The knowledge strategy orientation scale: individual perceptions of firm-level phenomena.

Kline (1998) suggests that evidence of convergent validity is provided when items specified to measure a construct all have relatively high path coefficients in CFA analysis. He further states that evidence of discriminant validity is provided when intercorrelations between constructs are not excessively high (i.e., > .85). In Sample Two, the standardized path coefficients for the Explorer scale range from .40 to .80, while the standardized path coefficients for the Exploiter scale range from .39 to .68, thus providing some evidence of convergent validity. Confirmatory factor analysis reveals that the disattenuated correlation between the Explorer factor and the Exploiter factor was .59, thus providing some evidence of discriminant validity between the constructs. In an effort at further validating the factor structure of the data, we submitted data from Sample Three to CFA.

Sample Three. Before we could assess the relationship between our Explorer and Exploiter constructs in Sample Three, we assessed the fit of the two-factor model on data from that sample. The two-factor model resulted in CFI = 0.95, RMSEA = 0.093, and SRMR = 0.066. Of these indices, the CFI and SRMR indicate good fit of the data to the model, but the RMSEA is slightly outside the recommended range. The more parsimonious one-factor model resulted in CFI = 0.91, RMSEA = 0.120, and SRMR = 0.080. Of these, only the SRMR meets the criteria for good fit. Additionally, the [chi square] for the two-factor model was 35.43 (p < .001), while the [chi square] for the one-factor model was 48.28 (p < .01), resulting in a [DELTA][chi square] of 12.85 (p < .001). The significant [DELTA][chi square] indicates that the two-factor model fits the data significantly better than the one-factor model, providing yet more evidence of the superior fit of the two-factor structure.

The standardized path coefficients for the Explorer scale range from .54 to .73, while the standardized path coefficients for the Exploiter scale range from .51 to .75, thus providing some evidence of convergent validity (see Table 4). Confirmatory factor analysis reveals that the disattenuated correlation between the Explorer factor and the Exploiter factor was .67, thus providing some evidence of discriminant validity. See Table 4 for the completely standardized factor pattern and squared multiple correlations for the two alternative models in both samples.

Relationship to Distinctive Competencies

We used a Z-test described by Meng, Rosenthal, and Rubin (1992) to examine our hypotheses that test for significant differences between correlated correlation coefficients. Each of our distinctive competencies is correlated with each of our focal constructs: Explorer and Exploiter.

In Sample Three, two of the four distinctive competencies associated with radical innovation were statistically stronger in their relationship with Explorer than with Exploiter. The significant correlations were between new product development (Z = 2.152, p < .05) and speed to market (Z = 2.344, p < .05) in their relationships with Explorer. Z-scores were 0.454 and -0.499 for research and development and product technology, respectively. Thus, there was partial support for hypothesis one in sample three. Additionally, each of the distinctive competencies associated with incremental innovation were statistically stronger in their relationship with Exploiter than with Explorer. The correlations were between process technology (Z = -2.021, p < .05), customer preferences (Z = -2.468, p < .05), operating efficiency (Z = -3.048, p < .05), and benchmarking (Z = -2.148, p < .05) in their relationships with Exploiter. Thus, there was support for hypothesis two in Sample Three. See Table 5 for the correlations and accompanying Z tests.

DISCUSSION

This study examines the individual perceptions of employees regarding the knowledge strategy orientation of their firms. More specifically, we are interested in whether these individuals perceive their organization to have an Explorer or an Exploiter knowledge strategy orientation.

Measurement Implications

We analyzed the self-report data in three samples of respondents using EFA and CFA to examine the factor structure of item responses, the convergent and discriminant validity of the explorer and exploiter constructs, and the relationship of these measures with the measures of distinctive competencies. Our results indicate that our scales are indeed separate factors, as a one-factor model did not fit the data well, but the two-factor model did. The Explorer and Exploiter scales also resulted in scores with acceptable reliability. The factor pattern coefficients were high enough to provide some evidence of convergent validity, while the correlation between the two factors was low enough to provide some evidence of discriminant validity between the constructs. Additionally, we found that each construct was differentially related to the various Distinctive Competencies. Therefore, the results of our analysis provide strong evidence of validity for our Knowledge Strategy Orientation Scale (KSOS).

By forcing our Explorer and Exploiter scale items onto different factors our two-factor model resulted in better indices of fit as evidenced by the superior indices and the Chi-square difference test over the one-factor model. Our results may be enlightening to researchers who use employees' perceptions for analysis of firm-level phenomena. Previous researchers have advocated a self-typing measure of firm strategy (cf. Hambrick, 1989; Snow and Hambrick, 1980). These researchers suggest that as an alternative to researcher inferences about firm strategy from archival data, an organization's managers might acceptably and reliably characterize their firm's strategy. Our analysis suggests that perceptions of firm strategy, as measured by our scale, are consistent regardless of the respondents' position held in a firm.

Our scales both resulted in acceptably high alpha reliabilities (Nunnally, 1978). This level of average inter-item correlation suggests that the Explorer items provide an aggregate measure of one construct and the Exploiter items measure another separate and distinct construct. Additionally, our standardized factor pattern coefficients ranged in Sample Two from .40 to .80 and in Sample Three from .57 to .76 for the Explorer scale. These values ranged in Sample Two from .39 to .68 and in Sample Three from .48 to .78 for the Exploiter scale, thus providing some additional evidence of the convergent validity of our scales. Regarding discriminant validity, our attenuated correlation between the two factors ranged from .40 to .55, but our CFA results show a disattenuated correlation ranging from .59 to .67. Although this indicates that they are indeed correlated, they are different enough so as to not be considered collinear (Kline, 1998), indicating some evidence of discriminant validity. The moderate level of correlation between our constructs as well as the acceptably high alpha coefficients indicate that our respondents conceive of the Explorer and Exploiter knowledge strategy orientations as independent constructs.

Data provided by the measure of our two constructs provided evidence of differential relationships with the distinctive competencies. Almost all of our distinctive competencies were significantly stronger in their relationship with our focal constructs. Specifically, two of four distinctive competencies associated with radical innovation were more strongly related to the Explorer knowledge strategy orientation than to the Exploiter knowledge strategy orientation. The stronger correlations between Explorer knowledge strategy orientation and distinctive competencies associated with radical innovation are consistent with the work of He and Wong (2004). This is a favorable source of external validation as we expect firms that engage in radical innovation to utilize an explorer's knowledge strategy orientation. We also found that each of the distinctive competencies associated with incremental innovation were more strongly related to the Exploiter knowledge strategy orientation than to the Explorer knowledge strategy orientation. These findings are consistent with the theoretical frameworks provided by Bierly and Daly (2002), March (1991), and Levinthal and March (1993).

Managerial Implications

One objective of our development of the KSOS was to address some of the methodological problems of past research in this area: an over-reliance on archival data, the use of single-item measures, and the use of proxy measures for focal constructs. Our study focused on a psychometric evaluation of survey items based upon theoretical insights provided by Holmqvist (2004), March (1991), Levinthal and March (1993), Bierly and Chakrabarti (1996), and Zack (1999) regarding firms' knowledge strategies. Our second objective in development of this new scale was to provide an instrument that would prove useful to managers in the areas of organizational assessment and strategic planning.