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Intra-organizational knowledge transfer and firm Performance: An empirical study of Vietnam’s information technology companies

Intra-organizational knowledge transfer and firm Performance: An empirical study of Vietnam’s information technology companies. The purpose of this paper is to contribute to the limited previous research on intra-organizational knowledge transfer, by examining the impact of particular organizational factors (IT systems, organizational culture, organizational structure and incentive systems).



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Journal of Economics and Development, Vol.17, No.2, August 2015, pp. 104-124

ISSN 1859 0020

Intra-organizational Knowledge Transfer and
Firm Performance: An Empirical Study of
Vietnam’s Information Technology Companies
Pham Thi Bich Ngoc
National Economics University, Vietnam
Email: ngocpb@yahoo.com

Abstract
The purpose of this paper is to contribute to the limited previous research on intra-organizational
knowledge transfer, by examining the impact of particular organizational factors (IT systems,
organizational culture, organizational structure and incentive systems) on the process of
knowledge transfer within IT companies in Vietnam and the relationship between the knowledge
transfer process and its organizational performance. A survey of 36 companies out of 200 software
companies in Hanoi and Ho Chi Minh city, targeted at 900 technical staff, middle managers and
top managers, was conducted. The study findings, based on a sample response rate of 24 per cent,
indicated that a culture of high solidarity, adaptability and collaboration was proved to have the
strongest impact on the process of knowledge transfer and company performance. It was also
found that a transparent and flexible incentive system motivated individuals to exchange and
utilize knowledge in their daily work, that a high level of centralization and formalization hindered
the flow of knowledge, and the effect of IT tools on the knowledge transfer process remained weak.
Overall, the findings of the study indicated that organizational factors and intra-organizational
knowledge transfer processes have positive correlations with organizational performance.
Keywords: Intra-organizational knowledge transfer; organizational performance; IT companies.

Journal of Economics and Development

104

Vol. 17, No.2, August 2015

1. Introduction
In the process of building a knowledge-based
economy, knowledge is increasingly considered as the most critical asset of firms. A critical factor in achieving organizational competitiveness is the ability to effectively transfer
knowledge (Rhodes et al., 2008). Despite the
growing research on knowledge transfer in recent years (e.g., Al-Alawi et al., 2007; Cabrera et al., 2006; Lai and Lee, 2007; Chen and
Huang, 2007, Rhodes et al., 2008, Liyanage
et al., 2009; Friesl et. al, 2011; Wang, 2013;
Amayah, 2013), four issues in the study of
knowledge transfer have not been successfully addressed. Firstly, rarely have all factors influencing knowledge transfer been taken into
account. Secondly, while researchers view
knowledge transfer as a critical determinant of
an organization’s capacity to confer sustainable
competitive advantage, the effect of knowledge
transfer on organizational performance has not
been fully examined or attracted adequate empirical testing. Thirdly, while most research on
intra-organizational knowledge transfer has
been extensively conducted in developed countries, only a limited number of researches have
been done in developing countries like Vietnam. Finally, given the importance of knowledge transfer and the significant research in this
domain, intra-organizational knowledge transfer remains a big challenge for the leaders and
managers of organizations.
This paper aims to propose and test a model
linking organizational factors (organizational
culture, organizational structure, information
technology tools and incentive system attributes) with intra-organizational knowledge
transfer process and organizational performance in the context of Vietnam’s information
technology companies.
2. Literature review and conceptual model
Journal of Economics and Development

105

2.1. Knowledge transfer
The simplest approach to knowledge transfer is that of some researchers who considered
that knowledge transfer is knowledge sharing
among people (Dyer and Nobeoka, 2000).
Knowledge sharing implies the giving and taking of information. Since the source and the
recipient may be different in their prior knowledge and their identities, they may have different perceptions and interpretations of the same
information. The knowledge received by the
recipient is not identical with that of the source.
Thus, the knowledge sharing implies the generation of knowledge in the recipient.
Some researchers view knowledge transfer
as a process through which knowledge moves
between a source and a recipient where knowledge is applied and used. Within an organization, knowledge can be transferred among
individuals, between different levels in the organizational hierarchy, and between different
units and departments. Szulanski (1996) defines knowledge transfer as “dyadic exchanges
of knowledge between a source and a recipient
in which the identity of the recipient matters”.
The level of knowledge transfer is defined by
the level of knowledge integrated in the operation of an individual and the level of satisfaction with transferred knowledge expressed by
the recipient.
Others focus on the resulting changes to the
recipient by seeing knowledge transfer as the
process through which one unit is affected by
the experience of another (Argote et al., 2000).
Similarly, Davenport and Prusak (2000) suggested that the knowledge transfer process involves two actions: the transmission of knowledge to a potential recipient and the absorption
of the knowledge by that recipient that could
eventually lead to changes in behavior or the
development of new knowledge.
Vol. 17, No.2, August 2015

Given the various definitions of knowledge
transfer, key aspects of knowledge transfer
are knowledge movement and its application
by the recipient that could lead to creation of
new knowledge or changes in behaviors. In
this research, the author takes both the process view and the outcome view on knowledge
transfer by emphasizing three key dimensions
of knowledge transfer. Knowledge transfer
involves three actions: (i) initiation - the extent to which people know how to access the
knowledge they need, (ii) implementation - the
volume of knowledge movement via communication among individuals; (iii) integration - the
extent to which a recipient applies the received
knowledge that results in a change in a recipient’s behavior or/and job performance, and the
extent to which a recipient is satisfied with the
received knowledge.
2.2. Organizational factors and knowledge
transfer
Information technology tools and knowledge
transfer
Communication-aiding technologies are
expected to foster knowledge transfer by efficiently alleviating factors leading to the difficulty of transfer knowledge. This kind of technology helps to overcome barriers of time or
space, promotes positive relational communication and coordination between people, thus
easing the “arduous relationship” that may
prevent effective knowledge dissemination. It
can increase knowledge transfer by extending
the individual’s reach beyond formal communication lines. Computer networks, electronic
bulletin boards, and discussion groups create
a forum that facilitates contact between the
person seeking knowledge and those who may
have access to the knowledge (Karlsen and
Gottschalk, 2004). Email, intranet and the internet were rated as the most currently used and
the most effective tools supporting knowledge
Journal of Economics and Development

106

management in 16 organizations in the UK
(Edwards and Shaw, 2004), in 340 organizations in Australia (Zhou and Fink, 2003) and in
115 management consulting firms in the USA
(Kim and Trimi, 2007).
Decision-aiding technologies usually require standard forms of input, procedures and
standard reports that are readily understandable
to users. The anonymity associated with general decision-aiding technologies allows users to participate freely in discussion without
considering status and personality, thus alleviating common problems such as conformity
of thought. The increased diversity of opinion
often leads to generation of new knowledge.
Moreover, information technologies are found
to support the knowledge transfer process via
enhancing the interactions between individuals, groups and organizations as well as easing
the decision making process in an organization
(Alavi and Leidner, 2001).
Information technologies play a very important role in fostering knowledge transfer.
However, this does not guarantee that the investment in information technologies will lead
to more effective knowledge transfer, and the
real value of technology in supporting knowledge transfer has not yet been fully understood.
The effective support of information technologies on knowledge transfer depends on the
technology itself and the frequency of use of
those technologies for exchange of knowledge
inside an organization. Because of that, the
supportive role of IT for knowledge transfer is
still questionable and need to be more closely
examined. Thus, we can hypothesize that:
Hypothesis 1 (H1): The frequency of using
IT tools will positively relate to the knowledge
transfer
Organizational culture and knowledge
transfer
Vol. 17, No.2, August 2015

Culture is “the set of values, beliefs and
norms, meanings and practices” shared by personnel in an organization (Robbin, 2001), and
guiding the action and thinking of people in an
organization (Mullins, 2005). Culture serves
as a sense-making mechanism that guides and
shapes the values, attitudes, and behaviors of
employees. Empirical results of several researches indicate that organizational culture is
the most important factor for success in knowledge management in both industrial and service corporations (Finke and Vorbeck cited in
Mertins et al., 2001; Ruggles, 1998).
In this paper, the author incorporates the
three culture models given by Cameron and
Quinn (1999), Denison and Young (1999), and
Goffee and Jones (1996) to drive several culture dimensions that capture all meanings of
organizational culture. The integration enables
identification of a specific type of culture and
concrete cultural traits associated with knowledge transfer in an organization. The culture
traits consist of team orientation, collaboration,
adaptability, and solidarity. Solidarity is mainly based on common tasks, mutual interests or
shared goals that benefit all involved parties.
Solidarity refers to the degree to which members of an organization share goals and tasks
(Goffee and Jones, 1996). This makes it easy
for them to pursue shared objectives quickly
and effectively and generates a strategic focus,
swift responses and a strong sense of trust. This
trust can translate into commitment and loyalty
to the organization’s goals. Adaptability refers
to the extent to which individuals express their
attitude toward learning, taking risk and creating change (Fey and Denison, 2000).
Although the relationship between organizational culture and knowledge transfer was
tested in different contexts by using different
methodology, the researchers seem to agree that
a culture characterized by mutual trust, openJournal of Economics and Development

107

ness, collaboration, teamwork orientation and
learning orientation has a positive impact on
the process of knowledge sharing in an organization (Bollinger and Smith, 2001; Goh, 2002;
Lee and Choi, 2003; Karlsen and Gottschalk,
2004; Molina and Llorens-Montes, 2006; Lai
and Lee, 2007; Hislop, 2002).
Additionally, Ladd and Ward (2002) and
Janz and Prasarnphanich (2003) also found that
organizations with cultural traits exhibiting
openness to change and innovation, a task-centered orientation and risk-taking, coupled with
a level of autonomy over people-related, planning-related and work-related processes, tended to be more conducive to knowledge transfer.
Despite researchers’ attempts in investigating the relationship between culture and
knowledge management, in most cases, little
attempt has been made to deeply specify the
type of culture and the influencing level of different culture traits on knowledge transfer in a
concrete and comprehensive manner, especially in the context of IT companies in a transition
economy like that of Vietnam. Since organizational culture is often seen as the key inhibitor
of effective knowledge sharing in an organization nowadays (McDermott and O’Dell, 2001),
there is a need to re-examine the relationship
between different culture traits and knowledge
transfer, and then to develop a culture that best
facilitates the process of knowledge transfer in
the setting of IT companies. Hence, the following hypotheses are proposed:
Hypothesis 2a (H2a): Team orientation will
positively correlate to knowledge transfer
Hypothesis 2b (H2b): Adaptability will positively relate to knowledge transfer
Hypothesis 2c (H2c): Collaboration will
positively relate to knowledge transfer
Hypothesis 2d (H2d): Solidarity will positively relate to knowledge transfer
Vol. 17, No.2, August 2015

Organizational structure and knowledge
transfer
On the one side, organizational culture creates the context for social interaction - informal communication among individuals in an
organization - and thus may influence knowledge transfer. On the other side, organizational structure - the basic lines of reporting and
accountability that are typically drawn on an
organizational chart - is clearly important for
any organization in controlling communications and interactions as well as coordinating
different parts and different areas of work in an
organization (Mullins, 2005). Organizational
structure creates a framework and controls formal communication among individuals across
management levels and/or across departments.
There are six dimensions that configure the
structure of an organization, including work
specialization, departmentalization, span of
control, chain of command, centralization,
and formalization (standardization) (Robbin,
2001). Among them, two primary dimensions
of organizational structure, centralization and
formalization, have received more attention
than any others (Tsai, 2002).
Centralization and knowledge transfer
Within an organization where different units
have different goals and strategic priorities,
centralization is likely to have a negative impact on knowledge sharing. In an empirical
research, Tsai (2002) found that a formal hierarchical structure, in the form of centralization,
has a significant negative effect on knowledge
sharing among units that compete with each
other for market share, but not among those
that compete for internal resources. ClaverCortés et al. (2007) claimed that the companies
adopting flexible, increasingly flat organizational forms with fewer hierarchical levels, not
only allow but also encourage communication
and teamwork among staff members. High
Journal of Economics and Development

108

centralization prevents an individual from exercising greater discretion in dealing with the
demands of his/her relevant task environment.
Moreover, it is possible that centralization reduces initiative so that an individual in a highly
centralized organization will not be interested
in providing his/her knowledge to others working in different units unless a higher authority
requires them to do so. Such an inactive role
reduces possible beneficial knowledge flows to
others in the same organization. Moreover, a
centralized structure hinders interdepartmental
communication and frequent sharing of ideas
due to time-consuming communication channels (Bennett and Gabriel, 1999). It also causes
distortion and discontinuity of ideas (Stonehouse and Pemberton, 1999).
On the other hand, breaking down hierarchies in the organization enables knowledge
transfer (Nonaka and Toyama, 2002). A flexible organizational structure (i.e., teamwork,
decentralized structure) provides a good environment for discussion and interaction among
employees about task-related issues (Chen and
Huang, 2007). Multi-faceted dialogue, individual autonomy, and high care are factors of team
working that favor knowledge transfer (Goh,
2002; Nonaka and Takeuchi, 1995). Moreover,
lateral relations and interactions among individuals are very important as they coordinate
activities across different units and substantially improve the design of a formal organization.
These relations and interactions blur the boundaries among members of different units and between different management levels, and stimulate the formation of common interests, that
in turn, support the building of new exchanges
or cooperative relationships (Tsai, 2002). A low
level of centralization provides more channels
for information exchange among members in
an organization as well as making communication among individuals across organizational
Vol. 17, No.2, August 2015

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