A Survey Of New Product Development: Can Decentralization Alone Deliver?

Geographic decentralization of the new product development (NPD) process is seen by many as a necessary means to increase innovation and its cost-effectiveness.  Decentralization promotes innovation in many ways, especially by allowing better access to local knowledge pools.  This study's results, based on a survey of top executives in large manufacturing firms around the globe, give only mixed support to this view.  Decentralization is associated with increases in revenues from new product but the performance of firms with geographically decentralized NPD is inferior otherwise.  The key culprits seem to be the decrease in involvement of NPD stakeholders in firms with geographically decentralized NPD and the inability of firms with geographically decentralized NPD to generate a greater level of radical innovations. The study results are broadly consistent with academic research in this area

Knowledge Accumulation and Dissemination in MNEs: A Practice-Based Framework

Much has been written on the importance of knowledge accumulation and transfer within the network firm but two questions remain. First, what are the specifics of this process, particularly for high tacit content knowledge? Second, how can firms create a sustainable competitive advantage from knowledge acquired from outside the firm? We address the first question by proposing that the mechanisms of external knowledge capture and internal knowledge transfer can best be understood and studied not at the level of networked subsidiary firms, but at the micro-organizational level of Communities of Practice (CoPs). We then offer a model of the dynamics of organizational learning in network organizations, such as MNEs, which builds on this unit of analysis. This framework clarifies the link between CoPs and Networks of Practice (NoPs), by offering a novel conceptual model of how knowledge, particularly tacit, embedded knowledge, is absorbed. The framework also proposes a new link - that between CoPs and Internal Networks of Practice (INoPs), as another essential ingredient to knowledge accumulation and transfer within firms. We also propose that the firm-level architectural knowledge that is developed through INoPs is valuable and rare. In combination with the component knowledge that is developed through NoPs, architectural knowledge can create novel knowledge that may be a source of competitive advantage

Research Note On The Incremental Value Of Knowledge Workers

As firms seek to manage knowledge, they rely increasingly on knowledge workers. The assumption is often that the incremental value from hiring these knowledge workers accrues to firms, but theory indicates that it may not. In this research note, we examine this question.  We perform a cross-sectional study of 30 investment banks in the period 1992-96.  We use gross value of mergers and acquisitions business as a proxy for gross performance, and pre-tax operating income as a proxy for net performance.  The dependent variable and measure of knowledge workers is the number of “star” analysts, as measured by Wall Street Journal/Zacks rankings.  Our results strongly support the hypothesis that the number of star analysts in investment banking is positively associated with gross performance, and weakly support the hypothesis that they are not positively associated with net performance. If future research could generalize these conclusions, they could have implications for design of compensation systems in industries significantly employing knowledge workers

Communities, alliances, networks and knowledge in multinational firms: A micro-analytic framework

We develop a model of the micro-process of knowledge acquisition, dissemination, and application in the networks of alliances that have become important sources of external knowledge for multinational firms. Based on the concept of communities of practice as sources of highly tacit know-how, this model addresses the use of alliances with local partners to acquire tacit knowledge on a sub-unit level and to then share this knowledge throughout the firm via an internal network of community-level alliances. We suggest that the supposed advantage of multinational firms in accessing and reconstituting knowledge from widely spread sources is composed of multiple micro-processes at sub-unit levels, and therefore much more complex than usually presented.Communities of Practice Tacit Knowledge Exchange Multinational Networks

Bringing institutions into performance persistence research: Exploring the impact of product, financial, and labor market institutions

This study challenges the implicit assumption of homogeneity in national institutional environments made in past studies of firm performance persistence. We propose that home-country institutions matter. We focus on the impact of formal institutions in the product, financial, and labor markets, arguing that they affect the size of pools of exchange partners and the types of exchanges allowed and condoned. Ultimately, these restrictions affect competitive intensity among firms, and firm performance persistence. Using data for over 10,000 firms from 33 countries over a 10-year time frame, we show that antitrust law strength, a product market institution designed to prevent collusion among firms, is associated with decreases in performance persistence. Unskilled labor market flexibility, a labor market institution that reduces legal constraints imposed on residual claimants (managers and owners) to take necessary actions to maintain or enhance profitability, is associated with increases in performance persistence. Product liability law effectiveness, another product market institution, and corporate control market development, a financial market institution, are positively associated with performance persistence only in the case of MNEs. The two remaining financial and labor market institutions, public equity market development (respectively skilled labor market availability) have a positive (respectively negative) impact for domestic firms only.