Proceedings of the 8th International Conference on Intellectual ...

Maurizio Massaro and Andrea Moro
performance targets with actual performance achieved. Thus, diagnostic approaches could help <strong>the</strong>
KL process by analyzing planned activities, showing results obtained in order to create a common
sense <strong>of</strong> knowledge in <strong>the</strong> value network. Interestingly, diagnostic LOCs shift <strong>the</strong> focus from
evaluating partners’ competence ex ante, to <strong>the</strong> evaluation <strong>of</strong> partners’ performance in itinere and ex
post. Diagnostic LOC also compensate for <strong>the</strong> lack <strong>of</strong> knowledge about partners’ competence, setting
very clear targets and deadlines, thanks to <strong>the</strong> implementation <strong>of</strong> master and operating budgets,
standard costing and variance analysis, project pr<strong>of</strong>itability analysis etc.
Perceived ability is context specific and based on <strong>the</strong> fact that <strong>the</strong> trustor considers <strong>the</strong> partner
competent and capable <strong>of</strong> running its own business. In value networks, when perceived ability is high,
<strong>the</strong>re is no concern about whe<strong>the</strong>r partners will be able to perform as expected and <strong>the</strong>y are
considered capable <strong>of</strong> producing <strong>the</strong> expected outcome on time.
CEOs <strong>of</strong> <strong>the</strong> cluster <strong>of</strong> firms that made reduced use <strong>of</strong> diagnostic tools displayed high levels <strong>of</strong>
perceived ability <strong>of</strong> partners. Very <strong>of</strong>ten CEOs argued that partners are very capable, stressing how
<strong>the</strong> partners have been able to sort out technical problems linked to projects developed within <strong>the</strong>
value network and putting in extra effort to meet deadlines. CEOs pointed out that <strong>the</strong>y considered
detailed budgeting and detailed procedures to authorize expenses unnecessary (for instance: “We
didn’t formalise a budget [...] when someone said he or she needed more time, or an external
consultancy no one asked “why?” or “are you sure?”.)
Thus, high levels <strong>of</strong> perceived ability reduce monitoring since partners are perceived as competent
and hence reliable: we can <strong>the</strong>refore derive <strong>the</strong> proposition:
Proposition 3. In order to develop common KL within <strong>the</strong> network partners, LOCs and
trustworthiness factors are useful but ability and diagnostic LOCs substitute each o<strong>the</strong>r (substitution
role)
4.4 Trustworthiness factors, interactive systems and knowledge leadership
According to Holsapple and Jones’s model (2005), KL is a catalyst for traits such as learning,
teaching and knowledge sharing. In this perspective and according to Argyris (1992), an interactive
control system should be considered a double loop learning system. Previous research suggests that
interactive LOCs require discussion in meetings with superiors, subordinates and peers for focusing
action on strategic success factors. This approach creates a recurrent challenge but it also requires
debate that facilitates learning and knowledge sharing attitudes (e.g. Simons, 2000). The success <strong>of</strong> a
value network depends on sharing information, but when firms disclose confidential information about
<strong>the</strong>ir skills, competences, capabilities, market positioning, strategy etc., <strong>the</strong>y expose <strong>the</strong>mselves to a
very high risk if <strong>the</strong> collector <strong>of</strong> such information misuses it. Thus, on <strong>the</strong> one hand, information
sharing is a key success factor for <strong>the</strong> firm; on <strong>the</strong> o<strong>the</strong>r hand it increases <strong>the</strong> risks <strong>the</strong> firm incurs. KL
process has to create <strong>the</strong> right confidential environment in order to facilitate this process.
High levels <strong>of</strong> perceived benevolence tend to support exchange <strong>of</strong> information since if <strong>the</strong> trustee is
perceived to do good to <strong>the</strong> trustor, <strong>the</strong> trustor will not perceive high risk in sharing privileged and
confidential information with <strong>the</strong> trustee. Thus, a high level <strong>of</strong> benevolence should support interactive
LOCs. Moreover, trust requires familiarity and mutual understanding (Nooteboom et al., 1997). Such
mutual understanding supports <strong>the</strong> idea that shared information will be used in <strong>the</strong> common interest.
In fact, sharing <strong>of</strong> values is <strong>the</strong> basis for <strong>the</strong> strongest form <strong>of</strong> trust, i.e. identification based trust
(Lewicki and Bunker, 1996). Firms that use integrative LOCs are found to have high levels <strong>of</strong> integrity
and benevolence. Various CEOs pointed out that <strong>the</strong> information shared is particularly confidential
and that high levels <strong>of</strong> perceived integrity support clear and effective information exchange (“[…] we
share our knowledge. We are also friends with <strong>the</strong> partners <strong>of</strong> <strong>the</strong> NPD project, because we started
our businesses more or less toge<strong>the</strong>r many years ago”). Moreover, dialogue and information sharing
is supported by <strong>the</strong> perception that partners behave benevolently: good and supportive behavior is
reciprocated (“I’m happy to share information since I know that my partner will use it for common
goal”). Many CEOs emphasize <strong>the</strong> role <strong>of</strong> reciprocal trust in communication and <strong>the</strong> fact that
benevolence and integrity foster frank debate about data, assumptions and action plans. In this
context, criticism is not perceived as a personal attack (“if we trust each o<strong>the</strong>r, <strong>the</strong>re is no problem in
telling it like it is!”). CEOs <strong>of</strong> <strong>the</strong> cluster <strong>of</strong> firms that rely less on interactive LOCs are aware <strong>of</strong> <strong>the</strong>
difficulties <strong>of</strong> implementing interactive control tools when <strong>the</strong>re is a lack <strong>of</strong> trust (and specifically
benevolence and integrity) since in this case <strong>the</strong> risk <strong>of</strong> disclosing information is perceived as very
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