The Duality of Knowledge:
Knowledge Transfer Practices in
Outsourcing
Thomas F. Stafford
Mark Gillenson
Sandra Richardson
MIS Department
Fogelman College of business and Economics
University of Memphis
Executive Summary
The primary contribution of this study of the parallel division of
knowledge development lies in building an understanding of
the knowledge transfer process in an outsourcing context
involving systems testing.
We note that the outsourcing vendor is tasked by the client
with developing, documenting and sharing an explicit
knowledge base of testing processes, but that the client
maintains an extensively tacit approach to skill development in
its internal systems testing organization.
Synergistic relationships between clients and vendors can
permit each party to maximize the specific benefit of its own
characteristics knowledge transfer modality.
Project Overview
• What has been achieved?
– Theoretical conceptualization
– Qualitative depth interviews with three levels of the testing
organization completed
– Interpretive analysis completed and implications explored
• Next plan of action
– Execute formal semantic analysis of interview transcripts, guided by
interpretive findings
• Implications for the practice and research
– Understanding current knowledge transfer processes between client
and vendor for purposes of optimization, rather than for revision
• Initial Results
– Under submission at International Conference for Information
Systems for the Montreal meeting in December.
Theoretical Conceptualization
• Knowledge, in the abstract, is a key asset of firms
– Alavi and Leidner (1999)
– Sambamurthy and Subramani (2005)
• Firms interact with each other with the expectation
of enhancing their performance through
knowledge transfer processes
– Knudson (2007)
• Improving employee knowledge has important
positive outcomes for the firm, resulting in
marketplace successes
– Bhagat, Kedia, Harveston and Triandis (2002)
– Sherif, Hoffman and Thomas (2006)
Theoretical Consideration:
Integrating the Tacit and the Explicit
• Emerging knowledge-based theories of
firm performance suggest that effective
facilitation and management of both tacit
and explicit knowledge types leads to
sustainable competitive advantage
– Santoro and Bierly (2006).
What is Explicit?
• You know it when you see it, because it can be
easily codified.
• If it can be readily documented, it is explicit
knowledge.
• Explicit knowledge is eminently transferable,
even to a point that can be threatening to firms
that develop it
– Resource-Based Theory considerations of agency
and opportunism
• Or, “take the money and run.”
What is Tacit?
• If I could show you, it might not be tacit. Keep
this in mind for further consideration
• Tacit is experiential and intuitive
– It exists in the minds of knowledge workers, and is
intimately related to personal expertise and skills.
• The real work of knowledge management is the
transfer of tacit knowledge, since explicit
knowledge is by definition transferable
– Schultze and Leidner (2002)
– Schultze and Stabell (2004)
Who is Whom and
Which is What?
•
•
•
•
The Client is observably tacit in its approach to knowledge
acquisition and application
The Vendor is extensively explicit in its orientation to
knowledge acquisition, use and transfer.
This is not a bad thing
We will do a much better job of knowledge transfer if we:
1. Leverage our strengths
2. Buttress our weaknesses
3. Combine approaches for a maximally synergistic approach to
systems testing knowledge transfer and application
•
By “synergistic,” I mean to suggest that a strategic
outsource partnership can be beneficial on grounds far
more extensive than financial, in the context of knowledge
transfer and systems testing training and practice.
Socially Mediated Transfer Processes
• All indications are that knowledge transfer is an
inherently social process of the workplace in many
ways (Santoro and Bierly, 2006)
– The quality of inter-organizational interactions is
expected to influence technical knowledge transfer
between firms (Lin, 2007).
– Even within the firm, knowledge transfer is considered to
be highly dependent upon interactions among team
members (Joshi, Sarker and Sarker, 2007)
– The extent of outsourcing between a client and a vendor
will likely determine the degree of knowledge sharing
between the parties (Gottschalk, 2006).
It’s the Human thing to do…
• Knowledge transfers routinely take place within and
across organizational borders, whether the process is
managed or not, because it seems to be an inherent
characteristic of the human condition
– Bhagat et al. (2002)
• Yet, research to date has generally focused on intraorganizational knowledge management processes
– Gotschalk (2006)
– Malhotra, Gosain and El-Sawy (2005)
• In other words, much more is known about how
knowledge is transferred within companies than without
Research Problem
1. To understand the nature and process of
knowledge transfer processes within the
client and the vendor organizations
2. But, especially, to understand and
potentially optimize the knowledge
transfer processes between the client
and the vendor
Research Method:
Hermeneutic Social Construction
• The Hermeneutic Circle consists of a
recursive process by which a researcher
cycles from the whole to the parts and
back again, in order to completely
consider all pertinent aspects of a
phenomenon
– Klein and Meyers (1999)
The Hermeneutic Circle in Practice
•
•
In the Hermeneutic Circle, the “whole” consists of shared
meanings that emerge from interactions between specific
points of view (Klein and Myers,1999)
We practice this analytical technique of cycling between
the general and the specific situation of the phenomenon
in several ways:
1.
2.
3.
By seeking the identify dyads of practice across the
vendor/client partnership,
By looking at hierarchical structure from one company’s
point of view and then from the partner’s point of view
From considering managerial versus operational
interpretations of critical concepts in knowledge transfer and
the client/vendor relationship.
Investigative Approach:
Dyads of Practice
• Interviews were conducted on both the
client side and the vendor side
• Interviews were requested at several
different levels:
– Day-to-day operations
– Mid-level management
– Senior Management
Dyadic Matching
• Test lead/Test lead
• Project Manager/Senior Test Lead
• Senior V.P/Associate General Manager
Key Informant Technique
• Depth interviews in community of practice
• Formatted question guide
• Interpretive assessment in the form of
researcher-as-instrument
– Phenominological experience of the
researcher embedded in the testing
organization.
• Observer-as-Participant context
Interpretive Results: Overview
• A basic acknowledgement that the predominant
style of the client is tacit
• The predominant style of the vendor is explicit
• The client is rather more informal in managerial
interactions among direct reports
– The vendor appears to have a rather more formalized
interaction process between managers and direct
reports
– This is most likely a cultural artifact
Test Leads and Knowledge Transfer
• Vendor test leads rely extensively on
documented information sources for training,
learning and problem solving
– Questions not covered by documented knowledge
sources were to be answered “by seniors”
– Although “juniors” were expected to use the explicit
knowledge base, they were routinely assigned to a
“senior” for mentoring during their early days
• “Explicit as a default, tacit as a supplement,”
would be my assessment of this arrangement on
the vendor side
Test Leads and Knowledge Transfer
• Client testing personnel were expected to
acclimate themselves on their own recognizance
• Explicit knowledge stores available to client-side
test personnel appeared to be recognized at a
tacit level among testers
– Subsequently underutilized
• In making their way during orientation to task
training, test personnel on the client side
showed a marked preference for “desk rides,”
which involved watching the work of more
experienced testers
– A remarkably tacit approach to training, in short
Project Management
Knowledge Transfer
• Those who managed the test leads were
what I would characterize as “clever
nonconformists”
– On the vendor side, “seniors” typically utilized
intuition, experimentation, and innovative
expansion of context to learn more about how
to test better
– In contrast to their default explicit orientation
to training new members of the vendor testing
team
Project Management
Knowledge Transfer
• On the client side, social relationships
appeared to be a key conduit for much
knowledge
– Making tacit knowledge explicit
• The Brown-Bag seminar series held with the
development organization
• This process was routinized over time into a
regular knowledge gathering and reporting process
– This approach appeared to leverage the
inherently tacit approach of the client to best
advantage
Knowledge Transfer at High Levels
• Two very senior managers on each side
– On the vendor side, the reliance on
documentation was clearly voiced
– On the client side, the recognition of the
vendor’s expertise in codifying explicit
knowledge bases was also specifically
recognized
– It did not appear that there was a
corresponding recognition on the vendor side
of the client’s tacit orientation
• Likely due to cultural differences
Knowledge Transfer at High Levels
• But, on the other hand…
– The vendor manager, despite the clear
recognition of the key role of explicit
knowledge in his testing organization, avowed
that most of his own information about his
work came from interpersonal relationships
• A tacit channel, in other words
• But, a tacit channel to the client, not within his own
firm
Knowledge Transfer at High Levels
• And, still on another hand…
– The client-side senior manager clearly
recognized the tacit style of his organization
– He has instituted a process whereby the tacit
knowledge of the client was to be
methodically codified by the vendor into a
knowledge base for client use
• He was committing to making the tacit explicit, in
other words
Integrating Approaches
• Each senior manager was, in a sense,
managing a social process of knowledge
development and transfer, despite the
predominant style of his own organization
• Much of this was arranged and overseen at
senior levels as part of the relational exchange
between the partners.
• At the executional level was where the typical
knowledge styles of each organization was most
recognizable, but this alternated at the strategic
level.
– Client is tacit within, and explicit without
– Vendor is explicit within, tacit without
Bridging Tacit and Explicit
Knowledge Transfer
• As a generalization, the more senior the
individual in either organization, the more tacit
their knowledge transfer processes seemed to
be, and the greater the appreciation for the
characteristic transfer style of the opposite party.
• Those responsible for modifying the course of
an organization were aware of the specific
proclivities each firm had for knowledge styles,
and were collaborating together to integrate the
two types of knowledge
Interesting Dichotomies
• Culturally-enforced explicit transfer
processes, versus hearty egalitarianism
and a tacit trend.
• Senior versus junior personnel and
knowledge preferences in cultural contexts
• Expertise in process versus expertise in
business and the need to regain and retain
original skills
A Key Conclusion
• As has already been instituted, the tacit stores of
client knowledge must be made explicit for the
vendor, or the vendor will not be able to operate
effectively
– They need knowledge of business units and
development initiatives related to them
– Their high turnover rate requires that they have a
detailed knowledge base of explicit knowledge about
client operations
• While the explicit stores developed by the
vendor have beneficial application on the client
side, as well
– Client-side organizational memory is well served by
this documentation process
Another Key Conclusion
• The client must get back in touch with its testing
skill-set.
– Reliance on outside vendors has led to a situation in
which the vendor has the explicit knowledge for how
to test systems, while the client has tacit knowledge of
same
– But, this leaves the client at a disadvantage in terms
of being able to effectively train new hires in its own
organization
– This also creates transaction-costs-based issues as
regards the relationship between the two firms.
Substantive Issues of Transfer
• Internal
– Development Requirements widely
considered the most important knowledge
area among client testing organization
• External
– Knowledge of business processes related to
software being tested are widely considered a
necessity by vendor-side testers
Strategic Overview
• Knowledge transfer between partners can be
risky, as seen through the lens of the resourcebased theory of the firm
• Knowledge transfer between partners is seen as
the next step to competitive advantage in the
knowledge-based theory of the firm
• Knowledge is a social good; there will always be
some degree of tacit knowledge making its way
to explicit stores in such strategic relationships
Concluding Interpretation
• The strategic relationship between client and
vendor is highly beneficial to both parties.
• Vendor seems quite dedicated to meeting the
unique needs of the client
• Client seems dedicated to leveraging its
uniquely tacit skill-set to support the vendor
– The routine internal transfer and periodic job
reassignment of individuals at the client, while highly
beneficial to client internal knowledge transfer, may
denigrate the knowledge transfer process with the
vendor
Thank you…
Any Questions?