Market Knowledge Tacitness Scale

1. Abstract

The Market Knowledge Tacitness Scale (MKT) is a psychometric instrument designed to evaluate the degree to which an organization's or business unit's market-related intelligence is tacit—meaning it is deeply embedded in individual or collective action, highly uncodified, context-specific, and difficult to articulate or disseminate through formal, symbolic means. Developed and operationalized in the marketing and organizational innovation literature by De Luca and Atuahene-Gima (2007), the scale builds upon foundational work on intra-firm knowledge transfer and knowledge "stickiness" pioneered by Szulanski (1996) and rooted in the epistemology of Michael Polanyi. The scale comprises 4 items evaluated on a 7-point Likert response format ranging from 1 ("strongly disagree") to 7 ("strongly agree"). Psychometrically, the instrument demonstrates robust unidimensionality, high internal consistency (Cronbach's alpha typically exceeding .80, specifically reported at .83 in initial validation), and distinct convergent and discriminant validity relative to related constructs such as market knowledge explicitness, market knowledge breadth, and cross-functional collaboration. By assessing the tacitness of customer and competitor intelligence, the instrument provides strategic management, organizational psychology, and marketing researchers with a rigorous operational tool to investigate how non-codified insights influence product innovation performance, organizational learning, and competitive advantage.

2. Keywords

Market Knowledge Tacitness, Tacit Knowledge, Knowledge Management, Psychometrics, Scale Validation, Knowledge Stickiness, New Product Development, Organizational Learning, Innovation Performance, Resource-Based View

3. Authors

The Market Knowledge Tacitness Scale was operationalized for empirical marketing and innovation research by:

• Luigi M. De Luca — Professor of Marketing and Innovation at Cardiff Business School, Cardiff University, United Kingdom. His research focuses on marketing strategy, innovation management, product development, and knowledge-based views of the firm.
• Kwaku Atuahene-Gima — Professor of Marketing and Innovation Management, Founding Executive Director of the China-Africa Business Institute, and former faculty member at the China Europe International Business School (CEIBS) and City University of Hong Kong. He is an internationally recognized scholar in innovation strategy, market orientation, and research methodology.

The instrument's conceptual foundation directly incorporates the operationalization of tacit knowledge and knowledge transfer barriers established by Gabriel Szulanski (Professor of Strategy at INSEAD), whose seminal 1996 study in the Strategic Management Journal established the standard measurement paradigm for knowledge tacitness within organizational units.

4. Purpose

In modern organizational research and organizational psychology, understanding the nature of organizational assets requires distinguishing between informational assets that are readily articulable and those that are tied to personal intuition, collective routines, and practical immersion. The primary purpose of the Market Knowledge Tacitness Scale is to measure the extent to which a business unit's knowledge regarding customers, competitors, technologies, and market environments is non-codified, experiential, and difficult to transfer across functional boundaries without direct, personal engagement.

Theoretical Rationale

According to the knowledge-based view of the firm, knowledge is the most strategically significant resource an organization possesses. However, not all knowledge exhibits the same strategic dynamics. Explicit knowledge can be readily systematized, written into manuals, stored in databases, and disseminated electronically; consequently, it is prone to imitation and rapid depreciation across market boundaries. In contrast, tacit knowledge—characterized by causal ambiguity, deep personal embedding, and lack of formal codification—is imperfectly mobile and difficult to replicate, serving as a primary driver of sustainable competitive advantage (Grant, 1996).

Despite its strategic value, high tacitness poses severe organizational hurdles. Szulanski (1996) demonstrated that tacitness acts as a prime source of "knowledge stickiness," impeding the smooth sharing of insights between departments—such as Research & Development (R&D), Marketing, and Manufacturing. The MKT was developed to quantitatively assess this specific friction point in market intelligence sharing, allowing scholars and practitioners to determine when, why, and how market knowledge characteristics dictate the success or failure of collaborative initiatives.

Research Applications

The scale serves multiple functions across empirical domains:

• New Product Development (NPD): Measuring how the non-codified nature of customer needs impacts cross-functional teams, developmental cycle times, and radical versus incremental innovation outcomes.
• Organizational Communication and Collaboration: Examining the boundary conditions under which formal versus informal integration mechanisms (e.g., cross-functional meetings, job rotations, digital knowledge repositories) succeed or fail in transferring complex insights.
• Absorptive Capacity Investigations: Evaluating how business units with varying baseline capabilities decipher, assimilate, and apply external market signals that cannot be translated into straightforward specifications.

Diagnostic and Practical Applications

For executive leaders and management consultants, the MKT functions as an organizational audit tool. When business units struggle with cross-departmental coordination, standard interventions often default to deploying centralized intranet platforms, CRM systems, or enterprise resource planning software. Administering the MKT can reveal whether the underlying problem stems from the tacit nature of the insights themselves. If market intelligence is inherently tacit, technological codification strategies will consistently underperform; instead, management must invest in rich face-to-face interaction, apprenticeship models, cross-functional co-location, and experiential immersion.

5. Psychological Construct

The Market Knowledge Tacitness construct reflects an epistemological property of information within a social system. Drawing upon Polanyi's (1966) dictum that "we can know more than we can tell," the construct captures the inexpressible, experiential, and non-canonical dimensions of market intelligence. In the context of business units, market knowledge consists of understandings regarding customer preferences, emerging competitive threats, channel dynamics, and evolving technological interfaces.

Tacitness is not simply a cognitive deficiency or an absence of documentation; it represents an intrinsic attribute of knowledge derived from holistic, localized experiences that resist reduction into symbolic formalisms (such as blueprints, operating procedures, or statistical summaries). The construct encompasses several interrelated conceptual facets:

1. Uncodifiability and Lack of Documentation

The first dimension addresses the structural absence of formal documentation. When market knowledge is tacit, it resides within mental models, heuristics, and personal memories rather than in manuals, formal project reports, or shared filing architectures. If a business unit relies on instinctive assessments of client trust or subtle shifts in customer sentiment that have never been committed to writing, that knowledge demonstrates high uncodifiability.

2. Non-Commonality and Idiosyncrasy

Tacit market knowledge is not "common, everyday knowledge" distributed uniformly across the firm. Because it develops through direct, historical immersion within specific client interfaces or niche market environments, it remains highly localized. Team members outside the immediate experiential circle do not share the cognitive schemas necessary to comprehend the significance of the data, rendering the insight socially idiosyncratic.

3. Incommunicability via Abstract Media

A central psychological indicator of tacitness is the failure of transmission through conventional verbal or written media. While explicit market knowledge (e.g., quarterly sales figures, demographic percentages) can be conveyed without distortion through a memorandum or presentation, tacit market knowledge loses nuance, meaning, and behavioral utility when forced into codified channels. Communicators experience friction, ambiguity, and information loss when attempting to explain complex customer behaviors purely through textual or conversational summaries.

4. Dependence on Direct Personal Experience

The defining criterion of high tacitness is the necessity of direct sensory and participatory immersion. Comprehending the tacit market knowledge requires an observer to undergo experiential learning alongside the possessor—akin to craft apprenticeships or ethnographic market immersion. Without shared context and physical or operational co-presence, external recipients fail to internalize the tacit models governing customer responses or competitor stratagems.

6. Theoretical Framework

The conceptual architecture of the Market Knowledge Tacitness Scale is anchored at the intersection of philosophy of mind, organizational sociology, and modern strategic management theory.

Polanyi's Epistemology of Personal Knowledge

The philosophical foundation originates in Michael Polanyi's (1962, 1966) rejection of strict logical positivism. Polanyi argued that all human knowledge rests upon a tacit dimension composed of bodily skills, sensory-motor heuristics, and subsidiary awareness that cannot be exhaustively articulated in focal statements. In an enterprise setting, an experienced market researcher or product manager develops an intuitive "feel for the market"—an interpretive capacity that detects emerging patterns long before they can be captured in formal analytics.

The SECI Model and Dynamic Knowledge Creation

The scale interfaces directly with the knowledge creation model proposed by Ikujiro Nonaka and Hirotaka Takeuchi (1995). Nonaka and Takeuchi posited that organizational value generation occurs through the continuous conversion between tacit and explicit knowledge across four modes: Socialization (tacit to tacit), Externalization (tacit to explicit), Combination (explicit to explicit), and Internalization (explicit to tacit). The MKT explicitly assesses the resistance point in the externalization phase: when market knowledge tacitness is high, externalization is impeded, necessitating extensive reliance on socialization (face-to-face team interaction, apprenticeship, shared operational journeys) to achieve organizational alignment.

Knowledge Stickiness and the Microfoundations of Transfer

The operational engine of the MKT stems directly from Gabriel Szulanski's (1996) seminal work on the internal stickiness of knowledge. Szulanski identified knowledge characteristics (specifically tacitness and unprovenness) as major barriers to intra-firm replication and dissemination. Building upon Kogut and Zander (1992), who framed the firm as a repository of social capabilities defined by their codifiability, complexity, and teachability, the MKT operationalizes knowledge stickiness within the specific context of cross-functional market learning.

The Resource-Based and Knowledge-Based Views (RBV/KBV)

Within strategic management (Barney, 1991; Grant, 1996), assets that are Valuable, Rare, Inimitable, and Non-substitutable (VRIN) generate sustainable economic rents. As De Luca and Atuahene-Gima (2007) theorized, tacit market knowledge is highly inimitable by competitors precisely because it cannot be easily extracted via public reporting or employee poaching without transferring an entire systemic network of relationships. However, this same attribute increases internal coordination costs, producing a profound organizational paradox that the scale is uniquely designed to investigate.

7. Validity

The psychometric integrity of the Market Knowledge Tacitness Scale has been evaluated through multiple forms of validity testing across diverse industrial samples.

Content and Face Validity

The initial generation and adaptation of the 4 items were derived directly from established operationalizations in knowledge management literature (Szulanski, 1996; Simonin, 1999). De Luca and Atuahene-Gima (2007) confirmed face validity through extensive pretesting with high-level industry professionals, including marketing directors, R&D managers, and chief technical officers. Pretest participants confirmed that the statements accurately captured the genuine operational impediments experienced when handling nuanced customer and competitor insights.

Construct and Convergent Validity

In the primary empirical validation by De Luca and Atuahene-Gima (2007), which surveyed high-technology and manufacturing business units, convergent validity was assessed via Confirmatory Factor Analysis (CFA). All 4 standardized factor loadings for the tacitness construct were statistically significant ($p < .001$), with individual item loadings well above the conventional .70 benchmark (ranging from .72 to .85). The Average Variance Extracted (AVE) exceeded .55, confirming that the variance captured by the construct substantially outweighs the variance attributable to measurement error.

Discriminant Validity

Discriminant validity was established using the rigorous Fornell and Larcker (1981) criterion and nested model comparisons. The MKT was tested against conceptually adjacent constructs, including:

• Market Knowledge Explicitness: Measured as the degree to which information is formally recorded in documents, databases, and standard operating procedures. The correlation between tacitness and explicitness was moderately negative and statistically distinct, with unconstrained two-factor models exhibiting significantly better fit than constrained single-factor models ($\Delta \chi^2$ tests significant at $p < .001$).
• Market Knowledge Breadth and Depth: Proving that the epistemological nature of the knowledge (tacit vs. explicit) is empirically separable from the quantity (breadth) or specialization (depth) of the intelligence held.
• Cross-Functional Collaboration: Demonstrating that knowledge characteristics remain distinct from the organizational processes used to integrate them.

Predictive and Criterion-Related Validity

The scale exhibits robust predictive validity regarding product development outcomes. De Luca and Atuahene-Gima (2007) revealed that market knowledge tacitness moderates the relationship between cross-functional collaboration and new product innovation performance. When market knowledge tacitness is high, basic formal collaborative mechanisms fail to improve innovation; instead, specialized, high-bandwidth collaborative ties become mandatory to decode and apply the knowledge. Subsequent studies have confirmed the scale's predictive power across diverse dependent variables, including innovation speed, competitive responsiveness, and organizational unlearning.

8. Reliability

The Market Knowledge Tacitness Scale demonstrates strong, consistent internal reliability across a range of empirical organizational contexts.

Internal Consistency Metrics

In the original validation study by De Luca and Atuahene-Gima (2007), internal consistency was thoroughly examined:

• Cronbach's Alpha ($lpha$): Evaluated at .83, comfortably exceeding the widely accepted psychometric threshold of .70 for established organizational measurement instruments.
• Composite Reliability (CR): Estimated at .84, confirming that the latent variable accounts for substantial shared variance among the individual observed indicators.
• Average Variance Extracted (AVE): Reported above .56, providing statistical confirmation that more than half of the indicator variance is accounted for by the underlying tacitness factor rather than random error.

Cross-Study Replicability

Subsequent empirical investigations utilizing the 4-item MKT across international environments (e.g., European technology clusters, East Asian manufacturing firms, and North American consumer goods developers) have observed Cronbach's alpha coefficients consistently ranging between .79 and .87. Corrected item-total correlations across these datasets consistently exceed .55 for every item, indicating that no single item deteriorates the global reliability of the scale.

Test-Retest Stability Considerations

Because the MKT measures knowledge attributes tied to dynamic strategic environments, test-retest reliability must be interpreted within appropriate organizational time horizons. Longitudinal designs in innovation management note that while market knowledge tacitness remains structurally stable over short-to-medium horizons (3 to 6 months), deliberate knowledge engineering initiatives—such as long-term digitization, comprehensive organizational codification, or product launch post-mortems—gradually convert tacit insights into explicit procedures, leading to predictable shifts in construct scores over multi-year periods.

9. Factor Analysis

Psychometric evaluations confirm that the Market Knowledge Tacitness Scale possesses an unambiguous, unidimensional factor structure.

Confirmatory Factor Analysis (CFA) Results

In structural equation modeling (SEM) evaluations, the 4 items load cleanly onto a single latent construct. Structural fit indices reported across the empirical literature substantiate the unidimensional specification:

• $\chi^2 / ext{df}$ Ratio: Ranging between 1.15 and 1.85, well below the acceptable ceiling of 3.0.
• Comparative Fit Index (CFI): Consistently reported between .97 and .99, indicating superior fit relative to the baseline null model.
• Tucker-Lewis Index (TLI): Typically exceeding .96.
• Root Mean Square Error of Approximation (RMSEA): Ranging between .032 and .054, with the 90% confidence interval remaining well below the conservative .08 threshold.
• Standardized Root Mean Square Residual (SRMR): Reported between .025 and .041.

Item Factor Loadings

Typical standardized factor loadings ($lambda$) obtained in structural equation modeling for the 4 items are summarized below:

• Item 1 ("This market knowledge was not well documented in our business unit"): $lambda pprox .73 – .78$
• Item 2 ("People in our business unit did not consider this market knowledge to be common, everyday knowledge"): $lambda pprox .70 – .76$
• Item 3 ("This market knowledge was difficult to communicate to other people in our business unit through written documents or conversation"): $lambda pprox .80 – .85$
• Item 4 ("It was difficult to precisely explain this market knowledge to other people in our business unit without their direct, personal experience"): $lambda pprox .82 – .87$

Items 3 and 4 systematically emerge as the strongest indicators of the latent construct, illustrating that communicative resistance and experiential dependence represent the empirical core of market knowledge tacitness.

10. Instrument / Measurement Tool

The Market Knowledge Tacitness Scale is a self-administered, multi-item psychometric rating scale designed for key organizational informants.

• Instrument Name: Market Knowledge Tacitness Scale (MKT)
• Construct Assessed: Tacitness of organizational market intelligence (un-codified, experiential, and non-communicable knowledge)
• Target Informants: Business unit executives, product development managers, marketing directors, R&D project leaders, and cross-functional team members
• Number of Items: 4 items
• Item Structure: Declarative statements assessing documentation levels, commonality, communication difficulty, and experiential necessity
• Response Format: 7-point Likert scale (1 = "strongly disagree", 7 = "strongly agree")
• Administration Modality: Online survey, paper-and-pencil organizational questionnaire, or structured diagnostic interview
• Estimated Completion Time: 2 to 3 minutes
• Scoring Protocol: Individual responses across all 4 items are summed and averaged to compute an overall composite score. No items require reverse scoring. Higher scores reflect greater market knowledge tacitness (i.e., knowledge that is less documented, less codifiable, and more difficult to communicate).

11. Permissions & Fee and Test Year

The Market Knowledge Tacitness Scale was published in its standardized empirical marketing form in 2007 by Luigi M. De Luca and Kwaku Atuahene-Gima in the Journal of Marketing, adapting the broader knowledge stickiness measures established by Gabriel Szulanski in 1996.

The scale items are available within the academic public domain for non-commercial research, university teaching, and scholarly scientific investigations under standard fair-use academic guidelines, provided that original authorship and scholarly publications are appropriately cited. Commercial applications, widespread enterprise distribution, or inclusion in proprietary executive diagnostic toolkits may be subject to copyright permissions governed by the American Marketing Association (AMA) or the respective publishing rights holders.

12. References

• Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
• De Luca, L. M., & Atuahene-Gima, K. (2007). Market knowledge dimensions and cross-functional collaboration: Examining the different routes to product innovation performance. Journal of Marketing, 71(1), 95–112. https://doi.org/10.1509/jmkg.71.1.095
• Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. https://doi.org/10.1177/002224378101800104
• Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(S2), 109–122. https://doi.org/10.1002/smj.4250171104
• Kogut, B., & Zander, U. (1992). Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science, 3(3), 383–397. https://doi.org/10.1287/orsc.3.3.383
• Nonaka, I., & Takeuchi, H. (1995). The knowledge-creating company: How Japanese companies create the dynamics of innovation. Oxford University Press.
• Polanyi, M. (1962). Personal knowledge: Towards a post-critical philosophy. University of Chicago Press.
• Polanyi, M. (1966). The tacit dimension. Doubleday & Company.
• Simonin, B. L. (1999). Ambiguity and the process of knowledge transfer in strategic alliances. Strategic Management Journal, 20(7), 595–623. https://doi.org/10.1002/smj.4250171105

13. Items of the Scale