Knowledge-based view

The KBV emerged out of the RBV and assumes that companies seek knowledge as key resource (Grant and Baden-Fuller, 2004) in order to build up new resources (Eisenhardt and Martin, 2000) or to improve strategic decision making (Hernandez et al., 2014). Firms therefore compete on the basis of knowledge and KM (Leonard, 1998). Chandler (1977), Penrose (1959), Nelson and Winter (1982) and Teece (2000) for example see the firm as being built out of knowledge. Furthermore, knowledge as a resource plays a vital role in CR (Uzzi, 1997) due to resource heterogeneity (Helfat and Peteraf, 2003) between agents. Consequently, knowledge is essential for the organisational and CR level.

Knowledge is a “fluid mix of framed experience, values, contextual information, and expert insight”

(Davenport and Prusak, 1998, p.8). This definition shows the complexity of knowledge as a framework for new experiences. In order to meet that complexity, three models introduced by Liu et al. (2014) are outlined in the following to structure the understanding of KBV as a concept. The authors introduced the tacit-explicit knowledge conversion model, the spectrum focused model referring to activities of exploration and exploitation and the knowledge stages model including knowledge creation, sharing and application. Under the consideration that knowledge is an important resource to be exchanged between collaborative agents, its distinct aspects such as knowledge as a resource, knowledge type and conversion, knowledge activities and KM stages, are introduced below.

2.3.2.1 Knowledge as a resource

Knowledge as a resource is defined quite distinctly by researchers. Zack (1999) sees knowledge as value of accumulated information, which is shaped through experience, communication and interaction. Knowledge is constantly manipulated by the process of ‘simultaneously knowing and acting’ (Zack, 1999, p.46). Teece (2000) defines knowledge as being not about data and facts in the first place but about the context the knowledge is placed in. Kodama (2007) as well sees knowledge to be rather context specific than content related. Van den Berg (2013, p.164) even interprets knowledge as being a ‘meta-resource’ with a value and meaning to all other resources of the company.

Even though knowledge is interpreted distinctly, differing types of knowledge can be useful for different situations and contexts.

2.3.2.2 Types of knowledge

In order to correctly distinguish between different terms in KBV research, it is essential to differ between data, information and different types of knowledge. Ackoff (1989) outlined that data serves information, which in turn serves the development of knowledge leading to understanding and finally to wisdom. Wisdom and its meaning are not investigated here, but the link between data, information and knowledge and the distinction between the terms is essential for understanding knowledge development (Rowley, 2007).

Zack (1999, p.46) defines data as being ‘observations or facts out of context’ which are not particularly meaningful without a certain context. Information in turn refers dominantly to facts and data which is transferable through simple interchange and communication without losing the meaning of it (Kogut and Zander, 1992; Szulanski, 1996). Information assists knowledge but is not knowledge itself (Teece, 2000). Information can be accumulated to knowledge and requires experience, interaction and communication for that process (Zack, 1999; Dretske, 1983). This is supported by the work of Zhong and Ohsuga (1996a, 1996b) stating that information put into a certain context can help to develop knowledge. Knowledge can also be considered as know-how, or knowing about, being accumulated skills as the basis for certain competence in a field (Ahuja, 2000; Grant, 1996b).

In order to successfully accumulate information or knowledge, its transferability needs to be considered. Here, two types of knowledge are of particular importance, named codified or non-codified knowledge or tacit and explicit knowledge (Nonaka, 1994; Dyer and Hatch, 2006).

Researchers hold a constant debate on if the terms codified and tacit can be used interchangeably (Johnson, Lorenz and Lundvall, 2002; Archer-Brown and Kietzmann, 2018). Tacit knowledge is seen as “difficult to articulate, developed from direct experience and action, and usually shared through highly interactive conversation, storytelling and shared experience. In contrast, explicit knowledge is

more precisely and formally articulated, although removed from the original context of creation or use” (Zack, 1999, p.46).

Tacit knowledge is often specialised knowledge as it resides in individuals (Nonaka, 1994) and individuals need to specialise due to cognitive constraints of the human brain (Grant, 1996a).

Consequently, it cannot be accessed or combined very easily (Grant, 1996b). Specialised knowledge is idiosyncratic knowledge only understandable in a certain context and in a certain environment (Grant, 1996b; Jensen and Meckling, 1992). As explicit knowledge is uncodified knowledge (Zack, 1999), it can be part of specialised knowledge as well but is more easily transferrable (Liu et al., 2014). Non-specialised knowledge in turn plays a vital role in surroundings where no further specialisation is required but additional and new general knowledge (Dyer and Nobeoka, 2000). This knowledge is not specialised on products but driven by good ideas or creativity and will only be detected or adapted by mutual learning mechanisms (Huber, 1991; Lorenzoni and Baden-Fuller, 1995; Burt, 2000). Specialised knowledge and the variety of non-specialised knowledge are at the basis for interfirm collaboration in order to share distinct resources and enable new knowledge creation, application and the development of innovative ideas (Leonard-Barton, 1995; Dyer and Nobeoka, 2000; Ahuja, 2000; Kodama, 2007).

In this work, information is considered to serve knowledge. Additionally, all types of knowledge that can be shared will be taken into account as only little is known about what type of knowledge is exchanged in what way by agents in CR following a certain strategic interest. Therefore it is necessary to follow an exploratory approach to knowledge in this research. All the above considerations influence the knowledge creation and sharing process, which can be seen as a process of ongoing activities of knowledge exploration and exploitation.

2.3.2.3 Knowledge exploration and exploitation

When KM is seen as a process (Zack, 1999) and shaped by ongoing activities it can be divided into knowledge exploitation and exploration (Liu et al., 2014). Knowledge exploration can be linked to

knowledge generation and knowledge exploitation to knowledge application (March, 1991; Spender, 1994; Grant and Baden-Fuller, 2004). Whereas knowledge exploration requires the detection of new and creative knowledge associated to higher uncertainty and risk, knowledge exploitation aims to specialise and deepen existing knowledge towards efficiency and productivity (March, 1991). In order to explore and exploit knowledge, organisations need to identify their existing knowledge bases to build on it. For these mechanisms a learning organisation is required (Teece, Pisano and Shuen, 1997). Especially knowledge exploitation of in-depth knowledge requires strong learning mechanisms (Berghman et al., 2013). Also, the abilities of a learning organisation are essential for knowledge internalisation as it requires to match old knowledge to new knowledge (Nonaka, 1994) and to develop new capabilities from the knowledge created (Teece, 2000), as discussed further below. Exploration in contrast requires the development of new ideas (O'Reilly and Tushman, 2008).

Balancing exploration and exploitation is essential for companies to ensure long term success. This is, as a focus on exploration could lead to high costs in comparison to new developments and a focus on exploitation to a lack of new ideas and further developments (March, 1991). Both processes build on each other and require learning processes within the organisation (Tamayo-Torres et al., 2011) being faster with exploitation building on existing knowledge and slower with exploration being based on a broader knowledge base (March, 1991).

2.3.2.4 Knowledge management stages

After having discussed different types of knowledge and knowledge exploitation and exploration as activities of KM, the next step is to look at how knowledge can be created and used in order to be beneficial for the organisation (Goh, 2002). KM is reflected in many different research streams such as the RBV, organisational learning, economics of innovation (Spender and Grant, 1996) and the KBV (Eisenhardt and Santos, 2000). Liu et al. (2014) introduces different KM stages referring to a KM life cycle and a processual perspective. They differ between ‘knowledge creation, retention, sharing/transfer and application’ (Liu et al., 2014, p.640). Others define KM as being “the process of

identifying, capturing, and leveraging knowledge to help the company compete” (O’Dell and Grayson, 1998, p.154). Argote, McEvily and Reagans (2003) explain KM as the creation, access and sharing of knowledge. Altogether, KM is a set of procedures (Teece, 2000).

Consequently, knowledge creation is the prerequisite for the other KM stages. Knowledge can be seen as value that resides in organisations (Bohn, 1994; Bollinger and Smith, 2001; Quintane et al., 2011) or as being created through a social process (Blackler, 1995; Cook and Brown, 1999; Quintane et al., 2011) between individuals. Which can also be defined as being a cognitive view, seeing knowledge as residing in individual heads, a structural view as seeing knowledge embedded into structural routines and rules, or a practical view with a focus on the knowledgeability (Orlikowski, 2006) of practice. Here, practise is seen as the demonstration of knowledge available (Marabelli and Newell, 2012). These approaches have quite different epistemological indications (Empson, 2001) that divide researchers in two camps either believing that knowledge resides mainly in the individual and the organisation (Nonaka and Von Krogh, 2009; Tsoukas and Vladimirou, 2001) rather than solely within the creativity of the individual (Glynn, 1996). Collective knowledge in turn is described as being a sublevel between individual and organisational knowledge. The concept of collective knowledge relates to the research stream of social capital (Nahapiet and Ghoshal, 1998; Adler and Kwon, 2002; Quintane et al., 2011). As individuals are part of organisations and knowledge can be related to all parts of the organisation, in this work knowledge is considered to reside in individuals, groups and the organisation and that the knowledge shared depends on the aim of the KS process and the individuals involved (Caimo and Lomi, 2014). Individuals can form groups of collective social capital (Lin, 2017).

Building on the above, the next step of KM is KS or KT as a prerequisite to the use of knowledge.

KT cannot be described as an act, but being a constant process stimulated by the environment of the organisation and processed by the individual (Szulanski, 2000; Nonaka, 1994). KS and KT are often used simultaneously (Liu et al., 2014) both meaning the use of knowledge across firm boundaries (Caimo and Lomi, 2014). Others differentiate between KT taking place only in one direction and KS

in both directions between knowledge owner and recipient (Szulanski, 2000). Some authors also agree on seeing knowledge as a commodity based in individuals and groups and transferrable between them (Newell et al., 2009; Spender and Grant, 1996; Swan and Scarborough, 2001). In this work, the term KS rather than KT is used to emphasise the importance of all parties involved into the KS process.

KS mechanisms have been researched for example in areas such as production and high specialisation (Dyer and Nobeoka, 2000). Researchers found out that explicit knowledge can be easily shared between individuals and organisations, but tacit knowledge such as skills, know-how, and contextual knowledge can only be accessed in its application and is slow and expensive (Kogut and Zander, 1992; Nonaka, 1994). That underlines that in order to create and share knowledge within or between organisations it needs to be usable and accessible (Appleyard, 1996). Grant (1996b) developed three main knowledge characteristics that define if knowledge accessed is usable and shareable. The first characteristic, transferability, explains the accessibility of knowledge meaning if it is codified or non-codified knowledge. Knowing how is tacit and knowing about is explicit knowledge. Consequently, explicit knowledge is easy to access and use, whereas tacit knowledge is nearly impossible to access, but only usable and learnable within it context (Kogut and Zander, 1992; Marabelli and Newell, 2012). For example, by learning its routines and by application (Grant, 1996b) which makes its sharing slow, costly and uncertain (Kogut and Zander, 1992).

The second characteristic is the capacity for aggregation, as KS needs a receiving and a transmission part. The ability to absorb the knowledge, the absorptive capacity, (Berghman et al., 2013) of the receiving party plays an essential role (Cohen and Levinthal, 1990). The ability needs to be existent at individual and organisational level as new knowledge is related to old knowledge which requires a certain ‘additivity between different elements of knowledge’ (Grant, 1996b, p.111).

The last characteristic Grant (1996b) points out is appropriability, which refers to the return of value for the resource the holder gave away (Teece, 1998; Levin et al., 1987) as KS is based on mutuality and reciprocity. Additionally, firms need to make sure that they do not lose their competitive position by sharing knowledge (Ahuja and Carley, 1999).

In terms of KS, the conversion from tacit into explicit knowledge often leads to knowledge loss (Nonaka, 1994) and is not easy to share (Van den Berg, 2012). A common language (Goh, 2002) and a shared understanding between individuals can help to prevent knowledge being meaningless in new contexts (Polanyi, 2010; Grant, 1996b). Still, researchers think that tacit knowledge can be transferred to some extent even though it might be sticky (Szulanski, 2000) and embedded in a certain context (Inkpen and Tsang, 2005; Marabelli and Newell, 2012; Suchman, 2000) when it is made explicit (Nonaka, 1994; Marabelli and Newell, 2012). Accumulated experience facilitates the communication between individuals and hence the sharing of knowledge (Zander and Kogut, 1995). Tacit KS can therefore be enhanced by “mentoring, teamwork, chat rooms, personal intranets, and opportunities for face-to-face conversations such as group dialogue or personal reflections on experiences and lessons learned” (Goh, 2002, p.27). Even though there are several technology tools to enhance the KS processes explained above, the effectiveness in KS can only be influenced by the user of such KS technologies (Goh, 2002). This underlines the importance of the individual person within the process (Grant, 1996a; Grant, 1996b; Teece; 2000; Goh, 2002). Additional to the possible knowledge loss through knowledge conversion, knowledge retention could also led to shedding knowledge when individuals or organisations hold back their knowledge out of strategic reasons (Levy, 2011).

Beside the challenges of KS, the ability to value information as being new is very important for successful KS (Cohen and Levinthal, 1990). This mechanism is called knowledge application (Liu et al., 2014). Especially as the development of new ideas often means the building of new created knowledge onto existing knowledge (Shafique, 2013), knowledge application is dependent on certain organisation capabilities. Existing knowledge can hinder the building of new knowledge (Lant, Milliken and Batra, 1992) as old routines within an organisation might prevent individuals from changing their attention to new routines (Kane, 2010). Kane (2010) found that a subordinate identity, a shared believe or vision, might facilitate the sharing of knowledge as well as the recognition of relevant knowledge. All parts of the KM process outlined above are influenced by the organisations

ability to share knowledge and this again influences its KS abilities in CR. Consequently, organisational factors for KS are explained in more detail in the next section of this chapter.