Nicolai J. Foss

Transferring Knowledge in MNCs: The Role of Sources of Subsidiary Knowledge and Organizational Context

We link up with the recent literature on the differentiated MNC and in particular with its stress on intra-MNC knowledge flows. However, rather than focusing on the characteristics of knowledge as determinants of knowledge transfer within MNCs, we focus instead on levels of knowledge in subsidiaries, the sources of transferable subsidiary knowledge and on the organizational means and conditions that realize knowledge transfer as the relevant determinants. We find largely positive support for the relevant hypotheses. These are tested on a unique dataset on knowledge development in subsidiary firms [the Centre of Excellence (CoE) project].

Strategic organization: a field in search of micro-foundations

Organizations are made up of individuals, and there is no organization without individuals. There is nothing quite as elementary; yet this elementary truth seems to have been lost in the increasing focus on structure, routines, capabilities, culture, institutions and various other collective conceptualizations in much of recent strategic organization research. It is not overstating the matter too much to say that ‘organization’ has generally entered the field of strategy in the form of various aggregate concepts. This editorial essay is born out of a frustration on our part for the present lack of focus on individuals in much of strategic organization and the taken-forgranted status of ‘organization’. Specifically, the underlying argument of this essay is that individuals matter and that micro-foundations are needed for explanation in strategic organization. In fact, to fully explicate organizational anything – whether identity, learning, knowledge or capabilities – one must fundamentally begin with and understand the individuals that compose the whole, specifically their underlying nature, choices, abilities, propensities, heterogeneity, purposes, expectations and motivations. While using the term ‘organizational’ may serve as helpful shorthand for discussion purposes and for reduced-form empirical analysis, truly explaining (beyond correlations) the organization (e.g. existence, decline, capability or performance), or any collective for that matter, requires starting with the individual as the central actor. Our particular focus in this essay is on the organizational capabilities-based literature in strategic management. This focus serves as a specific example of a more general problem of lack of attention to individuals in strategic organization. (Wider implications could be explicated given more space.) As brief support for the fact that our discussion does have wider ramifications, we note that Selznick has also quite poignantly raised the need for micro-foundations on the part of institutional scholars (1996: 274). Whetten (2004) also highlights the fact that scholars are rarely explicit about what they mean by ‘organizational’. STRATEGIC ORGANIZATION Vol 3(4): 441–455 DOI: 10.1177/1476127005055796 Copyright ©2005 Sage Publications (London,Thousand Oaks, CA and New Delhi) http://soq.sagepub.com

Capabilities and Governance: The Rebirth of Production in the Theory of Economic Organization

We argue that since Coase’s seminal 1937 paper on “The Nature of the Firm,” there has been an odd and unjustified separation between price theory and the economics of organization. For example, matters of production has been the domain of the former exclusively. However, a new approach to economic organization, here called “the capabilities approach,” that places production center-stage in the explanation of economic organization, is now emerging. We discuss the sources of this approach and its relation to the mainstream economics of organization.

Absorbing the Concept of Absorptive Capacity: How to Realize Its Potential in the Organization Field

The purpose of this perspective paper is to advance understanding of absorptive capacity, its underlying dimensions, its multilevel antecedents, its impact on firm performance, and the contextual factors that affect absorptive capacity. Twenty years after the Cohen and Levinthal 1990 paper, the field is characterized by a wide array of theoretical perspectives and a wealth of empirical evidence. In this paper, we first review these underlying theories and empirical studies of absorptive capacity. Given the size and diversity of the absorptive capacity literature, we subsequently map the existing terrain of research through a bibliometric analysis. The resulting bibliometric cartography shows the major discrepancies in the organization field, namely that (1) most attention so far has been focused on the tangible outcomes of absorptive capacity; (2) organizational design and individual level antecedents have been relatively neglected in the absorptive capacity literature; and (3) the emergence of absorptive capacity from the actions and interactions of individual, organizational, and interorganizational antecedents remains unclear. Building on the bibliometric analysis, we develop an integrative model that identifies the multilevel antecedents, process dimensions, and outcomes of absorptive capacity as well as the contextual factors that affect absorptive capacity. We argue that realizing the potential of the absorptive capacity concept requires more research that shows how “micro-antecedents” and “macro-antecedents” influence future outcomes such as competitive advantage, innovation, and firm performance. In particular, we identify conceptual gaps that may guide future research to fully exploit the absorptive capacity concept in the organization field and to explore future fruitful extensions of the concept.

Governing Knowledge Sharing in Organizations: Levels of Analysis, Governance Mechanisms, and Research Directions

We discuss and examine recent claims that research on knowledge processes has paid insufficient attention to micro (individual) level constructs and mechanisms and to the role of formal organization in governing knowledge processes. We review knowledge sharing research published in 13 (top academic plus top practitioner-oriented) journals in the period 1996–2006 in relation to these two propositions. The review confirms the claim that the knowledge sharing literature is preoccupied with constructs, processes, and phenomena defined at a macro (collective, organizational) level and pay comparatively little attention to micro level constructs. The review provides less support for the proposition that formal governance mechanisms have been under-researched in comparison to formal organization. Still, the multiple ways in which formal governance mechanisms may interact in influencing knowledge sharing outcomes have been under-researched, as has the interaction between more informal aspects of the firm and formal governance mechanisms. We argue that future research on knowledge sharing needs to fill these gaps.

Microfoundations of Routines and Capabilities: Individuals, Processes, and Structure

This article introduces the Special Issue and discusses the microfoundations of routines and capabilities, including why a microfoundations view is needed and how it may inform work on organizational and competitive heterogeneity. Building on extant research, we identify three primary categories of micro‐level components underlying routines and capabilities: individuals, social processes, and structure. We discuss how these components, and their interactions, may affect routines and capabilities. In doing so, we outline a research agenda for advancing the fields understanding of the microfoundations of routines and capabilities.

The Resource-Based Perspective: An Assessment and Diagnosis of Problems

The resource-based approach to strategy, which reaches back to the contributions of Penrose, Selznick and Chandler, has gradually become the dominant perspective in strategy (content) research, arguably because it combines realism with relative rigour. The present paper presents the main themes of the contemporary version of the resource-based perspective (Wernerfelt, Rumelt, Barney....) and diagnoses a number of problems, such as the lack of a clear terminology, unclarity as to what really is the unit of analysis, the role of the environment, and the seemingly different versions that exist of the perspective. The perhaps deepest problem, however, is the lack of theorizing with respect to the creation of new resources, which tends to give the perspective a retrospective character and makes its application to managerial practice. It is suggested that resource-based scholars may draw upon work relating to real options, complementarities and organizational learning if they wish to remedy this deficiency.

The Emerging Knowledge Governance Approach: Challenges and Characteristics:

The ‘knowledge governance approach’ is characterized as a distinctive, emerging approach that cuts across the fields of knowledge management, organization studies, strategy and human resource management. Knowledge governance is taken up with how the deployment of governance mechanisms influences knowledge processes, such as sharing, retaining and creating knowledge. It insists on clear micro (behavioural) foundations, adopts an economizing perspective, and examines the links between knowledge-based units of analysis with diverse characteristics and governance mechanisms with diverse capabilities of handling these transactions. Research issues that the knowledge governance approach illuminates are sketched.

Entrepreneurship, Subjectivism, and the Resource-Based View: Towards a New Synthesis

This paper maintains that the consistent application of subjectivism helps to reconcile contemporary entrepreneurship theory with strategic management research in general, and the resource-based view in particular. The paper synthesizes theoretical insights from Austrian economics and Penroses (1959) resources approach, arguing that entrepreneurship is inherently subjective and firm specific. This new synthesis describes how entrepreneurship is manifested in teams, and is driven by both heterogeneity of managerial mental models and shared team experiences.

Entrepreneurship and the Economic Theory of the Firm: Any Gains from Trade?

Although they have developed very much in isolation from each other, we argue the theory of entrepreneurship and the economic theory of the firm are closely related, and each has much to learn from the other. In particular, the notion of entrepreneurship as judgment associated with Frank Knight and some Austrian school economists aligns naturally with the theory of the firm. In this perspective, the entrepreneur needs a firm, that is, a set of alienable assets he controls, to carry out his function. We further show how this notion of judgment adds to the key themes in the modern theory of the firm (i.e., the existence, boundaries, and internal organization). In our approach, resource uses are not data, but are created as entrepreneurs envision new ways of using assets to produce goods. The entrepreneur’s decision problem is aggravated by the fact that capital assets are heterogeneous. Asset ownership facilitates experimenting entrepreneurship: Acquiring a bundle of property rights is a low cost means of carrying out commercial experimentation. In this approach, the existence of the firm may be understood in terms of limits to the market for judgment relating to novel uses of heterogeneous assets; and the boundaries of the firm, as well as aspects of internal organization, may be understood as being responsive to entrepreneurial processes of experimentation.