The Use Of Knowledge Management In Firms Business Essay


Review of literature on Knowledge Management (KM), the theoretical views on KM is a long term resolution where knowledgeable and effective organizational activities have come to provide the competitive edge (Metaxiotis, K., Ergazakis, K & Psarras J. 2005). In addition, Barclay & Murray (1997) agrees, KM is a strategy that turns an organization intellectual's asset - both recorded information and the talents of its members into greater productivity, new value and increased competiveness. Furthermore, Mutch, A (2008) added that KM is a conscious strategy of getting right knowledge to right people at right time and put it into action to improve organizational performance. There are many definitions of knowledge management as many varying definitions of KM appear in the literature; among others we can mention the following:

Quintas et all (in Metaxiotis, K., Ergazakis, K & Psarras J. 2005 pg9) defines "Knowledge management is the process of critically managing knowledge to meet existing needs, to identify and exploit existing and acquired knowledge assets and to develop new opportunities".

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Davenport & Prusak (in Metaxiotis, K., Ergazakis, K & Psarras J. 2005 pg9) "Knowledge management is concerned with the exploitation and development of the knowledge assets of an organization with a view to furthering the organisation's objectives. The knowledge to be managed includes both explicit, documented knowledge and tacit, subjective knowledge".

This suggests that, KM systems encompass both human and automated activities and their associated artefacts.

Emergence of Knowledge Management (KM): The drivers in the process

The business concept we call Knowledge Management (KM) has emerged over the last decades as a result of many intellectual, societal, and business forces. Correspondingly Brohm (2006) argues that in 1980's recognition of the growing importance of organizational knowledge was accompanied by concern over how to deal with exponential increases in the amount of available knowledge and increasingly complex products and processes. This influenced in growing the development of systems for managing knowledge that relied on work done in artificial intelligence and expert systems, giving us such concepts as "knowledge acquisition," "knowledge engineering," "knowledge-base systems, and computer-based ontology's (Barclay & Murray (1997). Alternatively, "Knowledge Management has its origins in a number of related business improvement areas, such as total quality management (TQM), business process re-engineering (BPR), information systems (IS) and human resource management (HR) "(Metaxiotis, K., Ergazakis, K & Psarras J. 2005 pg7). As a result, (Storey, 2005) suggest that change in the competitive landscape brought KM factor to emerge significantly.

Indeed, the driving forces behind the KM process was the organizational scope moving beyond tangible (plant, buildings, equipment) and intangible assets such as intellectual capital (reputation, trademarks, culture, patterns) and social capital (connections within and between social networks). A good example for this will be, "Bill Gates has also commented that if 20 of Microsoft's key people were to leave, his company would risk bankruptcy" (Nicholas, 2001 pg49). Consequently, Ray (in Little, Quintas & Ray 2002) suggest that, organizations start to re-discover that people are the locus of much organizational knowledge.

Objectives & Benefits

As mentioned above, KM focuses on 'doing the right thing" instead of "doing thing right". In other words, KM is a concept or framework within the organization views all its processes as knowledge processes. In a nut shell, objectives of the KM are all about getting the right knowledge, in the right place at the right time. Moreover, Davenport et al. (2004) describes four broad objectives of KM:

Create knowledge repository

Improve knowledge assets

Enhance the knowledge environment

Manage knowledge as an asset

As a result, "alliances, partnerships and other forms of inter-firm relationships have been prescribed as effective choices for gaining, leveraging, or developing new competencies and resources" (Silvi and Cuganesan 2006 pg2). Equally, "human resource management (HRM) has emphasized the development of "strategic HRM" practices given the importance of the organization's employees as "the source of innovation and renewal" Roadwell &Teo; Steward (in Silvi and Cuganesan 2006 pg2).

Understanding the Concept of Knowledge

Knowledge generation is a complex field. To start at the beginning: what do we mean by 'knowledge'? As Gregory (in Harrison, 2003 pg383) define "Knowledge: representations of facts (including generalisations) and concepts organised for future use, including problem solving". In addition, Sveiby (in Malhotra,Y (2004) perceived knowledge as entity that can be expressed verbally and then change and structured thorough words and symbols, knowledge can be distributed, analyzed, criticized, synthesized and expanded to new areas of knowledge. Thus it is this knowledge that must be made explicit for new knowledge to be created.

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At the same time, Brohm, R. (2006) suggest on Polanyi (1966) two distinctions of knowledge discoveries, namely explicit and tacit knowledge. Explicit knowledge is a formal knowledge can be articulated as a formal language including statements, expression, specification and manuals. It can be stored (in database or computer) and transmitted to others (electronically). On the other hand, tacit knowledge is informal knowledge involves intangible factors such as personal beliefs, values and view.

Knowledge Management: Theory & Practice

To begin, Story (2005) asserts that KM relates to both theory and practice, where its central issues are knowledge, people and learning. Although many KM models are largely found in the KM literature, Nonaka and Takeuchi model (refer to Fig. 1) is used to illustrate better because of its simple high level conceptual representation of KM. It is also very popular and widely used as a cornerstone model by many KM researchers (refers to Malhotra (2004); Barclay and Murray (1999); Davenport and Prusak (2004); Silvi and Cuganesan (2006); and Brohm (2006)). In addition, Nonaka and Takeuchi. (1995) state that firms can create knowledge through the interaction between explicit and tacit knowledge which is a process called knowledge conversion. Knowledge creation consists of four modes of conversion processes and they are: Socialization, Externalization, Combination and Internalization (see figure 1 - widely referred as to SECI Model). This knowledge transfer act as a spiral process where each type of knowledge can be converted in a clockwise spiral. As a result, Barclay and Murray (1999) argue this model that organizational learning is usually accomplished through peers, individuals with similar occupational backgrounds, goals and problems. They socialize to exchange knowledge, experiences, support and best practices.

Externalization (tacit to explicit): applying personal knowledge to a new problem;

Combination (explicit to explicit): bringing two pieces of information together in a new way;

Internalization (explicit to tacit): learning by experience;

Socialization (tacit to tacit): learning by sharing experiences.

Figure1: SECI Knowledge Creation Model by Nonaka and Takeuchi

Again, "this theory emphasizes the active, subjective nature of knowledge (defined as "justified true belief") and the problem of justification of the beliefs and getting people's commitment. It sees the main function of organizations in amplifying the knowledge created by individuals and crystallizing it as a part of the knowledge network of organization" (Levina, N, 1999, pg8).However, the above model also receives few criticisms among literatures. As Spender (in Levina, N, 1999) criticised for not explaining:-

1) How individuals generate tacit knowledge

2) How agency problems are resolved;

3) What are the closure means for knowledge creation in organizations?

In the same way, Harisson (2003) also agrees that, how tacit knowledge is shaped or how it changes in the course of time, therefore such knowledge is complex, if not impractical, to duplicate or to steal.

KM &Human Resource Strategy: A strategic Partnership

The changes to manage knowledge explicitly and in detail place great demands on supporting disciplines. In addition, for the knowledge to mobilise or controlled in the organisation, management structure & actions, HR Strategy and the employment system of the organisation will significantly determine how it is done (Harrison,2003). Reviewing the literature, equally, authors such as (Mutch, 2008; Silvi and Cuganesan, 2006; Nicholas, 2001; Harrison, 2003) stresses the development of integrated KM into the HR strategy helps to create and support a group of people who can achieve organizational goals - A strategic alliance of KM and HR able to influence the direction of the leadership, their tools, rewards, processes and actions.

Fostering Learning

"A learning partnership that operates as a long term strategic alliance can generate knowledge and creativity that produce increasing value through time" (Harrison 2003, pg392). A good example will be how making explicit knowledge tacit, or internalization in the SECI cycle, requires that, individuals learn how to do something. One of the places that this happens in an organization is in learning programs. Furthermore, Prusak & Weighs (in Nonako and Kazou, 2007) suggest, concentration on focus groups and practices is another way organizations are making it easier for knowledge employees to apply what they know. Another example of a "space designed to facilitate knowledge creation, sharing and learning is the new office for Fuji Xerox in Tokyo. It physical spaces are all designed to overcome or reduce physical constraints on knowledge transactions" (Nonako and Kazou, 2007 pg148)

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Challenges & Conclusion

Though KM grew vast in its respective field, it faced a number of challenges. Different organizations have different ideas and perceptions on KM. For instance, in some managing intellectual capital is important. In this type of organisations, managing of tacitknowledge is not easy. Since we don't know what is in human mind it's hard to document tacit knowledge. Cultural aspects also influence in KM challenges. Some people don't want to share their knowledge. Similarly Nonako and Kazou, (2007) argues, little emphasis was placed on the social, such as trust and relational capital have an effect on KM. Finally, as Harrisons (2003) suggest, misconceptions on KM and Information Management should be taken care cautiously. At the same time Nicholas (2001) worried, KM is often rebranded as Information Management. This is where the crucial and most important challenge will be faced by organisation which is creating the right culture and climate within the organization and developing the people to adapt and embrace this new way of thinking, acting and working.

From this we can infer, along with the coming of information age, knowledge has become the most important competitive advantage for the human society, and the theory and practice of knowledge management are getting more important for an organization to develop. Likewise Botkin (in Nicholas 2001, pg133) suggest, "maintains that KM is critical to business success and his writing closely follows Drucker who he quotes: To make knowledge work productive is the great management task of this century, just as to make manual work productive was the great management task of the last century".