Knowledge-Oriented Technologies & Network Marketing Direct

Selling Organizations (NMDSO)

Some Preliminary Insights into the Nature and the Goals of Shared Knowledge

Carolina Guerini and Eliana Alessandra Minelli

Dipartimento di Gestione integrata d’impresa, Università Carlo Cattaneo – LIUC, Corso Matteotti 22, Castellanza, Italy

Keywords: Business Models, Knowledge Artifact, Knowledge Sharing in Network Marketing Direct Selling

Organization.

Abstract: The work extends the sales and organization literature by analyzing the nature and the goals of knowledge

sharing within networkers’ downlines in Network Marketing Direct Selling Organizations (NMDSO). The

main results of the research, based on a qualitative methodology and referred to Lyoness network in Italy,

acknowledge the relevance of knowledge sharing & creation via digital technology, distinguish the nature of

knowledge sharing and identify the main goals.

1 INTRODUCTION

A recent study by PricewaterhouseCoopers

International Limited (PwC, 2014) describes the

Orange World – one of three emerging

organizational models- as networks of autonomous,

specialized operations. The orange company model

lays the foundation for its success on operational

flexibility, lean staffing, collaborative partnerships

and minimal fixed costs. This kind of organization

makes extensive use of technology to run the

business, coordinate a largely external workforce

and support its relationships with third parties. PwC

consultants show how the adoption of disruptive

technologies increases speed and favours employee

recruitment. Moreover, technology itself “keeps

these networks together, often on a task-by-task

basis, with social media heightening the connectivity

upon which the Orange world depends” (PwC,

2014).

Some local academic contributors underline long

since that enterprise and distribution models -such as

direct selling network marketing companies

(NMDSO) – represent (network) organizations

coordinating large amounts of autonomous sales

force. They underline that in NMDSO people have

come to realize that they can enjoy more flexibility

and varied challenges by working independently,

supported by knowledge sharing. In fact, networkers

base their careers on the collaboration with the up-

lines, and benefit in various ways from the support

given by the company itself. As such, NMDSO

represents an (old) example of the present and future

Orange organization, and probably one of the most

interesting research objectives where the connection

of autonomous salespersons generates knowledge

sharing and creation, thus enabling performance and

success (Guerini, 2003; Guerini, 2013; Gross, 2008).

More specifically, network marketing is largely

based on personal interaction and embedded

knowledge, whereas technology offers the means to

enable and support knowledge-related activities

(Cabitza and Locoro, 2014).

On the basis of the described features NMDSO

and especially the web-enabled type of collaboration

within downlines can be analysed with the aim to

find out the nature of the interchange, the goals and

preferred applications. Due to the lack of literature

on this peculiar kind of organization, a possible

research path includes a preliminary research of

exploratory nature, with the aim of verifying,

NMDSOs’ membership in the Orange world, and the

nature and goals of knowledge sharing and creation

within downlines.

2 BACKGROUND

Though academic literature includes a huge number

of publications referred to the impact of technology

Guerini, C. and Minelli, E.

Knowledge-Oriented Technologies & Network Marketing Direct Selling Organizations (NMDSO) - Some Preliminary Insights into the Nature and the Goals of Shared Knowledge.

DOI: 10.5220/0006081303010306

In Proceedings of the 8th International Joint Conference on Knowledge Discovery, Knowledge Engineering and Knowledge Management (IC3K 2016) - Volume 3: KMIS, pages 301-306

ISBN: 978-989-758-203-5

301

on sales activities and performance, none of these

studies directly refers to NMDSO. At the same time,

there are no publications that explicitly refers to the

issue of knowledge oriented technologies, and their

different capability in supporting the different core

and peripheral activities of direct sales (for a review

of the main contributions, see (Groza , et al., 2012) ).

Network marketers and their downlines,

represent also a peculiar example where the analysis

of the technology-mediated relation between

salespeople and customers and the analysis of the

intra-organizational aspects merge, as networkers

and dowlines components represent both customers

and distributors of the products.

A recent survey (Guerini and Minelli,

forthcoming 2017) aims at acquiring knowledge

about the digital support used and developed by

Italian networkers. It directly addresses DiDIY that

is an activity for the creation, modification or

maintenance of objects or services in the digital

domain, which develops a mindset as well (Mari,

2014). Based on the hypo-thesis of a potential

reshape of the networker’s role due to the impact of

DiDY, the above mentioned research will also

investigate how coordination and control

mechanisms are going to change within NMDSO

and networker’s downlines as a conse-quence of

digital knowledge sharing and creation.

The cited survey is a part of a research program.

Prior to the launch of a survey, intended to acquire

knowledge on the use of digital technologies by

networkers and to identify DiDYers, the same

research project addressed the issue of knowledge

sharing and creation, thus verifying the nature and

the objectives of knowledge sharing within network

marketers communities. This paper is illustrates the

results obtained in the first research phase.

3 METHODOLOGY AND

RESEARCH QUESTIONS

The importance of informal networks or communi-

ties of practice emerged in the Nineties. By way of

definition, Wenger et al. (Wenger , et al., 2002) have

defined a community of practice as «a group of

people informally bound together by shared

expertise and passion for a joint enterprise». While

communities of practice are pervasive in society and

organisations, more recently organisations have

recognised the central role that these communities

play in managing knowledge.

Starting from the observation of virtual

communities of practice comprised of networker

marketers - highly frequent on social media such as

FB, YouTube and Twitter in Italy- this work extends

the sales and organization literature by moving

beyond salespeople’s role as knowledge gatherers to

their role as knowledge sharers with the staff

belonging to the personal downline. Following

Kaplan and Haenlein (Kaplan and Haenlein, 2010),

we define social media as “a group of Internet-based

applications that build on the ideological and

technological foundations of Web 2.0, and that allow

the creation and exchange of User Generated

Content” (p. 61).

Frequent interactions and communication

exchanges with networker’s downlines also promote

new knowledge and this is “recreated in the

interaction within communities of practice, that is in

the message exchanges of their members and in the

free flows of content and narratives that the KITAs

host and help accumulate” (Cabitza and Locoro,

2014).

Because of the poor literature on this topic, the

issue of knowledge sharing in the virtual communi-

ties of networkers was addressed with an exploratory

research, intended to analyse the nature and the

goals of knowledge sharing within downlines.

Two focus groups (Liamputtong, 2011) were

organized in July 2016, involving eight networkers

each, with the aim of analysing that situated

knowledge artifact, not yet investigated so far.

Table 1: Main activities of the participants in the focus

groups.

Which is your main

activity?

First focus

group

Second focus

group

Only/mainly network

Marketing

Mainly other

activities

Both were composed of homogeneous salespeople in

terms of career path (all having achieved remarkable

steps in the network career path), whereas gender

and age varied, as per the universe of network

marketers in Italy and worldwide.

Table 2: Experience of the participants in the focus

groups.

How long have you

been in practice?

First focus

group

Second focus

group

Less than 3 years

Between 3-5 years

More than 5

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Table 3: Composition by gender of the focus groups.

Gender

First focus

group

Second focus

group

Male

Female

Table 4: Composition by age of the focus groups.

Age

First focus

group

Second focus

group

18-30

31-50

Over 50

All networkers worked for Lyoness, they came

from different Italian towns, knew each other and

took part comfortably in the focus groups.

The objectives of the two focus groups were: a)

to verify the (perceived) importance of virtual

knowledge sharing and creation within networkers

downlines; b) to classify the nature of knowledge

sharing and /or creation within those types of

communities; c) to pinpoint the main benefits

obtained thanks to technology in a typical high touch

activity, i.e. previously based on personal

interaction.

The organization of the second focus group

aimed at confirming the results collected during the

first one and allowed a more immediate

categorization of the answers and comments given.

4 RESEARCH RESULTS AND

DISCUSSION

As far as the findings are concerned, both groups

underlined – first of all - the engagement in

knowledge sharing/creating of networkers. As such

NMDSO marketing firms can be definitely

considered learning organizations (Guerini, 2013;

Nonaka, et al., 2006; Argyris and Schon, 1978) and

knowledge sharing is a fundamental activity of every

networker engaged in continuous learning, via

frequent interactions with his up-line and its

downline, and with the firm.

At the same time, in the case of network

marketing activities, this seems far more important

than in pure direct selling activities. Networkers

confirm the extensive use of technology to run the

various core activities, coordinate workforce and

support its relationships with third parties and

prospects. Networkers also affirm they use different

applications depending on the type of relationships,

clearly distinguishing between their collaboration

with the company, or with the downlines. Though

there was not full agreement (60%), most of them

stated that nowadays digital technology keeps

networks together, with social media heightening the

connectivity. The latter capability is strictly reduced

to intra-downline relations, whereas it doesn’t fit for

horizontal relationships between different network-

kers teams, and within vertical relationships with the

headquarter.

The main findings about the nature of the

knowledge shared in social media groups suggest a

distinction between the sharing of information about

the activity and the ideological considerations.

Downlines share, on a daily basis, huge

quantities of information about the company, its

marketing and compensation plan, the role of the

team or persons involved, as well as their status and

upgrade, sharing also verbal information, links

and/or photos (Kaplan and Haenlein, 2010)).

Information technology is increasingly used by

personnel engaged in network marketing activities

also as a means to encourage collective action in

support of the advancement of an ideology or idea

(Oh, et al., 2013). In this sense the analysed types of

organizations rely heavily on information, whereas

community-building, and action-oriented messages,

using the taxonomy of Lovejoy and Saxton (Lovejoy

and Saxton, 2012) seems to merge in a ‘ideology-

sharing’ category.

For them, this is considered part of the sales

activity, frequently communicated (by the NMDSO

as well) much more as a typical way of life rather

than as an alternative distribution model for goods

and services. In this case the downlines interact

frequently to share contributions by bestseller

Authors in the field of network marketing, videos

and posts that lay the foundation of the network

marketing ideology. The ideology-sharing concrete-

ly occurs, on the basis of the narration done during

the focus groups, by researching, analysing and

diffusing interesting contributions or by generating

new contents by commenting them, and posting the

results in all the social networks in which they are

active (FB personal page and group, Youtube,

personal site if existing).

Referring to the goals that motivate the sharing

of information, economic benefits are mostly cited.

Being compensation plans in network marketing

activities structured so as to reward collaboration

between people, sharing appears a rational, utility

maximizing behaviour. Furthermore, there are signs

of both positive and negative influences of economic

Knowledge-Oriented Technologies & Network Marketing Direct Selling Organizations (NMDSO) - Some Preliminary Insights into the

Nature and the Goals of Shared Knowledge

303

incentives on sharing behaviour (Davenport and

Prusak, 1998; Bock , et al., 2005; Kankanhalli, et al.,

2005) as networkers underline, during the

conversations within the focus groups, that

“economic benefits are the reason for avoiding

knowledge sharing with different downlines”

(horizontal relationships). This behaviour has a

potential negative impact on the network as a whole

in terms of coordination and success.

It is interesting to underline that discussion

converged, as the focus group components stressed,

that knowledge sharing is considered by owners also

as a way of ‘helping people’, thus solving them

‘problems’ and favouring a ‘better future of all

people involved’. More clearly, networkers add to

economic benefits personal gratification as an

important by-product of knowledge sharing,

collaboration and networking. In this case, the

interaction via FB and Whatsup allows networkers

to keep in contact continuously with recently

engaged workforce and favour their motivation,

training and the appraisal of the ideology.

Moreover, in the context of network marketing,

sharing through social networks serves as an

incentive for saving economic resources (Luchs, et

al., 2011). In network marketing activities the

organization of events is frequent and common (and

will persist in future). At the events all downline

components participate actively by accompanying

new members, potential customers and future

networkers. Nevertheless, if the knowledge sharing

occurs via social networks, instead of vis-à-vis, the

speediness and the advantage of cost-saving become

the main reasons for non-personal interaction.

At the same time, both focus groups confirm that

a fundamental dimension of virtual interactions via

social networks is represented by the enjoyment

derived from the activity itself. Social networks

appear to be ‘a way of handling life’. Being the

contents of information shared multimedia, and

thanks to the variety of stand-alone and built-in

social media services currently available, networkers

underline the fact that ‘entertainment’ and ‘joy’ are

part of their lives, and ‘entertainment an important

reason for interacting via social networks’. On the

basis of what networkers mention during the focus

groups, conversation mediated by technology

include every aspect of the networkers’ lives. Photos

and videos regarding their private sphere are part of

the information sharing. Nevertheless, frequent

interchange includes posts, videos, texts dealing

about aspects of our ‘existence as human beings’

that encourage, through emotional arousal, also the

likelihood of sharing news (Berger, 2011).

Enjoyment has been regarded as an important

factor in sharing-related activities, such as

information system use (van der Heijden, 2004), and

information sharing on the Internet (Nov, 2007;

Nov, et al., 2010). A study on the continued use of

social networking services established that

enjoyment is a primary factor, followed by the

number of peers and usefulness (Lin and Lu, 2011).

Social networking services and similar service

design used elsewhere can be seen to especially

promote relatedness (see (Hamari and Koivisto,

2015), and e.g., (Deci and Ryan, 1985; Ryan and

Deci, 2000) on relatedness), which is a major

determinant for intrinsically motivated use such as

enjoyment.

Finally, some questions were addressed to the

impact of knowledge sharing in network marketing

activities fostered by social media. Within

downlines, knowledge sharing has been defined as

the main source of knowledge, its impact judged as

‘very high’, its value defined as ‘incomparable’;

with the words of the interviewees: “without

interaction, collaboration and knowledge sharing,

network marketing wouldn’t be network marketing”;

“social media modify the way we share knowledge

and information by rendering that all much easier,

faster and more agreeable”; “the continuity allowed

by cheap technology in interaction and collaboration

makes it possible to reach 1 billion clients

worldwide in a limited number of years, which is

our network’s goal.”

5 CONCLUSIONS AND

LIMITATIONS

This study has several limitations. They include

issues related to: (a) sampling, (b) possible resear-

cher influence, and (c) participants’ level of honesty

and accuracy. The study was also limited to one

network and networkers came all from one country.

Nevertheless, we contributed to the elimination

of the general lack of context regarding knowledge

sharing in social media, as indicated by Kümpel et

al, (Kümpel, et al., 2015) in reference to qualitative

and situation-related research about news sharing.

Respondents had the opportunity to further develop

their thoughts and provide reasons for their

individual and collective sharing behavior.

The qualitative approach was suitable and

appropriate to the study for the richness of the

information obtained allowing researchers to gain

preliminary insights into the research problems and

to develop propositions to be validated

KITA 2016 - 2nd International Workshop on the design, development and use of Knowledge IT Artifacts in professional communities and

aggregations. Knowledge Artifacts as resources in the maker and DIY communities

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quantitatively (Creswell, 2005). As clarified in the

Introduction, the research project is comprised of a

series of steps. The results of the preliminary focus

groups encourage the launch of a survey intended to

acquire knowledge on the use of digital technologies

by networkers and identify DiDYers. This study

offers some preliminary insights on the relation

between knowledge-oriented technologies and

NMDSO by analysing the nature and the objectives

of the web-enabled collaboration.

The ‘social web’ (Stroulia, 2013)offers the means of

socializing the advantages of the network marketing

model, considered primarily a ‘way of life’, in which

autonomy, joy and amusement, but also altruism ,

generosity and personal gratification pay a great

role. Though the means of the social web, network

marketers benefit from cost-reduction, increased

efficiency and personal gratification as well.

At the same time, the study seems to offers also

some preliminary insights into the ‘knowledge

artefact‘ construct as well, and can be useful both to

inform the design and to evaluate the impact of

knowledge-oriented technologies in the communities

of practice that adopt them and adapt them to their

ever-evolving bodies of knowledge.

In details, knowledge artifacts appear to be

embedded in culture: in this case the network

marketing culture, being the research results highly

homogenous.

Besides networkers found some difficulties in

defining clearly the correlation between applicative

used/objectives and outcome. A further effort by the

Authors will be, thus, directed to the investigation of

the knowledge oriented platforms that best support

knowledge sharing and creation in NMDSO,

depending on the complexity of their aims.

Nevertheless, it is apparent that the above mentioned

social media represent the main application used so

far for virtual knowledge sharing and creation.

Networker marketers have also proved to be

knowledge sharing agents highly active within their

personal and professional network.

Thus, the general recommendation to focus more

on theory building could be combined with the

suggestion to subdivide theory building about

knowledge exchange via social media, not only

considering organizations and individuals but also

persona/professional networks.

Thirdly, this culture-bound, context related

research results deductively sustain the call for a theory

based on a multidisciplinary approach that could

positively be impacted from advances in information

technology, economics, marketing, organization and

psychology.

ACKNOWLEDGEMENTS

This article has been developed under the DiDIY

project funded from the European Union’s Horizon

2020 research and innovation programme under

grant agreement No 644344.

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