GLOBALLY DISTRIBUTED KNOWLEDGE

By Frans van den Heuvel, Niek den Teuling and Esther Verhoef

PROBLEM STATEMENT

What type of strategy is best used for a multinational corporation?

OVERVIEW

• MNCs• Knowledge management on a global scale• Knowledge management strategies

o Storing and managing knowledge o Managing knowledge at different levels

• Case study: an international pharmaceutical company• Conclusion• Questions • Discussion

MNCS

Advantages on the developed countries: Generating tax revenues Lower prices Products do not so much on price of materials

Advantages on the developing countries: Greater level of employment Provide access to management and organizational skills Training and skill creation Provide host country with foreign exchange

MNCS

Disadvantage on the developed country Decreasing employment Decreasing bargaining power of labor

Disadvantage on the developing country Hurt domestic firms by eliminating competition Worsen balance between rustic and urban areas Environment costs Avoid tax by practicing transfer pricing

KNOWLEDGE MANAGEMENT ON A GLOBAL SCALEKey issues that companies need to address in

global knowledge capture and management (Klahr, 1996): Knowledge distribution Localizing knowledge Maintaining knowledge Organizing and managing knowledge Distributed authoring

  

KNOWLEDGE MANAGEMENT ON A GLOBAL SCALE

Problems regarding global companies (Desouza and Evaristo, 2002):• Knowledge is shared between two persons, leaving the

rest of the company out • People might not share the same language, place and

behavior (Kiesler and Sproull, 1992)• Culture• Time zones• Language• Redundancy

STRATEGIES FOR STORING AND MANAGING KNOWLEDGE

• Two strategies for storing and exchanging knowledge (Martin Schulz and Lloyd A. Jobe, 1998): oCodification strategyoTacitness strategy

• Two knowledge management strategies (Martin Schulz and Lloyd A. Jobe, 1998):oFocused knowledge management strategyoUnfocused knowledge management strategy

• Combining the strategies

CODIFICATION STRATEGY

Codification strategy• Advantages

• Codify your knowledge• Codified knowledge can easily be stored and exchanged between

subunits• Maintaining knowledge becomes easier

• Disadvantages• Information overload (Horton, 1989; Stuller, 1996)• Cost• Knowledge leakage

TACITNESS STRATEGY

Tacitness strategy• Advantages

• Keep your knowledge tacit• Less costs than the codification strategy• Stimulates creativity (Nonaka and Takeuchi, 1995)

• Disadvantages• Knowledge loss• Slower flow of knowledge

FOCUSED AND UNFOCUSED KM STRATEGIES Focused knowledge management strategy:• Focus on a few forms of codification• Carefully choose and plan which forms to used

Unfocused knowledge management strategy:• Do not focus on specific forms of codification• The forms of codification used are a result of other

decisions 

COMBINING THE STRATEGIES

Unfocused strategy

Focused strategy

Codification strategy

Increase the level of codification across all forms

For each type of knowledge, increase the level of codification only on those forms which transfer knowledge fastest and most accurately

Tacitness strategy

Decrease the level of codification across all forms

For each type of knowledge, decrease the level of codification on those forms that pose the greatest risks of involuntary transfer of knowledge

MANAGING THE GLOBAL DISTRIBUTION OF KNOWLEDGE

3 Common strategies (Kevin C. Desouza et al. 2002)Headquarter Commissioned & ExecutedHeadquarter Commissioned & Regionally

Executed Regionally Commissioned & Locally Executed

HEADQUARTER COMMISSIONED & EXECUTED

All the knowledge management initiatives come from the head office

Knowledge exchange goes "through" the head office Good for standardizing 1 product across countries

HEADQUARTER COMMISSIONED & REGIONALLY EXECUTED

Knowledge exchange guidelines are being commissioned by the head office

Each regional head office uses these guidelines and can adapt them a little

Focus on sharing the knowledge regionally but through compatibility international knowledge exchange still possible

REGIONALLY COMMISSIONED & LOCALLY EXECUTED

Each region decides their own way of knowledge exchange

Most of the knowledge exchange locally Very fast knowledge exchange NOT really global knowledge exchange

QUESTIONS THAT CAN HELP YOU TO CHOOSE A STRATEGY• How beneficial is it to codify (too expensive/difficult/much time)? • How important is the distributed knowledge flow?• What type of knowledge do you have? • How important is it that everybody has exactly the same

knowledge?• What are the consequences and how high is the possibility of

knowledge leak age?• How big is the threat of competitors?

• At what scale is the exchange of knowledge most important?• How uniform does your product have to be?

Codification Tacitness Focused Unfocused

Beneficial to codify

Very Not much Very Very

Importance knowledge flow

Very Not much Very Between very and not much

Type of knowledge

Formulas Experience Shared databases

No information

Exactly the same knowledge

Yes No Yes Yes

High possibility of leak age

Good Not good Good Good

Threat of competitors

Not much Very Not much Not much

CASE STUDY: AN INTERNATIONAL PHARMACEUTICAL COMPANY• Everybody has to have the exact same knowledge• Competitors are not a big threat• Knowledge flow is important• Type of knowledge is recipes

• Differences in the product cannot be tolerated• Having the facilities working with each other is very

important internationally.

CONCLUSIONS

The best strategies for an international pharmaceutical company are:• The focused, codification strategy• Headquarter Commissioned & Executed

   But in general, it is better to use a combination of strategies.

QUESTIONS

?

DISCUSSION

• It is better to use a combination of strategies than one strategy

DISCUSSION

The tacitness strategy has too much disadvantages compared to advantages to use that strategy as the only strategy

DISCUSSION

Why would company's use a Regionally Commissioned & Locally Executed strategy often ?