Knowledge and Teams 1

Project team strategy: A competitive advantage through

knowledge creation

Doctorial Student Richard L. Jayne

St. Ambrose University
Davenport, Iowa
29 Oct 2004
 Knowledge and Teams 2

Abstract
In this paper, I review some of the life-span models for project teams and propose a

different way to assess the long term value of the stages and phases. Gersick’s (1988)

punctuated equilibrium model and Tuckman’s (1965) model of group development both

discussed early periods of reduced measurable performance, i.e., Gersick’s reduced

inertia during phase 1 and Tuckman’s norming stage before the performing phase. These

stages and phases could be key to tacit knowledge creation and as a result key to creating

a sustained competitive advantage for the firm. I propose that if a team manages these

early phases from a knowledge creation frame, then the team will more likely develop

products that will lead to a competitive advantage for a firm.

 Knowledge and Teams 3

Extensive research has been done on teams and organizational learning, but not

much work has been done to bring these two concepts together. Some product

development team life-span models have postulated that some earlier phases in the life-

span are less productive than the later phases. Tuckman (1965) reviewed 50 articles

dealing with stages of group development over time and proposed a linear model of

group development which consisted of four stages; forming, storming, norming, and

performing. Tuckman and Jensen (1977) updated the model and added a final phase,

adjourning. Gersick (1988, 1989) studied project teams and found that instead of

developing gradually over time, they progressed through an alternation of inertia and

sudden change. Gersick (1988) felt that “stage” connotes hierarchical progress from one

step to another and the search for stages is an effort to look for types of behavior.

Gersick (1989) stated, “The difference between the temporally defined phases that

emerged and the traditional activity-defined stages is somewhat analogous to the

difference between seeing the structure of football as a set of time-based quarters

(phases) with wide variation in the sequence of plays across games and seeing it as a

sequence of different styles of play (stages) that are the same for every game” (p. 276).

Therefore, she used the term phase rather than stage. When assessing the life-span

phases from a knowledge creation frame of organizational learning, one may come to a

different conclusion. Through initial team member socialization, tacit knowledge can be

created, which possibly leads to a sustained competitive advantage for the firm. The

purpose of this paper is to provide an integrated framework for exploring the relationship

among the life-span of self-directed project development teams, the knowledge creation
 Knowledge and Teams 4

process, and sustained competitive advantage given today’s increasingly dynamic

environment and movement to teams. To keep pace with the dynamic business

environment, teams are becoming more widely used. Hackman (1998) concluded that,

“Teams markedly outperform individuals, and self-managing (…) teams do best of all”

(p.245). Knowledge has emerged as the most strategically significant resource of the

firm (Grant, 1996a) and is built into the very nature of the firm (Penrose, 1959). This

paper examines two life-span theories of project teams and then proposes how tacit

knowledge creation during the team’s life-span can lead to creating a sustained

competitive advantage. This paper concludes by discussing two propositions related to

the knowledge creation process and to the life-span of self-directed project development

teams.

Theoretical Background

Within the framework of team and knowledge creation, I restricted my review to

self-directed project development teams. These teams have specific tasks to do within

definite time periods; consist of cross-functional members, and disband at the end of the

project (Sundstrom, 1999). Cross-functional teams consist of members from more than

one functional area such as comptroller, engineering, manufacturing, or marketing.

Functional diversity in product teams increases the amount and variety of information

available to design products. The composition, group process, and work organization of

the project team affect the knowledge and problem-solving results of the team (Brown &

Eisenhardt, 1995). Davenport and Prusak (1998) define knowledge as a fluid mix of

framed experience, values, contextual information, and expert insight that provides a

framework for evaluating and incorporating new experiences and information. It

 Knowledge and Teams 5

originates and is applied in the minds of knowers. Knowledge can be viewed as divided

into tacit and explicit knowledge (Polanyi, 1966). Tacit knowledge is tied to an

individual and is very difficult if not impossible to articulate. As knowledge is explored,

put into action, and socially justified, tacit knowledge is being made explicit through

codification resulting in it being converted into messages that can be processed as

information. Grant (1996b) identified tacit knowledge as the most strategic resource of

firms since tacit knowledge is difficult to imitate and immobile. Thus, it can constitute

the basis of competitive advantage. Knowledge is important for team performance, and

by managing the knowledge creation process, a team can understand what knowledge is

and how to create, transfer, and use it effectively to develop a competitive advantage.

Under the knowledge-based view theory of strategy, knowledge is a resource that can be

acquired, transferred, or integrated to achieve a competitive advantage. The basic

assumption under knowledge-based view is that knowledge is the firm’s most important

resource (Eisenhardt & Santos, 2002). Knowledge is important for sustaining a

competitive advantage, and by strategically managing the knowledge creation process,

one can understand what knowledge is and how to create, transfer, and use it effectively

to develop and sustain a competitive advantage. A firm has sustained competitive

advantage when it is implementing a value creating strategy, not simultaneously being

implemented by any current or potential competitors and when these other firms are

unable to duplicate the benefits of this strategy (Barney, 1991). This definition of

sustained competitive advantage does not depend upon a set calendar time when a firm

enjoys a competitive advantage. A competitive advantage is sustained only if it continues

to exist after efforts to duplicate that advantage have ceased. Thus, the inability of
 Knowledge and Teams 6

current and potential competitors to duplicate that strategy makes a competitive

advantage sustained. Barney (1991) suggested that elements needed to sustain

competitive advantage are rarity, value, inimitability, and non-substitutability, which are

consistent with Peteraf’s (1993) four conditions. Again, tacit knowledge meets Barney’s

conditions; it is rare and possesses value, it is difficult to imitate, and it is difficult to find

substitutes for the “know how” that is stored in an individual’s mind. Rouse and

Daellenbach (2002) argued that when sources of sustained competitive advantage remain

tacit, this precludes their public disclosure via secondary data. Thus, tacit knowledge can

form the basis of a sustainable competitive advantage. Kogut and Zander (1992) view

the firm as a social community. One way to prevent diffusion of tacit knowledge because

of employee turnover is through a firm’s social structure (Droege & Hoobler, 2003).

This can be done by promoting employee interaction and collaboration, which is

consistent with self-managed teams.

Team Models

Linear Group Development Model

Groups are viewed as progressing through five developmental stages and each has

its own unique pattern of behaviors (Tuckman, 1965, Tuckman & Jensen, 1977).

Stage 1 is “forming”. When first entering a group, the members feel anxious and

uncertain. They are usually polite and tentative but at times they can be defensive.

Stage 2 is “storming”. Individual members seek to clarify their roles, coalitions

form around members with similar ideas, and conflicts between coalitions with different

ideas start to emerge.

 Knowledge and Teams 7

Stage 3 is “norming”. Trust among members increases after resolutions of the

conflicts from stage 2. Communications become more open and related to the assigned

task

Stage 4 is “performing”. Work reaches its optimal level during this stage since

norms, goals and structures were established in previous stages.

Stage 5 is “adjourning”. At the end point of the project, members evaluate their

work together, give feedback, and express feelings about each other and the group.

Punctuated Equilibrium Model

Through her research Gersick (1988) found that groups do not gradually develop

over time but they experience a long period of inertia that is punctuation with a defining

moment that changes the direction of the inertia. Groups go through a two-phase

developmental pattern over a set calendar time. Phase 1 is the first period of inertia in

which the direction is set by the end of the group’s first meeting. At the midpoint (half

the allotted calendar time) of the team’s assigned project, the group undergoes a

transition that resets the direction of the inertia for phase 2. Gersick (1989) defined a

transition point as, “the moment when group members made fundamental changes in

their conceptualization of their own work” (p. 277). The group’s progress is triggered

more by members’ awareness of time and deadlines than by completion of an absolute

amount of work during a stage (Gersick, 1989). The point in time when this transition

occurred was the midpoint of the project. The midpoint acts as a reminder of the project

deadline and thus energizes the group to increase the inertia so as to complete the project.

Two ways were observed by Gersick (1989) in making this transition; (1) the team

summarizing and declaring complete previous work and moving to a new subtask, or (2)
 Knowledge and Teams 8

the team drops the stalled phase 1 approaches and looks for new inspirational approaches

that the team could crystallize around.

Team and Organizational Performance through Knowledge Creation

The team and organizational learning involves (Wah, 1999): (1) explicit

knowledge – capturing, storing, retrieving, and distributing tangible knowledge assets

(e.g., copyrights, patents); (2) tacit knowledge – gathering, organizing, and disseminating

intangible knowledge (e.g., professional expertise, individual insight, and experience); (3)

the creation of an interactive learning environment where organizational members are

encouraged to readily transfer and share what they know, internalize it, and apply it to

recreate new knowledge. Lee and Choi (2003) looked at three major factors for

managing knowledge: enablers, processes, and organizational performance. Enablers are

influencing factors that help foster knowledge consistently through the firm by

stimulating knowledge creation, protecting knowledge, and facilitating the sharing of

knowledge. Knowledge processes are knowledge management activities that help create

a coordination structure that manages knowledge effectively. Thus, enablers provide the

infrastructure necessary for the team to increase the efficiency of knowledge processes,

and knowledge processes represent the basic operations of knowledge.

Based on this research framework, Lee and Choi (2003) developed a knowledge

factor model consisting of seven enablers: (1) collaboration – degree of active support

and help in an organization; (2) trust – degree of reciprocal faith in others’ intentions,

behaviors, and skills toward organizational goals; (3) learning – degree of opportunity,

variety, satisfaction, and encouragement for learning and development in an organization;

(4) centralization – degree of authority and control over decisions; (5) formalization –
 Knowledge and Teams 9

degree of formal rules, procedures, and standard polices; (6) T-shaped skills – degree of

understanding of his or her own and other’s task areas; and (7) information technology

support – degree of IT support for collative work, for communication, for searching and

accessing, for simulation and prediction, and for systematic storing. The knowledge

creation process includes four intertwined activities: socialization, externalization,

combination, and internalization (Nonaka & Takeuchi, 1995). Socialization converts

tacit knowledge into new tacit knowledge through social interactions among members.

Externalization codifies tacit knowledge into explicit concepts. Combination converts

explicit knowledge into more systematic sets by combining key pieces. Internalization

embodies explicit knowledge into tacit knowledge.

Lee and Choi (2003) found collaboration, trust, learning, and centralization are

significant (.05 significance level) predictors for knowledge creation. Collaboration is

positively related with socialization, externalization, and internalization and not related to

combination. Trust is related to all knowledge creation modes. Learning is related to

socialization and internalization. Centralization is negatively related to socialization,

externalization, and internalization while not related to combination. Formalization and

T-shaped skills of members are not related to knowledge creation. IT support is

significantly related to knowledge combination only. Then knowledge creation is

positively related to organizational creativity, which is positively related to organizational

performance. Therefore, Lee and Choi’s (2003) findings confirm that an organizational

group such as a self-directed project development team can achieve performance benefits

through effective management of the knowledge creation process.

 Knowledge and Teams 10

Nonaka, Takeuchhi, and Umemoto (1996) defined the knowledge creation

process as a “never-ending spiral of tacit and explicit knowledge through four modes of

knowledge conversion” (p. 833); socialization, externalization, combination, and

internalization. The team cannot create new knowledge without the individual and so the

team needs to support individual team members and provide contexts for them as shown

by Lee and Choi’s (2003) enablers for creating knowledge. A critical assumption is “that

human knowledge is created and expanded through social interaction between tacit

knowledge and explicit knowledge” (Nonaka, Takeuchhi, & Umemoto, 1996, p. 835).

During the socialization mode, team members share experiences and mental models.

During the externalization mode, team members articulate their hidden tacit knowledge

using meaningful dialogue and reflections. During the combination mode, newly created

knowledge and exiting knowledge from internal and external sources are crystallized into

new products. During the internalization mode, learning-by-doing triggers the creation of

tacit knowledge. Thus, the organizational knowledge creation process is a spiral process

starting at the individual level, working through the team and ultimately crossing the

boundaries of the organization (Figure 1). In this spiral process, the socialization within

the team plays a critical role in creating new tacit knowledge that can lead to creating a

competitive advantage.
 Knowledge and Teams 11

Explicit
Knowledge Combination Externalization

Tacit Socialization
Internalization
Knowledge

Individual Group/Team Organization Inter-Organization

Knowledge Level

Figure 1. Spiral of Organizational Knowledge Creation

Reinmoeller and Chong (2002) create a framework for relating the knowledge

creation process to the context of time. They propose four different time contexts that

can enable different team knowledge processes (Figure 2 (modified from Reinmoeller

and Chong (2002)). These linkages are: (1) creative leisure enables socialization; (2)

defining moments enable externalization; (3) velocity enables combination; and (4)

seasonality (rhythm) enables internalization. Creative leisure can be associated with the

forming, storming, and norming stages of the linear group development model. If the

external leader of the project team ensures that socialization takes place during these

stages, then tacit knowledge will be created, which can lead to creating a competitive

advantage for the firm. Also, creative leisure can be associated with phase 1 of the

punctuated equilibrium model. Again the external leader plays a major role to ensure that

socialization occurs. As Gersick (1988) concludes, the project team’s first meeting sets
 Knowledge and Teams 12

the level of the inertia of the team during phase 1. Thus if the external leader of the

project team organizes the first meeting to increase the socialization during phase 1, then

the team will have a higher inertia during phase 1 and a higher level of tacit knowledge

will be created. The idea of defining moment relates in general to the transition from the

norming stage to the performing stage in the linear group development model. The team

moves from a stage of building trust and opening up communication to a stage of

increased productivity. The transition point in the punctuated equilibrium model clearly

represents a defining moment. The phase 2 inertia was always higher for all the project

teams that Gersick (1988, 1989) studied. The next stage for the linear group development

model is the performing stage that maps perfectly to the velocity (accelerated

performance) time context. The same relates to the punctuated equilibrium model since

the inertia increases during phase 2, which relates to increased performance in the

velocity time context.

Tacit
Externalization
Socialization
Tacit-to-Explicit
Tacit-to-Tacit
Creative Defining
Leisure Moments

Tacit Explicit

Seasonality Velocity

Internalization Combination
Explicit-to-Tacit Explicit-to-Explicit
Explicit

Figure 2. Temporal Multiplicity: Occasions for Knowledge Conversion

 Knowledge and Teams 13

Linear Group Development and Punctuated Equilibrium Models

Chang, Bordia, and Duck (2003) studied 25 simulated project teams to gain a

better understanding of group development considering Tuckman’s group development

model and Gersick’s punctuated equilibrium model. They found that 9 groups underwent

a midpoint transition, and 16 groups more closely fit the group development model.

However, 12 groups did undergo some transitions, most of which occurred within the

first quarter of the group’s life span. Chang, Bordia, and Duck (2003) concluded, “The

fact that most of the groups in the present study did show some form of transition during

their life spans supported the validity of the punctuated equilibrium model” (p. 113).

Chang, Bordia, and Duck (2003) found two interesting observations that relate to the

knowledge creation process. The percentages of statements related to work were steady

for times1 and 2 and then increased for times 3 and 4. The percentages of statements

related to pairing (reflective listening to other group members) were steady for times1

and 2 and then decreased for times 3 and 4. These observations support the concept that

the team moves from socialization (tacit-to-tacit) knowledge creation process to an

externalization (tacit-to-explicit) and combination (explicit-to-explicit) knowledge

creation process. During the socialization phase of the knowledge creation process, team

members need to listen and reflect on what the other team members say in order to create

new tacit knowledge, and as the team becomes more productive (more work), more

explicit knowledge is being produced. Therefore, one would expect socialization to

occur early in the life-span of a group and reduce over time, and one would expect
 Knowledge and Teams 14

externalization and combination to increase later in the life-span of a group with more of

a steady state during the beginning of the team.

Integrating Concepts of Knowledge Creation and Project Team Life-Span

Nonaka (1994) proposed that project teams trigger knowledge creation through

two processes: (1) the team facilitates the building of mutual trust among members and

accelerates creation of shared perspectives; and (2) the shared implicit perspective is

conceptualized through continuous dialogue among members. These two processes can

appear simultaneously or alternatively in the process of knowledge creation within a

team. Socialization is a process of sharing experiences that leads to shared perspectives

and thereby creates tacit knowledge such as shared mental models and technical skills

(Nonaka, Takeuchhi, & Umemoto, 1996). The sharing of mental models and physical

rhythm among team members serves as the driving force of socialization. In the linear

group development model, the process of socialization starts during the forming stage

and continues into the norming stage. Tuckman (1965) describes these stages: (1)

forming stage involves team members testing the boundaries of interpersonal and task

behaviors; (2) storming stage is characterized by conflict and polarization around

interpersonal issues; and (3) in the norming stage the interpersonal resistance is overcome

and cohesiveness and trust developed. Thus, Tuckman’s forming, storming, and norming

stages map to the socialization mode of the knowledge creation process (Figure 3). In the

punctuated equilibrium model, the process of socialization starts during phase 1. Gersick

(1988) describes phase 1 as the first half of a groups’ calendar time and the behaviors and

themes that dominate this phase were established at the first meeting. Thus, Gersick’s

phase 1 maps to the socialization mode (Figure 4). The externalization mode of
 Knowledge and Teams 15

knowledge conversion is typically seen in the process of concept creation and is triggered

by dialogue or collective reflection (Nonaka, 1994). Externalization holds the key to

knowledge creation, because it creates new, explicit concepts from tacit knowledge

(Nonaka, Takeuchhi, & Umemoto, 1996). Once explicit concepts are made, they can

then be models and turned into a product. In the linear group development model, the

process of externalization starts later during the norming stage and continues into the

performing stage. After the team develops more of an in-group feeling and becomes more

cohesive, then increased dialogue and collective reflections will occur that lead to

externalization. In the punctuated equilibrium model, the process of externalization starts

during phase 1, but the main thrust of the creation of explicit knowledge occurs at the

transition point (i.e., midpoint, defining moment) when the inertia of the team increases

so as to meet the project completion date. Combination is the mode of knowledge

conversion that involves combining different bodies of explicit knowledge. In the linear

group development model, the process of combination starts during the performing stage

and continues throughout the stage. The team becomes flexible and team energy is

channeled into the task, thus resulting in increased explicit knowledge. In the punctuated

equilibrium model, the process of combination starts principally during phase 2, and is

related to the increased inertia during the phase representing the increased explicit

knowledge being created to meet the project objective. Finally, internalization is a

process of converting explicit knowledge into tacit knowledge. When explicit knowledge

is internalized, (e.g., learning by doing), into individuals’ tacit knowledge in the form of

shared mental models or technical know-how, they become valuable assets (Nonaka,

Takeuchhi, & Umemoto, 1996). In the linear group development model, the process of
 Knowledge and Teams 16

internalization starts during the performing stage and continues through the adjourning

stage. In the punctuated equilibrium model, the process of internalization starts during

phase 2, and as the inertia increases, team members will be increasing learning by doing

and gaining more experience that leads to an increase of tacit knowledge. Figure 3

pictorially shows the proposed relationship between the knowledge conversion process

and the linear group development model.

Internalization
Explicit-to-Tacit

Adjourning Forming

Stages
Combination
Performing Storming
Explicit-to-Explicit
Socialization
Norming Tacit-to-Tacit

Externalization
Tacit-to-Explicit

Figure 3. Knowledge Creation & Linear Group

Development Model

Based on the mapping relationships established between the (Nonaka, Takeuchhi, &

Umemoto, 1996) spiral knowledge creation process; Tuckman’s (1965) linear group

development model; Grant’s (1996b) idea that tacit knowledge is the most strategic
 Knowledge and Teams 17

resource of the firm; and Eisenhardt and Santos’ (2002) conclusion that knowledge can

result in a sustained competitive advantage, the first proposition states:

P1: For a project development team, the tacit knowledge created during the

forming, storming, and norming stages of the linear group development model

will be positively associated with creating and sustaining a competitive

advantage at the organizational level.

Figure 4 pictorially shows the proposed relationship between the knowledge conversion

process and the punctuated equilibrium model. During phase1, tacit knowledge is being

created through the socialization process involving the individuals assigned to the team.

Gersick (1989) found that at the transition point, “they pulled in new ideas and reframed

their accrued experience in ways that enabled them to jump forward” and “transitions

may be at the heart of the invention process” (p. 277). Thus, the team members realize at

the midpoint that the project completion date is quickly approaching and that they cannot

add more time to the process. During phase 2, the explicit knowledge being created leads

to meeting the goals and objectives of the project.

 Knowledge and Teams 18

Socialization Externalization Combination Internalization

Tacit-to-Tacit Tacit-to-Explicit Explicit-to-Explicit Explicit-to-Tacit

Inertia
Phase 2
Inertia Transition/
Phase 1 Midpoint
[Defining Moment]

Figure 4. Knowledge Creation & Punctuated Equilibrium Model

Based on the mapping relationships established between the (Nonaka, Takeuchhi, &

Umemoto, 1996) spiral knowledge creation process; Gersick’s (1989) punctuated

equilibrium model; Grant’s (1996b) idea that tacit knowledge is the most strategic

resource of the firm; and Eisenhardt and Santos’ (2002) conclusion that knowledge can

result in a sustained competitive advantage, the second proposition states:

P2: For a project development team, the tacit knowledge created during phase 1

of the punctuated equilibrium model will be positively associated with creating

and sustaining a competitive advantage at the organizational level.

Conclusion

Given the increasing importance of project teams in today’s dynamically

changing environment, understanding how teams change over time becomes critical for a

firm to create a competitive advantage. Nonaka (1994) stated that “organizational

 Knowledge and Teams 19

knowledge is created through a continuous dialogue between tacit and explicit

knowledge” (p.14), and that “teams play a central role in the process of organization

knowledge creation” (p. 32). Fedor et al. (2003) investigated the roles of project team

knowledge creation processes and input (team leadership and organizational support)

variables on project success. They found; (1) internal (e.g., laboratory experimentation)

methods of knowledge generation were positively associated to project success, and (2)

external (e.g., industry benchmarking) methods of knowledge generation modify the

association between organizational support and project success. Lee and Choi (2003)

found that organizations could achieve performance benefits through effective

management of the knowledge creation process, and Fedor et al. (2003) found that the

knowledge creation process does specifically affect the success of project teams. Chang,

Bordia, and Duck (2003) concluded that both the linear development model and the

punctuated equilibrium model describe valid developmental patterns of project teams and

that the two models complement one another when assessing the different aspects of the

team’s development over time. Through a team management strategy that includes a

consideration of the knowledge creation process, the external team leader can

significantly increase the likelihood of the project team developing a competitive

advantage for the firm. Gersick (1989) concluded, “pacing and transition dynamics may

be facets of creative group work that are both consequential for group effectiveness and

amenable to improvement through learning” (p. 307). Thus, Gersick recognized the

importance of learning and knowledge in increasing group effectiveness. Knowledge

creation plays a very important role in a project team’s life-span, and in particular, tacit

knowledge creation can result in achieving and sustaining a competitive advantage.

 Knowledge and Teams 20

Lubit (2001) stated, “Because competitive advantage is increasingly found in knowing

how to do things, rather than in having special access to resources and markets,

knowledge and intellectual capital have become both the primary bases of core

competencies and the key to superior performance” (p. 164). Therefore, the early stages

and phases of a project team’s life may not be the most productive based on tangible

outputs but the early stages may be very critical in ensuring a competitive advantage for a

firm in the longer term.

Future Research

The propositions and ideas presented in this paper need empirical testing. Future

research needs to address how to quantitatively or qualitatively measure tacit creation

during the stages of the linear group development model and the first phase of the

punctuated equilibrium model. The tacit knowledge creation would then have to be

associated with team performance and then ultimately to the firm creating a competitive

advantage.
 Knowledge and Teams 21

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