Managing Knowledge For Sustained Competitive Advantage

THE ORGANIZATIONAL FRONTIERS SERIES

The Organizational Frontiers Series is sponsored by the Society for

Industrial and Organizational Psychology (SIOP). Launched in

1983 to make scientific contributions to the field, the series has at￾tempted to publish books that are on the cutting edge of theory,

research, and theory-driven practice in industrial/organizational

psychology and related organizational science disciplines.

Our overall objective is to inform and to stimulate research for

SIOP members (students, practitioners, and researchers) and peo￾ple in related disciplines, including the other subdisciplines of psy￾chology, organizational behavior, human resource management,

and labor and industrial relations. The volumes in the Organiza￾tional Frontiers Series have the following goals:

1. Focus on research and theory in organizational science, and

the implications for practice

2. Inform readers of significant advances in theory and research

in psychology and related disciplines that are relevant to our

research and practice

3. Challenge the research and practice community to develop

and adapt new ideas and to conduct research on these

developments

4. Promote the use of scientific knowledge in the solution of

public policy issues and increased organizational effectiveness

The volumes originated in the hope that they would facilitate

continuous learning and a continuing research curiosity about

organizational phenomena on the part of both scientists and

practitioners.

Previous Frontiers Series volumes, all published by Jossey-Bass, include:

Work Careers

Daniel C. Feldman, Editor

Emotions in the Workplace

Robert G. Lord, Richard J. Klimoski, Ruth Kanfer, Editors

Measuring and Analyzing Behavior in Organizations

Fritz Drasgow, Neal Schmitt, Editors

The Nature of Organizational Leadership

Stephen J. Zaccaro, Richard J. Klimoski, Editors

Compensation in Organizations

Sara L. Rynes, Barry Gerhart, Editors

Multilevel Theory, Research, and Methods in Organizations

Katherine J. Klein, Steve W. J. Kozlowski, Editors

The Changing Nature of Performance

Daniel R. Ilgen, Elaine D. Pulakos, Editors

New Perspectives on International Industrial/Organizational Psychology

P. Christopher Earley and Miriam Erez, Editors

Individual Differences and Behavior in Organizations

Kevin R. Murphy, Editor

The Changing Nature of Work

Ann Howard, Editor

Team Effectiveness and Decision Making in Organizations

Richard A. Guzzo, Eduardo Salas, and Associates

Personnel Selection in Organizations

Neal Schmitt, Walter C. Borman, and Associates

Work, Families, and Organizations

Sheldon Zedeck, Editor

Organizational Climate and Culture

Benjamin Schneider, Editor

Training and Development in Organizations

Irwin L. Goldstein and Associates

Productivity in Organizations

John P. Campbell, Richard J. Campbell, and Associates

Career Development in Organizations

Douglas T. Hall and Associates

Managing

Knowledge for

Sustained

Competitive

Advantage

Designing Strategies for

Effective Human

Resource Management

Susan E. Jackson

Michael A. Hitt

Angelo S. DeNisi

Editors

Foreword by Neal Schmitt

Copyright © 2003 by John Wiley & Sons, Inc. All rights reserved.

Published by Jossey-Bass

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Library of Congress Cataloging-in-Publication Data

Managing knowledge for sustained competitive advantage : designing

strategies for effective human resource management / Susan E. Jackson,

Michael A. Hitt, Angelo S. DeNisi, editors.

p. cm.

Includes bibliographical references and index.

ISBN 0-7879-5717-8 (acid-free)

1. Knowledge management. I. Jackson, Susan E. II. Hitt, Michael A.

III. DeNisi, Angelo S.

HD30.2.M3646 2003

658.4’038—dc21

2002154863

Printed in the United States of America

FIRST EDITION

HB Printing 10 9 8 7 6 5 4 3 2 1

The Organizational Frontiers Series

SERIES EDITOR

Neal Schmitt

Michigan State University

EDITORIAL BOARD

Robert L. Dipboye

Rice University

Fritz Drasgow

University of Illinois

Jennifer George

Rice University

Katherine J. Klein

University of Maryland

Cheri Ostroff

Teachers College-Columbia University

Richard D. Pritchard

Texas A&M

Neal Schmitt

Michigan State University

Contents

Foreword xi

Neal Schmitt

Preface xv

The Contributors xvii

Part One: Introduction

1 The Knowledge-Based Approach to Sustainable

Competitive Advantage 3

Angelo S. DeNisi, Michael A. Hitt, Susan E. Jackson

Part Two: Work and Organizational Designs

for Knowledge-Based Competition

2 Alternative Strategies for Acquiring Knowledge 37

David L. Deeds

3 Organizing for Knowledge-Based Competitiveness:

About Pipelines and Rivers 64

C. Marlene Fiol

4 Designing Work for Knowledge-Based Competition 94

Susan Albers Mohrman

Part Three: Staffing Organizations

for Knowledge-Based Competition

5 Managing the Human Resource Architecture

for Knowledge-Based Competition 127

David P. Lepak, Scott A. Snell

6 Hiring for Knowledge-Based Competition 155

Elaine D. Pulakos, David W. Dorsey,

Walter C. Borman

ix

x CONTENTS

7 Contracting Talent for Knowledge-Based

Competition 178

Alison Davis-Blake, Pamsy P. Hui

Part Four: Developing and Motivating Employees

for Knowledge-Based Competition

8 Knowledge Management: Developing Intellectual

and Social Capital 209

Raymond A. Noe, Jason A. Colquitt, Marcia J. Simmering,

Sharon A. Alvarez

9 Stimulating and Supporting Creativity in

Organizations 243

Greg R. Oldham

10 Reward Systems in Knowledge-Based Organizations 274

Edward E. Lawler III

11 Retaining Knowledge by Retaining Technical

Professionals: Implications of the Unfolding

Turnover Model and the Job Embeddedness

Construct 303

Steven D. Maurer, Thomas W. Lee, Terence R. Mitchell

Part Five: Measuring Knowledge-Based Resources

12 Assessing the Culture and Climate for

Organizational Learning 333

Lois E. Tetrick, Nancy Da Silva

13 Strategic Knowledge Measurement and

Management 360

John W. Boudreau

Part Six: Conclusion

14 Managing Human Resources for Knowledge-Based

Competition: New Research Directions 399

Susan E. Jackson, Michael A. Hitt, Angelo S. DeNisi

Name Index 429

Subject Index 443

Foreword

This is the eighteenth book in a series published by Jossey-Bass that

was initiated by the Society for Industrial and Organizational Psy￾chology in 1983. Originally published as the Frontiers Series, the

SIOP executive committee voted in 2000 to change the name to

the Organizational Frontiers Series in an attempt to enhance its

identity and visibility. The purpose of the publication of series vol￾umes in a general sense has been to promote the scientific status

of the field. Ray Katzell first edited the series. He was followed by

Irwin Goldstein and Sheldon Zedeck. The topics of the volumes

and the volume editors are chosen by the editorial board. The se￾ries editor and the editorial board then work with the volume ed￾itor in planning the volume, and occasionally, in suggesting and

selecting chapter authors and content. During the writing of the

volume, the series editor often works with the editor and the pub￾lisher to bring the manuscript to completion.

The success of the series is evident in the high number of

sales—now over forty-five thousand. Volumes have also received

excellent reviews, and individual chapters as well as entire volumes

have been cited frequently. A recent symposium at the SIOP an￾nual meeting examined the impact of the series on research and

theory in industrial and organizational psychology. Although such

influence is difficult to track, and volumes have varied in intent

and perceived centrality to the discipline, the conclusion of most

participants was that the volumes have made a significant impact

on research and theory in the field and are regarded as represen￾tative of the best the field has to offer.

Another purpose of the series has been to bring scientific re￾search from other disciplines to bear on problems of interest to

industrial/organizational psychologists. This volume, edited by

xi

xii FOREWORD

Susan E. Jackson, Michael A. Hitt, and Angelo S. DeNisi, provides

an in-depth examination of how organizations—not individuals—

can find, recruit, and manage knowledge. I/O psychologists cer￾tainly train individuals and are often involved in educational efforts

that enhance the knowledge of organizational members, but we do

not often look at how the whole organization harnesses knowledge

to strategic advantage. This is the focus of the current volume. Even

thinking about knowledge in this way represents a departure for or￾ganizations that have traditionally considered their resources as

commodities such as oil, gas, or other raw materials. Because the

book considers different strategies by which organizations can use

knowledge effectively, it also brings macro-organizational thinking

to a discipline that is usually most concerned with the behavior of

individuals. The very first chapter, by DeNisi, Hitt, and Jackson, de￾scribes the manner in which the knowledge, skills, abilities, and

other characteristics (KSAOs) familiar to I/O psychologists are re￾lated to the broader conception of knowledge as that term is used

in the strategy and organizational theory literatures.

The book is organized in six parts. The first part, consisting of

the chapter by DeNisi, Hitt, and Jackson, lays the basis for the rest

of the book; the authors discuss the nature of different types of

knowledge, how knowledge-based competition is affecting organi￾zations, and how these ideas relate to innovation and learning in

organizations. They also lay out the questions addressed by the au￾thors in the remainder of the book. Part Two consists of three

chapters in which the authors describe different strategies by which

organizations can acquire important knowledge (David Deeds),

what organizational structures promote the flexibility and network

building that facilitate the acquisition and development of knowl￾edge (Marlene Fiol), and how organizations design work and what

demands are placed on workers in knowledge-based organizations

(Susan Mohrman).

In Part Three the authors discuss the manner in which orga￾nizations make human resource decisions about knowledge re￾sources (David Lepak and Scott Snell), how organizations attract,

recruit, and select individuals into knowledge-based organizations

(Elaine Pulakos, David Dorsey, and Walter Borman), and what

types of nontraditional employment contracts can be used and how

they affect the protection of an organization’s knowledge resources

(Alison Davis-Blake and Pamsey Hui). Part Four discusses the man￾ner in which continuous knowledge acquisition and innovation is

promoted and developed among individuals and teams (Raymond

Noe, Jason Colquitt, Marcia Simmering, and Sharon Alvarez) and

how innovation and creativity may be fostered as a means of cre￾ating new knowledge (Greg Oldham). The chapter by Edward

Lawler examines how performance is measured and rewarded at

the individual, team, and organizational levels to realize short- and

long-term goals in knowledge-based organizations. Finally, the last

chapter in Part Four addresses the retention of employees and

knowledge (Steven Maurer, Thomas Lee, and Terence Mitchell).

In Part Five the focus is on measurement. Here the authors exam￾ine how to assess the culture and climate for organizational learn￾ing (Lois Tetrick and Nancy Da Silva), as well as how to measure

and monitor knowledge resources at the organizational level ( John

Boudreau). In the last part of the book, the editors conclude with

a summary and integration of the ideas offered in earlier chapters,

and they highlight several research issues that deserve attention in

the future.

Our target audiences include graduate students in industrial/

organizational psychology, human resource management, business

strategy, and organizational behavior as well as doctoral level re￾searchers and practitioners who want to learn about the most up￾to-date data and theory on the important role knowledge plays in

organizations and how organizations can acquire, develop, retain,

and use that information strategically to be more productive. I be￾lieve that the topics and issues discussed in this book will be novel

to many I/O psychologists and human resource practitioners. Al￾though we have read about these topics in our literature, there has

not been a similar focus on how they change for organizations

whose main resource is knowledge, not raw physical materials. As is

obvious from the chapters of the book and the authors chosen by

the editors, researchers who do not often interact with each other

because of their very different interests can all make interesting

and important contributions to our understanding of knowledge￾based organizations. To the degree that this book fosters interac￾tion among these researchers and stimulates interest among other

I/O researchers and practitioners it will meet the primary goals of

the Organizational Frontiers Series stated earlier.

FOREWORD xiii

xiv FOREWORD

The chapter authors deserve our gratitude for attempting to

communicate clearly the nature, application, and implications of

the theory and research described in this book. Production of a

volume such as this involves the hard work and cooperative effort

of many individuals. The chapter authors and the editorial board

all played important roles in this endeavor. All royalties from the

series volumes are used to help support SIOP financially; none of

the individuals involved received remuneration. They deserve our

appreciation for taking on a difficult task for the sole purpose of

furthering our understanding of organizational science. We also

express our sincere gratitude to Cedric Crocker, Julianna Gustaf￾son, Matt Davis, and the entire staff of Jossey-Bass. Over many years

and several volumes, they have provided support during the plan￾ning, development, and production of the series.

January 2003 Neal Schmitt

Michigan State University

Series Editor, 1998–2003