Organisational Learning and Knowledge: Designing Efficient Learning Structures

Page 1 Organisational Learning and Knowledge: Designing Efficient Learning Structures Tina Brandt Husman Centre for Economic and Business Research (C...
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Organisational Learning and Knowledge: Designing Efficient Learning Structures Tina Brandt Husman Centre for Economic and Business Research (CEBR) The Danish Ministry of Trade and Industry Langelinie Allé 17 DK-2100 Copenhagen Ø Denmark Phone: +45 35 46 64 98 Fax: +45 35 46 62 01 Mail: [email protected]

1st DRAFT May 2001 Abstract This paper theoretically discusses how internal firm structures may be designed to optimise organisational learning. It is contended that a firm can promote its organisational learning capability if it has a strength in a skill of attracting and acquiring new knowledge in order to maintain its existing valuable knowledge stock, and in a skill of minimising decay of valuable knowledge from the knowledge stock. Discussing three categories of organisational mechanisms: organisational structure, HRM policies and external communication activities, the paper seeks to determine how these focal organisational mechanisms may be designed to best possibly promote the skill of attracting and acquiring knowledge and the skill of minimising decay of knowledge, and hereby the firms’ organisational learning capability. An argument is put forward that firms can develop a learning strategy whose purpose it is to continuously ensure that the organisational mechanisms’ efficiently promote organisational learning. Keywords Inter-organisational relations; Organisational learning; Organisational structure; Human Resource Management; External communication; Learning skills; Knowledge transfer Acknowledgement This paper is funded by the CEBR, Copenhagen. I thank Ina Drejer, CEBR, for providing editorial comments.

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Introduction This paper theoretically discusses how firms’ internal firm structure may be designed to optimise organisational learning. Organisational learning may be visible in employees ultimately improving working processes and routines, or in employees for example creating new and better products or services. Both internal as well as external sources are input into the learning process1 (Pavitt 1984). A point of departure is taken in an assumption that firms can promote organisational learning by regulating mechanisms in its internal firm structure. An argument is put forward that firms can possess a learning strategy whose purpose is to optimise organisational mechanisms that promote organisational learning. Organisational learning can be promoted by the firm having a strong skill in attracting and acquiring new knowledge, that is, utilising the internal as well as external knowledge sources efficiently (what is also referred to as the learning possibilities, see next section), and a strong skill of minimising decay of knowledge. Although several organisational mechanisms may influence on these learning skills three categories of organisational mechanisms’ efficient design for optimising organisational learning are seen as particularly influencing these skills; the organisational structure, the HRM practices adopted by the firm and the external communication activities of the firm. Common for these structures is that, although some of them may be visible also external to the firm, they are all initiated, controlled by, or originate from within the firm2. Inspired by different strands of theoretical sources (organisational economics, human resource management and communication theory) and adding this inspiration to the point of departure taken in the resource-based view (RBV) of the firm, the paper contributes to deepening and refining the RBV3. More importantly, however, it discusses the different 1

Internal knowledge sources may be colleagues, that is, employees interacting learn from each other, and external sources may be partner firms, customers, industry specific associations and knowledge institutions such as universities and research labs. Both expert, more general knowledge and information, and knowledge on how to identify and utilise knowledge may be acquired. 2 The organisational mechanisms are not equally important for promoting learning to firms in all industries. External communication activities, and with this marketing, is for example less used by contractors in the construction firms than they are in industries based on Fast Moving Consumer Goods. Because of the expected influence on learning, and because the aim here also is to inspire to future research in the field, the selected organisational mechanisms, however, are still relevant to examine. Furthermore, external communication activities are rarely examined from a learning and resource based point of view. 3 Researchers have pointed to a few shortcomings of the RBV (e.g. Foss and Eriksen 1994). It is argued that the RBV does not sufficiently consider the organisation of resources, and that the RBV is primarily concerned with the firms’ existing resource base, rather than with the creation of new resources (Foss and Robertson

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theoretical works’ points of contact, and finds indicators of relationships between organisational learning and the focal organisational mechanisms. Hereby it provides an overview of designs and characteristics of these organisational mechanisms that are efficient for promoting learning. Being conceptual in nature, the paper encourages future research, among others empirically based studies, that contribute to illuminating insight into organisational mechanisms promoting learning. Firstly, the importance of learning to firms is discussed. Following this, underlying assumptions are presented in Section II, organisational learning is defined in Section III, Section IV examines the organisational mechanisms and the conclusion follows in Section V.

I

The Importance of Organisational Learning

Organisational learning is important to firms for several reasons. Learning allows a firm to renew itself, innovate (Rosenberg 1972; Håkansson 1989; Freeman 1991), and possibly enjoy first mover advantages, for example in form of product designs, new organisational forms and/or faster product development rates than its competitors (Barney 1991b). Knowledge constitutes input into the learning process (Foray, D., and B.-Å. Lundvall 1996), that is, knowledge transfer in many cases is a means to generate new learning and among others an agent’s existing knowledge stock, or the agents’ absorptive capacity (Cohen and Levinthal 1990), is crucial for the ability to learn (this is elaborated in Section III). Therefore, essential to a discussion of organisational learning is also a study of knowledge resources. Particularly, today where globalisation has contributed to eroding efficiency of traditional sources of competitive advantage (e.g. cost and technological advantages), organisational learning and knowledge is essential for differentiating products or services from those offered by competitors. Organisational learning is therefore a source of competitive advantage to firms (Argote and Ingram 2000). Firms may

2000). The RBV has also been criticised for being mainly “introspective”, not taking company external factors sufficiently into consideration (Foss and Eriksen 1994). The combination of the here applied theories may add angles to the RBV that promote the comprehension of internal organisational structures and of organisational learning’s importance for competitive advantages.

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choose either an exploration or exploitation strategy to achieve a competitive advantage (Barney 1991a). Knowledge of particular circumstances of time and place is initially local and dispersed among agents in society (Hayek 1945). Pooling and sharing knowledge resources is therefore an essential source for firms to problem solving, acquiring knowledge and learning. This may in particular be the case today where globalisation resulting in an intense competition, cause firms to increasingly specialise (Milgrom and Roberts 1992). As expressed by Richardson (1972), firms need to complement own resources and capabilities with complementary capabilities. Both firms following an exploitation and an exploration strategy are in need of inter-organisational relations. For this reason, organisational learning resulting not only from internal knowledge sources but also from external sources is extremely important to firms. The increased specialisation may indicate that especially inter-organisational relations and co-ordination with sources of learning external to the firm are important to firms. However, this paper seeks to identify designs and characteristics of organisational mechanisms which ensure that firms are efficiently attracting and acquiring knowledge both from internal and external knowledge sources, and which ensure that firms efficiently minimise decay of knowledge.

II

Epistemological and Ontological Platform

The process of learning does not consist of a linear sequence of steps, rather it consists of sporadic and circular processes, where it is hard to identify what makes a possible innovation arise, and whether internal or external knowledge sources caused that idea to arise. It is not the intention here to account for all processes and mechanisms in the learning process, rather it is to focus on some of the assumed essential categories of organisational mechanisms (those contributing to minimising decay of knowledge, and to attracting and acquiring new knowledge) that influence the learning process, and to discuss how these organisational mechanisms may possibly be optimally designed to most efficiently promote learning. Thus, this paper does not reject that additional processes take

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place in the learning process (it may be for example that a firm needs additional skills to transform the learning and knowledge acquired into product innovations). It is assumed that the learning skills focused upon are essential for the learning process, and that the organisational mechanisms focused upon influence a firm’s organisational learning capability, and thus function as regulators and indicators of how well developed the learning capability is4. An exact empirical testing of this particular relationship may be hard to undertake as this would require discussions of for example, whether knowledge can be compared and measured, of the value of different types of knowledge (see e.g. Argote 1999) and of whether agents have complete information hereby knowing also what he or she does not know. A theoretical assumption of the relationship between organisational learning and organisational mechanisms, however, is considered reasonable to make, and as mentioned the main objective of this paper is to discuss how selected organisational mechanisms vital to the learning process may be designed to most efficiently promote organisational learning.

II.I

Another Point of Departure

Consistent with Penrose (1959) pointing to the resource development taking place within organisations, this paper assumes that a firm’s ability to learn is determined by its internal structure (e.g. the organisational structure and the HRM-policy applied), but also by organisations in its broader or closer environment (consistent with Rosenberg 1972 and Håkansson 1989). Central to this project is an assumption that three elements are essential when discussing organisational learning: a firm’s need to learn, a firm’s possibility to learn and its ability to learn. The need for learning refers to firms’ need for acquiring knowledge to build a competitive edge in order to serve customers and survive. Whether firms’ need to learn derives from a pro-active strategy of wanting to create a market, or whether the need is part of a re-active strategy of having to adapt to market conditions will be market and industry specific. Both influences from the environment, for example such as intense 4

A more precise empirical testing of the relationship between organisational learning and the here discussed organisational mechanisms may be relevant to undertake in future studies. For example, the pay off or outcome of a firm’s investment in a specific organisational mechanism can be measured, that is, for example an input-output reasoning may provide further insight into this assumed relationship.

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competition as described in the previous section, but also internal reasons may cause the need for learning. The possibility to learn is determined by the firm’s internal and external environment; the environment consists of resources, or as focused upon in this paper knowledge sources, which may be utilised for learning, but learning possibilities may also derive from knowledge sources within the firm. In the following, learning possibilities will be referred primarily to as knowledge sources. The ability to learn refers to the firm’s ability to structure its organisational learning, that is, to attract, acquire and utilise learning possibilities, or knowledge sources, in the internal and external firm environment, as well as to the firm’s skill in minimising decay of knowledge from its knowledge stock (see elaboration in next section). Throughout the paper this ability is referred to as the learning capability. It is likely that the capability to learn consists also of other skills and processes, for example in a skill of integrating the knowledge sources and transforming them into product innovations, however, as will be elaborated in the next section, these processes will not be subject to discussion in this paper.

Figure 1: Analytical Focus

If firms possess both a need for learning and the required learning

possibilities,

they

possess

a

foundation

for

Broader Firm Environment

Learning Need • Learning Possibility •

developing a strong learning capability and thus a strength in organisational learning that can be a source of competitive

advantage.

Figure

1

illustrates

this

interrelationship.

Network Environment

Learning Need • Learning Possibility Firm Environment Learning Need • Learning Possibility •



In relation to Figure 1 and the reasoning behind it, the paper will examine how the firm is able to attract, acquire and utilise knowledge from the learning possibilities within

Learning Ability

the firm environment and from the network environment, as well as how it may best minimise knowledge decay, in order to promote its organisational learning. To limit the scope of this paper, I have chosen to omit a study of attraction and utilisation of learning possibilities in the broader firm environment, and instead focus on learning possibilities within the firm and in the network environment. The internal firm environment is here defined as the formal and

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informal structure of the firm; the network environment refers to the environment consisting of firms with whom the firm at study has traded relations, including its customers. The broader firm environment mainly consists of non-traded relations such as for example communities and regulatory frameworks set up by the State5. Expressed differently, this paper determines how firms can utilise and optimise learning possibilities (knowledge sources) deriving from its external and internal environment, while improving its learning capability (that is, the learning skills of attracting, acquiring and hindering decay of knowledge). Because of this focus the learning ability and possibility are written in bold in Figure 1. Influences are also reverse from the firm to the external environment, nevertheless for the analytical purpose these reverse influences6, are omitted in this paper (such interactions are illustrated as dotted arrows). A closer determination of what is meant by organisational learning is now relevant.

III

What is Organisational Learning?

Knowledge7 constitutes input into the learning process, and sometimes knowledge is the outcome of learning. All this comes down to defining what learning and knowledge means. I shall argue that the learning process is closely connected with the knowledge resource. Characterising learning this way it is clear that it constitutes a potential capability to the firm and thus a source of competitive advantage (Grant 1991). Over time capabilities and special skills such as learning may arise from processes and experience with combining and utilising resources. I shall argue that a firm possess both a knowledge stock (“the level of 5

With these definitions learning possibilities within the firm refer to knowledge sources such as employees with specialist knowledge, while knowledge sources in the network environment refer to co-operation for example with suppliers, buyers or competitors (knowledge sources in the broader firm environment refer to for example knowledge deriving from industry association, interaction with public universities or for example Authorised Technological Service Institutes). 6 The reverse interactions illustrate two-way causality processes, that is, that, such as Evolutionary Economists explain it, the firm and its environment may co-evolve (Langlois 1999), meaning that development patterns evolve at both the firm and the environment level from two-way interactions. 7 The literature discusses what can be defined as knowledge and what is information; hence a definition of knowledge may be in its place. It is argued that information is ”closed” since it springs from a specific set of data, and that knowledge is ”open-ended” in that it is created ongoingly (Loasby 1986; Fransman 1998). Another difference between the terms is that knowledge is dependent on the context requiring human knowers, whereas information does not require a human holder to be stored (Lorenzen 1999).

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knowledge present in a firm at any point in time“(Husman 2001, pp: 4)) and knowledge flow (“the flow of knowledge into and out of the knowledge stock” (ibid. pp: 4)), and that minimising the decay of the knowledge stock and increasing its level, as well as its value, must be in the interest of the firm, since this implies that the organisational learning capability thus is strong (ibid.). Argote (1999) refers to such a relationships as a need for acquiring and retaining knowledge. Thus, organisational mechanisms are efficiently designed if they ensure that firms attract and acquire new knowledge and minimise decay of its knowledge stock. Expressed differently, this paper sees the value and level of the knowledge stock as an indication of a firm’s organisational learning capability, that is, a high level and value of the knowledge stock indicates that the firm is good at learning, and that the firm thus is likely to possess organisational mechanisms that are efficiently designed as they contribute to optimising the organisational learning capability. Although different knowledge types, for example general, specialised, tacit or explicit knowledge, may lead to different incentive and cognitive costs associated with transferring knowledge (Husman 2001), and thus that the different knowledge types will influence the ease with which knowledge can be shared between firms and employees within a firm, I shall leave out a discussion the effect of different knowledge types. Instead this paper discusses, in a broader sense and more generally, how organisational mechanisms may be designed to promote the organisational learning capability.

III.I

The Learning Skills: Knowledge Decay, Attraction and Acquisition

To sum up it is contended that the organisational learning capability is comprised of various learning skills, some of which are particularly important for organisational learning. These learning skills of hindrance of knowledge decay, knowledge attraction and knowledge acquisition is accounted for here.

Knowledge Decay Decay of valuable knowledge refers to for example employees, possessing valuable knowledge to the firm, choosing to leave the firm. It may also be valuable knowledge spilling over to external relations, which implies that the value of the knowledge to the

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firm decreases. The firm may still possess the knowledge, but having shared8 it with others implies that its relative market value will be reduced, as it is no longer unique. Hereby its value as a source of competitive advantage has diminished. All knowledge shared between individuals or organisations will go through this process, but what a firm should aim at minimising is the extent to which knowledge, confidential and valuable for the competitive advantage creation, decays. Defining knowledge decay in this manner implies that the firm either looses expertise when employees leave, and with this its absorptive capacity (Cohen and Levinthal 1990) will be reduced, or that confidential knowledge is lost when knowledge decays. With a limited absorptive capacity it is complicated for firms to take in and utilise future knowledge too. Absorptive capacity refers to the ability of understanding and utilising the knowledge received from other internal or external knowledge sources: the individual taking in information or knowledge compares this with his or her existing knowledge stock (ibid.). A reduction of expertise not only is costly to firms measured in expenses on training the employees etc., but also in its possibly reduced ability to learn, create new knowledge and innovate. Therefore, as March and Levitt (1988) point to, attempts should be made to preserve knowledge and avoid its loss through turnover of the personnel. Various mechanisms and storing possibilities, I shall not discuss here, are available to ensure preservation of knowledge. Sometimes knowledge decay is a prerequisite for new learning (Fiol and Lyles 1985). A lack of ability to abstract from existing irrelevant or obsolete knowledge results in institutional inertia (Rumelt 1995) or competency traps (Levitt and March 1988), inflexibility and slow response time to adapting to internal or external changes (Hedberg 1981). Thus, sometimes employees need to accept to abolish existing working processes and routines to adopt and give room to new ones; this is the notion of unlearning. If knowledge decays because of unlearning, that is, if old procedures are “forgotten”, knowledge of these procedures no longer constitute a valuable source to the firm and decay of this knowledge should thus not be hindered. The following discusses how decay of valuable knowledge from the knowledge stock can be avoided or minimised. 8

Throughout the paper the term knowledge transfer is applied rather than knowledge sharing is. I shall not discuss possible differences between these two terms. The primary focus here is to examine how the ”knowledge receiving” agent in the knowledge transfer process optimises the knowledge in-take, thus possible implications of a “knowledge sending” firm is not focused upon.

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Knowledge Attraction and Acquisition Knowledge attraction and acquisition refers to the firm’s ability to attain new knowledge to add to its knowledge stock. Researchers also point to the importance of acquiring new knowledge for organisational learning (e.g. Bierly and Hämäläinen 1995 and Inkpen 1998). Knowledge may be acquired either from knowledge creation resulting from employees cooperating (internal firm environment), or from other firms, end-consumers, customers, suppliers (in the network environment), (or, which is not discussed, from for example public institutions in the broader environment). It can be argued, especially in relation to external knowledge sources, that firms need firstly to attract potential knowledge sources, and therefore need to put an effort into creating a proper image and profile of the firm to the environment, and secondly, when having attracted these knowledge sources, need to utilise them, that is, acquire knowledge from them for example by engaging in a knowledge transfer process with them. What should be stressed is that not all knowledge that may be attracted and acquired is equally relevant knowledge, that is, will contribute to giving the firm a competitive advantage. Less relevant learning may be for example when an external agent provides a firm knowledge about how the external agent likes his or her cup of coffee or what the agent may consider the shortest route for getting to work. In another context, this knowledge will be relevant, but it serves little value to the firm in respect of contributing to competitive advantage. Hence, a firm should aim at attracting relevant knowledge sources to utilise. It may be difficult, however, to determine the possible relevance of a knowledge source and of the knowledge that may be derived and utilised from this source, before it has been attracted. A prediction of what possible new ideas and learning may arise from engaging in knowledge creation processes may not be possible to make. Nevertheless, firms can search for and aim at attracting those knowledge sources they initially consider potentially relevant. Since a firm’s image and profile in the early stages of a knowledge attraction process is likely to influence what knowledge sources will be attracted to the firm, the learning skill of knowledge attraction will be discussed in relation to the organisational mechanism of external communication activities. It appears from this discussion, that the categories of organisational mechanisms must

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be designed to increase the firm’s skill in attaining new knowledge, as this will increase the knowledge stock hereby promoting organisational learning. As mentioned the absorptive capacity of the firm plays a vital role in attaining and understanding this new knowledge.

IV

Designing Efficient Organisational Mechanisms

This section discusses three categories of organisational mechanisms and how they may be designed for optimising the firm’s organisational learning capability, or more precisely the firm’s skills in attracting and acquiring knowledge from internal or external knowledge sources, as well as the firm’s skill in hindering relevant knowledge decaying from the knowledge stock. These categories of organisational mechanisms have been selected for discussion as it is contended that they especially they influence these learning skills, and that they, if designed properly, hence promote organisational learning. The organisational mechanisms discussed are categorised into organisational structure, HRM activities and external communication activities, but the boundaries between these categories are fluent. Each category of organisational mechanism is discussed in turn.

IV. I

The Organisational Structure

“A firm’s competitive advantage potential depends on the value, rareness, and imitability of its resources. However, to fully realize this potential, a firm must also be organized to exploit its resources and capabilities.” (Barney, 1995 pp: 6)

This quote illustrates the importance for firms to be organised and structured in a way that ensures that they are geared for deploying, maintaining and developing their resource base, and with this also the knowledge resource and learning capability. Fiol and Lyles (1985) also point to the organisational structure as especially important for the probability of learning to occur. The organisational structure is often seen as an outcome of learning (ibid.), that is, such as explained by the Natural systems view, organisations may initially

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have emerged to fulfil some intrinsic needs of people or the society (Scott 1992). Not all consistent with the Natural system view, I shall argue that irrespective of how the organisational structure may initially have come into existence, the structure is vital to control the learning processes too. Which ever comes first, learning or structure, is not important here, what is important is how to best design the structure and organise learning processes that promote organisational learning. A firm’s organisational structure must be designed to encourage organisational learning. Within this category of organisational mechanisms I shall narrow my focus down to touch upon mechanisms such as contact points, communication structures and power centralisation. In relation to Figure 1, in particular the organisational structure will affect the learning skills that minimise decay of knowledge and the skill that acquires knowledge from knowledge sources within the firm and from the network environment.

Contact Points and Communication Structures It may be argued that knowledge decay in form of for example confidential knowledge valuable to the firm is minimised if the firm is structured in a manner when contact to external relationship, that is, knowledge sources, happens through only a limited number of contact points. Contact points refer to employees in a firm that undertake most of the contact with external relations. With limited possibilities of interacting with external relations the risk of knowledge spill-over of confidential knowledge will be limited too (and with this an issue I shall not discuss further here: the risk of the external relations replicating elements of the valuable knowledge underlying the firm’s products or processes). On the other hand, limited contact points also imply limited access to external knowledge acquisition, that is, learning from for example other firms. Another consequence of limited contact points is that few persons interacting may be insufficient for building an efficient internal communication structure. Unless knowledge exchanged is kept very simple, complexity, technical content and number of issues will make few contact points deficient (Baughn et. al. 1997). Few contact points may not be able to serve the needs of both internal and external relations, that is, it may be collecting and acquiring external knowledge sources insufficiently, as well as insufficiently spreading out knowledge acquired from external sources to the right employees internally. The latter

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may result in a poor internal knowledge acquisition. Whether this will be the case naturally depends also on the quality of the contact points, that is, on the skills and expertise of the employees that function as contact points, as their insight will have an effect on how efficiently knowledge is absorbed and dispersed within the firm. Research has shown that efficient intra-firm knowledge transfer, and thus external acquisition, rests upon an efficient and systematic internal communication network (Baughn et. a. 1997). That is, an efficient internal communication structure is needed to disperse knowledge received throughout the organisation (Bierly and Hämäläinen 1997). Thus, I shall argue that a firm should ensure that the right employees function as contact points, and that a firm should strive at not too few contact points if organisational learning is on the agenda. Managers must assess the firm’s situation and environment to find the balance between not too few and not too many contact points (among others industry specific relations will influence on where that balance may be found). Besides this, an efficient and frequent communication may contribute to facilitating trust not only between colleagues, but also between the firm and its external relations. Trust in itself may even facilitate a richer flow of information and communication between individuals (Cooke and Morgan 1998), that is, in this manner communication is a selfreinforcing mechanism. Efficient communication and trust may also contribute to employees not leaving the firm; that is, knowledge decay is potentially minimised. In general, when it comes to intra-firm knowledge transfer and acquisition, similarities in the interacting firms’ communication structure and organisational designs may promote understanding between the parties (Husman 2001) and thus ease knowledge acquisition.

Power Centralisation A decentralised structure allows for shift of beliefs and actions as the individual member of the organisation’s cognitive workload is reduced (Fiol and Lyles 1985), and as colleagues engage in the decision making process. Thereby new patterns and associations are facilitated and a more creative environment may be created. According to Senge (1990) a company’s learning potential increases when thinking and acting are integrated at all levels, since it is not possible for anyone sitting on the top to possess sufficient insight into all relevant cases and information.

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A matrix structure facilitates organisational learning as it fosters co-operation, since different functions become interdependent (Minzberg 1983: Bakka et. al. 1999), and thereby a possibility of learning other functions and responsibility areas, than those traditionally held, arises. A matrix structure or other organisational structures encouraging co-operation and project management is one way to decentralise power, and open up for building communication, co-ordination and incentive structures that promote co-operation and learning. Another effect derived from decentralisation of power is that employees may feel appreciated and motivated, which may ultimately make them stay with the firm. This discussion argues for the need of designing the organisational structure in accordance with the characteristics here outlined. However, there may be implications experienced with designing the characteristics. For example, there may be costs associated with establishing a matrix structure. Its strength of flexibility and eased project management is also its weakness. A consequence of project orientation in a firm is a risk of unclear lines of command and reporting. Does an employee prioritise and report to the project manager, or to the department and line manager the employee may still be part of? An unclear line of command may create confusion as to what colleagues are working with and of whether all employees and projects work for achieving the same overall company objectives. Such examples illustrate possible implications of designing the learning promoting characteristics, and may explain why some managers do not initially design firms to match such characteristics. A second comment must be added. Having emphasised the importance of these characteristics for promoting organisational learning, it must be stressed that for organisations, or rather its employees, to learn, the firm must be continuously adaptive both to internal and external influences and knowledge sources. If the firms are not adaptive they risk the danger of path dependency and institutional inertia, since firms’ patterns of governance, conflict and learning are cumulative in nature (Coriat and Dosi 1998). The characteristics identified should thus not be seen as static, but as characteristics that exactly allow for flexible behaviour and adaptation.

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IV. II

The HRM Policies

A focus on HRM policies is relevant when discussing organisational learning as this opens for a discussion of how the organisational members may be encouraged and stimulated to learn more, that is, efficiently designed HRM policies, whatever efficiency may refer to for the different firms, function as means for ensuring consistency between the organisational members’ actions and the overall goals of the managers and firm. Although this can be seen as one objective of HRM policies, another objective can be employee well being and fulfilment of their needs. In relation to Figure 1 the HRM activities especially will affect the skills of the learning capability that acquires knowledge from internal and external knowledge sources and that minimises decay of knowledge focused upon. The learning skill of attracting new knowledge from the external environment may also indirectly be affected by the HRM policies, for example potential employees may be attracted to the firm if it is communicated external to the firm that employees are treated well, nevertheless since this is a side effect of HRM activities this will not be taken into further account here. For exploration and organisational learning to take place firms must encourage employees to acting innovative, and leave room for this. Firms must reflect upon their role in managing human capital. Approaching subordinates with a laissez faire management style or one of tight control and supervision will influence employees’ incentives for learning and creating knowledge differently. Is it the management’s role to be a strategic partner among colleagues thereby encouraging to participative management or is it to be more of for example a change agent serving as a catalyst for change within the firm (Yeung et.al. 1994)? Management styles influence organisational learning and the room employees are given for experimenting and learning. In the following, however, I shall examine HRM activities interrelated with management styles, and see these HRM activities as different angles to management styles. Specifically, I shall discuss designs of activities that motivate employees to learn, of incentive structures within firms and of corporate culture. Essential is it that there is a consistency in the HRM activities, that is, that they support each other in achieving first of all the goal of organisational learning. Consistency should in general account for the organisational learning mechanisms discussed so they support each other

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in attaining organisational learning. Encouraging to organisational learning can be done in several ways. I shall discuss some of those that have a direct influence on organisational learning instead of providing a comprehensive overview of all HRM activities. Another point of consideration before discussing motivation is how to hire new employees. In order to acquire most possible knowledge from external knowledge sources, too excessive socialisation too rapidly of newly hired employees should be avoided (Levinthal and March 1993), that is, the firm should leave room for heterogeneity in ways of thinking and acting. Newcomers may possess valuable knowledge and information possible to pass on to or share with the new colleagues (unless, as will be discussed below, employee contracts limit their knowledge transfer possibility). Thus, firms must find a balance of training newly hired and not socialising them excessively too fast, as otherwise the firm’s ability to learn from individual deviance is likely to be reduced.

Motivational Activities If knowledge transfer and teamwork is encouraged within the firm organisational learning too is promoted. The knowledge stock will be maintained and the ability to absorb knowledge and learning from external sources will be trained. Another effect of motivating employees is that their inclination to leaving the firm is likely to decline. Employees feeling appreciated and motivated are likely to stay with the firm meaning that the knowledge stock does not decay by employees leaving the firm. Motivation of employees may take many forms, and not all types of motivational activities lead to increased knowledge transfer and learning, but several types of motivation activities, of which I shall point to a few here, may lead to satisfied employees that will choose to stay with the firm thus keeping the knowledge stock intact. Training employees may be one way to promote organisational learning. Partly employees can be trained to become better at group work, and partly training can motivate employees in a more general sense not in particular to increase knowledge transfer and learning, but to not leaving the firm and thus not decreasing the knowledge stock. Other measures motivating employees that may also directly or indirectly contribute to promoting organisational learning are for example job design, or in particular job rotation

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and job enrichment. Job enrichment entails enlarging the variety of the employees’ tasks (Minzberg 1983). Job design may promote internal knowledge acquisition, as more employees will possess insight into different functions of the firms, which ultimately may increase their problem solving skills. At the same time job design may minimise knowledge decay as it may reduce alienation and increase commitment and satisfaction of workers (e.g. Herzberg 1966; Stone 1995 and Noe et. al. 2000). Depending on the nature of the work, job design will be a relevant activity to promote motivation and learning with. As I shall point to in the following there may be barriers to organisational learning, for example poor incentives to knowledge transfer.

Incentive Structures Unless monopoly rights of innovative ideas or projects are allocated to the organisational members, the rights to successful innovations rest with the firm. Managers should acknowledge this and as a consequence of this, also be willing not to constrain the most innovative employees too much with routine tasks, too tight deadlines or the like, as this will not encourage to organisational learning. Besides this, managers should accept that successful innovations may not always be the outcome of innovative endeavours, and managers should thus be willing also to bear the risk of less successful innovations, that is, establish a safety net for explorative failures, for example by leaving room on the budgets also for failures, as well as managers must be ready to reward those employees that may be identified as key contributors to an innovation (Levinthal and March 1993). If employees are charged for possible failures themselves, they may be reluctant to take on new projects (Milgrom and Roberts 1992). Otherwise employees may be reluctant to take on Exactly which employees contribute to an innovation can, due to the intangible nature of knowledge and learning, be hard to identify. Nonetheless, managers should be aware of which knowledge constellations are valuable for knowledge creation and thus should be rewarded and kept intact. Managers should acknowledge that poor performance in itself may lead to an intensified search for new solutions and thus to encourage organisational learning, this interpretation corresponds with the adaptive learning perspective (Cyert and March 1963). If this rationale is accepted and followed by managers a sound reasoning will be underlying the incentive structures designed in the firm.

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Closely interrelated with incentive structures are co-ordination mechanisms. To achieve the gains of co-operation, this be co-operation between employees within the firm with each their specialised skills or between a firm and its external relations, activities, decisions and resources need to be co-ordinated (Milgrom and Roberts 1992). However, for co-ordinated action and activities to happen, the owners’ of the resources and skills must have an interest in, or incentives to, engaging in co-ordinating each their objectives (Grandori 2000). The following discusses incentive structures for employees to engage in knowledge creation processes first of all with colleagues, that is, acquisition of knowledge from internal knowledge sources and incentive structures’ effect on knowledge decay. (See Grandori 2000 for a focus on co-ordination mechanisms and knowledge transfer). As indicated, lacking incentives may be a barrier to organisational learning. Hence incentive must be created that encourages to organisational learning. Employees must be given incentives to transfer knowledge to, and learn from, colleagues if new knowledge is to be created. Employees should not fear that sharing knowledge with colleagues makes themselves superfluous as their own special skills are now possessed also by others (Grandori 2000). At the same time employees should not fear that colleagues act opportunistically9 and steal their ideas, as well as employees should not fear that that they are not rewarded for giving ideas to each other. The same fear employees should not have when they interact with external relations (partners, suppliers or customers). Furthermore, employees must be given incentives to accepting the need for sometimes abolishing existing procedures, although the employees are good at pursuing them, if the procedures are no longer relevant to the firm (the notion of unlearning). This fear may be reduced by rewarding employees on basis of a team or small group performance (for elaboration of this, see the following). Such incentive structure will give no incentives to employees for stealing ideas from each. Besides this, the work environment and corporate culture may contribute to creating collegiality and trust among the employees as a code of behaviour may arise along with an internal shared value system encouraging co-operation. If a corporate culture at the same time emphasises an entrepreneurial spirit, it may imply that a greater degree of open-mindedness to knowledge transfer and learning is ensured (corporate culture is discussed in the next paragraph). 9

Opportunism means that both parties try to maximise his or her self-interest at the expense of the other party’s benefit. For example, if a partner misuses the knowledge acquired.

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The exact type of incentive plans used must match the type of firm, industry and work undertaken by the employees that are to be rewarded. Thus, rewards for performance may take form of compensation, and variable pay plans based on external benchmarking to the industry standard may be better to use for professional and managerial employees, whereas pay plans based on internal benchmarking may be more suitable for tasks that are associated with direct operational areas with clearly defined output (Stone 1998). Small group incentive plans (ibid.) may be particularly relevant for certain firms to increase organisational learning. Small group incentives increase flexibility in job assignments as it focuses on team accomplishments rather than individual performance, which thus promotes a strong group perspective. These incentive systems recognise that work situations differ and encourage involved employees to use their combined skills to solve problems, that is, encourages to internal knowledge acquisition. Recognition programs consisting of various forms of rewarding such as cash, merchandise, time off, certificates etc. provided to employees for having met a defined set of criteria, and organisation wide incentive plans that cover all employees and take form of for example a bonus plan or incentive plan, are other examples of incentive structures that can be applied to promote organisational learning. These incentive structures also contribute to retaining the employees since they are given incentives to stay with the firm. Not directly related to designing efficient incentive structures that encourage to organisational learning, but which may efficiently contribute to keeping decay of knowledge down, is the design of various formal employee contracts. Formal contracts give employees incentives to not leaving the firm in that they are forced to stay for a certain number of years, or in that employees are hindered in working with competing firms for some years after they may have left the firm, or in that employees are prohibited from discussing confidential company information with agents external to the firm (Liebeskind 1996). Examples of formal contracts that ensure this are exclusivity rules, confidentiality clauses and non-compete clauses. If the formal contracts are not fulfilled, the employees will experience sanctions. In that way they feel committed to stay with the firm. The ultimate outcome of contracts is thus minimisation of outflow of knowledge from the knowledge stock, either in form of employees possessing valuable knowledge leaving the firm, or in form of valuable and confidential knowledge spilling over to external agents that may

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misuse the knowledge for own purposes. Contracts for aligning incentives and ensuring employees’ commitment (Milgrom and Roberts 1992) must be applied carefully, or maybe even, if possible, avoided. Designing contracts may be perceived as a signal from the management that it does not trust the employees, and ultimately a vicious circle of distrust between the employer and employees may arise. As pointed to, especially trust between colleagues, employees and management and the firm and its external relations may promote organisational learning and thus contracts potentially reflecting distrust are conflicting with the wish of enhancing trust. These considerations on contracts also apply for contracts designed between the firm and its external relations.

Corporate Culture The corporate culture, and closely related to this, the work environment, also is highly influential on organisational learning (Fiol and Lyles 1985), or in particular knowledge decay and internal knowledge acquisition. A strong corporate culture may promote knowledge transfer and teamwork, and in an organisational learning situation, contribute also to a faster absorption of knowledge and learning. Besides this, a work environment and corporate culture that contributes to strengthening the personal ties between the employees and giving them a common purpose is likely to contribute to keeping the knowledge decay, in form of employees leaving the firm, low (Scott 1992), since employees may get emotionally attached to the colleagues, which may contribute to increasing the personal costs of leaving the firm (Liebeskind 1996). Characteristics of a corporate culture that in particular may encourage employees within a firm to co-operate, share knowledge and learn from each other may be one that reflects a can do attitude among the employees. That is, one that reflects a high risk preference among employees, which spreads out an entrepreneurial spirit and which emphasises learning in teams as well as on individual levels (Levinthal and March 1993). In such a culture the perception or fear of ideas being stolen by others is likely to be less explicated. Rather, a shared belief stimulating organisational learning may be created among the employees. This mechanism is similar to what is referred to as creating a creative tension, where the gap between where the firm is and where it wants to be drives the motivation for reaching desired positions (Senge 1990). The importance of corporate

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culture for organisational learning may be clear, but the mere creation or change of culture in organisations is not easily made. Martin and Meyerson (1987; 1988) stress the need of understanding culture from three different theoretical paradigms comprised of each their assumptions about culture and organisations. Although complicated to understand culture from three paradigms, Meyerson and Martin emphasise that this should be attempted to avoid blind spots, that is, that different sources and types of change are not considered. As with the organisational structure, some firms will potentially experience implications with designing some of the here mentioned HRM policies. As already mentioned promoting organisational learning via HRM activities is not without complications, since the right mix of incentive structures applied to transfer knowledge and learn has to be found. Also establishing a corporate culture that supports learning may not be as easy to do either, since this requires all employees are interested in and willing to engage in creating and maintaining the culture. Culture cannot simply be imposed top-down. Besides this, as stated, simply understanding cultures, which is a prerequisite for possibly designing it to promote organisational learning, is complicated. Again such examples illustrate implications of designing characteristics that supports organisational learning, and thus contribute to explaining why these characteristics may not initially have been designed by firms. Similar also to the dynamic element pointed to under the organisational structure, that the organisation continuously needs to adapt to avoid path dependency and institutional inertia, HRM policies and activities also need to be adapted according to what is strategically important to organisations (Tyson 1999). Thus, the here outlined HRM organisational mechanisms may need to be adapted over time since for example the specific techniques for motivating employees may change over time.

IV.III

External Communication Activities

External communication activities can be defined as the activities intentionally undertaken and possibly initiated by the firm in order for it to communicate with agents in its environment. As suggested in Section II, to assess an organisation and its operation

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necessitates not only looking inside the system, but also outside it. This approach corresponds largely with the contingency or Open System view (Scott 1992), where the organisation needs also to adapt to its external environment. Communication across firm’s boundaries has increased in importance over the last two decades with the rise of the information era (Manev and Stevenson 2001), researchers even speak of the rise of a boundaryless organisation (Dess et. al. 1995). As mentioned, both for exploitation and exploration purposes firms need to interact with each other. Examining the external communication activities also is crucial because marketing and other external activities, more than earlier, have evolved to become increasingly integrated with other functions of the firm, rather than being a separate entity of the firm (Firat et. al. 1994; Doyle 1995). Marketing and sales people in particular may be essential for attracting and acquiring knowledge from the external environment to pass on to colleagues. Their communicative linkages can aid in monitoring, exchanging with or representing the firm to the environment (Monge and Eisenberg 1987), as well as be a channel for influencing the firm’s socio-political environment (Finet 1993; Seiter 1995). The following discussion will not go into further specific examinations of marketing related activities, but reflect on external communication in a broader sense. In relation to Figure 1, this organisational mechanism affects mainly the part of the learning capability that attracts external knowledge sources. One could argue that also internal knowledge sources in the form of employees must be attracted, but since these knowledge sources are already in the firm, less effort may need to be put into attracting or convincing them of engaging in knowledge creation processes with their colleagues. Thus, I shall concentrate the discussion on the skill of attracting external knowledge sources, either in form of potential new employees, or in form of knowledge deriving from potential and existing customers and partner firms, that is, knowledge sources in the network environment. As mentioned, I shall omit a discussion of the broader firm environment although a firm needs also to consider how external communication may be organised to attract knowledge also from this level of environment. That is, the discussion is here on how to design the external communication activities to best possible attract and acquire knowledge from the network environment. It is assumed that the knowledge sources are present in the environment, that for example human capital or a labour force

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with the relevant skills is potentially available in the network environment. The different knowledge sources in focus here, potential and existing customers, employees, and other firms such as suppliers and partner firms, provide different types of knowledge to the firm, and the knowledge acquired may result in different types of learning to the firm. Input into the production process may be acquired, what may be characterised as one example of single loop learning (Argyris and Schön 1978), or lower level learning (Fiol and Lyles 1985) which is to obtain know-how in order to solve specific problems based on existing premises. Besides this, the knowledge attracted may ultimately foster new practices, routines and working processes based on a restructuring of existing manners applied, that is, inspire to double loop learning (Argyris and Schön 1978), or what is also referred to as higher level learning (Fiol and Lyles 1985). More specifically, the customers may provide valuable knowledge about their needs and preferences that may be relevant input to new product development. New employees, that may be temporarily hired consultants or long term hired, may possibly provide some insider information from earlier employers. The existence of different types of non-compete clauses between the newly hired and his/her former employer will reduce the likelihood of such knowledge spill-over to take place. Eventually, such knowledge may be a relevant input for competitive purposes. Besides this, new knowledge is contributed with in form of new and different skills than those the firm already possess in its knowledge stock. This new knowledge may be valuable in future knowledge creation and learning processes. It is important here, as mentioned, that a firm’s recruitment policy does not include too excessive socialisation (Levinthal and March 1993) of the newcomer as this will imply that this person’s valuable knowledge may not be properly utilised. Interaction with other firms such as suppliers and partners also implies access to valuable knowledge potentially relevant for example in the production process. As explained, networking between firms today is popular and thus an evidence that firms engage in joined activities for creating competitive advantage. Firms’ task is thus to find out how the external communication activities need to be designed to appeal to or attract knowledge from these interest groups or knowledge sources. To collect knowledge from these knowledge sources, firms may need to build internal systems to gather and utilise this external knowledge, as mentioned already an efficient

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internal communication structure is important in this context, and the use of different Management Information Systems may ease this process. Besides this, the firm may need to undertake surveys sometimes in order to assess customers’, and other interest groups’, perception of the firm’s market position and image. Such information will make maintenance of the efficient design of the external communication activities possible. In this discussion I look only at direct effects of the design of the external communication activities for attracting knowledge, that is, although for example the external communication activities may lead to a strong internal relationship among employees, which again may ultimately contribute to keeping the rate of knowledge decay low, these indirect effects will not be discussed further in this paper. An efficient design of the external communication activities is one that appeals to all these knowledge sources. I shall point to characteristics of firms that in general are likely to attract firms’ interest groups, the specific measures or attributes the different firms should apply to signal these here suggested characteristics, however, will differ from firm to firm among others depending on the industry they operate in. Thus, I shall not discuss the exact attributes a firm should apply to signal the characteristics. It seems that today more firms “scream” louder in the attempt of acquiring attention from their various interest groups and customers (Schultz et. al. 2000). The vast amount of communication tools available today (for example the Internet has become increasingly popular) is one reason why it seems that we live in an environment of information overflow. Firms struggle increasingly for achieving interest groups’ attention, but as firms struggle to build their reputation and identities, their very attempts to do this may contribute to the likelihood of them not being heard, because all competing firms’ external communication drown their individual messages (ibid.). As a consequence of the limited attention a firm is likely to get from its interest groups, it is extremely important that the firm carefully manages its external communication activities to ensure that the right set of images and values are communicated also the first time an interest group is confronted with the firms’ messages. The following presents a set of characteristics that firms should prioritise in their external communication activities, since exactly these characteristics are assumed to attract and appeal to the different kinds of interest groups. In order to appeal to these interest groups, the individual firm must give the

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impression that the firm is professional and one of the best within its line of business, or at least that the firm possess a great potential for becoming one of the best. To attract potential partner firms, this may be one of the most essential selection criteria a potential partner firm will look for. Equally important may professionalism be for attracting new employees, as their interest is to join a successful work environment. Finally, for attracting new customers professionalism too is essential, as customers too want the best value for money spent. Other attributes or characteristics of the external communication activities that are likely to appeal to the mentioned interest groups are the reflection of politically correct values consistent with the values of the broader environment of the time. Implied by this is that the firm behaves ethically correct and engages possibly also in local community activities and shows awareness of a social responsibility it should take. Throughout the 1990s firms’ (and consumers’) selection criteria when searching for suppliers have expanded to contain not only price and quality issues, but also an assessment of the suppliers’ values, behaviour and ethic standards (Larsen et. al. 1998). It seems that firms seem to be increasingly aware of this. An increased popularity among at least Western European firms to attempt to account for their knowledge levels, and to engage and be visible also in the local community, to sponsor politically and socially correct events such as AIDS shows etc. are examples of firms today being aware of the importance of taking a stand also to social issues in the community, make visible the firm’s value system to the external environment if they are to survive and not only attract customers, but also the right employees. Reflecting to the external environment that employees are treated well is also critical to firms as this may contribute to attracting new and relevant employees. Attracting the right employees is extremely important. On the one hand, more experienced and more trained individuals generally tend to perform better than less experienced or trained ones, on the other hand more experienced and more trained individuals also tend to produce fewer surprises and thus increase reliability (Levinthal and March 1993). Employee reliability is critical both internally in the organisation for attracting colleagues’ to engage in knowledge creation and learning processes with, but equally important is the reliability for attracting partner firms and customers, since reliability may lead to high expectations

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to the performance of the firm. Often stated is it that it takes twice the effort to re-establish credibility and reliability for a firm than to maintain it by performing as the interest groups expect the firm to perform (Patterson 1996; Doyle 1995). Hence, attracting the right employees is vital for the long-term survival of firms. Exactly what are the right employees will differ from firm to firm, and industry to industry. It may be useful to distinguish between firm specific, general knowledge (e.g. Tsang et. al. 1991) and industry specific knowledge (Laursen et. al. 1999), where general knowledge such as for example a Masters degree is equally useful to most firms, where industry specific knowledge is applicable for more firms in the same industry, and where firm specific knowledge is relevant only to the individual firm that has developed the knowledge. Some firms will need to attract employees possessing a more general knowledge; others will be in need of more specialised knowledge. Due to such distinctions it also evolves that the need for labour changes over time, and that, for some firms, a high educational level is bearing for learning and growth, whereas in other firms more industry specific knowledge determines growth. As was the case also with the former discussed categories of organisational mechanisms, the external communication activities may, in some firms, not be designed in accordance with the characteristics here identified. Again, designing the external communication activities this way may not be easily done among other because of the difficulty it is in practicability to satisfy all interest groups. There may be conflicting interest among the interest groups in the external environment, as well as such conflicting interests may preside within the firm too. Besides this, establishing a structure and a system for monitoring the environment may be costly in expenses and human capital. In addition to this, there may be other reasons to why most firms may not adopt the discussed external communication activities. Similar to the organisational mechanisms of organisational structure and HRM policies the specific characteristics and especially the specific attributes of external communication activities are likely to change over time. For example the value system of the individual firm, as well as that of the society in general, may change. Thus, the purpose of this discussion was partly to stress the critical task of examining exactly what is communicated externally as the rate of attention the firm can expect to acquire from its

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interest groups is increasingly limited. Partly the purpose was to outline the types of characteristics that in general are expected to appeal and attract interest groups in the network environment.

V

Conclusion and Suggestions For Further Research

Organisational learning is important to firms. It is a potential source of competitive advantage as it may lead to various types of process or product innovations. Inspired by different theoretical strands this paper conceptually points to a relationship between organisational learning and three selected categories of organisational mechanisms. The purpose is a theoretical identification of organisational mechanisms available to a firm to promote learning. The paper’s contribution is to collect different categories of organisational mechanisms and present an overview of characteristics that these organisational mechanisms ought to possess to promote organisational learning. It is contended that the organisational learning capability consists of various learning skills, and that in particular a learning skill of attracting and acquiring new knowledge, and a learning skill of minimising decay of knowledge from the firm’s knowledge stock is essential for organisational learning. The paper examined three categories of organisational mechanisms; organisational structure, HRM policies and external communication activities, and argued that firms characterised by an organisational structure with decentralised power, possibly organised around projects, with high quality of, and a reasonable number of, contact points and with an efficient internal communication structure will have the potential of promoting organisational learning in that knowledge decay is minimised, and the firm has the potential of acquiring new knowledge from internal and external knowledge sources. It is also argued that firms characterised by HRM policies of not too tight management style and control, not too heavy socialisation of newly hired employees, of training and job design as motivational activities, of incentive structures characterised by incentive plans, recognition programs, organisation wide incentive plans and/or employee contracts, and of the possession of a strong corporate culture emphasising an entrepreneurial spirit, will

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find it easier to minimise knowledge decay and to increase especially internal knowledge acquisition. Furthermore, the paper finds indications that firms with external communication activities representing the firm as a highly professional entity, which acts in accordance with the politically and ethically correct values, and which treats its employees well will find it easier to attract potential partner firms, customers and employees. Expressed differently, managers may pursue what can be termed a learning strategy whose purpose it is to continuously ensure that the organisational mechanisms are designed in accordance with the here outlined characteristics, as these characteristics will allow firms to promote and develop an advantage in organisational learning. Finally, the paper points to possible implications firms may experience with designing the organisational mechanisms in accordance with the recommendations put forward here. The findings of the paper are summarised in Table 1. Horizontally, the optimal design or characteristic of the focal organisational mechanisms are shown, as well as are the skills essential to the learning process. The vertical axis presents the organisational learning mechanisms available to a firm for promoting organisational learning.

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Table 1: Organisational Mechanisms’ impact on the learning skills (organisational learning) Skill in Learning Process Organisational Mechanism

Effect on: Knowledge Decay

Effect on: Knowledge Attraction

Effect on: Knowledge Acquisition

• Contact Points

• Ensure quality of & increase in number

• Minimises decay of confidential valuable knowledge

• Communication Structure

• Ensure frequent internal & external communication

• Minimises number of employees leaving

• Increase possibility of internal & external knowledge acquisition

• Power Centralisation

• Decentralise power

• Minimises number of employees leaving • Minimises number of employees leaving

• Increases internal knowledge acquisition • Increases internal knowledge acquisition

Organisational Structure

HRM Policies

Design to promote learning skills

• Management Style • Avoid tight control • Avoid excessive socialisation of newcomers



• -

-

• Increase possibility of internal & external knowledge acquisition

• Motivation

• Training • Job design

• Minimises number of employees leaving

• Increases internal knowledge acquisition

• Incentives

• Build incentive plans • Recognition programs • Organisation wide incentive plans • Employee Contracts

• Minimises decay of confidential knowledge spill-over & employees leaving

• Increases internal knowledge acquisition

• Corporate Culture

• Strong, can do & entrepreneurial, high risk preference spirit

• Minimises number of employees leaving

• Increases internal knowledge acquisition

Page 30 • Professionalism

External Communication Activities

V.I

• -

• Potential partner firms, employees & customers

• Politically, Ethically & Socially Correct Values

• Potential customers & employees

• The Treatment of Employees

• Potential employees

• -

Future Research

Due to the importance of organisational learning in particular today, more research within this field must be called for. Particularly in relation to this paper more research is needed to support the generality of the indicated relationships between organisational learning and organisational mechanisms. Empirical studies in particular are required, and for example comparative studies across industries may be of relevance. Industries suffering from learning, innovation and organisational problems compared to industries more conscious, experienced with and better at organising knowledge and structuring their learning processes, or which at least structures their organisational learning differently, may be one example interesting to study. It may be possible to derive learning lessons across the industries. Another particularly relevant future study would be to test additional organisational mechanisms’ impact on organisational learning than those discussed here. For example research has been conducted already within the relationship between co-ordination mechanisms and intra- and inter-firm knowledge transfers (see Grandori 2000). However, much more organisational mechanisms are still left for exploration. Finally, as stated already firms and systems need to be examined as part of their wider context, that is, because firms are influenced by and influence back on the surrounding environment, such influences on the learning skills here identified should be studied too. That is, the narrow network and firm level perspective discussed should be followed up by an identification of knowledge sources deriving from the broader firm environment.

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