Knowledge-Based Strategies and Information System Technologies: Preliminary Findings

Meir Russ1, Jeannette K. Jones2 1 Department of Business Administration, University of Wisconsin-Green Bay, Wood Hall 460 G; 2420 Nicolet Drive; Green Bay, WI 54311-7001, russm@uwgb.edu2 Franklin University, 201 S. Grant Avenue, Columbus, OH  43215, jonesj@franklin.edu

Presented at IEMC 2005, St. John’s, NF and Labrador, Canada; September 11-14, 2005

Agenda

Introduction C3EEP Framework overview Knowledge-Based Strategies and Information

Systems Literature Review Hypothesis Method Findings

Conclusions

The C3EEP framework of strategic dilemmas:

A. Codification-Tacitness B. Complementary-Destroying C. Concealment-Transparent D. External Acquisition-Internal Development E. Exploration-Exploitation F. Product-Process

KB strategic choices (1-2)

A. Should the company focus on codifying the knowledge or would it be better off leaving the knowledge tacit (e.g. Conner and Prahalad, 1996; Hansen et al., 1999; Leonard-Barton, 1995; Schultz and Jobe, 2001; Spender, 1996; Subramaniam and Venkatraman, 2001)?

B. Should the company focus on developing knowledge that is complementary to its current KB or would it be better off developing new knowledge even if this destroys the existing KB (e.g. Barley, 1986; Bower and Christensen, 1995; Fleming, 2001; Hill and Rothaermel, 2003)?

KB strategic choices (3-4)

C. Should the knowledge be transparent or would the company be better off keeping the knowledge concealed (e.g. Gray 1988; Inkpen, 1998; Lamming et al., 2001; Radebaugh and Gray, 1997; von Furstenberg, 2001)?

D. Should the company focus on getting the most from its existing knowledge or would the company be better off experimenting with new knowledge (e.g. Bloodgood and Salisbury, 2001; Fjeldstad and Haanaes, 2001; Levinthal and March, 1993; March, 1991; McGrath, 2001; Pitt and Clarke, 1999)?

KB strategic choices (5-6)

E. Should the knowledge be developed internally or would the company be better off acquiring the knowledge from external sources (e.g. Appleyard, 1998; Bierly and Chakrabarti, 1996; Jones, 2000; Parikh, 2001; Pitt and Clarke, 1999; Steensma, 1996; Zack, 1999a)?

F. Should the company focus on the KB that is supporting the process and creating the value or should the focus of value creation and the KB supporting this be the product/service (e.g. Abernathy, 1978; Jones, 2002; Smith and Reinertsen, 1998)?

KBS and IS - Literature Review

The basic premise:Specific IS technologies might be more

appropriate in different strategic contexts.For example:

1. Groupware might be more effective in the context of Exploitation strategy than in the context of the Exploration strategy (Robertson, Sorensen, and Swan; 2001).

KBS and IS - Literature Review (2)

2. Enterprise Information Portals (EIP) support system functionalities that assist in developing the basis for codification of tacit knowledge and that provide for development of organizational routines which might support the Codification strategy (Kim, Chaudhury, and Rao; 2002).

3. Skill Databases are extremely valuable in identification of where tacit expertise resides. Also Skill Databases are a central IS technology for successful process oriented strategies (Maier and Remus; 2002).

Hypothesis 1-A

H1: Particular KB strategies will have a positive association with particular IS technologies. A. Codification Strategy

H1ai: the Codification strategy will have a negative association with the DSS, Video Conferencing, Groupware technologies.

H1aii: the Codification strategy will have a positive association with the Workflow, EKP, Skill database technologies.

H1aiii: the Codification strategy will have no association with CRM or Document Management technologies.

Hypothesis 1-B

B. Exploration StrategyH1bii: the Exploration strategy will have a

positive association with the CRM, Workflow, Groupware technologies.

H1biii: the Exploration strategy will have no association with the other IS technologies identified in this study.

Hypothesis 1-C

C. Transparency Strategy H1ciii: the Transparency strategy will have no association

with the IS technologies identified in this study. D. Destroying Strategy

H1diii: the Destroying strategy will have no association with the IS technologies identified in this study.

E. Product Strategy H1eiii: the Product strategy will have no association with

the IS technologies identified in this study. F. External Acquisition Strategy

H1fiii: the External Acquisition strategy will have no association with the IS technologies identified in this study.

Hypothesis 2-A

H2: IS technologies will have an additional positive effect on outcomes, above and beyond the association with KB Strategy and culture.

A. Process Outcomes H2ai: Skill database technology will have a negative

association with process outcomes, above and beyond the association with KB Strategy and culture.

H2aiii: Other IS technologies will have no association with process outcomes, above and beyond the association with KB Strategy and culture.

Hypothesis 2-B

B. Product Outcomes H2bi: Skill database technology will have a

negative association with product outcomes, above and beyond the association with KB Strategy and culture.

H2bii: Portals (EKP) and Groupware technologies will have a positive association with process outcomes, above and beyond the association with KB Strategy and culture.

H2biii: Other IS technologies will have no association with product outcomes, above and beyond the association with KB Strategy and culture.

Method

Sample A convenience sampling was utilized due to time, access, and

budget constraints. The sample consisted of an evening MBA program’s

students, Ph.D. program and alumni from a number of Mid-West academic institutions, and employees from several Mid-West business entities to whom the authors had access.

The participants had, on average, more than 10 years of full time employment experience and were mostly first and second level supervisors and managers.

Sixty five (65) questionnaires denote a 41.4% response rate.

Measures – Method 2

Cronbach’s Alpha indicator was used:

Strategies: For Codification/Tacitness - 0.8614 For Complementary/Destroying - 0.8835 For Concealment/Transparency - 0.9211 For Ext. Acquisition/Int. Development - 0.8322 For Exploration/Exploitation - 0.8751 For Product/Process - 0.8880

Outcomes: For Product/service offering effectiveness - 0.9331 For the Process effectiveness - 0.8772

Culture: For values - 0.8899 For artifacts - 0.8708

Method 3

Information Systems: Based on earlier research data was collected about the use of the following IS technologies:

Enterprise Information and/or Knowledge Portals (EIP/EKP)

Customer Relationship Management (CRM) Workflow Video conferencing Decision Support Systems (DSS) Groupware Skill Data Base (Skill DB) Document Management solution

Descriptive Statistics

Variable Mean Use of CRM (yes=1) 0.42 Use of EIP/EKP (yes=1) 0.43 Use of Workflow (yes=1) 0.61 Use of Video conferencing (yes=1) 0.65 Use of DSS (yes=1) 0.42 Use of Groupware (yes=1) 0.68 Use of Skill DB (yes=1) 0.38 Use of Document Management (yes=1) 0.52

IS Tech. and KB Strategies-Results 1

KB Strategy Concealment Codification

IS tech EIP/EKP 0=3.843*

1=5.06 Workflow 0=28.33** 0=4.085*

1=44.55 1=4.952 DSS 0=4.195**

1=5.190 Groupware 0=3.977*

1=4.910 Doc. Management 0=4.024**

1=5.153

Significance ( *p < 5% ; ** p < 1% ; ***p < 0.1%)

Process Effectiveness-Results 2

Outcomes Process Effectiveness Model I II III

Intercept 2.471*** 1.681* 1.716* (.546) (0.674) (0.727) Controls Company size 0.102 -0.255 -0.365

(log of #) (0.399) (0.380) (.408) Culture Values 0.353*** 0.275** 0.262**

(0.080) (0.080) (0.084)

Artifacts 0.180* 0.082 0.069 (0.087) (0.191) (0.094)

KB Strategies Codification 0.246*** 0.236**

(0.067) (0.073) IS Technology Groupware 0.174

(0.240) DSS 0.056

(0.229)

R Square .332 .496 .505 R Square Adj. 0.30 0.415 0.403 F 10.274*** 6.132*** 4.925***

Product Effectiveness-Results 3

Outcomes Product Effectiveness Model I II III

Intercept 2.882** 2.855*** 2.934*** (.675) (0.798) (0.796) Controls Company size -0.051 -0.462 -0.707 (log of #) (0.520) (0.471) (.475)

Culture Values 0.198+ 0.114 0.069 (0.099) (0.093) (0.094)

Artifacts 0.194+ 0.052 0.039 (0.108) (0.106) (0.104)

KB Strategies Exploration Ext. 0.022*** 0.023***

(0.006) (0.006) Ext. Acquisition -0.019** -0.019**

(0.007) (0.007) Codification 0.162* 0.134+

(0.079) (0.079) IS Technology Groupware 0.547*

(0.271) R Square .134 .419 .463 R Square Adj. 0.092 0.323 0.361 F 3.171* 4.40*** 4.563***

Findings 1

Hypothesis 1 First, the Codification strategy (hypotheses H1a) was found

to have significant positive association with EKP, Workflow, DSS, Groupware, and Document Management technologies, but no significant association with CRM, Video Conferencing, and Skill Database technologies. As such, the first three hypotheses are only partly supported.

Second, the Exploration strategy had no significant association with any IS technology. As such, the first (H1bii) hypothesis is rejected while the second hypothesis (H1biii) is accepted.

Third, the hypothesis (H1ciii) regarding the Transparency/Concealment strategy is mostly accepted, since only the Workflow technology had a significant positive association with the Transparency strategy.

Findings 2

Fourth, the hypothesis (H1diii) regarding the Complementary/Destroying strategy is accepted, since no IS technology had a significant positive association with this strategy.

Fifth, the hypothesis (H1eiii) regarding the Product/Process strategy is accepted, since no IS technology had a significant positive association with this strategy.

Sixth, the hypothesis (H1fiii) regarding the Internal Development/External Acquisition strategy is accepted, since no IS technology had a significant positive association with this strategy.

Findings 3

Hypothesis 2 Due to sample size constraints each one of the IS

technologies was tested individually. The “Process” outcome was found to have NO significant

relationship with all IS technologies tested in this study. Only the Groupware technology showed statistically

significant association (see model III in Table 3.2) with the “Product” outcome above and beyond the KB strategies.

As such, the two hypotheses regarding the Skill database (H3ai and H3bi) were rejected. The only hypothesis (H3bii) that predicted positive association is partially supported, since Groupware is associated with the outcome, but EKP is not.

Conclusions 1

The lack of significant relationships between the KB strategies and the usage of IS technologies might explain why investments in IS technologies do not always appear to have an impact on the financial indicators as an increase in profitability or sales.

In the case of Product outcomes, the findings support the positive and direct relationship that the Groupware IS technology has with the Product outcome, but not with Process outcome.

The majority of the research in this area focuses on process improvements. This study suggests that even in cases when identifying and/or measuring process improvement might be difficult, within the appropriate context, the benefits of using the IS technology might be identified and measured at the outputs (product) level.

Conclusions 2

What might explain the lack of significant relationship between the IS technologies and outputs? 1. Time lag (of one to two years) that some researchers

suggest exist between the implementation of the IS technology and the technology’s impact on company financials (e.g. Feng, Chen, and Liou; 2004/2005).

2. The IS technology’s support needed for the successful implementation of the KB strategies as provided by the basic IS technologies (e.g. Internet, e-mail, etc.) is adequate (e.g. Scholl, Konig, Mayer, and Heisig; 2004).

3. The successful implementation of any IS technology can be a very complex process (e.g. Malhotra, Majchrzak, Carman, and Lott; 2001), resulting in a high rate of failure (e.g. 50-70% of failure in the case of CRM, as reported by Payton and Zahay (2003). Even as high as 80% as reported by Storey and Barnett (2000).

Conclusions 3

To summarize: the findings of this study may support the realization that the IS technologies aspects of KM are of less importance than the human factors (e.g. Butler, 2003) and that the naïve anticipation that using IS technologies can be easily converted into significant advancement of KM is unrealistic (e.g. Scholl, Konig, Mayer, and Heisig; 2004).

Limitations and Implications 1

A major drawback of this study is the small sample size and lack of randomness.

Getting additional outcome indicators, for example, financial outcomes or innovation outcomes, might be beneficial for this kind of study.

Limitations and Implications 2

Since the life cycle of many IS technologies is relatively very short, the maturation life cycle complex, the learning curve of organization implementation is long and complex, and there might be a time lag between the implementation of the IS technology and its impact on outcomes, large samples that are statistically valid, must include the timing of adoption of the IS technology (to control for the technology maturity) as well as the IS maturity of the organization to create any value for management. Empirical studies that include all of these elements are sparse but are of great need.

Thank you

Any questions?

Appendix A-Measures

Process Effectiveness 1. Increase in productivity of employees

2. Improvement of working conditions

8. Decrease in the number of complaints by clients 9. Decrease in production/operation costs 10. Ability to meet deadlines

Product Effectiveness 5. Increase in number of customized products/services offered 6. Increase in variety of products/services offered

7. Increase in number of new products/services offered

Appendix B-Measures

Values Senior management’s approachability Frequency of interactions Trust

Artifacts-Work place design Frequent interaction across work teams Access to the front line Ability to work with different groups throughout the

day and have access to all necessary work tools and information