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BIJ
11,6 Innovation or imitation?
Benchmarking: a knowledge-management
process to innovate services
610 Silvia Massa
DIST – Department of Communication, Computer and System Science,
University of Genoa, Genoa, Italy, and
Stefania Testa
DIP – Department of Industrial Engineering, University of Genoa, Genoa, Italy
Keywords Benchmarking, Knowledge management, Innovation
Abstract Traditionally, benchmarking has been described as a practice that promotes imitation.
However, according to a more recent approach, this paper suggests that benchmarking, looking
outside the firm boundaries and enabling comparison with others, in terms of both practices and
performances, enable the process of acquiring external explicit and tacit knowledge. Such newly
acquired knowledge, once integrated with previous internal knowledge of the firm, creates new
knowledge that may give rise to improvements and innovations. In order to study the innovative power
of benchmarking, this paper presents a three-year research undertaken in the maintenance-services
sector that is becoming more and more global and competitive. A model that integrates benchmarking,
knowledge management and innovation is presented as the main result of the research.

Benchmarking: An International
Journal
Vol. 11 No. 6, 2004
pp. 610-620
q Emerald Group Publishing Limited
1463-5771
DOI 10.1108/14635770410566519
Introduction
In today’s complex and turbulent environment the need for innovation in products and
processes is widely recognised. This is true especially in the services sector where, in
the absence of a concrete productive structure, innovation is even faster and
competition is harder and increasingly global.
But what do we mean by innovation and how could a benchmarking tool enhance
innovation potential in firms?
These questions are correlated and a possible answer may derive from the so-called
knowledge-based view of the firm, that identifies in the organisations’ intangible assets
the main source of competitive advantage of the firm. A knowledge-based perspective
of the firm has recently emerged in strategic management literature (Nonaka and
Takeuchi, 1995; Spender, 1996; Cole, 1998). This perspective builds upon and extends
the resource-based theory of the firm initially promoted by Penrose (1959) and
expanded by others (Barney, 1991; Conner, 1991; Wernerfelt, 1984). According to
Penrose it is not so much the tangible resources per se that create the firm’s competitive
advantage, but the services rendered by those resources that are, in their turn, a
function of the firm’s know-how. Because knowledge-based resources are often the
product of extended learning processes and so are complex and difficult to acquire and
copy, the knowledge-based extension of the resource-based view of the firm posits they
may produce long-term sustainable competitive advantage. A more recent evolution of
this theory recognises the core competence of the enterprise to be the outcome of the
A previous version of this paper was presented at Cinet 2002, 4th International Conference,
September 15-18, 2002, Helsinki University of Technology, Espoo, Finland.
process of accumulating the particular mix of tangible and intangible assets to which Innovation or
the firm has access; therefore they are considered as its main strategic device and a imitation?
dynamic key of competitive advantage (Hamel and Prahalad, 1990; Pavitt, 1990).
However, several authors (e.g. Alavi and Leidner, 2001) underline that it is not the
amount of knowledge existing at any given time that is important but the firm’s ability
to effectively apply the existing knowledge to create new knowledge. Following such a
perspective, organisational knowledge and its management are strictly connected to 611
the issue of organisational learning-unlearning and innovation (Albino et al., 2001).
According to Andriani and Hall (2002) the innovative features of any firm process may
concern several aspects such as technology, procedures, business models etc. and each
of them generates knowledge gaps that have to be bridged.
Expanding Nonaka’s model, Andriani and Hall (2002) identify seven knowledge
management processes adding to the four well-known basic processes (namely,
externalisation-communication-internalisation-socialisation) three more that are
“locating and acquiring external explicit knowledge new to the group”, “locating
and acquiring external tacit knowledge new to the group” and “inventing knowledge
new to the group”. In this paper we focus on these processes and we propose the use of
a recursive benchmarking to perform some of them. In the paper we will go into details
of the proposed recursive benchmarking project (RBP) in order to explain its validity as
a learning tool that should become part of the firm’s routine practices.
The importance for an organization to expose “receptors” to the environment in
order to “absorb” and exploit external knowledge, that is considered to be a critical
component of innovative capabilities, is broadly recognized in literature (e.g. March
and Simon, 1958). Cohen and Levinthal (1990) introduce the concept of “absorptive
capacity” to suggest the idea that the ability to evaluate and utilize outside knowledge
is largely a function of the level of prior related knowledge. The firm’s absorptive
capacity depends on the individuals who stand at the interface of either the firm and
the external environment or at the interface between subunits within the firm
(boundary spanning or gatekeeping roles). Expressing the same concept in a
knowledge-based perspective, von Krogh et al. (2000) introduce the term “knowledge
activists”, as “people who trigger and coordinate knowledge-creation processes”. Such
a role can be facilitated by a “boundary object”, first introduced by Star (1989). Star
describes boundary objects as objects that work to establish a shared context that “sits
in the middle”: repositories (databases, etc.), standardized forms and methods (FMEA,
etc.), objects or models (drawings, etc.) and maps of boundaries (Gantt chart, etc.). The
characteristics that make boundary objects “effective” are underlined by Carlile (2001):
“1) a boundary object establishes a shared syntax or language for individuals to
represent their knowledge, 2) it provides a concrete means for individuals to specify
and learn about their differences and dependencies across a given boundary, 3) it
facilitates a process where individuals can jointly transform their knowledge”.
The present work is deeply grounded in such a theoretical background in order to
suggest new insights about the connection between benchmarking, knowledge
processes and innovation.
Usually (e.g. Main, 1992; Schnaars, 1994), benchmarking is described as a practice
that promotes imitation. However, according to an emergent approach (Drew, 1997;
Lucertini et al., 1995), benchmarking, looking outside the firm boundaries and
performing comparison with others in terms of both practices and performances,
BIJ enables the process of acquiring external explicit/tacit knowledge. Such acquired
11,6 knowledge, once integrated with previous internal knowledge of the firm, creates new
knowledge that may give rise to improvements and innovations.
The paper is structured as follows: in the first section remarks on benchmarking
and innovation are summarised, in order to present the theoretical background.
Then the research setting, i.e. the maintenance service sector, is presented.
612 The RBP is introduced and detailed. The benchmarking questionnaire and a second
one about RBP are briefly described. Finally, some results are discussed and some
conclusions are drawn.

Benchmarking and innovation

There are several definitions of benchmarking all based on the idea of evaluating the
performance of an organised system by comparing it to exogenous entities. Webster’s
Dictionary defines a benchmark as “A mark on a fixed and enduring object (as on an
outcropping of rock or a concrete post set into the ground) indicating a particular
elevation and used as a reference in topographical surveys and tidal observations. A
benchmark is thus a point of reference from which measurements of any sorts may be
made”. Camp (1989) defines benchmarking as “the search for industry best practices that
will lead to superior performance”. Lucertini et al. (1995) propose the following definition
that includes all these different aspects: “[benchmarking is] continuing search,
measurement and comparison of products, processes, services, procedures, ways to
operate, best practices that other companies have developed to obtain an output and
global performances, with the aim of improving the company performance”. These
definitions emphasise the value of learning from best practices both internally and
externally for the purpose of achieving superiority (Bessant et al., 2003). In literature
several authors focus on the potentiality of benchmarking databases (e.g. Cagliano et al.,
1999). It is worth noting that available benchmarking data is primarily connected to
operations and design practices and focus on achieving superior performances through
transferring best practices e.g. PROBE database for procurement practices in large firms
(European Commission, 2000), Microscope database for Small and Medium Enterprises
(Cagliano and Voss, 2000). Only few authors (Cox et al., 1997; Vaziri, 1992) consider
benchmarking as a learning activity that should be undertaken with a structured formal
approach in order to promote continuous improvement. In this paper we adopt such a
perspective and suggest benchmarking as a learning routine to be repeated frequently in
order to take innovative inputs from the field. This paper argues that the process of
observation and imitation is a very important cognitive process that goes beyond the
activity of simply copying someone else’s practices. The benchmarking process, as
intended, is a learning process that involves observation of external practices and
performances, comparison with internal ones, identification of knowledge gaps and
finally the decision: bridging the gaps acquiring new resources or leveraging on internal
ones and investing in upgrading. The result of this learning process is something new,
deriving both from the integration of external inputs with internal previous knowledge
as well as from bridging knowledge gaps. Besides, the importance of outside sources of
knowledge to the innovation process is widely recognized in literature. At the
organizational level, March and Simon (1958, p. 188) suggest that most innovations
results from borrowing rather than inventing. This observation is supported by
extensive research concerning the sources of innovation (for an extended bibliography,
see Cohen and Levinthal, 1990).
The recursive benchmarking project Innovation or
The aim of our research is to derive a model that integrates benchmarking, knowledge imitation?
management and innovation through an empirical research in the maintenance
services sector. A sector benchmarking was launched in the third quarter of 1999. Data
has been collected through in-depth interviews in the whole universe using a
structured questionnaire. The output of the benchmarking was stored in database.
Next, we selected a subset of small- and medium-sized enterprises (SMEs) that 613
agreed to take part in the RBP, consisting of a continuous monitoring of the use of the
benchmarking data and its impact on their innovation performances. The RBP is
coordinated and supported by a pool of researchers. A decision-support system (DSS)
based on the benchmarking database was developed in order to facilitate the processes
of self-assessment, self-positioning, comparison with the best practices and choice of
the processes to be improved.
This phase of the research lasted three years. During this period, the benchmarking
data was updated and the use of the DSS and its impact on innovation performances
was monitored.

The research setting

This study focuses on the sector of industrial maintenance in Italy. Industrial
maintenance is a traditional activity that has always been considered an auxiliary part
of the production process. However maintenance concept has changed during the last
thirty years, becoming a new dynamic business sector, in which innovation plays a
considerable role.
In the 1970s maintenance activity moved from being an indirect cost entry into a
profit entry that therefore had to be increased. In the 1980s, this change moved the
most dynamic firms to accelerate the re-organisational plans of their maintenance
processes. In the 1990s, such re-organisational processes led to outsourcing
maintenance services with the broadest goal to make firms leaner and more flexible
(Furlanetto, 1998; Massi, 2000). In such a way, the industrial maintenance services
sector evolved, at the beginning as a service carried out by plant builders and then as
the core business of new firms, mainly created by spinning off such services from plant
builders. As a consequence of such a development path, the initial captive market of
maintenance evolved into a full competitive one (Fedele, 2002).
As the maintenance sector is strongly heterogeneous, this paper focuses on
maintenance services for large plants.
This interest in the maintenance services industry is mainly due to the following
factors:
(1) It is a business area at the borderline between manufacturing and services that
maintains characteristics of both sectors, also in terms of innovation paths and
knowledge management (Massa and Merlino, 1999).
(2) Maintenance services imply a broad range of activities: from the selection of the
mix of maintenance techniques to the selection of methodological tools and
hardware equipment, to the development of maintenance information systems,
to the execution and auditing of operating activities, to the co-designing of
plants. While some years ago maintenance service firms provided only a limited
part of these activities, today the market demands a global service that
BIJ integrates all the above-cited activities. Two main consequences have to be
11,6 emphasised:
.
Global services require different competencies that have different impacts on
innovation processes (Ritter and Gemunden, 2002).
.
Not all the competencies are necessarily available within the company at the
moment they are needed. Therefore, organisations often adopt
614 subcontracting, that strongly impacts on knowledge acquisition and
management (Andersen, 1999).
(3) The work force consists mainly of skilled workers and technical staff, whose
knowledge is partially in tacit form. As well underlined in literature (e.g.
Koskinen and Vanharanta, 2002) tacit knowledge has a primary role in
innovation processes and its acquisition and transfer are strategic issues for
every firm.
(4) The employees essentially work at customer sites and so the problems
connected with knowledge and innovation management processes in the
presence of dispersed workers take place (Geraerds, 2002).
(5) Continuous contacts with customers downstream and with plant builders
upstream (sometimes, as noted before, also a societal relationship with the
builders exists) influence knowledge flows within the firm and may be
meaningful sources of innovative inputs.

The questionnaires
Two questionnaires have been developed: one to implement the benchmarking and the
other to evaluate knowledge management and innovation processes deriving from the
recursive use of benchmarking.
Both the questionnaires were tested by a group of experts both in benchmarking
and innovation processes, in order to examine the clarity and effectiveness of the
questions. On the basis of the input of these respondents, the questionnaires were
revised.

The benchmarking questionnaire

The benchmarking questionnaire includes the following macro sections, according to
the most common benchmarking guidelines (Gopalakrishnan and Bierly, 2001):
innovation processes, maintenance and engineering processes, order management
(from bid formulation to tender management), vertical relationships with customers
and suppliers, horizontal relationships with other firms, organisational aspects and
business culture, key competencies, quality management, information systems,
performance evaluation.
The whole questionnaire is not further detailed because it goes beyond the purposes
of the present paper. Only the innovation processes section is detailed because it is
used in order to investigate the innovation performances of the SMEs involved in RBP
in respect to those not involved in it. Such a section contains aggregated indicators and
further details about innovation in technical, managerial and organizational processes,
investigated in the rest of the questionnaire. Furthermore, this section investigates
activities promoting innovation.
 Information about innovation typologies, innovation sources, innovation costs and Innovation or
effectiveness are collected in this section. imitation?
Regarding the typologies, innovations are classified in explicit/tacit on the basis of
the amount of involved explicit knowledge, systemic/autonomous on the basis of the
dependence degree from other innovations, simple/complex on the basis of the
implementation difficulty, product/process on the basis of the subject of innovation.
Regarding the sources, innovations are classified in three categories: internally 615
sourced, externally sourced and significantly modified, replicated from others.
Regarding the costs and the effectiveness, they are rated from very low to very high
on a five-point Likert scale.
Regarding the activities promoting innovation, for example, the commitment of
management is investigated in terms of sustaining the development of new ideas
through assessment and reward systems.
As well underlined in the literature about innovation (Caloghirou et al., 2004;
Gopalakrishnan and Bierly, 2001), it is very difficult to empirically measure the rate of
innovation. The framework adopted is generally accepted as valid (Gopalakrishnan
and Bierly, 2001).

The RBP questionnaire

The questionnaire is used as a guideline for face-to-face interviews with individual
respondents. The interviews lasted about two hours and involved the responsibles of
the benchmarking projects.
The questionnaire consists of propositions, which aim at eliciting the analysis of the
interviewees in terms of impact and benefits of RPB on innovation and knowledge
management processes. The used scale is a five-point rating scale ranging from
“strongly disagree”, “disagree”, “neutral”, “agree” to “strongly agree”.
The propositions include, but not comprehensively, the following two: “The first
meetings of the pre-analysis stage, cause hidden problems to emerge”, and
“Benchmarking data, easily available through the DSS, stimulates analysis about
intervention limits and modifiable constraints within the organisation”. The first
sentence aims at detecting the transformation from tacit to explicit knowledge
(externalisation), and the second one the transformation from explicit to tacit
knowledge (internalisation).

The results
According to the collected information by means of the second questionnaire, it
emerges that benchmarking has important effects on knowledge management and
innovation, therefore suggesting the following model (Figure 1).
The benchmarking process involves observation of external practices and
performances (pre-analysis), comparison with internal ones and identification of
knowledge gaps (analysis). Finally, it involves the decision of bridging the gaps
acquiring new resources or leveraging on internal ones and investing in upgrading
(decision making) (e.g. Lucertini et al., 1995).
As Figure 1 shows, every phase of benchmarking performs different phases of the
well-known knowledge creation spiral proposed by Nonaka and Takeuchi (1995) and
extended by Andriani and Hall (2002) (see labels at the top of the arrow). The details of
the processes and the different types of knowledge involved are depicted in Figure 2.
BIJ
11,6

616

Figure 1.
The RBP model

Figure 2.
The
knowledge-management
process
All the considered knowledge processes occur in all the three benchmarking procedures. Innovation or
Socialisation involves the communication and possibly enhancement of tacit imitation?
knowledge. For example, in the pre-analysis stage, it implies the identification of
up-coming problems and of the performance drivers through internal meetings. RBP
seems to have an impact on overcoming internal barriers to knowledge flow,
stimulating discussion and comparison among units. The interviewees underline the
driving role of external agents in promoting such effects otherwise not easily 617
reachable.
Externalisation is the process of transformation of knowledge from tacit to explicit.
For example, in the pre-analysis stage, it implies the definition of the performance
indicators and the benchmarking planning. These activities can be categorized as
externalisation processes since they involve taking the knowledge out of the person
and codifying it into a formal plan. RBP seems to play a relevant role in promoting
codification of internal tacit knowledge by means of periodic meetings scheduled by
the guiding team. This is a very important aspect because, as management studies
often underline, elements of tacit knowledge that cannot be recorded by the mere
collection of questionnaires can jeopardize the success of a benchmarking project
(Drew, 1997).
Locating and acquiring external explicit and tacit knowledge is the process of
scanning (to locate), accessing, and acquiring external explicit and tacit knowledge. For
example, in the pre-analysis stage, it is performed through gathering data and
information from the universe in order to select the benchmarking sample. The
acquiring process involves data and information gathering from the sample through
the benchmarking questionnaire (explicit knowledge) and other data (record of
impression, weak signals – tacit knowledge). The inability of the organization to
absorb new knowledge and to face “causal ambiguity” (i.e. the difficulty of
understanding existing cause and effect relationships) is partly overcome by the
cooperation among practitioners and researchers. Another important aspect
underlined by the respondents is the usefulness of the RBP in providing guidelines
to locate information by means of the DSS.
Communication involves the transferring and sharing of explicit knowledge. For
example, in the pre-analysis stage, it is performed by the preliminary comparison of the
performance indicators contained in the benchmarking database. The DSS provides a
user-friendly interface to access and share documents and reports, namely the
benchmarking output.
Internalisation is a learning process that involves the transformation of knowledge
from explicit to tacit. Internalisation results from contextualising external stimuli and
from integrating newly acquired knowledge with the previously existing one. For
example, in the pre-analysis stage, it is performed by the identification of the
intervention limits and of the modifiable constraints. The external knowledge acquired
and then shared inside the organization is now contextualised. DSS seems to play a
considerable role in promoting learning processes by providing aggregated indicators
and reports based on benchmarking data, across the entire organization. The DSS
works in both pull and push logics, providing easy data retrieval and alerting users
when new items are added.
The phase of inventing new original knowledge seems not to be directly connected
with the benchmarking process.
BIJ Conclusions
11,6 Benchmarking is generally both expensive and time consuming: a firm (especially an
SME) usually does not have enough resources to start a benchmarking project.
Furthermore, as underlined by Cassel et al. (2001), low level of interest in using
benchmarking is generally shown by SMEs not already using it even if, when they use
it, they are pleased with the results. The cooperation with a University Department and
618 the availability of a DSS seem to be essential in overcoming these problems.
The involved companies found, by means of the benchmarking project, that
innovation needs to be managed and planned and cannot be only accidental, emerging
from contingencies (as an example, a customer asking for a new service).
Unspoken needs or demands have to be discovered through socialization and
externalisation processes, transforming the benchmarking into a tool not only aimed at
problem solving but also at problem setting.
The spider diagram in Figure 3 shows the comparison in the innovative behaviour
between firms involved in RBP and those that are not, on the basis of the results
obtained in the last benchmarking survey.
Figure 3 suggests that benchmarking, under specific conditions, is more than just a
copying and imitation strategy. Many firms perceived benefits in improving their
innovative and creative capabilities even if these are not traditionally the targets of
benchmarking studies. As shown from the interviews, such a result could be partly
related to the role of the researchers as boundary spanning both in regards to the external
environment and to the interface between subunits within the firm. It is worth noting that
the same role could be played by carefully selected internal knowledge activists. Such a
role makes it possible for the DSS to be a boundary object impacting on absorptive
capacity and then on innovation performances, also thanks to its user friendliness.
The empirical research reveals that the RBP could prove useful in promoting
innovative behaviours, rather than mere imitations.
Regarding future developments of the research, data from the section of the
benchmarking questionnaire about internal competencies needs to be further
investigated in order to better evaluate their impact on innovation performances. In

Figure 3.
Innovative behaviour
fact, according to several authors (see for example Caloghirou et al., 2004), internal Innovation or
capabilities are crucial to improve innovative performances. imitation?
Furthermore the emerging RBP model should be tested in other research settings in
order to generalize the results.

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