Intra- and interorganisational learning processes: an empirical comparison

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Management S C A N D I N AV I A N J O U R N A L O F

Scand. J. Mgmt. 19 (2003) 443–466 www.elsevier.com/locate/scaman

Intra- and interorganisational learning processes: an empirical comparison Mikael Holmqvist* Department of Business Studies, Uppsala University, Uppsala, 751 20 Sweden Received 1 April 2002; accepted 1 December 2002

Abstract The organisational learning literature has so far focused primarily on intraorganisational learning processes. However, during the last 10 years or so, a growing number of organisational learning studies have focused explicitly on interorganisational learning. So far this literature has concentrated on the requirements for such learning. Little attention has been devoted to examining the potentially unique dynamics of interorganisational learning processes. Consequently, few if any studies have examined whether interorganisational learning processes differ from traditional intraorganisational learning and, if so, in what respects. The purpose of this paper is to make an empirical comparison between intra- and interorganisational learning processes by drawing on a longitudinal qualitative case study of experiential learning processes within and between a business organisation and its partners, continued over a period of 3 years. r 2003 Elsevier Ltd. All rights reserved. Keywords: Organisational learning; Interorganisational learning; Intraorganisational learning; Experiential learning; Strategic alliances; Case study

1. Introduction Organisational learning theory has been extending its range as a field of research ever since it was first delineated by Cyert and March some 40 years ago (Cyert & March, 1963/1992) and it has been acquiring an increasingly prominent position as an important scholarly field of inquiry in the organisation theory literature (see, e.g. Scott, 2002). *Tel.: +46-18-471-27-31; fax: +46-18-471-68-10. E-mail address: [email protected] (M. Holmqvist). 0956-5221/$ - see front matter r 2003 Elsevier Ltd. All rights reserved. doi:10.1016/S0956-5221(03)00055-1

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Evidence of this lies in the number of separate articles that have appeared in esteemed scientific journals (e.g. Argyris, 1976; Levitt & March, 1988; Miner & Mezias, 1996); or in special editions (such as Journal of Organizational Change Management 12(5) (1999), and Organization Science 2(1) (1991)); as well as the many review articles (e.g. Dodgson, 1993a; Fiol & Lyles, 1985; Huber, 1991); book . chapters (e.g. Hedberg, 1981; Lant & Mezias, 1996); books (e.g. Argyris & Schon, 1996; March, 1999) and handbooks (e.g. Baum, 2002; Dierkes, Berthoin Antal, Child, & Nonaka, 2001) that have appeared on the subject. Up to now, the organisational learning literature has focused primarily on how . ‘‘formal organisations’’ such as business companies (Argyris & Schon, 1996), universities (March & Olsen, 1979), government agencies (Olsen & Peters, 1996) and so on, learn from experience by producing and re-producing organisation-specific routines, standard operating procedures, and other ‘‘organisational rules’’ (Feldman, 2000; March, Schulz, & Zhou, 2000; Zhou, 1993). This literature has thus concentrated mainly on intraorganisational learning processes, for instance by looking at the way individuals learn from each other in organised settings (Brown & Duguid, 2001; Kim, 1993; Maier, Prange, Rosensteil, & von Rosensteil, 2001), or how groups, departments, and teams of individuals share experience and learn (Argote & Ophir, 2002; Edmondson, 1999; Hansen, 1999), or by paying particular . 1996; Cyert & March, attention to the role of social interaction (Argyris & Schon, 1992), or work practices within organisations (Child & Heavens, 2001; Lave & Venger, 1991). One of the potentially most important developments in organisational learning research recently concerns an extension of this traditional unit of analysis. Over the last 10 years or so, a growing number of organisational learning studies have focused explicitly on interorganisational learning processes, by exploring the unique behaviour of such interorganisational entities as strategic alliances, joint ventures, networks, and other formal ‘‘interorganisational collaborations’’ (see e.g. Child, 2001; Ciborra, 1991; Hamel, 1991; Ingram, 2002; Lane & Lubatkin, 1998; Larsson, Bengtsson, Henriksson, & Sparks, 1998; Liebeskind, Oliver, Zucker, & Brewer, 1996; Miner & Andersson, 1999). Up to now, this interorganisational learning literature has concentrated primarily on studying the requirements for successful learning between organisations with the help of such conceptual notions as transparency and receptivity (Hamel, 1991; Larsson et al., 1998), experiential similarity and diversity (Lane & Lubatkin, 1998; Simonin, 1999), and interorganisational trust (Dodgson, 1993b; Kanter, 1994). Less attention has been devoted, however, to the empirical examination of the way interorganisational collaborative constellations actually learn as unique learning entities by producing interorganisational standard operating procedures, routines and other ‘‘interorganisational rules’’ (Holmqvist, 1999; Zollo, Reuer, & Singh, 2002) that, it can be assumed, will differ to some extent from the experiential rules of the individual organisations that constitute the formal collaborations. Consequently little effort has been devoted to exploring empirically whether interorganisational learning differs from traditional intraorganisational learning and, if it does, in what respects (cf. Baum, 2002; Holmqvist, 2003). This issue is

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particularly relevant in view of the growing reliance that organisations place on formal interorganisational collaboration in conducting even the most central of their activities (see e.g. Child, 2001; Cooper & Rousseau, 1999; March, 1999), and given the prevailing notion in the interorganisational learning literature that interorganisational learning is a special case of learning, whereby more explorative learning outcomes are achieved compared with those typically emerging from traditional intraorganisational learning processes (e.g. Ciborra, 1991; Huber, 1991; Liebeskind et al., 1996; Powell, Koput, & Smith-Doerr 1996; Sanchez & Heene, 1997). The purpose of this paper is to compare intra- and interorganisational learning processes with one another. First I discuss some basic mechanisms of organisational learning as a theoretical framework for the subsequent empirical section. This last builds on some of the findings from a longitudinal qualitative case study on experiential learning processes within a business organisation and between that organisation and its collaborative partners. The study was made over a 3-year period. In Sections 4 and 5 I offer a conceptual discussion on the relationship between intra- and interorganisational learning based on the general observations of the case study.

2. Some basic mechanisms of organisational learning An organisation can be regarded as a unique political combination, or an alliance, coalition, partnership, association etc. of behaviour that stems from people’s diverse and often conflicting experiences (some of which may not even relate to formal organisational members). Bargaining between potential and current organisation members, which is typical informal and arising in ordinary daily talk, discourse, conversation and other activities, produces sets of incomplete agreements (due to limitations in time and the computational capabilities of those involved). These agreements, in turn, impose constraints of varying force on the behaviour of organisation members but also provide them with resources to perform specific activities (Giddens, 1984; March, 1994). The agreements that at any one time prevail over other potential agreements can be called ‘‘organisational rules’’, and they include standard operating procedures, routines, codes, programs, etc., that generate certain couplings between otherwise independent behaviours (Feldman, 2000; Nelson & Winter, 1982; Zhou, 1993). In future bargaining (as in earlier interactions) the cognition and behaviour of the members are organised with varying force by existing organisational rules, which thus serve as templates for interactions with one another and interactions with others. These interactions between individuals are experienced through the shared organisational lenses, which means people in organisations have usually generated themselves what they subsequently experience (Starbuck, 1976; Weick, 1995). Hence the situations that organisations encounter are largely created by the organisations themselves through the human members’ rule-like behaviour who constitute them. Organisational rules, which are not necessarily altogether consistent, allowing for

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some heterogeneity in experience, contribute in this way to the construction of a unique organisational identity that distinguishes the organisation’s behaviour from any extra-organisational behaviour, by generating a particular dominating behaviour among a specific group of people. Thus, when we say ‘‘organisation’’, we could say domination: ‘‘organisations can be described in terms of dominant rules for combining cognitions, routine utterances, mixtures of habituation and reflection.’’ (Weick, 1979b, p. 41). The processes of continuously producing and re-producing organisational rules through individual bargaining, compromising and negotiating can be regarded as ‘‘organisational learning processes’’, whereby the organisation creates knowledge in the form of behavioural rules through the transformation of humans’ experience (Bandura, 1997; Kolb, 1984; Huber, 1991; Levitt & March, 1988). By way of bargaining, individuals engage in social experiencing, from which they draw lessons that can contribute to their learning. Consequently, it makes conceptual sense to say that human beings can act on behalf of organisations, and it also makes conceptual sense to argue that individuals can embark on experiential learning processes on behalf of organisations,—processes which in turn yield behavioural outcomes . 1996; reflected in organisational rules that encode the experiences (Argyris & Schon, March, 1999). Experiential learning thus constitutes the processes whereby organisations learn particular behaviours based on individual bargaining over idiosyncratic experiences encountered in a variety of situations. A basic characteristic of all organisational learning processes is that they reflect asymmetrical bargaining. Typically a dominant individual or group of individuals acts ‘‘as writers of scripts and providers of cues and prompts’’ (March, 1994, p. 72), managing in this way the bargaining-learning processes by segmenting certain aspects of the experiences of other individuals (Cyert & March, 1992; Weick, 1995). The extent to which such dominance is possible is a function of the actors’ authority, i.e. ‘‘the power to make decisions which guide the actions of another’’ (Simon, 1997, p. 179). The subordinate actor makes possible this power, i.e. he or she ‘‘permits his [or her] behaviour to be guided by the decision of a superior’’ (Simon, 1997, p. 10), in the belief that the authority is legitimate, which normally means stemming from both formal sources such as societal laws (Pfeffer & Salancik, 1978; Simon, Thompson, & Smithburg, 1991) and informal sources such as professional codes (DiMaggio & Powell, 1983), as well as from personal expertise (Lawrence & Lorsch, 1967). The authority of various individuals (or groups) in the bargaining-learning process therefore becomes crucial to the outcome of organisational learning: any domination of whatever kind is always grounded in the dominating party’s simplified understanding of experiences, thus limiting the amount of attention paid to the full complexity of any situation. As a result, an organisation will find it difficult to perceive variations outside its particular experiences as stored in dominating organisational rules. Authority is a primary mechanism in this process and in many cases the ability to dominate organisational learning may be good for the organisation, since otherwise it would be unable to see or value or respond to anything in any way. However, it should be remembered that ‘‘learning tends to be

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specialised around the dominant mode and limited in areas controlled by the dominant mode’’ (Kolb, 1984, p. 31). By learning particular beliefs about their own experiences that remove them from other sources of experience, organisations often become ‘‘skilfully incompetent’’ (Argyris, 1993), ‘‘myopic’’ (Levinthal & March, 1993), and ‘‘simple-minded’’ (Cyert & March, 1992). In short, organisational learning creates a simplified world and . 1996; March, 1999; Starbuck, attaches organisations to this world (Argyris & Schon, Greve, & Hedberg, 1978). Learnt organisational behaviour as encoded in rules thus serve as the organisation’s memory (Walsh & Ungson, 1991) and permits organisations to deal effectively with particular experiences. However, it encourages an inability to comprehend in full any strikingly different situations (Cyert & March, 1992).

3. A case study In the following pages, I will report some of the findings from a case study relating to the Scandinavian software producer Scandinavian PC Systems (www.spcs.se). The aim of the study was to explore the way the company learnt both independently and together with its business partners, during the period 1997–1999. At the time of the study Scandinavian PC Systems (SPCS) was Scandinavia’s leading manufacturer of administrative PC-programs for small and medium-sized companies, and it collaborated intensively with a number of business partners. Access to the company was negotiated in 1997 with the CEO of SPCS, and later with the CEOs of SPCS’s partner companies. SPCS was considered to be an interesting object to study from a learning perspective, due to the alleged intensity of its product development and the number of partners. Naturally it also met the practical requirement of willingness to participate in the research. I chose to concentrate on four product-development projects both within SPCS and between SPCS itself and between the company and its partners, which involved both the refinement of existing products and the elaboration of entirely new ones. Product-development projects provide a manageable focus of attention and are rich in human and organisational interaction, and for these and other reasons have come to be seen as a good arena for studying learning (Liebeskind et al., 1996; Miner, Bassof, & Moorman, 2001; Twigg, 1996). Moreover, product development could help me to understand both how employees within the respective companies interacted with one another and how employees between the companies did so. In terms of this requirement, the productdevelopment projects allowed for the study of learning both within and between organisations. One limitation of this empirical focus was that it meant excluding potentially important learning processes, such as those arising from organisational . crises (Hedberg & Jonsson, 1978), or from the recruitment of new employees (March, 1991). In studying the organisational learning processes I followed the traditional approach of organisational learning theory and concentrated on the production and

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re-production of organisational rules. These included highly formalised and written rules and routines, as well as more tacit and informal conventions, roles and codes based on experience. I assumed that organisational learning had taken place when a set of individuals started to behave according to some tacit or explicit rules thus produced. In line with this assumption, I then studied how organisational members from the various companies produced experiential rules through bargaining when they were confronted with specific situations in new or ongoing product development projects. The bargaining that occurred between different professional groups in SPCS, or between employees of the various companies partaking in SPCS’s interorganisational collaboration, was of crucial importance to an analysis of learning dynamics. I interpreted intraorganisational learning as the bargaining that took place primarily between employees of SPCS and resulted in particular behavioural agreements, that is to say, rules. Interorganisational learning, on the other hand, I defined as interaction occurring primarily between employees of the different companies, i.e. between employees of SPCS and its partners. Focusing on the employment contract in discriminating between ‘organisational members’ and other participants is obviously not without its problems, given that formal members are not the only co-creators of organisations (Cyert & March, 1992), but such a focus is consistent with the way intra- and interorganisational interactions have commonly been conceptually distinguished from one another (see e.g. Metcalfe, 1981; March & Simon, 1958). Interviews, observations and documents were the means whereby I tried to determine what behavioural rules SPCS was using and how these changed as a result of learning. Rules that individuals constantly apply in daily life, are stored in their users in the shape of durable memory traces (Bandura, 1997). Hence I reasoned that the simplest and most adequate way to understand what rules were being practised, and how these rules changed over time, was to ask individual people to describe the way they work and this was consequently the focus of attention during the interviews. I conducted 47 interviews over a 3-year-period, each one lasting approximately one hour. Interviewees included SPCS’s own managers and employees, as well as those of its partner companies. Interviews were tape-recorded and documented as field notes. Access to respondents within SPCS or its partners was unrestricted, which enabled me to meet employees at various organisational levels. I followed a general interview guide (Patton, 1990) consisting of basic questions that served as a checklist. In the interviews I tried to infer learnt behaviour from statements about workrelated activities. For instance, much of SPCS’s internal learning seemed to revolve around the so-called ‘‘SPCS spirit’’ (which will be discussed further below). I assumed that phrases and statements such as ‘‘freedom’’ (interview with employee) and ‘‘we do not want any strict hierarchy or any strict line of reporting’’ (deputy CEO) were consistent with individuals having learnt the rules of this particular spirit, which emphasises an ‘‘informal’’ attitude on the part of the SPCS employees towards each other, as well as towards customers and partners.

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In other cases, people referred to behaving in an informal manner, for instance in the product development projects between SPCS and its partners that included much sharing of knowledge and socialising on a regular basis, and which I regarded as a result of the members having learnt particular behavioural rules that were reflected in their behaviour. Regarding the particular ‘‘SPCS spirit’’ I thus assumed this to be a set of implicit behavioural rules that organised the way employees (and even partners) attended to their experiences, which in turn affected their subsequent learning. Such behaviours were revealed to me when employees and partners described how they worked in ongoing product development projects and specifically how interaction occurred, how the parties regarded each other, how they experienced the development of the work practices had developed over time (within SPCS or between SPCS and its partners), etc. I also participated in a number of product development meetings and informal gatherings within SPCS or between SPCS and its partners (lunches, coffee-breaks, etc.) including about 400 h altogether. Observations are normally regarded as necessary to an understanding of the context of a case study (Patton, 1990). Observations of how individuals related to each other within SPCS or between SPCS and its partners revealed much about the behavioural rules, e.g. how interaction was organised in product development meetings in SPCS, how the SPCS employees addressed partners when working on a particular program, etc. In addition I noted styles of clothing and the way people were working (openoffice landscapes or sealed-off offices), which reflected particular learnt behaviours. Overall, the actual setting of the case contained a lot of information, which served as a background when it came to analysing the data. This was particularly important since the SPCS employees emphasised the ‘‘informal’’ and ‘‘laid back’’ behaviour of the SPCS spirit that prevailed at work. Learnt rules thus revealed themselves behaviourally in daily work activities. Finally, in the documents studied I concentrated on written statements about work-related behaviour, such as comments in the SPCS ‘‘Handbook for Employees’’ that stressed the necessity for employees to address each other in an ‘‘informal’’ way, thus emphasising particular behavioural rules. 3.1. The company and its partners SPCS develops, markets and sells standardised administrative PC programs in Sweden and Norway, relating to the balancing-of-the-books and tax returns for example. The customers are normally owner-led companies with a few employees including for instance a bookstore, a small accounting firm, a restaurant and so on, i.e. firms which are typically interested in buying PC-programs that are simple to use and easy to understand and so do not require any specialised competence. During the period of this study SPCS was a wholly Swedish company with about 120 employees. Most of the staff were fairly young and had been recruited direct from senior high school, which meant that they lacked any higher education or previous work experience. They worked mainly in three departments: the department

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of development that was responsible for the revision of existing products or the creation of new products; the support department that was responsible for providing program support to customers; and the testing department that tested programs in the process of development. Each department was headed by a manager who was a member of the executive team that also included the company’s two founders, CEO . Jan Almeby and deputy CEO Rolf Dahlberg. Producing the programs required special skills in a number of areas. First, experience of the market’s needs and the demands of existing and potential customers was called for. Second, skills in producing the programs according to specific programming techniques and systems design were also necessary. Third, skills were crucial in the areas for which the programs were designed, such as tax law, tax regulations, deductions, tax returns, etc. One way for SPCS to achieve its ambition to produce such programs could have been to formally employ individuals with the relevant skills and competencies (e.g. programmers, specialists in tax law, and systems designers). However, at an early stage in the company’s history it was decided instead to engage partners, i.e. legally independent companies. Partners consisted mainly of programmers, such as P-Data and Elicon and experts, such as KPMG, and Anders Andersson Ekonomi and Jan-Erik Persson Ra( d. In short, the programmers were programming companies that participated in the product development process and that possessed knowledge about how the products should be technically designed and programmed. They also conducted the process of programming. The employees of programming companies were typically individuals with a technical background who had specialised in systems design and PC programming. The experts were companies which had some specialist knowledge that was needed for certain programs (e.g. tax law and salary administration). 3.2. Learning within the company Product development was a central learning activity in SPCS. All product development processes were said to be ‘‘based on knowledge and information about customers’ real needs and demands’’ (SPCS Prospectus, 1997: p. 11). The SPCS support department assembled this kind of information on an ongoing basis. Whenever customers contacted SPCS with queries about the programs they had bought, the members of the various departments made lists of the questions arising most frequently, any complaints about existing products, and so on. This information was then discussed at formal meetings with members of the development department, directly responsible for the development of the particular product. The data thus assembled was later passed on at meetings, in telephone conversations, by e-mail, etc. to the company’s business partners, who were to undertake the relevant product development that would eventually result in the creation of a new product, or the revision of an existing one. Most of the interaction among the SPCS employees in the course of their daily activities proceeded on a basis of some learnt rules and routines that were particular to the company and which thus triggered a particular kind of behaviour among a

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group of people. The most important common behavioural framework shared by the employees consisted of the SPCS spirit, a set of loosely maintained organisational rules that appeared to be crucial to the company’s identity as a provider of administrative PC-programs appropriate to the demands of ordinary users, and for organising internal work activities. Essentially, the SPCS spirit provided employees with a framework for attending to their experiences, thus enabling them to approach different situations in a selective fashion. This could be done for instance by focusing exclusively on certain existing or potential customers, by addressing particular technological features only when producing the programs, or by designing the program manuals in a particular manner. By behaving in such rule-like ways the employees of SPCS were able to build up a body of experiences from which they could continue to learn. The SPCS spirit was basically about producing programs with special features that were ‘‘user-friendly’’ and focused on the demands of ‘‘ordinary users’’ demands, thus re-producing the general SPCS strategy of making ‘‘good programs for the people’’, as the deputy CEO put it. But the SPCS spirit was also about organising internal work practices. According to the CEO ‘‘freedom to decide and act’’ was a fundamental characteristic of SPCS. The deputy CEO also declared emphatically that ‘‘we do not want any strict hierarchy or line of reporting.’’ In the same vein as such official statements several SPCS employees described their way of working as informal, with the emphasis on ‘‘freedom with responsibility’’ and not having ‘‘to follow the formal way’’. In addition to organising internal behaviour, the SPCS spirit aimed to manage partners’ behaviour: ‘‘I hope that our spirit has influenced them [partners] (y) By being open and informal in our contacts with them, then I think we can influence them’’ (CEO of SPCS). The main arena in which employees learnt the ‘rules’ of the SPCS spirit thus also contributing to their re-production, was the daily activities of product development. Here employees experienced social expectations to behave in particular ways. As one of the SPCS managers put it: Your working colleagues show you how it must work. It is a social adjustment. Knowledge is transferred in the group; you can never teach that through propaganda or anything like that. Then we come in and support them through our personnel policy, whereby we decide on targets and visionsyand where we control things of course (y) There are no frames for what you are not allowed to do, but there are significant directions for travel. If they [the employees] go against these, then I may begin to wonder first, what is it that they haven’t understood? And, second, what are they up to? Through their placement in a specific working environment, individuals were thus triggered to learn a certain repertoire of skills, which contributed to the re-production of some of the SPCS rules. This kind of behaviour was fundamental, enabling the employees to acquire a certain behavioural repertoire. As noted above SPCS only employed young people from senior high school who lacked professional experience, which made it easier for the company to induce them

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to learn the basic company rules. As the CEO of SPCS argued: ‘‘They [young people direct from school] come here and say to themselves, ‘If this is the way you work in a company, then we’ll have to do it too.’ They adjust to anything and they don’t question what it means to be in a company.’’ Most SPCS employees seemed willing to learn to ‘fit in’ and to behave according to the dominant expectations as comprehended by the SPCS spirit. In general, then, much of the learning in SPCS, achieved as a result of the individual’s experiential learning, preserved the company’s unique identity. Moreover, to a great extent the learning seemed to be heavily controlled by the formally dominant actors in SPCS, that is to say the founders. I think it’s Jan and Rolf’s [the CEO and the deputy CEO] way of working that has generated the SPCS spirit. They decide on the framework and make the fundamental decisions. (Employee at SPCS). The executive team was by no means all-powerful and their authority rested upon their earning it, but since members of SPCS identified themselves as formal employees (and not as customers or partners, for instance) they took for granted a lot of the claims made in the organisational bargaining—implicit or explicit—about how to experience different situations. As a result the executive team dominated much of the various learning processes, which meant that there was much less need for explicit and implicit bargaining over experiences, however, at the cost of reducing experiential variety. An illustrative example of this phenomenon and its impact on learning concerned the learning from customer feedback, which was a central part of the formal product development activities in SPCS. The support department, whose head reported direct to the deputy CEO, led the work of collecting customer feedback. Customers phoned, faxed or e-mailed their complaints or suggestions for improving existing products to the support department, which then documented the information. As discussed already, this material was subsequently used in the product-development process with the company’s partners. In the analysis of customer feedback, not all reactions were attended and thus experienced, however. SPCS drew only lessons from experience that was much in line with the dominant idea to produce PC programs for ‘ordinary users’. In that way experiences were largely enacted. This was a basic behavioural result of the employees having learnt those parts of the rules of the SPCS spirit that tended to build up certain types of experience to which they subsequently reacted. Thus, customers who demanded complicated features that would have yielded complex programs demanding considerable skill of the user were ignored sooner or later. Overall, SPCS employees attended only to such aspects of any situation as were consistent with the SPCS rules implicitly retrieved in the SPCS spirit. Once the customer data had been collected, members of the support department discussed ways of making further sense of it with members of the department of development, as the data was regarded as crucial to their ongoing

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product-development activities. One important task involved ranking customer demands according to their importance. Two types of data come in from customers: bugs and suggestions for improvements. These are documented and evaluated by those providing the support for that particular program. The data is then presented at a meeting with the department of development, which tries to impose its view on the material; what is a bug and what is not. Communications could work better here. We have one view on the order of priorities and they have another (Manager of the SPCS support department). As a result of earlier learning activities relating to particular work practices, the two departments had learnt their own intradepartmental rules and routines for handling their daily work and had thus developed their own unique understanding of how to experience customer feedback. This, of course, is not a rare phenomenon in any organisation. Different groups within organisations, such as the marketing people, sellers, researchers, etc. have their own distinct competencies in that they are continuously producing and re-producing certain specific norms, routines, standard operating procedures and rules, relating to their own particular activities. These particularised rules create certain intraorganisational heterogeneity in interpreting common experiences. The SPCS support department was in daily contact with customers during which it relied on certain department-specific rules it had learnt from earlier experiences. In the course of this interaction with customers the department had produced solutions to problems that it experienced customers seemed to share with each other. The department of development, on the other hand, had only rudimentary experience of interacting with customers but more experience from interacting with SPCS’s partners. As a result of these interactions the department had in its turn learnt certain rules and routines for product development that then affected the way it behaved. These experiences did not always fit in neatly with the experiences of the support department: there were often clashes between what the support department experienced as good for the customer, and what the development department experienced as good for the production process. Thus, although they shared much experience in the form of the general SPCS spirit with its emphasis on addressing the demands of ordinary users the two departments still experienced many joint situations differently. A common response to interdepartmental conflict of this kind was that the deputy CEO whose official rank was higher than that of the two respective department managers intervened in the bargaining. Obviously his intervention did not concern such operative or technical matters as particular functions in the programs or new headings in the manuals. Rather, he ‘stabilised’ the conflict by stressing implicitly or explicitly the characteristics of ‘‘ordinary customer demands’’. As a result of this action, the departments generally agreed on how to interpret the customer data, thus achieving a certain degree of common experience. This in turn enabled them to

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collaborate more or less smoothly while also setting a learning precedent for future interactions. In this case of interdepartmental interaction there was initially an interesting potential for creating variety into the two departments’ respective experiences, which would have made their learning somewhat more broadminded than it ultimately was. This potential was reduced in that one actor, the formal leader, ultimately controlled the process of learning from customer experiences. Had the parties been allowed to try to learn from each other’s experiences in a process involving much mutual adaptation their learning might have become richer in terms of variety in the experiences gained. Nevertheless, the advantage of a dominated learning process was the achievement of a relatively smooth and fast learning experience, and the outcome was very much in line with the general experiences comprehended in the SPCS spirit, thus producing behavioural stability. 3.3. Learning between the company and its partners I have so far concentrated on learning activities within SPCS, i.e. learning activities that have taken place primarily between individuals formally employed by SPCS. By and large, it seems reasonable to interpret these activities as intraorganisational in that they organised certain individual behaviours in a formal way, essentially as a result of the respect that people paid to the formal authority of the executive team, SPCS’ dominant group. As regards the interaction between SPCS and its business partners, who were linked by loosely formulated market contracts, some potentially interesting differences can be noted in the manner of their organisational learning. An understanding of this type of phenomenon called for the adoption of an interorganisational learning perspective. Most of SPCS’ interaction with its partners was directly related to product development activities, and most joint product development processes were initiated by ‘‘brainstorming’’ meetings, to which representatives of SPCS brought information gathered from their customer database and where they met with representatives of the various partner companies. The initiative for such a meeting could be taken by anyone at SPCS or by one of the partners, depending on the nature of the issue at stake. For example, the programming partners might call for programs to be revised to meet new technological requirements, or the expert partners might call for products to be adapted to legal or other requirements. These brainstorming meetings generally consisted of bandying ideas about whatever topic had been raised, either by SPCS or some of its partners. There was usually a lot of bargaining and negotiating and the lack of formal authority to regulate these processes was obvious, not least as compared with the way the bargaining-learning processes were controlled within SPCS. Much of this interorganisational learning may have seemed slow and ineffective compared with the learning within SPCS itself; but in fact it had the great advantage of creating organisational rules stemming from a combination of experiences from widely

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divergent sources. ‘‘We can’t decide too much in the interaction with partners,’’ said one of the SPCS managers, because then ‘‘our products might risk becoming conventional.’’ Thus in this respect the more relaxed control on the part of the SPCS management towards its partners, as compared with its attitude towards its employees, seems to have been essential to get the collaborative venture up and running and to maintain an explorative aspect. At the same time, though, the lack of formal means to regulate the learning meant that the parties often became stuck in endless discussions that led nowhere, and any general agreement about how to move forward was hard to establish. The partners had different experiences and were thus wont to interpret joint situations their own way, which was not necessarily the same one that SPCS would adopt. For instance, employees of the partner companies had another view about how to interpret customers’ needs. There is a complication between the programmers and us. They are not pros when it comes to usability. This leads to a power struggle. We want a function that is practical and friendly to use. They want it as technically exciting as possible (Manager at SPCS). Similarly it was claimed that SPCS was not competent to understand such technical issues as programming and systems design. Those who work in the department of development [at SPCS] are not competent to lead or control the production of PC programs. They lack the technical grounding. We are technicians; we are different (CEO of Elicon, partner company). Programmers often had technical solutions that, on a basis of their own particular experiences, they believed to be powerful and exciting, and they tried to ‘produce’ a problem together with the others to justify its implementation. Such problems could be gleaned from interpreting customer reactions in a particular way. Interpreting customer reactions was typically the task of SPCS. However, what SPCS experienced as a problem was not necessarily seen as such by the programmers or the experts. Programmers typically took note of customer feedback that focused on technical issues and they interpreted these in light of their own particular experiences. This was not the case at SPCS, nor among the experts that not normally concerned with technical matters. For example, customers who contacted SPCS or one of the partners was likely receive very different responses. A customer complaint about some advanced technical solution would not even to be noticed by SPCS, as the company focused primarily on easy-to-manage solutions. But the same customer’s feedback would probably be taken most seriously by a programming partner. Nevertheless, despite these complications in collective learning from experience, interactions between SPCS and its partners often gave both parties course to reflect upon their own taken-for-granted myopic assumptions, thus introducing a certain variety into their experiences. In general, the SPCS employees regarded the idea of

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collaborating with external parties as something positive: ‘‘Their style is not characterised by our culture, but it can add something different. It’s like day and night’’ (employee). One SPCS manager pointed out in this context how crucial it was to work with ‘‘independent programmers (y) since much of what we say is coloured by the way we’re doing things around here’’, and ‘‘if we had our own programmers and I told them how they should work, the programs wouldn’t be nearly as good. There would not be any best-at-test.’’ Altogether, the question of dominance in the joint bargaining between SPCS and its partners around their different experiences was intimately bound up with the ability to maintain an environment favourable to much exploration and experimentation and with the ability to learn together. It was therefore a question of critical importance to the overall experiential learning outcome of the collaboration between the two parties. So long as no side permanently dominated the interaction at any particular stage, the result was often excessive bargaining without much result in terms of learning, although a good deal of variety was introduced into the experiences. This observation suggests that some form of dominance was needed in the interorganisational bargaining if it was to have any functional value in terms of joint learning. On the other hand, if learning was too controlled by either of the parties, the chances of creating an environment for open-minded learning were also reduced. The outcome of such insights commonly led to learning processes between SPCS and partners in which the leadership was shifting or unclear, and whose internal interactions seemed to proceed on a much more equal basis than was the case in SPCS. ‘‘You adjust to each other, we have to accept in some way that this partner works in a certain way, while they accept that we make certain demands’’ (Employee at SPCS). This was something that was also stressed by the SPCS CEO: ‘‘Naturally, we can’t tell the employees of other companies what to do. We can’t bypass their managers or owners’’. The partner companies shared this need for mutual adjustment: ‘‘We are pretty openyyou mustn’t be too rigid in your opinions; you must discuss problems through with the others, towards what you want to accomplish’’ (employee of P-Data). The one given authority in a concrete bargaining-learning situation would thus be the actor who possessed resources (in form of experiences) that the other parties deemed to be legitimate, i.e. that the resources enabled a feasible way of acting. For instance, SPCS took much of the partners’ knowledge for granted and without question in discussing such things as tax returns and tax regulations. In these cases, SPCS did not possess the resources to give it the necessary authority to control the bargaining-learning process. By ultimately producing some joint behavioural rules for interaction based on experience, i.e. by learning, the different organisations created couplings between their own rule-like behaviour, thus making future interaction and learning more predictable and stable. Indeed, employees of the different companies often experienced that some form of ‘‘common culture’’ developed with the passage of

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time, as one of the P-Data employees put it. An SPCS project leader who worked with this particular partner emphasised: We have created a certain spirit. We know how we want it. We follow a certain standard and this enables us to communicate freely with each other. (y) The cooperation with the partners has developed so that we have become friends. I have learnt how they want it, and have adapted to that. We have learnt several things together. For example, we have jointly created a bug-report system. What we learn together can be beneficial for the next project. Today, we know each other much better. We know how we react. We have built up a routine (y) Everyone learns what it takes, e.g. testing time for the program (y) The co-operation has become much easier with time. I have learnt a lot about what P-Data wants and I don’t need to ask so many questions any longer. In time, the parties thus learnt to relate to each other; they had created joint routines, rules, and norms that were respected by individuals attaching basically the same meaning to experiences. Instead of experiencing situations differently SPCS and their partners eventually came to experience many situations in the same way, which in turn made their future learning successively less varied, but certainly more reliable. Programmers came to experience that SPCS and experts had become more skilful at designing system specifications and using a terminology suited to their programming purposes. Conversely, programmers acknowledged that they had begun to pay more attention to customer-friendly solutions, that they ‘‘thought more about the customers’ situations than before’’ (Employee at Elicon). All this kind of learning was highly beneficial to the everyday product development-activities in that it created an environment that was both reliable and predictable. However, as a result of this joint experiential learning a good deal of the interorganisational interaction between SPCS and its current partners came to be based on successful past experience of how to learn from new situations, mainly because the same basic mechanisms of organisational learning that characterised the intraorganisational learning processes in SPCS came into play too. In both cases the intraorganisations and the interorganisations learnt competence by becoming better at things they did frequently and successfully, and they lost competence at things they did infrequently and unsuccessfully. In that regard SPCS’ intra- and interorganisational learning followed the same simplifying and specialising logic of experiencing, producing a less varied behaviour. Further, the learning between SPCS and its partners also appears to have blurred the organisational borders between the companies, as individuals ultimately learned the same behavioural rules and routines, according to which they subsequently acted. This meant that to some extent it became hard to conceptualise learning neatly as intraorganisational or interorganisational. As a result of their mutual learning, the employees of SPCS and its partners often shared the same sort of experiences. As one of the put it: ‘‘We regard each other as working colleagues (y) It doesn’t feel as though we’re working in different companies.’’ Such bonds also reduced variety in learning from experience.

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4. Discussion The case study discussed above has been described according to the approach generally adopted in the organisation-learning literature, whereby intra- and interorganisational learning processes are kept separate. However assuming that all organisations are systems of coupled behaviour and that thus ‘‘behaviours that are organised, not individual people’’ (Pfeffer & Salancik, 1978, p. 30; Weick, 1979a), we could expect to run into immediate problems if we try to impose such a separation in the empirical world, and that this in turn would make it difficult to define some organisational learning as intraorganisational in character and some other as interorganisational. As was found in the case study, interorganisational learning processes can be seen as processes in which collaborating formal organisations learn together from experience by producing and re-producing various kinds of rules and routines. These rules (if they are to have any meaning) create certain behavioural couplings between the different formal organisations as their employees ultimately come to behave in very similar ways. In time the employees of SPCS and their partner companies, for instance, created a ‘‘common culture’’ and a ‘‘joint spirit’’ that did have certain behavioural implications, not least among the SPCS people who found themselves learning to ‘‘speak the language’’ of programmers and experts. Indeed, the very idea behind most formal interorganisational collaborations is to create just such interdependencies between organisational behaviours (Lorange & Roos, 1993, Pfeffer & Salancik, 1978; Thompson, 1967), something that is accomplished through joint learning. But once interdependencies have been established, we should not perhaps speak of interactions as being ‘purely’ interorganisational any longer, as this implies that learning takes place between mutually independent organisations whereas conceptually speaking, they should also be intraorganisational. As (Weick 1976, p. 3) put it: ‘‘To the extent that two systems have few variables in common or share weak variables, they are independent of each other,’’ which means that their ongoing learning activities do not reproduce the same kind of organisational experiences as those stored in organisational rules. Hence, the notion of ‘interorganisational learning’ seems to be something of an oxymoron: If an ongoing relationship between two organisations is purely interorganisational, then by definition the learning in each of them should be largely independent of the learning in the other, whereas the learning between organisations that are engaged in formal interorganisational collaborations obviously creates behavioural interdependencies whereby individuals producing and reproducing certain routines, norms and other joint rules, will de facto generate a relationship that in behavioural terms is intraorganisational. Admittedly, the learning that takes place between two or more organisations but that does not yield any strong joint behavioural effects—perhaps because the interaction is in its early days—or when the joint learning leads only to ‘‘weak’’ rules with little real impact on humans behaviour, may be defined as purely interorganisational.

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It could thus make some conceptual sense to say that any purely interorganisational learning processes are ones that take place at the very beginning of some formal interorganisational interaction (thus assuming that any behavioural coupling between the parties concerned is still of a loose kind), or that the resultant learning is meagre (thus maintaining the earlier loose behavioural coupling between the organisations). This, of course, would not be in the spirit of mainstream interorganisational learning literature, which has argued that interorganisational learning consists of continuous learning activities clearly separated from any intraorganisational learning (see Child, 2001; Ingram, 2002; Lane & Lubatkin, 1998; Larsson et al., 1998; Miner & Andersson, 1999). Even so, it may be a more accurate way of defining organisational learning processes, at least those found in the case study discussed above. This tentative conclusion is not unproblematic, however. Most of us believe that we live in a world of formal organisations, i.e. business organisations, churches, schools, universities etc, whose rules are to some degree explicit and grounded in the . 1996; March & Olsen, 1984). legal system of the larger society (Argyris & Schon, Even though learning processes shared by formal organisations may produce joint behavioural rules and, as a result, strong behavioural interdependencies among those involved, which from a purely conceptual point of view are problematic to describe as interorganisational learning, the legal character of formal organisations does tend to have a major impact on the way people experience situations and behaviour. The legal institution of the employment contract may play an important role in this context by maintaining certain experiential independencies between organisations. As Barnard put it (Barnard, 1938, p. 173): ‘‘Officials would appear incompetent who issued orders to those outside their jurisdiction,’’ which echoes the point made by the SPCS CEO, namely that ‘‘naturally, we cannot give orders to the employees of other companies. We cannot ignore managers or owners’’. In other words, an organisation ends where its legal discretion ends and another’s begins. For a number of reasons individuals who are formally employed by the same company are likely to relate to each other differently than they do towards the employees of other companies, something that is ultimately connected with the source of authority to dominate organisational bargaining over experiences and of the legitimacy of doing so. Rather than assuming that interorganisational learning creates ‘complete’ behavioural couplings between organisations, thus blurring their boundaries altogether, we should perhaps conclude instead that interorganisational learning is selective, in that it only creates semi-interdependencies between organisations and always leaves a ‘core’ of organisational identity unaffected by any learning with other organisations: indeed, that joint learning with other organisations may be a mechanism for maintaining this core (cf. Thompson, 1967). In such instances it would perhaps be reasonable to speak of ongoing interorganisational learning activities that are to some extent separate from any ongoing intraorganisational learning. Given that as a system of rules for organisational identity the employment contract may insulate organisations against learning the same behaviour as each other, thus maintaining their mutual independence, there may be some real

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differences between intra- and interorganisational learning that could be worth examining. It seems, for instance, that a distinguishing feature of learning ‘within’ as supposed to learning ‘between’ formal organisations is that a formally appointed leader is in a particularly favourable position to dominate the bargaining-learning processes since the formal authority upon which he or she may draw is widely recognised as legitimate (Chandler, 1990; Simon et al., 1991). This appears to have been the case within SPCS when it came to learning from customer feedback, for example. In most societies there is a strong social expectation that those formally employed in an organisation will take some aspects of the internal interactions for granted, e.g. that a legitimately appointed manager normally has the final say (Chandler, 1990; Simon, 1997). To be employed is to be expected to learn a certain role and to behave in a certain way according to certain dominant expectations. Albeit naturally within certain limits (see Simon, 1997), the dominant individual or group of individuals, such as the CEO of a business organisation, a university president or a board of directors generally has the legitimate right to select, promote, demote and dismiss employees, which provides a powerful way of maintaining particular worldviews, norms, traditions and other rules that represent specific ways of interpreting experiences. This certainly contributes to increasing reliability in the experiential learning processes: ‘‘lacking formal co-ordination, the result will be highly fortuitous’’ (Simon, 1997, p. 115), which may be the reason why many wellknown formal organisations have been so successful in learning to behave in particular ways (see, e.g. Maravelias, 2001; Salzer, 1994). On this point several studies on interorganisational dynamics have stressed that interactions between organisations are often highly problematic and tend to involve more conflict and explicit compromising, bargaining, and negotiating than interactions within organisations, due it is said to the lack of a formal structure of authority between organisations (see, e.g. Killing, 1982; Mowery, Oxley, & Silverman, 1996). However, when an organisational form has difficulty in learning because its focus is weak, it may be readier to reflect upon its current operations. It will be learning, but not in too narrow or biased way, due to organisational rules ‘containing’ more variety as a result of extensive mutual adaptation between the interacting parties. An organisational form that contributes in this way to blur the recollection of past lessons and, hinders the implementation of past solutions, as well as making any communication about current problems or exchange of feedback unstable and uncertain, also ‘‘contributes to inefficiency in refining current practice, thus to the development of experiments’’ (Levinthal & March, 1993, pp. 107–108). And indeed, in the case study described here it was observed that in the interorganisational learning processes the source of dominance often shifted, and authority remained vague, thus making any consistent or continuous control of learning processes unlikely. In this respect, intra- and interorganisational learning did appear to differ from one another: intraorganisational learning processes appeared to generate much exploitative learning that created reliability in experience,

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and interorganisational learning appeared to generate much explorative learning that maintained variety in experience. However, in the course of time SPCS’s interorganisational learning also became biased and narrow, exploiting only particular experiences that came to dominate further learning processes. Together with its partners SPCS learnt certain behaviours based on certain successful joint experiences that in the end they tended to repeat over and over again, which made them less competent at other behaviours that might have been more relevant. The dominance in the interorganisational relations that produced such learning effects was certainly not based on formal authority. Rather, it arose from superior expertise that endowed arguments and behaviours with legitimacy. But the general outcome in terms of learning was the same as the outcome of the intraorganisational learning processes within SPCS: a reduction of variety in experience.

5. Conclusions The aim of this paper has been to contribute to the organisational learning literature by reporting on empirical comparisons between intraorganisational and interorganisational learning processes. Such a comparison provides an opportunity to discuss how formal interorganisational collaborations such as strategic alliances can learn on their own account by producing and re-producing interorganisational rules—a topic that has so far been largely neglected in the literature. But the comparison can also contribute to a discussion of the value and conceptual justification of the increasingly common separation between intraorganisational and interorganisational learning in the literature, where it is often maintained that interorganisational learning may be a means whereby organisations maintain much variety in their experiences. On a basis of the findings as reported here, it can be concluded that interorganisations learn in similar ways as intraorganisations and will, consequently, be subject ultimately to the same general learning problems. In the end, differences between intra- and interorganisational learning seem to be a question of degree rather than of kind, in terms of both process and outcome. Naturally this conclusion can only be speculative, given the limited data available here, and further empirical studies comparing intra- to interorganisational learning are thus needed before any more definite conclusions can be drawn. Nevertheless, it appears likely that the variety-reducing effects of experiential learning affect both intra- and interorganisational learning processes in much the same way, although a few minor individual differences may appear, for example regarding the time it takes to learn particular behaviours—something which can generally be expected to be longer in interorganisational learning processes than in intraorganisational learning processes, for reasons accounted for above. Thus if organisations are to ensure that variety is continually being maintained in their experiences, internally or externally generated, they must do something to counteract the drawbacks that experiential learning creates. Unlearning (e.g.

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. Hedberg, 1981; Jonsson & Lundin, 1977) may be a means whereby organisations can discard obsolete experiences and give themselves the chance to experience situations . in a fresh way. As Hedberg and Jonsson (1978, p. 49) put it: ‘‘If experienced users are to make use of new potential, they need to unlearn behaviours which previous learning has accumulated’’. Extreme examples of unlearning could involve a massive turnover affecting almost the whole of an organisation (Carley, 1992), or the disposing of business partners in an interorganisational collaboration (March, 1999), so that new routines, roles, standard operating procedures, etc. have to be learned and the continual re-learning of established behaviours can be halted. Such unlearning has occurred in times of extensive lay-offs, or during organisational crises (Starbuck et al., 1978), but a common denominator in all such events are that they are typically random, unwanted and thus unorganised. According to this view, unlearning is not part of an internally generated plan to act intelligently in order to sustain variety; rather it is the result of external shocks that cannot be fully controlled (Hedberg, 1981; Zhou, 1993). Thus although the result would be an organisation better adapted to experiencing strikingly new situations, unlearning seems unlikely be a part of daily organisational activities. However, to the extent that this type of unlearning does occur, it should involve a change in fundamental organisational experiences and allow potentially for necessary behavioural changes. Another example of potential unlearning refers to the straightforward destruction of an organisation’s formal memory, i.e. its files, records, etc. Such unlearning may be common in times of great political turmoil, for example, or in the shape of criminal acts whereby files are deleted in order to prevent the detection of inappropriate behaviour in an organisation. Albert Speer, minister of armaments in Germany, commented on the bombings of his ministry at the end of the Second World War as follows: ‘‘Although we have been fortunate in that large parts of the current files of the Ministry have been burned and so relieved us for a time of useless ballast, we cannot really expect such events will continually introduce the necessary fresh air into our work’’ (Weick, 1979a, p. 225). But, of course, a lot of organisational experience that is recorded in writing are never really learned by the members of an organisation, so the effect on the organisational learning of such events is probably quite small. A third potential process of unlearning occurs when dominating actors in an organisation are replaced, for instance with a shift of leadership. The new leaders, particularly if they are recruited externally, often learn from the upcoming experiences in a different way compared with their predecessors, and this may affect how the whole organisation learns and adapts to its experiences. The replacement of leaders has often been proposed as a major requirement if any variety in experiential learning is to occur (Starbuck & Hedberg, 2001, Tainio, Lilja, & Santalainen, 2001). But unlearning by such means can be expected to be very slow. Many a new leader has probably experienced the inertia that meets their attempts to change operations to fit their own ambitions, a resistance due to the organisation’s previous learning

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that has created certain routines, norms and other organisational rules now being maintained in current organisational activities. Tradition prevails, behaviour remains stable. Added to which the outside world imposes its own limitations on how much an organisation may change learnt behaviours in a way that would give more variety to its experiences. Intra- and interorganisational learning processes are without doubt useful in many cases, but they do not always generate good returns.

Acknowledgements Helpful contributions have been made by Kristian Kreiner, Walter W. Powell and two anonymous reviewers and by the participants at the SCANCOR seminar on May 25, 2002, at Stanford University. Funding was generously provided by the Jan Wallander and Tom Hedelius’s Research Foundation for Social Science

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