InnoSpring Knowledge Protection and Sharing in Global Networks Workshop:Sharing in Global Networks Workshop:

SOLUTIONS FOR KNOWLEDGE PROTECTION AND SHARING IN GLOBAL R&D

Thursday 14.2.2013, 12.00-16.00Teknologiateollisuus, 2nd floor meeting rooms, Eteläranta 10, Helsinki

InnoSpring: Knowledge Protection and SharingKnowledge Protection and Sharing in global value networks

• Tekes research project• Duration 1.7.2011-31.3.2013• Budget 580.000 € min 10% company funding required• Resources (main group from LUT/School of Business): Professor• Resources (main group from LUT/School of Business): Professor

Kirsimarja Blomqvist, PhDs Heidi Olander, Miia Kosonen and Paavo Ritala

• Extended group: Pia Hurmelinna-Laukkanen (University of Oulu), Snejina Michailova (University of Auckland Business School),

• 2 Master’s thesis workers part-time research assistant2 Master s thesis workers, part time research assistant• Chinese doctoral student Chunmei Gan as visiting researcher

Project collaboratorsProject collaborators

Project themesProject themes

1. HRM protection and related mechanisms in different markets (leader Heidi Olander)(leader Heidi Olander)

2. Knowledge sharing in online co-creation (leader Miia Kosonen)3 Teknologiateollisuus survey (leader Paavo Ritala)3. Teknologiateollisuus-survey (leader Paavo Ritala)4. Coopetition (leader Paavo Ritala)5 Knowledge protection and sharing in supplier relationships5. Knowledge protection and sharing in supplier relationships

(leader Kirsimarja Blomqvist)

KNOWLEDGE PROTECTION AND HUMAN RESOURCE MANAGEMENTRESOURCE MANAGEMENT

D.Sc. Heidi Olander

Why is HRM relevant in knowledge protection?

− People important for R&D-intensive firms− People make decisions whether to share− Mobile resource− Wider understanding needed – protection is not only IPRs− HRM as complementary mechanismp y

Seeking solutions to questions:Seeking solutions to questions:

1. How can HRM be used to prevent knowledge from leaking and leaving?2. Which effects does HRM-protection have on the willingness of employees

to protect (and share) knowledge to join and stay within the firmto join and stay within the firm

Risks related to human resources in R&D-intensive industries

• KNOWLEDGE LEAKING • Intentional or unintentional knowledge leaking out of the

company by an employee sharing company-confidential knowledge outside the firmknowledge outside the firm

• KNOWLEDGE LEAVING• Important knowledge residing within the employees, leaving with

a leaving employee (to retire, to start up own business, to work g p y ( , p ,in another industry, to work for a competitor)

HRM protection in relation to other pappropriability mechanisms

APPROPRIABILITY MECHANISMS

FORMAL MECHANISMS(based on legislation)

INFORMAL MECHANISMS(non- legal)

IPRs CONTRACTS HRM TACIT NATURE OFKNOWLEDGE

LABORLEGISLATION

PRACTICAL PROTECTION

LEAD TIME

TRADE SECRETS

Adapted from Olander (2011) Formal and informal mechanisms for knowledge protection and sharing, Diss.

Decreasing leaking and leaving by HRM

KNOWLEDGE LEAKING KNOWLEDGE LEAVINGHRM: HRM:

Recruiting (selecting the right people)

Training/education

Recruiting (selecting employees who are in for long-haul)

Retaining by Training/education Monitoring mobility Monitoring communication Restricting access

Retaining byIncreasing commitment e.g. by

- building trust - appreciating- rewarding- career paths- personal development

Capturing knowledge into databases Capturing knowledge into databases Enabling knowledge diffusion by open

firm-internal knowledge sharing and job rotation

Handling retiring and changing jobs

Adapted from Olander (2011) Formal and informal mechanisms for knowledge protection and sharing, Diss.

Empirical examinationEmpirical examination

Qualitative case study, with semi-structured theme interviews

Two R&D intensive MNCs• Two R&D intensive MNCs

• Interviews on 4 levels:Interviews on 4 levels:1. Strategy2. Manager/Expert3. Team leader4. Operative

• 50 individual interviews conducted in Finland, China and the US

Special features about HRM protection – findings from Finland*

− A culture of invidualism

Freedom to decide on one’s own makes decision making faster but riskier− Freedom to decide on one s own – makes decision making faster but riskier

− In traditional industries turnover relatively low

− The more turbulence in the industry, the more turnover

− Commitment often based on • family-like workplace with good atmosphere or • loyalty to professionloyalty to profession

• * results based the Finnish data have been published in: Olander et al. (2012) Human resources - invaluable inventors or weakest links, ISPIM Conference, Barcelona, Spain, 17-20 June, 2012

Special features about HRM pprotection – findings from US

− No (labour legislation related) employment contract Pronounced knowledge leaving i krisk

− Appreciation and sense of belonging notably important

− People like to be proud of who they’re working for and express it openly

− Career less important than “good place to work in” and “good atmosphere”

Special features about HRMSpecial features about HRM protection – findings from China

− Leaving is related to improving one’s standard of living

− More anchors, but also more opportunities to change

− Rewarding and promotions perceived ”deserved” happeningRewarding and promotions perceived deserved happening

− Open knowledge sharing with friends is natural

− Clear commands needed, yet informality appreciated

− A common knowledge risk is a combined one: an employee leaves with companyA common knowledge risk is a combined one: an employee leaves with company knowledge to start up own firm

Solutions for knowledge leaving risksg g

Risk / deficiency HRM mechanisms Solutions

Employees’ mobility RecruitingIncreasing commitmentIncreasing loyalty to profession

• Selecting for long‐haul• Care taking (esp. China), listening, appreciating, creating trust and good atmosphereprofession

Developing rewardingpracticesDeveloping career paths

good atmosphere• Challenging, giving freedom and responsibility• Developing clear material andDeveloping career paths Developing clear material and immaterial reward systems

Retiring of talent / Unexpected occacions

Handling retiring and changingjobs

• Transfer individual knowledge into team knowledgeUnexpected occacions jobs

Knowledge diffusionteam knowledge• Early succession planning & orientation• Mentoring – bringing up experts

Difficulties in attracting new top 

Brand marketingCareer marketing

• Enhancing visibility• Working closely with unis

talent • Communicating characters thatpotential employees appreciate

Solutions for knowledge leaking risksSolutions for knowledge leaking risks

Risk / Deficiency HRM‐mechanisms Solutions

Unconsciousness of the importance of protection

RecruitingEducating

• Evaluating knowledgeability• Educating on the severity of knowledge leaks, code of conduct• A shared vision of

• what we know – what is critical• what we need to keep confidential

i i f hi h h• Raising awareness from high enough• Leading by example, not have‐to but want‐to

Missing guidelines Creating shared • Discussing ground rules on new technologiespractices and publishing schedules

• Explicit policies for different collaboration parties: why, what and how to share

Culture‐related veryopen knowledgesharing (e.g. China)

RecruitingEducatingAccess restrictions

• Evaluating knowledgeability• Demonstrating why confidentiality is vital• Limiting sharing, using restrictions• Justifying restrictions: ”Why do we do this and• Justifying restrictions:  Why do we do this, and why it is extremely important to us?”

ConclusionsConclusions

1) Leaking related risks relate mainly to new employees and non-intended behavior1) Leaking related risks relate mainly to new employees and non-intended behavior(HRM – Education) or frustrated employees (HRM – Commitment factors)

− Most of the leaks could be prevented by increasing the level of awareness andMost of the leaks could be prevented by increasing the level of awareness and educating people both formally and informally

2) Leaving relates to any group of employees, but mostly on relatively new employees) g y g p p y , y y p y

− Cannot be fully prevented, but risks can be reduced from recruiting to retirement

− Different cultures call for different kinds of management styles and adapting to the local culture in terms of formality/informality of relationships

“We apply western style, but with hints of Chinese philosophy”pp y y , p p y

− Combining forces from different functions and levels of the company needed: strategy, HR, information security, team leaders, operative level employees should gy y p p yspread the same message

CROWDS & COMMUNITIES IN GAININGCROWDS & COMMUNITIES IN GAINING NEW IDEAS

D.Sc. Miia Kosonen

Why Online Co Creation?Why Online Co-Creation?

”Rebirth of Legos”  +20 % in media sales More than 18 500 ideas, gNew segments Meeting customer needs

Gaining publicity

,of which 527 implemented

Increased sales

Traffic up to 600 % 134 submissions of which 6 d tMore followers

Increased SE visibility

new products

+17 % in sales

+37 % in new product sales

Online Co Creation: ConceptsOnline Co-Creation: Concepts

highOpen innovation

Using external and internal ideas and knowledge

high

Using external and internal ideas and knowledge

CO CREATION

Online communitiesOnline panels

CO-CREATIONDeveloping and improving products and services in collaboration with• companies

i tit ti

Virtual design centersTesting and prototyping

• institutions• customers• end users/consumers

Idea crowdsourcing

User generated content

lowcontent

Inter-

offlineonline activity

Online Community ModelsOnline Community Models

Users and customersCompany …within customer-company

e.g. Nokia IdeasProject,Dell IdeaStorm

interface

Company…within independent communities

User community e.g. Linux or Apache Community

…within a single community of users

Company

users

CONTENT RULE: 1 % CREATES, 9 % EVALUATES AND 90 % CONSUMES

Crowdsourcing ModelsCrowdsourcing Models

Own platform Intermediary

ContestInnoCentive

SAPiensBombardier YouRail

EventIBM Innovation Jam Kickstarter

Community

Dell IdeaStormNokia IdeasProject

GrabCAD

y

www.ideasproject.com

Case IdeasProject – What Drives User Participation?

Expected social & learning benefits

Recognition from hosting company

Trust in the

INTENTION TO SHARE KNOWLEDGEhosting firm

Easiness of use

KNOWLEDGE SHARING BEHAVIOUR: ideas and comments

Support for knowledge ideas and commentsintegration

Based on a web survey and 283 responses from y pChinese IdeasProject users, effective sample 244.

Lessons learntLessons learnt

1. If you have a true community, focus on community-level attributes and not only on individual contributors!

2. Inspiration drives participation – the hosting firm as a role model

3. Altruism beats opportunism: sociability and ’love of community’ are valuable also online

4. Willingness to learn new drives participation in professional communities

5. More explicit linkages with experts and professionals needed to support knowledge integration

Three paths into successful online communities

Shared professionalidentity Learning new Active participation

Brandidentification

Trust and recognition SOVC Active

participation

Need for socioemotional

support

Perceivedreciprocity SOVC Active

participation

Lessons for Community ManagementLessons for Community Management

NETWORK LEVELNETWORK LEVEL

• Building partnerships• Decomposition of valuable

knowledge

INDIVIDUAL LEVELCOMPANY LEVELEmpathic e tro ert good listener• Empathic, extrovert, good listener,

dedicated, passionate –Giving face to the brand

• Aligning OCs into strategy• Co-creative thinking/mindset• Resourcing in OC management

F ilit ti k l d • Communication, organizing, good judgment, analytics, coaching –Making the community tick

• Facilitating knowledgeintegration and use

On community managers’ qualities, see www.somemonitor.com, mashable.com/2013/01/27/community-manager-qualities/ , http://www.tut.fi/soita, Twitter: #cmadFI

OPENNESS AS A SOURCE OFOPENNESS AS A SOURCE OF COMPETITIVE ADVANTAGE IN BUSINESS

ECOSYSTEMS – CASE NOKIAECOSYSTEMS CASE NOKIA

D.Sc. Paavo Ritala

IN-LOCATION ALLIANCE

Case key factsCase key facts

• In Location Alliance• In-Location Alliance• Aims to facilitate indoor-positioning technology and business• Initiated by Nokia, launched officially in August 2012• At start there were 22 members from leading global ICT firms, after

that the amount of members has been growing

• Data collection• Interviews with key persons within Nokia and partner companies

C tl 5 i d th i t i d t d 4 5 l d d i• Currently 5 in-depth interviews conducted, 4-5 more planned duringFebruary-March

• Key focuses in data collection and analysis• Coopetition (collaboration between competing firms)• Building and managing a business ecosystemBuilding and managing a business ecosystem• Value creation and appropriation in multi-actor environment

Openness as a source of competitive advantage?

• ”Openness” in strategy and management research• Openness in strategy and management research• Bilateral joint ventures, alliances (starting from 70s – 80s)• R&D alliances & consortiums

C ll b ti i ti i ti t k l t k• Collaborative innovation, innovation networks, value networks• Chesbrough (2003) open innovation & open business models• Business and innovation ecosystems

• Risk perspectives to openness• Knowledge spillovers, knowledge leakage, losing core competences –>

increased transaction costs• Needs to be tackled with certain organizational forms & protection

mechanisms

• Benefit perspectives to openness• Inbound and outbound open innovation• Knowledge acquisition, transfer & sharing• Market creation & expansion through technology and platform sharing

Key implications & lessons learntKey implications & lessons learnt

1) Make it big at the very beginning

2) If it increases the size of the markets, let your competitors win too

3) Prepare for interdependency risks and controversies

4) Push for firm-specific advantages of your own at the same time

Make it big at the very beginningMake it big at the very beginning

”…we would rather have a small piece of a big cake, than a major slice of a small cake”g j

”…no-one is excluded from this…”

”…the fundametal idea is to involve players p yfrom each part of the presumed value chain…”

”…it has to be open, since if we had a closed system, or multiple competing systems, thesystem, or multiple competing systems, the market growth will be slower”

Make it big at the very beginningMake it big at the very beginning

If it increases the size of themarkets let your competitorsmarkets, let your competitors win too

”…in order to get enough users, each important competitor needs to be on board”important competitor needs to be on board

” the industry alliance needs to have…the industry alliance needs to have enough horizontal players…”

”…it doesn’t fly, if technologies and solutions are not interoperable.”

If it increases the size of themarkets let your competitorsmarkets, let your competitors win too

Prepare for interdependency risks and controversies

”…everyone is dependent of everyone, and there may be disturbances which are unexpected…”

”…there are much more parameters, and related to pthose parameters is uncertainty and risk factors…”

”There is one, potentially slowing issue, in building this type of open ecosystem that it takes more time. Th t i l d ith h iThere are more actors involved with whom issues need to be combined together”

Prepare for interdependency risks and controversies

Push for firm-specific advantagesof your own at the same time

”We are pushing actively, and therefore we p g yshould be able to keep the advantage”

”…where to put the borders, what is proprietary and what is open, is actually the l h diff ti ti t k l ”place where differentiation takes place”

”If you have a bad product, there is no use of going into the open markets”

Push for firm-specific advantagesof your own at the same time

KNOWLEDGE SHARING & PROTECTION IN FINNISH TECHNOLOGY INDUSTRIESIN FINNISH TECHNOLOGY INDUSTRIES

I i ht f t i t diInsights from two on-going studies

D.Sc. Paavo Ritala

Research processResearch process

• Structured survey questionnaire on knowledge sharing &• Structured survey questionnaire on knowledge sharing & protection and related themes• Mainly 7-point likert scales or categorical variables

• Aims for statistical, empirical analysis• Descriptive, state-of-the-art –type of resultsDescriptive, state of the art type of results• Mean and group comparisons• Regression analyses, causality testing

• Data collection• In June 2012, Questionnaire was sent to the members of Finnish,

Technology industries• Minimum of 10 persons per firm, 1273 CEOs• Responses received from 150 firms response rate of 11 8 %Responses received from 150 firms, response rate of 11,8 %

Industries in the dataIndustries in the data

Information technology industries

Electronics and

technology industries13 %

Electronics and the electrotechnical

industry14 %

Metals industry and mechanical engineering

56 %

Consulting engineering17 %

Selected descriptive statisticsSelected descriptive statistics

Indicator Mean Median Minimum Maximum

S l ( ) 42 063 000 7 686 100 192 000 1 984 537 000Sales (euros) 42 063 000 7 686 100 192 000 1 984 537 000

Personnel 148,3 44 10 5689

Firm age(years)

18,9 17 1 116(y )

R&D % of sales2009*

5,3 % 3 % 0 % 80 %

R&D % f l 5 8 % 3 % 0 % 80 %R&D % of sales2011*

5,8 % 3 % 0 % 80 %

*three firms with over 500 % R&D intensity excluded

Industry key indicators for knowledge sharing & leaking

Knowledge sharing internallyKnowledge sharing internally• Highest at IT industries (5.4)• Lowest at metal industries (4.2)

Knowledge sharing externally• Highest at electronics industries (4 2)• Highest at electronics industries (4.2)• Lowest at metal industries (3.2)

Accidental knowledge leaking• Highest at consulting engineering industries (2.8)• Lowest at electronics industries (2 1)Lowest at electronics industries (2.1)

Deliberate knowledge leakingHi h t t l t i i d t i (2 1)• Highest at electronics industries (2.1)

• Lowest at IT industries (1.4)

Industry key indicators for y yknowledge protection mechanisms

Industry Tacitness IPRs Employee Lead time Preventing Preventing Secrecylegislation knowledge

leavingknowledgeleaking

Metals 4,4 4,1 3,8 5,2 5,1 4,5 4,9

Electronics 4,9 4,4 3,6 5,2 5,5 4,6 5,2

IT 5,1 4,2 3,4 5,3 6,0 5,5 5,7

Consulting 4,4 3,8 3,1 5,1 5,3 4,7 4,8

Study 1: Knowledge sharing, knowledge leaking, and innovation performance*

Background / motivation for the researchBackground / motivation for the research• Firms increasingly share knowledge with their external stakeholders• This can lead to increased innovation performance due to increased

two way flow of ideas (reciprocity) and knowledge exchangetwo-way flow of ideas (reciprocity) and knowledge exchange• However, there are risks related to knowledge leaking when

knowledge is shared externally

Research aim / question• To study how accidental and deliberate knowledge leakage affectsTo study how accidental and deliberate knowledge leakage affects

the possible benefits of knowledge sharing on innovationperformance

Methods• Linear regression analysis with moderator testing

*accepted for presentation at ISPIM Conference Helsinki, June 2013

Study 1: Knowledge sharing, knowledge leaking, and innovation performance

Sharingknowledge with 

externalInnovationperformance

+

partnersp

- -

Accidentalknowledgeleakage

Deliberateknowledgeleakage

• ImplicationsSh i k l d i h l i b fi i l f h• Sharing knowledge with external partners is beneficial for the overall innovation performance of the firm

• This effect is more positive when knowledge is not leakedE h i h ld b t t d t id t l d d lib t• Emphasis should be put to deter accidental and deliberateknowledge leakage

Study 2: Open knowledge sharing andradical innovation

Background / motivation for the researchBackground / motivation for the research• Knowledge shared externally can either be open or more focused

towards only appropriate persons, teams, and functions• While openness may be beneficial, in terms of radical innovation

business critical knowledge should not be shared too extensively

Research aim / question• How does focused / open sharing of business critical knowledge to

the external stakeholders affect the amount of radical innovation ofthe external stakeholders affect the amount of radical innovation of the firm?

MethodsMethods• Regression analysis with mediation testing (Baron & Kenny)

Study 2: Open knowledge sharing andradical innovation

Externalopenness of 

business critical

Externalopenness of 

business critical

More accidentalleakage of 

b i iti l

More accidentalleakage of 

b i iti l

Lower radicalinnovation

Lower radicalinnovation

+ -

knowledgesharing

knowledgesharing

business criticalknowledge

business criticalknowledge performanceperformance

• Implications• ”Uncontrolled” external openness to knowledge sharing leads to

more accidental leakage which lowers radical innovationmore accidental leakage, which lowers radical innovationperformance

• Knowledge sharing should be more focused, especially in areasthat aim for radical developmentsp

• If knowledge needs to be shared, emphasis should be put to mechanisms, practices and organizational culture that canprevent knowledge leakage, or conceretely secure the radicalp g g yinnovations otherwise (e.g. IPRs)

Thank you for your interest!Thank you for your interest!

P j t M H idi Ol dProject Manager Heidi Olanderheidi.olander@lut.fi +35840 833 5805

Paavo Ritalaritala@lut.fi+35840 833 5852

Miia Kosonen

Meet us at the ISPIM Conference!

”Innovating in Global Markets:miia.kosonen@lut.fi+35840 480 9428

Innovating in Global Markets: Challenges For Sustainable Growth” Helsinki, 16-19 June 2013

Project Leader Kirsimarja Blomqvistkirsimarja.blomqvist@lut.fi+35840 755 1693

http://conference.ispim.org/

Find our presentation slides at: www.lut.fi/web/en/tbrc/innospring-knowledge-protection-and-sharing