Elsevier

Long Range Planning

Volume 39, Issue 2, April 2006, Pages 155-175
Long Range Planning

Inter-Organizational Learning and Strategic Renewal in SMEs: Extending the 4I Framework

https://doi.org/10.1016/j.lrp.2005.02.012Get rights and content

Abstract

This article explores how mature SMEs which lack internal resources access external knowledge to facilitate strategic renewal. Organizational learning, in contrast to entrepreneurial learning, recognizes that owner-managers must distribute knowledge throughout the firm to achieve competitive benefits. Three case studies demonstrate how external ‘knowledge providers’ (customers, suppliers and educational institutions) help institutionalize ‘new’ knowledge. Initially, learning from inter-organizational relationships requires owner-managers to be proactive in accessing and extending appropriate inter-organizational relationships. Second, external organizations can play an active role by ‘intertwining’ knowledge to support the development of processes, systems and routines that distribute and institutionalize learning throughout the organization. The three cases have practical implications for owner-managers and add to academic knowledge via the extension of Crossan et al's 4I model of organizational learning.

Section snippets

Introduction: challenges for SMEs

Senior managers' perceptions of environmental conditions have a significant influence on the exploitation of opportunities. Researchers must identify the influences on those key individuals responsible for decision-making if they are to understand the way in which organizations acquire and utilise new knowledge.1 This is particularly important in SMEs where owner-manager (OM) influence is pervasive and will directly affect the ability of their organization to learn.2 Limited managerial

Individual to organizational learning

While the topic of learning in SMEs has attracted considerable attention in recent years, much of this work focuses on learning associated with the entrepreneur or owner-manager.6 We actually know very little about the internal processes associated with organizational learning and strategic renewal in smaller firms.7 Crossan et al. posit that, while learning may start with individuals, for organizational learning to occur new knowledge must be interpreted, distributed and institutionalized in

Institutionalizing learning

One of the most widely quoted attempts to give greater theoretical coherence to the field of organizational learning (OL) is Crossan et al's 4I framework. OL is viewed as a process incorporating thought and action shaped by the institutional mechanisms that are the basis of every established organisation. Crossan et al define the four social and psychological micro-processes which link learning at individual, group and organisational levels in the following manner:

  • Intuiting is the pre-conscious

Research methods and data collection

Our primary objective is to demonstrate how SMEs institutionalise knowledge acquired from external sources. We adopt a similar approach to Crossan et al to demonstrate the process of strategic renewal through the institutionalization of knowledge from external sources, drawing on three cases undertaken as part of other research projects. We suggest that this approach is appropriate because it is important to understand better the processes of learning and organizational renewal in smaller

The process of change in SMEs

As discussed above, the empirical data are based on three SMEs from different manufacturing sectors. We describe key elements of the change process in each firm to demonstrate how SMEs can respond positively to serious environmental threats. Critically, this positive response depends primarily on the willingness of owner-managers to initiate radical organizational change.

Discussion: intertwining knowledge in SMEs

This article focuses on the processes by which mature SMEs acquire, absorb and institutionalize new knowledge. We suggest that the way in which change was managed in each of the three SMEs followed a broadly similar process:

  • 1.

    a critical incident prompted managerial action;

  • 2.

    owner-manager recognized the need to access external knowledge and ‘opened-up’ to sources of new knowledge (customers, suppliers, knowledge providers);

  • 3.

    internal systems and structures were created to share knowledge (from

Theoretical implications

In the context of a theoretical understanding of OL, our objective is to extend the 4I framework by incorporating an external dimension to the institutionalization of knowledge in SMEs. That inter-organizational learning, both formal and informal, takes place is widely established in a range of literatures.25 Our approach differs in two ways: first we focus specifically on the problems of learning in mature SMEs, and second, we highlight the importance of external actors (customers, suppliers

Managerial implications

This paper has implications for those responsible for managing small firms. We know from the limited research on organizational learning in SMEs that owner-managers (OMs) can be both the main means of accessing new knowledge and the barrier to dissemination of that knowledge. This paradox is related to the way in which OMs exercise proprietary rights which means they are often the sole authority within the firm. Effective and proactive OMs recognize the risk of organizational failure associated

Conclusions

This article extends the original 4I framework by identifying the significance of external organizations to learning in SMEs. As a means of demonstrating the utility of our model we introduce three cases of learning in small, independent firms, who each renewed their activities by tapping into knowledge and expertise from external organizations. This activity was clearly part of the feed-forward process, as inter-organizational links helped resolve intractable problems in BRW, RSL and DMF.

Acknowledgements

Although data for this paper came from earlier projects the conceptual ideas were developed as part of an ESRC project; the evolution of business knowledge in SMEs (RES-334-25-0015). We acknowledge the contribution of two anonymous reviewers whose insight and suggestions helped us develop the paper. We also acknowledge the assistance of Jonathon Morgan (LRP copy editor) who improved the readability of this article. All errors and omissions remain the responsibility of the authors.

Oswald Jones is Professor of Innovation and Entrepreneurship and head of the Centre for Enterprise at Manchester Metropolitan University Business School (MMUBS). He has published widely in these areas with a particular focus on smaller firms (including British Journal of Management, Journal of Management Studies, Human Relations, R&D Management, Technovation and International Small Business Journal). Current research interests include innovation and entrepreneurial networks, innovation

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    Oswald Jones is Professor of Innovation and Entrepreneurship and head of the Centre for Enterprise at Manchester Metropolitan University Business School (MMUBS). He has published widely in these areas with a particular focus on smaller firms (including British Journal of Management, Journal of Management Studies, Human Relations, R&D Management, Technovation and International Small Business Journal). Current research interests include innovation and entrepreneurial networks, innovation management in mature SMEs, new venture creation and organizational learning in SMEs. Manchester Metropolitan University Business School, Aytoun Building, Aytoun Street, Manchester, M1 3GH UK tel: +44 (0) 161 247 3733, e-mail: [email protected]

    Allan Macpherson is senior lecturer in HRM and Organizational Behaviour at Manchester Metropolitan University Business School. His current research interests include a collaborative ESRC research project on the evolution of business knowledge in small firms, and the transfer of knowledge and knowing between organizational communities. His research contributions include publications on management development in small firms, e-learning, supply chain management and organizational learning. tel: +44 (0) 161 247 3971, e-mail: [email protected]

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