaches to knowledge management worldwide and how they can inspire management processes in our own culture. As we are confronted with more international and intercultural experiences, we need to develop more openness towards unknown, not yet experienced and difficult to understand management approaches. Cultural differences between members of an organization, teams, organizational units or companies can support knowledge managers in doing this. As researchers or managers in modern international workplaces, we need to change our focus from regarding them as challenges to seeing them as opportunities and to learn from them. Future knowledge managers will need a high degree of openness and interest to realize their chances of developing new and future-oriented approaches dealing with intellectual assets, for cultural differences are not the only aspect to be considered. Understanding, accepting and cherishing cultural differences and learning from all over the world will be essential for establishing efficient knowledge transfer procedures in multinational corporations in the twenty-first century.

Appendix

Variables used All data were collected through structured questionnaires and most items were measured using five-point Likert scales. However, items such as the number of employees were actual measured values. Tables A1 and A2 provide an overview of the variables used and the scales these were based on.

Table A1 Summary of the variables tested Variable name

Variable content

Measure

Choice of knowledge

Degree of procedural knowledge sent by interviewee Knowledge codification styles (non-abstract to abstract), when sent to a high-context country

5 interval scales

Source

Procedural Knowledge Scale (Ramaswami 1996) 19 interval Developed on the base of scales literature research

Choice of knowledge transfer instruments (Japan) 19 interval Knowledge codification Choice of scales styles (non-abstract to knowledge transfer abstract), when sent to a low-context country instruments (Germany) (Germany) Cultural Cultural openness of sender 10 interval openness scales Cultural distance Perceived cultural distance 6 interval scales (towards Japan) by sender towards high-context countries (Japan) Cultural distance Perceived cultural distance 6 interval scales (towards by sender towards Germany) low-context countries (Germany) International International experience of 3 interval experience sender scales

Developed on the base of literature research

Cultural Openness (Sharma et al., 1995) Cultural distance (Simonin 1999) and Distance (Fisher et al., 1997) Cultural distance (Simonin 1999) and Distance (Fisher et al., 1997) International Experience (Patterson et al., 1997)

150

Appendix

Table A1 (continued) Variable name

Variable content

Satisfaction Satisfaction of interviewee with knowledge with knowledge concerning knowledge gained from high-context and low-context partners Usage of Utilization of knowledge knowledge by interviewee concerning knowledge gained from high-context and low-context partners Decision-making Confidence in decision confidence making of interviewee concerning knowledge gained from high-context and low-context partner Nationality Nationality of interviewee Language skills

Mother tongue

Company data

Language spoken by interviewee Name of company Address of company Subsidiary/headquarter Number of employees at local unit Number of employees in whole corporation Industry

Measure

Source

12 interval Adapted from scales Satisfaction with Marketing Knowledge (Becerra-Fernandez and Sabherwal 2001) 20 interval Information Use scales (Moorman 1995)

6 interval scales

1 nominal scale 1 nominal scale 6 interval scales Open question Open question 1 nominal scale 1 ratio scale 1 ratio scale 8 nominal scales

Confidence in Decision Quality (Aldag 1986)

Appendix

151

Table A2 Questionnaire Choice of Knowledge (procedural and declarative) When working with our colleagues from foreign branches/subsidiaries … … we usually provide them with clearly defined instructions that can guide them in doing their work … we usually provide them with information on existing procedures and practices that can guide them in doing their work … we usually communicate procedures that tell them exactly how to respond to all situations … we usually let them actively search for solutions beyond standard procedures … we usually tell them which results we aim to achieve and do not interfere with their procedures Choice of knowledge transfer instrument When sending information to our colleagues at the German–Japanese branch … … we use groupware programs … we use a database to exchange information … we communicate via web pages (intranet and internet) … we use decision support systems … we send them information on best practices and lessons learned … we send them reports … we send our Japanese colleagues handbooks on our procedures … we send them theoretical material on different topics … we comunicate via postal mail … we communicate via e-mail … we have regular face to face meetings with our Japanese colleagues … we call them on the phone to discuss relevant issues … we organize seminars with/for our colleagues from Japan … we send them employees for training … our Japanese colleagues come here for training … we visit the Japanese branch/subsidiary on a regular basis … we send employees to work in Japan for a certain period … we form project groups with our colleagues from Japan … we exchange product samples Satisfaction with knowledge from Germany/Japan I am satisfied with the knowledge I receive from the German/Japanese units for my tasks The available knowledge from the German/Japanese units improves my effectiveness in performing my tasks I am satisfied with the management of knowledge at the German/Japanese units I am satisfied with the knowledge available from the German/Japanese units for the tasks in my department The available knowledge from the German/Japanese units improves the overall effectiveness of my company I am satisfied with the transfer of knowledge from the German/Japanese units to my company

152

Appendix

Table A2 (continued) Usage of knowledge from Germany/Japan The information I receive from the German/Japanese units enriched my basic understanding of my work The way I think about my work would have been very different had I not received knowledge from the German/Japanese units I have been considering obtaining available market information from the German/ Japanese units for a long time The process of obtaining knowledge from the German/Japanese units has really enlightened my understanding of my work The information I receive from the German/Japanese units reduces my uncertainty about my work The information I receive from the German/Japanese units helps me identify aspects of my work that would otherwise have gone unnoticed My ability to make decisions would have diminished without the information I received from the German/Japanese units My work decisions do not require the information I receive from the German/Japanese units I used the information I received from the German/Japanese units to make specific decisions for my work Without the information I receive from the German/Japanese units, my decisions would be very different Decision-making confidence with knowledge from Japan/Germany Based on the information I receive (from Germany/Japan) my solutions are usually good ones Based on the information I receive (from Germany/Japan) I am not sure my solutions are always appropriate Based on the information I receive (from Germany/Japan) I am not confident about my solutions Cultural openness I would like to have opportunities to meet people from foreign countries I am very interested in trying food from foreign countries We should have a respect for traditions, cultures, and the ways of life of foreign countries I would like to learn more about other cultures I have a strong desire for overseas travel I would like to know more about foreign cultures and customs I have a strong desire to meet and interact with people from other countries Perceived cultural distance towards Japan The national culture of home country and Japan differs greatly The language difference is a major obstacle when communicating with people from Japan Japanese people and I are on similar terms concerning the time it takes to make a decision Japanese people and I are on similar terms concerning a tolerance for risk Japanese people and I are on similar terms concerning our understanding of customers Japanese people and I are on similar terms concerning our focus on technology

Appendix

153

Table A2 (continued) Perceived cultural distance towards Germany The national culture of home country and Germany differs greatly The language difference is a major obstacle when communicating with people from Germany German people and I are on similar terms concerning the time it takes to make a decision German people and I are on similar terms concerning our tolerance for risk German people and I are on similar terms concerning our understanding of customers German people and I are on similar terms concerning our focus on technology International experience I am experienced in working in countries where people speak foreign languages I do not have much experience in working with people who speak foreign languages I am seldom involved in communicating with people in foreign languages My nationality is … Language skills German, Mother tongue (Yes–no), Level (excellent–poor) Japanese, Mother tongue (Yes–no), Level (excellent–poor) English, Mother tongue (Yes–no), Level (excellent–poor) Korean, Mother tongue (Yes–no), Level (excellent–poor) Name of your company Address of your company Number of employees of my company unit/the whole organization Industry of your company Bank/insurance, transport, telecommunications, manufacturing industry, health care, services, trade, agriculture

154

Appendix

Company profiles

Figure A.1 German industry sample

Figure A.2 Japanese industry sample

Appendix

Headquarter and subsidiaries Table A3 Head office and subsidiaries (Japanese and German samples)

Japanese managers (%) German managers (%)

Subsidiary

Head office

48.39 52.22

51,61 47,78

155

Bibliography

N. J. Adler (1986) International Dimensions of Organizational Behavior. First edition. Boston: Kent Publishing. P. Adler and S.-W. Kwon (2002) ‘Social Capital: Prospects for a New Concept.’ Academy of Management Review, 27: 17–40. M. Alavi and D. E. Leidner (2002) ‘Knowledge Management Systems: Issues, Challenges and Benefits.’ In Barnes, S. (ed.) Knowledge Management Systems: Theory and Practice. London: Thompson Publishing. M. Aoki (1986) ‘Horizontal vs. Vertical Information Structure of the Firm.’ The American Economic Review, 76: 971–83. C. Argyris and D. A. Schön (1978) Organizational Learning: A Theory of Action Perspective. Reading, MA: Addison-Wesley. Y. Awazu (2007) ‘Managing Knowledge Within and Across Geographical Borders: The Role of Culture.’ Knowledge and Process Management, 14: 145–47. M. Axel and J. Prümper (1997) ‘Interkulturelle Kompetenz durch interkulturelles Training.’ In Clermont, A. and Schmeisser, W. (eds) Internationales Personalmanagement. Munich, Germany: Verlag Franz Vahlen. J. E. Bailey and S. W. Pearson (1983) ‘Development of a Tool for Measuring and Analyzing Computer User Satisfaction.’ Management Science, 29: 530–45. A. Bargstädt (2007) ‘Defining the Knowledge Agent; A Qualitative Analysis of Knowledge Transfer within Multinational Corporations.’ Unpublished Master Thesis, Sophia University, 2007. I. Becerra-Fernandez, A. Gonzalez and R. Sabherwal (2004) ‘Knowledge Management: Challenges, Solutions, and Technologies.’ Upper Saddle River, NJ: Pearson Publishing. R. Bennett and H. Gabriel (1999) ‘Organisational Factors and Knowledge Management within Large Marketing Departments: An Empirical Study.’ Journal of Knowledge Management, 3: 212–25. J. Beyer and H. Trice (1982) ‘The Utilization Process: A Conceptual Framework and Synthesis of Empirical Findings.’ Administrative Science Quarterly, 27: 591–622. J. Birkinshaw (2001) ‘Why is Knowledge Management so Difficult?’ Business Strategy Review, 12: 11–18. M. Boisot and J. Child (1996) ‘From Fiefs to Clans and Network Capitalism: Explaining China’s Emerging Economic Order.’ Administrative Science Quarterly, 41: 600–628. C. Bowman and V. Ambrosini (2000) ‘Strategy from an Individual Perpective.’ European Management Journal, 18: 207–15. H. Bresman, J. Birkinshaw and R. Nobel (1999) ‘Knowledge Transfer in International Acquisitions.’ Journal of International Business Studies, 30: 439–62.

Bibliography

157

P. Buckley and M.J. Carter (2002) ‘Process and Structure in Knowledge Management Practices of British and US Multinational Enterprises.’ Journal of International Marketing, 8: 29–48. P. Buckley and M. Casson (1976) ‘The Future of Multinational Enterprises.’ London, UK: Macmillan. I. Buruma (2003) Inventing Japan. New York, NY: Modern Library. F. L. Casrnir (1999) ‘Foundations for the Study of Intercultural Communication based on a Third-culture Building Model.’ International Journal of Intercultural Relations, 23: 91–116. M. T. H. Chi (1981) ‘Knowledge Development and Memory Performance.’ In Friedman, M., Das, J. P. and O’connor, N. (eds) Intelligence and Learning. New York, NY: Plenum Press. C. J. Choi and S. H. Lee (1997) ‘A Knowledge-based View of Cooperative Interorganizational Relationships.’ In Beamish, P. W. and Killing, P. J. (eds) Cooperative Strategies. San Francisco, CA: The New Lexington Press. R. Clark (1993) The Japanese Company. Tokyo, Japan: Charles E. Tuttle Company. C. Collison and G. Parcell (2004) Learning to Fly: Practical Knowledge Management from Leading and Learning Organizations. London, UK: Capstone. R. J. Corsini (1987) Concise Encyclopedia of Psychology. New York, NY: Wiley. R. Cowan, P. A. David and D. Foray (1999) The Explicit Economy of Knowledge Codification and Tacitness. 3rd TIPIK Workshop, Strasbourg 1999. M. Crossan and A. C. Inkpen, (1995) ‘The Subtle Art of Learning through Alliances.’ Business Quarterly 60: 68–85. T. Davenport and L. Prusak (1998) Wenn Ihr Unternehmen wüßte, was es alles weiß …: Das Praxisbuch zum Wissensmanagement, Landsberg/Lech, Germany: Verlag Moderne Industrie. D. W. De Long and L. Fahey (2000) ‘Diagnosing Cultural Barriers to Knowledge Management.’ The Academy of Management Executive, 14: 113–27. G. Desanctis and B. R. Gallupe (1987) ‘A Foundation for the Study of Group Decision Support Systems.’ Management Science, 33: 589–601. R. Deshpande and G. Zaltman (1982) ‘Factors Affecting the Use of the Market Research Information: A Path Analysis.’ Journal of Marketing Research, 19: 14–31. C. Dodd (1997) Dynamics of Intercultural Communication. New York, NY: McGraw-Hill. T. Doi (1981) The Anatomy of Dependence. Tokyo: Kodansha. Y. Doz, K. Asakawa, J. Santos and P. Williamson (1997a) The Metanational Corporation. Fontainebleau, France: INSEAD Working Paper. Y. Doz and J. F. P. Santos (1997) On the Management of Knowledge: From the Transparency of Collocation and Co-setting to the Quandary of Dispersion and Differentiation. Fontainebleau, France: INSEAD Working Paper. P. F. Drucker (1992) ‘The New Society of Organizations.’ Harvard Business Review, 70: 95–104. O. Dupouet and A. Laguecir (2002) Element for a New Approach of Knowledge Codification. Strasbourg, BETA, University of Strasbourg Working Paper. G. Dutrénit (2000) Learning and Knowledge Management in the Firm. Cheltenham, UK: Edward Elgar. J. L. Encarnacao (2000) ‘Knowledge Management in Learning Organizations.’ In Knoll, W. S. O. T. V. F. (ed.) Debates on Issues of Our Common Future. Weilerswist, Germany: Velbrick.

158

Bibliography

R. Evaristo (2007) ‘Knowledge Transfer Across Borders: A Process Model.’ Knowledge and Process Management, 14: 203–10. C. Fiol and M. A. Lyles (1985) ‘Organizational Learning.’ Academy of Management Review, 10: 803–13. N. J. Foss and T. Pedersen (2002) Transferring Knowledge in MNCs: The Role of Sources of Subsidiary Knowledge and Organizational Context. Journal of International Management, 8: 49–67. C. Fox (1997) ‘The Authenticity of Intercultural Communication.’ International Journal of Intercultural Relations, 21: 85–103. Gabler (1995) ‘Gabler Lexikon Wirtschaft: 2200 Begriffe nachschlagen, verstehen, anwenden.’ Wiesbaden, Germany: Betriebswirtschaftlicher Verlag Dr. Th. Gabler. D. F. Galleta and A. L. Lederer (1989) ‘Some Cautions on the Measurement of User Information Satisfaction.’ Decision Sciences, 20: 419–38. R. M Grant (1996) ‘Toward a Knowledge-Based Theory of the Firm.’ Strategic Management Journal, 17 (Special Issue): 109–22. A. H. Gold, A. Malhotra and A. H. Segars (2001) ‘Knowledge Management: An Organizational Capabilities Perspective.’ Journal of Management Information Systems, 18: 185–214. M. D. Goslar, G. I. Green and T. H. Hughes (1986) ‘Decision Support Systems: An Empirical Assessment for Decision Making.’ Decision Sciences, 17: 79–91. K. Götz and N. Bleher (2002) ‘Unternehmenskultur und interkulturelles Training.’ In Götz, K. (ed.) Interkulturelles Lernen/Interkulturelles Training. Munich, Germany: Rainer Hamp Verlag. A. B. Graham and V. G. Pizzo (1996) ‘A Question of Balance: Case Studies in Strategic Knowledge Management.’ European Management Journal, 14: 338–46. D. A. Griffith and M. G. Harvey (2001) ‘Executive Insights: An Intercultural Communication Model for Use in Global Interorganizational Networks.’ Journal of International Marketing, 9: 87–103. A. K. Gupta and V. Govindarajan (1991) ‘Knowledge Flows and the Structure of Control within Multinational Corporations.’ Academy of Management Review, 16: 768–92. ——(1993) ‘Coalignment Between Knowledge Flow Patterns and Strategy Systems and Processes within MNCs.’ In Lorange, P. (ed.) Implementing Strategic Processes. Oxford, UK: Basil Blackwell. P. Haghirian (2009) Knowledge Transfer Within Multinational Corporations – An Intercultural Challenge. In J. Girard (ed.) Building Organizational Memories: Will You Know What You Knew? Idea Group Publishing, pp. 57–68. ——(2007) Markteintritt in Japan. Vienna, Austria: LexisNexis ——(2006) ‘Japan – Vorreiter im Wissensmanagement?’ [Japan – Leader in Knowledge Management?] Wissensmanagement, November: 30–32. P. Haghirian and O. Kikima (2004) ‘Intercultural knowledge transfer between headquarters and subsidiaries: The case of Japanese multinational corporations.’ Proceedings of EAMSA (Euro-Asian Management Studies Association), Conference 2004, Hong Kong. E. T. Hall (1981) Beyond Culture. New York, NY: Doubleday/Anchor Books. E. T. Hall and M. R. Hall (1990a) Hidden Differences; Doing Business with the Japanese. New York, NY: Doubleday, Anchor Books. ——(1990b) Understanding Cultural Differences, Maine: Intercultural Press. T. Hamada (1996) ‘As They See Us: The Americanization of a Japanese Multinational in the USA.’ Journal of Organizational Change 9: 31–43.

Bibliography

159

G. Hamel, Y. Doz and C. K. Prahalad (1989) ‘Collaborate with your Competitors, and Win.’ Harvard Business Review, 67: 133–39. M. T. Hannan and J. Freeman (1989) Organizational Ecology. Cambridge, MA: Harvard University Press. U. Hannig (2002) Knowledge Management und Business Intelligence. Berlin, Germany: Springer. K. Hayashi (2003) ‘Current Intercultural Issues and Challenges in Japanese Business Interfaces: Blending Theory and Practice.’ Management Japan 38. G. Hedlund and I. Nonaka (1993) ‘Models of Knowledge Management in the West and Japan.’ In Lorange, P. (ed.) Implementing Strategic Processes: Change, Learning and Co-operation. Oxford, UK: Basil Blackwell. M. Heinrich and A. Schmidt (2002) ‘Kommunikation im Management: Grundlagen und die Rolle neuer Medien.’ In Kasper, H. And Mayrhofer, W. (eds) Personalmanagement– Führung–Organisation. Vienna, Austria: Linde Verlag, pp. 213–54. P. Heisig (1999) ‘Die ersten Schritte zum professionellen Wissensmanagement.’ In Antoni, C. H. and Sommerlatte, T. (eds) Wissensmanagement. Düsseldorf, Germany: Symposion Publishing. G. Hofstede (1984) Culture’s Consequences; International Differences in Work-Related Values, London, UK: Sage Publications. N. Holden (2002) Cross-Cultural Management: A Knowledge Management Perspective, Harlow, UK: Financial Times, Prentice Hall. C. W. Holsapple and K. D. Joshi (2002) ‘Understanding knowledge management solutions: The evolution of frameworks in theory and practice.’ In Barnes, S. (ed.) Knowledge Management Systems: Theory and Practice. London, UK: Thompson Publishing. J. Howells (1996) ‘Tacit Knowledge, Innovation and Technology Transfer.’ Technology Analysis & Strategic Management, 8: 91–105. C. Inkpen (1996) ‘Creating Knowledge through Collaboration.’ Californian Management Review, 39: 123–40. B. J. Jaworski and A. K. Kohli (1993): ‘Market Orientation: Antecedents and Consequences.’ Journal of Marketing, 57: 53–70. M. Jelinek (1979) Institutionalizing Innovation: A Study of Organizational Learning Systems. New York, NY: Praeger. J.-A. Johannessen, J. Olaisen and B. Olsen (2001) ‘Mismanagement of Tacit Knowledge: The Importance of Tacit Knowledge, the Danger of Information Technology, and What to Do About It.’ International Journal of Information Management, 21: 3–20. J. Johanson and J.-E. Vahlne (1977) ‘The Internationalization Process of the Firm – A Model of Knowledge Development and Increasing Foreign Market Commitments.’ Journal of International Business Studies, 8: 23–32. N. Kameda (2000) ‘Communication Competency of Japanese Managers in Singapore.’ Corporate Communication: An International Journal 5: 204–9. F. R. Kardes (2002) Consumer Behaviour and Managerial Decision Making. Upper Saddle River, NJ: Prentice Hall. H. Kasper and J. Mühlbacher (2002): Von Organisationskulturen zu lernenden Organisationen. In Kasper, H. And Mayrhofer, W. (eds) Personalmanagement–Führung– Organisation. Vienna, Austria: Linde Verlag, pp. 95–155. Y. Kim (1988) Communication and Cross-Cultural Adaptation: An Integrative Theory. Clevedon, UK: Multilingual Matters.

160

Bibliography

C. Kluckhohn (1951) The Study of Culture. In Lerner, D. (ed.) The Policy Sciences. Stanford, CA: Stanford University Press, N. F. J. Kock, R. J. Mcqueen and J. L. Corner (1997) ‘The Nature of Data, Information and Knowledge Exchanges in Business Processes: Implications for Process Improvement and Organizational Learning.’ The Learning Organization, 4:70–80. B. Kogut and U. Zander (1993) ‘Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation.’ Journal of International Business Studies, 24: 625–45. ——(1996) ‘What Firms Do? Coordination, Identity, and Learning.’ Organization Science, 7: 502–18. A. Kohli and B. Jaworski (1990) ‘Market Orientation: The Construct, Research Propositions, and Managerial Implications.’ Journal of Marketing, 54: 1–18. P. Kotler, S. H. Ang, S. M. Leong and C. T. Tan (1999) Marketing Management; An Asian Perspective. Singapore: Prentice Hall. C. K. Kriwet (1997) Inter- and Intraorganizational Knowledge Transfer. (Dissertation St. Gallen). Bamberg, Germany: Difo-Druck. W. Kroeber-Riel (1992) Konsumentenverhalten. Munich, Germany: Vahlen. S. Lähteenmäki, J. Toivonen and M. Mattila (2001) ‘Critical Aspects of Organizational Learning Research and Proposals for its Management.’ British Journal of Management, 12: 113–29. A. Lam (2000) ‘Tacit Knowledge, Organizational Learning and Societal Institutions: An Integrated Framework.’ Organization Studies, 21: 487–513. M. Leipold, G. J. B. Probst and M. Gibbert (2002) Strategic Management in the Knowledge Economy. Erlangen, Germany: Publicis and Wiley. D. Leonard-Barton (1995) Wellsprings of Knowledge; Building and Sustaining the Sources of Innovation. Boston, MA: Harvard Business School Press. H. Z. Li (1999) ‘Communicating Information in Conversations: A Cross Cultural Comparison.’ International Journal of Intercultural Relations, 23: 387–409. S. A. Lippman and R. P. Rumelt (1982) ‘Uncertain Imitability: An Analysis of Interfirm Differences in Efficiency under Competition.’ Bell Journal of Economics, 13: 418–38. A. Lomi, E. R. Larsen and A. Ginsberg (1997) ‘Adaptive Learning in Organizations: A System Dynamic-Based Exploration.’ Journal of Management, 23: 561–82. C. Maasdorp (2001) Bridging Individual and Organizational Knowledge: The Appeal to Tacit Knowledge in Knowledge Management Theory. Downloaded from http://www. hds.utc.fr/~barthes/ISMICK01/papers/IS01-Maasdorp.pdf. R. M. March, (1990): The Japanese Negotiator; Subtlety and Strategy Beyond Western Logic. Tokyo: Kodansha International. F. Machlup (1983) ‘Semantic Quirks in Studies of Information.’ In Machlup, F. and Mansfield, U. (eds) The Study of Information: Interdisciplinary Messages. New York, NY: John Wiley & Sons. J. Mckenzie and C. Van Winkelen (2004) Understanding the Knowledgeable Organization; Nurturing Knowledge Competence, London, UK: Thompson Publishing. I. Melville (2000) Marketing in Japan. Oxford, UK: Butterworth-Heinemann. A. Menon and P. R. Varadarajan (1992) ‘A Model of Marketing Knowledge Use Within Firms.’ Journal of Marketing, 56: 53–71. K. Mertins, P. Heisig and J. Vorbeck (2001) ‘Introduction.’ In Vorbeck, J. (ed.) Knowledge Management: Best Practices in Europe. Heidelberg, Germany: Springer. M. B. Miles (1978) Designing and Starting Innovative Schools: A Field study of Social Architecture in Education. New York, NY: National Institute of Education, Center for Policy Research.

Bibliography

161

H. Mintzberg (1979) The Structuring of Organization. Englewood Cliffs, NJ: Prentice Hall. R. Moilanen (2001) ‘Diagnostic Tools for Learning Organizations.’ The Learning Organization, 8: 6–20. C. Moorman (1995) ‘Organizational Market Information Processes: Cultural Antecedents and New Product Outcomes.’ Journal of Marketing Research, 32: 318–35. P. S. Myers (1996) Knowledge Management and Organizational Design. Boston, MA: Butterworth-Heinemann. R. R. Nelson and S. Winter (1982) An Evolutionary Theory of Economic Change, Cambridge, MA: Belknap Press of Harvard University Press. H. Nishida (1999) ‘A Cognitive Approach to Intercultural Communication Based on Schema Theory.’ International Journal of Intercultural Relations, 23: 753–77. H. Nohr (1999) ‘Knowledge Codification.’ Knowledge WORKS News, 1. I. Nonaka (1994) ‘A Dynamic Theory of Organizational Knowledge Creation.’ Organization Science, 5: 14–37. I. Nonaka, P. Reinmöller and D. Senoo (2000) ‘Integrated IT Systems to Capitalize on Market Knowledge.’ In Von Krogh, G., Nonaka, I. and Nishiguchi, T. (eds) Knowledge Creation: A Source of Value. London, UK: Macmillan Press. I. Nonaka and H. Takeuchi (1995) The Knowledge Creating Company: How Japanese Companies Create the Dynamics of Innovation, New York, NY: Oxford University Press. I. Nonaka, R. Toyama and N. Konno (2001) ‘SECI, Ba and Leadership: a Unified Model of Dynamic Knowledge Creation.’ In Nonaka, I. and Teece, D. (eds) Managing Industrial Knowledge: Creation, Transfer and Utilization. London, UK: SAGE Publications. P. C. Nystrom and W. H. Starbuck (2004) ‘To Avoid Organizational Crises, Unlearn.’ In Starkey, K., Tempest, S. and McKinlay, A. (eds) How Organizations Learn: Managing the Search for Knowledge. London, UK: Thompson Publishing. C. O’dell and C. Grayson (1998) ‘If Only We Knew What We Know: Identification and Transfer of Internal Best Practices.’ California Management Review, 40: 154–74. A. Ohnishi (2009) ‘Knowledge Management.’ In Haghirian P. (ed.) J-Management: Fresh Perspectives on the Japanese Firm in the 21st Century. iUniverse Star, pp. 204–23. A. Osiander (1999) ‘Das Andere erfassen – Gedanken zur vergleichenden Kulturforschung.’ ASIEN 71: 41–6. K. D. Parhizgar (2000) ‘Globalization of Multicultural Management.’ In Becker, K. (ed.) Culture and International Business. New York, NY: International Business Press. M. Polanyi (1985) Implizites Wissen. Frankfurt, Germany: Surkamp Verlag. M. E. Porter (1985) Competitive Advantage: Creating and Sustaining Superior Performance. New York, NY: Free Press. G. Probst, S. Raub and K. Romhardt (1998) Wissen Managen. Frankfurt, Germany: Frankfurter Allg. Zeitung, Gabler. G. Probst and K. Romhardt (1997) ‘Faktor Wissen.’ Manager Bilanz, 2: 6–10. J. Rehäuser and H. Krcmar (1996) Wissensmanagement im Unternehmen. In Schreyögg, G. (ed.) Wissensmanagement. Berlin, New York, NY: Walter de Gryter, pp. 1–40. F.-J. G. Richter (1996) Organizational Learning between Subsidiaries and Headquarter: The German Experience in Japan. Berlin, Germany: Ostasiatisches Seminar, Freie Universität Berlin. J. Rizzi (2001) ‘Precision E-mail marketing.’ Direct Marketing, 64: 56–60. K. E. Rosengren (2000) Communication: An Introduction. Thousand Oaks, CA: Sage Publications. K. Roth (2001) ‘Material Culture and Intercultural Communication.’ International Journal of Intercultural Relations, 25: 563–80.

162

Bibliography

H. J. Rubin and I. S. Rubin (2005) Qualitative Interviewing: The Art of Hearing Data, 2nd edn. Thousand Oaks, CA: Sage Publications. S. A. Sackmann (1991) Cultural Knowledge in Organizations: Exploring the Collective Mind. Newbury Park, CA: Sage Publications. T. Salzberger (1999) Interkulturelle Marktforschung: Methoden zur Überprüfung der Datenäquivalenz (Dissertation). Vienna, Austria: Service-Fachverlag. C. O. Scharmer (2000) ‘Organizing Around Not-Yet-Embodied Knowledge.’ In Von Krogh, G., Nonaka, I. and Nishiguchi, T. (eds) Knowledge Creation: A Source of Value. London, UK: Macmillan Press. E. Schein (1985) Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass Publishers. F. Scheuch (1993) Marketing. Munich, Germany: Verlag Franz Vahlen. M. Schulz (2001) ‘The Uncertain Relevance of Newness: Organizational Learning and Knowledge Flows.’ Academy of Management Journal, 44: 661–81. M. Schulz and L. A. Jobe (2001) ‘Codification and Tacitness as Knowledge Management Strategies: An Empirical Exploration.’ Journal of High Technology Management Research, 12: 139–65. R. Scollon and S. Wong-Scollon (1995) Intercultural Communication. Oxford, UK: Blackwell Publishers. C. E. Shannon (1948) ‘The Mathematical Theory of Communication.’ Bell System Technical Journal, 27: 623–56. O. Shenkar (2001) ‘Cultural Distance Revisited: Towards a More Rigorous Conceptualization and Measurement of Cultural Differences.’ Journal of International Business Studies, 32: 519–35. B. L. Simonin (1999) ‘Transfer of Marketing Know-How in International Strategic Alliances: An Empirical Investigation of the Role and Antecedents of Knowledge Ambiguity.’ Journal of International Business Studies, 30: 463–90. H. Singh and M. Zollo (1998) The Impact of Knowledge Codification, Experience Trajectories and Integration Strategies on the Performance of Corporate Acquisitions. The Wharton School, University of Pennsylvania. J. M. Sinkula (1994) ‘Market Information Processing and Organizational Learning.’ Journal of Marketing, 58: 35–45. S. F. Slater and J. C. Narver (1995) ‘Market Orientation and Learning Organization.’ Journal of Marketing, 59: 63–74. D. Snowden (1999) ‘Storytelling: An Old Skill in a New Context.’ Business Information Review, 16: 30–37. ——(2002) ‘From Storytelling to Narrative.’ Knowledge Management, 5. C. W. Soo, D. F. Midgley and T. Devinney (2000) The Process of Knowledge Creation in Organizations. Fontainebleau, France: INSEAD Working Paper. C. Sorensen and U. Snis (2001) ‘Innovation through Knowledge Codification.’ Journal of Information Technology, 16: 83–97. Spender, J. C. (1996) ‘Making Knowledge the Basis of a Dynamic Theory of the Firm.’ Strategic Management Journal, 17 (Special Issue): 45–62. L. A. Stefani, L. A. Samovar and S. A. Hellweg (1997) ‘Culture and its Impact on Negotiation.’ In Samovar, L. A. and Porter, R. E. (eds) Intercultural Communication. Belmont, CA: Wadsworth Publishing. J. Steyrer (1990) ‘Organisationspsychologie.’ In F. Scheuch (ed.) Allgemeine Betriebswirtschaftslehre: Texte für das Grundstudium. Vienna, Austria: Service-Fachverlag, p. 339. W. G. Stock (2000) Informationswirtschaft. Munich, Germany: Oldenbourg.

Bibliography

163

W. Swap, D. Leonard, M. Shields and L. Abrams (2001) ‘Using Mentoring and Storytelling to Transfer Knowledge in the Workplace.’ Journal of Management Information Systems, 19: 95–114. G. Szulanski (1994) Unpacking Stickiness: An Empirical Investigation of the Barriers to Transfer Best Practices inside the Firm. Fontainebleau, France: INSEAD Working Paper. H. Takeuchi (2001) ‘Towards a Universal Management Concept of Knowledge.’ In I. Nonaka (ed.) Managing Industrial Knowledge: Creation, Transfer and Utilization. London, UK: Sage Publications, p. 315. H. Takeuchi (2004) ‘Knowledge Creation within a Dialectic Organization.’ In Takeuchi, H. and Nonaka, I. (eds) Hitotsubashi on Knowledge Management. Singapore: John Wiley & Sons, pp. 339–62. R. Tanaka (2007), Wie sehen japanische Mitarbeiter ihre deutschsprachigen Kollegen?’ In Haghirian, P. (ed.) Markteintritt in Japan. Vienna, Austria: LexisNexis, pp. 129–33. D. Taylor (1989) ‘Training.’ In Molander, C. (ed.) Human Resource Management. Lund, Germany: Chartwell-Bratt. A. Tiwana (2000) The Knowledge Management Toolkit: Practical Techniques for Building a Knowledge Management System. Upper Saddle River, NJ: Prentice Hall PTR. TFPL (1999) Skills for Knowledge Management. London, UK: TFPL. D. C. Thomas (2002) Essentials of International Management: A Cross-Cultural Perspective, Thousand Oaks, CA: Sage Publications. R. Tung (1982) Selection and Training Procedures of US, European and Japanese Multinationals. California Management Review, 25: 57–72. R. M. Turner (1994) Adaptive Reasoning for Real-World Problems: A Schema-based Approach. Hillsdale, NJ: Lawrence Erlbaum Associates. J.-C. Usunier (1998) International & Cross-Cultural Management Research. London, UK: Sage Publications. ——(2000) Marketing Across Cultures. Harlow, UK: Pearson Education. G. Von Krogh, K. Ichijo and I. Nonaka (2000) Enabling Knowledge Creation; How to Unlock the Mystery of Tacit Knowledge and Release the Power of Innovation. Oxford, UK: University Press. G. Von Krogh and M. Köhne (1998) ‘Der Wissenstransfer in Unternehmen: Phasen des Wissenstransfers und wichtige Einflussfaktoren.’ Die Unternehmung, 5: 235–52. R. T. Watson (1999) Data Management; Databases and Organisations. London, UK: Wiley John & Sons. M. K. Welge and D. Holtbrügge (2000) ‘Wissensmanagement in Multinationalen Unternehmungen – Ergebnisse einer empirischen Untersuchung.’ Schmalenbachs Zeitschrift für betriebswirtschaftliche Forschung, 52: 762–77. E. Wenger (2000) ‘Communities of Practice and Social Learning Systems.’ Organization, 7: 225–46. S. Wikström and R. Normann (1994) Knowledge and Value; A New Perspective on Corporate Transformation. London, UK: Routledge. J. D. Williams, S.-L. Han and W. J. Qualls (1998) ‘A Conceptual Model and Study of Cross-Cultural Business Relationships.’ Journal of Business Research, 42: 135–43. S. C. Williams (1995) ‘Researching Markets in Japan – A Methodological Case Study.’ Journal of International Marketing, 4: 87–93. S. Winter (1987) ‘Knowledge and Competence as Strategic Assets.’ In Teece, D. J. (ed.) The Competitive Challenge: Strategies for Industrial Innovation and Renewal. Cambridge, MA: Ballinger Publishing.

164

Bibliography

R. Tung (1982) Selection and Training Procedures of US, European and Japanese Multinationals. California Management Review, 25: 57–72. S. Young (2000) The Multinational Corporation: The Managerial Challenges of Globalization and Localization. In J. Legewie (ed.) Corporate Strategies for Southeast Asia after the Crisis: A Comparison of Multinational Firms from Japan and Europe. Houndmills, UK: Palgrave. M. H. Zack (1999) ‘Managing Codified Knowledge.’ Sloan Management Review, 40: 45–58. U. Zander (1991) Exploiting a Technological Edge: Voluntary and Involuntary Dissemination of Technology. Stockholm, Sweden: Institute of International Business. U. Zander and B. Kogut (1995) ‘Knowledge and the Speed of the Transfer and Imitations of Organizational Capabilities: An Empirical Test.’ Organization Science, 6: 76–92. I. Zigurs and B. K. Buckland (1998) ‘A Theory of Task/Technology Fit and Group Support Systems Effectiveness.’ MIS Quarterly, 22: 313–34.

Index

acceptance of knowledge 19, 31, 54, 62, 73, 83, 103, 113, 114, 115, 116, 119, 136, 138, 142, 143, 148 adhocracy 60, 61 advertising 17, 50, 58 analogies 37 antipathy 115 architecture 13 artefacts 12, 13, 14, 15, 27, 66, 88, 90, 91, 95, 101, 144 aspects of reality 87 awareness 140, 148 baby boomers 43 baseball 15 behaviour 9, 11, 27, 37, 45, 58, 60, 61, 62, 67, 78, 86, 105, 108, 109, 118, 135, 147 best practice 10, 13, 47, 48, 54, 55, 64, 91, 92, 98, 99, 100 bicultural 143, 144 bilingual 143, 144 bilingual managers 144 blueprints 8, 12, 13, 92 bond traders 88 books 12, 27 brand awareness 14 Buddhism 31 budget information 88 bureaucracy 29, 60, 61 business environment: see company environment business life 123, 142 case studies 94 collectivism 31 collectivistic culture 28, 80 Commodore Perry 115 communication barriers 90

communication model 70, 83 communication pattern 68, 69, 91, 104, 144 communication process 27, 30, 32, 33, 65, 68, 69, 70, 71, 72, 73, 83, 99, 103, 104, 105, 120, 121, 135, 142, 146 communication styles 29, 68, 71, 73, 80, 95, 107, 108, 115, 143 communities of practice 12, 14 company environment 9, 29, 33, 44, 55, 83, 84, 102, 106, 118, 139, 145 company vision 11, 13, 51, 62 competencies 23, 88, 121, 126 competition 16, 17, 18, 23, 29, 46, 48, 49, 61 competitive 4, 18, 23, 24, 26, 45, 47, 51, 52, 53, 64, 71, 136, 145 competitive advantage 10, 13, 16, 17, 18, 19, 21, 23, 24, 26, 29, 30, 33, 35, 41, 42, 44, 46, 50, 53, 54, 91, 108, 142, 145, 147 competitiveness: see competitive computer program 6, 12 conflict 29, 73, 115, 118, 122, 144 Confucianism 31, 115 consensus 104, 105, 108, 109, 111 consultancies 12, 19, 50, 123, 145 consultants 14, 48, 51 consumer attitude 19, 54 consumer wishes 17, 48 consumer 14, 16, 17, 25, 46, 49, 54, 107, 141 consumer group 24 consumer preferences: see consumer wishes conversion modes 37 corporate environment: see company envirionment corporate networks 90

166

Index

corporate strategies 12 cultural context 69, 71, 77, 81, 113, 135, 144, 145, 147 cultural difference 27, 29, 30, 46, 54, 63, 66, 67, 78, 82, 83, 95, 98, 104, 107, 110, 113, 121, 129, 135, 136, 139, 140, 142, 145, 146, 147, 148 cultural distance 71, 83, 115, 116, 119, 120, 121, 125, 127, 128, 129, 130, 131, 136, 137, 138, 139, 142, 144, 149 customer awareness 17, 54 customer 9, 14, 15, 16, 17, 18, 19, 24, 25, 26, 37, 39, 46, 50, 52, 53, 54, 64, 65, 92, 106, 144, 145 database 15, 26, 34, 35, 45, 54, 57, 63, 88, 89, 90, 91, 92, 98, 99, 100, 126 decision-making 6, 16, 23, 24, 30, 47, 67, 94, 109, 110, 111, 112, 113, 114, 116, 120, 121, 122, 126, 127, 130, 137, 150 decision-making process: see decisionmaking dependencies 145 design 13, 50, 58, 77, 78, 79, 146 dialogue 38, 39, 103 diary 37 directories 88 dissatisfaction 107, 108 distrust 115 diversification 16 diversity 46, 69, 70, 141, 147 documents 12, 88, 92 economic crisis 144 efficiency 25, 36, 60, 61, 127, 146 e-mail 91, 92, 98, 99, 100 epistemology 32 expatriates 52, 91, 95, 96, 101, 124, 125, 127, 136, 137, 142, 143, 144 experience 3, 6, 7, 8, 9, 11, 15, 22, 23, 25, 30, 33, 37, 38, 39, 40, 43, 45, 46, 54, 57, 61, 62, 65, 81, 88, 104, 107, 108, 109, 110, 118, 119, 121, 122, 123, 127, 129, 130, 131, 137, 138, 139, 148, 149 expert systems 88, 89 explicit knowledge 8, 9, 13, 15, 20, 31, 32, 34, 35, 37, 38, 44, 45, 57, 59, 65, 89 external environment 17, 18, 22 external experts 14, 15, 19, 145 extranet 91, 92

face-to-face 21, 91, 94 foreign market 13, 26, 53, 64 foreign subsidiary 71, 80, 121 formal knowledge 10, 13, 15, 33, 35, 60, 142 formality 110 free communication 138 gaishikei 144 gasshuku 33 global competition 46, 48 global marketing 16, 17 globalization 16, 18, 143, 146 gossip 10, 30, 33, 142 group decision 90 groupware 90, 91, 98, 99, 100 harmony 29, 31, 33, 142 high-context culture 28, 77, 86, 87, 105, 107, 112, 118 history 66, 115, 116, 118, 122, 138 homepages: see webpages human behaviour 86, 105 human capital 62 human interaction 90, 91, 93, 101 human resources 24 hunches 9, 15, 32 idea creation 24 implicit knowledge 7, 94 indices 87, 122 individual knowledge 9, 15, 26, 35, 42, 43, 44 individualism 31 informal information 33, 129, 141, 142 informal knowledge 10, 13, 15, 33, 35, 142 information overflow 44, 45 information processing 67, 90, 108 information systems 4, 9, 60, 61 innovation 14, 24, 25, 49 insight 9, 14, 15, 22, 37, 120 intangible asset 17 intangibles: see intangible knowledge intangible knowledge 5, 9, 14, 16 intellectual assets 4, 16, 18, 21, 22, 24, 26, 58, 140, 148 intercultural skills 70, 118, 122, 139, 144 international workplaces 148 internationalization 46, 47, 89, 121 internet 90, 91, 98, 99, 100, 146 intraorganizational knowledge 82, 145 interorganizational knowledge: see intraorganizational knowledge

Index interpretation 5, 6, 8, 9, 21, 22, 32, 40, 49, 69, 78, 102, 103, 108, 109, 110, 129, 131, 138, 147 intranet 91, 92, 98, 99, 100 intuition 9, 62 islands of information 87 Japanese company 29, 30, 31, 32,33, 34, 36, 38, 40, 41, 42, 44, 43, 45, 80, 111, 124, 126, 141, 142 Japanese corporations 29, 33, 34, 38, 39, 41, 43, 44, 96, 115, 116, 140 Japanese economy 131, 138 Japanese organization: see Japanese company JETRO, 80 J-form organization 60, 61 job rotation 21, 35, 94, 141 know-how 6, 7, 8, 9, 15, 50, 60, 65, 85 knowledge assets 6 knowledge brokers 143 knowledge carriers 12 knowledge creation 4, 14, 18, 20, 21, 26, 29, 32, 34, 35, 36, 37, 38, 39, 40, 41, 42, 95 knowledge discovery 4, 26 knowledge economy 8 knowledge evaluation 23, 111 knowledge flow 19, 26, 36, 44, 48, 49, 50, 51, 59, 62, 65, 88, 136, 138, 139, 141, 142, 145 knowledge goals 141 knowledge location 12, 14, 33, 34, 35, 40, 92 knowledge owner 7, 8, 15 knowledge sharing 4, 9, 14, 18, 19, 20, 21, 26, 30, 33, 34, 35, 36, 40, 41, 49, 55, 58, 59, 60, 62, 63, 64, 73, 83, 84, 88, 90, 93, 99, 118, 123, 128, 129, 136, 140, 141, 142, 143, 145, 146 knowledge worker 21, 22, 62, 63, 65, 84, 88, 118, 140 language ability 94, 123, 124, 125, 126 language barrier: see linguistic barriers language differences 47, 115, 124, 125 lawyers 14, 48 learning-by-doing 19, 57, 61, 91, 93, 94 lifestyle 122 lifetime employment 32, 43, 45 linguistic barriers 47 Lotus Notes 90

167

low-context culture 28, 68, 77, 86, 105, 106, 107, 112, 115, 116, 118 management styles 46, 135, 147 manual 7, 8, 12, 38, 88, 91, 92 manufacturing 14, 15, 24, 25, 46, 48, 52, 53, 55, 65, 102, 123 market conditions 47, 53, 141, 144 market demands 20 market entry 13, 47, 48, 53, 64, 65 market entry strategy: see market entry market entry process: see market entry market environment 16 market intelligence 18 market orientation 16, 17, 18, 25, 26, 145 market research 11, 12, 13, 19, 47, 51, 54, 58, 109, 145 market researchers 14, 48 market trends 14, 47, 54 marketing mix 47, 48, 53 Mazda 43 media 27, 63, 116, 146 mental models 38, 104, 116 metaphors 37, 93 mimicry 122 misinterpretations 73, 120 misunderstanding 63, 69, 72, 73, 86, 104, 105, 118, 120, 122, 123, 125, 127, 131, 146, 147 multicultural 138, 141, 143 multinational 19, 24, 26, 46, 48, 49, 50, 51, 52, 54, 55, 56, 59, 62, 63, 64, 65, 66, 70, 71, 73, 77, 78, 79, 81, 82, 83, 84, 87, 88, 89, 95, 99, 102, 103, 104, 116, 118, 119, 120, 121, 122, 123, 125, 126, 127, 129, 130, 131, 135, 136, 138, 141 narrative 37, 91, 93, 119, 142 national culture 58, 63, 67, 69, 84, 103, 118, 119, 120, 122, 135, 136, 138, 141, 144, 147 nationality 122, 150 nemawashi 38, 39 network relations 19 networking 62, 70 Nikkei 80 nomikai 33, 35 online 141 on-the-job training 33, 35, 37 openness 61, 117, 119, 120, 122, 127, 128, 129, 130, 131, 137, 148, 149

168

Index

operational knowledge 7, 11, 12, 13, 15, 25, 44, 84, 141 organizational knowledge 9, 10, 11, 15, 39, 42, 61, 88, 89, 94 organizational learning 22, 23, 26, 88, 109, 129 origin 16, 115, 130 overseas subsidiary 13, 48, 52, 57, 59, 126, 127, 141, 145 participant observations 142 patents 8, 102 performance 7, 10, 14, 15, 17, 25, 34, 37, 40, 49, 61, 64, 86, 109, 121, 123 personal experience: see experience personal knowledge 35, 39, 65, 94 Plato 3 polychronic cultures 28 positive attitude 118, 130, 131, 138, 141 postal mail 91, 92, 98, 99, 100 prejudices 142, 144 presentation 37, 38, 40 prior experience 23 product development 14, 17, 24, 26, 48, 50, 54 product differentiation 17 product life cycles 16 product loyalty 14 project management 12 prototypes 88 qualitative research 77, 78, 79, 146 redundancy 35, 36, 39 reinterpretation: see interpretation relationships 9, 14, 15, 26, 29, 30, 33, 58, 59, 61, 67, 68, 77, 79, 88, 95, 104, 105, 106, 119, 120, 121, 135, 141, 142, 145 representation 8, 56 research institutions 19, 145 revenues 14 rivals 4, 17, 19, 25, 46, 64 role playing 94 routine 11, 12, 13, 14, 21, 34, 36, 57, 59, 61, 62, 63, 65, 73, 86, 89, 90, 92, 99, 110, 126, 129, 138, 147 rumours 10, 33, 142 salarymen 43 sea of information 87 SECI, 36, 38 seniority 29 shared identity 104

shareholders 14, 15, 145 signals 87, 122 social capital 119 stakeholders 14, 145 status symbols 13, 14 stereotypes 142 storytelling 33, 57, 91, 93, 142 strategic goals 10, 11, 13, 25, 34 strategic knowledge 11, 13, 15, 44, 89, 141 suppliers 14, 15, 19, 51, 92 SWOT analysis 47, 64 symbols 13, 57, 66, 87, 95, 104, 105, 121 tacit knowledge 5, 7, 8, 9, 13, 15, 31, 32, 34, 35, 37, 38, 41, 43, 44, 45, 56, 57, 59, 60, 84, 88, 89, 93, 96 team meetings 39 team work 90, 94, 123 technical drawings 13, 92 technological advances 146 technology 3, 14, 15, 16, 20, 21, 24, 48, 57, 62, 88, 89, 90, 91, 95, 116, 143, 146 top management 31, 44, 59 transfer instruments 57, 87, 89, 91, 95, 96, 98, 99, 100, 101, 113, 136, 137, 149 transfer medium 90, 101 trends 14, 19, 24, 47, 54, 145 trial and error 7, 121 trust 29, 36, 41, 58, 141, 142, 145, 146 truth 3, 93, 110 uncertainty 17, 24, 26, 60, 80, 119 video 13, 94, 141, 146 video conferencing 146 vision 10, 11, 13, 15, 51, 59, 62 webpages 91 wisdom 7, 8, 15 work processes 12, 13, 32, 51, 60, 93, 109, 138, 147 workflow automation 90 workforce 43, 46, 118, 135, 147 working environment: see company environment workplace 33, 57, 58, 123, 131, 138, 142, 146, 147, 148 world language 126 World Wide Web 26, 91 Zen 31 Zen masters 88