Intra and Inter-organizational Networks (aug. 23)

Throughout the course we have emphasized the networked character of knolwedge management, under the premise that knolwedge sharing both within and between firms holds the key to tap resources in order to be able to produce more significant and sustained innovations. On the one hand, intra-organizational networks (between members of the same organization) stimulate knolwedge sharing as well as enabling more localized decision-making. Galbraith et al. (2002)  call these, the lateral capabilties of an organization to highlight the fact that they overcome the rigidity of hierarchies. Since network structures emerge naturally (from the bottom-up), it is idfficult to provide specific institutional designs, let alone guarantee that they will actually emerge in an effective manner. Nonetheless, Galbraith et al. do provide certain mechanisms or tols that should catalyze or nurture such emergence. Given that Galbraith is pioneer of the "information-processing view of organizations" (owing much to Herbert Simon) it is only natural that they would suggest information technology as one such mechanism (and here one must think of knowledge manegement technologies in particular). But we should keep in mind that IT may create information processing capabilities as well as generating additional iformation processing needs (by, for example providing local decision-makers with more information than what they are used to handling). Additional mechanisms include: communities or pracice, annual retreats, and personnel co-location, among others.

Moving beyind the organization we then go into inter-organizational networs (connected to literature on business networks, virtual organizations, clusters, districts, etc.). This new level steps aside from the traditional "resource-based view of organizations" where the focus is on a firm's resources and capabilities, to a focus on network resources. Through Toyota's experience when entering the US in the 90s, Dyer and Hatch (2006) illustrate the competitive advantage that one organization can create out of identifying and supporting relation-specific capabilities, in this case between Toyota and its US suppliers. Since Toyota's strategy and IT are aligned in order to enhance the capabalities of their suppliers, one could rightly expect that such capabilities might also be exploited by Toyota's competition (given that they share the same suppliers). However, such capabilities are tied to a knowledge-sharing strategy which is difficult to replicate and which in effect neithr GM nor Ford, for example, were able to benefit from. The specificity of the relation between Toyota and its suppliers, coupled to replication barriers (the existence of rigid processes or lack of absorbtive capacity) actually implies that Toyota was able to gain sustained advantage from their knolwedge transfer without the risk of it being copied. Since resources are tied to the capability to exploit them, it was not possible for other manufacturers to use the knolwedge that Toyota shared with its suppliers, since they would also have had to redesign their associated processes, systems, standards, or even trivial but rigid elements such as the size of boxes. This supports the notion that knowledge sharing is a key source of competitive advantage, rather than the belief that knolwedge protection is more strategic. Nonetheless, this needs to be a continued effort, because despite the lengthy or costly learning curves and transofmration processes, it will still be the case that best practices will eventually be copied and the firm must always be developing new ones.