Practice transfer in organizations: The role of governance mode for internal and external fit

TY - JOUR

T1 - Practice transfer in organizations

T2 - The role of governance mode for internal and external fit

AU - Fortwengel, Johann

PY - 2017/8/25

Y1 - 2017/8/25

N2 - This study leverages Multinational Corporations (MNCs) as a research context to advance our understanding of the relationship between internal and external fit over the course of the transfer of organizational practices. While internal fit describes the important condition that a practice should be aligned with organizational goals and must gain support internally, external fit refers to an additional condition for successful transfer, namely that a particular practice must gain and sustain support and legitimacy in the environment. Studying two German MNCs transferring apprenticeship-based training to foreign operations in the United States, the paper starts from the key observation that organizations can use different governance modes to organize the transfer process: they may either go it alone and organize transfer in a hierarchy mode, or they may partner up with other organizations and form an inter-organizational network for transfer. Using rich qualitative data, the paper finds that different governance modes affect the ability to attain internal and external fit by revealing a critical trade-off: while hierarchy helps create internal fit, it comes with significant additional costs to attain external fit; conversely, using the network mode facilitates the creation of external fit, but involves making compromises which reduce internal fit. Based on these findings, I theorize that different governance modes (hierarchy vs. network) work through distinct processes (autonomous vs. collaborative), driven by unique mechanisms (inward vs. outward orientation), to influence outcomes in terms of internal and external fit. The study contributes to the literature by shifting attention to the implications of different governance modes for transfer processes.

AB - This study leverages Multinational Corporations (MNCs) as a research context to advance our understanding of the relationship between internal and external fit over the course of the transfer of organizational practices. While internal fit describes the important condition that a practice should be aligned with organizational goals and must gain support internally, external fit refers to an additional condition for successful transfer, namely that a particular practice must gain and sustain support and legitimacy in the environment. Studying two German MNCs transferring apprenticeship-based training to foreign operations in the United States, the paper starts from the key observation that organizations can use different governance modes to organize the transfer process: they may either go it alone and organize transfer in a hierarchy mode, or they may partner up with other organizations and form an inter-organizational network for transfer. Using rich qualitative data, the paper finds that different governance modes affect the ability to attain internal and external fit by revealing a critical trade-off: while hierarchy helps create internal fit, it comes with significant additional costs to attain external fit; conversely, using the network mode facilitates the creation of external fit, but involves making compromises which reduce internal fit. Based on these findings, I theorize that different governance modes (hierarchy vs. network) work through distinct processes (autonomous vs. collaborative), driven by unique mechanisms (inward vs. outward orientation), to influence outcomes in terms of internal and external fit. The study contributes to the literature by shifting attention to the implications of different governance modes for transfer processes.

KW - Practice transfer

KW - Governance mode

KW - Inter-organizational networks

KW - Internal and external fit

KW - Process study

KW - Qualitative comparative case study

KW - MNCs

U2 - 10.1287/orsc.2017.1135

DO - 10.1287/orsc.2017.1135

M3 - Article

SN - 1047-7039

VL - 28

SP - 690

EP - 710

JO - ORGANIZATION SCIENCE

JF - ORGANIZATION SCIENCE

IS - 4

ER -