Proceedings of the 12th European Conference on Knowledge ...

Pamela Chidiogo Izunwanne
2. Knowledge creation in multinational corporations
knowledge creation is endowed with many definitions as observed in literature reviews: defined as a
major factor that allows an increase in <strong>the</strong> value/cost ratio <strong>of</strong> a cooperative process; building new
knowledge (Matusik and Hill, 1998); bringing innovative products and services into <strong>the</strong> market
place(Ganesh, 2000); a process that allows insights <strong>of</strong> individuals to be converted into knowledge that
can <strong>the</strong>n be used to develop new products and improve performance (Choo, 1996); <strong>the</strong> difference
between what is known and what must be known for success <strong>of</strong> a project (Johnson, 2002); use <strong>of</strong>
complex and discontinuing phenomena and a set <strong>of</strong> components emerging from communication
across interpersonal relationships(Styhre et al., 2002).
Many authors however discuss this subject without specifically pointing out <strong>the</strong> aspect <strong>of</strong> knowledge
creation that is being studied. According to Mitchell and Boyle in <strong>the</strong>ir recently developed taxonomy <strong>of</strong>
knowledge creation, <strong>the</strong>re is an input, output and outcome dimension to take into consideration
instudying knowledge creation (Mitchell and Boyle, 2010). Figure 1 below presents a good illustration
<strong>of</strong> this idea.
Knowledge
Creation input
Knowledge
Creation output
Knowledge
Creation outcome
Figure 1: The knowledge creating activity chain
The knowledge creation input refers to <strong>the</strong> method or process used in knowledge creation, <strong>the</strong> output
refers to <strong>the</strong> initial result <strong>of</strong> <strong>the</strong> knowledge creation activity (example; new product idea, prototypes,
new suggestions etc.) while <strong>the</strong> outcome refers to <strong>the</strong> final result <strong>of</strong> <strong>the</strong> knowledge creation activity
(new product in <strong>the</strong> market, new service, new procedures) (Mitchell and Boyle, 2010). The fact that
<strong>the</strong>re is new knowledge (output) adds a certain level <strong>of</strong> value in a multinational corporation but <strong>the</strong>
highest value would be realized when <strong>the</strong> new knowledge is translated into routine knowledge
(outcome) (Gooderham, 2007, Alavi and Leidner, 2001, Roth, 2003). A clear specification <strong>of</strong> <strong>the</strong>
aspect <strong>of</strong> knowledge creation under study is highly important to facilitate comparisons between
different models <strong>of</strong> knowledge creation(Mitchell and Boyle, 2010).
According to <strong>the</strong> knowledge based view <strong>of</strong> <strong>the</strong> firm, it is not enough that a firm’s knowledge base is
dynamic or difficult to imitate(Walczak, 2005, Nonaka et al., 2000), it must also be efficiently and
quickly transferable within <strong>the</strong> organization to all <strong>the</strong> areas where it will be useful (Grant, 1996b, Roth,
2003, Nonaka et al., 2000); be <strong>of</strong> high quality(Walczak, 2005) (only highest quality options are to be
selected) and it must be productive i.e. aligned with company policy, objectives and business
model(Walczak, 2005, Claver-Cortés et al., 2007, Hong, 1999). Thus, emphasis is placed on allowing
as many inputs as possible for <strong>the</strong> knowledge creation process, selecting high quality outputs and
ensuring fast implementation and adaptation in order to obtain desired outcomes.
MNCs are firms with business operations in more than one country. Some MNCs are extremely
influential in <strong>the</strong> countries where <strong>the</strong>y operate, with budgets exceeding <strong>the</strong> gross domestic product <strong>of</strong>
entire nations in some cases. The continuous creation <strong>of</strong> knowledge is a major source <strong>of</strong> global
competitive advantage for firms in this category (Choi and Lee, 2002). The focus on MNCs in this
study is interesting because knowledge creation for an MNC as a whole becomes more complex as
<strong>the</strong> number <strong>of</strong> its subsidiaries increase. Knowledge creation does not only involve problem solving
and knowledge acquisition in one or two subsidiaries, it involves ensuring that new knowledge
realized benefits <strong>the</strong> whole firm(Turner and Makhija, 2006, Hong, 1999).
The complexity <strong>of</strong> <strong>the</strong> knowledge creation activity is somewhat dependent on size (Walczak,
2005).And as I propose in this paper: organizational structure. Knowledge creation in structures that
require high integration (formalized reporting relationships between subsidiaries and headquarters) <strong>of</strong>
subsidiaries with <strong>the</strong> corporate headquarters and low responsiveness to local needs (also known as
global structure (Harzing, 2000)) may be more complex than knowledge creation in structures with
directly opposite characteristics (multidomestic (Harzing, 2000)).
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