1. Exploring internal stickiness: impediments to the transfer of best practice within the firm Gabriel Szulanski, 1996 SMJ Slides by Seth Carnahan, BADM 545 Fall 2009

2. Overview  Research question: Why do managers find it so difficult to transfer best practices within the firm?  Conventional wisdom takes an agency perspective  Actors know what needs to be done, they merely are not incentivized to do so  By contrast, Szulanski (1996) finds support for a market frictions argument  Lack of absorptive capacity  Causal ambiguity  Arduous relationship between sender and receiver

3. What is transfer of best practice?  Initiation  All events leading to the decision to transfer  Implementation  The time between decision to transfer and use of knowledge  Ramp-up  Begins on the first day of use, ends when satisfactory results are achieved  Integration  Routinization of use of transferred knowledge

4. Sources of stickiness Market Frictions -Causal ambiguity -Asset mass efficiencies -Asset erosion Agency Problems -Misaligned incentives Combo -Counterparty perceived as unreliable -Arduous relationship

5. Method  Survey of eight brand name companies  87 usable observations  Unit of analysis is transfer of best practice  Triangulates by getting responses from both parties to the transfer and a knowledgeable third party  Companies instructed to choose particularly challenging completed transfers  Possible selection bias

6. Empirical techniques  Author uses canonical correlation  “ appropriate when the phenomena cannot be adequately expressed or measured by a single variable, when any single criterion variable taken in isolation is at best indicative of only part of the overall relationship”  No causal claims but  Can rank right-hand side variables in terms of how good they are at explaining variation in left-hand side variables  Can get an overall measure of how good the right hand side in total is at explaining variation in the left hand side

7. Results -55% of the variation in the left side variables explained by the right side variables -Market friction arguments appear to win out -Coefficients on left-hand side are not discussed

8. Conclusion  Contributions  Theoretical and empirical demonstration of the existence of internal market frictions  Contributes to the RBV by helping explain persistent heterogeneity across firms  Possible problems  Author did the best job possible, but asking a survey respondent to rate his own motivation and reliability might contribute to the lack of findings for agency variables