Stickiness and the adaptation of organizational practices in cross-border knowledge transfers

Abstract

The reuse of organizational practices in multiple locations is a fundamental way in which MNCs leverage knowledge to seek competitive advantage. Scholars approaching the issue of adaptation from both a market and an institutional perspective argue that, in order to achieve fit with the local environment, some degree of adaptation is advisable, and the need for adaptation increases as the institutional distance between source and recipient locations increases. However, arguments to date have examined the effect of adaptation primarily on a subsidiary's long-term performance. A necessary precursor is to understand the effect of adaptation on the transfer process itself, as transfer difficulty, or stickiness, may preclude the reuse of an organizational practice in the first place. In this paper, we explore how the adaptation of organizational practices affects the stickiness of cross-border transfers. We use structural equation modeling to analyze data from 122 internal transfers of best practice. Contrary to expectation, we find that adaptation significantly increases, rather than decreases, the stickiness of cross-border knowledge transfer.

Appendix: Operationalization of variables

• 1) Each sentence in the description of the scales below is the full text of the question as it appears in the questionnaire.

• 2) Sections in brackets << >> indicate the text that was personalized for each different transfer and unit: that is, the names of the units and practices were specific to the transfer in question.

• 3) Unless otherwise indicated, answers were scored using the default scale (Y! Y O N N!).

• 4) Key for the default scale: Y!=‘Yes!’; Y =‘yes, but’; O =‘no opinion’; N =‘no, not really’; N!=‘No!’

• 5) The overall score for each scale was computed by adding the standardized scores obtained from each question.

Stickiness – Implementation (α=0.84, Items=18) Default Scale Unless Indicated

<<recipient>> recognized <<source>>'s expertise on <<practice>>. The transfer of <<practice>> from <<source>> to <<recipient>> disrupted <<source>> normal operations. <<Recipient>> could not free personnel from regular operations so that it could be properly trained. Communication of transfer-related information broke down within <<recipient>>. <<Recipient>> was able to recognize inadequacies in <<source>>'s offerings. <<Recipient>> knew what questions to ask <<source>>. <<Recipient>> knew how to recognize its requirements for <<practice>>. <<Source>> turned out to be less knowledgeable of the <<practice>> than it appeared before the transfer was decided. Much of what <<recipient>> should have done during the transfer was eventually completed by <<source>>. <<Source>> understood <<recipient>>'s unique situation. All aspects of the transfer of <<practice>> from <<source>> to <<recipient>> were carefully planned. Initially <<recipient>> ‘spoon fed’ the <<practice>> with carefully selected personnel and raw material until it got up to speed. At first <<recipient>> measured performance more often than usual, sometimes reacting too briskly to transient declines in performance. Some people left <<recipient>> after having been trained for the new role in the <<practice>>, forcing <<recipient>> to hire hastily a replacement and train it ‘on the fly’. Some people turned out to be poorly qualified to perform their new role in the <<practice>>, forcing <<recipient>> to hire hastily a replacement and train it ‘on the fly’. The <<practice>> had unsatisfactory side-effects which <<recipient>> had to correct. Outside experts (from <<source>>, other units, or external consultants) could answer questions and solve problems about their specialty but did not have an overall perspective on the <<practice>>. Teams put together to help <<recipient>> to get up to speed with the <<practice>> disbanded because their members had to attend to other pressing tasks.

Adaptation (α = 0.76, Items = 7) Default Scale Unless Indicated

Compared to that of <<source>>, <<recipient>>'s <<practice>> is: (circle one option) 1=‘Exactly the same’; 2=‘Essentially the same’; 3=‘Slightly modified’, 4=‘Markedly modified’, 5=‘Completely different’. <<Recipient>> performed unnecessary modifications to the <<practice>>. <<Recipient>> modified the <<practice>> in ways contrary to expert's advice. <<Recipient>>'s environment turned out to be different from that of <<source>> forcing <<recipient>> to make unforeseen changes to <<practice>>. The <<practice>> had to be adapted to make it workable at <<recipient>>. A practice could be thought of as composed of separable modules, some essential for its functioning, some not. Each of these modules may be included or may be excluded during a transfer. Thinking about the <<practice>> as a set of modules, please circle the most correct assertion: 1=‘All modules have been transferred’; 2=‘Only selected, but all the essential modules have been transferred’; 3=‘Only the essential modules have been transferred’, 4=‘Only selected modules, some essential some not, have been transferred’, 5=‘None of the modules have been transferred’. Some components for the <<practice>> were replaced by existing ones at <<recipient>>.

Recipient Motivation (α=0.93, Items=14) Binary Items

Recipient saw benefit in: measuring its own performance; comparing it with the performance of other units; understanding its own practices; absorbing <<source>>'s understanding; analyzing the feasibility of adopting <<practice>>; communicating its needs to <<source>>; planning the transfer; implementing the systems and facilities for <<practice>>, assigning personnel full time to the transfer; assigning personnel to be trained in <<practice>>; understanding the implications of the transfer; troubleshooting <<practice>>; insuring that its people knew their jobs; ensuring that its people consented to keep doing their jobs.

Causal Ambiguity (α=0.86, Items=8) Default Scale

The limits of the <<practice>> are fully specified. With the <<practice>>, we know why a given action results in a given outcome. When a problem surfaced with the <<practice>>, the precise reasons for failure could not be articulated, even after the event. There is a precise list of the skills, resources and prerequisites necessary for successfully performing the <<practice>>. It is well known how the components of that list interact to produce <<practice>>'s output. Operating procedures for the <<practice>> are available. Useful manuals for the <<practice>> are available. Existing work manuals and operating procedures describe precisely what people working in the <<practice>> actually do.