Can Virtual Networks Encourage Knowledge Absorptive Capacity?

Can Virtual Networks Encourage Knowledge Absorptive Capacity?

Cesar Camison (Universitat Jaume I, Spain)
DOI: 10.4018/978-1-60566-070-7.ch003
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Organisations are finding it more difficult to keep abreast with the pace of change. The continuous rise of business opportunities and the increase in global competition demands a capability to acquire, assimilate, transform and apply external critical knowledge to renew and reconfigure existing capabilities and knowledge, and to innovate. Developing this dynamic capability requires, in turn, new proactive Knowledge Management tools and new organisational forms. This chapter presents a framework in which virtual networks constitute more flexible new organisational structures to absorb and create knowledge. It also describes how embeddedness in such a network can affect most of the factors identified as antecedents of absorptive capacity. In addition, it evidences the important role of the firm’s relational capabilities in taking advantage of the relevant business information, knowledge, resources, technologies and capabilities circulating in the virtual networks.
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In the current business environment, characterised by intense global competition, rapid technological advancements, innovative managerial practices and increased pressure in demand, the importance of knowledge as a critical resource for firms’ competitive advantage is widely recognised (Teece, 1998). This knowledge allows firms to create and sustain competitive advantages through, for example, management innovations, product innovations and process innovations.

Firms can generate knowledge internally by investing in the development of distinctive competences related, for instance, to R&D activities. However, because of their limited size, some firms can barely sustain all the structural costs involved in developing the necessary knowledge and capabilities internally to innovate and compete at an international level.

In addition, authors such as Chang (2004) and Phene, Fladmoe-Lindquist and Marsh (2006) find that firms operating in turbulent and unstable environments cannot be self-sufficient in creating knowledge, due to the tremendous risk it entails.

In a context where innovations are incremental or related to previous technologies, organisations can be confident of the internal development of knowledge without exposing themselves to high risks, since these kinds of technological changes are related to the firm’s existing experience. However, in dynamic environments in which rapid changes and radical technological innovations occur, firms should be able to acquire external information, by focusing on the adoption of a strategy that emphasises the exploration rather than the exploitation of knowledge (March, 1991).

Similarly, Shan and Song (1997) suggest that firms in industries characterised by rapid technological change will find their competitive advantage eroded if they rely solely on internally existing knowledge and capabilities.

According to the dynamic capability view of the firm (Teece, Pisano and Shuen, 1997), in a changing operating environment, superior performance depends on the ability to recognise critical changes and knowledge and on the processes of renewing the firm’s knowledge base and capabilities.

In this scenario, the mechanism for the creation and development of internal knowledge must be combined and complemented with the mechanism for the absorption of external sources of knowledge (Veugelers, 1997; Teece, Pisano and Shuen, 1997; Lowe and Taylor; 1998; Oltra and Flor, 2003). Firms should therefore manage two learning processes: an internal and an external learning process.

Despite the importance that information and external knowledge has for firms, its identification, acquisition and, above all, its implementation is a far from simple process (Veugelers, 1997). Consequently, organisations need to invest time and effort in developing their absorptive capacities (Kim, 1998). An increasing number of companies recognise that their competitive advantages are derived from knowledge resources that are deeply rooted in social relationships with other companies (Koka and Prescott, 2002; Uzzi and Lancaster, 2003).

Recent studies show how a firm’s embeddedness in networks formalised in different organisational forms such as joint ventures (Vermeulen and Barkema, 2001), business alliances (Kumar and Nti, 1998; Ahuja, 2000; Lane et al., 2001; Chen, 2004), technology licences (Atuahene-Gima, 1992), and cooperation agreements with public and private research centres like universities and technology institutes (Meyer Krahmer and Schmoch, 1998) are increasingly used as knowledge sources to complement internal R&D activities that favour external knowledge absorption processes. As the market demands a shorter response time to environmental changes and a greater adaptation to varying customer needs, there is a growing awareness of the need for new flexible cooperation structures.

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Editorial Advisory Board
Table of Contents
Knowledge Management and Virtual Organizations
Chapter 1
Fernando Garrigos
This chapter presents the interrelationships between professional virtual communities and social networks, and analyzes how, and in what ways, these... Sample PDF
Interrelationships Between Professional Virtual Communities and Social Networks, and the Importance of Virtual Communities in Creating and Sharing Knowledge
Chapter 2
Luis V. Casaló
The rapid growth of virtual communities has created a new interest in researchers. Indeed, understanding these communities is especially relevant... Sample PDF
The Role of Trust, Satisfaction, and Communication in the Development of Participation in Virtual Communities
Chapter 3
Cesar Camison
Organisations are finding it more difficult to keep abreast with the pace of change. The continuous rise of business opportunities and the increase... Sample PDF
Can Virtual Networks Encourage Knowledge Absorptive Capacity?
Chapter 4
Montserrat Boronat Navarro
In this study we adopt an inter-organizational view to examine virtual organizations. Thus, we understand this phenomenon as a strategic agreement... Sample PDF
Knowledge Integration Through Inter-Organizational Virtual Organizations
Chapter 5
Mark E. Nissen
In today’s increasingly networked world of organizational practice, information and computer technologies are enabling people and organizations to... Sample PDF
Visualizing Knowledge Networks and Flows to Enhance Organizational Metacognition in Virtual Organizations
Chapter 6
Eduardo Bueno Campos
The aim of this chapter is to deepen the concept of ‘Communities of Practice’ (CoPs) from the understanding of a reference framework for knowledge... Sample PDF
Model on Knowledge-Governance: Collaboration Focus and Communities of Practice
Chapter 7
Josep Capó-Vicedo
This chapter highlights the necessity of establishing relationships with other companies and external agents in order to empower the creation and... Sample PDF
Knowledge Management in SMEs Clusters
Chapter 8
Raquel Sanchis
This chapter presents a general overview of the relationships between information and communications technologies (ITCs) and the process of... Sample PDF
Tools for Supporting Knowledge Management: Knowledge Internalization Through E-Learning
Chapter 9
Cesar Camison, Carlos Devece, Daniel Palacios, Carles Camisón-Haba
In this chapter we describe a practical tool useful to managing knowledge in the firm. It has already been introduced and tested in several firms... Sample PDF
The Value of Virtual Networks for Knowledge Management: A Tool for Practical Development
Chapter 10
M. Eugenia Fabra, Cesar Camison
Companies are increasingly conscious of the fact that the achieving of their objectives, together with the improvement of their competitive... Sample PDF
Human Capital and E-Learning: Developing Knowledge Through Virtual Networks
Chapter 11
Júlio Da Costa Mendes
This chapter looks to analyse new paradigms in the relationship between public and private organisations towards tourism destinations. It proposes... Sample PDF
The Development of Knowledge and Information Networks in Tourism Destinations
Chapter 12
E. Claver-Cortés
Government agencies are being pressed to become more efficient. For this reason, e-government strategies result from the expectations from society... Sample PDF
E-Government Challenges: Barriers and Facilitators in Spanish City Councils
Chapter 13
Hindupur Ramakrishna
The chapter presents a conceptual framework that identifies technological and organizational factors that impact the success of business analytics... Sample PDF
Business Analytics Success: A Conceptual Framework and an Application to Virtual Organizing
Chapter 14
Andrew Targowski
This chapter provides theoretical analysis and synthesis of how computer applications are applied in problem-solving and decision-making in practice... Sample PDF
The Evolution from Data to Wisdom in Decision-Making at the Level of Real and Virtual Networks
Chapter 15
Editor Conclusions  (pages 278-279)
Cesar Camison
The study of virtual organizations encompasses several research fields, and the variables involved in each of them are sometimes closely related.... Sample PDF
Editor Conclusions
Chapter 16
Andrew P. Sage, Cynthia T. Small
This chapter describes a complex adaptive systems (CAS)-based enterprise knowledge-sharing (KnS) model. The CAS-based enterprise KnS model consists... Sample PDF
A Complex Adaptive Systems-Based Enterprise Knowledge Sharing Model
Chapter 17
James G. Williams, Kai A. Olsen
The Telecommunications Act of 1996 opened competition in the telecommunications market in the U.S. and forced the incumbent telecommunications... Sample PDF
Developing a Telecommunication Operation Support Systems (OSS): The Impact of a Change in Network Technology
Chapter 18
Tor Guimaraes
Emerging agent-based systems offer new means of effectively addressing complex decision processes and enabling solutions to business requirements... Sample PDF
Enabling the Virtual Organization with Agent Technology
Chapter 19
Jens Gammelgaard
In geographically dispersed organizations, like multinational corporations (MNCs), contextual gaps exist between senders and receivers of knowledge.... Sample PDF
Virtual Communities of Practice: A Mechanism for Efficient Knowledge Retrieval in MNCs
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