Knowledge Management Systems in Multinational ...

Long Range Planning 40 (2007) 314e340

http://www.elsevier.com/locate/lrp

Knowledge Management Systems in Multinational Corporations: Typology and Transitional Dynamics Bo Bernhard Nielsen and Snejina Michailova

Knowledge Management Systems (KMSs) are becoming part of the agenda in many of today’s leading firms. Through in-depth case studies of seven multinational companies (MNCs), examined over a period of four years, we identify four distinctive types of KMS e Fragmented, Content-based, Process-based and Capability-based - and their characteristics. These characteristics include both the structure, dimension and flow of the knowledge itself, and the staffing, training and reward systems in place to support the KMS. Relevant organisational factors influencing KMS design and implementation include the level of resource commitment by the headquarters, the structure of the firm, and the distribution of roles between headquarters and subsidiaries. Key external influences include the degree of environmental change and pressures to follow industry norms in technology investment. Our empirical evidence suggests that while some MNCs adopt the same type of KMS for relatively long periods of time, others transit between different KMS types. Moreover, transitions between types may follow either an increased resource commitment and augmented KMS sophistication, or a decreased resource commitment and reduced KMS complexity. Insights from the strategy-structure-process and change management literatures are utilised to examine these transitions between KMS types. Key lessons for MNC managers are provided in relation to both the initial adoption of a KMS and the handling of transitions between different systems. Ó 2007 Elsevier Ltd. All rights reserved.

Introduction Multinational corporations’ (MNCs) effective performance depends increasingly on their ability to utilise existing knowledge and create new knowledge. This has motivated the need for a comprehensive 0024-6301/$ - see front matter Ó 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.lrp.2007.04.005

and systematic understanding of how knowledge is organised inside MNCs. While research pertaining to the nature and dimensions of knowledge is abundant, less is known about the impact of mechanisms used by firms for accumulating, creating, sharing and integrating it.1 This puts a premium on studies of effective knowledge management (KM) in MNCs. Over the past two decades, many organisations have developed information technology-based systems designed specifically to facilitate the sharing, integration and utilisation of knowledge, referred to as Knowledge Management Systems (KMSs). These systems are often associated with increased organisational flexibility, quicker responses to changing conditions, greater innovation and improved decision-making. But the challenges involved in successfully transferring and utilising knowledge across MNC units create a crucial design problem for MNC top management.2 Evidence suggests that while many leading MNCs deploy different types of KMS in the pursuit of competitive advantage, in many cases they find it difficult to reap the full benefits from those systems due to a poor alignment between the way the company is internally structured and organised and the way the external environment functions. As environmental conditions change, MNCs respond by adapting their strategic behaviours to the emerging situation. This typically involves changes to the configuration of organisational strategy, structure and process. KMSs are deeply rooted in the strategy-structureprocess of organisations and, therefore, if MNCs shift between different types of KMSs, this is usually due either to internal organisational factors (e.g., major changes at the top management level, deep organisational restructuring of the company), or to changes in the company’s external environment (e.g., a decline in the national economy, major industrial changes), or both. Senior managers play a critical role in the successful implementation of - and transition between KMS types, because they are in a position to influence organisational strategies, structures and processes.

Senior managers play a critical role in the successful implementation of - and transition between - KMS types The aim of this research is to (1) identify different types of MNC KMSs, based on these systems’ defining characteristics, (2) analyse the interdependencies between internal organisational factors and external environmental pressures that drive the adoption of a specific KMS, and (3) provide a better understanding of the processes underlying transitions between different types of KMS. In particular, we seek to advance the understanding of the dynamic nature of KM processes in MNCs. We make MNC managers aware of the existence of different types of KMS and provide guidelines regarding the factors to consider when implementing a certain KMS type. Moreover, we outline some lessons in the management of transitions between different KMS types, and show the importance of timing and resource allocation for successful KMS implementation and change. The article is organised as follows. First, we conduct a focused literature review of KMSs in MNCs and develop a typology of KMSs particularly related to MNCs. Next, we present the research methodology of the study. We studied seven MNCs over a period of four years to investigate how these corporations have utilised KMSs to organise their KM-related activities. We then systematically categorise the influence of internal resource commitment, organisational structure and external conditions on the KMS types. Our data suggests that while some MNCs adopt the same type of KMS for relatively long periods of time, others transit between different types. Drawing on the strategy-structure-process and change management literatures, we provide case evidence of the rationale behind companies’ choice of KMS, as well as the processes related to transitions between KMS types. Finally, we summarise and discuss the findings, and present managerial implications. Long Range Planning, vol 40

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Knowledge management systems in MNCs: Toward a typology Any discussion of KMSs needs to recognise that there are different views of what constitutes knowledge. Table 1 outlines three of the most widely recognised views on knowledge3 and their implications for KMSs in MNCs. When knowledge is viewed as an object, the KMS tends to focus on gathering, storing, and transferring knowledge (information), and headquarters (HQ) is responsible for the centralised customisation of information by employee users. When knowledge is seen as a process, the typical KMS focus in MNCs is on knowledge flows and the sharing of predominantly explicit knowledge (relatively easy to codify and transfer) dispersed throughout the global organisation. The view of knowledge as a capability suggests a focus on knowledge creation, and the building of core competencies through a combination of tacit (difficult to codify and transfer) and explicit knowledge. Although the theory behind KMSs has been widely studied over the past several years,4 there is a scarcity of empirical studies on KMSs. The published work consists primarily of conceptual principles of KMSs5 and single-case descriptions of such systems in leading organisations.6 In the main, this line of research has covered the general principles of building/creating and implementing KMSs and has often had an information technology (IT) focus. Diverting from this technical focus, we define a KMS as a system involving the application of various organisational resources (e.g., human, technical, financial resources) to manage knowledge. Another stream of work, most germane to the present study, is concerned with classifications of KMSs and the roles and objectives of KMSs in organisations.7 Among these studies, Housel and Bell described a KM maturity model that assesses the relative maturity of a company’s KM efforts.8 The KM maturity model defines five distinct levels based on commitment: fragmented Table 1. Knowledge views and their implications for KMSs

View

Definition

Role of KMS

Implications for KMSs in MNCs

Knowledge as an object

Knowledge, equated with information access, is viewed as a thing to be stored and manipulated (ie, an object)

KMS focuses on gathering, storing and transferring knowledge (information)

Knowledge as a process

Knowledge is a process of simultaneously knowing and acting (ie, applying expertise)

KMS focuses on links among sources of knowledge to create wider breadth and depth of knowledge flows

Knowledge as a capability

Knowledge is a capability with the potential for influencing future action (ie, the capacity to use information; learning and experience result in an ability to interpret information and to ascertain what information is necessary in decisionmaking)

KMS focuses on enhancing intellectual capital by supporting development of individual and organisational competencies

Centralised customisation of information dictated from HQ and transfer of know-how to new segments/markets. Focus on scale economies from information management (economies of information) Globally networked flows of knowledge dispersed throughout organisation. Focus on sharing of (predominantly) explicit knowledge among subsidiaries (economies of knowledge) Free flows of knowledge among knowledge brokers, separated in time and space and organised as boundary-less, fluid and ad hoc communities of practice (centres of excellence). Focus on creation of learning organisation through combining tacit and explicit knowledge (synergies of knowledge)

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Knowledge Management Systems in Multinational Corporations

KM efforts; sharing procedural knowledge on a need-to-know basis; organising information into enterprise knowledge-propagation systems; proactive enterprise knowledge-sharing systems; and institutionalised knowledge-sharing. In a similar approach, Voelpel, Dous and Davenport analysed Siemens’ ShareNet and identified ‘five steps to creating a successful global knowledgesharing system’.9 Predominantly focusing on internal structural and organisational cultural challenges in implementation, these studies neglect important linkages between internal factors (organisational structure, distribution of power between company units, etc.) and external factors (industry norms and development, broader economic environment, etc.), thereby risking an overly general portrayal of the process of implementing a complex KMS in a MNC. Subscribing to the view that companies do not necessarily progress through a linear sequence of stages, and that their progress is influenced to some extent by certain configurations of external factors and internal strategies, structures and processes,10 we demonstrate that MNCs can shift between different types of KMS, and not necessarily in a linear way. Within the MNC literature, limited attention has been paid to the various ways that MNCs may influence knowledge processes by organisational means.11 Among the few studies explicitly linking the way organisations are structured to effective KM, So¨derquist studied new product development in 12 global organisations and found that fit between knowledge structure and organisational design is key to effective KM.12 He identified three organisational KM forms (specific to new product development), but recognised the need for further refinement of these forms along the lines of a contingency-dependent typology of KM organisations, increasing the range of options available to the KMS through structural reformulation in the face of environmental change. The present study contributes to this stream of literature by linking knowledge-related features to internal and external factors. Specifically, we defined two aggregate groups: a) knowledge-related characteristics, and b) internal and external factors influencing these knowledge characteristics. The first group is related to knowledge structure, dimensions and flows, and is about the extent to which MNCs apply a systematic structure in their efforts to work with knowledge, their interpretation of knowledge, and the knowledge dimensions (i.e., independent knowledge vs systematic knowledge) most relevant to their knowledge-related activities. In essence, this first cluster investigates how knowledge ‘moves’ within the MNC. The second group concerns KM-related staffing, training and reward systems. This is associated with what one respondent called ‘knowledge-people links’, i.e., how the companies deal with knowledge-related challenges. The MNCs we studied differed in terms of whether they allocated KM-related positions, to what extent they initiated training in KM and whether they introduced reward systems to stimulate knowledge-sharing and/or learning and innovation. As the differences were significant, we organised this group of issues into the second cluster of characteristics for our KMS types. Based on our observations, we classified the KMSs of our sample MNCs into four different types and labeled them (1) Fragmented, (2) Content-based, (3) Process-based and (4) Capability-based. Table 2 shows the key characteristics of these four types of KMSs.

The MNCs we studied differed in terms of whether they allocated KM-related positions or introduced reward systems to stimulate knowledge-sharing An immediate question raised by the proposed KMS typology is how the choice of system is influenced by organisational factors and external conditions. Our evidence suggests that two groups of organisational factors are influential: (1) the level of resources committed by HQ to KM-related activities and (2) the organisational structure and the ways in which the roles in relation to Long Range Planning, vol 40

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Table 2. KMS types and their characteristics

KMS type

Fragmented KMS

Content-based KMS

Process-based KMS

Capability-based KMS

Characteristics Knowledge structures, dimensions and flows

KM-related staffing, training and reward systems

Knowledge viewed as an object; Predominantly simple, explicit and independent knowledge (information) Fragmented and unstructured efforts to store internal knowledge (information) Spontaneous knowledge flows Knowledge viewed as an object; Both simple and complex knowledge, predominantly explicit and independent knowledge Structured efforts to store and codify knowledge (information) Top-down knowledge flows Knowledge viewed as a process; Predominantly complex and explicit knowledge, both independent and systemic Systematic efforts to identify, share and utilise existing knowledge Direct lateral knowledge flows between internal knowledge brokers Knowledge viewed as a capability; Both simple and complex, tacit and explicit, independent and systemic knowledge Systematic efforts to create, share and utilise new knowledge Multilateral knowledge flows between internal and external knowledge brokers

No designated KM-related positions; Middle managers and project managers initiate ad hoc, informal KM activities No specific training in KM No reward systems related to knowledge-sharing

Designated single KM-related positions; Middle managers and project managers engage in building up formal systems for managing knowledge content Some training in content-management Reward systems related to knowledge-sharing emerge as an issue KM-related units at HQs and subsidiaries; Top management involved in designing formal systems to transfer knowledge between (internal) knowledge sources Specific training in KM (designated knowledge managers; employee support) Reward systems related to knowledge-sharing are established KM-related activities throughout entire organisation; All management levels involved in establishing a learning organisation through integration of internal and external knowledge and capabilities Specific and elaborated training in KM (knowledge workers; employee active involvement) Reward systems related to learning and innovation are implemented

knowledge flows and activities are divided between the HQ and the subsidiaries. We also found that the degree of environmental change and the extent of industry pressures to invest in technology were important external factors to consider when designing a KMS. These factors and their influence on KMS types are summarised in Table 3. Contrary to previous studies, we focus on observed types13 (as opposed to evolutionary stages) of KMS in a cross-industry sample of seven MNCs. The purpose of this typology is a classification of the various kinds of KMS, based on certain characteristics, which could be helpful in establishing a common terminology and assisting MNC managers in implementing different types of KMSs, as well as in 318


Table 3. Factors influencing KMS types

KMS type

Organisational factors

External factors

Resource commitment by HQ

Organisational structure and HQ-subsidiaries role distribution

Degree of environmental change and pressures to follow industry norms for technology investment

Fragmented KMS

Minimal resource commitment Simple technical design No top management involvement

Relatively stable to slow environmental changes Little pressure to follow industry norms for technology investments

Content-based KMS

Moderate resource commitment Moderately complex technical design Moderate involvement of top management

Process-based KMS

High resource commitment Complex technical design Relatively high involvement of top management

Capability-based KMS

Very high resource commitment Highly complex technical design High involvement of top management

Strongly centralised organisational structure HQ serves as information repository; Subsidiaries receive information from HQ when deemed necessary by HQ Centralised organisational structure HQ serves as knowledge hub/broker; Subsidiaries receive information/ knowledge from HQ when deemed necessary by HQ and/or when required by subsidiaries Decentralised organisational structure HQ serves as coordinator of knowledge flows; Subsidiaries act as local knowledge repositories Distributed organisational structure HQs and subsidiaries are interdependent; Subsidiaries are autonomous sources of ideas, capabilities and knowledge

Slow to moderate environmental changes Moderate pressures to follow industry norms for technology investments

Moderate to rapid environmental changes Strong pressures to follow industry norms for technology investments Rapid and/or ambiguous environmental changes Defining the industry norms for technology investments

managing the transitions between different KMS types. This, in turn, may make it easier to compare and integrate different studies in the field, and may help remedy the ‘lack of (both) conceptual integration and empirical corroboration’ in the fields of international management and KM.14

Research methodology The empirical data presented and discussed in this article has been collected in the framework of a large-scale research project, MANDI (Managing the Dynamic Interfaces between Knowledge and Culture). We started by carrying out two workshops with knowledge managers from the Danish subsidiary of a MNC operating within the IT field, together with management consultants representing two consultancy companies specialising in KM. During these workshops, the research team and the company representatives jointly identified the KM issues of interest. Among those selected themes were KM objectives, KM strategies, and relationships between KM and various organisational Long Range Planning, vol 40

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factors, such as level of resource commitment and organisational structure. In the conceptualisation stage we conducted a number of focused literature reviews related to the above themes. On the basis of the literature reviews and the workshop discussions, the research team developed a template for conducting case studies and writing case descriptions of a few selected MNCs. We contacted seven MNCs operating in different sectors, each with ongoing KM efforts, and conducted case studies during the period 2001-04. This activity was followed by cross-case analyses of the data and development of a questionnaire on knowledge-sharing in organisations. The KMS typology we propose is the result of a four-year iterative process of simultaneous data collection and data analysis. In order to identify the overall, more general and aggregate issues that managers and knowledge workers were dealing with in relation to the KMSs in their respective companies, we sought their inputs both individually (through field visits in the companies) and in groups using workshops. At this data collection stage it became apparent that the various issues with which these key actors were dealing could be clustered into two aggregate groups: a) knowledge-related characteristics and b) internal and external factors influencing these knowledge characteristics. Once we made a conscious decision to separate these analytically, we could focus on the more detailed identification of relevant issues within each cluster in the course of conducting the face-to-face interviews. Although our interviewees often mixed the above two groups of issues, we segregated their inputs into these two distinctive clusters in order to develop a consistent typology. In all seven MNCs the primary data was triangulated with secondary internal data consisting mainly of company profiles, annual reports, fact sheets, non-confidential presentations and other internal documents, and material available on the companies’ intranets, as well as reports and articles accessible in the media. The secondary data was primarily used to record and analyse the background, development, current conditions and environmental interactions of the case firms, both in general and in relation to their KMSs. The unit of analysis is the KMS of the MNC. KMSs involve significant resource commitment and require strategic decision-making at the corporate level. In two of the MNCs, however, CSC Denmark and Mandator Gothenburg, the data collection physically took place in local subsidiaries/divisions. As the nature of the questions and the level of analysis are at the corporate level, collecting some of the data in the subsidiaries is a weakness of the paper. In order to overcome the potential influence of this data collection factor on the results, we triangulated with secondary data from the HQs and critically assessed the subsidiary point of view vis-a`-vis the HQs’ perspective during the cross-case analyses.

Four types of knowledge management systems Type 1: Fragmented KMS The fragmented KMS is characterised by knowledge being perceived as an object, with the primary focus on information harvesting, storing, re-use and replication. MNCs adhering to this KMS type tend to have a sense of only part of their potential knowledge portfolio. While top management may formally recognise the importance of the knowledge assets in the company, minimal resources are committed to the KMS. The key players involved in establishing and maintaining fragmented KMSs tend to be middle managers and/or project managers, who have received no specific training in KM because no formal KM-related positions exist within the organisation.

While top management may formally recognise the importance of the knowledge assets in the company, minimal resources are committed to the KMS 320


MNCs with a fragmented KMS exhibit many of the characteristics of the traditional MNC:15 HQ serves as an information repository, making information available to subsidiaries on a project-toproject basis through existing organisational structures. Subsidiaries are tightly controlled by HQs and typically implement corporate strategies, as the emphasis is on cost efficiency and scale economies. MNCs adopting a fragmented KMS typically utilise a centralised structure with no formal systems to coordinate knowledge activities across subsidiaries. IT, typically an intranet, is mostly used for one-way communication of predominantly simple, explicit and independent information16 from HQ to the subsidiaries. IT spending in fragmented KMSs is often driven indirectly by industry standards and imitation of competitors. Our data suggests that fragmented KMSs are more likely to be found in predictable and stable environments where the product is rather standardised, the production is repetitive, the speed of technological change is slow, and the competition is driven by pursuit of efficiencies rather than innovation. Among the MNCs in our sample, the construction company Skanska is a clear illustration of a company efficiently adopting a fragmented KMS. As illustrated in Exhibit 1, Skanska has developed both the Knowledge Network and the Information Bank as co-existing parts of the KMS. Yet they are designed in a way that does not require the support by any specific knowledge strategy or structure. The existing organisational configuration of the company is utilised and no structural changes are initiated to take account of KM-related activities. The KMS is primarily utilised to identify, store and share knowledge about projects that have already been conducted. Consequently, the KMS functions as a retrieval system of basic historical information, much like a Yellow Pages directory, utilising a simple technical database design. The knowledge flows at Skanska tend to be relatively spontaneous, and do not require systematic knowledge-related human resources policies concerning KM-dedicated positions, training and reward systems. As a result, all KM-related activities are undertaken by business development managers without any formal training in KM. Furthermore, while Skanska’s top management acknowledges the importance of knowledge, it puts forward only vague vision statements related to managing knowledge activities. Skanska competes on a project-to-project basis in the construction industry, where time to market and cost are critical success factors. Each construction project is unique; however, certain more universal features are present; such as environmental responsibilities, safety considerations and legal standards. These features, along with the nature of competition and the relatively slow speed of change in the construction industry, have made it appropriate to adopt a fragmented KMS. Type 2: Content-based KMS The content-based KMS is characterised by increased attention to operational issues pertaining not only to the capture and storage but also the codification and transfer of knowledge between HQ and subsidiaries, in a structured manner. The focus of this type of KMS is on capturing and reallocating knowledge gathered centrally at HQ and often stored in large, retrievable databases. MNCs with a content-based KMS seek to benefit from global scale efficiencies by developing centralised knowledge structures for storage and codification of both simple and complex knowledge, but it is predominantly explicit and independent. Thus, content-based KMSs typically need to develop new organisational structures to support the effective leverage of knowledge across strategic business units, divisions and regions. Development of a KM infrastructure usually takes place at corporate HQ, which serves as a centralised information hub; subsidiaries compete for access to relevant knowledge. The model of organisational control embedded in such systems is frequently overwhelmed by the scale of information flows required: the managers of the centralised knowledge base are continuously updating employees on the latest changes in required outputs and modifications in procedures to achieve those outputs.17 Corporate policies often stipulate that all entries and sharing of knowledge have to be approved by a centrally located responsible KM person or unit, in order to increase quality, reduce misuse and spillover, and improve exploitation. As effective KM becomes part of the strategic agenda in the MNC and it develops formal mechanisms for sharing knowledge across national borders, top management may designate a few Long Range Planning, vol 40

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Exhibit 1 Skanska: A MNC with a fragmented KMS Since 2001 Skanska has been organised around 17 business units which report directly to the Senior Executive Team, a structure initiated to ‘efficiently use the collective competence of the Group to take advantage of new business opportunities, and to utilize synergies, for example when it comes to technology and resources or to increased coordination of major purchasing contracts’ (2001 Annual Report). ‘In this organization, decision-making processes are faster and transfer of ideas and experience between business units are easier. [.] Having an Executive Team that can coordinate Group operations in a more efficient way strengthens Skanska’s ability to take advantage of its collective competence’ (ibid.) In order to enable information and experience sharing among the different companies belonging to the Group, HQ in Sweden established the so-called Skanska Knowledge Network. According to internal corporate publications, the network was ‘designed to help find the information needed, by mining the internal databases. [.] With Skanska Knowledge Network it will be easier to find people within the Skanska Group’. The KMS was promoted with the following catchy words: ‘In 2001, Skanska’s 80,000 employees were engaged in more than 15,000 projects in 60 countries around the globe. Who did what? Where and how did they do it? Skanska Knowledge Network gives you the answers.’ According to an International Projects manager, ‘The company is not particularly knowledge intensive as it is based on repetitive production of a standard product. Thus KM should be kept fairly simple. On the other hand, the need for feedback from earlier projects on their experience is essential. We understand that the concept [a concept referring to a particular project] may be looking very differently in different countries depending on what kind of technique is used. Still, since the concept is based on the repetition of activities, it presents a unique opportunity for continuous improvement and cost reduction.’ Managers from this project tried to codify and make transferable some of their knowledge by introducing a separate site on Skanska’s intranet and named it Information Bank. According to a Human Resources manager, ‘the Information Bank contains very detailed project descriptions and contact information of specialists with expertise from similar projects worldwide. It is a very simple site. It is rather a database.’ The design of the KMS in Skanska is the responsibility of the business development managers. The biggest challenge they face is to identify what knowledge to store and what knowledge to make available for sharing.

KM-related positions to oversee the development and implementation of formal systems for managing knowledge content. As focal points, these managers typically receive some training in content management, and they may experiment with different kinds of reward systems in order to increase knowledge sharing. Our study reveals that MNCs with a content-based KMS often operate in slowly to moderately changing industries. These MNCs frequently face some pressure from internal and external stakeholders to increase investment in IT and other structural complements. In our sample, Coloplast e which markets and distributes medical devices - provides an example of a MNC with a content-based KMS.

MNCs with a content-based KMS often operate in slowly to moderately changing industries 322


Exhibit 2 describes Coloplast’s efforts to systematise information and improve the reporting of available knowledge resources throughout the company. As KM became part of the strategic agenda, top management focused on allocating the necessary financial and (to a lesser extent) human resources to develop an effective KMS. Coloplast HQ initiated the Technical Knowledge Database, a highly content-based information-retrieval system designed to create economies of information. Coloplast’s organisational structure is centralised and knowledge flows from HQ to subsidiaries. Coloplast assigned a few middle managers, the KM Group, to further develop and implement the content-based KMS. With little training in KM, this self-organising group received top management commitment to build an organisational infrastructure conducive to efficient knowledge content management. The focus remains on knowledge re-use, however, as the system’s primary objective is to achieve the most efficient means for transforming pre-specified inputs into pre-determined outcomes. With integrative and personalised features designed to capture, store, codify and transfer efficiently specific knowledge throughout the organisation, the Technical Knowledge Database is a complex content-based KMS. Coloplast competes in the global medical device industry, which is increasingly becoming an integrated health care business that provides products and services

Exhibit 2 Coloplast: A MNC with a content-based KMS As complexity of product and market needs moderately but continuously increased and Coloplast expanded internationally, it faced increasing pressure from global competition. IT investments were perceived as increasingly important. Top management put the importance of KM on the corporate agenda in 1996, particularly in terms of articulating a KM-related vision in annual reports. There were also efforts to systematise information and improve the reporting of available knowledge resources throughout the company; however, front-line managers did not seem to like their employees using much time on knowledge-sharing. Towards the end of 2002, a self-organised KM Group consisting of a few managers from one of the Coloplast HQ divisions conducted an internal survey on how to improve the existing KMS. On the basis of 180 responses, the following requirements were outlined: -

Developing a personalised KM network; Appointing a KM ofcer; Encouraging project managers to use the KMS; Establishing a technical intranet with a search function; Promoting job rotation, plants visits and other such initiatives; Introducing ‘The story of the day’: each working day to start with a story through which employees share newly acquired knowledge, talk about mistakes, discuss possible solutions, etc. The knowledge exchange between Coloplast’s HQ and subsidiaries is uni-directional. According to a HQ-based project manager, ‘Subsidiaries are on their own. They are big, but not influential. The HQ decides what to launch, in what order, by which means.’ Accordingly, exchange of knowledge across units and national borders is not high on the agenda, although there is increasing support for the idea of formally measuring the level of knowledge-sharing and, following a technical engineer, ‘making knowledge-sharing a must-parameter in both job descriptions and evaluation schemes.’ Based on the belief that a more active use of the intranet would solve some of the knowledge-sharing challenges, Coloplast’s middle management engaged in developing the socalled Technical Knowledge Database. One of the KM Group’s members has been assigned to improve the KMS further in terms of categorising existing internal knowledge, listing existing personal competences and contacts and evaluating technical projects. Long Range Planning, vol 40

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(solutions) simultaneously. In such a market, companies face increasing pressures to invest in new technologies in order to keep up with the pace of competition and streamline knowledge flows across an increasingly diverse product/market portfolio. Coloplast’s adoption of a content-based KMS should be viewed in light of a moderately yet continuously changing environment. Type 3: Process-based KMS The process-based KMS is distinguished by MNC senior management engaging in fully-fledged active KM. Knowledge is regarded as a process and formal systems are designed to transfer knowledge systematically between internal knowledge sources throughout the entire organisation. Top management supports the KMS by allocating ample resources to build systematic processes for simultaneous knowledge creation and utilisation. MNCs adopting process-based KMSs tend to develop specific policies according to the level of independence of the subsidiaries of the globally networked, often highly decentralised MNC. Subsidiaries are assigned different strategic roles vis-a`-vis intra-corporate flow patterns18 of predominantly complex and explicit, and both independent and systemic knowledge, whereas HQ acts as coordinator of these knowledge flows. Consequently, top management and specialised KM units and teams, at both HQ and subsidiary levels, are involved in designing formal systems to transfer knowledge between internal knowledge sources. Rewards are tied directly to knowledge-sharing activities, and knowledge metrics are designed to measure KM outcomes on a company-wide scale. The focus is on defining the key processes existing in the organisation and on making sure that the KMS adds value and reduces costs, while responding to moderately to rapidly changing external conditions and competitive pressures within the industry. Among the MNCs we studied, the food manufacturer Danisco and the telecoms company Mandator have adopted process-based KMSs. As evidenced by both the Danisco and Mandator examples, top management plays a crucial role in the development and implementation of process-based KMSs, supported by a decentralised organisational structure. In Mandator, top management encourages the local subsidiaries to exchange knowledge and experiences and to tap into each other’s competences in order to refine the final consultancy solutions delivered to clients. The resulting development of decentralised Competency Groups in subsidiaries has led to direct lateral knowledge flows concerning contacts, clients and business solutions across countries. As such, the individual subsidiaries at Mandator act as local knowledge repositories with a high level of autonomy.

Top management plays a crucial role in the development and implementation of process-based KMSs, supported by a decentralised organisational structure Similarly, in Danisco, the decentralised matrix organisation allows the Global Innovation Team to tap into local knowledge repositories in order to exploit local opportunities. As consumer tastes and production and market regulations differ widely across locations within the food ingredients industry, Danisco Global Innovation seeks effectively to link local sources of knowledge and meet consumer requirements in dispersed locations. Consequently, more than 30 local knowledge teams have been created in order to identify and modify best KM practices. Located at HQ and receiving considerable political and financial support from top management, the Global Innovation Team at Danisco is trained in KM activities. Both Danisco and Mandator acknowledge the value-added of effective KM and have introduced incentive systems directly linked to knowledge-sharing. Since both MNCs operate in volatile environments characterised by constant changes in both technology and market demands, the main goal of their KMSs is to establish and develop effective KM in order to adjust to market changes quickly. 324


Exhibit 3 Danisco: A MNC with a process-based KMS ‘First you add knowledge.’ is Dansico’s slogan. KM has been a systematic focus in the company since 1997, enjoying the support of both top management and the Global Innovation management group. Global Innovation is a specifically designated unit responsible for designing the KMS and coordinating the KM activities in the entire MNC. It has been set up as a matrix organisation to support communication and knowledge-sharing across the MNC, and to make local knowledge available for the generation of value, increased creativity and innovation. According to internal company documents, ‘KM in Danisco Global Innovation will play a significant e and measurable e role in the value creation of Dansico.’ Part of the mission of KM is ‘working in a structured manner to influence the relationship between systems, processes, people and organization to ensure efficient use and handling of knowledge.’ Danisco’s KMS is designed to ‘build, maintain, and provide training/communication in efficient and user-friendly IT tools and other tools, such as Knowledge Teams, that sustain the knowledge processes of development, sharing and application of knowledge and desired behavior.’ More than 30 Knowledge Teams have been set up to ensure that new knowledge within a particular area is communicated globally, both through inter-human and IT-based systems. The knowledge teams are virtual, professional networks within key application, product and technology areas that are continuously adjusted to the strategy and market situation. Representatives from all Innovation’s sites meet once or twice a year at Cross Regional Innovation Group meetings to exchange knowledge, experience and support the virtual cooperation that goes on in-between meetings. At the global KM seminar in 2004, attended by employees from all over the world, the company CEO confirmed that ‘knowledge sharing is one of Danisco’s values and it is vital that all employees support the use of the systems and commit themselves to making their knowledge available for each other.’ For Danisco, building knowledge also means being an efficient supplier of innovative market-based solutions. Working widely across geographical boundaries and time zones, Danisco has accumulated extensive knowledge of regional preferences for taste and texture, and hence the generation of ideas takes place throughout the world. At present, it has regional application centres on five continents. Danisco Global Innovation sees a lot of potentially positive effects in extending its experiences to the rest of the MNC, and the current training activities are designed accordingly. It also sees opportunities in developing new tools for measuring KM-related value creation. Global Innovation is currently working on gaining even stronger support from top management to implement KM in all of Danisco, maintaining visibility of current KM activities, developing meta databases (overview of competences, products, employees, etc) to help prevent information overload, and refining the existing incentives and reward systems to support knowledge-sharing behaviour and KM.

Type 4: Capability-based KMS Introducing and retaining a capability-based KMS is associated with extensive resource commitment, as the MNC seeks to develop sustainable advantage from the creation and leveraging of knowledge and capabilities by integrating internal and external knowledge sources across the entire corporation. Various management levels, both at HQ and in the subsidiaries, are concerned with facilitating the production of coordinated outcomes from networks of knowledge workers.19 They are also involved in coordination and decision-making, with subsidiaries acting as centres of excellence, i.e., as autonomous sources of skills, knowledge and capabilities. The capability-based KMS is designed to facilitate the exchange and utilisation of knowledge that is both simple and complex, explicit and tacit, and independent and systemic, among both internal Long Range Planning, vol 40

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Exhibit 4 Mandator: A MNC with a process-based KMS According to company internal information, the consultants working in Mandator possess technical and business-related competences, a combination that allows for a technically stable and efficient implementation of the suggested business solutions. Following one of our interviewees, ‘the KM activities in Mandator are not guided by one single overall strategy. There are a number of rather structured knowledge-sharing activities taking place and they are not highly coordinated.’ The establishment and the maintenance of the KMS is in the hands of top management. At the same time, a number of KM-related initiatives were taken up by middle managers and consultants. For instance, a group of enthusiastic middle managers initiated the so-called ‘competence groups’. These are informal groups consisting of organisational members who share the same professional interests and who meet on a regular basis to discuss workrelated issues and to exchange experiences. Ever since these groups were established, they have attracted intensive and continuous participation. The KMS relies heavily on the company’s intranet. At the same time, personal and department-related networks established in the organisation are found to be highly important for identifying, sharing, and utilising especially complex and systemic knowledge. Seminars and workshops have also been used, particularly in situations when departments need to search for competences that are required by clients, and that departments themselves cannot deliver. Since the knowledge flows in Mandator are not centralised, subsidiaries across countries communicate intensively in their search for contacts, clients, and business solutions. The employees in different locations in Mandator are aware of the fact that they work in a knowledge-intensive company, and that the knowledge they and their unit possess legitimises to a great extent the existence of that unit. This, combined with the fact that Mandator has grown through acquisitions, sometimes leads to a situation where ‘departments prefer to develop their own solutions instead of searching for already existing ones in other locations of the MNC.’ Mandator’s top management tries to utilise the KMS by encouraging the direct links and communication between the subsidiaries, instead of acting as an information and knowledge hub.

and external knowledge brokers, and regardless of time and location. Capability-based KMSs require specific and elaborate KM-related training. The incentive and reward systems are designed not merely to promote knowledge-sharing and utilisation, but also to facilitate learning and innovation. Influence and power (resources) are likely to flow to subsidiaries which are able to develop a dynamic capability to produce and transfer new knowledge to other subsidiaries20 and back to HQ. MNCs adopting a capability-based KMS typically operate in highly complex and innovative markets and, as a result, are organised as a bundle of autonomous yet interdependent centres of excellence, each acting as a source of capability and competency development. MNCs that increasingly compete in terms of time - whether it be time of innovation, time-tomarket, or time of adaptation to environmental changes - seek to be industry-defining actors. Such a context requires loose coupling between organisational and knowledge architectures, in order to ensure rapid adaptation to the dynamic shifts in the business environment. The capability-based KMS seems well equipped to meet these challenges, because it emphasises the enhancement of intellectual capital by supporting the development of individual and organisational competencies. The systems design company CSC exemplifies a MNC that has utilised this KMS type. 326


The capability-based KMS seems well equipped to meet the challenges of a dynamic environment because it emphasises the enhancement of intellectual capital by supporting the development of individual and organisational competencies As illustrated in Exhibit 5, CSC has devised a capability-based KMS in which subsidiaries gain power by exchanging knowledge through the implementation of flexible structural arrangements such as the ‘Knowledge Environment’, and effective policies for knowledge exchange. The ‘Knowledge Environment’, which comprises 600 knowledge communities providing technical, organisational and social infrastructure to support company-wide knowledge creation and sharing, was promoted and supported by top management and communicated personally to every employee by the CEO. The focus of CSC’s KMS is on knowledge creation, not only within the MNC itself, but also in relation to external parties, notably customers, suppliers, universities, local regulatory authorities, etc. ‘The Portal’ at CSC is an example of the emerging e-business infrastructure, with the internet as the central platform allowing multilateral knowledge flows between internal and external knowledge brokers, separated in time and space. At CSC, not only do the knowledge workers define problems and generate solutions, but they also evaluate and revise their solutiongenerating processes. By explicitly encouraging experimentation and rethinking of premises, this system promotes reflection-in-action, creation of new knowledge, and innovation. The CSC Office of Innovation is an extension of this philosophy: the company has realised the need to spearhead innovation in the IT industry, a hyper-competitive and highly volatile industry that is undergoing continuous redefinition as a consequence of rapid changes in technologies, products and demand.

Transitional dynamics MNCs operate in dynamic environments that require constant reassessment of their strategy-structure-process configurations.21 As indicated in the description of our KMS typology above, several internal and external factors play important roles in the adoption of a particular KMS. Consistent with the punctuated equilibrium model of change, our evidence suggests that some organisations will experience relatively long periods of marginal incremental change and stability, while others will experience more frequent transformational changes (reorientations) to their KMS. Equilibrium periods are relatively long periods of incremental change and adaptation. During such periods, systems make adjustments that preserve the deep structure (e.g., strategic content, strategic process, distribution of power, organisational structure, and the nature and type of control systems) against internal and external perturbations. Reorientations, on the other hand, are relatively brief periods of discontinuous change where strategies, power, structure and processes are fundamentally transformed toward a new form of alignment. Since reorientations involve changes to the core of a system’s structure, they affect all aspects of the organisation. In the case of KMSs, transitions to new types of KMS typically involve changes in the underlying perception of knowledge within the organisation. Based on the configuration of technology, structure and process, Miles and Snow identified four patterns of adaptive strategic behaviours as responses to environmental conditions, which they labelled the prospector, defender, analyser and reactor types.22 Among our sample, two MNCs have stayed with the same type of KMS over the last decade, whereas the other five have transited between different KMS types during the same period. Some transitions were gradual, i.e., from less sophisticated and less costly KMSs to more complex and resource-demanding ones. Other transitions involved the movement towards a simpler type of KMS, typically triggered by disruptive changes. Figure 1 shows the development trajectories followed by the seven MNCs in terms of the KMS types they have adopted over the last decade. Long Range Planning, vol 40

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Exhibit 5 CSC: A MNC with a Capability-based KMS CSC Global started focusing on KM in 1996. One of the pillars of the company’s KMS is the 600 knowledge communities which both top management and the knowledge workers across the globe view as essential. A number of business units have initiated communities with high relevance to the industry or geography in which they operate. Another important building block of CSC Global’s KMS is what the company calls the ‘knowledge environment’: the processes and infrastructure that facilitate collaboration across the entire MNC by providing an enterprise-wide view of its knowledge-related activities. In 1997, CSC Global initiated a Corporate Knowledge Program (CKP), the essence of which was building, maintaining and profiling CSC’s global knowledge environment. According to an interviewee in CSC Denmark, one of the Program’s objectives was ‘to instantiate all isolated knowledge programs existing across the MNC.’ The Program was personally articulated through an email sent by the CEO of CSC Global to every single CSC employee throughout the world. The key elements of the CKP focused on the shift from a traditional economy to a knowledge economy; the need to use and generate knowledge and be innovative in order to be the spear of the industry leading edge; and the necessity of building a strategy for knowledge-sharing in mergers and acquisitions and throughout CSC Global. In designing the KMS, it was also decided and communicated that every knowledge worker should have one virtual platform on which to work, e.g. when searching for or exchanging knowledge. CSC Sources, the CSC global knowledge environment that was started in 1996, was renamed to CSC Sources Knowledge Portal, referred to by company insiders as ‘The Portal’. In 2002 the web-based portal became a single-entry portal, ie one place where knowledge workers share knowledge. The Portal content comprises information and knowledge shared by CSC employees and their clients (in terms of best practices, problem solving and industry insight) and sourced from the external environment (internet, newspapers, Reuters business briefing, etc). According to company material, ‘The Portal helps us develop solutions more rapidly. Without an effective KM program most professionals spend about 80 per cent of their time resolving old problems and only 20 per cent exploring innovation. At CSC, we are turning that ratio upside down and therefore have more time to develop creative solutions for our clients’ competitive advantage. The stimulating and dynamic environment of The Portal offers learning opportunities and ready access to the knowledge resources and expertise employees need, around the clock and around the world.’ The CSC Portal changes the way of work at CSC, taking the MNC to the level of becoming a virtual organisation ‘in which knowledge workers collaborate, take advantage of common sets of tools and reuse information around the world to get their jobs done smarter, faster and better.’ The new CSC Office of Innovation reflects, in the words of its President, ‘CSC’s commitment to developing and harnessing the intellectual capital that will fuel an increased focus on innovation. It improves our global ability to apply IT strategically to deliver economic value to our customers.’ As illustrated in Figure 1, Skanska and Mandator have not really changed their KMSs in a relatively long period of time. While these two companies have made incremental adjustments to their strategystructure-process configurations, the main features of their KMSs have remained relatively unchanged over the period. Management and employees at Skanska recognise the need to assemble and store information; however, in a relatively stable environment and given the standard nature of its products and the strong competitive position, it is not deemed beneficial to commit further resources in upgrading the existing fragmented KMS (see Exhibit 1). Consequently, Skanska has adopted a ‘defender’ strategy that emphasises efficient operations and standardisation of information processing; this is characterised by functional division of labour, centralised control and fragmented, unidirectional knowledge flows. 328


Skanska has adopted a ‘defender’ strategy that emphasises efficient operations and standardisation of information processing Mandator operates in the rapidly changing IT industry; it has been growing through acquisitions, and the consultancy projects demand intensive knowledge-sharing among subsidiaries (see Exhibit 4). Operating in such a volatile environment characterised by constant changes in both technology and market demands, Mandator’s top management recognised at an early stage the need to adopt a decentralised, process-based KMS, in order to enable the company to respond quickly to market changes. Since Mandator’s primary focus is on finding and exploring new products and market opportunities, it has adopted a ‘prospector’ strategy that emphasises coordination among its numerous decentralised units and projects, via low degrees of formalisation and control and multilateral knowledge flows. Thus, while both Skanska and Mandator made adjustments to their KMSs over the period, their initial core KMSs have survived largely intact because their configurations of internal strategy-structure-process activities remain properly aligned with the external environment in which they operate. Three of our sample MNCs have progressed gradually from less sophisticated and less costly KMSs to more complex and resource-demanding ones. Coloplast, Danisco and CSC are examples of MNCs that have transited to more complex KMSs in response to internal changes and external pressures. Coloplast has deemed it necessary to adapt to increasing environmental uncertainties and competitive pressures by increasing resource commitment to its KMS. After a period of stability, during which the fragmented KMS was initially adopted, Coloplast grew from a small Danish firm to a global competitor with diverse products, suppliers, customers and competitors. Not using optimally the available information led to competitive disadvantage, as the internal strategy-structure-process configuration no longer matched the increasingly complex and changing environment. This, in turn, led to a reorientation during which the company switched to a centrally organised content-based KMS that could facilitate the storage and codification of increasing amounts of complex knowledge content (see Exhibit 2 and Figure 1). This transition was a conscious response by top management to changing competitive conditions; it resembled an ‘analyser’ strategy as Coloplast had followed its competitors into global markets. However, once the company had aligned itself with this new market reality through increased resource commitment, it retained

Trigger: Telecom equipment industry collapse (2001)

Processbased KMS

Contentbased KMS

high

CSC

Siemens

KMS complexity

Capabilitybased KMS

Danisco Mandator Trigger: New CEO and deep org.restructuring (2003/4)

Egmont Coloplast

Skanska

Low

Fragmented KMS

Mid-1990s

Late1990s

2005

Time

Figure 1. Transitions between KMS types by sample MNCs Long Range Planning, vol 40

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its focus on standardisation, routinisation and control centralisation, thereby entering another stability period. Danisco’s transition was similar in nature. A highly dispersed company competing in diverse global industries, Danisco initially saw a need to manage vast amounts of product and market knowledge effectively and in a structured way through a content-based KMS. However, as the company developed from its roots as a traditional sugar-producing firm focused on optimisation-based scale efficiencies, moving toward a knowledge-intensive MNC striving for advantage via product diversification,23 its content-based KMS could no longer cope with the increasing complexity in product offerings and competitive pressures from global producers of food ingredients. As a result, Danisco built a matrix organisation to facilitate coordination among dispersed projects and introduced company-wide KM initiatives in order to capitalise on multilateral knowledge flows (see Exhibit 3 and Figure 1). This transition to a process-based KMS, sponsored by executive management, was a natural response to changes in the company’s internal strategy and the broader environmental conditions. CSC was ‘born’ into a high-tech, disruptive environment. Through a series of acquisitions worldwide, CSC became a networked MNC, operating in a knowledge-intensive industry with isolated local knowledge repositories around the world. When CSC realised the need to coordinate its dispersed knowledge resources, it developed the ‘Knowledge Environment’ and adopted a process-based KMS. More recently, the business of IT consulting has metamorphosed into a business of total client solutions with emphasis on ‘practical innovation’. As a result, CSC adopted a ‘prospector’ strategy of highly decentralised organisational structures and controls, with emphasis on multilateral knowledge flows. CSC’s top management realised the need to coordinate not only subsidiary knowledge but also competencies and capabilities residing in each knowledge worker, whether these were internal brokers or external clients, customers, suppliers, etc. The web-based ‘Portal’ and later the Office of Innovation are examples of how CSC has transited toward a capabilitybased KMS (see Exhibit 5 and Figure 1). Consistent with evolutionary stage models of change,24 the above examples of transition all follow a path toward a higher level of resource commitment and a more elaborate and sophisticated KMS. However, due to both internal organisational dynamics and technological, social and political uncertainty, organisations are often faced with a choice of feasible strategic alternatives. Hence, there are no reasons why organisational systems must evolve through specific generic stages. In fact, we dispute the gradualist ideas that (1) individual systems of the same type all develop along the same path and (2) systems develop in a ‘forward’ unidirectional pattern. Rather, we suggest that change in the KMS of a MNC is a function of interdependencies among environmental and organisational factors. Consequently, KMSs do not inevitably evolve toward greater complexity; it is equally possible that they may be scaled back to a lesser complexity. Our evidence shows that reverse reorientations are likely to appear as a consequence of significant changes in both external environments (e.g., competitors’ unexpected behaviour, sudden institutional changes, unpredicted technological developments) and internal organisational parameters and constellations (e.g., change of strategy, deep organisational restructuring, sudden change of power distribution). Both Siemens AG and Egmont, in our sample MNCs, illustrate such trajectories. The Siemens case clearly illustrates that when a more demanding KMS is pursued too quickly in a turbulent environment, setbacks may occur in the process. Before the introduction of Siemens ShareNet in 1999 (see Exhibit 6), knowledge flows in Siemens were characterised as being ‘enabling’

KMSs do not inevitably evolve toward greater complexity; it is equally possible that they may be scaled back to a lesser complexity 330


and most information was centralised at HQ. Individual subsidiaries competed for access to information and the centralised, uni-directional knowledge flows did not allow for knowledge sharing across units without HQ involvement. Siemens was pursuing an ‘analyser’ strategy, with a functional organisational structure and centralised control systems capable of responding to industry changes while remaining cost-effective through standardisation. With the development of ShareNet, the elaborated knowledge-sharing system, Siemens transited from a content-based to a process-based KMS. This was partly in response to increasing industry pressures toward more integrated knowledge-intensive solutions, and partly as a result of organisational restructuring toward more process-orientation. Once this transition had taken place, a few important, and yet gradually evolving activities occurred during the ensuing period of relative stability and continuity. The KMS was continuously refined and more communities became ShareNet members as virtually all countries and markets were involved.25 Siemens later implemented a decentralised matrix structure in order to focus on innovation, a move aligned with adopting a ‘prospector’ strategy. The ShareNet intranet platform was expanded to include suppliers’ and customers’ access to knowledge pertaining to certain projects. In addition, knowledge-sharing became project- and team-based rather than unit- or department-based, allowing for flexibility and innovation in knowledge replication and applications. E-centres of excellence were created, and plans to convert the entire company to an e-company with the internet as the central platform were crafted. A non-competitive reward system was implemented, as the focus shifted from creating critical mass to enhancing the quality of the content in order to foster reuse of existing knowledge and development of new knowledge. Siemens had moved from a process-based to a capability-based KMS. However, when the global telecommunications equipment industry collapsed in 2001, Siemens’ top management decided to implement a company-wide cost-cutting strategy in order to reduce losses.26 The new strategic direction now focused on speeding up research and development cycle times while reducing employee counts through centralisation. One of the results was reduced investment in the KMS. With staff numbers reduced and reward systems removed, the knowledge infrastructure was no longer supporting a learning organisation. In an effort to keep the focus on knowledge-sharing while simultaneously reducing costs, Siemens’ top management opted to reduce knowledge autonomy by disempowering knowledge workers, and thus reoriented to a processbased KMS. Today, all KM strategies, training and flows in Siemens are controlled by HQ and the plans to put its entire business on an e-business infrastructural base have been halted. Siemens’ current KMS can best be described as a process-based KMS. Egmont is a MNC that transited from a content-based to a process-based KMS in the 1990s and back from a process-based to a content-based KMS very recently (see Exhibit 7 and Figure 1). The first transition was a conscious, adaptive reorientation in the company’s perception of the role of knowledge, as an internal strategic response to changing external conditions. The content-based KMS of Egmont fitted the relatively stable environment well up until the late 1990s. However, as media production became increasingly knowledge-intensive and product lifecycles became shorter, Egmont gradually transformed and emerged as a globally networked MNC with knowledge residing in business units in some 16 countries. The resulting decentralised knowledge infrastructure created the flexibility that Egmont utilised in its move to a process-based KMS. Knowledge infrastructures, such as ‘Insight’ and ‘Creative Network’, were introduced in an effort to increase knowledge-sharing. However, despite its potential, this KMS did not survive for long in the globalised organisation. No motivational efforts promoting knowledge-sharing at lower levels were introduced and internal competition continued. Lateral knowledge transfer among dispersed subsidiaries only took place at the top management level, and the subsidiaries remained centrally controlled and retained no profit. When a new CEO was appointed in 2001, he recognised the mismatch between the corporate strategy and the KMS; he opted to restructure the organisation to reap the benefits of information economies by transiting back to a content-based KMS. It was concluded that Egmont’s transition to a process-based KMS had been done without due attention to the fit between the external context and the internal, strategic, organisational and KM-related elements. In an industry characterised by Long Range Planning, vol 40

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Exhibit 6 Siemens: Multidirectional transitions between three KMS types In 1999, Siemens Information and Communication Networks (ICN) implemented ShareNet, Siemens’ internal system for knowledge-sharing. ShareNet allowed 17,000 sales and marketing people in 84 countries to tap into the company’s vast knowledge base to gather the latest information about products, customers and competitors from any web browser on the planet. The emphasis shifted to the systematic management of dispersed knowledge networks. For explicit knowledge, the aim was to provide structured knowledge objects in the form of project descriptions and, functional and technical solutions related to customers, competitors and markets. For tacit knowledge, the system provided functionalities such as newsgroups, innovation forums and chats. A Global Editor was responsible for ensuring the global synthesis of knowledge. Initially, the HQ was reluctant to share centralised knowledge and the business units showed implementation resistance due to fear of loosing sales opportunities. However, after changing the organisational support structures and implementing a knowledge-related reward system, knowledge flows intensified. ShareNet implemented a reward system; initially it was organised as a competitive one in order to build critical mass, but it was later changed to a noncompetitive, flexible one in order to focus on quality and reusability of the shared knowledge. Impacted by the telecommunications equipment industry’s collapse in 2001, top management decided to implement a strategy of rigorous cost cutting across the entire MNC, while still aiming to maintain high R&D quality among the globally dispersed units. When Siemens attempted to extend the KMS to first the R&D function and later the entire organisation, the company ran into problems, driven in part by the adverse economic conditions. The idea was to have all processes run electronically e from procurement to marketing, from development to controlling across the entire organisation. In the words of Heinrich v. Pierer, then CEO, the goal was to ‘e-outperform competition and become leaders of the e-conomy.’ New knowledge workers were hired and knowledge was perceived as a capability as Siemens developed e-centres of excellence. Responding to the new strategic direction and gloomy economic outlook, the ShareNet operating team announced late in 2002 that the knowledge-sharing reward system was discontinued. A new incentive system, based on recognition and employee target agreements was proposed by ICN’s executive management; however, it was never fully implemented due to the Siemens’ decentralised matrix structure. During 2003, the executive KM team was reduced to only three fulltime employees e barely enough to maintain the existing ShareNet. The local companies sharply reduced their KM efforts. The strategic direction now focused on speeding up R&D cycle times while reducing employee counts. This limited the ability and willingness of the local companies to devote resources to KM. Facing massive layoffs, many employees reverted to knowledge-hoarding behaviour in order to protect their personal competencies. As one interviewee noted: ‘knowledge has become a currency. If I share what I know with everyone else it might make me superfluous.’ Although these strategic changes led to more centralisation in terms of target definition and controlling, Siemens still made use of the networking of knowledge that ShareNet had fostered, since most employees recognised the need to identify and leverage knowledge globally in order to remain competitive and innovative. ‘I see the need to share knowledge among units in order to stay innovative and competitive in the global market place.’ At the beginning of 2004, Siemens had dramatically scaled back its financial and organisational support to KM, although KM still remains high on the strategic agenda. competition in efficiency, where organisations still viewed knowledge as an object, it was deemed necessary to refocus on centralised and structured efforts to codify and leverage large amounts of knowledge content. 332


Exhibit 7 Egmont: Multidirectional transitions between two KMS types Egmont’s structure was changed in 1998 from a divisional configuration to a SBUs-based network structure, after a decade of acting in a rather stable environment. The idea behind the new structure was to increase knowledge-sharing and cooperation across sectors and countries in order to foster growth. Egmont’s management promoted the network-idea into a new strategic goal. According to a company internal document, ‘Projects and experiences travel swiftly in management circles and within the electronic infrastructure. Every business area has its own board, with colleagues from other parts of the Group who can contribute as well as benefit from cooperation. They meet regularly, contributing knowledge and skills from their areas and taking the experience and know-how of others home with them. Working like this means business ideas are not allowed to be forgotten or remain untested.’ As a result, the company transited from a content-based to a process-based KMS. Egmont introduced the intranet called ‘Insight’ to facilitate dialogue and exchange of ideas and experiences among employees and managers around the globe. Top management aimed at intensifying the use of ‘Insight’ at the cost of paper-based communication. It also launched ‘Creative Network’, a forum for fiction staff from all Egmont’s media areas to exchange and inspire ideas for joint projects. At the same time, top management utilised the process-based KMS in the SBUs in Denmark and only afterwards wanted to spread it around the globe. The subsidiaries remained centrally controlled and retained no profit, although they generated about 70 per cent of the Group’s revenues. Top management’s contact with the SBU boards was limited, which reduced the amount and quality of personal relationships. A number of drawbacks, expressed in the conducted interviews as ‘difficulties with communication’, ‘managerial mistakes in operating the structure’, ‘problems with network implementation’, ‘lack of organizational boundaries’, pointed towards two facts: management had a clear idea about what it wanted to achieve with the new KMS but no clear implementation strategy; and the KMS was mainly designed to satisfy the needs of the upper management levels, rather than to make knowledge-sharing a reality throughout the Egmont Group as a whole. As expressed by an interviewee, ‘Communication barriers emerged across sectors. The sectors were becoming very isolated from each other, which greatly hindered cooperation, coordination and knowledge transfer among domestic operations. [.] Knowledge transfer across SBUs increased, but only at top management levels.’ In 2001 a new CEO was appointed and the organisational structure was changed to centre around six general areas: magazines, kids and teens, books, entertainment, Nordic Film and International. Although this is a fairly recent restructuring, our data suggests that this is being accompanied by a transition from a process-based KMS to a content-based KMS. What is being communicated in the Group so far is an effort to move (in a rather centralised manner) knowledge and competences from the companies’ employees to their division managers and then to other divisions. According to an executive manager, ‘the purpose of the narrower structure is to strengthen the corporate leadership, [.] and expand the media position by utilizing new technology’ - features characteristic of content-based KMSs.

Conclusion In this paper we have examined an important KM-related issue in MNCs e that of knowledge management systems e and presented a typology of KMSs on the basis of empirical data collected from seven MNCs. Our focus has been on advancing the understanding of the factors influencing MNCs when they design, establish and maintain/change their KMSs. Our data suggests that knowledge structures, knowledge dimensions and knowledge flows, in combination with KM-related staffing, training and reward systems, were of primary concern to our sample MNCs in regard to the KMSs Long Range Planning, vol 40

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they adopted. By analysing these features and observing the modifications made by the MNC management in response to changing organisational dynamics and/or external conditions, our analyses crystallised into a classification of four different KMS types e Fragmented, Content-based, Processbased and Capability-based KMSs. The seven MNCs in our sample differ in terms of their knowledge intensity. Obviously, industrial context matters and knowledge is more important to some companies than to others. However, in line with the proposition that managing knowledge assets is the key to building competitive advantage, even in less knowledge-intensive industries,27 an effective KMS matters to all the MNCs we studied. Yet the underlying features of the KMS, and the factors that shape it, differ in different contexts. In this sense, our typology is a response to calls to integrate macro (environmental) and micro (organisational) constructs and dimensions28 in relation to studying KM. Our case evidence points to some interesting transitional dynamics with regard to the KMSs adopted by our sample MNCs. Transitions can be seen as reorientations between periods of stability as companies commit more/less resources to their KMS. As such, companies will adopt strategies according to the fit between their internal organisational configuration and the external environment, and reorient their KMS accordingly.

Transitions can be seen as reorientations between periods of stability, as companies commit more/less resources to their KMS According to Miles and Snow,29 an organisation is based on the interplay between its strategy, structure and processes. Organisations constantly refine the mechanisms by which they achieve their purposes e rearranging role and relationship structures and managerial processes. Although Miles and Snow did not discuss contextual conditions or variability of their strategic types, the four strategic orientation types have been found to be highly correlated with the level of centralisation of information system services.30 For instance, a defender organisation has been found to be more centralised than a prospector or analyser organisation with respect to its KM activities, because it fits the competitive strategy and industry environment of this type of organisation. Moreover, each type is associated with different managerial ambitions in terms of level of resource commitment. Thus, the Miles and Snow typology provides a useful tool for understanding the transitions between KMS types in relation to both their characteristics (Table 3) and the organisational and environmental factors determining their adoption (Table 4). We found support for the thesis that defenders are more likely to adopt a fragmented KMS in a relatively stable environment, whereas prospectors are more likely to adopt a process-based KMS in a relatively volatile and rapidly changing environment.31 Hence, there seems to be a link between environmental uncertainty, strategy and KMS type, as well as between organisational design and knowledge structures (for example, fragmented and content-based KMSs are observed in centrally organised MNCs, whereas process- and capability-based KMSs are more typical in decentralised and dispersed MNCs). Thus, our findings support the organisational fit argument, in that the conformity between KM structure and overall organisational context variables, including the strategy-structure-process configuration, is instrumental to the implementation of KMSs. In our sample, Mandator and CSC resemble prospector organisations, succeeding by constantly examining new opportunities and prioritising innovation over efficiency. Both Mandator and CSC rely on a decentralised and participative management philosophy and structure their KM activities around product/market divisions. Consistent with the prospector strategy, both these MNCs have adopted proactive, resource-intensive KMSs in order to compete based on knowledge. This resource-intensive KMS is justified by changing business environments that have an element of unpredictability. 334


Table 4. Sample MNCs

MNC

HQ

# of countries

# of employees

Skanska AB

Sweden

60

80,000

Coloplast A/S

Denmark

30

6000

Danisco

Denmark

40

10,000

Mandator AB

Sweden

5

400

CSC Global

USA

84

90,000

Siemens AG

Germany

192

430,000

Egmont Group

Denmark

30

3500

Industries

Research method

Construction-related services and project development Development, marketing and distribution of medical devices Development and production of food ingredients, feed ingredients, sweeteners and sugar Telecom, financial services, automotive, government and retail/consumer brands

Data collected through interviews,1 workshops and secondary data at HQ level Data collected through interviews and secondary data at HQ level Data collected through survey,2 workshops and secondary data at HQ level

Systems design and integration, IT and business process outsourcing, applications software development, web and application hosting, management consulting Electronics and electrical engineering, industrial automation and control, information and communications, telecom network equipment, semiconductors, lighting, medical equipment, power transmission, and transportation and logistics Weeklies, magazines, comics, books, film, TVprograms, textbooks, games, content for mobile services and electronic entertainment

Data collected through interviews and workshops at subsidiary level (Gothenburg), secondary data collected at HQ level Data collected through interviews and secondary data at HQ level

Data collected through interviews and secondary data at HQ level

Data collected through interviews and secondary data at HQ level

1 We conducted a total of 45 face-to-face interviews with top managers, middle managers engaged in designing, implementing and maintaining KMSs and, where designated KM-related positions existed, knowledge managers. The interviews lasted between one and two hours each and employed a semi-structured framework. 2 The questionnaire consisted of 208 questions grouped in 27 clusters and used a fixed-response five-point Likert type answer scale.

Skanska, in contrast, operates in stable environments and achieves success by specialising in particular areas for cost-efficiency and high quality. Consistent with a defender strategy, Skanska is centrally organised with an autocratic management style, vertically integrated around basic business functions and oriented toward cost-saving based efficiency. Its KMS reflects a conscious Long Range Planning, vol 40

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defender ambition to protect its strong competitive position without committing additional resources to a fragmented KMS. Analyser organisations share characteristics with both prospector and defender organisations in that they face the need to achieve cost efficiency, while emphasising the flexibility to engage in new product and service developments in order to remain competitive in response to market changes. Coloplast is an example of an analyser MNC with a balanced decision-making structure and a matrix form of organisation. Its control structures are less centralised than those of Skanska but more centralised than those of Mandator and CSC. Coloplast competes based on standardisation and cost-efficiency; however, as managerial ambitions shifted toward becoming a global player, more resource commitment to the KMS was justified and a transition was initiated. Typically for analyser organisations, once Coloplast caught up with the competition, it entered a period of continuity and no further resource commitment to the KMS could be justified. Reactor organisations, the final type, do not possess a systematic strategy and thus are not prepared for changes in their environment. These organisations engage in new product or service developments in response to the way their managers perceive their environment, and their actions are reactive rather than proactive. We did not find evidence of this type of organisation in our sample. How often firms undergo transitions to their KMS depends on the relative influence of organisational inertia forces, environmental feedback and strategic choice, on activity patterns over time.32 Periods of stability, during which strategy remains largely unchanged, tend to be interspersed with periods of disruptive change in organisational life. Nevertheless, the frequency and duration of changes vary across different external and internal conditions. Hence, from the perspective of organisational adaptation, the central questions regarding change revolve around identifying the key external and internal forces that signal disequilibrium in the company’s behaviour. Our case evidence suggests that two basic forces drive transitions in KMSs: (1) sustained low performance resulting from a lack of consistency among internal activities (strategy-structure-process), and (2) major changes in external competitive, technological, social and legal conditions that render the existing knowledge management strategy ineffective. As illustrated above, transformational changes are more frequent in environments characterised by high rates of technological change and volatility. Furthermore, our research suggests that while incremental changes in KMSs can be carried out by middle management, direct intervention by top management is often required for transitions to occur, because even relatively modest changes usually involve a shift in the underlying knowledge structures.

Two forces drive transitions in KMSs: (1) sustained low performance resulting from a lack of consistency among internal activities and (2) major changes in external competitive, technological, social and legal conditions that render the existing knowledge management strategy ineffective Managerial implications Our research has confirmed the complex and dynamic nature of KM processes in MNCs. The importance of effective KM to business success puts a premium on the ability of practising managers to adopt high-quality strategies for implementing and managing their KMSs. Managers have to decide on the right combination of resource commitment to KMSs during times of change in their internal and external environments. The different tactics deployed by the firms in our study 336


Table 5. Lessons to practising managers

Lessons

Managerial actions

Both increasing and decreasing resource commitment should be considered viable strategic alternatives when designing and managing KMSs

Determine resource commitment to KMS, based on fit between external demand conditions and internal strategystructure-process configuration as well as managerial ambitions. Pay due attention to knowledge structures and incentive systems, and adopt appropriate metrics for measuring impact of KMS transitions Transitions involve restructuring of the underlying company knowledge structures. Therefore, changes in the internal strategy-structure-process configuration must be made before any transition between KMSs can occur Modifications to the KMS during relative stable times should be handled by local (subsidiary) junior-level management. Senior (HQ) management must leverage their political power and actively champion transformational changes to the organisational architecture and the KMS during periods of reorientation

Timing is critical; ensure organisational readiness before attempting transitions between KMS types Managerial involvement is critical; incremental changes in the KMS may be undertaken by middle and lower management, while transitions of a more substantive nature should be initiated and implemented only by top management

with regard to their KMSs, and our subsequent analyses, point to a few important lessons for practising managers, which may serve as a starting point for effective KM in MNCs (Table 5). First, we have illustrated, through our case analyses, why some companies may stay with the same KMS over a longer period of time, while others may transit toward either more complex and resource-demanding KMSs or, more interestingly, revert to simpler and less resource-demanding ones. Our evidence suggests that transitions between KMSs result from interdependencies among internal activities (strategy-structure-process) and external conditions (industry change and competitive pressure). In line with process-based change theories, we have demonstrated patterns of triggering activities, both internal and external, that drive increased or decreased commitment of both financial and human resources during transitions between KMSs. When industry complexity increases, a natural response by MNC senior management may be to increase resource commitment to their KMS (as was the case, for example, at Coloplast, Danisco and SCS, as well as in the first transitions of Egmont and Siemens). However, without due attention to KM-related practices (e.g., knowledge and incentive structures), this increased commitment is unlikely to succeed. By the same token, in times of high uncertainty and poor performance, MNC senior managements tend to decrease their resources commitment to the KMS (e.g., Siemens and the second transition by Egmont) in order to reduce costs. This strategy is in part driven by a lack of clear measurement of the impact of effective KM on corporate performance. A key lesson here is that both increasing and decreasing resource commitment should be considered viable strategic alternatives when designing and managing KMSs. Managerial decision-making concerning KMS transitions should be guided by the use of appropriate metrics for measuring the financial, organisational and human impact of implementing different knowledge strategies.

Both increasing and decreasing resource commitment should be considered viable strategic alternatives when designing and managing KMSs Long Range Planning, vol 40

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Moreover, our evidence suggests that the timing of the transition is vital to the successful adaptation of KMSs. A premature increase in resource commitment in response to changes in internal or external conditions may result in an unnecessarily complex KMS being adopted. Increasing KM budgets during times of internal change and/or external competitive pressures may result in transition to a KMS that cannot be fully utilised, due to lack of internal consistency with the strategy-structure-process configuration. Conversely, decreasing resource commitment without careful attention to the long-term strategic, organisational and human effects throughout the company brings the risk of destroying carefully established incentive systems and knowledge structures that can be costly and time-consuming to recreate. Similarly, changing too slowly to a different type of KMS may also result in a poor fit between the internal strategy-structure-process design and a dynamic external environment. Transitions involve restructuring the underlying company knowledge structures, because the KMS is deeply embedded in the existing organisational culture and design. Hence, although the need to move from one type of KMS to another may be driven by external events, changes in the internal strategy-structure-process configuration must be made before a successful transition between KMSs can occur. Finally, we have illustrated the importance of managerial involvement in different levels of change related to KMSs. Our evidence suggests that while incremental changes in the KMS may be undertaken by middle and lower management, transitions of a more substantive nature should be initiated and implemented only by the top management. MNCs will rely on the existing knowledge structures to accomplish their knowledge-related goals during periods of stability, and minor modifications to the KMS will typically be implemented by local junior-level managers because these decisions do not require significant resource-allocation from HQ. Conversely, during times of reorientation, MNCs will need to realign the underlying knowledge structures with the new strategic and environmental situation. This type of transformational change involves alterations in deeply embedded knowledge routines and processes, through reconfiguration of the strategystructure-process composition. This kind of intervention warrants the active involvement of senior-level managers, as it typically involves significant resource commitment and therefore considerable political jockeying. Thus, senior management must leverage their political power and actively engage in championing these transformational changes to the organisational architecture and the KMS, in order to ensure successful implementation of the transition.

Acknowledgements We thank the institutions and companies which have financed MANDI research project. We are grateful to those company representatives and members of the MANDI research team who have collected data in the MNCs used in this article. We are also grateful for the helpful comments from the Editor and the reviewers, and from our colleagues Siah Hwee Ang and Thomas Roehl.

References 1. N. J. Foss and T. Pedersen, Organizing knowledge processes in the multinational corporations: An introduction, Journal of International Business Studies 35(Special Issue), 340e349 (2004). 2. G. Szulanski, Exploring internal stickiness: Impediments to the transfer of best practices within the firm, Strategic Management Journal 17(Winter Special Issue), 27e43 (1996). 3. See S. A. Carlsson, O. A. El Sawy, I. Eriksson, and A. Raven, Gaining competitive advantage through shared knowledge creation: In search of a new design theory for strategic information systems, in Proceedings of the Fourth European Conference on Information Systems, Lisbon, Portugal (1996); R. McQueen, Four views of knowledge and knowledge management, Proceedings of the Fourth American Conference on Information Systems, 609e611 (1998); On the distinction between knowledge as object and knowledge as process, see also J.-C. Spender, Managing knowledge systems, in C. Despres and D. Chauvel (eds), Knowledge Horizons: The Present and The Promise of Knowledge Management, Butterworth Heinemann, Woburn, MA, 149e167 (2000). 4. M. Alavi and D. E. Leidner, Knowledge management and knowledge management systems: Conceptual foundations and research issues, Management Information Systems Quarterly 25(1), 107e136 (2001). 338


5. T. H. Davenport, D. W. D. Long and M. C. Beers, Successful knowledge management projects, Sloan Management Review 39(2), 43e57 (1998); P. H. Gray, The effects of knowledge management systems on emergent teams: Towards a research model, Journal of Strategic Information Systems 9(2/3), 175e191 (2000). 6. M. Alavi, KPMG Peat Marwick U.S., One Giant Brain, Harvard Business School Case, 9-397-108 (1997); C. Armistead and M. Meakins, A framework for practising knowledge management, Long Range Planning 35, 49e71 (2002); H. Heier, H. P. Borgman and A. Manuth, Siemens: Expanding the knowledge management system ShareNet to Research and Development, Journal of Cases on Information Technology 7(1), 92e110 (2005). 7. L. Prusak, What is up with knowledge management: A personal view, in J. W. Cortada and J. A. Woods (eds), The Knowledge Management Yearbook 1999e2000, Butterworth-Heinemann, Woburn, MA, 3e7 (1998); P. Gottschalk and V. K. Khandelwal, Stages of growth for knowledge management technology in law firms, The Journal of Computer Information Systems 44(4), 111e124 (2004). 8. T. Housel and A. H. Bell, Measuring and Managing Knowledge, McGraw-Hill, New York (2001). 9. S. Voelpel, M. Dous and T. H. Davenport, Five steps to creating a global knowledge-sharing system: Siemens ShareNet, Academy of Management Executive 19(2), 9e23 (2005). 10. R. K. Kazanjian and R. Drazin, An empirical test of a stage of growth progression model, Management Science 35(12), 1489e1503 (1989). 11. Although the literature on the ‘differentiated MNC’ does pay considerable attention to organisational mechanisms (eg, G. Hedlund, The hypermodern MNC e A Heterarchy?, Human Resource Management 21(1), 9e35 (1986); C A. Bartlett and S. Ghoshal, Managing Across Borders: The Transnational Solution, Harvard Business School Press, Cambridge, MA, (1989), the organisational dimension of MNC knowledge processes is not addressed, conceptualised and theorised in any systematic way. 12. K. E. So¨derquist, Organising knowledge management and dissemination in new product development: Lessons from 12 global companies, Long Range Planning 39, 497e523 (2006). See also M. Kodama, Knowledge creation through networked strategic communities: Case studies on new product development in Japanese companies, Long Range Planning 38, 27e49 (2005); J. Birkenshaw, Managing internal R&D networks in global firms: What sort of knowledge is involved, Long Range Planning 35, 245e267 (2002). 13. Through observations (interviews), we seek to classify our case companies according to certain identified characteristics. Observed types are not understood as value judgments (ie, perfect, ultimate or in any way better); rather, we derive the types based on common patterns of knowledge-related features among case companies and link these to different constellations of organisational factors. 14. K. Macharzina and K. Engelhard, Paradigm shift in international business research: From partist and eclectic approaches to the GAINS paradigm, Management International Review 31(Special Issue), 23e43 (1991). 15. Traditional MNC refers to divisional or matrix organisational structures with centralised customisation of information dictated by headquarters. The objective is typically to achieve scale economies by transferring know-how to new segments/markets. 16. We adopt the distinction between simple and complex, explicit and tacit, and independent and systemic knowledge, as introduced by S. G. Winter, Knowledge and competence as strategic assets, in D. J. Teece (ed), The Competitive Challenge, Harper & Row, New York, 159e184 (1987), and utilised by, among others. R. Garud and P. R. Nayyar, Transformative capacity: Continual structuring by intertemporal technology transfer, Strategic Management Journal 15, 365e385 (1994); R. S. Bhagat, B. L. Kedia, P. D. Harveston and H. C. Triandis, Cultural variations in the cross-border transfer of organizational knowledge: An integrative framework, Academy of Management Review 27(2), 204e221 (2002). Whereas simple knowledge is captured with little information, more factual information is required to capture complex knowledge accurately. Explicit knowledge can be communicated relatively easily, as opposed to tacit knowledge, which is often highly personal in nature and difficult to codify. Independent knowledge can be described by itself, whereas systemic knowledge needs to be described in relation to a specific context. 17. C. A. Bartlett and S. Ghoshal, Changing the role of the top management: Beyond systems to people, Harvard Business Review May-June, 132e142 (1995). 18. For a discussion of intra-corporate knowledge flows and strategic roles of subsidiaries, see A. K. Gupta and V. Govindarajan, Knowledge flows and the structure of control within multinational corporations, Academy of Management Review 16(4), 768e792 (1991). Long Range Planning, vol 40

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19. R. L. Nolan and D. C. Croson, Creative Destruction, Harvard Business School Press, Cambridge, MA (1995). 20. Thus, the power-wielding asset becomes the dynamic capability continuously to produce and transfer new knowledge, rather than possession of the knowledge per se. For further discussion of the determinants of subsidiary power in a MNC network, see, for example, M. Forsgren, T. Pedersen and N. J. Foss, Accounting for the strengths of MNC subsidiaries: The case of foreign-owned firms in Denmark, International Business Review 8, 181e196 (1999). 21. For a discussion of strategic alignment between internal factors and external conditions from an organisation theory perspective, see M. Beer, S. C. Voelpel, M. Leibold and E. B. Tekie, Strategic management as organizational learning, Long Range Planning 38, 445e465 (2005). 22. R. E. Miles and C. C. Snow, Organizational Strategy, Structure, and Process, McGraw-Hill, New York (1978); R. E. Miles, C. C. Snow, A. D. Meyer and H. J. Coleman Jr., Organizational strategy, structure, and process, Academy of Management Review 3(3), 546e562 (1978). 23. In April 2005 Danisco acquired Genencor in an effort to expand its position as leader in food ingredients and diversify into growing industrial biotechnology markets, www.Danisco.com (2005). 24. For a review, see N. Rajagopalan and G. M. Spreitzer, Toward a theory of strategic change: A multi-lens perspective and integrative framework, Academy of Management Review 22(1), 48e79 (1997). 25. According to population ecology, speciation must begin rapidly and in populations that are small and isolated enough for the change to take hold, in order to avoid being diluted by the parent population. In similar fashion, ShareNet started in the ICN division and received only limited support from HQ. As the KMS proved successful and valuable, it was expanded company-wide. 26. Information & Communication and Automation & Control remain the two main business areas for Siemens, receiving the majority of investments, contributing the most to the revenue stream and employing the most people. Thus, the downturn in the telecommunication industry during the beginning of the millennium resulted in corporate strategic changes throughout the entire Siemens organisation. 27. D. J. Teece, Strategies for managing knowledge assets: The role of firm structure and industrial context, Long Range Planning 33(1), 35e54 (2000). 28. R. House, D. Rousseau and M. Thomas-Hunt, The meso paradigm: A framework for the integration of micro and macro organizational behavior, in L. L. Cummings and B. M. Staw (eds), Research in Organizational Behavior 17, JAI Press, Greenwich, CT, 71e114 (1995). 29. See Miles and Snow (1978) for a discussion of the four strategic organisational types. Miles and Snow op. cit. 30. H. Tavakolian, Linking the information technology structure with organizational competitive strategy: A survey, MIS Quarterly, September, 309e317 (1989). 31. C. Snow and L. Hrebiniak, Strategy, distinctive competence and organizational performance, Administrative Science Quarterly 25, 317e326 (1980) found empirical support for a positive correlation between prospectors and uncertain industries (eg, electronics) and defenders and stable industries (eg, air transport). 32. A. Ginsberg, Measuring and modeling changes in strategy: Theoretical foundations and empirical directions, Strategic Management Journal 9, 559e575 (1988); M. L. Tushman and E. Romanelli, Organizational evolution: A metamorphosis model of convergence and reorientation, Research in Organizational Behavior 7, 171e222 (1985).

Biographies Bo Bernhard Nielsen is Associate Professor of Strategy at the Center for Strategic Management and Globalization at Copenhagen Business School, Denmark. His main research is within strategic management and knowledge management. Snejina Michailova is Professor of International Business at the Department of International Business at The University of Auckland Business School, New Zealand. Her main research areas are international management and knowledge management.

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