Knowledge Management Processes and International Joint Ventures Author(s): Andrew C.

Inkpen and Adva Dinur Source: Organization Science, Vol. 9, No. 4 (Jul. - Aug., 1998), pp. 454-468 Published by: INFORMS Stable URL: http://www.jstor.org/stable/2640272 Accessed: 30/07/2010 19:27
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Pennsylvania 19122 In nowledge creationis now recognizedas a key. Using data from a longitudinal study of North American-based joint venture (JVs) between North American and Japanese firms. Arizona 85306 School of Business and Management. knowledge types. (Organizational Knowledge. Using data from a longitudinal study of North American-based joint ventures (JVs) between North American and Japanese firms. Institutefor OperationsResearch and the ManagementSciences . Hedlund 1994. Quinn 1992).Fromthose linkages. research interorganizational Yet. Inkpen * Adva Dinur Thunderbird. nternational joint venturesare increasingly important the way of creatingknowledgeinteroras into has This ganizationally. the differentprocessesinvolve different typesof knowledgeanddifferent levels. (2) what types of knowledge are associated with the different processes and how should that knowledge be classified. New knowledge provides the basis for organizational renewal and sustainable competitive advantage (Prahalad and Hamel 1994. Joint Ventures and Alliances. Temple University. and (3) what is the relationship between organizational levels. Moreover. No. They identify four key processes-technology sharing. Glendale. Knowledge Management Processes) Increasingly. 9. the authors provide evidence to support the argument that the firm is a dynamic system of processes involving different types of knowledge. and the transfer of knowledge? Although many generalizations have been drawn about the merits of knowledge-based resources and the creation of knowledge. knowledgecreation beenunderdeveloped. prior alliance research has not addressed in detail the nature of alliance knowledge and how knowledge is managed in the alliance context. Nonaka Ikujiro K Abstract The management and processing of organizational knowledge are increasingly being viewed as critical to organizational success. Nonaka and Takeuchi 1995.Knowledge Management Processes Ventures and International Joint Andrew C. into a firm's dynamic paperoffers insights abouthow international joint venturescan be integrated systemof knowledgecreation. Grant 1996. we address three related research questions: (1) What processes do JV partners use to gain access to alliance knowledge.g. July-August 1998 Copyright(? 1998. personnel transfers. (2) what types of knowledge are associated with the different processes and how should that 1047-7039/98/0904/0454/$05. Each of the four processes is shown to provide an avenue for managers to gain exposure to knowledge and ideas outside their traditional organizational boundaries and to create a connection for individual managers to communicate their alliance experiimnoimc to nflw-rc Althoughall of the knowledgemanagement processesare potentiallyeffective. resultssuggestthatalthough varietyof knowlThe a can edge management strategies be viable. the creation of new organizational knowledge is becoming a managerial priority. 4. Spender 1996b).The American Graduate School of International Management. By exploring how firms access and exploit alliance-based knowledge. Philadelphia. The authors examine the processes used by alliance partners to transfer knowledge from an alliance context to a partnercontext. few efforts have been made to establish systematically how firms acquire and manage new knowledge. they address three related research questions: (1) what processes do JV partners use to gain access to alliance knowledge.some strategies lead to moreeffectiveknowledgetransfer thanothers. Thepriorganizational marytypesof knowledgeassociated witheachprocessareidentified andthen linkedwith the organizational level affectedby the transfer process. competitiveadvantage. We draw on recent work on knowledge management (e.. Tacit Knowledge. the global economy. to explore how firms access and exploit alliance-based knowledge. Learning.00 454 ORGANIZATION SCIENCE/Vol. and strategic integration-that share a conceptual underpinning and represent a knowledge connection between parent and alliance. alliance-parent interaction.severalpropositions are aboutorganizational and knowledgetransfer management developed.

firms may seek access to other firms' knowledge and skills. In recent years. Mahoney and Deckop 1993). Two examples help illustrate how firms learn through alliances. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures knowledge be classified. an alliance may generate knowledge that can be used by parent companies to enhance their own strategy and operations. Doz 1996. we explore alliance knowledge with the objective of developing a framework that integrates knowledge states and knowledge management processes with the organizational levels involved in the transfer processes. In ORGANIZATION SCIENCE/Vol. Kogut 1988. p. Pucik 1991. 4. Westney 1988). the second and third questions are directed at exploring the organizational and strategic implications of different knowledge types. 1996. Drucker (1995) suggested that the greatest change in the way business is being conducted is the accelerating growth of relationships based not on ownership but on partnership. competitors. such as how to manage product development cycles that are much faster in the computer industry than in consumer electronics. As a second example. In particular. In forming the alliances. If the alliance replicates partnerexperiential knowledge in a jointly owned organization. Simonin and Helleloid 1993. 323) suggested that learning can be an alliance motive under two conditions: one or all partner firms want to acquire the other's organizational knowledge. and other firms. Our focus in examining the research questions is knowledge management by the North American JV parents. Parkhe 1991. knowledge embodied only in the specific outputs of the alliance has no value outside the narrow terms of the collaborative agreement. Inkpen and Beamish 1997. First. 9. or one firm wishes to maintain an organizational capability while benefiting from a partner's cost advantage or knowledge. Our current research pertains to that type of knowledge. a firm with a culture of independence in product development. Knowledge useful to a parent may be knowledge transferredby an alliance partner to the alliance. We focus on alliance forms that combine resources from more than one organization to create a new organizational entity (the "child") distinct from its parents. July-August 1998 455 . firms may acquire knowledge useful in the design and management of other alliances (see Lyles 1988). Inc.General Motors has used its NUMMI experience as a catalyst for several successful internationalgreenfield plants (Miller 1993). the formation of international strategic alliances has increased substantially. Inkpen and Crossan 1995. Kogut 1988. Second. (NUMMI) joint venture with Toyota (Badaracco 1991. In organizational studies in general. Sony has enabled personnel at various organizational levels to gain access to new knowledge. Keller 1989. Researchers seeking to explain the alliance trend have argued that alliances provide a platform for organizational learning. Sony. Hamel 1991.ANDREW C. The alliances give Sony access to a wealth of new knowledge. Given that the firm can be viewed as a system processing different types of knowledge (Spender 1996b). and the transferof knowledge? The first question provides a basis for understanding how firms access and transfer knowledge across organizational boundaries. A still rather small but growing body of research (Dodgson 1993. one or all partnersmay have access to knowledge that would not have been available in the absence of collaboration. The number of domestic and internationalalliances has grown by more than 25 percent annually since 1990 (Bleeke and Ernst 1995). knowledge types. knowledge has been transferred successfully from NUMMI to other General Motors divisions and plants. has formed various alliances with computer and telecommunications firms in an effort to forge new technology linkages for its consumer electronics products (Hamilton 1995). Westney 1988) is addressing the issue of alliances and learning. and (3) what is the relationship between organizational levels. The alliance may also create a forum for interactions between the parents that is itself a source of new knowledge. The knowledge may be created independently by the alliance through its interactions with customers. As Hamel (1991) pointed out. perhaps because dominant theoretical paradigms are inappropriate for addressing the issue (Hedlund 1994).1 The knowledge transferredhas been primarily in the areas of manufacturing process and human resource management. Researchers have begun to explore some of the important questions associated with how organizations exploit alliance learning opportunities but have not examined in detail the nature of alliance knowledge and how knowledge is managed in the alliance context. Therefore. Hamel 1991. Over the past two decades. but without necessarily wishing to internalize the knowledge in their own operations. Mowery et al. Much has been written about how General Motors struggled to learn from its New United Motor Manufacturing. Makhija and Ganesh 1997. Third. The challenge for Sony and other firms involved in alliances. and for all firms seeking access to knowledge beyond their boundaries. Such knowledge may be applied to future alliances. In the alliance context. giving partnerfirms access to each other's knowledge (Grant 1996. No. is to incorporatedisparate pieces of individual knowledge into a wider organizational knowledge base. knowledge management has received limited attention. Kogut (1988. knowledge useful to a parent firm can be viewed from three perspectives. The knowledge is often organizationally embedded and causally ambiguous.

It is knowledge that has been transformed into habit and made traditional in the sense that it becomes "the way things are done around here" (Spender 1996b) Tacit knowledge is highly context specific and has a personal quality. Nonaka and Takeuchi (1995) argued that a key challenge for organizations is the conversion of tacit knowledge to explicit knowledge. which makes it difficult to formalize and communicate (Nonaka 1994). organizations are repositories of knowledge. Conceptual Background Types of Organizational Knowledge In developing an understandingof organizational knowledge.ANDREW C. Organizations cannot create knowledge without individuals. Specific learning processes are at work at each level. To capture the dynamic movement of knowledge across the levels. To address the knowledge conversion dilemma. Spender (1996b) developed a more comprehensive typology of organizational knowledge encompassing individual and social levels. manuals. training tools. The important question is how individual and group interactions contribute to organizational knowledge creation. It can be codified or articulatedin manuals. difficult to imitate knowledge. the knowledge will have a limited impact on organizational effectiveness. 4. an alliance between Siemens and Coming. automatic. board of directors. Conscious knowledge may be codified. and so on. we argue that although the distinction between tacit and explicit is important. Tacit knowledge is separated into three subtypes: conscious. not teachable versus teachable. we begin with the distinction between tacit and explicit knowledge. and so on is referred to as objectified knowledge. organizational knowledge creation should be viewed as a process whereby the knowledge held by individuals is amplified and internalized as part of an organization's knowledge base (Nonaka 1994). Siecor. CEO. Explicit knowledge is knowledge that is transmittable in formal. there is a need for a better. and is potentially available to other people. the critical process is interpreting and sense making. and staff. while maintaining a common individual knowledge with their coworkers. it does not allow us to consider any gray areas between completely tacit and completely explicit knowledge. is an example. July-August 1998 9. systematic language and may include explicit facts. Collective knowledge is tacit knowledge of a social or communal nature. Zander and Kogut (1995) discussed the tradeoff between the need to share and transfer knowledge internally and the risk of exposing the knowledge to imitation. intuitive. explicit knowledge stored in databanks. organizational knowledge is created (Nonaka and Takeuchi 1995). Similarly. and collective. No. communities have knowledge that constitutes the socialization and social activities of the individuals within them (Spender 1996b). Knowledge that is tacit and highly personal has little value until it can be converted into explicit knowledge that other organizational members can share. Whereas individuals have knowledge that is practical. share it with their organizational community. Individual tacit knowledge can be either conscious or automatic. at the group level it is integrating. Examining that type of alliance allows for a clear delineation of the partner relationship and the nature of alliance knowledge. axiomatic propositions.Spender (1996a) suggested that tacit knowledge could be understood best as knowledge that has not yet been abstractedfrom practice. and symbols (Kogut and Zander 1992). INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures most of the cases. Tacit knowledge was defined by Polanyi (1962) as knowledge that is nonverbalizable. but unless individual knowledge is shared with other individuals and groups. Recognizing that firms' idiosyncratic knowledge consists mostly of tacit. and thus increase the collective store of knowledge. The transformation occurs in a dynamic process involving various organizational levels and carriers of knowledge. and at the organization level it is integrating and institutionalizing (Inkpen and Crossan 1995). therefore. . computer programs. Organizational Levels and Knowledge Movement Clearly. The distinction between explicit and tacit should not be viewed as a dichotomy but rather as a spectrum with the two knowledge types at either end. Individuals constantly acquire knowledge. such a conversion process exposes the knowledge to the hazard of imitation by other firms.2 Automatic knowledge is implicit knowledge that "happensby itself' and is often taken for granted. As knowledge is transformed from an individual to a collective state. and not observable in use versus observable in use. including complex versus simple. Hence. perhaps as a set of notes. Winter (1987) identified other taxonomic dimensions of knowledge. such an alliance is an equity joint venture. The partnersin that alliance brought together their complementary capabilities in telecommunications and glass technology to build an independent organization with its own headquarters. Knowledge types. At the individual level. In Spender's (1996b) typology. Nonaka (1994) developed the concept of a spiral of 456 ORGANIZATION SCIENCE/Vol. broader taxonomy of both tacit and explicit knowledge. However. standardoperating procedures. must be classified on a continuum that ranges from explicit knowledge embodied in specific products and processes to tacit knowledge acquiredthrough experience and use and embodied in individual cognition and organization routines. and unarticulated.

1994). knowledge types. we examine the linkages between knowledge transferprocesses. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures knowledge creation. systems. For internalization to occur. The next section is an overview of JVs and learning. The vertical dimension refers to knowledge tacitness and the horizontal dimension distinguishes between the organizational levels where knowledge resides.ANDREW C.. and standardization. The second stage and our primary focus is the transfer of knowledge from the JV to the partners. Mintzberg (1990) suggested that strategic initiatives create experiences.g. knowledge moves upward in an organization. knowledge tacitness is a continuum in which explicit knowledge has very low tacitness. Their objective was to develop an understandingof how different knowledge types travel and change between individuals and organizations. and organizational levels. it can be discussed. and strategic choices that provide the foundation for learning. it may be enriched and amplified as individuals interact with each other and with their organizations. actions. less transferable (Kogut and Zander 1992). without knowledge connections. For example. action. less codifiable. Those internal managerial relationships facilitate the sharing and communicating of new knowledge and provide a basis for transformingindividual knowledge to organizational knowledge. we view knowledge creation through JVs as a multi-stage process. The JV experience can be the action that triggers learning because it provides new stimuli that may force changes in the mental maps of the organization (Nonaka and Johansson 1985). we propose Figure 1 as a framework for an empirical examination of knowledge management processes. and possibly discarded. The first stage begins with the formation of the JV and interactions between individuals from the two (or more) partners. specialized personnel such as "technological gatekeepers" (Katz and Tushman 1980) and specialized organizational structuressuch as transfer groups (Katz and Allen 1988) have been shown to have a significant effect on the transferof information between organizations. starting at the individual level. As the knowledge spirals upward in the organization." whereby organizations increase their store of knowledge by internalizing knowledge not previously available within the organization. The focus of our study is a particularstrategic initiative-the formation of a JV. In Figure 1. Grant (1996) argued that organization structurescan be designed to maximize the efficiency of knowledge integration. and outcomes. Figure 1 Knowledge Transfer Classification Framework Individual -* Group * Organization Low Knowledge High Ease of Transferability Tacitness Low Complexity | I_ _____________ ------------------------ High Knowledge Tacitness Low Ease of Transferability High Complexity Knowledge Management and Learning Through JVs In arguing that strategy making is a learning process. 1994). it becomes less teachable. and then up to the firm level. An underlying assumption is that managers have some understandingof the causal relationships associated with knowledge. Individual knowledge is inherently "fragile" and therefore. and hence. On the basis of the Hedlund and Nonaka (1993) model. analogous to the innovation diffusion process (e. The key assumption underlying this framework is that organizations have a range of types of knowledge and carriers of knowledge. Tushman and Scanlon 1981).Using JVs as the empirical context. No. 4. July-August 1998 457 . The figure implies that as knowledge becomes more tacit. Knowledge connections are formed through both formal and informal relationships between individuals and groups (Inkpen 1996). the organization is seen as a repository of various knowledge types in different organizational locations. new knowledge may be ignored or viewed as irrelevant (Von Krogh et al. Those efforts create the "connections" through which individuals can share their observations and experiences (Von Krogh et al. Hedlund and Nonaka (1993). When one individual's or group's knowledge connects with other knowledge. Hedlund and Nonaka (1993) argued that Western firms lose much of their potential for knowledge creation by overemphasizing explicit knowledge and the development of complex managerial hierarchies. In the literature on innovation. Where organizations differ is in their view of the importance of different types of knowledge and their ability to transform and move knowledge across organizational levels. proposed a model linking organizational levels and types of knowledge. the parents must first engage in efforts to transfer partner skill-related knowledge from the JV to themselves. The intensity of a parent firm's learning efforts reflects the degree to which the parent is actively trying to internalize the skills and capabilities of its partner. The knowledge may be further developed and move upward in the organization. debated. 9. Following Inkpen and Crossan (1995) and Nonaka (1994). moving to the group level. In the spiral. When a JV partnerhas a strategic objective ORGANIZATION SCIENCE/Vol. in their analysis of Japanese and Western knowledge management. In the framework.Huber (1991) referred to that process as "grafting.

Most managers held positions such as JV president or JV general manager and were either employed by the American partners or appointed by the American partnersto senior management positions in the JVs. First. contribute to knowledge dissipation (Inkpen and Crossan 1995). and in 8 ventures the American partnershad majority equity. The American firms were provided an excellent "window" into their Japanese partners' capabilities. Therefore. knowledge connections are the mechanisms for knowledge acquisition. Most of the JVs were direct suppliers to the automotive assemblers (i. With two exceptions. particularly with tacit knowledge. Geringer and Hebert (1991) found that such managers are a valid source of JV data. The first stage established the industry context and basis for the selection of cases for longitudinal study. An emphasis on process suggested Research Methods and Data We designed a two-stage study. (For more detail on the stage one methodology. Although the transfer of alliance knowledge is a necessary condition for knowledge creation.e. Stage 2: Longitudinal Case Study Stage 1 of the research yielded evidence that the JVs created important learning opportunities for the American JV parents. Alliance control mechanisms may influence the transfer of knowledge (Makhija and Ganesh 1997). In summary. The risk.3 The primary data collection method for stage 1 was field interviews with 58 managers associated with 40 two-partner JVs. when confronted with learning opportunities. our study examines the processes used by firms to gain access to and transfer different types of alliance-based knowledge. Second. In most cases the Japanese partnershad established relationships with the Japanese automakers. The industry. In terms of ownership. 4. the process of learning and the types of knowledge are also very important. studying knowledge creation may provide a more valid foundation for understanding how knowledge travels and changes within organizations (Hedlund and Nonaka 1993). and partner contextual data from stage I were critical in interpreting the case study data from stage 2. Stage 1: Context Definition The initial research stage was designed to provide contextual understanding of the alliance learning issues and 458 ORGANIZATION SCIENCE/VOl. The type of knowledge creation mechanisms plays a key role in how new knowledge is "managed" by alliance parent firms (Hedlund and Nonaka 1993). albeit adapted to the North American context.. all but five JVs were transplantsuppliers. July-August 1998 9. Although much of the learning literatureaddresses the product or content of learning. The rate of dissipation will be influenced by a variety of factors. those managers were expected to have an important influence on parent access to and management of alliance knowledge. see Inkpen. successful firms may see little need to change behavior and thus. is that knowledge transferred from a JV to a parent will dissipate as it spirals up to the organization level. . alliance. Given that the question of whether or not organizations learn is controversial. The primary JV motive for the majority of the American partners was access to the Japanese transplant market in the United States. The second research stage explored the knowledge management process in detail. A sample of North AmericanJapanese JVs located in North America provided the empirical base. Stage 1 also provided the foundation for an emerging understanding of alliance knowledge management. A focus solely on content ignores the complex cognitive and behavioral changes that must occur before a learning "outcome" can be identified. tier-one suppliers).ANDREW C. The window had two main sources of potential value. may become trapped by their distinctive competence (Levinthal and March 1993). managerial belief systems permeate all levels of knowledge creation and correspondingly. No. Finally. The strength of a firm's learning intent will help determine the organizational resources committed to learning (Hamel 1991). 17 ventures were 50-50. 1995a and 1995b. all JVs were startupor greenfield organizations. in 15 ventures the Japanese partners had majority equity. the JVs afforded the American partners an opportunity to learn how to manage a long-term Japanese customer relationship. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures of acquisition and proprietary control over alliance knowledge. Being at the boundary between the JV and parent firms. In the second stage we used an open-ended approach of grounded theory building (Glaser and Strauss 1967) to examine types of knowledge and processes of alliance-based knowledge management.) All JVs were suppliers to the automotive industry and only one had less than 50 percent of its sales to automotive customers. The JVs gave the American partners access to skills created by the Japanese partner for the Japanese market and also access to how those skills could be adapted to the North American work style and infrastructure. the JVs were often the American partners' initial experience in supplying Japanese automakers. For example. to gain a cross-sectional perspective on the basic dimensions of alliance learning. and generally the products supplied to the transplantswere similar to products manufacturedby the Japanese partnersin Japan. the parent must ensure that the transferred knowledge is moved and shared within the parent organization.

customer contacts. with the objective of finding variance across several dimensions. Japanese president. plant startup. American American president president/GM.ANDREW C. automakers Mix of Japanese and American Customers ORGANIZATION SCIENCE/VOl. American: manufacturing process. geographic proximity of the JV plant to the American parent. We used several criteria to select the cases. product design. American: raw materials. July-August 1998 459 . the Alpha JV was classified as creating high learning potential because (1) the Japanese partner contributed key manufacturing process technology and the customer contact. 10-year technology technology assistance relationship agreement signed in 1988 President from outside. American: customer contacts. No. access to American partner manufacturing equipment. It was based on theoretic replication (Yin 1989) because the choice of cases was directed by the emerging theory developed from stage 1. plant management. the functional similarity of products produced by the JV and the American parent. startup. 35% American Japanese: Japanese: manufacturing manufacturing process and process and engineering. Table 1 reports case characteristics. For example. (2) the JV and American Table 1 Case Characteristics Alpha High Low Medium Medium Beta Gamma Medium High Limited. manufacturing quality differences between the JV and the American parent. design. American: plant startup. customer contacts. It was important because it influenced the knowledge management processes initiated by the JV parents and the motivation of the American parentsto exploit the learning potential. For efficiencies in data collection and to capitalize on established industry contacts. plant startup. access to raw materials. To evaluate learning potential. Japanese sales managers 50/50 Japanese: sales support. finance). administration support PrimarilyJapanese automakers 65% Japanese. administrative support. 9. 4. and COO. licensing agreement from 1980 High Medium Extensive. plant management. Japanese VP American COO and plant managers Senior JV management Japanese chairman. Of particular interest was the learning potential created by the JVs. legal. we considered such factors as the nature of partner contributions to the JV. Japanese VP Japanese sales manager 50/50 50/50 Japanese: manufacturing process and engineering customer contacts. startup support American president and plant managers. Therefore. administration administration support support HR. product engineering. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures the need for a longitudinal approach that would provide deep and extensive access to the individuals involved in collaborative exchange. Equity shares Key partner contributions 50/50 Japanese: manufacturing process and engineering. JV management and plant management.S. plant management Customers Japanese and JV automakers PrimarilyJapanese automakers Japanese and U. and the willingness of the Japanese partner to share its technology. a multiple case study design was used. we selected a subset of five of the cases from stage 1. 25-year relationship between partner presidents Kappa Low High None Sigma Characteristic American partner learning potential JV performance Partner history None prior to Limited. product design. plant American: plant management.

Both partners agreed to be completely open in sharing both product and manufacturing technology. Table 3 summarizes some of the knowledge management activities associated with the Kappa JV. each of the processes is described in detail and additional examples are provided. In another case. "Medium" means that the process was occurring but at a lower intensity than it was in at least one of the other "high"cases. When no visible progress was made in designing new equipment. In the following sections. For example. We then link the processes with knowledge types and the parent's organizational levels affected by the processes. we collected data on the knowledge management processes used by the American parents. For the cases studied in this stage of the research. with the location alternatingbetween the JV and one of the American parent plants." As a result. and (5) the JV plant was located in an unused American facility a short distance from the American parent headquarters. July-August 1998 ." The American partner 460 ORGANIZATION SCIENCE/VOl.In both Kappa and Sigma. Access to partnertechnology skills also was available through direct linkages between Japanese and American partners. For product technology. the American parent might ask to borrow a Japanese partner engineer for a few weeks. Including the first stage interviews. In Gamma. monthly meetings were held. we began second stage site visits and interviews in May 1993 and continued to September 1994. although a few were a half day or more. and strategic integration. 9. JV-parent interaction. The Japanese engineers brought very detailed equipment designs that would enable the American firm to replicate their manufacturing process. the VP manufacturingat the American parenthead office. The four processes share a conceptual underpinning in that each represents a knowledge connection. which creates the potential for individuals to share their observations and experiences. personnel transfers. To capitalize on the Japanese partner's fabrication knowledge and ability to operate with fewer equipment operators. a total of 20 interviews were conducted with senior American managers in the JVs and parent organizations. To provide examples of actual knowledge management. quarterly R&D meetings were held involving the JV and American parent. R&D managers. and several senior JV managers. observations were collected over a period of three and one-half years. Kappa managers invited several Japanese engineers to the United States to train parent engineers. the four processes represent the locus of knowledge creation because it is through those processes that different types of knowledge converge and become accessible. medium. The high. American parentpersonnel regularly visited Japanese parentfacilities. (4) the JV's quality record was superior to that of the American parent. "Low" means that we found no evidence of a knowledge management process. When that had happened in the past there had been no financial considerations because "it all comes out in the wash. Similar data were collected for each of the cases. the American president decided to contract equipment design and manufacturingto the Japanese partner. Alpha was classified as low for three processes and medium for one. The interviews in stage 2 were usually 90 minutes to two hours long. The manufacturing vice president of one of the American parents said that "while [he] hated to admit it. explicit terms on licensing and royalties were established. the partnerssigned a very broad global technology agreement. For example. In addition. we observed that all of the knowledge management processes were present for Kappa and were occurring at a high intensity level. Technology Sharing. 4. heads of quality control. a program was initiated with plant managers to address the need to improve quality and customer service. No.JV performance was evaluated from the perspective of the American parent and was based on the American parent's overall satisfaction with performance. the cases were evaluated individually on the intensity of the processes for transferringknowledge (Table 2). Partner history reflects the extent of previous collaborative relationships between the partners. American parent firms instituted various technology sharing processes to gain access to technology resident in the JV and in the Japanese partner. Each of the four processes provided an avenue for managers to gain exposure to knowledge and ideas outside their traditional organizational boundaries and created a connection for individual managers to communicate their JV experiences to others. In that sense. Findings Knowledge ManagementProcesses For each of the cases. For manufacturing technology there were no terms. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures parent produced similar products. Building on the data collected in the first stage. (3) the Japanese parent was open in its willingness to share technology. four critical processes were identified: technology sharing. An American engineer would be sent to Japan to learn about the equipment so it could be installed in the United States. and low classifications are a function of comparison across the cases. The most evident knowledge transfer approach was through structuredmeetings between JV and parent managers. the quality of the JV product was superior to that in the parent. In attendance at the meetings were plant managers. From the data.ANDREW C. On the basis of the interview data.

A piece of manufacturing equipment was to be made by the Japanese partner in Japan. interaction. Several JV managers were promoted to positions within the AP." units of the company responsible for certain aspects of manufacturing. July-August 1998 461 . The JV is the strongest Asian connection. kaizen teams. which in turn was under pressure from its Japanese transplantsupplier. the American parent was forced to evaluate some of its manufacturing operations. Interactions between parent and JV managers beyond specific technology initiatives can create the social context necessary to bring JV knowledge into a wider arena. With the JV managers' support. The JV was asked to be the gatekeeper for JIT. satisfactory. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures Table 2 Knowledge Management in the Five Cases Alpha Beta Low Medium Medium Low Gamma High High Medium High Kappa High High High High Sigma Medium High Medium Medium Technology sharing Interorganizational interaction Personnel transfers Strategic integration Low Medium Low Low recognized the need for reciprocal commitment (cf. 6. The AP and the Japanese parent initiated a joint engineering project. The JV managers were generally convinced that the differences embodied in the JV were visible and parent managers would appreciatethe differences if they spent time in the JV. The AP set up what it called "gatekeepers. 1994) and tried to make the technology sharing a two-way relationship. such as monthly sales meetings between parent divisions and the JV. 5. including its use of employee involvement programs. Community members share knowledge and may be willing to challenge the organization's conventional wisdom. the JV-parent interactions provided the foundation for evolving communities of practice (Brown and Duguid 1991). More than 15 employees in the JV visited Japan. 3. The American parent (AP) studied various aspects of the JV's operation. the JV acted as both supplier and customer for the American parent. and indirectly becoming a transplant supplier. The gatekeeper was expected to be available to all units of the company on the specific process or technology. 9. the JV was a nonunion operation with a hybrid mix of Japanese and American human resource practices. AP senior managers were committed to the JV and to an Asian connection. Several engineers were also promoted. Individual knowledge and perspectives remain personal unless they are amplified and articulatedthrough social interaction (Nonaka 1994). Neither relationship was considered Table 3 Examples of Knowledge Management Processes Kappa in 1. No. the American parent had not had any extensive interactions with Japanese customers. were also a means of interacting ORGANIZATION SCIENCE/Vol. The AP has also studied some of the JV's process innovations. In the Alpha case. the interactions were primarily social and involved a variety of groups. Meetings. JV-parent Interactions. The American parent was establishing a new nonunion operation and decided to use the JV as a model. as various managers indicated. one of which the JV considers proprietary. the American parent substantially increased its quality because of pressure from the JV customer. and scheduling system. One manager was promoted into an AP staff training position at AP HQ. 4. 7. Visits and tours of JV facilities were an effective and simple interactive means for parent managers to learn about their JVs. Customer-supplier relationships between the JV and the American parent also created a basis for extensive. 2. In another example. with an American engineer visiting Japan during the project period. However. although the JV was a rich source of knowledge for the American parent. In contrastto most of the American parent plants. One explanation for the success of the knowledge transfer is that learning was focused on a discrete system that could easily be replicated. the visiting managers spent several days studying the JV and then incorporated much of their knowledge in the new nonunion plant. Until the JV was formed. In effect. although not always amicable.ANDREW C. A utilization of a JV visit that produced an observable change occurred when an American parent sent several managers to visit its JV to study the JV's human resource management systems. 4. In this study. visits were not always perceived as effectively utilized. The AP had several engineers temporarily working in Japan in the Japanese parent organization. The president of the AP had a very close relationship with the former Japanese parent chairman. Gulati et al. In supplying the JV.

the American parent promoted a Kappa manager to a staff training position at parent headquarters. However. For Gamma. two plant managers spent time in the JV and then returnedto plant management positions in American parent plants. Strategic Integration. A narrow and distant interface was found to be an obstacle to learning (Doz 1996). Personnel Transfers. Note the assumption that the linkages are consistent with the strategic goals of the parents and JVs. developed a substantial amount of business with domestic customers. the JV was initially presented to the transplant customers as a Japanese company. In Beta. Clearly. the chief operating officer of the JV came from the American parent to act as mentor for the younger JV managers and will eventually return to the American parent. technology could be viewed as having a significant tacit dimension. To maximize exposure to strategic knowledge. The process through which a JV strategy is linked with a parent strategy is termed strategic integration (Harriganand Newman 1990). For example. Table 4. The knowledge associated with technology sharing was classified as explicit. Transfers and rotation of personnel help members of an organization to understand the business from a multiplicity of perspectives. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures and exchanging knowledge. but in the cases studied. and in one case laboratory facilities. The linkage also opened the door for more knowledge sharing and cooperation in the future. The rotation of managers through JV positions and back to the parent may encourage the "bleedthrough"of ideas from the venture to the parent (Harrigan 1985).ANDREW C. None of the cases studied had a structuredprocess of rotation between the JV and the parent. The parent decided to use its JV to produce the part because of the JV's superior process technology. Kappa had an extensive informal system of personnel transfers between the organizations. the JV was formed strictly as a transplant supplier that was relatively independent of its American parent. knowledge about quality control processes and factory scheduling systems 462 ORGANIZATION SCIENCE/VOl. the primary types of knowledge associated with each process were identified. Personnel transfers can be considered a process of organizational reflection (Hedlund and Nonaka 1993) and a means of mobilizing personal knowledge. For example. 4. The JV evolved into a much less "Japanese"firm and. The careers of the managers were considered closely linked to the American parent and not just the JV. shows the classification and provides examples of each type of knowledge. in several cases the JV relied extensively on the American parent for various services. not just the JV itself. No. p. it does not include certain knowledge types that might be associated with the processes in different research settings. In Gamma and Kappa. accounting. the partners can gain important insights into each other's businesses. The objective. which in turn makes knowledge more fluid and easier to put into practice (Nonaka 1994. The JV was incorporatedinto the parent's strategic planning processes and was expected to contribute new ideas and provide leadership in a particulartechnology area. A JV perceived as peripheral to the parent organization's strategy is likely to yield few opportunities for the transfer of alliance knowledge to the parent. For example. For example. objectified knowledge because it was related primarily to product designs or specific manufacturingprocesses. Such a linkage indicates that the American parent management had internalized the knowledge associated with differences between the parent and JV. In Gamma. human resource management. Over the years. alliance partners must go beyond the narrow confines of the JV agreement. technology sharing in our study involved knowledge with low tacitness. Finally. the American parent managers had no choice but to be involved with the JV. the knowledge transferred(and the knowledge of apparentinterest to the American partners)had a minimal tacit dimension. The relationship between the partners was becoming much tighter. Types of Knowledge Building on the preceding description of the knowledge management processes. As Hamel (1991) argued. 9. such as purchasing. through its American parent's contact. the JV functioned like a related division of the American parent. Consequently. was for both the JV and the parents to benefit. Through strategic linkages between the JV and the parent.Several engineers also were promoted. For Kappa. relying extensively on the Japanese partnerfor product technology and marketing support. one of the American parents won a contract to supply a part but was unable to meet the target cost. leading to substantial parent-JV interaction and a greater commitment of resources to the management of the collaboration. A JV closely related to the parent strategy may receive more attention from the parent organization. Kappa became less independent as ties between the two partners increased. as a Gamma manager remarked. 29). In four of the cases. Because the table is based on our observations of knowledge types. receptivity to learning is enhanced if the parent and its alliance are closely related. July-August 1998 . senior managers in the JV had been transferredto the JV when it was formed. Doz (1996) argued that the partnerinterface is critical to the parent's appreciation of the differences between the partners. with the parent focused on managing the partnerrelationship. based on Spender's (1996b) typology.

Table 4 Knowledge Management Processes Knowledge and Types of Knowledge Management Processes Technology sharing Types of Knowledge Explicit/objectified Examples of Knowledge Potentially Useful to American JV Parents Quality control processes Product designs Scheduling systems Specific human resource practices Quality Commitment Continuous improvement objectives Commitment to customer satisfaction Meaning of quality from Japanese partner perspective Market intelligence Partner's keiretsu relationships JV competitive advantage Visions for the future Implications of the partner's keiretsu relationships JV-Parent interactions Explicit/objectified Tacit/collective Personnel transfers Tacit/collective Tacit/conscious Strategic integration Explicit/objectified Tacit/collective Tacit/conscious although our study suggests that American partnermanagers were generally unsure of how to capture the value. individual JV managers learned much about the s Japanese partner' interorganizational or keiretsu relationships. an important belief in the JVs was that Japanese transplant customers had greater expectations about customer satisfaction than American customers. Through strategic cooperation. In this study. Because our focus was managerial movements between the JV and parent. Figure 2 provides a multidimensional view linking the primary knowledge type and organizational levels in the parent firms. Other types of knowledge were more personal. we undoubtedly would have identified instances of automatic knowledge transfer. As Table 3 shows. The knowledge may also be of a tacit. difficult to articulate knowledge. communal knowledge about organizational behaviors and norms. Organizational Levels Learning and knowledge creation occur through a process involving various organizational levels and actors. For example. 4. the type of individual knowledge of greatest potential for transfer was conscious knowledge. For the technology-based knowledge. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures was of potential interest to most of the American partners. Such knowledge had potential strategic value.ANDREW C. individual nature because there is no consensus about the strategic value of the information. 9. such as beliefs and norms of behaviors. Personnel transfers had the potential to transfer tacit. In one case. JV partners can gain access to objectified. Like Table 4. the figure summarizes the findings for the five cases and is based on the identified (as opposed to ideal) knowledge transfer. the value of quality process knowledge was discounted by the parent (even after the Japanese parent had offered to facilitate the knowledge transfer) with the argumentthat "what the JV does would never work here. Because that belief was usually shared across levels of the organization. For each of the knowledge management processes. Most knowledge sharedthroughJV-parent interactions was objectified. but considerable resistance to it was evident at the American parent level. although there was a high potential for sharing tacit.4 The JVparent interactions provided an excellent opportunity for the American parentsto acquire such knowledge. such as the nature and importance of Japanese partnerapproaches to human resource practices. No. July-August 1998 463 . Although strategic integration creates linkages that are organizational. a strong explicit memory component was embodied in the practices of the JV and." even though the JV and parent were producing very similar products. such as that associated with a commitment to product quality. also in the practices of the Japanese parent. it is classified as collective knowledge within the JV. collective knowledge. in ORGANIZATION SCIENCE/VOl. because much of the knowledge in the JV originated in Japan. our findings suggest that potential knowledge transfers may involve both social and individual knowledge. Had we addressed the transfer of personnel below the managerial level. explicit knowledge as well as to culture-related. We view product quality knowledge as tacit because it was associated with a culture and philosophy about business and was not based on specific rules or guidelines.

The technology sharing process involved primarily explicit. Resistance in the American parents to the costs of learning limited the effectiveness of the process at the organization level. The JV-parentinteractionprocess had the potential to transferknowledge with similar tacitness to that transferredby strategic integration. Strategic integration also generated some individual knowledge. 9.s S e | Q3' /-x ~ . The personnel transfers process involved mainly knowledge with medium to high tacitness that influenced individual and group levels. and volume. 4. the greater the range of knowledge types. This supports the view that Western organizations try to learn in large. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures Figure 2 Knowledge Management Processes and Type of Knowledge Transferred Organizational Level Individual Low Knowledge Tacitness * Group * Organization Q2 Qi Objectified Technology Sharing l l l 'ed . we conclude that only a limited amount of knowledge associated with personnel transfers "spiraled" beyond the group level to the organizational level. Box width representsthe range of organizational levels affected by the knowledge management process.'/ 'Q4r4ne/rf s" . The boxes in Figure 2 can be interpreted by height. Box volume provides an indication of the overall intensity of the process. One explanation for that resistance was that American parent organizations were so lean that little time was available to invest in learning. Strategic integration involved knowledge ranging from low to high in tacitness that penetrated mainly the group-organizationlevels.1~~~~~~~~~. The higher the box.ANDREW C. High K-nowledge //// Tacitness Q3 Q4 Conscious LZIIIII Knowledge Collective Knowledge LIZ Objectified Knowledge two of the cases little knowledge was transferredfrom the JV to American parent. Based on our findings. social knowledge that could be transferredto the group and organizational levels within the American parents. width. but on a more limited scale and at lower organizational levels. ~~~~~~~~Objectif JV-Parent _ Intiraction l Objectif ed Strategic Knowleg Type Type~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~Integration HlhKnowledge Tacitnes. discrete steps (Hedlund 464 ORGANIZATION SCIENCE/Vol. July-August 1998 . The height of the box represents the range of knowledge types associated with the knowledge management process. No.

PROPOSITION 5. PROPOSITION 2. This is consistent with the argumentthat in their approach to organizational learning. more collective level. the greater the tacitness. The more successful the transfer of tacit strategic knowledge. we can predict that the more tacit the knowledge. Western firms tend to focus on explicit knowledge that can be created through analytical skills and concrete forms of oral and visual presentation Managerial Implications Spender (1996b) argued that the most strategically important feature of a firm is its body of collective knowledge. We have sought to systematically establish how firms acquire and manage new knowledge. the focus on narrow. nonverbalizable. Figure 2 shows that the identified knowledge transfer processes are primarily in quadrant 2. No. and transfereffectiveness. Proposition 3.5 Discussion This study contributes to the literatureon knowledge and the firm by examining knowledge management in an alliance context. in one of the cases. and three pertain to transfer effectiveness when the core of knowledge transferredis highly tacit. Hence. Proposition 1. This was particularly true when the knowledge had a high level of tacitness. The more successful the transfer of tacit knowledge. The absence of highly visible differences in systems and processes was often equated with low learning potential. the lower the organizational level through which successful transfers will occur. Hence. rather than "how" and "why"the Japanese firms knew what they knew. Similarly. the greater the strategic relationship between the "learning" organization and the "teaching" organization. Highly tacit knowledge is intuitive. The effectiveness of knowledge transfers initiated at the collective level will be negatively related to the tacitness of the knowledge. 9. thereby increasing their propensity to undervalue overall learning potential. The strategic integration process involved less visibly defined objectives than the technology sharing process and in that sense. and related to individual experiences. initial emphasis was on explicit knowledge. (Nonaka and Takeuchi 1995). We identified specific knowledge management processes by examining firms' efforts to exploit JV learning opportunities and linked those processes with types of knowledge and organizational levels. PROPOSITION 1. First. Although in all the cases the American firms formed JVs with an objective of learning from their Japanese partners.ANDREW C. the more likely individuals will be the primary knowledge transfer agents. the American firms often began their collaboration with the view that the knowledge management processes based on technology sharing and interorganizational interaction were the most viable. PROPOSITION 4. In other words. The American firms expected to find visible differences in the JV that could be analyzed and incorporated in the parent. Because of the focus on explicit knowledge. However. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures and Nonaka 1993) and often fail to recognize the value of incremental learning. the greater the individual interactions between the "learning" organization and the "teaching" organization. Two pertain to relationships between knowledge tacitness. 4. the American firms were focused on explicit knowledge. Earlier we noted that knowledge connections create the potential for individuals to share their observations and experiences. perhaps through team visits or group seminars. Clearly. technology-related learning objectives resulted in an early abandonmentof technology sharing efforts.the learning expectations revolved around "what"the Japanese knew. PropositionDevelopment Several propositions about organizational knowledge transfer and management can be derived from the findings. Knowledge that is low in tacitness is often related to product and process technology transfers that can occur on a higher. we can argue that when knowledge transfers are initiated at the group and organization levels. The firms most successful in knowledge transfer recognized that important knowledge could not be internalized without substantial interaction between the people in the parent and those in the JV. Firms increasingly saw the need for strategic relationships between the two organizational units as a means of solidifying the knowledge linkages. the transfers will be less effective when the knowledge has a high tacit element. PROPOSITION 3. with personnel transfers occupying the top half of quadrant 3. Firms that focus their initial learning efforts on explicit knowledge will tend to ignore tacitknowledge-based learning opportunities. First-hand experiences with tacit knowledge are critical to its successful transfer. The tacitness of transferred knowledge will have an inverse relationship to the organizational level where initial transfer takes place. organizational level. enabled the communication of more tacit knowledge. July-August 1998 465 . We identified several knowledge management processes that firms use to exploit alliance learning ORGANIZATION SCIENCE/Vol.

Finally. Acknowledgments Grants to the first author from the Carnegie Bosch Institute for Applied Studies in International Management. Temple University's Center for 466 ORGANIZATION SCIENCE/Vol. this research suggests that organizations must be aware of the different types of knowledge and design appropriate systems to process the knowledge. given that the decision to initiate knowledge creation efforts must be balanced with the cost of doing so. such long-term processes create the potential for a continuous flow of knowledge. For example. as we found. Furtherresearch is needed to probe deeper into the relationships between organizational levels. Visits and tours of JV facilities were identified as a simple and effective means for parent managers to interact with JV managers. Additionally.ANDREW C. Organizationscreate. over the long term successful knowledge creation should strengthenand reinforce a firm's competitive strategy. technology sharing and JV-parent interaction processes may be less costly than strategic integration and personnel transfers. transfer. Nevertheless. July-August 1998 . this study shows that they can be effective as a means of acquiring explicit. Strategic integration can be an effective higher level knowledge sharing tool. Personnel transfer schemes and strategic integration suggest a long-term basis for knowledge sharing and potentially allow for the largest amounts of knowledge to travel interorganizationally. Longitudinal research captures the evolutionary patterns in the underlying research context. 4. To maximize the effectiveness of personnel transfers. Third. First. firms will attach different values to JV knowledge. amplify. technology sharing and JVparent interactions. To be successful. industry conditions can influence learning intent and managerial commitment. are based on shorter term knowledge relationships and as such. The risk with personnel transfers is that if the knowledge remains individual. the U. types of knowledge. namely knowledge creation. store. Clearly. Personnel transfers can be an effective process through which to acquire tacit knowledge that can be acquired only through time and experience. The domestic auto industry was recapturing some of its market share. knowledge creation is a dynamic process involving interactions at various organizational levels and an expanding community of individuals that enlarge. Therefore. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures opportunities. It enables meaningful communication and collaboration between organizations at the group and organizational levels rather than at the individual level. automotive industry was under serious attack by Japanese firms. organizations must not only process information but also create new information and knowledge. No. 9. at least in part. which in turn can lead to continuous learning and change. are less effective in transferring tacit knowledge.S. the potential social impact of the learning is lost. knowledge creation and the upward movement of knowledge through the different organizational levels can be at least partially responsive to managerial influence. When our research began in 1990. Although all of the processes are potentially effective. Suppliers had to cope with new competitors. In particular. In summary. the Japanese partnerwas responsible for the manufacturing process and product technology. Such an orientation can help capturethe dynamics of knowledge management and greatly enrich understanding of how firms acquire and transfer knowledge. and suppliers were reaping the benefits. should be considered valuable by the other partner(s). in four of the five cases (all but Sigma). and their traditional customers were losing market share.and discard various types of knowledge. Although not all knowledge creation efforts will have immediate performance payoffs. and organizational processes. This study explored how organizations involved in alliances can use their alliance experience as the basis for managing and creating knowledge. organizations must engage in a variety of knowledge management processes. which obviously influenced the type of technology knowledge that could be exchanged between the partners. and internalize the alliance knowledge. The learning imperative that prevailed in 1990 was no longer as critical. we found that the different processes involved different types of knowledge and different organizational levels. objectified knowledge. personnel transfers do not always result in significant organization level knowledge transfer. That change highlights one of the problems with cross-sectional research. the situation had changed dramatically. each alliance partnerhas knowledge that. Second. and therefore knowledge creation and processing strategies will differ across organizations and also evolve over time. We provide some empirical evidence to support the conceptual arguments made by Hedlund (1994) and Spender (1996b) about the firm as a dynamic system of processes involving different types of knowledge. there is a need to study how organizations manage highly tacit knowledge that resides at the collective level of the organization. Conclusion There are several underlying assumptions in the paper. Moreover. although some strategies lead to more effective knowledge transfer than others. there can be a significant payoff in cooperating. However. namely that firms and industries are in constant evolution. systems may have to be established to ensure that knowledge goes beyond the individual level. Also. We found that a variety of knowledge management strategies can be useful. The other two processes. By 1994.

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