Knowledge Transfer in Strategic Alliances
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This paper reviews the literature on knowledge, transfer of knowledge and strategic alliances. Nowadays knowledge transfer within the firms becomes very important. It is crucial to understand what contributes to a successful knowledge transfer between companies as it directly affects the competitive advantage of the firms and their performance. This paper tries to analyze a knowledge transfer in the context of strategic alliances. The essence of this research is to find out how the knowledge can be transferred between the partners in the strategic alliances with the maximum effectiveness. In order to achieve this goal the determinants (including barriers) of knowledge transfer, specific features of alliances and behaviors enhancing knowledge transfer are determined.
Chapter 1: Introduction
1.1 Problem Indication
Knowledge was closely investigated by academic researchers for the last few decades. It is nowadays considered as one of the most important strategic assets (Winter, 1987) that contribute to the competitive advantage of the firms (Kogut and Zander, 1992); this perspective is associated with the knowledge–based view (Grant, 1996). Resulting from that numerous studies exist about knowledge. As Winter (1987) suggests, knowledge can be created, stored and transmitted (transferred), exploited and the ability to success in these activities represents the essence of the firm. Different studies consider these various stages. However, the process of transfer is very interesting to reflect on because it is precisely knowledge transfer that has been established by several academics as having a major impact on performance (Cohen and Levinthal, 1990; Osterloh and Frey 2000).
Some literature analyzes the process of knowledge transfer itself (O'Dell and Grayson, 1998; Szulanski, 2000), and its determinants (Grant and Baden- Fuller, 2000), other its boundaries (Szulanski, 1996; Salk, 1996; Hennart et al. 1999; Dyer and Hatch, 2006; Heiman and Nickerson, 2004). Together the authors try to shed light on the stages of knowledge transfer and factors that can positively or negatively contribute to it. Despite the abundance of studies, some researchers like Wagner (2005) call for the investigation of “soft issues” such as absorptive capacity and culture in successful knowledge sharing.
Moreover, different researchers (Inkpen, 2000; Mowery et al. 1996), studied knowledge in the context of a strategic alliance. Some studies convey the idea that this might be the most appropriate form of collaboration in order to share (transfer) knowledge because of several advantages (Grant and Baden-Fuller, 2004). Other academics, as Simonin (1999), define difficulties that alliances face in the process of knowledge transfer. Therefore it might be useful to combine these ideas and see what makes alliances being so unique and how knowledge can be transferred in these structures.
This literature review is meant to integrate various studies to make a clear picture of what makes the transfer of knowledge successful in-between partners of strategic alliance by reviewing determinants of knowledge transfer, particularities of alliances and possible strategies to follow in order to achieve the transfer.
1.2. Problem statement
The problem indication brings us to delimitate the following area of research:
Successful knowledge transfer in a strategic alliance
1.3. Research Questions
Since knowledge becomes an essential asset, and its manipulation might have strong impact on the wellbeing and performance of the firm, it is interesting to investigate the knowledge transfer. Our inquiry will be done by first looking at what is knowledge and its different kinds. Then the models of knowledge transfer (in general) will be considered to see how knowledge is shared, finishing with the factors that can impact positively or negatively (barriers) on this process, this includes the “soft issues” sited previously.
Research question 1: What are the key determinants in the process of knowledge transfer?
Strategic alliances are often used by firms to transfer knowledge. Several studies might convey the idea that alliances is the most appropriate form of cooperation in order to transfer knowledge, that is why in the second research question we are going to discuss characteristics and particularities of alliances that contribute to build a solid ground for knowledge transfer.
Research question 2: What characteristics and particularities of the strategic alliance might shape the process of knowledge transfer in this form of cooperation?
Perhaps the most practical issue for organizations involved in the process of knowledge transfer within a strategic alliance is the one that deals with practices to implement and strategies to follow for both partners. Therefore the third research question will deal with possible behavior and ways of doing that can facilitate the knowledge transfer within a strategic alliance.
Research question3: What strategies and behavior could the parties of the strategic alliance adopt (implement) to enhance the transfer of knowledge and cope with the difficulties alliance might face?
1.4. Research methods
This is a descriptive research that will be done in the form of literature review. The data sources are the existing academic literature in the field of management, strategy and organization science. The literature includes top journals such as Journal of Management Studies, Strategic Management Journal, Knowledge and Process Management, Academy of Management Journal, etc.
1.5. Thesis Structure
In the second chapter the investigation will be done in order to gain knowledge of what could be the determinants of the knowledge transfer in general (without considering the context of the strategic alliances). To do this, first of all, knowledge and its different kinds have to be defined. Following that the review of the literature about the process of knowledge transfer itself will be made. Chapter 2 will end with the review of possible factors that can affect the process by whether contributing to its success or by creating barriers to it.
In the third chapter we are going to take a closer look on the strategic alliances. Following the definition, the discussion will pursue in order to understand why certain researchers think that strategic alliances are the most appropriate form of collaboration between firms for the process of knowledge transfer. Moreover, in this chapter we are going to look if certain characteristics of the alliance can ameliorate the transfer (i.e. firm's similarities, orientation, strategy, resources).
The last research question will be answered in the fourth chapter by examining the possible strategies and behaviors that companies involved in the alliance could undertake to enable a successful knowledge transfer, while they might face several challenges.
At the end, conclusions will summarize this literature review bringing up possible questions for future discussion and useful recommendations about knowledge transfer within a strategic alliance.
Chapter 2: The determinants in the process of knowledge transfer
2.1. What is knowledge
In general knowledge is considered to be gained by observation, study and experiences. It is the mixture of values, context information, expert insight (Davenport and Prusak, 1998) that resides within the person. It can be accumulated and subjected to improvements unlimited number of times.
It is difficult to distinguish knowledge in itself from data and from information. Knowledge is neither of these two. Data results from transactions and information is derived from data. Fransman (1998) clearly underlines the fact that knowledge is indeed “processed information”. In this sense it is also possible to say that knowledge is socially constructed (Pentland 1995): individuals produce knowledge by processing information through their intellect. They act on knowledge by their actions and going through experiences, meanwhile their perspectives and insights change creating the opportunity to proceed differently in new situations, when new sets of information are available (Quinn et al. 1998).
2.2. Types of knowledge
Another approach to introduce knowledge would be to state its different kinds: tacit and explicit. The observation of the existence of the explicit knowledge goes back to Polanyi (1966). Later the number of terms used were substantially enlarged to: formal, declarative knowledge (Kogut and Zander, 1992), theoretical kind of knowledge (Nonaka and Takeuchi 1995), articulated or articulable knowledge (Hedlund, 1994; Winter, 1987), a ‘know-why' knowledge (Sanchez 1997).
To Polanyi (1966) explicit knowledge is easily subjected to codification in a formal language (can be stated or written down). Winter (1987, p. 171) agrees on that definition by saying that this type of knowledge can ‘be communicated from its possessor to another person in symbolic form and the recipient of the communication becomes as much “in the know” as the originator'. Sobol and Lei (1994) identified two ways in which one can think about explicit knowledge. The first one in terms of communicability: it is easily written down, encoded, explained, or understood' (Sobol and Lei, 1994, p.170). It is also possible to think about this kind of knowledge in terms of possession: ‘such knowledge is not specific or idiosyncratic to the firm or person possessing it' (Sobol and Lei, 1994, p.170).
Perhaps for this research the most interesting type of knowledge is the tacit knowledge because it is the one that largely contributes to competitive advantage of the firm. In fact, it was determined by several scholars (Pisano, 1994; Fang et al., 2007; Delios and Beamish, 2001) that tacit (as well as complex and specific) knowledge brings organizations to better-quality performance if its transfer was successfully accomplished. Also it is the type of knowledge that is considered to bring substantial competitive advantage by several academics (Nonaka, 1991; Grant, 1993; Spender, 1993).
Polanyi (1966) wrote that tacit knowledge is non-verbalizable, intuitive and unarticulated. Consequently it is hard to replicate and share. Deeper understanding was brought by Nonaka (1994) and (Sternberg, 1994) who both support the fact that tacit knowledge is context-specific: it ‘is a knowledge typically acquired on the job or in the situation where it is used' (Sternberg, 1994, p. 28). Nonaka (1994) as other researchers also wrote that tacit knowledge is personal (Sanchez 1997), difficult to articulate, and highly linked with action (Nonaka and Takeuchi 1995).
Therefore, on the one hand tacit knowledge is very difficult to transfer but on the other hand this same characteristic makes it being a critical and strategic resource of the firm and its competitive advantage, because competitors can hardly replicate it (Grant, 1993; Sobal and Lei, 1994).
2.3. Models: How to transmit knowledge
Before getting to discussion in which the transfer of knowledge involves strategic alliances, it is useful to look at the process itself. Several models attempt to explain the basics of knowledge transfer. Some of them identify key elements that play a role this process, other present stages and steps, finally some conditions are also acknowledged.
In order to understand how knowledge is transferred it is possible to first look at the definitions in cognitive psychology. At the individual level, the transfer was defined as ‘how knowledge acquired in one situation applies (or fails to apply) to another' by Singley and Anderson (1989).
The transfer of knowledge in the organizational context also involves transfer at the individual level because the evolution of knowledge merely occurs when individuals express the will to share their experiences and insights with others (Davenport and Prusak, 1998; Kim and Mauborgne, 1998). Through the communication between individuals, knowledge goes through all the levels of the organization. This movement of knowledge through various levels of organization from individual, through group, up to organizational was identified by Nonaka (1994) as the concept of “spiral of knowledge creation”. Here the transfer of knowledge is the process in which knowledge and experience of one unit (company, group or department) affects another. Szulanski (2000, p.10) supports this vision: ‘Knowledge transfer is seen as a process in which an organization recreates and maintains a complex, causally ambiguous set of routines (i.e. knowledge and experiences) in a new setting (i.e. another company, department, division, etc.)'.
Knowledge transfer can be regarded as process which is composed of basic elements. Szulanski (2000) identified them as: source, channel, message, recipient, and context. Obviously, source is the unit from which the message (knowledge) will flow to the recipient by the channel and the whole process will be considered in a particular organizational context which can be fertile (facilitates knowledge transfer) or barren (problems occur with transfer).
In the same research he explained several stages of the process of knowledge transfer. The process usually starts by the initiation. Then comes the implementation phase divided into several stages: ‘the initial implementation effort, the ramp-up to satisfactory performance, and subsequent follow-through and evaluation efforts to integrate the practice with other practices of the recipient' (Szulanski 2000, p.12)
Furthermore, O'Dell and Grayson (1998) elaborated six steps in the knowledge transfer. Primary the identification of important knowledge is necessary. From this point on it is essential to collect the knowledge systematically and then organize the knowledge. When knowledge has been organized it can be shared (transferred), but before the final stage of usage of knowledge to solve problems, it has to be adapted.
A number of conditions of knowledge transfer were presented by Grant and Baden-Fuller (2000). There are three main conditions of knowledge transfer. Firstly, the transmitter's knowledge must be capable of being expressed in a communicable form. It is effortlessly done with explicit knowledge, however tacit knowledge has to be made explicit with the help of an expert system or be shared trough ‘process of observation and imitation' (p.122). Secondly, transferred knowledge must be understandable to the source and the recipient. Therefore both have to use “common knowledge” which can be expressed in terms of the same language, information technology skills and culture. Thirdly, the new knowledge transferred from the source to recipient must be capable of aggregation which means that it would be possible to add to already existing knowledge.
2.4. What factors can influence the transfer of knowledge
Several features may play a substantial role in the process of knowledge transfer. When looking at the literature the most obvious in terms of determinants of knowledge transfer, might be the type of knowledge that is transferred.
Explicit knowledge is easy to codify and to transfer. Conversely, a large number of studies, like Grant (1996), report the negative influence of knowledge tacitness on its transfer. In general it is considered that tacit knowledge is very difficult to share because of the complexity of its codification (Reed and DeFillippi, 1990) and organizational embeddedness (Kogut and Zander 1992) and that it contributes to creating ambiguity which can most of the times create barriers to the process of transfer. Simonin (1999, 2004) proposed a model in which knowledge tacitness indirectly influences knowledge transfer through ambiguity; it nevertheless specifies the importance of knowledge tacitness as critical factor which makes knowledge transfer difficult.
Academics like Grant (1996), Reed and DeFillippi (1990) and Zander and Kogut (1995) raise the issue of complexity of knowledge. Complexity may appear for example when different kinds of skills and wide range of knowledge (individual, team-based experiences, technologies) have to be shared. The more complex the knowledge, the more difficult it is to share.
Reed and DeFillippi (1990) also considered the influence of the specificity on knowledge transfer. The term refers to knowledge which is related only to certain kind of transaction relations. Williamson (1999) defined specificity as ‘the ease with which an asset can be redeployed to alternative uses and by alternative users without loss of productive value.'
From these studies it is now clear that tacitness, complexity and specificity impedes to knowledge transfer by creating ambiguity. According to Simonin (1999) tacitness has the greatest influence in this relationship, followed by specificity, which is much less significant and finally complexity.
It seems that culture and willingness to share, elements often cited as factors that can influence knowledge transfer, are interrelated. Willingness to share is one of the key determinants of knowledge transfer; this means that one must be willing to share and the other one to receive. It is not always easy to let go from knowledge. As Bernstein (2000) suggests that willingness to share is influenced by identity because an individual might have a psychological ownership over the knowledge he possesses. Furthermore, Alavi and Leidner (1999) made a good remark about the fact that it will be difficult for organizations to share knowledge and integrate knowledge–based systems without primary having the information sharing culture (i.e. valuing information sharing). Davenport (1997) describes this as open versus closed culture.
Very similar to the concept of willingness to share, Szulanski (1996, p.12) argued that lack of motivation also has to be considered as one of the barriers to the process of knowledge transfer because it may ‘result in procrastination, passivity, feigned acceptance, sabotage, or outright rejection in the implementation and use of new knowledge.'
Szulanski (1996) also noticed another barrier of knowledge transfer. Absorptive capacity is one of the very well known elements that influence the transfer of knowledge. It is the ability to ‘exploit outside sources of knowledge' (Cohen & Levinthal, 1990, p. 128) and integrate it by replacing old practices by new ones, which is not always effortless (Glaseret al., 1983).
Chapter 3: Particularities of strategic alliances shaping the process of knowledge transfer
Combining resources is the logical response to the harshness of nowadays competition. Other factors as the increase in customers' expectations and the less strict regulatory barriers also led companies to form alliances (Gomes-Casseres 1994; Kogut 1988; Nielsen 1988; Harrigan 1988). Moreover, scholars have identified several key reasons for firms to form alliances. Among these usually appears risk mitigation, economies of scale/scope, entries to new markets (Inkpen 2000; Hennart, 1988; Kogut, 1988), and facilitated flows of technology-based capabilities (Mowery et al. 1996; Kogut, 1988; Cohen and Levinthal, 1990; Hamel, 1991; Khanna, 1996).
However these are not the only possibilities alliances are able to provide. Alliances can be considered as one of the means for knowledge gaining and sharing, besides mergers and acquisitions. According to Inkpen (2000) there exist several possibilities for companies to transfer and gain knowledge: “internalization within the firm, market contracts, and relational contracts”. He considers individual strategic alliances as relational contracts that permit knowledge acquisition and transfer, suitable in the context where knowledge is complex and hard to codify, whereas market based transfers are considered to be more efficient for product related (embodied) knowledge. Number of other researchers also supported the fact that alliances permit firms to share knowledge and ultimately to learn from the partners (Hamel, 1991; Grant, 1996; Khanna et al., 1998; Kogut, 1998). Inkpen (2000, p.1019) wrote: ‘Through the shared execution of the alliance task, mutual interdependence and problem solving, and observation of alliance activities and outcomes, firms can learn from their partners.'
3.1. Definition strategic alliance
In the literature it is possible to find several key characteristics of an alliance. An alliance is usually created between two or more firms that cooperate together in order to achieve some strategic objective, create value that they would not be able to achieve on their own (Borys and Jemison, 1989) and pursue a set of goals (Harrigan 1988; Yoshino and Rangan 1995). Partners are complementary and contribute with their resources and capabilities (Teece, 1992); they are involved in a range of interdependent activities (Contractor and Lorange 1988) and share benefits and risks of the alliance. Dussauge et al. (2000, p.99) described an alliance between two Knowledge Based Enterprises as: ‘an arrangement between two or more independent companies that choose to carry out a project or operate in a specific business area by co-coordinating the necessary skills and resources jointly rather than either operating alone or merging their operations'.
Some academics consider alliances to be arrangements in which firms establish exchange relationship without joint ownership being considered as a form of alliance (Dickson & Weaver, 1997); others consider equity alliances such as joint ventures, also be a form of alliance (Mowery et al. 1996). In this research all possible forms of alliances are considered: a non-equity alliance (co-operation without creation of new organization or exchange of equity); an equity alliance (unilateral or bilateral equity holding among partners without creation of the new firm); a joint venture (new firm is created, involving joint resources, where partners share ownership and control). Mowery et al. (1996) have as well identified various types of alliances: equity joint venture, license agreement, cross-licensing and technology sharing, customer-supplier partnership, mixed modes, R&D contract, and joint development agreement.
3.2. Why strategic alliance can be considered the most appropriate form of collaboration for knowledge transfer
Simonin (1999, p.595) wrote: ‘Accordingly, of all approaches to knowledge imitability between a knowledge holder and a knowledge seeker, strategic alliances constitute perhaps the most adequate, but nevertheless challenging vehicle for internalizing the other's competency'.
There are several forms of interorganizational exchange that enable firms to protect valuable resources including mergers and acquisitions, licensing and alliances (Coff, 1997). There are two kinds of knowledge explicit and tacit (Polanyi, 1966), therefore if two firms share knowledge, it will be explicit & explicit, explicit & tacit or tacit & tacit. Licensing can provide a solution for the first two combinations. Yet, it is very hard to gain competitive advantage with explicit knowledge resources, because they might be sold to other companies. By contrast, competitive advantage occurs when tacit knowledge assets are combined, provided their ambiguity, complexity and inimitability (Dierickx and Cool, 1989; Barney, 1991). This can be done through alliances or mergers and acquisitions.
Conventional sale contracts, markets, mergers and acquisitions seem to be less attractive structures for knowledge transfer in comparison with alliances. Coff (1997) found that it is not easy to evaluate the value of knowledge based resources, primary to knowledge transaction because of their tacitness (Mowery, 1983; Pisano, 1990). Firms that want to acquire new knowledge will have to face uncertainty concerning its characteristics and difficulties to determine its quality and to be certain of the transferability of the knowledge held by another firm. Some researchers raise a concern about the fact that in some cases the firm that will acquire knowledge is not certain to be able to deploy it (Polanyi 1966; Zander and Kogut, 1995). In this sense, alliance permits to mitigate risks of bad investments.
The ‘indigestibility' problem of M&A, quite the opposite of alliances, was discussed by several academics (Hennart and Reddy, 1997; Inkpen and Beamish, 1997). Indigestible assets are those who come with valuable assets during the transaction (Nonaka 1994). In fact, for some of these assets (in this case knowledge) the aftermarket may not exist after the acquisition. Within an alliance the company does not have to pay for ‘digestion' of non-valuable assets and has access to important knowledge resources held by the partner.
Grant and Baden-Fuller (2004) identified some advantages of alliances related to knowledge like possibility to achieve “early-mover” advantage and risk spreading. Early-mover advantage signifies recombining knowledge into innovative products in a quickly advancing knowledge environment. More precisely, this means ‘to quickly identify, access, and integrate across new knowledge combinations'. In this situation strategic alliances enable company to quickly access knowledge necessary for introduction of new products to market. Grant and Baden-Fuller (2004) wrote: ‘The greater the benefits of early-mover advantage in technologically-dynamic environments, the greater the propensity for firms to establish interfirm collaborative arrangements in order to access new knowledge.'
A risk exists in terms that sometimes a company might be uncertain about the future knowledge requirements and knowledge acquisition and integration takes time, the investments are risky (Grant and Baden-Fuller, 2004, p.76): ‘The greater the uncertainty as to the future knowledge requirements of a firm's product range, the greater its propensity to engage in interfirm collaborations as a means of accessing and integrating additional knowledge.' Powell (1987) also noticed that alliance formation diminishes the risk that knowledge will dissipate quickly.
3.3. Which characteristics and capabilities of alliance partners can ameliorate the transfer of knowledge?
Before considering the transfer of knowledge, it is important to underline, that both partners of an alliance are expected to possess valuable knowledge. Ahuja (2000) considered such knowledge possession as opportunity for linkage-formation. He also identified three categories of valuable knowledge assets that are: technical capital (capability to create new products, technology and processes), commercial capital (supporting resources) and social capital (useful networks).
Throughout the literature it is possible to distinguish some capabilities that are important for proper functioning of the knowledge based alliance: absorptive capacity, combinative capability, experience with alliances, suitable design for knowledge exchange, and choice of alliance structure.
In numerous studies, absorptive capacity plays an essential role in the process of knowledge transfer and learning within strategic alliances (Lane and Lubatkin, 1998). Van den Bosch et al. (1999) wrote that it combined the ‘evaluation, acquisition integration and commercial utilization of knowledge obtained from sources exogenous to the firm'. Absorptive capacity is susceptible to evolve and augment through activity (Barringer and Harrison, 2000) because it is ‘historical and path dependent in nature' as it was defined by Cohen and Levinthal (1990). Grant (1996) recognized that knowledge absorption capability can be influenced by: the degree to which the expert knowledge held by organizational members is utilized; the width of specialized knowledge required from firm members; the degree to which a capability can access additional knowledge and reconfigure existing knowledge.
Defined by Kogut and Zander (1992) combinative capability refers to the ability of the parties of an alliance to extend, interpret, apply, current and acquired knowledge with the goal of generating new applications from existing knowledge base.
Collaborative know-how affects firm's ability to form a successful partnership and create a solid ground for knowledge transfer. Simonin (1997) refers to it as to ‘ability to institutionalize organizational routines as a result of previous experiences'. Pennings et al. (1994) supports that firms tend to reproduce the behavior from their past experiences. When firms have previous experiences of collaboration within alliance, they acquire knowledge that helps them to effectively design future alliances (Lyles, 1988) and ‘develop superior capabilities at managing particular organizational forms such as alliances' (Kale et al., 2002, p. 748). This experience permits avoiding various difficulties (Doz, 1996).
Teece (2000) stressed the importance of the design of the firm to enhance performance and knowledge sharing. He identified distinctive characteristics of design in successful firms. Among these, entrepreneurial orientation and flexibility expressed in rapid responses to ephemeral market opportunities flexible boundaries (outsourcing and alliances). They were also characterized by their non-bureaucratic decision making and rapid internal knowledge sharing owing to the not really strict hierarchies.
The choice of alliance structure should be determined considering the perspective of gaining valuable resources (knowledge) from a partner without losing its own (Das and Teng, 2000).
Different views exist as to effectiveness of equity joint venture form of alliance for successful knowledge transfer. Several researchers find that this form is the most suitable for the transfer of tacit knowledge and complex capabilities (Kogut, 1988, Mowery et al., 1996). However, Das and Teng (2000) think that this structure is too risky for partnership based on knowledge-based contribution, and that it is more suitable for contributing property-based resources.
Inkpen (2002) identifies five categories of antecedents of alliance learning: learning partner characteristics; teaching partner characteristics; knowledge characteristics; relationship factors; and alliance form. Two key characteristics of the learning partner, identified by Nielsen and Nielsen (2009), are important, namely collaborative know-how (same as previous experience of alliances) and knowledge protectiveness (Simonin, 1997, 1999). Protectiveness matches the concept of openness and the degree to which partners are protective of their knowledge. How well do the support the risk of knowledge leakage or spillover (Inkpen, 2000).
Chapter 4: Potential strategies and behavior that parties of the strategic alliance might adopt to enhance the transfer of knowledge and to cope with difficulties alliances might face
4.1. Knowledge spillovers and ‘Trojan Horse' strategies existence
Strategic alliances might face a number of difficulties. The first thing that comes out from the numerous literature on strategic alliance and knowledge sharing, is the fear of knowledge spillovers, that are assumed to be inevitable consequence of alliance involvement, despite the efforts companies make in order to protect their valuable knowledge assets (Inkpen, 2000). Therefore, it immediately comes to the issue of trust. In the late 90's a discussion was raised about the possibility that some firms use strategic alliance as a Trojan Horse in order to steal knowledge from its partners. This was especially thought about Japanese partners. However empirical studies do not find support for this hypothesis (Hennart et al. 1999; Mowery 1996) but the rumor is still a shadow in the minds of people and sometimes is the reason of the low level of trust, for instance in the beginning of the relationship between organizations (potential partners).
4.2. ‘Learning races' an how to deal with them
Moreover, the literature elaborates on so called “learning races” (Khanna et al. 1998) when one partner (acts opportunistically) tries to gain more knowledge in the alliance exchange, than he shares. To raise concern about this issue Hamel (1991, p.86) described alliances as ‘transitional devices where the primary objective was the internalization of partner skills'. Learning race creates a significant challenge for strategic alliance. To deal with with this issue, norms and systems can be designed; functional rules can be developed to structure partner engagement (Quélin, 1997).
4.3. Trust and knowledge protectiveness influence on knowledge transfer
According to Koza and Lewin (1998, p.258) ‘Successful alliances exhibit trust between the partners; unsuccessful alliances exhibit a lack of trust'. Trust is a significant factor in successful strategic alliance, and ‘it is more likely to evolve as the design and management of the alliance matches the exploitation intents' (p.259) of the alliance partners, where exploitation intent is a quest of new perspectives and ‘discovering new opportunities for wealth creation and above average returns.'
When little trust is involved, this may lead to knowledge protectiveness from one or both of the partners. Nielsen and Nielsen (2009) wrote that ‘protectiveness not only may lead to uncertainty and conflict but it also reduces the amount of information exchanged'. They also add, that explicit knowledge protective policies and procedures by one partner, harmfully influence the perception the other partner might have on honest and open cooperation: ‘For instance, not revealing relevant information and knowledge may be perceived as unwillingness to devote adequate resources to the alliance'. This is in line with Simonin (1999) way of thinking, where knowledge protectiveness is positively related to ambiguity, which in turn impacts negatively on knowledge transfer. Therefore for successful knowledge transfer partners might be willing to cooperate and minimize knowledge protectiveness. Lee et al. (2007) suggest that knowledge protectiveness (still necessary if reasonably employed) should be accompanied with building up relational capital (trust, communication and commitment). Therefore one does not have to fear to trust in an alliance. In the contrary, established trust relationship between partners has been shown to bring positive outcomes for transfer of knowledge and learning.
4.4. Relational capital or social exchanges
Relational capital can be also expressed as social exchanges (social exchanges view). From this view, learning and knowledge transfer in strategic alliances are also positively influenced ‘commitment, trust and mutual influence between partners' as was mentioned by Muthusamy & White (2005). The results of their study show that reciprocal commitment between partners enhances interfirm learning because moral obligation of partners permits to build mutual commitment. They explain further, that interdependence and joint coordination increase due to the mutual resource commitment. To them trust is built progressively as knowledge, skills and competences are gained through alliance interactions. Trustworthiness, as well as goodwill, is shown to be key factors influencing effective transfer of knowledge in well functioning alliance. Therefore, partners should design and manage the strategic alliance with the aim to create an atmosphere of trust that will enable effective development of communication (social exchanges), mutual commitment and increase interactions essential for the transfer of knowledge.
Besides the previously cited difficulties involved in the transfer of knowledge from one partner to another and the behaviors organizations should adopt to face them, Davenport and Prusak (1998) have identified eight critical success factors for knowledge transfer (or characteristics of successful strategic alliances involved in knowledge transfer). The authors believe that technical architecture is very important. This means that information technology support for knowledge management must be effectively designed. Moreover they call for effective knowledge measurement, this is not easy to achieve, however it is very useful to know what is actually known. Furthermore, they underline the importance of the flexible organizational structure, multi-channel knowledge transfer and higher management support. This is important to realize because when for example an organization has a steep hierarchy, this might create difficulties for knowledge transfer from one level to another. A clear vision, a performance-based reward system and knowledge-friendly culture (where people might be willing to share) were also mentioned as important factors.
Chapter 5: Conclusions and Practical Recommendations
In chapter 2, after a detailed analysis of the term “knowledge”, two main kinds of knowledge can be identified: explicit and tacit knowledge. The first kind of knowledge may be characterized as easily expressible and reproducible. The most problems occur with the second kind of knowledge due to its complexity, specificity and organizational embeddedness. Even though tacit knowledge is very hard to transfer, this does not impact on the fact that it is the most important kind of knowledge for alliance partner as with its complexity it brings along the competitive advantage. Furthermore we have learnt that the transfer of knowledge occurs at the individual level as well as on higher levels such as group or department, this is why a flat structure of organization is recommended in order to avoid the stagnation of knowledge in on level unable to bypass hierarchical barriers. What is more, we have found that tacitness, complexity and specificity impedes to knowledge transfer by creating ambiguity. Moreover, such determinants as lack of motivation, unwillingness to share and lack of understanding create additional barriers in knowledge transfer and have to be prevented by cooperative behavior of the two partners.
From chapter 3 we learn that strategic alliances are formed with the purpose of value creation when partners alone could not achieve the same goal. In alliances, companies while complementing each other with the resources and capabilities may achieve much higher performance than operating alone. The factors which create incentive to form an alliance are various but most importantly there is a possibility to learn from each other. Alliances are considered the most suitable form for learning and for transfer of complex and not easy to codify knowledge. Because it is very hard to evaluate the quality of knowledge asset a priori, a market transaction would be too risky, whereas alliances represent a safe ground for tacit knowledge sharing. Additionally, strategic alliance may also provide organizations with “early-mover advantage” as well as avoid indigestibility problems of certain acquired resources. Concerning the factors that enable strategic alliances to ameliorate knowledge transfer, it was proven by the researchers that the possibility to absorb received knowledge and to combine it with existing knowledge, having previous experience with alliances and finding the most appropriate alliance design, will increase the success of knowledge transfer within the alliances. Therefore it is advisable for a firm in possession of complex knowledge and eager to share it and learn from the other, having sufficient absorptive capacity to enter a strategic alliance (choosing appropriate form) whether to gain first experience or to augment it.
Finally in chapter 4 it is clear that although alliances face issues such as knowledge spillovers and learning races and are obliged to protect themselves, they must not forget that the key ingredient to the success of knowledge transfer is trust. Upon trust partners may build a relationship with mutual commitment, interdependence and joint coordination that will enhance inter-firm knowledge transfer and learning. They shall avoid exaggerated knowledge protectiveness that leads to uncertainty harming the relationship and constitutes a solid barrier to knowledge transfer. The most important is that both parties of the strategic alliance should try to implement an approach involving clear vision, knowledge friendly culture and the building of the relational capital (trust, communication and commitment). The organizational management supporting knowledge transfer should be characterized by flexible organizational structure and multichannel knowledge transfer with senior management support.
Recommendations for further research
The issue of successful knowledge transfer should be further investigated by the academics. In particular the importance shall be paid to the strategies and behaviors enhancing knowledge transfer of an alliance. So far, most of the research about strategic alliances discusses some characteristics of successful alliances but there are no precise and determined guidelines on what exactly firms should do.
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