TACIT KNOWING THEORY AND KNOWLEDGE-BASED COMPETITION: A GROUNDED THEORY LOOK AT HIGH-TECH KNOWLEDGE STRATEGIES by JOSEPH G. GERARD (Under the Direction of Ann K. Buchholtz) ABSTRACT This dissertation serves three major functions in strategic management literature. First, Michael Polanyi’s philosophy of knowledge is reexamined and applied to organizational assets and their use under strategy’s knowledge-based and resource-based views. Second, theory- building takes place using exploratory and explanatory qualitative analysis to inform management theory. Third, a quantitative content analysis is performed to compare low- and high-performing organizations’ sustained competitive advantage evaluated through Barney’s (1986; 1991) indicators of sustained competitive advantage value, rareness, inimitability, and nonsubstitutability. Specifically, six hypotheses are tested using the Wilcoxon-Mann-Whitney non-parametric statistical test for paired rankings. Strong support for the notion of sustained competitive advantage and difference between strategic language content between low- and high-performing organizations is found. This study provides one of the first tests of some basic assumptions of knowledge- and resource-based views as well as on of the first tests of sustained competitive advantage. INDEX WORDS: Explicit and tacit knowledge, knowledge-based competition, knowledge- based strategy, sustained competitive advantage, high-tech organizations, value, rareness, inimitability, nonsubstitutability, knowledge-based view, resource-based view, Polanyi, epistemology. TACIT KNOWING THEORY AND KNOWLEDGE-BASED COMPETITION: A GROUNDED THEORY LOOK AT HIGH-TECH KNOWLEDGE STRATEGIES by JOSEPH G. GERARD B.A., The California State University, Los Angeles, 1990 M.B.A., Arizona State University, 1997 M.I.M., American Graduate School of International Management, 1998 A Dissertation Submitted to the Graduate Faculty of The University of Georgia in Partial Fulfillment of the Requirements of the Degree DOCTOR OF PHILOSOPHY ATHENS, GEORGIA 2003 © 2003 Joseph G. Gerard All Rights Reserved ii TACIT KNOWING THEORY AND KNOWLEDGE-BASED COMPETITION: A GROUNDED THEORY LOOK AT HIGH-TECH KNOWLEDGE STRATEGIZIES by JOSEPH G. GERARD Major Professor: Ann K. Buchholtz Committee Members: Allen C. Amason Melenie J. Lankau Marcus M. Stewart Karen E. Watkins Electronic Version Approved: Maureen Grasso Dean of the Graduate School The University of Georgia December 2003 iii DEDICATION This work is dedicated to my family: Reena Elizabeth Lederman Gerard who has been my partner in many adventures including Seattle, The Wedding, The Honeymoon, Phoenix, Marriage (in progress), The In-Laws, Families of Origin, Childbirth, Parenthood, Graduate School, Comprehensive Exams, and The Dissertation Aidan Gabriella Lederman Gerard who has taught me more at four years of age than any other individual I have met. She’s funny, intelligent, sensitive, caring, and strong – and a great daughter. Dulce because she’s such a good dog and the best running partner a man could ask for. She’s very insistent. iv ACKNOWLEDGEMENTS Beyond my family I owe a great personal and professional debt to my friends and colleagues from the Management Department at The University of Georgia. My “dream committee” was as great as it was not just because they were a diverse group of thinkers from different academic backgrounds but also because they are quality people who were generous with their time. Ann, my advisor, dissertation chair, mentor, role model, and friend is unlike anybody I know. Ann talked me in to focusing on a topic I absolutely loved instead of taking the safe and “easy” path. She was the reason my dissertation happened in its current form with a topic that sat so well with me. Allen’s professional advice was always on-the-mark. Whether saying how to make a presentation more impactful or pointing out the two or three things an essay absolutely needed, his economically short, sweet, and to-the-point professional advice made quite an impact. Allen’s expert and timely use of other more colorful verbiage too was the best thing since sliced-bread or beer-in-a-can. Melenie and Marcus brought an organizational behavior mind-frame to my dissertation that ended up very strongly influencing the design of the interview protocol as well as its qualitative and quantitative content analysis. Both Marcus and Melenie also were very generous with their time spent helping me to understand survey-based research which did not make it into the dissertation. I spent about six months bouncing between their two office doors. While all my committee members made their mark on the dissertation, Karen’s input early on set us all down an interesting path that we, in the management department, would in all likelihood not have lead toward qualitative data collection and the critical incident technique. She provided yet another unusual twist to the dissertation that bore unexpected fruit. v I have to thank all of The Terry College’s Management Department Ph.D. students for doing what we do best - suffering and losing what little sanity we had upon entrance to the program. I’ve heard that the goal of really good programs is to “break” the minds of their students “because once they’re broke, they have more room for other stuff!” Thankfully, none of us had to go it alone. Physical and mental health begin to return between the acceptance of the first position and the approach of graduation. Special thanks to everybody for those little things that made the program better: x Bryan Shaffer - for Freecell, a great Lumburg impression, and outspending me at Starbucks. x Mark Ciavarella - for data collection, putting your foot down on Compadres, your great Amish sense of humor, and never being too humble. x Hettie Richardson - for making us all look good by readjusting that bar. Hey, like we needed the stretch! x Matt Rutherford - for your meat-and-potatoes logic, teaching evaluations that couldn’t be beat…really, your passion for Barberitos burritos, and looking nonchalant no matter what. x Bryan Dennis - for spinning and smoking, breaking bones and tearing cartilage and getting back up again. Never say never again! You’re the older version Sean Connery of the Ph.D. program. x Bob Carton – for Thanksgiving dinners, The Big Green Egg, and two porpoises in a corral , one with a top hat and the other wearing a Stetson. x Carl Betterton – for the dustless office, desk feng shui, and an eye for quality. Thanks to all the Terry College’s Management Ph.D. students for your help. I sure did miss being around my last year when I was exiled to the Bank of America building. Thank you Dana and Roscoe for looking out for the “little people.” vi TABLE OF CONTENTS ACKNOWLEDGEMENTS.............................................................................................................v LIST OF TABLES.......................................................................................................................... ix LIST OF FIGURES ......................................................................................................................... x CHAPTER 1. INTRODUCTION TO THE DISSERTATION...........................................................................1 2. KNOWLEDGE AND THE THEORY OF TACIT KNOWING: A NON- DICHOTOMOUS PERSPECTIVE FOR KNOWLEDGE-BASED ORGANIZATION AND MANAGEMENT THEORIES...............................................................................................5 Polanyi and Tacit Knowledge............................................................................................. 6 Redefining Tacit Knowledge ...............................................................................................7 Introducing the Tacit Knowing Framework ......................................................................10 Applying the Framework to a Mysterious Face.................................................................15 References..........................................................................................................................26 3. BUILDING THEORY IN KNOWLEDGE-BASED COMPETITION: A RESOURCE- BASED LOOK AT EXPLICIT AND TACIT KNOWLEDGE IN ORGANIZATIONS .............33 Theoretical Background.....................................................................................................37 Organizational Knowledge and Sustained Competitive Advantage..................................47 Methodology......................................................................................................................57 Results................................................................................................................................65 Exploratory Findings .........................................................................................................67 Explanatory Findings.......................................................................................................101 Quantitative Content Analysis .........................................................................................154 vii Hypothesis Tests ............................................................................................................. 162 Quantitative Content Conclusions .................................................................................. 167 References........................................................................................................................168 4. DISCUSSION..........................................................................................................................177