Knowledge governance in project-based organizations : theoretical and empirical approaches

This paper conceptualizes knowledge governance (KG) in project-based organizations (PBOs) and its methodological approaches for empirical investigation. Three key contributions towards a multi-faceted view of KG and an understanding of KG in PBOs are advanced. These contributions include a definition of KG in PBOs, a conceptual framework to investigate KG and a methodological framework for empirical inquiry into KG in PBO settings. Our definition highlights the contingent nature of KG processes in relation to their organizational context. The conceptual framework addresses macro- and micro-level elements of KG and their interaction. The methodological framework proposes five different research approaches, structured by differentiation and integration of various ontological and epistemological stances. Together these contributions provide a novel platform for understanding KG in PBOs and developing new insights into the design and execution of research on KG within PBOs.

Capturing opportunities for business and innovation in knowledge intensive services

Research on opportunity has been extensively studied in contexts of new firm or new venture creation (Choi & Shepherd, 2004; Mullins & Forlani, 2005; Ozgen & Baron, 2007) where start-ups and new ventures use both opportunity discovery and opportunity creation (Alvarez & Barney 2005, 2007). Less research is found on examining the relationship between opportunity and innovation in existing firms (with Drucker (1985) an exception). In large firms, opportunity recognition has been analysed in terms of antecedent conditions, elements and outcomes (Ireland, Covin & Kuratko, 2009), but to date less attention has been given to how small and medium enterprises capture and use opportunities to remain competitive. Little research has been carried out regarding how smaller firms use opportunities to create new business with existing customers or use technological advances with new customers to create new economic activity, growth and competitive advantage. This study presents findings from a comparative case analysis of 20 diverse firms in the spatial information industry and identifies constructs associated with identifying opportunities that lead to better business performance and firm level innovation.

Capable but not able : the effect of institutional context and search breadth on the absorptive capacity-corporate entrepreneurship relationship

This study investigates how the interaction of institutional market orientation and external search breadth influence the ability to use absorptive capacity to raise the level of corporate entrepreneurship. The findings of a sample of 331 supplier companies providing products and services to the mining industry of Australia and Iran indicate that the positive association between absorptive capacity and corporate entrepreneurship is stronger for companies with greater external knowledge search breadth. Moreover, operating in a less market-oriented institutional context such as, Iran diminishes the ability to utilise a firm’s absorptive capacity to raise their level of corporate entrepreneurship. Yet, firms operating in such contexts are able to overcome these disadvantages posed by their institutional context by engaging in broader external search of knowledge.

Externally oriented capabilities and corporate entrepreneurship : institutional and managerial contingencies

This research adopts three different theoretical lenses- the attention-based view, institutional perspective and network theory- to investigate the effect of externally oriented capabilities (absorptive capacity and networking capabilities) on corporate entrepreneurship. Based on an Australian and Iranian sample of mining equipment, technology and service providers, this thesis provides new understanding of why some firms are able to generate higher levels of corporate entrepreneurship than others and opens new directions for more capabilities-oriented research in corporate entrepreneurship. In particular, this research provides new insight into how entrepreneurial management, institutional context and external knowledge search breadth shape the relationship between externally oriented capabilities and corporate entrepreneurship.

Corporate governance and bankruptcy risk

We examine how firm characteristics, particularly the degree of firm complexity and the firm’s need for specialty knowledge, affect the relationship between corporate governance and the risk of bankruptcy. We find that having larger boards reduces the risk of bankruptcy only for complex firms. Our results also suggest that the proportion of inside directors on the board is inversely associated with the risk of bankruptcy in firms that require more specialist knowledge, and that the reverse is true in technically unsophisticated firms. The results further reveal that the additional explanatory power from corporate governance variables becomes stronger as the time to bankruptcy is increased, implying that although corporate governance variables are important predictors, governance changes are likely to be too late to save a firm on the verge of bankruptcy.

Deriatives disclosure in corporate annual reports: bank analysts; perceptions of usefulness

Responding to mixed evidence on the decision-usefulness of annual report disclosures for derivative financial instruments to capital market participants, and concerns identified by practice, this paper examines usefulness in a direct study of user perceptions. Interviews with analysts from Australia’s four major banks reveal essential usefulness, limited by the disclosures’ failure to reflect companies’ actual use of derivatives throughout the period, and inability of users to understand companies’ off-balance sheet risk and risk management practices from information considered generic and boilerplate. The research complements and extends existing archival and survey research and provides new evidence suggesting low-cost ways for increasing usefulness. It supports the International Accounting Standards Board’s disclosure recommendations in its recent Discussion Paper: A Review of the Conceptual Framework for Financial Reporting, but, at the same time, highlights that for these proposed measures to be successful in relation to IFRS 7, they may need to address other issues. The research increases knowledge of the informational requirements of lenders, an important class of financial information user, and supports calls from practice for companies to improve their disclosure of material economic risks.

How to Succeed in Knowledge Transfer : Case Study of Scandinavian Alliance in Ukraine

The current study of Scandinavian multinational corporate subsidiaries in the rapidly growing Eastern European market, due to their particular organizational structure, attempts to gain some new insights into processes and potential benefits of knowledge and technology transfer. This study explores how to succeed in knowledge transfer and to become more competitive, driven by the need to improve transfer of systematic knowledge for the manufacture of product and service provisions in newly entered market. The scope of current research is exactly limited to multinational corporations, which are defined as enterprises comprising entities in two or more countries, regardless of legal forms and field of activity of those entities, and which operate under a system of decision-making permitting coherent policies and a common strategy through one or more decision-making centers. The entities are linked, by ownership, and able to exercise influence over the activities of the others; and, in particular, to share the knowledge, resources, and responsibilities with others. The research question is "How and to which extent can knowledge-transfer influence a company's technological competence and economic competitiveness?" and try to find out what particular forces and factors affect the development of subsidiary competencies; what factors influence the corporate integration and use of the subsidiary's competencies; and what may increase competitiveness of MNC pursuing leading position in entered market. The empirical part of the research was based on qualitative analyses of twenty interviews conducted among employees in Scandinavian MNC subsidiary units situated in Ukraine, using structured sequence of questions with open-ended answers. The data was investigated by comparison case analyses to literature framework. Findings indicate that a technological competence developed in one subsidiary will lead to an integration of that competence with other corporate units within the MNC. Success increasingly depends upon people's learning. The local economic area is crucial for understanding competition and industrial performance, as there seems to be a clear link between the performance of subsidiaries and the conditions prevailing in their environment. The linkage between competitive advantage and company's success is mutually dependent. Observation suggests that companies can be characterized as clusters of complementary activities such as R&D, administration, marketing, manufacturing and distribution. Study identifies barriers and obstacles in technology and knowledge transfer that is relevant for the subsidiaries' competence development. The accumulated experience can be implemented in new entered market with simple procedures, and at a low cost under specific circumstances, by cloning. The main goal is focused to support company prosperity, making more profits and sustaining an increased market share by improved product quality and/or reduced production cost of the subsidiaries through cloning approach. Keywords: multinational corporation; technology transfer; knowledge transfer; subsidiary competence; barriers and obstacles; competitive advantage; Eastern European market

Essays on corporate governance, stakeholders, and restructuring

This dissertation consists of an introductory section and three theoretical essays analyzing the interaction of corporate governance and restructuring. The essays adopt an incomplete contracts approach and analyze the role of different institutional designs to facilitate the alignment of the objectives of shareholders and management (or employees) over the magnitude of corporate restructuring. The first essay analyzes how a firm's choice of production technology affects the employees' human capital investment. In the essay, the owners of the firm can choose between a specific and a general technology that both require a costly human capital investment by the employees. The specific technology is initially superior in using the human capital of employees but, in contrast to the general technology, it is not compatible with future innovations. As a result, anticipated changes in the specific technology diminish the ex ante incentives of the employees to invest in human capital unless the shareholders grant the employees specific governance mechanisms (a right of veto, severance pay) so as to protect their investments. The results of the first essay indicate that the level of protection that the shareholders are willing to offer falls short of the socially desirable one. Furthermore, when restructuring opportunities become more abundant, it becomes more attractive both socially and from the viewpoint of the shareholders to initially adopt the general technology. The second essay analyzes how the allocation of authority within the firm interacts with the owners' choice of business strategy when the ability of the owners to monitor the project proposals of the management is biased in favor of the status quo strategy. The essay shows that a bias in the monitoring ability will affect not only the allocation of authority within the firm but also the choice of business strategy. Especially, when delegation has positive managerial incentive effects, delegation turns out to be more attractive under the new business strategy because the improved managerial incentives are a way for the owners to compensate their own reduced information gathering ability. This effect, however, simultaneously makes the owners hesitant to switch the strategy since it would involve a more frequent loss of control over the project choice. Consequently, the owners' lack of knowledge of the new business strategy may lead to a suboptimal choice of strategy. The third essay analyzes the implications of CEO succession process for the ideal board structure. In this essay, the presence of the departing CEO on the board facilitates the ability of the board to find a matching successor and to counsel him. However, the ex-CEO's presence may simultaneously also weaken the ability of the board to restructure since the predecessor may use the opportunity to distort the successor's project choice. The results of the essay suggest that the extent of restructuring gains, the firm's ability to hire good outside directors and the importance of board's advisory role affect at which point and for how long the shareholders may want to nominate the predecessor to the board.

Essays on Corporate Governance and the Quality of Disclosed Earnings: Across Transitional Europe

A growing body of empirical research examines the structure and effectiveness of corporate governance systems around the world. An important insight from this literature is that corporate governance mechanisms address the excessive use of managerial discretionary powers to get private benefits by expropriating the value of shareholders. One possible way of expropriation is to reduce the quality of disclosed earnings by manipulating the financial statements. This lower quality of earnings should then be reflected by the stock price of firm according to value relevance theorem. Hence, instead of testing the direct effect of corporate governance on the firm’s market value, it is important to understand the causes of the lower quality of accounting earnings. This thesis contributes to the literature by increasing knowledge about the extent of the earnings management – measured as the extent of discretionary accruals in total disclosed earnings - and its determinants across the Transitional European countries. The thesis comprises of three essays of empirical analysis of which first two utilize the data of Russian listed firms whereas the third essay uses data from 10 European economies. More specifically, the first essay adds to existing research connecting earnings management to corporate governance. It testifies the impact of the Russian corporate governance reforms of 2002 on the quality of disclosed earnings in all publicly listed firms. This essay provides empirical evidence of the fact that the desired impact of reforms is not fully substantiated in Russia without proper enforcement. Instead, firm-level factors such as long-term capital investments and compliance with International financial reporting standards (IFRS) determine the quality of the earnings. The result presented in the essay support the notion proposed by Leuz et al. (2003) that the reforms aimed to bring transparency do not correspond to desired results in economies where investor protection is lower and legal enforcement is weak. The second essay focuses on the relationship between the internal-control mechanism such as the types and levels of ownership and the quality of disclosed earnings in Russia. The empirical analysis shows that the controlling shareholders in Russia use their powers to manipulate the reported performance in order to get private benefits of control. Comparatively, firms owned by the State have significantly better quality of disclosed earnings than other controllers such as oligarchs and foreign corporations. Interestingly, market performance of firms controlled by either State or oligarchs is better than widely held firms. The third essay provides useful evidence on the fact that both ownership structures and economic characteristics are important factors in determining the quality of disclosed earnings in three groups of countries in Europe. Evidence suggests that ownership structure is a more important determinant in developed and transparent countries, while economic determinants are important determinants in developing and transitional countries.

Corporate Funding on the European Debt Capital Market

The integrated European debt capital market has undoubtedly broadened the possibilities for companies to access funding from the public and challenged investors to cope with an ever increasing complexity of its market participants. Well into the Euro-era, it is clear that the unified market has created potential for all involved parties, where investment opportunities are able to meet a supply of funds from a broad geographical area now summoned under a single currency. Europe’s traditionally heavy dependency on bank lending as a source of debt capital has thus been easing as corporate residents are able to tap into a deep and liquid capital market to satisfy their funding needs. As national barriers eroded with the inauguration of the Euro and interest rates for the EMU-members converged towards over-all lower yields, a new source of debt capital emerged to the vast majority of corporate residents under the new currency and gave an alternative to the traditionally more maturity-restricted bank debt. With increased sophistication came also an improved knowledge and understanding of the market and its participants. Further, investors became more willing to bear credit risk, which opened the market for firms of ever lower creditworthiness. In the process, the market as a whole saw a change in the profile of issuers, as non-financial firms increasingly sought their funding directly from the bond market. This thesis consists of three separate empirical studies on how corporates fund themselves on the European debt capital markets. The analysis focuses on a firm’s access to and behaviour on the capital market, subsequent the decision to raise capital through the issuance of arm’s length debt on the bond market. The specific areas considered are contributing to our knowledge in the fields of corporate finance and financial markets by considering explicitly firms’ primary market activities within the new market area. The first essay explores how reputation of an issuer affects its debt issuance. Essay two examines the choice of interest rate exposure on newly issued debt and the third and final essay explores pricing anomalies on corporate debt issues.

Knowledge Transfer within Western Multinationals' Subsidiary Units in China and Finland - The Impact of Headquarter Control Mechanisms, Subsidiary Location and Social Capital (summary section only)

It is suggested that the ability and practices of how the multinational corporation (MNC) manages knowledge transfer among its geographically dispersed subsidiary units are crucial for the building and development of firm competitive advantage. However, cross-border transfer of valuable organizational knowledge is likely to be problematic and laborious, especially within diversified and differentiated MNCs. Using data collected from 164 western multinational companies’ subsidiary units located in China and Finland, this study aims to investigate cross-border knowledge transfer within the MNC. It explores a number of factors that influence the transfer of knowledge among units in the differentiated MNC. The study consists of five individual papers. Paper 1 investigates a range of organizational mechanisms that may positively influence a subsidiary’s propensity to undertake knowledge transfers to other parts of the corporation. Paper 2 explores the impact of subsidiary location on the motivational dispositions of knowledge receiving units to value and accept knowledge from subsidiaries located in economically less advanced countries. Paper 3 examines the influence of social capital variables on knowledge transfer in dyadic relationships between foreign-owned subsidiaries and their sister and patent units. Paper 4 provides some initial insights into potentially different effects of trust and shared vision in intra-organizational vs. inter-organizational relationships. Using a case study setting, Paper 5 explores means and mechanisms used in transferring human resource management practices to Western MNCs’ business units in China from a cultural perspective. The results of the study show that MNC management through choices regarding organizational controls can encourage and enhance corporate-internal knowledge transfer. It also finds evidence that more knowledge is transferred from subsidiaries located in an industrialized country (e.g., Finland) than subsidiaries located in a developing country (e.g., China). While the study has highlighted the importance of social capital in promoting knowledge transfer, it has also uncovered some new findings that the effect of trust and shared vision may be contingent upon different contexts. Finally, in Paper 5, a number of mechanisms used in transferring selected HRM practices and competences to the Chinese business units have been identified. The findings suggest that cultural differences should be taken into consideration in the choice and use of different transfer mechanisms.

Work/Family Reconciliation: Corporate Management, Family Policies, and Gender Equality in the Finnish Context

Work/family reconciliation is a crucial question for both personal well-being and on societal level for productivity and re-production throughout the Western world. This thesis examines work/family reconciliation on societal and organisational level in the Finnish context. The study is based on an initial framework, developing it further and analysing the results with help of it. The methodology of the study is plural, including varying epistemological emphasis and both quantitative and qualitative methods. Policy analysis from two different sectors is followed by a survey answered by 113 HR-managers, and then, based on quantitative analyses, interviews in four chosen case companies. The central findings of the thesis are that there indeed are written corporate level policies for reconciling work and family in companies operating in Finland, in spite of the strong state level involvement in creating a policy context in work/family reconciliation. Also, the existing policies vary in accessibility and use. The most frequently used work/family policies still are the statutory state level policies for family leave, taking place when a baby is born and during his or her first years. Still, there are new policies arising, such as a nurse for an employee’s child who has fallen ill, that are based on company activity only, which shows in both accessibility and use of the policy. Reasons for developing corporate level work/family policies vary among the so-called pro-active and re-active companies. In general, family law has a substantial effect for developing corporate level policies. Also headquarter gender equality strategies as well as employee demands are important. In regression analyses, it was found that corporate image and importance in recruitment are the foremost reasons for companies to develop policies, not for example the amount of female employees in the company. The reasons for policy development can be summarized into normative pressures, coercive pressures and mimetic pressures, in line with findings from institutional theory. This research, however, includes awareness of different stakeholder interests and recognizes that institutional theory needs to be complemented with notions of gender and family, which seem to play a part in perceived work/family conflict and need for further work/family policies both in managers’ personal lives and on the organisational level. A very central finding, demanding more attention, is the by HR managers perceived change in values towards work and commitment towards organisation at the youngest working generation, Generation Y. This combined with the need for key personnel has brought new challenges to companies especially in knowledge business and will presumably lead to further development of flexible practices in organisations. The accessibility to this flexibility seems to, however, be even more dependent on the specific knowledge and skills of the employee. How this generation will change the organisations remains to be seen in further research.

Factors Affecting Knowledge Sharing in Strategic Alliances: The Role of Knowledge Sharing as Strategic Control Behavior among Multinational Enterprises

International strategic alliances (ISAs) have become increasingly important for the stability, growth, and long-term viability of modern business organizations. Alliance partnerships as inter-firm cooperative ventures represent an influential mechanism for asserting corporate strategic control among autonomous multinational enterprises. These different cooperative arrangements are made of equity investments or contractually-based partnerships. Different alliance forms represent different approaches that partner firms adopt to control their mutual dependence on the alliance and on other partners. Earlier research shows that the partner characteristics could provide an explanation for alliance strategic behavior and see alliances as alternative forms to markets or hierarchies for addressing specific strategic needs linked to partners’ characteristics and their subsequent strategic motives. These characteristics of the partners’ and subsequent strategic motives are analyzed as knowledge sharing factors and how these influence inter-firm control in alliances within the context of the focal-firm STMicroelectronics and its alliance partners Nokia, Ericsson and IBM. This study underline that as contracts are incomplete, they are therefore required to maintain mutual dependence based control mechanisms in addition to a contract. For example, mutual dependence based control mechanisms could be joint financial investments and the building of an ownership structure between the parties (e.g., JVs). However, the present study clarifies that subsequent inter-firm control is also exercised through inter-firm knowledge sharing. The present study contributes by presenting a dynamic interplay between competitive and cooperative rent seeking behavior. Such coopetition behavior describes the firm's strategic orientation to achieve a dynamic balance between competitive and cooperative strategies. This balance is seen in knowledge sharing based cooperation and competition behavior. Thus this study clarifies coopetition strategies by introducing the role of inter-firm cooperation and the competitive nature of knowledge sharing. Simultaneous cooperative and competitive behavior is also seen as synergetic rent-seeking behavior. Therefore, this study extends the perspective of previous studies on competitive and cooperative seeking behavior.

Evolving corporate entrepreneurship strategy: Technology incubation at Philips

Established firms tend to pursue incremental innovation by modifying and refining their existing products and processes rather than developing radical innovations. In the face of resistance to change and incumbent inertia, which prevent the generation of novelty, established firms have turned towards corporate entrepreneurship as a means of exploiting knowledge accumulated within its own boundaries and exploring external markets. This paper focuses on one mode of corporate entrepreneurship, corporate incubation, informed by a study of a Technology Incubator at Philips. An account of the history of the incubator traces its progress from its inception in 2002-2006 when further incubators were formed, building on this experience and focusing on lifestyle and healthcare technologies. We identify ways in which the Philips incubator represents an alternative selection environment that effectively simulated the venture capitalist model of entrepreneurial innovation. © 2009 Blackwell Publishing Ltd.

Corporate document mining for technology intelligence: An analysis of needs, utilization and possibilities

This paper focuses on document data, one of the most significant sources for technology intelligence. To help organisations use their knowledge in documents effectively, this research aims to identify what organizations really want from documents and what might be possible to obtain from them. The research involves a literature review, a series of in-depth/on-site interviews and a descriptive analysis of document mining applications. The output of the research includes: a document mining framework; an analysis of the current condition of document mining in technology-based organisations together with their future requirements; and guidelines for introducing document mining into an organisation along with a discussion on the practical issues that are faced by users. Copyright © 2011 Inderscience Enterprises Ltd.