Barriers to market knowledge acquisition

Knowledge transfer barriers have been approached in literature from different viewpoints; some are based on the characteristics of the knowledge to be trans-ferred (Kogut and Zander 1993) and others from the viewpoint of the characteris-tics of the situation or the context from which knowledge is being transferred.

Communication aspects and the nature of interpersonal relationships have also been reported as influencing effective knowledge transfer between parties (Szu-lanski 1996; Sullivan and Bauerschmidt 1990).

In this study, barriers to foreign market knowledge transfer to the organization have been conceptualized on the basis of situational context and ‘knowledge transfer’ denotes the holistic process of knowledge acquisition and internalization.

This is due to the fact that the knowledge is originally located in a different set-ting from where it must be transferred to the organization so that it can be trans-ferred into commercial use. Barriers to knowledge acquisition at the market level refer to the constraints that hinder or prohibit a foreign firm’s ability to acquire local market knowledge, thereby influencing its ability to initiate, expand or sus-tain export marketing operations. Knowledge transfer is seen to occur in two di-mensions. This is shown in Figure 12.

Figure 12. The context of knowledge acquisition in the study.

The first is the transfer of foreign market knowledge from external parties such as local partners to the foreign firm, and the second is the dissemination of this knowledge within its marketing, R&D and production departments. Both of the

R&D unit Marketing unit Production unit Foreign

market

Dimension 1: Market level

Dimension 2: Firm level

Firm

dimensions are assumed to complement each other for effective knowledge trans-fer.

Several scholars claim that all resource transfers are 'sticky' or inert, as the com-plexity, codifiability and tacitness of knowledge itself create barriers to knowl-edge transfer (Kogut and Zander 1992, Szulanski 1996, Foss, Knudsen and Mont-gomery 1995). The knowledge evolution cycle (Zollo and Winter 2002) also as-sumes that the ability of a firm to create new knowledge varies, as all firms differ on the degree to which the knowledge is articulated and codified.

Knowledge is disseminated through the social interaction of individuals, where shared mental models and communities of interaction allow individual know-how to be transformed into organizational knowledge (Kogut and Zander 1992, Nonaka 1994). The acquisition and utilization of knowledge requires firms to implement managerial processes to transfer and receive knowledge (Teece et al.

1997; Eisenhardt and Martin 2000). The utilization of knowledge depends on the user firm's capabilities; specifically the integration and coordination of routines, which allow the user firm to reconfigure, reintegrate and transform its resources into new competencies and competitive advantages (Teece et al. 1997). Thus, if the user firm’s knowledge creation mechanisms are not developed, it will face problems in foreign market knowledge competence development and the speed and success of export operations may be affected.

Knowledge without the right organizational mechanisms to transfer it into pro-ductive use is relatively worthless for firms (Grant 1996a). To achieve compe-tence in market knowledge, its transference must occur in both dimensions; from local market to foreign firm and from foreign firm to its departments. In this pro-cess the foreign firm has the central role in transferring knowledge from the mar-ket to other units within itself. Because knowledge acquired from the external environment must be utilized within the firm in order for it to be transformed into commercial use, firm-level knowledge coordination mechanisms are considered important in acquiring market information and disseminating it throughout the organization. However, some significant barriers to knowledge acquisitions at the market level need to be discussed.

In general, market-level barriers are numerous in number and may differ from market to market. With this in mind, it is beyond the scope of this study to list them all down. However, as the study is limited to the software vendor industry, importance is placed on those market-level barriers which have appeared in the preliminary empirical analysis.

Specific obstacles that may influence the transfer of knowledge from the foreign market to the organization have been listed as conflicts in strategic partnership relationships, the mismatch of expectations and required performance from dis-tributors and value added suppliers (Kauser and Shaw 2004), a lack of knowledge of the local language, insufficient knowledge of local market opportunities and a lack of foreign market connections (Howard and Herremans 1988).

Organizational memory has also been discussed as a firm level barrier to knowl-edge transfer (Levitt and March 1988; Sinkula 1994). Organizational memory is path-dependant and has a long life time. It is only due to organizational memory that an individual’s learning is retained in the firm in case of personnel turnover and the passage of time. Market knowledge is codified or recorded in information systems, operating procedures, white papers, mission statements, organizational stories or routines. For new activities, previous knowledge and learning is used.

However, the extent to which these memories are used and are useful may deter-mine how long they are retained within the firm.

In some instances, organizational memory may constrain new learning, in which case traditional capabilities of a firm become its core rigidity (Leonard-Barton 1992; Levitt and March 1988). The firm is unwilling or unable to reject the capa-bility in which it has invested so heavily in the past. New procedures or capabili-ties might turn out to be more effective than the older ones, but still the firm is rigid in adopting them. In such situations, market-driven firms promote unlearn-ing (Schein 1996) and motivate their personnel to take risks.

In the case of software vendor firms where some projects are temporary or carried out on short-term contracts, organizational memory plays an important role in retrieving past knowledge and utilizing it timely. Such behavioural flexibility carries importance as such firms can quickly reconfigure processes and reallocate resources to focus on the emergent opportunity or threat.

It has been mentioned that meaningful learning only occurs when there is behav-ioural change in firms (Sinkula 1994; Slater and Narver 1995). However, in the case where new knowledge confirms managerial perceptions or what was already suspected, behaviour can be pursued even more confidently (Menon and Varada-rajan 1992; Slater and Narver 1995). However, several other studies confirm that in the long term behavioural change is an essential link between learning, knowl-edge creation and performance improvement (Fiol and Lyles 1985; Lane and Lubatkin 1998).

In short, it can be said that following a market entry, the structural and behav-ioural adaptability of a firm can be linked to foreign market knowledge

acquisi-tion and also that this relaacquisi-tionship is likely to affect export expansion in a foreign market. From this it can be advanced that:

H6: Barriers to market knowledge acquisition will have a negative relationship to export expansion capabilities.

4.5 Summary

The discussion in this chapter mainly focused on relating market knowledge ac-quisition and utilization in firms developing an export-related capability. The pre-liminary case study findings were expanded by investigating existing literature.

The central theme of the arguments in this chapter emphasized and linked knowl-edge acquisition and its utilization for the purpose of specific export expansion capabilities. Both of these phenomena cannot be adequately explained separately, as they are interdependent and coexist in a firm. This interdependence may in-crease the complexity of the whole process. Such complexity may also influence the speed and success of export expansion. Knowledge acquisition was consid-ered significant for the international generation of knowledge from market to market. The utilization of knowledge, on the other hand, was seen to be signifi-cantly positive in the ability to use it for specific markets.

The hypothetical relationship between the variables is shown in Figure 13. The chapter started by establishing market knowledge as a competence of a firm. Two of the components of market knowledge competence were emphasized: experien-tial knowledge and the customer knowledge. Then, both components of market knowledge competence were linked to export expansion capabilities by develop-ing hypotheses between the relationships. The contextual factors contributdevelop-ing towards market knowledge acquisition and its dissemination in the firm were seen as facilitators and barriers to knowledge transfer from the market to the firm. En-trepreneurial orientation was seen as a facilitator, whereas behavioural and proce-dural barriers to market knowledge acquisition and internalization were seen as hindering factors. At the end, through the mediating role of these capabilities, market knowledge competence was linked to the dependent variable.

Figure 13. The hypothesized model of the study.

Success Speed

Market knowledge competence

H5+

H1 a + H2 a + Entrepreneurial

orientation

Contextual

factors Export

expansion

H1 b + H2 b +

Alliance management

capability MKT planning &

implementation capability

Alliance learning capability

New product development capability

H3 a +

H4 a +

H3 b +

H4 b Barriers to

knowledge transfer

H6-

Experiential Knowledge

Customer Knowledge

5 RESEARCH METHODOLOGY