Sharing and creating knowledge

As product life cycles get shorter and competitors rapidly imitate successful innovations, maintaining a competitive advantage in today’s global business environment requires effective knowledge development and sharing. In this chapter, we describe how to manage knowledge and enhance innovation in the multinational firm, building on the case of the German company Merck and its global leadership in liquid crystal technology for TV displays and monitors. We first discuss how to facilitate knowledge sharing across geographically dispersed units, where success depends on cross-unit social networks, organizational values of collaboration and support, and global mindsets among employees. We also review necessary coordination mechanisms and a range of people management practices that enhance knowledge sharing. We then turn to explore the knowledge creation that is necessary for innovation, and how people management can support acquiring knowledge from customers, partners, and other external groups. Sharing knowledge across units, acquiring knowledge from outside the firm, and recombining new and existing knowledge are all elements of corporate innovation. In the final part of this chapter, we examine how international firms can build innovation capability - they need to be ambidextrous, and to learn locally while acting globally.