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PROPOSAL
Pharos University
Faculty of Economics and Business Administration
Behind Green Plaza
Alexandria
EGYPT
E-mail: bmwclubegypt@yahoo.com
Words: 4.512
Most of the research communities tackle Knowledge Management from a Technological point
taking place during the adoption and implementation of KM in a cross-cultural context. By the
former we mean the culture of the foreign investor and the culture of the local individuals.
This initiative is to assist the foreign investor in being able to operate in both the tactical and
functional level of the organization previously difficult to access this mainly due to the
heterogeneity of mind mapping. We refer to the heterogeneity especially with regards to the
difficulty of implicit knowledge transfer. Thus, the focus of the research, is to target knowledge
resources requirements both of the functional level, where the clients interact and, and the
tactical-strategic level, where the design and implementation of the new services and
Knowledge Management is being considered for adoption as a practice that could facilitate
the sustainable development of new products and services and beyond that the transition to a
Every region has its own set of rules and processes that govern how business is done, the
Middle East and in particular Egypt has its own specific and local way of doing business.
This research shows the way to the potential foreign investor in Egypt on how to acquire
We tackle two important tools available for the investor, namely learning and outsourcing.
Egypt by definition is an implicit country; unlike its western counterpart business processes
lack the explicit nature. There is no transparency in most of the processes and business
dealings. Despite that the implicit knowledge is embedded in every process, which the local
Westerners wanting to invest in Egypt face a dilemma that is both difficult and tedious by
nature, which is they only get acquainted with the explicit side of the processes in Egypt, and
always have difficulties in getting access to the implicit knowledge of the business processes.
It is important to note that the implicit part is by far more important in Egypt that the explicit
Acquisitions and Mergers are not enough, the foreign investor must learn to survive.Thus, we
see important to delve in the arena of implicit knowledge in order for the foreign investor to
gain the competitive advantage essential for competing in the Egyptian market.
2.1 What are the standards, the methods, the concepts and rules for Mind Mapping?
ß How to draw implicit knowledge into consciousness, using mapping between
intuition and expression that would then give rise to the feeling of understanding?
ß How can we define the “background” (the implicit knowledge and feelings) that
both provides the meaning of the rule and the reason for having it in the first
place?
cultural context?
ß What are the standards, the methods, the concepts and rules for appraising and
ß In order to gain a competitive advantage what are the tools available to the
foreign investors?
ß What is critical to the outsourcing process and what is critical to the business
process?
3. Literature Review
Within the knowledge era, it has become widely recognized that the intangible assets of an
organization will be key to both its ability to create competitive advantage, and to grow at an
The shift of traditional production factors, which used to be capital, land or labor, to the only
meaningful resource that can lead to the obtainment of social and economic results, which is
Competitive advantage stems from the firm-specific configuration of its intangible knowledge,
The importance of knowledge as a strategic resource and its role in the firm’s competitiveness
has been widely recognized lately by a large number of scholars [Spender, 1996, 1998]
Knowledge plays a fundamental role in the formulation of business strategies, as the only
corporate resource that can provide sustainable competitive advantage [Rumelt, 1974]
[Grant, 1996].
Knowledge has a more important role than all the others production factors, like capital and
labor so much as input as output. Examples of companies in this category are law,
knowledge and organizational competences are closely interrelated as the source of wealth
Learning the formal rules and procedures and explicit knowledge of the discipline does not
exhaust or even adequately represent what is implicitly known. To understand an explicit rule
on must capture the intuitions, that is the implicit knowledge and feeling, the “background”
[Searle, 1983] that both provides the meaning for the rule and indicates the reason having
the rule.
Polanyi argue "We know more than we can tell” [1966, p.4]. Tacit knowledge is subjective,
Tacit knowledge has a personal quality, it is deeply rooted in action and understanding,
involves both cognitive and technical elements, and is non-transferable without personal
According to Kay [1999, p.13]: tacit knowledge can take many forms… is unique to an
organisation - and therefore cannot be copied...The benefits of such tacit knowledge arise
There is widespread agreement that tacit knowledge is important. Nonaka and his colleagues
regard it as the root of all organizational knowledge [Nonaka & Takeuchi, 1995];
3.3 Knowledge Transfer or Cognitive Mapping
In fact the issue of sharing the organizational knowledge, what is called transferability of
knowledge, is one of the most important ones in the knowledge discussion. It seems that
there is a powerful relationship between codification of knowledge and the costs of its
transfer; apparently the more a given item of knowledge or experience has been codified, the
Whether the transferred knowledge will be considered useful or not by its recipients depend
on whether they are familiar with the code chosen as well as the different contexts in which it
In fact the marginal cost of knowledge transmission rise very rapidly with "distance" from the
This happens mainly because of the tacit dimension of knowledge: tacit knowledge is less
As a result tacit knowledge transfer is slow, costly and very difficult to take place. Some form
of direct personal interaction (either physical or virtual) is necessary for transferring tacit
knowledge.
Blumentritt and Johnson’s [1999] framework for categorising knowledge puts the primary
emphasis on the degree of difficulty in transferring knowledge. They distinguish four different
categories of knowledge:
explicit;
ß Social knowledge, knowledge about cultural and interpersonal relationships;
a person.
According to this framework, the transfer of codified knowledge involves the smallest degree
of difficulty while the transfer of embodied (Tacit) knowledge is the hardest task.
Learning is never simple acquisition but rather the finding of something in one’s implicit
We can draw implicit knowledge into consciousness, using mapping between intuition and
expression that would then give rise to the feeling of understanding. The “background” (the
implicit knowledge and feelings) both provides the meaning of the rule and the reason for
having it in the first place. All learning presupposes prior learning. [Olson, 1994]
Indeed as Zhu Z [2004 ] notes, the complexity of understanding how best to understand and
manage knowledge is further broken down by country differences in each geographic area:
In addition, Sharif [2005] argue: These two 'Neuro-Hemispherical' worldviews as I will call
them, clearly represent a schism within the KM literature, being based upon either
processes and systems that capture and store knowledge from individuals. Here, the benefits
of eliciting both primary and secondary sources of knowledge are largely seen as having
within organisational KM systems say, the means for accessing and making use of
knowledge is achieved in a 'pull' sense. In other words, it is up to the seeker of knowledge to
seek and find his/her relevant information, via search and data mining tools.
In the latter Eastern view of KM, there is conversely a strong emphasis on providing means
for individuals and teams with the ability to share knowledge via the concept of communities,
within which the sharing or collaboration of knowledge is encouraged, that is, in a 'push'
sense. This engenders a long-term approach to the realisation of benefits that such a people-
In their studies Deshpande and his colleagues found significant differences in the way
companies operated from one nation to another. “The most successful companies all shared
Lisa Adent Hoecklin discovered the importance of national cultural differences within
organizations and provided practical insights and frameworks to aid successful management
Joint venture learning to cooperate and cooperating to learn joint venture management is a
each side will change over time and problems can arise at different stages of development.
[Gilbert Probst, Bettina S. T. Buchel, Bettina S. Buchel] Probst and his colleagues
emphasizes on learning the Tacit knowledge required for a long term relationship.
Global Competition has paved the way to new corporate combinations – and opened up new
Veiga, Lubatkin, Calori and Very [2000] developed a cultural compatibility index that can
Hofstede [1991] defines culture as the collective programming of the mind that distinguishes
the members of one human group from another. He states that each person as layers of
cultural programming and expands upon this idea of “ mental programming “ in a model.
Cultural Programming is divided into Human nature, Culture learned, and Inherited
Personality.
A study done by Hofstede [1984] discovered a consistent pattern in the tendencies and
attitudes of workers of different nationalities working within the same multinational firm. He
found that all individuals function under certain basic assumptions, values and beliefs which
Hoefstede divides into the following: 1) Individualism and Collectivism 2) Power distance 3)
Deshpande and Farley coined the tacit knowledge in different countries and had put them in
the form of animals to explain their differences. He divided them into a tiger culture where it
tends to be more achievement-oriented and competitive; Rabbits cultures are more flexible,
creative and entrepreneurial. Monkey and Elephants cultures are more inward focus, with
Monkeys more oriented towards teamwork and loyalty, while elephants respect hierarchy and
order.
DISCUSSION OF LITERARY REVUE
Although many researches in the past emphasized on the Importance of Knowledge starting
from the resource-based organization and through the learning organization by Peter Senge
Only recently however, there has been a widespread agreement that tacit knowledge is
Psychology and education offered us an invaluable tool namely: the Knowledge Transfer or
Cognitive Mapping. It is a tool available to the foreign investor to help him operate in a Cross-
Blumentritt and Johnson set up a framework to measure the degree of difficulty in transferring
knowledge.
Although many researchers talk about acquisition and merger, some like Reich and Mankin
[1984] even argue that alliances and then acquisition is superior to outright acquisition.
Culture Definition
Hoefstede defined culture under 4 different basic assumptions and Deshpande defined
Many investors coming to Egypt face the everlasting dilemma of not being able to grasp the
implicit knowledge in Egypt they usually go for the easier more obvious explicit knowledge
that has been codified and indexed. Thus, they take a knowledge stagnant position and stay
Table 4.1
Information on Culture
Occupational Skills
Behavioral Responses
Cultural self-awareness
Routines Complexity
Tacit Knowledge
A more adventurous investor will seek to go and operate within the implicit depth and within
the business level, where he will be confronted with local attitudes values and beliefs.
However, the foreign investor only sees the external shell of the Egyptian interactions; he
cannot see the “background” cultural and intuitive side of the business processes, settings,
and rituals. He will attempt to learn the implicit knowledge of the local market and this is
Although, the foreign investor may have had a competitive advantage in his home country;
however in the local market it becomes a mere core competency, local competitive advantage
Some foreign investors because of their stubbornness and their ego insist in considering it a
local competitive advantage and they discover the reality at their own jeopardy.
Actually they are quite wrong, it is only a core competency in the local market, since by
definition competitive advantage is what we do better than the competitors, and since the
foreign investor doesn’t know the local tacit knowledge, he cannot effectively compete in the
Many foreign investors will attempt to learn the local tacit knowledge. Unfortunately, this part
of the equation is hard to acquire and takes lots of time to comprehend. The foreign investor
is confronted with a challenge either to stay at the corporate level or attempt to learn the local
tacit knowledge.
The local Competitive Advantage Formula
Graph 4.1
Non critical
Local Tacit
Knowledge
Critical
Local Tacit
Knowledge
Foreign
Non- core
Competency
Armed with the notion that tacit knowledge is the only corporate resource that is unique and
therefore can provide competitive advantage. The foreign investor has an inner motive to
move downward from the corporate level, this is because the competitive advantage is
always present in the tactical or functional level and never in the corporate level.
The focus of the research, is to target knowledge resources requirements both of the
functional level, where the clients interact and, and the tactical-strategic level, where the
design and implementation of the new services and products is taking place.
Matching what is known with the knower is the key to transfer implicit knowledge.
By the former I mean the implicit knowledge embedded in Egypt and by the latter I mean the
foreign investor or the knowledge recipient. The Implicit knowledge is then codified and
Having said that, what knowledge should we learn first? We can clearly differentiate between
two kinds of knowledge or rather it is better to call them two phases: Outsource-Critical
Learning the tacit knowledge is performed in two distinct phases OCP and BCP. They are
also consecutive phases, thus a foreign investor will adopt an OCP position first, and then
with time he may turn to a BCP Position afterwards. This is why I will write then as OCP/BCP.
Table 4.2
The first phase OCP basically consists of learning the tacit knowledge critical to outsourcing
At this phase, the investor gain lead time and achieves only a temporary competitive
advantage, this is because the foreign investor has so far only learned the tacit knowledge
critical to outsourcing. He is required in order to succeed on the long term to learn the
outsourcing process.
Outsourcing is not about getting our problems off our chest and throwing them to a service
provider, it is a commitment in terms that we have to learn what we have outsourced in order
As previously said OCP (Learning the tacit knowledge critical to outsourcing) provides only a
temporary and artificial competitive advantage, this is why the OCP phase shouldn’t last for
For Example let’s say that the “designing buildings” skill is a business-critical skill and “writing
Legal Contracts” is an outsourcing-critical skill. Let’s assume for simplicity that the foreign
investor has no core competency in the “writing Legal Contracts but has a core competency
During the OCP phase, the foreign investor would be better off to learn the “writing Legal
Contracts” tacit knowledge first even though he would be more compelled to learn the tacit
No No
Critical for
Critical for
outsourcing
Business
Process
Process Outsource
immediately
Yes
Yes
Learn
Learn Later
immediately
Local
Core Competitive
Competency Advantage
Better than
Do I do it well? Local
Competitors
Yes Yes
No No
May be
outsourced if
Outsource not critical to
Immediately outsourcing
process
4.5 How to gain a local competitive advantage at the BCP phase?
Exactly like the OCP phase, in order to obtain a local competitive advantage it is essential to
mix the foreign core competency with the Business-Critical local tacit knowledge.
The BCP phase should follow in order to learn and codify the business-critical tacit
knowledge. Codifying the business-critical tacit knowledge doesn’t mean that the investor has
an inner intention to take over the outsourcing operations (in sourcing) or to get rid of the
service provider, instead he must learn the tacit knowledge to better measure the service
provider performance and be able to monitor the contracts and the Service Level Agreement
(SLA).
Fig2.1 and Fig2.2 will help the foreign investor sort his skills and knowledge at the BCP
Phase which of them are core competencies, foreign competitive advantage, local
Back to our example, after having learned the outsourcing-critical tacit knowledge, the foreign
investor will see it beneficial to learn the Business-Critical Local Tacit knowledge (“designing
building”) even though he has a core competency in this field or even a competitive
Knowledge which is basically a critical knowledge for the business purpose; I refer to it as the
No Critical for No
Critical for
Business
outsourcing
Process
Process
Outsource
immediately
Yes
Yes
Learn
Improve Immediately
Local
Core Competitive
Competency Advantage
Better than
Do I do it well? Local
Competitors
Yes Yes
No No
May be
Outsource outsourced if
Immediately not critical to
Outsourcing
or Business
process
5. Conclusion
Using the OCP/BCP sequence, the foreign investor instead of hiding in the organizational
level to avoid interaction with the implicit side of Egypt will be more inclined to be present in
the tactical or functional level of the organization whether in a business learning or outsource
1. measuring the degree of which the investor is operating or learnig the implicit
4. sorting and filtering using Fig1.1, Fig1.2,Fig2.1 and Fig2.2 . They will help the foreign
investor sort his skills and knowledge at the respective OCP or BCP Phase. In order
to filter which of them are core competencies, foreign competitive advantage, local
5. turning a core competency into a local competitive advantage using the competitive
advantage formula.
which consequently saves lots of time and trouble to the foreign investor when operating in
the local market by dividing the process into two consecutive phases OCP/BCP
The investor who fails to take a knowledge position is doomed to failure since he will be
caught at the corporate level forever surrounded by local consultants that may have special
agendas -- the ivory tower that separates him from the local business environment.
We believe the results will be of importance to foreign investors wishing to invest in Egypt. It
will help them acquire the implicit knowledge essential in gaining a sustainable local
competitive advantage.
Despite the research efforts made up to now, knowledge management remains an immature
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