Control Effectiveness: Servitude Or Seduction?

Control effectiveness: servitude or seduction?

Roslyn Larkin – University of Newcastle, Australia

Abstract

As awareness of the value of organisations knowledge stocks increase, methods of leveraging the knowledge for effective transfer with a view to exploitation have become significantly more focused. This paper considers two very different forms of control employed by a Multinational Enterprise (MNE) in an attempt to convince site managers to engage in knowledge transfer through the organisation’s dedicated Information Communication Technology (ICT) system. While both approaches could be considered punitive, they differ significantly through the control that is exerted as a result of the design of the system. That is, the first controls through bureaucratic means while the second through social systems. Analyses of findings demonstrate the power of controlling knowledge sharing behaviours through subtle methods. The primary contribution of the paper is both theoretical and practical through advancement of current understanding of the importance of alternative control mechanisms to leverage quality knowledge outcomes. The research is qualitative using semi-structured interviews undertaken with managers across 19 sites of an MNE operating in the Australian hospitality sector. Data was analysed using a multi-tiered coding and thematic analysis techniques consistent with qualitative enquiry.

Introduction

The knowledge based view identifies the firms heterogeneous knowledge bases as a significant determinant of a firms strategic competitive advantage (SCA). Drawing from this theory, research has made some enlightening contributions as to the characteristics of knowledge, typically reported as explicit or tacit, and individual or collective, and its transfer throughout the firm, typically through mechanisms of Information Communication Technologies (ICTs) or social systems. Indeed it is the transfer or sharing of knowledge throughout global subsidiaries that Multinational Enterprises (MNEs) seek as an avenue to SCA and as a result significant investment has been made in understanding and employing control systems to leverage strategic knowledge from one point in the organisation to others. This paper, grounded in the knowledge based theory is situated within an MNE using HRM as a control mechanism for the leveraging of explicit subsidiary knowledge through the firms ICT system. That is, the paper considers the effects of different control mechanisms on knowledge sharing behaviours.

There is a significant stream of literature informing understanding of the role HR plays to control knowledge sharing behaviour. To date such HR practices are situated within top down driven bureaucratic control systems usually directed towards performance management and reward for the knowledge owner and/or gatekeeper. While useful for understanding the relationship between HR practices and knowledge sharing outcomes, however, research so far has largely failed to consider alternative or more subtle control mechanisms such as social control or indirect control mechanisms to elicit knowledge sharing behaviours. It is here therefore that this paper provides benefit to those who design control systems and those who study them by drawing distinction through a comparative case study of one organisations use of two quite different control systems, each through HR practices. Significantly, based on the evidence, the paper proposes that while research has generated some understanding of the effects of direct control methods on knowledge sharing behaviours, such forms of bureaucratic top-down control are sustainable only in so far that they have temporal finite measurement attached to the consequences for the knowledge gatekeeper. Where the consequences of knowledge sharing behaviour affect the gatekeeper indirectly, in this case through a sub-group, the knowledge sharing behaviours of the gatekeeper are moderated through social control or more subtle mechanisms. This paper offers an exploratory investigation into the factors controlling knowledge transfer in one multinational organisation.The primary contribution of the paper is both theoretical and practical through advancement of current understanding of the importance of alternative control mechanisms to leverage quality knowledge outcomes.The paper is structured as follows. First the literature will be reviewed and analysed to identify the predominant research focus to date and key areas requiring further focus. Following will be a comprehensive discussion of the research methodology and its suitability for research of this nature. The next section will profile the cases which will be followed by an analytical discussion of the complexities between the two. The paper will conclude with recognition of the limitations of the research and identification of areas requiring further consideration.

Understanding knowledge

The knowledge-based view of the firm attributes a firms competitive advantage to its unique knowledge and its ability to embody new knowledge in its products and services (LippmanRumelt, 1982; Nonaka, 1991; Conner & Prahalad, 1996; NahapietGhoshal, 1998; Chakravarthy, McEvily, Doz & Rau, 2006. The management of the knowledge however has been identified as one of the most important challenges facing today’s managers (Drucker, 1993; Simon, 1996; Davenport & Prusak, 1998; van den Hoof and Ridder, 2004).

The importance attributed to the value that can be created from knowledge has contributed to a change in attitude of the role of the MNE subsidiary. Previously, and according to a traditional ethnocentric model (Perlmutter 1969), knowledge was viewed as a linear sequence (Almeida & Phene, 2004) created by headquarters and disseminated vertically to the subsidiaries. More recently however the role that the subsidiaries play in the creation of value from knowledge has also evolved (Almeida & Phene, 2004; Birkinshaw & Hood, 2000; Dunning, 1994, Malnight, 1995; Porter, 1990) and while subsidiaries may still exploit organisation wide knowledge, they simultaneously engage in their own knowledge generation or augmentation (Cohen & Levinthal, 1990; March, 1991).

Typically, literature on ‘knowledge’ comes under one of two key headings. The first, explicit knowledge relates to knowledge that is codified and easily communicated (Newell et al, 2009; Teece, Pisano & Shuen, 1997; Zollo and Winter, 2002). It is impersonal in nature and usually takes the forms of documents and reports, presentations or catalogues (Holste & Fields, 2010; NonakaTakuechi, 1995; Tsoukas, 2006). The other, tacit knowledge, is developed through experience and its personal nature makes it hard to communicate or be reduced to textual form. It’s hard to measure and unable to be stored using technology (Choo, 2000; NonakaTakuechi, 1995).

Leveraging and transferring Knowledge

The above section leaves little doubt that it is in the best interest of the MNE to exploit the knowledge residing in various parts of the organisation. At this point, two key areas must be considered. The first is leveraging individual knowledge so that it becomes collective and ultimately organisational, meaning that it is applied in another part of the organisation and second the mechanism through which the knowledge is transferred from on part of the organisation to another. Indeed, Kogut & Zander (1993) claim that an MNE arises from its superior efficiency to transfer knowledge across borders.

Just as there are differing interpretations regarding the nature of knowledge, there are likewise differing mechanisms for its transfer. The suitability of each mechanism coincides with the nature of the knowledge and whether it is tacit or explicit. For example, when considering the mechanism for the transfer of tacit knowledge, priority is given to social mechanisms. These are commonly referred to as communities (Jones, 1995; Komito, 1998; Von Krogh, 2006; Wenger & Snyder, 2000) or networks (Van Wijk, Van Den Bosch & Volberda, 2006; Newell et al, 2009). When considering the mechanism for the transfer of explicit knowledge, emphasis is on Information Communication Technologies (ICTs) focussing on the transfer of codified knowledge through computerised repositories (Alani & Tiwana, 2006; Zack, 1999).

In a complex MNE environment however coordination and control of knowledge sharing behaviour, or, the leveraging and adoption of knowledge from one point in the organisation to another becomes increasingly difficult. This is especially so where knowledge transfer barriers exist. Known barriers (for example, knowledge hoarding (Cyert 1995)) may arise at the point of the knowledge sender, or at the point of the knowledge receiver (for example, stickiness (Szulanski 1996) and Not Invented Here Syndrome (NIH) (Katz & Allen 1982)). As a result, organisations require processes and practices in place to promote knowledge sharing behaviours and overcome the known barriers to its transfer and adoption.

Motivation and Control through HRM

Within the last ten years, much focus has shifted to the potential of Human Resource Management (HRM) as a series of practices that may work to positively control organisational knowledge transfer. For example, Minbaeva, Pedersen, Bjorkman, Fey and Park (2003) considered the motivational effects of bundles of HR practices on knowledge sharing behaviours, while Lee, Williams & Yin (2006 considered the effect of individual HR practice on behaviours. More specifically is the interest in the link between extrinsic motivators such as performance reviews as a control device to elicit explicit knowledge sharing behaviour (Edvardsson 2007), through ICT systems. Indeed although the strength of the outcomes have been somewhat moderated (for example Gagne 2009) this area has been afforded much attention.

The link between performance management and knowledge sharing behaviours through ICTs however identifies a form of bureaucratic control (Ferner 2000). Indeed, while some consideration has been provided to social control mechanisms these have been considered predominately through the development of social capital (Welch et al, 2009; Bontis & Fitz-enz 2005, NahapietGhoshal 1998), and social transfer mechanisms. At no point therefore, has social control been investigated as a mechanism for the control of knowledge transfer through ICT systems, which until now has been the domain of bureaucratic control systems. It is here therefore that this paper departs from the mainstream and considers the effect of social control mechanisms on the transfer of explicit knowledge through ICTs through comparison of two case examples, one using bureaucratic control through the organisations performance management system and the other through social control at the workplace level. This research is undertaken at the subsidiary level of an MNE operating in the International Hospitality environment

Methodology

Design

This research is qualitative and uses a complex case study approach. Qualitative research was selected as the purpose is to understand the decisions of the actors when they have rational alternatives (Gardner 1999: 60). Therefore, the research is built on constructivist perspectives where knowledge and reality is contingent upon interaction between human beings and their world in a social context where meaningful reality is socially constructed (Crotty 1998). Further, qualitative research occurs in natural settings where the researcher attempts to bring meaning to phenomena in a world that is already there. That is, it’s a situated activity (Denzin & Lincoln 2005), interested in studying how people attach meaning to their lives and uncover perceptions and experiences of informers (Minichiello, Aroni, Timewell & Alexander 1995). Qualitative research can be used when the research is exploratory in nature and is useful when there is little understanding regarding a phenomena (Collis & Hussey 2003; Cresswell 2003).

A case study was chosen as the purpose is to understand the phenomenon in depth and within its natural context (Punch 1998). In this case is not the purpose of the research to provide generalisations but to consider causal factors rather than frequencies (Mitchell 1989; Denzin 1989; Stake 2000). That is, reliability relies upon the cogency of the theoretical reasoning rather than on the typicality of the case (Connell, Waring & Lynch 2000). Further the case was chosen not as a result of its ordinariness but rather because of its interest (Stake 2000).

Data Collection

Emencorp, the case study organisation, was considered suitable for this research as its people management is best described as geocentric. That is, it is harmonized in such a way that it is managed on a global basis while at the same time responding to local environment factors (Watson & Littlejohn 1992). In this way, the research wasable to pick up both centralised and local programs. Data collection occurred between 2008 and 2009 through semi-structured interviews. Overall, 19 managers (7 regional and 12 site managers) across 19 hotel sites in 3 Australian states provide input into these outcomes. Each interview had an approximate duration of 1-1.5 hours. The following table provides an example of the predominant themes of the interview questions with examples.

Theme / Purpose / Questions - example
The organisation’s
perspective on knowledge
transfer / This theme provided a useful
starting point to gauge
mangers views on the
organisation’s commitment to
knowledge sharing.
The responses provided a point
of comparison to relevant
organisational documents to
establish what was viewed as
rhetoric and reality. It also
provided early insight into the
systems in place. /

• Do you believe the
• organisation has a commitment
• to sharing knowledge
• throughout its global network?
• Why?/Why not?
• Does the organisation have
• mechanisms in place to support
• knowledge transfer?

1) ICT
2) Social systems
The employee’s
experience with the
knowledge transfer
mechanisms / This theme enabled the
researcher to learn about the
knowledge transfer
mechanisms from the
perspective of the managers. It
also helped to identify the
number of systems in place
either from a formal or
informal perspective. This was
achieved as different
employment positions use
different systems for
communication.
In addition, it enabled
discussion about organisational
changes overtime, and helped
to differentiate between the
attitudes and experiences of
long serving employees and
those newer to the organisation. / Tell me about your experiences
with knowledge sharing
through ICT mechanisms.
Tell me about your experiences
with knowledge sharing
through social mechanisms.
Are there any other
mechanisms for sharing
knowledge that you haven’t
covered in your discussion?
HR practices and
knowledge transfer / This theme helped to identify
HR practices that the employee
personally considered as useful
to knowledge transfer.
Additionally, it assisted the
process of triangulation in that
it enabled the researcher to
delve deeper into the practices
that were articulated as
identifying with knowledge
transfer in documentary data
and their actual application. / Which, if any, HR practices do
you consider to influence the
quality of the KT mechanisms
you have identified?
I note that in the documents
providing the procedures for
performance appraisal, HR
staff are prompted to identify
with knowledge sharing
activities. Do you do this?
Does your manager include
this dimension when
conducting your performance
review?

Data Analysis

Consistent with qualitative research the analytical categories were emergent throughout data collection and as such informed early analysis. In order to manage such large amounts of unstructured data, Nvivo 8 was used to assist a 3 layer coding technique. Initially, a process of data reduction was undertaken where individual elements were organised into concepts and categories. The next stage considered the interconnectedness of data taking into consideration the context in which it was embedded, the way it was managed and the consequences of such. Finally, selective coding was undertaken in order to validate relationships. Throughout analysis several iterations of relationships occurred as additional categories were considered and whereby areas of overlap and antecedents emerged.

Background to the cases

Case Commonalities

In 2006, Emencorp implemented a vast storage and retrieval knowledge system referred to from here on as the knowledge library. Established in line with the organisations strategic focus of global alignment, the knowledge library was to facilitate sharing of value added processes and practices across sites thus reducing time and resource waste and replication. In other words its purpose was to initiate a long term knowledge sharing culture. At the time of data collection, the knowledge library extended across all 140 hotels in the Asia, Australasian global region.The knowledge library acts as a two-way system allowing users to both submit and retrieve ideas. Indeed, the viability of the system relies on both, new knowledge sharing and the implementation of the new knowledge across sites. The ideas are stored by hotel function (i.e. food and beverage; housekeeping etc). Initially, access to the system was limited to site managers and above however this was eventually relaxed so that all staff from a supervisory level up can access the data. Submission of ideas continues to be limited to site managers and aboveas part of the gatekeeping function. The following cases identify control mechanisms employed byEmencorp to promote system use..

Case 1 – The knowledge library and the site managers (1)

In order to create a culture of knowledge sharing behaviour through the ICT system, each hotel or site manager was notified by their regional managers that the knowledge library was now in place and there was an expectation that each site manager would conform to its use. In order to support this conformity, use of the knowledge library was linked directly to each site managers Key Performance Objectives (KPOs). Measurement of the KPOs involved each site manager retrieving and implementing two ideas from the library each year into their hotel and each manager should add two ideas to the library each year for others to view and potentially implement in their hotels. Achievement of the KPOs was assessed through the site managers annual performance review.

The link with the performance management system however was to be relatively short lived. By 2008, just two years after its beginning the link with site managers KPOs were disestablished. From a managerial perspective the reason for removing the link was recognition of the constraints of site managers to continually put forward quality ideas. This is captured in the following quote from a regional manager,

There were a lot of things that ended up there because people were pressured to contribute and you cannot always contribute quality (RSM2).

Evidence from the site managers, while supporting this general theme however were a little more insightful. For example,

I wasn’t a big fan of the link with KPOs because you would get to mid-November and you felt: Oh gosh, I haven’t added two ideas so you would get on the Knowledge Library and it was potentially a gun pointed at your head (GSM3).

In addition to the forced compliance, a further theme began to emerge,