Chapter II. KNOWLEDGE TRANSFER ISSUES
3. Stages of knowledge transfer in mergers and acquisitions
3.1. Knowledge integration
There are three main stages in the process of knowledge integration:
• immediate action,
• stabilization of the acquired company,
• adjustments and assimilation.
Of course, the indicated breakdown into stages should be tailored to the specificity of knowledge management during its takeover in merger or acquisition.
The stages of enterprise organization integration are shown in Figure 8.
The means of integration are primarily determined by the motives of acquisition.
Among the listed four motives, from the point of view of knowledge transfer analysis, the motive for technology (capability) acquisition80 is interesting, whereby on the first stage it is recommended to maintain key personnel in this field and to maximize the use of the acquired technology. In the next step it is recommended to look for an opportunity to expand the use of this technology. The problem whether to do it within one or on the basis of technology importance, entire context of the acquisition must be resolved in more stages. This stage can be called the instantaneous action step (first). The second stage involves balancing the company’s leadership, maintaining the necessary staff, renewing the right relations with the environment, and identifying key players in the management. In the third stage, some actions are taken to achieve the final integration of companies. At the end of the development actions phase, it is aimed at integration, mainly cultural. Similar (but not identical) stages concern knowledge transfer. First of all it is important to emphasize that the type of transfer depends on the type of knowledge. This has a significant impact on its staging. This is emphasized by B. Kogut and U. Zander81 claiming that „the characteristics of knowledge determine the cost and the manner of transfer”. As the manner order in the integration process can be understood. For example, explicit knowledge of production procedures is most often transferred using existing databases, while operational improvement through practice in workshops82. Of course, it is much easier to decode the explicit, documented knowledge than laborious observation and imitation of tacit knowledge. However, one should not draw conclusions about a clear boundary separating these types of knowledge. The above-mentioned researchers point that there is space between these two types of knowledge (tacit, explicit), which is not constant, and where various processes of transmitting both types of knowledge take place at the same time. Even more firmly
80 M. Lewandowski, Znaczenie integracji…, op. cit., p. 335.
81 B. Kogut, U. Zander, Knowledge…, op. cit., p. 626.
82 A. Ring, H. Öfverström, Contextualised…, op. cit., p. 27.
express K. Lahti and M. Beyerlein83 who consider this dichotomy (tacit and explicit) to be unreal and propose to consider knowledge as occurring in different shades of grey, and anchored in pure form in both ends (poles) of the continuum. However, in figure 7 the above mentioned case of acquiring mixed knowledge (explicit + tacit) was not taken into account, to avoid excessive complication of the lead. All of these cases are included in explicit knowledge, assuming that most of this knowledge is directly available. Graphic representation of the knowledge transfer stages, according to its types is shown in Figure 9.
Figure 9. Explicit and tacit knowledge in various phases of transfer
TYPES OF KNOWLEDGE
Explicit knowledge
Tacit knowledge
Instant Stabilization Synergy and development STAGES
Explicit knowledge is transfer at the instant and stabilization stage Explicit and tacit knowledge transferred at the stabilization stage Tacit knowledge transferred at all stages
Tacit knowledge transferred at the stabilization stage
Tacit knowledge transferred at the synergy and development stage Legend:
Source: own study.
Figure 9 should be interpreted in the following manner. Basic explicit knowledge, expressed in clear and unambiguous form of documents, drawings, and easily accessible in databases, without the assistance of staff of the acquired company (which is not always favourable and helpful) can be obtained in the first stage (immediate).
Some part of this knowledge is available only with qualified specialists from the acquired company, and this part of explicit knowledge will be practically available at the stabilization stage, when there are conditions for collaboration between the consolidated companies.
The situation with transmission of tacit knowledge is different. Due to its nature it cannot be included in the documentation. Often, the knowledge owner alone cannot articulate it. It is also less accessible because of its holder is not always
83 K. Lahti, M. Ryan, M. Beyerlein, Knowledge Transfer and Management Consulting.
A Look at the Firm, “Business Horizons” 2000, Vol. 43(1), p. 65–74.
Figure 8. Stages of enterprise integration Strategic preparationTactical and operational preparationPost-activation management Selection of company to acquire resulting from strategic goals
Post-acquisition audit Selection of method and scope of integration
Effective acquisition of control Reduction of unnecessary assets Changes in management Restoration of leadership Avoiding violent changes in human resources and payroll policies Rebuilding ties with the environment Identification of key managers
Structural integration Operational integration Cultural integration DziałaniaStabilization of the acquired company
Adjustments and assimilation Possible divestments Source: own study on the basis: M. Lewandowski, Znaczenie integracji w procesach fuzji i przejęć przedsiębiorstw, in: W. Frąckowiak (ed.), Fuzje i przejęcia przedsiębiorstw, PWN, Warszawa 1998, s. 335 and Making Acquisition Work, p. 8.
interested in disclosing it due to personal interest. As long as the holder is in some manner a monopolist, it can count on the benefits that come from it. This knowledge is conveyed by observation and imitation, often by symbols and metaphors, and as I.
Nonaka and H. Takeuchi write, „in strict sense, knowledge is created only individually.
Organization cannot create knowledge without individualities”84. Acquiring silent knowledge must last for almost the entire integration period. People need to persuade and encourage externalization of knowledge by appropriate motivation, and it requires time. Not only types of knowledge affect the stage in which it is ultimately transferred. Other categories, such as fields of knowledge, elements and types of knowledge, are also very important. An attempt of defining the fields of knowledge transferred at each stage of integration is presented in Figure 10.
Figure 10. Knowledge by fields passed at each stage
AREAS OF KNOWLEDGE System and environment
Instant Stabilization
STAGE
Threats Logistics Planning Finances Utility indications Expressive content Resources
Preparation of production and products
Processes
Synergy and development
Source: opracowanie własne na podstawie: A. Polak, Nauczanie organizacji przedsiębiorstw za pomocą mapy wiedzy, „Przegląd Organizacji”, nr 03/2012.
This figure shows how the knowledge transfer is placed at each stage of integration. It should be noted that in other sectors of the economy than metallurgical industry, the situation may be different, e.g. companies with so-called intensive knowledge creation are not typical of today functioning companies, especially in Poland. Analysis of the integration time shown in Figure 8 is not accurate because there is no exact data on the time of information transfer. However, a scale may be applied here, where there is a possibility of arranging individual fields of knowledge according to the number of necessary stages in descending order, which is shown in Figure 10 in Table 13.
84 I. Nonaka, H. Takeuchi (eds.), The Knowledge…, op. cit., p. 59.
Table 13. Number of knowledge transfer stages taking into account type of knowledge Fields of knowledge Number of stages The prevailing type of
knowledge
Expressive content 3 tacit
Logistics 2¾ tacit
Processes 2½ tacit
System and environment 2 explicit
Utility indications 1¾ tacit
Planning 1½ explicit
Finances 1¼ explicit
Resources 1 explicit
Preparation of production and products
1 explicit
Threats 1 explicit
Source: own study.
The number of stages set in descending order show that the more tacit knowledge there is, the more stages the knowledge transfer has to pass. It should be reiterated, however, that these are estimates, both the estimation of the length of time needed and the estimation of the ratio of tacit and explicit knowledge in a given element of knowledge may be altered, which may be imprecise. The author’s experience allows to judge that these deviations do not change the fundamental judgement in this respect.