Expertise and collaboration in the geographically dispersed organization.(expertise management)

The knowledge-based view of the firm has led to greater theoretical interest in how organizations integrate knowledge resources embedded in their employees' expertise. We examine the knowledge-integration problem in geographically dispersed professional organizations in which experts work in project teams. From consideration of coordination costs and local ties, we argue that (1) the organization will develop specialized expertise within local sites, (2) managers avoid crossing geographic boundaries to staff a project unless bringing on a distant expert helps meet customer requirements, (3) cross-site connections help less-needed members participate in dispersed projects, and (4) dispersed projects that have a better match of expertise generate higher net earnings. We tested these hypotheses using archival data and interviews in a geographically dispersed professional service organization. We examined how managers staffed 493 local and dispersed projects over a five-year period, and the financial outcomes of these projects. Managers created dispersed projects comparatively rarely; they did so when scarce expertise from other sites was needed to match customers' project requirements. Dispersed projects garnered higher net earnings than local projects when there was a better match of scarce expertise to project requirements. However, a curvilinear relationship was observed, such that a very high percentage of dispersed experts on a project increased coordination costs and reduced net earnings. Our study extends the knowledge-based view by showing how considerations of coordination costs and social ties affect knowledge integration in the geographically dispersed organization. The study also shows, empirically, the managerial trade-offs that encourage or discourage dispersed collaboration.

Key words: knowledge-based view; virtual teams; expertise management; project teams

Introduction

From the knowledge-based view of the firm (Empson 2001, Grant 1996b, Lowendahl et al. 2001), integrating the expertise of employees is an important process in knowledge organizations. Organizational success depends not just on individual employees' expertise, but also on how the organization combines their expertise and deploys people in teams (Grant 1996a, b; Teece 1998). Nordhaug and Gronhaug (1994, p. 92) argue that a knowledge organization's distinctive capability rests on its ability to collaboratively blend specialists from its "competence portfolio" to perform better than competitors do. In this article, we argue that project team staffing is a critical function for achieving knowledge integration and strategic advantage in professional and technical services organizations, a sector of the economy that is especially dependent on expertise and collaborative teams (Maister 1993).

The knowledge-based view is not a formal theory, but an emerging set of ideas about organizational knowledge (Priem and Butler 2001). Grant (1996a) and Kogut and Zander (1992) have argued that specialized knowledge embedded in people is the organization's most important asset. Typically, many kinds of experts need to be included on a team to meet project requirements and satisfy customer needs. This argument does not account for how expertise is likely to be distributed across sites in a dispersed organization, influencing the costs and net returns of dispersed and local projects. The argument also does not account for the influence of coordination costs and local ties in project team staffing decisions.

In this article, we suggest a theoretical approach to understanding staffing of project teams in the geographically dispersed professional organization. Our approach accounts for organizational dispersion, returns to expertise, and the costs and benefits of collaboration across sites. We develop theoretical arguments about managers' decisions regarding expertise utilization when organizations are geographically dispersed, and we test these ideas using data from one professional service organization. In doing so, we contribute to the knowledge-based view a nuanced and predictive account of knowledge integration in organizations.

Theoretical Argument