International Conferences on Economics and Management of Networks - EMNet 2009
,,Influence of the network maturity on organizational learning and knowledge transfer in strategic alliances’’
Abstract:
The aim of this research is to investigate how important is the age of the network for learning and knowledge transfer among the members of the network. Empirical part of the research was carried out through the multiple exploratory case study. It showed that the network’s age per se does not have an adequate power to explain learning processes occurring within a network. Age is an important factor of learning, but only as a part of a broader concept associated with the evolution of the network, and therefore not directly connected with learning. We recognized this as the network maturity concept. Network maturity is a function of network age, pre-existing experience in working together, and the development of a social network among the employees of organizations that formed the network:
Key words:
Strategic alliances, organizational learning, knowledge transfer, evolutionary perspective, network maturity
Author:
Ana Aleksic Miric,
Faculty of Economics, University of Belgrade
Kamenicka 6 Street
e-mail: ;
- Introduction
Forming of networks between companies and organizations of different kinds under the conditions of a highly competitive environment, globalization and important technological changes has become an imperative in the business world. The beginning of the XXI century has indicated, and now available empirical data confirm that the further development of the world market moves in the direction of linking companies and their cooperation at different levels. The research that has been carried out so far points to a number of reasons why organizations recognize network[1]formation as beneficial for the successful business. They suggest that companies decide to create network in order to enter ’’forbidden’’ and otherwise unavailable market, to expand strategic potentials, to share risks and costs, to obtain rare resources, to increase profitability, to decrease the number of competitors; to finance capital investments, to exploit the existing and to explore new opportunities; in other words, to achieve strategically important goals much faster, with significantly lower costs, and with greater flexibility. Recently, researchers have started to particularly emphasize organizational learning and knowledge transfer as important reasons for the network creation. This is, of course, due to the understanding that knowledge is the basic source of competitive advantage. The business word of today is built on the assumption that one can be better than its competition if knows more than they do. In that global race for the competiveness, companies often decide to enrich their knowledge and strengthen their competitive advantages through the network formation.
When asked about how they progress with organizational learning and knowledge transfer as they have entered inter-organizational network, two senior managers from different organizations responded like the following:
Manager 1:
‘’Well, we are progressing fine on the learning curve. You know, this is still a young network, and we need to be realistic about our expectations. We will learn more as we get to know each other better.’’
Manager 2:
‘’We are progressing great! The new network is a true source of innovation, and we are exploring new learning opportunities every day!’’
Faced with the answers alike, we might be puzzled about when to expect the highest level of learning and knowledge transfer to occur in inter-organizational networks? According to the first manager’s judgment, this is likely to happen in later phases of the network existence, not at the beginning. According to the second manager’s logic, network’s youth is the true source of innovation, and consequently, learning.
However, empirical investigation of ours showed that the network’s age per se does not have an adequate power to explain learning processes occurring within a network. Certainly, age is an important factor of learning, but only as a part of a broader concept associated with the evolution of the network, and not isolated. Explorative analysis affirmed the importance of network maturity. Existing literature does not draw on the difference between organizational age and organizational maturity, especially in the case of complex organizational networks (such as strategic alliances, equity and non-equity joint ventures etc). Therefore, the aim of this research is to investigate how important is the age of the network for learning and knowledge transfer among the members of the network? This general aim of the research is further developed into the following research questions: (1) is the network age or the network maturity of critical importance for organizational learning and knowledge transfer, (2) can younger partnerships be more mature that the older ones, and consequently learn faster, and (3) what factors influence the difference between age and maturity of networks?
Research is based on comparative analysis of three in-depth case studies.
The research applied the following techniques: interviews with managers, observation, analysis of historical data, and quantitative social network analysis. The interviews were conducted in semi-structuralized form. In order to ensure validity of the content of the interview and to enable systematic data gathering during interview procedure, on the basis of the existing literature we developed a questionnaire which in content met the research questions. All the interviews were conducted face-to face. In total, 20 interviews were conducted. The interviews lasted from 45 to 210 minutes. Some of the interviews were conducted once, whereas in case of some other positions it was necessary to go over the research questions once more. Further, the data gathering phase included collection and the analysis of the archival data as well. Archival data included various historical data about the companies that created the network - contracts, manuals, and bylaws, minutes from managerial meetings, press releases and so forth. The method of observation was also applied when it was appropriate.
- Theoretical Framework
- Organizational learning and knowledge transfer
Knowledge is defined as ’’information that corresponds to a particular context’’ (Burton et al, 2006: 92). This point of view is particularly important because it addresses the difference between information and knowledge. Knowledge as a construct is unavoidably related to information: knowledge of any kind is structured and consisted of mutually related and logically connected groups of information. On the other hand, not every piece of information can be considered as knowledge, but only those that contribute to the increase in overall level of organizational knowledge.
There are numerous typologies of knowledge. Winter (1987), for instance suggests a typology which differentiates knowledge as (1) simple and complex, (2) teachable and not teachable, and (3) observable and not observable. Anderson (1983), on the other hand considers knowledge as declarative and procedural. Cummings (2001), as well as some other authors, states that the basic characteristic of knowledge, upon which we can classify different kinds of knowledge into different categories, is knowledge transferability. For long time knowledge transfer has predominantly been understood as the movement of the existing technology or management practice, into an organizational settings for which such transfer represents a new knowledge input (Lindholm, 1997). Nowadays, it is more common to define knowledge transfer as sharing ideas across boundaries both within and outside of an organization (Yeung et al., 1999), which points to understanding of knowledge from a different perspective. In that sense, knowledge is understood not only as technology, but as a wider concept. Among all classifications of knowledge, the most influential is the on of Polanyi (1966). Polanyi defines two basic forms of knowledge within organization: tacit and explicit. Explicit knowledge is the one that can be easily transferred through communication, while tacit knowledge can be transferred only through the application and acquired through practice (Grant, 1996:111). The implicit logic that underlies previously stated is that people usually know more than they can show, explain or say (Polanyi, 1966; Cummings, 2001: 18). Tacit knowledge is embedded within a specific context whereas explicit knowledge is opened and achievable more easily. Knowledge can be embedded within an individual, group or organizational context, and accordingly knowledge can be analyzed and traced on these three different levels – individual, group and organizational.
Knowledge as a concept should be discriminated from the concept of learning. Learning is the process of knowledge accumulation through modification of existing and acceptance of new knowledge (Burton, Obel, 2004). Knowledge is the result of the process of learning and, at the same time, prerequisite for further learning. Basically, learning is a phenomenon which is predominantly studied on the individual level of analysis. The first experiments and research about learning focused on an individual, with an intention to find out how an individual learns. Therefore the topics on learning and knowledge transfer are mostly grounded in the field of psychology. Within the management literature, knowledge from the field of individual learning developed by psychological school has been used basically in two ways. First, in the intentions to understand how organizations learn, management scholars have used the analogy with individual learning. Second, individual learning has been used as a basis and presumption for organizational learning (Maier et al., 2001). Relation between individual and organizational learning, as well as between organizational and individual knowledge is a complex phenomenon, which equally depends on both sides. Large number of authors agrees on that efficient individual learning is a key to organizational learning, and that organizational learning can occur if and only if individuals within an organization are ready to apply their knowledge. A simplified attitude to group and organizational learning could lead to the conclusion that these are simply a sum of individual learning. However, according to contemporary theory such simplification is unacceptable, and organizational learning is not and cannot be regarded as a simple sum of learning on an individual level; on the contrary, it represents a far more sophisticated and complex interpersonal process (Fear, 2001: 162; Fiol, Lyles, 1985). The relation between individual and organizational learning is a complex phenomenon which equally depends on the involvement of both sides. On the one hand, individual learning of employees as well as their interaction are an important determinant of a total learning within an organization; at the same time, the interaction of employees within an organization and the exchange of information and knowledge in organizational context influences the level of knowledge and learning on the individual level (Argiris, Schön, 1996; Nonaka, 1994:17). The basic logic underlying this view is that although individual knowledge is the essence of any group and organizational knowledge, it would be a mistake to conclude that organizational knowledge is just a cumulative result of what their members know, or as Hedberg (1981) states ‘’…members come and go, and leadership changes, but organizations’ memories preserve certain behaviors, mental maps, norms and values over time.’’
Early work on organizational learning is to a great extent related to the instrumental approach of individual learning. This learning approach suggests that learning is change in behaviour in response to stimuli. Later authors recognized the importance of including not only behavioural, but a cognitive dimension of learning as well. Today, the dominant approach without any doubts recognizes both cognitive and behavioural aspects of learning; pointing to the fact that learning occurs on the cognitive as well as on the behaviour level. Argiris and Schön (1996) propose a very specific point of view on how organizations learn, including both behavioural and cognitive aspect of learning. Their approach showed to be very influential on the further development of thought on how learning within organizations is understood and analyzed. Argiris and Schön recognize single loop and double loop learning. Single loop learning assumes behavioral changes within organization, while cognitive changes are not included implying that people change their behaviour in everyday organizational life, but do not change the way they look at organization, its role in business world, and the basic assumptions they have about its functioning. Mode of single loop learning has been recognized before by Cyert and March (1963), as well as March and Olsen (1976). Double loop learning, on the other hand, produces not only change in behaviour, but ’’change in the values of theory-in-use, as well as in its strategies and assumptions’’. (Argiris, Schön, 1996: 21).
The works published lately place emphasis on the group level of learning within organizations, so organizational learning in groups becomes an important segment of analysis. The first perspective of group learning starts from the classical functional organizational perspective, pointing to the well known silo effect, when organizational units are limited by their functional perspectives and for that reason do not have at the disposal the knowledge available to other organizational units. Dixon (1994), however, warns about another danger of functional approach to learning; that of alienation and the lack of exchange of knowledge between organizational units, which results with the problems in understanding their own information and their appropriate interpretation simply because they cannot see a total picture. The second perspective points to the difference between learning that occurs within group from learning occurring within teams. This perspective in fact makes a distinction between groups and teams as social systems. According to Marquardt (2002: 42) there are three prerequisites for team learning: (1) a complex issue has to be addressed through collective insight, (2) innovative action is coordinated within a team and (3) team learning has an ability to encourage and stimulate learning in other teams. The research done by Wong (2005) indicates that teams can learn both in explorative and in exploitative way. Exploitative learning implies that in the process of problems solving team members use their previous knowledge and experience extensively. In approaching a problem, they primarily start from the question whether a team member was previously involved with a similar situation and whether that knowledge could be exploited for the purpose of solving a specific problem in question. On the other hand, explorative or research approach to solving problems is based on facing new and creative problems, while at the same time the team is trying to come to a new, totally unexplored approach and generate a new solution to a specific problem.
2.2.Evolutionary perspective of organizational learning in strategic alliances
Evolutionary perspective of learning within strategic alliances starts from the assumption that they are structured systems of well-established relationships, which gradually develop over a period of time.
Research on the influence of age on learning within and between organizations can be summarized into two basic streams. The first one suggests that the relationship between learning and age is linear, so the older partnership is, the more it will know, and more it will be able to learn. Second stream suggests that the relationship between age and learning can be represented by a parabola curve, so learning increases with age to a certain point, after which it decreases. Child (2003: 666) states that the relationship between the life cycle of a partnership and organizational learning which is realized through it cannot be viewed isolated from the aims of partnership and the nature of cooperation between the partners. The question is whether the cooperation is collaborative or competitive. The direct connection between learning and a life cycle of a partnership can be studied only in those partnerships in which there is a genuine devotion of both partners to mutual learning and attempts at further cooperation. If a partnership is seen as a short-term opportunity it is clear that in this case the possibility for such an analysis are quite limited.
In the research which comprised almost 60 strategic alliances Faulkner (1995) identified direct interdependency between the developmental stage of an alliance and organizational learning.
Figure 1: Partnership age and organizational learning
Several models which follow the evolution of strategic alliances stand out in professional literature. Among these, Iyer’s model (Iyer, 2002) is the most relevant for this research as the one which comparatively analyzes both evolutionary stages of alliances and learning. Iyer’s model identifies four stages of learning within alliances: (1) awareness and partner selection, (2) exploration, (3) expansion and (4) commitment to relationship. In Iyer’s view, learning within alliances is of evolutionary type; it changes together with the evolution of the partnership, its growing up and its development. Iyer’s model follows the process of the evolution of learning in strategic alliances, starting from the stage of the selection of a partner, through the stage of exploration and expansion, to the stage of considerable extent of mutual learning. Iyer’s model analyzes a partnership as a polygon for mutual learning. It can have the characteristics of a game with null sum, or the one which is characterized by mutual learning of the partners. Iyer’s model identifies four developmental stages, and five learning dimensions: (1) environment, (2) skills, (3) goals, (4) tasks and (5) process. Iyer refers to the first stage as a stage of rising awareness and making decisions about choice of a partner. He considers this stage to be essential to the creation of a strategic alliance. This is the stage in which the partners learn most about the characteristics of external surrounding, especially in case of international strategic alliances.Iyer refers to a second stage as an exploratory stage. The relation between partners is still very loose and fragile, with an open possibility for both sides to give up the partnership in a relatively simple and fast way. Learning in this stage is dominantly unilateral with the indications of mutual learning. Although in this stage it is still important for the partners to learn about the characteristics of the external environment, learning about internal characteristics of the partner start gaining in importance: his culture, policies and common practices of doing and strategic developmental goals. This is the stage in which partners are trying to learn as much as possible about each other’s intentions and goals, so as not to jeopardize the functioning of the partnership. This stage implies learning about external and internal surrounding, but at the same time that learning does not imply a deeper insight into the skills and the in-built partner’s knowledge.The third phase is a phase of expansion. In this stage the level of the interdependence between partners increases. Learning is mutual in this stage and the partners work together on the aims of the alliance and overcoming potential inhibitions to learning. The partners devote less and less attention to learning about external and internal surrounding, and more and more attention to the ways of creating new possibilities and access to new markets.The fourth stage is characterized by a considerable exchange of economic resources as well as with the intensive communication between the partners and important social exchange.