Knowledge effect on firm performance in manufacturing and service firms

This thesis seeks to examine the difference between manufacturing and service firms with respect to the effects of knowledge on performance, and the influence of market turbulence in this relationship. Empirical data, resulting from a survey, was collected from more than 1,206 firms, involving several sectors. Two samples were analyzed, one with 334 manufacturing and other with 509 service firms. The findings indicate no significant difference in the importance of knowledge on performance between these sectors in the absence of market turbulence: knowledge development (KD) has a stronger effect than culture of competitiveness (CC) on firm performance. However, under market turbulence, manufacturers differ from service providers. The positive effect of KD is enhanced, while the positive effect of CC remains the same for manufacturing firms. On the other hand, the positive effect of KD is diminished, while the positive effect of CC is enhanced for service firms. This supports the argument concerning differences in the nature of manufacturing and service industries. From a managerial point of view, results confirm the importance of knowledge, irrespective of firm sector or market turbulence. However, while industrial firms should center efforts on KD, service firms must find a balance where knowledge development (e.g. norms, processes, routines) does not impair their culture of competitiveness (e.g. learning, innovation, action). The thesis contributes to existing literature by proposing that: (1) the positive effect of knowledge on performance is confirmed; (2) under turbulent markets manufacturing and service firms have different responses concerning the influence of knowledge on performance; (3) a multidimensional performance construct based on cost, profitability, and growth is an interesting way to evaluate firm sustained competitive advantage, rather than one-dimensional constructs; (4) the CC x KD interaction, found relevant for supply chains in previous studies, is not supported for firms; (5) differences in unit of analysis, e.g. from supply chains to firms, result in different effects of KD and CC on firm performance; (6) existing scales can be improved with the addition of more diverse indicators, capturing a wider range of concepts (e.g. information transfer measurement); and (7) results from previous studies are supported for Brazilian firms, contributing for theory generalization.

Knowledge management in knowledge intensive service networks:a strategic management approach

Purpose – The main purpose of this paper is to analyze knowledge management in service networks. It analyzes the knowledge management process and identifies related challenges. The authors take a strategic management approach instead of a more technology-oriented approach, since it is believed that managerial problems still remain after technological problems are solved. Design/methodology/approach – The paper explores the literature on the topic of knowledge management as well as the resource (or knowledge) based view of the firm. It offers conceptual insights and provides possible solutions for knowledge management problems. Findings – The paper discusses several possible solutions for managing knowledge processes in knowledge-intensive service networks. Solutions for knowledge identification/generation, knowledge application, knowledge combination/transfer and supporting the evolution of tacit network knowledge include personal and technological aspects, as well as organizational and cultural elements. Practical implications – In a complex environment, knowledge management and network management become crucial for business success. It is the task of network management to establish routines, and to build and regularly refresh meta-knowledge about the competencies and abilities that exist within the network. It is suggested that each network partner should be rated according to the contribution to the network knowledge base. Based on this rating, a particular network partner is a member of a certain knowledge club, meaning that the partner has access to a particular level of network knowledge. Such an established routine provides strong incentives to add knowledge to the network's knowledge base Originality/value – This paper is a first attempt to outline the problems of knowledge management in knowledge-intensive service networks and, by so doing, to introduce strategic management reasoning to the discussion.

Knowledge and innovation as value drivers in professional services firms: an empirical research in Central and Eastern Europe

The purpose of this study was to investigate empirically the role of knowledge and innovation within Central and Eastern Europe’s changing economy. We applied qualitative research methods, and focused only on professional services firms within the region. The connection between knowledge and innovation as well as knowledge and competitiveness was analyzed by top managers and senior industry experts. Our findings revealed that knowledge might be a real value driver for professional services firms. These companies can significantly contribute to the development of modern economies through the dissemination of their internal best practices in knowledge management. We found three factors that might influence the effectiveness of knowledge management. These three factors are the involvement of international knowledge networks, the investments in human capital, and focus on critical resources. These issues proved to be essential to maximize the potential of knowledge and to leverage this into increased business performance.

Service Concept Development - An Appoach for Professional Service Firm

Specific demand for service concept creation has come about from industrial organizations’ desire to find new and innovative ways to differentiate their offering by increasing the level of customer services. Providers of professional services have also demanded new concepts and approaches for their businesses as these industries have become increasingly competitive. Firms are now seeking better ways to understand and segment their customers, to ensure the delivery of quality services and strengthen their position in aggressively competitive markets. This thesis is intended to provide management consulting companies with a new work method that enables service concept creation in a business-to-business environment. The model defines the service concept as a combination of delivered value and the target customers; the third-dimension operating model is brought to the new system in testing of the service concept creation guidelines in the target organization. For testing, service concepts for a management consulting company are created. Service concepts are designed to serve as a solid foundation for further service improvements. Recommendations and proposals for further action related to service development in the target organization are presented, and recommendations to further improve the model created are given.

Customer-related skills and capabilities in knowledge-intensive business services

The roles of knowledge and customer involvement form distinct features in providing knowledge-intensive business services. The objective of this study was to investigate the customer-related skills and capabilities of knowledge-intensive business services. The research was carried out as case study, involving two polar cases. The other case represented customized services, and the other standardized services. The research method was qualitative, and included focus group workshops, individual interviews and a survey. The capabilities of business services have been mainly studied on organizational level. This study provides valuable insight into the role of individual skills as a part of capabilities of knowledge-intensive business services. According to this study, the most important capabilities are related to acquiring and integrating of knowledge, resource management, managing the customer’s role as a co-producer of the service, and active and effective communication. The study indicates that the level of tacit knowledge is high in the needed individual skills. Based on the study, the needed capabilities and skills are affected by the level of customization of the service, the demand for customer knowledge, the demand for consultation and the stage of the service providing.

Social media in the purchasing of knowledge-intensive business services

The purpose of this thesis was to understand how industrial buyers utilize social media in the purchasing of knowledge-intensive business services. By combining theories from past research a theoretical framework was formed to visualize the role of the social media at the different stages of the purchasing process. The subject was approached from the industrial buyers’ perspective instead of the knowledge-intensive business firm. The research was conducted using two qualitative research methods: interviews and netnography. The selected interviewees have been involved in the decision-making unit for purchasing knowledge-intensive business services. Additionally all of them are using various social media. Based on the interviews social media is used merely to support decision-making. Some of the interviewees had also shared their own experiences about the service and collaboration with the service provider with other social media users. Based on the interviews two social media were chosen for closer examination. The findings from netnography support the results from the interviews. The outcome of knowledgeintensive business services is dependable of the professionals. Therefore the information is used during decision-making process to confirm the formed image of the service, and the professionals of the service provider. Information obtained from social media complements information provided by the supplier. Even though the interviewees had not themselves used social media to find information about the service during search process, finding from netnography suggest it to exist. Industrial buyers ask other users’ opinions and experience about the services, and receive recommendations to them. Some recommendations are given publicly, but more discreet information is shared in private conversations. Observations in social media show that industrial buyers might be exposed to triggers to promote problem recognition as well. Companies share news and successful customer cases through their social media profiles, which might affect the industrial buyers, but to confirm this requires further research. The industrial buyers’ use of social media during different purchasing processes of knowledgeintensive business services can be conceptualize based on the findings. This helps companies to create right content to their social media pages, and encourage professionals to develop their networks in social media.

Location, control and innovation in knowledge-intensive industries

The rising share of intangibles in economies worldwide highlights the crucial role of knowledge-intensive and creative industries in current and future wealth generation. The recognition of this trend has led to intense competition in these industries. At the micro-level, firms from both advanced and emerging economies are globally dispersing their value chains to control costs and leverage capabilities. The geography of innovation is the outcome of a dynamic process whereby firms from emerging economies strive to catch-up with advanced economy competitors, creating strong pressures for continued innovation. However, two distinct strategies can be discerned with regard to the control of the value chain. A vertical integration strategy emphasizes taking advantage of ‘linkage economies’ whereby controlling multiple value chain activities enhances the efficiency and effectiveness of each one of them. In contrast, a specialization strategy focuses on identifying and controlling the creative heart of the value chain, while outsourcing all other activities. The global mobile handset industry is used as the template to illustrate the theory.

Nexus between contracting and construction professional service businesses: empirical evidence from international market

he construction market around the world has witnessed the growing eminence of construction professional services (CPSs), such as urban planning, architecture, engineering, and consultancy, while the traditional contracting sector remains strong. Nowadays, it is not uncommon to see a design firm taking over the work of a traditional main contractor, or vice versa, of overseeing the delivery of a project. Although the two sectors of contracting and CPS share the same purpose of materializing the built environment, they are as different as they are interrelated. Much has been mentioned about the nexus between the two but little has been done to articulate it using empirical evidence. This study examined the nexus between contracting and CPS businesses by offering and testing lead-lag effects between the two sectors in the international market. A longitudinal panel data composed of 23 top international contractors and CPS firms was adopted. Surprisingly, results of the panel data analyses show that CPS business does not have a significant positive causal effect on contracting as a downstream business, and vice versa. CPS and contracting subsidiaries, although within the same company, do not necessarily form a consortium to undertake the same project; rather, they often collaborate with other CPS or contracting counterparts to undertake projects. This paper provides valuable insights into the sophisticated nexus between contracting and CPS in the international construction market. It will support business executives’ rational decision making for selecting proper contracting or CPS allies, or a proper mergers and acquisitions strategy in the international market. The paper also provides a fresh perspective through which researchers can better investigate the diversification strategies adopted by international contracting and CPS firms.

Latin America’s competitive position in knowledge-intensive services trade

This study presents a dynamic analysis of Latin America's competitiveness in trade in knowledge-intensive services. The methodology used to undertake this analysis is based on the Tradecan approach developed by the Economic Commission for Latin America and the Caribbean (ECLAC), which provides a means of assessing different countries' competitiveness by looking at their exports to the fastest-growing markets. (In the past, it has usually been applied primarily to exports of goods.) The results suggest that, although some Latin American countries have made inroads in knowledge-intensive service segments and have comparative advantages in them, the percentage of "rising stars" (dynamic sectors in which a country or region is gaining in market share) is still low, while there is a high percentage of "missed opportunities" (dynamic sectors in which a country or region is losing market share). This points up the existence of areas in which the region's competitive position is weak and in which policies are needed to leverage its competitive advantages and remove the obstacles that are holding it back from establishing a more advantageous position in knowledge-intensive service markets.

New descriptions and understandings of internationalisation: A tale of knowledge-intensive SMEs

This research seeks to generate and foster new descriptions and understandings of processes underlying the internationalisation experienced by small- and medium-sized, knowledge-intensive enterprises. The longitudinal study centres on the growth and internationalisation of a cluster of small- and medium-sized enterprises (SMEs) in the most southern state of Australia, of which a number were 'bom global.' It draws on both retrospective data such as corporate archives, as well as observations and interviews as events unfolded over a period of eighteen months to garner insights into processes underlying the SMEs' internationalisation. The approach to inquiry is influenced by an epistemology of social constructionism, interpretive narrative, sensemaking and dramaturgical theoretical perspectives, and elements of cultural anthropology. Exploratory in the early stages, a funnel approach characteristic of ethnographic enquiry was used whereby the study became progressively focused over time. The extended period of fieldwork led to observations and interpretations that cast the retrospective data in new light, and the use of the construct 'legitimacy' as a lens through which to view activities and events infusing the firms' internationalisation. A generic narrative scheme that offers a temporal ordering of actions, context and meaning attributions in relation to legitimation behaviours and internationalisation processes is developed. This narrative scheme is then used to garner a deeper understanding of three activities that were central to the firms' internationalisation over time: the choice of geographic export markets, strategic participation in international standard-setting committees, and portfolio entrepreneurship. In addition, the study offers a rich story of the growth and internationalisation of the cluster of knowledge-intensive SMEs. The tale of growth and internationalisation pursued by the cluster of knowledgeintensive SMEs spans the period from 1975 to mid 1997, and may prove a useful resource for the theorising of others.

Changing career models and capacity for innovation in professional services

A number of professional sectors have recently moved away from their longstanding career model of up-or-out promotion and embraced innovative alternatives. Professional labor is a critical resource in professional service firms. Therefore, changes to these internal labor markets are likely to trigger other innovations, for example in knowledge management, incentive schemes and team composition. In this chapter we look at how new career models affect the core organizing model of professional firms and, in turn, their capacity for and processes of innovation. We consider how professional firms link the development of human capital and the division of professional labor to distinctive demands for innovation and how novel career systems help them respond to these demands.

What can situated learning theory tell us about leading to develop organizational learning capabilities for entrepreneurial performance? lessons from a knowledge-intensive small firm

Although the role of strategic leadership in developing organizational learning capabilities has been examined to a certain extent, the specific behaviors and mechanisms through which these capabilities are developed have not been adequately understood. Paucity of research in this direction is even more conspicuous in a small firm/entrepreneurship context, which has been linked to innovation, economic growth, and employment generation. Reporting on an ethnographic study of a knowledge-intensive, growth-oriented small firm, this article addresses this gap in the literature by integrating strategic leadership and organizational learning theory in an entrepreneurship context. In this undertaking, situated learning theory is used as the major analytical lens, to shed light on how strategic leadership can build organizational learning capabilities that underpin entrepreneurial performance in small firms. Finally, implications for situated learning theory as an organizational learning perspective and leadership practice in an entrepreneurship context are submitted. © 2012 Wiley Periodicals, Inc.