Journal of Knowledge Management Practice, Vol. 9, No. 3, September 2008

Aligning Knowledge Management Drivers With Business Strategy Implications

Jeffrey W. Alstete, David Halpern, Hagan School of Business, Iona College


Understanding the link between the drivers of knowledge management systems and business strategy is important for policy planning and execution.  This empirical research paper examines perceptions of 67 managers at medium and large-sized organizations in the NY metropolitan area to better understand the drivers of knowledge management in relation to business strategy.  Findings include a qualitative analysis of discussions with the participants, along with selected summary tabulation reporting of the results.  Findings show that knowledge-centric drivers such as knowledge hoarding, knowledge recognition failure, and tacit knowledge walkouts are the primary drivers for better management of knowledge resources. The meaning of these findings are then examined in light of first and second generation conceptualizations and it is reasoned that the drivers are primarily shaped by socio-cultural factors that management can influence. Recommendations for further investigation are also suggested.

Keywords: Business strategy, Functional convergence, Knowledge hoarding, Knowledge-centric drivers, Knowledge recognition failure, Tacit knowledge walkouts


The challenges of non-market influences on market strategies is an important concept to explore, and involves a variety of issues ranging from complicated continually-evolving external pressures to internal employee-driven issues related to knowledge, learning and innovation.  Managers today are formally and informally thinking about how to effectively direct their employee knowledge assets to strengthen the strategic performance of their organizations.  Strategically, managers are seeking to understand the present status of their organization, decide on a future direction, and planning how to steer the firm to that goal.  Often the reason that business strategies fail is because of poor execution, not the analysis and planning.  Therefore, managers should seek to construct an organization with policies that enable outstanding delivery of the chosen strategy.   To construct an organization that is able to deliver on the strategic plans, managers need to properly staff the company, build fundamental abilities, and arrange the organizational processes to leverage the knowledge held by the employees.  Knowledge management practices have been implemented at many companies with data warehousing, groupware information systems, systematic document management, imaging systems, and data mining techniques.  These first generation knowledge management practices have been followed-up with broader understanding and some application of second generation techniques that leverage the knowledge life cycle to help produce sustainable innovation to enhance knowledge production, not simply knowledge integration as in the first generation.  The question then arises regarding what are the drivers of knowledge management needs at organizations today and how are they related to business strategies?  This paper will attempt to uncover some current managerial thinking regarding this issue and relate it to strategic planning and execution.

Conceptual Background

Fundamentally, knowledge can be defined as a “fluid mix of framed experience, values, contextual information, insight, and intuition that provides an environment and framework for evaluating and incorporating new experiences and information” p. 5 (Davenport and Prusak 1998). It is probably clear to readers that knowledge is therefore a very important aspect of organizational performance today, and Davenport adds that individual minds are usually embedded with knowledge about organizational routines, processes, practices, systems, software and norms that we have all experienced in one form or another in our endeavors.  Interestingly, it has been estimated  that over forty percent of the U.S. economy is directly attributable to the creation of intellectual capital (Klasson 1999), and that over ten percent of the gross domestic product (GDP) in developed countries around the world are being reinvested in the development of knowledge (OECD 2001).  Therefore since knowledge has become so important for individuals, organizations, and the global economy, properly understanding the issues surrounding effective knowledge management, what drives it, and how it can impact business strategy is crucial.  Researchers and practitioners have already stated that knowledge management should be an integral part of business strategy, in order to out-think the competition (Snyman and Kruger 2004).

There are many definitions of knowledge management, and it has evolved in recent years from very information technology-leaning to broader organizational learning objectives. IBM and Lotus considered KM to be a “discipline that systematically leverage content and expertise to provide innovation, responsiveness, competency and efficiency” p.1-2 (Pohs 2001). Dean Call writes that a better definition of knowledge management comes from Professor John R. Searle (Call 2005) and is based on the history of the word “know” that derives from the Latin noscere, and the suffix “ledge” which may have originally meant “process or action” (Senge, Kleine, Roberts, Roth 1999). Understanding this tidbit of language history enables knowledge to be defined as the “capacity for action”, and successful knowledge management gives one access to the information needed to perform jobs better than in the past. Therefore, knowledge management facilitates the learning of  answers, rather than merely providing answers (Call 2005).   Peter Drucker succinctly states that the knowledge management is “the coordination and exploitation of organizations knowledge resources, in order to create benefit and competitive advantage”  p.157 (Drucker 1999).  Competitive advantage is a main objective of crafting and executing business strategy. A recent benchmarking study by the American Productivity and Quality Center suggests that more than one-half of best practice companies in Europe report that knowledge management is clearly part of their strategic goals (Anonymous 2006).

Some companies today have chief knowledge officers who see the strategic view on the connection between strategic management and strategic knowledge management.  The concept has become such a large part of organizational expectations, that a brief search of the jobs on a popular career website found 31 job titles containing the words knowledge management, and over 5000 job descriptions ( 2007).  The position titles included Director of Knowledge Management, Knowledge Management Specialist, Knowledge Management Manager, Head of Knowledge Management, Knowledge Management Administrator, and others.  These positions and the funding invested by the organizations reveal a level of importance placed on the value of effectively managing knowledge today.

Another aspect of knowledge change that is increasingly effecting organizations today is the diffusion of technical know-how across additional companies and other countries (Thompson, Strickland III, Gamble 2007). This involves the way that a firm’s competitive advantage from original expertise erodes as the competence to perform certain functions spreads throughout the world.  This dispersal of knowledge happens through the myriad of academic, scientific and industry journals, business trade publications, industry and world-class benchmarking practices (Camp 1989; Watson 1993; Cahoon and Pilon 1994; Camp 1995), verbal discussions among suppliers and customers, employee relocation, and the omnipresent Internet websites.  While this speedy technology and manufacturing transmission across national borders has been a fundamental cause for increasing global competitiveness, it is a great challenge for companies to create, retain and manage their knowledge resources. Hence the increasing emphasis on planning and investment by companies in this area.

In considering how knowledge management drivers can and should influence business strategies, many organization leaders already understand that KM plays a critical role not only in operational planning but also in strategic planning (Snyman and Kruger 2004; Newman 2006).  Tiwana succinctly states that knowledge is a driver of organizational strategy and strategy is a driver of knowledge management, and that even the well-planned KM systems will not yield success unless there is a clear link with the business strategy (Tiwana 2002).  In fact, a research study by InformationWeek found that 94 percent of corporations believe that knowledge management is strategically important to their company (Kleindl 2003). Therefore, in order to facilitate the link for strategic planning, this paper will seek to explore the KM drivers at organizations today, and discuss the connection to strategic planning and delivery.  The research questions regarding the drivers of knowledge management strategy seek to ask what are the key drivers, problem symptoms, threats and knowledge management solutions, and exemplars that affect business today?  In what ways do the drivers apply and what problem symptoms are observed? How can knowledge management assist in offering solutions?


Although some researchers may view collegiate teaching activities and research endeavors as divergent or contrasting undertakings, a relatively new research approach that takes place within courses is becoming increasingly popular (Loyd, Kern, Thompson. 2005).  This methodology attempts to connect the supposed division between learning activities and structured research, with controlled and valid procedures that are becoming fully recognized as legitimate methodology, and taking their place alongside laboratory and field research.  While the use of discussion boards in distance learning courses for qualitative research studies in the field of management education is a fairly recent innovation, there have been other refereed research articles using this technique published in respected journals (Alstete 2002; Alstete and Beutell 2004; Alstete 2006; Alstete 2008).  It should be noted that this methodology does have some limitations, particularly in regard to the self-selection of study respondents who chose to enroll in these online graduate business courses, the potentially biased biographic or demographic profile of these participants (especially their education level and location), and the size of the study population.  Nonetheless, the asynchronous online discussions in these graduate courses are well-planned and induce complete involvement which typically produces reflective and rational participant responses that can be thoroughly examined by the researcher for typological and content analysis.

In this particular qualitative research study of current corporate managers, the participants involved were enrolled in graduate-level distance learning courses offered by an accredited college in the New York metropolitan area from 2004 to 2007.   The majority of the study respondents were currently or previously employed at medium and large organizations in the financial services, pharmaceutical, health-care, and education fields.  This particular course has a very small number of full-time students with no managerial business experience, who were excluded from this analysis.  The study facilitator (instructor) directed the participants to read and discuss certain book chapters on a weekly basis, and then questioned the groups regarding their observations about knowledge management activities at their places of employment. The reality that most of the discussants fit a particular profile of current employment at national or international organizations, and have experience with representative managerial challenges, is an indicator that requirements of criterion sampling were established.  Criterion sampling can add important qualitative components to research and helps ensure more accurate in-depth analysis because the cases that are picked meet the predetermined criteria (Patton 1990).

There a total of 67 study participants enrolled in three sections of courses on knowledge management that were actively involved in the discussions for this research.   As aforementioned, nearly all of these participants are employed full-time at large and small corporations, are attending graduate school part-time, and typically range in age from 23 to 45.  It should be noted that virtually all of the study participants expressed an interest in the topic of knowledge management by enrolling in an optional upper-level graduate elective course, and offered their perceptions by actively participating in the course discussion boards.  The specific course configuration was via distance learning, and used an electronic learning platform (the Blackboard® system) to assist communication, assignment submission, monitoring, and permitting group discussion (Alstete 2001).  The virtual internet-based discussion boards created a method for the research to thoroughly examine individual respondent statements for inductive analysis and ensuing analyst-constructed typologies that were developed.  The first part of the study asked the participants to identify specific knowledge management drivers that the book chapter offered as possibilities.  The second part of the study asked the respondents to read several business case studies and identify which companies best align business strategy with knowledge management practices and what the basis for their perceptions are. This type of inductive analysis allow the researcher to recognize patterns, themes, and categories from the data, rather than being imposed on them prior to data collection and analysis (Patton 1990).  In addition, the type of Internet discussion board used in this study enables participants to continue discussion “threads” on various sub-topics.   Although the selected respondent postings shown in this paper do represent the discussion threads related to any of the categories derived, the researcher labeled respondents with a letter codes to enable readers to see any individual respondents who may have made follow-up comments. 

The respondents read two books on knowledge management (Tiwana 2002; McElroy 2003), and were asked to report and discuss what the drivers are for their organizations.  In particular, the Tiwana book has a chapter section and table that describes “the drivers, problem symptoms, and solutions that create a strong value proposition of knowledge management” (pp. 18-29).  The potential knowledge-centric drivers stated are knowledge recognition failure, rapid knowledge dissemination and application, tacit knowledge walkouts, knowledge hoarding, and learning.  Potential technology drivers are that technology provides a temporary advantage, compressed product and process life cycles, and strategic alignment (when business and information technology are not synchronized).  Possible structural drivers are functional (when complex dependencies among and between different functional areas necessitate inputs and cooperation from different divisions to accomplish joint objectives), convergence of products and services (when products and services are increasingly bundled), temporary organizational structures (such as ad-hoc project-centered teams), and deregulation and globalization.  The fourth set of potential drivers are process focused, that include expensive, repeated mistakes with reinvention of solutions, proactive opportunity-seeking behavior (inability to integrate external knowledge with internal expertise), and responsiveness to customer needs.  The fifth and final type of driver is economic and focuses on increasing returns.  Other research questions were also part of the discussions, and they will also be examined by the research for potential inclusion in the final paper.

Results and Analysis

The preliminary results reveal that the majority of knowledge management drivers at the organizations examined are knowledge centric drivers (72%), such as knowledge recognition failure, rapid knowledge dissemination and application, tacit knowledge walkouts, knowledge hoarding, and unlearning.  Interestingly, several respondents also stated they think that many of the drivers listed apply to most companies, in some form or another.  However, the findings in this study may show this belief may have been primarily directed at the knowledge-centric drivers, and less at the technology, structural, process focused, and economic drivers.  Further analysis and discussion is warranted to explore this aspect. (see Table 1)

Table 1: Knowledge Management Drivers Reported by Participants

Type of Knowledge Driver




Knowledge-centric Drivers:




Knowledge recognition failure




Rapid knowledge dissemination and application




Tacit knowledge walkouts




Knowledge hoarding








Technology Drivers:




Technology provides temporary advantage




Compressed product and process life cycles




Strategic alignment




Structural Drivers:




Functional convergence




Convergence of products and services




Temporary organizational structures




Deregulation and globalization




Process Focused Drivers:




Expensive, repeated mistakes and reinvention of solutions




Proactive opportunity-seeking behavior








Economic Drivers:




Increasing returns





Most individuals with experience working in organizations of varied types and sizes have observed the common practice of individuals that hoard their knowledge for presumed job security. So it is not surprising that this driver is the most commonly reported one in the study. The other highly reported knowledge-centric drivers are also quite frequently observed in companies, such as tacit knowledge walkouts, knowledge recognition failure, rapid knowledge dissemination and application, and unlearning.  It is somewhat interesting that technology drivers such as how technology provides temporary advantage and compressed product and process life cycles were not more frequently cited as drivers of knowledge management, especially given that information technology is seen by some researchers as the foundation and history of the practice. Not surprisingly, the organizational structural drivers were second most common, and include functional convergence as the most commonly seen driver. The structural drivers of knowledge management may be greatly underestimated in importance by the survey respondents, particularly the effects of increasing deregulation and globalization. It should be again noted here that participants in the study needed to understand the definitions and application of these terms before providing their answers in the discussion.  Less commonly reported drivers were the processed focused drivers such as expensive and repeated mistakes and reinvention of solutions, and the economic drivers of increasing returns.

It should also be noted that several respondents stated they think that many of the drivers listed apply to most companies, in some form or another.  In order to show the relevant importance, business experience, and strength of participant beliefs about the knowledge drivers, here are selected quotations from respondents in the study discussion:

Opening question by the facilitator: In Table 2-1 in Tiwana's book lists some key drivers, problem symptoms, threats and KM solutions, and exemplars. In looking at this table on pages 19-29, which drivers do you believe apply to your business, or another business that you know of? In what ways do the drivers apply and what problem symptoms do you observe? How do you think KM might be able to offer a solution in your example?

The knowledge drivers listed that I believe most relate to my existing company are:
1) Knowledge recognition failure- We don't always listen to the right people. Too often, only a few people are involved in the process and it's usually not the right people.
2) Knowledge hoarding- There is a paranoia that eminates throughout the IT Department. Frankly, there's also an arrogance that makes them believe they know better than the end user what they need. This creates dissension among the departments involved in the process.
3) Unlearning- We continue to use outdated processes despite the obvious need to update technologically as well as procedurally.
There are other drivers that are relevant to varying degrees but these stuck out as the most glaring examples of drivers that apply to my company. KM certainly offers a solution to our problems, but a cultural shift must take place for improvement to occur. The process can't change unless the people driving the process want it to change. .

One of the drivers that applies to my business is the Functional Convergence: This driver applies because currently there isn't a formalized way of integrating everyone's knowledge management strategies, the company has one that works very well in order to keep employees informed of company wide information, but there is a problem of functional areas knowing information about each others' area. KM may present some solutions and different options that could encourage the integration of information and knowledge …. V.S.

Two drivers that I think put my old company out of business are: Rapid knowledge dissemination and application--A problem symptom that frequently occurred was that no knowledge was gained from failures of past experiences. My old boss would make the same mistake several times and would never learn from it. Another driver was that expertise was not shared. If my old boss would share his ideas instead of hiding them I feel that he could have been successful. He too was scared to give out information in fears that others would try to find another job, or take their knowledge elsewhere. KM can work here because in order for this type of business to succeed, people need to know what is going on and ideas need to be shared. Another driver would be knowledge hoarding. Fears of losing one’s job is always on one’s mind. However, if ideas and knowledge were shared, perhaps this company would not have gone out of business. Again, KM could have been successful here …. J.R.

….those that apply to my work situation include:
-        Knowledge recognition failure. Part of the problem stems from the fact that over the past ten years, the company has grown through acquisitions. It could have been much bigger than its current size were it not for two failed merger attempts. Each time we grew, we added more staff and the knowledge base grew accordingly. Unfortunately, through the inefficiencies of growth, we have been unable to capitalize upon this base in a timely fashion.
-        Tacit knowledge walkouts. For whatever reasons employees leave companies, we have faced turnover that at times has hurt us because valued employees have left the company. In some cases, rapid recovery was hampered by the inability to replace lost personnel in key positions.
Functional convergence.
The process of drug development is a complex process with several go/no-go decision points. In almost all cases, it proceeds from Discovery Research → Development Track → Clinical Phase (I to III) → Registration → Clinical Phase IV (post licensure). Members in any one group must be cognizant of the preceding or subsequent stages in the process, in addition to that for which they are responsible. This is always easier said than done.
I believe that management is well aware of the need for and has already implemented KM. However, I am not sure what resources are available to those responsible for KM, since it has not achieved the visibility it deserves. Thus, in our company, while the need for KM is known, its value has not been demonstrably appreciated. This attitude must change if we are to achieve our stated vision of becoming the best pharmaceutical company in the world …. X.D.

I currently work for a Korean electronics company that took over an American company in 2003. There were a lot of employees that were let go during the acquisition, so many of the people here are relatively new. As we are trying to establish new ways of doing business there are issues that arise between the employees that were kept from the old company and the newer hires.
1) Knowledge hoarding- I think this happens at most companies, as it seems to be human nature, however it is extremely apparent at my current job. The individuals who have been here and understand some of the systems and have pertinent information are not eager to share their knowledge. Fear of losing their jobs and allowing people to gain an advantage are the primary motivations.
2) Unlearning- As the new parent company began to establish its own business plan and strategy, it became clear that the old forms of doing business would have to be updated or done away with entirely. New processes and a new "business thinking" needed to be implemented. However, there has been strong resistance to change by many of the employees who were used to the old system. It has been a struggle for management to implement new processes and ways of doing business …. K.K.

From an examination of the respondent comments and the summary results of Table 1 we believe that a number of observations can be drawn.  First it can be postulated that there are a number of commonalities to the choices of the respondents to the opening question.  Specifically the relationship between the type of knowledge management drivers and business strategy becomes stronger when respondents perceive a more intimate, personal connection to the knowledge driver.  This connection must be viewed as more under the control or individual influence of the respondents.  In addition, the influence exerted is, we believe, directly proportional to the perceived time frame in which these effects can be executed.  The more remote the perceived influence is, in time (knowledge-driven) to business strategy, the less the effect that respondents believe that knowledge management drivers will have on business strategy.  This observation, we believe, harmonizes with the common perspective among management experts that the more autonomy an employee perceives that he has in a work environment, the more that employee perceives he is effecting outcomes (policies and strategies) of the business.  It is therefore the personal connection (as perceived by the employee) and the perceived temporal ordering among the various knowledge management drivers and business strategy, that we believe, is the major explanatory linkage that accounts for the rank orderings in Table 1.

In applying these observations to an analysis of Table 1, we can see that the types of knowledge driver that is perceived by the respondents in the survey to have the strongest connection to business strategy, namely knowledge-centric drivers, is more amenable to the personal and immediate influence of the respondents than structural drivers, technology drivers, process-focused drivers and economic drivers.

Furthermore, within the first category (in terms of its perceived influence upon business strategy, namely knowledge-centric drivers, the strongest perceive relationship is between knowledge hoarding and business strategy.  In order of perceived decreasing influence between knowledge-centric drivers and business strategy, tacit knowledge walkouts, followed by knowledge recognition failure, rapid knowledge dissemination and application, and finally unlearning.  This rank order, we believe, demonstrates that the most personal and immediate influence upon knowledge management drivers by the respondents is perceived as having the greatest influence on strategy.  Specifically, knowledge hoarding, is totally under the control of the respondents and is immediate, while “unlearning” is a process that is slower and amenable to the other organizational influences such as new processes and ways of doing business.

In examining the second type of knowledge driver, structural drivers, in terms of the connection between knowledge management and business strategy, we find that these drivers are less amenable to direct personal influences, and have a longer time frame for their execution than knowledge-centric drivers have.  Moreover, within the category of structural drivers, functional convergence is more amenable to personal influence and immediate in execution than temporary organizational structures and convergence of products and services is less amenable to direct personal influence and less immediate in terms of its execution than temporary organizational structures but more immediate in terms of its connection to business strategy; and personal influence than deregulation and globalization.  In our table, technology drivers and process-focused drivers were perceived as equivalent in terms of their effects upon business strategy, but having a lesser effect upon it than either knowledge-centric drivers or structural drivers.  Again we believe that the same observations hold true for these findings as they do for the other km drivers discussed above.

Furthermore, if one examines the categories of technology drivers, wherein “technology provides temporary advantage, compressed product and process life cycles and strategic alignment” are perceived by the respondents from the former to the latter, in terms of their influence upon business strategy, we believe that the observations cited above hold true for these categories as well.  Specifically, the first category “technology provides temporary advantage,” is more amenable to personal influence and immediate in its effects than is compressed product and process life cycles and this category is more amenable to personal influence and immediate in its effects than strategic alignment which is more complicated and can take more time.

When we examine the category of process-focused drivers, again we can see that it is less amenable to personal inputs and less immediate in its execution than either knowledge-centric drivers or structural drivers.  And within this category, “expensive, repeated mistakes and reinvention of solutions,” is more amenable to personal input and takes less time to execute than either “proactive opportunity-seeking behavior” and likewise, we believe, the same relationships hold true between “proactive opportunity-seeking behavior” and “responsiveness.”

The last category, which is perceived by the respondents in the study as having the least influence upon business strategy, in terms of knowledge drivers is “economic drivers,” being defined in terms of “increasing returns”.  Again, we believe that the same observations discussed above can account for the perception that “economic drivers,” as a type of knowledge management drivers has the least influence upon business strategy by the respondents in this study.  Specifically, increasing returns, are the least amenable to direct, personal and immediate influence of individual employees than all the other knowledge management drivers discussed and depicted in Table I above. “Increasing returns” for a company globally are dependent upon a myriad of factors both within and outside corporate influence and if a company experiences increasing returns (increasing returns may not occur at all), they may not come about in the short-run, but may take years to materialize, such as in the examples of new ventures.  Accordingly, the “increasing returns” would be perceived by the participants in this study, we believe, as having less of an effect upon business strategy.

Finally, it is incumbent upon us to point out that our study was specifically designed to be a qualitative analysis of the perceptions of the participants in our survey regarding the relationship that different types of knowledge management drivers have to business strategy and to each other.  We believe it would be interesting and informative for further research studies to ascertain, through both qualitative as well as quantitative studies, whether in fact the observations we have postulated in this study, based upon our analysis of the results of our survey, are in fact real (between knowledge management drivers’ identified above and business strategy) or merely the perspectives of the respondents.  We would however, add the caveat, that perceptions of reality can act to shape actual events in the present and future, in terms of self-fulfilling prophecies.

Discussion And Implications

This paper has attempted to explore the relationship between specific knowledge management drivers and their impact upon business strategy.  The methodology employed a qualitative analysis of online discussions with employees from various companies who enrolled in a graduate business course, and analyzed their judgment concerning what types of knowledge management drivers are active at their company. An analysis followed that examined the potential impact on business strategy. The respondents chose knowledge drivers from five different categories of drivers including knowledge-centric, technology, structural, process and economic.  The results of the study indicated that the majority of respondents chose knowledge-centric drivers as having the most effect upon their current corporate strategy. This finding, we believe, is significant in that it appears to validate the concepts of second-generation knowledge management.

Specifically, second generation knowledge management views complex organizations as fundamentally socio-cultural in nature with respect to their most powerful explanatory paradigm.  This is a more modern viewpoint concerning the nature of organizational reality in contradicting the two previous organizational paradigms.  In the latter part of the 19th Century and early 20th century the prevailing viewpoint concerning industrial organization was mechanistic in nature.  The predominant school of thought was that of scientific management, promulgated and popularized by Frederick Winslow Taylor.  Taylor believed that the proper role of management was to plan the work of the day in exacting detail and insure that the workforce execute their exacting instructions. Taylor believed there was “one best way” to perform the jobs in American industry and it was the exclusive domain of management to find that way. Many of his principles and practices were carried out in the steel industry.  Scientific management thus created a “mindless” system in which workers were reduced to following directives of management without variance.  Taylor developed a considerable following in American industry and did succeed in dramatically increasing productivity in the industries where scientific management was employed.

In scientific management, therefore, the chief task was to capture the knowledge of the producing journeyman workers, codify that knowledge for organizational memory, tabulate it in exacting detail for future generations of industrial workers.  The aforementioned tasks were to be the exclusive domain of management.  The organizational view of reality conforms nicely with that of first generation knowledge management, which is concerned exclusively with the supply side of knowledge management.  If there is a mind or consciousness in the organization in Taylorism it resides solely in the delusions of management, not labor.  The mechanistic viewpoint of organizational reality held sway for a large part of the 20th century (Magner 1996; McElroy 2003; Gharajedaghi 2006).

A second major paradigm shift concerning the nature of complex organizational reality starting the mid-20th century in Europe, viewed organizations not as mindless systems but as uni-minded in nature (Gharajedaghi 2006). This point of view conceptualized organizations as biological entities just as individual organisms are considered as distinct living beings.  As with living entities the operative principle is survival and propagation in the form of growth. In the second paradigm the “mind” of the system resides in the working of the entity as a whole, not in its individual parts which functioned based on cybernetic principles to keep the organization in homeostasis. Freedom of choice was not part of the equations the parts of this “biological” organization.  The second paradigm is also supply-side knowledge management in nature.  A third major paradigm shift in organizational thinking occurred with the conceptualization of organizations as multi-minded and fundamentally socio-cultural in nature.  It is only in this last paradigm that organizational members are deemed to be embraced with freedom of choice.  Accordingly, the mechanistic and biological models no longer suffice to capture the nature of organizational reality in which the parts now have been credited with freedom of the will.

This third conceptualization, the socio-cultural model mandates a completely different role for modern management (Gharajedaghi 2006).  Rather than the directing role of previous paradigms, the socio-cultural viewpoint mandates that management play an enabling and facilitating role to permit emergent natural ideas and innovative tendencies of the “parts” of the system (i.e. the workers) to coalesce in natural groupings of their own choosing. Thus, hopefully innovation would be the inevitable result not of directed groups but of voluntary associations of individuals with like-minded interests.

This third conceptualization conforms to the principles of second generation knowledge management which is demand sided in nature and puts its greatest emphasis upon the generation of new knowledge (i.e. innovation).  Innovation, according to this viewpoint can only work if the constituent parts of the system (the employees) are given maximum freedom of will to pursue other ideas, in concert with their fellow workers. In second generation knowledge management, business strategy is driven by business policy which in turn, in large measure is conditioned by knowledge management in the form of innovation.


Our research appears to support the third paradigm discussed above, the socio-cultural view of organizational reality, in that the major knowledge drivers influencing business strategy are knowledge-centric drivers, to wit ‘knowledge recognition failure, rapid knowledge dissemination and application, tacit knowledge walkouts and knowledge hoarding.’  The essential point is that all of these drivers are mainly influenced by socio-cultural factors, wherein management can play a predominant role in shaping their outcomes by granting more autonomy to employees.  It is incumbent upon an enlightened managerial philosophy and practice to create a win-win socio-cultural milieu in which workers are encouraged to share their knowledge in a synergistic fashion that benefits the collectivity as well as the individual.  In this fashion, innovation, as a natural tendency of workers can be maximized and fostered, not directed.  Hopefully second generation knowledge management based upon the socio-cultural viewpoint of organizational reality can lead to effective policies which can then be translated into business strategies which are most appropriate in a sustainable manner.

We believe our study also raises questions for future consideration and research. Specifically,  if second generation knowledge management is correct with respect to its central promise that innovation is fostered in an organization in a maximal way when employees are given the widest latitude to congregate with individuals of like-minded interests, then we must insure the development of employees with the widest possible knowledge base and skill sets.  Yet in the current economic climate, where downsizing and outsourcing seems to be the norm in many corporations, employees are once again becoming dysfunctional with respect to both knowledge and skill sets in order to keep labor costs to a minimum.  If second generation knowledge management is correct in its assumptions regarding the etiology of the innovation process, then the generation of new ideas and the competitive advantage it confers upon organizations will suffer accordingly, if these labor saving measures become even more prevalent.  Second generation knowledge management tenets are thus incompatible with authoritarian and anti-labor viewpoints of corporate governance.

We suggest that it would be fruitful for future research in second generation knowledge management to explore the dichotomy between the viewpoint of broad-based knowledge workers collectively pursuing innovation with maximal freedom in an ever increasing democratized organization with the 21 century’s apparently increasing industrial tendencies to dumb-down workers and disenfranchise them with respect to their freedom to innovate.  In this respect perhaps the ghost of Frederick Winslow Taylor is still extant.  From our perspective, we believe that one of the major challenges of second generation knowledge management in the future will be to demonstrate to the corporate community that increasing returns (economic drivers) can be realized by companies that invest in second generation demand-sided knowledge management policies and strategies versus dominant corporate strategies operating today such as downsizing, outsourcing and deskilling workers all aimed at reducing costs of corporate payrolls.

As is evidenced by our survey, economic drivers were viewed by the respondents as less influential in shaping knowledge management corporate strategies.  If this thinking is typical of corporate management in general, then the investments in second generation knowledge management systems, be they in new technologies, structural or process drivers, would, we believe, have a difficult time being ratified by corporate boards and managers who are most concerned with the “bottom line,” owing to their fiduciary relationship to stockholders.

Thus, the challenges for acolytes of second generation knowledge management in the future, we believe, is to demonstrate through verifiable empirical data that corporations that invest in second generation knowledge management have a sustainable and higher rate of return (economic drivers) than those companies that instead employ a combination of corporate policies and strategies discussed above (i.e. anti-labor policies).  For this to occur, successful corporate managers will have to reorient their time horizons, from that of the next quarter returns, to a long term time frame. For this to occur, we believe, a similar paradigm shift would be necessary on the part of stockholders.  It would be impossible to bring about profound changes in corporate policies and strategies if the majority of the investing public were focused primarily on maximizing short-term returns.

Accordingly, since the world of business is a practical affair, the burden of proof, we believe, falls to practitioners of second generation knowledge management in the 21st century to demonstrate that corporations that invest in expensive second generation knowledge management programs and activities, will consistently have higher rates of return than companies that do not do so.  Of course we do not wish to imply that the future for corporate America’s labor composition is an either/or choice of second generation knowledge management liberated workers operating in a democratic corporate regime or a deskilled workforce subjected to an authoritarian management.  The choice could be some combination of the above, both with respect to the workforce and management philosophy, policies and strategies.

But the third scenario, “the combination” choice, presents interesting questions and challenges for corporations today.  Specifically if the corporate workplace of the 21st century develops into a two-tier system of workers who operate under radically different styles of either second generation knowledge management freedom or deskilled workers with little autonomy, then profound questions of corporate and industrial justice must be confronted as well as effective and efficient corporate governance.

Add to this analysis, a further level of complexity, that we live in a multi-national increasingly global corporate world, where business entities exist at once, both in the developed and developing worlds, operating simultaneously under vastly different rules and legal systems, as well as economic regimes, further increases the challenges inherent in attempting to “liberate” corporate employees through second generation knowledge management philosophies and strategies.  We suggest that these questions, posed in this paper as discussed above, are subjects that could be pursued by future researchers through well-designed researched methodologies, both theoretical and empirical in nature.


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Contact the Authors:

Dr. Jeffrey Alstete, Associate Professor, Department of Management and Business Administration, Hagan School of Business, Iona College, 715 North Avenue, New Rochelle, NY 10801-1890; Tel: 914-633-2265