The Relevance of Customers as a Source of Knowledge in IT Firms

Introduction

Strategic knowledge generation is viewed as fundamental to a company’s development and to successfully building and sustaining a competitive advantage. As organizations interact with their environment, they absorb information and convert it into knowledge (Nonaka and Takeuchi, 1995). That is, a firm is a dynamic entity which actively interacts with its environment, and reshapes the environment, and even itself, through the process of knowledge creation (Nonaka and Toyama, 2005).

As Kogut and Zander (1992) explain, companies are not just knowledge warehouses. They also have the capacity to learn and acquire new knowledge, which they refer to as a company’s combinative capability. In this sense, a company’s knowledge base can be produced and reproduced within a social framework. Companies are social organizations that specialize in creating and transforming knowledge (Nonaka and Takeuchi, 1995). In the knowledge-based view there is a basic assumption: knowledge cannot exist without human subjectivities and the context that surrounds human beings (Nonaka and Toyama, 2005). In this sense, individuals play a relevant role in each of the knowledge management processes: generation, transfer and utilization.

Knowledge generation is mainly an institutionalized activity, so each organization must be able to establish its own creative routines and human intervention to make this process possible. The challenge is to build systems that collect the learning processes acquired during projects and ongoing activities, to capture that knowledge in a database or document, and then to spread it throughout the entire organization (Grant, 2000).

Knowledge generation is defined as the specific activities and initiatives undertaken by organizations to increase their organizational knowledge (Davenport and Prusak, 2001). These activities involve external acquisitions of knowledge and internal creation of this intangible resource. Knowledge generation is highly dependent upon the organization’s culture and management style. Organizational culture, which results from experience based on tacitly shared norms of coordination and collaboration, can influence the way in which individuals interact within an organization. In fact, a culture that promotes intensive communication, accepts new ideas, and is prepared to explore new processes and activities favors the generation of knowledge (Ruggles, 1998). This process also leads to increased firm competitiveness. It may be stimulated through non-hierarchical organizational structures, an active general management, and by motivating employees to innovate and learn lessons that allow them to obtain new and better knowledge (Zapata, Rialp and Rialp, 2009).

The overall aim and contribution of this chapter is to identify the main sources of knowledge generation in IT-related SMEs and which organizational elements support this process. This objective has two critical points: First, these organizations have a specific profile in order to respond quickly to continuously changing market needs. Such firms require flexibility to coordinate internal resources and an adaptive capacity for managing environmental challenges - innovation becomes an important determinant of survival (D’Aveni, 1994; Teece, Pisano and Shuen, 1997). Secondly, it is important to study SMEs because these firms usually possess greater flexibility to adapt to market changes and to conduct innovative projects.

This chapter is structured as follows: Section 2 exposes the literature review related to knowledge generation and customers as a source of knowledge; Section 3 presents the methods used to conduct the empirical study; Section 4 shows how the results are related to some empirical studies; and finally, Section 5 puts forward some conclusions and future research directions.