Abstract – This paper develops a theoretical framework linking internal resistance to external knowledge (sources). The literature often refers to internal resistance against externally developed knowledge as the Not Invented Here Syndrome. In line with the Social Identity Theory we argue that external knowledge might increase a comparison of the in-group’s expertise with that of the out-group and as such threaten the identity of the group and its members. In addition we argue that the source of external knowledge matters. Knowledge acquired from similar organizations is more likely to lead to internal resistance than knowledge from dissimilar organizations. We argue that competitors are most similar to the focal organization and that therefore the NIH syndrome occurs when knowledge is acquired from competitors but not if this knowledge is acquired from suppliers, customers or universities. Keywords - Not-Invented-Here syndrome; external knowledge sources; social identity theory; organizational identity

I. INTRODUCTION

Organizational knowledge creation is a highly complex process. Individuals, working teams and communities within the organization develop their own routines, beliefs, artifacts, habits which makes it easier to deal with these complex processes [1] [2]. These routines reinforce path-dependencies and are useful when it comes to dealing with information consistent with existing competencies. When it comes to external knowledge though, routines and path-dependencies might hinder the integration of this external knowledge and the consequent radical innovations [3]. Therefore external knowledge requires individuals to change believes and break with the existing routines. If employees perceive external knowledge as a threat they may respond with resistance. Internal resistance against externally developed knowledge is referred to as the Not-Invented-Here syndrome (NIH) [4] [5] [6].

The literature on the NIH syndrome has so far mainly focused on antecedents of the NIH syndrome [4] [5] [7] Examples of antecedents of the NIH syndrome identified in the literature are group tenure [5], dysfunctional intra-organizational communication [7], inappropriate incentive systems [7] [8] [9] [10], the lack of or negative group experience with external knowledge [7]. The main identified antecedents are situated at the project or individual level.

In this study we propose that the source of external

knowledge is another important antecedent of the occurrence of the NIH syndrome. We focus therefore on the organizational level, whereas previous research is mainly identifying project or individual antecedents. We develop a theoretical framework for the effect of the external knowledge sources on internal resistance applying the social identity theory [11] [12] [13] [14] [15] [16] and the concept of organizational identity [17] [18]. According to the social identity theory the rejection of external knowledge is strongest if the out-group from which the knowledge is acquired is similar to the in-group. Similarity between groups increases the comparison between groups which might threat the identity of the in-group and induce the need to distinguish from the out-group to safeguard the in-group identity. We argue that competitors are the most similar out-group for companies in terms of product market or technology market expertise. Suppliers, customers and universities are rather dissimilar to the focal firm. Therefore internal resistance is more likely to occur if external knowledge is sourced from competitors rather than from suppliers, customers or suppliers.

The next section presents a review of the literature on the NIH syndrome. Section 3 develops a theoretical framework. Section 4 concludes and gives some managerial implications. II. THE NIH SYNDROME: WHERE DO WE STAND?

Research on the NIH syndrome mainly focusses on identifying group or individual characteristics facilitation the occurrence of the NIH syndrome. While analyzing several cases of successful and unsuccessful implementation of process innovations at a research center, [4] observed frequent failures of implementations of external technologies caused by the NIH syndrome. This could be reduced by involving the engineers at the production sites in the whole process of problem definition, development and integration of the innovation.

[5] take a closer look at project team tenure. Based on a study of 50 project groups of an R&D facility they find a curvilinear relationship between tenure and group performance. Two opposing effects of team tenure on performance were observed. On the one hand, project team tenure is a building component as it improves the

Internal resistance and External Knowledge (Sources): A Theoretical Framework on the Not-Invented-Here Syndrome

Katrin Hussinger 1,2,3, Annelies Wastyn 3

1 Dept. of Organization and Strategy, Maastricht University, Maastricht, The Netherlands 2 ZEW Centre for European Economic Research, Mannheim, Germany

3 Dept. of Managerial Economics, Strategy and Innovation, KU Leuven, Belgium

978-1-4673-0110-7/12/$31.00 ©2012 IEEE 261

understanding of each other’s capabilities, working environment and the collaboration between the group members and therefore positively influences the performance. On the other hand, [5] also observed that project groups with a stable team membership had a tendency to communicate less with individuals within the group, across groups and external parties. More specifically, they tend to isolate themselves from sources providing critical evaluations, information and feedback which do not coincide with group ideas. In this case, internal resistance against external knowledge occurs.

Also other antecedents of the NIH syndrome have been identified in the literature. Creating an open environment for communications is very important. Miscommunication [8] [9] [10] and dysfunctional intra-organizational communication [7] can induce internal resistance. Bureaucratic organizations make effective communication difficult [19]. Furthermore inappropriate incentive systems can be an antecedent of the NIH syndrome [7] [8] [9] [10]. A lack of experience with external knowledge or a negative experience with external knowledge can also be a cause. The NIH syndrome can also find its origin in a social environment which does not support a positive attitude towards external knowledge or an environment that is, in general, resistant to change [7].

An extensive overview of the literature on the NIH

syndrome is given by [6]. They propose an integrated framework for the antecedents of resistance at different stages of innovation and the different organizational levels. To indicate the different stages of innovation, they make use of the different knowledge management cycles; knowledge acquisition, accumulation and exploitation. In addition, different organizational levels such as individuals, groups, business units, organizations and inter-organizational levels are considered. At each stage of the innovation process management needs to decide whether the innovation activity should take place internally or externally. This means that at each stage an excessively positive as well as an excessively negative attitude towards external knowledge can occur. Neither excessive positive nor excessive negative attitudes are good for a firm’s knowledge management [6].

A possible consequence is that external knowledge can be wrongly evaluated [7] [20]. Furthermore, adaption of projects can fail and projects can be delayed or cancelled [4] [8] [9] [10].

We add to the previous literature by proposing the source of external knowledge as further antecedent of the NIH syndrome. In the next section we derive our theoretical framework on internal resistance and external knowledge using the social identity theory and the concept of organizational identity.

III. THEORETICAL FRAMEWORK

A. Internal resistance against external knowledge at the organizational level

Organizational knowledge creation is a complex

process. To be able to deal with this complex structure, employees, project groups and departments create their own believes, habits, artifacts, routines and subroutines [1] [2]. This supports information processing and problem solving [1] [2] [21] [22] [23] which is often difficult because it concerns different tasks and individuals with diverse backgrounds, interests and information. Such routines evolve over time and are mainly tacit so that they are difficult to be imitated or changed [24]. These routines reinforce path dependencies within the firm and are thus useful when it comes to dealing with information consistent with existing competencies. They support cumulativeness in innovation and facilitate routinized tasks. When it comes to external knowledge though, routines and path-dependencies might hinder the integration of this external knowledge and the consequent radical innovations [3] because they are not supportive for the adaption of new externally developed innovations [25] [26].

These path dependencies affect the formation of expectations and the self-concept of individuals and teams [27]. According to the social identity theory [11] [12] [13] [14] [15] [16] and the concept of organizational identity [17] [18], individuals identify themselves with the organization and derive their self-concept and self-esteem from their membership of that organization. Individuals strive for a positive social identity and engage in self-enhancement within their organization [15] [17] which can lead to in-group favoritism [15] [17] [28] [29]. Factors which threaten the organization and as such the social identity and the self-enhancement of the individuals’ part of that organization can be perceived as hostile. Resistance against such factors might occur in order to protect their organization’s self-concept. External knowledge is a factor which can be perceived as a threat to the self-concept of organizational entities. The sourcing of external knowledge can induce social comparison between the in-group and the out-group responsible for the external knowledge production. Such a comparison leads to a re-evaluation of the own organizational identity [30]. External knowledge can be perceived as a threat to own achievements, expertise and competence of the in-group. To defend their in-group and their identity, individuals reject external ideas [14] [31]. This attitude renders the acceptance, integration and application of external knowledge difficult or impossible.

Therefore we argue that a NIH syndrome might occur as externally sourced knowledge increases the occurrence of internal resistance against new innovation projects.

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B. Internal resistance and the different sources of knowledge

In the previous section we argued that in-group

favoritism can lead to internal resistance against external knowledge; the NIH syndrome. The social identity theory and the concept of organizational identity also suggest that the similarity between organizations and the distinction between multiple dimensions are two important factors to be considered when comparison between the in-group and the out-group occurs. We have a closer look at these two factors.

First, the focal firms have a tendency to compare

themselves with similar organizations [17] [30]. The more similar the in-group and the out-group, the more individuals tend to compare their in-group with the out-group [32]. Boundaries between groups are threatened to obliterate due to this similarity and increased comparability [33]. Because individuals want to defend their distinctiveness and as such their identity, they react with increased efforts to reinstall the boundaries between the in-group and the out-group [34].

Second, individuals and organizations possess the capability to make social comparisons on multiple dimensions. If the expertise of the other organization is superior on complementary or distinct dimensions, organizations can appreciate each other’s expertise [17]. In-group favoritism is strongest on dimensions regarded as important for the in-group while out-group favoritism is likely to occur on dimensions that are less important for the in-group [35]. So it is possible to acknowledge each other’s differential expertise without compromising a positive differentiation.

These two results derived from the social identity theory suggest that the source of external knowledge matters. Therefore we argue that the out-group that generated the external knowledge should be considered when analyzing the occurrence of the NIH syndrome. Different external knowledge sources can be distinguished; suppliers, customers, competitors and universities. We apply the two above discussed results on these external knowledge sources.

First, we argue that competitors are the most similar type of organizations since they are active in the same market with similar products based on similar technologies. This similarity induces an evaluation of the own strengths and weaknesses. To protect the in-group identity, individuals attempt to reinstall boundaries between organizations. Customers, suppliers and universities are not serving the same market and do not provide similar goods and services as the focal firm. The competitive dynamics between the focal organization and these types of knowledge sources are not strong enough to induce comparisons invoking actions of individuals to differentiate themselves, to safeguard their self-concept and the identity of the firm.

Second, we argue that since competitors have similar technologies and products, this induces comparison along the same dimensions of expertise. This enforces the acknowledgment of own strengths and weaknesses triggering the need to differentiate the own group from the out-group. By reinstalling the boundaries between groups it is attempted to protect the self-concept and identity and integrity of the organization. Knowledge sourced from suppliers, customers and universities causes comparison along different dimensions. Complementary or different knowledge can be valued [15] and acknowledged without threatening the organizational identity.

Applying these two results of the social identity

theory on external knowledge sourcing we argue that the source of external knowledge matters and the internal resistance against new innovation projects occurs when knowledge is sourced from competitors. Knowledge from customers, suppliers and universities do not influence the occurrence of internal resistance.

IV. DISCUSSION AND MANAGERIAL IMPLICATIONS

In this study we add to the literature by identifying

another antecedent of the NIH syndrome. We argue that the occurrence of the NIH syndrome is more likely to occur if knowledge is sourced from competitors. Knowledge sourced from customers, suppliers and universities does not have an influence on the NIH syndrome.

We draw from the social identity theory and the

concept of organizational identity [15] [17] when we argue that the occurrence of the NIH syndrome is facilitated by the similarity between the knowledge source and the focal company. Similarity between organizations raises comparison between the in-group and the out-group. This comparison might threaten the self-concept and self-esteem of the organization and the individual because individuals derive their self-concept and self-esteem from being part of the in-group. External knowledge can thus be seen as a threat to the in-group identity and resistance might occur against the out-group. Action might be taken to reinstall the boundaries between the different organizations. Similarity is also important as individuals/organizations are capable of making social comparisons on multiple dimensions. Out-groups with complementary/differential expertise can be appreciated [17]. Out-groups with expertise along the same dimensions might threat the in-group identity and therefore provoke in-group favoritism and defensive reactions [35]

We distinguished between four different sources of external knowledge: suppliers, customers, competitors and universities. Competitors are the most similar out-group for companies in terms of product market or technology market expertise. Therefore we argue that internal resistance is most likely to be invoked by

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knowledge sourced from competitors. Furthermore, suppliers, customers and universities are dissimilar from the focal firm as they are active in another market and specialized in other technology. Suppliers, customers and universities therefore do not invoke internal resistance against knowledge generated from them.

The results of our developed theoretical framework

on internal resistance and external knowledge have important management implications. Previous literature already indicated that team-related factors, communication, bureaucracy, incentives schemes and experience can invoke the NIH syndrome. We brought the analysis of the NIH syndrome to the organizational level and identified the source of external knowledge as an important antecedent of the NIH syndrome. So managers should be aware of that and take this into account when deciding on their external knowledge sourcing strategy. If the organization from which external knowledge is sourced displays similar characteristics as the focal firm then managers should be alert and special action might be taken to support the adaption and integration of this external knowledge. The person responsible for introducing external knowledge plays a key role here [4] [19]. He should be informed about a higher conflict potential associated with the respective innovation projects. This responsible person should together with the management work out a plan to prevent the NIH syndrome. Via proper communication channels and appropriate incentive systems, employees need to be involved in this plan before the innovation projects is started so as to prevent the occurrence of a NIH syndrome.

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