Corporate versus Contractual Knowledge Transfer The Case of Mobile Communication Services

In the paper a combined governance-capability model for knowledge transfer is developed with the purpose of critically examining the prophecy of consolidation of the mobile network industry. According to this prophecy, almost all local mobile operators should now have been acquired and integrated into a few giant multinational firms. Since this did not happen, and since economies of scale and scope from intra-firm knowledge transfer is one of the main reasons for the creation of the multinational firm, the advantage of intra-firm over inter-firm knowledge transfers cannot be that dramatic. The core message of the model is that converting tacit, specific and diffused pieces of knowledge into explicit, fungible and compact bundles of knowledge facilitate not only intra-firm knowledge transfer, but also inter-firm knowledge transfer and leakage to third parties. In mature markets, this may result not only in the corporate mode being outcompeted by the contractual and hybrid mode. It may also result in integrated multinational enterprises being outcompeted by a diverse collection of upstream firms, alliances and industry associations providing intermediate products and knowledge services to downstream local network operators. Fragmentation, not consolidation, of the downstream market may result.