Knowledge creation across multiple boundaries

The objective of this paper is to uncover what drives knowledge creation when firms engage with other organizations in collaborative knowledge creation. The open innovation literature has mainly focused on knowledge flows... [ view full abstract ]

The objective of this paper is to uncover what drives knowledge creation when firms engage with other organizations in collaborative knowledge creation. The open innovation literature has mainly focused on knowledge flows across the firm boundary, either unidirectional or bidirectional (Gassmann & Enkel, 2004). However, the primary objective of the firm’s engagement with its external environment rapidly evolves from accessing external knowledge to joint knowledge creation (Fjeldstad, Snow, Miles, & Lettl, 2012). A case in point of such collaborative knowledge creation is the research collaboration between firms and universities.
Compared to knowledge creation within an organization, knowledge creation across the organizational boundary presents a number of unique challenges. First, participants in such activities possess diverse, specialized expertise and knowledge – similar to cross-functional teams (Edmondson & Nembhard, 2009). Second, participants are embedded in different organizational contexts, differing in motivations, interests, geographical location and organizational structure. Further, the organizational boundary separates different identities and different practices. All these complexities arising from the organizational boundary complicate the transformation of specialized knowledge held by individual participants into an integrative co-generated outcome.
While scholars have examined how actors overcome these complexities pertaining to firm boundaries, they have mostly looked at them in isolation. For instance, Carlile’s work (2004) advanced our understanding of knowledge boundaries, which refers to differences in syntax and interpretations among participants. In contrast, the social practice literature (e.g. Brown & Duguid, 2001) highlights the relevance of differences in identity and social context for knowledge creation. However, in collaborative knowledge creation, it is rarely the case that only one type of boundary is present. We propose that a holistic understanding of how actors overcome such multi-dimensional boundaries in knowledge-creating activities is key to our understanding of a firm’s interaction with its external environment and thus of Open Innovation.
We first review the literature that has examined boundary complexities in different setting, including both intra-organizational and inter-organizational contexts. We identify four different boundary complexities uncovered by the previous literature, i) knowledge boundaries, ii) occupational or task boundaries, iii) interest boundaries, and iv) different identities. We suggest that intra- and inter-organizational knowledge-creating activities face different combinations of these complexities.
Subsequently, we reason that some of these boundaries interact to impact collaborative knowledge creation. For instance, in an inter-organizational project when participants with diverse expertise (i.e., high relevance of knowledge boundaries) have different goals pertaining to the project outcome (i.e., high relevance of interest boundaries), they can more easily in knowledge sharing. Because participants do not compete for the same goals, they do not face negative consequence in sharing their knowledge. In contrast, participants from two organizations that have very similar goals might engage in knowledge sharing to a much lower extent to avoid the risk of value appropriation solely by the partner.
To explain when actors in inter-organizational knowledge creation overcome the boundaries and thus successfully engage in knowledge creation, we employ the concept of cross-understandings (Huber & Lewis, 2010). A project member’s cross-understanding is defined as the “the extent to which a group’s members possess insights into the features of other members’ mental representations of the group’s task and task situation.” (Huber & Lewis, 2010: 6). The concept of cross-understandings does not assume that member share the same knowledge or mental representation of task. Instead, cross-understandings describe how much one participant or a group of participants knows about what the others know, about their interpretations and their interests. We propose that cross-understandings are especially useful to explain knowledge creation activities in an open innovation context. When one party understands the expertise, goals, and interests of the other party, knowledge is integrated into the collective outcome more easily and less conflict arises. Consequently, a higher degree of cross-understanding among project team members is expected to result in higher scientific knowledge creation and thus higher project performance.
To identify all mechanisms that establish a common understanding among project participants and their potential interactions, we probe both the boundaries and the social process (i.e., knowledge sharing) enabling participants to overcome boundaries. In particular, we explore two boundary features: knowledge boundary operationalized as scientific distance between participants (Kotha, George, & Srikanth, 2013) and interest boundaries, operationalized as goal congruence. Taking together, we build a model that explains how the presence of different types of boundaries in inter-organizational research project interact and how project participants establish higher levels of cross-understanding, leading to knowledge creation outcomes.
We test the theoretical model using data from research collaboration projects between a large pharmaceutical company and its research partners, including universities, hospitals, and independent research institutes. We are currently administrating surveys to project team members from the company and its research partners, in a two-wave design. We measured the boundary features of the project in the first survey and now collecting data on knowledge sharing and project performance in the second survey. Senior managers rate project performance, including scientific knowledge created and progress towards project objectives, in a separate survey to avoid common method bias.
This paper aims at making at least three major contributions to the open innovation literature. First, we advance knowledge of how firms engage in open innovation by extending the scholarly attention from knowledge (in or out) flows to joint knowledge creation projects. Second, we provide a comprehensive understanding of how multiple boundary features act and interact to influence knowledge creation across firm boundary. Third, we examined a firm’s interactions across the firm boundary at the project level and thus provide a micro-foundational view. By surveying participants from the firm and its partnering institution, we go beyond the limitation of a firm-level analysis that averages all activities of a firm.
We are currently administrating the second survey to all project participants. This round of data collection will be concluded by the end of August 2016. By the time of the OUI conference, we expect to have collected the majority of all data and done preliminary data analysis. We look forward to presenting our theoretical model and emerging empirical results at the OUI conference.