The rising world of knowledge management a performance perspective

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

1:1 Introduction

In the mid-1980s, individuals and organizations began to appreciate the increasingly important role of knowledge in the emerging competitive environment. International competition was changing to increasingly emphasize product and service quality, responsiveness, diversity and customization (Wiig, 1997). The concept of knowledge management has grown and gathered importance in the field of business management. Some ten years after its introduction, KM has a role in MBA and PhD programmes, is a keyword in bibliographic databases, forms the conceptual nucleus of a developing literature, is sought after by leading firms and just as readily prescribed by all the major consultants (Chauvel and Despres, 2002). Knowledge Management is an emerging set of organizational design and operational principles, processes, organizational structures, applications and technologies that helps knowledge workers dramatically leverage their creativity and ability to deliver business value (Gurteen, 1998). However, knowledge management is a complex, multi-layered and multifaceted concept. This is demonstrated by the number of differing opinions about the essence of knowledge management, which is reflected by the fact that there is no universally agreed definition of knowledge management (Ahmed et al., 2002).

1:2 School of thoughts

The research work in this important field falls into two divergent schools of thought. According to Lomax (2007):

The Culturalists: those more concerned with soft issues: finding means of analyzing knowledge within a systemic context: culture, values, schema, belief systems, tacit norms, embedded routines.

The Intellectual Capitalists: these are the empiricists, whose work is concerned with finding means of analyzing knowledge as quantitative, discernible, explicit, measurable and strategic.

School of thoughts

The Culturalists

The Intellectual Capitalists

Quantitative, visible, explicit, strategic, measurable

Culture, values, belief system, tacit norms

1:3 Tacit vs. Explicit knowledge

Takeuchi and Nonaka in their 1995 book 'The Knowledge-Creating Company', draw a distinction between knowledge, i.e., explicit and tacit. Tacit knowledge is very difficult to describe or express. It is the knowledge which is usually transferred by demonstration. It is made up of insights, judgment, know-how, mental models, intuition and beliefs, it is also context specific. While explicit knowledge is easily written down or codified. It is easier to transfer between individuals and organizations. It can be derived from a number of sources including data, business processes, policies and procedures and external sources such as intelligence gathering (Ahmed et al., 2002).

Knowledge Management

Tacit Knowledge

Explicit Knowledge

Easy to transfer

Difficult to transfer

Data, policies, procedures

Judgement, mental models, experience

Tacit knowledge is obtained by internal individual processes like experience, reflection or individual talents. Therefore managers face more problems in managing the tacit knowledge as compare to the same explicit knowledge. However, Seidler-de Alwis & Hartmann (2008) point out that for many, tacit knowledge is a new domain about which little is known. The concept of tacit knowledge was first introduced by Michael Polanyi. He introduced his ideas in a systematic form in Science, Faith and Society in 1946. Later he expanded the theme and argued that human knowledge can be divided into two different categories: tacit knowledge and focal knowledge. Everyone has tacit knowledge but it is difficult to define. According to Seidler-de Alwis & Hartmann (2008), tacit knowledge is the less familiar, unconventional form of knowledge that resides in individual skills, previous experiences of collaborations and their social context. Many of these skills and social arrangements are related to work activities.

Research so far has indicated that even though tacit knowledge may seem a simple idea, its implications are large and far reaching. If important knowledge is tacit, then it cannot be effectively spread through an organization. This means that useful knowledge will not be able to reach those who need it without direct, face-to-face contact.

1:4 Organizational knowledge

Knowledge Management is now one of the major driving forces of organizational change and wealth creation (Chase, 1997a). In its simplest form Knowledge Management is about encouraging people to share knowledge and ideas to create value-adding products and services.

According to Takeuchi and Nonaka (1995), tacit knowledge lies at the very heart of organizational knowledge. The success of any knowledge and learning programme to produce the much vaunted competitive advantages depends on how well the organization manages its tacit knowledge (Ahmed et al., 2002). Hall (1993) found that organizations have traditionally focused on the explicit part of knowledge while ignoring tacit knowledge though it has been estimated that only 10 per cent of an organization's knowledge is explicit. One major reason why tacit knowledge is rarely managed is because it is much more difficult to manage (Ahmed et al., 2002).

Takeuchi and Nonaka (1995) suggest that the process of knowledge creation is spiral, moving from tacit knowledge to explicit knowledge and back to tacit. There has been some interest in management of tacit knowledge but the field is still relatively unexplored and not fully understood compared to work on explicit knowledge.

Courtney (2001) note that knowledge relates to two main concepts in knowledge management, which are, 'know what' and 'know how'. 'Know what' real meaning is, facts and statements, for example, knowledge about the firm's current turnover, while the "know how" is more specialized knowledge, e.g. how to analyse a financial statement.

For knowledge management efforts and systems to be successful, it is important that individuals within an organization both contribute knowledge to the knowledge repository and search for and use knowledge that others have contributed to the repository (Govind S. I and Suryanarayanan R, 2009). Without adequate re-use, a knowledge repository serves little purpose.

Knowledge and the use thereof are of prime importance for the daily work of these institutions. International organizations have a high intake and a high output of information. Most international and supranational bodies have realized the value of knowledge sharing and have set up information and knowledge management programs. In spite of their ongoing activities, many organizations consider information management as part of their internal procedures and remain comparatively tacit about their activities (Claudia R. and Marc R., 2010).

To summarize, sharing knowledge or using shared knowledge will occur when the employees concerned believe that this will result in creating value for the others in the firm, and when they can expect to retain some of the value for themselves (Nahapiet and Ghosal, 1998).

1:5 General Review

Ahmed et al (2002) found in their literature review of this subject that knowledge management is written about in the context of human resource management, the learning organization, management training and intellectual capital.

The basic framework for Knowledge Management is still being explored and established. A number of books have been published which explore knowledge-based organizations, intellectual capital, the importance of innovation in creating knowledge companies, and knowledge management best practices (Chase, 1997b). To innovate continuously requires processes designed for creativity and employees who are knowledge enough about the business to make independent decisions (Chase, 1997a).

OECD (1999) defines intellectual capital as the economic value of two categories of intangible assets of a company, i.e., organizational and human capital. Where human capital refers to the stock of productive skills and technical knowledge embodied in labor.

Human capital and knowledge create value-added and even competitive advantages to modern businesses (Ulrich, 1998). Conceptualizations of intellectual and human capital and knowledge management are common currency in the strategic human resource management literature. The advocates of the human capital approach assert that many of the assets that individuals bring to the organization are intangible, tacit knowledge rather than the more explicit, explicated, formal, routine and standardized knowledge. The argument runs along the lines that value is added to organizations by installing such personnel knowledge into knowledge management systems that organizations create and use (Garavan et al., 2001).

Two different knowledge management strategies have been discussed in the literature for sharing tacit and explicit knowledge (Greiner et al., 2007). The companies whose business strategy requires re-using existing knowledge; the codification strategy is believed to be successful where objective is to collect knowledge, store in it databases and provide the available knowledge. In contrast, for generating new knowledge or customer specific solutions or product innovations, the personalization strategy is considered best where knowledge is exchanged through knowledge networks.

1:6 Knowledge management in organization's performance

In recent years organisations seem to concentrating on developing their competitive advantage by concentrating on knowledge management. Although positive experiences have already been made with knowledge management and it is being practiced by 80 % of the biggest companies world wide (KPMG 2000), there has been no sufficient examination of the success factors of knowledge management until now.

Some scholars have provided evidence which shows that a well-managed investment in management training and utilization is favorable to organization's performance and productivity (Acemoglu and Pischke, 1999). Furthermore, human capital is related to organization performance and income (Arthur, 1994).

The importance of tacit-ness in competitive advantage has been as good as competitive advantage itself. A study by Kang (2007) found that tacit-ness of knowledge does not have any relationship to project performance. The same study suggests that instead of complicated and/or user-friendly knowledge management system, firms should also invest in more informal employee gatherings such as lunches or outdoor activities.

The assumption by some researchers that measurement of intellectual capital has positive organisational effects lacks empirical confirmation. Whilst the current importance of intellectual capital is associated with the competitive advantage of distinctive competence, how this occurs and what conditions can encourage it are less clear. Neither is it clear whether Intellectual capital is simply the sum of organisational knowledge or something more mysterious about value (Chaharbaghi and Cripps, 2006).

An international survey by Reuters found that ninety percent of companies that deploy a Knowledge Management solution benefit from better decision making. Eighty percent said it increased productivity (Marwick, 2001). Some 92% of the respondents reported that they worked in knowledge-intensive organizations, though only 6% of the organizations were described as 'very effective' in leveraging knowledge to improve business performance and results. Moreover, the amount of money spent on employee training and information technology, it is amazing, but not surprising, that 87% of the surveyed organizations still suffer from costly errors or mistakes due to the best available knowledge not being accessible at the right time and/or place. 37% of all organizations have no knowledge management goals and 17% were unknown.

A major conclusion of (above mentioned) research study by Reuters note that whilst organizations do recognize the importance of creating, managing and transferring knowledge, but so far they have been unable to translate this competitive need into organizational strategies. While knowledge management systems have advanced over the years, most applications are still structured as searchable databases containing many pieces of explicit knowledge (Sasson and Douglas, 2006).

Syed-Ikhsan and Rowland (2004) noted that the actual transfer of knowledge within organization remains a big issue for managers. Organizations have to identify where tacit and explicit knowledge resides when designing strategies, in order to ensure that knowledge is created and transferred to the right individuals.

With the increasing amount of knowledge, a urgent task for companies is how to effectively manage their knowledge and to create added values with further innovation (Jing Xu et al., 2010).

1:7 Problem

The preceding discussion gives rise to the following:

There is no agreed-upon industry-standard definition of Knowledge Management, nor is there a framework in which to align different professionals.

A small number of organizations are effective in improving business performance. The problem is also to transfer tacit knowledge into organizational core capabilities. This is a real challenge of knowledge management.

Research Questions:

How successful is KM in organizations.

How tacit knowledge can be shared in organizations.

2: Research Aims and Objectives

2:1 Aim

The aim of this research is:

a deep understanding of KM field, which includes:

what are the reasons for knowledge management's failure

what KM is adding to individual/business performance and how

what is the likely role of knowledge management in achieving organizations' (SMEs and MNC's) goals or objectives

how information and knowledge differentiates and/or link with each other

2:2 Objectives

The objectives of this study are:

To study if Intellectual capital and knowledge management are interdisciplinary

To identify tacit knowledge and how it can be transferred into organizations

To identify the difficulties related in sharing of tacit knowledge

To spot the impact of tacit knowledge management on business performance

To evaluate the KM effects on organizations

To determine the managers, employees and CEO's perspective and understanding of this field

3: Methodological Approach

3:1 Research Design and Approach

Research Design

Research Design

Exploratory design

Conclusive design

Qualitative exploration

Quantitative exploration





Multiple cross sectional

Single cross sectional

Adopted from Malhotra and Birks (2006)

I would try and generate several important exploratory research hypotheses to test the effectiveness of knowledge management, in particular of tacit knowledge.

For the purpose of this research a mix of qualitative and quantitative research method (triangulation approach) will be used in order to obtain data but mainly it will be qualitative. This method will be used because the nature of the information required can best be collected using the face-to-face in-depth surveys which is a qualitative research technique. Qualitative research often has the aim of description, so descriptive research will be used as it answers the questions, what, how, and who.

3:2 Data Collection Method

There are three basic research methods:

(1) Survey

(2) Observation, and

(3) Experiment

Survey research method would be chosen in which an interviewer interacts with respondents to obtain facts, opinions, and attitudes (McDaniel and Gates 2005). As the aim of this research is to test the effectiveness of knowledge management, this technique will help answer the required questions.

Before data collection, the research hypotheses will be generated on the available literature.

Surveys techniques

Telephone surveys

Mail surveys

Face to face surveys

Street interviewing

In home/office surveys

Computer interviewingSurvey Techniques

Adopted from Malhotra and Birks (2006)

3:3 Sampling

Sample Size

A number of six organizations would be selected, and at least two respondents (e.g., chief knowledge officer) from each organization.

Sample Target

Knowledge-based and/or knowledge-intensive organizations

Questionnaire Design

The questionnaire would be semi-structure with some open and close ended questions because it will encourage respondents to tell what he/she know and think about the problem. Secondly, there would be no more than 10-15 questions, as too many questions will take longer time and create frustration and confusion for the respondent. Thirdly, simple language will be used and less time consuming wording will be adopted. I hope I would get the required information by using this design.

3:4 Approach to Data Analysis

Approach to data analysis would be as described by Malhotra and Birks (2006) and a computer would be used to analyze data.

making notes before, during and after the interview (other than the questionnaire, if required)

building up transcripts to represent the discourse in interviews

coding: attaching the key words to chunk of data

keeping data in an organized manner so that relevant segments of data can be located, pulled out and evaluated

linking relevant data segments with each other

writing up reflective comments that can be pasted on to relevant codes and connections

placing selected data in a condensed and organized format using a spreadsheet matrix

drawing conclusions and verification in order to interpret the data display and to test or confirm findings

developing systematic and conceptual coherent explanations of findings that are meaningful

presenting interim and final reports of the findings in a written manner

4: Programme of Work

The promising project plan is illustrated below:

Task 1: Introduction (6 months)

The introduction part will be thoroughly discussed, read and written in this time period. The objectives of the study would be produced.

Milestone 1: Introduction

Task 2: Literature Review (8 months)

The literature will be thoroughly viewed, read and written in this time period. The hypotheses will be generated just after the completion of literature review.

Milestone 2: Literature review

Task 3: Methodology (6 months)

The research methodology would be chosen based on to literature and then written.

Milestone 3: Methodology

Task 4: Questionnaire Design (1 month)

Milestone 4: Questionnaire Design

Task 5: Ethical Approval (1 month)

Ethical approval will be taken by submitting required forms in University's office.

Milestone 5: Ethical Approval

Task 6: Data Collection (2 months)

Data would be collected

Milestone 6: Data Collection

Task 7: Data Analysis (4 months)

Interpretation of data

Milestone 7: Data Analysis

Task 8: Conclusion and Discussion (3 months)

The conclusions of the research paper will be written down after assessing all data. Furthermore, the discussion for the future effects of this research will also be recorded.

Milestone 8: Conclusion

Task 9: Proof Reading( 1 month)

The whole document will be read thoroughly and check for grammatical and any other possible mistakes.

Milestone 9: Proof Reading

After completion of this task, the dissertation would be ready for submission on September 2013.