The ability to identify and transfer knowledge within a firm is emerging as one of the most important management issues of the late 1990’s. Evidence from fact-based management methods such as TQM, benchmarking, and process reengineering suggests that there are often surprising performance differences between units within firms. In this article, Szulanski seeks to explain why companies find it difficult to transfer knowledge, in this case "best practices," internally.

A "best practice" is one that is performed in a superior way in some part of an organization and is deemed better than alternate practices used by or known to the rest of the company.

Stages in the Transfer Process

1. Initiation - include all events that lead to the decision to transfer the practice such as discovery of both the need and the knowledge within the firm, can take months of information collection and evaluation
2. Implementation - resources flow between recipient and the source, social ties formed, efforts to make knowledge transfer less threatening to recipient. etc.
3. Ramp-up - begins when recipient starts using transferred knowledge, much time spent identifying and resolving unexpected problems, performance gradually improves
4. Integration - begins after the recipient achieves satisfactory results with the transferred knowledge and the use of the knowledge becomes routinized, the new practice loses its novelty and becomes institutionalized

There are many factors that influence the difficulty of knowledge transfer ("internal stickiness). They fall into four categories. To test the relative influence of these factors, the author analyzed data from eight companies that describe 122 best practice transfers. (The three factors that the author found to be most important are highlighted and boxed)

1. Characteristics of the knowledge transferred
   • Some knowledge is easier to transfer than others. It’s difficult to transfer practices that have a high proportion of undefinable knowledge due to the tacit human skills involved, collective nature of the information, or idiosyncratic features of the context in which the knowledge is put to use (that is, when there is ambiguity about why or when a practice works well).

   • Knowledge that does not have a proven track record will be harder to "sell"

2. Characteristics of the source of knowledge
   • Lack of motivation - may fear losing ownership, privilege, resent not being rewarded for sharing success

   • Not seen as reliable, trustworthy, knowledgeable

3. Characteristics of the recipient of knowledge
   • Lack of motivation - the "not invented here" syndrome

   • Lack of ability to value, assimilate and apply new knowledge successfully to commercial ends (called "absorptive capacity").

   • Lack of persistence to make it work instead of giving up and reverting to status quo (called "retentive capacity")

4. Characteristics of the context
   • Fertile versus barren organizational context - a fertile context is one that facilitates the development of transfers while a barren one hinders the gestation and evolution of transfers. Some factors that differentiate the two are their formal structures and systems, sources of coordination and expertise, and how they frame behaviors.

   • Arduous relationship between unit - if the communication between the source and recipient units is fluid and the overall relationship is "intimate," the transfer will go more smoothly than if the relationship is laborious and distant.

Summary and Implications

The three factors the author found to be the greatest impediments to internal transfer, causal ambiguity of the knowledge itself, lack of absorptive capacity of the recipient, and an arduous relationship between the source and recipient, are all knowledge-related barriers. In contrast, conventional wisdom on why knowledge is hard to transfer within firms has focused almost exclusively on motivational barriers such as interdivisional jealousy, lack of incentives, lack of buy-in, resistance to change, lack of commitment, etc. The results of this study indicate that the difficulty firms have in transferring knowledge may be less because organizations do not want to learn and more because they do not know how to. Therefore, firms may want to consider devoting resources to develop the learning capacities of organizational units, fostering closer relationships between units, and systematically understanding and communicating practices.