Knowledge Creation in Commitment-Based Value Networks in Multinational Organizations

Abstract

The digital networked economy has gone global and is reshaping traditional business models. “Free” and “open source” software (Raymond, 1999) along with more recent successes in the private, public and social sectors offer a vision of a radically new globally networked economy. This economy is characterized by new sources of value creation and competition as barriers to entry are lowered and substitution made easier. It also requires a more stratified, localized approach to the marketplace (Hart and Milstein, 2003) to meet more specialized demands from customers and the societies and environments within which they live. These challenges have implications for almost every aspect of a firm’s strategy and business model, especially its ability to leverage these networks to create value through innovation. Yet, most multinational firms are ill – equipped to take advantage of the knowledge creation derived from high value relationships with suppliers, complementors and customers. This chapter shows the importance of developing a corporate strategy which takes into account ways in which an innovation focus must integrate with installed business processes. This chapter considers the challenges associated with knowledge disclosure, diffusion and utilization (Snowdon, 2002; Spinosa, Flores and Dreyfus, 2001) across value networks and concludes that while successful examples exist in “Free” and “open source” software projects (Raymond, 1999) commercialization of innovation becomes more challenging when increasing levels of personal and financial commitment are required (Mauer, Rai and Sali, 2004). Choosing the most appropriate value networking strategy can have serious implications for success. This chapter adds to studies on knowledge creation and knowledge transfer in multinational corporations by proposing a conceptual model of commitment based value networking strategy. It is hoped this will contribute to future research by offering a theoretical foundation upon which this research may be based and explains why and under what conditions people in commitment based value networks share knowledge.