Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

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Technological Forecasting & Social Change

journal homepage: www.elsevier.com/locate/techfore

Constructing a strategy on the creation of core competencies for African

companies
Shenxue Lia,⁎, Timothy Clarkb, John Sillincec
a
Kent Business School, Medway, University of Kent, Sail and Colour Loft, The Historic Dockyard, Chatham, Kent ME4 4TE, United Kingdom
b
Durham Business School, Arthur Holmes Building, University of Durham, Science Site, South Road, Durham DH1 3LE, United Kingdom
c
Newcastle University Business School, 5 Barrack Road, Newcastle upon Tyne NE1 4SE, United Kingdom

A R T I C L E I N F O A B S T R A C T

Keywords: A growing number of studies on economic development have relied on the premise that international technology
International technology transfer transfer provides a mechanism for developing competitive advantages for companies of developing countries,
Core competence and Africa in particular. In this article, we focus on the explicit nature of technology transferable to LDCs to
Knowledge management argue that conventional technology transfer alone cannot create core competencies for African companies that
Africa
lead to the sustainable economic development of the continent. Drawing on insights from the resource-based
view and the knowledge based perspective, we develop a conceptual framework for constructing core compe-
tencies for African companies. More specifically, we explore the under-researched linkage between core com-
petencies and knowledge management. By examining the roots of core competency in the resource-based view
and knowledge-based perspective, we identify the knowledge underpinning core competencies. We then re-
concile diverse knowledge management models to propose an integrative approach towards generating such
critical knowledge, based on which we further argue that African companies should build their strategy on the
creation of core competencies rather than solely relying on conventional international technology transfer.

1. Introduction 1993; Maskus, 2003; Radosevic, 1999; Westphal et al., 1985) have
found that conventional ITT between technologically advanced
International technology transfer (ITT), “the diffusion of technology economies and less developed countries (LDCs) is often limited to the
from the place of its introduction to other markets around the world” transfer of technical information and equipment rather than technolo-
(Grosse, 1996, p. 782), is increasingly viewed as a mechanism for de- gical know-how, a critical source of competitive advantage (Leonard-
veloping competitive advantages for indigenous companies of devel- Barton and Sensiper, 1998; Nonaka, 1994; von Krogh et al., 2000) di-
oping countries (Buckley and Hashai, 2014; Chen, 1983; Contractor, rectly linked to core competency of the recipient (Prahalad and Hamel,
1980; Cusumano and Elenkov, 1994; Glass and Saggi, 1998; Keller, 1990). A large number of studies (Aitken and Harrison, 1999; Archibugi
2004; Osabutey and Debrah, 2012; Radosevic, 1999). For example, and Pietrobelli, 2003; Borensztein et al., 1998; Djankov and Hoekman,
based on a longitudinal study of 29 manufacturing industries in 2000; Keller, 2002; Kim, 1997; van Pottelsberghe de la Potterie and
Shenzhen special economic zone of China, Liu (2002) argues that ITT Lichtenberg, 2001; Xu, 2000) report that countries that are further from
through foreign direct investment (FDI) has significantly improved and the global frontier often have limited collective learning capabilities to
strengthened the competitiveness of Chinese manufacturing industries. absorb and integrate the transferred knowledge effectively into their
In recent years, there is growing evidence to suggest that ITT creates production and development systems. Hence, conventional ITT be-
important conditions for African firms in certain sectors to catch up tween industrial economies and LDCs alone does not necessarily facil-
with technologically advanced economies (Amankwah-Amoah, 2015; itate the development of technological core competence of the tech-
Amankwah-Amoah and Sarpong, 2016; Osabutey et al., 2014; Osabutey nology recipient (Amman and Cooper, 1982; Maskus, 2003). Yet it is
and Jin, 2016). unclear from the literature how technology recipient nations can
While ITT may have a crucial role to play in reducing the techno- overcome such challenges and develop their own core competencies
logical gap between companies of industrial economies and African needed for their indigenous companies to create a distinctive compe-
firms, substantial challenges remain. Several scholars (Hill and Hay, titive edge in the knowledge-based economy.

⁎
Corresponding author.
E-mail addresses: [email protected] (S. Li), [email protected] (T. Clark), [email protected] (J. Sillince).

http://dx.doi.org/10.1016/j.techfore.2017.08.008
Received 15 December 2016; Received in revised form 7 July 2017; Accepted 14 August 2017
0040-1625/ © 2017 Elsevier Inc. All rights reserved.

Please cite this article as: Li, S., Technological Forecasting & Social Change (2017), http://dx.doi.org/10.1016/j.techfore.2017.08.008
S. Li et al. Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

In this paper, we focus on the explicit nature of technology trans- how coexist in firms because the application process of scientific
ferable to less developed countries (LDCs) to argue that conventional knowledge produces context-specific idiosyncratic knowledge. In this
ITT alone cannot create technological core competencies for African paper, we see technology as knowledge existing on a spectrum, with
companies that lead to the sustainable economic development of the explicit technical information and highly tacit technological know-how
continent. Drawing on insights from the resource-based view and the (i.e. context-specific specialized knowledge) at the two ends.
knowledge based perspective, we develop a conceptual framework for
constructing core competencies for African companies. To accomplish 3. Knowledge underpinning core competencies
this goal, we explore the under-researched linkage between core com-
petencies and knowledge management. By examining the concept of 3.1. The concept of core competency
core competency, and its roots in the resource-based view and knowl-
edge-based perspective, we identify the knowledge that underpins core The concept of core competency has been interchangeably used
competencies. We then propose a knowledge management model to with core capability, distinctive competency or distinctive capability by
suggest the strategic means with which African firms can generate such different researchers (e.g. Brown and Duguid, 1998; Day, 1994; Meyer
critical knowledge, based on which we pinpoint that African companies and Utterback, 1993; Prahalad and Hamel, 1990; Stalk et al., 1992).
should build their strategy on the creation of core competencies rather With the emergence of resource-based view in the late 1980s and early
than solely relying on conventional international technology transfer 1990s it has been widely used to refer to those resources that are un-
mechnisms. ique, inimitable and universally applied in different markets.
The discussion of core competencies for African firms in this paper is Prahalad and Hamel (1990, p. 82) defined core competencies as
structured around five propositions, each has associated with it a cer- “the collective learning in the organization, especially how to co-ordi-
tain critical issue identified in the literature on ITT strategies for de- nate diverse production skills and integrate multiple streams of tech-
veloping countries, the resource-based view and the knowledge-based nologies”. By quoting the example of Sony's miniaturization they fur-
perspective, areas which we intend to contribute to. ther stated that “core competence is about harmonizing streams of
technology, it is also about the organization of work and the delivery of
2. Knowledge and technology value”. This definition parallels Stalk, Evans and Schulman's (1992, p.
62) view of distinctive capabilities. They attribute organizational suc-
Knowledge is so intrinsically ambiguous and equivocal a concept cess to a capability that is defined as “a set of business processes stra-
that no single commonly agreed definition for this intangible factor tegically understood”.
exists despite the plethora of attempts (Birkinshaw et al., 2002; Grant, Similarly, by analyzing Wal-Mart's cross-docking logistic systems,
1996; Phelps et al., 2012). Building on Polanyi's (1958) original as- Day (1994, p. 38) gave capabilities a more explicit meaning – “complex
sumption that knowledge cannot be fully expressed, some scholars bundles of skills and collective learning exercises through organiza-
(Ambrosini and Bowman, 2001; Griffith et al., 2003; Leonard-Barton tional processes that ensure superior co-ordination of functional activ-
and Sensiper, 1998) proposed a continuum view of knowledge. In ities”. He characterized “distinctive capabilities” valuable to customers,
contrast to the widely employed tacit-explicit dichotomy view of matched by rivals and used in different ways to “speed the firms'
knowledge which tends to polarize knowledge types, the continuum adaptation to environmental change” (Day, 1994, p. 40). Collis and
perspective of knowledge sees knowledge as existing on a spectrum, Montgomery (1995, p. 120) suggest that strategies should be built on
with tacit and explicit knowledge at the two ends. At one end of the “valuable resources” – “an organizational capability embedded in a
spectrum knowledge is totally tacit and thus difficult to explicate. At the company's routines, processes, and culture”. They emphasized the
other end of the spectrum, knowledge is completely explicit and can be business context in which core competence is deployed.
easily codified. Most forms of knowledge fall somewhere in between Tampoe (1994) made the first effort to distinguish core competency
these two extremes. This paper adopts this wider view of knowledge, and distinctive capability by emphasizing that the true competency of
based on which we outline our understanding of technology below. an organisation lies in its technical subsystem. However, this has been
Technology generally refers to the application of knowledge to in- challenged by certain authors (e.g. Day, 1994; Marino, 1996; Stalk
dustrial or commercial use. Technology may be a set of pieces of et al., 1992) in respect of its vulnerable nature amid environmental
knowledge embodied in particular products or tangible equipment, change.
systems and devices used in productive activities (Blau et al., 1976; Although capability-approach theorists have been trying to differ-
Dosi, 1982; Leonard-Barton, 1992; Woodward, 1958). It may also be entiate capabilities from competencies the dividing line between them
disembodied knowledge consisting of particular expertise, production is still unclear. Nevertheless, certain researchers (e.g. Day, 1994;
techniques, expereince of past experiments, managerial methods, and Marino, 1996) have suggested that core competencies and core cap-
know-how of complex business processes (Grosse, 1996; Perrow, 1967; abilities possess homogeneous characteristics and, thus, are equally
Thompson, 1967). According to Grosse (1996), technology can be ca- important to the firm's business success. In this paper, core compe-
tegorized as product technology (the knowledge used to specify the tencies will encompass both.
characteristics and uses of any product), process technology (the
knowledge used in any production process such as know-how of orga- 3.2. Core competencies in resource-based view
nizing the inputs), and management technology (the managerial skills
used in operating a business). In the resource-based view, resources are classified as tangible and
For classical and neo-classical theorists of value and distribution intangible. According to Grant (1991) tangible resources include fi-
(Arrow, 1962; Jewkes et al., 1958; Solow, 1957), technology is codified nancial resources and physical resources such as plant, equipment, and
technical information and, therefore, easily reproducible and transfer- stocks of raw materials. Intangible resources range from intellectual
able (Radosevic, 1999). However, recent economic theorists (e.g. property rights such as patents, trademarks and copyrights to the know-
Mowery and Rosenberg, 1989; Patel and Pavitt, 1994) argue that how of personnel, informal networks, organisational culture and a
technology is part of the firm's firm-specific assets cumulated over time. firm's reputation (Hall, 1992). However, the dividing line between the
In this perspective, a significant part of technology is tacit knowledge tangible and intangible is often unclear and how they are classified can
deeply rooted in the firm's local context, and thus, difficult to reproduce vary from one writer to another. Nevertheless, agreement on the re-
and transfer (Dosi, 1982; Radosevic, 1999). Yet a number of scholars lative importance of the two types of resources has been achieved in
(e.g. March and Simon, 1958; Orlikowski, 1992; Romer, 1993) suggest spite of the problems over classification. Although it is clear that both
that technical information and the more tacit forms of technical know- types of resources are required for any business to operate, resource-

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S. Li et al. Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

based theorists argue that intangible resources are the most likely They further state that collective know-how is more difficult to circu-
source of competitive advantage, because they are less visible and, late and transfer, and the more it is embedded in the work practice, the
therefore, more difficult to identify, understand and imitate (Hall, less relevant is the absence of one or some of the members of this
1992). Consequently, the importance of intangible concepts, such as collective. Wal-Mart's success in its distinctive capabilities building
know-how (Teece, 2000), corporate culture (Barney, 1986) and re- adds effective evidence to this point (Stalk et al., 1992). Another ex-
putation (Aaker, 1989), is widely recognized in work adopting the re- ample showing the strength of embedded knowledge comes from
source-based view. Whether or not these intangible resources have the Toyota's higher quality products over GM's although they had the same
potential to become core competencies depends on how difficult they standard system (Inkpen, 1998). Moreover, McEvily and Chakravarthy's
are for competitors to acquire and how valuable they are to the firm as a (2002) research on knowledge attributes underpinning key capabilities
basis for competitive advantage. As Day (1994, p. 41) states: provides further support to this point when they state that increased
complexity of collective know-how ensures its competent nature. They
“when they are rare, difficult to imitate, non-substitutable and they
argue that collective know-how is complex in nature therefore gen-
allow a firm to exploit opportunities or neutralize threats, then they
erates durable advantages because such knowledge is difficult to imi-
can be considered core competencies and serve as the basis of an
tate.
organisation's sustained competitive advantage.”
However, by looking at the specialized, context-specific, distributed
Therefore, the concept of “core competency” was developed in the and intrinsic nature of tacit knowledge some researchers (Almeida
resource-based view to indicate the need for the resources that are et al., 2002; Grant, 1996; von Hippel, 1994) question whether all types
unique, inimitable and universally applied in different markets, and to of personal tacit knowledge can be or are necessarily transmitted into
evaluate the firm's strategies. However, the questions raised thereafter collective know-how. Building upon this perspective certain scholars
are what resources meet these measures for core competencies and how argue that integrated knowledge, created by combining many areas of
core competencies could be developed. The search for the answers to specialized knowledge (e.g. highly tacit technological know-how), is
these questions has led to widespread recognition of the importance of sticky and so not easily diffused to rival organizations, and is, thus, the
managing knowledge. essence of organizational capabilities (Day, 1994; Foss and Knudsen,
1996; Kogut and Zander, 1992; Kotha et al., 2013; von Hippel, 1994).
3.3. Core competencies in knowledge-based view For example, when a management team utilize their individual spe-
cialized knowledge to make and implement consensus strategic deci-
Knowledge has been increasingly recognized as a powerful source of sions their knowledge will be integrated and difficult to diffuse, thus, of
competitive advantage. Not surprisingly, many of the perspectives that great strategic value at the organizational level (Gioia and Chittipeddi,
dominate current thinking concerning competitive advantage have fo- 1991; Li et al., 2016; Majchrzak et al., 2012). A joint venture will be
cused on knowledge management as their strategic means for securing competitive when all its specialized knowledge from different parties is
competitive advantage. The central argument in this research stream is systematically woven together (Beamish, 1988; Madhok, 2006; Makino
that knowledge must be proactively managed to sustain core compe- and Delios, 1996).
tencies (Boisot, 1995; March, 1991; Nonaka, 1994). Thus the concept of On the basis of this argument we propose that:
core competencies which evolved from the resource-based view has
Proposition 1. (P1). Core competencies (or core capabilities) are the
recently diffused into the field of knowledge management. However,
combination of collective tacit knowledge and integrated specialized
the linkage between core competencies and knowledge management is
knowledge.
under-researched. As Eisenhardt and Santos (2002) have argued, it is
unclear from the literature what constitutes valuable knowledge that In the context of ITT from technologically advanced economies to
underpins core competencies. Consequently, it is unclear what knowl- LDCs in Africa, this suggests that core competencies of technology re-
edge management strategies position the firm at the competitive edge cipients in African continent lie in their capabilities to develop and
(Davenport and Prusak, 1998). integrate collective and individual technological know-how.
In the knowledge-based view, knowledge is conceived to be the Technology is seen as a fundamental competitive advantage of both
most important intangible resource (e.g. Grant, 1996). Competencies or domestic and international firms (Grosse, 1996). Our view of tech-
capabilities are viewed as “sets of knowledge that differentiate a com- nology as knowledge ranging from technical information to context-
pany strategically” (Oliveira Jr. and Child, 1999, p. 4). specific technological know-how has important implications for un-
It is widely accepted that, unlike explicit knowledge, tacit knowl- derstanding the nature of technology transferrable to LDCs. Conven-
edge (e.g. technological know-how) is difficult to capture and copy. tional ITT between industrial economies and LDCs is carried out largely
Hence, it is a powerful source of competitive advantage (Boisot, 1995; through FDIs in the form of equipment, subcontracting, and the trans-
Grant, 1996; Leonard-Barton and Sensiper, 1998; Nonaka, 1994; von action of import goods (and capital goods in particular) (Maskus, 2003;
Krogh et al., 2000) and, according to Prahalad and Hamel (1990), is Radosevic, 1999). However, international trade in technology transfers
directly linked to core competency. However, as tacit knowledge ori- information and equipment but not technological know-how that is
ginates in people's heads there is a debate in the literature about firm-specific, yet, needed for recipient firms of LDCs to develop their
whether tacit knowledge should or can be shared. Some commentators own technological capabilities (Hill and Hay, 1993; Westphal et al.,
(Argyris, 1994; Decarolis and Deeds, 1999; Nonaka, 1994; Teece, 2000) 1985).
express the view that knowledge is of no great value unless it is shared. Given the context-specific nature of technology, internationally
They further claim that individual tacit knowledge is mobile, hence, transferred technology is often incomplete, and difficult to absorb
needs to be transmitted into collective know-how. They argue that the without sufficient investment in learning and capability development in
core competency of the firm lies in its collective tacit knowledge. Others recipient countries (Grant and Gregory, 1997; Hobday, 1995;
(e.g. Boisot, 1995) hold that diffused tacit knowledge tends to leak Rosenberg, 1982; Westphal et al., 1985). Such difficulties are com-
away and core competencies are not sustainable and become diluted. pounded by the greater technology distance, the level of differences in
Nevertheless, the latter view is criticized by a number of scholars economic, physical and social conditions, between the technology
(e.g. Lei et al., 1996; Oliveira Jr. and Child, 1999; Spender, 1998). For source of an industrial economy and the technology recipient of a LDC
example, Oliveira Jr. and Child (1999) argue that the strategic pro- (Evenson and Westphal, 1995). Very often, conventional technology
blems will be of less intensity when the firm's advantage is based on transfer to LDCs transmits codified proprietary information (e.g. written
collective knowledge such as a teamwork solution because it is em- production processes, standards and operating manuals) that has been
bedded in the organization and difficult for competitors to imitate. taken out of its local context and, thus, is largely explicit in nature. Such

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S. Li et al. Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

technical information does not constitute the recipient firm's core sees this knowledge transmission process as a dynamic knowledge
competencies (i.e. collective tacit knowledge and integrated specialized creation spiral, in which new insights are constantly created by
knowledge) identified above. Hence, technology transferable to LDCs in knowledge recipients and managed to sustain the firm's competitive
Africa is of limited value to recipient firms that hope to develop their advantage, as knowledge recipients are perceived to be creative rather
own technological core competencies through ITT (Amman and Cooper, than passive, so that, the knowledge transfer process is not a one-way
1982). We therefore postulate that: process. This is consistent with other scholars' arguments (e.g. Brown
and Duguid, 2000; Clark, 1995).
Proposition 2. (P2). Technology transferrable to LDCs is explicit in
The main constraint of this model, however, is that it is based on the
nature and, thus, does not constitute the recipient firm's core
assumption that all tacit knowledge can be eventually converted into
competencies (i.e. collective tacit knowledge and integrated
explicit knowledge, hence, it ignores the notion that some specific tacit
specialized knowledge).
knowledge may be non-transferable (Hu, 1995; Winter, 1987) or the
transferring process may not meet the firm's requirement for efficiency
4. The creation of core competencies (Athanassiou and Nigh, 2000; Demsetz, 1991; Grant, 1996; Spender,
2002). In addition, in business planning processes individuals often
The field of knowledge management strategy is arguably separated make sense of diffused explicit knowledge and directly create new in-
into two distinct domains – one in which it is maintained that knowl- dividual tacit knowledge, especially specialized knowledge. In this case,
edge should be transferred (Boisot, 1995; Nonaka, 2002; Senge, 1990; diffused explicit knowledge is utilized and converted into individual
Szulanski, 1996), and a second domain wherein writers such as tacit knowledge rather than embedded into collective tacit knowledge.
Demsetz (1991), Grant (1996), and Spender (2002) emphasize knowl- This individual tacit knowledge often immediately contributes to cor-
edge integration (KI) mechanisms by grounding their arguments upon porate decisions through well-designed integrating systems to form the
management efficiency. Those that advocate the knowledge transfer basis of corporate integrated knowledge (Li et al., 2016), the other part
(KT) approach highlight the benefit an organization obtains from re- of organizational core competencies.
plicating and sharing knowledge. Under knowledge integration con-
siderations, knowledge has a specialized nature and is therefore diffi-
4.2. Creation of corporate integrated knowledge
cult to share; to maximize specialized knowledge the firm needs to have
a mechanism through which individual knowledge is exploited and
A number of scholars (e.g. Demsetz, 1991; Dougherty, 1992;
combined to fulfil organizational tasks (e.g. Grant, 1996). Should
Eisenhardt, 1989; Grant, 1996; Hargadon and Sutton, 1997; Li et al.,
knowledge be transferred or integrated? Whether knowledge transfer or
2016) investigated the strategic means for facilitating specialized tacit
integration alone leads to the creation of the firm's core competencies?
knowledge integration. By questioning whether all types of personal
Having identified streams of knowledge underpinning the firm's
tacit knowledge can be or are necessarily transferred into collective
core competencies, we, in this section, shall focus upon exploring
know-how, Grant (1996, p. 114) sheds light on the specialized nature of
knowledge management strategies for creating both collective tacit
knowledge to argue that:
knowledge and integrated specialized knowledge. The intention is to
develop a conceptual framework for developing the African firm's core “transferring knowledge is not always an efficient approach to in-
competencies. tegrating knowledge. If production requires the integration of many
people's specialist knowledge, the key to efficiency is to achieve
4.1. Creation of collective tacit knowledge effective integration while minimising knowledge transfer through
cross learning by organizational members.”
The means of facilitating the creation of collective tacit knowledge
In this context he pointed to four mechanisms for integrating spe-
has been widely explored in the work of several writers (e.g. Argyris,
cialized knowledge - rules and directives, sequencing, routines, group
1994; Boisot, 1995; Crossan et al., 1999; Nonaka, 1994; Senge, 1990).
problem solving and decision-making. Rules and directives regulate the
Between them, Nonaka's (1994) SECI (Socialization, Externalization,
actions among specialists. Sequencing ensures that each specialist
Combination, Internalization) model, based on Polanyi's (1962) dis-
contributes independently in a pre-assigned time slot. Routines rely on
tinction between articulated and tacit knowledge and focused on its
an organizational business procedure system to reconcile complex
tacit dimension, is probably the most cited theoretical work on
patterns of individual behaviours and business interactions between
knowledge creation. He illustrates how to motivate knowledge creation
specialists. Group problem solving and decision making provide a
through bold visions of products and strategies coupled with organi-
means by which specialized individuals coordinate to deal with com-
zational cultures that promote sharing, transparency and proactive use
plex problems and varied tasks. The smooth implementation of these
of knowledge. In his model, knowledge is deemed to be transferable,
mechanisms is contingent upon the existence of adequate common
and each transfer is defined as a specific process - individual tacit
knowledge between specialists. Moreover, Grant and other researchers
knowledge is shared through socialization process and made explicit
also extend this knowledge integration perspective beyond the firm
through externalization process; explicit knowledge is then re-
boundaries. Kogut and Zander (1996), for example, emphasize the role
configured and shared through combination process and converted into
of relational networks in integrating external knowledge with internal
organizational tacit knowledge through internalization process. The
knowledge, and others (Hamel and Prahalad, 1989; Teece, 2000) have
organization continuously creates collective tacit knowledge by con-
increasingly looked into strategic alliances as an important means to
verting personal, tacit knowledge of individuals into shared explicit
integrate valuable external knowledge.
knowledge and embedding the latter into business practice. In these
Though there is a separation, even conflict, between the knowledge
knowledge conversion and transfer processes, externalization and in-
transfer approach and the knowledge integration perspective in the
ternalization processes are identified to be crucial, as both processes
literature we postulate that they are not exclusive but complementary
require high self-commitment important for self-transcendence, which
because neither alone creates all types of critical knowledge that un-
was identified as a key determination of the knowledge creation pro-
derpin the firm's core competencies.
cess. The internalization of newly created knowledge is the conversion
To summarize these arguments:
of explicit knowledge into the organization's tacit knowledge, which
was identified as embedded collective know-how, part of organizational Proposition 3. (P3). Knowledge transfer and integration techniques
core competencies. should be adopted systematically rather than separately in order to
One important contribution of this theoretical framework is that it fully utilize the value of individual knowledge.

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S. Li et al. Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

5.1. Codification
Diffused

Collective Internalization Corporate

(KT, LP) TR
Codification refers to the transformation of knowledge from tacit
Tacit Kn. TR Data
into a codified format. It is a “people-to-documents” process (Hansen
TR P4 TR et al., 1999, p. 108). As we noted earlier, a certain proportion of

TR
Socialization (KT)
P1 technology on the technology spectrum is transferable and can be ex-
Articulation

Diffusion (KT)
(NKC, LP)
(KT) pressed on paper. Knowledge codification can be accomplished through
Core P4 encoded methodologies, such as encoding of tacit technological know-
Competencies Sense-making how of a technology source, e.g. a multinational company (MNC) of an
P5 (KI, NKC) industrial economy, in formulas, codes, expert systems, drawings and
P3
the like; expressing technology in natural language formats, such as

TR
P4 P2 P5
TD TR
reports, manuals, memos, patents and policies (Cacciatori et al., 2012;
Zollo and Winter, 2002). Documenting a Q & A list for a new product
Undiffused

TD TR Spectrum of New Knowledge

Integration TD TR developed over years is an example of this codification process. Another
(KI, LP) TR Codification (KT) example is the writing up of a production plan based on years of shop
floor management experience. In the codification process, the tech-
nology developer transforms certain valuable technological know-how
into accessible and easy-to-transfer forms for the technology recipient.
Specialized Tacit Tacit Explicit
Conventional ITT between industrial economies and LDCs is often
Fig. 1. A strategic knowledge management model for African companies. limited to this process because it focuses on the trade of equipment and
the transmission of codified technical information only (Maskus, 2003;
Based on these arguments in next section we merge the two separate Radosevic, 1999).
perspectives and propose a unified knowledge management model that For African firms, it is crucial to negotiate the best available terms
facilitates the creation of all streams of critical knowledge underpinning for comprehensive international deals (e.g. the inclusion of sufficient
the firm's core competencies for African companies that hope to de- codified technological know-how) that maximize the international
velop technological core capabilities. transfer of relevant technologies. In FDI funded enterprises, the parti-
cipation and training of technology recipient in encoding technologies
is an essential measure taken by recipient firms to develop their own
5. A proposed model of knowledge management process for technical capability. By doing so, the recipient firm generates economic
African companies rent from the valuable tacit knowledge of the technology developer
(Cowan et al., 2000; Fiedler and Welpe, 2010). On the other hand, the
Fig. 1 depicts a strategic knowledge management model, in which recipient firm can avoid severe loss of knowledge during employee
the type of knowledge underpinning core competencies, as stated in turnover in the host-country.
Proposition 1 (P1), is clearly indicated and the processes through which Knowledge codification in this framework is one of the KT processes
African firms can gain core competencies are illustrated. The model and one of the necessary steps leading to the creation of ‘collective tacit
reconciles the knowledge transfer (KT) approach, such as Nonaka's knowledge’ (Nonaka, 1994; Schulz, 2008). Yet the codification process
(2002) knowledge creation model, and Boisot's (1995) social learning alone does not lead to the creation of such critical knowledge. As we
curve, and knowledge integration perspective such as Demsetz's (1991) stated in Proposition 2 (P2), technology transferred to recipient firms of
concept of knowledge integration and Grant's (1996) knowledge in- LDCs (e.g. codified technical information) is often explicit in nature
tegration (KI) mechanism. It shows how KT and KI can be adopted and, thus, does not constitute the technological core competencies of
systematically, as postulated in Proposition 3 (P3), during the ITT the recipient firm. Rather, codified knowledge is mobile and of limited
process between the technology developer (TD) of an industrial value if it is not appropriated by relevant members of the recipient
economy and the technology recipient (TR) in Africa. Compared to organization (Davenport and Prusak, 1998; Heimeriks et al., 2012).
existing models it is distinctive because (1) it indicates the most valu- Therefore, a diffusion process within a given population in the tech-
able knowledge that underpins core competencies, which was unclear nology recipient firm should be followed.
in existing studies (Eisenhardt and Santos, 2002), (2) it provides addi-
tional insights into the knowledge transfer-or-integration contradiction 5.2. Diffusion
revealed by previous studies, and (3) it suggests a new knowledge
creation process, sense-making, which stimulates a new circle of core Codified knowledge can be disseminated into corporate explicit
competence creation. knowledge for public use within the technology recipient firm in Africa.
The model consists of seven management processes – codification, We call such a process knowledge diffusion. The widespread use of
diffusion, articulation, internalization, sense-making, socialization, and filing systems, databases and internet communication in contemporary
integration. Core competencies are created following internalization, business facilitates this process (Dodgson et al., 2013; Vaccaro et al.,
socialization, and integration processes, while new knowledge that 2009). Conventional ITT between industrial economies and LDCs en-
stimulates new circles of core competence creation is developed in so- gages little in the diffusion of codified technology in recipient firms due
cialization and sense-making processes. We place the seven processes to significant technology distance between the technology source and
within a 2D-space, modified from Boisot's (1995) C-space. It consists of the recipient (Evenson and Westphal, 1995). The technology recipient
two dimensions: codification, the extent to which knowledge can be firm in Africa therefore needs to invest in information sharing systems
made explicit and recorded in a codified form, and diffusion, the extent or negotiate FDI projects that offer similar systems. The firm can also
to which knowledge is shared within a given population. Core compe- distribute hard-copy operational manuals and management handbooks
tencies of the African firm, collective tacit knowledge and integrated across its operations (Levine and Prietula, 2012). Although diffused
specialized knowledge, are located at the left upper and lower corners explicit knowledge is mobile in nature, it offers the opportunity for its
respectively. wide application within a given population. This knowledge can be
We now turn to explain each aspect of the model. internalized to enhance the technology recipient's collective practice or
used to make sense by their individuals for decision-making (Le Mens
et al., 2011; Shropshire, 2010).

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Like codification, knowledge diffusion in this framework is one of 2002), which emphasize the relationship between “action” and
the KT processes and one of the necessary steps leading to the creation “learning”.
of collective tacit knowledge but it alone does not lead to the creation of
such critical knowledge. To be of great value diffused knowledge needs
5.5. Sense-making
to be exploited by members of the African firm through internalization
and sense-making processes.
Corporate explicit knowledge (diffused and articulated knowledge)
is often not only internalized into collective tacit know-how but also
5.3. Articulation
utilized by corporate members in business planning and problem sol-
ving processes (Le Mens et al., 2011). In the technology recipient firm,
Certain technological know-how on the technology spectrum may
actors can enact the ordinary routines of organizational life, make sense
not be codifiable but can be expressed verbally to members of the
of diffused technology, and directly construct new knowledge
technology recipient organization (Johnson et al., 2002; Peltokorpi
(Orlikowski, 2010; Weick, 1995). Sense-making in this sense is a new
et al., 2007). Articulation is a process through which such tacit
knowledge creation (NKC) process. It is not just about interpreting a
knowledge is enacted and transformed into articulated forms, and
great volume and diversity of technical information (Weick, 1995).
widely diffused within a given population of the technology recipient. It
Rather, it is an innovation process through which organizational
is one of the KT processes and another necessary step leading to the
members create their own meaning that is relevant for a range of ac-
creation of collective tacit knowledge, but itself alone does not lead to
tions and commitments (Gioia and Chittipeddi, 1991; Patriotta, 2003).
the creation of such critical knowledge. Like diffused knowledge, to be
Novel ideas are created when organizational members relate newly
of great value articulated knowledge needs to be exploited by members
diffused explicit knowledge to their own intellectual, social and his-
of the technology recipient firm through internalization and sense-
torical contexts (Cornelissen, 2006; Ringberg and Reihlen, 2008;
making processes.
Whiteman and Cooper, 2011). This new knowledge can be enacted,
Articulation can be accomplished through collective discussions and
codified and transferred into corporate knowledge when it is efficiently
debriefing sessions during ITT (Jian, 2011; Zollo and Winter, 2002). It
and economically transferable in the African firm.
is widely used in technological training and company meetings (Hong
However, very often, such new knowledge also directly contributes
and Snell, 2013; Zhao and Anand, 2009). Compared to knowledge co-
to corporate decisions (Pandza and Thorpe, 2009) through well-de-
dification, knowledge articulation is a quicker way of externalizing tacit
signed integrating systems to form the basis of corporate integrated
knowledge (Ernst and Kim, 2002). Knowledge can be disseminated ef-
knowledge, the other type of the firm's critical knowledge (see knowl-
fectively and very quickly to a larger population when individuals ex-
edge integration section for detailed reasoning). As Weick (1995) and
press their opinions and beliefs (Argyris, 1994; Kale and Singh, 2007).
Ringberg and Reihlen (2008) described, innovators make sense of new
In this process, the technology developer verbally explains their tech-
situations by looking back, drawing on their own and corporate
nical knowledge to members of the technology recipient. However,
memory to shape a new “landscape” of meanings that is sufficiently
knowledge articulation does not resist erosion of company memory
plausible to serve as a basis for joint action. This happens especially
(Lazaric et al., 2003). African companies therefore are suggested to
when organizations are faced with uncertainty (e.g. uncertainty in new
adopt it in combination with knowledge codification.
applications of a type of technology) and the need to act under time
However, it is important to note that company abilities to transform
constraints (Orlikowski, 2010). In doing so, they define emerging needs
potentially articulable knowledge into articulated statements vary
and determine whether they will maintain organizational continuity,
(Cowan et al., 2000; Winter, 1987). It potentially requires significant
shift to contingency plans, or instead engage in new forms of action
efforts and commitment from members of the company (Nonaka,
(Pandza and Thorpe, 2009). Therefore, sense-making is also a KI pro-
1994). It also requires the development of mental models and the ex-
cess which is not adequately illuminated in existing knowledge-based
istence of a language and a social context in which knowledge can be
frameworks.
articulated and understood (Ringberg and Reihlen, 2008).

5.4. Internalization 5.6. Socialization

When members of the technology recipient firm put corporate ex- Some tacit knowledge (e.g. experience of implementing a new
plicit knowledge (diffused and articulated knowledge) into practical use production process) is context-specific and difficult to formalize, thus,
they will gradually embed such knowledge into their business or rou- can only be acquired through shared experiences (Dyck et al., 2005;
tinized behaviour (Nelson and Winter, 1982; Vasudeva et al., 2013). We Tortoriello et al., 2012). Such a KT process can be called “socialization”
call this process knowledge internalization (Nonaka, 1994). KT is (Michel, 2011; Nonaka, 1994). A corporate learning culture, for ex-
completed and collective tacit knowledge is created following this ample, can be best acquired by new employees through day-to-day
process. For example, shop floor workers can gain tacit understanding business interactions with other corporate members (Zander and
of how to implement a quality control system through using their Zander, 2010). Socialization therefore can be particularly used to
production manual over time. This collective tacit knowledge secures transfer transferable yet difficult-to-formalize tacit knowledge into
the manufacturing of high quality products, which place the firm at the collective tacit knowledge (Li et al., 2016). Technicians of the tech-
competitive edge. An example of such strength is Toyota's superior nology recipient in Africa, for instance, can acquire certain technolo-
routine use of knowledge shared between its strategic alliances (Dyer gical know-how embedded in technical expatriates by spending time
and Nobeoka, 2000). Although such best practice is known by Toyota's with them, which allows the recipients to master new technology
rivals, they are not replicated because of the difficulties in doing so. As eventually. Socialization is, therefore, another channel of transferring
Nonaka (1994) argues, knowledge becomes a valuable asset when it is technological know-how and another process which directly leads to
internalized to become shared mental models or technical know-how. the creation of collective tacit knowledge.
Therefore, value is created when externalized knowledge is inter- However, it is important to note that learning through socialization
nalized. Unlike codification, diffusion and articulation, knowledge in- is not a one-way process (Clark, 1995; Yang et al., 2008). New
ternalization directly leads to the creation of collective tacit knowledge. knowledge is often constructed in the course of socialized learning,
Internalization bears similarities to the well-perceived notions of which stimulates a new circle of critical knowledge creation (Nonaka,
“collective learning” (Macpherson et al., 2010; Prahalad and Hamel, 1994). Hence, socialization is also a new knowledge creation (NKC)
1990) and “routine development” (Cacciatori, 2012; Zollo and Winter, process.

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S. Li et al. Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

5.7. Integration technology transferable to LDCs. A primary premise of this central

claim is that technology transferable to LDCs is largely explicit in nature
Some specialized tacit knowledge on the knowledge spectrum takes and, thus, does not constitute the technology recipient firm's core
considerable time to acquire or is non-transferable, yet is a key source competencies (i.e. collective tacit knowledge and integrated specialised
of competitive advantage (Grant, 1996; Parmigiani and Mitchell, 2009; knowledge). Our conceptual model for constructing core competencies
Spender, 1998). A typical example of such knowledge is a scientist's for African companies suggests the strategic means with which African
vision for a new product developed through years of research experi- firms can generate critical knowledge that underpins the firm's core
ence. This is the knowledge that can be identified yet unobservable and competencies.
thus has been overlooked by scholars who favour the KT approach. In the model, some tacit knowledge is codified, articulated, and
Drawing from Grant's (1996) KI perspective we argue that this diffused into corporate explicit knowledge base. Corporate data is then
knowledge can be utilized through wide-scale business co-operation further embedded into corporate tacit knowledge base or utilized
and collaboration during ITT from the technology developer to the through sense-making by individuals to create new individual knowl-
recipient in Africa, such as home- and host-country nationals' team- edge. Specialized tacit knowledge is integrated into corporate-level
work, collective decision-making, cross-functional taskforce, and stra- specialized tacit knowledge for fuller utilization. Core competencies for
tegic alliances (e.g. a joint venture project) of technology developers African firms are created through these particular knowledge man-
and recipients. Such collaboration provides a means by which specia- agement processes.
lized individuals coordinate to deal with complex problems and varied We have identified three leading paths (LP) to the creation of core
tasks (Li et al., 2016; Majchrzak et al., 2012; Srikanth and Puranam, competencies for African technology recipient firms – socialization,
2011). The widespread adoption of teamwork in or across organizations internalization, and integration. We have also identified two new
underlines this understanding (Brusoni et al., 2001; Davis and knowledge creation (NKC) processes that stimulate new circles of core
Eisenhardt, 2011). Team members bring and apply different perspec- competence creation. Based on this model, we pinpoint that African
tives in order to solve context-specific problems or fulfil a business task companies should build their strategy on the creation of core compe-
that could not be done individually (Dougherty and Dunne, 2012; tencies rather than solely relying on conventional ITT mechnisms.
Hobday, 1998). In a fast-moving business world existing technology Second, by examining the concept of core competency, and its roots
may soon become irrelevant to the business. Hence, KI can be more in the resource-based view and knowledge-based perspective, we
useful even for managing transferable knowledge because of its flex- identified the most valuable knowledge that underpins core compe-
ibility and speed (Sanchez and Mahoney, 1996). tencies, which was unclear in existing studies (Eisenhardt and Santos,
KI is a different business process from KT which is accomplished 2002). We argued that the firm's core competencies rest on its collective
through knowledge codification, articulation, diffusion, internalization tacit knowledge and integrated specialized knowledge. Based upon this
and socialization in our framework. It does not require the movement of argument, we proposed our knowledge management model in which
knowledge from one carrier to another. Yet it is not simply about the type of knowledge underpinning core competencies is clearly in-
putting diverse knowledge together. The process requires extensive dicated and the processes through which firms can gain core compe-
interaction between technology developers and recipients which pro- tencies are illustrated.
vides the context for the construction of new knowledge (Gavetti, 2005; Compared with preceeding models (e.g. Boisot, 1995; Grant, 1996;
Spender, 1998). If the KI process is implemented smoothly the resulting Nonaka, 1994), our knowledge management model is distinctive be-
knowledge derived from it should be critical to the business' success cause we established a theoretical link between core competencies and
(Bruns, 2013; Li et al., 2016). We therefore argue that KI entails in- knowledge management to further our understanding of knowledge-
tegrating highly specialized knowledge of the technology developer and based view to the firm's strategy, which is also vague in the strategic
recipient and constructing new knowledge which gives the technology management literature (Eisenhardt and Santos, 2002).
recipient in Africa a competitive advantage. Finally, our conceptual model provided additional insights into the
Because it takes time to acquire and develop both collective tacit debate and contradiction revealed by previous studies (e.g. Grant,
knowledge and integrated specialized knowledge it follows that firms 1996; Nonaka, 1994) over the question of whether and how knowledge
that already possess a relevant set of these can gain competitive ad- can be managed. We exploited the theoretical synergy of the two main
vantage over rivals (Grant, 1996). conventional approaches, KT and KI. We argued that neither KT nor KI
Based on our key arguments developed from this model we propose alone leads to the creation of all streams of core competencies. The
that: essence of our argument is that core competencies that confer compe-
titive advantage on the firm are a combination of collective tacit
Proposition 4. (P4). The leading paths (LP) to the creation of core
knowledge developed through KT processes, and integrated specialized
competencies for African technology recipient firms are internalization,
knowledge derived from KI mechanisms; thus KT and KI techniques
socialization, and integration processes.
need to be adopted systematically rather than separately. We have
Proposition 5. (P5). New knowledge that stimulates new circles of core shown how various types of knowledge on the knowledge spectrum can
competence creation in African technology recipient firms is developed be managed to create the African firm's competitive advantage through
in socialization and sense-making processes. complementary use of these two processes. This framework suggests
that conventional knowledge-based approaches are limited and should
give rise to a more integrative perspective on managing knowledge.
6. Conclusion and implications
6.2. Managerial implications
6.1. Theoretical implications
The propositions developed and the conceptual model presented
The theoretical contributions of this study are three fold. First, our have implications for managers of African companies who strive to
analysis of core competencies and the proposed knowledge manage- catch up with companies of industrial economies. First, the explicit
ment process model enhance our understanding of knowledge-based nature of technology transferable to LDCs suggests that African com-
strategizing for African companies. We argued that conventional ITT panies should not solely rely on conventional ITT mechanisms which
alone cannot create technological core competencies for African com- often fail to transfer context-specific technological know-how (Hill and
panies that seek to close the technological gap with firms of industrial Hay, 1993; Westphal et al., 1985) and thus cannot create technological
economies. We explored this claim through examining the nature of core competencies for technology recipients. Very often, technology

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S. Li et al. Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

developers seeking to generate value from its existing technology see scope of this article. The focus of our paper is on the various knowledge
technology as a “public good” and focus on transferring codified tech- processes rather than the micro-level contextual factors that constitute
nology into various markets. This is the case when companies of in- the complexities and operational difficulties of building technological
dustrial economies attempt to internationalize by selling equipment core competencies. Yet, to understand what facilitates KT and KI is
(e.g. telecommunication system) and relevant technical information to crucial to exploiting technology as a potential source of wealth. It
companies of LDCs. Setting a strategy for attracting foreign investment would be fruitful to further research the contextual factors that facil-
in advanced equipment is important in that this process may offer op- itate our proposed knowledge processes for African companies.
portunities for the technology recipient to learn advanced technology Second, the framework does not take account of the difficulties in
(Liu, 2002). However, it should be noted that international trade in measuring knowledge in firms. The challenges inherent in measuring
technology transfers equipment and related information (e.g. the user the intangible are well-documented (King and Zeithaml, 2003; Peng,
manual) but not technological know-how needed for technology re- 2001; Phelps et al., 2012). The non-quantifiable nature of knowledge
cipient firms to develop their own technological core competencies. suggests difficulties for firms to implement their knowledge-based
Second, the core competence of the recipient firm rests upon its strategies (Li and Scullion, 2006). Although a couple of approaches are
capability to develop and integrate collective and individual technolo- sought to tackle the problem, such as the use of archival proxies (Miller
gical know-how through systematic employment of knowledge transfer and Shamsie, 1996) and other observables that underlie unobservables
and integration techniques. African companies need to formalize a (Godfrey and Hill, 1995; Turner and Makhija, 2006), they are subject to
holistic strategy for developing its technological core competencies. “concerns about construct validity” (Barney et al., 2001, p. 636). Future
Although the knowledge transfer processes lead to the creation of col- scholars therefore are encouraged to undertake studies employing new
lective know-how, an important part of core competencies of the methodologies or multiple approaches (Argote and Miron-Spektor,
technology recipient, certain types of technological know-how are 2011; Easterby-Smith and Lyles, 2003; Hoskisson et al., 1999; Phelps
highly tacit, specialized and difficult to transfer, yet are critical sources et al., 2012). Barney et al. (2001), for example, suggest the conduct of
of competitive advantage (Spender, 1996). Therefore, reliance solely on qualitative studies of intangible assets to elicit a set of tangible in-
technology transfer risks the danger of neglecting the most critical dicators which are measurable. It would be useful to explore these
proportion of technological expertise. possibilities and illuminate possible solutions in future research.
Third, making a holistic strategy work is challenging because its Nevertheless, our framework is among the first to reconcile diverse
implementation crucially depends on the participants' professional ex- knowledge-based perspectives and propose knowledge-based strategic
periences and social interactions, as well as their motivation (Grant, means for developing technological core competencies for African
1996; Nonaka, 1994). This requires that African companies must focus companies. We have shown how the contradictory mechanisms for
on the organization of key activities facilitating crucial knowledge handling different types of knowledge are complementary and can be
processes such as making sense of diffused technology to generate new adopted in combination to develop the African firm's competitive ad-
insights, putting codified knowledge into practical use to develope vantage.
collective technological know-how, sharing technological experiences
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