UNIVERSITY OF LJUBLJANA FACULTY OF ECONOMICS MASTER`S THESIS EDITA GABRIČ

Transcription

1 UNIVERSITY OF LJUBLJANA FACULTY OF ECONOMICS MASTER`S THESIS EDITA GABRIČ

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3 UNIVERSITY OF LJUBLJANA FACULTY OF ECONOMICS MASTER`S THESIS A CORPORATE UNIVERSITY: THE POSSIBILITIES FOR ITS IMPLEMENTATION IN SLOVENIA Ljubljana, May 2012 EDITA GABRIČ

4 IZJAVA O AVTORSTVU Spodaj podpisana Edita Gabrič, študentka Ekonomske fakultete Univerze v Ljubljani, izjavljam, da sem avtorica magistrskega dela z naslovom A Corporate University: Possibilities for its implementation in Slovenia, pripravljenega v sodelovanju s svetovalcem prof. dr. Bogomirjem Kovačem in sosvetovalko prof. dr. Majo Makovec Brenčič. Izrecno izjavljam, da v skladu z določili Zakona o avtorskih in sorodnih pravicah (Ur. l. RS, št. 21/1995 s spremembami) dovolim objavo zaključne strokovne naloge/diplomskega dela/specialističnega dela/magistrskega dela/doktorske disertacije na fakultetnih spletnih straneh. S svojim podpisom zagotavljam, da je predloženo besedilo rezultat izključno mojega lastnega raziskovalnega dela; je predloženo besedilo jezikovno korektno in tehnično pripravljeno v skladu z Navodili za izdelavo zaključnih nalog Ekonomske fakultete Univerze v Ljubljani, kar pomeni, da sem o poskrbel(-a), da so dela in mnenja drugih avtorjev oziroma avtoric, ki jih uporabljam v zaključni strokovni nalogi/diplomskem delu/specialističnem delu/magistrskem delu/doktorski disertaciji, citirana oziroma navedena v skladu z Navodili za izdelavo zaključnih nalog Ekonomske fakultete Univerze v Ljubljani, in o pridobil(-a) vsa dovoljenja za uporabo avtorskih del, ki so v celoti (v pisni ali grafični obliki) uporabljena v tekstu, in sem to v besedilu tudi jasno zapisal(-a); se zavedam, da je plagiatorstvo predstavljanje tujih del (v pisni ali grafični obliki) kot mojih lastnih kaznivo po Zakonu o avtorskih in sorodnih pravicah (Ur. l. RS, št. 21/1995 s spremembami); se zavedam posledic, ki bi jih na osnovi predložene zaključne strokovne naloge/diplomskega dela/specialističnega dela/magistrskega dela/doktorske disertacije dokazano plagiatorstvo lahko predstavljalo za moj status na Ekonomski fakulteti Univerze v Ljubljani v skladu z relevantnim pravilnikom. V Ljubljani, dne Podpis avtorja(-ice):

5 CONTENT INTRODUCTION IMPORTANCE OF COGNITIVE CAPITALISM AND KNOWLEDGE CAPITAL IN BUILDING TRUE LEARNING ORGANIZATION COGNITIVE CAPITALISM KNOWLEDGE CAPITAL Knowledge management Knowledge transfer and Multinational companies (MNCs) LEARNING ORGANIZATIONS COGNITIVE CAPITALISM IN INTERNATIONAL BUSINESS ENVIRONMENT DEFINITION, MODELS AND KEY PROCESSES OF CORPORATE UNIVERISTY`S DEVELOPMENT EMERGENCE AND DEVELOPMENT OF CORPORATE UNIVERSITY Definition of CU: Utilization of the term Corporate and University Definition of CU: Corporate University = C + U MODELS OF CORPORATE UNIVERSITY Strategic models of CU Organizational models of CU Structural models of CU FUNCTIONS OF CORPORATE UNIVERSITY TEACHING METHODS FOR CORPORATE UNIVERSITY STRENGTHS AND WEAKNESSES OF CORPORATE UNIVERSITIES ANALYSIS OF CORPORATE UNIVERSITY`S POSSIBILITIES IN SLOVENIA OVERVIEW OF SLOVENIAN HIGHER EDUCATIONAL SYSTEM Resolution on a National higher education development Current programs linking academia and corporate world in Slovenia CORPORATE UNIVERSITIES AROUND THE GLOBE CORPORATE UNIVERSITY AS EDUCATOR IN THE BUSINESS SPHERE ANALYSIS OF KNOWLEDGE TRANSFER IN THE CHOSEN SLOVENIAN CORPORATION EMPIRICAL RESEARCH IN GORENJE GROUP Purpose of the research Research methodology PREPARATION AND IMPLEMENTATION OF THE RESEARCH Participants`s profile Research`s time-frame Research limitations OVERVIEW OF GORENJE GROUP RESULTS OF THE ANALYSIS IN GORENJE GROUP Existing programs Cooperation between Business Units and parent company i

6 4.4.3 The support for a Corporate University of Gorenje (CUG) Content of the programs SUGGESTED MODEL OF CORPORATE UNIVERSITY FOR IMPLEMENTATION IN SLOVENIAN CORPORATION Key Ingredients of Corporate University`s success Basic steps in the creation of Corporate University of Gorenje Structural model of Corporate University of Gorenje Organizational model for Corporate University of Gorenje THE NAME OF THE NEWLY ESTABLISHED CORPORATE UNIVERSITY OF GORENJE CONCLUSION POVZETEK LITERATURE AND SOURCES APPENDICES TABLE OF FIGURES FIGURE 1: THE AMBIGUOUS CIRCLE OF COGNITIVE CAPITALISM... 5 FIGURE 2: STRUCTURE OF KNOWLEDGE CAPITAL... 7 FIGURE 3: KNOWLEDGE SYSTEM... 7 FIGURE 4: SYSTEMS LEARNING ORGANIZATION MODEL FIGURE 5: HISTORY OF CORPORATE UNIVERSITIES FIGURE 6: STRATEGIC LEARNING MATURATION FIGURE 7: THE PYRAMID MODEL FIGURE 8: LEARNING IN THE WEB 2.0 WORLD FIGURE 9: CORPORATE UNIVERSITY NON-FORMAL PROGRAMS WITHIN SLOVENIAN HIGH EDUCATION FIGURE 10: CORPORATE UNIVERSITY AS AN INITIATIVE FROM CORPORATE WORLD FIGURE 11: GORENJE HEADQUARTERS IN VELENJE, SLOVENIA FIGURE 12: EXISTING EDUCATIONAL PROGRAMS OF GORENJE GROUP ACCORDING TO THE AUTHOR`S EMPIRICAL RESEARCH FIGURE 13: GRAPHIC REPRESENTATION OF SUPPORT FOR CUG (CORPORATE UNIVERSITY OF GORENJE) FIGURE 14: ASSESSMENT OF THE NEEDS FOR CUG PROGRAMS IN % FIGURE 15: KEY INGREDIENTS FOR CORPORATE UNIVERSITY`S SUCCESS FIGURE 16: CORPORATE STRATEGY MODEL OF P&G FIGURE 17: STRUCTURAL MODEL OF CUG TABLE OF TABLES TABLE 1: BASIC BELIEFS IN TACIT VERSUS EXPLICIT KNOWLEDGE MANAGEMENT APPROACHES... 9 TABLE 2: TYPES OF KNOWLEDGE TRANSFER TABLE 3: TYPES OF KNOWLEDGE TRANSFER ACCORDING TO DIXON (2000) ii

7 TABLE 4: STRATEGIC ROLES OF CU TABLE 5: POSSIBLE FUNCTIONS OF CORPORATE UNIVERSITY TABLE 6: STRENGTHS AND WEAKNESSES OF CORPORATE UNIVERSITY TABLE 7: SUGGESTED CONTENT FOR CORPORATE UNIVERSITY OF GORENJE iii

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9 INTRODUCTION To attract and retain talent, successful global organizations are using learning as a tangible offering to new employees. It is no longer the doctrine to learn only basic things to perform the job well, but there is a doctrine of continuous learning and strategic approach towards managing human resources. Many companies have this already in place, especially multinational companies, others still cannot decide on the right approach. Nevertheless, my thesis is about the second group of companies who want to go a step further towards strategic management of their employees. This step further are corporate universities, according to Allen (2002, p. 9), they are strategic tools designed to assist its parent organization in achieving its mission by conducting activities that cultivate individual and organizational learning, knowledge, and wisdom. In my thesis I use primary and secondary research approaches to study knowledge management and existing corporate educational systems, and later on applying it to Slovenian education scheme on example of Gorenje Group, one of Slovenian Multinational Corporations that is represented in over 70 countries in the world. According to Marquardt (2002, p. xiv), nowadays learning skills are more important than data and penetrating questions are more important than good answers, the question is only if Slovenian corporations are developing their human resources in this way. There are already companies offering college degree programs to interested participants, however little is done on top management education and offer of high education degrees, also there are universities that have established their own institutes that offer accredited degrees, however my aim is to examine what are the options for corporate world to offer formally accredited programs, since they are the end users of such services, but nowadays they mostly go to university world for information and knowledge. I believe such corporations have enough of their own knowledge to be able to run their own programs for wider public. However, in the process of writing my thesis, and after examining the theory and Slovenian Higher Education System, I came to the conclusion that formally recognized Corporate University would take a long time to be established and even then may not be used by Slovenian public. Therefore I propose informal Corporate University within Slovenian Multinational Company that would have strategic role and a strong brand-name that would enhance corporate culture and values throughout the corporation. My thesis is divided into four main chapters, going from the basic theory on knowledge management and Corporate Universities to analysis of current Slovenian educational system and finishing with, what is mostly important, analysis of possible application of proposed model in one of the Slovenian successful multinational corporations, manufacturer of home appliances, Gorenje Group. Their cooperation added enormous value to my thesis, since it enabled me to apply gained knowledge to practice. With the help of empirical research, as 1

10 part of which I firstly conducted interviews at Gorenje Group`s headquarters (Slovenia) and secondly got the answers from questionnaire-based survey in Gorenje Group`s Network, a model has been constructed that describes basic functions and processes of Gorenje Corporate University. I start the first chapter with knowledge transfer theory and developments in the so called cognitive capitalism. Here I especially emphasis the characteristic of knowledge transfer in international environment. I continue with definition and analysis of Corporate University (corporate meaning corporation under which university could be established) and its models, functions, structure. Although Corporate Universities are not a well known concept in Slovenia, they are already going through their own metamorphosis, some disappearing, and some changing into so called stakeholder universities. Chapter three presents the shift from theory into practice, firstly touching upon Slovenian educational system and how could Corporate University fit in. Chapter four is dedicated to empirical research conducted in Gorenje, where I was aiming to find out employee`s satisfaction with educational systems in place and whether Gorenje Group`s top employees in the network would support the idea of Gorenje Corporate University. Based on the findings I propose a model for Gorenje Group later on. In my thesis I aim to construct a model for Corporate University in Slovenia, where this type of institution does not exist yet, what is more, many do not even know about its existence in the world. The fact is that organization nowadays has to perform more things at once, offering its employees more than just work and payment. We spend half of our time at work and, especially in times of economic crisis, we need motivated and eager employees that could grow with an organization, therefore education should not be a cutting-cost but investment in the future. However, this investment should be carefully thought through and strategically applied. The purposes of my master`s thesis are: - to examine scientific literature from the field of human resources, knowledge sharing and long-life learning, - to present Slovenian educational system and analyze whether Corporate University could be implemented, - to conduct empirical research in one of Slovenian corporation and examine possibilities for the implementation of Corporate University. On the basis of my goals I set up three main hypotheses, which are as follows: H1: Lack of knowledge about Corporate University`s existence in the world will make it harder to implement in Slovenia. My hypothesis is that Corporate University is not well known concept in Slovenia and that many do not make a difference between Corporate 2

11 University and those universities that are part of formal education scheme. I believe this fact will contribute to the resistance of managers to implement it in Slovenia. H2: If Corporate Universities are the best tool for knowledge sharing and enhancing corporate culture, then they best work in multinational companies. My second hypothesis is that Corporate University show its best when they are implemented in multinational company that has units and subsidiaries all over the world. I believe that in these cases they work as unifying factor. H3: Current scattered international approach towards employee education will make it easier to apply Corporate University in Slovenian Multinational Corporation. For every change to be implemented there needs to be a reason and that is why in my empirical research I examine whether there exists a need for Corporate University to be implemented. With several questions going from general perspective of education in their company to specific question regarding special topics I will be able to evaluate if Corporate University is a way to go in Slovenia. When I test the current satisfaction with internal educational programs for the international network, I will be able to evaluate whether they need also Corporate University`s model. 1 IMPORTANCE OF COGNITIVE CAPITALISM AND KNOWLEDGE CAPITAL IN BUILDING TRUE LEARNING ORGANIZATION In today s highly competitive business environment, learning organizations hold a significant competitive advantage and knowledge transfer has a very important role within companies. Ability to harness the power of learning at all levels, individual, team, and organizational, and to disseminate it across the organization enables companies to rapidly leverage new knowledge into new products and services, into new marketing strategies, and new ways of leading the learning revolution. There has come the time when we do not talk about capitalism as such anymore, but we use the term cognitive capitalism (Virno, 2001), that has managed to arise from industrial area and fordism, passed post-fordism and ended in area where knowledge capital is important generator of value. Thus, I begin my thesis firstly with cognitive capitalism concept and division of knowledge capital and knowledge transfer, where I also include knowledge management. I continue with basic concept of learning organization and conclude with its importance in the world of multinational companies (MNCs). All of these concepts will help the reader in understanding and building Corporate University. In increasingly more connective world, MNC are exposed to a constant flow of data and information, the question is how well are they at absorbing that information and changing it into knowledge, and what effect does a good knowledge transfer between the headquarters and affiliates have on company`s overall performance. 3

12 1.1 Cognitive capitalism International division of labor is now based on the so called cognitive division of labor, which means we moved away from pure capitalism, in which products are the essence of every company, to the cognitive capitalism (CC), where knowledge represents true intellectual capital. Cognition is the mental action or process of acquiring knowledge and understanding through thought, experience, and the senses (Oxford Dictionaries), therefore people who can find, acquire and use knowledge the most effectively are the ones who are the most valuable resource in the company. Virno (2001) is one of the best known philosophers discussing the concept of cognitive capitalism, arguing that it developed from post-fordism. Virno (2001, p. 181) claims that Today work is no longer performed by a silent human chain but it is part of the production process. Labor activity is now performed alongside the system of machines, with regulating, surveillance and coordinating functions and raw materials such as knowledge, information, culture and social relations are part of the production process. With cognitive capitalism we refer»to a system of accumulation in which the productive value of professional and scientific work becomes dominant and the central stakes in the valorization of capital relate directly to the control and transformation of knowledge into fictitious goods«(vercellone, 2009, p. 119). According to Lucarelli and Fumagalli (2008, p. 78) cognitive capitalism has generated two new economies of scale that have a positive impact on the nature of production returns and therefore on productivity. On the one hand we have dynamic economies of learning (learning by doing, learning by using, etc.), strictly depending on the characteristics of information and communication technologies; on the other, we have new spatial economies, related to the existing network and capabilities that affect a given territory and are able to increase diffusion of knowledge. To obtain and sustain competitive advantage in this new environment, companies will have to learn better and faster from their failures as well as success and transform themselves into learning organization that constantly offers their employees places and resources to grow. As many things, CC can also be interpreted in many ways. In the figure below we can see the ambiguous circle of cognitive capitalism which explains how income levels in CC not only depend upon wage but also on financial gains of the company. Within processes of globalization, financial products work as multiplier of aggregate demand and equilibrium of the system relies upon the growth of financial markets and the distribution of the generated surplus, however also upon a high level of growth in the new industrialized countries. According to Lucarelly and Fumagally (2008, p. 80) the latter two conditions cannot be considered as structural, which makes CC unstable. The absence of fair social compromise determines the ambiguity of this finance-driven growth. On the other hand, authors (Lucarelly & Fumagally, 2008, p. 82) continue that equilibrium of the cognitive economy 4

13 depends also upon the impact of network economies and intellectual property right on productivity, the effect on productivity of both dynamic and static economies, public expenditures, and finally upon level of consumption, which is diminished by taxes and investment propensity. Figure 1: The ambiguous circle of cognitive capitalism Source: S. Lucarelli & A. Fumagalli, Basic income and productivity in cognitive capitalism. Review of social economy, 2008, p. 81.»Technology and globalization have led to an economy based on knowledge. Knowledge workers now outnumber industrial workers by 3 to 1. The workforce has moved from manufacturing to mentofacturing. Continuous learning and knowledge provide the key raw materials for wealth creation and have become the fountainhead of organizational and personal power«(marquardt, 2002, p. 12). Cognitive capitalism is fully in operating in the developed world, since competition from China and India forced us to build our own competitive advantage, however, we should not forget that cognitive capitalism did not erase the disparities among peoples and nations, quite opposite; it excluded them even more from global discourse. Many in Africa still do not have telephones, not less internet access; also the illiteracy rate of women has not decreased in this part of the world, although it has to be acknowledged here that some philosophers argue the notion that cognitive labor also includes reproductive work etc. 1.2 Knowledge capital Knowledge capital is the essence of cognitive capitalism and should be discussed, however before going to knowledge capital, knowledge management and knowledge transfer, we need to define what knowledge is and what types of knowledge exist. 5

14 In the analysis of knowledge processes within the company we should not forget that not every information is knowledge and that absorptive capacity is just as important as defining which knowledge to use in our work. For data to become knowledge and later usable capability, it needs to go through certain process. Most commonly used division of knowledge is based upon its origin, divided on tacit and explicit knowledge. Tacit knowledge is the knowledge we hold inside and may have difficulty expressing, whereas explicit knowledge is formal, systematic, easily shared knowledge, such as product specifications, scientific formulas, and computer programs (Marquardt, 2002, p. 149). Further on we distinguish between organizational and production knowledge, first enabling development and success of the company with organization innovations, second builds new knowledge in production. Most commonly diverse knowledge is recognized under the name Knowledge Management and Organizational Competences (Dimovski, Penger, Škerlavaj & Žnidaršič, 2005). On the basis of which knowledge we want to obtain in the organization we also customize the model for knowledge transfer, well known are tacit or explicit knowledge approaches I discuss in the following subchapter. Overall, the term knowledge capital bridges the difference between knowledge as a resource and capital as wealth generator. Knowledge capital thus also includes knowledge management that deals with the»flow«of knowledge. Each of them is crucial and should collaborate in creating value for the company. For example, good knowledge transfer techniques may not be of any use if the knowledge of the employees is not valuable (in quality and relevance) enough to transfer. Of all the factors of production, knowledge capital creates the longest lasting competitive advantage. It may consist entirely of technical information (as in chemical and electronics industries) or may reside in the actual experience or skills acquired by the individuals (as in construction and steel industries). 6

15 Figure 2: Structure of Knowledge Capital Knowledge Captial KC Human Captial HC Information Captial I + ICT Source: T. Nasseri, Knowledge Management. GIS Community of Practice Workshop: Moving Forward Together, 2006, p. 5. When talking about knowledge capital, we accept the premise that knowledge is what generates future value in forms of socio-economic benefits or profit. As shown in the figure above, knowledge capital consists of human capital (HC) and Information Capital (IC). Under information capital we also include Information and Communication Technologies (ICT). Human Capital (Nasseri, 2006) represents the totality of people s knowledge, talents, skills and personality traits, and IC the contents of the information storage media: Web, scientific papers, patents, design manual s, books, etc Knowledge management The basic framework of the multinational firms and knowledge management is derived from the theory of three models: the horizontal model, the vertical model and the knowledgecapital model. The horizontal model describes a firm with plans that engage in the same activity in the multiple locations, vertical model locates different activities in different countries in order to take advantage of cost differences. Upgrade from that would be the knowledge capital model which integrates horizontal and vertical models and allows for both multiplan scale economies and exploitation of factor-price differences (Blonigen, Davies & Head, 2002). In order to better understand knowledge transfer within the organization and to use it properly, we need knowledge management. Knowledge Management Processes within an organization are indicated in Figure 3. Organizational culture impacts all processes within a company and it should be consistent also with knowledge mechanisms and techniques. Technologies offer us tools for transfer of knowledge and sharing which is in general connected with business processes and practices of an organization. Figure 3: Knowledge System 7

16 Knowledge system Organization & Culture KM Process Technologies Business - Value Generating Process & Practices Source: T. Nasseri, Knowledge Management. GIS Community of Practice Workshop: Moving Forward Together, 2006, p. 10. Knowledge processes (Nasseri, 2006) further on consist out of 5 main stages: - Knowledge Needs Assessment - Knowledge Generation & Acquisition - Knowledge Mapping & Accessing - Knowledge Sharing & Transfer - Knowledge System Evaluation. From the above mentioned stages I would emphasize the importance of Knowledge Mapping and Accessing, where the main question is whether the organization actually knows what it knows, since it occurs in practice that organizations look outside for knowledge that they already have inside; however this knowledge is scattered all over the organization. Organizations often lack systems for transferring and sharing knowledge, some also in most crucial storage systems. Knowledge Mapping and Accessing includes (Nasseri, 2006): codification & categorization of enterprise s knowledge: R&D, consultants, internal projects, inventory of Knowledge Capital: data, competencies, solutions, problems, patents, KC locating capabilities, access managements, security of corporate memory. Knowledge management engages in ways of sharing and managing information among employees and within the organization with the help of information technology. Besides information transfer it comprises also currents of procedural and critically-evaluated knowledge and all other types of knowledge that was gained, that members of organization hold or knowledge that they intend to carry over around an organization (Dimovski et al., 2005, p. 103). Knowledge management systematically searches, organizes and ensures intellectual capital of the company and the culture of constant learning and sharing of knowledge, thus uniting the processes under the term knowledge capital. 8

17 When implementing knowledge management in a company, managers still face many challenges and they have wide range of options to help them out. Each company is specific in its nature, industry, people and approaches, however two fundamental approaches to knowledge management do exist, tacit and explicit knowledge approach and synthesis between them is recommended to create a hybrid design for the knowledge management practice. According to Sanchez (n.d.) the basic belief of the tacit knowledge approach is that knowledge is essentially personal in nature and is therefore difficult to extract from the heads of individuals and it focuses on managing key individuals as knowledge creators and transfer of people as knowledge carriers. By contrast, the explicit knowledge approach argues that knowledge is something that can be explained by individuals; therefore it can be articulated and made explicit. Here information system plays a huge role, as it facilitates the dissemination of explicit knowledge assets across the company. Table 1: Basic Beliefs in tacit versus Explicit Knowledge Management approaches Tacit Knowledge Approach Explicit Knowledge Approach Knowledge is personal in nature and very difficult to extract from people. Knowledge must be transferred by moving people within or between organizations. Learning must be encouraged by bringing the right people together under the right circumstances. Knowledge can be articulated and codified to create explicit knowledge assets. Knowledge can be disseminated (using information technologies) in the form of documents, drawings, best practices etc. Learning can be designed to remedy knowledge deficiencies through structured, managed, scientific processes. Source: R. Sanchez, Tacit Knowledge versus Explicit Know ledge Approaches to Knowledge Management Practice, n.d., p. 20. Both approaches have their strengths and weaknesses that can be explored. A benefit of tacit knowledge approach is that it may also lead to improvements in employee satisfaction and motivation when an organization officially recognizes and makes visible the knowledge that individual workers claim to have. Although explicit knowledge approach is more challenging to start, it offers greater potential benefits in the long term, since knowledge that can be made explicit can often be more carefully codified and more effectively leveraged than tacit knowledge assets. The explicit knowledge can also stimulate more the learning process within 9

18 an organization, since it is more visible and analyzable, it can be discussed, debated, tested further, and improved (Sanchez, n.d). All in all, the goal should be to create a hybrid design for knowledge management practice that synthesizes the right combination and balance of the tacit and explicit knowledge management approaches. As it is good to encourage personal exchange of tacit knowledge, it is also good to have some basic standard knowledge/expertise written down Knowledge transfer and Multinational companies (MNCs) Knowledge is the essence of our learning organization, and therefore we have to have mechanisms in place to enable its transfer. There is little use of knowledge that was given only to one and not spread to others, or that was collected but not promoted to be used, even worse is when organization today builds non-attractive online portals for knowledge sharing with no monitoring of its usage and results. Especially when talking about MNC, knowledge transfer is of great importance. In MNC knowledge is being transferred from headquarters (HQ) to affiliates abroad, from affiliates to headquarters and among affiliates themselves. Although knowledge transfer can be different from one organization to another, the basic characteristics remain. Therefore knowledge transfer is the transfer of either expertise or external market data of strategic value among individuals, groups, units, and departments (Gupta & Govindarajan, 2000). In my case study of possibilities for CU implementation in Slovenia I will focus on two dimensions of knowledge transfer, firstly being between headquarters and subsidiaries; and secondly, knowledge transfer among subsidiaries themselves. I am interested in finding out to what extent headquarters and its subsidiaries transmit knowledge to each other. Literature knows different types of knowledge transfer, depending on whether they are connected to the types of knowledge itself or means of transfer. In the table below you can find collective explicit and tacit knowledge approach (Knowledge Management Systems, 2004). The former happens when a company opens a production unit in other country; it sends its own team of experts there to start and manage the initial process and teaches local employees/managers how to manage production. For each team-setting a protocol should exist which specifies how a team should function (known as Transfer Protocol). Explicit approach is what is mostly used, since most of the knowledge transferred is explicit and factors like human relations play important role. The third type is dedicated to unique knowledge transfer. 10

19 Collective Sequential Transfer - focuses on collaboration and collective knowledge, - one team specialized in specific task moves to another location to perform that same task. Table 2: Types of Knowledge Transfer Explicit Inter-team Transfer - allows a team, which has done a job on a site, to share its experience with another team working on a similar job on another site. Source: Knowledge Management Systems, Tacit Knowledge Transfer - unique knowledge - the team receiving the tacit knowledge can be different in location, in experience, in technology and in cultural norms In her book about knowledge transfer Nancy Dixon (Dixon, 2000) goes further in distinguishing five types of knowledge transfer that could be put in a sequel as seen from the Figure below. These types are: Serial, Near, Far, Strategic and Expert Transfer. With each level the amount of time and quality of techniques to transfer knowledge increases. If the knowledge is going to be used to handle novel situations, it is referred to as a far transfer. When the knowledge is applied to a routine situation the type of transfer is called a near transfer. Table 3: Types of Knowledge transfer according to Dixon (2000) Far Strategic Expert Near Serial Source: Adapted from N. M. Dixon, Common knowledge: how companies thrive by sharing what they know, 2000, pp In the end old fashion face to face knowledge transfer is still proven to be most effective, however with evolvement of technologies there is no need to stand in the same room in order for learning to take place. Communities of practices (CoP) as a form of sharing information in the informal, self-organized network are also among the most popular mechanisms used in some organizations. 11

20 1.3 Learning organizations To be or not to be a learning organization is no longer a question today. If companies are not seeing individual and collective learning as keys to competitive advantage, they will need to realize it quickly. This concept is not new, however many are still catching up with it in practice. Learning organization grows in environment that values learning, inquisitiveness and creativity. According to Dimovski et al. (2005, p. 75) the learning organization also evolved into a new, molecular or network model, where each change in an organization affects the other parts of the organization. And similar to chemical processes, changes are not always just casual but also evolutionary. Learning organizations are those organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together (Senge, 1990, p. 3). Peter Senge, the founder of the Center for Organizational Learning at MIT's Sloan School of Management, developed a model of continuous learning, which includes five disciplines 1 : systems thinking, personal mastery, mental models, building shared vision and team learning. However, he also argues (Senge, 1994, p. 14) that one must be careful when using the term learning, since it has lost its meaning by some that confuse it with just taking in information and he points out the importance of adaptive learning that is joined with generative learning, learning that enhances our capacity to create. Learning has become a driver of business, since companies realized that they are too affected when people and their knowledge just walk out their front door. In the Figure below we can see the systems learning organization model, where people, organization, technology and knowledge subsystems enhance the learning. These five systems should be partners in building and maintaining organizational learning and productivity. 1 A discipline is viewed by Senge as a series of principles and practices that we study, master and integrate into our lives (Senge, 1994). 12

21 Figure 4: Systems Learning Organization Model Source: M. J. Marquardt, Building the Learning Organization mastering the 5 elements of corporate learning, 2002, p. 24. E-learning With the spread of online technologies and webinars, it is almost impossible for top companies to lack behind and miss the train, and so educational system cannot escape the virtual world, even more they need to enhance it. The challenge here is how to be more innovative in your approaches, so that employees will want to participate in knowledge sharing, have fun with it in the same way as many people enjoy today social networking sites. One of them is E-learning that offers tools for exchanging knowledge, less and less it is used just as a media for transferring information. Content is being created and used, no longer are members just passive participants. When it concerns e-learning, we are still in our infancy too. Learning via linking, , self-paced courses, simulations, chat rooms, etc., is still a new frontier for us. While we may have accepted that this is how the future business as well as day-to-day life will look like, our intellects are still catching up. And the ways in which our brains work can enable our learning, or they can interfere with it. The trick is in knowing which methods of technology will smooth the way to learning and which will create speed bumps that dislodge learning (Hall, 2002, p. 147). Of course, e-learning cannot replace classroom training. However, it is a great solution for some training needs, companies can effectively move some training sessions on-line. However, this demands extra work for lecturers as well, since they cannot simply put their presentations on-line with some additional notes; they have to adapt the whole program, too. According to Rosen (2009) there are many things one should watch out, such as length of the individual trainings, user friendly design, easy to use and navigate sites, content display that works on different devices, interactive tools, test-taking tools etc. 13

22 When planning e-learning we need to consider the ways new generations, the so called digital natives (Prensky in Rosen, 2009) learn today with the help of Information Technology (IT). They gather information and knowledge at the same time from different sources, but only superficially. They look for information according to their needs, not on stock; they communicate all the time, and create their own media. All these changes are being seen also in education that is leaner centered, new educational model is recognized under the name connectivism. According to Siemens (2004) Connectivism presents a model of learning that acknowledges the tectonic shifts in society where learning is no longer an internal, individualistic activity. He defines connectivism as learning theory for digital age. The world has become more interconnected and complex, changes are happening fast and only those quick enough survive. Siemens (2006, p. 4) further on identifies the key changes facing learners and organizations today to support his theory. They include: - societal changes, - technology, - globalization, - rapid pace of information development, - decentralization. To sum up, organizations should not just look on e-learning as a quick cost-saving method for network connectivity. Instead they should plan it carefully, constantly on the watch for new developments and updates. Furthermore, one should measure how often and when employees access such portals, and decide on evaluation techniques etc. It is far more complex than just publishing an e-internal portal of an organization and calling it e-learning. 1.4 Cognitive capitalism in international Business environment Cognitive capitalism places intellectual capital of people in the first place; how to gather, critically evaluate and use information gained, becomes a special entity of each individual in the company that is responsible for changes and growth of the company. Employees and their innovative thinking is the essential part of an organization. Thus, companies also should not be afraid to participate in Best employee competition and award ceremonies, since knowing what employees think of the company`s human resource development is the best for improving it. With satisfied employees, who feel that they can personally grow within the company, we get more motivated and productive workforce. A lot of research has been done on the effects of knowledge transfer in MNC on the productivity and overall performance of companies. Resource based theory and network theory are the main approaches used by the researchers in this field. The first one suggests that knowledge and MNC network strength are the two 14

23 critical firm resources individually and collectively influencing new product outcomes. Hansen and Nohria (2004, p. 95) extend this logic and argue that the value of a foreign subsidiary comes partly from its interactions with customers and competitors of its host country market and with its headquarters. Therefore, subsidiaries can be viewed as parts of a global value-added chain. Network based theory emphasizes that a foreign subsidiary is an internal information source embedded in an MNC network. However, the question remains on their usage and effectiveness. How is this information collected? How is knowledge applied to every day practice? Different organizations take different approach to handle these issues, one of them could be strategic approach towards learning and brand new educational system that would grow with the organization. Additionally, research on the knowledge-based view of the firm has suggested that social networks facilitate the creation of new knowledge within organizations (Kogut & Zander in Tsai, 2001, p. 997). Therefore companies should take initiative in this process. Personal connections and networking are becoming more and more important in big corporations, just knowing personally the person you cooperate with every day through different media (telephone, computer, s) can help build a stronger bond. Business units of a corporation should not only identify which knowledge do they need, they also must have the capacity to absorb inputs in order to generate outputs. Therefore, it is important to evaluate whether or how knowledge is applied in organization, since the knowledge itself cannot lead to competitive advantage. And here is where the model proposed in my thesis come into place, Corporate University can be the right way to go. As De Luca and Atuahene-Gima (in Lee, Chen, Kim & Johnson, 2008, p. 4) rightly argue the configuration and integration of knowledge is the key to success«. Knowledge transfer can be measured by changes in knowledge or by changes in performance, with it capturing changes that occurred in other parts of the global organization and changes in competitiveness in other foreign markets (Argote & Ingram, 2000). Evaluation processes are a whole separate issue that I will not touch upon in my thesis; however evaluation and control standards have to be in place before building any kind of educational program, and Corporate University is certainly one of them. 2 DEFINITION, MODELS AND KEY PROCESSES OF CORPORATE UNIVERISTY`s DEVELOPMENT To attract and retain talent, the successful multinational organization today uses learning as a tangible offering to new employees, and really the best ones think of innovative approaches in their educational strategy. The purpose of this chapter is to introduce the basic concepts and developments in the field of Corporate Universities (CUs), where it is important to see them 15

24 as a process that evolves through time and should be applied case by case to specific organization. With the help of CU organizations integrate strategically and results are seen as oriented learning throughout organization`s entire workforce chains, and thus they make learning an ongoing process. Not to neglect, there are also some practices of Corporate Universities that carry the name, however do not present the real core of what Corporate University should be. It is important to be clear that CU is not just renamed Human Resources department or training program. M. Allen (2007) argues that we are facing a new generation of Corporate Universities that should focus not only on how knowledge is obtained, but also how it is actually used in day-to-day processes in an organization. I continue the chapter with presenting models of Corporate Universities from organizational as well as content perspective, functions that CU could encompass. 2.1 Emergence and development of Corporate University The concept of Corporate University started to evolve in USA, originally driven by executive development function. The shift in demand led companies to bring university professors inhouse to deliver company specific programs. Now-a-days many successful companies have their own Corporate University, and the models themselves evolved, which can help us find the best one also for Slovenian environment. However in order to understand the Corporate University of 21 st century, we must firstly look at how it all began. Densford (1998) finds the main reasons for organizations establishing Corporate Universities in the United States which are: 84 percent to link education and training to strategic business goals; 61 percent to drive change within organizations; 59 percent to elevate the importance of education within the organization; 48 percent to coordinate all training and education programs in a single area. Corporate universities emerged in the twentieth century as a continuation of the workforce education trend that began as early as Instead of coping with the perceived slowness and inapplicability of the theoretical learning found in traditional colleges and universities, business and industry turned inward and created training and development departments (Barley, 2002, p. 43). As we see in Figure 5 it all began with so called corporation schools or internal trainings of General Electric and General Motors, however true emergence of Corporate University happened about 40 year later when General Electric opened the first»management school«in What is more, General Electric s Jack Welch Management Development Institute has become known as a top leadership academy which has supplied numerous CEOs for companies such as Boeing, Home Depot, and many others (Meister, 2009). From this time on many more Corporate Universities in the United States (US) and across the world have been launched, some survived, others loosing themselves in their own administrative processes. 16

25 Figure 5: History of Corporate Universities Source: Corporate University Enterprise October Many authors link the creation of Corporate Universities to the poorness of state education that lacked the expertise for providing what companies needed the most for growth and continuous innovations. CEOs in large corporations found that employees lacked the competences; therefore they set up programs within organizations to enable more specific training and development. Now-a-days the trend goes toward shorter, but annual courses for top-management. One of the first studies of leading Corporate Universities (those at Motorola, GE, Arthur Anderson) discovered that these companies shared similar strategic orientations for their corporate universities. Most of the leading Corporate Universities focused on aggressive growth and continuous innovation (Miles, 1993). Since the beginnings, Corporate Universities have spread all around the globe. Already back in 1998 almost 40 % of the Fortune 500 firms had a Corporate University, which made Corporate Universities sector the fastest growing one in higher education (Meister, 1998). What is more, according to Hearn (2002) in 1993, Corporate Universities existed in only 400 companies and by 2001 this number had increased to 2,000. While Europe has boasted numerous Corporate Universities (typically called»academies«or»institutes«) for more than a decade, there are increasing numbers appearing in China, many other Asian countries, Australia, South America, and parts of Africa. The advisory board of the Global Council of Corporate Universities consists of members representing Corporate Universities from the United States, Canada, Argentina, France, Spain, Switzerland, Russia, the United Arab Emirates, China, Singapore, India, Australia, and South Africa (Allen, 2010, p.48). CU makes a difference when its work and structure is closely connected with the company`s overall strategy and vision. It helps align learning programs with business goals and reduces 17

26 the cost of providing training. As shown in the figure below, companies need to move from individual to organizational orientation and from tactical to strategic learning. Educational programs, especially in global companies, should all lead to one common focus and goal, uniting under one umbrella all the individual as well as organizational training. As seen in the quadrant four (Figure 6), the optimal learning occurs where training tactics and organizational strategies are integrated in such a way that learning becomes a competitive business variable, which blends the difference between learning and work. Figure 6: Strategic Learning Maturation Source: K. Barley, Learning as a competitive business variable, 2007, p. 54. According to Barley (2007) next generation of CU are more focused on contributing to organizational performance, which means they need to shift focus from training to the strategies of learning, however this approach may include greater accountability and risk, and evaluation will play a bigger role here Definition of CU: Utilization of the term Corporate and University In the literature there are many definitions of what Corporate University is and what it incorporates. Different authors put emphasis on different areas and functions of corporate universities. However, the basic construction of the definition is more and less always the same, bringing together terms corporate and university, which I analyze below. Overviews of various definitions of CU will help me construct the definition that will best suit my case analysis. 18

27 Utilization of the term Corporate There is less discussion about the utilization of the term corporate in the literature as it is for the term university. The exact meaning of the term corporate is: of or relating to a corporation (Business Dictionary). For this purpose I directly translated this adjective into Slovene as korporacijski, although some Slovene literature uses the term podjetniški (angl. Entrepreneurial). The reasons why the term corporate should be used are according to Shenton, Clist and Dirks (2005, p.147) that the»term corporate has the universal connotation of a common policy being implemented throughout the organization, across the dividing lines of geography and business unit identity. On the other hand, in the case of a CU focusing on top management and existing alongside decentralized training centers, the term corporate refers to the inter-business unit level within the central headquarters«. To further elaborate, according to Meister (1998), the term corporate is used as such because it also offers learning contents to suppliers and customers, or takes knowledge from them, by utilizing communications and facilitation of social, technological and organizational practices. Additionally, Rademakers and Huizinga (2000) argue that Corporate Universities should remain in its title corporate, because it emphasizes their link with strategy 2. More and more universities are aware of this and cooperate closely with top management to develop programs that will benefit the company`s long-term performance. Authors further define three stages of corporate development: operational, tactical, and strategic. However, it should be pointed out that these are not perceived by authors as different types of corporate universities, but rather as different developmental stages, meaning that Corporate Universities evolve, which I elaborate upon in the following sub-chapters Utilization of the term University The term university when talking about Corporate University is professional and at the same time provocative, since it means corporate world entering the academic sphere, two poles that interact a lot, however they have never merged into one. The word university is derived from the Latin universitas magistrorum et scholarium, which roughly means community of teachers and scholars. Specifically the word Universitas" refers in general to "a number of 2 For the purpose of the case study of corporate university`s implementation in Slovenia, the use of the term corporate could in author`s opinion also have positive effect on general image of the whole organization, since there are some continuous questions in Slovenian business environment whether we even have corporations, what constitutes as a corporation etc. 19