Organizational Learning and Dynamic Capabilities (aug. 16)

Dynamic capabilities, according to Sher and Lee (2004) refer to the organization's way of responding in a rapidly changing environment, where a capability is understood as the adoption, integration and reconfiguration of skills, resources and functions to meet change. In order for dynamic capabiities to develop, Sher and Lee argue that an organization must take into consideration: (1) path-dependence (future decisions are influenced by past decisions); (2) double-loop learning (where single-loop learning referes to doing things better, double-loop is about doing better things); and (3) meta-routines (routines to learn routines). In sum, it is about knolwedge management of both exogeneous knolwedge (clients, suppliers, competition) and endogeneous knolwedge. Information technology then acts as a mediating variable between knowledge management and dynamic capabilities, enabling the transition from knolwedge and learning to being able to react adequately. However, in their study, Sher and Lee found that only ERPs and Data Warehouses were indeed influential factors in this relationship, while e-mail, document managemrnt and online search capabilities were not. This suggests that IT does not have a deterministic effect on this relationship and will in fact be dependent on the way in which specific organizations employ it to leverage knowledge management.

A different understanding of dynamic capabiltiies allows for a broader definition, where they refer to  a learned and stable pattern of collective activity through which the organization systematically generates and modifies its routines in pursuit of improved effectiveness (Zollo and Winter, 2002). In this view, the envinroment need not be rapidly changing for the orgrnization to adapt to it, the key is rather in the formal and persistent way in which the organization goes about this adaptation (an ad hoc cerative adaptation is not a dynamic capability). Dynamic capabilities are related to learning mechanisms, which can be (1) through experience and routines; (2) through articulating (implicit) knolwedge; or (3) through codifying (explicit) knolwedge. As a process, Zollo and Winter propose an evolutionary approach where dynamic capabilities emerge from a cycle going from variation (of explicit knolwedge), to selection (explicit), to replication (of tacit knolwedge) and finally to retention (tacit) and then back to variation. Along the way, it is a key factor that individuals and the organization as a whole be able to explicitly identify the connection between decisions /actions and performance.

It then becomes clear that the relationship between knolwedge management and dynamic capabilities is learning-oriented. In fact, a combination of organizational learning and knowledge sharing is what enables improved firm effectiveness (Yang, 2007). In particular, it is an effort aimed at preventing knowledge depreciation (out of employee turnover, obsolescenece, incomplete knolwedge transfer or difficult access). However, until recently most literature on organizational larning has focused on procedural (know -how) and declarative knowledge (know-what) while negelecting relational knolwedge (know-who), as claimed by Borgatti and Cross (2003). This is obviosuly changing in the context of a networked, knowledeg-based society where the Internet and social networking have become familiar interaction spaces. In this new environment, social ties may be weak (in which case they may help in finding a job, advancing professionally or distributing ideas) or strong (in which case they may foster knolwedeg transfer, especially when such knolwedge is tacit and complex). It has already been recognized for some time that such ties are more likely to emerge when there is homophily (kinship in terms of race, gender, age, education) or physical proximity. However, Borgatti and Cross also find that it all starts with the decision to seek information in the network and this depends on: knowing (who knows what), value (how much do I value the other's knolwedge), access (how easy is it to access the other's knolwedge) and cost (how costly is it to access the other's knowledge). Empirically, however, cost seems less important perhaps becase it is overshadowed by the urgency of the information need.

In summary: in order for an organization to develop dyamic capabiltiies that will enable it to stay in the game and improve its effectieveness, an adequate organizational learning strategy must be in place, with an emphasis on relational knowledge. Furthermore, this connection is enabled both srategically and technologically by knowledge management

Knowledge managament and innovation (Jul. 19)

Innovation is a generic and sometimes confusing concept. There may be industrial, social, cultural, incremental, radical as well as being the result of an explicit aim (such as in R&D) or an emergent (sometimes unexpected) result of a learning process. Some place the weight of innovation on the fact that the new product or service is actually introduced successfully into the market, as opposed to just a new idea that is never marketed. Some emphasize the novelty behind an innovation, while others admit knowledge or technology transfer as a potential source of innovation. For example, the same product or service may be introduced into a new context or market implying a new innovation (since there is no guarantee that it will have the same success it has had elsewhere). In any case, the role of knowledge and knowledge management as pillars of innovation is long recognized and empirically demonstrated.

With respect to the modes of learning and innovation, Jensen et al. (2007) make a distinction between the Science, Technology and Innovation, or STI-mode, and the Doing, Using and Interacting, or DUI-mode. STI is borne out of formal, science and technology-based codified knowledge, emphasizing so-called know-why type of knowledge. In addition, STI usually implies a formal documentation of the whole learning and innovation process, which often results in the generation of new global knowledge, despite having a local, problem-based origin. Because it is formal, STI has widely used (standardized) measures for assessing its presence and strength in firms (e.g. investment in R&D, scientifically trained personnel, cooperation with universities or research centers). DUI, on the other hand is much less formal and is akin to organizational learning in that it stems from experience-based relational learning. as such, DUI focuses on know-how and know-who types of knowledge and is made possible in flexible organizations that foster knowledge sharing especially across disciplines and organizational units. While the presence of either STI or DUI enable a firm to be more innovative, it is a combination of both which is usually behind firms that excel in innovation. as a consequence, knowledge management may be used to propel the integration between STI and DUI-modes by enabling shared access to codified knowledge, as well as supporting knowledge-based interaction within the firm and across its boundaries (clients, partners, market in general).

The role of knowledge management for innovation is not new, but the focus has shifted as organizations move towards a service-based paradigm, as argued by Darroch (2005). Rather than seeing resources as the main assets of the organization, the key are the services those resources actually deliver. And in order for a resource to deliver a service, it must be coupled to a capability (skills or experience which enable exploiting a particular resource). Seen this way, knowledge is a resource and knowledge management is a coordination mechanism which supports its transformation into a capability, specifically the capability to innovate. A study of New Zealand firms shows that this is the case for all three phases of knowledge management. Acquisition, Dissemination and Responsiveness to Knowledge all contribute to innovation (or rather, innovative firms usually support these three KM functions).