The Duality of Knowledge Knowledge Transfer Practices in

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The Duality of Knowledge: Knowledge Transfer Practices in Outsourcing Thomas F. Stafford Mark Gillenson

The Duality of Knowledge: Knowledge Transfer Practices in Outsourcing Thomas F. Stafford Mark Gillenson Sandra Richardson MIS Department Fogelman College of business and Economics University of Memphis

Executive Summary The primary contribution of this study of the parallel division of knowledge

Executive Summary The primary contribution of this study of the parallel division of knowledge development lies in building an understanding of the knowledge transfer process in an outsourcing context involving systems testing. We note that the outsourcing vendor is tasked by the client with developing, documenting and sharing an explicit knowledge base of testing processes, but that the client maintains an extensively tacit approach to skill development in its internal systems testing organization. Synergistic relationships between clients and vendors can permit each party to maximize the specific benefit of its own characteristics knowledge transfer modality.

Project Overview • What has been achieved? – Theoretical conceptualization – Qualitative depth interviews

Project Overview • What has been achieved? – Theoretical conceptualization – Qualitative depth interviews with three levels of the testing organization completed – Interpretive analysis completed and implications explored • Next plan of action – Execute formal semantic analysis of interview transcripts, guided by interpretive findings • Implications for the practice and research – Understanding current knowledge transfer processes between client and vendor for purposes of optimization, rather than for revision • Initial Results – Under submission at International Conference for Information Systems for the Montreal meeting in December.

Theoretical Conceptualization • Knowledge, in the abstract, is a key asset of firms –

Theoretical Conceptualization • Knowledge, in the abstract, is a key asset of firms – Alavi and Leidner (1999) – Sambamurthy and Subramani (2005) • Firms interact with each other with the expectation of enhancing their performance through knowledge transfer processes – Knudson (2007) • Improving employee knowledge has important positive outcomes for the firm, resulting in marketplace successes – Bhagat, Kedia, Harveston and Triandis (2002) – Sherif, Hoffman and Thomas (2006)

Theoretical Consideration: Integrating the Tacit and the Explicit • Emerging knowledge-based theories of firm

Theoretical Consideration: Integrating the Tacit and the Explicit • Emerging knowledge-based theories of firm performance suggest that effective facilitation and management of both tacit and explicit knowledge types leads to sustainable competitive advantage – Santoro and Bierly (2006).

What is Explicit? • You know it when you see it, because it can

What is Explicit? • You know it when you see it, because it can be easily codified. • If it can be readily documented, it is explicit knowledge. • Explicit knowledge is eminently transferable, even to a point that can be threatening to firms that develop it – Resource-Based Theory considerations of agency and opportunism • Or, “take the money and run. ”

What is Tacit? • If I could show you, it might not be tacit.

What is Tacit? • If I could show you, it might not be tacit. Keep this in mind for further consideration • Tacit is experiential and intuitive – It exists in the minds of knowledge workers, and is intimately related to personal expertise and skills. • The real work of knowledge management is the transfer of tacit knowledge, since explicit knowledge is by definition transferable – Schultze and Leidner (2002) – Schultze and Stabell (2004)

Who is Whom and Which is What? • • The Client is observably tacit

Who is Whom and Which is What? • • The Client is observably tacit in its approach to knowledge acquisition and application The Vendor is extensively explicit in its orientation to knowledge acquisition, use and transfer. This is not a bad thing We will do a much better job of knowledge transfer if we: 1. Leverage our strengths 2. Buttress our weaknesses 3. Combine approaches for a maximally synergistic approach to systems testing knowledge transfer and application • By “synergistic, ” I mean to suggest that a strategic outsource partnership can be beneficial on grounds far more extensive than financial, in the context of knowledge transfer and systems testing training and practice.

Socially Mediated Transfer Processes • All indications are that knowledge transfer is an inherently

Socially Mediated Transfer Processes • All indications are that knowledge transfer is an inherently social process of the workplace in many ways (Santoro and Bierly, 2006) – The quality of inter-organizational interactions is expected to influence technical knowledge transfer between firms (Lin, 2007). – Even within the firm, knowledge transfer is considered to be highly dependent upon interactions among team members (Joshi, Sarker and Sarker, 2007) – The extent of outsourcing between a client and a vendor will likely determine the degree of knowledge sharing between the parties (Gottschalk, 2006).

It’s the Human thing to do… • Knowledge transfers routinely take place within and

It’s the Human thing to do… • Knowledge transfers routinely take place within and across organizational borders, whether the process is managed or not, because it seems to be an inherent characteristic of the human condition – Bhagat et al. (2002) • Yet, research to date has generally focused on intraorganizational knowledge management processes – Gotschalk (2006) – Malhotra, Gosain and El-Sawy (2005) • In other words, much more is known about how knowledge is transferred within companies than without

Research Problem 1. To understand the nature and process of knowledge transfer processes within

Research Problem 1. To understand the nature and process of knowledge transfer processes within the client and the vendor organizations 2. But, especially, to understand potentially optimize the knowledge transfer processes between the client and the vendor

Research Method: Hermeneutic Social Construction • The Hermeneutic Circle consists of a recursive process

Research Method: Hermeneutic Social Construction • The Hermeneutic Circle consists of a recursive process by which a researcher cycles from the whole to the parts and back again, in order to completely consider all pertinent aspects of a phenomenon – Klein and Meyers (1999)

The Hermeneutic Circle in Practice • • In the Hermeneutic Circle, the “whole” consists

The Hermeneutic Circle in Practice • • In the Hermeneutic Circle, the “whole” consists of shared meanings that emerge from interactions between specific points of view (Klein and Myers, 1999) We practice this analytical technique of cycling between the general and the specific situation of the phenomenon in several ways: 1. 2. 3. By seeking the identify dyads of practice across the vendor/client partnership, By looking at hierarchical structure from one company’s point of view and then from the partner’s point of view From considering managerial versus operational interpretations of critical concepts in knowledge transfer and the client/vendor relationship.

Investigative Approach: Dyads of Practice • Interviews were conducted on both the client side

Investigative Approach: Dyads of Practice • Interviews were conducted on both the client side and the vendor side • Interviews were requested at several different levels: – Day-to-day operations – Mid-level management – Senior Management

Dyadic Matching • Test lead/Test lead • Project Manager/Senior Test Lead • Senior V.

Dyadic Matching • Test lead/Test lead • Project Manager/Senior Test Lead • Senior V. P/Associate General Manager

Key Informant Technique • Depth interviews in community of practice • Formatted question guide

Key Informant Technique • Depth interviews in community of practice • Formatted question guide • Interpretive assessment in the form of researcher-as-instrument – Phenominological experience of the researcher embedded in the testing organization. • Observer-as-Participant context

Interpretive Results: Overview • A basic acknowledgement that the predominant style of the client

Interpretive Results: Overview • A basic acknowledgement that the predominant style of the client is tacit • The predominant style of the vendor is explicit • The client is rather more informal in managerial interactions among direct reports – The vendor appears to have a rather more formalized interaction process between managers and direct reports – This is most likely a cultural artifact

Test Leads and Knowledge Transfer • Vendor test leads rely extensively on documented information

Test Leads and Knowledge Transfer • Vendor test leads rely extensively on documented information sources for training, learning and problem solving – Questions not covered by documented knowledge sources were to be answered “by seniors” – Although “juniors” were expected to use the explicit knowledge base, they were routinely assigned to a “senior” for mentoring during their early days • “Explicit as a default, tacit as a supplement, ” would be my assessment of this arrangement on the vendor side

Test Leads and Knowledge Transfer • Client testing personnel were expected to acclimate themselves

Test Leads and Knowledge Transfer • Client testing personnel were expected to acclimate themselves on their own recognizance • Explicit knowledge stores available to client-side test personnel appeared to be recognized at a tacit level among testers – Subsequently underutilized • In making their way during orientation to task training, test personnel on the client side showed a marked preference for “desk rides, ” which involved watching the work of more experienced testers – A remarkably tacit approach to training, in short

Project Management Knowledge Transfer • Those who managed the test leads were what I

Project Management Knowledge Transfer • Those who managed the test leads were what I would characterize as “clever nonconformists” – On the vendor side, “seniors” typically utilized intuition, experimentation, and innovative expansion of context to learn more about how to test better – In contrast to their default explicit orientation to training new members of the vendor testing team

Project Management Knowledge Transfer • On the client side, social relationships appeared to be

Project Management Knowledge Transfer • On the client side, social relationships appeared to be a key conduit for much knowledge – Making tacit knowledge explicit • The Brown-Bag seminar series held with the development organization • This process was routinized over time into a regular knowledge gathering and reporting process – This approach appeared to leverage the inherently tacit approach of the client to best advantage

Knowledge Transfer at High Levels • Two very senior managers on each side –

Knowledge Transfer at High Levels • Two very senior managers on each side – On the vendor side, the reliance on documentation was clearly voiced – On the client side, the recognition of the vendor’s expertise in codifying explicit knowledge bases was also specifically recognized – It did not appear that there was a corresponding recognition on the vendor side of the client’s tacit orientation • Likely due to cultural differences

Knowledge Transfer at High Levels • But, on the other hand… – The vendor

Knowledge Transfer at High Levels • But, on the other hand… – The vendor manager, despite the clear recognition of the key role of explicit knowledge in his testing organization, avowed that most of his own information about his work came from interpersonal relationships • A tacit channel, in other words • But, a tacit channel to the client, not within his own firm

Knowledge Transfer at High Levels • And, still on another hand… – The client-side

Knowledge Transfer at High Levels • And, still on another hand… – The client-side senior manager clearly recognized the tacit style of his organization – He has instituted a process whereby the tacit knowledge of the client was to be methodically codified by the vendor into a knowledge base for client use • He was committing to making the tacit explicit, in other words

Integrating Approaches • Each senior manager was, in a sense, managing a social process

Integrating Approaches • Each senior manager was, in a sense, managing a social process of knowledge development and transfer, despite the predominant style of his own organization • Much of this was arranged and overseen at senior levels as part of the relational exchange between the partners. • At the executional level was where the typical knowledge styles of each organization was most recognizable, but this alternated at the strategic level. – Client is tacit within, and explicit without – Vendor is explicit within, tacit without

Bridging Tacit and Explicit Knowledge Transfer • As a generalization, the more senior the

Bridging Tacit and Explicit Knowledge Transfer • As a generalization, the more senior the individual in either organization, the more tacit their knowledge transfer processes seemed to be, and the greater the appreciation for the characteristic transfer style of the opposite party. • Those responsible for modifying the course of an organization were aware of the specific proclivities each firm had for knowledge styles, and were collaborating together to integrate the two types of knowledge

Interesting Dichotomies • Culturally-enforced explicit transfer processes, versus hearty egalitarianism and a tacit trend.

Interesting Dichotomies • Culturally-enforced explicit transfer processes, versus hearty egalitarianism and a tacit trend. • Senior versus junior personnel and knowledge preferences in cultural contexts • Expertise in process versus expertise in business and the need to regain and retain original skills

A Key Conclusion • As has already been instituted, the tacit stores of client

A Key Conclusion • As has already been instituted, the tacit stores of client knowledge must be made explicit for the vendor, or the vendor will not be able to operate effectively – They need knowledge of business units and development initiatives related to them – Their high turnover rate requires that they have a detailed knowledge base of explicit knowledge about client operations • While the explicit stores developed by the vendor have beneficial application on the client side, as well – Client-side organizational memory is well served by this documentation process

Another Key Conclusion • The client must get back in touch with its testing

Another Key Conclusion • The client must get back in touch with its testing skill-set. – Reliance on outside vendors has led to a situation in which the vendor has the explicit knowledge for how to test systems, while the client has tacit knowledge of same – But, this leaves the client at a disadvantage in terms of being able to effectively train new hires in its own organization – This also creates transaction-costs-based issues as regards the relationship between the two firms.

Substantive Issues of Transfer • Internal – Development Requirements widely considered the most important

Substantive Issues of Transfer • Internal – Development Requirements widely considered the most important knowledge area among client testing organization • External – Knowledge of business processes related to software being tested are widely considered a necessity by vendor-side testers

Strategic Overview • Knowledge transfer between partners can be risky, as seen through the

Strategic Overview • Knowledge transfer between partners can be risky, as seen through the lens of the resourcebased theory of the firm • Knowledge transfer between partners is seen as the next step to competitive advantage in the knowledge-based theory of the firm • Knowledge is a social good; there will always be some degree of tacit knowledge making its way to explicit stores in such strategic relationships

Concluding Interpretation • The strategic relationship between client and vendor is highly beneficial to

Concluding Interpretation • The strategic relationship between client and vendor is highly beneficial to both parties. • Vendor seems quite dedicated to meeting the unique needs of the client • Client seems dedicated to leveraging its uniquely tacit skill-set to support the vendor – The routine internal transfer and periodic job reassignment of individuals at the client, while highly beneficial to client internal knowledge transfer, may denigrate the knowledge transfer process with the vendor

Thank you… Any Questions?

Thank you… Any Questions?