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Social Capital and Knowledge Integration in an ERP Project Team: The Importance of Bridging AND Bonding

Social Capital and Knowledge Integration in an ERP Project Team: The Importance of Bridging AND Bonding
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  Social Capital and Knowledge Integrationin an ERP Project Team: The Importanceof Bridging AND Bonding Sue Newell, Carole Tansley *  and Jimmy Huang w Bentley College, Department of Management, Waltham, MA 02453, USA,  * Nottingham Business School, TheNottingham Trent University, Burton Street, Nottingham, NG1 4BU and  w Nottingham University BusinessSchool, Jubilee Campus, Nottingham NG8 1BB, UK A project team, set up to design and implement a large-scope IT system, is essentiallytasked with integrating distributed knowledge. This suggests that the social capital of members will be organizationally important. However, we suggest that in understandingthe relationship between social capital and knowledge integration within a project team,it is necessary to distinguish between two forms of social capital – external bridgingsocial capital and internal bonding social capital. We argue that for the effectivemobilization of ‘weak’ social capital bridges for collective purposes, there is first a needto create ‘strong’ social capital bonds within the project team so that it becomes acohesive social unit that will be able to effectively integrate knowledge that is acquiredthrough members’ bridging activity. Introduction Companies are increasingly using temporaryproject teams to manage IT initiatives that areone-off and large-scope (Markus, Tanis andFenema, 2000). Such large IT projects are,however, often not successful so that it isimportant to identify areas where they can beginto go awry (Kumar and van Hillegersberg, 2000).In this paper, we consider the problems experi-enced in such projects from a knowledge integra-tion perspective, drawing on empirical materialfrom a project that was set up to design andimplement an Enterprise Resource Planning(ERP) system. ERP systems are based ondeveloping a common IT infrastructure andcommon business processes that will supportintegration of the total business activity (Markus,Tanis and Fenema, 2000). They have beendeveloped in response to the need to manageacross global businesses, which is difficult wheneach business is using different systems andtechnologies (Imra, Murphy and Simon, 2000).ERP systems have diffused extremely rapidly andextensively, especially across large firms, basedon their purported benefits, especially in terms of improved productivity and speed (Davenport,1998). However, evidence is accumulating thatmany organizations have failed to achieve suchbenefits (Stein, 1998).In considering the problems experienced inlarge-scale IT projects from a knowledge integra-tion perspective we have chosen to adopt aprocessual account, which takes as its startingpoint that all human knowledge is developed,transmitted and maintained in social situations(Berger and Luckmann, 1966). From this per-spective knowledge is not a ‘resource’ that cansimply be transferred (Barney, 1991); nor is itsimply embedded in organizational processes(Winter, 1987). Rather, from this perspective,knowledge is seen to emerge as people interactrecurrently in the context of established routinesand procedures. Therefore, when firm membersparticipate in organizational activities or prac-tices, they have the potential to simultaneously British Journal of Management, Vol. 15, S43–S57 (2004) r 2004 British Academy of Management  create or extend the firm’s knowledge (Spender,1996). Thus, we analyse the problems experiencedin such IT projects based on their requirement forthe integration of knowledge. In order to do thisthe individual project members need to drawupon their social capital (Nahapiet and Ghoshal,1998) to access dispersed knowledge. However, aswe will see, individual project members maychose not to use their social capital to gain accessto knowledge that is of benefit to the project and/or may not be able to effectively integrateknowledge within the project team.The paper is structured as follows. Theliterature review begins with a consideration of the importance of knowledge integration forlarge-scale IT design and implementation pro- jects and focuses on the problems associated withthis in terms of the dispersed and ambiguouscharacter of organizational knowledge. Theliterature review then highlights the crucial rolethat social capital plays in facilitating thisknowledge integration. The next section outlinesthe research method that has been adopted andthen the case itself is described, followed by amore detailed description of the ERP projectteam and its activities. The analysis and discus-sion of the case is provided in the next sectionand in particular we focus on the conditions thatappeared to be absent in the case and whichaccounted for the personal, rather than collectivefocus of social capital appropriation. The paperends with some conclusions about the antece-dents of social capital for effective knowledgeintegration within a project team. Knowledge integration and socialcapital Once a company has decided to adopt an ERPsystem and has selected the particular variant, thesystem needs to be configured to suit theparticular organizational context. This involvesmapping existing organizational processes (‘asis’), identifying the organizational processes thatare embedded in the ERP software and thendefining new organizational processes (‘to be’)that ‘fit’ both the software and the organization(Soh, Sia and Tay-Yap, 2000). Typically, a multi-functional implementation project team will beset up to configure and implement the ERPsystem. The first task of this team then, is to mapexisting ‘as is’ organizational processes. Yet thisposes a fundamental problem because, as will bediscussed below, complete knowledge of thesecurrent processes does not exist, since organiza-tional knowledge never exists in a concentrated orintegrated form (Becker, 2001). Exploring thecharacter of organizational knowledge is thusimportant for understanding the task of mappingexisting and defining new organizational processes. The dispersed and ambiguous character of organizational knowledge Tsoukas and Vladimirou (2001, p. 981) defineorganizational knowledge as ‘the set of collectiveunderstandings embedded in a firm, which enableit to put its resources to particular uses’. Whilethey note that much of this organizational knowl-edge may be formal, there is always and inevitablyan informal aspect to this knowledge, which isgenerated in action. Collins (1990) refers to this asheuristic knowledge and it is the knowledge thatarises as individuals engage in their daily routinesand improvise (Orlikowski, 1996) in response toparticular situations that are encountered. Thismay or may not be shared with others, butcertainly heuristic knowledge based in action hasbeen found to contribute significantly to efficientworking (e.g. Orr, 1996). To map existingorganizational processes, then, involves accessingand integrating these collective understandings,which are both dispersed and ambiguous.First, in terms of dispersion, as Nelson (1991)notes, knowledge of a particular practice orprocess does not form a complete and coherentbody of knowledge that can be precisely docu-mented or even articulated by a single individual.Rather, it is a form of knowing that exists onlythrough the interaction among various collectiveactors (Gherardi and Nicolini, 2000; Lave andWenger, 1991). In terms of the ambiguity of knowledge, it is also clear that each individualhas only a partial view of what constitutes aparticular organizational process, since knowl-edge is inherently indeterminate (Tsoukas, 1996).Each individual sees the organizational processthrough a particular interpretive lens, whichmeans that another individual may see thatorganizational process differently. In particular,individuals from different departments or func-tions are likely to see an organizational processdifferently because departments have differentS44  S. Newell, C. Tansley and J. Huang  ‘thought worlds’ and so focus on different aspectsof a process (Dougherty, 1992).Importantly, this suggests that holistic knowl-edge of a process does not exist prior to itsdocumentation so collective knowledge of thatprocess has first to be generated through interac-tion and communication, not only betweenmembers of the project team but also betweenthe project team and others within and evenoutside the organization (Hislop  et al. , 1997).Mere access to dispersed knowledge is only thestarting point, because the ambiguity of knowl-edge means that information may not resolvemisunderstandings (Weick, 1995). Rather, peopleneed to communicate, assimilate cognitive frame-works and develop shared understandings (Beck-er, 2001). So, the integration of knowledge withinthe project team does not simply involve themechanistic pooling of the various ‘pieces’(Knights and Wilmott, 1997). Rather, the integra-tion of knowledge depends on joint knowledgegeneration. Cook and Brown (1999) describe theprocess of collective knowledge generation, as a‘dance’ since communication within a group doesnot simply add knowledge to each individual’sknowledge. More importantly, communicationand exchange within a team can also evoke novelassociations, connections and hunches such thatnew meanings and insights are generated.In the context of an organization-wide ITsystem, such as an ERP system, this issue of knowledge integration is particularly important.Simply computerizing existing organizationalprocesses will not surface the benefits of such asystem (Lee and Lee, 2000). Rather, the benefitsof an ERP system emerge from its potential tocombine information across processes that havetraditionally been independent especially inhighly diversified and geographically dispersedorganizations, such as in the case companyreported here. In order, however, to exploit thispotential, the system will need to be designed toensure this. This will only happen if the projectteam access and integrate knowledge about thedifferent organizational processes and generateideas about new ways of doing things that buildon the potential for combining information. Forexample, data on absenteeism is typically col-lected in very many different ways in differentparts of a business so that it is virtuallyimpossible to either monitor this, and/or exploreproblem areas where intervention might be useful.Similarly, there are, in many companies, numer-ous skills databases that have been independentlyset up in different areas but that are run by verydifferent principles so that looking across thecompany is virtually impossible. In an ERPproject team, then, there is a need first to developan understanding of current ‘as is’ processes andthen to integrate knowledge in order to generatenew ‘to be’ processes that identify innovative,more effective processes that capitalize on thepotential of an integrated IT system. The importance of intellectual and social capital inthe project team Most fundamentally, the successful completionof these activities will depend on selecting projectteam members with appropriate knowledge, skillsand expertise, so ideally project teams will bechosen so that their members have a mix of knowledge and capabilities in order to ensureteam diversity and representation (Schneider andNorthcraft, 1999; Teram, 1999). We can refer tothis as the intellectual capital of the team – the‘knowledge and knowing capability of the col-lectivity’ (Nahapiet and Ghoshal, 1998, p. 245).While intellectual capital and its mix across theteam is important, it is unlikely that project teammembers will have all the relevant knowledge andexpertise necessary to design the system andredesign organizational processes. Rather, theseproject team members will need to network witha range of other individuals in order to makesense of both organizational processes (‘as is’ and‘to be’) and the ERP system. Becker (2001) refersto this as the strategy of substituting knowledgeby access to knowledge. In doing this they will bedrawing upon their collective  social capital  .Despite the widespread use of the concept of social capital, the term is used differently bydifferent authors (Hirsch and Lewin, 1999).Nahapiet and Ghoshal (1998, p. 243) define socialcapital as ‘the sum of actual and potentialresources within, available through, and derivedfrom the network of relationships possessed by anindividual or social unit. Social capital thuscomprises both the network and the assets thatmay be mobilized through the network’. Theirdefinition and discussion focuses in particular onthe public good that social capital can provide foran organization. However, others focus more onhow social capital is used as a private good (Leana Social Capital and Knowledge Integration  S45  and Van Buren, 1999). Researchers treating socialcapital as a public good see it as an attribute of asocial unit and suggest that the benefit for theindividual in enhancing and leveraging socialcapital is indirect and secondary (Putman, 1993).Those treating social capital as a private goodconsider how individuals use their social networksfor direct personal benefits (Belliveau, O’Reillyand Wade, 1996). From the private-good perspec-tive, social capital is created by rational, purpose-ful individuals who build this capital to maximizetheir individual opportunities and to furtherpersonal projects. Nevertheless, it is argued thatwithin the context of a team or an organization itis possible to find some balance between theinterests of the individual and the interests of thecollective, if a conscious effort is made to achievethis (Leana and Van Buren, 1999).This raises the question as to what conditionslead an individual team member to use theirsocial capital for the public collective good (i.e. toaccess and use knowledge relevant for theproject) rather than, or at least as well as, theirown private good. This issue will be explored inthe case study presented later. Leana and VanBuren (1999) provide some indication of thiswhen they argue that providing stability inemployment relations is a key way to ensure thatthe benefits from social capital are balancedbetween the needs of the individual and the needsof the organization.The Nahapiet and Ghoshal (1998) definition of social capital also focuses on the way networksprovide an individual with an access or bridge tothe information of others. Other definitions focuson the ‘bonding’ aspect of social capital (Adlerand Kwon, 2002). The ‘bridging’ view sees socialcapital as a resource inhering in a social networkthat can be appropriated by a focal actor basedon relations with others in the network (Burt,1992). Individuals who provide a ‘bridge’ acrossdivided communities (structural holes) are im-portant, since they play a brokerage role. Thelevel of associability between the parties can berelatively limited and trust can be fragile (Leanaand Van Buren, 1999). Such weak ties (Grano-vetter, 1973) with many external parties can,however, be sufficient to ensure access toinformation and knowledge from across theorganization (Hansen, 1999). The ‘bonding’ view,by contrast, focuses on the collective relationsbetween a defined group (Coleman, 1988). Socialcapital relates to the internal structure andrelations within this collective. It ensures aninternal cohesiveness that allows the collective topursue shared goals. This bonding view of socialcapital starts from the premise that levels of associability and trust between the parties in thenetwork must be strong to ensure that collectivegoals are pursued (Leana and Van Buren, 1999).Adler and Kwon (2002) note that somedefinitions do not distinguish whether the focusis internal (bonding) or external (bridging). Theyargue that this is preferable because, in practice,both ‘bridging’ and ‘bonding’ will influencebehaviour in all situations. They argue against‘bifurcating our social capital research into astrand focused on external, bridging social capitaland a strand focused on internal, bonding, socialcapital’ ( ibid. , p. 35). They develop a definition of social capital that does indeed include bothinternal and external ties: social capital is ‘thegoodwill available to individuals or groups. Itssource lies in the structure and content of theactor’s social relations. Its effects flow from theinformation, influence and solidarity it makesavailable to the actor’ (ibid., p. 23).In the context of an IT implementation projectteam it is quite clear that both the bridging andthe bonding aspects of social capital are highlyrelevant. Thus, each individual has a uniquenetwork, which will provide a bridge to access theknowledge of others. Project team members,then, need to mobilize their social capital inorder to access distributed knowledge aboutorganizational processes. At the same time,strong bonds within the project team are neces-sary since, as already discussed, knowledgeintegration is a social construction process bywhich members negotiate, achieve and refine ashared understanding through interaction, sense-making and collective learning (Ayas and Zeniuk,2001; Boland and Tenkasi, 1995). Consideringthese two aspects of social capital then, suggeststhat it might be helpful to explore each sepa-rately, since it would seem possible for thebridging and bonding aspects to vary indepen-dently of each other.In light of these arguments, the aim of thispaper is to explore a particular example of aproject team involved in designing and imple-menting part of an ERP system in a largemultinational organization. Of particular interestis the extent to which they used their socialS46  S. Newell, C. Tansley and J. Huang  capital bridges for the collective public good of the project versus their own personal good. Atthe same time, we consider how far, if at all, thisteam bonded into a community able to integrateknowledge and so generate ideas about neworganizational processes. We demonstrate thatthe bridging and bonding aspects of social capitalshould be considered independently. Indeed, thecase study suggests that the bonding of theproject team may be a prerequisite for the useof social capital bridges for the public good tobenefit the collective by enabling members tointegrate knowledge. Research method The research described in this paper adopts aninterpretivist approach exploring and conceptua-lizing meanings emerging from the interaction of social actors (Walsham, 1983). Here we attemptto unravel the antecedents to the collective use of social capital during an ERP implementation. Theresearch was based on only a single project withinone company. This was seen very much as anexploratory case that would help us develop someinitial conceptual insights for future research. Theactual study was conducted between 1997 and2000 in Quality Engineering Limited (QEL), alarge global engineering corporation, headquar-tered in the Midlands, UK. The theoreticalinsights developed by Alder and Kwon (2002)and Leana and Van Buren (1999) were incorpo-rated in the research analysis. Klein and Myers(1999, p. 75) endorse the approach of building onexisting theories rather than using a grounded-theory approach, noting that a theory can be usedin interpretive research as a ‘sensitizing device’, toview the world in a certain way.This empirical study focused on analysing oneelement of a large ERP project, within QEL. Inthis company the implementation of the ERPsystem was extensive, involving systems integra-tion across all of the company’s functions. Thisstudy focuses on the HR functional ERP ‘pillar’.One member of the research team was on site as aparticipant observer on many occasions over an18-month period, talking informally to projectteam members, attending project meetings andgenerally observing what was happening. Inaddition, semi-structured interviews were under-taken. The project team leader was interviewedapproximately once a month, with the interview-ing beginning shortly after he had been assignedto the role, and continuing until the project waseffectively put on hold (see below). In addition,all of the ERP/HR project team members (n 5 9)and the process owners (n 5 10) were interviewedafter the project had been ongoing for about ninemonths. These interviews were of about onehour’s duration, were tape-recorded and latertranscribed. In total, 19 formal interviews wereconducted with process owners and team mem-bers, and in addition about 12 interviews wereconducted with the project leader. These laterinterviews were not tape-recorded at his request.In conjunction with the above relatively-struc-tured interviews, approximately 40 informalinterviews were conducted, often without priorarrangements, during visits to the site to observeteam meetings or talk to the project leader.Conducting these informal interviews was im-portant and useful to unravel insightful storiesabout the progress of the project.Adopting multiple data collection methodsaided triangulation – multiple interpretations(Klein and Myers, 1999) – as a means of enhancing the validity of the findings (Denzin,1988). Prior to data analysis, preparatory re-search activities included transcribing interviewtapes, typing and filing research notes, summar-izing documents and clustering the data. Inparticular, we explored the empirical material interms of the interplay between the utilization of social capital and knowledge integration. Case description QEL has 40 000 employees located in more than30 countries. Following the appointment of anew CEO, a decision was made in 1998 toimplement an organization-wide ERP system toreplace approximately 1600 extant legacy sys-tems. These legacy systems comprised both off-the-shelf packages and systems developed in-house; some were interfaced with others, butmany were stand-alone. This led to a consider-able waste of resources and also meant that it wasdifficult to collect information at an enterpriselevel (or indeed even at a business-unit level).This influenced the decision to implement anERP system. The system selected was SAP/R3.One of the QEL divisions had already decided to Social Capital and Knowledge Integration  S47
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