Inter and intra network knowledge flows and market performance for smaller firms in...

ABSTRACT

Competition in the pharmaceutical industry has long focused on the innovation, of which result from intensive knowledge exploration and exploitation and appear as patent in the market. Smaller firms in the industry generally lack sufficient resources and subsequent knowledge

within the organizational boundary. We propose that smaller firms in pharmaceutical industry seek to enhance its competitive advantage shall effectively explore knowledge from external organizations, and consequently combine such knowledge into current system for further exploiting. Establishing a subsidiary in foreign countries may satisfactorily serve this purpose. A foreign subsidiary will need to maintain quality relationship or social capital with both members of organizational network as well as those in the network of its market. BY combing the exploration and exploitation capabilities, subsidiaries of smaller firms could achieve market performance and be contributive to the parent's competitive advantage.

1. INTRODUCTION

The pharmaceutical industry is characterized with both knowledge and capital intensive inputs. Knowledge is particularly the major critical success factors and the most important assets of an organization in this industry (Grant, 1996a; Teece, Pisano & Shuen, 1997). As a knowledge base (Grant, 1996b), firms in this industry encounter challenges in both exploring knowledge from external organizations for future development and exploiting internal knowledge from its network for optimal utilization for rent maximization and competitive advantage (Nerkar & Roberts, 2004; Miller, Fern & Cardinal, 2007). Knowledge that has potential to foster competitive advantage shall be valuable to customer and is always unique, and always dispersed and embedded in individual organizational sub-units (Conner & Prahalad, 1996; Hansen, 2002). Thus, pharmaceutical products require extensive knowledge inputs not only in the research and development stages but also in application stages, not only knowledge generated from the laboratory that located in the headquarter and some sub-units but also from the market. There are several streams of knowledge flows moving within and across the organization boundary.

While headquarter of MNE was assumed dominating the knowledge creation and allocation privilege and acting as the sole informant and sole distributor in the past, growing studies recently realizes the emergence of knowledge that dispersedly embedded in individual knowledge network (Hansen, 2002). Foreign subsidiary is now recognized as an important contributor of non-monetary assets to the MNE (Schmid & Schurig, 2003; Ambos, Ambos, & Schlegelmilch, 2006) rather than just business extension of headquarter.

The literature explored the mobility of knowledge from various perspectives, e.g. organizational learning (Floyd & Wooldridge, 1999), knowledge transfer (Szulanski, 1996; Gupta & Govindarajan, 2000a; Tsai, 2000; Hansen, 2002), and knowledge integration (Pisano, 1996; Grant, 1996b), have affirmed that knowledge flow has significant effects on the knowledge creation and organization's competence. MNE exploits its assets by flowing workable knowledge to the subsidiary in against competitors and in response to customer demands. This means knowledge may have multiplier effect when flow to other units of the organization. As a result, MNE has now become a network of dispersed subsidiaries in quite different markets, in which unique knowledge and capability is essential in response to the highly differentiated customers in that market (Ghoshal & Nohria, 1989; Kogut & Zander, 1993). Managing the knowledge flow and making it accessible and useable by both headquarter and subsidiaries become essential in gaining competitive advantage for MNE (Andersson, Forsgren & Holm, 2002), particularly for those cross-border knowledge flow contexts (Gupta & Govindarajan, 2000a). Contrast to past studies, this research inquires the knowledge flow in the perspective of subsidiary that embeds in culturally distinctive marketplaces. We emphasize in this paper the role of such foreign subsidiary and its contribution to make the entire knowledge flow network complete, of which otherwise the MNE could not achieve through other channels.

Determinants of subsidiaries' performance are orchestrated by intra-organizational or 'global network' (Ghoshal & Bartlett, 1990; Kogut & Zander, 1993; Gupta & Govindarajan, 2000a; Kostova & Roth, 2002) with those non-organizational or external factors. One of the major determinants beyond global network is the knowledge that spins in the 'local network', local value chain and research institutes, where the subsidiary has routine exchanges. This provides additional learning resources to both headquarter (Ambos et al., 2006) and subsidiary, and brings extra contribution to the subsidiary's performance. As global production network perspective advocated, the better the performance of knowledge flow the subsidiary performed in the host country, the better the subsidiary's capability and performance (Ernst & Kim, 2002). Subsidiary that significantly engaged in interacting with local market as well as the R & D institutions in host country, i.e. locally embedded technological application (Andersson et al., 2002; Ernst & Kim, 2002; Belderbos, 2003) with mainstream of knowledge flows, would reinforces its knowledge base for unique capabilities and critical competences (Birkinshaw, 2002; Lehrer; Lehrer & Asakawa, 2002; Belderbos, 2003).

Pharmaceutical companies in Taiwan that seek overseas expansions indeed require knowledge-based competitive advantage that often combines knowledge from both organizational network and interorganizational network (Von Hippel, 1994). Therefore, a subsidiary to be contributive to the parent or to be competitive in its market shall attempt to absorb both sources of knowledge flows from intra and inter networks.

Both knowledge flows from the global and the local networks independently or jointly contribute subsidiary's operation outcomes. The former contributes basic competences to the subsidiary, while the latter provides additional strength with rich context-specific knowledge for the subsidiary's competitive advantages. Well adopted from multiple and dispersed sources of knowledge, dual-embedded subsidiary tends to gain better outcomes than those single-embedded. Reciprocally, such dual-embedded knowledge can later infuse to the stock of the knowledge integrating institution, the MNE (Kogut & Zander, 1993), through subsidiary's knowledge outflow. It is clear that the knowledge flow between subsidiary and the institutes in host country would be successful whenever fixed boundary is absent (Amos et al., 2006). This implies that the social relation with local institutes is equivalent important as that within the MNE network.

Taken a pharmaceutical subsidiary in Taiwan as example to explore its interactions with local network, this research attempts to reveal the factors that determine the quality of knowledge flows to and from both global network and local network respectively, and subsequently its impacts on the subsidiary's customer-based performance in local market, shown as the figure 1. Therefore, research questions includes exploring the property of the knowledge from MNE global next work and the subsidiary's local network respectively, identifying the roles the global network and the local network would play respectively in terms of the subsidiary's knowledge flow, and revealing to what extent the quality and quantity of subsidiary's knowledge flow will impact it's performance.

[FIGURE 1 OMITTED]

2. THEORIES AND PROPOSITIONS

Knowledge-based view (KBV) suggests that firm is the collection of differentiated types of knowledge (Grant, 1997). Knowledge that is unique and hard to be imitable is always latent with substantial extent of tacitness and generally embeds in certain professional routine that is context-specific. This is a main challenge when firms in attempt to practice knowledge management (Kogut & Zander, 1993; Gupta & Govindarajan, 2000b; Brown & Dugid, 2001). Subsidiary today has its own resource and power (Birkinshaw & Hood, 1998), thus can facilitate the mobility of such localization knowledge (Almeida & Kogut, 1999). They are able to maintain both intra- and inter-organizational relationships with internal and external networks concurrently (McEvily & Zander, 1999; Yli-Renko, Autio & Sapienza, 2001) through social-interactions at their own will. Moreover, the network relationship perspective advocates similar argument as that of social capital (Adler & Kwon, 2002) by addressing that the relationship is the building blocks of social capital between interacting parties. Social capital in the inter-organizational relationship denotes that exchange parties for knowledge exchange have made a reliable relationship available for both inflow and outflow.

2-1. Knowledge And Knowledge Flow

In the new era of co-petition, knowledge flow within the MNE is important, yet the knowledge flow along with the interactions with external environment would be another critical determinant in the success of the accumulation and exploitation of internal knowledge (Nahapiet & Ghoshal, 1998). We define the knowledge, and illustrate the nature of knowledge flow as follow.

Knowledge, distinct from information, is a set of systemize and structuralize instincts, experiences, and facts (Nonaka, 1994), of which resides not only in both documents and files, but also in the daily routines, procedures, practices, and norms. This research attempts to explore how the subsidiary performs the knowledge flow of exchange, transfer, and diffusion between localized global network and local network for performance advancement. Therefore, the term of knowledge in this research refers to systematic knowledge in any form in purposefully solving various types of problems in business administration, including production, marketing, and organizational management etc. This includes the first cluster of technical, management, and market knowledge (Simonin, 1999; Andersson & Forsgren, 2000), of which have various levels of impacts on the performances of new product, innovation, and market (Andersson & Forsgren, 2000). The second cluster involves the extent of specialization of specific knowledge (Birkinshaw, 2002; Kotabe, Xavier & Hiroshi, 2003) refers to the level of association between knowledge systematic and causality. Capability is reflect of knowledge stock (Foss, 2006), the higher the specialization of the knowledge flow, the higher the possibility of creating unique capability and non-imitable competitive advantage, and accordingly the superior performance (Kotabe et al., 2003). This research concentrates on the flows of knowledge from both organizational network and local network to the focal subsidiary's knowledge flow management. In other words, we assume that different source of knowledge network provides varied capability to the subsidiary, yet the relationship or social capital the subsidiary maintained has significant impact on the quality of such flows. This may differentiate the performance of each individual subsidiary, shown as figure 2.

[FIGURE 2 OMITTED]

2-2 Intra Network Knowledge Flows

Knowledge flow between units of the organizational network is a continuous exchange flow of capital, mandate, report, routine, product and knowledge (Ghoshal & Bartlett, 1990; Gupta & Govindarajan, 1991), to which linkages with the parent and other subsidiaries differentiate the performance of knowledge flow (Tseng, Se-to & Yu, 1998).

Drawn on social capital perspective, quality of knowledge inflow is determined by three factors. First factor that leads to quality inflow is the core position of a subsidiary within the network, i.e. center of excellence. Structural argument of social capital suggests that subsidiary (is) hinged in the entire network ensure a heavy traffic of interaction with network members. Acting as 'Ba', this hub can receive and distribute substantial amount of information and knowledge. Cooperating experience and trusting relationship is the second factor in building importance of the subsidiary in knowledge flow (Nahapiet & Ghoshal, 1998; McEvily & Zaheer, 1999) and consequent performance. Central role of receiving and distributing knowledge, this subsidiary is able to align its own knowledge flow in higher level of richness and diversity (Koka & Prescott, 2002). The third factor is the common goal and value that is shared by members of the organization. The higher the convergence of subsidiary with network members in terms of common goals, cognitions, and norms, the higher the willingness of knowledge sharing as well as the lower communication barriers (Dyer & Nobeoka, 2000). Knowledge receive from organizational network means a competence receive from the parent and brothers, transfer the By receiving higher level and amount of knowledge from other MNE network members, subsidiary will be more capable in further exploring and exploiting such knowledge both in global and local networks.

Proposition 1: When subsidiary situated as core to the network, enjoyed favorable cooperation experiences and trusts, or shared same context with counterparties, or both, this subsidiary will have a better capability of exploitation among other members of the organization. 2-3 Inter Network Knowledge Flows

Subsidiary has dual roles in its knowledge network. As a member of organizational network in one hand, subsidiary frequent interacts with local R & D institutions (Fang, 2002), local value chain, and customers. Moreover, effective interactions with government system will gradually entitled legitimacy to the subsidiary, of which in turn strengthen the willingness and relationship with local suppliers and institutions (Tsai, 2000). As a result, better quality of information and knowledge flow with local network could be achieved.

To remain competitive, managers actively seek to prevent knowledge from imitation in any forms (Liebeskind, 1996). Smaller pharmaceutical firms exploring knowledge from external sources may employ one of the three external market mechanisms to enhance its knowledge search: alliances, inventor mobility, and acquisitions (Miller et al., 2007). Maintaining quality knowledge inflows with local institutions (system) of distribution (customers and suppliers), R & D, and government, subsidiary can sharpen its capability in further exploring those advantages unique in local market, of which advanced its competitive capability (Lee, Lee & Pennings, 2001; Takeishi, 2001 ; Andersson & Forsgren, 2000; Yli-Renko et al., 2001). We there fore infer a proposition as follow.

Proposition 2: When subsidiary has favorable ties with local value chain and research institutes, good reputation and image, or important role in local market, or both, the relationship such subsidiary maintained with the local network will have better quantity and quality of knowledge flows and consequently better exploration capability.

Social capital

Social capital as a concept has been widely adopted in the studies of competitive advantages across different organizational contexts by scholars of organizational theory and strategic management (e.g. Uzzi, 1997; Nahapiet & Ghoshal, 1998; McEvily & Zaheer, 1999; Yli-Renko et al, 2001; Uzzi & Gillespie, 2002) since 1990s. Organization and strategy scholars generally agreed that well leveraging the quality and quantity of inter-organizational relationship would bring multiple benefits to knowledge flow. Benefits may include accelerating inter-organizational resource and knowledge flows, enhancing organizational coherence, and as a result, the effectiveness of 'tacit knowledge' transfers and exchanges (Nahapiet & Ghoshal, 1998; Ahuja, 2000; Tsai, 2000). Organization's social capital is composed by relationship, structural connection, and cognitive contexts (Gulati, 1998; Nahapiet & Ghoshal, 1998; Adler & Kwon, 2002).

During the process of social capital construction, firms secure information, controls transaction, obtain community identity (Lesser, 2000; Adler & Kwon, 2002; Koka & Prescott, 2002). This social capital incubation process is not only create values for the MNE (Tsai & Ghoshal, 1998) but also sharpen the organization's capability of knowledge exchanges with members, of which in turn further advanced member's motivations of exchange (Nahapiet & Ghoshal, 1998; Adler & Kwon, 2002). Previous studies suggested that there are three possible components of organizational social capital in structural dimension, relational dimension, cognitive dimension, or both (Nahapiet & Ghoshal, 1998; Yli-Renko et al., 2001).

Structural dimension. Subsidiary can leverage its structural connection in certain network to create interorganizational relationship to sharpen its competitive capabilities (Nahapiet & Ghoshal, 1998; Gulati, 1999; Kale, Singh & Perlmutter, 2000). Subsidiary's knowledge flows as well as network learning could be further advanced with new information that externally exist outside the organization (i.e. interorganizational learning) as well as intra-organizational knowledge creating (Powell, Kogut & Smith-Doerr, 1996; Nahapiet & Ghoshal, 1998).

Relational dimension. Relational dimension of social capital refers to the quality of social interactions between member organizations of the network (Yli-Renko et al., 2001), of which fosters the cooperative atmosphere and facilitates relationship-oriented instead of interest-oriented exchanges of the network (Ahuja, 2000; Gnyawali & Madhavan, 2001 ; Tsai, 2000). The social relationship as a base for cooperation is similar to the 'Ba' ('place' in Japanese) or platform that designed for cross-organizational knowledge creation (Nonaka, Toyama & Konno, 2000) in the related knowledge studies. Cooperating based on mutual benefit and community identity tends to promote stronger knowledge sharing and exchange (Koka & Prescott, 2002).

Cognitive dimension. Dimension of cognition refers to self-identity, norms, beliefs, and shared common visions and experiences (Nahapiet & Ghoshal, 1998; Lesser, 2000; Adler & Kwon, 2002). Under the common assumption and shared context, the higher the convergence of the entity that network members formed and held, the higher the possibility of reducing communication barriers and easing the opportunistic behavior (Conner & Prahalad, 1996; Dyer & Nobeoka, 2000). In addition, such commonality will provide network members more motives and opportunities in knowledge resource sharing (Dyer & Nobeoka, 2000; Adler & Kwon, 2002).

Drawn on the social capital theory, we explore the its mediating effects on the relationships between intra and inter networks knowledge flows and outcomes of such flows respectively, of which in turn differentiate the subsidiary's market performances that grounded on knowledge-based innovation. We thus infer a proposition as follow. Proposition 3: The better the subsidiary maintained social capital with network, the better the knowledge inflows to respective capabilities of exploitation and exploration.

2-4 Dual Networking Knowledge Flows

Increasing globalization has geared modern organizations become internationally involved, from which even small and medium companies network its subsidiaries dispersed around the world (Ghoshal & Bartlett, 1990) as well as external organization that subsidiaries in presence. There are four categories of subsidiary in terms of knowledge flows (Gupta & Govindarajan, 1991). The local innovators receive highest autonomy (Harzing & Noorderhaven, 2006), or similar level of integrated players (Gupta & Govindarajan, 1991) for its high or modest local responsive requirement where inter networking with local institution is essential for survive. In most cases, headquarter typically wishes to control subsidiary that strategically important as net knowledge provider (Young & Tavares, 2004), i.e. global innovator (Gupta & Govindarajan, 1991). As a result, the intra and inter networking of the parent, subsidiaries, and external organizations emerge as integrated network (Birkinshaw, 2002). Resources and knowledge flow through various types of exchanges and subsequently result in market performance (Foss, 2006) to which social capital act as catalyst in facilitating the quality of such exchanges (Nahapiet & Ghoshal, 1998; Foss & Pedersen, 2004). For example, Japanese subsidiaries in Europe utilize its 'research-based' knowledge exchange with and learning from 'actors' in local network to 'incubate' satisfactory performance in local market (Lehrer & Asakawa, 2002).

Subsidiaries maintain quality relationships with members of both networks within organization or external organizations would generate quality of knowledge inflows and subsequently good capabilities of both exploitation and exploration. Secured knowledge and its subsequent exploiting and exploring capability will in turn enrich subsidiary's current and future technical development, foster market sensitivity for earlier preparation for competition and customer demands, of which ultimately ensure market performance. For example, Procter & Gamble adds wax to the original model of Swifter mop to Italian market as the inter network exploration suggests along exploiting its knowledge within the intra network (Peng, 2006). Such combination of exploitation and exploration on knowledge from both internal and external networks helps market success. We therefore infer a proposition as follow: Proposition 4: The higher the subsidiary combines the capabilities of exploitation and exploration, the better the performance of the subsidiary.

3. CONCLUSION

Knowledge incubates capability. Ongoing knowledge inflow from members of the organizational network builds the competences. Subsidiaries dispersed across different cultures provide superior grounding for knowledge vitalization, particularly for smaller firms. Subsidiaries located in individual host country are facing both intra and inter networks. The relationship fosters the willingness for members of MNE network to share valuable knowledge, and the path for foreign subsidiary to create knowledge community with local players.

Social capital that a subsidiary held with both organizational network and local network members is just that the subsidiary maintained a trustable relationship in daily routines. Both relational and cognitive factors of social capital are expected to have significant impacts on the effectiveness of knowledge flows between members in organizational and local networks. The positive influences of structural factors of social capital on the knowledge flow can be achieved by situating as the centrality of organizational network, or by creating reputation and market importance in the local network.

The sort and the extent of the knowledge under consideration for exchange depend on the corporate strategy and the specific strategy toward such market. However, strategies the smaller firms in pharmaceutical industry could employ are very limited due to insufficient knowledge. Subsidiaries in foreign countries may not simply be commissioned as knowledge exploiter or market explorer, they can be much more important as knowledge explorer.

REFERENCES:

Adler, P. S., & Kwon, S. W. (2002). Social capital: Prospects for a new concept', The Academy of Management Review, 27(1): 17-40.

Ahuja, G. (2000). Collaboration networks, structural holes, and innovation: A longitudinal study. Administrative Science Quarterly, 45(3): 425-455.

Almeida, K., & Kogut, B. (1999). Localization of knowledge and the mobility of engineers in regional networks. Management Science, 45(7): 905-917.

Ambos, T. C., Ambos, B., & Schlegelmilch, B. B. (2006). Learning from foreign subsidiaries: An empirical investigation of headquarters' benefits from reverse knowledge transfers. International Business Review, 15:294-312.

Andersson, U., & Forsgren, M. (2000). In search of centre of excellence: Network embeddedness and subsidiary roles in multinational corporations. Management International Review, 40(4): 329-350.

Andersson, U., Forsgren, M., & Holm, U. (2002). 'The strategic impact of external networks: Subsidiary performance and competence development in the multinational corporation. Strategic Management Journal, 23(11): 979-996.

Belderbos, R. (2003). Entry mode, organizational learning, and R&D in foreign affiliates: Evidence from Japanese firms. Strategic Management Journal, 24(3): 235-259.

Birkinshaw, J. (2002). Managing internal R&D networks in global firms--What sort of knowledge is involved?. Long Range Planning, 35(3): 245-267.

Birkinshaw, J., & Hood, N. (1998). Multinational subsidiary evolution: Capability and charter change in foreign-owned subsidiary companies. Academy of Management Review, 23 (4): 773-795.

Brown, J. S., & Duguid, P. (2001). Knowledge and organization: A social-practice perspective. Organization Science, 12(2): 198-213.

Conner, K. R., & Prahalad, C K. (1996). A resource-based theory of the firm: Knowledge versus opportunism. Organization Science, 7(5): 477-501.

Dyer, J. H., & Nobeoka, K. (2000). Creating and managing a high-performance knowledge-sharing network: The Toyota case. Strategic Management Journal: Special Issue: Strategic Networks, 21(3): 345-367.

Ernst, D., & Kim, L. (2002). Global production networks, knowledge diffusion, and local capability formation. Research Policy, 31 (8, 9): 1417-1429.

Floyd, S. W., & Woolridge, B. (1999). Knowledge creation and social networks in corporate entrepreneurship: The renewal of organizational capability. Entrepreneurship Theory and Practice, 23(3): 123-143.

Foss, N. J, & Pedersen, (2004). Organizing knowledge processes in the multinational corporation: an introduction. Journal of International Business Studies, 35 (5): 340.

Foss, N. J., (2006). Knowledge and Organization in the Theory of the Multinational Corporation: Some Foundational Issues. Journal of Management and Governance, 10 (1): 3.

Ghoshal, S., & Bartlett, C. A. (1990) 'The multinational corporation as an interorganizational network. Academy of Management Review, 15(4): 603.

Ghoshal, S., & Nohria, N. (1989) 'Internal differentiation within multinational corporations. Strategic Management Journal (1986-1998): 10(4): 323-336.

Gnyawali, D. R., & Madhavan, R. (2001) 'Cooperative networks and competitive dynamics: A structural embeddedness perspective. The Academy of Management Review, 26(3): 431-445.

Grant, R. M. (1996a) 'Prospering in dynamically-competitive environments: Organizational capability as knowledge integration. Organization Science, 7(4): 375-387.

Grant, R. M. (1996b). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17: 109-122.

Grant, R. M (1997). The knowledge-based view of the firm: Implications for management practice. Long Range Planning, 30(3): 450-454.

Gulati, R. (1999). Network location and learning: The influence of network resources and firm capabilities on alliance formation. Strategic Management Journal, 20(5): 397.

Gulati, R. (1998). Alliances and Networks. Strategic Management Journal 19(4): 293.

Gupta, A. K., & Govindarajan, V. (1991). Knowledge flows and the structure of control within multinational corporations. Academy of Management Review, 16(4): 768.

Gupta, A. K., & Govindarajan, V. (2000a). Knowledge flows within multinational corporations. Strategic Management Journal, 21(4): 473.

Gupta, A. K., & Govindarajan, V. (2000b). Knowledge management's social dimension: lessons from Nucor steel. MIT Sloan Management Review, 42(1): 71-80.

Hansen, M. T. (2002). The search-transfer problem: The role of weak ties in sharing knowledge across organization subunits. Administrative Science Quarterly, 44(1): 82-111.

Harzing, A. W., & Noorderhaven, N. (2006). Knowledge flows in MNCs: An empirical test and extension of Gupta and Govindarajan's typology of subsidiary roles. International Business Review, 15: 195-214.

Kale, P., Singh, H., & Perlmutter, H. (2000). Learning and protection of proprietary assets in strategic alliances: Building relational capital. Strategic Management Journal: Special Issue: Strategic Networks, 21 (3): 217-237.

Kogut, B., & Zander, U. (1993). Knowledge of the firm and the evolutionary theory of the multinational corporation. Journal of International Business Studies, 34(6): 516.

Koka, B. R., & Prescott, J. E. (2002). Strategic alliances as social capital: A multidimensional view. Strategic Management Journal, 23(9): 795-816.

Kostova, T., & Roth, K. (2002). Adoption of an organizational practice by subsidiaries of multinational corporations: Institutional and relational effects. Academy of Management Journal, 45(1): 215-233.

Kotabe, M., Xavier, M., & Hiroshi, D. (2003). Gaining from vertical partnerships: Knowledge transfer, relationship duration, and supplier performance improvement in the U.S. and Japanese automotive industries. Strategic Management Journal, 24(4): 293-316.

Lee, C., Lee, K., & Pennings, J. M. (2001). Internal capabilities, external networks, and performance: A study on technology-based ventures. Strategic Management Journal, 22(6/7): 615-640.

Lehrer, M., & Asakawa, K. (2002). Offshore knowledge incubation: The "third path" for embedding R&D labs in foreign systems of innovation. Journal of World Business, 37(4): 297-306.

Liebeskind, J. P. (1996). Knowledge, strategy, and the theory of the firm. Strategic Management Journal, 17 (Special): 93-108.

McEvily, B., & Zaheer, A. (1999). Bridging ties: A source of firm heterogeneity in competitive capabilities. Strategic Management Journal, 20(12): 1133.

Miller, D. J., Fern, M. J., & Cardinal, L. B. (2007). The use of knowledge for technological innovation within diversified firms. Academy of Management Journal, 50 (2): 308-326.

Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. The Academy of Management Review, 23(2): 242-266.

Nerkar, A., & Roberts, P. W. (2004). Technological and product-market experience and the success of new product introductions in the pharmaceutical industry. Strategic Management Journal, 25:779-799.

Nonaka, I. (1994). A dynamic theory of organizational knowledge creation. Organization Science, 5 (1): 14-37.

Nonaka, I., Toyama, R., & Konno, N. (2000). SECI, ba and leadership: A unified model of dynamic knowledge creation. Long Range Planning, 33(1): 5-34.

Peng, H. W. (2006). Clean but slow: Cases in Italian market. Business Weekly, 9662 138-140.

Pisano, G. P. (1994). Knowledge, integration, and the locus of learning: An empirical analysis of process development. Strategic Management Journal: Special Issue, 15: 85&

Schmid, S., & Schurig, A. (2003). The development of critical capabilities in foreign subsidiaries: Disentangling the role of the subsidiary's business network. International Business Review, 12:755-782.

Simonin, B. L. (1999). Ambiguity and the process of knowledge transfer in strategic alliances. Strategic Management Journal, 20(7): 595.

Szulanski, G. (1996). Exploring internal stickiness: Impediments to the transfer of best practice within the firm. Strategic Management Journal, 17(Winter Special): 27.

Takeishi, A. (2001). Bridging inter- and intra-firm boundaries: Management of supplier involvement in automobile product development. Strategic Management Journal, 22(5): 403-433.

Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7): 509-533.

Tsai, W. P. (2002). Social capital, strategic relatedness and the formation of intraorganizational linkages. Strategic Management Journal, 21 (9): 925.

Tsai, W. P., & Ghoshal, S. (1998). Social capital and value creation: The role of intrafirm networks. Academy of Management Journal, 41 (4): 464-476.

Uzzi, B. (1997). Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42(1): 35-67.

Uzzi, B., & Gillespie, J. J. (2002). Knowledge spillover in corporate financing networks: Embeddedness and the firm's debt performance. Strategic Management Journal, 23(7): 595-618.

von Hippel, E. (1994). Sticky information and the locus of problem-solving: Implications for innovation. Management Science, 40: 429-439.

Yli-Renko, H., Autio, E., & Sapienza, H. J. (2001). Social capital, knowledge acquisitions, and knowledge exploitation in young technology-based firms. Strategic Management Journal, 22(6/7): 587-613.

Feng-Chuan Pan, Tajen University, TAIWAN

Wen-Hsu Tsai, Tajen University, TAIWAN

Shih-Jeih Fang, National Cheng-Kung University, TAIWAN

Dr. Feng-Chuan Pan is assistant professor to the department of Healthcare Administration as well as Graduate Institute of Leisure and Healthcare Management at Tajen University, Taiwan. Dr. Pan has published several dozens of peer-reviewed papers in multiple publication outlets.

Wen-Hsu Tsai is currently the sale manager of a pharmaceutical company in Taiwan and a Graduate student of the Leisure and Healthcare Management at Tajen University in Taiwan.

Dr. Shih-Jeih Fang is professor of organization and international business of National Cheng-Kung University in Taiwan. Dr, Fang has received numerous outstanding awards for his academic output in the areas of international business and knowledge management.