Knowledge
Management And The Organization's Perception: A Review
K. Alrawi,
Al-Ain University of Science and Technology , United Arab
Emirates
ABSTRACT:
The challenge of Knowledge Management (KM) is to determine what information within an organization qualifies as valuable; not all information is knowledge, and not all knowledge is valuable. The key is to find the relevant and worthwhile knowledge within a vest sea of information. This study is empirical and sought to determine whether or not human resource management is capable of managing knowledge to the advantage of the firm. This study asserts that realistic expectations are needed in the planning process.
Key Words: Knowledge,
Technology, Information, Industry, Human Resources
1. Introduction
Snowden (2002) states that KM involves the identification, optimization, and active management of intellectual assets, either in the form of explicit knowledge held in artifacts or as tacit knowledge possessed by individuals or communities. Alavi and Leidner (1999) explained that knowledge management should deliver top-line growth, improve operations and increase profit margins. Yet many knowledge management systems fail to deliver on this promise.
In contemporary business environments, organizations are faced with tremendous competitive pressures. Global issues combined with those of rapid technological change and the increased power of consumers, places huge demands on firms to remain flexible and responsive (Drucker, 1998; Teece et al, 1997). Additionally, at the global level there are common influences including rapid political changes, regional trade agreements, low labour costs, and frequent and significant change in markets (Dam, 2001). In addition, there are change in the nature of the workforce (which is older, better-educated and more independent), government deregulation and reduction of subsidies, and shifts in the ethical, legal and social responsibilities of organization. Digh (1997) found that, technology is playing an increasingly important role in business in this regard and that environment, increased innovation, and new technologies are providing vast improvements in cost-performance and an important impetus to strategy.
Barnard (1999) explained that, a variety of techniques were developed to enhance a firm’s ability to react to and cope with such pressures, including business process re-engineering, total quality management, downsizing, outsourcing and empowerment. However, the power of such methods often appeared limited and transient.
One fundamental question needs to be answered: how do organizations create and sustain competitive advantage? Recently, strategic management theorists have begun to rethink the concept and underpinnings of competitiveness. In terms of the traditional perspective of organizational capability and competition, the focus has shifted to the internal resources of the firm as a key determinant of competitive advantage (Barney, 1991; Lank, 1997). This new approach is often referred to as the resource-based view of the firm. Alavi and Leidner (2001) argued that the resource-based view of the firm recognizes the importance of organizational resources and capabilities as the principal source of achieving and sustaining competitive advantage. According to this approach, there is a distinction between resource and capability (Lee and Yu, 2001). Corporate resource – including equipment, skills, patents and financial capital – are basic inputsfor gaining and maintaining competitive advantage. Ruggles (1998) showed that organizational capability is the capacity of a firm to acquire and utilize its resources to perform tasks and activities for competitive gain. Thus, while resources are the main source of an organization’s capabilities, capabilities are the principal source of its competitive advantage.
Pamela (2004) showed that within the resource-based perspective, information and knowledge have become increasingly recognized as competitive differentiators. In the knowledge-based view, organizational knowledge – such as operational routines, skills or know-how – is acknowledged as the most valuable organizational asset. Knowledge-sharing among employees, with customers, and with business partners, has a tremendous potential pay-off in improved customer service, shorter delivery-cycle times and increased collaboration with an important value as a commodity - it can be sold to others or traded for other Knowledge.
In business, a deluge of organizational initiatives have appeared, typically
based on the use of modern information technologies for managing
organization-wide knowledge resources. KM began to emerge most strongly between
1995 and 1997, after the proliferation of the web-browser (O’Brien and Cambouropoulos, 2002). The browser simplified the
development of KM applications because it allowed developers to build a
standard interface. The resulting Knowledge Management Systems (KMS) are at the
core of enterprise KM approaches. The leading vendors of Knowledge KMS include
Autonomy, Business Object, Cognos, Hewlett Packard,
Hummingbird and Invention Machine, in a market worth around $8.5 billion for KM
software and services in 2002(Carnelley et al.,2001).
Some companies have also developed bespoke KMS solutions. An estimated 80 per
cent of the largest global corporations now have KMS projects (
Unfortunately compelling, approaches to KM and the use of KMS have not been without problems. Purvis et al (2001) argued that part of the difficulty stems from the nature of knowledge and defining knowledge is not a simple undertaking. Typically, it is now recognized that there are many types of knowledge present in an organization – contained in the ‘organizational memory’ (Whitfield-Jones, 1999). Whilst there are various typologies, in its simplest form there are two main types of Knowledge – tacit and explicit (Nonaka and Takeuchi, 1995). Explicit Knowledge may be expressed and communicated relatively easily; tacit Knowledge tends to be personal, subjective and difficult to transmit (or sometimes even to recognize). Thus, while some explicit knowledge may lend itself to codification and communication in KMS, tacit knowledge is very strongly embedded in the mind of the individual and is highly context-sensitive (Barnes, 2002). A key challenge of KMS therefore, has been to make appropriate tacit Knowledge explicit and portable.
In the business world, inappropriate handling of knowledge can bring huge financial losses. Fortune 500 companies lose at least $31.5 billion a year by failing to share knowledge, according to International Data Corp. (IDC). Since KM became all the rage in the high-flying 1990s, companies have poured tremendous resources into KM technology that has failed miserably or shown little results. Businesses sank $2.7 billion into new systems in 2002, according to the IDC, which estimates that number to rise to $4.8 billion in 2007.
This study was not intended to build or test theory, but does offer some insights into needed and relevant research in the area of KM. All respondents responded to questions concerning their perceptions of KM, the capabilities they believed necessary for effective KM, and the key concerns they had about it. One objective of the study was to ascertain the meaning that managers ascribe to the concept of KM. Three perspectives emerged:
Ø an information based one
Ø a technology based one
Ø a culture-based one.
However the research reported here was concentrated on the perceptions of KM.
2. Knowledge Management In The Literature
This section reviews in summary the KM literature. The review covered the concept of the ‘learning organization’ alongside KM because both of these management ideologies are centrally concerned with enhancing organizational performance through improved opportunities for learning and developing knowledge. This contrast was informative in terms of understanding the core themes and discourse of KM, and key drivers of this discourse. Details of the existing literature of KM can be found elsewhere (Scarbrough et al, 1999). The review covered mainstream journal articles from January 1993 to August 1998. These articles were located via searchable databases of social science and management journals (in particular Proquest Direct {PQD} and BIDS ISI). The review was limited by those journals listed (mostly those in English). That said, PQD alone is quite comprehensive (1562 different journals), and the findings from this review were supported by a broader examination of a wide range of additional sources (e.g. websites, news, book listings).
The PQD search yielded 334 references to KM and 439 references to the learning organization over the period 1993 to 1998; a similar search of BIDS yielded a total of 68 KM and 92 learning organization references. Further searches carried out using combinations of core terms allowed a classification of numbers of articles by dominant subject areas. This search was accompanied by a qualitative analysis of the content of the abstracts of all articles covered by the review. This provided a reasonably thorough coverage of the core themes and issues in the KM and learning organization literatures (Crossan and Guatto, 1996).
The analysis allowed the development of management ideologies (in this case KM and the learning organization) and their associated ‘buzzwords’ to be tracked over time. Figure 1 indicates rapid emergence in the discourse of KM, with more references to KM in the first six months of 1998 than cumulatively in the previous five years. This contrast with a rise and then fall in references to the learning organization – a profile that mirrors the normal distribution observed across a number of other managerial practices. Abrahamson (1996) found that these diffusion patterns reflect the prevalence of fashion cycles in management literature.
Figure 1: References To KM And The Learning Organization
It might be tempting to conclude here that KM is driven by the same philosophy as the learning organization and that it has merely replaced it as the latest management buzzword. However, an analysis of the major themes discussed in the literatures on KM and the learning organization highlight significant differences. The separation between IS and IT reflects an attempt to distinguish broader information management and strategy (IS) from ‘header’ information software and tools (IT). IT articles were the most prevalent of all KM articles. Articles on intellectual capital also focused mainly on development and exploitation of knowledge ‘assets’ (often via IT-based tools), with relatively little attention to people management.
It is also feasible that KM is not distinct from, but merely a subset of, a broader literature on the learning organization with a closer emphasis on IT. However, an analysis of the types of journals that published articles on KM and the learning organization suggests that these concepts have been developed among distinct professional communities (Barnes and Hunt, 2001). The development of KM has been concentrated within the IT and computer sciences communities, so that almost 48 per cent of articles written about KM were found in computing journals. In contrast, people or human resource management (HRM) and organization science theorists have been the dominant groups concerned with the learning organization. More than half (51 per cent) off all of the articles published on the learning organization were found in HRM, organizational theory, and general management journals. Only 0.5 per cent of organizational learning articles were published in computing journals.
It is highly unlikely that these different professional communities read or author each other’s journals and magazines. Therefore, this analysis suggests that KM is a divergence from, and not a development or a subset of, the learning organization, a concept developed mostly within the domain of people management. In particular the concept has focused on the learning culture and the development of trust and commitment engendered through appropriate people management practices. In contrast, the fact that the concept of KM has been developed mainly within the IT community has led to a much heavier emphasis on IT, IS and organizational accrual of intellectual capital.
The literature also indicates an emerging gap in articles on KM in terms of the treatment of issues concerning people management. Despite observations that the dramatic improvements in KM capability in the next ten years will be human and managerial, most articles continue to focus on developing and implementing KM databases, tools (e.g. decision-support tools) and techniques. The reasons for this emphasis in KM on IT-based tools will be fully examined in the discussion. Next, its implications for KM practice within firms are considered. There are two main possibilities here: one is that the literature is merely a reflection of the centrality of IT-based tools in driving successful KM; another is that people-management issues do pose real problems for KM, but that these have been neglected in existing research. The latter would suggest that KM, like its predecessor, BPR, may be in danger of becoming the next ‘fad that forget people’, a re-labeling of information management, rather than a genuinely innovative attempt to create opportunities for the creation, development and use of knowledge in organization.
3. The Research Methodology And Results
The researcher invited a non-random sample of 102 managers in different organizations in Abu-Dhabi / UAE to participate. Those managers were CIO, IS managers, and general and functional executives from different nationalities that in the researcher's view represented individuals with significant investment in the economy. The questionnaire contained 15 questions requiring brief answers or closed questions. A total of 52 usable responses were received (a response rate of 50.9 percent). The questionnaire tapped into the manager's perceptions and conception of KM. Despite the intersecting meaning between KM and KMS, the researcher will concentrate on the concept of KM .Tables, 1and 2, depict the sample of respondents by their position within their organizations and their industry.
Table 1:
Respondents By Position Within Their Organizations
|
Title |
Percentage |
|
Senior IS Manager |
11 |
|
Directors |
30 |
|
Managers of functional areas |
20 |
|
Senior Managers non-IS |
24 |
|
Managers of IS |
15 |
Table 2:
Respondents By Industry
|
Title |
Percentage |
|
Financial |
13 |
|
Manufacturing |
30 |
|
Energy |
10 |
|
Consulting |
10 |
|
Government |
11 |
|
Consumer products |
18 |
|
Others |
08 |
As can be seen in the two tables, the respondents represent a range of organizational positions and industries in the UAE. The responses were examined on the basis of whether the responding individual was from an organization with a KMS or not. However, there did not appear to be any major differences in the perceptions of KMS for those managers.
Organizational culture is a system of shared values about what is important and beliefs about how the world works. In this way, a firm's culture provides a framework that organizes and directs people's behavior on the job (Cameron and Quinn, 1998). When respondents were asked about manager's key concern's regarding KM, the primary issues raised were cultural, managerial and informational. With the cultural issues the managers were concerned over the implications for change management, the ability to convince business departments etc, to share their knowledge with other departments. In many organizations, a major cultural shift would be required to change employee’s attitudes and behavior so that knowledge and insights are willingly and consistently shared. The managerial concerns related to the business value of KM and the need for metrics upon which to demonstrate the system's value. There was apprehension over how to determine who would be responsible for managing the knowledge, and over the bringing together of the many players involved in developing KMS, including database administrators and the professionals with the knowledge. The respondents expressed concern that senior managers might perceive KM as just another fad and that the concept suffered from immaturity. In particular they expressed a need to understand better the concept and to be convinced that Km worked before pursuing future developments (Nonaka, 1994).
The concerns related to information were primarily associated with a desire to avoid overloading already taxed users with yet more information. Therefore the concern was as much about the new information that would be available as it was eliminating old, or wrong data, or knowledge that was no longer valid. Rowley (2000) explained that omitting the unimportant may be as important as concentrating on the important in determining what knowledge to include in the KMS. Concern was expressed about customer confidentiality now that much information would be gathered and widely available in organizations.
Table 3 shows the importance of various types of information that may be included in KM systems. Questions were answered on a seven-point scale with seven representing the highest score. Respondents in organizations without KMS were also asked to rate the importance of the various domains of knowledge in their organizations even if they did not have technology designed to provide such knowledge.
Table 3:
Importance Of Knowledge Domain
|
The Domain |
Firms with or building KMS |
Firms with no
KMS |
|
Internal operations |
6.12 |
6.71 |
|
Suppliers |
5.80 |
6.20 |
|
Competition |
5.51 |
6.12 |
|
Sales volume |
5.32 |
6.14 |
|
Customer service |
4.71 |
5.82 |
|
Business partners |
4.40 |
4.83 |
|
Human Resources |
3.39 |
3.80 |
Note: Maximum value = 7
The most important domain of knowledge for firms with or without KMS is internal operations. The second and third domains for firms with KMS were suppliers and competition. For firms without KMS, the second and third highest domains were suppliers and sales volume. For both groups knowledge on human resources was indicated as the least important domain of knowledge to be included in systems, perhaps reflecting the large percentage of internal operations-oriented firms (more than 50%) in our sample. Therefore, external sources of information tended to be rated highly. The respondents who reported that their organizations currently had or were developing KMS were designed to achieve both process results and organizational outcome. The process improvements involved many benefits, including reducing problem-solving time, improving project management, time management, and achieving customer satisfaction. These findings suggest that these practitioners did not value KM for the sake of knowledge as an end in itself, but only when it was perceived to lead desirable organizational benefits.
Although none of the organizations participating in our survey had conducted formal cost-benefit analysis for their KMS, the respondents felt that development of meaningful metrics for measuring the value, quality and quantity of knowledge is a key factor in the long-term success and growth of KMS. In other words, organizations need to find leverage points where enhanced knowledge can add value, and then develop KMS to enable significant benefits through delivery of the required knowledge.
No single dominant technology tool or product for KMS emerged in our survey. KMS seems to require a variety of technological tools in three areas: Data base management, communication and browsing and retrieval (Stuart, 2002).
Knowledge in the context of KMS is perceived to constitute a new form of information not previously addressed in other systems such as MIS, DSS, and EIS.Respondents in the survey implied a distinction between information and knowledge This perspective seem to support the view that information is the raw material of knowledge, and that more information does not necessarily lead to enhanced knowledge creation and sharing.
Several mangers expressed concerns over technological issues. These issues related to technical infrastructure and security of data on the Internet. The finding views was that knowledge should make a difference in some way materially, aesthetically or spiritually.
4. Conclusions
Knowledge Management is a recently observed aspect of business culture. As it relates to the way information resources are applied to an organization, KM has many areas of application that affect modern business. Because of the wide range of business applications, KM merits closer inspection by the academic community.
There are many aspects of KM that need to be explored to better understand how KM can be applied. To begin with, KM must be explored to see how it will interact within existing organizational structures. Additionally, research should be undertaken to determine how to set up KMS so that workers can best use and contribute to a system. Furthermore, determinations that establish regulations of content must be clarified so that KMS is applied in the most appropriate manner. Finally the benefits of KM should be examined from the perspective of an organization’s external relationships. In exploring KM, researchers will better understand how KM can apply to an organization in relation to its goals and strategy.
The study of KM will reveal how to make information resources available in an accessible format for end users. In doing s, the issues of creating, capturing, sharing and maintaining knowledge will be explored. This study suggests that KM resources will be best employed by organizations utilizing technology with long term investment.
5. References
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Contact
the Author:
Dr. K. Alrawi, Al-Ain University of Science and Technology, Al-ain, United Arab Emirates; E- Mail: Kalrawi47@hotmail.com