How do ownership type and knowledge transfer influence success of change? A study of transition economy firms

• Author: Thomas H Brush,Mona Bahl,Aldas Kriauciunas
• DOI: http://doi.org/10.1002/gsj.1367
• Date: 01 November 2020
• Published date: 01 November 2020

RESEARCH ARTICLE

How do ownership type and knowledge

transfer influence success of change? A study of

transition economy firms

Mona Bahl

1

| Aldas Kriauciunas

2

| Thomas H Brush

2

1

Management and Quantitative Methods

Department, College of Business, Illinois

State University, Normal, Illinois

2

Krannert School of Management,

Purdue University, West Lafayette,

Indiana

Correspondence

Aldas Kriauciunas, Krannert School of

Management, Purdue University, West

Lafayette, IN 47907–2056.

Email: akriauci@purdue.edu

Abstract

Research Summary: This paper investigates the joint

effect of ownership type and knowledge transfer on

success of change. For knowledge transfer, we include

transfer of both tacit and codified knowledge, and for

ownership type, we consider state owned, privately

founded, and privatized firms. We argue that incentives

and monitoring mechanisms will cause a given owner-

ship type to moderate the direct effect of knowledge

transfer on success of change. Using data from firms in

four transition economy countries, we find that the

relationship between knowledge transfer and success

of change is stronger for state owned firms compared

to privately founded and privatized firms.

Managerial Summary: The fundamental premise of

this paper is that effectiveness of knowledge transfer in

determining success of change is moderated by owner-

ship type of a firm. We argue that state owned, pri-

vately founded, and privatized firms have distinct

incentives and monitoring systems that will moderate

the direct relationship between transfer of both tacit

and codified knowledge on success of change. Our

empirical analysis shows that state owned firms experi-

ence a stronger relationship between transfer of knowl-

edge and success of change as compared to privately

founded and privatized firms.

Received: 3 July 2016 Revised: 27 August 2019 Accepted: 16 September 2019

DOI: 10.1002/gsj.1367

Global Strategy Journal. 2020;10:861–884. wileyonlinelibrary.com/journal/gsj ©2019 Strategic Management Society 861

KEYWORDS

incentives, knowledge transfer, ownership type, success of change,

transition economy

1|INTRODUCTION

We examine the joint effect of ownership type and knowledge transfer on success of change.

Ownership types are heterogeneous in incentive and monitoring mechanisms (Villalonga,

2000), learning potential, and organizational capabilities (Goldeng, Grunfeld, & Benito, 2008;

Villalonga, 2000). Past research indicates that ownership type influences firm outcomes such as

performance (Goldeng et al., 2008), competitive strategy (Vroom & Gimeno, 2007), financial

slack and R&D investment (Brush, Bromiley, & Hendrickx, 2000; Kim, Kim, & Lee, 2008). Miss-

ing from this past work is a consideration of how ownership type influences knowledge transfer

and subsequent success of change. Knowledge transfer is a strategic process that entails sharing

and disseminating knowledge that resides either in the minds of individuals and organizational

routines (as tacit knowledge) or in documents and manuals of an organization (as codified

knowledge) (Grant, 1996; Szulanski, 1996). Knowledge transfer is a source of competitive

advantage for firms (Argote & Ingram, 2000; Grant, 1996; Szulanski, 1996). Past research indi-

cates there are different learning and capability gaps in state and privately owned firms

(Goldeng et al., 2008; Uhlenbruck, Meyer, & Hitt, 2003), which can possibly be filled through

knowledge transfer. Further, previous studies show that organizational characteristics, such as

ownership types, not only serve as antecedents to knowledge transfer (van Wijk, Jansen, &

Lyles, 2008) but also define boundary conditions for knowledge transfer (Foss, 2007; Foss,

Husted, & Michailova, 2010). For these reasons, we examine the distinct effects of state owned

enterprises (SOEs), privatized and privately founded firms on the relationship between transfer

of codified and tacit knowledge and success of change.

We draw upon firm ownership and knowledge transfer literatures to develop our argu-

ments. We expect that incentives and monitoring mechanisms of respective ownership types

will influence managerial behavior towards knowledge transfer in affecting change. The core

reasoning is that the incentives and monitoring systems in SOEs are more favorable for trans-

ferring codified knowledge to implement change than in the other two firm types. Further, pri-

vately founded firms' incentive and monitoring systems are more conducive for transferring

tacit knowledge than in SOEs. However, privatized firms will have lost many of the benefits

from their previous state-ownership status, but will not have implemented the monitoring and

control systems found in privately founded firm (Filatotchev, Wright, Uhlenbruck, Tihanyi, &

Hoskisson, 2003; Rodriguez, Espejo, & Cabrera, 2007), thus hindering their ability to transfer

tacit knowledge. We hypothesize that SOEs will experience a stronger (i.e., more positive) rela-

tionship between transfer of codified knowledge and success of change. We also hypothesize that

while SOEs will experience a stronger relationship between transfer of tacit knowledge and suc-

cess of change compared to privatized firms, this relationship will be weaker as compared to

privately founded firms. All our hypotheses except one are empirically supported. Specifically,

in contrast to our prediction, we find the relative effect of the transfer of tacit knowledge on

success of change for privately founded firms are weaker than for SOEs.

We test the hypotheses using a unique data set from firms in four countries in Central and

Eastern Europe. Although SOEs, privatized and privately founded firms exist in many

862 BAHL ET AL.