Title: The Role of Organizational Controls in Managing Knowledge
Authors: Turner, Karynne L., Makhija, Mona V.
Subject: Knowledge management
Publish: 2006
Status: full text
Source: Academy of Management Review; Jan 2006, Vol. 31 Issue 1, p197-217
Preparation: Scientific Database Management Articles www.SYSTEM.parsiblog.com
Abstract: We present a model demonstrating the role of organizational controls in managing organizational knowledge characterized by different combinations of knowledge attributes. Specifically, we show how particular controls (outcome, process, and clan) differ in their ability to acquire, transfer, interpret, and, finally, use knowledge. We argue that the use of different controls therefore creates distinguishably different knowledge management processes within the firm.   Download Article

Introduction: According to the knowledge-based view of the firm, the uniqueness of a firm’s knowledge plays a fundamental role in its sustained ability to compete (Conner & Prahalad, 1996; Grant, 1996a; Zander & Kogut, 1995). The essential dilemma within the firm, then, is how to manage knowledge in a way that such competitive advantage is created (Barney, 1991; Nonaka, 1994; Wernerfelt, 1984). Building competitive advantage involves creating and acquiring new knowledge, disseminating it to appropriate parts of the firm, interpreting and integrating it with existing knowledge, and, ultimately, using it to achieve superior performance (Cohen & Levinthal, 1990; Kogut & Zander, 1992; Kusunoki, Nonaka, & Nagata, 1998).
The literature provides us with only a rudimentary understanding of such organizational processes associated with the treatment of knowledge. A primary impediment to developing a more comprehensive understanding arises from the fact that knowledge is inherently unobservable (Argote & Ingram, 2000). Because of the difficulty in distinguishing knowledge in an unambiguous manner (Spender, 1996; Szulanski, 2000), we have very limited insight on how different types of knowledge are managed by the firm. Without such an understanding, however, we will be unable to truly comprehend the processes by which firms develop their distinct knowledge, and the firm will largely remain a knowledge-based “black box” (Spender, 1996). It is this concern that motivates our research.
Despite the unobservable nature of knowledge, the firm has other more readily observable features that can be used to illuminate both the properties and use of its knowledge. A particularly useful feature of the firm in this regard is its organizational control systems. Researchers have defined control systems in a variety of ways, including the formal and informal routines and procedures of the firm (Birnberg & Snodgrass, 1988; Cardinal, 2001; Makhija & Ganesh, 1997), the processes by which the firm coordinates activities (Lebas & Weigenstein, 1986; Tushman & Nadler, 1978), and the cultural norms and practices within the firm (Floyd & Lane, 2000; Jaeger & Baliga, 1985; Kirsch, 1996; Rowe & Wright, 1997). Regardless of how control systems are defined, they have a critical feature that has typically been overlooked in the literature: their ability to manage the flow of knowledge within the firm. All control mechanisms influence the firm’s knowledge management process by affecting how knowledge is acquired, disseminated, interpreted, and used to accomplish organizational goals. Two particular features of controls play an integral role in the firm’s ability to manage its knowledge. First, control mechanisms have inherent information processing properties (Egelhoff, 1991; Grant, 1996a; Nelson & Winter, 1982; Ouchi, 1979; Tushman & Nadler, 1978). Such  mechanisms, whether they encompass routines, coordination mechanisms, or organizational norms, mandate specific relationships between individuals and groups that influence how information is shared and knowledge is disseminated within the firm (Makhija & Ganesh, 1997; Simons, 1994). Second, controls create incentives and disincentives for organizational members to behave in a manner consistent with firm goals and ives (Anthony, 1965; Camillus, 1986).
Since meeting goals and ives requires the use of knowledge by organizational members,
the purposeful structuring of control mechanisms by a firm in turn directs the type of knowledge management behavior exhibited. These two important knowledge-related properties of control systems help us to provide critical insight into how knowledge is processed within the firm.1 We present a model demonstrating the role of controls in managing organizational knowledge.
To accomplish this, we begin by describing the nature of organizational knowledge, emphasizing the ways in which it can vary. We also outline the process by which this knowledge is managed, detailing the important stages identified in the literature. Our model, presented next, draws on this discussion. It shows how each control (outcome, process, and clan) is suited for handling specific attributes of knowledge.
Because of this, we argue that a firm’s mode of control affects its ability to leverage its knowledge. In this vein, we show how controls, owing to their handling of knowledge attributes, vary in their ability to acquire, transfer, interpret, and, finally, use knowledge. Ultimately, this model demonstrates how a firm’s use of particular controls is critical to the formation of its distinctive organizational knowledge.

THE CONCEPT OF ORGANIZATIONAL KNOWLEDGE
The Attributes of Organizational Knowledge In order to appreciate how organizational knowledge is managed by the firm, wemust first understand how knowledge itself can vary. A review of the literature, a sample of which is shown in Table 1, indicates that a variety of knowledge attributes have been identified by researchers, but three in particular capture important qualitative differences in knowledge.
We refer to these as codifiability, completeness, and diversity.2 Below we discuss these three knowledge attributes in relation to two important kinds of organizational knowledge: (1) the means, behaviors, or processes by which organizational goals are accomplished and (2) the ends or outcomes of these processes, which are the goals themselves (Eisenhardt, 1985; Kirsch, 1996; Snell, 1992; Snell & Youndt, 1995).
Codifiability. The defining characteristic of more codifiable knowledge is that it can be  roken
down into specific components that are easily understood and articulated (Kogut & Zander, 1992). Highly codifiable knowledge is also known as explicit knowledge (Makhija & Ganesh, 1997), since it tends to be unambiguous, observable, and indisputable. Such characteristics allow highly codifiable knowledge to be readily transferred within the organization or between individuals without loss of meaning (Grant, 1996a,b). In contrast, tacit knowledge, or that which is not easily codified, cannot be broken down into component parts. Because of this, tacit knowledge is difficult to articulate or express.
Therefore, the ability to use tacit knowledge depends on the individual’s prior experiences and familiarity with the knowledge. Such experience provides a base from which new knowledge can be understood more easily. When knowledge related to processes is highly codifiable, it is possible to reduce the process into a set of specific and identifiable rules or courses of action (Grant, 1996a; Kogut & Zander, 1992). The employee can be given clear and unambiguous direction as to the exact procedures in which to engage. In contrast, tacit process-related knowledge cannot be broken down in such an unambiguous manner. Instead, subtle nuances associated with the process are what makes it effective. Because of this  ubtlety, it becomes necessary to actually engage in the understand how knowledge itself can vary. A review of the literature, a sample of which is shown in Table 1, indicates that a variety of knowledge attributes have been identified by researchers, but three in particular capture important qualitative differences in knowledge.
We refer to these as codifiability, completeness, and diversity.2 Below we discuss these three knowledge attributes in relation to two important kinds of organizational knowledge: (1) the means, behaviors, or processes by which organizational goals are accomplished and (2) the ends or outcomes of these processes, which are the goals themselves (Eisenhardt, 1985;  irsch,
1996; Snell, 1992; Snell & Youndt, 1995).
Codifiability. The defining characteristic of more codifiable knowledge is that it can be  roken
down into specific components that are easily understood and articulated (Kogut & Zander, 1992). Highly codifiable knowledge is also known as explicit knowledge (Makhija & Ganesh, 1997), since it tends to be unambiguous, observable, and indisputable. Such characteristics allow highly codifiable knowledge to be readily transferred within the organization or between individuals without loss of meaning (Grant, 1996a,b). In contrast, tacit knowledge, or that which is not easily codified, cannot be broken down into component parts. Because of this, tacit knowledge is difficult to articulate or express.
Therefore, the ability to use tacit knowledge depends on the individual’s prior experiences and familiarity with the knowledge. Such experience provides a base from which new knowledge can be understood more easily. When knowledge related to processes is highly codifiable, it is possible to reduce the process into a set of specific and identifiable rules or courses of action (Grant, 1996a; Kogut & Zander, 1992). The employee can be given clear and unambiguous direction as to the exact procedures in which to engage. In contrast, tacit process-related knowledge cannot be broken down in such an unambiguous manner. Instead, subtle nuances associated with the process are what makes it effective. Because of this subtlety, it becomes necessary to actually engage in the ...Download Article