Knowledge Combination and Knowledge Creation in a Foreignr-Market Network

By Tolstoy, Daniel | Journal of Small Business Management, April 2009 | Go to article overview

Knowledge Combination and Knowledge Creation in a Foreignr-Market Network


Tolstoy, Daniel, Journal of Small Business Management


This article rests on the idea that knowledge is dispersed among different individuals and entities. For international entrepreneurial firms to create new knowledge, they need to find ways to combine these dispersed bits of knowledge. Because of the notion that resource constraints make international entrepreneurial firms dependent on external knowledge, it is assumed that a portion of knowledge combination takes place in networks. The purpose of this article was to investigate the prospective impact network knowledge and knowledge combinations have on entrepreneurial firms' knowledge creation. Three hypotheses are developed and tested in a structural equation model, using linear structural relations (LISREL, Scientific Software International, Inc.).

Introduction

This article rests on Hayek's (1945) assumption that knowledge is dispersed among different individuals and entities. When dispersed bits of knowledge are combined, new knowledge that no one had previously anticipated may be created (Dew, Velamuri, and Venkataraman 2004).

Although networks are widely known to stimulate innovative behavior in international entrepreneurial firms, little is known about the actual factors that underlie knowledge creation in these settings. This article aimed to contribute to international entrepreneurs hip theory by examining a model where network knowledge is stipulated as input to the knowledge combinations that drive knowledge creation at the foreign market level. Network knowledge is here conceptualized as knowledge drawn from the network (Blomstermo et al. 2004). Knowledge combination, in turn, is viewed as connecting previously unconnected separate bits of knowledge whose value is enhanced by combination (Buckley and Carter 2004). Further, knowledge creation is conceptualized as business outcomes of modifications and alterations of knowledge (Yli-Renko, Autio, and Sapienza 2001). Finally, small and medium-sized enterprises (SMEs) that grow and develop by expanding in foreign markets are commonly regarded as international entrepreneurial firms and, therefore, serve as units of analysis in the empirical inquiry.

Although an accepted definition of international entrepreneurs hip does not yet exist, it is generally viewed as the proactive effort to identify and exploit opportunities in foreign markets (Oviatt and McDougall 2005). To be able to identify/exploit such opportunities, recent research in the field posits that international entrepreneurial firms must create knowledge on a continual basis (Gassmann and Keupp 2007; Zhou 2007; Cui, Griffith, and Cavusgil 2005; De Clercq, Sapienza, and Crijns 2005; Murray and Chao 2005; Knight and Cavusgil 2004; Zahra and Filatotchev 2004). This study stipulates that networks provide a useful rationale for explaining knowledge creation as they present a multitude of options for leveraging network knowledge that is supplemental to other network knowledge and/or to the firm's internal knowledge (McGovern 2006). This argument is further substantiated by the general comprehension that international entrepreneurial firms are inherently resource constrained and therefore have to tap networks on the knowledge they need for their international endeavors (Coviello 2006; Lu and Beamish 2006; Sullivan Mort and Weerawardena 2006; Saarenketo et al. 2004; Sharma and Blomstermo 2003; Crick and Jones 2000; Wolff and Pett 2000; Jones 1999; Bell 1995; Coviello and Munro 1995). Moreover, previous research in the discipline of international business has shown that firms depend on knowledge derived from different levels of the network (e.g., Lindstrand 2003). Therefore, to capture a broader scope of the network, this study focuses on knowledge from both the upstream level and the downstream level of a network production chain, that is, the supplier network and the customer network, respectively (Verhees and Meulenberg 2004). By this conduct, specific insights can be derived regarding the relative benefits of employing supplier network knowledge respective of customer network knowledge in combinations for leveraging other internal/ external knowledge. …

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