Knowledge Management Capabilities for Steel Makers: A British-Japanese Corporate Alliance for Organizational Learning

Abstract

This paper draws on a detailed case-study of a technical alliance between British Steel Strip Products (BSSP) and a leading Japanese steel company which was established to help the UK producer improve its product quality, its production control management and its customer links with Japanese car company transplants in the UK. The study is one of a series of comparisons of leading UK and Japanese manufacturing companies, from the steel, aerospace, telecoms and chemical industries. The overall project has been funded under the ESRC Innovation Programme. Evidence of the success of the alliance is illustrated in a series of graphs depicting the reduction in scrap and steel losses from particular BSSP mill sites and clear improvements in quality and productivity levels at these sites. The case-study traces these improvements back to specific management practices transferred from the Japanese producer as part of the alliance. Detailed evidence comes from the activities of 'Task Teams' which were assembled, with engineers from the Japanese companies as team members, to identify key quality problems at the mill sites and initiate procedural changes to overcome them. Using this empirical foundation the paper explores and develops a number of key concepts believed to be increasingly important within the broader analysis of organisational change and innovation at the firm level. The corporate 'capabilities' approach and 'knowledge-based' theories of the firm are brought together to help identify differences between the two firms and explain the resulting effects on company performance. The main focus in on 'knowledge management practices', including practices and procedures governing project management, inter-divisional coordination, management roles, budgeting and resource allocation, networking and information exchange, human resource development, employee motivation and so on, in each of the firms. The study highlights important differences between the two firms in terms of how specialist knowledge is developed, deployed, integrated and exploited or 'leveraged' for manufacturing innovation (quality control improvements at the mill sites). This also encourages intra-firm knowledge flows between technical support departments, R&D and production sites. The case study of the alliance represents an unusually clear illustration of how some knowledge management practices are more difficult to transfer between firms because they are more deeply 'embedded', that is, highly dependent on broader contextual factors (knowledge resources, organisational structure, culture etc.,) to operate effectively. Broader changes are more difficult to implement and usually take much longer. Moreover, as shown by other studies looking at the transferability of Japanese management practices, some changes, though leading to performance improvements, are probably not possible and/or desirable. The study therefore provides some insights into the capacity for and limits of various kinds of organisational innovation in the British firm.