Knowledge Networks: Explaining Effective Knowledge Sharing in Multiunit Companies

This paper introduces the concept of knowledge networks to explain why some business units are able to benefit from knowledge residing in other parts of the company while others are not. The core premise of this concept is that a proper understanding of effective interunit knowledge sharing in a multiunit firm requires a joint consideration of relatedness in knowledge content among business units and the network of lateral interunit relations that enables task units to access related knowledge. Results from a study of 120 new product development projects in 41 business units of a large multiunit electronics company showed that project teams obtained more existing knowledge from other units and completed their projects faster to the extent that they had short interunit network paths to units that possessed related knowledge. In contrast, neither network connections nor extent of related knowledge alone explained the amount of knowledge obtained and project completion time. The results also showed a contingent effect of having direct interunit relations in knowledge networks: While established direct relations mitigated problems of transferring noncodified knowledge, they were harmful when the knowledge to be transferred was codified, because they were less needed but still involved maintenance costs. These findings suggest that research on knowledge transfers and synergies in multiunit firms should pursue new perspectives that combine the concepts of network connections and relatedness in knowledge content.