Role of Knowledge in the New Strategy Creation

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UNIVERSITY OF EASTERN FINLAND

Faculty of Social Sciences and Business Studies Department of Business

Role of Knowledge in the New Strategy Creation

International Business and Sales Management Master’s thesis course code - 5216301

Neerajan Bista

Student No - 300170

neerajb@uef.fi/neerajan.bista@gmail.com

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ABSTRACT

UNIVERSITY OF EASTERN FINLAND

Faculty of Social Sciences and Business Studies Department of Business

International Business and Sales Management

Bista, Neerajan: Role of Knowledge in the New Strategy Creation

Supervisors: Professor. Saara Julkunen, and Professor. Mika Gabrelsson December 2019

The aim of this thesis is to explore role of knowledge in the new strategy creation.

This paper focuses on sales professionals. It is factual that knowledge has significant role in the strategy building, that could be one of the reasons why knowledge is used as a source of strategy and applied into professional level.

It is an empirical paper, based on literature review and the outcome from the analysis of semi-structured interviews conducted with sales professionals. All participants are currently working or have already worked in the sales team at Finnish firms with international sales experiences.

In the sales prospective, this study suggests that sales knowledge is the source of sales strategy. Knowledge grafting process is considered as a key source of knowledge building and supports on establishing new strategy.

Finally, it turns out to be important for sales professionals in the strategic level.

It attributes on sales strategy, and ability to work in the sales team. As a result, this study has formed a theory as “Individual sales knowledge is the source of sales strategies, however creation of strategies is the individual phenomenon of sales professionals, which relies on individual competence”.

Key Words: Knowledge Management, Knowledge Grafting,

Strategy Formulation.

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1.0 Introduction

In this thesis, knowledge is defined in the sales prospective. In that perspective, it concentrates on tacit and explicit knowledge as a source of strategy and its role on initiation to new strategy.

As Nonaka & Ichijo (2007, P.121-122) pointed out that “the importance of knowledge and strategic management in the organization turns on the practical use of knowledge in a business setting and constitutes competitive advantage”.

Moreover, McKee (1992) suggests that knowledge is an important source of the organizational strategy, however it depends on motivation and capabilities of management team, particularly managers. This means that the knowledge is completely an individual phenomenon how one accommodates those and implements into practices (Drucker, 1993).

Particularly, knowledge management is approached from the various aspects in the strategy formulation. Even though certainty is uncertainty in the sales, the only one source for everlasting is knowledge, it can be said that knowledge of salesperson impacts on any firms. In addition to that rational knowledge is necessary for any sales professionals in order to be ready to deal with any foreseen and unseen circumstances (Nonaka & Ichijo, 2007). However, it is a continuous process and comes from all means of professional experiences in the tacit and explicit forms of knowledge (Kohlbacher, 2008).

The idea for the topic was initiated from the International Business and Sales &

Selling management courses during the master studies at University of Eastern Finland, Kuopio; in Autumn 2018 and Spring 2019. I believe that the information and findings of this thesis would be valuable for sales and marketing students and aspirants. In addition, this thesis provides information on knowledge-based strategy formulation in order to perform effectively in the sales process, which is necessarily important for all salespersons.

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1.1 Research Background

The goal of this research is to identify theory between sales knowledge and sales strategy. It is important to understand the impact of sales knowledge on knowledge management, to know the relationship between strategy and its role, how they could impact on the sales strategy. Thus, it is significantly important topic to be researched. The author of this thesis would like to explore how sales knowledge acts in the sales strategy formulation and what would be the consequences in order to establish successful sales strategy.

This research precisely follows the concept of knowledge grafting process in order to explore the influence on strategy formulation, and what other aspects could inspire on creating new strategies. Therefore, the following research question would justify the research gap. “How does sales professional’s knowledge management initiate to develop new sales strategy?”

Not all knowledge has strategic value (Probst, et al., 1998) however, it is important that managers use their practical knowledge to fulfill their task. The knowledge of the salesperson could be used for survival and advancement of the sales process. Hansen et. al (1999) refer that due to the tacit and explicit knowledge of the salesperson, they possess various knowledge from the past experiences and current situation. Ultimately, the knowledge transforms into organizational strategies at certain time. In addition to that Calipha et. al (2018) concern that survival strategy concerns with the current situation, however successful strategy relates with future strength and future sales growth.

Furthermore, they highlight that in the advancement of strategies, the experience of sales professionals matters a lot, thus, their tacit and explicit knowledge helps in gaining the sales evolution process to influence the future sales management strategy.

Therefore, the tacit and explicit knowledge of the salesperson remains as a competitive advantage of the firm. Due to transformation of the existing

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3 knowledge, salesperson attains sales competences and implements as actionable strategy (Arnett & Wittmann, 2014). This means that such kind of knowledge that allows them to remain competitive and distinct throughout the sales process. Therefore, it would be interesting to explore further and revealing the findings should be noteworthy in this case.

1.2 Thesis Objectives and Limitations

This research concentrates on grafting of sales knowledge in order to create sales strategy; it focuses on sales professionals how they transform their knowledge into strategy. They are not only responsible for formulating strategies but also liable for effective sales process. In order to maintain successful sales process, they need to retain prospective relationship between senior and junior managers.

There are lots of information about sales process but not so much information on knowledge grafting in the strategy formulation process.

Due to the limitation of the thesis, author has chosen specifically sales process, however, all departments have their own role in the sales process. The reason for this topic is the personal interest of the author in the sales strategy but also the current trend of developing strategies in national and international level for the greater work opportunities. Therefore, the author believes that this kind of research brings valuable information to students and aspirants in the international business and sales & selling management. Hereafter, this information could be useful for professionals to understand the macro prospective in this field.

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1.3 Research Method and Data Collection

During the research, appropriate research method should be used otherwise research hardly provides necessary outputs, therefore research output absolutely depends on nature and personality of the researcher (Maanen, 2000).

The qualitative method is applied to analyze the theories with primary and secondary data sources. Several researchers have already proved that the qualitative research method supports to understand of underlying reasons.

Furthermore, Eriksson and Kovalainen (2016) have mentioned that qualitative research is precisely relevant with business and its core process, so it is concerned with interpretation and understanding of the base theory. On top of that, some of the research should be done not on numbers but on logic and rigorous application of theories to verify the appropriate circumstances.

In this thesis, abductive research approach is implemented to examine the theories in order to identify and validate the propositions. Abductive reasoning is valid to do further research on actual matter from the various dimensions and explains matter on the highest possible forms (Cresswell, 2007). In addition to that, abductive research approach is implemented, which is operative to understand relation between theories and consequences of the data analysis in this thesis. As a result, this type of research approach reveals surprising facts.

There are two ways of data collection, primary and secondary. Primary data are those which are found during the research, it has been collected via interviews with managers from multinational companies in Kuopio and Helsinki.

Furthermore, supporting information has been collected via secondary sources, which is also known as published sources such as journals, books and references from relevant sources. (Saunders, et al., 2009).

In order to get appropriate findings, the information has collected via semi- formatted interviews with business consultant and managers from reputed firms

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5 in Finland, who has experience in the sales management. These sales professionals could be highly reliable source in order to understand the strategic formulation in the sales process. Interviews were conducted face to face. The reason for preferred face to face interview was that the author believed there could be less room for error and misunderstanding while having Q&A.

Furthermore, the subjects didn’t have to leave valuable information so that the result could increase the quality of interview.

1.4 Thesis Structure

Figure 1: Research Steps

In this research, it has six chapters. First, introduction provides overall view of the research and presents the purpose of the thesis, research objectives, and data collection procedures. Generally, introduction means outline of the complete research. In addition, research background presents the theme of this

1. Introduction 2. Literature Review

3. Research Method & Data

Collection

4. Results and Findings 5. Discussions &

Conclusions 6. Further

Reserach

Recommendation

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6 thesis and explains why this research is important and objective describes the purpose of this research.

In the second chapter, the author has presented literature review of knowledge management and strategy formulation. In addition, this chapter defines the knowledge-grafting theory, which represents the theoretical framework. Due to the limitation of the thesis, author has selected literature related with knowledge management, which are highly influential in the sales process. So, this chapter will find out the relevant theories to define the role of sales knowledge to formulate the sales strategy. The chapter three defines data collection procedures and research methods. The chapter four explains how the chapter three has relation with chapter four in order to have interpretation of the results and findings.

Lastly, the chapter five and six consists of discussion, conclusion and further recommendation, where readers could find clear idea of the thesis out-comes and further recommendations for future researchers.

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2.0 Theories and Literatures Review

In this chapter, the author has reviewed literatures and theories that are relevant with this research, which provides supporting information to fulfill the objectives of the thesis. At this point, previous literatures should be followed to understand earlier information, in addition to that theoretical review provides existing theories and their reliance with literature review in order to present accurate definition.

This chapter has four sections. First section provides literature review on existing literatures and theories related with sales management and sales strategy.

Second section lets you know about tacit and explicit knowledges. Third section discusses on knowledge grafting process. Fourth section defines SECI model of knowledge creation, and final section presents process of strategy formulation.

2.1 Literature Review

In the Oxford dictionary, Angus (2010, p. 2505) refers that knowledge is the theoretical and practical understanding of the subject that possesses with facts, information, and skills. Jobber and Lancaster (2009, p. 326-332) state that sales knowledge is the personal skills of the salesperson, which is required while performing the sales process. Furthermore, Hislop (2009) suggests that sales knowledge is the relation between personal knowledge of salesperson and business strategy of the organization which initiates to create sales knowledge and turns into sales strategy.

As Nonaka (1991) suggests that new knowledge always begins with individuals.

Therefore, one of the key influencers in this research is salesperson, and they are considered as the important sources of sales knowledge. Recent studies outlined by Arnett and Wittmann (2014) that tacit knowledge is the major source of sales knowledge. Salesperson are the one who needs to know how to protect

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8 and effectively implement those knowledges. In order to bring effective sales strategy, salesperson requires diverse inputs. Salesperson’s knowledge provides how to receive and reform sales knowledge into strategy and brings positive changes in the sales process (Szulanski, 1996).

Madhavaram and McDonald (2010) implemented knowledge as an important component of the firms. Therefore, they conclude that sales knowledge is to achieve competitive advantage and superior performance in the firms. That means, first firms should systematically accumulate knowledge, second appropriately use of knowledge and third evaluate and control the performance of sales force for sales completion (Madhavaram & McDonald, 2010) (Hunt &

Madhavaram, 2006). Same authors urge that salesperson needs typical knowledge on recognizing and understanding the customer’s needs. In addition to that Chonko et. al (1993) highlight that salesperson may even require sales training based on their knowledge requirement in order to be productive in the sales dealings, that needs to be concentrated on products, markets, companies and sales techniques.

Salesperson’s adaptive selling is required to be effective, Weitz et. al (1986) discuss that knowledge of salesperson relies on their interactions and behaviors, and information acquisition skills. Their performance can be evaluated based on various knowledge, however their product knowledge, customer knowledge, knowledge of company policies and procedures, and interpersonal and communication skills are the important one (Madhavaram & McDonald, 2010).

Therefore, same author considers that sale knowledge is the combination of several knowledge that guides numerous activities in the sales process.

Professor Takeuchi (2013) defines that knowledge is objective and absolute. In the strategy formation, knowledge works as the catalyst. Moreover, strategy is created by a subjective, interactive and action taken within particular context.

He further refers that tacit knowledge is the origin of effective strategy, however it is completely related with individual actions and experiences. He further

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9 highlights that explicit knowledge is objective and rational, that can be expressed in the words, numbers, and data.

Furthermore, Takeuchi (2012) underlines that salesperson should possess both tacit and explicit knowledge in order to build up organizational strategy, and they are the one who has greater responsibilities to maintain the important role of “middle-up-down” management. Importantly, same author focuses that sales managers always need to emphasis on new ways of thinking to generate new ideas for “know-what-should-be-done” for the future. To conclude the knowledge management, Panagopoulos and Avlonitis (2010) highlight that corporate level strategy affects the whole firm and business level strategies affect the business units, similarly individual level strategies particularly interacts within individual level however, it has greater effects on entire firm in the strategy formulation.

2.2 Tacit and Explicit Knowledge

Takeuchi (2012) states that tacit knowledge is extremely personal knowledge, that is entirely inter-related with the insights, intuitions and attitudes. Moreover, sales knowledge is also the combination of tacit and explicit knowledge, however it relies on the personal capabilities of the salesperson based on their knowledge.

Both, Tacit knowledge and explicit knowledge could be the sources for knowledge building. Explicit knowledge is formal and systematic form of knowledge which comes through rigorous training and education (Hislop, 2009). In addition to that explicit knowledge is objective and rational, it can be expressed and majored in the numbers, data, sound, picture, formula or in a manual form (Takeuchi, 2012, pp. 72-73).

Reber (1989) claims that tacit knowledge comes from implicit knowledge, implicit knowledge means learning of complex information without awareness of what has been learned. In addition, he further adds that tacit knowledge is the form of tangible knowledge, it is a conscious process which is related to the real-life

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10 action and objectives. Same author highlights that they are the thoughts and ideas, which comes via combination of ideas and experiences in the form of knowledge. Furthermore, implicit knowledge can be acquired via reflective strategies (Reber, 1989).

Insights from the Kolb’s (1984) experimental learning cycle suggest that the explicit knowledge comes from reflective strategy and happens to be tacit knowledge. In his theory, four stages of learning cycle are recommended, claiming that knowledge creation is a continuous process. However, he argues that it depends on the individual capabilities. His four steps include not only experiential learning but also creation of tacit and explicit knowledge.

The objectives of presenting the Kolb’s experimental theory is that before exploring further literature, it is required to understand how knowledge comes in the personal level.

Figure 2: Kolb's Experiential Learning Cycle (1984)

A person needs to progress through the four-stage cycle in order to build explicit knowledge. Kolb’s (1984) learning cycle is the combination process of four different phases. He views that it is possible to enter in the process cycle at any

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11 stage and follow the process in a logical sequence. Ultimately, learning could happen if all four phases is executed precisely.

First, the concrete experience starts from the real-life experiences of the person.

As Petkus (2000) says that, in order to gain knowledge, one should have effective learning. Generally, it starts from own experiences and leads to doing and having new experiences to experience new situation. Same author further argues that one could feel stressful due to the changes in the situation, from that point learning starts happening in various forms. After repeated encounter with such experience forms strong base of learning, and same experience would remain in the form of tacit and explicit knowledge (Petkus, 2000).

Second, the process of experiencing something happens after gaining concrete experiences (Rainey & Kolb, 1995). In this phase, knowledge grafting happens, which means one needs to bring all their experiences together in order to review their own knowledge. In the sales perspective, grafting means preparing and placing new ideas and experiencing together to get new technique for sales process (Madhavaram & McDonald, 2010). This phase is a repeating process in the knowledge formation, as a result it leads to the next step in the experiential learning cycle.

Third, this phase is abstract conceptualization of learning cycle. At this level, salesperson needs to develop their own perception in the form of knowledge on how to deal with the situation in a best way. After replaying with own experiences, learning happens simultaneously. In addition to that, they start processing their sense for understanding and comparing with what had happened in the past. As a result, they learn what they have to do now via reflecting on what they have already known (Rainey & Kolb, 1995) (Kolb, 1984).

In the last phase of the cycle is to have active experimentation. It completely relies on the learner’s styles, space and skills. Consequently, the learner tries to implement actively, what they have learned. Their knowledge helps them to plan in order to build new working strategy. As a result, knowledge enhances self-

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12 awareness and influences on how to approach work and manage effectively. At this stage, one can easily deal with any situation in order to adapt the situational needs (Rainey & Kolb, 1995).

As a result, explicit knowledge produces tacit knowledge (Reber, 1989), such knowledge has to be acquired independently, meaning experiential learner follows the process in order to build up strong tangible knowledges and experiences. Thus, it could be used to create knowledge personally and professionally, however it should be done accurately and independently. In addition to that knowledge grafting helps to substitute one part of knowledge to another by creating new knowledges and enables to build up strong and effective new strategies.

2.3 Knowledge Grafting

Figure 3: Relationship between KM, KGP & SF

The primary objective of this section is to reveal how new knowledge comes from existing knowledge. It is known that rational knowledge is the outcome of tacit

• Knowledge Management

Knowledge Acquisition

• Knowledge Grafting

Knowledge

Integration • Strategy Formulation

Synergistic

Outcome

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13 and explicit knowledge. On the other hand, rational knowledge comes from the knowledge grafting process. One should create, manifest, use and transfer the knowledge in order to process number of sub processes, that improves corporate performance (Choi & Lee, 2002). In addition to that knowledge is considered as one of the valuable assets, which provides competitive advantages during the strategy formulation.

Lee and Sears (1995) suggest that grafting is the combination of one variety of plant into another for propagating superior plant. Traditionally, grafting was popular for placing and preparing together to grow. Same metaphor has applied in the knowledge grafting, which means the application of two different knowledges together to get newer version of knowledge. Thus, Huber (1991) identifies that knowledge grafting is one of the strong sources of new knowledge formulation. He further adds on grafting as acquiring useful knowledge, which can be done from individuals, teams, and organizations.

In addition, Huber (1991) claims that firms need larger scale of knowledge, and grafting process is not enough for knowledge acquisitions. At that time, they do hire individuals who has knowledge currently lacking in the organization. Firms increase their store of knowledge by hiring individual consultant or developing relationship with other firms and organizations. He strongly predicts that acquisition of knowledge is quicker process than learning via imitation.

Therefore, following four processes are the key steps to understand knowledge grafting.

First, Becerra-Fernandez et. al (2008) analyze that knowledge acquisition is the process of structuring the knowledge from one source to another, it completely depends on individuals how they relate their information each other. Same authors referred that knowledge acquisition is also an individual acquisition, so that the use of knowledge depends on the person’s perception and their interpretation of certain events and actions. In addition to that Grant (1996) proposes knowledge flows systematically in the organization from the individual

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14 level to the business unit level, and business unit level contributes to transfer their knowledge in the corporate level, such knowledge integration provides strategical value for further implementation. Thus, knowledge acquisition is also an individual acquisition, and impacts on individual’s knowledge and interpretations (Probst, et al., 1998, pp. 87-21). Therefore, it is a process of converting explicit knowledge into tacit knowledge or vice-versa in order to internalize salesperson’s knowledge into strategical form (Becerra-Fernandez, et al., 2008).

Second, Integration of knowledge is the most strategical resources of the organization. The solid form of knowledge comes from various level. The process of combining specialized knowledge happens individually or in a team at top management to floor management. The integrated knowledge from individual level forms new knowledge and firm establishes long term strategy (Becerra- Fernandez, et al., 2008). Furthermore, the integration of knowledge increases strategical output, while knowledge plays a role of input as a result, each individual shares their specialized knowledge and firm formulates dynamically competitive strategy via integration of the specialized knowledge (Zack, 1999).

Therefore, in the formulation of new and appropriate strategy in the firm, knowledge integration works as the strategical integration. At last, Zack (1999) further refers that knowledge integration means the combination of many forms of knowledge for success.

Third, Becerra-Fernandez et al. (2008) highlight that the synergistic outcomes from the knowledge integration is greater than the individual sum of their separate effects. Synergistic knowledge growth happens with the integration between two or more individual or organization. It supports on prospective making and prospective taking between individuals, groups and organizations.

As a result, the outcome from the collective knowledge is the synergistic, and greater than each individual’s knowledge. In conclusion, the synergistic knowledge growth is applicable for combination of previous knowledge with the

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15 present knowledge, and development of new form of knowledge by the process of knowledge grafting process (Becerra-Fernandez, et al., 2008).

Finally, Maddhavaram and McDonald (2010) first utilized the knowledge grafting metaphor in the sales knowledge management, noted that it is an important metaphor for knowledge development. Hunt (1991) highlights it is a process of knowledge acquisition, integration and synergistic knowledge growth. Thus, knowledge grafting process builds up and acquires new knowledge. After acquisition of new knowledge, it is possible to integrate with existing knowledge to foster synergistic knowledge growth (Leach & Liu, 2003).

2.4 Knowledge Management with SECI model

Knowledge management is essential in the strategy formulation, as Nonaka (1991) highlights that it is considered as a strategic resource. He further adds that knowledge management is the actionable form of strategy and can be used effortlessly to manage everyday business. O’Dell (1996) did research on the knowledge management and considered it as a foundation of business strategy.

Therefore, he sums up that knowledge management provides know-how and know-why ideas, and initiates in the strategy formulation.

Knowledge management focuses on establishing knowledge management and knowledge creation strategies (Hansen, et al., 1999). One dimension of knowledge management is to create, store, share and use in the firms. The strategy as per this dimension is storing knowledge for further implementation, that can be done individually and, in a group, to fulfill the organizational mission under certain circumstances. Another dimension is to emphasize on knowledge sharing, that can happen via interpersonal interaction by social networking in between team (Lee & Kim, 2001). Moreover, creation of new knowledge is possible because of existing knowledge, and both implies together in the strategy formulation. However, it depends on tacit and explicit knowledge of corporate level, business unit level and individual level, and becomes the source of strategy, that comes from the knowledge grafting process (Huber, 1991).

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16 This thesis is entirely based on sales prospective, and research concentration related with individual level. It is well known that firms should implement various strategies during the sales process, but sales strategies originate from sales knowledge (Reiter, et al., 2011). Similarly, other strategies interplay with sales strategies in order to complete the sales process. Therefore, this is probably why sales knowledge has important role to relate its responsibilities while formulating sales strategy (Terho, et al., 2015). Thus, an effective knowledge management strategy is necessary not only in sales process, but also important on strategic planning for the future (Hansen, et al., 1999).

Terho et. al (2015) pinpoint that strategy formulation happens in the corporate level as a vision & mission of the firms, subsequently, that becomes objectives, later it happens to be organizational strategy for long term. They further argue that sales strategy is the byproduct of organizational objectives, which works as a catalyst in the sales process. It is also considered as the long-term direction of sales process. Therefore, outcome lies in the experience of managers.

The determinants of sales strategies are the individual capabilities of managers.

It seems, they have minimal influence while having sales, in fact those knowledges and skills are mainstream factors. To accomplish the sales process, managers follow quite a few processes simultaneously. On the other hand, they build up some strong factors in order to accommodate over such determinants (Terho, et al., 2015).

Furthermore, organizational strategy should develop appropriate networks with customer relation departments, where product promotion strategies initiate to support sales and selling department on retaining prospective customer. In addition, the effective role of key account management also impacts on sales and selling. For instance, the coordination between senior managers with junior manager could influence on initiation of marketing and communication strategies.

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17 In this thesis, Nonaka and Takeuchi (1995) SECI model is followed precisely to understand knowledge management. He refers that particularly tacit knowledge and explicit knowledge have huge impact on knowledge management. In addition to that same authors have proposed four ways of knowledge integration for knowledge creation. This model indicates that it identifies existing knowledge, shares what knowledge is required, develop new knowledge, maintains quality of the knowledge and dispose of the knowledge if no longer needed. In order to combine and convert the existing knowledge into new knowledge, they have created model as outlined below.

Figure 4: SECI model of knowledge creation

(adapted from Nonaka & Takeuchi 1995, pp 57,62,71)

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18 The SECI model of Nonaka and Takeuchi (1996) present that socialization is the first step to begin conversion of tacit knowledge, refer the acquisition of tacit knowledges by the people who do not have it from the people who do. Ever since, knowledge is considered as the important resource in the firm, it has important role in any faculties. In response to the knowledge management, it should be true and applicable knowledge, otherwise tacit knowledge turns into information (Dayan, et al., 2017).

In response to socialization, Dayan, Heisig and Matos (2017) clarify that knowledge management and organizational strategy shares similar properties.

Same authors have specified that the relationship impacts not only on operation, but also on the creation of the organizational value. In addition to that Pawlowsky and Schmid (2012) conclude that knowledge management has a significant influence on the organizational performance, and same author consider that knowledge management method is still the most popular management tool for new knowledge creation.

Furthermore, Porter (1998) pinpoints that knowledge is essential for the firms sustainability, he considers human resources are the determinant factors for the knowledge management, when firms able to transform best tacit knowledge from the human capital into explicit knowledge, which then becomes part of the organization and remains as an organizational strategy. Even though, some of the knowledge comes into practice accidentally (Nonaka & Takeuchi, 1995), once people learn it, they can reflect on it and perhaps get success in creating new knowledge.

Externalization, the next step in the knowledge management process, Nonaka and Takeuchi (1995) refer that two different departments, or two or more groups from same business unit share their best-known ideas for assessing and understanding their best knowledge for the better result. The externalization allows the transformation of informal knowledge into formal knowledge, however

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19 it needs a matching process of knowledge internalization (Kalpic & Bernus, 2006).

Holsapple and Joshi (2002) proposed that externalization gives managers a practical way to approach cross organizational knowledge, which is considered as a practical benefit of knowledge management. Walczak (2005) presents that an organization’s functional knowledge transforms successfully from upper level to lower level, which enables maximation of competitive advantage through knowledge sharing.

The next step in the SECI model is combination, Nonaka and Takeuchi (1995) highlight that this step is a process of systematizing concepts into a knowledge system, it happens when various explicit knowledge emerges and converts into new form of explicit knowledge. He sums up that combination of knowledge happens due to the various activities such as talking, listening, reading and writing, particularly between corporate level and business unit.

The final step is described as internalization, it is a process of symbolizing explicit knowledge into tacit knowledge. Nonaka and Takeuchi (1995) consider it as a traditional process of learning by doing. Individuals, team and all departments could implement their efforts respectively. Same authors have analyzed that individuals could also internalize their experience by documenting what they experienced, so that other people could experience the experience of others in order to build their notion. Whereas corporate level could also internalize their knowledge by disseminating their explicit knowledge towards business unit and to the individual level.

Due to the limitation of the thesis, the individual level is particularly concentrated in order to interpret the theories and literature. As per the SECI model of knowledge management, everyone in the firms are precisely important in the knowledge creation. In the sales prospective, all of the sales professionals get to fetch own experience and could be valuable in the sales process (Jobber &

Lancaster, 2015). While addressing knowledge management, most authors refer

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20 that it is instrumental in strengthening organization’s competitive position (Becerra-Fernandez, et al., 2008) (Dayan, et al., 2017) (Easterby-Smith & Prieto, 2008). Therefore, knowledge management is relating to human capital (Dayan, et al., 2017), due to the skills and experiences, sales professionals should play an essential role in the formulation and implementation of strategy for the benefit of the organization (Madhavaram & McDonald, 2010) (Terho, et al., 2015).

Therefore, following section has defined to understand the knowledge management steps.

2.4.1 Knowledge Acquisition

Becerra-Fernandez et. al (2008) analyze that knowledge acquisition is the process of structuring the knowledge from one source to another, it completely depends on person how they relate their information each other. Some authors also referred that knowledge acquisition is also an individual acquisition, so that the use of knowledge depends on the person’s perception and their interpretation of certain events and actions.

In addition to that Grant (1996) proposes knowledge flows systematically in the organization from the individual level to the team, and team contributes to transfer their knowledge in the organizational level, such knowledge acquisition provides strategical value for further implementation. Thus, knowledge acquisition is also an individual acquisition, and impacts on individual’s knowledge and interpretations (Probst, et al., 1998, pp. 87-21). Therefore, it is a process of converting explicit knowledge into tacit knowledge in order to internalize salespeople’s knowledge into strategical form (Becerra-Fernandez, et al., 2008).

2.4.2 Knowledge Integration

Knowledge is the most strategical resources of the organization. The solid form of knowledge comes from various level. The process of combining specialized

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21 knowledge happens individually or in a team at top management to floor management. The integrated knowledge from individual level forms new knowledge and firm establishes long term strategy (Becerra-Fernandez, et al., 2008).

Furthermore, the integration of knowledge increases strategical output, while knowledge plays a role of input. As a result, each individual shares their specialized knowledge and firm formulates dynamically competitive strategy via integration of the specialized knowledge (Zack, 1999). Therefore, in the formulation of new and appropriate strategy in the firm, knowledge integration works as the strategical integration. At last, Zack (1999) refers that knowledge integration means the combination of many forms of knowledge for success.

2.4.3 Synergistic Knowledge Growth

Becerra-Fernandez et al. (2008) say that the synergistic outcomes from the knowledge integration is greater than the individual sum of their separate effects.

Synergistic knowledge growth happens with the integration between two or more individual or organization. It supports on prospective making and prospective taking between individual, group and organization. As a result, the outcome from the collective knowledge is the synergistic, and greater than each individual’s knowledge.

In particular, the synergistic knowledge growth is applicable for combination of previous knowledge with the present knowledge, and development of new form of knowledge, which happens by the process of knowledge grafting process (Becerra-Fernandez, et al., 2008).

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2.5 Strategy Formulation

Knowledge Flow Strategy Flow

Figure 5: Strategy formulation process designed by author

Brief information on above figure, various authors have already mentioned that the first initiation of strategy happens in the form of knowledge at firm by individual level (Jobber & Lancaster, 2015) (Dayan, et al., 2017); ultimately, the effective knowledge transforms into strategy. According to the Nonaka (1995) SECI model is to understand knowledge management in the firms, where he has pinpointed that knowledge flows from lower level to higher level first, and the productive one turns into organizational strategy and same strategy cascades down to lower level for further implementation. Therefore, Nonaka and Takeuchi (1996) highlights that strategic knowledge is the determining factor of firm’s existence and plays important role in the recreation of knowledges and strategies.

Individual Level Corporate

Level

Business Unit Level

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23 Dayan, Heisig and Matos (2014) research on knowledge management as a factor for the formulation and implementation of organizational strategy, their finding pinpoints that knowledge management is to be regarded as a factor for the formulation and implementation of the organizational strategy. Therefore, similarities can be seen between knowledge management and strategy, due to their sharing properties, in addition to that both knowledge management and strategy shares foundation of excellence knowledge (Snyman & Kruger, 2004).

Therefore, Dayan et. al (2014, pp. 310) state that “knowledge drives strategy, and strategy drives knowledge creation and knowledge management”.

John Thompson (2001) argues that strategy could be the long-term oriented or short-term oriented, it relies on the things that managers and organizations do.

Such action or activities are needed in order to fulfill certain purpose of the organization. The results could be negative, when strategy fail to meet the requirements of customers and stakeholders. This means that strategy sometimes play its role as the organizational mission and their relevance is important in the organization. Therefore, knowledge should flow through several units.

During the strategy formulation process, effective strategy transfer from one department to other, however there is high possibility that same strategy applies to competitors, customers and suppliers to build up strategic sales cycle (Schulz

& Jobe, 2001). Thus, from the sales point of view, as well as knowledge point of view, strategy formulation is an integrated process of knowledge and knowledge competence. Therefore, various author has stated that knowledge is becoming a key resource of strategy and it has profound effect on strategy formulation (Snyman & Kruger, 2004) (Ingram, et al., 2015).

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3.0 Research Method and Data Collection

Figure 6: Research Methods

During the research, appropriate research method should be used otherwise research hardly provides essential outputs, this absolutely depends on nature and personality of the researcher (Maanen, 2000). The research methodology is a part of justification methods for this study and how the methods have been utilized. Yin (2009) proposed that research question has to be identified at first based on objectives, then methodology should be chosen for analysis and interpretation of the results.

In this thesis, the qualitative method has been applied to analyze the theories with primary and secondary data sources. Various researchers already have proved that the qualitative research method supports to understand of underlying reasons. Eriksson and Kovalainen (2016) has mentioned that qualitative research is precisely relevant with business and its core process, so it is concerned with interpretation and understanding of the base theory. On top of that, some of the research has to be done without numbers, but with logic and rigorous application of theories to verify the appropriate business circumstances (Stake, 2010).

• Qualitative

• Literature Review-Themes-Research Questions

Reserach Method

• Abductive

• Theme Analysis

Research Approach

• Primary - Semi-structured Interviews

• Secondary - Journals, Books and Articles

Data Collection

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25 Qualitative methodology provides relevant information based on articles or written forms, and considered as a powerful method for research in management and business subjects including general management, marketing, sales, corporate strategy and more (Eriksson & Kovalainen, 2016). Same authors further highlight that researcher should play active role in generation and interpretation of the theories as the qualitative research does. This type of research could be essential for understanding the strategic knowledge and interpretation of their capabilities (Stake, 2010).

Furthermore, abductive research approach has been implemented to review the theories in order to understand and verify the themes. Abductive reasoning is concerned with new theories, which emerges from the data and corelates from precise cases and comprehensive conclusions (Cresswell, 2007). Hobbs et. al (1993) present that abductive interpretations describe new context and arise the logical form of the sentence together, which allows coercions, merging redundancies by making assumption if necessary. In addition to that Dubois and Gadde (2002, p. 553) use this approach to describe and accommodate a new context by understanding and generating the dialogue.

In the theme analysis with abductive research process begins with the examination of the real-life experiences (Spens & Kovacs, 2006). This approach could able to observe puzzling situation via previous theories in order to explain the phenomena. Dubois and Gadde (2002) conclude that it is a process of theory matching or systematically combining the theory in an attempt to find a possible or matching framework, in addition to that it also borrows theories from other disciplines in social sciences. Therefore, all research which follows abductive approach develops best coordination with empirical data in the qualitative studies (Dubois & Gadde, 2002).

Lewis-Beck, Bryman and Liao (2004) state that abductive research examines the everyday activities and meaning of the language used by social actors. That supports in examining precise phenomena in the business. Specially in the

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26 business research, abductive is considered as an effective method, because it narrates with human language and interpretation of their experiences. That could be the reason, researchers would able to profoundly explore into the perception, perspective, understandings and their feelings based on their experiences and circumstances (Reiter, et al., 2011).

As stake (2010) notes, qualitative research method has many advantages, it allows researchers to explore new phenomena where little understanding exists.

A prior hypothesis is not needed in the qualitative research. It approaches into the theme and examines the theories. In this process, the observation should do through the theories to confirm the consequence and provides deeper insight with more complete knowledge. In order to get greater research flexibility and subjective interpretation in the sales process the qualitative research is necessary in that case. (Stake, 2010).

3.1 Data Collection

In response to the data collection procedures, there are two ways of data collection, primary and secondary. Primary data are those which are found during the research, that has been collected via interviews with managers, and business consultants of multinational companies from Kuopio and Helsinki.

Furthermore, supporting information has been collected via secondary sources, which is also known as published sources such as journals, books and references from relevant sources. (Saunders, et al., 2009).

Primary data were collected via interviews, Vuorela (2005) says that the data collection via interviews is one of the easiest ways to collect due to the flexibility and availability to have direct contact with interviewees. The researcher could get to correspond with unplanned questions to know the various situation firsthand. Therefore, Nielsen (1993) highlights that the interviews are the good ways to explore the topics for data in the various dimensions so that it makes

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27 interviewers get to understand the advantages and disadvantages. In addition to that qualitative data obtained from the interviews are preferred type of data in this case.

In this thesis, semi-structured interviews are designed. Patton (1990) refers that semi-structured interviews helps interviewer to concentrate on specific point, similarly interviewees also convey proper information during the short time, which is also known as theme interviews. Same author further highlights that the same kind of approach is called “the general interview guide approach”.

Therefore, the focus of interview is like an inquiry of study and interviewees are encouraged to relate their stories (Elliott, 2005) without any exaggeration. So that they could reveal their fact within the periphery of research topic (Janesick, 2000). Previous researchers have suggested that well experienced and knowledgeable informants are the reliable source, it is believed that they disclose important and realistic information (Kumar, et al., 1993).

According to Eriksson and Kovalainen (2016), the advantages of theme interviews are that it proceeds according to the central ideas and makes easy to build up questions in order to get proper information and understanding. In addition to that theme interviews are settled and specific, however interviewer uses non formatted question when compared to the structured interview.

Therefore, theme interview facilitates to make voice of the interviewees and takes into account the fact through interaction. Interview made with a positivist “How”

question in mind are most often semi-structured and open discussion (Eriksson

& Kovalainen, 2016).

The primary data includes five semi structured interviews, each contains approximately 30 minutes long. All interviewees embrace strong working background from various industries, for instance Banking Management, Insurance Sales, Business Consulting, Digital Marketing and Marketing Management. Therefore, five interviews can be considered as an adequate number of interviews in order to represent sales strategy formulation from

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28 various fields in the international business and sales management. It is not necessary to take more interviews if the saturation point is already achieved after couple of interviews. As, Eskola and Suoranta (2008) stated that the saturated point means where interviewers do not get any new information. Therefore, the quantity of interviews could be considered as enough for data collection.

During the interviews, it is necessary to set key criteria for data collection in the semi structured interviews (Kantanen, et al., 2017). The reason of choosing individual business professionals from random profession is to represent all business sectors. In addition to that all the participants have at least five – thirty years of work experiences on their specialized field. They retain international work experiences rather than specific location in the Finland. At first, interviewees were contacted via email to schedule for the interview. After their written confirmation, we had small face to face interaction in order to convey the notion of research, which helped author to select suitable interviewee candidate for this thesis.

All five interviews were conducted face to face in the months of March to May of 2019. The interviewees represent strategical levels in the big firms from sales manager to the head of the sales department. In order to understand the views of interviewees on strategy formulation, the author has aimed to keep interviews more specific as possible. It is considered that semi structured interviews could help focusing on research purpose. However, open interviews could take towards various dimensions rather than concentrating on specific one. Therefore, semi- structured and open formatted interview method has applied together in order to encourage interviewees to tell their best experiences and ideas rather than inconsequential explanation.

In the qualitative research method, a semi structured questionnaire given to respondents to produce specific information, which should be tested via one pilot interview at first. The first pilot interview was successfully conducted and proved to be useful. Whereas, interview questions are listed in the Appendix 1. The list

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29 of the questions is in sequence to understand the process. However, the list of questions and order are totally different than literature review to understand more on specific point. Therefore, such questions give natural flow on the discussion.

During the interview, participant evidently understood the terms knowledge acquisition, knowledge integration and synergistic knowledge outcomes. The concentration of the interviews was precisely under those three phenomena. All participants were familiar with those terms, which made easy to make them understood and simplify the interview questions. Therefore, we had small conversation based on the research topics and purpose of the research at the initial stage of the data collection and suitable candidate selection for further interviews.

The pre-information proved to be valuable because that made easy to be well prepared for interviews beforehand. In addition to that interviewees precisely understood the question and promptly replied without hesitation. It was natural flow of the interview. All interviewees were familiar with similar scenario in their day to day working life. However, it is necessary to understand that we did not use business terms, but it was defined in various ways to understand and interpreted correctly.

With the exclusive permission from the interviewees, the interviews were recorded via recording device. All interviews were conducted in the silent and closed room without disturbance and distraction in English language. All of them were good in English, though interviewees were Finnish/Swedish/Russian speaking professionals. The interviewer is a non-Finnish speaking person;

therefore, English was used as a language of communication.

After successfully completion of the interviews, that was transcribed within one week. Moreover, the interviewees provided precise information in order to make our interview more effective for data collection. All of the interviewees were familiar with the situation and helped interviewer to create extra question during

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30 the interview. Therefore, all answers by interviewees are presented in this report are original and as accurate as it was in the interview.

In the following table interviewees profile summery can be seen.

Job Title Duration of work experience

Department Education Abbreviation used in text Marketing

Manager

Seven Years Sales &

Marketing

M.A, MIBS R1

Sales Manager

15 years, 5 years in Insurance Policy dept

Sales MIBS R2

Sales Assistant

5 years, 2 years in international sales team

Sales and Promotion

MIBS R3

Sales &

Business Consultant

8 years, 4 years as Business Strategist

Sales Strategy Management

MIBS R4

Department Head

30 years, over 10 years on Customer Service Management

Head of Department

LLM, MIBS, Ph.D Candidate

R5

Table 1: Interviewees Profile

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3.2 Designing the Interview Question

Figure 7: Theme of the interview questions

In this research, I have developed three concentration for interviews. Based on the literature review, it has coordinated to establish the core process of designing and developing research question.

First, themes are designed from the reviewed literature. They have supported to form relevant interview questions. Second, the purpose of the theme is to make connection between interview-data and literature presented in the Chapter 2.

Lastly, the true concentration of the theme is to explore on research question in order to get authentic result as the thesis outcome, which ensures the reliability in order to build trustworthy research findings. In addition to that, themes have directed to conduct systematic interviews. Therefore, it has provided references for unstructured interview questions and helped to cover all the relevant situation. In fact, it has guided to generate reliable concept during the actual interviews.

• Knowledge Acquisition

Theme 1

• Knowledge Integration

Theme 2

• Synergitic Growth

Theme 3

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3.3 Data Analysis

Saunders, Lewis and Thornhill (2009) mentioned that it takes long time to prepare reliable data for appropriate analysis, however they also mentioned that there are plentiful approaches on analyzing the qualitative data, however it depends on capabilities of researchers. They further added that all researcher should follow suitable method in order to organize and collect them from the reliable sources, and they should be categorized, utilized and designed into meaningful co-relation.

Weber (1990) states that data analysis is a rigorous process, from early stage till the end of research. He further adds that after collecting initial data, every researcher needs to go into various phases to signify them appropriately. In this research, following phases of analysis are executed respectively.

1. Getting to know the data:

At the first step of the data analysis, it is necessary to know the data from the dimensions of the research approach (Weber, 1990). In this case, qualitative analysis is implemented, and abductive approach is followed.

In addition to that each research possesses its own theme (Berg & Lune, 2001). Therefore, the researcher has categorized the theme based on the earlier literature review, whereas, this research has three themes, first one focused on acquisition of knowledge for knowledge management, second one is concentrated on integration of knowledge on knowledge grafting.

Third theme is focused on synergistic knowledge growth from the knowledge management for knowledge creation.

2. Themes and Categories:

After having appropriate research question at first for research, themes are categorized to support the main research question. Thus, themes are created based on the previous literatures and theories. That has assisted in classifying the data into the prospective themes. So that, themes facilitated in developing appropriate interpretation of the findings. By the

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33 coordination of research question and themes, data is analyzed based on content analysis. In addition to that, contents were carefully considered into relevant group according to the themes, which has helped in creating the themes for productive analysis.

3. Managing Contents:

At this point, researcher has selected data in a manageable form. Each content develops relevant information for the concerned themes. So, the theme supports on identifying core and valuable information from the data, which finds the relations between the themes and concepts (Stake, 2010). If needed, researchers could review the research question for the better outcome of the research. So that, they could pinpoint the valuable and central insights from the research (Cresswell, 2007).

4. Content Analysis:

Content analysis supports researchers to review the theoretical issues so that one could able to improve understanding of the data in the relevant context (Krippendroff, 2018, pp. 1-10). In this research technique, researcher uses valid interpretation to examine the recorded or writing communication, so that the content has to be defined during the data analysis. After carefully evaluation of the data, the content has to be described in the reliable way. Defining and analyzing the relevant contents provides reliable analysis. (Weber, 1990).

5. Interpreting the Findings:

Definitively, after successfully completion of categorization and interpretation of the findings, qualitative analysis imports appropriate findings and conclusions (Patton, 1990). That means interpretation and discussion should focus on the basis of literature reviews and theories, which is necessary to correlate with themes and main research question.

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3.4 Trustworthiness

Although, it is vast topic to explore , however, researchers need to take appropriate steps to demonstrate that findings comes from the various data, not from the superficial analysis (Shenton, 2004). In this thesis, the author has followed Guba’s constructs: Credibility, Transferability, Dependability, and Confirmability.

Eriksson and Kovalainen (2016) refer that traditionally, qualitative research has been evaluated based on validity, reliability and generalizability. Same authors have mentioned that the research relying on the ontological view with multiple realities and on subjectivist epistemology should substitute the traditional evaluation criteria. Therefore, in this case, Guba’s (1981) construct has been accepted, and which has been followed by various positivist researchers as well.

He has presented that the quality of qualitative research should pursuit trustworthiness via previously mentioned four measures (Guba, 1981).

Firstly, As Guba (1981) referred, credibility is the equivalent of internal validity, comes via appropriate and well-designed research method, and that makes trustful and acceptable outcomes (Bryman & Bell, 2007). In addition to that Lincoln and Guba (1985) mentioned Yin’s idea to recognize the importance of incorporation (Yin, 2009), meaning “ correct operational measures for the concepts being studied”, thus, researchers should practice according to the research needs, and finding has to be approved by the members who involves in the research directly or indirectly (Lincoln & Guba, 1985). Therefore, this thesis is researched under the supervision of the thesis supervisors, has gone through rigorous peer evaluation. The themes and interview questions has been designed under the guidance of supervisors.

Secondly, transferability, which means external validity in the qualitative research (Eriksson & Kovalainen, 2016), refers whether the findings are transferable to other research context or applicable to other milieu (Lincoln &

Guba, 1985). In regard to this thesis, it is a case study, based on individual

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35 experience on sales process. The outcome from this research would be helpful for further information on similar kind of research. However, the findings might be useful for professionals to understand and formulate strategies.

Third aspect of trustworthiness is dependability, which includes the aspect of consistency (Lincoln & Guba, 1985), corresponds reliability (Bryman & Bell, 2007), and the stability of findings in the qualitative research (Korstjens & Moser, 2018). Generally, qualitative research specifies to a small number of particular situation and individuals; therefore, it is important to demonstrate research outcome effectively and the researcher’s responsibility to provide sufficient information. Hence, research has to be logical, systematic, and well documented (Eriksson & Kovalainen, 2016). The author has specifically concentrated on overall research process as transparently as possible, with the researcher’s mindset. if further research conducted, the similar kind of result could be achievable.

Lincoln and Guba (1985) mentioned that the concluding aspect of the trustworthiness is confirmability, which addresses the objectivity of the research. The role of tranquility justifies in this case, this means that, the findings should be clearly derived from the data, not from the imagination of the researcher. The strategy of the confirmability is to establish reflective thoughts, sampling, adapted research materials, and data management, which enables the transparency of the research and research path (Korstjens & Moser, 2018). To fulfill the mentioned points, the author of this thesis has successfully utilized all the resources during data analysis, which has done based on constant comparative method by examining the data with existing literature and various theories. As a result, the outcomes are transparent with the correctness of the data collection and interpretation.

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4.0 Findings

In this chapter, the findings are presented with information. This thesis is precisely concentrated on five interviews, interviewees are the source of information. It primarily relies on their information and supporting information from the secondary sources. It is needed to understand that all the information is valuable to comprehend the findings, therefore this chapter is divided into three section.

In the following section, findings are presented according to the three themes and research question. As stated, research question has already defined in the previous chapters. The first section 4.1 aims to address about knowledge acquisition by the salesperson to understand further how it supports on knowledge creation. Section 4.2 addresses the second theme, that defines how knowledge integration supports in the knowledge grafting. Section 4.3 focuses on third theme, which analyzes synergistic knowledge outcome, is considered as the outcome of knowledge grafting process in order to create new sales strategy.

Moreover, it is an empirical fact based on data. Therefore, this is principle outcomes from the research, whatever this thesis reveals. During the research, each section is analyzed based on research theme, which provides outcomes and discusses on the main findings from the data. The findings are concluded based on the themes, which links with a piece of information discovered during the analysis of research data.

4.1 Knowledge Acquisition for Knowledge Creation

At first, it was challenging for interviewees to define the knowledge acquisition.

They explained it in a various form, which means that they increase their knowledge through adaptation. They tried to present their mindset through consistent learning and achievement from education, experience and training,

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37 despite they know that was from adaptive motivation. However, knowledge acquisition can mean different things for different salesperson. It can be simple form to complex form of knowledge acquiring through acquisition.

I basically grew up in the marketing family, cause my dad started advertising business in the 80s. I surrounded by marketing and Salesperson in my family. And that effected my world view. So, a lot of the stuff that now I do in working life actually dates back to how I brought up. (R1)

I am highly motivated to perform as well as possible in my job, because happy and satisfied customers are my personal reward for doing my job well. I am always interested finding ways to improve the way i work in order to perform better more efficiently. (R2)

Yes, I am motivated for work. But I think it only works if you are used to changing routines and are open for changes, generally. Then you are better able to adjust your experience to suit the specific situation/task. (R3)

Knowledge acquisition could happen from every little thing; the professional mindset excels any form of knowledge. Interestingly, one of the interviewees quotes that majority of the knowledge comes from how we brought up during our childhood. In the prospective of other participant that our sense making process helps us to develop our knowledge from observing and analyzing the situation around us. Same mindset affects our knowledge building process while we go into professional life.

“We have been trying to develop way of working through all the time thought out the project, and since we started we are much more professional, not even owner was specialist, who was working in the company for long time, but all of us working in that company are improving now. I would say that I constantly have to evolve and develop in doing that because we recognize more sufficient ways of developing things to genuine system, so than we adjust way of working but it happens in the team level and as well as personal level.” (R2)

Knowledge acquisition also happens in the group by focusing into certain task, which leads to improve working experiences. While working under team,