Control effectiveness: servitude or seduction?
Roslyn Larkin – University of Newcastle, Australia
Abstract
As awareness of the value of organisations knowledge stocks increase, methods of leveraging the
knowledge for effective transfer with a view to exploitation have become significantly more focused.
This paper considers two very different forms of control employed by a Multinational Enterprise
(MNE) in an attempt to convince site managers to engage in knowledge transfer through the
organisation’s dedicated Information Communication Technology (ICT) system. While both
approaches could be considered punitive, they differ significantly through the control that is exerted
as a result of the design of the system. That is, the first controls through bureaucratic means while the
second through social systems. Analyses of findings demonstrate the power of controlling knowledge
sharing behaviours through subtle methods. The primary contribution of the paper is both theoretical
and practical through advancement of current understanding of the importance of alternative control
mechanisms to leverage quality knowledge outcomes. The research is qualitative using semistructured interviews undertaken with managers across 19 sites of an MNE operating in the Australian
hospitality sector. Data was analysed using a multi-tiered coding and thematic analysis techniques
consistent with qualitative enquiry.
Introduction
The knowledge based view identifies the firms heterogeneous knowledge bases as a significant
determinant of a firms strategic competitive advantage (SCA). Drawing from this theory, research has
made some enlightening contributions as to the characteristics of knowledge, typically reported as
explicit or tacit, and individual or collective, and its transfer throughout the firm, typically through
mechanisms of Information Communication Technologies (ICTs) or social systems. Indeed it is the
transfer or sharing of knowledge throughout global subsidiaries that Multinational Enterprises
(MNEs) seek as an avenue to SCA and as a result significant investment has been made in
understanding and employing control systems to leverage strategic knowledge from one point in the
organisation to others. This paper, grounded in the knowledge based theory is situated within an MNE
using HRM as a control mechanism for the leveraging of explicit subsidiary knowledge through the
firms ICT system. That is, the paper considers the effects of different control mechanisms on
knowledge sharing behaviours.
There is a significant stream of literature informing understanding of the role HR plays to control
knowledge sharing behaviour. To date such HR practices are situated within top down driven
bureaucratic control systems usually directed towards performance management and reward for the
knowledge owner and/or gatekeeper. While useful for understanding the relationship between HR
practices and knowledge sharing outcomes, however, research so far has largely failed to consider
alternative or more subtle control mechanisms such as social control or indirect control mechanisms
to elicit knowledge sharing behaviours. It is here therefore that this paper provides benefit to those
who design control systems and those who study them by drawing distinction through a comparative
case study of one organisations use of two quite different control systems, each through HR practices.
Significantly, based on the evidence, the paper proposes that while research has generated some
understanding of the effects of direct control methods on knowledge sharing behaviours, such forms
of bureaucratic top-down control are sustainable only in so far that they have temporal finite
measurement attached to the consequences for the knowledge gatekeeper. Where the consequences of
knowledge sharing behaviour affect the gatekeeper indirectly, in this case through a sub-group, the
knowledge sharing behaviours of the gatekeeper are moderated through social control or more subtle
mechanisms. This paper offers an exploratory investigation into the factors controlling knowledge
transfer in one multinational organisation. The primary contribution of the paper is both theoretical
and practical through advancement of current understanding of the importance of alternative control
mechanisms to leverage quality knowledge outcomes. The paper is structured as follows. First the
literature will be reviewed and analysed to identify the predominant research focus to date and key
areas requiring further focus. Following will be a comprehensive discussion of the research
methodology and its suitability for research of this nature. The next section will profile the cases
which will be followed by an analytical discussion of the complexities between the two. The paper
will conclude with recognition of the limitations of the research and identification of areas requiring
further consideration.
Understanding knowledge
The knowledge-based view of the firm attributes a firms competitive advantage to its unique
knowledge and its ability to embody new knowledge in its products and services (Lippman & Rumelt,
1982; Nonaka, 1991; Conner & Prahalad, 1996; Nahapiet & Ghoshal, 1998; Chakravarthy, McEvily,
Doz & Rau, 2006. The management of the knowledge however has been identified as one of the most
important challenges facing today’s managers (Drucker, 1993; Simon, 1996; Davenport & Prusak,
1998; van den Hoof and Ridder, 2004).
The importance attributed to the value that can be created from knowledge has contributed to a
change in attitude of the role of the MNE subsidiary. Previously, and according to a traditional
ethnocentric model (Perlmutter 1969), knowledge was viewed as a linear sequence (Almeida &
Phene, 2004) created by headquarters and disseminated vertically to the subsidiaries. More recently
however the role that the subsidiaries play in the creation of value from knowledge has also evolved
(Almeida & Phene, 2004; Birkinshaw & Hood, 2000; Dunning, 1994, Malnight, 1995; Porter, 1990)
and while subsidiaries may still exploit organisation wide knowledge, they simultaneously engage in
their own knowledge generation or augmentation (Cohen & Levinthal, 1990; March, 1991).
Typically, literature on ‘knowledge’ comes under one of two key headings. The first, explicit
knowledge relates to knowledge that is codified and easily communicated (Newell et al, 2009; Teece,
Pisano & Shuen, 1997; Zollo and Winter, 2002). It is impersonal in nature and usually takes the forms
of documents and reports, presentations or catalogues (Holste & Fields, 2010; Nonaka & Takuechi,
1995; Tsoukas, 2006). The other, tacit knowledge, is developed through experience and its personal
nature makes it hard to communicate or be reduced to textual form. It’s hard to measure and unable to
be stored using technology (Choo, 2000; Nonaka & Takuechi, 1995).
Leveraging and transferring Knowledge
The above section leaves little doubt that it is in the best interest of the MNE to exploit the knowledge
residing in various parts of the organisation. At this point, two key areas must be considered. The first
is leveraging individual knowledge so that it becomes collective and ultimately organisational,
meaning that it is applied in another part of the organisation and second the mechanism through which
the knowledge is transferred from on part of the organisation to another. Indeed, Kogut & Zander
(1993) claim that an MNE arises from its superior efficiency to transfer knowledge across borders.
Just as there are differing interpretations regarding the nature of knowledge, there are likewise
differing mechanisms for its transfer. The suitability of each mechanism coincides with the nature of
the knowledge and whether it is tacit or explicit. For example, when considering the mechanism for
the transfer of tacit knowledge, priority is given to social mechanisms. These are commonly referred
to as communities (Jones, 1995; Komito, 1998; Von Krogh, 2006; Wenger & Snyder, 2000) or
networks (Van Wijk, Van Den Bosch & Volberda, 2006; Newell et al, 2009). When considering the
mechanism for the transfer of explicit knowledge, emphasis is on Information Communication
Technologies (ICTs) focussing on the transfer of codified knowledge through computerised
repositories (Alani & Tiwana, 2006; Zack, 1999).
In a complex MNE environment however coordination and control of knowledge sharing behaviour,
or, the leveraging and adoption of knowledge from one point in the organisation to another becomes
increasingly difficult. This is especially so where knowledge transfer barriers exist. Known barriers
(for example, knowledge hoarding (Cyert 1995)) may arise at the point of the knowledge sender, or at
the point of the knowledge receiver (for example, stickiness (Szulanski 1996) and Not Invented Here
Syndrome (NIH) (Katz & Allen 1982)). As a result, organisations require processes and practices in
place to promote knowledge sharing behaviours and overcome the known barriers to its transfer and
adoption.
Motivation and Control through HRM
Within the last ten years, much focus has shifted to the potential of Human Resource Management
(HRM) as a series of practices that may work to positively control organisational knowledge transfer.
For example, Minbaeva, Pedersen, Bjorkman, Fey and Park (2003) considered the motivational
effects of bundles of HR practices on knowledge sharing behaviours, while Lee, Williams & Yin
(2006 considered the effect of individual HR practice on behaviours. More specifically is the interest
in the link between extrinsic motivators such as performance reviews as a control device to elicit
explicit knowledge sharing behaviour (Edvardsson 2007), through ICT systems. Indeed although the
strength of the outcomes have been somewhat moderated (for example Gagne 2009) this area has
been afforded much attention.
The link between performance management and knowledge sharing behaviours through ICTs
however identifies a form of bureaucratic control (Ferner 2000). Indeed, while some consideration has
been provided to social control mechanisms these have been considered predominately through the
development of social capital (Welch et al, 2009; Bontis & Fitz-enz 2005, Nahapiet & Ghoshal 1998),
and social transfer mechanisms. At no point therefore, has social control been investigated as a
mechanism for the control of knowledge transfer through ICT systems, which until now has been the
domain of bureaucratic control systems. It is here therefore that this paper departs from the
mainstream and considers the effect of social control mechanisms on the transfer of explicit
knowledge through ICTs through comparison of two case examples, one using bureaucratic control
through the organisations performance management system and the other through social control at the
workplace level. This research is undertaken at the subsidiary level of an MNE operating in the
International Hospitality environment
Methodology
Design
This research is qualitative and uses a complex case study approach. Qualitative research was selected
as the purpose is to understand the decisions of the actors when they have rational alternatives
(Gardner 1999: 60). Therefore, the research is built on constructivist perspectives where knowledge
and reality is contingent upon interaction between human beings and their world in a social context
where meaningful reality is socially constructed (Crotty 1998). Further, qualitative research occurs in
natural settings where the researcher attempts to bring meaning to phenomena in a world that is
already there. That is, it’s a situated activity (Denzin & Lincoln 2005), interested in studying how
people attach meaning to their lives and uncover perceptions and experiences of informers
(Minichiello, Aroni, Timewell & Alexander 1995). Qualitative research can be used when the
research is exploratory in nature and is useful when there is little understanding regarding a
phenomena (Collis & Hussey 2003; Cresswell 2003).
A case study was chosen as the purpose is to understand the phenomenon in depth and within its
natural context (Punch 1998). In this case is not the purpose of the research to provide generalisations
but to consider causal factors rather than frequencies (Mitchell 1989; Denzin 1989; Stake 2000). That
is, reliability relies upon the cogency of the theoretical reasoning rather than on the typicality of the
case (Connell, Waring & Lynch 2000). Further the case was chosen not as a result of its ordinariness
but rather because of its interest (Stake 2000).
Data Collection
Emencorp, the case study organisation, was considered suitable for this research as its people
management is best described as geocentric. That is, it is harmonized in such a way that it is managed
on a global basis while at the same time responding to local environment factors (Watson & Littlejohn
1992). In this way, the research was able to pick up both centralised and local programs. Data
collection occurred between 2008 and 2009 through semi-structured interviews. Overall, 19 managers
(7 regional and 12 site managers) across 19 hotel sites in 3 Australian states provide input into these
outcomes. Each interview had an approximate duration of 1-1.5 hours. The following table provides
an example of the predominant themes of the interview questions with examples.
Theme
Purpose
The organisation’s
perspective on knowledge
transfer
This theme provided a useful
starting point to gauge
mangers views on the
organisation’s commitment to
knowledge sharing.
The responses provided a point
of comparison to relevant
organisational documents to
establish what was viewed as
rhetoric and reality. It also
provided early insight into the
systems in place.
This theme enabled the
researcher to learn about the
knowledge transfer
mechanisms from the
perspective of the managers. It
also helped to identify the
number of systems in place
either from a formal or
informal perspective. This was
achieved as different
employment positions use
different systems for
communication.
In addition, it enabled
The employee’s
experience with the
knowledge transfer
mechanisms
Questions - example








Do you believe the
organisation has a commitment
to sharing knowledge
throughout its global network?
Why?/Why not?
Does the organisation have
mechanisms in place to support
knowledge transfer?
1) ICT
2) Social systems
Tell me about your experiences
with knowledge sharing
through ICT mechanisms.
Tell me about your experiences
with knowledge sharing
through social mechanisms.
Are there any other
mechanisms for sharing
knowledge that you haven’t
covered in your discussion?
HR practices and
knowledge transfer
discussion about organisational
changes overtime, and helped
to differentiate between the
attitudes and experiences of
long serving employees and
those newer to the organisation.
This theme helped to identify
HR practices that the employee
personally considered as useful
to knowledge transfer.
Additionally, it assisted the
process of triangulation in that
it enabled the researcher to
delve deeper into the practices
that were articulated as
identifying with knowledge
transfer in documentary data
and their actual application.
Which, if any, HR practices do
you consider to influence the
quality of the KT mechanisms
you have identified?
I note that in the documents
providing the procedures for
performance appraisal, HR
staff are prompted to identify
with knowledge sharing
activities. Do you do this?
Does your manager include
this dimension when
conducting your performance
review?
Data Analysis
Consistent with qualitative research the analytical categories were emergent throughout data
collection and as such informed early analysis. In order to manage such large amounts of unstructured
data, Nvivo 8 was used to assist a 3 layer coding technique. Initially, a process of data reduction was
undertaken where individual elements were organised into concepts and categories. The next stage
considered the interconnectedness of data taking into consideration the context in which it was
embedded, the way it was managed and the consequences of such. Finally, selective coding was
undertaken in order to validate relationships. Throughout analysis several iterations of relationships
occurred as additional categories were considered and whereby areas of overlap and antecedents
emerged.
Background to the cases
Case Commonalities
In 2006, Emencorp implemented a vast storage and retrieval knowledge system referred to from here
on as the knowledge library. Established in line with the organisations strategic focus of global
alignment, the knowledge library was to facilitate sharing of value added processes and practices
across sites thus reducing time and resource waste and replication. In other words its purpose was to
initiate a long term knowledge sharing culture. At the time of data collection, the knowledge library
extended across all 140 hotels in the Asia, Australasian global region. The knowledge library acts as a
two-way system allowing users to both submit and retrieve ideas. Indeed, the viability of the system
relies on both, new knowledge sharing and the implementation of the new knowledge across sites.
The ideas are stored by hotel function (i.e. food and beverage; housekeeping etc). Initially, access to
the system was limited to site managers and above however this was eventually relaxed so that all
staff from a supervisory level up can access the data. Submission of ideas continues to be limited to
site managers and above as part of the gatekeeping function. The following cases identify control
mechanisms employed by Emencorp to promote system use..
Case 1 – The knowledge library and the site managers (1)
In order to create a culture of knowledge sharing behaviour through the ICT system, each hotel or site
manager was notified by their regional managers that the knowledge library was now in place and
there was an expectation that each site manager would conform to its use. In order to support this
conformity, use of the knowledge library was linked directly to each site managers Key Performance
Objectives (KPOs). Measurement of the KPOs involved each site manager retrieving and
implementing two ideas from the library each year into their hotel and each manager should add two
ideas to the library each year for others to view and potentially implement in their hotels.
Achievement of the KPOs was assessed through the site managers annual performance review.
The link with the performance management system however was to be relatively short lived. By 2008,
just two years after its beginning the link with site managers KPOs were disestablished. From a
managerial perspective the reason for removing the link was recognition of the constraints of site
managers to continually put forward quality ideas. This is captured in the following quote from a
regional manager,
There were a lot of things that ended up there because people were pressured to
contribute and you cannot always contribute quality (RSM2).
Evidence from the site managers, while supporting this general theme however were a little more
insightful. For example,
I wasn’t a big fan of the link with KPOs because you would get to mid-November and
you felt: Oh gosh, I haven’t added two ideas so you would get on the Knowledge Library
and it was potentially a gun pointed at your head (GSM3).
In addition to the forced compliance, a further theme began to emerge,
We were mandated through our KPOs so would that influence me to share? Yes, it would,
but it turned into a dog’s breakfast, everyone’s throwing in ideas just to tick the box. I
think they dropped it because it discredited the system. It’s better to have 10 ideas rather
than 100 if 90 aren’t good. That’s not the official reason, but unofficially I think that’s it
(GSM3).
Another respondent more candidly hinted at sabotage,
The link with KPOs might have influenced me to share, but would it be good data going
into it? We proved it wouldn’t so they had to scrap it and start again [be]cause they were
silly ideas and now it’s no longer linked to our KPOs (GSM6).
The separation of the Knowledge Library and site managers KPOs opened the system up to wider
access. It was at this time that those in a supervisory or above position were granted access to view
ideas generated from other properties although access to add an idea remained with the site manager.
By all accounts however, the Knowledge Library lapsed into either underuse or in many cases disuse.
Almost paradoxically, the site managers blamed the severed link with their KPOs as the reason for
this. For example,
There’s probably a lot of good ideas there…but if it’s not part of your KPOs then it’s not
something you think about (GSM7).
Case 2 – The knowledge library and the housekeepers (and the site managers)
Typically, Emencorp exhibit a geocentric form (REF). In this case, this is identified through the
centralised approach to strategic HRM operating simultaneously with the decentralisation of many
operational HR decisions to the regional, national or in the case of Australia, state level. As such,
varying operational models exist amongst the Australian sites. One such variance was the
employment of housekeeping staff in some states and the outsourcing of the housekeeping function
and staffing in others.
This divergence of staffing practices has triggered much debate regarding the overall utility of the
mixed model. In 2009, the debate led one RGM to implement a project entitled the ‘housekeepers
project’ in order to establish whether there are cost and operational advantages to staffing the function
rather than outsourcing it. The basic premise of ‘housekeepers project’ was identified as follows:
If we outsource, what we are saying is ABC outsourcing has a better culture than
Emencorp. By outsourcing you are saying that management doesn’t understand how to
manage something… so I said to Norman [pseudonym] let’s get the housekeepers
together and see if we can develop best practice or else we can outsource it…you see
there appears to be a mentality of if you can’t measure it you can’t manage it… so I gave
the housekeepers something that was pretty measureable, that’s called job security
(RGM2).
The project involved the following steps. First, all executive housekeepers in the state are brought
together to a central location each month in order to discuss potential projects or areas requiring
improvement, new ideas they are considering and, updates on process improvements or projects they
are currently working on. Teams of 2 or 3 executive housekeepers are formed and each team becomes
responsible for developing, trialling and reporting each separate project. If the trial is successful and
the idea is considered to produce efficiencies it is deemed a ‘best practice’ initiative and added to the
knowledge library. In other words, in this case, quality and innovation are inherent in the design of the
initiative. The final stage and where ultimate measurement of success of the house keeper’s project
occurs however is at the hotel level. That is, if it is not picked up and implemented in hotels then it is
deemed to be a failure which by implication extends to the housekeepers project generally and
ultimately employment of the housekeepers. Therefore, as it is clearly in the interests of the
housekeepers to have the best practice initiatives implemented at their hotels, it is up to them to
convince the site managers to undertake the processes (practical and administrative) of
implementation. This is captured in the following quote:
It’s no longer up to the attitude of the site manager, it was the degree of engagement by
the housekeepers that was an interesting learning curve and, the pressure created by the
time we got half way into it. You recognise and reward the people who are doing a good
job, so the peer group put pressure on those site managers with NIH…until they realised
it was about getting a result… (RGM2)
Although the Housekeepers project was still quite ‘new’ at the time of data collection, discussion with
the regional manager responsible for its implementation deemed it an early success. That is, as a result
of pressure exerted by executive housekeepers, site managers were adopting the knowledge sharing
culture through implementation of the best practice ideas that were being placed in the knowledge
library.
Analysis and discussion
Each of the two examples above identify with the full knowledge transfer process of sending,
receiving and implementing new knowledge channelled through the organisations dedicated ICT
system. Structural similarities between the two include the use of punitive outcomes relating to job
security (although disproportionately) for non-compliance and that each was operationalised through
HR practices. Also, although again disproportionate in relative strength, both examples identify with
a reduction in known transfer barriers such as NIH and negative attitudes towards sharing. Finally,
common to both cases is an onus on the site managers for accessing the data and implementing new
knowledge. Key differences between the cases however require further consideration and appear to
reside within two main categories. These are the nature of the control mechanism that accomplishes
the actual transfer, and, the knowledge sharing outcome as a response to the mechanism. The
following table provides a snapshot of the content of differences and each of these is discussed in
further detail below.
Responsibility
Affect
Control
Measure
Pressure
Innovation
Outcome
HR practice
Response
Performance
Management
system
Site Managers
Direct
Bureaucratic
Quantitative
Top-down
Low
Short term
(tick-the-box)
Performance appraisal
Individual
Housekeepers project
Housekeeping staff
Indirect
Social
Qualitative
Bottom-up
High
Long term (culture)
Outsourcing
Collective
Control Mechanism
As mentioned above a commonality between the cases was that lack of conformity resulted in some
form of punitive outcome. Structurally however, the requirement differed in terms of the party held
responsible for the outcome and the method by which the outcome was achieved. For example, in the
first case, knowledge transfer outcomes were achieved through direct or overt control where the site
manager was required to become subservient to management through bureaucratic methods.
In the second case, however, control was achieved indirectly or possibly covertly, filtered through the
social mechanisms existing between the housekeepers and the site managers at the level of the hotel.
Predominately, the location of the value of the knowledge shifted from site managers to housekeepers
pressuring the housekeepers to modify the knowledge transfer behaviours of the site managers which
resulted in knowledge transfer outcomes achieved as a result of persuasion rather than subjection.
Knowledge sharing outcomes
The second area that differed significantly between the examples is within the characteristics or
quality of the actual knowledge transfer outcome as a response to the control mechanism. For
example, the first case demonstrated that controlling through bureaucratic quantitative assessment
while achieving accountable measures may produce a series of unanticipated and unwelcome
outcomes towards both the knowledge library and longer term knowledge sharing culture generally.
First, there was a distinct air of resentment towards the link with the project management system from
the site managers. This was clearly captured in the comment ‘…it was potentially a gun pointed at
your head…’ (GSM3). Further, the design resulted in creating a negative or at best a null response to
the utility of the knowledge library from the site managers where it became viewed as a means to an
end or a vehicle through which to ‘tick the box’ resulting in short term conformity rather than a longer
term commitment to knowledge sharing. These outcomes were far removed from the original
intention of the system where its implementation was to facilitate a knowledge sharing culture.
Further, the ideology of the system was to share value added or innovative processes and practices in
order to gain efficiencies. With only a quantitative measurement attached to the link with the
performance management control system, site managers by admission shared ‘silly ideas’ ultimately
turning the knowledge library into a ‘dogs breakfast’. On the other hand, innovation and quality was
part of the inherent design of best practice and therefore, by extension, became an object of the
implementation.
Conclusion and limitations
The above examples identify one organisations experience shifting from a direct bureaucratic control
mechanism to indirect control through social mechanisms in order to elicit knowledge sharing
behaviour from their site managers. This shift took place when the knowledge sharing system lapsed
into disuse as a result of unintended consequences of the bureaucratically controlled mechanism.
By shifting and adding to the personal value of the knowledge exchange from site managers to
housekeepers, the organisation was able to indirectly control site managers by creating an
environment of persuasion dispensed through the social system. This was in stark contrast to the
previous bureaucratic system built on direct obedience. Additionally, while each control mechanism
delivered a knowledge sharing response, the indirect method proved most productive for quality of
knowledge and appropriate use of the knowledge sharing system.
In a practical sense this signals a caution for managers to not only consider the potential outcomes of
their control systems but to ensure that the design of the control system provides a desired outcome.
That is, by definition, quality over quantity and pull rather than push. From an academic perspective,
this paper offers a small increment to better understanding social control systems in MNEs but is not
without limitations. Significantly, as the housekeepers project was in its infancy at the time of data
collection, the results were unable to be further tested and therefore more work in this area is needed.
Related areas include whether without the duress of control as an explanatory logic for use, the
Knowledge Library, under the housekeepers project instils an actual long term knowledge sharing
culture and will become embedded in the organisational routines.
One may argue that a considerable limitation to this outcome is that housekeepers did not participate
directly in this research. However, while that would make an interesting inclusion in further research
it was not the purpose of this paper. Rather, the paper is about the control mechanisms the
organisation uses to promote knowledge sharing through the ICT system.
Finally, multi-disciplinary research might go some way to assist in uncovering the raison d’etre for
the shift. For example was it created as a result of collective action, or was it a sense of responsibility
from the site manager for the housekeeping staff? Further, was it a sense of guilt? Either way, it is
clear that this form of indirect control applies pressure from below to achieve organisational outcomes
in a way that promotes quality knowledge transfer outcomes.
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