17 Apr 2008Working Paper Summaries

Diffusing Management Practices within the Firm: The Role of Information Provision

by Michael J. Lenox and Michael W. Toffel

Managers face a range of options to diffuse innovative practices within their organizations. This paper focuses on one such technique: providing practice-specific information through mechanisms such as internal seminars, demonstrations, knowledge management systems, and promotional brochures. In contrast to corporate mandates, this "information provision" approach empowers facility managers to decide which practices to actually implement. The authors examine how corporate managers diffused advanced environmental management practices within technology manufacturing firms in the United States. The study identifies several factors that encourage corporate managers to employ information provision, including subsidiaries' related expertise, the extent to which the subsidiaries were diversified or concentrated in similar businesses, and the geographic dispersion of their employees. Key concepts include:

This research can help managers better understand when to employ an "information provision" approach to facilitate knowledge transfer within their organizations.
Corporate managers in the information and communication technology sector were more likely to use information provision to diffuse advanced environmental management practices when their subsidiaries on average possessed modest levels of related expertise, and when the levels of expertise varied greatly between subsidiaries.
An information provision diffusion strategy was used more heavily by corporate managers of firms that were more diversified and where employees dispersed across more facilities.

Author Abstract

A key role of corporate managers is to encourage subsidiaries to adopt innovative practices. This paper examines the conditions under which corporate managers use information provision to encourage subsidiaries' adoption of advanced management practices. Focusing on the distribution of expertise across subsidiaries, we propose that corporate managers elect an information provision strategy when (i) subsidiaries, on average, possess moderate levels of related expertise, (ii) subsidiaries exhibit significant heterogeneity in this expertise, and (iii) the subsidiaries are more diversified and less concentrated. We examine the efforts to diffuse pollution prevention practices exhibited by manufacturing firms in the information and communication technology sector in the United States, and find empirical support for the four hypotheses developed here. The research presented in this paper has implications for our understanding not only of who adopts advanced environmental management practices, but more broadly, of when firms adopt information provision strategies to encourage knowledge transfer within the organization.