Int. Journal of Business Science and Applied Management, Volume 17, Issue 3, 2022

How to Transfer Operational Capabilities in Multinational

Companies without Disclosure: Optimizing Decentralization

and Information Richness in Times of Digitalization.

Stefan Sommer

Chair of General Business Administration & Int. Automotive Management, University of Duisburg-

Essen

Adress: Lotharstraße 1, 47057 Duisburg

Tel: +49 203 379 1055

Email: stefan.sommer@uni-due.de

Abstract

Multinational companies simultaneously try to facilitate the internal transfers of operational capabilities

without disclosing them to external stakeholders. To mitigate this tension, the decentralization of the

decision-making and information richness of communication mechanisms are balancing parameters

that can be regulated appropriately. Since digitalization has changed the coordination and interaction in

intra-firm transfers, both balancing parameters need to be optimized. The present study examines how

to adjust decentralization and information richness in times of digitalization by drawing on an

exploratory single-case study approach in a German industry company. This research identified six

sub-parameters set differently within the company’s digital collaboration platform and video

conference technology network.

Keywords: operational capabilities, capability transfer, capability protection, decentralization,

information richness, digitalization, digital collaboration platform, video conference technology

Stefan Sommer

1. INTRODUCTION

Multinational companies (MNCs) generate competitive advantages (Argote & Fahrenkopf, 2016) if

there are many intra-firm flows of capabilities (e.g. De Castro & Aquino, 2021; Gaur, Ma & Ge, 2019;

Prompreing & Hu, 2021), or, more precisely, operational capabilities (Helfat & Winter, 2011; and similar

Teece, 2014). These are firm-specific sets of skills, processes, and routines (Cepeda & Vera, 2007) based

on valuable, rare, inimitable, and non-substitutable (VRIN) resources (Barney, 1991). However, these

capability transfers within MNCs are facing a “paradox” (Coff, Coff & Eastvold, 2006): on the one hand,

the companies try to facilitate the transfers of operational capabilities within their organization (e.g.

Burmeister, Lazarova, & Deller, 2016), but on the other hand, they are careful to avoid disclosure to

external parties (Contractor, 2019; Ritala & Stefan, 2021), e.g. when underlying skills, routines and

resources become transparent to rivals (Hurmelinna-Laukkanen, 2011; Ralston & Blackhurst, 2020).

To mitigate this tension, (I) the level of decentralization of decision-making (Sumelius & Sarala,

2008) and (II) the information richness of communication mechanisms (Daft & Lengel, 1986) are

considered to be balancing parameters, whereby (I) describes the autonomy of the transfer participants

in their actions (Molina, Lloréns-Montes & Ruiz-Moreno, 2007) and (II) refers to the ability of the media

channel to transmit information and effectively change the understanding of the receivers (Shaw, Chen,

Harris & Huang, 2009).

As digitalization reduces traditional physical boundaries and interdependencies between

organizational units, and standardizes communication interfaces (Cano-Kollmann, Cantwell, Hannigan,

Mudambi & Song., 2016; Culot, Orzes, Sartor & Nassimbeni, 2020), it enables more scope for interaction

and coordination in the transfer of operational capabilities (Eisenman & Paruchuri, 2019; Hagiu &

Wright, 2015). In doing so, digitalization also intensifies the paradox between simultaneously facilitating

the transfer of operational capabilities and their protection from disclosure (Thalmann, Manhart,

Ceravolo & Azzini, 2014), thus shifting the focus to the optimization of decentralization of decision-

making and the information richness of communication mechanisms.

Some scholars have attempted to examine the advantages and disadvantages that come with

leakages of capabilities to externals (Inkpen, Minbaeva and Tsang, 2018; Wadhwa, Freitas & Sarkar,

2017). Other studies investigated how the internal use of digital tools enhances or threatens the

codifiability of knowledge and capabilities (Coff et al., 2006; Berraies, 2019; Chatterjee, Chaudhuri,

Vrontis & Piccolo, 2021), or they focused on the paradox from the perspective of inter-organizational

transfers (Contractor, 2019; Ritala & Stefan, 2021), and were anchored, for example, in open innovations

research (e.g. Lauritzen & Karafyllia, 2014). However, these studies do not open the black box of the

balance between facilitation and protection of intra-firm capability transfers, nor do they provide

guidance on how digital transfer mechanisms need to be optimized. Therefore, current literature remains

on a higher level of consideration in the context of the trade-off, which neglects the influencing factors

of decentralization of decision-making and information richness in times of digitalization. This raises the

following research question, both theoretically and practically.

RQ: How do MNCs optimize (I) decentralization of decision-making and (II) the information

richness of communication mechanisms to simultaneously facilitate and protect transfers of operational

capabilities in times of digitalization?

For this purpose, a German-headquartered multinational industrial product company, characterized

by high rates of capability transfer flows between organizational units, was analyzed in a single-case

study (Zhao & Anand, 2009).

The article is organized as follows. Section 2 presents a literature review of the transfer of

operational capabilities, decentralization of decision-making, and the information richness of

communication mechanisms. In addition, the influences of digitalization on intra-firm transfers of

capabilities are discussed. Then, Section 3 explains the research framework applied to investigate the

research question. Section 4 examines the research methodology used in this study. This is followed by

a presentation of the findings in Section 5, and the subsequent discussion in Section 6. This article ends

with a conclusion (Section 7) including theoretical and practical contributions as well as the limitations

of the study.

2. LITERATURE REVIEW

2.1. Transfer of Operational Capabilities

In the literature, operational capabilities are seen as a subset of frequently used organizational

capabilities and thus share a large overlap in attributes (Argyres, 2021; Sheehan & Foss, 2017).

Operational capabilities, in consequence, represent “information-based tangible or intangible processes

that are firm-specific and are developed over time through complex interactions among the firm’s

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resources” (Amit & Schoemaker, 1993, p. 35). Ideally, operational capabilities can generate competitive

advantages when they are based on valuable, rare, inimitable, and non-substitutable (VRIN) resources

(Barney, 1991) such as knowledge (Papa, Dezi, Gregori, Mueller & Miglietta, 2018; Proff 2005).

Operational capabilities can be transferred between organizational units such as the headquarters

and subsidiaries (Jankowska, Bartosik-Purgat, & Olejnik, 2020; Law & Kamoche, 2017) or peer

subsidiaries of an MNC and have the “ability to globally leverage dispersed subsidiary specific

advantages and to generate new knowledge through a global synthesis of dispersed knowledge” (Keupp,

Palmié & Gassmann, 2011, p.214). The management is interested in facilitating these transfers, because,

on the one hand, the operational capabilities are bound to complex routines and processes (Bloodgood,

2019; Inkpen, 2008), which means a separation and documentation (“codification”, Simonin, 1999;

Zander & Kogut, 1995) is difficult (Windsperger & Gorovaia, 2011), or the organizational structures are

too centralized concerning the subsidiary’s management transfer decisions (Nesheim & Gressgard, 2014).

On the other hand, MNCs also try to avoid operational capabilities becoming transparent to external

parties in the case of spreading the transfer to a large number of receivers (Ritala & Stefan, 2021). Hence,

there is a tension between facilitating the transfer of operational capabilities within the company (e.g.

Burmeister et al., 2016) and protecting them from disclosure to external stakeholders (Contractor, 2019),

which is described as a “paradox” (Coff et al., 2006), and cannot be mitigated in favour of a clear decision

for one of the two sides.

However, it can be seen from the literature that there are parameters, such as decentralization of

transfer decisions and the information richness of communication mechanisms, which can be used to

reduce the tensions of this trade-off (Molina et al., 2007; Shaw et al., 2009). These two parameters are

presented below.

2.2. Decentralization and Information Richness

The level of (I) decentralization of transfer decisions and (II) information richness of

communication mechanisms are parameters that influence (facilitate or hinder) the transfer of operational

capabilities (Gaur et al., 2019; Molina & Llorens-Montes, 2006; Nisar, Prabhakar & Strakova, 2019):

Decision-making decentralization varies between full decentralization and full hierarchy, whereby

decentralization refers to the level of freedom that an organizational member has in carrying out his or

her activities (Grant, 1997; Molina et al., 2007). Decentralization, therefore, also influences commitment

and cooperation in the transfer of operational capabilities (Nahapiet & Ghosal, 1998). According to Teece

(2000), non-bureaucratic, decentralized, autocratic, and task owner-oriented transfer conditions are

particularly necessary to facilitate the transfer of capabilities in MNCs (Molina & Llorens-Montes, 2006).

That is, it is difficult to transfer operational capabilities that are more likely to flow from one

organizational unit to another. In addition, too much decentralization can lead to a lack of clear rules on

intellectual property and security (Luo, 2022), and the transfer processes become uncontrolled and

dissipated in the organization (Ritala, Husted, Olander & Michailnova, 2018). Individual capability

owners might also resist a transfer if their decision-making freedom is too high, for example, because

they fear a loss of uniqueness within the organization (Cabrera, Collins & Salgado, 2006). The

managerial challenge is to balance the two sides: a high level of decentralization of decision-making to

empower the independent creation and dissemination of operational capabilities within the organization

and a low level of decentralization to ensure the transfer of capabilities in an orderly and safe manner

(Andersson, 2003).

According to the information richness theory (Daft & Lengel, 1986), the effective transfer of

operational capabilities also requires a fit between the codifiability, that is, the level of documentability

of the operational capabilities, and the “richness” of the communication media or mechanisms

(Windsperger & Gorovaia, 2010). Appropriate information richness is shown in four attributes (Ishii,

Lyons & Carr, 2019; Windsperger & Gorovaia, 2010): immediate feedback, availability of multiple cues

(voice, body, gestures, and words), language variety, and personal focus (transfer of emotions and

feelings). Mechanisms that fulfil these attributes facilitate the sharing of unconcealed tacit knowledge as

the basis of operational capabilities (Szulanski, Ringov & Jensen, 2016) because they can transfer the

context of information, resolve ambiguity, and support understandability (Peltokorpi, 2014). While text-

based communication mechanisms, such as e-mails, have rather low information richness, feedback can

be provided, and body language is shown particularly quickly in face-to-face conversations (Abbariki,

Snell & Easterby-Smith, 2017). Here, the information richness can be described as very high (Dunaetz,

Lisk & Shin, 2015). However, high information richness in communication mechanisms bears the risk

of unraveling the VRIN characteristics of capabilities more easily (see section 2.1).

However, the two parameters of (I) decision-making decentralization and (II) information richness

of communication mechanisms are not to be regarded as invariable. Rather, they need to be adapted to

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organizational changes (Chatterjee et al., 2021; Contractor, 2019). One of these changes is triggered by

digitalization, which will be explained in the next section.

2.3. Digitalization

Digitalization causes changes in organizations through the increasing use of digital technologies

(Krasonikolakis, Tsarbopoulos & Eng, 2020; Sandkuhl, Shilov & Smirnov, 2020), which leads to far-

reaching socio-technical phenomena and processes of use and adaption (cf. Gray & Rumpe, 2015; Legner

et al., 2017). This wide application of new technologies has also influenced the transfer of operational

capabilities within MNCs, as strictly sequential and interdependent communication and decision-making

channels, for example, within the relationship between a subsidiary and the parent company, have been

dissolved by the introduction of standardized communication tools (Peñarroja, Sánchez, Gamero, Orengo

& Zornoza, 2019). Consequently, activities can be uncoupled, and decision-making units can make

partial decisions independently (Weyer, Schmitt, Ohmer & Gorecky, 2015). Therefore, organizational

units can be linked to modular systems (cf. Herbst, 2021; Koch & Windsperger, 2017) and thus form

temporary, network-like structures such as connected production systems (Lu, Liu, Wang, Huang & Xu,

2020). This also applies to the transfer of operational capabilities within digital networks, which are

implemented with the help of software tools, and thus can be made faster and more far-reaching

(Paruchuri & Awate, 2016). Common communication mechanisms include blogs and wikis (Matos &

Lourenço, 2013) or video conference technologies (Schneckenberg, Truong & Mazloomi, 2015). In the

course of digitalization, platforms are also emerging, such as enterprise collaboration platforms, in which

interactions for extensive two-way dialogue among employees are created, including private and social

topics and issues (Lehmkuhl & Jung, 2013). Thus, network attendees create social ties (Valenzuela,

Correa & de Zuniga, 2018) in multilateral relationships between organizational units (Murray &

Peyrefitte, 2007) and consequently build intra-firm networks of employees (Razzaque, Eldabi & Jalal-

Karim, 2013). The implementation of these digital networks creates more scope for interaction and

coordination in the transfer of operational capabilities, which on the one hand allows faster and more

frequent transfers with a high number of network participants and on the other hand also increases the

danger of capabilities becoming transparent to external companies (Hurmelinna-Laukkanen, 2011),

which amplifies the risk of the disclosure of operational capabilities (Krylova, Vera & Crossan, 2016).

Thus, further research is needed on how to mitigate this trade-off, which gets intensified by

advancing digitalization. An approach to this is presented in the next Section.

3. RESEARCH FRAMEWORK

In this study, a research framework (see Fig. 1) was applied to investigate the trade-off between the

facilitation of the transfer of operational capabilities and their protection from disclosure in times of

digitalization. This research framework was developed based on the theoretical foundations in Section 2.

At this point, it could be shown that the tensions cannot be mitigated by a decision in favour of one of

the conflicting goals. Instead, one proposition is to make the trade-off “more favourable” (Teece, 2019)

by reducing (Mudambi, 2011) or more strongly narrowing down the conflict to the level of balancing

parameters (Elahi & Yu, 2007; Winter, 1987), which need to be optimized. In the literature, the two

parameters of (I) decentralization of decision-making and (II) the information richness of communication

mechanisms are often discussed as having an impact on the transfer and protection of operational

capabilities (see Section 2.2). That is, they can be seen as “third variables” (Ledgerwood & Shrout, 2011)

and sub-parameters. However, the balancing of (I) and (II) can range from high to low and always needs

to be adapted in consideration of organizational changes. As shown in Section 2.3, digitalization can be

seen as a cause of organizational change, which has shifted the transfer of operational capabilities. This

means especially the transformation from traditional bilateral communication (e.g. headquarters and

subsidiaries) to multilateral communication based on software tools such as collaboration platforms that

enable the coordination and interaction by means of multiple connections and transfer channels (see

Section 2.3).

Therefore, based on the review of the literature in the respective sections the present research

framework focuses on the optimization of the two sub-parameters (I) decentralization of decision-making

and (II) information richness in communication mechanisms under digitalization. This research

framework, therefore, builds the starting point for the in-depth case study approach and thus can shed

light on the optimization of (I) and (II) from a qualitative perspective. The underlying methodology is

explained in the next Section.

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Figure 1: Research framework (Source: own compilation)

4. METHODOLOGY

4.1. Case Study Approach

Qualitative research was used that provides in-depth insights into the transfer of operational

capabilities (Mees-Buss, Welch & Westney, 2019; Simons, 2013) by answering “how” and “why”

questions (Yin, 2004). The case in the present research is a worldwide industrial company headquartered

in Germany, generating more than 5 billion euros in sales with more than 20,000 employees (state of

2022) from over 100 locations. It has diversified its product portfolios for industrial products. Digital

intra-firm networks for the transfer of operational capabilities have already been implemented.

4.2. Data Collection

The present study’s data are based on 12 interviews with middle- and top-management employees

who are highly involved in knowledge and capability-transferring activities. The interviews were

conducted following a semi-structured approach with open questions (Wagstaff, Salvaj & Villanueva,

2020) concerning the decentralization of transfer decisions (for example, “How can participants decide

to take part in capability transfers?” and “Who is responsible for the administration of these transfers?”)

and the information richness of communication mechanisms (e.g. “What kind of software do you use in

the transfer of capabilities?” and “Which type of data were transferred?”). Video calls were used for each

interview (Gray, Wong-Wylie, Rempel & Cook, 2020) with respondents from international company

locations, and the interviews were recorded (see Table I).

Table 1: Conducted interviews

After 12 interviews with a deep focus on the research question, the point of saturation was reached,

that is, no new information could be gained after this point (Glaser & Strauss, 1967). The recorded

interviews were transcribed for data analysis (Meyer, 2001), resulting in 124 pages of transcription. For

triangulation, additional digital artifacts were collected (Eisenhardt, 1989) in the form of software

Digitalization

(I) Facilitating transfers of

operational capabilities

(II) Protection of operational

capabilities from disclosure

(I.1) High

decentralization of

decision-making

(I.2) High information

richness in

comm. mechanisms

(II.1) Low

decentralization of

decision-making

(II.2) Low information

richness in comm.

mechanisms

Optimizing

trade-off

Respondent

Position at company

Located

Duration

Head of Corporate Business Excellence

Headquarters

84 min

Corporate Excellence Network Manager

Headquarters

60 min

Corporate IT Manager

Headquarters

58 min

Head of Corporate IT

Headquarters

58 min

Corporate Strategy Manager

Headquarters

50 min

Senior Manager Production Excellence

Subsidiary

63 min

Vice President

Subsidiary

53 min

Plant Manager

Subsidiary

53 min

Plant Manager

Subsidiary

54 min

CTO, COO Business Unit

Subsidiary

58 min

Technology Manager

Staff Unit

76 min

Technology Manager

Staff Unit

65 min

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manuals (991 pages) and documents (626 pages), both demonstrating the functionality and features of

the networks. The research team was also allowed to attend live meetings on intra-firm capability

transfers. A researcher with expertise in knowledge and capability transfer conducted pre-tests of the

interviews with two employees from the organization (Ellram, 1996) before the actual interviews were

conducted.

4.3. Data Analysis

The analysis was applied to all the available data (interview transcripts, documents, and software

manuals, see Section 4.1) following the principles of inductive qualitative research (Gioia, Corley &

Hamilton, 2013). Open coding was applied (Holton, 2007) and supported with software (MAXQDA; see

Kuckartz & Rädiker, 2019) using the constant comparison method (Corbin & Strauss, 1990). By cycling

between the coded data and theoretical constructs and vice versa, central statements and first-order

concepts were generated from the data and finally grouped into sub-parameters (“second-order

concepts”, Langley, 1999; Strauss, 1987, see Fig. 2). The results indicate how to set these sub-parameters

to optimize (I) the decentralization of decisions and (II) the information richness of communication

mechanisms (see Section 3). For proof of reliability, research colleagues who performed the coding

independently arrived at the same conclusion (Yan & Gray, 1994).

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Figure 2: Central statements, first-order concepts, and aggregated sub-parameters for the

optimization of decentralization and information richness (Source: own compilation)

5. FINDINGS

On the one hand, digital collaboration platforms are set up within the case study company in which

participants contribute their best practices or technologies and transfer information to the community.

These platforms are based on enterprise social media technology, where users can open, edit, and

comment on best practices and participate in virtual groups (Gressgard, 2012; Sun, Fang & Zhang, 2021).

On the other hand, networks based on video conferencing technology are built, in which participants

Avoid transparency of capabilities by limiting number of participants

In video based networks participation is not dependent on hierarchical

level

Limited access for people on business excellence platform (experts only)

Participants from globally distributed units on technology management

platform

In general no access to externals to any platform

In video networks the presentations can be accessed by many, workshops

for smaller groups only

Limitation of access

Interoperability of software

infrastructure

Expansion of access

Platform software technology can be supported with additional software

for collaboration

Video conference software works with collaboration tools

Technology management platform software is browser based for

technical compatibility in every subsidiary

Business excellence platform can extract results to global intranet

Cloud solutions can be used, but need to be secure

Technology platform is basing on role concepts for administrators

Some video conference networks are self-administrated by community

Video conference networks are initialized in headquarters

Business excellence platform is incentivated

Media is limited to pictures, documents, text

Allocation of administration

Abstraction of information

High level of information on technology platform (to avoid too much

transparency)

Visualization of capabilities and knowledge for quick overview

Business excellence platform results are available to organization at

highest level (via intranet)

Capability description on business excellence platform is basing on

standardized sheets

Using English on all platforms

Comments-functionality is given on platforms

Glossaries for common understanding are used in video conference

networks

Like-functionality is given on platforms

Get information about each other with tag-word functionality

Alignment of sender and

receiver

Social media features will be adapted, but need active administration

In video networks groups are compiled according to background

Complementary background on video-workshops

Digital whiteboard software can improve collaboration

Topic related break-out sessions for focus via conference rooms

Intensity of collaboration

Openness of transfers

Additional software

Compatibility of software

Central administration

Decentral administration

Visibility of information

Format of information

Understanding of language

Building social ties

Complementarity

Working together

Central statements First-order concepts

Second-order concepts

(sub-parameters)

Platform information is displayed on the intranet (abstract level)

Platform can be designed without interaction (wiki-like storage of

knowledge)

Optimizing

decentralization

Optimizing information richness

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deliver presentations or participate in interactive workshops. Both network types differ in terms of (I) the

decentralization of the MNC’s decisions on transfers and (II) the information richness of the

communication mechanisms, which can be seen in the three sub-parameters for both (I) and (II).

5.1. Optimizing the Decentralization of Decision-Making

5.1.1. Sub-Parameter A: Openness of Transfer

From the data, it can be seen that the company has defined accessibility to its transfer networks for

the subsidiaries’ and headquarters’ employees to varying degrees. In the case of collaboration platforms,

this parameter is set more restrictively such that only a fixed group of participants is admitted.

Registration was not possible for all employees. For example, the worldwide business excellence

platform for best practice transfers has limited access to business excellence experts. The company wants

to keep the number of transfer participants manageable, thereby avoiding the circulation of capabilities

in an uncontrolled manner.

Capability transfer networks based on video network technology extend beyond the usual one-to-

one conversations in normal calls and act more like “communities of practice” (Roberts, 2006). Meetings

normally take place with 10 to 15 participants and therefore have smaller characteristics. The openness

of transfer is high and is based on a voluntary exchange of capabilities, so that participants benefit from

free (i.e. intrinsically motivated) interaction and the formation of social relationships (Lave & Wenger,

1991). That is, network members from different subsidiaries are free to transfer their capabilities, as

respondent B stated.

“[…] and by the foundation of these networks people from different company locations can meet on

[video conference software] and can talk to each other and can share capabilities very well.”

Participants’ access is granted without restrictions concerning their hierarchical level or affiliation

to a corporate division, and the interaction can occur in webinars and lectures, mainly in smaller groups,

so that conversations are easy to manage.

5.1.2. Sub-Parameter B: Interoperability of Software Infrastructure

The company uses a standardized collaboration platform and video-conferencing technologies in

which the central headquarters or leading subunits have decided to implement and meet the requirements

specified by the top management. Both network types have the possibility of expansion. In collaboration

platforms, software usage is browser- and cloud-based, because standard interfaces (see Section 2.2) can

enable compatibility with a broad range of global IT systems, as can be seen from respondent L:

“The software is cloud-based software, which we deliberately chose. Because we need to have a

cross-group tool, and because our group has different IT architectures, which then cannot always

connect to one solution. Therefore, a cloud-based solution that is accessible through the browser.”

However, independent use of additional software is not possible. Instead, only software extensions

that work together with existing infrastructure (add-in tools) can be used. By doing so, the software

variety is expanded to a predetermined pool of products, applications, and additional tools that have been

proven to be secure. This ensures that the transferred capabilities remain within controllable

environments and that the transfer processes are stable.

In transfer networks based on video call technology, standardized software can be expanded for

functionality up to a certain level, for example, if more collaboration is needed. Additional software was

used in parallel. Therefore, communities can individually decide whether an additional browser-based

collaboration tool should be added, such as Mural (Mural Enterprise, 2021), which supports the joint

creation and editing of content and information. This affords users more freedom than would be possible

with proprietary solutions, leading to improvements in meeting their expectations and increasing their

satisfaction (Wang & Li, 2012).

5.1.3. Sub-Parameter C: Allocation of Transfer Administration

Networks that transfer capabilities based on collaboration platform technology or video technology

are implemented within the company from the headquarters or by leading subsidiaries, but administration

differs according to the size and underlying technology of these networks. Big transfer networks based

on platforms (e.g. best practice sharing in a narrowly defined subject area) are administered by a central

subsidiary, which uses a reward system based on performance points to track and incentivize transfer

activities, as respondent F explained:

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“Sharing knowledge of best practice and lessons learned is part of our excellence system, and that

is assessed in assessments, and if the factories don’t do that […] then he [transfer contributing

subsidiary] gets fewer points.”

Incentivization often occurs when there are too few network participants to generate a steady flow

of contributions or when they have little motivation to share information on their own (Friedrich, Becker,

Kramer, Wirth & Schneider, 2020). Especially at the beginning of the formation of such platforms,

incentivization is a solution to generate both secure and traceable transfer activities, as well as adequate

engagement from the participants. Centralized administration with incentivization for transfer activities

mediates these networks, creating an artificial impetus for transfers. On some platforms that have reached

a certain size, the central units cannot handle the administration alone because the traceability of activities

across the growing network requires too much capacity. Therefore, globally accessible platforms are

based on role concepts, meaning that certain community members become administrators acting as

moderators, who can still maintain connections to top-level administrators.

In contrast, video-technology-based transfer networks are implemented from the headquarters to

staff offices, but can move from centrally administrated to self-administered governance (i.e. managed

independently by the community). Respondent A stated:

“We see that the members of the network access the colleagues in the excellence network as a source

of solutions for their daily business as if it were a matter of course. […] This means that beyond the

formal events, independently developing networks emerge here.”

In this case, people from different subsidiaries of the network are part of the transfer network and

are also responsible for coordinating transfer processes and content.

5.2. Optimizing Information Richness in Communication Mechanisms

5.2.1. Sub-Parameter D: Abstraction of Information

The case study company’s collaboration-platform-based transfers contain information with reduced

details only. Even though more detailed information can be transferred, the storage of capabilities is

based on superficial and standardized input options with a higher degree of abstraction so that sensitive

data and information do not become too transparent in the organization. This kind of “anonymization”

(Alamäki, Aunimo, Ketamo & Parvinen, 2019) of content decreases the information richness and is

chosen in such a way that the stored capabilities still provide a basic understanding of the underlying

principles and functionalities; more detailed information is deliberately transferred only if there is interest

in a bilateral exchange, which is handled via other channels. Respondent L confirmed this as follows:

“However, technical documents or drawings are never exchanged on the platform. This is not done

via the cloud, but is exchanged bilaterally between the experts using internal communication channels.”

In comparison, networks based on video conference software enable the transfer of operational

capabilities with greater language variety and a higher number of cues and channels (Daft & Lengel,

1986), which is typical in video face-to-face interactions. Thus, even capabilities in a highly complex

context can be explained by these mechanisms. Because the group of participants in workshops, in

particular, is small compared to the potential number of people in platform-based solutions, the risk of

uncontrolled transfer of capabilities remains low.

5.2.2. Sub-Parameter E: Alignment of Sender and Receiver

On the company’s collaboration platforms, participants can add keywords, ratings, comments, and

linkages to information on capabilities, and the sender and receiver will automatically get in touch after

a search inquiry. In particular, because the organization is increasingly based on the globally distributed

expertise and knowledge of individuals (see also Caldwell, Palmer & Cuevas, 2008), the company’s

platforms can connect members if they have shared interests or complementary capabilities. According

to Sheer (2011), even though these exchange channels offer limited opportunities for transmitting social

information compared with face-to-face communication, their multiple features (e.g. commenting, rating,

and sharing) make it easier to build relationships and build up social-emotional cues (Daft & Lengel,

1987). In the future, the company intends increasingly to rely on algorithms with artificial intelligence

analyzing each documentation of capabilities to make accurate recommendations as to which capabilities

need to be transferred to which persons. According to Respondent D,

“[This technology can] evaluate the information that I have and target it in the group or on an

employee’s intranet page who then says he is interested in the following points, and then he gets a tech

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cloud, and there is the intelligence behind it. These are new ways to display relevant information. [...]

New topics are suggested to me.”

In comparison to collaboration platforms, the company’s video-based networks offer the possibility

of face-to-face interaction, which can enable rapid feedback related to information richness (Daft &

Lengel, 1986). In these networks, wikis and glossaries as well as user profiles are created to improve

participants’ understanding of the topics issued in the network, where prior knowledge is required. As a

result, not only are the participants always involved and they co-determine the content of the transfer

networks, but also the alignment of participants to network goals is stronger than on digital platforms.

5.2.3. Sub-Parameter F: Intensity of Collaboration

The transfer of capabilities via the digital collaboration platform focuses on the unilateral sharing

of information and is based only on delayed feedback because there is a time lag between members’

contributions, which prevents instant answers and communication (Dennis & Kinney, 1998).

Consequently, platform transfers are mainly utilized to document best practices and publish them within

a circle of participants. Collaboration occurs at a low level through comments, supplementary entries, or

shared documents edited by the community. On the one hand, this hinders the deeper co-creation of

capabilities, but on the other hand, it can keep the collaboration documentable and thus prevent

uncontrolled and overhasty dissemination of content.

For more intensive collaboration with multilateral interaction, video-technology-based networks

enable the transfer of operational capabilities with greater language variety and a higher number of cues

and channels (see Daft & Lengel, 1986). This allows people with different background knowledge to

interact better with each other and exchange the character of a workshop in which content is developed

jointly. Respondent C said:

“Because we do everything at [video-call software] and […] said we would take people from our

network top-down to the technical basis so that we can work in a workshop format.”

In the course of this communication, participants can not only document their already known

capabilities but also, by bringing in complementary knowledge, co-create completely new capabilities

(“value co-creation,” Vargo & Lusch, 2008) outside their daily work. In this context, additional

collaboration software is used in the case company, where people can live in different groups (e.g. on a

blackboard or a mind map) and present the results together, giving immediate feedback.

6. DISCUSSION

The findings from the present study show six parameters: (I) decentralization of decision making

and (II) the information richness of communication mechanisms, which optimize the facilitation of intra-

firm transfers of operational capabilities and their protection from disclosure to externals in times of

digitalization (see Fig. 3).

Figure. 3: Adjustment of sub-parameters for optimizing decentralization and information richness

of capability transfers (Source: own compilation)

Digital collaboration platform

Optimizing

decentralization

Restricted access to platforms, background related

(i.e., experts only)

Open access, voluntary participation,

interdisciplinary composition

High level of abstraction (summarized information,

text- and graphics-based interaction)

Low level of abstraction (detailed information,

virtual face-to-face interaction)

Tag-words, linkages, ratings, comments and search

functionality

Common understanding via glossaries, wikis, user

profiles

Delayed feedback on platforms, limited co-creation

of capabilities

Immediate co-creation of capabilities, enabling of

workshop mode

Optimizing

information

richness

Openness of

transfer

Allocation of

administration

Abstraction

of information

Alignment of

sender and receiver

Intensity of

collaboration

Video-technology network

Cloud-based standardized platform software,

supplementary add-in tools

Interoperability

of software

infrastructure

Standardized video-conference software,

supplementary stand-alone software

Initialized (incentivated) by central units,

administration by de-central moderators and

automated algorithms (for big networks)

Initialized in headquarters, self-administration by

community

Sub-Parameters

Stefan Sommer

Accordingly, decentralization of decision-making regarding the transfer of operational capabilities

can be optimized by adjusting A) the accessibility of the transfer activities (“openness of transfer”), B)

the level of autonomy to expand the software functionality or compatibility that is used in communication

(“interoperability of software infrastructure”) and C) the responsibility for the administration of the

transfers (“allocation of administration”). The information richness of communication mechanisms in

transfers of operational capabilities can be optimized by adjusting D) the depth of details of the

transferred information (“abstraction of information”), E) the characteristics of the alignment between

the sender and receiver of the capabilities (“alignment of sender and receiver”), and F) the intensity of

collaboration, for example, when co-creating capabilities together.

The results provide initial indications of how the sub-parameters will be designed within the two

basic technologies of collaboration platforms and video-conferencing for the transfer of operational

capabilities. Companies can adjust (I) the decentralization of their decisions in the transfer of operational

capabilities via collaboration platforms through limited access management for participants (A), a

controlled extension of the software infrastructure without foreign additional tools (B), and a shift of

administration to moderators in the case of larger numbers of participants on collaboration platforms (C).

(II) Information richness in platform-based transfers can be optimized with abstract information sharing

only (D), enabling the alignment of participants by (increasingly automated) matching of their common

interests and improving personalization (E). Moreover, companies might accept delayed collaboration

functionality (F), which minimizes the risk of the rapid spread of sensitive content that occurs when

communication is left completely dynamic and in real time. For this reason, collaboration platform

technology in the MNC is mainly used for the transfer of best practices to larger groups of participants

(e.g. in the sharing of best practices in business excellence).

Furthermore, MNCs can optimize their (I) decentralization of decision-making in the transfer of

operational capabilities via video conference software by providing open access for participants (A),

allowing additional software for enhanced functionalities that can improve collaboration (B), and

outsourcing the administration of transfers to the community (C). (II) Information richness of

communication mechanisms is facilitated by allowing detailed information sharing (D), improving

mutual understanding in smaller groups (e.g. by writing glossaries) (E), and enabling bilateral and live

collaborations for strong co-creation of capabilities (F). That is, video conference technology-based

networks facilitate the transfer of particularly complex operational capabilities and can create new

capabilities in smaller groups of participants such that sensitive information is contained within a well-

defined circle of involved participants.

7. CONCLUSIONS

7.1 Theoretical Contributions

This article has investigated the paradox between facilitating the intra-firm transfers and the

protection of operational capabilities from becoming lost to externals in times of digitalization. So far, in

the literature, this trade-off has been treated as a black box and has not been examined in detail by

considering balancing factors for digital communication mechanisms (see Section 1). By narrowing

down the trade-off with the introduction of “third variables” as balancing parameters (Elahi & Yu, 2007;

Ledgerwood & Shrout, 2011), which includes optimizing the (I) decentralization of the MNC’s decisions

and (II) the information richness of communication mechanisms, this study could provide a theory-based

approach to mitigate the paradox. In general, the findings have contributed to a better understanding of

the theoretical constructs of decentralization and information richness under digital impact. In particular,

six sub-parameters for the optimization of the balancing parameters were identified. Thus, the present

case-study results extend the previously generically described understanding of decentralization of

decision making (e.g. Grant, 1997) and information richness (Daft & Lengel, 1986) and apply it to the

design of digital capability transfer networks, in which the balance between transfer and protection of

operational capabilities is optimized. The identification of sub-parameters for (I) and (II) can thus also

provide a fundamental basis for operationalizations in quantitative empirical research in the field of

digital intra-firm knowledge or capability transfers.

7.2 Practical Contributions

The findings from the single-case study revealed six sub-parameters of (I) decentralization of

decision making and (II) the information richness of communication mechanisms, which can help the

management of MNCs to adjust their digital capability transfer networks. In particular, practical

indications were provided, on how to design digital collaboration platforms and video conference

networks that can improve the transfers, but without losing capabilities to externals (mitigation of the

“paradox”, Coff et al., 2006). The findings show that to transfer operational capabilities in networks with

Stefan Sommer

many participants, but without uncontrolled content distribution, collaboration platform-based networks

with a balancing parameter setting of lower decentralization and information richness would be

appropriate. In contrast, for collaborative exchanges among participants and intensified interactions in

smaller groups, video-based networks with parameters that lead to high autonomy and information

richness could be the most suitable choice for MNCs. For both platform-based networks and video-based

networks, the present research could provide concrete recommendations for implementation (see Section

6). Thus, the findings will not only contribute to the identification of design parameters for balancing the

trade-off but can also be a preparation for the establishment of virtual organizations (Choi & Cho, 2019)

in the medium term or for the transfer of knowledge and capabilities in increasingly discussed metaverse

organizations (Choi, 2022) in the future.

7.3 Limitations

Despite the contributions of this study, several limitations should be considered in future research.

Due to the non-representative nature of the sample, the data collection process might be subjective and

cause research bias (e.g. when identifying interview partners and conducting the interviews). Hence, the

findings should be considered with care (as initial indications that require further quantitative research),

since they do not provide general validity. In addition, other sectors or industries may have different

digitalization impacts and capability transfers than those in the present study. Future research could

therefore also apply a quantitative research approach to include a larger number of participants and allow

conclusions to be drawn about the generalization of the results.

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