Small and medium-sized companies need to become better at exploiting external knowledge in order to strengthen their competitive position. A new PhD dissertation from Business and Social Sciences at Aarhus University concludes that companies should avoid like-minded employees.

2011.03.31 | Rikke Carlsen

It is an impediment to innovation in small and medium-sized enterprises (SMEs) to have too many like-minded employees and too many common values at the workplace. This is one of the conclusions of a new PhD dissertation from Business and Social Sciences at Aarhus University. 

- If the employees agree on everything and have the same values, there is a great risk that they will exclude the external environment and external ideas, believing that they know best and do not need more input, says PhD Ana Luiza Burcharth.

She explains that SMEs with very like-minded employees are rarely willing to seek external knowledge, which can have serious consequences:

- Small and medium-sized companies cannot and should not only develop their own ideas; instead they should adopt and further develop external ideas and technologies to ensure a constant development in the companies’ innovation processes with lower costs and at a more rapid pace. If they block the flow of external knowledge, it will only be a question of time before they stifle innovation, says Ana Luiza Burcharth.

Risky corporate culture

Some SMEs simply underestimate the value of external knowledge because they do not have any experience in the area. But according to Ana Luiza Burcharth, a strong corporate culture is also one of the main culprits. It encourages employees to comply with company rules and values, which is positive in many ways, but it hampers innovative thinking, she says.  

- Small companies tend to engage people who already have the same ideas as the current employees, but here they have to be careful – just as they have to be careful not to “brainwash” new employees into adopting the same way of thinking as the rest of the employees, says Ana Luiza Burcharth.

This does not help generate willingness to apply external knowledge. On the contrary, it reinforces the employees’ insistence on the “we know best” mentality.

FACTS

Ana Luiza Burcharth’s PhD dissertation defence took place on Friday, 4 March 2011.

Her supervisors are Professor John Parm Ulhøi and Professor Christopher Lett.

The dissertation is entitled: The Role of Absorptive Capacity and NIH Syndrome: An Empirical Study of the Application Study of the Application of External Knowledge in Danish SMEs

The dissertation offers advice on how SMEs can derive more benefit from external knowledge:

• From the outset, the management should prepare a strategy in respect to relevant external knowledge.
• Encourage informal processes and dialogue in the company.
• Devote time and resources to seek external knowledge.
• Dare to replace resources that are no longer useful – including human resources.
• Expand the network of external contacts.

Behind the research:

The dissertation deals with two main topics. Ana Luiza Burcharth has primarily studied why some small and medium-sized enterprises are better at seeking and exploiting external knowledge than others. In addition, she has studied why some SMEs have a more protective attitude towards external knowledge – also known as the “Not Invented Here” syndrome. This means that companies want to avoid knowledge and ideas that have not been generated within the company.

The project is a combination of qualitative and quantitative research methods.
The qualitative part consists of 15 interviews with SMEs, large companies and research institutes. This gave Ana Luiza Burcharth an idea of what reality looks like and enabled comparison with the theory behind the dissertation.
The quantitative data includes a questionnaire study of 169 small and medium-sized industrial companies in medium high-tech and high-tech sectors in Denmark. This was used for hypothesis testing and also contributed to greater generalisation of the results.

For further information:

Ana Luiza Burcharth

PhD
Business and Social Sciences, Aarhus University
Department of Business Administration

Tel: (+45) 89 48 67 04
Mobile: (+45) 29 82 66 20
E-mail: alla@asb.dk