The 7th European

Conference on Knowledge
Management
Corvinus University of Budapest,
Hungary
4-5 September 2006

Edited by
Dr. Péter Fehér
Corvinus University of Budapest, Hungary

i
Copyright The Authors, 2006. All Rights Reserved.

No reproduction, copy or transmission may be made without written

permission from the individual authors.

Papers have been double-blind peer reviewed before final submission to

the conference. Initially, paper abstracts were read and selected by the
conference panel for submission as possible papers for the conference

Many thanks to the reviewers who helped ensure the quality of the full
papers.

ISBN: 978-1-905305-29-2 CD/Booklet

Published by Academic Conferences Limited

Reading
UK
44-118-972-4148
[email protected]

ii
 ECKM 2006

Contents
Proceedings
Paper Title Author(s)
Page
Preface vii
Biographies of Conference Chairs,
Programme Chair, Keynote Speaker and ix
Mini-track Chairs
Biographies of contributing authors xi
An Ontology-Based Content Management Maurizio Agelli and Felice Colucci
System for a Dynamic Operating Context: Parco Scientifico e Tecnologico della 1
Issues and Prototype Evaluation Sardegna, Pula Italy
Marko Anzelak, Gabriele Frankl and
Building up Knowledge like a “Rubik Wolfgang Ebner
10
Cube” Alpen-Adria University of Klagenfurt,
Austria
Nekane Aramburu, Josune Sáenz
and Olga Rivera
Innovation Focus and Middle-up-down
ESTE School of Management, 19
Management Model: Empirical Evidence
University of Deusto, San Sebastián,
Spain
Peter Bednar, Christine Welch and
Four Valued Logic: Supporting Vasilios Katos
Complexity in Knowledge Sharing University of Portsmouth, 29
Processes Buckingham Building, Portsmouth,
UK
Marco Bettoni, Silvio Andenmatten
Knowledge Cooperation in Online
and Ronny Mathieu
Communities: A Duality of Participation 36
Swiss Distance University of Applied
and Cultivation
Science, Brig, Switzerland
György Boda and Peter Szlávik
Alternative Accounting to Manage
Corvinus University, Budapest, 43
Intellectual Capital
Hungary
Karsten Böhm1, Martin Delp1 and
Systematic Knowledge Organisation for Wolf Engelbach2
1
Marketing Research with Assisted Search FH KufsteinTirol – University of
53
Employing Domain Models and Integrated Applied Sciences, Kufstein, Austria
2
Document Storage Fraunhofer Institute for Industrial
Engineering IAO, Stuttgart, Germany
Ettore Bolisani1 and Roberto Ruaro2
1
Knowledge Intermediation in Regulated Department of Management and
Electronic Commerce Environments. The Engineering, University of Padova,
64
Case Study of NETMA (Nato Eurofighter Italy
2
and Tornado Management Agency) Italian Air Force, RMS, Villafranca
Airbase, Italy
The Cognitive Rationalization of
Professional Services: Expected and Marion Brivot
72
Unexpected Effects of Knowledge HEC, Jouy-en-Josas cedex, France
Management Systems

i
 Proceedings
Paper Title Author(s)
Page
Maria do Rosário Cabrita
Managerial Perceptions of Linking Faculty of Science and Technology,
82
Intellectual Capital and Strategy Universidade Nova de Lisboa,
Portugal
Analysis of International Experiences in Nuria Calvo Babío and Marta García
Knowledge Management Systems: The Pérez 91
SOSMER Project University of A Coruña, Spain
Knowledge Building in Innovation Annick Castiaux
Networks: The Impact of Collaborative Business Administration Department, 99
Tools University of Namur, Belgium
Where is the Pharaoh and the Treasures? Jordi Colobrans Delgado
The Social Mystery of the Great Pyramid Universitat Autonoma de Barcelona, 108
of Knowledge Bellaterra, Barcelona, Spain
Monica De Carolis and Vincenzo
Multiple Competences in Distributed
Corvello
Communities of Practice: The Case of a 116
Department of Business Science,
Community of Financial Advisors
University of Calabria, Rende, Italy
Yanqing Duan1, Xiaoxiao Xu1 and
Zetian Fu2
1
Understanding Transnational Knowledge Luton Business School, University of
126
Transfer Luton, UK
2
China Agriculture University, Beijing,
China
John Edwards
Knowledge Management Strategy – What
Aston Business School, Birmingham, 136
Have We Learnt?
UK
Learning Networking and Knowledge
Tiit Elenurm
Sharing Skills in Cross-Border e-Learning 144
Estonian Business School, Estonia
and Student Exchange Processes
Knowledge Management and Career Luiz Paulo Lopes Fávero, Patrícia
Development: The Application of Hedonic Prado Belfiore and Claudio Felisoni
152
Approach to Evaluate Real and Potential de Angelo.
Salaries of Brazilian Retailers’ Executives University of São Paulo, Brazil.
Péter Fehér
Organisational Solutions for Supporting
Corvinus University of Budapest, 161
Knowledge Management
Hungary
Weizhe Feng1, Yanqing Duan2,
Zetian Fu1 and Brian Mathews2
The Role of an Extensionist in ICT-based 1
China Agricultural University, Beijing, 171
Knowledge Transfer
China
2
University of Luton, Luton, UK
The Role of Integrative and Interactive
Cécile Godé-Sanchez
Technologies on Know-What and Know-
French Air Force Academy Research 178
How Exchanges in Defense
Centre, Salon de Provence, France
Organizations
Waltraud Grillitsch, Alexandra Müller-
Sharing Project Knowledge: Initiation, Stingl and Robert Neumann
184
Implementation and Institutionalisation Alpen-Adria-University of Klagenfurt,
Austria

ii
 Proceedings
Paper Title Author(s)
Page
Khalid Hafeez1, Jawed Siddiqi2 and
Using Analytical Hierarchy Process for Essmail Essmail3
1
Evaluating Organisation Core Bradford University, UK
2 192
Competences and Associated Personal Informatics Research Group, City
Competencies campus, Sheffield, UK
3
Sheffield Hallam University, UK
Meliha Handzic1,2 and Amila
Lagumdzija2
1
Motivational Influences on Knowledge Sarajevo School of Science and
208
Sharing Technology, Bosnia
2
BiH and Universitas 21 Global,
Singapore
Knowledge Networks: A Mechanism of Deogratias Harorimana
Creation and Transfer of Knowledge in Southampton Business School, 213
Organisations? Southampton Solent University, UK
Construction Model for IT Assignment to Milan Hasznics
Corporate Knowledge Management Budapest University of Technology 223
Systems and Economics, Hungary
Julie Hermans and Annick Castiaux
Knowledge Creation Through University-
Business Administration Department, 233
Industry Collaborative Research Projects
University of Namur, Belgium
Jianzhong Hong, Aino Pöyhönen and
Cultural and Communicative Interaction
Kalevi Kyläheiko
and the Development of Dynamic 241
Lappeenranta University of
Capabilities
Technology, Finland
Hanna Hovila and Jussi Okkonen
Transferring Experience Into an
Tampere University of Technology, 250
Organizational Resource
Finland
Isabelle Kern
Topic Maps for Knowledge Creation With
University of Applied Sciences for 260
Stakeholders
Business Administration, Switzerland
Per Kirkebak and June Tolsby
Partaking as a Tool for Knowledge
Ostfold University College, Faculty of 268
Creation and Sharing in Practice
Engineering, Norway
Gábor Klimkó1 and Róbert Tóth2
1
Business Strategy Drives KM Strategy: A MTA Information Technology
274
Case of a Central-European Firm Foundation, Budapest, Hungary
2
MOL Plc., Budapest, Hungary
Andrea Kő and Zoltán Szabó
A KM Framework for IT Auditing Corvinus University of Budapest, 280
Hungary
Harri Laihonen
Health Care Ecosystem as a Network of
Tampere University of Technology, 292
Knowledge Flows
Finland
Valerie Martin, Chuda Basnet, Paul
Knowledge Management for the Childerhouse and Leslie Foulds
Sustainable Supply Chain: A Literature Waikato Management School, 302
Review University of Waikato, Hamilton, New
Zealand

iii
 Proceedings
Paper Title Author(s)
Page
Aboubakr Moteleb and Mark
Identifying the Knowledge Gap in
Woodman
Knowledge Management Systems 310
Middlesex University e-Centre, The
Development
Burroughs, Hendon, London, UK
Knowledge Enhanced e-Workflow John Ndeta, Farhi Marir and Islam
Modelling - A Pattern-Based Approach for Choudhury
318
the Development of Internet Workflow Department of Computing, London
Systems Metropolitan University, UK
Margit Noll, Doris Froehlich and
Communication and Knowledge Transfer Damaris Omasits
326
in a Research Organisation Arsenal research, Giefinggasse,
Vienna, Austria
Preparing a Robust Entity-Relationship
Model Using Supporting Worksheets: Gary Oliver
335
Demonstrating the Basis for an The University of Sydney, Australia
Acceptable Model
Theresia Olsson Neve
The Power in Visualising Affects in the
Mälardalen University, School of 347
Organisational Learning Process
Business, Västerås, Sweden
Architecting Knowledge Management for Patrick Onions
355
Results The Knowledge Studio, UK
Patrick Onions1 and René de
Langen2
1
Knowledge Management Governance The Knowledge Studio, UK 365
2
Sasol Synfuels, Secunda, South
Africa
Paul Otterson, Zoë Dann, Ian Barclay
Innovation Management: Complexity and and Peter Bond
375
Systems Thinking Liverpool John Moores University,
Merseyside, UK
Organizational Knowledge Transfer: Robert Parent and Julie Béliveau
Turning Research Into Action Through A Université de Sherbrooke, 380
Learning History Québec,Canada
Systemic Methodologies and Knowledge Alberto Paucar-Caceres and Rosane
Management: A survey of Knowledge Pagano
389
Management and Systems Thinking Manchester Metropolitan University
Journals Business School, UK
Why Do Managers from Different Firms Mirva Peltoniemi
Exchange Information? A Case Study Tampere University of Technology, 399
from a Knowledge-Intensive Industry Finland
David Peto
Corvinus University of Budapest,
Knowledge Reuse in Creating Audit Plans 406
Department of Information Systems,
Hungary
Stavros Ponis1, Epaminondas
Koronis2, Ilias Tatsiopoulos1 and
Knowledge Logistics to Support the George Vagenas1
1
Management of Organizational Crises: A National Technical University of 415
Proposed Framework Athens, Greece
2
Warwick Business School, University
of Warwick, UK

iv
 Proceedings
Paper Title Author(s)
Page
Aino Pöyhönen and Kirsimarja
Knowledge-Based View of the Firm –
Blomqvist
Foundations, Focal Concepts and 425
Lappeenranta University of
Emerging Research Issues
Technology, Finland
Conceptual Design of a Knowledge Agnieta Pretorius and Petrie Coetzee
Management Support System for Tshwane University of Technology, 434
Assessment of Intellectual Capital Pretoria, South Africa
Seyed Mohsen Rahnamafard and
Developing a Taxonomy for Knowledge
Hajar Fatemi ShariatPanahi
Management Documents Organization in 447
Tehran University, Faculty of
Digital Libraries
Management, Tehran, Iran
Camille Rosenthal-Sabroux1 and
Michel Grundstein2
1
Paris – Dauphine University,
From Teaching to Practicing Knowledge
Lamsade, Paris, France 460
Management in Internal Auditing Services 2
Bénédicte Huot-de Luze, Senior
Manager Internal Audit Services,
KPMG
Knowledge Management in the Extended Enrico Scarso, Ettore Bolisani and
and Virtual Enterprises: A Review of the Maria Rita Arico’ 468
Current Literature University of Padua, Vicenza, Italy
Christian-Andreas Schumann and
Information Broker Approach for
Claudia Tittmann
Management Information Systems in 476
University of Applied Sciences
SME
Zwickau, Germany
Architecture for Effective Knowledge
S.Shanthi and. V.C.Ravichandran
Creation in Educational Institutions and
College of Engineering Guindy, Anna 484
Dissemination Through Satellite
University, Chennai, India.
Technology – An Indian Experience
The Moderating Role of the Team–Leader Evangelia Siachou and Anthony
in the Value of Knowledge Utilization: An Ioannidis,
495
Extension of Haas and Hansen's Situated Athens University of Economics and
Performance Perspective Business, Athens, Greece
Kerstin Siakas1 and Elli Georgiadou2
1
Alexander Technological
Educational Institute of Thessaloniki,
Knowledge Sharing: Cultural Dynamics 505
Greece
2
Software Forensics Centre,
Middlesex University, UK
Joanna Beth Sinclair
Journalists, the Makers and Breakers of Hanken Swedish School of
514
Relational Capital Economics and Business, Helsinki,
Finland
Pernille Dissing Sørensen
Knowledge Management: An
University of Southern Denmark, 523
Organization Design Issue
Denmark
Kaisa Still
Exploring Knowledge Processes in User-
Department of Information 533
Centered Design Process
Processing, University of Oulu

v
 Proceedings
Paper Title Author(s)
Page
Ildikó Szabó
The Implementation of the Educational Corvinus University of Budapest,
541
Ontology Department of Information Systems,
Hungary
Eduardo Tomé
The Hidden Face of Intellectual Capital:
Instituto Piaget, Viseu, Lordosa, 548
Social Policies
Portugal
Kuo-Hung Tseng and Chun-Yu Chen
The Role of Knowledge Transfer for
Meiho Institute of Technology, 561
Innovation in a Knowledge Community
Taiwan
Knowledge Base Development in
Ananya Upadhyaya and S. Krishna
Organizations: Impact on the Knowledge
QMIS Area, Indian Institute of 568
Transfer Capabilities; an Organization
Management Bangalore, India
Learning Perspective
Réka Vas
Educational Ontology and Knowledge
Corvinus University of Budapest, 577
Testing
Hungary
George White1 and Sandra Begley2
The Impact on Intellectual Capital of 1
Mi-2 Limited, Loughborough, UK 585
Organisational Improvement 2
Staffordshire University, Stafford, UK
Capital and Equity and the Knowledge Roy Williams
598
Process Cycle University of Portsmouth, UK
Diana Woolis and Susan Restler
Actors and Factors: Online Communities
Knowledge in the Public Interest, 610
for Social Innovation
New York, USA
Investigating the Use of Knowledge Irfan Bashir, José Miguel Baptista
Management to Support Innovation in UK Nunes and Nigel Russell 619
Energy SMEs: A Questionnaire Survey University of Sheffield; UK
Knowledge Management and Claudia Bitencourt and Mírian
Competence Management: New Oliveira 635
Possibilities Based on old Conceptions University of Vale Dos Sinos, Brazil
The Role of Sunk Costs in Knowledge
Matteo Bonifacio and Diego Ponte
Conflicts: The Case of a Small Rural 643
University of Trento, Italy
Bank
Roberta Cuel
A Constructivist Approach to IC: A Case
DISA, University of Trento, Trento, 653
Study
Italy
Kimiz Dalkir1, Erica Wiseman1,
Michael Shulha1 and Susan McIntyre2
1
Graduate School of Library and
An Innovative Measurement Framework
Information Studies, Montreal,
for a Government Knowledge 662
Quebec, Canada
Management Initiative 2
Defence R&D Canada, 344
Wellington Street, Ottawa, Ontario,
Canada

vi
 Proceedings
Paper Title Author(s)
Page
Scott Erickson1, Helen Rothberg2,
James Melitski2
1
Regional Development Authorities as a School of Business, Ithaca College,
671
Basis for Knowledge Management Ithaca, USA
2
School of Management, Marist
College, Poughkeepsie, USA
Elli Georgiadou1, Kerstin Siakas2 and
Eleni Berki3
1
Middlesex University, London, UK
Knowledge Creation and Sharing through 2
Alexander Technological
Student-lecturer Collaborative Group 678
Educational Institute of Thessaloniki,
Coursework
Greece
3
Department of Computer Sciences,
University of Tampere, Finland
Khalid Hafeez and Fathalla Alghatas
Knowledge Dynamics in Community of
School of Management, Bradford 690
Practice
University, UK;
Jorg Hartwig
Adaptive Working Environment Through
University of Leipzig, Institute of 703
Semantic Interoperability
Computer Science, Leipzig, Germany
Ali Hessami
Manage Business and Knowledge 713
Atkins Global, London, UK
Silva Karkoulian1 and Leila Halawi2
1
Assessing Knowledge Management Business School, Lebanese
Implementation at Two Major Lebanese American University, Beirut, Lebanon 720
2
American Universities Nova South-Eastern University Fort
Lauderdale, Tampa, FL USA
Mounir Kehal, Sandrine Crener and
Patrice Sargenti
Knowledge Diffusion in Context 726
International University of Monaco,
Principality of Monaco,
Axel-Cyrille Ngonga Ngomo and
Implicit Knowledge Sharing Frank Schumacher 736
University of Leipzig, Germany
Rosane Pagano and Alberto Paucar
A Holonomic Approach to Strategic
Manchester Metropolitan University 748
Knowledge Elicitation
Business School, UK
Dan Remenyi
Facilitating the Generation of Research
School of Systems and Data Studies, 755
Questions using a Socratic Dialogue
Trinity College Dublin, Ireland

vii
Preface

Welcome to the 7th European Conference on Knowledge Management (ECKM 2007)

hosted this year at Corvinus University Budapest in Hungary. The Conference Chair is Dr
András Gábor and the Programme Chair is Dr Péter Fehér, both from Corvinus University
Budapest.

The opening keynote address is given by Dr. Péter Racskó, Director of Knowledge
Management, T-Com Hungary (Magyar Telekom, Subsidiary of the Deutsche Telecom
Group).

The main purpose of the Conference is for individuals concerned with current research
findings and business experiences from the wide community which is now involved in
knowledge management and intellectual capital and organisational learning to come
together to share knowledge with peers interested in the same area of study.

A key aim of the conference is about sharing ideas and meeting the people who hold
them. The range of papers will ensure an interesting two days. Alongside the main
conference there are mini tracks on Auditing Knowledge Management – Chaired by Dr
Bálint Molnár, ISACA Hungarian Chapter, Budapest, Hungary, Measuring Intellectual
Capital, chaired by Bernard Marr from Cranfield University in the UK and the Role of
Knowledge in Regional Co-operations, chaired by Professor Jose Viedma from the
Polytechnic University of Catalonia in Spain. To further enhance the conference
experience Professor Dan Remenyi will be facilitating a Socratic Dialogue and Dr Gabriela
Avram and David Gurteen will lead a workshop on Social Computing.

With an initial submission of 134 abstracts, after the double blind, peer review process
there are 83 papers published in these Conference Proceedings. These papers represent
research from Australia, Austria, Belgium, Brazil, Canada, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, India, Iran, Ireland, Italy, Lebanon, Monaco, New
Zealand, Norway, Portugal, Peoples Republic of China, Singapore, Spain, South Africa,
Sweden, Switzerland, Taiwan, United Kingdom and USA.

I hope that you have an enjoyable conference.

Dr Péter Fehér
Programme Chair
[email protected]
September 2006

viii
Conference Executive:
Dr Joan Ballantine, Queens University, Belfast, UK
Professor Sven Carlsson, Jönköping International Business School, Sweden
Daniele Chauvel, Independent Consultant, France
Dr Charles Despres, Conservatoire Nationale des Arts et Metiers, Paris, France
Dr. Péter Fehér, Corvinus University of Budapest, Hungary
Dr Andras Gabor, Corvinus University of Budapest, Hungary
Professor Meliha Handzic, Sarajevo School of Science and Technology, Croatia
Barnard Marr, Cranfield School of Management, UK
Dr Fergal McGrath, University of Limerick, Ireland
Professor Dan Remenyi, Trinity College Dublin, Ireland
Professor Jose Viedma Marti, Polytechnic University of Catalonia, Spain
Dr Roy Williams, University of Portsmouth, UK

The conference programme committee consists of key people in the Knowledge Management and IS
community. The following people have confirmed their participation:

Fathalla Alghatas (Bradford University School of Management, UK); Derek Asoh (Southern Illinois University,
Carbondale, USA); Gabriela Avram (University of Limerick, Ireland); Joan Ballantine (Queens University
Belfast, UK); Frank Bannister (Trinity College Dublin, Ireland); Diane Benjamin (National Health Service, UK);
Egon Berghout (Groningen University, Netherlands); Maumita Bhattacharya (Charles Sturt University,
Australia); Heather Bircham-Connolly (University of Waikato, New Zealand); Janis Briedis (Riga Business
School, Latvia); John Byrne (RMIT, Australia); Sven Carlsson (Lund University, Sweden); Daniele Chauvel
(Independent Consultant, France); Satyadhyan Chickerur (Sona College of Technology, India); Bruce Cronin
(University of Greenwich Business School, UK); Reet Cronk (Harding University, USA); Farhad Daneshgar
(University of New South Wales, Australia); John Deary (Higher Colleges of Technology, UAE); Charles
Despres (Conservatoire des Arts et Metiers, Paris, France); Yanqing Duan (University of Luton, UK); John
Edwards (Aston University, UK); Jamal El Den (American University of Beirut, Lebanon); Tiit Elenurm
(Estonian Business School, Estonia); Mercy Escalante-Ludeña (São Paulo University, Brazil); Andras Gabor
(Budapest University of Economic Sciences and Public Administration, Hungary); Leslie Gadman
(International Business School, Isle of Man, UK); Andrew Goh (International Management Journals,
Singapore); David Gurteen (Gurteen Associates, UK); Khalid Hafeez (University of Bradford, UK); Matthew
Hall (Aston University, UK); Meliha Handzic (Sarajevo School of Science and Technology, Bosnia and
Herzegovina); Ali Hessami (Atkins Global, UK); Andrew Kok (University of Johannesburg, South Africa); Ilidio
Lopes (Polythenic Institute of Santarém, Portugal); Farhi Marir (London Metropolitan University, UK); Olivera
Marjanovic (University of New South Wales, Australia); Fergal McGrath (University of Limerick, Ireland);
Sandra Moffett (University of Ulster, Ireland); Arthur Money (Henley Management College, UK); Kehal
Mounir (International University of Monaco, Monaco); David O’Donnell (Intellectual Capital Research
Institute of Ireland); Gary Oliver (University of Sydney, Australia); Patricia Ordóñez de Pablos (University of
Oviedo, Spain); Kaushik Pandya (University of Luton, UK); Ann Peng (Providence University, Taiwan); José
de Jesus Pérez-Alcázar (University of São Paolo, Brazil); Selwyn Piramuthu (University of Florida, USA); John
Politis (Higher Colleges of Technology, UAE); Aino Pöyhönen (Lappeenranta University of Technology,
Finland); Thurasamy Ramayah (Universiti Sains Malaysia); Dan Remenyi (Trinity College Dublin, Ireland);
Carol Royal (University of New South Wales, Australia); John Saee (IESEG School of Management, Lille,
France); Sarosa Samiajii (Atma Jaya Yogyakarta University, Indonesia); Dave Snowden (The Cynefin Centre,
UK); Siva Sockalingam (Glasgow Caledonian University, Scotland); Edward Truch (Lancashire University
Management School, UK); José María Viedma (Polytechnic University of Catalonia, Spain); Roy Williams
(University of Portsmouth, UK); Les Worrall, (Wolverhampton University Business School, UK).

ix
Biographies of Conference Chairs, Programme Chair and
Keynote Speaker
Dr. András Gabor, professor, head of department of information systems. He earned
a diploma (MSc) in Economics (1974) and in Computer Science (1979) , dr. univ. oec.
(1976), C.Sc (Ph.D) (1983), CISA (1999), Habil.dr (2002). His expertise: systems
analysis, information management, and intelligent systems. Foreign experiences:
"Delivering Information Services", Harvard Business School, USA (Executive course)
1995, Imperial College of Science and Technology, Department of Management
Science, UK, 5 months (knowledge-based systems) 1986, DePaul University, Department of
Computer Science and Information Systems, Chicago, USA 1 month (executive information
systems, AI applications) 1985, Imperial Chemical Industries, Pharmaceutical Division, Alderly
park, Macclesfield, UK 2 months (sales/distribution management simulation) 1975. Memberships:
John von Neumann Society of Computer Science, ISACA Hungarian Chapter. He participated and
managed several national and international projects: PRAXIS, ACTS program, AC301 project.
(1998-2000), “Hospital Evaluation and Analysis” Research project No. 622/191, Soros Foundation
Healthcare Management Programme (1998-99), “Knowledge intensive technologies in the
development of global information infrastructure” c. Ministry of Education R&D program, No.
1355/1997. (1997-99), “Decision Support Methods for Hospital Evaluation”, Swiss National Science
Foundation, Project #7UNPJ048553, cooperating with the Ingenieur Schule, Wadenswil. (1996-98)
Knowledge-based Systems, Knowledge Engineering, Frame-based Expert Systems University of
Amsterdam (1992-95), "Curriculum Development in Business Information Systems",
PHARE/TEMPUS project (1990-92).

Dr. Péter Fehér, a “Depozit” research fellow, Corvinus University of Budapest,

Department of Information Systems. He earned a diploma (MSc) in Economics in
2000, and defended his PhD thesis in 2005. His foreign experiences are: Universität
Paderborn (Germany, 1999), HEC (France, 2001), and Kingston Business School
(United Kingdom, 2003-2004). He leads courses in the topics of Knowledge-, and
Project Management, Management Information Systems. His current research areas are
Knowledge Management, especially the problems and difficulties of KM practices, but he is also
participating in IT Service Management, Software Process Improvement, IT Audit and Organisation
Development projects, both as researcher and as consultant.

Dr. Péter Racskó is currently the Director of Knowledge Management Centre at T-

Com Hungary. He earned a diploma (MSc) in mathematics in the Lomonosoff
University, Moscow, and a PhD in mathematics (1977). The spent a semester at
Cornell University, 1 month at Brown University and 2 months at University of
Indianapolis as a visiting researcher, at. He also earned a PhD in applied
informatics. He holds System Analyst, Smart Cards Expert certifications, and he is also a Certified
Information System Auditor. He was member of the IT Committee of the Hungarian University
Union, member of the IT Committee of the Hungarian Government, member of the management
board of the Smart Card Forum, member of the IT Committee of the National Development and
Research Program, President of the board of the CARDNET Co., IT advisor to the Hungarian
Higher Education and Research Board, and member of the Jury of the National R&D Program. He
works for Matáv (Hungarian Subsidiary of Deutsche Telecom) since 2000, as Head of IT Strategy
Department, later as Business Intelligence and Documentation director. The company changed its
name the T-Com Hungary.

x
Biographies of contributing authors (in alphabetical order)
Maurizio Agelli (48) is head of the Digital Media Systems group at CRS4 (www.crs4.it). He is
currently working on research projects focused on personalized content delivery. His research
interests also extend to KM (in particular on the usage of ontology’s for resource classification).He
has a degree in Electronic Engineering from the University of Pisa (1985).

Nekane Aramburu is PhD in Economics and Business Administration, and a faculty member of
the University of Deusto (Spain). She also participates in the Cluster of Knowledge of the Basque
Region (Spain) and in SOL-Basque Country (the fractal of the Society of Organizational Learning
in the Basque region). Her research focus is currently on Organizational Learning and Knowledge
Management

Pierre Barbaroux has a PhD in economics. Research assistant in the Research Center of French
Air Force Academy. My research interests are organization theory and IT, organizational learning
and cognitive approaches of the firm. My empirical research focuses on Defense organizations and
the impact of IT on the military.

Irfan Bashir holds a BSc Hons in Chemical Engineering with Chemistry from the University of
Huddersfield. He has subsequently worked with Johnson & Johnson having acquired experience
as a Project Scientist. Currently, Irfan is undertaking PhD Research with dual supervision from the
Department of Chemical & Process Engineering and Department of Information Studies, both at
the University of Sheffield. This project is a CASE Scholarship fully funded by the EPSRC.

Peter Bednar is a Senior Lecturer at the University of Portsmouth, UK and is affiliated with the
Department of Informatics at Lund University, Sweden. His research covers contextual analysis,
organisational change and information systems development, apart from academic teaching and
research he also has an industrial background.

Marco Bettoni is Director of Research & Consulting at the Swiss Distance University of Applied
Sciences focusing on knowledge cooperation as a way of managing research activities. From 1977
to 2005 researcher, engineer and lecturer with industrial and academic organisations in the
domains of machine design, engineering education, IT development, knowledge engineering,
knowledge management and knowledge-oriented cooperation.

Claudia Bitencourt is Assistant Professor at the Universidade do Vale do Rio dos Sinos, Brazil.
She obtained her Ph.D. in Business Administration from the Universidade Federal of Rio Grande
do Sul, Brazil. She was a researcher fellow at the University of Queensland, Australia. She has
published 2 books about Human Resource Management and Competences Management &
Organizational Learning.

György Boda is a PhD professor at the Corvinus University in Budapest. His main expertise is
controlling and knowledge management. Péter Szlávik is a management consultant dealing with
the same topics. Both authors are co-partners of their joint consultancy firm named Boda &
Partners.

Karsten Böhm (35) studied Computer Science with a specialization in Automatic Language
Processing and Intelligent Systems at the Universities in Leipzig (Germany) and London (UK).
After obtaining his degree in Computer Science (M.Sc.) he worked for several year in the industry
mostly for technology oriented companies in the area of applied text-mining and information
extraction technologies and applied them in several industrial Knowledge Management projects.
He returned to the Leipzig University in 2003 to work as a researcher in several funded research
projects mostly focused on the topic of business process oriented Knowledge Management. Since
2006 he is holding a Research Professorship for Business Informatics at the University of Applied

xi
Science FH KufsteinTirol (Austria). His main research interests are in the area of IT-based
Knowledge Management and the development of new software system for the operational support
of Knowledge processed in enterprises.

Ettore Bolisani (L Eng, PhD) is Associate Professor of Business Information Management at the
Faculty of Engineering of the University of Padova. He previously worked as Assistant Professor at
the Universities of Trieste and Padova. In 1997 he was visiting research fellow at PREST
(University of Manchester), where he conducted a research project funded by the European
Commission on the developments of Electronic Commerce in the UK and Italy. His current
research centres on the economic and organisational issues of Information and Communication
Technology applied to Knowledge Management. On such topics he took part in various research,
and wrote several publications at international level. He is member of MCFA (Marie Curie
Fellowship Association).

Marion Brivot worked as a consultant from 1999 to 2005, first as a senior consultant at KPMG
Consulting France, and more recently at the European headquarters of KPMG Tax within
knowledge management. She is currently completing her Ph.D. thesis on the cognitive
rationalization of professional services at HEC Paris.

Maria do Rosário Cabrita is assistant professor in Lisbon Institute of Banking Management. She
holds graduate and master degrees in business administration and international economics. She is
currently a Ph.D. candidate at Institute of Economics and Business Administration, Lisbon
Technical University. She also has several years’ experience in executive positions in international
banks.

Nuria Calvo Babío has worked for one decade as consultant, involved in projects related with
innovation and knowledge exchange. Actually she combines her professional activities with the
academic research in the knowledge management area. In this sense, she has published some
articles and has contributed with several papers in Spanish and American Conferences during the
last two years.

Annick Castiaux is a Professor at the University of Namur. After a PhD in Physics, she was a
consultant in KM during 5 years. For 4 years, she is back at the university to share her experience
with students in management sciences and perform research on innovation and knowledge
management.

Chun-Yu Chen is a lecturer at the department of business administration in Mei-ho institute of

technology, Taiwan. She is also a PhD candidate at the department of industrial and technology
education in National Kaohsiung Normal University Taiwan. Her research interests are knowledge
management, technology innovation, and e-Learning.

Jordi Colobrans Delgado (Barcelona, 1965) is a Doctor of Sociology of Organizations and a

graduate in Cultural Anthropology. He is a lecturer of qualitative methodology at Ramon Llull
University (URL), University of Barcelona (UB), Open University of Catalonia (UOC), a researcher
at the Institute of Governance and Public Policies (IGOP, University Autonoma of Barcelona) for
the EURODITE project. He also works as a consultant in private sector. His main field of interest is
the organization of meaning systems and their practical uses in public and private institutions.

Roberta Cuel holds a Ph.D. in “Organization and Management of the Firms” (2003). She was a
post-doc fellow at the computer science department of the University of Verona. Currently, she is a
senior researcher in the Net Economy Group at the department of computer and management
science of the University of Trento. Her research interests include: the study of KM and knowledge
representation systems (such as ontology’s, classifications) as mechanisms for knowledge
reification processes. She has contributed to a number of publications, and has served as the PC
member for a number of interdisciplinary conferences.

xii
Monica De Carolis is contract professor of Business Management at the faculty of Engineering of
the University of Calabria. She holds a PhD and a master degree in Management Engineering.
She published in national and international conferences and in national reviews. Her research
interests are knowledge management, communities of practice, organization design.

Zoe Dann Is currently a Senior Lecturer in the Technology Management Group at Liverpool John
Moores University. Prior to this she was the New Business Generation Programme Manager in the
Merseyside SME Development Centre at Liverpool John Moores. From 1994 to 1997 she was a
Senior Research Fellow in the Department of Industrial Studies at the University of Liverpool. She
has extensive industrial experience in Technical Sales and as a Project Engineer. She has a
particular interest in New Business generation management systems.

Yanqing Duan, Ph.D, is a Reader in Information Systems in University of Luton. Her principal
research interest is the development and use of advanced information and communication systems
(ICTs) in, and their impact on, business and management. She is particularly interested in ICT
based knowledge management and transfer, and the use of e-learning in enhancing knowledge
and skills in SMEs. She has published about eighty papers in journals, books and conference
proceedings.

John Edwards is Professor of Operational Research and Systems at Aston Business School,
Birmingham, and U.K. His principal research interests include: integrating knowledge-based
systems with simulation models; investigating knowledge management strategy and its
implementation; and the relevance of technology to knowledge management He has published
more than 40 articles in refereed journals, and is editor of the journal Knowledge Management
Research & Practice.

Tiit Elenurm holds the professorship in entrepreneurship at the Estonian Business School. Ph. D.
in 1980 for the dissertation “Management of the Process of Implementation of New Organizational
Structures”. His vision is to develop synergy between management training, consulting and
research activities. Research interests include knowledge management, change management,
international networking and transfer of management knowledge.

Scott Erickson is Associate Professor of Marketing and International Business at Ithaca College,
USA. He holds a Ph.D. from Lehigh University, USA. He has published extensively on KM
development and protection issues, including his book with Helen Rothberg, From Knowledge to
Intelligence, published by Elsevier Butterworth-Heinemann.

Péter Fehér Dr, a “Depozit” research fellow, Corvinus University of Budapest, Department of
Information Systems. He earned a diploma (MSc) in Economics in 2000, and defended his PhD
thesis in 2005. His foreign experiences are: Universität Paderborn (Germany, 1999), HEC (France,
2001), and Kingston Business School (United Kingdom, 2003-2004). He leads courses in the
topics of Knowledge-, and Project Management, Management Information Systems. His current
research areas are Knowledge Management, especially the problems and difficulties of KM
practices, but he is also participating in IT Service Management, Software Process Improvement,
IT Audit and Organisation Development projects, both as researcher and as consultant.

Gabriele Frankl is a researcher at the Institute for Media and Communication Studies (Research
Unit: New Media – Technology – Culture) at the University of Klagenfurt in Austria. Her main topics
of interest are knowledge management and e-Learning. Since 2002 she is developing Knowledge
Management Systems and since 2004 e-Learning Systems.

Elli Georgiadou is a Principal Lecturer in Software Engineering and Curriculum Leader for
Postgraduate Courses in Business Information Systems, at Middlesex University, London. Her
teaching includes Knowledge Management, Software Metrics, Methodologies, CASE and Project
Management. She co-ordinates the European Affairs and International Exchanges of her School.

xiii
She is engaged in research in Knowledge Management, Software Measurement for Product and
Process Improvement, Methodologies, Metamodelling , Cultural Issues and Software Quality
Management. She is a member of the University’s Global Campus project (developing and offering
ODL). She has extensive experience in academia and industry, and has been active in
organising/chairing conferences and workshops under the auspices of the British Computer
Society, the ACM British Chapter and various European programmes for Technology Transfer and
development of joint curricula. She established a Distance Mode! Initiative between a UK
University and a Hong Kong Institute developing and offering technology-based learning. She
designed and carried out evaluations of various ODL initiatives in the UK, Greece, Spain, Finland,
Hong Kong and Cyprus.

Gode PhD economics. Researcher in the Research Centre of French Air Force Academy and
professor in economics and management. The organization management leads me to concentrate
my researches on organizational culture and on the influence of ICTs uses on organizational
structures and changes. My application cases are Defence organizations and weapon systems.

Waltraud Grillitsch is researcher/member of the Knowledge Management project group of the

department for eBusiness/ Business Technologies (biztec) and lector at the department for
Organizational-, Human Resources and Management Development at the “Alpen Adria” University
of Klagenfurt. She is writing her Ph.D. Master thesis in the field of Knowledge Management in
corporate networks and is studying journalism at the University of Klagenfurt. She is working in
specific company projects in the region.

Khalid Hafeez is a Reader in Operations and Information Management, and Director for the
Centre for Ethnic Entrepreneurship and Management at the Bradford University School of
Management. He is a regular member of the organisation committee for the ECKM since 2003. He
is an editor and conference organizer for the IEEE Conferences on Machine Learning. He has
presented in many conferences and has been an invited speaker on Knowledge Management and
Core competence on many occasions. He is supervising many projects on Knowledge
Management, Core competence, E-Commerce and E-Governance and has published on these
subjects in prestigious journals such as Journal of Operations Research Society (JORS), IJPE,
IEEE Engineering Management, IEEE Potentials, Computers & Operations Research and TQM
and Business Excellence. He was on the book-reviewing panel for Knowledge Board Publishers
and for the Financial Times/Prentice Hall/Pearson Publisher. He is a visiting Professor to NIMBAS
and eTQM Dubai. He is an external examiner for the University of Leeds, the University of Central
England, and the University of Hong Kong.

Leila Halawi (B.S, and MBA, Lebanese American University (formerly Beirut University College) in
Beirut, & DBA, Nova South-eastern University) is the operations manager for Avis in Brandon,
Florida. Prior to this, Dr. Halawi was a lecturer at the Lebanese American University. She has
authored several journal articles and contributed to the new edition of the textbook Business
Intelligence and Decision Support Systems. Her current research interests include knowledge
management, data mining, information systems success and strategy, ethical impacts of
information technology and software piracy.

Deogratias Harorimana graduated in BA(Hons) Business with Information Management prior to

embarking on PhD Management with focuss on Knowledge Transfer at Southampton Solent
University. His most recent recent paper was " Indigenous Knowledge: Shifting Boundaries?"
Deogratias is the Chair Elect of the Geographical Society of Great Britain with the Institute of
British Geographers Post Graduates Forum Research Group.

Milan Hasznics. M.Sc. degree in technical informatics at the Budapest University of Technology
and Economics. 2005: - PhD student at the Budapest University of Technology and Economics,
Department of Information and Knowledge Management. Research topic: IT support of knowledge

xiv
management. 2005: - Specialized engineers' degree of Banking Informatics at the Budapest
University of Technology and Economics

Julie Hermans is researcher at the Information Management Research Unit of Namur University.
She is developing her interest in University-Industry Relationships and Knowledge Transfer by
undertaking her PhD programme at Namur University.

Ali Hessami is Chief Engineer and Head of Advanced Technology Group at Atkins Global and
Director for Transportation Surety (Safety & Security) at Project Development Group. He is an
expert in the systems assurance and safety/security assessment methodologies and has a
background in design and development of advanced control systems for critical industrial
applications. Ali has established an International reputation in the field of system safety assurance
and has published many papers and lectured throughout the world from Europe to the Far-Middle
East and North America

Jianzhong Hong PHD (PSYCH). is a senior researcher in knowledge management at

Lappeenranta University of Technology (2001-date). He was a postdoctoral researcher in
University of Helsinki, leading a research project Learning, Expertise and Innovation of Chinese
and International Work Organizations Undergoing Transformation (1997-2000). His articles have
appeared in several international journals, including those in the areas of Psychology, Education
and Management.

Vasilis Katos Dr is a Senior Lecturer at the University of Portsmouth. His research area include
Systems Security. Among other responsibilities he is also course-leader for a new MSc in Forensic
IT.

Mounir Kehal Professor in Computing Science and Knowledge Management at the International
University of Monaco. Member of the European Conference on Knowledge Management,
Organizing Committee. Member of the Association of Information Systems. Co-Director of
Teaching Links, Informing Science Institute. Member of the Computer Society/IEEE. Member of
the Artificial Intelligence Group, University of Surrey, UK. Member of the Editorial Review Board for
the Interdisciplinary Journal of Knowledge and Learning Objects, IJKLO The International Journal
of Mobile Learning and Organization, IJMLO The Interdisciplinary Journal of Information,
Knowledge and Management, IJIKM, The International Journal of Internet Technology and
Secured Transactions, IJITST

Isabelle Kern graduated at the University of Zurich in English, German and History in 1993.
Afterwards she worked for four years in the multimedia industry as an author of computer-based
training programs. In 1998 she began her studies in business administration and IT, again at the
University of Zurich and graduated in 2004. Her research topic treats computer-supported systems,
which support stakeholder management and knowledge management.

Per Kirkebak 1975: Chemical Engineer from NTNU, Norwegian University of Science and
Technology, Department of Chemistry 1975: Master of Pulp and Paper Technology from NTNU,
Norwegian University of Science and Technology, 2000: Awarded PhD from NTNU, Institute of
Industrial Economics and Technology Management, on innovation with the title “ Better
implementation of innovation processes: A study of methods and praxises in one company within
the Norwegian pulp and paper process industry”. 2003 and present: Responsible for the curriculum
at the Ostfold University College for the Bachelor of Technological, Innovation and
Entrepreneurship study, 2001 – 2003: R&D manager at Ostfold Regional Research Institute 1991
– 2001: Process- and Product Development Manager at Peterson Paper and Board AS 1989 –
1991: Senior researcher at Ostfold Regional Research Institute 1984 – 1989: Manager in a
company I founded. When I left, I sold out, and at that time we had 12 employees 1981 – 1984:
Process responsible for new Processing plant at Borregaard CemCell 1977 – 1981: Senior

xv
Process Engineer at Aker Engineering today Aker Kværner Oil & Gas (stationed mainly in Scotland
and Brasil) 1975 – 1977: Senior Process Engineer at Borregaard Cellulose Factory.

Gabor Klimko PhD in 2003, interest information strategy and knowledge management. Regular
participant of ECKM.

Andrea Ko; Dr Ph.D graduated at the ELTE (Eötvös Lóránd University of Budapest) in 1988 (MSc
in mathematics and physics). She has a university doctoral degree in computer science (1992).
She is an associate professor of the Corvinus University of Budapest, where she has earned her
Ph.D. in 2005. Her research field includes systems design, intelligent systems, knowledge
management, management and design of ontologies and IT audit.

Gita Kumta, Dr has a Masters in Statistics from the Indian Statistical Institute, Calcutta, and a
Ph.D from University of Mumbai, India. She has around 30 years experience in Information
Systems and IT consulting. Presently Dr. Kumta is Professor at Narsee Monjee Institute of
Management and Higher Studies (NMIMS-Deemed University), Mumbai, India and specialises in
Information Systems and Knowledge Management

Harri Laihonen is a Ph.D. student who studies knowledge-intensive organisations from the
viewpoint of knowledge flows. In an ongoing research project, he focuses to health care
organisations and their renewal capability. He works currently as a researcher in the Institute of
Business Information Management at the Tampere University of Technology.

Valerie Martin With an M.Sc in Information Management (Strathclyde University, UK), and a Ph.D
in Computer Integrated Manufacturing (Cranfield University, UK), Dr Valerie Martin has had
substantial research and consulting experience in manufacturing regeneration and change, supply
chain management, information management and knowledge management. She presently works
as a lecturer at the University of Waikato, New Zealand. She has published in a wide range of
international conferences and journals.

Aboubakr Moteleb . Throughout his education and work experience, Abou-Bakr has combined
engineering and IT with social and organisational sciences both in academia and business. His
MSc. Business Information Technology is applied to help growth and integration of organizations in
the digital economy through e-Business, e-Commerce and e-Marketing. He worked for the
American University in Cairo (AUC), the Industry Modernization Center (IMC) with the European
Commission, Japan International Cooperation Agency (JICA), the Regional Information
Technology Institute (RITI) and the Regional Information Technology and Software Engineering
Center (RITSEC) in Egypt. Moreover, he provided consultancy for private sector, governmental
and non-governmental organizations such as the UNDP, the International Advertising Association,
the League of Arab States, Trenta Real Estate, Panasonic, the Ministry of Administrative
Development, the Information and Decision Support Center, and the Centr! al Bank of Egypt.
Furthermore, his current PhD research in Knowledge management systems development focuses
on its value to organizations

Theresia Olsson Neve (PhLic) is a PhD student in Computer and Systems Science. Her main
interest concerns individual and organisational learning. She will defend her thesis in September
2006 at Stockholm University, The Department of Computer and Systems Sciences."

Axel-Cyrille Ngonga Ngomo was born in 1983 and received his Masters in 2004. He worked on
government funded projects on Information Retrieval (Pi-AVIDA) and Knowledge Management
(PreBIS). He is now a PhD student at the graduate school of the University of Leipzig. His topics of
interest include Information Retrieval, Ontology Extraction and Intelligent Systems.

Margit Noll. I am concerned with research management in arsenal research as well as responsible
for the knowledge management process. My work is based on my prior scientific research and

xvi
consulting activities in the fields of knowledge management, innovation and technology
management. Basically I have studied physics and finished an MBA in general management.

Patrick Onion Formerly director and principle consultant of South African knowledge management
and information management consultancy The Knowledge Studio, Patrick Onions has taken a
sabbatical and is currently a PhD student and lecturer at Leeds Metropolitan University. Patrick has
a background in information systems and technology development and project management, and
holds an MSc and MBA.

Paul Otterson (DR) is Programmes Manager for Technology Management subject area. A
Principal Lecturer and the Programme Leader of the e-Business Technology and Management
programme at the John Moores University in Liverpool. He has a particular interest in e-Business
applications in SMEs. His doctoral thesis was on the use of Innovation and Creativity tools within
SMEs

Rosane Pagano is a Senior Lecturer in Management Information Systems, at Manchester

Metropolitan University Business School, United Kingdom. She has a long experience developing
Information Systems for organisations, and in particular on requirements elicitation. Rosane holds
a PhD in Applied Sciences (University of Louvain, Belgium), a BSc in Systems Engineering, and a
Post Graduate Diploma in Education.

Robert Parent holds a Ph.D. in human and organizational systems from the Fielding Graduate
University in Santa Barbara, California and conducts his teaching and research as a full professor
of strategy with the Faculty of Administration at the Université de Sherbrooke (UdeS) in Québec.
He also serves as Director of the Knowledge Transfer Research Laboratory at the University. As a
researcher with the Centre d’étude en organisation du travail at the UdeS, he conducts research
on how effective knowledge transfer contributes to a systems competitive advantage. Prior to his
academic career, Mr. Parent was president of an international consulting firm specializing in
strategic management.

Alberto Paucar-Caceres, BSc, MBA, MA, MPhil. Alberto’s research interest is in the area of
application of Systems Thinking and systems ideas in organisational problematical situations, in
particular, in the use of systems methodologies (Soft Systems Methodology, Critical Management
Sciences and Soft Operational Research) in organisations. He has published on Systems,
Operational Research and Management Education Journals.

Mirva Peltoniemi has received a Master of Science degree in industrial engineering and
management from Tampere University of Technology, where she is currently working as a
researcher at the Institute of Business Information Management, pursuing her doctoral studies. Her
research interests include the development mechanisms of the Finnish games industry from the
viewpoint of complexity and evolutionary economics.

Dávid Peto is a assistant professor at the Corvinus University of Budapest, Department of

Information Systems. He graduated as M. Sc. of Business Administration in 2000 and he is
employed by the university ever since. He recently submitted his Ph. D. thesis: Daring Measures -
Risk Assessment Metrics in IT Auditing. In addition to teaching, he has worked on several research
and consultancy projects in his main research topics: IT auditing, risk management and ERP
systems connectivity.

Stavros Ponis has graduated from the School of Mechanical Engineering of the National
Technical University Athens (NTUA) in 1996 and owns a PhD from the same institute. Since
December 2001 he holds a position of Teaching and Research Associate in the Section of
Industrial Management and Operational Research of National Technical University Athens. He is
an expert reviewer for the European Union, and as from November 2005, he has been elected a

xvii
Lecturer in the scientific area of Supply Chain Management and he currently waits for his official
appointment by the Ministry of Education.

Aino Pöyhönen, Ph.D. (Econ.) is Professor of Knowledge Management at the Department of

Business Administration, Lappeenranta University of Technology, Finland. Her research interests
include, for example, the knowledge-based view of the firm, intellectual capital, organizational
renewal and innovation, creativity and imagination, and social capital.

Agnieta Pretorius is a doctoral student and a lecturer in information and communication

technology at Tshwane University of Technology, South Africa. Prior to this she was a software
developer. Her current domains of research and teaching include technical programming,
knowledge management and decision support systems.

Camille Rosenthal-Sabroux is a graduate of PHD Paris VI, (1971). Since 1989, She is full
Professor at Dauphine University, and advises some large companies about Information Systems,
Knowledge Management, and Decision Science. She is the founder of the SIGECAD Group, which
domain topics are Information System, Knowledge Management and Decision Aid. She published
several books and articles.

Enrico Scarso is Associate Professor of Engineering Management at the University of Padova.

His research interests are in the area of the economics and the management of technology, with
particular reference to the use of ICTs in Knowledge Management. He has published in several
journals and contributed to various books. He is member of IAMOT and IEEE.

Christian-Andreas Schumann, born 1957 in Chemnitz, studied Industrial Engineering in the

Technical University of Chemnitz, first doctor’s degree in 1984 and second doctor’s degree in
1987. In 1988 he was appointed as associated professor for plant planning and information
processes in the TU of Chemnitz. In 1994 he became professor for business and engineering
information systems in the University of Applied Sciences Zwickau. Since March 2003 he has been
dean of the faculty of business and management sciences in the University of Applied Sciences
Zwickau. He is director of the Institute for New Kinds of Education, Vice-Chairman of the Central
German Academy for Further Education and the Institute for Knowledge Management.

Margaret Shannon With a Ph.D. from the University of Chicago, Margaret Shannon writes on
circus as discourse and studies the nexus of embodied knowledge, meaning, and dynamic social
change. Since presenting in Greece on success and composition as well as exploring the
relationship between writing and complexity theory, Dr. Shannon believes that inter-disciplinary
approaches to language are critical for social change.

Evangelia Siachou is a PhD candidate at the Department of Business Administration, Athens

University of Economics and Business. She holds a Bachelor's degree in International and
European Studies from the Panteion University of Athens and an MSc in Industrial Relations and
Personnel Management from the London School of Economics. She possesses work experience in
the Strategic Planning Department of ATHOC 2004 (Olympic Games). Her current research
interests include Knowledge Management and Strategic Human Resources Management.

Kerstin Siakas is an Associate Professor at the Alexander Technical Educational Institute of

Thessaloniki in the department of Informatics. She comes from a in multicultural and
multidisciplinary background and has an extensive experience of software development from
different organisational levels in several countries. Her research interests are in the "soft" issues of
Information Systems development, including cultural issues influencing software quality
management, knowledge management (knowledge creation and transfer), as well as educational
issues, such as Open and Distance Learning.

xviii
Joanna Sinclair is currently working on her Ph.D at Hanken, the Swedish School of Economics
and Business Administration. Before joining the academic world she worked as a publicist and PR
consultant, which greatly influenced her choice of research topics: Building and upholding
Relational Capital through storytelling, with a particular interest in the gatekeeper role of business
journalists.

Pernille Dissing Sørensen is a PhD-student with the department of Marketing and Management
at the University of Southern Denmark. She holds a MSc in Business Administration (International
Management). Her research interests are organizational learning, knowledge management,
knowledge management strategies, and organization design. Her PhD project focuses on
knowledge management and organization design

Kaisa Still has been involved with both the professional and academic worlds of Knowledge
Management for 10 years. She is currently working as Knowledge Management Specialist for
Beijing DT Electronic Company, in China. In addition, she is pursuing Ph.D. at the Oulu University,
Finland, at the department of information science. Her research interests include knowledge
processes, communities, and communication technologies.

Zoltan Szabo associate professor, Corvinus University of Budapest, Department of Information

Systems. He graduated from the Budapest University of Economic Sciences, specialized in
Information Management in 1994. He has earned his Ph.D. in 2001. His research field includes
strategic information system planning, management of IT services, IT governance.

Eduardo Tome I am Portuguese, made a PhD in Economics, and I am interested in IC, KM and
Social Policies. Was present in ECKM 2002, 2003, and 2005. Published in the Journal of
Intellectual Capital and in the Journal of European Industrial Training.

Ananya Upadhyaya is doing a doctorate from one of the leading management institutes of India.
My area of interest is knowledge sharing and transfer issues in organizations. Prior to this I did my
Masters in Computer Applications. My long-term goal is to join academics.

Réka Vas is an economist, graduated at the University of Szeged. Since 2002 she is a researcher
at the Department of Information Systems of the Corvinus University of Budapest. At the same
time she is a Ph.D. candidate at the Faculty of Business Administration of the University.

Vincent Wade FTCD is a Senior Lecturer in the Department of Computer Science, Trinity College
Dublin and Research Director for the Knowledge and Data Engineering Group. Vincent is also
founder and Director of the Centre for Learning Technology in TCD. The Centre is responsible for
the supporting Trinity College's academic staff in the areas of Technology Enhanced Learning.
Having graduated from University College Dublin with a BSc (Hons) in Computer Science in 1988,
he completed his postgraduate studies in Trinity College Dublin before taking the position of
Lecturer in the Computer Science Department in 1991. As Research Director for the Knowledge
and Data Engineering Group in the Computer Science Department, Vincent leads a-team
comprises seven academic staff and twenty five research staff (including research fellows,
associates and postgraduates). The group focuses on knowledge and data management research
and has established an international reputation in three related research areas! , Namely
Telecommunications & Network Management, e-Learning and e-Business services and Health
Telematics. He was awarded Fellowship of Trinity College for his contribution to research. Vincent
is co-chair of the ACM sponsored Adaptive Hypermedia and Adaptive Web Systems International
Conference (AH2006), is guest editor of the upcoming special issue of IEEE Internet Computing
and serves on many prestigious International Conference and Journal Series such as IEEE
Communications, IEEE Networks, WC3’s www Conference Series, IEEE IM and NOMS, AACE’s
E-Learn and EdMedia.

xix
Christine Welch is a Senior Lecturer at the Portsmouth Business School. Her research interests
include systemic thinking, organisational analysis, learning and change. Her academic
responsibilities include being the course leader for a MSc Knowledge Management.

George White is an IS Consultant providing Business Analysis and Project Management services
primarily within the Utilities and Manufacturing sectors. George is currently working on the final
stage of an MSc in Professional Computing at Staffordshire University.

Roy Williams Dr develops and manages e-learning and knowledge management for the University
of Portsmouth, and for w.w associates in Reading, both in the U.K. His research includes the
practical design development of knowledge and e-learning systems, the theory of knowledge and
knowledge management, discourse analysis and semiotics, and the application of discourse
analysis and complex adaptive systems theories to management and development issues. He is
actively involved in the European Conferences on e-learning and Knowledge Management, and
edits the Electronic Journal of e-learning. He has held posts of Visiting Professor of Education,
Professor and Chair of Communication, and Executive Board Member and CEO of the South
African Broadcast Regulator. He has also worked extensively in international development in
literacy, distance education, media, HIV/AIDS, and national and international policy.

Diana Woolis founding Partner, Knowledge in the Public Interest, the first company devoted
exclusively to KM for Social Innovation. She has published in professional and popular journals on
access and equity, organizational learning, and most recently the power of the Internet to
revolutionize social program and policy development. Her Doctorate and Masters Degrees are
from Columbia University, USA.

xx
An Ontology-Based Content Management System for a
Dynamic Operating Context: Issues and Prototype
Evaluation
Maurizio Agelli and Felice Colucci
Parco Scientifico e Tecnologico della Sardegna, Pula Italy
[email protected]
[email protected]
Abstract: Content management systems are very useful tools for organizing and sharing information
resources and may considerably benefit from using ontology-based description schemes. Ontologies set a
common ground for resource acquisition, enabling different users to share a common view of a knowledge
domain, and may considerably enhance the search paradigms by exploiting semantic relationships between
concepts. However, ontologies may evolve since they reflect knowledge schemes that are by nature dynamic.
Moreover this evolution should be the result of a collaborative process of ontology maintenance. These and
other issues are addressed in the present work and some practical solutions are proposed. Also, a very simple
prototype implementation of an ontology-based content management system is described. Finally, the results
of a short experimentation of this prototype within a small community are presented.

Keywords: Content management systems, ontologies, knowledge sharing, ontology evolution, and
communities of practice

1. Introduction
Nowadays, the availability of reliable information sources is a key factor for any decision making
process in private and public organizations. However, the amount of information sources that are
available on-line and off-line is overwhelming and this abundance of content may become virtually
useless without the right tools that allow retrieving the useful information items. Search engines,
although restricted to on-line resources, play an important role, but the results they provide are
quite often imprecise and narrowing down the search may be a very complex and time-consuming
task.

Content management systems (CMS) provide an integrated framework, based on metadata and
workflows, for organizing and sharing information resources within a community of users. Many
description schemes have been standardized, defining metadata sets and vocabularies and
providing a good level of interoperability among applications. However, metadata vocabularies are
generally too loosely related to the operating context of the end users and finding the most suitable
tags for describing a resource can lead to inaccurate or ambiguous results. Information should be
contextualized using a description that makes sense in the domain where the information will be
used. What distinguishes knowledge management systems from content management systems is
that they deal with information plus semantics, not with information alone (Riedl 2002).

Ontologies, adding the required semantics to vocabularies of concepts, may considerably improve
the classification and search paradigms. It is much easier to identify the right description tags
exploiting semantic relationships between ontology concepts, rather than looking up in a long list of
keywords provided by a metadata vocabulary. Also, ontologies may integrate different views of a
knowledge domain, enabling different users to reach the same concept going through different
semantic paths. An ontology, intended as a set of structured terms that describe some domain,
provides the skeletal structure for building a knowledge base (Swartout et al. 1996).

The centralized technological infrastructure obtained by combining a CMS with an ontology is still
weak from an organizational perspective because it has to face a distributed social form made by
communities that operate in different and dynamically changing contexts. Knowledge should be
autonomously managed where it is created and used. Each community should formalize its own
context and then create a mapping with the contexts of the other communities through social
interaction (Maier 2002). The process shall lead to the definition of a common ontology that is

1
The 7th European Conference on Knowledge Management

understood and accepted across the different contexts and can be used to classify the knowledge
repository.

2. Framework overview
A methodological and technological framework was set up with the aim to encourage the sharing of
information resources within research teams working in the domain of digital media systems and
applications. The objective was to provide an online toolset that could help to keep track of
information sources that were considered worthwhile for a subsequent reuse.

A CMS provided the basic infrastructure for collecting, annotating and retrieving information
resources. A set of ontology tools provided the support for ontology construction, resource
classification and semantic search.

The ontology described a very dynamic knowledge domain that, like many other information
technology topics, was far from being consolidated. A collaborative environment was provided for
building and maintaining ontologies through an evolutionary process that involved the participation
of all teams.

3. Methodology

3.1 Approach in terms of knowledge management strategies

Knowledge management practices are based on two fundamental strategies: the codification
strategy, consisting of making explicit the knowledge that is tacitly held by people, codifying it in
documents and making it available for a subsequent reuse, and the personalization strategy,
involving the direct transfer of tacit knowledge among people through socialization and personal
interaction (Hansen et al. 1999).

The knowledge management approach based on “communities of practices” represents a recent

evolution of the personalization strategy and is based on the consideration that knowledge cannot
be separated from the communities that create it, use it and transform it. In any type of knowledge
work people are required to personally interact and exchange experiences with other people, even
where technology provides a considerable support (Allee 2000).

Communities of practice contribute to creating a common language and context that can be shared
by community members. They also contribute to developing taxonomies within the common
repositories managed by community members where individuals could submit knowledge artefacts
that could be reused by others (Lesser et al. 2001).

The proposed framework is based on a mix of the two knowledge management strategies. The
people-to-document approach of the codification strategy is adopted in the CMS, that acts as a
common knowledge repository. The people-to-people approach of the codification strategy is
adopted by setting up a collaborative process, based on communities of practice, aimed at defining
an ontology matching the different operating contexts.

In figure 1 is described a case where two teams, working in different operating contexts, interact in
order to define a common ontology that is used to contextualize the repository of information
resources.

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 Maurizio Agelli and Felice Colucci

Community of Practice

OPERATING OPERATING
CONTEXT A CONTEXT B
Sharing of
operating contexts

ONTOLOGY
(codification
of a common
operating
context)
Classification of resources

Knowledge Repository

Figure 1: interacting with the knowledge repository from different operating contexts

3.2 The metadata schema

The choice of a suitable metadata schema is a fundamental step towards the specification of a
knowledge repository. Many metadata schemas exist, addressing specific application
requirements, however the Dublin Core (DC) metadata set, defined by the Dublin Core Metadata
Initiative (DCMI) has been chosen for the present work, for several reasons:
ƒ It is an open standard, adopted by W3C, and provides full interoperability with other
applications;
ƒ Its metadata attributes can be easily embedded in HTML/XHTML, allowing an easy detection by
search agents (Powell 2003)
ƒ Depending on specific needs, extensions and element refinements may be added to the
standard metadata set defined by DC.
DC also provides a set of encoding schemas that may be used to identify, e.g. through
vocabularies of terms, the possible values that metadata may assume. In the present work an
ontology-based encoding schema for the DC:subject metadata field is proposed.

3.3 The knowledge model

The metadata set should not only annotate information resources, but must also place them in the
context of a knowledge scheme. A knowledge scheme can be effectively represented by ontology,
i.e. by a formal and agreed description of a knowledge domain in terms of concepts and
relationships. Therefore, mapping information items to ontology concepts provides a homogeneous
view over the repository of information sources and allows identifying, through the ontology
network, new relations among resources and concepts.

Ontology can be seen as a collection of concepts (also called classes) and properties (also called
slots). Properties may describe relationships to other concepts. In particular, an inheritance
relationship (IsA or SubclassOf) allows the building of a hierarchical view of the ontology (i.e. a
taxonomy) that is particularly suitable to the knowledge classification task that is at the basis of the
present work.

The DC: subject metadata field maps information resources to domain concepts. The whole of
information resources and domain concepts is nothing but a knowledge base. Creating a
knowledge base involves adopting a knowledge model in order to achieve interoperability with
other knowledge representation systems and to enable knowledge sharing and reuse.

Many ontology representation languages exist, however, in the scope of the present work, the RDF
knowledge model has been considered. RDF (Resource Description Framework) is a knowledge
representation language defined by W3C with the aim of enabling software agents to directly
process web resources (W3C 2006). The RDF knowledge model is based on a simple predicate
logic that defines relationships between resources. The RDF Schema (RDFS), that is an integral

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part of the RDF recommendation, allows defining application-specific vocabularies of concepts

(classes) that can be used by RDF to describe the knowledge items (instances). RDFS classes can
be hierarchically organized using the rdfs:subClassOf relationship. Moreover, since a class may
have more than one parent, a concept can be located going through different inheritance paths.
This is an important aspect, because it allows integrating in a unique ontology different views of the
same knowledge domain. The only main concern with RDFS is the impossibility of modelling
axioms. However, this potentially serious limitation of RDF can be overcome either by adding extra
application layers on top of RDFS or by modelling axioms as RDF objects (Staab et al. 2002).

3.4 User roles and workflows

Creating and using an ontology-based repository of information resources involves different kinds
of activities, which are described hereafter.

3.4.1 Ontology editing

Creating an ontology that encodes a given knowledge domain is the first activity required to
build the repository. It is quite a long and laborious task even for domain experts and it should
rely on a specific tool (ontology editor) that facilitates the design, the construction and the
consistency check of the ontology. Also, using a version control system is highly recommended
in order to keep track of the whole ontology development roadmap.

3.4.2 Knowledge acquisition

As soon as a first version of the ontology is available, the knowledge acquisition process can
start. Knowledge acquisition is essentially a collaborative task carried out by a community of
users that submit relevant information items to the repository, classifying them on the basis of
the available ontology concepts.

3.4.3 Knowledge validation

Trusted users prior to making them available for knowledge retrieval should validate all
submitted information items. The validation involves both an evaluation of the resource itself
and a full review of the associated metadata.

3.4.4 Knowledge retrieval

Knowledge processing encompasses all activities concerning the utilization of the repository,
such as semantic search, automatic generation of reports, etc.

3.4.5 Ontology maintenance

Ontology maintenance is assumed to go on throughout the entire lifetime of the knowledge
repository and relies on the contribution of all users. In the case that the users operate in
heterogeneous contexts, the community of practice paradigm may be useful to encourage
knowledge sharing leading to the creation of a common ontology. The ontology maintenance
process does not involve direct modifications of the ontology, instead it produces a feedback
directed to the people in charge of editing the ontology. Ontology maintenance should not
prevent the normal usage of the repository.
A minimal set of user classes has been identified and is reported in table 1. In figure 2 is depicted
the interaction between the users and the main functional blocks.
Table 1: User classes and roles
User roles
User Class knowledge knowledge knowledge ontology ontology
acquisition retrieval validation maintainance editing
Domain Expert √ √ √ √ √
Trusted User √ √ √ √
Generic User √ √

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 Maurizio Agelli and Felice Colucci

DOMAIN ONTOLOGY

knowledge knowledge
acquisition acquisition

knowledge KNOWLEDGE knowledge

validation REPOSITORY validation

Ontology knowledge knowledge

Editor retrieval retrieval

Domain Generic Trusted Generic Generic Trusted Generic

Experts User User User User User User

Team A Team B

Community of Practice

Figure 2: User classes and functional blocks

Workflow management, which is supported by most of the CMS, should be tailored according to
the possible states a knowledge item may assume, as shown in figure 3. Any knowledge retrieval
activity may only access knowledge items that are in the “valid” state.
publish / retrieve

Valid

validate

validate
submit a
new resource review
New
publish / retrieve

Under
modify Review
metadata
modify remove
metadata
Deleted

Figure 3: Possible states of a knowledge item

4. Key issues

4.1 Encouraging knowledge acquisition

The intrinsic value of the repository is strictly correlated to the amount and quality of the information
resources it contains. The possibility to submit new resources in a quick and easy way as soon as
the users evaluate them is vital. If the knowledge acquisition phase involves laborious and
unfriendly tasks, users will be reluctant to add new resources and the repository will never reach its
critical mass in a reasonable time. Therefore, only a minimal set of DC metadata elements should
be required to be provided when a new resource is added to the repository, while the remaining
metadata may be added later on. The user should always be able to switch to a full metadata entry
form, containing all metadata fields.

The use of automatic metadata detection tools is also recommended. However, in order to avoid
affecting the performance of knowledge acquisition, these tools should operate in background.

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 The 7th European Conference on Knowledge Management

Finally, it is important that the choice of DC:subject metadata term is done using techniques that
allow an easy identification of closely related concepts (e.g. using a taxonomy navigation tool).

4.2 Dealing with ontology evolution

Ontologies represent a point of reference in the attempt to structure information resources within an
agreed knowledge scheme. However, ontologies are not necessarily static and may generally
evolve for different reasons, e.g. because they reflect knowledge schemes that are by nature
dynamic, or because the more skilled the domain experts become, the more thoroughly ontologies
are detailed. A big challenge in the design of an ontology-based CMS is the ability to cope with
ontology changes that may occur during the lifetime of the system (Stojanovic et al. 2002).

The main issue in managing ontologies changes is to avoid invalidating any resources already
present in the repository. Another concern is how to update the knowledge base after some parts
of the ontology have been improved. The possible operations that involve ontology modifications
are addressed by the following cases:

4.2.1 Adding a new class.

Adding new classes is a common practice that occurs during ontology maintenance, e.g.
because some concepts need a more detailed classification or because the scope of the
domain has slightly changed. Adding a new class also involves specifying relations with
other classes, in particular its position in the taxonomy tree (i.e. identifying the super-
classes the new class inherits from).
After a new class has been added to the ontology, there is a possibility that knowledge
instances related to parents or siblings of that class may be better reclassified. These
instances remain valid but should be marked as “pending for review”, in order to highlight
them in a future revision process.

4.2.2 Removing a class.

Removing a class is a potentially dangerous operation that may cause inconsistencies in
the knowledge base. For example, removing a class that is referred by some knowledge
instances ends up in an inconsistent status of the knowledge base. Therefore, removing a
class of the ontology can be allowed only if that class is no longer referred by any
knowledge instance. In most cases it is preferable to mark the class as obsolete.

4.2.3 Making a class obsolete.

An obsolete class cannot be used anymore to index new knowledge instances. Existing
instances that are related to obsolete classes are marked as ‘pending for review’.

4.2.4 Modifying semantics.

Modifications in the semantics (e.g. altering the taxonomy tree) can be allowed at any time,
since it does not cause inconsistencies in existing instances. However, the same
considerations made for adding a new class shall be applicable in this case too.

4.2.5 Renaming a class.

Renaming a class should not cause particular problems as long as it maintains a unique
identifier in the context of the knowledge base.

The design of a strategy for managing the ontology evolution should consider the above described
cases. As a general rule, every time a new version of the ontology is produced it should be verified
whether the new ontology version causes incongruences in the knowledge base. If so, an
explanatory report should be produced in order to allow domain experts to build a correct version of
the ontology.

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 Maurizio Agelli and Felice Colucci

5. Prototype application framework

5.1 General architecture

A prototype application framework, named ORKO (Ontology-based Repository of Knowledge
Objects), was developed with the aim of (1) experimenting and validating the solutions proposed in
the present work; (2) highlighting unexpected issues; (3) laying the foundations of the prototype
evolution.

The entire prototype, whose building blocks are outlined in figure 4, was totally developed using
open source components. In particular, Plone (Plone 2006), a CMS based on Zope application
server, was chosen because it provided full support for workflow management, creation of custom
content types and web publishing. Protégé (Protégé 2006), a knowledge based framework written
in Java, was adopted as ontology editor. Ontologies were exported to an ontology server and made
available remotely through XML-RPC web services.

Although Protégé already includes all required tools to build a knowledge base, it was originally
conceived as a centralized application. A web-based distributed paradigm was definitely more
appropriate for the ORKO prototype, whose primary purpose was to serve communities. Therefore
it was preferred to rely on a traditional CMS for storing, searching and publishing knowledge items,
using Protégé only for the tasks related to ontology creation and maintenance.

The ontology server was designed to provide access to different versions of the ontology. In fact, it
may happen that the ontology version in use by the CMS is not the latest available, owing to
inconsistencies that have arisen during the evolution of the ontology itself. The trusted users that
are in charge of validating the knowledge repository shall be able to switch to a new version of the
ontology only upon evaluating the actions that such an upgrade involves.

The ontology maintenance process was supported by Zwiki (Zwiki 2006), a wiki engine based on
Zope and fully interoperable with Plone, that provided an informal discussion tool within the
community of practice for sharing ideas about ontology evolution, enhancements and defect fixing.

Wiki

XML-RPC
Ontology RDFS Ontology
CMS Server
(Plone) (written
Editor
(Protégé)
in Java)
users domain
experts

Version
Control
DB (CVS)

Figure 4: General architecture of the ORKO prototype

A sample screenshot of the ORKO prototype, related to the knowledge acquisition phase, is shown
in figure 5.

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The 7th European Conference on Knowledge Management

Figure 5: sample screenshot of the prototype application

6. Evaluation and implication for future work

The ORKO prototype was tested for a 10-month period by two small teams working on a joint
research project related to multimedia content delivery. At the end of this period, about 1200
resource items were available in the repository and about 550 classes made up the ontology.
Approximately 85% of the repository items were online resources. During the evaluation period
many improvements were made in the prototype upon users’ suggestions.

Although the ORKO prototype showed to be a profitable tool for sharing knowledge within a small
research community, a number of problems were identified. Firstly, in spite of the enhancements
made during the test phase, usability was still an important issue and users were not encouraged
to actively participate in the knowledge acquisition process. In particular, the necessity to navigate
through a taxonomy tree in order to find the required description tags (rather then entering directly
some text) was reported as a disadvantage by most skilled people. Secondly, the ontology
maintenance process lacked a real involvement of users, who preferred in many cases to produce
an imprecise classification of the resources rather than undertake a discussion within the
community of practice about the required ontology enhancements. Finally, the need to validate
every resource item by a trusted user could raise scalability issues as the number of resources
increases.

Future work should look into a different approach to overcoming the above described issues. An
interesting possibility could be adopting a collaborative classification system based on freely
chosen tags. The ontology would be no longer visible to the users, however it would still play an
important role in background, mapping the many user-generated tags to a formal representation of
a common knowledge domain. Moreover, since these tags can also contribute to improving and
extending the ontology, all users would be implicitly involved in the ontology maintenance process.

Acknowledgements
(1) “Driving Innovative Exploits for the Sardinian Information Society” (DIESIS) project funded by
the European Regional Development Fund (ERDF); (2) "Distributed Architecture for Semantic
Search and Personalized Content Delivery” project funded by the Italian Ministry of Education,
University and Research (MIUR).

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 Maurizio Agelli and Felice Colucci

References
Allee, V. (2000) “Knowledge Networks and Communities of Practice”, OD Practictioner, Vol.32,
No.4, [online], http://www.odnetwork.org/odponline/vol32n4/knowledgenets.html
DCMI (2006) “Dublin Core Metadata Initiative Organization”, [online], Dublin Core Metadata
Initiative, http://dublincore.org/
Hansen, M.T., Nohria, N., and Tierney, T. (1999) “What’s your strategy for managing knowledge?”,
Harvard Business Review, Vol. 77, No. 2, pp106-116
Lesser, E.L., and Storck, J. (2001) “Communities of Practice and organizational performance”, IBM
Systems Journal, Vol. 40, No. 4, pp831-841
Maier, R. (2002) “State-of-Practice of Knowledge Management Systems: Results of an Empirical
Study”, Revue des Organisations Suisses d’Informatique, No. 1, pp14-29.
Powell, A. (2003) “Expressing Dublin Core in HTML/XHTML meta and link elements”, [online],
DCMI, http://dublincore.org/documents/dcq-html/
Plone (2006) “Plone: A user-friendly and powerful open source Content Management System”.
[online], Plone Foundation, http://plone.org
Protégé (2006) “The Protégé Project”, [online], Stanford Medical Informatics,
http://protege.stanford.edu
Riedl, R. (2002) “Some Critical Remarks in Favour of IT-based Knowledge Management”, Revue
des Organisations Suisses d’Informatique, No. 1, pp44-49.
Staab, S., Erdmann, M., Maedche, A., and Decker, S. (2000) “An extensible approach for Modeling
Ontologies in RDF(S)”, AIFB, University of Karlsruhe, [online], http://www.aifb.uni-
karlsruhe.de/WBS/Publ/2001/AEAfM_sstetal_2001.pdf
Stojanovic, L., Stojanovic, and N., Handshuh, S. (2002) “Evolution of the Metadata in the Ontology-
based Knowledge Management Systems”, [online], University of Karlsruhe,
http://www.aifb.uni-karlsruhe.de/WBS/sha/papers/evoMeta.pdf
Swartout, B., Patil, R., Knight, K., and Russ, T. (1996) “Toward distributed use of large-scale
ontologies”, Proceedings of the Tenth Knowledge Acquisition for Knowledge-Based
Systems Workshop, pp32.1-32.19
W3C (2006) The World Wide Web Consortium Organisation, [online], The World Wide Web
Consortium, http://www.w3.org
Zwiki (2006) “A powerful Zope 2-based wiki engine”, [online], Joyful Systems, http://zwiki.org

9
Building up Knowledge like a “Rubik Cube”
Marko Anzelak, Gabriele Frankl and Wolfgang Ebner
Alpen-Adria University of Klagenfurt, Austria
[email protected]
[email protected]
[email protected]
Abstract: As the amount and the complexity of available information steadily rises, the user’s demand for
information gets more and more specific. In most cases, the user queries about data require not only a subset
of stored data. Very often complex relationships between different data, sometimes derived from different
applications, are needed. At the same time it is very important that users should not be confronted with
several front ends to avoid the waste of cognitive resources. To focus the user’s attention on important content
it is necessary to provide uniform user interfaces, which are adjusted to their requirements. Complex search
algorithm and data queries, which operate on databases of different applications, should not bother the user.

Additionally, it is necessary that important data and information are continuously collected and stored in the
system. At the same time entry masks hide a complexity of demons. To satisfy those requirements it is
essential to have a system architecture that enables the user to retrieve the data easily and at any time
without much of an effort and with exact results. Using the experience that we were able to gain through the
implementation of knowledge management systems in the paper industry in former projects, we elaborated on
a concept, which we shall introduce in this paper. The conceptual architecture is based on the “Rubik cube“
and allows the user to gain different and flexible views of the same data. In the field of knowledge
management and e-Learning, these perspectives correspond to individual user requirements like knowledge
collection, knowledge transfer, knowledge retrieval and also knowledge acquisition and learning.

Keywords: Knowledge management, e-Learning, rubik cube, software-architecture, information

overload, user requirements.

1. Preface
For some years now there has been concern about an overflow of information in different areas, for
example in media and communication studies, economics, IT, brain research, sociology, pedagogy
and psychology (Jochum 1999, Welsch 2000, Borchers 1998). What we often forget is that we are
always confronted with an overflow of information: If we were aware of and attempted to analyse all
the information surrounding us, it would. certainly be problematic. For example, working on a
computer, we would have to look at the monitor but we would also be distracted by things
happening directly outside the office, noticing, for example, whether a fly is walking across the
window-pane, or in which direction someone might be passing. We would become aware of every
noise in our office, such as the electrical buzz from lights, the noise we make when typing, the
sound of passing cars, people chatting in rooms close by or outside the building. We would notice
smells are in the air, the contact of our fingertips with the keyboard, the sensation of clothes on our
skin, the feeling of our forearms on the table, or the physical contact of our thighs on the chair and
our feet on the floor. Our brains would have to evaluate which temperature had been reached,
which kind of light source influences us and to what degree, whether we are hungry or thirsty, what
our bodies feel like, whether our muscles are flexed, and so on. At the same time we would have to
concentrate on our proper work, which, considering the processing capacity of our brains is almost
impossible.

We do not get lost in this overflow of information because we have found ways of concentrating on
a particular section of reality if required, so-called selective perception (Anderson 1985/2001). This
makes it possible to deal with a large amount of information, which has always been important to
survival and is still important. What is needed, are strategies to store this information meaningfully,
to supervise it, to interrogate it methodically, to manage it skilfully so that it can be used efficiently.
Strategies evolved in the natural world can thus be used in other areas.

The negative competence (Röll 2003) is missing in the electronic section because the mass of
information always increases. So it is important to find more strategies, which will help us find our
way through the thicket of information. One of our proven strategies will be introduced in this paper.

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 Marko Anzelak, Gabriele Frankl and Wolfgang Ebner

2. Specific requirements of production companies to a knowledge

management system
As in other areas, the production field investigated is marked with an increase in complexity. Some
factors that have led to more variables being considered in the production processes, which
become more complicate, are changing markets, a low life-cycle of products, more specific as well
as higher customer demands on products. A difficulty arises for the individual user of the machines
in the production process: on the one hand the operator has to provide more knowledge and
consider more information, on the other hand he has to make decisions in a limited amount of time.

The correct information must be readily and freely available if there are incidents with the machine
so that the employee can act promptly and efficiently. In addition to basic knowledge, a user needs
access to external and collective shared information, and advice on how to use it.

The flow of information among peers enables an exchange of experiences and the passing on
thereof widens and actualises a shared knowledge base. Informal discourse is an ideal method for
sharing knowledge but there are few opportunities for staff interaction, especially in manufacturing
companies where staffing levels are often low. The opportunity for informal, interpersonal
exchange is made more difficult when there is shift work because the exchange of information must
occur during the changeover, when the following shift must be informed about incidents during the
preceding shift. This is problematic because the employees have to stay on after working hours to
summarise their work for colleagues who are starting their shift. It is possible then that knowledge
is lost when the entire course of the shift cannot be made explicit.

A situation can become critical when information is passed from one shift to the other without
personal contact among workers of the early morning shift and the employees of the night shift.
Precious explicit knowledge, which is needed for production to run smoothly, is thus lost forever.
In this way the burden on the individual worker increases, as well as on the company, in the sense
of an organisation learning to produce efficiently and remain competitive in order to survive in the
face of global competition.

2.1 Source, complexity and combination of data versus user requirements

In the company we analysed the data come from different data sources, as explained in chapter
3.2. There is a data warehouse and a process control system, which records the working history of
different machines. In a text based data bank – the AS400 – different maintenance data are stored
and supervised. The third kind of data sources are shared drives where files, created and
administered by the employees, are stored. These files are almost exclusively Microsoft Office files.

Figure 1: Schematic presentation of the data sources

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The 7th European Conference on Knowledge Management

The development that takes place in the field of Knowledge Management Systems (e.g. the e-
learning component) should help to prepare relevant knowledge for a production company.

The shared drives are important devices and give the employees of different departments access
to data and information fundamental to their work. Furthermore, there is the potential for
interchanging data with other locations of this globally operating company. A problem is that these
variable data sources might have variable data types from variable tables of databases and “real“
users. Their specific requirements and individual computer literacy are confronted with these data
types and data sources. Obviously the use of different systems requires that the user become
familiar with different user interfaces and different operating instructions and data structures.

All too often such user requirements are not taken seriously. As a result, expensive and laborious
systems don’t achieve the de facto user requirements. This leads to an absence of acceptance on
the part of the employees or difficult handling and consequently the reduced usage of the system.
Most operators in manufacturing companies have achieved low computer literacy; they are not
familiar with touch systems and are afraid of applications with high complexity.

This fear strengthens if the abstract-formal logic of these systems is based on abstract and
technical logic, which doesn’t correspond with the user’s habitual way of thinking. Thus, these
systems are not transparent, but are irreproducible and unpredictable to the user and as a result
the motivation for use is diminished.

On the one hand the amount of information an individual operator has to process and consider
rises but on the other hand, the skills to manage and use it for profitability are missing. First-
generation document management systems and information systems that offer merely access to
information or documents are not able to find remedy to handle the information. Mostly marketed
as knowledge management systems, it is easy to see that they are merely slightly extended
versions of document management systems, which only offer features such as data storage, data
management and simple data output. These static systems, where data has to be treated directly,
were not able to produce what is required of Knowledge Management.

Beyond this, user interfaces are created without including special user requirements. The existence
of data or information pools is not adequate, the information pools must have a reasonable
structure because with a logical structure it is much easier for end-users to work with the data.

To bridge the gap between the system and user requirements, it is necessary to integrate future
users into the development of the system. The way in which we tried to integrate the users is
described in the next chapter.

2.2 Method and realisation

During each step of the development of our knowledge management system and the extended e-
learning module for Mondi Packaging Frantschach GmbH, employees were largely involved in the
process of making important decisions because they were the future users of the system. Their
requirements were analysed in detail with regard to special conditions of employment of
manufacturing companies.

At the beginning of our project, these user requirements were collected with the help of different
questionnaires. After that, we conducted interviews and had intensive talks with end-users and
stakeholders and as a result we implemented a draft prototype. This prototype came up for
discussion and during an iterative process it was improved using the results of these discussions
as input. During the preparatory training with the application, there were several feedback units to
give users a chance to play a part in the system design. At the same time the users’ behaviour and
active handling were observed from a distance in order to note discrepancies in the interviews
mentioned above.

After the system was set up at the company, we gave employees the opportunity to make
suggestions for improvement. During the whole development process the users´ doubts were taken

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 Marko Anzelak, Gabriele Frankl and Wolfgang Ebner

seriously, we integrated their proposals for improvement into the system or they received an
explanatory statement as to why it was not advantageous or possible to implement this
requirement. This process might to be costly but it proves worthwhile. Mostly, the end-users do not
know the possibilities or limitations of knowledge management and e-learning systems and
therefore do not know what is or is not feasible.

This may make it difficult for them to articulate their requirements and wishes. This was, however,
made possible with the help of the prototype. The prototype was used in discussions and helped us
to find new ideas as well as to work out what was necessary or useless, and end-users could see
that their point of view was taken seriously. End-users thus are not forced to use a new system that
was developed by management without their own requirement being considered. The user is a part
of the development process of the application and is willing to use the system because individual
requirements are being met and the system is adapted to individual skills and knowledge. This is
perhaps the most important precondition to managing knowledge and activating learning
processes. Users are motivated because they work with an application that is partly their own
creation. Also, the content of the system is not abstract and inapplicable but rather derived from a
theory based on facts, which are practical and immediately convertible. Importantly, the opportunity
to introduce users´ own expertise, to share their own knowledge with that of colleagues and to
improve the system encourages the acceptance of knowledge management and e-learning. This,
in turn, is associated with employees´ positive feelings and pride in the system (Frankl 2006).

According to (Mandl/Huber 1983), emotions affect the content of cognitive processes and the
capacity to remember. Negative emotions such as indifference, boredom or disinterest have a
detrimental impact on cognitive ability and performance, whereas positive emotions such as fun or
a sense of achievement improve the performance of the user.

2.3 Conclusion
To find a balance between a continuously growing and heterogeneous information pool and the
need to lighten the cognitive load of the user, the use of homogenous front ends is essential – in
terms of both navigation and operation logic. The vigilance of the user can thus be directed toward
important contents. The closer the user is integrated into the process of system development, the
more successful its implementation will be.

3. System architecture and Rubik cube

3.1 Philosophy of the Rubik cube

Erno Rubik was a lecturer in the Department of Interior Design at the Academy of Applied Arts and
Crafts in Budapest. He was thrilled by geometry, in construction and in combinations of forms and
material when he developed a first working prototype of his Cube in 1974. The idea was to improve
the stereoscopic imaginative faculty of his students, and in this he succeeded with the Rubik Cube.

Rubik developed the three-dimensional colourful cube whose sides at the starting point show a
different colour. Each side consists of nine smaller cubes, all of which can be rotated. If one “layer”
of the cube is moved, more sides change because all pieces of the cube are connected through an
ingenious mechanism. The individual layers of the cube can be manipulated vertically and
horizontally so that 43.252.003.274.489.856.000 transformations of the Rubik Cube are possible
(Puzzle-Shop online 2006). This is an order of magnitude, which outstripped all puzzles in the
market.

Although the cube is mentally extremely demanding, Rubik’s students and their friends were very
interested and the Cube was popular. This popularity led Erno Rubik to take out a patent for the
cube in 1975. In 1978, without promotion or publicity, the Cube slowly gained wider popularity with
youths, in homes, playgrounds and schools” (Rubik online 2006). In June 1979 David Singmaster,
an English mathematician, wrote an article in Scientific American, with a cover picture by Douglas
Hotstadter, an acknowledged authority in the field of Recreational Mathematics. This article brought
the Cube to the attention of academic circles world wide and represented a milestone in its history:.

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The 7th European Conference on Knowledge Management

In September 1979 a deal was signed with Ideal Toys to bring the Magic Cube to the West. The
cube appeared at the Toy Fairs of London, Paris, Nuremberg and New York in January/February,
1980 and became “Toy of the Year” in England. Demand for the cube then outstripped supply. In
1981 Rubik Cube was included in the design collection of the Museum of Modern Arts in New York
(Rubik online 2006).

3.2 Systemdesign of "knowledge for production“

Our Knowledge Management System “Knowledge for Production”, which consists of the modules
described in chapter 3.2, is a “coherence-network”. This “coherence-network” is composed of
variable data that are shown to the end user in a consistent and intuitive way. The network is a
three dimensional combination of data and every user can retrieve specific and customised
information needed for learning. Schematically, the structure of our system is similar to a Rubik
Cube because there are user-defined views on data and information. Arranging the parts of the
cube can change these views. The generation of views and combination of data can only be
achieved through a constant matching of meta-information. The user builds up this meta-
information in part automatically and in part. This means that the user can take control of the actual
data. Most important is the manually read in meta-information. Important giving an event can save
information a chosen name and this information would not be stored with pure data storage as in
the process control system. Another way of combining data is achieved by three possible data-
allocations - a plant-view, a process-view and a profile-view. Our approach predominantly uses a
vertical combination of data inside the modules. A horizontal combination of data is built up by the
different modules and by the departments of the company. The primary sorting of data is done by
the plant-view. The plant-view is displayed in a navigation tree and is a copy of the real working
environment. This is important because the user detects the structure of the plant in the system
which makes it easier to use.. However, the two other views, the process-view and the profile-view,
can also be used to sort the data.

The specific dimensions of the cube are only partly obvious for end-users because the front-end is
used to abstract from the structures and processes that run in the background. The end-user is
able to gain active access on the first and the second dimension of the cube (see Figure 2)
because it is possible to navigate, through the user interface, to the components and subject-areas
that are managed by the first and the second dimension.

As can be seen from Figure 2: Schematic diagram of a “Knowledge-Rubik Cube”, the first
dimension of the “InfoCube” corresponds to the different departments of the company that work
with the knowledge management system. In large part this is information from the departments
quality assurance, paper mill and maintenance because they are closely connected with each
other.

The second dimension shows the three modules of the system that can be used and managed
through a frontend. These modules are named Electronic Shift Protocol ESP, Electronic Shift
Support ESS and Extended Search, in short E-Search together with an e-learning module that is
already under way.

The third dimension comprises the three data sources and databases - IBM AS400, an Oracle
database and a data warehouse. The third dimension is the one that cannot directly be
manipulated by the user because depending on user interactions, the system itself chooses
adequate data source and allocates the information.

Figure 2: Schematic diagram of a “Knowledge-Rubik Cube” shows that there is a direct connection
between the several parts of the cube. From this we get cooperation and interaction among the
several parts and the whole system. With only few mouse-clicks, each user may arrange his or her
own view of the “InfoCube” by choosing the relevant and important parameters. The user has the
opportunity to select a concrete goal or “knowledge-object” or only “play” with the system. These
are shown in more detail in chapter 3.3.2 „Search strategies, playful learning and Serendipity“.

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 Marko Anzelak, Gabriele Frankl and Wolfgang Ebner

ESP Electronic Shift RePort

ESS Electronic Shift Support
E-Search Extended Search
Q-Assurance Quality-Assurance

Figure 2: Schematic presentation of a “Knowledge-Rubik Cube”

Clearly our cube consists of a larger number of parts (see Figure 2) because there are more
departments in the company and the several parts of the cube are therefore split up into smaller
cubes. This means that a user not only has access to all the information of the department “paper
mill” but also to information and knowledge of a special area inside the “paper mill”. These
subdivisions are very detailed because the user should, if necessary, be able to retrieve only the
relevant information for a small field, without information that is not of interest or is already known.
Thus an “overkill” of information should be avoided. The subdivisions are very small so that the
user is able to get information even for a single component of a machine. This division has several
advantages but also a disadvantage. That is, if a user creates a new event in the system, it is
necessary to make an exact allocation to a part of a machine. The more subdivisions there are, the
more time is needed to make this allocation but with the rising experience of the user this
disadvantage will diminish.

3.3 Characteristics of the Rubik cube and their applicability to knowledge

management systems

3.3.1 Flexibility
The aim of the Rubik Cube is to return the cube to its original state, which means six unicoloured
sides, and there are 43.252.003.274.489.856.000 ways in which this can be achieved (Puzzle-
Shop online 2006). There are other aims in Knowledge Management and e-learning. The pieces of

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the cube can be arranged according to need in such a way that there exist
43.252.003.274.489.856.000 flexible views of the data pool The flexibility of this architecture is
multifaceted and powerful and this is precisely what is needed for applications that aim to make
such complex constructions as Knowledge Management and learning processes easier, or even
make them possible.

A possibility, to admit different sights on linked data stock, exists in the use of reports. These have
limitations because they are defined statically and are not readily adaptable. For some queries
these reports are appropriate, such as for daily production, setup time, change of settings, or times
of idling, and discrepancies of nominal value. They do not, however, offer flexibility.

A certain degree of flexibility is offered with the known OLAP-Cube – probably a reason for the
success of this application, though the possible data combinations are pre-defined. In addition, the
OLAP cube is constructed such that only linear data combinations are possible and make sense.
As can be seen from Figure 3, a linear comparison of the data makes sense, for example the
contrast of the paragraph of Rootbeer in the first quarter in Chicago and Dallas. Not useful will be a
non-linear comparison of the paragraph of Rootbeer in the first quarter of Chicago and of Lemon
Line in the second quarter in New York.

Figure 3: Schematic presentation of an OLAP-Cube. (IBM 2006)

The Cube-model, by contrast, is based on the architecture of the Knowledge Management System
"Knowledge for Production“. The individual pieces of the cube – referring to the philosophy of the
Rubik Cube (cf. chapter 3.1.) - can be turned and combined individually.

It should be noted that the data combination is pre-defined, as far as the system architecture is pre-
defined, that is determined. Nonetheless, all variations of the cube model are in principle possible
and make sense.

This is the reason why non-linear data combinations make sense – for example, it can be quite
informative to compare the data of the electronic shift protocol (ESP) of the maintenance
department with data of the electronic shift Support (ESS) of the paper-mill.

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 Marko Anzelak, Gabriele Frankl and Wolfgang Ebner

The Best Practice description of ESS could be optimised through information of maintenance,
which offers conclusions for optimisation possibilities in the production process. Another flexibility
are user queries that were not planned at the conception stage of the system. This is a powerful
way to access and combine information, which opens enormous new knowledge potentials.

However, in order to use these potentials, appropriate strategies must be in place and these will be
described in the next chapter.

3.3.2 Search strategies, playful learning and serendipity

There are more opportunities for information retrieval in an information system. In the first scenario,
the user knows the aim pursued and the knowledge object searched, as well as the specific area of
the searched information.

The search strategy is target-directed, while it tries to locate the information as quickly as possible.
The way to the information is relatively well-known. In the second scenario of “Information
retrieval”, the user does not know exactly what he is searching.

An exact definition or description of the knowledge object is not possible. If he or she sees it, it will
be perceived and the search will be terminated. The search strategy is led by hypotheses about
where the searched information might be. These presumptions are either confirmed or corrected
until the search is successful.

In the third scenario, the finding of information happens incidentally, which comes close to
“Serendipity”. This unforeseeable, incidental, pleasant but unexpected information acquisition we
would like to direct our attention to – we would like to thank Mr. DI Harald Semmelrock for the
inspiration in a discourse on 4 May 2006. As the exact aim of information finding in form of
knowledge object is not known, a conscious strategy cannot be developed and followed. Here,
knowledge acquisition is more like a floating, a playful approach that is fun and rewarding if useful
information is found unexpectedly. This reward motivates engagement with the system and
information search – the best precondition for learning and knowledge acquisition are thus provided
(Huizinga 1938/1997).

In addition, Toms (Toms 2000) points to studies that explore the effect of Serendipity. For the first
two types of “Information retrieval” the aim of the search is more or less known, which can lead to a
narrow mindedness.

By contrast, “Serendipity” opens up all directions. That means the user considers themes, which he
or she has not considered before or at least not deliberately. This allows synergies to arise, it
brings new ideas and ‘discoveries” that can lead to important improvements in a company, and
these should be supported and promoted by the architecture of our Knowledge Management
System. Evidence for its utility and success comes from current experience protocols of users, as
well as from employees of the paper machine and even the management, who appreciate the new
access to information and the resulting “aha-events”.

3.3.2 Illumination of coherence

The Rubik Cube is a perfect example for recognising continuity (cf. chapter 3.1). The Knowledge
Management Systems, which builds up analogies for the Rubik Cube, can be used for users to
impart precious continuity knowledge. This is very important for production processes where a
smooth course is only possible if the machine user is familiar with processes that take place before
and after, and where the user knows their interactions.

The employees of Mondi Packaging Frantschach GmbH mentioned in the interviews that their main
concern is to build up continuity knowledge. “Knowledge For Production” is ideally suited to fulfil
this requirement. Every Best Practice Article and each learning unit is provided with meta data for
“Topics in connection with”.

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Moreover, basic knowledge and interactions as well as continuities with pre- and postliminary
processes are illuminated. This was the first step the end user welcomed that and that was
transferred into workday routines.

4. Summary and future directions

The above provided an introduction to system design, which was derived from the Rubik Cube, and
was initiated by the Mondi Packaging Frantschach GmbH with great success. The determining
factor for that success was the appropriate description of connections in paper production, and also
the linking of theoretical and relevant practical knowledge, which is gained from user feedback. At
present the extension of Knowledge Management Systems through an e-Learning component is in
process.

For further development in the near future stronger integration of communicative tools is planned.
For example, to foster the exchange of experiences between old and young employees, there
should be access to opportunities for communication and for discourse about machines. In
addition, more data should be integrated into the system, for example. Own company Data
Warehouse. This would optimise the homogeneity of the operation system and the end user
interface development. . There is furthermore the opportunity for exchange of available explicit
knowledge among various company sites. The challenge thus will be to extend the Rubik
Knowledge-Cube to include a level of a very interesting cultural dimension. The aim of this already
started and further planned expansion is in line with the philosophy of Erno Rubik, and includes
further development, improvement and adaptation to new demands, in brief, the development of
Knowledge Management Systems to include new cube levels. This will enable and open up new
dimensions of experiences.

References
Anderson, J. R. (1985/2001) Kognitive Psychologie. Heidelberg (et al.): Spektrum, Akad. Verlag,
original: Cognitive sychology and its implications, 2. ed., New York: Freeman, 1985.
Borchers, A., Herlocker, J., Konstan, J., Riedl, J. (1998) Gaining up on Information overload,
Computer, Volume 31, Issue 4, April 1998 Page(s):106 - 108
Frankl, G. (2006) eUsability. Emergente Usability und Accessibility im Knowledge Management
und eLearning, in print
Huizinga, J. (1938/1997) Homo ludens: vom Ursprung der Kultur im Spiel, reprint, Reinbek bei
Hamburg: Rowohlt.
Jochum, M. (1999) Wissenschaftswissen und Medienwissen oder: die Virtualität des Wissens,
Innsbruck, Wien: Studien-Verlag. Hrsg. Vom Senatsarbeitskreis für Wissenschaft und
Verantwortlichkeit
Mandl, H., Huber, G. L. (1983) Emotion und Kognition, München [et al.]: Urban & Schwarzenberg.
Röll, F. J. (2003) Pädagogik der Navigation: selbstgesteuertes Lernen durch Neue Medien,
München: kopaed-Verlag
Toms, E. (2000) Serendipitous Information Retrieval, Proceedings of the First DELOS Network of
Excellence Workshop on Information Seeking, Searching and Querying in Digital Libraries,
Zurich, Switzerland: European Research Consortium for Informatics and Mathematics.
Welsch, J. (2000) Globalisierung, neue Technologien und regionale Qualifizierungspolitik: welche
Regionen sind die “Gewinner der Informationsgesellschaft?”. Marburg: Metropolis-Verlag
für Ökonomie, Ge. U. Politik.
Online- Sources
Puzzle-Shop online, 2006
http://www.puzzle-shop.de/loesung.html, May 2006
Rubik online, 2006
www.rubiks.com, May 2006
IBM, 2006
www-
306.ibm.com/software/data/db2/db2olap/docs/v82docs/miner82/omugtfrm.htm?howitworks.
htm, May 2006

18
Innovation Focus and Middle-up-down Management
Model: Empirical Evidence
Nekane Aramburu, Josune Sáenz and Olga Rivera
ESTE School of Management, University of Deusto, San Sebastián, Spain
[email protected]
[email protected]
[email protected]

Abstract: This paper is aimed at measuring to what extent manufacturing companies from the Basque Region
(Spain) which place a greater emphasis on innovation have adapted their management context consistently,
and in accordance with the middle-up-down management model put forward by Nonaka and Takeuchi (1995),
and Nonaka, Toyama, and Byosière (2003). Moreover, the paper explores whether the degree of adoption of
the aforementioned model is influenced by factors such as company size or technological level.

Keywords: Knowledge creation; knowledge sharing; innovation; management systems; manufacturing firms;
Spain

1. Conceptual framework

1.1 Catalysing factors in knowledge generation and innovation processes

Assuming that the capacity of organizations to innovate lies in their capacity to generate new
knowledge (Nonaka, and Takeuchi, 1995; Nonaka, Toyama, and Byosière, 2003), social interaction
among individuals and groups constitutes a key element in this process. In accordance with the
aforementioned authors, organizational knowledge is generated dynamically by means of social
interaction among individuals and groups, both those belonging to the same organization and
different ones.

To manage this process effectively, conventional top-down and bottom-up management models
are not valid (Nonaka, and Takeuchi, 1995), due to the fact that such models make it difficult for
individuals and groups from different organizational levels to interact with each other, thus
preventing the exchange of both tacit and explicit knowledge, as well as that of knowledge assets
accumulated in the organization.

In order to be able to create an organizational context which may facilitate interaction among
individuals and groups and, therefore, the dynamic process of organizational knowledge creation,
Nonaka and Takeuchi (1995) and Nonaka, Toyama, and Byosière (2003) put forward a new
management model: the so-called middle-up-down one.

This model considers all members of the organization to be major players in knowledge generation,
interacting through both vertical and horizontal relations (Nonaka, 1988, 1991; Nonaka and
Takeuchi, 1995). Specifically, the model is characterized by the wide scope of relations involving
cooperation and exchange among top level managers, middle, and lower level managers, with
middle managers being the ones who play a key role as links between the upper and lower
organizational levels.
Three essential aspects characterize this middle-up-down management model: the existence of a
knowledge vision; the construction and dynamization of “BAs” (or areas in which knowledge is
shared, created, and used), and the exchange of knowledge assets.

1.2 Relationship between the middle-up-down model with specific aspects of the
management system
In the study carried out, two crucial aspects are analysed, which shape the middle-up-down model:
(1) the construction and dynamization of “BAs”, and (2) the exchange of knowledge assets. For the
purposes of this research, the existence of a knowledge vision is considered as forming part of the

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organizational “BAs”. Indeed, the aforementioned vision may be seen as a mental space for
knowledge exchange.

Regarding the construction and dynamization of “BAs”, as said earlier, these are the areas in which
knowledge is shared, created and used; in other words, spaces - physical or virtual - where
socialization, externalization, combination, and internalization processes could take place (Nonaka,
Reinmoeller, and Senoo, 1998).

Along these lines, Nonaka and Takeuchi (1995) and Nonaka, Toyama, and Byosière (2003), put
forward a type of specific organizational structure - the so-called Hypertext Organization, which
combines adhocracy with hierarchy - as that which to a greater extent favours the existence of
areas for sharing knowledge or “BAs”.

On the other hand, and in addition to the type of organizational structure implemented (which may
foster or, conversely, hinder the generation of areas for creating, sharing, and using knowledge),
the strategic formulation process itself is considered to be a critical element in this field.

The fact of carrying out a process of systematic strategic reflection implies that top management
generates time and space – in other words, “BAs” – for sharing knowledge about what has
occurred in the organization, what has functioned and what has not, and about what has happened
and may be expected to happen in the environment. The purpose of all this is none other than to
generate new "organizational theories in use" (Argyris and Schön, 1978) or new improved
guidelines for action – or radically different ones – or reaffirm those already embarked on.
Moreover, such reflection processes involve dialogue and interaction not only among the members
of the organization, but also sometimes with different stakeholders which may be affected by the
company's action.

In short, systematic reflection or strategic formulation processes foster the processes of knowledge
generation and organizational learning (De Geus, 1988; Pedler, Boydell, and Burgoyne, 1991;
Mayo and Lank, 1994; Drew and Smith, 1995) and, consequently, act as catalysers in the
innovation processes.

On the other hand, the degree of decentralization of the strategic formulation process is also an
essential factor. This decentralization fosters the incorporation of a greater number of people and
organizational levels into the process and, consequently, the creation of broader “BAs" for the
exchange of knowledge, with organizational learning processes (Swieringa and Wierdsma, 1992)
and innovation being favoured to a greater extent.

As far as the existence of a vision of knowledge is concerned, this is identified in the study with the
existence of a global strategic framework as a reference point for the organization: that is, with a
formal definition of mission, vision, values, and policy of the company.

To create value by means of knowledge generation activities, the organization needs a vision
which may gear it all towards the type of knowledge it has to acquire, and which may foster
spontaneous bonding on the part of individuals and groups involved in knowledge creation and
sharing. In this sense, the formally defined mission, vision, values, and policy of the company
delimit a shared mental space - or virtual “BA” - which determines the way knowledge is generated
and distributed among organizational members.

Finally, another aspect considered in the survey as forming part of the existing organizational “BAs”
is the one referring to the improvement of internal communication processes. Such processes may
act as catalysers or, on the contrary, as obstacles for knowledge sharing, depending on their
nature. If a relevant effort is made by the organization in order to improve its internal
communication processes - more fluid and flexible ones - a good context for knowledge distribution
is created, expanding organizational “BAs”.

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 Nekane Aramburu, Josune Sáenz and Olga Rivera

Moving on now to the exchange of knowledge assets (and also linked to the previous point), the
configuration of the control and the compensation systems, as well as the fact of fostering
teamwork, may make a major contribution to this purpose.

In the area of control, the use of tools such as the balanced scorecard and annual management
plans (together with the associated information system) may to a great extent promote the
exchange of knowledge. In particular, the balanced scorecard is a tool, which fosters the interaction
and information redundancy advocated by Nonaka, Toyama, and Byosière (2003). Indeed and as
Simons (1995, 2000) points out, the balanced scorecard may be used perfectly as an interactive
control tool, promoting continued dialogue and discussion about those indicators which are related
to elements of strategic uncertainty, as occurs with everything surrounding innovation. Additionally,
the balanced scorecard enables a synthetic and overall vision to be obtained of what occurs in the
company, and of the impact, which each part has on the whole, thanks to the strategic maps that
accompany it and to the cause-effect relationships reflected in them. In this way, the spreading of
information contained in the balanced scorecard enables each individual to go beyond the limits of
their job, thus fostering mutual understanding and knowledge generation.

As regards annual management plans (in the preparation of which middle managers carry a lot of
weight), these are the translation of the strategic directives of a general nature to more specific,
quantified actions. In other words, the annual management plans, in some way, enable the role
given by Nonaka and Takeuchi (1995) and Nonaka, Toyama, and Byosière (2003) to middle
managers in their middle-up-down management model to be specified, as these plans make the
materialization of values, vision, and strategy generated by top management possible, by means of
concepts and images which may guide their implementation more effectively.
On the other hand, the conscious promotion of teamwork by top management throughout the
company may help to reinforce the exchange of knowledge among people on all organizational
levels. In the same way, the establishment of incentives linked to teamwork may help to strengthen
this aspect.

2. Research method

2.1 Research hypotheses

According to the aforementioned conceptual framework, the following hypotheses have been
tested:
H1: The innovation focus of companies is positively related to the
implementation of management systems which are in accordance with the so-called
middle-up-down management model. This means that:
H1(a): The innovation focus of companies is positively related to the
implementation of management systems which foster the creation and dynamization of
“BAs”, or areas in which knowledge is shared, created, and used.
H1(b): The innovation focus of companies is positively related to the
implementation of management systems which foster the exchange of knowledge
assets.
H2: The degree of adoption of management systems which are in accordance
with the so-called middle-up-down management model is stronger in the case of
medium- and large-sized companies, which have a greater innovation focus.
H3: The degree of adoption of management systems which are in accordance
with the so-called middle-up-down management model is stronger in the case of those
companies which belong to medium-high and high technology industries, and which
have a greater innovation focus.

2.2 Target population and sample of companies surveyed

The population subject to study is limited to the set of manufacturing companies from the Spanish
region of the Basque Country, excluding those so-called micro-companies. Once the companies

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making up the target population had been identified (thanks to the use of the SABI data base,
which contains the registered annual accounts of over 190,000 Spanish companies), and in order
to carry out a statistical study which could allow minimally significant conclusions to be obtained, a
representative sample was then selected from the configuration of the manufacturing industry of
the Basque Region, comprising a total of 199 companies.

This general sample and the subsequent sub samples considered (see Table 1), meet the
minimum size requirements established for the application of Structural Equation Modelling (SEM),
based on Partial Least Squares (PLS). The minimum size is determined by the most complex
regression analysis, which should be carried out (ten times the number of variables involved in the
aforementioned regression). In this case, this number corresponds to 50 companies.
Table 1: Number of companies surveyed
According to size According to technology level
Medium-high or high
Medium- and large-sized Small Low or medium Total
technology
companies companies technology companies
Companies
89 110 68 121 199
On the other hand, and in order to assess the different variables subject to study in the research,
an ad hoc questionnaire was designed and addressed to the 199 Chief Executive Officers (CEOs)
of the companies selected in the sample. The questionnaire was subjected to prior trials so as to
check the extent to which it was understood by the CEOs concerned, the time required for their
response, and the extent to which the type of answer to the questions was adjusted to real
situations envisaged by the companies.

2.3 Statistical analysis

The statistical analysis has comprised two types of studies:

2.3.1 Descriptive analysis

First, a descriptive study has been carried out, aimed at measuring the innovation focus developed
by manufacturing companies from the Basque Region, as a consequence of the changes they
experienced during the period 2000-2003. To this end, the degree of introduction of explicit
mechanisms which attempt to strengthen the capacity for organizational innovation have been
analysed: the systematic allocation of part of the annual budget to the development of new
challenges; linking the compensation policy to the generation of new ideas, and the creation of
teams systematically devoted to the generation of new initiatives.

In particular, the innovation focus is considered to be low where none of the aforementioned
mechanisms has been implemented, medium where at least one of such mechanisms has been
implemented, and high where two or more of said mechanisms have been put in place.

On the other hand, in the case of those companies showing the greatest innovation focus, the
degree of presence of each component of the management system that supports a middle-up-
down management model has been identified, both for the general sample and for the different sub
samples considered.

2.3.2 Multivariate analysis

For the hypotheses of the research to be tested, Structural Equation Modelling (SEM) based on
Partial Least Squares (PLS) has been applied. For this purpose, PLS-Graph software (version
3.00) has been used (Chinn and Frye, 2003). The multivariate analysis has comprised two phases:

2.3.3 a) Phase one:

In accordance with the conceptual framework previously explained, the proposed model for the
analysis carried out in this phase encompasses three constructs:

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 Nekane Aramburu, Josune Sáenz and Olga Rivera

ƒ • Innovation focus: This is the exogenous construct of the model and is made up of three
dummy indicators: (1) the systematic allocation of part of the annual budget to the development
of new challenges (no/yes); (2) linking compensation policy to the generation of new ideas
(no/yes), and (3) the creation of teams systematically devoted to the generation of new
initiatives (no/yes). The aforementioned indicators are reflective in nature: that is, they “reflect”
how strong the innovation focus of the company is.
ƒ • Generation and dynamization of “BAs”: This is one of the two endogenous constructs of the
model and is made up of five indicators: (1) the existence of a formal definition of company
mission, vision, values, and policy (no/yes); (2) the existence of a systematic strategy
formulation process (no/yes); (3) the existence of a decentralized strategy formulation process
(no/yes); (4) the type of organizational structure in place (learning supportive or not learning
supportive), and (5) the effort made to improve internal communication processes (measured on
a scale of 1 to 5). These indicators are formative in nature: that is, they give rise to the
existence and dynamization of organizational “BAs”.
ƒ • Exchange of knowledge assets: This is the second endogenous construct of the proposed
model and is made up of four indicators: (1) the degree of use of annual management plans (on
a scale of 1 to 5); (2) the degree of use of the balanced scorecard (on a scale of 1 to 5); (3) the
effort made in order to foster teamwork in the company (on a scale of 1 to 5), (4) and the
relevance of teamwork in compensation policies (on a scale of 1 to 5). Again, these indicators
are formative in nature: that is, they favour the exchange of knowledge assets within the
company.
ƒ In order to Asses the measurement model reliability and validity, several tests have been
carried out. In the case of constructs made up of reflective indicators (“innovation focus”),
individual item reliability, construct reliability, convergent validity, and discriminate validity have
been checked. On the other hand, in the case of constructs made up of formative indicators
(“generation and dynamization of BAs”, and “exchange of knowledge assets”), potential
collinearity has been explored.
ƒ Finally, the structural model validity and its predictive power have been tested, by means of
bootstrapping techniques and the Stone Geiser test, respectively.

2.3.4 b) Phase two:

In order to verify the existence or non-existence of significant differences between the diverse
groups of companies considered, two multigroup analyses have been carried out: medium- and
large-sized firms versus small companies; and medium-high or high technology level firms versus
low and medium technology level companies.

3. Findings of the research

3.1 Results of the descriptive analysis

The descriptive analysis has shown that significant differences exist in the innovation focus of
firms, according to their size and technology level (see Table 2).
On the other hand, Tables 3 and 4 show the degree of presence of each component of the middle-
up-down management model in the case of those companies with a higher innovation focus, both
in the general sample and in the different subsamples considered.

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Table 2: Innovation focus of companies

According to size According to technology level
Medium-
Low and
Medium- and high or Difference
General Small Difference medium
large-sized high signifi-
companies significance technolo-
companies technolo- cance
gy
gy
Low 31.15% 22.47% 38.18% 20.59% 39.67%
Medium 28.14% 20.22% 34.54% p < 0.001 32.35% 28.10% p < 0.1
High 40.70% 57.30% 27.27% 47.06% 40.50%
Table 3: Degree of presence of the variables linked to the generation and dynamization of BAs in
the case of those companies with the highest innovation focus
According to size According to technology level
Medium- and Medium-high Low and
General Small
large-sized or high medium
companies
companies technology technology
Formal definition of
mission, vision, values, and 91.4% 94.1% 86.7% 93.8% 89.8%
business policy
Systematic strategy
65.4% 70.6% 56.7% 65.6% 65.3%
formulation process
Decentralized strategy
53.1% 54.9% 50.0% 53.1% 53.1%
formulation process
Learning supportive
27.2% 21.6% 36.7% 15.6% 34.7%
organizational structure
Effort made to improve
internal communication
3.85 3.82 3.90 3.84 3.86
processes (on a scale of 1
to 5)
As far as the “generation and dynamization of BAs” is concerned, the main component of the
management system implemented in firms is the formal definition of mission, vision, values, and
business policy. The elements related to the strategy formulation process and internal
communication processes are also quite important. However, learning supportive organizational
structures (process or project structures and matrix structures, which do contemplate a project axis
– hypertext organization – or a process axis), are not very frequent. Nevertheless, in the case of
small companies and low and medium technology level firms, these types of organizational
structures have a stronger presence.
Table 4: Degree of presence of the variables linked to the exchange of knowledge assets in the
case of those companies with the highest innovation focus (on a scale of 1 to 5)
According to size According to technology level
Medium- and Low and
General Small Medium-high or
large-sized medium
companies high technology
companies technology
Use of annual
4.26 4.31 4.17 4.41 4.16
management plans
Use of the balanced
3.73 3.84 3.53 3.78 3.69
scorecard
Effort made in order to
4.23 4.27 4.17 4.25 4.22
foster teamwork
Relevance of
teamwork in 3.42 3.29 3.63 3.50 3.37
compensation policies

As regards the “exchange of knowledge assets”, the main aspect of the management system is the
use of annual management plans. The second position belongs to the fostering of teamwork. The
third one corresponds to the use of the balanced scorecard, and finally, the worst positioned
element is the degree of relevance of the teamwork as a part of the compensation system. The

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 Nekane Aramburu, Josune Sáenz and Olga Rivera

degree of relative importance of each element is quite homogeneous in all categories of firms
considered.

3.2 Results of the multivariate analysis

3.2.1 Results of phase one

Referring to the validity and reliability of the measurement model, the following can be observed:

3.2.2 Reflective construct

In the case of the reflective construct (“Innovation focus”), four aspects have been studied: the
individual item reliability (assessment of the degree of reliability of each one of the indicators
making up the construct); the construct reliability (evaluation of the degree of reliability of the set of
indicators which form the construct as a whole); the convergent validity (measurement of the
percentage of the variance of the construct that is explained by the indicators which make it up);
the discriminate validity (aimed at evaluating whether the construct shares a higher variance with
its own indicators than with other constructs).

As regards the evaluation of individual item reliability, the results obtained are shown in Table 5:
Table 5: Innovation focus – Individual item reliability (loadings)
According to size According to technology level
Medium- and Medium-high Low and
General Small
large-sized or high medium
companies
companies technology technology
Systematic allocation of
part of the annual budget 0.804 0.869 0.714 0.835 0.799
to new challenges
Linking compensation
policy to the generation of 0.672 0.640 0.702 0.468 0.771
new ideas
Creation of teams
systematically devoted to 0.778 0.772 0.764 0.722 0.786
new initiatives
According to Carmines and Zeller (1979), the individual reliability of an item is acceptable when its
loading with respect to the construct it belongs to is higher than 0.7. However, 0.5 or 0.6 loadings
may be acceptable in early stages of scale development (Chinn, 1998), as is the case in this
research. Therefore, individual reliability of the items making up the “Innovation focus” construct
could be said to be acceptable for almost all the items considered in the research (they are higher
than 0.6). Only one item infringes the aforementioned critera: “linking compensation policy to the
generation of new ideas”, in the case of medium-high or high technology level firms (loading =
0.468). Nevertheless, and considering that it is very close to 0.5, it has finally been considered as a
valid indicator.

Secondly, and as far as construct reliability is concerned, the results obtained are the following
(see Table 6):
Table 6: Innovation focus – Construct reliability (composite reliability)
According to size According to technology level
General Medium- and large- Small Medium-high or Low and medium
sized companies companies high technology technology
Composite
0.797 0.808 0.771 0.724 0.829
reliability
In order to consider the construct reliability acceptable, composite reliability should be higher than
0.8. Nevertheless, in early stages of research (as is the case here) values that at least overcome
the threshold of 0.7 are suitable (Nunnally, 1978). Hence, in this research construct reliability is
acceptable because it is higher than 0. 7 (0.797).

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Thirdly, convergent validity has been examined, as shown in Table 7:

Table 7: Innovation focus – Convergent validity (AVE)
According to size According to technology level
General Medium- and large-sized Small Medium-high or high Low and medium
companies companies technology technology
AVE 0.568 0.587 0.529 0.479 0.617
The average variance extracted should be higher than 0.5 (Fornell and Larcker, 1981). Therefore,
in this research the AVE is acceptable (> 0.5) in almost all the groups of firms considered, except in
the case of medium-high or high technology level firms. However, and considering that the value of
the AVE in this case is only slightly lower than 0.5 (0.479), the convergent validity in this case has
also been deemed appropriate.

Finally, discriminate validity has been analysed in order to verify that, for all groups of companies,
the variance that the “Innovation focus” construct shares with its own indicators is higher than the
variance it shares with other constructs of the model (squared correlations between constructs).
The result of discriminate validity tests is positive (for space reasons tables have been omitted).

3.2.3 Formative constructs:

In the case of the two formative constructs (“Generation and dynamization of BAs” and “Exchange
of knowledge assets”), a test geared towards exploring the potential collinearity between the
indicators which form each construct has been carried out. As a result of this, the absence of
collinearity has been proven.

As regards the assessment of the structural model, the following has been checked:

First, the strength of the hypotheses formulated in the research has been measured (analysis of
path coefficients). The results obtained are shown in Table 9:
Table 9: Path coefficients
According to size According to technology level
Low and
General Medium- and large- Small Medium-high or
medium
sized companies companies high technology
technology
Innovation focus
0.403 0.383 0.420 0.415 0.445
– Bas
Innovation focus
0.487 0.508 0.449 0.476 0.528
– Exchange
In order to verify the degree of significance of the path coefficients, a “bootstrapping” technique has
been applied (for 500 subsamples), in order to obtain the “t” statistics for all groups of firms. In all
cases, the “t” value is highly significant, with a critical probability lower than 0.001 (Chinn, 1998).
Hence, it can be stated that hypotheses H1(a) and H1(b) are proven.

Secondly, the variance explained regarding the endogenous constructs and the prediction power of
the model have been analysed (see Table 10):
Table 10: Variance explained and prediction power
According to size According to technology level
General Medium- and large- Small Medium-high or Low and medium
sized companies companies high technology technology
R2 Q2 R2 Q2 R2 Q2 R2 Q2 R2 Q2
BAs 0.162
-
0.147 -0.085 0.176 -0.071 0.172 -0.064 0.198 0.120
0.077
Exchange 0.238
-
0.258 0.001 0.202 -0.053 0.227 -0.044 0.279 0.026
0.010

As regards the variance explained, it could be said this is quite high, in the sense that only one
exogenous construct (“Innovation focus”) explains a 16.2 % of the variance in the case of the
“Generation and dynamization of BAs”, and a 23.8% of the variance in the case of the “Exchange

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 Nekane Aramburu, Josune Sáenz and Olga Rivera

of knowledge assets” (for the whole sample). Therefore, it can be concluded that the
implementation of a middle-up-down management model is explained to a large extent by the
emphasis the firms put on innovation.

On the other hand, and as far as the prediction power of the model is concerned, the “cross
validated redundancy” (Q2) parameter has been analysed. This should be higher than 0 to consider
that the model has predictive validity (Chinn, 1998). In this case, the Q2 corresponding to the whole
sample is slightly lower than 0 (-0.077 for the “BAs” construct, and -0.010 for the Exchange
construct). Nevertheless, the value of this parameter is very close to 0, so it could be considered
that the model is in the threshold of having predictive power. In the particular case of low and
medium technology level firms, Q2 is higher than 0, as well as in the case of medium-sized and
large companies for the Exchange construct. Hence, in both cases, the predictive power of the
model is higher than in the general case.

3.3 Results of phase two

In order to verify the existence or non-existence of significant differences between the diverse
categories of companies, a multigroup analysis has been carried out. This has been done for the
groups of firms differentiated according to their size and their technology level. As a result of the
multigroup analysis, a “t” parameter is obtained that follows a t-Student distribution with m+n-2
degrees of freedom. To obtain the value of “t” the following formula has been applied:

Where:
ƒ m = size of the sample 1 (first group).
ƒ n = size of the sample 2 (second group).
ƒ SE = Standard Error (from the Bootstrap).
In all cases, the value of “t” is not significant (p>0.1). Therefore, it can be concluded that there are
not statistically significant differences between the firms belonging to each group, according to their
size and technology level. Hence, hypotheses H2 and H3 are not proven.

4. Conclusions
Finally, the most important conclusion to be drawn is that the first hypothesis of the research -
H1: The innovation focus of companies is positively related to the implementation of management
systems which are in accordance with the so-called middle-up-down management model - and
their associated sub-hypotheses - H1(a), H1(b) - are proven.

In other words, it is true that the companies with a higher innovation focus tend to implement a
management system whose characteristics are those of the middle-up-down management model
(Nonaka and Takeuchi, 1995; Nonaka, Toyama, and Byosière, 2003).

On the other hand, it is proven that significant differences exist between firms belonging to different
categories according to size and technology level, in terms of the emphasis they put on innovation.
In this sense, medium-sized and large firms and medium-high or high technology level companies
are those with a higher innovation focus.

However, and in the case of companies with a higher innovation focus, there are not significant
differences with regard to the degree of presence of the different components of the management
system that support the middle-up-down management model, depending on their size and
technology level (hypotheses H2 and H3 are rejected).

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5. References
Argyris, C. and Schön, S. (1978), Organizational learning: a Theory in Action Perspective, Addison-
Wesley, Boston, Massachusetts.
Bagozzi, R. P. (1994), “Structural Equation Models in Marketing Research: Basic Principles”, in
Bagozzi, R. P. (Ed.), Principles of Marketing Research, pp. 317-385, Blackwell, Oxford.
Carmines, E. G. and Zeller, R. A. (1979), Realiability and Validity Assessment, Sage University,
paper series on quantitative applications in the social sciences, N. 07-017, Sage, Beverly
Hills, CA.
Chinn, W.W. and Gopal, A. (1995), “Adoption Intention in GSS: Relative Importance of Beliefs”,
Database, 26, pp. 42-64.
Chinn, W.W. (1998), “The Partial Least Squares Approach to Structural Equation Modelling”, in
Marcoulides, G. A. (Ed.), Modern Methods for Business Research, pp. 295-336, Lawrence
Erlbaum Associates Publisher, Mahwah, NJ.
Chinn, W.W. and Frye, T. (2003), PLS-Graph Version 3.00, Build 1017, University of Houston,
Houston.
Diamantopolulos, A. and Winklhofer, H. M. (2001), “Index Construction with Formative Indicators:
an Alternative to Scale Development”, Journal of Marketing Research, 38, pp. 269-277.
Drew, S. and Smith, P. (1995), “The Learning Organization: Change Proofing and Strategy”, The
Learning Organization, vol.2, nº1, pp. 4-14.
Fornell, C. (1982), “A Second Generation of Multivariate Analysis: an Overview”, in Fornell, C.
(Ed.), A Second Generation of Multivariate Analysis, Vol. 1, pp. 1-21, Praeger Publishers,
New York.
Fornell, C. and Larcker, D. F. (1981), “Evaluating Structural Equation Models with Unobservable
Variables and Measurement Error”, Journal of Marketing Research, 18, pp. 39-50.
Geus, A.P. De (1988), “Planning as Learning”, Harvard Business Review, March-April, p. 70-74.
Kaplan, R.S. and Norton, D.P. (1996), The Balanced scorecard: Translating Strategy into Action,
Harvard Business School Press, Boston, Massachusetts.
Kleinbaum, D. G., Kupper, L. L., and Muller, K. E. (1988), Applied Regression Analysis and Other
Multivariate Analysis Methods, PWS-Kent Publishing Company, Boston.
Mayo, A. and Lank, E. (1994), The Power of Learning, Institute of Personnel and Development,
London.
Nonaka, I. (1988), “Creating Organizational Order out of Chaos: Self-Renewal in Japanese Firms”,
California Management Review, Spring, pp.57-93.
Nonaka, I. (1991), "The Knowledge-Creating Company", Harvard Business Review, vol.69, nº6,
pp.96-104.
Nonaka, I. and Takeuchi, H. (1995), The Knowledge-Creating Company, Oxford University Press,
Oxford.
Nonaka, I., Konno, N., and Toyama, R. (1998), “Leading Knowledge Creation: a New Framework
for Dynamic Knowledge Management”, paper presented at the Second Annual Knowledge
Management Conference, Haas School of Business, University of California, Berkeley.
Nonaka, I., Reinmoeller, P., and Senoo, D. (1998), “The Art of Knowledge: Systems to Capitalize
on Market Knowledge”, European Management Journal, vol.16, nº6.
Nonaka, I., Toyama, R., and Byosière, P. (2003), “A Theory of Organizational Knowledge Creation:
Understanding the Dynamic Process of Creating Knowledge”, in Dierkes, M., Berthoin, A.,
Child, J., and Nonaka, I., Handbook of Organizational learning & Knowledge, Oxford
University Press, Oxford.
Nunnally, J. C. (1978), Psychometric Theory, McGraw-Hill, New York.
Pedler, M., Boydell, T., and Burgoyne, J. (1991), The Learning Company, Mc.Graw-Hill, London.
Simons, R. (1995), Levers of Control: How Managers Use Innovative Control Systems to Drive
Strategic Renewal, Harvard Business School Press, Boston, Mass.
Simons, R. (2000), Performance Measurement & Control Systems for Implementing Strategy,
Prentice Hall, Upper Saddle River, N.J.
Swieringa, J. and Wierdsma, A.F. (1992), Becoming a Learning Organization, Addison-Wesley,
Amsterdam.
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Organization, vol.10, nº1, pp. 8-17.

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Four Valued Logic: Supporting Complexity in Knowledge
Sharing Processes
Peter Bednar, Christine Welch and Vasilios Katos
University of Portsmouth, Buckingham Building, Portsmouth, UK
[email protected]
[email protected]
[email protected]

Abstract: An essential problem of ‘knowledge management’ is the impossibility of codifying ‘knowledge’ which
is embedded in human agents. It can never be straightforward for members of an organization to share what
they know with one another. Such a process might be facilitated, but would be difficult to ‘manage’. In
recognition of this, organizations have sought ways to support knowledge sharing processes, ranging from
document-based repositories to on-going mentor/trainee relationships. From day to day, all individuals will
need to make choices relating to their organizational roles. A need to recognize the element of choice and
judgment available to an individual requires an ability to distinguish and discriminate between different
categories of argument or assertion. When attempting to deal with problems, people are capable of using
multi-valued logic in a process of creating assertions. It follows, therefore, that any support mechanism based
only on bi-valued logic might serve to constrain and inhibit exercise of judgment. Using four-valued logic, it is
possible to codify, not knowledge, but categories of argument/assertion. By this means, improved support may
be provided for a knowledge-sharing environment, i.e. with a purpose to support knowledge management
processes. In this paper, the authors draw on previous research in contextual analysis, complex methods of
inquiry and paraconsistent logic in order to develop these ideas. A model of four-valued logic is described and
applied for the purpose of categorising arguments.

Keywords: Contextual analysis, complex methods, multi-valued logic, knowledge sharing.

1. Introduction
The authors’ position is that knowledge is essentially embedded in people, who have created it for
them through learning experiences. For this reason, the authors prefer to discuss ‘knowing’ as a
subjective process, rather than ‘knowledge’ in an objective sense. (Bednar et al, 2005). It is
suggested that processes through which people create and recreate their knowing are at once
deeply personal, contextual and social (Bateson, 1972). It follows therefore that complex methods
for inquiry are appropriate (Bednar, 2000). We recognize complexity in organisational knowledge
sharing processes. Because of this complexity, human analysts would benefit from technological
support in their practice of inquiry. We therefore need to look for ways to support development of
technological aids for complex methods, which can deal with the inherent contradictions and
paradoxes in knowledge sharing processes.

When it comes to process support for complex methods of inquiry, we can see great possibilities,
drawing upon the potential of paraconsistent logic (Anderson, 2002). Paraconsistent logic we see
as a variant of multivalued logic, which is tolerant of contradictions and paradoxes. Multivalued and
paraconsistent logic have a long history see for instance discussion of work by Charles Sanders
Pierce who extended the truth table method to three-valued logic as early as 1909 (Recher, 1969).
It is possible to envisage development of tools, which may act as intelligent agents. Intelligent
strategies may include software that is able to keep up with human abilities to categorise and
create resolutions that are inherently self-contradictory. It may also incorporate language software
tools. For example, software that can store and interpret grammatical rules, and could potentially
be used to analyse text to determine logical conclusions from statements made. Human analysts
could then review such conclusions for meaningfulness in context. In addition to this, further
developments in voice recognition software can be envisaged. Systems that could ‘listen’ to
discussion and transform it into coherent discourse, and then analyse (and categorise) the results,
may become possible. Such systems would not at one time have been considered feasible due to
the huge processing power that they would demand. However, alongside developments in
application software, progress is now being made in personal computing, using multiprocessor
hardware and associated operating systems capable of multitasking. For example, Justin Rattner
of Intel®, addressing a developers’ forum in 2005, suggested that intelligent language processing

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agents will be feasible by 2015. This could enable sophisticated software tools to be made
available, and affordable, for everyday use by managers without investing in specialist hardware.
Even with today’s technologies we can foresee a time when software support may become
available to users in systematic and logical analysis of resolutions. Human analysts can then be
helped either to categorize them and use them (inclusive of their inconsistencies), or to isolate
unexpected inconsistencies and attempt to reframe those resolutions.

While all these things may be possible in the future, the main problem is not necessarily to develop
the paths of existing technology to higher precision or correctness. The real difficulty is to find ways
to apply that excellence, i.e. we are not looking for innovation in technology but for innovation in
application of technology. In this we include, not only algorithmic progress, but also development of
application of algorithm. The problem with human knowledge sharing is not only a matter of
innovation or excellence in technology, but of developing patterns of application supporting human
innovation and excellence. Therefore, a model for four-valued logic is not to the authors of this
paper an issue of mathematics; it is about applying logic for the purpose of human knowledge
sharing processes.

Organizational knowledge, the authors believe, cannot be seen as a commodity. Knowledge, as

opposed to data or information, is related to an individual person’s ability to act. It is embedded in
real human beings, and even they may not always be aware that they have it. It is clear that
procedural knowledge cannot easily be recorded or passed on. As an illustration of this, any person
who knows how to drive may try to imagine giving driving lessons to a novice in the form of written
instructions (Polyani, 1967; Nonaka, 1991).If it is to be exploited in an organizational context,
people must be empowered and enabled to interact in ‘sharing’ ways. They must be enabled to act
in order to render their knowledge useful to an organization. This embedded quality of human
knowledge makes sharing problematic and makes any attempt at codification extremely
challenging. Many would argue that ‘knowledge management’ is for all practical purposes
impossible, and that managers can only attempt to facilitate, support and encourage knowledge
creation and sharing (Wilson, 2002). In this paper, the authors draw on previous research in
contextual analysis, complex methods of inquiry and paraconsistent logic (Bednar et al, 2005). A
model of four-valued logic is described and applied for the purpose of categorising arguments. The
following section presents examples of four-valued logic as an application of human categorisation
of arguments, including uncertainty, which may or may not incorporate contradictions. Then, in
section three, a model of paraconsistent logic is explored. This model has a pattern of resolutions
that we suggest is sufficiently parallel with human application of four-valued logic to be applied
successfully. Finally, in the last section of the paper, the authors outline their main conclusions.

2. Human reasoning
Research in contextual analysis shows that people are capable of exercising choice and
judgement, and are able to distinguish and discriminate between categories of argument or
assertion. Resolutions may include contradictions and in everyday life complexity is regularly acted
upon (e.g. not bypassed or regarded as a problem in familiar environments). The authors of this
paper suggest that it is our common experience in everyday life that, when posing a question to
someone, we might receive the answer ‘it depends’. Here, an individual gives an answer
conditional on obtaining further data about the context of the question. We infer from this that
people might be comfortable with multi-valued logic when dealing with everyday problems. Things
are not necessarily assessed on a scale of ‘truth’ or ‘falsity’ (bi-valued logic). If ‘true’ or ‘false’ is
inadequate, we might consider a three-valued model - ‘yes’, ‘no’ or ‘it depends’. However, this still
does not include a possibility that the person interrogated is baffled. She might say ‘I have no idea’,
which is the essence of uncertainty. Whilst there may be occasions when it is beneficial to break
problems down and simplify them, this need not be done as a matter of course. In our view an
approach involving routine and systematic attempts to simplify inquiry is reductionist. Attempting to
identify every aspect of a problem situation separately, in isolation from its context, in order to
establish the ‘truth’ or ‘falsity’ of certain key parameters ignores emergence. Instead, we would
advocate ‘complexification’ of inquiry, creating a multi-valued assessment and categorization
through elaboration upon individual expression of ‘it depends’. We need a model which we can use

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 Peter Bednar, Christine Welch and Vasilios Katos

as an analogy to the kind of human reasoning we have described. The following Figure 1 illustrates
this in relation to knowledge sharing:

Certainty

Assertion of negative Assertion of positive

alternative alternative

Negative belief Positive belief

Assertion of
Assertion of possible
ignorance of
alternative
possible alternative

Uncertainty

Figure 1: Categories of arguments

The authors see emphasis on use of bi-valued logic as restrictive of individual choice. In everyday
life, human beings are confronted with the need to make choices. It is important to examine the
element of choice and judgement available to individuals. The categorization as presented in
Figure 1 outlines a phenomenon, i.e. that decision makers are able to keep in mind that they are
asserting beliefs of truths rather than truths - exercising judgement. All four alternatives can be
seen to be variants of the answer ‘it depends’ (the main different lies in character and degree of the
espoused certainty). The logic also implies that choices need to be made for each individual
alternative. Any assertions made, even if assumed to be generally valid, are not obviously valid
under all conditions and out of context. Each assertion requires a decision. Each decision is
chosen as a result of an assessment of risk of being ‘wrong’ where the fit between assumptions of
context and generalization is taken into consideration. This phenomenon is a result of a strategy for
dealing with uncertainty in context. It. happens as an aspect of negotiation, when people (analysts)
try to make sense of their own, and each other’s, narratives regarding their understandings and
definitions of a problem space (see example in figure 2 below).
Example:
Let us assume that you and I are in Portsmouth, on the south coast of England.

Assertion of positive alternative:

If you asked me ‘Is it possible to get to Southampton this afternoon?’ I would answer ‘Yes, I believe so.
It is twenty miles by road or rail, and there are plenty of services.’

Assertion of negative alternative:

If you asked me ‘Is it possible to get to Buenos Aires this afternoon?’ I would answer ‘No, I doubt it.
Even if there was a flight from the local airport today, the distance is so great that you would not arrive
until tomorrow.’

Assertion of possible alternative:

If you asked me ‘Can I get to Paris this afternoon?’ I would answer ‘I expect so. It could be possible if
there is an afternoon flight from the local airport. Assuming seats are available and you can afford the
fare, then perhaps you can’.

Assertion of ignorance of possible alternative:

If you asked me ‘Can I get to Timbuktu this afternoon?’ I would say ‘I have no idea. I am not sure where
it is or even which continent it is in. I do not know whether there are services from Portsmouth or even
direct flights from the UK’.

Figure 2: Example of four-valued logic

A major aspect of this kind of sense making and negotiation is an effort made both to create
individual understanding and to categorize narratives. This negotiation surrounds agreement on
categorisation of narratives regarding problem re-definition and solutions. Complex methods of
inquiry are by their nature time consuming and demanding to manage. It would be advantageous to
be able to make use of software support for managing both the process of analysis and the
resulting data. If we wish to develop suitable systems to provide such support, a model of four-
valued logic may be helpful. NB. We have considered fuzzy logic in this context. However this is an

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approach used to structure uncertainty into certainty. When using complex methods we wish to
maintain uncertainty within a problem space but transform it into a more structured form, ie
ambiguity. Our purpose is to enrich understandings of a problem space rather than to search for an
immediate solution. It should be noted in relation to the model discussed below that the
mathematical underpinning of its logic need not map onto the logic of something by a human
observer recognized as a real-world inquiry. In establishing four values, we can then allocate any
classification to them that is useful in a particular observer’s real-world context. The particular
chosen variant of a truth table that could be used in any specific situation is influenced by context
and the particular beliefs of the participating stakeholders. For example we would not expect a truth
table, which might be produced from the beliefs of a group of Christian stakeholders to be the same
as one produced from the beliefs of a group of Buddhists.

3. Logical model
Although it could be argued that Aristotle’s Law of Non-Contradiction may guide human reasoning,
human behaviour often exhibits true contradictions (dialetheism); that is when both a proposition P
and its negation ¬P are true. Societal approaches and aspects of culture encourage these
conflicting modes. Most legal systems, for example, are constructed on the assumption that a
person is either guilty or not guilty. In practice however, uncertainty is catered for in many systems
by application of the principle ‘being deemed innocent until proven guilty’. Probabilities of events
and facts in some legal systems such in the UK appear due to the “beyond reasonable doubt”
doctrine, as these probabilities may carry a dose of uncertainty. A similar application may be found
in science and scientific research. While historically founded on the ‘cause and effect’ paradigm,
revolutions in scientific paradigm in the 20th century have resulted in a situation where
contemporary science is based, not on ‘laws’, but on probabilities. This incorporates variations of
Heisenberg’s famous uncertainty principle. Empirical research is geared towards understanding
patterns of behaviour, given a set of ‘input’ conditions and assumptions. The consequences of this
uncertainty principle are that ‘no causal law can be proved anymore, but only statistical laws’
(Einstein, 1990, p59, cited in Monod, 2004, p108).

We acknowledge that systems based in bi-valued logic are adequate in assisting us to perform
many tasks, and can provide an effective problem-solving tool. Although this may hold true most of
the time, bi-valued logic has received considerably more credit than its real value merits, and has
entered realms ‘incompatible’ with its nature. In our view human behaviour may not be regarded as
deterministic. Each human individual observes phenomena and interprets them from her own
unique perspective. Human beings have free will to adapt their behaviour to their perceptions in
any feasible way. The greater the experienced complexity of the problem situation, the greater is
likely to be the uncertainty experienced by the individuals. In the context of a complex problem
space therefore it is likely that behaviour patterns of different individuals will vary widely.

In our experience very many computational models are based on bi-valued logic. Historically this
has included models on which research in artificial intelligence were based. Consequently, efforts
in creating autonomous intelligence machine may encounter the Law of Non-Contradiction as a
barrier. Researchers began to realise that a system that will not be able to accommodate
contradictions will be far from ‘intelligent’. Given the system in Fig. 1, we can semantically define it
as a four valued logic system as follows. In this example we use negation (logical NOT),
conjunction (logical AND), disjunction (logical OR), equivalence (logical XNOR) and implication (IF
THEN). The four values are 0,1,X,Y, corresponding to FALSE, TRUE, PARADOX, UNKNOWN.
More specifically, the first two values correspond to the classic bi-valued logic values. The third
value arises when a statement can be both true and false, allowing contradictions and dialetheias.
Since we are modelling human reasoning, we need to include a fourth value representing the void,
i.e. when a person is refusing to commit to an opinion. These four values together with their truth
tables definitions are adequate in modelling human conversational interactions in the context of a
proposed system.

The truth tables are essentially addressing the different types of combined statements or evidence,
which are formally referred to as operations. It is of great importance to develop a logic where the

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 Peter Bednar, Christine Welch and Vasilios Katos

different operations are understood and provide “meaningful” results. In order to demonstrate this,
we refer to the example in Figure 2.
Table 1: Truth tables of the four valued logic model
Negation Conjunction Disjunction Equivalence Implication
P Q
¬P P ∧Q P∨Q P↔Q P→Q
0 0 1 0 0 1 1
0 1 1 0 1 0 1
0 X 1 0 X 0 X
0 Y 1 0 Y 0 Y
1 0 0 0 1 0 0
1 1 0 1 1 1 1
1 X 0 X 1 0 X
1 Y 0 Y 1 0 Y
X 0 X 0 X 0 0
X 1 X X 1 0 1
X X X X X X X
X Y X Y X 0 Y
Y 0 Y 0 Y 0 0
Y 1 Y 0 1 0 1
Y X Y Y X 0 X
Y Y Y Y Y Y Y

Consider for example the first question ‘Is it possible to get to Southampton this afternoon?’ and
the given answer: P= ‘Yes, I believe so’(=1) . The negation of P would be the straightforward
negative alternative ¬P = ‘No, I doubt it’(=0). This would formally be described as:

F(‘It is possible to get to Southampton from Portsmouth this afternoon’)=1

and
F(‘It is NOT possible to get to Southampton from Portsmouth this afternoon’)= ¬F(‘It is possible to
get to Southampton from Portsmouth this afternoon’)=0

Where F()is an evaluating function (i.e. a mapping between the statement and the four value
range). However, in the case of a possible alternative or of ignorance, negation should not affect
the outcome:

F(‘It is possible to get to Buenos Aires from Portsmouth this afternoon’) =¬F(‘It is NOT possible to
get to Buenos Aires from Portsmouth this afternoon’)= X.

Similar rule follows for the UNKNOWN value, Y. The problem is of more significance and interest
when there are two or more statements and their combination should yield a meaningful outcome
as previously stated. Referring to the Southampton question, suppose that we get different
answers from two people:

– ‘Is it possible to get to Southampton this afternoon?’

P= ‘Yes, I believe so’ (=1)
Q= ‘I expect so’ (=X)

In the case of conjunction, we expect that all people have to be fundamentally positive about the
truth of the statement, therefore P ∧Q=1∧X=X, i.e. an answer like ‘I expect so’ is adequate, as if
one agrees that it is possible to get to the destination, then they will not object if one demonstrates
a positive but less stronger opinion. On the contrary, in a disjunction any indication of a possible
alternative would result to TRUE. In the case of equivalence, we are more interested in whether
two people (or statements) agree, but in the case when both claim ignorance, then the result will
also be ignorance (i.e. UNKNOWN), which is the only information we have gained from their
answer. A similar logic follows for the implication operation.

The truth tables described in Table 1 represent one of many alternatives (see for example Alnakari
et al, 2000; Anderson 2002). When these truth tables are constructed, they will need to be done in
the specific context. For instance, if we are dealing with life threatening critical systems, then the
conjunction should be used in the strict sense, i.e. P ∧Q=1∧X=0, i.e. an answer like ‘I expect so’ is

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not good enough to warrant a ‘Yes’ output. The main design approach is that the classic bi-valued
logic would still be valid, as it is considered to be a subset. That is, by removing the additional two
values, the corresponding truth tables would be identical to the classic bi-valued logic truth tables.
In the majority of cases (including critical systems) we would not wish to remove the additional
values since they signify an uncertainty. This is often a telltale sign of conditioned response specific
to particular criteria, circumstances or exceptions. Examination of truth tables based in four-valued
logic can show us that the many (16) apparent alternatives actually resolve into only four, which are
relevant.

In order to support possible processes of human reasoning, we have to escape bi-valued logic and
begin to explore higher orders of multi-valued logic allowing paradoxical reasoning to be modelled.
The model of four valued logic described here appears to cover most categories of human
reasoning. The technical challenges and problems in transforming such multi-valued logic into
supportive systems, which can be implemented, are naturally amplified. Systems supporting
human reasoning maybe judged against benchmark criteria such as whether they can cope with
exclusive disjunction’ i.e. the challenge to correctly combine two truth statements to yield a result of
false (1 XOR 1=0). In many cases researchers have found for example that it is difficult to model
and train neural networks, which will meet this criterion. If four valued logic is to provide a new
domain for creating supporting software then it will be useful to maintain similar benchmark criteria
for success and indeed to incorporate further peculiarities or constraints of X and Y values. The
model that we offer in this paper does produce a basis for developing software, which could meet
this benchmark without sacrificing any benefits of two-valued logic.

4. Conclusion
The authors believe that a focus on bi-valued logic would constrain normal exercise of human
judgement, since people are capable of using multi-valued logic in a process of creating assertions.
In recognizing that human reasoning supports contradictions in forming judgements, we perceive a
need for any supportive system we create to extend beyond bi-valued logic. Using four-valued
logic, improved support might be provided for knowledge sharing environments, since it follows
more closely human practice and capability for reasoning. In this paper we have outlined an
example of a model, which could be used to parallel human reasoning. We offer a model of four-
valued logic as a basis for possible future development of software. We have shown with examples
how four-valued logic may be mapped against human reasoning. If it becomes possible to follow
human reasoning in applying the proposed categories, then complex resolutions can be tolerated in
technological support systems. If developers aspire to be able, in the future, to create systems,
which provide support for knowledge sharing environments, then we need to be able to recognize,
codify and trace different categories of resolutions. These categories need to be consistent with a
capability of human judgement to tolerate inconsistency.

References
Alnakari R., and Rine, D. (2000) ‘A Four-Valued Logic B(4) of E(9) for Modeling Human
Communication,’ ismvl, p. 285, 30th IEEE International Symposium on Multiple-Valued
Logic (ISMVL 2000), 2000.
Anderson, D. (2002). ‘LM4: a classically paraconsistent logic for autonomous intelligent machines,’
Proceedings of the 6th World Multi-Conference on Systemics, Cybernetics and Informatics
(SCI 2002), Florida
Bateson, G. (1972). Steps to an Ecology of Mind. Chicago: University of Chicago Press.
Bednar, P., M. (2000). ‘A Contextual Integration of Individual and Organisational learning
perspectives as part of IS analysis’. Informing Science, Vol.3, No. 3, 2000.
Bednar, P. M., Andersen, D. and Welch, C. (2005). Knowledge Creation and Sharing – Complex
Methods of Inquiry and Inconsistent Theory. Proceedings of ECKM 2005, Limerick, Ireland
8-9th September.
Einstein, A. (1990). Conceptions Scientifiques, Champs. Flammarion, Paris.
Rattner, J. (2005). Keynote Address, Intel Developers Forum Spring 2005,
http://www.intel.com/technology/techresearch/idf/platform-2015-keynote.htm,
accessed 28 April 2005.

34
 Peter Bednar, Christine Welch and Vasilios Katos

Recher, N (1969), Many-valued Logic, McGraw Hill, New York

Nonaka, I (1991), ‘The Knowledge Creating Company’, Harvard Business Review, 69 Nov-Dec
1991.
Monod, E. (2004). Einstein, Heisenberg, Kant: Methodological distinction and condition of
possibilities. Information and Organisation. No. 14, p 105 – 121. Elsevier, Amsterdam.
Polyani, M (1967), The Tacit Dimension, Garden City, N Y, Doubleday
Wilson, T D (2002), ‘The nonsense of ‘knowledge management’, Information Research, Vol. 8 No.
1, October 2002.

35
Knowledge Cooperation in Online Communities: A
Duality of Participation and Cultivation
Marco Bettoni, Silvio Andenmatten and Ronny Mathieu
Swiss Distance University of Applied Science, Brig, Switzerland
[email protected]
[email protected]
[email protected]
Abstract: This paper is an attempt to answer the question “How to design for engagement in community-
oriented knowledge management?” In order to do this we need an approach that has its primary focus on
distinguishing, balancing, connecting and negotiating between knowledge in its two fundamental dimensions:
individual and social. The concept of “knowledge cooperation” that we have defined as “the participative
cultivation of knowledge in a voluntary, informal social group”, is our proposal for fulfilling the previously
mentioned requirements. After introducing this definition of “knowledge cooperation” with its background in
community-oriented knowledge management, we will explain and give reasons for its constitutive elements
(participation, cultivation, knowledge, voluntary, informal, social) and their unique combination in our
approach. On this basis we will then describe the two coupled learning loops (participation and cultivation),
which in our conception characterise the dynamics of knowledge cooperation and argue for the importance of
looking at participation and cultivation as an interacting duality. Our main message is that the duality of
participation and cultivation that constitutes our model of knowledge cooperation allows both to better
understand knowledge processes in an online community and to design active, dynamic, healthy communities
where cultivating knowledge and participation in cultivating that knowledge mutually activate and sustain each
other.

Keywords: Online communities, community-oriented knowledge management, participation, cultivation,

knowledge cooperation, and communities of practice

1. Introduction
A recent survey report on collaboration in enterprises shows that participation in online
communities is growing, that technology for online communities is continuing to improve and that
retention of community participants is not a significant problem (Ambrozek & Cothrel 2004).
Unfortunately, despite these positive signs, one major obstacle remains: the discipline of creating
and managing communities is widely perceived as poorly defined. Both experience and research
show that we do not know enough about how something resembling an online community of
practice (CoP) can be designed (Barab et al. 2004). Some researchers even claim that enthusiasm
about CoP is well beyond empirical evidence (Schwen & Hara 2004). In fact, many communities
lack sustainability: either they fall apart soon after their initial launch or they adopt a short-term,
opportunity driven behaviour, which allows them to survive in some way. In both cases however,
they are not able to generate enough energy and synergies for engaging in long-term
cooperation’s. Moreover their short-term thinking and opportunistic behaviour leads to uncertainty
and mistrust between the members and consequently to low quality of shared work results.

This is where our concept of “knowledge cooperation” comes into play as an attempt to convert the
promise of social networks and collaborative technologies into the reality of active, dynamic,
healthy communities integrating learning and knowledge processes. This paper is an attempt to
contribute to the discipline of creating and managing online communities, especially those with a
focus on knowledge and research, by answering the question “How to design for engagement in
community-oriented knowledge management?”. In order to do this we need an approach that has
its primary focus on distinguishing, balancing, connecting and negotiating between knowledge in its
two fundamental dimensions: individual and social.

2. What is “knowledge cooperation”?

Knowledge is bound to human action. Knowledge cooperation – the cooperation and collaboration
of different domain experts with the aim of stewarding knowledge – is a living process with both
tacit and explicit elements, with both individual and social components, a process that constantly
changes and further develops through actions and interactions. Knowledge in such processes can

36
 Marco Bettoni, Silvio Andenmatten and Ronny Mathieu

not be completely reduced to an object of managerial actions, but must be treated as a kind of
organic entity, bound to persons, to interactions as well as to social contexts (Wenger et al. 2002;
Bettoni & Schneider 2003; Bettoni et al. 2004). On this background the point of view of work
psychology becomes more relevant: thanks to its focus on social dynamics the work psychological
approach views knowledge management as analysis and organization of knowledge oriented
cooperation (Clases, Dick & Wehner 2002, Wehner & Clases 2002). From this perspective one
recognizes, that human interactions and relationships are of greatest importance for knowledge
management and it appears thus more reasonable, to design the management of organizational
knowledge processes by resorting to socially oriented approaches and methods, like for instance
“Communities of Practice" (Wenger et al. 2002; Huysman et al. 2003).

On this basis, our proposal for fulfilling the previously mentioned requirements is a concept of
“knowledge cooperation” inspired by the CoP approach and defined as “the participative cultivation
of knowledge in a voluntary, informal social group” (Bettoni 2005). The group is informal in the
sense that its members meet within their organization but outside the reporting roles connected to
their position in the formal, organizational hierarchy to which they belong.

According to our model, cooperating and collaborating on knowledge consists of two cross-coupled
learning loops that activate and sustain one another: “cultivation of knowledge” and “participation in
knowledge” (Figure 1). Each individual learning loop is defined in its own terms and is in principle
autonomous, meaning that it could function alone, independently from the other. As a result the two
loops are not mutually exclusive. On the contrary, they must take place together, they are two
intrinsic constituents of knowledge cooperation and only their cross-coupling, represented in the
diagram by the lemniscate curve (∞ - the infinity symbol), allows to create an interacting, resonating
duality with a sufficient activity level. In this duality what is of interest in relation to engagement in
knowledge stewarding is understanding or promoting the interplay and integration of learning and
knowledge processes.

Figure 1: Circular processes of knowledge cooperation

The right loop in Figure 1, cultivation of knowledge, is the circular process by which a community
stewards its knowledge resources (by processes like acquiring, developing, making transparent,
sharing and preserving knowledge), uses them in daily work and then feeds these experiences
back into the stewarding process.

The left loop in Figure 1, participation in knowledge, is the circular process by which community
members build social capital (establish and take care of personal relationships, develop individual
and collective identities, etc.), “invest” this social capital in stewarding the knowledge resources of
their community and feed these experiences back into the socializing process.

These two processes are circular because in both cases a second process and returns to the
previous one as input transform the output of one process. In this model cultivation and
participation come as a pair, a dyad, a tandem: they form a unity in their duality. The three
processes or groups of knowledge processes connected by means the two mentioned learning
loops are (Figure 1):

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ƒ Stewarding knowledge – This group of knowledge processes encompasses processes like

acquiring, developing, making transparent, sharing and preserving knowledge. They are used
for handing down, reproducing and renewing knowledge and experience. What should be
noticed here is that these processes are not considered at a cognitive but at a coordinative-
cooperative level (see the cooperation model by Wehner et al. 1998): knowledge stewarding
does not intervene therefore directly in individual cognitive processes as too easily alleged by
certain critics of Knowledge Management.
ƒ Applying knowledge – This group of knowledge processes collects what happens when
knowledge resources are used in business processes. The learning loop of ‘cultivation’ is
established, if employees of the formal organization (teams, departments) informally participate
at the same time also in communities of practice (Wenger et al. 2002, 18 ff). This multiple
membership creates a learning loop which has its focal point in the employee: she gains
experiences in her daily work within business processes and can incorporate them in the
community of practice, where this knowledge is stewarded collectively and prepared for flowing
back to the business processes from where it originated.
ƒ Socializing knowledge – This group of knowledge processes collects what happens in personal
and institutional relationships between the people involved in stewarding and applying
knowledge. Relevant dimensions to be considered here are for example those which lead to
effective knowledge sharing like meta-knowledge, accessibility, engagement in problem-solving
and safety (Cross et al. 2003). Important elements to be considered in this group are: involved
people as individual persons, their ties, their interactions (regularity, frequency and rhythm), the
atmosphere, the evolution of individual and collective identities and, last but not least, spaces
(physical or virtual) for meeting together. This group is very important because it allows taking
into account the social aspects of stewarding knowledge, applying it and learning together.

3. Participation and cultivation as an interacting duality

In our concept of Knowledge Cooperation the circularity of participation and cultivation and the
interaction (cross-coupling) of these loops can be modelled more technically (Figure 2) as
consisting of two feedback loops applied as control systems to knowledge stewarding viewed as a
performing system whose performance (stewarded knowledge) must be maintained in line with
reference values (organizational performance and culture) in the presence of disturbances. As in
physiological or ecological systems, feedback is here the process by which the system’s inputs are
altered by its output (stewarded knowledge).

But which are the reasons that make this design suitable for better understanding knowledge
processes and for designing healthy communities? Our basic idea in developing this model was to
focus on the issue of “engagement” as a central design feature. The question is then: how to get a
lasting engagement in the community? The most common approach is to look for incentives, for
motivation (Bettoni et al. 2003). This may be a useful perspective in many organisational
development initiatives, but in the case of knowledge we claim (and will argue for in a future paper)
that the incentives view on engagement should be extended by a complementary and at least
equally important consideration of the issue of “meaning”.

In fact our knowledge is of course strongly related to motivation but probably much more intimately
connected and directly influenced by our experience of meaning. More specifically our claim is that
if we want to get enough engagement for stewarding knowledge in a community of practice, then
we need to:
ƒ Better understand the human experience of meaning
ƒ Extend our community design by a design for meaning.

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 Marco Bettoni, Silvio Andenmatten and Ronny Mathieu

Figure 2: Feedback view of knowledge cooperation

A basic aspect of our engagement is that we thrive for experiencing our actions, our practice as
meaningful; we do not simply want to get something done (a report written, an event organized, a
request answered, etc.): what counts in what we do is always more than the result, it is the
experience of meaning connected with that result. In the end the meaning we produce matters
even more than the product or service we deliver.

The kind of meaning involved here is an experience of everyday life, the experience that what we
did, are doing or plan to do “makes sense” to us. But how do we operate to produce these
meanings and to put them in relation to the histories of meanings of which they are part? In his
investigation of this issue Wenger (1998, p. 53) introduces the notion of negotiation of meaning as
“the process by which we experience the world and our engagement in it as meaningful.” This
process has the following characteristics:
ƒ An active, dynamic, historical process
ƒ It affects the elements which shape it
ƒ The meaning we experience is not imposed, it is produced, but not from scratch
ƒ The meaning we experience is not pre-existing and not simply made up
ƒ The meaning we experience does not exist as an independent entity outside the process
ƒ The meaning we experience exists in the process (in fieri)
Which elements are necessary for constituting a process with these characteristics? Wenger
proposes a model, which distinguishes two constituent processes: 1) a process embodied in
human operators, called participation; 2) a process embodied in an artificial operand (artefact),
called reification. The human operators contribute to the negotiation of meaning by their histories of
interactions in the practices of a community. The artificial operand contributes to the negotiation of
meaning by reflecting aspects of the practice of the community (histories of transformations). Thus
the negotiation of meaning takes place as a convergence of two histories, that of the human
operators and that of the artificial operands.

In Wenger’s model participation is conceived as: a) the social experience of living in the world in
terms of membership in social communities; b) active involvement in social enterprises. In the
same model reification is seen as the process of giving form to our understandings, experiences,
practice by producing objects, which express them. Writing down a law, producing a tool or even

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even putting back a book in a shelf are examples of this process. Participation and reification are
both distinct and complementary. They cannot be considered in isolation, they come as a pair.
They form a unity in their duality (Wenger 1998, p. 62).

According to this model, our experience of meaning is viewed as a duality, as an interplay of

participation and reification with the following implications: a) when you understand one, you should
also understand the other; b) when one is given, you should wonder where the other is; c) when
you enable one, you should also enable the other; d) one comes about through the other, but they
cannot replace each other.

By taking seriously Wenger’s theory and appreciating its potential impact on knowledge
management we can now deduce the following main guideline for our design for meaning:
If meaning as a constituent of a social theory of learning should be viewed as a duality
of participation and reification, then engagement in stewarding knowledge should be
implemented as a duality of two corresponding processes, in our case participation in
knowledge and cultivation of knowledge.
To conceive and implement participation and cultivation as a duality means that they should take
place together, they should both require and enable each other. There should not be any cultivation
without participation and no participation without cultivation.

Participation and cultivation should imply each other. Increasing the level of cultivation should not
substitute an equal amount of participation; on the contrary it should tend to require an increase of
participation. Cultivation of knowledge should always rest on participation in knowledge: applying
knowledge requires a history of participation as a context for its interpretation. In turn, also
participation in knowledge should rest on cultivation because it always involves words, concepts
and artefacts that allow it to proceed. Finally, the processes of participation and cultivation should
not be considered just as a distinction between people (human operators) and explicit knowledge
(artificial operands, things) that embody them. In terms of meaning, people and things cannot be
defined independently of each other. On one hand our sense of ourselves includes the objects of
our practice, on the other hand what these objects are depends on the people that shape them
through their experiences.

4. Participation and cultivation: An experiment

At the Swiss Distance University of Applied Sciences (FFHS) we are experimenting with this model
of Knowledge Cooperation in the realisation of a virtual research networking space called „CoRe
Square“ and implemented in MOODLE (Bettoni et al. 2006). This networking space for research
activities is a central issue in an ongoing project that has as its goal the integration of teaching and
research by means of the design launch and cultivation of an online “community of research”
(acronym: CoRe) for distributed research cooperation by 3 types of research partners: lecturers,
students and research staff. In the current version the CoRe Square space is divided in the
following seven areas that correspond to aspects of community life: Individual Hut, Community
Circle, Domain Club, Practice Lab, Connections Room, Leadership Lounge and Technology
Corner. Following the design for meaning guideline presented above, we have designed the inner
structure of all these seven activity spaces as one or more pairs of tools, each of which should form
a unity in its duality. In terms of technology each pair is a dyad constituted by a forum-tool and a
wiki-tool (Figure 3).

The forum is a tool for enabling participation in knowledge: creating new discussion threads,
reading posts and replying to them supports participation as the social experience of being
connected with other and being actively involved in a collective enterprise (stewarding research
knowledge).
The wiki is a tool for enabling cultivation of knowledge that preserves the results of conversations
(new ideas, insights, best practices, lessons learned, definitions, procedures, etc.) by organizing
them in a structured way and independently of time.

40
 Marco Bettoni, Silvio Andenmatten and Ronny Mathieu

Figure 3: Dyad tool of knowledge cooperation

Following this design, in the current version of CoRe Square the seven activity spaces contain for
example the following dyads: a) Individual Hut: each member has an own forum (“personal blog”)
and an own wiki; b) Community Circle: a forum for talking about experiences with the platform and
a wiki for making a systematic overview of these experiences; c) Domain Club: a wiki for collecting
an overview of research methods and a forum for talking about individual methods; d) Practice Lab:
each project has an own forum for talking about project steps and issues and an associated wiki for
a systematic overview of project work and outcomes; e) Leadership Lounge: a wiki where members
can sign up for tasks and a forum for talking about engagement for the community.

Figure 4: Practice lab area

As an example of an activity area the “Practice Lab” is shown in Figure 4. Just below the title bar
there is a file named “… about Practice Lab”. It explains the primary activity in this area. Further
explanations are given in three additional “about” files below it. The Practice Lab is an area for
research practices, i.e. working in research projects, writing articles and giving presentations at
conferences. Each research project has an own forum for conversations about project steps and
issues and an associated wiki for a systematic overview of conversation results, project work and
research outcomes. With many projects the topic area would become very long and difficult to
navigate. For this reason we have assigned an individual project area (a MOODLE topic) to each
project and collected all project names and short descriptions in a table from where a links leads to

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The 7th European Conference on Knowledge Management

the associated project area. Below the file with the project table the Project Lab gives access to 4
dyads: Cases, Stories, Publications and Conferences.

5. Conclusion
CoRe Square will be launched during a future search event and opened to all members of CoRe (a
community of about 250-300 persons) in June 2006. By then many dyads Forum&Wiki – our
fundamental design unit – will be ready for use and further development by the users. At this point
we plan to start an empirical investigation (formative evaluation) for assessing the suitability of
Knowledge Cooperation and of our dyad tool as a way for fostering and maintaining engagement in
community-oriented knowledge management.

References
Ambrozek, J. & Cothrel, J. (2004). Online Communities in Business: Past Progress, Future
Directions. http://www.sageway.com/ocib.html.
Barab, S.A., Kling, R. & Gray, J.H. (2004). Designing for Virtual Communities in the Service of
Learning. Cambridge Univ. Press, Cambridge, UK.
Bettoni M., Andenmatten S., Mathieu R., (2006). Research Networking with “CoRe Square”. In:
Proc. of MApEC 2006, Multimedia Applications in Education Conference, Graz, Austria,
Sept. 4-6.
Bettoni, M. und Schneider, S. (2003). The Essence of Knowledge Management: A Constructivist
Approach. In: Proc. of the Fifth Intern. Conf. on Enterprise Information Systems, ICEIS
2003, Angers, France, April 22-26, Vol. 2, 191-196.
Bettoni, M. (2005). Wissenskooperation: Die Zukunft des Wissensmanagements, Lernende
Organisation, Nr. 25, Mai/Juni.
Bettoni, M., Clases, C. & Wehner, T. (2004). “Communities of Practice” as a way to a more human-
oriented Knowledge Management. International Conference on HRM in a knowledge-
based economy, 2.-4. 6. 2004, Ljubljana, Slovenia.
Bettoni, M., Braun, A. & Weber, W. (2003). “What motivates cooperation and sharing in
communities of practice?”. In: F. McGrath & D. Remenyi (eds.), Proc. of the 4th Europ.
Conference on Knowledge Management (ECKM 2003), Oriel College, Oxford University,
UK, Sept. 2003, pp 67-72.
Clases, C., Dick, M. und Wehner, T. (2002). Vom Wissensmanagement zur Analyse und
Gestaltung wissensorientierter Kooperation, Journal Arbeit, Herbst 2002.
Cross, R., Parker, A., Prusak, L., & Borgatti, S.P. (2003). Knowing What We Know. Supporting
Knowledge Creation and Sharing in Social Networks. In: Cross, R., Parker, A. & Sasson, L.
(eds.), Networks in the Knowledge Economy. Oxford University Press, Oxford.
Huysman, M., Wenger, E. & Wulf, V., eds. (2003). Communities and Technologies. Proc. 1st Int.
Conf. on Communities and Technologies. Dordrecht: Kluwer.
Schwen, T.M. & Hara, N. (2004). Community of Practice. A Metaphor for Online Design?. In:
Barab, S.A., Kling, R. & Gray, J.H. (2004).
Wehner, T., Clases, C., Endres, E. & Raeithel, A. (1998). Zwischenbetriebliche Kooperation.
Zusammenarbeit als Ereignis und Prozess. In E. Spiess (Hrsg.), Formen der Kooperation
(S. 95-124). Göttingen: Verlag für Angewandte Psychologie.
Wehner, T. & Clases, C. (2002). Knowledge oriented cooperation. A work psychological approach
to knowledge management. In: M. Fischer & N. Boreham: Work process knowledge and
work-related learning in Europe. Cedefop, Thessaloniki.
Wenger, E. (1998). Communities of Practice. Learning, Meaning, and Identity. Cambridge
University Press, Cambridge, UK.
Wenger, E., McDermott, R., Snyder, W. (2002). “Cultivating Communities of Practice: a Guide to
Managing Knowledge”, Harvard Business School Press, Cambridge, MA.

42
Alternative Accounting to Manage Intellectual Capital
György Boda and Peter Szlávik
Corvinus University, Budapest, Hungary
[email protected]
[email protected]
Abstract: The connection of intangible assets to cash flow generation is a major management issue. In
addition, majority of the investment is made in the intangible capital items. This paper intends to present an
approach that supports the continuous measurement of intangible assets and allows an extended value based
management framework that considers both tangible and intangible elements. The value of a company
includes significant elements that are not described by the generally accepted accounting methods such as
relationship capital, organizational capital, and knowledge and competence of employees. These elements are
possible to be presented in an expanded balance sheet. We face challenges when we try to quantify the
elements for a concrete date or when we intend to capture the exact changes throughout a certain period.
Based on generally accepted accounting standards, the investment into intellectual assets is mostly handled
as cost. This cost is accountable against the revenue of the period therefore decreasing the period’s profit.
This approach does not allow the carrying forward of any cost element for future periods, even in the case of a
long-term cost. If we reconsider our cost management framework and costs that serve the development or
replacement of intellectual capital items we manage as capital expenditures in intellectual capital items and
not as period’s expense, we could build up a ground up approach of handling of intellectual capital items. This
approach results in the compilation of two balance sheets and profit & loss accounts that are alternative
versions of each other. The visualization of intellectual assets and intellectual capital might significantly
change the decision making process and the general thinking of the management. The authors suggest
further research in order to support the development of the conceptual framework and the operational rules of
practice.

Keywords: Intellectual capital; value-based management; measurement; alternative accounting; intangible

balanced sheet

1. Introduction
The value of a company includes significant elements that are not described by the generally
accepted accounting methods. The customer and supplier relationships, the knowledge related to
the organization and the knowledge and competence owned by employees are such elements.
Current accounting practices – in general – do not allow for the visualization of these assets (often
referred as intellectual assets, or intellectual capital 1 ) in the company’s balance sheet. There is one
exception however; in the case of a company acquisition the buyer is allowed to represent goodwill
in its accounts when the book value of the purchased entity is below the purchase price.

The importance of intellectual capital in the value of a company is increasing rapidly. Due to the
fact, that accounting standards do not support the reporting of these assets, the task of
management teams is getting even more complex because it is extremely difficult to manage
something that you cannot properly visualize.

Our intention is to provide guidelines and support for the entities that intend to manage these
elements by integrating related management information into existing reporting frameworks. By
doing this we can help these companies operate more efficiently.

2. The shift among tangible and intangible assets

1. Fewer and fewer companies have operations primarily involving physical assets. Instead, most
companies are service providers.
2. Among production factors there is a remarkable shift to the intangible (i.e. intellectual)
elements.
1
Intellectual capital and Intellectual assets are referring to the same resources, therefore could be used as
synonyms, although the “intellectual asset” label refers to the asset side of the balance sheet while the
“intellectual capital” refers to the ownership of these assets. Throughout the text we are using both terms as
synonyms.

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The above statements are true in most industry sectors worldwide. Research shows that on
average 75% of the company’s value is not described on its balance sheet 2 . Investigation and
research carried out by the authors among Hungarian entities resulted in similar findings.

Companies taking action in this field are not limited to certain industry segments. In general those
entities are more open to putting a lager emphasis on these assets that have a higher “intellectual
capital index” 3 .

There are several reasons why we should concentrate on this process. In general, the value of a
company is significantly higher than its book value; therefore we cannot neglect answering the
question why this occurs.

The increasing company value – in most cases – does not mean that the total book value of assets
is growing with the same rhythm, moreover the proportion of total book value of assets to company
value is getting smaller as the company value grows. In such a situation we should be able to
predict the resulting increasing company value. Does the profit making capability of the physical
assets grow with an increased marginal productivity or are there hidden assets behind the ones
presented in the balance sheet?

The book value only represents the value of the physical assets and the value of certain – but
limited – intangibles (e.g. software and patents). The market value of a company consists of other
elements, such as
ƒ Relationship capital (external structure related value)
ƒ Organizational capital (internal structure related value)
ƒ Knowledge and competence of employees (employee related value)
Relationship capital includes customer, supplier and other relationships. In addition this
represents references, public relationship value and the image of the company (and its products).
These elements could represent a significant proportion of the company’s value. Yet only small
portions of such elements (such as patents) are allowed to be indicated in the company accounts.

Organizational capital includes standardized and customized processes, information and

administration systems/frameworks and company culture. These elements differentiate the entity
from similar organizations (besides relationship capital and individual employees) and allow the
organization to be unique in its own way.

Knowledge and competence of employees describes the value assigned to individual

employees. This refers to the capability of employees to create material or immaterial assets and
properties.

These elements are strongly related to the manpower of the company (or are very difficult to
harvest it without them) therefore we could define them as knowledge capital or intellectual
capital.

Based on the previously described factors, the balance sheet describing the capital of a company
should be expanded by these newly introduced elements. The expanded balance sheet is
described in figure 1.

2
Stefano Zambon: Intellectual assets and value creation: Exploring the „black link”; International Policy
Conference, Ferrara. Italy, 20-22 October 2005.
3
=(Company Value – Book value of assets)/Company value

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 György Boda and Peter Szlávik

Figure 1: Structure of expanded balance sheet

3. How can we identify and quantify the intellectual capital of an entity?

Theoretically we could easily identify the elements of intellectual capital. The theoretical
identification does not need exact data, and the components will be the same for every company.
However, we face challenges when we try to quantify the elements for a concrete date or when we
intend to capture the exact changes throughout a certain period.

The simplest approach to capturing the amount of intellectual capital is to first determine:
• A. The market value of the company, or
• B. The quantified strategic plan of the company.
In the latter case we could identify the discounted free cash flow of the entity based on the strategic
plan. This enables us to measure the value of the company, therefore finally version B, equals
version A.

In case of listed companies the value of the entity is always available (although not always reliable
for various reasons) – version A –, while for unlisted companies it is available only on a case-by-
case basis (i.e. when having an offer from a potential investor). Should there be any problem with
the availability of market value, we can always rely on version B, to identify the required
information.

The basic – and a bit simplified – formula for identifying total amount of intellectual capital is to
subtract the book value of total assets from the market value of the company. Having this data
available – unfortunately – does not provide information about the elements of intellectual capital.

Since the value of the company comes from both the physical assets and the intellectual assets of
the entity, proper value based management requires the management of the intellectual assets,
too. The balanced way of managing the value of a company is accomplished by concentrating on
both crucial elements.

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When managing material assets, we have a lot of information available from the conventional
management reports, where we can see the physical assets, the working capital and other
elements in detail. The process of identifying intellectual capital that we investigated above only
gives us an overall value. This identification process does not give us understanding and therefore
the ability to manage the individual components of intellectual capital. We need to find a proper
way to capture this information.

4. Money spent on intellectual capital – Is it cost or investment?

Based on generally accepted accounting standards, the investment into intellectual assets is
mostly handled as cost. This cost is accountable against the revenue of the period therefore
decreasing the period’s profit. This approach does not allow the carrying forward of any cost
element for future periods, even in the case of a long-term cost (like the tutorial fee of an internal
training). There is one exception that we have already mentioned: in the case of a company
acquisition the buyer is allowed to represent goodwill in its accounts if the book value of the
purchased entity is below the purchase price.

The generally accepted accounting standards require having the chart of accounts as described in
figure no. 2.
ƒ Includes those accounts that are describing the book value of the entity’s assets such as
tangible assets, current assets, cash and bank, long term financial assets and prepayments
ƒ Includes an intangible account that summarizes those assets that are intangible, but allowed to
be presented in the balance sheet (e.g. patents, software)
ƒ Includes the most important liabilities that are necessary to determine the company’s
shareholders’ equity
ƒ The chart describes the creation of assets and the patterns of change; it also describes the
balance between assets and liabilities.
These accounting rules are extremely important for our analysis, because the axioms behind this
logical framework are the points that we would like to modify slightly in order to have an alternative
(updated) accounting structure.

The cautious, conservative approach of generally accepted accounting methods is understandable.

This only supports those quantifying methods that are fully defendable and reliable, and therefore it
provides stability for the measurement process. On the contrary the measurement of intellectual
capital is highly uncertain. This is true, but we believe that this should not mean that we exclude
any element just because there is uncertainty assigned. If declare any intellectual capital related
event as cost related to the current period, we do not allow for the visualization of certain assets.
Therefore finally the total assets we present in the company’s books will be far below the real value
of the company. As the intellectual capital is growing at an accelerating rate, the proportion of
company value presented in the books is getting smaller and smaller and the value based
management is becoming more and more difficult due to the fact that the necessary information for
decision making is not visualized, and therefore it cannot be obtained.

5. Alternative chart of accounts

We can capture the value of the company more precisely if we do not distinguish between the
creation of tangible capital expenditures, intangible capital expenditures – that are allowed to be
accounted for as assets by accounting standards – and other intangible capital expenditures not
handled by accounting standards. Moreover the volume of the latter group is more significant than
conventional intangibles. Resources invested to intellectual capital – in our view – are basically
capital expenditures and not expenses. Without visualizing and controlling this process we can not
manage our company properly. This approach allows us to measure better the real extent of the
profit of every period.

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 György Boda and Peter Szlávik

Figure 2: Figure of accounts according to the generally accepted accounting standards

If we reconsider our cost management framework and costs that serve the development or
replacement of intellectual capital items we manage as capital expenditures in intellectual capital
items and not as period’s expense, we could build up a ground up approach of handling of
intellectual capital items. Of course this requires a significantly modified cost accounting
framework. In this framework we should make a decision on each and every individual cost item
which asset category it belongs, and what the proportion is that could be capitalized (based on its
efficiency). Besides this, we should determine the depreciation rule and the impairment
measurement of each group of assets, too.

This method expands the generally used chart of accounts with alternative accounts (see figure no.
3.).

Figure 3 does not include accounts that are not important for visualizing the creation of intellectual
capital. These are not influenced by the newly introduced elements. Neglecting these accounts
allows us to simplify the chart, but of course these accounts remain in use.

The main difference between the two charts of accounts is that we separated the first expense flow
on figure 2 into two relevant pieces. On figure 3 we separated those expenses that refer to the
creation of intellectual assets (1b expense flow) and we determined the capitalization of these
expenses. This method produces fewer expenses in our profit and loss of the first period compared
to the conventional approach, but – in parallel with this – additional depreciation cost should be
presented relating to the new categories of assets in each period.

This new cost management approach results in profit reallocation among different periods. The
total effect of profit reallocation is zero in the long term (although the costs are redefined as capital

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expenditures, the newly created assets should be depreciated during the time horizon), therefore
compared to the conventional approach this approach creates different foundation for management
decisions. This approach could be helpful for management if they see the conventional reports in
parallel with the extended reporting. Companies have to calculate taxes based on their
conventional accounting statements; therefore the modification of the chart of accounts should not
result in neglecting tax accounting information. In the new structure we should be able to visualize
both the conventional and the extended accounting information.

The extended accounting approach not only modifies the asset side of the balance sheet but also
requires an alternative calculation of shareholders’ equity (see figure 4).

Figure 3: Chart of accounts expanded by alternative accounts

Shareholders’ equity and profit/loss for the year can be calculated in an alternative way:
ƒ With the help of the wide arrows we can obtain the company’s shareholders’ equity and
profit/loss for the period according to accounting standards. In this case we apply cost items of
accounting standards, which measure the company’s shareholders’ equity and the change of
shareholders’ equity.
On the side of dotted arrows we determine the company’s intellectual assets and its shareholders’
equity and profit/loss for the period influenced by its intellectual assets. This method results in
different values than the values calculated based on the conventional accounting standards.

48
 György Boda and Peter Szlávik

Figure 4: Principle of alternative accounting that supports the management of intellectual capital
This approach results in the compilation of two balance sheets and profit & loss accounts that are
alternative versions of each other.
ƒ The balance sheet compiled by accounting standards includes assets and liabilities. Assets
consist of intangible assets, tangible assets, long-term financial assets, cash and bank, other
current assets and prepayments. Liabilities consist of visible shareholders’ equity, provisions,
short-term and long-term liabilities and accruals. The balance between the two sides is kept
stable.
ƒ The balance sheet that allows us to support the measurement of the company’s enterprise
value, includes additional intellectual assets, such as internal structure related, external
structure related and individuals’ competence related elements. These additional intellectual
assets are balanced by the invisible shareholders’ equity on the other side of the balance sheet.
Management that is used to solely relying on conventional accounting information might be
frightened to give up this comfortable framework. The introduction of extended elements however
is not contrary to the classic way of reporting, but rather it can provide useful additional information
that might be critical for certain management decisions. Besides the calculation of cash flow related
information remains exactly the same in both approaches.

Similar to conventional group of assets, the efficiency and obsolescence of intellectual assets is a
crucial topic, as well. The method of intellectual asset evaluation should be the same that is used in

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the case of tangible assets according to IFRS 4 . At the end of each period we have to measure the
actual value of our intellectual assets (item by item) and decide upon their impairment loss.

6. Controls related to intellectual capital

The visualization of intellectual capital is not yet a settled procedure; therefore it is difficult to
provide exact guidance for decision-making dilemmas assigned to the topic. Several samples show
that if one can misuse something then it will be misused. Accounting standards disallow the
application of alternative solutions, because they might take uncertainties into accounting
measures. The figures of one of the largest Hungarian pharmaceutical companies figure 5) support
these dilemmas.

Book value
DCF enterprise value by 10% discount rate & 6% valorisation rate
Market price of assets based on share prices
900 000

800 000

700 000

600 000

500 000
THUF

400 000

300 000

200 000

100 000

0
1997 1998 1999 2000 2001 2002 2003 2004 2005

Figure 6: Visible and invisible capital of Richter Gedeon Ltd.

Estimations of enterprise value are very sensitive to prospective expectations. This can be
presented by the enterprise value estimated based on share prices. Stability of enterprise value
measured by discounted cash flow (DCF) is deceptive. This is also sensitive to the applied discount
rate and weighted average cost of capital (WACC). Growth of book value is significant and stable.
The problem is that the book value is not in the neighborhood of enterprise value, it is less than the
half of the company’s enterprise value. An accounting approach that continuously undervalues the
company’s enterprise value with such an extent could be questionable by this market data.

When measuring the company’s intellectual capital the management intends to gather information
for its own purposes, thus it does not want to give a short weight and cheat itself. Of course,
mistakes are always possible. The situation is similar to planning: the planning process is the real
value for the management and not the plan itself. Translating it to the company valuation: the base
value is the process of company valuation (and the related value based management) and not the
enterprise value itself.

The good planner knows that planning is indispensable despite the fact that a plan is often built on
some level of uncertainty. Risk management and sensitivity analysis should handle uncertainties
during the planning process. The person who deals with measurement of company value has to do

4 IAS 36

50
 György Boda and Peter Szlávik

something similar: he has to identify the sensitive points of the adopted procedure and work out
methods for decreasing the volume of sensitivity.

Uncertainties can be managed in different ways:

ƒ The first way can be the methodology of discounted cash flow (DCF) based company valuation.
This method calculates enterprise value – total value of assets operated by the company 5 –
based on the discounted cash flows produced by the company in the foreseeable future. In the
case of listed companies this method can be completed by the share price based company
valuation method.
ƒ The other way can be the alternative (expanded) accounting approach presented above.
Alternative accounting could be an important control instrument. It is possible, that if we capitalize
all types of intellectual capital expenditures, which are not allowed to be accounted for as assets by
accounting standards, we might get higher intellectual capital value than the difference between the
DCF-based enterprise value and the tangible assets would allow. In such a case the intellectual
assets might be under managed, or not efficient and therefore their value is not appropriate, thus
impairment should be applied. However, if the intellectual capital calculated during the bottom to
top approach is smaller than the difference between the DCF-based enterprise value and the
tangible assets, we have another problem that requires action. In this case we might not had
identified some items of intellectual capital which might lead to the under management of these
assets without proper management focus.

There are some other instruments – scorecards – that support the managing of uncertainties.
Skandia Navigator 6 , Intangible Asset Monitor by Sveiby 7 , and Balanced Scorecard 8 all try to grasp
the efficiency of intangible assets from the point of view of financial result of the entity.

During the identification and quantification process of the company’s intellectual capital we face
significantly larger uncertainties than during the process of identifying the visible (tangible) capital
based on the physical assets. In order to support these efforts we need to have scorecards and
efficiency indexes. These indexes monitor the company’s invisible capital (although they are not
measuring it). Basically they all operate based on four viewpoints: financial, (customer/client)
relationship, organizational and human. The general rule is that if the value of capitalized
intellectual assets is exceeds the intellectual capital measured by DCF, the value of scorecard
indexes will be unfavorable. This might help a lot in the management of the elements of intellectual
capital. The use of scorecards might be a cost effective way of monitoring intellectual capital
elements. Overall the annual itemized review (audit) of intellectual assets cannot be avoided by the
simple use of scorecards.

The detailed monitoring of intellectual capital will require a lot of resources (both money and time).
A profit-oriented company will undertake itself to these additional tasks only if the additional costs
and efforts increase the profit and make cost management more efficient. This method provides a
basis for the consistent valuation of a complex asset base that is fundamental for an effective cost
management framework. Management can control a company’s costs only in if it is fully aware of
the characteristics of the company’s assets (including cost of operation and profit generating
capability). Due to the fact that the majority of the assets are intellectual, we cannot have an
effective cost control environment without having controlling the management of intellectual assets.

The new approach gives additional responsibility to the management, thereafter they need to
operate based on extended return indexes (such as “ROCA” 9 ) instead of the old indexes (like
ROA 10 ). The former deals with the modified profit figure and the expanded asset base compared to
the latter one. This might significantly change the decision making process and the general thinking
of the management.
5
References of Mills, Copeland, Koller and Murrin
6
Reference of Edvinson - Malone
7
Reference of Sveiby
8
Reference of Norton - Kaplan
9
Return on Complex Assets
10
Return on Assets

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This new approach does not mean that we can increase our intellectual capital endlessly, without
limits. Ascending capital expenditures in intellectual capital, which is a routinely and mechanically
increased capital expenditure, imply the devaluation of capitalization index (i.e. a worsening
marginal utility ratio). So the decreasing proportion of capital expenditures increases the relevant
intellectual capital items and the enterprise value. The rest is depreciated (or impaired) during the
period, and finally becomes period cost. Identification of intellectual capital items does not mean
that the classical efforts to reduce costs are useless. We can not avoid the cost efficiency steps
with capitalization of expenses as intellectual assets, either. Parallel with the calculation of
intellectual capital items we have to elaborate the continuous examination of efficiency of these
new assets. The effect of an intellectual capital structure controlled with efficiency could be the
same as the effect of a well thought out cost reduction and cost control procedure.

7. Further steps
Based on research carried out so far, it is clear that the introduction of alternative charts of
accounts and the quantification of the intellectual property elements would cause debates among
financial experts and academics. The level of uncertainty assigned to the valuation of individual
intellectual property items, the depreciation and impairment process related to these elements and
the inclusion of this approach into everyday management decisions are areas where further
investigation is required. We would like to open a debate that requires the involvement of both
acting management accountants and academic researchers, with the aim of identifying those
elements of the approach that needs further research. By the development of this conceptual
framework we expect to work out a general approach for the introduction and continuous use of
alternative chart of accounts.

References
Damodaran, Aswath (2001) The Dark Side of Valuation, Prentice Hall PTR, Upper Saddle River,
2001.
Danka Starovic and Bernard Marr, CIMA (Chartered Institute of Management Accountants),
Cranfield School of Management, [email protected] 28. pages.
Davenport, Thomas H. - Probst, Gilbert J. B. (2002) Knowledge Management Case Book, Publicis
Corporate Publishing - John Wiley & Sons, Siemens Best Practices
Deakin, Edward B. - Maher, Michael W. (1987) Cost Accounting, IRWIN, Homewood, Illinois
60430, 1036 pages.
Edvinsson, Leif - Malone, Michael S. (1997) Intellectual Capital, Harper Collins, New York
Hermanson,Roger H. - Edwards, James Don - Maher, Michael W. (1992) Accounting Principles,
IRWIN, Homewood, IL 60430, Boston, MA 02116, 1266 pages.
International Accounting Standards 2003, IAS 36, 38
Kaplan, Robert S. - Atkinson, Anthony A.: Advanced Management Accounting.
Kaplan, Robert S. - Norton, David P. (1996) The Balanced Scorecard, Harward Business School
Press, Boston, Massachusetts
Kaplan, Robert S. - Norton, David P. (1992) The Balanced Scorecard - Measures That Drive
Performance, Harvard Business Review, 1992 January-February.
Kaplan, Robert S. - Norton, David P. (2004) Measuring the Strategic Readiness of Intangible
Assets, Harvard Business Review, 2004 February.
Mills, Roger W. (1998) The Dynamics of Shareholder Value - The principles and Practice of
Strategic value Analysis, Mars Business Associates Ltd., 256 pages.
Standfield, Ken (2002) Intangible Management, Academic Press, Boston
Stewart, Thomas A. (2002) The Wealth of Knowledge, Nicholas Brealey Publishing, London
Sveiby, Karl Erik (1997) The New Organizational Wealth, Berreth-Koehler Publishers, Inc., San
Francisco
Sveiby, Karl Erik (2003) A Knowledge-based Theory of the Firm to guide Strategy Formulation,
Paper presented at ANZAM Conference, Macquarie University Sydney, 2003 February.
Tom Copeland, Tim Coller, Jack Murrin (1995) Measuring and Managing the value of Companies,
McKinsey & Company. Inc. Published in Hungarian by PANEM, 550 pages.
Volkart, Rudolf (1998) Financial management - A basic framework for corporate finance, Versus
Verlag AG, Zürich, 96 pages.

52
Systematic Knowledge Organisation for Marketing
Research with Assisted Search Employing Domain
Models and Integrated Document Storage
Karsten Böhm1, Martin Delp1 and Wolf Engelbach2
1
FH KufsteinTirol – University of Applied Sciences, Kufstein, Austria
2
Fraunhofer Institute for Industrial Engineering IAO, Stuttgart, Germany
[email protected]
[email protected]
[email protected]
Abstract: A new approach is described that combines the advantages of search engines that are accessible
on the Internet and from professional information providers with a flexible organisation system for documents
and conceptual structures obtained from the research in a specific application domain. It aims at supporting
systematic research activities that go beyond a single-step ad hoc retrieval and that request a systematic
search strategy, which includes iterative query refinement and the organisation of search results and
documents. A domain specific information model will be used to organize all items (document and concepts)
according to their domain and task specific relevance. During the research this domain model will be used to
assist the retrieval process in the research activity. The system is targeted at SMEs and should be applied for
the support of systematic researches in the domain of marketing and internationalization for the exploration of
new markets for a company.

Keywords: Assisted search, domain models, knowledge organisation, evaluation of knowledge management
systems, marketing research

1. Introduction
Systematic knowledge organisation becomes more important as the amount of information still
increases rapidly and is relatively easy to access – compared to the possibilities that existed some
years ago. A number of powerful search engines are available to search on Internet and Intranet
resources and they provide the expert with powerful means to retrieve the needed information with
only a number of iterative searches.

Still, the appropriate search for users with less experience in the domain in question will be more
difficult. Thus, assistance during the individual search steps would be desirable in order to query
appropriate sources with the right questions (Assisted search). In order to be able to trace the often
iterative searches, a way of documenting the individual research steps would be useful either to
communicate the course of a search process to persons not involved in the research (e.g. clients of
a consultancy company) or to document and archive the search activities in order to reuse them
later or to share them with colleagues.

After the retrieval process itself it is usually necessary to store the relevant information in order to
capture the current state of the research for later reporting and to organize the information in some
task-specific way, so that they form a dossier that files all the information relevant for the research
carried out. Finally, it should be possible to document the knowledge gained from the research in a
more abstract way on a conceptual and system independent level, which should in turn be usable
to organise the information pieces accordingly.

Especially small and medium-sized companies (SMEs) need to look for information without
investing too many resources in terms of time and money, in particular without employing external
consultants. As valuable information about external business factors is readily available on the
Web, what is needed is just to explore the web resources properly. On the other hand the expertise
of SMEs in using internet tools is rather restricted, especially if the domain that is researched for is
only partly known. Therefore, there is a tremendous need to provide tools that would simplify the
Internet exploration process as a foundation for decision making for subsequent processes as an
internationalisation project.

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For this purpose, we have developed a software prototype within the project AMI-SME (Analysis of
Marketing Information for Small And Medium-Sized Enterprises) that combines advantages of
existing Internet search engines with modern text analysis functionalities and an intelligent ontology
based storage system for documents and knowledge items. The following two main objectives are
addressed:
ƒ The solution aims at supporting systematic research activities that goes beyond a single-step
ad hoc retrieval and that request for a systematic search strategy, which includes iterative query
refinement and the organisation of search results and documents.
ƒ A domain specific information model will be employed and used to organize all items
(document and concepts) according to their domain and task specific relevance. During the
research this domain model will be used to assist the retrieval process in the research activity.
A systematic research consists of a number of iterative retrieval steps, which have to be carried out
in a specific order with a dedicated task specific purpose. The results need to be filtered, sorted
and stored for further processing or for documentation purposes. Current search capabilities do not
support such a multi-step research activity and do also not support the organisation of the results in
an application or domain dependent structure.

The paper is structured as follows: after briefly introducing the business case addressed in this
project we will explain our methodology of using ontologies as conceptual structures to support the
two main objectives of the IT-solution: assisted search and organisation of the research findings in
such a conceptual structure. The following section will highlight the technical architecture and
illustrate core functionalities using different aspects of the user interface. In section 4 we will outline
the evaluation methodology for the IT-solution developed in the AMI-SME project and in section 5
we will discuss some related approaches und give an outlook in the concluding final section.

2. The approach for systematic knowledge organisation

2.1 Objectives: Considerations on the business case marketing research for

internationalisation projects
Increasing competition and globalisation trends are challenging companies to expand the target
markets for their products and services into foreign countries. The process of internationalisation
necessitates many decisions. Adequate information (e.g. relevant products and companies, or the
market situation) about the specific industry niche is required to support decision-making and
ensure the successful implementation of the internationalisation strategy. The research for the
required information – which is often distributed over several Websites of companies, research and
governmental institutions – consists usually of several individual search steps and requires that one
could keep track of the researched information at a later stage, too.

The business case of Marketing Research and Internationalization for SME represents a
challenging application setting for IT-based research tools, because of the following reasons:
Firstly, these types of information researches are related with both the business perspective of the
company (products, competitors, markets) as well as with the specific domain branch-related
information (such as technologies, competitors, trends), thus spanning a heterogeneous field of
research questions with a rather broad scope of potential useful information sources. Secondly, a
marketing or internationalization research is carried out in an SME only occasionally, therefore
research experts are not likely to be found within the enterprise; a proper guidance how to carry out
the research is therefore desirable. External consultants which are carrying out such a research on
behalf on a SME, are familiar with the research methodology and need only a limited assistance for
the search process itself (e.g. concerning domain specific issues), but are working for a number of
client, maybe even simultaneously, and need therefore functionalities to organise the researches in
a project like manner.

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2.2 Methodology: The dual use of conceptual structures for assisted search and
for document organization
As already mentioned and as illustrated in figure 1 below, we use conceptual structures as a
central model to support both the individual search processes as well as the organisation of the
findings of the research, which will be referred to as documents throughout the article. In order to
realise this functionality we are using ontologies implement the central conceptual structure.
Ontology is understood in this article as a common conceptualization to structure a domain.

Structure Sort and find

relevant topics search results

Product Company
Questions Answers
Project

Suggest Sort and find

Area Market
search terms knowledge

Improve and extend

project ontology

Figure 1: Project ontology usage overview

The software application distinguishes between system ontologies and project ontologies. System
ontologies structure the domain of several projects, e.g. internationalisation and cover the general
methodology for a certain class of researches, such as marketing researches. Project ontologies,
however, are specific for one research project, e.g. selling simulation software in France and
should cover the specific facets of the individual research project.

If one defines a new research project, he selects the appropriate system ontology and all
modifications will be stored to its project specific copy. Thus, each project will have its own project
ontology, extended and instantiated by modifications during the usage of the system. As illustrated
in figure 1, the project ontology is the central element to support the core functionalities:
ƒ Structuring of relevant topics is provided by the ability to label search results manually, which
allows to find them within the ontology structure easily;
ƒ Suggestion of new search terms is available as soon as enough results are labelled manually it
is also used to suggest labels for search results automatically; this function will also assist in the
definition of queries by topic suggestions related to the concepts and instances of the ontology,
e.g. legal issues or distinct products and it also suggests keywords and synonyms as well as
relevant Internet pages for concepts and instances.
ƒ Sorting and finding of search results allows saving and retrieving the individually extracted
information about relevant knowledge items, e.g. about specific competitors or relevant regions;
ƒ Sorting and finding of gained knowledge will be supported by organising the researched
information on a conceptual level (e.g. the competitors of a marketing research project that will
be represented as instances in the ontology).
ƒ Finally the improvement and extension of the project ontology itself will be considered as an
important functionality for the user to tailor the conceptual structure according to the need of his
or her information research.
Since all these activities relate to the same project specific ontology, wherever you add a new
knowledge item (instance), a knowledge type (concept) or a relation, they are immediately
available for the other purposes as well.

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Currently one system ontology is already designed for and integrated in AMI-SME. It describes
important concepts in internationalisation and is used to test the system. That ontology has four
main top-level concepts, which are crucial to understand a given situation: product, company,
target market and regional area. All of them are further specified with sub-concepts, relations and
attributes, but also other concepts such as events and associations exist.

In order to obtain valuable search results it could be advisable to augment such industry
independent system ontology with industry or company specific concepts attributes or relations.
This follows the approach in other domains, where generic ontologies exist, e.g. for organisational
knowledge, that can be instantiated to a specific situation, e.g. to a specific company (Gualteri,
Ruffolo 2005). In addition it is possible to connect the system ontology with project specific
ontologies; for example to specify the concepts “product” or “company”. Moreover, it is possible to
define other system ontologies related to a different domain, e.g. innovation management, and thus
use the system for other purposes.

All changes to system ontologies have to be done outside the AMI-SME system, using ontology
modelling tools. The sample internationalisation ontology was modelled with the graphically
oriented software tool SemTalk (Fillies,Weichhardt, Smith 2005). You can also import existing
industry or region specific ontologies and use them as system ontologies, as far as they follow
some formal restrictions regarding the supported relations and constraints.

Several independent search projects can exist in parallel or successively. Each user can access
the projects that he defined, and where the project initiator or the system manager assigns him to.

3. Description of the technological architecture

The core innovation in AMI-SME is the multi-purpose usage of the ontology, in particular to provide
means for organizing the local document and knowledge repositories and to support the query
definition in order to access the information sources properly. The software-system therefore
combines a domain specific pre-structuring, automatic analysis and manual annotation and
structuring functionalities:
ƒ A persistent storage for different search projects and their related queries and results allows
working over a long time span on the same project with different users.
ƒ A complex but intuitive and expandable ontology supports definition of queries and information
sources, navigation in researched documents and organisation of the collected knowledge
items.
ƒ The integration of text analysis functionalities for clustering, abstracting labelling and filtering
helps to keep an overview in the growing repository of information pieces.
The software development environment is based on the existing development framework Object
Ledge that is provided by Warsaw University and allows reusing of basic components and
simplifying the development process (Caltha 2006). The user interface screens are optimised in
order to offer a wide range of intelligent functionalities while hiding the complexity of language
processing and ontology manipulation for the user.

The following five tasks are crucial for the implementation of the AMI-SME specific technological
solution, each under the responsibility of one of the four development partners:
ƒ Concept, design and integration of the graphical user interface (Fraunhofer IAO,Germany),
ƒ Ontology management and language processing algorithms (GraphiTech, Italy),
ƒ Information sources and user management (CIMNE, Spain),
ƒ Backend functionality such as task execution, storage and persistency (Warsaw University of
Technology, Poland),
ƒ Testing of the software solution in terms of acceptance and usability tests from a user’s
perspective (FH KufsteinTirol, Austria).

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The following section describes the usage of ontologies and the implemented interfaces from a
user’s point of view. They are structured according to the three main project related views: the
assistance of the search-steps during a marketing research, the storage of retrieved documents
and the organisation of newly acquired knowledge-items.

3.1 Search management

For each project separated searches can be defined, executed and saved. There are different
support levels for the definition of searches in AMI-SME:
ƒ In ad-hoc search, only keywords and a search name have to be entered, and comments to the
search are possible. This makes search simple as in other (meta) search engines, but saving
and many result processing features are available (see figure 2).
ƒ Assisted search gives easy access to the project ontology, which can be used to build more
complex queries and to direct the search to relevant Internet pages, e.g. of an association, a
magazine or a company.
The query is translated to the standard corresponding to the selected search engine’s web services
(currently yahoo, google and a9). Search results received from various search engines are merged
and ranked according to relevance.

1. Named searches on different Sources

2. Integrated search results

3. Search history

4. Annotation & Local Storage of documents

Figure 2: The main Search screen for individual searches on various information sources.
The results of a search and the searches steps will be stored locally for later reference. Additionally
result documents can be stored in a local repository and be annotated with concepts from the
ontology.

For the results of all search modes, a clustering functionality structures the results, and filtering
searches in the results or its metadata. A search history allows to view and compare the results of
existing queries, and to re-execute queries again. A session history additionally offers a
chronological overview of all searches that were executed or tackled during the current use of the
system.

3.2 Organisation of search results in project documents

A database stores all Search Result Documents (SRD). A SRD represents a document, e.g. web
page, PDF or MS Word file, etc. The same document only exists once in the system, even if gets
detected by several searches, which allow labelling, and annotations that are available for the
document. The view on new search results can be limited to new documents.

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The results are downloaded upon request only to save storage resources and to reduce download
time. If downloaded, they are accessible for more detailed analysis, such as automatic abstract
generation, or text analysis algorithms including clustering, classification and named entity
extraction.

A project document screen allows the user to concentrate on the evaluation of the results of all
project related searches. Here all results for the whole project are available, but the view can be
restricted to the results with a specific ontology label.

For each search result, a details pop-up screen is available for annotations, as well from the search
screen as from the project document screen (see figure 3). These document details contain partly
system suggested values, e.g. by a summariser, language detector, or metadata extracted from the
search engine); Here the result document can also be labelled with concepts or instances of the
project ontology; in addition the labelling of all selected documents is possible.

1. Extracted document Meta Data

2. Generated information about the document

3. Concepts attached to the result

4. Manual comments on the result

Figure 3: The document details pop-up screen

It contains extracted meta data provided by the search engine as well as automatically extracted
information (e.g. summaries) and provides means for entering personal comments. Finally it
provides functionality to attach concept labels to the result.

3.3 Arranging the acquired concepts in a project knowledge repository

Relevant knowledge that is identified from the SRDs can be directly stored in the project specific
knowledge base, which is identical to its project ontology: for example, competitors are instances of
companies, and they may have values to attributes such as the name of the owner of a company.
In this way, the user is able to extend the ontology in an easy and comfortable way.

A project knowledge screen (see figure 4) allows editing values to specific instances of the project
ontology, e.g. the number of a company’s employees, or adding relations, e.g. from a company to
its products. From the two other main screen, search and document, it is possible to open a project
knowledge pop-up window to directly view and edit information about identified knowledge items.

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 Karsten Böhm, Martin Delp and Wolf Engelbach

In the project knowledge screen, but also in project details and in the project documents, the
concepts of the project specific ontology are displayed comparable to a folder structure in form of a
tree in the left column, with the instances of the selected concept listed below. In the knowledge
screen only (see figure 4) also relations to other knowledge items and relations to labelled
documents are presented in two separated lists in the right column; and also related documents
are linked. This allows a well-known navigation, despite of the complex structure of the project
ontology itself.

1. Details on the selected concept

2. Additional attributes for the concept

3. Concepts tree and instance list

4. Concepts and documents related to the selected concept

Figure 4: The project knowledge pop-up screen

Which presents and organizes research results on a more abstract (conceptual) level. It contains
details and available attributes about selected concepts and shows the relation to other concepts
and documents.

4. Evaluation methodology
The evaluation of the software is carried out with two-step strategy with prototype implementations
that will be tested with application partners from different industries. The major goal of the
evaluation is to get insights that show how much guidance and organisation in the research is
possible using agile semantic technologies without obstructing the creative process of retrieving
and organizing information from digital sources as well as how the retrieval process can be carried
out more effectively. The goal of the evaluation method is the transfer of the two major objectives of
the project AMI-SME, assisted search and integrated document storage, in measurable values.

4.1 Objectives of evaluation methodology

Objective of the evaluation method mix is the analysis of search software tools for their support of
user requirements. An aggregation of AMI-SME user analysis consists of four major user
questions:
ƒ Question I: How to deal with heterogeneous information sources?
ƒ Question II: How to design international flexible ontologies?
ƒ Question III: How to model the business processes that require information?
ƒ Question IV: How to structure and use the context of information requests?

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Transforming these questions into measurable user requirements we obtained a choice of central
criteria

4.1.1 Requirement I: Handling of information sources

ƒ Did the AMI-SME solution reduce the number of information sources that need to be consulted
to obtain the necessary information to answer domain specific questions from the domain of
marketing research and internationalization?
ƒ Does AMI-SME provide a useful functionality to store the findings of the search run and thus
reduce the number of repositories to store relevant information from marketing research
projects?

4.1.2 Requirement II: Designing ontology’s

Did the design of the General Marketing Ontology reflect the general needs for assisting and
structuring the marketing research activity? Measurable indicators
ƒ The number of concepts that were used for the assisted search.
ƒ The number of documents that were assigned to concepts in the ontology.
ƒ The distribution among all concepts of the ontology.
ƒ The amount of concepts and relations that were modified in the derived project ontologies for
the individual research projects.

4.1.3 Requirement III: Modelling business processes

ƒ Amount of time that is needed to prepare the results of the marketing information research for
subsequent business processes and activities.

4.1.4 Requirement IV: Structure and use of context

Is the structure provided by the ontology useful for organising the research results and does it
provide the suitable contextual framework to support the individual search activities?
ƒ Number of concepts that are used to support the domain specific search (coverage) for
marketing related search projects. This number can be interpreted as an indicator for the
mapping of an information request to the conceptual structure of the ontology

4.2 Testing and evaluation methods

We will have two prototypes with added functionality and distinguish between the system test and
the evaluation of the AMI-SME software. The evaluation will be carried out with the 2nd prototype,
only (as indicated in the table below).

Each of the measure and its application to the AMI-SME software will be describes briefly in the
following section.
ƒ Feature Inspection focuses on the feature set of a product. Each feature is analysed for its
availability, comprehensibility, and other aspects of usability.
ƒ Usability Evaluation by Question asking Protocol is a technique, where human factors engineers
formulate questions about the product based on the kind of issues of interest.
ƒ Cognitive Walkthrough involves one or a group of evaluators inspecting a user interface by
going through a set of tasks and evaluating its comprehensibility and ease of learning.
ƒ Interviews will be used to formulate questions about the product based on the kind of issues of
interest after carrying out the evaluation.
ƒ Operational Efficiency is of primary interest for the evaluation and will be based on quantitative
as well as qualitative aspects. In order to achieve a measure for the quantitative aspects we will
use the well-known Precision/Recall measures and do a comparative evaluation of a marketing

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research with the AMI-SME tool and without the AMI-SME tool, using the traditional information
sources (see the illustration below).

4. Deploy-ment
Evaluation
Project Phase

2. Coding
1. Design

3. Test &
1 Feature Inspection
(Testing) - - 9 -
2 Usability Evaluation by Question-
asking Protocol (Evaluation) - - 9 -
3 Cognitive Walkthroughs
(Evaluation) 9 - 9 -
4 Interviews
(Evaluation) - - - 9
4 Operational Efficiency
(Evaluation) - - - 9
9 Used ; - not used
Table 1: Overview on evaluation methods that will be carried out on the first and on the second
version of the prototype

Figure 6: Precision and recall measures to obtain results for the operational efficiency of AMI-
SME 1
The usual problem of not knowing defining the optimal information will solve the optimal document
collection set by a domain expert (e.g. the known content of a relevant study or by an expert setup
of the retrieval task). For the measurement of the qualitative aspects we will concentrate on those
features that are not present in common search engines, such as the functions for clustering,
classification, and abstracting of search results, as well as the means for organisation of search
runs and retrieval results.

5. Related work
Since the advent of Web the problem of exploratory search was addressed in many papers, albeit
not sufficiently reflected in practical applications. Its growing meaning has been recently confirmed
by a number of publications collected in [6], where the issue has been exhaustively revisited.

1
Source of the figures: http://www.hsl.creighton.edu/hsl/Searching/Recall-Precision.html

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Moreover, the focus of many approaches was on the retrieval side of exploratory search and not
about organisation of findings, which was often done in other IT-Systems such as local file-
systems, DMS or CMS-System. We have attempted to implement AMI-SME in line with the idea
expressed in (Gersh et. al. 2006) and paraphrasing the famous Hamming statement to the form
“the purpose of exploratory search is insight, not data” (Hamming 1997): “In intelligence analysis,
as in other domains, that insight comes from the process of exploration, not just from its end result.
We are interested in capturing and visually representing analysts’ iterative query processes and
insights to help them collect and compare information more effectively, as well as record and share
the products of their analytic insights.”

To an extent our approach refers to the idea of web farming systems, as defined by Hackathorn in
(Hackathorn 1999) as “…the systematic refining of information resources on the Web for business
intelligence”, although the focus of our solution is not tailored to business intelligence, but the
project specific information research and organisation to fulfil a dedicated information need. On the
other hand it should provide means for quick exploration of new web areas. Until now, there were
very few attempts to practically implement it, especially for the scale of SME needs. In this sense,
AMI-SME is quite a unique system-combining Web exploring functionality with advanced storage
system and text analysis means. One of the main features of AMI-SME is building a repository by a
sequence of consecutive queries. Somehow a similar approach has been implemented with the
system SensMaker, presented in (Wang et. al. 1997) which is already using clustering techniques
for visualizing the search results. Another approach that seems to be close to AMI-SME was
INSYDER reported in (Reiterer et. al. 2000). The similarity resulted from the similar goals of
gathering the information sources; however the proposed solutions referred mainly to using web
agents, whereas in AMI-SME we expect to tap high quality information from the existing web
search engines by a simultaneous search covering a number of existing engines.

While there are a number of solutions available for assisting during the individual search steps
there are not many for approaches for organising the research findings using a conceptual
structure that was also applied to assist the search process. There are a number of solutions to
organise web resources in Bookmark-Systems, some even follow a collaborative approach (such
as del.icio.us, http://del.icio.us) but most of them only keep track of the link to the resource, which
is not sufficient for documenting research findings. New application allow to clip parts of Web-
Resources (see ClipMarks, http://www.clipmarks.com), but again this Web application is
implemented as a public collaborative service, which is not appropriate for the business
professional to support the addressed business case of Marketing Research and
internationalization.

6. Conclusion and outlook

The realised concept of ontology based search and storage improves the interface between search
engines and applied Knowledge Management: it makes Internet search more flexible and
integrates it closely to the users’ working context of an information research project, thus bridging
the gap between the search activities and the documentation and reporting activities in a research
project. Especially for tasks that companies seldom conduct, like internationalising, such a guiding
structure helps not to forget important issues while conducting the research. This is even more
important in the case of weakly structured information, as for individual industrial niches, since the
reader has the effort to extract relevant content on his own and is now supported to store results in
a proven way.

The main result of the AMI-SME project is the presented prototype. The following lessons were
learnt during the development process:
ƒ The users do not only want intelligent search, but they are strongly interested in result handling,
regarding the retrieved documents and the extracted knowledge. The ontology approach
organises the results closely related to their business context.
ƒ If several companies are supposed to agree on one common ontology, the ontology design
needs close cooperation and a clear method, since there are different conceptualisations in the
partners´ minds, as well as different intentions for using the ontology.

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 Karsten Böhm, Martin Delp and Wolf Engelbach

ƒ Each ontology based system faces the question how much ontology editing it should allow, and
what kinds of manipulations should only be done outside.
The general idea can be transferred to other topics than internationalisation, e.g. product
development or innovation management. Also the automatic extraction of available content from
the Internet to the knowledge base is a research activity that would additionally extend the usage of
the software, either by integration of relevant RDF sources (e.g. the World Factbook) which
contains a wide range of useful information about countries, see (CIA 2006) or with specific
wrappers, like in the PiggyBank-project (Huynh et. al. 2005).

Acknowledgements
The described IT-solution is being developed within a EU-supported CRAFT project “AMI-SME:
Analysis of Marketing Information for Small And Medium-Sized Enterprises” (Contract Nr. 017566).
More information on the project can be found here: http://www.ami-sme.org.

References
Caltha (2006) “Objectledge, [online], http://objectledge.org
Fillies, C.; Weichhardt, F.; Smith, B. (2005) “Semantically correct Visio Drawings”, Proceedings of
the 2nd European Semantic Web Conference, Heraklion, Crete, May 29 – June 1, 2005.
CIA (2006) “The World Factbook” [online] http://www.cia.gov/cia/publications/factbook
Gersh, J., Lewis, B., Montemayor, J., Piatko, Ch., Turner, R. (2006) “Supporting exploratory
search: Supporting insight-based information exploration in intelligence analysis”,
Communications of the ACM, Vol. 49(4).
Gualteri A., Ruffolo M. (2005) “An Ontology-Based Framework for Representing Organizational
Knowledge”, In: Proceedings of I-Know 05, Graz, Austria, June 29- Juli 1, 2005, pages 71-
78.
Hackathorn, R. (1999) “Web Farming for the Data Warehouse”, Morgan Kaufman.
Hamming, R. (1997) “The Art of Doing Science and Engineering: Learning to Learn”. CRC Press.
Huynh, D., Mazzocchi, S., Karger. D (2005) Piggy Bank: Experience the Semantic Web Inside Your
Web Browser. Proc. of the International Semantic Web Conference 2005.
Reiterer, H., Müller, G., Mann, T. M., Handschuh, S. (2000) “INSYDER - An Information Assistant
for Business Intelligence”, Proc. of the 23rd Annual Int’l ACM SIGIR Conference
Wang, M. Q., Baldonado, Winograd, T. (1997): “SenseMaker: An Information-Exploration Interface
Supporting the Contextual Evolution of a User’s Interests”, Proc. of the SIGCHI Conf. on
Human Factors in Computing Systems.

63
Knowledge Intermediation in Regulated Electronic
Commerce Environments. The Case Study of NETMA
(Nato Eurofighter and Tornado Management Agency)
Ettore Bolisani1 and Roberto Ruaro2
1
Department of Management and Engineering, University of Padova, Italy
2
Italian Air Force, RMS, Villafranca Airbase, Italy
[email protected]
[email protected]
Abstract: Although ecommerce is often seen as a tool for the direct connection between sellers and buyers,
the function of “digital intermediation” is critical. While the presence of intermediaries is considered usual in
the case of “open electronic markets” - where a proper and trustworthy environment has to be established in
order to perform spot transactions - their role can be equally important in the case of regulated ecommerce
systems i.e. in contexts where long-term partners set a strict agreement on the conditions, rules, and
standards for electronic transactions. Indeed, ecommerce is not just a matter of "exchanging orders
electronically", but implies an articulated exchange of knowledge. In this paper, we argue that the role
intermediaries in ecommerce, as well as their managerial implications, can be better understood if these
mediating functions are seen as functions of knowledge intermediation between electronic traders. The paper
presents the study of NETMA, an agency whose role is to underpin electronic transactions between parties in
the e-procurement system of spare parts for military aircrafts within NATO. The case study highlights that
even in a highly regulated environment the role of knowledge intermediary between trading parties is essential
and involves different complex activities.

Keywords: e-Commerce, knowledge intermediation, regulated electronic markets, knowledge exchanges,

and defence e-Procurement, case study

1. Introduction
e-Commerce has often been seen as a tool for the direct connection between sellers and buyers.
However, the function of “digital intermediation” between parties - i.e. third parties that help the
traders to solve the problems associated with electronic transations - is critical (Sarkar et al., 1995).
The presence of intermediaries is generally considered usual (and, somewhat, necessary) in the
case of “open electronic markets”, where a proper and trustworthy environment has to be
established in order to perform spot transactions between many suppliers and buyers. However,
mediating functions prove to be equally important even in the case of regulated ecommerce
systems, i.e. systems where partners establish long-term relationships and set strict agreements
on conditions, rules, and standards for e-Commerce.

This can be explained when considering that ecommerce is not just a matter of "exchanging orders
electronically", but implies an articulated exchange of knowledge during the life cycle of the
systems. With regard to this, there is still need for empirical studies to explore the complex
mechanisms and activities of knowledge intermediation that are essential in such cases, as well as
their managerial and economic implications.

This paper presents the study of NETMA (NATO Eurofighter and Tornado Management Agency),
an agency whose role is to underpin electronic transactions between parties in the e-procurement
system for military aircrafts within NATO. In particular, the case focuses on EPS (Enhanced
Procurement System), the e-procurement system developed to support the supply of spare parts in
the Tornado programme. The paper highlights the peculiarities of knowledge exchange that are
involved in the design, operation, and maintenance of such complex system, and the essential role
of NETMA as a Knowledge Intermediary (KMY) between the parties involved.

2. Knowledge management and ecommerce

The interplay between knowledge management (KM) and ecommerce is increasingly recognised in
the recent literature (Bolisani and Scarso, 2003). Indeed, ecommerce is a way to perform business
transactions, which always implies the management and exchange of knowledge between traders.

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 Ettore Bolisani and Roberto Ruaro

The particular electronic transmission performed by an ecommerce application thus underpins a

communication of knowledge. In other words, any commercial transaction is not simply the
transmission of pure data (e.g. quantity and price of products), but implies a transfer of knowledge
between trading partners about all the aspects of the transaction and the associated decisions
(Holsapple and Singh, 2000).

In this process, different types of knowledge can be identified. One fundamental distinction is that
between tacit and explicit knowledge, although other classifications are commonly used in KM
literature. This appears to be important for the design and operation of a specific ecommerce
system. First, some applications may be more suitable for managing certain kinds of knowledge
than others (Zack, 2001). Also, to deal with all the relevant knowledge involved, a complex
combination of different ecommerce tools may be necessary. In general, it can be said that
although computers just transmit data (i.e. that part of knowledge that has been made explicit
entirely), there may be the need for a tacit or contextual component of knowledge to interpret and
exploit such data. As the empirical evidence shows, in a particular industry or value chain where
common languages, codes and trading procedures have been established, electronic transactions
are easier. In other cases, the creation of a shared knowledge environment is a time consuming
and expensive process that requires long-term collaboration.

As is well known, KM activities are depicted as a number of distinct processes (for instance:
knowledge generation, acquisition, processing, delivery, storing, etc. – Mårtensson 2000). Such
processes greatly differ from one another, and their shape depends on the particular
circumstances. Similarly, the transfer of knowledge in ecommerce is generally directed from
specific sources to specific receivers, as this specificity gives value to the process itself. In
substance, knowledge is not transferred “at random” or made available like a sort of public good,
but in relation to its effective use. Thus, any ecommerce application is valuable when applied to the
specific KM process supported. Furthermore, the way in which a single process is performed may
influence the outcomes of the subsequent processes. Also, the same KM process may require
different methods and tools, in relation to the knowledge type involved (Becerra-Fernandez and
Sabherwal, 2001).

KM and ecommerce should also be seen in terms of their linkage with knowledge relations (Seufert
et al. 1999), that allow traders to acquire external knowledge, create fresh knowledge, exchange or
share it with business partners and, eventually, use it to create value. Clearly, building and
maintaining effective knowledge relations is no easy task. In principle, ecommerce can combine the
positive benefits of knowledge sharing with the effective communication underpinned by
information and communication technologies. But the actual role of ecommerce is always linked to
the specific nature of trading relations (for instance: what kind of economic co-ordination
mechanism are used; how these influence knowledge exchanges; what level of trust is required to
sustain such relations; and so on). Thus, the effectiveness of a specific ecommerce application
depends on the aims, nature of the task, processes performed, and organisational context of use.

In the case of e-procurement, since this a particular application of ecommerce, the points
previously illustrated can be particularised in more detail. First, e-procurement is typically a b2b
application used to support transactions of intermediate goods along supply chains. The value and
volume of transactions, the characteristics of traded goods, and the modality of order processing
are thus very different from b2c systems. Accordingly, the transactions (and the associated
cognitive transfers) depend specifically on the modalities with which the firms handle commercial
data internally, on the goals of efficiency and, more generally, on business strategies of traders.

Each e-procurement environment (and, consequently, the kind of knowledge transfer) is integral to
the particular configuration of inter-firm relationships. For instance, at one extreme, highly
integrated supply chains imply the substantial cognitive homogeneity of the firms in terms of shared
visions, common languages, shared procedures of information handling, and so on. Long-term
relations are required to establish a common but very specific knowledge environment, which, once
built, makes possible the implementation of highly automated (bud rigid) e-procurement systems,
such as EDI. At the opposite extreme, open electronic markets and online auctions are designed to
support spot transactions between occasional trading partners. In principle, this allows high

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The 7th European Conference on Knowledge Management

flexibility, but restricts the application to specific transactions, where knowledge contents can be
made explicit and transferred by means of electronic ways among all the potential traders,
independently from their specific characteristics or aims.

3. Knowledge intermediation in e-procurement

The effective functioning of ecommerce systems often requires intermediating functions.
Intermediaries act as interface between supply and demand to make transactions more efficient,
and it can be argued that many of these functions (e.g.: identification of needs; information on
products and suppliers; comparisons; distribution of information on products, order entry, etc.) can
be seen in relations to their cognitive contents (Bolisani, Scarso and Di Biagi, 2003). In substance,
the value added by intermediaries consists in “bridging” over a cognitive gap between suppliers
and buyers, thus facilitating the exchange of knowledge for settling transactions.
The “cognitive” implications of intermediation rises key issues for ecommerce. Firstly,
although the huge amount of information available on computer networks extends the
cognitive capabilities of the users, the growing complexity of the cyberspace makes its
exploitation even more difficult. This suggests the importance of “knowledge brokers”,
capable of assisting the users in the management of online knowledge sources
(Hargadon and Sutton, 2000). Another topic is the structural effect of e-commerce on
intermediation. As it is well-known, theoretical arguments and empirical observations
show that ecommerce facilitates the creation of new forms of intermediaries (Sarkar et
al., 1995). In the case of b2b relations, the literature also proposes analysis of the
restructuring effects on value chains, with the creation of new intermediaries
establishing connections inside virtually-glued value chains (Lefebvre and Lefebvre,
2000; Upton and McAfee, 1999).
Recently, some studies explore the new roles of knowledge intermediation inside ecommerce b2b
relations (Scarso et al, 2005). Knowledge intermediaries (KMYs) can be, first, associated to the
recognition of knowledge as a core resource for business. Since a single firm may encounter
several problems in accessing external sources and managing knowledge relations, this may open
opportunities for innovative intermediating services that act as interface between knowledge
sources and users, thus favouring knowledge exchanges. Also, the implementation and
management of complex e-procurement systems requires specific capabilities to select or design
the most adequate solutions.

This paper focuses on the role of service organizations supporting the implementation and
management of e-procurement systems. In particular, despite the fact that ecommerce applications
are often intended as tools to directly connect business partners, and these tools are generally
designed to automate procurement activities in integrated supply chains, the assumption here is
that the cognitive implications of any e-procurement implementation are so important that the firms
often need the assistance of an external KMY service.

The functions, roles, and importance of KMY services in e-procurement systems can largely vary in
accordance to several aspects (i.e.: number of trading partners, configuration of the supply chain,
products traded, homogeneity of firms, degree of automation of transactions, etc.). The case-study
described in the next section considers a regulated e-procurement environment, characterized by
pre-defined products and processes, and a trustworthy set of inter-firm relationships. We will show
that, even in such situations, the problems involved by the management of electronic transactions
may be so significant that KMYs assume a vital function in both the design and effective operation
of the system. We will illustrate this point by adopting a cognitive interpretation of such issues.

4. Case-study: NETMA as knowledge intermediary in defense e-

Procurement

4.1 NATO procurement and the role of NETMA

The defence procurement, and particularly the provision of sophisticated weapon systems,
represents a particular situation compared to the “normal” supply chains in private sectors.

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Generally, there is one buyer (the customer Nation) in a monopsony position, and a few sellers that
generally reduce to one lead contractor. Thus, for each weapon system, there is often a “one-to-
one” bilateral relationship. In principle, this environment favours long-term trustworthy links, which
is an important pre-condition for the establishment of a shared knowledge context. As we argued
before, this is the starting point for the implementation of highly automated e-procurement systems.
However, as we illustrate here, all this is not so simple.

First, the establishment of the bilateral relationships between buyer and seller is not easy. A long
lasting process of knowledge exchange is requires. After the identification of the requirements of
the new weapon system (made by the Ministry of Defence - MoD), the selected supplier should
become responsible for the supply of the weapon system and also for the provision of spare parts.
This is necessary to ensure efficiency and reliability to provisions, but to achieve this goal; a
complicated activity of knowledge exchange and standardisation is needed, which can take months
or years. The procurement relationship requires pre-negotiated detailed contracts that cover all
procurement aspects (supply, invoicing, payments, after-sale, disputes, etc.). Also, it should be
noted that the supplier can be a single company, but more frequently, is a group or a joint venture
of several companies with different roles and functions, which implies the co-ordination of all
activities and the sharing of critical information between several partners.

In addition, the increasing sophistication of weapon systems makes defence procurement

increasingly complicated. The high cost of R&D and management favours aggregation on both
demand (i.e.: MoDs) and supply side (producers). Very often, a certain number of Nations with
interest in a common weapon system aggregate to reach a “critical mass”. In the case of NATO,
this organisation plays an active role in developing common procurement strategies. Although
plans and standardisation of weapons systems are considered a responsibility of each Nation,
NATO supports and co-ordinates the co-operations of all members with the industrial production.
This is also made (see the Article 9 of the Treaty) via international Agencies, created for the joint
development and production of weapon systems. The main purpose of these Agencies is thus to
manage the different needs of the Nations along the entire life cycle of a certain product (from
design, to production, and to in-service support). An Agency becomes the single purchaser of all
industrial products related to the military programme, and conducts business relationships with
industry. National MoDs usually share the costs of the Agency, in proportion with their participation
to the programme.

NETMA (Nato Eurofighter and Tornado Management Agency), which is the case-study illustrated
here, is the agency created for the development, production and in-service support of two military
aircrafs, namely the “Panavia Tornado” and the “Eurofighter Typhoon”. NETMA was created in
1996 by merging two different NATO agencies (NAMMA, responsible for the management of the
Tornado, and NEFMA – for the Typhoon), and is located in Munich (Germany). The structure,
mission, and role of NETMA are defined in the Memorandum of Understanding (MoU), signed by
four Nations (UK, Germany, Italy and Spain) in 1995. The organisation is fully hierarchical, with
three Directions under the control of a General Manager, which reports to a Board of Directors
(composed by national members): a personnel director, a commercial director, and the operational
and engineering Director.

The mission of NETMA is to manage all the procurement aspects of Typhoon and Tornado
programmes, including the development, production and supply of spare parts and dedicated
equipment, and in particular:
ƒ To receive, merge and forward to the industry representatives all requirements coming from
MoDs. This implies also the assessment of operational performances, production and supply
time, and prices;
ƒ To write, negotiate with industry, and sign all procurement contracts, as well as any
modifications, in accordance with the national procurement strategies;
ƒ To manage the programme, in terms of continuous monitoring and problem solving;
ƒ To plan the budget and control the commitment;

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ƒ To perform payments and accounting.

The Logistic Support Section (TL3) is the part of the Tornado Division that, working for the
Operational and Engineering Director, manages all the procurement of spare parts and the repair
and overhaul (R&O) activities of the Tornado. In particular, this section is responsible for the
management of transaction flows related to the procurement of spare parts via an e-procurement
system called “Enhanced Procurement System” (EPS), connecting Nations and suppliers involved
in the Tornado programme.

Next, we provide a short description of the characteristics and the peculiarities of the EPS. With
regard to this, we will be able to show the role of NETMA as KMY.

4.2 EPS - The Tornado e-Procurement system

As said, the “traditional” defence procurement is usually characterised by a one-to-one relationship
between the single MoD and the main contractor. This relation is often maintained via a “pen and
paper” system, with no use of ecommerce. Different from this, a programme like Tornado, even
though it maintains some characteristics of the “one-to-one relation” (such as: a regulated market,
and the use of pre-negotiated contracts), is characterised by a more complex configuration,
involving more than one subject, both on demand and supply side. Three national MoDs (Germany,
UK and Italy) are the customers, and two main consortia (Panavia - responsible for the production
of airframe and formed by EADS, BAES and Alenia; and Turbo Union - responsible for the engine
and formed by MTU, Rolls Royce and Fiat Avio) are the main contractors. NETMA was mandated
to automate all procurement procedures, which resulted in the development of the EPS. The aim
was to establish a common methodology to exchange information, to improve effectiveness and
efficiency in the management of spare parts procurement, which is an extremely critical aspect of
complex weapon systems. If this activity is not carefully managed, this can affect the operational
effectiveness of the Air Forces. On the other hand, if efficiency levels are not maximised, this can
lead to budget problems for the customers or unused industrial capacity.

This system connects in real time all the users through a dedicated network and a central node
(CADPS - Central ADP System) directly managed by NETMA. Various information flows are
handled, including: on-line catalogues, order entry, consignment, and invoicing. This system allows
users to perform the typical functions of an EDI system (in practice, this means orders and
invoices), which is compatible with the business context, characterised by pre-codified information
and long-term rigid relationships. As a matter of fact, the EPS system manages transactions based
on standard formats codified by AECMA (European Association of Aerospace Companies) and
validated by CADPS. All transactions are stored on the NETMA databases, and made available for
monitoring and performance measurement. Clearly, all this would not be possible without the
fundamental functions of an intermediary organisation (i.e. NETMA), which is necessary to co-
ordinate business transactions and, thus to regulate flows of codified knowledge between all the
partners.

4.3 NETMA as knowledge intermediary

Considering the EPS as a mean for exchanging knowledge in standardised format and agreed
messages, and having introduced the central position of NETMA in this context, we can now
illustrate how NETMA can be seen as a “knowledge intermediary” (KMY), and discuss the main
issues arising i.e.: the kind of intermediation that the Agency is supposed to perform, how critical
the role of NETMA is, how big the value added is to the supply chain and in which terms.

The proposed analysis uses the classification of explicit vs. tacit knowledge, where the first one
indicates knowledge contents that are simple to obtain, transfer and store, while tacit knowledge
relates to ideas, perceptions and experience and is impossible or difficult to codify and, thus,
transfer electronically. The role of NETMA as a KMY can be seen in relation to both the two kinds
of knowledge.

Explicit knowledge intermediation. Due to its nature, the EPS system allows only the exchange of
explicit knowledge contents (i.e.: order forms, invoices, etc), which can be simply transferred, with

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the use of pre-defined and fixed code. Each message arrives at CADPS (NETMA) where, after
automatic handling, is sent to the receiver’s information systems. The interpretation of this coded
knowledge is relatively easy, since meanings and consequent actions are pre-defined (as is usual
in EDI-based systems). However, the role of KMY of NETMA is valuable. NETMA plays the
essential function of facilitator of the correct functionality of the entire system. In other words,
although the communication between the information systems of all the parties involved can be
seen as automatic connections, NETMA ensures that all messages sent to CADPS arrive at
destination on time and with no errors, thus avoiding system failure, ensuring prevention from
malfunctioning and intrusions, and resolving disputes and misunderstanding. What is more, in
performing this fundamental activity, the NETMA staff must have the competence and ability both
to constantly monitor the flows of messages, and to technically intervene if a problem occurs.
However, this is only a part of the KMY role of NETMA.

Tacit knowledge intermediation. In addition to the operational management of the e-procurement

system, NETMA has also the task to continuously monitor all order cycles, from order entry to
payment. From a KM perspective, this implies three main activities directly involving the transfer of
tacit knowledge, i.e.: a) the management of updating meetings among partners; b) the
development of ad-hoc advancements in the e-procurement systems; and c) the creation and
delivery of “fresh” knowledge on the use of the system.
ƒ A) Management of meetings among partners. NETMA has been asked by all parties to manage
procurement meetings at different levels, with the aim to exchange knowledge “outside” the
core technical staff, and exchange useful information, impressions, and opinions on the system
operation that cannot be clearly communicated via EDI.
A first level of meetings has the purpose to discuss the so called “low stock” situations – i.e. cases
where wrong forecasts in the consumption rates or missing deliveries have generated criticality in
the availability of spare parts. This information is essential to eliminate malpractice and for a correct
use of e-procurement by all parties. A higher level of meetings regards discussion of procedures,
procurement policies, and logistics strategy. NETMA is entirely responsible for calling the meeting,
organising the event, recording the discussion, and monitoring the way forward. Such meetings
thus provide “tacit interpretation” and comprehension of the phenomena, and collateral issues that
are associated to the exchange of electronic data. This complex role of “meeting facilitator” is
clearly typical of a context characterised by long term relationship - as is the Tornado programme,
allows the exchange of precious and non-standard knowledge, and the creation of a collaborative
environment.
ƒ B) Ad-hoc developments. This is strictly connected to the life cycle of the programme itself, and
the consequent flexibility required. The production of Tornado aircrafts stopped in 1996, as well
as the regular production of parts. Consequently, the major challenge becomes to keep the flow
of parts active. The problem is that the stocks, created in accordance with the “initial
provisioning”, are now nearly finished, and new parts have to be ordered directly to the
manufacturers. However, without a regular ordering level, the main suppliers may find it difficult
to provide parts that meet the specifications. NETMA was asked to find a solution to this issue,
by creating a system for maintaining open the production and avoiding cost increase. A new
component of the procurement system was created, i.e. the “long term ordering” procedure
(“Reprovisioning Conference” – RPC). This implies a procedure to select requested items,
quantify requirements, and start negotiations for forecasted provisions. A huge amount of data
needs to be exchanged among partners. From the buyer’s viewpoint, this requires new
forecasting and evaluating techniques to handle information (such as future size of the air fleet,
average flying hours, adoption of new systems, etc.) and translate this into explicit data (in
terms of quantities, times, and prices) that can be of use by suppliers. On the industry’s side,
firms have to inform buyers on their business strategies (such as closure of plans, outsourcing
strategies, modifications of components), and provide all data that allow MoDs to plan their
procurement. To support this kind of knowledge, characterised by a low level of standardization,
the EDI-based system is of no use, and NETMA had to develop new procedures and ad hoc
systems. This example clearly shows the role of NETMA in solving particular KM situations that
can emerge during the life cycle of the defence programme.

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ƒ C) Creation and delivery of fresh knowledge. NETMA, thanks to its role in the EPS procurement
methodology, supervises the evolution of all parts of the Tornado business. The monitoring
activity helps the Agency to control the progress of the programme and formulate the actions
that have to be taken to keep a good quality level of service, for the benefits of all partners.
Again, this is clearly an intermediation function that involves cognitive aspects. In addition, since
this intermediation is associated with the management of electronic data, we can again see the
role of NETMA as one of a KMY. In fact, NETMA manages the EPS central database, and can
thus extract significant information, that can be elaborated, organised and made available for
further analysis. This is a sort of Management Information System (MIS) activity conducted by
the NETMA TL3 staff members, and sponsored by both Nations and industry partners. The MIS
activity consists of monitoring the ongoing procurement business in terms of level of ordering,
procedure and timescale adherence and performance. The value added by the Agency consists
of production an delivery of fresh knowledge to help analysis, monitor trends, show
performance, etc. Again, this implies a complex activity of managing tacit and explicit
knowledge combined together, and of translating knowledge contents from one form to another
(Nonaka and Tageuchi, 1995). For instance, a new series of statistics (“Key Performance
Indicators”) was established by the top level management of NETMA, MoDs and suppliers, to
focus on particular issues. To formulate and implement such indicators, both explicit knowledge
(i.e.: quantitative data, and their meanings) and tacit knowledge (i.e.: knowledge of
requirements and strategies, industry’s characteristics, etc.) are involved, as is typical in the
development of MIS tools. What is relatively new here, is that there is a central player here (i.e.:
NETMA) that takes the responsibility for combining the different characteristics of the various
partners to provide a “shared view”.

5. Conclusion
Reading the role of NETMA as a KMY highlights the essential functions played by this agency in
the context of the regulated e-procurement system described above. Those “knowledge mediating
functions” are clearer if we consider the different stages of the system life cycle. In fact, e-
procurement is finalised to the electronic exchange of “explicit knowledge contents” (i.e.: orders,
etc.), but this requires that a high degree of formalisation of contents is reached first. To achieve
this result, buyers and sellers need sharing a knowledge context that allow them to: a) understand
electronic messages; b) activate the proper procedures to generate or handle them; and c) share
the goals of the system. The experience of NETMA clearly shows how the function of a KMY can
be essential here, to facilitate the reciprocal knowledge among interacting parties in the preliminary
stage of design of the e-procurement system.

Even once knowledge contents have been defined and agreed on (i.e.: electronic order formats are
set), the operation of the e-procurement system still requires that the electronic exchanges meet
the performance requirements. Again, the deep knowledge of the entire system is essential here,
as the KMY plays the role of “referee” in this playground.

Equally important, the KMY performs functions in the development and maintenance of the system.
For instance, the implementation of a mechanism to measure the performance of e-procurement
from the viewpoint of the users, requires the capability to capture knowledge requirements from
business partners, translate them into key performance indicators, develop appropriate tools to
extract and calculate data, and provide evaluations to the users.

In short, the activity of knowledge intermediation can be seen as involving three main aspects, i.e.:
ƒ The capability to integrate exchanges of tacit and explicit knowledge, since both the two kinds of
knowledge are essential to the design and functioning of the system;
ƒ The capability to select and use the appropriate mechanism to support those knowledge
exchanges (i.e.: electronic vs. face-to-face mechanisms, formal vs. formal mechanisms, etc.);
ƒ The capability to act as a recognised “third party” in such knowledge exchanges, thus
guaranteeing a fair balance between the needs and viewpoints of the different parties.

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Acknowledgements
This paper contributes to the FIRB 2003 project “ Knowledge management in the Extended
Enterprise: new organizational models in the digital age”, funded by the Italian Ministry of
Education, University and Research.

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The Cognitive Rationalization of Professional Services:
Expected and Unexpected Effects of Knowledge
Management Systems
Marion Brivot
HEC, Jouy-en-Josas cedex, France
[email protected]
Abstract: Professional service firms (PSFs) are increasingly coming under pressure in the three areas of cost,
flexibility and quality, from clients seeking to rationalize their service purchasing behavior. To survive in this
selective environment, most PSFs are forced to think in terms of efficiency and productivity, two values
imported from the industrial world that may conflict with their traditional professional identity. This paper
illustrates how environmental pressures can translate into organizational tensions that finally being about the
adoption of a rationalization plan. Our purpose is to compare the expected rationalizing effects of knowledge
management systems with their unexpected effects on PSF’s work and structure. The research concentrates
on the case study of a law firm, ex member of a “Big Four” worldwide network of auditors, tax and legal
advisers and management consultants, and analyzes the dialectical interactions between its knowledge
management system, its professionals and the structural properties of the firm, by using an adapted version of
Orlikowski (1992)’s structurational theory of technology. This research fits into the structural perspective on
the impact of technology on organizations. It also borrows from the sociology of professions and adds to the
literature on organizational knowledge management.

Keywords: Knowledge management systems, professional service firms (PSF), structurational theory of
technology, work rationalization

1. Introduction
Mergers and acquisitions and the globalization trend in many industries have resulted in fewer
large target clients for PSFs, which have found themselves up against tougher competition (Stumpf
Doh and Clark 2002). This encourages clients to benchmark PSFs, negotiate lower billing rates
and place limits on the amounts of fees they are prepared to pay, despite growing demand in a
number of professional service areas (Huon 2004). PSFs, whose business models are based on
the selling of technical expertise coupled with diagnostic and problem-solving skills, must also
absorb and comprehend their clients’ increasingly complex and constantly changing products and
services, and cope with the growing heterogeneity and volume of their clients’ technical and
commercial knowledge. This general economic acceleration and diversification (Hatchuel and Weil
1992) not only affects the technical complexity of PSFs’ work, but also the ever-shortening lifecycle
of their solutions and ideas.

As quality and flexibility are no longer differentiating factors, one of the few remaining
discriminators has to be cost, which forces PSFs to think in terms of efficiency and productivity, two
values imported from the industrial world that potentially clash with the very “soul of
professionalism” (Freidson 2001). As a result of these external pressures, most professional
service firms are tempted to standardize their service offerings, control their costs, and rationalize
their production in the same way their clients are rationalizing their purchasing behaviors. PSFs’
rationalization efforts usually comprise 3 steps (Gadrey 1999): the cataloging of recurrent business
issues and client questions, the formalization of diagnostic and problem-solving methods and
techniques, and the adoption of a portfolio of organizational routines. 0. This study examines the
effects – whether intentional or accidental, negative or positive – of the use of a knowledge
management system (KM system) at a large French law firm, ABC & Associates (not its real
name), with reference to the rationalization and efficiency strategy the system is supposed to
serve. Two types of consequences are considered: processual and structural consequences
(Orlikowski 1992, 2000).

This paper continues with a presentation of the theoretical framework and methodology adopted.
After a section highlighting the main results, the conclusion discusses the contribution of this study
and identifies some of the research avenues it opens up.

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2. Theory

2.1 Knowledge management systems and organizational changes

Following the publication of the pioneering work by Polanyi (1958), developed by evolutionists
(Nelson, and Winter, 1987) and management researchers (including Boisot 1995; Drucker 1993;
Grant 1996; Nonaka 1991, 1994; Spender 1996; Starbuck 1992), knowledge management (KM)
came to be considered by knowledge-intensive firms as the new Holy Grail of management in the
early 1990s. Fifteen years later, contrary to the forecasts of a number of academic observers
(Trepo 1987) who believed KM to be nothing more than a passing fad, far from disappearing from
the corporate agenda, KM seems in fact to have grown in popularity. Bain & Co’s Management
Tools and Trends 2005 survey shows that “54 per cent of companies use KM systems, compared
with 28 per cent in 1996”. This popularity also concerns the academic sphere, as confirmed by
Bang (2005).

This study proposes to analyze the effects of the use of a KM system on a large law firm’s
structural properties and the work of its professionals. Assessing the effects of a technological
instrument does not necessarily require a deterministic view, or a technocratic approach. The term
“KM system” as used here refers to a “technology-in-use”, i.e., an artifact comprising hardware and
software, with physical properties and functionalities on the one hand, and two types of uses on the
other hand: prescribed and actual uses (Rabardel 1995). In line with the ergonomic view of
technology, human actors can be considered as highly creative in their usages of technology.
Usage modes are inherently personal; they depend on the user’s technology proficiency,
experience, personal history, as well as other factors. For this reason, actual usage modes can
hardly ever be fully anticipated by technology designers. Users, however, do not have total
freedom of maneuver or, to put it differently, there is a limit to the malleability of uses, due to the
physical characteristics of the artifact.

Evaluation of the impacts or effects of IT on organizations - a common theme in research literature

and in practice - is difficult due to the lack of a utilizable and commonly accepted IT evaluation
model despite the overabundance of techniques available. To add to this difficulty, companies vary
in IT literacy, use and intensity, which make any deterministic evaluation model hazardous. The
major point of interest in this study is the dual nature of technology. Humans structure technology,
firstly by those human actors who design it, and secondly by the variety of usages that human
actors then make of it. Technology, in turn, structures human action in that it both constrains and
enables it (Orlikowski 1992, 2000). This dialectical model, adapted from Giddens’ theory of
structuration (1984) is inspired by an analogy with language: speech (c.f., technology-in-use)
structures grammar; it either reinforces its existing rules or causes grammatical evolution. In turn,
grammar (c.f., the artifact and its prescribed uses) structures speech in that it simultaneously
enables it and constrains it.

For DeSanctis and Poole (1994), the “spirit” of a technology is the general intent with regard to the
values and goals underlying a given set of features. “The spirit is the official line which the
technology presents to people regarding how to act when using the system, how to interpret its
features, and how to fill gaps in the procedure which are not explicitly specified.” (p. 126).
Accordingly, the prescribed uses of the KM system, as presented by the firm’s top management
and the system’s promoters, encapsulate the structures of domination, legitimation, and
signification that they wish to promote (Orlikowski 2000).

DeSanctis and Poole (1994) further argue that the “use and re-use of technology structures […]
lead, over time, to their institutionalization […]. As technology structures are applied in group
interaction, they are produced and reproduced. Over time, new forms of social structure may
emerge in interaction […]. Once emergent structures are used and accepted they may become
institutions in their own right and the change is fixed in the organization.” These considerations lead
us to the formulation of a first research proposition:
Research proposition 1: the routinization of professionals’ uses of the KM system
leads to the institutionalization of the structure of domination, legitimation and
signification virtually encapsulated in the KM system.

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Lastly, it is worth considering the unintended consequences of the adoption of those structural
properties that have been encoded into the KM system. Like Giddens (1990), who focuses on the
reflexivity of knowledge and its unintended effects, which “transcend the intentions of those who
apply it to transformative ends” (p. 54), my focus is on analyzing the unintended transformations
originated by the enactment of ABC & Associates’ KM system.
Research proposition 2: the transformations originated by the enactment of ABC &
Associates’ KM system were not all expected by the firm’s leaders.

2.2 Rationalization of work and professionalism

A number of terms with distinct semantic nuances gravitate around the concept of rationalization
(industrialization, formalization, standardization, normalization, homogenization, etc.). Gadrey
(1994) distinguishes two types of rationalization strategies. The first form of work rationalization is
called “cognitive” and has three intertwined modalities: (1) the classification of recurrent client
issues, (2) the formalization of diagnostic and problem-solving methods and techniques, and
cataloging of the service offering and (3) the adoption of a portfolio of “organizational routines” as
defined by Nelson and Winter (1987). According to Gadrey, this type of rationalization has always
existed – to varying extents – in professional service firms, whether they be large or small.

The second rationalization model proposed by Gadrey (1994, 1999) has a neo-Taylorian basis and
can be considered comparable to the concept of “industrialization”.

This form of rationalization is usually implemented by mechanistic organizations evolving in

relatively stable environments, such as Mintzberg (1980)’s Administrative Bureaucracies. The main
characteristics of this rationalization model are (1) the specialization of tasks and work processes,
(2) the production of standardized products, or services that the author refers to as “quasi-
products”, (3) the predominance of Technostructure (Mintzberg 1980) and (4) the adoption of
hierarchized control mechanisms. This model is usually accompanied by extensive use of
quantitative measures of performance and productivity.

According to Gadrey (1994, 1999), adoption by PSFs of a purely neo-Taylorian model of

rationalization would prompt the end of the professional identity, and transform the firm into a
mechanistic bureaucracy, whereas adoption of the professional rationalization model can
accommodate the spirit of professional enterprise.

The concept of “rationalization” is nebulous but the same ambiguity applies to the concept of
“profession”: there is no standard definition available and few propositions have the clarity and
comprehensiveness of Freidson’s (1994, 2001). According to the author, professions are inherently
local and contingent to national socio-historical contexts but there are five critical conditions for
establishing and supporting “professionalism” in most countries: (1) “an esoteric body of knowledge
requiring ‘considerable discretion’”, (2), “an occupationally controlled division of labor” in which
occupations struggle for and negotiate “territories” between themselves, independently of labor
consumers – as explained by Abbott (1988) in his famous “system of professions”, (3) an
occupationally centralized and controlled labor market “organized by a monocratic rational-legal
authority that determines the qualifications required of those employed, the work they do, how they
do it, and the way they are evaluated and compensated” (4) “an occupationally controlled training
program”, and (5) “an ideology serving some transcendent value”.

In the last chapter of his 2001 book, Freidson deals with “the soul” and “the essence” of
professionalism, i.e., professionalism-as-ideology, and points out the inherent clash between
“commercialism”, reflecting the core values of competition and the profit motive, and
“professionalism”, grounded in values such as duty and diligence, skill, advocacy and altruism.
For the author, the core difference between professional and non-professional services lies in
professionals’ “independence of judgment and freedom of action”. Professionals have the
independence and expertise to make choices for others, and even violate the wishes of their
clients. This “freedom to judge and choose the ends of work, is […] what expresses the soul of
professionalism.” (p. 217). The question therefore arises of whether the rationalization –

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hypothesized above – of ABC & Associates’ activities might be perceived by its employees as a
transgression or a transformation of their identity as professionals:
Research proposition 3: The use of a KM system has contributed to the transformation
of the professional identity of ABC & Associates’ employees.

3. Method
To address the above research propositions, a case study was conducted at ABC & Associates
from April through October 2005. Various sources of information were triangulated and Orlikowski
(1992)’s structurational model of technology was applied.

3.1 Research field and sources of data

ABC & Associates owns more than 100 offices throughout France. Its various provincial offices
deal with local accounts, the Parisian office concentrates on national accounts, and the
international office (IO) focuses on multinational clients and cross-border operations. Of all ABC &
Associates’ main offices, only the IO uses a formal KM system, which is the reason why the study
focuses solely on this entity. ABC & Associates employs more than 1200 licensed lawyers, 230 of
whom work for the IO.

The KM system developed by the IO in 1999 was designed to meet specific needs defined by a
team of managers and partners. Semi-structured interviews were conducted with the creators and
promoters of the system, so as to grasp the structural properties encoded into the technology,
understand its “prescribed uses” and its “expected effects”. The interviewees were ABC &
Associates’ managing partner, the partner promoting the KM system, the system manager and five
additional partners designated by the managing partner. Next, internal documents dealing with the
launch and deployment of the firm’s KM system were analyzed. All system training materials and
the internal memos that were sent to foster its use from 1999 to 2005 were compiled and
examined, to assess any evolution in the system’s prescribed use and expected effects.

Thirdly, the database of hits and downloads of documents stored in the system was analyzed over
a period of 3 months – April through June 2005, which represented 17 861 observations - and five
professionals were observed in their day-to-day interactions with the system during the month of
July 2005, in order to explore the “actual uses” of the system and assess its unexpected effects.

3.2 Data analysis model

To analyze the data collected as described above and address the research propositions
presented earlier, an adapted version of the model proposed by Orlikowski (1992), was used, as
shown in Figure 1. Orlikowski’s original triadic model outlines the dialectical interactions between
human actors, structure and technology. It shows that technology is an outcome of human actions
such as design, development, appropriation and modification (arrow 2). At the same time,
technology is a medium of human action, since it both facilitates and constrains human action
through the provision of interpretive schemes, facilities and norms (arrow 3). Besides this,
institutional properties influence human action in their interactions with technology (arrow 1), and
interaction with technology influences the institutional properties of the organization (arrow 4) by
reinforcing or transforming structures of signification, domination and legitimation.

In order to observe the interactions designated by those four arrows, this study imports the concept
of “prescribed uses” and “actual uses” from the ergonomic literature (Rabardel 1995), and
considers two dimensions of effects: structural versus processual effects on the one hand, and
expected versus unexpected effects on the other hand, as shown in Figure 1. Orlikowski has
already considered these two dimensions of effects in her 2000 paper, but she did not clearly relate
them to the various elements of her model, which makes it difficult to understand how she was able
to observe such effects.

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Figure 1: Structurational model of technology. adapted from Orlikowski (1992)

4. Results
First, the artifactual component of the system is described, highlighting the uses prescribed by its
designers and promoters (see Arrow 1 in Figure 1). This is followed by a presentation of the effects
that the system’s designers and promoters had anticipated when they launched the technology
(see Arrows 3a and 4a in Figure 1). The various enactments of the technology actually made by
users (see Arrow 2 in Figure 1) are then discussed, with illustrations of some of the effects
observed (see Arrows 3b and 4b in Figure 1). Finally the three research propositions are
addressed, and a discussion ends the paper.

4.1 The knowledge management system

The IO’s KM system comprises four sub-sections, respectively called “Internal Contributions”, “Tax
and Legal News”, “Library” and “Marketing”. The “Internal Contributions” section contains the legal
opinions sent out to clients (necessarily validated by at least 2 partners). Every lawyer is supposed
to be self-disciplined and upload each of his/her opinion letters into the system either directly or
with the help of a secretary. The “Tax and Legal news” section contains press articles and
technical news selected and uploaded either by the professionals themselves or by the IO’s
librarians. The “Library section” includes solutions to standard tax and legal questions, checklists,
information notes, or “subject files” prepared by junior staff on chosen legal issues under the
supervision of a “knowledge committee”. The last section, called “Marketing” or “Client Base” is
designed to allow professionals to store their client contact names and report their activities (time
spent, type of work performed, number of professionals involved, status of work, etc.) by line of
business, line of service, company name, client contact name and partner in charge. The whole
system is equipped with a search engine that allows users to perform a “simple” or “advanced”
search based on keywords and other criteria, through all four sections of the database
simultaneously if required. Filters can also be activated, to restrict search results to documents that
are relevant for certain specialist areas, such as “Value Added Tax” for example. Certain “lines of
service” or “lines of business” as virtual portals to the firm’s specialized knowledge use these filters.

4.1.1 Prescribed uses and corresponding structures

Interviews reveal that the uses, which the system’s developers and promoters prescribe, embody a
number of structures listed in Table 1.

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Table 1: Prescribed uses and corresponding structures

4.1.2 Expected effects

The analysis of internal documents shows that the reasons why the system was developed in 1999
were not explicitly communicated to future users. The a-posteriori justifications obtained from the
interviewees cover four main arguments, which correspond to the effects that they expected from
adoption of the KM system.

The first implicit motivation was to legitimize the reorganization indirectly imposed by the
international tax and legal network which the IO belonged to at that time. The IO needed to
transform its ad-hoc structure (Mintzberg 1980) into a matrix structure based on “lines of business”
and “lines of services”. This organizational change would not have had any substance or “body”
without the identification and categorization of specialized knowledge and solutions at the
intersections of this matrix, and this was made possible by the KM system. The interviewees also

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supplied 3 operational justifications for the existence of the system: improvement of productivity,
improvement of monitoring and risk management procedures due to increased visibility of
employees’ work via the system, and finally, improvement of the technical quality of opinion letters,
i.e., lawyers’ end-products, the materialization of the service that they deliver to their clients.

4.2 Technology enactments and observed effects

Observations and interviews reveal that users exert great pressure to have the tool modified to suit
their own vision, which in many instances differs from the structural properties virtually encoded
into the “prescribed uses” of the system.

4.2.1 Structure of legitimation

The system was initially designed to grant all lawyers unrestricted access to any kind of content.
However, users insisted on a less “open” model in the second release of the system, where access
to content could be restricted according to the user’s hierarchical level. Their justification for this
functional evolution of the system was that junior professionals might not be able to make good use
of highly technical tax and legal strategies. The system’s promoters conceded this point, seeing it
as the necessary price to pay for ensuring the system was actually used.

Today however, this access restriction feature is not widely used. Ninety-five percent of the opinion
letters are freely downloadable by everyone, suggesting that – apparently – the attempt by
professionals to resist the institutionalization of the “opinions-are-owned-by-the-firm-and-should-be-
accessible-to-all” normative property has failed.

However, the interviews reveal that people continue to produce their opinions “from scratch”, not so
much because they are hostile to industrialization of their practices – which they are – but because
they seldom find pre-packaged solutions to suit their needs when they browse the system. Two
explanations have been put forward by interviewees: the contingent nature of lawyers’ work and
the potential withholding of the most valuable solutions by lawyers who derive power and prestige
from the asymmetry of knowledge they are thus able to maintain. These findings show that all
professionals have not adopted the second normative property sought by the system’s promoters,
i.e., the fact that lawyers should leverage the firm’s existing experience rather than starting their
work from scratch. Junior lawyers tend to abide by these new rule more than senior lawyers, and
professionals operating in “industrializable” areas of expertise are more prone to apply this rule
than those who feel that their specialty area requires an ad-hoc production mode.

4.2.2 Structure of domination

The perception by some interviewees that a certain number of experts carefully avoid sharing their
most valuable opinions through the system shows that the traditional professional power structure
has somehow survived in the organization, despite the efforts of the system’s promoters to unlock
the doors of each professional’s knowledge closet. Knowledge asymmetry is still used to obtain
and maintain power. The “democratic” power structure encoded into the system is thus only
imperfectly espoused.

What is perceived as a threat is not so much the “panoptical” control intended by the system’s
promoters, as the potential “robbery” of expertise the system is believed to facilitate. This fear is
even greater as regards client contacts. Senior professionals consider client contacts as their most
important asset. Sharing personal client contact names and details in a central database available
to their peers is thus perceived as a major violation of professional powers. In addition, people are
very suspicious of what others may do with their contacts. The slightest “faux pas” might result in a
client the firm took great pains to win turning to competitors. For these reasons, not openly
mentioned during the interviews but perceptible “between the lines”, the “Client Base” section of the
KM system has been rejected. By collectively refusing to use this section of the system, the IO’s
lawyers display their resistance to the new power and control structure mediated by the system, but
without managing to fully preserve their traditional power and control structure. Professionals at the
IO are not autonomous or independent; they are directly controlled by their lines of services and
lines of businesses, and are indirectly monitored – although less overtly - by potentially any of their

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peers. The resultant structure is a hybridization of both forces, the conservative professional force
that aims for autonomy and self-discipline, and the bureaucratic force that seeks authority and
control. In this particular structure, the IO thus oscillates between Gadrey (1999)’s industrial and
professional rationalization models.

4.2.3 Structure of signification

Our analysis reveals that two conflicting interpretive schemes coexist within the IO. The first is a
hybridization of professional and bureaucratic values, whereby “productivity” and “cost
effectiveness”, two bureaucratic values, have been added to the traditional professional values of
autonomy, freedom of judgment, diligence, skill, advocacy and altruism. The professionals who
best embody this mixture of values are professionals who, on top of their day-to-day legal and tax
advisory work, also take on managerial responsibilities such as heading knowledge committees,
participating in the IO’s research and development entity set up to design new tax and legal
solutions, or involvement in the management of lines of businesses and lines of services. These
lawyers recognize that the bureaucratization of the firm is a painful but inevitable process, in which
junior lawyers are more “comfortable” than senior professionals. The second interpretive scheme
that can be found at the IO is more conservative. Lawyers in this scheme will share standard
knowledge, or “common knowledge” as Grant (1996) puts it, but resent sharing specific, high-value
knowledge outside the small circle of their community of practice. They take a proprietarial view of
knowledge management, defending what they see as their own private property, and are anxious
that others could potentially “steal” their hard-won knowledge.

4.2.4 Expected and unexpected effects

Let us now consider the two dimensions of effects observable (Table 2).
Table 2: Expected and unexpected effects of technology enactments on the International Office’s
structure and production process

The results presented above allow us to address each of the three research propositions: (1)
contrary to our forecast, users’ technology enactments have caused the transformation of a
number of structures, the reinforcement of other structures and quite simply the rejection of a few
other structures encoded into the system. (2) Although some of the transformations, reinforcements
and rejections mentioned above had been expected by the system’s promoters, some had not
been anticipated, as summarized in Table 2. Lastly (3), the use of a KM system has fostered a
transformation in the firm’s professional identity, by bringing professional and bureaucratic values

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to coexist. This is perceived by those lawyers who are hostile to the rationalization of the firm’s
production process as a betrayal of the “soul of professionalism” (Freidson 2001).

5. Discussion
One important result that this study reveals is that professional service firms’ attempts to rationalize
their operations may cause professionals to either hybridize their identity, adopting a personal
blend of bureaucratic and professional values, or reinforce their traditional identity when they
perceive this attempt as a violation of the very “soul of Professionalism”. One potential avenue for
future research would be to analyze the consequences of this identity clash in professional service
firms.

Secondly, it would be useful to go further and explore the concept of “mass-customization” in

professional service firms. Mass-customization can take two forms: (1) individualization, which
involves the adjunction of specific, tailored elements to a standardized product or service, or (2)
“massification” or generalization of a product or service initially designed to serve specific client
needs (see Bressand Distler and Nicolaïdis 1989). Studying the ways these mass-customization
production strategies are being applied by professional service firms would give a better
understanding of the rationalization of knowledge-intensive services.

Thirdly, this study shows that the implementation of a KM system can be regarded as a solution to
a control crisis in professional service firms, but that the very use of such a system causes the
emergence of a new “control crisis”, in line with Beniger’s theory (1986). At ABC & Associates,
junior professionals tend to turn to the system too readily, and re-use tax and legal opinions
produced by more senior lawyers without having to make the effort to fully understand their client’s
issues. Besides, the law changes quickly, and the opinion letters available in the system do not
carry a “sell-by” date that could alert system users to the risk they run in re-using them.

It would be informative, in future studies, to examine this control-revolution / control crisis paradox
further, and analyze how the control crisis induced by the use of a KM system in professional firms
could be overcome.

Fourthly, the traditional master-apprentice model, which used to be a successful way of training
and developing professionals, is endangered by two factors: the growing size of professional
service firms is causing individual bonds between junior and senior professionals to fade, and the
availability of a KM system leads junior professionals to acquire a document re-use reflex. This
reflex engenders a new type of skill which is a source of cost-effectiveness for the firm, but, at the
same time may damage junior lawyers’ ability to fully understand their client’s issues, as well as
their ability to develop creative solutions from scratch when need be. It would thus be worthwhile to
conduct an in-depth analysis of the effects that KM systems can have on the evolution of the PSF’s
professional training and development model.

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Managerial Perceptions of Linking Intellectual Capital and
Strategy
Maria do Rosário Cabrita
Faculty of Science and Technology, Universidade Nova de Lisboa, Portugal
[email protected]

Abstract: Intellectual capital is becoming increasingly important to the scientific community as well as the
business world. However, this enthusiasm has not been matched by an understanding of how this occurs and
what conditions can encourage it. The purpose of this paper is to bring together the visions of different
Portuguese bank managers and to make their differences explicit. Portuguese bank managers recognize the
strategic importance of IC though its components are distinctly evaluated because different organizations
develop different visions about the value of resources and industry strengths and weaknesses. We argue that
intellectual capital is specific-context, unique for each organization and it is more like a characteristic rather
than property of a company.

Keywords: Intellectual capital, core competences, strategy, value creation, banking sector.

1. Introduction
The knowledge economy increasingly relies on the diffusion and use of knowledge, as well as its
creation. The growing importance of knowledge to the success of enterprises and to national
economies as a whole is reflected in a dramatic increase in literature that addresses the role and
nature of knowledge management and intellectual capital (IC). In spite of this increase and the
resulting vibrancy within the topic, it suffers from a relative lack of meta-level concepts, which help
one put intellectual capital into practice (Wexler, 2002). Companies poorly understand the relevant
IC components, and therefore are not able to adequately identify, measure, report and manage
their IC (Petty and Guthrie, 2000). Despite these limitations, the empirical evidence suggests that
successful players in competitive markets are those that have access to a corpus of unique – or at
least difficult-to-replicate – capabilities and competences (Andriessen, 2001; Eustace, 2003;
Viedma, 2004) which are generally bundled together and interdependent to such an extent that
they are difficult to isolate and value.

Helfert (2000) argues that there are key elements that stand out as significant in the creation of
value in intellectual capital assets. These “value-drivers” represent the source of value of
intellectual capital, and understanding and identifying their underlying characteristics would allow
us to effectively manage the value chain of intellectual capital.

Hoskisson et al. (1999) suggest that single industries provide a particularly important context for
examining resources critical to the industries and markets in question. However, Barney (1986)
argues that strategic choices should flow mainly from the analysis of the firm’s unique skills and
capabilities rather than from an analysis of its competitive environment. For this author, differences
in firm expectations concerning the future value of a strategy are the central source of above-
normal returns from acquiring resources from strategic factor markets (i.e. a market where the
resources necessary to implement a strategy are acquired).The purpose of this study is to develop
and validate a measurement instrument for IC and to understand whether managers perceive a
dimension of IC that can be considered strategically important for the Portuguese banking industry.
The findings reported in this paper are based on data collected in two phases. In the first phase,
data were collected from a survey administered to 53 banks. The second phase included 22 semi-
structured interviews with senior bank managers, aiming to identify the most relevant IC
components for the banking industry. In this step the respondents were expected to identify which
intangibles contribute most strongly to the business performance of their banks.

Our study aims to provide a deeper understanding of the strategic perspective of intellectual
capital. We argue that IC is context-specific, unique to each organization, and it is more like a
characteristic than a property of a company. The relative importance companies place on their IC
components differs even among organizations operating in the same sector. This is because each
firm exists within a context (vision and strategy) that shapes its view of what is or is not of value.

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2. Theoretical background

2.1 Defining IC
It is difficult to define IC due to its intangible and dynamic nature. Several definitions of IC have
been proposed (Roos et al., 1997; Stewart, 1997). However there is presently no universally
acceptable one, although it would appear that researchers and practitioners have the same broad
set of theoretical and practical assumptions in mind. They also realize that in principle great
economies and efficiencies could be achieved if knowledge could be managed and distributed
efficiently around the organization.

To simplify, we argue that there are at least three basic components that emerge from the various
definitions of intellectual capital:
ƒ The knowledge itself is its basic element;
ƒ The need for a structure to encourage, maintain, distribute and deliver that knowledge
appropriately and;
ƒ The perception that it is the effect of a collective practice.
A well-known definition is the one proposed by Edvinsson and Malone (1997:3): “IC is the
knowledge applied to work to create value”. Viedma (2004) uses the terms “intellectual capital” and
“core competences” interchangeably. This approach is in agreement with Andriessen (2001) who
refers to IC as a unique bundle of intangible assets that are the bases of sustainable competitive
advantage. It seems that the difference between various IC definitions lies mainly in the content
that IC may cover. According to Zhou and Fink (2003), a definition of IC should be broad enough to
enable organizations to include the full range of their intangibles and specific enough to provide
guidance for management to take action.

Due to its dynamic nature, the concept of IC is often identified as a phenomenon of

interdependencies and interactions (Marr et al., 2004; Cabrita and Vaz, 2006), a driver of business
performance and value creation (Bontis, 1998; Cabrita and Bontis, 2007). Although frameworks are
useful for classifying intangible assets, they do not reflect the flow of intellectual capital in an
organization or provide a basis for its management. Some attempts to operationalize the concept
have emerged in the literature, classifying IC into the categories of human capital (HC), structural
capital (SC) and relational capital (RC) (Edvinsson and Malone, 1997; Stewart, 1997; Bontis,
1998).

Human capital is the brain and soul of an organization. It is considered the primary element of
intellectual capital (Choo and Bontis, 2002; Cabrita and Bontis, 2007) and the most important
source of sustainable competitive advantage (Nonaka and Takeuchi, 1995). Employees generate
IC through their competence, attitude and intellectual agility (Roos et al., 1997). Competence
includes skills and education, while attitude represents the behavioural element of the employee’s
work. Intellectual agility enables one to change practices and to think of innovative solutions to
problems. Structural capital is what remains in the company when employees go home at night
(Roos et al., 1997). It comprises internal processes, organizational structure, databases, culture
and all that enable organizations to make their human capital more productive. The role of
organizations is to provide the necessary structure for individuals to collaborate in a way that
leverages their talent and existing market opportunities in order to create economic value. The
focus is on getting a higher leverage of the human capital through structural capital, producing a
“multiplier effect” (Edvinsson, 2002).

Relational capital is the knowledge embedded in the network of relationships that an organization
develops by conducting its business. This network of relationships is the product of investment
strategies, individual or collective, consciously or unconsciously aimed at establishing useful
relationships that can be converted into capital. In this networked value creation, customer
relationships are decisive in converting IC into market value while customer satisfaction can
maintain the business relationship, decrease price elasticity and improve the company’s image and

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reputation (Fornell, 1992). In this context, trust among the members of network is a major driver for
moving the value of relational capital up and down.

2.2 Linking strategy and IC

The literature on strategy stresses three common value creation themes. Porter’s (1980) view
corresponds to the horizontal value creation processes in a competitive landscape. This activity-
based perspective sees firms as entities that create value by transforming a set of inputs into more
valuable outputs. Barney (1991) outlines a resource-based view of strategy and value creation in
which firms are seen as heterogeneous entities characterised by their unique base of resources.
When these resources are unique, valuable, rare, and hard to imitate, appropriate usage of these
resources will help to maintain a competitive advantage for the business. Finally, Prahalad and
Hamel (1990), founders of the core competence theory, state that the real future of a company lies
in the optimal utilisation and maintenance of unique skills: core competences. In this theory,
strategic success demands competences that continually evolve slowly and incrementally,
requiring training to be learnt.

IC perspective emphasizes the importance of matching those complementary visions of value

creation. Viedma (2004) provides an important contribution to this aim, integrating in its Strategic
Kowledge Benchmarking System (SKBS) the activity-based view, the resource-based view and the
core competence perspective. The activity-based view (Porter, 1980) focuses in what the firm
does, while the resource-based view (Barney, 1991) focuses in what the firm has. Additionally, the
core competence theory (Prahalad and Hamel, 1990) converges to the crucial role of core
competences, as particular competences “that embedded in the value chain’s core business
activities deliver products and services with competitive advantages and high knowledge and IC
content” (Viedma, 2003:217).

Any company has a range of competences, though only some of them are fundamental to its
performance and strategy. A firm’s specific core competences are not usually very numerous.
Thompson and Cole (1997) consider that competitive success in a dynamic environment is
dependent on three groups of competences: the content of the actual strategies; strategic change
competences and strategic learning competences.The central question for strategy theory has
always been how firms compete in their industries or in global markets and how they create value.
Operating in a turbulent and unpredictable environment, firms realize that when formulating a
strategy it is not enough to identify the competitive forces of industry (Porter, 1979) or to possess
resources, which are unique and difficult for competitors to imitate (Barney, 1991). Additionally,
firms must understand the strategic importance of the right combination of resources, capabilities
and competences and complementary it is also important to know what the firm does with these
resources. This means that the static view (what the firm has) needs to be complemented with a
dynamic perspective (what the firm does).

From a strategic perspective, IC is viewed as a valuable resource used to create and leverage
organizational value, playing a central role in the formulation of strategy. Intellectual Capital is
linked to questions about identity: “who we are and what we want to be” (Roos et al., 1997:62).
Thus, any consideration on IC has little value unless it is linked to the firm’s strategy (Marr et al.,
2003). While a company’s strategy defines what IC is needed to achieve its strategic intent, the
reverse is also true, as a company’s IC defines what strategy it can formulate and implement.
Linking IC with strategy allow companies to identify the core IC needed to accomplish the strategy
and the path to achieve the strategic intent.

2.3 Banking sector overview

Since joining the EU in 1986, Portugal has achieved a good track record in terms of real economic
convergence benefiting from the modernization of its economy and the financial stability provided
by the euro. In this context, financial sector has playing a crucial role in the development and
growth of the Portuguese economy.

The changing nature of the banking sector, where banks are moving from on-balance sheet to off-
balance sheet activities, together with new challenges driven by the Basle II Agreement and the

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International Accounting Standard (IAS) rules, has created a need for skills, technologies, and
organizational models that are quite different from those of traditional lending. The Basel II
Agreement looks to modernize the global framework for calculating regulatory capital in the
financial services industry to protect it from shocks to the system caused by credit defaults,
operational failures and market fluctuation. Its scope is much broader than any previous capital
regime. It attempts to both standardize regulatory approaches and introduce more flexible and risk-
sensitive measures for the calculation of regulatory capital. The International Accounting Standards
are a set of globally accepted guidelines that seeks to unify the way in which accounting
information is reported. Additional information about IAS can be found at http://www.iasb.org.uk.

In the past, banks sought to improve their balance sheet and asset growth to increase profitability.
However, since the Basle II Agreement, the emphasis is on asset productivity, capital efficiency
and revenue growth. In this context, the key challenges to banks have been to develop and
implement strategies to create the critical mass and capabilities needed to operate in the sector.
Major players are, therefore, engaged in mergers and acquisitions to extend their geographical
influence, create an adequate capital base, improve cost structures and extend their product range.
In this context, banks share strategic factor markets where innovation and information technology
(IT) represent key drivers to improve efficiency, productivity and competitiveness.

3. Research methodology
This study extends prior research (Cabrita and Vaz, 2006) by seeking to create a deeper
understanding of how senior managers value the IC components and perceives their influence on
the banking strategy formulation process. There are no precedents for a study of this topic in the
Portuguese context. The study follows two phases. First phase was conducted prior to
operationalizing the constructs to enhance the construct validity of our measures. For this purpose,
a survey data were collected from a sample of 53 banks, all affiliated members of the Portuguese
Bankers Association. Following conventional IC conceptual frameworks, human capital, structural
capital and relational capital were used as independent variables. The questionnaire included
questions related to all components of IC as well as business performance. Day (1999) states that
business performance a strategic step in establishing a firm’s competitive position, and intended
market share.

All measures are perceptual and a seven-point scale was employed. The second phase includes
22 semi-structured interviews to senior managers aiming to perceive their perceptions about: (i) the
strategic importance of IC; (ii) the most important IC components, and; (iii) the drivers of bank’s
business performance. A range of key informants was sought, including CEO’s, regional directors
and the directors of functional areas. Based on the concept of “strategic awareness” (Hambrick,
1981), the “key informant” methodology (Phillips, 1981) was employed because the organizational
characteristics we intend to measure are only known by a small select set of members in the upper
echelons of a bank (Bontis, 1998; Bukh et al., 1999). Preliminary interviews allowed us to identify
people (function and level) who possessed special qualifications (status, experience or specialized
knowledge) to answer the questionnaire.

From the analysis of the survey data, we identified the items perceived to influence the
organizational performance, i.e., the IC elements that fulfil the conditions of having high importance
towards value creation process. Because senior managers have different expectations about the
future value of a strategic resource and accordingly adopt different strategies, the importance of
each component of IC to the organization is different. In order to identify these specific elements,
personal semi-structured interviews were conducted seeking to explore the following questions:
ƒ Q1: Is IC strategically important for your bank?
ƒ Q2: In your opinion what are the most important IC components (HC, SC, RC) that enable your
bank to deliver value to your stakeholders?
ƒ Q3: In your opinion what are the key drivers of bank business performance?
IC is socially complex and therefore a deeper understanding of its strategic importance requires a
higher level of intrusion or involvement in an organization. As stressed by Rouse and Daellenbach
(1999:964) “research in organizations has a distinct advantage over research on organizations”

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and because of the causally ambiguous nature of the companies’ idiosyncrasies, only intrusive
work can provide an improved understanding of how and why organizations develop their IC. A
multi-method approach to data collection has been emphasized in the field of strategic
management (Levitas and Chi, 2002) and IC (Petty and Guthrie, 2000) as well.

4. Discussion of results

4.1 First phase of the study

The measurement instrument was pre-tested for clarity and relevance. To validate the instrument,
a pilot test was carried out at a convenience sample of 178 senior managers. The 151 returned
questionnaires helped us to purify the measures and retain the reliable items. A scale validation
procedure was accomplished using:
ƒ The analysis of item correlation;
ƒ The analysis of item-total correlations;
ƒ The analysis of Cronbach’s alpha and;
ƒ An exploratory factor analysis with Varimax rotation.
Inter-item consistency reliability was established using Cronbach’s alpha coefficient, which are
greater than 0.93 for all constructs, exceeding the level of 0.7, considered good for exploratory
research (Nunnally, 1978). Convergent validity is verified, given that all factors rise significant t-
values (p<0.05). Discriminant validity is confirmed given every Cronbach’s alpha raises higher
values than any of the correlations of the scale with the rest of scales. To validate the intellectual
capital dimensions established a priori, principal component analysis with varimax rotation was
used to assess underlying dimensionality. The 71 items were forced into four factors despite only
48 items with loadings at levels of 0.5 or greater were retained (Hair et al.,1992).

Table I summarises the variables that are, according to the preceding analysis, most important for
banking industry to focus. Banks should assign importance to those aspects included in the scales
for each of the IC components. For HC this means that employees have to be intelligent and
competent, they have to learn quickly, they have to have knowledge, skills and experience. Also,
they have to be able to solve problems in an adequate manner and to adapt to different situations.
In addition, they have to receive training and be motivated. Banks should also hire the best in the
market. Concerning SC it means that sufficient “infrastructural assets” in the form of technologies
and methods have to exist. A database, hardware, software, information systems, networks and
distribution channels have to subsist. The corporate culture has to be supportive in general and
positive in particular and operation times have to be small. Efficiency and innovation are the most
important drivers of SC development. Respecting RC, a sufficient number of distribution channels
have to exist, the image and reputation of the bank is of importance, and customers have to be
satisfied in order to increase loyalty and to build long-term relationships. In order to be successful,
banks must analyse competitors’ strengths and weaknesses and address the interests of groups of
stakeholders.

4.2 Second phase of the study

The responses to the interviews were transcribed into a database and then analysed according to
standard qualitative coding principles (Dey, 1993). Each question was analysed in isolation from
the others. The answers were analysed in detail and where the respondents gave several
comments or compound observations, these were extracted and treated as separate items.
Keywords were identified and grouped into broader categories and an iterative process undertaken
whereby keywords and categories were refined until all the original responses were satisfactorily
categorized.

4.2.1 Q1: Strategic importance of IC

To determine the strategic importance of IC, senior managers used descriptions of numerical
values ranging from “5” (very important) to “1” (not at all). As shown in table 2, IC is generally
recognized as very important for the long-term bank’s success however, managers do not know

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how to identify it, how the phenomenon occurs and what conditions can encourage it. Whilst the
current importance of IC is clear, it seems that its concept is not easily understandable and its
breakdown into components often makes managers miss out the holistic picture and therefore the
interconnections between the different elements.
Table 1: Principal component analysis: Managerial perceptions
Principal component analysis
Summary of survey items HC RC SC BP

H1 Competence ideal level 0,788

H3 Planners on schedule 0,731
H5R No internal relationships 0,631
H6 Come up with new ideas 0,750
H7 Upgrade employees’ skills 0,763
H8 Employees are bright 0,820
H9 Employees are best in industry 0,729
H10 Employees are satisfied 0,785
H11 Employees perform their best 0,797
H12 Recruitment program comprehensive 0,772
Employees do things without thinking 0,662
R
H15
H17 Employees voice opinions 0,683
H18 Get the most out of employees 0,701
H20 Employees give it their all 0,707
R6 The most positive value-added service 0,552
R8 Customer increasingly select us 0,531
R9 Firm is market-oriented 0,571
R10 Meet with customers 0,537
R11 Customer info dissemination 0,532
R14 Capitalize on customer’s wants 0,573
R16 Confident of future with customer 0,593
R17 Feedback with customer 0,673
R18 Responsive to competitors 0,597
R19 Strengths and weaknesses of competitors 0,668
R20 Regular contact with sector associations 0,589
R21 Importance of information from sector associations 0,688
R22 Importance in strategic decisions 0,676
R23 Corporate culture is supportive 0,722
S2 Improving cost per revenue 0,631
S3 Increase revenue per employee 0,634
S6 Transaction time is best 0,795
S7 Implement new ideas 0,709
S8 Support development of ideas 0,741
S9 Develops most ideas in sector 0,731
S10 Bank is efficient 0,705
S11 Systems allow easy info access 0,598
S12 Procedures support innovation 0,580
S15 Atmosphere is supportive 0,555
P1 Industry leadership 0,757
P2 Future outlook 0,664
P3 Profit 0,864
P4 Profit growth 0,771
P5 Growth of financial margin 0,713
P6 ROA 0,786
P7 ROE 0,777
P8 Overall response to competition 0,579
P9 Success rate in new product launch 0,510
P10 Overall business performance 0,676
Note: R- reverse coded items
Table 2: Strategic importance of IC
N=22 5-very important 4- important 3- somewhat 2- not important 1-not at all
important
Importance of IC 16 5 1

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4.2.2 Q2: Most important IC components

Despite in the same industry, different bank managers had different views on the importance of IC
components. The fulfilment of Basle Agreement requirements and IAS implementation are today
the dominant banking concerns though banks go through different development stages. In this
context, the relative importance of IC dimensions largely depends on the stage of business cycle
and the manager’s expectations about the future value of strategic resources. Banks concerned
with market share put emphasis on the RC dimension, while those involved with regulation
implementation underscore SC or HC dimensions according to the stage of development.

4.2.3 Q3: Key drivers of bank business performance

Bank managers are aware that the great challenge is settled on the efforts to innovate, to exploit
technological advances, competitor’s failures, industry opportunities and the investment in
knowledge processes and knowledge workers. In table 3 the first column shows the broad
categories used to summarize the issues while the second shows the issues extracted from an
analysis of the keywords used by the respondents.Some specific aspects stand out from the
interviews. Firstly, banks consider personality characteristics as a critical differentiator. Secondly,
teamwork has a great influence on the building of human capital because it is one of the most
important mechanisms for collective learning and knowledge exchange among team members.
Thirdly, shared values are also considered crucial in the banking context, and symbolises the
extent to which the bank and the customers share common beliefs on critical values like ethics,
security and privacy. In line with the literature, a loyal customer base and the bank’s image is a
critical asset. Finally, aligned with the theoretical prepositions, bank managers perceive that IC is
about how firm’s resources are used in combination to create value.

5. Conclusions and further research

This exploratory study provides some insights of how Portuguese bank managers identify the IC
components and how they link them to the business performance. The main conclusions are:
ƒ IC is strategically important though the relative importance of each component vary according to
particular organizational characteristics.
ƒ Managers at each time put an emphasis on a restricted type of IC elements, neglecting others
and also shifts that emphasis to other IC elements over time;
ƒ The core IC is unique and specific-context.
In general, IC frameworks comprise mainly intellectual assets. Agreeing with Viedma (2003), other
affective elements such as values, talent, attitudes, commitment, honesty, integrity are also of great
importance to the success of organizations because they are the intangibles that convert
intellectual assets into competitive products and services. Breaking down intellectual capital into
human, structural and relational capital is of little practical use (Viedma, 2003). Indeed, the logic of
functioning of intangible capital forms is related to the transformation or conversion from one type
to another and, in this context, managers do not perceive what is in between the resources and the
activities that turn resources into results or results into resources. Thus, we argue that researchers
should focus on the identification of company’s core competences rather than in IC components
considered separately. This is because products and services are the result of a bundle of
resources reflected in those core competences. Additionally, it makes sense to perform industry-
specific analyses. It seems that IC is more like a characteristic than a property of an organization
because it evolves and changes over time. So it could be very interesting to focus on this issue and
check which IC characteristics may drive specific strategic objectives.

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Table 3: Key drivers of bank business performance.

HC
Cognitive characteristics (39%) Knowledge 35%
Competences 32%
Skills 21%
Problem solving 12%

Relational characteristics (34%) Teamwork 55%

Trustworthiness 31%
Collaboration 14%

Personality characteristics (27%) Attitudes 37%

Integrity 25%
Motivation 23%
Honesty 15%
SC
ICT (48%) Technological competence 62%
Sharing information 20%
Communication 18%

Culture (39%) Shared values 53%

Knowledge sharing 47%

Organizational structure (13%) Processes 52%

Policies 48%

RC
Network of relationships (50%) Customer base 85%
Other stakeholders 15%

Reputation (50%) Image 100%

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Analysis of International Experiences in Knowledge
Management Systems: The SOSMER Project
Nuria Calvo Babío and Marta García Pérez
University of A Coruña, Spain
[email protected]
[email protected]
Abstract: This paper describes the process followed by the European regions Galicia, Balearic Islands
(Spain); Sicily, Tuscany (Italy); Crete (Greece) and Malta to promote a knowledge and methodologies
exchange, through some initiatives in line with the European financing program Regional Frame Operation
(RFO). The main goal of this program is the design of knowledge management systems, which unify criteria
and define common methodologies to solve common problems of European regions, in compliance with
Lisbon Agenda objectives, and the promotion of the use of the information and communication technologies

Keywords: Knowledge management, innovation, international knowledge.

1. Introduction
On 16 and 17 March all 25 EU Member States presented their key Lisbon priorities and challenges
at the European Business Summit in Brussels, and improving the environment for research and
development (R&D) and innovation was a recurring theme. Considering knowledge as the only
opportunity for the competitiveness of these countries in the future, the European Union has
increased in the last years the number of programs aimed to create knowledge networks and
aimed to transfer local and international experiences of different countries. The main role of these
programs is to promote cooperation and economic synergies among European countries, avoiding
the high current expenses of E.U. investments in the same researches and very similar
methodologies, implemented at the same time in different countries.

In this sense, in 2003 The European Union designed the European financing program called
Regional Frame Operation (RFO), involved in the INTERREG III C initiative. The European
Community’s INTERREG III C Program for inter-regional cooperation provides financial support
from the European Development Fund (ERDF) for public sector partners from the regions of
Europe to exchange their experience and to cooperate in delivering more effective regional
strategies on a wide range of themes – from sustainable development, spatial planning, urban
renaissance and regeneration to e-governance, procurement, innovation enterprise and business
support. The Regional Frame Operations (RFO) is aimed to promote the regional knowledge
exchange of a group of European Regions in methodologies and project management. The final
result will be the design of a common strategy based on a limited number of projects. This initiative
is focused on public organizations belonging to, at least, three countries, two of them members of
The European Union.

In the first quarter of 2004, several regions of South Europe designed an RFO called Territories
and associated regions for development (TREND). The general objective of this project of
interregional cooperation was to promote the joint development of new approaches and tools for
directed programming on the local level that was able to evaluate the different forms of local
association for development (including the model of local partnership). Specifically, TREND was
designed (1 )to develop and disclosure the culture of programming and concordance, (2) to
promote the exchange and training among civil servants, and (3) to obtain the commitment of a
broad-ranging local partnership involved in the development of a suitable policy. Six European
Regions (Sicily, Tuscany, the Balearic Islands, Galicia, Crete and Ministry of Gozo) belonging to
four different countries (Italy, Spain, Grece and Malta) were participants in TREND. Their common
interest was focused on designing tools able to obtain the results planned in Goteborg and Lisbon
European Agencies. Three were the priority areas analysed in the Project: technological
innovation, information and knowledge society and local sustainable development.

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Once a common methodology frame was designed, the Regions participants promoted specific
programs in the three selected areas. As a result of it, Galicia, The Balearic Islands and Crete
designed SOSMER Project, which was aimed to design a common protocol of action in maritime
security. The main goal of this paper is the analysis of these initiatives as knowledge management
tools, which can be able to create international intellectual capital, through the design of common
methodologies and projects management for the cooperation of European Regions.

2. Theoretical considerations
The multidimensional nature of intellectual capital is often not well understood which means
definitions are not always very clear and neither are the boundaries of what people mean when
they talk about intellectual capital, reducing the potential of generalization and comparison of
applications and researches based on this construct (Marr, 2005). Using a multifunctional
approach, Bontis, Chong and Richardson (2000) divide intellectual capital into three components:
(1) human capital, defined as “individual knowledge stock of an organization as represented by its
employees”; (2) structural capital, which includes all the non-human storehouses of knowledge in
organizations: databases, organisational charts, process manuals, strategies, routines and
anything whose value to the company is higher than its material value; (3) customer capital, which
encompasses the knowledge embedded in all the relationships an organisation develops whether it
be from customers, from the competition, from suppliers, from trade associations or from the
government. Considering this approach, these authors compare the elements of intellectual capital
based on studies by Annie Brooking, Göran Roos, Thomas Stewart and Nick Bontis, trying to
design a general theoretical frame.
Table 1:Comparison of Intellectual capital concepts.
Annie Brooking Göran Ross Thomas Stewart Nick Bontis
(UK) (UK) (USA) (Canada)
Human-centred assets. Human capital: Human capital: Human capital: The
Skills, abilities and Competence, attitude, employees area an individual-level knowledge
expertise, problem solving and intellectual agility organisation´s most that each employee
abilities and leadership important assets possesses
styles
Infrastructure assets. All Organisational capital: All Structural capital: Structural capital: Non-
the technologies, organisational, innovation, Knowledge human assets or
processes and processes, intellectual embedded in organisational capabilities
methodologies that enable property, and cultural information used to meet market
company to function. assets technology requirements.
Intellectual property: Renewal and Structural capital: All Intellectual property:
Know-how, trademarks development capital: New patents, plans and Unlike IC, IP is a protected
and patents. patents and training trademarks. asset and has a legal
efforts definition.
Market assets: Brands, Relational capital: Customer capital: Relational capital:
customers, customer Relationships which market information Customer capital is only
royalty and distribution include internal and used to capture and one feature of the
channels. external stakeholders. retain customers. knowledge embedded in
organisational
relationships.
Source: Bontis, Chong and Richardson (2000)
Following the resource based view of the firm, Grant (1996) describes as “human capital” the group
of skills, knowledge and management abilities of individuals, and considers that the identification
and evaluation of the human capital stock of an organization is difficult, because direct assessment
methods based on results, experience or qualifications only work as indicators of the real
possibilities of employees. According to this, the organizational capacity of one company requires
the coordinated efforts of different groups of resources, specially the efforts of individual experts
who possess many different types of knowledge, using several mechanisms: (1) rules and
directives, “impersonal” approaches to coordination involve plans, schedules, forecasts, rules,
polices, procedures, and standardized information and communication systems; (2) sequencing,
which individuals can integrate their specialist knowledge in a time-patterned sequence; (3)
organisational routines, as relatively complex pattern of behaviour able to support complex patterns

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of interactions between individuals in absence of other ways of communication; (4) group solving
and decision making, aimed to improve the organization behaviour in tasks which may require
more personal and communication-intensive forms of integration.

Considering this last approach, intellectual capital is defined as a human resources investment
(Watson and Papamarcos, 2002). Human capital development requires some individual abilities be
instilled in employees. These abilities will let them to improve and accelerate their performance. So,
a suitable human resources management in a firm can support a sustainable competitive
advantage. In this sense, selection, development and use are a sequence of human resource
management functions that represent increasing human capital, increasing firm specificity, and
decreasing imitability (Hatch and Dyer, 2004). This organizational point of view has been
expanding to other levels, due to social and economic globalization of the last decade. This
situation determines the need of organizational rules and routines, which lets cooperation among
sectors and countries. These rules and directives will avoid duplicities and will promote sinergy.
The growth of European Union members makes a big effort to be done in cooperation and design
of frames of reference. Because of this, it is necessary to design knowledge management systems
to guarantee the creation of intellectual capital as a competitive advantage for The European Union
in global market.

3. TREND. A project based on learning processes.

In contrast to other E.U. programs, TREND (Territoires et Régions ensemble pour le Development)
was designed to create a common work frame for the experiences exchange and the
implementation of specific tools of action to solve problems detected in Goteborg and Lisbon
Agencies. This Community Program planned two kinds of actions: (1) a previous design of a
common work methodology and (2) the implementation of specific sub-projects led by several
Regions participants, interested in the selected areas of the program: technological innovation,
information and knowledge society and sustainable development.

Actions of TREND focused on the design of a common work methodology were grouped in five
work lines:
ƒ Management and coordination: this work line had to asure a good working of the global
knowledge management project. Tasks as planning strategies and designing partial goals were
important in this pack.
ƒ Contacts network development: the main goal of this line was to promote innovation activities
and to transfer their consequences.
ƒ Exchange and twinning: the role of this work line was to promote exchange and training tasks
among participants and other agents involved in this program.
ƒ Experimentation: this line had got as objective the promotion of new tools of planning for
Regional development. The main task of this pack was the selection and funding of innovation
projects designed by Regions participants in TREND.
ƒ Communication and transfer of results: the goal of this work line was to communicate the work
procedures followed as international initiative and transfer consequences for Regions
participants and their territories. The final objective of this line was to estimulate discussion
about the future of Regional planning and the European Development Fund (ERDF).
The work sequence of the program can be analyzed through a graphical diagram, which was
designed as a work frame for all international partners of TREND. Following Bontis (2000)
classification, we can link TREND framework to the intellectual capital model, based on assets,
capital and intellectual property. So, work lines a) management and coordination, b) contacts
network development, c) exchange and twinning and e) communication and transfer of results will
be related to relational capital, embedded in organisational relationships. However, work line d)
experimentation will be related to human and structural capital belonging to different European
Regions. The innovations obtained from final sub-projects, will be considered intellectual property
for the participants.

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Figure 2: General framework diagram.

Source: TREND workpapers.
The focus on procedures differentiates TREND from other projects managed by European Union.
Most of Community initiatives have been designed to promote a selection of projects proposals
based on their capacity to obtain tangible results for European Union. However, TREND initiative
is focused on designing a common methodology for a better knowledge transfer among European
Regions. It is also is focused on developing standards which will be the basis of an implementation
of projects oriented to solve common problems of participants, in a second phase of the program.

So, interest and funds have been focused on the process, instead of considering results only based
on tangible products. From our point of view, this is an new approach in this kind of international
initiatives. One of the main initial difficulties of TREND was the existence of legal differences in
European Regions. So, all participants, through an edict, to design a common legal frame,
accepted the first task of this project, which described the project procedures, and observed current
legislation of all European Regions involved in TREND.

4. SOSMER project. A knowledge management system applied to maritime

security.
Once all European Regions reached a consensus on a common work methodology, the second
phase of TREND had as main goal the promotion of specific sub-projects among European
Regions participants interested in exchange experiences related to the selected areas:
technological innovation, information and knowledge society and local sustainable development.

Tools designed in the “alliance management” phase of TREND made easier the design of sub-
projects proposals, and it was the starting point of SOSMER project.

Two activities were implemented during the “alliance management” phase:

ƒ Organization of meetings to promote each partner to present the most relevant problems of his
Region, and to show interest in cooperation with other participants interested in solving the
same problems.
ƒ Implementation and management of an intranet, as a virtual channel for specialized chat lines
for participants to concrete international proposals and present them as sub-project, using the
common work methodology of TREND, in one of the selected areas (technological innovation,
information and knowledge society and local sustainable development).

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As a consequence of alliances management, partners belonging to Regions The Balearic Islands,

Galicia (Spain) and Crete (Grece) formalized a sub-project called SOSMER which, led by Galicia
Region, looking for the following objectives:
ƒ To evaluate the maritime security systems in the coastline of participants.
ƒ To detect the main deficiencies of systems analyzed.
ƒ To coordinate the experiences exchange of crisis and to evaluate consequences.
ƒ To manage the partners´ knowledge for an improvement of the maritime security levels in case
of accidental or intended maritime spilling.
ƒ To design registered models of performance through standards for European Regions
participants of TREND.
The causal analysis of the interregional agreement SOSMER, from a knowledge management
approach, showed a critical factor able to break out public Regional iniciatives. In the last decade,
tons of pollutant materials were spread in several oceans, causing irreparable damage. However,
the Prestige disaster, sinking of an oil ship face to Galician coast and spillage of the oil load in the
sea, sparked off an international agreement aimed to join knowledge and worries of participants in
maritime security. The final goal of this agreement was described as the design and
implementation of a common protocol of actions to face maritime emergencies. Lessons of
Prestige disaster, as Exxon Valdez or Erika, have shown that maritime emergencies have to be
faced with no improvisation. Prevention is more effective than reparation, and immediate actions
multiply effectiveness of security measures.

Because of it, and after more than ten years of crisis and uncontrollable actions in the maritime
transportation area, some Regions detected, through the European initiative TREND, the specific
need of coast public authorities to own, previous to emergency situations, a protocol of actions at
their disposal. This protocol should be internationally checked to increase the efficiency of results.
The final users of SOSMER were the following:
ƒ Local authorities of each Region participant with competentes in maritime security, environment
and emergencies. They will be who will take the lead in case of crisis.
ƒ Technical responsible of emergency actions. They will play a critical role when they have to
raise the alarm.
ƒ Researchers involved in the analysis of maritime security area, who play an important role in the
international knowledge management and experiences and knowledge exchange.
It was necessary to guarantee all Regions participants had enough knowledge in maritime security,
to assure a good intellectual capital management. Because of it, before of signing the cooperation
agreement, the teamwork of TREND checked that all interested partners of SOSMER had
implemented experiences in local development able to guarantee the goals achievement. The
following results were presented:
ƒ The project Leader, Galicia Region, through University Institute of Maritime Studies, has been
internationally recognized for its results in the maritime security area. The studies of the
research group called “Maritime Security Observatory”, belonging to this institute, has obtained
local, national and international funds for its researches of marine environment and maritime
security, internationally transferred.
ƒ Crete Region, through FORTH, one of the most important research institution of Grece, has
developed more than three hundred research and technological projects, in collaboration with
other international research institutions. Through the Institute of Applied and Computered
Mathematics, one of the top European institutions which analyzes sounds for maritime science
and technology researches, FORTH has got a very advanced knowledge in the marine
environmental security thank to researches of this institution.
ƒ The Balearic Islands Region, SOSMER partner through General Management of Emergences
of Internal Department of The Balearic Islands Government, has participated in several projects
focused on international cooperation in maritime security systems and coastline environmental
protection. Because of that, this Region was also considered a very valuable partner of
SOSMER.

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The activities planned in SOSMER project, implemented according to the work frame of TREND,
were developed following this process:

Figure 3: Work process. SOSMER project.

Source: SOSMER work papers.
The final goal of this work process was an optimal technical knowledge management, through the
deficiencies detection of all partners and a good experiences exchange to solve them.
The selected knowledge area was very complex, because it joined economic, legal, political and
environmental factors, and a good international knowledge management transfer included
difficulties related to different work languages and physical distance among partners.

To solve some of these problems, Regions participants agreed to develop a technological system,
which worked as documents management and also as facilitator of virtual chat lines of discussion.
This system let a continuous workflow of technical staff, reducing partners meetings and, at the
same time, assuring participants cooperation.

The technological knowledge management system minimized indirect costs attributable to

SOSMER project. It implemented work synergies among all technical staff that owned valuable
knowledge for the project. This system avoided frequent situations in this kind of initiatives, such as
only first level staff go to international meetings, and they are only responsible of the transfer of
technical analysis. Of course, this situation uses to reduce understanding and knowledge exchange
because of the lack of technical experts in these meetings. So, using the intellectual capital
framework identified in section 2, we can compare SOSMER work process to analyse the issues,
which contribute to manage international knowledge involved in the project.

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 Nuria Calvo Babío and Marta García Pérez

Figure 4: Involvement of SOSMER work process in IC framework.

From this point of view, technological knowledge management system was an important human-
centered asset for a better understanding and transfer of results among participants. Meetings of
partners, on the one hand, and technical staff, on the other, made up human and organizational
capital needed in the project. Finally, international protocol for maritime regions, actually in
progress, will be the main result, legally protected, which will make up intellectual property of the
project.

SOSMER project work methodology priorized the knowledge management process, promoting the
securing of the following results:
ƒ Main result: development of a contingences model designed to be used by coastline authorities
of each Region participant, to implement an action protocol for maritime emergencies caused by
marine spilling and dumping.
ƒ Complementary results:
ƒ Current coastline situation evaluation for each Region participant.
ƒ Marine pollution risks evaluation for each coastline.
ƒ Knowledge management of international experiences related to maritime security for
technical staff of all Regions participants.
ƒ Information and knowledge transfer and work methodology designs for maritime security and
emergencies control, capable of a further use.

5. Conclusions.
The critical factor studied in this paper, through the analysis of TREND initiative and its
development in SOSMER project is the new approach followed by the European program Regional
Frame Operation (RFO), financed by INTERREG III, which is promoting knowledge management in
European Union as the main factor to get an European competitive advantage in a global market.

If we consider the Bontis, Chong y Richardson (2000) classification, the new approach followed by
European Institutions has changed from the priorization of tangible results, to emphasize
intellectual capital development in their three components: (1) human capital, through a major
boost for technical training of experts; (2) structural capital, through work methodologies
development and technological knowledge management systems; and (3) customer capital,
through promoting international exchange of experiences and deficiencies detection, to design a
common knowledge database.

The process approach of TREND is a qualitative advance in the design of this kind of European
initiatives. A work methodology like the designed, which has been agreed by Regions belonging to

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four different countries, will let to define action standards for future inter.-regional projects. This is a
first step to design a general quality indicator for European projects, which does not exist
nowadays.

From a Grant (1996) approach, we can declare that this initiative increases the organizational
capacity of The European Union, through: (1) rules and directives, defined in the TREND work
frame; (2) sequencing, increasing the Regions specialist knowledge integration in a time-patterned
sequence, (3) organisational routines development, developed in TREND and SOSMER, as a way
to create Inter.-regional synergies and (4) group solving and decision making, through Regions
participants agreements for maritime security (SOSMER project).

Based on the premises, SOSMER project made possible local researches to continue from a very
valuable international approach, contrasting same experiences and deficientes and different ways
to face them.

International knowledge management able through SOSMER has assured synergies for maritime
security, through human capital training (technical staff); structural capital development (group
action plans, coastline analysis and researches and technological systems); and customer capital,
through the knowledge management system bases on virtual and real meetings, able to create a
competitive contacts network of different levels of specialization and responsibility.

The final goal of this paper has been the analysis of this kind of initiatives for a better intellectual
capital development in Europe, considering a common interest area for several members of The
European Union and a priority of Goteborg and Lisbon Agencies: sustainable development.

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Bontis, Nick; Chong Keow, William Chua y Richardson, Stanley (2000). “Intellectual capital and
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Carlsson, Sven A. (2003). “Knowledge managing and knowledge management systems in inter-
organizational networks”. Knowledge and Process Management, 10 (3):194-206.
Carmeli, Abraham & Tis-Iler, Ashler. (2004). “The relationships between intangible organizational
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Grant, Robert M. (1991). “The resource-based theory of competitive advantage: implications for
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Grant, Robert M. (1996). “Toward a knowledge-based theory of the firm”. Strategic Management
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Gupta Anil K. & Govindarajan Vijay (2000). “Knowledge flows within multinational corporations”.
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Hatch, Nile W. & Dyer, Jeffrey H. (2004). “Human capital and learning as a source of sustainable
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King, Adelaide W. & Zeithaml, Carl P. (2003). “Measuring organizational knowledge: a conceptual
and methodological framework”. Strategic Management Journal, 24:763-772.
Maier, Ronald & Remus, Ulrich (2002). “Defining process-oriented knowledge management
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Marr, Bernard (2005). “Perspectives on Intellectual Capital”. Proceedings of the 6th European
Conference on Knowledge Management, University of Limerick, Ireland, 8-9 September
2005 (pp. 1-6).

98
Knowledge Building in Innovation Networks: The Impact
of Collaborative Tools
Annick Castiaux
Business Administration Department, University of Namur, Belgium
[email protected]
Abstract: Building complex knowledge and producing technological innovation depend more and more on the
efficiency of networking. In this paper, we consider the use of ICT tools by those innovation networks in order
to analyze their possible support in this socialization process. In particular, we study the emergence of
research or knowledge weblogs. Dedicated to a given advanced research subject, those blogs provide a
platform for idea generation, debate and collaborative knowledge building. We analyze several blogs, some of
them being the personal initiative of individual researchers (as PhD students), others being promoted by
companies (especially ICT companies) that encourage their scientists and engineers to share knowledge on
the web with other specialists, customers or suppliers.

Keywords: Tacit knowledge, explicit knowledge, innovation networks, ICT tools, weblogs

1. Introduction
The necessity of networking in the innovation process is no more in question. The era of individual
pioneers who had an idea, developed it, commercialised it and where cited as success examples is
far away. No organisation is an island and no organisation integrates internally the complex and
multidisciplinary knowledge that is now needed to offer innovation a chance of success. We are in
Rothwell’s fifth generation of innovation models (Rothwell 1992), i.e. innovation relying on systems
integration and extensive networking, leading to a flexible and customised response to
environmental changes, and requiring continuous adaptation.

More than a necessity induced from the growing complexity of the innovation process, networking
is also an opportunity. It brings emergent properties: as system theory states, the whole is more
than the sum of parties. Emergence is particularly welcome in the knowledge building sub-process
of innovation (Mitchell 1988), since this sub-process is dedicated to the production of scientific and
technological knowledge where high volatility is welcome to ensure maximal potential (Castiaux
2005).

Networks in knowledge building are not a new phenomenon. Research scientists have always used
contacts with peers to feed their science with new knowledge, to face their ideas with relevant
opinions and to build collective knowledge integrating different expertises. In organisations having
a strong research activity, such knowledge networking practices are also recognized as essential,
even if information leakage is sometimes feared.

For an individual researcher, proactive peers with whom he can share information, confront ideas,
debate scenarios, are essential actors in his creation process. For an individual organization, good
partners that complement its core competencies, provide it with new knowledge, open new
opportunities, are more than ever a key factor of its success in innovation. In the knowledge-
building step initiating the innovation process, this networking is rather informal. Studies have
demonstrated that knowledge networks are built from personal contacts between individuals who
share cultural and educational background to understand each other rapidly and “tacitly”, i.e.
without elaborating preliminarily on prerequisites to the exchange. Moreover, even if those network
members can communicate from distant locations, face-to face meetings are welcome. As a matter
of fact, the exchanged knowledge at those premises of innovation is mainly tacit, which requires
socialization between the persons involved. Personal contacts reinforce trust that is necessary to
go beyond the fear of information leakage and allow knowledge transfers, even if shared
knowledge in those initial steps of innovation is generally highly specialized and not yet marketable.

New technologies have offered platforms to manage supply networks: inter-organisational

information systems allow organizations to optimize their collaboration with suppliers and
customers. However, when knowledge networks are at stake, those solutions are no more relevant.

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They do not favour emergence of newness. They are not built to share informal knowledge and to
enhance personal contacts. Looking at the growing phenomenon of blogging, we have noticed that
weblogs, on the contrary, meet some of the conditions required for efficient knowledge sharing in
research networks. Some initiatives using weblogs to share and discuss preliminary research are
remarkable. This paper studies the conditions for efficient knowledge sharing in research networks.
It analyzes weblogs strengths and weaknesses to meet those conditions. Finally, it presents some
initiatives of research weblogs, demonstrating the opportunities that they offer and underlying the
threats that they could be faced with.

2. Preliminary reflections about human networks

ICTs have accelerated change in the way people work. As underlined in the Economist recently
(Hindle 2006), the “Organisation Man” of Whyte (Whyte 1956) has been replaced by a networked
person. However, the organisations, which these new workers belong to, did not evolve at the
same pace. Following Bryan and Joyce (Bryan and Joyce 2005) “their vertically oriented
organizational structures, retrofitted with ad hoc and matrix overlays, nearly always make
professional work more complex and inefficient”. One of the challenges these authors see in the
necessary evolution of organisations is the creation of knowledge marketplaces. Technologies
allow such implementations. The only barriers are organizational. As Malone wrote in his recent
book (Malone 2004), “it is possible to have now the best of both world – the economic and scales
efficiencies of large organisations, and the human benefits of small ones: freedom, motivation, and
flexibility”. To fit with their networked workers, organisations must towards networking entities, both
internally and externally.

In the late nineties, some firms launched some initiatives in this direction. They tried to build
communities of practice and communities of interest in order to link employees sharing the same
work practices or interested by the same subject. Ten years later, lessons can be learned from
these pioneers. From his study of some French firms having experienced those communities,
Meingan (Meingan 2006) proposes some conditions of success at the firm’s level:
ƒ The answer to a management issue;
ƒ The definition of a field (communities of interest) or dynamics (communities of practice) for
knowledge sharing;
ƒ The support from the hierarchy;
ƒ The designation of a moderator or a moderation method;
ƒ The size operationality;
ƒ Tangible results, not necessarily immediately measurable.
Information and, even more, communication technologies have provided a technological framework
to support those networking initiatives. In their study of electronic communities of practice, McLure
et al. (McLure Wasko and Faraj 2000) point out the interaction with a community as the first
motivation of individuals to participate in knowledge sharing. This interaction includes the access to
multiple viewpoints, the membership to a peer group, the altruism and pro-social behaviour, the
reciprocity, and the contribution to the advance of the community. Other factors found in the
literature are trust (Meingan 2006), respect (McLure Wasko and Faraj 2000) and loyalty (Koh and
Kin 2004). These motivations at the individual level are somewhat different from those of the
organizations those individuals belong to. On one hand, firms are motivated by the potential return
networking can provide, which requires some formalisation and control of the networking process.
On the other hand, workers are motivated by moral obligation (fidelity to the community), which can
only be met in auto-emergent and informal structures (Seely Brown 1998).

The challenge for firms in this organisational revolution is thus to encourage their employees to
participate in those informal networks and to be able to profit at the firm level from the knowledge
created through individual networking. A company blogging policy, as we will demonstrate in
section 6, can provide a solution. It can help “turning knowledge workers into innovation creators”
(Boothby 2005) and to enhance the firms’ global innovation capability.

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3. Blog definition and typology

3.1 What is a blog?

A blog, more precisely weblog, is a kind of diary shared on the web by its author(s) (Laughton
2006). Readers can react at the posts of the contributors. Their comments are also available for the
readership of the blog. This provides loosely coupled conversations. The posts are presented
chronologically, the more recent being the first (the term blogroll is used within the community).
Generally, the most significant or the most recent posts are listed on one side of the page.
References to other blogs that the authors find relevant are also often proposed.

The blog posts very often include links to another section of the same blog or to external websites.
Each post also referenced by a specific URL, in order that other bloggers can refer to it in their
blogs. This is called a trackback. If the initial blog manages trackbacks, an automatic link to the
referrer blog or website appears in the referred post to indicate to the author and its readership that
the post has been commented at this address. This allows readers to find their way in a network of
blogs sharing similar subjects of interest. This also leads to inter-blog conversations that are
sometimes (if not often) richer and more challenging than intra-blog conversations (Maister 2006).

Blogging popularity experiences an amazing growth for the last two years (Cohen and
Krishnamurthy 2006). The number of blogs referenced in Technorati (Technorati 2006), a search
engine dedicated to blogs, has tripled in 2005. If teenagers are still a large category of blogging
aficionados, more and more individuals (scientists, teachers, politicians, students, etc.),
organisations and firms join the blogosphere. In the next section, we introduce a brief typology of
blogs. We also point out the types of blogs that will be studied in the following section, i.e. blogs
that contribute to knowledge building and innovation at an individual and/or a corporate level.

3.2 Blog typology

To build this typology, we decided to classify blogs following two dimensions: their origin (who
launched the blogging initiative: an individual or an organisation) and their objective (what is the
main purpose of the blog). Other classification criteria could have been chosen as the main subject
of the blog, the size of its readership, etc. However the origin and objective dimensions particularly
serve the goal of this paper. The resulting typology is summarised in Table 1.
Table 1: Blog typology following the origin and objective dimensions
Main objective Individual blogs Organisational blogs
Sharing “life” Diary relating the author’s everyday life and News blog relating the last events in the
experiences personal reflections organisation
Publishing or Blog of an author proposing his or others’ Informational blog dedicated to the
publicising work work to an open readership who can personnel or the partners with the
comment, criticise objective of keeping them informed
Opening a Discussion blog concerning general topics Discussion blog where the organisation
general debate about societal, cultural, political, etc. issues policy / strategy can be discussed
internally or more openly
Building a Blog of a person seeking support in the Internal or external blog dedicated to a
community of particular practice of a personal or particular professional practice with the
practice professional activity among other objective to share experiences
practitioners
Building a Blog of individual specialists / researchers Internal or external blog dedicated to a
community of seeking support in their field among their particular expertise, which is relevant for
interest peers the organisation
The proposed distinction following objective is not so clear. For example, the blog of a PhD student
can be mainly dedicated to the discussion of his research field (and thus have the main objective of
building or participating in a community of interest), but some posts could also share his life as a
PhD student, and he could use his blog to ask the opinion of his readership concerning his working
papers. At the organisational level also, things are not so sharp. For example, a blog dedicated to a
community of practice can also be used to spread documentation and information concerning this

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practice or more general subjects. However, when looking at blogs, the main objective is generally
obvious.

If all those types of blogs can help knowledge sharing, the blogs dedicated to the building of
communities of interest are more oriented towards new knowledge building. They are sometimes
called knowledge blogs or k-logs. The next sections will focus on those particular blogs in order to
determine how they can contribute to research and innovation through their networking capabilities
and facilities.

4. Research blogs: Their characteristics and motivations

Recent papers underline their emergence in scientific communities: in maths (Laughton 2006), in
physics (Gould 2006), in medical sciences (Sauer et al. 2005). This emergence can be linked to the
rising interest for open access in the scientific community (Chesler 2004). The traditional scientific
publication channel is currently in question. The costs of publication are at the centre of the debate
(Gass 2005), as well as the relevance of reviewing processes in closed scientific communities
(Christi 2003). Blogs not only offer a publishing alternative to scientists, they allow them to confront
the development of their research to peers all along their creative process, from the idea
generation up to the final publication. In this section, we list the motivations of research bloggers as
they express them on their blogs, we analyse the general characteristics of research blogs and we
propose a small case study of high-level physicists’ blogs that are inter-linked.

4.1 Motivations of research bloggers

The main objective to build a community of interest, more precisely a community of research, is
expressed in various ways in the blogs that we have analysed. Hereafter the motivations that we
have encountered through the analysis of researchers’ blogs are listed following the order of the
activities in the creative process of scientific research.
ƒ To find an opportunity for informal discussion about the blogger’s research as well as others’
research linked to the field. Bloggers generally underline that they do not find such an
opportunity in their university because research subjects are too specialised at the PhD (or after
the PhD) level. Blogs open their horizons of collaboration.
ƒ To keep a diary of research advancements up to date. Regular blogging forces the researcher
to reflect on the progress of his work, to organise his thoughts and to write down small reports
concerning the work he has done, the challenges he has met, his failures and successes. If he
does not feed his blog with new posts, he may loose his readership, or, if the relationship is
already loyal, to be questioned concerning his recent progress. Blogs challenge the researcher
in the progress of his work.
ƒ To propose a new theory or scientific experiments to the community. The blogger is not alone in
front of new knowledge. He can share his discoveries with his readership. Through their
reactions, he can be comforted or challenged. Blogs favour the learning loop.
ƒ To publish working papers or to comment published work. Once the research work is more
mature, the blogger can propose preliminary versions of papers to his readership. Here also
their reactions help him improve his work and prepare him for the final publication process.
ƒ To aggregate information on a field. Blogs offer a dynamic repository for knowledge, with links
to sources and comments from readers concerning their interest and relevance.
Another motivation is the development of a sense of community, in which we can find the factors
necessary for communities’ success: trust (Meingan 2006), respect (McLure Wasko and Faraj
2000) and loyalty (Koh and Kin 2004). A more anecdotic motivation that was mentioned in the
studied blogs is the development of redaction skills.

4.2 Advantages and limits of research blogs

In this section, we list the various characteristics of research blogs, as cited by bloggers
themselves, and try to determinate to what extent each of those characteristics is an advantage
and/or a limit for knowledge creation.

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ƒ Informal: they favour informal (if not tacit) knowledge sharing, but can lack at rigour.
ƒ Immediate: they favour spontaneity, which can lead to very brilliant thoughts as well as to a lot
of waste.
ƒ Openness: they potentially provide extremely various readerships, which can favour systemic
effects in knowledge building, but also pollute the discussion.
ƒ Worldwide: they offer opportunities of on-line meeting between distant specialists in the same
field, but they do not replace face-to-face meetings from time to time.
ƒ Dynamic: they favour interactivity and reaction, which can also lead to a loss of control in the
developments of the blog.
ƒ Based on voluntary participation: they favour intrinsic motivation, which is favourable to
knowledge exchange, but they have no means to retain participants (excepting the quality of
exchanges).
ƒ Relatively anonymous: anonymity helps participants to express themselves freely, which is
positive if it helps to build knowledge and negative if freedom engenders destructive behaviours.
ƒ With an own culture: it provides bloggers with this sense of community that is one of their
motivations. It also closes doors to researchers that cannot adapt themselves to this particular
culture.
ƒ Rewarding: the blogger is rewarded by the growth of his readership, the comments to his posts
and the trackbacks from other bloggers; this can also lead to a certain addiction to blogging.
ƒ Easy to set up and cheap: a simple technology. It is more a social than a technological
innovation
ƒ Funny.

4.3 Illustration 1: A network of physicists

When one searches for blogs about physics through Technorati (Technorati 2006), 264 are
mentioned (number updated on May 8th 2006). Among them, a lot are personal diaries of PhDs or
postdocs that want to keep in touch with friends or the family. Some of these physics blogs provide
high-level research posts. For this illustration, we focus on four blogs:
ƒ Life on the Lattice (Nobes and von Hippel 2006)
ƒ Luboš Motl's reference frame (Motl 2006)
ƒ Physics comments (Rivero et al. 2006)
ƒ P.P. Cook’s Tangent Space (Cook 2006)
Theoretical physicists write those blogs. They use trackbacks to mutually refer their blogs and
comment on the posts of each other. They regularly post advances to their work. Intra-blogs
conversations are rather rare, while inter-blogs conversations are frequent.

They are strongly linked with the Open Access publishing initiative of Cornell University Library
“arxiv.org” (Cornell University 2006), where 362,181 e-prints in Physics, Mathematics, Computer
Science and Quantitative Biology are on-line. This link is so important that arxiv.org allows (within
some rules) trackbacks from blogs on the papers published on its site. This group of theoretical
physicists is a small network of specialists who help each other to progress in the development of
their common research field. Through blogging, those geographically remote scientists find a
platform for collaborative knowledge building.

5. Company blogs: Contribution to innovation and knowledge building

5.1 Motivations of company blogs

At the organisational level, the state-of-the-art concerning knowledge blogs is more difficult to
establish. Blogs dedicated to conversations with clients or to information concerning products are
already recognized as a powerful marketing tool (Maister 2006). They open a window on the

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organisation for potential customers that can check the service skills and the product quality of their
future supplier. More and more, executive in large companies publish their personal blogs (Crainer
and Dearlove 2004). It can be a good initiative to communicate internally and externally. However,
very often, those blogs are not updated and are simply static web pages.Not so many companies
are blogging. European companies are rather few to propose company blogs (Wackå 2006).
American companies are more numerous to blog. However a look at Fortune 500 blogging
companies (Anderson and Mayfield 2006) shows that these bloggers are mainly technological
companies – among others Xerox (Xerox 2006), Cisco (Cisco 2006), Oracle (Oracle 2006), HP
(Hewlett Packard 2006) or IBM (IBM 2006). Those companies have developed a blog culture,
giving their employees the opportunity to develop blogs in which they discuss sometimes very
sharp technological subjects with communities of practice. Some automobile companies, as
General Motors (General Motors 2006), also propose blogs that are more promotional and image
®
blogs. As the blog McDonald’s proposes about corporate responsibility (McDonald’s 2006).

Those observations on company blogging, however, do not take into account the growing number
of internal blogs that are not available on the public Internet (Balker 2006). As a matter of fact,
generosity in knowledge sharing must be considered with caution when intellectual property is at
stake. Among the motivations of internal blogging, one can easily imagine the following that are not
directly linked to knowledge building and innovation:
ƒ To build a culture of consultation and participation;
ƒ To integrate various stakeholders in project developments (Garrety et al. 2004);
ƒ To create a “group” culture at the team, project or company level.
Other motivations are directly relating to knowledge building and innovation:
ƒ To share and develop private knowledge in research and development departments, potentially
in collaboration with partners as universities or industrial subcontracting firms;
ƒ To store knowledge in a dynamic archive that helps to structure, aggregate and analyse
available knowledge on a field of research.
The advantages and inconveniences that have been listed for individual research blogs are also
present for organisational knowledge blogs. Blogs provide a platform for networking at various
levels: inside the organisation, with chosen partners and with the public. Blogs provide a tool
(among others) for organisations to evolve towards this more flexible structure corresponding to the
evolution of their workers.

5.2 Illustration 2: “Play On”

The only corporate research blog that we could find on the Internet is the “Play On” blog of the Palo
Alto Research Center of Xerox (Xerox 2006). The subtitle of this blog is “Exploring the Social
Dimensions of Virtual Worlds”. The objectives of this blog are clearly related to research questions
related to the social interactions between players in virtual games or the improvement of social
interactions with simulated realities. Play On has four authors with different backgrounds that are
complementary for their research topic: two computer scientists, a sociologist and a communication
scientist. The posts that are published and the comments they receive meet the motivations that
have been listed in section 5 concerning individual research blogs: informal discussion, diary of
research progress, submission of new theory or experiments, paper pre-publishing, knowledge
repository. The interactions with readers are rich, regular trackbacks occur with virtual worlds
aficionados’ blogs, with technological or sociological scientists’ blogs. Play On meets the conditions
to be classified as knowledge blog. It may however not meet the conditions to be considered as an
organisational blog.

6. Do blogs meet the requirements to support networked innovation?

In section 2, we have seen some criteria that literature underlines as favouring the success of
networked innovation as communities of practice or communities of interest at the company and at
the individual levels. Let’s see if the blogs that we have analysed meet those criteria.

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6.1 At the company level

Following the analysis of Meingan (Meingan 2006), the networking initiatives that companies
launch should meet some criteria to be successful. Table 2 recalls those criteria and analyse if
research blogs help to fulfil them.
Table 2: Do blogs meet success factors for networked innovation at the company level?
Factor The way blogs can meet it…
Answer to a management Blogs can provide an easy and inexpensive platform to support the following
issue management challenges:
Flexible networking ;
Informal knowledge transfer with partners, customers, suppliers ;
Daily project management even if team members have distant locations ;
Etc.
Definition of a field The company blogs should be devoted to a theme that is relevant for the
(communities of interest) or company or should allow knowledge sharing with persons or organisations
dynamics for knowledge that can bring useful knowledge to the company.
sharing (communities of
practice)
Support from the hierarchy Since blogs could also be the source of knowledge leakage, the blogging
initiatives should be approved by the hierarchy. Moreover the company
blogging policy should be clear for all employees (open and closed blogs,
limits to knowledge sharing, etc.). When approved, the employees’ blogging
initiatives should be strongly supported in order to transform them in long-term
collaboration tools.
Designation of a moderator A blog is generally managed by a single person or a small group of persons.
or moderation method The author(s) has (have) the authority to manager the blogs and the
exchanges following adequate rules. Such rules should be the product of a
company reflection.
Size operationality Specialized blogs are usually small enough to avoid chaotic behaviour of the
network. However, companies can also decide to control partially the network
through blogs with limited access.
Tangible results The company blogging policy should include a process to transform the
knowledge acquired by individuals though their blogging activities into
knowledge exploitable by the company.

6.2 At the individual level

The literature (McLure Wasko and Faraj 2000, Koh and Kin 2004) also underlines that networking
initiatives should meet some requirements at the individual level. Table 3 analyses if research
blogs can support each of those requirements.
Table 3: Do blogs meet success factors for networked innovation at the individual level?
Factor The way blogs can meet it…
Access to multiple viewpoints The openness of blogs favours this access. However, in the
framework of company blogging, strategic reasons could limit
openness.
Membership to a peer group Bloggers mentionned the “sense of community” that blogging
creates. Moreover, for knowledge blogs, this community sense is
reinforced through the sharing of common specialized knowledge.
Altruism and pro-social behaviour These are important sources of motivation for individual bloggers.
Reciprocity The blog or the blogs network should offer the members the
possibility to communicate freely in order to favour emergence of
innovation for the whole community.
Contribution to the advance of the For a researcher, this aspect is fundamental. As we have noticed
community through our study, a lot of blogs do not contribute to the advance of
science as they are focused on personal reflections. Some blogs are
really dedicated to the development of knowledge. Those really
contribute to the advance of a global community.
Trust Particularly in the framework of collaborative innovation, trust
between partners is fundamental to allow knowledge transfers that
are really profitable for the network. For some projects, this can lead
the company to restrain the access to some blogs where strategic

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Factor The way blogs can meet it…

knowledge is developed.
Respect As in any group, respect and loyalty are a prerequisite to knowledge
Loyalty exchanges. Particularly in the framework of innovation where new
ideas must emerge, participants have to feel a respectful and loyal
behaviour from all network members to propose their suggestions
without any fear. Those behavioural requirements should be
specified in the company’s blogging policy.

7. Conclusions
A sign of their growing interest, more and more recent papers were published these lasts months
concerning blogging (see e.a. (Jacobs and McFarlane 2005, Brady 2005, Pinnock 2005)). These
papers concern mainly blogging by individuals and the way this practice can contribute to
knowledge building on the web. When organisational blogging is the subject of those papers,
knowledge building is rarely considered. However, the innovative advantages enlightened for
individual k-logs are also valid for company blogs. We think that blogs and similar collaborative
technologies offer companies the opportunity to evolve towards organic structures that would be in
better compliance with today’s work modalities. Especially in the domain of innovation and
knowledge building, the positive experiences of individual bloggers provide incentives to similar
developments at an organisational level. In our future research work, we intend to have contacts
with companies that demonstrate already relevant public blogging activities in order to check if they
also promote internal blogging activities. If so, we would like to understand their motivations and
compare those with the ones enlightened for individual blogs. We will analyse the various
innovation objectives underlying internal blogging. Finally, we will study if blogs provide a
convenient platform for inter-organisational networking in the particular framework of co-innovation.

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Where is the Pharaoh and the Treasures? The Social
Mystery of the Great Pyramid of Knowledge
Jordi Colobrans Delgado
Universitat Autonoma de Barcelona, Bellaterra, Barcelona, Spain
[email protected]
Abstract: Meaning systems allow people to interpret their experiences in social contexts. Myths like "El
Dorado "motivated conquerors to discover new lands. The search for the philosopher's stone helped the
transition from alchemy to chemistry. Market economies and the business world also have their own myths:
their hopes and their labyrinths. What leads to success in business, politics or society? This is a "million
dollar/euro question" that, periodically, has its "million answer". Now it is time for Knowledge Management
proposals. So, is knowledge management practice the solution for a knowledge-based economy and society?
If that is the case, the epistemological foundations of Knowledge Management must be laid to develop its
continuity. In this sense, one of the central assumptions of Knowledge Management theory is the Pyramid of
Knowledge, a model where the mysterious transition from data to knowledge is explained. In this paper, I will
explore the confusions entailed by the uses of the metaphor of the pyramid and its consequences for the
future development of the practice of Knowledge Management. In order to proceed with the building of the
Knowledge Society and the Knowledge Economy we must review our conceptual framework and, perhaps,
understand knowledge not simple as an object, not as a process but as a meaning system.

Keywords: Knowledge management epistemology, knowledge management theory, systems of meaning,

knowledge management metaphors pyramid of knowledge

1. Introduction
In this article I explore the epistemological bases of knowledge management with the aim of
consolidating a model, which will allow more comprehensive practice. I analyse the metaphor of the
pyramid or the hierarchy of knowledge to show that such hierarchy is merely theoretical and
practically unsustainable. It leads to confusion and, once the expectations that have been invested
in such projects have come to an end, it makes all such archaeological fantasies inviable in the
long term. The pyramid of knowledge does not deal so much with a hypothetical hierarchy of
knowledge as with the hierarchical structure inherent in organisations and the quality of the
resources available to each of the levels of responsibility. Considering the relationship between
knowledge and organisation from a less objective and more processual perspective alternative
models arise. In doing so, the emphasis will not be knowledge understood as a thing but rather as
a flow, process or even better as a meaning system with a greater or lesser capacity to give
meaning to the experiences of those who share them. In this sense, knowledge is meaning which
when applied to make sense of empirical or rational experiences give rise to several
interpretations. All that in-forms (gives form to, which is expressed in a support) by means of a
meaning system becomes information. The act of knowing cannot be separated from the act of
interpreting. The supposed knowledge, which may be found at the top of the pyramid, is interpreted
information but not knowledge itself. When treating knowledge as an object knowledge
management is impoverished and the possibilities of its practice limited. Can this be avoided?

2. The pyramid of knowledge

One of the theoretical bases of knowledge management is the pyramid or hierarchy of knowledge,
still in use; a model which tries to explain how, by organising simple data we obtain information and
how, under certain circumstances, with certain cognitive skills and applying certain rules,
information becomes knowledge, and even wisdom. To describe this hierarchy the DIKW -Data,
Information, Knowledge, Wisdom- acronym is frequently used. The model, which was popularised
by the reference books on this practice (Nonaka and Takeuchi 1995; Davenport and Prusak 1998;
Skyrme 1999) is explained in the most popular manuals in this discipline (Buckowitz and Williams
1999; Liebowitz, ed. 1999; Tiwana 2000; Bellmann, Krcmary and Sommerlatee, ed 2002;
Holsapple, ed. 2004) The simplicity of the model has led to the building of a complete theory and
practice on how to manage a thing called knowledge. The results of applying such a model seem
evident to its most enthusiastic practitioners and, of course and from a pragmatic point of view,
revitalises a part of the so-called knowledge economy.

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In the metaphor of the pyramid, knowledge is a treasure hidden in a secret chamber that is located
inside the pyramid and which can only be reached by negotiating certain hermeneutic perils. In this
sense, knowledge or wisdom is a promised reward, which compensates for the risks faced in the
great adventure of knowledge. This treasury of knowledge (call it intellectual capital or knowledge
assets once we have abandoned the archaeology and are back in the administration of
organisations) will be used to finance the competitive capacity of entities in the battle for market
share (economics), reputation (media) or votes (politics). An excerpt from Thomas S. Eliot's work
"Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in
information?" (Eliot 1934) is quoted as the origin of this metaphor. Some authors have found this
analogy suggestive and developed its interpretations: information, knowledge and wisdom (in
Cleveland 1982), data, information, knowledge and wisdom (in Zeleny 1987) or data, information,
knowledge, understanding and wisdom (in Ackoff 1989). Echeverría (2000) dates the sweeping
popularity of this analogy back to Fritz Machlup (1980-1984) in Knowledge: its creation, distribution
and economic significance. In every case, the relationship between data, information and
knowledge is conceived as hierarchical.

However, the discovery of the analogy with the structure of the pyramid soon became dogma.
Knowledge could only be reached by scaling the pyramid (Vaagan 2004; Davis, Palda, Drazin and
Rogers 2006). There may be steps, and it may be a difficult climb, and the further we are from data
the more difficult it will be to understand what is hidden behind them. From this situation, which
becomes a problem to be solved, an entire series of methods, techniques and debates emerges
ofering the best (and cheapest) way of transmuting data into knowledge. The short version of
pyramids has three steps: data, information and knowledge. The extended version, as the
response began to reveal itself as complex, added additional steps to the structure.

For Maestre (2000), for instance, the knowledge pyramid has eight levels. At the bottom are bits,
the elementary unit of information (0 or 1). The bit is followed by the character, or byte. Bytes take
on the guise of letters, numbers, orthographic symbols and the like. Then come the chains of
characters, or a set of bytes. In fourth place appear data or chains of characters associated by a
concept, for example "Institut de Governació i Polítiques Públiques" [samples are mine].
Information is defined as an interrelated set of data capable of providing value, such as "The
congress being held at the Universitat Autónoma de Barcelona". When different pieces of
information are interrelated in such a way that the changes at the bottom of the data affect the
entire set it is called an information system. Maestre placed knowledge on the seventh level.
Knowledge is defined as an inference based on a general rule applied to specific information. For
example: If the announcement about layoff in the company encourages investors to purchase
shares in these enterprises (general rule). And if tomorrow the CEO of the company Money-Money
will publicly announce the layoffs (specific information). Then, right now I am going to purchase
shares in the company Money-Money because starting tomorrow I will begin to earn profits
(knowledge). Maestre goes on to add an eighth level, wisdom, which adds to knowledge the ability
to create general rules. Of course, Maestre's improved pyramid is highly explicative for some and
provides a very interesting solution for converting information that is digitalised on computers into
the "wisdom" that enables an organisation to undertake more competitive management. This is a
symptom of the maturity of the metaphor. On this point, the metaphor is tremendously resolute and
becomes part and parcel of a whole specific body of jargon as part of organisational culture. The
steadfast conviction that the pyramid is real, along with the results from promising case studies,
justifies the enormous efforts and resources earmarked for the development of information and
communication systems in organisations (Bath 2001). The deployment of resources used for this
purpose might be persuasive given the degree of technical sophistication at stake or the degree of
institutionalisation in light of the creation of rules, for instance, of good practice (See the
recommendations in the “European Guide to Good Practice in Knowledge Management” issued by
the European Committee for Standardisation) How can one doubt in the face of such immense
evidence when one of the prime services in the information business is precisely that of converting
data into "knowledge"?

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3. The pyramid of knowledge as a metaphor

However, the expression, "knowledge pyramid" is a metaphor. Metaphors and metonyms, and
behind them that Lakoff and Johnson (1981) called metaphorical concepts, are instruments that
enables people to interpret their experiences. Metaphorical concepts emphasise interaction. They
link reality with the representation of reality and help human collectives to comprehend the reality.
Subsequently, the meaning serves to guide their actions. Metaphorical concepts are in no way
trivial; they have a very high cognitive value (Nubiola 2000). In contrast to the classical theory of
replacement where images are equivalencies (A literary figure of expression that serves the
purpose of embellishing linguistic expressions by enriching them with images. In this sense, for
instance, referring to data mining does not imply the existence of a miner who is extracting gems
from the bottom of the mine), the theory of interaction (Blank 1966 and 1979; Davidson 1978;
Richards 1936; Ricoeur 1975) explains why certain words are chosen because their denotations,
connotations and evocations. Emphasis is transferred from the metaphor as a figure of expression
to the analogy chosen in order to analyse the implications of this choice. For example, Morgan
(1986 and 1997) analyse some metaphors that have been used to explain how organisations work
based on their similarities with living beings, machines, brains, cultures, political systems and the
like. Associating the characteristics of one reality with those of another can be highly suggestive
and inspiring. It enables people to interpret their experiences and understand how certain specific
systems work in certain contextual conditions. Analogical thinking is a powerful source of
inspiration (Nerlich 1998).

On the other hand, the pyramidal form is a contingency. What would happen if it were inverted? As
Tuomi noted (1999), before information can become knowledge, another enigmatic shift must be
resolved, that of the shift from data to information. But as this author observes, we cannot speak
about data without information, so data cannot be at the foot of any structure, and thus, the entire
conceptual scaffolding built on the assumption that both information and knowledge are
elaborations of this data collapses. The knowledge pyramid might, however, be inverted and
continue to remain suggestive. This would be a "data pyramid" built on the foundation of
knowledge. There is little doubt that the relation between data, information and knowledge is vague
(Boisot and Canals 2004). The theory of interaction deals with the importance of choosing either
one model or the other. When modelling experiences, the initial conditions set by the
representation of the chosen reality inspire and motivate a specific evolution in the comprehension
of reality. When modelling reality, complexity is reduced to give certain degree of control over
confusion. Nevertheless, though it has its advantages, it also has disadvantages.

4. The knowledge pyramid and its archaeological fantasies

When is it time to stop the chain of association leading us to an analogy and avoid falling into
absurdity? For instance, considering DIKW in a pyramidal form invites us to solve a labyrinthine
problem. However, at the end, we lack the pharaoh and the treasures. A pyramid is a helpful model
to think about dynamics of knowledge. It denotes, connotes, evokes and conjures up something
else, a hierarchical arrangement between the elements included within the system, a cumulative
process in which simple elements are progressively organised into increasingly complex guises. It
also includes value judgements. In a competitive society it is accepted as a credo that "above" is
better and preferable to "below". Above is "more", while below is "less". More perspective, more
usefulness, more intelligence, more understanding and so forth. Interpreted thus, knowledge is
"better" than data, although not because it is inherently "better", rather because it is located at the
peak of a geometrical figure constructed on the assumption that "above is better than below".

In every pyramid one finds a pharaoh (at least in Egyptian pyramids) with his treasures. Thus,
alongside the image of the pyramid, there coexists the image of a wealth inside. It is thus worth the
effort of descending to the bottom of the pyramid, extracting the data and illuminating the
information in order to find the magnificent sarcophagus in which eternal knowledge is resting,
arrayed in gems and jewels. But the pharaoh's treasure is not easily accessible. Labyrinths, false
chambers, protect it and, if we let ourselves be guided by the adventures of Indiana Jones, it is full
of dangers that the thieves of historical patrimony or romantic adventurers must risk their lives to
negotiate. The idea of the difficulties to reach the treasure hidden inside the pyramid goes hand in

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hand with its form. When knowledge is a treasure and the treasure is hidden within a pyramid, and
when the treasure is intellectual capital and the pyramid is an organisation's intranet, then the
metaphor ceases to bear a resemblance. Reality takes on the guise of the tool that has been used
to create it. From this moment on, the purpose of the metaphor of the pyramid is no longer to
inspire a new reality, but to describe it.

In this sense, knowledge will be discovered in some place (knowledge discovery). How can one
reach the secret chamber? By data mining or data archaeology. Who will help me extract the
treasure from the chamber? Cooperation amongst the community of workers (eCollaboration). How
can I classify the treasure? By indexing knowledge within a comprehensive system (knowledge
ontologies). How can I make an inventory of the treasures? With a knowledge repository. Who is
the owner of the treasure? Knowledge property. What value does the treasure have? Intangible
assets. Where will I store the treasure so that nobody can take it from me? Inside a Data
warehousing. How will I protect it? Passwords and security policies. With whom shall I share the
treasure? Shared knowledge. And so forth (See Hey 2004 for more samples). But where is the
Pharaoh and the Treasures?

5. Where is the pharaoh and the treasures?

As Thomas S. Eliot noted, "What are we losing when interpreting information in search of
knowledge, and knowledge in search of wisdom?"

The leap, or shift, from information to knowledge seems to take place instantaneously through
finding oneself on a higher step of the step pyramid. The only thing needed is the effort of
"climbing" a little higher. Herein lies the confusion. In this analogy, knowledge is interpreted as a
question of perspective. The syllogism in modus ponens is as the following:
ƒ The higher we go, the better the perspective, and
ƒ The better the perspective, the more knowledge we have,
ƒ Therefore the higher we go, the more knowledge we have.
In this way, the experience of the perspective derived from being higher up is transferred to the
experience of knowledge. The image is suggestive and proposes a definition to us: knowing is the
ability to glide above information. The bird's eye view for geographers, the eagle's gift for shamans,
or the photograph from spy satellites for soldiers provide empirical experiences to consider the
validity of this analogy. The relationship between height and knowledge thus seems undeniable.
Read the eye of Horus, the eyes of Buddha or The Father who art in heaven who sees everything
and knows everything. Definitively, believing that things are known "from above" seems convincing
to many people. This perspective enables us to structure the data and information beneath us as if
it were a geographical map. Nevertheless, one does not shift from information to knowledge by
lifting our knee, leaning our body forward and taking one-step up. The problem is much more
complex. Information is presented in the guise of statements. Knowledge is presented as
propositions. To convert, achieve, obtain or extract knowledge from information one must
undertake an exercise in interpretation. Because needless to say, knowledge is not found in
databases. Databases contain data. Knowledge appears when a reader interprets the data, read
as information. Why must we shift from information to knowledge? In fact, we cannot shift from
information to knowledge because knowledge is what we use to interpret information.

Given the fact that interpretation is a mental activity by which meaning is assigned to experiences,
to interpret information we must first of all understand it. However, the job of understanding
phenomena is somewhat complicated. It requires a phenomenological approach and a
hermeneutic effort, actions that, as preliminary tasks, must convert reality into a socially
constructed reality and attend the language. Here is the underlying problem; we are encouraged to
climb to find knowledge precisely when knowledge lets us "climb", "descend" or "remain". The
pyramid of knowledge offers us a phantasmagoric treasure. It thus seems that we are faced with a
contradiction: all the technology of knowledge management is created with the purpose of
facilitating data storage through a data warehousing system and manipulating packages of
information to extract from them their golden seeds in the guise of knowledge (via data mining

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methodologies) when this precisely hinders access to knowledge. Does this mean that information
systems are only capable of generating more and more information but not knowledge?

How did we come to this head? What is convincing us that knowledge can be managed? The
explanation is related to traditionally opposing myths rooted in the collective imagination, that of the
quest for the philosopher's stone and that of the search for the elixir of life. The former strives to
find the way of turning everything one touches into gold, that is, profit. Living is earning. The latter
attempts to prolong life, because living knows, and knowledge leads to wisdom. Life is learning. In
the early 20th century, the scientific management theories of Frederick W. Taylor and Henry Fayol
helped the capitalist market economy to remind itself and definitively convince itself that time was
money. With the advent of the digit, the information society postulated, "information was power".
The knowledge society adds yet another belief to the already-existing ones: "knowledge is money".

The reasoning can be expressed as follows:

ƒ If knowledge is money, and
ƒ If money can be managed,
ƒ Then, knowledge can be managed as money.
This conclusion promises business opportunities: "knowledge management" might lead to profits.
From which one can conclude that knowledge management will bring profits if knowledge is
properly managed.

In this way, treating knowledge as if it were a type of capital, the same questions can be asked of it
as are asked of money: How can it be made profitable? What should we invest in? How can it be
protected? How is it attained? How should we manage it? Who has it? How can it be attracted?
And so forth. From here, a new necessity emerges: that of having models (that will give rise to
rational, empirical research), guidelines (that will give rise to educational literature), motivation (that
will give rise to inspirational literature), and effective tools (that will give rise to software) to manage
knowledge. This necessity brings with it other necessities: that of training expert people in these
models, guidelines, motivation and tools; and that of adapting organisations to the new
management tools (implementation projects, and so on), even regulations to promote the so called
knowledge society.

So, the pyramid of knowledge is constructed on the illusion that knowledge is a higher stage than
information and that possessing it is equivalent to possessing money. Objectively speaking, neither
time nor knowledge is money. Perhaps with time or knowledge, money is earned (or lost).
Knowledge comes from intellection and information from documental supports. The container
overlapping with the content, the medium with the message, cause with effect, or the procedure
with the result, is a fallacy. To manage knowledge it has to be treated as if it were an object.
However is knowledge an object, a process, both, or a mental phenomenon? Just documents
storing information can be managed but not knowledge. So, where is the treasure? The promised
treasure is not on the objects but on the people who interpret such information. Concretely is on the
meaning systems they use to interpret their social experiences. This is not new (see Geertz 1973),
but is easily forgotten and has to be remembered periodically.

6. The pyramid of knowledge and hierarchy in organisations

Behind the imaginary pyramid of knowledge we find another classical hierarchy, that of the
organisation itself. It can help us to understand why the pyramid or hierarchy of knowledge was so
easily accepted and integrated to knowledge management discourses. In organizations people is
distributed according their degree of responsabilities. So we find above the executives, beneath
them managers, followed by technical staff and even lower yet operators, administrative personnel,
warehouse helpers, maintenance workers, cleaning staff and so forth. In this representation, to be
at the top means to be more than to be at the bottom. In these conditions, each level of the
organisation has a correspondence to each step of the pyramid of knowledge and makes a perfect
geometry. One serves to the other. The workers create bits, bytes, chains of characters and data
for technicians. The technicians contribute to organising the information systems so that
information can be transferred and knowledge can be allowed to grow for managers, while

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management is concerned with facilitating the creation, acquisition, retention, transfer and use of
knowledge for executives. Finally, the executives plan the strategy to facilitate the job of the
managers and take strategic decisions using the knowledge extracted from the information. By
attributing more wisdom to more status (this is crossing an intellectual accomplishment with a
social accomplishment), the executives are identified with wisdom. In this way, the rules of the
game are respected. The pyramid of knowledge helps to confirm the hierarchy (structure) in
organisations. It is cognitively coherent with it. It becomes an argument about what was already
known in the most classical sense, that whoever is the boss has the power to give orders and takes
the decisions and, that in every level, a different quality information is required. Hence, the pyramid
resolves a problem of social structure, that of maintaining the established order in an epoch of
acceleration, change and general disorientation. It gives meaning and mental structure to people in
promises material treasures.

Consequently, the pyramid of knowledge cannot explain the transition from data and information to
knowledge because in reality it does not deal with the problem of knowledge, rather it projects the
hierarchical structure of organisations. It speaks about the distribution of power, responsibility and
privileges of access to information in formal organisations. It defines the quality of information
needed by those in power - wisdom and knowledge for executives -, those who plan - information
for technicians -, and those who produce - data for workers. Likewise, it defines the functions of
information: making decisions with knowledge, analysing with information and storing with data.
And finally, it suggests a value judgement as to what is more or less important in the organisation.
In this sense, knowledge is quality when data are quantity. Thus, whoever interacts with knowledge
is "more" important than those who interact with data.

7. Conclusion
We live in a socially constructed reality (Berger and Luckman 1967), we interpret our experiences
within the framework of a social structure (Geertz 1973), and metaphorical concepts structure our
minds (Lakoff and Johnson 1981). Metaphors help us to think, but at the same time they impose
restrictions on our creativity and introduce contradictions into the very language we use to
communicate with each other. They help us to understand reality, but at the same time they
imprison us in their implications, in their glass cage or ivory tower. They do not allow us to go
beyond the images they impose on us. Metaphors are initially gratifying; they are a good start to
help the imagination leap from one level of reality to another, but once metaphorical solutions have
been activated, they castrate the reproduction of ideas. The interpreter can no longer understand
anything else; the metaphor becomes belief and from that point on, its job is to justify the models.
What begin as a stimulus for the imagination becomes a straitjacket of a model. On certain levels
of physical and natural reality, it is relatively easy to deal with objects and human beings, but when
dealing with a symbolic expression of human beings the job gets trickier. The kingdom of meanings
is like smoke; it is difficult to find a place to gain a foothold. We cannot always use the senses and
empirical methods to take decisions. How can we explain why we chose one metaphor or another?
We cannot ignore analogical thinking because it is part of our most basic experience, yet we can
evaluate some of the analogies as more or less useful tools in given contexts.

The "pyramid of knowledge" does indeed contain a labyrinth. By putting knowledge at the top and
treating it as a superior form of information, we have seen that leads to confuse the interpretation of
information with the knowledge that allows the interpretation of this information. Knowledge is not a
superior form of data. And no knowledge management system can turn data into and object called
“knowledge”, at the most they can aid people in interpreting information (a process called
“knowing”). At the end of our quest we have found no trace of the pharaoh nor his treasure
because we have chosen the wrong pyramid. The hierarchical relationship between data,
information and knowledge has nothing to do with the act of knowing but rather the quality of the
information that is available to the various levels of responsibility of the organisational hierarchies.
In the name of a pyramid of knowledge we found a pyramidal structure of organisations.

That makes we think how fragile are discourses. They are full of metaphors, and builded over
them. The current alternative proposal to knowledge as a thing is knowledge as a flow or as a
process, an image that also has specific denotations, connotations and evocations A fluid relation

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with the knowledge? Changeling relations with knowledge? How can be drawn a knowledge
genealogy? Or the life cycle of knowledge? or an innovation biography? This invites us to think
knowledge as a living been. But it is? Again doubts are invited.

So, what can be knowledge? The anthropological cue see knowledge as a system of meanings
that helps people to interpret and understand their experiences and made them meaningful to live
with. Knowledge is not a thing; it is something more than a process (a process is involved). When
social experiences change, metaphors change. When metaphors change, social experiences
change. Which metaphor and social change will help better to manage knowledge? Some
metaphors are very inspirational other not. The Pyramid of knowledge was one of them, which one
will replace it? Could be the metaphors of knowledge as a meaning system be more
comprehensive and useful to understand a little more the role of knowledge in knowledge-based
societies and economies?

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Multiple Competences in Distributed Communities of
Practice: The Case of a Community of Financial Advisors
Monica De Carolis and Vincenzo Corvello
Department of Business Science, University of Calabria, Rende. Italy
[email protected]
[email protected]

Abstract: The research focuses on the study and analysis of some emerging organizational structures, the
Communities of Practice (CoPs). Many authors see them,, as a “privileged locus” for learning, creation and
sharing of knowledge. Traditionally the learning process in CoPs has been described as “peripheral and
legitimate participation”. That is novices, who in the beginning play a peripheral role in CoP, progressively
increase their competences through interactions with expert members. As their competences increase the
same Community attributes them a more central status (legitimation). This description is convincing but too
much simplified. Each profession, in fact, can be seen as a group of overlapping knowledge domains. It is
difficult for a worker to develop all the necessary competences at excellent levels. CoPs group experts, which
specialize each in different knowledge domains. Individuals, then, join CoPs to find complementary
competences. If the traditional image of a CoP is a core of experts surrounded by a peripheral zone of
novices, the image we propose is a Community with multiple knowledge cores. This aspect of CoP is
especially relevant for dispersed knowledge workers. In fact they work autonomously and physically distant
from their colleagues. In this paper we study a Community of financial advisors. The main characteristics of
this Community are: (1) the members work for the same Italian Bank; (2) they are geographically dispersed
and communicate mainly through instant messaging tools; (3) the Community is informal. Our research
hypothesis is that the learning process in CoPs depends on the different levels of expertise that members
show in the knowledge domains relevant for the profession. To measure this phenomenon we define two
“Professional Heterogeneity (ProH)” indexes. Our findings suggest that low values of ProH inhibit learning
processes. High values are associated with ambiguous results. The learning processes are, instead, facilitated
by average values of ProH.

Keywords: Community of practice, professional heterogeneity, learning processes, knowledge sharing,

dispersed workers

1. Introduction
Communities of Practices (CoPs) have been described as an useful organizational subset in order
to study knowledge creation and knowledge sharing processes. They are a privileged locus for
problem solving and learning (Brown and Duguid, 1991). For this reason, organizations have been
studied, in recent years, using CoPs as the unit of analysis. Many authors with different names
have introduced similar concepts: Occupational Communities (Van Maanen, Barley, 1984),
Communities of Knowing (Boland, Tenkasi, 1995) and Microcommunity of Knowledge (von Krogh,
Ichijo and Nonaka, 2000). Lave and Wenger’s original definition of CoP is the following: “A
community of practice is a set of relations among persons, activity, and world, over time and in
relation with other tangential and overlapping communities of practice” and “Nor does the term
community imply necessarily co-presence, a well defined identifiable group, or socially visible
boundaries. It does imply participation in an activity system about which participants share
understandings concerning what they are doing and what that means in their lives and for their
communities […]” (Lave and Wenger, 1991, p. 98).

Lave and Wenger define the learning process within CoPs as “legitimate and peripheral”. The
workers are divided in newcomers and old-timers. The first ones acquire new and better
competences through the interactions with the second ones. At the beginning the newcomers move
at the periphery of the Community (i.e they perform simple tasks and are not a point of reference
for their colleagues); as their competences increase the same Community attributes them a more
central status (legitimation).

The focus of the research about CoPs has moved, during time, from the study of small groups and
of the learning processes, which take place within them, to other subjects. As shown in table 1, it is
possible to single out two other levels of analysis that focus respectively on organizational aspects

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(e.g. organizational mechanisms and managerial systems to support CoPs) and on the innovative
potential of CoPs (with special reference to the role of ICTs).
Table 1: The continuum of levels of analysis

Focus: learning
processes Catino (1999); Gherardi (2000); Gherardi et al. (1997; 2002); Hays et al.
Level: individuals, small (2001); Zucchermaglio et al. (2000)
groups

Focus: organizational
Bogenrieder et al. (2004); Gongla et al. (2001); Lesser et al. (2001; 2004);
characteristics
Malone (2002); McDermott (1999; 1999a); Wenger (1998); Wenger et al.
Level: intra-
(2002)
organizational

Focus: innovation and

ICT support Kodama (2005); Lee, Cole (2003); Lundkvist (2004); Pan, Leidner (2003);
Level: inter- Vaast (2004); Wasko, Faray (2000)
organizational

The present paper can be located between the first and the second level. The above-mentioned
description of the learning processes in CoPs is not clear enough about three problems:
1. In previous studies the boundaries of informal Communities have seldom been defined in a
rigorous way, nor a clear methodology to single out the members of an informal CoP has been
described;
2. A Practice, above all in the case of knowledge workers, requires multiple competences. Lave
and Wenger’s description seems to be too simplified. In facts they do not consider the
interactions among the different competences (that a profession requires) and their impact on
the learning processes;
3. Several studies define CoPs as homogeneous groups. This characteristic could, instead, inhibit
the learning processes. Research in other topics, such as group design (Hackman, 1987),
points out the importance of the variety of competences for group effectiveness.
The paper focuses on Communities of dispersed workers. These individuals often show difficulties
in interacting with colleagues and keeping themselves up to date.

Our study means to evaluate the hypothesis that a greater variety in the knowledge domains of the
members facilitates learning in CoPs.

The hypothesis is explored through the analysis of a community of financial advisors. The
boundaries of the Community were identified throught a “snowballing” technique. This experience
can give some methodological indications to identify the members of a Community of dispersed
workers.

2. Variety and multiple levels of competences in CoPs

Most descriptions of Communities of Practice distinguish their members according to only one
dimension: members can be novices or experts. The only discriminating variable among members
is experience.
Researchers have paid more attention to the factors, which make members similar to each other
than to the factors, which create differences. Taking into account the scientific literature on
heterogeneity within organizational groups is useful to understand the role of heterogeneity within
CoPs. Groups have been seen in the literature as decision making instruments and/or as
organizational units with a defined task.If the group is considered as a support to individual
decisional processes, its main advantage is that the dialogue among members allows to see new
aspects of a problem, to discover new information, to accept other points of view and, in case, to
modify one’s position (Grandori, 1995). Groups allow, when treating complex problems, to limit the
cognitive distortions, which are typical of individual rationality.

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As a consequence an effective group can benefit from high levels of internal differentiation. On the
other side an excessive cognitive distance may inhibit communication and reciprocal
comprehension (Nooteboom, 2000). When considering the group as an organizational unit, the
availability of different knowledge domains is necessary for several reasons: to warrant the
presence of the needed competences to perform the overall tasks of the team; to maintain the
capability of the actors to work together again in the future (ability of the group to last) and to satisfy
members social needs (Hackman, 1987). Several studies underline (e.g. Gladstein (1984)) how
group processes are influenced by its composition and structure in terms of, e.g., member’s level of
experience, seniority, heterogeneity of competences and leadership behaviours. In the literature
several typologies of heterogeneity have been proposed. Generally speaking the factors, which
make members different, are divided in two classes: job-related (education, technical abilities,
tenure, functional background, etc.) and demographic (race, age, gender, nationality etc). Often the
distinction between surface-level diversity (age, sex, race etc) and deep-level diversity (attitudes,
values, knowledge and capabilities) is used (e.g. Harrison, Price, Bell, 1998).

In particular job-related diversity seems to improve performances. The relation between

demographic diversity and performance is less optimistic and more ambiguous. Svyantek and Bott
(2004), in their recent and detailed review of the literature on this topic, arise the doubt that the only
relation between demographic diversity and organizational performances is “no relation”. What is
important to underline, for the aim of the present research, is that several individuals provide
different capabilities, information, contacts and knowledge, which can improve group effectiveness
(Ancona, Caldwell, 1992). When Knowledge Workers are geographically dispersed, learning
processes go through several difficulties. Usually these workers need to be self-sufficient, that is,
they need to be up to date on several topics in order to provide a satisfying service to their clients.
On the other hand, because of their partial isolation, they need to invest time and efforts in
professional updating. It is possible to suppose that each member will specialize in few knowledge
domains and that he will look for support from other members when needed.

The concept of Professional Heterogeneity (ProH) defined below derives partially from the concept
of knowledge and competences differentiation discussed above and partially from some factors
referable job-related diversity (years of working experience, seniority). The research hypothesis is
the following:

Hyp1: Within CoPs Professional Heterogeneity enhances learning processes. An excessive

professional homogeneity among members, instead, inhibits learning processes. The main idea is
that some factors, which make the members of the group different from each other, affect the
information and knowledge transfers and the learning processes within CoPs, even if a base of
common professional knowledge is necessary (Brown and Duguid, 1991). Clearly the members of
a CoP share a part of their knowledge, but it is less obvious that an excess of these “common
elements” can inhibit learning processes (Weick and Roberts, 1993).

3. Research methodology

3.1 How to identify a Community of dispersed workers

To single out the boundaries of a CoP of dispersed workers a version of the reputational strategy
has been used (Scott, 1997): the so-called snowballing strategy. In this approach it is necessary to
contact a few informants and to ask them to indicate other actors suitable for the study. The new
actors are contacted and are invited to give further names.
The process stops when:
1. No new actor is indicated;
2. The new actors can be considered marginal.
To speed the data collection up, we used a questionnaire. We called it the “map of actors”. It
consists of three set of questions about:

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 Monica De Carolis and Vincenzo Corvello

1. The typologies of interaction among members. We have defined three typologies of interaction
which are important for the development of a practice:
ƒ Exchanges of technical-numeric data;
ƒ Exchanges of opinions about problems (common or not); these exchanges are, in general,
relevant for validation processes concerning a personal idea or opinion;
ƒ Exchanges of experience: they consist in stories about problems faced in the past and
solutions, which are considered useful for the actual problem.
These interaction typologies are partially inspired by Bales’ analysis system of interaction
processes (1999) and in particular by the set of interactions oriented to the task;
2. The nature of interaction. We have distinguished between “informal” and “formal” interactions.
In this way the attention can be focalized on the spontaneous interactions, that is, those which
are not formally prescribed;
3. The frequency of the interactions (never, once-twice a year, once a month, twice-three times
per month, once or more times per week) and the communication tools (e-mail, fax, telephone,
instant messaging, video-conference, forum on-line, informal meeting face to face and formal
meeting).
In the present research we have chosen to consider members of the Community the workers that:
ƒ Have been indicated by two actors, at least, during the snowballing process;
ƒ Interact (in formal or informal way) at least weekly;
ƒ Interact with a colleague working in a different district from one of the colleagues at least.
The boundaries can be enlarged making these conditions looser. For an initial analysis it is
possible to consider a little number of members, in particular when, as in this case, the aim is to
study the information and knowledge that flow in the network of relations.

3.2 Learning processes and dialogues between actors

Learning processes can be understood as an increase of the ability to perform effective actions.
This ability is improved by interactions with members which hold different competences. Often
learning is driven by dialogues through which individuals search for information, confrontation,
validation and/or solutions to specific problems. Following Yin (1994) we use the dialogue as
embedded unit of analysis. In particular we have analyzed 812 dialogues hold through instant
messaging 1 between October and December 2004. These dialogues were divided in three main
categories:
1. Dialogues with a personal or social content: conversations with a content not referable to work
activities;
2. Dialogues with a professional content;
3. Other: this category groups incomplete conversations. For example, some conversations,
which started via instant messaging, were completed through other media.
Dialogues with professional content were further divided in dialogues aimed to research activities
and dialogues aimed to coordination activities (e.g. organization of meetings).
Dialogues belonging to the first and third category and dialogues aimed to coordination activities
were not considered useful for the study.
In the end the dialogues aimed to research activities were divided in:
ƒ Search for information: in this case an actor asks another for data or for a specific piece of
information;
ƒ Search for validation of personal opinion: actors with a personal idea about a specific topic, ask
their colleagues for their opinion;
ƒ Search for confrontation on specific topics or problems: actors without a defined idea about a
specific topic, exchange opinions with their colleagues;

1
This communication tool is the most used in the studied Community.

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• Search for solutions to common problems: in this case, two actors interact to solve a problem,
which is of common interest.
In the end 567 dialogues belonging to the category dialogues with “professional content/research
activities” were used to evaluate our hypothesis. The following figure shows the distributions of the
analysed dialogues.

Figure 1: Typologies and distribution of dialogues

Each dialogue was classified as effective or ineffective for learning processes. Even if we are
conscious to introduces some approximations, we used the following rules for each category to
decide if a dialogue is effective:
ƒ Search for information: the actor who undertakes it obtains the required data;
ƒ Search for validation: when the actor who answers proposes new or under evaluated arguments
to the actor who searches for validation;
ƒ Search for confrontation: when after the exchange of opinions, about a specific topic, at least
one actor expresses satisfaction about the conversation;
ƒ Search for solutions to common problems: when the participants obtain a solution for their
common problem.
In all the other cases, the dialogues were considered ineffective (for learning processes). The four
typologies of dialogues are characterized by growing levels of uncertainty and ambiguity (March,
Olsen, 1976).

3.3 Professional heterogeneity

The concept of Professional Heterogeneity (ProH) has been operazionalized through two
constructs: the Experiential ProH Degree (measured through an index called EProH) and
Knowledge based ProH Degree (measured through an index called KProH).

EProH is a combined measure of two constructs derived from our literature analysis:
ƒ Experience, that is the total amount of years spent in the current sector;
ƒ Seniority, that is the number of years spent in the current organization.
Through interviews with the members of the CoP, we have identified four levels both for experience
and seniority (tables 2 and 3). For example, for the experience construct, the same financial
advisors proposed that there are significant differences among members which have more than
two, five or eight years of experience. We have associated to each level a score ranging from 1 to
4. The interviewees agreed with this scoring.

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Table 2: Years of experience and attributed scores

Years of experience Attributed scores
Less than 2 1
Between 2 and 5 2
Between 6 and 8 3
More than 8 4

Table 3: Years of seniority and attributed scores

Seniority Attributed scores
Less than 1 1
Between 1 and 2 2
3 3
More than 3 4

The EProH, for each dialogue, was calculated using the following formula:

E Pr oH A, B= E A − E B + S A − S B

Where “EA” and “SA” are the levels of Experience and Seniority for the actor which starts a
dialogue; “EB” and “SB” are the levels of Experience and Seniority for the other one.
B B

This formula produces values ranging from to 0 to 6 which were divided in the following three
classes: low EProH (0 to 1), medium EProH (2 to 3) and high EProh (4 to 6).

Experience and Seniority are factors that can be related to the learning processes, but they are not
sufficient. For this reason, we have considered a further index, the Knowledge based ProH Degree
(KProH). This index is based on knowledge domains that are characteristic of a profession and, to
a certain degree, are independent from each other. In the case of financial advisors the three main
knowledge domains are:
ƒ Knowledge of the offered Products/services (KP);
ƒ Knowledge of the financial Market (KM);
ƒ Knowledge of the Customers (KC).
Through a peer evaluation process a score has been attributed to each member of the Community
for each knowledge domain. These scores, originally ranging from 1 to 10, were successively
grouped in three classes. To each class was attribute a score from 1 to 3. The KProH was
calculated with the following formula:
K Pr oH A, B= KPA − KPB + KM A − KM B + KC A − KC B
Again A and B represent the two actors participating in the dialogue.

As happened with the EProH index, the KProH formula produced values ranging from to 0 to 6
which were divided in the following three classes: low KProH (0 to 1), medium KProH (2 to 3) and
high KProH (4 to 6).
We observed that not necessarily a more experienced worker has better knowledge in each
domain. The KProH index can be considered independent from the EProH index.

According to Hyp.1, we expect that a low number of effective dialogues will be found in
correspondence of couples of actors characterized by low values of EProH index. In a similar way
we expect few effective dialogues when the value of the KProH is low.

Growing the values of the two indexes the number of effective dialogues is expected to grow as
well.

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4. The case of a Community of financial advisors: results

The Community, singled out through the snowballing process, is composed by 29 financial
advisors, which work for the same bank in different districts in Southern Italy. The interviews have
pointed out that the interaction modes are various and flexible. The availability of a variety of cheap
and user-friendly tools, is suitable for relationship which require flexible communication. Repeated
contacts between a limited set of members allowed the development of communication and
behaviour rules. These rules seem to limit social and interpretive problems usually associated with
the condition of dispersed workers.
The examined Community has a dynamic but well-defined structure. Within the CoP we pointed
out: (1) a core of extremely active members (9 financial advisors), (2) about 10 members
characterize by an average level of participation, (3) a periphery of less active members (10
individuals) and (4) some specific roles (a practised leader and a charismatic leader). Relationships
are equal: within the group there are not explicit rules of behaviour and formal roles.
The following table shows how many, out of the 567 dialogues considered useful for our study,
were assigned to each of the four categories introduced in the previous paragraph.
Table 4: Numbers of dialogues per typology
Numbers of dialogues Percentage (N=567)
Search for information 228 40,2%
Search for validation 189 33,3%
Search for confrontation 108 19,0%
Search for solutions to common problems 42 7,4%
Total 567 99,9*%
The classification clearly shows that most of the dialogues are “search for information” and “search
for validation”. Only few dialogues dialogues are “search for solution to common problems”. The
distribution of conversations suggests that growing the complexity of interactions (in terms of time,
involvement of actors, uncertainty or ambiguity of the process to be carried out) reacher media are
preferred.
In particular the “search for validation” are the most likely to succeed (see tab. 5), followed by the
“search for information”, by the “search for solutions to common problems” and, in the end, by the
“search for confrontation”.
Table 5: Percentages of effective dialogues per typology
Search for Search for
Search for Search for solutions to
information confrontation
validation (N=189) common problems (N=42)
(N=228) (N=108)
“Effective” 63.60% 65.60% 59,26%
59,52%
Dialogues
“Ineffective” 36.40% 34.40% 40,74%
40,48%
Dialogues
Total 100% 100% 100% 100%
The distribution of effective dialogues, growing EProH and KProH, has a reversed U-shape. The
percentage of effective dialogues when the EProH or KProH are low is lower than the overall
percentage of effective dialogues (cfr. tab. 6 and tab. 7). When the values of EProH and KProH are
medium the percentage of effective dialogues grows over the overall percentage. The same can be
said when the values of two indexes are high, but the difference is significant.

The variation is smaller for the EProH index than for KProH. We suppose that differences in the
years of experience or seniority have a weaker impact on learning processes if compared with
differences due to different levels in the three knowledge domains.

Tendentially it is more likely that the dialogues between similar actors (low EProH and KProH) are
ineffective. It not possible to say much about the relation between high EProH/KProH and
effectiveness of the dialogues. This difficulty remains the same even when analysing the typologies
of dialogues separately.

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In general dialogues in the class “medium” seems to be more profitable than those in the class
“high” 2 . We formulate the hypotesis that besides being not too similar actors have to be not too
Table 6: Distribution of “effective” dialogues per EProH values
EProH
Low Medium High Total Overall
(N=209) (N=214) (N=144) (N=576) percentage
“Effective” Dialogues 119 147 92 358 63,14%
“Ineffective” Dialogues 90 67 52 209 36.86%
Total 209 214 144 567 100%
% “Effective” Dialogues 56.94% 68.69% 63.89%
Variations in the percentage of effective dialogues
-6.2% +5.55% +0.75%
compared to the overall percentage
Different for the dialogues to be useful.
Table 7: Distribution of “effective” dialogues per KProH values
KProH
Low Medium High Total Overall
(N=163) (N=262) (N=142) (N=576) percentage
“Effective” Dialogues 82 185 91 358 63,14%
“Ineffective” Dialogues 81 77 51 209 36.86%
Total 163 262 142 567 100%
% “Effective” Dialogues 50.31% 70.61% 64.08%
Variations in the percentage of effective dialogues -
+7.47% +0.94%
compared to the overall percentage 12.83%

5. Discussion of the results and conclusions

The analysed case study points out that a Community is born around a shared profession and its
topics of discussion. The CoP has developed in a spontaneous way with pragmatic goals (i.e.
solution of professional daily problems), to substitute for formal teaching programs. It is a social
network, which allows financial advisors to interact regularly with a selected professional
environment, without the support of a shared physical space of work and without the opportunity of
accidental meetings (the members work in different teams and districts). Social contents that flow
in the CoP supported the interactions and strengthened the Community. In particular, they are very
important to develop trust in other members’ knowledge and capabilities. The legitimation of others’
competences and reciprocal esteem has developed on the basis of this trust. This relationships
and social rules, however, are based more on professional than on personal or affective factors.

In the described case of a Community of financial advisors we pointed out that there is not a single
core competence, but different knowledge cores toward which, ideally, members move. These
different knowledge domains (1) are overlapping and complexively form the specific profession
(see fig. 2) and (2) are dynamic: they are continually updated. We have defined two Professional
Heterogeneity (ProH) indexes. We have supposed that an excessive homogeneity among
members (in terms of knowledge and experience) can inhibit learning processes and that a higher
etherogeneity improves them. Our initial hypothesis is only partially supported. The main results of
our research, based on interviews, a questionnaire and the analysis of a set of dialogues, are the
following ones:
ƒ An average difference between actors involved in a dialogue (in terms of levels of knowledge
and experience, i.e. average values of the two ProH indexes) are generally associated with a
useful outcome (search for information, validation, confrontation or common problem solving);
ƒ Low values of the ProH indexes are more frequently associated with ineffective outcomes, i.e.
dialogues in which the information or knowledge exchange is very limited and that can be
considered ineffective for the learning processes;

2
For some typologies of dialogues this trend is inversed (in particular for “search for validation”).

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ƒ The results for high value of ProH indexes are ambiguous.

Figure 2: An example - three members of the Community and their shared knowledge domain
A shared background (in terms of experience and knowledge) has to be neither so wide to make
interactions routine (group thinking, lack of arguments and so on) nor so limited to inhibit the
creation and exchanges of knowledge and the problem solving. In the first case it is likely that the
Community does not represent any more a chance for professional growth. In the second case
learning processes can be inhibited by:
ƒ The absence of a language common to all members, in particular learning the “language of the
Community” could require too long;
ƒ Limited contributions to a dialogue by a member with lower levels of knowledge;
ƒ The difficulties of the novices to fully understand the suggestions they receive.
It is possible to affirm that learning processes in the analyzed CoP are inhibit from an excessive
homogeneity in knowledge and experience domains. When a certain etherogeneity exists, the
Community can be considered a system in which problems are solved through the dialogue and in
which the members find support to face uncertainty and variability.

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Understanding Transnational Knowledge Transfer
Yanqing Duan1, Xiaoxiao Xu1 and Zetian Fu2
1
Luton Business School, University of Luton, UK
2
China Agriculture University, Beijing, China
[email protected]
[email protected]
[email protected]
Abstract: Knowledge transfer is a complex process and difficult to understand. Many factors affect its
success. As the globalization is moving fast across countries, transnational knowledge transfer happens not
only in organizations like Multinational Corporations (MNC), but also in dispersed organizations or individuals.
A significant and increasing amount of efforts and activities are devoted to knowledge transfer at a
transnational level. Numerous studies have attempted to address the transfer phenomenon theoretically and
empirically. However, transnational knowledge transfer cannot be simply classified as one of other commonly
accepted categorizations like intra-organizational or inter-organizational knowledge transfer. Most of previous
research examines the transfers that take place within MNC in particular, rather than transfers across nations
in general. Transnational knowledge transfer has its own characteristics, thus deserves to receive separate
attentions. This paper attempts to analyse the transnational knowledge transfer in the context of a European
Commission funded Euro Asia ITC project called VEGNET and develop a framework towards understanding
of the transfer process and effectiveness. One of objectives of VEGNET is to foster the knowledge transfer on
the use of Internet technologies in agribusiness supply chain operations and management from Europe to
China. To undertake effective transnational knowledge transfer from Europe to China, the project needs to
define the transfer process, and identify the key actors and critical factors affecting the transfer success.
Based on the literature review, Alboni et al.’s (1999) four knowledge transfer components are used for a
preliminary analysis. The work reported represents an initial step towards a better understanding of the
transfer and developing a comprehensive transnational framework for VEGNET project.

Keywords: Transnational knowledge transfer, knowledge transfer framework, key actors, China, web based
supply chain management

1. Introduction
We are living in a globalized society. As knowledge is regarded as one of the most important
assets by organizations, cross-country knowledge transfer is an emerging phenomenon in the
current globalization era. It happens not only through Multinational Corporations (MNC) or joint
ventures, but also through the international projects supported by governments, European
Commission, or other national and international funding organizations, aiming to help the
developing countries to improve their practice and competitiveness. It is under the latter initiatives,
funding from European Commission’s Asia ICT program has been granted to a project called
VEGNET. The overall aim of this project is to transfer know-how and develop links between Europe
and China by introducing the concept of Supply Chain Management (SCM) and the use of Internet
technologies to support SCM in Chinese Agribusiness.

Many studies discuss the cross-country knowledge transfer (Berry 2005, Bresman et al. 1999,
Cummings and Teng 2003, Kaedia and Bhagat 1988, Schlegelmilch and Chini 2003) within the
intra-organizational level of MNC. Findings from their studies can provide valuable insights into
some issues at a cross-country level, but there is still some gaps regarding the cross-country
knowledge transfer outside the context of MNC. The case represented in this paper is a public
funded knowledge transfer project. In this project, knowledge transfer occurs between academic
institutions in Europe and industries in China. Pires et al. (2002) suggest that the study of university
and the industry needs a broader analytical framework. Fernandez-Arroyabe and Arranz’s (2000)
study reveals the increasing importance of transnational study on the technology transfer, because
the process of knowledge and technology transfer is complex, especially when it occurs across
countries and industries. Holden and Kortzfleish (2004) argue that the cross-cultural transfer of
knowledge is new from a knowledge management Perspective, and a feature of this newness is a
lack of conceptual tools and guiding notions to gain deeper understanding. Therefore, this study
intends to contribute to a better understanding of knowledge transfer from cross-country
perspective. The paper starts with a review of knowledge transfer in general and transnational

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knowledge transfer in particular. It then reviews related research in terms of transfer models and
key influential factors. The study then attempts to adopt an existing analytical framework to analyze
the knowledge transfer in the context of VEGNET. The analysis in this case is a first step toward
developing a comprehensive framework to facilitate effective transnational knowledge transfer and
to reduce friction, misunderstanding or even resistance among partners.

2. Literature review on knowledge transfer

2.1 Knowledge transfer and its success

There are many different definitions of knowledge transfer. For example, knowledge transfer is
defined as a process through which one unit (e.g. group, department, or division) is affected by the
experience of another (Argote and Ingram, 2000), or a process of systematically organized
exchange of information and skills between entities (Wong et al. 2003). Some scholars also use the
term ‘knowledge sharing’ (Cummings and Teng 2003, Nonaka and Toyama 2003), and others
argue that there is no definite distinction among knowledge transfer and organizational learning
(Bresman et al. 1999). Although different terms may be used, most of them refer to the
management of the knowledge being transferred or shared at individual, intra-organizational or
inter-organizational levels.

The objective of any knowledge transfer is to transfer the source knowledge successfully to the
recipient (Cummings and Teng 2003). In addition, Argote and Ingram (2000) point out that
knowledge transfer manifests itself through changes in the knowledge or performance of the
recipient units. Schlegelmich and Chini (2003) argue that the effectiveness of knowledge transfer
processes depends on the perceived benefit and the overall satisfaction with knowledge
management. Kostova (1999) defines the success of transfer as the degree of instituionalization of
the practice at the recipient unit.

Studying the R&D knowledge transfer across various forms, Cumming and Teng (2003)
summarized from the literature that there are four different approaches used to measure the
transfer success. They are (1) number of knowledge transfers engaged in during a certain period of
time, (2) a transfer that is on time, on budget and produces a satisfied recipient, (3) knowledge re-
creation by the recipient, and (4) knowledge internalization. The last measurement, i.e. knowledge
internalization, underpinned by instructional theory, is defined as the degree to which a recipient
obtains ownership of, commitment to, and satisfaction with the transferred knowledge (Cummings
and Teng 2003). Knowledge internalization as a success measure of transfer is also discussed by
other scholars (e.g. Abou-Zeid 2005).

Knowledge transfer is a complex process and difficult to understand. Many factors affect its
success. Some of the factors reported in the literature cover culture difference (Berrell et al. 2000,
Wong et al. 2002), organizational atmosphere (Bresman et al. 1999), participative competence
(Kayes et al. 2005), and communication channels (Pedersen et al. 2000).

2.2 Transnational knowledge transfer

The trend of globalization has pushed all types of organizations to search for new opportunities,
extend their existing business boundaries, or develop collaborations with international partners. As
a result, organizational knowledge needs to be transferred across national boundaries.
Transnational knowledge transfer can include knowledge transfer activities in an across country
context and at individual or organizational levels. Underpinned by translation theory, Holden and
Kortzfleish (2004) identifies three noises in this process, ambiguity (confusion at the source),
interference (intrusive errors from one’s own background), and lack of equivalence (absence of
corresponding words or concepts). To minimize those noises, Gupta and Govindaraian (1991)
point out the importance of the local competence of a knowledge intermediary or integrator. On the
other hand, Wang (2004) identified from the case studies in China that the competence of
expatriates are critical in the success of knowledge transfer. Expatriates could be considered as
knowledge intermediaries in the transnational context. The concept and role of a knowledge
intermediary is discussed in Sharon et al. (2000).

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Transnational knowledge transfer can occur in many different forms from an organizational
perspective, such as: intra-organizational transfer within an international organization, inter-
organizational transfer within a community or partnership, or inter-organizational transfer among
dispersed organizational in different nations sponsored by third parties, such as international
charities, international or national governing bodies. A increasing number of transnational
knowledge transfer projects have been set up aiming to help developing countries to benefit from
the know how, best practice, innovation and technology advance from developed countries and to
facilitate the knowledge creation at the local levels.

2.3 Knowledge transfer models

Knowledge transfer is one of the most important stage in knowledge management process, and is
often found to be laborious, time consuming, complicated and difficult to understand (Huber 2001,
Szulanski 2000). Knowledge exists at multiple levels within an organization (Ipe 2003) and can be
transferred in different forms, directions and levels. There is an upsurge of interests in knowledge
transfer in recent years. As a result, many relevant papers can be found in this area. Most of them
develop knowledge transfer models and frameworks as an attempt to illustrate the transfer
process, the key actors, the transfer channels, influential factors, etc. The literature on transfer
models or frameworks primarily focuses on one of three levels, i.e. individual (e.g. Ipe 2003, Tsai
and Tsai 2005), intra-organizational (e.g. Miesing et al. 2004, Schlegelmilch and Chini 2003), or
inter-organizational levels (e.g. Bresman et al. 1999, Cranefield and Yoong 2005, Dyer and Singh
1998).

2.3.1 Individual knowledge transfer models

At the very basic level, Knowledge is embodied in people and created and developed by
individuals. In this sense, the sharing of individual knowledge is imperative to the creation,
dissemination, and management of knowledge at all the other levels within an organization (Ipe
2003). Knowledge cannot be transferred without individuals’ involvement. Therefore, some prior
studies have focused on the issues related to knowledge sharing and transfer among individuals,
for example, process theory of individual learning by Lind and Seigerroth (2003) and Ipe’s (2003)
conceptual framework of knowledge sharing. Ipe’s (2003) conceptual framework presents four
factors and illustrates the relationships between them. The identified four factors are nature of
knowledge, opportunities to share, motivation to share, and culture of work environment. The first
three factors, argued by Ipe (2003), are embedded within the culture of the work environment. The
other well recognized and reported factors affecting knowledge transfer between individuals are
absorptive capacity, prior experience, motivation, openness, trust, and expressiveness (Chen et al.
2002).

2.3.2 Intra-organizational knowledge transfer models

Extensive research has been dedicated to address knowledge transfer within an organization;
consequently, various models and frameworks are developed to help understand the transfer
phenomena in this context. For example, Szulanski (2000) develops a well-known process model
for intra-organizational knowledge transfer which contains four stages – initiation, implementation,
ramp-up and integration. Initiation means the initiation of a transfer; implementation represents the
initial implementation effort; ramp-up means that the implementation ramps up to satisfactory
performance; integration represents subsequent follow-through and evaluation efforts to integrate
the practice with other practices of the recipient.

Goh’s (2002) integrative framework are also frequently cited by researchers. His model integrates
the key factors, which have been recognized as significant influence on the ability of transferring
knowledge. To effectively transfer knowledge, he suggests a co-operative and collaborative culture
should be created. He also addresses the importance of leadership, problem-solving/seeking
behaviours, support structure, absorptive and retentive capacity and types of knowledge in
knowledge transfer. Goh (2002) then integrates all above-mentioned factors to form a conceptual
framework that explains how effective knowledge transfer can be managed in an organization. This
framework clearly demonstrates the relationships among the key factors, and stresses the

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importance of the organizational culture that leads individuals or groups to have higher propensity
to share knowledge.

Szulanski’s model helps to understand the knowledge transfer from process point of view and
Goh’s model help to unveil the important factors affecting effective knowledge transfer from
organisational perspective. The contribution of Goh’s work is the elaboration and integration of
some key factors that can influence the effectiveness of knowledge transfer process.

2.3.3 Inter-organizational knowledge transfer models

When transferring knowledge between organisations, the organisations have to face ‘the boundary
paradox’ (Quintas et al. 1997), which involves more complicated factors impinging on the
transaction. A review of literature shows many attempts in developing inter-organisational
knowledge transfer frameworks (e.g. Abou-Zeid 2005, Albino et al. 1999, Dalley and Hamilton
2000, Khanna et al. 1998, Mohr and Sengupta 2002).

Albino et al. (1999) identify four components in the inter-organizational knowledge transfer among
firms in an industrial district. They are the actors involved in the knowledge transfer process; the
context where the interaction takes place, the content transferred between actors; and the media
by which the transfer is carried out. Cranefield and Yoong (2005) propose a six-stage model in the
inter-organisational knowledge transfer from process perspective, and identify the key factors at
each stage.

Building on the previous work on inter-organizational knowledge transfer, Abou-Zeid (2005)

conceptualize the inter-organizational knowledge transfer as a culturally aware four stage process
involving initialization, inter-relation, implementation and internalization. Abou-Zeid’s
conceptualization allows a closer examination of how the culture traits of source and recipient firms
at different levels affect each stage of the transfer process.

Also building on Szulanski’s process model and some empirical evidence collected from inter-
organizational knowledge transfer in SMEs, Chen et al. (2006) developed a five stage inter-
organizational transfer framework in SMEs. The study uses empirical evident to demonstrate that
the transfer in SMEs follows a five stage process, that is, identification, negotiation, selection,
interaction and conversion.

2.3.4 Knowledge transfer models at the transnational level

Knowledge transfer at a transnational level needs to deal with organisations characterized by
separation through time, space, culture and language (Schlegelmilch and Chini 2003). A number of
researchers have investigated the issues on transnational knowledge transfer. For example, Wang
et al. (2004) proposed a two-stage model describing knowledge transfer from MNCs to their China
subsidiaries. In the first stage, the model proposes factors affecting the extent of knowledge
contributed by a MNC to its China subsidiary. In the second stage, the model proposes factors
affecting the extent of knowledge acquired by the China subsidiary from its MNC parent.
Knowledge contributed by the parent to the subsidiary is affected by two groups of factors: parent’s
capacity to transfer knowledge and parent’s willingness to transfer knowledge. Holding constant
knowledge contributed by the parent, knowledge acquired by the subsidiary from its parent is
determined by two groups of factors: subsidiary’s capacity to acquire knowledge and subsidiary’s
intent to acquire knowledge.

Holden and Kortzfleish (2004) discuss knowledge transfer in its international contexts and has
brought to bear concepts of translation theory. In transnational dimension, Bresman et al. (1999)
examine the knowledge transfer and the factors facilitating it in international acquisitions. Studying
global knowledge transfer in multinational companies, Schlegelmilch and Chini (2003) propose a
conceptual framework for marketing knowledge transfer. They address the impact of organizational
distance, cultural distance, strategic mandate and ability to engage in knowledge transfer on the
effectiveness of marketing knowledge transfer.

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Similar to the marketing knowledge transfer model, Miesign et al. (in press) propose an knowledge
transfer model based on the case study in China. They indicate that effective intra-organizational
knowledge transfer across nations requires the flexible world views of both sender and recipient,
close relationship between the both sides, and recipient absorptive capability.

Cummings and Teng (2003) integrate the inter and intra organizational transfer in the context of
MNC and has proposed and empirically tested a knowledge transfer framework, which consists of
five contexts: knowledge context, recipient context, relational context, activity context, and
environmental context. The empirical evidence confirms the link between transfer success and the
articulability, embedded ness, knowledge distance, norm distance and learning culture.

Most of knowledge transfer models are conceptually based and not empirically validated. Some
models are developed from process perspective and offer a dynamic view of transfer stages and
processes. Others depict the causal relationship between transfer success and its influential
factors. A limited number of researchers also attempted to provide a model aiming to demonstrate
both the transfer process and the key factors (e.g. Chen et al. 2006).

3. Transnational knowledge transfer in VEGNET project

There is an emerging need to help Chinese agribusiness to improve their supply chain
performance and improve business competitiveness using modern management approaches and
advanced ICTs technologies. It is under this circumstance that a new partnership was formed and
co-funded by European Commission’s Euro Asia ICT program. The project entitled “Enhancing
Agribusiness Supply Chain Management with Internet Technologies” (VEGNET) aims to facilitate
transnational knowledge transfer by identifying knowledge gaps in the use of Internet technologies
to support SCM in Chinese Agribusiness between Europe and China and increasing mutual
understanding of the complexity of transferring knowledge at transnational level - thus improving
technology cross-flow and the quality of Euro-Asia partnerships.

As a first step towards a better understanding of knowledge transfer process and the critical factors
affecting knowledge transfer success in the context of VEGNET project, a clear definition of what is
the knowledge transfer success needs to be agreed. Following Cummings and Teng’s (2003) study
on the key factors affecting knowledge transfer success at a transnational level, the project adopts
the knowledge internalization as a success measure. As discussed in section 2-knowledge
internalization is defined as the degree to which a recipient obtains ownership of, commitment to,
and satisfaction with the transferred knowledge. For a better understanding the transfer process
and key factors, Alboni et al. (1999) four components in knowledge transfer analysis are employed
as an analytical framework.

According to Alboni et al. (1999), the four components of knowledge transfer are:
ƒ The actors involved in the knowledge transfer process;
ƒ The context where the interaction takes place;
ƒ The content transferred between actors;
ƒ The media by which the transfer is carried out;
The four components in the context of VEGNET project are identified and analyzed below.

3.1 Actors
Actors of the knowledge transfer process can be considered as either the organizations or
individuals (Albino et al. 1999). The key actors involved in the knowledge transfer process of
VEGNET project are shown in figure 1. They are knowledge sender (project partners in Europe),
knowledge intermediary (project partners in China) and the knowledge recipient (project
beneficiaries in China, i.e. agribusiness firms). Many factors associated with actors involved will
influence the knowledge transfer effectiveness, such as, the relationships, trust, motivation, prior
experience and knowledge, etc..

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 Yanqing Duan, Xiaoxiao Xu and Zetian Fu

Figure 1: Knowledge transfer process and actors involved in VEGNET

One of the important findings from VEGNET experience is the recognition of the knowledge
intermediary in the project. The knowledge intermediary plays a unique, but very critical role in
facilitating and enhancing the knowledge transfer process. It can be said, in this case, that the
knowledge could not be successfully transferred without the participation of the knowledge
intermediary. The main reasons for the need of knowledge intermediary in the case are the extent
of knowledge gaps and the communication barriers existed in the process. The initial findings from
project investigation revealed a huge knowledge gap between knowledge sender and the recipient.
Any attempt to directly transfer the knowledge may not be effective due to the competence level of
the recipient and their absorbability of the direct transferred knowledge from another country.
Another strong reason is the communication barriers due to the culture distance and language
problem. In VEGNET, the target groups in China have very limited or no comprehension of English,
so their capability to directly receive the knowledge via face-to-face communications or ICTs is
seriously undermined. The role of intermediary can be twofold: to facilitate the knowledge transfer
between senders and recipients, and to enhance and localise the knowledge to be transferred. In
VEGNET, Transnational transfer process can be broken into two stages: from sender to
intermediary, and from intermediary to recipient. In the first stages, the recipient is the intermediary,
so the identified factors affecting the knowledge transfer success in the literature, such as recipient
competence, absorptive capacity, etc.. can be applicable to the knowledge intermediary.

Good relationships and effective communication among actors is important. Napier (2005)
discussed the participative competence of the sender and recipient in willingness to share (sender)/
receive (recipient). He finds that the recipient readiness and willingness to receive knowledge,
ability to understand and use it is critical. If any of these factors are weak, knowledge transfer will
fail or be inefficient. Gupta and Govindarajan (2000) also discuss the importance of recipient’s
absorptive capacity, ability to understand knowledge and ability to value and use the knowledge in
international knowledge transfer.

3.2 Context
The context refers to organizations and can be internal and external. The context where the
interaction takes place in VEGNET can be described as transnational knowledge transfer across
different countries and organizations. The transfer is considered as inter-national and inter-
organizational.

Culture is regarded as a most important factor affecting knowledge transfer at all levels, especially
at the transnational level. However, studying the culture impact on knowledge transfer is a complex
task (Abou-Zeid 2005). Consequently, it has been the centre attention of most research. As with
no exception, the impact of culture difference would be considerable on the knowledge transfer in
transnational level. Kaedia and Bhagat (1988) indicate that cultural difference across nations in the
knowledge transfer is a major factor that influence the success. Napier (2005) argues that, due to
the exist of culture difference, the transition economy and foreign managers experience, the
interactions and relationships between senders and recipients follow four stages, which are initial

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contact, critique on each other, convergence, and continue. Berrell et al.(2000) compare the culture
difference between Chinese and western culture, and identify the culture difference impact the
whole process of knowledge transfer. Transnational transfer has to overcome the culture difference
at both across country and organizational level, although the organizational culture could be part of
the national culture.

3.3 Content
According to Albino et al. (1999), the content of the knowledge transfer is the ability to perform a
specific task. The content transferred between actors in VEGNET are know-how and best practice
in fresh produce supply chain operations and management and Internet technology adoption in
facilitating supply operations and management. The knowledge to be transferred can be classified
mainly as explicit knowledge.

Types and value of knowledge to be transferred are identified as factors affecting the knowledge
transfer success (Bonache and Brewster 2001, Goh 2002, Gupta and Govindarajan 2000, Ipe
2003, Napier 2005, Simonin 1999, Wang et al. 2004). Studying knowledge transfer in Vietnam in
multinational companies, Napier (2005) finds out that it is important to understand that the
knowledge transfer at early stage will be mostly explicit; tacit knowledge will be accepted and used
only as the receivers build the capacity for it. This is also true in the VEGNET context. The project
facilitate the explicit knowledge transfer first and it is expected that the recipient will benefit from the
tacit knowledge transfer once they have be able to understand and further develop what whey have
received.

3.4 Media
Media can be considered as every means useful for transferring data and information (Albino et al.
1999). Syed-Ikhason and Rowland (2004) believe that ICT technology is a key enabler in
implementing a successful knowledge management program and strategy, and it is considered as
the most effective means of capturing, storing transforming and disseminating information. The
media in VEGNET is mainly ICT, though face to face methods are also involved, such as meetings,
discussion, site visits and training sessions. Two knowledge transfer systems will be developed by
the project, one is an online knowledge base and another an online training and education system.
ICT has been widely accepted as effective tools in transferring explicit knowledge though its role in
facilitating tacit knowledge is debatable (Feng et al. 2006).

Knowledge transfer in general is regarded as a very complex process and difficult to achieve. The
analysis of knowledge transfer in VEGNET demonstrates even higher level of complexity and
difficulty in a transnational level across Europe and Asia. The transfer activities have not only to
overcome barriers and difficulties inhibited in inter-and intro-organizational knowledge transfer in
the same country, but also the huge culture and communication gulf across countries.

4. Discussion and conclusion

As part of a funded research project, this research attempts to understand the knowledge transfer
and its related issues at a transnational level cross Europe and China. The relevant concepts and
models are reviewed. It is revealed that most of current research on knowledge transfer primarily
focuses on inter or intro organizational level, although some studies address the cross country
knowledge transfer in the context of multinational corporations or join venture companies. The
transnational knowledge transfer activities addressed by this research are an EC funded project
aiming to facilitate the transfer of know how and best practice from Europe and Asia and between
academic institutes and industries. The study adopts a preliminary framework to identify the key
actors, the context, the content and the media associated with this particular type of knowledge
transfer. A knowledge transfer framework for VEGNET project will be further developed.

The existing literature identifies three levels of knowledge transfer at individual, intro-organizational,
and inter-organizational levels. As the globalisation gathering its paces rapidly, the research calls
for the reorganization of another broad level of knowledge transfer above other three levels, i.e. a
transnational level. The four levels of knowledge transfer can be depicted in figure 2. This structure

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 Yanqing Duan, Xiaoxiao Xu and Zetian Fu

corresponds with Kostova’s (1999) proposition, that the factors existing in the transfer are at
individual, organizational, and international levels.

Figure 2: Knowledge transfer Levels

A number of interesting issues raised when attempting to understand the transnational knowledge
transfer in the context of VEGNET project. Although the findings may seem to be closely related to
the case under investigation, they are actually not limited to this situation. The case of VEGNET
project does represent the similar features and exhibits some common problems or difficulties in
public funded transnational knowledge transfer activities. The research reveals some challenges
associated with the effectiveness of the transfer activities. Apart from some well recognized issues,
such as culture, local competences, absorptive capacity, etc, the study stresses that the language
problem and huge knowledge gap are major barriers for the effective transfer between Europe and
China. As a result, an emerging role of a knowledge transfer intermediary is identified. The
research agrees with Schlegelmilch and Chini (2003) on the impact of organizational and culture
distances on transfer success. It further suggests that when a knowledge gap and organizational
distance between sender and recipient are too high, a knowledge transfer intermediary is needed
to help bridge the gap and reduce the distance. The knowledge may need to be absorbed,
localized and even enriched by the intermediary before being transferred to the local recipient.

This paper is a research in progress report. It first unveils a gap in the literature on knowledge
transfer at transnational level, and then calls for a fourth level of transfer (Transnational) to be
added to the commonly referred three levels. The preliminary analysis of the transfer activities in
VEGNET using Alboni et al.’s (1999) four components have helped the understanding of the
situation and the development an initial transfer framework. To have an effective knowledge
transfer, a two stage transfer process involving a knowledge transfer intermediary is proposed.
Research is still being undertaken to further clarify the role and functions of the knowledge
intermediary and to develop a comprehensive framework as a formal guidance in facilitating the
VEGNET transfer activities.

5. Acknowledgement
This research forms an important part of a VEGNET project, which is funded by European
Commission’s Euro Asia ITC program (CN/ASIA-IT&C/005 (89099). Authors would like to
acknowledge the financial support of EC and the project partners for their collaboration and
contribution. In particular, we would like to thank Dr. Xue Liu and Ms. Wanyan Nie in China
Agricultural University, Prof. Konstantinos Zografos and Dr. Christos Tsanos in The Transportation
System and Logistics Laboratory (TRANSLOG) of Athens University of Economics and Business,
and Mr. Boris Bemeleit in Bremen Institute of Industrial Technology and Applied Work Science at
the University of Bremen (BIBA), Germany.

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Knowledge Management Strategy – What Have We
Learnt?
John Edwards
Aston Business School, Birmingham, UK
[email protected]
Abstract: This paper picks up on the widely accepted personalisation and codification approaches to
knowledge management strategy. It looks at the relationship between these knowledge management
strategies and the competitive strategies that organisations have adopted, and by considering the strategy and
manufacturing strategy literature, identifies a certain inconsistency between the discussions there and those in
the knowledge management literature. It goes on to consider what examples in the literature have contributed
to our knowledge of knowledge management strategies, and to highlighting the weaknesses in that
knowledge, since these two “fundamental strategies” were first defined back in the 20th century. Aspects
where the theory may benefit from being extended include: more precise consideration as to what a
competitive position of “standardisation” really means, especially in the light of the expansion of so-called
mass customisation; the three-way fit (or lack of it) between knowledge management strategy, competitive
strategy and organisational culture, how these are developed, whether it is possible to change them if
desirable, and if so, how; and the role of leadership in relation to different knowledge management strategies.

Keywords: Codification; competitive strategy; knowledge management strategy; mass customisation;

personalisation

1. Introduction and background

It is widely accepted within the literature on knowledge management (KM) that there are two
fundamental approaches to KM strategy: those of personalisation and codification. Personalisation
takes the viewpoint that the organisation’s knowledge resides mainly in the heads of its people, and
the main purpose of KM systems is to help people locate and communicate with each other.
Codification takes the viewpoint that the most relevant knowledge for the organisation can be
codified and stored in computer format, so that it may be widely shared. These two approaches
were originally identified and proposed as fundamental by Hansen et al (1999), on the basis of
research conducted initially with management consulting companies. The two approaches were
not, however, proposed as being mutually exclusive. The original study found that all management
consultancies (the “early adopter” first sector examined) used both personalisation and codification
strategies to some extent. Nevertheless, from analysing the success of KM initiatives, Hansen et al
advocated that to achieve the most effective results, an organisation should commit itself principally
(say 80%) to one strategy, with the other in a supporting role (say 20%). A “stuck in the middle”
position, such as 50% use of each strategy, was to be avoided.

In KM terms, 1999 is quite a long time ago; more than half the lifetime of the discipline if we date it
from the pioneering work of Wiig (1993). It therefore seems appropriate now to revisit the topic of
KM strategy and consider what more we might have learnt about KM strategy in the seven years
since then. In their paper, Hansen et al (1999) went on to identify these two main KM strategies as
corresponding to different competitive strategies. Personalisation fitted a competitive strategy
based on creative, individual solutions to high-level problems (examples given were McKinsey &
company, and Bain & company). Codification, by contrast, fitted a business strategy based on high-
quality standardised solutions usually relying heavily on information systems (examples given were
Andersen Consulting – now Accenture – and Ernst & Young). A further additional dimension that
needs to be considered is the implementation of KM strategy. Whatever focus it might have, the
strategy that comes from the senior management of the organisation must be matched by
commitment coming from the rank and file. Moreover, KM is not something that can be
implemented in a simple unitary fashion across a whole organisation. Different issues arise at work
group or departmental level, and multi-national organisations face the further problems of
differences between similar operating units in different countries. Can these issues be linked to the
formulation and implementation of KM strategy more precisely than by an 80-20 rule of thumb?

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In order to explore this topic, we begin by looking at the literature on organisational or competitive
strategy itself, then review that on KM strategy, bringing in other contributions to add to the
concepts of personalisation and codification, and then discuss how the ideas about KM strategy
and competitive strategy are related. We will go on to examine the factors affecting KM strategy in
the light of this discussion, and draw some tentative conclusions.

2. Strategy
The most influential author on business strategy as far as current Business School teaching is
concerned, is Michael Porter. His work was originally based on manufacturing, but was
subsequently extended to all aspects of business. Porter looked at strategy in terms of three
dimensions: the level of differentiation of the product or service, the cost of the product or service
relative to those of the business’s competitors, and the scope of the market that the business was
targeting. His key contribution (Porter, 1980) was the identification of the three most effective
generic strategies as cost leadership, differentiation and focus (also known as niche, or market
segmentation). Porter identified that organisations should adopt one of these three strategies in
order to compete effectively and achieve maximum profitability, shunning other possible strategic
positions on the three dimensions mentioned earlier. These are shown in Figure 1. He also
recommended that they should commit themselves to a single strategy, with the only allowable
combination of the three being to pursue either low cost or differentiation within a focus or
segmentation strategy. Where an organisation did believe that it would be more effective to adopt
different strategies for different parts of its operation, Porter’s recommendation was that these
should be set up as separate strategic business units. The strategic business unit, therefore, is
actually the level at which the “single strategy” recommendation applies.

In the generation since it was published, critiques of Porter’s work have appeared quite frequently,
but the view expressed in the literature is that these generic strategies still hold sway, even in the
online world of e-commerce; see for example (Koo et al., 2004). However, the strategy literature is
not as simple as might appear from the discussion thus far. Porter is indeed the most influential
author, but he is clearly identified with the market-driven view of strategy, which believes that the
main drivers for strategic choice are external to the organisation. There is an alternative view, the
resource-based view, which believes the main drivers for strategic choice are internal ones, such
as an organisation’s core competences (Grant, 1991). Indeed, Grant himself (Grant, 1997) has
gone on to write about knowledge and its management.

As well as deciding competitive strategy, implementation is also crucial, and not always easy, even
just translating the high level competitive strategy into operating strategy. In manufacturing, for
example, where Porter’s work had its base, what is termed manufacturing strategy has a complex
relationship with competitive strategy (usually termed corporate strategy in the manufacturing
literature). For example, Hayes and Wheelwright (1984) proposed four stages of progression in
manufacturing strategy, from internally neutral to externally supportive, during which the
relationship between manufacturing strategy and corporate strategy changes. The final
complicating factor that we consider here is whether the scope for competition has actually
changed since Porter defined his generic strategies. The principal new element in the debate here
is the idea of mass customisation, a term introduced by Davis (1987) to describe the provision of
products and services to a wide market that are nevertheless customised to satisfy a specific
customer need. This approach cannot easily be pigeon-holed as either offering a unique
product/service or providing a standard product at lowest-cost. Lampel & Mintzberg (1996) define
three types of mass customisation, as intermediate points on a scale ending with a fully customised
unique product. They are:
ƒ Distribution customisation – customers require customised product packaging, delivery
schedule or location. Customisation occurs after production;
ƒ Assembly customisation – Pre-defined options can be configured after fabrication and include
colour, easily adapted technical modifications, size, etc. Modular components enable firms to
customise during the assembly stage;

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ƒ Fabrication customisation – firms tailor a product based upon a pre-defined design. Flexible
technology and information systems facilitate customisation at the fabrication or production
stage;
Their descriptions were focussed on products only, but the same principles clearly apply to
services. The difference between the types is the point at which the customer influences the
process (distribution, assembly or manufacture); for full customisation it is at the design stage.
Figure 2 shows these three intermediate points together with the extremes of full customisation and
standardisation.

STRATEGIC ADVANTAGE
Uniqueness
Perceived by the Low Cos t Position
Customer
STRATEGIC TARGET

Industrywide Overall
Differentiation
Cost Leadership

Particular
Segment Only Focus

Figure 1: Generic strategies (after Porter, 1980, p.39)

Figure 2: The range of approaches from standardisation to full customisation

3. Knowledge management strategy

In addition to the seminal Hansen et al paper, 1999 also saw the appearance of a paper by Zack
that was almost as widely cited (Zack, 1999a), as well as a contributed volume, also edited by
Zack, that attempted to set out what was known about KM strategy (Zack, 1999b). Both Zack and
the contributors to the book he edited took the resource-based view of the organisation. Since
1999, there have been relatively few attempts to advance the theory of KM strategy. Many articles
appear to take it for granted that the personalisation and codification dichotomy is the last word on
the subject. Perhaps the most significant contribution has been that of Earl (Earl, 2001). Earl
identified seven different strategies, or "schools," for KM, concentrating on the nature of the IT
support required. They are: systems, cartographic, engineering/process, commercial,
organisational, spatial, and strategic. The correspondence between Earl’s schools and the Hansen
et al strategies is clear for some, but not for all. Earl states that the systems school is based on
codification and contrasts it with the cartographic school based on personalisation. The
organisational school is defined in terms of communities, networks and people, and so clearly falls
under personalisation also. The spatial school similarly emphasises face-to-face contact. Indeed,
Earl gives this the alternative label of the social school; clearly personalisation again. For the
strategic school, Earl’s description is that the organisation decides to compete on knowledge. This
surely implies invention in the organisation and thus a personalisation approach. This is further
supported by Earl’s use of Buckman Labs, well-known for using a personalisation strategy (Pan
and Scarbrough, 1999), as an example in this category. Earl’s first exemplar of the process school
is Hewlett-Packard, which was cited by Hansen et al as an example of personalisation, but the
information technology support is described in terms of shared databases, sounding more like

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codification. On balance, given that it appears in Earl’s examples to be the user’s decision to
consult a database, this is more personalisation than codification. The hardest school to assign is
the commercial school, which seems to be even more “in the middle”. Its emphasis on making the
most of intellectual assets ought to imply some element of invention, but Earl cites the two critical
success factors for this school as developing a specialised team or function and managing
intellectual assets as a routinized process. The latter in particular sounds more like codification.

As may be seen from Figure 3, although the Behavioural schools clearly imply a personalisation
strategy, there is no clear progression from one side of the diagram to the other.

Figure 3: Earl’s seven schools related to personalisation and codification

The use of the plural (strategies) by Earl raises the question of the level, or the unit of analysis, at
which KM strategy is considered. It is clear from his article that Earl’s seven schools of KM strategy
appear to be capable of applying both at the level of the whole organisation and at a rather lower
level. Some of the examples he gives are at lower levels, such as maintenance expertise
distributed on CD-ROM in Airbus Industries, while others apply to the whole organisation, such as
the knowledge communities in BP Amoco and Shell. Returning again to Hansen et al, they looked
initially at large management consultancies (their own words) and treated the whole business as
the unit of analysis. They then went on to extend their study to two other sectors: health care
providers and manufacturers of computers, using just one pair of examples from each (Memorial
Sloan-Kettering Hospital and Hewlett-Packard for personalisation, Access Health and Dell for
codification). Again the unit of analysis was the whole business. Later in the article they did
recognise the possibility of strategic business units pursuing separate KM strategies, where the
business units are as separate as finance and car manufacture in General Motors (their example),
but suggested that if the business units are tightly integrated then the organisation should stick to a
single KM strategy. Lower levels of the organisation are never explicitly mentioned, but presumably
are part of the explanation as to why all organisations were found to use both personalisation and
codification strategies.

Overall, the vast majority of authors in the literature appear content with the personalisation and
codification dichotomy. However, although it is implicit in the literature that a KM strategy can apply
at different levels in an organisation, there seems to be no explicit attempt to incorporate this into
the theory. We now go on to consider how the literature on KM strategy links to the market-driven
view of competitive strategy.

4. Knowledge management strategy and organisational strategy

Hansen et al (1999) identified the two main KM strategies with corresponding competitive
strategies, without explicitly referring to any of the strategy literature in their article. Their two
competitive strategies, broadly termed standardisation and customisation, do not correspond
exactly to those in Porter’s theories, although clearly adopting a market-driven view. Customisation
fits well enough with Porter’s differentiation, but standardisation does not entirely match Porter’s
cost leadership: Dell computers, for example, have never been the cheapest. Hansen et al based
their analysis not just on the management consulting sector, but that part of the sector dealing with
high-level (strategic and/or organisation–wide) consultancy. No criticism of this is intended. Given
that management consultancies of this kind were amongst the earliest adopters of KM as an
explicit activity, it was an obvious sector to choose in order to find data on KM strategy. However,
strategic management consultancy is not a sector in which cost leadership appears to be a tenable

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market position. The appropriateness of a KM strategy of personalisation for a competitive strategy

of differentiation does not seem to be problematic. Buckman Labs, mentioned earlier as one of the
most widely cited examples of successful KM, takes a personalisation approach to KM, and this is
consistent with its competitive strategy that is based on customised solutions (and thus
differentiation). Beyond differentiation, the picture is mixed. Shih and Chiang (2005) studied 147
large Taiwanese companies, and confirmed that personalisation went with a differentiation strategy
and codification with a cost leadership strategy. Massingham (2004) assumes that cost leadership
and differentiation are the only competitive strategies possible. Smith (2004) and Michailova and
Nielsen (2006) both give three categories, two of which fit the Hansen et al model well. We return
to the third in 5.2.

Thus there is widespread support for the correspondence of personalisation with full customisation
(and hence differentiation), and some support for the correspondence of codification with
standardisation. However, as we have already seen in Figure 2, there are intermediate positions of
mass customisation between full customisation and standardisation, and this is where the model
based on a simple dichotomy becomes less clear-cut. One standardisation example that Hansen
et al (1999) gave was Dell Computer’s PC business. This is clearly mass (assembly)
customisation. Even their definition of standardisation in strategic management consulting refers to
reuse of components, thus implying at least assembly, if not fabrication customisation. Access
Health, however, was definitely pursuing a competitive strategy based on standardisation (or at
most delivery customisation) and cost leadership. This lack of acknowledgement of mass
customisation makes mapping their terms onto Porter’s generic strategies even more complex.
Squire et al. (2004) treat mass customisation as the fragmentation of the market into multiple
niches, so that fundamental competitive strategy again reduces to the choice between
differentiation and cost leadership. Taking this view to its logical conclusion, this must mean
competing mainly, if not exclusively, by differentiation – since if it were simply a question of cost,
there would be no need for customisation in the first place.

In the next section we move on from this somewhat confusing picture to discuss a wider range of
factors, and look at potential ways forward.

5. Factors affecting choice of knowledge management strategy

5.1 Competitive strategy

Although we have expressed some misgivings as to whether the picture is as clear-cut as Hansen
et al presented it, there can be no doubt that corporate competitive strategy must be related to KM
strategy. The KM literature continues to confirm this. For example, Snyman and Kruger (2004)
comment that an appropriate fit between the organisation’s mission and objectives and its KM
strategy should be found. One aspect that does need further thought is what standardisation as a
competitive strategy really means. As we have seen, this is not a term used in the strategy
literature. Arguably, none of Hansen et al’s examples actually deal with true standardisation.
Standardised operations such as commodity production or fast food retailing rarely feature in the
KM literature. One scenario might be called “beyond codification”. Perhaps organisations, which
truly compete on cost leadership and standardisation, do not have the same KM problems as
others. Hence their knowledge is more likely to be built into the very procedures by which the
organisation operates than specifically into databases or electronic document systems (the term
originally used by Hansen et al). This resembles Earl’s engineering or process school, which we
had trouble classifying in Hansen et al terms earlier. We have recently worked with two
manufacturing organisations where building knowledge into the organisation’s operating
procedures was a key element of the KM strategy (Shaw and Edwards, 2006). In one of the two
cases, the only information technology used for this was word processing.

A second aspect that needs to be taken on board is that the competitive strategy may need to be
questioned. Firestone and McElroy (2003) argue that most KM methods are biased to an assumed
purpose of supporting the organisation’s strategy, so that they treat the existing competitive
strategy as given. They coined the phrase “the strategy exception error” for this, making the point
that the strategy may need to change. Business strategy and KM strategy, they say, should

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therefore be developed together. A useful example here is provided by Massingham (2004), who
describes a company changing competitive strategy. It is an Australian firm in the building materials
sector, which traditionally has been a commodity market. Such a market implies that cost
leadership is the basis of competition more or less by definition. However, the company is now
changing to a differentiation strategy based on the service that the company can provide. The KM
strategy is developed as part of this change.

5.2 More than two strategies?

The KM literature also yields some examples, which no longer appear to fit easily into the
personalisation-codification dichotomy. For example, Smith’s third example (Smith, 2004) is Mellon
Financial Corporation, which appears from his description to be successfully pursuing a mixed KM
strategy, contrary to Hansen et al’s recommendation. Smith’s paper does not discuss Mellon
Financial Corporation’s competitive strategy, but the organisation’s slogan (from www.mellon.com)
is “the difference is measurable”. Interestingly, this could be interpreted as fitting either a
differentiation strategy or a cost leadership one! Mellon Financial Corporation may have found a
tenable “mixed” position for both competitive and KM strategy. Michailova and Nielsen also argue
cases that do not fit the simple model well. Their middle category (Michailova and Nielsen, 2006) is
the “MNC as knowledge network”. Its definition mentions innovation, but the emphasis of the
strategic approach is stated as “integration of dispersed resources”. This does not map easily onto
either Hansen et al’s terminology or Porter’s generic strategies. Michailova and Nielsen bring a new
perspective to examples such as BP and Royal Dutch Shell, as a result of which the existing
categories may need to be modified.

5.2.1 Multiple levels

A further aspect that may need to be added within this discussion is that of organisational level.
The standard description of levels found in the literature on organisational behaviour identifies
three levels: individual, group or team and organisation (Robbins, 2003). These are the levels used
by Nonaka and Takeuchi (1995) in their spiral model. We have already seen that the existing
theory allows for strategic business units to have different fundamental KM strategies, and for
some (20%) use of the “other” strategy, which would presumably be for certain work groups or
teams. However, the precise way in which this might affect organisations’ KM and organisational
learning needs further examination. For example, Sanchez (2006) identifies five levels of
organisational learning, including individual, group and organisation, plus individual/group and
group/organisation.

5.3 Organisational culture

Another dimension to add in considering KM strategy is organisational culture. Hansen et al do not
explicitly mention culture at all, but they do allude to it in their article. They use the terms
“inventors” and “implementers” to describe the sort of people who work in organisations that pursue
customising and standardising approaches respectively. Their point “having both inventors and
implementers rubbing elbows can be deadly” clearly refers to the cultural aspects. McDermott and
O’Dell (2001) pointed out that successful companies in knowledge sharing did not change their
culture to match their KM initiatives. They adapted their approach to KM to fit their culture. The
example of Intel given in Neef (2005) also stresses the importance of cultural alignment. Intel’s
personalisation strategy works because of the organisation’s culture, exemplified by its “Right To
Know” principle. Earl (2001) also makes this point with reference to what he termed the
organisational school of KM. Earl advises that this can only be followed in an organisation that
possesses the right culture, i.e. one that is predisposed to networking and sociability.

5.4 Leadership
Leadership continues to raise issues relating to the implementation of KM strategy. The importance
of knowledge champions is widely accepted (Skyrme and Amidon, 1997; Davenport et al., 1998),
but more thought needs to be given to their precise role in the strategy and its implementation.
Smith (2005) uses the work of Rogers on the diffusion of innovation to discuss the importance of
opinion leaders being early adopters of KM. (Rogers, 1995).

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By contrast, Laycock points out the existence of stealth or covert KM, especially in the public sector
(Laycock, 2005). This is supported by a recent book (Sinclair, 2006). The notion of competitive
strategy does not always fit well with public sector activity, but the difficult questions that it raises
bear proper consideration. For example, in the UK press it is not uncommon for the National Health
Service to be criticised for operating a “postcode lottery” when the service provided appears to be
different in different places (presumably advocating standardisation), and (simultaneously!) for
failing to respond to local needs (presumably advocating customisation).

6. Conclusions
In conclusion, the original concepts of personalisation and codification are still fundamental
knowledge management strategies. However, careful consideration needs to be given to extending
this theory in several ways:
ƒ The links to competitive strategy need to be explored more carefully, especially as few
organisations in the KM literature really have completely standardised products or services. The
precise meaning of mass customisation is more complex than the KM literature assumes. A
clearer split between knowledge about internal processes and knowledge about the external
environment, as is seen in the manufacturing strategy literature, may help in this.
ƒ There may be a third KM strategy that is neither personalisation nor codification, but nor is it
“stuck in the middle”. Here the knowledge drives the competitive strategy rather than the other
way round.
ƒ Whatever the principal KM strategy, the theory needs to give more advice regarding when a
different strategy should be used. This will require explicit consideration of the levels in the
organisation, and perhaps other aspects of the organisational structure as well.
ƒ When thinking about KM strategy, it should not be assumed either that the existing competitive
strategy is appropriate, or that the competitive strategy fits the organisation’s culture. If the
organisation’s strategy does not fit its culture, this is not something that any KM initiative can
address by itself.
ƒ The precise role of leaders needs to be better incorporated with the rest of the theory. It is easy
to see how a leader might demonstrate a personalisation strategy by example, but much harder
for a codification strategy (by definition, there is only one chief executive).
An optimistic prognosis, then, is that KM researchers have much more to contribute to helping
people to devise KM strategies for organisations. A slightly more negative one is that some types of
organisation, those that compete solely on least cost and standardisation, have very little need for
KM, whilst in others, where the competitive strategy and/or the culture are not appropriate for what
is required, any KM initiative is probably doomed to failure. We are currently in the process of
extending our previous work with a sample of UK organisations that are “average” at KM, to an
analysis of KM taking into account competitive strategy. We hope that this will shed some light
about the above four points.

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Learning Networking and Knowledge Sharing Skills in
Cross-Border e-Learning and Student Exchange
Processes
Tiit Elenurm
Estonian Business School, Estonia
[email protected]
Abstract: Purpose of the paper is to present the opportunities and challenges of creating synergy between e-
Learning, cross-border student exchange and knowledge sharing between small and medium-sized
enterprises (SMEs) and international student teams. Knowledge creation and sharing mechanisms in a
knowledge management course that tries to develop an international learning community and prepares
students for international networking can be linked to other courses. The paper will discuss experience with e-
Learning courses that enable cross-border knowledge sharing for monitoring international business
opportunities around the Baltic Sea. The author challenges some traditional views about the main tools and
benefits of e-Learning from the learning community and knowledge management competencies development
point of view. E-Learning and face-to-face learning opportunities have to be integrated in order to link virtual
information monitoring skills and the management of both tacit and explicit knowledge in cross-cultural teams.
Company projects, where students participate in international teams that monitor and integrate business
information in order to help SMEs in the process of internationalisation also serve as exercises for building
cross-cultural trust. Students that are interested in co-operating with SMEs as gatekeepers for international
contacts during Erasmus student exchange programmes have to be identified and trained for such a role.
Networking readiness is also influenced by the relationship between imitative, innovative and co-creative
entrepreneurship orientations. Business students should be encouraged to analyse their readiness for
international networking and its implications for their future. The paper identifies tools for preparing students
for knowledge sharing in the “global village” and barriers that inhibit developing cross-border networking
practices.

Keywords: Cross-border knowledge sharing, e-Learning, networking, learning community, integration of

knowledge

1. Introduction
The “global village” is the metaphor that links knowledge management initiatives with international
networking and the capability of knowledge management subjects to access and integrate different
sources of new knowledge. Knowledge management strategies in organisations have to take into
consideration knowledge management enablers and barriers in order to apply a staged approach
to implementing knowledge management (Edwards, 2005). Linking external and internal
knowledge is a topical issue in software companies (Fehér, 2005), but also in other sectors, where
new global trends have to be considered on the real time basis. Companies in many business
fields can improve their international competitiveness if they manage to find the most appropriate
international partners for knowledge sharing and to implement the appropriate form of networking
that is aligned to the development stage of their internal knowledge management practices.
International networking is not an easy task for innovative small and medium-sized enterprises if
they have limited human and financial resources (Elenurm 2005). Even a good information and
communication technology infrastructure is not the solution if key people in the SME do not have a
clear networking vision, orientation and skills that enable systematic use of international networking
opportunities and tools.

Students of business schools as future entrepreneurs and employees have a crucial role in
developing international networking practices. In Estonia, many students experience the role of an
entrepreneur already during business school studies. The challenge of a business school is to raise
the awareness of students about knowledge management opportunities and challenges in the
international networking context. Course design and learning methods should support learning by
doing opportunities, where students experience searching and combining relevant knowledge from
virtual sources for co-creation in international teams. They can also be involved in company
projects, where knowledge gaps in small enterprises are identified and the capabilities of
enterprises for finding foreign business partners and participating in international networking are

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improved. e-Learning in this process becomes the tool that allows to overcome distance and time
barriers in order to combine and re-use knowledge from the learning community.

The objective of this paper is to present opportunities and challenges for creating synergy between
e-Learning, cross-border student exchange and knowledge sharing between SMEs and
international student teams. In section 2, links between international networking, entrepreneurship
and knowledge management are discussed. Section 3 focuses on diagnosing the different
entrepreneurial orientations among students that influences their readiness to participate in co-
creative learning communities. Section 4 presents some examples of learning practices that
develop cross-border knowledge sharing and networking skills. Section 5 discusses international
knowledge sharing opportunities in the Erasmus student exchange framework. Section 6 presents
conclusions for future development of learning practices, where students can act as gatekeepers
for SMEs interested in international networking.

2. Knowledge management and international networking

Business networks mean continuous exchange and other co-operative relationships that a
business organisation is engaged in with other organisations (Hǻkansson and Snehota 1995).
Although networking has been a popular concept in EU-sponsored development projects, external
communities of knowledge have been overlooked for the role they play in the flow of strategic
knowledge inputs to organisations (McGrath & Purcell 2004). Networking as a knowledge
management tool assumes a win-win relationship between the organization and the individuals
involved in the knowledge sharing. Participants of the knowledge sharing process have to
understand their core competencies and competency gaps, but also the competencies and
competency gaps of their partners in the context of their common and individual interests.
Complementary core competencies among the network participants can be applied to reframe
value chains as the main way of competing in the future (Hamel 2000; Normann 2001; Simpson
2002).

Industrial clusters and regional clusters as geographically bounded concentrations of

interdependent firms have, during the last decades, been identified as environments where
competitive advantage arises from intensive relationships between business partners and rivals
and from the concentration of highly specialized skills and knowledge (Rosenfeld 1997, Porter
1998). Networking that utilizes frequent face to face contacts enabled by geographical proximity is
an easy way to build trust and to share tacit knowledge. Global networking however, assumes
extensive use of the virtual knowledge sharing tools as SME representatives in such networks have
limited opportunities to use direct face to face contacts in their networking process.

Many SMEs in Eastern European countries are rendering subcontracting services to companies in
Western Europe and Nordic countries, but relationships between such partners are often limited to
short-term deals and do not give the Eastern European subcontractors enough knowledge for
anticipating and influencing their roles in future value chains. Internet-based virtual tools have
created new opportunities for rapid access to business information about foreign markets.
Identifying potential business partners and developing new business links with SMEs in other
countries have become easier for these entrepreneurs that are experienced in monitoring web-
based information sources and able to combine tacit knowledge that is shared in face to face
communication between established partners with new contacts and knowledge sources that are
enabled by information and communication technology tools.

The potential role of social software in enabling a bottom-up approach for supporting knowledge
activities through new forms of business intelligence, knowledge capture and refinement in wikis,
easy web publication in weblogs and the sharing of links and photos has become a topical issue.
Social software as a knowledge-sharing tool provides the individual with control of his own
generated content as opposed the hierarchical control of central knowledge repositories (Avram
2005). Although social software has already transformed the group interactions of people actively
involved in blogging, using its potential for changing the methods of collaboration and
communication among large numbers of entrepreneurs and managers in SMEs is still a future
challenge.

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In recent years, linkages between knowledge management and international networking have been
studied in the context of technology networks pointing to the risks in corporate networks: partner
drop out, insufficient project planning and unrealistic time management (Grillitsch et al. 2005).
Knowledge-oriented co-operation ideas between technology suppliers and technology customers in
the 2nd generation of inter-organisational co-operative networks stress the willingness to volunteer
and interest as features of communities of practice (Bettoni et al. 2005). Research has established
the crucial supporting role of networks during the creation, development and growth of small
businesses (Greve 1995; Kautonen and Welter 2005). Three types of trust can influence business
relations and networking. Personal trust builds on initial personal knowledge and informal contacts
with the partner. Collective trust is based on shared norms and mutually recognized co-operation
principles in a group or community. Institutional trust is based on legal guarantees and sanctions
that can be enforced if agreements between partners are not followed (Kautonen and Welter 2005).
The transition of Eastern European economies towards politically and economically more stable
business environments has diminished the importance of personal trust, while the role of
institutional trust has increased in business relations (Venesaar 2005).

Noteboom (2002) has explained the role of cognitive distance as a factor that may diminish trust in
business relationships. Cognitive distance as an aspect of trust is especially relevant to
international networking that is focused more on knowledge sharing than on international trade or
other tangible business transactions. In communities of practice that deepen their knowledge and
expertise in a common field or topic by interacting on an ongoing basis (Wenger et al. 2002), trust
is created through reflecting common practice and offering useful solutions to other community
members. An international community of practice can be considered an advanced form of
networking, but looser forms of networking are also useful for monitoring new business trends or
for discovering new business opportunities. In the “global village”, open-minded entrepreneurs
have to be skilful also in the use of weak network ties as sources of novel information.

Contemporary business school education is preparing students for international business

opportunities by offering such established courses as international business and international
management. Communication skills for going international are being developed through
presentation and negotiation training. It is, however, not guaranteed that such courses address
knowledge management issues that are relevant for using international business opportunities and
involve students in practical learning of networking and knowledge sharing skills on a cross-border
scale. On the basis of links between knowledge management and international networking we
present some principles that can be taken into consideration in order to learn networking and
knowledge sharing skills for international business:
ƒ Students should be encouraged to study their orientations towards international knowledge
sharing in the role of an entrepreneur, manager and/or business expert.
ƒ Students develop skills for searching for relevant business information on the Internet and
experience the challenge of combining their search results with information found by other
students, preferably from other countries, in order to create new practical knowledge for
different stakeholders in international business transactions.
ƒ Opportunities for testing one’s competencies and competency gaps in international project
teams is essential for learning by doing in order to understand the links between trust and
knowledge sharing. If the client of the project is a real company it is also possible to reflect on
the potential role of international student teams in overcoming knowledge gaps of real
entrepreneurs.
ƒ The combination of e-Learning forums and face-to-face discussion is useful, of course, for
developing international learning community participants from different countries, but also for
understanding the features and limitations of virtual and face-to-face knowledge sharing.
ƒ Knowledge management courses with an international audience can become a testing ground
for international networking competencies if course participants have different opportunities for
presenting their learning priorities and experiences and can use a variety of e-Learning and face
to face communication modes to make their contribution to the learning community.

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ƒ Partnerships between SMEs and Erasmus exchange students should be developed in order to
give to SMEs a cost-efficient option for searching for relevant business information about
potential export markets, but also to develop the skills of students so they can act as
gatekeepers in international networking.
We will now present some examples of how these principles have been introduced at the Estonian
Business School. Some ideas are still in the process of development and international knowledge
sharing in the ECKM community would provide us with new valuable inputs for improving our
learning practices.

3. Entrepreneurial orientations and knowledge sharing

In 2005, the self-assessment test was introduced to assist students to identify their priorities
concerning three entrepreneurial orientations: imitating entrepreneurship (copying or transferring
best practices), individual innovative entrepreneurship and orientation towards co-creation. The
questionnaire created by the author of the present paper in co-operation with Finnish innovation
consultant Aarni Moisala consists of 15 choices between statements comparing these three
orientations from the point of view of sources of entrepreneurial ideas, motivation and business
success models, the roles of customers and employees in knowledge sharing, and the importance
and function of socializing, teamwork, networking and ownership of the business idea. Alternatives
for managing risk, credibility and transparency of business are also presented in order to identify
preferences towards orientations that influence goals and rules of knowledge sharing.

The pilot version of the test has so far been used with 313 Estonian Business School students,
33% of them had entrepreneurship experience. The dominant orientation for 126 (40%) students
was individual innovative entrepreneurship. The proportion of co-creation as the dominant
orientation was quite similar, represented by 125 (39,9%) students. Imitating entrepreneurship was
the dominant orientation for only 19 (6%) students. The remaining 43 students had equal scores for
more than one orientation. Co-creation as an entrepreneurship orientation is motivated by the
desire to be part of a new process of value creation that involves many partners and follows the
belief that the best way to succeed is to innovate and develop new business ideas with other
people. Students that have a high total score for the co-creation orientation also prefer to combine
good business solutions and are ready to treat employees as partners who might one day pursue
their own business visions. They see both the broad contact network and ideas of friends as useful
in re-assessing their original business visions. Such features of co-creators can be interpreted as a
readiness to use networking as a knowledge-sharing tool. Students that received a high total score
for the co-creation orientation and students that had a high score for the individual innovative
orientation were at the same time quite restrictive towards transparency in entrepreneurial
activities. More than 70% of students in both orientation categories stated that only the closest
partners should know their cost structure. This attitude can inhibit attempts to develop knowledge
sharing in international value chains. The test for entrepreneurship orientation is developed as a
tool for self-reflection that encourages training participants to identify the role of knowledge sharing
in their personal future vision and initiates discussion about the meaning and function of networking
in developing personalities and teams. International networking opportunities are introduced as a
logical input during test feedback sessions.

4. Learning practices for developing international knowledge sharing and

networking skills
Its developers have traditionally linked the advantages of e-Learning to the opportunity to choose a
suitable learning time, place and pace and to side step mandatory attendance (Mariani 2001;
Harrison 2001)). These factors are also relevant for many learners (Elenurm et al. 2003). Learning
the knowledge sharing and networking skills however assumes shifting priorities to mapping new
information sources, presenting new ideas in a format that matches the cognitive preferences of
other students and communicating in the virtual learning community, reflecting inputs of community
participants in the process of socialization, and combining and reusing knowledge that has been
created by earlier and present course participants.

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Creating a learning community, establishing the ground rules for online communication, facilitating
virtual discussions and encouraging social interaction between online learners are important tasks
of the online tutor (Duggleby 2000). A knowledge management course at a business school can
serve as a departure point for studying the opportunities and challenges of creating learning
communities, where students from different countries are involved. At the Estonian Business
School practical tasks during the knowledge management course focus on presenting the
experience and learning needs of students on their personal websites created in the WebCT e-
Learning environment. Students review Internet sources that reflect new trends in developing
knowledge management and the learning organization. MBA students compare knowledge
management development priorities in their organizations and basic assumptions related to
development efforts in this field. We have the vision that the knowledge management course
supported by an e-Learning environment could become the tool that involves some Erasmus
student exchange programme participants from foreign countries in virtual networking with local
Estonian students even before arriving in Estonia.

Although international networking and learning communities are important issues in the knowledge
management course, other courses are also used for introducing international knowledge sharing
practices. In the courses “Doing business in the Baltics” and “International business around the
Baltic Sea”, individual tasks for searching and reviewing Internet sources that are relevant to
different stakeholders of international business transactions serve as the departure point for
creating a learning community. Another task for students is to interview an expatriate and to
present new insights from such interviews on the WebCT forum. Reviewed information sources are
first prioritized on the WebCT e-Learning forum. Cross-border feedback has also been encouraged
in this process by asking students in Tallinn, Helsinki and Budapest that study similar courses to
send their comments about the best reviews presented by students at other locations. International
student teams, after the virtual discussion stage, are asked to analyze the discussion threads that
have emerged at the WebCT forum in face to face group work in order to specify knowledge that
they can use in further projects and to reveal tacit issues related to the task. A role-play about
creating an international joint venture is staged between student teams from Eastern and Western
Europe. The aim of combining e-Learning and face to face interactions between students from
different countries, including Erasmus exchange students, is to demonstrate that business success
in the “global village” depends both on skilful use of virtual networking tools and also on cultural
flexibility in face to face knowledge sharing.

Students are encouraged to reuse, and if necessary, to reassess the WebCT forum content that
has been created by earlier course participants. This forum serves as a knowledge base for
studying lessons learned from earlier business ideas and company projects in the field of
international business. Course participants form international teams try to assist interested
Estonian SMEs in analyzing and pursuing new international business opportunities. In practice,
student teams have been especially valuable in finding new business contacts and networking
opportunities and in advising SMEs on how they could present their strengths to potential
customers and business partners in other countries. It is important to check that students from
different countries are represented in each project team in order to use the company project as an
exercise for building cross-cultural trust through reflecting their common practice.

5. International knowledge sharing opportunities in the Erasmus student

exchange programme
Company projects that are accomplished by international student teams during one course have a
limited time frame. Erasmus student exchange programmes can be used for developing more
sustainable partnership relations between students and SMEs in order to support the international
networking efforts of enterprises and to develop the skills of students in this field. SMEs have
limited resources for hiring experienced consultants for identifying new market opportunities and
potential partners in distant foreign countries. Both incoming and outgoing Erasmus exchange
students have the potential to become cost-efficient international business knowledge gatekeepers
for small enterprises that are interested in going international.

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Focus group discussions among students that are or have been involved in the Erasmus exchange
programme gave evidence that only some exchange students are interested in linking the Erasmus
exchange experience to serious partnership with companies in their own country or abroad, where
they are planning to go for 1-2 semesters. The other students gave a higher priority to socialization
with students of different nationalities and improving language skills during the exchange
programme, but did not see partnership with a company as an essential tool for facilitating their
international career. Erasmus exchange students had difficulties in linking their present roles to
participation in other international student networks such as the International Association of
Students interested in Economics and Management (AIESEC) or the European Student Forum
AEGEE. In the survey of Estonian Business School students conducted in co-operation with the
EBS student organisation at the beginning of 2006, 56 respondents from a sample of 67 students
stated that contacts with individuals and organisations in other states are essential for their future.
48% of students stated that they need international contacts in order to work abroad and 40% of
students were eager to find international contacts for joint business. Personal contacts in more than
two foreign countries that could be used to secure answers to urgent information requests were
found among 47% of the students. At the same time only 27% of respondents were participating in
organisations that are engaged in international co-operation and information exchange. The share
of students that exchange information in Internet forums or in other virtual communities on a daily
basis or regularly were also low, only 13%. Among the main obstacles to participation in the
Erasmus exchange programme the students mentioned lack of finances, existing jobs in Estonia,
family ties and limited information about the destination country.

Establishing contacts between both Erasmus exchange students that have studied in Estonia and
already returned to their home country and Estonian students that have been Erasmus exchange
students in the same foreign country and those Estonian students who are preparing themselves
for studies in the same destination is considered to be essential for offering good information and
knowledge gatekeeper services to companies. The vision of step-by-step development of a
partnership between SMEs and students that can include internship in the company before fulfilling
a market study and contact search abroad was supported by the majority of the focus group
participants. Opportunities for attaining new co-operation experience with SMEs in other countries
were especially appreciated by Erasmus exchange students from Western European countries,
where becoming employed in a managerial job already during their university studies happens
more rarely than in the rapidly developing economies of Eastern Europe.

A systematic approach to developing partnerships between Erasmus exchange students and

SMEs interested in international knowledge gatekeepers assumes the creation of a knowledge
base that will help to match the international business information search requests of companies
and the profiles of interested students. The profiles should describe the work experience of the
students, their possible involvement in international projects or foreign trade, participation in
international organisations and networks, priorities for developing international contacts for future
career opportunities, their readiness to conduct information searches in different business sectors
and fields, and what support the student is looking for from the SME and the business school in
order to accomplish his/her international knowledge gatekeeper mission.

6. Conclusions
Various tools and methods can be used to facilitate the process of learning about international
networking and knowledge sharing skills. We have presented examples of how to link the student's
own reflections upon personal entrepreneurial orientations that influence international networking,
training students in information search and presentation skills in the e-Learning environment and in
co-creating new knowledge content both on virtual forums and in face to face group work. These
tools support cross-border knowledge sharing of students, introduce them to international
teamwork experience in company projects and broaden international knowledge sharing
opportunities in the Erasmus student exchange programme.

The author has had 5 years experience of working to integrate e-Learning and classroom activities
ir order to embed knowledge sharing practices and learning community principles into university
courses. Studying entrepreneurship orientations and reflecting with course participants upon their

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implications for knowledge sharing and networking is the system under construction. Introducing
Erasmus exchange students as international knowledge gatekeepers in partnerships with SMEs as
a large-scale programme is still a future vision, although some elements of this vision have already
been applied in short-term company projects.

An essential conclusion from learning activities that can be related to international networking is the
need to bring together “here and now people” that are good at face to face communication and
“there and then people” that are able to manage large virtual networks and projects enabling
knowledge sharing with people they may have never met in the same physical location. The first
“tribe” demonstrates empathy and a high level of emotional intelligence in critical situations, but the
second “tribe” is able to combine large numbers of information sources and is often simultaneously
involved in several virtual knowledge sharing activities and co-operation projects with distant
partners. A sustainable “global village” needs contributions and mutual understanding between
both “tribes”. They have to learn from each other.

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151
Knowledge Management and Career Development: The
Application of Hedonic Approach to Evaluate Real and
Potential Salaries of Brazilian Retailers’ Executives
Luiz Paulo Lopes Fávero, Patrícia Prado Belfiore and Claudio Felisoni de Angelo
University of São Paulo, Brazil
[email protected]
[email protected]
[email protected]
Abstract: The purpose of this article is to identify variables that explain the real and potential salaries of
retailers’ executives in Brazil. To this end, it discusses the results of the application of a hedonic pricing model
to input supplied by a sample of the said executives concerning the impact of different qualifications and
characteristics (age, field of undergraduate degree, quality of MBA, number of language spoken, etc.) on their
worth (i.e., the remuneration they desire), vs. how retail companies actually “price” executives (i.e.,
characteristics and qualifications reflected in actual remuneration). The population of this investigation
consisted of executives working for companies operating in the various segments of retail. As a census type of
research calls for a very high budget, we chose to rely on a sample. For the case in point, the sample
amounted to 215 answered questionnaires, obtained over the time span (i.e., October, November and
December 2004), during which the research was explained on the Retail Management Program website
(www.provar.org) of the Management Institute Foundation, an organization connected with the School of
Economics, Administration and Accounting of the University of São Paulo, Brazil. The results, which were
obtained by means of econometric multiple regression models, indicate that certain attributes have a positive
influence on increasing actual and potential salaries whereas others do not, many variables have a
considerable impact on the determination of desired salaries but not of actual salaries, and many retail sector
companies fail to take into account certain hedonic variables that concern academic qualifications as a real
reason for improving remuneration. The evaluation of the most representative attributes to compose real and
potential salaries can determine a better management of the career planning.

Keywords: Human resource management, career management, hedonic pricing theory, retailing.

1. Introduction
In the current Brazilian economy, similarly to what occurs in some other developing countries, the
wholesale, retail and services sector is the most important one, accounting for some 50% of
Brazil’s GDP. Among the many services it supplies, commercial activity stands out, more
specifically the retail trade, whose relevance is not only due to its immense economic importance,
but also to its being the final supply chain link. Thus, thanks to its direct contact with consumers,
the retail trade serves as an indicator of the trends of the consumer market and of the distribution
of goods in general. For many decades, the operating aspects of retail management were
neglected, given that the possibilities offered by the financial market allowed the sector’s
companies to easily offset operating income shortfalls. Indeed, little attention was paid to
commercial activity, since financial investments provided earnings several times greater than what
could be obtained from the simple operation of buying and selling merchandise (Blecher, 2001).

The policy of drastically reducing inflation, introduced in 1994 through the Real Plan, fostered
substantial changes in the entire dynamics of the Brazilian economy and promptly restructured the
consumption market. The reasonable price stability in effect since 1994 strongly encouraged
competition. Retailers, with their earnings severely curtailed, they now found themselves obliged to
generate profit almost entirely from their commercial operations. The new economic reality, in
conjunction with technological progress, globalization and the manifestation of new formats,
substantially changed the way retail operated. Technology has been providing improved
management methods, cost reduction, and better servicing of customer needs. Globalization
caused the 90s to become the decade in which foreign concerns increased their presence in food
retail; one can expect that the first decade of our current century will reflect a substantial expansion
of the world’s large non-food retailers in Brazil, this being a sector in which the country is far less
developed than other countries. As for the new formats that have appeared, they have been

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 Luiz Paulo Lopes Fávero, Patrícia Prado Belfiore and Claudio Felisoni de Angelo.

reducing the life cycle of the more traditional institutions, which are obliged to give way for the
development of new models.

The described transformations encouraged the growth of retail chains. However, the ways in which
the remuneration of their executives was affected and the concrete benefits generated by the
latter's innovative qualifications still give rise to doubts. Thus, this work used data collected through
a structured questionnaire answered by retail executives in Brazil to evaluate the actual impact of
each one of these qualifications, acquired as a result of the executives’ own effort or of other
encouragement, on their fixed or variable remuneration, in order to find out which are the attributes
that best explain the make up of both their actual salaries and of the salary they desired, given the
greater competitiveness of the job market over the last few years. To this end, we employed a
hedonic pricing model, which enables an analysis of the relative importance of each attribute vis à
vis the different positions and salaries found in the job market. The results fulfill three main
objectives, in that they allow one to assess: first, to what extent the semi-logarithmic hedonic model
employed in this study is suitable; second, if the results are satisfactory for determining whether or
not the data supply sufficient information on the attributes found in the market; and third, whether
the analysis incorporates the differences in salaries and remuneration due to the presence or lack
of a given characteristic. This article opens with the presentation of the classical theory of
remuneration structure, relating it with the attributes. This is followed by a discussion of the concept
of hedonic prices and its applicability in terms of remuneration. After this, we present the research
method employed and the study’s theoretical model. Finally, results are presented and analyzed.
The implications of hedonic analysis and the possibility of future studies are discussed in the
conclusion.

2. An approach to the structure of remuneration and the hedonic prices

theory
The definition of a market price structure has been studied recently using hedonic models of
regression that estimate the price of certain goods or services based on their features (Leeuw,
1993).

In general terms, the organizational market is dominated by a major segment of agents that offer
knowledge, such as executives, who compete amongst themselves on the basis of practical
experience and theoretical knowledge, this being their offering of differentiated attributes.
Therefore, in order to analyze real salaries vs. the salaries desired as a function of the attributes
offered, one must try to deal with themes that are connected with the vectors of pressure in market
relations, so that the resulting element characterizes the “price” of each transaction. On the other
side of the transaction, we have consumers, in this case companies and corporations, which try to
maximize their satisfaction by choosing from a basket of attributes in the market, based on what
they believe will provide them with the greatest amount of utility within the limits of their budgets
(Pindick; Rubinfeld, 1999). Figure 1 (below) shows that the dividing line represents the interface
between the consumer and the offering of a given set of attributes by a retail executive. This
executive determines a price (PE) based on his characteristics, and an offering of utility (UE),
represented by his attributes. The company and/or the market, on the other hand, indicate the
maximum price they are willing to “pay” (this being determined their budget limitations and
interests), in the form of remuneration, for an executive for a given job or position and for the
perceived utility that the set of attributes offered would provide them with. According to Besanko,
Dranove, Shanley and Schaefer (2004), hedonic prices use market data to determine the value of
the attributes of a particular product, service or even salaries. Through an analysis of how the
pricing of some product varies as a function of different combinations of attributes, one can
determine the price of another product with the same features. Still according to the said authors,
hedonic prices have been used to identify the value of innovations for automobiles, computers,
residential property and the prospects of professional careers in organizations. However, they
require multiple regression analyses in order for one to estimate the impact of the attributes on the
value of a product, service or salary. The dependent variable of the regression is the price or value
of the goods, services or salaries, whereas the predictors are the variables that measure the
presence or absence of different attributes.

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Dividing line

Attributes of offering Wishes regarding attribute

UE UC
entrepreneur consumer
PE PC

Figure 1: Interface between the supply and demand for attributes (Fávero, 2005).
The construction of hedonic price models in the determination of market values has been used to
evaluate automobiles, to determine the rates to be charged for electric power and for the evaluation
of residential property (Kravis; Lipsey, 1969). In a historical context, the work of Court (1939)
pioneered this type of analysis; practical issues that involved the automotive industry in the United
States motivated it. In 1961, Griliches, as quoted by Sartoris Neto (1996), also employed a
practical context for comparing the prices of different automobiles through the application of the
several available characteristics. In a theoretical way, Lancaster (1966) proposes a type of
approach in which the arguments of the utility function are the characteristics of the goods, rather
than the goods themselves. According to this approach, as we have already discussed, the
consumer is willing to pay the price of goods, in order to acquire them, with a view to the utility that
their characteristics will provide. Starting with Lancaster, many other authors carried out several
studies on the use of the hedonic prices approach, but the first one to put the problem within a
market context was Rosen (1974). Item 3, below, presents several studies that originated from the
work of Court, Griliches and Rosen.

3. Literature review
The structuring of the concepts related with the decision to choose a product or service, and the
utility offered by the latter, was structured theoretically in the approach to Consumer Theory,
proposed by Lancaster (1966). According to this author, the choice of a certain product or service
does not occur spontaneously, but as a response to a package of characteristics associated with it,
the utility function’s arguments being these very characteristics, its being therefore assumed that
consumption is an activity in which the product or service or a combination thereof are obtained
with the purpose of acquiring a set of characteristics found in them (Sartoris Neto, 1996).

Thus, Lancaster (1966) did not replace traditional Consumer Theory, but proposed its expansion, in
that he structured these concepts theoretically, taking into account the presence of the
characteristics of the products or services, this being a practice also employed before Lancaster
(1966) by Court (1939) and Griliches (1961), for instance. Firstly Court (1939), in order to
determine a hedonic equation capable of explaining the behavior of automobile prices as a function
of their characteristics, proposed a simple procedure, involving a single equation that allows one to
see how much each characteristic influences the end price of the vehicle, and that also enabled the
creation of indices. This method, also adopted by Griliches (1961), defines a hedonic equation and
corresponds to the first stage of the procedure proposed by Rosen (1974), described below.

The works of King (1976) are some of the few to be based solely on Lancaster’s approach, King
having been the first author to employ the term “Lancastrian”. From the empirical standpoint, his
method was not significantly different from the one used by Court and Griliches (Sartoris Neto,
1996). The method proposed by Rosen (1974), on the other hand, has the purpose of defining
supply and demand equations, so that the market’s equilibrium can be defined. Thus, two
equations are proposed, representing supply and demand, as follows:

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 Luiz Paulo Lopes Fávero, Patrícia Prado Belfiore and Claudio Felisoni de Angelo.

Demand: p(z) = f(z1, z2, ..., zn, Y1, W)

(1)

Supply: p(z) = f(z1, z2, ..., zn, Y2, W)

(2)

Where:
p(z) represents the price as a function of the vector of attributes;
zi represents the model’s intrinsic set of variables;
Y1 represents the vector of extrinsic variables that only affect demand;
Y2 represents the vector of extrinsic variables that only affect supply;
W represents the extrinsic variables found in both equations.

The work of Rosen (1974) has two stages. The first one refers to estimating p(z), without
considering Y1 and Y2; in other words, one works out the regression of the prices found for the
products differentiated by characteristic z. Rosen’s second stage refers to the application of
simultaneous equations methods, in which each of them is identified as a function of the
composition of vectors Y1 and Y2 (Sartoris Neto, 1996). Many authors have proposed these
applications to study the impacts of attributes on prices and salaries, like Bowen, Mikelbank and
Prestegaard (2001), Ekeland, Heckman and Nesheim (2002), Figlio and Lucas (2004), Silver and
Heravi (2004), and Angelo, Fávero and Luppe (2004). One should stress that our study used
Rosen’s method as the basis for determining the hedonic regression models, as we will show
under item 4, given that the hedonic equation that has the actual salary as a dependent variable
refers to the demand equation (the company’s point of view),whereas the hedonic equation that
offers the desired salary as a dependent variable refers to the supply equation (the executive’s
point of view).

4. Research method and theoretical model

The research conducted with retail executives was based on a sample. The tool employed for
collecting data was a questionnaire developed by the technical staff of the Retail Management
Program (PROVAR - Programa de Administração de Varejo) of the Management Institute
Foundation (FIA – Fundação Instituto de Administração), an organization connected with the
School of Economics, Administration and Accountancy of the University of São Paulo, Brazil. This
questionnaire, before being used, was pre-tested, after which it was fine-tuned until the final
version used for online research was reached.

The population of this investigation consisted of executives working for companies operating in the
various segments of retail. As a census type of research calls for a very high budget, we chose to
rely on a sample. For the case in point, the sample amounted to 215 answered questionnaires,
obtained over the time span during which the research was explained on the PROVAR site
(www.provar.org), i.e., October, November and December 2004. Solely for the purposes of
checking deviations relative to the population, given the number of questionnaires answered, one
can calculate the maximum admissible error. As most of the questions were closed and of a
dichotomic nature, and given that the dispersion of the population was not known beforehand, we
admitted to the worst possible case regarding the sample’s dimensions, namely, 50% positive
responses and 50% negative responses. Adopting a level of correction of 95.5% in the
establishment of the confidence intervals and being aware of the dimension of the sample (215
interviews), one reaches a sample error of plus or minus 6.8%. As the sample is far smaller than
the population, it is unnecessary to use the correction factor for finite populations.

The formula employed for calculating the size of the sample is:

n = (P.Q. Z2) / D2
(3)

Where:
- n is the dimension of the sample (215 completed interviews);

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- P is the estimate of the proportion of the population favorable to a given result. In this case, P =
0.50 (50%);
- Q = 1 – P is the estimate of the proportion of the population unfavorable to a given result for the
same question. In this case, Q = 0.50 (50%);
- Z is the abscissa of the standard normal distribution, with a given level of confidence being fixed.
In this case. Z=2, because the level of confidence was 95.5%; and
- D is the sample error, i.e., the maximum difference admissible between P* (the real proportion of
the population) and P. As we mentioned above, the purpose of this article is to identify the
variables that explain the real salaries and the desired salaries of retail executives working in the
Brazilian market. The model was specified based on the pioneering work of Rosen (1974). Real
salaries and desired salaries were related to a set of attributes in the following way:

Log S = x0 + x1.AGE + x2.TIMEWORK + x3.NCOMPANIES + x4.CURRCOMPANY +

x5.ANALYST + x6.CONTROLLER + x7.MANAGER + x8.SUPERINTENDENT + x9.DIRECTOR +
x10.VICEPRES + x11.PRESIDENT + x12.ENGLISH + x13.SPANISH + x14.LANGUAGES + x15.MKT +
x16.ADM + x17.ECON + x18.COMP + x19.ENGIN + x20.ACCTG + x21.SOC + x22.PSYCH + x23.LAW +
x24.PEDAG + x25.JOURN + x26.STAT + x27.MED + x28.ARC + x29.GRAD + x30.FORGRAD + x31.MBA
+ x32.FORMBA + x33.MAMSC + x34.PHD + x35.LATUSENSU + x36.COURSE + x37.FORHOME + e
(4)
Where:

S: the executives’ real or desired salary

AGE: age
TIMEWORK: length of time during which the person has been active in the job market
NCOMPANIES: number of companies worked for
CURRCOMPANY: length of time with the current employer
ANALYST: position of analyst (dummy)
CONTROLLER: position of controller (dummy)
MANAGER: position of manager (dummy)
SUPERINTENDENT: position of superintendent (dummy)
DIRECTOR: position of director(dummy)
VICEPRES: position of vice-president (dummy)
PRESIDENT: position of president (dummy)
ENGLISH: speaks English (dummy)
SPANISH: speaks Spanish (dummy)
LANGUAGES: number of languages spoken, other than English and Spanish
MKT: degree in marketing (dummy)
ADM: degree in administration (dummy)
ECON: degree in economics (dummy)
COMP: degree in computer science and IT (dummy)
ENGIN: degree in engineering (dummy)
ACCTG: degree in accounting (dummy)
SOC: degree in sociology (dummy)
PSYCH: degree in psychology (dummy)
LAW: degree in law (dummy)
PEDAG: degree in pedagogy (dummy)
JOURN: degree in journalism (dummy)
STAT: degree in mathematics and statistics (dummy)
MED: degree in medical sciences (dummy)
ARC: degree in architecture (dummy)
GRAD: number of undergraduate degrees
FORGRAD: undergraduate degree from foreign university (dummy)
MBA: MBA (dummy)
FORMBA: foreign MBA (dummy)
MAMSC: Master’s degree (dummy)
PHD: Ph. D. (dummy)
LATUSENSU: non-degree post graduate specialization programs – latu sensu (dummy)
COURSE: number of professional training courses completed during the last year

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 Luiz Paulo Lopes Fávero, Patrícia Prado Belfiore and Claudio Felisoni de Angelo.

FORHOME: has lived abroad for more than six (6) months

In the model presented, the logarithm of the real / desired salary is the dependent variable,
whereas all other variables are possibly explanatory ones. We chose a semi-logarithmic
specification, given that, as many of the independent variables are dummies, the definition of the
natural logarithm of zero becomes impossible. As the dependent variable is the logarithm of the
salary, the coefficients resulting from regression may be interpreted as an estimated percent
change in value for a unit change in a particular attribute (Griliches, 1971). Therefore, the partial
derivative of these hedonic regressions, with regard to a given attribute, describes a marginal
change in the total evaluation, associated with a change in one of the characteristics, other
constants being maintained (Linneman, 1980). This determines the increment that applies to a
given salary, whether this is the real one or the desired one, which starts to reflect an specific
attribute, all other things being equal (Fávero, 2005).

The method adopted for this study has the purpose of estimating a model of the market for
remunerating the careers of retail executives, taking into account 37 characteristics in the formation
of salaries. Some of the independent variables were incorporated in the form of dummies; thus, 1
indicates the presence of a given attribute whereas 0 indicates the lack thereof. Table 1, below,
shows a description of the independent variables.

5. Results
In this section, we present the results obtained from the sample we collected. The hedonic
estimates are analyzed in order to determine the suitability of the model, i.e., whether the data
collected provide sufficient information to allow adequate hedonic estimates to be calculated
(Aryeetey-Attoh, 1992). We then analyze the coefficients, to find out which attributes have the
greatest impact on real and desired salaries. First, for better specification, the existence of
problems related to the autocorrelation of residues was checked. According to Vasconcellos and
Alves (2000), the problem of residue autocorrelation results from the fact that the residue
incorporates the effects of a variable that was excluded from the model. Additionally, incorrect
specification of the functional form of the model may account for the generation of autocorrelated
residues.

The presence of heterocedasticity must also be tested, given that flaws in the specification of the
model can generate a heterocedastic residue; in other words, as an explanatory variable increases,
there is an increase in point dispersion. This means that the variance of the random term will be
greater the greater the value of the explanatory variable, or vice-versa. One must also check
whether multicolinearity is occurring, given that many of the explanatory variables taken into
account in this study can produce similar behaviour; in other words, there may be a greater
correlation than theoretically expected between some of them, as a result either of the selection of
a sample collected on the basis of convenience or of an insufficient number of observations
(Vasconcellos; Alves, 2000).

With the modeling carried out, one can see that there were no problems concerning the
autocorrelation of residues, heterocedasticity or multicolinearity between the explanatory variables.
Table 2 presents the results.

As table 2 shows, some variables that explain the determination of desired salaries are not
significant for the formation of real salaries.

A vertical analysis shows that the variables that best explain the behaviour of real salaries are
those connected with the executive’s age, the amount of time he has been employed by his current
company and fact that a position of director, vice-president or president is held. The educational
variables that appear to be significant for explaining real salaries are speaking English, the number
of undergraduate degrees and having a Master’s Degree (but not an MBA).

When we analyse the variables that are significant in the formation of the salaries that executives
desire, in addition to the ones mentioned above, the only addition is the one that refers to

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experience, which is related with the number of companies for which the executive has worked. On
the other hand, many academic qualification variables, besides the ones mentioned in the
paragraph above, are now factors that explain the desired salaries, such as the number of
languages spoken, the field the undergraduate degree was in (business administration, economics,
computer sciences, engineering, psychology, law and mathematics & statistics), and an MBA or a
non-degree post-graduate specialization course.
Table 1: Definition of the hedonic variables
Attribute variable Definition of the variable
AGE Age
TIMEWORK Amount of time active in the job market
NCOMPANIES Number of companies worked for
CURRCOMPANY Amount of time with current employer
ANALYST Yes = 1; No = 0
CONTROLLER Yes = 1; No = 0
MANAGER Yes = 1; No = 0
SUPERINTENDENT Yes = 1; No = 0
DIRECTOR Yes = 1; No = 0
VICEPRES Yes = 1; No = 0
PRESIDENT Yes = 1; No = 0
ENGLISH Yes = 1; No = 0
SPANISH Yes = 1; No = 0
LANGUAGES Number of languages spoken, other than English and
Spanish
MKT Yes = 1; No = 0
ADM Yes = 1; No = 0
ECON Yes = 1; No = 0
COMP Yes = 1; No = 0
ENGIN Yes = 1; No = 0
ACCTG Yes = 1; No = 0
SOC Yes = 1; No = 0
PSYCH Yes = 1; No = 0
LAW Yes = 1; No = 0
PEDAG Yes = 1; No = 0
JOURN Yes = 1; No = 0
STAT Yes = 1; No = 0
MED Yes = 1; No = 0
ARC Yes = 1; No = 0
GRAD Number of undergraduate degrees
FORGRAD Yes = 1; No = 0
MBA Yes = 1; No = 0
FORMBA Yes = 1; No = 0
MAMSC Yes = 1; No = 0
PHD Yes = 1; No = 0
LATUSENSU Yes = 1; No = 0
COURSE Number of professional training courses completed
during the last year
FOREHOME Yes = 1; No = 0
Thus, one can see that, from the point of view of demand, there is a surplus of consumers
(represented by the companies in the market), in that many of them fail to recognize the relevance
of a post-graduate course or an MBA, even though their line of discourse contradicts this.
Meanwhile, executives, who represent the supply point of view, believe that they should continue to
pursue academic qualification and knowledge, since they highlight the importance of having
degrees and theoretical skills in order to improve their salaries and remuneration. This becomes
very clear when one compares the average actual salary with the average desired salary found in
this study. Results show that, whereas the average actual salary is roughly R$ 5,100.00, the
average desired salary, based on the qualities acquired by these executives, amounts to some R$
6,980.00.

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 Luiz Paulo Lopes Fávero, Patrícia Prado Belfiore and Claudio Felisoni de Angelo.

6. Conclusion
The results indicate that: (i) certain attributes have a positive influence on increasing actual and
desired salaries, whereas others do not; (ii) many variables have a considerable impact on the
determination of desired salaries, but not of actual salaries; (iii) many retail sector companies fail to
take into account certain hedonic variables that concern academic qualifications, such as an MBA
or a non-degree post-graduate specialization program, as a real reason for improving
remuneration; (iv) executives feel that intellectual development can enhance their remuneration;
and (v) if there is a positive correlation between a salary increase and the presence of a given
attribute, executives will invest a greater amount of time in developing these qualifications.
Table 2: Regression results for the semi-logarithmic model
Attribute variable Dependent variable = real salary Dependent variable = desired salary
AGE 0.273 * 0.374 **
TIMEWORK
NCOMPANIES 0.118 **
CURRCOMPANY 0.135 ** 0.123 **
ANALYST
CONTROLLER
MANAGER
SUPERINTENDENT
DIRECTOR 0.201 ** 0.241 **
VICEPRES 0.123 ** 0.115 **
PRESIDENT 0.125 ** 0.190 **
ENGLISH 0.126 * 0.123 **
SPANISH
LANGUAGES 0.134 **
MKT
ADM 0.255 **
ECON 0.092 *
COMP 0.143 **
ENGIN 0.170 **
ACCTG
SOC
PSYCH 0.206 **
LAW 0.121 **
PEDAG
JOURN
STAT 0.095 **
MED
ARC
GRAD 0.127 * 0.132 *
FORGRAD
MBA 0.140 **
FORMBA
MAMSC 0.102 * 0.105 *
PHD
LATUSENSU 0.072 *
COURSE
FOREHOME
R2 0.488 0.684
R2 - adjusted 0.373 0.617
F 4.257 10.230
Prob. (Est. F) 0.000 0.000
N 215 215
OBS.: The blank cells refer to the lack of statistical significance, at a level of 10%, for the hedonic
variable in the referred income level.
* indicates a significance level of 0.10. ** indicates a significance level of 0.05.
N is the number of the sample.

This having been said, one can see, first, the power of adaptation of the semi-logarithmic hedonic
model used in this study. Furthermore, results are satisfactory, allowing one to state that the data
supply sufficient information as to the attributes that can be found in the market. Finally, hedonic
analysis ends up by incorporating the differences in salaries and remuneration that result from the
presence or absence of certain attributes. Although the results presented in this article may be

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used in different ways as regards defining priorities and strategies, it is necessary to continue to
pursue the subject, as we did not use all the possible attributes that might have an impact on the
subject at hand. Further data can be collected as variables, taking into account, for instance, the
psychological profile and the degree of entrepreneurship of the executive, as well as family-related
characteristics. The subject is truly vast and should be seen as input into the education of
executives and the job market for the development and implementation of strategic recruitment and
career remuneration actions.

References
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de imóveis comerciais no Município de São Paulo. Revista de Economia e Administração,
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Aryeetey-Attoh, S. (1992) An analysis of household valuations and preference structures in Rio de
Janeiro, Brazil. American Journal of Agricultural Economics, pp 183-198.
Besanko, D; Dranove, D.; Shanley, M; Schaefer; S. (2004) Economics of Strategy, John Wiley &
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Fávero, L. P. L. (2005) Precificação e comercialização hedônica: uma aplicação no mercado
imobiliário varejista da região metropolitana de São Paulo. São Paulo. 319 f. PhD’s degree
thesis - School of Economics, Administration and Accountancy, FEA - Universidade de
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Figlio, D.; Lucas, M. (2004) What’s in a grade? School report cards and housing prices. American
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Griliches, Z. (1961) Hedonic price indexes for automobiles: an econometric analysis of quality
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housing market. Journal of Urban Economics, No 8, pp 47-68.
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Rosen, S. (1974) Hedonic prices and implicit markets: production differentiation in pure
competition. Journal of Political Economy, Vol 82, No 1, pp 34-55.
Sartoris Neto, A. (1996) Estimação de modelos de preços hedônicos: um estudo para residências
na cidade de São Paulo. São Paulo. 74 f. Master’s degree thesis – School of Economics,
Administration and Accountancy, FEA - Universidade de São Paulo.
Silver, M.; Heravi, S. (2004) Hedonic price indexes and the matched models approach. The
Manchester School, Vol 72, pp 24-49.
Vasconcellos, M. A. S.; Alves, D. (2000) Manual de econometria. São Paulo: Atlas, pp 128-142.

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Organisational Solutions for Supporting Knowledge
Management
Péter Fehér
Corvinus University of Budapest, Hungary
[email protected]
Abstract: Knowledge management activities became important part of knowledge oriented organisations, like
software development companies. These activities can be supported by technological and organisational
solutions. This paper concentrates on the organisational support factors of knowledge management activities
in the software development industries, and examines the role of organisational design, structures, processes,
communication and management support, while highlights the challenges.

Keywords: KM strategy, software development, KM processes, influence factors, organisational factors

1. Introduction
Knowledge has become one of the most important strategic resources of organisations, so they
must be very careful when they handle and use those resources. Knowledge management (KM)
deals with activities, which related to the knowledge of the organisation. In KM, three main
approaches can be identified:
ƒ Creating new knowledge and enabling innovation based on the development of organisational
knowledge and learning procedures. (Nonaka and Takeuchi, 1995; Wiig, 2000; von Krogh and
Grand, 1999);
ƒ Transferring organisational knowledge inside and inter organisations (Rubenstein-Montano et
al, 2001b), and systematic use of knowledge in order to support organisational goals (KMRR,
2000).
ƒ Evaluating organisational knowledge and intellectual capital, so in this case the role of
knowledge management is creating value, based on intangible assets (Sveiby, 1997).
By supporting these goals, organisations should create the required environment, they have to find
the required technological and organisational solutions to support these processes (Allee, 1997). In
the history of knowledge management two different directions were arisen (Sveiby, 2001): People
track KM believes that knowledge is embedded in human minds and organisational processes,
therefore philosophical, sociological, psychological and management approaches are useful for
managing personal competencies and behaviour. IT track KM deals with explicit knowledge by
acquiring, recording and transferring knowledge via IT solutions.

1.1 Knowledge management supporters

Neither the technological, nor the organizational factors can establish KM activity, but both can
improve the efficiency of those activities (Bixler, 2002; Hendriks, 1999). Based on the researches of
knowledge management enablers and supporters (Wiig, 1999; Tissen et al, 1998; Rubenstein-
Montano et al, 2001b; Lai és Chu, 2000; Stankosky, 1999; Fehér, 2005), the following main groups
can be distinguished (Figure 1):
ƒ The role of a knowledge management strategy is to support organisational goals through
defining knowledge management processes, supporting tools and environment (von Krogh et al,
2000; Earl, 2001). Knowledge management strategies are vital for successful knowledge
management practices (Truch and Bridger, 2002).
ƒ Technological solutions provide the possibility of effective management of codified (store,
process, transfer) knowledge. Information and communication technologies (ICT) decrease the
barriers of knowledge sharing and transfer. Although IT solutions (knowledge management
support systems - KMSS) have a key role in supporting KM practices.
ƒ To understand the possibilities and limits of KMSS is a challenge of non-IT professionals, and
the decision makers of organisations. There are several possibilities to support KM processes:
creating knowledge by data-mining systems; discovering knowledge by intelligent agents;

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supporting cooperation, coordination and communication; using knowledge repositories or

applying expert systems (Lawton, 2001).
ƒ The possible supportive factors of organisational solutions are widely discussed in the general
management, and KM literature. Researches presented that even each of the general
management factors can have effects on KM practices: organisational structures, processes,
communication platforms and even leadership behaviour.
ƒ Although human resource management is a vital part of the group of non-technical solutions,
especially in the case of knowledge management it has significant role in managing the
embedded and mostly tacit knowledge of employees. Human resource management activities
have to face the more and more important selection of valuable and appropriate employees, the
different motivation factors of knowledge workers, and also the increased requirements of the
management. The supportive culture can have the highest impact on KM, which is mostly based
on trust, and heavily emphasised by leadership styles.
Concentrating on these factors themselves is not enough, but practitioner should not forget that in
order to measure the effectiveness of any practice or process, a well-defined measurement system
is required, with feedback possibilities (Ahmed et al, 1999). Measurement can include the
monitoring of performance indicators, analysis of process effectiveness, questioning workers in the
KM system.

Figure 1: Simplified model of knowledge management supporters

1.2 Role of organisational solutions in KM

The goal of this paper is to present and analyse the role of organisational solutions in knowledge
management. The interdisciplinary characteristic of knowledge management is strongly
emphasised in the area of organisational solutions, even if the role of human resource
management is not discussed in this topic. But since knowledge management activities are
obviously performed in organisations, organisational solutions cannot be neglected.

Based on the organisational design approach the performance of an organisation is the result of
strategy, organisational environment and the combination of individual behaviours (Myers, 1996).
The role of organisational design is to create a supportive organisational environment to help the

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realisation of organisational goals that include the combination, coordination and control of
organisational resources.

Therefore Organisational Design has an important impact on organisational structures and

organisational processes. Newly arising organisational structures integrate different solutions (flat
organisation, autonomy, self-managing groups, empowerment, flexibility, etc.) in order to allow the
flow and creative use of knowledge and to motivate knowledge workers. While according to the
contingency-theory the organisational structure is determined by the environment, the knowledge-
based approach emphasises that structures should change in order to support the efficient use of
internal resources. (Prusak, 1996). Conscious organisational design should also concentrate on
creating communication platforms: occasions and physical space for personal knowledge sharing.

In every organisational solution arises the role of the management. Questions relating to
organisational structures are connected to questions of delegating tasks and involving employees.
Scarborough (2003) emphasises the behaviour of managers, as a leading example that workers –
in case of trustworthy manager - accept to follow. General organisational behaviour theories
research this question, as the field of leadership (personal leading, leading style), where leading
style and motivation questions are strongly connected. According to Guns (1998) a good
knowledge leader must show good example to the workers of the organisation by having a clear
vision about the position of the organisation that can be achieved by conscious use of knowledge.

2. Research methodology

2.1 Qualitative and explorative research

Qualitative researches should be conducted in research areas, in which there are no mature,
commonly accepted concepts, methods and methodologies (Elenurm, 2003). In the field of
knowledge management, even the basic concept of knowledge has no shared definition. Because
knowledge management is at the frontier of different scientific areas, approaches and
interpretations can be radically different.

In qualitative researches, there is the possibility to explore thoughts, definitions and assumptions of
researched persons and organisation, namely the context of research. In the complex field of
knowledge management, researchers have more possibilities to explore new, not expected results
that are relevant to research (Oakley, 1999). In qualitative research, analysis of numerical data is
also possible, but the main emphasis is on deep exploration and understanding of relationships of
the research area (Blaxter et al, 2001).

A special characteristic of knowledge management is that researches should be explorative,

instead of hypothesis testing, because of the immature nature of the field. The goal of this research
is the deep examination of a quite unexplored area.

2.2 Case study based research

Among the tools of qualitative research approaches, the case study based research method is the
most suitable, because it provides the possibility of deep understanding. Based on Yin (1993), case
study based research should be used, when the field of research is wide and complex. The
research can answer the questions of why…? and how…?, but the questions should be posed by
the researcher (Yin, 1994). Case study based researches are suitable for testing, developing and
competing theories (Eisenhardt, 1989). This case study based research is complemented by
statistical analysis.

2.3 Scope of research

The targeted area of this research is the behaviour of software development companies, related to
the management of knowledge. Software development requires knowledge that is embedded in
products (software), and knowledge that describes organisational processes. In this case the area
of activity by itself justifies the requirement of conscious management of knowledge. The

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processes and tasks of this industry are knowledge-intensive, because of the following conditions
(Starbuck, 1992; Sveiby, 1992):
ƒ Organisational value-creating processes cannot be fully standardised: although software
development processes could be standardised at high level by methodologies (feasibility study,
planning, physical/logical modelling, programming, testing, etc.), but in each task creativity and
adaptation is required.
ƒ Activities require high-level of group-work and cooperation, that are performed in projects;
ƒ Employees are well trained, creative. Quality of products and services are determined by the
capabilities of employees.
In the research 72 cases – software development organisations – were examined, that are
identified with a code of three letters in this study. The source of the cases is partly the European
Software Process Improvement database. The research is focusing on knowledge management
solutions in software development processes that are based on the own reports of the
organisations. The deep, detailed description provided the possibility for examining relationships
that would have been ignored by using only statistical analysis. Through quantification of cases,
statistical analyses were also possible. To meet these requirements of the research, the detailed
analysis of knowledge management development projects of researched organisations were
analyses. Through this method the hidden relationships and connections were explored. These
findings were used to interpret the results of statistical analysis, that were collected through
structured questions of a questionnaire.

By now, knowledge management is considered to be essential part of software process

improvement models (Meehan and Richardson, 2002). Process improvement approaches
emphasise well-defined and standardised use of processes, which requires the disposability of the
required knowledge. In process improvement models, the demand for knowledge sharing is also
important, in order to decrease the dependency on employees who are single owners of critical
knowledge. Therefore knowledge management has vital, either direct or indirect role in software
process improvement projects (Meehan and Richardson, 2002).

3. Organisational supporters in KM projects

3.1 Management role and leadership

In knowledge management projects – as in every project activity – the management have an
important role in providing support for project goals, but they also have to set an example for
employees about the required behaviour and new values of the organisation (Guns, 1998). During
the research both the type of management support and its necessity was examined from the point
of view of the KM project (Table 1 and 2).
Table 1: Management roles
Managerial role Rate of companies
Oppose-tolerate 1,4%
Tolerate 5,6%
Support in words 13,9%
Support in actions 59,7%
Support with incentives 5,6%
Not determinable 13,9%
The management has not supported the KM projects only in a few cases, because they either
preferred another solution, or they did not accept that the project goals can also support the
organisational goals. The lack of support did not mean the failure of these projects.
In only one case did the management oppose the knowledge management
approaches, or rather they tolerated this project only with limitation (therefore the
project could be at least partly successful). At SCC company when establishing the
project the leader of software development department succeeded in obtaining the
support; but when he and several key-position employees left the company, the
reorganized departments could not keep the support. Referring to the lack of

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resources the management did not support the continuing of the project. Although the
management later authorised the project, resources were not provided. Because the
project participants felt the indefensibility of this chaotic situation, university students
were hired to execute the necessary developments. The biggest problem in this
project was the lack of management support, instructions and vision of change, based
on the opinion of employees.
In other cases the managers only tolerated the activities, for which they did not provide additional
resources, so the activities were accomplished and kept alive because of the self-effort of mid-level
managers and employees. The fact that it was successful in spite of the passive managerial
tolerance indicates that the lack of the managerial support does not mean automatic failure of the
projects; however it affects the execution. In such cases engagement and enthusiasm of
employees is important. The lack of support also affects the training and knowledge transfer forms:
if managers do not spend time for these tasks, only in-the-job training (mentoring system) and the
self-learning remain the only useful form personal development activities.
At CTE managers basically agreed with training and learning approaches of
employees, however they did not provide timeframe for these activities, and they did
not support and acknowledge these volunteering employees. The management
handles knowledge sharing in a similar way: until knowledge sharing has no impact on
operational work, it is free for everybody to share their knowledge and help others.
Because of this management approach only informal knowledge sharing solutions are
existing – but on a very low level –, and employees mostly depend on the own,
personal knowledge.
At the PRO company, in the first phase of change top management was very
committed and supported the project, therefore results were achievable. In the second
phase a contracting process was delayed, and it has deep financial impact on the
organisation. Starting from this point, the management concentrated on daily,
operative problems instead of the long-term goals. In this phase of the project
employees did feel the lack of management commitment, the required support
disappeared, that questioned even the retaining the already achieved results. Based
on the original plan of the project leaders, completed project results should be
financed from the operative budget, but because of the lack of support, the financial
background became uncertain.
A positive, but still passive managerial approach is the public, verbal support project goals and
achievable results. It is a sign of management commitment, but does not mean additional
resources. It rather has impact on the motivation of employees, and mid-level managers of projects
can know that their work is important for the company.

Providing additional resources for a project indicates the active support of management.
Organisational structures and roles can be changed only with this active background. Based on the
research more than two-third of the organisational changes (69,7 %) were realized in a way that
the managers supported the project goals in practice. Without the support of top managers
considerable changes cannot take place in the organisation.
At MTE company the condition of starting a change management process was the
change of the leader of software development department. The new leader was
committed to the required changes, and set an example for the employees of the
expected behaviour.
At AOI the change of organisational processes and culture processed in a very short
time range. Managers continuously set good examples: they participated in every
process, in every task, and supported the initiative. Even the employees themselves
accepted the changes enthusiastically, and the continuous improvement and
development became a part of the organisational culture.
At AMT managers not only verbally supported the project goals, but they were the first
who used the new solutions, and they take part personally in the project. By this way
managers set a good example of the required new values.

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The highest level of management support is the introduction of incentive solutions. Incentives were
used in organisations, were projects started because of an internal initiative instead of the pressure
of the market. External pressure and increasing level of competition themselves were enough to
motivate for employees, but without these pressures the motivation should be artificially
established.

Although managers supported (or tolerated) projects on different levels, employees did not mention
the necessity of management support in every project, in order to achieve success (Table 2).
Based on the research results, success can be achieved even in the case of the lack of
management support, but supported projects could end as failure. In most cases the management
support was required.
Table 2: Necessity of management support
Necessity of management support Rate of companies.
Not necessary 5,6%
Partially necessary 12,5%
Determinant 58,3%
Not determinable 23,6%
Based on the research, in case of successful projects the expected management support level was
lower; while in case of unsuccessful projects it was higher; and between the degree of the required
managerial support and the success the correlation is negative. Based on the experienced,
management support and involvement in projects was a success factor, and the lack of support
considered to be a failure factor.
Between the managerial support and the result weak (0,218) correlation can be
showed (tested on 0,05 significance level);
Between the necessity of the managerial support and the result also weak negative (-
0,227) correlation can be indicated (tested on 0,05 significance level);
Between the necessity of the managerial support and the level of managerial support
the correlation is also weak (0,249) (tested on 0,05 significance level);

3.2 Strengthening communication

Increasing the communication between the employees facilitates primarily the transfer of tacit
knowledge and hardly formalisable experiences. In 61,11% of the examined cases communication
development was emphasised by both formal and informal solutions. Formalized solutions of
increasing the personal communication include the regular and frequent meetings. Meetings limited
to individual projects are accepted widely; but wider approaches also occurred. In the case of
organisational or inter-project meetings, wider exchange of knowledge and experience can be
accomplished.
The INT company wanted to identify mistakes emerging during the development
process. The exploration of reasons was supported by „brainstorming” sessions after
identifying the mistakes. In these sessions employees were encouraged to explain
their opinion for a larger audience.
Increasing the non-IT communication forms was observable primarily in organisations following
personalization strategy (0,617 strong correlation). In projects, where improvement of
communication was emphasized, the rate of success was higher; while in unsuccessful projects the
improvement of communication was less demonstrable. Based on these experiences, increased
communication has impacts on success rate (0,263 correlation).

3.3 Features and changes of the organisational structure

Software development companies mostly organised themselves on a project-structure. In projects
employees form a temporary structure, based on their knowledge, skills and competences. One
employee may work on several (2-3) projects at the same time. Well-educated knowledge workers
perform projects. Managers rather control the strategic decisions, while the operative decisions are
made on lower levels, primarily in the projects.

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During knowledge management projects, in 52,78% of the cases organisational structures were at
least partly changed, but changes have no impact on the project-based organisational model.
Therefore these changes have only low impact. Mostly new roles, new planning and coordinating
departments were created.

New individual roles support knowledge sharing, transferring and utilisation. These new roles are
created as new positions, or through redesigning existing positions. Such functions are for example
the “reuse expert” (PRO), mentors (INT, CSE, VAL), “problem expert” (SAG) or “process supporter”
(FTC, ASD).

In 31,94% of the examined cases, knowledge related tasks are performed by a central planning or
coordinating unit. These units partly existed before the projects, but their responsibilities were
extended. These new units practically work as knowledge centers, their responsibilities include the
coordination of different organisational functions, knowledge acquirement, codification and transfer.
The CEB company established the Project Monitoring Office, which essentially
operates as a knowledge centre: it collects data about the execution of projects,
crosschecks and analyses them. In case of a new project it supports the organisation
of project starting and the quality assurance activities, and it gives help in project
planning. Simultaneously this unit collects the project experiences for future reuse in
new projects.
The goal of BOT’s knowledge centre (Software Technology Department) is to improve
the software development processes, evaluate new technologies and integrate the
utilizable technologies into the activities of the organisation. Evaluated technologies
can be totally new, or already partly tried by the organisation. New technologies are
evaluated through a prototype project, but in real environment. During the
popularisation activities of these new solutions the members of the knowledge center
are acting as consultants and educators.
Based on the research experiences, new organisational functions and units support knowledge
related activities and the development of the required organisational and technological
infrastructure.

4. Conclusions
The application of organisational solutions was required to provide support for knowledge
management projects and change management activities in organisations. The behaviour of the
management and organisational structures are very tightly connected: in a centralised company the
organisational structure is more hierarchical, while in the case of decentralisation employees has
more freedom, and less control. These empowerment solutions have motivational impacts, but the
right level of centralisation and decentralisation should be achieved.

Knowledge related work includes collection of information, experiments, exploration, and

combination of different knowledge areas. This feature of knowledge related work requires new
coordination mechanisms, because personal behaviour can be only partly influenced. Therefore
the traditional, bureaucratic organisational solution should be changed, and decision making and
acting responsibilities should be delegated to the level of knowledgeable employees. The structure
of organisations should support this new principle, and the free use of individual knowledge and
competences. These non-bureaucratic solutions are especially useful in fast-changing
environments, because organisations are able to change themselves quickly, and adapt to the new
conditions.

Another challenge is the combination of decision tasks and required knowledge, since the transfer
of domain specific professional knowledge is highly expensive (Figure 2). In the case of a
centralised organisation decision making responsibility is at the top of the hierarchy, thus the
activities of the organisation are completely controlled. However, other required information for
decision-making can be found in other parts of the organisations. Collecting and communicating

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them is more expensive, in addition they can become distorted. Making the right decision is
expensive, but in case of inadequate information, the risk of wrong decisions is high.

In entirely decentralised organisations knowledge for decision making is in the right place, but this
knowledge allows decision making only on local problems, and does not reckon with the interests
of the whole organisation. Knowledge-related tasks means challenge for the employees, therefore
tight structures are not suitable for the motivation of knowledge workers.

As an interesting phenomena appeared related to the necessity of managerial support of projects:

in the case of successful projects employees considered the support of the management less
required than in the case of unsuccessful project. This phenomena points it out, that failure factors
can be more easily analysed than success factors, because of the different perception of
employees: in the case of success the real supportive factors are more hidden, although not less
important.

Figure 2: Determination of the optimal decentralisation level (Jensen and Meckling, 1995)

5. Acknowledgements
I have to thank to International Software Consulting Network 1 , for the possibility of conducting this
research, as well for Varpex Plc. (Depozit) for supporting it.

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The Role of an Extensionist in ICT-Based Knowledge
Transfer
Weizhe Feng1, Yanqing Duan2, Zetian Fu1 and Brian Mathews2
1
China Agricultural University, Beijing, China
2
University of Luton, Luton, UK
[email protected]

Abstract: This paper addresses the identification of major actors involved in Information and Communication
Technology (ICT) based knowledge transfer activities. Based on empirical evidence collected from ICT-based
knowledge transfer projects in the Chinese Agriculture sector, a number of key players are examined. These
key players are knowledge source (provider), knowledge engineer, knowledge extensionist and knowledge
user. The paper is a first attempt to introduce and acknowledge the unique role of an extensionist in the ICT-
based knowledge transfer process. The name “extensionist” is borrowed from previous literature and
describes an actor whose role is an intermediary in supporting transferring knowledge towards the knowledge
end user. The word “extension,” in this context, derives from an education development in England during the
19th century when Oxford University and Cambridge University attempted to serve the rapid expansion of
educational needs from the society. It was called “university extension”. In the early 20th century, the word
extension was applied to describe the transfer of knowledge and technology for serving the needs of rural
development by American land-grant universities (Jones and Garforth, 1997). The role of the extensionist is
examined in more detail using a range of ICT-based knowledge transfer projects, such as expert systems and
e-learning systems, for agricultural knowledge extension in China.

Keywords: knowledge transfer, ICT-based knowledge transfer, extensionist, expert systems, e-learning.

1. Introduction
Lin et al (2005) develop a knowledge sender and receiver framework for classifying the
relationships of a knowledge sender and user. They indicate that most literature implicitly assumes
that knowledge transfer occurs under a symmetric complete structure. Within this structure both
sender and receiver are underpinned the same knowledge base and have the same knowledge
capability. In practice the sender-advantage asymmetric structure occurs commonly, within which
the sender has a much larger knowledge base and stronger knowledge capability, and so have an
advantage over the receiver. The mainstream of ICT based knowledge transfer (ICT-KT) literature
is focused on the business sector and examines inter- and intra-organisational knowledge transfer
utilising ICT. With the knowledge base and knowledge capability at similar levels, inter- and intra-
organisation knowledge transfer can be defined as a symmetric complete structure. The number of
actors in the business sector is typically relatively small compared with a Government sponsored
ICT-KT ‘development’ project that sometimes can be very large. For example, a web-based expert
system project in China can have impact on the majority of farmers in a province, which accounts
for over a million farmers. In the education sector, China’s top five e-learning schools at higher
education level have twenty thousand registered rural adult students in each, and on average 2000
students in one subject. With the classification given by Lin et al. (2005), it would be appropriate to
classify ICT-KT practice in development projects as belonging to the sender-advantage asymmetric
structure.

2. Literature review
The process of knowledge transfer is described as two-stages, knowledge transmission by source
and absorption by receiver (Garavelli et al. 2002), or as a multi-stage process (Santoro and
Gopalakrishnan 2000) and multi-stage knowledge flow (Kim et al. 2003). In terms of actors in
knowledge transfer, there must be a knowledge source/sender and a user/ receiver (Garavelli et al.
2002). In addition to the source and user, knowledge transfer intermediaries or brokers have also
drawn some research attention. The role of the knowledge broker is observed as the middleman of
a transfer process for recombining past experience toward new knowledge (Hargadon, 2002), or
helping an organisation in procuring new knowledge (Hinloopen, 2004). Matson et al. (2003)
maintain that the lack of intermediaries may be one of the key reasons leading to the failure of ICT
based KT projects.

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There has been a different understanding in knowledge transfer texts concerning the capability of
ICT’s in transferring knowledge. According to a case study of SMEs in Italy, Bolisani and Scarso,
(1999) argue that ICT can support both explicit and tacit knowledge transfer. Demonstrated with a
model, they explain that tacit knowledge is transmitted via ICT in the form of graphic data, which
transformed from tacit knowledge in the sender’s side and transformed back again into tacit
knowledge in receiver’s side. Cummings and Teng (2003) imply that ICT is effective at facilitating
codified knowledge transfer in a virtual project. Receiver locally based on explicit knowledge
embedded in and transferred with ICT only can develop the tacit knowledge. McCreadie and Rice
(1999) draw a distinction between electronic medium transferable knowledge and all other
knowledge dimensions. In this study, the classification of knowledge is adopted as ICT transferable
knowledge and non-transferable knowledge, given by McCreadie and Rice (1999) and Cummings
and Teng (2003). With this assumption, ICT’s capability in knowledge transfer can be critically
investigated in the context of ICT-KT. If there is knowledge identified beyond the transferability of
ICT, not only the current debate can be answered, but also theory on ICT-KT is further developed.

3. Research methods
To investigate ICT-KT practices with the sender-advantage asymmetric structure, a case study
strategy is adopted. Field investigation and field data collection were based on five projects for
web-based expert systems and e-learning rural development in China. The web-based expert
systems offer knowledge on agricultural production and diseases prevention and treatment. The e-
learning programme provides agricultural education for part-time adult in rural areas. Both
categories of projects have state key research institutes or Universities as the knowledge source
and so have a much larger knowledge base and greater knowledge capability than that of
knowledge users, farmers in rural areas. The profile of cases are summarised in table 1. The case
study was employed in this research because it is a common research strategy in studying the
complex social phenomena. It allows researchers to retain the “holistic and meaningful
characteristics and real-life events” (Yin, 2003:2). In-depth interviews were the major data
collection method for studying the ICT based knowledge transfer process. A Qualitative interview
studies the demonstration of causation based on the description of a sequence flow of events
(Weiss: 1994:179). In-depth interviews can help to find ongoing events and to seek new insights.
To enhance the reliability of qualitative data, all in-depth interviews were tape recorded and
transcribed into MS-Word. Collecting project documents and conducting direct observations
achieved triangulation of evidence.
Table 1: Data and profile of cases and samples
Source of data
Organisation Project and aims
A state agri. Information engineering ES- Transferring crop and fruit farm production knowledge to
centre in Beijing * rural Beijing farmers
a
ES-b Transferring crop and fruit farm production knowledge to
other provinces
A ministry precision agri. Laboratory in ES-c Transferring fish and pig disease diagnosis knowledge to
Beijing large farms in Beijing
ES-d Transferring fish disease diagnosis knowledge to large
fishing farms in Tianjin city
A state key agricultural university in EL-a Delivering e-learning programme to rural adults in Beijing
Beijing and nationwide
*
The abbreviation of project names. ES is for expert system project; EL is for e-learning project

4. Source, brokers and user for ICT-KT

Knowledge transfer takes place at both individual and organisational levels. In this study context,
knowledge transfer activities are mainly institutional settings, which are sponsored by government
and implemented by institutions. So, source and brokers should be defined as institutional entities
involved in different functional tasks within ICT-KT. With the criteria, all project participants
interviewed can be classified into following four roles.

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4.1 Knowledge source

In most knowledge management literature, knowledge source is the starting point of knowledge
transfer. In e-learning programmes, the course lecturer is identified as the knowledge source. The
course instructor is responsible for producing all courses content, designing knowledge presenting
methods, and performing in the ICT production. The e-learning software is an integration of a video
programme for oral teaching, a PowerPoint file for teaching assistance, and a detailed text-
providing course content. In accordance with the context of different projects, knowledge
acquisition approaches vary. For example, in ES-a and b projects, for the development of a fruit
disease diagnosis system, the institution actually has no first-class experts available within the
organisation. It is reported that the publications are the first line references and human experts in
other organisations are visited regularly for checking and confirming the knowledge. Engineer CW
finds that publications help him not only to build his personal knowledge in the domain, but also to
search knowledge in order to reduce reliance on the domain expert. In project ES-d, almost all
knowledge is acquired from many aquiculture experts. Thus, contrary to expectations, the field
study finds that prior to the initiation of some specific projects a knowledge source per se did not
exist and had to be created from both individuals and published resources making it a ‘virtual’
knowledge source in expert system projects.

4.2 Knowledge engineer

The knowledge engineer is identified with important knowledge brokering tasks in ICT-KT. In one
definition, the knowledge engineer is the role who builds the knowledge-based system (Giarratano
and Riley, 2002:6). In case of ICT-KT, the knowledge engineer is defined as having the functional
tasks for developing the specific ICT solution for knowledge transfer. In e-learning programme
development, the course producer is recognised as the knowledge engineer for ICT-KT. In
practice, the course producer is responsible for producing the electronic integration of the course
content given by course instructor. With a comparatively simpler knowledge processing, the course
producer enables the knowledge content being electronically packed up and delivered.

In the expert system projects investigated, the people titled knowledge engineer actively work with
domain experts for expert system development. The study has questioned the possibility of
combining the roles of domain expert and knowledge engineer into one actor, as it was
recommended for the participatory approach of agricultural extension study (Röling, 1990). In the
participatory approach, the researcher has the roles of both creating and transferring knowledge by
the same actor. Nevertheless, empirical practices show significant difference between the
traditional participatory extension and an ICT-KT. In the investigated practices, an agricultural
expert builds none of the identified knowledge engineering work. It is explained that with in-depth
location in specific research subjects, neither the agriculture expert nor the engineer are interested
in crossing the two academic subjects. The profound career risks and research difficulties are the
main reasons. In expert system development, the knowledge engineer sometimes is intensively
involved into system programming tasks. In other cases, the work is left to another divisional task,
for example, system programming. The dynamic knowledge transfer process in practice crosses
the roles of acquiring, representing and encoding human knowledge into ICT. Hence, regardless of
the sub-division of tasks, the engineer for system programming is also recognised as the actor of
knowledge engineer.

4.3 Knowledge extensionist

This study presents a first attempt to introduce and acknowledge the unique role of an extensionist
in the ICT-based knowledge transfer process. The name “extensionist” is borrowed from previous
literature and describes an actor whose role is an intermediary in supporting transferring
knowledge towards the knowledge end user. The word “extension,” in this context, derives from an
education development in England during the 19th century when Oxford University and Cambridge
University attempted to serve the rapid expansion of educational needs from the society. It was
called “university extension”. In the early 20th century, the word extension was applied to describe
the transfer of knowledge and technology for serving the needs of rural development by American
land-grant universities (Jones and Garforth, 1997).

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The investigation of expert system projects finds some agricultural extensionist offices being
responsible for facilitating ICT-KT in the local region. In project ES-b and d, the local agricultural
extension office works under the supervision of project initiators in Beijing. The involvement of local
extensionist is observed for two purposes. Firstly, it is to use the extension office to facilitating the
transfer of complex knowledge beyond capacity of an expert system. Secondly, it is to use their
local experience to support farmer’s absorption of knowledge from ICT. For example, before the
expert systems are applied in rural regions nationwide knowledge engineers gave a training
programme to local extensionists in Beijing where extensionists learned to use the system. Further,
being given more complex knowledge associates and case studies in the related topics expanded
their domain knowledge. Some difficult disease cases were carefully analysed and well discussed
in the training course. All participants shared their own understanding and past experience in that
topic. In regard of the cases recorded in written text in the expert system, extensionist GC pointed
out that “the cases in computer is dead cases to farmer if without further explanation.” For
recommended disease treatments, he said it was “ too abstract to farmer and not applicable in the
local condition.”

In addition to an on campus learning centre, the e-learning programme also set up many local
learning centres around the country under their supervision. Local tutors in those centres are paid
by university to come to Beijing and attend seminars on campus during the winter or summer
vacation. In terms of ICT non-transferable knowledge, e-learning students find that a local tutorial
class is helpful because more localised contextual knowledge is given. Student ZJ stated:
“The course professor never knew my difficulty when he delivers the lecture on
screen. It used to make me sleepy. While we can be given some further explanations
and familiar examples by a local tutor, it increases my interest in continuation of study
using computer based courses…”
Local tutors are found important in laboratory class, teaching much richer knowledge than that is
possible simply through ICT. Student LQ argued:
“In laboratory class, I am able to move around to observe the tutor’s operation
globally. We are encouraged to experience the animal’s body temperature, body
shaking by direct touching. But if we learn it from computer screen, you only see what
the lecturer or photographer would like you to see.”
In light of the completeness of knowledge transfer, it is argued that ICT non-transferable knowledge
should not be left behind. It is not guaranteed all knowledge contents can be represented with ICT
codes. Empirical evidence in both e-learning and expert system applications shows the important
role of a knowledge extensionist in transferring the knowledge beyond the transferability of ICT.
Therefore, the knowledge extensionist is recognised as the knowledge broker to transfer ICT non-
transferable knowledge to ensure the completeness and effectiveness of ICT-KT.

4.4 Knowledge user

A Knowledge user is the end user of ICT-KT. ES projects is developed for farmers, and the e-
learning project for students.

5. The role of knowledge extensionist in ICT-KT

In accordance with the empirical investigation in five cases, knowledge flow can be drawn between
already identified roles. There are two ICT-KT approaches identified, which is defined as ICT-KT
with dual roles of knowledge source, and with specified role of knowledge extensionist.

5.1 ICT-KT with overlapped roles of knowledge source and extensionist

In expert system projects ES-a and c, the project sites are located in the same city as the project
initiator. The role of domain expert overlaps with the role of extensionist to deliver the ICT non-
transferable knowledge to farmer. A framework of ICT-KT with overlapped roles of knowledge
source and extensionist is shown in figure 1.

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 Weizhe Feng, Yanqing Duan, Zetian Fu et al

Figure 1: The co-location actors and knowledge flow

It is argued that the special ICT-KT settings can work effectively in terms of the quality of
knowledge being transferred. Nevertheless, an expert directly transferring the knowledge may
decrease the efficiency in terms of economies of scale in ICT-KT. It is the same for the course
lecturer in e-learning. In regard to this challenge, it is practicable but not preferable in ICT-KT for
ICT non-transferable knowledge to flow directly from expert to farmer, or from course instructor to
student.

5.2 ICT-KT with specified role of knowledge extensionist

In cases ES-b,c,d and EL-a, the specification of local knowledge extensionist plays an important
role in ICT-KT. In a sender-advantage asymmetric structure there is a significant gap of knowledge
base and capability between the knowledge source and end user. Large amounts of useful
knowledge can be codified into ICT and transferred. In regard to the completeness of transferring
the remaining ICT non-transferable knowledge, a face-to-face approach is the only way to have it
done. The framework of ICT-KT with the specified role of knowledge extensionist is shown in figure
2.

Figure 2: The actors at the different locations and knowledge flow

It is argued that it is often necessary to transfer some ICT non-transferable knowledge. The ICT
non-transferable knowledge can be contextually related and difficult in codification. For example, a
veterinarian in ES-b stated:
“When you diagnose a sick pig, you may comprehensively scan the circumstances it
lives, its physical appearances, and its body movement. But to some extent, some
facts only can be known when you are on the sites, e.g. smell, touching behaviour. To
ensure the farmer to learn it accurately, we have to teach their local extensionist to
learn it by direct observation and practice with my supervision. When they return back,
they may find appropriate cases and demonstrate such knowledge face to face to
farmers”.
The traditional knowledge transfer approach for development project is frequently criticised for its
rigidity and bureaucrat in knowledge transfer. Because all knowledge transfer tasks solely rely on
the face-to-face approach from a centralised extension agency down to the local farmer. After a
few layers of people-to-people contact knowledge can be easily lost or distorted. At the same time,

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knowledge transfer cannot achieve a great deal of efficiency by one source when dealing with
many users. In the case where only ICT transferable knowledge is embedded into and transferred
with ICT, knowledge transfer may possibly reach high efficiency compared with the traditional face-
to-face approach. Nevertheless, knowledge content with implicit attributes may be left behind due
to the lack of face-to-face interaction. Such sole technology approach can also be argued to be
weak in the completeness and effectiveness of knowledge transfer. Therefore, a combined
approach implemented in the field gives a reasonable solution to ICT-KT, which emphasises the
importance of the role of the knowledge extensionist in practice.

6. Conclusion
In the ICT-KT framework investigated from a series of cases in web-based expert systems and e-
learning, an important role of knowledge extensionist is identified. With traditional face-to-face
knowledge transfer being criticised for a bureaucratic process that leads to knowledge loss and
distortion, ICT-KT is seen as a technical solution for efficiency and accuracy in knowledge transfer.
On the other hand, solely relying on a technical solution may also lead to the weakness in complete
knowledge transfer. What has been empirically demonstrated in ICT-KT is the specification and
enhancement of the role of the knowledge extensionist. In tradition, the role of extensionist is to
transfer the knowledge and skills in a social network initially, and in the agriculture sector in later
time. As a demand called for the intensive involvement of domain experts, such institutional setting
is mainly beneficial to developed countries that have sufficient experts in the agricultural extension
system. With insufficient agriculture experts and scarce investment, the practices of agricultural
extension in most developing countries are evidenced with a high rate of failure. ICT-KT brings a
new opportunity to developing countries for agricultural development by the mess duplication and
transfer the valuable knowledge of domain experts. But the application of ICT can not override the
ICT’s disadvantage in transferring complex knowledge contents. The role of knowledge
extensionist in ICT-KT is to enhance the completeness of knowledge transfer when the application
of ICT-KT with vast field learners is expected to achievement a high standard of efficiency at the
same time. This study evidenced the importance role of it.

This study also found the limitation of current classification of knowledge properties. By simply
dividing knowledge into the ICT transferable and non-transferable, it may have conceptual conflicts
or cause confusion with another common classification, explicit and tacit knowledge. Explicit
knowledge, by its definition, is easily transferred with ICT. The ICT’s transferability on tacit
knowledge remains vague. Therefore, both further theoretical development and empirical study are
called for.

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The Role of Integrative and Interactive Technologies on
Know-What and Know-How Exchanges in Defense
Organizations
Cécile Godé-Sanchez
French Air Force Academy Research Centre, Salon de Provence, France
[email protected]
[email protected]

Abstract: In the field of knowledge management, Information and Communication Technologies (ICTs) are
frequently viewed as instances of knowledge codification. ICTs use makes knowledge sharing between people
more efficient because they support the conversion from tacit knowledge to knowledge as a ‘code’, referring
here to the informational representation of that specific body of knowledge. Some analysts can therefore
assign a primal importance to codification because it could de facto provide an expansion of knowledge
exchanges between many actors. This paper keeps this last viewpoint in perspective. First of all, we highlight
that any discussion about codification and knowledge sharing have to make the distinction between the kinds
of knowledge exchanged. Factual knowledge (know-what) refers to knowledge about facts and can be easily
codified. Procedural knowledge (know-how) represents knowledge about skills and expertises; it is difficult to
codify because a large part remains irreducibly tacit. Some basic characteristics make different ICTs
appropriate to manage these two kinds of knowledge: integrative technologies effectively sustain management
of existing stocks and sequential flows of codified knowledge in organization. These technologies seem to be
appropriate for sharing know-what between people. Interactive technologies are focused primarily on
supporting interactions: allowing communication, they sustain exchanges of codified knowledge as explicit
knowledge through communication. Interactive technologies are appropriate for sharing know-how in
organizations. From these typologies, we stresse the importance of tacit knowing to any treatment of know-
what and know-how exchanges through ICTs. As a consequence, we highlight the limits of ICTs’ use on
knowledge sharing. The American military organizations appear to be a relevant application case: integrative
and interactive technologies play an essential role in military activities since the adoption of the Network
Centric Warfare doctrine by the American forces. We note the role of tacitness in exchanges of know-what
and know-how through ICTs during military operations.

Keywords: codification, knowledge sharing, Defense organizations, Information and communication

technologies

1. Introduction
ICTs’ implementation in organizations is frequently viewed as instances of knowledge exchanges
and interactions between people. Their abilities to compress time and space and/or to increase
data storage affect both quantity and quality of knowledge exchanges. ICTs primarily support the
conversion from tacit knowledge to knowledge as a ‘code’. They also sustain an explicitation
process of tacit knowledge: email, chat, audio and video-conferencing systems provide a medium
for sharing opinions without automatically codifying them.

It is therefore most important to make the distinction between tacit, explicit and codified knowledge
in order to analyse the effect of ICTs on knowledge exchanges in organization. Tacit knowledge is
highly individual and personal. It is deep-rooted in experiences, actions and values. Explicit
knowledge refers to the ability to express a part of tacit knowledge: ideas, feelings but also
knowledge, which can be broken down into different languages and codes (Nonaka & al. 2001) and
to transfer through “code-books” (Cowan & al. 2000; Foray 2004). That last specific body of
knowledge is codified and refers in part to a representation of a piece of information. Academic
literature commonly considers that tacit knowledge is more difficult to transmit than explicit and
codified knowledge because it requires sharing practical experiences and skills during action. As a
consequence, the role of ICTs’ in tacit knowledge exchanges seems to be de facto restricted, even
if it is possible to explicit a part of the tacitness. On the contrary, ICTs could represent efficient tools
for sharing codified knowledge. This tends towards a strict separation between each type of
knowledge and leads to a high problematical dichotomy between explicit and tacit knowledge.

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We keep that last viewpoint in perspective. In order to analyze the role plays by ICTs on knowledge
exchanges in organization, we primarily concentrate on the complementary of tacit, explicit and
codified knowledge (Amin & Cohendet 2004), because any treatment of explicit or codified
knowledge must include tacit knowing as an essential element. A sharp division between tacit and
explicit knowledge is therefore unsound and meaningless (Polanyi 1966). Johnson & Lundvall
(1994) start with this critical assessment and provide another type of distinction between factual
knowledge (or know-what) and procedural knowledge (or know-how). This typology gives a reliable
analytical framework to understand the closer relationship between explicit/codified and tacit
knowledge.

This article examines the interests and the limits of ICTs’ use on knowledge sharing in
organizations. We highlight that some ICTs are more appropriate than others to manage factual
and procedural knowledge, and most of all, that tacit knowing cannot be put aside when dealing
with any of those types of knowledge. The American military organizations appear to be a relevant
application case as they are undergoing a deep process of technological transformation. The so-
called Revolution in Military Affairs (RMA) is mainly a revolution in information where the new
technologies advances provide an enormous amount of near real-time information, being available
to individuals anywhere at anytime. Network Centric Warfare (NCW) is a military doctrine based on
RMA. It encompasses a myriad of computer networking and knowledge sharing technologies and
is able “to translate information superiority into combat power by effectively linking knowledgeable
entities in the battlespace” (Albert & al. 1999, p.2) This new configuration affects the way people
share knowledge during military operations because they have to manage both with new
technologies and new work practices. Such application case highlights the expectations over ICTs’
use.

This article is structured as follows: next section provides a definition of ICTs and introduces a
typology based on their usual functions. Using the Johnson & Lundvall distinction, the section
underlines the link between their purpose of uses and the type of knowledge that ICT’s are able to
convey. The third and the fourth sections focus on the roles and the limits of integrative
technologies on know-what exchanges and interactive technologies on know-how exchanges.
Examples from the actual US military organizations will highlight the role of tacitness in exchanges
of know-what and know-how through ICTs during military operations. The last section is conclusive.

2. ICTs’ characterization and kinds of knowledge

In the general term ‘information and communication technology’ various natures of technologies
are grouped together even though very different from one to the others and must be therefore
clarified. A distinction can be made based on their functional characteristics. A first category of
ICTs represents a set of tools, which hold the capture, the storage, and the transfer of knowledge.
These ICTs are called integrative technologies (Zack 1999) because they provide a way to
integrate and to manage disseminated knowledge in organization (re-using of knowledge, purging
the redundancies, etc.). Integrative technologies sustain effectively management of existing stocks
and sequential flows of codified knowledge in organization. The knowledge management systems
as databases or Positioning Location Guidance System (PLGS) used by the armed forces are
appropriate to this category of integrative technologies.

A second category of ICTs represents all the applications supporting interactions and cooperation
among people. These ICTs are called interactive technologies (Zack 1999) because they
concentrate on the communication and learning processes. They sustain exchanges of codified
knowledge as explicit knowledge through communication. The synchronous (chat) and
asynchronous (email, forum) communication systems, the Web server (called NIPRNET for non
sensitive activities and SIPRNET for sensitive activities) used during operations are interactive
technologies.

In practice, military organizations (as civilian) manage technological system mixing integrative and
interactive technologies: email, database, electronic whiteboard, etc. are closely linked to one
another and can be sometimes exchangeable. Organizations decide on a technological trend in
line with their goals and the nature of activities that they have to coordinate. For instance, military

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authorities are used to favour radio for giving out orders (US Army) and video teleconferencing for
planning military operations. The communication processes are chosen depending on the nature of
the operational activity. Other tasks do not require any cooperation between people. In this way,
integrative technologies like database are appropriate to maintain coordination by standardization.
Otherwise, interactive technologies can play a major role in supporting integrative applications. For
example, a database build up necessarily requires some degree of interactions in order to discuss
the nomenclature. In this respect forum and chat are typical useful applications.

It appears that each type of communication and/or information process deals with different
categories of knowledge. If integrative and interactive technologies are appropriate for sharing
codified and explicit knowledge, the extent of codification or explicitation is closely linked to the
core nature of the knowledge (Johnson & al. 2002). Johnson & Lundvall (1994) provide a
distinction between knowledge about the state of the world (factual knowledge or know-what) and
knowledge in the form of skills (procedural knowledge or know-how):
ƒ Know-what refers to knowledge about facts. This nature of knowledge is close to what is
commonly called information and can be codified to a great extent: data, nomenclatures,
operational procedures, etc. represent factual knowledge. Know-what is relatively easily
transmitted through books, manual, or formal instructions. Integrative technologies like
database are efficient to share know-what.
ƒ Know-how refers to skills and competences (the ability to do something). It is highly dependent
on experienced-based learning. Parts of know-how may be possible to explicit and/or codify but
there is always a tacit dimension, which remain irreducible because know-how is “sticky” to
individuals; it is embedded in work practices and contexts. As a consequence, know-how is
often difficult to transmit in documents and formal instructions. ICTs are able to transmit only a
part of procedural knowledge. Interactive technologies are most appropriate in situation for
which explicitation is sufficient to improve coordination. But when people have to share a
context, experience, routines, etc., the most advanced technology is not enough to improve
coordination and face-to-face must therefore take place.
Any body of factual and procedural knowledge might be codified (or explicated) to a certain extent.
ICTs’ efficiency to improve knowledge sharing has to be analysed from this perspective.

3. Integrative technologies and know-what exchanges in American Defense

organizations
Integrative technologies represent major ICTs in American Defense organizations. Most of them
relate to shared databases and standards of data manipulation and knowledge transmission.
Positioning Location Guidance System (PLGS) illustrates an up-gradable database used by armed
force on the battlefield.

Various weapon systems are fitted out with PLGS (US Army, US Air Force and US Navy). They are
linked to a Global Information Grid 1 and transmit tactical information in real time: opposing and
allied forces locations appear on the display(s) as coloured icons on a digitized map. Information
relates to troop movements, speed of moving, battle development (level of fuel, ammunitions, etc.).
Such knowledge is factual. In this way, PLGS carries the exchange of a large and various amount
of know-what. Military capabilities are largely possible thanks to PLGS: distant tactical command
centers can effectively coordinate the targeting of weapons and direct battle units in a more jointly
and closely approach. PLGS also helps forces in avoiding friendly fire casualties. Then know-what
codification via integrative technology supports efficiently the coordination of spread out activities?

However, in order to understand the effects of integrative technologies on knowledge exchanges, it

necessarily involves taking into account the complementary nature of codified and tacit knowing. In
fact, some experience returns show that know-what requires a tacit dimension to be efficiently used
during action because the data uniqueness does not guarantee that ‘everybody is talking about the
same thing’. For instance, one of the perverse effects of integrative technologies’ use is the

1
The Global Information Grid (GIG) is the communications infrastructure that supports DoD and related services missions
and functions, and enables the sharing of information between all military entities.

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overflow in information. With the Positioning Location Guidance System, the US Army soldier have
reported that they could feel overloaded with the amount of information, and that sometimes much
of it may have had little bearing on their missions (Wilson 2005). They receive messages and
images over too many different networks, leading them to operate a large number of appropriate
selections, which involve certain skills to manage informational space. Those skills are gradually
acquired through experiences and trial and errors processes. Soldiers learn to improve their
practices and competencies. Thus, coordination via integrative technologies is based on a know-
what and know-how combination.

Another example of the major role-played by tacit knowing on integrative technology’ use is the
PLGS databases management. Standardized procedures are required to exploit know-what: each
soldier save sensors detections, process data, and transmit them to the highest level of command
in respect with the formal instructions. Although standardization is usually highly extended in
processing know-what, some problems are bound to come up. For instance, numerous sensors are
able to detect only one vehicle at a time. If each soldier automatically transmits the information to
the highest level of command, the threat is overestimated. As a consequence, the PLGS tactical
situation is false. This problem in particular tends to improve the soldiers’ ability in enhancing their
work practices. In order to manage the discrepancies between knowledge capture, the reality of
situation and the speed of transmission, soldiers have to learn know-how.

Integrative technologies appear efficient to manage know-what sharing during military operations.
Nevertheless, theses examples highlight the importance of skills and tacit knowing in using know-
what. Know-how represents the ability to put know-what into practice (Brown & Duguid 1998).
Analysing the effects of ICTs on knowledge exchanges requires also studying the role of interactive
technologies on know-how sharing.

4. Interactive technologies and know-how exchanges in American Defense

organizations
Know-how is embedded in work practices, experiences, and organizational routines and context. In
this way, a part of know-how is irreducible tacit and very difficult to share. Interactive technologies
provide the ability to explicit a part of know-how. People are able to take part in a socialization
process: interactive ICTs connect geographically isolated people, provide them a way to
collaborate, and make the cooperation easier. Defense organizations use such capacities.
Planning and executing operations, employing command and control doctrine, or defining rules of
engagement represent processes of know-how creation. Due to their restrictive features, such
knowledge has to be explicated to a certain extent. For instance, command and control doctrine
defines responsibilities and the level of delegation and control during a military operation. Rules of
engagement describe the conditions of the use of force and self-defense, but also the degree of
violence tolerated by states. As a result, explicitation of a part of know-how is needed to see
operations through successfully.

Virtual collaboration via video teleconferencing (VTC) or chat plays a major role in the planning of
operations (Noble 2004), in particular since Operation Allied Force in Kosovo (Stuart II 2000).
Usually, commanders and staffs know each other, or at least share some routines, and work
practices, making cooperation easier. The interactive technologies’ use provides horizontal
relationships, reducing the influence of hierarchical mode and conferring more informal
opportunities to exchange. Inside that virtual workspace, commanders and staffs are able to share
their experiences and skills in discussing, exchanging viewpoints and more conceptual knowledge,
and in negotiating. In this way, synchronous communication processes give the opportunity to
share procedural knowledge and to create new know-how. Such interactive technologies support
the Nonaka & Takeuchi (1995) externalization mode as the conversion from tacit to explicit
knowledge.

Nevertheless, the tacit dimension of know-how is not transmitted by interactive technologies. Some
authors highlight the quality differences between virtual collaboration and face-to-face meeting.
Wainfain & Davis (2004) concentrate on the perverse consequences and ambiguity of
communication systems’ use as the “classic” videoconferencing where groups meet in dedicated

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meeting rooms with video-equipment. Then, the first challenge for the attendees consists in
interpreting each one’s body language and gestures, especially as the number of members
increases. VTC limits nonverbal, para-verbal and status cues and reduces the quality of the
knowledge exchanged. Participants are also less willing to engage a discussion and find a solution.
VTC appears persuasiveness than face-to-face, in part because of the poor image resolution and
the delays in VTC’s audio. These disadvantages explain why VTC tends to be less social and
cohesive than immediate relationships. It means that VTC only achieves a part of the socialization
process. Such ambiguities in military operations are not without any consequences. For instance,
during the planning of operations, one of the most essential proceedings is the commanders’
intentions. Experience returns report that the use of VTC leads the participants to question the
command intent (Stuart II 2000; White 2002; Fox 2004). The poor quality in know-how exchanges
constrains the commanders to clarify their objectives, in most cases in a face-to-face meeting.
Face-to-face conversations appear to be the most efficient communication mode for those who had
to take actions based on what was perceived to be the commander’s desire. It is possible with
Interactive technologies to explicit a part of know-how but it is very difficult to convey the
development of the thought if not on a face-to-face basis. If virtual collaboration via interactive
technologies improves coordination and provides tangible benefits, it also tends to develop
misunderstandings between participants. When decision needs all aspects of know-how to be
efficient, interactive technologies are not suitable anymore and face-to-face becomes essential.

5. Conclusion
Using the military cases, this article analyzed the effects of appropriate technologies on knowledge
exchanges in American Defense organizations. The aim is to draw attention on complementary
nature of tacit, explicit and codified knowledge.

First, the results highlight that integrative technologies are useful to share know-what.
Nevertheless, to put such knowledge into practice, know-how is necessary. Secondly, interactive
technologies appear to be more efficient to exchange know-how. Even so, the most advanced
technology is useful to a certain extent. Face-to-face conversations play a major role when
commanders have to exchange their deep thoughts and/or to explain their intents.

These conclusions highlight the limits of ICT’s use on knowledge exchanges: a part of tacit
dimension of knowledge (as know-what and know-how) is very difficult to transmit, even through
communication systems. Such part of knowledge is embedded in work practices and organizational
routines and cannot be separated from action.

References
Albert, D., Garstka, J. & Stein, F. (1999) Network Centric Warfare: Developing and Leveraging
Information Superiority, DoD C4ISR Cooperative Research Program, Washington.
Amin, A. & Cohendet, P. (2004) Architecture of Knowledge: Firms, Capabilities and Communities,
Oxford University Press, New-York.
Baumard, P. (1999) Tacit Knowledge in Organizations, Sage, London.
Brown, J. & Duguid, P. (1998) “Organizing Knowledge”, California Management Review, Vol. 40
(3), pp. 90-111.
Cowan, R., David, P. & Foray, D. (2000) “The Explicit Economics of Knowledge, Codification and
Tacitness”, Industrial and Corporate Change, Vol. 9 (2), pp. 211-54.
Foray, D. (2004) The Economics of Knowledge, MIT Press, Boston.
Fox, G. (2004) Virtual Collaboration: Advantages and Disadvantages in the Planning and Execution
of Operations in the Information Age, Naval War College, Newport.
Johnson, B. & Lundvall, B. A. (1994) “The Learning Economy”, Journal of Industry Studies, Vol. 1
(2), pp. 23-42.
Johnson, B., Lorenz, E. & Lundvall, B. A. (2002) “Why All This Fuss About Codified and Tacit
Knowledge?”, Industrial and Corporate Change, Vol. 11 (2), pp. 245-62.
Noble, D. (2004) “Knowledge foundations of effective collaboration”, 9th International Command
and Control Research and Technology Symposium, Copenhagen, 14-16 September.

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 Cécile Godé-Sanchez

Nonaka, I. & Takeuchi, H. (1995) The Knowledge Creating Company, Oxford University Press,
Oxford.
Nonaka, I., Toyama, R. & Byosiere, P. (2001) “A Theory of Organizational Knowledge creation:
Understanding the Dynamic Process of Creating Knowledge” in Handbooks of
Organizational Learning and Knowledge, Diekes, M., Berthonantal, A., Child, J. & Nonaka,
I. (Eds), Oxford University Press, New-York, pp. 491-517.
Polanyi, M. (1966) The Tacit Dimension, Routledge & Kegan Paul Ltd., London.
Stuart II, R. (2000) Network Centric Warfare in Operation Allied Force: Future Promise or Future
Peril?, Naval War College, Newport.
Wainfain, L. & Davis, P. (2004) Challenges in virtual collaboration: videoconferencing,
audioconferencing and computer-mediated communications, Rand Corporation, National
Defense Research Institute, Santa Monica.
White, J. (2002) Retrospect of Information Technology’s Impact on Society and Warfare:
Revolution or Dangerous Hype?, Naval War College, Newport.
Wilson, C. (2005) Network Centric Warfare: Background and Oversight Issues for Congress, CRS
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pp. 45-58.

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Sharing Project Knowledge: Initiation, Implementation
and Institutionalisation
Waltraud Grillitsch, Alexandra Müller-Stingl and Robert Neumann
Alpen-Adria-University of Klagenfurt, Austria
[email protected]
[email protected]
[email protected]
Abstract: Interdisciplinary project teams foster the creation of new ideas and innovations to meet customer
needs and to challenge competition under the pre-condition that the team and knowledge transfer processes
are running smoothly and efficiently. In practice knowledge created in projects often is lost when the team
splits up and the members are returning to their tasks in the organisation. This leads to inefficiency as time
and money is spent in inventing things, which are already known inside the organisation. The case study
outlines how knowledge and potentials for improvement can be explored and synergies can be realised. 0ur
approach offers guidelines to accumulate transfer and utilize knowledge acquired in projects to improve future
business. Through knowledge oriented concept the consulting and software implementation process of the
case study’s company is optimised. This offers the possibility to integrate organisational change management
know-how and furthermore it gives the opportunity for a critical reflection of finished and ongoing projects. In
this process “best practices” and “lessons learned” are explored to foster a better planning and realisation of
projects on the long run.

Keywords: Knowledge sharing, best practices, lessons learned, knowledge creation, community of practice

1. Introduction
The paper highlights the importance of an intelligent approach to knowledge sharing demonstrated
on a practically approved procedure of knowledge sharing on a project management level.
Furthermore the concept and process for a successful institutionalisation of Knowledge
Management to foster communication and sharing among people is described via a case based
systematic through a procedure of “knowledge oriented project supervision”. Starting from the
case’s background and major occurring problems (chapter 2), the necessity of sharing mechanisms
in practice and the possibilities to initialise knowledge sharing is explained (chapter 3). It illustrates
how experienced Lessons learned of old projects can be integrated to improve new projects. The
implementation of knowledge sharing procedures needs specific guidelines (chapter 4); following
the case a process-oriented focus to optimise project management via Knowledge Management
techniques is visualised. Specific criteria for success are needed to foster and promote the whole
process (chapter 5). Key facts are reflected and different points for a further discussion are
highlighted (chapter 6).

2. Background and problem identification

The case study’s company is dealing with specialised “Customer Relationship Management”
(CRM) software and wants to optimise processes in the consulting department. The consultants
are responsible for the implementation of the software in banks worldwide. Over 90 % of the
turnaround is realised with international customers in Europe, Africa and Asia. The Marketing and
sales department is responsible for the acquisition of customer orders; software specialists develop
the individualised software solutions in house. Marketing and sales passes the projects to the
consultants; their main task is the implementation of the software on-site at the customer. The
consultants are working in different project teams, work overextends them and there is no time to
train newcomers. The consultants are specialists in CRM-software but most of them are not
experienced in organisational change processes, which are accompanying software
implementations.

The consultants have changing roles in different projects because the project teams are arranged
depending on urgency and disposability. Dealing with special customer requests they have to be
familiar with every detail of the software features. In addition they need competence in consulting,
organisational development and change management to ensure a successful implementation of the

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 Waltraud Grillitsch, Alexandra Müller-Stingl and Robert Neumann

software at the customer. The project managers are coordinating different projects. Due to the fact
one team’s project manager can be a participant of another team, overlaps and bottlenecks might
arise.

As a result of these conditions the training of newcomers proves to be the experienced consultants
predominantly process a long-term process and important projects. To provide good customer
service and avoid internal problems the top management wants to improve project management
through Knowledge Management. As the enterprise has few experiences with Knowledge
Management methods, our institute as external partner is consulted for the implementation of
knowledge sharing process. The consulting department is selected as Knowledge Management’s
first field of realisation. Exchange of experience in this area promises a high profit because
coordinating the software project processes and the implementation are challenging and frequently
similar difficulties occur at different customers.

Experiences gained in projects are only partly available for colleagues because they are not
systematically shared and documented; exchange of experience works only through informal talks.
If required meetings within the individual project teams are called up; a general and organized
exchange between project teams does not take place. Frequent problems and solutions are not
analysed and productively used for new projects. Consultants are often out of the office; therefore
informal knowledge exchange is difficult. The systematic approach towards Knowledge
Management should help to conquer these problems and to discover and use synergy potential.

3. Initialisation of project knowledge sharing

Theory and practice show that employees spend about 30 minutes per day to search for needed
information to work effectively. This is approximately five per cent of the whole working time. (Heck,
2002). Initiatives to share knowledge or to show ways to use knowledge sources help to minimise
this search time and the related costs. Rosenkopf advises to focus on dynamic knowledge
networks (e.g. among employees) to realise competitive advantages. These networks influence
technological and performance outcomes whereby a systematic approach to information and
knowledge is needed (Rosenkopf, 2000). Company project experiences consistently show that
projects mostly stay unquestioned. This can primarily be seen as a reflection of the existing project
culture of a company, e.g. a company jumps from project to project without questioning relevant
criteria for success or failure of specific project steps. If anything is questioned than just who are
the ones responsible for the failure: a play of accusing and justification instead of learning from
failures and improving systems, procedures or processes in the organisation. Learning from each
other seems to be out in the age of “distance learning” via CD-ROM or e-learning tools
(Pfeffer/Sutton, 2001) but learning by doing and learning from experiences is very effective. In
many cases when problems have to be solved or “new avenues to fast track thinking and
innovation” have to be explored (Rylatt, 2003): gather the right people around the table!

Because of the aforementioned problems and basic conditions in the working environment of the
consultants, knowledge oriented project supervision meetings are introduced in order to conquer
the increasing pressure of quality in consulting. In this context first the term “knowledge-oriented”
refers to knowledge acquisition, reflection and use that is realised in these project supervision
meetings. Sedond the term “supervision” is originally rooted in the American linguistic area and
means control and/or monitoring (Scobel 1995). In this process “best practices” and “lessons
learned” are explored to foster a better planning and realisation of projects. Through this process in
our case the consultants have the chance to improve their work and to practice critical reflection.
Internal facilitators are trained for a better future knowledge transfer. Furthermore the possibility for
holistic learning is enhanced trough the documentation and transfer of the results to all involved
colleagues.

For knowledge-oriented project-initiatives it is recommendable to start with the constructive

reflection of ongoing or already finished projects. In our case consultants who had to implement a
specific IT-system shared their knowledge in continuous project supervision meetings to discuss
their project experiences in a structured way. It makes sense to use projects and the
consequentially gained “lessons learned” and “best practices” in the sense of KM to learn for

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similar future projects. For that purpose it is necessary to openly ask and honestly answer critical
questions during project meetings as well as during a concluding project-review, and to document
the results: (1) What was good, what was bad? (2) What would we change as a project team, if the
project started again? (3) What did we learn from the specific project? (4) What do we know now
and what didn’t we know before? With questions like that project meetings get a new structure.
This certainly means a change in the sense of a knowledge-oriented handling of projects that are
always a mirror for the organisation and its organisational culture. The results of the supervision
meetings have to be documented and shared with the colleagues; information and communication
technologies are helpful in this context to foster knowledge transfer. The following illustration shows
how “lessons learned” can be included to improve new project activities. The left column shows the
old way; projects in practice often stay unquestioned and the potential for learning and further
development is lost. The right column underlines an ideal solution to improve current and future
processes through including “lessons learned”.

Figure 1: Integration of project experience in new projects

Project risks like planning-, conversion- and surrounding field risks (Redlefsen 1997) need to be
made conscious and prevented purposefully. External supervisors accompany the meetings, in
order to ensure that relevant, usable final results in the form of "best practices" and "lessons
learned" are developed in the project. In this connection supervision is not top down guided as a
form of control, but is organized as a cooperative, critical and steered process. Central aims of
knowledge-oriented project supervision are: systematic examination of the own work, the
production of ideas and mental impetuses by the experience of others and gaining insight of
colleague’s work. The participants develop individual learning and consulting competence through
the detailed analysis of projects and the discussion in supervision-groups, whereby their work is
substantially facilitated and professionalized at the customer.

4. Implementation of project knowledge sharing mechanisms

Starting knowledge-oriented project supervision the respective project must be defined, whereby
tasks, goals and strategies are considered and the basic conditions for the project are clarified. On
the basis of a prepared problem list, completed during the meetings, background and causes are
analyzed. Resuming ideas for solution and a process design are developed, which are
operationalized and concretized in an action-list. Measures must be evaluated for negotiability and
practical fit ("obstacle course") through a critical test of the action-list, whereby simulations and
worst-case scenarios can be used as supporting tools. Due to experiences in projects and
reflection in the meetings "lessons learned" are documented and possibilities for improvement are
compiled. A structured and clearly communicated procedure for introduction of knowledge oriented
project supervision contributes crucially to a successful progress. The transparency of the process
reduces uncertainty and contributes to the acceptance by the concerned employees.

The supervision takes place in a multi-personal-setting, i.e. the consultants meet in relatively
regular intervals in a "group-system", which stands "differently connected to the institutionalized
social systems" (Schreyögg. 1991), whereby each participant has the task to actively describe a
"learning project". Per meeting a learning project is presented, discussed and analyzed by the

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supervision group. “Learning projects” are respective problem fields and challenges as well as
solutions from the work of the consultants, whereby the following conditions should be given:
ƒ Work basis: The respective subject should be related to the field of activity during the project.
ƒ Significance: The questions brought into the supervision group are important for the respective
participant (no "alibi" exercises).
ƒ Relevance: In the supervision circle behavior, structure and process questions are raised.
ƒ Influence: Each supervision participant has direct influence.
ƒ Process: Problem solutions are developed through an ongoing process.
Interaction: Communication and co-operation are crucial preconditions for a problem solution (link
to KM: knowledge transfer processes).

“Learnings” Project Start !?

“ lessons learned“ and titel/topic/tasks
potential for improvement decisions, targets – strategies
because of reflection background

Realisation-efficiency Trouble list

and practicability Competence
of developed procedures development
Increase of
realisation feasibilit y
“obstacle course” of integration- and Causes
critical test of course of action change initiatives
worst-case-ccenario, simulations

Course of action
Who What Till Wh en R esult
Possible solutions &
Process-design

Figure 2: Guidelines for a knowledge-oriented project supervision process

Important for the success of knowledge oriented supervision meetings are open communication
and the development of a productive meeting culture. The team has to know exactly what are the
reasons and the outcome of the meetings and of their contribution. If the team is not yet familiar
with each other a team-building phase has to be included. From the structure-theoretical point of
view an integration and use of knowledge result only, if the involved actors (“knowledge agents”)
reproduce their knowledge-enriched actions; they have to use “lessons learned” and “best
practices” in daily work. Furthermore they refer in their interactions to changing structures, sets of
rules, and resources. The definition of rules for the supervision meetings, suitable for the respective
context, is therefore essential during the supervision process. For the successful knowledge
exchange between the consultants it is crucial to establish a meeting culture, which promotes the
open exchange, the expression of constructional criticism, and the development of solutions.

5. Institutionalisation of project knowledge sharing for future success

At the beginning of KM intentions one must define the strategy and targets of KM attempts. The
strategic orientation regarding knowledge-based processes and practices depends on
considerations about the organisational purpose. A “strategic architecture” (Hamel/Prahalad, 1995)
for the purpose of knowledge development has to be created which determines how the specific
company will meet its competition in future. This conception contains perceptions about the future
of the specific company, formulated in universal metaphors, analogies, symbols and models, which
represent the core concepts of the company and clarify the self-conception (Neumann, 2000;
Neumann/Stingl/Grillitsch, 2002 und 2004). To use the advantages of knowledge oriented project
supervision in the long run, the supervision meetings must be institutionalised in the organization.
In our case the following steps were undertaken:
ƒ Commitment of top management for the project supervision meetings
ƒ Structured procedure for the implementation

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ƒ Training of internal moderators

ƒ Collection and documentation of “best practices” and “lessons learned”
ƒ Reflection and evaluation of the project supervision meetings
ƒ Improvement of the meetings and the documentation according to participants needs
ƒ Supporting IT-infrastructure to foster knowledge transfer
ƒ Clear roles and responsibilities (in meetings and for documentation)
The quality of the supervision meetings depends on the quality of the participant’s contributions
and particularly on communication and reflection culture in the supervision group. Supervision
acting forms the basis of the "supervision culture" (Petzold, 1998), which is coined by perception
parameters, normative guidance concepts, and interpretation work and action strategies for
supervision work. In order to succeed the desired supervision culture must be coined and
institutionalized from the beginning. Qualitative team supervision provides the feeling of action in a
"safe place", in which the group tackles sensitive topics guided by a reliable supervisor. Without
“direct action and decision pressure” an area for suppressed questions, conflicts and problematic
topics is generated where these issues can be addressed, reflected and clarified (Pühl, 1998). In
this regard the supervisor’s role as a facilitator must give necessary mental impetuses to the group,
without an anticipatory solution or a too strong influence on participants.

Through the spontaneous, in a way self-organised creation of rules, the locally existing knowledge
of the knowledge agents is used in the best way. In rules about learning- and selection processes,
the knowledge and the experiences of the different experts are integrated. Only through the
possibility of relating to knowledge in a current action, knowledge is effective as an “accurate or
valid awareness” (Giddens, 1984) about a situation or problem. In the collective reflection of
activities/projects the problem solving potential is activated. New or improved solutions can be
found which leads in our case to process innovation. These collective activities lead to a self-
referential circle and act as a starting point for further actions, which finally shape the identity of the
system. Everyone is responsible for “sparking ideas” and their transformation into “useful
innovation” (Mauzy/Harriman, 2003). KM has always to do with change whereby the degree of
change should suit the aimed-at purpose to be effective. The most important influential factors for
excellent companies’ performance results and according KM-attempts are fruitful relationships
among people, result-based leadership, communication and teamwork.

6. Discussion and suggestions

Initialisation - in the sense of „cultural change“ knowledge management projects are always highly
complex, multi-dimensional, far reaching challenging areas with numerous impacts (looking right
and left, back and forth, etc.), this results in a mostly consequently, concentrated and adjusted way
of a cascading realisation of separate steps of change. Rethinking and reframing (change of
paradigms, change in consciousness) need to be started at the managerial top-level, because it is
transmitted and carried by them. This means a creation of organisational consciousness through
kick-off workshops and sensibilisation seminars for the realisation of the organisational processes,
the identification of problem areas and for the necessary changes. The top and middle
management activity and commitment is an important multiplier for the success of knowledge
management initiatives. Through the personal commitment and the willingness to realise KM,
multiply available single-activities of KM are constituted as a broad movement. (Palass/Servatius
2001) The main task of managers lies in the creation of a promoting work environment, in which
many people have access to established knowledge and are able to act according to it. Managers
take the position of role models through their activities. They create standards, through the desired
frankly handling and transfer of knowledge (give a limit and demand). Managers need to be the
facilitators of knowledge management projects and they should promote management for
knowledge as an essential criterion for success.

Besides of an evaluation of “present” data, for an analysis and description of the company’s
situation, a specific data feedback and a resulting holistic company diagnosis in the sense of “dual
management” (hard facts resp. indicators for economic situation, market share, capacity, utilisation,
production course, product-market combination etc. and soft facts like character, identity, sense,

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behaviour, communication, climate, culture, management, etc.), a target-oriented realisation of

developed measures and a concerning control of success is necessary. This leads to a cyclic,
iterative process in the sense of a rolling planning to realize the whole target “step by step”. Many
unplanned side effects, backlashes and blowbacks of separate process steps and systemic
interventions need to be played through (in the sense of worst case scenario planning) for the
reduction of unexpected effects. The process of diagnosis carries specific importance. The
diagnosis does not describe just symptoms, but moreover the actual causes for problems,
nuisance, emotions of discontentment and learning-barriers. One should find out, why the
organisation is like it is; why specific results are reached, etc. Every organization is perfectly
designed (structures, strategies, culture, behaviour, etc.) to get the results, it gets. There are also
many different methods, instruments and techniques. We think that the principle of “put the whole
system in the room” is the most useful. This means to work together with a representative
community of organisational members (picture the organisation with its characteristics and ways of
functioning) in a workshop on the possible causes of specific problems. This creates transparency;
makes the problem landscape more conscious; decreases one-sided interpretations, prejudices,
attribution, fantasies and projections and furthermore promotes an open discourse process.

Implementation - time plays a mostly underestimated and important role for the initiation of
planned knowledge management and change-programs as well as for the right timing (kairos) of
interventions (window of opportunity). The related relevant questions are: “How much change is
necessary at what point in time?” and “How much change is useful at the present development
stage?” Through the ongoing serious, open and collaborative answering of the questions an
excessive demand as well as unnecessary burden can be prevented (following the “right”
company’s velocity). Communication, exchange of information and media work is essential criterias
for success in the sense of „management of knowledge and change“. Communication is essential
in each step of the initiative: at the beginning (clear transmission of vision, target, and strategy);
during ongoing processes (feedback, report of actual things/intermediate results for motivation). It
is essential to consider the right time, intensity, use of media and an informational and
communicative language.

Team development and team supervision should help to build, develop and reflectively assist
teamwork. The separate task and target-oriented configured groups pass consequently the diverse
team-dynamic phases of development till they are a powerful, effective, target-oriented, learning
and result-responsible team which is based on functional trust. The primary interest of the task
force is the improvement of the cause, but they know about the interpersonal relations and their
impact on the task’s success probability. The team members need to know about each one’s
strengths, potentials, affinities, interests as well as weaknesses for the classification and
acceptance of roles. Besides this social competence the teams moreover need to have
professional competence and knowledge regarding project management, method and tool use,
techniques of decisioning and problem solving. If it is necessary this can be conveyed in separate
training elements.

Institutionalisation - through team supervision the lonesome existence of the realization goal
getter is reduced. Different process- and result owners come continuously together in supervisory
groups to expand the project specific problems. This means they collectively diagnose the specific
starting situation, promoting and hindering framework, plan separate steps of action and alternative
processes, reflect and prove them reciprocally and go back to practice with concrete realisation
arrangement plans. They use the knowledge of many group-members in similar situations. They
interchange knowledge within a community, communicate and pick up role-specific problem areas,
expectations and misgivings as a central theme. That way they can assist each other, what again
leads to incentives and staying power. Besides this supervisory meetings (escorted by external
consultants in the role of reflectors, process specialists and if necessary responsible for input) the
specific team-members meet each other in the mean time. This helps each other in the way of an
“intervision” for the specific project-work and leads to an identification and use of existing employee
potential.

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7. Conclusion
The cognitive comprehension about the necessity of an efficient utilisation of knowledge in the
company’s code of practice permanently increases, though the company’s pressure of troubles and
change in an increasing knowledge competition primarily provides the increasing probability for
serious steps towards realisation. For this case not only established theoretical models need to be
generated but also feasible ways of implementation in sense of a systemic Management for
Knowledge. For a successful, systematic integration of KM in applied project management and
furthermore for an enhancement of excellent procedures, cross-project supervision meetings are
one possible solution to transfer “best practices” and “lessons learned”. These structured
supervision meetings crucially contribute on the one hand to the social dimension of enterprises
(formal and informal communication and information) and on the other hand they optimise project
processes and give the opportunity to learn from already realised projects (do not reinvent the
wheel!). Effective and efficient knowledge oriented project management lays in the balance of
organisational framework and supporting IT-infrastructure. Each company needs its own
specifically designed and adjusted KM solution to foster innovation and development of business
excellent strategies, structures, processes and products.

Organisational consciousness, as the ability to think in structures and processes (Buchinger 1997),
is the core principle of knowledge oriented project supervision. This competence is developed
systematically, supported by external supervisors, through the analysis of projects. But even
knowledge management is only a kind of construction of reality among many others and does not
supply universal rules for the development of companies. Investment in KM needs to be directly
connected with change and improvement of the organisation step by step. It lies in the hand of the
company itself to put one’s money where one’s mouth is.

References
Buchinger, K. (1997) Supervision in Organisationen: Den Wandel begleiten. Heidelberg.
Giddens, A. (1984) Interpretative Soziologie. Eine kritische Einführung. Frankfurt am Main.
Hamel, G., Prahalad, C. K. (1995) Wettlauf um die Zukunft: Wie Sie mit bahnbrechenden
Strategien die Kontrolle über Ihre Branche gewinnen und die Märkte von morgen schaffen.
Wien.
Heck, A. (2002) Die Praxis des Knowledge Managements. Grundlagen – Vorgehen – Tools.
Braunschweig/Wiesbaden.
Mauzy, J.; Harriman, R. (2003) Creativity, Inc. - Building an Inventive Organization.
Boston/Massachusetts.
Neumann, R. (2000) Die Organisation als Ordnung des Wissens. Wissensmanagement im
Spannungsfeld von Anspruch und Realisierbarkeit. Wiesbaden.
Neumann, R. and Stingl, A. (2003) Knowledge Management Systems and Best Practices.
Corporate Management’s Way to Business Excellence. Proceedings of the IADIS
International Conference. Lisbon, Portugal.
Neumann, R. and Stingl, A. and Grillitsch, W. (2002) Best Practices and Lessons learned in
Knowledge Management Projects. Proceedings of the European Conference on
Knowledge Management (ECKM). Dublin, Ireland.
Neumann, R. and Stingl, A. and Grillitsch, W., (2004) Knowledge-Oriented Project-Initiatives or
How Companies Use their Knowledge to Create a Sustainable Order of Knowledge.
Proceedings of the Conference on Global Project and Manufacturing Management.
University of Siegen, Germany.
Palass, B. and Servatius, H.-G., (2001) WissensWert: Mit Knowledge-Management erfolgreich im
E-Business. Stuttgart 2001, pp. 68 – 75
Petzold, H. G. (1998) Integrative Supervision, Meta-Consultig & Organisationsentwicklung –
Modelle und Methoden reflexiver Praxis. Paderborn.
Pfeffer, J., Sutton, R. (2001) Wie aus Wissen Taten werden. So schließen die besten Unternehmen
die Umsetzungslücke. Frankfurt am Main.
Pühl, H.: Team-Supervision (1998) Von der Subversion zur Institutionsanalyse. Göttingen.
Redlefsen, Ch. (1997) Von der Supervision zu Projektberatung. Salzburg.

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Rosenkopf, L. (2000) Managing Dynamic Knowledge Networks. Day, G. S. and Schoemaker, P. J.

H. (eds.): “Wharton on Managing Emerging Technologies”. New York.
Rylatt, A. (2003) Winning the Knowledge Game. Smarter learning for business excellence. Oxford.
Scala, K. and Grossmann, R. Supervision in Organisationen: Veränderungen bewältigen – Qualität
sichern – Entwicklung fördern. München.
Schreyögg, A. (1991) Supervision: Ein integratives Modell – Lehrbuch zu Theorie & Praxis.
Paderborn.
Scobel, W. A. (1995) Leitfaden zur Supervision. In: Wilker F.-W. (Hrsg.) Supervision und Coaching
– Aus der Praxis für die Praxis. Bonn.

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Using Analytical Hierarchy Process for Evaluating
Organisation Core Competences and Associated
Personal Competencies
Khalid Hafeez 1, Jawed Siddiqi 2, and Essmail Essmail 3
1
Bradford University, UK
2
Informatics Research Group, City Campus, Sheffield, UK
3
Sheffield Hallam University, UK
[email protected]
[email protected]
[email protected]
Abstract: This paper introduces a structured framework to identify organisation core competences and
associated personal competencies involving two key stages. The first stage aims to identify core competence
through a sequential process using Analytic Hierarchical Process (AHP) to deliver robust and consistent data
particularly for the key capabilities determination task. Using organisation core competences as a basis, the
second stage involves a pair-wise comparison methodology to assess related personal competencies. AHP is
once again used to evaluate and prioritise the most appropriate personal competencies that can be linked to
core competences.

The framework is implemented in a construction company. The study's outcomes were verified with the
original interviewees. We believe that AHP methodology helped us in obtaining consistent data by screening
out any subjective anomalies. The assessment helped the company to benchmark its competitive business
performance, and to understand its competence in specific functional areas. Moreover, the framework help the
management to prioritise the most related personal competencies needed for the identified core competences
and to undertake crucial business functions.

Keywords: Key capabilities; core competence; personal competencies.

1. Introduction
The importance of core competence is widely recognised, but its identification process is complex
and many challenges still exist on how such competences can systematically be evaluated. There
has been unanimity that competitiveness of organisation is driven by those core competences it
has (Drejer, 2000). Despite the rich literature on core competence, vague definitions and
exchangeable usage of the relevant term is common amongst academics and practitioners. This is
mainly due to the lack of a constructive identification process (Tampoe, 1994). It is widely
acknowledged that the importance of core competence concept; yet, a concrete organisational
process to identify it is still sought (Javidan, 1998). The literature is divided on how to identify
organisation core competence (Hafeez et al., 2002a; Hafeez et al., 2004).

We argue that it is imperative to specify the portfolio of related personal competencies that make
up and enhance the identified core competences for business success. During our process of
evaluating core competence, the role of human resources as intangible assets importantly emerge.
Core competence is often equally recognised in the form of tangible and intangible assets. It is
argued that organisation should pay equivalent considerable amount of attention to its employees’
competencies once it starts to pursue core competences track (Bergenhenegouwen et. al, 1996).
However, the intangibles' contribution and value-added to competitive advantage is much more
critical and influential (Hafeez and Abdelmeguid, 2003). With stress on the significance of
intangible assets role, Whitehill (1997) points out that tangible assets offer decreasing competitive
advantage against intangible assets and therefore organisations must focus on their intangible
assets. He adds that patents, brands, organisational or process knowledge as other faces of
intellectual capital represent a benchmark to build up competitive advantage.

2. Distinction between competence and competency

Literature often shows conflicting definitions about competence. It has been defined from several
points of views and much ink has been spilt on finding out an accurate distinction between

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 Khalid Hafeez, Jawed Siddiqi, and Essmail Essmail

competence/competences and competency/competencies (Hoffman, 1999; Weightman, 1994).

Competence in the Longman Dictionary of Contemporary English (1995: p.270) is defined as “the
ability and skill to do what is needed”. Competency may be defined as the necessary knowledge,
skills, experience and attributes to carry out a defined function effectively, whilst competence
means those things the whole organisation must be good at to outperform its competitors (Mackay,
2003). At the individuals' level, competencies mean skills, traits, characteristics and behaviours that
distinguish an individual, whereas at the organisational level, competences are those activities that
an organisation has the capability to effectively performing given the required skills and knowledge
(Hafeez, Essmail, and Siddiqi, 2005). According to Armstrong (2000), whilst competency is a
person-related concept, competence is a work-related concept. For this work, we use Whiddet and
Hollyforde (1999) definition where competence refers to an ability based on work tasks and
functions; and competency refers to an ability based on personnel behaviour.
Table 1: The difference between competence and competency
Term Term The Unit
(singular form) (plural form) of Analysis
Competence Competences Organisation
Competency Competencies Individual

3. What Is core competence?

Core competence term was introduced in Prahalad and Hamel’s 1990 Harvard Business Review
article “the core competence of the corporation” to deal with capabilities within diversified firms.
Many global giant manufacturers such as Honda, Sony, Canon, Kodak, Sharp, 3M and NEC, since
then has progressively pursued the path to gain core competence (Gilgeous and Parveen, 2001).
Core competences of organisation are those specific capabilities that represent the "collective
learning" of organisation and provide it with real competitive advantage (Prahalad and Hamel
(1990; 1994). They are the organisation's areas of strength (Javidan, 1998) and things it does very
well. Core competence is an outcome of a deliberate management strategy (Godbout, 2000). Many
practitioners value these concepts as a way of developing new businesses in response to modern
customers. Core competence concept explores how competitive advantage is linked to unique
resources and firm special assets which constitute the basis of value-added process (Post, 1997).
Hayes (2003) simply defines core competence as a unique capability that creates some type of
competitive advantage. Gilgeous and Parveen (2001) emphasize that core competence should:
ƒ Allow the organisation to access a wide variety of markets.
ƒ Make a significant contribution to customer perception.
ƒ Be difficult for the competitors to imitate.
Examples of some of world class organisations' core competences are illustrated in Table 2
(Yeung, 2004).

Table 2: Examples of some global manufacturers' core competences (Yeung, 2004)

Organisation Organisational Core Competence

Intel Processor
McDonald Food preparation process
Sharp LCD technology
Dell Supply chain management
Honda Light and powerful engines

4. Core competence identification

Identifying core competences is a complicated mission (Unland and Kleiner, 1996), as the
underlying process for evaluating the structure of core competence still poses a challenge for
academics and practitioners alike (Hafeez, Essmail, and Siddiqi, 2005). Overlapping and some
times conflicting views about a methodology to link basic related terms such as resource,
capability, and competence to core competence are prevalent (Hafeez, Essmail and Siddiqi, 2004).
In spite of significant contribution Prahalad and Hamel (1990) definition of core competence as a

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"collective learning process" made (Javidan, 1998); further explanation about the mechanism to
identify them is required. Unland and Kleiner (1996) also, comment that although Prahalad and
Hamel definition of core competence is wide spread, its model does not provide details how core
competences can be built and developed. It is difficult to identify core competences and even more
difficult to measure it (Hafeez et al., 2002a; 2002b; 2002c).

5. Core competence and personal competencies

"Competency is about performance" (Weightman, 1994: p. 21). Core competence is created when
distinctive activities and tasks are well performed by individuals and groups (Post, 1997). Core
competence refers to the optimum mix between core technologies and core skills that would
enhance the organisation competitiveness (Baker et al., 1997). Many decision-makers argue that
value added is considerably enhanced through intellectual assets contribution such as human
knowledge and experience. Core competence is often a combination of intangible assets such as
culture and people knowledge, and tangible assets such as technology (Hafeez and Abdelmeguid,
2003).

6. The concept of personal competencies

A person's competency is a set of skills that an individual should possess in order to be capable of
satisfactorily performing a specified job (Baker et al., 1997). Wynne and Stringer (1996) simplify the
meaning of personal competencies as the things a person has to have, know, and do to achieve
the standards required for the task. "Competency is a capacity that exists in a person that leads to
behaviour that meets the job demands within the parameters of the organisational environment and
that, in turn, brings about desired results" (Boyatzis, 1982: Armstrong, 2000, p. 41).

In this work, we use the Chartered Institute of Personnel and Development (CIPD) framework
which highlights seven most widely used competency headings (See Table 3) in order to build a
link with organisational competences. It can be noted that the CIPD framework is derived from the
competencies list introduced by Armstrong (2003).
Table 3: The seven widely used competency headings (CIPD, 2004)
CIPD: The most widely used competency headings

Team orientation
Communication skills
People management
Customer focus
Results orientation
Problem solving
Planning and organising

7. Linking personal competency to core competence

The expertise and knowledge, and skills and motivation of employees, and the degree to which
they are appreciated by management are key elements to drive the maximum benefits of the
organisation's objectives and its core competence content (Bergenhenegouwen et al., 1996). Core
competences are the result of a joint learning process throughout the organisation and they shape
products in which internal and external business strategies, production logistics and individual's
competencies can be reflected and accounted.

In the same vein but with much more weight towards the human competencies' contribution,
Godbout (2000) views the organisational competences as a combination of business specialisation
and economic utilisation of human skills. Core competences are therefore considered and related
to the organisation's characteristics areas of expertise and involve the synergy of intellectual assets
such as motivation, employee effort, technological and professional expertise, relationships and
management processes. He defends that employees’ talents, skills and motivation are key

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 Khalid Hafeez, Jawed Siddiqi, and Essmail Essmail

elements in developing core competence and consequently achieving the organisation’s objectives
because knowledge is carried out through human resources.

8. An integrated framework to evaluate core competences and associated

personal competencies
A summary of an integrated framework to identify organisational core competences and their
appropriate personal competencies is given below. We effectively tested the model in a pervious
study (Hafeez, Essmail, and Siddiqi, 2005) in a utility company. The main stages that constitute our
framework include:
ƒ Mapping the capabilities and underlying tangible and intangible assets.
ƒ Determining key capabilities.
ƒ Determining competences.
ƒ Identifying core competences.
ƒ Evaluating and linking the related personal competencies.

Resources & Stage I:

Assets Value Mapping and Analysing
Analysis Capabilities' Structure

Financial and Stage II:

Non-financial Determining Key
Assessment Capabilities

Collectiveness Stage III:

& Uniqueness Evaluating
Assessment Organisational
Competences

Strategic Stage IV:

Flexibility Identifying Core
Analysis Competences

Competency Stage V:
Evaluation Evaluating and Linking
Related Personal
Competencies

Figure 1: The main stages of the integrated framework

Resources are split into static tangible and intangible assets. Capability is seen as the dynamic mix
of these assets for imparting some business operations. Capabilities and therefore key capabilities
determination is considered the most important step in the process. We apply Analytic Hierarchy
Process (AHP) to filter out key capabilities by conducting a pair-wise comparison to evaluate the

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financial and non-financial contribution made by capabilities under certain measurements. The
financial measurements are (sales growth, operating profit, return on capital employed), whereas
non-financial ones are (customer satisfaction, market share, new product introduction). It is
increasingly argued (Hafeez et al., 2002) that relying just on financial measurements contribution
when evaluating business performance has limitations. We demonstrate how to isolate
competences from key capabilities by assessing the collectiveness and unique attributes.
Collectiveness refers to the operational flexibility of the company and is assessed by gauging the
integration: across-function, across-product, and across-business. Uniqueness associates with the
organisation's external differentiation to rivals and is assessed against three attributes namely:
rareness, inimitability, and non-substitutability. Strategic flexibility analysis assessment for
competence candidates in terms of resource re-deployment and routine re-organisation measures
is, therefore, conducted to identify core competence (Hafeez et al., 2002; Hafeez, Essmail, and
Siddiqi, 2004; 2005). Competences and core competences candidates are assessed according to
subjective analysis using a scale of 1 to 4 points. Subsequently, we extend the original framework
at the individuals' level and investigate the potential link between core competence(s) and personal
competencies by analysing the structure of the identified core competences and evaluating the
contribution made by personals' competencies. Lastly, based on CIPD (2004) competency areas,
we map out and prioritising appropriate personal competencies to be linked with the identified core
competences using AHP technique again. The whole process is illustrated in Fig. 2.

Identify Highlight Identify

Core the Key Related the Relevant
Competence(s) Common Individuals’
Competencies Competencies

Apply Use Use AHP for

(Hafeez et. al. CIPD (2004) Relative
2002) Core Competency Importance
Competence Framework Pair-wise
Framework Comparison

Figure 2: The process of implementing competence and competency evaluation framework.

I n im i t a b i l i t y R o u tin e
r e - o r g a n is a t i o n

R a re n ess R eso u rce

r e -d e p lo y m e n t
N o n - s u b s t i tu t a b i l i t y
U n iq u e n e s s S t r a t e g i c f l e x ib i l i t y
d e t e r m i n a t io n d e t e r m in a t i o n

Id e n tify in g D e te rm in in g
D e te rm in in g
key c o re
c o m p e te n c ie s
c a p a b ilitie s c o m p e te n c ie s

A c ro ss-p ro d u c t

A c r o s s -fu n c tio n
A c ro s s -b u s in e s s
C o lle c tiv e n e s s
d e t e r m in a tio n
S ta g e 1 S ta g e 2 S ta g e 3

Figure 3: The core competence identification framework.

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 Khalid Hafeez, Jawed Siddiqi, and Essmail Essmail

8.1 Analytic hierarchical process (AHP)

In addition to the statistical analysis of gathered data, the Analytic Hierarchy Process (AHP)
approach is adopted using specific software called EXPERT CHOICE to critically analyse the
collected data at particular stages. AHP is a viable technique widely used in human judgement
process to help decision-makers in multi-criterion decisions process by decomposing the complex
decision operation into a multi-level hierarchal structure (Lee et al., 1995; Hafeez et al., 2000). AHP
is applied throughout three basic steps: the hierarchical construction, prioritisation procedure, and
results calculations (Hafeez et al., 2002c). It is basically conducted in a pair-wise comparison
methodology between several alternatives under particular criteria with respect to a specific goal.
AHP is a powerful tool to eliminate any bias resulting from human judgement by providing a
measure called inconsistency ratio (CR) to check the consistency of evaluation. So, the acceptable
upper limit of consistent data is 0.1, and therefore data is due to re-evaluation if CR ≥ 0.1. In this
paper, we consider the financial and non-financial contributions are the goals; the measurements
are the criteria; and capabilities are the alternatives.

9. Case study: Construction company a (CCA)

CCA is a governmental organisation whose headquarter is based in the Middle East responsible for
construction and development works of historic, heritage, and religious nature buildings. It has
successfully executed many domestic and global projects. It works in a highly competitive
environment which requires creating a state of art architectural designs for niche customers and
markets. Interviews were arranged with the director of the department to collect relevant data. The
results of the analysis were verified by the director of CCA and some important notes were raised.

9.1 Stage I: CCA resources and capabilities relationships

The CCA director was asked to map out the main capabilities that run the business and then to
specify the tangible and intangible assets' contribution towards those capabilities. Nine capabilities,
therefore, were selected and understood to constitute the most strength areas to achieve its
business objectives. These capabilities and the contributions of their tangible and intangible assets
are illustrated in Table 4. It can be seen that CCA's capabilities are largely governed by intangible
assets. The CCA manager interpreted that distinctive feature to the fact of having a prestige
designers and allocating of sophisticated information technology combined with reputable brand in
the country.
Table 4: The CCA capabilities and their assets' contribution
Capability % Contribution of Tangible % Contribution of Intangible Total
Assets Assets %
Modern methods of
15 85 100
construction
Value added design 20 80 100
Modern style design 15 85 100
Innovative solutions 10 90 100
Cost effective construction 20 80 100
Quality management 15 85 100
Completion on time 20 80 100
Execution to specifications 15 85 100
Safety, environment 100
20 80
applications
It was agreed to use the outcomes and business values delivered by some capabilities instead of
using their direct titles. That is to simplify the evaluation process and avoid repetition,
generalisation, and intervene amongst them. For instance, it was noted that there some of the
operational capabilities can be shared by several functions. Design management capability, for
example, may mean different tasks and therefore it is worth to split it to more capabilities and
replaced by other synonymous. Completion on time and execution to specifications also could be
considered as project management. Table 5 illustrates some of the selected capabilities and their
outcomes that taken for assessment.

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Table 5: CCA's capabilities and their deliverables

Capability Outcome of capability

Construction development Modern methods of construction

Design management Value added design
Design management Modern style design
Performance development Innovative solutions
Construction financial management Cost effective construction
Project management Completion on time
Project management Execution to specifications

9.2 Stage II: Determining key capabilities of CCA

AHP is used to determine key capabilities out of the mapped valuable capabilities as the model
suggests. The goal is to evaluate the financial and non-financial contributions made by CCA
capabilities to its business performance. Data was processed using the Expert Choice software to
produce key capabilities of CCA (See Appendix A).

9.3 Financial and non-financial performance evaluation

The process of determining CCA key capabilities includes two parts. First, with respect to the goal
of evaluating the financial performance, a pair-wise comparison between its quantitative
measurements (sales growth, operating profit, and return on capital employed) is conducted. Then,
similarly, a pair-wise comparison between the qualitative measurements (customer satisfaction,
market share, and new product introduction) with respect to the non-financial performance goal is
carried out (See Appendix A). The aim is to demonstrate the weight and relative importance of the
used measurements before conducting a similar assessment of capabilities. All the results of
analysing capabilities are presented in Tables 6 and 7.
Table 6: Evaluation of the financial performance of CCA
Financial Performance
Capability Sales Operating Return On Capital Overall
growth profit Employed weight
(0.558) (0.122) (0.320)
Modern methods of construction 0.089 0.143 0.070 0.089
Value added design 0.265 0.229 0.203 0.237
Modern style design 0.068 0.095 0.067 0.071
Innovative solutions 0.123 0.085 0.156 0.131
Cost effective construction 0.072 0.050 0.072 0.069
Quality management 0.131 0.101 0.127 0.125
Completion on time 0.099 0.063 0.084 0.089
Execution to specifications 0.125 0.204 0.196 0.161
Safety, environment applications 0.028 0.031 0.025 0.027
Table 7: Evaluation of the non-financial performance of CCA
Non-financial Performance
Capability Customer Market New product Overall
satisfaction share introduction weight
(0.352) (0.559) (0.089)
Modern methods of construction 0.050 0.121 0.069 0.092
Value added design 0.156 0.183 0.195 0.175
Modern style design 0.081 0.083 0.051 0.079
Innovative solutions 0.151 0.085 0.130 0.112
Cost effective construction 0.059 0.047 0.041 0.050
Quality management 0.123 0.102 0.151 0.114
Completion on time 0.162 0.059 0.057 0.095
Execution to specifications 0.197 0.300 0.295 0.263
Safety, environment applications 0.023 0.021 0.011 0.021

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Table 6 and Table 7, respectively, show the financial and non-financial contributions made by
capabilities of CCA. The overall weights of capabilities are calculated using the Expert Choice
software. Each capability's contribution against each criterion is multiplied by each criterion's
weight with respect to the main goal and then added. This is simplified by this equation:
The overall weight of capability= ∑ weight of alternative × weight of criterion.
For example, the overall financial weight of Modern methods of construction capability (0.089) is
computed as follow: (0.089×0.558+0.143×0.122+0.070×0.089).

9.3.1 The key capabilities determination method

The financial and non-financial weight of CCA capabilities are then plotted in a matrix and the
average values of both measurements are calculated, (See Table 8). Therefore, to determine key
capabilities of CCA, a statistical programme called Minitab is run to produce a two dimensional
chart where a key capability zone can be demonstrated. The boundaries of key capability zone are
the mean values of financial and non-financial measurements (See Fig. 4).
Table 8: The overall priority weights of the capabilities alternatives.
Capability Financial Weight Non-financial Weight
Modern methods of construction 0.089 0.092
Value added design 0.237 0.175
Modern style design 0.071 0.079
Innovative solutions 0.131 0.112
Cost effective construction 0.069 0.050
Quality management 0.125 0.114
Completion on time 0.089 0.095
Execution to specifications 0.161 0.263
Safety, environment applications 0.027 0.021
Mean value 0.111 0.111

Key Capability Zone

0.111

0.25 Execution to specifications

0.20
Non-financial Weight

Key Capability Zone

Value added design
0.15
Quality management
Innovative solutions 0.111
0.10 Completion on time
Modern methods of construction
Modern style design
0.05
Cost effective construction

Safety, environment applications

0.00
0.00 0.05 0.10 0.15 0.20 0.25
Financial Weight

Figure 4: Determining graphically key capability zone.

Candidates of key capabilities are those capabilities with scores ≥ the mean value respective
financial and non-financial measurements. So, as shown in Table 8 there are four key capabilities
(distinguished by shaded areas) that are determined based on the results produced by the

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software. These are Value added design, Innovative solutions, Quality management, and
Execution to specifications.

9.4 Stage III: Identifying CCA competences

This stage aims to carry out a two dimensional quantitative assessment based on weighing the
identified key capabilities in terms of their internal integration (collectiveness), and external
differentiation (uniqueness).

9.4.1 Collectiveness assessment

The score allocated to each attribute of a capability reflects the management perception how a
capability is integrated amongst various business functions. For this case, a key capability with a
score of 9 or more out of 12 is considered a collective capability and constitutes an integral part of
various essential business operations.
Table 9: Collectiveness assessment of CCA key capabilities
Collectiveness
Key Capability
Across-function Across-product Across-business Total Score
Score (1-4) Score (1-4) Score (1-4)
Value added design 2 1 4 7
Innovative solutions 4 2 4 10
Quality management 3 4 2 9
Execution to specifications 2 4 4 10
Table 9 demonstrates three key capabilities achieved relatively high scores ≥ with mean value
(9.00). These are Innovative solutions, Quality management, and Execution to specifications. This
implies that these are widely integrated within the company's business activities and operations.

9.4.2 Uniqueness assessment

In this part key capabilities are once again assessed using an equivalent scale of evaluation from 1
to 4.
Table 10: Uniqueness assessment of CCA key capabilities
Uniqueness
Non-
Key Capability
Rareness Inimitability Substitutability Total Score
Score (1-4) Score (1-4) Score (1-4)
Value added design 3 4 3 10
Innovative solutions 3 3 3 9
Quality management 2 2 2 6
Execution to specifications 3 3 3 9
Table 10 indicates that there is a clear variation with regards to key capabilities’ scores for
uniqueness assessment. For instance, whilst Value added design scored the highest, Quality
management achieved only (6) points in total which is less than the mean value. In accordance
with the framework assumptions, we suggest to evaluate the key capability scores against the
collectiveness and uniqueness dimensions simultaneously. This allows for collectiveness and
uniqueness analyses to be mapped on a XY plot and screen out the candidates of competences.
Table 11: key capabilities' values against collectiveness and uniqueness criteria
Collectiveness Uniqueness
Key Capabilities
Total Score (max=12) Total Score (max=12)
Value added design 7 10
Innovative solutions 10 9
Quality management 9 6
Execution to specifications 10 9
Mean Value 9.00 8.50

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Table 11 shows that two key capabilities could be considered CCA competences. These are
Innovative solutions and Execution to specifications. The other key capabilities are excluded
because they fail to achieve the required score simultaneously on the given dimension.

9.5 Stage IV: Identifying CCA core competences

A similar procedure is followed to conduct strategic flexibility analysis to identify core competences.
The analysis shows that despite the reciprocal scores regarding the strategic flexibility elements,
both competences achieve identical total score of (7: the mean value). Accordingly, both
competences are selected as core competences of CCA (See Table 12). The overall filtration
process of identifying CCA core competences is illustrated in Fig. 5.
Table 12: Identifying core competences of CCA
Organisational Competences Strategic Flexibility Total
Resource Re-deployment Resource Re-organisation Score
Score (1-4) Score (1-4)
Innovative solutions 3 4 7
Execution to specifications 4 3 7
Mean value 7.00

Functional areas / Capabilities?

Value
Analysis

Modern methods of Value added Modern style Cost effective

construction design design construction
Quality Safety,
Innovative Completion Execution to
management environment
solutions on time specifications
applications
Financial Non-
Performance Key Integrated Capabilities? financial
P f

Value added Innovative Quality Execution to

design solutions management specifications

Collectivenes Uniqueness
s Assessment Competences? Assessment

Value added Innovative Quality Execution to

design solutions management specifications

Core Competences?
Strategic
Flexibility

Innovative Execution to
solutions specifications
Figure 5: The core competence filtration process of CCA

9.6 Stage V: Organisational competences and personal competencies

In order to use the AHP procedure again, all CCA competences are compared in a pair-wise
approach to evaluate the respective contribution of personal competencies. The data is analysed
using the Expert Choice software as shown in Table 13.

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Table 13: Contribution of personal competencies towards the organisational competences

On which of these competences, personal
competencies have much contribution?
Competence Relative Importance
Innovative solutions 0.220
Value added design 0.153
Modern style design 0.139
Modern methods of construction 0.131
Quality management 0.092
Cost effective construction 0.090
Execution to specifications 0.069
Completion on time 0.064
Safety, environment applications 0.043
Table 13 illustrate the priorities of relative importance of individual competencies to CCA
organisational competences in an ascending order to. It can be seen that Innovative solution
(which is one of CCA core competences), come out to be by far competency driven competence.
However, the other identified core competence, Execution to specification, achieves a low score of
(0.069).

9.7 Competencies contribution

Looking at the human, organisation and technological contributions in Table 14, it is noted that
there is a significant domination of personal competencies (human and organisational
contributions) on the CCA core competences. The share of human and organisational contribution
towards Innovative solutions is 75% and in Execution to specifications reaches 90% (See Table
14). This means that both core competences are tremendously reliant on personals' competencies,
therefore, supporting the hypothesis of assuming a strong potential link between core
competencies and organisational core competences.
Table 14: The structure of CCA core competences
Core Human Organisational Technological Total
Competence contribution contribution contribution %
Innovative solutions 65 10 25 100
Execution to specifications 60 30 10 100

9.7.1 Determination of related personal competencies

Once again, AHP is used to conduct this part, where the goal is to determine the most relevant
competencies to be linked with core competences. The results of analysis presented in Table 15
illustrate that Customer focus is the most important competency that should be developed to
enhance Innovative solutions as a core competence. Team orientation comes as the second
important competency followed by People management, and Planning and organising
competencies with an identical ratio of importance of (0.149).
Table 15: The prioritisation of personal competencies against Innovation solutions core
competence.
Core Competence:
Innovative solutions
Personal Competency Relative Importance
Customer focus 0.218
Team orientation 0.176
People management 0.149
Planning and organising 0.149
Problem solving 0.114
Communication skills 0.099
Results orientation 0.095
A similar procedure is carried out with regards to Execution to specifications core competence as
shown in Table 16. The seven competencies are headed by Team orientation as the most
important competency. Problem solving competency is considered the second one for this

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competence. People management, and Planning and organising competencies interestingly remain
at the same position of significance; the third and fourth respectively; with Execution to
specifications too. In contrast, Customer focus competency can be seen at the bottom of Table 16
indicating low relative importance regarding this competence, although it is the first essential
competency with respect to the previous core competence.
Table 16: The prioritisation process of personal competencies against Execution to specifications
core competence.
Core Competence:
Execution to specifications
Personal Competency Relative Importance

Team orientation 0.239

Problem solving 0.202
People management 0.154
Planning and organising 0.151
Communication skills 0.113
Customer focus 0.078
Results orientation 0.063

10. Discussion
The overall analysis reveals that the major contribution towards CCA business performance rests
on Innovative solutions and Execution to specifications. Indeed, these are the deliverables of
Performance management and Project management areas. They are the most collective key
capabilities that govern its internal activities and operations, and also the most unique tools it has
against its rivals. In addition, they are the most flexible organisational competences for investing
and developing their resources and routines for strategic decisions. Value added design,
alternatively, seems a potential competence, however, its collectiveness assessment is poor
revealing that it does not span over wide functions and products. Overall the case study shows
that the composition of its capabilities is dominantly governed by intangible assets' contributions.

From Table 14 it is clear that CCA's core competencies are significantly gravitate towards human
contribution. However, results of pair-wise study in Table 13 illustrates that the respondents didn’t
feel that personal competencies would have any significant impact (score 0.069) for the Execution
to specifications core competence. In fact, Execution to specifications core competence lags
behind several organisational competences against this criterion. One explanation of this could be
that although in general intangible competencies thought to make up the bulk of any organisational
competence, however, it is not the only and necessary condition. In our view the nature of business
and the type of industry sector may play an important role in this. In this (construction) case, for
instance, there are some competences such as Value added design largely dominated by personal
competencies but not identified as a core competence. The other possible reason could be
attributed to the subjective nature of evaluation for this part of the study, as we are unable to filter
out any inconsistencies, or bias from the subjective data However, in future study we anticipate to
use AHP at all stages of the framework to offset any questionable results.

11. Conclusions
Based on subjective value analysis, nine capabilities were mapped out during a structured
interview with CCA top management. The capabilities financial and non-financial contributions
towards the organisation's business performance were evaluated using the AHP technique of pair-
wise comparison. Only four capabilities scored high weighting values for both measurements and
consequently were determined as key capabilities. These are Value added design, Innovative
solutions, Quality management, Execution to specifications. Key capabilities, therefore, were
evaluated against their collectiveness and uniqueness to determine CCA potential competences
candidates. The analysis shows Innovative solutions and Execution to specifications are clearly the
CCA organisational competences. Interestingly, with carrying out strategic analysis they both
achieved similar total score of 7 and became CCA core competences. The outcome was validated
and found identical to the management preliminary perception about their competitive areas.

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In the second stage of our framework, the impact of personal competencies contribution on the
core competences was investigated. Personal competencies are those particular human skills and
knowledge that can enhance core competence development. The AHP was further used to
evaluate the most related personal competencies based on CIPD (2004) list of most used
competencies. The AHP prioritisation analysis confirms that with regard to Innovative solutions,
Customer focus, and Team orientation are the most related personal competencies. On the other
hand, regarding Execution to specifications, Team orientation, and Problem solving seem to be the
most relative competencies. Interestingly, whilst Customer focus competency became the second
important one regarding Innovative solutions, it secured low rank against Execution to
specifications. We believe that our framework can help the organisation to explore its potential
strength areas to reach its business goals, and shed some light on the most appropriate personals'
competencies that they need to develop in immediate future.

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Appendix A

The AHP evaluation results for CCA

CCA: The Financial Performance

Priorities with respect to :

_
Goal : Financial Performance
_

_ales Growth
S ._558
Operating Profit
_ .122
_
Return on Capital Employed
_ .320
_
_Inconsistency = 0.02
_

Synthesis: Summary

_
Synthesis w ith respect to:
_
Goal: Financial Performance
_ Overall Inconsistency= 06
.

M odern methods of construction _

_ .089
_
V alue added design ._237
_
M odern style design ._071
_
Innovative solutions ._131
_
Cost effective construction ._069
_
Quality management ._125
_
Completion on time ._089
_
Execution to specification ._161
_
Safety, environment application
... ._027

CCA: The Non-Financial Performance

Priorities with respect to :

_
Goal : Non-Financial Performance
_

_ ustomer Satisfaction
C ._352
Market Share
_ .559
_
New Product Introduction
_ .089
_
_Inconsistency = 0.05
_

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Synthesis: Summary

Priorities with respect to :

_
_ oal : Non-Financial Performance
G
_ >Customer Satisfaction

_ odern methods of construction

M ._050
Value added design
_ .156
_
Modern style design
_ .081
_
Innovative solutions
_ .151
_
Cost effective construction
_ .059
_
_ uality management
Q ._123
Completion on time
_ .162
_
Execution to specification
_ .197
_
Safety, environment applications
_ .023
_
_Inconsistency = 0.06
_

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Motivational Influences On Knowledge Sharing
Meliha Handzic1,2 and Amila Lagumdzija2
1
Sarajevo School of Science and Technology, Bosnia
2
BiH and Universitas 21 Global, Singapore
[email protected]
[email protected]

Abstract: This paper analyses the influence of incentives and rewards on knowledge sharing behaviour. A
case study was undertaken to compare knowledge sharing behaviour among graduate students in a global
MBA program under different grading incentive conditions. The study found no difference in the amount and
nature of students’ contributions to the discussion board between graded, mixed and non-graded conditions.
These findings suggest that intrinsic rewards may have as powerful an effect as extrinsic ones on knowledge
sharing behaviour.

Keywords: Knowledge sharing, incentives and rewards, motivational influences, case study

1. Introduction
Motivating people to share their knowledge with others represents a major challenge in knowledge
management (KM). Modern knowledge intensive organisations are attempting to address this
challenge by linking the knowledge sharing activities of employees to incentive and reward
systems. The literature suggests that externally or internally induced motivation may have a
beneficial effect on knowledge sharing. In general, a high level of motivation is expected to lead to
a greater willingness of people to share what they know with their peers.

In the knowledge-based view of the firm (Spender 1996, Teece 2000), knowledge is considered as
the main driver of a firm’s competitive advantage. The sharing of knowledge between individuals
within and across organizational boundaries is considered important for preventing knowledge
gaps that are likely to produce less-than-desirable performance of work. Among the main motives
for knowledge sharing, Muller et al (2005) identifies altruism, conditional cooperation, strategic
reciprocity, reputation, social norms, group identity and payoff. Bock et al. (2005) classify
motivating drivers as economic (anticipated extrinsic rewards), socio-psychological (anticipated
reciprocal relationships and sense of self-worth) and sociological (fairness, innovativeness and
affiliation). The idea of an incentive system is to align individual benefits from knowledge sharing
with corporate goals.

Davenport et al. (1998) argue that motivation to contribute knowledge is an intangible critical
success factor for any KM project. Hauschild et al. (2001) found that less successful companies
tend to take a top-down approach: pushing knowledge to where it is needed. Successful
companies, by contrast, reward employees for seeking, sharing, and creating knowledge.

Motivation is typically a difficult issue to address as it relates to changing people’s perception and
behaviour. It is closely tied to the cultural norm of an organisation. According to Handzic and Zhou
(2005), this issue has not been addressed any great extent. This is reflected in the current KM
practice where less management attention is paid to rewards and incentives for knowledge sharing
than to employee training, KM systems development, organisational structure and organisational
culture (Zhou and Fink, 2003).

According to Muller et al. (2005), the design of suitable incentive systems is particularly difficult in
circumstances when companies are distributed across countries and cultures. The general lack of
empirical research on the issue adds further to the difficulty of the task as there is no appropriate
guidance available on what works, under which circumstances. The purpose of this paper is to
analyse different factors derived from theory and prior research that may motivate people to share
knowledge and be used to empirically test their effect on knowledge sharing behaviour.

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2. Incentives and rewards

2.1 Types of incentives and rewards

Rewards could be monetary or non-monetary, formal or informal, and long term or short term.
Which one(s) to use will depend on the circumstances and will requires careful consideration
(Handzic and Zhou 2005).

Formal, monetary rewards such as bonuses, compensation and promotions are not necessarily
more powerful than informal, non-monetary rewards. Bonuses, compensation and promotions used
to be part of the formal rewards system in organisations but they do not work well in every
circumstance. Contrary to what may be expected, inappropriate use of such incentives could
discourage knowledge sharing and lead to other counterproductive practices (Hauschild et al.
2001). Tying annual bonuses solely to frontline employees’ sales volume, for example, may spark
unhealthy competition. Moreover, the growth of sales volume in the short term may be achieved at
the expense of customer satisfaction, which can be harmful to the future prospect of the firm.

Non-financial rewards, such as recognition of expertise (e.g. the bestowing of the title of subject
matter expert - SME), extra leave, a thank-you note or e-mail, an opportunity for training or a
present, can have the same effect as financial rewards. Other incentive measures include coveted
office space, an opportunity to travel or to receive a more challenging assignment (Hauschild et al.
2001).

Incentives can be long term or short term. If organisations choose short-term incentives, they
should be, in the opinion of Davenport et al. (1998), highly visible to attract good public attention.
However, given the fact that people tend to hide knowledge for their own advantage, organisations
should focus on long-term motivational approaches, and make the extent of knowledge contribution
part of the evaluation and compensation structure (Davenport et al. 1998).

2.2 Effects of incentives and rewards

Hofstede (2006) suggests that values in the workplace are influenced by five cultural dimensions:
power distance index (focusing on equality), individualism (focusing on the degree the environment
reinforces individual or collective achievement), masculinity (focusing on gender differentiation),
uncertainty avoidance index (focusing on the level of tolerance for uncertainty) and long term
orientation (focusing on the degree of devotion to traditional values). Accordingly, different types of
incentive systems may be effective in different organisational cultures.

According to Muller et al (2005) the effect of monetary incentives on total knowledge sharing is
twofold: firstly, the relative benefit compared to the cost of knowledge sharing is enhanced (the
relative price effect) and secondly, the intrinsic motivation of knowledge sharing is lowered (the
crowding-out effect). The total effect can be positive if the relative price effect is stronger than the
crowding-out effect. But it is also possible that the total effect of incentives is negative. The authors
suggest that in highly individual cultures, voluntary knowledge sharing is relatively hard to achieve
and other auxiliary activities such as incentive systems are recommended. In highly collectivism
cultures, knowledge sharing can be enhanced if knowledge sharing is made prominent and
knowledge sharing is rewarded with higher reputation and status.

When changes need to be made to the established rewards system, an incremental approach
would be more workable than a radical one. Advice from Rumizen (2002) is not to make substantial
changes as it could cause undesirable effects. When a change is being implemented, employees
should be given time to learn and adapt.

Recognising the importance of incentive systems in motivating knowledge sharing, the main
objective of the current research is to study the behaviour of global MBA students as typical
representatives of knowledge workers. The goal of the study is to provide deeper insight into the
role of extrinsic and intrinsic incentives and rewards in increasing or lessening individuals’
tendencies to engage in knowledge sharing behaviours.

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3. Research methodology

3.1 Research design and variables

A case study approach was chosen as the preferred research method for the current investigation,
as it examines a phenomenon of interest in a natural setting. In addition, its main purpose is to
describe the things the way they are and draw meaning from social contexts, rather than to
investigate cause-and-effect relationships. Therefore, it is considered a suitable approach for the
current research involving a study of the actual knowledge sharing behaviour of a specific group of
real-world knowledge workers. A case study methodology is often associated with research about
human affairs (Yin 1998). The proponents of this approach also argue that the results of a case
study can provide a greater level of depth and understanding of many aspects of a social
phenomenon than is possible using other methods (Lee 1989). However, some authors warn that it
requires careful planning and attention to detail in order to establish validity (Miles and Huberman
1994). Two aspects of knowledge sharing investigated in this study were: the amount and the
nature of knowledge shared. The amount of knowledge shared was measured in terms of the
average number of messages posted on the discussion board per person. The nature of
knowledge shared was evaluated in terms of two contribution types. This could be either a new
posting to the discussion board, termed main, or a comment on someone else’s posting, termed
feedback.

3.2 Subjects and procedure

Subjects for the current study were 29 MBA students enrolled in the Information Technology course
at Universitas 21 Global. This institution represents an association of sixteen universities from
around the world together with Thomson Learning. It was established with the aim of providing
innovative online management education for global leaders (http://www.u21global.com). As part of
their course, the students participated in peer discussions on various course topics by contributing
their ideas, opinions and comments to a discussion board over a period of three months. A total of
1487 knowledge contributions were collected for the purpose of our analysis across three different
incentive systems. Knowledge sharing during the initial course period (about one month) was
voluntary and not graded. During the middle course period, sharing was partly mandatory and
graded and partly voluntary. For the purpose of graded knowledge sharing, students were required
to contribute three times: one main discussion board posting on a given topic and three comments,
feedback, to other students’ postings. Total worth of graded discussions was 30% (3 times 10%) of
the overall mark. Finally, knowledge sharing among students using discussion board was
mandatory as part of their graded team project worth 20%.

4. Results
Quantitative and qualitative analysis of participants’ knowledge contributions to discussion board
was conducted and the results presented in Figure 1 and 2. Different techniques were used as
suggested by Miles and Huberman (1994) to better identify patterns, themes and clusters and
ensure plausibility of the findings.

4.1 Amount of knowledge shared

With respect to the quantitative approach, a descriptive analysis of participants’ contributions to the
discussion board was conducted. In order to identify a central tendency in participants’ knowledge
sharing behaviour, the average number of messages per person was calculated under three
grading incentive conditions (ungraded, mixed, graded). The results, shown in Figure 1, indicate no
significant difference between extrinsic and intrinsic incentive effects on subjects’ knowledge
sharing behaviour. The mean scores obtained were 9.55 for ungraded, 10.07, 11.55, 10.76
(avg=10.79) for mixed and 9.35 for graded conditions. Scores above 4 in mixed grading condition
indicated that the subjects tended to share much more of their knowledge than required to get their
grades.

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 Author name

Amount of knowledge sharing

12

number of contributions
10
8
6
4
2
0
ungraded mixed graded
incentive system

Figure 1. Number of contributions per person by incentive systems

4.2 Nature of knowledge shared

Classifying individual participants’ contributions into two categories performed further qualitative
analysis of data: main or feedback. From the results shown in Figure 2, it can be seen that 90% of
all contributions fell into the feedback category. The remaining 10% were main type.

Types of Knowledge Contributions

10%

main
feedback

90%

Figure 2. Nature of knowledge contributions

5. Discussion
The findings of this study make two important contributions to the development of knowledge
sharing theory: (i) it provides missing empirical evidence on the role of incentive systems; and (ii) it
supports the contention that both extrinsic and intrinsic incentives are equally powerful motivators
of knowledge sharing behaviour.

5.1 Main findings

In summary, the study has demonstrated that different types of incentive systems made no
significant difference to the subjects’ knowledge sharing attitudes and behaviour. More specifically,
quantitative analysis of the collected data found no difference in the amount of knowledge shared
among participants between ungraded, mixed and graded conditions. It appears that the
participants balanced the benefit and cost of engaging in knowledge sharing by spending similar
amount of time and effort to obtain good grades as well as position themselves favourably within
their virtual community of practice. Such findings are contrary to other recently reported ones.
More specifically, Bock et al (2005) found that extrinsic rewards exerted negative effect on
individuals’ knowledge-sharing attitudes among Korean managers. The difference may be
attributed to culture factors as suggested by Hofstede (2006). Participants in this study came from

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a variety of countries and cultures. In contrast, Korean culture is characterised by high collectivism
and knowledge sharing can be enhanced by intrinsic motives (eg. higher reputation and status)
rather than extrinsic ones (Muller et al. 2005). Additional qualitative analysis of the collected data
was undertaken to examine the nature of shared knowledge. The results indicate that the
overwhelming majority of participants tended to respond to other people’s ideas rather than
contribute their own. With respect to the quality of feedback, both tendencies, agreements and
disagreements with given points of view were found to be equally prominent.

5.2 Study limitations and directions for future

It is important to note that the current research was limited in a number of aspects. Further studies
in other contexts are necessary to verify current findings and further deepen our understanding of
the role of incentive systems in motivating/inhibiting knowledge sharing. While the case study
design gives a realistic picture of the behaviour in a real system, it does not allow us to control
possibly critical variables, as would be the case in an experimental environment. Muller et al (2005)
suggest that using alternative empirical designs would be useful to measure the values of each
employee directly using a survey method. Moreover, determining the direct change in the relative
value of incentives would be a useful way to further test the incentive effect for knowledge sharing.

6. Conclusion
This paper has presented results of a case study examining the relative influence of extrinsic and
intrinsic incentives on knowledge sharing behaviour in the real-world context of a global MBA
education. The case study produced both quantitative and qualitative results that provided deeper
insights into the issue compared to alternative experimental studies. In summary, the study found
that both extrinsic and intrinsic incentives were equally powerful motivating force that drove
participants to engage in knowledge sharing behaviour. However, commenting on other people’s
work was more prominent behaviour than contributing one’s own ideas.

References
Bock, G.W., Zmud, R.W., Kim, Y.G. and Lee, J.N. (2005) “Behavioral Intention Formation in
Knowledge Sharing: Examining the Roles of Extrinsic Motivators, Social-Psychological
Forces, and Organizational Climate”, MIS Quarterly, 29(1), March 2005, 87-111.
Davenport, T.H., DeLong, D.W. and Beers, M.C. (1998) “Successful knowledge management
projects”, Sloan Management Review, 39(2), 43-57.
Handzic, M. and Zhou, A.Z. (2005) Knowledge Management: An Integrative Approach, Chandos
Publishing, Oxford, UK.
Hauschild, S., Licht, T. and Stein, W. (2001) “Creating a knowledge culture”, McKinsey Quarterly,
1, 74–81.
Hofstede, G. (2006) “Geert Hofstede Cultural Dimensions”, [online], http://www.geert-
hofstede.com/.
Lee, A. (1989) “A Scientific Methodology for MIS Case Studies”, MIS Quarterly, 12(3), 33-50.
Miles, M.B. and Huberman, M.A. (1994) Qualitative Data Analysis, Sage, London.
Muller, R.M., Spiliopoulou, M. and Lenz, H.J. (2005) “The Influence of Incentives and Culture on
Knowledge Sharing”, in Proceedings of the 38th Hawaii International Conference on
System Sciences.
Rumizen, M.C. (2002) The Complete Idiot’s Guide to Knowledge Management, CWL Publishing
Enterprises, Madison, WI.
Spender, J.C. (1996) “Making Knowledge the Basis of a Dynamic Theory of the Firm”, Strategic
Management Journal, 17(2), Winter 1996, 45-82.
Teece, D. J. (2000) Managing Intellectual Capital, Oxford University Press, Oxford, England.
Yin, R. (1988) Case Study Research: Design and Methods, Sage, London.
Zhou, A. and Fink, D. (2003) “Knowledge management and intellectual capital: an empirical
examination of current practice in Australia”, Knowledge Management Research and
Practice, 1(2), 86–94.

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Knowledge Networks: A Mechanism of Creation and
Transfer of Knowledge in Organisations?
Deogratias Harorimana
Southampton Business School, Southampton Solent University, UK
[email protected]
Abstract: Academics on knowledge transfer in organisation argue that the creation and transfer of knowledge
is a basis for competitive advantage in firms. In this empirical framework of knowledge networks the paper
argues that knowledge transfer can be achieved through a combination of methods that facilitates transfer of
tacit knowledge. This paper identifies the kinds of knowledge that are most difficult to transfer to different
contexts and develops a framework in which interactions among people, tasks, and tools facilitate transfer. An
analysis follows of how organisations can derive competitive advantage by transferring knowledge internally
as well as engaging in external transfer to their partners and alliances. Since it is obvious that external transfer
would expose an organisation to competitive forces, the paper argues that unselfish (where mutual benefit is
achievable) knowledge sharing practices generate new knowledge and innovation, which can lead to
competitiveness. Because people are more similar within than between organisations, interactions among
communities of practice make transfer more readily achievable. By embedding knowledge in cultural settings
and interactions involving people, organisations can achieve knowledge transfer within its networks.
Furthermore, by expanding or moving this community of networks, external knowledge transfer can be
achieved with minimal or no risk.

Keywords: Knowledge transfer, communities of practice, identity, knowledge Networks, tacit knowledge

1. Introduction
Knowledge transfer can be defined as the process through which one individual, a department, an
organisation or a country’s experiences are shared, transferred to a third party and subsequently
affect this recipient’s original practices, actions, ultimately his or her knowledge reserves and future
knowledge generation. Experiences or a single act that leads to reaction, change or modification on
the pre existing processes of a third party can trigger knowledge transfer in specific settings.
Knowledge transfer can be internal, external or both. It can be achieved through an internal
process but also an external process that may or may not lead to mutual benefit. At the individual
level for example, analysis in cognitive psychology defines knowledge transfer as simply
experiences of one affecting another. According to Singley and Anderson (1989, p. 1) knowledge
transfer at the individual level is “how knowledge acquired in one situation applies (or fails to apply)
to another.” This does provide us with enough information on how knowledge transfer in
organisations involves transfer at the individual level, but fails to transcend the individual level to
include transfer at higher levels of analysis, such as the organisation, the multinational’s product
line, the department, or the country.

This empirical study is based in three multinational manufacturing firms based in Hampshire. The
research interviewed staff at all levels including senior managers, line managers, team leaders and
staff engineers. Line workers and supervisors discussed issues in focus groups to help triangulate
some of the previous findings. Interviews and questionnaires are ideal methods to investigate
knowledge related subject matter given the nature of knowledge subjectivity that forms an integral
part of this study.

The research employed case study replication logic methods. Each case was designed and
conducted independently from one organization to another and each case followed the following
steps: (1) design the case study (2) conduct the case study (3) analyse the case study findings,
and (4) develop the conclusions and recommendations. The researcher independent observation
over a period of six months allowed him to investigate the informality of the CoPs members.
Besides various methods used to collect the data, the study choice of respondents depended on
their position in the organisation and the knowledge (or experience) of organisational members
from different levels within the firm. It was through the researcher’s own employment six months
earlier in one of these firms that he generated interests that led to the design of the objective of this

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investigation into how the knowledge networks constitute a mechanism of creation and transfer of
knowledge in organisations.

The components of the knowledge that organisations acquire may be tacit and not easily
articulated (Pinch et al 2003). Tacit knowledge cannot be captured through the verbal reports often
used to measure knowledge. This is because it is not codifiable and cannot be collected or stored
in written materials. It is only though social interactions where personal observation of individual in
action this knowledge can be extracted and transferred. Tacit knowledge is embedded in an
individual’s culture, language, gestures, and cognitive ability that are all hard to extract. Successful
managers, and best lecturers in isolation of office hold this knowledge. Regular procedural layouts
that include an exchange of experiences and similar approaches are better suited to capture tacit
knowledge than approaches that attempt to measure the knowledge through performance based
means as proposed by Argote and Ingram (2000).

2. Communities of practice (CoP) 1

Communities of practice have previously been thought of coming into existence when people
interested in a common work-related area or in an avocation feel a need to share what they know
and to learn from others. Professional associations, groups of software developers, and skilled
mechanics, or potters, guilds are examples of work-related communities of practice. Vocational
examples range from communities of quilters to communities of rowers. With technology growth,
the e-mail, electronic discussion groups, videoconference rooms and electronic chat rooms have
facilitated the development of communities of practice whose members live many miles apart.
Regardless of the mode of interaction, the traditional notion of a CoP is that it emerges from a
work-related or interest-related field and that its members volunteer to join, or it occurs naturally
because of a working necessity.

As organisations grow in size, geographical scope, and complexity, it is increasingly apparent that
they set up specilaised units, organize specialised committees, or even go further to sponsor
research groups; markets surveys and innovative communities. All the above constitute a strategy
to improve organisational performance. This kind of group has become known as a CoP; a group
whose members regularly engage in sharing and learning, based on their common interests. For
example within the organisations analysed, CoP members identify strongly with both the group and
the organisation. These are some of the views expressed:
“If someone has ideas or had developed a project it helps me to get things done
quickly. If you've got to start from scratch to put documentations together, it's going to
take you longer. If you've got somewhere that you can go to where you've got a
template or a model that says that this particular product fits, it helps you”. [Senior
Manager A, Plant C]
“People don’t have to repeat themselves all the times. If we're sharing our knowledge,
then I can use what somebody else has learned and work on it somewhere else,
instead of spending time doing it myself. It has improved the efficiency of people's
delivery material. We are able to achieve targets easily while others’ aren’t”. [Line
Manager B]
According to Wenger (1999), a sense of identity is important because it determines how an
individual directs his or her attention. What one pays attention to is, in turn, a primary factor in
learning and sharing personal experiences. Therefore, identity shapes the learning and transferring
of experiences process. The relationships within the community members are enacted on the field,
which provides an initial set of boundaries on the interactions among its members and on their
goals. And, as with most field-based games, overall community welfare ultimately is more important
than individual goals. Communities constitute an effective way for organisations to handle
unstructured problems and to share knowledge outside of the traditional structural boundaries. In
addition, the community concept constitutes the means of developing and maintaining long-term

1. Communities of practice (CoP) and Epistemic Communities are not automatically interchangeable terms .Epistemic
Communities constitutes a knowledge community, but they do not necessarily practice it. CoP actively practice their
knowledge and this guide their decisions into coming to existence

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organisational memory as these communities engage in wider community of organisations in which

they take part. CoPs constitute an important, yet often unrecognized, supplement to the value that
individual members of a community obtain in the form of enriched learning and a higher motivation
to transfer what they learn.

According to Snowden (2002) “Such communities work at higher level of abstraction” furthermore,
in their different social interactions, CoP translate what is absolutely abstract to a much clearer
sense, therefore sharing tacit knowledge. In this case study for example, identity, mutual
collaboration and informality were observed as follows
“In terms of support, I think that if I had any bottlenecks or any questions, I could
always go to the community. Most of them are my best friends now anyway .We just
helps each other on everything. (…). Someone down the road who is part of our
network may also help though he is not working for the same company as us. There is
always that sense of belonging to a family of like-minded people who faced similar
issues before. I feel very free to go to people who are part of it” (Staff Engineer A plant
A).
Peripheral members bringing new ideas can catalyse innovation. One may think of face-to-face
communication as the way that members of a community achieve the necessary level of
engagement to develop their identities, relationships to learn and to share what they actually know
(many occasions unknown to others). In fact, earlier studies of the ways that people engage with
each other have focused primarily on face-to-face communication. Nevertheless, there is nothing in
the classical sociological definition of CoP that rules out communication media such as e-mail,
discussion groups, or chat rooms as support mechanisms for participating in distributed CoPs.

Despite evidence asserting that CoPs create institutional value (Stork and Hill 2000, Wenger and
Synader 2000) there has been relatively little systematic study of the linkage between community
outcomes and the underlying social mechanisms that are at work. The difficulty in assessing their
contribution is that communities are often hidden assets, appearing neither on an organisation
chart nor on a balance sheet. To build understanding of how communities of practice create
organisational value, it is necessary to think of a community as an engine for the development of
social capital. In the third world, knowledge created by communities does not die with these
subjects; it is shared among people and communities that may encounter them many years after
the death of their creator (Firestone and McElroy 2003). Communities constitute the social capital
that often leads to behavioral change .The greater social interactions occur, the greater knowledge
sharing happens, which in turn positively influences business performance. The table below
illustrates how each of the dimensions of social capital offered by CoPs relates to the creation of
value by a community, with focus on outcomes that are a result of greater knowledge sharing and
innovation. It also outlines the linkage between Information and Computer Technology (ICT), the
special kind of social capital represented by a community of practice and organizational
performance.

In the past, Starbuck (1982); Walsh and Ungson (1991) studies argued that experienced
participants performed better on a subsequent simulation, but these were not able to articulate why
they performed better. Neither self-report questionnaire measures nor verbal protocols showed
differences in the knowledge of experienced and inexperienced participants. Knowledge transfer
problem for organisations is that knowledge resides in individual employees; hence there are
difficulties in transferring individual embedded knowledge through papers and catalogues alone.

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Table 1: Communities of practice in view of activities and value outcomes (CoPs VA)
Organisation CoPs Objectives CoPs Activities CoPs VA
Multinational Engineers Share experience and Held informal lunchtime seminars Faster project delivery
manufacturing firm 1 expertise across similar
projects Conducted formal training sessions Greater reuse of
knowledge assets
Facilitated Web site repository developed
Produced CD of relevant materials

Captured experiences of retiring

practitioners in multimedia and Video
conferencing
Multinational HR and Share experience and Held informal lunchtime seminars Faster project delivery
Manufacturing firm 2 Managerial expertise across similar
staff projects Conducted training sessions Greater reuse of
Consistency achieved through ICT intellectual capital
monitored Standards developed
Improved linkages to
outside knowledge
sources
Manufacturing Quality Develop and exchange Held informal discussions among Increased reuse of
company 3 champions implementation and practitioners previously developed
training techniques Developed Web sites with relevant assets
training material and advice

Customer Programmers Respond to needs for Maintained internal list servers for Greater reuse of
satisfaction and customization of a individuals to post comments about existing software assets
Products standard product modifications Increased innovation
development DPt Maintained Web site to support sharing around new software
of software components products
Provided access to “spearhead” experts Quality assurance
around the company supported by ICT
Plant workers Line production Share and suggest Held discussions But no database Faster response time to
workers practical solutions to where individuals can post and seek customer problems
end products answers to customer problems Greater linkage
Employed knowledge brokers and between customers and
Participation into the editors to cull through discussion line workers
New initiatives to satisfy databases and identify frequently asked developing new
customer needs questions and other knowledge needs solutions
Held informal “meetings” to share
experiences and engage other in
problem solving

Manufacturing Project Transfer experience Held initial face-to-face meeting with Faster response to
(Overall) managers and techniques across community members to outline orders and request for
industry groups community objectives and opportunities proposals
Developed e-mail-based expert Greater reuse of
access/question-and-answer system to existing knowledge
post and distribute inquiries assets

3. Breaking the barriers

To alleviate the obstacles and facilitate the transfer, CoP and gatekeepers interact with and
through other repositories of knowledge. Five retention repositories of knowledge identified in
Walsh and Ungson (1991) would assist the transfer, creation of new knowledge thereby facilitating
change. These are (a) individual members, (b) roles and organisational structures, (c) the
organisation’s standard operating procedures and practices, (d) the culture, and (e) the physical
structure of the organisation. Individual members can be gatekeepers; these may work as part of
CoP within and outside their mother organisation. CoPs interact within cultural settings despite
diverse originality and informal interactions at all levels of organisational structures. Their
interactions break barriers of physical organisational structures that are often a hindrance to
problem solving in fast paced virtual economy. Such interactions among many members at all
levels facilitate transfer of tacit elements of experiences gained both in internal departments and
with external partners that use the products. Unfortunately most existing techniques for measuring
knowledge, such as questionnaires or verbal protocols, measure changes in knowledge embedded
in individuals, but fail to transcend the underlying interactions principles of informal group members
such as CoP.

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Knowledge is embedded in three basic elements of organisations’ members, tools, tasks and
various sub networks. Combining or crossing the basic elements forms these. Members are the
human components of organisations. Tools, including both hardware and software, are the
technological component. Tasks reflect the organisation’s goals, intentions, and purposes. The
basic elements of organisations combine to form sub networks. The member–member network is
the organisation’s social network but the task–task network is the sequence of tasks or routines the
organisation uses. The tool–tool network is the combination of technologies used by the
organisation while task distribution among staff forms another network that maps members onto
tasks. The member–tool network assigns members to tools. The task–tool network specifies which
tools are used to perform which tasks. The member–task–tool network specifies which members
perform which tasks with which tools (see Starbuck 1982, Walsh and Ungson 1991, Argote and
Ingram 2000).

Performance improves with increases in both the internal compatibility of the networks and their
external compatibility with other networks. Organisational performance is enhanced when the
member–task network allocates tasks to those members most qualified to perform them. Similarly,
when members have the appropriate tools to perform the tasks allocated to them, the member–
task network is compatible with the member–tool network. The former is an example of internal
compatibility of the networks, while the latter is an example of external compatibility or compatibility
between the different networks. For example in this empirical study, compatibility of networks of
engineers, line workers who were culturally embedded were identified to be facilitating factors that
increased production levels of different production line while using same resources at different
sites. Also new staff members were able to identify themselves with tasks they were good at in new
but similar circumstances, in separate production lines.

In professional service organisation such as law firms or consulting firms, a significant component
of the organisation’s knowledge is embedded in individual member’s knowledge which is
subsequently embedded in an organisation’s tools and technology. This means that some form of
adjustment needs to take place to produce a modified tool to capture and apply new knowledge in
new situations with little or no major disruption to the existing material knowledge, (Creplet et al
2001).For example, Washamba’s new knowledge of producing compost to increase soil fertility was
embedded in Rwandan cultural contexts to facilitate the transfer process to Nyabisindu. Similarly,
an external German funded project did break cultural barriers trough training of and interactions
with local populations face to face, which meant that tacit elements originally hidden in tasks were
interpreted into local languages and cultural practice. Practices already in place were not disturbed,
rather because identity formation paved the way for subsequent mutual benefits. After value-
addition, knowledge was retransferred to Washamba village in Tanzania (Harorimana 2006).

Knowledge can also be embedded in institutional tasks and interrelationships. The task network is
the sequence of tasks or the routines and standard operating procedures the organisation uses
(see Gersick and Hackman, 1990) for discussions of routines. While investigating production
performance within firm’s boundary, the study found that the production of a higher quality product
was embedded in what they called “innovative communities” and their routines. Their knowledge
was embedded in the various networks formed by combining members, tools, and tasks. Ultimately
the division of labour specified which member performs which tasks in the organisation. CoP
defines criterion and recommend roles in the firm hierarchy (see Table1).

Experience gained while working together in small or large groups improves knowledge and
increases the performance of individuals and that of groups (Hollingshead 1998; Liang, Moreland,
and Argote1995) Acquiring knowledge of who knows what reinforces confidence building,
cooperation and mutual benefit. As the organisation acquires knowledge, it also learns which
people best perform tasks and those which are best performed by tools or automation. The latter
knowledge is embedded in the task–tool network that also contains information about which tasks
are best performed by which tools. Organisations acquire information about which members best
perform which tasks with which tools. This knowledge is embedded in the coordination network.
Knowledge transfer occurs when experience in one unit of an organisation affects another unit.
Knowledge transfer can occur explicitly when units communicate with each other about practices

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they have found to improve performance. But it can also occur implicitly without the recipient unit
being able to articulate the knowledge it has acquired. In our study norms or routines were
transmitted to group members without them (members) being able to articulate the norm or being
aware of the knowledge embedded in it. For example, this study found that knowledge was
transferred by moving a knowledge network to where a newly formed product line was formed at
different site: “It is easy for us to mix large team of experienced and inexperienced staff particularly
at the start of a new line production for them to observe each other in actions. New staff can learn
specific skills we cannot provide through a formal training” Manager Plant C
“Training sessions are conducted at one to one sometimes by an expert or at least the
best person on the task. Here we call them “Buddies.” (Manager D, Plant C)
Careful analysis of these statements demonstrates the role of training in the knowledge transfer
process. Training aligns old knowledge to new ones. This is achieved trough individual training and
team coaching.

4. The gatekeepers and networks

The advantage of training is that it highlights the fact that interdependencies between knowledge
gatekeepers and their knowledge may vary and this makes some types of knowledge easier to
transfer than others. Moving gatekeepers demonstrated to be a powerful mechanism for facilitating
knowledge transfer in lines of production, because individuals were able to adapt and restructure
knowledge so that it applied to new contexts. They were also able to transfer both tacit and explicit
knowledge between each other through observing tasks carried by an experienced engineer at the
new site, (see also Allen, 1977). This study follows empirical findings of the effect of moving
members of engineer gatekeepers between firms in UK and Poland, the study shows how moving
members contributed to the transfer of knowledge about innovations in the car industry (Dobosz
and Jankowicz 2002).

Gruenfeld, Martorena, and Fan (2000) demonstrated that moving individual members can have
intricate effects on knowledge transfer across countries (and this can be perceived if these are
mainly strangers to a receiving site). Moving members did not automatically result in ideas moving
directly from one group to another, mainly due to the lack of identification in the new group. It is
therefore obvious that CoP identity would counter less problems because the sense of belongings
they bring is often flexible and able to relate to new cultural settings .The “itinerants” who changed
groups are not particularly influential in the new groups without common identity and their ideas are
used significantly less often than those of “indigenous” members after the itinerants returned to
their groups of origin. Such a situation underlines the current state of many African nations that
despite in that they, receiving huge amounts of aid, they have failed to produce economic
improvements. The Zambian Water Dam projects (UNDP 2004) the Rural Electrification Project in
Ghana (UNDP 2004), the “fertilizer” project in Rwanda are such examples. However, those
countries that employed “indigenous” graduates from Western economies such as the UK flourish
(Blomstrom and Kokko 2002). The experiences and skills acquired become helpful, and contribute
to the learning experience of the country as a whole as they transfer through physical interactions
with local businesses. There are no exhaustive studies that determine the reasons for this strategy,
hence we recommend that future studies would analyse the relationships between outsourced
skills and the knowledge production at the organisational level. According to (Gorjestani 2000), the
first step into successful knowledge transfer is developing a compatible technology transfer with
new knowledge and embedding new knowledge into cultural settings; while placing greater
emphasis on people interaction to build relationships that promote understanding of local practices.

Although knowledge utilised at the start of a project operation is less likely to create conflicts
because networks of knowledge are not yet fully established, the emerging evidence on the effects
of moving networks involving people suggests that moving the network task–tool can be an
effective way to transfer knowledge from one place to another. During this study for example, an
analysis of the productivity of the three manufacturing plants, one of which added a second shift
with a newly trained manger under a “buddy” after three years of operating with one shift, and a
second shift (newly relocated at a new site was composed primarily of members who were new to
the organisation. Workers were instructed to use the same tools and task sequences embedded in

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the assembly line that the first shift had used. However, the second shift achieved higher levels of
productivity in a couple of weeks, which the first shift took many months to achieve. The former
benefited from knowledge embedded by the first shift in the tools and tasks sequences. There were
balances of strengths of moving people as a knowledge-transfer mechanism and the strengths of
moving tools or technology. People were able to transfer tacit as well as explicit knowledge when
they moved to a separate line of production. However, the adaptation within the new member team
was occasionally disturbed by their “indigenous” knowledge. Both new and experienced staff
needed to adapt too each other, and to the new working practices. During analysis, the study
uncovered that technology enhanced consistency (see Table 1 for examples), but, it depended
largely on individual competencies and ability to exploit this tool.

With acknowledgement of previous studies on the role of networks in knowledge transfer process
(see Argote and Ingram 2000, Levine and Moreland (in Turner 2000); Cohen and Prusak 2001)
findings of our study indicate that the most successful knowledge conduits are the networks
involving people who operate within a knowledge community or along the lines which are willing to
mutually benefit from the advantages of best practice of knowledge sharing. Although socio-
psychological processes mediate the effect of moving people towards knowledge transfer, in most
instances people have been effective knowledge conduits. To date, there are no findings that
suggest that human material can be excluded from any successful network, (Gruenfeld et al.2000,).
CoP maximise knowledge spillover to others but member-member, member-tool networks in
external firms can be the most difficult to transfer because knowledge in this type of network is the
most difficult to transfer or copy without in-house training. Moving the networks involving people will
be a more effective way to transfer knowledge within than between organisations. Therefore,
embedding knowledge in the networks that work in communities of practice makes it easier to
extract, codify and transfer knowledge readily available, thus, facilitating the external knowledge
transfer process while permitting some (albeit challenging) internal knowledge transfer, since
community members are part of an established independent team.

In addition to moving knowledge in CoP from one site to another, other methods of knowledge
transfer can be achieved through modification of the reservoir of knowledge of the recipient.
Whether one is teaching or learning new skills and practices, the aim is to modify the recipient
reservoirs. This word derived from the French word “reserver” means “keeping for future use”. In
this context however, we are referring to two different ways that networks can transfer knowledge.
Firstly the learner or the recipient must be willing and ready to accept changes, secondly the
teacher need to be able to relate to he learner and takes him/her through the inevitable changes.
The qualitative findings uncover that considerable time saving can also be achieved through
modification of knowledge reservoirs.
” If someone has ideas or had developed a project it helps me to get things done
quickly. If you’d think about it f you've got to start from scratch to put documentations
together, it's going to take you longer. If you've got somewhere that you can go to
where you've got a template or a model that says that this particular product fits, it
helps you”. [Senior Manager A, Plant C]
Manufacturing firms analysed benefit in similarities as they build on trust and mutual
understanding. These elements constitute foundation for knowledge transfer in communities of
practice. Such trust encourages greater transparency and mutual support develops over time.
Strategic thinking and development of goals and objectives becomes much clearer and group
orientated. Engineers are willing to provide help those requiring. Their decision to help their
colleagues is largely governed by reciprocity norms. Workers are more responsive to, and they are
perceived more likely to help their colleagues in expectation of future return. To capture the idea
that reciprocity norms would hinder and communal norms would facilitate the free-flow of
information, it has been argued and substantiated in this empirical study that three of those
organisations do share or intend to share their know-how within the manufacturer-manufacturer
network, manufacturer-supplier network, and they intend to play a role in a supplier-consumer
network.
“It is easy for us to define prices in line with the current markets .Our suppliers play a
key part into this. Our business is theirs. This is why we seat and discuss so often on

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distribution matters, regulations, and prices. It is always our policy to work closely with
our partners and suppliers (Senior Manager Plant B).
These findings underscore the importance of relationships in knowledge transfer. Sharing
knowledge procedure exposed group members to the ideas of others while allowing them to
generate ideas continuously, and to maintain personal knowledge as well as cultural identity.
These generate more innovative ideas than did procedures that simply seek to encourage
individualised ideas or particular individual group members. It shaped the development of a shared
reality in groups that affected their problem-solving strategies. Discussion groups focused more on
shared information that members held in common than on unshared information that members
uniquely possessed. It prompted new thinking and generated new ideas. New ideas came from
part timers and from new staff with experiences from different member-networks.

One impediment to knowledge transfer is the fact that employees have multiple groups with which
they can identify. In addition to identifying with the larger organisation, employees also may identify
with their subunit, such as their work groups, function, or divisions
“Sharing knowledge with someone I know down the line, yes. Sharing with anyone I
never met no” (Manager C, Plant A).
Strong levels of subunit identification, relative to organisational identification, are posited to be
associated with lower levels of knowledge sharing. The competition had a negative effect on
knowledge sharing between the competing units. In one of the three organisations studied here,
empirical findings shows that the least performing department, employees identified themselves
more with their subunit than the organisation as a whole. They were less likely to share their know
how outside their line managers and close colleagues,
“I am here to work and get paid; I don’t care about the rest. If I passed on my
knowledge or skills, I may lose my job to someone else. ” (Line worker 3, Plant B).
It is observed from above statements that strong identification with sub-units has a negative effect
at organisational level, hence the need to encourage wide and open knowledge sharing and
transfer in communities that interact at and from different levels and departments.

5. Conclusions
We have argued that knowledge transfer is process that can be achieved through encouraging
interactions among people. Communities of practice naturally integrate most of the elements that
form this kind of knowledge networks. Further, these communities remain an important part of
wider network. Both formal and informal interactions among people facilitate extraction and transfer
tacit knowledge that originally cannot be collected or stored in intermediaries other than by face-to-
face contact and observation.

Qualitative data show that there is a strong “identity” within the CoP and this contributes towards
better collaboration, learning and innovation. CoPs are governed by mutual benefit norms in which
the community welfare takes priority over individual interests. Because reciprocity norms dominate
successful knowledge transfer, it is impossible to transfer knowledge that is not embedded in local
cultural practices and settings. Hence knowledge embedded in people’s minds, in tools and in
organisational structures can be best transferred if it is embedded in culture through people
interactions and not tools nor tasks.

For the knowledge transfer to be successful, the sites, the people or CoP and networks that are
moved must be flexible in order to accommodate changes caused through transfer processes or to
be compatible with the new cultural and situational contexts. As noted previously, the compatibility
of members, tools, and tasks moved from one production line cannot be guaranteed without careful
monitoring and coaching.

Findings also help us to understand the process of innovation in communities through continuous
improvements and learning. CoP constitutes individually organisational networks and they perform
their tasks using tools as individuals. This complexity and varied background of experience of CoP
members makes it ideal for them to become the best source of innovative ideas, and strong

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facilitators of knowledge transfer among firm networks. Best results were achieved for external
knowledge transfer through interactions of people and tasks with suppliers. Competitive advantage
was achieved where similarities in members and tasks is high among manufacturer-manufacturer
networks.

Conclusive empirical evidence highlights the role of trust in knowledge transfer. The relationship
between manufacturer-Manufacturer is strong and in particular, the manufacturer-supplier network
is becoming an important part of the Manufacturer-Manufacturer Network. Who identified as an
important factor when it came to decide how to develop new products and trust. Because
limitations of this study, did not allow us to analyse innovative relationships between manufacturers
–Supplier networks, supplier –manufacturer network. We recommend future studies into how these
networks interact to facilitate the transfer process, and determine the role of the end user products,
knowledge transfer for innovation and products development in manufacturing firms.

References
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Advantage in Firms” Organisational Behaviour and Human Decision Processes 82 ,150-
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Blomstrom M., and Kokko A.(2002) From Natural Resource to High Tech Production : The
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Behavior and Human Decision Processes, 47, 65–97.
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Retrospective and Prospective, Africa Region, the World Bank
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Human Decision Processes, 82, 45–59.
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performance: The mediating role of transactive memory”. Personality and Social
Psychology Bulletin 21,384-393.
Pinch S., Henry, Jekins, M., Tallman,S (2003): “From Industrial districts to Knowledge clusters: A
model of knowledge dissemination and competitive advantage in Industrial agglomerations
: Journal of Economic Geography. 31, 665-682
Singley, M. K., & Anderson, J. R. (1989). The transfer of cognitive skill, Cambridge, Harvard Univ.
Press, MA: Cambridge
Snowden, D. (2002), “Complex Acts of Knowing; Paradox and Descriptive Self Awareness”,
Journal of Knowledge Management, 6 N.2, 1-14.
Starbuck, W.H., (1982), “Learning by Knowledge-intensive Firms” Journal of Management Studies,
29, 713-738.
Storck, J., and P. Hill (2000), “Knowledge Diffusion Through 'Strategic Communities',” Sloan
Management Review 41, N.2, 63–74

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Turner ,M. (2000), “Groups at work: Advances in theory and Research”, NJ: Erlbaum ,Mahwan
,PP69-112
Walsh, J.P and Ungson, J.R (1991),” Organisational Memory”, Academy of Management Review
16, 57-91
Wenger E. (1999). Communities of Practice: Learning, Meaning and Identity, University Press,
Cambridge.
Wenger E. and Snyder,B (2000) “Communities of Practice: The Organisational Frontier,” Harvard
Business Review 78, N.1, 139–145
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http://www.dams.org/kbase/studies/zz/zz_toc.htm

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Construction Model for IT Assignment to Corporate
Knowledge Management Systems
Milan Hasznics
Budapest University of Technology and Economics, Hungary
[email protected]
Abstract: The purpose of this paper is to provide an overview of the progress of my Ph.D. research. The main
goal of this research is to construct a model according to which an effective, IT supported corporate
knowledge management subsystem can be established. Nowadays, the proper management of the intellectual
capital is of outmost importance. The inevitable component of achieving sustainable advantage over the
competitors is the effective knowledge management. Just like quality assurance systems, the knowledge
management should serve as a corporate subsystem supporting all the activities of the company. In this
paper, a model is to be introduced. The usage of this model enables the user (e.g. the CKO – Chief
Knowledge Officer) to construct a wide coverage, fully functional knowledge management system in a step –
by – step manner.

Keywords: Knowledge management, IT assignment, assignment framework

1. The KM activity matrix

The first step of the methodology or the application of the model is to collect the knowledge
management activities in a systematic way. The KM activity matrix gives a framework to the
execution of the tasks of this phase. In the following chapters, the components and the construction
rules will be introduced.

The corporate knowledge management subsystems usually perform various tasks with the same
goal: make the knowledge transfer and creation process more and more effective. Examples for
such tasks are: organizing trainings, maintaining databases about tacit knowledge locations,
facilitation of self-organizing expert groups etc. The KM activity matrix was constructed to give a
systematic framework for the assignment of tasks of the local KM subsystems. The construction of
the KM activity matrix is shown on figure 1.

Explanation for the concepts used in figure 2:

ƒ Codification is the process that can be effectively used when dealing with explicit knowledge:
the explicit type of knowledge can be recorded easily by writing down, loading it into a database
etc. The codification process embodies the progress of capturing this type of knowledge,
recording it with an adequate media type, and making the recorded volumes accessible – for
example, a bi-lingual language lecture book holds the codified knowledge about the grammar
and the vocabulary of a foreign language.
ƒ Personalization is the only way to effectively preserve tacit knowledge within the organization.
To conduct personalization, the tacit knowledge must be reconassianced, the carrier must be
identified and added to the intra-organizational chart of carriers. This chart should be widely
accessible.
ƒ Some jobs require support from both types of methodologies: for example, a car exterior
designer must consult with material property tables for conclusive data (which is clearly codified
knowledge), but also may need the help of more experienced designers (tacit knowledge) to
create a car that impresses the costumers by it sight.
Now, the contents of a cell are specified, we need to clarify the semantics of the dimensions of the
matrix.

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Figure 1: KM activity matrix

The cells of the matrix (figure 1) contain knowledge management activities, categorized accordingly
to their nature. (figure 2.)

Figure 2: KM activity matrix cell

1.1 Dimensions
The dimensions of the KM activity matrix are of two different origins. The coordinates of axis 1 and
2 are composed of the elements of the set specified by Karl Erik Sveiby (Sveiby, 2001) as the four
key players of knowledge management. Axis 3 is based on the spiral model of knowledge creation.
The activity content of the cell, determined by the three corresponding values of coordinates
represents the activities conducted between the specific types of staff (first two coordinates), of the
specific phase of the knowledge spiral.

1.2 Key players

According decades of corporate experience, K.E. Sveiby determines four major groups of players
in the field of knowledge management; the brief descriptions of these groups are in the following:
ƒ Leader: capable of cooperation and can cope even with the experts. The leader possesses the
vision and the power to change into a new direction.

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ƒ Manager: capable of cooperation- the task of a manager is to maintain the functionality of the
company and keep heading in a predefined direction – the “great preserver”.
ƒ Expert: excellent workforce in his/her own field, a capable problem solver usually with narrow
perspective. Needs guidance, only cooperative with its own class.
ƒ Support staff: Facilitates the work of all other groups in its own, regulated way. The education
level of the members is usually lower.
This classification fits the most complex variant of KM systems: the knowledge management of the
knowledge organizations. This fact ensures us that the model remains useful if we apply it (with
restrictions – of course) to other types of organizations as well.

2. The process model of knowledge creation

The spiral model which was set up by Nonaka and Takeuchi (Nonaka and Takeuchi,1995) is used
to represent the knowledge creation process, by considering the flow of the knowledge. The stages
and the process are displayed on figure 3.

Figure 3: Knowledge spiral model

The brief explanation of the stages:
1. Externalization: making the personal tacit knowledge accessible by codification (writing essays,
tutorials, etc.)
2. Internalization: turning the explicit knowledge into own, personal knowledge – mainly similar to
learning.
3. Combination: creation of additional knowledge by combining the elements of explicit
knowledge.
4. Socialization: Direct transfer of tacit knowledge, mainly executable in a master-student relation.
Once we have the proper profile identification along with the exact coordinates within the matrix,
we need to use repositories to select the corresponding solutions.

3. Grouping of IT systems

3.1 High level outline, concepts of repositories

Our goal is to support knowledge management with IT systems in an effective way. To do so, we
need to link the high-level knowledge management activities with the level of raw IT systems using
a formal model. Our model enables us to directly couple knowledge management activities with
adequate IT systems. In this model I suggest two separate phases for the execution of the coupling
process:
1. The use of a high level repository: The IT systems are classified overall accordingly to their
properties. It is the primary role of the high level repository to represent all the relevant
properties along which the IT systems can be properly classified form the perspective of

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knowledge management. The careful and proper selection of these relevant properties/factors
is of key importance, as these will form the basis of the final IT system selection.
2. The use of a low level repository: The actual, implemented IT systems that are available on the
market are being classified in this repository, accordingly to the factors specified in the high
level repository. Dividing the final phase into these two levels is not only advantageous from
the logical and didactical perspective, but highly simplifies the tracking of environmental
changes. The development rate of the IT industry is among the fastest ones. This fact implies
the quick change of available IT products: appearance, disappearance, modification etc. It
could be extremely challenging to track this rapid fluctuation with a single level solution.
However, we should notice an important aspect that leads us to the solution: all these IT
systems fulfill a logical role on the high level. This logical role is exactly specified by the factors
of the high level repository. In this case the change of versions or entire products is only the
change of the available assets of execution, so the model can remain useful. Overall, we can
state that the fluctuation frequently affects the content of the low level repository, but rarely
changes the rules of the high level repository*.
* Note that new system concepts may arise along the development progress, and these concepts
may affect the systems of rules stated in the high level repository, but such changes are extremely
rare and easy to handle at high level. Of course the classifications, which compose the content of
the low level repository, must be reclassified according to the new factors.

In the following chapters, the concept of the logical chain which links the IT systems with
knowledge elements and the detailed concept of high level repository will be introduced.

3.2 From the knowledge element to the IT system

During the development of the first computer networks (the predecessors of the well known
Internet), the designer staff faced with a problem with unprecedented features: the architecture that
was to to be created had to connect heterogeneous systems with different syntaxes and semantics
while keeping the interconnectivity and compatibility at the maximum.
To give an overview upon the variety of the tasks that needed to be solved by the same
architecture, an example is to be introduced:

Network framework software – which is certainly a set of cooperating soft wares – shows a virtual
image towards the user like it was the same system that solves all the following functions:
ƒ Access to application – level functions
ƒ Connection handling with remote service provider
ƒ Regulation of voltage levels and timing in the cables
The difference in the semantics of the functions is self-evident. It is imperative that we do not try to
resolve it by one step, or one homogenous system. The soundness of the suggested solution is
proven by decades of practice and by the pure existence of the Internet. This architecture is the
layer based system composition. An example for this type of system composition is shown on the
next figure (figure 4):

The parallelism that was exploited during the phase of choosing the appropriate architecture is the
magnitude of semantic gap between the extreme elements of the array of problems that need to be
covered at this time. The parallelism between computer networks and ICT-knowledge assignment
is shown on the figure below (figure 5):

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Figure 4: Multilayer models for network systems

Figure 5: Semantic gaps

According to the principles mentioned above, my approach to the problem of knowledge element –
commercial IT system assignment is based on a multi-layer model, displayed on figure 6:

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Figure 6: Multilayer model

3.3 Explanation to the figure

At the highest level, there is the knowledge, the intellectual capital that is to be managed, and
which is composed of knowledge elements. Not only the elements, but the relations between them
carry information (and in some cases – additional knowledge). I use the idea of knowledge
element in the meaning introduced by Klimkó (2002). In the current model, this type of classification
of knowledge elements (elements and relations) is irrelevant on the highest level as the relations
can also be handled as individual knowledge elements. The difference in the nature should be
handled at the lower levels (even the separation process should be done at these levels). The next
layer is the layer of knowledge management activities. This layer contains the activities which
enable the organizations to handle and manage their knowledge elements of different types – their
intellectual capital. This collection of activities follows the schema defined by the KM activity matrix.
The activity is classified according to whether it is a part of codification strategy or personalization
or else it can support both types. The knowledge management as a corporate subsystem is
represented here on the highest level. It is obvious that its importance exceeds that of a simple IT
system – as there are knowledge activities that do not require IT support at all. The third layer is
the high level repository, which has already been mentioned. This repository contains criteria
relevant to the classification of IT systems. The detailed system of criteria will be introduced in the
next chapter.The fourth, final layer is the so-called low-level repository. The elements of the arrays
of systems that are specified by the factors of the high level repository are annotated here. This
layer requires the highest level of maintenance. Completing this repository is a task with the
magnitude of stand alone Ph.D research, moreover, its content can become totally obsolete within
thee years. Due to these conditions it is highly recommended to keep the low level repository
existing only at theoretical level. The practical solution in this case is the on-demand classification
of IT systems.

3.4 The process of assignment

Once the mapping process of the knowledge elements is complete (which means we are fully
aware of where can we find the elements, which elements are relevant and where they are to be
delivered), we must manage these elements with the proper knowledge management activity. This
is the entry point for the knowledge management activity-IT system property assignment, (the
assignment layer between the second and the third layer on figure 4.) This step is complete when

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we can determine which IT system properties are required to fulfill its support role in the case of the
given type of knowledge management activity. When the targeted properties are all set, we can
start choosing the implemented system from the low level repository.
The choice of the new system can be affected by additional factors: the current organizational
culture and the compatibility with the existing IT infrastructure.

Notes:
1. The arity of the assignment between all the four levels is of the type: multiple-multiple, which
means for example that a knowledge element can be managed by multiple types of activities
and an activity can manage multiple types of knowledge elements.
2. We must state that knowledge management can only act in active ways at the second, third
and fourth layers. The first layer is composed of the existing intellectual capital of the
organization. In this layer, the mapping activity is of key importance. The development of
knowledge elements and the increase of intellectual capital is the result of the activities
committed in the lower layers

3.4.1 Criteria of the high level repository

As it was mentioned above, the proper high level classification of IT systems is vital for the usability
of the model. The classification must comply the following requirements:
1. The model must provide direct connectivity towards knowledge management activities
2. The model must be capable of classifying any IT system in a deterministic manner using the
classification rules of the model.
3. The system of the high level criteria should be durable: it should be formulated in a way which
implies rare requirement for changes in the criteria system while tracking the changes of IT
environment.
To comply these requirements, during the design phase, a top-down type approach leads us to the
solution.(a bottom up approach could lead to uncontrollable problems due to the high number of
existing IT systems).
To execute the top-down design, the highest-level model of all ICT systems, the IPO will be used
(Input, Process and Output, figure 7). For an IT system, there are few requirements to fit in ths
framework. The requirements are:
ƒ Existing input of some kind
ƒ Contains a process, executed on the input
ƒ As a result: there is an output

Input Output
Process

System name Input Process Output

Figure 7: IPO diagram

It is clear, that any IT system will fit in the IPO model, however the IPO in itself is not sufficient for
our purposes, as it is too common and cannot be linked to knowledge management directly Before
the next step of model refinement, we must consider the IPO model is not only too wide scoped for
knowledge management activities, but doesn’t even require the analyzed system to be an IT
system. That’s why this model needs to be refined in the following way.

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There are facts about the functionality of ICT systems which come in handy:
ƒ The input and the output reaches its destination by some kind of communication – the IT system
communicates.
ƒ The process inside is a result of input data, stored data and series of operations – the IT system
executes various operations and stores data.
The features mentioned above can be used as dimensions for the classification of IT systems.–
along these dimensions, the classification criteria can be defined.

The dimensions (overview):

ƒ Communication capabilities
ƒ Data store capabilities
ƒ Operation execution abilities

3.4.2 Communication capabilities

The communication capability is the key of the accessibility of the given IT system. These abilities
delimit the possibilities of data collection and dissemination – where, when and to whom can the
system deliver the information needed. This is the guideline to set up the categories:

Network compatibility
ƒ Stand-alone: the system can be accessed only a physical way on a single workstation, where it
is installed.
ƒ Capable of network communication
ƒ Multiple users can access the same system via network, and the system is capable of
accessing resources connected to the same network.
ƒ Internet compatible
ƒ Similar to the category number 2, but the network can be the Internet.
Capability of group communications

The system makes it possible for more than two nodes to communicate
ƒ No group communication capability – maximum two nodes can communicate
ƒ Broadcast capability: only broadcast feature for more than two nodes – the array of the
recipients cannot be delimited
ƒ Multicast: the users can both specify the members of the recipient group (the group of recipients
can have multiple members or one single member)
ƒ The category of multicast capable systems can be sub-divided according to the built in
intelligence of the addressing subsystem.

3.4.3 Data storage capability

Storing data is important in the case of both personalization and codification. In my opinion, the
physical implementation of the actual data store is irrelevant from the perspective of knowledge
management, because the implementing functions are hidden by the operating system on a level
much lower than the levels of our model. The important aspect here is the complexity of the
structure of the stored data, as this is the property that determines which elements of the world to
be modeled can be mapped (entity types) and this structure also determines the complexity of the
queries that can be run on the specific system.

• No data storing capability

• File system storing – the content can only be searched according to filenames, fine search can
be only done after opening the file

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• Basic meta structure present – the search is supported by metadata – for example: directory
structure.
• Full text search capability: the internal content of the stored files can be centrally searched in
• Keyword or
• Complex manner
• Data record type storing: the data element carry value and role information and the entire
stored data can be searched according to these information. The system makes it possible to
search the data in a complex way along complex queries regarding to arithmetical and logical
conditions stated upon the content of data fields with specific roles,
• The systems organized along data records, can be sub divided according to the flexibility of the
storing structure, whether it can be modified to adapt the system to new needs of knowledge
management or not.
• Object – network type storage: the background structure can handle the record type storing
tasks for both the objects of the world to be mapped and for the relations between them.
Queries can be executed along the relationships as well.
• Handling capability for the time dimension: the structure enables the user to view historic data
on concerning upon the same object, making it possible to analyze trends and make
predictions on some figures.

3.4.4 Operation execution capability

From the perspective of the knowledge management the physical operation execution capability of
a complete IT system (flops – floating point operations per second) is irrelevant. Naturally, we
presume that we will not encounter commercial systems with hardware requirements practically
uncompliable. Towards the user, the relevant is the complexity of the operations that the system
can execute in its highest layer – the application layer. Before displaying the categories of this
dimension, some ideas must be clarified: in this chapter, and in the entire model we use the idea of
operation execution capability in the following meaning: The application layer in our interpretation
takes place between the user and the background database. The complexity of the operations can
that can be performed in this layer gives us the basis of the categorization in this dimension. The
categories, mentioned in the chapter of data storing capability require a certain operation execution
capability, but as these functions are integrated in the functionality of the background database-
these functions will not participate in the categorization of the current dimension.

Complexity levels:
1. None - only the dedicated communication and data store functionality is present.
2. General arithmetical and logical operations can be performed at he application level.
3. Aggregation capability: the results of simple queries can be aggregated and the figures can be
shown in complex displays as well.
4. Capability of generating complex reports: parameterized reports can be generated according to
templates, using complex data , including aggregations.
5. Algorithm definition capability: algorithms can be defined to use the results of queries – codified
knowledge can be recorded within the system.
6. Capability of tacit knowledge creation: if we accept the idea of the recorded codified knowledge
within program codes – which means that the executable code is the electronically mapped
version of the codifiable knowledge which is used for solving the given problem of the software
in the real life. In this case the tacit knowledge also has its electronic counterpart. For this, a
fine example: the self-learning neural networks.

3.4.5 Compatibility levels

The categories of the three dimensions are numbered. The role of this numbering is not only the
maintenance of an ordering relation, but the numbers also express a relation of compatibility.

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The systems of a higher category comply al the functions of the systems of lower categories.

3.4.6 Combination of systems

If a system cannot comply the requirements of the knowledge management activity that is to be
supported, it can be combined with other systems – which means that the model is valid in the
case of complex or combined systems. Software compatibility issues only limit the combination
possibilities.

4. Summary
The model, presented in this paper is still under construction. The chapters contain the
fundamentals and the basic elements of the framework. In this paper the key ideas are the logical
chain, and the classification ideas of the high level repository. The unique feature at this point, is
that the model carries constructive elements taken from sophisticated ideas of the IT world,
combining them wit socio technical aspects of the field of knowledge management. The next step
in the construction will be the research of a relevant and representative collection of KM activities
and the experimental set up of an assignment code, based on the categories presented in the
previous chapters.

The final goal is obvious: give the CEOs a powerful tool with practical usability.

References
Dawenport – Prusak (2001): Tudásmenedzsment, Kossuth kiadó
Nonaka, I. (1994): A Dynamic Theory of Organizational Knowledge Creation,. Organization
Science 5(1):11-37
Nonaka-Takeuchi (1995): The knowledge creating company, Oxford University Press
Porter, M. (1985): "Competitive Advantage: Creating and. Sustaining Superior Performance" New
York: Free Press (1985)
Sveiby, Karl Erik (2001): Szervezetek új gazdagsága: a menedzselt tudás,KJK–KERSZÖV
Sveiby, K.E.(1998): Tacit Knowledge, in: Cortada, J.W., Woods, J.A. (1998)
Szelecki, Zs. (1999): A tudásmenedzsment koncepciója és háttere. Vezetéstudomány XXX(12):22-
31Polányi, M. Személyes tudás. Budapest:Atlantisz . (1994)

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Knowledge Creation Through University-Industry
Collaborative Research Projects
Julie Hermans and Annick Castiaux
Business Administration Department, University of Namur, Belgium
[email protected]
[email protected]
Abstract: It is obvious from the study of literature that university-industry (U-I) relationships and their
subsequent knowledge transfers are topics of high political, economic, managerial and academic interest.
Indeed, technological knowledge is seen as a major source of long-term economic growth and its transfer is
critical for the firm since it acts as a significant innovation factor. This paper presents our literature analysis
concerning this research topic and examines knowledge creation and sharing mechanisms at stake in one
particular U-I interaction, namely the collaborative research project, through a qualitative exploratory study.
This interview survey has been realized with respondents actively involved in Belgian U-I interactions and
provides qualitative data analyzed through the SECI process of Nonaka.

Keywords: University-industry interactions, knowledge transfer, Nonaka

1. Introduction
Assuming that transfer activities between academic and private sectors will contribute to business
competitiveness and economic growth (Hitt et al., 2000), researchers have intensively investigated
university-industry (U-I) relationships. This research field has been highly influenced by quantitative
approaches favoring patents and publications as the main used spillover indicators and considering
they also provide evidence about the significance of traditional open sciences channels (Cohen et
al., 1998) and other knowledge interactions.

In this paper we present our literature analysis concerning this research topic as well as the results
of an exploratory interview survey conducted toward relevant actors in the field of university-
industry relationships such as junior and senior academic researchers, Technology Transfer Office
members and research project managers.

The first part of this paper will be dedicated to the place of university as a knowledge supplier, in
particular through U-I collaborative research project. In the following section, we shall describe the
theoretical framework used to examine knowledge flows at stake in such projects, namely the SECI
process of Nonaka. The next sections will present findings and draw paths for further research.

2. Knowledge transfer through U-I collaborative projects

The knowledge created in academic research usually takes two distinct paths to reach a
competitive recipient. In the first one, knowledge diffusion occurs without any identified target.
Traditional instruments of open sciences belong to the category of untargeted knowledge transfer,
like conferences, publications and the education of skilled workers-to-be. The economic definition
of public good applies to such knowledge, as it is a non-rival and non-excludable good. Indeed,
knowledge is non-rival per definition since our consumption of it does not hamper further
consumption. It becomes a public good when there is no efficient way to prevent free riders from
accessing it (Maskus and Reichman, 2004), or in other words when its access is not restricted to
selected agents. Following this definition, patent is an interesting contributor to public knowledge
stock through its mandatory publication.

Nevertheless, patent has an ambiguous role as knowledge transfer channel. It is an indirect source
of public knowledge through the mechanism of disclosure, but it is also a direct and excludable
source: from the moment an exclusive license is set up between the university and a private firm,
the piece of knowledge encapsulated in the patent loses its non excludable nature. The second
path reviewed in this paper thus concerns targeted knowledge flows between university and one
(or more) specific private partner(s), like in licensing, consulting, or collaborative research, when
the knowledge interaction gives the private partner the opportunity to access some level of

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knowledge appropriation. Note that the partial exclusion of other agents is not only due to
contractual agreements; it is also caused by the particular nature of knowledge which is transferred
through direct interactions (Marr, 2005). Indeed, the tacit dimension of the knowledge that will be
exchanged also makes it difficult to replicate for external organizations or individuals.
Table 1: U-I Knowledge transfer
Untargeted KT Targeted KT

Direction UÖI UÙI

Nature of knowledge Public, explicit K Private, explicit and tacit K
Instruments Publication, conference, patent, etc. Consulting, collaborative project, exclusive
license, etc.
Untargeted and targeted knowledge transfers have different but complementary epistemologies.
Indeed, knowledge diffusion through publications and patents occurs under a codified, articulated
form while the specific relationship built up through targeted transfer allows the sharing of explicit
and tacit knowledge. Different knowledge paths also suggest a specific meaning of the knowledge
interactions. On the one hand, university is seen as a central source of knowledge, reaching
recipients in a one-way relationship. On the other hand, the knowledge interaction through targeted
transfer implies critical feedbacks from the recipient, the interaction eventually affecting both
partners on their research and transfer activities. According to these specific features, untargeted
and targeted knowledge transfers may require specific analysis methods.

When examining U-I knowledge flows, an important part of the literature presents quantitative
measurement of untargeted knowledge transfer. This perspective studies open knowledge diffusion
in an aggregated way, looking at various means of knowledge transfer but mostly paying attention
to publication and patents citation as spill-over indicators. This piece of literature (Jaffe and
Trajtenberg, 1998; Autant-Bernard, 2001; Rothaermel and Thursby, 2005) fails to explore the
specific flows at stake in particular projects and the way to maximize benefits for each partner. As a
result, the way by which knowledge is exchanged between partners in bilateral agreements is still
relatively unknown (Agrawal, 2001).

Landry and Amara (1998) defined the collaborative research projects - one of those less studied
channels - as an “exchange relationship in formal research projects undertaken by universities
researchers and other research partners”. In the context of University-Industry (U-I) collaborative
research, the project is jointly defined and conducted by the science institution and its private
partner (Debackere and Veugelers, 2005).

The collaborative research project has several strong theoretical advantages. First, the
formalization of interactions through a shared covenant precisely defines the objectives and
responsibilities of each partner to ensure the success of the collaboration (Barnes et al., 2002).
Secondly, it is a strong form of partnership (Landry and Amara, 1998) inducing a propitious ground
for trust building. Thirdly, frequent personal contacts result in an efficient collaboration and the
transfer of tacit knowledge between partners (Schartinger et al., 2002). Based on those
assumptions and the general belief that collaborations are “good things and should be encouraged”
(Katz and Martin, 1997), the collaborative research project has received a growing attention in
recent years, both from public concern (European Commission, 2000; OCDE, 2003), academic
world (Davenport et al., 1999; Hall et al., 2001; Hall, 2004; Johnson and Johnston, 2004) and
practitioners.

Until recently, the U-I collaborative project literature had focused on motives and barriers for
collaboration although some authors turned to the experience of it, mainly through the examination
of success factors (e.g. Barnes et al., 2002; Mora-Valentin et al., 2004). However, the effectiveness
of knowledge transfer is not equal to the success of its dedicated activities (Bozeman, 2000;
Davenport, 1999) and the knowledge processes underlying collaborative research may go through
some difficulties based on the intrinsic nature of those inter-organizational projects. In addition,
recent changes in the academic environment have put traditional knowledge diffusion in trouble. As
an example, the various national “Bay-Dohl Act like” policies and the Lisbon strategy have initiated
an irreversible trend toward systematic valorization of academic research in Europe. As a result,

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changing environmental conditions have re-defined the conventions that used to rule U-I
relationships, urging for a deeper understanding of knowledge creation and transfer mechanisms
between partners.

3. Theoretical framework
Knowledge transfer, and broadly speaking knowledge management, is traditionally considered as
an internal phenomenon, which implies knowledge assets management through building and
reinforcement of competences (Amesse and Cohendet, 2001) within the organization to ensure a
positive contribution to the firm.

From this perspective, when knowledge comes from an external source, as through collaborative
research project, the key challenge is to develop competences to acquire, communicate, apply,
accept and finally assimilate its content (Gilbert and Corday-Hayes, 1996). In such a conceptual
framework, the knowledge creator has a passive role of transmitter, most of the absorptive work
being done in the target organization. Likewise, the target organization has no influence on the
creation process. Nevertheless, the systemic view of innovation (Goh, 2005) argues for interactions
and feedbacks between parties, which may have some impact on both partners, through interactive
knowledge creation and the building of absorptive capacities.

Recent publications (Castiaux, 2006; Johnson and Johnston 2005) made interesting attempts to
apply a theoretical framework usually oriented toward internal knowledge handling with inter-
organizational context. Those authors used the knowledge spiral of Nonaka and Takeuchi (1995) to
explore collaborative modes and the creating process at stake in university-industry collaborative
projects where personal contacts between academic researchers and the industrial partner create
the appropriate context for tacit and explicit knowledge sharing.

Tacit Tacit

Socialisation Externalisation
Explicit
Tacit

Empathising Articulating
Explicit

Embodying Connecting
Tacit

Internalisation Combination

Explicit Explicit

Figure 1: The knowledge spiral, adapted from (Nonaka et al., 2000)

First introduced in the work of Polanyi (1967), tacit knowledge is defined by Reed and DeFillippi
(1990) as the “implicit and noncodifiable accumulation of skills that result from learning by doing”.
Bozeman (2000), likewise some other authors (Spender, 1996), enlarged that definition by
including the fraction of knowledge that is not articulated or explained yet. Quoting Howells (1995),
“It would appear that the tacit is not forever tacit; with effort it can be partially formalized and
partially communicated”. Using the metaphor of the knowledge spiral instead of the circle, the SECI
process (Socialization; Externalization; Combination; Internalization) does not only describe the
formalization and communication mechanisms between partners but it also draws attention to the
knowledge creation potential enabled by the transitions between tacit and explicit states.

The Socialization step is described in (Nonaka et al. 2000) as the “process of converting new tacit
knowledge through shared experience”. The contacts presiding at this phase are rather informal,
allowing for the transmission of tacit knowledge (Castiaux, 2006) and the confrontation of
unarticulated ideas at the early beginning of the collaborative project.

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The Externalization step is defined in (Nonaka et al. 2000) as “the process of articulating tacit
knowledge into explicit knowledge”. The subsequent formalization of knowledge allows for an
easier and better diffusion between partners.

Following (Nonaka et al. 2000), “Combination is the process of converting explicit knowledge into
more complex and systematic sets of explicit knowledge”. In this phase, each partner selects and
organizes the created knowledge in order to fully exploit its potential according to its specific needs.

As defined in (Nonaka et al. 2000), “Internalization is the process of embodying explicit knowledge
into tacit knowledge”. It is related to the lessons learned from the collaboration activities and the
research work.

In the next section, we applied the theoretical framework of Nonaka to the qualitative data collected
through semi-structured interviews. The knowledge creation and transfer mechanisms at stake in
U-I collaborative projects were analyzed through the SECI process in order to disclose the
knowledge spiral at stake in such research behaviors.

4. Interview survey

4.1 Methodology
This qualitative exploratory study aims at a deeper understanding of collaborative projects and their
knowledge creation and sharing mechanisms. A qualitative approach was clearly appropriate given
the significant tacit component of knowledge flows and people-related concerns proper to U-I
collaboration (Davenport et al., 1999).

The study has been conducted toward different actors involved in the innovation process,
particularly in Belgian university-industry relationships. Academic researchers, technology
intermediaries and project managers were asked during semi-structured interviews about their
experience of inter-institutional collaborations. Interviews were recorded and taped in order to get
reliable primary data that were explored through thematic analysis. Table 2. presents the actual
respondents’ distribution. Besides, three members of university Technology Transfer Offices and
one more junior researcher were interviewed but not recorded.
Table 2: Respondent distribution
Respondent category Frequency Cumulative frequency

Junior academic researcher 1 1

Senior academic researcher 4 5
Private entrepreneur 1 6
Technology intermediaries (from university) 1 7
Technology intermediaries (from public institutions) 2 9
Research project manager 1 10
After data organization, category, themes and patterns were generated (Marshall and Rossman,
1995) through codification in order to reduce data and to come to some hypothesis about
collaborative behaviors of public and private partners. The main themes emerging from the data
were: projects features, knowledge process, appropriation issues and impacts of U-I collaborations.
In the next sections, we present findings focusing on communication means and knowledge
creation evidence through the four knowledge conversion processes of Nonaka.

4.2 Findings

4.2.1 Socialization
Evidence highlights the key role of the socialization process at the early beginning of the project in
building credibility between potential partners. Indeed, institutional representatives from each side
of the partnership-to-be share tacit knowledge about their own skills and capabilities by socializing
through observation and discussion, fostering trust, which can be definied in this context as a set of

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beliefs and expectations about the ability of the partner to perform the collaborative tasks, and his
disposition to act as agreed (Castelfranchi, 2004).

Tacit knowledge about the research problem is also shared; the confrontation of experience
eventually leads to the redirection of the research activities. This is an interesting illustration of the
bilateral interactions built up in such research projects. As one academic researcher said about
their industrial partner:
“They bring few funds but they bring the basic research ideas, they’ve brought many
things in this area.”
The main problem emerging from the data set has to do with the initiation of interactions between
the laboratory and new industrial contacts due to what is perceived as a cultural gap. This problem
does not seem to occur when a prior relationship exists between partners such as friendship, family
and repeated partnering. A solution consists in using a third-party, a technological mediator, which
acts as a broker and contributes to trust and credibility building between partners.

As socialization is mainly performed though informal contacts, it may bring an explanation about
the lack of success perceived by respondents about formalized events organized by technological
intermediaries to bring research centers and industrial actors together in some kind of research
exchanges. It rather supports their action as a discrete broker bringing together the knowledge
seller and the knowledge buyer in an informal context.

Eventually, partners share their ideas and confront institutional positions. As a result, the
socialization process also allows for the creation of tacit knowledge about tasks and partners’
responsibilities that will be formalized through the externalization process.

4.2.2 Externalisation process

The externalization process formalized the knowledge interactions through a shared covenant, the
formal research agreement. This phase strongly depends on the socialization process as the
created tacit knowledge about respective responsibilities and deliverables is converted into explicit
knowledge under the form of research contract and confidential agreement.

This explicit knowledge allows for an unambiguous and visible definition of the collaborative work
throughout the project. Besides, this phase is characterized by institutional commitment. Indeed,
whereas the academic researchers on their own mainly perform the remaining activities,
externalization through formal agreement involves University as an institution through its
Technology Transfer Office, which is in charge of contractual, and appropriation issues. As a
matter of fact, the success factor identified by Barnes et al. (2002) about formalization of
interactions may also have some impact on the knowledge process. Indeed, findings indicate that
physical evidence of confidential agreements enhance the commitment of individuals working on
the project and act as a mediator with regard to subsequent knowledge transfers, are they under a
tacit or explicit form.

However, this mechanism postulates the significance of this phase to become a shared value
between partners. While systematic formalization of interactions turns out to be the rule rather than
the exception in the academic community, industrial contacts lacking scientific competences may
address this issue quite differently. Once again, technological intermediaries can help value
sharing through prior negotiations and the acknowledgment of the need for formalization.

4.2.3 Combination process

As the research work defined in the joint research agreement goes on, knowledge is developed
and converted into more complex sets. Through interview analysis, we identified two main tangible
supports for knowledge transfer in collaborative research projects.

First of all, project reports have been identified as central supports for knowledge transfer between
partners. Beside its channel function, the role of this articulated piece of knowledge is to create
meeting opportunities, eventually leading to face-to-face knowledge exchanges and tacit sharing.

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“We often attend meetings where people have had no time to read the technical
report. The best means to inform about research progress are meetings, along with
discussion, but the report has to be, remains necessary to keep a track of what has
been realized.”
Although discussions seem more important during the project than the reports on which they are
based, explicit knowledge forms are unavoidable supports for transfers between partners and
tangible outlines for further partnerships.

Next, publications and co-publications also make knowledge transfer between partners possible. In
addition, they reach the scientific community, as academic researchers involved in collaborative
research have to justify their research activities toward academic peers through publication and
other communication mechanisms.

As a result, combination plays a key role in the reconciliation process between industrial and
academic needs. While reports serve exclusively as knowledge supports within partners,
publications allow for privileged knowledge sharing between co-authors and knowledge diffusion
toward peers. Indeed, findings indicate that targeted knowledge flows through collaborative project
do not perfectly prevent the diffusion of public knowledge toward competitive outsiders and the
academic community. Similarly, findings from Cassier (2002) suggests that despite confidentiality
agreements, academic researchers involved in U-I collaborative projects easily conciliate
disclosure and reserve, for instance by differentiating between public and private conclusions. For
example, one respondent said that:
“The split was not a real issue because the distinction between outputs the university
was interested in and results that were useful for the firm was relatively easy. The
university is interested in the description of the approach, not in the final tool, while the
firm is interested in practical application, services, that should not suffer from
information diffusion. ”
Furthermore, publications and conferences were stated as mandatory objectives in the project
agreement of this junior researcher, allowing for the convergence of academic and industrial goals.
However, the convergence may be at the cost of publication richness. As other respondents
pointed out:
“The protection of intellectual property is a mandatory requirement from industry; it’s
the basement, the foundation of the collaboration.”
“Sometimes, there are some problems to publish due to confidentiality constraints. We
are stuck between because we make some fundamental developments that we want
to communicate to the scientific community and there is a lot of data that we can not
mention so that it looses some value. Publication of research findings is not an
industrial priority.”
Evidence identified limited diffusion of research results for appropriation reasons. Consequently, it seems
legitimate to question how the balance actually occurred between knowledge diffusion and appropriation.

4.2.4 Internalisation
Internalisation refers to the lessons learned from the collaboration activities, the research work and
the exploitation of created knowledge. Nevertheless, respondents agreed that massive scientific
knowledge was no automatic outcome from U-I research projects but that trust, credibility and
social network enhancements were of underestimated benefits.

Trust has a central role throughout the conversion processes, as a condition for conducting
collaborative behavior, as a mediator for knowledge sharing and interest reconciliation, and
eventually as an intangible outcome from the U-I knowledge transfer. Beliefs about respective
capabilities and motivations are reinforced between partners but also toward external economic
agents. The reputation of the academic laboratories as a valuable industrial partner increases the
credibility of the associated firm toward venture capitalists or public authorities. For instance, one
technological mediator from an incubation park said that:

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 Julie Hermans and Annick Castiaux

“The selection criteria for a company are firstly innovation and added value of the
project (…), and then collaboration perspectives with universities, research centers. It
is a crucial point.”
Embodied social and scientific knowledge gained from the collaboration is now a starting point for
new collaborative projects, with the same collaborators or through new partnerships enabled by
their enhanced social networks.

5. Conclusion
Empirical findings support the existence of a knowledge spiral as a dynamic for the whole U-I
collaborative project but their exploratory nature also raises further interrogations. In fact,
individuals are involved daily in some knowledge conversion processes through direct interactions.
Tangible knowledge outcomes such as reports and formal presentations are grounds for
speculation and informal discussions at an individual level but we still do not know which type of
interactions is the most beneficial to daily research progress and knowledge transfer. Besides,
evidence indicates that perfect appropriation is unlikely in the context of scientific research due to
interests’ reconciliation and respect of open science norms such as skepticism and communalism.
Nevertheless, they also highlight that knowledge diffusion outside the project framework may suffer
from appropriation issues. As a result, we should open the analysis to public knowledge circulation
and spillover, complementing bilateral knowledge exchanges by examining the specific nature of
knowledge flowing outside the partnership. In fact, it remains true that: “The impact of industrial
partnerships on knowledge diffusion and circulation is one of the more controversial issues in
economic and sociological literature on university-industry collaborations” (Cassier, 2002).

In conclusion, this exploratory study just scraped the surface of knowledge creation and sharing
mechanisms at stake in collaborative research projects. Further work should involve in-depth case
studies to capture all relevant knowledge flows as well as their supports and potential impacts on
the overall process. By initiating this research, we aim to contribute to the understanding of
collaborative practices and U-I knowledge interactions. Besides, we hope it will bring some insights
about the role of university as a knowledge supplier in the overall innovation process.

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Management Journal, 17, pp. 45-62

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Cultural and Communicative Interaction and the
Development of Dynamic Capabilities
Jianzhong Hong, Aino Pöyhönen and Kalevi Kyläheiko
Lappeenranta University of Technology, Finland
[email protected]
[email protected]
[email protected]
Abstract: Dynamic capabilities are vital as they have been considered the major source for the creation of
new knowledge and capabilities needed in today’s dynamic markets. The existent literature draws our
attention to several more or less identifiable sources and strategy level processes for the creation of such
dynamic capabilities, emphasizing primarily the role of top management. In our view, however, these often
quite ad hoc explanations cry for more detailed micro foundations that really open up and reveal underlying
microstructures and processes. Hence, our paper argues that cultural and communicative interaction and
interagency at different levels are a major driver for the creation of new knowledge and dynamic capabilities
particularly in transitional economy. The paper applies a case research method based on cultural-historical
activity theory and developmental work research approach, examining the pursued topic in Chinese and
international firms operating in South China.

Keywords: Dynamic capabilities, knowledge creation, cultural interaction, and communication

1. Introduction
The creation of new knowledge and dynamic capabilities (i.e., capabilities that make it possible to
modify, restructure, and renew the existing knowledge base and capabilities) is often related to
knowledge workers and knowledge-intensive organizations operating in rapidly changing and
turbulent environments. While the image of routine-based production systems is typically portrayed
as mechanical and static or slowly changing, the issues of knowledge creation and dynamic
capabilities are highly relevant to the Chinese manufacturing companies we studied for the
following reasons:
1. The case companies concretely manifested and acted as drivers of the Chinese economic
reform leading towards the market economy in a way which totally changed the official
economic philosophy and basic assumptions from the Planned Economy Paradigm to the
Socialist Market Economy Paradigm;
2. China has rapidly been connected with the world’s most advanced production and
management systems of leading global companies. The new ideas, methods and tools were
introduced, implemented and operated in an unfamiliar environment in a hybrid way due to
business globalization and a huge portion of foreign investments in China, thus manifesting
huge capacity to adjust and restructure existing routines and capabilities;
3. The competition in the markets of manufactured products and services was extremely fierce
because of the large supply of local cheap labour and other cost-effective resources and
applications;
4. Socio-cultural and many other unexpected factors are influencing and challenging the basic
principles and conceptions of modern Western type management and governance.
In our view, because of the facts above, the discussion of knowledge creation and the development
of dynamic capabilities in Chinese production systems may enhance our understanding of the
nature and complexity of change and development in a broader way. The dynamic capability view
proposes that capacities for mastering change are the most essential elements of sustaining a
firm’s competitive advantage, especially in the conditions of rapidly changing environments, and is
related to the increasing interest of both academics and practitioners in knowledge creation and
innovation activities (Ferdinand et al. 2004; Jantunen 2005; Pöyhönen 2004). In this connection the
most fundamental question is what the driving force for the creation of such capabilities really is.
The existent literature draws our attention to several identifiable sources and processes such as
resource creation, coordination, entrepreneurship, and asset selection. This view clearly
emphasizes the crucial role of top management. Our paper, however, argues that cultural and

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communicative interaction and interagency at different levels of the organization are the major
drivers for the creation of new knowledge and dynamic capabilities in Chinese production systems.

2. Culture and cultural interaction

The intimate and interactive relation between culture, organizational knowledge, capabilities, and
routines has been acknowledged in the literature. In particular, the close connection of culture with
tacit knowledge, operating routines, and capability development has been emphasized (Nelson &
Winter 1982; Nonaka & Takeuchi 1995; Sackmann 1991). Researchers such as Cook and Yanow
(1993) see organizations as cultural rather than cognitive entities. This means that learning and
knowledge creation are a collective enterprise to be done by the organization as a whole, not just
by individual within it. In a similar way, we understand culture in terms of both mental and material
artifacts mediating organizational capabilities, routines, and activities. Mediating artifacts include
material tools and technologies, but they also include sign systems, symbols, concepts, and
cultural models (see D’Andrade & Strauss 1992).

The mediating function of culture does not mean that culture imposes on organizational routines
and capabilities, but that organizational culture is both embedded in and built through routines and
static and dynamic capabilities. Thus, we propose that the significance of organizational culture to
routines and capabilities should be understood in terms of dynamic processes rather than static
structures.

In short, culture plays a central role in mediating organizational behavior, routines, and capability
development activities; and vice versa, routines and capabilities function as basic elements for
building organizational cultures.

2.1 Western versus Chinese production cultures and management systems

As Boisot and Child (1996) have already pointed out, “China’s rapid economic development is
being accomplished through a system of industrial governance and transaction that differs from
Western experience” (p. 600). In light of this and others’ work, the key dimension we have identified
in differentiating two lines of Western and Chinese production cultures and management systems
are task-oriented vs. relation-oriented cultures and management systems (Beamer 1998; Boisot
and Child 1996; Hong & Engeström 2004; Nonaka & Takeuchi 1995; Worm 1997). We find that
they are particularly useful for the issue we discuss in this paper. Below are some distinctive
features of each system.

2.1.1 The Western production culture and management system

ƒ Is task/performance-oriented and impersonal, often governed on the basis of explicit laws or
behavioural rules and performance measurement methods,
ƒ Emphasizes standardized and codified training systems and the role of explicit knowledge, and
ƒ Values quantitative measurement and performance efficiency, focusing on cause and effect with
an emphasis on results; in this sense, it is more related to the high appreciation of the so-called
scientific management originated by Frederick Taylor.

2.1.2 The Chinese production culture and management system

ƒ Is relation-oriented and personal, and governed on the basis of guanxi (the Chinese concept of
guanxi refers to interpersonal connections or informal social networking, and is important in the
Chinese business world, which is largely based on reciprocity and mutual favors),
ƒ Emphasizes experience and the role of tacit knowledge, and
ƒ Values holistic approach and group harmony, placing great importance on informal relationships
among the people who generate the results; in this sense, it is more related to the high
appreciation of the humanistic approach to management originated by Peters and Waterman
(who emphasize much more the sharing of values of employees and the role of “corporate
culture”).

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2.2 Cultural and communicative interaction in the context of the study

Cultural and communicative interaction in the context of our studies encompasses both
organizational and national culture. It captures the dynamic interrelationships between
1. Different managerial assumptions developed through different cultures (performance efficiency
vs. group harmony);
2. Management approaches, systems or management know-how embedded and practiced in a
dominant way in one but not the other type of organization or business environment (scientific
management vs. humanistic management);
3. Pervasive and long-standing cultural models such as guanxi and face which may have a
profound influence on managerial and organizational behavior and production operations; and
4. Systems of management and production operations on the shopfloor.

3. The creation of dynamic capabilities

3.1 Dynamic capabilities and knowledge creation

The dynamic capability view (DCV) focuses on understanding the sources and processes leading
to and sustaining competitive advantage during the conditions of rapid change (Eisenhardt & Martin
2000; Ferdinand et al. 2004; Jantunen 2005; Kyläheiko et al. 2002; Pöyhönen 2004; Teece et al.
1997). Dynamic capabilities (DCs) are vital since they have been considered as the major source
for creating new knowledge and capabilities needed in today’s dynamic markets. In these markets,
DCs are defined as “the firm’s ability to integrate, build, and reconfigure internal and external
competences to address rapidly changing environments.” (Teece et al. 1997: 516) This implies that
the DCV seeks to provide a coherent framework, which can both integrate existing conceptual and
empirical knowledge and facilitate prescription. DCs are often described in terms of routines to
learn routines, while other DCs are more related to the gain and release of resources, which
include knowledge creation activities whereby managers and others build new thinking within the
firm (Eisenhardt & Martin 2000).

The DCV considers the firm essentially as a knowledge creating, upgrading, and applying entity. It
seeks determinants for inter-firm differences mainly from dissimilar abilities among firms to exploit
existing intangible and tangible assets and to build up new capabilities. To be able to recognize
changes in the environment, to sense even the weak signals, and to utilize opportunities, firms
make use of processes for acquiring information, assimilating it into their organizational knowledge
base, and acting on the knowledge gained (Jantunen 2005).

3.2 The driving forces identified from the literature

Teece (2003) has identified several basic sources for developing the firm’s DCs. They include
coordination, entrepreneurship, and asset selection capabilities. This means, firstly, that routine
processes and resource coordination are an essential element of DCs. Secondly, a far more
important source of DCs lies in the entrepreneurship—the ability of managers not just to sense the
changing market and technological opportunities, but to seize them through effectuating new
combinations. According to Teece, this is where entrepreneurial aspects of management come into
play and where the distinctive transactional competence of the firm meets knowledge/skill
competences. Thirdly, the asset selection capabilities are not macro or cross industrial in nature.
They are situational. For instance, a management’s decision to invest in complementary assets
typically involves decisions whether to invest in a greater or lesser degree, namely, they do not
implicate the choice of industry. The asset selection component in managerial decisions is also
where real option considerations come into play. The value of an asset is not just its current cash
flow, but also its option value often based on waiting, i.e., on learning and decreasing uncertainty
(Kyläheiko et al. 2002).

Even though Teece has highlighted the issue of basic sources for developing the firm’s DCs, there
is still no clear explanation of how they really evolve in time. Zollo and Winter (2002) propose that
DCs emerge from the co-evolution of three learning mechanisms: tacit experience accumulation

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processes with explicit knowledge articulation and codification activities. They have emphasized
the point that DCs are structured and persistent, routine-using organizational activities implying
strong path dependencies. Thus, DCs take time and money to evolve, and their evolvement
benefits from a deliberate learning approach (Zollo & Winter 2002), where operational routines and
the associated capability development are intervened in from a strategic point of view (see also
Antonacopoulou 2005). The emphasis on routines and deliberate learning draws our attention to
the very nature of intervention-based workplace learning as a means for a more systematic and
comprehensive way of analyzing capability development in organizations. Such an approach
implies that in order to understand entirely the creation of new knowledge and capabilities, the
micro level social structures and processes should be taken into account more fully than the
previous literature on dynamic capabilities has done.

4. Case illustration

4.1 Case companies

The two case studies included in this paper were conducted in the Guangdong Province, a coastal
area in South China, which plays an avant-garde role in the Chinese economic development.

4.1.1 Case 1: Company A

This was a Finnish-Chinese joint venture established in 1995, which manufactures mobile phones
and mobile phone accessories. The ratio of the investments made by the Chinese partner to those
made by the Finnish partners was 30:70. Within a year from the establishment, the company’s
personnel had doubled, and in 1997–1998 reached 700 employees. The company’s employees
were mainly from other provinces and known as migrant workers, most of who were female. The
top managers of the company were mostly from the Hong Kong subsidiary of the Finnish company.

4.1.2 Case 2: Company B

This was Chinese Industrial Corporation established in 1992, with personnel of over 8,000. The
company developed to its present proportions from a small-scale township and village enterprise,
which was founded some thirty years ago. Within this large corporation, we focused our studies on
a plant that belongs to the division of air conditioners, and did a follow-up. The plant had just been
established and had some 300 employees. Over 75 percent of the workers in the plant were locals.
Most managers and workers knew each other very well having worked together for many years.
Although it is a Chinese company with a relatively long history, it has increasingly received
consulting services from Western management experts and experimented with some of Western
management systems and tools recently.

Some revealing features of the contrasting cultures in the case companies A and B are highlighted
in Table 1.
Table 1: The contrasting cultures and their interactions in the case companies
Company A Company B
Newly established enterprise with a short history Developed from a local township and village
Management team mostly from the Hong Kong type of enterprise with a long history
subsidiary of the global mother company with workforce Consulting services from Western
consisting mainly of Chinese migrant workers management experts, introduction of Western
management systems and tools recently

4.2 Data collection and analysis

The empirical data of the two case studies was collected in 1998–2000, in collaboration with a local
research team from South China Normal University. The collection of data was based on a
participant approach of developmental work research that capitalizes the longitudinal nature of the
research (Engeström 1987, 1996).

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We started the fieldwork in the case companies by carrying out development work either jointly with
the management or directly in company development programs. We collected the relevant data
and produced intermediate analyses that were fed back to each organization in pre-agreed
sessions where practitioners engaged in dialogue as well as in the analysis and redesign of
company activities. The feedback reports and discussions became an additional source of data for
continuous analysis.

We collected our data mainly by the following methods. Firstly, we videotaped workgroup meetings
and made field notes of their observations. Secondly, we observed and recorded shop-floor work
and interaction with the help of video cameras and audio recorders. Thirdly, we interviewed and
recorded different actors on audiotape. Fourthly, we recorded our feedback sessions and the
ensuing discussions with the managers. Finally, we collected available company documentation.

The focus of the data analysis was on development-related tensions, problems, and conflicts,
which we considered as posing either possibilities or threats to the increasing DCs. Tensions,
problems, and conflicts are not only negative aspects, but also indicate new opportunities for
innovative learning and change and predict the direction of proximal development. It has often
been assumed that such contested fields and chaotic situations function as the source of
knowledge creation and innovation (Engeström 1987, 1995; Ståhle & Grönroos 2000).

4.3 Reflection on our previous studies

The empirical cases studied here showed different profiles in the creation and management of new
knowledge and DCs. The central issues of our reflection include 1) problem situations and
contradictions in production systems and activities derived from our observations, and 2) the
emerging needs for change and the creation of new knowledge and DCs revealed from the cultural
and communicative interaction and interagency of opposing forces and tensions.

4.3.1 Communication and information sharing

Broad local and international markets led Company A to expand its business rapidly and keep
production levels high. At the same time, these markets also brought about new challenges for the
firm in managing and developing mindful practices and DCs on the shopfloor. Communication
between managers and workers presented a key challenge. For instance, in our discussion with
the management, the general manager expressed his dissatisfaction with the way daily work group
meetings were conducted on the shopfloor in his company.
General Manager: Could you [researcher] give us your suggestions? Now, the
morning meetings are conducted together [with all the shopfloor workers] and the
workers and line leaders act like this [GM stands up and salutes in a military fashion].
Researcher: Is that the case? Is there a lack of discussion?
General Manager: Yes, there is a total lack of discussion.
In our conversations with the supervisors, we found out that some of them had previously tried to
organize discussion-based meetings as one supervisor had tried to do because she hoped that her
workers would develop “an attachment” towards their work. However, she explained that there was
a contradiction in holding further meetings in such a way—a contradiction between good discussion
and the time-related pressure that stemmed from production priorities.
Supervisor 1:before, when we had our morning meetings on the first floor in a rather
open atmosphere, that is, everyone participated in the discussions.
Researcher: Is that so? That’s rather interesting. The present situation is quite
different.
Supervisor 1: Indeed, we did try arranging discussions but it just took long and we
have to meet daily output objectives … after some consideration, we changed the form
of the meetings and now simply take 10 minutes to inform employees on matters of
immediate importance.

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To get the production efficiency, it seems to be reasonable to keep short morning meetings.
However, such a formal and non-discussive way of working may limit its potential development to a
large extent. The contradiction here and its resolution seem to present a major challenge for the
firm in developing DCs in the long run.

Concurrently, the market incentive and high levels of production brought Company B endless
vitality. The company enjoyed its production and marketing peak at the same time as we formally
began our research there in 1998. It could easily be felt that, for this company, the market was like
a battlefield where those who impeded the company’s advance perished. Nevertheless, some
problems, which were typical to this period of intense production, greatly dampened the employees’
motivation to work. Consequently, a sentiment of helplessness towards development and learning
grew. When interviewed, workers complained mostly about having to work overtime: they often
worked over 12 hours a day.
[You have to] work an extra shift on Sunday…yet another extra shift. [You have to]
work overtime until late in the evening, always until nine or ten p.m. [It is] not a
question of just one or two days, but instead the [whole] busy [production] period.
Everyone more or less dislikes working overtime day after day. (A day-shift worker in
the Chinese company)
He [the group leader] said: “Production tasks are pressing.” I felt they do not care
about how you feel, just as long as you accomplish your tasks … you work until dawn,
although they themselves do not do the work. I guess that is what they think. (A night-
shift worker in the Chinese company)
The company’s management was ready to loose everything except the market share. The
challenge for developing power to change and DCs here is that it has to be well nurtured before it
can be well used.

There is no one best way of or a principle for communication and information sharing which can
facilitate the best outcome of knowledge generation or management in dynamic and complex
business environments. The case studies here show that the communication in the companies
involved takes place in two directions: towards an increasingly personal character of the principle of
official authority on the one hand (as in Company A), and an increasingly production-oriented
character of the guanxi principle of social networking on the other (as in Company B) (for a detailed
analysis, see Hong & Engeström 2004). This implies that effective organizational communication
depends not only on a formally or mechanically designed system but also on the informal or
organic and dynamic characteristics of the organization, such as the formation of guanxi.

4.3.2 Work motivation and potential for change

With respect to the potential for change, we mainly focused on the factor of work motivation, which
was one of the most concerning issues for the management in the case studies. The results of the
studies here show that the workers’ accounts of the de-motivational factors inherent to the system
in Company A are those pertinent to the lack of comprehension and trust between the frontline
workers and line leaders. They sprout from limited management and communication skills,
assuming roles and posing as role models, the reluctance to deal with workers’ opinions and
suggestions, the rules applied in the selection of line leaders, and the delaying effects of the
material supply on work shifts. Meanwhile, in Company B, the de-motivational factors are those
pertinent to working overtime. They are, for instance, wage and reward practices regarding
performance, job descriptions and work division, material supply, and production planning as well
as daily work arrangements (for a detailed analysis, see Hong, 2000a). These findings indicated
that the motivational problems in Company A are more power- and trust-related, in contrast with
the case of Company B where they are more rule- and procedure-related.

Enlightened by the perspective of DCs and the empirical analysis, the above findings concerning
work motivation imply that motivation and other “potential for change” issues can best be
understood when 1) collective motives and system-specific factors are taken into account (not
limited only to top–down strategy and management), and 2) the focus of research shifts from

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creating universal and static categories of DC components or the “best practice” recipe to sense-
making (articulating meaning and offering interpretation) in the context of culture and activity.

4.3.3 Problem solving on the shop floor

We found two learning issues to be important in the case studies: Firstly, there existed different
problems, challenges, and development requirements for different companies in the areas of
knowledge creation and management. In Company A, the major learning challenge seemed to deal
with the formation of a more socially-based network for developing innovative solutions at work,
while for Company B, the core issue essential for greater business success was to cope with the
formalization of rules and the standardization of work procedures.

Secondly, in the case of multicultural work organizations such as the case companies, learning is a
mutual and interactive process between different production cultures and management systems
rather than an adaptation in one direction. The changing form of guanxi and face (Face is
essentially the recognition by others of a person’s social standing and position) in our case
studies indicates that the complexity, interaction and innovative type of learning, both within a
culture and between different cultures, should be taken into account in the management and
development of DCs in global fast changing industries (for a detailed analysis, see Hong 2000b).

The above findings and reflection, which have been drawn from the case studies, have been
summarized in Table 2. They are mainly concerned with what the researchers have found with
respect to developmental tensions, problems, challenges, the possible synergy and development of
the firm’s DCs.
Table 2: This is how tables should appear
Problem Situation and Emerging Needs for Change & the
Contradictions in Production Creation of New Knowledge and DCs
Systems and Activities
Work Motivation and Potential Company A: -- > Understanding local culture & the
for Change (de-motivational Power- & trust-related relational particularity (e.g. management
factors) role & role models)
Company B: -- > Rule enforcement & internal
Rule- & procedure-related commitment
Problem Solving Routines Company A: -- > Trust relationship between
Difference in approach to work management & workforce
between the workers & line
leaders
Company B: -- > Coping with the formalization of
Old tools vs. change & new rules & the standardization of work
demands of production procedure

Communication and Company A: -- > Personal & relation- centered object

Knowledge Sharing Rule-dominated
Company B: -- > Production-oriented object
guanxi-dominated

5. Concluding remarks
In this paper we employed the concept of DCs as an analytical tool to enable understanding the
issue in relation to fast paced technical innovation, market-oriented production and global
manufacturing efficiency. Our case studies and reflective analysis of the previous findings showed
that cultural and communicative interaction and interagency at different levels of the organization
play a critical role in the development of new knowledge and DCs. This has several implications for
understanding the nature of DCs in general, and in particular for exploring the intrinsic mechanisms
and dynamic processes of knowledge creation and the development of DCs in international
organizations located in emerging transitional economies.

Firstly, even though economic reformation and market forces at the macro level are powerful
drivers for creating new knowledge and capabilities, overstressing the market goal and its pursuit

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may damage the necessary and constructive foundation for the creation of DCs in the long run. It is
apparent that huge marketing demand and production pressure give impetus to change and
development in management systems and shopfloor activities. It is much harder to see that
developing the firm’s DCs takes time and demands a deliberate strategy and innovative learning
actions.

Secondly, the significant role of management–workforce interaction and communication in the

development of DCs should be given its own place. A top–down strategy and management
produce neither sufficient results nor explanations in regards to work communication, formation of
employee motivation, and learning and knowing in Chinese production systems. The development
of DCs, efficient production performance and routine-based innovation demand intensive and multi-
dimensional communication and interaction within the firm and between the firm and its
environment.

Finally, we propose conflicts and tensions arising from diverse mental and cultural models and
activity systems should be seen as potential enablers of creating new knowledge and more
advanced forms of operation and adaptation. In this regard, when two or more cultures meet, the
creation of new knowledge and capabilities is a mutual and interactive process between different
cultures rather than an adaptation to one direction (i.e., to be minimized by aiming to assimilate
towards the dominant culture). Such mutual interaction creates new ways of working and learning,
which differ qualitatively from the original forms. This challenges traditional types of adaptive
learning, suggesting the emergence of an innovative type of learning and knowledge creation
through mutual interaction between the organization and its environment.

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249
Transferring Experience Into an Organizational Resource
Hanna Hovila and Jussi Okkonen
Tampere University of Technology, Finland
[email protected]
[email protected]

Abstract: Human capital has become an important resource for organizations. The effective utilization of
competence is merely economically rational. By ensuring competencies adequate to organizational goals, an
organization creates continuance of activities. In many European countries baby-boomer generations are soon
retiring. The organizations are at risk of losing the valuable experience and competence of these employees.
This increases the need for efficient competence management, which includes e.g. identification of present
competencies and evaluation of future needs. To avoid competence gap, which could threaten the
competitiveness of an organization, it is important to transfer the experience of the senior employees into an
organizational resource, e.g. transfer it to the younger employees. This paper is based on a literature review,
which discusses the threat of competence gap in organizations, especially in the Finnish public sector, and
different methods for competence transfer. This paper also presents a process model for competence transfer.
The model is based on decision-making methodological research, i.e. it is normative and theoretical by nature.
The model consists of two components: a general presentation of its stages and a 2x2-table including the
subprocesses to be applied in the model. The presented competence transfer model is valuable especially to
organizations losing critical knowledge and competence and it is adaptable to different contexts. In the present
quick-paced working-life systematic competence transfer creates continuance, effectiveness and occupational
well being in organizations.

Keywords: competence transfer, process model, and competence gap

1. Introduction
The so-called baby-boomer generations those were born shortly after the World War two will retire
in a few years time. This trend is typical to many European countries but Finland will face this
dilemma among the first (Moilanen 2005a). In addition, the age structure in Finland is contorted by
the decreasing birth rate. Also the amount of foreign workforce in Finland is low (Vesterinen 2002).
As a result the amount of the active, work-aged people will lessen as the amount of people
depending on the services of the society will be greater than before (see e.g. Kauppinen 2005).
The situation poses many challenges to different parties and areas. Societies will have to take care
of an increasing amount of people with a decreasing amount of active, work-aged people. National
welfare and economy could be in danger. Individual’s occupational well being is being threatened
as personnel will have to deal with rising workload with decreasing resources.

The retirement of the baby-boomer generations will be a challenge especially to those

organizations, where the average age of the employees is high. A large amount of employees are
about to retire in a short period of time. These employees have the longest experience in work life
and life in general. This experience is also based on the time before major technological
developments, which the young have no experience of (DeLong 2004). In addition, the seniors
have often worked for the same employer for a long time, which means they have a lot of
organizational knowledge (DeLong 2004). Their applied knowledge is what organizations require in
order functioning fluidly and competitively. If this experience is not transferred to the remaining
employees or into the organizational structure, organizations are in risk of losing it.

What actually is in stake is the competitiveness of those organizations where the threat of
competence gap is significant. According to DeLong (2004) a competence gap is often realized
trough mistakes, unexpected quality problems or other costly disruptions in performance. Lost
competence can have anticipated or unanticipated effects and the impacts of these can be tangible
or intangible. The costs generated by these effects can be immediate or delayed. (DeLong 2004)
The loss in resources should be compensated with improvements in productivity. Despite
productivity increase there will also be a fierce competition for new resources, i.e. new employees,
which forces organizations to pay more attention to their employer image.

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In consequence, organizations will struggle to match resources with requirements as available

workforce decreases and competence is lost. Competence management and transfer of
competence offer means of trying to solve this dilemma. In organizations, transfer of competence
from the seniors to the younger employees can have three major effects in light of this upcoming
competence gap (fig. 1).

Figure 1: Competence transfer in organizational context

Firstly, the growing attention to the elderly caused by competence transfer, will most likely improve
their work conditions even if preventative actions might be too late. It can also improve the future
occupational well being of the younger employees by matching available resources with workload.
Secondly, competence transfer will improve organization’s productivity by adding the competence
resource of the remaining employees. In combination with these two factors competence transfer
can result in the third factor, i.e. staying competitive.

2. Managing competence
An individual’s knowledge and competence do not benefit the organization, if the organization isn’t
able to utilize them. Competence management aims at making the most of the competence of the
individuals to achieve organizational goals. It includes competence identification, development and
utilization, and assists in concentrating on strategically important areas with respect to the
personnel. Knowledge, competence and experience are at the core of competence management
and the threatening competence gap. Next this paper will consider these terms more closely. After
that, the concept of competence transfer will be examined in more detail.

2.1 The characteristics of knowledge, competence and experience

Knowledge is the understanding of data and information gained with experience (Awad and Ghaziri
2003). It includes use of discretion and the ability to make interpretations (Alvesson 2004). There
can be identified different elements from knowledge. Knowledge can be tacit or explicit. Knowledge
can also be viewed as static or dynamic. Tacit knowledge is personal know-how that is hard to
express with words. It is mental schemes and beliefs, which guide actions. (Nonaka and Takeuchi
1995) It is also non-verbal and abstract knowledge, which is included in actions (Järvinen, Koivisto
and Poikela 2002). During time, tacit knowledge is tested and modified from so many different
angles and perspectives, that it is hard to bring back to a detailed level. Even though tacit
knowledge is hard to put to words, it becomes visible in action. It cannot be transferred trough
technological channels, but through social interaction. (Ståhle and Grönroos 1999) Seniors have
more developed methods for knowledge use, and the tacit knowledge of the seniors has its special
features compared to the younger employees (Paloniemi 2004).

Explicit knowledge is formal knowledge and can be presented with words and numbers (Nonaka
and Takeuchi 1995). This means it can be transferred on paper or in files. Explicit knowledge forms
approximately five per cent of the competitiveness of an organization. The rest 95 per cent is based
on other forms of knowledge (Ståhle and Grönroos 1999) i.e. mostly tacit knowledge. The division
to tacit and explicit knowledge is quite common. But in addition, some see also tacit knowledge
consisting of different dimensions. These are e.g. technical and mental dimension (Huuhtanen et al
1999). Virtainlahti (2005) also brings forth the bodily dimension of tacit knowledge. With different
senses one can sense messages from the environment and interpret these based on experience. A
physical experience creates long lasting learning. An example of a physical experience is an
abnormal tremble coming from productive machinery. With seniors this bodily dimension of tacit
knowledge has grown strong with experience.

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Knowledge can also be considered as either static or dynamic. The static view examines what
knowledge actually is and sees it sometimes as an object. The dynamic view regards knowledge
as action, i.e. knowing. The dynamic view has in recent literature gained more ground. Newell et al
(2002) describe the dynamic view as a process, where knowledge isn’t an object owned by
individuals or organizations, but it lies in different practices. Instead of people creating knowledge,
knowledge would appear in social processes. Also Blackler (1995) emphasizes that knowledge
should be considered as something people do and not as something people own. The static view to
knowledge would be easier when considering knowledge transfer. Knowledge would be a certain
entity to be transferred from one place to another. However, the dynamic view will benefit the
organization more, because only activities, not static resources, can lead to good results. The
dynamic view of knowledge is very closely related to tacit knowledge and competence.

Ståhle and Grönroos (1999) see competence as the ability to apply knowledge to perform a task or
solve a problem. According to Sydänmaanlakka (2000) competence includes knowledge, skills,
attitudes, experience and contacts. In addition to these, organizational competence includes
processes, workings and culture. The competence of an organization is a combination of individual
competencies and capabilities, which in interaction becomes greater than the sum of its parts
(Lankinen, Miettinen and Sipola 2004). An organization can’t own the competence of its individuals,
but only manage it. Organizational competence remains in the structures of an organization even
when individuals leave the organization (Ahvo-Lehtinen and Maukonen 2005). Competence
remains in e.g. systems, ways of working, tools and attitudes. Software systems have become ever
more important knowledge reserves (Ahvo-Lehtinen and Maukonen 2005). It is fair to say that the
structures for organizational competence have strengthened and also the role of organizational
competence has grown.

In summary of the above, competence can be said to be the ability to apply knowledge in social
context for goal achievement. Organizational processes, ways of working and culture create the
framework for application and basis for competence. Experience both widens and deepens
competence. It also helps utilize competence more fully, with greater selection of mental schemes
and the possibility to make the right choices. Experience builds up the competence of an employee
eg. by testing it in practice. In general, experience is often paralleled by tacit knowledge (Ståhle
and Grönroos 1999), but does also have interesting features of its own. People gain experience
over time and through different events. Long work history doesn’t automatically generate rich
competence reserve. All depends on how a person is able to learn from, apply and utilize
experiences in work (Paloniemi 2004).

Work experience eases completion of tasks by creating routines for action. For an experienced
employee, every move or decision will not require vast contemplation. Routines ease solving both
new and familiar problems. A broad experience base both quantitatively and qualitatively helps
widen a person’s perspective on work and life (Paloniemi 2004) and thus hinders negative or
unbalanced routines. Also experience of life is valuable and creates emotional intelligence
(Ilmarinen, Lähteenmäki and Huuhtanen 2003). The older one is the more likely one has gained
useful experiences. Figure 2 tries to picture the relationships between the terms knowledge,
competence and experience. The impulses from the environment, such as data and information,
can be considered as inputs for knowledge processing. Knowledge, competence and experience
are means and enablers for processing. Final result from this is productive action, which can be
considered as the highest level of competence. The value of knowledge, competence and
experience in work life comes from enabling productive action. Action also generates more
experiences.

The strengths of the seniors improve the possibility to create action. Seniors process knowledge
with a greater probability more efficiently or correctly than younger employees. It should be noted
that figure 2 is an oversimplification, because it doesn’t include e.g. feedback or learning.

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Figure 2: Productive action results from different aspects of knowledge

Knowledge, competence and experience are very closely related terms and even overlap. This
paper prefers the term competence, even though English literature often uses the term knowledge.
This is because we want to especially emphasize the application and experience-based sides of
knowledge.

2.2 Competence transfer

Knowledge, competence and experience are all the substance of competence transfer.
Competence transfer is in the literature more commonly called knowledge transfer. This term will
also used in this literature review. Knowledge transfer has long been an interest of individual
psychology researchers. Lately it has also occurred in strategic management and organizational
theory literature. An important topic for knowledge transfer research has also been macro-
organizational relationships. (Argote et al 2000) While pursuing competitiveness, productivity and
occupational well being, the transfer process also increases the knowledge resource in value as
well as in quantity. This is due to the dynamic feature of knowledge (Newell et al 2002). At the
same time the need to disseminate knowledge grows. Knowledge lost can create a strategic threat
if it reduces organization’s capacity to innovate, weakens the ability to pursue growth strategies,
makes impossible to execute low-cost strategies with reduced efficiency, gives competitors an
advantage or otherwise increases vulnerability (DeLong 2004). This means that not all knowledge
and competence is necessary to preserve, but an organization should concentrate on the critical
knowledge and on the particular strengths different aged people posses.

According to Bender and Fish (2000) knowledge transfer includes transfer of information to the
receiver and the absorption of this knowledge by the receiver. The receiver can be an individual or
a group. Knowledge transfer is truly valuable to the organization if it leads to changes, new ideas
and development of processes and practices. Argote et al (2000) as well as Argote and Ingram
(2000) see knowledge transfer as a process, where the experience of one organizational unit
affects another. An organizational unit is an individual, team or division. So in addition to your own
experiences it is possible to learn indirectly from the experience of other people (Argote et al 2000).

As already described above, the basic elements of knowledge or competence transfer are the
source and recipient. Tacit knowledge is hard or even impossible to externalize e.g. into
information systems for others to study independently. Externalization is also often uneconomical.
This is why knowledge transfer is based mostly on social interaction. Social processes include
sharing, interpreting, maintenance and retention. (Argote et al 2000; Ståhle and Grönroos 1999)
Through speech and actions knowledge spreads to other members of the organization and is
interpreted and internalized by the receivers. Social interaction helps keep knowledge up to date.
Dialogues are a good way to interpret and update knowledge and at the same time create shared
meaning. When it comes to tacit knowledge, wide distribution helps store it even if key personnel
exit the organization.

Shariq (1999) emphasizes knowledge transfer to be an interactive and dynamic process. In such a
process the transformation of knowledge is inevitable. One person doesn’t interpret knowledge
exactly the same way another does. This is at least due to different experience base. Similar
organizational background prevents major knowledge transformation (Argote and Ingram 2000).
For example organizational culture steers interpretation along the same line. Similarity between
organizational members also helps to protect competence, just because it is hard to transfer it
outside the organization. (Argote and Ingram 2000)

So far knowledge transfer has almost automatically been seen as a process. Szulanski (2000)
reinforces this view by noting, that the process model helps in observation of learning and detection
of possible problems. Modelling transfer as a process brings forth continuance and orderliness. Still

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the practice of knowledge transfer shouldn’t be continuous or too intensive when considering the
forth-coming competence gap and baby-boomer generations (Koivuniemi 2004). As such it will
become too wearisome. For example the duty to advise constantly changing substitutes will disturb
motivation and execution of actual responsibilities, although substitutes are meant to ease the
burden.

Literature offers multiple methods for knowledge and competence transfer. These methods, listed
in figure 3, take into account the special qualities of the seniors. According to DeLong (2004)
transfer methods can generally be classified as providing either direct or indirect knowledge
transfer. Direct knowledge transfer practices include more personal interaction between knowledge
source and recipient. ICT has enabled interaction to become more virtual. Indirect knowledge
transfer usually involves some kind of mediation between the source and recipient. Knowledge is
captured from the source, edited, formatted and stored for later use. The anonymity of the source
makes it hard for the recipient to question or verify the knowledge being transferred.

The nature of tacit knowledge and the characteristics of seniors make social interaction and
learning by doing, i.e. direct transfer practices, the most important methods for competence
transfer. Sometimes the externalization of knowledge, i.e. indirect practices, is justified. Selection of
proper methods depends on the characteristics and significance of knowledge and competence
being transferred. Figure 3 illustrates a 2x2-table with competence transfer methods classified
based on the form of knowledge they transfer and the number of people taking part in the transfer.
First, it is important to consider whether knowledge can be transferred only as tacit or if it could be
explicated. When explicated, knowledge could lose some of its depth. Next, the number of
participating employees has to be decided: to how many people is this knowledge critical and
should be transferred. Some knowledge is so specific that not many people can utilize it. In such
cases it is often effective to transfer it socially in pairs or small groups. Written knowledge is easy to
transfer to multiple recipients. Also available time and money guide the choice of method. Some
take longer and are more expensive than others. Direct knowledge transfer methods are often
such.

Figure 3: Methods for competence transfer

Most of the transfer methods include either individually created explicit knowledge to be passed on
indirectly or people working together sharing tacit knowledge directly in co-operation. In co-
operation knowledge doesn’t have to be explicated. Transfer methods can also be based on a
mixture of these two types. The methods found in literature are so multiple in numbers that it is not
possible to describe them in detail. Figure 3 presents many competence transfer methods, but is
not meant to be extensive. The choice of a concrete method or even the development of a new

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method can be quite straightforward after the knowledge to be transferred is identified and fully
analyzed.

3. Process model for competence transfer

After considering the theoretical perspectives, it is possible to create a process model for
competence transfer in organizations. According to Lankinen, Miettinen and Sipola (2004) only a
few organizations already have a systematic plan for transferring knowledge, competence and
experience across the organization or for ensuring that the personnel can learn from experiences
of others. Every organization should take a unique approach to competence transfer that is not
narrowed down to just information and communication systems (DeLong 2004).

The process model for competence transfer presented in this paper is designed for systematic
competence transfer including the choice of proper methods, implementation and evaluation of the
implementation. Because the development of a universal competence management model is
almost impossible (Viitala 2005), this process model includes the possibility to adjust it to different
contexts. Of course, this could be criticized for making the model quite general in nature, but it also
makes the model more applicable.

The competence transfer process consists of four stages as illustrated in figure 4. The stages are:
1) the identification of the threatening competence gap, 2) the identification of the competence
critical to preserve and the selection of the right transfer method with the help of the 2x2-table
(figure 3), 3) the implementation of these methods to practice and 4) the evaluation of these actions
and the outcome.

Figure 4: The stages to be covered in the competence transfer process

The identification of a possible competence gap should be constant or at least a regular activity for
the management. In addition to evaluating the whole process before iteration, also the
implementation stage should be controlled during the required actions. This is firstly, because the
implementation time is quite long. Secondly, most of the applied methods are complicated social
processes, where a lot can be done by e.g. matching the right people together to carry out suitable
tasks. Next the stages of the model will be described in more detail.

3.1 Identification of the competence gap

An organization can face a competence gap when it is about to lose a significant amount of
competence critical to competitiveness. The gap can be sudden, such as key personnel handing in
their notice or it can be anticipated some years ahead as the retirement of the baby-boomer
generations. In the case of competence gap, the organization won’t have the required resources to
achieve its goals without special actions. Not all competence is critical to competitiveness or goal
achievement. Only the competence vital to the functioning of an organization is profitable to
transfer. In order to recognize a competence gap, an organization has to know its present
competence and the competence needed to achieve its vision and strategy. This identification is
one of the basic elements of competence management and is probably already done in some
depth in the organization.

Figure 5 illustrates the steps for recognising the competence worth-wile to transfer. The
competence required to achieve the set goals is divided into present and future, i.e. not yet existing
competence. The figure shows also other areas of competence management besides competence
transfer, such as competence maintenance and development. The process model presented in this

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paper concentrates directly to competence transfer. In addition, as the figure shows, not all
competence has to bee secured in the organization.

Figure 5: Identifying different kinds of competence (adapted from Haasteena Tuleva Osaaminen -
Työryhmä 2003)
In addition, an organization has to recognize the age dependencies of its competence. The
competence gap is probable, if the critical competence is based much on the experience of the
seniors. This competence process model can be applied successfully even in approximately one
year, even though some of the transfer methods function better in the long term.

The width of the competence gap is dependent on the quality of the competence and amount of the
employees leaving the organization and the time period this departure will happen in and also on
the characteristic of the remaining employees. The employees remaining in the organization might
not be equipped to receive and learn the competence of the seniors. This can be reality in
organizations where different tasks are centred among different age groups or the turnover of
younger employees is great. In such cases the appliance of transfer methods might require
recruiting of new employees first.

3.2 The identification and positioning of the competence to be transferred

Because of the characteristics of tacit knowledge, it is difficult to fully recognize all the competence
and knowledge a person possesses. This stage of the competence transfer process concentrates
on identifying the special features of the competence of those individuals, who have been identified
as critical to the competitiveness of an organization. These features influence the choice of a
proper transfer method. Also the characteristics of the individual should be taken into account when
choosing the transfer method. The time available is also a factor when deciding on the method to
be used.

The competence should be positioned on the 2x2-table (fig. 3). A central matter to consider is
whether the competence should be transferred as tacit or as explicit knowledge. In the 2x2-table
(fig. 3) the y-axel represents this dimension. In the other end there is the tacit knowledge requiring
social processes and in the other end there is explicit knowledge requiring documentation. In the
2x2-table (fig. 3) the x-axel represents the amount of people participating in the transfer. The
number of competence sources and recipients can vary depending e.g. on the importance of the
competence to be transferred.

Basically multiple methods can be aimed at one critical competence. Often this not possible in
practice because of the lack of other resources, such as time and motivation. The seniors should
not feel that they are being exploited, and they should be able to concentrate also on their actual
duties. Also it is recommendable for the younger employees to be able to quickly put their new
knowledge into use.

3.3 Implementation
The implementation should be executed according to the principles of the chosen competence
transfer method. More methods and detailed descriptions can be found in literature. The prior two
stages of the transfer process should ensure partly that the implementation will succeed. But also
the practical arrangements require careful planning and resources.

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Competence transfer requires certain organizational circumstances to be successful (see Goh

2002). Also the support of the management is essential (Moilanen 2005b). Valpola (2003)
emphasizes that everyone should be able to use the methods for knowledge adoption most
suitable for them.

As stated earlier, the implementation will be performed in parallel with the next stage, evaluation,
when considered necessary. Actions should be viewed critically but at the same time the
organization should operate with determination to transfer competence.

3.4 Evaluation
The evaluation stage dissects how the advance planning and the implementation have been
managed. If the measures taken do not seem sufficient enough and there still is a recognizable
competence gap and the competencies haven’t already been lost, the process can be applied
again from the start.

However, the evaluation is not simple. The transfer of competence, especially tacit knowledge
cannot be observed, which means it cannot be measured easily. Also the inputs and outputs in
social interactions are difficult to focus on the particular people. The evaluation should be done by
measuring and assessing the final situation and end result. The results of those methods, where
explicit documentation is developed, are more concrete. (Osterloh and Frey 2000) In the case of
the baby-boomer generations retiring, the results from competence transfer will become evident not
until the competence is really lost and the younger will have to solve their tasks with what they
have learned from other’s experiences. In a shorter time period, the opinion and satisfaction of both
parties is a possible indicator of the success of the competence transfer process.

4. Conclusions
The significance of the experience of the seniors to the competitiveness of an organization is
undisputable. Now that the baby-boomer generations are soon retiring, organizations are facing a
potential competence gap. This is a future challenge to e.g. Finnish organization both in the public
and private sector. It is important to transfer the evanescent experience into an organizational
resource, i.e. share it with the remaining, younger employees or transfer it to the organizational
structures.

Knowledge and competence have for a while been of interest to the academics. The competence
transfer process model presented in this paper attempts to combine theories and practical methods
to preserve the competitiveness of an organization. It aims at making organizations knowingly
contemplate the reasons, which can cause a competence gap. The model consists of two
components: the 2x2-table illustrated in figure 3 presenting the sub processes, i.e. the methods for
transfer, and the general presentation of the stages for the process presented in figure 4.

There are already many potential methods for transfer. The decision of which method to choose
should be based at least on cultural, personal, conditional, time and money constrains. Often social
interaction provides profound knowledge and is also a convenient style for the seniors. These
methods might even have a positive effect on organizational climate and culture. Explication of
knowledge is an efficient way to diffuse knowledge broadly and it also stores the knowledge for
later use.

The process model can be applied in different organizations, both in the public and private sector. It
is great in variety, so it takes into account the starting point and requirements of each organization.
It is the most adequate in organizations, where the competence gap could realize in 1-2 years time.

When competence transfer succeeds it can in addition to competitiveness have an effect on the
remaining personnel’s occupational well-being and also direct attention to the working conditions of
seniors. Competence transfer can also affect productivity despite the competence lost. Securing
existing competence will help keep productivity in original level or even improve it. It is important to

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recognize the competence gap as a real risk early on and systematically start competence transfer
between the members of an organization.

To avoid competence loss, application of competence transfer methods is not the only action to
take. There still are a lot of negative attitudes towards the aging, when they should be seen as a
resource. By caring for their well being early, seniors will be able to stay active longer. In addition,
the employer image should be strengthened in order to get new, competent recruits. Also the
organizational culture should underpin networking and social learning.

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Viitala, R. (2005) Johda osaamista! Osaamisen johtaminen teoriasta käytäntöön. Keuruu:
Inforviestintä Oy.
Virtainlahti, S. (2005) Hiljaisen tiedon tunnistaminen ja siirtäminen. In Moilanen, R., Tasala, M. and
Virtainlahti, S. (eds.) Hiljainen tieto näkyväksi. Helsinki: Edita.

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Topic Maps for Knowledge Creation With Stakeholders
Isabelle Kern
University of Applied Sciences for Business Administration, Switzerland
[email protected]

Abstract: In a business world that is becoming increasingly more complex, firms need to create new
knowledge to sustain a competitive advantage. The tools used for knowledge creation must on the one hand
allow for grasping and mapping this complexity. On the other hand, they must allow for the integration of a
broad spectrum of stakeholders. Firms cannot afford to just integrate their employees and ignore the
knowledge of external stakeholders such as suppliers, customers, regulators or experts (Post et al. 2002a,
2002b). The broader the spectrum of involved stakeholders, the more unique and rare knowledge can be
created which in turn constitutes a competitive advantage for the company. For this reason, this paper
attempts to apply the knowledge management framework by Nonaka and Takeuchi (1995) (SECI model) to
the firm’s internal and external stakeholders. The aim of the SECI model (socialisation, externalisation,
combination, and internalisation) is to transform implicit into explicit knowledge, to enrich it with other explicit
knowledge and to turn it into implicit knowledge again. Simultaneously, the mental models of the involved
persons are disclosed in order to create knowledge and to disseminate it within the firm. With the help of XML
Topic Maps (ISO standard 13250), these mental models can be depicted and visualised, and dynamic
knowledge networks can be constructed. In addition, Topic Maps also allow the visualisation of stakeholder
relations as well as a combination of both, mental models and stakeholder networks. Evidence from a case
study based on a qualitative analysis will illustrate the suitability of Topic Maps for knowledge management.

Keywords: Knowledge management, internal and external stakeholders, topic maps, visualisation of mental
models

1. Introduction
In today’s complex business world, knowledge creation is paramount for firms to achieve and
maintain a competitive advantage. While the number of knowledge management tools is constantly
increasing, most of them are text-based and therefore prevent an intuitive grasp of related
information and knowledge. Similarly, many firms merely include their employees into their
knowledge-creation processes (e.g. Voelpel et al. 2005). Yet other stakeholders, such as
customers, suppliers, external experts or NGOs can be considered valuable sources of novel
knowledge as well. For these reasons, an attempt is made in this paper to illustrate how Topic
Maps can be used as a knowledge creation tool, which allows for easily grasping and mapping
complex relations. In addition, internal and external stakeholders are integrated into the knowledge
creation process. The rest of the paper is structured as follows: Chapter 2 will introduce the SECI
model by Nonaka and Takeuchi as a framework for knowledge creation and discuss the role of
Topic Maps in knowledge management and within the SECI framework. In chapter 3, the role of
stakeholders in creating knowledge is illustrated. The case study and the methodology applied to
illustrate the use of Topic Maps are described in chapter 4.

2. Knowledge management

2.1 The SECI model

The so-called SECI model (socialisation, externalisation, combination, and internalisation) by
Nonaka and Takeuchi (1995) is a very comprehensive and suitable framework for knowledge
management for several reasons:
ƒ It makes a clear distinction between implicit and explicit knowledge.
ƒ It treats the question of how implicit knowledge can be made explicit and how individual
knowledge can be transformed into collective knowledge.
ƒ It includes the actual process of knowledge creation and dissemination.
The key to knowledge creation lies in making explicit the individual’s mental models so that they
can be understood, compared and further developed by others. When this occurs, a knowledge
spiral is created which is based on four steps: socialisation, externalisation, combination, and
internalisation, or SECI for short, as illustrated in figure 1.

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Figure 1: The SECI model of knowledge conversion (modified from Nonaka and Takeuchi 1995:
62 and 71)
The four steps can be described as follows:
ƒ Socialisation: In this process, tacit knowledge is created (e.g. technical skills or mental models)
through sharing experiences. This occurs through learning by doing, observation and imitation.
A particularly interesting feature is that knowledge is created in a “mute” state, i.e. without using
language.
ƒ Externalisation: The second step of the knowledge spiral is used to convert implicit into explicit
knowledge. The means applied are discussions, metaphors or visuals. The goal strived for is to
render the individual’s mental models visible in order to reach a common understanding.
Moreover, discussions of mental models allow for the creation of new knowledge.
ƒ Combination: In the third step, the results of the previous externalisation are transferred to a
knowledge system. The existing explicit knowledge is standardised, linked to other explicit
knowledge and made accessible throughout the firm. This includes meetings just as well as
exchange of documents or access to a database.
ƒ Internalisation: In the fourth and closing phase of the cycle, explicit is turned into implicit
knowledge. By means of trial and error processes, the newly created knowledge becomes
embodied. As new experiences are made, new mental models and skills are built whereby the
individual and the organisational knowledge base are expanded simultaneously.
Ideally, the four steps are repeated continuously leading to the creation of a knowledge spiral, as
Nonaka and Takeuchi emphasise: “The organization has to mobilize tacit knowledge created and
accumulated at the individual level. The mobilized tacit knowledge is ‘organizationally’ amplified
through four modes of knowledge conversion and crystallized at higher ontological levels. We call
this the ‘knowledge spiral’, in which the interaction between tacit knowledge and explicit knowledge
will become larger in scale as it moves up the ontological levels. Thus, organizational knowledge
creation is a spiral process, starting at individual level and moving up through expanding
communities of interaction, that crosses sectional, departmental, divisional, and organizational
boundaries.” (1995: 72)

2.2 Topic maps

Knowledge management without an IT tool is inconceivable. The available tools cover a wide
range, from Computer Supported Cooperative Work systems (CSCW) which are used to improve
group work and productivity (Schwabe and Krcmar 1996) to communities of practice which often
combine yellow pages (a directory of the community members and their expertise) with a document
repository (Wenger 2001), and tools based on artificial intelligence such as case-based reasoning
with which new problems are compared and matched to existing cases and experiences in order to
create new solutions (Tsui 2003, O'Leary 2003).

While most of these tools are text-based, Topic Maps can add an additional quality as they allow
for structuring knowledge and relations in semantic networks, thus also visualizing correlations that

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may not have been obvious before. “Semantic networks consist of nodes and links. Nodes usually
represent objects, concepts, or situations within a specific domain. Links represent relationships
between the nodes that have a semantic meaning to them. Both the nodes and the links can have
labels.” (Freese 2003: 328) As this description can also be applied to Topic Maps, they can be said
to represent semantic networks.

Topic Maps conform to the ISO Standard 13250 and consist of three main elements: names to
define topics, associations to build relations between the topics, and occurrences to attach
resources to particular topics (Kay 2004, Pepper 1999, Rath 2000). Thanks to these elements,
topic maps are well suited for knowledge management as they allow the user to construct a well-
organised network which on the one hand associates different topics to each other, and on the
other hand links these topics to information resources such as databases or documents. There are
hardly any limits to Topic Maps: Everything can be represented as a topic so that Topic Maps can
express organisational structures just as well as knowledge structures. In fact, some participants of
the case study (cf. section 4 below) consider the most appropriate solution to be a combination of
both organisational and knowledge structures. Topic Maps are not limited in size either; they can
be constantly expanded and adapted to the users’ needs to navigate through the bulk of the
information available today, which is why they are sometimes also called the “GPS of the
information universe” (Rath and Pepper 1999: 3). Thanks to these characteristics, Topic Maps are
ideally suited to cover steps 2 and 3 in the SECI model described above: On the one hand, they
serve to make the users’ mental models explicit and therefore accessible and comprehensible to
others as well. On the other hand, they can be linked to documents and databases thus combining
existing explicit knowledge in novel ways. In the graph below (figure 2), an example of a very
simple Topic Map on obesity (cf. section 4, The Case Study) is given:
Food
Industry Advertising Topics (names)
influences and their
influences relationships
(associations)

Obesity
Prevention
influences
Genetics/
Neurology

Databases and
Documents
(occurrences)

Figure 2: Basic topic map on obesity (adapted from Garshol 2002).

Generally speaking, Topic Maps represent knowledge structures in the same way the human brain
does, which not only allows for associations to be made but also helps to transfer the knowledge
into the user’s cognitive processes. In addition, semantic networks and therefore also Topic Maps
are a form of visualisation enabling users to grasp the represented knowledge structures easily
(Malafsky 2003). In order to enhance one’s knowledge, it is necessary to integrate new information
and explicit knowledge into the existing structures. This can be easily done with the help of Topic
Maps, as Jonasson confirms. Although in his description he refers to concept maps it can be just
as well applied to Topic Maps: “Semantic networks help in organizing learners’ knowledge by
integrating information into a progressively more complex conceptual framework. When learners
construct concept maps for representing their understanding in a domain, they reconceptualize the
content domain by constantly using new propositions to elaborate and refine the concepts that they
already know. More importantly, concept maps help in increasing the total quantity of formal
content knowledge, because they facilitate the skill of searching for patterns and relationships
among concepts. Research has shown that well-organized and integrated domain knowledge (as
evidenced by integrated semantic networks) is essential for problem solving.” (Jonassen 2003:
372). The Topic Map tool used for the case study is open-source software called TM4L (Topic Map
for e-Learning), developed by the Winston-Salem State University (USA;
http://compsci.wssu.edu/iis/nsdl/download.html). It consists of two parts:

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ƒ An editor which is used to construct the Topic Maps (it won’t be discussed any further as the
case study participants will only use the viewer), and
ƒ A viewer, which provides a very convenient graphical user, interface (GUI) for the users to
visualise and navigate the Topic Map.
With the TM4L viewer, the developers aimed at realising two principles: First, the handling of the
viewer should not be the main concern of the users, because they should be able to concentrate on
the content of their Topic Map. Second, as users are frequently accustomed to browsing and
searching, both strategies are supported in the viewer in order to guarantee an intuitive grasp of
the tool. Depending on the users’ expertise concerning a certain topic, they have different needs,
which the viewer tries to address: Users looking for specific information are enabled to find it
quickly. Users unfamiliar with the represented topic are enabled to search for topics or relations in
an exploratory way (Dicheva et al. 2005).

Figure 3: An excerpt from the TM4L Viewer: On the left, the alphabetical listing of the topics, in the
middle the tree view of the Topic Map and on the right the graph view
The intuitive navigation in the viewer is further enhanced by the three different views the user can
choose from: the Graph View, the Tree View (cf. figure 3) and the Text View. The graph view
represents the actual visualisation of the Topic Map, whereas the tree view resembles the
representation of information in the Windows-Explorer. The text view, finally, structures the content
according to topics, relations and resources (such as documents or links to web sites). In addition,
seven indexes can be used to browse the content: Subject topics, relationships, topic types,
relationship types, resource types, member types and themes. In order to avoid information
overload, the Topic Map viewer does not display the whole map with its entire links and relations
but only the topics that are directly connected with a specific topic chosen by the user. The
resources belonging to a topic are only visible in the tree and the text view, but not in the graph
view. This way the developers hope to avoid an information overload on the screen (Dicheva et al.
2005). As it is the aim of the case study that the users of the Topic Map visualise their own as well
as other stakeholders’ knowledge representations and mental models, the stakeholder framework
is introduced in the next section.

3. The role of stakeholders

Most firms include only their employees in their knowledge management. Yet, there is no reason
why other stakeholders such as customers, suppliers, shareholders or NGOs would not be able to
make valuable contributions as well. After all, Post, Preston and Sachs define the term stakeholder
as “the individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-
creating capacity and activities, and that are therefore its potential beneficiaries and/or risk
bearers.” (2002b: 19) In order to survive in the long term, it is paramount for firms to create wealth.
Many people and constituents contribute to this wealth creation: employees contribute services and
goods at high quality, which the firm sells; customers who buy these goods and services are

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essential for the success of a company; reliable suppliers who produce at high quality and fair
prices are indispensable for the firm. Their contributions can be either tangible (e.g. financial
assets) or intangible (e.g. reputation, knowledge). As contributors to the organisational wealth,
these stakeholders also have a right to profit from the firm in some way, be it in adequate wages,
good products or long-term contracts. Organisational wealth is not one-sided but, as Post, Preston
and Sachs define it: “Organizational wealth is the summary measure of the capacity of an
organization to create benefits for any and all of its stakeholders over the long term.” (Post et al.
2002b: 45) The research of Berman et al. (1999) proves that stakeholder relations do have a
positive effect on the companies’ financial performance and therefore on their ability to create
wealth.

As stakeholders put something at risk by building relations with the firm, they share a common
interest in the firm, “past, present or future” (Clarkson 1995: 106). As they contribute valuable
resources to the corporation – be they of tangible or intangible character – they also face the risk of
losing their investment and therefore have something “at stake” – from which the term stakeholder
is derived (Kochan and Rubinstein 2000). In order to support the firm in gaining a competitive
advantage and in prospering in the long run, stakeholders can contribute their most valuable
resource – their knowledge. This complies with Barney’s (1991, 1995, 2001) criteria resources that
have to be fulfilled in order to constitute a competitive advantage: They must be valuable, rare and
particularly inimitable. Mahoney (1995: 97) developed this view further by combining intangible
resources and mental models: “Competition between firms involves not only competition between
heterogeneous ‘bundles of resources’ but also competition between heterogeneous ‘mental
models’.” Knowledge and relations that stakeholders offer are both unique, intangible assets as
they are always tied to humans. Thanks to this characteristic, asymmetries between firms
(Capasso 2004) are enhanced and build the foundation for competitive advantage. Good relations
to stakeholders can therefore be very beneficial for companies, particularly if stakeholders are
willing to share their knowledge with the firm. In this respect, it is indispensable to include external
stakeholders, such as suppliers, customers, NGOs, experts etc. into the knowledge creation
processes, as these stakeholders can contribute novel knowledge, new insights and relations
hitherto unknown to the firm. The more different the stakeholders, the more different and the more
valuable the knowledge they can contribute. When collaborating with different stakeholders, it is
important for the firm to know who knows what in order to tap the proper source to solve a specific
problem. In other words, the firm must establish a network of relations to different stakeholders
(Post et al. 2002b, Leana and Rousseau 2000). As Topic Maps can help to define and visualise
such relations, they are particularly suited to build stakeholder networks and to represent
knowledge items connected with the various stakeholders.

4. The case study

The aim of the case study is to analyse whether Topic Maps are suitable for knowledge
management and whether they can visualise the users’ mental models. As this is a unique case
and method to analyse a hitherto inaccessible phenomenon (Yin 1994), a single case-study was
chosen to test the theoretical frameworks. The case study is done with one of the world’s leading
insurers for which obesity is an emerging topic. The WHO defines obesity by the Body Mass Index
(BMI), which is the ratio of weight in kilogrammes divided by the square of height in meters. People
with a BMI of 30 and above are considered obese (WHO 2004). Obesity is one of the major
problems society faces today. The number of obese people is rapidly increasing worldwide, which
has massive effects on health care costs. For the United States, estimates range from $70 to $240
billion per annum, thus overtaking the costs caused by smoking and drinking (Brownell and Horgen
2004, Schlosser 2002, Sturm 2002) – as well as on morbidity (cardiovascular disease, type-2
diabetes, certain types of cancer and hypertension) and mortality (WHO 2004, Rayner et al. 2004,
Fabricatore and Wadden 2003, Brownell and Horgen 2004).For this reason, it is important to
insurers to acquire new knowledge related to obesity in order to insure that pricing and underwriting
in life insurance keep pace with this growing epidemic, but also to be prepared for liability issues as
legal cases against food companies, distributors and the advertising business could leave insurers
exposed to potential claims under certain liability covers.The methodology applied to the case
study is – with certain adaptations – based on the Hermeneutic-Classificatory Content Analysis
(HCCA) as described by Mathes, Roller and Eckert (Mathes 1992, Roller and Mathes 1992, Roller

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et al. 1995, Mathes 1988). The HCCA is well suited for the investigation into rare phenomena as
described by Yin (1994), as well as for the analysis of large and complex amounts of data such as
interviews or documents which cannot be analysed by statistical means. The case study is based
on a qualitative (verbal or narrative as in interviews) analysis and consists, according to Roller et al.
(1995), of the following four steps: preparation of the material (documents and interviews) that will
be analysed; establishing a set of codes; coding documents and interviews; and finally analysing
the results. In the actual case study, the HCCA concept is slightly adapted and consists of the
following steps:
ƒ In a first step, documents on obesity provided by the insurance company are analysed in a
qualitative way. The results are used to develop questionnaires for internal and external
stakeholders.
ƒ Based on the questionnaires, semi-structured interviews with internal experts are made. In
addition, the insurance company organises stakeholder dialogues in which experts inform on
their specialised area (e.g. genetics, prevention) and in which the employees of the insurance
company can discuss the topic with the experts.
ƒ Based on their knowledge and the knowledge they acquired from the external experts, the case
study participants construct a first topic map, which will be elaborated and expanded over time.
ƒ At the end of the case study, the participants will be interviewed again, this time on their
experiences with the Topic Map and its suitability for knowledge management.
The case study has recently started. In a first step, the analysis of the documents related to obesity
was made. This was followed by a first interview stage in which the case study participants were
interviewed about the degree to which they are confronted with obesity in their daily work and their
opinions on how the Topic Map ought to be structured. In addition, a first expert hearing (with
internal and external stakeholders) has taken place as well. A first analysis indicated that it might
be useful to construct the Topic Map in a way that depicts the stakeholder network (i.e. the
insurance’s organisational structure) and at the same time illustrates the knowledge fields covered
by the experts involved. Based on these insights, two drafts of the Topic Map were made (on
paper, for easier handling): In one, the central topics depict the insurer’s organisational structures.
On a second level, the participants representing these structures are linked, and on a third level,
the obesity topics, which the participants deal with in their daily work, are depicted. In the second
Topic Map draft, the central topics are concerned with obesity, and the persons dealing with those
topics are illustrated on the second level. Both drafts have been sent to the participants for revision.
Once they return their suggestions on how to adapt the Topic Maps, the different versions (which
represent the participants’ mental models on obesity) will be constructed in the TM4L editor (these
result in a XTM files) and afterwards transferred to a laptop, so the participants can view and
browse their own Topic Map as well as those constructed by the others. In addition, they can
constantly adapt the Topic Maps (be it their own or one of the other participants’) and connect
useful resources (links to websites or documents) in order to better illustrate the way they see the
relations in the Topic Map.

The aim of the case study is to answer the following questions:

ƒ The most important and also most interesting question is whether the different Topic Maps will
converge over time, i.e. whether the involved internal stakeholders will construct a single Topic
Map and thus adapt their own mental models to an overall mental model. It is also possible that
several completely different parallel Topic Maps exist or that they partly converge.
ƒ A further question is how the participants integrate the knowledge they gathered from the
external stakeholders (i.e. from the expert hearing). This new knowledge can result in new
topics and relations added to the Topic Maps or simply in documents integrated into existing
topics.
ƒ The Topic Map viewer offers three different views (graph view, tree view, text view). It will be
interesting to see whether the view intended for visualisation (graph view) will be used more
frequently than the others, whether participants prefer to work with the view they are probably
most familiar with, i.e. the tree view which resembles the Internet Explorer, or whether they use
the different views according to different needs.

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ƒ In addition, the Topic Maps will be compared to other knowledge management tools the
participants are familiar with. This will highlight the advantages and disadvantages of Topic
Maps with respect to their suitability for knowledge management.
By answering these questions and supporting the results with a qualitative analysis of the case
study outcomes, it will be possible to evaluate the suitability of Topic Maps for knowledge
management and to assess to what degree they can visualise mental models of internal and
external stakeholders. Particular emphasis will be laid on the strengths and weaknesses of Topic
Maps in comparison to other, already established knowledge management tools. This will on the
one hand help to improve the Topic Maps themselves, and on the other hand to find a solution to
the question of how Topic Maps can be fruitfully applied in firms.

5. Final conclusions and remarks

Topic Maps are a useful tool for visualising knowledge and hidden correlations. They can
contribute a new quality to knowledge management and support firms in their endeavour to gain
competitive advantages. It is paramount for firms not to restrict their knoweldge management to
their employees but to include external stakeholders and their novel ideas as well. Topic Maps are
well suited to integrate this external knowledge and to present it in an intuitive form. The Topic Map
used in this case study has a great potential. It might be interesting to investigate if additional
features could be introduced and the effect they might have on the user. One feature could be the
opportunity to weigh the relations (e.g. by using different colours) in order to distinguish important
from less important relations, another a search function. A further aspect to investigate is how
Topic Maps can be usefully combined with other existing knowledge management tools in order to
enhance their visualisation potential.

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Voelpel, S. C., Dous, M. and Davenport, T. H. (2005) "Five Steps to Creating a Global Knowledge-
Sharing System: Siemens' Share Net", Academy of Management Executive, Vol. 19, No. 2,
pp. 9-23.
Wenger, E. C. (2001) Supporting Communities of Practice: A Survey of Community-Oriented
Technologies, Retrieved 2nd June 2004, http://www.ewenger.com/tech/.
WHO (2004) In Fifty-Seventh World Health Assembly, No. Issue World Health Organization, pp. 1-
20.
Yin, R. K. (1994) Case Study Research: Design and Methods, Sage, Thousand Oaks.

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Partaking as a Tool for Knowledge Creation and Sharing
in Practice
Per Kirkebak and June Tolsby
Ostfold University College, Faculty of Engineering, Norway
[email protected]
[email protected]
Abstract: This paper demonstrates the importance of partaking in promoting knowledge creation and sharing
in practice. The empirical data used as documentation is taken from a recent study aimed at optimizing a
corrugated cardboard machine in a paper mill. The study is based on a SCOT approach (Pinch and Bijker,
1989; Latour, 1987; Law, 1992) and demonstrates the importance of including workers in discussions
concerning their workplace. Through a broad participatory process the workers became aware of what they
could contribute and developed a sense of ownership in relation to the process (Wenger, 1998). This was
achieved by building trust between the researcher and the workers, and creating a safe atmosphere where the
workers could speak openly and freely. Three important provisions were made at the beginning of this project
which proved vital to the knowledge sharing process. Firstly, only those working with the cardboard machine
were included in the process. Secondly, no representatives from management were included in the processes
at the corrugated cardboard machine. Finally, the management entrusted the researcher with the project, and
was in turn continuously informed about project progression. Thus this study demonstrates the importance of
anchoring the fundament for knowledge creation and sharing at the organization level where problems occur
and where solutions need to be implemented. Consequently the approach used in this research is a bottom-up
process. This way of approaching knowledge creation and sharing concentrates on those who need the
knowledge which is developed (Webb et.al., 2002). In reality what happened in this project was a redistribution
of power and influence (Lukes, 1974). This paper argues that knowledge creation and sharing will only
succeed in an organization if it is related to real problems and involves those facing the problems in the
process.

Keywords: Learning and knowledge process, Scot, involvement, power creation, trust

1. Introduction
This paper demonstrates the importance of partaking in promoting knowledge creation and sharing
in practice. When this happens it causes a change in power structures by giving more responsibility
to workers. The case presented in this paper shows how it was necessary to restructure power in
order to develop a high degree of employee involvement. This was one of the effects of involving
employees in an internal project, which aimed to increase the production efficiency of a corrugated
cardboard machine in a paper and cardboard mill.

The paper and cardboard mill had been striving to fulfil their strategic vision – “We shall inspire and
improve” – in order to enable the company to take a leading market position by 2008. The idea
behind this vision was that a strong focus on inspiration would improve the daily work, since this
would lead to an increase in worker motivation and job satisfaction. The top management team
formulated the company vision, and all employees were informed about the vision in a large
barbeque party defined as a kick-off meeting. The company continued to work with their vision for
one year after the kick-off meeting, but as time progressed, the momentum in this work was lost. In
order to speed up their work with their strategic vision the company started to search for ways to
revitalize the process. At the same time a regional research programme was announced which was
aimed at increasing the innovation capacity of regional companies within the nutrition- and paper
industries by focusing on the inclusion of workers in discussions on work challenges and problems.
This programme was called the Value Creation 2010 Research Project (VS2010). The paper and
cardboard mill therefore decided to join the VS2010 project.

As a result of their entry into the VS2010 research programme, researchers were invited to the
company to discuss how they should work to realize the company’s strategic vision. Consequently,
with the aid of the researchers the company defined four internal projects. One project was to focus
on internal communication, one on problems related to sick leave, one on improvement of the work
environment and one aimed to increase production efficiency in general. In order to be more
specific about production efficiency, the production manager suggested that they focus on

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improving the efficiency of the company’s corrugated cardboard machine, which was considered by
many to be the heart of the company.

2. Reflections over method and data

The empirical data used in this paper is taken from a recent study carried out in a paper and
cardboard mill to optimize a corrugated cardboard machine. The process began in November 2005
and is still going on. The epistemological background for this investigation was the SCOT approach
in combination with communities of practice (CoP) (Pinch and Bijker, 1989; Latour, 1987; Law,
1992; Wenger, 1998). Our study was carried out using action research (Levin and Klev, 2002).
Data were collected in the form of interviews, observations and meetings with the employees and
managers working at the corrugated cardboard machine over a period of six months. The first
months were used to interview all employees working at the corrugated cardboard machine. The
researcher participated in the two daily work shifts at the machine. In this way the researcher
developed an overview of the work processes at the corrugated cardboard machine, got to know
the employees who worked with the machine and earned their trust. In addition interviews were
conducted with the production manager and the foreman to identify technical challenges and
machine production potential. As a result of these activities a report was written which described
the current challenges at the corrugated cardboard machine and how these challenges could be
met. This report was then presented first to the employees at the machine to get their feedback on
the content and anchor the process at the shop floor level.

3. Defining an inclusive learning approach

In accordance with Illeris (1999) we claim that learning is both about experience, practice, skills,
knowledge, attitudes, and emotional reactions. Illeris (1999) has tried to tie together some of the
different perspectives on learning. He says that learning comprises the results of the learning
processes, the cognitive processes taking place within each individual, the social interaction
between the individual and his/her material and social surroundings, and finally learning as a
synonym for teaching. He narrows down this broad definition by saying that learning basically
consists of two related processes, which influence each other. Firstly, the co-play between the
individual and its surroundings including interaction with different types of media (e.g. a book, a
tape, a computer), and secondly the internal cognitive acquisition- and preparation process leading
to something being learned, a learning result (Illeris, 1999, p.15-16). In this paper Illeris’s (1999)
definition of learning is used. We define learning as having taken place when a project worker is
able to reconstruct, reapply and explain how a particular solution solved a particular problem during
the product development project. Thus learning involves some negotiation of meaning, it has been
made tacit (been internalised within the individual) (Easterby-Smith et.al. 1999; Polanyi, 1983) and
it has been reified (materialised in some way) (Wenger, 1998). This implies that learning occurs
through social interaction (Wenger, 1998; Lave and Wenger, 1991). Wenger (1998) later explored
in more detail how practice is more than just a learning process; the community of practice is
created as a continuous process of negotiation and renegotiation of meaning and this process
forms our identity.

His idea is that members of a community of practice participate in a shared activity or enterprise.
But, he emphasizes that participation embraces ‘all kinds of relations, conflictual as well as
harmonious, intimate as well as political, competitive as well as cooperative’. It also includes ‘our
ability (or inability) to shape the practice’, and furthermore, ‘participation goes beyond direct
engagement in specific activities with specific people. It places the negotiation of meaning in the
context of our forms of membership in various communities. It is a constituent of our identity’
(Wenger, 1998: 57). Learning is, under these conditions, considered to be a social process, which
occurs as a result of the interaction between the people attached to the project. The results of the
learning process materialise through identifiable changes in the produced product, or in changes in
the processes related to production or both. But an inclusive learning approach involves taking into
consideration how power constellations influence decisions, and acknowledging that power and
knowledge are inextricably intertwined. Therefore power structures will influence what is known and
who knows. Our point of departure for an analysis of power and knowledge is based on the three
dimensions of power elaborated by Lukes (1974); power may not only exist in an actual conflict, or

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when actors constrain themselves from raising certain issues because of different barriers, but also
when people’s needs and desires are shaped by agents of power so that the outcome is not in their
real interest, Klev (1993). Lukes (1974) identifies three dimensions of power as follows:
ƒ In Lukes’s first dimension of power he sees a person a as exercising power over a person B in a
manner that is contrary to B’s interests.
ƒ In Lukes’s second dimension of power, power is something that suppresses decisions and
issues where there is an observable conflict of interest, typically when policies are formed
based on what should be included and what should not be included.
ƒ In Lukes’s third dimension of power, he claims that control of knowledge is critical to the
exercise power.
Lukes’s first dimension of power focuses on behaviour in the decision making process, where there
is an observable conflict of interests between the participating actors, in determining who wins and
who loses in clearly defined issues. The absence of anyone in the debate, their non – participation
– is interpreted as being due to their own apathy, and not due to a process of exclusion from the
political process. Knowledge may be understood as the resources that can be mobilized to
influence debates and to create new knowledge. However, little attention is paid in this definition of
power to those who are not represented in the decision making process, nor to how forms of power
affect what types of problems come to be a part of the agenda. Bacharach & Baratz (1970)
criticized Lukes’s first dimension of power by arguing that this dimension has a strong behavioural
focus, in terms of identified human actors. In Lukes’s (1974) second dimension of power, power
suppresses decisions and issues when there are observable conflicts of interest, typically when
policies are formed based on what should or should not be included.

In Lukes’s (1974) third dimension of power he claims that control of knowledge is critical to the
exercise of power. Knowledge mechanisms such as information control, secrecy, education,
socialization, and the creation of political beliefs and ideologies become important in creating an
understanding of how power operates. This three dimensional framework of power has been a
useful way of understanding power and knowledge creation. It focuses on all the various
constellations of interest; the first two dimensions concentrate on the view of the interests of the
individual.

In this paper we are interested in showing how power manifests itself as a division between the
management’s overall vision and the work processes taking place at the corrugated cardboard
machine. We are particularly concerned with the dynamics between periphery and core, in terms of
power differences, as regards different actors or actor groups and their chances of having a say in
processes that concern them.

4. The paper and cardboard mill case: Restructuring power through

participatory processes in order to improve learning conditions
This case study of the corrugated cardboard machine started in mid November 2005. The aim was
to increase the efficiency of the machine by 25 percent. The scope of the project was defined after
discussions with the employees working at the cardboard machine. The project group consisted of
the foreman and the external researcher, who decided to investigate the potential for increasing the
efficiency of the cardboard machine by 25 percent. After some preliminary investigations it became
obvious that the achievement of this large increase in efficiency was realistic. But, the researcher
pointed out at this stage that this would not be a quick fix for the company. Implementation would
take time and both the technical staff and the organization itself would have to cooperate in order to
realize the efficiency potential of the machine.

4.1 First project meeting

At the first meeting in the paper mill the project group discussed challenges and problems related
to a low utilization of the cardboard machine. Obviously, some ways of increasing efficiency, mostly
of a technical character were already known. However, the company had so far not been able to
implement solutions to increase the efficiency of the cardboard machine. Despite a rather open
atmosphere in the meeting nothing was said about the reasons why a systematic examination of

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the matter had not been formerly undertaken. It was decided that the project group would consist of
the foreman of the cardboard machine and the external researcher.

Furthermore, the project group decided to try to determine how a 25 percent increase in efficiency
at the cardboard machine could be achieved. The project group agreed that a 25 percent increase
was very ambitious, but acknowledged that an ambitious aim was needed to attract attention to the
project within and outside the company. During this first meeting different problems and solutions
affecting the improved efficiency of the cardboard machine were discussed.

4.2 Second project meeting

At the second project meeting, which was arranged by the production manager, all employees
working the two daily shifts at the cardboard machine participated. The foreman, the union
representative, and the researcher also participated. The purpose of this meeting was to anchor
the project with the employees to ensure their engagement and participation in identifying problems
and solutions to problems.

The production manager presented the new project and told the employees about the aim to
increase efficiency at the cardboard machine by about 25 percent. The employees responded
irritably that they had made suggestions for improvements for a long time without being heard. The
employees were suspicious about what was happening, and some of them expressed fear that
the researcher was the top management’s representative and was thus intent on finding ways of
reducing the number of operators working at the cardboard machine. The atmosphere was tense
and there was a heated discussion.

After a while the union representative, the foreman and the researcher took more active part in the
discussion and the atmosphere changed. At the end of the meeting the employees were much
more positive about the project. The production manager, the foreman, the union representative
and the researcher felt that it was up to them and in particular the researcher to establish the
necessary trust between the project group and the employees working at the cardboard machine if
the project were to succeed.

4.3 Collaboration with staff at the cardboard machine

As the project preceded the collaboration with the staff at the cardboard machine improved, and
the necessary trust between the staff and the investigating researcher was established. The
employees contributed with positive feedback to the researcher, based on how they perceived the
work challenges related to the cardboard machine and how efficiency could be improved. The
researcher spent a lot of time in the company with the employees, and was present at all their
shifts. The atmosphere has been open and good. At one point, the employees on the evening shift
told the researcher: “We will manage this project together”. Gradually the focus the staff had on the
machine changed from purely technical problems to also include organizational challenges.

Communication gradually improved in an atmosphere characterized by strong trust. Consequently,

the investigating researcher’s phone number was handed out to all employees at the cardboard
machine. In this way the employees were able to report to the researcher whenever an interesting
development occurred at the cardboard machine.

During the working process only actors working directly at the cardboard machine were involved in
the work. However, the project group, even at the board level of the company, continually informed
the rest of the organization in order to avoid any negative reactions from individual actors or actor
groups.

4.4 Implementation of project results

The project group understood very early in the project that the successful implementation of the
potential solutions to improve the efficiency of the cardboard machine by 25% could only take place
through a strong anchoring of these solutions with the staff on the machine. Consequently, before
the project results were presented to the management, the staffs working on the cardboard

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machine was gathered to approve the potential technical/organizational solutions. This took place
in an open discussion in a trusting atmosphere, creating a common understanding of what would
be presented to the management.

Shortly thereafter, the operators working at the cardboard machine took part in a workshop. There,
the project group presented questions challenging them to prioritise a task list to improve the
efficiency of the machine, assigning each item to a responsible actor. Surprisingly only
organizational elements were mentioned in the discussions. During the workshop the production
manager turned up, announcing that the operators had free reigns to start up the improvement
work. His only restriction was that the cardboard machine had to be kept running.

5. Discussion
The study demonstrates the importance of including workers in discussions concerning their
workplace. Through a broad participatory process the workers became aware of what they could
contribute and developed a sense of ownership in relation to the process (Wenger, 1998). This was
achieved by building trust between the researcher and the workers, and creating a safe
atmosphere where the workers could speak openly and freely. Three important prerequisites that
helped to achieve knowledge sharing were established at the beginning of this project. Firstly, only
those working with the cardboard machine were included in the process. Secondly, no
representatives from management were included in the process. Finally, the researcher was
entrusted with the project by the management. In this way the study of this project is an example of
a bottom-up process that demonstrates how the fundament for knowledge creation and sharing
needs to be anchored at the level where the problems occur and where the solutions to the
problems will be implemented. This way of approaching knowledge creation and sharing is based
on who is supposed to know and who needs to know (Webb et. al., 2002). In reality what happened
in this project was a redistribution of power and influence (Lukes, 1974). An important prerequisite
for the acceptance of the researcher’s investigation of the cardboard machine amongst the
employees was the establishment of trust but also the fact that the investigating researcher had
substantial knowledge about paper and cardboard production. The researcher had both a
university degree within the field and long practical experience from the paper and packaging
industry.

6. Conclusions
This paper has proven how the success of knowledge creation and sharing in an organization
depend on addressing concrete problems and involving those facing the problems in their solution.
The project group analysed the possible causes of low capacity at the cardboard machine, focusing
on technical elements. During this investigation it became apparent that the organization knew
about many of these technical challenges, but few changes had been implemented to improve the
machine.

Thus, the low efficiency of the cardboard machine could not be blamed solely on technical
problems; part of the explanation could be found in the organisation itself, in particular the lack of
communication between management and employees. This is consistent with the socio-technical
thinking necessary for bridging the gap between technology and the organisation. According to
Levin et.al (1994; 2002) this is called a socio-technical approach. Susman (1983) claims that socio-
technical design involves a search for the best solution, which often leads to opposing demands
from the technical and social systems. This means that relations between the technical and social
systems must be optimal in order to arrive at good solutions involving compromises from both
parties (Trist and Bamforth, 1951). This also applies to the case study of the cardboard machine
and this relationship is illustrated in Figure 3.

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 Per Kirkebak and June Tolsby

Figure 3: Illustration of the Socio-Technical Relation

One of the consequences of the corrugated cardboard project, a technological transfer project, was
that it forced through necessary organizational changes in the company. Using a technological
project, it was possible to restructure power, start a learning process and convince the
management that this was a fruitful approach that eventually would lead to an increase in efficiency
at the corrugated cardboard machine.

References
Bachrach, P and M.S. Baratz. (1970) Power and Poverty: Theory and Practise, Oxford University
Press, New York.
Easterby-Smith, M., J. Burgoyne, et al. (1999) Organizational Learning and the Learning
Organization: Developments in theory and practice, SAGE Publications Ltd, Gateshead.
Illeris, K.(1999) Læring - Aktuell læringsteori i spenningsfeltet mellom Piaget, Freud og Marx,
Roskilde Universitetsforlag, Gylling.
Latour, B. (1987) Science in Actions. Harvard University Press.
Lave, Jean and Wenger, Etienne (1991) Situated Learning: legitimate peripheral participation,
Cambridge University Press, Cambridge.
Law, J. (1992) “Notes on the Theory of Actor Network: Ordering, Strategy and Heterogeneity”,
System Practice, Vol 5, No. 4, pp379-393.
Levin Morten and Klev Roger (2002) Forandring som praksis – Læring og utvikling I
organisasjoner, (Our translation: Change as Practice – Learning and development in
organizations), Fagbokforlaget, Poland.
Lukes, S. (1974) Power: A Radical View, Macmillan, London.
Pinch T. and Biljer W. E. (1989) The Social Construction of Technical Systems, MIT Press,
Massaachusetts.
Polanyi, Michael (1983) The Tacit Dimension, Peter Smith, Gloucester Madd.

Susman,G. (1983) “Action Research: A sociotechnical Perspective “ in Beyond Method - Strategies

for social research G.Morgan (Ed), Sage, Newbury Park.
Trist,E and K.W. Bamforth (1951) “Some social and psychological Consequences
of the Longwall method of Coal getting”, Human Relation, Vol 4, February, pp3-38.
Webb Jen, Schirato Tony, Danaher Geoff (2002) Understanding Bourdieu, Allen & Unwin/Sage
Publications Ltd, London.
Wenger Etienne, (1998) Communities of Practice, Learning, Meaning and Identity, Cambridge
University Press, Cambridge.

273
Business Strategy Drives KM Strategy: A Case of a
Central-European firm
Gábor Klimkó1 and Róbert Tóth2
1
MTA Information Technology Foundation, Budapest, Hungary
2
MOL Plc., Budapest, Hungary
[email protected]
[email protected]
Abstract: The company in the case is an integrated oil and gas company, one of the determining actors of the
Hungarian economy and the CEE region. The corporate strategy targeted a regional consolidating role. In
1999 a holistic knowledge management strategy was prepared and accepted by top management that was to
achieve quick wins. Knowledge management activities, however, were mainly restricted to using sophisticated
information technology tools. Management interest in the programme gradually faded away until acquisitions
shed light again on the necessity of knowledge management in 2004. The knowledge management strategy
was renewed, its scope was widened, activities were revitalised. A new business strategy was published for
2006-2010 and this is the ultimate guideline for knowledge management. The lesson of the case is fairly
simple: knowledge management activities must provide value for money otherwise they will be abandoned.

Keywords: Case study, knowledge management strategy, alignment.

1. Introduction – raison d’etre and approach

Multinational companies in the oil industry (Shell, BP etc.) initiated knowledge management (KM)
programs already during the early 90’s (more than a decade ago!, see for example Davenport and
Prusak 1998, Wakin 1998, Brennemann et al. 2000). These KM experiences are among the oldest
ones; their approaches have been quoted and imitated in other industries several times. These KM
programmes caught the attention of the academic sector as an obvious subject as well..

This was the case at our company (MOL Plc., http://www.mol.hu/ ), too which is a dominating
player in MOL Group, an integrated oil and gas group of companies. In 2001, one of the authors
studied the case of MOL as a researcher whereas the other author was a core member of MOL’s
knowledge management team from very the beginning. Five years have passed since a KM
function was established at MOL and it seems to be beneficial to have a glimpse of what has
happened with respect to KM. At MOL a formal KM strategy was developed and accepted in 1999
with a two-year time horizon. The need for aligning business strategy and KM strategy is widely
supported in the literature. “A company’s KM strategy should reflect its competitive strategy”
(Hansen et al, 1999) A competitive strategy is clearly expected to focus on creating value for
customers, turning a profit, and managing people. The fit between the two strategies is sometimes
viewed as a critical success factor for KM (Zack 1998, O’Dell and Grayson 1998, Binney 2001).
Zack went further by stating “… the most important context for guiding knowledge management is
the firm’s strategy. Knowledge is the fundamental basis of competition. Competing successfully on
knowledge requires either aligning strategy to what the organization knows, or developing the
knowledge and capabilities needed to support a desired strategy.” (Zack 1999). However, there are
a number of companies where there was no KM strategy though they were pursuing KM activities
(KPMG Consulting 2000, Maier and Remus 2001). In such cases we cannot speak of any match or
fit between strategies. For those who believe in the top-down manner built management style, the
idea of having an accepted, formal KM strategy will be very appealing.

The case is presented as it is. There was neither a specific research objective nor any hypothesis
to be verified during the observations of this recap. There has been no attempt to compare the
MOL experience with other ones. There are, however, a number of practical lessons to be learned
as a result of MOL’s KM activities that are reinforcing the obvious necessity of a strong link
between business needs and KM activities. In this case what happened was that changing
business needs reinforced the link between business requirement and KM activities. The basic
lesson of the case is strikingly simple: KM activities must provide value for money.

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2. The MOL experience

2.1 The starting years (1999-2004)

MOL is one of the determining actors of the Hungarian economy, whose shares are traded in the
Budapest stock exchange as well as in the London SEAQ and in Warsaw and Luxemburg. The
company’s majority owners are foreign institutional investors. The company’s activities include oil
and gas exploration, production (“upstream”), refining and marketing (“downstream”) both for
corporate and retail customers as well as petrochemical business and gas transmission. In 1999
the company owned a total of 447 filling stations in the region. In Hungary, prices in the oil
business are uncontrolled, whereas in the gas business they are controlled by legislation. The
globalisation of the oil sector posed a number of challenges for the company. Multinational
companies were looking for expansion opportunities in the Central and Eastern-European region,
and Hungary’s approaching accession to the European Union brought new tasks, too. Globalisation
permitted comparison as benchmarking data were available about the companies of the sector.
MOL set the goal of achieving a performance level positioned in the upper quarter of the sector.
For efficiency reasons the company started a large scale staff cut-back, the number of employees
was reduced by 1700 in 1999, and it was the company’s intention to carry out further reduction.
Furthermore, a cost saving program was initiated to reduce administrative and organisational costs.
The goal was to attain a yearly reduction of 100 million USD until 2002. The next table summarizes
some characteristics of MOL /source: (MOL 2001-2005), note that for the years 2001-2002,
financial statements were available in mHUF in the Annual Reports of MOL/.
Table 1. Some revealing data of MOL (source: MOL Plc. Annual Reports)
2001 2002 2003 2004 2005
Staff 9390 7296 6539 5546 5348
Net sales (mUSD) n/a n/a 6,792 9,727 12,390
Net income (mUSD) n/a n/a 444 1,033 1,227
The improvement of capital efficiency was to be achieved through the introduction of strict resource
allocation regulations. Company hierarchy levels have been reduced from eight to five, the number
of organisational units has been halved. Professional people with experience acquired at
international companies were appointed to senior management and mid-management posts. The
company intended to increase retail trade in an aggressive manner while reducing operating costs.
A business process re-engineering project was started and certain support services were
outsourced. The company focused its business portfolio. Rationalisation was carried out in the
fields of supply, refining and logistics; plants operating with a high overhead were closed down.
The chemicals portfolio was rationalised, too. The exploration portfolio was focused on domestic
exploration. Acquisitions were carried out during the course of regional expansion, which was and
has been part of the company’s strategy. The goal is to attain a regional consolidating role.
Consequently the criteria of strict capital efficiency, simplicity, efficiency and transparency must be
complied with during the course of investments. The importance of KM was obvious for the senior
management of MOL who arrived from multinational companies, and thus, on their initiative, the
Knowledge Application Project was kicked-off at the end of 1999. The aim of the project was to
develop the company’s Knowledge Management Strategy White Paper, with a time horizon of three
years.

The classical gap analysis technique was used during the preparation of the strategy. The business
goals of the company were used as a starting point, to which knowledge management objectives
were subordinated. This (knowledge) strategy put forward a shared and commonly accepted
definition of knowledge and KM. It proposed a holistic approach and did not stop at technological
developments only. Achieving quick wins was set as a strategic objective; therefore the scope of
the strategy was limited in terms of supported business activities. An action plan was submitted in
order to build-up a proper environment where, among others, the organisational issues of KM, the
development of the culture promoting knowledge sharing and the selection of the suitable
technology were discussed. The strategy went beyond the framework of a traditional strategy by
including a detailed tactical (implementation) plan, too. It included ten potential pilot application
fields from which two were chosen (the competitive intelligence and the EU regulatory and lobby
knowledge base). For both chosen applications the setout objectives were strengthening of existing

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work processes and improvement of their efficacy and efficiency. The project for the preparation of
the knowledge strategy document presented its findings after four and a half months, expending a
total of 12 manmonths' work. The senior management of MOL in March 2000 approved the
document. The company appointed knowledge management officer, KMO, subordinated to the
chief information officer, CIO. The knowledge management officer came from the human resources
management field. The implementation of the two pilot applications started inmediately. These
pilots, however, were information technology (IT) related actions by their nature. The KM staff was
under the auspices of the IT unit of MOL, and the stress shifted towards IT aspects of KM activities.
A “KM portal” was established and a corporate yellow pages project was initiated, too. Though the
projects were continued KM activities seemed to smooth into the work of the IT unit (note that
originally a holistic approach had been accepted that emphasised the importance of the human
side). The KM strategy was not updated until mid-2004, however it was acknowledged in 2003 (the
originally planned lifespan of strategy was 2002).

2.2 Regaining momentum (2004-2006)

In 2004 MOL acquired Slovnaft, a company working in the same line of business in neighbouring
Slovakia. The integrated operation and cooperation between the two companies as well as seeking
for synergies led to the investigation of possible rationalisation (e.g., common usage of Reuters,
Platts databases and other external information resources etc.). MOL faced problems that are
classified usually under the general term of change management. Because of the nature of such
questions, previously applied supporting mechanisms such as the KM strategy were reassessed. It
was asserted that institutionalized knowledge is needed during the change period. Top
management therefore did not drop the original KM objectives but asked for a verified KM
approach and an updated road map. The mission of KM in MOL Group was restated. KM was
expected to improve MOL Group image and increase the set of potential answers to strategic
issues and challenges by
ƒ Developing corporate memory; mobilising and utilising intellectual and informational assets on
cross-border level
ƒ Aligning individual and corporate aspirations
ƒ Improving level of joy and motivation for better performance
The scope of KM was to cover both service and production activities. KM, however, was designed
to play slightly different roles in these two areas. In service activities KM is part of the everyday
course of business, in production it is expected to provide a competitive advantage. It was also
pointed out that KM should not work as a stand-alone effort but as part of the company’s operation.
The role and the responsibility of the central KM group (and co-ordinating team) were redefined.
The updated road map listed the applicable tools, processes and people in three different time
frames (short, medium and long term). New strategic targets appeared in the text as e-learning,
corporate dictionary, help card, knowledge asset, content management, collaboration tools, etc.
Traditional tools of change management such as ”group level rotation” were also incorporated. The
expectation was that successful KM initiatives should have significant financial contribution through
strategy-linked business objectives supported by systems and infrastructure along with a conducive
corporate culture. The style of the updated strategy document was fitted for an “international,
English speaking, integrated multinational” company.
The following critical success factors were identified for the creation and sustenance of the
corporate KM programme
ƒ There must be a clear link to corporate strategic objectives, as well as to business priorities.
ƒ Senior management should openly support KM.
ƒ A culture of knowledge sharing and learning should be built.
ƒ Knowledge should be viewed as a corporate resource.
ƒ Managing knowledge should be a systematic process.
ƒ There is a need for a collaborative technology infrastructure.
This updated strategy returned to the original holistic KM approach by asserting that a supportive
corporate culture is the true driver behind all successful knowledge management.

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The next figure illustrates the general ingredients of MOL’s renewed strategy.

Figure 1: MOL’s framework for KM

3. Some of the lessons learnt

KM is viewed at MOL as a vehicle for mobilising and utilising intellectual and information resources
that helps in harmonising organisational and individual interests. The MOL KM staff accumulated
reasonable experiences during their work in the past six years.. Some of their findings are the
following:
1. The key to the success of the KM programme is 10% theory, 90% pragmatic
implementation. Support of business is the first, academic interests will not be financed.
When MOL expanded, KM was revitalised by the natural requirement of sharing knowledge
among people of different nationality and culture.
2. Small is beautiful: KM projects of small, limited scope with the promise of quick wins is more
likely to be accepted (and succeed). This statement, by the way, is not restricted to the area of
KM.
3. There is one statement which seems to be accepted by all parties: there is no single,
universal “academic” definition for KM., However, in a company, where KM activities are
pursued there must be a shared understanding of what the term means. Although redefinition
of such a basic term should be avoided; a compromise should be achieved at the beginning.
(Note that this fits to the assertion that for a community a common understanding of the basic
terms and concepts are more important than the interpretation of those terms, sees Klimkó
2001.)
4. KM is better viewed as a corporate function than an organisational unit. Even if the KM
team is in an organisational unit, unnecessarily strong influence on the KM function posed by
other units, such as the human resources department or the IT department should be avoided.
If IT-relations are overemphasized, there is a temptation to view the position KM as a sub-
function of IT, which would be a mistake. On the other hand, a strictly HR-focused approach
might hide the available commoditised IT technologies supporting collaboration and
dissemination of information; therefore they will not be used and exploited.
In corporate level KM function KM professionals have a role and many other units/individuals
have their role as well. KM should be done “by the company” not just by KM people.
5. It is better to have an expert amateur than an amateur expert, which means one must
appreciate the “instant” and experience-based insights of colleagues. Therefore, the central KM
team should appreciate and facilitiate other’s KM related activities and does not only initiate or
generate them. Need for actions should stem from the core business of that area. Cooperation

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between the KM team and other units of MOL must be facilitated in a proper manner. However,
it must be made clear for all participants if cooperation happens to fail.
6. Fighting against a “common enemy” is a strong cohesive force for people.. Knowledge
sharing happens easily and in a focused way when there is barrier to be dismantled. E.g. if
running a certain KM activity helps workers to cope with unnecessary rules or inefficient
processes/procedures there will be no need for any further special motivation.
7. Imitating or copying the KM practice of other companies will not necessarily help in a
problematic situation. Common sense and trust in internal capabilities often help more than
outsiders’ advice as they do not know and cannot understand internal relations and facts.

4. Linked tightly to the business strategy: 2006-2010

Integrated MOL Group in its business strategy for 2006-2010 is going to continue international
development and efficiency improvements. The vision for 2010 is to be a multinational and
multicultural company with people sharing knowledge, learning, cooperating and communicating
effectively. These objectives are to be achieved by efficient governance and management and by
means of efficient internal coordinating mechanisms. Three main strategic objectives are set:
growth, efficiency and financial flexibility. With respect to growth, MOL wants to triple hydrocarbon
production as well as triple total oil and gas reserves by 2010. The number of filling stations is
expected to grow up to 1,500 by 2010. Efficiency also remains a major concern. The target is the
creation of efficiency improvements worth $US 285 million by 2010, which will involve significant
cost savings and better utilisation of assets.

Both the growth and efficiency requirement could and should be supported by KM activities;
therefore in 2006 the KM strategy is to be updated. The main themes of the update come from
strategic requirements:
ƒ Merger and acquisitions, post-merger integration capability and the process of becoming
international should be supported.
ƒ Business capabilities should be supported by KM activities, processes, and tools.
ƒ Continuous improvement requirement should be counted on.
The strategy is expected to focus on the support of business capabilities. Capabilities (derived from
the business strategy) are decomposed into objectives, which are to be refined into concrete
actions. For example, a capability to be developed is “integration capability of organisations”. This
capability includes the objective of improving collaboration, which is supported by proper e-learning
systems, intranet support, utilisation of groupware, development of collaborating communities, etc.
There are target values for the goals, e.g. intranet is used regularly by 80% of MOL staff; or the
documentation of key projects and teamwork should be all available on the intranet as a common
resource.

5. Findings and conclusions

There is a clear link between the core business and KM activities at MOL from the very beginning.
(Note that one can argue that the need for a KM strategy was partly due to an external push. If all
major players in the industry have KM then MOL should also have one. It is an excellent example
of organisational institutionalism). MOL management selected a cautious, holistic strategy that
changed into an almost pure IT-based approach during its implementation. However, melting KM
into IT resulted in the former’s state of being suspended until business needs woke it up from its
“Sleeping Beauty” dream.

There are different types of KM strategies in the literature, such as “codification vs. personalisation”
(Hansen et al., 1999), or “knowledge hierarchy, knowledge market and knowledge community”
(Dennis and Vessey, 2005) (for a more detailed survey on see Haggie and Kingston, 2003; a
general and business-focused classification can be found in Huang, 1999). Interestingly, MOL’s
strategy does not seem to fall into any of the aforementioned, simplified categories (note that
MOL’s KM strategy is expected to support business needs, and therefore it fits into the typology of
Smith and McKeen, 2003). MOL’s KM approach is low-cost and practice-centred, simple and at the

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same time it seems to be effective. When on reflecting growth needs, MOL changed into a
multinational group of companies by acquiring Slovnaft, Shell Romania and integrating a number of
subsidiaries in the region the need for activities, which are often collected under the umbrella of
KM, were revitalised. Top management asked for and reinforced KM strategy. The business
strategy for the next four years heavily builds on integration capabilities, including accessibility of
information and homogenisation of knowledge. Linking KM strategy to the business strategy is a
must. On the other hand, the KM function, as any other functions in the company is required to
provide value for money. IT played a distinguished role in KM activities at MOL from the beginning.
This experience cannot be attributed only to the fact that initially KM was under IT auspices. In fact,
practice shows that IT often heavily interlaces with KM activities, especially where business
processes span over large distances (Alavi and Leidner 2001). Some of the IT related terms have
been recently reinvented by KM terminology (e.g. what we previously called “central database” is
now called “knowledge repository” etc.). Note that some authors, based on empirical studies, claim
that there is no significant direct effect of IT on KM success (Khalifa and Liu, 2003), which
contradicts the previous view.

The case also highlights the fact that drivers of KM are coming from different sources: growth and
increased complexity, integration needs, business objectives as well as improvement and
objectives. These separate drivers together will probably lead to a permanent interest in an
embedded KM function.

References
Alavi, M and Leidne, D. (2001) “Knowledge Management and knowledge management systems:
conceptual issues”, MIS Quarterly, Vol 25. No.1, pp107-136.
Binney, D (20001) “The knowledge management spectrum - understanding the KM landscape”,
Journal of Knowledge Management, Vol. 5, No. 1, pp33-42
Dennis, A.R and Vessey, I. (2005). “Three Knowledge Management Strategies: knowledge
hierarchy, knowledge market and knowledge community”, MIS Quarterly Executive, Vol 4,
No 4 , pp399-412.
Hansen, M. T., Nohria, N. and Tierney, T. (1999) “What’s Your Strategy for Managing Knowledge?”
Harvard Business Review, March-April, pp. 106-116.
Haggie, K. and Kingston, J. (2003) “Choosing Your Knowledge Management Strategy” [online],
Journal of Knowledge Management Practice, June 2003, http://www.tlainc.com/articl51.htm
Huang, K.T., Lee, Y.L., and Wang, R.W. (1999) Quality Information and Knowledge. Prentice Hall.
Khalifa, M and Liu, V. (2003) “Determinants of Successful Knowledge Management Programs”
[online], Electronic Journal of Knowledge Management, http://www.ejkm.com/volume-
1/volume1-issue-2/issue2-art10.htm
Klimkó, G. (2001) “Knowledge management and Maturity Models: Building a Common
Understanding”, Proceedings of the 2nd European Conference on Knowledge
Management, Bled
KPMG Consulting (2000) Knowledge Management Research Report 2000.
Maier, M. and Remus, U. (2001) “Toward a Framework of Knowledge Management Strategies:
process Orientation as a Starting Point”, Proceedings of the 34th Hawaii International
Conference on System Sciences, IEEE
MOL (2001-2005) MOL Plc. Annual Report 2001-2005 [online],
http://www.mol.hu/en/about_mol/investor_relations/financial_reports/
Smith, H.A. and McKeen, J.D. (2003) “Developing and Aligning a KM Strategy” (Working Paper)
[online], Queen’s Centre for Knowledge-Based Enterprises,
http://business.queensu.ca/knowledge/workingpapers/abstracts/abstract_03_03.htm
O’Dell, C. and Grayson, C.J. (1998) “If only We Knew What We Know: Identification And Transfer
Of Internal Best Practices”, California Management Review, Vol. 40, No. 3, pp. 154-171.
von Krogh, G., Nonaka, I.,and Aben, M. (2001). “Making the Most of Your Company's Knowledge:
a Strategic Framework”. Long Range Planning, 34, 421-439Zack, M. H. (1999)
“Developing a knowledge strategy,” California Management Review, Vol. 41, No. 3, pp.
125-145.
Zack, M.H. (ed) (1999a) Knowledge and Strategy. Boston: Butterworth-Heinemann

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A KM Framework for IT Auditing
Andrea Kő and Zoltán Szabó
Corvinus University of Budapest, Budapest, Hungary
[email protected]
[email protected]
Abstract: Our paper investigates the role of knowledge management in complex system development
projects and IT audit. The primary goal is to provide an evaluation framework for an assessment of the
development of special knowledge management solutions. On the other hand IT audit itself is a knowledge-
dependent activity. Our paper analyses the role of knowledge management in IT audit in general, the
protection of knowledge assets during an audit, the role of knowledge management processes during system
development (from audit point of view) and in the implementation of controls, the relationship of knowledge
management with audit standards. We investigate the specialities of KM developments from audit point of
view (particularly important aspects of audit, specific control objectives) A case study, based on experiences
gained from GUIDE project (IST-2003-507498 funded by the European Commission’s 6th Framework
Programme) illustrates the findings.

Keywords: IT audit, risk, risk evaluation, knowledge management systems, knowledge management systems
development

1. Introduction
Many IT development projects can be supported by knowledge management solutions. The most
promising ones are ontologies and ontology-based knowledge management systems.
Development of ontology-based applications is hot topics nowadays, especially at the field of the
development of complex and large, enterprise-wide applications, like e-Government solutions (at
national and international level). These projects are not “simply” IT projects, but complex
knowledge management projects with special KM-related characteristics and risks. Assessment
and audit of such developments requires special approach. During the evaluation of knowledge
management solutions, knowledge management related aspects have to be assessed also, which
gives additional requirements for audit.

Audit methodologies adopt risk-based approach, so IT auditor has to deal with risks assessment
during the early stages of the audit. While our paper focuses on IT audit and knowledge
management aspects of IT audit, knowledge audit also a relevant concept. First let’s discuss the
most important relevant definitions and their relationships!

Knowledge related audits are classified into two groups in the literature. “The information audit is a
process that will effectively determine the current information environment by identifying what
information is required to meet the needs of the organization” (Henczel, 2000: p211). In this
definition information audit is a tool that can be used to identify strategically significant information
resources, and also identifies those tasks and activities that create knowledge and those that rely
on the transfer of knowledge from other areas of the organisation (Henczel, 2000). An information
audit concentrates on developing a 'knowledge' map of recorded information assets. It can also
identifies the information created and assesses its value, identifies the expertise and knowledge
assets and the information gaps, reviews the current use of external and internal information
sources, and maps information flows and bottlenecks within those flows.

A knowledge audit looks more specifically at the tacit knowledge and knowledge of the
organisation, that is the knowledge, information, expertise, experience and company know-how
that its staff have in their heads. Knowledge audit means an investigation into the organisation’s
knowledge ‘health’. It is conducted to identify an organisation’s knowledge assets, how they are
produced and by whom. Typically a knowledge audit has two main objectives: to identify the 'issues
that impact on knowledge creation, transfer and sharing, and to identify which knowledge can be
captured, where it is needed and can be reused, and to determine the most efficient and effective
methods to store, facilitate access to and transfer of the knowledge. (Henczel, 2000) “A complete
and detailed knowledge audit offers comprehensive examination, review, assessment and
evaluation of a company’s knowledge abilities, its existing knowledge assets and resources, and of

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its knowledge management activities. The knowledge audit is a fact-finding, analysis, interpretation,
and reporting activity, which includes a study of the company’s information and knowledge policies,
its knowledge structure and knowledge flow. The audit brings high visibility to the organisations
knowledge assets” (Hilton, 2002).

A knowledge audit is a systematic review of the firm’s knowledge assets and associated knowledge
management systems, a review of the adequacy and integrity of important organizational assets
and systems. It is problem-oriented; it investigates what knowledge is available, what knowledge is
missing, who needs this knowledge, and how the organization should use the knowledge
(Liebowitz, 2000).

Information systems audit is a process, which collects and evaluates evidence to determine
whether the information systems and related resources adequately safeguards assets, maintain
data and system integrity, provide relevant and reliable information achieve organizational goals
effectively, consume resources efficiently, and have in effect internal controls that provide
reasonable assurance that business, operational and control objectives will be met and that
undesired events will be prevented or detected and corrected in a timely manner (ISACA 2005).
Relationship of knowledge management and IT audit can be described from several aspects, we
can explore many exciting problems by investigating this interrelationship. Next sessions will focus
on the IT audit domain, emphasizing the knowledge-related problems and issues.

2. Relation of knowledge management and IT audit

2.1 Overall role of knowledge management in IT audit

The relation between knowledge management and IT audit has numerous sides. Knowledge
management processes can support the IT audit and vice versa. The auditor has to be
knowledgeable about the system and its environment in order to perform the audit. He has to
capture and structure the relevant knowledge to understand the purpose, the functionality of the
system, to reveal the potential risks regarding the system. The auditor has to map, acquire and
evaluate relevant knowledge during the assessment. Well-developed knowledge management
processes can support these audit activities and leverage the results. Poor knowledge
management activities will make IT audit cumbersome and limit the usefulness of the outcome.
Knowledge management systems can be valuable sources of audit-relevant knowledge. Several
knowledge management solutions could help the audit among others the followings:
ƒ Audit related domain ontologies could be used for avoiding conceptual misunderstanding,
ƒ Document management systems and text mining could support the further analysis of audit
reports.
Audit can be also a major source of new knowledge about IT systems, processes, organization,
risks, etc., by transforming tacit knowledge or make it explicit, or even discovering new knowledge
(e.g. revealing deficiencies, which require different management from audit aspects, additional
controls).

Another important aspect is that audit can be used to identify knowledge management (and KM
systems) related risks. One chance is the insufficient protection of information and knowledge
assets, which can be an outcome of the audit (e.g. not satisfactory level of authorization and
authentication of a knowledge base of knowledge management system).

On the other hand, audit is a source of knowledge management risks: the potential danger of
loosing valuable knowledge assets is high. How can an organization protect its audit related
knowledge? Beyond the typical IT related solutions for protection (like logging, entrance systems
etc.), knowledge management could offer additional instruments, like knowledge sharing policies.

A special sub-class of IT audit is the audit of knowledge management systems, where all of the
above mentioned issues are relevant.

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Figure 1: Knowledge management life cycle

Figure 1. Shows the IT audit related knowledge management processes. IT audit usually include
the following:
ƒ Obtaining and recording an understanding of the audit area/subject
ƒ Risk assessment and general audit pan and schedule
ƒ Detailed audit planning
ƒ Preliminary review of audit area/subject
ƒ Evaluating audit area/subject
ƒ Test of controls
ƒ Substantive test
ƒ Reporting
ƒ Follow-up.
Knowledge management life cycle sub-processes can be interpreted from audit aspects. Auditor
has to collect information and knowledge about the field has to be audited. He has to be familiar
with prior year’s audit results, the control environment and control procedures (knowledge
discovery and generating phase). Based on the knowledge collected he has to evaluate the
situation, to prepare the audit plan. During the audit process he applies the audit related
knowledge, he has to cooperate with the aditee. The outcome of the audit process, the findings of
audit report has to be communicated for the management and the consequences have to be
leveraged, applied at the affected part of the organisation (knowledge sharing and leveraging).

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Table 1. Summarizes the relationships of knowledge management and IT audit. We discuss the IT
audit relevant activities at KM cycle subphases. To reveal the most important value-adding
potential of KM was our additional goal. Common KM related risks in the IT audit process are
important at the evaluation, the underlying table gives a summary about them.
Table 1: Relationships of knowledge management and IT audit
KM cycle phase IT audit relevant Value-adding potential of KM related risks in the IT
activities KM audit process
Definition of a knowledge Definition of the goals Common language Audit doesn’t fit to the
management vision and and scope of IT audit Unique and unified strategy
goals (evaluating phase) approach in knowledge Unclear goals and visions
management and IT audit due to misunderstandings
strategy Audit scope is not optimal
Missing or unavailable
market knowledge will
lead to irrelevant actions
Mapping available Preliminary Availability of relevant Large amount of relevant
knowledge, (discovering, assessment of the technical knowledge – knowledge remain hidden
generating phase) available information e.g. knowledge map Preparation is longer and
resources requires more resources
Protection of knowledge
assets is not planned

Knowledge acquisition: Data collection, Common language (e.g.: Potential conflicts due to
capturing expertise (e.g., observations, ontology) enables misunderstandings
structured/ unstructured interviews, document knowledge sharing Unnecessarily large
interviews, verbal analysis to support between the actors, efforts in data collection
walkthroughs, observation, audit process facilitate the exploration Misinterpretation of facts
simulation, questionnaires, of tacit knowledge Uncontrolled knowledge
etc.) Knowledge repositories assets cannot be
(discovering, generating provide documented protected
phase) explicit knowledge
Development of new Development of the External and internal Misinterpretation of facts
knowledge (generating knowledge, required knowledge repositories Lack of necessary
phase) by the audit, facilitate evaluation and knowledge can limit the
development the audit preparation of proposals relevancy of the report
report Misunderstandings of the
organizational goals and
needs will lead to
irrelevant results

Knowledge sharing Knowledge sharing KM culture and Dissemination can be

with the auditees, to mechanisms to share and problematic (different
base the smooth audit institutionalize knowledge background, cultural
process. Discussion attitude)
of the results
Utilisation of knowledge Preparation of Improved learning New knowledge (results)
corrective actions, potential helps the cannot be institutionalized
improvement plans, internalization of new Irrelevant proposals will
etc. practices, methods, etc. be sabotaged
Evaluation Post-project Knowledge repositories Loss of control over the
evaluation, feedback and ontologies facilitate valuable knowledge
mechanisms comparisons and assets will not be realized
assessment Results cannot be used
Control of the knowledge as a feedback
assets can be extended
to the whole process
Next session is dealing with the relationship of knowledge management and audit/service/security
standards. The literature offers several standards, which can be useful from knowledge
management aspects also. We deal only with the most promising ones.

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3. Implementation of controls, relationship of knowledge management with

audit/service/security standards– Relevant audit standards: COBIT, ITIL
Standards for IT management and security are crystallized by consensus or compromise from best
practices discussed by a large group of individuals from various organisations. Standards or
methodologies for managing IT services (e.g. COBIT and ITIL), security standards (e.g. Common
Criteria, ISO 15408), system acquisition (Bootstrap, ISO 12207, etc.), implementation standards
(PMBOK, PRINCE2), quality management (ISO 9001), and risk management (COSO) are based
on best practices. Most governance regulations (such as the Sarbanes-Oxley Act in the US)
require the implementation of these best practices. Organisations usually choose a de facto
standard to be compliant (i.e., the risks of using an internally developed standard with omissions or
errors are reduced by using de facto standards), and larger organisations have learned that
drafting their own policies for security is often much more costly and less successful than basing
their polices on ISO 17799 (Oud, 2005).

Knowledge management penetrates many (or most of the) organizational activities, especially in
the field of IT. There are several knowledge-oriented aspects of the above-mentioned standards.
Typically the standards provide common language to facilitate the implementation and utilization.
Organizational learning plays crucial role in the adaptation process. The best practice oriented
standards and methodologies also put the emphasis on the externalization of knowledge-by-
knowledge repositories, comprehensive documentation and the formalization of relevant tacit
knowledge. Standard patterns of knowledge sharing are frequently provided by these standards
(e.g. documentation forms offered by PRINCE2).

One can select several highly knowledge-dependent control-objectives from CobIT and processes
form ITIL:
ƒ The core function of ITIL is configuration management, where disseminated, sometimes even
tacit(!) knowledge should be collected and represented in a complex model of the organizational
IT infrastructure (including not only hardware, software and network, but also services,
procedures, incident records, etc.). The problem here is not the presentation of the inventory,
but the exploration of complex and sometimes hidden dependencies between the various
elements.
ƒ Change Management provides control over the changes in infrastructure. This control requires
detailed knowledge about the infrastructure, and also formalized and traceable knowledge
sharing during the procedure.
ƒ Incident management and problem management are popular and widely used functions of ITIL.
Incident management is responsible for the smooth functioning of the IT services by
implementing quick fix to recover IT services in the case of an incident. Problem management is
a proactive approach that prevents the repetitive occurrence of incidents. Both functions require
knowledge sharing, up-to-date information concerning the infrastructure and services, and the
implementation of a comprehensive knowledge base (about incident handling methods,
solutions). KM related applications, e.g. expert systems and data mining can also be used.
Ontologies, knowledge repositories, knowledge bases and additional KM solutions can be very
helpful in the implementation efforts. Without having these facilitating tools and methods the
implementation of ITIL functions and processes almost impossible and very risky.

In the case of COBIT we can observe similar situation too. Just mentioning a few high level control
objectives, like Assess risks (PO9), Manage third party services (DS2), Ensure continuous service
(DS4), Develop and maintain procedures (A14) we can see, that knowledge embodied in
procedures and formal systems, technics like knowledge sharing, ontologies, etc. are prerequisites
of the implementation of such control objectives.

It is clear from the above-mentioned example, that KM tools and solutions are prevalent and
inevitably necessary elements in the implementation of IT standards, as they can significantly
reduce risks and facilitate the adoption. Knowledge management is a key enabling factor in the
utilization of IT service and management related standards. In the next part of the paper we will

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investigate the reverse side of the problem: how can risk management and IT standards facilitate
knowledge management related initiatives?

3.1 Risks in KM system development projects

The high number of failed initiatives demonstrates the risky nature of system development projects.
Methodologies and standards have been developed to overcome this problem. In addition to the
difficulties of system development, operational risks of a successfully implemented system should
be managed with appropriate IT service management and security standards. Most of the above
mentioned audit and service management oriented standards and methodologies are focusing on
the operational aspects.

Due to their complex nature high level of risk can be associated with the development of KM
systems. Estimates of KM projects failure rates range from 50% to 70% (Ambrosio, 2000). That is
true for the operation too. Let’s take a closer look at the typical risks of KM system developments
first!
ƒ The built-in knowledge of some KM systems (e.g. expert systems, etc.) is very complex and
requires special perfection in the field of IT and also knowledge management. Post-
implementation control/audit of such system can be very problematic. Lack of maintenance and
knowledge validation could lead to the omission of the system.
ƒ Unclear definitions of the organizational need emphasizing the real role of knowledge
management systems.
ƒ Unconsolidated or unclear terminologies would lead to failed systems or to inconsistent
knowledge content in the systems. Another concern is the missing knowledge structure. That is
why knowledge management systems, especially ontologies can play really useful role in
system development. It is also especially true in the case of international developments.
ƒ Ethical and legal concerns and limitations should be taken into consideration.
On the other hand KM systems are the sources of special operational risks:
ƒ Potential uncontrolled access of knowledge assets enforces organizations to concentrate on
security issues
ƒ Potential damage of these assets can be very harmful, as the accumulated knowledge can be
lost. Inappropriate changes would cause poor quality and decreased usability. As the non-IT
specialists’ role can be very important in the maintenance and further development of such
systems, tight control of these activities is a crucial requirement. Change management of the
KM systems can be very complicated and time-consuming due to the complexity.
ƒ Incident and problem-handling of KM systems requires special expertise, and makes
documentation especially important
ƒ Although the availability requirements of the KM systems are not so high than of the backbone
transaction processing systems, downtime of these applications is really expensive.
ƒ All of the above mentioned issues are even more complicated, if the KM systems is provided by
an external company. Definition of SLAs can be very complex effort. As the value of such
systems and services may be eroded by the dynamic shifts in the business and competitive
environment, maintenance and further development is a problematic but crucial issue.
Specialities of auditing KM system development come from the special characteristics of these
projects. They are related to the IT field (all the IT project management issue is relevant) and also
to knowledge management, because knowledge management related risks have to be counted. To
perform the audit well, the auditor has to be familiar with many possibly separated fields, like the IT
development environment (e.g. ontology development tool), the knowledge management
environment, the applied standards, the knowledge domain, which is prepared. Several roles have
to cooperate smoothly during the audit process, like domain experts and IT experts. Therefore
assessment of KM system development is a complex task, with many interrelated dimensions. Next
part of our article offers an evaluation framework to support the auditing.

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4. Evaluation framework for knowledge management system development

During the KM system development, related risks have to be managed properly. It should be
determined what level of risk-tolerance is appropriate. It depends on the organizational culture, the
control activities effectiveness, and the applied standards. Risks and their assessment have special
importance nowadays according the higher significance of change management. As it well known
all knowledge management initiative is a change in a company. Nowadays enterprises have to
cope with the continuous change, which is true for the KM system development also. Domain
knowledge is renewed possibly during the development; it depends on the complex environment
(e.g. regulation, legislation) environment. Adaptation of the system to the new requirements
requires efficient change management. New knowledge management systems can help reinforce
an organization’s cultural routines, requires new attitude against the knowledge management
processes. Success of a knowledge management project, like other projects depend on economic
returns. Unfortunately economic returns have been difficult to quantify, therefore we must rely on
another indications of success. To prove the capitalization, utilization of the new system is a
justifiable demand of the management. Benefit calculations can be indirect, e.g. improved level of
customer satisfaction. Because of the frequent huge investment, evaluation of a knowledge
management project - KM system development - has special importance. During the development
several risks have to be managed, e.g. organizational changes, fluctuation in the relevant
legislation or because of the missing motivation system refusal. At least three types of risks can
occur in a KM system development project: IT related risks, project management risks, knowledge
management risks. Our approach is a risk-based approach, dealing with the most important risks
categories, in order to support the evaluation of development. The evaluation framework risk
dimensions are the next:
ƒ Information management policies: SDLC (e.g. in ontology development CommonKADS)
ƒ Standards used – (e.g. COBIT , ITIL)
ƒ System documentation management
ƒ Regulatory compliance
ƒ Compliance to knowledge management requirements
ƒ The embedded knowledge quality, and
ƒ The knowledge process quality – e.g. the way of knowledge sharing
ƒ Way of change management
ƒ Project organization
ƒ E.g. roles related knowledge management (domain expert).
The first step of the risk evaluation is a list of finding in a certain KM system development. Next
step is to reveal the impacts of findings (table 2).
Table 2: Risk evaluation
Finding Risk dimensions Weighted Significance Likelihood Risk
Audit Rate level level
Description of Information management 1 Low High Medium
finding. policies
Standards used 3
System documentation 3
management
Regulatory compliance 5
Compliance to knowledge 3
management requirements
Project organization 2
Weighted audit rate 2,84
A numeric value is assigned to each risk dimension with a range of 1(commendable) through 5
(unsatisfactory) (table 3). A weighted audit rate is the average calculated from the subjectively
assigned value to each of the six risk dimensions (in our example it is 2,84). If the weighted audit
rate is below 3, the significance level is low, if it is 3, the significance level is medium, if it is above

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3, the significance level is high. Likelihood is a subjectively assigned value (it can be low, medium
and high). The assigned level of likelihood is a reasonable reflection of a chance, that the
weakness may be capitalized. Significance level and the likelihood determine risk level according
to the risk rank matrix (table 4).
Table 3: Audit rating scale
Rating Description
5 The auditable dimension/activity was not in compliance with policies, systems and
Unsatisfactory procedures.
4 The auditable dimension/activity was not always in compliance with policies, systems and
Improvement is procedures.
needed
3 The auditable dimension/activity was generally in compliance with policies, systems and
Average procedures.
2 The auditable dimension/activity was in compliance with policies, systems and
Good procedures. Some control deficiencies were identified, but these are not expected to lead
to major risk.
1 The auditable dimension/activity has achieved its goals and objectives. The auditable
Commendable dimension/activity was in compliance with policies, systems and procedures. No
significant control deficiencies were identified.
If a risk level is high, there were substantial deficiencies during the development of KM system,
project is not managed properly (project processes and elements were poorly handled) ,
knowledge management characteristics were no considered. If a risk level is medium, there are
weaknesses, but not from the all aspects. If a risk level is low, the project, the development process
was well managed.
Table 4: Risk rank matrix
Significance level Likelihood Risk level
High High High
High Medium High
Medium High High
High Low Medium
Low High Medium
Medium Medium Medium
Low Medium Low
Medium Low Low
Low Low Low

Figure 2: Evaluation framework for KM system development

5. Guide case: Application of evaluation framework for guide informal

ontology development
Our research method was a case study based approach. Being this research exploratory in its
nature, a case study based research can be much more powerful to answer the above research

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question and to provide deeper understanding of the topic. “Case study is a research strategy
which focuses on understanding the dynamics present within single settings.” (Eisenhardt 1989:
p534). A case study examines a phenomenon in its natural settings, employing multiple methods of
data collection to gather information from one or few entities (Bensabat et. al. 1987). The purpose
of the empirical material in this study was to examine whether the relationships that have been
identified are supported in practice. Empirical data was collected form case study material. We
demonstrate the utilization of the above described evaluation framework through a case, about an
assessment of knowledge management system (Guide ontology prototype) development. We
present the main features of the development in the next section (5.1.) and the following section
(5.2.) displays the application of the evaluation framework for Guide ontology prototype
development.

5.1 Guide ontology prototype development

Conceptualisation initiatives for identity management domain are currently a hot topic and at the
same time a challenge because of many reasons: the continuously expanding e-services, fast
technological development shorter life cycles of the identity management solutions (e.g. new
initiatives for national identity cards equipped with biometric identification), legislation environment
(e.g. national data protection laws) and security issues. One of the best approaches for knowledge
structuring is the ontology. To support the knowledge sharing between project partners and to
provide a common base for the partners in GUIDE project (IST-2003-507498 funded by the
European Commission’s 6th Framework Programme) we developed an ontology prototype for the
identity management domain. Ontology development is dependent mainly on the applied
methodology. So far, number of suggestions for such a methodology has been published, as
people reflect their experiences from ontology building. While formulating the methodology for
identity management domain, we have leant on some parts of other methodologies also, like
TOVE, Menthology, Plinius, Enterprise Model Approach and CommonKADS (Schreiber 1999) and
Sure-Studer ontology development methodology (Fensel 2003). Our approach is a mixture of the
above-mentioned methodologies, but Sure-Studer ontology development methodology was the
most decisive one.

Several ontology tools could support the implementation. PcPack4 (PcPack4 is an integrated suite
of knowledge tools designed to support the acquisition and use of knowledge) has been selected
for implementation from a number of alternatives. The most important reasons for this choice were
the similarity of the theoretical background between the research task and PcPack4 philosophy (it
supports various methodologies, like MOKA, CommonKADS, etc.); and the effective support in
knowledge modeling and knowledge acquisition phases.

One of the most important benefit of the system is knowledge management-related, especially we
have to mention the enhanced level of knowledge dissemination and sharing between project
partners, due to web-based features (figure 3). Another advantage is that results can serve as a
conceptual base (common base to avoid inconsistencies in terminology), and it can be reusable in
any IT project at the identity management domain, through usability and reusability of the
knowledge base. It offers support for data modeling and knowledge modeling activities.
Collaborative development is made possible through the discussion forum feature. Return on
investment in identity management projects can be achieved through applications, which are built
on the identity management solutions.

5.2 Application of the evaluation framework for guide ontology prototype

development
In this section we apply the evaluation framework for the above-described Guide ontology
prototype development. That project was knowledge management-related and IT –related at the
same time.
Applying the risks dimensions from risk evaluation table we prepared the following summary (table
5):

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Figure 3: The html version of the ontology, the objects tree and the annotation of citizen ID
attributes
Table 5: Risk evaluation
Finding Risk dimensions Weighted Significance Likelihood Risk
Audit Rate level level
Description of Information management 2 Low Medium Low
finding. policies
Standards used 2
System documentation 2
management
Regulatory compliance 3
Compliance to knowledge 3
management requirements
Project organization 3
Weighted audit rate 2,5
For “information management policies” dimension we gave 2. The ontology development applied
CommonKADS methodology, which is considered now de facto standard for the development of
knowledge-intensive systems (Fensel 2001). From security aspects, these information assets are
well protected, an html version is public, but the ontology itself not. For “standards used” dimension
we gave 2, because COBIT was applied and standard ontology language output was used (RDF).
“System documentation management” dimension got 2. We used a collaboration environment and
documentum management system for documentation purposes. “Regulatory compliance”
dimension got 3. The consortium determined the nature of the system. For “Compliance to
knowledge management requirements” dimension we gave 3, because knowledge management
processes (especially knowledge sharing) quality was improved by the system. Knowledge items
have owners who responsible for maintenance. Change management is supported through the
discussion forum and version management. “Project organization” got 3 also, because we couldn’t
achieve the perfect separation of duties (the knowledge management related roles were combined
IT related roles) (figure 4).

6. Conclusion and future works

Both knowledge management and IT audit are hot topics nowadays and they can get advantages
from each other methods, solutions. Our paper offer an extensive approach for a special KM and IT
audit related field, we proposed a framework for the evaluation and assessment of knowledge

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system development. Beyond that, we gave a summary about the relation of knowledge
management and IT audit. We demonstrated the role and value-adding potential of knowledge
management in IT audit according the KM cycle phases. Results can support the audit process
effectiveness, because the application of KM practices can enhance the quality of the audit process
and speed it up. Paper gave a summary about the relevant audit standards and highlight the
knowledge management related aspects.

Figure 4: Evaluation framework for Guide ontology prototype development

Evaluation and assessment of knowledge system development is very important, justification for
the undertaking of the project has to be proven. Suggested evaluation framework for knowledge
management system development can be used as a comprehensive assessment environment.
Because of the vital roles of risks during the development, our evaluation framework applied a risk-
based approach. We counted both knowledge management related risks and IT related risks.
Evaluation framework can be applied during early stages of the development process yet, so it can
support requirements specification through risks determination and evaluation. Based on the
determined risks, requirements can be set up and completeness of risks set can be checked. Our
approach helps one of the crucial phases of the knowledge management system development
process, the requirements analysis. The framework can be a useful tool for project managers, in
order to monitor the KM project progress.

Future research will concentrate on the further exploration of risks categories, which can occur
during the development and the improvement, refining the evaluation framework. Another goal is to
test the framework on cases in order to collect inputs for further analysis of the certain knowledge
management system development projects characteristics.

7. Acknowledgements
The European Commission’s 6th Framework Programme funds project GUIDE (IST-2003-507498).
This publication reflects only the author’s views. The European Community, represented by the
Commission of the European Communities is not liable for any use that may be made of the
information contained herein. Further information regarding GUIDE can be found at
http://www.guide-project.org/.

References
Ambrosio, J. (2000), Knowledge Management Mistakes, [online],
http://www.computerworld.com/industrytopics/energy/story/0,10801,46693,00.html
Benbasat, I.; Goldstein, D. K.; Mead, M. (1987): “The Case Research Strategy in Studies of
Information Research”, MIS Quarterly, 11(3), September, pp.369-386.
Eisenhardt, K.M., (1989a): „Building theories from case study research”, Academy of Management
Review, 14, pp.532-550

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Fensel, D.; van Harmelen, F.; Davies, J. (2003) Towards the Semantic Web – Ontology driven
knowledge management, John Wiley & Sons Ltd., West Sussex, England
Fensel D. (2001): Ontologies: A Silver Bullet for Knowledge Management and Electronic
Commerce, Springer-Verlag, Berlin, ISBN 3-540-41602-1, pp.112
Hylton, A. (2002b) “A knowledge audit must be people-centered and people focused”, [online],
http://www.knowledgeboard.com/library/people_centered_knowledge_audit.pdf
ISACA (2005): CISA Review Manual, Inc, Illionois, USA
Liebowitz Jay, et al. The knowledge audit. Knowledge and Process Management. 2000, Volume 7
Issue 1, pp 3-10
Oud, E. J. (2005) The Value to IT of using International Standards. Information Systems Control
Journal, V3, pp 35-39
Schreiber A. Th. et al. (1999) Knowledge Engineering and Management: The CommonKADS
Methodology Version 1.1, University of Amsterdam, Netherlands

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Health Care Ecosystem as a Network of Knowledge
Flows
Harri Laihonen
Tampere University of Technology, Finland
[email protected]
Abstract: This paper has two objectives. First, it offers a way of describing Finnish health care system as a
health care ecosystem where different kinds of agents operate with a shared general target – health of the
population. Second, the paper categorises and shortly analyses knowledge flows of health care ecosystem by
using the knowledge flow model. The model is based on the framework of complexity-based knowledge
management and has been developed for elaborating knowledge flows of knowledge-intensive organisations
such as health care organisations.

Methodologically the paper builds on the existing literature and ongoing case study of knowledge flows in a
Finnish health care organisation. Case materials (interviews and observations) are used for conceptualisation
of the health care ecosystem and the paper contributes to the academic discussion by presenting a
preliminary definition and conceptualisation of the Finnish health care ecosystem. After defining the
ecosystem the paper continues by connecting it to the knowledge management discussion.

Keywords: Knowledge flows, health system, complexity-based knowledge management, ecosystem

1. Introduction
Finnish health care sector has changed from a centrally planned, strictly regulated system towards
a more open one. The current Finnish health care system is very decentralised and government
regulation has been partly replaced by steering through information. This information consists of
policy recommendations based on research and evaluation, evidence based medicine and
protocols, education and training, performance indicators and other information development
activities (Järvelin 2002, p. 14). This change has set demanding requirements for knowledge
management since health care organisations have been accustomed to hierarchal working
methods. New competencies and approaches are needed especially at the management level.

Generally health care organisations have been regarded as bureaucratic institutions in which
reporting and interaction between units have been strictly predefined by organisational functions.
The new openness and decentralisation requires much more co-operation and interaction at all
organisational levels. Specialists should be able to work in co-operation with other professionals
with backgrounds different than their own and this co-operation should also be expanded across
organisational boundaries. Co-operation is needed between public organisations and also with
private sector and the third sector, i.e. non-profit, organisations.

This paper uses the framework of complexity-based knowledge management, developed by

Koivuaho and Laihonen (2006), and attempts to build an understanding of public health care from
the knowledge flow perspective. Terms information and knowledge flow are not separated due to
the professional nature of transferred knowledge. It is assumed that in a given context medical
experts are able to transfer knowledge at the deeper level than would be possible without a certain
medical specialty, experience and a common language. The paper builds on the concept of health
ecosystem, which among other concepts adapted from complexity sciences could be used for
conceptualising the interconnected and complex environment of health care.

2. Framework for analysis

2.1 Theoretical framework

This study has been carried out based on Complexity-Based Knowledge Management (CBKM)
framework that is described in Figure 1. The basic ideas of the framework have been developed
and utilised in several earlier publications (Koivuaho and Laihonen 2006, Laihonen and Koivuaho
2005, Laihonen forthcoming and Koivuaho 2005) and for this reason the framework is not

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discussed in a detail in this paper. Figure 1 describes briefly the theoretical background to provide
a general idea of the framework for the purpose of this paper.

Figure 1: Complexity-based knowledge management (CBKM) (Koivuaho and Laihonen 2006).

The framework is composed of three theoretical backgrounds. The most important part of the
framework is knowledge management, because the main research interest arises from the
knowledge management domain. Other domains are complexity thinking (term “thinking” is
preferred due to the ongoing debate about whether the complexity theory fulfils the requirements
for an actual theory) and organisation theory.

CBKM framework highlights the importance of interconnectedness, i.e. knowledge flows, for
organisations. The importance of interconnectedness and interaction for contemporary
organisations has been pointed out in several discussions and based on this the framework
focuses on knowledge flows and communication processes. The framework has been used for
constructing a knowledge flow model that can be used for conceptualising knowledge flows of a
knowledge intensive organisation.

2.2 Knowledge flow model

Knowledge flow model (Koivuaho and Laihonen 2006) has been developed for the purposes of
depicting the complexity of the network of knowledge flows and communication processes in
knowledge-intensive organisations. The model is used in this paper to conceptualise knowledge
flows of the health care ecosystem that will be discussed in the next chapter.

Knowledge flow model is a three-dimensional construct (Figure 2). The dimensions represent the
knowledge flows of an organisation as output flows, input flows, and internal flows. The model can
be applied as a tool for analysing interaction and communication processes on any organisational
level.

Input and output flows refer to communication and knowledge sharing over the boundaries of the
organisation. As an illustration, input flows could be seen as information that is provided for the use
of health care organisations by a research institute. Input flows could also be interpreted as
learning and assimilation of knowledge conducted by individuals or groups. Output flows can be
understood, for example, as a preventive recommendation that health care organisation provides
for the inhabitants in its area. Internal flows refer to those communication processes and
knowledge flows that, for example, personnel of an organisation have on a daily basis. Internal
flows do not cross organisational boundaries.

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An organisation can be positioned into the model according to its knowledge flows, but its position
in the model is dynamic. For example, a highly bureaucratic organisation moves from the bottom
left corner diagonally towards top right corner if it allows knowledge to flow more freely internally
and also across organisational boundaries. The position changes during the evolution of the
organisation and its employees. In addition, the environment is in a continuous change and this
sets high requirements for the management of communication processes and knowledge sharing.

Figure 2: Knowledge flow model (Koivuaho and Laihonen 2006).

Koivuaho and Laihonen (2006) have argued that the conceptual approach of the knowledge flow
model has practical relevance in situations where the number of individuals or work groups is large
or increasing. According to the authors, it might be hard for managers to piece together the
knowledge flows taking place in such situations. Recognising the situation through the three
different flows discussed in the model and situating the organisation or a part of it accordingly might
offer them a way to develop new procedures and control methods that are more suitable for the
challenges of the operational environment.

3. Health ecosystem
In this chapter three concepts of comprehensive health care are presented. Chapter 3.1 very
shortly links the discussion to the mainstream literature of comprehensive health care and chapter
3.2 defines the health ecosystem that will be later used as a conceptual framework for analysis of
knowledge flows.

3.1 Integrated care and health system

According to Integrated care network (2006), integration refers to “a single system of service
planning and/or provision that is put in place and managed together by partners who nevertheless
remain legally independent”. This kind of a single system would unite, for example, mission,
culture, management, budgets, accommodation, administration and records. (Integrated care
network 2006.) In many cases, this kind of integration is implemented in practice by defining care
pathways and by concentrating on their development from the viewpoint of the patient. The focus of
integrated care seems to be in co-operation of separate specialists and separate activities that in
the short run, with no doubt, gain for service users by overcoming fragmentation of services. This
approach might ignore the preventive care that would lead to long term improvements. Integrated
care could be seen as an approach where the health care sector internally aims to improve its
operational efficiency.

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The World Health Organization (WHO) has defined health system as “The people, institutions and
resources, arranged together in accordance with established policies, to improve the health of the
population they serve, while responding to people's legitimate expectations and protecting them
against the cost of ill-health through a variety of activities whose primary intent is to improve
health.” (WHO Glossary 2006.) This definition brings together all the actors that are aiming to
provide health for the population. The definition covers many aspects of health services but it
seems to concentrate mainly to the actual production of health services, although quite broadly.

According to WHO (WHO Glossary 2006), health is “a state of complete physical, social and
mental well-being, and not merely the absence of disease or infirmity.” Health is therefore a very
large issue that is composed of many more factors than health services. Such factors as living
conditions, work situation, home life, immediate surroundings, education and social services are
only few of those factors that should be taken into account. Therefore it is argued here that the
above definition of health system is actually a definition of health care system not health system in
its all aspects. The next chapter presents the concept of health ecosystem that could be seen as
the possible next level extension.

3.2 Health ecosystem

Health ecosystem is a relatively new concept in academic research, and there is still a lot to be
done to establish it. The purpose of this chapter is to present one definition of the concept and to
reconcile this definition to the Finnish health care sector.

In this paper, the concept of health ecosystem is derived from the concept of business ecosystem.
Peltoniemi and Vuori (2005, p. 279) have defined the business ecosystem as “a dynamic structure
which consists of an interconnected population of organizations. These organizations can be small
firms, large corporations, universities, research centers, public sector organizations, and other
parties which influence the system”. Difference between the definition of health ecosystem and the
definition of business ecosystem is in the role of the government in the system. According to the
Peltoniemi and Vuori (2005), the principles of complexity would require that business ecosystem
should be self-sustaining. This would mean that no government, or any other external,
interventions would be needed in order to the system to survive in local or global markets. In the
context of health ecosystem, the government has to be seen as a part of the ecosystem and not as
an external force.

In Finland, the municipalities are responsible for providing health services and strict government
regulation has been partly replaced by the steering through information. Government still sets the
boundaries through legislation but within these boundaries municipalities are free to self-organise
in a way that they see as the most suitable for their local requirements. Within the ecosystem, there
exists competition and cooperation. Specialisation and fiscal pressures drive organisations to
compete and to form alliances.

Baskin (2000) has used the concept of ecosystem in the context of social ecosystems and his
approach is close to the one presented in this paper. Baskin’s health ecosystem includes agents
like patients, doctors, schools, neighbours, dentists, business, law enforcement, governmental
services, government health agencies, medical equipment supply and pharmaceuticals. According
to Baskin, these parties on every level of scale are interconnected to each other.

Another reference to ecosystem in the literature of health care organisations is Kernick’s (2004, p.
99) suggestion that ecosystem metaphor might offer useful ideas for the development of NHS in
the U.K. According to Kernick, the unit of activity shifts from the patient to patient-professional unit
in a perspective that sees all elements within the system coevolving. Kernick continues that the
emphasis is then on the relationships amongst a system’s components and an understanding of
what creates patterns of behaviour among them. According to Kernick (2004, p 99), the important
features of health care system are diversity, connectivity, feedback and the existence of self-
ordering rules that enable emergence of new order in a system. Kernick argues that individual
agents cannot be understood in isolation. These features and ideas that Kernick points out origin
from the complexity literature and are therefore also important factors of complexity-based

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knowledge management that was described in chapter 2. The importance of knowledge

management and especially knowledge flows in both Baskin’s and Kernick’s views are obvious.
Knowledge flows connect the actors and enable interaction between them within the ecosystem.

In this paper the ecosystem metaphor is used for defining the health care ecosystem that refers
only to those organisations whose primary tasks are health oriented, e.g. health promotion, disease
prevention and care. This view can be compared to health system and integrated care approaches,
but the added value of these approach origins from the interconnectedness of the system. As
Kernick mentions, the focus is shifted to the interaction of the actors. By building on the definition of
business ecosystem referenced above and the ideas of Baskin and Kernick, the health care
ecosystem in the context of Finnish municipal health care could be defined as follows:
“Health care ecosystem is a dynamic structure which consists of an interconnected
population of organisations that influence municipal health care. These organisations
are e.g. municipalities, private health care organisations, third sector organisations,
hospital districts, inhabitants of municipalities, government and research institutions
that provide the latest research results that are used for information steering or for
medical purposes ”.
Figure 3 presents the Finnish health care ecosystem based on author’s conceptualisation.
Nationwide health care ecosystem is composed of several local health care systems.

Figure 3: Finnish health care ecosystem.

Eisenberg (2005), who refers to the report of The Institute of Medicine, has made a differentiation
between four interdependent systems in a health care. These subsystems can be found also from
the Figure 3. Eisenberg describes that the first level is the system of patient and community. This
level includes the experiences of patients. The second level is the microsystems of work, in which
patients meet clinicians and other helpers. The macrosystem level includes organisations that
support the microsystems and create the conditions in which they operate. Finally, the fourth level
is the environmental systems. These systems determine the contingencies that apply to
organisations and to microsystems. (Eisenberg 2005.) These different systems or levels of health

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care ecosystem will be used in the next chapter to categorise the knowledge flows of the health
care ecosystem.

4. Knowledge flows
This chapter links the previous discussion on health care ecosystem to the health care
organisations and their knowledge flows. First, a short description why the focus is on knowledge
flows in chapter 4.1 and then preliminary ideas how knowledge flows of health care ecosystem
could be categorised in chapters 4.2 and 4.3

4.1 Organisational knowledge flows

Grant (1996, p.120) has, in his knowledge-based view of the firm, argued that the primary role of
the organisation is to integrate the specialist knowledge resident in individuals into goods and
services. Grant has also pointed out that the primary task of the management is to establish the
coordination necessary for this knowledge integration. If the process view of knowledge is adopted,
it can be argued that integration of specialists and coordination of tasks are both about routing
knowledge flows. Alavi and Leidner (2001) have described that process view of knowledge
management regards knowledge as a process instead of object that can be stored to database and
further, managed and controlled. Grant also highlights the role of knowledge creation and
application, which again both take place through knowledge flows – transfer of either tacit or
explicit knowledge.

As Nissen and Levitt (2002) mention, a number of theoretical models have been developed to
describe various aspects of the knowledge flow phenomenon. Nevertheless, Alavi and Leidner
(2001) in their extensive review of knowledge management point out that little empirical work has
been undertaken and that there exists large gaps in the body of knowledge in this area. Alavi and
Leidner (2001, p. 129) also raise an important research question of how can knowledge be
effectively transferred among organisational units. Again, it is a question of knowledge flows.

Grant (1996, p. 111) regards the issue of transferability as an important determinant of knowledge,
not only between organisations but also within an organisation. This basic idea of knowledge-
based theory of the firm links also to the complexity literature, which is another background theory
of the CBKM framework used in this paper. Interest in complexity theories is based on the
increasing dynamics of the market situation as well as on the increased understanding of the
nature of complexity (see e.g. Casti 1992, Kauffman 1993 and Holland 1995) and it’s potential for
business management (see e.g. Dooley 1997 and Mitleton-Kelly 2003). Authors in complexity
research have argued that flows of people, natural resources, orders, goods, capital and products
characterize the complex behaviour of an enterprise (e.g. Holland 1995 and Clippinger 1999).
According to these authors, different properties of these flows essentially define the structure and
character of an organisation and that the management of internal and external flows is an important
source of value creation. In the context of knowledge-intensive organisations knowledge flows are
the most essential. For this reason the possibilities of complexity theories should be investigated
carefully in order to find out how they can be used for intensifying the knowledge flows of an
organisation and the effectiveness of its operations also in a broader context.

The ecosystem approach presented in chapter 3 origins from the complexity science and it
highlights the importance of interconnectedness and through this connection it also brings
knowledge flows into the discussion as interconnections take place through knowledge flows. In the
next chapter knowledge flows of health care ecosystem will be categorised and in chapter 4.3
those categories will be shortly described with the practical examples from the Finnish health care
ecosystem.

4.2 Knowledge flows of the health care ecosystem

In this paper, above-mentioned four levels of health care ecosystem (chapter 3) are used for
categorising knowledge flows. Corresponding categories of knowledge flows are: 1) knowledge
flows between the patient and the doctor, 2) knowledge flows between health care specialists, 3)
administrative knowledge flows that are needed to run the organisation and 4) knowledge flows

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that make an organisation as a part of the health care ecosystem. These flows and some examples
of them are presented in Figure 4.

Figure 4: Categorisation of knowledge flows within the Finnish health care ecosystem.
The research, on which this paper builds, concentrates to the two categories at the top. Interest is
on the question: “How do the health care organisations adjust their knowledge processes to fulfil
the requirements of the health care ecosystem?” Interconnectedness and interdependence are the
key elements for the survival of any ecosystem and health care ecosystem makes no exception. In
many situations organisations and different agents might even share a common fate, as Iansiti and
Levien (2005) have pointed out in their study of business ecosystems. Within an ecosystem health
care organisations compete and collaborate with each other, they co-evolve.

Along those knowledge flows that connect the organisation to its environment it is interesting to
study how knowledge is transferred within the organisation. What kind of knowledge flows exist and
what kind of flows would be needed to better respond to external diversity? Interesting questions
are also: how the knowledge is used for managerial purposes and could the organisation gain in
efficiency by understanding their knowledge flows better.

In the next chapter knowledge flows of the Finnish health care ecosystem are shortly described by
using the three-dimensional knowledge flow model that was described earlier.

4.3 Preliminary analysis of knowledge flows of the health care ecosystem

In this chapter, the knowledge flow model is used for describing and shortly analysing knowledge
flows of the Finnish health care ecosystem. The discussion is based on the ongoing research
project, where the knowledge flows of local health care system are studied.

4.3.1 Input flows

Input flows in the knowledge flow model refer to those knowledge flows that cross the boundaries
of the organisation and which flow inwards. The research that this paper is based on focuses on
the inflow of knowledge that is called information steering. This means, for example,
recommendations, guidelines, and different kind of quality standards that the government, local
interest groups and different research institutions provide for the use of health care organisations
and health care specialists.

A good example of information steering and therefore, input flows, are so called Current Care
guidelines that provide evidence based clinical practice guidelines for the use of health care
ecosystem. Guidelines are produced in a co-operation of clinical specialists and under the auspices
of Ministry of Social Affairs and health. The development process of a guideline begins with

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literature search done by an experienced medical librarian. Critical appraisal of the literature is
based on criteria originally outlined by the Evidence Based Medicine Working Group. Based on the
evidence and consensus, the development group drafts a guideline that is widely circulated to
identify stakeholders. The comments are carefully reviewed and changes are made especially
when additional evidence is brought up. (Current Care Guidelines 2006.) The finalised Current
Care guidelines provide collectively accepted recommendations for health care organisations.

From the knowledge management perspective the whole process could be seen as a practical
implementation of knowledge centres that collect information worldwide and compact and
contextualise the information for the local needs. From the knowledge flow perspective this kind of
system acts as a source of knowledge that from the view point of health care organisation is
utilised through inflows of knowledge. These inflows of knowledge typically launch internal
knowledge processes in organisations.

Inflow of knowledge can also be perceived at the personal and group levels. Individuals and groups
are in a continuous interaction with each other and in this interaction they acquire and assimilate
knowledge from their environment. Along these, patients are an important source of feedback and
knowledge that should always be taken into account especially in health care organisations.

4.3.2 Output flows

Output flows refer to the knowledge that flows outwards from the health care organisation. Clinical
pathways require that information about patients must be continuously exchanged between
organisations. Organisations also deliver different kind of reports and statistics about their
operation for the government, municipalities, media and other health care organisations. Parts of
this information deal with administrative issues but, for example, referrals guide the patient through
the health care processes. Organisation and its members also give feedback for patients in the
form of diagnosis and other guidance.

Preventive health care can also been interpreted as an outflow of knowledge. Health care
organisations guide inhabitants, for example, through their web sites, by giving them advice and
instructions about issues concerning health. Health care organisations also participate to the
environmental health issues by monitoring hygiene standards. In addition, organisations give
recommendations to prevent different kind of epidemics to pervade. All of these are important
sources of health education for inhabitants.

4.3.3 Internal flows

Internal flows refer to the internal knowledge sharing and transfer that occur within the health care
organisation. Human resources management, finance and many other different supportive
functions provide enormous amounts of knowledge about the system and along these there exists
millions bytes of data about patients, which is analysed and transferred within organisations.

In the ongoing research the health care ecosystem is approached from bottom up and therefore
internal flows have an important role for the study. The main interest is on what kind of knowledge
is transferred in nursing processes and how this knowledge could be turned into a valuable
resource and, further, how that knowledge could support the management in their decision making.
To answer these questions the study was started by modelling an actual nursing process. The
process of diagnosing dementia was modelled in Health care district of Forssa (FSTKY). The
process can be described with a greatly simplified process chart presented in figure 5. The process
includes several phases and different professionals take care of different parts of the process.
Arrows at the top present the information steering that the process is continuously receiving from
many different sources.

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Figure 5: Simplified process model of diagnosing dementia in FSTKY.

The process starts at the patients home where the patient, or in dementia case probably a relative,
has a doubt that something is wrong. Different kinds of external sources of information influence
this decision of seeking medical help. For example, media, friends and internet have a strong
influence to inhabitants. The next step in the process is the consulting of a health care professional.
This is normally a doctor or a nurse in primary health care. The professional makes his/her
estimation of the situation and sends the patient to meet a specialist in secondary health care if
needed. The process continues with the necessary examinations and tests. Finally neurologist
makes the diagnosis. After the diagnosis the treatment continues case by case.

From the knowledge management point of view it is interesting to study how this information that
accumulates in countless nursing processes is collected and utilised at the organisational level and
further at the health care ecosystem level. How does the management of health care organisations
use this information to make their decisions and to adjust organisation’s strategy? On the other
hand, it is also interesting to study how the ecosystem as a whole gathers information and
improves the systems effectiveness.

5. Discussion
This paper defines health care ecosystem in the Finnish context. In literature, ecosystem approach
has been seen as a novel approach to health care but the references are still few. The definition
given in this paper provides the basis for further application. As a conclusion the paper argues that
the ecosystem approach enlarges the viewpoint of integrated care and health system approaches
and by highlighting the interconnection of the actors it might provide a promising basis for the study
of knowledge flows.

The author sees the role of knowledge flows as building blocks of organised activity at the system
level and assumes that by studying and understanding knowledge flows at the local and
organisational level it is possible to better understand functioning of the system and its overall
complexity.

The CBKM framework and the knowledge flow model presented seem to offer a method for health
care organisations to analyse their knowledge flows. The framework and the model could be used
for understanding and differentiating knowledge flows and organisational types from the knowledge
management perspective. The framework also connects organisations and knowledge
management research to complexity thinking and through that also to the concept of health care
ecosystem. There are still a lot to be done to make this interconnection clear and to justify the
approach, but this paper has opened the discussion.

6. Acknowledgements
This paper was produced as a part of the TIP Research Program (Knowledge and Information
Management in Knowledge Intensive Services), which is funded primarily by The Finnish Funding
Agency for Technology and Innovation. The research was conducted at the Institute of Business
Information Management at Tampere University of Technology. The work was supervised by

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Professor Marjatta Maula and Professor Matti Rimpelä. I would also like to thank the Health care
district of Forssa and especially Markku Puro and Riitta Suhonen for their support for this work.

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Knowledge Management for the Sustainable Supply
Chain: A Literature Review
Valerie Martin, Chuda Basnet, Paul Childerhouse and Leslie Foulds
Waikato Management School, University of Waikato, Hamilton, New Zealand
[email protected]
[email protected]
[email protected]
[email protected]
Abstract: This paper reviews the literature on current knowledge management (KM) practices in the
sustainable supply chain, and in particular, the extent to which it supports and builds sustainable competitive
advantage. The literature is examined from four perspectives: The first explores the reason that knowledge
management enables sustainability of business competitiveness, through approaches which are not simply
technology-driven, but also leverage tacit knowledge and learning. The second looks at current KM practices
in the supply chain. The third explores supply chain alliances and networks which often practice KM but do not
recognise it as such. Small to medium sized enterprises (SMEs) often do this very well. The fourth perspective
focuses on some anecdotal evidence in these areas, interspersed with the literature. An important point is that
KM practices in the supply chain are not clearly understood nor consolidated. However, the move towards
supply chain integration illustrates an increasing need for such strategies between groups of customers and
suppliers, and the formation of SME supplier networks also illustrates knowledge transfer occurring without a
formal KM strategy.

Keywords: Knowledge management, knowledge transfer, supply chain management, sustainability, supply
chain integration, and networks.

1. Introduction
Companies of all types and sizes are being confronted with growing competition, unremitting
advances in technology and ever-shorter life cycles in today’s competitive business environment.
Customer expectations have increased and so has national and international competition. New
technologies and processes can quickly be imitated and therefore give no guarantee of sustainable
success. As a result of this, there is an increasing emphasis on knowledge management (KM): the
preservation and cultivation of internal expertise and capabilities manifested in people, teams,
processes, communication norms, human resources, skills and learning capabilities. Davenport
and Prusak (2000) claim that knowledge can provide a sustainable advantage for businesses that
previously relied on material resources and market clout as knowledge assets increase with use
rather than deteriorate. The major interest in knowledge management has been on individual
companies and very little on the supply chain, although there has been an explosion in formal
knowledge management practices over the last decade. In the supply chain, more traditional order
winners still predominate. For example, Hines, Rich and Hittmeyer (1998, p. 19) point out the over-
emphasis on competing on time using techniques such as just in time (JIT), Quick Response (QR)
and Efficient Consumer Response (ECR). Basnet, Corner and Tan (2003) largely support this claim
through their survey of twenty five commonly cited supply chain practices in New Zealand: the top
three supply chain activities were:
ƒ On-time delivery of own firm’s products directly to the customers’ points of use
ƒ On-time delivery of own purchased materials directly to the firm’s points of use
ƒ Determining customers’ future needs.
The first two are time related, but the third point reveals a growing awareness of the need for more
knowledge in relation to the supply chain. Hines, Rich and Hittmeyer (1998, p. 19) also found this
awareness through a research project involving 14 companies in the UK, revealing that in addition
to time compression, more tacit factors such as openness, honesty, empowerment of cross-
functional teams, and inter-company suggestion exchange was considered important in the supply
chain. These examples indicate the need for a novel approach to supply chain management – one
based on the understanding and leverage of more intangible resources such as knowledge. This
paper reviews the knowledge management theories and practices in today’s supply chain, and in

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particular, the extent to which it supports and builds sustainable competitive advantage in a supply
chain context. In Section 2 the literature in the area of knowledge management is reviewed,
emphasizing the important role of KM in sustaining a company’s competitiveness. Section 3
explores KM in the supply chain, pointing out the general dearth of supply chain awareness in
knowledge management research. Section 4 explores supply chain alliances and networks, which
rely on knowledge transfer to strengthen their position, particularly for small to medium sized
companies. Section 5 discusses the implications for academics in the areas of KM and supply
chain management, and practitioners who wish to improve supply chain efforts and sustain them
into the future.

2. Knowledge management for sustainability

The field of knowledge management spans a multitude of areas and paradigms, from leveraging
knowledge assets, to social capital, intellectual capital, networks and organizational learning. It is a
diverse area and often confusing, however, one of the most dominant paradigms in KM is the IT,
tool driven paradigm. Through a survey, Scarbrough, Swan and Preston (1999) found that nearly
70% of articles on KM were in the IT/IS areas. Managers hope that these tools can be exploited to
retain knowledge within the company. With connectivity between computers, this knowledge can be
shared quickly and easily. This view is supported from an academic perspective by Schultze and
Leidner (2002, p. 216), who claim that the vast majority of research in the area of KM falls under
the normative discourse, from Deetz (1996). In analyzing the predominant discourses in KM, they
claim that the normative discourse is concerned with codification of objective knowledge, and the
generation of law-like relationships between variables, with generalizable results.

This paradigm has been named as first generation, or supply side KM, when technology is
deployed to increase the flow of knowledge (Cavaleri 2004, p. 161). Within this paradigm, there is
little or no real exploration of the nature of knowledge as it assumes that knowledge and
information are separate to people; a ‘thing’ which can be identified, captured and made explicit.
Snowden (2002) claims this period began in the early 1990s, dominated by decision support
systems such as executive information systems (EIS), data warehousing and process re-
engineering. However, a quandary with this approach is that technologies and information can
quickly be imitated, transferred and duplicated by other companies that have the money and the
desire. This approach to KM is simply not sustainable. Exploring the nature of tacit knowledge,
Davenport and Prusak (2000, p. 7-11) claim that experience, ground truth, complexity, judgment,
rules of thumb, intuition, values and beliefs are at the core of the knowledge and capabilities that
allow sustainable advantage for companies. This view is realized and supported by McDermott
(1999, p. 105), who pointed out that knowledge is not just about information, but about thinking,
and acting on the information. Cavaleri (2004, p. 161) recognizes these traits as second and third
generation KM, where innovation, knowledge creation and organizational learning are a critical
aspect. Snowden claims second-generation KM dates roughly from 1995 onwards and focuses on
the elicitation of tacit knowledge into codified form and growing exploration of the nature of tacit
knowledge. The most prominent debate of this era is the ‘Knowledge Spiral’, the conversion
processes of tacit and explicit knowledge that gained popularity through the work of Nonaka and
Takeuchi (1993, p. 70-73). Although Cavaleri does not make a distinction between second and
third generation KM, Snowden (2002) defines the post-2000 era as the ecology of knowledge, in
which managers do not control organizational knowledge, but are only able to direct and influence
their companies within their environment, and encourage organizational learning.

These three approaches to KM are not mutually exclusive, nor can they be too clearly defined, but
the important point is that success and sustainability of a company’s competitiveness does not
come from technology on its own. It comes from a more holistic approach to KM, one that
incorporates all three approaches to some degree. The World Bank, for example, connected its
branches worldwide through not only digital communication technologies, but also by the cultivation
of communities of practice which encouraged people to communicate face to face and build a
relationship based on trust and joint learning (ECCH, 2004). British Petroleum found that the huge
amount of capital needed for upstream investment was a catalyst to better knowledge management
(McDermott, 1999, p. 103, Davenport and Prusak, p240). The problem was how to find out where
oil was located, and how to reduce the amount of time and money spent on drilling only to find

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rocks and no oil, for example. The company enabled 42 global, independent business units to
share knowledge and learn from each other on such matters. They created virtual teams through
videoconferencing technology, including state of the art desktop equipment, shared whiteboards,
multimedia email and groupware. These technologies allowed specialists to collaborate in a
personal manner, even though they were often located at different sites in different countries,
therefore leveraging tacit knowledge and encouraging communication. Sustainable competitive
advantage cannot be built by first generation approaches alone, although these technologies are
important and have their place. For KM to be sustainable, a company needs a full understanding of
the tacit aspects and the commitment to drive a holistic KM strategy with learning from past
mistakes and creating new ideas for future application as an integral part of this. On this basis it is
reasonable to assume that this approach applies not only within organizations, but also between
organizations. If KM can enable sustainable competitive advantage in a company, then it can do
the same for a supply chain.

3. Supply chain management and knowledge management

It is sometimes hard to define exactly what supply chain management is. Chandra and Kumar
(2000, p. 100) claim that supply chain management consists of either:
ƒ Structural characteristics: a philosophy for carrying out business, an arrangement of suppliers,
or a network for efficient management of demand and flow of products;
ƒ Functional characteristics: co-ordination or synchronization of actions of its members.
This paper takes the structural approach, and focuses in particular on the KM arrangements
between a company, and companies, which may be original equipment manufacturers, and
suppliers, which may be one or many. Therefore the approach is dynamic, not focusing in particular
on customer or supplier, or a one-to-one relationship, but on the broader context of supply chain
arrangements, one-to-many, or many-to-many (Figure 1).
Customer B

Customer C

Customer A
Org E Org D
Org A

Org C
Org B

Customer D

Figure 1: Structural approach to supply chain management

There is a dearth of studies on KM initiatives in the supply chain, and the area is fragmented and
unconsolidated. Documented studies of knowledge management initiatives have been largely
confined to individual companies, multinationals in particular. The research that has been
undertaken generally focuses on only one approach to KM. Desouza, Chattaraj and Kraft (2003, p.
130), for example, claim that the effective deployment of KM technologies enables companies such
as automotive, which have thousands of different suppliers, to plan and forecast operations
effectively. Such technologies can be integrated with customer relationship management (CRM)
and other enterprise-wide systems to allow real-time information and knowledge for on-time
performance, accurate forecasts and good supplier performance. These needs are increased when

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a supply chain is international (Kidd, Richter and Li, 2003), as western companies often have highly
complex products and processes, which rely on, integrated global suppliers, customers and other
partners. An advantage of this type of approach is enabling companies in the supply chain to
reduce their levels of complexity (Power, 2005, p. 253). Companies have found they can
counteract the ‘bullwhip’ effect and co-ordinate information through the supply chain (Lee et al.,
1997, from Power, 2005, p. 253). However, this is really supply side, or first generation KM, not
sustainable in the long run as competitors can imitate this sort of approach and buy in the
technologies necessary. In addition, Forrester (1961) claims the dangers of an information
technology driven approach can be too intense a focus on short-term decision-making.

At present, there are few documented studies of tacit KM, or any emphasis on second or third
generation KM in the supply chain, and research focuses primarily on theory. Kidd et al. (2003)
argue that companies today need to be agile, therefore upstream and downstream knowledge
creation must be managed. They go on to say that people must have the potential to understand
another’s ‘world view’, and information exchange is affected by degree of trust. Furthermore,
globally, there is now a pressing need to understand and manage the reverse supplies chain to
ensure proper disposal of in-process residues and end-of-life goods in an eco-friendly manner
(European Commission, 2000; Carter and Ellram, 1998, from Kidd et al., 2003, p. 603). Hall and
Andriani (1998), working with the senior managers of two companies and four of their suppliers,
also recognise the value of tacit knowledge assets. They describe their technique for analysing the
role of intangible resources in a supply chain context to codify the tacit knowledge they had of their
company’s strengths. The aim was to enable these managers to communicate with each other in a
meaningful way and identify possible complementary capabilities.

One informative anecdotal case is that of Glisby and Holden (2005), who achieved success in
expanding their supply chain through tacit knowledge sharing and building personal relationships in
an international context. As a Danish specialist manufacturer of household products, trying to
establish a customer base in Japan, Rosendahl made the significant choice to bypass
intermediaries. They employed local Japanese, living in Denmark, to build relationships with
customers who were primarily department stores, retail chains and speciality gift shops. Once a
customer was secured, the company then went on to build a relationship through knowledge
sharing, involving socialization in informal surroundings. This enabled not only insights into
potential new markets, but also the networks and connections these market segments were
involved in. Once trust was gained, Rosendahl enabled their Japanese customers to question and
reflect on their own business knowledge, leading to many of these companies wanting to work with
Rosendahl on a partnership basis. This allowed Rosendahl to educate them on how to work with
them for mutual improvements. Although the implementation of KM in the supply chain is both
underutilized and also under-researched, there are clear indications that it can provide many
benefits to companies trying to manage, integrate and even expand their supply chain. It is doubtful
whether the implementation of integrated technology by itself could give sustainable advantage for
very long. However, the example of Rosendahl, who had won the trust and participation of not only
their customers, but also their customers’ customers, thereby creating a dynamic network, illustrate
the value of tacit knowledge and a holistic approach. Tacit knowledge was leveraged through trust,
participation, questioning and reflecting and sustainability was achieved through building personal
relationships through networks and communities, realization of cultural values and developing a
learning-oriented supply chain. The evolution of knowledge management in the supply chain
appears to lag behind the evolution of KM within the organization, without having a clear and
consolidated approach, as these approaches illustrate.

4. Supply chain alliances and networks

Supply chain integration, in the form of alliances between customers and suppliers, is based on the
building of a trust-based relationship and the leverage of intangible assets. In contrast to more
traditional adversarial relationships between customers and suppliers, where there is little regard
for sharing benefits and risks and communication is limited, integration is characterized by
ƒ Customers and suppliers exploiting their collective performance through working together;

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ƒ Companies building a relationship based on trust, shared objectives and voluntary contracts
(National Research Council, 2003, p. 27);
ƒ Co-operation, collaboration, information sharing, trust, partnerships and shared technology
(Power, 2005, p. 253).
Although there is no discussion of KM as such, many of these characteristics such as shared
objectives and contracts, rights, desires and opinions being expressed are familiar KM concepts,
especially in the tacit dimension. The case of Quaker Oats and Graham Packaging, both in the US,
illustrates some of these concepts (Burt, Dobler and Starling 2002, p. 99-102). Quaker selected
Graham as their chief supplier, and installed a new in-plant facility for Graham, to operate plastic
bottle manufacturing. They then developed an alliance through an open book accounting
relationship, based on disclosing bottle costs, and Quaker paid all expenses and a fixed return on
invested capital (which was mutually costed). The alliance has enabled more accurate forecasting
and an understanding of total costs, which lowers costs for both parties. Burt et al (2002) argue that
sharing of information, especially cost information has enabled a degree of trust to develop
between the companies. Many of the activities and values that form an important part of building an
alliance are actually aspects of KM approaches, such as information transparency and sharing, and
trust building, as this case illustrates. It is reasonable to assume on this basis that some companies
practice KM in the supply chain without realising it or naming it as such. However, there is a huge
gap between theory and practice here, as few companies, even those with a reputation for
progressive supply chain practice, appear to manage the supply chain beyond first tier either
backwards or forwards (Fawcett and Magnan, 2002, p. 343). Supply chain integration is still far
from a reality, as companies tend to be less comfortable with inter-organizational co-operation and
more comfortable with internal integration efforts.

Although rarely managing knowledge in any formal sense, small companies’ inherent lack of
structure, agility and informal information flows with customers and other partners allow them to
transfer knowledge, build trust and strengthen resources (Ratcliffe-Martin and Sackett, 1999). They
appear to have a head start when leveraging knowledge with customers, suppliers and partners as
they tend to have more informal, personal relationships allowing them to respond faster (Bridge,
O’Neil and Cromie 2003). This is important to them as they are particularly at risk in the supply
chain through increasing competition, the trend to outsourcing from different countries and
rationalization of supplier bases (Nelder and Martin, 1997). They inherently lack material and
financial resources making it harder for them to influence their environment.

5. Hard and soft supplier networks

Alliances and networks are not always with customers - they can also be with competitors in the
same supply chains or other companies in the same industry, the philosophy underpinning such
networks being strength in numbers. In recent years there have been many cases of supplier
network formation, especially between small manufacturing industries. Through combining
resources, capabilities and knowledge these companies can strengthen and sustain their
competitiveness. Sometimes known as clusters, participating companies are often in geographical
proximity to each other. A well-known example is the Emilia-Romagna district in Italy, where a rapid
development process based on SMEs and clusters occurred after the sixties. The success of these
clusters are seen to be based on the technical specialization attained, accumulated tacit
knowledge, a high degree of openness, internationalisation and networks extension (Bertini, 2003,
p. 1). Another well-known example is the Danish Technological Institute, which developed a model
aimed at encouraging the creation of business networks. This model has been adopted by many
other countries (Chaston, 1996).Advantages for companies taking part in these networks can be
extensive, including such benefits as cost-sharing, technology transfer, sharing of information,
enabling improved ability to outmatch a stronger competitor and easier entry into new markets. In
fact, a small company network comprises a knowledge resource in itself as it is actually a form of
social capital (BarNir and Smith, 2002, p. 221). Chaston and Mangles (2000) found that small
companies in the UK involved in such networks tend to adopt a more sophisticated learning style
than companies which do not. This leads such companies to a better-developed, more formalized
KM system, greater competence across marketing, human resource management and information
management.

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Success of these networks can depend on the strength of the network ties. Some studies have
pointed out two basic types of network. Sherer (2003, p. 326) refers to co-marketing and co-
production networks (Hard), and learning and resource networks (Soft) (Bosworth 1995, US Net
1995, from Sherer, 2003, p. 326). The former focus on sharing distribution channels, pricing
strategies, marketing staff and advertising to the same markets. The latter tend to focus on co-
operatively learning about factors, which may affect their competitiveness, such as workforce
training, technology transfer and waste management. BarNir and Smith (2002, p. 221) also
recognize two types: technology and manufacturing alliances, for developing new products or
utilizing a new technology, and support alliances, for sharing resources needed for business or
administrative activities, primarily to lower costs.

Although both these definitions are slightly different, two general types of network can be
discerned. Harder networks will tend to rely on stronger bonds and commitment, including formal
rules and protocols, with more financial investment, and are by nature more risky. Softer networks
will require less financial investment and formalization, but are less risky. These types of networks
have also been referred to as formal and informal networks. Formal networks are officially
recognized or created by a group of people and are task-oriented, whereas informal networks are
more private (de Heer, 2003, p. 7). These network forms illustrate both explicit and tacit types of
knowledge being transferred and managed. Although few of these studies explicitly discuss
knowledge or KM as an integral part of these networks, it is possible to see that knowledge is being
managed to some extent: in hard networks, through formal negotiations, contracts and teamwork,
and in soft networks through face to face dialogue and team learning.

6. Conclusions
In this paper knowledge management for sustainability in the supply chain has been reviewed. KM
was categorized into three broad generations, and it was suggested that a company must build a
holistic KM strategy based on aspects of all three approaches to be sustainable. In the supply
chain some KM strategies focusing on both leveraging tangible and intangible knowledge
resources to build and sustain competitiveness was explored. However, this area is fragmented,
and it was pointed out that companies in a supply chain often practice KM implicitly through
alliances and networks based on long term trust and transparency of information. In particular,
smaller companies have proven to be adept at forming networks, even with their competitors, to
strengthen their own positions with customers, managing knowledge implicitly.

KM as an academic discipline is new and there is still much trial and error in the area, and little in
the way of satisfactory ways to measure the value of KM initiatives, especially the value of tacit
knowledge. There are major challenges in researching and building tools on KM in any context, not
just the supply chain. Knowledge management is a diverse area, and this paper has shown that
companies’ competitiveness can be enhanced and sustained by combining aspects of first, second
and third generation KM. There is an urgent need to study and develop theories on KM applied to
the supply chain through this lens, as it complements and gives added value to the areas of supply
chain integration, alliances and networks. Much investigation is still needed into KM and how these
three generations are put together in a holistic KM strategy for sustainability. Also, in the supply
chain, there could be more investigation on internal supply chain integration and the role KM is, or
could be playing, in this, and this could then lead to more investigation into KM and its extension
into the supply chain. This challenge is hard enough for large companies that can afford to plan
and implement KM strategies; it is an even tougher challenge for companies trying to integrate their
supply chain to adopt KM strategies successfully, especially as many companies have not
managed to successfully integrate their own internal operations. For practitioners there is the
challenge of understanding KM in their own companies before they can successfully implement a
KM strategy across their supply chain. An even bigger challenge comes when a company is a first,
second or third tier supplier, having little influence with their own customers in terms of negotiating,
especially when these suppliers are smaller and/or don’t own their own products.

For managers of original equipment manufacturers, understanding and finding ways to implement
an integrated approach to KM with their suppliers may enable their companies not only to lower
costs, but build and sustain partnerships with trusted suppliers building synergies and enabling

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more long term opportunities. Such companies may be able to learn how to do this from the
networking abilities of smaller companies. For managers of companies further down the tiers of the
supply chain, particularly smaller companies which have less influence, forming networks with
other companies may enable substantial gains such as joint product development or mutual
learning opportunities. Such companies should also utilize KM processes and practices through
these networks, to enhance their effectiveness.This research is limited in that it only represents a
cross-section of literature and anecdotal evidence, and is by no means an exhaustive review.
However, it raises awareness of KM potential in the supply chain, and provides pointers to new
areas of research. There is a pressing need for more study in this area, through empirical
evidence, especially of companies who are using integrated KM approaches with customers,
suppliers or competitors to strengthen their position, and if they are not, the reasons they are not.
Knowledge management needs to be understood and taken more seriously by companies who
wish to improve their supply chains and sustain them into the future, not only by small companies
but also their larger counterparts.

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Identifying the Knowledge Gap in Knowledge
Management Systems Development
Aboubakr Moteleb and Mark Woodman
Middlesex University e-Centre, London, UK
[email protected]
[email protected]
Abstract: Despite its emergence as a distinct domain of research and practice, knowledge management has
roots in a many disciplines. As a result, a wide variety of philosophies, theories, and definitions of knowledge
management are used in the literature as well as in practice. This has led to many models and methodologies
being used in developing knowledge management systems, but without sufficient cross-pollination of ideas
from influencing disciplines. We argue that this has led to significant gaps in the understanding of what is
needed for knowledge management systems with divergent and impoverished models and methodologies
hindering research and practice. Our fieldwork in knowledge management systems development for
organisations is supported by a deep analysis of the literature, which has revealed the gaps in knowledge
management system research. This paper summarises these, challenging the very notions of knowledge,
knowledge management, and models of knowledge management, and proposes what knowledge
management systems should be.

Keywords: Knowledge, knowledge management, knowledge management systems, knowledge management

systems development

1. Introduction
Knowledge Management (KM) owes much to disciplines, such as philosophy, psychology, social
sciences, economics, management sciences, and computing science. Indeed KM relies on such
disciplines for its concepts and methodologies. However, researchers and practitioners who
espouse KM, seem not to look beyond their base disciplines to others relevant KM. As a result, a
wide variety of ideas – philosophies, theories, concepts, etc. – are used in definitions relating to KM
(Kakabadse et al., 2003). The self-limiting language of discourse has led to a wide range of what
we view as impoverished models and methodologies in what should be a broad, rich discipline. Our
work on how to improve the development of IT-based systems for KM in organisations has
exposed significant gaps due to the narrow perspective of many contributors.

We believe that Information System Development (ISD) is fundamentally the wrong point for
starting Knowledge Management System Development (KMSD) in organisations. This paper
outlines the reasons for this position (though space limits the detail). We believe rooting KMSD in
ISD is damaging, because ISD focuses on consensual, single meanings whereas we argue KMSD
needs to support individualistic, multiple interpretations. Partly, the use of ISD concepts and
methodologies for KMSD is due to history. Partly, it is to do with the divergent and impoverished
models and methodologies in the literature (Gebert et al., 2003; Herder et al., 2003; Moffett et al.,
2003). By examining what is needed for KMSD we will show that ISD methodologies are not
adequate for KMSD; they do not address or reflect the nature and locus of knowledge in KMS
(Hahn & Subramani, 2000). At very least KMSD requires the identification of what constitutes the
‘knowledge’ to be managed, why it needs to be managed, and how it is to be managed.

To address the question of what is needed for KMSD we started by a critical analysis of KM
theories and models all KMS should embody reasonable, useful models of KM. These are
discussed next. When these were shown to be deficient, we looked at the notion of KM itself, so
the paper continues by summarising that journey (space does not allow a full review). The last
aspect of KMSD we examine is knowledge itself. We conclude with a summary of the gaps that
must be filled to be methodological about KMSD and recommend areas that might fill those gaps.

2. KM models
A multitude of KM models with a wide range of approaches are apparent in the literature. Recently,
there have been different attempts to classify them. Whereas, Earl (2001) provides a classification

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of KM models into seven schools according to their ‘orientation’, others (e.g. Gebert et al., 2003,
Herder et al., 2003) perceive different dichotomies in KM models. We will focus on dichotomies in
criticising KM models because they expose limitations vis-à-vis KMSD.

2.1 Dichotomies in KM models

Gebert et al. (2003) argue that almost all KM models can be traced back to two basic approaches
for analysing knowledge:
ƒ epistemological models, e.g. Boisot (1987), McLoughlin & Thorpe (1993), and Nonaka &
Takeuchi (1995);
ƒ ontological models, e.g. Bontis (1998), Enkel et al. (2000), Probst et al. (1999), Wenger (1998),
and Wiig (1997).
The first approach focuses on the nature of knowledge independent of its context, while the second
focuses on the relationship between knowledge and its environment. The main differentiating
characteristic of knowledge, from the epistemological perspective, is the difficulty of its articulation.
Knowledge that can be easily articulated is labelled explicit knowledge, while knowledge that is
difficult to articulate, and therefore difficult to communicate to others, is labelled tacit knowledge
(Polanyi, 1966). Famously, Nonaka & Takeuchi (1995) address this differentiation in their SECI
model, which focuses on the arrangement and regeneration of knowledge through continuous
conversions between explicit and tacit knowledge. In contrast, ontological models provide a
systematic representation of a conceptualization by representing the entities that exist in some
area of interest and the relationships that link them. These models treat knowledge as a ‘black box’
with undefined inherent characteristics, and a focus on its relations with its surroundings. Gebert et
al. (2003) divide ontological models into:
ƒ Process-oriented KM models, such as those of Probst et al. (1999) and Wiig (1997), represent
relationships among KM practices, usually in a lifecycle format, e.g. knowledge creation,
knowledge communication, and knowledge utilisation.
ƒ Agent-oriented KM models, such as those of Wenger (1998) and Enkel et al. (2000), represent
relationships among knowledge workers and/or stakeholders during knowledge transfer.
ƒ Financially oriented KM models, such as those of Bontis (1998), represent relationships among
knowledge capital residing with the organisation, both internally and externally, e.g. intellectual
capital, human capital, structural capital, and customer capital.
On the other hand, Herder et al. (2003) and Moffett et al. (2003) have different binary KM models
that we believe are equivalent in practice:
ƒ Analytical or technology-oriented approaches;
ƒ Actor or people-oriented models.
Analytical (technology-oriented) models focus on the codification of knowledge into IT systems.
Herder et al. (2003) argue that these models emphasise the importance of explicit knowledge and
the technological infrastructure to share it such as an Intranet. On the other hand, actor models are
people- and business process- oriented. Herder et al. (2003) argue that these emphasise the
importance of tacit knowledge and the social infrastructure to share it, for example through
communities of practice.

2.2 Implications of KM models for KMSD

In terms of value to organisations, adopting either solely an epistemological or ontological
approach to KM models is insufficient and cannot be used for management decision-making. The
value of undiluted epistemological models is limited in a business context Gebert et al. (2003),
especially in situations that require the evaluation of knowledge as a business resource. Here, all
epistemological models have the common weakness of only contributing to an assessment of value
through internal qualities, which are independent of the context of use. The business value of
ontological models alone is also limited, especially on the operational level, because they disregard
inherent characteristics of knowledge. For example, budgetary decisions on identifying,
disseminating, and using knowledge, depend on whether its manifestation is mainly tacit or mainly
explicit.

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It is essential to have KM models that incorporate both the nature and relationships (the process
and the practice) of knowledge in organisations. Gebert et al. (2003) suggest a balanced, hybrid
paradigm, with the potential of considerable synergy. A fully balanced model is yet to be created
with only few attempts of balancing both in the literature. Nonaka & Konno (1998) have tried to
integrate an ontological dimension to the epistemological approach in their spiral-like model, and
Demarest (1997) tried to analyse different types of knowledge in his process-oriented model.
Adopting either solely an analytical approach or an actor approach in KM models is also insufficient
in terms of value to organisations. Analytical models overlook the role of tacit knowledge and
cultural aspects in KM. Technology alone will not lead to a KM culture (Davenport & Prusak, 1998).
Similarly, the value of actor models alone is limited because they do not acknowledge the full
potential of technology and systematic processes to managing knowledge.

An unbalanced approach to implementing KM in organisations hinders its success. Moffett et al.,

(2003) assert that tensions are often found between knowledge-orientated applications and the
progress of organisational change in implementing KM programmes. Therefore, more systematic
empirical research addressing the relationship between cultural and technological aspects of KM is
required. We conclude that focusing on epistemology or ontology in KM models limits the value to
organisations. Similarly, emphasising either analytical or actor aspects in KM models hinders the
success of organisational KMS. Understanding and addressing these issues either practically or
theoretically is currently being held back by a paucity of systematic empirical research, addressing
the relationship between the organisational, human and technological aspects of KM. Current KM
models lack a holistic representation of KMS in organisations. Malhotra (2005) argues that the gap
is widening between technology inputs, knowledge processes, and business performance. This is
leading to failures of KM technology implementations.

Accordingly, a balanced approach is needed for KMSD to deliver a balanced KM model. It is

essential to be able to encompass organisational, human, and technological aspects by including:
1. People (actor),
2. Tools (analytical), and
3. Processes (actor and analytical).
This leads us to investigate what KM means in the context of KMS and how KMSD should address
it.

3. Knowledge management in KMS

Knowledge has been implicitly managed, as long as work has been performed. Recent publications
point at a continual relationship among economic, industrial, social, and cultural transformations
and evolution in managing knowledge (Wiig, 1997; Drucker, 2002) Knowledge is now the cause
rather than the effect of such transformations, particularly when it is systematically organised to be
purposeful. Since many argue that the more developed world is evolving into a knowledge-based
economy (e.g. Beijerse, 1999; Drucker 2002; Wiig 1997), the new application of knowledge today is
to knowledge itself, i.e. meta-knowledge (Laszlo & Laszlo, 2002). Hence the essence of KM is to
manage knowledge about knowledge. This section summarises attempts to clearly define KM and
frameworks and lifecycles for KM by analysing what the most cited scholars have said. Ultimately
we are concerned with KMSD so we need to be clear about what KM itself is.

3.1 Abstractions of knowledge management

We start by examining a variety of what have been variously called ‘frameworks’ and ‘lifecycles’,
also known as ‘processes’ (without necessarily being provided with differentiating definitions). We
take these to be generalizations without explicit mechanisms for instantiation or phasing. Nonaka &
Takeuchi (1995) focus on informal and tacit knowledge in their KM lifecycle. Rather than
‘knowledge management’ they identify the main processes in a KM lifecycle as knowledge creation,
dissemination, and embodiment. Moreover, they emphasise knowledge exploration for creating
new knowledge, over exploitation of existing knowledge. On the other hand Wiig (1997) focuses on
procedural and explicit knowledge more than informal and tacit knowledge in his definition:

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KM is to understand, focus on, and manage systematic, explicit, and deliberate

knowledge building, renewal, and application – that is, manage effective knowledge
processes.
Wiig identifies main processes in a KM lifecycle as knowledge building, renewal, and application
and stresses a more methodical approach to KM by associating processes with the terms
systematic, explicit, and deliberate knowledge. These indicate that knowledge can be articulated
and that it has a specific purpose and, presumably, value. Also, it gives an indication that he views
managing knowledge to be guided by procedures and techniques. Davenport & Prusak (1998)
provide a pragmatic approach to describing processes in a KM lifecycle. Despite the lack of an
explicit definition of KM, they describe the main processes knowledge generation, codification &
coordination, and transfer. Beijerse (1999) has a more analytical approach to KM lifecycles. For
example, he breaks down the term ‘knowledge management’ and analyses different definitions of
each component to derive his own resulting in the following:
Knowledge management is achieving organizational goals through the strategy-driven
motivation and facilitation of (knowledge-) workers to develop, enhance and use their
capability to interpret data and information (by using available sources of information,
experience, skills, culture, character, personality, feelings, etc.) through a process of
giving meaning to these data and information.
Beijerse identifies main processes in a KM lifecycle as knowledge developing, enhancing and
using. In line with Nonaka & Takeuchi (1995), he emphasises the role tacit knowledge, viewing it as
the added value to these processes. Note the explicit responsibility given to workers to interpret
and hence give individual meaning to knowledge. Ignoring this crucial facet of KM has left a huge
gap for KMSD. Instead, of an explicit definition of KM, Bhatt (2000) selects processes from the KM
lifecycles from others: knowledge creation (from Nonaka, 1991), knowledge adoption (from Adler et
al., 1999) knowledge distribution (from Prahalad & Hamel, 1990), and knowledge review & revision
(from Crossan et al., 1999). However, Bhatt describes his own KM lifecycle in the following
definition, which stresses procedural KM by emphasising processes like Wiig (1997):
… The knowledge management process can be categorized into knowledge creation,
knowledge validation, knowledge presentation, knowledge distribution, and knowledge
application activities.
We conclude that KM definitions, both explicit ones and those implicit in frameworks and lifecycles,
in the literature do not describe a coherent account of what is knowledge management, because
they are mainly prescriptive. Rubenstein-Montano et al. (2000) argue that the majority of KM
definitions and frameworks merely provide “direction on the types of procedures without providing
specific details”. Hence, we argue that more descriptive KM frameworks are required to provide
insight into what knowledge to manage, why, and how. Many scholars posit that the key flaw of KM
is the focus on KM activities without addressing why knowledge should be managed (Malhotra,
2005). We propose that the ‘why?’ can should be provided by an organisation’s strategy.

3.2 Implications of notions of KM for KMSD

A richer interpretation of what KM is required to guide KMSD for organisations. We need to define
what knowledge to manage, why, and how. Furthermore, it is important for business value to be
able to guide KMSD towards what an organisation intends for its business. We propose a working
definition of KM, that relates to business value and which incorporates most of the processes in KM
lifecycles described earlier as the set of processes of (i) creation & acquisition, (ii) representation &
dissemination, and (iii) validation, utilisation & renewal of purposeful knowledge:
ƒ That is needed by knowledge workers and aligned with an organisation’s business goals and
strategies;
ƒ That addresses a problem or an opportunity for the organisation;
ƒ That is provided to the right person, at the right place and time
This preliminary definition provides a general direction for developing KM theory, to allow us to
consider what knowledge means for KMSD, as we discuss next.

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4. Knowledge in knowledge management systems

Deficiencies in the models of KM lead inexorably to the question of what ‘knowledge’ is for KMSD.
Frankly, the literature is distracted by what we assert is an irrelevant discussion of the meanings of
and relationships among ‘knowledge’, ‘information’ and ‘data’. Knowledge, in the context of KMS,
needs to be represented in a way not previously addressed in other systems such as Management
and Executive Information Systems (Alavi & Leidner, 1999). Yet, arguments still continue regarding
the nature of knowledge how it is formed and held and its relationship to notions of information and
data.

4.1 Knowledge, information and data

The literature frequently discusses de facto differences between knowledge and information, and
information and data. Whereas the terms are perceived to represent concepts that are significantly
different in nature, there is a lack of clear distinction. In fact, the three terms are often used
interchangeably in both research and practice (Alavi & Leidner, 1999; Stenmark, 2002; Vouros,
2003). Often the relationship among these concepts is taken to be linear and mutually exclusive:
something is added to data to make it information, and something is added to information to make
it knowledge. However, there is nothing that indicates such linearity or justifies such separation
(Holsapple, 2005). Whereas transformations are perceived to happen from data to information to
knowledge, the literature fails to explain these transformations.

One widely accepted view in the literature is that data, information, and knowledge are radically
different (Lang, 2001; Yahya & Goh, 2002). However, this assumption has come under criticism
recently, especially with a lack of definitions that clearly distinguish the terms one from another
(Stenmark, 2002). The following questions are frequently addressed:
ƒ What is knowledge in comparison with information and data?
ƒ What is the relationship among knowledge, information and data?
ƒ What transformations occur among knowledge, information and data?
The terms are often defined in relation to each other. Data is usually defined distinctively as ‘facts’:
ƒ Raw facts (Bhatt, 2001; Pe’rez et al., 2002; Beveren, 2002; BSI, 2003), or
ƒ Discrete facts (Davenport & Prusak, 1998; Herder et al., 2003).
However, information is usually defined in relation to data:
ƒ Processed data (Bollinger & Smith 2001),
ƒ Organised data (Bhatt, 2001; Pe´rez et al., 2002),
ƒ Collected data (BSI, 2003), or
ƒ Messages (Davenport & Prusak, 1998; Nonaka & Takeuchi, 1995).
Similarly, knowledge is usually defined in terms of information:
ƒ Meaningful information (Bhatt, 2001; Herder et al., 2003; Pe´rez et al., 2002), or
ƒ Commitments and beliefs created from messages (Nonaka & Takeuchi, 1995).
A widely accepted assumption in the literature is the unidirectional nature of transformations from
data to information to knowledge, and not in the other direction. This asymmetrical situation has
come under criticism recently as being incorrect, since knowledge is required for the creation of
information and data, just as the creation of knowledge often requires information or data (see
Beveren, 2002; Stenmark, 2002). The above definitions and rule would allow the deduction that
knowledge might be ‘meaningful, processed discrete facts.’ However, we should not infer what data
is needed to represent messages that embody a belief. How does this help KMSD?

Alavi & Leidner (1999) state the view that “knowledge is not a radically different concept than
information”. They assert that the key distinguishing factor between knowledge and information is
“not found in the content, structure, accuracy, or utility of the supposed information or knowledge”,
but “rather, knowledge is information possessed in the mind of an individual”. Holsapple (2005)
takes the view that the terms should not be casually equated, but echoes Alavi & Leidner, stating

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that while knowledge is not equated to information, there is no barrier built between them.
Information is data represented in a different format due to an action performed on it: processing,
organising, collecting, etc. Similarly, knowledge is information represented in a different format due
to an action on it: producing meaning, commitments or beliefs. Likewise, data is information or
knowledge represented in different format: unprocessed, discrete, or abstracted. We argue that
the entire discourse on knowledge, information and data is ill-founded, irrelevant and distracting.
They are labels for essentially the same thing. If they have any usefulness it is to indirectly signal
different contexts or values, e.g. ‘knowledge’ is what an individual will claim to have, and be of
value, whereas ‘information’ is from somebody else, and therefore its value has not yet been
assessed by an individual.

4.2 Implications of notions of knowledge for KMSD

All disciplines that update the meaning of their vocabulary suffer from the persistence of old
meanings or ideas. We believe that the evolution of the terms ‘knowledge’, ‘information’ and ‘data’
are a case in point and argue that the confused perspectives we have discussed lead to position.
However, the literature has shown some tentative moves in the direction we propose. Alavi &
Leidner (1999) see knowledge as “personalized or subjective information related to facts,
procedures, concepts, interpretations, ideas, observations and judgments (which may or may not
be unique, useful, accurate, or structurable)”. For us this introduces the personal assessment of the
value of ‘knowledge’ to an organisation, which means that whatever a KMS might store cannot
have a fixed meaning for all users of that ‘knowledge’.

The value or purpose of knowledge is a crucial aspect that must be represented in a KMS. Despite
the argument of the importance of knowledge to organisations (Drucker, 2002; Koskinen, 2003), it is
vital to direct KMSD towards knowledge of value, so as to develop and implement an effective
KMS. However, directing KMSD towards knowledge of value does not mean limiting access to pre-
specified entities. KMSD should maintain a balance between directing development towards
knowledge of value, and allowing enough flexibility for natural emergence and interaction among
interpretations of knowledge.

5. Discussion and conclusion

In this paper we addressed a need for development methods for KMS through a critical analysis of
the literature of knowledge management. This analysis showed a lack of credible models for KMS,
inconsistencies and obfuscating variations regarding KM definitions, and confusion about what is
knowledge itself. In our review of KM models, we concluded that focusing on epistemology alone
or ontology alone limits the value to organisations. A KM approach based only on epistemological
ideas will lack the representation of relationships that would expose clear business value. Such
looseness would suit few modern organisations. A KM model based only on ontological notions
would be so process-focussed that only a single, inflexible worldview could be supported. Such
rigidity has proved unsuccessful in many organisations. Similarly, emphasising either analytical or
actor aspects in KM models hinders the success of KMS in organisations. Understanding of these
issues in KM models, both practically and theoretically, is currently hindered by a paucity of
systematic empirical research that addresses the relationship between the organisational, human
and technological aspects of KM. Therefore, KMSD should embody both epistemological and
ontological aspects of knowledge, and encompass organisational, human, and technological
aspects in KM.

Having encountered many issues in models of KM we reviewed notions of KM. These showed
insufficient accounts of what KM actually is – and even whether knowledge could really be
‘managed’. Our analysis leads us to argue that a richer notion of KM is required to provide insight
into (a) what knowledge to manage, (b) why to manage knowledge, and (c) how to manage
knowledge. We have proposed a suitably descriptive definition of KM, which addresses these and
also incorporates all of the KM processes posited by a range of scholars.

We found the discussions comparing knowledge with information and data sterile and unhelpful –
obscuring the important ideas that there need to be multiple interpretations of knowledge and
flexibility to extend, blend and change interpretations. Through our analysis, we have shown

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divergence in KM philosophies, definitions, theories, and models have left gaps that are hindering
KMSD in organisations. While some might argue the suitability of such variation, we argue the
requirement for a common basis for KMSD. A common basis is required to:
1. Facilitate communication between practitioners, especially with different perspectives and
roles;
2. Enable interoperability of different KMS of different departments within an organisation or
between different organisations.
Ultimately we need to be clear about what, in terms of IT, is an ‘information system’ as opposed to
a ‘knowledge management system’. In the context of our work an ‘information system’ is one in
which static relationships between entities (in the accepted database sense) dominate the system’s
architecture and design. Typically an information system could be developed according an
accepted approach, such as embodied by Zachmann (1987). Crucially, there will be a single
meaning ascribed to all entities in an information system and to the relationships between them.
By contrast, a ‘knowledge management system’ is not dominated by static relationships but needs
to support the ad hoc, dynamic creation of and changing relationships among entities – the type
that no a priori analysis would reveal. A KMS should accommodate the dynamic and inherently
unpredictable nature of knowledge. Crucially, a KMS must support multiple meanings for stored
entities and must support interactions between interpretations, not just stored entities.

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Knowledge Enhanced e-Workflow Modelling - A Pattern-
Based Approach for the Development of Internet
Workflow Systems
John Ndeta, Farhi Marir and Islam Choudhury
Department of Computing, London Metropolitan University, UK
[email protected]
[email protected]
[email protected]
Abstract: Workflow management systems are an important information technology in terms of their uptake
and applications, which are designed to automate and make work more efficient, integrate heterogeneous
application systems, and to support intra-organisational and inter-organisational processes and in so doing
radically improve the performance of clerical and administrative processes. However, the traditional workflow
metaphor, which focuses on the management of work processes and information processing perspectives of
an organisations strategy, are increasingly inadequate in the Internet or new e-business era that is often
characterised by an increasing pace of radical, discontinues and unforeseen change in the business
processes and business environment. It has also ignored the human dimension of organisational knowledge
creation. To address the workflow flexibility problem, this article presents a pattern-based approach, which
integrates knowledge-based planning techniques in the form of workflow design patterns with an Internet
workflow in order to increase the flexibility of workflow management systems. It also presents a workflow
design pattern repository to serve as a source of sound solutions, proven by experience, for problems
occurring during workflow modelling. In order to assist workflow designer/users in selecting a suitable
workflow design pattern, we will make classification of patterns and analyse relationships between design
patterns for easy navigation through the workflow design pattern repository.

Keywords: Workflow, e-workflow, knowledge management, e-Business, workflow Design Patterns,

exceptions.

1. Introduction
Business process modelling is an effective tool for managing organisational change and is known
to have brought benefits to many organisations. Organisations and their business processes
undergo changes from time to time, and in some cases this changes are dynamic, discontinuous
and complex. Organisations change either through anticipation of surprise (proactive) efforts to
become more competitive or in response to a need to maintain competitiveness in a changing
business environment (Chung et al., 2003). The importance of process is a key aspect of
computing, and the notion of process and role are central in the field of workflow management
(Kurt, 2001). A workflow management system "completely defines, manages and executes
'workflows' through the execution of software whose order of execution is driven by a computer
representation of the workflow logic" (Hollingsworth, 1995). Workflow systems (WFSs) are an
excellent base for process-oriented knowledge retrieval because they are well studied and
increasingly common in contemporary organisations, and many companies are providing software
support for WFSs. Workflow systems embody explicit process and product models, i.e., a
completely specified workflow design is required that will need to be modified to reflect the changes
in organisations. A major limitation of traditional workflow systems is that they can, typically, only
support simple, static and predictable processes, but not the dynamically changing and complex
processes that are present in many contemporary e-business organisations. Our approach to e-
workflow modelling aims at providing process support like traditional workflows do, but in such a
way that the system is intelligent enough to deal with new Internet business environment that is
characterised by rapid, dynamic and discontinuous change. Because of these and other related
potential advantages, there is increasing interest in making workflow approaches more flexible and
in using knowledge-based techniques to allow workflow systems to cope with complex,
unpredictable and dynamically changing processes (Dellen et al., 1997). Our proposed approach
extends traditional approaches to flexibility problems encountered during e-workflow modelling by
incorporating the concept of workflow design patterns. Workflow design patterns can be seen as
generalised solutions to recurring problems within the context of e-business. Tried and tested
solutions can be reused to solve recurring problems within e-business environment that is

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characterised by many uncertainties and variations (Marir & Watson, 1995). These problems can
be exceptions in the Internet workflow and business environment i.e., change in customer needs,
unexpected breakdown during the execution of a workflow process and changes in business
environment in general. The paper is organised as follows. Section 2 looks at related work; section
3 presents the architecture of the e-workflow design pattern environment with its features for
accessing and managing the pattern repository. It also presents an example for modelling e-
workflow by using the workflow design patterns from a pattern repository, and illustrates the
indexing and retrieval scheme of patterns. Finally, section 4 concludes the paper and presents the
future work.

2. Related work
Following the limitations of the traditional Workflow Management Systems (WFMS), there has been
numerous attempts to tackle some of the problems. However, most of the attempts do not provide
clear phases and activities within each phase on how to analyse, design and implement what it
calls e-workflow. Their approach focuses more on implementation issues and do not provide clear
procedure on how to incorporate knowledge management issues in their e-workflow development.
In (Chung et al., 2003), their adaptive workflow approach uses the ontology and intelligent agents
and knowledge based planning techniques to provide support for developing flexible workflow for
the development of new product in the chemical industries, where the modelling focuses only on
the functional perspective. In (Dellen et al., 1997), they integrate knowledge-based techniques with
a workflow management approach to support processes change, trace decisions and to provide
notification mechanism. This approach was applicable in civil and software engineering and
focuses more on implementation issues and doesn't look at the other perspectives of workflow
modelling e.g., informational and organisational perspective. In (Van der Aalst, 2003), uses
workflow-mining techniques to create a feedback loop to adapt the workflow model to changing
circumstances and detect imperfections of the workflow design and also find explicit
representations for a broad range of process models. The approach focuses more on
implementation issues in the form of reverse engineering. Cardoso & Sheth (2002) use ontology as
a tool for explanation and provides an algorithm to resolve the heterogeneity amongst the
interfaces of web services and integrate it with workflow tasks. The approach focuses on the
functional and information perspective of e-workflow modelling and fails to mention organisational,
social and behavioural perspectives, which are essential if a complete picture of e-workflow
modelling is to be exemplified. (Van der Aalst, 1999) provides process-oriented architecture for
modelling inter-organisational workflow for Internet e-commerce. It uses Petri-net formalism to
model behavioural/dynamic aspects of inter-organisational workflows and the concept of
soundness to verify the workflow model. However, the work does not show how to model other
workflow perspectives and it also has clear procedure on how to handle exceptions in
communication scenarios or architectures for modelling workflows.

3. The proposed e-Workflow design pattern environment

The pattern-based approach presented in this research borrows concepts and solution from both
design and rule patterns to support flexibility issues in Internet workflow modelling. Traditional
approaches to workflow modelling mainly deal with the use of rules in specific contexts serving as a
mechanism for workflow enactment and evolution (Casati et al., 1999). Our approach focuses on
providing abstraction mechanisms to represent in an implementation-independent manner the
knowledge and experience associated with exceptional situations in workflow design and evolution.
The goal is the reuse of "good" old workflow design patterns for new workflow modelling tasks. This
requires an "Experience and knowledge-based Factory" like the workflow design pattern repository
with efficient retrieval and adaptation techniques in order to avoid reinventing the wheel. It is a
basis for long-term process improvements resulting in increased competitive advantage for e-
business enterprises. Our e-workflow modelling approach also involves human cognition
(knowledge from personal experience or view) and problem solving. People have the tendency to
use existing methods and solutions to solve new problems. Unfortunately, the role of human
cognition is often neglected in traditional workflow development approaches (Zhuge el al., 2002). A
cognitive-based e-workflow process model can unify the workflow process and the developers'
cognitive process. The model provides a way to improve the workflow process through enhancing

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the cognitive skill of workflow designers and users. Finally, the proposed approach for e-workflow
modelling needs less design work than the traditional approaches do, another is that the proposed
approach can adapt more easily to changes of the domain business. Thus compared to traditional
workflow approaches our proposed approach provides a consistent development process, so it
meets the needs of virtual organisations for rapid, low cost and flexible development. The approach
also takes into consideration all the perspectives involved in the design and modelling of e-
workflow applications (Ndeta & Marir, 2005). In this section, we present the e-workflow
environment supporting the pattern-based approach highlighted in the previous section. We first
introduce the architecture and the functionality, and then we present the sample usage of the
environment. The architecture is shown in fig 1. The definition of workflow schema is performed
through the schema interface by reusing the available patterns in the workflow design pattern
repository. From within the schema interface, the designer or user can interactively search the
repository for suitable generic workflow design patterns. Retrieved patterns are
instantiated/customised/specialisation for the workflow schema at hand, through the schema
interface, which can also be used to define new patterns from scratch if the available ones in the
pattern repository do not fit the workflow requirements.

Designer/users
Workflow
process/task Pattern
interface interface

Workflow
Pattern
engine
reviewer
process/task
interpreter

Workflow design
Workflow Workflow pattern
process process repository Workflow
repository
management design pattern
management

Figure 1: Architecture of the e-workflow design pattern environment

Patterns defined for a workflow schema can be reviewed through the reviewer component before
storing in the repository. The workflow design pattern management component performs the
pattern repository management functions, which are insertion, modification and deletion of
workflow design patterns from the pattern repository through the pattern interface. The workflow
schemas are defined through the schema interface. The schema interface accesses the schema
repository in order to insert, modify, and delete workflows. The defined workflow schemas are then
accessed and interpreted by the e-workflow engine during workflow execution. E-workflow
execution may involve the modification of system and workflow relevant data, which can only be
accessed by the e-workflow engine and not the pattern component, which is not involved with
workflow instances and execution. The workflow process management component also performs
the schema management functions, i.e. insertion, modification and deletion of workflow schemas
from the workflow process repository.

3.1 Workflow design patterns

Object-orientation and component software engineering suggest well-proven design patterns
(Gamma et al., 1995) in order to implement solutions for typical recurring problems. Patterns are a
way for the designer to specify the workflow schema (process definition) by reusing previous

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experience and knowledge of the best designers. Workflow management systems are generally
used to support, control and monitor business processes. Explicit models of different perspectives,
i.e. process, organisational, behavioural and data, etc, typically drive them. In other to build a
workable model with the help of a workflow system efficiently, all perspective of requirements put
on the systems from process, data, resources and other perspectives, must be well understood.
Several steps have already been made in the direction of formalising patterns in the workflow
domain and substantial effort in the form of workflow patterns (van der Aalst et al., 2003), Workflow
data patterns (Russel et al., 2004), and workflow resource patterns (Russel et al., 2004), are
currently under investigation. These pattern languages address the process, data, and resources
perspectives in isolation. Note however that in a real system, process, data, and resources
perspectives interplay, thus considering every perspective in isolation is not sufficient. No attempts
have been made to formalise the patterns combining several perspectives (Mulyar & van der Aalst,
2005). Workflow designers and users, working in the same problem domain, experience similar
difficulties while solving the same kind of problems. Since problems to be solved are multi
dimensional and are often not unique to a particular domain i.e. they recur in many systems;
workflow designers and users often invest their time and effort on solving a problem and often
reinvent the wheel (reinvent already existing solutions). Patterns are viewed as a description of a
problem, of a solution, and of the context in which this solution works. We introduce patterns as
generalised description to problems and solutions that can frequently occur in workflow modelling.
Patterns encapsulate typical rules or set of rules that capture the knowledge about the occurrence
of an exceptional situation and the actions that can be performed to deal with it. Patterns consist of
predefined parts, parameterised parts, and optional parts. Parameterisation and optionality are
introduced to support pattern re-usability and adaptation in workflow design for aspects related to
workflow modelling and exception handling (Casati et al., 1999).

3.2 The workflow design pattern repository

The main goal of the workflow design pattern repository is to serve as a source of sound solutions,
proven by experience, for problems occurring during workflow modelling by means (Perronne et al.,
2006) of Unified Modelling Language (UML). A workflow design pattern repository is one of the
possible ways to assist designer and users in building their models efficiently, while avoiding
reinventing already existing solutions of problems, which are common in the domain context. The
workflow design pattern repository is based on past experience and knowledge; they express
sound solutions for problems frequently recurring in a workflow domain in the form of pattern
templates. When a workflow designer or user is faced with a problem, he/she can look up a
solution for the problem at hand from the workflow design pattern repository, thus spending less
time and effort on solving the problem and ensuring the soundness of the solution. For instance,
many workflow processes are faced with the need for managing such situations as the cancellation
of an order or of a service request, or the violation of data or temporal constraints. Patterns define
these behaviours in abstract template forms, and the templates may be reused or specialised for
different workflow applications, thereby increasing the speed, flexibility and quality of exception
handling or problem-solving and consequently reduce the development cost. The availability and
applicability of such workflow process patterns is one of the key aspects of the e-business process
and domain knowledge and experience that must be provided by a flexible and adaptable
knowledge enhanced e-workflow system if it has to provide effective workflow process
management support. During the design of a workflow application, the designer must be able to
identify suitable combination of processes for achieving the tasks, select the ones most appropriate
to the current situation, and, if necessary, adapt/customise them for that situation.

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Figure 2: The travel booking service workflow definition

To support this, our proposed approach for knowledge enhanced e-workflow development
incorporates a workflow design pattern repository, which maintains a history of process structure,
relating each structure to the types of tasks for which it is a suitable method. Each workflow design
pattern specifies a set of tasks, together with the ordering constraints and object flows between
them. Thus, a workflow design pattern represents one possible means of achieving a given type of
task by breaking it down into a particular structure of sub-tasks. Each workflow design pattern
specifies a single level of structural decomposition. However, the decomposition is into a further set
of tasks, for each of which further workflow design patterns may exist in the repository. These
workflow design patterns may in turn be selected to specialise/instantiate the sub-tasks, and so a
multi-level hierarchical process structure may be generated by composition of many design
patterns. For any given task, there may be multiple possible workflow design patterns, expressing
different ways of breaking the task down for different situations. In this research we focus on the
patterns in business problem domain, where control flow and data flow interact. We select UML as
an implementation language, since it allows the modelling of the various perspectives i.e. process,
organisational, behavioural and data perspective. The workflow schema shown in figure 2 depicts a
simple workflow definition (schema) for the business process of booking a travel service from a
network centric travel service provider (NCBSP). The workflow schema has three other sub-
workflow schemas relating to partner (associate) business service providers (BSP), airline
reservation, hotel reservation and car rental reservation. Three additional sub-workflow design
patterns are required, each for achieving the airline, hotel and car rental reservation sub-workflows
task. A manager of a workflow process can configure such workflow design pattern dynamically,
with decisions being based on the current situation at hand and which of the alternative breakdown
is more appropriate. A similar process of specialisation may then be applied to structure each of
the sub-workflows within the chosen breakdown. For example, the hotel reservation sub-workflow

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may have several different available workflow design patterns. The workflow design pattern
repository provides support for carrying out common tasks in any one of a number of standard
ways. Knowledge creation, sharing and collaboration is enhanced by the provision of workflow
design patterns at different levels of abstraction, so that each user can work with design patterns
expressed at the necessary level, without having to commit unnecessary to particular lower-level
details.

3.3 Pattern format

We developed an input format for pattern creation so that pattern's contents would be structured
and predictable. We surveyed pattern libraries on the web to devise a base set, and after some trial
and error, settled on the following fields:
ƒ Name, used for uniquely identifying the pattern in the workflow design pattern repository. As
this name will become part of the design vocabulary, it must be chosen carefully.
ƒ Author, each pattern has one principal author;
ƒ Contributors, For when there are co-authors;
ƒ Problem, written in user-centred terms, i.e. what is the problem presented to the end user?
ƒ Intent, This section describes in few sentences the main goal of a pattern, i.e. towards which
problem it offers a solution.
ƒ Classification, according to the categories and sub-categories of the workflow design pattern
repository to allow users to browse by category;
ƒ Solution, This section describe possible solutions to the problem
ƒ Related to, establishing links among patterns to combine them in different structures;
ƒ Guidelines, providing suggestions to the user about possible usage and
instantiation/personalisation of patterns
ƒ Keywords, which are a set of user-selected terms that can be used to refer (select, search,
etc) to the available patterns in the repository; this field allows one to describe more precisely
the topics of the pattern, especially to distinguish the different patterns of a given category in the
classification;
ƒ Template, it contains the core specification of a pattern. The specification is given in terms of
events, conditions, and actions. Unlike events and conditions, which are the main parts of the
patterns, the action part provides only suggestions. This reflects the fact that exception patterns
focus on how to capture exceptions, rather than on how to fix reactions, which are application
dependent. The template contains parametric fields (also called generic terms in the following)
to be filled in with specific values provided by the designer (Casati et al., 1997)
ƒ Sample usage, since the user of the repository is anticipated to be an expert of the application
under design but is not required to have detailed knowledge of the exception language syntax,
the repository is provided with some user-oriented sample usage. This is a set of instantiations
of patterns on specific examples. They show how patterns can be customised in different
context and applications by illustrating how the designer to produce a concrete workflow model
can supply parameters of patterns. The sample usage description is a set of workflow-specific
instantiations of patterns related to an application domain (Casati et al., 1999)
The fields required to define a pattern are the Name, Problem, Sample usage, and Solution fields.
Other fields that aren't filled out don't show up on the pattern detail page. They are considered to
be optional fields.

3.4 Workflow design pattern indexing and retrieval

In order for the mechanism and data structure of workflow design patterns retrieval to be applicable
to retrieving context-sensitive workflow design patterns and sub workflow design patterns, the
indexing scheme for patterns and sub patterns must be at an appropriate level of generality of the
global and local context and to reflect the hierarchical structure of the workflow design patterns. For
this purpose, two main interconnected indexing schemes are provided in the workflow design

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pattern repository; workflow design pattern indexing scheme and the sub-workflow design pattern
indexing schemes as shown on fig. 3. Each of the indexing schemes is composed of two types of
indexes with different functionalities.

Figure 3: Workflow design pattern indexing scheme (Adapted from Marir & Watson, 1995)
Classification indexes represent the global and local context features of workflow design patterns
and their sub-workflow design patterns that represent the acquired knowledge and experience in
the workflow domain. These indices are considered as difference-based indexing scheme by their
main function of differentiating a workflow design pattern from another similar workflow design
pattern. However, these indexes are mainly used to classify and direct the retrieval to context-
sensitive workflow design patterns and sub-workflow design patterns. This reflects the importance
given to the context information which expert domain retrieve and adapt patterns and also adds an
advantage to the proposed e-workflow approach by reducing the scope of the retrieval search
space of classes of similar workflow design patterns rather than the whole workflow design pattern
repository. Retrieval indexes represent a strategy for accessing the workflow design pattern
repository and search for suitable workflow design patterns. Two search strategies are provided
namely, keyword-based and classification-based search. The first is based on a pre-defined
glossary of terms loaded during the specification of patterns to characterise the pattern within the
repository. Keywords can refer either to pattern elements (e.g., names of events, actions) or can be
more generic, domain-related words (Casati et al., 1999). The second strategy allows for the
retrieval of patterns based on two criteria: Typology of the patterns with respect to event types
(e.g., temporal, external, data); and abstraction level of patterns in the repository.

4. Conclusion
In this paper we have presented an e-workflow modelling approach that takes into consideration
the knowledge dimension in the form of workflow design pattern. We have also provided an input
format for pattern creation, which would enable patterns content in the workflow design pattern
repository to be structured and predictable. The architecture of the e-workflow design pattern
environment is provided with its features for accessing and managing the pattern repository. The
paper also provides classification strategies for pattern storage and retrieval in a structured

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repository of inter-related patterns and on providing strategies for specialising and instantiating
workflow design patterns in the pattern repository. Finally, the approach involves human cognition
and takes into consideration all the perspectives involve in human cognition. Future research work
will incorporate the use of exceptions as a basis for managing dynamic workflow evolution and the
design of patterns for authorisation management in Internet workflow.

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MB, The Netherlands.
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Knowledge Enhanced e-Workflow Modelling, Proceedings of the 6th European Conference
on Knowledge Management, University of Limerick, Ireland.
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behaviour modelling and integration, Mathematics and Computers in Simulation 70 (2006)
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Patterns. QUT Technical report, FIT-TR-2004-01, Queensland University of Technology,
Brisbane, 2004.
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Patterns, BETA Working Paper Series, WP 127, Eindhoven University of Technology,
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Patterns. Distributed and Parallel Databases, 14(1):5-51, 2003.
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(2003), Workflow mining: A survey of issues and approaches, Data & Knowledge
Engineering 47 237-267
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virtual organisation development, Information & Management 39 325-336.

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Communication and Knowledge Transfer in a Research
Organisation
Margit Noll, Doris Froehlich and Damaris Omasits
Arsenal Research, Vienna, Austria
[email protected]
[email protected]
[email protected]
Abstract: Research organisations as expert organisations are primarily dedicated to knowledge creation and
transfer and are therefore deeply involved – consciously or unconsciously – in knowledge management. This
holds true also for arsenal research as a research organisation with its main research in the areas of mobility
and energy. Its strategic objectives are focused on technology development and transfer to support industrial
R&D. As a project oriented organisation with a high degree of interdisciplinarity an adequate knowledge
strategy is required for linking different teams and disciplines. Therefore, a knowledge management initiative
was started at arsenal research to analyse the present situation and to derivate an action plan to improve
knowledge transfer and cooperation. As boundary conditions for the knowledge management strategy the
relatively small size of the organisation as well as a high degree of specialisation in manifold disciplines have
to be considered. Therefore the knowledge management strategy focuses on a personalisation strategy and
cross-linking. Face-to-face communication and knowledge transfer have been identified as key elements to
improve the (internal) cooperation and project execution. Therefore, different measures have been set up to
support and increase communication - especially between different organisational units. They comprise for
example the usage of the intranet for knowledge management purpose and the linkage to external information
sources to facilitate scientific work. The main focus, however, is laid on the initiation of Communities of
Practice. The objective of the communities is to establish a platform for interdisciplinary knowledge and
experience exchange and by this means improve project work, avoid reinventing the wheel, increase
networking within the organisation and create new project ideas. In this context, the paper summarizes the
boundary conditions of knowledge management in a research organisation and the process of this initiative,
focusing especially on the Communities of Practice and is giving an outline of the next steps in knowledge
management at arsenal research.

Keywords: Knowledge management, research organisation, Community of Practice, knowledge transfer,

communication, case study

1. Introduction
Knowledge is a key factor of organisations for gaining economic success and competitive
advantage (Nonaka 2000). Therefore, knowledge management as a management concept has
been implemented in the last years in many different companies and branches. Especially in
research intensive or service-based companies like consulting enterprises, medical or
pharmaceutical industries, banks, insurances or automotive industries knowledge management
initiatives are put into practice (Davenport 1998, Hansen 1999, Sarvary 1999, Tschida 2005,
Morgner 2005). The spectrum of knowledge management acitivities comprises most different
aspects from building up knowledge repositories, developing expert or competence networks up to
intensifying communication, initiating cultural changes and supporting education and training.

Based on these most different possibilities of putting knowledge management into practice the
selection of appropriate methods and tools highly determines the success of the knowledge
management initiative. The effective management of knowledge requires therefore the
development of a corporate-specific, fine-tuned knowledge management strategy. Several studies
have been performed to evaluate knowledge management projects and to identify their success
factors and strategical aspects (Hansen 1999, Davenport 1998). One of the main results is the
differentiation between codification and personalisation strategies. While the first one focuses on
the codification, storage and reuse of knowledge and information, the second supports the person-
to-person contact and knowledge transfer.

The different types of knowledge – explicit and tacit knowledge, mainly determine the choice
between these two strategies. Explicit knowledge «can be expressed in words and numbers»
(Nonaka 1994). It can therefore be stored into repositories, communicated and reproduced quite

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easily. On the other hand tacit knowledge is highly based on the experiences and commitments of
the people and is visible in action rather than documents – tacit knowledge «has a personal
quality» (Nonaka 1994). In organisations focusing on the knowledge creation and the development
of highly customized solutions this tacit knowledge plays an essential role. In this case an exclusive
codification of knowledge is neither helpful nor feasible. Neglecting the tacit knowledge leads to
inefficiencies in knowledge processing and wasted ressources. As Nonaka (1994) points out the
process of knowledge creation is a highly dynamic one. Creating knowledge requires more than
only the application and processing of knowledge in a static input-output process. Furthermore, in a
dynamic process of discussion, knowledge transfer and cooperation, new aspects emerge and new
knowledge is developed. Companies dedicated primarily to knowledge creation – as research
organisations are – therefore have to handle the knowledge transfer and information processing as
one of its main businesses. Providing customized solutions to more or less unique problems needs
highly specialised employees who have to be linked within the organisation as well as
interorganisational. A knowledge management strategy supporting such an organisation mainly has
to facilitate and intensify the personal contact, the communication and the networking among the
individuals within the organisation and across its borders – it requires a personalisation strategy.

Analysing the activities and processes of arsenal research in this context, it is an expert
organisation primarily dedicated to knowledge creation and transfer. High quality, interdisciplinary
scientific research and knowledge creation and its efficient customer based application are the key
factors of arsenal research´s success and competitive advantage. For that purpose, the long-term
securing, continuous improvement as well as futher development of the knowledge base has to be
assured. The main requirements for the knowledge management at arsenal research are therefore
the support of the expert organisation by structuring and improving the processes for knowledge
creation, transfer and application.

2. Knowledge management at Arsenal research

2.1 Organisational and strategic aspects for knowledge management at arsenal

research
Arsenal research is an application-oriented research and development company offering a wide
range of services in the fields of mobility and energy: its portfolio ranges from state-of-the-art
methods of applied research and development such as computer simulation and artificial
intelligence to high quality measurement and test engineering. Its activity is characterised by R&D
and testing services for major enterprises, operators of infrastructure, service enterprises, and
high-tech SMEs. Through its position in the national and international innovation system and its
defined research programs arsenal research is a strong technology partner for enterprises.
Therewith, transfer of knowledge and technology to various industries and across structural
borders is enabled.

To position arsenal research as an essential node for technology development and transfer,
continuity within its key areas mobility and energy is the major strategic alignment. For that purpose
arsenal research is currently divided into six business units (Fig. 1) that are focusing on different
market segments. Furthermore, comprehensive expertise in quite different disciplines and topics
within the key areas is necessary. Therefore, a research program made up of five so-called
“program lines” is defined, representing the strategic research objectives on a mid- and long term
scale. These program lines are telematic solutions for mobility applications, safety and
environmental impact of traffic infrastructure, intelligent drive and vehicle concepts, systems and
components of electrical power engineering as well as efficient and sustainable thermal energy
systems. Looking at these different program lines the wide spectrum of technologies and
competences necessary to perform R&D becomes obvious.

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Figure 1: Organisational structure of arsenal research

Figure 2: Knowledge flows between arsenal research and its relevant environments
The program lines are defined in such a way that in most cases two or three business units are
involved in one program line. This overall structure of business units and research program results
in a distinction between research content (i.e. the research program) on the one hand and market
access (i.e. business units) on the other hand. The reason for this distinction becomes more
obvious by considering the external environment of arsenal research. It is made up of a broad
spectrum of organisations and stakeholders. Fig. 2 summarizes the different stakeholders that play
an essential role for arsenal research’s business. They can be divided into two main parts: On the
one hand the customers, partners and shareholders – the market side – and on the other hand the
scientific community and scientific organisations.

Within this network arsenal research has to identify the relevant knowledge and integrate it into the
organisation for developing and creating new knowledge. The created knowledge has to be
communicated and transferred to the relevant environment – customers, partners, scientific
organisations, society, etc. This is a dynamic process and its efficiency is highly determined by the
way external knowledge is integrated and processed within the organisation and by the way
organisational knowledge is applied efficiently to create new knowledge. Furthermore, for the
internal knowledge processing it has to be taken into account that although the market segments of
the business units differ, similar or identical methods, tools and technologies are used in the
business units to develop and provide the different R&D services. This complex situation was one
of the main boundary conditions for the development of a knowledge management concept.

2.2 Knowledge transfer at Arsenal research

Based on the boundary conditions mentioned above the current situation of the internal
cooperation and knowledge transfer has to be analysed. Within the business units different teams
are focusing on highly specific research topics and customer demands (Fig. 3). Therefore, a high
degree of interdisciplinarity and a high specialisation within the disciplines at the same time is
necessary to develop new technologies, methods and customer solutions. On the other hand the
existing expertise is in many cases isolated within the different business units or teams. The
knowledge about the wide spectrum of competences and know-how, even of different tools and
methods available within the organisation is widely missing. This causes inefficiencies in projects
due to unknown expertise existing in other teams or business units and losses of synergies in
knowledge creation and market development.

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Analysing the knowledge flows within the organisation two different levels of knowledge flows have
been determined. On the one hand communication within the project teams is necessary to
perform the projects. This communication aims at the information and knowledge exchange
necessary to process defined tasks and to develop customer solutions. It is therefore an essential
part of the daily business and the corresponding knowledge flows occur mainly within the project
teams or business units. This level of communication is indicated in fig. 3 as first level knowledge
flow. On the other hand knowledge exchange beyond the projects’ focus is required for
organisational learning.

Figure 3: Business units, team structure and corresponding knowledge flows within arsenal
research.
Different levels of knowledge flows are indicated differentiating between project oriented knowledge
flows (first level) and methodical oriented knowledge flows (second level).

The interdisciplinary experience exchange on methodical and technological knowledge, e.g. the
applicability of specific tools and methods, is of importance to improve and further develop the
organisational knowledge base. This requires information and knowledge flows not only within the
business units and teams but especially between different business units that are applying similar
technologies and tools. This so called second level knowledge flow is of special relevance for
facilitating synergies, developing or applying new technologies and methods with lower efforts and
developing new project ideas (fig. 3). It requires communication between individuals who are not
collaborating on a regular basis, who apply similar methods in different fields of applications or who
have complementary competences. The increase of the project’s efficiency, the optimized
exploitation of in-house knowledge and expertise for future developments and enhanced customer
satisfaction is to a high degree based on the intensity and quality of this second level knowledge
flow.

The analysis of the communication behaviour showed that while the first level knowledge flow is
working quite well, the second level communication is widely neglected. As an example the
simulation environment can be given. The performance of simulations in different fields of
application is an essential part of arsenal research’s development environment and research
activities. Simulations of electrical components for vehicles and energy systems, energy flows in
thermal power plants, traffic flows, mobility behaviour of people, etc. are performed. For that
purpose several simulation tools are necessary and available within the organisation. But there is
no or very limited experience exchange between the different teams about current problems,
innovative solutions or advantages or disadvantages of tools for specific problems.

As the main reason for the existing lack or disregard of this second level knowledge flow, the lack
of knowledge where to find relevant expertise within the organisation was identified. Therefore, the
knowledge management initiative aims on the improvement of the knowledge exchange within the
organisation focusing especially on this second level knowledge flow. The strategy choosen for
realisation of this objective was a personalisation strategy. Especial emphasis is given to the
structuring and intensification of the face-to-face communication of the scientific researchers
across the organisation. By this means the access to existing knowledge should be improved and

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the interdisciplinary knowledge creation and development of new methods and technologies
supported.

2.3 The knowledge management process

The knowledge management process for developing and implementing appropriate actions to
improve the second level knowledge flow was set up as a mixed top-down and bottom-up process.
The knowledge management team responsible for the design of the process and the
implementation of the results acted as promoter and moderator (Fig. 4).

Figure 4: Knowledge management process at arsenal research.

The different hierarchical levels involved in the process are indicated by shading. Light grey:
management team, dark grey: employees, white: knowledge management team, and striped: all.

While the personalisation strategy was defined in cooperation with the management team, the
topics and demanded activities within this strategy were identified in dialogue with the scientists.
This procedure resulted on the one hand in a visible commitment of the management to the
knowledge management process and a strategic orientation. On the other hand a high degree of
involvement of the “knowledge workers” and by this in a high connectivity to daily business was
achieved. The identified topics and activities were structured and prioritized by the knowledge
management team and a knowledge management concept was deduced. In cooperation with the
management team the activities for the first implementation phase were selected.

2.4 The action plan to improve knowledge transfer

According to the main objective of the knowledge management initative – the improvement of the
second level knowledge flow – the cross linkage of the scientific researchers has to be improved by
implementation of different methods and tools. The questions «who knows what» and «how to
facilitate an adequate communication process and knowledge transfer» were the crucial ones
identified in several workshops with the employees. Due to the size of the organisation and the
high degree of specialisation of the researchers the personal contact and communication has to be
intensified. The action plan derived from the workshops’ results is summarized in fig. 5. The main
part of the concept focuses on measures to improve of the scientific knowledge transfer.
Furthermore the access to external scientific information, the usage of the intranet for
communication and networking as well as the continous improvement of the communication culture
is considered.

In the context of knowledge transfer the main aspect is concerned with the initiation and support of
the face-to-face communication and experience exchange between the different business units.
The action taken to facilitate the creation of knowledge and the interdisciplinary knowledge
exchange was the implementation of Communities of Practice.

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Figure 5: Knowledge management concept and corresponding acitivities of the first

implementation phase focusing on the improvement of knowledge transfer and face-to-face
communication.

3. Communities of practice
The concept of Communities of Practice (CoP) was developed by Lave and Wenger (Lave &
Wenger 1991). The basic assumption is that learning is a social process and that «the kind of
dynamic knowing that makes a difference in practice requires the participation of people» (Wenger
1998). Basically, organisational CoPs are interest groups. They bring together people with similar
interests with the objective of experience exchange and organisational learning regarding a specific
aspect of their work. The main focus of CoPs is “practice”. Therefore, CoPs can be characterised
by three aspects (Wenger 1998):
ƒ Joint Enterprise: The community has a mission, a common focus with a clear purpose and
works on the topics continuously.
ƒ Mutual engagement: The members of the CoP interact with each other and by that way improve
their knowledge and redefine their work.
ƒ Shared repertoire: The community is not only linked by their work but also by methods, tools,
technologies as well as languages they have in common.
Based on this definition CoPs differ from other organisational structures and groups, like teams or
business units. Storck and Hill (in Lesser and Storck 2001) distinguish clearly between teams and
communities. Team members are usually appointed by the organisation, the objectives and the
structure of the team are defined by people not involved in the teams themselves, the relationship
between the team members is hierarchically defined and teams report to the organisation. The
main distinction in that context is that the participation in a CoP is voluntarily and not based on a
formal function within the organisation. That implies that a CoP defines its working program on its
own, develops its own processes. The authority relationships within the community emerge through
interaction and are based on expertise. The CoP, therefore, is responsible only to its members. In
that sense people can belong to different CoPs and can play different roles regarding their degree
of involvement independent from their formal position within the organisation. This distinction
between teams and CoPs corresponds in many ways to the differentiation between the different
levels of knowledge flows determined within arsenal research.

Although CoPs are non hierarchical platforms for knowledge exchange and learning characterised
by a voluntary membership and a high degree of self organisation the official organisation itself
plays an important role. There are different ways of relationship between a Community of Practice
and the formal organisation. Wenger (1998) discriminates the kind of relationship depending on the
institutional involvement. In case of a CoP visible and intended institutionally the organisation has
to provide the general conditions and resources for implementing a community, like working time or
infrastructure (IT, meeting rooms, etc.). On the other hand the results of the community, e.g.
extended knowledge, new ideas, have to be implemented into the operative business of the
organisation.

Based on this definition of Communities of Practice the CoP contributes to the organisational
learning twofold: by knowledge transfer and development within the CoP and by knowledge

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transfer into the organisation respectively between different CoPs by interacting at its boundaries.
While the first aspect is important to guarantee a high expertise within the CoP the second aspect
is essential for a dynamic and vivid community because it allows new insights and renews the
learning processes. Therefore, the core of the CoP representing the high competence as well as
the boundaries as interfaces to the organisation should be considered as complementary roles and
as such actively utilized.

Besides the experience exchange the benefits of CoPs are manifold: the development of a
common language across the organisation, the development of new project ideas or improvement
of processes, increased trust as a basis for cooperation, identification of key players and
cooperation partners, effective ways to assimilate individuals into methods and tools, and set up of
organisational knowledge beside repositories in a living way (Lesser and Storck 2001, Wenger
1998). Providing these opportunities the main advantage of CoPs in organisations is the possibility
to handle unstructured problems in an effective way and to support knowledge sharing and
organisational learning beyond formal structures and hierarchies.

Since the basic idea of CoPs was introduced many communities have been initialized in
organisations like IBM, Xerox, National Semiconductors, British Petrol or the Delft Cluster, just to
name some of them (Lesser & Storck 2001, Kukuric 2003, Gongla & Rizzuto 2001). The objectives
of these communities are manifold and comprise mostly the sharing of knowledge regarding
projects or new businesses, the developnmet and exchange of know-how on techniques and
methods or the improvement of the customisation of products and services.

3.1 Objectives of the CoPs at Arsenal research

The main objective of the CoPs at arsenal research is the interdisciplinary scientific experience
exchange and knowledge transfer. According to the life cycle of a Community of Practice as
defined by Wenger (1998), in the starting up phase (fig. 6) a core team discussed and identified
potential topics and technologies for the communities. As selection criteria for the identified CoP
topics the number of people interested and involved in the topic (critical mass), the high expertise
already existing within the organisation and the number of business units involved in that
community have beed defined. According to the results of this evaluation four CoPs have been
selected and initiated for a test phase, like a one-dimensional simulation community or a CoP on
telecommunications. The number of participants in each CoP varies between 10 and 25 scientists
of up to four business units. Each community sets up the time frame, the working program as well
as the way of integrating external knowledge individually. Nevertheless the main parts comprise the
discussion and comparison of different tools and methods, the presentation of case studies, the
invitation of external experts or the cooperative development of new methods of resolution for
current simulation problems. Moreover, the CoP can be used as test audience for preparation of
conference presentations. The meetings are held on a monthly basis. The working plan of the
meetings is decided by its members and is based on the willingness of the members to present
their tools and projects.

As an example the one-dimensional simulation CoP can be given. The first meeting has shown that
an overview of the available tools and competences is necessary. Therefore the first phase is
concerned with presentations and discussions of different simulation tools. Their workflow, their
appropriateness for specific fields of application or problems as well as their user-friendliness have
been discussed. Thereby different objectives are met: the experts for different tools within the
organisation are identified, the experiences are exchanged and an organisational knowledge base
is developed. By this means the efficiency of knowledge usage is increase, similar developments
within different teams can be avoided, new internal cooperation can be facilitated and new project
ideas developed.

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 Margit Noll, Doris Froehlich and Damaris Omasits

Figure 6: CoP stages of development (Wenger 1998)

4. Conclusions
As many different authors have already shown, the face-to-face communication and an efficient
knowledge exchange are key factors for economic success and competitiveness. As a research
organisation this holds especially true for arsenal research.

The knowledge management initiative started at arsenal research has shown that there are
different levels of knowledge flows and communication processes within the organisation – first
level knowledge flows focusing on project items and second level knowledge flows focusing on
methods, tools and technologies used within different teams with different fields of application. Due
to this diversity different methods have to be applied to facilitate and support these two knowledge
flows. While for the first level knowledge flow project meetings or other project management tools
are sufficient, the second level knowledge flow requires a completely different communication
structure. To support organisational learning and experience exchange a high degree of
interdisciplinarity as well as personal commitment are fundamental requirements. Therefore, the
concept of Communities of Practice was chosen to improve the knowledge and experience
exchange within the organisation. Four communities have been started and are now in their testing
phase.

The knowledge management team supports the CoPs from an organisational point of view and
evaluates the communities. For determination of the improvements of knowledge transfer the
intensity of the internal networking and the second level knowledge flows will be analysed after
about half a year running time. Based on these results further improvements and adaptations of the
CoP-concept will be made.

5. Acknowledgements
The authors want to thank all those colleagues involved voluntarily in the knowledge management
process for their engagement and efforts. The results obtained up to now would not have been
possible without them.

References
Davenport, T.H., De Long, D.W., Beers, M.C. (1998) “Successful Knowledge Management
Projects”, Sloan Management Review, Winter, pp43-57.
Gongla, P., Rizzuto, C.R. (2001) “Evolving communities of practice: IBM Global Servies
Experience”, IBM Systems Journal, Vol. 40, No. 4, pp842-862.
Hansen, M.T., Nohria, N., Tierney, T. (1999) “What’s your Strategy for Managing Knowledge?”,
Harward Business Review, March-April, pp106-116.

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Kukuric, N., Velickov, S., van der Spek, J. (2003) „Collaborative working in Delft Cluster: Setting up
Communities of Practice”, DC1-731-1, [online],
http://www.onderzoekinformatie.nl/en/oi/nod/ onderzoek/OND1278961/.
Lave, J., Wenger, E. (1991), “Situated Learning: Legitimate Peripheral Participation”, Cambridge,
University Press.
Lesser, E.L., Storck, J. (2001) “Communities of practice and oragnisational performance”, IBM
Systems Journal, Vol. 40, No. 4, pp831-841.
Morgner, A. (2005) “Wissensmanagement für bessere Autos”, Wissensmanagement – Motivation,
Organisation, Integration, N. Gronau et al. (Hrsg.), Proceedings of the 7th Konferenz zum
Einsatz von Knowledge Management in Wirtschaft und Verwaltung, KnowTech, pp.517-
524.
Nonaka, I. (1994) “A Dynamic Theory of Organisation Knowledge Creation”, Organisation Science,
Vol. 5, No. 1, pp.14-37.
Nonaka, I., Toyama, R., Nagata, A. (2000) “A Firm as a Knowledge-creating Entity: A New
Perspective on the Theory of the Firm”, Industrial & Corporate Change, Oxford University
Press, Vol. 9, No. 1, pp.1-20.
Sarvary, M. (1999) “Knowledge Management and Competition in the Consulting Industry”,
California Management Review, Vol. 41, No. 2, pp95-107.
Tschida, H., Steinacker, A. (2005) “Wissensmanagement bei Wienerberger – Optimaler Einsatz
von Mitarbeitern, Dokumentation und Medien”, Wissensmanagement – Motivation,
Organisation, Integration, N. Gronau et al. (Hrsg.), Proceedings of the 7th Konferenz zum
Einsatz von Knowledge Management in Wirtschaft und Verwaltung, KnowTech, pp.467-
472.
Wenger, E. (1998) “Communities of Practice Learning as a Social System”, Systems Thinker,
[online], www.co-i-l.com/coil/knowledge-garden/cop/lss.shtml.

334
Preparing a Robust Entity-Relationship Model Using
Supporting Worksheets: Demonstrating the Basis for an
Acceptable Model
Gary Oliver
The University of Sydney, Australia
[email protected]

Abstract: The Near Transfer Learning theory suggests that applying knowledge is optimal where there is a
close correspondence between an existing base of knowledge and the proposed new knowledge kernel. The
concept of worksheets is familiar to many students and practitioners as a means of selecting and organizing
data relevant to an outcome. A method of teaching Entity-Relationship modelling is proposed based on
supporting worksheets, which identify and confirm entity types, relationships, assumptions and business rules.
These processes correspond to four supporting worksheets. The Entity Recognition Worksheet moves from
entity instances to provisional entity types, records results of the tests and then considers whether confirmed
entity types should be included in the model. The Entity Association Worksheet identifies the connections
between entity types and provides the basis for identifying fragments, which can be assembled into the full
model. The Assumption Resolution Worksheet documents ambiguities, omissions and inconsistencies found
in a scenario or during elicitation of requirements. A scenario is analysed to demonstrate the use of the
worksheets. The Business Rule Worksheet documents the business rules governing the identification of
relationships. The method is independent of any E-R symbol convention. While the worksheets are aimed at
helping students develop modelling discipline and recognize the possibility of acceptable alternative models,
they are equally applicable to use in business. Preparation of working papers to support business decisions is
a common business practice. These worksheets can be adopted “as is” for business use where they will act
as both a record and an agenda for confirming assumptions.

Keywords: Data modelling; entity-relationship model; E-R model; templates; worksheets.

1. Introduction and scope

Knowledge management causes adopting organisations and individuals to better appreciate the
information that an enterprise can use for competitive advantage including customer satisfaction.
An overlooked class of information is the expert knowledge that resides in information technology
departments which structures and determines what information will be made available throughout
the organisation. This paper considers the transfer of expert knowledge that arises from preparing
an Entity-Relationship (E-R) model which has the unique benefit of taking a Top-Down approach
(Allen and Terry: 2005: 196-197) across an enterprise or a sub-unit to document data useful to the
organization. Since the objective of an E-R model is to organize information (Watson, 2004) to
produce a conceptual or logical design for a database (Chen, 1976) which can then form the basis
for the physical design of a relational database (Martin, 1987), the greater the involvement of line of
business employees, the greater the likelihood that the model will better reflect the current and
potential uses of information that improve competitive advantage. Moreover, as an E-R Model uses
basic graphical symbols to show the organization of and relationships between data (Chen, 1976)
many obstacles in reaching a common understanding are reduced. The issue addressed in this
paper is the whether knowledge management can assist produce a robust E-R model.

Similar issues also face students (Topi and Ramesh, 2002). It is desirable to prepare a model,
which can be defended against challenges from other students and the instructor. The three
worksheets introduced in this paper are aimed at providing supporting evidence, which can be
reviewed if necessary by stakeholders, for the decisions, which culminate in the resulting E-R
model. Two of the worksheets (the Entity Recognition Worksheet, and, the Entity Association
Worksheet) directly support the entities used in the model and the process and hierarchical
relationships, which are established between them. The third worksheet (the Assumption
Resolution Worksheet) is arguably even more important. It records the shortcomings in the source
data and identifies the actions taken by the data modellers and thus acts as a record of decisions
concerning the model, which appear as “facts” in the model. Consequently, the approach proposed
in this article serves both business and education.

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Two objections to the preparation of supporting worksheets are immediately apparent. The first is
the additional time taken in their preparation. Systems analysis emphasizes spending time in
planning to fully establish requirements (Schmidt, 1999), and English (1999: 131) confirm the
benefits from preparing E-R models. There are several advantages from using the worksheets. The
Entity Recognition Worksheet makes plain what has been excluded from the model as well as what
grounds were found for including entities in the model. The Entity Association Worksheet facilitates
drawing by shifting the focus from the entire model to fragments from which the complete model is
then assembled. The Assumption Resolution Worksheet provides a formal opportunity to
communicate the decisions regarding omissions, ambiguities and inconsistencies when gathering
information about entities and relationships, in case they later require reconsideration. A second
objection is their superfluity when a skilled practitioner prepares the model. If this is the case, then
preparation of the worksheets will take little time while affording a crosscheck for the end-user
representatives through having available the supporting details providing a means of knowledge
equality between expert and novice. The worksheets thus encourage some reflective
understanding of the environment in which the model is prepared and provide a resource that can
be accessed by physical modellers in fast changing organizations where the original modeller may
be unavailable or unable to recollect the basis for modelling decisions.

2. Advantages and disadvantages of using worksheets

The near and far transfer learning approach (Gagne, 1997) suggests that learning can be
transferred from similar experiences. Using scenarios and case studies with worksheets addresses
several approaches to learning including coping with abstraction (Beishuizen et al, 2002),
organizing problem domain data through pattern recognition (Reed, 1972) and transferring
knowledge into new applications (Glick and Holyoak, 1987). A recent study specifically using a
worksheet to identify E-R model fragments (Bock and Yager, 2005) found learning was significantly
improved, particularly with regard to modelling ternary relationships. However the worksheet in
Bock and Yager (2005) is simply a list of the names of entities and their attributes (on the left side
of the page) and provide space to draw the fragments (on the right side of the page). Given that the
background of students was accounting where worksheets are common and function as data
gathering and organization devices (Byrd and Byrd, 1986:277-278) or as supporting materials
reporting to management (Oliver and Walker, 2006) worksheets were devised based on the
relevant data modelling theory found in many introductory business information systems textbooks
(e.g., Gelinas, et al 2003; Laudon and Laudon, 2005; O’Brien, 2003; Turban et al, 2005, on the
basis of selecting one from each of the major publishers) and many data modelling/database
textbooks (e.g., Beynon-Davies, 2003; Hoffer et al, 2004; Rob and Coronal, 2004; Watson, 2004,
selected on the same basis). None of these textbooks use worksheets with the exception of
D’Orazio and Happel (1996: 39-40). However it uses worksheets to record the link between entities
and their synonyms, and, attributes with synonyms. In effect, these are worksheets for a data
dictionary (Atzeni et al, 1999: 182-183). As proposed here, worksheets are the intermediary
between the source data and the final full E-R model.

3. Overview of process, concepts and conventions

Using the proposed approach, there are eight steps in drawing an E-R model:
ƒ Complete Entity Recognition Worksheet;
ƒ Complete Entity Association Worksheet (if necessary);
ƒ Document assumptions using Assumption Resolution Worksheet;
ƒ Draw fragments of the model from the Entity Association Worksheet;
ƒ Assemble the fragments into the full model;
ƒ Fully label the model;
ƒ Perform final quality checks; and
ƒ Apply cardinalities.
An Entity Instance is a single occurrence of an Entity Type. Examples of entity instances include:

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ƒ The name of a particular faculty member (e.g., Gary Oliver);

ƒ An item or unit of product (e.g., Cadbury Dream 350g white chocolate bar); or
ƒ A particular service (e.g., design and install a new kitchen).
Attributes are not recorded in worksheets, as their representation will depend upon the convention
followed. Under the Chen (1976) convention, attributes are listed separately to avoid making the
model complicated. Under the bubble convention (Martin, 1987: 193; 222) attributes may are
shown in ellipses (that is, ovals) attached to the Entity Type. Alternately CASE tools include them in
boxes together with the Entity Type (e.g., Kramm and Graziano, 2000). As noted above, the first
step is preparing the Entity Inclusion Worksheet.

4. Using the entity recognition worksheet

The Entity Recognition Worksheet documents the entity instances, generalization to provisional
Entity Types, the separate tests of the provisional Entity Type, whether the provisional Entity Type
is confirmed and the decision on whether to include in the model. Figure 1 introduces the template
for the Entity Recognition Worksheet.
Entity Entity Type Entity Type Confirmatory Tests (Pass or Fail) Confir Includ
Instance (Provisional) m as e in
Unique E/Instance Properties Self Relatio Entity E-R
Explanat nship Type Model
ory valid ?
<Column <Column 2> <Colu <Column <Column <Column <Colu <Colu <Colu
1> mn 3> 4> 5> 6> mn 7> mn 8> mn
9>

Total number of entities confirmed because they passed all tests:

Total number of entities found to eligible for inclusion in the model:
Completion Guidelines:
Column 1: Sourced directly from the scenario.
Column 2: The name given to the Entity Type that corresponds to the entity instance listed in column 1.
Columns 3-7: Applies the tests of an Entity Type to the provisional Entity Type named in column 2.
Column 8: Confirmation occurs where the provisional Entity Type has passed all the tests.
Column 9: For those Entity Types confirmed in column 8, the result of applying the test for inclusion in the
model.
Figure 1: Entity recognition worksheet used to record steps in moving from entity instances to
entity types including executing the tests for entity type and Inclusion in the E-R model.
The first step in completing the Entity Recognition Worksheet is to work through the scenario word-
by-word, or, use notes from business discussion selecting the ‘noun’ part of speech. This may
encompass:
ƒ Organizational objectives and outcomes;
ƒ Organization name;
ƒ Participant names and their position titles;
ƒ Department names;
ƒ Inputs, processes and outputs;
ƒ Business rules; and
ƒ Names used by the organization for its various activities.
Once all entity instances are identified the corresponding provisional Entity Type is created.
Initially each Entity Type is designated a Provisional Entity Type in the worksheet because it is yet
to be subject to the tests for Entity Type recognition. A suite of five tests is used to decide whether

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the provisional Entity Type should be confirmed as an Entity Type. Table 1 below lists the tests and
describes the criteria for passing a test.
Table 1: Tests for an entity type showing criteria to pass each test.
Test # Test Name Criteria to Pass the Test
1 Instance validation To pass the instance validation test, each Entity Type should have multiple
entity instances. An Entity Type represents (1) a single concept determined
by the cohesive nature of its attributes; (2) not a single actual thing but a set
of like or similar things. In testing instance validation, it is essential to check
that the provisional Entity Type that was generalized can be traced back to
the corresponding entity instance.
2 Unique To pass the uniqueness test the names for Entity Types cannot be
repeated. It is always preferable to use the vocabulary of the organization. If
synonym, select only one of them.
3 Property validation To pass the property validation test, each Entity Type should possess at
least one characteristic. A property or characteristic is also known as a
descriptive attribute. You may have to deduce the attribute from the
available data. An Entity Type without properties or characteristics may be
an attribute.
4 Self explanatory To pass the self explanatory test, the chosen name should give an
immediate sense of meaning to stakeholders of the organization. It is
always preferable to use the vocabulary of the organization. Occasionally
the data modeller may amend the name or recommend another name for an
Entity Type to avoid confusion with other Entity Types or business
processes and rules. A data dictionary will also guide the naming of Entity
Types.
5 Minimum To pass the minimum relationship validation test, each Entity Type must
relationship participate in at least one relationship.
validation

The worksheet also records whether the confirmed Entity Type should be included in the model.
The single test of inclusion of an Entity Type in the E-R model restates the fundamental concept of
an Entity Type. The Entity Type is included if it is important to the organization to have data about
this Entity Type available to it. Consequently evidence from the organization combined with
assumptions will govern the decision to include a confirmed Entity Type in the model.

5. Using the assumption resolution worksheet

During preparation of the other worksheets, an Assumption Resolution Worksheet is prepared. The
Assumption Resolution Worksheet records decisions concerning scope (boundary) and omissions
or ambiguities in the scenario, which affect the E-R model or attribute notation and the resulting
action. It allows the dilemma of deciding between an entity or a relationship (Nijssen et al, 1990) to
be surfaced, if applicable. The Assumption Resolution Worksheet ensures that Entity Types and
relationships depicted in the model are justified either from the scenario or in the Assumption
Resolution Worksheet and is also used when applying cardinality. Figure 2 introduces the template
for the Assumption Resolution Worksheet. Assumptions may codify business rules appropriate to
the circumstances or interpret ambiguous business rules. In practice, recognizing and formalizing
assumptions facilitates discussion with end-user representatives and developers during detailed
design. This can avoid costly redesign during testing or post-implementation model. In completing
the Assumption Resolution Worksheet, column 5 is used to identify the criteria for making the
assumption. Drawing on assertions in Levene and Loizou, (1999: 473-480), Table 2 below,
provides the criteria for an acceptable model. The objective in rooting each assumption with one of
the criterion is to ensure that the assumption assists in delivering a useful model.

6. Using the entity association worksheet

The Entity Association Worksheet documents the relationships between Entity Types. Many
software tools do not allow relationships between “any number of entity-types (Hitchman,
2003:452) and relationships are critical (Dey et al, 1999). As a result it specifies the number of

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connection points for each Entity Type. Each row of the Entity Association Worksheet can be
converted into a fragment of the E-R model. Figure 3 introduces the template for the Entity
Association Worksheet.
Reference Assumption Affected Entity Criteria for particular Action Taken in the
detail or issue Type, relationship assumption chosen Model
or attribute
<Column <Column 2> <Column 3> <Column 4> <Column 5>
1>

Completion Guidelines
Column 1: This is the supporting worksheet (Entity Recognition Worksheet or Entity Association
Worksheet) and the particular line number.
Column 2: State the reason for requiring an assumption.
Column 3: Name the entity, relationship or attribute affected by the assumption.
Column 4: State the criteria used for making the assumption. See Table 2.
Column 5: Describe the result of adopting the assumption in the model
Figure 2: Assumption resolution worksheet used to record omissions, ambiguities and
inconsistencies discovered during preparation of the E-R model.
Table 2: Criteria for an acceptable model together with an explanation and commentary on the use
of the worksheets.
Criteria Explanation Commentary on Use of the Worksheets
Objective The business reason for preparing If the reason may is implicit it is recorded in the
the model. Assumption Resolution Worksheet
Scope The boundary or limits to the model. The Entity Recognition Worksheet and the
Assumption Resolution Worksheet will assist
determine the scope.
Efficiency The simplest model with the fewest The Entity Recognition Worksheet will show the
essential entities. decisions leading to the confirmed entities used in
the E-R model.
Accuracy Ensure conformance with the The completed Entity Recognition Worksheet, the
business environment. Entity Association Worksheet and the Assumption
Resolution Worksheet act as validation tools.
Clarity Prepare a neat, well laid out model The fragments prepared from the Entity Association
which is easily comprehended by the Worksheet should facilitate planning the layout.
reader.
Stability Change is flexibly accommodated. Later queries can be tracked back to the appropriate
worksheet.
Completion Guidelines:
When recording an assumption in the Assumption Resolution Worksheet, one of the criteria is used to
support the assumption.

The first step in completing the Entity Association Worksheet is to work through the scenario word-
by-word, or, use notes from business discussion selecting the ‘verb’ part of speech since the
relationship will include a verb (Schmidt, 1999: 157) to establish the business reason for an
association between at least one Entity Type. In practice relationships are bi-directional. In the E-R
model, strictly each relationship should have two names however by convention only one name is
shown. Since only one name is shown the name chosen for the relationship between Entity Types
is the one which makes sense when read from left to right and top to bottom.

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Note 1 ENTITY ENTITY ENTITY ENTITY Number of

TYPE 1 TYPE 2 TYPE N-1 TYPE N Associations

ENTITY TYPE 1 Note 2 Note 3 and 4

ENTITY TYPE 2 Note 3 and 4

ENTITY TYPE N-1 Note 3 and 4
ENTITY TYPE N Note 3 and 4
Number of Associations Note 3 and Note 3 and Note 3 and 4 Note 3 and 4 N/A
4 4
Completion Guidelines
1. ENTITY TYPES shown are from the Entity Recognition Worksheet which are to be included in the
model.
2. Write a ‘Y’ in a cell where a scenario states a relationship between the Entity Types based on the
scenario or an assumption justified in Assumption Resolution Worksheet identifies a relationship.
3. Number of Associations for each Entity Type is separately summed by column and row.
4. A discrepancy between the number of associations in row and a column may indicate incorrect
identification of a relationship. Often this is owing to a relationship being bi-directional but only recorded
for one direction in the worksheet because it is only shown in one direction on the E-R model. A cross
check is the comparison of the Number of associations in a column with the number of associations in the
corresponding row.
Figure 3: Entity association worksheet showing the relationships between each pair of entity types.

7. Drawing the model

Drawing the model commences after identifying the Entity Types, the relationships between them
and documenting any ambiguities. It is recommended that all the models are hand written on
standard size paper (e.g., Letter, A4) in landscape format. There are several reasons. Drawing aids
thinking. A handwritten model can be completed quickly. Mistakes are easily corrected with an
eraser if drawn using pencil. Too much time can be spent learning and manipulating software
graphic commands. Use the Entity Association Worksheet to prepare fragments corresponding to
each of the relationships recognized in the worksheet. When drawing the fragments, some
simplification may be possible. N-ary relationships may be eliminated since many ternary (three),
quaternary (four) and higher relationships can be decomposed into two or more binary
relationships.

8. Sample scenario
The objective of the sample scenario is to demonstrate the benefit of the worksheets. It therefore
contains some ambiguities and omissions, which are discussed in the Assumption Resolution
Worksheet to indicate the added value provided by using the worksheets. Other worked examples
are available from the author. The exercise is also supported by formal learning objectives, which
appear in the appendix.

The Summer Bay Exercise Club (SBEC), which opened in December 2005, provides sporting
services for patrons in the active sports areas and the member passive activity areas. A duty
manager operates it. There is four different sports areas which customers can use: the pool, the
gymnasium, the squash court and the tennis court. The courts require a booking. Patrons may use
the facilities any pay an entrance or an annual fee. Patrons who pay an annual fee are members
who nominate Safety Wardens. Members have exclusive use of the mezzanine, which has several
different size rooms containing chairs and coffee tables to allow members to relax, and shaded
deck for workouts with a personal trainer. Different entrance and member fees are calculated for
each specific area. SBEC is very safety conscious and each area has one Safety Warden always
on duty. Safety Wardens must have a current First Aid Certificate. Safety Wardens receive a 25%
discount on their annual membership fee. SBEC is busy if the weather is extremely hot as
customers drop in just to swim. Members at special rates can hire the sports areas and the rooms
in the member mezzanine. The pool has held many weddings with reception in the mezzanine.

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Required
ƒ Identify the Entity Types;
ƒ Perform the Entity recognition tests;
ƒ Determine which Entity Types should be included in an E-R model; and
ƒ Prepare an E-R model based on data in the worksheets.
Figure 4 presents the completed Entity Recognition Worksheet. It documents the comprehensive
list of entity instances found in the scenario. It firstly shows the conversion of entity instances to
provisional Entity Types. The results of entity identification tests described in Table 1 above are
shown. In performing the tests Mezzanine may be considered an attribute of area rather than an
attribute. However the worksheet confirms that it possess properties (e.g., type of room, number of
chairs, number of tables) so it is rightfully treated as an Entity Type. The disposition of all the
provisional Entity Types is apparent with some being recognized as duplicates and therefore failing
the test of uniqueness. It is then possible to see the correspondence between the provisional Entity
Types and the confirmed Entity Types. The final question is whether a confirmed Entity Type is
included in the model.

Figure 5 presents the completed Assumption Resolution Worksheet. Although the scenario is brief
there are ambiguities concerning the purpose of preparing the model, which affect its scope, as
well as the entitlement to use areas for payment of a daily fee. There is also an inconsistency
concerning whether Safety Wardens must be members (that is, have paid annual membership).
The worksheet makes clear that resolving these assumptions may affect all entities and as a
consequence, all the relationships.

Figure 6a presents the completed Entity Association Worksheet. The four confirmed and to be
included in the model, Entity Types stated in this worksheet have been brought forward from the
Entity Recognition Worksheet. Figure 6a uses the actual words from the scenario, which describe
the relationship to show that the relationships are rooted in the evidence from the scenario.
Inspection of the worksheet reveals that one relationship has been inadvertently omitted (that of the
relationship between FEE and PATRON CATEGORY called say, ‘determined by’. The worksheet
would then be amended accordingly although no additional fragment is necessary as it is already
embodied in the fragment represented by the relationship PATRON CATEGORY and FEE.

Figure 6b presents the completed Entity Association Worksheet. This version of the worksheet
converts the actual words from the scenario into Yes confirmation symbols for ease of reading.
This is the recommended format for this worksheet. This worksheet includes the omitted
relationship from figure 6a.

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Entity Entity Type Entity Type Confirmatory Tests (Pass or Fail) Confirm Include
Instance (Provisional) as Entity in E-R
E/Instance Unique Properties Self Relationship Type Model?
Explanatory valid (Y/N) (Y/N)

Duty MANAGER P P P P P Y N
Manager
Summer BUSINESS P P P P P Y N
Bay
Exercise
Club
Area AREA P P P P P Y Y

Customers CUSTOMER P P P P P Y Y

Patrons CUSTOMER P F P P P N Y

Pool AREA P F P P P N -

Gym AREA P F P P P N -

Sauna AREA P F P P P N -

Members PATRON P F P P P N -
CATEGORY
Annual fee FEE P P P P P Y Y

Daily fee FEE P F P P P N -

First aid SKILL P P P P P Y N

Safety ROLE P P P P P Y N
Wardens
OH & S LEGISLATION P P P P P Y N
Code
Discount DISCOUNT P P P P P N -

Shaded MEMBER P P P P P Y Y
deck ROOM
Mezzanine MEMBER P F P P P N -
ROOM
Swim AREA P F P P P N -

Total number of entities confirmed because they passed all tests: 9

Total number of entities found to eligible for inclusion in the model: 5

Figure 4: Completed entity recognition worksheet.

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Reference Assumption detail or Affected entity Criteria for Action Taken in the Model
issue type, particular
relationship or assumption
attribute chosen
Entity Reason for producing the ALL ENTITIES Objective Assume the objective is
Inclusion model is unclear usage of the facilities
Worksheet
Entity All functions of the ALL ENTITIES Scope Include revenue and
Recognition Summer Bay Exercise and responsibilities as they are
Worksheet Centre are of interest relationships closely tied to the facilities
Entity Two terms appear to be CUSTOMER, Efficiency Use PATRON
Recognition used interchangeably PATRON
Worksheet
Entity The two Entity Types may AREA, Accuracy Use both Entity Types
Recognition be so similar as to allow MEMBER AREA, MEMBER ROOM
Worksheet them to be treated as a ROOM to distinguish them as the
single entity called say, club provides different
FACILITY levels of facilities for them
Figure 5: Completed assumption resolution worksheet
AREA PATRON PATRON FEE MEMBER Number of
CATEGORY ROOM Associations
AREA - - Used by Has a - 2
PATRON - - - Pays a - 1
PATRON Uses - - Note 1 Accesses a 2
CATEGORY
FEE Calculated Paid by Determined - - 3
by by
MEMBER - - Used by a - - 1
ROOM
Number of 2 1 3 2 (Note 1 N/A
Associations 1)
Note 1: The relationship (called say, determined by) between FEE and PATRON CATEGORY has been
omitted and would need to be added making the total number of associations in row equal to 3 and in
column equal to 3.
Figure 6a: Relationship recognition worksheet showing the relationship names.
AREA PATRON PATRON FEE MEMBER Number of
CATEGORY ROOM Associations
AREA - - Y Y - 2
PATRON - - - Y - 1
PATRON Y - - Y Y 3
CATEGORY
FEE Y Y Y - - 3
MEMBER - - Y - - 1
ROOM
Number of 2 1 3 3 1 N/A
Associations
Figure 6b: Entity association worksheet with the relationship names replaced by Yes (abbreviated
Y).
Figure 7 presents the fragments of the model produced from the Entity Association Worksheet.

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AREA PATRON
Used by
CATEGORY

Allocated to PATRON
PATRON CATEGORY

PATRON Pays a FEE

FEE Entitles use of an AREA

FEE Entitles use of MEMBER

ROOM

Figure 7: Fragments corresponding to the rows of the entity association worksheet.

Figure 8 presents the final E-R model. The model is assembled from the fragments prepared from
the Entity Association Worksheet. The model shows both process and hierarchy forms of
relationships. The PATRON and PATRON CATEGORY fragment has been reversed as it is a
hierarchy and the most basic Entity Type is shown at the lowest level. PATRON CATEGORY and
FEE are arranged as a process. FEE has an N-Ary relationship with AREA and MEMBER ROOM
shown by the ternary degree of the relationship ‘to use’.

Figure 8: Assembling the fragments produces the full model.

9. Conclusion: Worksheets as knowledge companions

The wider adoption of these worksheets (e.g., by textbook authors) would have substantial
knowledge ramifications. For students, the literature is clear on the higher-order academic benefits
gained from using worksheets in terms of transfer learning and mastery of the constructs. For
organisations, use of the worksheets offers a visual medium to not only share knowledge but also
an opportunity to generate conversations about the different information needs of stakeholders and
the value of having information routinely available for business intelligence and decision-making.
Worksheets function as knowledge companions formalising the salient source data and the
resultant model. A reader who calls for and peruses the supporting documentation gains
knowledge at both an explicit and tacit level. The rationale for inclusion or exclusion of entities is
made visible by the preparer in the absence by using the Entity Recognition Worksheet. Similarly,
the associations between Entity Types are established using the Entity Association Worksheet. The
inevitable omissions and ambiguities, which would otherwise be exclusive tacit knowledge of the
preparer, are available for reconsideration using the Assumption Resolution Worksheet. Readers
considering the supporting worksheets are can confidently check whether the knowledge has been
adequately have been incorporated in the E-R model. As a result, the model should be higher
quality as well as easily evaluated by third parties for acceptability.

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Using worksheets reinforces knowledge management in the current business environment.

Governance permeates many details of decision-making. As the worksheets supplement the E-R
model, stakeholders can be made accountable for evaluating its adequacy and identifying changes,
which, because they are identified early in the project, can be authorized, owing to the substantially
reduced cost of adoption. In today’s virtual asynchronous environment, providing worksheets to
support of an E-R model reduces the need for explanatory presentations and avoids ad hoc virtual
communications. By more closely linking the model with the source data near rather than far
transfer is invoked both assisting learning and enabling business process innovation and
competitive advantage.

10. Acknowledgements
Kudos to Peter Chen on the 30th anniversary of his publishing the E-R model as a top-down tool for
representing business data needs.

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The Power in Visualising Affects in the Organisational
Learning Process
Theresia Olsson Neve
Mälardalen University, School of Business, Västerås, Sweden
[email protected]
HTU UTH

Abstract: This paper presents a study about the idea of structurally managing individuals’ affections, i.e.
affects, in relation to the organisational learning process. The instrument under investigation has been TABLe
MATRIX – ‘The Affect Based Learning Matrix’; a structured tool, based on the cognitive therapeutic process,
to be used to identify affects and thus aiding in making analyses in relation to an organisational occurrence or
change (coming or already existing), a subject, or a problem. In order to evaluate the approach, we have
interviewed thirteen management representatives from Human Resources and/or Operational Development
within following branches: Medicine, Finance, Education, Retail FMCG (Fast Moving Consumer Goods),
Manufacturing, Travel and Transportation, Construction, and the Public Sector. The evaluation shows a great
interest among the respondents in visualising affects in relation to learning.

Keywords: Organisational learning, knowledge management, emotions, affects

1. Introduction
In order to achieve sustainable development within organisations they need at a larger extent to
change their fundamental view upon learning: i.e. 1) humans prerequisites for learning, 2) how to
effectively reduce the human barriers in relation to learning, and 3) the importance of having a
structured learning (and problem-solving) process, not primarily focused upon the ‘solution’, but
which also considers humans more subjective fundamental aspects, such as automatic thoughts
and feelings. Today, it is important to observe and strengthen the individual within the organisation
and his or her situation then for example more and more of those seeking help within primary care
have underlying psychosocial problems (Undén & Elofsson 2001). Even work-related problems due
to ill health have been doubled since 1997 in Sweden. This conveys large costs for organisations
and society. Nevertheless, Mimmi Engestang, manager for competence development and coach
for the customers at the Nordic temporary staffing company Proffice, says that managers today are
educated according to the traditional leader model; to delegate, steer and control work (Svenska
Dagbladet 2004). This widespread thinking has been shaped by the rationalistic tradition traced
back at least to Plato (Winograd & Flores 1986). For the rationalist, people that are steered by their
emotions are seen as non-rational. Feelings such as; love, hate, guilt, regret, frustration, and
embarrassment obscure the strategist’s understanding of a problem-situation and possible
solutions (de Wit & Meyer 1999). However, it is the ability to express a feeling that creates our
personality (Adler & Adler 2006) and if the human’s nature is neglected this will lead to increased
stress, resignation, mental ill health, etc.

With an organisational perspective derived from the rationalistic tradition, there is a tendency to
regard learning activities at an organisational level as equal to learning on an individual level – i.e.
specific diagnostic and evaluative methodological tools are used to secure ongoing learning
processes instead of observing and analysing processes related to the individual (see for example
Easterby-Smith and Araujo 1999). This implies less focus upon the specific knowledge-worker and
useful knowledge for practitioners will not be provided in the learning process.

Unlike the rationalist, the generative thinker interprets, reflects, visions, experiments and acts upon
different impressions. The generative thinker agrees that logic is important, but stresses that logical
reasoning is often more a hindrance than help. Instead of defining the solution of the problem from
the beginning it is important to be equipped with a broader field of vision in order to be able to think
‘out of the box’.

This paper will next present the cognitive-based learning support tool TABLe MATRIX – ‘The Affect
Based Learning Matrix’, and its structure. Thereafter, we present the interviews we made with
thirteen management representatives from Human Resources and/or Operational Development
from different large organisations in order to evaluate the tool. The feedback has been positive and

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the respondents thought that TABLe MATRIX touches upon a pressing issue within organisations
today. Finally, a summary and some concluding remarks are outlined.

2. TABLe MATRIX – ‘The affect based learning matrix’

The issue of cognition becomes highly central in relation to the generative thinking perspective
since much of the responsibility to act and operate is being laid upon the individual. TABLe
MATRIX – ‘The Affect Based Learning Matrix’, is a structured tool, based on the cognitive
therapeutic process (see Figure 1 below) for identifying affects and making analyses in relation to
an organisational occurrence or change (coming or already existing), a subject, or a problem (the
underlying theory for this cognitive approach has earlier been described in Olsson Neve 2002;
2003a; 2003b; 2003c; 2005a; 2005b). In the cognitive process below, the issue of feeling has been
given a particular place. Instead of just defining a problem and work up a solution, one should
implement two steps where associated feelings and underlying automatic thoughts in relation to the
situation are identified and dealt with.

Figure 1: The cognitive therapeutic process

TABLe MATRIX includes both an organisational problem-solving perspective and a preventing
perspective. Moreover, it can be used either in a paper-based version or in a Web-based version
where the following phases are dealt with (see Figure 2 below); (1) ‘SETTING OFF’
(Issue/problem), (2) ‘THE PULSE METER’ (Feeling), (3) ‘SUBMERGING’ (Automatic thoughts), (4)
‘THE CONSEQUENCE’ (Behaviour), (5) ‘CROSS BREEDING’ (Alternative scenario), (6)
‘THINKING AFRESH’ (Output), (7) ‘SETTING THE GOALS’ (New behaviour), and (8) ‘THE
BONUS’.

These phases are supported by a culture of critical thinking, different interview techniques
originating from the cognitive therapeutic area dealing with issues such as how to ask questions in
a cognitive manner and in what sequence (the logical aspects), and the importance of emotional
response in the dialogue. The purpose in using TABLe MATRIX is for improving the quality of the
organisational learning process by more structurally emphasising the significance of individuals’
affections in relation to it.

Figure 2: Phases within TABLe MATRIX

When using TABLe MATRIX within the organisational context, an overall graphical image
concerning existing climate (emotions, questions, opinions, behaviours, desires, thoughts, etc.) for
a group in relation to a specific issue is supplied. This graphical image functions both as basic data

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for various discussions among the employees and also as a strategic steering-tool for the
management function.

The process in Figure 2 is outlined in the following way:

ƒ ‘SETTING OFF’ – The process starts with identifying the problem situation/the issue to be ex-
plored. Collect as many perceptions of the subject as possible from a wide range of people.
Here could for example the Rich Picture technique be used (see Checkland 1993).
ƒ ‘THE PULSE METER’ – Collect as many feelings as possible in relation to the subject. If there
is, for example, unspoken anger connected to a specific situation there is a risk of passiveness.
Anger makes people passive in finding new solutions. Silvan S Tomkins (1995) description of
the nine basic affects should be used here in order to identify associated feelings. Affects are
feelings so called “memory”; more of a biological and physiological nature. They appear in the
limbic system of the brain, i.e. the brains most primitive parts, and signal the body’s current
state. Affects are important to recognise and understand in order to become aware of ones
need for a specific situation. The nine basic affects are presented in Table 1 below.
Table 1: Categorisation of the nine basic affects
Positive Neutral Negative
1. Joy 3. Surprise 4. Anger
2. Interest 5. Fear
6. Sorrow
7. Disgrace
8. Boredom
9. Detestation
These nine affects are further grouped into the following three categories: Positive, Negative and
Neutral. The basic affects joy and interest are attached to positive. Surprise belongs to neutral and
anger, fear, sorrow, disgrace, boredom and detestation to negative.

In the early childhood affects are living separated. Gradually they are becoming more and more
complex and finally they form unique patterns of emotional reactions by humans. This is what
shapes our personalities. Every affect has its own time profile and influence and engage the whole
body. Studies have shown that ‘interest’, ‘anger’, ‘detestation’, and ‘surprise’ can be observed very
early at infants. ‘Shame’ (i.e. disgrace), on the other hand, is not appearing until the end of the first
living year. This affect is attached to our ability to feel ashamed who assume a certain cognitive
and emotional maturity in order to appear. (Adler & Adler 2006, authors’ translation)
1. ‘SUBMERGING’ – Consider automatic thoughts that appear in relation to the subject. Here the
question should be answered: “What types of spontaneous thoughts are related to the
subject?” This question should grasp the ‘identity’ of the subject. For example Kim (1993) says
that a shared understanding of the organisation’s key assumptions and interrelationships
emerges through a process where each employee is participating in surfacing and testing each
other’s mental models. However, here the automatic thought will be tested individually. The
technique of questioning categorical formulations can be used in order to help individuals to
express themselves in a more nuanced way by understanding the expression literally or
drawing it to its extreme (see for example Freeman et al. 1990).
2. ‘THE CONSEQUENCE’ – Clarify the behaviour phase 2 and phase 3 may result in. In this
phase symptoms such as: stress, monotonously work, less engagement, and less initiative,
should be identified.
3. ‘CROSS BREEDING’ – Consider the subject from another point of view. In this phase one
should investigate alternative ways, i.e. improved working procedures, of dealing with the
subject. The technique of developing alternative scenarios may be used (ibid), and a good
starting question is for example: “In what other ways may one look at the situation?”
4. ‘THINKING AFRESH’ – Redefine the output. Here one should specify the new desired output
the improved working procedure should receive.

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5. ‘SETTING THE GOALS’ – Define the new desirable behaviour. Explain and specify how the
organisation should implement the improved working method(s). It also might be useful to
iterate the process from phase 2 and discuss and reflect upon the obtained results.
6. ‘THE BONUS’ – Express other spontaneous thoughts that occupy your mind.
When developing TABLe MATRIX, the time aspect for using it and the ability to manage the
experiences and the knowledge it generates have been of essential significance then most
organisations are having problems with lack of resources. The value of using the tool for the
organisational member concerns: (1) an increased feeling of involvement and a forum for reflection,
(2) a possibility to experience and practice a certain type of methodology for solving problems and
for learning, and (3) an overall understanding for how others think and feel. At the same time, the
managing level is given the possibility to receive an increased understanding of how the employees
feel and think in a specific situation. This makes it easier to guide the organisation and come to a
decision. In general terms, TABLe MATRIX should be used in order to motivate the organisational
members to continuously rethink their actions and their implicit assumptions.

3. Interviewing management representatives about TABLe MATRIX

During the period of September 2005 to Mars 2006 we made interviews with thirteen management
representatives from Human Resources and/or Operational Development from organisations within
the following branches: Medicine, Finance, Education, Retail FMCG (Fast Moving Consumer
Goods), Manufacturing, Travel and Transportation, Construction, and The Public Sector (see
below). The respondents contributed with: (1) information about their organisation’s view upon
learning and efforts for becoming a learning organisation, (2) their relation to the issue of ‘emotion’,
and (3) feedback of TABLe MATRIX. In general, three major questions were asked:
ƒ What is your relation to operational development within the organisation?
ƒ Are you in some way working with the employees’ feelings?
ƒ By your opinion, would TABLe MATRIX be a useful tool for your organisation?
However, in the first two interviews this structure was not that clear. It was much more informal and
of a talkative nature. Also, the format of TABLe MATRIX was updated and changed during the
interviews: the first version consisted of seven A4-pages with two columns at each page, and the
final version was more graphical with colours and figures in the size of an A3-format.

3.1 Participants

3.1.1 Medicine
Pfizer Health AB, which produces semi-manufactured articles within medicin by growth hormone.
Respondent: The Human Resource Manager.

3.1.2 Finance
The SEB Group – a North European financial group for corporate customers, institutions and
private individuals with ten home markets in the Nordic and Baltic countries, Germany, Poland and
the Ukraine.
Respondent: The Head of Leadership Development.

3.1.3 Education
Kärrtorp Upper Secondary School – a highly ranked upper secondary school in Sweden oriented
towards IT, media, natural and social science.
Respondents: The principal and one of the teachers involved in quality issues.

3.1.4 Retail FMCG

COOP – a leading FMCG Operator which runs stores and hypermarkets within the Nordic Region.
Respondent: The Specialist for Human Resources for the Stockholm region.

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ICA AB - a leading FMCG Operator, which runs stores and hypermarkets within the Nordic Region.
Respondent: One of the Human Resource Consultants.

Statoil Retail AB, which embraces more than 2 000 service stations in nine north European nations
offering automotive fuels, car accessories and vehicle servicing, as well as convenience products
such as hot food and groceries.

Respondent: The Human Resource Manager.

3.1.5 Manufacturing
Scania Sverige AB, which develops, manufactures and sells trucks with a gross vehicle weight of
more than 16 tonnes (Class 8).

Respondent: The Human Resource Manager.

Volvo Powertrain, which mainly manufactures gearboxes for heavy trucks and buses within the
Volvo group.

Respondent: The Manager for Human Resources and Communication.

3.1.6 Travel and Transportation

Posten AB – one of Sweden’s largest companies, which on a daily basis performs postal services
to 4.5 million households and 800 000 companies.

Respondent: The Vice President.

3.1.7 Construction
Skanska Sweden AB – a global construction services group, which offers a broad range of
services: from project development to construction.
Respondent: The Manager for Competence Development.

3.1.8 The public sector

Apoteket AB – the sole retailer for medicinal products in Sweden.
Respondent: The Human Resource Manager.

The Church of Sweden – a national church, open to everyone in Sweden regardless of nationality.
Respondent: The Director of the Diocese in Stockholm.

The Swedish Association of Local Authorities and the Federation of Swedish County
Councils (SKL), which represent the governmental, professional and employer related interests of
Sweden’s 290 local authorities, 18 county councils and two regions.
Respondent: The Quality Assuror.

4. Field results
A majority of the organisations in the study are in a process of change and confront new challenges
such as; increased competition, fast changing environments, a number of employees that exceeds
their capacity as well as a need for new self-confident employees with a fresh thinking, increased
focus upon the human capital, etc. This in turn leads to an increased focus on practicing the ability
of confronting new situations, such as how to strengthen the individual’s own perspective and how
to take other perspectives into account, as well as an increased focus upon the human in the
process, i.e. how to deliver things, instead of just focusing upon strategic goals. One respondent
was talking about leaving “the gold watch culture” where commitment, capability and sustainability
are rewarded and instead prepare for a culture more open to change and fresh thinking. In Table 2
below, we present a summary of the organisations relation to feelings and also their feedback on
TABLe MATRIX.

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Table 2: Results from the interviews with management representatives (sorted by date for when
the interview was carried out)
Organisation Relation to feelings Feedback on TABLe MATRIX
COOP (Not discussed) “It is too well developed”
“This is interesting”
Kärrtorp Upper (Not discussed) “We are already working with these kind of questions, but not as
Secondary School structured”
“We are really interested in this approach”
SKL Not in a structured way “We are already working like this, but not as structured”
Other comments (with background to the respondent’s own
experiences):
“It takes time”
“The employees don’t want to fill in text into questionnaires. They are
getting frustrated”
“The employees want directives instead of thinking by them selves”
Scania Sverige AB No special relation “If we had known what the employees felt for the new system before
we implemented it, the process would not have taken so much time”
Other comments:
“The format is not appealing”
“We don’t want a new method”
“TABLe MATRIX could be useful for special occasions, such as kick-
offs or when starting a project”

At this point, we changed the “questionnaire” format of TABLe MATRIX to one paper
in the size of an A4-format
Apoteket AB Feelings have been “This seems very interesting”
discussed in relation to Other comments:
the new organisational “In general, this will work”
structure “Step 5, Crossbreeding, is difficult”
“TABLe MATRIX could be useful for special occasions”
ICA AB No special relation “This seems very interesting”
“You are definitely on the right track”
Other comments:
“Good that everyone is doing this anonymously”
“Most people will probably answer these questions”
“The time for doing this is a disadvantage”
“If you are afraid you will have problems with answering the
questions, particularly within a group”
“Good that everyone is doing this under the same conditions”
“Good with questions on a paper – an interviewer may not always be
that professional”
“Some questions might be augmented unnecessarily”
The Church of Sweden The employees are “You are definitely on the right track”
used to show feelings Other (personal) comments:
and the respondent “In front of changes your personnel must be with you”
explained that it is not “You must be allowed to make mistakes”
unusual that someone
cries at a meeting.
Pfizer Health AB No special relation “This could work”, “You are definitely on the right track”
Other comments:
“To set the goals are important – how will it look afterwards?”
“This is a tool for having the employees to understand their situation”
“The tool is not better than the people who are using it”
SEB No special relation “You are definitely on the right track”
“This could be useful when entering a new project”
Skanska Sweden AB No special relation “This is how we want to work!”
“This seems really interesting, we would like to test it”
Other comments:
“An “agent” should be doing this – a neutral part”
“It is important to inform the participant about: 1) why are we doing
this? and 2) what happens afterward?”
“The anonymity makes people more secure”
“TABLe MATRIX is simple and understandable”
“Feedback must be given shortly afterwards”
“Have an text example in the tool”
Volvo Powertrain No special relation “This is how we try to work”
“We are interested in testing this approach”
Other comments:
“Step 5 is difficult, but it is important for the individual to be initiative”
“This is how we try to work, but not as structured”

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“There exists no forum here within the organisation to show anger –

TABLe MATRIX could be useful here”
“Feedback must be given immediately”
“This instrument will promote a culture where you take care of the
emotional parts”
Posten AB No special relation “This approach is in line with our next step in our current change
process”
Other comments:
“This instrument demands good leaders”
“It is important to clarify why they should use it, the purpose and the
goal with it”
“This is a steering tool”
“You must be aware of the consequences when using the instrument”
“You must be patient – it takes time”

At this point, we changed the A4-format of TABLe MATRIX into A3. Also, Step 5 had
been divided into Step 5A and Step 5B
Statoil Retail AB Feelings have been “If this could work? Yes, why not?”
discussed in relation to Other comments:
the new organisational “There is a danger of fuzziness. One must be able to measure the
structure results – where are we going?”
“How should the participants be motivated?”
“The first step is extremely important – how can you overhear the real
underlying issue?”
“This instrument creates a lot of expectations of the initiators because
the user communicates private thoughts and feelings.”
“TABLe MATRIX would have been useful in the current change
process.”
“The presentation of the material, i.e. the analysis and the
visualisation of it, is the most powerful aspect of TABLe MATRIX; this
without not loosing the subjective aspects of the content.
Organisations consist of stressed employees with little time for doing
“the extra”; such as analysing complex situations.”

The following comments can be made in relation the collected material: After presenting the first
version of TABLe MATRIX for The Specialist for Human Resources at COOP, she spontaneously
exclaimed: “It is too well developed”. This we found as a surprising and interesting comment and
started to think if it was possible to make it more “undeveloped” without loosing the original vision.
At that time we spontaneously started to think at the “strict” format but kept its current design for
the next two interviews. However, when changing the format, the respondent’s attitude changed
dramatically. The respondent at Scania Sverige AB told us that: “We don’t like the format”, and “We
don’t want a new method”. The format was most easy to change, but how could this approach be
seen as a natural element in the organisational work and not as a new method? However, after
changing the format from mainly four text-based pages into one page with a more graphical look;
the respondent’s mental attitude for the approach changed. The respondent at Skanska Sweden
AB told us that: “Have a text example”. In the latest version of TABLe MATRIX this was included.
Several respondents also commented Step 5, ‘Crossbreeding’, as hard to understand. Therefore,
the actual question was changed several times. In the latest version of TABLe MATRIX, Step 5
was also divided into two different steps; Step 5A and Step 5B, depending on if the user had
marked a positive, a neutral or a negative feeling in Step 2.

5. Summary and concluding remarks

ƒ People involved in operational development within organisations seem interested in visualising
and managing feelings in relation to the organisational work.
ƒ The issue of visualising and analysing affections seems not restricted to a specific type of
organisation, but possible within any type.
ƒ However, as one of the respondents expressed it; ‘the tool will not be better than the people that
are using it’. This puts great demands upon the management function which must inform the
participants of 1) why they are doing this, 2) what is beneficial for them, and 3) how to manage
the results.

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ƒ According to the last management representatives, the really strength in TABLe MATRIX lies
upon the possibility in doing analyses and reports effectively, this without not distorting the
subjective content.
Our ambition with the study has been to investigate how individuals can increase the motivation
and awareness for contributing with their knowledge and experiences in relation to the
organisational work. That individual’s become motivated by appreciation, attention and confirmation
were already established by the psychologist Abraham Maslow in his Hierarchy of Needs (1970).
However, it becomes harder for today’s changeable and exposed organisations to give the
employees the attention and confirmation, to not to say safety, they need. By constructing TABLe
MATRIX with its focus upon the structured method and the cognitive culture, i.e. asking the right
questions according to a specific structure (see for example Olsson Neve 2002), we have tried to
contribute to today’s knowledge debate regarding unmotivated employees and not using the
organisational competence sufficient enough, as well as supporting the increasing trend of mental
illness. We also find it as highly relevant for the systematic aspect and the ability to analyse and
compile data quantities to have the product Web-based, this because specialised software:
improves availability; offers measures to adapt the mode of access to knowledge and its
presentation to individual preferences; allows the deployment of specialised software that operates
on digitalised knowledge; (Frank 2002) and offer human beings and organisations much faster,
cheaper and broader sources of data and means for communication for enabling them to generate
and share knowledge (Walsham 2001).

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International Thomson Business.
Checkland, P. (1993) Systems Thinking, Systems Practice. Chichester: Wiley.
Easterby-Smith and Araujo (1999) “Organizational Learning: Current Debates and Opportunities”, in Easterby-Smith, M.,
Burgoyne, J. & Araujo, L. [ed] (1999) Organizational Learning and the Learning Organization: Developments in
theory and practice. London: SAGE.
Frank, U. (2002) “A Multi-layer Architecture for Knowledge Management Systems”, in Barnes, S. [ed.] (2002) Knowledge
Management Systems: Theory and Practice. London: Thomson Learning.
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Kim, D. H. (1993) “The Link between Individual and Organizational Learning”, Sloan Management Review, Fall.
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Organisational Learning, ICICKM 2005, 21-22 November, Dubai, United Arab Emirates.
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Management, ICKM´05, 27-28 October, Westin Charlotte, North Carolina.

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on Knowledge Management in Electronic Government, KMGov2003, Rhodes Island, Greece.

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Approach”, 4 Working Conference on Knowledge Management in Electronic Government, KMGov2003, Rhodes
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Island, Greece, 26-28 May. Organised by IFIP WG 8.3 and 8.5. ISBN 3-8548724-6-1.
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Olsson Neve, T (2002) “Right Questions to Capture Knowledge”, 3 European Conference on Knowledge Management,
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ECKM 2002, Trinity College Dublin, Ireland, 24-25 September. ISBN 0-9540488-6-5. Also published in The
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current.htm, ISSN 1479-4411.
Svenska Dagbladet, Tuesday, Mars 16, 2004, ’Idag’, Interview with Mimmi Engestang.
Tomkins, SS (1995) Exploring affect: the selected writings of Silvan S. Tomkins. Camebridge: Camebridge University Press.
Undén, A-L. & Elofsson, S. (2001) “Health from the Patient’s Point of View. How Does it Relate to the Physician’s
Judgement?” Family Practice, Vol. 18, No. 2, pp. 174-180.
Walsham, G. (2001) “Knowledge Management: The Benefits and Limitations of Computer Systems”, European
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Architecting Knowledge Management for Results
Patrick Onions
The Knowledge Studio, UK
[email protected]

Abstract: Successful knowledge management requires alignment with business objectives, integration into
business processes, and application by people, activities appropriate to the nature of the knowledge involved,
and implementation in a pragmatic fashion. An action research approach led to the development of a model
for knowledge management that enables strategy, assists in project architecture at all levels, facilitates design
for return on investment, clarifies the roles of knowledge and knowledge management and contends with
issues related to the tangibility of knowledge. Called the knowledge management architecture model, it may
be used descriptively in mapping or prescriptively in designing entities and the relationships between
knowledge and the people who use it, the processes in which it is applied and the outcomes of those
processes. Results from employment of this model in two large public sector organisations and one multi-
national corporation are discussed. Results show that use of the model leads to focused knowledge
management projects that consequently deliver more predictable, calculable returns that business deems
important.

Keywords: Knowledge management architecture, process, designs.

1. Introduction
Knowledge management continues to display less than optimal performance (Malhotra 2005; Arora
2002) despite adoption or investigation by most large organisations (McCampbell et al. 1999;
Smalley-Bowen and Scannell 1999), and despite apparently being of enormous value to business
(Tobin 2004; Davenport and Prusak 1998). If this performance is not improved, likely
consequences could include reduced academic interest, dwindling research funding, organisation
disenchantment and discredited practitioners. Empirical observation already suggests waning
corporate interest; evidenced by a dearth of job vacancies, fewer published tenders and declining
sales leads.

Whilst root causes of poor performance should be researched in depth, practical experience and
literature suggest the following issues could be contributory: Knowledge management shows signs
of not having matured beyond the ‘pre-scientific’ phase of scientific progress (Kuhn 1962); a state
characterised by incompatible and incomplete theories, little consensus on methods and
terminology, and little coherent understanding on how to take the research forward. Metaxiotis et
al. (2005) agree, finding more disagreement than agreement and the field to be in its infancy.

There is disengagement between theory and practice, demonstrated by organisations treating

knowledge management quite differently to academic approaches (McAdam and Reid 2000).
There may be excessive focus on subject rather than on problem solving (van den Berg and
Popescu 2005). There may be too much strategy and insufficient implementation (Hsieh and Yik
2005; Smart et al. 2003; Sterling 2003). Focus may be overly technological (Smart et al. 2003), or
on knowledge at the expense of organisation issues. Heath (2003) is of the opinion that knowledge
management should be about managing knowledge processes rather than managing knowledge.
“The design of knowledge organisations is one of the critically unsolved issues in
knowledge management.” (Augier and Knudsen 2004)
Research methodologies employed may be allowing overly optimistic claims (Storey and Barnett
2000) to be made without sufficient validation. Lessons from change management and cultural
inhibitors of knowledge management (Wong and Aspinwall 2005; Yih-Tong Sun and Scott 2005)
suggest the futility of theory suggesting corporate culture must change (Robb 2006). Architecture,
as an activity that occurs between business analysis and implementation (Kim et al. 2003), is in a
position to translate relatively intangible strategy, objectives and intent into a more concrete and
usable form. It is therefore proposed that architecture may be a solution, if its role is to find a
compromise between form, function and the needs of the various stakeholders whilst providing
construction with an executable plan that will lead to a tangible result. What is architecture? Within
the information systems context ‘architecture’ (noun) has been regarded as a representation,

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defined to include the components, their configuration and relationships (IEEE Standards 2004;
Bass et al. 2003). Architecture may also be regarded as the activity of designing a system (verb ‘to
architect’). The consideration of human interaction and organisation, costs and decisions (Augier
and Knudsen 2004) may be added to a definition of knowledge management architecture.
Knowledge management architecture is therefore defined as
“the representation of a knowledge management system including its components,
configurations, relationships and environment; and the process of designing that
representation with regard to its form, function, stakeholders’ requirements and
implementation.”
The term ‘system’ is used broadly sense, referring to any configuration of people, technology,
infrastructure, projects, initiatives, practices and functions.

2. Architecture model design

Definition alone is insufficient for practitioners. Empirical experience shows that a model is an
efficient means of providing practitioners with a useful theory. Generic models can ‘give structure to
experience’ (Morris 1967) and capture the essence of real systems for manipulation and
manageability (Abdullah et al. 2002). Technically, they can bring clarity to complex situations, be
more communicable, generalise concepts for reuse, and transfer understanding for self-sufficiency.
“Maintaining alignment between business design and IT solutions through a model-
driven architecture has the potential to greatly reduce the “time to value” of business
transformations” (Kapoor et al. 2005).

2.1 Design through action research

The knowledge management architecture model was developed in early 2003 for use in
consultancy work; in response to gaps in literature, a lack of practical models to guide knowledge
management systems design, and to fill a commercial demand for efficient project delivery and
effective project outcomes. Initial model design and application was undertaken during a consulting
project, using a methodology that closely approximated action research. The author reviewed
literature, engaged with the client’s representative, and then developed the model with entities,
processes and relationships deemed important by both literature and the client. As a project
deliverable, the model was prepared during the first week of a much larger project. Eight iterations
involving design and implementation were undertaken, each identifying key elements, generalising
conceptually similar elements and reviewing the result with the client representative.

The following suggest action research was an appropriate methodology:

Practitioners display a tendency toward framing solutions in terms of pre-inquiry understanding

(Chenail and Maione 1997), yet they do have a valuable role to play as researchers (McNiff and
Whitehead 2006). Practitioner’s insider (emic) perspective (Pike 1967) is ideally placed for
reflection on practical applications of theory. Consultants, as a subset of practitioners, adopt both
an observer (etic) perspective by bringing externally derived theory and experience to an
engagement whilst participating with an emic insight of insider understanding and aspirations. The
ethnographic and phenomenological nature of knowledge management projects and the
sociological nature of knowledge management (McAdam and Reid 2000) suggest a practical
approach may be valuable in knowledge management research.

Deductive methods are unsuited to industry research where consultants and practitioners do not
have the time, unlimited resources and flexible outcomes available. Assignments tend to be
immersive, participatory and brief. Contract terms often only provide basic direction, the extent of
the situation remaining unknown until well into the project. The use of action research by
practitioners has been established. “Action research is about practitioners creating new ideas about
how to improve practice, and putting those ideas forward as their personal theories of practice”
(McNiff and Whitehead 2006, p5). Knowledge management consulting also displays characteristics
which favour action research; including immersion, the need to produce deliverables of significance
to the organisation, the need for environmental and political support (O’Leary 2005), the consulting

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process resembling the iterative action research cycle of observe-reflect-act-evaluate-modify

(McNiff and Whitehead 2006), and extensive use of action research in knowledge management
revealed by literature.

2.2 Developing the model

No practical model for knowledge management systems architecture was found when the original
project commenced. Model design was therefore informed by empirical understanding and theories
of process, knowledge and knowledge transfer. Furthermore, the model was designed to be as
theory independent as possible so as to facilitate architecture regardless of each organisation’s
understanding of knowledge, knowledge processes and knowledge management; thereby avoiding
problems associated with the wide range of approaches in the field (Metaxiotis et al 2005).
Students of design are taught, “form follows function”, a phrase coined in 1896 by architect Louis
Sullivan (1947). Applying this dictum here could resolve many of the issues described.
Unfortunately literature is unhelpful in establishing what this function and form should be, with there
being diverse knowledge management definitions and approaches (Patriotta 2004).

Commencing with function of a knowledge management architecture model, practitioner

experience suggests that a focus on organisation outcomes is what clients are asking for. This
observation is supported by document analysis of tender publications, requests for proposals, and
literature such as Model 1 and 2 for knowledge management systems (Malhotra 2004). A simple,
broad assumption will be made, that the role of knowledge management should be “to enable
achievement of the organisation’s objectives through managing knowledge.” Sufficient detail is
provided at the operational level by a simple process model, input Æ process Æ output (Shewhart
1939). Form of the architecture may be built around the Shewhart model. Knowledge is an obvious
input. Work activity could be the process, referring to general work and not knowledge processes
such as transfer or codification, a treatment suggested by knowledge value chains (Stewart 1997
p293). Several factors dictate the possible output. Resistance to measurement (Jones and Schilling
2000), resistance to change (del Val and Fuentes 2003), and organisation objectives suggest that
achieving organisation goals are more suitable outputs than knowledge products. Learning may
also be added to the model, to provide a control or feedback loop, shown in figure 1 below.

Figure 1: The core process model

Figure 1 is not incompatible with approaches such as Malhotra’s “right information to the right
person at the right time” (2004), Argyris’ single loop learning (1992), feedback in systems thinking
and organisation learning (Senge 1990), the “know-how, know-what, know-why, care-why”
elements of knowing (Quinn et al. 1996), various knowledge mapping techniques discussed by
Davenport and Prusak (1998 p72), and Darroch’s (2005) conceptual model of resource based
knowledge management. Individuals and their contribution should now be mapped into the
process. Components are suggested by the inseparability of people from knowledge (Baumard
1999; Polanyi 1966), the SECI knowledge transfer model (Nonaka and Takeuchi 1995), findings
that employees usually internalise knowledge before employing it (Onions 2002), relative immobility
of tacit knowledge (Yakhlef 2005), and linkages between knowledge processes, work and people
(Davenport and Prusak 1998 p xi). Those who know (people) are differentiated from what is known
(knowledge) to allow for identification of multiple sources and users of knowledge, to allow for
some organisation’s definitions of knowledge that include explicit knowledge, and to separate task
level activities from more general projects and processes to support finer resolution of knowledge
applications.

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Figure 2: Model including people and process

Figure 2 reflects aspects of models such as the IS assessment tool (Myers et al. 1997) and
Malhotra’s models 1 and 2 (2004), and is consistent with the Zachman (1998) framework’s domain
views of information management. Ex Hewlett-Packard CEO Lew Platt said, "If Hewlett-Packard
knew what Hewlett-Packard knows, we would be three times as profitable." (Davenport and Prusak
1998), signifying the model should clarify and map types and sources of knowledge. Access to
many types of knowledge through a common interface is required (Galup et al. 2003), indicating
more depth and process is needed to make provision for environmental complexity and intangible
knowledge. Care however should be taken not to pre-empt or prescribe selection of a codification
or personalisation strategy (Hansen et al. 1999). The model should generalise the forms that
knowledge may take, as shown in figure 3 below, and allow differentiation between tacit and
explicit knowledge to occur at design or application level.

Figure 3: Known knowledge component

Examination of the use and acquisition of knowledge in organisations (Onions 2002; Baumard
1999) suggests that knowledge we don’t know about or isn’t disclosed may be identified during the
course of work activities. Unknown knowledge may be modelled as per Figure 4 below.

Figure 4: Unknown knowledge component

At this stage the model only represents components and configuration of the ‘noun’ architecture.
The definition also stipulates for relationships and functions. Arrows drawn between the
components represent these, consequently describing the function of architecture. Knowledge
management activities would focus on the transfer of knowledge represented by the relationships
(arrows), and in the processing of knowledge that will occur at each node (components). Several
activities have been illustrated as ellipses in figure 5. Sources of knowledge will depend on the
implementation situation. Several however have been illustrated, demonstrating the model is
independent of the various forms that knowledge may take. A ‘walk-through’ description of the final
model in figure 5 below should demonstrate the model, as is the practice in UML modelling
(Eriksson and Penker 1998):

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“Knowledge that is valued and needed is located and acquired from internal and
external sources by people, then used during task activities in the course of their
work on projects or in processes to achieve goals and objectives of the project,
team or organisation. Unknown knowledge may be identified during the course of
activities, acquired or created, then used in the same way. People learn during the
course of work, on reviewing progress and evaluating outcomes. Lessons and new
knowledge are then fed back into the system through learning, increasing known
knowledge.”

Figure 5: The knowledge management architecture model

Inspection shows this model is commensurate with Matsumoto et al.’s (2005) requirements for
knowledge management that is designed to support knowledge processes; “it is essential to
identify what knowledge should be captured, why it is of value, how can it be captured, how can it
be stored, how can it be retrieved, and how will it be used.”

2.3 Applying the model

Use of this model suggests there are three modes of employment: An illustration of the architecture
process: to convince management of rigour, to describe the process and output to teams, and to
plan projects. An analysis template: to guide elicitation of details and idiosyncrasies of each project
during business analysis interviews and joint application development workshops (JAD: Wood and
Silver 1995), and to deconstruct situations. A design template: conceptualising alternatives,
identifying suitable tools and techniques at each node, and architecting the overall solution. Use of
the model suggests the sequence of events in architecting solutions using the model would
typically be:
ƒ Identify a business requirement, often by targeting poor performance areas.
ƒ Describe the model to management to enlist their support in finding any possible solutions.
ƒ Present the model to the team, so they may understand their role and prepare.
ƒ Hold a JAD session.
The business analyst walks the ‘client’ through the model, from right to left. Requirements and
processes will be identified and analysed at each ‘node’ and relationship in the model. Questions
are asked, such as:
1. What organisation goals, objectives, outcomes need to be achieved?
2. What projects and processes contribute to that?
3. What works activities do people perform on those projects?
4. Who are the people?

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5. What knowledge do they know they need to do that work?

6. What knowledge do they have?
7. What knowledge don’t they have?
The analyst will then identify appropriate knowledge and knowledge management tools and
techniques by asking questions of the JAD group, such as:
ƒ (Between questions 4 and 5). How do we make the knowledge available to people at the right
time? What does this knowledge look like?
ƒ (Between questions 5 and 6) How do we locate and reuse that knowledge?
ƒ (Between questions 5 and 7) How do we specify, source and acquire that knowledge? Who
owns it? Where might it be stored for optimal efficiency?
The analyst will then assess potential solutions, possibly by describing alternatives to the group
and soliciting feedback. The results of the JAD are then used to architect a solution. The analyst
applies the model as a template, working from left to right. Once conceptualised, the solution is
presented to management and teams for review. A system is then developed, pilot tested,
evaluated, modified and released. Note the definition provided in the introduction for system is not
exclusively technological.

3. Architecture model validation

Since its development, the knowledge management architecture model has been employed in
twenty-two public sector and corporate knowledge management projects. Analysis of the ‘what-
happened’ and ‘why-did-it-happen’ should lead to the ‘what-can be-learnt-from-this’, necessary to
improve practice and the body of knowledge. One means of analysing findings, documenting
application and validating theory is the case study method: Case studies offer authenticated
evidence to demonstrate internal validity and illustrate application of theory (McNiff and Whitehead
2006 p157). Case study research is suited to the access and emic understanding that practitioner
researchers have in order to develop the deep insights necessary (Tellis 1997). Review of literature
shows that case studies are widely used in knowledge management to document findings and
validate theory. Consultants are in a position to derive findings from across their portfolio, partly
avoiding one criticism of the case study method that it is unable to produce generalisation due to
insufficiency of cases (Yin 1993). Three cases have been chosen from the portfolio of
implementations. They have been selected on the basis of variety, clarity, availability of detailed
data and the ability to contribute and publish findings.

3.1.1 Case 1: Retention of consultant knowledge

Retention of international consultants’ knowledge at a government department was one of the first
applications of this model. International experts were providing consultation in the privatisation of
state owned assets, and their services were being reused on similar projects rather than
transferring this capability to the department.

The model was used to deconstruct and explain the problem to department management in an
hour-long workshop. It was found that knowledge management was valued by everyone and
supported by none. This predisposed a solution that wouldn’t require management intervention.

A three hour workshop followed, in which:

ƒ Organisation outcomes were identified to be ‘retention of consultant knowledge’ and ‘reuse of
consultant knowledge’.
ƒ Consulting processes appeared to involve production of discrete deliverables such as reports
for larger projects. Tasks appeared to be analytical and advisory, and consultants were largely
autonomous.
ƒ No formalisation or codification of the processes that converted knowledge into
recommendations was found.

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ƒ Consultants appeared to use years of expertise and best practices in formulating solutions, with
much knowledge being tacit.
ƒ Alternatives for each ‘node’ and ‘relationship’ were proposed and assessed
A workable, technical design was prepared on the basis of this information over a two-day period.
The solution called for all external consultants to codify their methodology whilst producing
deliverables, and to involve a designated staff member in their activities. Documents would be
stored in the repository, and involved staff members were to disseminate knowledge through
preparing reports, holding workshops and being included in similar future projects.

Research findings include:

ƒ The model enabled clear situation deconstruction and analysis of potential alternatives
ƒ Problem-centric design of the solution was possible, and the tangibility of the outcomes was
improved.
ƒ Delivery was efficient.
ƒ Assigning clear roles and responsibilities at the operational level was facilitated.
ƒ Use of the model helped transfer understanding of the analysis and design processes from the
consultant to the client.
ƒ An analyst still has to possess a broad knowledge of knowledge management tools, techniques
and knowledge transfer mechanisms to be able to elicit correct information and propose suitable
alternatives at each node.

3.1.2 Case 2: Knowledge mapping

The second case is that of a government directorate that required a human resource audit process
and skills taxonomy. It was proposed instead to use the model to design a knowledge map linking
tacit and explicit knowledge to people, projects and outcomes.

A database was initially populated with roles, processes and projects. This required unexpectedly
extensive administration to analyse and record.

Roles and processes were then mapped to a list of individuals imported from the email system.
A pilot group listed their skills and sources of information.
ƒ These were ‘mapped’ using a hyperlink to the relevant document or email address of the
‘knower’.
ƒ Human resources began grouping and defining skills.
ƒ Roles were identified, and mapped to skills required
ƒ Gaps could then be identified.
The resulting database could be used to identify career development requirements for individuals,
training programmes to remedy organisation deficiencies, duplicated ‘pockets’ of knowledge to
consolidate, organisation experts and to build a ‘yellow pages’ directory of experts.

Research findings for this case include:

ƒ The model could efficiently map people to processes, outcomes and knowledge.
ƒ A knowledge expert was required to build a consistent model of the organisations knowledge.
ƒ Organisation experts were vital for specification of generic roles.
ƒ Depending on organisation culture, management intentions should be clearly communicated to
those involved and potential change management issues addressed.
ƒ It was more efficient to elicit all information in one sitting from each individual. This tended
however to generate concerns about job security and micro-management of their activities.

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ƒ The outcome was that considerable resistance from individuals realising the extent of
information to be gathered stalled the project, and the project was eventually restored to its
original remit.

3.1.3 Case 3: Consolidation of dispersed knowledge

A large multi-national corporation wished to apply knowledge management to a performance
management initiative. The initiative assisted managers with setting and achieving targets and
motivating the workforce, and consisted of a central administrative group, distributed centres and
roaming organisation consultants. The model was used to educate management on the concept of
knowledge management. A JAD workshop was then convened; attended by the consultant,
knowledge manager and five of the team’s representatives as domain experts. Objectives for
knowledge management were identified as providing the organisation with access to the initiative’s
knowledge, to facilitate communication, and to facilitate consolidation. Issues were identified to be
time, access to technology and internal capabilities. Existing work processes were examined,
suggesting common practices that could be automated or ‘quick wins’ that could easily be
implemented. Knowledge appeared to be dispersed, inconsistent and poorly managed. Knowledge
was being generated widely, but not stored and more importantly no one knew who had it. Lessons
learnt were being transferred orally and without any methodology. Knowledge was often in an
unusable or impractical format. One example was documents stored in a common drive that
workers who were computer illiterate could never access. Functional knowledge areas were
identified, and the role of ‘knowledge coordinator’ for each area assigned to a client representative.
Each representative was provided with a template worksheet that allowed them to find and record
details that were necessary to populate the model, such as for the ‘knowledge we need’ node:
ƒ Name and describe the knowledge?
ƒ What is its source (name the person, job, group, document, repository etc)?
ƒ What format is it in (document, spreadsheet, skill etc)?
ƒ How might this knowledge be acquired, stored or referred?
This information was then used to design a web site that enabled its customer’s needs for tacit and
explicit knowledge, and allow the team to consolidate its knowledge in a consistent and intuitive
way. Findings included:
ƒ Management could budget the project accurately, on the basis of obvious outcomes and
specific designs.
ƒ Email evidence shows the model’s clarity and systematic approach helped take manager’s
knowledge beyond that which they had gained from editorials and management textbook
chapters, understand the issues involved, formulate strategy and justify expenditure.
ƒ Model efficiency was demonstrated, planning and analysis taking only one day.
ƒ Tacit knowledge and socialisation processes (Nonaka and Takeuchi 1995) that characterized
this organisation function were not ignored or codified. The model helped the team design a
solution that allowed tacit and explicit to coexist and service the same people and processes.
ƒ Skills in knowledge architecture were transferred from the consultant to the client.

4. Conclusions
Extended and diverse use has shown the model to be an important tool in one knowledge
management consultant’s toolbox, ensuring greater consistency, efficiency, precision and maturity.
The model benefits clients in several ways. Solutions can be designed for specific organisation
objectives, display quantifiable, predictable value and consequently support feasibility study and
budgeting. Management intuitively recognise the model’s configuration, communication of ideas is
supported, generalisation of most situations with no modification is possible, and analysis of
complex situations is clearer. Teams have a clear, obvious process to adhere to and be measured
against. The model benefits projects by ensuring a systematic, consistent approach, focusing on
solutions development and organisation outcomes that have been lacking in knowledge
management. Diverse tools and techniques may easily be integrated. Right to left application

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ensures that form follows function and knowledge management is subordinate to organisation
objective. Left to right technical design ensures that knowledge management is efficient. The model
does have limitations. Case studies presented show good understanding of knowledge and
knowledge management are necessary; and culture, organisation structure and change
management must be borne in mind.

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Knowledge Management Governance
Patrick Onions1 and René de Langen2
1
The Knowledge Studio, UK
2
Sasol Synfuels, Secunda, South Africa
[email protected]
[email protected]
Abstract: As an organisation function, knowledge management needs ongoing direction and control of its
activities at both strategic and operational levels. Performance management drives activities towards
continuous improvement and organisation goals. Governance ensures performance management is practiced,
enforced and aligned with organisation needs. This paper recommends governance should be applied to
knowledge management in large organisations. A model of governance will be proposed that consists of two
standards, a maturity model for direction and knowledge criteria for control, as well as a process to impose
standards prescriptively. Action research was used to develop and deploy this novel combination of standards
and processes in one multi-national corporation, and the empirically obtained qualitative results are discussed.

Keywords: Governance, knowledge management, standards, maturity model, knowledge criteria.

1. Introduction
Governance has become an organisation priority following recent high profile corporate scandals
and subsequent legislation. Business is seeking tangible returns on investment from every function
(De Feo 2006), particularly since the dot-com bust and spectacular cases of corporate
mismanagement (Hansen and Smith 2006). Rather than being a knee jerk reaction, governance is
a valuable tool in the direction and control of almost every function within a large organisation,
including knowledge management. This paper proposes that knowledge management might benefit
from governance, and presents a model to do this. Knowledge management is an extensive and
diverse field, with abundant definitions and many disciplinary and theoretical approaches (Patriotta
2004). Literature reveals organisations often construct their own definitions and treatments, and
these often differ from theory (McAdam and Reid 2000). To generalise and clarify research of its
governance, knowledge management may be broadly regarded, as “any planned, formal or
recognised management of activities and processes concerned with is known in organisations.”

Several arguments may be made that governance is necessary or useful. Knowledge management
is usually practiced as an organisation function and should therefore be subject to the same
controls as other functions. It bears some similarity to information technology; at least in literature
(Scarbrough et al. 1999), through IT being a critical success factor in knowledge management
(Holsapple and Joshi 2000; Davenport et al. 1998), and the high technological focus of its
implementations (Smart et al 2003). Knowledge management has tended to under-perform
(Malhotra 2005; Arora 2002; Prusak 2000), so suggestions to improve that situation should be
considered. Knowledge management performance management is recommended in literature
(Wong and Aspinwall 2005; Holsapple and Joshi 2000; Davenport et al. 1998), as is its governance
(Dobbs et al. 2005; Davenport et al. 1998). There are even published instances of applications, at
least at the strategic level (Zyngier et al. 2004).

Within the organisation, governance has come to mean ensuring quality of performance
management and measurement (OECD 2004). Performance management sets targets and
measures execution against them. Results furnish decision makers with information necessary to
control activities and guide improvement (Busi and Betitci 2006), suggesting a need for distinct
targets for direction and control, and processes for feedback and learning. This may in turn lead to
process improvement, which has been found to be necessary for efficiency and governance
(Sussland 2004). There are other complementary perspectives. Corporate governance refers to
alignment of management and shareholder interests in a way that ensures transparency, ethics,
integrity and sustainability (Grant 2003). Corporate governance is required by some legislation,
such as the Sarbanes-Oxley or ‘Enron’ Act, and recommended in literature as being critical to
managing operations and ensuring long-term performance and health (Dobbs et al. 2005).
Information technology governance is more specialised. It has been identified as a critical success

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factor in IS effectiveness (Mingay et al. 1998), and is variously applied as compliance procedures
and rules and regulations under which the function operates through the use of frameworks and
toolsets such as COBIT (IT Governance Institute 1996). Within the context of organisation
knowledge management, performance management will be defined here as “the process of
directing and controlling knowledge management activities and outputs to achieve particular goals”;
and governance as “the assessing, ensuring and assuring that knowledge management is
managed according to acceptable standards and to achieve a desired level of performance.”
2. A governance model
Literature shows that governance models should begin by considering implementation. Perhaps
70% of business strategies fail to be put into practice (Sterling 2003), and in knowledge
management there is excessive focus on definitions, models and strategy and insufficient
implementation and practice (Smart et al. 2003). Knowledge management strategies must be
accompanied by sound, strong implementation (Hsieh and Yik 2005; Onions 2004), yet few
practical operational level measures have been proposed (Smart et al. 2003) and ‘operationalising’
is proving difficult (Marr and Spender 2004).

Practical designs and deployment methods are required for implementation. A literature search
revealed few discussions of knowledge management governance (Zyngier et al. 2004; Chourides
et al. 2003; Wiig 1997), and these tended to be conceptual. Models from business and IT may
therefore be drawn on for adoption or adaptation. Yakhou and Dorweiler (2004) note corporate
governance mechanisms should consist of standards and processes, the latter comprised of
communication and enforcement rules, implementation mechanisms, auditing and assessment.
The COBIT framework (IT Governance Institute 1996) consists of four components; high-level
control objectives, detailed control objectives with practical and implementation-oriented criteria,
management guidelines and a process maturity level.

A model for knowledge management governance is synthesised from these to consist of:
ƒ Standards for direction and control. Standards could inform performance targets, and express
the changing requirements of stakeholders.
ƒ Processes for implementation, enforcement and learning. Standards alone tend to be merely
suggestive and descriptive, without effect or ability to induce change. Prescriptive governance
applications would require standards are appropriately quantified, qualified or expressed, and
coupled with processes for deployment and enforcement of compliance.

2.1 Governance standards

Governance standards should perform two functions, providing targets and providing measures.
Since there are few clear, measurable, industry-accepted performance standards for knowledge
management (Darroch 2005, p103), standards will have to be developed or modified rather than
adopted based on the following factors:

Prescriptive application can preclude more descriptive approaches, such as the Australian
Standards for Knowledge Management (2005) and Housel and Bell’s (2001) standards.Intangible
measurement can preclude the financial approaches of business performance management and
business governance.Measurement should be management oriented, since “measurement is
essential to making the value of knowledge accessible to managers and others who need to justify
expenditures in some concrete way” (Iftikar et al. 2003) and knowledge management is dependent
on managers appreciating its intangible benefits (Bailey and Clarke 2001).

Knowledge management outcomes and benefits are difficult to quantify in economic and financial
terms (Strassman 2001), so measures have to be meaningful and useful and not based exclusively
on value (Stewart 1997).A homogenous approach is often not possible (van den Berg and Popescu
2005; Yoo and Ginzberg 2003), so localisation should be supported. Whilst industry-wide
standards may not be available, organisation-wide measures should be prepared to ensure
consistent management objectives, with latitude to adapt to specific conditions.

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These factors suggest that two sets of standards should be proposed, a maturity model for targets
for activity and knowledge criteria to measure output quality.

2.1.1 Knowledge management maturity

Multi-stage models, a group to which maturity models belong, demonstrate several characteristics
that suggest they are useful in setting performance targets: Designed for evolution or growth, they
provide an ascending series of goals to work towards and aspire to (Dayan and Evans 2006).

Literature suggests the use of multi-stage models for performance management and governance
purposes. Maturity has been used to assess growth in IT, with models such as Nolan’s early (1973)
model and the influential ‘CMM’ Capability Maturity Model (SEI 1993). Empirical observation
suggests their suitability as a set of benchmarks for strategic and tactical direction, as rationale and
justification for projects, risk reduction through more consistent and tangible planning, measures for
review, measures for control and reporting purposes and even a mutually supportive learning cycle
resembling continuous improvement.

Knowledge management maturity models have been proposed, mainly as a descriptive tool (Hefke
and Trunko 2002; Housel and Bell 2001) although they have been used to guide process
development (Dayan and Evans 2006). Selection of an appropriate scale may be critical. CMM and
IT maturity scales tend to be outcomes-based and therefore suited to control and direction setting.
Activity and culture-centric scales, such as Housel and Bell (2001) levels of “know-aware-
enterprise sharing systems-enterprise sharing culture”, appear more difficult to align directly with
organisation outcomes. Scales should accommodate both tacit and explicit knowledge and the
often-intangible nature of outputs by applying a flexible results-oriented focus, ordinal ranking
rather than strict ratios or intervals which could attempt to demarcate the intangible, and expressing
each level in a way that measures qualities of knowledge rather than quantities.

A theoretical scale will not be proposed as the need for localisation and inputs from all stakeholders
suggests this should be done at an organisation or project level. An example of one such project
scale will be described in the case study.

2.1.2 Knowledge criteria

Measurement requires standards to measure against, to guide design and appraise output quality.
Standards are needed for direction and control at the operational level to ensure knowledge
management, processes and outputs are effective, optimal and measurable. It has been shown
that knowledge management and knowledge are difficult to measure. Measuring instead the
knowledge outputs and knowledge product quality may alleviate this. Quality standards have long
been used in operations management for control purposes and to establish ‘direction’ in the form of
product design criteria (Schonberger and Knod 1997). Quality standards have also been used in
decision-making, with a cyclical mechanism for process industries achieving performance
management and informing decision-making (Schuman and Brent 2005). These quality standards
will be termed knowledge criteria.

The same constraints of prescriptive and descriptive application, measurability and flexibility that
were applied to maturity levels should be applied here. Organisation and project specific technical
requirements, performance targets and strategy should inform criteria. An example of knowledge
criteria will be provided in the case study.

2.2 Governance processes

Descriptive standards alone will not ensure governance. Governance requires prescriptive
implementation. For standards to be used prescriptively, processes are required that implement
and enforce standards. Knowledge management governance literature (Zyngier et al. 2004) and
knowledge management control literature (Dayan and Evans 2006; Hefke and Trunko 2002;
Housel and Bell 2001) do not discuss necessary processes in depth. Corporate governance
processes may also not be useful, due to the incompatibility of auditing oversight and management
adherence to statutory requirements (Rezaee et al. 2003) with intangible benefits. In designing

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governance processes, literature and definitions of governance suggest the following process
objectives should be borne in mind:

There should be integration of governance, performance management and strategy into a simple
management framework that supports rapid monitoring of key issues and interactions between
business enablers and results (Sussland 2004). Governance should integrate into existing control
structures, not impose new ones, for several reasons. Horizontally disconnected organisation
functions (silo’s) can adversely affect long-term initiatives (Dobbs et al. 2005), distinct horizons of
vertically separated groups (Anthony 1965) tend to produce different management outlooks, dual
reporting to both project or knowledge manager and line manager potentially can cause contention,
confusion and conflict (Kerzner 2003), and mandatory compliance with externally driven, operated
and imposed management tends to diminish success, at least in information systems (Whyte and
Bytheway 1996).

There should be direction, through using standards for decision-making and design. There should
be control, through imposing standards and followed by monitoring and measurement. There
should be learning and continuous improvement, through correction and review.

The Shewhart (1939) cycle (input -> process -> output) has long been used as basis for
management control systems design. As a crude skeleton of management activity, it provides
process design with a cyclic model reiterating the stages of control. This paper will adapt this
control cycle to reflect issues discussed and describe the governance processes necessary to
achieve the above objectives:

Set standards:
ƒ Quantify, qualify or express standards, providing specific targets and accurate predictable
measurement for management and teams to rely on.
Deploy and operate:
ƒ Conceptualise projects, using maturity to consider current maturity and agree on new targets,
and criteria to design deliverables.
ƒ Inform major decisions using maturity levels, and minor decisions using criteria.
ƒ Schedule realistic milestones, to ensure project success (Kerzner 2003).
ƒ Impose standards early, lessening resistance to change and improve direction of projects and
design.
ƒ Apply governance to each project phase.
ƒ Let different groups work towards different maturity levels.
Measure against standards:
ƒ Measure on delivery of project outputs, project milestones, during regular review of initiatives,
when determining rewards and recognition.
ƒ Report management information constructively, with:
ƒ A criteria checklist for project deliverables, to team leaders or project managers.
ƒ A project progress report against knowledge criteria, to team leaders or project managers.
ƒ A monthly or quarterly progress report against knowledge criteria and maturity levels, to
stakeholder management including unit managers and sponsors.
ƒ An annual report on average or aggregate maturity levels, provided to knowledge management
sponsors and department heads.
ƒ Regular review of knowledge management governance efficiency and effectiveness, to the
knowledge management practice and relevant management.
Take corrective action:
ƒ When planned or when triggered by deviation.

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ƒ Corrective action is planned and undertaken by the knowledge manager and line manager.
ƒ Amend standards and processes if necessary.
ƒ Recommend and implement changes.

3. Research methodology
Research aims to ‘investigate thoroughly’ in an ‘active, diligent and systematic’ manner (Wikipedia
2006), to build broader understanding and pave the way for change (O’Leary 2004), and improve
learning through teaching or generating new knowledge and theory (McNiff and Whitehead 2006).

A research methodology appropriate for this model should:

ƒ Evaluate whether governance can provide benefits to knowledge management.
ƒ Evaluate the model’s suitability for knowledge management governance.
ƒ Evaluate whether the model performs as intended.
ƒ Determine the transferability of the model to other organisations.
Researching in the field can be difficult. Whilst commercial pressures and exigent circumstances
often prevent practitioners from employing formal research methods, research aims are
nevertheless still important to clients and the professional practice. Action research is one of the
more frequently used and appropriate methods in professional practice for the following reasons:

There is considerable precedent for its use; “action research is about practitioners creating new
ideas about how to improve practice, and putting those ideas forward as their personal theories of
practice.” (McNiff and Whitehead 2006, p5)

Governance in knowledge management is intended to be practical, offering situational

improvements and outcomes that would be of significance to the organisation. This favours action
research (O’Leary 2005).

Problem and solution are often tangible and capable of articulation, and there is a need for and
presence of political support. These too favour action research (O’Leary 2005).

Knowledge management has a sociological nature (McAdam and Reid 2000), favouring qualitative
research, a paradigm to which action research belongs.

Solutions are usually developed and implemented as project deliverables, requiring immersion and
time constraints, which favour action research (McNiff and Whitehead 2006).

Development and implementation tends to be investigational. Cause-and-effect relationships may

be difficult to determine given the organisation complexity and many influencing factors (Wong and
Aspinwall 2005; Chourides et al. 2003). This again favours action research (O’Leary 2005).
Balance must be reached between commercial delivery, organisation learning and incidental
academic outcomes.

Practitioners often intuitively follow action research’s iterative action-reflection cycle of observe-
reflect-act-evaluate-modify (McNiff and Whitehead 2006, p9). This paper’s case study involved
development of the governance model, and the following sequence was followed:
ƒ Review literature for relevant techniques
ƒ Design model using theory and input from organisation experts
ƒ Define standards
ƒ Design a pilot implementation with project team participation.
ƒ Communicate designs to project participants and stakeholders and set localised targets.
ƒ Participate in project implementation.

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ƒ Assess project outcomes and analyse adoption and performance.

ƒ Adjust the model and make any recommendations.

3.1 The case study

Sasol Synfuels in Secunda South Africa approached consultants The Knowledge Studio in 2005 to
rebuild knowledge management. Sasol Synfuels is a division of Sasol Limited, a global
petrochemical firm producing synthetic fuels, plastics and chemicals. Listed on two stock
exchanges, the organisation employs 30000 people in almost 50 corporate entities on several
continents in the production of innovative products from coal and other hydrocarbons (Sasol
Annual Report 2005).

3.2 Setting standards

Governance requires alignment of performance management with stakeholder interests. To do this,
definitions for five maturity levels were prepared by analysing strategic requirements in the
organisation and reviewing various IT maturity models:
ƒ None: no knowledge management activity.
ƒ Basic: knowledge is identified, listed and perhaps codified or mapped.
ƒ Managed: knowledge is mapped, codified, linked, expertise located and tools implemented.
ƒ Sustainable: knowledge that improves or enables efficiency is being reused, best practices are
identified and reused, and knowledge management has a measurable contribution in achieving
cost savings and achieving productivity.
ƒ Innovative: knowledge that improves effectiveness is being generated, reused, synthesised;
enabling and assisting in achieving a measurable revenue or functional improvement.
Information technology standards, quality standards (Schonberger and Knod 1997) and knowledge
management standards (Curley and Kivowitz 2001; Davenport and Prusak 1998, Stewart 1997)
were then consulted whilst preparing knowledge criteria that propose knowledge outputs and
‘products’ be: sufficient, reused and reusable, accurate, up to date, prompt and punctual, shared,
available, accessible, usable, useful and extendable.

Analysis followed by consultation with management confirmed these criteria were suitable. Time
constraints during the engagement prevented immediate definition of each criterion. Criteria were
later enhanced so as to be expressed in common terms, published and communicated so as to
become ubiquitous and integrated, quantifiable or measurable, relevant, actionable, applied
equally, predictable and objective.

Designs for governance processes were analysed by the knowledge management team, then
assessed and accepted by management. Processes were then prescribed to each new initiative.
To reduce resistance to change, control overall was light and lenient deployment relied more on
selling the concept than on directives.

3.3 Preliminary outcomes and findings

Initial outcomes and findings were documented in consulting notes. The knowledge manager
documented subsequent findings. These notes are summarised here according to project phase:

Concept phase; during which projects are planned:

ƒ Standards facilitated the practice roles of champion and strategist; by providing guidelines to for
project direction, identifying improvement areas and suggesting solutions.
ƒ Standards tended to improve knowledge management credibility, project motivation and
feasibility by offering technical design criteria, more rigour and precision, more focussed
tangible and unambiguous goals, and lowering perceptible risk through precision.
ƒ Maturity levels helped guide and motivate adoption by demonstrating the clear path that other
teams have successfully negotiated to lower apprehension.

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 Patrick Onions and René de Langen

ƒ Senior management received more reliable and detailed resource allocation, budgeting and
strategic information than before.
ƒ Illustrative examples included reuse of safety knowledge from areas with higher knowledge
maturity levels, motivating safety knowledge consolidation efforts, and use in new project
proposals for staff morale programs and an expertise locator.
ƒ Findings from this phase show the model can improve setting of direction, alignment with
stakeholder requirements and transparency of outcomes.
Project phase; during which projects are designed and developed:
ƒ Standards facilitated the practice role of architect, instead of developer or administrator.
ƒ Criteria clarified goals, informed selection of templates and made project requirements more
explicit.
ƒ Maturity levels helped manage expectations, such as for ‘web sites’ where they recommended
iterative development rather than a ‘big-bang’ approach.
ƒ Illustrative examples include applications that recognised whether explicit knowledge must be
shared (codified and stored) or tacit knowledge must be shared (the knower identified), and
faster and better quality portal ‘web site’ development. ‘Clients’ were informed how criteria
would affect page design, pages were developed to more consistent and higher quality, and
content and style guidelines more promptly and even automatically complied with.
ƒ Phase findings show that direction and control can be established early, the model does assist
in delegation and monitoring, and alignment with strategy is possible. Suggested modifications
include planning of maturity goals to reflect resource availability, risks and contingencies, and
introducing a surprise element to ensure freshness and reduce monotony.
Transition phase; during which the practice transfers ownership and control to the ‘client’:
ƒ Use of knowledge criteria to test outputs and performance allowed the knowledge manager to
consult rather than manage or participate, enabling practice oversight, quality control, efficient
use of resources and skills transfer.
ƒ Teams used knowledge criteria to better manage themselves, determine own readiness and
evaluate own need for assistance.
ƒ Maturity levels have been used to suggest future iterations, functionality, unresolved
requirements and help manage budgets and expectations.
ƒ Performance measured in the first few months against the maturity levels provided more
specific, communicable feedback to management.
ƒ Use of criteria such as ‘sufficient’ and ‘accurate’ is illustrated in a request for assistance in
completing web pages prior to publication.
ƒ Findings include that the model enabled performance management and governance, with
monitoring and control of operational activity and team management possible. More stringent
management of knowledge management may improve compliance and formalisation of
performance management, but at the possible cost of adoption and resistance to change.
Practice phase; during which teams manage knowledge independently:
ƒ Standards allowed the practice to delegate rather than participate. Monitoring project criteria
found a best-practice initiative’s knowledge to be organised, accurate, usable, punctual, up to
date and accessible, but requiring audits to confirm capture and storage in one area.
ƒ The model fostered progress. Evaluation at an aggregated level during a management review
found the knowledge management practice had matured from none to basic in eight months
and was expected to achieve managed within a further six months.
ƒ Information supported management decisions. Progress helped justify a plan to select and train
appropriate people to act as knowledge management coordinators, and performance
information has justified a decision to survey validity and usefulness of portals every six months.

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ƒ Findings are that the model enables output and process improvement, decision making, rapid
monitoring of key issues and interactions, learning and review of the knowledge management
practice.
Other areas in which standards and governance have had a contribution:
ƒ Promoting individual contribution has inspired a series of reward and recognition initiatives that
use criteria to judge entries. The first, a “Day of Collaboration”, provides a forum for twelve
exhibitors to share best practices with other employees in an informal atmosphere, and awards
one plant-related and one people-related winner and four runner-ups. A second bi-monthly
challenge receives peer nominations for employee knowledge sharing. Winners from both of
these initiatives are entered for the Sasol Knowledge Sharing Luminous award, a prestigious
company-wide gala evening.
ƒ Knowledge sharing reward-and-recognition was chosen as a company wide Best Practice
ƒ The knowledge manager has been appointed a member of the benchmarking team.
Other factors may have contributed to knowledge management performance and governance:
ƒ Renewed organisation impetus and attention may have encouraged compliance.
ƒ Organisation predisposition to knowledge that may have eased adoption, lowered resistance,
encouraged participation and reduced the need for knowledge management ‘marketing’.
ƒ Previous knowledge management failure may have predisposed managers towards these more
quantitative or rigorous approaches.
ƒ Light levels of control exercised by knowledge management may have reduced resistance and
encouraged participation.

4. Conclusions
This paper has proposed a model for governance that consists of standards for direction and
control and processes to apply these standards to knowledge management throughout its lifecycle.

Knowledge management outcomes in the case study organisation cannot be ascribed solely to
governance. Environment and research methodology prevent confirmation of cause and effect
relationships. However outcomes, positive management feedback and comparison with previous
efforts suggest that governance has been of benefit to knowledge management in the case study
organisation.

Findings suggest this model is strongly performance management oriented. It has successfully
contributed to knowledge management direction and control with little modification since first
introduction. The model has been applied to governance in reviewing of knowledge management
performance and standards themselves, and improving alignment with strategy, transparency,
delegation and monitoring. Issues related to organisation, tangibility of knowledge and
measurability of knowledge management have been minimised. These confirm the model is
capable of governance and suited to knowledge management governance.

Assessment of the model’s performance is hampered by availability of similar projects to compare

against, no quantitative performance audit, a qualitative research methodology and the short test
duration. Overall results however suggest most intended outcomes have been achieved.

It may therefore be concluded that governance has been beneficial to knowledge management in
Sasol Synfuels, the model has subjected knowledge management there to governance, and has
performed satisfactorily. Limitations do restrict transferability of the model to other organisations,
and further research is warranted before making overly optimistic claims (Storey and Barnett 2000).

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Innovation Management: Complexity and Systems
Thinking
Paul Otterson, Zoë Dann, Ian Barclay and Peter Bond
Liverpool John Moores University, Merseyside, UK
[email protected]
[email protected]
[email protected]
[email protected]
Abstract: New Product Development (NPD) is one of the most complex organisational environments that
exist. The NPD process ranges from the simple repositioning of products in new markets through to the
development of products that are entirely new to the world. In the latter case, the degree and level of
complexity and innovation can be extreme because we are introducing a new component into a complex
adaptive system. In this case, not only is the NPD process inherently difficult, the problem of complexity is
extended by the nature of the product being developed and the market into which it is to be launched. It is the
role of management that must bring together the product’s development process and launch it into the market
successfully.

In the last few years, the science of complexity theory has been developed and various attempts have been
made to relate this to the NPD environment. This paper describes our work in this area and shows how we
have developed a NPD Complexity Application Model (CAM) that represents the management processes
encompassing the three dimensions of NPD:
ƒ Activity and process management
ƒ Knowledge management, development and dissemination
ƒ Learning development and application
The paper then goes on to show how the use of systems thinking may be used to address the details of the
CAM to allow practitioners to better understand the knowledge requirements of the NPD process. It shows
how the use of soft systems thinking may be used to aid the practitioners’ understanding of the root definitions
of NPD knowledge and to define customer requirements and educate customers.

Keywords: New product development, complexity representation and application, systems thinking,
knowledge management, learning organisation.

1. Introduction
In many companies, NPD is both a creative process and also a highly formalised and systematic
project. There are two fundamental concerns. First, that the product is truly right for its target
market (acceptable to the targeted end-users). Second, whether the organisation/system that will
deliver the product (and which is co-designed with it), will be truly capable of delivery.

The complexity of NPD not only lies in the number of components that have to be drawn together
to make the final product, but in the nature of the adaptive human system that needs to draw it
together. Arguably, the complexity of NPD from a systems perspective is greater than more
established and stable systems of production and would be nearer the ‘edge of chaos’. The
introduction of product introduction management systems is considered an attempt to create order
and predictability from an otherwise chaotic process, even though this may have the effect of
reducing the freedom for creativity. Therefore a balance has to be struck between the formal
(structured and tightly coupled) and the informal (less structured and loosely coupled) systems
respectively both of which are integral parts of the same NPD system.

The basic premise of our adaption of the CAM model (fig 1) to NPD is, that because of the scale
and complexity of the NPD unpredicted events will occur, creating the opportunity to identify
knowledge gaps. This presupposes that there is recognition of such events based on a dissonance
between predicted and actual performance, Boisot explains this as the scanning process. (Boisot,
1995). The link points in the scanning process can be mapped to the organisation’s ‘intelligence’
function and its ‘environment’ in Beer’s Viable Systems Model, (a cybernetic systems approach to

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modelling organisations). More simply put, it is the proactive activity of information gathering
between the organisation and the wider community in which simultaneously exists, serves,
competes etc. It is here that the mutual engagement of formalised and informal systems is needed
for accumulating, converting and disseminating knowledge.

We can define “formal systems” here as being principally populated from within the organisation
such as an internal project team based on a process stages of NPD (and may have specialist
external members co-opted to it) and “informal systems” principally populated by people external to
the organisation such as a Community of Practice (CoP), professional institution etc. By
encouraging both formal (internal) and informal (external) systems a company develops a more
holistic knowledge generation capability. To paraphrase Bond and loosely apply Ashby’s Law of
Requiste Vareity, “The more an individual learns and the more they share, the greater the variety of
situations and events they and their community are able to handle. The more problems they are
able to solve, the more strategies their community has for dealing with unanticipated events”.
(Bond, 2004)

2. CAM in NPD
The basis of the CAM model development and its relationship to complexity theory on which it was
based was discussed in an earlier paper (Dann & Barclay, 2005). The following is a brief recap:
ƒ Central core: of the CAM uses as its basis the “flow” from Organisation to Evolution. This
interacts with the organisation’s formal and informal systems and processes.
ƒ Formal aspects: The left-hand side “box” represents the organisation’s formal knowledge,
processes, systems and procedures that deal with foreseen/predicted potential events through
contingency planning and systems.
ƒ Informal aspects: The right-hand side “box” represents the organisation’s informal knowledge
and learning processes etc. that deal with unforeseen events through the capability of the
organisation’s people and culture.
The spiral between formal and informal represents the continuous interplay between the two.
ƒ Confirmation of knowledge: This has two dimensions. If the events “match” requirements
and/or predictions, then the existing knowledge is valid and is confirmed. If events create a
“mismatch” then the new, appropriate knowledge has to be incorporated, validated and
confirmed. In either case, new learning may be absorbed.
ƒ Incorporation of learning: Again, this has two dimensions. Whether events “match” or
“mismatch” new and appropriate learning may be incorporated into the organisation as required
for improvement
ƒ * Organisational development: Here there are two extremes. If the formal processes work
well, then the organisation’s knowledge base is confirmed as being correct (i.e. matches). If the
formal processes do not work well enough (mismatches), then the learning from the informal
processes may be built into the formal processes. Minor perturbations are addressed by the
formal systems that are capable of dealing with them on an ad hoc basis by internal teams,
major perturbations where the formal system is unable to cope (Ashby’s Law - where the
disturbance in the environment has greater variety than the system has capacity to cope with) is
aided by the inclusion of an informal system (CoP).
It is the informal aspects of the model (right-hand side “box”) that exhibit the basics of complexity
theory. It represents the organisation’s informal knowledge and learning processes etc. that deals
with unforeseen events through the capability of the organisation’s people, culture and its
interaction with informal systems (CoPs). This model is, in effect, a system that adapts through a
process of ‘self organisation’ and selection into coherent new behaviours, structures and patterns,
in short, a ‘learning organisation’ model.

For management, access to knowledge held and created in both internally and from CoPs, can be
a driving force in the successful application to NPD. The managerial challenge is to allow CoPs to
flourish and so, must be comfortable with creating and joining them and embedding the knowledge
they bring into their formal systems. The managerial environment is a dynamic ‘Human Activity

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System’ that should learn, adapt and evolve. Understanding the relationship between the whole
system, the organisation and its relationships to CoPs is vital, and it is here the CAM model acts a
conceptual guide as to the “ideal” system, one that self-organises, learns, adapts and evolves with
its environment.

ORGANISATION

TO DIRECT
& CONTROL

FORMAL INTERACTIONS INFORMAL

COMFIRMATION OF KNOWLEDGE

INCORPORATION OF LEARNING
RESULTING IN

FORESEEN EVENTS UNFORESEEN

REQUIRING

PREDICTED ADAPTATION REACTIVE

LEADING TO

SYSTEMS EVOLUTION FLUID

ORGANISATIONAL DEVELOPMENT

Figure 1: Complexity application model

3. CoPs for NPD in SMEs

Communities of practice differ from the ‘formal systems’ that naturally form part of the NPD process
(user focus groups, project task teams etc.), they share a common concern do and continuously
learn how to do it better through regular interaction.

“The term ‘community of practice’ is of relatively recent coinage, even though the phenomenon it
refers to is age-old. The concept has turned out to provide a useful perspective on knowing and
learning. A growing number of people and organizations in various sectors are now focusing on
communities of practice as a key to improving their performance. Communities of practice provided
a new approach, which focused on people and on the social structures that enable them to learn
with and from each other. Today, there is hardly any organization of a reasonable size that does
not have some form of ‘communities of practice’ initiative. A number of characteristics explain this
rush of interest in communities of practice as a vehicle for developing strategic capabilities in
organizations:
ƒ Communities of practice enable practitioners to take collective responsibility for managing the
knowledge they need, recognizing that, given the proper structure, they are in the best position
to do this.
ƒ Communities among practitioners create a direct link between learning and performance,
because the same people participate in communities of practice and in teams and business
units.
ƒ Practitioners can address the tacit and dynamic aspects of knowledge creation and sharing, as
well as the more explicit aspects.
ƒ Communities are not limited by formal structures: they create connections among people across
organizational and geographic boundaries”. (Wenger, 2006)
We are all familiar with external CoPs that loosely include members with shared interests, such as
Knowledge Management. CoPs like this give a wide airing to a variety of ideas but are not normally

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aimed to a specific company problem. There are other communities grouped around a shared task
orientation, such as user self-help groups for Microsoft Developers. Here the shared knowledge is
very much more specific to the Individual’s tackling a task problem, and potentially common to all
members. Organisational CoPs mentioned by Wenger are based for larger organisations.

What differs in our approach is our aim to apply this to NPD process within small local companies
(typically the small – micro business sector < 50 employees), so it is clear that for CoP to work it
must become a wider organisation, encompassing key stakeholders with a common interest (e.g.
customer/supplier focus groups, 3rd party specialists, company employees etc) who are known and
trusted by the company to be included in their NPD process. Such a CoP needs to encompass the
SME and its external support in a symbiotic relationship. Hence it will both influence and be
influenced by the organisation’s structure and its communication practices, as the key elements for
success for CoPs appear to be shared vision, open-mindedness (especially in management) and
inter-organisational knowledge sharing. Our intention was to use the CoP to develop a discourse
on Continuous Improvement (CI), stemming from a Senge (Senge, 1990) notion of creative tension
between the informal and formalised systems. To our CoP, CI extends the concept Continuous
Product Innovation as defined by Bartezzaghi et al (in Chapman R, Hyland P, 2003) to all aspects
of innovation and management related to NPD.

4. Gaining knowledge through systems thinking within the CoP

Knowledge needs structure. It is the creative tension between the constraining and enabling
aspects of structure that provides the framework to change. Innovation stems from application of
knowledge to a dissonant state when a level of dissatisfaction with the status quo has been
reached. At this point the informal system pushes change onto the formalised systems. The
process of evaluating the acceptability of designed systems as a continuous cyclical model stems
from our work in innovation techniques, (Bond P & Otterson P, 1998 and Bond P, 2006). The
methodology chosen to implement the cycle was based on Checkland’s Soft Systems Methodology
(SSM).

"Systems-based methodologies for tackling real-world problems in which the known-to-be-desirable

ends cannot be taken as given. Soft systems Methodology is based on a phenomenological
stance... a philosophical position characterised by a readiness to concede primacy to the mental
processes of observers rather than to the external world; this contrasts to a positivist stance...
characterised by a readiness to concede primacy to the given world as known through
experimental evidence." (Checkland 1991)

Soft Systems Methodology was created to deal with problems where a plurality of viewpoints (i.e.
stakeholder centric world views which also called ‘weltanschauung’) needed to be synthesised into
a singular working definition. Within our view, ‘Knowledge Management’ is definable as a Human
Activity Systems (HAS). HAS are social systems, and as such are purposive, which Checkland
defines as "describable by an observer as serving a purpose" and so the purpose of the system
defines which elements are relevant for inclusion and which other systems it relates to.

The tools of SSM are the development of root definitions of stakeholder weltanschauung,
conceptual modelling and testing. The different backgrounds of the CoP lead to a variety of
modelling techniques but all based on systems thinking. Root definitions are the key tool used for
engendering discourse within the CoP. It was used to further develop the definition of a CoP -

A CoP is a system owned by its actors (members) who value and seek collaboration (their world
view or the values they hold and bring to the system and which influence their behaviour and
attitudes). The purpose of the system is to achieve a positive transformation in their collective
capacity to solve problems (so they are customers of their own system, i.e. their own marketplace)
in the context of its host community (environment), in a timely and effective manner in the service
of the owners of the problems they are motivated to solve.

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5. Conclusions
"…Scientific and technological knowledge needs to be combined with other forms of
expertise, such as knowledge of markets and customer needs, to create innovative
new products and services. We have to manage innovation more effectively and be
more ambitious in exploiting our ideas to the full. The ability to market products and
services successfully both at home and abroad is essential to ensure properly targeted
innovation. It is only when ideas are commercialised that jobs and wealth are created."
(DTI 1998).
Such a push in the late 1990’s/ early 2000s justification the creation of a Technology Management
group within the University, funded to our work with local SME businesses in NPD. Specifically
included were a variety of subject specialists with a common interest in enterprise and innovation,
and a common attempt to embed systems and systems modelling as our ‘lingua franca’. This is
not a claim of a unique grouping; many Universities and Institutions provide NPD services. What is
different is our self-perceived view as our group being a CoP. Wenger’s writings on what
constitutes a CoP and how have been influential on changing our weltanschauung, this in its own
way affects our group organisation, client interactions, and methods for generating and
disseminating knowledge within the CoP. In the latter point of knowledge generation and
dissemination Wenger’s paper on shaping knowledge strategy through CoPs has been most
influential. (Wenger, 2004)

Setting up a group that sees itself and acts, as CoP specifically aimed at small businesses NPD
around the expertise of the company and University staff is relatively new and evolving. Its
success may not only be measurable by the number of problems it has interventions in. Its success
needs to be measured by the increase in its knowledge base and hence capability to make useful
interventions for its members. What we have found is the common language of systems and
system based tools, does allow greater sharing of ideas and knowledge amongst the community,
and a greater uptake and tightening of formal methods within client companies.

References
Boisot M (1995) “Information Space : A framework for learning in organisations, institutions and
culture.” International Thomson 1995 ISBN 0 415 11490 X
Bond P, Otterson P (1998) “Creativity Enhancement Software – A Systemic Approach”
International Journal of Technology Management 1998 Vol 15
Bond P (2004), “Communities of Practice and Complexity: Conversation and Culture”,
Organisations & People journal, Vol 11 No 4 (November 2004), Association for
Management Education and Development (AMED).
Bond P (2006) “Emotioing, Foundational Knowledge and Enterprise Creation” Organisations &
People Volume 13 Number 1 2006 Special edition on Knowledge Management
Chapman R, Hyland P (2003) “Complexity and Learning Behaviours in Product Innovation”
Technolovation 23. Pergammon
Checkland P.B. (1991) “Systems Thinking, Systems Practice” (1991 edn.), Wiley& Son 1991
ISBN 0 471 27911 0
Dann Z, Barclay I (2005), “Complexity Theory and Knowledge Management Application”,
Proceedings European Conference Knowledge Management 2005.
DTI (1998) White Paper : “Building the Knowledge Driven Economy” Chpt 2 : Creating and
Exploiting Knowledge HMSO 1998
Senge P.M. (1990) “The Leaders New Work: Building Learning Organisations” Sloan Management
Review 1990 / Fall pp. 7-22
Wenger E (2004) “Knowledge management is a donut: shaping your knowledge strategy with
communities of practice”. Ivey Business Journal, January 2004.

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Organizational Knowledge Transfer: Turning Research
Into Action Through A Learning History
Robert Parent and Julie Béliveau
Université de Sherbrooke, Québec, Canada
[email protected]
[email protected]

Abstract: Organizational learning and knowledge management experts are searching for more appropriate
research tools to tackle the difficult concepts of organizational learning and knowledge. This paper provides an
overview of the learning history methodology, first proposed by Kleiner and Roth, in studying knowledge
transfer activities. The learning history methodology, typically used within an action research environment, is
designed to allow recognition of what has been learned in the past to guide stakeholders in the dialogical
generation of a new future. It is a qualitative measurement tool of what has been learned, and remains
sensitive to contextual factors, since it is based on the perceptions of the organization’s actors and the
theoretical sensitivity of the researcher. This paper surveys the learning history literature to determine the
roots, benefits and challenges of this research method. We will then demonstrate the advantages of using this
approach to studying organizational knowledge transfer by presenting a case study where it is being used
within participatory action research logic. Finally, we will provide lessons learned from our ongoing research
and draw on implications for practice and future theorizing.

Keywords: Knowledge transfer, learning history, organizational learning

1. Introduction
Organizations of all types are struggling to learn to survive in a dynamic environment of increasing
complexity. This requires that organizations employ mechanisms to reflect collectively on their
experience, make sense of it and assess their investment in learning efforts (Roth and Kleiner
1998). When asked what topic will have the greatest impact in the future of organizational learning
(OL) and knowledge management (KM), a panel of experts answered that it will be “research
methods and measures of OL/KM” (Easterby-Smith and Lyles 2003). These experts are searching
for more appropriate tools to address learning and knowledge concepts, both difficult to tackle.
Some suggest a greater utilization of empirical research designs and qualitative research methods
that are sensitive to contextual factors, such as narrative methods, to better understand processes
related to organizational learning and knowledge management (Scholl et al. 2004; Easterby-Smith
and Lyles 2003). Until now, few ideas have been presented on how to improve learning from
experience and how to capture and disseminate knowledge in organizations. Many efforts at
helping organizations learn have failed because the skills necessary to make effective OL/KM
interventions, such as reflection and dialogue, are difficult to master and do not always provide
organizations with effective solutions to promote learning and solve their business problems (Cross
and Rieley 1999). Employee surveys, best-practice reports, traditional case studies and the use of
consultants are all tools that fall short in helping organizations reflect collectively on past
experience in a way that helps them to prepare for future actions (Farr 2000).

Meanwhile, the use of stories for helping organizations learn and transfer tacit knowledge is gaining
widespread favour among both practitioners and academics (Cortese 2005; Sole and Wilson 2002;
Royrvik and Bygdas 2002). Narration is increasingly seen as the privileged form for constructing
and expressing one’s own personal stories, and organizations are viewed as narrative artefacts
(Cortese 2005; Klein 2005).

The learning history methodology, typically used within an action research environment and
designed to allow recognition of what has been learned in the past to guide stakeholders in the
dialogical generation of a new future (Bradbury and Mainemelis 2001), seems to address the
needs of the OL/KM experts cited earlier. However, few authors have demonstrated the potential of
this qualitative research methodology in studying knowledge management, and more particularly,
knowledge transfer activities. The purpose of this paper is to suggest the emergence of a new
action methodology, the learning history, proposed by Roth and Kleiner (1995a), to study
knowledge transfer initiatives. It is intended for both scholars and practitioners who want to explore

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new ways to study knowledge and learning concepts. First, we present an overview of the learning
history literature to determine the roots, benefits and challenges of this research tool. We then
demonstrate the advantages of using learning histories to study knowledge transfer by presenting a
case study where it is being used within participatory action research logic. Finally, we provide
lessons learned from our ongoing case studies and draw out implications for practice and future
theorizing.

2. Overview of the learning history methodology

First designed to help pilot projects transfer their learning to other parts of an organization, the
learning history is a qualitative research methodology that considers human perceptions, actions,
opinions and evaluations (Cortese 2005). It was created in 1994 at MIT’s Centre for Organizational
Learning in response to the needs of organizations to engage in collective reflection. Some see this
narrative method as a qualitative measure of knowledge (Greco 1999) or as a knowledge
management tool, especially effective for managing personal and context-specific tacit knowledge
(Milam 2005). The learning history also qualifies as inductive research, since researchers are not
trying to prove or disprove starting hypotheses. The naturalistic/constructivist perspective is used to
capture and construct stories by collecting data from a wide group of people (Milam 2005).

Inspired by Van Maanen’s (1988) ethnography tool, called the jointly told tale, the learning history
document is a 20- to 100-page narrative of an organization’s recent critical episodes, presented in
an engaging two-column format (Bradbury and Mainemelis 2001; Kleiner and Roth 1997a). The
right-hand column presents an emotionally rich story of relevant events through the interwoven
quotations of people who took part in them, including champions and skeptics, people who were
affected by them, or people who observed them up close. The left-hand column contains the
learning historians’ analysis, which identifies recurrent themes in the narrative, asks questions
about its assumptions and raises “undiscussable” issues. The content of the left side of the
document is based on recognized research in the areas of systems thinking, organizational
effectiveness and organizational behaviours (Cross and Rieley 1999). Once written, the learning
history document is disseminated through group discussions with people who were involved in the
change effort and others who might learn from it. Thus, a learning history is as much a process as
it is a product (Roth and Kleiner 1995a). It brings tacit knowledge to the surface, codifies it and
turns it into an actionable knowledge base (Kleiner and Roth 1996). More generally, the learning
history “is inspired by belief that legitimate or valid knowledge results from an emancipatory
process, one that emerges as people strive toward conscious and reflexive emancipation,
speaking, reasoning, and coordinating action together, unconstrained by coercion” (Bradbury and
Mainemelis, 2001, 352).

3. On what is it based?
The roots of the learning history are manifold. In their first paper on the methodology, Roth and
Kleiner (1995a) state that the learning history draws upon theory and techniques from ethnography
(to understand the realities of organization members from their points of view), journalism (to
present the story in an accessible and compelling way), action research (to guide new actions
through reflection and assessment of learning efforts), oral histories (to describe history with
narratives) and theatre (to disseminate narratives that are often emotionally charged). Taking a
systems view of organizations, the learning history methodology starts with a premise that all
individuals are actively trying to do their best and that feedback to compare what was
accomplished to what was expected is necessary to sustain any improvement process (Roth
2000). However, the learning history process differs from most evaluation approaches, where the
only feedback people get is from an expert’s assessment (Roth and Senge 1996).

The learning history can also be viewed as an intervention methodology, positioned in the field of
action research at the organizational level of analysis (Coghlan 2002), and more precisely along
the lines of participatory action research, since the research is co-designed and co-developed
(Bradbury and Mainemelis 2001). The learning history methodology builds upon organizational
culture research by using insider/outsider teams who take on the role of learning historians (Roth
2000). Insider/outsider research is particularly useful when the research goal is to generate rich

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appreciation of immediate or unfolding situations grounded in organizational participants’

experiences, or to give details about beliefs and assumptions held by these participants (Louis and
Bartunek 1992). In contrast to the traditional research approach where researchers collect and
analyze the data without the participation of people in the organization, insider/outsider research
encourages ongoing dialogue and heterogeneous interpretations, which can result in more robust
theorizing (Louis and Bartunek 1992). While the outsider searches for knowledge that can be
generalized to many situations, the insider wants to develop knowledge of practical use. In that
sense, insiders and outsiders complement each other and foster a better understanding of the
ways that organizational members make sense of their world (Louis and Bartunek 1992).
Furthermore, the insider/outsider team avoids the separation of experts’ evaluation from the
organization’s own learning efforts (Roth and Kleiner 1995a).

4. What are the benefits of its use?

For researchers, the learning history methodology helps them make their work available to the
larger community of scholars and practitioners (Bradbury and Mainemelis 2001) by using a text to
focus conversation and experiential engagement. As a result, the learning history contributes to the
body of generalizable knowledge about what works and what doesn’t in management (Kleiner and
Roth 1997a). Learning histories also generate a lot of information on the organization’s way of
learning, which allows learning historians to work with this material as an ongoing resource,
spinning off other documents, training programs and learning tools from the same material (Roth
and Kleiner 1995b) and facilitating future research (Jacques 1997).

For participants, the learning history is a collective and inclusive process (Farr 2000) which
produces positive social change (Bradbury and Lichtenstein 2000). First, it builds trust when people
see their anonymous comments in the learning history document (Kleiner and Roth 1997a; Farr
2000). It also shows them that their views count (Farr 2000). For example, in one organization, the
learning history forced senior managers to recognize the teams’ stress level and recommendations
concerning the staffing process for future project organization (Cross and Rieley 1999). Moreover,
the group discussions favor collective reflection and help people openly express their fears,
concerns and assumptions, which builds trust and a sense of community because people feel they
are not alone in their efforts to improve the organization (Kleiner and Roth 1997a). Another positive
element for participants can be the narrative interviews, where they recall the learning experience
and often find that they have “learnt again” through the process (Cortese 2005).

The learning history is also a new qualitative way of measuring organizational improvement efforts
without killing their learning value (Kleiner and Roth 1997b), since it allows people to tell their story
without fear of being evaluated (Roth and Kleiner 1995a). The process is regarded as safe by
participants (Farr 2000). By transforming tacit knowledge into explicit knowledge, the learning
history text acts as a transitional object through which opinions are made discussible in a concrete
way because they refer to observable data (Bradbury and Mainemelis 2001). According to Argyris
(1990), these conditions facilitate reasoning, which in turn favors learning. For example,
Kleinsmann and Valkenburg (2005) used the learning history methodology for their case study on
learning through collaborative new product development and found that it is an appropriate method
to identify learning opportunities as well as a structured and transparent way of analyzing case
study data.

5. What challenges does it bring?

Bringing this type of tool into organizations can be a revolutionary enterprise. The learning history
dissolves hierarchical privileges and favors conversations that create meaning and common
objectives to guide future organizational actions (Roth 2000). In this context, researchers do not
always get the necessary support from the organization. Even if most organizations agree on the
importance of organizational learning, few of them are willing to invest the time, courage and
honesty it requires (Roth and Kleiner 1998). For example, some executives are reluctant to
undertake a learning history because of its cost, both in employee time and consulting/researching
fees (Parnell et al. 2005). Also, building insider/outsider collaboration may require some time, since
insiders often lack the necessary research skills and require training (Louis and Bartunek 1992).

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Furthermore, in a business culture where action is glorified, managers often find it difficult to take
the time to reflect (Roth and Kleiner 1998) under the pressures of proving results, serving a political
agenda, identifying problems and finding solutions (Milam 2005). In this context, to get the most out
of the learning history process, the organizational climate has to welcome contradictions,
uncertainty and conflict as learning opportunities (Milam 2005). If the organizational context does
not favor a transformational learning approach, the learning history can set off flames that burn up
the organization’s good will and resources (Roth and Kleiner 1995a).

Participants’ responses to learning history documents are not always positive. Managers and
consultants who promote learning efforts are often disturbed by what the learning history actually
uncovers (Kleiner and Roth 1996). Moreover, dissatisfaction is more visible when people learn and
become aware of the gaps between their aspirations and their corporate reality (Kleiner and Roth
1997b). However, that is exactly where learning histories have their value: in their capacity to bring
out multiple perspectives stories that make visible to an organization what is collectively hidden
(Roth 2000), such as the psychological and emotional problems faced during the transformation
effort (Milam 2005). In that sense, learning histories are like mirrors to organizations. They raise
issues that people want to talk about but have been afraid to discuss openly (Kleiner and Roth
1997a).

The learning history text also brings forth contradictions between suppressed and better known
voices, as well as between the way things are supposed to be done and actual practices (Bradbury
and Mainemelis 2001).To deal with these challenges, learning historians have to find the right way
to bring out the issues of the story without blaming anyone (Kleiner and Roth 1996). Indeed, the
process of collectively reflecting and assessing the learning history sometimes goes against
people’s expectations that senior management should tell them what to do (Roth 2000).
Researchers have to continuously negotiate practitioners’ involvement in the learning history
(Bradbury and Mainemelis 2001).

Conflicts about the meaning and causes of organizational events can also arise within the
insider/outsider research team (Louis and Bartunek 1992). The team must then be able to discuss
these conflicts openly and not rely on compromises, which would result in poor research or even
the dissolution of the team. It is also crucial to ensure that no particular perspective is over
represented in the insider/outsider team.

Another challenge of the learning history methodology is related to its two-column format, which is
quite unusual and must be formatted carefully to avoid reader confusion (Coghlan 2001). For
researchers, who are not used to telling the story through the voices of other people, the format
can be difficult to master. Some are not sure what to write in the left column (Kleiner and Roth
1996). Furthermore, there is no obvious place in this format for them to insert their observational
field notes. Researchers are also faced with the challenge of creating an engaging text for many
people whose learning styles can be different (Bradbury and Mainemelis 2001). For their part,
managers would like a more prescriptive document, one that would include more synthesis,
analysis and recommendations (Kleiner and Roth 1996). All in all, the two-column format needs
further testing, because experience with it is limited. In the first section of this paper, we presented
an overview of the learning history methodology. We started with the roots of this new approach,
followed by its benefits and the challenges related to its use. The next section of this paper will
demonstrate the relevance of using learning histories to study knowledge transfer activities. We will
do so by presenting a case study of a project developed by the Knowledge Transfer Research
Laboratory of the University of Sherbrooke, where the learning history was used within participatory
action research logic.

6. Case study: Using a learning history methodology

The Knowledge Transfer project team came together as a consortium in 2003 and included
researchers and administrators in workplace health and safety from a rural Anglophone province,
administrators in workplace health and safety research from a combined urban and rural
Francophone province, and a team of business school researchers in workplace design and
knowledge transfer from the same Francophone province. Two of the partners in this project had

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worked on knowledge transfer initiatives together before. The backgrounds of the researchers were
multi-disciplinary, including sociology, psychology, systems thinking, political science, ergonomics,
health and safety. The teams aim was to tell the story of the project in a case study that was true to
the experience and perspectives of all the participants. They also intended to use the learning
history to track the project milestones for reporting purposes. Finally, and perhaps most
importantly, they wanted to stimulate and inform conversation on what actually happened, why it
happened and how the team could learn from what had happened. In other words, they hoped to
do as Houshower (1999, iv) suggests and “go far beyond a post audit review of a project, digging
more deeply into the motivation and passion of those involved in the endeavour.”

The team began by framing the project within participatory action research logic. William Foote
Whyte (1991), in his review of the field of action research, differentiates action research from
participatory action research (Whyte, Greenwood, and Lazes 1991). In participatory action
research, people in the organization or community actively participate with the professional
researcher throughout the research process from the initial design to the final presentation of
results and discussion of their action implications. They thus engage actively in the quest for
information and ideas to guide their future actions and participate directly in the research
processes, which in turn are applied in ways that benefit all participants directly. Participatory
action research is usually described as cyclical, with action and critical reflection taking place in
turn. The reflection is used to review the previous action and plan the next one. Participatory action
research is very useful when used across different organizations, with participants who come from
different situations and are involved in different activities.

7. Bridging theory and practice

In all, six senior members of the project participated in the first phase of the learning history. These
participants represented a multitude of different backgrounds in terms of language, culture,
geographic location, education level, responsibilities, needs and objectives. These differences
proved to be at times complementary and at other times conflicting. For example, some members
of the group were focused on knowledge transfer, others on health and safety, others on financing
to ensure survival of their group, etc. From a life cycle perspective, one of the partners is a mature,
well-established and recognized workplace health and safety research organization, while the other
occupies a more junior position and is struggling to be recognized as a research representative in
its health and safety community. To capture the differences in these backgrounds, we needed to
develop a good understanding of the differences between theory and practice.

Traditionally, theory is an attempt to answer the question of why a specific phenomenon occurs
(Sutton and Staw 1995). Why do people get involved in one project and not another, why do people
become influenced, why does conflict happen and get resolved. But a theory that tells us why a
phenomenon occurs, does not really tell us how it occurs or even more importantly, how we can
create, develop or deter that phenomenon. According to Friedlander (2001), to turn theory into
practice, we must ask how. To make practice into theory, we must ask why. The practitioner tends
to ask how; the researcher tends to ask why. But it is the integration of the how and the why which
will result in a holistic, systemically enriched and useful practice-theory. For example, to
understand how we can reduce conflict adds to our knowledge of why conflict gets reduced; and to
understand why conflict is reduced contributes to our knowledge of how we can reduce it.

For Friedlander (2001), the methodologies of traditional research and participatory research give
rise to very different theories: essentially, researcher-dominated versus participant-dominated. In
researcher-dominated methodologies, the researcher determines the research question or
hypothesis, the way data will be collected, the analytic method and how the conclusions will be
shaped. In participatory research, the population to be served or helped determine these
characteristics. In the former, the researchers and their audience achieve the primary learning; in
the latter, the participants and their constituencies achieve the primary learning. The participatory
action research logic allowed us as a group to begin to address the issues of how and why certain
conflicts happened during the project. The focus of the consortium was solely on the project-related
activities of the participants, which are distinct from regular operations because they involve “doing
something which has not been done before and which is, therefore unique” (Project Management

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Institute 1996, 5). By focusing in on the unique nature of the project, we could separate the
participants’ regular exploitation type work from the exploration type work associated with a new
project (March 1991).

The learning history methodology then provided the vehicle for the team to capture in the
participants’ own words what took place, why it took place and how they perceived what took place.
The learning historian’s role was assumed by a research professional with the KT Laboratory. The
learning historian with the use of a learning history protocol covering the basic topics to be
addressed conducted the retrospective interviews. The actual interview process for the learning
history began early in the second year of the five-year project. From the outset, some of the
project’s participants only partially bought into the learning history. For example, everyone saw it as
an appropriate vehicle for tracking the “hard” facts and project events for reporting purposes. But
the “softer” opportunities of stimulating and informing conversations on what happened, why it
happened and how future action could be improved were less obvious to some of the team
members. Nonetheless, the team decided to continue with the learning history.

8. Data analysis
The method of analysis used for this learning history was to examine, categorize and tabulate the
data gathered in order to identify project milestones, including learning milestones. In general, such
an analysis consists of developing a descriptive structure of the project on the basis of the
theoretical propositions guiding the study (Yin 1997). The objective is attained when we have an
adequate narration of the facts and circumstances surrounding the project. As the project got
underway and interviews took place, the learning historian began to suspect significant differences
in perspectives from the three partner organizations. As the initial learning history document began
circulating amongst participants, it became clear that project objectives and the needs of the three
partner organizations varied considerably.

These differences surfaced in two separate ways. The first was when the director of the KT
Laboratory used the learning history to help develop a case report on the progress of the
consortium and submitted it to the six partners, asking them to look at it and become co-authors. At
the request of the funding agency, the case contained activities that had gone well (success
stories), others that had not gone as well (horror stories) and still others that were more neutral in
their impact (non-events). The reaction by the co-authors from one of the partner organizations was
rapid and decisive and clearly reflected different opinions about what had taken place thus far,
including different ontological predispositions to theory development, network development,
knowledge transfer and the development of capacity for action. The conflicting interests were
significant enough to delay the decision to move ahead with the proposed case until the authors
could meet in person to discuss the project’s progress.

The second indication that the project was experiencing difficulties came at the third annual project
meeting where the differences between the groups began to generate tension. One group felt that
they were being blamed for project misfires, and accused the other two groups of not pulling their
weight on the project. It was obvious to all those involved that more time had to be devoted to
addressing the differences raised in the learning history. At that meeting, the realization that the
entire group was confronting was the difficulty of achieving “hard” results (transferring high quality
research results and programs from one Canadian province to another) through an emphasis on
concepts that many people termed “soft” (good communication, openness, honesty and trust,
networking, relationship building). After two days of, at times complimentary, and at times
conflicting conversations, the teams concluded the meeting with a more aligned understanding of
what everyone was trying to accomplish. They also agreed to go ahead with an improved version
of the case. Had the group not had the learning history to bring these tensions to the fore, it is not
unrealistic to assume that they would have remained dormant until much later into the project,
when in all likelihood it would have been too late to deal with them. The learning history was also
very useful in developing the mid-term project report required by the project sponsors.

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9. Lessons learned
Some of the most significant learning’s to come out of this experience include:
ƒ The need to obtain clear and early buy-in by all participants of a learning history methodology;
ƒ The usefulness of the “hard” aspects of a learning history for project reporting purposes;
ƒ The contributions of the “softer” opportunities of stimulating and informing conversations on
what happened, why it happened and how future action can be improved;
ƒ The ability of the learning history to raise significant issues that needed to be addressed for the
project to deliver the expected results.
For this project, the learning history helped focus attention on differences within the groups which
then had to be addressed using participatory action techniques. Since the learning history was part
of participatory action research logic, the group had a good combination of tools and techniques to
help them resolve issues and adjust the project focus. The participatory action research approach
that helped the project team get realigned included:
ƒ A project sponsored by an independent group or community,
ƒ Directed toward the discovery of information about an issue of community concern,
ƒ Aided by a facilitator,
ƒ Resulting in empowerment of the community of people involved.
This project is now in the second half of the five-year commitment and the combination of learning
history and participatory action research have contributed significantly to improving how the project
team functions. Many obstacles still remain to be overcome but participants now feel they have the
appropriate knowledge, trust level and tools to continue to develop and improve the way they work
together. Some of those obstacles include the time commitment required by both the learning
historian and the project participants. They found that a learning history requires considerable time
and effort to develop and keep up to date. They also found that the closer to real time the history is
developed and shared, the more opportunities it provides for the group to change and improve
performance before the end of a project. While considerable, the time investment in a learning
history is far outweighed by the value of the knowledge it generates and synergy it provides.

Because of the perceived value of the learning history and participatory action research
methodology in this first knowledge transfer project, the team decided to repeat its use in another
project with a different set of partners. The general objectives are similar to those of the first
project, but in addition, this project involves the transfer and adaptation of a highly successful
management philosophy developed in the US health care industry, called "Putting Patients First",
to a healthcare setting in Quebec, the Centre de Réadaptation de l’Estrie (CRE). This learning
history is an open-ended story about one organization’s (CRE) journey toward proactive
humanization of patient care and management practices. It is also intended to provide additional
learning’s about project learning and improvement for readers in the organization and for others
wishing to undertake a similar journey. This is designed as a pilot project sponsored by the
Government of Quebec and the CSN, the labor union representing CRE employees.

Although this project is in its early stages, the researchers have already begun to apply some of the
learnings from the first learning history project to this project. For example, they have been careful
to make certain that everyone involved buys into the methodology; that a list of “noticeable results”
or “hard” facts are included in our interview protocol in order to link interviewees’ interpretations to
observable data; and that the interviewing and dissemination phases are kept close together in
time to allow the learning history to have the best impact possible. They are also more prepared for
difficult issues that may surface during the learning history process. The experience with the first
project has strengthened our commitment to the value of conversations as a valuable resource to
help resolve conflicts among project members and build a dialogical future.

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10. Conclusion
This paper has provided an extensive overview of the current learning history methodology. We
presented the roots of this new approach, its benefits and the challenges related to its use. This
overview will help researchers and practitioners that are new to the learning history methodology
quickly get acquainted with its origins, goals, advantages, limits and appropriate contexts while
learning what conditions are necessary to ensure its success and validity. This paper has also
contributed to empirical research by presenting a case study where the learning history
methodology is being used to study knowledge transfer activities within participatory action
research logic. To date, our empirical results convey many lessons. The first lesson learned is the
need to obtain clear and early buy-in by all participants of a learning history methodology (through
information sessions or other means). Second, “hard” aspects of a learning history can be very
useful for project reporting purposes while the “softer” aspects serve as opportunities to capture
participants’ perspectives and stimulate conversations on what happened, why it happened and
how future action can be improved. We also learned that the closer to real time the history is
developed and shared the more opportunities it provides for the group to change and improve
performance before the end of a project. Even though a learning history requires considerable time
and effort to develop and keep up to date, we believe that the time and energy invested are far
outweighed by the value of the knowledge generated.

Although the learning history provides a fresh and effective way to study learning and knowledge
concepts, it is still at an experimental stage. The potential of this new methodology in studying
knowledge transfer activities has not been fully explored. The limitations are primarily those
associated with the amount of work involved in a developing a learning history. More empirical
research is necessary to demonstrate its effectiveness in studying collective learning processes
and knowledge transfer initiatives.

11. Acknowledgements
This research was made possible in part by funding from the Canadian Institutes of Health (CIHR)
and the Centre d’étude en organisation du travail at the University of Sherbrooke.

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Systemic Methodologies and Knowledge Management: A
Survey of Knowledge Management and Systems Thinking
Journals
Alberto Paucar-Caceres and Rosane Pagano
Manchester Metropolitan University Business School, UK
[email protected]
[email protected]
Abstract: Knowledge Management (KM) arrival in the early 90s as a distinctive management field can be
linked to both the development of Organisational Learning as it was seen in the US and Japan; and to the
preoccupation of certain management authors to approach issues about knowledge in organisations using the
Systems Thinking (ST) approach. After more than ten years, KM practice in both sides of the Atlantic still
seems to be influenced by the systemic approach, as it is understood in the US. Over the last 30 years, the
UK Systems Movement has been very active and developed a strong set of well established Systems Based
Methodologies (SBM): Soft Systems Methodologies, Critical Systems, Total systems Intervention amongst
others. Although these systems methodologies have established a well solid Systemic Practice (SP) in the
UK, it seems to have had some influence on the KM field in general but there is little evidence of their being
used explicitly in KM practice. The paper discusses at a conceptual level the link between Systems Thinking
and KM in the US, exploring the theoretical approaches that were embedded in the early KM literature. A
survey of a sample of Journals in both Systems Practice and Knowledge Management areas is carried out to
assess the current exchange of concepts/methods between KM and Systemic Practice, as it is mainly
understood in the UK. The survey focuses on papers published between 1995 and 2005 that seem to have
used directly or indirectly ST and Systems Methodologies in KM practice; results indicate that there is a
reasonable number of papers that seem to have used SBM when tackling KM issues. Our objective is to raise
Knowledge Management and Systemic Practice researchers’ awareness of the possible cross fertilisation
between these two important management fields.

Keywords: Knowledge management, systems thinking; methodology, systems; survey

1. Introduction
Knowledge management has become a crucial resource in almost every organisation in its search
for improving effectiveness, efficiency and effectiveness. Systems thinking and the embodiment of
systems ideas in the so-called Systems-based methodologies has also been one of the major
developments in management in the last 30 years. The motivation of this paper is to find out
whether a cross influence between these fields of management is taking place. We start by
identifying the links between KM and ST at a conceptual level outlining the systemic approach
motivating and present in the early Knowledge Management writings of Nonaka and Takeouchi; the
paper argues that the general tone of their man book is an indication of the importance of Systems
Thinking in Nonaka’s model of knowledge creation in organisations.

In order to introduce the developments in Systemic Practice, the main Systems based
methodologies are mapped using a framework that identifies four distinctive paradigms: (1)
Optimisation Paradigm: Problem-Solving methods; (2) Learning Paradigm: Situation Improving
methodologies; (3) Critical Paradigm: Intervention and empowering methodologies; and (4)
Pluralistic paradigm: Multi methodologies. A list of the main established methodologies
representing these paradigms is compiled. It is argued that Knowledge Management al least in its
beginnings can be linked to the Learning paradigm developed in Systems thinking. To assess the
input of Systems Based Methodologies (SBM) developed over the last years and to ascertain its
influence on the Knowledge Management research and practice we surveyed journals from both
the KM and Systems Practice field. The ISI (Institute of Scientific Information) and the ABI Informs
database were used to search for articles published in a set of well established Knowledge
Management and Information Systems (which in general include research on KM) and Systemic
Practice Journals (here we include OR and Management science journals); the search was driven by a
set of keywords that will identify articles linking both fields, the search covered the period between
1995 and 2005 inclusive. The structure of the argument followed in this paper is: (1) to outline the link
between KM and Systems Thinking present in the early KM theoretical and conceptual developments;

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(2) to map the development of the main Systems-Based Methodologies (SBM) into a framework of
four stages or paradigms; (3) to survey articles in KM and ST journals to ascertain the cross influence
amongst both fields; and (4) conclusions from both the concepts explored and the survey are drawn
and further ideas for future research are drawn.

2. Knowledge management and systems thinking

It is widely acknowledged that over the last years, Knowledge Management (KM) as made a major
impact on the way that organisations are managed. Although not in its present form, the interest in
knowledge and its management can be traced back to the 60s when major companies established
Research and Development (R &D) Departments; mainly to explore and investigate new ideas and
develop prototypes of possible new products. R &D departments were given the task of
coordinating between the functional departments of Marketing, Production and Personnel.
Research findings were indeed knowledge that organisation owned and kept but partly because
they were still restricted to the problems of finding ideas for new products, knowledge was confined
to the boundaries of the R & D departments’ briefs. It was in the early 90s that one of the most
influential Management thinkers of the twentieth century, Peter Drucker predicted that there will be
a fundamental change in the way organisations will be run in the future; it was his prediction of the
increased of knowledge over production as the main shift of a post-capitalist society that gave birth
to KM management, Drucker (1993). Two years after, Nonaka and Takeuchi (1995) elaborated the
theory of knowledge-creation encapsulated into the concepts of explicit and tacit knowledge and
their roles in the process of creating knowledge. Ever since these two major events that have
marked the birth of KM, the amount of books, conferences and journals devoted to KM has
continue to proliferate and it seems that despite of being seen by some as a possible ‘fad’ doomed
to have a short life in the field of management (Jackson, 2003, pp xiv), KM is growing in importance
and has become an essential task of almost every organisation; creation and leverage of
knowledge both within the organisation and externally to their customers and shareholders has
become a constant managers’ preoccupation (Rubestein-Montano et al ,2001).

Nonaka and Takeuchi were concern with the way knowledge is created and although not explicitly,
they indicated that to better understand the process of knowledge creation, the mechanistic model
of the organisation as an entity processing information, needed to be revised and instead a more
holistic approach was necessary; so it can be said that although not explicitly the beginnings of the
KM theoretical developments, were linked to the concepts of Systems Thinking as it was
understood and conceived in the US, in particular through the work developed by Peter Senge
(1990). Nonaka and Takeouchi (1995) acknowledged both of Senge’s major contribution that is his
ideas on Organisational Learning and his search for a synthesis approach in Organisational
sciences; these have seen important theoretical contributions that somehow have cleared the field
for Nonaka’s organisational knowledge creation to arrive in the early 90s.

Also, Nonaka and Takeuchi took a clear standing in favour of a systemic view of organisations, a
view very much embedded in Japanese culture. An important part of the book is devoted to
contrast western and eastern ways of thinking; this eastern approach is very much linked to a
systems stand or systemic view as oppose to a western reductionistic or systematic way of
perceiving situations. Furthermore, there are grounds to claim that the difference has to do with
cultural issues and the dichotomy Systemic-Systematic can be equated to the philosophy
underpinning western and eastern way of thinking (Paucar-Caceres, A. 1998). The tone and
discussion of Nonaka and Takeouchi book indicates that for them, Systems Thinking was important
and implicit in the process of organisational knowledge creation which is advanced intertwined with
the discussion that the underpinning philosophy that have shaped modern Japan has lead to a
business culture that very much takes a holistic approach to situations; Japan seems to be better
equipped to cope with systemic thinking whereas the west was still entrapped in the mechanistic-
functionalist way of thinking. In terms of the different systems thinking paradigms, it can be argued
that this way of seeing the world is much close to the Learning Paradigm of Systems Thinking.

Although the systems movement in the UK has been very active in promoting the set of systemic
methodologies through the UKSS conferences and established journals such as Journal of
Operational Research, Systemic Practice and Action Research, Systems Research and Behavioural

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Science amongst others, it seems that there has not been an exchange of ideas/concepts/methods
between the field of KM and ST as it is known in the UK.

3. The systems movement in the UK

In this section, a map of the development of some of the main SBM associated with systems
thinking in the UK is proposed to further understand the influence between Systems Thinking and
KM. A framework based on the paradigms underpinning the methodologies introduces four
paradigms in the general development of management sciences and systems thinking in the UK:
(a) Optimisation paradigm: problem-solving methods (1940-1960); (b) Learning paradigm:
improving-situation methodologies (1960-1980); (c) Critical Paradigm: intervention-empowering
emancipatory systems methodologies (1980-1990); and (d) Pluralistic and Multi-methodological
Paradigm: use of multi-methodologies and pluralistic approaches (1990- ). Using time and the
paradigms developed in management sciences and the systems movement over the last decades,
a framework was constructed as shown in Fig. 1. It depicts the emergence and development of the
main systemic methodologies in the UK, showing the major direct and indirect influences between
them over the last six decades. The map depicts four main paradigms. The emergence of hard
approaches is located in the late 50s and it has been associated with the developments of
operational research (OR) in the UK and the USA and with the developments of systems
engineering/systems analysis in the USA. During the 60s and 70s, a number of soft systems
thinking methodologies emerged in the UK amongst them the more influential were Checkland’s
soft systems methodology (Checkland, 1981; Checkland and Scholes, 1990) and cognitive
mapping developed by Eden et al (1983). In the late 1980s and 1990s, Critical Systems Thinking
(CST) became prominent in the UK when ‘total systems intervention’ developed by Flood and
Jackson embraced the CST commitments in systems practice, (Flood and Jackson 1991). Finally,
the more recent debate in OR and systems communities in the UK is around the use of
methodologies in combination and acknowledging various paradigms. The term Pluralistic/Multi-
paradigmatic thinking has been coined to name the approaches under this approach (Jackson
1997, 1999, 2003; and Mingers, 1997a, 1997b, and 1999. These major methodological
developments together with the main theoretical influences of the four paradigms over time are
depicted in Fig. 1, a brief description of the paradigms follows in the next sections.

3.1 The optimisation paradigm (1940-1960): Problem-solving methods

Checkland (1981) locates the emergence and development of this paradigm in the late 50s and
60s. It was mainly an extension into management of what was the positivistic epistemology to
natural sciences. The belief that organisations can be seen as objective worlds was certainly
underpinning the early developments of classical OR/MS methods and techniques. The
Optimisation Paradigm and the development of ‘solving methods’ are generally associated with
classic Operational Research techniques and the so-called ‘hard’ approaches. Jackson (2003)
places some of the systems-based methodologies of this paradigm in what he calls Systems
approaches for ‘Improving Goal Seeking and Viability’. The methodologies to be surveyed in this
paper are:
ƒ Systems Dynamics;
ƒ Organisational Cybernetics; and
ƒ Complexity Theory

3.2 The learning paradigm (1970-1980): Situation-improving systems

methodologies
The learning (Checkland, 1981), interpretivist (Jackson, 1982; Mingers, 1980, 1984) paradigm is
the one that underpins the methodologies involved in this group. Ackoff (1993) calls this the ‘design
approach’ comprising methods that attempt to dissolve systems of problems or messes. He argues
that these methodologies differ substantially to those of the ‘research approach’ in that they aim to
tackle the context or environment where the mess takes place and trying to alleviate or dissolve the
systems of problems rather than solving it. Jackson (2003) groups the methodologies of this
paradigm under Systems approaches that ‘Explore Purposes’; here he includes ‘Strategic Assumption

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Surfacing and Testing’ developed by Mitroff (1981) and ‘Interactive Planning’ proposed by Ackoff
(1981, 1991).
The methodologies to consider in this survey are:
ƒ Soft Systems methodology (Checkland’s)
ƒ Interactive Planning (Ackoff’s)
ƒ Strategic Assumption Surfacing and Testing, SAST (Mason and Mitroff’s)
ƒ Systems Intervention Strategy (Mayon-White)
ƒ Social System Design (Churchman’s)
ƒ Cognitive Mapping, SODA (Eden’s)
Viable Systems Diagnosis (Beer’s)

3.3 The critical paradigm (1980-1990) Intervention-empowering systems

methodologies
During the 1980s, a new set of methodologies based on Critical Systems Thinking (CST), Jackson
(1992), Flood and Jackson (1991) appeared in the UK systems movement. It is a relatively new
development in the systems movement; essentially its philosophy is based on the belief that social
systems are oppressive and unequal therefore systems thinking should concentrate on the issue of
inequality of the participants. It can be argued that the main feature of these approaches is that
they try to empower the actors in the intervention. The critical systems thinking paradigm provides
the philosophical underpinnings for the methodologies in this group. CST aims to provide a
framework for those methodologies working in coercive context and in which the social and
organisational world are oppressive and unequal. There are two main approaches to be consider in
this survey:
ƒ Critical Systems Heuristics (Ulrich); and
ƒ Total systems intervention (as developed by Flood and Jackson)

3.4 The Pluralistic Paradigm (1990): Multi-paradigmatic and Pluralistic thinking

In the early 90s an interesting debate in the OR and systems communities in the UK emerged
around issues concerning the use of more that one methodology (combining them or using parts of
them); systems academics and systems practitioners have been debating the possibilities of using
methodologies from different paradigms acknowledging and recognising the strengths and
weaknesses of them. Two of the more developed current approaches to multi-methodology are:
ƒ Critical Systems and critical pluralism/complementarism as initiated by Flood and Jackson and
lately developed into ‘coherent pluralism’ by Jackson (1999); and
ƒ Multi-paradigm multi-methodology/Critical pluralism developed by Mingers (1997a, 1997b).

4. Survey of articles citing systems-based methodologies in KM journals

We started by assembling a sample of Journals that publish academic and practitioners’ research
at both fields Knowledge Management and Systems Practice. The selection is a sample of
Journals in the fields of Knowledge Management and Systems Practice and adjacent fields such as
OR, management science, and IT. The list includes journals published in the UK, the USA and
Europe. All the Journals surveyed are published in English. First we planned to survey the journals
directly using the set of keywords but this proved difficult since not all the journals websites had
search facilities so it was decided to use the ABI Informs bibliographic database search facilities.
Table 1 lists six of the most important journals that publish theoretical and research articles in
Systems Thinking and Systems practice; and ten Journals in the various areas associated with
Knowledge Management. All the Journals are well known and recognised as important in both KM
and the Systems field.

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Since the aim was to ascertain the cross influence between the field of KM and Systems practice,
we selected a set of key words that identify the field of Knowledge Managment and the field of
Systems Practice to search the KM and SP journals. The keywords were:
ƒ Knowledge Management keywords to search articles published in Systems Practice journals:
ƒ Knowledge
ƒ Knowledge management
ƒ Organisational learning
ƒ Learning
ƒ Intellectual capital
ƒ Systems Practice keywords to search articles published in KM journals:
ƒ Systems Thinking
ƒ Systems Dynamics
ƒ Viable Systems
ƒ Organisational Cybernetics
ƒ Complexity Theory.
ƒ Soft Systems Thinking
ƒ Critical Systems
ƒ Interactive Planning Strategic Assumption Surfacing and Testing (SAST)
ƒ Systems Intervention Strategy
ƒ Social System Design
ƒ Critical pluralism
The ISI Web of Knowledge Service for UK Education and the ABI/Inform bibliographic data bases
were used ; titles and abstracts of Knowledge Management and Systems Practice articles
published in the 16 Journals between 1995 and 2005 were queried for the occurrence of our set of
keywords. The ten year period was considered adequate because KM as such started in the early
90s but also because a 10 years period seems to be reasonable span of time over which to assess
the cross exchange between the systems movement and their embodiment into a set of SBM
developed in the UK and the field of KM

The survey considered only papers that have been catalogued by the ISI and ABI databases as
articles or academic papers hence, books reviews, editorials, letters, etc. were not included
because these documents are not generally cited by authors in the field. Although the search was
conducted using the ISI and ABI/Inform databases, it was mainly the output of ABI that has been
compiled because ISI is a database that includes mainly Computer Science and IS journals which
are also included in the ABI Inform ( the ABI database which includes more general Business and
Management oriented bibliographic data bases journals). Table 2 shows a sample of the main
results of the search; it groups the KM paper by the Systemic Methodologies that have been used
and details of the paper’s title, authors and Journals.

A summary of the number of paper using Systems Based methodologies is presented in Table 3
ƒ (1) These are the Knowledge Management and Systems Practice journals included in Table 1
ƒ (2) Other Journals:
Total Quality Management and Business Excellence, Decision Science; the Learning
Organization; International Journal of Operations & Production Management; Journal of Change
Management; KM World; Organisational Science; Futures; Logistics Information Management;
Information technology and People; Management Decision; Journal of Workplace learning;
Employee Relations and Information Systems Security

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Table 1: Knowledge management and systems practice journals

SYSTEMS PRACTICE JOURNALS

Journal of Operational Research Society

Interfaces
Omega-International Journal of Management Science
European Journal of Operational Research
Systems Practice/Systemic Practice and Action Research.
Systems Research/ Systems Research and Behavioural Science
KNOWLEDGE MANAGEMENT JOURNALS

European Journal of Information Systems (EJIS)

International Journal of Information Management
Journal of Information Technology
Journal of Management Information System (JIMIS)
Journal of Information Systems
Journal of Strategic Information System (JSIS)
Journal of Knowledge Management
Knowledge Management Research and Practice
Journal of intellectual Capital
MIS Quarterly (MISQ)
Table 2: Samples of articles published between 1995-2005

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Table 3: Summary of the number of KM articles using SBM

Number of Journals
articles
KM and Others
SP (1) (2)

Optimisation Paradigm: Problem-Solving methods

Systems Dynamics 15 7 8
Organisational Cybernetics 0 0 0
Complexity Theory 9 3 6

Learning Paradigm: Situation-Improving methodologies

Soft Systems methodology (Checkland’s) 7 4 3
Interactive Planning (Ackoff’s) 0 0 0
Strategic Assumption Surfacing and Testing, SAST (Mason and 0 0 0
Mitroff’s)
Systems Intervention Strategy (Mayon-White) 0 0 0
Social System Design (Churchman’s) 0 0 0
Cognitive Mapping, SODA, JOURNEY (Eden’s) 1 1 0
Viable Systems Diagnosis (Beer’s) 7 5 2

The Critical paradigm: Intervention-empowering systems

methodologies
Critical Systems Heuristics (Ulrich) and Total systems intervention 9 8 1
( Flood and Jackson)

The Pluralistic Paradigm: Multi-paradigmatic and Pluralistic thinking

Critical Systems and critical pluralism/complementarism (Jackson 1 1 1
and Flood )
Multi-paradigm multi-methodology/Critical pluralism (Mingers) 0 0 0

5. Discussion of results
Table 2 shows the results of the survey grouping the articles by the systemic approach used; the
papers were published in various journals between 1995 and 2005 inclusive. The set of Systemic
methodologies used have been grouped according to the framework of four paradigms presented
earlier. Summary of the survey results are presented in Table 3 which lists the main System-Based
Methodologies used in the area of Knowledge Management. The table groups the number of
papers published in journals devoted to both are4as KM and Systems Practice (i.e. Journal of
Operational research Society, Journal of Knowledge Management, etc as listed in Table 2); and
also includes journals in other areas of management. The results show that there is a reasonable
number of KM papers that have made explicit use of Systems Based Methodologies or Systemic
Practice (SP). Most noticeable is the case of Systems Dynamics with 15 papers, seven of which
were published in KM and SP journals. A possible explanation to this high proportion may be that in
its beginnings KM was influenced and somehow linked to Organisational Learning as championed
by Peter Senge who popularised the principles of Systems Dynamics. The results show also that
Soft Systems Methodology as proposed by Checkland is an approach that has been used in
various KM papers, most of them (four out of seven) have been published in Systems/ KM/OR
journals confirming the popularity of SSM. The survey also shows that Viable Systems Diagnosis
that is Stafford Beer Approach has been used regularly, seven papers were published five of them
in KM and Systems journals. The other area of Systems that has been used fairly extensively in
KM is clearly Critical systems: nine papers were published and eight of them in KM and SP
journals.

The rest of Systems-Based methodologies clearly have not reached or influenced the KM
community. Methodologies such as ‘Interactive Planning’, Strategic assumption surfacing and
testing’, ‘ Social systems Design’ have not been mentioned or used in KM articles; only Cognitive

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 Alberto Paucar-Caceres and Rosane Pagano

mapping (Eden’s SODA and JOURNEY) appeared in on of the KM papers. These findings are
consistent with the fact that SSM, Systems Dynamics, Viable Systems Diagnosis and to some
extent Cognitive Mapping are the most fully developed methodologies made available by the
systems community, the others can be seen as useful general frameworks and theoretical
background when practitioners approach managerial situations including KM. On the other hand,
Critical Systems (approach and not fully fleshed methodology) appears to be used frequently even
though most of the papers were published in one Systems Journal (Systems Research and
behavioural Science) It is interesting to note that not all of the KM and Systems Practice journals
have published KM papers with SBM applications; thre journals: Interfaces; Omega and European
Journal of operational research have not published papers that claimed to have used explicitly
Systems Methodologies in KM; this may be because two of these journals (Omega and Interfaces)
area US based where the UK systems movement endeavours sem to have had little influence; the
US management science journals are still biased to accept OR and classical ‘hard’ management
science articles. But also, five of well established KM/IT journals listed in Table 2 (European
Journal of IS; Journal of Information technology; Journal of Information systems; Journal of
Strategic Information systems and MIS Quarterly) appear not to have published papers in which
SBM was applied to KM

The number of KM papers using SBM published in other Journals (not categorised in this appear
as KM or systems journals) is also noticeable: the Leaning Organisation journal; published three
papers containing applications of SBM to KM.

6. Conclusions
ƒ The OR/Systems Community has been actively promoting the development and the use of
systemic methodologies over the last decades. The paper has attempted to asses to what
extent the range of these Systems Based Methodologies (SBM) developed mainly in the UK,
have been used in the relatively new field of Knowledge Management. To understand these
developments and to explore the links between Systems Practice and Knowledge Management,
the paper has: (1) outlined the links between Systems thinking and KM found in the earlier
Knowledge Management literature; (2) mapped the SBM developed in the last years into four
Systems Paradigms containing a set of specific Systemic Methods/ methodologies; and (3)
surveyed papers published in both areas KM and Systems practice during 1995 and 2005
inclusive in KM and OR/Systems Practice Journals.
ƒ Essentially the survey shows that the methodologies linked to the Learning and Critical System
Paradigms have been used fairly extensively in KM papers; these include SSM, Viable Systems
Diagnosis and Critical Systems Approach. The only method from the Optimisation Systems
Paradigm that appears to be popular when KM is tackled is Systems Dynamics although a good
proportion of them were published in journals outside the KM and OR/Systems areas. In
general, judging from the number of papers found in the survey, there has been a reasonable
exchange of ideas between the KM and Systems communities especially in the UK. It is
therefore a credit to the efforts of the UK systems community that has been promoting and
made available these Systems methodologies to other audiences; the KM community seems to
be certainly receptive to the UK systems movements endeavours and has made good use of
the systemic methodologies developed.
ƒ The paper has only touched on the possible cross influence between KM and ST at the level of
paper titles and keywords which it can be argued are only a vague indication of the said cross
influence. Both fields have authors that represent their main theoretical strands, i.e., in the
Systems area authors such as Checkland, Jackson, Flood, Mitroff, Beer, Maturana amongst
others; and in Knowledge Management there area authors that have been certainly very
influential (Nonaka, Takeuchi, Davenport, amongst others). To assess the influence of their
ideas and in order to have a better picture of the cross fertilisation happening between the
fields, a survey on the articles citing their work will be useful to have a better understanding of
the exchange between these two areas of management.
ƒ Finally, the survey only counts the number of papers published KM and Systems Practice
journals; to further assess the exchange and mutual influence, a deeper analysis if not of all
papers here sampled maybe of an exemplary paper (representing each paradigm) will certainly

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shed further light into the real exchange of ideas between these two important fields of
management.

References
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2006)
Ackoff, R. (1993), The art and Science of Mess Management. In Mabey, C., Mayon-White, B.
Managing Change, Paul Chapman Publishing, London,
Ackoff, R. (1979), The future of OR is past, Journal of operational Research Society, 30, 2.
Ackoff, R. (1981), Creating the corporate future, Wiley, New York.
Drucker, P. (1993), Post-capitalist Society, Harper Business, NY.
Eden, C., Jones, S. and Sims, D. (1983). Messing About in Problems, Pergamon, Oxford.
Checkland, P. B. (1981), Systems Thinking, Systems Practice, Wiley, Chichester.
Checkland, P. B. and Scholes, J. (1990). Soft Systems Methodology in Action, Wiley, Winchester.
Flood, R. and Jackson, M. (1991). Creative Problem Solving: Total Systems Intervention, Wiley,
Chichester.
Jackson, M. (1992). Systems Methodology for the management Sciences, Plenum press.
Jackson, M. C. (1997). Pluralism in Systems Thinking and Practice, in Multimethodology, (J.
Mingers and A. Gill, eds.), Wiley, Chichester.
Jackson, M. C. (1999). Towards coherent pluralism in management science, Journal of the
Operational Research Society, 50: 12-22.
Jackson, M. C. (2003), Systems Thinking, Creative Holism for Managers, Wiley, Chichester
Institute of Scientific Information-Web of Science: - http://tame.mimas.ac.uk (accessed 25 May,
2006)
Mingers, J. (1980). Towards an appropriate social theory for applied systems thinking: critical
theory and soft systems methodology, Journal of Applied Systems Analysis, 7.
Mingers, J. (1984), Subjectivism and soft systems methodology-a critique, Journal of Applied
Systems Analysis. 11:85.
Mingers, J. (1997a). Towards critical pluralism, in Multimethodology, (J. Mingers and A. Gill, eds.),
Wiley, Chichester.
Mingers, J. (1997b). Multi-paradigm Multimethodology, in Multimethodology, (J. Mingers and A.
Gill, eds.), Wiley, Chichester.
Mingers, J. (1999). A Comparative Characterisation of Management Sciences Methodologies, in:
Systemist, 21(2): 81-92.
Mitroff I (1981) Challanging Strategic planning assumptions, Theory, Cases and Technique, Wiley,
NY.
Nonaka, I. and Takeuchi, H. (1995), The Knowledge-Creating Company, Oxford University Press,
New York, NY
Paucar-Caceres, A. (2003) Measuring the effect of highly cited papers in OR/Systems journals: a
survey of articles citing the work of Checkland and Jackson. Systems Research and
Behavioural Science, 20, 65-79.
Paucar-Caceres, A. (1998), Systems Thinking: East and West, Systemist, Journal of the United
Kingdom Systems Society, Vol. 20, N. 2, May 1998.
Rubenstein-Montano, et al, (2001), SMARTVision: a Knowledge Management Methodology,
Journal of Knowledge Management, Vol 5, N. 4 pp 300-10
Senge, P. (1990), The Fifth Discipline: The Art and Practice of the Learning Organization, Random
House, London.

398
Why Do Managers from Different Firms Exchange
Information? A Case Study From a Knowledge-Intensive
Industry
Mirva Peltoniemi
Tampere University of Technology, Finland
[email protected]
Abstract: This paper explores the motivation for information exchange between firms within a knowledge-
intensive industry. The qualitative empirical data is gathered from the Finnish games industry. The industry is
seen as a complex system that changes through an evolutionary process. There are three main explanations
for such collective efforts. First, the firms want to help each other in order to create critical mass at the national
scale. Second, selection operates more strongly at the group level between industries than within the industry.
Third, information exchange makes their search functions more effective allowing collective search.

Keywords: Information exchange, knowledge-intensive industry, group selection, collective search

1. Introduction
This paper explores the motivation of information exchange between firms within a knowledge-
intensive industry. The main objective is to find out why the managers engage in such activities and
what it means in the light of the dynamics of the industry. This question has emerged during a case
study of the Finnish games industry and its development mechanisms. Within the case study the
representatives (CEOs, CFOs or equivalents) of eight firms were interviewed. Also other sources,
such as newspaper and magazine articles were used in order to understand the context.

The Finnish games industry is here defined to comprise firms that engage in the development
and/or publishing of PC, console, mobile and/or online games. The Finnish games industry
includes about 100 firms of which the first ones were founded in mid 1990s and the majority after
the year 2000. They range in size from one to hundreds of employees and all operate in the global
market. As a generalisation one can say that the number of firms with more than one hundred
employees is less than ten and the number of firms with less than ten employees is about one
hundred. Of these only a fraction concentrates solely on games.

The problem of the motivation of inter-firm communication within such an industry is approached
with evolutionary and complexity theories. The industry is seen as a complex system that changes
through an evolutionary process. This is because with these theories it is possible to capture the
dynamics that follow from decentralised decision-making and interconnectedness within such a
population.

The paper starts with a short overview of evolutionary and complexity thinking related to the topic
of the paper. This is followed by a description of the information exchange and why it has an impact
on the development of the industry. Subsequently, the motivation for the information exchange is
analysed with three concepts, namely critical mass, group selection and collective search. Finally,
some conclusions are given.

2. Evolution and complexity within the industry

Evolution means that novel things come about by changing and recombining existing things
(Murmann 2003). The basic proposition of evolutionary economics is that firms have certain ways
of doing things that do not change over night and that these ways vary from firm to firm. Thus,
continuity and distinctiveness are assumed (Dosi et al. 2000, pp. 11-12). Nelson and Winter (1982,
p. 4) state that their evolutionary theory of economic change emphasises “the tendency of the most
profitable firms to drive the less profitable ones out of business”. This means that the variety built of
different kinds of firms undergoes market selection. It favours those firms that are better fitted with
current circumstances, which translates into better profitability.

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In the field of evolutionary economics an industry is often defined as a population of firms that faces
the same selection mechanisms. This means that firms, that have to tackle the same kinds of
challenges in order to survive and succeed, belong to the same industry. This also translates into
similar success factors and sources of competitive advantage for firms within an industry. Firms
may be different, but the market process measures them with the same metrics.

Murmann (2003) claims that individuals do not evolve, but populations do. This means that change
within an industry comes from the birth of new different kinds of organisations and death of old
ones, and not from change within existing organisations. This is quite a harsh statement since
although it is consistent with evolutionary biology, where animals and plants cannot change their
genetic makeup, firms and other kinds of organisations can. Perhaps they are not capable of swift
changes because of organisational inertia, resistance in the face of change and lack of resources,
but people fundamentally decide what they do and all firms have some kind of a hierarchy based
on which such decisions are made.

The games industry in general is an interesting case of variation and selection since its existence is
acutely dependent on the emergence of new variation. New games have to differ from the old ones
either by technology or by content. In an ideal case the difference is remarkable in both. The same
product cannot be sold again to the same consumers. This means that every firm is aiming at
variety creation with each and every product.

Selection operates on several levels in such an interconnected business. The developers face
selection first in coming up with financing for producing a demo of a prospective game. In the case
of past successes income financing is the obvious alternative. In other situations the financing has
to come from the initial capital of the firm or it may be acquired from an outside investor. So-called
sweat capital (work with no pay) is also a viable option for new and enthusiastic entrepreneurs.
Once the demo is completed the developer has to pitch for a publishing deal and thus the
publishers enforce the second round of selection. In the case of a hugely successful developer the
selection process operates another way around and the developer chooses which publisher would
best suit its needs in terms of retail channels, marketing capabilities, and - most importantly -
revenue sharing. Thus, the rise in the relative importance of a firm in the industry enhances its
position in negotiations, which changes its function from merely generating variety to enforcing a
significant selection pressure. This makes it easier for a firm to influence the development of the
industry and its norms.

Once the finished product reaches the consumer market both the developer and publisher face
selection. The effect of that selection is determined by the contract that the developer and publisher
have made. Thus, if the developer in any case receives the cost of production the selection works
mainly on the publisher. In the opposite case the developer carries the risk and is also entitled to a
greater share of profits in the case of good sales.

From the viewpoint of prospective game concepts the selection operates on them three times.
Firstly, any developer firm has several potential ideas from which to choose and only limited
resources with which to work on them. Thus, only a fraction of the ideas will be developed even to
the concept or demo level. Secondly, publishers receive large numbers of demos and will choose
to finance only a portion of those. The third selection goes on within the consumer market. Majority
of published games end up as financial disasters making losses for the publisher. For this reasons
the publishers have a portfolio approach where a big hit can compensate for several failures. In the
first and the second stage the decision-makers are trying to figure out what the eventual consumer
instigated selection would favour. However, this has proven to be difficult and the overlap of these
three selection mechanisms in terms of what they favour is not perfect.

Evolutionary thinking emphasises variation within the population and the selection process, which it
undergoes. There is also an interest on how such variation is renewed as selection winnows it.
However, there is basically no interest on how the members of the population are connected and
how such connectedness affects the development of the system. This is why the evolutionary view
is here supplemented with the complexity view.

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 Mirva Peltoniemi

There is no strong consensus over the relationship of evolutionary and complexity theories. Some
see evolution as a part of complexity and others the other way around. The following is an example
of the former view. “The process of evolution is an important integrative theme for the sciences of
complexity, because it is the generative force behind most complex systems.” (Ray 1999, p. 161)
Here, however, evolutionary and complexity theories are seen as complementing ways to analyse
an industry.

According to Metcalfe and Foster (2004, p. ix), a complex system is a network structure that
contains elements and connections. According to their interpretation the connections constitute of
knowledge and understanding and for this reason knowledge is core to economic systems and a
source of economic value. Secondly, they see that selection mechanisms can be seen from a
complexity perspective and then selection will not lead to an equilibrium or regression to the mean.
Selection mechanisms highlight the fact that the variety on which they operate is of prior
importance in economic systems and it arises from forms of knowledge that are much less
prevalent in the biological domain. (Metcalfe and Foster 2004, p. ix)

Any knowledge-intensive industry can be regarded as a knowledge-based system. Competitive

advantage is built on knowledge. Opportunities and threats arise based on knowledge that the
particular firm or some other firm may have. Relevant knowledge can be classified into two groups.
The first group, internal knowledge, concerns the methods to do the things that a firm in question
does itself. The second group concerns knowledge on what the competitors are doing and how
they do it (external knowledge). These two types of knowledge interact leading to absorption
whereby new decisions are made based on both internal and external knowledge.

The industry in question, the Finnish games industry, is an interconnected system, where
information exchanges is an important factor creating the connections between the firms. This
means that the firms do not find out of each others’ actions merely through the market processes
by winning or loosing a bidding contest or seeing each others’ products on the shop shelf. The
firms consciously seek for more information and also distribute it. Information exchange also
functions as a feedback process.

3. Information exchange within the Finnish games industry

The firms within the Finnish games industry rarely see each other as competitors. Although the
interviewees often talked about Finnish competitors, they found it hard to name any that would
actually affect their own success potential or business decisions. This means that the firms are able
to find a niche where they can protect themselves from fierce rivalry. But how do they manage to
do that? The first explanation is that the founders of many firms have been eager gamers before
the entry to the industry, which has given them an idea of what is missing from the market.
However, that is not a sufficient explanation since there is often a reason for such absence, be it
technological or related to consumer potential. At least a part of the answer seems to lie in the
nature of interaction between the game companies. A distinctive feature of the Finnish games
industry is that there is a lot of communication and exchange of information among the firms. In
Table 1 some information about the firms and their attitudes and objectives related to information
exchange are presented. Below are some examples collected from the interviews illustrating the
information exchange.
”Our seller does informal cooperation as he meets others. He tells them that we have
entered some market and it seems quite good and it is worthwhile to go there. That
doesn’t take anything away form us. It is based heavily on the personal relationships
between people.” (Alpha)
”I guess this is typical for a young industry that personal relationships are very
important. For example today I am going to go for a beer with a competitor. We are
going to talk about what is happening in the market and whether something new is
emerging.” (Alpha)
”Information exchange is clearly a case of win-win because you can always learn from
others and it does not take anything away from you. And a large part of it is simply
about having fun.” (Delta)

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”From our point of view the most important information is what our competitors are
doing and we always know that before the press releases come out because word
gets around.” (Alpha)
“It is also a part of marketing. You should not spend five days a week inside a cubicle.
You don’t see or hear anything [new or interesting] there.” (Beta)
”For example there is one case in which an [graphics] artist had sent a job application
and included works that other people had done in his portfolio. It didn’t take more than
three days that everyone within the industry knew about it. The guy committed a
professional suicide. One can only be amazed at how stupid people can be.” (Alpha)
Table 1: The views of the firms concerning information exchange

Subcontractor
Attitude towards Main reasons for exchanging
Employees

Developer

Publisher
information exchange information
Founded

Platform
Firm

Critical mass to improve

We want to help
Alpha 2004 35 Mobile X X recruiting situation. To gain
others.
knowledge about the market.
Everything is easier
To do marketing. To get inputs
Beta 2002 27 Mobile X X when you have a
for our creative process.
network of contacts.
To find subcontractors. To
Together we can find
Gamma 2000 24 Mobile X X understand the global games
new profitable things.
market.
I can learn from you To find subcontractors. To find
Delta 1999 100 Mobile X X and you can learn employees. To see what others
from me. are doing.

To find out about the

Online, mobile,
We all help each development of the industry. To
Epsilon 2000 170 handheld, X X
other. ponder what is going to happen
console
next.

We can benefit each

To enhance the growth of the
Zeta 2002 9 PC, online X X other and have fun
industry.
together.
To find out what is going on. It is
We want to help
Eta 1995 25 Console, PC X in our interest to see other firms
others.
in Finland succeeding.
To discuss what the publishers
We want to exchange
Theta 1995 13 Console, PC X want. To find out concrete leads
our views with others.
on sales opportunities.
Information exchange seems to be heavily based on personal relationships. People within the
industry know each other and enjoy discussing industry-related matters with each other. The
underlying assumption is that it is not harmful for anyone to engage in such interactions. When
asked why they participate in active communication most of the representatives of the firms stated
that there is no reason or that they do it for altruistic reasons. Helping others is seen as a norm
within the industry and its benefits to oneself are not considered. However, this cannot be the full
explanation since after all it is a tough branch of business and things just cannot be that cosy. As
the interviewer relentlessly kept on asking about the motivation for information exchange some
other reasons were also mentioned, as is shown in Table 1.

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 Mirva Peltoniemi

4. Explanations for collective efforts

4.1 Critical mass

There is quite a good consensus over the benefits of critical mass of firms within the Finnish games
industry. The firms do not see each other as threats but as vital creators of critical mass at the
national scale. Critical mass has several aspects here. Since skilled staff is scarce it is in every
game firm’s best interest to have other potential employers for their staff. This will make the
industry appealing for prospective employees and lowers their personal risks in investing their time,
efforts and money on industry-specific training and career. This is quite evident in the following two
comments.
“We see it so that the more there are entrepreneurs within the industry and firms, in
the long run it will help us. One thing is that we will be able to get employees that have
worked within the industry. If they want to work in a larger firm then we are an option.”
(Alpha)
”Some of the other firms here have had to scale down and the first thing that the HR
managers do is they call us and say that these kinds of skilled employees would be
available. The overall goal is to keep the people within the industry.” (Alpha)
As there are more firms, the employees will also have more job opportunities. This also means that
there is more demand for skilled workers and they can be persuaded to change jobs. This can
cause some tension between the firms, but at least some of the interviewees saw also positive
potential in such circulation.
”I think it’s good that they get to see new things and develop their skills. Perhaps one
day they will come back here to a higher position. I don’t see that as a bad thing, but is
it punished? I guess some people would like to do some arm-twisting at some cocktail
party.” (Epsilon)
Critical mass of game firms can also make the industry appealing for prospective investors. The
mass will increase the general credibility of the industry and realised success stories can serve as
best case scenarios. Critical mass of the Finnish games firms can also serve as a collective track
record towards international publishers and operators. Coming from Finland will certainly not get
you a publishing deal, but it might open the door for the first meeting.

4.2 Group selection

The definition of an industry through common selection mechanisms is not particularly suitable to
the Finnish games industry. The main problem is that competition at the national level is scarce. In
addition, many interviewees stated that they do not have any direct competitors abroad either.
However, all the representatives of the firms see the firms as belonging to the same industry. This
is especially visible in the lively communication and information exchange between the firms. It
seems that the firms have a collective search function and selection mechanisms operate more on
a group level. Saviotti and Pyka (2004) state that as competitive selection between populations or
sectors is fiercer than that within a population or sector, the conditions are optimal for the creation
of variety. Additionally, variation generation is seen as a prerequisite for economic growth and
progress. The findings from the Finnish games industry support this line of thinking since the firms
do not compete with each other, but find niches where they can protect themselves from fierce
rivalry. This is evident in one comment.
“We just operate in a niche within the ecosystem that is different from those on many
other firms.” (Beta)
By finding these niches they create variety which enables them to continue to specialise. This
means that the surface on the space of potential content and technology that the population covers
is continuously spreading.

Group selection is in conflict with selfish maximisation (Bergstrom 2002). However, this line of
thinking has both a short-run and a long-run aspect. In the short run the firms could not care less
about the survival of other firms, but they concentrate solely on putting off acute fires, such as

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finding the money to pay the monthly wages. In the long run the firms see the benefits of group
thinking. They see that there is selection pressure at the group level as the industry has to compete
with other forms of spending free time. At the national scale an important driver for group selection
is the institutional setting within which all the games firms have to operate and which they try to
collectively change. One example of such lobbying successes is the recently started game
development education programme at the secondary level.

4.3 Collective search

Each firm has a search function according to which it explores new possibilities and alternatives to
be applied in the future. According to Cyert and March (1992) such search is problemistic. This
means that firms would not continually search for better ways to do things or new things to do, but
they will start the search only once the old way presents a problem. Thus, search is triggered by
encountered problems and not by some inner motivation for continuous bettering. However, as it
was stated earlier, in a knowledge-based creative industry the creation of new variety is
fundamental. It is the inevitable problems that would follow from failing to find novelty to be
included in the products in the future, that makes search an every day activity. Information
exchange means that the firms are not forced to execute a purely trial-and-error type of a search
function. The search functions of the games companies are linked to each other because of the
ongoing information exchange between the people of different games companies. This kind of
communication allows the firms, first of all, not to make the same mistakes that someone has
already made, but also to find potential directions towards which to head. This kind of
communication also enables efficient exploitation of existing niches and also the avoidance of
fierce rivalry. Communication among the firms allows the evaluation of more alternatives since
more of those are known. Also, communication may allow the identification of attributes and
aspects that might not be considered if they would not have been discussed with others that have
different backgrounds and experiences. The following two comments illustrate the nature of
information exchange that leads to collective search.
“A very large part of very good ideas emerge in such discussions.” (Gamma)
“And a large part is contemplating. We puzzle over what is happening next.” (Epsilon)
Although it is often thought that such an active information exchange would lead to the
concentration of the population, it is not the case here. Naturally, there is also such me-too type of
decisions, but the overall picture is more characterised by finding out what the others are doing in
order to avoid doing the same thing.

5. Conclusions
When asked why they exchange information the managers stated that they do it for altruistic
reasons. However, that cannot be the only reason. Another reason could be that this way they can
build their personal reputation within the industry and also get personal satisfaction by being able to
share their knowledge. This is supported by the interviewees’ eagerness to tell about this business
to the interviewer. However, the reasons cannot be just at the personal level since the information
exchange is often done within working hours. Thus, there must be some kind of motivation also at
the firm level.

The managers of the firms must see the benefits in engaging in such collective efforts. They either
do not want to admit it or the motivation forms in an unconscious level. By finding out what the
others are doing they can avoid highly competitive areas and find uninhabited niches. However, the
motivation of telling what they are doing is a trickier matter. One explanation is that getting the word
out on what they are doing might help in getting a good publishing deal. Another one is that in order
for the others to play along you also have to pass the ball. This means that sharing information that
you have is a ticket to getting the information that others have.

Collective efforts may also arise from the idea that the industry in question is seen as a group
abroad. This then means that competitive advantage has group characteristics. By acting as a
group in attracting skilled employees and investors as well as in searching for new possibilities the

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firms may achieve more that by flying solo. This also applies to changing the institutional setting
under which they have to operate.

From a complexity perspective the lesson here is that connections consisting of knowledge or
information are important for the functionality of the system and they enable the development of the
system towards better fitness. The development constitutes of self-organisation, since the
participation and contribution of each firm is their own decision and the direction arises bottom-up.
This informal network is fundamentally an emergent structure that is in continuous flux of change.

6. Acknowledgements
This paper was produced within the TIP Research Programme (Knowledge and Information
Management in Knowledge Intensive Services). The projects in the programme explore theories of
complex adaptive systems and their various interpretations and apply them to the study of socio-
economic systems. The programme is funded primarily by The Finnish Funding Agency for
Technology and Innovation, and the research is conducted at the Institute of Business Information
Management at Tampere University of Technology. Professor Marjatta Maula is the director of the
programme. I would like to thank all the representatives of the games firms that I have interviewed
regarding my research project and also the staff of Neogames: The Centre of Game Business,
Research and Development for helping me in directing the study towards interesting issues.

References
Bergstrom, T. C. (2002) “Evolution of social behaviour: individual and group selection”, Journal of
Economic Perspectives, Vol 16, No. 2, pp67-88.
Cyert, R.M. & March, J.G. (1992) A behavioral theory of the firm, Second edition, Blackwell
Publishing, New Jersey.
Dosi, G., Nelson, R.R. & Winter, S.G. (2000) “Introduction: The nature and dynamics of
organizational capabilities” in The Nature and Dynamics of Organizational Capabilities,
Dosi, G., Nelson, R.R. & Winter, S.G. (Eds), Oxford University Press, pp1-22.
Metcalfe, J.S. & Foster, J. (2004) “Introduction and overview” in Evolution and economic
complexity, Metcalfe, J.S. & Foster, J. (Eds), Edward Elgar, pp3-23.
Murmann, J.P. (2003) Knowledge and competitive advantage: The coevolution of firms,
technology, and national institutions, Cambridge University Press.
Nelson, R.R. & Winter, S.G. (1982) An Evolutionary Theory of Economic Change, The Belknap
Press of Harvard University Press.
Ray, T.S. (1999) “Evolution and complexity” in Complexity: Metaphors, Models, and Reality,
Cowan, G.A., Pines, D. & Meltzer, D. (Eds), Westview, pp.161-176.
Saviotti, P.P. & Pyka, A. (2004) ”Economic development by the creation of new sectors”, Journal of
Evolutionary Economics, Vol 14, No. 1, pp1–35.

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Knowledge Reuse in Creating Audit Plans
David Peto
Corvinus University of Budapest, Department of Information Systems, Hungary
[email protected]

Abstract: In this research the question of knowledge reusability in creating more reliable IT audit plans has
been investigated. With the use of appropriate simulation techniques and statistical analysis, it has been
proved that the explicit usage of self-reflection in IT auditing enables more precise audit plans, therefore the
execution might become more effective. This self-reflection means that auditing methodologies are largely
depending on the results of previous examinations of certain areas. In fact, the most widespread methods and
guidelines are also based on the experience gained through previous examinations. If the results gathered in
this way are being used, more precise audit plans can be made and the designation of the areas to be
examined can become more accurate. If the fact that audit methodologies are primarily based on practical
experience is accepted and explicitly formulated, then, with the use of the information acquired in previous
audits, better and more precise audit plans can be created. In other phrases: the assignment of control
objectives in certain situations of examination can be done based on the experiences from previous audits.
Additionally, the audit plans created in this way enable the cost-effective execution of audits, without
sacrificing accuracy and reliability. The results of the simulation confirm these statements.

Keywords: IT audit, COBIT, knowledge reuse

1. Introduction
The purpose of IT audit reports is to inform the company’s executives of the revealed situation, let
them know of the possible deficiencies, and preferably to offer ways of solution. Obviously though,
the decisions have to be made by the executives themselves.

It is a common and serious problem that managers are not provided with all the necessary
information to make their decisions regarding information technology issues. This is true in spite of
the fact that audit reports present a description of the areas with higher risks, the risk factors in
these fields and often the possible solutions as well. Audit reports do not help in the decision which
areas the limited resources should be invested in for effective treatment. Decision-makers often
make the allocation of different resources in an ad hoc manner to cure the diverse problems. In
their decision, they mainly rely on their previous experiences.

Another problem, although its cause is basically the same, is that the results achieved by different
audit processes, especially the ones regarding risk levels, are not comparable with each other. As
there is no commonly agreed regulation for the assessment of risks, the evaluation is usually made
in a highly subjective manner (Ozier 2003). Thus, even if numerical indices are available
concerning certain areas, they cannot be compared to other cases, as another auditor might reach
different results, even if the method and the investigated problems are the same. The risk levels in
the results of different audits made in different periods in the same organization, or different
companies in the same industry are not comparable.

According to the assumption made in this research a metrics that is based on a widespread
methodology and that secures more precise measurement and comparability of different risks,
helps in optimizing corporate resource-allocation in the areas involved, and – thanks to this and the
benchmarking capabilities – enhancing the efficiency, numerical representation and verifiability of
company decisions based on the audit results.

An additional achievement is that by calculating the risk levels more precisely the results of
previous audit processes can be used to more accurately delimit the areas of interest. Therefore
auditing knowledge might be reused in order to make more specific audit plans. This paper
describes the steps taken to verify this assumption and also its consequences regarding
knowledge reusability.

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2. The usability of knowledge in auditing

2.1 The goals of auditing

The main goal of an information technology audit, similarly to other methods of supervision, is to
examine compliance. Thus, to check whether the processes, control and operation of the inspected
areas comply with some kind of predefined regulations. Therefore, there are only two kinds of
results of an audit process: complying or not complying.

The intention in regulating corporate operation is to restrain the different operational risks in order
to achieve the strategic goals. Obviously to make compliance measurable in a suitable way,
controls must be built into the company’s processes. In our case these are derived from the Control
Objectives of COBIT, the methodology that has been used as a basis for the research.

But the question that is one of the key issues of this research arises: to what extent does the
appropriate selection of controls (control objectives) enhance risk reduction? Do the appropriate
narrowing down of the area of focus or the amount of questions that have to be examined result in
the cost-effective reduction of risks derived from corporate IT? If the knowledge gained in previous
audits is used to articulate the self-reflection of the assessment system, does it help in selecting the
right control objectives?

2.2 Audit plans based on previous experiences

We might presume that the use of risk assessment metrics during IT auditing contributes to the
optimization of the allocation of corporate resources. Executives responsible for IT governance are
in a difficult position when they have to decide on countermeasures against risks (Trites 2004).
Without an appropriate measurement method it is hard to precisely determine the desirable use of
resources. The metrics creates a chance to make optimal decisions on the use of resources.

Our assumption was that if the self-reflecting nature of the execution of IT audits is formulated
explicitly, the results can be reused to improve and more accurately specify the audit plans.

Information technology audit is essentially based on previous experiences. Most methodologies

(including ITIL, Common Criteria, COSO ERM and also COBIT) are actually a collection of best
practices (ITIL 1989, CC 1999, COSO 2004). Therefore, the data from different audits is obviously
worth to be used to more precisely define the assessment method. According to our assumption,
the refinement can be carried out if the results of previous audits are used in an appropriate way.

3. Risk assessment metrics as a tool for knowledge reuse

The primary goal of this research was the creation of a risk assessment metrics based on a widely
spread methodology, which might be used in information technology auditing, and optionally the
creation of a software system that might be of use in the audit process by providing support for the
auditors. After the appropriate methodological funding and the choice of methods, the research has
been mainly of practical nature, as on basis of the principal background, the assessment method
was constructed, as well as the scaling and the tool that provides the necessary support for the
users.

There were several prerequisites of the research. First, a comprehensive collection of the possible
risks had to be created that could be used as the foundation of the assessment. Second, the
appropriate measurement and ranking method had to be shaped, namely the metrics that is
capable of the evaluation of the risk factors and the totalling on certain areas.

As the goal was to create a method that can be used in many areas, the definition of risks also had
to be as wide as possible. To reach this goal an audit methodology had to be selected that is both
widespread and detailed enough so the certain risks could be generated with its use in a direct or
indirect way.

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There is only one comprehensive audit methodology that fulfils the above criteria, which is
accepted by most experts, covers the most possible areas, but at the same time is suitable for the
deconstruction so the risk factors can be reached. This is the COBIT methodology, issued by ITGI
and ISACA (COBIT 2000). Although there has been some criticism on the completeness of the
threats to information integrity mentioned in COBIT (Boritz 2005), this is obviously the methodology
that covers most of the areas in question.

On the other hand, COBIT does not originally include such deconstruction that would allow the
direct analysis of risks. Although it provides serious help in creating the control questions on risks,
the extraction of actual risk factors from this standard needed further work.

The other task was the creation of the metrics itself. The method is described below.

To make the metrics functional, the calibration of the method had to be done. This was assured by
the execution of several measurements and the recording and comparison of data. The operation
of the index was tested with the use of Monte Carlo simulation.

4. Creating the index

The aim of the research has been to create a method that allows the certain determination of the
risk level regarding the examined company; thus, the making of a risk index that defines the risk
level, based on the data collected during the audits.

In order to reach this goal, the widely used guidelines of COBIT were used as a research basis. In
its construction, COBIT (3rd edition) contains 34 control objectives grouped in four domains. The
control objectives cover practices to follow that are important in the information security and
effective operation of the company. As further specification, these contain more than 300 detailed
control objectives, which are to specify and more precisely define the higher-level objectives.
Although the 4th edition of COBIT has been published recently, the basic concept has not changed.

According to its objective, COBIT covers every area related to corporate information technology,
therefore the risk factors may be considered as the most comprehensive possible. This is the
reason why the detailed control objectives of COBIT were taken as a basis for the identification of
risks in this research.

COBIT makes the evaluation of control objectives possible only by assigning levels of 1 to 5 (0 in
the case of non-applicable) to them, based on the capability-maturity models. This results a
variable that is measurable only on an ordinal scale that is not appropriate for calculating averages
or other statistical indices. For the sake of easier usage, these evaluations can be taken into
consideration in a way that the risk linked to the control objective raises or lowers the risk of the
company (or some of its parts).

The main concept of the risk assessment method is the following: the auditor assigns the
capability-maturity levels regarding the individual factors on the area in focus (There have been
attempts to create metrics based on this concept (Jelen 2000)). Relying on these the decision can
be made whether the certain factor raises or lowers the risk level. As a starting point, the
acceptance threshold, namely the line between raising and lowering is 2.5, which is only used as a
parameter in the model. Based on these data, the risk level of the investigated area can be defined
with the use of a certain algorithm.

The most straightforward algorithm is the calculation of a simple mean. In this case the values of
+1 and -1 are added, which show the contribution to the risk level. Obviously, this method is not
capable of supplying refined data and it is not useful in practice, as one cannot state the equal
importance of all factors. With the use of this simple method, it is inevitable that such factors
extinguish each other that are obviously of different importance in real life. With the use of a
method like that, it is impossible to define the areas where the resources have to be concentrated
upon, as all problems appear to be of same severity.

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As a result the introduction of importance weights was also necessary. With this method, which
appears in most of the known risk assessment tools as well, it is possible for the auditor to consider
the different importances of the individual factors. There are several methods to assign the weights
(Hwang-Shin-Han 2004); the choice between these is not part of this research.

To use this method, the allocation of appropriate weights is also expected from the person carrying
out the audit; thus, the creation of a weighted average can be done. In the research, the making of
the weights can rely on the scenarios. Namely, during the examination such sets were defined that
determine the areas to be analyzed in certain industries (e.g. banks, manufacturing etc.). The
weights of the examined areas are also expected to be different in these cases.

4.1 Mapping the interactions

At the same time, the allocation of weights does not solve another important problem: the
interaction of risk factors. During the research, the conclusion was drawn that the assessment of
risks can be much more precise if the factors are not regarded independent, but their relationships
are also taken into account. To reach this goal the effects of the coexistence of two simultaneous
factors had to be mapped. For example it could be defined how the overall risk index is going to be
affected by the coexistence of the two factors when the quality of the plan on IT strategy is a factor
raising the risks and the qualification of the personnel is a factor lowering the risks. Obviously,
these estimations cannot be done in a totally faultless way. As there are no historical data on
regarding these questions, expert estimations had to be relied on. At the same time this is not
opposed to the viewpoint of COBIT, as this is a collection of empirical knowledge, therefore its
individual statements are not unquestionable.

As a result of the detailed discovery work, an interaction matrix was created that contains these
simultaneous effects (see table 1).
Table 1: A section of the interaction matrix
domain_id id PO PO PO PO PO PO PO PO PO PO PO AI AI AI AI AI AI DS
1 2 3 4 5 6 7 8 9 10 11 1 2 3 4 5 6 1
PO 1 1 -1 1 0 1 1 1 -1 1 1 1 1 1 0 1 -1 1 -1 1 1 1 0 1 -1 1 -1 1 -1 1 1 1 -1 1 0
1 -1 1 -1 1 -1 1 -1 -1 -1 1 -1 1 -1 1 -1 1 -1 1 -1 0 -1 1 -1 1 -1 1 -1 -1 -1 1 -1 0 -1
PO 2 1 1 1 0 1 1 1 -1 1 -1 1 0 1 -1 1 1 1 -1 1 1 1 -1 1 -1 1 1 1 -1 1 0 1 1
-1 -1 0 -1 -1 -1 -1 -1 0 -1 -1 -1 0 -1 -1 -1 0 -1 0 -1 1 -1 0 -1 -1 -1 1 -1 -1 -1 -1 -1
PO 3 1 -1 1 1 1 0 1 0 1 -1 1 -1 1 0 1 -1 1 -1 1 -1 1 -1 1 -1 1 -1 1 0 1 0
1 -1 -1 -1 0 -1 0 -1 1 -1 1 -1 0 -1 0 -1 1 -1 1 -1 1 -1 0 -1 1 -1 0 -1 1 -1
PO 4 1 1 1 0 1 0 1 0 1 -1 1 0 1 0 1 0 1 -1 1 -1 1 -1 1 0 1 1 1 1
-1 -1 -1 -1 -1 -1 -1 -1 1 -1 0 -1 0 -1 1 -1 1 -1 0 -1 0 -1 -1 -1 -1 -1 -1 -1
PO 5 1 -1 1 -1 1 0 1 -1 1 -1 1 -1 1 -1 1 -1 1 -1 1 0 1 -1 1 1 1 -1
1 -1 0 -1 0 -1 1 -1 1 -1 1 -1 0 -1 1 -1 1 -1 0 -1 1 -1 -1 -1 0 -1
PO 6 1 -1 1 -1 1 -1 1 0 1 -1 1 -1 1 -1 1 -1 1 0 1 -1 1 -1 1 1
-1 -1 1 -1 1 -1 -1 -1 -1 -1 1 -1 1 -1 1 -1 -1 -1 -1 -1 1 -1 -1 -1
PO 7 1 0 1 -1 1 0 1 0 1 -1 1 0 1 0 1 1 1 -1 1 1 1 0
-1 -1 1 -1 -1 -1 0 -1 0 -1 -1 -1 0 -1 -1 -1 0 -1 -1 -1 0 -1
PO 8 1 -1 1 -1 1 -1 1 -1 1 -1 1 0 1 0 1 -1 1 -1 1 1
1 -1 0 -1 1 -1 1 -1 1 -1 0 -1 -1 -1 0 -1 0 -1 0 -1
PO 9 1 1 1 1 1 0 1 0 1 1 1 0 1 0 1 1 1 1
-1 -1 -1 -1 -1 -1 0 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1
PO 10 1 -1 1 -1 1 -1 1 -1 1 0 1 -1 1 1 1 1
0 -1 0 -1 1 -1 0 -1 0 -1 1 -1 -1 -1 0 -1
PO 11 1 0 1 -1 1 -1 1 1 1 -1 1 1 1 -1
-1 -1 1 -1 1 -1 -1 -1 1 -1 -1 -1 1 -1
AI 1 1 0 1 -1 1 -1 1 -1 1 1 1 1
0 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1

On this basis, it was possible to develop the assessment procedure further. The determination of
the risk index is done in such way that the capability-maturity indices and risk factors defined by the
auditors are considered in selecting the certain elements of the matrix and the results are
cumulated. The meaning of the certain squares of the matrix is made clear by table 2.
Table 2: Legend for the interaction matrix
AI 1
+ -
+ 1 0
PO 4
- 1 -1

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The upper left field shows the value that is appointed to the risk index when both factors in question
perform in a positive way – in this case in the example, their coexistence lowers the overall risk (the
positive number means the raising of security, therefore the lowering of risks). In the upper right
field, the factor shown in the column on the left is positive and the one shown in the row on the top
is negative. The other fields are also filled up according to the figure.

4.2 The algorithm of the index

The appropriate elements of the interaction matrix, totalling and weighting can create the risk index.
The totalling can be carried out using the following formula:

n
ri + ∑ ri , j n
R = ∑ wi ∑w
j =1
, where i =1
i =1 n i =1

In which R is the overall risk index, wi is the weight of the certain risk factors, ri is the converted
value of the risk index (-1or +1) and ri,j is the value created from the first-order interaction of the risk
factors by the use of the above matrix (might be -1, 0 or +1).

Thus, the formula creates a weighted average of the risk indices including the interactions as well.
The value ri is emphasized, as that is the direct contribution of the certain risk factor to the
cumulated risk level. In fact this is the self-interaction of factor i, who is not else but its own risk
value.

The benefit of the procedure is that the value of the index can be easily calculated for certain sub-
domains as well, thus for the subset of overall risk consisting of some control objectives. Simply
simply totalling these then can create the overall risk index.

In case the auditor finds it hard to assign weights to certain areas with a total of 1, a transformation
can be executed easily. Therefore it is possible to use practically any kinds of weighting, if the
individual weights are divided by the total of weight values; namely, if the weights are normalized.

It might appear so that during the cumulating each risk interaction is considered twice, but this
phenomenon is parried by the use of appropriate weighting. The attribution of weights is done
according to the weights of parent-factors given by the auditor, and during the cumulating; the
weights of individual risk factors (control objectives) are used.

5. The simulation experiment

Because of the lack of relevant data, Monte Carlo simulation was used during the research. The
simulation and the generation of the results were carried out in several steps.

5.1 Scenarios
First, the formulation of 4 different scenarios took place, representing certain audit situations. Thus,
the model of the examination of a bank, a manufacturer, a service company and a software
development firm was created in such way that the detailed control objectives to be examined were
identified depending on practical experience.

The importance of the creation of these scenarios regarding the goals of this research is that the
different risk assessment methods may be distinguished from the aspect of their usability in diverse
auditing situations. With the help of the scenarios, further peculiarities specific to the certain areas
might be observed as well.

5.2 Random samples

Next, 500 random samples were created in order to represent the capability-maturity values
defined in the auditing process. Equal distribution of the values was assumed when creating the

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random numbers, which means that each of the evaluation levels (measured on a scale of 0 to 5)
had the same chance to be in the sample. Naturally, during further research, it is possible to
change the distribution and make further analysis.

Random numbers were generated for the scenarios as well. In order to assure the comparability of
the results, the same cases were used, thus each of the 500 cases used in the scenarios are
shortlists of the random values created for the whole of the control objectives.

5.3 Conversion
In the next step the evaluations were transformed into the values +1 and -1, where +1 stands for
the growth of security and -1 for its decrease, therefore the raising level of risks. There were two
reasons to make this conversion: first, the values measured on an ordinal scale are obviously not
usable directly to create numerical values – e.g. averages; second, the concept of the research
was to make a separation of factors depending on whether they raise or decrease overall risk.
Thus, the set of simulated data is divided in two groups depending on the acceptance threshold.

In the simulation, this threshold was 2.5, which is the middle of the range of values. As this is only a
parameter of the model, this might be changed in further research. The threshold had been set at
that level, as this made the enabled the allocation of equally distributed variables in two groups of
the same size. However, if the distribution is changed, the shifting of the acceptance threshold
might be needed. This is considerable also, because the value 0 is a special measure in the
capability-maturity models, as this stands for not applicable.

5.4 Calculating the risk indices

The following step was the creation of the risk indices from the generated and transformed values.
In order to do that, equally distributed weights had to be rendered to the factors, which were
normalized to total 1. There are different weights attributed to each of the cases, therefore 500
different set of weights were used.

Four different indices were created in the research:

1. In the creation of the mean, simply the +1 and -1 values were averaged in each of the cases.
2. In the construction of the weighted average, the +1 and -1 values rendered to the control
objectives were averaged with the use of the constructed weights.
3. In the index created with respect to the interactions, the respective elements of the interaction
matrix (therefore the intersections rendered to the +1 and -1 values of the control objectives)
are averaged.
4. Finally the creation of the R index, the goal of the research, was done. This index is created
with respect ot the interactions and the different weights of the control objectives.
The calculation of the risk indices was made for each of the cases in the sample of 500 for all of the
control objectives (thus, the risk factors), and also for the different scenarios. In this way,
500*5*4=10000 index values were created.

5.5 Statistical analysis

In the final step, the statistical analysis of the cumulated risk indices regarding the risk factors in the
whole of the sample and also in each of the scenarios was made. With the help of these, it was
possible to compare the different assessment methods concerning their basic attributes, and also
the verification of the examined hypotheses. The statistical indices were created using SPSS
software. The histograms illustrating the behaviour of the respective indices seriously support the
analysis.

6. Results
The main results of the simulation experiment are the following:

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The average values of the indices created with respect to the interactions (the expected values of
the variables) are shifted towards the negative values. This means that, by the use of the index
suggested here, the risks of the organization in question might appear bigger than in the case of
simple averaging. Namely, the shift towards the negative direction means that the value of the
security index is lower. This is natural, and it reflects one of the main principles of auditing:
prudence. This is the consequence of the fact that in cases where it was hard to decide on the
effect of the interactions, negative values were preferred to be safe. This can also become clear by
totalling the elements of the interaction matrix, as the result is a negative number.

The variation of the indices created with respect to interactions is higher than in the cases of simple
averages. This additional variation calculated on basis of the matrix extended with fist-order
interactions compared to the basic situation is generated by the simultaneous occurrence of risk
factors. In this research, only the first-order relationships could be analysed. The additional
variation generated by the second and higher order interactions could also be analysed one by
one, but this is beyond the limitations of the present research. This is why Monte Carlo simulation
had to be employed that allows the estimation of the effects of higher order interactions, therefore
all further indirect impacts. The operational strategy for moderation of risks and the goals of the IT
function can be based on the intention to lower the additional variation discovered in the above-
mentioned way. The importance of the method introduced in this paper is the capability of
identifying such strategic focus points in addition to the explicitly formulated primary risks, which
are impossible to discover without this approach.

By analysing the results of the simulation, the statement can be made that the positive or negative
sign of the index considering the risk interaction is very seldom different from that of the simple
average – only in cases with values close to 0. At the same time, the size of the shown risk might
be considerably different, depending on the case. Thanks to this, the method is capable of raising
the attention to special cases and orientate so that the simultaneous effects of the individual risk
factors can be estimated. While the use of weights lowers the variation in the case of the indices
without respect of the interactions, variation is bigger in the indices considering the relationships
compared to the not weighted methods. This method is capable of giving even more importance to
the cases different from the usual, and raising the attention to hidden relationships (see the
histograms). Indirectly this verifies that there is a procedure that is capable of active management
and articulation of hidden relationships. The weighting also expresses the relative importance and
posed amount of threat by certain factors in certain moments.

Figure 1: The distribution of weighted averages in the sample containing all the control objectives

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The range of the results – the distance of the minimum and maximum values – does not change, or
gets larger with the insertion of interactions (also visible on the histograms). Therefore, the
suggested method is creates the opportunity to raise attention to the cases differing from the
average even more.

The effect of the weighting of risks is smaller than that of the consideration of the interactions.
Thus, the difference in the totals of the weighted and not weighted cases is smaller, than the
amount of the effects of taking the interaction in consideration.

Figure 2: The distribution of the R index in the sample containing all the control objectives
Comparing the suggested index and the simpler methods shows that the index considering the
interactions as well is usually even more different in the examination of the scenarios than in the
case of the whole of the control objectives. This confirms that, if the amount of available information
is less, the importance of this method is even bigger in determining the appropriate measure. In the
case of the scenarios, the avoidance of individual risks is less important than the consideration of
their simultaneous effects. With the use of the index that is the result of the research, the critical
coexistences that influence corporate risk are easier to spot.

Thanks to the construction of the index, in the extreme cases (e.g. all factors are raising or all are
lowering risk) there is no difference between the resulted values; at the same time in the cases in
between, that are much more likely in real situations, the shift can be considerable.

6.1 Confirmation of the assumption

The practical meaning of our assumption is that if the fact that audit methodologies are primarily
based on practical experience is used, then, with the use of the information acquired in previous
audits, better and more precise audit plans can be created. In other phrases: the assignment of
control objectives in certain situations of examination can be done based on the experiences of
previous audits. Additionally, the audit plans created in this way enable the cost-effective execution
of audits, without sacrificing accuracy and reliability. The results of the simulation confirm that the
index created in the described manner is capable of the appropriate measurement of risks. As the
creation of a risk index with the consideration of interactions succeeded; the self-reflecting quality
of auditing was usable in creating the audit plan. Therefore our assumption is confirmed.

7. Knowledge reusability conclusions

As it is possible to create a cumulated risk index that considers the simultaneous effects of
individual risk factors, a new method for the assessment of corporate risks is enabled. With the use

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of such metrics, previously unidentifiable risks can be brought into front. In some cases areas that
remained hidden when using traditional methods, can now be considered of higher risk that need
further investigation.

All this results in the possibility for corporate management to get a better and more accurate image
of the information technology risk level of the organization. Because of the consideration of the
relationships of risk factors, this suggested index is more capable of comprehensive assessment of
larger areas, ranges consisting of more sources of risk in the company. This may be a tool in the
hand of the management that allows the correction of strategy on a more objective basis.

It has become clear that the results of previous audits are usable in making more accurate and
more purposeful audit plans. If the the already examined areas and the relations on these are
taken into consideration, it is possible to set up scenarios that employ the interactions of individual
risk factors and their effects on overall risk. This also enables the more accurate designation of the
critical areas regarding the examination. In this way, it is possible to create better audit plans that
are easier to execute than previous ones.

If these data, the results of auditing, and their confirmation by indices are available, it becomes
possible for corporate management to optimally distribute the resources related to information
technology. The limited assets of the company can be used in such way, that IT risk management
receives the most benefits possible.

It has to be noted, that the exploration of the results is not enough to realize the advantages
mentioned above. In order that the executives be able to interpret the results, it is necessary to
bring them to a format that is understandable for them; to “translate” these into the appropriate
language. Therefore the tasks of the auditors do not end at creating the risk index. It is a further
duty to put the results in an appropriate context, providing a handhold for corporate executives in
the interpretation.

It has been confirmed that by employing the suggested index, the identification of such IT-related
and strategically important areas is achievable that were indefinable with the use of traditional
methods. This is primarily made possible by the fact that the consideration of joint effects of risk
factors enables the perception of such co-existences that are important from the corporate strategy
point of view, but which were impossible to discover due to the too few dimensions of risk indices.

References
Boritz, J. E. (2005) “IS practitioners’ views on core concepts of information integrity”, International
Journal of Accounting Information Systems, Vol. 6, Issue 4, pp260-279.
CC (1999) CSE-SCSSI-BSII-NLNCSA-CESG-NIST-NSA: Common Criteria for Information
Technology security Evaluation
COBIT (2000) COBIT Framework, 3rd edition, IT Governance Institute, Rolling Meadows.
COSO (2004) Enterprise Risk Management – Integrated Framework, Executive Summary, COSO,
Jersey City.
Hwang, S-S. – Shin, T. – Han, I. (2004) “CRAS-CBR: Internal control risk assessment systems
using case-based reasoning”, Expert Systems, Vol. 21, Issue 1, pp22-33.
ITIL (1989) IT Infrastructure Library, Central Computer and Telecommunication Agency, London.
Jelen, G. (2000) SSE-CMM Security Metrics, [online], NIST and CSSPAB Workshop, Washington,
http://csrc.nist.gov./csspab/june13-15/jelen.pdf
Ozier, W. (2003) “Risk metrics needed for IT security”, IT Audit, Vol. 6.
Trites, G. (2004) “Director responsibility for IT governance”, International Journal of Accounting
Information Systems, Vol. 5, Issue 2, pp89-99.

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Knowledge Logistics to Support the Management of
Organizational Crises: A Proposed Framework
Stavros Ponis1, Epaminondas Koronis2, Ilias Tatsiopoulos1 and George Vagenas1
1
National Technical University of Athens, Greece
2
Warwick Business School, University of Warwick, UK
[email protected]
[email protected]
[email protected]
[email protected]
Abstract: In the complex environment of late modernity, organizations, large and small, are challenged by
corporate crises more than ever. Thus, not surprisingly Crisis Management has gained additional attention
during the last two decades. Yet, the knowledge aspects of crises’ management theories and the role of
effective knowledge retrieval and sharing in the processes of crises’ prevention, management and survival
have been relatively unexplored. In this paper, a generic knowledge-based framework is proposed to address
the increased knowledge needs of organisations during a crisis and to help management in establishing the
necessary risk avoiding and recovery mechanisms. We combine crisis management and knowledge
management literature and provide a thorough specification of knowledge activities of crises. Both, the
specified knowledge processes of crises and the proposed framework have been tested and applied in a
pharmaceutical company resulting empirical results and evaluations.

Keywords: Knowledge management, organizational crises, knowledge logistics, pharmaceutical industry

1. Introduction
In today’s media-driven and highly networked society, organizations face the challenges of crises
more than ever. Organizational crises, symbolic or real, can escalate exponentially affecting people
and assets, damaging reputations leading to overturning market dominance and undermining the
prosperity and viability of the organization as a whole. In an attempt to provide guidelines for
managers and organizations, analysts developed strategic management frameworks,
methodologies, tools and technologies that support managers in dealing with crises; these efforts
have been multiplied and improved significantly in the last two decades. An elaborated study of the
available literature proves that although a large number of useful guidelines for preparing for and
managing crises are provided, the practical role of efficient and effective knowledge management
to support these guidelines’ execution is severely under explored. The lack of a knowledge-based
view of crises and the study of such considerations is rather surprising, taking into account that
crisis management is a heavily depended on information and knowledge intensive discipline
(Coombs, 1999).

The aim of this paper is to discuss the knowledge implications and aspects of crisis management
and to propose a knowledge-based crisis management framework. Given that the necessity for
efficient and effective knowledge is amplified in conditions of crises, and that crisis management
requires the rapid knowledge transfer of the crisis-related domain knowledge to the physical
location and to the people that are handling the crisis, we believe that the integration of Crisis and
Knowledge Management disciplines, presented with this framework, could provide interesting and
useful results.

The paper is structured as follows. In section two we provide a literature review of the two
theoretical poles of our study, these being Crisis and Knowledge Management followed by a critical
examination of the added value of integrating knowledge logistics guidelines in crisis management
activities. In section three, the elaborated knowledge-based crisis management framework is
presented. In examining such theoretical issues, we draw from a case study of a crisis in a
Pharmaceutical company, which is elaborated in section four. Finally, in section five, conclusions
and opportunities for further research created by the efforts in this paper, are presented.

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2. The knowledge management of crises

2.1 Crisis management

In the complex environment of late modernity, organizations, large and small, are challenged by
corporate crises more than ever. Literature is full of examples of business crises include amongst
others, the well documented Exxon Valdez oil spill (Ott, 2005), the racial discrimination case at
Texaco (Bowen, 2000), the incidents of glass, found in Gerber baby foods (Baldassere, 1998), the
bankruptcy of Orange County (Rothchild, 1998).

In spite of the raising interest in crises and corporate scandals, a common definition has not been
stated yet (Pearson & Claire, 1999). According to Arpan & Pomper (2003), a crisis is an
unpredictable major threat, which might produce negative effects and harm organizational
legitimacy and reputation if it is improperly handled. According to Brewton (cited from McMullan
1997), a crisis should have “some of all” of the following features: (i) severe disruption of
operations; (ii) negative public perception of the company; (iii) financial strain; (iv) unproductive of
management time; and (v) loss of employee morale and support, usually in this order. Carley
(1991) also pointed out that a crisis is a multi-phase organizational phenomenon that is relatively
short. Should the crisis continue for an extended period, it would not be a crisis but a general
problem.

Shrivistava and Mitroff (1987) suggested different types of corporate crises, pointing out that each
crisis results from organization-environment interactions of socio-technical factors. Quarantelli
(1988) argues that there are community crises, which are generated by natural or technological
agents, “disasters” and conflict type situations such as wars, civil disturbance, riots etc., and non-
community kind of disaster crises, such as most transportation accidents that do not impact the
functioning of type community. According to the Crisis Resource™ (2005), class action, product
recalls and accidents remain the key reasons for organizational crises while symbolic crises and
stakeholder-driven ones become increasingly more often.

A key concern of crisis management analysts is the recognition and description of the various
stages of crises. Fink (1986) divided the “anatomy” of a crisis into four stages: the prodormal crisis
stage, the acute crisis stage, the cornice crisis stage, and the crisis resolution stage. In fact, some
analysts developed the idea that it is the multiplicity and evolution of an event that constitutes a
crisis. In this paper we draw from Coombs (1999) and understand crises as evolving into three
main phases: a) the Pre-Crisis phase, b) the Crisis Event phase and c) the Post Crisis phase.

The study of literature shows that each school of Crisis Management analysts has tended to focus
on particular stages of crises. For example, Mitroff et al. (1989) placed emphasis on the pre-crisis
processes and the prevention of crises arguing that organizations could be considered as being
“crisis-prone” or “crisis-prepared”. On the other hand, other scholars, particularly communication
school theorists, developed managerial frameworks for the management of crisis when it happens
and after by providing normative views on how organizational image should be managed during
crisis and how it can be rescued or restored (see Benoit, 1995; Heath, 1994; Coombs, 1999).
Combining these approaches, we would argue that crisis management involves the organizational
processes related with the preparation for crisis, identifying a crisis, planning a response to the
crisis and confronting and resolving the crisis while minimizing the effects for the organization.

2.2 Knowledge management

Despite the historical background of knowledge theories (see Drucker, 1964; Marshall, 1965), the
perception of knowledge and its effective handling and utilisation as an independent,
institutionalized management function has become common only in its recent development and
right after the emergence of new concepts such as the Learning Organisation (Senge, 1990) and
Knowledge Management (Drucker, 1988; Nonaka, 1991). In our days there is an unambiguous
recognition by academics, researchers and practitioners about the importance of knowledge as a
critical resource for organisations (Foucault, 1980). In that context managing knowledge has
become an imperative in order to survive in this new unstable and fierce business environment

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(Davenport et al., 1998). More recent efforts have shown that knowledge and its effective
management are major factors in determining the level of an organisation’s performance and its
degree of competitiveness (Holsapple and Jones, 2004).

According to Metaxiotis et al., (2005) one can distinguish between three generations of Knowledge
Management (KM). The first spans the period between 1990 and 1995, and includes initiatives
focusing on defining KM, investigating its potential benefits and designing specific KM projects
(Nonaka, 1994; Wiig, 1993). The second generation of Knowledge Management (1996-2002)
initiated by many corporations setting up new jobs for KM specialists and “Chief Knowledge
Officers”. During this generation, KM research touched knowledge definitional issues, business
philosophies, systems, frameworks, operations, practices and advanced technologies (Metaxiotis
et al., 2005).

Nowadays, knowledge management goes through the third generation of its evolution which is
characterised by efforts to connect knowledge with action (Paraponaris, 2003). In this context,
Knowledge logistics is a new direction of knowledge management addressing the issue of decision
support by delivering necessary and timely information for knowledge management systems. In
doing so, knowledge is generated, passed on, used and in turn contributes to its re-generation. In
order for this to happen, an intensive cooperation and an open real-time knowledge exchange
between participants in the global information environment are required, so that the right
knowledge from distributed sources can be integrated and transferred to the right person within the
right context at the right time for the right purpose. The aggregate of these interrelated activities will
be referred to as knowledge Logistics (KL) (Smirnov et al., 2003).

2.3 Knowledge intensive crisis management

In this paper we argue that a potential integration of Crisis and Knowledge Management disciplines
would produce interesting theoretical results and meet the current needs of practitioners. Crisis
Management literature has already placed emphasis on “crisis” as a situation in which important
decisions have to be made and where management problems should be confronted under
conditions of major technical emergency (Turner and Pedgeon, 1997). Given that a crisis is a
situation that obliges the organization to make quick and efficient decision under conditions of
uncertainty and complexity, the role of information and knowledge is extremely important. Coombs
(1999) provides an ontological and methodological approach on crises focusing on the information
and knowledge management aspects of crisis management. He argues that ultimately “crisis
management is a process of moving from the unknown to the known through information gathering
and processing” (ibid: 99). In this respect, getting hold of the right information, at the right time, at
the right place and if possible at the right cost is critical for the success of managing any crisis
situation (ISCRAM, 2006).

An analysis of cases of organizational crises in literature reveals the knowledge dynamics of crisis
management. For instance, in the case of the boycott of black minorities against NIKE (see
Jackson, 1993) it becomes evident that the lack of efficient response supported with the
appropriate knowledge undermined the validity of the corporations’ claims and promises. More,
evidently, in the cases of Brent Spar (Tsoukas, 1999) and the recall of Firestone tyres (O’ Rourke,
2001), an identified challenge for organizations was to be able to regulate and control the
construction of knowledge and its dissemination to the public. Other famous crises, like the Bhopal
disaster or the Tylenol crisis also show how a crisis is mainly a socially constructed phenomenon
which requires the participation of the organization in providing information about the crisis, the
consequences, the risks and its own contribution to the resolution of the crisis (Wallace, 2004).

In the context of the research efforts described in this paper, organizational crises are regarded as
events which produce additional challenges for knowledge management, mainly because complex,
polymorphic and both structured and unstructured knowledge must be efficiently harnessed,
processed and disseminated to the appropriate internal and external actors under specific time,
media and environmental constraints. For example, it is essential for actors involved in a crisis to
possess the knowledge of what happened, relevant regulations and team views before being
involved in the management of communication and the handling of crises. We conceptualize crises

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as knowledge intensive organizational phenomena and we explore the knowledge aspects of crises
and crisis management. Such challenges have been revealed by Wang (2005), who proposed a
strategic model for crises knowledge management; but further studies, drawing from Knowledge
Management, are required.

An organisations ability to effectively react to a severe crisis most –if not all- of the times, depends
on the existence of a mechanism to represent and process the explicit and implicit modes of all
kinds of available crisis related knowledge (procedural, reasoning etc.). Taking into consideration
such mechanisms, this paper aims to provide an integrated knowledge-based framework, based on
existing efforts by Holsapple (2004) and Smirnov (2003), which will support the effective
management of a crisis during its life cycle. We argue that an integrated approach of knowledge
logistics guidelines coupled with an existing, consistent crisis management framework could
significantly improve an organization’s readiness and efficiency towards confronting both expected
and unexpected crises.

3. Knowledge logistics of crises: An integrated framework

A framework is defined as an integrated and consistent description of the major elements and
concepts of a particular domain and provides their relationships and the principles that define the
way in which these elements and concepts interact. Current literature proves the existence of two
types of frameworks. Prescriptive frameworks that provide general directions about the types of
management procedures and descriptive frameworks that characterize or describe management
activities. The proposed framework presented in this paper is of the prescriptive type and includes
a) a description of the major elements, concepts and the relationships between them for both Crisis
and Knowledge Management domains in the form of two interrelated ontologies. An abstract
description of the necessary underlying knowledge repository structure is also presented b) a
procedural matrix of knowledge intensive Crisis Management approach which utilises ontology
elements and integrates the two domains into a set of practical guidelines in the form of knowledge
activities and c) a graphic technique for documenting and disseminating knowledge activities that
supports Crisis Management during the pre-crisis and crisis event phases of the crisis’ life-cycle.

3.1 Knowledge repository and ontology

The core of any knowledge management system is the underlying knowledge repository.
Repositories can have different structures and implementations depending on the purpose of the
implemented system. For the need of our approach we intend to use Smirnov’s KSNet-approach
repository (Smirnov, 2003). This repository is used for storage of information about knowledge
sources’ characteristics, knowledge procedures, crisis management procedures, domain
descriptions etc. and the relations between them. Smirnov (2003) identifies three different
repository components a) the semantic description component that includes the library of
ontologies b) the service component containing knowledge source and user profile information and
c) the physical component used for storage and verification of knowledge, entered by experts,
learnt from users, obtained as a result of the knowledge logistics process or acquired from
knowledge sources which are not free, not easily accessible, etc. In the context of this paper we
will address issues related with the ontological structure of the repository since our approach
research still lies in the analysis phase and does not yet concerns implementation issues.

A semantic description component is used for knowledge representation and the creation of a
common understanding of the domain terms and definitions. In doing so, this component includes
all the necessary ontologies used to describe the domain terms and correspondence between
terms of different ontologies. In the context of this study, two different ontologies were created, one
for each domain under study, these being Crisis Management and Knowledge Logistics/
Management. Both ontologies were further specified in a declarative form by using OWL (Web
Ontology Language). OWL is recommended by W3C (World Wide Web Consortium) as a standard
language for the Semantic Web. Figure 1, illustrates a snapshot of the later ontology shown in
Protégé ontology editor.

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A B C

Figure 1: A Snapshot of the knowledge management/ logistics ontology

Finally, these two core ontologies will be supported by a library of ontologies that includes a) the
implementation of a set of application-based ontologies for each instantiation of the methodology in
real-life business situations, b) a knowledge source ontology c) a request of service ontology and
d) a tools, methods and practices ontology.

3.2 Crisis management knowledge-based activities

The next section of this chapter presents the procedural matrix of crisis management knowledge
activities, which is based on the frameworks of Holsapple and Jones (2004) and the analysis on
Crisis Management typologies and anatomy introduced by Mitroff (1988), Pearson and Mitroff
(1993) and Coombs (1999). According to Holsapple and Jones (2004), knowledge management
includes the following primary activities: a) knowledge acquisition (from external sources),
knowledge selection (from internal sources), c) knowledge generation, d) knowledge assimilation
and e) knowledge emission.

According to Coombs (1999; 2004) and Lerbinger (1997) Crisis Management consists of only three
phases; the pre-crisis phase, the crisis event and the post-crisis recovery. In the pre-crisis phase
the management should attempt to define the crises that their organization is most likely to
experience as well as determine the likelihood of the crises occurrence and do as much
preparations as possible to deal with each of the crises should they occur. In the crisis event,
phase two, which, the time for decision-making is compressed and decisions have to be made
under conditions of high uncertainty. Management needs to contain the damage of the crisis itself
as well as the media’s reporting to the public. In the third and last phase, post-crisis, management
should seek to rebuild its reputation and carry out changes in its organizational structure, corporate
governance policies, and corporate culture and control mechanisms in an attempt to recover from
the crisis. Based on the works of the aforementioned authors a procedural framework of crisis
management knowledge activities was elaborated. The framework includes a set of knowledge
activities to support crisis management for each phase of the crisis’ lifecycle. Respecting the size
limitations of this paper we present the results regarding the Pre-Crisis phase in Table 1. Similar
tables have been elaborated for the Event-Crisis and Post-Crisis phases.

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Table 1: Pre-crisis knowledge activities

Pre-Crisis Phase
Knowledge Searching external environment for possible crises
Acquisition
Conducting external surveys to identify potential events that would lead to crisis
Studying previous industry crises
Evaluating symbolic effects through external surveys
Participation in inter-organizational communities of practice
Focusing on knowledge of customer complaints
Monitoring possible technological advances and options in order to avoid crises
Hiring people with Crises Management experience
Forming alliances and joint ventures with other organizations
Using informal relationships for acquisition of information
Acquiring advice from consultants and experts on Crisis Management
Gathering advice on Crises from the professional literature (Books, Newsletters,
Journals)
Obtaining intellectual property (Proprietary Software, Patented Methodologies)
Observing failed/ successful efforts of others in dealing with Crises
Subjecting employees to external training
Improving processes through purchase of technology
Knowledge Transforming internal agents’ instinct into exploitable knowledge about crises
Selection
Observing behaviour and processes (e.g. quality management system)
Monitoring organization’s systems of indicators and record incidents that insinuate the
potential of a forthcoming crisis (e.g. increase in the number of faulty products)
Evaluating suggestions for alternative forms of organizing/ operating
Consulting with top management and align crisis prevention with strategy
Bringing experts & people together (Internal Communities of Practice)
Participating in in-house training
Retrieving information from Crisis Management manual (if available)
Retrieving information from available knowledge repositories
Identification of potential enemies/allies triggering crises or amplifying consequences.
Knowledge Evaluating risk of new products and services
Generation
Brainstorming
Identification of patterns leading to crises
Creating knowledge objects in a repository/ Create a crisis-related data warehouse
Gathering data from data mining, text mining and simulation
Creating and performing pilot Studies
Developing intellectual assets strategy to support crisis management practices
Creating a crisis management system
Authoring a crisis management manual
Codifying a mission statement and corporate identity profile
Elaboration of a wiki-based thesaurus on risk management issues and topics
Selection of staff to form a 24/7 rota over individual staff members that will be available
should a crisis strike/ Selection of spokesman
Knowledge Disseminating information about potential crises via email, intranet, newsletters,
Assimilation corporate portal, internet and conferences and meetings
Publishing and Disseminate to appropriate users of the Crisis Management Manual
Populating a crisis-related data warehouse
Pushing knowledge via an electronic alert
Informing the whole of the organization about the official spokesman and communication
handling
In-house training
Informally acclimating employees with the general crisis management guidelines of the
company (code of practice)
Establishing a social atmosphere of trust to encourage interpersonal communications
Knowledge Mobilising resources towards addressing the particular crisis immediate needs related
Emission with the incident results.
Lobbying

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4. Case study: Crisis management practices and realities in a

pharmaceutical company
In order to draw empirical data from real life we examine a crisis in an SME (Small and Medium
Size) pharmaceutical company. Such case analysis has been the first step of a series of empirical
research in an attempt to further explores the knowledge aspects of crisis management while it
stands as a preliminary effort for validating our ontology-based framework and the identified
knowledge activities. For confidentiality reasons we will refer to the company as PharmaCom. The
aim of our empirical investigation was to evaluate the validity of the proposed integrated framework
and to identify the importance of knowledge activities while also setting a first step to develop an
applicable process-based tool for handling crises knowledge management activities.

4.1 Case description

PharmaCom is a manufacturer of pharmaceutical products, involved in the production and
marketing of several owned brands while also providing contract-manufacturing services for eleven
(11) other companies. Despite the existing regulatory and safety system, the complexity of
manufacturing operations creates the risk for manufacturing errors and the company faced three
(3) production crises in the last five (5) years. We focused on a small-scale crisis that happened in
March of 2005, when a customer has denounced to the Ministry of Health, the National
Organization of Medicines and the Customer Protection Secretariat that she has found three
tablets of a product, which contained an alien object (hair). The incident concerned a product
manufactured in PharmaCom for another company and created panic and fear to organisation’s
management at all levels. The aforementioned crisis evolved in four stages:
ƒ a. The customer has contacted the Company to report the problem but the Sales Manager
failed to satisfy her demands. He did not retain the customer’s contact information and
underestimated the potential organizational threats.
ƒ b. The customer has reported the incident to the authorities, publicized the case, sent a fax to
the mass media and threatened for litigation.
ƒ c. The Company immediately responded by:
ƒ Sending a salesman to examine the problem in place.
ƒ Initiating a chain of internal inspections and safety controls especially for the recent batches
of the product.
ƒ Contacting the brand’s owner firm to explain the situation.
ƒ Organizing a large meeting to search for the reasons.
ƒ Sending a complete report to the NOM (National Organisation for Medicines) explaining the
causes of the problem.
ƒ Trying to influence media’s agenda and to avoid and publicity.
ƒ d. A few weeks later, the NOM has conducted an inspection to the product and the
manufacturing processes. The company has assigned the case to a lawyer
Given that our research team aimed at identifying the knowledge dimensions of the crisis, we have
designed and conducted qualitative research using both structured and unstructured interviews
which best reveal hidden dynamics within organizations (Denzin & Lincoln, 1998). We also
organized two (2) discussion groups with the top management of the company.

4.2 Crisis management and knowledge activities in PharmaCom

Our research revealed that PharmaCom is a crisis prone organization, particularly because of the
manufacturing operations, which comprise an increased level of risk. While a few elements of crisis
management exist in the current ISO documentation (e.g. defected product’s recall, customer
complaints reporting) and managers are aware of the risks for crises (e.g. manufacturing errors,
changes of regulatory system, financial threats), it is arguable that no particular effort has been
dedicated in designing a system which would address the organizational needs during a crisis.

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Drawing from the particular crisis’ case experiences, managers and staff of PharmaCom agreed
that the lack of shared knowledge on policy; potential threats and crisis handling information have
amplified the effects of the crisis. Moreover, people in PharmaCom harvesting useful insights from
the proposed framework (and in particular the procedural matrix) used their previous experiences,
memories and evaluations of the recent crisis and provided us with a list of – in their opinion -
knowledge activities that are important during crisis. The empirical study showed that the staff, in
all levels of hierarchy, shared the strong belief that knowledge should efficiently flow within the
organization during a crisis, hence enabling everybody to know the general strategy, the process of
reaction, the spokesman and other particular details of the crisis. A key consideration of middle
management employees was their need to know what the top management thinks about the crisis
and what are its size and significance. More importantly, the case revealed the absence of a
standard tool of rapidly disseminating that knowledge to all implicated stakeholders of the crisis
inside the organisation.

To address this issue, the research team introduced a simple to use graphic technique which
integrated into one diagram all the factors participating in the handling of a crises, these being the
crisis management activity, the agent that process it, the knowledge source that provides the
necessary information and the system that supports it (IT or manual). The technique gained
management acceptance and a set of approximately fifty different diagrams covering all the
knowledge-based crisis management activities were elaborated. In Figure 2, an example of such a
diagram that supports the “Focusing on Knowledge of Customer Complaints” activity is presented
(as part of a pre-crisis, crisis-event prevention process). In this figure a specific workflow (part of it,
since the whole process is depicted in a set of five diagrams) for efficiently handling knowledge of a
customer complaint that could lead to a crisis is presented. All the agents and the departments they
belong to are shown along with external and internal sources of used knowledge (e.g. Production
Registration File). Creation of new knowledge is also depicted (e.g. CM Strategy file). Moreover, for
each activity an index is appointed showing the system that supports it (e.g. CC for Call Center,
MIS for Management Information System and M for Manually executed activities). Particular
emphasis is placed in this workflow to the formation and strategic role of a Crisis Handling
Committee, with members from all over the organization, which would facilitate the knowledge
transfer among different departments and the dissemination of knowledge about the crisis and the
tactical overview of the organization.

5. Conclusions
The aim of this paper is to point out the important role of knowledge logistics in crisis management.
We have argued that crises may be conceptualized as knowledge intensive phenomena; our
empirical study confirmed that managers and employees identify the need of a well defined crisis
management strategy that must be supported by a knowledge logistics mechanism that rapidly and
efficiently circulates the necessary knowledge to all the implicated crisis handling agents. In an
attempt to contribute to this particular and rather innovative field we proposed a generic framework
that provides a common understanding of the domain in the semantic level and a set of knowledge
activities that can support the management of crises during its lifecycle, in the operational level. In
an effort to transform the theoretical suggestions of the framework into applicable actions and
based on empirical data drawn from the case company, we introduced the use of a graphic
technique that supports the rapid and efficient dissemination of the knowledge activities during a
crisis. This paper stands as the first step towards the elaboration of an integrated complete
knowledge management model for crisis management. In this process, current research of our
team includes the elaboration of reference interrelated diagrams for all the activities of the
procedural matrix resulting in a functional reference model for knowledge-based Crisis
Management. Our empirical research has also been focusing on the testing, validation and
evaluation of both the ontological framework and the description of knowledge activities by drawing
data from a selected sample of pharmaceutical companies.

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 Stavros Ponis, Epaminondas Koronis, Ilias Tatsiopoulos et al

MARKETING & TOP

SALES DEPARTMENT
COMMUNICATIONS DPT MANAGEMENT
Sales Employee 1
Custome r Calls with Crisis Handling Committee
External 4.1.1 a Complaint / 4.1.2 Document Call ID Conduct Issue
IV Media CC Problem CC
4.1.8 Assessment
Environment M Meeting
Sales Employee 1
K.R. 1. Customer
Communications Document Customer
Data MIS 4.1.3 Crisis
Dire ctor Information External
Complaint Management Knowledge Activities (I/IV)

Prepare a Media – CRM History Sources

4.1.12 Customers K.R.2. Production File
Database MIS Sales Employee 1
M Communication Plan
Document Complaint
No Can the Issue
4.1.4 / Problem
K.R.3. Product Transform to
CM M Information A C risis
Registration MIS
Strategy File
File Sales Employee 1 Yes
Yes? Can the Issue
Communications Effort to Re solve the B e Solved
4.1.5
Director M
Issue Instantly? Board of Direc tors
Evaluate No
Conduct General
4.1.11 Communication 4.1.9
Board Meeting
M Situation & T hreats Sales Manager M
Is the Issue/ Inform Management
Problem 4.1.6 about
Communications Resolved? ? ?? M T he problem/ Issue
Director ? a?
CM
Str ategy
Communicate with Sales Employee 1
4.1.13 File
M
Source s of Influence Record Issue
4.1.7 Resolving
M Process
Unresolved III
Issue Report

Leads the
Issue Sales Manager Process to
History Reestablish The Legal
External File 4.1.10 Communication Department
Social IV M With Customer
Envir onment
Leads the
II Process to
The Financial
Department

Figure 2: Complaint management knowledge activities diagram (partial, 1 of /5)

6. Acknowledgements
The research efforts described in this paper are within the context of a project co - funded by the
European Social Fund (75%) and National Resources (25%) - Operational Program for Educational
and Vocational Training II (EPEAEK II) and particularly the Program PYTHAGORAS.

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424
Knowledge-Based View of the Firm – Foundations, Focal
Concepts and Emerging Research Issues
Aino Pöyhönen and Kirsimarja Blomqvist
Lappeenranta University of Technology, Finland
[email protected]
[email protected]
Abstract: The logic of doing business and creating value has changed fundamentally during the past
decades. Knowledge has taken the place of land, labor and capital as the most significant resource, and
productivity of knowledge work has become the main challenge for all types of organizations. Along with this
development, a novel theoretical approach to organizations, the knowledge-based view of the firm (KBV), has
risen, which implies significant changes to how organizations are understood. However, the KBV still is in an
emerging state and a lot of vagueness remains even in is basic tenets and key concepts. Our paper traces the
foundations and suggests future developments for the KBV. Specifically, we address two promising directions
of future inquiry: organizational renewal capability and trust as a form of governance.

Keywords: Knowledge-based view of the firm, knowledge management, innovation, organizational renewal,
dynamic capabilities, trust

1. Introduction
The competitive environment of firms has changed dramatically during the last two decades. The
role of the traditional sources for competitive advantage has deteriorated in the process of
globalization and technological change. Monopolies have broken down through the deregulation of
markets, and the economies of scale seem to bring diminishing returns. The high-technological
change creates incentives for innovation and entrepreneurs seeking opportunities. Also, large and
established companies need to adapt to the changes in the business environment. In addition to
streamlining their structures and processes for increased efficiency, firms need to create new
knowledge for increased innovativeness. As James March (1991) notes, firms need to exploit the
existing potential, but also to adapt to the ongoing changes by exploring new business
opportunities. The discontinuities may be turned into opportunities either through proactive
innovation and self-renewal (Pöyhönen, 2004), or by co-operating with innovative firms and
learning from them. Large companies are building relevant capabilities through acquisitions,
partnerships, and collaborative R&D projects. For example, Microsoft, Cisco and Nokia have
diversified their capabilities through collaboration and acquisitions with Internet, software and
content capabilities (Blomqvist, 2002).

The role and effect of knowledge in the contemporary society and organizations is so profound that
the change has been compared to the Kuhnian paradigmatic shift. The increasing role of
knowledge has dramatic consequences for the nature of work (e.g., Drucker, 1999). It also has
implications for the authority relations within the firm, organizational structures and processes, and
even for the boundaries of firms. An increasing number of organizations worldwide are consciously
attempting to manage their knowledge and leverage their intellectual capital. Along with these
developments, a novel theoretical approach to organizations, the knowledge-based view of the firm
(KBV) has risen, which implies significant changes to the way in which organizations are
understood. However, the KBV still is in an emerging state and a lot of vagueness remains even in
is basic tenets and key concepts. Therefore our aim in this paper is to clarify the current state of the
art of the KBV and to point out some crucial issues that have so far been given inadequate
research attention. To achieve this goal we first review the theoretical foundations of the KBV and
pinpoint some of its most focal ideas. Then discuss some promising directions of future inquiry.
Specifically, we address two important areas of development, organizational renewal capability and
trust as a form of governance, and present suggestions for how they could be approached.

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2. Foundations of the knowledge-based view of the firm

Along with the rise of knowledge work, a novel approach to organizations, the knowledge-based
view of the firm, has emerged bringing significant changes to the way in which organizations are
understood. The starting point is that knowledge is the key explanatory factor, and the nature of
knowledge is an important determinant enhancing understanding of firm organization and
behaviour. The KBV addresses the issues of the existence, the boundaries, and the internal
organization of the multi-person firm (Foss, 1996, 460). According to the KBV, organizations exist
to create, transfer, and transform knowledge into competitive advantage (Kogut & Zander, 1992),
and performance differences between firms derive from their differing stocks of knowledge and
capabilities in using and developing knowledge (Nonaka & Takeuchi, 1995; Grant, 1996b; Spender
& Grant, 1996). While most authors discussing knowledge management do not explicitly refer to
the KBV, this tradition is arguably one of the the most important theoretical developments
connected with the field of knowledge management. In the following, we review the most important
tenets of the KBV.

As a productive resource, knowledge has some distinctive characteristics that set it apart from
other types of resources. First, there are economies of scale in knowledge. This means that the
replicating costs of knowledge are less than the original discovery or knowledge creation costs.
Especially explicit knowledge is economical to reproduce in digital form (Shapiro & Varian, 1998).
For tacit knowledge, replication is costly and slow, but even its replication costs are lower than the
costs of its creation. There are also economies of scope in knowledge. This means that knowledge
is not specific to the production of single product or service, but can also be extended to benefit the
production of other outputs (Kogut & Zander 1992, Grant, 1996b). Unlike traditional physical goods
that are consumed when they are used, knowledge is subject to increasing returns: the more
knowledge is used, the more valuable it becomes (Grant, 1996b; Zack, 1999). In the sense that the
KBV views knowledge as the most important firm resource, it is similar to the resource-based view
of the firm (RBV) (e.g. Penrose, 1959; Wernerfelt, 1984; Barney, 1991), which conceptualizes the
firm as a unique bundle of idiosyncratic resources and capabilities. In comparison with the RBV,
the KBV takes a more fine-grained and profound understanding of knowledge as its basis.
Especially relevant are three background assumptions of the nature of organizationally relevant
knowledge: constructionism, activity-relatedness and inter-subjectivity (Pöyhönen, 2004).

Firstly, the KBV is based on the constructionist view of knowledge, which assumes that knowledge
is always tied to a particular viewpoint and practical application. In other words, knowledge is a
product and vehicle of human activity, bounded by the limitations of human cognitive and other
psychological capacities, and by the social and cultural environment of activity. Information
technology systems and other related mediating tools can act as vehicles for transferring
knowledge, or as repositories for storing knowledge, but in knowledge-based management the role
of these is secondary compared with knowledgeable human actors. Humans are seen as active
constructors of knowledge, who use knowledge for achieving certain goals, rather than naive
recipients of externally created knowledge or “garbage cans” into whose minds information is
inserted and where it exerts a stable and predictable influence. Learning is understood as a
situated process of knowledge construction based on action (e.g. Berger & Luckmann, 1966;
Nonaka & Takeuchi, 1995; Orlikowski, 2002). Constructionism also implies that knowledge cannot
be completely controlled but can only be managed by creating enabling conditions (Von Krogh,
1998). It also directs attention from mapping knowledge resources per se to examining how these
resources are utilized and coordinated (Spender, 1996b),

Secondly, the particular socio-historical context sets the boundaries for individual understanding
and behaviour, while at the same time individuals regenerate and modify the context by enacting it.
Individuals neither think nor take action in a vacuum; knowledge is embedded and constructed in
shared practices by interacting individuals that combine their efforts while striving towards more or
less common goals (e.g., Berger & Luckmann, 1966; Crossan et al., 1999). As Spender (1996a,
64) argues, “knowledge is less about truth and reason and more about the practice of intervening
knowledgeably and purposefully in the world.” And to intervene in the world one has to be able to
communicate with others and understand the particular context of activity. In this sense, knowledge
essentially exists between individuals and not only within them.

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 Aino Pöyhönen and Kirsimarja Blomqvist

For a firm to be knowledgeable, it is not enough that its individual employees are skilled and
educated. The scattered, uncoordinated insights of individual organizational members are not
enough to produce competitive advantage; in order to produce sustainable value, they must be
combined into a synergistic whole. This does not mean a mechanistic aggregation or synthesis of
what the individual members of the organization know. The pattern and mechanisms of integration
of knowledge cannot be reduced to the level of individual actions, but have to be analyzed in their
own right, on the level of shared practices. The crucial issue is how the employees work together,
how their tasks interrelate and how their individual knowledge is integrated to produce value for the
company (Grant, 1996a; 1996b). This entails that, from a knowledge-based view, organizations are
above all social entities “specializing in the creation and transfer of knowledge” (Kogut & Zander,
1996, 503).

In the knowledge-based production, the role of organizational factors is critical. The

competitiveness of the firm does not so much depend on its product–market positioning in relation
to external competitors, as on its internal characteristics. Humans are bounded by cognitive
limitations as to how much and what they can know, and therefore they have to specialize (Simon,
1955). Especially in complex issues, which cannot be understood by any single individual, there is
a need for integration and coordination of knowledge (Grant, 1996b). Producing a good or service
typically requires the application of many types of knowledge resources (Kogut & Zander, 1992;
Grant, 1996b; Grant & Baden-Fuller, 2004). This means that the organization also has to be able to
manage, integrate, and coordinate the knowledge of its employees (Penrose, 1959; Kogut &
Zander, 1992; Grant, 1996b).

Finally, knowledge is always connected with action: that what is known is demonstrated in
knowledgeable activity. Knowledge is created and leveraged in the context of on-going
organizational activities (e.g., Dougherty, 1992; Leonard-Barton, 1995; Brown & Duguid, 2001;
Orlikowski, 2002). The most valuable kind of knowledge is that which is demonstrated in “knowing”
and skillful behavior, rather than that which is stored in, for example, databases and patents.
Competitive advantage, in fact, flows not from resources themselves but from the firm capabilities
to use these resources for productive purposes (e.g., Penrose, 1959; Kogut & Zander, 1992;
Spender & Grant, 1996; Grant, 1996b). Furthermore, because knowledge is always based on
human action, it cannot be managed in the same way as inhuman resource stocks and flows.
Knowledge is intangible, invisible and to a large extent unconscious even to those in whose minds
and bodies it is embedded. Tacit knowledge can never be fully externalized and brought to be the
subject of rational management control. Thus, the most important way to manage knowledge is by
creating contexts where knowledge can grow and flourish. Higher-order organizing principles
(Kogut & Zander, 1992) and collective knowledge (Spender, 1996a; 1996b) create the context
where organizational activities take place, and therefore have a crucial role in steering any
knowledge-based organization. To summarize, according to the KBV, knowledge is not something
objective, free-floating, abstract, and universal as portrayed by the traditional western
epistemology; but neither is it only subjective, residing solely in the heads of individuals as their
personal experience. Instead, knowledge is something that is constructed in the social practices of
actors embedded in a particular social context. Rather than residing in the minds of individuals or in
databases, the most important type of knowledge is that which is located between people (e.g.,
Spender, 1996b; Brown & Duguid, 2001). Knowledge emerges from the social interactions between
various parties within and across the organizational borders. In addition, it is continuously re-
interpreted and modified, and continuously changing and developing (e.g., Blackler, 1995; Drucker,
1999; Tsoukas & Chia, 2002; Orlikowski, 2002). In other words, knowledge is fundamentally
dynamic in nature: it is the subject of constant negotiations, modifications, and alterations. It is also
related to the issues of power and control (Blackler, 1995).

3. Emerging issues in the knowledge-based view of the firm

According to Spender (1996a; 1996b), the strategically most important type of knowledge for firms
is collective knowledge, which consists of patterns and modes of knowledge combinations between
individuals, groups, units, and organizations. Shared operating methods are inimitable across firms,
and therefore they are the main source of sustained competitive advantage. Also, Kogut and
Zander (1992) argue that the central competitive dimension of firms is the efficient creation and

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transfer of knowledge within the organizational context. Thus, the processes by which knowledge is
used and created in organizations are at the heart of business performance and value creation.
Furthermore, as organizations increasingly face worldwide competition in rapidly transforming,
unpredictable environments, the ability to generate constantly novel and improved products,
services, processes, and mindsets has become quintessential for sustained competitive advantage
(e.g., Grant, 1996a; Teece et al., 1997; Eisenhardt & Martin, 2000; Pöyhönen, 2004). In sum, it
seems that there are two fundamental issues that are especially important topics of research for
taking the KBV further: understanding organizational capability for continuous self-renewal and
innovation, and knowledge-productive mechanisms of social coordination. Correspondingly, in the
field of knowledge management, several authors (Snowden, 2002; Tuomi, 2002; Hong & Ståhle,
2005) have noted that the next generation of research will be characterized by an interest in the
complicated, complex and chaotic nature of knowledge, management of risk and uncertainty, as
well as capabilities for the creation of new knowledge and innovations. The key issue then is how
to navigate successfully in the midst of turbulent and unpredictable environments and to benefit
from the diverse and dispersed knowing of various actors, while instilling and maintaining a
requisite coherence in the firm activities. In this chapter, we discuss two important research
directions which represent emerging topics in the KBV and knowledge management: organizational
capability for continuous innovation and trust as a governance mechanism.

3.1 Organizational capability for renewal

It is widely recognized that winners in the global marketplace are those firms that can renew
themselves by continuously generating new knowledge and capabilities through learning and
innovating. Renewal capability does not only mean that the organization is able to respond to
today’s challenges and to keep up with the changes in its environment, but also that it can act as a
forerunner by creating innovation, both at the tactical and strategic levels of operation and thereby
change the rules of the market (Hamel & Prahalad, 1994; Brown & Eisenhardt, 1998). The demand
for constant renewal is not limited to firms: non-profit organizations as well as regions and nations
face similar challenges.

Figure 1: Knowledge assets, renewal capability, and the production of sustained competitive
advantage (Pöyhönen, 2005)

However, even though both academics and practitioners recognize that the dynamic capability for
continuous learning, development and renewal is a major source of sustained competitive
advantage (e.g. Grant, 1996a; Teece et al., 1997; Eisenhardt & Martin, 2000; Pöyhönen, 2004),
there is no widely shared view on how organizational renewal capability should be defined, and the
research field is characterized by a plethora of concepts and definitions. This has lead into
theoretical pluralism and relatively segregated research strands with little cross-communication
(e.g., Wolfe, 1994; Van de Ven & Poole, 1995; Dunphy, 1996). Although there is a wide
multidisciplinary literature addressing some dimensions of organizational renewal, there are few
integrative models that would draw together the most important aspects of a wide array of studies.

A recent theoretical model by Pöyhönen (2005) integrates the contributions of various approaches
and presents a comprehensive model of organizational renewal capability. In this model, it is
proposed that sustained competitive advantage in turbulent environments is created in an

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interaction between knowledge assets and renewal capability of the organization. Figure 1
demonstrates the interconnections of knowledge assets, renewal capability, innovation, learning
and sustained competitive advantage. The model further argues, based on an extensive literature
review, that there are six key elements of organizational renewal capability: strategic capability,
leadership, exploiting time, connectivity, managing knowledge, and learning orientation (see
Pöyhönen, 2005).

The model posits that sustained competitive advantage in turbulent environments is created when
an organization is able to renew itself continuously (Leonard-Barton, 1995; Teece et al., 1997;
Eisenhardt & Martin, 2000; Weick & Sutcliffe, 2001; Pöyhönen, 2004). Renewal is demonstrated as
organizational learning (i.e. development of novel mental models and insights) (e.g. Fiol & Lyles,
1987; Huber, 1991) and innovation (i.e. development of new products, services, processes etc.)
(e.g. Kanter, 1988; West & Farr, 1990). Learning and innovation result from the interaction between
knowledge assets and renewal capability. Renewal capability determines how an organization is
able to develop its existing knowledge assets and to create new ones. Renewal capability is
defined as the organizational capability to produce incremental development and radical change in
its mental models and activities. In other words, an organization with high capability for renewal is
not only able to respond to today’s challenges and to keep up with the changes in the environment,
but it can also act as a forerunner by creating change from within the organization and thereby
change the rules of the market. Knowledge assets and renewal capabilities in turn are modified by
the learning and innovation outcomes. Learning and innovation are the main mechanisms that
produce new knowledge assets for the firm. Also renewal capability can be extended and improved
by learning and innovation outcomes. When this cycle is continuous, the organization is able to
sustain itself in the face of both external and internal change, and to proactively create change from
within the firm.

Knowledge assets refer to the stock of strategically important knowledge in the firm. Knowledge
assets embody the particular substance of knowledge, for example the field of individual expertise
or the content of a particular database or the script of a particular work activity. The knowledge
asset base of the organization influences innovation and learning outcomes, as shown in the
model. The development of knowledge is always based to some extent on already existing
knowledge (Cohen & Levinthal, 1990). However, even though the existing knowledge base of the
organization influences the possible developmental paths, in order to understand the extent to
which an organization is able to produce cognitive and behavioral development it is not enough to
examine the knowledge resources that the organization governs at the moment. Knowledge assets
such as human capital and IPRs tell only a part of the story. The organization’s capability for
renewal determines how efficiently it is able to use its resources for learning and innovation. The
management of organizational renewal is significantly hindered by the lack of measures that would
allow its reliable assessment and effective development. Even though the importance of renewal
capability for organizational success is an uncontested fact in the literature, there are few metrics
for this important phenomenon. At the moment, most of the research on renewal capability is based
on case studies, and there is a lack of quantitative methods that would allow reliable assessment,
internal communication and inter-firm comparison of renewal capability. The theoretical model of
renewal capability has been used as a basis for creating a survey instrument, which will be
psychometrically validated in a sample of Finnish organizations in the near future. The survey
instrument is suitable for both scientific research and practical performance measurement and
organizational development purposes.

3.2 Trust as an emerging form of governance in intra- and inter-organizational

relationships
In the knowledge economy, trust is becoming an increasingly important issue, as high-trust forms
of intra- and inter-organizational relationships are seen to encourage more effective knowledge
creation and transfer (Miles et al., 2000; Adler, 2001; Tyler, 2003). Most scholars (e.g. Bradach
and Eccles, 1989; Adler, 2001) approach trust as a complementary governance mechanism in
comparison to price (incentives) and authority (control). In addition to being an important form of
governance, trust also has essential role as an enabler in intra- and inter-organizational knowledge

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creation processes (Ellonen et al., 2006). Miles et al. (2000) have illustrated the role of trust in
knowledge creation and innovation as follows (Figure 2).

Time, Broad
trust and entrepreneurial
territory empowerment

Knowledge Product and

Collaboration creation service Commercial
and transfer innovation application

Figure 2: The role of trust in knowledge creation and innovation (Miles et al., 2000)
Based on existing research, trust has a direct effect on communication, collaboration, and
commitment (e.g., Hardwig, 1991; Blomqvist, 2002; McEvily et al., 2003). Most scholars, such as
Bradach and Eccles (1989) approach trust as a complementary governance mechanism especially
suited for networks and communities, in comparison to price (markets) and authority (hierarchy).
Trust can also be seen as a lubricant in managing uncertainty, complexity, and related risks
(Luhmann, 1997), as well as a higher-order organizing principle (Kogut & Zander, 1992; Foss,
1996; 2005). Traditional mechanisms of trust may be inadequate yet in the global network society
(Adler, 2001; Blomqvist, 2002; Tyler, 2003). In many cases there is not enough time for repeated
interaction on which the traditional, slowly evolving trust is based. Therefore the nature of trust may
be changing towards a more analytical, reflective and tentative type of trust (Adler, 2001). It is also
proposed that the fast and individual-based trust acts as a critical threshold condition for managers
attempting to cope with environmental and organizational complexity, limited time and attention,
and the related risks. Trust is argued to be especially critical in a high-risk dynamic environment,
and allowing asymmetric actors to connect despite the lack of (perfect) information, limited shared
context, and related risks (Blomqvist, 2005).

However, due to organizational and management challenges, future organizations cannot only rely
on individual-based trust but demand complementary mechanisms and trust to support the
knowledge creation and transfer. Trust cannot only be particularistic, but more universalistic forms
of trust are also needed. Procedural justice has been positively associated with employee attitudes,
such as commitment to the organization (Pearce et al., 2000). At present, researchers are studying
the role and nature of impersonal and institutional trust in both organizational and virtual contexts
(Kosonen, Ellonen, and Blomqvist, forthcoming). It is therefore proposed that different forms of
trust, such as fast and individual-based trust, as well as impersonal and institutional trust are
increasingly important for knowledge-based organizations.

4. Conclusions
In this paper we examined the basic tenets of the KBV and pointed out two emerging research
topics of high importance: organizational capability for continuous renewal and innovation, and trust
as a social coordination mechanism. In knowledge-based competition, sustainable competitive
advantage is not possible without continuous innovation. Organizations need to understand how to
master change, both by adapting to it, but also by proactively creating change for themselves and
extending this change to the environment. Innovations, by nature, emerge in social interaction in
which diverse actors share complementary knowledge. When hierarchies collapse and traditional
incentives work poorly with knowledge workers, the role of mutual trust as a social coordination
mechanism becomes increasingly critical. Concerning the KBV as a whole, it should be noted that
it still is in an emerging state and is more a set of ideas about the existence and nature of the firm
than a unified theory in a formal sense (Grant, 2002). Further, the main foci of the KBV are
extremely demanding to observe reliably and even more so to operationalize and measure.
Spender and Grant (1996) note that many of the phenomena that are the most interesting from the
knowledge-based perspective may in fact be unmeasurable. Connected with this is the lack of a
large body of empirical research that would demonstrate the connection of the key knowledge-
based variables to firm performance.

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 Aino Pöyhönen and Kirsimarja Blomqvist

However, interest in the KBV is increasing all the time and we expect to see much progress in the
next years. An increased understanding of the social aspects of knowledge creation could
especially complement this abstract yet focal theoretical framework. We believe that research on
organizational renewal and trust will contribute significantly to the emerging theory of knowledge-
based organizations.

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433
Conceptual Design of a Knowledge Management Support
System for Assessment of Intellectual Capital
Agnieta Pretorius and Petrie Coetzee
Tshwane University of Technology, Pretoria, South Africa
[email protected]
[email protected]
Abstract: Existing literature propagates a variety of methods, models, systems and frameworks for
assessment of intellectual capital. Unfortunately, awareness of and interest in the assessment of intellectual
capital, far exceeds its practical application. Due to the complexities involved in selecting and implementing an
appropriate method for assessing intellectual capital, knowledge management support systems are needed for
managing the evolving body of knowledge concerning such assessment. This paper discusses the first
iteration of the development process of a conceptual design for a knowledge management support system to
(i) provide management support to the process of selecting and implementing an appropriate method (or
combination of methods) for assessment of intellectual capital, (ii) utilize past knowledge and expertise to
accelerate and improve decision-making, (iii) promote synergism through integration of methods, and (iv)
manage the evolving body of knowledge concerning the assessment of intellectual capital.The proposed
knowledge management support system builds upon the rich body of existing knowledge on knowledge
management systems, decision support systems, expert systems, and hybrid support systems, and is
composed of a data management subsystem, a model management subsystem, a user interface subsystem,
and a knowledge-based management subsystem. The knowledge-based management subsystem is the major
focus of this first iteration and provides intelligence for the selection and implementation of appropriate models
and for knowledge acquisition from a knowledge repository for keeping track of current and best practice
scenarios.

Keywords: Intellectual capital, intangible assets, methods of assessment, knowledge management support
systems, decision support systems, intelligent systems

1. Introduction
Intellectual capital (IC) is increasingly acknowledged as a dominant strategic asset and a major
source of competive advantage for organizations (Harrison and Sullivan 2000; Holsapple 2003;
Housel and Bell 2001; Kannan and Aulbur 2004; Mouritson, Bukh and Marr 2004; Sánchez,
Chaminade and Olea 2000; Teece 1998).

Despite a rich and evolving body of literature on methods, models systems and frameworks for
assessment of IC, and increased awareness of the need for such assessment, relatively few
organizations are actively and comprehensively assessing their IC (Andriessen 2004b; Best
Practices, LLC 1999, Chen, Zhu and Xie 2004; Bontis 2001; Green 2005; Marr 2005; Pretorius and
Coetzee 2006; Smith and McKeen 2003).

According to Simon as cited by Turban, Aronson and Liang (2005), the human mind has cognitive
limits in processing and storing information, limiting individuals’ problem solving capabilities when a
wide range of knowledge and diverse information is required.

Knowledge about methods, models, systems and frameworks for assessing IC is scattered across
existing literature, the operations and processes of organizations, various databases and the minds
of academics and practitioners (Pretorius and Coetzee 2005). This knowledge includes:
ƒ Theoretical descriptions of existing methods;
ƒ Knowledge on how to practically implement such methods;
ƒ Data, information and know-how on which methods and what particular implementations
thereof were used in which contexts and industries, at what levels and for what purposes;
ƒ Whether a particular implementation was deemed successful or not;
ƒ Theoretical descriptions of models, systems and frameworks; and

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ƒ Tacit knowledge concerning which methods should most likely be suitable under what
conditions and circumstances.
Pretorius and Coetzee (2005) note that, with a growing awareness of IC as a key strategic asset of
the organization, and with more and more organizations supplementing their annual reports with
sections on IC, organizations and their managers feel increasing pressure to assess, manage and
report on their IC assets. They argue that, due to the complexities involved in selecting and
implementing an appropriate method or combination of methods for assessment of IC, and the
cognitive limits of human problem solving, there is a need for a system or mechanism to manage
(organize, store and retrieve) the evolving body of knowledge concerning such assessment. They
refer to such a system or mechanism as a knowledge management support system, a term that will
be discussed in more detail in the next section.

Any such system needs to be embedded in a rather sophisticated socio-technical system to be

able to deal with the variety and complexities of assessment of intellectual capital, this process
being a knowledge-intensive process. In this paper we focus more on design of the technical
aspects of such a system than on the design of the socio-technical system in its totality.

This paper discusses the first iteration of the development process of a conceptual design of a
knowledge management support system:
ƒ To provide management support to the process of selecting and implementing an appropriate
method/strategy (or combination thereof) for assessment of IC;
ƒ To utilize past knowledge and expertise to accelerate and improve decision-making;
ƒ To promote synergism through integration of methods; and
ƒ To manage the evolving body of knowledge concerning the assessment of IC.
The proposed knowledge management support system is composed of a data management
subsystem, a model management subsystem, a user interface subsystem, and a knowledge-based
management subsystem. This first iteration focuses on the knowledge-based management
subsystem of such knowledge management support systems.

2. Terminology
The following sub-sections explain some of the terminology of this paper.

2.1 Knowledge management support systems (KMSS)

The term “management support system”, as defined by Turban et al. (2005), “refers to the
application of any technology, either as independent tool or in combination with other information
technologies, to support management tasks in general and decision-making in particular”. These
technologies include, according to Turban et al (2005), amongst others, management information
systems, executive information systems, group support systems, decision support systems (with or
without knowledge-based management subsystems), expert systems and neural networks.
Pretorius and Coetzee (2005) refer to a management support system (MSS) that includes a
mechanism for the management of knowledge, as a knowledge management support system
(KMSS). Such a system could be realized as a decision support system (DSS), an expert system
(ES), or some other integrated system. As illustrated in Figure 1, mechanisms for the management
of knowledge could, for example, be in the form of the knowledge repository of a knowledge
management system (KMS), the knowledge-based management subsystem of a decision support
system, and/or a knowledge base maintained through an ES.

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Figure 1: Schematic representation of a KMSS as derived from the definition by Pretorius and
Coetzee (2005)
Turban et al. (2005) emphasize the difference between a knowledge-based management system
and a KMS and between a knowledge base and a knowledge repository:
ƒ A knowledge-based management subsystem is the optional fourth component of a decision
support system that contains an ES or other intelligent system. (A decision support system
containing a knowledge-based management subsystem can also be called an intelligent
decision support system (IDSS), an ES, an active decision support system, a knowledge-based
decision support system (KBDS) or an expert/intelligent system integrated with a decision
support system.)
ƒ A KMS is typically implemented as a text-oriented DSS. Such a text-oriented DSS supports
decision-making by electronically keeping records of textually represented information that
could affect decision-making.
ƒ A knowledge base forms part of an expert- or other intelligent system and contains the relevant
knowledge for understanding, formulating and solving problems. Its two basic elements are
facts (about the problem situation and the theory of the problem area) and rules or heuristics for
directing the use of knowledge to solve specific problems in a specific domain.
ƒ A knowledge repository, sometimes called an organizational knowledge base, forms part of a
KMS, stores knowledge (which is often text-based), has characteristics very different from a
database or knowledge base, and can be connected to the database management system or
knowledge-based management subsystem of a DSS.

2.2 Intellectual capital (IC)

Smith and McKeen (2003) note that intellectual capital (IC) is often confused with other intangible
assets such as knowledge assets, human capital, intellectual property, customer capital and
structural capital. Furthermore there is an overlap between terms being used, such as knowledge,
intellectual capital and human capital.

According to Brooking (1999), IC refers to the combined intangible assets that enable the company
to function, including market assets, intellectual property assets, human centered assets and
infrastructure assets. As shown in Table 1, similar to the components of IC identified by Brooking
(1999), but not explicitly including intellectual property assets, Stewart, as quoted by Smith and
McKeen (2003), states that it is “generally agreed by academics” that IC consists of “at least” three
categories, namely human capital, structural capital and customer capital. Edvinsson and Malone
(1997) further subdivide structural capital into organizational, process and innovation capital.

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There is some disagreement on whether IC includes intellectual property or not: Prusak, as quoted
by Kannan and Aulbur (2004), defines IC as “intellectual resources that have been formalized,
captured and leveraged to create assets of higher value” (including knowledge, information,
intellectual property and experience). Contrary to Brooking (1999) and Prusak, as quoted by
Kannan and Aulbur (2004), Bontis (1998) explicitly states that IC does not include intellectual
property, defining intellectual property as “assets that include copyrights, patents, semiconductor
topography rights and various design rights” and also “trade and service marks”. It should be noted
that, as a result of this disagreement on whether IC includes intellectual property or not, certain
methods of assessments accounts for intellectual property and others not.
Table 1: Components of IC
Human Centred Assets Human
Capital
Infrastructure Structural Organizational Capital
Assets Capital Process Capital
Innovation Capital
Market Customer
Assets Capital
Intellectual Property Assets

2.3 Assessment
Although the terms measurement, (e) valuation and assessment are often used interchangeably in
literature, Andriessen (2004a) notes a distinct difference between valuation and measurement: He
quotes Rescher (1969) as defining valuation (using the term evaluation) as a “comparative
assessment or measurement of something with respect to its embodiment of a certain value” and
also Swanborn (1981) as defining measurement as “the process of assigning scaled numbers to
items in such a way that the relationship that exists in reality between the possible states of a
variable are reflected in the relationships between the numbers on the scale”.

Andriessen (2004a) subsequently explains that valuation requires an object to be measured, an

evaluation framework and a criterion reflecting usefulness or desirability. He identifies four options
for determining value (clarified in Table 2), namely financial valuation, value measurement, value
assessment and measurement. The first three qualify as evaluation methods and the fourth as a
measuring method. In this paper the word “assessment” includes measurement, (e) valuation and
all other methods for determining value, as intended through its placement in the third column of
Table 2.
Table 2: Options for determining value
Options for determining value
Financial valuation (E)valuation Assessment
(EVA, HRA, Tobin’s Q)
Value measurement
(BSC, HRA, IC Audit)
Value assessment
(IC Benchmark system)
Measurement Measuring
(IC Index, CWP, HRA)
Figure 2 below shows the relationship between the four options for determining value as expressed
by Andriessen (2004a).

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Figure 2: Financial valuation, value measurement, value assessment and measurement. Source:
Andriessen: 2004a

3. Existing methods for assessment of IC

Existing literature propagates a variety of methods for assessment of intellectual capital IC,
including market-to-book ratio, Tobin’s Q, return on assets, technology broker’s IC audit, balanced
scorecard, human resource accounting, intangible asset monitor, IC-index, Skandia navigator, the
“new IC measurement model” of Chen, Zhu and Xie, as well as citation-weighted patents
(Andriessen 2004b; Best Practices, LLC 1999, Chen et al. 2004; Bontis 2001; Smith and McKeen
2003).

Selecting an appropriate method or combination of methods for assessment of IC in a particular

context, is a complex process (Pretorius and Coetzee 2005). Smith and McKeen (2003) note that
“no single metric would work in all circumstances”, Sveiby (2002) that “no one method can fulfill all
purposes” and Andriessen (2004a) that “the array of problems being addressed by many of the
methods are so broad that it seems questionable whether they can be solved using one method.”
The appropriateness of assessment methods – and of specific implementations of such methods –
depends on factors such as:
ƒ Purpose of and motivation for assessment (Andriessen 2004a; Sveiby 2002);
ƒ Context, goals, objectives and critical success factors of organization (Harrison and Sullivan
2000; Smith and McKeen 2003);
ƒ Circumstance or situation (Smith and McKeen 2003; Sveiby 2002);
ƒ Audience (Sveiby 2002);
ƒ Industry and line of business (Van Buren 1999);
ƒ Level of assessment (Sánchez et al. 2000; Smith and McKeen 2003); and
ƒ Level of resources the organization is willing to commit towards assessment of IC (Harrison and
Sullivan 2000).
The classification of methods for and/or approaches to assessment of IC provides a valuable aid in
the quest towards determining which method or approach to follow in a particular scenario. Existing
classification schemes include those by Andriessen (2004a; 2004b), Best Practices, LLC (1999),

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Kannan and Aulbur (2004), Luthy (1998), Smith and McKeen (2003), Sveiby (2002), and Williams
as quoted by Green (2005) and Sveiby (2002).

4. Objectives of KMSS
Turban et al. (2005) emphasize that in decision-making situations, rather than attempting to
reinvent the wheel each time, there is a need to draw upon past knowledge and expertise to solve
reoccurring problems and problems similar to those solved before. Pretorius and Coetzee (2005)
deduce that, due to the complexities involved in selecting and implementing an appropriate method
or combination of methods for assessment of IC, systems or mechanisms are needed for
managing (organizing, storing and retrieving) this evolving body of knowledge concerning the
assessment of IC and their spheres of relevance.

The components of such system are required to assist with:

ƒ Making sense of the context and sphere of relevance of existing solutions;
ƒ The development of relevant solutions for new problems;
ƒ The selection of an appropriate solution; and
ƒ The implementation of such solution.
According to Simon as cited by Turban et al. (2005), the decision-making process involves three
major phases: intelligence, design and choice. Implementation, as a fourth phase, was added later.
Mapping these requirements to Simon’s decision-making process (Turban et al. 2005), this could
be rephrased as stating that systems or mechanisms are required to provide support to
organizational analysts and managers for all four phases of the decision-making/modeling process,
as illustrated in Table 3.
Table 3: Matching of requirements of KMSS with phases of Simon’s decision-making process
Requirement Requirements of KMSS Simon’s decision-
making process
The selecting of an appropriate method or methods for Sense-making Intelligence
a specific organization and purpose Development of relevant Design
solutions
Selection of appropriate Choice
solution
The actual implementation of such method or methods Implementation of Implementation
solution
Analyzing various existing methods/approaches/models/strategies for assessing IC (Andriessen
2004a; Andriessen 2004b; Best Practices, LLC 1999; Bontis 2001; Castellanos, Rodríguez and
Ranguelov 2004; Chen, Zhu and Xie 2004; Edvinsson and Malome 1997; Sánchez, Chaminade
and Olea 2000; Sveiby 2002), it was found that:
ƒ These methods consists of steps;
ƒ A certain step may appear in more than one method; and
ƒ Similar categories of methods appear to have similar/overlapping steps, even though the
guidelines for executing these steps may differ.
After noticing the overlaps in steps between methods, these methods were re-evaluated in search
for possible synergisms that could be achieved by combining/exchanging/adding steps from other
methods.

The resultant list includes the following:

ƒ The same data, e.g. goals and critical success factors of the organization, may be fed into more
than one model;
ƒ Steps described as part of one method, e.g. determining IC indicators (Andriessen 2004B;
Edvinsson and Malome 1997, Sánchez et al. 2000), could be useful in other methods that, for
example, also make use of indicators;

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ƒ Intermediate output, e.g. IC indicators, may be fed into more than one method, e.g. the Skandia
Navigator, the Caterpillar IC base and Battery’s IC system (Roos et al., as quoted by
Andriessen 2004b); and
ƒ Intermediate output derived from a model such as the Skandia Navigator (Edvinsson and
Malome 1997) could be further explored by feeding it into another model, e.g. Chen et al.’s “new
IC measurement model” (Chen et al. 2004), which could, for example, be used to analyse the
interrelationships between categories of IC.
From the above analysis the objectives as listed in Table 4 are derived for the proposed knowledge
management support system (KMSS).
Table 4: Objectives of KMSS
Objectives
Objective Provide management support to the process of selecting and implementing an appropriate
1 method/strategy (or combination thereof) for assessment of IC, addressing all four phases of
Simon’s decision making process, including intelligence, design, choice and implementation
Objective Utilize past knowledge and expertise to accelerate and improve decision-making
2
Objective Promote synergism through integration of methods
3
Objective Manage the evolving body of knowledge concerning the assessment of IC
4

5. Conceptual design of KMSS

Following from the objectives derived in the previous section (Table 4) the proposed KMSS for
assessment of IC needs mechanisms for decision support (objective 1), for knowledge capturing
storage and retrieval (objectives 2 and 4) and possibly for providing intelligence (objectives 1, 2, 3
and 4).

Scanning and analyzing existing literature (Andriessen 2004a; Bolloju, Khalifa and Turban as cited
by Turban et al 2005; Green 2005, Jackson 1990; Nonaka 1995; Turban et al. 2005), the following
short list of possible structures for such a system arises:
ƒ A DSS, consisting of a data management subsystem, a model management subsystem, and
user interface subsystem, and a knowledge-based management subsystem, possibly
connected to an organizational knowledge base (maintained by an intelligent system) or to a
knowledge repository (maintained by a KMS);
ƒ A KMS integrated with a DSS and possibly an intelligent system such as an expert system (ES)
or neural network; and
ƒ A knowledge-based decision support system (KBDSS), also referred to as an intelligent
decision support system (IDSS), defined by Turban et al. (2005) as a DSS that “integrates
knowledge from experts”.
Analysing these structures reveals that they are overlapping and that all four consists of some or all
of the following components:
ƒ The three main subsystems of a DSS, namely a data management subsystem, a model
management subsystem and a user interface subsystem;
ƒ The fourth (optional) component of a DSS, as introduced by Turban et al. (2005), namely a
knowledge-based management subsystem consisting of a knowledge base or knowledge bases
maintained by one or more intelligent systems;
ƒ One or more intelligent systems (including one or more knowledge bases); and
ƒ A KMS (including a knowledge repository).
A closer look reveals that, in the list above, the third component is conceptually the same as the
second component, and is henceforth dropped from this list. Table 5 below shows the resulting list
of components, and for each component the objectives it facilitates (is responsible for), or assists
with (supports the responsible component with).

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Table 5: Matching components of proposed KMSS with objectives listed in Table 5

Components Objectives Objectives
facilitating assisting with
1. The three main subsystems of a DSS, namely a data management 1 2, 3 and 4
subsystem, a model management subsystem and a user interface
subsystem

2. The fourth (optional) component of a DSS, namely a knowledge-based 2 and 3 1 and 4

management subsystem consisting of a knowledge base or knowledge
bases maintained by one or more intelligent system

3. KMS (including a knowledge repository) 4 1, 2 and 3

It follows from Table 5 that, in order to fulfill all the objectives of the proposed KMSS listed in Table
4, all three (remaining) components need to be included.

An extensive body of knowledge exists for DSS (the subject of Component 1) and related
technologies tailored since at least the 1960’s to effectively support the phases of the decision-
making/modeling process. The top-level schematic view of a DSS (Figure 3) therefore provides an
ideal starting point for the required knowledge management support system.

Figure 3: A top-level schematic view of DSS. Source: Turban et al. (2005)

Departing from the “top-level schematic view of DSS” illustrated in Figure 3, matching the
objectives identified in Table 4 for the proposed KMSS with existing theory on KMS, intelligent
systems (including expert systems and neural networks), hybrid support systems and DSS
(Jackson 1990; Oz 2002; Turban et al. 2005) and building upon the four subsystems of DSS as
outlined by Turban et al. (2005), we arrive at the schematic representation of the proposed KMSS
for assessment of IC shown in Figure 4.

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Figure 4: Schematic view of proposed KMSS for assessment of IC

The following subsections elaborate on the structures of the four subsystems illustrated in the four
quadrants of Figure 4, namely the data management subsystem, the model management
subsystem, the user interface subsystem and the knowledge-based management subsystem. The
focus and main contribution of this paper is in the quadrant of the knowledge-based management
subsystem.

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 Agnieta Pretorius and Petrie Coetzee

5.1 Data management subsystem

According to Turban et al. (2005), the data-management subsystem – refer to the bottom-left
quadrant of Figure 4 – maintains internal data sources, facilitates access to internal and external
data sources, and consists of a decision support database, a database management system, a
data directory and a query facility. The decision support database contains data extracted from
internal and external data sources, as well as from users’ personal data.

5.2 Model management subsystem

According to Turban et al. (2005) the model management subsystem – refer to the top-left
quadrant of Figure 4 – maintains internal models, facilitates access to internal and external models,
and consists of a model base, a model base management system, model building blocks and
routines, modeling languages and tools, a model directory and a model execution, integration, and
command processor.

The model base management system performs model creation, generation of new routines and
reports, model updating and changing, model data manipulation and the interrelation of models
(Turban et al. 2005).

As mentioned earlier, the appropriateness of assessment methods – and of specific

implementations of such methods – depends, amongst other factors, on the contexts, goals,
objectives and critical success factors of organizations (Harrison and Sullivan 2000; Smith and
McKeen 2003), the circumstance or situation (Smith and McKeen 2003; Sveiby 2002) and the
industry and line of business (Van Buren 1999). The model base of the proposed knowledge
management support system includes/provides access to models, both for analyzing organizations
(e.g. their contexts, goals, objectives and critical success factors) and for assessment of IC.

The model directory provides a catalog and definitions for the models in the model base, as well as
information concerning the availability and capability of models (Turban et al. 2005). It therefore
assists with determining the sphere of relevance of models.

The model execution, integration, and command processor controls the execution of models,
combines the operations of more than one model when required, and accepts, interprets and
routes modeling instructions from the user interface subsystem (Turban et al. 2005).

5.3 User interface subsystem

According to Turban et al. (2005), the user interface subsystem – refer to the top-right quadrant of
Figure 4 – facilitates input, output and language processing, and is composed of a user interface
management system and input and output languages. The user interface management system
enables the user to interact with the model and data management systems in a variety of formats,
with multiple, different dialog styles and with a variety of input and output devices.

5.4 Knowledge-based management subsystem

The knowledge-based management subsystem – refer to the bottom-right quadrant of Figure 4 –
consists of a knowledge base management system (responsible for the execution and integration
of the intelligent system), an intelligent system (supplying intelligence (i) for the selection of
appropriate models and (ii) for knowledge acquisition), and a knowledge base (containing facts
about problem situations, and rules for applying knowledge to solve problems). The intelligent
system draws upon a knowledge repository for retrieval of current and best practice scenarios. The
knowledge repository is maintained by a KMS and extracts information from actual
implementations, as well as from external sources. (Derived from Oz 2002; and Turban et al. 2005)

As mentioned earlier, “rather than attempting to reinvent the wheel each time”, past knowledge and
expertise should be used to accelerate and improve decision-making. Knowledge accumulated
over time, including best-practices, can be organized and stored in a knowledge repository (also
referred to as an organizational knowledge base) and used to solve similar problems (Turban et al.

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2005). The knowledge repository stores knowledge on current and best practice scenarios, which
is often text-based, and is populated and maintained by the KMS. The (text-based) knowledge
stored in the knowledge repository of the proposed KMSS (Figure 4) is sourced from actual
implementations of methods and strategies for assessment of IC, and from external sources such
as experts, literature, publications, current and best practices (in any format and from any origin),
the Internet, intranets and extranets. As explained by Turban et al. (2005), the six steps in the cycle
of a “functioning” KMS are: (i) create, (ii) capture, (iii) refine, (iv) store, (v) manage, and (vi)
disseminate.

The primary function of the intelligent system of the knowledge-based management subsystem of
the proposed KMSS (Figure 4) is to provide intelligence for the selection and implementation of
appropriate methods or models. It aims to answer questions such as:
ƒ “Which model should be used for what situations?”
ƒ “What method should be used to solve a particular problem in a particular model class?”
Turban et al. (2005) explain that the model selection required to address this type of question
couldn’t be done by a model base management system, because it requires expertise, and suggest
that such expertise could be provided manually or by a knowledge component.

The knowledge base contains the relevant knowledge for understanding, formulating and solving
problems. Its two basic elements are facts representing knowledge about the problem scenario and
rules or heuristics for using the knowledge to solve specific problems in a particular context. The
process of extracting knowledge into the knowledge base is called knowledge acquisition and
includes “the accumulation, transfer, and transformation of problem-solving expertise from experts
or documented knowledge sources to a computer program for constructing or expanding the
knowledge base”. (Turban et al. 2005)

The secondary function of the intelligent system of the knowledge-based management subsystem
of the proposed KMSS (Figure 4) is to facilitate automatic knowledge acquisition from the
knowledge repository to the knowledge base. Such automatic knowledge acquisition could take
place either at regular intervals, or, whenever the intelligent system – while attempting to solve a
problem (e.g. select an appropriate model for a specific scenario) – sources relevant knowledge
from the knowledge repository.

Oz (2002) and Turban et al. (2005) note that a knowledge engineer may be required to interface
with human experts to build the knowledge base. In the proposed KMSS (Figure 4) further
knowledge acquisition is performed manually by the knowledge engineer, by drawing upon the
knowledge repository, as well as upon external sources such as experts and literature.

6. Summary and conclusion

Due to the complexities involved in selecting and implementing an appropriate method for the
assessment of intellectual capital, there is a need for knowledge management support systems to
assist with the decision-making process concerning the assessment of intellectual capital. Such
knowledge management support systems are envisioned to serve organizations by (Pretorius and
Coetzee 2005):
ƒ Leveraging their intellectual capital as a sustainable source of competitive advantage;
ƒ Enabling them to align their intellectual capital with their organizational context, goals,
objectives and critical success factors and with the opportunities and threats posed by their
environments;
ƒ Providing support for all four phases of the decision-making process concerning the selection
and implementation of models for assessment of intellectual capital;
ƒ Promoting synergism by combining the steps of different models for assessment of intellectual
capital;
ƒ Facilitating the organization, storage and retrieval of relevant data, models and knowledge; and
ƒ Enabling and assisting with intellectual capital reporting.

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 Agnieta Pretorius and Petrie Coetzee

This paper proposes a conceptual design of a knowledge management support system for
assessment of intellectual capital, which has resulted from the first iteration of the development
process. The proposed knowledge management support system builds upon the rich body of
existing knowledge on knowledge management systems, decision support systems, expert
systems, and hybrid support systems (particularly as described by Turban et al. (2005)), and is
composed of:
ƒ a data management subsystem maintaining internal data sources and facilitating access to
internal- and external data sources;
ƒ a model management subsystem maintaining internal models and facilitating access to internal
and external models (i) for analyzing organizations and industries, and (ii) for assessing
intellectual capital;
ƒ a user interface subsystem facilitating input, output and language processing; and
ƒ a knowledge-based management subsystem (the main focus of this first iteration of the
development process) providing intelligence for (i) the selection and implementation of
appropriate models and (ii) for knowledge acquisition from a knowledge repository for keeping
track of current and best practice scenarios.
During further iterations of the development process, the proposed conceptual design will be
refined through formal and informal sound-boarding against knowledgeable academics and
practicing experts and through implementation of partial prototypes. Such partial prototypes will
serve to clarify particular problematic design aspects.

Areas for further research include investigating the implications for conceptual design of
cooperation, competition and coopetition (cooperating while simultaneously competing (Loebke
and Angebrn 2006)) in respect of acquisition, diffusion and use of knowledge. Incentives and
mechanisms to enable and encourage sharing of knowledge (possibly between competitors) may
be required. This could emanate/be realized in the form of a knowledge brokering system. The
structuration of such a knowledge brokering system would be linked to – if not included in – the
conceptual design of a knowledge management support system for assessment of intellectual
capital.

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Developing a Taxonomy for Knowledge Management
Documents Organization in Digital Libraries
S.Mohsen Rahnamafard and Hajar Fatemi ShariatPanahi
Tehran University, Faculty of Management, Tehran, Iran
[email protected]
[email protected]
Abstract: Many people, working on KM, face a similar problem of classifying their documents on KM. Since
KM is a multidisciplinary field of science and experts from different fields have worked on it during the last
decades, we have widespread points of view. An overarching theory of knowledge management has yet to
emerge, perhaps because the practices associated with managing knowledge root in a variety of disciplines
and domains. In this paper we suggest new way to organizing KM documents. We develop a taxonomy which
aimed to help KM experts organize KM documents in accurate and carefully way. Our proposed taxonomy of
KM document organizing will have three main features: 1. all files about any fields of KM will have a place in
our taxonomy 2. Each file will have only one place 3. 3 drills down movement can access every file.

Keywords: Information technology, knowledge management, taxonomy, KM frameworks

1. Introduction
Being in 21st century, we are having a knowledge-based economy. What that means is quite
simple: Our economic well-being and competitive advantage are dependent on knowledge
resources. In fact, the Intellectual capital and knowledge assets are the prime factors and
resources of production in knowledge-based economy. In the words of Jack Welch, former CEO of
General Electric, “Intellectual capital is what it’s all about. Releasing the ideas of your people is
what we’re trying to do, what we’ve got to do if we’re going to win.” (Stankosky 2005) Agreeing on
existence of a domain with a developing trend, called knowledge management, there is not any
wide spreading approved definition of it and not any border for the domains it includes. This is
apparent in many papers and resources like Beckman (1999), (Lueg 2002), (Davenport and Cornin
2000), (Bollinger & Smith 2001), (De Grooijer 2000), (Holsapple & Joshi 2000) and (Bullinger et al.
1998). Knowledge management is a new and exciting topic of academic research that has been
adopted, over the past few years, by many diverse discipline areas, with a variety of points of view.
In practice, KM is a cross-functional area in organisations and there is disagreement as to whether
it should be considered a technical issue, a human resources issue, a procedural issue or a part of
strategic management (Bollinger & Smith 2001)

As cited in a study that Stankosky had done on reviewing the knowledge management curriculum
programs in 2000, there are an initial collection of knowledge management study impact areas that
shows the variety and diversity disciplines and domains of knowledge. (Table 1).Table 1, list of
knowledge management study impact areas, shows the variety and diversity disciplines and
domain of knowledge.
Table 1: List of knowledge management study impact areas
Systems Theory Systems Analysis Strategic Planning
Risk Management Assessment Systems Engineering Management-by-Objectives
Intelligent Agents Leadership Total Quality Management
Management of R&D Ethics Management Theory
Decision Support Systems Communications Theory Management of IS
Modeling and Simulation Organizational Psychology Database Design / Database
Data Mining / Data Warehousing Visualization Management Systems
Enterprise Resource Planning Groupware Data Communications & Networks
Business Process Engineering Virtual Networks etc.
On the other hand the study, done by Michael J.D. Sutton in McGill University (2002) showed that
lacking an accepted definition for KM, academics, (as well as practitioners), have not been able to
agree upon curriculum, certification benchmarks, or course contents. A tabulation of all the 79 KM
programs discovered so far offered by 47 institutions is presented in below. Table 2, list of schools
present KM courses, shows the variety and diversity disciplines and domain of knowledge.

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Table 2: List of schools present KM courses

Department of Computing Science Faculty of Health and Science
School of Information Management and Systems School of Public Policy
Department of Management School of Engineering and Applied Science,
Division of Communication and Education Engineering Management and Systems
College of Science School of Knowledge Science
School of Media and Information Department of Behavior in Organizations
School of Information Systems College of Continuing and Adult Education
College of Business and Economics Division of Education, Arts and Social Sciences
Department of Artificial Intelligence Center for Professional Development
Faculty of Communications, School of Library and Information Science
Outside the academic world and in business environments also lots have been done for defining
and categorizing KM domains. One of the most important of them is the European Council effort to
establish a standard framework of KM. Figure 1 shows a schema of the results of a brainstorming
workshop attempting to find out KM domains.

Figure1: A brainstorming session result on KM domains (Weber 2001)

However, one of the most striking aspects of knowledge management is the diversity of the domain
and the lack of universally accepted definitions of the term itself and its derivatives, knowledge and
management. As a consequence of the multidisciplinary nature of KM, the terms inevitably hold a
difference in meaning and emphasis for different people. Regarding to the above discussion, an
interesting point is an overarching theory of knowledge management has yet to emerge, perhaps
because the practices associated with managing knowledge root in a variety of disciplines and
domains. Some KM specialists made suggestions on developing taxonomies and matrixes on KM
concepts, most of them have different aims, such as trying to discover future researches on KM or
develop a framework only on KM applications and tools. None of theme has a birds-eye-view
approach to the whole KM documents and records classification.

On the other hand in recent investigations on digital libraries several scholars have argued that it is
relevant to provide a shared model of the term taxonomy employed to classify the documents of
the library itself. For an up-to-date viewpoint, containing relevant references see (Malizia et al.,
2004 cited by Bellomi 2005). So, developing a general and standard taxonomy model with more
reliable and comprehensive acceptances, covering all aspects of KM, would be a way to solve the
problem of KM classification in libraries, particularly in digital libraries. We suggest taxonomy
through this view of point after a complete review on literature about KM taxonomies, matrixes, and
other classifications, which can help any km specialists or librarian or take in use in digital libraries
to classify KM documents with following characteristics:

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 S.Mohsen Rahnamafard and Hajar Fatemi ShariatPanahi

1. All files about any fields of KM will have a place in our taxonomy
2. Each file will have only one place
3. 3 drills down movement can access every file.

2. Related works
There are two approaches for the categorization of body of knowledge. First is “Taxonomy”, refers
to some so called phrases such as tree-view, hierarchy, directory and more. Taxonomy was once
only the science of classifying living organisms, but later the word applied to a wider sense, and
now it also refers to either a classification of things, or the principles underlying the classification.
Almost anything, living objects, non-living objects, places, and events, may be classified according
to some taxonomic scheme. Taxonomies are frequently hierarchical in structure and may include
single children with multi-parents. Taxonomy might also be a simple organization of objects into
groups, or even an alphabetical list. Mathematically, a hierarchical taxonomy is a tree structure of
classifications for a given set of objects. At the top of this structure is a single classification, the root
node that applies to all objects. Nodes below this root are more specific classifications that apply to
subsets of the total set of classified objects Second approach of classification is frameworks, which
are named matrixes in this paper inspired by mathematic concepts. When we want to organize
related things, we use multilateral matrix or table to compose different subjects into one frame and
use this frame to address a new subject. Frameworks understood as a holistic and concise
description of the major elements, concepts and principles of a domain. They aim to explain a
domain and define a standardized schema of its core content as a reference for future design
implementations. A KM matrix explains the world of KM by naming the major KM elements, their
relationships and the principles of how these elements interact. In contrast of taxonomies, matrixes
cover more interdisciplinary or interrelated things and subjects. Out of the issues discussed above,
this research effort will lead approaches to classify KM documents in new taxonomy, but first a
completed literature review with regard of these two types of categorization have been studied.

2.1 Taxonomies
The first and the most popular taxonomy of KM domain is people, process and technology synergic
domains. As Australian government departments showed in “Better Practice Checklist of KM” we
can add content aspect to this categorization in order to cover the concept more accurately. On the
other hand, KM has emerged as an inter-disciplinary framework to assist organizations engage in
the wider information /knowledge economy. As KM impacts all the aspects of organization, we can
use organization theories classifications in managing its documents. Richard L. Daft explains six
basic components of any organization in his book;” organization Theory”. We can use these
components for our categorization; Strategy, Structure, Human Resource, Culture, System,
Technology. Generally we can divide knowledge tools to three categories: Knowledge generation
(Identification, Selection, Acquisition etc.), Knowledge organizing (Representation, codification,
Refining etc.), Knowledge transfer (Distribution, Accessing, Sharing, Utilize etc.).Still we can find
more famous taxonomy classifications on KM such as European KM framework, Australian
government KM framework, KMBOK domains etc. We will describe some of them in detail below. It
is noticeable that respecting our first definition, most of the KM classifications has used the word
framework wrongly. So based on definition, we categorize them in taxonomies.

2.1.1 Australian government KM framework

There are several projects worldwide working on standards for KM (in Britain, Europe, South Africa,
Asia and the USA). Australia is well advanced in its process with an Interim KM Standard released
in 2003 and the full Standard in 2004. The standards project aims to provide a national focal point
for KM and to stimulate Australian advances in the area. The Standard initiative followed the
publication by Standards Australia of a preliminary document on KM (Standards 2003) developed
with input from an extensive list of Australian KM researchers and practitioners and included the
integrated KM framework shown in Figure 2.

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Knowledge Knowledge Knowledge

Foundations Processes Alignment

Technology

Acquisition
Sustaining

Planning
Systems

Creation

Analysis
Sharing

Context
Culture
Figure 2: Australian government KM framework (Standards2003)

2.1.2 European KM framework

The first draft of the European KM framework – which work about is still in progress and will be
further developed and improved – includes the following core modules:
ƒ Strategies
ƒ Human + Social KM issues
ƒ Organization
ƒ Processes
ƒ Leadership
ƒ Performance measurement
ƒ Business cases + implementation
ƒ Technologies

Figure 3: European KM framework (WEBER1 2002)

2.1.3 KIM taxonomy

The preliminary results of the theoretical analysis of the literature (George M. Giaglis, 2001)
suggest that there might be an opportunity for drawing a list of sub-areas within the overall field of
knowledge and information management in the form of taxonomy. According to this, as a novel
classification for Knowledge and Information Management research, the KIM area consists of two
domains that present different characteristics and research roadmaps: Knowledge Management
and Information Management. Each of these two main research areas can be further divided into a
number of more detailed themes as shown in the figure 4.

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 S.Mohsen Rahnamafard and Hajar Fatemi ShariatPanahi

Figure 4: KIM Taxonomy (Giaglis 2002)

2.1.4 KM body of knowledge (KMBOK)

The KM Institute is building a specialized KMBOK. To this end, KM Institute has initially defined 30
domains and 17 industrial sectors, which are being staffed with world-class specialists. Shown in
table3
Table 3: KMI Taxonomy (KMI 2005)
Appreciative Inquiry (Best Practice Benchmarking) Knowledge Economics
Business Disciplines; BPR, TQM, ISO9000, CMM, etc Knowledge Engineering
Change Dynamics & Management KM Methods (Methodology)
Communities of Practice KM Performance (Metrics)
Complexity (Chaos) Thinking & Applications KM Sciences
Content Management KM Techniques
Customer Relationship Management Organizational Learning
Decision Support Personal KM Skills
Human Capital Project Management
Information Architecture Semantic Web & Networks
Innovation & Creativity Storytelling & Narrative
Intellectual Property Strategic & Systems Thinking
Leadership Knowledge Workforce Performance
Learning Theory Workgroups & Teams
Knowledge Audits/Mapping KM Technologies

2.1.5 IKMF of Handzic

This framework distinguishes between three generic types of knowledge processes: those that
generate new knowledge; those that transfer the existing knowledge; and those that utilize
possessed knowledge to produce new knowledge.

Figure 5: IKMF of Handzic (Handzic 2001)

The framework further proposes two broad groups of socio-technological factors as major
knowledge enablers. These include organizational environment and technological infrastructure.
Most important factors within the organizational environment category include organizational
structure, leadership and culture. Technological factors, on the other hand, cover a wide range of

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information and communication technologies and systems that provide a platform for knowledge
processes.

2.1.6 IST project WISE KM tools and products

The deliverable D-1.3 of the IST project WISE (2002) – Web-enabled Information Services for
Engineering contains platform will fill existing gaps and will prove to be useful in supporting and
improve the existing knowledge communication and work in engineering design for large
engineering organizations. In order to better organize the large realm of KM tools and products and
to facilitate the splitting of responsibilities among WISE partners that participate in the authoring of
this deliverable they reached this classification:
ƒ • Collaboration
ƒ • Knowledge Mapping
ƒ • Data Mining
ƒ • Information Retrieval
ƒ • Knowledge Discovery
ƒ • Online Training Systems
ƒ • Document Management
ƒ • Organizational Memory
ƒ • Pure Knowledge Management

2.1.7 KM architecture
Ronald Maier and Thomas Hädrich (2004) showed an ideal layered architecture for KMS that
represents an amalgamation of theory-driven in their paper “Centralized versus Peer-to-Peer
Knowledge Management Systems”:
ƒ Access services (Authentication, Translation, Transformation, Application (e.g. browser),
Appliance (e.g. mobile)
ƒ Personalization services (Portals, Profiling, Push services, Etc.)
ƒ Knowledge services (Discovery; Search, Mining, Visualization, Navigation, Knowledge maps;
Publication; ,Format, Structuring ,Contextualization, Workflow, Co-authoring - Collaboration:
Skill mgmt, Community, Expertise mgmt, Awareness mgmt, Learning; Authoring, Course mgmt,
Evaluation, Content management )
ƒ Integration Services (Taxonomy, Knowledge structure, Ontology, Meta data, Directory,
Synchronization services)
ƒ Infrastructure services (Intranet/ extranet, Fileserver, Imaging, Asset management, Security,
Loading)
ƒ Data and Knowledge bases (RDBMS, Internet, DMS, Data warehouses)

There are also many other samples like above that we ignore them and summarize them to the
mentioned samples.

2.2 Matrixes

2.2.1 Integrative framework and review of emerging themes

Figure 6 represents a summary of Argote (2003) efforts to create a framework for organizing the
literature based on the relative positioning of work along two critical dimensions: knowledge
management outcomes (knowledge creation, retention, and transfer) and properties of the
knowledge management context (properties of units, properties of the relationships between units,
and properties of knowledge). The knowledge management outcomes are represented on the
vertical axis. Knowledge creation occurs when new knowledge is generated in organizations.

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Attempts to transfer knowledge can lead to the creation of new knowledge. Despite the diversity of
research on knowledge management, theoretical explanations can be organized according to three
properties of the context within which knowledge management occurs: properties of units (e.g., an
individual, a group, or an organization), properties of the relationships between units, and
properties of the knowledge itself. The context dimension displayed along the horizontal axis
highlights the fact that different theories of knowledge management give causal priority to different
contextual properties. The framework in Figure 6 can be used to characterize research in the
knowledge management literature.

Figure 6: Integrated framework and Review of emerging themes ( Argote 2003)

Because many studies in the special issue analyze more than one outcome and more than one
contextual variable, Argote (2003) did not place studies in the cells of their framework. Rather they
discuss relevant findings from each study as they elaborate the framework. The framework can be
used to identify points of integration across different traditions and gaps in our understanding of
knowledge management.

2.2.2 A framework for characterizing KM methods, practices, and technologies

Newman (1999) describes his framework (Table4) to be used in several ways:
ƒ To organize and classify knowledge management methods, practices and technologies by
relating them to distinct phases of the targeted knowledge flows
ƒ To examine knowledge flows to understand the interactions and dependencies among pieces of
information, communicators and their associated behaviors.
Table 4: A framework for characterizing KM methods (Newman 1999)

This is not the only way the framework can be displayed. The framework is a general-purpose tool
that can be applied to a variety of problems and solutions and adapted to individual work styles.
(Newman 1999)

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2.2.3 Knowledge management conceptual framework

In laying out all the so-called models, elements, definitions, pronouncements, cautions, and
approaches, it became apparent that there were four principle areas or groupings, each containing
many elements. The challenge was to find names for these four groupings and to validate them
through some scientific approach. All the KM elements were grouped under the following:
Leadership/Management, Organization, Technology, and Learning.
ƒ • Leadership/management
ƒ • Organization
ƒ • Learning
ƒ • Technology
A KM research conceptual framework, based on the four pillars has been constructed and it
incorporates the various functions of KM: knowledge assurance, knowledge capture, knowledge
retention, knowledge transfer, and knowledge utilization (Figure 7). As shown in Figure 7, each
Function is further divided into various categories. (Stankosky 2005)

Figure 7: Levels of the knowledge management conceptual framework (Stankosky 2005)

2.2.4 Toronto university knowledge management frameworks

There are two ways of navigating the content in this guide: a “Conceptual” view that focuses on
theories and concepts; and an “Application” view that highlights practices and case studies of
organizations. Both views are based on a Knowledge Management Framework that the Toronto
faculty has developed and applied in its projects. The framework identifies three types of
organizational knowledge (tacit, explicit, and cultural knowledge), and four levels of organizational
enablers (vision and strategy, roles and structure, practice and process, tools and platforms).
Together, these elements provide a systematic way of looking at KM, which they define as: "A
framework for designing an organization’s goals, structures, and processes so that the organization
can use what it knows to learn and to create value for its customers and community." (Cheung
2004)
ƒ Conceptual Framework

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This framework will show you the fundamentals of knowledge management.

Tacit Knowledge Explicit Knowledge Cultural Knowledge

Knowledge Creation Knowledge Sharing Knowledge Use
Building Culture
Values Planning & Execution
Implementation Facilitating Creation
Strategy Themes & Tensions
Facilitating Transfer
Frameworks
Complexity
Roles Management Management
Leadership
Structures Structure Networks
Ontology
Tech. Support
Learning
Process Organization Motivation
Communities of Practice
Practice Work Processes Social Regulation
Valuation Process
Collaboration
Collaboration
Tools Document Management Community Building
Learning
Platforms Ontologies
Networks
Systems
Figure 8: Toronto Univ. KM conceptual framework (Cheung 2004)
ƒ Application Framework
This framework will show you how KM can be applied to enrich an organization.

Tacit Knowledge Explicit Knowledge Cultural Knowledge

Knowledge Creation Knowledge Sharing Knowledge Use
Culture
Values Enabling Knowledge (Temporarily Not
Global Strategy
Strategy Creation Available)
Society
Leadership
Roles Professionals
Evolving Networks Learning
Structures Role of KM
Structure
Communities of Practice Practice
Process Libraries
Concept Mapping Processes
Practice Work Flow
Process HR Issues
Frameworks
Tools Framework Implementation
IT Support
Platforms Tools Portals
Support Systems
Figure 9: Toronto Univ. KM application framework (Cheung 2004)

3. Prepositional taxonomy
It is easy to find some problems in mentioned taxonomies and matrixes. Some of them e.g. WISE
and KM architecture are developed for special propose. So they are not useful for other purposes.
In others, you cannot see any precise separation between layers of taxonomy or cells of matrixes.
For example in KMI Taxonomy you can place a document about “Evolution of R&D Capabilities,
the Role of Knowledge Networks within a Firm” both in “Intellectual Property” and “Communities of
Practice” as well as “Innovation & Creativity” positions. Beside, none of this categorizations offer
any clear guidance and method to their users in classifying files based on their models. And finally,
offering many positions will make users confused. Trying to answer these problems, we are
suggesting a new model in KM classification. Basically, this model faces KM as a new paradigm
that has been affecting all other domains and fields of study and it approaches KM in a more macro
way. The optimization criteria of the categorization as taxonomy, is the equality variance of files on
different levels and also covering the basic three characteristics, explained in introduction. In our
taxonomy, there are three hierarchical layers of Science, Knowledge and Knowledge Management.
In the first layer, science is divided to Human and Social related and Tools and Technology related,
based on Philosophy of science. The second layer is dividing each of these two, to three kind of
Declarative, Strategic and Procedural knowledge, based on Epistemology. And finally in the third
layer and based on different knowledge lifecycles, each of knowledge kinds divided to four kind of

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Acquisition, Analyze, Storing and Using. So a hieratical structure with 26 lower position, 6 middle
positions and 2 higher positions will be able to place all KM files in a semi-density way.

Figure 10: Our proposed taxonomy of knowledge management

3.1 1st layer: philosophy of science

The philosophy of science is the branch of philosophy that studies the philosophical assumptions,
foundations, and implications of science. Science draws conclusions about the way the world is
and the way in which scientific theories relate to the world. (Toulmin 1967) Regarding to this
philosophy the researches in KM were generally fall under two broad categories. One research
stream concentrates primarily on the technological issues surrounding the development and
implementation of knowledge management systems. This stream of research draws predominantly
on findings from the fields of computer science and information systems and sees knowledge
management as an application area that extends the traditional realm of databases and information
management into so-called knowledge bases and knowledge management systems. A separate
research stream is approaching the same kinds of problems from a complementary perspective
and attempts to tackle the managerial, organizational, and human issues surrounding the
successful implementation of knowledge management within organizations. The primary reference
disciplines for such research are management science, psychology, sociology, and other social
sciences. (Giaglis 2002) Also Gaßen, (1999) differentiated the KM world in two branches of theory,
namely on one side a technology centered KM thinking which is mechanistic, productivity driven
and based on systems implementation, and on the other side, a human centered KM thinking
which is based on constructivism, cognitive principles, and interaction approaches. However,
talking about an academic discipline like KM, we can consider two different aspects; first is
humanistic and social aspect and the second is machines and tools aspects.

3.2 2nd layer: epistemology

Epistemology is the branch of philosophy, which talks about the nature, origin, and the scope of
knowledge. The word "epistemology" originated from the Greek words episteme (knowledge) and
logos (word/speech). There are different approaches to the theory of knowledge. Alavi and Leidner
(2001) categorized knowledge as declarative, procedural, causal, conditional, and relational. These
types of knowledge are the categories that can describe or explain events or things, where
declarative knowledge is ‘know-about’ knowledge, procedural knowledge describes how certain
activities can be done or we call it ‘know-how’ knowledge, causal knowledge describes reasons for
certain happenings, conditional knowledge describes when certain activities or phenomena may
occur and relational knowledge describes the relationships between occurrences of events or
activities. (Alavi 2001) Fred Nickols (2003) has shown that generally three meaning is aimed,
using the word “knowledge.” First, we use it to refer to a state of knowing, by which we also mean
to be acquainted or familiar with, to be aware of, to recognize or apprehend facts, methods,
principles, techniques and so on. This common usage corresponds to what is often referred to as
"know about." Second, we use the word "knowledge" to refer to what Peter Senge calls "the
capacity for action," an understanding or grasp of facts, methods, principles and techniques
sufficient to apply them in the course of making things happen. This corresponds to "know how."
Third, we use the term "knowledge" to refer to codified, captured and accumulated facts, methods,
principles, techniques and so on. When we use the term this way, we are referring to a body of

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knowledge that has been articulated and captured in the form of books, papers, formulas,
procedure manuals, computer code and so on. (Nickols 2003)

However we choose Cognitive psychologists sort of knowledge which divides knowledge into two
categories: declarative and procedural. Some add strategic as a third category. Declarative
knowledge has much in common with explicit knowledge where declarative knowledge consists of
descriptions of facts and things or of methods and procedures. One view of procedural knowledge
is that it is the knowledge that manifests itself in the doing of something. As such it is reflected in
motor or manual skills and in cognitive or mental skills. This knowing-is-in-the-doing view of
procedural knowledge is basically the view of John Anderson, the Carnegie-Mellon professor
mentioned earlier. Another view of procedural knowledge is that it is knowledge about how to do
something. This view of procedural knowledge accepts a description of the steps of a task or
procedure as procedural knowledge. Strategic knowledge is a term used by some to refer to what
might be termed know-when and know-why. Although it seems reasonable to conceive of these as
aspects of doing, it is difficult to envision them as being separate from that doing. (Nickols 2003)
(Anderson, 1976; 1993; 1995)

3.3 3rd layer: knowledge management

Finally in the last layer we focus on knowledge process or in other words KM life cycle. KM
specialist has introduced different life cycles about KM activities during recent years. . (Table5)
Table 5: different KM lifecycles (Ghaeni et al 2005)
Phase Phase Phase
Phase 1 Phase 2 Phase 3 Phase 4 Phase 7
5 6 8

Wiig(1993) Create Declaration Use Transfer

Holsapple&Joshi (1998) Acquire Select Internalizationuse

Davenport and Prusak

Create Codify Transfer
(1998)
Vander Spek &
Develop Distribute Combine Hold
Spijkervet(1997)

Gartner Group (1998) Create Organize Captures Access Use

Arthur Anderson and Create- Mapping-

Identify Gather Apply
APQC(1996) share organizing
Probost & Raub & Save
Knowledge IdentificationCaptures Developments Sharing Uses Evaluate
Romhard Storage
Newman, B. Conrad,
Creation Retention Transfer Utilization
K.W.(1999)

Ruggles (1997) Generation Codification Transfer

Considering all of these approaches we can characterize KM by the following four activities in sum:
ƒ 1. Acquire knowledge (learn, create, or identify);
ƒ 2. Analyze knowledge (assess, validate, or value);
ƒ 3. Preserve knowledge (organize, represent, or maintain); and
ƒ 4. Use knowledge (apply, transfer, or share).
Don’t get too concerned by the choice of words used here, but accept that to manage knowledge
you must first have some knowledge to manage, you may need to analyze the knowledge you
have, you will need to store the knowledge, and of course you will want to be able to access and
use the knowledge in the future. (Watson 2003)

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4. Conclusions
Reviewing most of the taxonomies and matrixes that have been presented for categorizing
knowledge management contents, we proposed a new taxonomy based on 3 layers of science,
knowledge and knowledge management. The proposed taxonomy is based on the context
literature review and it has developed to solve some problems in existing classifications. So it
includes 3 main characteristics: 1.All files about any fields of KM will have a place in our taxonomy
2.Each file will have only one place 3.Every file can be accessed by 3 drills down movement. We
recommend future works on investigating more precisely on KM nature and adding some possible
layers to this taxonomy, testing the taxonomy in a pilot society and analyzing the results for
promotions and establishing general rules for better organizing files and documents.

References
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No. 4, April 2003, pp. 571–582
Beckman, T. J. (1999) “The Current State of Knowledge Management In J. Liebowitz (Ed.)”
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Bellomi and Cristani and Cuel (2005) “A cooperative environment for the negotiation of term
taxonomies in digital libraries” , Library Management, Vol. 26 , No. 4/5, 2005, pp. 271-280
Bollinger A. S. and Smith R.D. (2001) “Managing organisational knowledge as a strategic asset”,
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für die Praxis” Wissensmanagement. Schritte zum intelligenten Unternehmen. pp. 21- 39,
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Cheung P. and Shaheen U. (2004) Knowledge Management Resource Guide Designed, FIS
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Gaßen, H.(1999) “Wissensmanagement – Grundlagen und IT-Instrumentarium”, Arbeitspapiere WI,
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Gutenberg Universität: Mainz 1999, p. 12.
Ghaeni E. and Fatemi H. and Motevallian S.A. and Rahnamafard S.M. (2005) “Practical review of
KM life cycles in organizations” , Proceeding of 5th national conference on R&D an
knowledge management, winter 2005, Tehran, Iran
Giaglis G. (2002) “European Research on Knowledge and Information Management: Current
Status and Future Prospects”, Proceeding of 2nd International Conference on Systems
Thinking in Management, pages 19-25
Handzic M. and Hassan H. (2003) The Search for an Integrated KM Framework, Australian Studies
in Knowledge Management, University of Wollongong Press.
Handzic M. (2001) “Knowledge Management: A Research Framework”, Proceedings of the
European Conference on Knowledge Management, Bled.
Holsapple C.W. and Joshi K.D. (1999) “Description and Analysis of Existing Knowledge
Management Frameworks” Proceedings of the 32nd Hawaii International Conference on
System Sciences
KM Institute (KMI) (2006) “Knowledge Management Body of knowledge”,
http://www.kminstitute.org/index.php?page=blank&subpage=rationale
Lueg and Alamán (2002) “Knowledge Management and Information Technology” , Novática and
Informatik/Informatique, UPGRADE Vol. III, No. 1, February 2002 7

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Maier, R., and Hädrich, T. (2004) "Centralized versus peer-to-peer knowledge management
systems", Proc. OKLC04, Innsbruck (2004).
Newman B. and Conrad K. (1999) “A Framework for Characterizing Knowledge Management
Methods, Practices, and Technologies”, George Washington University Course, EMGT
298.T1, Spring 1999.
Nickols F. (2003) “The Knowledge in Knowledge Management”, Knowledge Management
Yearbook 2000-2001
Regans R. and McEvily B. (2003), “Network Structure and Knowledge Transfer: The Effects of
cohesion and Range” , Administrative Sceince Quarterly, 48:240-267
Roehl, H. (2000) “Instrumente der Wissensorganisation”, Deutscher Universitätsverlag, Wiesbaden
Schindler, M.(2000) “Wissensmanagement in der Projektabwicklung” Josef Eul Verlag , Köln 2000.
Standards (2003) “HB275 Knowledge Management: A Framework for succeeding in the knowledge
era”, Standards Australia
Stankosky, M. A. (2005) “Advances in knowledge management: University research toward an
academic discipline”, Creating the discipline of knowledge management: The latest in
university research, pp. 1-14.
Sutton M.J.D (2002) Running head: Topical Review of Knowledge Management Curriculum
Programs, Programs in University Graduate Schools: Library and Information Science,
Business, Cognitive Science, Information Systems and Computer Systems Schools ,McGill
university, Graduate School of Library and Information Studies
The WISE consortium (2002) Review of KM Tools ,Ref. 1.2 CYS/ 020326-1/Version A4 Issuing
Date: 26-03-2002
Toulmin, Stephen (1967) The Philosophy of science, Hutchinsto university, London
Watson I. (2003) , Applying Knowledge Management Techniques for Building Corporate Memories,
Morgan Kaufmann Publishers
Weber and Frithjof and Kemp and Jeroen (2001) “Common Approaches and Standardisation in
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Commission’s IST Key Action II Concertation Meeting, Brussels, 14 June 2001.
Weber and Wunram and Kemp and Pudlaztz and Bredehordt (2002) “Standardisation in
Knowledge Management –Towards a Common KM Framework in Europe”, Proceedings of
UNICOM Seminar “Towards Common Approaches & Standards in KM“, 27 February,
2002, London

459
From Teaching to Practicing Knowledge Management in
Internal Auditing Services
Camille Rosenthal-Sabroux1 and Michel Grundstein2
1
Paris – Dauphine University, Lamsade, Paris, France
2
Bénédicte Huot-de Luze, Senior Manager Internal Audit Services, KPMG
[email protected]
[email protected]

Abstract: Our researches focus on Information systems, Knowledge Management and Decision Aid. In 1997,
we initiated teaching of Knowledge Management (KM) in a Master Degree specialized in Information
Technologies (IT) Audit, since it is strongly related to companies’ needs. This specialty is well recognized
since more than five years by most practitioners in the sectors of IT audit and IT consulting. Knowledge
Management is related to other disciplines as Information Systems, Information System Audit Approach,
Quality Management Approach, Organizational Learning and Modelling Processes. Knowledge Management
does not exist as a full discipline. Furthermore the French Association of Internal Audit (IFACI) has created a
research group on Internal Audit and KM. This research group identified seven key success factors for
introducing a KM approach in Internal Auditing Service. In this paper we present Knowledge Management as
“The management of activities and processes that enhances creation and utilization of knowledge within an
organization. It aims at two strongly linked goals: a patrimony goal and a sustainable innovation goal with
economic and strategic, human, socio-cultural and technological underlying dimensions”. Then we emphasize
the interest to develop KM in Internal Auditing Service and we discuss the key success factors highlighted by
the research group.

Keywords: Knowledge management, information technology audit, success factors and problems raised,
teaching KM, tacit and explicit knowledge.

1. Introduction
The Internal Audit directions have more and more to prove their performance and follow a quality
approach. Scandals such as Enron and WorldCom have given rise to a general mistrust regarding
the sincerity and truthfulness of the declarations of the companies and their management. This lost
of confidence has consequently led some governments to strengthen the legislation on governance
and internal controls. According to the 2005 IFACI survey, Internal Audit is deeply involved in the
process of meeting the new legal requirements. Indeed, 65% of Internal Audit Directions have had
to draft the projects report intented to meet the Sarbanes-Oxley requirements and 92% of
companies subjected to Sarbanes-Oxley have involved their internal audit directions in the project.
According to Michael P. Cangemini in Information Systems Control Journal Volume 2, 2006 page
5: “The Financial Executives International (FEI) Current Financial Reporting and Issues (CFRI)
Conference on 9 November 2005 in New York, USA. The conference was opened by an address
from FEI President Collen Cunningham, who said, “I believe Sarbanes-Oxley has brought about
significant and positive change. Activities are conducted with more transparency and with investors
in mind. The law has laid the foundation for stronger corporate governance, meaning that investors’
faith in the integrity of the capital markets has real reason to be restored. Thankfully, we’re seeing a
renewed emphasis on ethical conduct and an understanding of how tone at the top drives the
actions of an organization”.

Furthermore, these scandals have triggered an increase of the materialisation of proves. Trusting
oral information is now out of question. Everything has to be written and recorded as to document
and support any statement. Internal Audit has evolved, been adapted and professionalized. It is
nowadays creating value, with experienced practitioners. However, Internal Audit turnover is high,
more than 23%, ie more than a fifth of the staff renewed each year. Indeed, the internal audit
function is a transitory position; the average length of staying in an internal auditor position is 3
years. Risk of losing Knowledge is consequently very high. In this context, KM becomes a strategic
issue since it takes an active part in the maintenance and improvement of the Internal Audit
performance.

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In this paper we present our vision of Knowledge Management (KM). Then we introduce our
teaching program in a Master Degree specialized in Information Technologies (IT) Audit. Next, we
emphasize on the interest to develop KM in Internal Auditing Service. Finally, we discuss the key
success factors for introducing a KM approach.

2. Our vision of knowledge management

KM is often looked at from a technological viewpoint, which leads to consider the knowledge as an
object and disregard as the same time the importance of the people. To avoid this drift, the CCRC
ECRIN Working Group (2001) defined KM as follows:
“Knowledge Management is management of the activities and processes that
enhance the utilization and the creation of knowledge within an organization,
according to two strongly linked goals, and their economic and strategic dimensions,
organizational dimensions, socio-cultural dimensions and technological dimensions: (i)
a patrimony goal and (ii) a sustainable innovation goal”.
This definition implies three postulates: (i) Company’s knowledge includes two main categories of
knowledge, (ii) Knowledge is not an object, (iii) and Knowledge is linked to the action.

2.1 Company’s knowledge includes two main categories of knowledge

Within a company, knowledge consists in explicit knowledge on the one hand, comprising of all
tangible elements (we call it “know-how”) and tacit knowledge (Polanyi, 1966) on the other hand ,
which includes intangible knowledge (we call it “skills”), on the other hand. The tangible elements
are formalized in a physical form (databases, procedures, plans, models, algorithms, analysis, and
synthesis documents) and/or are embedded in automated management systems, conception and
production systems and in products. The intangible elements are inherent to the individuals who
bear them, either as collective knowledge (the “routines” – non-written individual or collective action
procedures (Nelson & Winter, 1982) or as personal knowledge (skills, crafts, “job secrets”,
historical and contextual knowledge, environmental knowledge – clients, competitors, technologies,
socio-economic factors). Ref. Figure 1.

Figure 1: Company’s knowledge

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2.2 Knowledge is not an object

Knowledge lies in the interaction between an interpretative Framework (incorporated within the
head of an individual, or embedded into an artefact) and data.

This postulate is based on the theories developed by Tsuchiya (Tsuchiya, 1993), who deals with
the construction of tacit individual knowledge. According to his research, the tacit knowledge, which
lies within one’s brain, is the result of the meaning one allocates – through one’s interpretative
schemes – to the data that one perceives as part of all the information received.

This individual knowledge is tacit and it may or may not be expressed. It becomes collective
knowledge as soon as it is shared by other individuals, whose interpretative schemes are
“commensurable”, ie schemes that enable a minimal common level of interpretation, which is
shared by all members of the organization.

2.3 Knowledge is linked to the action

From a business perspective, knowledge is created through action. Knowledge is essential for the
business’s functioning and is finalized through its actions. Hence, one has to be interested in the
activities of the actors – decision-makers – engaged in the process contained in the company’s
missions. This vantage point is included in the use of the concept of knowledge, which cannot be
separated from the individual placed within the company, his/her actions, decisions and relations
with the surrounding systems (people and artefacts).

3. Teaching KM in a master degree specialized in information technologies

audit
According to our KM definition: “Knowledge Management is management of the activities and
processes that enhance the utilization and the creation of knowledge within an organization,
according to two strongly linked goals, and their economic and strategic dimensions, organizational
dimensions, socio-cultural dimensions and technological dimensions: (i) a patrimony goal and (ii) a
sustainable innovation goal”, KM doesn’t exist as a full discipline. It must be integrated into all the
activities of the organization, notably in Information Technologies Audit.

The purpose of the specialty is to educate future professionals on the audit and consulting
methodology and techniques in an Extended Corporate Information system environment. Objective
is for them to become able to:
ƒ Handle the conceptual framework of the IT audit methodology,
ƒ Contribute to the evolution of the IT audit methodology,
ƒ Apply this methodology to the various IS fields using the potentialities of the ICT,
ƒ Address recommendations, write and present audit reports,
ƒ Initiate the consulting aspect of the profession,
ƒ Manage IS risks,
ƒ Audit the techniques, the management and the development of information systems,
ƒ And apply this method to other related profession as the “MOA” (French equivalent of the
business analyst or key user).
Therefore, the courses of the specialty are divided into 3 main axes:
ƒ Courses related to the main scientific topics of the field: methods of audit, fundamental audits,
audit of the ERP, IS security.
ƒ Courses related to the surrounding fields such as the organizational management, the IS
governance, the Extended Corporate Information system, the behavioural aspect, law and IS,
the knowledge management aspect, the communication aspects, and the new security
regulations.
ƒ A three-month internship (Internal Auditing Services)

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The objectives of the KM courses are to provide insight on the fundamental principles of the
Knowledge Management, to introduce the issues of capitalization of knowledge assets within the
company, to position the Knowledge Management facing, to suggest a methodological framework
allowing to set up the appropriate preliminary studies to a KM project, and to highlight the
contribution of the KM approach to the Information Technologies Audit.

4. The interest to develop KM in an internal auditing service: The key

success factors
In order to introduce KM in internal audit departments, a research group called « a KM approach
for an internal audit director » was created on behalf of the IFACI with the participation of internal
auditors. KM is not an objective in itself; it is a way to improve the quality and the knowledge
(Know-how and skills) and to limit the lost of knowledge. Internal auditing is “an independent,
objective assurance and consulting activity designed to add value and improve an organization's
operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined
approach to evaluate and improve the effectiveness of risk management, control, and governance
processes.”

4.1 The interest to develop KM in an internal auditing service

KM is for an internal audit direction a way to meet its objectives, as fas as it contributes to:
Reduce the risk of losing crucial skills;
Support the team when employees are retiring, resigning or moving to other services within the
company
ƒ Reduce mission length and costs in the long term;
ƒ Improve the auditors’ competencies;
ƒ Increase the entity reactivity;
ƒ Strengthen the services and deliverables quality;
ƒ Promote creativity and innovation;
ƒ And increase training quality.
It would be wrong to consider KM as no more than tools management, documentation
management, or information diffusion and archiving. KM is a wider process, which implies in
particular the identification of tacit knowledge, the explicitation of this knowledge, and/or the
implementation of knowledge transfer techniques.

4.2 The key success factors for introducing a KM approach

The success of a KM project in an internal audit service depends on several factors. Below are
listed the important points on which, we think, we must lay stress on considering the innovative
dimension of this kind of project. These key factors raise some problems that are summarized in
the table 1.

4.2.1 Take the double dimension of knowledge into consideration

Knowledge Management takes tacit as well as explicit Knowledge into account. Knowledge
Management is generally seen as the management of explicit knowledge – deemed equivalent as
information management - and ignores the tacit side of knowledge. Knowledge Management
highlights the importance of the tacit part of knowledge.

Knowledge Management displays the interest to promote the exchange and the sharing of tacit
knowledge on the one hand and their conversion into explicit knowledge on the other hand so as to
extend the field of knowledge that can be managed by rules of industrial properties.

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4.2.2 Obtain the executives’ support

In a KM approach, it is important to increase the executives’ awareness and to obtain their support,
given the innovative nature of the approach and its managerial impact. In order to obtain the
executives’ support, it is necessary to enhance the KM strategic role and to integrate the approach
to the global strategy of the entity. Indeed, KM is not an end in itself, but a way to improve the entity
performance.

One way to obtain the executives’ support is to communicate regularly on the work thanks to key
performance indicators, which are a pointer to the value, added by a KM approach.

4.2.3 Link the approach to the internal audit direction performance

The internal audit direction effectiveness could be measured among oters by answering some
questions as:
ƒ How does internal audit take part in the global strategy of the entity?
ƒ Are human resources set in accordance with the process in place at the internal audit direction?
Are the processes in place reactive to the new needs of the activities?
The implementation of KM contributes to answer to the previous questions, notably through:
ƒ A better performance on process analysis (time saving, effectiveness, cost reduction…);
ƒ A higher relevance for the development audit plans;
ƒ Favourable conditions for innovation and creation of new knowledge;
ƒ The improvement of the documentation and deliverables quality and the services provided by
the internal audit direction;
ƒ An identification of key persons carrying crucial knowledge;
ƒ A support when social mobility, retirement or workers are being laid off;
ƒ A better visibility of knowledge detained by the internal audit direction which allows a better
reactivity;
ƒ Time saving for the recommendations;
ƒ And a better answer for training needs.

4.2.4 Involve the audit team

The aim of this approach is that the Knowledge Management becomes an automatism. Have the
auditors involved and obtain their support is therefore an essential key success factor.

Following elements must be taken into account to achieve this goal:

ƒ Describe the objective of the Knowledge Management and present all the advantages related to
this approach;
ƒ Explain the approach by precisely detailing each step;
ƒ Define the way to “capture” knowledge (direct/indirect transfers…);
ƒ Create a climate of confidence between members;
ƒ Encourage team members to work together;
ƒ Involve all auditors, with no exception, in the project;
ƒ Define a precise role to each auditor;
ƒ Promote each team member’s role and behaviour;
ƒ Establish creative, sharing and cohesion culture;
ƒ Include in the recruitment process the values necessary to the Knowledge Management;
ƒ Ensure a favourable environment for information circulation;

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ƒ Know how to assess the project progress and follow up key performance indicators;
ƒ Train the auditors to the tools supporting the project;
ƒ And take the difficulty to implement such approach into account.
Furthermore, considering the intangible nature of knowledge, following elements must be
specifically taken into account:
ƒ Collegially identify critical knowledge in order to share it;
ƒ Define the vocabulary through a glossary;
ƒ Limit divergences of interpretation;
ƒ Communicate on ambiguous critical knowledge;
ƒ And do not only focus on knowledge related to the process “auditing”.

4.2.5 Adapt the approach to the culture and the context

In the steps of Knowledge Management, it is essential to adapt the approach to the culture and the
context of the entity.
ƒ Certain elements must be taken into account:
ƒ Give the project workable objectives by setting up precise limits
ƒ Avoid the “big bang” approach
ƒ Develop this approach on a pilot process
ƒ Take into account and include the existing process
ƒ Adapt the project to meet the entity’s needs
ƒ Promote a way of transcribing tacit knowledge (company memory, story-telling or feedback…)

4.2.6 Include Knowledge Management into existing approaches

It is essential the KM is not simply added to existing processes but attached as far as possible to
each of them, by taking advantage of a process modelling project, a quality approach or the new
regulations (SOX for instance…).

4.2.7 Use tool adapted to the KM approach and not the opposite
The Knowledge Management will be more profitable if it is based on relevant and adapted tools.
The entity must not be subjected to technical choices that do not meet its business needs.
Therefore, it is essential to think of the Knowledge Management approach prior to determine the
technological tools that will support this approach.

5. Conclusion
Following a short introduction on our view of the KM and the specific master programme, we’ve put
forward the issues of KM within the internal audit services. We have noted the interest of the
students for KM, which lead to deep discussions.

During internal audits of the Company Information System, some students (30% to 40%) have
taken the initiative for including KM elements whenever it is possible. Their tutors in the company
have turned their attention to the KM, which leads to positive results. This situation led us to
suggest a KM approach in an internal audit department to the group sponsored by the IFACI. The
key success factors have been summarized in this document.

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Table 1: Problems raised for promoting the key success factors

Key success factors Problems raised
1) Take into account the double How can tacit information be identified?
dimension of knowledge How can the entity value the possibility of clarifying them?
How can explicit information be managed?
2) Involve the Executives How can the strategic role of KM be highlighted?
How can KM be included in the global strategy of the entity?
How can the entity communicate regularly on the progress of work performed
through performance indicators revealing the added value of the KM approach?
3) Link the approach to the performance How does the internal audit take part in defining the global strategy of the entity?
of the internal audit management Are Human Resources in accord with process of the internal audit services?
Are processes reactive to new business’ needs?
How can performance on process analysis be measured (time saving, efficiency,
cost reduction…)?
How can pertinence in establishing audit plans be valued?
How can favourable conditions for innovation and creation of new information be
implemented?
How can contribution to quality of templates and internal audit services be
measured?
How can people with crucial knowledge be identified?
How can support in case of mobility, leaves or lack of activity be guaranteed?
How can the entity be aware of information possessed by internal audit services
allowing it to be more reactive towards new activities/business?
How can the entity save time to set up recommendations?
How can the entity meet its needs of training?
4) Involve the audit team How can KM goal be described?
How can benefits from the KM approach be presented?
How can this approach be explained by detailing all steps?
How can the way of “capturing” information be defined?
How can trustworthy relationship among team members be implemented?
How can team work be encouraged?
How can all auditors feel involved in the project without exception?
How can a precise role be offered to each auditor?
How can the role and behaviour of each team member be promoted?
How can a creative, sharing and cohesion culture be implemented?
How can values necessary to KM in recruitment be included?
How can a favourable environment for knowledge sharing be ensured?
How can the progress of work performed be measured?
How can performance indicators be followed?
How can auditors be trained to tools supporting the project?
How can difficulties in implementing such an approach be taken into account?
How can critical information be identified collectively in order to share them?
How can the vocabulary through a glossary be defined?
How can divergences of interpretation be limited?
How can the entity communicate on critical but not explicit information?
How prevent the entity from focusing only on information related to the process
«auditing”?
5) Adapt the approcah to the culture and How can the project be shaped in feasible objectives using precise limits?
the context How can the “big bang” approach be avoided?
How can the KM approach be developed on a pilot process?
How can existing approaches be included and taken into account?
How can the project be adapted to the entity’s needs?
How can a way of transcripting explicit and tacit information be promoted
(company memory, or story telling or feedbacks…)?
6) Include the KM to existing How can KM be included in a quality approach?
approaches How can KM be included in management via process approach?
How can KM be included in Cobit approach?
How can KM be included in a SOX regulation approach?
7) Use tool adapted to the approach and How can the functionalities of a tool adapted to the KM approach be defined?
not the opposite How can this tool be chosen?

References
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(pp.171-178). Reading, UK: Academic Conferences Limited.
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Associées. Translation of Control Objectives for Information and Related Technology.
Information Systems Audit and Control, (3rd Edition). Rolling Meadows Illinois: IT

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Governance Institute. Translated into French language by AFAI the French Chapter of the
Information Systems Audit and Control Association - ISACA. Paris: AFAI.
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Coleman, D. (1999). Groupware: Collaboration and Knowledge Sharing. In Liebowitz (Ed.),
Knowledge Management Handbook (Section IV, pp. 12-1 – 12-15). Boca Raton, Florida:
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Know. Boston, MA: Harvard Business School Press.
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European Conference on Knowledge Management (pp. 391 – 402). Reading, UK:
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at Rule-Based Systems. In J. Liebowitz (Ed.), Knowledge Management Handbook (Section
IV, pp. 14-1 – 14-16). Boca Raton, Florida: CRC Press LLC.
Moore, C., R. (1999). Performance Measures for Knowledge Management. In J. Liebowitz (Ed.),
Knowledge Management Handbook (chapter 6, pp. 6.1-6.29). Boca Raton, Florida: CRC
Press LLC
Tsuchiya, S. (1993): Improving Knowledge Creation Ability through Organizational Learning.
International Symposium on the Management of Industrial and Corporate Knowledge.
Compiègne, France: UTC-IIIA, ISMICK'93 Proceedings.
Wensley, A.K.P., & Verwijk-O’Sullivan, A. (2000). Tools for Knowledge Management. In C.,
Despres, & D., Chauvel (Eds), Knowledge Horizon: The present and the Promise of
Knowledge Management (Chapter 5, pp. 113-130). Woburn, MA: Butterworth-Heinemann.
Wiig, K. (2004). People-Focused Knowledge Management. How Effective Decision Making Leads
to Corporate Success. Burlington, MA: Elsevier Butterworth-Heinemann.

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Knowledge Management in the Extended and Virtual
Enterprises: A Review of the Current Literature
Enrico Scarso, Ettore Bolisani and Maria Rita Arico’
University of Padua, Vicenza, Italy
[email protected]
[email protected]
[email protected]
Abstract: The models of the extended and virtual enterprise (EE/VE), that are increasingly attracting the
attention of scholars and practitioners, represent new modalities of organisation of inter-firm relationships
aimed to increase flexibility and responsiveness in a global competitive environment. The functioning of those
structures has important implications in terms of Knowledge Management (KM). Actually, the EE/VE forms
originate from the fact that the single firm is not capable to internally develop and manage all the knowledge
needed to be competitive in the global economic environment, and hence it must resort to external sources of
knowledge. This raises several questions, i.e.: how can knowledge assets be managed in an inter-
organisational context? How should inter-organisational knowledge transfers be effectively organised and
managed? What are the opportunities and limitations of ICT applications for this? In principle, the literature of
Knowledge Management offers important suggestions to face such questions. However, the studies of KM
have originally developed in relation to other contexts of application (namely, the problem of managing
knowledge within the single firm). It is only recently that scholars have started to investigate the issue of inter-
organisational KM, with a particular reference to the so-called knowledge networks (i.e. inter-organisational
solutions formed to create and share new knowledge). This paper presents a critical analysis of the recent
literature on the overlapping issue of EE/VE on the one hand, and inter-organisational KM on the other. The
main purpose is to identify notions, concepts, and approaches of the two areas of study that may useful to
develop a systematic approach of KM in the EE/VE models.

Keywords: Extended enterprise, Virtual enterprise, Knowledge management, Knowledge networks, Literature
review

1. Introduction
Extended and virtual enterprise (EE/VE) are increasingly attracting the attention of scholars and
practitioners, mainly because they represent new modalities of organisation of inter-firm
relationships aimed to increase flexibility and responsiveness by combining different competencies
and capabilities. Those structures have important cognitive implications since they stay on an
intense exchange of information and knowledge among involved firms. This is the reason why they
are indicated as knowledge-based organisations, and as such they have to be managed. This
raises several questions, i.e.: how can the common pool of knowledge be managed? How should
inter-firms knowledge flows be favoured? What are the opportunities and limitations of ICT
applications for this?

In principle, the literature of Knowledge Management (KM) offers important suggestions on this
matter. However, such discipline has originally developed in relation to other contexts, namely
managing knowledge within the single firm. However, in recent times, KM scholars have started to
deal with the issue of managing knowledge across organisations, with a particular reference to the
so-called knowledge networks, i.e. inter-organisational arrangements formed to favour the creation
and sharing of knowledge among different firms. It is from these studies that several indications
useful to manage EE and VE as knowledge-based organisations can be drawn.

This paper presents a critical analysis of the recent literature on the overlapping issue of EE/VE on
the one hand, and inter-organisational KM on the other, with the aim to identify notions, concepts,
and approaches of the two areas of study that may used to develop a systematic approach of KM
in the EE/VE models. More specifically, section two analyses the new models of extended and
virtual enterprises as are illustrated and developed in the current literature. Section three examines
the recent field of study of knowledge network management, seen as an extension from original
KM literature. Section four proposes a comparison of the two fields of study in terms of how they
treat the topic of “inter-firm network management”. The final section draws some remarks on the

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 Enrico Scarso, Ettore Bolisani and Maria Rita Arico’

possible implications for research, especially in terms of integration of the two distinct but
converging areas.

2. Extended and virtual enterprises as knowledge-based organizations

Extended Enterprise and Virtual Enterprise are common terms in the recent literature indicating
new models of inter-enterprise relationship. Such models have different origins but some common
features in their definition. EE refers to a long-term form of coordination between firms involved in
the value chain of a specific product or family of products, each of them focused on different
phases of production or different components of the product. One firm (usually the one which sells
goods and services to the final market) has the role of coordinator of the whole group (Childe
1998). In the VE model, there is also a central firm, that creates temporary links between
independent organisations with the aim to develop specific products or services characterised by
short life-cycle (Jagdev and Thoben 2001). Different from the EE, this is a project-oriented
structure, that may dissolve once reached its target (Halaris et al. 2003), even though it could be
reconstituted for new projects or market opportunities.

What is of relevance here is that both the definitions recall aspects that underline the central aspect
of interorganisational knowledge exchange. As a matter of fact, EE and VE indicate groups of firms
characterised by different core-competencies, which co-operate with the purpose to combine
efficiency and production flexibility. Firms can achieve this aim by means of an intense exchange of
information and knowledge supported by ICTs (Browne and Zhang 1999). Some authors explicitly
indicate EEs/VEs as knowledge-based organisations, in which distinct firms gather and exploit
knowledge using explicit efforts and, whenever possible, planned processes of transfer (Kinder
2003; Preiss 1999). Thus, knowledge is generally indicated as the primary resource in an EE/VE
structure, in which member firms participate in the development and delivery of goods and services
with their peculiar knowledge and skills, in order to satisfy customer needs and to innovate in
product, process, and managerial practice (O’Neill and Sackett 1994; Preiss 1999; Venkatraman
and Henderson 1998).

The mechanisms for knowledge exploitation and exchange in EE/VE structures are seen under two
main perspectives. The organisational view points to human aspects in knowledge exploitation and
learning (Beesley 2004). The emphasis is put on the peculiar organisational solutions that are
required to facilitate the management of knowledge assets and the interorganisational knowledge
flows (Preiss 1999). The literature highlights that the practical implementations of EE/VE
organisations are based on frequent exchanges of ideas, proposals, technical data, and other
informational contents across business units, firms, and value chains. Co-design/co-development
teams and other formal/informal structures are commonly used to implement collaborative
knowledge creating processes. The technological view focuses on the role of ICTs (e.g., shared
databases, extended ERP systems, web-based services, etc.) as the principal tool for knowledge
sharing within an EE/VE (Zhuge 2005; Yoo and Kim 2002; Lillehagen and Karlsen 2001). In this
view, the problem of knowledge codification arises as a critical issue. In other words, the
technology can provide links that enable the effective sharing of data, but the communication of
context-related knowledge requires a shared system of meaning to be understood and applied
(Swann et al. 1999).

The cognitive implications of the implementation of EE/VE models also relate to the kind of co-
ordination mechanisms among economic activities. As mentioned, the “return on investment” in
such structures is the possibility for each firm to concentrate on its own knowledge base and “let to
the others” the development of complementary competencies that are essential to the functioning
of the whole value chain. In accordance to the classic Williamson’s categorisation of markets vs.
hierarchies (Tuma 1998), both EE and VE are considered intermediate forms between market and
hierarchy (although with distinctions), which has important implications from a knowledge-based
perspective.

First, the EE structure represents an attempt to develop a further integration of pre-existing

supplier-customer relations through a long-term ICT-based partnership (Jagdev and Thoben 2001).
Mechanisms of coordination are based on directions from a leading enterprise, and this makes the

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EE a substantially stable and “quasi-hierarchical” structure. Instead, in the VE model a greater

flexibility and more temporary relations can be permitted, thus establishing an environment where
market transactions can partially also occur is (Goranson 2003). In both cases, the role of a
“principal” firm, capable of co-ordinating the other trading partners, is clearly recognizable (Childe
1998; Lefebvre and Lefebvre 2002). From a cognitive viewpoint, this activity requires tasks such
as: “mapping” the knowledge scattered among dispersed organisations; managing transfers of
relevant information among nodes in a trustworthy environment; setting common rules and
language standards, and regulating exchanges with external environment. Related to this, another
important issue is that of trust. The effective functioning of a network of firms such as EE/VE
requires limiting risks of opportunistic behaviour by participating partners. The reduction in
information and knowledge asymmetries among parties is seen as a way to build a trustworthy
environment (Spekman and Davis 2004).

Finally, it is often possible to identify different stages of development and management of an

EE/VE (Davis and O’Sullivan 1999; Tsai et al. 2004; Stanescu et al. 2002), that involve and require
different processes of knowledge transfer. The implementation stage of an EE/VE implies the
issues of partner selection, subdivision of work, setting common rules, etc. This requires “sharing of
a vision” and agreement on common goals between participating firms, which generally implies
sharing knowledge contexts and direct contacts between managers and teams. Once the structure
is built, the design of the new product needs an effort to combine previous projects, past
experience, and tacit competencies, and convert them into technical designs and specifications.
Finally, the operations stage requires the exchange of explicit formats and contents to perform
efficient transactions in the supply chain and implement just-in-time strategies: in doing this, the
firms can take advantage of integrated information systems, whose implementation and use imply
the pre-codification of knowledge into forms that can be treated by computers efficiently.

3. Inter-organisational knowledge management

KM is another important field of management where knowledge is regarded as a key competitive
asset. In particular, this “emerging discipline” stresses that knowledge requires effective
management with specifically designed approaches. The “new” discipline of KM has aroused in
recent years, but the literature already counts an impressive number of contributions. The research
in KM has shed light on the nature of organisational knowledge processes and on the issue of how
to manage it.

Most of the literature has focused on knowledge generated, transferred, and used within a single
organization, while less work has been done to understand how to manage knowledge across
organisations (Parise and Henderson 2001; Spring 2003). Nevertheless, as the day-by-day
practice shows, it is very unlikely that single firms can own or internally generate all the knowledge
they require (Quintas et al. 1997; Bolisani and Scarso 2000). Hence, interactions with other
companies for accessing to a wider pool of knowledge resources are needed to gain and sustain
competitive advantages (Blecker and Neumann 2000). The resulting knowledge networks (i.e.:
formal or informal relations to share knowledge, explore innovations, and exploit new ideas - Millar
et al. 1997; Pyka 1997, 2002; Warkentin et al. 2001; Peña 2002; Inkpen and Tsang 2005)
constitute a basic and distinctive feature of the current business environment. The recent studies of
knowledge network management, that represent an effort to translate and re-frame KM notions and
practices from internal environments to inter-organizational relationships (Seufert et al. 1999), are
of great use to analyse knowledge processes involving various enterprises.

This sort of “extended KM” raises more problematic issues than managing knowledge within the
single firm. For instance, attempts to communicate meanings across the borders of the single firm
may be difficult due to the lack of common goals, languages, values, and mental schemes. In
particular, the cognitive distance or gap that separate knowledge sources and users makes the
sharing of (really) useful knowledge difficult. Furthermore, the effective “functioning” of a knowledge
network involves the subdivision of “cognitive tasks” and KM competencies among the participants.
As long as the dimension of inter-firm networks and their importance to the competitive success of
their members have been recognised by scholars and practitioners (Inkpen and Tsang 2005), the
interest of the KM literature on networks has been increased. The recent literature of knowledge

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network management highlights some essential concepts and issues. A particular attention has
been paid to the conditions that facilitate the effective transfer of knowledge among members, in
that networks have the main goal to provide firms with access to valued knowledge. Nevertheless,
effective knowledge sharing inside a network cannot be taken for granted: many, in fact, are the
factors that affect this process.

First, the nature of the exchanged knowledge is a central point. As is well known, there is a
substantial difference between tacit and explicit knowledge in terms of transferability. In principle,
explicit knowledge can be transferred without any kind of limit, while tacit knowledge requires the
existence of a shared interpretative context (i.e. a common language, shared mental models, and
so on). Furthermore, the kind of exchanged knowledge is strictly linked with the nature of the
involved task, since a more structured task require less tacit knowledge to be performed.

As a direct consequence, the knowledge gap that separates network members is of importance.
More specifically this gap has a double and conflicting effect. On the one hand, the larger the gap
and the more useful the knowledge exchange is. On the other hand, the smaller the gap and the
easier the exchange of tacit knowledge. Thus, a trade-off is required between the wideness and
richness of the network knowledge pool (that favour the generation of new ideas) and its
heterogeneity (that hinders its circulation inside the network).

Another question is that inter-organizational arrangements for nurturing knowledge sharing can
become sterile and even pathological when trust between partners is lacking and conflict is poorly
managed (Panteli and Sockalingam 2005). As many scholars affirm, trust is at the heart of
knowledge exchange, since it influences the extent and the nature of knowledge shared. The issue
here is that since different kinds of trust exist, there must be a correspondence between the
cognitive aims of the network and the kind of trust to be developed. Another point is that in general
trust may evolve during time, and consequently the knowledge potential of the network may
change.

Also, the network structure matters. Structure is characterised by elements such as: size,
organisation, and stability. Several studies state that size affects knowledge transfer processes
significantly. When size increases, “structural holes” grow up, and sub-networks emerge (Hislop
2005). This creates “knowledge islands” that separate some members from others. As regards
network organisation, this aspect is generally seen in relation to the different roles played by the
various members. Knowledge transfers require one (or some) knowledge sources and receivers,
and also one or more knowledge brokers whose job consists in favouring the knowledge
transaction (Scarso et al. 2006). Furthermore, the success of a knowledge network depends on the
presence of critical players as sponsors, managers, etc. In fact, the network must be managed, and
this requires the subdivision of both the cognitive and the managerial work. Lastly, the stability of
the network primarily affects and requires the development of trust (Panteli and Sockalingam
2005). More specifically, “superior” levels of trust, needed to exchange more complex and tacit
knowledge, can be reached only after a certain time of cooperation.

A less considered, but still a critical aspect concerns the economic side of the question. Like any
other exchange, in a knowledge exchange there are individuals or organisations that take
economic advantage from the process, and they (or others) might be requested to pay for it. A key
question here is that the sum of benefits and costs has to be as much fairly distributed as possible.
In some cases, economic incentives are needed to motivate people to contribute to the knowledge
network.

A last point concerns the technical tools used to enable the sharing of knowledge inside the
network, generally denoted as Knowledge Management Systems. Even if they are not the panacea
of the knowledge transfer problems, KMS are however vital to the effective working of a knowledge
network, but have to be designed and implemented properly (Holsapple 2005).

To sum up, several issues affect the sharing of knowledge inside a network of firms. In particular,
different networks shows different features in terms of the knowledge processes they enable and

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their effectiveness. Hence, the dynamics of knowledge transfer vary across different network types
(Inkpen and Tsang 2005), and this has notable implications, as analysed below.

4. EE from a KM perspective
As illustrated, the two areas of study considered here are developed to meet different goals, and
have their roots into different fields. The literature on EE/VE models examines the “new”
organisational configurations for manufacturing and delivering products and services, while the
literature on knowledge network management especially focuses on the mechanisms and
processes for sharing knowledge among firms.
Our analysis highlights that the two areas have a number of points in common that, in our view, are
particularly important, and namely:
ƒ The main object is, in both cases, inter-organisational networks allowing co-operation between
(at least in part) autonomous companies;
ƒ The focus is how it is possible to manage these networks effectively, and what are the
fundamental roles and mechanisms for this;
ƒ Knowledge is seen as a crucial element in the management of networks, not only (as is
obvious) for a KM viewpoint but also (as is less obvious) for the new EE/VE models;
ƒ Finally, ICT applications are deemed to play a vital role in the development and functioning of
inter-firm networks, which raises essential issues of their selection, design, and implementation.
Although there is awareness that ICTs cannot solve all the problems, their importance is
recognised in both the literatures.
Having said that, the two areas of study have several diverging aspects that sometimes represent
complementary views but, in other cases, are contrasting points. We attempt to examine such
critical topics, focusing on the implications in terms of “knowledge and its management” (Table 1).
Table 1: Comparison between EE/VE models and knowledge networking
Issue EE/VE models Knowledge Networking
respond to particular operational or
Purpose transfer and share knowledge
economic needs
subdivision of competencies and tasks “cognitive” nature and heterogeneity of
Configuration and
to reach a trade-off between stability the network, knowledge floes between
structure
and flexibility nodes
sources and users of knowledge;
Key roles leading firm
knowledge brokers
co-ordination of operational tasks and nature and characteristics of knowledge
Network relationships
economic transactions transfers
knowledge as “competence” or “know
knowledge as the object of transfer and
Role of knowledge how” for performing tasks in the
management
network
Managerial processes adaptation of traditional managerial processes of knowledge transfer and
and key performances models to the inter-firm environment management
Issues of ICT design (direct) connection between information tools for exchanging and sharing
and management systems multidimensional knowledge contents

4.1 Purpose of networking

The EE/VE models are seen as networks built to respond to particular operational or economic
needs (i.e.: how to design, manufacture and delivery a product in the global market). Knowledge
networks, instead, focus on the main purpose of “how to transfer and share knowledge”; this is of
course finalised to business, but as a sort of “consequent effect” that is generally not analysed
directly in economic terms. This distinction has important implications in terms of selection, roles of
members, and division of tasks (see below).

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4.2 Configuration and structure

In the EE/VE literature, the main question is what structure reaches a trade-off between stability
and flexibility for competing in a highly dynamic environment. From a knowledge-based
perspective, this means focusing on the firms’ core competencies and know-how that are needed
to the functioning of the whole network, and how to subdivide and co-ordinate tasks accordingly. In
the studies of KM, what characterises the structure of the network is its size (in terms of “amount”
and heterogeneity of knowledge) and the links between nodes (in terms of sources and users of
knowledge).

4.3 Key roles

In an EE/VE, there is generally one firm that co-ordinates the network. Generally, this role is seen
in terms of either operational tasks, or co-ordination of economic transactions within the network. In
both cases, there are implications in terms of managing knowledge, but this is generally seen as a
secondary aspect. In the KM literature, roles of members are identified in terms of their function in
a process of knowledge transfer (i.e.: source, receiver, broker or intermediary).

4.4 Network relationships

The EE/VE literature often focuses on the mechanisms of co-ordination of both operational tasks
and economic transactions. For instance, crucial questions in those studies are if member firms
have long-term or temporary relationships, if the network is based on market vs. hierarchical
transaction mechanisms, etc. In such cases, the economic issues (e.g.: transaction costs) are
considered more relevant than the cognitive aspects. The relationships in a KM network are
essentially defined by the nature and characteristics of knowledge transfers between members.

4.5 Role of knowledge

In an EE/VE model, knowledge is essentially intended as “competence” or “know-how” that a firm
possesses about a particular market, activity, industry, technology, etc. In KM networks, knowledge
is the main object of transfer between firms; it is this transfer that directly determines the value of
the relationship (and of the whole network).

4.6 Managerial processes and key performances

The (dynamic) efficiency, intended as the capability to respond to the external competitive
pressures, is the main performance required to an EE/VE organisation. To achieve this, a
significant effort is made to adapt the classic managerial schemes and models (e.g.: scheduling,
task allocation, planning procedures, etc.) to the new inter-firm environment. KM studies, instead,
focus on the design and implementation of methods and practices to manage knowledge transfer
(i.e.: identification of appropriate tools for different kinds of knowledge, subdivision of tasks in KM
processes, etc.)

4.7 Issues of ICT design and management

In EE/VE organisations, the main concern is how to connect information systems of different firms;
the emphasis is thus on extended ERP, EDI applications, and similar technologies. From a
knowledge-based viewpoint, the central issue is thus the codification of knowledge in forms that
can be directly handled by computers. In the case of knowledge networks, the literature considers
the broader problem of transferring different kinds of knowledge through ICTs. Here, a critical
aspect is how and when computer applications can underpin the sharing of tacit forms of
knowledge.

5. Discussion and conclusions, implications for research

The analysis proposed provides a number of interesting insights. First, the two fields of study focus
on similar questions (i.e.: how to manage inter-firm networks) with a number of differences. These
different perspectives can be seen as complementary to one another. Indeed, a network can be
considered to be a “multi-level web of firms”. In other words, at the upper level we have cognitive

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relationships, while at the bottom level operational interconnections. The analysis of the connection
between those two layers can also be an interesting point for further research on inter-firm
networking.

However, as the literatures examined show, there is little integration between the two fields. Even
though knowledge is considered an essential asset in both the areas of study, the focus,
languages, and practical research approaches that are used are in some cases significantly
different. An effort of homogenisation can be still necessary.

Also, there are some key issues for inter-firm network management that still require further study
from both the two viewpoints. Here, we address the issue of the practical economic aspects of
network management. For instance: what are the benefits of networking for the single firm and for
the entire network? How can we measure that? Also, it is important to note that building, managing,
and maintaining a network is a complex task that requires both infrastructural investments (i.e.:
physical assets) and intangibles (i.e.: investment in individual and organisational learning, standard
setting, etc.). How can costs be subdivided between members? What is the role of the leading
network?

The focus of the EE/VE literature is not far from these issues, but these are just treated faced
based on either transaction costs analysis, or on traditional accounting schemes. The literature on
knowledge network has, instead, not yet reached a significant level of analysis of the economic
measurement of knowledge management activities. An effort of further research is thus required.

6. Acknowledgements
This paper contributes to the FIRB 2003 project “Knowledge management in the Extended
Enterprise: new organizational models in the digital age”, funded by the Italian Ministry of
Education, University and Research.

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Knowledge Management and Virtual Organizations, Yogesh Malhotra (Ed), Idea Group
Publishing, Hershey – London, pp63–83.
Bolisani, E. and Scarso, E. (2000) “Electronic communication and knowledge transfer”,
International Journal of Technology Management, Vol. 20, Nos.1/2, pp116-133.
Browne, J. and Zhang, J. (1999) “Extended and virtual enterprises-similarities and differences”,
International Journal of Agile Management Systems, Vol.1, No.1, pp30–36.
Childe, S.J. (1998) “The extended enterprise-a concept of co-operation”, Production Planning &
Control, Vol.9, No.4, pp320-327.
Davis, M. and O’Sullivan, D. (1998) “Communications technologies for the extended enterprise”,
Production Planning & Control, Vol.9, No.8, pp742-753.
Goranson, H.T. (2003) “Architectural support for the advanced virtual enterprise”, Computers in
Industry, Vol.51, No.2, pp113-125.
Halaris, C., Kerridge, S., Bafoutsou, G., Mentzas, G. and Kerridge, S. (2003) “An Integrated
System Supporting Virtual Consortia in the Construction Sector”, Journal of Organizational
Computing and Electronic Commerce, Vol.13, No.3/4, pp243-265.
Hislop, D. (2005) “The effect of network size on intra-network knowledge processes”, Knowledge
Management Research & Practice, Vol.3, pp244-252.
Holsapple, C.W. (2005) “The inseparability of modern knowledge management and computer-
based technology”, Journal of Knowledge Management, Vol.9, No.1, pp42-52.
Inkpen, A.C. and Tsang, E.W.K. (2005) “Social capital, networks and knowledge transfer”,
Academy of management Review, Vol.30, No.1, pp146-165.
Jagdev, H.S. and Thoben, K.D. (2001) “Anatomy of enterprise collaborations”, Production Planning
& Control, Vol.12, No.5, pp437-451.

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 Enrico Scarso, Ettore Bolisani and Maria Rita Arico’

Kinder, T. (2003) “Go with the flow-a conceptual framework for supply relations in the era of the
extended enterprise”, Research Policy, Vol.32, No.3, pp503-523.
Lefebvre, L.A. and Lefebvre, E. (2002) “E-commerce and virtual enterprises: issues and challenges
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Millar, J., Demaid, A. and Quintas, P. (1997) “Trans-organizational Innovation: A Framework for
Research, Technology Analysis & Strategic Management, Vol.9, No.4, pp399-418.
O’Neill, H. and Sackett, P. (1994) “The extended manufacturing enterprise paradigm”,
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Panteli, N. and Sockalingam, S. (2005) “Trust and conflict within virtual inter-organizational
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Systems.

475
Information Broker Approach for Management
Information Systems in SME
Christian-Andreas Schumann and Claudia Tittmann
University of Applied Sciences Zwickau, Germany
[email protected]
[email protected]

Abstract: The generation of the business achievements as products and services of SME is realised by
intra-organisational and intra-operational structures and inter-company networks increasingly. The huge
quantity of originated data generated in the business processes has to be extracted and collected purposeful.
The organisational units are provided with useful data according to a concept of the position- and hierarchy-
dependent information service by special management information and knowledge transfer systems.
Therefore, the organisational units are comprehended and developed as competence cells and as parts of
one or several competence networks and clusters, respectively. Furthermore, the network architecture for the
competence and information exchange including a suitable information and business model is created for the
support and the automation of the processes. The result will be a Knowledge-Information-Broker as special
knowledge transfer system or tool for SME. That is why, the complex processes and functionalities in the
business divisions have to be analysed and described in relation to the database and information systems.
The first level is the organisational and technical model of the knowledge and information exchange system.
The content definition and benchmark model in the second level completes it. The third level is the application
of the Knowledge-Information-Broker as business approach for the exchange of information and knowledge as
evaluable goods in intra-organisational and inter-company networks. The general concept of Knowledge-
Information-Broker will be presented in the paper.

Keywords: Knowledge transfer, knowledge broker, semantic net, and management information
system

1. Information and knowledge within business processes

Knowledge management is an approach to improving organisational outcomes and organisational
learning by introducing into an organisation a range of specific processes and practices for
identifying and capturing knowledge, know-how, expertise and other intellectual capital, and for
making such knowledge assets available for transfer and reuse across the organization.
(Wikipedia-KnowledgeManagement, 2006)

The increasing application and impact of the knowledge management is established through:
ƒ The transformation of society, work, workers, organisations, products, and services into
knowledge society, knowledge work, knowledge workers, intelligent organisations as well as
intelligent products and services
ƒ The increasing acceleration of knowledge development, acquisition, storage, diversification, and
distribution
ƒ The growing complexity of organisational systems, architectures, processes, and functions
ƒ The resulting reaction of the management with initiatives such as Business Process
Reengineering (BPR) Lean Management, Relationship Management, Risk Management,
Intelligent Planning and Forecasting etc.
ƒ The modern information and communication methods, systems, and technologies as catalysts
and as enabler for new organisational concepts and architectures as well as systems and tools.
(Maier, 2003; Dick and Wehner, 2001)
Knowledge Management is a complex approach characterised by socio-economical, psychological,
organisational, and technical aspects. (Fig. 1)

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Figure 1: The Influences onto knowledge management (Dick and Wehner, 2001)
There is a clear confession of the management to the knowledge management. The management
recognised that knowledge management has strategic relevance. Knowledge and Information are
rated as one of the most important resources. (Fig. 2)

Figure 2: Importance of resources in enterprises (Telephone Survey, 2003)

But there are still a number of problems in introducing knowledge management in enterprises.
Especially the complex change of philosophy and strategy, the long introduction period, huge
volume of investigations as well as the interactions with the other systems and processes of the
enterprises complicate the implementation of the knowledge management. They are completed by
a number of additional factors of disturbance. (Fig. 3)

Figure 3: Barriers for the implementation of knowledge management (Telephone Survey, 2003)
State of the art in the enterprise practice is that the knowledge can be distinguished in two main
streams: documents knowledge and process knowledge. In the past the majority of the
management persons were focused on the documents knowledge because it is easier to handle. It
is fixed knowledge in the shape of documents. The documents knowledge is really relevant but the
discovering of the process knowledge should complete it. Thereby, the information retrieval has a
secondary role. Rather the methodology of linking information units with process steps is essential.
(Zagos and Kiehne, 2003)

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A business process is a recipe for achieving a commercial result. Each business process has
inputs, a method and outputs. The inputs are a pre-requisite that must be in place before the
method can be put into practice. When the method is applied to the inputs, then certain outputs will
be created. (Wikipedia-BusinessProcess, 2006) Therefore, the process knowledge reflects not only
defined facts as fixed information and data but also the methodological knowledge for the design,
the implementation, and the realisation of dynamic processes. The special process knowledge of
the single specialist has to be transformed into the general process knowledge and to be integrated
with the detailed process knowledge of the other specialists. (Fig. 4)

Figure 4: Collaborative Implementation and Application of Knowledge Spaces (Zagos and Kiehne,
2003)
It is possible to optimise the existing business processes and to use the process know-how for
generating standard processes as best practice solutions. The recent task in the knowledge
management is to integrate the documents and process knowledge in the business theory and
practice. Therefore, the network theory is important. It is applied in the framework of the networks
of competence as a special kind of knowledge transfer network. (Schumann and Tittmann, 2004)

2. Process knowledge in relation to the competence networks

The significance of networks of competence can be derived by the trend that company structures
organise themselves are increasingly decentralized. On the one hand it comes to the legal spin-off
of departments (Ortmann and Sydow, 2001). Primarily non-core processes will be separated. On
the other hand cooperation with suppliers, customers or even competitors increases, and
enterprise networks are formed on this way.

Henceforth, short-term market relations will be replaced by cooperative meshed structures. The
enterprise-spanning cooperation processes effect an increasing integration. The consequence is
the mutual dependence of the partners. This requires a stronger coordination of the transactions
within the scope of the cooperation. Furthermore, the specialist areas information management and
knowledge management become more and more important (Nonaka and Takeuchi, 1995).

The formation of competence networks implicates increasing complexity by the multiplication of

information and knowledge. Additionally the business processes of the competence network yield
new knowledge: process knowledge, which is useful for the whole network as well as for each
competence partner.

In spite of knowledge is no material value it has an immense importance:

The assets of enterprises (Daum, 2002) consist of the components circulating assets, fixed assets,
financial assets, and intangible assets. Into the fourth category, all immaterial enterprise values
belong to the intangible assets. The generic term for this is „goodwill“. It is also referred to as
intellectual capital.

In this context the whole market value of an enterprise will be determined as follows:
Market Value = Book Value + Intellectual Capital
Intellectual Capital = Human Capital + Structure Capital + Relationship capital

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 Christian-Andreas Schumann and Claudia Tittmann

It becomes relatively difficult to determine the intellectual capital. The decreasing capital
investments into material assets are the trends in enterprises. (Weber and Hess, 2005). The
balance value of the enterprises amounts is partly only 10% of the market value in knowledge-
intensive industries. (Daum, 2002). That is why, the meaning of utilisable evaluation of information
and knowledge increases permanently.

Networks of competence (Fig. 5) are a solution for handling of information and knowledge by
providing information transfer and knowledge transfer. These networks organise and structure the
competences of the partners and associated knowledge.

Figure 5: Structure of competence networks

Important tasks for the competence network are retrieval and benchmarking as well as using and
disposing knowledge. The realisation of these tasks demands from information technological view
a knowledge management system for structuring knowledge of the competence partners,
processes, skills, projects, etc. So for the competence network should be built up a knowledge
network, based on semantic relations (Fig. 6). Indicators for benchmarking will complete the
relations in the knowledge network.

Figure 6: Knowledge representation by semantic graphs

Thus document and process knowledge can be saved, extracted, and utilised.
The system has to supply the management with information about success-critical ranges of the
enterprise and to realise the performance monitoring of processes. From the strategic view
managers are enabled to control assets from their own enterprise or out of the other competencies

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in the network. This makes the configuration of assets for value chains much easier. Furthermore,
the business processes can be controlled and benchmarked, and a risk management can be
planned.

3. Business process benchmarking of organisational and additional

knowledge
The total knowledge in competence networks consists of the knowledge delivered by competence
partners involved in the network, and additionally, knowledge extracted from business processes.
The knowledge potential of every cooperation partner in the network as well as the whole
organisational knowledge increases iteratively with the number of executed cooperation and
processes.

The accretion of knowledge also enormously affects the knowledge value of every competence
partner.

Therefore evaluating of this knowledge is necessary. This process needs three perspectives on the
knowledge in companies to be examined:
ƒ Intellectual capital, yielded into the network by the companies
ƒ Intellectual capital, created by the cooperation processes
ƒ Intellectual capital, took out of the network by the companies.
The structured knowledge admission mapping and knowledge profiles are used for the acquisition
and structuring of the newly integrated knowledge. These knowledge profiles consist of the
components of the knowledge capital, that means human capital (e.g. number of co-workers,
qualification), structure capital (e.g. resources), and relationship capital (e.g. enterprise contacts).

It is possible to create a subset of skill profiles by using the entirety of the knowledge profile. These
competence profiles deliver the support for the management in order to detect qualified
cooperation partners.

The imported knowledge and the new developed knowledge of an competence network have to be
processed from two aspects:
ƒ Information identification by semantic search and expert search
ƒ Performance measure based decision support.
Finally there is another important fact: how to handle security and authorisation. The ideas for
collecting and using knowledge are not enough. Rule for who has access to which information and
knowledge have to be integrated in the knowledge network.

Knowledge components of the competence partners are mapped into the knowledge net, the
knowledge base of the competence network. Afterwards the knowledge is distributed and made
accessible according to set authorisations. (Fig. 7)

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 Christian-Andreas Schumann and Claudia Tittmann

Figure 7: Knowledge profiles within cooperation networks

The structure of the knowledge net is related to the definition of the semantic net (Wikipedia-
SemantischesNetz, 2006). A semantic net is a formal model of terms and its relations. Already in
the early 1960s semantic nets were suggested by the linguist Ross Quillian as one possible
representation form of semantic knowledge (Quillian, 1967). Semantic nets represent an optimal
method for the representation of knowledge.

The purposeful development of the models of terms is the basic condition for an efficient
knowledge net (Hahn and Heeren, 2004) and fundamental for a working competence network.

The concept of a semantic net will be extended by a detailed performance measurement system
for the benchmarking of the knowledge. That means for an competence network, that first of all a
strategy of semantic relations and performance measures is created to support the future value
processes.

The performance measurement system working on the fundamental semantic net should integrate
the following dimensions, derived from the perspectives of intellectual capital:
ƒ Benchmarking of companies knowledge (knowledge profiles), including human capital, structure
capital, and relationship capital
ƒ Benchmarking of business processes and cooperation, including companies view, partnership
view, and process view
ƒ Risk evaluation, including measures for strategic objectives within the network
The performance measurement system integrates aspects of the balanced scorecard conception
(measurement of the company objectives) and the knowledge balance (evaluation of the
intellectual capital). Therewith, both dimensions cooperation identification, and process evaluation
(Bergrath, 2004) are represented.

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4. Architecture of a knowledge broker system for retrieval and distribution

of information and knowledge within the network
Finally for using the knowledge-based competence network an implementation into integrated
system architecture is necessary.

The architecture of the knowledge-based system for information distribution for the management of
SME consists of three complexes. (Fig. 7)

Figure 8Architecture of a knowledge broker system

The first level will be the organisational and technical model of the knowledge and information
exchange system. The content definition and benchmark model in the second level will complete it.
The third level will be the application of the Knowledge-Information-Broker as business approach
for the exchange of information and knowledge as evaluable goods in intra-organisational and
inter-company networks.

The tools integrated in the system work into four directions: development-orientated, individuals-
orientated, utilisation-orientated and data-orientated (Seidel, 2003).

The bottom level provides the fundamental services (IT- and database services). For a working
knowledge net a well planned and homogeneously IT-infrastructure is essential.

In the second level the knowledge structure will be defined. This corresponds to the semantic
meta-model consisting of the following components:
ƒ Definition of the structure of classes,
ƒ Relations between classes and their instances,
ƒ Authentication-Model
ƒ Performance Measurement-Model
ƒ Triggers / Workflows
ƒ Definitions of expert searches, semantic searches, and reports.
Main focus should be set on the definition of the semantic class structure, because it defines
structure, knowledge, and cooperation processes of competence partners within the network.

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 Christian-Andreas Schumann and Claudia Tittmann

Finally the third level enables the user editing of assigned knowledge areas, purposeful knowledge
navigation and authorization-dependent knowledge representation. Existing external knowledge
can be imported by standardized interfaces (e. g. XML, CSV). This knowledge will be integrated by
mappings in the existing semantic structure.

According to the information needs (e. g. in the management) the definition of semantic queries
and expert searches supports the fast provision of knowledge on demand from the knowledge net.
SME networks are enabled to evaluate existing knowledge and create new knowledge by using an
information-knowledge-broker architecture. It is efficient to use this knowledge for business
processes.

5. Summary
The enormous significance of the intellectual capital for the market value of an enterprise requires
the development and use of knowledge-based systems making appropriate information available
for the management, and supports it by planning and executing value-relevant processes. Since
enterprises unite their competences into networks, the concept is extended to a performance
measurement knowledge network. The optimised knowledge for cooperation and the creation of
value processes as well as the purposeful distribution of information are ensured by this system.
Primarily, the focus is not set on knowledge quantity, but rather on the investigation of the optimal
knowledge view for co-operation processes. At last but not least the enterprise success by
optimised using of the available intellectual capital of the companies networks is essential for the
re-engineering of the enterprise processes.

References
Bergrath, A. et.al (2004): Wissensnutzung in Klein- und Mittelbetrieben. Wirtschaftsverlag Bachem,
Köln.
Daum, J. H. (2002): Intangible Assets. Galileo Press GmbH, Bonn.
Dick, M.; Wehner, Th. (2001): Wissensmanagement der Stand der Diskussion.
Hahn, O.; Heeren, R. (2004): Kompetenzplattform Mechanische Fügetechnik. Shaker Verlag
GmbH, Aachen.
Maier, R. (2003): Wissensmanagement in Organisationen, Paper, INSITU, MLU Halle.
Nonaka, I.; Takeuchu, H. (1995): The Knowledge Creating Company. Oxford University Press,
New York / Oxford.
Ortmann, G.; Sydow, J. (2001): Strategie und Strukturation. Gabler Verlag, Wiesbaden.
Quillian, M. R. (1967): Word concepts. A theory and simulation of some basic semantic capabilities,
in: Behavioral Science 12
Schumann, Chr.-A.; Tittmann, C.; Weber, J.; Wolle, J. (2004): The Impact of Networks for
Knowledge Transfer to the related Networks of Competence, VPP2004, Proceedings, TU
Chemnitz.
Seidel, M. (2003): Die Bereitschaft zur Wissensverteilung. Deutscher Universitäts-Verlag,
Wiesbaden.
Telephone Survey (2003): „Wissensmanagement in deutschen Unternehmen“, LexisNexis
Deutschland, Frankfurt/Münster, Untiedt Research, Hattingen März / April 2003
Weber, J.; Hess, T.; Hachmeister, D. (2005): Controlling und Management von Intangible Assets.
Gabler Verlag, Wiesbaden.
Zagos, A.; Kiehne, D.-O. (2003): Wirtschaftliche Perspektiven, Anwendungen und Chancen für das
Prozessorientierte Wissensmanagement, InTraCoM, Stuttgart
Wikipedia-BusinessProcess (2006): http://en.wikipedia.org/wiki/Business_process, 02/05/2006
Wikipedia-KnowledgeManagement (2006): http://en.wikipedia.org/wiki/Knowledge_management,
02/05/2006
Wikipedia-SemantischesNetz (2006): http://de.wikipedia.org/wiki/Semantisches_Netz, 06/05/2006

483
Architecture for Effective Knowledge Creation in
Educational Institutions and Dissemination Through
Satellite Technology – An Indian Experience
S.Shanthi and V.C.Ravichandran
College of Engineering Guindy, Anna University, Chennai, India.
[email protected]
[email protected]

Abstract: Indian education faces the challenges of both quantity and quality. To support this challenge, the
Indian Space Research Organization has launched a satellite ‘EDUSAT’ completely dedicated to education
intended to meet the requirements of several sectors of education. The recently tested Indian Virtual Learning
Programme through EDUSAT and conduct of a survey research on the educational channel of India’s largest
technical university at Chennai, working on the learning technology of Two way video and One way Video Two
way audio respectively, warrants implementation of Knowledge Management programme in institutions of
higher learning. Also the results of a comparative analysis performed between the practices to manage
knowledge in Business sector and that of institution of higher learning revealed educational institutions in India
are hitherto to take lessons from the business world in adopting Knowledge Management programme to
create, acquire, store, share, utilize, transfer, disseminate knowledge and in sustaining its competitive
advantage. This paper aims to review the SECI framework to assess its role in enabling knowledge creation in
educational institutions. Further model architecture has been envisaged for effective Knowledge Management
in educational institutions with special reference to knowledge creation, storage and effectively to disseminate
the same to the required people, at the required time and in the required format through satellite technology.

Keywords: Knowledge management in education, knowledge creation, knowledge dissemination, satellite

technologies in higher education.

1. Education in India
The extension of quality education to remote and rural regions becomes a Herculean task for a
large country like India with multi-lingual and multi-cultural population separated by vast
geographical distances, and in many instances, inaccessible terrain. The lack of adequate rural
educational infrastructure and non-availability of good teachers in sufficient numbers adversely
affect the efforts made in education. ‘Providing urban amenities in rural areas (PURA) is essentially
to address comprehensively all these problems. It is conceived around four types of connectivity,
with the aim to speed up the process of achieving total rural prosperity. They are Physical
connectivity, Electronic connectivity, Knowledge connectivity and Economic connectivity. Efforts
have been continuously taken for a long period of time for Physical Connectivity and it still will take
considerable time as it involves heavy capital and recurring budget. Electronic Connectivity is the
essential infrastructure for Knowledge transfer, which will cause Economic Prosperity (PoI). The
focus of India is now on the Electronic Connectivity, i.e. meeting the needs of education in India
through technology, especially Satellite technology.

1.1 Educational experiments

India has had numerous projects during the last five decades of media ventures. Indian Space
Research Organization emerged with INSAT series of Satellites. Institutions of higher learning
started playing a major role in providing educational content to be disseminated through the media
ventures. Five Indian Institute of Technology, 4 National Technical Teachers Training Institute and
Indira Gandhi National Open University started creating software for technology education. The
Consortium of Educational Communication was set up by the University Grants Commission, which
started making knowledge-ware available to people with the help of satellite technology. The
Training and Development Communication Channel (TDCC) of INSAT, which provides the ‘one-
way video two-way audio’ teleconferencing network for interactive training and education, Higher
Education Television Channel, ‘Vyas’, Gyan Darshan (GD) with four operational channels helps
provide quality education to a larger population. The Indian Space Programme has promoted the
development and applications of space technology for the socio-economic benefits of the nation
through hired satellites initially and later on by the indigenously built INSAT satellite system and

484
 S.Shanthi and Dr.V.C.Ravichandran

now recently the exclusively dedicated satellite for education EDUSAT. EDUSAT has a capability
to provide a C-Band national beam, KU-Band national beam and five KU-Band regional beams.
This would facilitate imparting of education in the regional languages and meet the needs of the
state governments. EDUSAT will supplement curriculum based teaching, provide effective
teacher’s training, provide greater community participation, increase access, strengthen education
efforts and provide access to new technologies through a well thought ground segment established
in schools, colleges and other institutions. A wide range of technological possibilities is the most
vital support system for enhancing the quality of education. The figure below projects all technical
possibilities on EDUSAT such as radio broadcast, TV broadcast, online education through internet,
computer connectivity & data broadcasting, talkback channel, audio-video interaction, voice chat on
internet, asymmetric internet through TVRO and video conferencing.

Figure.1: Technical possibilities of EDUSAT

1.2 Knowledge dissemination through satellite technology

Anna University is a highly renowned affiliated type of University, having brought into its fold about
225 Self-financing Engineering Colleges, six Government Colleges and three Government-aided
Engineering colleges located in various parts of Tamilnadu State in India. It offers higher education
in Engineering, Technology and allied Sciences. Anna University caters to the knowledge needs of
the large student community in its fold through various ways, one such being the dissemination
through its educational channel AU-TDCC. AU-TDCC (Anna University-Training and Development
Communication Channel) is the first channel to go on EDUSAT since September 2004. It provides
curriculum and syllabus based live interactive lecture series to its affiliated engineering colleges of
Tamilnadu.

This paper presents the results of two surveys, the first conducted among the students of
engineering colleges in Tamilnadu, India who are users of the channel AU-TDCC. The first survey
studies the effectiveness of the channel in disseminating knowledge and the user requirements in
terms of Quality of Content delivered, the most preferred teaching-learning process, the need for
reuse of knowledge disseminated, the existing knowledge storage mechanisms, the preferred
mode of transmission and the preferred mode of reuse of knowledge. The data presented in this
paper is a part of the major survey research conducted in selected 12 engineering colleges from
North, South, East and West regions of Tamilnadu. In the selected colleges, a survey was
conducted among the students and faculty of all branches of engineering and an in-depth interview
with the Heads of Departments and Principals of all these institutions. Random sampling was
adopted to select samples and questionnaires were distributed to these samples (in each branch
and in each year of study). This paper considers the data of 300 student samples collected from a
college each in urban and rural area, Chennai and Thuckalay. The findings given in Figure 2 clearly
state that knowledge that is disseminated from those institutions with abundant knowledge sources
to those that lack in them, is well received as it contributes to a great extent to the whole process of
teaching-learning. The basic infrastructure is now available to enable knowledge transfer through
satellite technology. Meanwhile, the results also draw attention to the need for refinement of the

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whole system to facilitate delivery of better quality content; mechanisms to store and reuse
knowledge as and when required and further usage of various other modes of transmission.

Figure.2: Results of survey on educational channel

The results obtained from the survey given above clearly state the need for much professionally
managed knowledge to be disseminated. Content disseminated does not completely satisfy the
requirements of the learners, as it is evident from the results. The knowledge disseminated is not
available for further use owing to lack of proper storage or sharing mechanisms. The learner’s
community prefers all formats and internet mode for retrieval of knowledge as and when required.
Though some of these are already being addressed, to some extent, in a random manner, it needs
to be systematized and done professionally. Having the infrastructure ready, now the knowledge
content that is developed and disseminated has to pass through proper stages. Knowledge will fuel
economic prosperity. But for this to be realized a lot more needs to be done in terms of identifying
knowledge resources, capturing, formatting, storing and effectively delivering them through the
available media. Continuous feedback mechanisms to monitor the relevance and effectiveness of
the delivery mechanisms have to be put in place.

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1.3 Integrating management of knowledge and media

The success of education in achieving its objective of providing high quality education to all those
who will require it can only be achieved by properly managing the Knowledge and Media. The
survey results discussed in Figure.2 leads to the following model which aims to deliver quality
content to the end user.

Figure.3. Integrated management of knowledge and media

ƒ Knowledge Requirement Analysis and Specification- A proper research study to analyze and
specify the Knowledge Requirements
ƒ Knowledge Identification - Identification of experts or expertise already captured, for the various
domains of Knowledge Required
ƒ Knowledge Acquisition - The knowledge available with the experts to be acquired and captured
in suitable format with appropriate illustrations using graphics and other multimedia authoring
tools.
ƒ Knowledge Base- The knowledge acquired from experts internally or from external sources on a
mutual sharing basis or for a cost have to be properly organized and stored in the Knowledge
Base so that easy and efficient storage is possible and later leads to effective retrieval and
updates.
ƒ Knowledge Dissemination through proper Media Management. User Requirement Analysis-
Selection of delivery Mechanism-Managing the Media
ƒ Closed Loop Control. Analyse the effectiveness of the delivery mechanism-Analyze the
changing user requirements, Knowledge Requirements-Media Access Capabilities
At this moment when Virtual Classrooms, E-learning, Two way video, Audio on Demand, Video on
Demand have started supplementing conventional education at Universities, higher education still
faces tremendous challenges. To provide right knowledge, to the right people at the right time;
knowledge has to be managed in terms of identification, acquisition, storage, creation, sharing,
transfer and dissemination across the Universities. Towards achieving this objective, the
implementation of knowledge management in Institutions of higher learning as a key solution is
discussed further in this paper.

2. Knowledge and management

A business discipline called Knowledge Management emerged that identifies captures, organizes,
and processes information to create knowledge. Knowledge Management is a conscious effort to
get the right knowledge to the right people at the right time so that people can share and put
information into action in ways that improve an Organization’s performance. The management of
knowledge has to do with how people use information to solve problems. Knowledge Management
is also concerned with the sources of information that become knowledge and how knowledge can
be stored and retrieved for use by specific and particular clients. The existence of practices to
manage knowledge at both business and educational sectors are studied with the help of in-depth
interviews and surveys to understand the current status and further to arrive at an architecture that
would help manage knowledge at Institutions of Higher Learning. Knowledge Management in one
of the top five information technology companies of India is considered, for understanding the

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practices to manage knowledge in terms of knowledge creation, sharing, utilization, transfer and
dissemination. In-depth interviews with employees of the organization revealed that the top
management of the organization encourages and rewards knowledge sharing, knowledge reuse
and new knowledge creation through both culture as well as technology. The organization under
study had practices such as established communities of practice, corporate yellow pages, provision
of talk rooms, after action reviews, knowledge fairs, knowledge networks, knowledge repositories,
best practices database, lessons learnt database, knowledge maps, intranet and forum to share
knowledge thereby enabling employees to share and constantly create new knowledge. Culture
plays a tremendous part in motivating employees to make tacit knowledge explicit and engage in
new knowledge creation.

2.1 Institutions of higher learning and knowledge management practices

To study the management of knowledge in institutions of higher learning, a short spectrum survey
was conducted among the teaching faculty members of various government and private
engineering colleges. To have a representative sample for the study, the survey was conducted
among the participants of an International conference, which had attracted faculty members from
various parts of India, Andaman Nicobar Islands and a few Universities from abroad. Random
sampling was done to select 30 samples from the participants. The selected samples constituted
Lecturers, Assistant Professors, Professors and Heads of Departments. A questionnaire was
administered to the samples, which consisted of 37 questions aimed at studying the culture and
technologies in place for knowledge management in their institutions. Questions were asked to find
if there is a formal vision or strategy to manage knowledge, capture of key expertise in some form,
reuse rate of stored knowledge, rewards for sharing and reusing knowledge, existence of on-line
communities of practice, conducive layout to share knowledge, technological infrastructure to share
knowledge. The following figure portrays the existing scenario in educational institutions.

The results obtained clearly state the non-existence of practices to capture the best practices or
lessons learnt, work together in teams integrating various departments of the institution, reward
mechanism to appreciate reuse of knowledge. It points to the low rate at which new knowledge is
created in the institution. This is a clear indication of the need for a formal Knowledge Management
programme in Institutions of higher learning. Still a sizable amount of the Institutions are yet to
realize the concept of knowledge management and to take full advantage of its knowledge
potential. Institutions of higher learning need to be re-configured to fit changing requirements. From
the samples that responded that there is a knowledge management programme formally or
informally to some extent, the Correlation values are positive (0.561716) for the relationship
between willingness to share knowledge and creation of new knowledge. Also a positive
relationship (0.350586) exists between culture and willingness to share. The results validate the
need for a formal Knowledge Management programme in all Institutions of higher learning to share,
create and make best use of its knowledge in sustaining its competitive advantage and to improve
its academic, research products and services.

3. Architecture for knowledge management in institutions of higher learning

Even if universities, research institutions and laboratories produce large amounts of knowledge, it
will be of little use until the majority of the population actually receive and assimilate it. Only then
the process of knowledge communication is complete. The infrastructure required to disseminate
knowledge to large masses is very much available but the practices to take care of managing
knowledge at its own centers of creation is lacking to the core. Every institution needs to take
lessons from the business world in identifying its own knowledge and in sustaining it for competitive
advantage. India is now flooded with world-class institutions from every part of the world. In such a
context, the nation needs to identify its own centers of excellence and sustain its competitive
advantage to withstand the stiff competition.

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Figure.4: Results of survey on knowledge management practices

3.1 SECI process for institutions of higher learning

An organisation creates knowledge through the interactions between explicit knowledge and tacit
knowledge called the `knowledge conversion'. Through the conversion process, tacit and explicit
knowledge expands in both quality and quantity. There are four modes of knowledge conversion.
They are: (1) socialization (from tacit knowledge to tacit knowledge); (2) externalization (from tacit
knowledge to explicit knowledge); (3) combination (from explicit knowledge to explicit knowledge);
and (4) internalization (from explicit knowledge to tacit knowledge) (Nonaka, 1995). The figure
shows the four modes of knowledge conversion and the evolving spiral movement of knowledge
through the SECI (Socialisation, Externalisation, Combination, and Internalisation) process.

Each educational institution needs to build up its own framework in order to benchmark its
progress. This will depend very much upon its particular sector of education and its individual
strengths and weaknesses. Establishing this will help it judge what will best drive its knowledge
management programme, and allow it to set standards and targets. All institutions already possess
some level of knowledge management within their existing structure. This has to be identified and
institutions must commence a formal Knowledge Management programme. Prior to commencing
one, it is helpful to perform a knowledge audit to measure the strengths and weaknesses of the
institution. The audit will help the institution identify the inhibitors of internal knowledge sharing and

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identify each and every factor for managing knowledge towards being a competitive advantage.
Every institution must strive to establish a strategy to identify its strengths and weaknesses, enable
new knowledge creation, establish mechanisms to store, share, utilize, reuse knowledge and
disseminate the same to the large mass. The institution must embark on a strong culture to enable
knowledge sharing and utilization; define the skills and competency necessary to create new
knowledge. The supporting infrastructure should provide both the right technologies, the right
motivation and rewards package.

Figure.5: Knowledge spiral (Nonaka & Takeuchi 1995)

Much of the education process is about the building up of tacit knowledge and making it explicit for
the learners. The SECI process as defined for the organizations to convert tacit into explicit and
back to tacit knowledge will well suit the education process, where the whole challenge lies in this
conversion. Institutions of higher learning constantly create new knowledge through its various
interactions internally and externally, through its research and development activities and the
constant search for knowledge through various conferences, seminars and workshops.

For knowledge educators, the most difficult thing is to learn how to transfer tacit knowledge into
explicit knowledge for learners’ retrieval. Through discussions, meetings, chats, Invited talks and
interviews, institutional knowledge in terms of curriculum development process, subject knowledge,
research process, strategic planning process and also administrative process can be made tacit to
the person(s) interviewing or engaged in discussions. This tacit to tacit conversion can be made
explicit through informal codification. The knowledge can be converted into various formats of
power point presentations, audio files, video files, text files, web applications and can well be
stored for further reference. Technologies such as intranet, internet, knowledge sharing website,
groupware, list servers, knowledge repositories, databases, knowledge networks play its part in
sharing the explicit knowledge. Tacit knowledge converted to explicit and stored in repositories are
accessed by the academic community and thereby create new knowledge out of the assimilated
knowledge and their own tacit knowledge and further stores the same for others reference. The
explicit knowledge found in such storage and sharing technologies are read, assimilated and made
tacit again. The entire process of knowledge conversion can take place in the institution. The
knowledge spiral suggested by Nonaka & Takeuchi (1995) can well be extended to the institutions
of higher learning to convert tacit to explicit and back to tacit. This process requires adequate
leadership, culture and technology. Content created out of the knowledge conversion process can
be disseminated through the satellite and other technology.

Key expertise existing in both tacit and explicit forms need to be captured and codified. Knowledge
codification is the translation of explicit knowledge into some written or visual format. Frequently
the codified knowledge is to be stored within knowledge management systems, or manuals.
Individualized learning should be transformed into institutional learning through documenting the
knowledge into the Institution’s knowledge repository. This repository can be a bank of best
practices and lessons learnt. A well-established technological infrastructure to support
communication of knowledge should be present. The layout of the institution has to be conducive to
knowledge sharing formally and informally. Many programmes designed to exchange knowledge is
to be created such as Knowledge fairs and exchanges. Reward systems are to be identified to
promote team based relationships, knowledge sharing, reuse and creation of new knowledge.
Measurement techniques are to be established to track the degree of knowledge management
initiatives and its outcome. The success or failure stories must be captured, as they are extremely

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valuable in following the best practices or to avoid reinventing the wheel. Knowledge management
roles are to be identified. The most important thing that a knowledge manager can do is to identify
causes that prevent sharing of Knowledge and overcome them. Reward and recognition system
should be consistent with the Institution’s missions and objectives. The architecture, infrastructure
and culture to manage knowledge should constantly be updated to make people committed to
knowledge sharing and creation. Knowledge communities are probably one of the best practical
means of developing and leveraging tacit knowledge. A very broad definition of Communities of
Practice is that it is a group of people with a common interest who work together informally in a
responsible, independent fashion to promote learning, solve problems, or develop new ideas
(Storck and Hill, 2000; Wenger and Synder, 2000). Within a CoP, people collaborate directly; teach
each other; and share experiences and knowledge in ways that foster innovation.

Institutions must create knowledge repositories. The purpose of knowledge repository is to take
knowledge embodied in documents, reports, articles and put it in a repository where it can be easily
stored and retrieved. Tacit knowledge has to be codified and to be made available on these
repositories. Institutions can set up Knowledge centres, which will be responsible for the addition,
maintenance and review of documents placed within the knowledge repositories. These knowledge
centres should also be responsible for the security and accuracy of information and knowledge that
is placed within the repositories. Personnel in these knowledge centres need be responsible for the
setting up and maintenance of the knowledge dictionary for the Institution. The knowledge
dictionary is very important as it holds the key to searching and retrieving documents held within
knowledge repositories. The results of the survey conducted among the students of various
engineering colleges of Tamilnadu, the faculty members of Institutions of Higher Learning and that
of the Business Organization has clearly necessitated the extension of the concepts of knowledge
management present in the business sector to the education sector. The above discussions on the
SECI process of knowledge creation finally leads to the much required detailed architecture for
effective knowledge creation and management in Institutions of Higher Learning. The architecture
proposed below will result in a knowledge grid where the institution of higher learning will interact
with the various research and development institutions, Industries and other academic institutions
through high bandwidth optical and satellite connectivity. In every institution the adoption of SECI
process will constantly result in creation of new knowledge. The entire process of academics,
research, administration and planning of the institution can be well managed through appropriate
culture, technology, leadership and strategies and measurement mechanisms as mentioned in
Figure 6.

Through Socialization, Externalization, Combination and Internalization processes, there will be a

constant sharing and generation of new knowledge. Technology will act as a facilitator for
knowledge storage and sharing among members of the academic community. Tacit Knowledge
acquired through research activities, academic-industry collaborations, administrative experiences
and planning gets converted into explicit knowledge for further sharing and retrieval. The
transformation of tacit to explicit knowledge will lead to fruitful integrated assignments among the
various departments of the institution. The explicit knowledge becomes tacit once again on
assimilation of the various knowledge sources through internal and external interactions. The entire
process of conversion is suitably supported with an encouraging culture and environment to share
and reuse knowledge. Recognizing knowledge as the main driver of success, this architecture
suggests a clearly formulated vision and strategy for knowledge creation, commitment to manage
and create knowledge, valuing employees for their intellect and their capacity to create knowledge,
motivating high levels of individual, team and Institutional learning, creating culture that facilitates
knowledge creation, launching new knowledge based products and services, creating a reward
system that encourages knowledge sharing and transfer, using technology as a catalyst to support
knowledge networks and communities of practice, and providing continued support by leaders to
constantly spread the message of sharing and leveraging knowledge. The democratization of
knowledge resources induces people at every level to contribute, to participate, to interact, to grow
and to learn.

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Figure. 6: Knowledge management architecture for institutions of higher learning

3.2 Knowledge management in educational media centres

On successful implementation of knowledge management concepts in the Institutions of Higher
Learning, it is further required to manage knowledge at the educational media production centres
for effective dissemination of the same. Technology can provide media software producers and
managers with new ways to manage. Effective Knowledge Management requires a hybrid solution
of people and technology. Technology can provide the vehicles, for the successful management of
knowledge, the various forms of content and the dissemination modes. Information Communication
Technologies and other Knowledge Management tools make information easier to store, access
and manipulate and help in managing the content right from its inception through its dissemination
process.

3.2.1 Content management

Selecting and implementing a content management system will be one of the largest knowledge
management projects to be tackled by many educational software production centres.

When the content is generated, it should be a sharable learning object across all the learners
locations and across all platforms. Content can be generated in many ways, the first is the
assimilation of the subject by an expert teacher through research study of many books and articles
leading to the generation of quality and creative content in a presentable form, the second form of
content on a self learning method, and the third which could be extracted through a digital library
and presented just-in-time to all the remote students and those who need it. In addition to
traditional databases, it is recommended to integrate multimedia and database technology to allow

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production centres to effectively store, index, retrieve and disseminate images, text, video and
audio any other multimedia files. The core of most Content Management System solutions is a
central repository supported by a range of tools for manipulating and managing the content.
Content Management System will have many simultaneous users.

Figure 7: Life cycle of content management system

Media Server: Production centres will have to systemize the production process for efficient
management. A three-stage process can be adopted. The roughly produced content on the basis
of formative research has to be placed in server1: Development Server. The next following phase
is the Testing. Process research could be undertaken to find out the value of the content in terms of
its utilization, usefulness and relevance so that mid-course corrections, change of emphasis,
change in communication approach can be brought about. Content which fails to meet the
standards could be sent back to server 1 and if it conforms to the standards and requirements of
the region, language, format etc., the content could be moved to the next server level, the Test
Server. Contents, which have cleared this stage, could then be pushed to the final server, the
Production Server, which could be then given permission for dissemination. Server 3-Production
Server will facilitate the dissemination process. The basic search will allow the user to search by
subject area, phrase, format or keyword. If the user wishes to contribute a resource to the
multimedia database, submission process could be done by pressing the contribute button based
on details of criteria. The Content Management System must be supported by adequate
documentation for users, administrators and developers.

3.2.2 Document management

Any content management system must be associated with relevant documents explaining all the
processes involved through the stages of formative research, production, process research and
summative research. A document management system provides for easy and faster access to all
the documents. It takes care of creating, storing, editing and distributing documents. It facilitates
authorization and authentication of users to specific document, along with version control of the
documents. Content Management will prove to be effective if and only if media organizations adopt
and effectively maintain the following types of documents.
1. As Is Document - Document to state what the present requirements are for content generation.
2. To Be Document – Document reflecting the expected production capacities
3. Document for Technical requirements and other related issues
4. Document for Testing conditions
5. Document for Review and feedback assimilation
6. Document for further suggestions and improvements.
Document and Content Management products so far supporting the Information Technology
Industry can be extended to the educational software production centres for its effective and
efficient management.

4. Conclusion
With the help of survey results and in-depth interviews among the students and faculty of
Institutions of Higher Learning and that of Business organizations, this paper has proposed a
detailed architecture to enable new knowledge creation and to implement Knowledge Management

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in Institutions of Higher Learning. The paper has also presented ways to manage knowledge in the
Educational Media Production centres. This architecture developed for institutions of higher
learning will rectify the problems revealed by figure 2 and figure 4. When connectivity is established
with high bandwidth, linking all universities, research institutions and industries, the emergence of a
greater need to manage knowledge effectively will be met by this proposed architecture. The goal
to achieve excellence in the educational system largely depends on the implementation of
knowledge management processes and practices in the institutions of higher learning, which are
the sources of knowledge creation, acquisition and dissemination. This model architecture
envisaged for effective Knowledge Management in educational institutions and in the educational
media centers will prove to be effective and efficient in satisfying the dual demands of education in
India, that of Quality and Quantity. The proposed architecture will enable effective knowledge
creation and dissemination of the same to the required people, at the required time and in the
required format through satellite technology. For institutions of higher learning, both in India and
elsewhere, this proposed architecture for knowledge management is particularly promising and
appropriate.

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Abdul Kalam, APJ and Sivathanu Pillai, A. (2004) “‘Envisioning an empowered nation Technology
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Armistead, Colin and Magda Meakins. (2002) “A Framework for Practising Knowledge
Management”, Long Range Planning. Vol.35, p.49-71.
Davenport, T and Prusak, L. (1998) “Working Knowledge: How Organizations Manage What They
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Harvard Business School Press” Boston.
Gamble, P R and Blackwell, J. (2001) “Knowledge Management”. Kogan Page. London.
Holsapple [Ed.] (2000) ”Handbook on Knowledge Management Vol I”, Springer Verlag.
Kreiner, K (2002) “Tacit Knowledge Management: The Role of Artifacts”. Journal of Knowledge
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Kasturirangan, K. (2003) Space program-India forges ahead, http://www.isro.org
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Nonaka, I, Toyama, R. and Konno, N. (2000) “SECI, Ba and Leadership: A Unified Model of
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Knowledge Creation”, Long Range Planning, Vol.33, p.5-34.
O’Dell, C. and Grayson, C.J. (1998) “If only we knew what we know: Identification and transfer of
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best practices,” California Management Review, 40,3, 154-174.
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“Papers on Educational Sectors for EDUSAT Utilization” Development and Educational
Communication Unit, ISRO, Ahmedabad, 2003.
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publications, December 2003.
Prof. Marmar Mukhopadhyay, (2003) “Educating the nation-Need for a dedicated satellite’,
DECU/ISRO
publications.
Pan, S and Leidner, D. (2001) “Bridging Communities of Practice: The pursuit of Global Knowledge
Sharing,” Working paper, National University of Singapore.
Sohan Vir Chaudhary, (2003) “Open Distance Learning in India A case for a dedicated Educational
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494
The Moderating Role of the Team–Leader in the Value of
Knowledge Utilization: An Extension of Haas and
Hansen's Situated Performance Perspective
Evangelia Siachou and Anthony Ioannidis
Athens University of Economics and Business, Athens, Greece
[email protected]
[email protected]
Abstract: This empirical study builds on the rationale behind Situated Performance Perspective (the effective
use of the organizational knowledge from outside the team is task-situated) and also combines elements of
prior research related to knowledge transfer issues within teams in organizations. It examines the effective
transfer of knowledge (personal or codified) from outside the team, which is embedded in different
organizational sources, and the effective use of incoming knowledge within the team. In so doing, it considers
the case of action-teams having to deal with unpredictable situations and thus with a greater need to obtain
and use specific knowledge from outside the team, within time constraints. Moreover, this framework views
the team-leaders as knowledge-processors playing the dual role of recipients of knowledge acquired from
outside the team and of sources of knowledge required for their team to complete the tasks undertaken
successfully. Results verify that the active participation of team-leaders in the knowledge transfer mechanisms
leads to effective knowledge utilization.

Keywords: Team-leadership, knowledge transfer, knowledge use, action teams

1. Introduction
The transfer of knowledge is one of the organizational knowledge management processes
(knowledge acquisition, creation, storage/retrieval and application) encouraged by many
organizations. Transfer of knowledge within organizations can occur at various levels: between
individuals, within or between teams in an organization (Argote and Ingram, 2000; Rulke et al,
2000; Alavi and Leidner, 2001). At each of these levels, there is a relationship of knowledge
exchange between a source and a recipient depending on the characteristics of everyone involved;
that is the willingness or unwillingness of the source to share knowledge and/or the recipient's
absorptive capacity or lack of it (Szulanski, 1996).

Although the ability to transfer knowledge within organizations promises success as it has been
found to improve performance, the effective transfer of knowledge remains a problem for many
organizations (Szulanski, 1996; Hansen, 1999; Argote and Ingram, 2000; Cabrera and Cabrera,
2002). A plausible explanation could be the tendency of organizations to accept unquestioningly
the uni-dimensional nature of intra-organizational knowledge transfer. For instance, the advanced
information technology (Knowledge Management Systems) that many organizations employ
extensively does support knowledge transfer, yet alone it is not always adequate to transfer
knowledge to the parts of the organizations where this is needed and can be used effectively.
Knowledge transfer yields maximum benefits when its multi-faceted nature is taken into account.

Much research into organizational knowledge transfer indicates the complexity of this process, in
that it distinguishes various factors with a significant impact on knowledge exchange. Moreover,
research evidence shows the process can also be selective (Argote et al, 1990; Epple et al, 1991;
Darr et al, 1995) and often task-situated (Haas and Hansen, 2005); its effectiveness depending on
organizational situations. Among other factors, the role of regular communication, personal
acquaintance, and meetings as transfer mechanisms facilitate the knowledge transfer process
(Darr et. al, 1995); mutual trust and influence increase the levels of knowledge sharing between the
groups and lead to beneficial organizational performance outcomes (Nelson and Cooprider, 1996).
The role of strong ties in transferring knowledge between organization subunits (Hansen, 1999)
and, furthermore, the motivational inclination of the source to share knowledge with others - as well
as the existence of the transmission channel (Gupta and Govindarajan, 2000).

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2. An extension of Haas and Hansen's situated performance perspective

2.1 The nature of the problem

The Situated Performance Perspective proposed by Haas and Hansen (2005) expands prior
research on the effects of knowledge transfer within teams on team-task performance, viewing
organizational knowledge as information good with practical value. It assesses the use of
knowledge embedded (Badaracco in (Nelson and Cooprider, 1996:411) in organizations (either
personal or codified) by measuring task performance outcomes. Furthermore, it indicates that the
conditions under which a task is undertaken influence the effectiveness of obtaining and using
organizational knowledge from outside the team. Specifically, this perspective considers the level
of prior experience of the team with the task, and the competitive intensity of the task situation, as
two important conditions, moderating the effects of obtaining and using the organizational
knowledge from outside the team required to complete the team-task successfully.

Drawing on the Situated Performance Perspective, and aiming to extend prior research, an attempt
is made to examine another important factor suggested by Haas and Hansen (2005): the effect of
the team leader's role in the efficient use of organizational knowledge. Specifically, the purpose is
to examine whether the level of the team leader's participation in the knowledge transfer process
within the team may affect the value of organizational knowledge. Generally speaking, it is
expected that team leaders set up the conditions required obviating the inherent difficulty of the
knowledge transfer (Davenport and Prusak, 1998; Rulke et al, 2000). To do this, they should have
the ability to motivate team members to accept knowledge from outside the team or be able to
exploit resources of knowledge outside the organization (Szulanski, 1996).

In addition, the nature of the tasks that teams have to perform is a significant factor that determines
the role of a team leader in the exchange of organizational knowledge within the team. Action
teams, comprising members with special skills who have to deal with unpredictable situations, have
a greater need to obtain and use accurate and specific knowledge from outside the team, within
time constraints, in a coordinated consequence of actions (Edmondson, 2003).

2.2 The theoretical framework

When a knowledge transfer process is implemented by an organization, it is almost prerequisite
that the appropriate organizational context supports such a process. In other words, organizations
have, first, to create the appropriate culture that respects knowledge transfer and second, to
establish suitable knowledge infrastructure that enhances and facilitates exchange of knowledge
between and within their constituent functional parts. Although it is very difficult to pinpoint the
proper organizational context, it is supposed that formal structures and systems (i.e. formal and
informal communication channels), sources and coordination of expertise, familiarity with
knowledge-oriented technologies and the behavior–framing characteristics of knowledge sharing
could promote effectively the transfer of knowledge within organizations (Argote et al, 2000; Rulke
et al, 2000).

Reviewing the relevant literature (Darr et al, 1995; Gupta and Govindarajan, 2000; Alavi and
Leidner, 2001), several mechanisms of knowledge transfer are isolated (i.e. personnel movement,
training, communication, technology transfer, replicating routines). For the present study, it was
decided to examine the knowledge transfer mechanism of personal formal and informal
communication channels and tools (to obtain personal knowledge) as well as impersonal
communication tools (to accumulate codified knowledge). Personal formal communication channels
refer to scheduled communication activities (e.g. annual executives’ conferences, departmental
meetings, ad hoc situational committees, training sessions and / or speak-up groups), whilst
personal informal communication channels refer to similar (unscheduled) communication activities
taking place informally (Nelson and Cooprider, 1996; Alavi and Leidner, 2001; Reagans and
McEvily, 2003). Additionally, communication tools - either formal or informal - refer to scheduled or
unscheduled e-mail exchanges and phone calls respectively. Finally, impersonal communication
tools are the knowledge repositories in which the organizational knowledge is embedded, such as
newsletters, intranet, textbooks and/or various web sites relevant to the tasks undertaken.

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In an attempt to define the expected moderating effects of the team–leader's active participation in
the knowledge transfer process, it is proposed that the team-leaders act as knowledge processors:
in this view, team–leaders behave as both the “source” and the “recipient” in a knowledge
exchange procedure. It is expected of team-leaders to support and promote the desired culture for
an effective knowledge exchange within and between parts of the organization, exhibiting a number
of characteristics, which could affect the efficiency of the process of knowledge transfer.

Based on Szulanski’s characterizations, it is proposed that team-leaders, when playing the role of
knowledge-recipients from outside the team, need to recognize the value of incoming knowledge,
making any necessary modifications in order to complete the tasks undertaken (absorptive
capacity) (Cohen and Levinthal, 1990; Szulanski, 1996; Gupta and Govindarajan, 2000) or, equally,
to institutionalize the utilization of the incoming knowledge (retentive capacity) (Szulanski, 1996).
Furthermore, following the same taxonomy, team-leaders in the role of knowledge-source have to
manifest high levels of motivation in order to share important knowledge with the team members, to
devote time and resources to support the transfer, and also to motivate the members of the team in
terms of ongoing learning, accepting and using the incoming knowledge effectively.

The implication here is that the characteristics that team-leaders have to manifest – in the role of
the knowledge-sources or of knowledge-recipients - affect the effectiveness of the transfer and the
valuable use of the incoming knowledge within the team, and thus could be barriers or enablers
accordingly, when a knowledge exchange occurs.

Following Haas and Hansen's (2005:26) taxonomy of organizational knowledge, obtaining and
transferring knowledge through communication channels (either formal or informal) from outside
the teams refers to personal knowledge, and obtaining and transferring knowledge from database
systems outside the teams represents codified knowledge. These two types of knowledge –
personal and codified – comprise knowledge utilization. It has also to be noted that the quality of
incoming knowledge, together with the immediate transfer to the team members, determines the
effectiveness of the knowledge transfer process. It is expected that the action level of the team-
leaders (active or non-active participation) when knowledge exchange occurs will affect the
performance outcome of the teams. In other words, the implication here is that an effective
knowledge exchange may enable the members of the teams to make valuable utilization of the
incoming knowledge acquired from outside the team, that to complete their tasks undertaken
successfully, yielding beneficial performance outcomes (Figure 1).
Inputs Constraint Variables Expected Outcomes
Knowledge obtaining through
Communication Channels and Tools

Figure 1: The fundamental role of the team–leader in the knowledge transfer process

3. Methods

3.1 Data collection and sample

Data for this study were collected through a questionnaire survey. A total of 180 questionnaires
were distributed to team-members and team-leaders of 30 teams of different organizations (i.e.

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financial services, manufacturing). 102 individuals yielding a response rate of 56,7% returned
completed questionnaires.

The questionnaire was developed after an extensive review of Knowledge Management issues and
comprised a total/ of 100 question items in seven subject related sessions, measuring a range of
aspects of the effect of the team leader's role in the efficient use of knowledge within teams in
organizations.

Teams examined in this study are defined as action teams the members of which frequently faced
exceptional situations and in order to face up to these successfully have a great need to obtain and
use accurate and specific knowledge from outside the team within time constraints (Edmondson,
2003). Moreover, all of the teams exhibit turnover homogeneity, meaning that their members work
full-time together for a period of time and are completely aware of the knowledge existing among
team-members.

Presuppositions for a team to be included in the final sample was that tree-quarters of their
members responded (Ancona and Caldwell, 1992) and, moreover, the participation of the team-
leader in the research (Teams whose team-leaders did not respond were excluded from the final
sample).

3.2 Measures
The proposed theoretical framework is tested through several question items each of which
represents a particular measurement in a multi-item scale (5-point Linkert scale). However, given
the large number of question items there is a need to condense them into subjective relative sets.
Cronbach reliability coefficient is first used to indicate acceptable internal consistency and reliability
of the question items, which then are factor analyzed using principal component analysis and a
varimax rotation given concept-related factor solutions. In each case, factor solutions are also
supported by inspection or of the Scree plot. The results of principal factor analysis are
summarized on Table 1.

To determine the relationships within the inputs, constraint variables and expected outcomes
(Figure. 1) we use correlation analysis. Since this paper is about teams, the data for each team are
grouped together (based on the average of the individual responses) finally yielding twenty cases
corresponding to the 20 teams included in the final sample. Linear regression analysis is performed
on quantified characteristics of the relation between the inputs and constraint variables.

Specifically, the team-leaders’ action level in the knowledge transfer process is measured in terms
of their participation in communication activities, in seeking to obtain knowledge required from
outside the team. Hence, it is asked of both team-leaders and team-members to indicate the extent
to which they participated in, and made use of (i) personal formal communication channels
(a=0.92) and tools (a=0.44) (ii) personal informal communication channels (a=0.93) and tools
(a=0.82) as well as (iii) the extent to which they obtained knowledge from various organizational
sources (i.e. extracted knowledge through impersonal communication channels (a=0.99)).

Similarly, two sets of question items concerning the dual role of team-leaders either as “source” or
“recipient” of knowledge from outside the team measure the fundamental role of the team-leader in
the knowledge transfer process. Team-leaders indicate whether or not they felt each of the items
were parts of their responsibility when a knowledge exchange procedure occurs (a=0.86, a=0.81).
For the same purpose, team-members indicate whether or not the leader of their team exhibiting
appropriate characteristics so as to behave as either knowledge source (a=0.95) or recipient
(a=0.40) of the incoming knowledge from outside the team.

Additionally, the effectiveness of the knowledge transfer process (i.e. the effective and valuable use
of the incoming knowledge by the members of the teams) is tested among other things in terms of
the familiarity with the changes happening in the organizational environment, flow and quality of
new knowledge, obtaining knowledge within time constraints as well as the uncertainty of finding
the new knowledge required that team-members may need in order to perform their tasks

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undertaken. It asked, then, of both the team-members (a=0.81) and team-leaders (a=0.87) to
indicate whether or not they experienced each of the question items when a knowledge transfer
process occurred.

Analysis is also controlled for team size, team skills diversity and team cognition that might impact
the effectiveness of knowledge transfer within organizational teams. As team size reflects the
maximum number of individuals involved in the team (Katz, 1982; Hackman, 1990; Haas and
Hansen, 2005), respondents report the total numbers in their teams (including team-leaders).
Moreover, as education is found to be one of several sources of knowledge that contribute to one's
expertise (Dahlin et al, 2005:1108), skills diversity of the teams is measured in terms of
respondents' majors, and their field of expertise by asking them to choose their educational field
from 11 listed items (e.g. Finance, Business Administration, Social Sciences, etc) appearing on the
questionnaire, and to indicate further the level of major that they hold (e.g. BA, MBA, Ph.D). Finally,
the influence of team cognition on the knowledge transfer process is controlled by asking both
team-leaders and team-members to indicate whether or not they assimilate incoming knowledge
easily and make effective and valuable utilization of new knowledge acquired (a=0.84).

3.3 Results
Correlation analysis of relationships between team-leaders’ and team-members’ participation in the
communication activities posits a significant negative relationship between team-leaders’ and team-
members’ participation in personal formal communication channels. A similar negative relationship
exists between the use of personal formal communication tools made by the team-leaders and
team-members. In contrast, correlation analysis points out a significant positive relationship
between the team-leaders’ and team-members’ participation in personal informal communication
channels as well as between team-members’ and team-leaders’ activities for accumulating
knowledge from various organizational knowledge sources and the equivalent team-leaders’
activities. Correlation results appear in Table 2.

Concerning the relationships between what team-leaders felt as knowledge processors and what
the members of their team indicated, correlation analysis supports some positive relationship
between team-leaders’ and team-members’ opinions. The opinions of team-leaders and team-
members concerning the role of the team-leader as recipient of knowledge from different
organizational sources are also positively correlated. The results of the correlation analysis are
shown on Table 3.

Moreover, the results of regression analysis used to investigate the possibility that team-leaders’
participation in the communication activities (inputs) could be a good predictor of the effectiveness
of the knowledge transfer process support this supposition. The team-leaders’ participation in the
personal formal communication channels is positively related to the effective and valuable use of
the incoming knowledge by the team-members.

Regression analysis also determines that the participation of the team-leaders in the informal
communication channels and/or in the impersonal communication activities is positively associated
with the effectiveness of the knowledge transfer process and could be treated as predictor of the
valuable use of the incoming knowledge within organizational teams.

According to the additional results of the regression analysis, the relationship between the
constraint variables and the expected outcomes of the proposed theoretical framework is positively
related, meaning further that team-leaders’ characteristics either as source” or “recipient” for the
knowledge from outside the team could facilitate the effectiveness of knowledge exchange within
organizational teams. Table 4 summarizes the results of regression analysis.

As regards control variables, the team size that reflects the maximum number of the members
involved with a team, the relatively small final sample does not allow us to isolate significant
differences or relationships concerning the team size and its effect on a knowledge transfer
process. Controlling for the team skills diversity impact on the effectiveness of the knowledge
transfer process within organizational teams, correlation analysis provides some significant

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negative relationship between team skills homogeneity and the effective and valuable utilization of
the new knowledge by the members of the team (r=-.0.47, DF=17, p<0.001). In contrast to this, the
same analysis supports a significant positive relationship between team-skills diversity and the
effectiveness of the knowledge transfer process (r=0.80, DF=17, p<0.001. Finally, team cognition
(i.e. the familiarity with the knowledge related to the tasks to be undertaken) is positively correlated
with the effectiveness of the knowledge transfer process (r= 0.571, DF = 18, p<0.001), and could
facilitate the effectiveness of a knowledge exchange within teams in organizations when the
suitable values for input and constraint variables exist (B=0.99, p<0.001).

Table 1: Principal component factor analysis

Principal Component Factor Analysis (N=102)
Communication Channels and Tools Items 1 3 4 5
Personal Formal Communication Channels:
Annual executives’ meetings and conferences .861
Departmental meetings .83
Ad-hoc situational meetings .847
Training sessions/seminars .736
Open ideas schemes and speak up .808
Personal Formal Communication Tools:
E-mail
Phone-Calls
Personal Informal Communication Channels:
Departmental meetings .889
Ad-hoc situational meetings .888
Open ideas schemes .845
Speak up groups .841
Personal Informal Communication Tools:
E-mail .956
Phone-Calls .935
Impersonal Communication Tools:
Newsletters .966
Intranets .982

Leaders’ knowledge processors” Items 1 3 4 5 6

Leaders” knowledge “source” scales:
Common language of communication within the team .741
Familiarity with the changes happening in their work environment .890 .505
Clear division of roles and responsibilities allowing them to transfer new
knowledge .730 .751
Technical competence required to absorb the new knowledge .846 .885
Managerial skills to transfer effectively the new knowledge .885 .684
Well-informed about the abilities of the team-members .837 .903
Leaders” knowledge “recipient” scales:
Provide team-members with the appropriate training sessions .771 .574
Detect dysfunctions in assimilation of the incoming knowledge for the team .825 .805
Provide team-members with opportunities to speak-up freely .828 .838

Expected Outcomes variables Items 1 2

Effective and Valuable Use of the new knowledge: M L
Flow of information concerning the changes happened in the work environment .640 .806
Adopting new methods and practices frequently .734 .918
Assimilating new knowledge required accurately .828 .861
Taking advantage of new knowledge from outside the team .826 .727
Feeling of uncertainty concerning the acquisition of new knowledge from outside the team .775 .806

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Table 2: Correlations among communication channels and tools and team-leaders΄ participation
Correlations among Communication Channels and Tools and Team-Leaders participation
Mean SD 1 2 3 4 5 6 7
1 Members’ opinion about
Personal Formal
Communication Channels 3.68 1,18 -
2 Leaders opinion about
Personal Formal -
Communication Channels 3.17 .88 .121 -
3 Members; opinion about
Personal Formal -
Communication Tools 3.88 .90 .225 .220 -
4 Leaders opinion about
Personal Formal
Communication Tools 3.82 1.21 .282 .091 -.246 -
5 Members’ opinion about
Personal Informal
Communication Channels 2.99 1.23 .076 .505* .366 .227 -
6 Leaders’ opinion about
Personal Informal -
Communication Channels 2.79 .73 .078 .870** .376 .099 .339 -
7 Members’ opinion about
Personal Informal -
Communication Tools 3.46 1.26 .297 .130 .612** -.220 .486* -.028 -
8 Leaders’ opinion about
Personal Informal
Communication Tools 3.39 .99 .444 .269 .010 .472* .035 .300 .033
9 Members’ opinion about
Impersonal Communication -
Tools 2.68 1.07 .227 .304 .357 -.097 .521* .107 .737**
10 Leaders; opinion about
Impersonal Communication -
Tools 2.69 .72 .105 .814** .187 -.153 .381 .708** .256
* Correlation is significant at the 0.05 level (2-tailed).
** Correlation is significant at the 0.01 level (2-tailed)

Table 3: Correlations among Team-Leaders’ and Team-Members’ opinions about Team-Leaders

Processors’ characteristics
Team-Leaders’ and Team-Members opinion concerning Team-leaders Processors’ characteristics correlations
Mean SD 1 2 3 4 5 6 7
1 Members’ opinion of the leaders’
role as knowledge “source” 4.12 .61 -
2 Leaders opinion of their role as
knowledge “source” 4.25 .44 .216 -
3 Leaders opinion of their role as
knowledge “source” 4.55 .69 .432 .536* -
4 Leaders opinion of their role as
knowledge “source” 4.50 .76 .563** .570** .857** -
5 Members’ opinion of the leaders’
role as knowledge “recipient” 4.05 .51 .736** .276 .490* .543 -
6 Leaders opinion of their role as
knowledge “recipient” 4.33 .56 .207 .658** .491* .606** .336 -
7 Leaders opinion of their role as -
knowledge “recipient” 4.31 .57 -.104 .583** .335 .291 0.23 .639** -
* Correlation is significant at the 0.05 level (2-tailed).
** Correlation is significant at the 0.01 level (2-tailed)

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Table 4: Regression analysis results

Regression Linear Analysis
Effective and Valuable Use of Knowledge Transfer
Variables M L
Team-Leaders’ participation in and use of:
Personal Formal Communication Channels .400 (.027) .476 (.011)
Personal Formal Communication Tools .370 .279
Personal Informal Communication Channels .
Personal Informal Communication Tools .157 .144
Impersonal Communication Tools
Team-Leaders’ characteristics as knowledge “source” .311 (.043) .279
Team-Leaders’ characteristics as knowledge “recipient” .688 (.001) .953 (.013)
Entries are standardized regression coefficients

4. Discussion
The main finding of this study is that the level of team-leaders’ participation in communication
activities affects the outcome of the knowledge transfer process within teams in organizations.
When team-leaders accumulate knowledge from outside the team, participating in formal
communication activities, team-members obtain - within time constraints - the flow of specific and
accurate new knowledge required to complete the tasks undertaken successfully. An additional
consequence is that the members of such teams are found to be well-informed concerning
changes happening in their work environment, which may affect their daily performance. Equally,
the high levels of team-leaders’ participation in communication activities decrease the uncertainty,
which the members of the team may feel about finding the required knowledge.

Since team-leaders offer high levels of participation in formal communication channels, seeking to
obtain knowledge from outside the team, team-members are at some distance from such activities.
Similarly, team-members indicate that they do not make frequent use of personal formal
communication tools (e-mails and phone calls) to communicate with individuals outside the team in
the attempt to exploit resources of new knowledge, since they feel certain that the team-leader
makes use of such communication tools.

The implication here is that team-members who often deal with unpredictable situations are able to
overcome them, without feeling the pressure to discuss and evaluate all sources of utilized
organizational knowledge. Devoting time to such activities when there is a need for team members
to perform the tasks undertaken within time constraints does not yield desired task outcomes.
Indeed, there is also the likelihood of action team-members avoiding dealing with situations
demanding knowledge from outside the team.

In contrast, the findings of this study support the team-members’ informal participation in
communication activities. Team-members tend to participate in communication channels when
need exists to obtain new knowledge from outside the team, regardless of the team-leaders’
participation in such communication activities. Additionally, team-members abstract and make use
of organizational knowledge from outside the team even if the leader of their team performs the
same activities in terms of acquisition of new knowledge from outside the team. A plausible
explanation could be that team-members who are not obliged to discuss and question all possible
sources outside the team, taking the initiative in seeking the knowledge required in selective
sources outside the team. However, the extensive participation of the team-members in informal
communication activities it is likely to impair their performance outcomes for reasons such as the
questionable quality of the knowledge acquired, the time and effort devoted to obtaining new
knowledge, and even their inability to institutionalize the utilization of new knowledge.

Concerning the dual role of team-leaders as “source” and “recipient” of knowledge from outside the
team, research shows that when team-leaders felt that they exhibit the appropriate processors’
characteristics of knowledge accumulated from outside the team, team-members verified this
through their responses. In other words, team-leaders who manifest high levels of processor
characteristics facilitate the effectiveness of knowledge exchange within organizational teams. It

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could thus be argued that team-members make effective and valuable use of the knowledge
transfer when team-leaders are able to detect the dysfunctions the assimilation of incoming
knowledge may cause within the team, and to provide team-members with the appropriate training
sessions to implement effectively the new knowledge acquired. Additionally, team-leaders who
counter the potential difficulties that knowledge from outside may create impairing the successful
completion of the team-tasks, influence the knowledge transfer process and sets up the conditions
required to obviate the inherent difficulty of the knowledge exchange.

In addition, team skills diversity and team cognition may indicate additional facilitators when the
proposed inputs and constraint variables exist. The implication in relation to skills diversity within
teams' dominant educational backgrounds is that team skills diversity, in contrast to team skills
homogeneity, may facilitate the knowledge transfer process. A plausible explanation is that team
skills diversity is useful for the teams as it offers a multi-dimensional approach to the issues that
they deal with. It may be suggested further that teams' cognition could affect the performance
outcome and that team-members familiar with knowledge related to the tasks to be undertaken are
able to recognize the value of the incoming knowledge, so using it effectively

In conclusion, the extension of Situated Performance Perspective emphasizes the fundamental role
of the team-leader when knowledge exchange occurs. The rationale for such a suggestion is that
high levels of team-leaders’ participation in communication activities (especially in personal formal
communication activities) affect positively the process of knowledge transfer within teams in
organizations. Constraint variables, namely those characteristics that team-leaders exhibit as either
source or recipient of knowledge from outside the team, contribute to the effective and valuable use
of incoming knowledge by the team-members. Perhaps the most important requirement for the
analysis of knowledge transfer is to focus on the complexity and multi-faceted nature of the
processes, and thus on how knowledge is transferred effectively, rather on the amount of
knowledge transferred. . .

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Haas, M. and Hansen, M. (2005) “When using knowledge can hurt performance: The value of
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performance”, MIS Quarterly, Vol. 20, No. 4, pp. 409-432.
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504
Knowledge Sharing: Cultural Dynamics
Kerstin Siakas1 and Elli Georgiadou2
1
Alexander Technological Educational Institute of Thessaloniki, Greece
2
Software Forensics Centre, Middlesex University, UK
[email protected]
[email protected]

Abstract: Knowledge is one of the most valuable assets of businesses and an important competitive factor.
Knowledge evolves continuously as the individual and the organisation adapt to influences from the external
and the internal environment. Working knowledge is initially tacit (personal and context-specific including
cognitive elements) and is created by earlier experiences, perceptions and internalisation. Tacit knowledge
becomes explicit (formal and systematic), which is expressed by explicit procedures. Knowledge sharing is the
process where individuals mutually exchange both tacit and explicit knowledge, and jointly create new
knowledge. This process is essential in transferring individual knowledge into organisational knowledge.
Continuous knowledge creation requires voluntary actions including openness, scrutiny, trust and tolerance
towards different views and interpretations. The constructive learning process in the work place is revealed
through bottom-up knowledge creation spread from individual to individual in the socialization process.

Research concerning the factors affecting knowledge sharing has identified a number of different factors that
can be classified as hard (technologies and tools, such as computer mediated communication) and soft
(relationships between the individual and the team, department or organisation including motivation, and
organisational climate).

This paper argues that willingness to converse and share knowledge is influenced by cultural dynamics from
the external environment (national culture) and from the internal environment (organisational and personal
culture). National Cultures mould the degree of openness, capacity for collaboration and exchange of ideas.
Certain organisational cultures support and facilitate knowledge creation and transfer, whereas other
organisational cultures promote knowledge retention. The cultural dynamics influencing knowledge sharing
are unfolded and a set of guidelines for the creation of a knowledge sharing culture is proposed.

Keywords: Knowledge management, knowledge sharing, culture

1. Introduction
Knowledge originates and is applied in the mind of the knower (Alavi and Leidner, 1999). In
organisations it becomes embedded in the organisational culture in the form of artefacts, such as
documents, organisational processes, practices and norms. Knowledge is one the most valuable
strategic assets of businesses. It is widely recognised that knowledge driven organisations attain a
competitive advantage (Tanriverdi, 2005). If knowledge is seen as a resource critical to an
organisation’s survival and success in the global market, then it demands good management.
However many organisations are still struggling to comprehend the Knowledge Management (KM)
concept and do neither deliberately nor formally perform any KM activity (Holsapple and Joshi,
2002).

KM can be viewed as the process of turning data into information (data in context) and further on to
knowledge (use of information) (Kanter, 1999; Spiegler, 2000) or as the organisationally specified
systematic process for acquiring, organising and communicating both tacit and explicit knowledge
of employees so that other employees may make use of it (knowledge sharing) in order to be more
effective and productive (Alavi and Leidner, 1999). KM is a business philosophy. It is an emerging
set of principles, processes, organisational structures, and technology applications that help people
share and leverage their knowledge to meet their business objectives (Gurteen, 1999). This
focuses the individual and places responsibility on the individual, the knowledge worker. At the
same time KM programmes in organisations emphasise the holistic nature of creating, sharing and
managing knowledge.

Organisations formally capture, manage and store explicitly knowledge by with the help computer-
based systems, such as Management Information Systems (MIS), Decision Support Systems
(DSS) and Expert Systems, which today are becoming ubiquitous in organisations (Davenport and

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Prusak, 1998). However technology by itself often does not solve an organisation’s inherent
problems relating to intellectual capital, knowledge and information management. The view of
knowledge is changing and today it is seen as human capital that ‘walks out the door at the end of
the day’ (Spiegler, 2000). Information Technology (IT) seems to enhance the KM capabilities of
organisations (Alavi and Leidner, 2001; Tanriverdi, 2005).

In order to accomplish added business value and competitive advantage fundamental

characteristics of the KM process, including knowledge creation, knowledge sharing and
knowledge storing, need to be addressed. This paper helps address this need by presenting a
descriptive framework that identifies and characterises the main elements of KM and unfolds the
cultural issues involved in knowledge sharing. We also argue that effective KM goes beyond
technologies and is a critical organisational capability linking IT with stakeholder performance.
Further, we claim that both the national and the organisational culture are decisive for moulding,
hindering or aiding attitudes regarding knowledge sharing and organisational knowledge.

2. Individual vs. organisational knowledge

In knowledge intensive organisations knowledge becomes an ongoing requirement and employees
need to continuously find new information, which in turn should lead to knowledge creation. New
knowledge almost always begins with the individual. Making personal knowledge available to
others - sharing knowledge - is a central activity in knowledge creation. Knowledge can be
characterised by different attribute dimensions, such as knowledge mode: explicit vs. tacit,
knowledge subject: domain vs. relational and knowledge quality: knowledge value and validity
measures (Holsapple and Joshi, 2002).

Explicit knowledge is formal and systematic, whilst tacit knowledge is highly personal (Nonaka,
1998).

There are four patterns for creating organisational knowledge, namely:

ƒ Socialisation: tacit to tacit - observation, imitation;

ƒ Combination: explicit to explicit - standard reports;
ƒ Articulation: tacit to explicit - innovative reports;
ƒ Internalisation: explicit to tacit – learning.
In the knowledge-creating organisation these four patterns exist and interact dynamically in a kind
of spiral, where the knowledge reaches higher levels continuously. The Articulation phase, namely
converting tacit knowledge into explicit knowledge, and the internalisation phase, namely using that
explicit knowledge to extend one’s own tacit knowledge, are critical steps in the spiral of
knowledge, because they require active personal involvement (Nonaka, 1998). In particular, the
articulation step is highly related with practices, such as symbols, rituals and heroes (Hofstede,
2001) as well as with slogans (Deming, 1986), which are artefacts of organisational culture (Siakas,
2002). In 1978, for example, top management at Honda introduced the slogan “let’s gamble” for a
new concept car, which gave the team a very clear sense of direction (Nonaka, 1998).

Employees have the capacity to reflect in action; they accumulate and refine the knowledge
required for completing their tasks (context) through a process of learning-by-doing (Garu and
Kumaraswamy, 2005). In addition organisations expect their employees to keep up-to-date by
continuously obtaining internal and external information relating to their profession. The tasks of the
knowledge workers appear to be sensitive to change, which in turn is intensified by Information and
Communication Technology (ICT) and the internet (Chen and Edgington, 2005). Knowledge
workers may be overwhelmed when trying to find the content most relevant for completing new
tasks. To address this problem rating schemes (quality of specific content used) and credibility
indicators (validity of the content and/or ratings) can be used in order to improve the search and
evaluation of KM systems content (Poston and Speier, 2005).

Individuals may maximize personal utility, but to what degree is the personal knowledge creation
benefiting the organisation? Individuals’ knowledge does not transform easily into organisational

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knowledge. Individuals tend to hoard knowledge for various reasons (Bock et al., 2005) particularly
if there is evidence of rewards to ‘indispensable’ employees. In order to utilize the individual
knowledge and transfer it to organisational knowledge the organisation needs to strategically align
knowledge workers’ assignments to suitable tasks for maximal organisational value outcome (Chen
and Edgington, 2005). The organisational structure, the processes and the organisational culture
are important for avoiding organisational knowledge dilution and for sustaining organisational
knowledge. KM involves more than sponsorship of initiatives at and across different organisational
levels (Garu and Kumaraswamy, 2005). It also involves an active process of causing intended
consequences. Action is not simply discovering of new ideas or development of new policies; it is
the implementation of those ideas or policies and the evaluation of the effectiveness of the
implementation (Argyris, 1993).

3. Knowledge creation
The Knowledge Creation (KC) process is an instructed or self-administered activity undertaken for
improving individual or organisational tasks with respect to quality or efficiency (Chen and
Edgington, 2005). Organisational tasks are directed efforts including measurable results that
benefit the organisation. Thus a KC process can be said to be assigned or unassigned activities
regarding future organisational tasks for which benefits are expected.

Malhotra (1997) lists four issues of knowledge creation (KC) in organisations:

ƒ Dynamic and continuously evolving nature of knowledge;
ƒ Tacit and explicit dimensions in knowledge creation;
ƒ Subjective, interpretative and meaning-making base of knowledge creation;
ƒ Constructive nature of knowledge creation.
Knowledge evolves continuously as the individual adapts to amplifications and innovations from
their peer workmates. Working knowledge is basically tacit, which means that people rely on their
earlier experiences, perceptions and internalized knowledge instead of expressing knowledge by
explicit procedures. A successive knowledge creation also requires voluntary actions including
openness, scrutiny and acceptance of different views and interpretations. The constructive learning
process in work places is revealed through bottom-up knowledge creation spread from individual to
individual in the socialisation process (Nonaka and Takeuchi, 1995).

The knowledge acquisition process can be seen as a cumulative knowledge process resulting from
investment (learning-by-investment) and a by-product of production experience (learning-by-doing)
(Dorroh et al., 1994). The individual’s self-interest determines in which informal KC processes to
participate, whilst the organisations have more control over formal or structured KC process (Chen
and Edgington, 2005). The organisation’s responsibility is to align organisational learning
investment with organisational value outcome taking into account both current and future
organisational tasks.

4. Knowledge sharing
Knowledge sharing is central to the success of all knowledge management strategies. Effective
knowledge sharing practices enable reuse and regeneration of knowledge at individual and
organisational level.

A definition of knowledge sharing according to Kim and Mauborgne (1997, page 67) is as follows:
“Unlike the traditional factors of production - land, labour, and capital – knowledge is a
resource locked in the human mind. Creating and sharing knowledge are intangible
activities that can neither be supervised nor forced out of people”.
Three human factors are involved in knowledge sharing, namely:

ƒ Knowledge sharing is time consuming: There is a limited amount of time available during a
workday and spending that time on working vs. helping a colleague or codifying the knowledge
in some KM tool is usually avoided if there are not suitable incentives.

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ƒ Knowledge is power: As people start hoarding their knowledge in the belief that they could
manipulate knowledge to ensure their own success, sharing becomes a myth. Also some
individuals have reasons to doubt the value of their own knowledge; exposing it increases their
perceptions of vulnerability (Huysman and de Wit, 2002).
ƒ Knowledge sharing involves trust: Since individuals accumulate knowledge at considerable
expense of time, resources and energy, they would not give it away unless they are assured
that it will not be misused and that there is a good chance of reciprocity.
From an individual employee’s perspective we need to understand what makes people help each
other learn and share their hard earned knowledge and what incentives and motivations the
organisation can provide to create a culture of knowledge sharing.

5. Cultural dynamics
Researchers and practitioners have identified and discussed the importance of culture for
organisations (Brown, 1998, Hofstede, 2001; 1994; Schein, 1985; Trompenaars and Hampden-
Turner, 1997) and related differences between cultures to different approaches to solving common
human problems.

5.1 The dimensions of national culture

Hofstede distinguished four key elements, or "dimensions", of culture (Hofstede 1994; 2001) as
described below:
ƒ Power Distance (PD), which describes the extent to which hierarchies and unequal distribution
of power is accepted;
ƒ Uncertainty Avoidance (UA), which indicates the extent to which a society feels threatened by
ambiguous situations and tries to avoid them by providing rules, believing in absolute truths,
and refusing to tolerate deviance;
ƒ Masculinity versus Femininity, which describes the relationship between the masculine
assertive-ness, competitiveness and materialism opposed to the feminine concern for quality of
relationships, nurturing and social well being;
ƒ Individualism versus Collectivism, which describes the relationship between the individual
independence and the collective interdependence of a group.
All the four dimensions are a continuum between two extremes (0 and 100) and only very few
national cultures, if any, are wholly at one or the other extreme.

5.2 The dimensions of organisational culture

The concept of organisational culture has been popular since the early 1980s. The organisational
culture can be identified through “practices”, like symbols, heroes and rituals (Joynt and Warner,
1996; Mullins, 1989). Others have used the structure of the organisation to explain corporate
culture (Lofland and Lofland, 1995). Sahni and Rastogi (1995) suggest that organisational culture is
defined as the integrated pattern of human behaviour in a corporation, which includes the way
employees think, speak and act. It is a rigid tacit infrastructure of ideas that shape not only our
thinking but also our behaviour and perception of our business environment (Gurteen, 1999).

The basic assertion in cross-cultural studies is that national culture, expressed in terms of values
and beliefs, has a direct impact on organisational culture and individual behaviour (Hofstede 1994;
2001; Schein, 1985). The economical, political and legal environment imposed by governmental
rules, the technical environment, such as communication networks, and the socio-cultural
environment in which the organisation exists, directly affect organisational culture and functioning
of organisations.

Organisational culture in turn directly affects individual behaviour by imposing guidelines on and
expectations from the members of the organisation. Values of other stakeholders, like employees,
also create impact on the organisational culture. One of the key issues for managers in
international organisations is shared commitment and collaboration, which entail sharing

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information, knowledge and views with other people. Collaboration requires communication, which
in turn builds trust.

The organisational structures can formally indicate and facilitate connections and communications
between individuals, as well as they may place limitations on communications or create intentional
or unintentional obstacles both within and across organisational boundaries. Structural elements of
organisations influence the collaboration and sharing of knowledge within organisations (O'Dell and
Grayson, 1998) as well as hinder these activities (Gold et al., 2001).

A knowledge-oriented organisational culture is clearly one of the most influential factors for
successful KM and knowledge transfer (Davenport et al., 1998), because a culture that promotes
change and innovative behaviour encourages active exchange of ideas and increased knowledge
sharing. An orientation promoting information transfer and information flows is reflected in a
general atmosphere of inventiveness, creativity, and willingness to make changes (Menon et al.,
1992).

6. Creating a knowledge sharing culture

It is often said that it is essential to create a knowledge sharing culture as part of a KM initiative
(Gurteen, 1999). The creation and application of new knowledge is essential to the survival of
almost all businesses because of the following reasons:
ƒ Increasing staff turns over. When staff leave an organisation their knowledge walks out of the
door with them;
ƒ Intangible products (eg. information) are taking a growing share of global trade from the
traditional manufactured tangible products;
ƒ Continuous innovation (the application of new knowledge);
ƒ Lack of awareness of existing knowledge in organisation. Expertise learnt and applied in one
part of the organisation is not leveraged in another;
ƒ Accelerating change in technology generates difficulties in catching up.
Successful knowledge sharing is associated with three outcomes:
ƒ Improved organisational learning (Hall, 2001);
ƒ New knowledge creation and innovation (Janssen, 2000);
ƒ Knowledge re-use (Huysman and De Wit, 2002).
Since knowledge is primary created by individuals a company-wide cultural change, including
effective collaboration and communication, is needed for embracing knowledge sharing initiatives.

In order to make this cultural change happen organisations need to understand the dynamics of
culture and underlying values and attitudes. The first step is identifying and removing impediments
and obstacles. According to Bob Buckman (Master Class, London, Feb 2nd, 2006) “Whether you
call your knowledge strategies “knowledge sharing”, “knowledge transfer” or “knowledge
management” they will cut clear across the organisation; they are transformational in nature and
carry significant culture change implications”. In order to make this transformation or cultural
change happen organisations need to understand the dynamics of culture and underlying values
and attitudes. A cultural change is one of the most difficult changes in an organisation and a
change in organisational structures and processes is necessary particularly when changing from
autocratic, hierarchical structure to a more democratic, participative one. Since all individuals carry
with them the mental cultural programming since childhood such an organisational change may
conflict with their basic national values. In order to assess the fit between national and
organisational culture the SQM-CODE (Software Quality Management – Cultural and
Organisational Diversity Evaluation) was developed (Siakas, 2002; Siakas and Hyvärinen, 2006).
The tool can be used for an individual, an organisational or a national assessment. Depending on
the results of the assessment different initiatives need to be taken. If there is considerable
difference between national and organisational culture management would need to investigate in
depth the reasons in order to take suitable actions.

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6.1 Guidelines for the development and adoption of knowledge-sharing strategies

Figure 1 depicts the guidelines we developed for helping organisations embark on a successful
development and adoption of Knowledge Sharing Strategies (KSS).

Show benefits - 1 2 – Build trust

Support by Technology - 8 Knowledge 3 – Reward desired Behaviour

Sharing
Strategies

Learn from mistakes - 7 4 – Create Role Models

Train stakeholders - 6 5 – Include in job descriptions

Figure 1: Guidelines for developing and adopting/using KSS

ƒ Show people how knowledge benefits them personally and how access to others' knowledge
can improve their performance and how sharing what they know makes their knowledge more
valuable (Siakas, 2002).
ƒ Build trust and a sense of community. Trust seems to be one of the most important ingredients
in the knowledge sharing process (Fukuyama, 1995).
ƒ Reconsider reward and recognition systems. Most reward systems still reward individual effort
and knowledge. If we want to create a culture that supports knowledge creation, sharing and re-
use, we must reward behaviour that contributes to such efforts and also maintain a sense of
ownership and accountability for improved commitment (Siakas and Georgiadou, 2003).
ƒ Show people what knowledge sharing is by providing them with role models (champions)
(Siakas, 2002).
ƒ Make knowledge sharing a formal job requirement (included in job descriptions) by integrating
knowledge sharing into everyday work. The most common reason not to share knowledge is
lack of time for deliberately share their knowledge with colleagues (Gurteen, 1999).
ƒ Train people regarding what knowledge is most valuable and how it is (or could be) leveraged.
Part of building a knowledge culture means ensuring that all stakeholders understand the
knowledge value statement and how it relates to business strategies, objectives and outcomes
together with their interrelationships (Siakas et.al. 2005).
ƒ Let people know it is allowed to make mistakes. In many cultures people are brought up to
believe that they are always supposed to have the right answer. This approach leaves very little
room for learning and growth and closes the door to knowledge sharing (Hofstede, 2001;
Buckham, 2006).
ƒ Make sure the technology works for people, not the opposite.
Culture is critical to KM, but is equally critical to related processes such as learning, innovating and
achieving high performance for competitive advantage. The same type of open, responsive and
trusting environment is needed to support all these processes.

In Table 1 we relate Hofstede’s dimensions to KM, trust and knowledge sharing.

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Table 1: Trust and knowledge sharing potential in different cultural settings

Dimension Characteristic relating to KM Trust Knowledge Sharing

High Authoritative leadership, centralised Low if instruction so requires

Power Distance decision structures,
inequality between higher ups and
lower downs
Low Participative leadership, decentralised High a natural process
Power Distance decision structures
High Uncertainty Suspiciousness to innovations and Low has to be enforced by regulations and
Avoidance new knowledge, uncertainty for instructions
ambiguous situations
Low Uncertainty Problem solving tasks preferred High expected
Avoidance
Masculinity Assertiveness, sympathy for strong Low Hiding of knowledge for competition
reasons
Femininity Co-operation important High a basic value
Sympathy for weak
Individualism I consciousness Low if personal advantage can be identified
Collectivism In-groups High trust has to be established before any
knowledge sharing can take place
Out-groups Low between in- and out- groups

The table above shows that in low Power Distance (PD) countries, low Uncertainty Avoidance
countries (UA) and Feminine countries trust is high and knowledge sharing is an expected natural
process, one of the basic values of the culture. Evidence from a two months field-study and
observations in a global Danish organisation, with subsidiaries in the USA and Germany confirm
the correctness of the theoretical judgement derived from the literature review. In total 56
interviews with employees in software development on different levels was conducted in Denmark,
USA and Germany (Siakas, 2002). Below Hofstede’s values for the three countries above is
outlined together with the conclusive remarks in the final report (Siakas, 2002) to the organisation
regarding the cultural differences observed in the interviews.
Denmark: PD – 18 (low), UA – 23 (low), Mas/Fem – 16 (Fem), Ind/Col – 74 (Ind)
“The Danes seem to be very easygoing and taking their roles seriously (due to
Femininity)…. They are proud of working for the organisation and they are committed
to what they are doing. There is no competition and everybody seems to willingly both
ask for help if needed and also proud of being able to give help if asked for
(Knowledge sharing). They work well in teams and they are empowered to take
delegated decisions”.
USA: PD – 40 (low), UA – 46 (low), Mas/Fem – 62 (Mas), Ind/Col – 91 (Ind)
“The Americans were very keen on stressing that they are ambitious, hard working
and like to be productive (due to Masculinity). The structure is more hierarchical and
competitive. They feel they do not have enough information from the mother
organisation about what is going on and about the future. They would also like to play
a more active role in the change process and in decision making.. They think that the
Danes are somehow conservative, not willing to take risks and not very innovative.
They are very individualistic, but they also want to feel like a team. Trust, seems to be
an important thing for collaboration. They would like more focus on target market
issues and on being at the leading edge. They want things to happen faster…... They
also want acknowledgement for their efforts and respect from colleagues …. They
think management in Denmark is not aware of their professional level and of how
ambitious and good professionals they are”.
Germany: PD – 35 (low), UA – 65 (high), Mas/Fem – 66 (Mas), Ind/Col – 67 (Ind)
“The organisational structure in Germany is higher than in Denmark. They are
competitive, task-oriented and in general committed to the organisation philosophy.

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They feel they need more instructions or direct rules about how to work (due to high
UA) they also feel that they do not have enough information from the mother
organisation in general and that there is a need for training especially in quality issues
(Not enough knowledge sharing). They have a good team spirit and they seem to
accept things they don’t like more easily than the Americans do. They want to be
acknowledged for their achievements and they want to be respected as equals by the
Danes”.
The evidence shows that a knowledge sharing culture is almost occurring naturally in a cultural
environment with low Power Distance and low Uncertainty Avoidance values, whilst in cultures with
a higher Power Distance and Uncertainty Avoidance a more serious cultural change will be needed
for embracing knowledge sharing as a natural process.

7. Conclusion
Knowledge creation is a strategic issue that involves investments. It includes elements of risks and
uncertainty and therefore the organisation needs to assess the organisational added value with
regard to knowledge creation investments. This paper argued that willingness to converse and
share knowledge is influenced by cultural dynamics from the external environment (national
culture) and from the internal environment (organisational and personal culture). National Cultures
mould the degree of openness, capacity for collaboration and exchange of ideas. Certain
organisational cultures support and facilitate knowledge creation and transfer, whereas other
organisational cultures promote knowledge retention. The cultural dynamics influencing knowledge
sharing were unfolded and a set of guidelines, which provides a perspective for understanding and
organising concepts in a unified fashion were proposed. Future work will study KM programmes in
organisations looking at successes and failures in order to develop a framework for the introduction
and operation of KM process and tools. We will seek to obtain empirical data and derive suitable
measures for monitoring and improving the process of adoption and operation of KM programmes.
The data will be collected from across a number of countries in order to gain further understanding
of the cultural dimensions organisations operating across cultural boundaries.

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Journalists, the Makers and Breakers of Relational
Capital
Joanna Beth Sinclair
Hanken Swedish School of Economics and Business, Helsinki, Finland
[email protected]
Abstract: This article presents further understanding to how storytelling builds Relational Capital, through the
analyses of interviews of a selected group of six business journalists and six PR professionals. The main
contributions of this paper are its understanding of business journalists as key gatekeepers in creating
Relational Capital, as well as providing managerial implications on how stories could be used in a more
effective way to attract the attention of business journalists.

Keywords: Storytelling, gatekeeper theory, media coverage, relational capital

1. Introduction
The perception that the public holds of a company has many names. Some scholars call it
reputation or image (e.g. Preston 2004); marketing practitioners often call it a brand (Knudsen and
Jones, 2000). New insightful literature calls it celebrity and speaks of celebrity firms (Rindova,
Pollock & Hayward, 2006). Call it what you may, everyone is essentially speaking of the same
thing: “What does the rest of the world think about us” as an intangible asset. During the past
decade, the notion of utilizing storytelling as a method of communication has raised considerable
interest in the KM field (e.g. Snowden 1999, Denning 2000). While KM literature recognizes the
power that storytelling has as a method of knowledge sharing and internal organizational
communication, little attention has been paid to how storytelling creates Relational Capital.

The aim of this paper is twofold. First, to underscore why storytelling is a pivotal building block of
Relational Capital and second, to provide an understanding of how stories receive media coverage,
in essence explain how PR professionals seek to influence the business press into telling stories
about their client companies and how journalists in turn react to the story material sent to them by
PR departments. This paper includes necessary theoretical reflection, but chiefly attempts to bring
new insights to the topic by providing empirical research results. The paper reports findings from a
qualitative analysis of semi-structured, in-depth interviews conducted with 6 journalists from the
Finnish business press and 6 Finnish PR Professionals, and includes a number of relevant quotes
from the interviewees. The article concludes in suggestions on how companies could attain more
control over the stories that journalists create for the larger public. Finally, before plunging into the
thick of my research, I would like to provide the readers with two key definitions: that of storytelling
and Relational Capital.

Stories and storytelling have numerous definitions. In this research, a story is understood broadly,
as a verbal or written description of true or fictional events, structured by a plot. A plot is
understood as defined in Aristotle’s Poetica: the arrangement of incidents that (ideally) each follow
plausibly from the other. Storytelling refers to the verbal or written communicating of these stories.
Likewise, Relational Capital enjoys a multitude of differing and often contradictive definitions. In this
research, Relational Capital refers to an organization’s relationships with the outside world. It
includes both reputation and image at a large and all individual stakeholder relationships.

2. How storytelling creates relational capital

This article argues that storytelling is a primary creator of Relational Capital, whether organizations
utilize it knowingly or not. Many arguments can be made to support this view. Various examples
from the dot.com years proved the power of storytelling and its links to Relational Capital. For
instance Vendelø (1998) showed that companies could build and enhance their reputation by
producing and presenting stories of future performance, and that the production of such stories
could happen quickly and be rather inexpensive. It is easy to see, why stories created such great
excitement during the dot.com years. Stories have always appealed to the human mind. After all,
storytelling has been a major form of human communication throughout history (e.g. Orr 1990,

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 Joanna Beth Sinclair

Swap et.al. 2001). Great tales of hunt and heroic ancestors, as well as simple campfire lore, have
entertained, taught, and in the absence of writing, been our primary method of moving wisdom from
one generation to the next (Simmons 2000). Many argue that we are, by our very nature,
storytellers (e.g. Fisher 1984, Polkinghorn 1988).

Sveiby (Sveiby & Skuthorpe 2006) illustrates the power and longevity of storytelling as a chief
knowledge-sharing device in his studies of the Australian Aboriginal Nhunggabarra, a non-literary
society that built and retained knowledge through storytelling and created the longest continuous
record of actual historic events and spirituality known to humankind. In his research, he shows how
lifelong learning through the deduction of multiple meanings from stories was central to the
Nhunggabarra education system. The Nhunggabarra stories include vivid facts of events that
archeological evidence supports, dating back as far as 40-60,000 years ago. As Sveiby explains,
no written record or database could plausibly survive the test of time that stories prevail. The
understanding we have of story and storytelling today is based on a foundation of multidisciplinary
research coming from fields such as cognitive science, organizational studies, sociology,
anthropology and folklore. Most research looks upon storytelling as both a social and a cultural
phenomenon, which people actively use to make sense of their life, the organization they work in
and the world they live in (Boyce 1996).

A central aspect to recognize whilst looking at storytelling, as a building block of Relational Capital
is a point brought forward by Harris (1994). Quoting Kintsch (1977), he explains how a very general
script or schema exists for stories in the media. Media viewers and readers learn this narrative
script implicitly during their early years, by hearing stories from their parents and teachers. Harris
explains that both television and print media draw on this narrative script to make their stories
readily understandable. For instance children’s cartoons follow the script very explicitly, as do most
TV shows, and even advertisements. Finally, Harris quotes Meadowcroft and Reeves (1989) who
found that children obtain well-developed story schema skills by the age of 7 and that these skills
led to a better memory of central story content, a reduction in processing effort and a greater
flexibility of attention-allocation strategies. It is evident that stories have an inherent appeal to
human beings. The research quoted above describes a rich variety of usages for stories and
storytelling that we find in our everyday lives. Schank and Abelson (1995) put forth an argument,
which may well explain the universal appeal of storytelling. In their title Knowledge and memory:
the Real Story, they maintain that 1) Virtually all human knowledge is based on stories constructed
around past experiences; 2) New experiences are interpreted in terms of old stories and 3) The
content of story memories depends on whether and how they are told to others, and these
reconstituted memories form the basis of the individual’s remembered “self”. In summary, stories
are capable of carrying multiple meanings and communicating in a comprehensible, memorable
way. The strength of storytelling lies in its ability to give meaning to the individual through the story.
From an organizations viewpoint, this suggests that storytelling allows organizations to express
their values and image to the larger public in an accessible and vivid manner (Knudsen and Jones,
2000).

3. Journalists as gatekeepers
The impact of storytelling as a powerful, memorable form of communication is apparent. It seems
that in order to gain Relational Capital through storytelling, organizations can rely on three major
channels: marketing, word of mouth and public relations. The latter of these three is the focal point
of this study. It is a longstanding claim that the public believes issues in the news far more than
statements made by companies themselves in advertising or other forms of stakeholder
communication. Thus it is arguable, that business journalists have a vital gatekeeper role in
creating and upholding any given company’s Relational Capital. The ideals in journalism are of
considerably high standard. According to McQuail, “the normal standard of impartiality calls for
balance in the choice and use of sources, so as to reflect different points of view, and also
neutrality in the presentation of news – separating facts from opinion, avoiding value judgments or
emotive language or pictures” (McQuail 1994). As McQuail himself clarifies, reality is often quite
different. Journalists are rarely able to be unbiased, as whether realizing it or not, journalists select,
reject, and interpret both material sent to them and their own accounts on events taking place,
hence making the news in its final form highly subjective.

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Attaining media coverage for stories lies heavily on the organizations ability to influence journalists
and produce stories that are appealing to them. Hence, the theoretical background chosen for this
research is gatekeeper theory. Although the theory does not by any means provide a complete
overview of news selection process, it serves the purposes of this study by focusing on the position
of individual journalists and how they choose amongst a multitude of messages sent to their
disposal. Gatekeeper theory argues that information travels through channels, and information
encounters forces that determine its flow, i.e. gatekeepers. Shoemaker (1991) defines gatekeeping
as the process “by which billions of messages that are available in the world get cut down and
transformed into the hundreds of messages that reach a given person on a given day” (Beard &
Olsen, 1999).

White introduced Gatekeeping to the communications field in 1950. He studied the decision making
of one wire editor, looking at why he chose to run certain stories while disregarding others. White
had his chosen wire editor, “Mr. Gates”, keep a record of all the stories available to him from three
wire services during one week. Mr. Gates recorded his reasons for not publishing the rejected
stories. White concluded that in most cases Mr. Gates' decisions on which stories to run were
“highly subjective” and based on his “own set of experiences, attitudes and expectations” of what is
news. The study has been duplicated several times. Snider replicated the study 16 years later, in a
study where he looked into both the reasoning for rejecting certain stories and why some news
items were chosen for publication. He discovered that the chosen stories represented a better
balance among story topics, but that the news judgments were based on personal values, just as
the original study showed. Bleske replicated the study in 1992, and although the profile of the
gatekeeper has changed somewhat and the latest study shows "Ms. Gates" using a computer to
edit copy, the result and conclusion was basically the same as White's (Allen, 1994, Kratzer &
Kratzer 2003).

Figure 1: Whites simple gate keeping model

The idea of gatekeepers in mass communication has naturally evolved throughout the years. Later
studies have found certain patterns in the judging behavior of media gatekeepers. For instance
Buckalew conducted a gatekeeper study on news editors at television stations, and found that
news editors' judging patterns are characterized by five news facets: normalcy; significance;
proximity; timeliness and availability of visual elements (Allen 1994). In addition, several authorities
have pointed out that there are multiple gatekeepers, the first one being the source from which the
story emanates. The last is the reader herself, who chooses which news items to follow.
Gatekeepers in the media are not only selectors of news stories, but also cover a wide range of
media occupational roles (Hirsch, 1977, Dailey, Demo & Spillman 2003). Hence, although business
journalists can plausibly be considered pivotal gatekeepers in the creation of Relational Capital, it is
important to note that they are simply one key link in a process. A single gatekeeper is rarely
responsible for final decisions. A good example of this comes from Berkowitz who studied a
network-affiliated television station and discovered that a group of people and not an individual
producer decided which news stories should air (Kratzer & Kratzer 2003). Nevertheless, the
gatekeepers in the media arguably have a central role and a significantly strong influence on other
gatekeepers. This was found by for instance McCombs and Shaw (1976), who looked at the effects
of gatekeepers' decisions. They found the audience learns how much importance to attach to a
news item from the emphasis the media place on it (Allen 1994).

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4. Research design
The paper reports findings from a qualitative analysis of semi-structured, in-depth interviews
conducted with 6 journalists from the Finnish business press and 6 Finnish PR Professionals. The
interviews were conducted during the latter half of 2005, with initial data analysis taking place
alongside data collection to allow questions to be refined and new avenues of inquiry to develop
simultaneously with the gathering of material. The interviewees were derived from two sources: key
informants and snowball sampling, where key informants was asked to identify other
knowledgeable individuals to interview. Snowball sampling was chosen as it is appropriate when a
study is primarily explorative, qualitative and descriptive (Atkinson & Flint, 2001).

The respondents from the business press (2 females, 4 males) represent three major Finnish
Media: Kauppalehti, Taloussanomat and Yleisradio financial news. In addition, one respondent had
held several years of experience with Ekonomi, the trade magazine of Finnish economists, and had
recently moved to work as a financial reporter for a large regional newspaper, and spoke of
experience from both of these media. The PR professionals (1 male, 5 females) represent 2 middle
size Finnish PR firms, which are both specialized in business related Public Relations, and one PR
Manager of a large adult training institute with substantial experience of dealing with the business
press.

The interviews were transcribed and then analyzed using Weft QDA, a freely available software
tool designed for qualitative analysis. The data was first divided into larger categories, such as
nature of work or attitude towards ready-made stories. Subsequently, they were grouped into sub
categories such as creativity of journalism or time pressure at work. The aim was to identify and
analyze different aspects, which affect how PR professionals choose to pitch stories and business
journalists choose to either utilize them or disregard them. The categories and sub categories
created based on this analyses were thereafter re-read and categorized into four main groups of
findings: first, how PR professionals use, and business journalists react to: 1) ready made stories
2) indicated stories and 3) hidden stories, and second, answers identifying and weighing the
importance of the gatekeepers who are involved in the process of stories attaining media coverage.
The findings of the analysis are presented below, with the discussion presented alongside relevant
quotes from the interviewees.

In the quotes, the respondents are identified by gender and years of experience, for instance:
Female, 7 years in PR. Some of the respondents held work experience from both journalism and
PR. In these cases they are identified by gender, followed by work experience from their current
position as either journalist or in PR, followed by their years of experience in their former field, for
example: Female, 10 years in PR, 2 years in journalism.

5. Creating stories for the business press

Today, storytelling is a rather common tool in public relations, providing a valuable method of
communication that is recognized by journalists and PR professionals alike:
“It became wildly common during the IT boom… everyone had a story to tell … Stories
were in the air already before this but this is when it really started.” (Male, 21 years in
journalism)
Storytelling has in fact, became such a common phenomena, that journalists claim to easily
distinguish when they are being approached with a story instead of staple PR material. They also
could pick out trends in business storytelling:
“The heroic stories that everyone was pushing five years ago are not around anymore.
Now everyone is pushing these stories on the collective firm and their phenomenal
group work… PR firms have completely forgotten is the grass root people, I’d love to
see more of them. The nerd with the bad skin working in his lonely cubicle…” (Male,
14 years in journalism, 2 years in PR)

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6. Ready-made Stories
According to Gans (1979) journalists are in constant search for new ideas and often pressed for
time. Pressures of time, immediacy, and deadlines require reporters to make direct and indirect use
of prepared information. Hence it is reasonable to assume that PR professionals would at least at
times attempt to pitch ready-made stories to the media. When asked about ready-made stories,
many of the PR professionals and business journalists stated that although they are useful in some
situations, they often decided against using them:
“You should never ever send material that is too ready made. You have to leave the
journalists with room for ideas.” (Female 9 years in PR)
Both PR professionals and journalists commonly stated, that ready-made stories often feel too
overtly positive for them to be used directly. Finnish business journalists are notorious for their
negative outlook on “advertising” any commercial organization. It is considered unethical. Thus
journalists typically shun away from news that seems like it would be highly beneficial for a
company to get media coverage on:
“The stories have to be written skillfully, so the journalist doesn’t immediately think that
ok, now they’re just advertising themselves again…it has to be written so that you feel
that you could get the same kind of answers if you made an interview on the topic
yourself.” (Female, 6 years in journalism)
One of the most prominent features that the interviewees in both PR and journalism spoke about
could be called the NIH (Not Invented Here) syndrome. If journalists are approached with material
that is considered too ready-made, they will often disregard it even if the issue is considered
newsworthy:
“If something is written in a really fascinating manner… I notice that hey, this same
stuff has been sent to everyone. I realize that I can’t use this as it is… it’s sort of
stealing my job. I’m useless if all I do is copy paste.” (Male, 6 years in journalism, 1
year in PR)
The NIH syndrome is plausibly caused by how journalists view their occupation. They see
journalism as being inherently a very creative job that they take pride in. Most of the interviewees
stressed that they never merely reflect the outside world and tell things as they occur. Their work
involves a great deal of interpretation and decision-making:
“It reminds me a lot of an artistic process, when we start thinking about what we will do
and how will we introduce and develop the story…” (Male 24 years in journalism)
However, many respondents claimed that it is useful to send ready-made stories, for they are
utilized often enough, especially as background information:
“I read them. If they are well written I’ll read them. I’ll certainly not use the material
itself at all if I run a story, but…if I run something related in a few weeks I’ll contact the
people that were mentioned in the ready text…” (Male, 14 years in journalism, 2 years
in PR)
It seems that ready-made stories do not hold a great appeal to business journalists, but they may
be used as background information or occasionally used fully. Many of the journalists noted that
their reaction to ready made stories is due to their being in business news, and stated that other
fields of media may well be more appreciative of ready material. This also was apparent from the
interviews conducted with PR professionals, who noted that journalists working in areas such as
entertainment (movie’s, record releases etc.) seems much more enthusiastic toward ready-made
stories and quite often print them as such.

7. Indicated stories
Many of the PR professionals saw indications of stories, which they also referred to as hints or
even bates, as their preferred method of attaining media coverage for their story. The indications of
stories were often fully thought out stories that the PR professionals deliberately left bits and pieces
out of:

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“I always approach journalists first with a story suggestion. It has a clear idea of a
story in it but it has some loose ends so they can tie it up in a fashion they like… I
have this gut feeling I should let the journalist have the joy of finding” (Female, 10
years in PR, 2 years in journalism)
Many of the journalists shared this view, stating that they appreciate material that is thought out to
an extent, but leaves them room for creativity:
“Of course its easier for us if the stuff we are sent is slightly ready chewed …”(Male,
21 years in journalism.)
Avoiding an excessively positive tone or “advertising” was a key issue that interviewees often
referred to when discussing how they use indications of stories. Many PR professionals stated that
they generally choose topics that can be linked to a current discussion in the media or spoke of
trends in the industry:
“I’d say some of the best PR successes our firm has had have been when we take an
issue that is not straightforwardly tooting our clients horn… I’d say it’s best if you just
hint to a journalists about a story like that.” (Male 12 years in PR)
Often enough, when recognizing a phenomena that they felt could make a story, PR professionals
will simply pitch this to a picked journalist who they consider would be interested in the matter,
without developing the full story. Hence the appeal of indications of stories to PR professionals may
also lie in the fact that they take less effort to create:
“It can be kind of an idea, like this company is unique because it offers such flexible
working hours to its personnel. Stuff we could write up as a full story, but it’s easier to
for instance arrange for our client and some journalist to… just sort of… discuss this
topic. They often like it better anyway when they (the journalists) can figure out for
themselves how they want to write the story.” (Female 9 years in PR)

7.1 Hidden stories

Many of the journalists spoke enthusiastically about stories that can best described as “hidden”. By
this they meant a story that is not brought up straightforwardly, but that they can themselves find
amongst “PR jargon”:
“This PR firm send us a usual press release on this large private hospital chain…about
how they had expanded… and then just casually mentioned that here in the private
sector, anyone can rise to become a manager… it had a small example of this 33 year
old occupational health nurse… how she was running four medical stations and was
the boss of all these doctors… just a few short lines in the midst of the text… our
management pages called them right away to run a feature on it.” (Male, 14 years in
journalism, 2 years in PR)
One journalists speaking of these hidden stories explained that he assumed PR professionals were
“slightly hiding the beef” on purpose, to get journalists excited about finding it, but that he still found
the hidden stories appealing:
“Well, smart PR people understand this and know how to pitch stories for journalists in
a sly manner…they don’t pop upright away, so we get like, this is my story, I invented
this!” (Male, 21 years in journalism)
Interestingly, it appears that journalists were more willing to cover stories that plausibly would be
directly beneficial to a company’s image if the story was hidden. It seems that when journalists find
the story themselves, concerns of “advertising” disappear:
“If say, a company says that they have recruited this and this many people, then we
take the bate when we see it and realize that hey, they must be doing very well…
Then we make it into our own thing.” (Male, 6 years in journalism, 1 year in PR)

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7.2 Gatekeepers involved in attaining media coverage for stories

In accordance to suggestions of later gatekeeper theory, this analysis shows that that business
journalists are only one significant gatekeeper in the process of attaining media coverage for
stories. Numerous gatekeepers can exist, but not necessarily:
“It’s quite… lonely, actually. I make my own decisions. Mostly the only communicating
I do is with the editors in chief, if even them.” (Male, 24 years in journalism)
“We typically find the story…we do the actual choosing of what to pitch… Customers
of course give the final ok, shall we advance on this idea” (Male 12 years in PR)
It seems that the gatekeepers can vary in different situations. At a minimum, the journalist finding a
story and deciding to cover it will be the sole gatekeeper. This is the case in for instance many
online news desks. Providing that any readers come across this story in the press, they will
naturally also act as a gatekeeper, choosing what they want to read. In addition, there typically is
an editor in chief or other decision-making body within the media who chooses the final news mix
for the day. When a story is offered to a journalist through a PR agency or department, a few more
gatekeepers can be added to the chain: the PR professional, who finds and creates stories and
decides how and to which media they will pitch the stories to, and also the customer organization
who approves of the stories or news that will be presented to the media. An illustration of typical
gatekeepers involved in the process of a story receiving media coverage is illustrated in Figure 2.
Gate 5 the reader:
Choosing which stories they will take interest in

Gate 4 the chief editor:

Deciding if the story is suitable and fits the news mix of the day

Gate 4 the journalist:

Choosing if the story is newsworthy and suitable for the
media, and in most cases creating their interpretation of it

Gate 3 the PR professional:

Choosing media and approach of story pitching

Gate 2 the customer organization:

Approving stories that will be pitched

Gate 1 the PR professional:

Finding and creating stories

Figure 2: An Example of gatekeepers affecting the media coverage of corporate stories

Although the gatekeepers in the media can be considered pivotal, the gatekeeper role of the PR
professionals is highly influential as well, as they commonly either contact a small number of media
with a certain story or tailor make it in a manner that they feel will fit different media needs:
“The biggest challenge at the moment is that every media house has such diverse
needs…packaging the same story in different forms for all these different receivers…
that’s what makes the successful PR people. (Male 14 years in journalism, 2 years in
PR)

8. A final note on luring the business press into covering stories

Previous research has shown that journalists often base their decisions on which news to cover on
instincts rather than textbook news values (Kratzer & Kratzer 2003). This research conforms this
view to some extent. When questioned about how journalists react to story material sent to them
their reasoning for finding material appealing and newsworthy typically centered around being able
to discover news themselves and present the public their interpretation of it. Many journalists did,
however, give textbook examples of what makes stories newsworthy, such as size of a company or
monetary value of a deal.

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Nevertheless, discovery and interpretation seem to be key issues that commercial organizations
should take into account when attempting to lure the business press into covering their story.
Indications of stories or hidden stories are much more appealing to business journalist than ready
made stories, and perhaps most importantly, business journalists are seemingly more willing to tell
positive stories of commercial organizations when finding the story themselves or when presented
an indication of a story that gives them the chance to be creative and fit in the missing pieces. The
argument is illustrated in table 1.
Table 1:Different story types’ appeal to journalists
Story type Appeal to business journalists

Indicated story appealing to business journalists, especially if not obviously

helping a commercial enterprise improve their image

Hidden story appealing to business journalists even if the story would clearly
improve a commercial enterprise’s image

Ready-made story appealing to journalists as background information that might

trigger a later story. Sometimes used as such, for instance when
pressed for time.

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Preston, L.E. Reputation as a source of corporate social capital. Journal of General management.
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Knowledge Management: An Organization Design Issue
Pernille Dissing Sørensen
University of Southern Denmark, Denmark
[email protected]
Abstract: Organization design is a fruitful perspective that allows for a closer examination of features and
bundles of features that affect knowledge management (KM) requirements and how firms organize to facilitate
KM in response to such requirements. KM strategies also represent a holistic perspective on KM in
organizations. Rather than focusing on specific knowledge processes or KM systems, the notion of KM
strategy retains focus at an organizational level. Several frameworks for KM strategy have already been
proposed. An analysis of those frameworks from an organization design perspective reveals that knowledge-
as-perspective does add value to organizational analysis, but also that KM features are closely related to
established organizational dimensions. Such an analysis supports the understanding of KM’s property space –
i.e., attributes unique to KM as an organizational phenomenon. It further contributes to the advancement of a
shared language for communicating about KM and serves to sensitize empirical examinations of KM.

Keywords: KM; KM dimensions; knowledge strategy; KM strategy; organization design; organization theory

1. Introduction
Researchers investigate knowledge management (KM) from multiple perspectives, for instance,
knowledge as asset, individual agent levels, organizational sub-processes and group processes
(e.g., Alavi & Leidner 2001;Argote, McEvily, & Reagans 2003;Grover & Davenport 2001). While
each of these perspectives is important for understanding KM, complementary views on KM as an
organizational phenomenon are required. At academic conferences and workshops, sceptics and
critical thinkers tend to pose the same type of questions concerning the legitimacy of both a
knowledge perspective and of KM as such – for instance, ‘What is the value of a knowledge
perspective? What does knowledge add? How can I recognize KM when I see it?’ While these
questions are challenging to answer, one way of clarifying the value of knowledge-as-perspective
on organizations is to look into the dimensions that researchers use in a systematic way to
describe organizational KM behaviour. One systematic way of organizing KM dimensions occurs in
research on KM strategies. The study of KM strategies is a specialized area of study in which
researchers aim to find and organize patterns in organizational behaviour related to knowledge.

I present an analysis of dimensions that researchers use for characterizing and explaining KM in
organizations. These dimensions are matched with dimensions from the organization design
literature. The outcome is evidence of a clear conceptual connection between extant organizational
literature and KM research. Still, the analysis also shows that research on KM does add extra
dimensionality that potentially betters our understanding of how and why organizations organize as
they do.

2. Theoretical background

2.1 KM
KM originated in practice and gradually became appropriated as phenomenon by a variety of
academic fields, from philosophy to psychology (e.g., Jashapara 2004). Here, we are concerned
with KM from an organization theory angle. KM is complex to define because it occurs at multiple
organizational and interorganizational levels at the same time – as reflected in the field’s
fragmentation. We use KM as an umbrella term for a range of related events, process, behaviours,
and structures within and between organizations. For instance, Alvesson and Kärreman argue “KM
focuses on the creation and distribution of knowledge in organizations through technological
novelties…although there are also streams concentrating on social relations and interactions
(Alvesson & Karreman 2001: 995). Alvesson and Kärreman as well as Kakabadse et al. (2003)
identify several KM conceptualisations or models. From an organizational viewpoint, KM is about
improving quality of decision-making, improving individual and collective problem-solving, taking
advantage of an existing knowledge-base as well as creating a basis for future knowledge, in
essence, increasing both learning and potential for learning. So, exercising KM is improving and

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benefiting from individual and organizational learning on a continuous basis. The keyword here is
‘improve’ because it emphasizes the connection to practice that distinguishes KM as a research
field from, e.g., organizational learning (Easterby-Smith & Lyles 2003: 3). Organization theory’s
influence on KM’s theoretical development can be broadly attributed to three sub-fields: human
resources, information systems, and strategic management (Jashapara 2004). While calls have
been made for integrating these different perspectives on KM (e.g., Davenport and Prusak 1998 in
Jashapara 2004), only few authors have explored that road, and fewer investigated the one
organizational perspective that actually does integrate human resources, information systems, and
strategy – namely, organization design.

2.2 Organization design

Organization design is concerned with the creation of appropriate structures and processes to
support an efficient and effective organization (e.g., Burton & Obel 2004) and with developing
“frameworks and criteria for making choices about organizational structure and processes” (Miles &
Snow 2003: 7). The basic assumption is that “there is no one best way to organize”, but several
best ways depending on the situational factors. The situational factors' constraining influence is
highly debated (e.g., Donaldson 1999), but some degree of constraint is always assumed even if
equifinality is present. Equifinality occurs when there are several possible ways to reach a similar
end-state (see discussion in Donaldson 2001). Over time, the perspective has become more varied
and more complex (e.g., Dunbar & Starbuck 2006). It ranges from structural contingency theory
(e.g., Donaldson 2001) over configurational perspectives (e.g., Miles & Snow 2003), and, during
the past years, dynamics and emergence have to some degree become integrated as can be seen
in Organization Science’s recent Special Issue on organization design (2006). The perspective falls
within applied research.

For the purposes of this paper, I draw on Burton & Obel’s (2004) model (see Figure 1) because it
summarizes the majority of design-related factors. Its comprehensiveness matches the amount of
variables used in KM research, as we shall see.

Figure 1: Design-related dimensions in the ‘Multi-contingency diagnosis and design’ model.

Source: adapted form (Burton & Obel 2004)

2.3 Linking KM and organization design

Different scholars argue that KM is an organization design problem (Burton & Obel 2004), that
knowledge is a contingency variable (Birkinshaw, Nobel, & Ridderstrale 2002), and that research is
needed for “identification of factors that influence the KM requirements of the firm” and
“development of effective and efficient methodologies for determining these requirements for a
given firm” (Alavi 2000: 16). An organization design perspective offers a way of explaining why
different firms prioritize and combine KM tasks differently, thus answering the call to explore KM
requirements. The organization design view argues that different firms exercise KM in different
ways due to their differing circumstances and goals, but also that such behaviour falls within a
limited range of ‘classes’, which we begin to explore in the following sections. Drawing on
organization design, the KM tasks of creation, organization, diffusion, and use of knowledge have
to be solved by any given firm, but in different internally consistent ways. The perspective thus
illuminates central aspects of the phenomenon ‘KM’ and its context in organizations. The breadth of

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the design perspective allows for integration of the fragmented areas of the KM literature and is a
good theoretical match for KM because both approaches share a close coupling to practice and are
concerned with – and give input to – management. As we shall see, several KM researchers
already implicitly draw on arguments that can be characterized as having a design logic. Because
the KM field is so fragmented and we wish to focus on the organizational level, we need to delimit
our focus – we do so by drawing on the notion of KM strategy.

3. KM strategies
The resource based view (e.g., Barney 1991;Peteraf 1993) has been the primary theoretical
strategic approach to knowledge and KM. It has emerged gradually into a knowledge-based view
on strategy and the firm (Grant 1996;Grover & Davenport 2001) in which knowledge is considered
the main source of competitive advantage. This view is subject to the same criticisms generally put
forward towards the resource-based view (e.g., Black & Boal 1994). A strategic approach to
knowledge differs from a knowledge approach to strategy, however. The latter often results in a
best practice approach to direct the strive for competitive advantage around knowledge resources
and organize in prescribed ways – an exercise that in practice is very difficult. Recently, authors on
KM strategy have begun to challenge the knowledge-based view and argue that it is also
necessary to consider more externally-oriented views (e.g., Clarke & Turner 2004; Maier & Remus
2002). Taking a strategic approach to knowledge rather than a knowledge approach to strategy, we
see KM as supportive of, but subject to business strategy (e.g., Smith & McKeen 2003;Zack 1999).
In correspondence with an organization design view, a ‘one best’ KM strategy is not an option. The
notion of KM strategy is can be somewhat problematic, however.

3.1 KM strategy as construct: The strategy-concept revisited

Consider Mintzberg’s (1987) conceptualisations of strategy as plan, ploy, pattern, position, and
perspective. Many researchers think of strategy in a narrow sense as rational, planned action, i.e.,
strategy-as-plan. However, as Mintzberg (1987) points out, we always use the word in context.
Consider strategy-as-pattern defined as “consistency in behaviour, whether or not intended”
(Mintzberg 1987: 12, sic.). In this formulation, KM strategy can be identified as a firm’s pattern of
consistent decisions and behaviours – a 'de facto strategy' (Zack 1999) – for improving and
benefiting from individual and organizational learning on a continuous basis. By conceptualising
KM strategies as patterns of behaviour, we investigate KM as phenomenon rather than local KM
initiatives. A realized strategy is the result of both deliberate strategy and emergent strategy
(Mintzberg 1987). This conceptualisation allows us to observe, identify, and analyze KM strategy in
practice. So, a firm’s KM strategy will have elements planned by management and, at the same
time, elements of emergent initiatives and practices developed by employees and through on-going
decision-making. Critiques have been made against researchers’ propositions on KM for
addressing primarily “instruments, activities or efforts” (Maier & Remus 2002). Conceptualising KM
in terms of KM strategy takes us beyond individual activities, processes, groups, and individuals,
and allows us to look at it at an organizational level. The KM strategy construct conceptualises KM
by integrating and organizing basic dimensions that describe and explain KM as an organization
level phenomenon. Thus, the value of KM strategy as construct lies in its (1) explaining
organizational behaviour on knowledge-related dimensions, and (2) summarizing the relevant
dimensions.

3.2 KM strategy frameworks and the KM property space

A literature study identified twelve different frameworks on KM strategy. Each of these frameworks
suggests, albeit in different ways, that organizations are constrained in their choice of KM strategy
by contextual factors related to knowledge, which is then reflected in organizational behaviour.
These frameworks build on a range of dimensions that researchers consider most important for KM
strategy and comprise a selection of competing and complementary KM strategies, which can be
conceptualised as a bundle of dimensions. The frameworks thus offer constructs for discussing the
property space of KM. This section gives a brief, but not full, review of the selected frameworks as
focus is on the frameworks’ dimensionality. They are divided into two groups: Externally oriented
KM strategies (Table 1), and internally oriented KM strategies (Table 2).

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The explanatory logic behind the frameworks is functionalist meaning that “the consequences of
some behaviour or social arrangement are essential elements of the causes of that behaviour”
(Stinchcombe 1968: 80, sic.). That is, firms organize to respond to contextual factors and to a some
degree, according to their own wishes and perceptions (e.g., Hansen, Nohria, & Tierney 1999).
While functionalist explanations have been much criticized, Stinchcombe (1968) argues that
functionalist explanations are appropriate whenever equifinality seems to be present, and as there
are different roads to successful KM, the phenomenon can be characterized by equifinality.

3.2.1 Externally oriented KM strategies

Externally oriented strategies view organizational behaviour relative to a strategic knowledge
environment and summarize overall orientations to how knowledge is acquired and used.
Table 1: Externally oriented KM strategies
Authors Strategies
Bierly & Chakrabarti (1996) Explorers
Exploiters
Loners
Innovators
Clarke & Turner (2004) Resource/knowledge-based (internal)
Relational (interfirm)
Industry
Maier & Remus (2002) Market orientation (external)
Resource orientation (internal)
Von Krogh et al. (2001) Leveraging
Expanding
Appropriating
Probing
Zack (1999) Conservative (user)
Aggressive (creator)
Maier & Remus (2002) argue that if business strategy is based on a traditional strategy
understanding directed towards the environment, such as industry position, then KM strategies are
externally focused and market oriented. Alternatively, if the basis for business strategy is a
resource-based view, then KM strategies will have an internal focus. Similarly, Clarke & Turner
(2004) depart in business strategies as departure for KM strategy. They argue that firms can take a
resource-based and internal perspective, a relational and interorganizational perspective, or a
traditional industry structure perspective (Clarke & Turner 2004). Zack’s (Zack 1999) conservative
and aggressive strategies focus on learning in terms of exploration and exploitation, and how these
relate to organizational boundaries (internal, external, and unbounded). The framework is
structured around industry and competitor characteristics. Bierly & Chakrabarti (1996) also use
characteristics of learning and the breadth of the firm’s knowledge base for clustering firms into
strategic groups: explorers, exploiters, innovators, and loners. Finally, Von Krogh et al. (2001)
Employ a growth perspective on KM strategy. In a framework comparable to Ansoff’s growth
strategies (1957), they use existing or new knowledge domains combined with the two processes
of knowledge transfer and creation, resulting in four KM strategies for growth, namely leveraging,
expanding, appropriating, and probing.

3.2.2 Internally oriented KM strategies

Internally oriented strategies address organizational behaviour within organizations and summarize
different approaches to prioritizing and organizing knowledge and knowledge-related behaviour.
Some of the frameworks use similar dimensions but different wordings. The personalization and
codification strategies (Hansen, Nohria, & Tierney 1999) reappear under different headings:
Human-oriented and systems-oriented (Choi & Lee 2002), and knowledge market and knowledge
community (Garavelli, Gorgoglione, & Scozzi 2004). These frameworks focus on the transfer and
sharing of knowledge inside the organization. Bloodgood & Salisbury (2001) also depart in key
knowledge processes – creation, transfer, protection – and argue that firms need to focus relatively
more on one of the processes.

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Table 2: Internally oriented KM strategies

Authors Strategies
Bloodgood & Salisbury (2001) Knowledge creation
Knowledge transfer
Knowledge protection
Choi & Lee (2002) Human oriented (personalization)
System oriented (codification)
Donoghue et al. (1999) Integration strategies
Collaboration strategies
Transaction strategies
Expert strategies
Garavelli et al. (2004) Knowledge community
Knowledge market
Hansen et al. (1999) Personalization (person-to-person)
Codification (people-to-documents)
Morris & Empson (1998) Embrained (expertise/training)
Encoded (precedent/system/process)
Embodied (in experience/wisdom and technique)
Encultured (embedded in routines and relationships)
Turner et al. (2002) Generalist (breadth of knowledge; tacit; creation)
Specialist (depth of knowledge; explicit; transfer)
Turner et al. (2002) address product development in teams and focus on knowledge as basis for
division of labour. They argue that a generalist strategy is characterized by breadth of knowledge,
tacit knowledge, and a focus on knowledge creation, while a specialist strategy is characterized by
depth of knowledge, explicit knowledge, and a focus on knowledge transfer. Focusing on tasks,
Donoghue et al. (1999, see also Bhatt 2002) use the dimensions task routine and task
interdependence. Combined, these generate four possible KM strategies: integration, collaboration,
transaction, and expert. Task interdependence is similar to the dimension ‘Focus of knowledge’
used by Morris & Empson (1998), because it centres on whether problem solving knowledge is
activated individually or collectively. Morris & Empson (1998) combine this dimension with the tacit-
explicit knowledge dimension and get four distinct strategies: Embrained, encoded, embodied, and,
encultured. Each of the twelve frameworks draws on a wider understanding of KM than is visible
from the tables, so we proceed to take a closer look at this understanding.

4. Knowledge dimensions
As mentioned earlier, sceptics often question the value of KM and knowledge-as-perspective.
Through an analysis of the frameworks’ arguments based on the 'Multiple diagnosis and design
model', I show that there are in fact additional insights from a knowledge perspective. I match the
dimensions used in the KM strategy frameworks to the organization design factors by comparing
conceptual definitions and operationalizations. I look at constraining factors and design dimensions
separately.

4.1 Constraining factors

Table 3 links factors influencing organization design to dimensions from the KM strategy
frameworks. The factors are summarized according to Figure 1 and matched to the KM strategy
dimensions based on a careful examination of the different frameworks. Dimensions that do not
match the traditional factors are denoted ‘Knowledge-related’. While Table 3 recaps a large amount
of information, its interpretation is straightforward. First, the dimensions included in the KM strategy
frameworks can all be organized within a comprehensive organization design model (such as
Burton and Obel’s). Second, not all of the dimensions identified match an equivalent organization
design dimension, although they match the overall categories such as technology and
environment. So, this exercise shows us that there is something additional at stake from a KM
perspective. In addition, researchers frame the dimensions to fit a knowledge perspective, for
instance, divisibility is conceptualized as knowledge-interdependence at the individual or collective

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level. The analysis also spurred other interesting considerations. Below, I present briefly those
observations that hold particular interest for each of the groupings:

4.1.1 Technology
While the use of information technologies is an important part of KM (Easterby-Smith & Lyles
2003), it is defined here as an element of organization design and not a technologically
constraining factor. Burton & Obel (2004) argue that IT is a means for communication and control,
i.e., in essence, a means for increasing information processing capacity.

4.1.2 Strategy
With a KM perspective, traditional strategy issues are framed in new ways. For instance,
knowledge source captures product and process developments as well as strategic alliances.
Learning speed is also closely related to the dimensions of incremental-radical learning and
product and process development.

4.1.3 Size and skill

In the organization design literature, the influence of size on organizational structure is one of the
most robust results (e.g., Donaldson 1999;Miller & Droge 1986). One would expect size to be
relevant for KM as well. For instance, increasing or large size makes communication and
coordination, and particularly knowledge transfer, more difficult across both time and space (e.g.,
Gupta & Govindarajan 2000;Hansen & Lovas 2004). It is therefore surprising that only two of the
frameworks specifically include organizational size as an important parameter. Clarke & Turner
(2004) argue that SMEs take advantage of strategic alliances and patents for creating, maintaining
and controlling knowledge, which they cannot afford to develop on their own due to their size.
Morris & Empson (1998) compared KM strategies in a large and a small firm. They concluded that
while small size allows for informal knowledge transfer, highly professionalized employees may
mediate for the effects of ‘absolute size and scale’ (Morris & Empson 1998: 621).

4.1.4 Environment
While Bierly & Chakrabarti’s (1996) ambiguity measure matches the Burton & Obel equivocality
measure, for the rest of the dimensions, the match is more difficult to make as they overlap or are
unclearly stated.

4.1.5 Residual factors

Leadership and management style as well as climate and culture are the least employed factors.
Garavelli et al. (2004) are the only authors that specifically mention management style. Garavelli et
al. suggest that the knowledge market strategy fits with a designer management style, while a
knowledge community strategy is best matched by a teacher management style (2004).
Organizational climate is not mentioned. Instead, authors draw on the concept of organizational
culture (Zack 1999). Garavelli et al. (2004) use measures of commitment, behaviour and
atmosphere and Maier & Remus (2002) suggest that cultural environment is affected by KM
strategy.

Above, we have examined the left part of Figure 1. Now, we turn to the other part, organization
design.

4.2 Organization design factors

Table 4 links traditional organization design factors to the dimensions used for characterizing the
organization design solutions related to KM strategies.

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Table 3: Constraining factors in KM strategy frameworks

Constraining factors Corresponding dimensions in KM strategy Authors
frameworks
Technology
Divisibility Problem solving/Task interdependence: Hansen et al. (1999); Donoghue et al. (1999);
Individual versus collective knowledge Morris & Empson (1998)
Routineness Complexity of task/routine work versus Donoghue et al. (1999)
interpretation/judgment
Type of production Standardization versus customization Hansen et al. (1999)
Knowledge-related Nature of the knowledge base Morris & Empson (1998)
Knowledge type: Explicit/codified versus Hansen et al. (1999); Bloodgood & Salisbury
tacit (2001); Choi & Lee (2002); Garavelli et al.
(2004); Morris & Empson (1998);
Business Strategy
Managers’ perception of knowledge and Hansen et al. (1999); Zack (1999)
value generation (in effect, business
strategy)
Long-term strategy Garavelli et al. (2004)
Market- versus resource-oriented strategy Maier & Remus (2002)
Industry position Morris & Empson (1998)
Core processes and capabilities Donoghue et al. (1999)
Change strategy: reconfigure and/or acquire Bloodgood & Salisbury (2001)
Resource-based view
Product and market Product and market breadth Bierly & Chakrabarti (1996); Morris & Empson
breadth (1998)
Product innovation Product innovation, R&D intensity: internal Bierly & Chakrabarti (1996); Hansen et al.
learning (1999)
Product and/or process Radical or incremental learning: Bierly & Chakrabarti (1996)
innovation products/technology
Barriers to entry Barriers to entry: patents Clarke & Turner (2004)
Knowledge-related Existing knowledge base relative to Zack (1999)
competitors: core, advanced, innovative
knowledge
New versus existing knowledge base Von Krogh et al. (2001)
Learning speed (organizational level, e.g. Bierly & Chakrabarti (1996); Hansen et al.
technology cycle time) (1999); Zack (1999)
Knowledge source: External learning versus Bierly & Chakrabarti (1996); Zack (1999);
internal (cf. product and process innovation) Clarke & Turner (2004); Garavelli et al. (2004)
Size and skill-related
Size Small size Clarke & Turner (2004); Morris & Empson
(1998)
Skills, human resources, Experienced hiring; apprenticeships/ internal Donoghue et al. (1999)
complexity development of experts
Hiring and training Morris & Empson (1998); Hansen et al. (1999)
Professionalization Morris & Empson (1998)
Capability protection Donoghue et al. (1999)
Environmental
Equivocality, uncertainty, Uncertainty: market turbulence Turner et al. (2002)
complexity, and hostility
Ambiguity Bierly & Chakrabarti (1996)
Stability I: technology maturity, autonomy of Garavelli et al. (2004)
innovations/systemic innovations
Stability II: mature versus emerging industry Von Krogh et al. (2001)
Change rate: industry learning cycle, Zack (1999); Bierly & Chakrabarti (1996)
strategic knowledge environment
Industry characteristics: Porter’s five forces Clarke & Turner (2004)

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Similar to the first part of the analysis, we see that KM strategy researchers employ traditional
dimensions and frame them to the context of knowledge, claiming, for instance, that incentives
should be directed at certain behaviours that support different KM strategies (Hansen, Nohria, &
Tierney 1999). Only one text focuses particularly on the organizational configuration (Garavelli,
Gorgoglione, & Scozzi 2004). We also see that several dimensions are added to the traditional
ones, for instance, the dimension ‘access to knowledge’ and the design implications for IT.

4.3 Concluding remarks

The analysis shows that the organization design literature provides a relevant knowledge-base that
KM researchers can and do draw on. The mapping of dimensions used in the KM literature to the
dimensions in the organization design framework shows this. While not all frameworks include all
dimensions, the range and nature of the dimensions reflect a close conceptual relation between
classic organization theory and recent KM research. Still, a knowledge perspective adds a different
rationale to the dimensions as they are reconceptualised within a new frame of understanding, for
example, when division of labour is conceptualized as information redundancy and knowledge
integration. Also, new knowledge-specific dimensions are added to the traditional ones, expanding
the organization design model as well as our understanding of KM’s property space – such as KM
researchers insisting that informal social relations need to be part of organization design, for
instance, through facilitation of communities of practice. The social dimensions pose a particular
challenge to the organization design field, because it has largely ignored individual agents'
importance. While the recapture here may seem somewhat ‘dusty’ from a practitioner’s view, it is
an academic necessity that the frameworks for KM strategy be further examined in terms of both
internal and external validity. The main reason is that several KM strategies are currently presented
as de facto in textbooks (e.g., Jashapara 2004) used in universities and business schools. So,
more integrative studies and more cumulative research seem to be a fruitful way to establish, not
only a shared language for communicating about KM, but also more confidence in theories and the
value of knowledge-as-perspective.
Table 4: Organization design factors
Organization design Corresponding dimensions in KM strategy Authors
factors frameworks
Configuration Spider’s web versus cellular organization Garavelli et al. (2004)
Organizational complexity Hierarchy: span of control and specialization Morris & Empson (1998)
Division of labour: Information redundancy Turner et al. (2002)
(generalist team) versus knowledge integration
(specialist team)
Proficiency relevance and applicability Garavelli et al. (2004)
Standardization and Formalization Morris & Empson (1998)
Formalization
Routinization, productization, automatization Donoghue et al. (1999)
Codification versus personalization Hansen et al. (1999);
Morris & Empson (1998);
Choi & Lee (2002)
Centralization Centralization Morris & Empson (1998)
Hierarchy: flow of knowledge and access to Morris & Empson (1998)
knowledge
Incentives Incentives Morris & Empson (1998);
Hansen et al. (1999);
Zack (1999)
Coordination and control Teams: matrix, ad hoc Donoghue et al. (1999);
Von Krogh et al. (2001);
Zack (1999)
Process integration/orientation Donoghue et al. (1999);
Maier & Remus (2002)
Knowledge dimensions IT for codification versus personalization/network Bloodgood & Salisbury
(2001); Hansen et al.
(1999); Choi & Lee
(2002)

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Organization design Corresponding dimensions in KM strategy Authors

factors frameworks
KM systems: Integrative versus interactive Maier & Remus (2002)
Knowledge transfer: formal/codified versus informal Morris & Empson (1998)
Best practice benchmarking Donoghue et al. (1999)
Knowledge content Maier & Remus (2002);
Zack (1999)
Communities of Practice Von Krogh et al. (2001)
Knowledge target group Maier & Remus (2002)

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Exploring Knowledge Processes in User-Centered Design
Process
Kaisa Still
Department of Information Processing, University of Oulu
[email protected]
Abstract: This research focuses on analyzing knowledge processes of the design process. It aims at
developing a body of knowledge that builds on the relevant issues toward user-centered design process in a
form of a model. This model is intended to apply, organize and synthesize processes, theories and concepts
from the separate but linked disciplines of knowledge management and human-computer interaction, hence
addressing one of the most essential topics and goals of system design, i.e. how to define what is needed in
the system and how the system should mediate human activities. In doing so, this research takes a rather
theoretical look at design as a social process including collaboration, communication and knowledge of
various parties. The model is based on the following propositions: (1) The participants of design process
include designers and users as actors, both of which are seen to possess knowledge needed toward
successful design; (2) this knowledge is proposed to be context-specific, hence being specific for certain users
using certain technology; (3) for the user as well as for the design professional there are some things that are
known but have not been articulated; and (4) the knowledge processes transforming tacit knowledge into
explicit knowledge by users and designers are linked and need to be combined, finally (5) toward knowledge
embedded into concepts, products, or services. Overall, the research highlights how knowledge processes
enable user involvement and capturing tacit (and novel) user knowledge toward successful design.

Keywords: User-centered design process, knowledge process, tacit knowledge

1. Introduction
This research focuses on one of the most essential topics and goals of system design, ie. how to
define what is needed in the system and how the system should mediate human activities. In doing
so, it embraces the principle of user-centric design. In the background of this research is research
conducted between 2002-2005 toward designing mobile communication devices for interest-based
communities (presented in Ijäs et al, 2003; Isomursu, Isomursu and Still, 2004; Still et al, 2004; and
Still, Isomursu and Väinämö, 2005). These communities are formed by individuals with a shared
interest, expertise, and passion in a focused area that can be just anything (Wellman, 1988;
Rothaermel and Sugiyama, 2001; Preece, 2000; Preece and Maloney-Krichmar, 2003), and are
technologically mediated, usually with web-based technology, but also with mobile technology, for
example as described by Rheingold (2002).

During an extensive literature review it became clear that the “popularity” of focus of design needs
has contributed toward the following: (1) it is discussed and analyzed within many disciplines,
usually with an interdisciplinary approach (2) therefore the amount of relevant literature is vast, (3)
therefore there is a multitude of relevant theories, approaches and methods, both academic and
professional, and (4) the concepts have seldom universal definitions that are agreed by all. In
addition, (5) the context of organizations tends to dominate current research, and (6) few design
studies concentrate on needs of an interest-based group or community. Also, (7) the
interdisciplinary research team exploring the mobile communication of interest-based communities
was accustomed to operating within the scope of organizations.

To address the above-mentioned challenges, this research aims at developing a body of

knowledge that builds on the relevant concepts and approaches toward user-centered design
process in the form of a framework. The framework is intended to illuminate, organize and
synthesize at least some of the existing processes, theories and concepts applicable to design of a
mobile device for interest-based communities. The guiding principles behind the framework are: (1)
it is recognized that design is social process including collaboration and knowledge of various
parties, (2) based on the user-centeredness that calls for user understanding and involvement,
these parties include designers and users as actors, both of which are seen to possess knowledge
needed toward successful design (3) as processes in general, the design process is seen to
transform certain inputs into a desired output, (4) based on the knowledge -based view of the

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design process, these inputs and outputs are knowledge, emphasizes the complexity of knowledge
as well as the inherent knowledge processes during the dynamic collaboration.

Exploring the complexity, the processes and the methods to achieve and utilize knowledge are
supported with the discipline of knowledge management (KM). KM sees knowledge as the primary
resource for organizations, trying to answer how to better create, use and manage knowledge in
organizations, emphasizing the complexity of knowledge (for example by McInterney (2002) and
Nätti (2005)) well as the collective process of knowledge creation and knowledge sharing (one of
its earliest examples described the new product development of a bread-machine, see Nonaka and
Takeuchi (1995)and the need to embed the achieved knowledge in concepts, products and
services. This model is supported with the concepts and approaches from CSCW and human-
computer interaction (HCI), though going beyond a single user (Bannon, 1992), for addressing the
design for technology for mediating human activities.

2. Knowledge management and design process

Design is said to a cognitive activity, thought work (Beyer and Holzblatt, 1998). Hence, people
involved in the design process (or in new product development) are seen to be knowledge workers
engaged in knowledge processes. These knowledge processes are high added value processes in
which the achievement of goals is highly dependent on the skills, knowledge and experience of the
people carrying them out. In design process, knowledge workers are seen to operate by taking into
account multiple inputs (generally a wide set of unstructured data and information) to perform
difficult tasks and make complex decisions among multiple possible ways of doing the work, each
one implying different levels of risk and possible benefits (Cervera, 2006).

For the purposes of this research, the term designer refers to the individuals that are participating
in the design process as professionals such as designers, developers of software development,
engineers, interface designers, psychologists, project managers, and market researchers. The
concept of user is referring to an individual interacting with the system and who is seen to be a
social being, oftentimes also referred to as customer or client.

2.1 Knowledge as a process and result

Even (or maybe especially) in knowledge management literature, there is no single agreed upon
definition of knowledge. Knowledge is seen to be something more that information, something that
adds value to information-- it has been conceived as “information put to productive use”
(Kakabadse, Kakabadse and Kouzmin, 2003). Overall, words such as meaning, application, use,
integration, action, and know-how have been used to explain it and its value. Hence, it is seen to
be directly linked to information and (Nonaka and Takeuchi, 1995), with a traditionally linear
process of data-information knowledge that has been challenged by Davenport and Prusak (1998)
who state that non-manageable amounts of knowledge become data.

The key attribute for knowledge is that it exists and resides in the heads of people-- “Humans
possess knowledge” stated Bollinger and Smith (2001:8). Hence, it is problematic to separate the
process of knowing and its resulting knowledge (Orlikowski, 2002). This furthermore implies that (1)
committing explicit knowledge to a medium (such as paper) changes it into information (2) people
have different interpretations on the knowledge and information based on their expertise, values
etc., (3) information that artifacts contain is not the same as the knowledge required to use them,
all of which can influence the design process.

One encompassing definition for knowledge is:

“A fluid mix of framed experience, values, contextual information, and expert insight
that provides a framework for evaluating and incorporating new experiences and
information. It originates and is applied in the minds of knowers. In organizations, it
often becomes embedded not only in documents and repositories but also in
organizational routines, processes, practices and forms.” (Davenport and Prusak,
1998: 5)

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2.2 Beyond designer knowledge

It is generally recognized that the oftentimes the views and knowledge of some design process
participants tend to dominate. This can be seen from the fact that the design process in seen to be
political by nature, and all design in in/for someone’s interests (Karasti, 2001) from the time and
resource limitations of the design process in real life, as well as from the traditional “if we build it,
they will come”- philosophy.

Usually, this has lead to the following dichotomies:

ƒ The separation of design and use, as users and the developers are seen to have distinct roles
and separate contributions that they can make to the design process,
ƒ The clear distinction between the professionals of design process or “design team” as active
participants, and users as passive participants, and
ƒ The design knowledge (meaning the knowledge of design professionals) of system design as
well as of users, which has also been called design thinking (Beyer and Holtzblatt, 1998) or
technical experience and expertise to suggest potential design factors and alternative solutions
being emphasized, therefore the knowledge considered legitimate within system design not
being the knowledge of those who use the technology, who are seen to experience the system,
but are not seen as experts in HCI and are not considered to be able to analyze or articulate
directly their requirements (Smith and Dunckley, 2002) .
User-centered research, which can be said to be the guiding principle for most design processes
nowadays, centers on the user. The term for user’s interaction with this principle is called user
involvement. User involvement usually describes direct contact with users, and it is considered to
mean participation, involvement, or integration of users in the design, evaluation and
implementation of new products. A clear definition of user involvement is lacking in the system
design world. The concept has been used synonymously with “including users in the design
process” (Nesset and Large, 2004) and with “focus on users” “contacting with system users”,
“consulting end-users” and “participation of users” (Kujala, 2002). Involvement is encouraged at all
phases of the design process, but it is oftentimes seen to be most efficient and influential in the
early stages of system development (Ehrlich and Rohm, 1994).

User involvement is nowadays considered essential and valuable in understanding user needs and
achieving successful, usable products. Early inclusion of users is seen central, and users are seen
to have a role also in the initial design stages of a new technology. The generic term of “user-
centered design” actively involves the user in product development in all phases of the design
process, hence lessoning the gap between design and use. User involvement has been seen to
provide the needed knowledge about the user for design activities. Even though the presence of
designer (and his/her knowledge) is traditionally omitted from the explanations of user involvement,
it is clear that the designers are expected to be “contacting with system users” or “consulting end-
users”, generally focusing on users.

The elicitation of user needs is considered beneficial by many for system design, but it is most
likely also seen to be problematic by many (for example in Druin et al (1999)). Behind this is seems
to be the fact that the two sides of the process, namely the users and the designers, do not
communicate or work together well, causing misinterpretations and other negative issues. From the
designer’s as well as the users’ points of view, users do not know what they want or they cannot
articulate the needs. This challenge of articulating tacit knowledge toward explicit knowledge is
something that various methods of inquiry try to address. In addition, designers state that users are
not aware of the real-life technical and cost limitations. From the user’s perspective, the designers
do not articulate clearly what they want you to tell, or are not willing to spend time to understand
how things really work. Furthermore, it can be difficult for designers to narrow down the number of
users to involve in the study, or to concentrate on existing practices when aiming to create
something totally new. For the users, it can be difficult to go beyond the specific features or
technical solutions of existing technology, and to look at something new.

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2.3 Knowledge processes

The codifiability of knowledge is a characteristic associated with knowledge, leading to the
traditional classification of knowledge into mutually complementary concepts by Polanyi (1966).
“Tacit knowledge” has been described as personal, non-articulated, silent, hidden experience-
based and skill type bodily knowledge and “what we know but cannot articulate” (Polanyi, 1966;
Nonaka and Takeuchi, 1995), and explicit knowledge then is objective, sequential, digital and
rational, or what we know and can articulate (synthesis of Polanyi 1966, and Nonaka and Takeuchi,
1995:8). The classical knowledge process model by Nonaka and Takeuchi (1995) sees
organizational knowledge being created through a continuous dialogue, or interaction, between
tacit and explicit knowledge. Individuals develop new knowledge, but organizations play a critical
role in articulating and amplifying that knowledge. This transformation of tacit into explicit
knowledge has also been called “vertical knowledge transfer”, highlighting the “horizontal
knowledge transfer”, e.g sharing knowledge in face-to-face contacts and the overall knowledge
transfer is described as occur through direct personal interaction and intermediated transfer with
codified, explicit, available knowledge (Nätti, 2005). For the purposes of this research, knowledge
transfer is seen to be a knowledge process in itself, which is included in the process of knowledge
creation.

The knowledge spiral by Nonaka and Takeuchi (see Figure 1.) centers on “knowledge conversion”
and identifies four different patterns of interaction between tacit and explicit knowledge:
1. Socialization involves the sharing and exchanging of tacit knowledge between individuals to
create common mental models and abilities, most frequently through the medium shared
experience (apprentices learn by observation and imitation of experts, children learn by
observation and imitation of adults etc.)
2. Externalization is the process of articulating tacit knowledge into comprehensive forms that can
be understood by others into explicit knowledge (into models, concepts, analogies, stories and
metaphors). Hence, there are two processes operating: (I) individuals sharing their mental
models with others, and (II) also reflecting and analyzing their own mental models hence
creating conceptual knowledge.
3. Throughout the combination phase, existing explicit knowledge is combined or reconfigured in
order to generate new explicit knowledge. The three processes that result in systemic
knowledge include (I) capturing and integrating new knowledge. (II) disseminating new
knowledge, and (III) editing and processing new knowledge.
4. Internalization is the process of adding to explicit knowledge (principles, procedures,
methodologies) into tacit new knowledge (in the form of sensations, memories, images)
through experimenting in various ways, through real life experience or simulations. The
resulting synthetic knowledge is shared throughout the organization, and converted into tacit
knowledge by individuals.

Tacit - tacit knowledge Tacit - explicit knowledge

Socialization
Externalization

Internalization Combination

Explicit - tacit knowledge Explicit - explicit knowledge

Figure 1: Knowledge creation process.

The model by Nonaka and Takeuchi is widely used, as it is seen to resonate with organizational
learning crossing individual, group and organizational levels (Inkpen and Crossan, 1995) and

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therefore it seen applicable to the research context of this study. However, it is recognized to be a
simplification of reality, which the further limitations of (1) simplifying the ambiguous nature of
knowledge (Alvesson, Käreson and Swan, 2002) and (2) focusing on “knowledge” instead of
“knowing” (Orkilowski, 2002).

2.4 Context-specificity of knowledge

The study is based on the notion for the user as well as for the design professional there are some
things that are known but cannot be articulated. This knowledge is proposed to be context-specific,
hence being specific for certain users using certain technology. The knowledge processes take this
existing context-specific knowledge and transform it to knowledge embedded into concepts,
products, or services. In this research, it is proposed that both the users and designers possess
context-specific knowledge, which is either tacit or explicit. CSCW and HCI are seen to provide
useful and appropriate concepts and approaches to this context-specific knowledge, as each
discipline has developed procedures, methods and tools that facilitate the design of more effective
interfaces and devices better adapted to user’s and user group’s specifications for practical, real
life situations. The concepts explore the human understanding, which is seen to reside, first and
foremost, in the practices in which the human participates (Taylor, 1993).

The exploration toward context-specific knowledge centers on the following concepts:

ƒ Use-context (also called context-of-use), which is at the interface between user and technology
(also other than computer, its hardware or software), and means users, tasks, equipment, and
physical and social environment in which a product is. Context is central to all explanations of
social science and though it has been said to be something that “everyone knows it is there, but
nobody is sure where- or what- it is” (Keith, 1994:230). It is generally studied as equivalent to
the situation, in which an individual is immersed, but also as contingency, with specifying key
situational factors which impact the context, as well as with frameworks that provide individuals
with a situated context for action, filtering out some stimuli (Johnson, 2003).
ƒ Usability, as it can be argued that most HCI efforts by practitioners are ultimately aimed at
achieving more usable computer systems (Lowgren, 1994) that are user-centered (Head, 1999)
as usability is now widely recognized as critical to success of an interactive system of product
(Maguire, 2001) hence making usability the major expectation of the technology in general. It is
generally agreed that usability (referring to how to support users in their tasks) is achieved
through the involvement of potential users in system design (Karat, 1997).

3. Framework for user-centered design with knowledge processes

The framework emphasizes the context-specificity of knowledge that acts as inputs and outputs of
the design process. The knowledge processes of designers and users are fueled by this
knowledge. Especially valuable is seen the tacit knowledge, which needs to be made explicit during
the user-centered design process. As the tacit knowledge has not been articulated before, it is
seen to provide new insights and hence value to the design process. Following, the goal of the
design process can be expressed as: to enable the context-specific knowledge process in which
the tacit knowledge of users and design professionals is modified to explicit knowledge, combined
and finally embedded in a concept, product or service.

3.1 Toward context-specific knowledge

The knowledge processes are proposed to build on the existing context-specific knowledge. It is
suggested that the existing context-specific knowledge is primarily explicit knowledge. Capturing it
is seen integral and useful for the purposes of the design process, and many times can be seen to
provide a certain level of user understanding. The quest for context-specific knowledge is made
possible with designers’ building on their existing knowledge of technology, the different facets and
approaches to usability and use-context (based on their experiences) as well as their
understanding on users in general. This is proposed to occur through a thorough analysis of the
context-specific knowledge: user, technology, usability, and use-context.
Users interact directly with the design factors that determine usability and benefits of the system,
and their resulting knowledge is also context-specific. Contrary to the designers, much of users’

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approaches and experiences with the usability and use-context most often have not been clearly
articulated, leading to the need for knowledge transformation processes. It is integral that
designer/design team appreciates the context-specificity of the knowledge. This moves the
designer away from the “universal” or “cookie-cutter” approaches, and allows for creative methods
of involving the user toward user understanding.

3.2 Linked knowledge processes

At the core of the framework is the understanding that both the users and the designers need to
move on the knowledge spiral with their own, separate though interlinked knowledge processes.
These knowledge processes happen within a person’s head, and as such they are not something
that a person does consciously, but are a natural process. The goal of representing these
processes with a framework (see Figure 2.),and with the knowledge-spiral model by Nonaka and
Takeuchi (1995), is to emphasize the interplay between tacit and explicit knowledge.

User understanding is generated during the first knowledge process of the designer, when the
explicit knowledge about users is combined with the existing design knowledge (both tacit and
explicit) of the design team. As in all the knowledge processes within design process, the context-
specific knowledge is combined with the general design knowledge. To gain access to tacit
knowledge of users as well as to integrate that to the tacit and explicit knowledge of the designers,
further knowledge spiraling is needed. As designers are the primary actors on the designing
process, the knowledge created during the first knowledge process enables them to involve the
users to the process in an appropriate and useful manner.

Users are regarded as an essential part of the process and can act as co-designers. As a result of
their knowledge process, their tacit knowledge becomes apparent for the purposes of the design
process. This knowledge from user(s) is hence not the design professional’s view or translation of
the user needs, separate of the use and user, as in the traditional way in design process. Nor is it
simply seen to be the user’s response to the questions “what do you need” or “what do you want”,
which could be communicated during some user involvement activities. The context-specific
explicit knowledge from designers may influence this knowledge creation process, which is
something that designers need to be aware of. However, user understanding gained from the
previous knowledge process can assist in this.

User Technology
Context /
Usability Use-context

Interlinked knowledge processes

Design knowledge User knowledge

(1) Knowledge process toward user

understanding (2) Capturing tacit knowledge from
(3) Knowledge process to integrate user users
knowledge to design knowledge
(4) Knowledge process to embed the
knowledge in a concept, product, User
service involvement

Figure 2: Framework for user-centered design process

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 Kaisa Still

The participation of users is not enough, as designers and other professionals are needed to
complete the design process. The resulting knowledge is seen to be a synthesis, an outcome of the
knowledge process as well as the knowledge process itself by design professionals and by users.
This knowledge and process have been generated and understood through specific courses of
action aimed at turning existing situations into preferred ones in specific contexts. Furthermore,
knowledge itself is not enough, but it needs to be used, materialized, or embedded in concepts,
models, and artefacts. Even though the model exhibits only one knowledge process for users, it
should be noted that in many cases there might be need for user involvement several times, for
example first with concept, then with prototype, and then with the product itself.

4. Discussion
This paper described the user-centered design process as a set of context-specific knowledge
processes, which address the dichotomies of (1) designer vs. user, emphasizing the value of
knowledge from both, based on the principle of user-centricity, and (2) tacit vs. explicit knowledge,
accentuating the interplay between them, based on the principle of knowledge-based approach.
Both are generally used to understand design process, however, their combination is not typical.
Hence, this paper presents a novel perspective into the design process.

The framework was created and used in the context of interpreting and understanding the process
of designing mobile communication technology for interest-based communities. Because the
framework is partly a result of the challenges faced during the research process – it was created
and applied simultaneously—the framework was considered constructive and applicable when
designing for the interest-based communities. It helped to organize the related, relevant concepts,
provided means for seeing the connections between the different concepts, and guided the
research process in general. In the context of the research, the framework supported the
achievement of the research process goals, which included not only gaining thorough knowledge
about the interest-based communities and their members’ expectations about mobile technology,
but also embedding the knowledge into concepts of dedicated mobile devices and applications that
would be used by the community members.

It is proposed that the framework can be applicable outside its original scope of interest-based
communities. This is proposed because the concepts and approaches used in the framework are
usually also utilized outside the context of the study (namely in business and learning
organizations). At least, it is suggested that design processes in general could consider (a) the
elevated role of the user, as the framework demonstrates a visible, active and needed role, (b) the
means and methods of involving the user, as universal, cookie-cutter approaches may not provide
the desired outcomes, and (c) going beyond the explicit and visible, toward tacit knowledge that
brings the fresh and innovative knowledge needed for the design process.

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The Implementation of the Educational Ontology
Ildikó Szabó
Corvinus University of Budapest, Department of Information Systems, Hungary
[email protected]
Abstract: The changes of labor markets in the European Union have created new challenges for the
European Higher Education. Two of them – the adoption of a common framework of readable and comparable
degrees and the promotion of student mobility – have inspired our research project, which started at the
Corvinus University of Budapest in September 2005. These challenges require the creation of transparent
curricula contents of the qualifications and the elaboration of a testing system for surveying the student’s
knowledge. These activities suit well the purposes of an e-Learning oriented project, which is developing an
adaptive knowledge test system. The model consists of the Educational Ontology and the adaptive testing
system. The paper deals with the realization of each part. It presents the Educational Ontology implemented
by the Protégé ontology editor and shows the advantages and disadvantages of the two ways for realizing the
testing system: using the JessTab, which is a Protégé-based plug-in or developing software in Java. Finally
the article discusses the linking of this model and an e-Learning environment - like Coospace, which is a
popular Hungarian Learning Management System.

Keywords: Educational ontology, protégé, jess, Java, e-Learning environment.

1. Introduction
For suiting the new requirements of the labor markets the European Higher Education has to be
restructured. There are global reforms - like the Bologna Process (The Bologna Declaration, 2005)
– and institutional level, restructuring processes – like the introduction of new training forms for
example e-learning qualifications. The long-term purposes of the HEFOP – “Development of
Knowledge Balancing, Short Cycle e-Learning Courses and Solutions” – project are the next ones:
supporting the acquisition of the competitive training system’s knowledge base and promoting the
transition between the different levels of this system (BsC, MsC levels). These goals suit the aims
of the Bologna Process well. That’s why the training system developed within the frames of this
project would be the prototype in a wider range of qualification systems. The curricula contents of
the qualifications have to be well structured that’s why ontology (the Educational Ontology)
composes the base of the system. The evolution of this ontology is presented by Réka Vas (2006)
the result of the development process will be shown in Section 2. The Section 3 deals with the
presentation of the implementation tools and the presentation of the prototype based on the
ontology. For aiding the free student mobility between the different training levels we need an
adequate testing system. There are several tools for realizing this system; two of them – JessTab
and Java – are presented in Section 4. At the end of this article a potential improvement of this
model will be shown.

2. Educational ontology
In the course of the learning process the student arranges the knowledge elements into a serried
set. A well functioning testing system has to be built on this structure. That’s why the Educational
Ontology is a key element of this system. We thought that the least unit of the human knowledge is
the basic concept. Certain basic concepts are the premise or conclusion of the declaration process
of a given theorem. The examples well represent the coherences between the basic concepts and
the theorems. These knowledge elements refer to themselves or each other and constitute the
knowledge areas. In the course of the testing process the student accounts for knowing certain
knowledge areas and its sub-knowledge-areas. So the usage of this knowledge element is key
aspect from the view of the project. Gegesi et al (2004: 84-94) created a study on the subject of
lifelong learning in that they presented a modular organized educational model created by CNAM
(Conservatoire National des Arts et Métiers), which is used nowadays too. The advantage of this
model is the following ones: if a student wants to enroll in a new training, the competencies of the
student will be compared to the requirements of the training. So this is a well functioning model
that’s why the comparison through competencies has been visualized in the conceptual model also
by the help of the competency module. This ontology element ensures the appearance of the labor
markets requirements in the model. Figure 1 presents the ontology.

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Figure 1: Educational ontology

3. The testing procedure

The appearance of computers offered new possibilities in the establishment of testing systems.
The traditional fixed-length, pencil-and-paper fixed-item testing gave place to new testing
procedures –like computer based testing. Computer based testing can be divided into three
categories (Luecht, 2005: 4-7):
ƒ Computer-adaptive testing (CAT): an algorithm, which adapts them to the abilities of each
examinee, selects the test items.
ƒ Multistage Testing (MST): Multi-item modules called “testlets” are assigned to each stage.
Examinee completes an entire testlet before moving on the next stage that is determined by
scoring and adaptive test decision algorithm. (Luecht),
ƒ Multiple fixed testing (MFT) is the computerized version of pencil-and-paper fixed item testing.
Among them we chose CAT as a testing category, but now our testing method is MST rather than
computer-adaptive testing. In the later phase of the project our goal is to transform it into an
adaptive testing system. The testing procedure starts the examination at the top of the hierarchy of
knowledge areas. It gives the student a testlet having so many questions that cover the given
knowledge area. We accept the knowing of this area if the sum of points received for his answers
reaches a given level (for example 60%). If he does not reach this level we put the questions about
all the basic concepts and all the sub-knowledge-area of this knowledge area. If he answers
properly the knowledge area will be accepted. If the student answers badly for some sub-
knowledge-area then the testing engine interrogates these knowledge areas in the previous
manner. If the student does not know the answer for the question related to the basic concept the
knowing of the basic concept’ super-knowledge-area will be refused. Namely the testing engine
executes a depth first graph search algorithm in such manner that it closes a branch if the student
does not know a given basic concept or he knows the actual knowledge area. But if we reach the
bottom-level where the knowledge area has just basic concepts this area will be accepted if the
student proves the knowledge about it.

4. The implementation of the ontology

For implementing this system we have to choose an adequate ontology editor, which meets the
following requirements:
ƒ Extensible: the training system has to meet the requirements of labor markets so it has to be
developed continually.

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ƒ Treatment of high volume data: the curricula contents consist of several knowledge areas, basic
concepts, theorems etc.
ƒ Interoperability: there are several partners in this project so it is necessary to ensure the access
and usage to the system.
ƒ User friendly interface.
We examined two ontology development tools in these points of view: Protégé and PCPACK.
Protégé, which is the most known free tool being the most widely used and PCPACK., which was
applied in former projects of our department for example Guide (Government User IDentity for
Europe). Protégé is an open source ontology editor and knowledge base framework. The Protégé-
2000 knowledge model is frame-based. It consists of classes, slots, facets and axioms. (Noy,
Fergerson, Musen, 2000: 3-15) The classes correspond to the concept of the domain. They
constitute a taxonomic hierarchy in such manner that each class can have more than one
superclass. The instance of a class can be either class or individual. The metaclass is a class
whose instances are themselves classes. Slots describe the properties of classes or instances.
Slots can also represent the relations between classes. A class has own slots and template slots.
The first one cannot be inherited by the instances or subclasses. The facets specify constraints on
the allowed slot values. Axioms determine additional constraints. The knowledge model is the core
of a knowledge-based system using Protégé. It is in communication with the files, schemas and the
applications built on the model. Protégé is a tool, which helps the ontology developer’s work from
designing to making applications.

PCPACK is a business solution that supports the acquisition, sharing, management and re-use of
knowledge by the help of seven tools. The knowledge model is frame-based where frames
described by a group of attributes and values using a matrix representation represent the
knowledge. (PCPACK, 2006)

PCPACK is an efficient tool in the domain of knowledge acquisition and Protégé supports the
development of the applications based on the ontology. That’s why PCPACK would have been
feasible for filling the ontology with knowledge elements and the testing system would have created
with help of Protégé API. But it could have been realized only if it had been possible to convert
PCPACK formats into Protégé formats. So only only Protégé ontology editor implements the
Educational Ontology.

4.1 Prototype
For creating the prototype system based on this conceptual model we had to choose an adequate
curriculum and to implement the model in this domain. We decided to use the curriculum called
“The development of information systems”. Its knowledge elements have been corresponded to the
instances of the model’s classes. In line with this process we had to elaborate a procedure of
testing for surveying a candidate student’s knowledge base. For verifying this procedure we had to
lay the full implementation of the model down that’s why just the instances of curricula module,
basic concepts and knowledge area were determined by us. The prototype is implemented by
using Protégé. It is presented by this figure:

As compared with the conceptual model and the prototype we can state that there are some
differences between them:
ƒ In the case of the prototype the relation called is part of had to be corresponded to the relation
with specific name, for example has part (theorem), has part (basic concept) etc. Because in the
course of filling the model with knowledge elements it was difficult to distinguish which is part of
relation is applied to the relation between the knowledge area and the theorems or which one is
applied to the relation between the knowledge area and the basic concepts, etc. The Figure 2
underpins this statement.
ƒ To test the procedure easily the database of multiple-choice questions is built in the knowledge
model in form of a class. This class is related to the basic concepts, theorem and knowledge
area classes.

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Figure 2: The implementation of prototype system in Protégé

5. The implementation of the testing system

For realizing the testing system the set of test items called testbank has been built into the Protégé
project. So there were two ways to verify the applicability of the testing procedures: development in
JessTab, which is a Protégé-based plug-in or development of Java software.

5.1 JessTab
JessTab (Eriksson, 2004:1-19) is a bridge between Protégé-2000 and Jess - Java Expert System
Shell- which is a Clips based programming language. It provides a Jess console window in a
Protégé tab and a set of extensions to Jess to allow mapping of Protégé knowledge bases to Jess
facts and manipulation of Protégé knowledge bases. A set of Jess functions is able to query the
Protégé knowledge elements. Some functions have been applied in the course of the prototype
development, for example the following ones:
ƒ (slot-get <instance> <slot-name>): gets a value from an instance’s slot in the Protégé
knowledge base.
ƒ (deffunction <function-name> [<doc-comment>] (<parameter>)): it helps to define own
functions.
At the first tryout of the testing system we confronted the disadvantages of the JessTab.
ƒ It works only if the Jess engine is available, so it does not aid interoperability and platform
independence.
ƒ The test item can be displayed in character mode it does not support the graphical display.

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ƒ The Jess functions appear in the Protégé knowledge base so they enlarge the number of the
Protégé instances.
ƒ It is difficult to handle in Jess if the student chooses a non-existent answer.
ƒ The usage of brackets puts the programming more complicated.
ƒ The failure messages are not clear and we can not use breakpoints.
So although the testing procedures functioned well in JessTab we started the software
development in Java.

5.2 Java
Java is an object-oriented, platform independent programming language. There are several free
development platforms for helping the programming – like Eclipse. Protégé also is a Java-based
ontology editor (Protégé, 2006). It provides an interface which makes the knowledge-base
accessible to other applications. These applications do not need to use Protégé graphical interface.
The protégé.jar file includes the getKnowledgeBase() method inside the
edu.stanford.smi.protege.model.Project class. The Protégé java documentation contains
information about this class and related classes.

So the application written in Java facilitates the common availability and interoperability among the
HEFOP project members. It ensures a graphical user interface, where the marking of the answers
is unambiguous.

The next parts of Java and Jess program present the process of asking.

Jess program:

(deffunction kerdez (?all ?osszpont)

(bind ?kerdesek (slot-get ?all tested))
(bind ?hossz (+ (length$ ?kerdesek) 1))
(bind ?i 1)
(while (< ?i ?hossz)
(printout t ?i ". ")
(bind ?tesztitem (nth$ ?i ?kerdesek))
(printout t (slot-get ?tesztitem kérdés) crlf)
(printout t "A válasz:")
(bind ?valasz (str-cat (read t)))
(if (eq* ?valasz (slot-get ?tesztitem válasz)) then
(printout t ' "Jó válasz" crlf)
(bind ?osszpont (+ ?osszpont (slot-get ?tesztitem súly)))
else
(printout t "A válasz rossz." crlf)
(if (member$ ?all (slot-get alapfogalom :DIRECT-INSTANCES)) then
(printout t "Tanulj még!")
(bind ?osszpont (* ?osszpont 0))
(bind ?i ?hossz)))
(printout t crlf)
(bind ?i (+ ?i 1)))
(bind ?osszpont (/ ?osszpont (- ?hossz 1)))
(return ?osszpont))

Java program:

public double askTesztkerdes(Instance e){

String valasz = "";
String k = new String();
Ablak.Answer v = new Ablak.Answer();
double opont = 0;

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double suly = 0.0;

int darab = 0;
Collection c_kerdesek = new ArrayList();
Slot s_ellenorizve = (Slot) kb.getSlot("tested”);
Slot s_valasz = (Slot) kb.getSlot("válasz");
Slot s_kerdes = (Slot) kb.getSlot("kérdés");
Slot s_suly = (Slot) kb.getSlot("súly");
if (e != null) {
c_kerdesek = e.getOwnSlotValues(s_ellenorizve);
Iterator j = c_kerdesek.iterator();
while (j.hasNext()) {
darab = darab + 1;
Instance i_kerdes = (Instance) j.next();
String f = (String) i_kerdes.getOwnSlotValue(s_valasz);
f = f.substring(0,1);
k = (String) i_kerdes.getOwnSlotValue(s_kerdes);
Float sul = (Float) i_kerdes.getOwnSlotValue(s_suly);
suly = sul.floatValue();
v = cutKerdes(k);
w.resetAblak(v,g,c);
w.pack();
w.show();
while (valasz==""){
valasz = w.getFelelet();
}
System.out.println("valasz" +valasz);
System.out.println(f);
char f1 = f.charAt(0);
char valasz1 = valasz.charAt(0);
if (valasz1 == f1) {
System.out.println("Jó válasz");
opont = opont + suly;
}
w.removeAll();
w.setFelelet();
valasz = "";
v.resetAnswer();

}
}
opont = opont / darab;
return opont;
}
Each program queries the test items of a given instance belonging to the knowledge area or basic
concepts classes. The Jess program also verifies whether the wrong answers refer to basic
concepts. In this case it finishes the asking process. The Java program makes this action not in this
procedure but in the underlying procedure of the testing process. If we compare the Java program
to the Jess program we can state it uses more functions than the other one. Because Protégé API
does not contain functions, which handle the knowledge base directly, like the slot-get function in
Jess. The Java functions are divided into two Java classes: a class handling graphical interface
and a class manipulating knowledge base. This partition allows the construction of a more complex
system: the linking of Java testing procedures and Coospace – which is a popular Hungarian
Learning System.

Coospace creates the possibility of the communication and cooperation among the students and
the teachers. It consists of so called scenes where the Coospace members can share documents,
information and they can take a look at the administration of courses. Coospace communicates
with mySAP ERP Edition, which is responsible for structuring the curriculum to the courses and

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displaying them (Kaszai, 2004:22-25). Because Coospace can run Java-based web applications,
the linking of the ontology based testing system and LSO-based curricula display system seem to
be achievable.

6. Conclusion
In the first testing period we could state the Educational Ontology can ensure the appropriate base
for an adaptive testing system. It describes the given domain – like the curricula of Business
Informatics – in such manner that the knowledge of the student becomes verifiable. At present
there are twelve curricula, including “The development of information systems”, which upload to the
Educational Ontology is under way. The testing system is also under development – like the
refinement of testing procedures (selecting test questions random, giving weights to the questions
for measuring how many percents of the knowledge area they cover) and the transformation of the
program structure for creating the connection between the Java-based testing system and
Coospace. We chose the software development in Java because it ensures graphical interface,
interoperability and improvement against JessTab. Though JessTab has its own functions, which
helps the programming process, this advantage cannot compensate its drawbacks – like non user-
friendly interface, uneasy syntax etc.

In the future we are going to try the testing system under real conditions but at first we need to fill
the conceptual model with more knowledge elements, which are also used to compare the
qualifications and to collect high volume of test questions from the partners. If these activities are
realized, we will possess enough results to appreciate. So as future work we are going to elaborate
new computer testing procedures based on these results. In order to improve the model we are
going to expand the prototype and the testing system by using the competencies. So the testing
system can designate the knowledge areas belonging to input competencies and verify them or it
can display the output competencies belonging to the known knowledge areas by the student.

References
Eriksson, H. (2004): “JessTab Manual”, Linköping University, [online], pp1-19.
http://www.ida.liu.se/~her/JessTab/JessTab.pdf
Gegesi Kiss, P., Mlinarics, J., Soltész, P., Udvardi-Lakos, E. (2004) “Az egész élethosszon át tartó
tanulás és az infokommunikációs technológiák együttes alkalmazásának a nemzetközi-, a
magyarországi helyzete és a jövőbeni fejlődés lehetőségei”, Budapest, [online], pp84-94.
http://www.matisz.hu/tartalomfejlesztes/csatolmany/lifelonglearningtanulmany040809.pdf
“Government User IDentity for Europe”, [online] informatika.bkae.hu/guide
Kaszai, P. (2004) “Paradigmaváltás az oktatásban, vagy egy újabb .com lufi? Az e-learning.”,
[online], pp22-25.
www.sap.com/hungary/company/events/education/pdf/6_SAP_DrKaszaiPal.pdf
Luecht, R. M. “Computer Based Testing, University of North Carolina at Greensboro”, [online]
http://208.164.121.55/reference/SOME/Outlines/computer_based_testing.htm
Luecht, R. M. (2005) “Some Useful Cost-Benefit Criteria for Evaluating Computer-based Test
Delivery Models and Systems”, University of North Carolina at Greensboro, [online], pp4-7.
http://www.testpublishers.org/Documents/JATT2005_rev_Criteria4CBT_RMLuecht_Apr200
5.pdf
Noy, N. F., Fergerson, R. W., Musen, M. A. (2000): “The knowledge model of Protégé-2000:
combining interoperability and flexibility”, [online], pp3-15.
http://smi-web.stanford.edu/auslese/smi-web/reports/SMI-2000-0830.pdf
“PcPack homepage” (2006), [online] http://www.epistemics.co.uk/
“Protégé knowledge base api” (2006), [online] http://protege.stanford.edu/doc/pdk/kb-api.html
“The Bologna Declaration on the European space for higher education: an explanation” (2005),
[online] http://europa.eu.int/comm/education/policies/educ/bologna/bologna_en.html
Vas, R. (2006) “Educational Ontology and Knowledge Testing”, 7th European Conference on
Knowledge Management, Budapest

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The Hidden Face of Intellectual Capital: Social Policies
Eduardo Tomé
Instituto Piaget - Viseu, Lordosa, Portugal

Abstract: This paper addresses the question of the supply of Intellectual Capital (IC). The paper’s main
hypothesis is that the analysis of Intellectual Capital is usually made based in the overall level of IC that exists
in a country. That way of analysing IC, crucially hides the importance of the Social Policies and of the Welfare
States as providers of IC and enablers of investments that use IC intensively. Consequently this paper tries to
shed light in the fact that, for a country to have a high level of IC, a very important set of public policies must
be put in place. Therefore its main conclusion is that, even in an epoch in which Social Policies and Welfare
States are said to be at risk, those Social Policies and those Welfare States are the foundation of Intellectual
Capital, and of the prosperity in the world.

Keywords: Intellectual capital, social policies, welfare states, united states, European union.

1. Introduction
Intellectual Capital is considered to be one of the assets that will frame the success of the
economies in the 21st century. Most of the analysis made on IC is centred in companies;
sometimes Non Governmental Organizations (NGOs) are studied; recently, the IC of regions and
countries has been analysed (Bonfour, and Edvinsson, 2004). Quite interestingly, those studies
see IC has an available resource, which is used by individuals and organizations, with an economic
or social objective. Therefore, those studies use mainly a demand perspective of IC.

But, crucially, and before it is used, IC has to be produced. The analysis of the production of IC is
fundamental to understand the social dimension of the phenomenon. Therefore this paper is
focused in the supply of IC, that is, in the institutions that, in the various regions and countries of
the world provide the different types of goods and services, which constitute IC.

The paper starts (section 1), with the description of the two main concepts that will be put together
(IC and Welfare States) and of the main theories that exist about those concepts. Afterwards
(section 2), statistics available on the supply of IC are presented.

The data focus on the investments made by societies and countries in education, training, health,
R&D, technology, culture, science, as aspects that are essential to someone or any organization to
possess IC. The paper ends with a section of conclusions, policy guidelines and suggestions to
further research.

2. Concepts and theories

2.1 Intellectual capital

2.1.1 Definitions
One of the best-known definitions of IC comprises structural and financial capital, costumer capital,
human capital, organizational capital (including innovation capital and process capital) (Edvinson
and Malone, 1997). Individuals, companies, organizations, regions and countries possess
intellectual Capital.

In this paper Intellectual Capital (IC) will be viewed in a societal perspective, and considered as a
sum of various phenomena: education, training, work experience, know-how, science, technology,
patents, organizational routines, social relations.

This may be considered a perspective rooted in Human Resources, Organizational and R&D
analysis. In this perspective, IC is very much linked with intelligence and costumer capital is
considered more as a product of IC and of intelligence than as a component of IC itself. Also, in

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this perspective, IC is different from financial capital, because this form of capital is considered to
be a return of IC.
Therefore, the supply of IC will be measured in terms of education and training, R&D, Health
services.

2.1.2 Theories
The theoretical background about IC is mainly found is the sciences that studied each one of the
components of the notion: economics, sociology, psychology, and engineering. This paper will be
based on an economic perspective.

In Economics it is considered that all the components of the IC notion have positive impacts in the
economic situation and performance of their owner. The wages, productivity, employment level,
unemployment spells, and export levels, of IC possessors should be better than those of the other
type of workers. That should happen, because IC generates competence, which translates in
economic outcomes.

In organizational terms, IC should mean higher competence levels and generate higher
productivity, better social climate, better working processes, better costumer satisfaction and higher
profits. This economic logic was reflected in the Balance Scorecard and in other very well known
evaluation methods (Kaplan and Norton, 1994; Edvinsson and Malone, 1997; Sveiby, 1998).

In macroeconomic terms, societies may be divided in the following two categories (Ashton and
Green, 1996). In high equilibriums skills are abundant and rewarded. In low equilibriums skills are
few and rewards are scarce.

Those two situations may be described in terms of demand and supply. In high equilibriums, the
demand of IC by organizations is currently very high. Crucially, those societies are able to generate
by themselves the skills and competences they need. So, in those societies the offer of IC is also
very considerable.

In low equilibriums, even if there is a need for IC, in order to the country to be developed, the level
of actual demand for IC is small. Those societies are characterized by a vicious cycle, or a “bad job
low skills trap” (Snower, 1996), meaning that jobs are not created because there are no skills
available, and skills are not produced because there is no expectative that those skills will be
employed. So, in those societies, a small offer of IC corresponds to a very weak demand, even if,
IC is very much needed for the development to happen.

Two further notes should be made to that situation:

ƒ 1) When an economy begins to change from a low skilled equilibrium to a high skilled ones, the
demand for skills increases; this happens because more organizations that use high levels of
skills want to establish themselves in those countries; however, the provision of skills as to
match that increase in demand; therefore in those countries some kind of Welfare State is
slowly built; those Welfare States are made with significant increases in the national public
investment; however international support may be very useful, made by multinationals,
international communities of countries, NGOs, or by international organizations of support; it is
also possible that those countries attract experts or entrepreneurs from other countries;
ƒ 2) Very important relations exist between the social and the economic performances of
countries: - if the economic sector is not efficient, high investments in the social sector can’t be
sustained; this explains that after the failure of the socialist experience, many citizens from the
Eastern Countries migrated to Western Europe; - if the economic sector is booming, migrations
are a way of obtaining IC without having to bear the costs of the investment; this explains the
waves of brain drains, that, since the Renaissance happen in Europe, benefiting Central
Europe; this also explains the actual flow of migrations, from Asia, Africa and Southern Europe
to North America, Australia and North and Centre Europe.

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2.2 Welfare states

2.2.1 Definitions
Welfare States are very complex social constructions. To build them a conjugation of efforts of the
public sector, the private sector, the third sector, the informal sector and the families, is necessary.
The way those five types of institutions combine themselves is called the “Welfare mix”. Different
“Welfare mixes” generate different types of Welfare States.

Quite interestingly, the weaker form of Welfare mix is called the Welfare Society. In this situation
the public intervention is almost inexistent, and every citizen and organization is left to its own
possibilities in order to found the ways of survival. In the more extreme Welfare Societies, families
give the basic support.

The other weak form of Welfare mix is called the Quasi-Welfare State. In this situation, a mix of
public, private, and informal organizations makes the safety net. But many needs are left without
answer, and only a small number of individuals may be said to be secure.

Welfare States are a form of social organization that gives every individual, the social support they
need to live a wealthy and healthy life.

2.2.2 Types of welfare state.

At least five types of Welfare States may be listed: the Social Democratic, the Conservative, the
Liberal, the Socialist and the Latin (Esping Andersen, 1990; Ferrara, Hemerejick, Rhodes, 2000;
Deacon, 2000).

In the Social Democratic form, the State provides a very large number of services, to every citizen.
Therefore, the State effectively commands the social organization. The “big public house” defends
the citizens from the problems of life. Private and informal organizations exist only in a
complementary basis. Quite importantly, the private organizations are decisive, because for such a
big and efficient public social organization to exist the economy must be very competitive,
unemployment must be is low, and taxes must be paid. In this form of Welfare State, the justice is
redistributive, because high earners have to fund the welfare of low earners. That situation is
justifiable because it is considered that the redistribution ensures equity, social peace, and wealth.
In those societies it is understood that low-income persons feel better and produce more when they
are supported. The Social Democratic form of Welfare State exists in the Nordic countries like
Norway, Sweden, Finland, and Denmark.

In the Conservative form, the State exists as a rearguard and subsidiary mechanism of support.
Basically, the private sector, the third sector, the families and the informal organizations should
ensure the social wellbeing. But, it is understood that they are not enough, and that the existence
of a public safety net, to act when the other sectors fail, it is essential for the society. Therefore,
social dialogue is a crucial feature of this form of Welfare State. By dialogue, the public, the private
and the informal sectors should cope in order to meet the social needs. The restrictive perspective
of the State’s role corresponds to a commutative form of justice, by which an individual has rights
to social support according to the level of its own contributions. This kind of justice means that
different individuals should receive different levels of support. But, rather crucially, it is also meant
that there are minimum levels of welfare to which everyone should be entitled. In consequence, in
those societies, every individual is obliged to a Compulsory Social Discount to the social services.
The existence of that Compulsory Discount is defended because it is considered that the provision
of the minimum levels of support generates social peace. The Conservative form of Welfare State
exists in countries like Germany, France, Italy, and Japan.

In the Liberal form of Welfare State, the public sector is only responsible for the satisfaction of a
small part of the needs. The Welfare mix is eminently dualistic: the wealthy citizens receive private
support; the poor and disadvantaged receive public support. This type of Welfare State is driven by
very competitive private sectors in the economic area. That affluence generates a very strong and
efficient private sector in the social area, and makes possible that the ordinary citizen may afford to

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pay the services from those private organizations. The Liberal form of Welfare State exits in
countries like the UK, the USA, Australia, and Canada.

In the Socialist form, the public sector assures the provision of the goods and services that satisfy
the social needs. The political organization of those countries causes that specific situation. The
satisfaction of social needs is considered to be a human right, and the public failures are
considered to be much less than the market failures. The Socialist form of Welfare State existed in
the Soviet Union and in the Eastern European countries that had socialist regimes, between World
War II and the fall of the communist regimes. China and Cuba still have a type of Welfare State that
may be classified as Socialist.

Finally, the Latin form of Welfare State is a derivation of the Conservative case. In few words, it is a
Conservative case that works worse. In this case, the Welfare State is more incomplete – in fact
the Latin case may be considered a Quasi Welfare State. Also, in this case, the Welfare Society
has much more importance, because many needs are satisfied through the actions of the families.
Families are decisive in this type of Welfare State. The Latin case of the Welfare State exists in
countries like Portugal, Spain, and in Latin America.

Two notes have to be made to the ideas that were just expressed:
ƒ The classification of countries presented is very generic. For example, the UK has a health
service that may be considered as social democratic;
ƒ The classification of countries presented is also static. In practice, dynamics exists. The
Socialist and the Latin for of Welfare States are less permanent than the other three forms of
Welfare States. Latin Welfare States may evolve easily to the Conservative form (it rights are
generalized in practice, but the organization of justice stays the same), or even to the Social
Democratic form (if the left parties take power, many improvements happen and justice
changes) or to a Liberal form (if the right parties take power, and the country is able to generate
enough private organizations). Socialist Welfare States also incur in that type of changes when
the regime becomes democratic: the Eastern European countries are moving from Socialist
forms to Social Democratic, Conservative or Liberal forms of Welfare State.

2.2.3 Theories
Each form of Welfare State was originated by a set of factors (Esping Andersen, 1990; Ferrara,
Hemerejick, Rhodes, 2000; Deacon, 2000).
ƒ Social Democratic Welfare States were built in societies in which, during the last decades of the
19th century, and the first decades of the 20th century, the industrial unions were sufficiently
strong, to share the political power. Also, those were small countries, in which the public
structures that were needed were not very big. Furthermore, in those countries the level of
education was always high, by the epoch standards – and in consequence it was possible to
have high productivity levels, and an efficient and decentralized public sector;
ƒ In the societies in which Conservative Welfare States exist, the rural parties were in power,
during the last decades of the 19th century and the first decades of the 20th century. In those
countries the political power always tried to control the Socialist Parties, and the instauration of
a negotiated form of Welfare State, in which a minimum contribution to the Social Security was
compulsory, was a good way of achieving that goal. The lower social position of the political
parties from the left meant that the pressure to equalize was much smaller, and therefore the
Welfare State that was put in place co-existed with many class differences and was based in
those differences. The goal of the Welfare State was to control the society and to balance it, not
to equalize it. The level of education of those countries was high, although not as high than in
Social Democratic countries. And quite interestingly, the Conservative Welfare State was built in
big countries, with centralized structures. It seems that in what concerns Welfare States, small
is beautiful and small is best;
ƒ Liberal Welfare States were established in countries that had two common features: English as
a mother tongue, and a culture of competitiveness; also, in many of them, (to be fair all of them
with the exception of the UK and Ireland), the country had a small history and the land was

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unexplored. English was and is important because English become slowly to be the universal
language, and this generates business possibilities and profits, in the long run. The culture of
competitiveness and fighting spirit gave the citizen of those countries the notion that
opportunities were to be grabbed and that the private welfare should depend mainly on private
actions and private forms of support. Also quite interestingly, in those societies, democracies
were implanted very early, and that give those people a notion of need of public accountability
that also contributed to a form of Welfare State, in which the private sector is in the forefront,
and the public sector is minimal and is very controlled;
ƒ Latin Welfare States were originated by social and by political causes. Catholicism was an
important factor, because it originated less investment in education than Protestantism. Religion
also gave much importance to the family. Socialist ideas were seen as anti-catholic;
ƒ Socialist Welfare States are and were politically motivated. They are based in the Marxist
ideology, according to which the public sector should provide all the social assistance, as a way
of ensuring that the workers effectively won the class struggle.

3. Statistical data

3.1 Sources and variables

The data on the supply of Intellectual Capital worldwide are found in the statistical basis of very
well known organizations. The situation is summarized in Table 1.
“Basic Infrastructures” were also considered in the analysis, because it was assumed
that they are decisive development enablers (see 2.5).

3.2 Education and training

3.2.1 Education
The data used in the paper are shown in Table 2A.
The two first variables (enrolment and expenditures
) Represented fluxes; the two other variables (average years of schooling and illiteracy rates)
represented stocks
Table 1: Information sources on supply of the IC components
IC Variables Source
Component
Education Enrolment by school level; Adult illiteracy rate; Investment in World Bank and
education as a share of the GDP; Average years of schooling. United Nations.
School quality; educational attainment. UNESCO
Training Percentage of individuals that receives training each year. European
Commission

Expenditure in training as a percentage of the GDP. OECD

R&D Percentage of expenses in R&D as a share of the GDP; Researchers United Nations
per million of inhabitants.
Health Life expectancy at birth; Physicians per 100 000 people. World Bank and
Expenditures in health as a % of the GDP; Infant Mortality per United Nations
thousands.
Infrastructures Percentage of paved roads; Percentage of houses with good sanitary World Bank
conditions; Telephones per thousand; Electricity consumption per
inhabitant.
All the four variables were meant to describe the provision of education by different countries in the
world.

The last column of the Table shows an Index of Supply of IC regarding educational variables. The
index was obtained in the following way. First each variable was rescaled, the highest value
meaning 100 and the remaining being represented by the correspondent fractions of 100.

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Secondly, for each country, the four scaled values of each variable, were summed and divided by
4. When a value was inexistent 3 divided the sum.

The ranking shows that the country that supply more IC related to education are those which have
a Social Democratic form of WS. In second place appear the countries with a Liberal form of
Welfare State. In third place come the countries with a Conservative form of WS, closely followed
by the Socialist States, with the exception of China, that lags behind. Some Latin countries (Spain
and Chile) have values that are similar to those of the Conservative and Socialist WS, but those
are exceptions. In fact the Latin Countries are in the middle of two worlds: they have higher values
then the Arab, African and Asiatic countries that don’t have a developed form of WS but have lower
values than the countries that have developed forms of WSs. Some African and Asiatic countries
(Gabon, Kenya, Vietnam, Philippines) have much better values than the rest.

3.2.2 Training
In relation to this topic, the data obtained relate only to the EU. Therefore they are merely a small
sample of the ones that were needed. Additionally, it was only possible to obtain data for a flux
variable (percentage of trainees in the work force) and not for the corresponding stock variable
(distribution of the labour force by skill levels).
Considering all those limitations in mind it is possible to see, in Table 2B, that the level of
investment is much higher in the Social Democratic countries than in the other countries.
Furthermore, it is clear that the UK is the country in which the supply of IC is higher.

3.3 Research and development

Two variables were used: total expenditure in R&D as a share of the GDP (a flux), and researchers
in R&D per million of inhabitants (a stock).

The two variables were treated in the same way as the variables that characterized education, in
section 2.2.1. The result of the calculations is presented in column 5 of Table 2C. The pattern of IC
supply that was depicted in the analysis on education is reinforced in this subsection. Chance may
have had a little to do with it, but it is quite clear that the Arab, Asiatic and African countries which
were selected, live in another reality regarding R&D, and therefore regarding IC. The analysis of
the Human Development Report (2005) from which the data were taken shows that, some Arab
(Kuwait, Tunisia), African (South Africa) and Asiatic (Malaysia) had figures regarding R&D, but that
was the exception and not the rule. The big difference between the Latin States and the Arab
African, and Asiatic becomes clear: they have a small amount of IC supply based on R&D, which is
detected and accounted. Strong differences also appear between the countries that have some
form of WS: the Social Democratic states dominate the situation, followed by the Liberal countries,
the Conservative, the Socialist; the Latin States are those that have the lower levels of supply in IC
via R&D.

4. Health
Although these kind of variables are usually not used in IC calculations, we found it was interesting
to incorporate them in the study because they can describe some form of investment in the human
potential, and therefore in IC. In this case, two variables were used: life expectancy at birth
(considered as a stock indicator) and expenditures in health in dollars PPP (as a flux indicator).
The two variables were treated in the same way of the variables that characterized education, in
section 2.2.1. The result of the calculations is presented in column 5 of Table 2D.

Again, many similarities exist with the situation depicted in the case of education. In this case, the
USA had the highest value. The countries were divided in large groups. The first group with high
values (around 0.7) consisted of the Social Democratic, Liberal and Conservative countries. In a
second group, with average values (around 0.5), appeared the Latin and the Socialist WSs. And all
the other countries had low values (around 0.4).

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4.1 Social infrastructures

These kinds of variables are not very usually used in the calculations of the indicators of IC and
knowledge, but we think they are important as ways of defining the supply of IC. In fact the
Table 2 A: Supply of intellectual capital worldwide – Basic data - education
Type of Country Enrolment Expenditures in Mean years Adult Index of Supply
WELFARE Secondary Education as a % of of schooling Illiteracy of IC
STATES studies the GDP - 2004 2004 rate (%) (Education)
2004 2001
Social Sweden 100 7.7 12 99 0.93
Democratic
Denmark 96 8.6 11.82 99 0.94
Finland 95 6.4 12.03 99 0.88
Norway 96 7.6 12.70 99 0.93
Conservative Italy 91 4.8 9.05 98.5 0.77
Germany 88 4.8 10.07 99 0.78
France 94 5.6 8.26 99 0.79
Japan 101 3.5 11.74 99 0.80
Liberal United 88 5.6 13.83 99 0.87
States
United 95 5.2 12.16 99 0.85
Kingdom
Ireland 83 5.3 11.00 99 0.80
Canada 98 5.3 14.27 99 0.83
Australia 88 5 12.50 99 0.83
Socialist Poland 83 5.7 9.27 99.7 0.78
Hungary 94 5.8 10.01 99.3 0.82
Czech 91 4.6 9.14 99 0.77
Republic
Slovakia 88 4.4 10.36 100 0.78
Bulgaria 88 3.6 10.85 98.5 0.76
Romania 81 3.6 9.73 98.2 0.72
Russia 3.9 13.7 99.6 0.80
China 2.1 6.54 85.8 0.52
Estonia 88 6 12.49 99.8 0.86
Latin Spain 96 4,5 9.12 97.7 0.77
Mexico 63 5.4 7.78 91.4 0.68
Brazil 75 4.4 8.38 87.3 0.68
Chile 81 4.3 10.27 95.9 0.75
Argentina 81 4.3 10.33 96.9 0.75
Nicaragua 39 3.2 5.57 66.8 0.45
Ecuador 50 1.1 8.12 91.8 0.53
Guatemala 30 4.58 69.2 0.44
WELFARE
SOCIETIES
Arab World Morocco 36 6.6 2.84 49.8 0.46
Pakistan 1.8 3.51 44.0 0.30
Egypt 81 6.6 56.1 0.46
Africa Nigeria 29 5.77 65.4 0.45
Togo 27 2.7 3.15 58.4 0.35
Senegal 3.7 1.8 38.3 0.31
Benin 20 3.3 2.47 38.6 0.29
Mozambique 12 2.5 2.24 45.2 0.25
Niger 6 2.4 1.12 16.5 0.14
Gabon 4.6 6.71 71 0.57
Cameroon 4.1 5.32 72.4 0.48
Kenya 25 7.1 6.26 83.3 0.59
Malawi 29 6.1 4.23 61 0.48
Mali 3 1.45 26.4 0.24
Asia India 4.1 5.03 58 0.47
Cambodia 24 1.9 5.70 68.7 0.39
Nepal 3.4 2.46 42.9 0.33
Myanmar 1.3 4.32 85 0.43
Indonesia 54 1.3 7.38 87.3 0.52
Lao 35 2.8 4.08 65.6 0.40
Vietnam 65 6.96 92.7 0.69
Philippines 59 2.9 8.77 95.1 0.62
Source: Human Development Report, United Nations, 2005

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Table 2B: Supply of intellectual capital world wide – Basic data – Training
Type of WELFARE STATE Country Percentage of Individuals Enrolled in Training 2004
Social Democratic Sweden 18.4
Denmark 18.4
Finland 18.9
Netherlands 16.4
Conservative Italy 4.6
Germany 5.8
France 2.7
Belgium 6.5
Luxembourg 7.7
Austria 7.5
Liberals United Kingdom 22.3
Ireland 7.7
Socialist Poland 4.3
Slovenia 9
Hungary 3.3
Czech Republic 5.9
Slovakia 9.0
Bulgaria 1.3
Romania 1.1
Latvia 8.2
Lithuania 3.3
Estonia 5.2
Latin Spain 5
Greece 1.1
Portugal 2.9
Cyprus 3.7
Malta 4.4
Source: Social Situation of Europe, 2004, European Commission
Phenomena those variables reflect are at the base of every investment, and if a society lacks them,
can’t be developed. In this case three variables were used: houses with basic commodities as a
percentage of the total, and telephones by 1000 inhabitants. Those are all stock values, but it is
very difficult to find data on flux variables related to this topic.

The data are shown in Table 2E.

They confirm all what was said in the previous subsections.

4.2 Indicator of IC supply

When the figures related to Education, R&D, Health and Infrastructures are put together a global
indicator of Knowledge Supply may be obtained, as shown in column 2 of Table 3.

It is quite apparent that the different types of WS are ranked in the following order: Social
Democratic, Liberal, Conservative, Socialist, Latin.

Also, quite interesting, the countries that don’t have a developed form of WS (therefore they are
essentially Welfare Societies) have much lower levels of IC supply. Quite significantly, the supply
of IC as defined in this paper originates figures that are very similar to the definition of knowledge,
as used by the World Bank, and shown in the fourth column of the Table (World Bank, 2005). The
ranking, by WS forms is quite the same, and the differences between the countries that have
developed WSs and those that haven’t, are of the same magnitude. Therefore, the main message
of this paper is the following: what we see is important, but different perspectives, even if they end
up with similar results, or because of that, may be very fruitful. This paper shows that there is a
hidden link between social policies and intellectual capital (or knowledge). That link means that in
order to achieve higher levels of knowledge in a society, social policies are crucial. Even if private
companies use IC in profitable operations,, the investment of IC is rooted in social policies. The
politicians and administrators of the developed and developing countries should take this fact into

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account. Even in developed countries, this fact should be noted, because it means that social
policies have to continue to be pursued.
Table 2C: Supply of intellectual capital world wide – Basic Data – R&D
Type of Country Total expenditure in R&D as a Researchers in R&D per Index of Supply
WELFARE % of the GDP (1997-2002) million (1990-2003) of IC (R&D)
STATE
Social Democratic Sweden 4,3 5171 0,85
Denmark 2,5 4822 0,61
Finland 3,5 7431 0,91
Norway 1,7 4442 0,5
Conservative Italy 1,1 1156 0,21
Germany 1 2036 0,25
France 2,3 3134 0,48
Japan 3,1 5085 0,70
Liberal United States 2,7 4526 0,62
United 1,9 2691 0,40
Kingdom
Ireland 1,1 2395 0,29
Canada 1,9 3487 0,46
Australia 1,5 3446 0,41
Socialist Poland 0,6 1469 0,17
Hungary 1 1473 0,22
Czech 1,2 1467 0,24
Republic
Slovakia 0,6 1707 0,18
Bulgaria 0,5 1158 0,14
Romania 0.4 910 0,11
Russia 1,2 3415 0,37
China 1,2 633 0,18
Estonia 0,7 2253 0,23
Latin Spain 0,6 1568 0,18
Mexico 0,4 259 0,07
Brazil 1 324 0,14
Chile 0,5 419 0,09
Argentina 0,4 715 0,09
Nicaragua 0,1 73 0,01
Ecuador 0.1 84 0,01
Guatemala X X 0
WELFARE
SOCIETIES
Arab World Morocco X X 0
Pakistan 0,2 88 0,02
Egypt 0,2 X 0
Africa Nigeria X X 0
Togo X X 0
Senegal X X 0
Benin X X 0
Mozambique x X 0
Niger X X 0
Gabon X X 0
Cameroon X X 0
Kenya X X 0
Malawi X X 0
Mali X X 0
Asia India 0,8 120 0,1
Cambodia X X 0
Nepal 0,7 62 0,09
Myanmar X X 0
Indonesia X X 0
Lao X X 0
Vietnam X X 0
Philippines X X 0

Source: Human development report, United Nations, 2005.

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Table 2D: Supply of intellectual capital world wide – Basic data – Health
Type of WELFARE Country Life expectancy at Expenditures per capital in Index of Supply
STATE birth 2003 dollars, PPP 2002 of IC (Health)
Social Democratic Sweden 80 2512 0,73
Denmark 77,5 2583 0,72
Finland 78,5 1943 0,67
Norway 79,5 3409 0,81
Conservative Italy 80 2166 0,70
Germany 78,5 2817 0,75
France 79,5 2736 0,75
Japan 81,5 2133 0,70
Liberal United States 77,5 5274 0,98
United 77,5 2160 0,68
Kingdom
Ireland 77,5 2367 0,70
Canada 79,5 2931 0,77
Australia 79 2699 0,74
Socialist Poland 75 657 0,52
Hungary 73 1078 0,55
Czech 75,5 1118 0,57
Republic
Slovakia 73,5 723 0,52
Bulgaria 72,5 499 0,49
Romania 70 469 0,47
Russia 66 535 0,46
China 71 261 0,46
Estonia 71 604 0,49
Latin Spain 80 1640 0,65
Mexico 74 550 0,51
Brazil 69 611 0,48
Chile 76,5 642 0,53
Argentina 74,5 956 0,55
Nicaragua 69 206 0,44
Ecuador 71,5 197 0,46
Guatemala 66 199 0,42
WELFARE
SOCIETIES
Arab World Morocco 69 186 0,44
Pakistan 64 62 0,40
Egypt 70,5 192 0,45
Africa Nigeria 44,5 43 0,28
Togo 50 163 0,32
Senegal 52,5 62 0,33
Benin 53 44 0,33
Mozambique 41 50 0,26
Niger 46,5 27 0,29
Gabon 53 248 0,35
Cameroon 48 68 0,35
Kenya 46,5 70 0,29
Malawi 37,5 48 0,23
Mali 41 33 0,25
Asia India 63,5 96 0,4
Cambodia 54,5 196 0,35
Nepal 60 64 0,37
Myanmar 57,5 30 0,36
Indonesia 67 110 0,42
Lao 55 49 0,34
Vietnam 70 148 0,44
Philippines 70 153 0,44

Source: Human Development Report, United Nations, 2005.

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Table 2E: Supply of intellectual capital world wide – Basic data – Infrastructure
Type of WELFARE Country Housing with commodities as Telephones per Index of Supply of IC
STATE a % of total 2002 thousand 2004 (Infrastructure)
Social Democratic Sweden 100 1743 1
Denmark 100 1599 0,96
Finland 100 1407 0,90
Norway 100 1530 0,94
Conservative Italy 100 1541 0,94
Germany 100 1525 0,94
France 100 1299 0,87
Japan 100 1176 0,84
Liberal United States 100 1223 0,85
United 100 1584 0,95
Kingdom
Ireland 100 1425 0,91
Canada 100 1053 0,8
Australia 100 1359 0,89
Socialist Poland 100 777 0,72
Hungary 100 1217 0,85
Czech 100 1392 0,9
Republic
Slovakia 100 1027 0,79
Bulgaria 100 966 0,78
Romania 86 673 0,62
Russia 93 508 0,61
China 96 499 0,62
Estonia 93 1260 0,83
Latin Spain 100 1321 0,88
Mexico 90 545 0,61
Brazil 83 587 0,58
Chile 96 799 0,71
Argentina 100 579 0,67
Nicaragua 78 177 0,44
Ecuador 80 472 0,54
Guatemala 72 350 0,46
WELFARE
SOCIETIES
Arab World Morocco 83 357 0,52
Pakistan 92 63 0,48
Egypt 84 235 0,48
Africa Nigeria 94 79 0,49
Togo 71 48 0,37
Senegal 70 72 0,37
Benin 58 38 0,3
Mozambique 51 27 0,26
Niger 48 13 0,24
Gabon 37 388 0,3
Cameroon 63 103 0,34
Kenya 56 85 0,30
Malawi 66 25 0,34
Mali 59 36 0,31
Asia India 71 85 0,38
Cambodia 53 40 0,28
Nepal 68 22 0,35
Myanmar 96 10 0,48
Indonesia 71 184 0,41
Lao 61 48 0,32
Vietnam 84 131 0,46
Philippines 81 446 0,53

Source: World development indicators. World bank

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Table 3: Global indicator of knowledge supply

Type of WELFARE Country Global Indicator of IC Knowledge Indicator
STATE supply
Social Democratic Sweden 0,88 9.25
Denmark 0.81 9.08
Finland 0.84 9.11
Norway 0.79 8.65
Conservative Italy 0.65 7.6
Germany 0.68 8.4
France 0.72 8.1
Japan 0.76 8.3
Liberal United States 0.83 8.6
United Kingdom 0.72 8.8
Ireland 0.67 8.1
Canada 0.73 8.6
Australia 0.72 8.7
Socialist Poland 0.55 6.9
Hungary 0.61 7.3
Czech Republic 0,62 7.3
Slovakia 0.57 7
Bulgaria 0.54 5.9
Romania 0.48 5.2
Russia 0.56 6
China 0.45 4.1
Estonia 0.60 8.1
Latin Spain 0.62 7.8
Mexico 0.46 5.1
Brazil 0.47 5.2
Chile 0.52 6.9
Argentina 0.51 5.4
Nicaragua 0.34 2.6
Ecuador 0.38 3.2
Guatemala 0.33 2.4
WELFARE
SOCIETIES
Arab World Morocco 0.35 3.2
Pakistan 0.30 1.4
Egypt 0.35 3.8
Africa Nigeria 0.30 1.6
Togo 0.26 X
Senegal 0.25 2.1
Benin 0.23 X
Mozambique 0.19 1.2
Niger 0.17 X
Gabon 0.30 X
Cameroon 0.29 1.4
Kenya 0.30 2.8
Malawi 0.26 1.4
Mali 0.20
Asia India 0.34 2.6
Cambodia 0.25 X
Nepal 0.28 1.1
Myanmar 0.32 X
Indonesia 0.34 3.0
Lao 0.27 0.8
Vietnam 0.40 2.9
Philippines 0.40 4.2
Source: Own calculations and World Bank (2005)

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5. Conclusions
Even if IC is mainly a private investment, and even if big companies derive huge profits from their
IC levels, the role of the “social sector” as an enabler of IC investments in fundamental.

All the countries that obtained a reasonable level of development have significant IC levels and
obtained those levels with the supply of competences and social welfare by Welfare States. There
are different forms of Welfare States, corresponding to different “Welfare mixes” that are caused by
different economic, political and social backgrounds. But some form of Welfare State is needed,
and Welfare Societies are not enough. That fact means that companies that want to profit from IC
and use IC could and should help national governments, NGOs and international organizations
building the basis of some form of WS, or strengthening the existing forms.

Much work should be done trying to study deeper the relation between WSs and IC even if the
picture that emerges is quite clear. Specifically, work should be done on how to support the
development of WSs in the poor countries and its continuation in rich countries.

References
Ashton D., Green F,(1996) Education, Training and the Global Economy Edward Elgar; Cambridge
UK; pp 100-4.
Bonfour, A.; Edvinsson, L. (2004) Intellectual Capital for Communities (Edts) Butterworth-
Heinemann. Elsevier. Oxford. UK.
Deacon B. (2000) Eastern European Welfare States. Journal of European Social Policy Volume 10
(2) 146-161.
Edvinsson, L. Malone, M. (1997) Intellectual Capital, Harper Business.
Esping Andersen G. (1990) The Three Worlds of Welfare Capitalism. Princeton. Princeton
University Press.
European Commission (2005) Social Situation in Europe 2004.
Ferrera, M; Hemerijck, A.; Rhodes, M; (2000) The Future of Social Europe. Recasting Work and
Welfare in the New Economy. Oeiras (Portugal) - Celta Editora
Kaplan R. Norton D (1994) The Balance Scorecard. Harvard Business School Press. Boston.
Snower D. (1996) ”The low-skill, bad job trap” in Acquiring Skills: Market Failures, Their Symptoms
and Policies Responses Allison Booth and Dennis Snower (Eds) CEPR Cambridge
University Press – pp. 109-24.
Sveiby, K-E. (1998) Measuring Intangibles and Intellectual Capital – an Emerging First Standard
http://www.sveiby.com/articles/EmergingStandard.htlm
United Nations (2005) Human Development Report. New York.
World Bank (2005) Knowledge for Development (K4D)
http://info.worldbank.org/etools/kam/scorecard_adv_param.asp?default=1.

560
The Role of Knowledge Transfer for Innovation in a
Knowledge Community
Kuo-Hung Tseng and Chun-Yu Chen
Meiho Institute of Technology, Taiwan
[email protected]
[email protected]
Abstract: This paper presents the results of a case study, S-Inc., a semiconductor manufacturing company
located in Taiwan. The purposes of this study were to find out the mechanisms of knowledge community, and
to explore the role of knowledge transfer for innovation in a community. The framework of the study was
based upon the theory of planned behaviour (TPB) and social constructive learning. After questionnaire
survey, path analysis was used to examine the direct and indirect relationships between the response and
predictor variables. It was discovered that knowledge transfer was an important intervening variable in the
process of innovation on S-Inc.’s knowledge community. It advocates the position that in order for innovation
to be high, a specific and well-designed transfer model must be in place, which included two components:
knowledge transfer behavioural intention (KTBI) and knowledge transfer behaviour (KTB). In addition,
knowledge transfer attitude toward behaviour (KTAB), knowledge transfer perspective behaviour control
(KTPBC), and environment with critique and introspection (ECI) all had significant positive impacts on KTBI.
This empirical report showed that without knowledge transfer, innovation is significantly stalled or non-existent.

Keywords: Knowledge transfer, knowledge community, theory of planned behaviour

1. Introduction
Knowledge acquisition and implementation has become the main driving force of productivity and
development in the present world economy. As professional knowledge increases among each
member of a specific cooperate-community, the need of setting-up professional community
networks for sharing this new information and technology innovation also increases. Previous
research (Nonaka and Konno, 1998) had shown that the transferring of “tacit knowledge” into
“explicit knowledge” within an organization was a difficult task. In the past years, the knowledge
flow among researchers mainly focused on inter-group or inter-unit informal network
sharing(Hansen, 2002, Tsai, 2000). The interaction and cooperate sharing among team members
had become very important(Berman et al., 2002). If there are defects or gap in the members’
internal learning mechanism or new knowledge flowing mode, new knowledge and new technology
from outside (other teams or other organization) will be difficult to fasten, diffuse, and extend
among other members.

Studies probing into knowledge transfer have focused mostly in the argumentation of concepts and
theory. There is a need to explore that which knowledge transfer modes can enhance the quality
knowledge transfers within the knowledge-driven economy. In other words, it is through the
process of knowledge transfer that community learning and innovation can take place. This study,
therefore, investigates the importance of knowledge transfer in groups. It also looks at how such
transfer affects group innovation and personal creative within a community. How do teams diffuse
creative and innovation knowledge? Can a community help professionals to increase their
knowledge, creativity ability, performance, and communication ability? With these questions in
mind, we proposed the following objectives of this study: (1) to examine aspects affecting
knowledge transfer behaviors in knowledge communities; and (2) to propose a framework of
knowledge transfer and innovation in communities. The following sections of this paper were
organized as follows. Section 2 discussed the various aspects that affect the knowledge transfer in
communities. Section 3 reviewed a computer behavior theory, TPB (theory of planned behavior) as
well as a framework for modeling knowledge transfer and innovation in knowledge communities.
Section4 presented the result of data analysis. Section 5 concluded the paper and Section 6 was
some ideas for the future research.

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2. Literature review
Knowledge transfer is an important topic in management literature. Some studies have focused
on the transfer of best business practices in multinational corporations as they transfer
accumulated knowledge from their headquarters to new foreign units (Gupta and Govindarajan,
1991, Kogut and Zander, 1993). Other studies have focused on the transfer of technology,
business processes, and best practices inside a firm(Argote, 1999, Lee and Lee, 2000). This study
is to find out the key factors of good knowledge community and the way in which those factors
affected knowledge transfer.

2.1 Knowledge Transfer and Innovation

Previous studies (Davenport and Prusak, 1998, Nonaka and Konno, 1998, Nonaka and Takeuchi,
1995) have indicated that there are two types of knowledge in the context of knowledge sharing
and transfer, Explicit knowledge and Tacit knowledge. Because tacit knowledge is subjective and
intuitive, it is not easily processed or transmitted in any systematic or logical manner. Nonaka and
Takeuchi using this same framework, argue that the traditional philosophical definition of
knowledge as a justified true belief becomes irrelevant in practice because knowledge means
different things to different people. They argued that “Knowledge [is] a dynamic human process of
justifying personal belief toward the ‘truth’ ”.Gilbert and Cardey-Hayes point out that the process of
knowledge transfer is not a static one, it is a dynamic, and is part of a process of continuous
learning (Gilbert and Cordey-Hayes, 1996). The five-stage knowledge transfer model was
proposed. The aim of the conceptual framework was to track the ability of the organization to
achieve knowledge transfer by investigating the organizational processes that might encourage or
prohibit learning. Five stages were identified as acquisition, communication, application,
acceptance, and assimilation. Hendriks indicated that knowledge transfer is a progress of
communication. It appears that knowledge could be reconstruction, based upon basic knowledge,
and then transferred(Hendriks, 1999).

Nonaka and Takeuchi also thought that the externalization of tacit recessive knowledge is the part
that can display effectiveness mostly(Nonaka and Takeuchi, 1995). And they proposed “knowledge
spiral” containing these four kind of knowledge process, the knowledge creation mechanism, the
hereafter called it the SECI process (SECI process, refers to organization penetrates
"internalization, externalization, socialization and combination" of knowledge spiral to carry on
knowledge creation). They emphasized that in the knowledge-creating firm, knowledge was
created through the SECI spiral, which goes through the four modes of conversion between tacit
and explicit knowledge. Team members without these four knowledge creation abilities could not
have chance to create new knowledge in firm. Gilbert and Cardey-Hayes also pointed out that,
projects lead to knowledge creation mainly relative to the new technologies or concepts developed
by the project (Gilbert and Cordey-Hayes, 1996). This knowledge was unsanctioned and not
stabilized due to dynamical aspects of innovation, and through process of knowledge transfer,
technological innovation could be successfully achieved.

In summary, knowledge transfer in this study refers to the enterprise staff to utilize the knowledge
community, carries on the knowledge acquisition, communication, application, acceptance, and the
assimilation, those five stages dynamic interaction processes, including quantitative and qualitative
achievements of knowledge transfer in communities. Moreover, the good communication,
interaction and the network relationship will affect the knowledge transfer effects. It is believed that
communication among individuals leads to socialization, which in turn nurtures social relationships
important for team-oriented values, collaboration, cooperation, harmony, consensus, participative
decision-making, and team accountability(Pan and Scarbrough, 1998). Bridging structural holes in
the external network enabled the scientists to access and share with each other diverse
knowledge, resulting in greater creativity and innovation, thereby improving the team’s overall
productivity. Innovation in this study focused on community members’ innovation on research and
knowledge application to work. This included personnel/ individual innovation performance and
team innovation performance. Personnel innovation performance is member’s objective opinion for
personal research achievement satisfaction. Team innovation performance is the extent of
innovation of team products, results and the way in which it achieved the target.

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2.2 Factors affecting knowledge transfer in community

Past researches(Davenport and Prusak, 1998, Kostova, 1999, Nonaka and Konno, 1998, Rulke et
al., 2000)had found factors that influenced knowledge transfer including relational channels,
partner similarity, organizational self-knowledge, divergence of interests, knowledge context ,
relational context, recipient’s culture, and the quality of knowledge to be transferred. Cummings
and Teng pointed out the key factors affecting knowledge transfer success included knowledge,
relational, recipient, and activity contexts (Cummings and Teng, 2003). In knowledge context,
transfer success increased as the articulation of knowledge increased. As the transfer success
decrease, knowledge embedding seemed to increase. In relational context, transfer success
decreased as organizational distance between source and recipient increased, as well as physical,
knowledge, and norm distances. In activity context, transfer success increased as the number of
transfer activities increased. Moreover, in recipient context, transfer success increased as project
priority increased and recipient’s degree of learning culture increased. Franke and Shah pointed
that receiving assistance in a knowledge community would positively affect the flow of innovation of
products. Communication, cooperation, and encouragement were key factors that affected tacit
knowledge during project sharing (Franke and Shah, 2003). Such factors also include choice of
communication channels and open attitude of cooperation and trust. Lynn et al. proposed the
structure of an innovative community and pointed out that such community had positive effects on
creating new markets in the marketing industry (Lynn et al., 1996). Knowledge transfer is a
complex KM activity that integrates communication technologies with challenging social, cultural,
and organizational issues. Organizations realize the benefits of knowledge sharing and knowledge
transfer to competitive advantage and organizational performance (Wakefield, 2005).

In short, the knowledge community has offered different interaction chances for learning. The
computer network has opened up virtual communities, strengthened activity assistance, and
knowledge learning. These systems must handle the specificities of innovative design projects
characterized by evolving environments, specific contexts and dynamic knowledge and intensive
decision-making tasks. To sum up, we defined community of environment with critique and
introspection as 1) research culture of the team, 2) innovation thinking, 3) reliance and confidence,
4) communication channels, 5) interaction chances, 6) introspection thinking, 7) criticism discussion
and 8) knowledge scaffolding, eight characteristics of the knowledge community environment.

3. A framework for knowledge transfer in communities

This research took “Theory of Planned Behaviour”, TPB, as the construction to discuss
influence factors of knowledge community members’ knowledge transfer behaviour. We discussed
the theoretical foundation of knowledge community, as well as Theory of Planned Behaviour
related research applications.

3.1 Theory of planned behaviour

Theory of Planned Behaviour, TPB, a model that Ajzen proposed(Ajzen, 1985), pointed out the
behaviour intention was influenced by “Attitude toward the Behaviour,” AB, “Subjective Norms
Concerning the Behaviour,” SN, and “Perceived Behavioural Control,” PBC. According to this
theory, human action is guided by three kinds of beliefs. The first “behavioural beliefs” are those
about the likely outcomes of the behaviour and the evaluations of these outcomes. The second
“normative beliefs” are those about the normative expectations of others and motivation to comply
with these expectations. In addition, the third “control beliefs” are those about the presence of
factors that may facilitate or impede performance of the behaviour and the perceived power of
these factors. In their respective aggregates, behavioural beliefs produce a favourable or
unfavourable attitude toward the behaviour; normative beliefs result in perceived social pressure or
subjective norm; and control beliefs give rise to perceived behavioural control. In combination,
these three factors lead to the formation of a behavioural intention. Finally, intention is thus
assumed the immediate antecedent of behaviour. However, because many behaviours pose
difficulties of execution that may limit volitional control, it is useful to consider perceived behavioural
control in addition to intention (Ajzen, 1989). Figure 1 is a schematic representation of the theory.

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This research discussed the enterprise staffs using the knowledge community to carry on the
knowledge transfer and innovation behavior. In addition, this behavior was affected by community
member's manner that tallies with manner of using new technology. Therefore, we drew up the
TPB (theory of planned behavior) as the basic construction. Those included three independent
variables, "attitude toward the behavior", "subjective norm" and "perceived behavioral control" that
affect the dependent variable "knowledge transfer in the network knowledge community”, the
intention and the behavior.

Figure 1: Ajzen’s theory of planned behaviour ((Ajzen, 1985))

3.2 Conceptual framework for knowledge transfer

This paper began with a brief overview of knowledge transfer researches from the technology
transfer/innovation and knowledge community fields. Based on the TPB modelling of technology
using behaviour, a framework is described foe the knowledge transfer behaviour in knowledge
communities. The framework covers the factors affecting knowledge transfer in communities, the
knowledge transfer intention and behaviour, and the outcome of innovation in communities. In this
study, we defined knowledge community based upon TPB as support functions of collaboration,
cooperation, sharing, creation, stimulating learning motivation and the transfer from tacit knowledge
to explicit knowledge. We defined the outcomes of the knowledge community as KTAB, KTSN,
KTPBC, which were focus on knowledge transfer relating factors in community. Based upon the
previous research streams, Figure 2 presents a model of knowledge transfer and innovation
performance in knowledge communities that include some key factors affecting knowledge transfer.
In this overhead construction, there contained three main research items that are independent
item, “the network knowledge community,” and dependent items, “the knowledge transfer” and “the
innovation performance.” This Framework was established base upon the theory of planned
behavior (TPB). In addition, the network community item included four phases: community
knowledge transfer attitude toward behavior (KTAB), community knowledge transfer subjective
norm (KTSN), community knowledge transfer perspective behavior control (KTPBC) and
community environment with critique and introspection (ECI). The fourth item, , ECI, took dialectical
thoughts and critical interaction as the basis of knowledge transfer and knowledge innovation.
Therefore, we set ECI, an independent variable, as an important influence factor in community
platform. First, three items according to TPB variables AB, SN, PBC (cause), could affect the
dependent variable “knowledge transfer intention KTBI” (result). Dependent variables contained
knowledge transfer behavior intention (KTBI) and the knowledge transfer behavior (KTB). In the
theory of planned behavior, the behavior intention can affect and estimate the behavior
performance [Fig. 1]. The other dependent variable “innovation” considered the quantification
research and development as innovation achievements of the community members. Innovation
contains new product development, technical innovation and manufacture process innovation. The
relationships between dependent variables, knowledge transfer, and the innovation performance
were also represented in this framework.

4. Results

4.1 Basic data

The subjects of this research for in-depth interview and questionnaire survey were knowledge
communities of S-Inc., founded in 1984, are a world leader in providing semiconductor-
manufacturing services. S-Inc. Kaohsiung, the flagship company of the S Group, provides valuable

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expertise in product and process technology for the manufacturing of CSP (Chip Scale Package),
high frequency packages, MCM (Multi Chip Module), flip chip, and wafer bumping manufacturing.
S-Inc. drove strategic knowledge communities, and its knowledge communities (Best Known
Method, BKM) were operated according to company’s core ability and knowledge strategy. Thirty-
one BKMs were set up with average 10 to 25 members per community.

Figure 2: Framework of knowledge transfer in knowledge community based on TPB

As for questionnaire survey, 205 community members and leaders from S-Inc. knowledge
communities were invited to fill out a copy of our research questionnaire. There were 169
responses but only166 were effective, resulting in effective response rate 80.98%. This research
carried on the investigation in view of the participation situation of R&D unit's knowledge
community, which provided an environment for members to interact with each other, solve
problems, and construct knowledge hyper-system. The obtained data was shown as follows.

4.2 Path analysis

Multivariate multiple regressions (path analysis) were used to examine the direct and moderator
relationships between the response and predictor variables. An alpha level of 0.05 was used for all
test of significance. The result is presented in Figure 3. Multivariate Phillai’s F statistics were
significant for direct and moderator effects on knowledge transfer and innovation performance. In
this study, we found that knowledge transfer attitude toward behavior (KTAB) (β=0.20**),
knowledge transfer perceived behavioral control (KTPBC) (β=0.22**), and environment with critique
and introspection (ECI) (β=0.47**) had significantly positive effect on knowledge transfer behavioral
intention (KTBI), and its coefficient of determination and F value (R2=0.637, adjusted R2=0.631,
F=94.937***) were acceptable. Knowledge transfer subjective norm (KTSN) did not have significant
effect on KTBI.

Besides, knowledge transfer behavioral intention (KTBI) (β=0.342***) and KTPBC (β=0.50***) have
significantly positive effect on knowledge transfer behavior (KTB) and its coefficient of
determination and F value (R2=0.602, adjusted R2=0.598, F=123.499***) was acceptable. Also,
knowledge transfer behavior (KTB) (β=0.531***) had significantly positive effect on innovation
performance (IP) and its coefficient of determination and F value (R2=0.282, adjusted R2=0.278,
F=64.482***) were acceptable. Knowledge transfer behavioral intention (KTBI) did not have
significant effect on IP. The direct effects of independent variables of knowledge community are all
non-significant on innovation performance. The significance of regression coefficient shows that
only through the moderator variables, knowledge transfer behavioral intention and knowledge
transfer behavior; knowledge community can affect the innovation performance. Thus, it can be
seen that knowledge transfer is an important moderator of the process of innovation in knowledge
communities.

5. Conclusions
This research carried on the investigation in view of the participation situation of knowledge
community, which provided an environment for members to interact with each other, solve
problems, and construct knowledge hyper-system. This study identified factors that influence

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knowledge transfer in knowledge community. Moreover, this research provided enterprises guides
and best practices to appraise and implement network knowledge community through the
framework. Only if community has clear and definite goals and topics, community knowledge and
discussions can effectively transfer to innovation achievements through knowledge transfer
process. In this way, community could help the company in actual routines and the operation.
Otherwise, the knowledge community has the possibility to turn to discussion area or ballroom
chatting without actual performance. The conceptual framework indicated that an integrated model
that presented the basic categories of cognitions from TPB provided a good explanation of
knowledge transfer and innovation process in knowledge community. In this model, it appeared
that knowledge transfer facilitated by the knowledge community is the driving force behind
innovation. That was, without the moderator variables, knowledge transfer, knowledge community
could not affect the innovation efficiently. This demonstrated the value of knowledge transfer, and
also provided support for companies actively pursuing knowledge transfer program or environment
to improve innovation. The empirical results showed that, in knowledge community activities,
“knowledge transfer attitude toward behavior, KTAB”, “knowledge transfer perceived behavioral
control, KTPBC,” and “environment with critique and introspection, ECI” were very important factors
to influence knowledge transfer. KTPBC and KTBI (knowledge transfer behavior intention) both had
significant positive impacts on KTB. Moreover, KTB had significant positive impacts on innovation
performance. Therefore, in the management, leaders or managers must let the members
understand the advantages and the importance of knowledge transfer. They also need to establish
the members’ mutual recognition to the knowledge transfer, and provide enough free and
dialectical interactive space or activity to communities. Those strategies would stimulate knowledge
sharing and knowledge transfer activities effectively.

Figure 3: Path analysis result of this study

Knowledge community makes numerous contributions of knowledge transfer such as: knowledge
community provides space for not only knowledge sharing and interaction, but also for pooling
ideas (i.e. brainstorming) and problem solving. These activities, which integrate employee’s
performance evaluation and research innovation strategically, can enhance the quality of
knowledge created; that is, value creation. Knowledge community can stimulate new ideas in
cognition way and can provide approval in perceptual way in order to pull more and more
knowledge sharing and intention, and that can form a positive and effective cycle to grant
organization and members power of innovation. Enterprises also encourage employee to promote
quality and quantity of knowledge transfer and knowledge creation through formal and informal
methods. There will be growth not only in knowledge increasing but also in social capital increasing
that we said knowledge community had great contribution to knowledge transfer and innovation.

6. Future work
This study could also provide suggestions and references for enterprises to implicate and manage
knowledge community effectively. The practice experience of Taiwan advanced technology
companies would provide some new aspects of knowledge management for industry and future
research. It is expected that the various methods derived from the framework will enhance future

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researches of more quantitatively empirical survey studies. Case study including questionnaire
survey, in-depth interviews, and observation for auxiliary will be taken to examine this conceptual
framework. Take this research as the foundation; the future research may aim more widespread at
knowledge community of different areas of knowledge, different industrials, and different social
network, as well as the different knowledge community management.

References
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GREENWALD (Ed.) Attitude Structure and Function. Hillsdale NJ, Lawrence Erlbaum
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Argote, L. (1999) Organizational Learning Creating, Retaining and Transferring Knowledge,
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Berman, S. L., DOWN, J. & HILL, C. W. (2002) Tacit knowledge as a source of competitive
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Cummings, J. L. & TENG, B. S. (2003) Transferring R&D Knowledge: the Key Factors Affecting
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Kostova, T. (1999) Transnational Transfer of Strategic Organizational Practices: a Contextual
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Perspective. Journal of Information Technology, 15, 281-288.
Lynn, L. H., REDDY, N. M. & ARAM, J. D. (1996) Linking Technology and Institutions: the
Innovation Community Framework. Research Policy, 25, 91-106.
Nonaka, I. & KONNO, N. (1998) The Concept of 'Ba': Building a Foundation for Knowledge
Creation. California Management Review, 40, 1-15.
Nonaka, I. & TAKEUCHI, H. (1995) The Knowledge-Creating Company: How Japanese
Companies Create the Dynamic of Innovation? London, Oxford University Press.
Pan, S. L. & SCARBROUGH, H. (1998) A Socio-Technical View of Knowledge Sharing at Buckman
Laboratories. Journal of Knowledge Management, 2, 55-66.
Rulke, D. L., ZAHEER, S. & ANDERSON, M. H. (2000) Sources of Managers' Knowledge of
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TsaiI, W. (2000) Social capital, strategic relatedness and the formation of intraorganizational
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567
Knowledge Base Development in Organizations: Impact
on the Knowledge Transfer Capabilities; an Organization
Learning Perspective
Ananya Upadhyaya and S Krishna
QMIS Area, Indian Institute of Management Bangalore, India
[email protected]
[email protected]
Abstract: It has been well established in the literature that a firm’s competitive advantage lies in its ability to
create, assemble, integrate, exploit and transfer knowledge assets. A learning organization is one that is
skilled in creating, acquiring, transferring knowledge and modifying its behaviour to reflect new knowledge and
insights. One perspective of organizational learning is that it involves development of knowledge base in the
organization. Organizations can be viewed as systems that process a given set of inputs to outputs. How
effectively an organization does this is a function of long-term strategic choice, the transformation process and
the administrative structures in place, which in effect, are functions of the knowledge base available in the
organization. Organizations learn over a period of time and this leads to the knowledge base development, the
usefulness of which is determined by the relevance and the accessibility of the knowledge. Knowledge
transfer is a process through which knowledge gets shared and determines how knowledge flows from one
part to the other in an organization. The determinants of effective knowledge transfer are form (of knowledge
being transferred), intent (of the parties engaged in KT), culture (of the organization), trust (within the parties
engaged in KT) with transparency (of the KT process) and learning capacity (of the receiving unit). Effective
KT is fraught with several issues, the most common being that organizations do not know what they know
since technical, functional and market knowledge is being generated continuously in all parts of the
organization. This paper attempts to link the development of knowledge base to the process of knowledge
transfer, and argues that a well-developed and accessible knowledge base is an important factor in the
process of knowledge transfer.

Keywords: Knowledge base, knowledge base development; internal knowledge transfer; organization
learning.

1. Introduction
According to the knowledge-based perspective of the firm, the services rendered by tangible
resources depend on how they are combined and applied. (Nonaka & Takeuchi, 1995)This in turn
is a function of the firm’s know-how (i.e., knowledge). This knowledge is embedded in and
transmitted forward through multiple entities and processes including organization culture and
identity, routines, policies, systems, and documents, as well as individual employees (Grant 1996a,
1996b; Nelson and Winter 1982; Spender 1996a, 1996b). Since knowledge-based resources are
usually difficult to imitate and socially complex, the knowledge based view of the firm posits that
these knowledge assets may produce long-term sustainable competitive advantage. The ability to
integrate and apply specialized knowledge of organizational members is fundamental to a firm’s
ability to create and sustain competitive advantage (Grant, 1996). (Alavi & Leidner, 1999) In this
paper we proceed to examine how employees can be used as agents to transfer and share
knowledge within the boundary of the organization, and what impact it has on the cumulative
knowledge base and the knowledge outflow capabilities of an organization.

2. Literature review

2.1 Organization learning and knowledge management

With the ushering in of information and communication technologies, the competitive advantage of
any organization depends to a large extent on creating, assembling, exploiting, sharing and
applying the knowledge assets.(Alavi & Leidner, 1999) Organization learning is viewed as
prerequisite for survival, as organizations need to continually adapt themselves to the changing
environment (Lähteenmäki, Toivonen, Matilla, 2001). The ability of an organization to store
knowledge and to utilize it provides several benefits of buffering against turnover (Argote,
Beckman, & Epple, 1999), facilitating coordination (Argote, Beckman, & Epple, 1999), Innovation

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 Ananya Upadhyaya and S. Krishna

(Hargadon, Sutton, 1997; Messick & Mackie, 1989) and sometimes helps in rebuilding the
organization. (Campbell-Kelly, 1996). It has also been well established in literature that storing new
knowledge and using it are key components of organization learning. (Huber, 1991; Duncan &
Weiss, 1979; Casey, 1997) Organization learning is about how organizations effectively process,
interpret and respond to information within the intra and inter organizational context. (Easterby-
Smith, Araujo 1999) Organization learning as a discipline looks at learning and adaptation behavior
within an organization. (Shrivastava, 1983). Organizations can be viewed as learning systems, or
as knowledge systems in this context (Tsouaks, Mylonopouloas, 2004; Shrivastava, 1983).
Knowledge management and its various processes of knowledge creation, acquisition, sharing and
application use the theories of organization learning as the building base. (Thomas, Sussman,
Henderson, 2001)

The theories in organization learning range from defining the means by which organizations learn,
ie organizations as learning systems (Shrivastava, 1983), the notion of single loop vs. double loop
learning (Agryris, Schön 1978), from the tradeoff between exploitation and exploration (March,
1991) to knowledge acquisition and sharing as the primary means through which learning occurs
(Levitt & March, 1988; Huber, 1991). Organization learning from the perspective of social
dimension focuses on learning being constructed as a social process, political process or imbibed
within the culture of the organization. (Easterby-Smith, Araujo, 1999).

One of the perspectives in Organization learning is to view it as developing knowledge in

organizations of action outcome relationships (Shrivastava, 1983). In this context an organization is
defined by Duncan and Weiss (1978) as”.a group of Individuals who engage in coordinated
activities which transform directly or indirectly a set of inputs into output..”. This perspective of
organizations views it as a system, which transforms input to output. The effectiveness of such a
system is dependent on three factors, namely: 1) Long term strategic choice, 2) The process of
transformation, and 3) Administrative structure which support the processes. The first two factors
are based on knowledge held previously about the transformation process, which in turn is a
function of the knowledge base available with the organization (Shrivastava, 1983).

2.2 Knowledge base in an organisation

2.2.1 Repositories of kowledge in an organisation

The repositories of knowledge in an organisation are organisation routines and standard operating
procedures (Levitt & March, 1988; Walsh & Ungson, 1991; Starbuck, 1992); in the products and
processes, in technologies and equipments (Levitt & March, 1988; Walsh & Ungson, 1991); in its
culture and norms. (Levitt & March, 1988; Walsh & Ungson, 1991; Starbuck, 1992); in individual
employees (Walsh & Ungson, 1991; Starbuck, 1992) and in the physical structure of the workplace.
(Walsh & Ungson, 1991; Levitt & March 1988). Please refer to table 1 for details.
Table 1: Knowledge repository in the organisation
Levitt & March (1988) Walsh & Ungson (1991) Starbuck (1992)
Organization’s routine and Standard Standard operating procedures and Organization routines
operating procedures practices
Individual employees Individuals
Technologies and equipments Physical capital (h/w &
s/w)
Layout & structures Physical structure
Culture and norms Organization culture Culture
Product & Processes
Roles and organisational structure
It is assumed that in the context of an organization, between two units or departments all, but one
of the retention bins for knowledge would be the same. Since different departments would have
different individuals working for them, the knowledge held by these individuals would vary from one
unit to another in an organisation

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2.2.2 Individual knowledge base

Individuals are regarded as a key repository of organizational knowledge in organizational memory
discussion (Argotey, 1999) In an organization people translates their knowledge into routines, job
descriptions, strategies and culture. (Starbuck,1992). Literature has established the relationship
between high performance employees and the productivity of the organization (Argotey, Eppel,
Rao, Murphy, 1997; Engeström, 1990; Argotey, 1999). Individuals have their own perceptions and
beliefs of what has occurred in the organization, which is based on their experiences and
observation. The information about the perception is stored in their memory, and is reflected in their
belief structure, and their information processing capabilities (Walsh & Ungson, 1991)

2.3 Knowledge transfer in organizations

One of the attributes of the learning organization is its ability to transfer knowledge (Goh, 2002).
Knowledge transfer as defined by Argotey and Ingram (2000) is the process where one network
member is affected by the experience of another. The effects of knowledge transfer are measured
by changes in performance and/or knowledge of the recipient. (Inkpen & Tsang, 2005). It has been
established fairly well in the literature that the organizations that able to transfer knowledge
effectively are more productive than organizations with the inability to do so. (Almieda, 1999;
Argotey,Beckman, Epple, 1990; Baum & Ingram, 1998; Hansen, 2002; Kostova, 1999; Inkpen &
Tsang, 2005).There are different levels at which knowledge transfer in organization has been
studied, It varies form knowledge transfer across products or models of same products (Udyajiri &
Balakrishnana, 1993), between units of same organization (Argotey, Eppel, Rao, Murphy, 1997), in
relation to super ordinate relationship (Baum & Ingram , 1998), along with spillover factors
(Henderson & Cockburn 1996; Irwin and Klenow, 1994) (Argotey, 1999). Effective KT in
organizations is fraught with several issues. In an organizational context technical, market and
functional knowledge gets generated continuously in every unit of the organization. (Almieda,
Song, Grant, 2002). For an effective KT the following factors are important: form (of knowledge
being transferred), intent (of the parties engaged in KT), culture (of the organization), trust (within
the parties engaged in KT) with transparency (of the KT process) and learning capacity (of the
receiver) (Rolland & Chauvel, 2000)

2.3.1 Knowledge transfer across units/departments in an organization.

Knowledge transfer in an intra organizational context is beneficial and desirable, but it is fraught
with difficulties (Argotey, 1999). Knowledge transfer occurs in organizations when experience in
one unit affects another unit or department. Knowledge transfer explicitly occurs when a unit
communicates with another unit about a practice that improves performance. Knowledge transfer
can also occur implicitly without the recipient unit being able to articulate the knowledge it has
acquired. In general terms, knowledge can be transferred by moving a knowledge reservoir from
one unit to another or by modifying a knowledge reservoir at recipient site. Members can be moved
from one unit to another. Similarly, technology can be moved and routines can be transported from
one organization to another. The reservoirs at the recipient unit can also be modified through
communication and training.

2.3.2 Benefits of internal knowledge transfer in an organization

From the point of view of an organization, knowledge transfer among its different departments has
several benefits, from extension of firm’s distinct and valuable knowledge to the parts of the
organization that are globally distributed (Leonard-barton, 1995), creation of new knowledge by
aligning different perspectives. Isabella (1990) and Mcdonald (1995) opine that internal knowledge
transfer creates new knowledge and ideas by rearranging information already in use and by using
information that has been neglected. (Pawlowski & Robey, 2004). Any organization has huge
amount of knowledge which lies untapped, which could leverage the organization by providing
tremendous gains in speed to market products, higher customer satisfaction and increase in
organizational competence.(Odell & Grayson, 1998). Knowledge generated in the organization by
individuals and subunits is of limited value if it is not shared across the organization. (Schulz, 2000)

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 Ananya Upadhyaya and S. Krishna

2.3.3 Barriers to KT in intra organizational context

Several surveys have reported the key problem in organizations to be the inability to transfer
knowledge in the organizations. (Goh, 2002) Many factors may lead to problem in transferring
knowledge in knowledge transfer process between two different units, such as competition
between units, difference in context (Almieda & Kogut, 1999; Szulanski, 1999; Messick and
Mackie, 1989); internal stickiness which leads to ignorance of the knowledge in the organization
(Szulanski, 1999), absorptive capacity of the receiver (Cohen & Levinthal, 1990), lack of
relationship between the source and the recipient of knowledge, which translates to absence of
personal ties. (Odell & Grayson, 1998)

2.3.4 Knowledge transfer among different units in organizations using individuals

Although knowledge transfer in organizations involves transfer at the individual level, the problem
of knowledge transfer in organizations transcends the individual level to include transfer at higher
levels of analysis, such as the group, product line, department, or division. More research has
been done on moving members and moving tools or technology than on moving the other
knowledge reservoirs. Moving members is generally seen as a powerful mechanism for facilitating
knowledge transfer in organizations (Galbraith, 1990; Rothwell, 1978; Argotey, 1999) Individuals
are able to adapt and restructure knowledge so that it applies to new contexts (Allen, 1977).
Individuals are also able to transfer both tacit and explicit knowledge to new contexts (Berry &
Broadbent, 1984, 1987). A recent empirical study of the effect of moving members found that the
mobility of engineers between firms contributed to the transfer of knowledge about innovations in
the semiconductor industry (Almeida, Kogut, 1999). A recent study by Pawlowski and Robey [2004]
examine the role of IT professionals as facilitating knowledge transfer in intra organizational
context.

Knowledge Transfer between the employees in an organization improves the creativity and
innovativeness of the organizations. As early as 1968, Pelz and Andrews established that people
prefer people to documents for gaining information and knowledge. Mintzberg (1973) , Allen (1977)
and Cross (2001) found that even people with enough documentation and paper based sources of
information which were readily accessible , were more prone to seek information from their
colleagues than the resources at hand.(Levin & Cross, 2002).

3. Theoretical model

3.1 Social ties and effective Intra organization KT

The effect of weak and strong ties on the process of knowledge acquisition has been studied in
detail by social network researchers (Levin & Cross, 2002). The effectiveness of knowledge
exchanges is dependent on the ties between the sender and receiver, which are determined by the
intimacy of the relationship between them (Szulanksi, 1996). Social relations between the parties
involved in the process of knowledge transfer helps the exchange of knowledge. In this paper, no
distinction is made between weak versus strong ties. It is proposed that the presence of ties,
reflected in the form of social relationship between the parties involved in the process of knowledge
transfer has a positive impact on the process of knowledge transfer. In the case when an employee
is transferred from one unit to another, to transfer knowledge to the other unit, the effectiveness of
KT would be dependent on whether the employee has social ties with the people of the receiving
unit. The presence of social ties promotes trust and goodwill among the employees, which in turn
facilitates smooth knowledge transfer.
Proposition 1: Effective KT, through the process of employee transfer between units is
affected by the social ties between the people of the unit (recipient) and the employee
being transferred (sender).

3.2 Absorptive capacity and effective Intra organization KT

Absorptive capacity is defined as the ability of the firm to recognize new information, assimilating it
and applying it for business needs. At the individual level the notion of absorptive capacity remains
more or less the same. Cognitive and behavioral sciences studies focus on the notion of absorptive

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capacity at the individual level to be dependent of existence of prior knowledge to assimilate and
use new knowledge. (Cohen & Levinthal, 1990). In the present context, through employee transfer,
when knowledge is being transferred from one unit to the other, the effective KT would be a
function of the absorptive capacity is the recipients. How well is the knowledge transferred is
dependents upon how well the receivers are able to assimilate, interpret, acquire and apply the
newly gained knowledge.
Proposition 2: Effective KT, through the process of employee transfer between units is
affected by (dependent on) the absorptive capacity of the people of the unit (recipient).

3.3 Type of knowledge being transferred and effective Intra organization KT

The main categories of knowledge are tacit and explicit as explained in section on classification of
knowledge. Explicit knowledge by definition can be codified and easy to transfer from one part of
the organization to the other, since it is readily available in the form of documents. Nonaka and
Takeuchi (1995) define tacit knowledge as technical or cognitive. The technical tacit knowledge is
the know-how, and the essential crafts and skills for a particular work. The cognitive tacit
knowledge is related to the mental models and is dependent from person to person. In the context
of employee transfer to promote knowledge transfer, the type of knowledge being transferred plays
a critical role. Explicit knowledge, due to its very nature would transfer effortlessly. On the other
hand, Cognitive tacit knowledge, due to highly personal nature, would be the most difficult to
transfer, unless it is made explicit by the individual who carries it. The same is true for technical
tacit knowledge. To sum up, in the case of employee transfer to the unit for the purpose of effective
KT, is dependent on how well the employee articulates the knowledge being transferred, which is
again the function of the type of knowledge being transferred.
Proposition 3: Effective KT, through the process of employee transfer between units is
affected by the type of knowledge being transferred.

3.4 Timing of knowledge transfer and effective Intra organization KT

In an organization the timing of the process of knowledge transfer is of utmost importance. For
technology centric and complex projects, it is generally required that KT be done before the
commencement of the project. Some projects require KT to be done midway through, and for some
projects the process of KT should be there right throughout the life cycle of the project, especially if
the technology is new and there is no other source of getting access to the knowledge apart from
the transferred employee. Hence the type of the project and the timing of KT play a critical role in
determining the effectiveness of the knowledge being transferred.
Proposition 4: Effective KT, through the process of employee transfer between units is
affected by the timing of the knowledge transfer process, which depends on the type
of project being undertaken.

3.5 Previous experience and effective Intra organization KT

The previous experience of the transferred employee and of the recipient employees in the unit
with the process of KT using personnel transfer, to transfer knowledge, plays an important role.
The experience of the part of the transferred employee helps the employee to articulate the
knowledge in a much better manner, and the same is transferred effortlessly and effectively to the
recipients. Greater experience on the part of the employee also ensures that the positioning of the
employee in the organization generates value for the organization. On the other hand, if recipients
are also experienced with such an arrangement before, their absorptive capacity is increased, as
they are able to acquire and assimilate the new knowledge in a better manner.
Proposition 5: Effective KT, through the process of employee transfer between units is
affected by the previous experience of the employee being transferred and the
previous experience of the recipients.

3.6 Effective intra organization KT and the perceived increase in knowledge base
Through the process of employee transfer, to transfer knowledge across units in an organization,
the net effective value of the knowledge being held by the employees increase as a consequence

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of effective KT. In this scenario, the knowledge held by one individual is transferred to ‘n’
individuals, resulting in overall increase in the knowledge assets of the organization, as the
knowledge stock held by the individuals is getting increased. This implies that if the Intra
organization KT is effective there is perceived net increase in the knowledge base of the
organization.
Proposition 6: Effective KT, through the process of employee transfer between units
leads to the increase in the knowledge base of the organization, which is reflected
primarily in the knowledge being held by the employees.

3.7 Increase in knowledge base and the knowledge outflow from the organization
If there is increase in knowledge base of the organization, the organization is building its
knowledge assets (ie, it’s in the Exploration phase, March 1991). March (1991) introduced the
notion of exploration and exploitation in organizations. Exploration is linked with he search,
discovery, experimentation and innovation of new ideas. Exploitation refers to the selection,
execution and implementation of the resources, or ideas at hand. An organization with sufficient
knowledge assets will go about exploiting these assets for some immediate gains, whereas an
organization with limited knowledge assets or knowledge base will seek means to improve its stock
of knowledge, so that in future it can exploit these resources.(March, 1991) In the context of a
multinational corporation of which the given organization is a part, any subsidiary can engage in
knowledge transfer with peer subsidiary/ headquarters only if the subsidiary has built its knowledge
assets well. Knowledge outflows from a subsidiary are likely to be high when the subsidiary’s
knowledge stock is valuable (non-duplicative and relevant knowledge) to the rest of the MNC
(Gupta and Govindarajan, 2000). This implies that if the knowledge assets of an organization are
developed well, it could lead to knowledge outflows from the subsidiary to the rest of the MNC,
leveraging its position in the value chain of the parent organization. Knowledge flow in this context
is defined as the transfer of skills and technology between organization subunits (Gupta and
Govindarajan, 2000), or transfer of business practice (Szulanksi, 1996; Argote, Epple, Rao,
Murphy, 1997; Schulz, 2000)
Proposition 7: Increase in the knowledge base of the organization leads to the
increase in the knowledge outflow from the organization to peer organization in a
multinational company’s context.

4. The research model

Developing on these ideas the theoretical model is constructed as follows

Figure 1: The research model

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5. Conclusion
This paper has attempted to link the notion of personnel transfer to the development of knowledge
base in organization by enabling knowledge transfer in the intra organizational context. Employees
are considered to be an effective means to transfer knowledge within an organization. The
knowledge, which is resident with one employee, gets transferred to other employees, if the
transfer mechanism is effective, resulting in overall increase in the knowledge accumulated by the
organization. This is under the assumption that employees are primary knowledge assets of the
organization, and are recognized as knowledge repository in literature.

The developed knowledge base aids in the knowledge outflows from the organization in a
multinational company’s context, which promotes and leverages the organization up the value
chain of the MNC.

This paper presents a conceptual model of the process of intra organizational KT, and how it
impacts the knowledge base, which in turn impacts the knowledge outflow (transfer) capabilities of
the organization. Future work on this topic entails an in depth study to empirically determine the
relationship presented in the conceptual model.

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Educational Ontology and Knowledge Testing
Réka Vas
Corvinus University of Budapest, Hungary
[email protected]
Abstract: The Bologna declaration aims at providing solutions for the problems and challenges of European
Higher Education. One of its main goals is the introduction of a common framework of transparent and
comparable degrees that ensures the recognition of knowledge and qualifications of citizens all across the
European Union. This paper will discuss an ontology-based model that supports the creation of transparent
curricula content (Educational Ontology) and the promotion of reliable knowledge testing (Adaptive Knowledge
Testing System). Beside the description of the evolution of the Educational Ontology, which has been
developed within a research project by the Department of Information Systems, role of the ontology in
managing, mapping and sharing the knowledge of curricula will be discussed in details as well. The
Educational Ontology addresses establishing relation between the requirements of labour markets and the
content of curricula through competencies that can be acquired during a given training program. Another
critical aspect of this research concerns the measuring of knowledge. The second part of the paper will focus
on the possibilities of adaptive knowledge testing and describes how a suitably elaborated ontology model can
support adaptive testing of students by enabling a detailed exploration of missing knowledge and knowledge
areas.

Keywords: Knowledge representation, ontology, adaptive testing

1. Introduction
The Sorbonne Joint Declaration of 25th of May 1998 was the first one which proposed the creation
of the European area of higher education as a key way to promote citizens mobility and
employability and Continents overall development. The Bologna declaration (1999) acknowledged
the importance of these statements and initiated remarkable reforms of European Higher
Education, also recognizing its crucial role in social, economic and human growth of the Continent.
Beside the creation of the European Higher Education Area, the Bologna process aims at
ƒ Adapting easily readable and comparable degrees,
ƒ Adapting a system essentially based on two main cycles,
ƒ Establishing a system of credits,
ƒ Promoting mobility,
ƒ Promoting European co-operation in quality assurance and
ƒ Promoting the necessary European dimensions in higher education.
The goal of introducing a common framework of transparent and comparable degrees that ensures
the recognition of knowledge and qualifications of citizens all across the European Union was
highlighted again in the Berlin Communiqué (2003), which added a third cycle (doctoral cycle) to
the Bologna Process.
“Ministers encourage the member States to elaborate a framework of comparable and
compatible qualifications for their higher education systems, which should seek to
describe qualifications in terms of workload, level, learning outcomes, competences
and profile.”
The members of the Joint Quality Initiative aimed at developing descriptors for Bachelor’s and
Master’s that might be shared within Europe and be available for a variety of purposes, depending
on particular national, regional or institutional contexts and requirements. This was one of the first
initiatives, which provided support for facilitating the comparison of degrees. The launch of these
Dublin descriptors also indicates that competences should have a key role in providing transparent
and comparable curricula and qualifications.

Beside the description of the evolution of the Educational Ontology, its role in overcoming still
existing obstacles of access between cycles and its role in measuring knowledge in a reliable and
objective way will be also discussed in the paper. The European Higher Education Area is

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structured around three cycles where each level has the function of preparing the student for the
labour market, for further competence building and for active citizenship. Accordingly, the
demonstrated research aims at providing ontological relation between competencies acquired
during a training program and labour market requirements. Preparing the student for the labour
market and for further competence building also requires setting up ontological relation between
the content of curricula and competences. A further goal of the research is to provide support for
the adaptive knowledge testing of students with the help of the developed Educational Ontology.
The curricula of Business Informatics will be analysed in this research.

Keeping these goals in view the following questions should be analysed during the course of the
research:
ƒ How the model of the Educational Ontology should be build up?
ƒ How the knowledge of Business Informatics curricula should be structured and modelled?
ƒ How the Educational Ontology can support the construction of adaptive knowledge testing
system and its operation?
ƒ How the Educational Ontology and the Adaptive Testing System should be connected?
ƒ What aspects of ontology development may have effects on the development of the testing
system? Which ontology language should be chosen for knowledge representation?

2. Educational ontology
A challenge of modelling is that the scope of curricula taught in Business Informatics training
program is wide and curricula are substantively different in nature. For example the modelling of
Knowledge Management curriculum may require different approach, then the modelling of
Mathematics. Moreover it should be also taken into consideration that the structure and content of
a subject may be at least partly different in different institutions. Accordingly in the first cycle of
development the research has concentrated on defining the major classes of the ontology, pointing
out the role competences and concentrating on facilitating comparability.

2.1 Initial ontology model

Competences have played central role in the first version of the ontology model to enable grabbing
the common features of different curricula. In higher education, accreditation documents must
provide a list of goals of the given training program in the form of competencies. This means that
competencies and curricula of the training program must be aligned. Accordingly classes of
“Competence module” and “Curricula module” were formed and connected to each other with the
“belongs to” relation in the ontology to enable tracing of knowledge and competences possessed
by students. Modules represent standardized units (of curricula or competences) that facilitate the
comparison of curricula and competences of different institutions and universities. Competencies
also have to be aligned with labour market requirements. In this case groups of tasks that are
necessary to successfully carry out work duties and the required competencies must be aligned, so
in the ontology the class of “Group of tasks” is connected to the class of “Competence Module” with
the “required by” relation.

Curricula are modelled by defining their major parts that we call knowledge areas. The class of
“Knowledge Area” is further structured into elements that are the least knowledge elements;
assertions that are set up by assertions, elements and logical rules and logical rules, which are
divided into logical operational symbols and inference rules (like IF-THEN, THEN-IF). This part of
the conceptual model ensures the comparison of the curricula’s contents of qualifications and
provides the basis of testing system by enabling inferencing. Figure 1 depicts the initial ontology
model.

Creation of ontology and its content always has to be based on consensus and its easy use and
understanding also has to be ensured. Although the above described model provides a promising
approach for structuring the given domain and offers efficient help in comparing knowledge
covered by the curricula of different institutions by applying modules, the actual construction of the

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ontology – especially the modelling of knowledge areas – would expect enormous efforts from the
experts of the field, from the teachers. For that very reason the model requires modifications and
improvement, and its connection with adaptive testing system should be elaborated as well.

Figure 1: Initial ontology model

2.2 Improvement of the ontology model

Knowing the amount of work required to produce ontologies even for the simplest concepts, the
improvement of the ontology was focused on providing easily definable and applicable classes and
precise determination of relations, also keeping the goal of knowledge testing in view. This section
gives a description of all of the classes and the introduced changes too.

2.2.1 Scope of activities

The “Scope of Activities” class contains all of those professions, employments and activities that
can be successfully performed with acquisition of those competencies that are provided by the
training program.

2.2.2 Group of tasks / competence module

In the first version of the model the “Group of Tasks“ and the “Competence Module” class ensured
the connection between the scope of activities and knowledge areas acquired during the training.
Taking into account the goals of the research and the above-mentioned problems these classes
are too general. Instead the following elements were introduced in the model:
ƒ “Task” and “Competence” class
ƒ One scope of activities should be in direct “specified by” – “served by” relation with tasks. This
way the given scope of activities prescribes a number of concrete tasks and not a group of
tasks.
ƒ Each task should be in “requires” relation with competences.
This way not sets (competence modules, group of tasks), but their elements are connected to each
other. This solution also enables a facilitated execution of comparison and declaration of
differences between competence modules. At the same time the “Group of Tasks” and the
“Competence Module” classes should be kept in the model to enable the definition of the sets of
tasks and competences as well and ensure further ways of comparison.

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2.2.3 Curriculum module

In the first model “Knowledge Area” and the “Competence Module” has been connected through
the “Curriculum Module”. In the modified model knowledge areas and competences are connected
indirectly with the “requires” and “ensures” connection. (A competence requires the knowledge of a
given knowledge area and the good command of a knowledge area ensures the existence of
certain competence(s).)

The class of “Knowledge Area” is an intersection of the ontology, where the model can be divided
into two parts:
ƒ One part of the model describes the relation of knowledge areas and labour market
requirements with the help of the above-described elements.
ƒ The other part will depict the internal structure of knowledge areas.
Figure 2: Depicts the first part of the model in the following way:
ƒ Rectangles sign classes.
ƒ Arrows depict 0-N relations (so a competence may have several prerequisites, scope of
activities may specify more tasks at the same time and it is also possible that a competence
those not have any prerequisites).

Figure 2: Ontological relation of knowledge areas and scope of activities

2.2.4 Knowledge areas

In the former model knowledge areas have been divided into basic concepts and sub-knowledge-
areas, but the internal structure of knowledge areas must be refined to allow of effective ontology
construction and the efficient functioning of the adaptive knowledge testing system.

“Knowledge Area” is the superclass of the ontology, representing major parts of a given curriculum.
Each “Knowledge Area” may have several ”Sub-Knowledge-Areas”. Not only the internal relations,
but relations connecting different knowledge areas are also important regarding knowledge testing.
The “is part of” relation is still an important element of the model connecting knowledge areas and
sub-knowledge-areas in the model. At the same time a new relation has to be introduced, namely
the “requires knowledge of” relation. This relation will have an essential role in supporting adaptive
testing. If in the course of testing it is revealed that the student has severe deficiencies on a given
knowledge area, then it is possible to put questions on those areas that must be learnt in advance.

For the sake of testing all of those elements of knowledge areas are also listed in the ontology
about which questions could be put during testing. These objects are called “Knowledge Elements”
and they have the following major types: “Basic concepts”, “Theorems” and “Examples”.

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The internal structure of knowledge elements is not examined in details. For example we do not
conduct precise analysis on how different basic concepts are based on each other. Knowledge
elements are only examined from that point of providing support for the adaptive testing. The
introduction of this method has practical reasons, since an overall, comprehensive analysis of the
internal structure of knowledge elements is enormous and an almost unaccomplishable task.
Compared to the thorough analyses of these elements, the simple listing of elements is relatively
easy work. Moreover if test questions are connected to each knowledge element, then it also
enables the adequate functioning of the testing system.
Although, in order to precisely define the internal structure of knowledge areas relations that
represent the connection between different knowledge elements also must be described. The role
of “premise” and “conclusion” relations is to determine which basic concepts are used to declare a
given theorem and which basic concepts are formed by the declaration of a theorem. The “refers
to” relation determines connection between knowledge elements of the ontology. Namely, a basic
concept or theorem may refer to another basic concept or theorem and an example may refer to
any of the other two knowledge elements. The goal of introducing this relation is to enable making
connection between knowledge elements, where it is indispensable in ensuring understanding and
formation of clear ontology structure.

Applying the previously described marking system of Figure 2 the internal structure of knowledge
areas can be depicted in the following way (Figure 3.):

Figure 3: Internal structure of knowledge areas

2.2.5 Testbank
In order to provide adequate support by the educational ontology for the testing system several
theoretical foundations and conceptions must be laid down in this model.

One pillar of the testing system is the set of test questions. Main characteristics of test questions
should be the following:
ƒ A question must be connected to one or more Knowledge Elements or Knowledge Areas. On
the other hand a Knowledge Element or Knowledge Area may have more then one test
question. The Educational Ontology structures this way the Testbank.
ƒ All questions should be weighted according to their difficulty.
ƒ Test questions will be provided in the form of multiple-choice questions. So parts of the question
must be the following:
ƒ Question
ƒ Correct answer
ƒ False answers
Figure 4 shows the entire and final model of the Educational Ontology, also depicting how test
questions connect to the elements of the ontology. (Test questions are connected with dashed
lines to the ontology, indicating, that they don’t form a part of the ontology.)

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Figure 4: The model of educational ontology

3. Adaptive knowledge testing

Primarily, the ontology aims at capturing and modelling all knowledge, which is part of the curricula
of Business Informatics program. Besides, a suitably elaborated ontology model can support the
(adaptive) knowledge testing of students by enabling a detailed exploration of missing knowledge
and knowledge areas (KA). The ontology model is developed as a part of a research project, which
aims at introducing an interface, which can develop a customized qualification program, based on
the individual’s pervious qualifications, completed levels, corporate trainings and practical
experiences, in case of entering a certain educational level. Two main groups of input are needed
to build up a qualification program. On one hand the individual’s knowledge and abilities must be
measured, on the other hand a definition must be given about the prerequisites of the targeted
qualification, which depends on the quality assurance and the accreditation system of higher
education. After testing the individual’s knowledge, a customized supplementary training program
should be allocated. A corresponding adaptive test provides help to the individual, who draws on
this service. If the candidate passes the exercises and tests successfully, than the prerequisites for
the certain qualification are fulfilled, so the student may enrol to the targeted level. As an additional
benefit, some parts of this solution may be used for correcting the deficiencies of a certain
curriculum during the qualification, as an ad-hoc support of education. The model itself consists of
two main modules: the Test Module, which consists of the Educational Ontology, Testbank; and
Adaptive Examination System; and the e-Learning environment, which contains a Learning
Management System and a Learning Content Management System. The Educational Ontology
plays a key role in setting into operation the Test Module and also has an indirect influence on the
functioning of the whole learning environment.

The main principles of adaptive testing also have to be analyzed to enable the development of an
adequate testing system and its connection with the ontology. The main idea of adaptive testing is
that the test should tailor itself to the estimated ability level of test takers and take into account how
each test taker has answered previous questions. Accordingly the test taker always encounters
personally challenging questions in the test.

Alfred Binet (1905) worked out the first form of adaptive testing. In his intelligence test he aimed at
making a diagnosis of the individual candidate by the following simple strategy: The test items

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(questions) were ranked according to their difficulty. He would then start testing the candidate with
a set of questions targeted at the estimated level of candidate’s ability. If the candidate succeeded,
Binet continued to give successively harder questions till the candidate frequently failed and vice-
versa. With this strategy Binet could easily define or estimate the real ability level of the candidate.
Lord’s (1971) Flexilevel Testing Procedure, in which he applied adaptive techniques in test
evaluation, is also an important contribution to adaptive testing, just like its variants, such as
Hening’s Step Procedure or Lewis and Sheehan’s Testlets. All of these procedures is easy to
implement with computers, but Reckase (1974) was the first who worked out a methodology of
computer adaptive testing (CAT) (Linacre 2000).

The basic principles of computer adaptive testing are provided by Thiessen and Mislevy (1990):
ƒ Test can be taken anytime, no need of group-administered testing.
ƒ There are no identical tests, as every test is tailored to the needs and capabilities of the test-
taker.
ƒ Questions are presented on a computer screen.
ƒ After the answer is confirmed there is no chance to change it.
ƒ The examinee is not allowed to skip any of the questions.
ƒ The questioning process is fully and dynamically controlled.

3.1 Supporting knowledge testing

In the previous section it has been already introduced how test questions are connected to the
ontology and how the Educational Ontology structures Testbank. In this section possible ways of
applying the Educational Ontology in knowledge testing and other ways of use are discussed.

With the help of the developed ontology we can get answers very easily for several administrative
questions. On one hand, the applied structure ensures easy access to all of that information
(knowledge areas, competences) that is necessary for conducting a specific task. On the other
hand, if a candidate provides information about his knowledge, the system is able to define and list
all of those tasks and activities that the candidate is able to conduct. Moreover, the combination of
the above-mentioned two cases is also possible. If the candidate describes what kind of tasks he
wants to conduct (what scope of activities is that he/she wants to do) and the knowledge he/she
has, then based on the ontology model it can be laid down which competences he/she still has to
acquire.

Another important application of the ontology is supporting the exploration missing knowledge
areas. Primarily, the goal of examination must be described to be able to define those knowledge
areas that are necessary for the fulfilment of those tasks that are related to the defined goals.
These knowledge areas must be examined when looking for deficiencies. The tool of exploring
missing knowledge is the test. The proposed goal and the ontology determine the scope of test
questions in the exam. Based on the distribution of correct and incorrect answers on the structure
of the ontology an adequate figure can be drawn about the knowledge and deficiencies of the
candidate. In setting up such test the structure of the Educational Ontology and semantic relations
among knowledge elements provide efficient support.

3.1.1 Questions of implementation

Beside the challenge of developing an ontology model that suits all of the requirements arisen by
different curricula, selecting the most appropriate ontology language for formalization is also a
critical aspect of the project. The applied ontology language will also determine the usefulness of
the reasoning engine. The higher the expressiveness of the ontology language is, the lower will be
the number of questions that can be answered with the help of the reasoning engine (Corcho,
Gómez-Pérez 2000), (Gómez-Pérez, Corcho 2002). Finally selecting a proper ontology-
engineering tool, which is capable of handling even several thousands of concepts and applying
the required ontology language is also a critical decision of the project.

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4. Conclusions
In the current phase of the research curricula of the Business Informatics program are modelled
and uploaded to the Educational Ontology. In line with ontology engineering the adaptive testing
system is also under development. A detailed description of implementation is provided by
Borbásné Szabó (2006).

The primary goal of the adaptive knowledge testing system, which is supported by the Educational
Ontology, is to explore missing knowledge areas. At the same with the help of the ontology the
accumulation of acquired competences and knowledge can also be determined. These way
employers will be able to reinforce the position of student, trainee and employee when these
persons want to enter in the labour market, want to look for another job or continue their study.
In the future by improving the ontology and extending its content a common understanding of levels
of competences based on learning outcomes can be established and this way educational systems
can compare their positions. Qualifications of “higher” level embrace the competences of “lower”
levels. This suggests that there is a hierarchy between competences. Improving the model and
applying further relations can also model this hierarchy in the Educational Ontology.

References
Berlin Communiqué (2003) “Realising the European Higher Education Area” [online],
http://www.bologna-berlin2003.de/pdf/Communique1.pdf
Binet, A.(1905) “Méthodes nouvelles pour le diagnostic du niveau intellectual des anormaux”
Année psychol., Vol 11, pp.191-244.
Bologna Declaration (1999) “The Bologna Declaration of 19 June 1999” [online],
http://www.bologna-berlin2003.de/pdf/bologna_declaration.pdf
Borbásné Szabó (2006) “Educational Ontology for Transparency and Student Mobility between
Universities” in Proceedings of ITI 2006 (under progress)
Corcho, O., Gómez-Pérez, A. (2000) “Evaluating knowledge representation and reasoning
capabilities of ontology specification languages” in: Proceedings of the ECAI 2000
Workshop on Applications of Ontologies and Problem-Solving Methods, Berlin
Henning, G. (1987) “A guide to language testing” Cambridge, Mass.: Newbury House
Linacre, J. M. (2000): “Computer-adaptive testing: A methodology whose time has come”, in Chae,
S. - Kang, U. – Jeon, E. – Linacre, J. M. (eds.): Development of Computerized Middle
School Achievement Tests, MESA Research Memorandum No. 69., Komesa Press, Seoul,
South Korea
Gómez-Pérez, A., Corcho, O (2002) “Ontology Languages for the Semantic Web” IEEE Intelligent
Systems, Vol. 17, No. 1, pp. 54-60.
Sorbonne Joint Declaration (1998) “Joint declaration on harmonisation of the architecture of the
European higher education system” [online],
http://www.aic.lv/rec/Eng/new_d_en/bologna/sorbon.htm
Reckase, M.D. (1974) “An interactive computer program for tailored testing based on the one
parameter logistic model”, Behaviour Research Methods and Instrumentation 6(2): 208-
212
Thissen,D., Mislevy,R.J. (1990). “Testing Algorithms” in: Wainer, H. Computerized Adaptive
Testing, A Primer. Lawrence Erlbaum Associates, Publishers, New Jersey, pp. 103-135.

584
The Impact on Intellectual Capital of Organisational
Improvement
George White1 and Sandra Begley2
1
Mi-2 Limited, Loughborough, UK
2
Staffordshire University, Stafford, UK
[email protected]
[email protected]
Abstract: Current research highlights the benefits in harmonizing Intellectual Capital (IC) indicators with other
organisational management models, allowing comparison across organisations to facilitate a common
understanding. The literature does not provide enough evidence of this harmonisation and many IC metrics
are still at the experimental stage. The objective of this paper is to demonstrate a model for measuring
Intellectual Capital that considers how process management, continuous improvement and Balance Scorecard
development can lead to an increase in Intellectual capital. An ethnographic case study methodology is
presented, adopting multiple perspectives that were applied within the Information Systems department
(EWIS) of one of the UK’s leading energy suppliers who are the largest investor owned utility in the world.
The UK Utilities sector is one of the most competitive in the world and increasing liberalisation of a global
energy market will ensure that business innovation will dominate the sector. This paper describes a
departmental improvement initiative introducing continuous improvement based upon the EFQM Business
Excellence Model (BEM) and the Balanced Scorecard to deliver explicit measurable value through
performance improvement initiatives that typically require the area under study to comprehend their
capabilities as a means of creating new value. The paper explores how development of these intangible IS
capabilities, part of what is known as Intellectual Capital, will help EWIS improve departmental performance
and contribute to a sustainable competitive advantage for Eon UK Energy Wholesale. This study highlighted
four key implications for practice and further research: The importance of the Intellectual Capital statement as
a benchmark in upgrading organisational capabilities; The importance of developing competencies at the
individual level (Human Capital); That effective teams are built, not simply though individual gains but also
through interactions amongst specialists (Relationship Capital); The importance of involving the owners of any
measurement/management system in its development.

Keywords: Process management, intellectual capital, balanced scorecard, organisational

improvement, continuous improvement.

1. Introduction
One of three necessary factors for executing IT successfully is a highly functional, performance
orientated IS/IT organisation (Field & Stoddard, 2004) with operational excellence the key to
efficiency management (van Someren & Bongartz, 2005). Investors in Excellence (IiE) is a
structured programme based upon the EFQM Business Excellence Model (BEM) that analyses all
areas of an organisations performance (British Quality Foundation, 2003) and along with the
Balanced Scorecard (BS) have been widely used in recent years to drive organisational
improvement (Andersen et al, 2000).

A key element of the knowledge economy is a huge investment in human capital and information
technology (Edvinsson & Malone 1997) but Intellectual Capital (IC) often gets little consideration,
as the return on investment (ROI) is unclear. Using the BS to measure IC can demonstrate its
increasing value better than traditional accounting where it usually appears only as a cost,
however, if a management team aren’t comfortable with measures for IC they won’t build them into
the Balanced Scorecard (BS); conversely if consultants design measures that management don’t
understand then they won’t be owned or acted upon. There are clearly benefits in harmonizing IC
indicators across organisational management models such as the BS and BEM (Cobbold & Lawrie,
2002; Claessen, 2004).

The objective of this paper is to demonstrate how process management, continuous improvement
and a Balance Scorecard development within an IS department of the largest investor owned utility
in the world (Eon) can not only provide a measurement system for IC but also lead to its increase.
Eon UK Energy Wholesale IS are using business improvement to develop IS capabilities and the

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BS to measure these capabilities, part of what is known as ‘Intellectual Capital’ with the objective of
delivering a sustainable competitive advantage for Eon UK Energy Wholesale.

2. Background
Eon UK are organised into Strategic Business Units (SBU), one of which, Energy Wholesale are
responsible for the generation of power (from a portfolio of over 30 power stations) and trading of
power and gas to meet the needs of their 8 million domestic, commercial and industrial customers.
Several areas of Eon UK are independently working towards accreditation under the IiE
programme including the IS department of Energy Wholesale (EWIS).

A new Head of EWIS has helped deliver improvements in Leadership, Staff Development and
Performance and Strategic IS Planning (SISP) which in common with many organisations
undertaking SISP have also improved alignment between the Business and EWIS (Earl, 1993).
EWIS aspire towards a ‘customer intimacy’ value proposition that is typically based upon quality
customer relationships, exceptional service and exceptional solutions (Kaplan & Norton, 2000) to
elevate them as a ‘trusted brand’ to the rest of Energy Wholesale.

These changes in organisation along with centralisation of IT services and a Sarbanes Oxley
compliance project have all underlined process weaknesses within EWIS and despite significant
training in formal methods such as ITIL, SUMMIT-Ascendant and PRINCE2 these have not been
consistently adopted.

Proactive management and continuous improvement of critical processes in combination with a

measurement and management system based around a Balanced Scorecard can provide a
tangible increase in departmental performance, customer satisfaction and business value (Kaplan
& Norton, 1996; Olve et al, 1999), whilst intangible benefits are expected from the development of
core competences leading to increases in Intellectual Capital (IC) within EWIS.

In this section the theoretical underpinning is presented in relation to process improvement, the
Balanced Scorecard (BS), the Business Excellence Model (BEM) and Intellectual Capital (IC).

2.1 Process improvement

Processes, skills and structural assets make up the dynamic capabilities that economists think of
as Intellectual Capital capabilities that are underpinned by knowledge (Keen, 1997; Marr et al,
2001). In knowledge economy the value of a firm is influenced by the extent to which it can
leverage its human resources and business process improvement is a key factor required to
maximise performance and provide solutions that allow the business to achieve competitive
advantage (Malone, 2003).

Total Quality Management (TQM) is a strategy to achieve the highest process quality at the lowest
possible cost by focusing on customer needs via continual improvement and assessment (Sumner,
1993). Despite setbacks for continuous improvement initiatives like TQM some of the tools remain
as popular as ever and the EFQM Excellence model (BEM) is one such framework designed to
help organisations achieve business excellence through continuous improvement in the
management and use of best practice. Whilst improving processes is a central focus of the BEM it
is important to recognise that improvement does not automatically lead to value (Keen, 1997) and
therefore a necessary precursor to continuous improvement is to assess processes and select
those that provide the greatest opportunity to generate value

Within the BEM (Figure 1), there are 5 criteria which cover “Enablers” or “What an organisation
does” whilst the other 4 cover “Results” or “What the organisation has achieved”. The Investors in
Excellence program relies upon self-assessment and improvement planning to measure progress
but the benefits of Business Excellence are usually only seen in the long term once cultural
changes are realised.

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E n ab lers R esults

P eo p le
P eo p le
R esu lts

Po licy K ey
C u sto m er
L ead ersh ip an d Pro cesses P erfo rm an ce
R esu lts
S trategy R esu lts

Partnerships
S o ciety
and
R esources R esu lts

Innovation and L earning

Figure 1: EFQM excellence model (BEM) showing areas affected by this study
Whilst process improvement is a critical part of the BEM its non-prescriptive nature gives little to
guide the actual process by which improvements are made in contrast to tools such as the
Capability Maturity Model® Integration (CMMI®) which is a process improvement approach
(Carnegie Mellon Software Engineering Institute, 2005) full of guidelines to help organisations
improve all aspects of their systems and software engineering (Curtis et al, 1997).

2.2 The balanced scorecard and the excellence model (BEM)

The Balanced Scorecard (BS) is now an established management tool that has been described as
a measurement system, strategic management system and communication tool complementing
traditional financial indicators with measures of customer performance, internal process
performance and employee learning and growth (Kaplan & Norton, 1996; Olve et al, 1999). A
weakness of traditional measurement is that it is meaningless to the large part of the organisation
that can’t relate their work to financial measures but one of the BS’s major strengths is its ability to
link performance measures with business unit strategy, such that employees can clearly see
strategic aspects of their day-to-day work (Olve et al, 1999).

Since its introduction a number of changes have been made to the physical design, application and
processes used to implement the BS that have enhanced its use as a strategic tool (Andersen et
al, 2004). Two of the most significant and valuable are the Strategy Map and The Destination
Statement.

Strategy maps show the cause and effect relationships that allow employees to see how their jobs
connect to the overall objectives of the organisation and from a larger perspective how it converts
its resources including intangibles such as employee knowledge into tangible outcomes. The
Destination Statement was originally created as the end of the design process as a target for future
performance but subsequently became the initial activity as the process was reversed.

Wongrassamee, et al (2003) in their comparison of the BS with the BEM described both methods
lack of target setting as a weakness but the scorecards destination statement addresses this and
enhances its utility as an effective tool for strategic management control. They suggest that both
have been developed from similar concepts (containing multiple factors focused on specific areas
and requiring feedback after assessment) but that whilst the BEM is broader the BS has greater
flexibility particularly when applied to sub organisational units.

Effective process improvement needs a clear linkage with strategy and the BS can close the divide
between TQM and strategic control (Andersen et al, 2004) by establishing a target (the destination
statement); uncovering strategic objectives that will help reach the target (the strategy map) and
establishing a balance of measures to track progress towards the target.

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2.3 Intellectual capital (IC) and the balanced scorecard (BS)

Although the importance of knowledge, competence, capabilities, culture and relationships is clear
there still exists no commonly agreed definition of IC (Marr & Chatzel, 2004).

For the purposes of this study a working definition of ‘Intellectual Capital’ was used
The set of intangible knowledge assets of an organisation which can be subdivided
into Human Capital (Employee attitude, Employee capabilities, management
experience and innovativeness), Structural Capital (hardware, software, processes,
intellectual property, management style, organisational structure) and Relationship
Capital (Customer relationships, supplier relationships, stakeholder relationships and
image).

Many tools have attempted to measure IC such as the Skandia’s Navigator and the IC-Audit model
(developed by Annie Brooking) both of which attempt to represent IC in financial terms but require
a considerable leap of faith from qualitative assessment to financial valuation (Marr et al, 2001).
The IC-Index developed by Johan and Goran Roos (in Marr et al 2001) combines 6 elements of IC:
Competence, Attitude and Intellectual Property, Relationships, Organisation and Renewal and
Development into a single Indicator whilst Stewart (1997) describes the ‘Calculated Intangible
Value’ (CIV) formula and proposes his ‘Intellectual Capital Navigator’ as a measurement tool. Marr
et al, (2001) incorporate ideas from a wide range of other measurement tools (including those
above) into a broader framework of organizational knowledge with their Knowledge Assets Map.
Whilst Wu (2005) suggests the BS as a tool to manage and measure IC others suggest the
following (see Table 1 below).
Table 1: Comparisons of the balanced scorecard and intellectual capital
Theme Key Concept
Strategy Strategy is central to both but whilst the BS is based around competitive strategy as
a vision of future profitability and market position (Cobbold & Lawrie, 2002) IC
considers competency based strategy to describe the desired future identity
(Mouritsen et al, 2005)
Value Chain v BS describes the firm as a value chain whilst IC sees it as a network of knowledge
Value Net of resources and competencies – a value net (Mouritsen et al, 2005).
Accounting Both are supplements to traditional accounting (Olve et al, 1999)
Cause and Both use ‘non financial indicators’ to supplement financial indicators however the
effect BS is one dimensional (bottom of scorecard up) whilst IC indicators are loosely
coupled so that cause and effect is rarely evident (Mouritsen et al, 2005).
IC represents capabilities that need to be grown to establish or maintain competitive advantage
and Knowledge Management is one way at least to increase IC particularly those elements that
correspond to the non-financial perspectives of the BS (Olve et al, 1999; Marr et al, 2001).

3. Research design and techniques adopted.

An ethnographic case study methodology, adopting multiple perspectives was applied within EWIS;
an appropriate approach that enables the gathering of qualitative data in the work context. The
model adopted for the study, to demonstrate how process management, continuous improvement
and Balance Scorecard development can lead to an increase in Intellectual capital is shown in
figure 2.

Semi-structured interviews were used to establish best practice in TQM from other areas of Eon
and also to collect the customers’ view of: their interface to IS, experiences of IS project delivery
and value added by IS to the business. The interviews identified many problems with the service
provided by EWIS to its customers whilst brainstorming sessions and facilitated workshops
provided an opportunity for both EWIS management and staff to surface their own issues. These
sessions proved to be effective in increasing the involvement of all EWIS staff in the improvement
initiative.

Issues from all sources were collected into a single list and grouped into 12 improvement areas.
These groupings were reviewed and endorsed by the Head of IS who determined that, given the

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 George White and Sandra Begley

high level of activity within the IS group, two would be selected to pilot the improvement process.
All 12 items were presented to the management team who independently ranked the two they
believed would provide the most value to Eon UK. Responses are shown in Table 2 below.
Define 'Straw Collect EWIS Develop
Interview
Man' Employeee Balanced
Customers
processes Issues Scorecard

Customer Employee
Issues Issues

Review
Process Measurement &
Models with Issues
Issues Management Issues
Senior Staff

Refined Models Potential Initiatives

Process Process Select Strategy

Framework Value Pilot Initiatives Map

Continuous Balanced
Process
Improvement Scorecard
Changes
Activity

Figure 2: The model adopted for the study.

Table 2: Scores for improvement initiatives
1= Improve the processing of work requests 4 points
1= Improve effectiveness of testing process 4 points
3 Improve effectiveness of early project stages 3 points
4= Reduce time to get change into SIT 2 points
4= Improve project planning 2 points
4= Improve integration of Strategy and Architecture 2 points
7 Improve project monitoring and control 1 point
The other items received no points.
A team was established to champion the ‘Improve the processing of work requests’ initiatives
comprising of representatives from all areas of EWIS and a key business representative. It was
sponsored by a member of the EWIS management team and led by a newly promoted project
manager.

A primary challenge in completing this work was to demonstrate a link between the TQM elements
of the EFQM model and the strategic focus of the BS to generate a shift in managerial thinking
within EWIS. A secondary challenge was ensuring ownership for the improvements within the
EWIS department to facilitate their ultimate implementation. Therefore, a clear Terms of Reference
(ToR) was required to establish focus and manage expectations within the EWIS management
team.

4. Discussion and findings

This discussion and presentation of the findings focuses on the core elements of the processes
applied: the framework and establishing best practice; the strategy map; the Balanced Scorecard
and the resulting IC Footprint, with a sample of the Intellectual Capital statements and measures
identified. These measures and their impacts provide an indication of the importance of the
Intellectual Capital statement as a benchmark in upgrading organisational capabilities.

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4.1 Process framework and establishing best practice

Corporate Develop
Guidance Architecture
Strategy (AR)

Architecture
Develop IS
Business Plan IS Business Plan
(ISP)

Application Review Business

Roadmaps Available Resource
Plan (BP)
Develop
Business Plans
Application
Strategy (AS) Manage Resource
(RM) Approved Budget

Allocated Resource Prioritise IS

Projects (PP)

Review IS Programme Manage Programme

Programme (RP) Status Programme (PM) of work

Maintenance
Request

Operate Systems
(OP)

Ad-hoc Requests
Faults
for Work

Figure 3 'Straw Man' of EWIS Level 1 processes

The initial stage of the study involved establishing Eon’s EFQM best practice and a Process
Framework for EWIS starting with mapping of processes at level 1 (Figure 3) and level 2. This
mapping provided both a foundation for process improvements and increased engagement within
the management team as initial models were discussed, refined and errors such as missing quality
criteria, inconsistent naming of artefacts etc were resolved. During this activity the high number of
issues generated underlines the lack of process understanding across EWIS

Early work to establish Eons EFQM best practice had provided many key learning points for the
process improvement:
ƒ Improvement teams needed a Terms of Reference (ToR) and should write their own
ƒ The risk of ‘Working group fatigue’ by trying to do too much simultaneously
ƒ The need for a process for ‘process improvement’ – incorporated in the process framework
ƒ Benefits take time to be delivered
ƒ KPI’s are important to measure and monitor improvements
ƒ Communication of benefits delivered is important to maintain enthusiasm.
These factors led to a decision that a rigorous TQM approach of continuous process improvement
supported by dynamic feedback of achievements would be taken for the initiatives to deliver real
value. This approach was consistent with the most successful of the Improvement Teams visited.

590
 George White and Sandra Begley

4.2 Strategy map – cause and effect

In building the BS it was decided to adopt the four perspectives originally suggested by Kaplan and
Norton (1996) as the management team used EWIS’s strategic business plan to identify, prioritise
and select key objectives that could be linked into cause and effect relationships. Early attempts
were unable to generate a shared vision of how the IS Strategy would change IS and so attempts
to develop the Destination Statement were abandoned. Early attempts also resulted in an
imbalance of objectives particularly in the Customer and Internal Process areas but additional
iterations resolved this so that they could be drawn along with their linkages into a Strategy map
Perspective

Deliver a
Financial

M eet special M eet budget

revenue budget +/- balanced
w ithin +/- 5%
5% investm ent
Customer Perspective

D eliver
Increase Enable business applications built for
system s to deliver benefit scalability,
reliability m aintenance &
enhancem ent

Increase System ise

business business
support processes

Deploy
resource
Internal Process

R eact prom ptly Consolidation flexibly

Perspective

M aintain
system s
proactively
M aintain
Refresh legacy
headcount
technologies
Learning and Growth

D evelop
Understand appropriate
Perspective

business standards
processes

Increase
em ployee
capability

(
Figure 4).

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Perspective Deliver a
Financial
M eet special M eet budget
revenue budget +/- balanced
w ithin +/- 5%
5% investm ent
Customer Perspective

D eliver
Increase Enable business applications built for
system s to deliver benefit scalability,
reliability m aintenance &
enhancem ent

Increase System ise

business business
support processes

Deploy
resource
Internal Process

R eact prom ptly Consolidation flexibly

Perspective

M aintain
system s
proactively
M aintain
Refresh legacy
headcount
technologies
Learning and Growth

D evelop
Understand appropriate
Perspective

business standards
processes

Increase
em ployee
capability

Figure 4: EWIS strategy map showing causal linkages

Development of the Balanced Scorecard must directly involve those who will make use of the
measures to manage the business area therefore having produced the strategy map it was
presented back to the management team as a precursor to their selection of scorecard measures.
This proved sufficient to re-enforce ownership of the scorecard within the management team and
allowable for informed discussion during measure selection.

Working upwards from the Learning and Growth perspective each objective on the strategy map
was considered to identify potential measures. In some cases an obvious metric did not present
itself and although the team wanted a resilient, lasting set of measures they sometimes had to
accept a proxy that could be refined later (Blosch, 2005)

As well as a balance across the four perspectives the selected metrics include both short (increase
IS support) and long-term measures (benefits reported), external (customer satisfaction) and
internal (headcount), performance drivers (professional qualifications) and outcomes (quality of
implementation). Wherever possible the measures also involve comparison (Olve et al 1999) by
expressing scores as percentages. Each Improvement team would also provide a related measure
for the scorecard maintaining the linkage between the improvement and scorecard activities and
increasing awareness of both within EWIS.

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 George White and Sandra Begley

Before

After 8

14
Figure 5:Before and after comparison of the EWIS Balanced scorecard
The discussion has shown how organisational improvement needs dynamic measurement and how
development of such a system can improve alignment between strategic, delivery and operational
areas. It also proves that whilst a target is more than useful for an organisation, absence need not
be a barrier to development of the Balanced Scorecard. The work highlights that the scorecard as
a mechanism can not only validate the Organisations Strategy but also ensure that it is relevant
and understood by those charged with its execution. The Head of IS used a Gartner model
(Blosch, 2005) to score the original scorecard prior to the study and the new scorecard post study
and the increase from 8 to 14 is evidence of his increased confidence in its communication
potential (Figure 5).

4.3 Measuring intellectual capital statements at EWIS

The literature search has provided no harmonized mechanism for measuring IC. Rather than
combining individual elements to create an arbitrary consolidated score (Claessen, 2004) the
authors believe that it is their change over time that best illustrates growth. This section explores
the combined effect of the improvement initiatives and discusses their effect on Intellectual Capital
within EWIS. The working definition of IC used in this study is the basis for measurement and for
each element we have considered whether a change will result from this project as indicated in the
EWIS Intellectual Capital Footprint (figure 6).

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M anagem ent
Experience
4 O rganisation
4 Structure
Em ployee
Capability
5
+ +

5
5

Hardw are
+ Process
Capability

Softw are Process

M aturity
+

5
4

+
+ Custom er
Im age
+ Relationships
5
4

+
Stakeholder 5 5
Supplier
Relationships Relationships

Figure 6: EWIS intellectual capital footprint

A sample of the IC measures (see appendix A for the measures utilised during the project) their
rating and impact of the study is presented in table 3.
Table 3:Intellectual capital statement (sample of IC measures)
IC Measure IC Statement/Current Rating Impact
Employee Eon as an organisation and the EWIS team are Employee involvement in organisational
Capabilities active in mentoring and team building through a improvement contributes towards an increase in
custom development programme. employee capabilities - Human Capital
Rating: Level 4 - Managed
Management EWIS have responsibility for the strategic The BS will improve strategic measurement and
Experience management of EW’s information resources. management increasing Human, Structural and
Rating: Level 3 - IS/ICT Strategic Management Relationship Capital.

Hardware EWIS use a quantitative acquisition process Reviews of the MIS infrastructure have identified
supported by best practice through liaison with the need for a dedicated test environment.
procurement and IT colleagues. Infrastructure improvements increase Structural
Rating: Level 4 – Quantitative Capital.
IC Measure IC Statement/Current Rating Impact
Process Processes are defined primarily at EWIS level A metric from each improvement initiative will lead
Maturity (although are often customised for individual to more quantitative management of processes.
projects) This along with the process improvements
Rating: Level 3 – Defined themselves will increase Structural Capital.
Communication of progress will increase
Relationship Capital
Supplier The primary supplier relationship for EWIS is to Analysis during the project has identified many
Relationships Eon’s IT Services unit. Basic service management support issues to be addressed by the Operations
processes are established and either formally and Implementation team that over the long term
documented in the process of being documented. will result in an improvement in Human, Structural
Although some SLA’s are available formal reviews and Relationship Capital.
are immature.
Rating: Level 3 - Defined
Stakeholder Key stakeholder relationships are represented Involvement in the improvement initiatives will
Relationships through the Business Change Managers (BCM), increase Human Capital within the business and
whose role is well understood, documented and Relationship Capital for the business and EWIS
controlled.
Rating: Level 4 – Managed.

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Effective process improvement needs a clear linkage with strategy and the BS can close the divide
between TQM and strategic control (Andersen et al, 2004) by establishing a target (the destination
statement); uncovering strategic objectives that will help reach the target (the strategy map) and
establishing a balance of measures to track progress towards the target. Organisational
improvements have provided tangible benefits to EWIS, and the BS not only measures EWIS’s
strategic progress but also communicates progress to the business and shows individuals how
their daily work helps realise IS Strategy. A more capable, enlightened workforce with better tools
is the foundation that will allow Eon to innovate in a fiercely competitive global market.

5. Conclusion and future work

This study has shown how a number of separate organisational improvement initiatives have lead
to an increase in Intellectual Capital for an IS department of a global utility. Although conceived as
separate activities there has, in practice, been a high level of interdependency as process
management issues have influenced the selection of continuous improvement initiatives, which
have appeared on the Balanced Scorecard, a pattern repeated many times. This study
complements a small area of literature that deals with the Balanced Scorecard as a mechanism for
measuring intellectual Capital and shows how a sub-set of the measures within non-financial
perspectives of the scorecard provide indicators for Human, Structural and Relationship Capital. It
has demonstrated that the Balanced Scorecard as a measurement, management and
communication system for organisational strategy can also be considered alongside other
measurement models for IC.
Organisational Improvement requires a medium to communicate results and whilst the Balanced
Scorecard can provide such a medium by engaging management and staff in the process for
developing the scorecard it has also led to increases in employees understanding of the strategy
and how they can contribute to its delivery. Along with increased understanding members of EWIS
have developed new knowledge and capabilities (Human Capital), identified and improved
processes (Structural Capital) and provided an effective medium to communicate the value of IS
(Relationship Capital). A related area of study leading from this project is the identification of those
elements of IC that relate directly to individuals within an organisation or team, mapping of the
cause and effect relationships between individual items and development of a measurement
framework to manage and report the growth of, what constitutes, basic foundations upon which all
higher levels of organisational IC are built.

6. Acknowledgements
The authors would like to thank Jorg Koletzki and his EWIS team for their support and assistance
in this project and their appreciation of the value to be gained from the measurement of intangibles.

References
Andersen, H. Lawrie, G. & Shulver, M. (2000) “The Balanced Scorecard vs. the EFQM Business
Excellence Model” 2GC Working Paper available World Wide Web URL:
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Andersen, H. Lawrie, G. & Savic, N. (2004) “Effective quality management through third-generation
balanced scorecard” International Journal of Productivity and Performance Management
2004 Vol. 53 No 7 pp634-645
Blosch, M. (2005) “Upgrading the IS Scorecard” Presentation from Gartner CIO Academy,
September 2005 Oxford
British Quality Foundation (2003) “The Impact of Business Excellence on Financial Performance”
British Quality Foundation White Paper available World Wide Web URL:
http://www.cforc.org/measuringexcellence/BQF_busex_finance_perf.pdf (Accessed 2nd
September 2005)
Carnegie Mellon Software Engineering Institute (2005) [Online] “What is CMMI ® ?” available World
Wide Web URL: http://www.sei.cmu.edu/cmmi/general/general.html (Accessed 7th October
2005)

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Claessen, E. (2004) “The PIP Project (Putting IC into Practice): Harmonising the Reporting of
Intangibles to Improve SME Performance in the IT Sector” proceedings of the 5th ECKM
2004
Cobbold, I. & Lawrie, G. (2002) “The development of the balanced scorecard as a strategic
management tool” Proceedings of the 3rd International Conference on Performance
Measurement and Management (PMA 2002) Boston, MA, July
Curtis, B. Hefley, W, Miller, S. & Konrad, M (1997) “Developing Organisational Competence” IEEE
Computer March 1997 pp122-124
Earl, M.J. (1993) “Experiences in Strategic Information Systems Planning” MIS Quarterly, March
1993, pp1-23
Edvinsson, L. & Malone, M (1997) Intellectual Capital Harper Collins, ISBN 0-887-30841-4
Field, C.S & Stoddard, D.B (2004) “Getting IT Right” Harvard Business Review February 2004
pp72-79
Kaplan, R.S. & Norton, D.P. (1996) The Balanced Scorecard Harvard Business School Press 1996
ISBN 0-8758-4651-3
Kaplan, R.S. & Norton, D.P. (2000) “Having Trouble with Your Strategy? Then Map It” Harvard
Business Review September-October 2000 pp167-176
Keen, P [1997] The Process Edge Harvard Business School Press 1997 ISBN 0-8758-4588-6
Balanced Scorecard Step by Step
Malone, J (2003) “Shooting the Past: An instructional Case for Knowledge Management” Journal of
Information Systems Vol. 17 Issue 2 pp41-50
Marr, B. Schiuma, G & Neely, A. (2001) “Intellectual Capital – defining key performance indicators
for organisational knowledge assets” Business Process management Journal, Vol. 10 No.
5pp551-569
Marr, B. & Chatzkel, j. (2004) “Intellectual capital at the crossroads: managing measuring and
reporting of IC” Journal of Intellectual Capital Vol. 5 No. 2 pp224-229
Mouritsen, J. Larsen, H., Bukh, P. (2005) “Dealing with the knowledge economy: intellectual capital
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Niessink, F. Clere, V. Tijdink, T. & Van Vliet, H. (2005) “The IT Service Capability Maturity Model”
CIBIT Consultants / Educators
Olve, N. Roy, J. & Wetter, M (1999) Performance drivers: A practical guide to using the balanced
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Renken, J (2004) “Developing an IS/ICT Management Capability Maturity Framework” Proceedings
of SAICSIT, 2004, pp53-62
Stewart, T. (1997) Intellectual Capital: The New Wealth of Organizations Nicholas Brealey
Publishing, ISBN 0-385-48381-3
Sumner, M. (1993) “The impact of Total Quality Management on the Roles and Responsibilities of
Information Systems Professionals” Proceedings of the 1993 conference on Computer
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Van Someren, C. & Bongartz, H. (2005) “Empowerment of the powerful: Business Innovation in the
European Utility Sector” Commodities Now pp23-27
Wongrassamee, S. Gardiner, P. & Simmons, J (2003) “Performance measurement tools: the
Balanced Scorecard and the EFQM Excellence Model” Measuring Business Excellence
Vol. 7 No. 1 pp14-29
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Intellectual Capital Vol. 6 No. 2 pp267-284

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7. Appendix A: Measurements of IC adopted in the study

(Sample from 15 elements measured)
Element
IC Type IC Measure Range of possible values/calculation and source
Human Employee 1=initial, 2=Repeatable, 3=Defined, 4=Managed, 5=Optimising
Capital capabilities Source: People CMM (Curtis et al, 1997)
Human Management 1=Technology & Data Management, 2=Information Systems
Capital Experience Management, 3=IS/ICT strategic management, 4=Business strategy
management
Source: Management Capability Maturity Framework, Managerial
Paradigm (Renken, 2004)
Structural Hardware 1=Initial, 2 = Repeatable, 3=Defined, 4=Quantitative, 5=Optimising
Capital Source: SA-CMM (Carnegie Mellon Software Engineering Institute,
2005)
Structural Process Maturity 1=Initial, 2=Managed, 3=Defined, 4=Quantitatively managed,
Capital 5=Optimising
Source: CMMI (Carnegie Mellon Software Engineering Institute,
2005) as used in Process Framework
Relationship Supplier 1=Initial, 2 = Repeatable, 3=Defined, 4=Managed, 5=Optimising
Capital Relationships Source: IT Service Capability Maturity Model (Niessink et al, 2005)
Relationship Stakeholder 1=Initial, 2 = Repeatable, 3=Defined, 4=Managed, 5=Optimising
Capital Relationships Source: IT Service Capability Maturity Model (Niessink et al, 2005)

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Capital and Equity and the Knowledge Process Cycle
Roy Williams
University of Portsmouth, UK

Abstract: Knowledge management is still a developing field and much of its terminology, its basic building
blocks, are still unsettled. One of the key terms in KM, and in many books and publications on the subject, is
Capital – particularly Intellectual Capital, but also a variety of other kinds of capital: social capital, human
capital, etc. The paper will explore some of the fundamental epistemological issues concerning knowledge,
and the acquisition, communication, and management of Intellectual Capital, using the Knowledge Process
Cycle. The notion of ‘capital’ and particularly ‘Intellectual Capital’ will be revisited, and some suggestions
made on how ‘capital’ and ‘equity’ might better be deployed in developing and clarifying how knowledge and
equity is acquired, communicated and managed. The knowledge society has been described by people like
Drucker and Castells as inherently involved with ‘programmability’ and even more so, ‘re-programmability’.
The Knowledge Process Cycle provides an entry point into the debate on the nature of what we might call the
‘Re-programmable’ society, which will require different analytical frameworks, different management and
different methods for the communication of organisational value.

Keywords: Intellectual capital, embedded knowledge, knowledge process cycle, re-progammable economy,
semiotics, linguistics.

1. Introduction
Key concepts like ‘Intellectual Capital’ are convenient shorthands for a range of quite different
descriptions, measurements, and aspects of management. This is an attempt to take the debate
on the nature and measurement of Intellectual Capital a step or two further, specifically the debate
as it is captured in Bernard Marr’s collection (2005). In one sense I agree that what really matters is
to develop the practical applications of knowledge management. If we still seriously engage with
the theoretical and conceptual issues, we can live with some ambiguity, and in fact it might even be
productive to do so.

However, there are several terminological and theoretical areas where I think we can make some
progress, which I will explore in this paper. These questions about what constitutes knowledge and
intellectual capital include issues such as whether knowledge is:
ƒ An object or meaning?
ƒ Contextual or context free?
ƒ Tacit or explicit?
ƒ Positivist, interpretative, etc.
There are also questions as to whether these are different ‘aspects ‘or ‘types’ of knowledge,
intellectual capital, and epistemologies.

2. The knowledge society

The Knowledge Economy, or the Next Economy as Drucker called it (2001), or what I would call
the Re-programmable Economy (see below), is clearly different from what went before. Spender &
Marr (2005:183)) write that the “enthusiasm [for] the idea that knowledge has become the most
strategic of corporate assets …has not, however been matched by an understanding of how to
operationalise knowledge [because it is] a different kind of asset”.

They add (p. 184) that the economy is now much more knowledge intensive than ever. This applies
both to the way in which products and services are produced and sold, and to the nature of the of
competitive advantage in global, saturated markets, in which “differentiation and innovation
become critical, [and in which] cost-focused management tools do not provide managers adequate
information”. The question remains: what is knowledge, in what way is it ‘a different kind of asset’,
and how do we best operationalise it?

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3. Object or meaning?
Spender and Marr start their discussion with the question of whether knowledge is an object, or
meaning. They link this to different approaches to the firm: objectivist or interpretivist. The contrast
is between the objectivist approach, in which “the knower adds nothing to the data, [and] the
interpretivist frame [in which] knowledge is determined by some combination or melding of the
phenomena to be known and the knower … since such meaning is underdetermined by the
phenomenon itself” (p 187).

Semiotics (and its sub-discipline, linguistics) can help us here, as can a closer reading of
Wittgenstein, whose views are far from “the most extreme arguments” attributed to neo-
Wittgensteinianism (p186).

Umberto Eco summed up the basis of semiotics cleverly. He asked: What is a sign? And
answered: “That which can be used to lie” (1978). In formulating it in this way, he emphasised the
radically arbitrary and conventional (not representational), nature of the sign, and he also
piggybacked on the basic tenet of linguistics, i.e. the differentiation between the two aspects of the
sign: the signified and the signifier.

More specifically, linguistics is based on the double articulation of the linguistic sign into sound
elements (monemes) and the basic combinations of sounds (phonemes), to which meaning is
ascribed. The selection and combination of both these articulations is in an important sense both
conventional and arbitrary. Barthes says, “every use becomes a sign of itself” (1977), and
Wittgenstein says beguilingly simply: “meaning is use” 1 (1973).

We can link this back to the debate on ‘object v. meaning’. The broad agreement between these
various fields and authors can be summed up as follows:
The fundamental tenets of semiotics, linguistics and linguistic philosophy are that the
nature of the elements of signs, and the combination of these elements in various
layers or ‘articulations’ is both arbitrary and conventional.
That means that in principle all signs could be different, but that no sign can exist
without convention – and a community within which that convention is established and
maintained. Even if it is a community of two, with only a few signs between them 2 .
All signs are social constructs.
From there we can proceed. We can reposition Spender and Marr’s statement that: “to investigate
knowledge as meaning one must look behind the data and symbols to the processes the determine
or shape the meaning attached to them” (187), by applying this approach to knowledge as both
‘object’ and as ‘meaning’.

The processes that shape objectivist or interpretivist approaches are basically the same. In both
there is a community that establishes and maintains particular kinds of processes and signs for
particular kinds of ‘meanings that it uses’. Where these approaches differ is in the aims and
objectives of these two communities. In the ‘objectivist’ community people are primarily interested
in signs, which can be separated off from the (particular) ‘knower’. There is a range of endeavours
in which this is both possible and useful – the scientific and financial communities being the key
examples 3 .

1
Gibson, a key figure in applying these insights to the analysis of perception and action says: ‘The meaning
or value of a thing consists of what it affords’ (1982: 407), and ‘the affordances of the environment are
what it offers the animal, what it provides or furnishes, either for good or for ill’ (p. 127, in Witthagen &
Michaels 2005).
2
This should help us to avoid misleading statements like: “We see that data and meaning can be separated
into two distinct kinds of knowledge, one inherent in the phenomena, the other contributed by the knower.
This separation has also been explored in terms of the semiotic distinction between a language’s sounds or
symbols and the ideas to which they refer.” (Spender and Marr 2005: 187).

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Then there is another range of communities, which are primarily interested in signs, which are
inseparable from the members of that community – cultures are the key example. Cultures,
however, range from national, linguistic and ethnic cultures to business and professional cultures.
People can be members of both kinds of communities.

We can usefully apply Spender and Marr’s interpretivist notion both to knowledge which is tied to a
community of ‘knowers’, and to that which is separated from any particular ‘knower’. To do this we
have to use the systematically non-representationalist tenets of semiotics, linguistics, and linguistic
philosophy, and proceed from Eco’s notion that the power of the sign (and in its later iterations,
knowledge) lies in the fact that it is flexible and malleable, precisely because it is based on a
structure which allows people to lie, and therefore think innovatively and creatively.

The key shift is to de-link the valid aspects of an ‘objectivist’ approach from the invalid
‘representationalist’ pseudo-epistemology that is most often tied into it.

3.1 Communities
The basic differentiation between types of knowledge can be analysed by using a variety of
different terms. What is important is not the particular terms, but the analysis of the different
communities, purposes, and processes by which they generate these different outputs.

With this in mind, we can start by using the knowledge process cycle, below (amended from:
Williams 2006).

Figure 2: The knowledge process cycle

3
See Williams 2005 for a broader discussion on the way in which science and money are sub-sets of ‘meta-
semiotics’.

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There are a variety of communities at work here, (see the ‘C1’, C2’ … additions, above) which we
can usefully explore to resolve some of the issues that Spender and Marr have raised.

3.2 Experience
The first transcription of experience into data, via processes indicated here as ‘naming and sorting’,
is the most basic function within semiotics or linguistics. It involves the production of signs, (words
for example) that, with use, become associated with particular meanings. This requires our first
community, the basic semiotic community ‘C1’.

For example, the initial discussion on knowledge management started with the terms data,
information and knowledge – ‘data’ and ‘information’ coming out of IS and IT, and ‘knowledge’
coming from a long, fuzzy, and interesting heritage, starting with Aristotle, and still today in the
process of being defined.

3.3 Ante-formal Information

The transcription of data into information, via processes of categorising and tracking over time
yields accounts of events, rather than just things, and requires a second, more complex
community, the ante-formal community (C2). These signs and processes in ante-formal
information can range from the simple to the very complex, and can be highly formalised, within
cultures, but they are still tied to a particular community, people, and context. Most interaction
takes place within ‘ante-formal’ communication, and with the growth of digital media, like the
Internet, email, txt and IMS chat, and a range of social software, ante-formal communication is
historically the most impressive growth area, ever.

For example, the terms knowledge management and intellectual capital are still, to a large extent
within the domain of ‘ante-formal’ information: they are used by both practitioners and academics,
for very varied purposes, and are communicated between a range of people without necessarily
being too formalised. That might even be a good thing, as it is precisely within the domain of
communication and interaction among users of these terms that the terms develop, and find
resonance among groups of users, and eventually settle down into useful, if not ‘formal’ terms.

3.4 Formalised information

The transcription of ante-formal information into formalised information (what I have elsewhere
[2005] called ‘meta-semiotics’) requires a very particular kind of community (C3). It is, as I said
above, “primarily interested in signs which can be separated off from any particular ‘knower’” –
what Spender and Marr might call the ‘objectivist’ community, or what I would call the ‘meta-
semiotic’ community – i.e. the community that is interested in generating and establishing meta-
semiotic information, which is information that is deliberately stripped of subjects and context, so
that it can be communicated, exchanged, tested, and used and applied by anyone, anywhere. It is
most often expressed in numbers and algorithms, e.g. money, science, bureaucracy and law, and
representative democracy. Various communities of practice are associated with these forms of
meta-semiotics: scientists, bureaucrats, the judiciary, democracies, etc.

As I said, the particular terminology is not the issue here. For instance we could talk of ‘formalised
knowledge’ instead of ‘formalised information’. What is important is the knowledge process
analysis. Formalised information is split into two: procedural information (or algorithmic information
and its embodiment in procedures, as well as in hardware and/or software), and contextual
analysis.

This community, C3, might then usefully be split into C3(a) and C3(b), as the two (sub-
)communities, C3(a) concerned with procedural information, and C3(b) concerned with contextual
analyses, coincide broadly with natural and social scientists respectively.

For example, the term ‘intellectual property’ has become highly formal, and has a place within the
highly codified system of law in most countries (China seems to be an interesting counter-
example). More interestingly, ‘intellectual capital’ is in transition: it started off as a bright idea in

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someone’s mind (or academic paper). Interesting attempts were then made use it in very formal
domain, that of public company accountability moving, hopefully, into the ‘accounting’ of
‘intangibles’ for stock market valuations. This is still (see the debate that is critiqued in this paper,
for instance) in transition, although you might say that it has successfully become part of ‘formal
information’, where it is firmly enough ensconced for papers like this to critique it, and for most
people in the field to understand the debate as well as the critique. (That is, in fact, quite a good
criteria for whether a term has moved into ‘formal information’ – i.e. whether it is secure enough for
a broad discussion (as in Marr et al 2005) or a broad critique (for example this paper) to take place.

4. Knowledge
The process of using formalised information requires strategy, which comprises, first of all, of
finding the right ‘fit’ between procedural information and contextual analysis, or the application of
the right algorithms to the right contexts. This ‘fit’ is, however, multifaceted. It might include finding
the right social, financial, organisational, technical, cultural, international, etc ‘fit’. Some of these
will inevitably clash – so it will end up being a ‘set of fits’ as it were.

In a sense procedural information is a just set of exchangeable algorithmic tools, which although
they can be applied, in principle, in any context, need to be applied within the domain of knowledge
(or ‘strategic knowledge’ if you prefer), in a particular context.

The knowledge (or strategic) community, C4, can be very private, as in a corporation, or it may be
more public, in a public organisation driven by public policy. In both cases there will be a measure
of public scrutiny – either within the domain of public policy and media debate, or within the domain
of public accountability and regulation. This public scrutiny, particularly in the case of public
(limited liability) companies, is based in turn on another iterative layer of formalised procedural
information – company and shareholder accounts and reports, including the newer procedures for
measuring and communicating ‘intellectual capital’, which are an interesting variant.

The final community in this knowledge process analysis is C5, the Communities of Practitioners.
These are alliances between professional and institutional contexts, each of which is a Knowledge
(or Strategic Knowledge) community.

To conclude this section: what emerges from this knowledge process analysis is a picture of types
of semiotic activity and function, each tied into a different community. The boundaries of these
communities overlap quite a bit and, more particularly, their memberships certainly overlap.
People are members of many of these different communities, and shift in their roles from one to the
other.

This turns the question that Spender and Marr raised around. The question is no longer whether
you need to “investigate knowledge as meaning [by investigating the] processes that determine or
shape the meaning attached to them” only within in the interpretivist approach. This method will do
quite nicely for both ‘interpretivist’ and ‘objectivist’ approaches, but only if we see the two
‘approaches’ as phases within a single knowledge process, as both of them are based on
particular processes that shape meaning. They are indeed quite distinct, but they are not the
incompatible alternatives they might seem, they are just different phases in a knowledge process
cycle.

Instead of calling them different ‘types’ of knowledge, it would be more useful to emphasise that
they are actually different ‘phases’. They are certainly not incompatible epistemologies, which
seems to underlie this debate in Spender and Marr, as well as much of the broader debate in the
literature on KM, epistemology and on research methods.

The two communities (‘interpretivist’ and ‘objectivist’) are in practice one and the same. The
managers who require people working on one set of tasks in the firm to produce scientifically based
products and processes are asking these people to produce the procedural information that is part
of ‘formalised knowledge’. The same managers, in another context, will be required to consider,
decide on, and implement strategies in which they will be required to fit procedural information to

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context, and to make judgements about a number of layers of ‘fit’, all of which are heavily
embedded in context – i.e. a fundamentally interpretative task. People working in a firm may have
to be ‘members’ of both communities, for different purposes and at different times. The firm (even a
research firm) cannot be either one or the other. They all have to be both, although to varying
degrees.

For example, the term ‘intellectual capital’ has been used for some time, and it is now a tool within
formalised information that can be applied – as a procedure – to company reporting and
accountability to the capital markets. The question of ‘fit’ still arises – which companies, for
instance, can the term be successfully applied to – any firms, consulting type firms, does it exclude
manufacturing, and so on. These are all questions, which require the firm, or CEO, to find the best
‘fit’ between the procedure, or tool (‘intellectual capital’) and the context (type or sector of firm), in
which that tool can be applied.

4.1 Experience
The knowledge process cycle loops back again to experience, via C5, the Communities of
Practitioners that implement the strategic knowledge formulated in C4. These (C4 and C5) overlap
quite a bit.

These communities of practitioners (C5) generate experience which needs to go through a similar
process loop to our original one, even including the ‘basic semiotics’ of finding new words for new
things and events. For instance, the first implementations of business on the Internet did not have
to wait for the emergence of terms like ‘B2B’, ‘B2C’, etc. Rather, strategic choices were made to
apply certain tools and algorithms to specific business contexts, which generated Internet-based
transactions within a business community. Reflections on that experience, in turn, generated the
new terms, which gradually became more widely used, (see Barthes’ ‘every use becomes a sign of
itself’), gained currency, and became part of the ‘formal’ lexicon of ‘e-business’ and ‘e-commerce’,
and also became standardised and formalised items of ‘procedural analysis’ which could be
applied to new contexts within new business strategies.

For example, the application of ‘intellectual capital’, in one of its details manifestations, needs to be
applied both within the community of a particular firm, and then taken to a broader community of,
on the one hand, other firms and other capital markets, and on the other hand, to academic forums
and debates, in which its application is evaluated and critiqued. The next step is for the application
of the term to be taken to an even wider forum, that of financial regulation, both nationally and
internationally.

5. Tacit and Explicit

Spender and Marr make some interesting points about tacit and explicit knowledge. In particular,
they raise the issue of knowledge, which is embedded in action, where “an explanation of the
performance is not sufficient for someone else to acquire the performance” (2005:189). This meets
the requirements for epistemological distinctness; as such knowledge is acquired through action,
and stored in what is often referred to as ‘muscular memory’. This is a very different way of
acquiring knowledge than discussing it, or even acquiring knowledge by observation.

It would be interesting, though, to see what they would make of the widespread transcription of
exactly such ‘embedded knowledge’ in the process of extracting machine-tool competencies from
skilled trades-people, and then embedding those competencies in numerically controlled tools – or
digitally controlled tools. I would think that it would be useful to maintain the epistemological
distinction between the different ways in which a person could acquire knowledge – by action or by
instruction, but then to compliment this with the notion that knowledge embedded in human action
can, at least sometimes, be made explicit, and re-embedded in programmable machine action. In
which case it would change into a form of knowledge that could be exchanged, and acquired, from
machine to machine, even if not from machine to human.

This process of making tacit knowledge explicit has been fruitfully explored in the KM literature.
What is often left out is the rest of the cycle: i.e. after tacit to explicit, back again to tacit.

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It might be useful to speak of tacit knowledge not [only]as knowledge that has not yet
been made explicit but, contrarily, knowledge which was explicit, and which through
practice, fine-tuning and personal mastery has become internalised.
This process of utilizing and consolidating knowledge takes place through the
articulation of knowledge into the subconscious – old-fashioned mastery … As a
particular capability is mastered, it is also shifted across from the explicit, conscious
domain to the subconscious domain; leaving the conscious mind free to consider the
next series of explicit issues and decisions before it.
In this sense tacit knowledge increases, rather than decreases, with mastery, learning
and the spread of knowledge. (Williams 2006).

6. Applying the KPC to asset management

A key issue in an applied field like knowledge management or intellectual capital management is
the way in which frameworks such as the KPC (Knowledge Process Cycle) can help us in the
(internal) management and measurement and (external) communication of the value of
organisational assets. As Spender and Marr point out (2005:189): “Little attempt has been made to
identify the ways the different views of knowledge resources (data, information, knowledge) affect
the means we must employ to measure and manage these knowledge resources in our
organisations”.

We need to find a way to manage, measure, and communicate the value of IC assets. If we accept
the framework of the KPC (above), we are not dealing with a single type of asset, but rather several
different types of assets, according to the different functions of each of the different forms of
knowledge, within the different communities of practitioners associated with each type or phase,
within the KPC.

If we don’t differentiate in this way, we get into difficulties. Neither the ‘positivistic’ view nor the
‘Interpretative’ view (or its variant, the ‘Organic’ view) of organisational assets will adequately cover
all forms of knowledge and information (op. cit. 189-191). We need to move beyond the attempt to
find a single ‘view’. Rather, we need to try to explore an integrated KPC (of which the one
developed here is not the only option – see Saint-Onge 2004, for instance) from which we can
extrapolate an integrated model for the management of various IC asset types – not a unified
model of a single type of IC asset.

The question is: how to differentiate the indicators and metrics, and then how to avoid the problem
that “these resource bundles affect performance with causal ambiguity” as various authors put it!
(op. cit. p190). The relationships between the constituents of these resource bundles clearly need
to be mapped out, but it will not help if we continue to base our analysis on “three knowledge types
… data, meaning, and the ability to generate proficient practice” (ibid). We need a bit more than
that. The problem with the distinction between ‘data’ and ‘meaning’ is that although it coincides,
more or less, with the distinction between data and information, it tends to reinforce the widespread
epistemological confusion, i.e. that ‘data’ can be separated from ‘meaning’ in the first place.

6.1 Transcriptions
There is general agreement that one of the key issues in managing IC or Knowledge is the problem
of the transcriptions or ‘transformations’ of one type of knowledge, or type of Intellectual Capital
asset, to another.

The list is long, and somewhat confusing, and includes Spender and Marr’s types of knowledge
(see above), Polanyi’s tacit and explicit forms of knowledge, and more exotic examples such as
Roos’s: Cognitivist, Connectivist, and Autopoetic Epistemologies (2005: 198-199).

This is somewhat confusing. First of all, we need to make a broad level distinction between the
following:

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ƒ Forms of Knowledge: data, information, knowledge, or as in the KPC, phases in the

knowledge cycle: data, ante-formal information, formalised information, and (strategic)
knowledge.
ƒ Modes of knowledge: tacit and explicit cycles, with the complimentary factor of
‘embeddedness’ – in action, in machines, and in human and organisational routines.
ƒ Types of Equity: Financial, Human, Relational, Intellectual, Structural, and so on.
We have dealt at some length with the transcriptions of forms of knowledge, or phases of
knowledge in the KPC and, similarly, with modes of knowledge.

6.2 Equity, capital and the KPC

The term ‘Intellectual Capital’ has brought together a number of specific ideas, theories, concerns
and applications, most prominently the attempts to develop a standardised format to communicate
the value of intangibles to the investment community. In the context of shareholder accountability,
and capital market investment, the term Intellectual Capital has obvious purchase.

Although this might be useful in the investment context, in which the issue is precisely the
tradability of the assets, some of these assets are not ‘capital’ in the same sense as others, and
some of them (like humans) are not tradable as objects, nor are they amenable to be managed as
such. They have their own identities, and can to some extent make their own independent choices.

6.2.1 Organisational equity

In the KPC we defined knowledge as the fit between algorithms and contextual analysis. But
knowledge, i.e. the capacity to take effective action, requires resources, so we need to add the
notion of equity, and define knowledge as the fit between algorithms and contextual analysis on the
one hand, and equity on the other (See the chart: Equity, Capital, and the KPC).

Equity has slightly different meanings in different contexts, but in common across these contexts
equity includes ‘capital’, and it also, in a very important sense for our purposes, includes value
which can only be mobilised within the current markets – i.e. within the current perceptions and
assessments of value. Equity thus includes a substantial portion of relational value, over and
above commoditised value – it is value that can be translated into commodity value, but that
depends on a number of relational variables, some of which are human, and can only be mobilised
with the consent of the people concerned.

So for my purposes here, I will use the terms human equity, relational equity, and even structural
equity, as the structures (whether they are physical IS or IT) need to be operated by people. This is
in line with Peppard’s statement that “continuously delivering business value through IT is a
knowledge based activity, and has little to do with technology, although technology solutions can
represent the embodiment of organisational knowledge” (2005: 121).

Equity needs to include a wide range of resources that may be mobilised and deployed within
effective action. These include financial equity, which is inherently consumable, as well as equity,
which is not, such as science. Other types of equity lie across the boundary, such as patents and
copyright, which are not consumable, though they may, for a fixed period, incur a substantial
transaction cost. Yet other forms of equity, such as bureaucratic procedures and democratic
capital can be devalued with use or misuse. The ‘velvet’ revolutions in Eastern Europe, and even
in Lebanon, are interesting examples of the transience of political equity, the dotcoms the
transience of stock-market valuations, and Enron the transience when there is a substantial tie-in to
executive stock options.

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Figure 2: Equity capital and the KPC

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Knowledge for our purposes is defined as the fit between algorithms, contextual analysis and
equity. This puts a definite strategic slant on the matter, in line with Saint-Onge (2004)’s analysis.

6.2.2 Intangibles
A key element of Intellectual Capital in the literature is “intangibles”, which include a wide range of
elements such as: intellectual property, social capital, and structural relational and human capital.

In an attempt to clarify and order the field, which is widely acknowledged to be confusing and
somewhat contradictory, we propose that the following are used as the basis for a framework for
describing and analysing the field:
ƒ Capital: this should include only those elements that are inherently and deliberately
exchangeable: such as fixed assets and ‘objective’ procedural information. This includes
financial, scientific (natural and social sciences), political and bureaucratic (or cultural) capital,
as well as what is currently referred to as intellectual property (e.g. patents and copyright).
ƒ Equity: this may include the above forms of capital (as in the common usage, in which ‘equity’
is a super-ordinate term to ‘capital’), but it must more importantly include structural equity,
relational equity, and human equity (to replace the current usages: structural capital, relational
capital, and human capital).
This usage would include under the rubric of ‘equity’ all those things that may be mobilised and
deployed, subject to various conditions, such as the consent (or even endorsement?) of the people
concerned and various contextual factors, such as aspects of financial and political confidence, and
brand equity.

This would confine the category of ‘capital’ to those elements that are specifically designed to be
exchanged and traded without consent or consultation. Once again, we hope that the particular
terms that we use here will contribute to the overall clarification of the field, but it is not the terms
themselves we would like to focus on, rather it is the functional distinctions, which underlie their
use.

7. The re-programmable society

It might be useful at this stage to revisit some of the parallel, and sometimes overlapping debates
on the information society/ knowledge society (Drucker 2001 (a) & (b), Castells 2000). And to link
this with a fresh look at the notion of structural capital or, as I would prefer to call it, structural
equity.

Structural equity is an interesting borderline category in our framework (See Figure 2). It
commonly refers to routine practices and processes which have been developed in an organisation
over time, and which are a major element of the value added. This ranges from financial business
models to customer relations management, to personnel policies and practices. These may have
been strategically and deliberately designed, or may have arisen as best practice, and become, in
the words of Complex Adaptive Systems Theory, emergent properties or frozen accidents.

Structural equity is part of the equity that is mobilised in taking effective action – i.e. the resources
that are used to operationalise strategy, so it is an embodiment of knowledge. However, structural
equity is often substantially embedded in machines, routines, IS and IT, which are part of
Formalised Information. So structural equity bridges knowledge and formalised information, and it
has be kept in balance across these two components. If not, we run into ‘legacy’ problems,
particularly in IS and IT.

What is interesting in the information age is that the establishment and management of routine
practices, from the very scientific, production line practices to the ‘softer’ areas of customer and
personnel management, is increasingly subject to programmability, and even more particularly, to
digital re-programmability. This has come a long way from the rather restrictive era of the first
numerically controlled tools, to integrated, virtual client driven production and procurement
processes, such as Dell computers. To rise to Drucker’s challenge to fill in some detail on the ‘Next

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Society’, we might think of a narrative running from the Machine Age of modernist industrialisation,
to the Programmable Age of Post-modernism, to the Re-programmable Age of Global Ecologies
(not there yet, but it might be the next aspiration, if not the next achievement).

This re-programmability, which applies both to the elements of the production process, and to the
staff, who increasingly have to see themselves as reprogrammable too, expands the category of
“structural/ programmable equity” in Figure 2 substantially into the domain of formal information, as
well as into the domain of intelligence. Re-programmability can add flexibility to the firm’s ability to
balance the components of structural equity, but like any new trend, it brings with it problems and
dilemmas that have not been thought of before. For example, the human genome and embryonic
stem cell research have already made the first, tiny, steps towards not only programmability, but re-
programmability in human tissue, if not yet in humans.

Routine practices overlap formal information and strategic knowledge in any event, nowadays even
more so. It is the programmability, and re-programmability that transforms these categories, as well
as practice, even further. This feeds into, and is a requirement of, intelligent behaviour in a post-
scarcity economy, as both technology and mechanism. That is, if intelligence is defined as the
capacity for effective action within a dynamic and sustainable global economy and society.

8. Conclusion
We have applied the fundamental tenets of semiotics, linguistics and linguistic philosophy to some
of the key epistemological issues of the way we define, acquire and manage knowledge. This
provides the theoretical foundation for the analysis of the Knowledge Process Cycle, and the
various communities, which have specific functions in each of the phases of the KPC. This also
provides the basis for us to revisit and resolve some of the epistemological confusions that arise
from attempts to separate data from meaning, and a framework within which we can keep the
valuable aspects of both the objectivisit and interpretivist (and the related organic) approaches to
knowledge.

We have also looked at the way in which tacit and explicit modes of knowledge fit in the Knowledge
Process Cycle, the way in various forms of embedded knowledge can be transcribed into business
processes and memory, and the way tacit mastery can increase with learning and the acquisition of
knowledge.

The notion of ‘capital’ and particularly ‘Intellectual Capital’ has been explored, and some
suggestions made on how ‘capital’ and ‘equity’ might better be deployed in developing and
clarifying how knowledge and equity is acquired, communicated and managed. This more flexible
framework provides an entry point into the debate on the nature of what we might call the ‘Re-
programmable’ society, which will require different analytic frameworks and different management
and communication of organisational value.

References
Barthes, R. (1977) Elements of Semiotics.
Castells,M. 2000 The Information Age: Rise of the Network Society Vol 1
Oxford, Blackwell.
Eco, U. (1978) Semiotics. Bloomington, Indiana University Press.
Drucker, P. (2001a) The next society Economist Nov 1st 2001, London.
www.economist.com
Drucker, P. (2001b) The new workforce: Knowledge workers are the new capitalists Economist
Nov 1st 2001, London.
www.economist.com
Marr, B. (ed.) (2005) Perspectives on Intellectual Capital. Oxford, Elsevier.
Peppard, J. (2005) An Information Systems perspective on Intellectual Capital. Pp. 106-124 in:
Marr,( 2005)
Saint-Onge, H. & Armstrong, C. (2004) The Conductive Organisation. Oxford, Elsevier.

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Spender, J.C. & Marr, B. (2005) A Knowledge-Based perspective on Intellectual Capital. Pp183-
195 in: Marr (2005).
Roos, G. (2005) An Epistemology perspective on Intellectual Capital. Pp 196-210 in Marr (2005)
Williams R. T. (2005) Meta-semiotics and Practical Epistemology. Theory and Psychology, 15 (5):
719-734
Williams R. T. (2006) Narratives of Knowledge and Intelligence: beyond the tacit and explicit.
Journal of Knowledge Management 10 (4), forthcoming.
Withagen, R. & Michaels, C. (2005). On Ecological Conceptualizations of Perceptual Systems and
Action Systems Theory & Psychology 15(5): 603–620
Wittgenstein, L. (1973) Philosophical Investigations. Oxford, Blackwell.

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Actors and Factors: Online Communities for Social
Innovation
Diana Woolis and Susan Restler
Knowledge in the Public Interest, New York, USA
[email protected]
[email protected]
Abstract: Online communities of practice (COPs) are fast becoming a basic work unit in a networked world.
The relationship between COPs, Knowledge Management, and the Learning Organization is a question of
priority for social sector leaders, researchers, policy makers, and practitioners as they seek to establish ways
to maintain relevance and effectiveness in the volatile environments in which they work i . When well executed,
COPs produce results because the knowledge is stewarded: organized for learning, poised for action, and
planned for sustainability. In this paper, we document and analyse the actors and factors that, in our
experience, contribute to success: Enlightened Leadership, Compelling Work, Appropriate Technology and
Knowledge Sustainability.

Over the last two years we have worked with new online COPs in both the public and non-profit sectors. The
outsized successes prove the power of this approach to work. The failure and under-performers help define
the parameters for more effective implementations. Perhaps surprisingly, the critical success factors for a
high-performing online COP have absolutely nothing to do with technological aptitude. The two key
determinants of community success harken back to Business Management 101: the strategic clarity and
capacity for collaborative leadership in the organization, and the specificity and practicality of the community
mission.

Keywords: Communities of; practice, innovation, knowledge management, online communities, non-profit
management, public administration

1. Actors and factors: An introduction

In 1990 Charles Savage ii was one of the first to define the “networked infrastructures” required by
the emerging “knowledge era.” He articulated the transitions required to move from the industrial
era to the knowledge era, from “confusingly complex to elegantly simple enterprises”:
ƒ "Chain of Command" to "Networked and Networking"
ƒ "Command and Control" to "Focus and Coordinate"
ƒ "Authority of Position" to "Authority of Knowledge"
ƒ "Sequential Activities" to "Simultaneous Activities"
ƒ "Vertical Communication" to "Horizontal Communication"
ƒ "Distrust and Compliance" to "Trust and Integrity"
We posit that Communities of Practice for Social Innovation – those communities working within
organizations whose mission it is to advance the public good – are such structures. Online COPs
are tools for effective organizational leadership in the digital age, or at least an early and promising
entry into this arena. As such, they need to be consciously planned, intelligently introduced,
supported with a vengeance and, over time, firmly and creatively pushed to do more for the
organization’s mission. In other words, they require stewardship.

We have discerned through our work that there are four requirements for effective stewardship,
beginning with enlightened leadership. There are several kinds of community leadership, but the
most essential is sponsorship by someone who is clearly identified as leading or helping to lead the
organization. The leader explicitly ties the CoP to the organization’s mission and overall strategic
plan. The criticality of senior leadership to the success of an online COP cannot be overestimated
and is, in part, a function of the “newness” the medium. Senior leadership's endorsement and
modelling through personal engagement is key to shifting the group or organization's thought and
work habits.

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The second requirement for success is compelling work. We have learned that this extends beyond
the criticality of the work to be accomplished to encompass the group's investment in getting the
work done (the program developed, the policy defined, the decision made, etc.). This investment
turns in part on the group’s perception of the value the leader places on the outcome. However, we
have found each person’s perception of the benefit of the work done in the community to their own
work is equally important. Our engagement with a variety of professionals has lead us to believe
there is a strong correlation between a person’s commitment to the social imperative of their
organization and their willingness to alter long established ways of working, learning, and
contributing to the work of others.

The third requirement is appropriate technology. It goes without saying that it is impossible to have
an online COP without the basic supporting technology: electricity, a computer, access to the
internet and software that enables a specific set of activities. However, the best technology on its
own fails to produce effective COPs – and thus is not the most important requirement to success.
That said, there do exist minimum technological requirements – and many “nice to haves” – that
ease and support online COP work, including functions that allow participants to write and save a
document, attach and email a document, and search the community by varied keyword
approaches.

Today's online COP software market has many choices. So far, everything works and nothing
works perfectly – meaning that all available software allows individuals with limited technological
skill to participate easily in online work, but no single option for creating online COPs includes
every design feature and function that would make it as easy as possible to solve problems and
make decisions online. Technology management from behind the scenes to facilitate the clarity and
fluidity of the community can also be exceptionally difficult (although COP participants do not have
to see this). Increased user demand and experience hopefully will drive software designers to
improve their online COP products.

The fourth requirement for an effective online COP is sustainable knowledge, which we divide into
three components. Knowledge Creation is the support for initial engagement and the facilitation of
work in the community. Knowledge Maintenance involves caring for the community and its
knowledge objects. And, most important, Knowledge for Action: transforming the online work into
productive results. While meetings in the "real world" are often messy exchanges of views and
ideas, replete with digressions and irrelevant contributions, meetings that occur online create their
own record – a "digital paper trail" that facilitates creation of “minutes” that exclude the messiness
and summarize the work while allowing the original commentary to serve as an unmediated
account.

This record also generates another resource, arguably more valuable: the information that emerges
when the discussion is read and analyzed as a whole. Again and again, we find that several
important organizational phenomena are embedded in such exchanges, including implied and
explicit areas of confusion, opportunities for clarification or decision, suggestions of tension or other
organizational blockages that are impeding goal achievement, and nuggets of knowledge critical to
achieving immediate and overall organizational goals. The digital paper trail creates an opportunity
to identify and address such issues rapidly. This resource is the single most important contribution
that online communities make to accelerate the pace of organizational work. Another tremendous
payoff of the digital paper trail is that as it accrues over time, an accessible record is created that
preserves institutional intelligence and knowledge.

Employing computer technology generates these resources; thus we consider online COPs to be
organizational structures made possible by the digital age. But the organization must be primed to
respond. Working online can immediately enable faster – and possibly better – decision-making,
particularly if the technology is used to widen the participatory circle to those who would have been
excluded without it. But only when the messy inputs of the work are analyzed, synthesized and
organized do we create organizational knowledge, fulfilling the long promise of Knowledge
Management to transform work.

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2. A great success and a complete failure in online communities of practice:

What can we learn?

2.1 Success: Enlightened leadership and compelling work

Client A: State of Virginia Department of Education
Outcome: Adult Education Accelerated model development and roll out at scale, with wholesale
change in strategic focus and culture

2.2 The context

In the fall of 2003, Virginia Governor Mark Warner established the goal of doubling the number of
recipients of the General Equivalency Diploma (the equivalent of a high school degree in the U.S.
educational system) from an average of 10,000 to 20,000 Virginians annually within 18 months. Dr.
Yvonne Thayer, Virginia's Director of Adult Education and Literacy, saw this daunting mandate as
an opportunity. She recognized that this “crisis” could facilitate implementation of a radically new
model of General Equivalency Diploma (GED) programming incorporating active student
recruitment and new teaching techniques that could propel a cultural shift away from the traditional
adult education worldview of “literacy as empowerment” to one providing “practical skills for
workplace advancement.” Dr. Thayer realized that if she could successfully develop and implement
this new GED model with a small pilot group, she would have leverage to transform the
programmatic approach and mindset of every adult education director in Virginia.

2.3 From 0 to 100: State-wide rollout in 12 months

2.3.1 November 2003

Dr. Thayer convenes a small team within the Department of Education to set out the key
dimensions of the new program. Together they establish initial criteria and milestones, mandating a
six-week program and suggesting eligibility criteria for prospective students.

2.3.2 January 2004

Dr. Thayer convenes five program managers from sites across Virginia, selected for population
diversity (urban/rural), receptivity to change, and willingness to work collaboratively. The group
begins to develop a “Fast Track” program built around the parameters established by the state. At
Dr. Thayer’s urging they rapidly prepare pilot programs in order to learn by doing. The first Fast
Track class begins in February 2004.

2.3.3 March 2004

Dr. Thayer invites Knowledge in the Public Interest (KPI) to meet in person with the five pilot
program managers, whom she asks to form an online community of practice, or Polilogue, to share
their implementation experiences and accelerate the adoption of emerging “better practices.”
A three-hour strategy meeting with KPI leads to the establishment of the Fast Track Online
Community. Its focus reflects the interests and needs of the program managers: marketing and
recruitment, curriculum and staff development, budgeting, funding and partnerships with state
workforce organizations and the business sector, and reporting.

2.3.4 April to July 2004

Pilot program managers participate in several “Jams” – asynchronous discussions in the Polilogue
during which experiences and ideas are exchanged and materials are shared. These early Jams
are facilitated by KPI. Dr. Thayer follows the discussions closely, leading off each one with a
posting on her ambitions for the work.

At the outset of the program, the managers focused intensely on marketing the new program in
order to fill classes, using radio ads, bus posters and the like. An important first Jam on marketing
addresses the principle of market segmentation. The staff's experience in the field informs initial

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profiles of people most likely to be interested in the accelerated GED program and capable of
passing the tests after only six weeks of preparation. Discussion enables the community to link
these findings to basic marketing concepts of message and medium, and each director is able to
rapidly adapt her/his “pitch” and refine expenditures to target best prospects more effectively.
KPI organizes, summarizes and analyzes the work of each Jam in three ways: as an easy
reference for the participants, a source of knowledge for the future, and an input for Dr. Thayer as
she guided the pilots. Market segmentation became an important insight for the Dept. of Education
as it prepares to expand the programs beyond the pilot phase.

2.3.5 August 2004

The five pilot sites establish the efficacy of the program model. At the annual statewide GED
conference Dr. Thayer asks pilot program managers to share their experiences with the full group.
Each manager speaks to a different dimension of the pilot program – basically each of the
Polilogue topic areas – as opposed to speaking only to her/his own program experience.

Dr. Thayer then invites 10 additional program managers to join “Fast Track” and the Polilogue. She
sees advantages in relying on the online COP to facilitate the program's expansion: the new
managers can learn from the pilot staff on an as-needed basis, and learn effectively, without
leaving their sites. And the peer-to-peer collaborative nature of the community helps the new
managers to see themselves as fellow program builders and adapters, rather than as recipients of
a fixed model. This averts the resistance so common when a leader establishes a challenging goal.
The result is rapid build-up to launch.

One Jam concerns relationships with local Workforce Investment Boards (WIBs), which are
constructive and supportive in some regions and antagonistic and unproductive in others.
Managers share tactics, presentations, and data. In analyzing the exchange, KPI highlights the
apparent confusion among program managers over the WIB’s funding obligation for adult
education. Dr. Thayer acknowledges the confusion and enlists the Virginia Department of Labor in
clarifying its mandate in this regard, securing an expression of support from the Department that
paves the way for WIB/Adult Education cooperation. She models the approach for the program
managers, who begin to emulate it in the field.

2.3.6 October 2004

Dr. Thayer feels the model has been sufficiently developed and vetted and is indeed producing
strong GED pass rates in the six-week timeframe. She expands the program to scale, bringing in
all 50 adult education GED sites across Virginia. The entire program rollout takes place over two
days via the Polilogue with a succession of Jams held on each major program element, moderated
by the 15 experienced program managers. The Polilogue provides a twofold benefit. The first is in
cost- and timesavings, as new managers are introduced to the program elements without having to
leave their work sites. The second could be characterized as psychological: a peer-to-peer
inculcation with the explicit message that new program managers are being offered the benefit of
the experience of predecessors, which they can consider and adapt to their own environments.

2.4 What has happened since?

In the online community of practice:
ƒ At the suggestion of program managers, a community of instructors has been formed in the
Polilogue. This group has collaborated on issues including summer school planning and
technology-based self-instructional aids for GED preparation. This included bringing various
vendors into the Jams to answer questions and offer advice.
ƒ A new community is being launched to bring together adult education professionals with those
in the health care field, to build explicit bridges for prospective students.
ƒ In adult education in Virginia:
ƒ 90 percent of those enrolled in a GED “Fast Track” preparation program received GED
certification. Gov. Warner's goal of 20,000 recipients by July 2005 was achieved.

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ƒ All GED preparation courses in Virginia are adopting and adapting “Fast Track” pedagogical
and motivational techniques, including the establishment of relationships with local employers to
create a tight link between training and better employment opportunities.

2.5 What can we learn

In almost any sector, whether public, private or non-profit, it is admirable to create an effective
programmatic response to a challenging and arbitrary mandate, such as doubling the number of
GED recipients in 18 months. To take this program to scale in this timeframe – that is, to expand it
statewide – is unheard of. While the online COP was only one element in this process, it was a
critical one for two reasons.

First, the online COP facilitated and indeed encouraged the development of a robust and ultimately
successful program model by supporting rapid learning and adaptation – allowing many to benefit
from that which a smaller group had found effective, and abandon that found unproductive.
Inhibitors to progress that would otherwise not have been explicitly apparent were quickly
identified, facilitating their speedy resolution.

The online COP also maximized the practicality of the program elements by having the field staff
drive the details, and it minimized the inevitable resistance to change that is perceived as being
imposed from outside (i.e., the Department of Education, or “headquarters” in private sector
parlance). Gov. Warner's mandate was the non-negotiable impetus for change, and the hand of the
Department of Education was an ever-present guide as well as a source of pressure. But the field
staff determined the nature of the response and owned the program’s success.

There was an intangible benefit to engaging the field in an online COP that may actually prove to
be its greatest advantage. For a group of relatively technophobic people, the very act of working
virtually opened their minds to new ideas and approaches. Many went where they had never
expected to venture. The experience built confidence and countered the resistance to change so
well embedded in human nature.

While Dr. Thayer has moved on from the department, it is a credit to the process and to her
leadership that the Polilogue continues and expands in support of GED preparation in the State of
Virginia.

2.6 Failure: Strategic focus but a void in leadership

Client B: A public policy organization focused on democracy reform and economic equity in the
United States

Outcome: An online COP failed to facilitate collaboration among activists working on voting rights
issues in advance of the 2004 election.

2.7 The context

Client B, which describes itself as “up and coming” because it is a relatively new player in the
public policy arena, wished to coordinate the community of attorneys working on and writing about
state-by-state implementation of voting rights legislation during the 2004 U.S. election season. In
the aftermath of the 2000 presidential election – with its hanging chads and allegations of unfair
denial of access to the voting booth – Congress had passed the Help America Vote Act (HAVA).
HAVA enforcement depended largely on the relevant state official's interpretation of the law. Public
policy groups such as Client B worried that citizens would not know their voting rights, and that this
would lead to illegal denials or wasted votes on Election Day. Client B was working hard to address
relevant issues of public policy, and was both supporting and contributing to available materials on
state interpretations of HAVA.

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2.8 Two months until Election Day

Client B observed in September – less than two months before Election Day – that there was little
communication among the lawyers and organizations writing on HAVA, risking duplication of work
on some states while missing others completely. Client B decided to create an online COP for
attorneys preparing state-by-state HAVA information. Unable (or perceiving itself to be unable) to
get the attention of key people in relevant organizations, Client B decided to form a stealth
community and load on a multitude of documents, hoping that the relevant actors would see the
value of this virtual resource and join in.

This approach inevitably put the technology cart before the HAVA-coverage-for-every-state horse.
When Client B sponsored a conference call to present the possibilities offered by the online COP,
few attended; those who did perceived the new technology as a daunting and time-consuming
distraction from their important work. Ultimately the HAVA activists never came together to
strategize on how to best complete the needed work. They were not inspired to recognize that their
individual yearnings for public recognition of their efforts were secondary to the civic value of
getting voting rights information to citizens in every state.

2.9 What went wrong?

The critical missing ingredient was leadership, but perhaps not in the traditional sense of the word.
Client B accurately diagnosed a problem: there were too many independent practitioners potentially
working at cross-purposes. It selected a potentially effective means to solve the problem: an online
COP. However, several factors seemed to hamper Client B's efforts, including the emphasis on
demonstrating the technology over conveying how the COP would lead to more effective work, and
a perceived lack of stature within the public policy arena that inhibited its ability to lead others in the
sector.

2.10 What can we learn?

KPI identified the lack of engagement by the organization’s leader as a major factor in Client B's
failure to establish the online COP. Many of the lawyers Client B hoped to attract were "first-timers"
to using technology to accelerate and enhance collegial efforts. For such newcomers, the group
needs a leader who both comprehends the possibilities and has the capacity to communicate them
to the group.

3. The work comes first – But technology matters

Before describing the spaces of opportunity created by COP technology, it is wise to review a
cautionary tale of how over-emphasis on technology can undermine the introduction and progress
of a COP – even with the most promising organizations.

3.1 Enlightened leadership, compelling work, misconceptions about technology

3.1.1 Client C: The context

Client C is a dynmic professional association directed by a vibrant leader, funded by a large
foundation to “replicate” a new high school model in 17 locations across the United States. Client C
engaged KPI to build an online COP for the principals of these schools to help support the
establishment of the model. With a compelling mission, clear goal, and passionate membership,
the client was positioned for an exemplary online COP. However, it has taken two years to launch
a very small pilot community.

3.1.2 What can we learn?

Client C has grappled with two misconceptions about online COPs that KPI sees repeatedly with
clients that were not successful or were slow starters, as well as several prospective clients.

First, they believe that to master the technology is to master their project. This undermines efforts
on both fronts, as the focus drifts from the work at hand to the features of the presenting software.

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For example, Client C focused inordinately on making the online COP look and operate like a
website. Client C also imperfectly aligned its reasons for adopting the technology with the
organization's mission. Depite the clearly articulated intent of connecting school principals and
facilitating their work, leadership actually focused energy and resources on building a large
document repository. This had no immediate benefit for staff striving to achieve concrete project
goals, and also forced the COP technology into document and content management fuctions for
which it was not designed.

We cannot emphasize strongly enough that technology comes last in launching an online
community of practice for social innovation. Many organizations succumb to the wonder and
practicality of enabling many people to save and share documents. But people do not come to the
community because there is “stuff” there. They come because they need to accomplish work.

That said, there are three important factors to consider in choosing online COP technology that can
contribute substantially to a community's eventual success.

3.2 Critical features of online COP software

3.2.1 Opening spaces for opportunity

Online COP systems should enable the spaces of opportunity that help an organization realize
the potential to work differently (and better) and do new work, some of which may result in new
ways to extract greater value from organizational intelligence. There are three such spaces:
ƒ Public Space: content available to all, activities open to the public.
ƒ Private Space: participants must be community members; activities defined by and for
members.
ƒ Privileged Space: Accessible by a subset of members, under conditions and terms defined by
the community.

3.2.2 Enabling the community to govern itself

Communities need to be able to self-govern. Online COP technology should give them the power
to:
ƒ Assign leadership roles such editor, facilitator, moderator, community manager.
ƒ Create communities and sub-communities.
ƒ Control member privileges to read, write, delete, edit, post, etc., as well as add and delete
members and provide access to guests.
ƒ Organize content.

3.2.3 Supporting diverse knowledge objects

The technology should allow knowledge object diversity:
ƒ Supporting multimedia knowledge objects (e.g. text, pictures, audio, video and graphics) in any
variety of combinations.
ƒ Enable knowledge objects to be in many places at the same time without having to put them in
each place manually.
ƒ Providing means to both "push" information out to the community via email groups,
announcements, or similar, and for members to "pull" information in via varied subscription
capabilities.

4. Sustainable knowledge
Organizations deploy online communities for varied reasons. For KPI clients, they include:
program “replication,” policy development, professional development, technical assistance,
program support, standards development, rapid response, distance learning, and capacity building.

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We approach our work assuming that these efforts are fundamentally about knowledge
sustainability: stewarding knowledge and accelerating learning.

4.1 Community engagement

Knowledge is created as a function of doing work in an online community. The old days of KM
required people to put knowledge into a system after work was done, an added-on, time-eating
task which people resisted, and which ultimately failed. Knowledge Creation for Social Innovation
occurs when knowledge is stewarded properly. Generating actionable knowledge involves a set of
discrete acts associated with the knowledge life cycle, undertaken by one or many people both
inside and outside the formal organization or the community. But all the elements must be
attended to, beginning with community engagement. People must be enticed to engage and their
attention secured.

4.2 Community facilitation

Once engagement is accomplished, our experience is that only facilitated communities remain
productive. Community facilitation is a skilled task that takes time and energy, and its centrality to
success should not be underestimated. People engaged in online communities for social
innovation want to participate in the work that is occurring online, not be distracted by managing
the COP as an organizational structure. While there is a lot of overlap between doing work online
and supporting online community, there still needs to be time and talent exclusively devoted to the
activities that make online work productive.

4.3 Analysis and codification

Once the community is engaged and well facilitated, it organically produces vast and varied data.
No one really wants to read all the discussions, or hunt around for particular knowledge objects.
So the work must be analyzed and codified in such a way that it can be easily used for decision-
making and problem solving – the reasons that people engage in online COPs. Analysis and
codification creates the actionable knowledge that we view as the goal of social innovation.

Until analysis and codification occurs, the community may have a lot of information, but not
necessarily much knowledge. As the UK Advanced Knowledge Technologies Interdisciplinary
Research Collaboration points ou iii t,

“…Whilst accessing and storing data and information is technically cheap and relatively
straightforward, interpreting it requires intellectual investment: attention, time, expertise and
experience are now the commodities in highest demand and shortest supply. Veterans and other
experts are so valued because they make sense of information, seeing patterns, implications and
connotations that others miss….

KPI has developed a unique approach to interpreting online community work in a way that converts
information into actionable knowledge. We begin analysis and codification within a week of
community activity, and report three views of the data: verbatim quotes selected to represent keep
points as well as the tone and texture of activity; a summary of the activity, using en vivo categories
and including a list of the knowledge objects posted, with data instantaneously “triangulated” by
posting the “reports” in the communitynto create the opportunity for any member to challenge the
“findings” and/or verify their veracity; and, periodic online surveys to ascertain if and how
community members benefited from their participation. These surveys also probe for actions taken
as a result of the learning that occurred.

5. Why COPs produce results

Much has been made of the concept of the Learning Organization, popularized by Peter Senge in
The 5th Discipline iv . It is defined by Watkins et al. v as an organization that “…learns continually and
transforms itself, "one in which "[L]earning is a continuous, strategically used process" that is
integrated with work and augments the organization's "capacity for innovation and growth." In an
analysis of the learning organization literature at the time, Woolis and Ziegler vi found that they

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called for “a complete rethinking of the concept of organizations, the function of management, the
meaning of work, and the role of the individual in the workplace.” The relationships between
organizational learning, innovation and adaptive capacity to organizational survival and growth
have been well documented. Learning we hold as “the organization’s ability to cause: data to be
transformed into knowledge, knowledge to be translated into action; and action encoded and
decoded into patterns which in turn create data.

Our thesis is that only now, with the advent and ubiquity of networked systems, can the potential be
realized for creating mature learning organizations. Online COPs produce results because they are
the optimal structure for a world characterised by a networked, knowledge driven economy and
populated by “microworkers”—distributed individuals or communities who group, regroup, and
repurpose as the context demands.

What makes online COPs an optimal organizational structure? They are organized for Learning:
like the best learning environments, they feature diverse content and have many points of entry.
They are interactive, democratic, contextualized, and self-paced, and permit working on one’s own
or in groups of infinite combinations. And for the most part, all without requiring the worker to move
from the comfort of their own best thinking space. Most importantly, online COPs are Poised for
Action: at a click, community members can know who is, who can, who has, who knows, and who
will. Supporting documentation, weblinks, newsfeeds, and more are available, and members can
deploy powerful communication tools to distribute intelligence and leadership where and when
knowledge is needed, as well as readily reframe it as necessary – a kind of knowledge recycling.

Such efficient and waste-free use of irreplaceable resources is a hallmark of places Planned for
Sustainability – making COPs a vital to a Learning Organization.

The government of the United Kingdom defines a sustainable community as

“…places where people want to live and work, now and in the future. They meet the
diverse needs of existing and future residents, are sensitive to their environment, and
contribute to a high quality of life. They are safe and inclusive, well planned, built and
run, and offer equality of opportunity and good services for all.” vii
The same can be said of online COPs for social innovation.

References

Thomas, R., Campbell, A., Clemens, W., Barcus, M. (2005) “Beyond Buy In: Integrating
Knowledge Sharing Into Organizational Culture”, [online], KnolwedgeWorks Foundation for
Grantmakers for Effective Organizations, Knowledge Management Conference
Norris, D., Mason, J., Robson, R., Lefrere, P., and Collier, G. (September/October 2003) A
“Revolution In Knowledge Sharing” EDUCAUSE r e v i e w _, 14
World Bank Institute (undated) “Capacity for Knowledge Management in Organizations”, [online]
http://siteresources.worldbank.org/WBI/Resources/CKMObrief.pdf
Savage, C. (1990) 5th Generation Management: Integrating Enterprises through Human
Networking, Digital Press, p.viii.
Advanced Knowledge Technologies, EPSRC Interdisciplinary Research Collaboration (undated)
“Manifesto” p.1
Senge, P. (1990) The Fifth Discipline: The Art and Practice of the Learning Organization,
Doubleday, New York.
Watkins, K. and Marsick, V. (1993) Sculpting the Learning Organization, Jossey-Bass, San
Francisco, p. 8.
Woolis, D, Ziegler M. (1992) “The Learning Organization: Toward Building a Shared Vision”, Paper
presentation AAACE, Anaheim, October 5 1992.
United Kingdom Government, Department for Communities and Local Government. (2005) "What
is a sustainable community?", [online], http://www.odpm.gov.uk/index.asp?id=1139866

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Investigating the Use of Knowledge Management to
Support Innovation in UK Energy SMEs: A Questionnaire
Survey
Irfan Bashir, José Miguel Baptista Nunes and Nigel Russell
University of Sheffield, UK
[email protected]
[email protected]
[email protected]
Abstract: Knowledge is an important organisational asset that needs to be appropriately managed and used.
This knowledge management process is crucial in fostering and sustaining competitive innovation processes
that create economic and social value through the generation, development and implementation of ideas.
These new ideas are behind the production of new or significantly improved products and processes. Hence,
the global interest in knowledge management (KM) and the consensus that KM is an ideal innovation vehicle.
However, the organisations, which have readily adopted and implemented KM are found to be the larger, well
financed and better resourced ones. There are many success stories of KM in large organisations, but these
have not been replicated in small to medium-sized enterprises (SMEs). Although most SME managers claim
an interest in KM to support innovation and develop their tangible and intangible assets, there are many
obstacles in the successful implementation of KM in SMEs. Therefore, there are only very few published
successful cases of KM in SMEs. This paper reports on an ongoing research project that aims at exploring
how KM is currently used in SMEs in the energy sector. The research design for the project is based on a
questionnaire survey of the sector. A conceptual model deduced from an extensive literature review process
informed this questionnaire. This model was compared against a set of KM-Innovation activities, using 400
UK SMEs from the sector, with a response rate of 14%. The questionnaires aimed at identifying issues or
discrepancies between the model and activities. The paper presents an extensive discussion of findings of
the study.

Keywords: Questionnaire survey, deductive research, knowledge management, innovation, small to medium-
sized enterprises (SMEs).

1. Introduction
Knowledge is an important organisational asset that needs to be appropriately managed and used
(Handzic, 2006). Knowledge Management (KM) has been proven to benefit organisations, and
there is a consensus that KM is an ideal vehicle, which enables innovation. This KM process is
crucial in fostering and sustaining competitive innovation processes that create economic and
social value through the generation, development and implementation of ideas. These new ideas
are behind the production of new or significantly improved products and processes. Hence, the
global interest in KM and the consensus that KM is an ideal vehicle to enable innovation.

However, the organisations, which have readily adopted and implemented KM are found to be the
larger, well financed and better resourced organisations. There are many success stories of KM in
large organisations, but these have not been replicated in small to medium-sized enterprises
(SMEs) (Nunes et al., 2006). SMEs are different to larger organisations and in most cases
encounter different issues e.g. finance and resource issues. Although most SME managers claim
an interest in KM to support innovation and in order to develop their tangible and intangible assets,
these issues have a knock-on effect on what strategies and systems SMEs can successfully adopt.
There are only a few reported cases where SMEs have successfully adopted KM in their context.

Nevertheless, there is a growing interest in KM amongst SMEs as the KM discipline matures. The
interest follows some of the successful trials and tests, which KM encountered with the larger
organisations. The use of KM in SME is an area, which requires much investigation in order to
make it a success. The purpose of the research project is to contribute to our understanding of this
phenomenon.

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This paper reports on a research project that was triggered by the intention to investigate on this
apparent paradox. SMEs should make intensive use of KM strategies, due to their inherent nature
and the need to avoid knowledge loss and leakage (Annansingh and Nunes, 2005). However,
evidence shows that, despite the high levels of awareness regarding KM usefulness, levels of KM
penetration are very low (Sparrow, 1999; Nunes et al., 2006; Salojärvi, et al., 2005). This project
aims at exploring how KM is currently used in SMEs in the UK energy sector. The research design
for the project is based on a questionnaire survey. The questionnaire used a conceptual model
deduced from the literature review. The model was compared with the KM-Innovation activities,
using 400 UK SMEs from the sector, with a response rate of 14%. These questionnaires aimed at
identifying issues or discrepancies between the model and activities.

2. Research rationale

2.1 Research question and objectives

The research question of the project was formulated as follows:
ƒ “How can Knowledge Management (KM) be used to support Innovation in SMEs in the UK
Energy sector?”
This question could be further explicated by the following sub-questions:
ƒ What are the KM objectives of SMEs?
ƒ What are the innovation objectives of SMEs?
ƒ What are the relationships, processes, practices and understandings between KM and
innovation in SMEs?

2.2 Research approach

This research project adopts an approach or framework developed by Galliers (1992:161). The
original proposition has been adapted to suite this study as shown in Fig 1.

Figure 1: Research design based on Galliers (1992:161).

The first stage of the approach is to develop a research question (as discussed above). Secondly,
review the literature related to the research question. Thirdly, build a theory or model from the
literature review. Fourthly, design and implement the study based on social survey methods to test
and evaluate the theory or model. Finally, review the findings, and modify the model if necessary.
The following sections will briefly discuss each stage of this research framework.

2.2.1 Literature review

The purpose of the literature review in this study was to review the current knowledge in the field,
related to the research question, in order to form a cohesive and coherent argument to support the
research project. Hence the literature review was the source of the theoretical propositions, which
form the basis of the conceptual/theoretical models. The literature review was divided into the
following specific areas: Knowledge Management; Innovation; SMEs; UK Energy Sector; KM in
SMEs; Innovation in SMEs; KM and Innovation.

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2.2.2 Theoretical/conceptual model

The literature review, into innovation in SMEs, enabled the selection of the innovation model
proposed by Oxbrow and Hart (2002) as presented in Fig. 1. The review on KM models led to the
realisation that a new proposition was required that closely mapped the integration of innovation
into KM cycles. As a result of combining both the Innovation and KM models, the Knowledge
Management for Organisational Learning and Innovation (KMOLI) Model was than established as
shown in Fig. 2. This model was discussed elsewhere (Bashir et al, 2005).

Figure 1: The continuous innovation model, adapted from Oxbrow and Hart (2002)
The KMOLI model (Fig. 2) represents the researcher’s initial proposition of the role of KM in
Innovation processes in SMEs within the UK energy sector. The Innovation Model (Fig. 1) is
included in the KMOLI model and would fit in the ‘centre’ of the KMOLI model i.e. in the “Drive
Continuous Innovation” sphere. After this initial proposition the model needed to be instantiated
and qualified. That is, identify relationships (processes, practices and understanding) between KM
and Innovation by testing the model in the actual organisational environments and qualify the
different stages with the real activities. In order to do this, a process of ‘theory testing’ was
designed as described in the following section.

2.2.3 Theory testing

Theory testing of the study consisted of a sector wide questionnaire survey. This is a very well
accepted method in business and management research. Saunders et al. (2003) argue that
surveys allow the collection of a large amount of data from a sizeable population in a highly
economical way. Often obtained by using a questionnaire, these data are standardised, allowing
easy comparison. In addition, people perceive the survey strategy as authoritative in general; this
is because it uses quantitative methods of analysis and is easily understood as data collection
method. There are various definitions of the term ‘questionnaire’ (Oppenheim, 2000). The greatest
use of questionnaires is made by the survey strategy. Some authors, such as Kervin (1999),
reserve it exclusively for surveys where the person answering the question actually records their
own answers. Others, such as Bell (1999), use it as a more general term to include interviews that
are administered either face to face or telephone. Saunders et al, (2003) and deVaus (2002) use
the term in a more precise way, to include all techniques of data collection in which a person is
asked to respond to the same set of questions in a predetermined order. It therefore includes
structured interviews and telephone questionnaires as well as those in which the questions are
answered without an interviewer being present. The survey undertaken by this research aimed
basically at obtaining a ‘snap-shot’ of the current way of “doing things” in KM and Innovation.

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Hence the study adopted a cross-sectional approach as supported by Easterby-Smith et al, (2002)
and Robson (2002).

There are a number of different ways questionnaires can be delivered. In this survey, a postal
questionnaire approach was used due to the difficulties in finding up-to-date and accurate SME
information (i.e. email addresses). SMEs tend to have high personnel turnovers and be more
dynamic in terms of changes of individuals in the company. It was acknowledged that this type of
questionnaire has some known disadvantages. The type of questionnaire dictates the reliability of
responses. Even if the postal questionnaire is addressed to a company manager by name, there is
no way of ensuring that she or he will be the respondent. Her or his assistant or someone else
could complete it! Email questionnaires offer greater control because most users read and
respond to their own mail at their personal computer (Witmer et al, 1999). Any contamination of
respondents’ answers will reduce data’s reliability. Additionally, if respondents have insufficient
knowledge or experience they may sometimes deliberately guess at the answer, a tendency known
as uninformed response. Respondents may also discuss their answers with others, thereby also
contaminating their response. However, these later contamination problems are common to all
types of questionnaire survey and therefore were deemed to be acceptable. This survey is seen as
an exploratory study and aims to explore and identify issues and discrepancies between the
conceptual/theoretical models and the actual KM and innovation practices being carried out by the
SMEs.

Figure 2: The Knowledge management for organisational learning and innovation cycle (KMOLI)).

3. Selecting SMEs for the survey

In total, 400 SMEs were identified using the KOMPASS™ Business Directory. The aforementioned
directory was used to identify products and services; and verify that the number of employees did
not exceed 250, which is the criterion for a SME according to the DTI (1999). Products and
services associated with the UK energy sector were identified using the Institute of Energy
Yearbook and Directory 2003 and the collaboration of a panel of experts from the Chemical and
Process Engineering Department at the University of Sheffield.

4. Questionnaire design and pilot

In order to maximise the response rates and ensure validity and reliability of the questionnaire, the
following design guidelines were considered (Saunders et al, 2003):

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ƒ Clear layout of the questionnaire form;

ƒ Careful design of individual questions;
ƒ Pilot testing;
ƒ Lucid (clear and easily understood) explanation of the purpose of the questionnaire;
ƒ Carefully planned and executed administration.
The actual questionnaire was 3 pages of A4 divided into the following three sections: Organisation
Characterisation; Strategic Components; and Organisation Systems and Processes. A variety of
question types were used determined by the data which needed collecting for analysis. This is
common practice as discussed by Youngman (1986; cited in Bell, 1999).

The questionnaire was pilot-tested on 5 SMEs. They were provided with a draft version of the
questionnaire with the aim of employing their comments to improve the main questionnaire. The
main outcome of the pilot was that the questionnaire was too long – the final questionnaire was
improved on this basis. The explanation of the purpose of the questionnaire and the administration
are discussed in the following section.

5. Data collection using questionnaire

Questionnaires, formulated from the theoretical/conceptual models, were disseminated to 400
SMEs. In total, there were 56 survey respondents. This represents a 14.0% response rate, which
is within typical response rates from SMEs (Macdonald et al, 2001). Issues and discrepancies
between the conceptual/theoretical models and actual KM and innovation practices were identified
as discussed below.

The questionnaire distribution consisted of two main phases:

1. The initial contact consisted of sending the questionnaire with a cover letter and proforma. The
purpose of the proforma was to collect details of the respondent including contact information.
2. The second contact was a reminder. This consisted of sending a follow-up letter with the
original content and in addition reminding the SME that a response was expected. SMEs,
which were no longer in operation or had changed address without a redirection address were
identified at this stage. Royal Mail returned questionnaires where either the employee had left
the organisation or the organisation was no longer at that address. Royal Mail returned 25
questionnaires.
The highest number of responses was received after initial contact (34). Even so, a further 22
responses were received after the first reminder. A third contact, i.e. a second reminder, was
considered, but due to typical constraints of time limited research project, was abandoned.

6. Data analysis
The data analysis was broken down into three areas: descriptive statistics findings; exploratory
statistics findings; and integration of findings. Descriptive statistics were used to analyse data in
order to identify areas to explore using exploratory statistics, an approach discussed by Tukey
(1977). In total, 24 relationships were identified using descriptive statistics, these were divided into
the following three categories: KM relationships in UK Energy sector SMEs; Innovation
relationships in UK Energy sector SMEs; and KM and Innovation relationships in UK Energy sector
SMEs.

Subsequently, these relationships were then analysed using exploratory statistics. In this case,
Chi-square test was considered to be the most relevant technique to ascertain if two variables were
associated; and Phi-coefficient was used to determine the strength of association where applicable.
The Chi-square test is a technique which only establishes if there is an association or not between
any two qualitative variables. However, in most cases the Fisher’s Exact Test (FET) was used due
to the relevant number of samples.

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The findings in this paper focus on the relationship between KM and Innovation in UK Energy
sector SMEs. This study is, as far as the researchers are aware, the first to systematically
determine the aforementioned relationship. As a result, literature directly relevant to this study was
difficult to find.

7. Discussion of findings
This discussion of findings is subdivided into two sections. The first discusses the findings of the
descriptive statistics analysis and the second those of the exploratory analysis. Furthermore, the
questionnaire was divided into three sections: Organisation Characterisation; Strategic
Components; and Organisation Systems and Processes. Consequently, this section will discuss
the descriptive statistics in three separate sections first, and than discuss the exploratory statistics.
Finally, an integrated discussion is provided.

7.1.1 Organisation characterisation

The main purpose of this section was to collect information in order to verify the organisation’s
applicability to the survey. For example, Q5 states “Please indicate, by ticking the appropriate box,
how many employees (both full-time and part-time) do you have in your organisation?” Here the
respondent was given three choices: 1 to 49; 50 to 249; and 250 or more. Even though, the size of
the respondent was verified before the survey was executed, as described above, from the 56
responses three respondents selected the latter (Fig.3 and Fig. 4).

Figure 3: Table of results for size of SME

Figure 4: The sizes of Sme that responded to the survey

Surprisingly, the majority (61.0%) of SMEs that responded to the survey claim that they do not
contribute to the UK energy sector. Nevertheless, all SMEs, which were asked to participate in the
survey, have products and/or services, which are associated with the UK energy sector. As
mentioned earlier, the products and services listed by KOMPASS™, which totalled over 1000, were
reviewed by experts from the Chemical Engineering department (at the University of Sheffield) and
using the Institute of Energy Yearbook and Directory 2003 to ensure that products and services
were associated with the sector. Therefore, and after a close analysis of responses, it is clear that
these companies have misinterpreted Q4 [Does your organisation contribute to the UK Energy
sector?] of the questionnaire. The misinterpretation consisted in considering themselves to be in
service provision rather then in energy production, i.e. consultancy, training, IT solutions. However,
these companies are still working almost exclusively for the energy sector, and in terms of studying

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KM and Innovation in the sector, they are very much important agents. As a result, they were
included and integrated in the study. The majority of SMEs (69.1%) were the parent SME, and
30.9% are subsidiary of a larger group of companies (Fig. 5 and Fig. 6). The latter may have an
added advantage to the previous with regards to resources and finances to support KM and
Innovation activities. With regards to the main activity of the respondents, majority (29.1%) of
SMEs indicate that they provide ‘Business Services’ (Fig. 7 and Fig. 8).

Drucker (1993) has described knowledge, rather than capital or labour, as the only meaningful
economic resource in the “knowledge society” today. Similarly, the findings of the survey seem to
indicate that the vast majority (83.3%) of SMEs claim that knowledge is one of their most
competitive factors (Fig. 9). Even so, the majority of SMEs (57.1%) have not heard of KM (Fig. 10
and Fig. 11). This indicates that the majority of SMEs are not aware of KM; and its potential
benefits related to what academics have termed as the “knowledge society”.

Figure 5: Table of results for type of SME

Figure 6: Bar chart to shoe the type of SME

Figure 7: Tables of results for main activity of SME

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Figure 8: Bar chart to show main activity of SME

Figure 9: Table results to show SME’s, which acknowledge knowledge as a competitive factor

Figure 10: Tables of results to show SME’s, which have heard of KM

Figure 11: SME’s, which have heard of KM

7.1.2 Strategic components

The second section of the questionnaire - strategic components – aimed at collecting information
with regards to the strategic elements of the SMEs, specifically for KM and innovation. With
regards to strategy, the vast majority of SMEs do not have a formal KM (85.2%) and innovation
strategy (81.5%) to co-ordinate KM and innovation activities (Fig. 12, Fig. 13 and Fig. 14).

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Figure 12: table of results to show SME’s which have a KM strategy

Figure 13: Bar chart to show SME’s which have a KM strategy

Figure 14: Table of results to shoe SME’s, which have a innovation strategy
Despite this, the vast majority (81.8%) of SMEs claim to introduce new or improved products or
services to the market (Fig. 15 and Fig. 16). Furthermore, the majority (54.5%) of respondents
allocate resources to innovation activities. On the other hand, with regards to systematically
allocating resources to KM activities, the majority (66.7%) of respondents claim they do not allocate
any resources to KM activities. Therefore, SMEs seem to be much more innovation conscious and
therefore willing to allocate resources to this type of activity rather then KM. Hence, the gap in
understanding the importance of KM (identified in the previous section) seems to have a direct
impact on resource allocation for knowledge related activities.

Figure 15: Tables of results to show SME’s, which have introduced new or improved products or
services

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Figure 16: SME’s, which have introduced new or improved products or services

7.1.3 Organisation Systems and Processes

Finally, the Organisation Systems and Processes, the purpose here was to collect information with
regards to KM and innovation activities used by respondents on a day-to-day basis. These
activities were identified through an extensive literature review and then incorporated into the
survey to establish applicability to SMEs. The majority (63.0%) of SMEs do not acknowledge
activities from each of the KM and innovation processes depicted in Figure 1 and 2. In this light, it
may well be that the SMEs are actually implementing these activities in non-formal and implicit
manners as part of other operational aspects of their activity. It may also be that, despite the pilot
questionnaire test, the respondents did not generally understand the terminology used in the
questionnaire. Nonetheless, these responses were investigated by linking them to KM and
innovation components of the theoretical KMOLI model presented in Fig 2.

Figure 17: table of results to show SME’s, which continuously map or identify knowledge in their
organisation

Figure 18: Pie chart to show SME’s, which continuously map on identify knowledge in their
organisation

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 Irfan Bashir, José Miguel Baptista Nunes and Nigel Russell;

8. Knowledge gap
With regards to the process of Knowledge Gap majority of SMEs (50.9%) strongly agree and agree
that they identify key knowledge they need to achieve their strategic goals and objectives.
Surprisingly however, majority of respondents neither agree nor disagree (37.0%) that they
continuously map or identify the knowledge within their organisation (Fig. 17 and Fig. 18). This
indicates that the majority of respondents do identify gaps in knowledge but are unsure in
sustaining this activity during the organisations lifetime.

9. Knowledge acquisition
With regards to Knowledge Acquisition, the vast majority (89.1%) of respondents acknowledge that
they offer opportunities for employees to acquire information and experience from within and/or
outside the organisation. Furthermore, from the activities listed for this knowledge acquisition
process, respondents acknowledge the use of all the listed activities (Fig. 19 and Fig. 20).
Nevertheless, the majority (>50.0%) of respondents indicate the use of two of the possible nine
activities: ‘Training (outsource)’ and ‘purchasing software’.

Figure 20: Knowledge acquisition activities

Figure 19: Table of results to show the knowledge acquisition activities

10. Knowledge development

From the activities associated with the Knowledge Development process, respondents
acknowledge the use of all 19 activities (Fig. 21). Nevertheless, the majority (>50.0%) of
respondents acknowledge the use of seven activities. These include: Employee training (81.8%);
creating organisational capabilities built around clients’ needs (63.6%); and ensuring that staff can
readily match customer problems with appropriate services (63.6%). As illustrated in Fig. 21 SMEs
do engage in a number of other knowledge development activities. For instance 52.7% claim to do
research and development in house and 63.6% claim to match the information needs of staff with
appropriate services. This is not at all surprising as many SMEs in the sector are knowledge

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intensive companies providing consultancy and training services. The only somewhat
disappointing result seems to be the lack in interest in developing processes to capture intellectual
capital (only 12.7%).

11. Knowledge embodiment

Similarly, as in the previous KM processes, respondents acknowledge the use of all 17 Knowledge
Embodiment activities (Fig. 22 and Fig. 23). For instance, 12.7% of SMEs acknowledge the use of
a ‘Knowledge Management System’. Nonetheless, the majority (>50.0%) of respondents indicate
the use of one activity ‘Maintain project files’ (69.1%).

Figure 21: Knowledge development activities

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Figure 22: Table of results to show knowledge embodiment activities

Figure 23: Knowledge embodiment activities

12. Knowledge sharing and dissemination

The vast majority of respondents acknowledge that they make employees aware of information and
experience accessible to use for current projects and activities (85.4%) and encourage employees
to disseminate information and experience which may be useful to other employees within the
organisation (87.8%). Furthermore, respondents acknowledge the use of all 25 Knowledge
Sharing and Dissemination activities (Fig 23). Nonetheless, the majority (>50.0%) of respondents
indicate the use of two activities: ‘Share knowledge with customers and partners’ (59.2%) and
‘Make product information easily available to employees and customers’ (61.2%). However, there
is a rich diversity of activities used in the sector.

13. Knowledge use and revision

With regards to Knowledge Use and Revision, respondents acknowledge the use of all 17 activities
(Fig. 24). The majority (>50.0%) of respondents acknowledge the use of four activities: ‘Internal or
external audits’ (69.4%); ‘Performance appraisals’ (61.2%); ‘Enabling flexible solutions rather than
off-the-shelf products’ (57.1%); and ‘Ensuring sales proposals built on previous successful
approaches’ (57.1%).

13.1 Findings of the exploratory statistics

The purpose of these exploratory statistics is to investigate the relationships between the KM and
the innovation components of the questionnaire. This will establish if there is such a relationship
according to the perceptions of SMEs. From the findings, at a strategic level, the majority of SMEs
do not have formal KM and Innovation strategies. Nonetheless, 50.0% of SMEs, which have a
formal KM strategy, also have a formal innovation strategy; the association between these two
variables is statistically significant using a Fisher's Exact Test [p=0.021; <0.05].

In addition, majority of SMEs which have made improvements in: Strategy; Structure; and
Operations, do not allocate resources to KM activities but the majority of SMEs which have made
improvements in: Market and Management, allocate resources to KM activities. This is an
interesting result that needs further exploration in the future.

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Figure 23: table of results to show the knowledge sharing and dissemination activities

Figure 24: Table of results to show the knowledge use and revision activities

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 Irfan Bashir, José Miguel Baptista Nunes and Nigel Russell;

Strategy Total Market Total Structure Total

1 2 1 2 1 2
Allocate resources to KM activities Yes 14 4 18 13 5 18 10 8 18
No 15 21 36 23 13 36 13 23 36
Total 29 25 54 36 18 54 23 31 54

Figure 25: Cross tabulation for KM activities and improvements in strategy, market and structure

Figure 26: Cross tabulation for Km activities and improvements in management and operations

Figure 27: table to show p-value for KM activities and improvement areas

14. Conclusions
It is widely acknowledged that the strategic element of KM is essential for successful KM
implementation in any organisation (Zack, 1999; Drew, 1999). However, even though Biejerse
(2000), in his study of Dutch SMEs, concluded that SMEs have many instruments or activities
related to KM he also acknowledged the lack of a systematic approach to KM at both strategic and
tactic levels. The findings of this project seem to confirm that assertion. However, and despite
claiming that they did not implement KM, most SMEs are in fact implementing KM activities that
were mapped against the theoretical view presented in Fig 2. That is, SMEs recognise the value of
knowledge and allocate resources to KM activities, but do this implicitly and intuitively, rather then
in a formalised manner. This means that SMEs do not implement systematically the totality of
theoretical activities that could be expected, but rather use a flexible approach to KM, selecting
those activities that they perceive as imperative at a particular moment in time. This may be due to
finance and resource constraints. Nevertheless, SMEs could be termed as opportunistic users of
KM rather then systematic and formal ones.

Similarly, with regards to innovation, SMEs also show a lack of a strategic approach to innovation,
therefore confirming findings of other authors such as Humphreys et al. (2006). However,
generally, SMEs are more innovation active rather than KM active. Furthermore, the findings seem
to indicate that there is a close association between awareness of KM and awareness of
innovation. It is clear that most SMEs do not adopt formal innovation and KM strategies. However,
it seems equally conclusive that the adoption of KM and Innovation formal strategies is very closely
associated to one another. This seems to show an evolution in SMEs strategic thinking towards an
understanding that in order to gain from innovation opportunities there is a need to consider KM
strategic components.

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Knowledge Management and Competence Management:
New Possibilities Based on old Conceptions
Claudia Bitencourt and Mírian Oliveira
University of Vale Dos Sinos, Brazil
[email protected]
[email protected]
Abstract: Despite the great diversity of studies about Knowledge Management and Competence
Management, these approaches have some points in common and some particularities that need to be better
understood. Moreover, Knowledge Management has been more intensively discussed in the information
technology area (IT) while Competence Management has been well discussed by researchers from the
human resources area (HR). Many knowledge management initiatives are based on the same assumptions;
however, they fail to make the fundamental distinction between information and knowledge. Knowledge is
more than a simple meaning. It goes further and encompasses the beliefs of groups or individuals, and it is
intimately tied to action. By contrast, competence is more than just a cluster of knowledge, attitudes and skills
needed to perform various jobs. It includes beliefs, experiences, values and learning which compose the
individual path. In both approaches, there is a concern regarding the creation, dissemination and application of
knowledge. Nevertheless, in the competence management approach, differently from the knowledge
management issue, the emphasis is on the human aspect and on interaction between individuals within the
organization. The objective of this paper is to analyze similarities and differences between knowledge
management and competence management, allowing a better understanding of the possible connection
between these two areas. A proposal framework, which integrates the main concepts and ideas of each
approach, could also bring new insights and stimulate future studies.

Keywords: Competence, knowledge, share meaning, sense making

1. Introduction
The objective of this paper is to analyze similarities and differences between Knowledge
Management and Competence Management, allowing for a better understanding of the possible
connection between these two areas. We believe that one approach complements the other,
allowing for new reflections on themes normally discussed individually in literature. As these
approaches give special treatment to common aspects like the collective, context, and the question
of share meaning and sense making, the nature of these approaches stimulates new insights
starting from an analysis of similarities, differences, difficulties and possibilities. Thus, this paper
initially presents the concept, elements, phases and the evaluation of Knowledge Management
(section 2) and of Competence Management (section 3). Following this (section 4), the relationship
between Knowledge Management and Competence Management is discussed. Conclusions
(section 5) will present an initial proposal of a framework relating the main ideas of each approach,
as well as insights for future research.

2. Knowledge management
Before defining Knowledge Management (KM), it is necessary to clarify the difference between
data, information and knowledge. Data may be regarded as raw facts, which when organized
considering a certain context, make information, which serves to achieve an established objective.
Knowledge is information in connection with individual experiences. Knowledge may be of two
types, explicit and tacit (Nonaka and Takeuchi, 1995). Explicit knowledge is easily documented and
transmitted to others as it is structured. It may be found, for example, in manuals and documents.
While tacit knowledge is difficult to articulate and make available to others, it can be, for example,
expressed through intuitions, insights or individual beliefs. According to Nonaka and Takeuchi
(1995), tacit knowledge is composed of technical elements (know-how and skills) and cognitive
ones (mental models such as paradigms, beliefs).

Tacit knowledge is important for an organization as it encapsulates individual expertise and,

because it is harder to be copied by competition, can be a competitive differential. Competition
between organizations is more intense every day. In this environment, focusing on tangible aspects
is not enough for the organization’s survival. Knowledge then becomes a source of competitive

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advantage (Sher and Lee, 2004). Knowledge can also be classified as individual and organizational
(Bhatt, 2002). Individual knowledge is expressed through creativity and attitudes, while
organizational knowledge is reflected in the products and services that the organization offers its
clients. Individual knowledge can be transformed into organizational knowledge by interaction
between individuals, as long as there is a favorable organizational environment, which allows for
this.

Knowledge management involves three elements: technology, the individual, and the organization.
Related to the individual are the creation of information, abilities, and the competency of the
organization’s members. At the organizational level, there are the structural requirements and the
creation of conditions that stimulate the dissemination of knowledge. Technology corresponds to
the implementation of a communication structure and tools that can be used as support for the
process based on knowledge. Nowadays, there is not just one definition for KM as, depending on
the author, different conceptual dimensions are considered. KM is defined by Darroch (2003) as
“the process that creates or locates knowledge and manages the dissemination and use of
knowledge within and between organizations”. This concept focuses on acquisition, dissemination
and the utilization of knowledge. Another important aspect is inclusion, that is, KM does not only
occur within the organization. Knowledge can be attained from different sources such as by
workers, competitors, suppliers and clients (Darroch, 2003). The organization, for instance, can
obtain knowledge from customers, which enables innovation or the creation of new products. In this
way, KM needs to focus on the internal and external environment of the organization. Lee and
Yang (2000) say that KM is “the collection of processes that govern the creation, dissemination,
and leveraging of knowledge to fulfill organizational objectives”. In this concept, the relationship of
KM with organizational objectives stands out.

KM can be divided into stages, for example, Darroch (2003), Tiwana (2002), and Armistead (1999)
consider acquisition, dissemination, and the utilization of knowledge. On the other hand, Bose
(2004) considers the phases of creation, storage, refinement, management, and dissemination. As
opposed to the other authors, Bose (2004) does not include utilization as one of the stages of KM.
Demarest (1997) presents the following phases for KM: construction, transformation,
dissemination, utilization and management. According to Ahmed, Lim and Zairi (1999), KM has
phases that may be compared to the PDCA (Plan-Do-Check-Act) cycle of total quality control
(TQC). The creation of knowledge corresponds to the plan phase, sharing knowledge is related to
do, measurement with check, and utilization is associated with act. Based on the different
proposals by the authors quoted, we can say that the stages of KM are creation, storage,
dissemination, utilization and measurement. Armistead (1999), Demarest (1997), and Ahmed, Lim
and Zairi (1999) discuss the necessity of measuring KM. According to Ahmed, Lim and Zairi
(1999), measuring is important because: it is not possible to manage what cannot be measured; to
determine which aspects need to be improved; to make comparison possible, and supply
references to people permitting them to monitor their own performance, among other aspects. A
measurement system should reflect the different levels in the organization, combine indicators
associated with individual tasks and with the process as a whole, indicating opportunities for
improvement. According to Bose (2004), KM should be aligned with the organization’s objectives.
In this way, the KM measuring system should be linked to the measuring system of the
organization’s performance as a whole.

3. Competence management
When discussing Competence Management (CM) there are, basically, two topics: the first referring
to conceptual comprehension, involving discussions on the diversity of concepts and competence
levels (individual and organizational), and the second referring to a view of competency based on
the internal and external environments of the organization. CM is an approach that has been
attracting the attention of both academics and businessmen in Brazil. However, there is no single
concept on the theme, mainly because of its complex and dynamic nature. According to Boterf
(1997), competence is a concept under construction. Even so, it is still possible to talk about
notions of competence. Hence we have pointed out some elements that allow for a better
understanding of the matter.

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1. Development of concepts, abilities, and attitudes (background) - Boyatizis (1982), Parry (1996),
Boog (1995), Becker (2004), Spencer and Spencer (1993), Magalhães and Rocha (1997),
Dutra and Silva (1998), Sandberg (1996);
2. Capability (aptitude) - Moscovicci (1994), Magalhães and Rocha (1997), Dutra and Silva
(1998), Zarifian (1999);
3. Work practice, capacity to mobilize resources, a fact that differs from the potential concept
(action) - Sparrow and Bognanno (1994), Cravino (2000), Ruas (1999), Moscovicci (1994),
Boterf (1997), Fleury and Fleury (2000), Davis (2000), Zarifian (1999);
4. Articulation of resources (mobilization) – Boterf (1997);
5. Search for better performance (results) - - Boyatizis (1982), Sparrow and Bognanno (1994),
Parry (1996), Becker (2004), Spencer and Spencer (1993), Cravino (2000), Ruas (1999),
Fleury and Fleury (2000), Dutra and Silva (1998), Davis (2000), Zarifian (1999);
6. Constant questioning (dynamic perspective) – Ulrich and Lake (1990);
7. Individual learning process, where the main responsibility falls upon the individual himself (self-
development) – Bruce (1996);
8. Relationship with other people (interaction) – Sandberg (1996).
One of the main reasons for interest in CM is the intention to obtain a clear focus on the company’s
competitive actions and, from this, prioritize action, processes and key areas, and stimulate the
development of people. In this way, competency management can be understood based on two
main levels of analysis. The first refers to organizational competence – popularized by Prahalad
and Hamel (1990). This concerns a collection of abilities and technology available in companies,
which are fundamental for the organization’s competitive success in the long term, and, as long as
they are not dealt with separately, contribute to a wide variety of markets and potential products.
The second level involves individual competence – bearing in mind the diversity of concepts in this
area, we chose that developed by Boterf (1997) in which “competence is assuming responsibilities
when facing complex work situations to deal with new, surprising and singular events.”

Effective mobilization between these two levels would give the company a consistent movement of
consolidation of competitive differential based on the management of its internal resources. CM
thus possesses a strong influence from the Resource Based View (RBV), as it implies mobilization
and dynamic management of resources. In this vein, the emphasis on the work of competences is
in the company’s internal environment (Penrose, 1959; Wernenfelt, 1984; Foss, 1997; Barney,
2001). Consequently, it deals with the company’s mobilization of resources in the sense of creating
a competitive differential based on their effective management, in the course and the dynamics of
the company. However, to consolidate this competitive advantage, it is necessary for the customer
to perceive these competences as elements that value his purchase. Thus, we emphasize an
internal movement from the company towards the consolidation of competences and an external
one, when these competencies are observed and, therefore, validated by customers. A cycle is
then created, where competences are produced in the organization’s internal environment and
validated within the external one by the perception of the associated value of the customers
(inside-out movement).

4. Knowledge management versus competence management

Although discussed by authors, the relationship between KM and CM approaches has been little
explored, making evident only specific aspects like, for example: the relevance of the individual in
some KM phases, relating individual capacities with the creation and the utilization of knowledge
(Spanos and Prastacos. 2004); the effect of the transference of tacit knowledge on the capacity of
innovation in the organization (Cavusgil, Calantone and Zhao, 2003); the importance of the
evaluation of capacities for KM (Denrell, Arvidsson and Zander, 2004) and new knowledge and
competence management initiative at Ericsson Business Consulting (EBC), which uses an intranet
as its main means of implementation (Baladi, 1999).

These papers favor empirical research relating specific KM and CM elements. However, not one
proposes carrying out a wider theoretical analysis of the relationship between these two

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approaches. The present study is intended to develop a theoretical comparison relating both
approaches, without the pretension of being conclusive. Here, we will present the main elements of
each approach in comparison. There is a diversity of concepts in both approaches, with each
author emphasizing specific aspects. This is related to the subjectivity of the themes. We highlight
the existence of a paradox related to the notion of the themes discussed – if, on the one hand,
there exists the necessity to have a single concept (clarity of limits), on the other hand, it becomes
impossible to attribute a universal concept without excluding important elements (complexity and
dynamic).

When it comes to a vision of the internal and external company environments, the logic of the
rationale developed by KM and CM is distinct. From a KM point of view, the organization uses
knowledge obtained together with suppliers, customers and competitors, which are external
elements to the organization (outside-in view). In the same way that suppliers and customers can
also participate as appraisers of the result (inside-out view). On the other hand, CM comes from an
internal analysis based on management of resources and capability to consolidate competence.
The external environment would enter in the final stage of validation of these competences (inside-
out view). In other words, the customer would need to see the aggregated value brought by them.
Without this client perception, it would not make sense to talk about organizational competence. In
summary, KM begins the process with input information and CM ends the process validating
competences.

KM is concerned with retaining and disseminating knowledge at an organizational level. However,

the acquisition of this knowledge begins with the individual. In other words, the KM process starts
from the individual having an organizational focus. From a CM perspective, the logic is quite the
opposite. CM starts with strategic discussion about competences at an organizational level,
centralizing its effort on managing individual competences as a way to consolidate organizational
ones. To summarize, the CM process starts at an organizational level but gives special treatment
to action at an individual one. Despite the fact that knowledge management focuses on the
organization, it would not be possible without considering individuals and information technology.
Most literature on CM highlights the importance of people management. In other words, the
management of competences at an organizational level is not viable without specific work in
relation to individual competences, as it is the people who form the organization.

The stages of KM do not run linearly, however, they are presented clearly in literature, along with
the inclusion of the measurement phase, which takes place throughout the process. CM does not
present pre-defined phases in its process, which can be highlighted. We may be able to speak of
identification, development and evaluation of competences in a generic way. All the same, it would
not make sense to consider rigid phases in relation to the thematic ones, as what brings value to
the discussion and comprehension of competence is exactly the path dependence and dynamic
constructed by the company, which cannot be fragmented. Furthermore, the actual evaluation of
competence is limited to the evaluation and performance of people. Comparing with KM, evaluation
is taking its first steps, although authors state that the process, as much as the results, should be
considered although the way to do so is not yet clear to either academics or organizations.

A great number of publications that talk about KM, deal specifically with information technology. As
mentioned before, IT is an essential support for KM, yet not a unique element. Some companies
utilize IT tools to make evaluations in CM. Thus, IT represents more of an instrumental vision than
a strategic one from a CM perspective.

KM is associated with the acquisition of competitive advantage and is supported by several

authors. However, a consensus regarding the utilization of metrics to evaluate the process and
results obtained with KM is still inexistent. Authors point to the relevance of utilizing metrics, which
contemplate the KM process and the results of this process for the organization, contributing to the
acquisition of sustainable competitive advantage. The difficulty is in identifying the real contribution
of KM in organizational results starting from each individual’s contribution. From a CM perspective,
the emphasis in the evaluation process is on the individual. Despite recognizing competency
management at a managerial and organizational level, inherent difficulty exists in relating decisions
of strategic scope to operational ones. Discussion at a strategic level but evaluation and operation

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 Claudia Bitencourt and Mírian Oliveira

of competences on an individual one, is favored. Metrics reinforce the idea of an ideal,

standardized profile of the professional, often distant from the strategic focus of the organization.

The table below synthesizes above-mentioned ideas.

Table 1: Main elements of knowledge management and competence management
Element Knowledge Management Competence Management
Notion Diversity of concepts Diversity of concepts
Environment External/Internal Internal/External
Customer Begins process – input of Ends process – validates competence
information
Level Individual/Organizational Organizational/Individual
Emphasis On the organization On the individual
Stages of process Clearly defined phases Path dependence dynamic of the
company
Information technology Indispensable support Possible tool for individual evaluation
Performance Process/Results Process/Results
evaluation Organizational Individual
Despite the comparison between KM and CM having been developed based on distinct elements,
shown in a highly precise manner for each approach, this analysis does not permit us to have a
dynamic view on the relation between the theories. Thus, we highlight the importance of (re)
thinking about KM and CM under a more interactive and complementary perspective. Choin and
Lee (2003) focus on the study of KM styles: dynamic, system-oriented, human-oriented and
passive. According to the authors, organizations classified in the passive style do not explore
knowledge, showing little interest in KM. The human-oriented style focuses on the acquisition and
sharing of tacit knowledge and individual interaction. The system-oriented style prioritizes the
codification and reuse of knowledge, technology being an important aspect. In organizations
classified as dynamic style, technology is introduced to support the group, they are intensive in
communication and consider tacit and explicit knowledge. Based on these highlighted elements,
we believe that KM can contribute to the development of competence, stimulating the development
of strategies and motivating analysis closer to the customer, thus suggesting more effective work in
the organizational ambit. This emphasis on the organization is dealt with when it defines the
company’s competence; however, it is soon left in second place when there is an appreciation of
actions in the management area of people for competence. In another way, CM can stimulate the
development of knowledge at an individual level, which appears to be one of the limitations when it
comes to KM. In other words, there is an apparent difficulty when referring to KM on the individual
level, which can be stimulated through the development of competence in people. Figure 1
illustrates this complementary.

ORGANIZATION INDIVIDUAL
COMPETENCE MANAGEMENT
COMPETITIVE
DIFFERENTIAL
KNOWLEDGE MANAGEMENT
INDIVIDUAL ORGANIZATION

Figure 1: Virtuous cycle between KM and CM

5. Conclusion
This paper analyzed the relation between the KM and CM approach. We believe it is a little
explored field, which can contribute to the development of both approaches from new insights
produced in this work and in future studies. Thus, we do not intend to develop a conclusive work
rather, a reflective one. The main contributions of the proposed reflections are based on similarities
and peculiarities of each approach, having as a core some important elements discussed in
literature: notion, level, environment, customer, organization, people, stages of process,

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information technology and performance evaluation. These elements permit better comprehension
of what we understand by KM and CM and, also, allow for reflective analysis in the attempt to
approximate these theories.

We can present the main conclusions based on analysis:

ƒ Of the internal and external environment of a company;
ƒ Of the individual and the organization.
Regarding the internal and external environment of a company, we can say that both approaches
make reference to the importance of observing these two types of environment, being different only
in the emphasis attributed the moment that the process of development of knowledge and
competence begins. From the KM perspective, we observed a focus in the external environment
when the customer creates new inputs and demands on the organization (outside-in view), just as
when he recognizes the results presented by the organization (inside-out view). The entire
problem, then, is in how to manage and create opportunities so that knowledge can be developed
in a company’s internal environment. On the other hand, from the CM perspective, there is a whole
initial process of mapping and prioritizing of resources and competences that can generate a
competitive advantage for the organization. Nevertheless, the management of these competences
will only be effective if the customer perceives value in them (inside-out view). In reality, this vision
concerning the internal and external environment is complementary as both outside-in and inside-
out movements are important as much for KM as CM. The following figure illustrates this situation.
CLIENTS

ORGANIZATION INDIVIDUAL
COMPETENCE MANAGEMENT
COMPETITIVE
DIFFERENTIAL

KNOWLEDGE MANAGEMENT
INDIVIDUAL ORGANIZATION

SUPPLIERS
COMPETITORS
CLIENTS

Figure 2: KM and CM – vision of internal and external environment

Another point that we highlight in this study refers to the vision of the individual and the
organization. From the KM point of view, effort is concentrated on the organizational environment,
as much in practice as in expected results. In this context we point out the importance of the IT
area and of indicators regarding organizational performance. In turn, CM draws attention due to its
work developed on an individual level. In this way, effort is focused on the HR area and indicators
of individual performance. Once again we observe a virtuous cycle where KM and CM can be seen
with complementary strategies. Figure 3 illustrates this characteristic.
CLIENTS

ORGANIZATION INDIVIDUAL
COMPETENCE MANAGEMENT
COMPETITIVE
EVALUATION
DIFFERENTIAL
KNOWLEDGE MANAGEMENT
INDIVIDUAL ORGANIZATION

SUPPLIERS
COMPETITORS
CLIENTS

Figure 3: Relation between knowledge management and competence management

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 Claudia Bitencourt and Mírian Oliveira

Finally, we highlight that even though neither KM nor CM are recent approaches, their combination
may stimulate the development of new and more effective organizational practices, be it by the
complementary views given in this study or by others, not dealt with as yet, but which we strongly
recommend be investigated.

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The Role of Sunk Costs in Knowledge Conflicts: The
Case of a Small Rural Bank
Matteo Bonifacio and Diego Ponte
University of Trento, Italy
[email protected]
[email protected]
Abstract: During the last decades, knowledge management studies have underlined the importance of
knowledge boundary spanning processes to foster innovation and change as it enables the revision of current
practices and worldviews. On the other hand, there is general evidence that communities of practice tend to
resist or oppose to boundary spanning which becomes an intrinsically conflictual process that needs to be
enacted. In this study the topic of boundaries in organizations will be re-examined starting from the question of
why people resist to changing their perspectives and practices. The answer to this question becomes crucial
in order to define methods able to enact a process that, although valuable, is clearly not spontaneous.
Extending the concept of knowledge invested in practice as first proposed by the pragmatic view of
knowledge, our claim is that the willingness to span a knowledge boundary is constrained by the need to
preserve the reuse of sunk costs (not only practice but also related infrastructures, languages, capabilities).
That is, when negotiating knowledge, people will tend to reach a configuration that preserves at best their
sunk costs. We tested this hypothesis in a case study of a small bank facing internal semantic conflicts due to
a series of change interventions. Results show that the final configuration of knowledge dynamics comes out
by a tacit negotiation between the world’s views - and their related irreversibilities - held by different
communities of practice. Conclusions will be drawn about the possibility to both foresee the outcome of
organizational semantic conflicts and intervene in order to facilitate the resolution of conflicting interpretations.

Keywords: Boundary spanning, communities of practice, sense making, sunk cost, interests

1. Introduction
During the last decade, knowledge has been increasingly recognized as one of the most important
dimensions upon which organizations should both build a sustainable competitive advantage and
an innovation-based strategy (Stewart 2002). A series of Knowledge Management models and
initiatives emerged that described knowledge dynamics as based on a sequential process of
creation, codification, storing and reuse of knowledge (Davenport and Prusak 2000). Moreover,
knowledge has been intended as a stand-alone substance or content that can be typically
embedded in the form of documents (Al-Sayed and Ahmad 2003). It is worth noting that many of
these implementations usually fail to achieve knowledge sharing because what comes out to be
shared is, rather than knowledge, often a meaningless collection of documents (De Souza 2003)
(Currie and Kerrin 2004).

In part as an answer to these limitations, descriptive approaches arose in order to provide a richer
understanding of those organizational dynamics related to knowledge and learning processes.
From this perspective, several studies showed how knowledge is embedded in social contexts and
how learning can be considered as a lens to read the evolution of social structures and practices of
organizational communities (Brown and Duguid 1991) (Lave e Wenger 1991) (Wenger 1998). From
a cognitive perspective, other studies have underlined that knowledge is deeply entrenched in
interpretative schemas or mental models (Argyris and Shön 1996) (Senge 1994).

However social or cognitive is the adopted framework, these interpretative approaches share some
important conclusions. First, rather than a separable stand-alone content, knowledge is primarily
seen as interpretation which is inseparably rooted in the perspective or practice of a community of
knowers. Second, in process terms, knowledge dynamics, rather than being described according to
a sequential process, are better seen as a double faced dynamic of knowledge exploitation and
exploration (March, 1991). These two latter processes are qualitatively different since the former
assumes the perspective or practice as given and is aimed at consolidating existing beliefs. On the
other hand, the latter is aimed at re-discussing, re-visioning and changing existing assumptions or
practices. In this sense, while the former elaborates on existing interpretations, the latter seeks for
a reformulation of how events are interpreted (Boland and Tenkasi 1995).

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Besides these theoretical conclusions, both the cognitive and the social approach have also
reached some agreements on some normative conclusions and behavioural observations. From
the first perspective, it has been noticed that innovation processes are rooted in the experience and
encounter of alternative world views (Dougherty 1992). That is, the opportunity to radically change
or revise existing interpretations rises when what is taken for granted is confronted with people or
groups that share alternative and conflicting interpretations. In this sense, innovation lies at the
edges of interpretative schemas or at the boundaries of communities.

On the other hand, from a behavioural perspective, it has been noted that while exploitation
processes and converging dynamics are spontaneous, exploration or boundary crossings are
strongly resisted and opposed. People and groups tend to avoid a revision of their interpretations
and, as a consequence, view boundary encounters as a threat rather than an opportunity. As a
consequence, communities can often be an obstacle, rather than a means to facilitate knowledge
flows, since self-referential dynamics are likely a source of path dependencies and competency
traps (Cyert and March 1963) (March 1999). In terms of knowledge management, if on the one
hand these conclusions underline the importance of belief revision processes and their link with
boundary spanning activities, on the other hand they also underline their intrinsic conflictual nature.
It follows that to promote innovation organizational actors should overcome semantic conflicts
through the engagement in sensemaking activities. On the other hand, these activities are
systematically avoided, resisted and even contrasted. This mainstream approach has been named
by Carlile (Carlile 2002) the semantic approach to KM.

As points out the same Carlile (Carlile 2004), this view risks leading to some “ingenuous” or naïve
conclusions. In short, it views the resolution of knowledge conflicts as a process that occurs at an
immaterial level being it either a mentalist process of changing interpretative schemas (the
cognitive approach) or a social process of bridging and negotiating identities (the social approach).
In both cases, knowledge is still seen as something that lives “in a vacuum”, as a representational
or interactional layer which is separated by the concrete interests of its holders. From this
perspective, knowledge conflicts are “mistakes” that can be overcome if actors engage in
sensemaking dialogues and interactions able to show that conflict is basically rooted in
misunderstanding; here boundary crossing can be achieved being exposed to the perspective or
identity of the other. In this context the manager plays the role of enabling such kind of exposure by
means of various types of sensemaking methodologies (Argyris and Shön 1996) (Senge 1994).

This view is said to be naïve since it looks at semantic conflict as something that can be resolved if
actors engage in some sort of open and positive attitude towards the others. And actors tend not to
do so due to innate psychological reasons such as the need to preserve their identity (Wenger
1998) or to preserve themselves and the other from embarrassment (Argyris and Shön 1996).
Rather, it does not consider, as well suggested by Giddens, that actors may find themselves within
a set of constraints whereby the resolution of conflict may be against their own interests (Giddens
1994). Said differently, the resistance to change interpretations should be also less ingenuously
considered as motivated by the fact that interpretations may justify legitimate interests. As a
consequence, knowledge conflicts are to be seen as motivated contrapositions between the
alternative interests at stake.

This latter approach has been referred to as the pragmatic approach to knowledge (Carlile 2002).
Among the various points, it suggest that knowledge can be better seen as an invested matter; it is
stuck in a set of elements and practices that, being highly idiosyncratic to specific activities and the
working context, binds and influences communities’ interpretations of fact and events. As a
consequence, the deeper sources of conflict are not rooted in some anthropological “defensive”
behaviour, but rather in the mutual inconsistencies between the alternative sets of artefacts,
practices, technologies, or infrastructures whose existence is justified by each community’s
knowledge. To change knowledge, is to manipulate interests.

In this sense traditional knowledge management approaches fail to achieve the goal to foster
innovation or reduce interpretative conflict as their focus is at the semantic level, which assumes
that pragmatic inconsistencies are resolved. Differently, it is only when pragmatic issues are
resolved (i.e. interests are compatible) that semantic based methods can be applied. This leads to

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the interesting methodological conclusion that semantic convergences can be promoted only when
the interest at stake are preserved or previously negotiated. To some extent, the boundary
between the knowledge intervention and the political one blurs, as managing knowledge implies a
management of interest.

Unfortunately the pragmatic approach suffers a lack of empirical evidences. We suggest that this
depends by the fact that it did not specify in a clear and unequivocal way some important aspects
of its proposal. We refer in particular to the specification of both the process that links knowledge to
interests and the concept of interest itself. Important questions are: what is the nature of an
interest? Which process links the interests of an actor to the formulation of interpretations? In this
paper we propose that these answers can come from a fruitful synergy between those studies that
looked at the phenomenon of retrospective reasoning: the sensemaking approach, and the
research on the sunken cost effect. We will sustain that interests can be described as the need to
preserve irreversible past investments (sunk costs) and that interpretations are ex post
rationalizations of these sunk costs. In this sense, people produce interpretations suited to
preserve the reuse of their irreversible resources, and semantic conflict occurs when a new
interpretation represents a thread to such preservation. This argument will be sustained through a
brief review of the literature and a case study on semantic conflict in a small rural bank.

2. Knowledge reconsidered: the role of retrospective rationality and sunk

costs
Within the semantic approach, sensemaking have been proposed as a useful tool to allow people
to span boundaries and to diminish organizational conflict. The sensemaking approach states that
knowledge schemas are often the result of retrospective rational processes aimed at giving sense
to past actions in ambiguous situations. The reason why the formulation of interpretations is
retrospective lays in the intrinsic ambiguity of the environment. Since the world can be read
according to alternative and even conflicting perspectives, it cannot be used as a referent to guide
interpretations. For this reason, the only available “handle” is the past; as proposed by Weick,
through the observation of the past, subjects can sort out current events in order to give them some
significance. Interpretations are ex-post justification of past actions (Weick 1995; 2000).

Unfortunately one of the major problems of the sensemaking approach is that it does not clarify
what kind of past actions are to be rationalized by individuals. Given a set of actions performed by
an actor, which will be more plausibly rationalized? This question is crucial since it allows us to
predict, within an ambiguous context and a set of performed actions, which interpretations will be
reasonably generated. And, what is more interesting for the purpose of this paper, given two
conflicting interpretations, it allows us to understand on which set of actions interpretations are
based and which actions should be performed to allow the formulation of new and compatible
interpretations.

Unfortunately Weick provides a quite elusive answer, stating that rationalized actions are “(…)
those actions that are high in choice, visibility and irrevocability” (Weick 1995, pp. 162). The more
an action is irrevocable, the more it will drive the formulation of interpretations. But isn’t it
irrevocability a result itself of interpretation? In this case, it does not constitute an external referent
or handle to drive interpretation. On the other hand, to allow irrevocability to play the role of a
handle, it must be characterized by some sort objective quality, which is a premise, rather than a
result of interpretation. But this conclusion would be in contradiction with the radical constructive
approach of the author. Rather understandably, Weick does not respond to the question of what we
should consider as an irrevocable action as much as it would either be a tautology (what drive
interpretation is a result of interpretation) or contradict its epistemological assumptions
(constructivism).

Interestingly, the wide research filed about the so-called sunk cost effect seems to offer an
interesting answer to these questions. This experimental research area has widely studied
behaviours that are quite similar to the ones proposed by the sensemaking approach. In fact, they
both look at retrospective reasoning as a means to provide justification to current courses of
actions, and look at escalating behaviours as a way to commit to such interpretations (enactment).

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More interestingly, the main difference of the two is the negative account provided by the former
(stating that such cognitive attitudes are irrational) (Staw 1997), and the positive one provided by
the latter (stating, on the contrary, that such attitudes are perfectly plausible). Moreover, they both
find a quite interesting linkage in the notion of ambiguity, being such quality both the premise to
sensemaking, and, as we will see afterwards, the foundation of one major critic to the irrational
explanation of the sunk costs effect: the decision dilemma theory (Bowen 1987) (Hantula and
DeNicolis Bragger 1999).

The major perspective on sunk cost states that when people invest in irreversible resources,
subjects tend to become locked into behaviours that lead to “throw good money after bad money”
(Arkes and Blumer 1985). Even if these behaviours are explained through different perspectives
such as the “resource utilization”, the “project completion” and the mental budgeting justifications,
all these approaches underline that individuals are heavily influenced by the irreversible assets
developed in the past (Heat 1995) (Boehne and Paese 2000). Whatever the reason would be, the
fact that respondents tend to continue their past actions, despite they should not from a rational
perspective, is considered irrational (Arkes 1996).

Starting from quite different epistemological positions, those of the sensemaking approach, the
school of thought that falls under the name of decision dilemma theory challenges the core
assumptions of the traditional approach (Bowen 1987). As proposed by these authors, respondents
of the first experiments were lacking the necessary conditions to make a prospective rational
choice leading to situations in which sunk costs affected behaviours could be considered as
perfectly plausible. In short, sunk cost experiments are to be considered as ambiguous since
respondents were provided with a feedback that was not useful to clearly determine a-priori if
investing additional resources would have been profitable (Northcraft and Wolf 1984) (Brecker and
Hantula 2005).

This last approach can fundamentally contribute to respond to the crucial question left unanswered
by sensemaking. On this regards, the sunk cost tradition provides a wealth of evidences of what, in
ambiguous contexts, should be considered as an irrevocable action. Here we propose to view it as
an action that generated a sunk cost. Sunk costs represent the “economic ratio” that drives the
evaluation between alternative interpretations and, given a set of sunk costs, the actor will try to
produce an interpretation that is able to preserve them as much as possible (figure 1).

Figure 1: Relationship between knowledge (semantic aspect) and irreversible investments

(pragmatic aspect)
Going back to the issues left open by the pragmatic approach to KM, our hypotheses are that:
ƒ An interest can be described as the need to preserve the reuse of sunk costs;
ƒ Such need enacts a retrospective sensemaking process aimed at creating interpretations that
allow for such preservation and that call for future actions aimed at creating worlds in which
these prophecies are realized.
In the following sections we propose a case study as a first, and of course not conclusive, attempt
to provide to these hypotheses an empirical support. In particular, we show the case study of a

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small rural bank subject to organizational changes that raised a series of semantic conflicts as
regards the need and the aims of change. We will propose that these conflicts were the pragmatic
result of interpretations that have been produced by the different groups at stake in order to
preserve their past irreversible investments. Further, we show that the need to preserve these
irreversible resources represents the economic ratio that drives semantic negotiation processes
(figure 2).

Figure 2: Model of semantic conflict and irreversible investments incongruence

3. The research context

The research hypothesis was explored within a small rural bank. At that time the bank was facing
internal conflict due to a series of change interventions put forward by the management starting
from the 2001. It has a total of 30 employees, and 4 branches. The groups identified within the
bank are three: the change agents (high level management), the middle manager and the base
group that is formed by skilled newcomers and old unskilled employees. The changes operated by
the management can be basically divided in two groups. The first type of changes had the goal to
reorganize a set of internal procedures according to new national banking regulations. New
administrative procedures and a new information system were implemented. A second type of
changes, more substantial than the former ones, and more ambiguous in nature, had the goal to
shift the work model of employees from the standard front-office employee to that of a costumer
consultant (meaning that a single employee should be able to offer a wide range of services to the
customers and not only the standard services). The management adducing that competitive forces
were pushing for a more dynamic, modern and customer based view of banking operated this
second series of changes. To achieve this goal, a series of activities, such as learning seminars,
were organized for both the middle managers and the base employees. For this latter group, the
training activities were particularly focused on improving their knowledge of both the processes and
activities performed by the bank and on how to manage the client more effectively. Further, a
rotation schedule of the employees was planned and implemented. For the middle managers group
the training activities were mainly focused on providing them with a series of managerial
competences such as the management of meetings with collaborators.

3.1 The methodology

A multi-perspective methodology was used for the analysis. As figure 3 shows, a crucial aspect of
our analysis was the gathering of different types information which is implied by our theoretical
framework: the interpretations of individuals (in order to represent the semantic aspect of our
model), their irreversible investments (to represent the interests underlying semantic
representations), and the relationship between them (to represent how irreversible investments
influence the formulation of interpretations). Interpretations were analyzed trough ethnography of
six months, and by means of two series of open interviews at each organizational level made at a
distance of ten months. All this material was translated, according to Argyris and Schön, in the

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theories of action (TAs) of the various groups in order to represent the various interpretation
schemas at stake (Bonifacio and Zini 2005). For the sunk costs analysis no former method was
available and so we used a particular version of the narrative methods of life experiences that was
simply called “curriculum interview” (Denzin and Lincoln 1994). This method allowed the
identification, through an analysis of the curriculum vitae, of the capabilities, competences
developed by individuals during their life (including primary school and non working activities).
Each subject was further requested to cluster these capabilities, competences in homogenous
groups and evaluate each group in terms of effort spent in its development and its perceived
irreversibility. A triangulation of the gathered data was made in order to identify groups within the
organization.

Figure 3: Summarization of the methodology used

3.2 Conflicts and changes

In a first period both middle managers and base employees were unsatisfied with the changes.
Employees showed not to understand the need and rationale for such changes. These were
considered as imposed by the top management without their direct involvement and, moreover,
they were said to be unnecessary for such a small bank whose value is based on informality and
direct contact with the customer. The group that resisted more to these interventions was that of
the old middle managers who enacted a series of conflicting behaviours that sometimes took the
form of sabotage. In particular, these behaviours were focused against the new highly structured
information system procedures and against the new consultant metaphor. Sabotages against the
new consultant metaphor appeared as double-faced behaviours. On the one hand, during the
training seminars they declared to agree with the new consultant metaphor and the necessity to
change working models; on the other hand, during the daily work, they skipped to follow these new
practices while convincing the base employees that changes were wrong and always announced
too late.

After a year of false starts due to the sabotages and resistances of the employees, change agents
started to reconsider whether to step back or to change the way they were implemented. The first
hypothesis was immediately discarded since the changes were considered as a necessary
adaptation to law and market requirements. So change agents decided to reconfigure changes in
two main types being each directed to different audiences: operational versus substantial changes.
Operational changes, which included the structured procedures and the information system, were
forced trough a massive control also by means of behavioural tracing thanks to the improved
features of the information system. In this way, no one could skip the routines without being
instantaneously reported. For what concerns the substantial changes, specifically the consultant
metaphor, change agents decided to redirect all the effort to the base employees with a particular
attention to the young newcomers. This activity was performed without the involvement of the
middle managers that played usually a bridging role between the top management and base
employees. Middle managers were de facto excluded. These accepted the new situation without
fighting for their role. As a matter of fact, an implicit negotiation stated that substantial changes

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were addressed to the young and that the middle managers would not interfere or oppose if
expectations on their direct involvement was discarded.

Currently the change process is at an intermediate phase. At an initial stage, change agents had a
series of beliefs, expectations and objectives that were achieved only partially. The controllable and
more necessary changes were forced and implemented. The non-controllable ones, which have no
direct urgency due to law requirements (specifically the figure of the employee consultant), were
modified in their implementation according to the major o minor counteractions of the employees.
At first, old middle managers were fully contrary to the procedural changes but, as behaviours
became traced, they accepted them. For what concerns the consultant metaphor, middle managers
totally challenged the idea and forced change agents to directly engage only with base employees.
After a turbulent period the situation seems now to be quite stabilised. The extent of the strategic
actions and counteractions has been diminished and the bank seems oriented to a new stable
situation.

3.3 The conflict at a semantic level

The process described until now, could be usefully represented as a negotiation among alternative
knowledge. At the initial stage the involved actors had a series of mutually contradictory beliefs and
values. Figure 4 shows these beliefs and values by mean of the theories of actions (TA) developed
during the analysis. As it can be noticed, the contradictions among the theories are both at the root
of the series of actions and counteractions performed by the actors and the source of interpretative
inconsistencies among these communities. As a matter of fact, other TAs developed during the
analysis (that cannot be showed here due to space constraints) clearly show the great differences
of change agents’ interpretations and middle mangers’ interpretations about other important related
concepts like the nature of the competitive forces faced by the bank and the target costumer.

Figure 4: Initial TAs of change agents and old managers

During the conflict, in order to re-establish a proper organizational setting, each group was forced
to give up something of their interpretations and beliefs in order to get some advantage. For
instance, middle managers gave up on the operational changes while they heavily challenged the
consultant idea as the new working metaphor for the bank. They accepted, with some reservation,
the new information system and autocratic procedures at the prize of not being involved in the new
consultant metaphor activities. On the other hand, change agents gave up on the extent to which
the consultant metaphor had to be implemented (all the employees) at the advantage of gaining
more control over base employees. These dynamics were reflected into the TAs found during the
final period of the analysis. As figure 5 shows, TAs changed both to rationalize false starts and
compulsory behaviours.

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Figure 5: Theories of actions during the final phases of the analysis

It is our opinion that a classic knowledge management perspective cannot explain the dynamic
seen in the research context. In fact the case study rises a set of questions that cannot be easily
answered by an ingenuous knowledge perspective. For instance, why the change agents, instead
of reconsidering their interpretations of the customer needs, or of the environmental pressures,
continued the implementation of the consultant metaphor changing only the extent to which it
should be implemented? Or, why the middle managers, instead of reconsidering their perception of
environmental stability, the changed needs of the customer, or the utility of the consultant’s idea,
have only changed their evaluation about the dangerousness of procedural changes? Next section
tries to address these questions.

4. The conflict at a pragmatic level

From the point of view used in this research, the evolution presented above is related to the set of
interests that give sense to the knowledge perspectives of the involved groups. In particular we
found sunk costs as the major interests to be protected. In the case study change agents and
middle managers showed a set of totally incompatible interests.The analysis showed a major
emphasis of change agents on those sunk costs related to their work activities. Huge efforts were
made, trough master programmes and previous work experiences, to develop capabilities such as
“market trend analysis”, “organisational management”, “sensemaking sessions”, “interactive
training” etc. The organization development manager, just hired for operating the changes, seems
to be a sunk cost him since high level managers have invested “their face” on his recruitment
(interestingly, a responsible of organizational change in an organization of 30 people seems quite a
choice that needs a clear justification). This group showed less effort in developing extra-work
capabilities. For instance, two out of the three people forming this group do not have a family and
the set of irreversible capabilities necessary to manage it (e.g. skills to repair the house). Notice
that during the curriculum analysis, one of them was really shocked in realizing this fact.
Considering all this, it is possible to affirm that change agents interpretation schemas were oriented
in seeing the need for substantial change and in implementing it trough certain particular activities
such learning seminars. These interpretations and related activities were those able to preserve at
best the reuse of the change agents’ sunk costs.

At the other side of the conflict, old middle managers invested interests in totally different fields.
Their major investments were on capabilities related to extra-work activities such as hobbies, semi-
pro sport activities, and all the various “infrastructures” surrounding the concept of family (from
garden work to car maintenance). Consistently, their interpretations and consequent actions were
aimed at enacting a world able to preserve the reuse of these resources. That world was not the
one that was foreseen by change agents. Interestingly, these sunk costs were found in the
unskilled base employees as well being more developed in the old employees and less in the
young. This observation is compatible with the circumstance that viewed old unskilled employees
become allied of the middle managers while young employees were keener to accept substantial
changes. Following the research hypothesis proposed above, the irreversibilities found for both the
change agents and old middle managers have been used to explain the evolution of the TAs.
Figure 6 tries to summarize the TAs of the two main groups at the end of the analysis and their
major sunk costs. In short, while negotiations were explicitly experienced at a semantic level

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(different interpretations) they were deeply rooted in pragmatic considerations (preserve

irreversibilities). On this ground, each group was keen to change his mind on some issues (those
that did not involve a loss in sunk costs) but would not accept to change his mind on others (where
sunk costs would be threatened).

Figure 6: Final state of TAs of change agents and old managers and their respective sunk costs

5. Conclusion
This study has started from the consideration that knowledge management studies, although giving
important contributions for the analysis of semantic conflict and boundary spanning, risk to fall in a
ingenuous view of knowledge and organizations as they separate knowledge from its political
nature. In this sense, the knowledge invested in practice perspective allows to overcome this limit
underlining how knowledge is often embedded in a series of activities, technologies and practices
that often shape the evolution of knowledge itself. Unfortunately such approach was not able to
give a clear-cut definition of the nature of the interests at hand and how they shape knowledge
evolution. Here an answer to these problems has been suggested. We identified sunk costs and
sensemaking activities as respectively the interest at hand and the process that links knowledge to
interests. Our “pragmatic” reading of knowledge conflicts finds its root in the inconsistency among
investments of one part with those of the other. In fact, if the perspective of the old manager
prevails, the investments of change agents would be useless (starting from the responsible of
organizational change himself). Vice versa, if the interpretative frame of the change agents
prevails, the investments of the middle managers would be in danger. On the base of this situation,
a negotiation process started aiming at finding equilibrium able to minimize the waste of
investments for both parties. Apparently this conflicting process is performed at a semantic level:
the different communities see the world in totally different ways and conflict manifests at the level of
beliefs and ideas. On the other hand, we propose that behind the immaterial and legitimate level of
ideology, a rather material economy and politics of sunk costs drives the process of semantic
negotiation. The case study presents a first attempt to experimentally test such hypothesis. Clearly
further research is necessary both from a theoretical and a methodological point of view.

6. Acknowledgements
It is our pleasure to thank Elena Tonetta for her helpful and worthwhile contribution in the first part
of this research.

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Argyris, C. and Schon, D. A. (1996) Organizational learning II: theory, method and practice.
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Davenport, T.H. and Prusak, L. (2000) Working Knowledge, Harvard Business School Press.
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A Constructivist Approach to IC: A Case Study
Roberta Cuel
DISA, University of Trento, Italy
[email protected]
Abstract: The aim of the paper is to show how Intellectual Capital (IC) can be measured in a real case study:
SPES Trento Cooperativa Sociale. This firm manages five homes (residences) for the elderly in northern Italy,
and has invested a lot of resources, in terms of time and money, in Research & Developments (R&D) projects.
SPES Trento aims to innovate its internal processes and services, revealing/showing the significant role of
knowledge measurements, rising workers’ consciousness about knowledge as a fundamental element for
good quality services, improving inmates’ healthiness (inmates are called guests by Spes Trento employees)
and workers’ welfare. One recent R&D project entailed the evaluation of IC within the firm according to a
constructivist approach. This work is based on well-known Intellectual Capital literature. The underlying idea is
to draw up plans aimed at exploiting the organizational knowledge assets and at investing in them, thus
increasing their values. The achieved results are summarized in the 2005 annual report.
Even if many experiments on knowledge management and Intellectual Capital are currently being carried out
in Europe, this seems to be one of the first attempts to measure knowledge in the Italian healthcare sector.
Another innovative aspect derives from: (i) the use of groupware applications that allow people to share
knowledge and documents in a common virtual space (ii) the creation of a heterogeneous group of workers,
involving stakeholders’ employees, such as local government officers. This heterogeneous group of
participants has been involved in the project in order to share knowledge, perspectives, ideas, and define new
IC ratios and measurement criteria. This case study shows a constructivist approach to Intellectual Capital and
identifies some positive results.

Keywords: Intellectual capital, constructivism, case Study, healthiness and welfare, annual account

1. A short overview of intellectual capital theories

John Kenneth Galbraith used the word Intellectual Capital (IC) for the first time in the 1969 (Feiwal,
1975), considering it not only as the product of knowledge, but also, as the economic value that
knowledge can produce and develop within a firm. Later in the ‘90s, theories of the IC were
developed in Northern Europe (Stewart 1994, 1997, 2002; Sveiby 1997; Teece 1986; Serenko and
Bontis, 2004; Bontis, 2004), and have been used in many business cases. Many companies have
integrated the traditional accounting system with some IC rates In particular, the Swedish group
Skandia has published the “Skandia Intellectual Capital model” in 1994, which represents one of
the most important cases. Some others are:
ƒ Karl Sveiby’s intangible assets monitor (www.sveiby.com.au);
ƒ The excellent scorecard described in the annual report of Celemi (www.celemi.se);
ƒ Various useful techniques in Patrick Sullivan’s Profiting from Intellectual Capital: Extracting
Value from Innovation;
ƒ Paul Strassmann’s methods for calculating knowledge capital (www.strassmann.com);
ƒ The Skandia navigator developed by Leif Edvinsson (www.skandia.com).
Ideally, IC can be categorized in three macro areas:
ƒ Structural capital: composed by knowledge that becomes property and patrimony of the
company. For instance: the organizational model and strategy, the firm culture, organizational
processes, intellectual properties, IT investments, patents cited by others, etc.;
ƒ Human capital: determined by the competences and skills of workers. Some relevant variables
are: average number of years of service, average educational level, hours of training, employee
turnover, gross margin from new products, R&D intensity investments, etc.;
ƒ Relational capital: produced by the continuous relationships between the organization and
customers, suppliers and others firms’ stakeholders.

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2. Description of the project

In June 2005, Spes Trento Cooperativa Sociale started a triennial research project, called
INterdipendences and CONnections with SPES (InConSPES), in collaboration with the Department
of Computer and Management Science (DISA) of the University of Trento. Spes Trento is a
company that manages five homes for the elderly in the north of Italy. One of its innovative aims is
to analyze, from a knowledge management perspective, the needs of knowledge sharing among
units, also by using new ICT technologies. In particular, Spes Trento aims at improving workers’
knowledge and at enabling innovation within the organization, through a series of steps related to
knowledge management. These are:
ƒ The analysis of communication processes within the firm,
ƒ The study of the co-dependences among technologies and organizations (both humans and
processes),
ƒ The state of workers’ welfare,
ƒ The inmates’ health conditions and well-being,
ƒ The identification of rates of knowledge performances.
This paper focuses on this last task, the evaluation of knowledge performances, which was carried
out in the 2005 annual report. The initial aim was to advance the work accomplished by the 2004
annual report, by revising it according to the Intellectual Capital literature (Stewart, 2002). Now,
however, it is part of a larger plan that involves the Italian National Healthcare Plan (developed
and published by the healthcare Italian Ministry Office). The latter contributes to emphasizing the
importance of intangible assets and IC within the whole sector of health care, such as:
ƒ The human capital: skills and competences;
ƒ The structural capital: processes, IT infrastructures and archives, etc.;
ƒ The relational capital: knowledge that derives from good relationships between practitioners
(e.g. doctors, nurses, physiotherapists) and stakeholders (e.g. guests’ relatives, city council
members of the healthcare and welfare sectors).
These indications provide a lot of insights, also for Spes Trento, which revisited the 2005 annual
report in order to focus on the structural, human, and relational capital of the firm.

2.1 The teamwork

A group of officers, who constitute the team, has supervised the revision of the annual report
according to the IC theories and published the 2005 final document.
The team is composed of several workers of Spes Trento and other representatives of
stakeholders (such as public and private organizations which operate in the Province of Trento).
The members are the following:
ƒ The CEO of Spes Trento;
ƒ Three executives of Spes Trento homes for the elderly;
ƒ A doctor;
ƒ Two nurses;
ƒ Five members of central offices (i.e. the administration officers, two human resource officers,
the quality officer, and the R&D coordinator);
ƒ Three delegates, respectively of the local government, the regional nursing school, and one
CEO of another public home for the elderly.

2.2 The method of analysis

A qualitative analysis, in particular an ethnographic approach, has been employed as the working
method Ethnography is based on the participation of the observer within the firm, who tries to
obtain a detailed understanding of the circumstances, strategies and power of the few subjects

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being studied, but cannot determine the significance of what she/he observes without gathering
broad statistical information (Spradley 1979).

The author, an investigator of the INConSPES project, has actively participated in the actions taken
by the team members, introduced a new learning approach based on constructivism, and
coordinated the work of the group. The active participation of the team members allowed the
identification of some criteria of analysis (intellectual capital ratios), and the constructivist approach
enabled participants to better understand and then transform their reality (Mouritsen, 2004).

2.3 The constructivist learning approach

The learning process, implemented in the project, yielded two positive results. First, it improved the
personal knowledge of each single team member, provided a common understanding of some
basic theories of IC, and enabled knowledge sharing among participants. Second, it allowed team
members to analyze, identify, use knowledge performances ratios within the 2005 annual report, by
identifying some inefficiency to be overcome, and by addressing new organizational strategies.

At the beginning, participants studied some basic IC theories, and discussed them in order to find
new solutions. The process of learning was based on a knowledge management constructivist
approach (Berger and Luckmann 1966; Weick 1979), adopting the “sense-making” technique
(Weick 1995). This one is based on the following elements:
ƒ A framework: the system of mental constructions that individuals use when interpreting objects
or reality. In a collective sense, it is the systems of values, routines, stories that are embedded
in the organizational culture;
ƒ An issue: an object that acquires a meaning only if connected to the framework;
ƒ A cognitive shock: a gradual or radical interruption of the continuous flow of the interpretations
of issues. This interruption is usually caused by a significant deviation between expectations
and interpreted issues. Namely, individuals or groups recognize issues and experiences but are
not able to interpret them in a sound way as long as framework changes take place.
According to Weick, to make sense means to create order and understanding among experiences
by applying mental frameworks. The process of connecting a framework to an issue, which has
been introduced into the mind or into an organizational environment, is the very core of making
sense. Besides, routines and well-established practices correspond to a specific framework, and
only a cognitive shock allows changing them.

The cognitive shock appeared at various levels, at the beginning of the project and during the
identification of ratios. For instance, at the beginning of the project team members intended to
redefine the 2004 annual report according to traditional systems of evaluations. The introduction of
a new theory, the IC one, forced them to understand a new method of analysis, even if it was
perceived very far from worker daily activities. Constructivist approach enables informal
communication processes as ``horizontally oriented'' processes in which participants negotiate the
meaning of the content of communications. Team member participate to some specific activities,
discussing and combining their (apparently incomprehensible) visions. They cooperate to build
socially constructed ratios that are used in the 2005 annual report (they will be described in the
following paragraphs). These ratios are the result of a ”sense-making” process (Weick 1995; Weick
and Roberts 1993), which includes the sharing of common values of the firm, and a sense of
identity and belonging to the organization itself.

3. Some previous results

The research activitiy of the Spes Trento team yielded some results: both in terms of the general
methodology and the tools to manage the group, as well as the more practical 2005 annual report.

3.1 Results of the learning approach

The team members studied the IC theories in order to create a common framework that would
enable them to understand their daily practices according to a new approach. These new theories

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allowed members to see their working environment from a new perspective. This new perspective
showed them new opportunities as well as problems to overcome. Members identified a new issue:
the definition of rates of knowledge performance that would be useful for a health and social
assistance organization. Two significant cognitive shocks emerged.

The first one occurred at the beginning of the project, when some member of the team did not
understand the need to study intellectual capital. They did not perceive the need to introduce new
theories of intellectual capital to identify some performance ratios in the healthcare sector. After
several meetings, strong discussions and a number of readings, participants changed their mind,
considering IC very helpful in their daily activities. In particular, a nurse said:
“I had to study these theories even if I was convinced that IC was completely useless
for my activity. After the initial difficulties due to having to read the material, I realized
that it could be very useful to understand and thoroughly analyze my work. Now, after
a few months, I can see how IC ratios might give me a way of evaluating the quality of
my work, and offer me useful criteria to improve it”.
The second one happened when the deep analysis of data about turnover and part-time work
yielded a result very different from the expected one. Hence, the CEO and other teamwork
members decided to organize a series of specific meetings to better understand and interpret the
new data as framework changes were taking place. Now ratios that refer to turnover and part-time
work are the most important results of the 2005 annual report, and they will be thoroughly analyzed
hereafter.

3.2 Results of the 2005 annual report

The results of the project are depicted in the 2005 annual report of Spes Trento, both in its
structure and contents. The document is organized in three areas, in line with the IC theories:
ƒ The structural capital: physical structure of homes (offices, inmates’ rooms, open spaces,
gardens), organizational processes, organizational strategy and culture, the information system
(called SISPES), etc.
ƒ The human capital: competences and skills of the human resources of Spes Trento, the
turnover of the staff and the variation of knowledge deriving from this flows, training activities,
etc.;
ƒ The relational capital: knowledge that derives from the relationship with inmates’ relatives,
Public Administration, groups of volunteers, etc.;
In the following sections, only few selected ratios will be described.

3.3 Some innovative ratios

A Scandinavian study (Bonani, 2002) showed that, in the healthcare sector, the net worth
determines the material and tangible value of a firm. It only accounts for the 15% of the entire
business wealth. On the contrary, the non-material and intangible assets make up almost 85% of
the entire business wealth. In the analysis of the IC of Spes Trento, the team has estimated a
slighter thickness of intangible assets, which correspond to the 60% of the entire business wealth.
This result is due to the high level of technological literacy, the innovative structures, the high level
of explicit and well-formalized knowledge. In particular, in the last few years, a lot of efforts have
been devoted to making the personal knowledge of doctors, physiotherapists and nurses explicit.
The total amount of Spes Trento’s IC amounted to €14.095.627,50 in? 2005 and to €14.073.877,50
in 2003; in particular, as shown in figure 1, it was equally distributed among structural, human and
relational capital.

In particular, the structural capital refers to the physical structure of the homes for the elderly, the
coordination processes of the company, information, and communication processes among
organizational units, etc. The human capital refers to the system of workers’ competencies, the
quality of medical, and physiotherapeutic services, the total amount of time dedicated to social and
religious services. Finally, the relational capital refers to the degree of customer satisfaction related
to some services: nursing, cleaning, restaurant, laundry, and coiffeur.

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Figure 1. Percentages of structural, relational and human capital

3.3.1 The structural capital

The 2005 annual report describes the following aspects of the structural capital:
ƒ The description of the organizational model;
ƒ The description of innovative factors of each home for the elderly, and their distinctive
characteristics;
ƒ The information system, called SISPES, developed and adopted within Spes Trento;
ƒ The evaluation of the ability to coordinate each single unit and role;
ƒ The evaluation of the ability to communicate with stakeholders (inmate’s relatives, public
administration, etc.).
Figure 2 shows the level of users’ satisfaction for some elements of the structural capital:
ƒ The structure: level of comfort of the homes, quality of the furniture in the rooms and in the open
and outdoor spaces, the possibility of personalizing spaces and services, the quantity quality
and availability of medical equipments;
ƒ Coordination and organization: the organizational ability to coordinate and organize daily
activities;
ƒ Information and communication: clarity and thoroughness of the information provided by the
various professional figures of the home;
ƒ Personalization: level of personalization of health and social services offered to inmates.

Figure 2: Level of satisfaction of the structural capital

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3.3.2 The human capital

According to Stewart, the human capital is the primary source of innovation, from which new ideas,
products, or services, spring. In addition, talented and creative workers who are strongly motivated
to participate in the daily activities of the firm, become the strategic core of human capital. For this
reason, a positive atmosphere in the working environment enables workers to meet, compare and
share experiences, information and data, thus creating their collective knowledge.

The 2005 annual report describes the following aspects regarding human capital:
ƒ Number of employees;
ƒ Gender distribution of employees, for each organizational role;
ƒ Education level and professional training;
ƒ Hours of internal training activities and their distribution among the organizational roles;
ƒ Distribution of employees’ nationality. It emerged that a greater number of highly educated
foreign people work in the homes;
ƒ Workers’ average number of years of experience with Spes Trento. The turnover resulted very
high;
ƒ Number of interdisciplinary meetings, teamwork, and R&D projects, which enabled knowledge
sharing and both incremental and radical innovation;
ƒ Amount of part time contracts. Part time work makes it possible to manage more flexibly human
resources, to assure a a higher workers’ satisfaction due to the reduced amount of very
stressful work, and to meet women’s needs (more free time is required to tend to family,
children, etc.)
An interesting ratio is defined by the following formula:

This ratio derives from the elaboration of the most known turnover formula described in (Stewart,
2002). The aim is to measure the changes in the amount of knowledge generated by movements
(dismissal and engagements) of employees during a year.
As a working method, we selected three variables and a relative weight, such as education level,
work experience in the company (seniority) and type of contract (part time or full time). The sum of
each worker’s variable and weight should be divided for the number of cases taken into
consideration, deriving an average ratio. The result of this computation might be:
ƒ A positive value: indicating that the average of acquired knowledge is greater than knowledge
lost by discharging employees;
ƒ A negative value: indicating that the average of acquired knowledge is lesser than knowledge
lost by discharging employees;
ƒ A null value: indicating that during the year the value of acquired knowledge is equal to the
value of knowledge related to dismissals.
In carrying out the analysis, we decided to take into consideration the organizational roles that
show the higher turnover during 2005: socio-sanitary assistants/social and health workers,
physiotherapists, and enliveners (called in Italian animator: people paid to entertain inmates).

As we can see in figure 3, the variation of knowledge, deriving from turnover, yields a negative
value for 2005. In more detail, this is due to the fact that people holding a lower degree was hired
and high experienced workers were dismissed.

Conversely to social and health workers, the knowledge performance ratio deriving from the
turnover of animatori, presents a positive value as far as the educational level is concerned. As a

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matter fact, new employees have a higher and very specialized degree, which enables practitioners
to use their competences, tailoring services to the inmates’ needs.

Figure 3. Knowledge performance deriving from turnover of socio-sanitary and social assistants

Figure 4. Knowledge performance deriving from turnover of animatori

Figure 5. Knowledge performance deriving from turnover of physiotherapists

Finally, the knowledge performance ratio deriving from turnover of physiotherapists yields a
negative result, mainly caused by the number of experienced people discharged. As previously, the

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level of education shows a positive value, but in this case it depends on the fact that a new course
in physiotherapy is offered by Italian universities. In conclusion, it is important to note that in all
three examples, the experiences ratio does not consider the know-how accumulated by people in
previous positions, in other companies. It is very complex to evaluate/estimate the situation, and
Spes Trento does not have any data on that. Therefore, the outcome of the experience ratio is
obviously negative. The process of analyzing and defining this ratio enabled team members to
think about the main characteristics of turnover, by recognizing its features, and finally by taking
action to improve the knowledge performance. In particular, considering the high level of turnover
of these roles, some actions might be taken to reduce the negative consequences of this process.
For instance, the negative results from education can be reduced by a massive and continuous
investment in training activities. Establishing processes and practices that could enable people to
make knowledge explicit might reduce the negative values of the lost experiences. For this reason,
Spes Trento has invested many resources (in terms of money and time) to implement and maintain
an information system called SISPES. Finally, even if the value of turnover is often negative, the
firm will not reduce it in order to:
ƒ Enable flexibility;
ƒ Allow workers, in particular women, to strike a good balance between work and private life
(more free time is required to tend to family, children, etc.);
ƒ Increase the well being of workers that have to deal with very stressful activities.
Thus, a new version of turnover ratio should take into consideration these features.

3.3.3 The relational capital

The knowledge, deriving from the relationships with customers, suppliers and other stakeholders,
represents the relational capital of the company, namely the system of relations that could assume
economic value, innovating products, and services.
Figure 6 describes the level of satisfaction of the relational capital related to three different
services:
ƒ Nursing service: it is composed of four elements: courtesy of nurses, clarity and completeness
of information provided to the relatives, trust/? That relatives have in the services provided by
nursed;
ƒ Restaurant service: it focused on the possibility of personalizing dishes, and the capacity of
preparing good food;
ƒ Cleaning service: it is based on the perception that the cleaning services are good for both
outdoor and indoor areas.

Figure 6. Relational capital

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4. Final remarks
In conclusion, it should be pointed out that in spite of the theories of the Intellectual Capital and the
new indications disseminated by the National Healthcare Plan, the adoption of knowledge
management approaches in the healthcare sector is still lagging behind. Only few experiments,
based on intellectual capital, have been published so far. The 2005 annual report, presented in this
paper, is only one thin end of the wedge, but constitutes the first building block for carrying out a
thorough work on knowledge management in the Italian healthcare sector. Thus, it should be
refined and revisited in order to complete and exploit it to other organizations. The system of ratios
can become a tangible structure of comparison, forcing homes for elderly to measure their
knowledge, if needed recover it, and then improve services, and inmates’ welfare. In any case, it is
important to note that this experiment has enabled team participants to have a deeper
understanding (through the sensemaking approach) of their activities, knowledge sharing
processes, and system of measurements. This sensemaking process provided them with several
insights for future research activities and daily work.

5. Acknowledgements
This job has been carried out within an Italian research project called InConSPES. For more
details, please, please take a look at http://fandango.cs.unitn.it/net-economy/InConSPES/. The
author gratefully thanks SPES Trento Cooperativa Sociale for funding the project and in particular
all the members of the teamwork.

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Teece D. (1986), Profiting from tecnological innovation, Research Policy.
Weick, E. K. 1979. The social psychology of organizing. McGraw-Hill Inc.
Weick K.E. (1995), Sensemaking in Organizations, Sage Publications.
Weick K.E. and Roberts K.H. (1993) “Collective mind in Organizations: Heedful interrelating on
Flight Decks”, Administrative Science Quarterly, Volume 38, Pages: 357-381;

Web sites:
www.sveiby.com.au
www.celemi.se
www.strassmann.com
www.skandia.com

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An Innovative Measurement Framework for a
Government Knowledge Management Initiative
Kimiz Dalkir1, Erica Wiseman1, Michael Shulha1 and Susan McIntyre2
1
Graduate School of Library and Information Studies, Montreal, Quebec, Canada
2
Defence R&D Canada, 344 Wellington Street, Ottawa, Ontario, Canada
[email protected]
[email protected]
[email protected]
[email protected]

Abstract: The Canadian Government launched the Chemical, Biological, Radiological, and Nuclear (CBRN)
Research and Technology Initiative (CRTI) in May 2002 to increase Canada’s scientific and technical
knowledge and preparedness in preventing and responding to terrorist attacks. Part of CRTI’s mission has
included bridging organizational boundaries, bringing scientific and technical experts and first responders
together to share their knowledge and resources in order to increase Canada’s response capability.

Effective knowledge management (KM) has been an important element in achieving this goal. In a community-
based initiative like CRTI, KM plays a key role in facilitating effective interactions and collaboration within the
CBRN research community, stimulating knowledge creation, and disseminating knowledge to the broader
CRTI community. After three years of activity, it is important to determine the extent to which KM is
contributing to the achievement of CRTI’s mandate. To obtain informative metrics in this case, it is necessary
to focus on non-financial outcomes and show KM's impact on CRTI's broader goals in a logical manner. The
challenge is that there are currently no metrics systems that fit CRTI’s particular measurement objectives
entirely. In addition, there is a trend in Canadian government towards results-based management – an
approach to management and performance evaluation, which has not yet been investigated in KM research,
but has the potential to successfully capture the context and KM measurement goals of CRTI. A joint research
project was created between CRTI and the Graduate School of Library and Information Studies at McGill
University to develop an innovative metrics framework built on the results-based management method in order
to measure the impact of KM at CRTI. This paper will describe the results-based management approach to
KM metrics; outline the research methodology undertaken at CRTI, and the resulting KM metrics framework
that was developed for CRTI.

Keywords: Knowledge management, metrics, and results-based management

1. Introduction
Organizations that implement knowledge management (KM) need to be able to show the business
value that knowledge sharing and reuse bring to their organization. Metrics help an organization
guide and adjust its use of KM by providing feedback on the initiatives and helping it set realistic
targets and goals (Hanley 2001). However, measuring the success of KM continues to be a
challenge for many organizations (Vestal 2002), largely due to a misconception that KM
measurement consists only of a bottom line number that justifies investment (American Productivity
and Quality Center (APQC) 2000).

The secret to success lies in finding the right system of measurements (Pearson 2000).
Organizations must identify their specific critical KM success factors to design metrics that truly hit
measure the KM value of their ventures. As such, there can be no single perfect KM measurement
of success since definitions of success vary between organizations depending on their strategic
goals and objectives (APQC 2000). Further challenges of KM measurement include showing a
direct correlation between knowledge sharing and business results as well as the length of time
that significant return on investment (ROI) takes to incur.. Understanding the direct impact that the
people, content, processes and technology of KM have on business results requires its own
investment and time (Vestal, 2002).

As organizations learn to select appropriate measures for their goals, the results act as a
dashboard for the value and impact of KM. At every stage of the KM initiative, proper
measurements focus the organization’s attention on valued results and feasible improvements

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(APQC 2000). Once suitable measures have been identified, these metrics act as indicators, tools
and guidelines that help direct, manage and improve the KM strategy (Hanley 2001). With a clear
understanding of the KM strategy, its objectives and its potential impact, demonstrating the ROI of
the initiatives becomes more feasible (Vestal 2002).

Knowledge management metrics have evolved out of accounting frameworks and models that have
been adapted to measure intangible assets and intellectual capital such as the Skandia Navigator,
the Balanced Scorecard, the Intangible Assets Monitor, and the Value Chain Scorecard. As will be
discussed below, a Results-based Management and Accountability framework was chosen as an
innovative approach to measuring the knowledge management initiatives at CRTI.

2. CRTI and its KM vision

Following the events of September 11, 2001, issues of counter-terrorism and national security have
become a serious concern for Canada. In an effort to increase Canada’s preparedness and
capability to respond to such events, the Chemical, Biological, Radiological and Nuclear (CBRN)
Research & Technology Initiative (CRTI) was created. CRTI is a five-year, $170M CDN federal
program funded through the government’s Public Security and Anti-Terrorism budget. This
interdepartmental initiative involves 18 different ministries and agencies and represents the federal
science community’s commitment to providing scientific knowledge, research and technology to
prevent and respond to CBRN attacks. CRTI has created a network of laboratories and various
research and technology projects in collaboration with industry, academic and first responder
communities (e.g. police, firemen, ambulance technicians etc…) to “create clusters of federal and
other government labs, create a fund to build S&T capability in critical areas, accelerate technology
into the hands of the First Responders community and other operational authorities and provide
funds to those areas where national S&T capacity is deficient owing to obsolete equipment, dated
facilities and inadequate scientific teams” (CRTI Framework, 2002: 6). In meeting these goals,
CRTI will address “the need for horizontal co-ordination across department/agencies and their
clients/stakeholders…the need to prioritize and match response to risk assessment, the need to
account for and effectively harness existing S&T capacity, programs and agreements and the need
for clients to be engaged in establishing expectations for CRTI outcomes, and in exploiting these
outcomes” (CRTI Framework 2002: 6).

Within CRTI, there is a KM function, whose purpose is to facilitate the achievement of the CRTI
goals through KM initiatives and tools. The KM strategy at CRTI is focused on enabling effective
interactions in the CBRN research community, stimulating science and technology innovation and
knowledge creation among project participants, and providing knowledge to the broader CRTI
stakeholder community.

The CRTI KM strategy is built upon KM theory and premises that focus on recognizing and
managing the role of knowledge in organizational learning and innovation. These theories have
helped CRTI identify the following ten principles as the focus for the KM department:
1. There must be a reciprocal exchange of knowledge between first responders and the R&D
community, with good validated information via feedback loops, to ensure operational
relevance of research and technology development.
2. Interoperable mechanisms for sharing common knowledge (e.g., diagnostic lab test results)
must be available within clusters, between clusters and with the CRTI Secretariat.
3. Knowledge must be synthesized and made available in different formats for different target
audiences, e.g., layman terms in public information documents.
4. Knowledge must be captured to be made available to other stakeholders, e.g., identifying
subject matter experts in a variety of disciplines.
5. This knowledge must be archived in a repository.
6. A network must be established for timely knowledge exchange and so that stakeholders can
deliberately apply knowledge to scientific, technical or operational situations with intent and
purpose.

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7. Knowledge must be embedded in the overall emergency management process.

8. An appropriate organization which respects existing procedures, authorities and structures is
required for effective KM, i.e., informal networks that are capable of dealing with the
unexpected in addition to formal groups that are well prepared to deal with the expected are
both required.
9. KM must add value, e.g., by creating synergy (mixing departments, disciplines, different forms
of expertise) and by creating trust (because lack of trust is what causes a breakdown in
communications).
10. The effectiveness of knowledge must be measured to determine whether it is doing what it was
intended to do, benchmarked against standards, and tested in models, real world exercises,
and field trials.

3. CRTI and McGill university: A joint research project in KM metrics.

In 2005 a joint research project between CRTI and McGill University, under the direction of Dr.
Kimiz Dalkir and Susan McIntyre, was undertaken to develop and implement an appropriate metric
system for CRTI’s KM function. While the KM function had initially begun exploring its
measurement strategy through a results based management accountability framework perspective,
the first step of the research project was to determine if this was in fact the most appropriate
framework for CRTI. The initial step therefore was to evaluate the current academic and practice-
based literature on KM metrics to aid in assessing whether or not the RMAF was the best approach
for CRTI. The following questions paired with the subsequent best practices garnered from the
literature review allowed the research team to better understand the KM function’s measurement
objectives and thus create a targeted customized measurement solution for them.

Why are we measuring? A well-designed measurement strategy is essential to understanding the

success or failure of any knowledge management initiative and helps with its continuous
improvement (Smith 2001).
For CRTI, there were two major goals in producing a measurement framework:
1. To quantify and show that the CRTI KM model and goals are appropriate, achievable and
measurable.
2. To evaluate the impact of the various KM initiatives on CRTI’s preparedness, capability and
capacity to respond to CBRN terrorist attacks.
For whom are we measuring? Identifying and targeting the interests of key stakeholders is a critical
step in designing KM metrics (Smith 2001). In the case of CRTI the project has many stakeholders
including the federal government of Canada, the Canadian people, operational communities, and
the federal and international science and technology community. For each of these stakeholder
groups, there is an interest in determining if the invested efforts contribute to tangible results.When
will we measure? Metrics should be linked to the maturity of the KM initiative (Smith 2001). In the
case of CRTI it has been determined by the KM team that many of its initiatives have reached a
stage of maturity where significant performance metrics can be collected. What we will measure?
KM measures should be tied to specific initiatives and objectives and should reflect the critical
success factors of a given initiative (APQC 2000). The following KM initiatives and their objectives
have been targeted by the research term for measurement.
ƒ Intranet portal solutions (IPS) - to offer online access to CRTI information and documentation,
CBRN expertise and knowledge, and to encourage virtual collaboration and exchange by
creating tools and methods for sharing knowledge,
ƒ Collaboration support (CS) - to aid and support existing and new communities of practice in
achieving objectives; to enable effective interactions inter-community, pan-community, and with
the wider CRTI community and by creating synergy and trust; to create opportunities to facilitate
learning and knowledge creation from CRTI experiences; and to encourage reciprocal
dissemination of knowledge between CRTI stakeholders and First Responders,
ƒ Knowledge products (KP) - to capture, create and disseminate knowledge products that apply
CBRN knowledge to CRTI goals in order to support the work of CRTI and the knowledge needs

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of stakeholders and to ensure that this knowledge is synthesized and packaged in a manner
appropriate to each audience,
ƒ Knowledge and information management structures (KM/IM) - to create and implement
knowledge and information management (KM/IM) structures, processes and tools to assure
current and future accessibility, and
ƒ Communications and media relations (CMR) - to establish strategies and guidelines for efficient
and appropriate communications among CRTI stakeholder groups and with the media in order
to develop and maintain positive relationships and to increase visibility of CRTI and help
promote it as a legitimate and credible voice on CBRN issues.
How should we measure? Methods for collecting data vary depending on what is being measured.
For IT-related initiatives, the best practice is often to build usage metrics directly in to the IT system
(Smith 2001). For non-IT-related areas, Raimann et al. (2000: 29) suggested the following best
practices on how to conduct measurements:
ƒ “Measurement should not stand in contradiction to enabling conditions.
ƒ Measurement has to be transparent.
ƒ Measurement should be based on realistic goals.
ƒ Quantitative and qualitative methods should be considered.
ƒ Measurement should be linked to skill building”.
Following these best practices it was decided that a mix of quantitative system metrics and
qualitative metrics, which will be discussed in more detail below, would be used.

How should we display and analyze results? There is a variety of measurement models designed
to measure intellectual capital, which were reviewed prior to selecting how best to display and
analyze the results of CRTI’s KM function. The initial options included the Value Chain Scorecard,
Skandia Navigator, Intangible Asset Monitor and the Balanced Scorecard – each of which will be
briefly reviewed below.

The Value Chain Scorecard, which was created by Lev in 2001, is a model for measuring
innovation. This model is particularly useful for organizations that are heavily focused on R&D for
new products, patents, etc. The model identifies three phases of innovation as 1- discovery and
learning, 2- implementation and 3- commercialization. Each of these phases is associated with 3
additional indicators that can be measured. The Value Chain Scorecard aims to identify “…the
ways in which knowledge is developed, integrated, transformed and employed” and to isolate the
impact that these indicators have on the company’s processes and operation (Zambon 2003: 182).
These indicators are designed to be standardized and provide input into decision-making
processes and to support investor disclosure at different levels of the organization’s operations.
While the standardization might allow for benchmarking and comparisons across organizations,
one of the drawbacks of this model is that the indicators are designed to be expressed only in a
quantitative terms - thus leaving out all qualitative performance information. The Skandia Navigator
model was designed to evaluate and measure intangible assets (IA) and intellectual capital in a
way that allows the organization to plan for the future. This model requires that each business unit
create its own set of IA indices. These indices include metrics that address the following five
perspectives: financial, customer, process, renewal & development, and human. With these
perspectives an organization can then evaluate and make decisions based on its past performance
(financial), current performance (customer, process, human) and future performance (renewal &
development). The main benefit in using the Skandia Navigator as a measurement model is that it
provides a method for measuring intellectual capital and a means to view the various components
that have an affect on intellectual capital over time (Zambon 2003)

Sveiby in 1997 and shows how intellectual capital can be broken down into three categories
designed the Intangible Assets Monitor (IAM): external structure, internal structure and personal
competence. Each of these categories is measured along three focus points: growth/renewal,
efficiency, and stability. The contents of each category will change and adapt for each organization
depending on their measurement goals (Zambon 2003). One of the challenges in using the IAM

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model to measure the success of KM initiatives is the clarity with which one must understand the
link between the goals of those initiatives and the goals of the organization as a whole (Smith
2001). Kaplan and Norton first introduced the Balanced Scorecard in 1992 in the Harvard Business
Review. The Balanced Scorecard is a simple framework and tool that allows strategy to be clearly
articulated and acted upon. The underlying purpose of the Balanced Scorecard model is to be able
to look at traditional financial variables in combination with non-financial operating measures in an
effort to create a holistic view of the organization. Combining financial and operating measures
allows analysts to form what the Kaplan and Norton maintain is a balanced view of an
organization’s performance. These traditional financial and non-traditional operating measures are
broken down into four performance perspectives:
ƒ Customer perspective;
ƒ Internal perspective;
ƒ Innovation & learning perspective;
ƒ Financial perspective.
In each of the four perspectives, management defines specific goals and assigns specific
measurements, both financial and operational, to gauge the success of the organization in meeting
these goals. Its main strengths are its flexibility and adaptability for measuring and strategic
planning at the outcome, output and system levels, as well as its built-in strength of linking learning
and measurement to pre-defined business objectives. Over the years, the BSC has become less of
a tool for measuring and reporting intellectual capital, and more of an essential part of strategic
planning and measurement in organizations worldwide (Zambon 2003). After reviewing and
assessing the applicability of these models to the KM function’s needs, it was decided that the
Results-based Management and Accountability Framework (RMAF), which was already the
structure for CRTI’s management and accountability, would be an innovative and yet appropriate
method for analyzing and displaying the results of the KM activities.

4. Results-based management and accountability framework

A Results-based Management Accountability Framework is a tool designed specifically to help
track, manage and measure the outputs and outcomes of an organizational initiative and is ideally
suited for ensuring that strategy is continuously aligned with the objectives and goals of the
organization. There are eight key stages in the development and implementation of a RMAF which
include:
1. Program profile, logic model creation and clarification, identification of strategic outcomes and
key evaluation goals
2. Identifying performance measures
3. Establishing appropriate data gathering strategies and tools
4. Gathering the data
5. Reporting of performance results
6. Reviewing, assessing and modifying the initiative and/or activities
7. Formative evaluation of management issues
8. Summative evaluation of fundamental initiative issues (Treasury Board of Canada Secretariat
(TBS) 2001).
The creation of the logic model in step one is the critical component that allows the RMAF to
maintain accurate and measurable links between the activities and their outcomes. The logic model
graphically identifies and maps the logical connections between the activities of an initiative and the
achievement of their possible outcomes. It shows the chain of results between the activities and the
final outcomes and identifies the steps in between that must occur for the achievement of the final
outcomes. (TBS 2001).

All logic models contain 3 core components: activities, outputs and outcomes of the initiative.

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ƒ Activities consist of the specific actions that will be carried out in the initiative. These include
the specific activities that lead to the attainment of the final outcomes of the initiative and
exclude activities such as administrative work.
ƒ Outputs are the initial tangible results of the planned activities and provide measurable
evidence that an activity has been accomplished.
ƒ Outcomes are typically broken down into at least 3 levels and are all associated with verbs
such as enhanced, enabled, increased etc. It is important to note that the failure to identify a
verb in an outcome can often be a sign that the outcome is inappropriate or not measurable.
ƒ Immediate Outcomes represent the foreseeable short-term consequences of the activities and
outputs.
ƒ Intermediate Outcomes follow the chain of logic that has already been established and answer
the question “what will be the impact of the immediate outcomes”.
ƒ Final Outcomes represent the ideal strategic outcomes of the given initiative. Because final
outcomes are long-term goals, and are subject to organizational and environmental influences
beyond the accountability of the logic model, they are not, as a general rule subject to
evaluation.
Logic models are ideally created through group working sessions involving managers,
stakeholders, and persons responsible for the eventual evaluation of the outputs and outcomes. It
is also important to note that designing a logic model is intended to be an iterative process, the
results of which ideally represent a shared understanding between management, stakeholders, and
the eventual evaluators of the initiative’s activities, outputs and most importantly, their outcomes
(TBS 2001). The advantage that the RMAF provides as a measurement framework for KM
activities is that the logic models are directly tied to the process of accomplishing the goals of the
initiative. Designing metrics then, consists of moving step by step through the various levels of the
logic model and identifying the most appropriate and relevant measurements for each
output/outcome.

4.1 The KM-RMAF at CRTI: Steps 1, 2 and 3.

The CRTI KM logic models were initially created on the basis of the KM objectives that were
originally identified by the KM function in 2003. In the case of CRTI’s KM function, both the
activities and outputs were identified directly from the original objectives and the final outcomes
were tied to supporting CRTI’s ultimate goals of preparedness for and prevention of CBRN attacks.
The challenge in step 1 remained to fill in the immediate and intermediate outcomes. Through an
iterative approach, immediate and intermediate outcomes were identified for each activity and
output by determining the desired and/or expected outcome of the activity. It is important to note
that this process was done in a bi-directional fashion, in that the team initially identified the
outcomes starting from the activities (which identified the desired results) and then subsequently
from the final outcomes (which identified the expected outcomes that would be necessary to arrive
at the final outcomes). By using this approach, the team was able to ensure that the strategic goals
of the KM function were represented at each level of the model. The resulting results chain logic
model for the Collaboration support category can be seen in figure 1.

The result-chain framework content was then converted into a flow diagram showing the logical
links between the activities/outputs and the outcomes. The arrows visually depict ways in which
activities might affect final outcomes. The flow diagram also shows if any logical outcomes are
missing i.e. if certain activities cannot be directly connected to the final outcome (see Figure 2).

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CS. Collaboration support Reach:

Purpose: CRTI clusters and
* To aid and support existing and new clusters and communities in achieving objectives stakeholders
* To enable effective inter-cluster and pan-cluster interactions, as well as with the wider CRTI
community by creating synergy and trust
* To create opportunities to facilitate learning and knowledge creation from CRTI experiences
* To encourage reciprocal dissemination of knowledge between CRTI stakeholders and First
Responders

Activity Output Immediate outcomes Intermediate Final outcomes

outcomes (impact)

Foster facilitation, leadership Timetable for Exchange of scientific Trust & synergy CBRN S&T
& reporting of cluster & pan- events and operational within the CRTI knowledge &
cluster activities & provide Templates for knowledge is increased community is expertise in support
resources synopsis reports increased of operations is
Consensus More knowledge is developed,
conference calls captured Exploitation of managed &
AARs, realignment valuable leveraged
and capture Organizational knowledge is
Training (e.g. processes & reporting increased Horizontal
Media) quality are increased capability, links
Performance is within CRTI
Awareness of CRTI improved communities are
expertise, technology, built
projects & successes is First Responder
Establish & support Supporting of CoP increased gaps & Technology and
communities of practice leaders requirements are S&T knowledge
(CoP) Meeting New partners are addressed in created is pertinent
organization established and the research & for FRs
S&T community is development ---Capability &
Contribute to building Meetings & expanded (resulting in fewer capacity to respond
relationships with the national exchange with gaps) is increased
& international scientific other Procedural support for (operational
community for knowledge organizations rapid data exchange & readiness)
exchange Joint sponsorship communication among Communication &
of conferences & labs is created collaboration (joint
workshops exercises,
Participation by FRs in projects) is
the InfoPort and increased
projects is increased
Explore and establish Harmonized lab Interoperability is
standards and protocols for procedure protocol increased
interoperability
Hold workshops and Workshops CRTI- Organizational
conferences to facilitate wide exercise memory is
exchange of information CRTI annual increased
conference
Identify First Responder (FR) FR & technology
capability gaps & demonstration
requirements & facilitate workshops
knowledge sharing between Feedback
FRs & larger CRTI mechanisms &
community dissemination by
reports

Figure 1: Collaboration support RMAF in results chain logic model format

In step 2 of the KM-RMAF development, the team was able to proceed through the flow diagram to
identify metrics that would measure each output and outcome. First identifying performance
indicators for each output accomplished this and outcome and then identifying appropriate metrics
to use for each indicator. The selected metrics were modified from the metrics that were found in
the case studies that were found in the initial literature review. Step 3 involved the formulation of
an appropriate data gathering strategy. To facilitate data collection it was decided to collect
quantitative metrics for CRTI’s Intranet Portal usage through the system. However to address the

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 Kimiz Dalkir, Erica Wiseman and Michael Shulha

impact that the KM activities have had on the broader CRTI objectives and the people involved in
the initiative, it was decided that the most added-value method would be to design an electronic
qualitative survey, using likert scales and open ended questions, which would be distributed to
CRTI members through CRTI’s portal and then follow up with interviews to gather additional
anecdotal information on the impact that KM has had on CRTI’s ultimate goals. Because the
ultimate goal of measuring the KM activities is to determine the affect that KM has had on helping
CRTI become more prepared for and able to respond to CBRN attacks, rather than measuring the
success of the KM initiatives in and of itself, it was determined that the best way to gather this
information would be to ask those that are involved in and affected by the KM activities directly.

Collaboration support

CS1: Foster facilitation C S6: Explore &

CS2: Establish & CS3: Contribute to CS4: Hold workshops & C S5: Identify FR
leadership & reporting, relationship building gaps & requirements establish standards for
support C oPs conferences
provide resources interoperability
- Meetings with other - Workshops - FR Workshops - Harmonize lab
- Templates for reports organizations - C onferences - Feedback procedure
- CoP support
- After-action reviews, etc. - Joint sponsorship of - C RTI-w ide exercises mechanisms protocol
workshops etc.

Procedural support
Im mediate Organizational N ew partners are Exchange of S&T & Awareness of CR TI
More tacit Participation for data exchange
outcom es processes & established, S&T operational expertise, projects,
knowledge is by FRs is and communication
reporting quality are community is know ledge is gaps, successes is
captured increased among labs is
enhanced expanded increased increased
increased

Interm ediate CR TI C ollaboration & Interoperabili

Tacit Trust and communication
outcomes community ty is
knowledge is synergy is within & betw een
learning is increased
preserved increased clusters is
increased
increased

Final
outcomes Knowledge continuity is Performance is H orizontal capability
increased improved is increased

Utlimate
C apability to
outcome
respond is
increased

Figure 2: Collaboration support RMAF in flow diagram

5. Conclusion
One of the critical tasks in KM metrics is to measure the degree to which KM is integrated in
organizational processes and the extent to which it improves pre-defined objectives. The KM-
RMAF at CRTI is well placed to accomplish these tasks and is critical in the evolution and success
of KM at CRTI. The KM-RMAF presents CRTI with a uniquely suitable measurement framework for
evaluating the success of its KM initiatives. Many factors contribute to this conclusion. To begin
with, RMAF is already successfully implemented at CRTI (to measure its overall program success)
and is embraced by the culture. As such, selecting the RMAF for the KM function avoids ‘re-
inventing the wheel’, as well as challenges associated with stakeholder buy-in and acceptance of
the measurement framework. Secondly, RMAF logic models serve to clarify the causal links
between activity outputs and expected immediate and intermediate outcomes. Highlighting these
relationships will allow CRTI to measure the impact that the KM activities are having on CRTI’s
capability and preparedness to respond to CBRN activities. In using this framework, CRTI will be
able to measure the extent to which KM is helping CRTI meet its broader organizational objectives.
The benefit of this process for CRTI is twofold, in that these logic models:

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1. Provide various stakeholders (including management and employees) with a clear and concise
vision of the thought process behind a particular KM initiative.
2. Provides CRTI with a framework for measurement that is directly tied to its specific KM
objectives and initiatives.
This paper has reviewed some KM metric basics and then the first three steps in the creation of
CRTI’s KM-RMAF along with the methodology through which this was done. The implementation of
the KM-RMAF and the reporting of the results will be conducted over the summer of 2006.

6. Acknowledgements
The authors would like to thank Stephanie Lemieux for her contribution to both the project and the
paper.

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Regional Development Authorities as a Basis for
Knowledge Management
Scott Erickson1, Helen Rothberg2, James Melitski2
1
School of Business, Ithaca College, Ithaca, USA
2
School of Management, Marist College, Poughkeepsie, USA
[email protected]
[email protected]
[email protected]
Abstract: The paper establishes the conceptual basis for ongoing research into knowledge management
(KM) in governmental and non-governmental organizations responsible for regional economic development.
This research opens a new direction for KM, looking not only at non-profit agencies but also those that must
compete and whose success or failure is easily assessed. In pursuing this work, an understanding of the
discipline referred to as Regional Innovation Systems (RIS) is necessary. While both KM and RIS are
interested in operating effectively in the knowledge-based economy, there are some key differences in
approach that are discussed throughout the paper. The consequences of these differences are then explored,
particularly in light of how cross-fertilization between the disciplines can enhance our understanding of how
regional economic development activities are conducted. Finally, some key questions based on this
discussion and guiding the research into regional development authorities are posed.

Keywords: Knowledge management, regional innovation systems, regional development authorities

1. Introduction
This paper grew out of work the authors are pursuing regarding Regional Development Authorities
(RDA’s), the governmental and non-governmental organizations (NGO’s) responsible for guiding
economic development in cities, states, countries, or combinations of any of these geographical
entities. While pursuing a grant to study how these organizations manage knowledge assets, we
began a literature review of work done concerning regional development and knowledge,
particularly outside the knowledge management (KM) and intellectual capital (IC) literature. For
ease of discourse, we’ll refer to this core field as KM while recognizing that differences do exist in
theory and practice between KM and IC.

RDA’s are unique among government agencies and NGO’s in that they have distinct, measurable
objectives and engage in sometimes-fierce competition to achieve these objectives. RDA’s are
charged with spurring economic development. They do this by building the economic base of an
area, bringing new businesses and new investment into their domain while retaining existing firms.
As a result, economic activity increases, jobs are created, and the region shows growth according
to all the standard economic indicators. Thus, income growth, investment flows, job growth, and
other such measures are easily available assessment mechanisms for the success or failure of
RDA’s. Further, when a prospect with a lot to offer chooses to locate in one region, all other
regions pursuing it obviously lose out. So there are clear winners and losers in the regional
development game.

To illustrate, when Mercedes looks to build a plant in the US South, it brings investment dollars,
numerous well-paying jobs, tax revenues, and a certain amount of economic activity that supports
other firms in the area. As a consequence, cities and states pursue Mercedes with a variety of
attractive deals. When Huntsville, Alabama eventually wins, Mississippi, South Carolina, and their
cities lose out. And the effects are quite clear and measurable. The same concepts apply on the
other end if a region loses key employers, its worker base, etc.

As with many of the applications of KM, there are obvious ways in which managing the knowledge
assets of the region (including the workforce, universities, and common technologies) might make it
more attractive for economic development. This is closely tied to Porter’s (1990) concept of
clusters, where natural resources, a large and specialized workforce, and other factors can result in
a successful clustering of firms in a single industry. A related, slightly different but not inconsistent
scholarship has also developed around Regional Innovation Systems (RIS) seeking to understand

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the environment within which a region develops innovativeness and measure outcomes. Both of
these approaches to understanding and guiding development, however, take more of a macro
approach while standard KM theory tends to look at micro management topics (recent limited work
on national IC and regional IC notwithstanding). Indeed, save for a few common sources, the two
fields virtually ignore one another.

So the objective of this paper is to begin to explore the KM of regional development agencies.
We’ll lay out the existing literature concerning regional innovation systems while presuming most
readers are already familiar with KM scholarship. With the conceptual basis in place, we’ll move to
a discussion of where the two streams of research can complement each other. Finally, we’ll lay
our plans for further research.

2. Regional innovation systems

RIS studies grew out of National Innovation Systems (NIS) work, especially that of Nelson (1993)
and Freeman (1987). NIS scholars suggested that the environment within which innovation takes
place can help or hurt the process. During the early 1990’s, the field developed rapidly with the
rise of Japan and concerns about lagging innovation in the US and Europe. Although dated now,
theories about the superiority of the Japanese model, with government support and coordination for
targeted innovation, spurred interest in whether different national approaches to competitiveness
and technology generation result in different outcomes. Environmental factors such as government
and private sector R&D spending, intellectual property protection, antitrust attitude, science and
engineering workforce, and even economic culture (e.g. entrepreneurial or not) were all measured
and assessed in a variety of countries. Indeed, the concepts of the learning society/economy
(Lundvall 1992) and knowledge-based economy (Foray 2000) both grew out of NIS work (Godin
2006). Foray’s work, in particular, raised questions about more micro topics such as the
distribution of knowledge assets between organizations.

And per Porter’s already mentioned contribution concerning the benefits of clusters to
development, other researchers eventually noticed that development and competitiveness can vary
widely even within nations. Cooke (2002), in particular, is credited with the concept of Regional
Innovation Systems. Just as a national environment can affect competitiveness and innovation, so
can a regional environment with natural and engineered clusters or other economic entities
forming. Indeed, the idea of constructed advantage (rather than comparative or competitive) flows
from this concept, that a nation or region can create an environment that results in competitive
advantage for its member organizations (Best 2001). Etzkowitz and Leydesdorff (1997) have
suggested that a “Triple Helix” approach recognizing the interconnectivity of business, government,
and university can be the key to success in an RIS.

It’s important to note that the RIS researchers themselves are emphatic that these entities go
beyond clusters. Clusters generally imply a single industry while an RIS could include multiple
industries and/or multiple knowledge competencies. Characteristics of an RIS include:
ƒ Focus on high-tech, knowledge based or “creative” industries
ƒ Building up of research excellence
ƒ Attraction of global companies
ƒ Stimulation of spinoffs (Todtling and Trippl 2005)
The RIS literature is not totally divorced from KM work, though there are a number of important
differences that we’ll discuss later. RIS work does tend to recognize the tacit/explicit knowledge
difference-underlying KM. Indeed, Nonaka and Takeuchi (1995) is one of the few common
elements in the established literature of both fields. One interesting direction taken by Scharmer
(2001) that hasn’t been widely incorporated within KM is the concept of self-transcending
knowledge. With some liberties taken, this is unembodied tacit knowledge containing elements of
personal genius, creativity, an ability to anticipate future directions, and other such highly individual
knowledge traits. This has elements of sticky knowledge, which is hard to apply outside its original
context (firm or individual) but also takes it a bit further. Turning self-transcending knowledge into

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sharable knowledge is obviously a particular challenge, expandng the Nonaka and Takeuchi
knowledge conversion framework in a new direction (Uotila, Melkas and Harmaakorpi 2005).

And knowledge creation and combination is at the heart of what many of the RIS scholars are
looking at. As in KM circles, the knowledge-based economy is taken very seriously, and the RIS is
seen as a mechanism for succeeding in that economy. But where KM work has generally cited the
EU Lisbon proclamation, that the EU is to be the leader in the knowledge economy, RIS work has
centered on the idea that regions are the best places to attempt to build knowledge-centered
competitive advantages (Nonaka and Reinmoller 1998). The advantages of physical proximity for
communicating tacit and self-transcending knowledge, including face-to-face contact and trust
building, can have huge advantages over virtual networks. Proximity can also help with local
learning processes and sticky knowledge, as the environment is conducive to location-specific
knowledge and transmission processes (Asheim and Coenen 2006, Asheim and Isaksen 2002).
As a result, an interorganizational regional network may function as a knowledge-sharing system
more effectively than a dispersed system within a single company.

RIS does focus on specific industries, particularly those designated knowledge-based (or high-
tech), seemingly to a greater degree than KM often does (which can tend toward “one-size-fits-all”
solutions, particularly with technology, though some have recognized the danger, Todtling and
Trippl 2006). We’ll discuss this aspect shortly. And RIS also recognizes the specter of
competition. As noted in the introduction of this paper, when regions compete for employers,
employees, or other groups, there are winners and losers. In standard KM circles, the emphasis is
on knowledge sharing, sharing, sharing, with little concern for protecting proprietary knowledge
assets. In RIS work, an element of competition does exist, so protecting a region’s intellectual
capital, while not explicitly, could be easily inferred. Indeed, Krugman’s (2000) game theory work
on regional development certainly lends itself to this perspective.

So RIS work has pursued a different though complementary path than what we have seen in most
KM studies. Scholars have particularly emphasized research with the very practical purpose of
identifying conditions lending themselves to regions being successful in the new knowledge-based
economy. The research has established that knowledge creation and combination is a necessary
component, allowing successful regions to generate innovation, providing competitive advantage to
resident firms. The research to date also suggests, however, that the element of competition exists
in building knowledge capacity, so even though governmental agency or NGO, the RDA’s that are
often at the heart of these innovation systems must have proprietary concerns for both their own
knowledge and that of their networks.

3. Regional development authorities and knowledge management

What does combining an RIS perspective with KM do for us? We are chiefly interested in
extending KM theory and practice into the arena of RDA’s, whose activities are firmly placed within
RIS. KM has had numerous extensions to government, of course, but typically to national
governments and rarely to government agencies and/or NGO’s that must compete in some manner
beyond the budget table. Further, given all the attention on knowledge-based development in the
RIS literature, we really believe that KM theory and practice has something further to offer RDA’s in
their activities, something that goes beyond what scholarship currently provides. Consider several
areas ripe for further study.

3.1 Knowledge definitions

As one would expect from its basis in national innovation system theory (and its name), RIS work is
heavily tilted to technological innovation. NIS studies have typically managed the innovation output
of nations by hard knowledge measures such as patent counts, royalty flows across borders, high-
tech exports, and similar readily available indicators. Similarly, inputs are measured by means of
R&D spending, science and engineering employment, university grants received, etc. RIS has
followed a similar path, though it is opening up a bit to other views on what constitutes knowledge
in a knowledge-based economy. But the bottom line is that the emphasis is still on intellectual
property, essentially ignoring all the work on the softer knowledge assets included in intellectual
capital studies over the last two decades.

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 G. Scott Erickson, Helen Rothberg, James Melitski

Indeed, if you read some of the RIS literature, they define successful regions as those possessing
higher levels of employment in knowledge-based industries, defined as those listed as high-
technology by Eurostat (Cooke and De Laurentis 2002). The technique is pursued in a similar
manner in the US with National Science Board data. The Cooke and De Laurentis study is pretty
much state of the art and even opens up some new directions, as we’ll discuss momentarily. But
the point is that RIS work tends to narrowly define the industries in which knowledge is an
important component (those spending a lot of money on R&D) and so regional success or failure in
managing knowledge so as to make an area more attractive to economic development is defined
only by capturing firms in those select industries.

Cooke and De Laurentis recognize this issue. Initially, they include auto manufacturing (dismissed
in other studies as not knowledge-based) in their index. Secondly, they make an argument for
including services, particularly financial services. Noting the complex financial models employed
by investment firms and hedge funds, they correctly suggest that there is valuable knowledge
within the industry.

But, in our view, this widening of the definition of knowledge-based industry does not go far
enough. KM theory and practice, of course, suggest that soft knowledge assets exist in just about
any kind of job. The barber who knows how to cut hair more efficiently, who organizes his shop or
her employees effectively, and who has developed deep customer knowledge over the years
possesses human, structural, and relational capital. This is important in the regional development
context.

Cooke and De Laurentis note that successful, knowledge-based regions tend to be in northern
climates while less successful regions are often in southern climates that specialize and depend on
tourism. Obviously, tourism does not measure well on the traditional RIS list of knowledge-based
industries. Does that mean that no knowledge is present within the industry, that no firm or
individual can differentiate himself or herself with better knowledge management? Further, does
that mean that tourism is unattractive from a regional development standpoint? Of course not.

If we examined the market valuation vs. the physical assets of a Marriott or Starwood, we would
undoubtedly find a difference, suggesting substantial intangible assets present within each firm.
We could call it goodwill or brand equity, but the basis has to do with the intellectual capital of the
firms, their recognized ability, through individual employees, to execute services. This is, of
course, standard intellectual capital thought, but there is little doubt that human, structural, and
relational capital exist within such firms and they have benefited by managing it well. Indeed,
Harrah’s well-known excellence in customer relationship management has a lot to do with IT
systems but is also now embedded within a firm that has deep knowledge of its best customers
(relational capital) and is able to execute strategies to capitalize on its relationships (human and
structural capital).

Why does this matter? From a regional development perspective, if the environmental conditions
are right, is tourism necessarily a bad option to pursue? In the US, Orlando, FL or Las Vegas, NV
have both staked a certain amount of their economic growth strategies on the tourism industry.
Each has managed to develop a knowledge base to support the industry and attracts new workers
through relocation (Las Vegas) or internships (Orlando). If you want to go to Las Vegas and open
a casino, there are people there with the requisite human, structural, and/or collaborative capital
that will enable you to do the job.

So a broader perspective on what valuable knowledge assets actually are would assist RDA’s
trying to determine what knowledge is already available in their area which may be available for
establishing competitive or constructed advantage. The RIS perspective of only high technology,
only patentable knowledge is very limiting. As we know from KM, knowledge exists in all sorts of
places and can probably be better managed in most.

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3.2 Sharing knowledge beyond the borders of the organization

Another area in which RIS and KM are a bit different concerns networks. As noted above in the
definition of an RIS, knowledge spillovers are a key piece of the package. Audretsch’s (1995)
Knowledge Spillover Theory of Entrepreneurship focuses on small businesses, but the concept is
more universal. An advantage of regional expertise in a given area is that knowledge crosses
organizational borders, including to innovative startups. The Triple Helix also contributes to this
idea as universities and/or government/NGO’s can assist in such knowledge sharing.

KM theory also deals occasionally with relationships beyond the borders of the core organization
(Erickson, Rothberg and Carr 2003) but focuses primarily on single firms. Communities of practice,
for example, have to do with sharing across boundaries at times but often concern only a single
large entity as well. Cross-fertilization of ideas across RIS and KM can help both disciplines better
understand the implications for RDA’s, member firms, and employees.

The most important question is what knowledge should be shared and what not? When the
knowledge in question is hard knowledge, intellectual property embodied in and protected by
patents, there is more certainty concerning ownership rights. As a result, sharing with collaborators
or even competitors can be done more freely. Protection mechanisms exist to keep the knowledge
proprietary. When the knowledge in question is softer, such as intellectual capital which may not
even rise to the level of trade secret, the issues get much more muddled.

Regional development can be aided by knowledge sharing of all types, as organizations build on
what all discover. There can be explicit sharing (e.g. licensing of technologies) or more casual
exchanges (employee disclosure), but sharing and compounding are a key facet of a region’s
ability to build an accessible knowledge base in a given field. But all the firms within the region are
also seeking competitive advantage. In a knowledge-based economy, this competitive advantage
tends to come from proprietary intellectual capital of one sort or another. Thus, for just about all
entities, there will be some key knowledge assets, which should probably not be freely shared.

Thus, firms face networks of collaborators within which knowledge flows. Determining the optimal
amount of knowledge to share vs. knowledge to keep proprietary can be the key to
competitiveness (Rothberg and Erickson 2005). In a regional setting, these concerns are even
more pronounced. Standard competitive intelligence procedures to wrest proprietary knowledge
away from a competitor include:
ƒ Observation of facilities
ƒ Observation of presentations by executives, managers, employees,
ƒ Regulatory filings (national, local)
ƒ Press coverage
ƒ Collaborator sources
ƒ Hiring away executives, managers, employees
ƒ Listening in on conversations in public places (restaurants, plane flights, etc.)
This isn’t a complete list, but all of these tactics are much easier to practice and often more fruitful
when competitors are bunched in a region. As noted, knowledge spillovers are part of the
attraction of an RIS but can obviously also lead to spilling more than is desired. An available,
knowledgeable labor pool is another attraction but knowledge obviously moves with people as they
change employers. Silicon Valley is notorious for the level of competitive intelligence activity that
goes on, including all of the above tactics. Firms that are aware of the dangers are more careful in
what they share around the region, reviewing public statements and appearances, executing non-
disclosure and non-compete agreements, and other counterintelligence actions that reduce the
risk.

RDA’s also need to be aware of these issues. The agencies vary in terms of what they provide to
resident and potential firms. Some simply provide the right contacts in government or local industry
(e.g. banks) to grease the skids for relocations. Some have the power to negotiate deals

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concerning governmental details such as zoning, tax breaks, subsidies, etc. Others can actually
help to set up knowledge-sharing structures, especially when universities are involved. Those at
this extreme of the continuum have to be aware of the wishes of resident firms in terms of what
knowledge is shared and what knowledge is protected.

One aspect of this balance would be dependent on the industries and the knowledge involved.
Certain knowledge may be risky for a single firm to move forward. But by sharing the base
knowledge, the region as a whole could develop a critical mass that moves the technology forward.
In the area of environmental protection, for example, all firms may want to adopt more sustainable
technologies or practices, but because the payback may be limited or far in the future, each may be
hesitant to take the step alone. By sharing, risk is reduced (Maitland 2005).

A countervailing aspect, however, is recognition of antitrust issues. Anytime firms in a given

industry band together, competitiveness authorities get nervous. When they are already bunched
in a region, however, and they then begin sharing knowledge in an organized fashion (perhaps
coordinated by an RDA), antitrust can become a concern. RDA’s or other structures within an RIS
need to balance the knowledge sharing so as not to invite unwanted attention. The theoretical
benefits of knowledge intensity and sharing in an RIS are very appealing. RDA’s may have a role
in constructing ways to encourage or even facilitate such sharing, making their region more
attractive to prospective firms. But there must be a balance struck. One piece of our research with
RDA’s concerns how this balance is struck. What variables do firms weight when determining how
much knowledge to release and share vs. how much knowledge to keep proprietary? Do such
firms have different rules for different collaborators? What part can RDA’s play in helping to
manage this balance in their region? How aware are they of the issues and what have they done
to date?

3.3 RDA’s and competition

One final area of interest is the knowledge management of the RDA’s they. As noted earlier, the
RIS literature recognizes the prospect of competing regions and competing RDA’s. A lot of regions
would like to be the next biotech or nanotech hub, so substantial competition takes place to lure
new firms, retain existing firms, attract university researchers, establish and maintain a work force,
and attain other measurable outcomes.

Successful RDA’s themselves possesses critical knowledge resources. Human capital related to
how to pitch deals to prospect firms, how to structure deals, etc. exists. Structural capital is also
present in terms of the agency’s culture and organization (as well as that of its network). Relational
capital is apparent as well, with relationships between the RDA and government contacts, existing
firms, etc. in place. But, as in the previous section, where competition exists, so do attempts to
appropriate a competitor’s knowledge assets. RDA’s are also quite capable of hiring away key
employees, monitoring public appearances and presentations at conferences, and pumping
collaborators about what an opposing RDA may be doing to attract a target firm. So just as RDA’s
must understand the sharing/protecting balance between resident firms’ knowledge assets, so they
must understand the balance regarding their own intellectual capital. As before, we are interested
in the variables that affect on RDA decisions on managing knowledge, both sharing it and
protecting it. Are they aware of the issues and, if so, how do they deal with them?

4. Conclusions
This paper lays out the conceptual foundation of our research direction. We have established
contacts with a number of RDA’s with whom we’ll be conducting depth interviews in upcoming
months (several will be in hand before the conference actually runs). Based on the theory
reviewed in this paper, we believe that we can make some interesting contributions by focusing on
the key issues we have identified.

Initially, what is involved in establishing a knowledge base and constructed advantage in a region?
Although all regions presumably would like to possess a high-tech competency, they can’t
realistically all expect to obtain it. So what types of knowledge are apparent in RDA knowledge

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bases? Is it primarily of the innovation/high-tech variety or is it defined more broadly, as suggested

here?

Secondly, how are regional knowledge assets managed? How much sharing goes on? How much
protecting goes on? How involved are the RDA’s in these matters? What variables affect
decisions by RDA’s and firms about how much knowledge is shared?

Finally, how do RDA’s compete, in terms of knowledge? Do they share and protect their own
knowledge assets? How do they balance sharing (they are non-profits and should be amenable to
sharing with other non-profits) and protecting?

References
Asheim, B. and L. Coenen (2006) “Contextualising regional innovation systems in a globalising
learning economy: On knowledge bases and institutional frameworks,” Journal of
Technology Transfer, Vol 31, pp163-173.
Asheim, B. and A. Isakson (2002) ”Regional innovation systems: The integration of local ‘sticky’
and global ‘ubiquitous’ knowledge, Journal of Technology Transfer, Vol 27, pp77-86.
Audretsch, D. (1995) Innovation and Industry Evolution, MIT Press, Cambridge, MA.
Best, M. (2001) The New Competitive Advantage, Oxford University Press, Oxford.
Cooke, P. (2002) Regional Innovation Systems, Routledge, London.
Cooke, P. and C. De Laurentis (2002) The Index of Knowledge Economies in the European Union:
Performance Rankings of Cities and Regions, Centre for Advanced Studies, Cardiff
University.
Erickson, G., H. Rothberg and C. Carr (2003) “Knowledge-sharing in value-chain networks:
certifying collaborators for effective protection processes,” Advances in Competitiveness
Research Vol 11 No 1, pp152-164.
Etzkowitz, H. and L. Leydesdorff (1997) Universities and the Global Knowledge Economy, London,
Pinter.
Foray, D. (2000) L’economie de la Connaissance, La Decourverte, Paris.
Freeman, C. (1987) Technology Policy and Economic Performance: Lessons from Japan, London,
Pinter.
Godin, B. (2006) “The knowledge-based economy: conceptual framework or buzzword?” Journal of
Technology Transfer, Vol 31, pp17-30.
Krugman, P. (2000) “Where in the world is the ‘new economic geography’,” in The Oxford
Handbook of Economic Geography, Clark, G., M. Feldman, and M. Gertler (Eds.), Oxford
University Press, Oxford, pp49-60.
Lundvall, B. (ed.) (1992) National Innovation Systems: Towards a Theory of Innovation and
Interactive Learning, Pinter, London.
Maitland, A. (2005) “Industries seek safety in numbers,” Financial Times: FT Responsible
Business, (November 28),
Nelson, R. (1993) National Innovation Systems: A Comparative Analysis, Oxford University Press,
Oxford.
Nonaka, I. and P. Reinmoller (1998) “The legacy of learning: Toward endogenous knowledge
creation for Asian economic development,” WZB Jahrbuch, pp401-433.
Nonaka, I. and H. Takeuchi (1995) The Knowledge-Creating Company, Oxford University Press,
Oxford.
Porter, M. (1990) The Competitive Advantage of Nations, Free Press, New York.
Rothberg, H. and G. Erickson (2005) From Knowledge to Intelligence: Creating Competitive
Advantage in the Next Economy, Elsevier Butterworth-Heinemann, Woburn, MA.
Scharmer, C. (2001) “Self-transcending knowledge: Organizing around emerging realities,” in
Managing Industrial Knowledge: Creation, Transfer and Utilization, I. Nonaka and D. Teece
(Eds.), Sage Publications, London, pp68-90.
Todtling, F. and M. Trippl (2005) “One size fits all? Towards a differentiated regional innovation
policy approach,” Research Policy, Vol 34, pp1203-1219.
Uotila, T., H. Melkas and V. Harmaakorpi (2005) “Incorporating futures research into regional
knowledge creation and management,” Futures, Vol. 37, pp849-866.

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Knowledge Creation and Sharing Through Student-
Lecturer Collaborative Group Coursework
Elli Georgiadou1, Kerstin Siakas2 and Eleni Berki3
1
Middlesex University, London, UK
2
Alexander Technological Educational Institute of Thessaloniki, greece
3
Department of Computer Sciences, University of Tampere, Finland
[email protected]
[email protected]
[email protected]
Abstract: In this paper we examine some of the challenges and opportunities faced by the learner who is
required to work in teams. We consider the inter-relationships, overlaps, complementarily and differences
among commitment, co-operation, collaboration, competition, the need for consensus participation and
commitment, the need for cultural change, adaptation. Finally we discuss accommodation of diversity, and the
constant need for communication. We discuss the strengths and potential pitfalls of group work through
qualitative research carried out within our institutions in three different countries, namely United Kingdom,
Greece and Finland. We discuss the role of the educators as facilitators, and provide guidelines for student-
lecturer participatory group coursework, including the use of self and peer assessment in the process of
creating and sharing knowledge. Assessment strategies and assessment instruments are viewed as vehicles
for consolidating theoretical knowledge through application to problem situations, thereby engendering a
questioning and reflective approach to knowledge acquisition. Finally we present the KAS Model (a
Knowledge Acquisition and Sharing Model) and conclude with suggestions for future work.

Keywords: Knowledge sharing, student group-work, co-operation, collaboration, competition, consensus,

commitment, culture, communication

1. Introduction
The way people internalise concepts and assimilate existing knowledge is moulded by their prior
knowledge and experiences. The learning process does not take place in a vacuum. The learner,
when working in teams, operates in a societal context and uses knowledge to carry out tasks and
projects. In addition to the domain specific knowledge and technical skills (application-oriented)
graduates are increasingly required to acquire a wider set of skills related to the applicability in
content and in context.

Working in teams is one such skill of particular relevance and importance to students of Software
Engineering and Computing graduates, who need to deliver workable artefacts and understand the
process of determining client needs.

Hoefling (2001) describes four basic criteria a workgroup must meet to be called a team, namely:

ƒ The group must have a shared purpose;

ƒ The group must be interdependent;
ƒ The group must be committed to working together;
ƒ The group must be accountable as a unit to the organisation.
If these criteria are not met individuals will work autonomously and independently from each other.
Reconciliation of differences and conflicting objectives while conducting trade-offs are cornerstones
that require negotiation and communication skills. Presentation, communication and negotiation
abilities are equally important to specific domain knowledge in industrial and academic jobs.
Academic and training programmes often use group work as a vehicle for knowledge creation and
knowledge sharing, and for assessing the level of achievement reached by learners. The learner is
required to work with a group in order to solve problems.

Individual work involves the student seeking knowledge from the teacher, the internet, books,
journals and other sources and answering questions, solving problems posed by the teacher.

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Group work requires communication, collaboration, cohesion and consensus. The teacher’s
principal duty is to create cohesion, interdependence and trust by involving the team members in a
virtuous circle of communication and collaboration by reducing complexity, solving conflicts, and
removing obstacles the team faces. The aims are to create motivation, commitment and
interaction. Teamwork is a human interaction, which creates relationships and group identity that
are vital for knowledge sharing and effective team performance. Increased interdependency among
team members is required in order to comprehend information required to perform the tasks.

A team’s degree of interdependence correlates with the members’ willingness to help each other
(Hoefling, 2001). Interdependence is not only a feature of cooperation, but also of competition
(Lipnack & Stamps, 1997). Competitive conflicts develop from differences in personality,
motivations, perceptions and power. Competitive conflicts can require the involvement of the
teacher and usually are solved through face-to-face interaction. The more interaction and
interdependence, which naturally occurs between team members, the greater their commitment to
each other and to the team (Hoefling, 2001). Between the individual and the in-group a
dependence relationship develops which is both practical and psychological (Hofstede, 2001).
Cohesion is the result of the interaction between team members that generate group identity,
status and personal satisfaction. It is the creation of the feeling of belonging to the “we” group
distinct from the “they” group. A definition of who is part of the in-group and the out-group. The in-
group is the major source of one’s identity and the group to which one owes one’s loyalty. The
group is something more than the sum of its members.

2. Case studies
The authors had gained insights into the development of assessment strategies and instruments
through a series of longitudinal studies covering a diverse number of modules and levels by the
authors. We present our experiences with delivering and assessing course/modules in Computing,
Information Systems and Software Engineering Best practice, findings, guidelines and a framework
were presented in (Georgiadou, 2002; Georgiadou and Berki, 1997; Georgiadou and Siakas 2003;
Georgiadou and Dalcher, 2004; Georgiadou, 2005; Berki et. al, 2005; Siakas and Georgiadou,
2003; Siakas and Mitalas, 2004a; 2004b; Siakas et. al, 2005). Student group work aims to prepare
the Software Engineer for the world of work.

The research methodology adopted a qualitative approach although quantitative information was
also captured particularly through the self and peer assessment templates. The research
instruments were interviews, observations and surveys.

The studies presented here served as vehicles for gaining insights into the learning process and
the role of group work. The templates and set of questions were not identical, and the students
were on undergraduate and postgraduate programmes. More standardisation and consistency in
further studies is necessary. Despite this diversity in the studies considerable similarities in issues
such as student attitudes towards group work were present.

3. A case study from the UK

3.1 The need for group work – setting the scene

Within the Computing Science School of Middlesex University and in particular within the Business
Information Systems Group we adopted good practice and templates for the specification,
monitoring and assessing of group work. Several mechanisms (some more formal than others)
have been used to establish the attitude of students to group work at the very beginning of the
semester. One such mechanism is the questionnaire given in Appendix A. This process enables
the students to reflect on previous experiences and to externalise any misgivings, and on their own
personal strengths and weaknesses.

Once these questionnaires are completed, the teams (of 4 or 5 students) share their profiles and
discuss how they may use their strengths in order to successfully complete the tasks.
Complementary strengths must be recognised and used, but equally prominent weaknesses must

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be addressed. This is the first step towards encouraging professional behaviour. Students need to
understand that the learning process involves negotiation, mediation, compromise, listening to
others and sharing of knowledge. Indeed, the power of effective teams is derived from the ability to
assign tasks in a way that maximises strengths and overcomes identified weaknesses (Georgiadou
and Dalcher 2004, Georgiadou, 2005)

The team needs to carry out analysis and design of a complex problem. There is a large number of
deliverables and strict delivery deadlines. The tasks need to be shared and the team must work
closely in order to complete the tasks. Interim deliverables provide opportunities for monitoring
progress and for giving formative feedback. Groups that pay close attention to formative feedback
tend to improve their processes leading to perceptible gains in the products derived from them.
(Indeed, members of effective teams seem to also improve their personal effectiveness in project
work, resulting in improved final year projects). Meetings logs provide a mechanism for capturing
facts (not feelings) such as: Members present, apologies, length of meeting, items discussed,
problems encountered and tasks for next meeting. These minutes have proved useful for pacing
the work, for encouraging openness, and in the case of dysfunctional teams, for assessing the
variability of individual effort/contribution and hence the variability of achieved marks.

The lecturer facilitates the discussion and makes suggestions to each team recognising and
encouraging multi-faceted viewpoints. Lecturers provide timely feedback, support and assist in
conflict resolution. In general lecturers should avoid breaking the group up if possible. They must
also be flexible to accommodate unforeseen circumstances.

Difficulties arising from lack of knowledge, misunderstandings, absenteeism and general lack of
professionalism are addressed, always aiming to reach consensus. Inevitably some teams become
dysfunctional in which case some flexibility is called for. In exceptional circumstances deadlines
might be extended and the number of deliverables altered in order not to penalise diligent members
of such teams. Students must learn to be open, co-operative, and responsible to others,
considerate and prepared to do their fair share of the work.

Staff (lecturers and tutors) benefit from staff development and sessions for reflecting and
internalising the learning resulting from the successes and failures of group work.

3.1.1 Self and peer assessment

Upon completion of the assignment, students are students are required to reflect on the
contribution of their team members and of their own contribution. Using templates (presented in
Georgiadou and Dalcher, 2004) and example given in Appendix B they carry out peer and self-
assessment. The completed forms are included in their group assignment report. These templates
concentrate on three aspects of group work contribution namely in terms of technical know-how,
organisation and communication. Students have the option to submit these forms confidentially.

They are also prompted to rank perceived benefits and drawbacks of group work. Tables 1 and 2
present the consolidated responses of an MSc group of 90 students taking a Systems Analysis and
Design module.

It can be seen that students value sharing of knowledge, sharing of the workload and learning from
others. Equally students appreciate that lack of communication, team members not pulling their
weight, dysfunctional groups and logistics (e.g. unable to find suitable slots for meetings) are
drawbacks of group work.

4. A case study from Greece

In a Software Quality Management Course in the Department of Informatics at the Alexander
Technological Educational Institute of Thessaloniki, Greece, 52 students working in teams of 4
replied to a questionnaire regarding assessment of the course for future improvement (Siakas and
Mitalas, 2004a; 2004b).

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The following learning features were emphasised during the seminars described below (Siakas et.
al. 2005):
ƒ Active and adaptive project-based learning through collaborative activities and discussions;
ƒ Exercises supporting reflective thinking, problem-solving skills and productivity;
ƒ Requirements promoting task-relevant skills, evaluation and self-assessment skills.
Problem solving skills, teamwork, innovation and use of appropriate software engineering principles
are in particular taken into consideration. The aims are to optimise experiences obtained during
previous courses and best practices by simulating a real-word software-development environment
including core business activities and competences.

The students were asked about the collaboration between the team members. Figure 1 shows the
results.
Table 1: Benefits of team work
Rankings
Benefit 1 2 3 4 5 6 7 8 9
Sharing of knowledge 25 30 20 5 2 3 5 - -
Sharing the work load 24 30 26 6 4 - - - -
Enhancing Communication 9 8 13 15 20 16 9 - -
Learning to compromise and listen to others 10 5 12 19 20 17 5 2 -
Gaining additional perspectives 4 4 8 4 17 20 24 6 -
Providing Mutual Support 5 9 5 20 15 19 10 5 -
Learning from teaching others 27 16 13 15 10 15 10 10 5
Other: Making friends - 2 3 - - - 3 7 10
Other: Enhancing discipline & attendance - - - 6 2 - 10 10 -
Table 2: Drawbacks of team work
Rankings
Drawback 1 2 3 4 5 6
Lack of communication 25 30 25 6 4 -
Team members not pulling their weight 40 32 15 2 1 -
Cultural clashes 22 27 17 11 7 6
Style of working/ dysfunctional groups 15 19 13 15 17 11
Logistics difficulties 15 4 8 4 17 20
Other commitments (family, work, other) 7 9 5 11 16 4
In table 3 we present an indicative set of responses of one particular team. The majority of the
students ranked ‘Sharing the work load’ or ‘Sharing knowledge’ as the most important benefits.
Table. 3: Ranking of group work benefits
Ranked by Student
Benefit S1 S2 S3 S4 S5
Sharing of knowledge 2 1 2 1 2
Sharing the work load 1 3 1 2 1
Enhancing Communication 6 5 5 3 4
Compromise/Listening to others 7 6 4 5 3
Obtaining additional perspectives 5 7 6 4 7
Providing Mutual Support 3 2 3 6 6
Learning from teaching others 4 4 7 7 5
Other (specify) – Making friends 8

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 Elli Georgiadou, Kerstin Siakas and Eleni Berki

Among the
worst
7%
Below
average
10%
Among the
best
33% Average
10%

Better than
average
40%

Figure 1: Collaboration
In total 83% of the students answering the questionnaire responded that they had average or good
collaboration. It must be mentioned that only 58% of the enrolled students (30 out of 52 – the most
active ones) responded to the questionnaire. However, the lecturers observed collaboration
problems within many groups and the most interesting observation was that the groups where the
group members were friends (in-groups) worked best (Hofstede, 2001). All the students that
answered the questionnaire also responded to the question about the reasons for bad
collaboration.
ƒ Not enough meetings (47%) – (Decision of the team)
ƒ Time of meeting (the students had different course attendance hours)
ƒ No meeting rooms in the department of the University
ƒ Distance between students’ residences
ƒ Difficulties in finding a place for meeting
ƒ Choice of team members (37%) (team members were chosen between each others)
ƒ Unknown between each other (in-group vs. out-group (Hofstede, 2001)
ƒ Different levels of Knowledge (The students can choose obligatory courses from 7
semesters in whatever sequence they want and thus some students may not have
undertaken/passed some of the courses)
ƒ Too big groups (17%)
ƒ Difficulty in defining responsibilities within the team (30%)
A study of the reasons for difficulties from a cultural viewpoint (Siakas and Mitalas, 2004b) found
that the students ‘do not like to share knowledge’. The main reason for this might be attributed to
the educational system in Greece which does not embrace teamwork and hence many students
had minimal such previous experience. Also Greece has the highest value (112) on Hofstede’s
Uncertainty Avoidance scale. According to Hofstede (2001) people in High Uncertainty Avoidance
countries want to keep knowledge for themselves in order to be non-replaceable. Employees in
high Uncertainty Avoidance societies are isolated, do not work in teams (except within in-groups, if
the society is collectivistic), and bureaucratic rules will be in place to control the employees.
Knowledge sharing also involves trust and as a Mediterranean country Greece is considered to
belong to Low Trust societies (Fukuyama, 1995). Our own experience with the students in Greece
has been that the groups perform better when clear rules and regulations are put in place instead
of leaving the team to self-management.

We also observed that 20% of the students had difficulties in understanding the demands of the
laboratory element. The reason probably was that the groups were asked to develop a software
system equivalent to the principles in Personal Software Process (PSP) (Humphrey, 2000) and
simultaneously to use the PSP (first manually and later by using the software product the group
itself had developed). This confused the students in particular at the beginning.

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Despite the problems, in total 73 % of the students that answered the questionnaire considered
that team work is really a good idea for the following reasons:
ƒ Discussions and collaboration for problem solutions;
ƒ Improvement of knowledge through sharing of thoughts, ideas and responsibilities.
After improving the course structure and making more clear the expectations on the groups and the
role of the individual members of the groups (instead of self-managed teams) we continued to
follow up through self and peer assessment as well as through interviews the difficulties the groups
experienced and the expected and pragmatic learning outcome from the course (Siakas et. al.,
2005).

ƒ Difficulties to work in groups

“We had different background level of programming knowledge” (The course is
optional and students from different semesters can choose the course)
ƒ Difficulties to adjust to the course requirements.
“The course had a very different emphasis compared to previous experience of
courses…we had to face a complete process, including the whole life-cycle of
software development. In other courses we do bits and pieces”.
ƒ Coordination difficulties (self management)
“To concentrate on particular parts of the program and simultaneously to have a
holistic view of the project created a responsibility conflict whether to focus on the
program itself or also check if the other team members contributed as expected”
ƒ Expectations of the course
“My expectations of the course were to learn ways to develop better code, but in the
course I had to work in a predetermined work-frame with strict dead-lines, time
schedules and to share knowledge. Coding was only a small part of the requirements”.
ƒ Learning Outcome
“We adapted the agile methodology and worked in groups of two which was very
effective – I learned a lot of new things… Now I understand what software quality is
and how important it is to measure progress and to share knowledge”
“This experience was catalytic for my future programming career. In the future I will
design quality into the code from the beginning not expecting to conclude the program
and measure it for quality afterwards”
“I learned that a structured way of writing code is important for reuse by me and
others”
“We focused too much on code! We saw the trees but missed the forest. We should
have concentrated more on processes and quality issues. Now I understand the
importance of a holistic view”
“I felt this course was a continuation of the Software Engineering course, we had to
put everything we have learned so far into praxis“
The lessons learned from previous courses, from the qualitative investigation of potential problems
with group-work and the content of the course improved our confidence in the importance of a
holistic view in Software Engineering including a formalised standard process, designing quality
from the beginning and measuring of performance. Problem solving skills, teamwork, knowledge
sharing, innovation and use of appropriate software engineering principles were emphasised.
Students optimised experiences obtained during previous courses and best practices by simulating
a real-word software-development environment including core business activities and competition.
It was the first time most of the students faced to this kind of pedagogic experiment and the results
are very encouraging.

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5. A case study from Finland

At an MSc degree of Group Technologies, the students were asked through a questionnaire to
evaluate their own learning in three courses, focusing on group-work. The three courses used a
mixture of traditional lectures (50%) with student-led group-work seminars (50%) gradually
increasing students' autonomy and involvement in knowledge creation and management. The
course module of Virtual Communities in particular was taught by adopting the following approach:
The lecturer participated in every group of students in co-preparing and co-delivering a seminar
and setting a discussion task, which later on was completed in the reflection portfolio (or course
logbook). The assessment of the first two courses involved coursework and exam while the third
course was assessed solely on the reflection portfolio, which needed to be delivered one month
after the last course session (Berki et al., 2005).

The group work was carried out in a friendly, relaxing mode and comfortable atmosphere with the
lecturer present as a facilitator. The need for an expert or support manager never appeared; it was
rather preventive guidance for reassurance for the first steps of the work required. The teaching
and learning sessions as well as the assessment tasks had moved the focus from traditional
studying for examination versus constructivist learning tasks. (Berki et al., 2005).

5.1 Students opinions on factors contributing to learning

The interactive nature of the course - discussions and knowledge sharing with other students - was
found to be an effective learning method by many respondents.
“The interactive form of teaching has been facilitative from my point of view.”
“Personal reflections and listening to other’s opinions and ideas in discussion sessions
during all the courses helped me to have a broader view to the things.”
One student mentioned to have found the interdependence of the discussions and logbooks useful:
“The discussions were opening the thinking process that was finished in writings for
the logbook.”
Reflection is a word that has been discussed a lot in the context of educational research and
practice for its fuzzy meaning. It has even been suggested that it should be replaced by the word
‘thinking’ (Andrew et al., 2002). In the context of this analysis a few students mentioned that they
reflected, thought more and associated the seminar talks to a wider or more specialised application
domain. It was obvious though that the reflection logbook tasks for further thinking and the opinions
expressed in the seminar discussion sessions were contrasting. Some students also preferred
more specific and structured tasks to open questions:
“The logbook tasks have been fruitful...”
“Logbook tasks were not defined well (for further reflection). I cannot say that
logbooks have been useful for me.”
Presentations, especially preparation for presenting own material in the student-led seminars
(individual and group work) was found to help learning:
“I believe that preparing those lectures for other students and the discussions were
helping my learning process”
Notwithstanding presentations were found to be a good learning method, one student found them
risky, and raised the issues of subjectivity and objectivity of different worldviews:
“It may easily, introduce subjectivity to things”
Not only preparing for presenting, but preparing for others’ presentations by reading the articles to
be presented from the learning pack-collection of papers was found useful by one student, as well
as the introductory lectures by the lecturer to set the framework of thinking and discussion before
the students seminar presentations.

Others expressed the opinion that it was not only the courses of management that were supportive,
but also the literature and the experience of readings on the field. In some opinions, the awareness

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on the course material stimulated the interest to gain further knowledge from journals and
newspapers when a related interest to the course issues was raised. The actual applications of
organisational knowledge management in the workplace have helped one respondent in
understanding the theory. The same student, among a few others, also hoped for more real life
examples to concretise the issues learned in theory.

Suggestions were given to further improve the courses. One respondent suggested for a course
module (Virtual Communities) that there would have been a list of the readings for people to get a
more holistic view and to be able to connect things together. One student was hoping for more
structure, for example in the form of a book. The respondent justified this with saying that even
though the connection between the topics is afterwards obvious, getting that from the beginning
“…Would have enabled the learning process to become deeper and the outcome
more successful.”
Some students were very happy with all courses, and thought that they had reached the stated
teaching goals and understood the learning objectives well:
“For me it took a while to get used to the teaching methods, but after that I did I gained
knowledge…”

5.1.1 Other learning to that expected from the learning outcomes

The usability of the knowledge gained was not clear or even 'certain' to many respondents. But
learning and understanding that had not been expected had happened anyhow, according to many
opinions. Respondents had learned presentation and self-expression skills, the usefulness of
theory, new learning and teaching methods among other things. The following are quotes of the
respondents’ comments:
ƒ Conversational skills and related or unrelated knowledge:
“I learned a lot of things during the conversations in the class that were probably
outside the actual subject but will prove useful later on to have discussed on them.”
ƒ Multidisciplinary and the dialectical nature of IT and how consensus is achieved:
“All design and implementation of IT is not only technical issue, but there is need for
discussion of the participants from very many disciplines before it could reach the
success.”
The information on existing models and their potential utilisation:
“ I also learned how useful good theories are. Some theories and articles in these
courses have really been impressive, for example Nonaka’s model of knowledge
creation.”
The development of research skills and the utilisation of the Internet as means of research and
source of valuable information:
“Links to sites that have important information and ideas about how web communities
are designed and work.”
Practicality and potential application:
“…Especially the management of knowledge creation and organisational learning
processes - ways to support geographically distributed organisations and teams.”
ƒ Interactivity, dialectic skills and good planning in order to be fruitful:
“I learned that discussion and interaction can be used in teaching. I also learned that
they have to be planned well.”

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6. A knowledge acquisition and sharing lifecycle

6.1 Knowledge partners: Educators and learners

There is considerable literature on learning styles, the cycle of learning and knowledge acquisition
and knowledge transformation. Major contributions made by Kolb et al (2001) and Baker et al
(2002) explored the theoretical foundations of learning and proposed frameworks and models for
improving the learning process in education. Learning in groups and the relationship of the
teacher/instructor/educator and learner as well as the inter-relationships between the learners (who
are working in groups) have also been explored. Much has also been written in recent years about
single and double-loop learning. Our studies aimed to integrate teaching, learning and knowledge
acquisition through knowledge sharing and experience using group work as a vehicle for the
learning process and its improvement. The three case studies have revealed similar attitudes and
have been useful for the students as well as the lecturers involved.

Teaching and Learning involves sharing explicit and tacit knowledge. During the process of
imparting tacit knowledge the teacher’s own knowledge becomes explicit. The learner acquires part
or all of this knowledge initially in tacit form. Through the discussion with his/her team-mates
shared knowledge becomes explicit and so on in a perpetual cycle of both improvement of learning
and of the learning process. We depict this lifecycle in figure 2, where it can be seen that the
educators and the students are active participants in the process. The educator facilitates and
improves the process whilst the learner acquires knowledge about the domain and about the
learning process through collaboration, co-operation and sharing of knowledge.

Figure 2: A knowledge acquisition and sharing model (KASM)

6.2 Concluding remarks and indications of future work

Experiential learning especially for Software Engineering courses can be greatly facilitated by
group work where the learners play an active role in their own and their team members’ learning.
Opportunities for reflection and internalisation of knowledge are integral to the process. Educators
must act as catalysts in the process. They themselves experience learning not necessarily of the
subject matter but of the learning process itself, which in turn serves to improve the teaching, and
learning process. Educators are also responsible for helping to reach conflict resolution. Students
must learn to be open, co-operative, responsible to others, considerate and prepared to do their fair
share. More detailed work needs to be carried out on the planning, re-engineering and
improvement of the Knowledge Acquisition and Sharing Model (KASM), the use of learning
technologies across borders, cultures and social settings. New templates integrating elements from

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the three case studies and the knowledge gained from the educators’ point of view, need to be
designed and used for capturing the data in a consistent manner which in turn will enable us to
carry out both qualitative and quantitative, derive lessons and improve the working model (KASM).

References
Andrew, D., Green, M., Pheiffer, G., Holley, D. (2002). A critical review of the use of the concept of
reflection in Higher Education, BEST Conference, UK, April
Baker, A., Jensen, P., & Kolb, D. A. (2002). Conversational Learning: An experiential approach to
knowledge creation. Westport, Connecticut: Quorum Books
Berki, E., Kaarilahti, N. & Ruuskanen, T. (2005). Researching and Evaluating the Quality of the
Learning Process: How Do Students Understand and Apply the Knowledge Specified in the
Teaching Aims and Objectives? Bennetts, P., Ross, M. & Staples, J. & (Eds) INSPIRE X
Quality Issues in the Teaching of Computing. The Tenth International Conference on
Software Process Improvement: Research, Education and Training, 19-21 Mar 2005,
Cheltenham, UK. pp. 43-67
Fukuyama, F. (1995), Trust: the social virtues and the creation of prosperity, Hamish Hamilton,
London
Georgiadou, E (2005), Ethics, Logistics and Pragmatism of Student Group Work, INSPIRE March,
UK
Georgiadou, E., Dalcher, (2004), D. Student Self and Peer Assessment: A Question of
Professionalism, Inspire International Conference, BCS, Canterbury, UK, April
Georgiadou Elli (2002). "FATHOM, A Framework for Assessment Through Hybridising of Methods"
Software Quality Management Conference, SQM, Limerick, Ireland, 25-27 March
Georgiadou Elli, Siakas Kerstin V. (2003), Technology-based learning - Cultural Dimensions and
Considerations, The 8th INternational Conference on Software Process Improvement -
Research into Education and training, INSPIRE 20003, 23-25 April, Glasgow, UK
Georgiadou, E. & Berki, E. (1997), "Participative Teaching & Learning of Information Systems
Development Methodologies". C Hawkins; M Ross; G Staples; H Wickberg (Eds) INSPIRE
II Process Improvement - Training and Teaching for the Future. Proceedings of the Second
International Conference on Software Process Improvement, Research, Education &
Training, (INSPIRE '97), Aug, IVF at Gothenburg, Sweden, pp. 82-93, SGEC Publications.
Hofstede, Geert (2001); Culture's consequences: comparing values, behaviours, institutions, and
organisations, Thousand Oaks, California, London: Sage Publications
Hoefling, Trina. (2001), Working Virtually: Managing people for successful virtual teams and
organizations. Sterling: Stylus.
Humphrey Watts (2000), Introduction to the Personal Software Process, Wiley
Kolb, D. A., Boyatzis, R., & Mainemelis, C. (2001). Experiential learning theory:
Previous research and new directions. In R. Sternberg and L. Zhang (Eds.) Perspectives on
cognitive learning, and thinking styles. Mahwah, NJ: Lawrence Erlbaum Associates.
Lipnack, Jessica, Stamps, Jeffrey. (1997), Virtual Teams: Reaching across space, time and
organizations with technology. New York: Wiley.
Siakas K.V., Taouktsis V., Pehlivanis K., Voutsa E, Gisis T (2005), Assessment – Improvement of a
Balanced ScoreCard Application; Experiences from a Laboratory Course in Software
Quality Management, The 10th INternational Conference on Software Process
Improvement - Research into Education and training, INSPIRE, 21-23 March,
Glouchestershire, UK
Siakas Kerstin V., Georgiadou Elli (2003), Learning in a Changing Society and the Importance of
Cultural Awareness, IADIS 2003 (International Association for development of the
Information Society) International Conference, Algarve, Portugal, 5-8 Nov.
Siakas, Kerstin V. and Mitalas, Andreas (2004a): The Personal Software Process; Experiences
from a Laboratory Course in Software Quality Management, The 9th INternational
Conference on Software Process Improvement - Research into Education and training,
INSPIRE, Kent, UK, 05-07 April, pp. 73-82
Siakas, Kerstin V. and Mitalas, Andreas (2004b): Experiences from the Use of the Personal
Software Process (PSP) in Greece; Analysis of Cultural Factors in the 9th INternational
Conference on Software Process Improvement - Research into Education and training,
INSPIRE 2004, Kent, UK, 05-07 April, pp. 11-21

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Appendix A
Questionnaire 1
Read each of the following carefully and tick the option that best describes your feeling about it. Be
honest.
Table A1 - My Strengths and weaknesses
Tick 1 if you agree fully
2 if you agree more or less
3 if you disagree more or less
4 if you completely disagree 1 2 3 4
1 I am a co-operative person
2 I am a good leader
3 I will back my leader fully
4 I am enthusiastic about my work
5 I am adaptable in my work
6 I have a good technical knowledge of the project area
7 I am good at analysing problems
8 I am good at designing solutions
9 I am good at planning
10 I have good implementation skills in the project area
11 I put a lot of effort into my work
12 My work is of good quality
13 I always meet deadlines
14 I am good at planning my time
15 I am good at planning resources
Questionnaire 2
Read each of the following carefully and tick the option that best describes your feeling about it. Be
honest.
Table A2: My attitude to group work
Tick 1 if you agree fully
2 if you agree more or less
3 if you disagree more or less
4 if you completely disagree 1 2 3 4
1 I listen to others
2 I like putting my point of view
3 I like to get my own way
4 I know my limitations
5 I like to work things out for myself
6 I always admit when I need help
7 I admit my mistakes
8 I feel guilty when I make mistakes
9 I feel that other people are more capable than me
10 I sometimes pretend to be brighter than I am
11 I think other people pretend to be brighter than they are
12 I am good at working as part of a team
13 I like to criticise others
14 I only work well if I get my own way

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Appendix B
Self assessment template
Using the scale of 0 to 5 please provide a critical appraisal of what has been achieved, and of your
contribution and of the other team members’ contribution.
0 = Absent (or Very Poor) 3 = Good
1 = Poor 4 = Very Good
2 = Satisfactory 5 = Excellent

Self assessment
ƒ How would you rate your technical contribution to the group work?………..
ƒ How would you rate your contribution in terms of organisation? …………...
ƒ How would you rate your contribution in terms of communication? ………..
ƒ It is believed that group work has more benefits than drawbacks, and that groups always
achieve more and better results than people working as individuals. Please rank the following
in order of importance in the context of group work.
Benefit Ranking
Sharing of knowledge
Sharing the work load
Enhancing Communication
Compromise/Listening to others
Obtaining additional perspectives
Providing Mutual Support
Learning from teaching others
Other (please specify)

Please enter possible drawbacks and their ranking in the table below:

Drawback Ranking
Lack of communication
Team members not pulling their weight
Cultural clashes
Style of working/dysfunctional groups
Logistics difficulties
Other (please specify)

1. Please insert your name and your University Number below

Name:……………………………………………………..Uni No:……………………

689
Knowledge Dynamics in Community of Practice
Khalid Hafeez and Fathalla Alghatas
School of Management, Bradford University, UK
[email protected]
[email protected]
Abstract: The topic of Community-of-Practice (CoP) has been discussed in the management literature in the
earlier part of 1990’s, and since attracted a lot of attention from academics and professionals around the
globe. Communities of Practice (CoP) have become a strategic approach for fostering learning and
transferring knowledge. However, there are a few studies, which explain what makes a community to engage
in a discussion to share their knowledge and experience. This paper discusses the anatomy of a CoP, and
examines a number of knowledge management tools such as Nonaka and Takeuchi’s knowledge spiral
model, story telling and discourse analysis to illustrate how knowledge is transferred and learning takes place
in a virtual Community of Practice.

Keywords: Community of practice, discourse analysis, knowledge management, story telling, Nonaka and
Takeuchi’s knowledge spiral model.

1. Introduction
A recent survey by the Institut für e-Management e. V. (2001) proposes Communities of Practice
(CoPs) as one of the top ten topics of Knowledge Management (KM). Co-founders of this concept,
Lave and Wenger, go to extent of considering CoPs “an intrinsic condition for the existence of
knowledge” (Kimble; Barlow, 2000). The CoP has been particularly recognised as main tool for
converting “implicit” knowledge into “explicit” form of knowledge (Davenport and Prusak 1998).
Reports from American Productivity and Quality Center (APQC, 2000) survey suggest that 95% of
the Best Practice organisations consider CoPs very important to their KM Strategy. According to
the survey, firms such as Ernst & Young consider CoPs an equivalent to Knowledge Management.
Almost 33% participants included in the survey represented consulting firms, which demonstrate
that consulting which highly knowledge-intensive industry value CoPs as a valid method knowledge
acquisition and transfer. In this paper Wenger’s and Snyder’s definition is considered for co-
presence of distributed groups if they can still be considered Community-of-Practice (2000). Lave’s
and Wenger’s initial analysis relate to the groups those were exclusively co-located in non-IT-
settings (e.g. tailors, quartermasters, butchers and claims processors). They suggest that the co-
presence should not be seen as essential condition for forming a CoP (McDermott, 1999). Since
Brown’s and Duguid’s (1996) influential case study on CoP at Xerox, other case studies of
distributed and computer–mediated Communities have been published as explained in the
subsequent sections.

2. Community-of-practice (CoP)
The famous case study with Xerox PARC, done by Brown and Duguid in 1996, helped rejuvenating
the modern notion of “Community of Practice” (CoP). They defined CoPs as “peers in the execution
of real work, held together by a common sense of purpose and a real need to know what each
other knows.” (Brown & Duguid, 1998). Again, Wenger and Snyder (2000) two of the most
recognized theorists on the topic define CoP as ‘‘. Groups of people informally bound together by
shared expertise and passion for a joint enterprise.” (Wenger, 2000) The key points of other CoP
definitions include knowledge sharing, learning (Reinemann-Rothmeier and Mandl, 1999), a
common practice or solving of common problems of the group and construction of a common
knowledge repository (Stewart, 1996, McDermott, 1999). However, there is a close relationship of
CoP topic with the notion of ”Business Communities” which is defined as groups formed around a
topic, which is relevant for business(Gruban, 2001). It is assumed that these groups have been
working for some time together, while manifest other characteristics of being a community, such as,
sharing a common meaning; identity and common language derive from common practice and
common interest(s) (Hildreth et al, 1998). We, therefore agree with following working definition of
CoP for the purpose of this paper:

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“Group(s) of people, which have an interest in the same topic over a longer period of
time and who are engaged in an activity of sharing their opinions on this topic.”
(Probst, 1999)
In the following sub sections we would summarize a number of knowledge management tools used
to analyse an on-line community of practice.

3. Understanding knowledge dynamics

Literature provides very clear links of learning and knowledge management (Hafeez and
Abdelmeguid, 2003). Also learning is an essential ingredient for developing individual and
corporate competences in the knowledge society (Hafeez et al., 2002a, 200b, 2002c). Here we
would consider two specific tools for knowledge management, namely, Nonaka and Takeuchi’s
spiral model (1995) and story telling. We would argue these are useful tools to explain knowledge
dynamics in a virtual CoP context.

3.1 Knowledge transfer (SECI) spiral model

Nonaka and Takeuchi (1995) spiral model illustrates how knowledge is created and transferred in
an organisation through interactions between tacit and explicit knowledge. More specifically they
recognize these interactions as ‘knowledge conversion’. There are four modes of knowledge
conversion, namely, socialisation, externalisation, combination and internalization (see Figure 1) as
summarized in the following:
ƒ Socialisation (from tacit to tacit): where knowledge transfer takes place in a tacit form. Here, an
individual acquires tacit knowledge directly from others through shared experience, observation,
imitation and so on.
ƒ Externalisation (from tacit to explicit): through articulation of tacit knowledge into explicit
concepts. This field prompted by meaningful dialogues or reflections.
ƒ Combination (from explicit to explicit): through a systematisation of concepts drawing on
different bodies of explicit knowledge present in the environment of an organisation.
ƒ Internalisation (from explicit to tacit): through a process of "learning by doing" and through a
verbalisation and documentation of experiences.
The main benefit of this model is that it provides a mechanism to provide an understanding on the
epistemology and dynamism of knowledge itself, and provides a framework for management of the
relevant knowledge management processes from the ontological perspective.
Tacit Tacit

Socialisation Externalisation
Explicit
Tacit

Sympathized knowledge Conceptual

knowledge
Explicit

Internalisation Combination
Tacit

Operational knowledge Systematic knowledge

Explicit Explicit

Figure 1: SECI diagram representing four modes of Knowledge conversions (Source: Nonaka and
Takeuchi, 1995)

3.2 Story telling

Storytelling is the use of stories in organisations as a communication tool to share knowledge
(Snowden, 1999). Stories can be used to serve a number of different purposes in an organization
to meet different context, for example Denning identifies that there are eight purposes for

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storytelling, which all relates to expressing complicated ideas and concepts (2000). The aim is to
produce clear communication for converting knowledge into a form in which easier for others to
understand. In a CoP context, socialising in a formal or informal way provides opportunities for
stories to be told as people relate their experiences and it is through the medium of story telling that
people are encouraged to share knowledge. For us storytelling is a powerful transformational tool,
which if used appropriately can facilitate sharing of knowledge in a virtual CoP.

3.3 Discourse analysis

Discourse analysis is a way of identifying, categories and developing relationships between
exchanges, sequences, and episodes of messages (Sherry, 2000). Discourse analysis is good way
of determining the relationships between the concepts that are presented and discussed in the
conversation. Spradley (1980) recommends four levels of investigation in order to conduct a
discourse analysis as explained in Table 1.
Table 1: Different investigation levels for discourse analysis (Spradley, 1980)
Level of
investigation Description
This means capturing the parts or elements of cultural meaning that occur in the
Domain analysis conversation by identifying the discrete set of moves used by the participants.

This is a search for the way that the cultural domains are organized. It usually involves
Taxonomic drawing a graphical interpretation of the ways in which the individual participants’ moves
analysis form groups and patterns that structure the conversation.

This means searching for the attributes of the terms in each domain, the characteristic
Componential phrases or sentences that tend to recur within each category of moves.
analysis

The last and final step is to search for patterns or recurrent relationships among
Theme analysis domains. If certain moves or language functions tend to enhance learning, then these
patterns need to be identified.

In a virtual CoP context, we feel the above relationships, as well as the interaction of the moderator
could construct the subsequent structure of the conversation. Such electronic dialogue could be
characterized by a dynamic membership of the community members that are distributed across
space and through time.

4. Methodology
As mentioned earlier we are using a virtual community of practice representing System Dynamics
Association as our case study. The CoP is a specialist community involving technical expertise of
domain experts, teachers, consultants and students. The reason for choosing the CoP was our
own interest and expertise of this subject area for the past 16 years. This allows us to have a good
knowledge of the domain expert in the different categories of SD discipline. Also we have an active
participant in the past discussions of this CoP. However, we have been an observant during the
case study period.

5. Case studies
System Dynamics has been around for about 50 years and was conceived due to the cross-
fertilization of the fields of management science, control theory and computer simulations. It aims
to represent time behaviour of a “real world” system using some well-known pattern such as
learning curve or S-curve. More complex models are readily developed using non-linear algebraic
equations, however, the main aim is to understand the dynamics and behavioural changes in a
system over time rather focusing on actual numbers or quantitative outputs. Such analysis is
therefore suitable to study medium to long-term changes such as impact of an organisations’ three
to five year strategy or policy.

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5.1 Case study: System dynamic society’s community of practice

The System Dynamics Society was established around thirty years ago with key aim to provide a
platform for researchers, educationalist and practitioners for exchange of ideas. Over the years the
activities of the Society have evolved in many forms such as organizing workshops, conferences
and doctoral colloquiums. The SD community of practice was such a successful initiative that
subsequently two offspring communities were established to ensure a focus debate in the related
fields. These include:
ƒ K-12 CoP: This is established by the educators of SD at the pre university schools and colleges.
ƒ Sustainability CoP: A dedicated forums for social scientist and economist predominantly
engaged with developing SD models for sustainability at macro level.
The front end of the website is illustrated in Figure 2, (this may be viewed at:
http://www.ventanasystems.co.uk/forum/)

Figure 2: SD CoP interface: http://www.ventanasystems.co.uk/forum/

The analysis in this paper concerns the main System Dynamics CoP. The analysis reveals how
domain expert in the field are acting as a voluntary mentors for educating the students and semi
experts in the field. We also illustrate how these mentor experts bring out their subjective and tacit
knowledge to act as a catalyst to generate new ideas, and maintain the interest of the community
to remain engaged in a dialogue. We further explore a number of knowledge management tools to
illustrate how learning takes place in this CoP and individual as well as domain knowledge is
expanded. We have selected two topics for further analysis as illustrated in Table 2.This paper
reports on two discussions that involved both a relatively high number of “replies” but also involved
numerous participants. The limited contribution by most individuals taking part in these discussions
is somewhat unfortunate because it does not allow us to see how individuals’ views developed
through the interactive process of this discussion. This limitation to the study is readily accepted but
it is submitted that this does not prevent the broader methodological approach of this paper from
being discussed. In developing this work and the overall approach, a more comprehensive dataset
can be compiled.
Table 2: A list of selected topics for analysis from SD CoP
Posted on Discussion Discussion
Topic No. of Topic generator date period
replies

1 Can system dynamics 46 Martin F. G. 17 April 18/4/03 to 20 days

models learn Schaffernicht 2003 7/5/03 (3 wks)

2 Using statistics in 28 Jay Forrest 29 Jan 29/1/04 to 9 days

dynamic models 2004 6/2/04

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We have classified each reply into five main categories as follows:

ƒ Technical Dialogue: Participants apply specific knowledge from a particular field(s)
ƒ Experiential Dialogue: Participants use anecdotes and reflections based on from their own
experiences to argue their case.
ƒ Philosophical Dialogue: Participants refer to or are guided by a particular school of thought.
ƒ Academic Dialogue: Participants draw upon specific academic references.
ƒ Mixed: Participants combine two or more of the above categories.
Also, we have classified the nature of discourse within discussion as follows:
ƒ Explanation: to make something clear by giving reasons
ƒ Story telling: use of this technique to enhance an idea
ƒ Support: to show one’s loyalty or approval of belief
ƒ Inquiry: the content is inquiring specific knowledge to be clarified by other members.
An analysis of the first topic is presented in the following section.

5.1.1 Topic 1- ‘Can SD models learn?’

The Query: Inspired by the development in the machine learning field, the CoP bulletin board
received a question from one member (Martin Schaffernicht) to guide him
“Is it possible to build a system dynamic model that ‘learns’?
Developing a context to his inquiry, Martin Schaffernicht argues that this is possible only in so far
as some decisions may change values of converters that are used by other decisions; but if
learning means that some existing variable is replaced by a new one (second loop changes
objectives and values), it seems hardly possible. His specific request worded “if anyone have an
academic paper or some other written material about this theme”.

The Nature of discourse: Over the past twenty years many of the non-deterministic problems are
modeled using some learning algorithms such as neural networks, fuzzy logic, genetic algorithm or
some other kind of probabilistic reasoning method such as stochastic automata. The non-
deterministic problem are those where an exact mathematical solution does not exists, and only
way to achieve a near optimum solution through trial and error. This discipline is more recently
evolved as “machine learning” and the underlying logic of these models is to bring the output of the
model as close to target as possible. Therefore after each simulation, an error function (which is
the difference between the target and actual output) is generated. If the new error function is less
than the previous one, a corresponding input is generated based on a fractional association to the
new error function such that overtime the error reduce to zero or as close as possible. In contrast,
system dynamics generates a non-exact solution based on complex mathematics. However, the
SD algorithm does not go through any optimization runs to find a near exact solution, as explained
earlier the main aim of SD study is to understand the time behaviour of a system in terms of
increasing or decreasing trends such as impact of educational interventions to cut down smoking in
teenagers, which would be quantifiable after a few years of implementation.

Figure 3 shows the time history of this discussion and Table 3 provides a discourse analysis how
the discussion took place. We would regard the query as a mixed category as it include search for
technical information as well as need for developing an academic dialogue to provide an answer to
this discussion. The query initially attracted 18 responses from participants over the first 5 days.
The first contributions expressed opinions regarding different System Dynamic approaches. The
analysis suggests that members were the active participants of this debate. From our knowledge of
the subject area we would regard them as domain experts. Figure 4 shows that the message sent
on the 1st of May 2003 by J. Lauble was the last substantive contribution to the discussion. There
were two further contributions made in this CoP, however, these were general comments to
support the previous arguments and to thank participants for their inputs. The topic can be
regarded highly technical that it in general led to much focused discussion. However, despite of
highly technical nature of the topic, most of the experts posted relatively long (250-500 words) or

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very long (501-1000 words). The interests from other members in terms of accepting or rejecting
different opinions encouraged the experts to make further contributions. An analysis of the total
dialogue reveals that, overall; academics contributions in the discussion were almost 40%.
Whereas around 16% came from experts belonging to some professional organisation (for example
Strategy Academic Solution, PA Consulting Group and Sports Business Simulation Inc.). We have
used life cycle term very loosely here to explain the life cycle of the topic itself rather life cycle for
the community of practice as suggested by Wenger (1998). Figure 4 illustrates various fluctuations
in the intensity of discussions. We would relate some of these fluctuations due to the broadness of
the topic area-giving rise to related sub-questions, however not attracting much attention from
wider community. However, in our view the main reason for the success of this topic as can be
seen from the discussion profile (Figure 3) is that every time community started to lose interest with
the topic (the ‘’dispersed stage’’), a new related question was posted. This question sparked the
interest of other members and domain experts were quick to jump in to share their experiences and
give their opinions. In total, five sub questions were raised during this discussion. These questions
were as follows:
ƒ What kinds of things could continuous aggregate models like system dynamics models learn?
ƒ Did the system lose focus?
ƒ Does the SD model meet all ”learning” needs?
ƒ Are there other arguments for SD being used in learning?
ƒ Why did a correspondent make bad decisions despite possessing sufficient information to make
more appropriate decisions regarding SD?
The nature of the discussion was predominantly explanation. The discussion classification was
mostly academic or mixed where participants combined more than one dialogue such as technical,
philosophical, or experience in their messages (see Table 3).

Figure 3: Discussion profile for the Topic “Can SD models learn”

Figure 4 provides a percentage contribution of the key authors illustrating that the engagement of
various domain experts of the discipline provided the stimulus in this debate. There were 29
members involved in this discussion of which we would regard fourteen (14) having substantial
experience in the discipline. These experts belonged to academic institutions, businesses as well
professional organizations. The analysis suggests that the domain experts overall posted 36% of
the total replies. The replies constitutes, giving relevant suggestion to participants, express their
own opinions and relating to their own experiences to contextualise any emerging questions and
sometimes even acting as a moderator to summarise the discussion in a concise way.

5.1.2 Topic 2- Using SD in statistics

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The Query: This topic was generated by the originator of system dynamics discipline Jay Forrester
himself. The topic was initially springs from a previous discussion on the subject by another domain
expert Jim Hines. The question worded:
“How statistics can be used in the System Dynamics Models”?
The Nature of discourse: The query was actually trying to give an answer to the question itself.
The question was posed in an academic context and caused an initial flash of interest with five
contributions being posted to the discussion on 29th January 2004. These contributions expressed
opinions representing a range of positions; primarily there was a division between those who
considered stories to be a valid means of understanding cultural transmission in themselves and
those who suggested that the strength of such stories in transmitting cultures could be tested
through statistical analysis. One contributor sought to find a middle-way between these two
opposing views by emphasizing the value of using stories and statistics together. From this
contributor’s perspectives, anecdotes provided a picture of events while statistics could be used to
explore how applicable these stories might be to other situations.

Length (in words)

Classification
Community
participants

Number of
Member
Number of

Messages

Discourse
Nature of
Message

Message
Code

- M Schafernicht - 1 S (topic generator) VS Inq. (topic Mix

1 Bill Harris A 1 first reply generator) Ac
2 Paul Newton B 1 VS Exp. Ac
3 Ignacio Mayano C 1 VS Exp. Ac
4 Natarajan R. C. D 2 M, M, Exp. E, Mix
5 Raymond Joseph E 5 L, L, VL, M, L ST, Exp. Mix, Ac.,
Exp., Exp., Exp., Tech,
6 Magna Myrtveit F 1 M Exp., Support Mix, Mix
7 George Backus G 1 S Exp. Ph
8 John Sterman H 3 M, VL, L Support Ph
9 Alan Graham I 2 L, M ST, Exp., Exp. Mix, Ac, Ac
10 Yamen Barles J 2 L, L Exp., Support Ac, Mix
11 George Lofdahl K 1 S, Exp., Cont. Ph, Mix
12 Jim Hines L 5 S, L, M, L, L Support Ac
13 Bill Braun M 3 S, VL, S ST, Exp., Exp., Ac, E., Mix,
14 Rainer N 2 M, L Exp., Exp. Ac, Mix
15 Niko Papula O 1 M Support, Con., Ph, Mix, Ac
16 Rod Brown P 1 VS Exp. Ac, Mix
17 Finn Jackson Q 1 L Cont., Exp. Ac
18 Marsha Price R 1 VL Exp. Ac
19 Cleotlide Gorrzalez S 1 S Cont. Mix
20 George Richardson T 2 L, VL Exp. Mix
21 Brain Daingerfield U 1 L Support Ac
22 Martens V 1 M Support Ac, Mix
23 F. G. Schaffernicht W 1 L Exp., Exp. Mix
24 Carlos Ariza X 1 M Support Ac
25 Dave Paker Y 1 M Support Mix
26 Z. Abraham Z 1 L Exp. Ac
27 Allocar Strasbourg AA 1 VL Inq. Mix
28 Jim Thompson AB 1 S Exp. Ac
29 David Kreutzer AC 1 L (last reply) Support Mix
Inq. & Exp. Ph
Support Mix
Support

Table 3: Discourse analysis for the topic: “Can SD models learn?”

Key:
Message Classification: Technical (Tech); Experiential (E); Philosophical (Ph); Academic (Ac)

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Nature of discourse: Explanation (Exp.); Support; Contradict (Cont.); Storytelling (ST); Inquiry
(Inq.)
Message Length (in words): 1-50 Very Short(VS); 51-100 Short (S); 101- 250 Medium (M);
251-500 Long (L); 501- 1000 Very Long (VL); +1000 extended contribution (EC)
Z, 2% AA, 2% AB, 2% AC, 2% A, 2%
Can SD Models learn B, 2%
Y, 2%
C, 2%
X, 2%

W, 2% D, 4%

V, 2% E, 11%
U, 2%

T, 4%
F, 2%

S, 2% G, 2%

R, 2%
Q, 2% H, 7%

P, 2%
O, 2%
I, 4%
N, 4%
J, 4%
M, 7% K, 2%
L, 11%
A B C D E F G H I J K L M N O P Q R
S T U V W X Y Z AA AB AC

Figure 4: Authors relative contribution in the discourse: ‘Can SD models learn’

As the discourse of the discussion moved from a relatively general set of responses into more
detailed consideration of analytical rigour (for example the reliability of statistical testing), the
number of responses declined significantly. This decline was reversed, however, when one
respondent involved in the detailed methodological discussion included a number of additional
comments on the topic in hand. The wider range of subjects for people to address seemed to
stimulate renewed interest and point of entry for potential participants. As illustrated in Figure 6 that
participation rate increased after such interventions. This interest was sustained up until 3rd of
February 2004, although participation never reached the levels of initial interest in the topic. On 3rd
of February 2004 John Gunkler tried to focus to the nature of the discussion by pointing towards
the original question asking the community whether the topics had become too broad (for example
the almost philosophical discussions on the nature of proof occurring on 1st and 2nd February 2004)
and whether the thread should be broken into separate discussions. Thereafter contributions to this
discussion declined with the final entry being made on 6th February 2004 when J. Lauble usefully
summarized the points raised and thereby provided a natural conclusion to this discussion.

Based on the fact that all members have knowledge about SD, nearly one third of contributions
came from domain experts. The composition of the participant group may be a reason for the broad
nature of the discussion, as opposed to a series of narrowly focused contributions closely related to
the topic in hand. As acknowledged by John Gunkler this does produce an interesting discussion
and can stimulate creation of potential new threads but can also require the experts in the
discussion to help retain the focus of discussions or bring matters back on track. The summary
provided by the final contributor is a good example of how an expert can perform a “management”
role in such wide-ranging discussions, the comprehensive entry posted by an expert who
summarizes the previous arguments clearly and added some new material to stimulate further
discussion.

In this discussion, altogether eighteen members took part. Out of those, we regard ten (about 56%)
are the domain experts belonging to either academia or business and consulting organizations.
The nature of the discussion took the forms of explanation and support in most replies, in spite of
they’re being other forms that could have been utilized, such as storytelling, inquiry and
contradiction (see Table 4). Observing the general tone and language adopted by the participants,
the discussion appeared to be one of friendly exchange based around developing mutual
understanding around this topic. Even when participants disagreed, they either made efforts to
point out where they could agree with another contributor, or were very articulate in explaining the

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basis for their disagreement. The extracts, which we term explanatory, had worked examples or
experiential dialogue in an attempt to clarify the points what a contributor was trying to make.

Around 61% of the contributions could be classified as either long (251-500 words) or very long
(501 – 1000 words), whereas, 39% were medium (101 – 250 words) or short (51 to 100 words)
replies (see Table 4). Similar to the first topic, three domain experts lead this discussion as they
posted 43% of the overall contributions (12 contributions out of 28).

Figure 5: Discussion profile for the Topic “Using statistics in SD”

Using statistics in dynamic models

A; 7%
B; 4%
Q; 21%

C; 11%

P; 4% D; 4%

O; 4%
E; 7%
N; 4%

M; 4% F; 4%

L; 4% G; 4%

K; 4% J; 4% H; 11%
I; 4%

Figure 6: Authors relative contribution in the discourse: ‘‘using statistics in dynamic models’’

6. Discussion
One key area of our interest with this research is to find out how knowledge transfer takes place in
virtual community of practice. As it is shown in figure -7, it provide a summary of the results in
terms of how knowledge in CoP would allow transfer of knowledge and learning within such
disperse and diverse community. Adapted from Nonaka and Takeuchi (1995), figure 7 provides a
summary of the results in terms of how CoP would allow transfer of knowledge and instigate
learning within the virtual community. The analysis reveal that the Systems Dynamics CoP under
investigation do facilitate the processes of socialisation, externalisation and combination. The
community organise annual seminars and special chapter workshops each year that help to
socialize and develop community ethos. Thereby, it allows members to share knowledge through
chat rooms in a virtual context. Interacting with domain experts creates new knowledge. The CoP

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practice hold a structured archive that contains all the discussions ever took place since the start of
the CoP in a topic-by-topic structure. In the combination process, the structured archive that the
CoP hold, makes it possible for members to access information over a period of time, and benefits
through the use of “organisation memory” if one is faced in a knowledge crises situation. Also,
some of the topics that are discussed in virtual context become a topic for future face-to-face
workshops and conferences. System Dynamics society issues its own electronic newsletter for
promoting its events, course, and publications and stories that helps in the internalization of
knowledge within the community boundary.
Table 4: Discourse analysis of the Topic: Using statistics in SD

Nature of Discourse
No. of Messages

Classification
participants

Community
Number of

(in words)
Message

Message
Member

Length
Code

- Jay Forrester - - L (topic generator) Exp. Ac

1 Joal Rahn A 2 L (first reply), VL Support & Exp., Cont. & Mix, Mix
2 Kim Warren B 1 L Exp. Mix
3 Jim Hines C 3 M, VL, M Support Ac, Mix,
4 Finn Jackson D 1 M Exp.& ST, Exp& Inq, Exp Mix
5 Bill Harris E 2 S, L Support Mix
6 Gorey Lofdahl F 1 L Exp., Cont. Ac, Ac
7 John Voyer G 1 L Exp. E
8 Alan Graham H 3 M, EC, M ST Ac
9 Camlo Olayo I 1 L Exp., ST, Exp. Ac, Mix,
10 Enting Moxnes J 1 L Support & Exp. Mix
11 George Backus K 1 EC* Exp. Tec.
12 Michael Evans L 1 M Exp. Ac
13 Kia Arild Lohre M 1 L Support & Exp. Mix
14 Santaigo N 1 M Exp. Ac
15 Arango O 1 L Exp. Ac
16 John Gunkler P 1 L, M, VL, M, VL, M, VL (last Support & Exp. Ac
17 Carlous Q 6 reply) Cont. Ac
Grutters Exp., Exp., Exp., Exp., Ac
Jean Lauble Exp., Exp. Ac, Mix,
Ac,
Mix, Ac,
Mix
Key
Message Classification: Technical (Tech); Experience (E); Philosophy (Ph); Academic (Ac)
Nature of discourse: Explanation (Exp.); Support; Contradict (Cont.); Storytelling (ST); Inquiry
(Inq.)
Message Length (in words): 1-50 Very Short(VS); 51-100 Short (S); 101- 250 Medium (M); 251-500
Long (L);
501- 1000 Very Long (VL); +1000 extended contribution (EC)

The analysis of the SD CoP reveals how individual’s tacit knowledge may be transferred into
explicit knowledge and communicated. Participants adopt devices of story telling and intervening
not only to crystallise their own tacit knowledge but also to express their views and thereby share
their knowledge. This demonstrates not only a willingness to engage with CoP members on
particular topics, exchanging knowledge, but also that there are established means or conventions
for the form of expression. From the analysed topics, it is evidenced that some of the participants
hidden knowledge ‘tacit’ was converted to explicit knowledge as the information is stored in a
systematic way.

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7. Conclusion
The topic of Community-of-Practice (CoP) has been discussed in the management literature since
the earlier part of 1990’s, and has attracted a lot of attention from academics and professionals
around the globe. However, there are a small number of studies, which explain what makes a
community to engage in a discussion to share their knowledge and experience. This paper
discusses how knowledge transfer takes place in a virtual community of practice. The discourse
analysis conducted in this study illustrates that participating of domain expert’s play a crucial role to
conduct a vibrant and meaningful debate. The domain experts not only provided the needed
stimulus when the discussions was cooling off but also intervened to help focus on the main issues
of the debate when the community was dispersing the issues into sub threads. Also they provided
a meaningful dialogue at times to sum up the debate. It is also interesting to note that although the
SD CoP is very mature site existed for over twenty years; there was no cross over between the
domain experts for the two topics. In addition, our analysis suggests if a topic is initiated by a
domain expert (Topic 2), it attracted relatively more domain experts for the discussion. Moreover
the responses were relatively more personalize as these were directed to a particular domain
expert either supporting or contradicting his/her views. However, topic initiated by a well known
domain expert does not necessarily means more contents and debate, as the participation level
and membership for Topic 1 initiated by non domain expert was relatively higher. However, for the
both cases, the members adopted an explanatory discourse with academic style, and relied upon
medium (100 – 250 words) and long (251–500 words) messages. We find Nonaka and Takeuchi’s
knowledge spiral model, story telling and discourse analysis as useful knowledge management
tools to investigate and explain how knowledge is transferred and learning takes place in a virtual
Community of Practice context.

To Tacit To Explicit
Knowledge Knowledge
Socialisation Externalisation
Sub-CoP,
Planned expert Emails and newsletters,
From Tacit conference and chapter detailed knowledge stores, databases and report
Knowledge meetings boards.

Internalisation Combination
Email and chat rooms.
From Email newsletter A structured archive (organisation memory) where
Explicit general issues are stored and can be referred to when
Knowledge Community Rules and necessary, Knowledge stores.
Community stories

Figure 7: SECI Spiral diagram for the System Dynamics Community of Practice (Adapted from
Nonaka and Takeuchi, 1995)
The System Dynmaics CoP under investigation facilitates the processes of socialisation,
externalisation and combination through chat rooms where new knowledge is created by
interacting with more knowledgeable participants. In the combination process, the structured
archive that the CoP hold, make it possible for members to access to all past and present
discussions if needed when faced by a particular problem. Our analysis also reveals that
socializing through face-to-face chapter meetings and annual conferences has been a crucial
mechanism for the community members to develop community ethos and personalization to
become more enthused in virtual debates.

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Adaptive Working Environment Through Semantic
Interoperability
Jorg Hartwig
University of Leipzig, Institute of Computer Science, Germany
[email protected]
Abstract: Today, much implicit knowledge is lost, when employees leave companies. The more knowledge
intensive work the user carried out the greater the losses will be from the enterprise’s point of view.
Unfortunately, many man-hours. are wasted clarifying ambiguous terminology, which hampers knowledge
sharing. Using the Adaptive Working Environment provided by Semantic Interoperability, a solution will be
presented, which increases the understanding of useful content in a specific situation or whilst creating new
content. Such useful and informative content must meet the concept agreements held in different domain or
role-dependant ontologies as a part of the enterprise’s knowledge repository. The introduced Semantic Bridge
relays heavily on ontologies with a living link between the user’s software application and the enterprise’s
knowledge base. By using the living link during the user’s daily work the result will be the successful shift of
the user’s partial implicit knowledge to the enterprise’s organizational memory. Such explicit knowledge
remains a part of the company; even once the user has left.

Keywords: Semantic interoperability, concept corona, semantic bridge

1. Motivation
Efficient knowledge work depends strongly on a clear and unambiguous description of the task a
knowledge worker has to do. Manufacturing has a longer tradition and so it has better optimized
methods and sequences described in processes, which are running in more stable and solid
production environments than knowledge work. But similarly to manufacturing, knowledge intensive
work also requires well-modeled processes with proper resource structures and information flows
as well as the necessary machines, networks and tools.

The old economy has run several iterations to optimize their processes, such as business process
modeling, optimizing and redesign. These processes can be easily adapted for product
modifications or rapid product creations. Such plants and systems have a long lifetime and are
therefore almost guaranteed a return on the investment.

The new economy, namely the production and distributing of digital products, is only 15 years old.
It is, in contrast to the old economy, not so matured and explored. There are various reasons for
this. For example:
ƒ Rapidly evolving hard- and software systems with short lifetimes,
ƒ Difficulty ascertaining criteria regarding the requirements of digital products and services,
ƒ No clear separation of productive and informative content,
ƒ No existing or weakly modeled flows of information along the process chains as well as
between groups of knowledge workers,
ƒ No continuous help for knowledge workers whilst installing and configuring their working
environment.
The first two points are inherent to and given by the nature of virtual, i.e. digital work. However, for
the last three points, a concept will be presented in this paper to support knowledge intensive work
with an Adaptive Working Environment through Semantic Interoperability (AWE). Such AWE
greatly helps knowledge workers by opening a semantic bridge between an information space
system and a Knowledge Unit.

2. Separation of productive and informative content

This section will explain the difference between the two subclasses of enterprise content.
Enterprise content is every kind of a digital unit in an organization that can be stored and
transformed within a computer system. If such a unit is transformed into content, the new object

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has to consist of data, structure and a design style. Enterprise content can be used in two different
ways:
ƒ To build digital products and IT services for selling as an asset or
ƒ To inform about making the product or optimizing work as well as to provide better and faster IT
services.
Enterprise content (Figure 1) can be used in various situations, but it has to relate to a specific
context, i.e. a set of facts, which describe a certain situation, or an event to characterize it and
therefore make it interpretable.

Text files (ascii) or archive files can be classified as simple content, but multi-media documents,
audio and video streams and records of it represent complex content. Simple and also complex
content can be stored in a structured, semi-structured or unstructured way.

Generally, a knowledge worker needs and creates each type of content. To make knowledge work
efficient and logical, content objects must be re-usable and provided with the appropriate
information (inside an informative content object) for a certain task. In this way, the knowledge
worker can make new valuable productive content.

For example, a market survey about the ‘Evaluation and implementation of a Knowledge
Management System’ of a big consultancy company is productive content, also called an asset.
Productive content comprises every digital content object, which is necessary to make IT products
or to provide IT services.
Enterprise
Content

Informative
Content

Concept
Skeleton

Productive
Content

Figure 1: Separation of enterprise content

If a knowledge worker devises a special solution to a problem or gives advice about how a feature
of highly sophisticated software can be applied, that is informative content. It is the know-how and
lessons learned etc. or all interesting and important facts about a certain task. Informative content
enables knowledge workers to use productive content more effectively.

Informative content comprises every digital content object, which is helpful and supports the
manufacturing process, especially related to knowledge work.

The separation of enterprise content into productive and informative content is necessary (Härtwig
& Thränert 2005), because semantic technologies can filter the productive content and thereafter
automatically create a concept skeleton from of it.

Such a concept skeleton makes it easier to model expert ontologies and lowers the costs of
creating a knowledge base. Search engines or information systems do not yet differentiate
between productive and informative content. Key words are searched for within the entire
enterprise content. Therefore, users refine the search with the use of regular expressions,
however, that is a syntactic qualification, which does not distinguish between informative and
productive content.

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3. Semantic interoperability in an enterprise environment

Härtwig & Böhm (2005) introduced the Interoperable Semantic Enterprise Environment (ISEE) and
a framework, which comprises an information space system, different semantic tools and
technologies and Knowledge Units. Such an ISEE targets the semi-automatic transformation of the
active knowledge of users connected with the current context surrounding the Knowledge Unit and
the activated concepts of the Knowledge Repository enclosed in knowledge objects. Such
knowledge objects present the informative content related to a special situation, or one similar to it.

When the knowledge worker builds a new knowledge object or refines an existing one to share with
others, it is a called Knowledge Co-Production (Fuchs-Kittowski 2001). When the knowledge
worker retrieves a knowledge object and applies its informative content during the work that is
called Knowledge Co-Consumption. The more the knowledge object suits the need within the
current situation, the easier and more efficiently the solution can be reached.

3.1 The information space system as a knowledge repository

A pre built information space 1 system (PreBIS), shown in Figure 2, can be explained in two ways:
from the bottom-up and from top-down (Härtwig & Fähnrich 2003). From bottom-up, the information
space has to structured and filled. Starting from the lowest level, documents must be sorted into
different domains. Documents in such domains will be chopped into smaller pieces, called chunks
or micro content respectively. The providing and the retrieval of chunks promise better handling
and less time-consumption than with documents.
Business Level Business Processes

Concept Representation

Adaptation Layer

Pre Built: Structure and Fill

Use: Retrieve Information

PreBIS

Term net Table

Knowledge

Repository
Chunk Database

Document Sources

Figure 2: Pre built information space system

Chunks or documents are the input for the text mining software to create a term net table. A term
net table holds a flat and static context containing external knowledge that can be built up
automatically.

The adaptation layer above consists of relations between concepts and terms. These relations are
weighted and will be adjusted during the use of the system, so that the information space system
simulates a learning behaviour. The highest layer is a collection of concept representations.
Ontologies are modelled manually following an interview. Business processes are not part of the
PreBIS. PreBIS only requires context about the process task from the business layer, especially
information about roles and the tasks.

The top-down approach describes the use of the information space system that enables a more
efficient retrieval of information by including a knowledge base.

1
The PreBIS-project is a joint research cooperation between academic institutions and German companies. It is partly
funded by the German Federal Ministry of Economics and Labour (see www.prebis.de for more information).

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PreBIS take process information, such as the current task and role names, from another source,
i.e. a process execution or a workflow system. For this reason a web service interface was
developed. With the role name, PreBIS can select a certain ontology and with the task name,
PreBIS can select the active concepts within this ontology. With this information we can build a
simple semantic filter.

The adaptation layer expands this filter with spreading activation within the term net table. At this
point, the key words (given by the user) will be combined with the expanded semantic filter and
then PreBIS sends the request to an integrated meta search engine.

We call this role and task dependent information providing (von Hoof et al. 2003).

3.2 Semantic tools and technologies

Since the Semantic Web has been introduced, lots of technologies and software tools have been
developed. This trend will continue in a way that enables almost all software to use semantic
technology. The Open Knowledge Base Connectivity (Chaudhri 1998) in an example of how it is
possible to have access to a knowledge base over a protocol and a common interface similar to the
ODBC driver.

The main goal of the Semantic Web is to make machines interoperable through semantics, and as
a side effect, semantic technologies are likely to greatly influence enterprise software. On the one
hand, there are ontology editors and semantic search engines and on the other there are
Knowledge Base Systems or Information Space Systems which are designed to handle informative
content. However, there is a need to enable the desktop software (with which the user interacts) to
interoperate with a Knowledge Base System and with semantic tools.

3.3 Knowledge unit

With the concept of a Knowledge Unit, it should be possible to overcome this problem. A
Knowledge Unit consists of the main application and the user (Error! Reference source not
found.), who works on it. This means that the user and their main application will be considered in
detail, even as the smallest constituent in an interoperable semantic enterprise environment. Such
a Knowledge Unit is still strongly underexploited by knowledge managers, because either the user
is in focus or the application, but not both together. This depends on the technical or the
organizational approach of the knowledge manager. But approaching these two parts as a
symbiosis might be important and useful in the IT oriented knowledge management. The
knowledge unit is comprised of the active knowledge in the user’s brain (that can be their
background, experience and so on) and the information provided by the IT systems (the metadata
about the current context and activated concepts as explicit knowledge).
Main Application

Presentation Tier
Logic Tier
Data Tier

IT-System User

Figure 3: Knowledge unit

For example Knowledge Worker could be very important in the current context of the active task
that the user has to apply or to think of.

4. Adaptive working environment

A knowledge worker has huge and special requirements in the working environment. How the
desktop is organized and how the knowledge worker controls the business information systems is
an important success factor. Usually, one or two main applications are used and a couple of
auxiliary software tools, such as search systems, organizers, mind map managers and support
systems, which are necessary for the administration of the various information sources and their

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contents. Over a period of time each knowledge worker ‘assembles’ their appropriate working
environment with the knowledge unit as the main part of it.

Such a working environment is configurable but static. The user works with their main application
on a specific task while the auxiliary IT tools needed to complete it run separately. These auxiliary
IT tools process informative content normally. A static working environment has neither
connections between the main application and the search systems nor does it support the other
tools in behaving dynamically (i.e. reacting to what the user does).

To overcome these obstacles, a semantic bridge is needed as a ‘living link’ between the main
application and the business information systems (e.g. PreBIS), to adjust the information sources
and the pieces of information the user requires for a certain activity.

Such a living link is bi-directional with a well-defined bundle of commands and space for
extensions. Like a bridge the living link connects two distant points. One point located within the
main application scans text in the background. The other point lies inside the information space
system and it interoperates with the first point. That makes the living link dynamic.

5. Semantic bridge
In the middle of the semantic bridge, but located within the knowledge worker’s main software, a
Concept corona plays a pivotal role. Such a concept corona is part of the knowledge worker’s role-
dependent ontology and contains the nearest neighbours of a concept identified by the text scan.
This simple concept retrieval is like a semantic amplifier of the concept in the centre of the corona.
The concept corona is dynamic and with each concept change it holds the main concept in the
middle with the adjacent concepts surrounding it. The bi-directional relation of the semantic bridge
is illustrated in Error! Reference source not found.. From the concept corona in the middle of the
bridge, one spotlight highlights the actual region in the document and the other spotlight focuses on
an appropriate subset of the information pool, using a semantic filter. This important aspect makes
the working environment dynamic and interoperable due to the semantic bridge.
Semantic Bridge over a concept corona

Ontology Model
Concept retrieval
(nearest neighbours)
and content providing
on demand

Business Processes

Concep t Rep resentation

Semantic text scan with Adap tation Layer

concept localisation
Knowledge Term net Table

Repository
Chunk Database

Document Sources

Figure 4: Behaviour of the semantic bridge

5.1 Concept corona

An expert ontology contains a view of the world as seen from the expert’s eye. Named relations,
i.e. ‘is-a’ or ‘is-part-of’ etc, connect the important concepts to each other. Let’s assume that concept
C (in Error! Reference source not found.) is labelled as Knowledge Worker and it has a relation

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to concept B which is labelled as Expert. The relation between them could be named with ‘is-a’.
Furthermore, concept E could be labelled as R&D-Field and so on.

With such ontology a company can collect detailed knowledge about their employees, which allows
special semantic software to infer certain answers to questions. Such a question could be: What
education does employee X have. Maybe the answer is: (X studied) journalism and physics. This
will be very interesting for the business analyst or the personnel department, because the company
has never used X’s knowledge and skills in journalism.
Concept A
Concept W
Concept B

Concept C

Concept V

Concept E
Concept D
Concept F
Concept U

Concept H
Concept G

Figure 5: Example ontology

Concept A

Concept B

Concept C

Concept D
Concept Corona

Figure 6: Concept corona of concept C

A concept corona is a small part of ontology and consists of a main concept in the centre
surrounded by its nearest neighbours. In Error! Reference source not found., a concept corona
of ‘concept C’ is shown. It is a simple mechanism to get neighbours of a node in a graph and
ontology is such a graph, stored in OWL (W3C-OWL 2004). With an appropriate graphical
interface, it is also easy to implement a process, which allows the re-call of the mechanism when a
user clicks on the neighbour concept B. The result for the example above will be the concept
corona of concept B with the neighbours A, C and E.

The use of the concept corona as a pivotal role of the semantic bridge follows the assumption, that
the semantic nearness of two nodes in ontology will also be important at both endpoints of the
bridge (Error! Reference source not found.).

5.2 Living link

A link normally has an anchor and a target. Such links are used, for example within unix file
systems but more commonly within the WWW to link html files to each other. This type of a link will
usually be static at the anchor as well as at the target. A living link instead implements a certain
kind of stereotypes at their endpoints, because they interact with the user and the organizational
memory (Habermann 2001) (i.e. a knowledge repository) where other users, groups etc. store and
adapt their explicit knowledge with the same procedure.

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According to Argyris (1977) and Nonaka & Takeuchi (1995) there are two dimensions related to
organizational learning. The ‘Single loop learning’ aims to increase the development of the
technical dimension. It helps to optimize processes, lowering costs and solving specific problems.
‘Double loop learning’ involves the cognitive capabilities of individuals and also the organization as
a whole. Therefore, questions such as should product X be manufactured whether or not, will be
asked. That is a process of maintaining an organization’s activities (Vat 2003). If the knowledge
workers clarify their knowledge and transform it from implicit to explicit for storing in a knowledge
repository, it will foster the organizational memory, which is the foundation of organizational
learning effects. In general, people (are motivated by themselves) enjoy sharing knowledge and
information. That is noticeable on the internet where lots of blogs and WiKi content parts are
published daily. Two ways of working are shown in Figure . The conceptual work will be assisted by
the living link, which connects the knowledge units with the knowledge repository and enables the
user to browse and retrieve concepts of certain ontology or to adapt and store informative content.
This knowledge co-production is heavy brainwork with deep semantics. Further, the user can
continue the traditional manufacturing process of productive content that is not restricted through
the living link.

Knowledge Co-Production/Knowledge Co-Consumption

(browsing, retrieval, adaptation and storing of informative content)

Living link main

Living link application

main
application
Knowledge
Living link
Repository

Semantic meta search engine main

application
Data access

Data Bases/Content/Documents

File Manager/File Explorer Data access

Manufacturing process
(creation, storing and retrieval of productive content)

Figure 7: Semantic interoperability through living links

The living link is the behaviour of the semantic bridge with two goals:
ƒ To encourage users, especially knowledge workers, to improve the technical dimension by
collaboration with other users to give help and solve technical problems and
ƒ To change their learning behaviour for shaping strategies or developing new methods.

6. Scenario of a living link

A software company needs a study about legal directions referring to software development. The
manager picks a lawyer and a software developer to do this task. They are working in different
departments miles away and they haven’t met yet. Both are familiar with working with the Adaptive
Working Environment and therefore with the functions of the semantic bridge.

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√ legal_concepts

Figure 8: Concept detection with smart tags

The lawyer started writing days before the developer did and so the lawyer sent the draft and a
special ontology to the developer. Then, the developer opens the draft with a common text
processor, which includes smart tags. Over the menu the developer inserts the lawyer’s ontology
‘legal_concepts’ (7). After that, the text scans starts and the algorithm uses the known legal
concepts.
The text inside the editor is as follow:

Exploitation of intellectual property rights is a lucrative area in today's business world.

As an in-house lawyer it is essential to be able to recognize an IP right when it crops
up and to be able to protect it properly to increase exploitation opportunities.
This paper gives an introduction to the types of IP issues that they will come across
in their role, informing them of the best ways of protecting the right whether through
registration or by ensuring the contract contains appropriate safeguards.
(Source: http://www.intelproplaw.com/)

Figure 3 shows the result of the text scan. The phrase ‘intellectual property’ was found and marked
by underlining with blue dots. If the developer moves the mouse over the smarttagged word, the
smarttag icon will be displayed.

intellectual property
Add to personal ontology
Solve ambiguity
Show concept
Show conceptcorona
corona
Semantic search
Share with colleagues
Remember smarttag
Delete smarttag

Smarttag options

Figure 3: Text scan found important terms

Now, the developer opens the smart tag menu and selects the menu item ‘show concept corona’.
This command triggers the concept retrieval with the parameter ‘intellectual capital’ and presents
the concept corona of it in a pane inside the text processor.

The incomplete sample of the legal ontology and the concept corona of intellectual property are
shown in Error! Reference source not found. and Error! Reference source not found..

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 Jorg Hartwig

Author
Organization
License

World IP Software
Organization Intellectual
License
Property

Trademark

Intangible
Asset Legal
Aspect
Copyright

Patent

Figure 10: Legal concepts

Author

World IP
Organization Intellectual
Property

Intangible
Asset Legal
Aspect

Figure 11: Concept corona of intellectual property

Not the whole ontology will be shown within the pane, but the concept corona (Figure 4). This pane
can be easily enlarged with an input mask for additional key words or with a list to present the
search results.
Concept Corona of intellectual property

Ontology Model
Concept retrieval
Author
(nearest neighbours)
intellectual property
World IP
and content providing
Organization Intellectual
Property on demand
Intangible
Asset Legal
Aspect

Business Processes

Concept Representation

Semantic text scan found Adaptation Layer

intellectual property
Knowledge Term net Table

Repository
Chunk Database

Document Sources

Figure 4: The pivotal role of the concept ‘intellectual property’

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7. Conclusion
An adaptive working environment has to respond to what the user does within normal work by
including semantic tools to create and enrich informative content, which is shareable in groups. The
knowledge repository stores the knowledge base, in ontologies described in OWL, and holds the
enterprises vocabulary in an upper layer, above the content object layer. This feature enables
users to cooperate with each other through interoperable semantic content objects. The integration
of the introduced solution into the user’s task is the main advantage here, because he or she does
not have to run auxiliary tools separately. This reduces and simplifies their workload and increases
their motivation to solve ambiguities. It also helps to prevent misinterpretations of other people’s
ideas and to increase and improve the informative content. The growing knowledge base holds the
explicit knowledge of the users, which is transferred from the user’s brain to the organizational
memory. The organizational memory is the enterprise-owned property which survives after users
leave the company.

References
Argyris, C. (1977): Doble loop learning in organizations. In: Harvard Business Review, Boston,
Harvard Business School Publ. Corp., 1977
Chaudhri, V. K.; Farquhar, A; Fikes, R.; Karp, P. D.; Rice, J. P (1998).: Open Knowledge Base
Connectivity 2.0.3. Stanford, Knowledge Systems Laboratory
Fuchs-Kittowski, K. (2001): Wissens-Ko-Produktion: In. Organisationsinformatik und Digitale
Bibliothek in der Wissenschaft: Wissenschaftsforschung Jahrbuch 2000. Berlin,
Gesellschaft für Wissenschaftsforschung, pp9 - 88
Habermann, F. (2001): Management von Geschäftsprozesswissen: IT-basierte Syste-me und
Architektur. Wiesbaden, Dt. Univ.-Verl.
Härtwig, J.; Böhm, K. (2005): A Process Framework for an Interoperable Semantic Enterprise
Environment. In: Proceedings of the 6th European Conference on Knowledge
Management. Kidmore End, Academic Conferences, 2005, pp227-237
Härtwig, J.; Fähnrich, K.-P. (2003): Grundkonzepte des Wissensmanagement im
Informationsraum. In: Content- und Wissensmanagement. Leipzig, Universität, pp35-42
Härtwig, J.; Thränert, M. (2005): Ein Ansatz für das Semantic Integration Engineering. In:
Umsetzung von kooperativen Geschäftsprozessen auf eine internetbasierte IT-Struktur.
Leipzig, Universität, pp137-143.
Nonaka, I.; Takeuchi, H. (1995): The Knowledge-Creating Company, Oxford Univ. Press
van Hoof, A.; Fillies, C.; Härtwig, J. (2003): Aufgaben- und rollengerechte Informationsversorgung
durch vorgebaute Informationsräume. In: Content- und Wissensmanagement. Leipzig,
Universität, pp. 1-9
Vat, K.-H. (2003): Toward an Actionable Framework of Knowledge Synthesis in the Pursuit of
Learning Organization. InSITE – “Where Parallels Intersect”, Informing Science, 2003
W3C-OWL (2004): Web Ontology Language. [online], http://www.w3.org/TR/owl-features/

712
Manage Business and Knowledge
Ali Hessami
Atkins Global, London, UK
[email protected]
Abstract: Whilst KM has been in the mainstream over the past few decades, managing knowledge is still
viewed as an additional management fad within businesses. Given the multiplicity of other management
regimes in common usage today from Business, Safety, Environmental, Financial, Compliance and Quality to
Risk, it is no wonder KM is seen as a yet another layer of unproductive bureaucracy in the modern
organisations (O’Dell, 96).This paper elaborates on the experience of piloting KM within a knowledge intensive
multi-national organisation. Unlike traditional approaches, the route to implementation of KM in the new
organisation was a top down view of the key risks and opportunities to the viability and success of the
business and identification of knowledge as a strategic driver for the organisation's sustainable prosperity.

Keywords: Business management, weighted factors analysis, ontology, knowledge fragment

1. Background
Whilst this paper is principally focused on Knowledge Management within a knowledge intensive
international organisation, it is instructive to view KM within the context of other synergistic
initiatives, which are briefly outlined here.

1.1 Research and development

Mainly value added and often client oriented applied research. Some aimed at internal process
improvements whilst majority should be tailored to client’s needs. This is generally carried out
internally or on a collaborative basis whilst fostering closer ties with universities and research
organisations for technology transfers.

1.2 Knowledge management (KM)

Mainly driven internally aiming to capture, develop and disseminate key domain knowledge. These
are often aimed at efficiency enhancements and capturing core expertise for dissemination,
supporting the business development policy. The KM initiative is generally focused on the experts
and the organisational dimensions.

1.3 Training and staff development

These activities are mainly aimed at staff competence and development, disseminating requisite
knowledge, increasing and updating engineering/process knowledge and ensuring competence
through continual professional development. These initiatives will additionally support self-
certification and compliance with statutory and professional duty of care.

1.4 Corporate capability development

These activities are mainly aimed at exploring new frontiers and opportunities for business
development and expansion. This generally draws upon the findings of R&D to consolidate the
core capabilities in specific emerging technologies and market sectors whilst also promoting and
these through appropriate means. The above innovation initiatives are highly complementary and
collectively render an emergent systems property, which would enhance corporate image and
underpin growth and globalisation strategies.

2. Knowledge management
Developing and implementing a knowledge management regime constitutes a key element in the
innovation framework, which is a crucial catalyst to business development and growth as outlined
earlier. The case study presented here is principally aimed at a demonstration and pilot exercise in
a knowledge intensive global organisation in order to highlight the challenges, benefits and support

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future decisions on the optimal approach to a broader implementation. To illustrate the potential of
the KM in the organisation, a pilot project was conceived and implemented during 2004.

2.1 Implementation plan

The pilot exercise for the application of knowledge management paradigm comprised six core
activities in two phases namely;
ƒ Consultation & Requirements Capture
ƒ Ontological and Taxonomic Architecture
ƒ Data Preparation
ƒ Implementation in a Content Management & Collaboration (COMAL) Facility
ƒ Demonstrations, Training & Trials
ƒ Consolidation
The first phase comprised mainly preparatory internal tasks resulting in essential knowledge
requirements, classifications and structuring focused principally on a small part of the organisation.
The subsequent phase comprising three tasks of the pilot project related to the exploitation of the
knowledge structures and determination of the strengths, weaknesses, benefits and risks
culminating in a consolidation of the experience gained. The outline schedule based on the
assumption that the proposal was endorsed and resources were secured by early February 2004.

2.1.1 Resourcing
The implementation of this pilot required a few key ingredients for success namely:
ƒ Availability and support from highly experienced Engineering/Process experts and Business
Unit Managers;
ƒ Availability of necessary computing and communications infrastructure for collaborative work;
ƒ Timely availability of selected archived historical data;
ƒ Acquisition and adaptation of an IT collaboration environment to host the pilot.
A suitable collaboration and KM environment was identified and a lease negotiated for the trials
period. The Content Management and Collaboration facility was hosted on the supplier’s servers to
reduce the impact on the internal IT policies and duration of the pilot. The internal resources
required were mainly staff time and was coordinated to reduce impact on other commitments and
work.

2.1.2 Priorities
The thrust of the first pilot related to the development and implementation of a knowledge
management pilot facility pertaining to corporate knowledge in some selected Business Units. The
focus on Expert Knowledge and the individuals were deferred to the next phase of the initiative.

2.1.3 Deliverables
The key deliverables of the initiative, relating to the key activities in the plan are depicted in table 1;

2.2 The KM pilot project

A number of technically and structurally diverse business units in the target organisation were
consulted with a view to seek their interest and engagement in the KM pilot study. Overall 4
Business Units participated in the pilot and the case study presented here relates to the Systems
Engineering department as more advanced and synergistic with the planned objectives of the pilot.
The diversity was aimed at ensuring coverage of various classes of requirements and business
units from customer facing highly technical teams in Systems Engineering to internal financial and
administrative services department. A limited number of workshops were planned and held during
with the representatives of each Business Unit in order to elicit their requirements before a solution
was conceived and presented. Overall, two ½ day sessions proved adequate with each Business

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Unit during which their requirements were captured using the Weighted Factors Analysis (WeFA)
graphical methodology. The focus of study in all pilot cases was the capture of business
requirements. This high level perspective proved essential in order to ensure the duty holders
themselves established a broader view of the necessity and role of KM within each business unit.
In all cases and having started scrutinising the key business and value generation processes, an
aspect of business activity pertaining to the generation and use of knowledge emerged through the
requirements capture and analysis. Only this aspect was further pursued during the WeFA session.
Table 1: Deliverables from the KM pilot project
Item Activity Deliverables
1 Consultation & Requirements Capture Outline Requirements
2 Ontological and Taxonomical Architecture Outline structures
3 Data Preparation Archived copy of reports
Implementation in a Content Management Facility -Fast Indexing & search
4 -K Thesaurus
-Collaboration
5 Demonstrations, Training and Trials Training & demos, questionnaire
6 Consolidation Experience Report

2.2.1 System engineering’s pilot

A team comprising the Business Unit Manager and two other experts were nominated to support
the pilot initiative and assist with the requirements capture for the SE. Two workshops were held
during which the key requirements for the generation, storage, retrieval and usage of knowledge in
the business unit were captured in the form of Weighted Factors Analysis graphical schema. Each
business unit was left free to determine the architecture of their corporate knowledge repository
and the SE chose a flat model with no major structuring other than meta-data. The SE business
and KM requirements is depicted in Figure x. Each workshop focused on the background to the
need for a structured and systematic approach to management of knowledge assets in the
particular business unit. The SE rationale is depicted in Table 2.
Table 2: Rationale and aim for KM in SE business unit
Rationale and Background for SE
SE have an age profile with some knowledge nearing shelf life/availability
need tools and mechanisms to capture this rich source of knowledge
Issue of efficiency and sharing of best practice in different offices
Enable/collect information to facilitate networking
To do better than the opposition
Establishing of new opportunities through better awareness of capabilities
Collaboration and possibly alliancing
Consistency from client/third party perspective
Project cost savings
Should be ideally on our own network and consistent with work practices
People are more mobile hence availability problems
Requires a light hand/approach to avoid appearing threatened
Need to capture skills and knowledge as a corporate property
Being prudent about our proposals by giving suitable and sufficient view of the solutions

Aim
Offer value for money by leveraging our knowledge for corporate gain and staff development purposes, in a
rewarding and enjoyable environment
Note that according to the WeFA methodology, once a rationale is captured, the participants
formulate the objective for the creative knowledge capture session through consensus. This is
referred to as the aim and is presented in Table 2 as well.

2.3 Weighted factors analysis (WeFA)

Whilst the underpinning philosophy for WeFA, the elicitation process and the representation
schema is detailed in the published literature (Hessami 1999, Hunter & Hessami 2002), a brief
account is given here as a quick reference to the methodology and the notation employed for the
development of the ERTMS knowledge framework as presented in this paper.

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WeFA is a group based knowledge capture, representation and evaluation methodology. The
expert panel are chosen to represent related but diverse and non-overlapping aspects of the
problem being studied. The focal point of a group study in WeFA is an AIM represented graphically
by an oval annotated with brief relevant text. With the active participation of the expert panel, the
AIM is defined, agreed and decomposed into a number of influencing factors (GOALs). The
GOALs, which are deemed to support the attainment of the AIM, are classed as Drivers and those
opposing the attainment of the AIM are considered Inhibitors. The Driver GOALs are represented
by ellipses with yellow background linked upward to the AIM or other GOALs with green forward
arrows implying positive influence. The Inhibitor GOALs are represented by ellipses with dark
background colour, linked to the AIM or other GOALs that they influence with red arrows pointing
backward (towards themselves) implying negative influence. All GOALs are annotated with brief
text to indicate their nature and a unique numbering system to simplify referencing. In WeFA, each
factor (GOAL) is in turn decomposed into its Driver and Inhibitors and the process is repeated until
the AIM is studied and analysed at a desirable level of detail.

The influences of factors in a WeFA schema, represented by green or red arrows, can be
hierarchical as well as lateral. This creates a powerful and inter-related network capable of
representing the hard/soft factors, their influences, dependencies and relationships with respect to
the AIM under scrutiny. WeFA diagrams are hierarchical and the GOAL numbering system is
designed to reflect the hierarchy as well as type i.e. Driver or Inhibitor. The closest layer of GOALs
to the AIM of a WeFA diagram is referred to as Level 1 and a G followed by a number annotates its
GOALs. The numbering scheme for Driver GOALs is clockwise from 12:00 (top) starting from 1 e.g.
G1, G2, G3 and anticlockwise for the Inhibitors e.g. G1, G2 etc. Deeper layers of the hierarchy are
annotated as G1.1, G1.1.2 etc. These are referred to as level 2, 3 etc.

The graphical representation of all the factors and their positive and detrimental influences upon an
AIM is referred to as a WeFA schema. This form of knowledge representation is principally aimed
at ease of comprehension and review due to the graphical representation of the key factors and
their influences. The schema or the factors within can be supported by additional text if required.
Each Goal in a schema has a value and a degree of influence on other Goals. These are elicited
from the expert panel and incorporated in the schema permitting a weighted evaluation of all the
Drivers and Inhibitors and assessment of their total effect on the value of the Aim. This underpins
the approach to the development of a holistic environment for the capture, storage, retrieval and
reuse of ERTMS knowledge.

2.4 Domain ontology

The System Engineering’s creative requirements and ideas capture based on the WeFA
methodology initially focused on the key drivers and inhibitors relevant to the business unit’s
success as an operational entity. The so-called Level 1 schema emerging from the study
essentially depicting the domain ontology for the success of the business unit is represented in
Figure 1. This highlights the main drivers (helpful factors) and inhibitors (detrimental factors) which
in the opinion of the participating team represent the most significant influences on the success of
the business unit.

Note that the analysis is focused on the success of the business operation at the SE departmental
level and is not initially concerned with KM and its business benefits and costs. In the level 1
schema of Figure 1, only the Driver G6 is relevant to KM aspects of the business operation. This
goal has been decomposed hierarchically using the WeFA technique to determine all the essential
aspects of the KM in the SE department. The G6 sub-goals and structures are depicted in Figure 2.

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G1
G1 Maintain a
Failure to update competent
and maintain Skills organisation

Giving away knowledge with no commercial gain G2

Efficient Time
G2
Inefficient Use of Management
Time and Resource

G3 G3
Losing Staff (to Competitive Product
Competitors?) Pricing

G4 Offer Value for Money by

Products are not Leveraging our Knowledge for
Required Corporate Gain and Staff
Development Purposes, in a
Rewarding and Enjoyable G4
Environment Create a People
Focused Culture

G5
Products are too
Expensive

G5
Ensure Consistent
Delivery & Compliance
with Requirements

G6
Products are not at
Appropriate Quality or
Inconsistent
G6
Creating a SES/TS&R
Knowledge Base

Figure 1: The taxonomy of SE department’s business and knowledge requirements

G6.1
Identify Current
G6 Skills and
Creating a SES Competencies

G6.2 Knowledge Base

Overhead of
Maintaining the KB

G6.2
Identify Records & G6.4.1.1
G6.1 Documents
No Limits
Skepticism
G6.3
G6.4 Identify Knowledge
G6.5 Develop Strcucture &
Env. For K Capture & Requirements
Engaging the
Reuse
People

G6.4.1
SES K Structure
G6.4.4
SES K Access,
Management & G6.4.2.1
Maintenance
User Friendly
G6.4.3
G6.4.2
SES K Output
SES K Input G6.4.2.2
G6.4.3.4 Manual/Electronic
Offer Flexible Input
Output Formats
G6.4.3.1
Flexible Query
G6.4.2.3
G6.4.3.3 System
Adaptive System
User Friendliness for Key Attributes

G6.4.3.2
Comprehensive & G6.4.2.5 G6.4.2.4
Efficient Search & Fault Tolerance on
Meta Data
Response Data

Figure 2: The taxonomy of SE department’s knowledge requirements

Note that the SE management team participating in the knowledge and requirements capture
exercise opted for a flat knowledge repository structure, which was in sharp contrast with the other
participating businesses. A meta-data template was also defined in order to facilitate classification,
tagging and storage as well as retrieval of information in the SE’s knowledge base. The meta-data
template was implemented in the pilot and activated during storage and search thus ensuring a
much more focused search outcomes.

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3. Discussion
The recognition of the need and justification for the implementation of a regime for the
creation/acquisition, codification, storage, retrieval, reuse, enhancement and deployment of
knowledge in organisations is often a matter of faith and conviction rather than systematically
derived from the business requirements. This poses a major dilemma to those who are tasked with
the development and implementation of KM policies and procedures since they are viewed as an
overhead and an expensive fad. The success of any major attempt at embracing KM in
organisations depends upon the clarity with which such practices are seen to contribute to the
overall business objectives. The Weighted Factors Analysis methodology provides a hierarchical
and pragmatic approach to the attainment of this elusive goal. It was adopted for the pilot study and
implementation of KM within a knowledge intensive international organisation.

A number of business units were consulted and four volunteered to participate in the pilot study,
which had been planned and justified in advance through a business case. The starting point of the
consultation and requirements capture workshops was deliberately chosen as the business aim for
the departments involved. Using the WeFA methodology, the key drivers and inhibitors influencing
the attainment of the organisational/business objective were identified through a creative group
session in a consensual manner. Such business focused approach led to the capture of the
business unit’s specific requirements with widely varying approaches and architectures for their KM
repository. The key benefit accrued from the ability to relate a new activity to the key business
objectives, which is often lacking in many organisations.

4. Conclusions
Given the knowledge intensive nature of the parent organisation, it was inevitable that knowledge
or its prudent generation and deployment would appear as a significant usiness driver (Stan Davis,
88) during the WeFA knowledge capture sessions. This happened in all four cases even for the
departments which were not client facing. This particular driver, was then hierarchically
decomposed into lower level drivers and inhibitors which essentially led to the clarification of the
requirements and the structure of the KM repository for each specific business unit. The emerging
WeFA schema was subsequently employed as the user interface on a web based knowledge portal
throughout the trials period. The pilot study revealed that;
ƒ Knowledge is a key and almost universal driver for the attainment of business objectives;
ƒ There’s a need for explicit recognition and depiction of the role of knowledge in each
organisation;
ƒ Knowledge requirements must be identified before any attempt at finding solutions is made;
ƒ KM is not the same as procuring an IT application;
ƒ The success of a KM initiative is largely contingent on a collaborative and sharing culture ;
ƒ IT is only an enabler and not an active ingredient of KM and its requisite culture;
ƒ KM solutions have to be customised for each native environment and one size does not fit all
even within the same organisation;
ƒ In the emerging knowledge economies, successful organisations will be those with better grasp
of the nature and treatment of knowledge throughout the life cycle from creation to disposal.
In truth, possessing and deploying requisite knowledge is an indispensable aspect of managing a
business (Drucker, 88). KM therefore is not an artificial add on or a fad. It is coexistent with any
successful enterprise focused on business objectives as illustrated through the case studies in the
multinational organisation. Knowledge and business have to be managed prudently together
otherwise the impression is one of divergence and possibly irrelevance for KM.

References
O'Dell, Carla (1996), A current Review of Knowledge Management Best Practice, Knowledge
Management 96 Conference, Business Intelligence, London (December).

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Hessami, A. Hunter, A. (2002) Formalisation of Weighted Factors Analysis, Knowledge Based

Systems, Vol 15 pp377-390.
Hessami, A. (1999) Risk, a Missed Opportunity, Risk & Continuity-The International Journal for
Best Practice Management, Volume 2, Issue2.
European Guide to Good Practice in Knowledge Management, Work Item 5: Culture Working Draft
6.0, CEN-ISSS, July 2003.
Hessami, A. Gray, R. (2002) Creativity, the Final Frontier? The 3rd. European Conference on
Knowledge Management ECKM 2002, Trinity College Dublin, 24-25 September 2002.
Davis, Stan and Botkin Jim, The Coming of Knowledge-Based Business, Harvard Business review,
pp.165-170.
Drucker, Peter, 'The Coming of the New Organization', Harvard Business Review, pp. 45-53
(January-February 1988)
Nonaka, Ikujiro (1991), The Knowledge-Creating Company, Harvard Business Review, pp.96-104
(November-December)
Nonaka, Ikujiro and Takeuchi, Hirotaka (1995), The Knowledge Creating Company, Oxford
University Press.
Skyrme, David J. (1991), Knowledge Networking, The Intelligent Enterprise, Aslib, Vol. 1, No. 9/10,
pp. 9-15 (November)
Skyrme, David J. And Amidon, Debra M. (1997), Creating the Knowledge-based Business,
Business Intelligence, London.
Sveiby, Karl Erik (1987) and Lloyd, Tom, Managing Knowhow, Bloomsbury.
Wyllie, Jan (1993), 'The need for business information refineries', Aslib Proceedings, Vol. 45, No. 4,
pp.97-102 (April).
Stewart, Thomas A. (1991), 'Brainpower', Fortune, pp.44-56 (3 June).
Stewart, Thomas A. (1993), 'Your Company's Most Valuable Asset: Intellectual Capital', Fortune (3
October)
Stewart, Thomas A. (1995), 'Trying to Grasp the Intangible', Fortune, pp.157-61 (2 October)

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Assessing Knowledge Management Implementation at
Two Major Lebanese American Universities
Silva Karkoulian1 and Leila Halawi2
1
Business School, Lebanese American University, Beirut, Lebanon
2
Nova South-Eastern University Fort Lauderdale, Tampa, FL USA
[email protected]
[email protected]
Abstract: The knowledge-based economy is a reality. Today’s global economy categorizes knowledge as the
most important corporate asset as it improves an organization’s fundamental ability to compete. Higher
education institutions are no different in this respect. We present an overview of knowledge management. We
focus our discussion on two major American Lebanese Universities to describe their KM initiatives and stages
of implementation. Finally, we discuss the findings of the study and their implications.

Keywords: Knowledge management, sustainable competitive advantage, Information and communication

technologies (ICT), and knowledge management assessment.

1. Introduction
A new era has started, the knowledge era, which is expected to have a radically different outlook
and which will need an remarkable business scope (Van Buren, 1999). During the last decades,
the practice of knowledge management (KM) has developed into a central management topic all
over the world (Wigg, 2002). KM is being tackled by an extensive selection of academic literature
and common press. KM is still getting substantial notice, from both academics and practitioners
(Kakabadse, Kakabadse and Kouzmin, 2003). To overlook the progression of KM would be to
overlook the importance of knowledge in the economic, social, and technological context of the 21st
century (Morrow, 2001).

The KM thinking a mixture of has affected field disciplines specifically philosophy, social science,
management science, information science, knowledge engineering, artificial intelligence, and
economics. Promoting the creation, sharing, and leveraging of the organization’s knowledge regard
KM regarded as an increasingly important discipline.

The knowledge revolution or even evolution has not truly influenced the main processes of learning
and teaching in Lebanese business schools. Even though many corporations, industries and
economies worldwide have made or have started a shift into the knowledge age, the Lebanese
educational system has been left behind in the industrial age. While universities produce and
acquire knowledge, they are hardly ever successful in implementing that knowledge into their own
activities (Garvin, 1993). KM has proved to be a distinctive and competent field to exploit facing the
increasing competitive pressures in the business schools, being mainly used as a means for
altering the educational processes.

Our purpose is to assess the application of KM and the strategies that promote its use in the
Lebanese Universities. This study focuses on the diffusion of KM into the Lebanese Universities by
investigating the use, importance, and current initiatives of KM in Lebanese Universities. We begin
with an overview of knowledge management followed by a description of KM assessment and
strategies. We then present an overview of the educational climate in the Lebanese Higher
education institutions. Next, we present the study methodology. In the last section, we offer a
summary of our findings, research implications and a conclusion.

2. Knowledge management (KM) defined

As we progress from the industrial age to the intelligence age, knowledge has developed into a
vital strength behind the success of firms. Knowledge is an important asset for firms in the modern
economy (Sambamurthy and Subramani, 2005; Drucker, 1999).

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There is a general acceptance that sustainable competitive advantage in the 21st century will be
accomplished thru KM. As stated by Porter (1999), we can generate competitive advantage when
we make hard choices regarding what we will do and not do. Barney (1991) specified that a firm
have a competitive advantage when it implements a value creating strategy before any other
current or potential competitor implements that same strategy.

Knowledge management (KM) is not a fantasy. It is not a trend nor is it an agreed solution (Morrow,
2001). KM is a growing field of study. It corresponds to a method of managing and acting, which to
be successful, should be integrated and rooted in the organization’s strategy, people, processes,
and culture (Morrow, 2001). KM programs are not a simple solution. Many programs have failed
(Baum and Silverman, 2004; Kautto-Koivula, 1998; Lucier and Torsillierii, 1997; Pfeffer and Sutton,
1999; Storey and Barnett, 2000).

A large number of definitions for the term “knowledge management” (KM) have been proposed by
scholars, and researchers from various backgrounds. Knowledge management (KM) is not about
managing technology alone, but is about managing how humans can share their knowledge
effectively, using technical tools where appropriate (Coakes, Willis and Clarke, 2002; Lehaney,
Clarke, Coakes and Jack, 2003)

The KM process involves a reliable, fast and rapid access for capturing, processing, storing and
sharing of data, information and knowledge. The KM strategy is giving accurate data to the right
people at the exact time while helping them to share and place information in ways that ensures
the enhancement of the organizational performance (O’Dell and Grayson, 1998).

3. Knowledge management assessment and strategies

The systematic analysis of the organization’s current knowledge management capability is known
as Knowledge management assessment. This type of assessment does evaluate anyone or an
individual against the world-class practice and it identifies critical areas for applying knowledge
management. It points out the areas in your organization where knowledge management is
needed. The process as to “how” to apply the assessment is in a cyclical form (Refer to Figure 1)

Figure 1: KM assessment cycle

KM assessment is intended at evaluating the necessity for KM solutions, the knowledge these
solutions can help discover, capture, share, or apply, along with the influence they can have on
individual or organizational performance. A KM assessment can help establish the baseline for
implementing those KM solutions, including the existing infrastructure and technologies that can
help support those efforts (Becerra-Fernandez, Gonzalez and Sabherwal, 2004).

As higher education institutions strive to become knowledge-based, they need to meet the
challenges of harnessing knowledge and information to sustain competitive advantage. Effective
KM strategies enable organizations to link KM to strategic business goals, gain senior leadership
buy-in and support, implement effective KM solutions, and address people, process, content and
technology issues (APQC.ORG)

Several key strategic enablers must be used to improve organizational performance. These
enablers (culture, leadership, technology, and measurement) work together to streamline and
enhance the capture, flow, and transfer of an organization’s data, information, and knowledge.

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4. Overview of the educational and information technology climate in

Lebanese higher education institutions
The education pyramid classifies the higher education at its head. The higher education
establishes to a great degree the status of the country’s education system, particularly its value.
Per se, this pyramid owes accountability to both the entire education system and to the whole
society. Higher education has a significant function to perform through its graduates. These
graduates have to put forth several functions. First, they ought to present educational leadership
roles as researchers, teachers, consultants and managers. Second, they ought to generate and
utilize new information and innovations. Finally, they ought to offer analytical perceptions on
problems development and service to both public and private sectors (Sanyal, 2001).

Over the last decade in the United States, Europe and particularly in Lebanon, there has been a
growth in support for the use of technology within teaching and learning in higher education.
Lebanon aims to regain its title as “the financial hub of the Middle-East”. Lebanon holds a unique
advantage over other neighboring countries. Most of Lebanon’s infrastructure was destroyed by the
civil war and the country had to rebuild its telecommunications infrastructure using the latest
technologies like fiber optics. Information and communication technologies (ICT) are a mainstream
issue in higher education. The same broad definition of ICT could be taken to include radio,
television, satellite, fixed and mobile telephone, fax, computers and CD-ROMs and the Internet, as
used by institutions or groups (http://www.imfundo.org/Advisory/basicedu.htm). The information
and communication technologies (ICT) usage is now seen as both a requirement and an
opportunity and therefore can lead to competitive advantage. Out of 43 licensed private
universities and one public university in Lebanon, 13 universities offer ICT-related programs. There
is noticeable change in the teaching methodology that involves a transfer from teacher –centered
learning to student-centered learning.

5. Methodology
The research is designed to investigate, assess and explore whether or to what degree Lebanese
universities use KM.

The population selected for this study was 2 private universities. The participants included
professors, chief officers, vice presidents, deans, directors, and other members from the IT
departments.

APQC has determined five essential steps to obtain end results from KM efforts
The major research instrument used in this survey was the American Productivity and Quality
Center (APQC) road map to KM results: stages of implementation: Where are you now? The
instrument is composed of thirty-one questions divided among five sections. The first section is
where you get started; the second is about developing a strategy. In the third stage you design and
launch KM initiatives. The fourth stage is about expansion and support, and the last deals with
institutionalizing KM pertaining to the current stages of KM implementation in each university. Each
section of the survey encompassed a set of five or eight questions. If one or more of the
statements within each stage are true, your institution may be placed in that corresponding stage of
implementation. Data were analyzed using the statistical package for the social sciences (SPSS)
version 11.5. The analyses included descriptive statistics and conventional inferential statistical
methods.

6. Results, discussion and research implications

A summary of the characteristics of the respondents is displayed in table 1.

Learning where you are is the principal central task all along the path to knowledge management
success. Table 2 presents the frequencies of the people who answered ‘yes’ to the questions
within each stage among the first sample from University 1.

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Table 1: Demographic and Personal Data

Learning where you are is the principal central task all along the path to knowledge management
success. Table 2 presents the frequencies of the people who answered ‘yes’ to the questions
within each stage among the first sample from University 1.
Table 2: Frequency distribution for university 1 (Sample 74).
Stage: Frequency Valid Percent
Stage 1 32 44.44%

Stage 2 17 23.61%

Stage 3 6 8.33%

Stage 4 6 8.33%

Stage5 11 15.27

Table 3 presents the frequencies of the people who answered ‘yes’ to the questions within each
stage among the second sample from University 2. After inspecting the tables, we may conclude
that university 2 is ahead in its KM initiative, even though the small sample size may have
influenced the results. For both universities, however, we notice that KM has surfaced as an area
of interest and both universities have moved to stage 2 where the main aim was to devise a
business strategy that fits each institution’s business model. At stage 2, both institutions have
attained a turning point and they both can start to uncover how KM will work for their business
given the support of an executive sponsor. During stage 2, a KM task force is chosen, select pilots

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are instigated and sources to assist the pilot are secured. On the other hand, University 2 is
embarking into stage 3, where the major objective is to conduct successful pilots and offer
particular indication of KM business value along with the capture of lessons learned. While stage 4
entails escalating KM initiatives throughout the institution, stage 5 seats the institution among few
exclusive companies who have achieved this stage of institutionalised KM. To sum up, we
conclude that institution 2 is ahead of institution 1. Institution 2 is moving towards all the five stages
too.
Table 3: Frequency distribution for University 2 (Sample 34).
Stage: Frequency Valid Percent

Stage 1 25 73.52%

Stage 2 19 55.88%

Stage 3 12 35.29%

Stage 4
16 47.05%

Stage 5 12 35.29%

For institution 1 to progress and attain a certain level of KM improvement, the researchers
recommend that the institution follow the following guidelines:
ƒ Institution 1 should find the resources (i.e. skilled staff members) to support the pilot and thus
facilitate the KM initiative.
ƒ Moving from stage 2 to stage 3 requires designing and launching KM initiatives. Institution 1
should start funding the pilot, holding pilot measures and indicators in place and a system for
tracking and reporting them, and finally mapping out a strategy to expand these pilot initiatives
across the organization.
ƒ Institution 1 should develop an expansion strategy (i.e. applying the pilot selection criteria), the
exposure of the KM initiatives throughout the organization by communicating and marketing the
strategy, and finally managing the growth by keeping all the resources organized, consistent,
and easily accessible.
ƒ The final recommendation would be for institution 1 to recognize that KM is a business plan
forming an integral part of its business model. The fifth stage is then realized when KM is
embedded in the business model through embracing it in the mission statement, management
model, or even in the assessment process.

7. Conclusion
The dynamic changes in the economies of the different nations around the globe have been treated
differently. The creation of an economy whereby knowledge-based industries are the leading
industries is the goal of government policy in many countries (e.g. the UK, Singapore, The U.S.A.,
Malaysia and Australia) (Morrow, 2001). We live the knowledge age. Lebanon, and Particularly
Lebanese higher education institutions are still in the infancy stage of the Knowledge management
evolution. The KM area hasn’t been given the attention it deserves so far. Companies and
universities are very different organizations. A certain level of cultural tension should be expected
and tolerated.

Despite the growing global interest about the strategic perspective on knowledge management
(KM), the potential benefits provided by KM in Lebanon are still not fully understood and there is a
lack of interest in making a step to appreciate them. There are numerous challenges that confront
the improvement of KM education and applicability within the Lebanese market, and some effort is
required from IT researchers interested in KM to face them. The authors are attempting to bridge
this gap. Careful attention needs to be also paid to the role that KM will play in the organization,

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and the design of the KM system to complement existing work processes so as to make its future
users familiar with the benefits it will provide them in their daily jobs.

KM assessment can be classified according to the following aspects: (1) when is KM assessed, (2)
how is KM assessed, and (3) what aspects of KM are assessed? It can be helpful at the start of a
KM initiative, following a strategic review or after an initial phase of KM activities where the
potential benefits have not yet materialized. Even though the knowledge management assessment
provides a diagnostic of the current practices and a benchmark for improvement, more research is
needed to advance the KM field within the Lebanese market.

References
APQC . “KM Roadmap to Success”. [Online] www.apqc.org.
Barney, J. B. (1991). “Firm Resources and Sustained Competitive Advantage.” Journal of
Management, Vol.17, No.1, pp.99-120.
Baum, J. & Silverman, B. (2004). “Picking Winners or Building Them? Alliance, Intellectual, and
Human Capital as Selection Criteria in Venture Financing and Performance of
Biotechnology Start-Ups”, Journal of Business Venturing, Vol.19, No.3, pp.411-436.
Becerra-Fernandez, I., Gonzalez, A. & Sabherwal, R. (2004). Knowledge Management Challenges,
Solutions and Technologies. Pearson Prentice Hall, Upper Saddle River, New Jersey.
Coakes, E., Willis, D. & Clarke, S. (2002). “Knowledge Management in the Socio Technical World”,
London, Springler-Verlag.
Drucker, P. F. (1999). The Coming of the New Organization. Harvard Business Review on
Knowledge Management, Vol. 124, No. 14, pp.1-19.
Kakabadse, N., Kakabadse, A. & Kouzmin, A. (2003). “Reviewing the Knowledge Management
Literature: Towards a Taxonomy.” Journal of Knowledge Management, Vol. 7, No.4,pp 75-
91.
Kautto-Koivula, K. (1998). “The Pitfalls of Knowledge.” Information Strategy, Vol. 3, No.6, pp. 26-
28.
Lehaney, B., Clarke, S, Coakes, E. & Jack, G. (2003). Beyond Knowledge Management, Hershey,
PA: IRM Press.
Lucier, C. & Torsillieri, J. (1997). “Why Knowledge Programs Fail?” Strategy & Business, 4th
Quarter.
Garvin, D. (1993). “Building A Learning Organization”. Harvard Business Review, July-August, pp.
78-91.
Morrow, N. M. (2001). “Knowledge Management: An Introduction.” Annual Review of Information
Science and Technology, Vol.35, pp. 381-423.
O'Dell, C., & Grayson, C. J. (1998). “If Only We Knew What We Know: Identification and Transfer
of Internal Best Practices.” California Management Review, Vol 40, No.3, pp.154-174.
Pfeffer, J. & Sutton, R. (1999). “ Knowing What to Do is Not Enough”. California Management
Review, Vol.42, No.1, pp. 83-107.
Porter, M. (1999) “Creating Advantage”, Executive Excellence, Vol.11, pp. 13-14.
Sambamurthy, V. and Subramani, M. (2005). Special Issue on Information Technologies and
Knowledge Management. MIS Quarterly, Vol. 29, No.1, pp.1-7.
Sanyal, B. (2001). “Globalization and Comparative Planning Education”.American Planning
Association Annual Conference, New Orleans, LA, March.
Skyrme, D & Associates, “Knowledge Management Assessment”
[Online] http://www.skyrme.com/services/kmassess.htm, Retrieved April15,2006.
Program Assessment Overview, Cleveland State University,
[Online] http://www.csuohio.edu/assessment/overview.html, Retrieved, April 15,2006.
Sayegh, Z. (http://www.american.edu/initeb/zs3680a/itsaw.htm), Retrieved April 15, 2006.
Storey, J. & Barnett, E. (2000). “ Knowledge Management Initiatives Learning From Failure”.
Journal of Knowledge Management, Vol. 4, No.2, pp. 145-156.
Van Buren, M. E. (1999). “A Yardstick for Knowledge Management”. Training & Development, Vol.
53, No. 5, pp. 71-78.
Wigg, K. (2002). “New Generation Knowledge Management: What May We Expect?”
Knowledge Research Institute, Inc. [Online] http://www.krii.com/karl_wiig_pubs.com
(http://www.imfundo.org/Advisory/basicedu.htm)

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Knowledge Diffusion in Context
Mounir Kehal, Sandrine Crener and Patrice Sargenti
International University of Monaco, Principality of Monaco
[email protected]
Abstract: Initiatives to manage knowledge of innovative organizations may prove to be complex, as such is
assumed to be one of the main variables whilst a distinguishing factor of such organizations to survive within a
marketplace. Their main asset is the knowledge of certain highly motivated individuals that appear to share a
common vision for the continuity of the organization. Satellite technology is a good example of that. From early
pioneers to modern day mini/micro satellites and nanotechnologies, one can see a large amount of risk at
every stage in the development of a satellite technology, from inception to design phase, from design to
delivery, from lessons learnt from failures to those learnt from successes, and from revisions to design and
development of successful satellites. In their groundbreaking book The Knowledge Creating Company (1995),
Nonaka et al laid out a model of how organisational knowledge is created through four conversion processes,
being from: tacit to explicit (externalisation), explicit to tacit (internalisation), tacit to tacit (socialisation), and
explicit to explicit (combination). Key to this model is the authors’ assertion that none are individually sufficient.
All must be present to fuel one another. However, such knowledge creation and diffusion was thought to have
manifested and only applied within large organizations and conglomerates. Observational (questionnaire-
based) and systematic (corpus-based) studies – through case study elicitation experiments and analysis of
specialist text, can support research in knowledge management. Organizations that manufacture, use, and
maintain satellites depend on a continuous exchange of ideas, criticisms, and congratulations. One can regard
such organisations from NASA to SSTL as amongst a class of knowledge-based organizations. Through
selective use of the previously stated approaches, and concise reporting for the purposes of this paper we are
to show how knowledge flows in a finite organisational setting and could be modelled by specialist text. We
aim to describe in this paper our understanding of the nature of a specialist organization in a quantifiable
manner, and the constructs of a knowledge management audit conducted through the observational study
within a satellite manufacturing SME, based in the UK. We have examined how knowledge flows and is
adapted between commercial and research types of corpora. One of the major results deduced from the
observational study was that knowledge diffusion is paramount within the lifetime of an organization, and could
be supported by information systems. Leading us to investigate on how knowledge diffusion takes place, in an
empirical way. Our analysis shows that research papers (created within educational institution) and
commercial documents (created within spin-offs of such higher education institution) can be distinguished
rather on the basis of single word and compound terms. These two lexical signatures show the potential for
identifying points of mutual interest in the diffusion of knowledge from the research institution to the
commercialization process, thus to application(s) within a domain.

Keywords: Knowledge management, corpus-based analysis, observational study, knowledge diffusion, text
analysis

1. Research synopsis
In order to investigate the gap in knowledge diffusion within an organization we did carry an
observational study, within an SME (Small to Medium Enterprise) in satellite manufacturing. Inline
with a study of the language used in satellite engineering in general, and that stemming from SSTL
(Surrey Satellite Technology Limited) and Surrey Space Centre in particular. Both studies have an
empirical basis. The observational study (mainly questionnaire-based) was designed to ask
questions related to knowledge diffusion within the company and was initially based on Liebowitz
(Liebowitz, 2000). The questionnaire-based studies were not based on intuitions on how
knowledge is managed, rather based on a set of empirical questions, partitioned under five
sections namely:
ƒ Awareness and Commitment
ƒ External Environment
ƒ Information Technology
ƒ Knowledge Maintenance and Protection
ƒ Organizational Issues
We have investigated the diffusion of knowledge within SSTL, based on the practice within SSTL,
as articulated through the questionnaire. There were two sets of questionnaire-based observations.

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The pilot study was conducted with managers and whereas the second run of the questionnaire
was intranet-based, and more widespread. SSTL, is a small knowledge-based organization, for
minimalism, a knowledge based organisation is one where knowledge is being the dependent input
variable, as the need would exist for organisational resources to acquire such knowledge from
physical entities (i.e. knowledge workers) and convert it as input for electronic storage medium (s),
making it easier for retrieval and dissemination of information. Thus, knowledge (encompassing
data and information) would be needed for creating and offering a product and service line mix,
including that contained in individual employees and that in SSTL (as a collective entity, expertise
accumulated over time). SSTL’s principal assets are its engineers, its project managers and its
researchers. Collectively, the engineers, managers and researchers are sometimes called
knowledge creating crew (Nonaka et al, 1995). In a rapidly developing, high-technology field like
satellite engineering, it is important to communicate, share and validate knowledge – especially as
much of the knowledge is based on experience. As manufacturing small range satellites requires
precision, and hence that is gained through research, learning, and development, including the
recording of induced aspects learnt for studies on and reuse of knowledge through specialist
terminology that could allow for elicitation of practice. The Surrey Space Centre researches into
many varied aspects of satellite design, control and applications. Spacecraft technology requires a
broad range of backgrounds form Physics and Engineering to Mathematics and Software systems.

2. Method
Nonaka et al’s (1995) knowledge conversion model is intuitive. It is based on long experience and
judgement. Such model emphasizes the importance of practice, knowledge amongst knowledge
workers. The case studies produced were between researchers, practitioners, and managers.
There was transfer of knowledge from researchers to knowledge workers. Such has yielded a
contingency table for the transfer of knowledge, so-called knowledge conversion model that
generates four knowledge conversion modes. Such model is plausible but remains largely
intuitive.Our interest is tacit to explicit knowledge conversion (externalization) and explicit to explicit
knowledge conversion (combination). The reason we have studied an SME (Small to Medium
Enterprise) because it would appear that knowledge would be shared because smaller groups
would get together easily, i.e. no logistics involved. As well as it appears that in a SME knowledge
bottlenecks which are characteristic of large organizations would not exist. Being in relation to the
size of SMEs, managers are expected to interact with and understand needs and requirements of
knowledge workers. Consider an organization like SSTL, Surrey Satellite Technology Limited, we
focused on the interaction between knowledge engineers and knowledge practitioners, and were
aiming to see how knowledge is shared. In order to investigate the gap in knowledge diffusion
within SSTL, we did an observational study, and a study of language used in satellite engineering
in general. Both studies have an empirical basis.

A bimodal research method was followed. Inclusive of an observational study: questionnaire and
interview based and a - Corpus-based study: analysis of text repositories. Involving extraction and
modelling of specialist terminology collated from: public domain publications (i.e. NASA, British
Standards Institute – Terminology Specification, and BMP - Best Manufacturing Consortium
database), and specialist domain publications (i.e. Surrey Space Centre and SSTL). Figure 1
represents a relational view of the methodology, integrated within the possible set of agents for
knowledge diffusion. Whereby knowledge is assumed to flow among or across from knowledge
workers, to the organization, then to worldwide (horizontally), but the adaptation phase comes into
place once knowledge is personalised and applied (vertically). However, such methodology was
implemented in the specialist nature of the domain of investigation. Yin (1994) identified five
components of research design that are important for case studies: the study's questions, its
propositions, its unit (s) of analysis, the logic linking the data to the propositions, the criteria for
interpreting the findings. The above components were integrated within the observational study, as
guidelines to the formulation of the different stages involved within the conduct of this research,
from the pilot run of the survey study, to the intranet-based survey and historical studies. In which
the intranet-based survey seemed to generate interest, impact and a set of internal actions.
Supported as well by over 30% participation rate for the intranet-survey, and being composed
mostly by middle to senior managers. Evidence of knowledge diffusion and support for it was
manifested as outlined in the table below.

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Knowledge Adaptation

Knowledge Flow
Figure 1: A methodology for examining knowledge flow and adaptation
Table 1 shows how knowledge bottlenecks have been looked upon during the flow and adaptation
of knowledge amid agents involved in its diffusion. Through the observational study and the
historical study, behaviour between agents was modelled using the techniques prescribed below.
Table 1: Knowledge diffusion in the environment of a small organization
Agent A Agent B Artefact Technique
Person Person Opinion, practice, know-how, Questionnaire-
organizational structures based study
Person Organization PhD Dissertation, Research Text Analysis
Publications, technical reports
Organization Organization Specialist documents (i.e. technical Text Analysis
documents, technology-specific
documents, missions documents)
Organization Worldwide Specialist documents (i.e. technical Text Analysis
documents, technology-specific
documents, missions documents)

The intranet-based survey study had 5 sections, stretching to cover possible areas of applications
and implications for knowledge diffusion within an organization, namely - Knowledge Management
Awareness and Commitment, External Environment, Information Technology, Knowledge
Maintenance and Protection, and Organizational Issues. On the other hand, for our historical and
special corpus, we followed where applicable and pertinent, Atkins et al’s (1992:2), five principal
stages for corpus building. Outlined in table 2:
Table 2: Stages for building a corpus (Atkins et al, 1992:2)
Stage Description
Specification and Corpus type is identified taking into account sample size, language varieties and
design the time period to be sampled.
Computer Hardware and software needs for the corpus project are estimated.
Hardware and
software
Data capture and The data/texts are captured and transformed to electronic form via OCR,
mark-up keyboarding, or audio transcription. The captured files are then marked-up with
embedded codes containing text features.
Corpus processing Includes basic tools, i.e. word frequency lists, concordance, and interactive
standard query tools and tools for lemmatization, tagging, collocation etc.
Corpus growth New materials may be added to the corpus or some of the old materials may be
and feedback deleted according to feedback from previous analysis to reach a balanced and
enhanced corpus.

Specification and design of a corpus and its processing are the most important steps in building the
corpus and for any kind of subsequent study. Second and fourth stages are not so important due to

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the technological advances in computer hardware and software. The importance of the last stage
depends on the nature of the study. Studying the state of the specialist terminology is considered
important for the study of the language discourse. Corpus-based studies are empirical and depend
on both quantitative and qualitative analytical techniques (Biber et al, 2002). Therefore to get
results have an important effect, the corpus must be sampled and created carefully: “the decisions
that are taken about what is to be in the corpus, and how the selection is to be organized, control
almost everything that happens subsequently. The results are only as good as the corpus (Sinclair,
1991:13)”.

3. Observational study
The term knowledge management is used to articulate the concept that knowledge is an asset on a
par with the tangible assets of any organisation - land, capital, plant and machinery. Management
involves the management of assets; ergo knowledge should be managed from its inception through
its nurturing to maturity to exploitation and to ultimate obsolescence. The term was also coined to
indicate that knowledge within organisations is communicated not only through the typical
organisational hierarchies but also through interaction between members of the organisations
across the hierarchies and the different structures (divisions/departments and their functions,
management style, communication culture, computer-mediated processes, practices and so forth)
contained with an organization. The questionnaire portrays through its five sections, some of the
concepts raised within the Knowledge Management field, outlined in Section 1. Two runs for the
questionnaire-based study were conducted, a pilot study, and an intranet-based study.

The majority of the respondents were knowledge practitioners (i.e. team members). Over 80% from
the intranet-based questionnaire were as such, like reported from the respective representative of
the study onsite, head of Research and Development at SSTL. The key point was that the
managers were more optimistic and confident about extent of knowledge sharing. Our analysis has
been supported by the feedback received from one of the key managers cited previously.

Our method is no more then holding a mirror to an organization and what is reflected is the
management of knowledge within the organization when looked upon from the five different facets
of the questionnaire sections (i.e. awareness and commitment, external environment, information
technology, knowledge maintenance and protection, and organizational issues).

The questionnaire study raises the need for a knowledge map through both the pilot and intranet-
based observational studies, one that is specialist in nature. That can represent the domain
language providing an environment for querying and validation for the knowledge worker, and thus
containment of both elements of such knowledge (explicit and tacit). Allowing as well for the
knowledge conversion modes (Nonaka, 1995) to take place, and hence knowledge to be created
and utilized. This may act as basis for the research conducted on whether SMEs do create the
dynamics of innovation, as such dynamics may need to encapsulate the sharing of the domain
knowledge (touted and supported by knowledge workers), and thus embedded within the domain’s
ontology – referring to the explicit formal specifications of the terms in the domain and relations
among them (Gruber, 1993).

This part of the research (observational/introspective) has focused on the organizational structures
(management hierarchies, attribution and validation of knowledge, and so forth) in place, enabling
or facilitating the diffusion of knowledge. Our conclusions from this survey; based on the feedback
and responses received, affirm that knowledge sharing is encouraged. As well as innovation being
encouraged either through collective or individual effort(s), and facilitating knowledge sharing is
possible through availability of knowledge maps and communication channels between multi
disciplinary teams for specialist areas. The above results, from either the pilot study or the intranet-
based studies; have encouraged us to explore how a collection of specialist documents will
facilitate knowledge diffusion and perhaps to construct knowledge map.

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4. Text analysis and a corpus-based study

Text analysis should be taken to mean the analysis of text by algorithmic processing, and that may
involve the computation of lexical signatures (Ahmad et al, 2003) within a specialist domain. An
algorithm may be defined as a step-by-step procedure capable of being run on a computer, hence
rendered automatic or semiautomatic. Before it can actually be run, however, the algorithm must
be coded in some computer language as part of a software program. The tool currently used for the
purposes of this research is System Quirk, a computational linguistic software system providing a
computer-mediated environment for text analysis created by the Artificial Intelligence Group,
University of Surrey.

The compound terms generated through System QUIRK/Ferret (Artificial Intelligence Group,
University of Surrey), illustrate to a certain extent the composition and acceptance of frequent
specialist words within a text repository. As well within the language of the domain and the domain
knowledge; since latent clusters of concepts, may be represented by each of the compound terms
(a hierarchy of concepts through morphological productivity of terms). Whereas each term’s
relevance to a collection of documents is erratic, it may be validated (combined and/or externalized
knowledge) by the knowledge worker as it composes toward a given terminology. That signifies
being of use to the individual knowledge worker or group of them. Thus, achieving acceptance
based on consensus within an organization, and growing to be part of it and its external
environment (ontological spectrum). We have used these and other sets of compound frequent
terms extracted based on a statistical criterion (in relation to the BNC); for comparative purposes,
sometimes referred to as “Lexical Signatures” (Ahmad et al, 2003) to index collections of text to be
contained within a text repository. Frequent compound terms extracted from the collection of
documents (Source: Surrey Space Centre corpus) listed below, illustrate the specialist nature of the
organization and the domain of the knowledge within aspects of satellite technology encompassed
by the research and possibly of the commercial activities of the organization.

The compound terms selected below, from the corpus of SSTL and Surrey Space Centre is from a
listing of over 50.000 compound terms within the corpus. Such contains all collated research
publications of the organization (s) aforementioned.

The above table is illustrative of the morphological productivity (Bauere, 2001) of single word
terms, like: cost, satellite, system, launch, sensing, et cetera. Whereas, their compound word
formations may be representative of a morphological process based on which knowledge of the
domain flows and adapts to the organizational setting in which it is created. Sometimes similar
terms that were ranked differently have appeared within the collection of documents collated from
the Swedish Space Corp satellite technology news corpus, as shown below in table 4. Being
possibly illustrative of wider ontological spectrum (knowledge sharing), of the knowledge of the
satellite technology domain and corresponding research and commercial activities. That could as
well happen to be dependent on the source of authorship; thus biased. Implying in turn a wider
epistemological spectrum (knowledge theory), as suggested by Nonaka et al (1995).

Examining compound terms within collections of PhD Theses, from Surrey Space Centre. These
compound terms have appeared to present some dominate terms within, thus knowledge created
and utilized. As shown in Table 5 below, select compound terms are listed, relating their frequency
behaviour to the number of total compound terms generated from the corpus in percentage value
(frequency / total number of compound terms found). The data presented in the table below
(composing 20.96% of the total compound terms found) is presented as such to see lexical
composition of such collection of documents – the extent to which each compound term contributes
to the total number of compound term. Nonetheless, terms like: mobile satellite, satellite
communication, satellite network, leo satellite, satellite constellation, remote sensing, and last but
not least geostationary satellite orbit. Though all exist in satellite technology corpora, which were
collated from sources prescribed previously. Some common ground is possibly available for such
concepts to be shared across such specialist domain, and organizations within. This is assumed to
facilitate the diffusion of knowledge within such domain (s). However, level of adaptation and
further flow of the knowledge involved, is related to technological implications for the knowledge
worker or organization.

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Table 3: Ranking of select compound terms in SSTL/Surrey Space Centre corpora

Rank Compound Term Rank Compound Term
1 Low cost 32 Doppler shift
4 Propulsion system 33 Swath width
6 Remote sensing 33 Satellite platform
7 Surrey satellite technology ltd 33 Narrow angle image
8 Surrey space centre 34 Sstl microsatellites
9 Board computer 34 Control system
10 Low earth orbit 34 Satellite missions
15 Spectral bands 34 Data products
17 Disaster monitoring constellation 34 Disaster monitoring
18 Attitude determination 35 Multiple satellites
19 Earth observation 35 Satellite engineering
21 Launch site 35 Radiation environment
22 Remote regions 35 Space science
23 Ground station 35 Board processing
24 Launch vehicle 35 Satellite design
28 Board computers 35 Mission lifetime
29 Satellite communications 35 System design
30 Synchronous orbit 36 Satellite programme
30 Satellite technology 36 Synthetic aperture radar
30 Band downlink 36 Board data handling
31 Solar panels 37 Data storage
31 Global coverage 38 Space technology

Table 4: Ranking of select compound terms in Swedish Space Corp corpora

Rank Compound Term Rank Compound Term
2 Launch vehicle 40 Resolution images
3 Geostationary orbit 40 Proton launch
8 Launch pad 41 Reusable launch vehicle
10 Geostationary transfer orbit 43 Satellite manufacturing
15 Shuttle mission 44 Remote sensing
17 Surrey satellite 46 Satellite constellation
19 Rocket boosters 48 Meteorological satellite
20 Shuttle missions 49 Spy satellite(s)
22 Satellite launch 50 Satellite launched
24 Remote sensing satellite 52 Mobile satellite
27 Manned spaceflight 53 Manned spacecraft
29 Satellite launcher 54 Satellites launched
30 Geostationary satellite launch vehicle 54 Geosynchronous orbit
31 Satellite launches 55 Satellite payloads
32 Launch initiative 58 Remote sensing satellites
36 Synchronous orbit 60 Disaster monitoring constellation
38 Launch vehicles 60 Launch mission
38 Remote manipulator 60 Launched satellites

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Table 5: Compound terms within a listing of PhD theses titles

Compound Term Relative Compound Term Relative
frequency frequency ratio
ratio
Mobile satellite 2.94% Selective fading 0.37%
Satellite communications 1.47% Satellite constellation 0.37%
Processing satellites 1.47% IP multicast 0.37%
Satellite networks 1.10% Geomobile satellite 0.37%
IP telephony 0.74% Multicast strategies 0.37%
Satellite constellations 0.74% Adaptive multiuser detection 0.37%
Leo satellite 0.74% Thrust orbit 0.37%
Mobile satellite communications 0.74% Geostationary satellite 0.37%
Satellite multimedia 0.74% Noise amplifier 0.37%
Geostationary satellite orbit 0.74% Satellite inertia matrix 0.37%
Mobile communications 0.74% Orbit calibration 0.37%
Gravity gradient 0.74% Satellite diversity 0.37%
Orbit satellites 0.74% Sstl satellites 0.37%
Remote sensing 0.74% Frequency bands 0.37%
Novel orbit propagation algorithm 0.37% Ozone content 0.37%
Satellite imaging 0.37% Satellite measurement 0.37%

On the other hand, Figure 2 portrays shared single word terms between a corpus of SSTL/Surrey
Space Centre (research corpus) publications and that from Swedish Space Corp satellite
technology news (commercial corpus). Terms in the research corpus are expressed in a relative
frequency ratio, in relation to the BNC and in relation to their frequency behaviour within the
Swedish Space Corp corpus (commercial corpus). However, terms like payload and spacecraft
seem to occur more frequently within the research corpus in relation to the BNC, as opposed to a
lesser relative occurrence within the Swedish Space Corp corpus. Other terms, like: satellite (s),
system, orbit, space, launch, and mission, occur more frequently within the Swedish Space Corp
corpus, in relation to the SSTL/Surrey Space Centre corpus, and even with respect to the BNC.

The observational and historical studies carried out, have provided better understanding into the
field of investigation. Such studies provided the basis and validation for inferences made. Based on
Nonaka et al’s (1995) terminology used within the knowledge conversion model, portraying creation
of knowledge and corresponding conversion processes. It is believed that knowledge undergoes a
combination and socialization conversion process (for knowledge flow) within an organization or
across a (sub) domain (s), and undergoes an internalization and externalization conversion
process (for knowledge adaptation) within an organization or across a (sub) domain (s).

Figure 3 expands Nonaka et al’s (1995) knowledge conversion model, to include consideration for
how knowledge flows and is adapted within research and commercial documents. Within the case
of an SME, Small to Medium Enterprise, such knowledge flow and adaptation through a knowledge
conversion model may be a framework that could stimulate innovation through conversion of
knowledge amongst the Knowledge Creating Crew (Nonaka et al, 1995) and stemming from an
organization.

5. Conclusions and outlook

The case study is a method of learning about a complex instance through extensive description
and contextual analysis. The product is an articulation of why the instance occurred as it did, and
what may be important to explore in similar situations, in our case the specialist knowledge and its
diffusion is the product. As the observational study laid the framework for the conduct of our
research, it was focused on examining knowledge flow, and corresponding practices and
information technology support in place. Results from the observational study have indicated that
knowledge bottlenecks may exist, in particular were technological support could be needed.

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BNC Swedish Space Corp

5000 4.5

4500 4

4000
3.5

3500
3
3000
2.5
2500
2
2000
1.5
1500

1
1000

500 0.5

0 0
o r b it

t e ch n o lo g y
s p a c e cr a ft

d a ta

s pac e

e a rth
la u n ch

p a yl o a d
s m a ll
s a te lli t e s

m is s io n s
s a te lli t e

m is s io n

s ys te m s
s ys te m

Figure 2: Select shared terms between SSTL/Surrey Space Centre corpus and Swedish Space
Corp corpus

Figure 3: Knowledge diffusion through the knowledge conversion model (Nonaka et al, 1995)
The transmutation of science into technology is a complex process when one sees unique ideas
highlighting the past scientific landscape and beneficial technological artefacts in the present. The
notion of satellite technology or space technology, with variable scope and scale, was an
ostentatious idea that has led to a range of remote sensing and earth observation instruments for

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instance. The unique idea is a key reference point for forecasting how the idea will metamorphose
into an artefact. Knowledge is communicated through so-called semiotic systems: written text,
images, mathematical and chemical symbols, and so on. The knowledge of emergent domains is
yet to standardize its symbol systems, which simply add to the (creative) chaos inherent in such
emergent systems. The analysis of change in written text, amongst the most changeable semiotic
system at the lexical level at least, may reveal a consensus or dissension in the use of terms.
Terms denote concepts and textually help us to understand how knowledge evolves in an
emergent domain. The emergent domain of small satellite technology was studied as an exemplar.
This is our attempt to establish a method, which covers a broad range of texts, research articles,
commercially-driven documents and state-of-the-art papers representative of research and
development conduced within an organization, to observe the emergence of a new domain.

We have by design focused on an innovative organization to establish our method, which is driven
by knowledge workers, document-based and guided by terminology, utilized. The method will
facilitate the construction of knowledge maps in an objective and systematic fashion. This method
will help in establishing knowledge visualisation studies in the realm of decision making focused on
how research is exploited and how such a process can be facilitated, at lexical and knowledge
worker levels. Whilst aiming to model sustainability of an organization through its continuous
knowledge diffusion processes from persons composing such organization.

It is an intuitive statement that research ideas and experimentation form the basis of new
technologies, products, and practices. The research effort leads to the creation of new knowledge,
and to the suspension of ‘obsolete’ knowledge, and this knowledge crosses over into technology.
Perhaps a comparative analysis of the choice of terms (lexical signature) will indicate the extent of
this crossover. In this spirit of specialist knowledge still in the realms of research and not quite
making it into the construction of artefacts and vice versa, we have compared the rank order of the
most frequent words in the research corpus of SSTL/SSC papers with that of the Swedish Space
Corp satellite technology news corpus, or between Surrey Space Centre PhD research theses and
SSTL research publication, for instance.

Our analysis shows that research papers and commercial documents can be distinguished
somewhat on the basis of single word and compound terms that were generated automatically.
These two lexical signatures show the potential for identifying crossover points in the diffusion of
knowledge from the research arena to applications domain. The metamorphosis of science into
technology is a complex process when one sees innovative ideas highlighting the past scientific
landscape (i.e. in the form of PhD theses and state-of-the-art research papers) and beneficial
technological artefacts in the present. The notion of satellite technology, with variable applications,
was a unique idea that has led to a range of remote sensing devices for example. The innovative
idea is a key reference point for forecasting how the idea will metamorphose into an artefact.

Knowledge is communicated through so-called semiotic systems: written text, images,

mathematical and chemical symbols, multimedia and so on. The knowledge of emergent domains
is yet to standardize their symbol system, which simply adds to the (creative) chaos inherent in
such emergent systems. The analysis of change in written text, amongst the most changeable
semiotic system at the lexical level at least, may reveal a consensus or dissension in the use of
terms. Terms denote concepts and textually help us to understand how knowledge diffuses in a
domain. The specialist domain of satellite technology or space technology, specifically an
organization in such a domain was studied as an exemplar. This is our attempt to establish a
method, which covers a broad range of texts, PhD theses, journal articles, technical reports, and
state-of-the-art review papers, to observe the emergence of a domain.

References
Ahmad, K. Al-Thubaity, A. (2003). “Knowledge Maps as Lexical Signatures of Journal Papers and
Patent Documents”. In (Eds.) Ebad Banissi et al. Proc. of 7th International Conference on
Information Visualization (London, England, 16-18 July 2003). Los Alamitos: IEEE
Computer Press. 582-588.

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Atkins, S. Clear, J. Ostler, N. (1992). “Corpus Design Criteria”. Literary and Linguistic Computing,
7(1), 1-16.
Bauere, L. (2001) “Morphological productivity”. Cambridge: Cambridge University Press,
(Cambridge studies in linguistics; 95).
Biber, D. Conrad, S. Reppen, R. (2002) “Corpus Linguistics: investigating language structure and
use”. Cambridge: Cambridge University Press.
Burrows, J. F. (1992) “Computers and the Study of Literature”, pp: 167-204. Oxford: Blackwell.
Gruber, T.R. (1993) “A Translation Approach to Portable Ontology Specification”. Knowledge
Acquisition, Vol. 5, 199–220.
Holmes, D. I. (1998) “The Evolution of Stylometry in Humanities Scholarship”. Literary and
Linguistic Computing, 13: 111-17.
Liebowitz, J. (2000) “Building organisational intelligence: A knowledge management primer”, Boca
Raton, CRC Press.
Nonaka, I. Takeuchi, K. (1995) “The Knowledge Creating Company: How Japanese Companies
create the Dynamics of Innovation”. Oxford University Press, Oxford.
Sinclair, J. (1991). “Corpus, Concordance, Collocation“. Oxford, Oxford University Press.
Sperberg-McQueen, C. M. (1991) “Text in the Electronic Age: Textual Study and Text Encoding,
with Examples from Medieval Texts”. Literary and Linguistic Computing, 6/1: 34-46.
Stemler, S. (2001) “An Overview of Content Analysis”. Practical Assessment, Research &
Evaluation, 7(17). http://ericae.net/pare/getvn.asp?v=7&n=17. A peer-reviewed electronic
journal. ISSN 1531-7714. Last Accessed [15/11/2002].
Surrey Space Centre (University of Surrey) – SSTL (Surrey Satellite Technology Limited), George
Edwards Library (University of Surrey), collection of text documents 1979-2002,
http://www.surrey.ac.uk/Library, http://www.ee.surrey.ac.uk/SSC/, www.sstl.co.uk.
Swedish Space Corp, collection of text documents, historical corpus 1997-2002. http://www.ssc.se.
Yin, R. (1994). “Case study research: Design and methods”. (2nd ed.). Beverly Hills, CA: Sage
Publishing.

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Implicit Knowledge Sharing
Axel-Cyrille Ngonga Ngomo and Frank Schumacher
University of Leipzig, Germany
ngonga|@informatik.uni-leipzig.de
[email protected]
Abstract: This paper presents a new approach on implicit knowledge sharing and storage based on semantic
query expansion and implicit feedback techniques. Our aim is to ensure that knowledge workers indirectly
share their knowledge with others over their search engine, hence enabling more efficient information supply
and the automatic storage of semantic knowledge on knowledge intensive tasks. From the point of view of
information retrieval, this is equivalent to a context-dependent alteration of the user queries, which ensures a
higher precision and an adaptive ranking of retrieved information. We learn the relevance of the retrieved
content units using implicit feedback, which itself is collected using a novel document presentation method
and an interaction monitoring technique. This paper focuses on the document presentation, the feedback
collection and the learning mechanisms used to achieve our goals. Furthermore, it presents some evaluation
results.

Keywords: Knowledge sharing mechanisms, Knowledge storage

1. Introduction
While working for a company, knowledge workers develop some special knowledge and skills that
can be crucial for the further development of the enterprise. Yet such knowledge is lost as soon as
the knowledge workers leave the company. Storing the knowledge of such key employees is one of
the most difficult tasks knowledge management has to face nowadays. One way of dealing with
this knowledge storage problem is to have experienced knowledge workers to implicitly store their
knowledge in a computer system. Since solely digitalizable knowledge can be stored and ranked
by these means, we focus on storing and adapting semantic task descriptions.

Knowledge workers know which information they need to complete a given tasks and can thus
distinguish between relevant and irrelevant information in a given work context. The idea of the
system we developed is first to describe possible user context and to adapt these descriptions
using implicit user feedback. Our context description is based on an ontology extracted out of the
document repository of the company. This context description is coupled with the firm intern search
engine, which operates on segmented documents called chunks. When retrieved, these chunks are
displayed in a document browser, which equips the user with different operations (see more, less,
whole chapter...). Each of these operations is mapped to a feedback value that is used to compute
the relevance of the retrieved chunk for the task. Based on these values, a right-on-time
information supply can be implemented to support other during the completion of similar tasks. In
this paper, we will describe the functionality of the document browser; the feedback collection
mechanisms used and present some evaluation results.

The remainder of this paper will be organized as follows: We will first present the architecture of the
system that implements the functionality described above. Then, we shall present the two main
components of this system: the document browser and the feedback collection component. A
presentation of some results will follow. After a brief discussion of these results and a comparison
with similar work, we shall conclude with an overview over the next steps.

2. Architecture
Our system consists of three main subsystems (see Fig. 1): a query expansion module for
semantic query expansion using the vector space model of Salton (Salton 83), a presentation
module (commonly called the document browser) implementing the presentation and the feedback
collection functionality and a feedback module that re-adapts the semantic information stored in the
query expansion module using a feed-forward neural network (Zell 97).

Each user query is forwarded from the search mask to the query expansion module (Fig. 1, step 1).
The query expansion module implements a context-dependent information retrieval strategy, a

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context being the combination of the actual role and the actual task of a user. Existing role and task
combinations can be extracted from the business process models (BPM) of the company either
manually by analyzing the BPM or automatically by adding send points in the firm intern workflow
engines that send the actual context to our system.

Figure 1: Architecture of the system

Given a certain context, a role-dependent ontology describing the key concepts needed to reliably
complete the given task is loaded. These key concepts are obtained by interviewing experienced
workers, who have completed instances of the task to describe several times.

Each query is enriched with the context dependent key concept labels describing the actual task.
The enriched query is further expanded in a second step, which consists in adding the n terms that
are most similar to those already included in the query to it. The similarity of terms is determined
using a clustering algorithm on distributional data. By adding similar terms to the query, we ensure
that documents containing words that are not contained in the query but that still are very similar to
those words used in the query are also found.

The expanded query is sent to a standard search engine implementing the vector space model
(Fig. 1, step 2). The retrieval results are subsequently sent back to the presentation module, which
displays them and monitors the user operations on the pieces of information returned (Fig. 1, step
3). An exact description of this module can be found in section 3. The feedback values collected
by the presentation layer are sent to the feedback module in the following step (Fig. 1, step 4) and
they are finally used to update the semantic description of the possible contexts (Fig. 1, step 4).

Since the similarity values of words are less than one, documents containing only words similar to
the input query but not the input terms themselves are automatically ranked lower than those
containing the terms contained in the not expanded query. Documents containing both the input
words and similar words are ranked higher than those containing only the input words. This fact is
of crucial importance for our system, since the similarity values used here are updated later based
on user feedback.

One of the main advantages of this method is the fact, that a new user can query the system
without having to enter a query. In this case, the system returns the key documents that have been
learned to be important for the task the user is on. By these means, a right-on-time information
delivery is made possible: with each context change, an empty query can be started and the results
presented in the document browser automatically.

3. The document browser

An important point to improve in the information supply process is the presentation of the retrieved
information pieces of information. When using classical Information Retrieval systems, one needs
to seek for information twice: the first time for the documents containing the information needed
and the second time within these documents for the information itself. To improve the search

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performance of our system, we implemented a tool that presents the section of the document that
contains relevant pieces of information directly to the user. To achieve this, the documents to be
displayed are split into semantically coherent units we call “chunks”. Furthermore the retrieval
results are presented to the users in a way that enables them to perform certain operations on
them.

3.1 Document segmentation

Figure 2: The document segmentation process model

The process of document segmentation breaks down into three steps (see Fig. 2). The first step is
document browsing, where the structure of the documents is analyzed. The complexity of this
process is reciprocally proportional to the structural degree of the source document. Hence it is
relatively easy to process HTML-documents and utterly challenging to analyze PDF-documents.
The second step is structural unification, which consists in splitting the document into small parts
(the “chunks”) and adding structural information to these chunks. The third step is explicit
structuring, where the refined chunks are structured hierarchically and then stored in a database.

We decided to focus on the following important document formats: HTML, PDF and doc. Further
parsers can be written to be able to split a wider range of formats into chunks. The less structured
the documents are, the more complicated is the segmentation process. Documents in the PDF-
format do not contain structural elements such as tables, lists and headlines explicitly. We thus
need to compute structural properties indirectly based on information such as the positioning and
formatting of text. It is thus not possible to determine the structure of the document with a high
accuracy since the result of the document segmentation depends heavily on the thresholds
mapped to the structural elements in the algorithms we use.

In order to process PDF-documents, we use a tool called “PDFBox” (PDFBox 2005), which is able
to parse them. The output of this tool is a data-stream, which contains the content of the document,
including formatting information, like fonts, size, etc. This stream is divided into paragraphs, which
are saved into objects. These objects are classified based on the structural characteristics of the
text part. We designed a heuristic that uses a classification algorithm to determine the syntactic
category of these text parts. Certain criteria such font size, font style, the kind of the first character
of the line, text alignment, text spacing and so on are combined to determine the syntactic category
of the text. Obviously, the quality of our results decreases wit the increase in complexity of the
documents. Simple, plain text with lists, paragraphs, images and simple tables are best for
segmenting.

The doc-format contains special annotations for ordered and unordered lists, headlines, pictures,
tables and so on. Processing documents in the Word-format is thus slightly easier than processing
PDF-documents. Using the existing COM object model (Microsoft 2006) for word-documents,

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which enables us to programmatically access documents and retrieve the structural information
they contain, we can simply parse the structure of Word-documents and retrieve all the needed
information. Yet one drawback is the heaviness of the word object model. It can take up to five
seconds to retrieve all the data from a moderate complex document of about five to ten pages. This
becomes problematic, when we try to process a big document store. The biggest problem is the
fact, that many users don’t use the given formatting possibilities to structure their documents. There
are templates for structures like headlines, but when these styles are not used, and headlines are
simply in a bigger font and a bold format, we cannot access the structural information through the
object model. With well-structured documents we were able to retrieve the expected segmentation
when converting Word-documents into chunks. HTML-documents are already structured and the
structure information is easy to access. The main difficulty remains the identification of meaningful
content (document sections such as navigation bars, advertisements or special formatting being
irrelevant content). We try to identify the meaningful parts of the document by comparing the
amount of text within the tags: tags within which the highest percentage of text is situated usually
contain the important information. We furthermore need to check for validity of the given html-
stream, to ensure correct cascading and closed tags.

The processing result for any source document is a sequential list of annotated text chunks. The
following structures are important and will be considered for structural unification:
ƒ Headlines
ƒ Lists (ordered and unordered)
ƒ Tables
ƒ Pictures
ƒ Hyperlinks
In order to be able to access only certain parts of the document, we need to map the sequential list
of annotated text chunks to a hierarchy in form of an order n root-tree, which itself is eventually
saved in the file-system or stored into a database. Every node is assigned a structural label, which
describes the position in the original document. The root element is generated generically and
contains all elements of depth one (see Fig. 3).

Figure 3: The root of the structured document tree

The allowed types for child nodes of node type “root” are “paragraph” and “headline”. The children
of a node of type “paragraph” constitute a semantically coherent passage and are called chunks.
Paragraphs only appear directly below the root node when the source document contains no
headline or no headline at the start of the document. Nodes of type “headline” contain the nodes
with the parts of the document, which belong to this headline and can also sustain subchapters.

Figure 4: The structured document tree for „headline“

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The only difference between “root” and “headline” (see Fig. 4) is the existence of a further child
node labeled “headlinecontent”, which contains the text or pictures that are part of the headline.
The structure of the node “paragraph” is very similar to the structure of paragraph in html-
documents. A closer look at its structure will be omitted, because it would go beyond the scope of
this paper.

Summing up, a source document is split into its several chapters, which are represented as nested
nodes of the type “headline” according to the structure extracted from the document (see Fig. 5).
This structure is merged to a root-tree. To save this structure to a database, the tree is saved as a
nested set of nodes. A node contains all child nodes, displayed through two additional attributes
that we call “left” and “right”. A number characterizes each of the attributes. All elements en are
children of e0 if the following is true: (left(e0) < left(en)) && (right(e0) > right(en))

Figure 5: The nested set model

3.2 Chunk presentation in the document browser

To present the pieces of information retrieved by the query expansion, we created a browser-based
tool, which gives the user the possibility to operate on the result sets (see Fig. 6). The basic idea is
to present the user not only a link to the referenced document, but a glimpse on the actual content.
Realizations of this concept exist in several web search engines such as Google. Yet we extended
this concept to collect implicit feedback. Ideally the document segments displayed have a high
relevance for the query and contain the information needed by the user. In any case the user is
able to rate the relevance of the result sets without having solely the document name to rely on.

In addition to opening the dedicated document, it is possible to expand the view of the chunk to the
left or right chunk, to read the whole chapter or to remove the chunk completely from the view or to
minimize it. All of these operations on chunks can be used to collect information on the relevance
of this chunk for the query. This information can eventually be used to re-compute the relevance of
the chunk for the input query and adapt the results of further search requests on the same topic:
simply closing the chunk will decrease the estimated relevance of a chunk; working with the chunk,
like viewing the full chapter will increase it. Eventually, presenting the best fitting chunks, computed
from the previous operations performed of the users, optimizes the result set for a given query.
Naturally, this optimization is only useful when similar search tasks are often repeated like in call
centers or first level support.

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Figure 6: The document browser

3.3 Feedback collection

As stated above, the document browser provides different operations on information chunks. They
are the following:
ƒ “Download”: This operation is rated with 5µ, µ being the feedback constant. Downloading the
whole document shows that the user is sure that it contains exactly the information he needs.
This is especially the case when mobile information supply is concerned.
ƒ “View whole document”: Viewing the whole document is rated with 4µ. It shows that the user is
interested in the content of the document and that he is yet not really sure that he will need the
whole document. He therefore wants to be able to close some of the non-relevant chunks
contained in the document.
ƒ “View chapter”: For the same reasons as stated above, this operation is rated with 3µ.
ƒ “View paragraph”: This operation is rated with 2µ.
ƒ “Back”: This operation can be positive or negative. The user reestablishing the last state of his
browser window means that the last operation was wrong. Thus its feedback value is simply
subtracted from the cumulated feedback value.
ƒ “More”: A rating of µ was assigned to this operation
ƒ “Less”: This is the reciprocal operation to “more”. It was thus accorded a rating of -µ
ƒ “Close”: This is the reciprocal operation to all “view” operations. We thus mapped it to the
average of the ratings of view operations and accorded it a rating of -3µ.
The ratings of operations on a chunk are sequentially summed to compute a cumulated feedback
value that is stored with the query in a feedback database along with user context. After a period of
data accumulation, a stored procedure for computing the new word similarity values is triggered.

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4. The feedback module

The feedback module is the key module of this tool. By learning the context-dependent concept-
term relations, we ensure that the meaning of the concepts describing the task is implicitly learned
by the system and that it thus returns relevant documents even when an empty query is sent to the
system.

4.1 Topology of the neural network

The query expansion activates sequentially the different layers of our system (concept layer, term
layer and data layer). The retrieval path equivalent to an expanded query is a four-layer directed
graph (see Fig. 7) that can be mapped to a neural feed-forward neural network with shortcut
connections. His topology is as follows:

Figure 7: Topology of a retrieval path

ƒ The first layer represents the concepts describing the task to achieve.
ƒ The second layer contains terms that are either similar to the concepts in the first layer or that
where given in as input and could not be matched to a concept. The weights of the connections
between the first and the second layer are computed automatically using an analysis of the
distribution of keywords of interest in a firm intern data corpus.
ƒ The third layer contains words that are similar to those in the second layer.
ƒ The fourth layer is the data layer. We compute a vector representation of each of the
information chunks using the distribution of the terms in the third layer in the “headline”. The
transpose of the term-document matrix is then used to connect chunks and terms. As shown in
Fig. 7, some documents that do not contain any of the terms in the original query can be
retrieved (blue document in the figure). Such documents are ranked lower that documents that
contain the query (yellow document). Neurons in the first layer can be linked to the neurons in
the second (shortcut connections) or the third layer.
The network generation was implemented using the JoOne5-library 1 . Since this library can not
handle shortcut connections directly because of the layer-paradigm it uses to represent networks,
we had to add temporary neurons to ensure correct connections between the neurons. All layers
were modeled as linear layers.

4.2 Learning
The learning phase consists in two passes: the forward and the backward pass. During the forward
pass, the neural network is sequentially activated downwards (i.e. from the concepts to the
documents, see Fig. 7). The forward pass is basically the query expansion phase, during which the
query dependent topology of the neural network is edified through the activation spreading
between the layers described above. The result of the forward pass is an activation value for the
documents.

1
http://www.jooneworld.com

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The backward pass is used to compute the new weights of the edges between the neuron layers.
Thus it implements the learning as such. It consists in activating the document layer with feedback-
dependent values, propagating these activation values back into the neural network and computing
new edges weights out of the difference between the activation values during the forward pass and
the new activation values.The initial activation of the document layer for this pass consists in the
feedback values generated by user interaction monitoring combined with the document activation
computed during the forward pass.
activation new = (1 + norm( feedback ))activationold ,

Where norm is a function that ensures, that the cumulated feedback is in the interval [-1, 1]. We
chose to use the following adapted sigmoid function to achieve this:

1 − e−x
norm( x) =
1 + e−x
The norm of a negative value stays negative, the norm of a positive value positive and that the
norm of 0 is 0. The feedback-dependent activation values are back-propagated in the neural
network through the first three layers to finally alter the weights of the connections between the
concepts and the terms. Using a standard learning technique to adjust the weights of the edges
between the concepts and the terms adapts the document ranking by later queries in the sense of
the user. We used the batch version of the standard back-propagation algorithm without
momentum (Zell 97) to update the weights of the edges between the concepts and the terms. The
altered weights of the connections between concepts and terms are stored back into the query
expansion module.

5. Results
The functionality described above has been fully implemented but hast not yet been tested in a big
setting such as a company. We tested the three main modules using the CLMET (Corpus of Late
Modern English Texts) (see Fig. 8). The most important feature for our system being the learning of
concepts, we tested it by trying to learn the concept “beauty”. This was done using twenty learning
iterations on three positive feedbacks with different learning rates, we had the following results:
Table 1: Learning the concept “beauty”
Learning rate Beauty Virtue Land
0 1 0.16 0.16
0.05 1 0.68 0.16
0.1 1 0.68 0.16
0.2 1 0.70 0.16
0.5 1 oscillation (chaotic behavior) oscillation (chaotic behavior)
The system learned “beauty” as being beauty + virtue. The similarity value for “land” stayed almost
constant since no negative feedback values were used. For learning rates above 0.4 the system
behaves chaotically and the learning depends heavily on the number of iterations. Smooth changes
are reached for learning rate values around 0.1 (see Fig. 8). Since the retrieval is based on the
vector space model, i.e. on the relative weights, searching for the concept “beauty” will now boost
“beauty” and “virtue” and thus neglect “land”.Our tests showed that the edges between concepts
and keywords, which express the semantics of the concepts in the given context, get stronger with
time. The absolute weights of such edge can be used to compute the relevance of a concept for a
task, leading to an automatic determination of the semantics needed to complete it. Furthermore,
empty queries retrieve contextually more relevant data with time. This realizes the goal we were
aiming at: Knowledge workers using the feedback functionality implicitly store their knowledge
about the semantics needed to complete the knowledge intensive tasks included in the everyday
business process instances. This allows (especially new) workers in the same role to retrieve
relevant pieces of information even without any knowledge about the keywords necessary to find
them. Furthermore, the system can adapt to time-related changes in the semantics of concepts
simply be updating the weights of the edges between these concepts and terms. New concepts
can be added to the description of a task by monitoring the activation of the all concepts related to

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 Axel-Cyrille Ngonga Ngomo and Frank Schumacher

the terms activated in the second layer during the back-propagation phase and adding concepts
that very often have an activation level above average in the given context.

The query expansion without feedback had a 15% better precision. We are aware, that the retrieval
results are highly dependent on the models used (ontology, data set for similarity computing, etc.).
We thus aim at testing our system with standard data sets such as PUBMED publications 2 and
standard ontologies such as the GALEN ontology 3 .

The extraction of semantic information to create meaningful chunks is a difficult task, and depends
heavily on the accuracy of the document creator regarding the structure of it. The extraction
process of Word-documents by the COM-object-model with a .NET program is still suboptimal
because each call to this object is encapsulated. Thus the computing time for one document can
be immense. This field needs further research, with a lot of fine-tuning to the chunk-generating
algorithms.
Learning rate = 0.01

0,8

0,7

0,6
Similarity to "beauty"

0,5

Land
0,4
Virtue

0,3

0,2

0,1

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Iterations

Learning rate = 0.1

0,8

0,7

0,6
Similarity to "beauty"

0,5

Land
0,4
Virtue

0,3

0,2

0,1

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Iterations

2
http://www.pubmed.com
3
http://www.opengalen.com

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Learning rate = 0.2

0,8

0,7

0,6
Similarity to "beauty"

0,5

Land
0,4
Virtue

0,3

0,2

0,1

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Iterations

Learning rate = 0.5

1,8

1,6

1,4

1,2
Similarity to beauty

1
Land
Virtue
0,8

0,6

0,4

0,2

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Iterations

Figure 8: Learning the concept “beauty”

6. Discussion
The work presented in this paper is related to the areas of query expansion, implicit feedback and
document segmentation.

6.1 Query expansion

Using thesauri or other forms of semantic knowledge to improve IR has been done in different
settings of which most tend to try expanding user queries and/or document descriptions. One of the
first experiments done to evaluate the use of thesauri was carried out by Wang, Vandendorpe, and
Evens (1985). The result of this experiment showed that the use of thesauri for query expansion
can noticeably improve both precision and recall. Yet experiments conducted by Voorhees and
Hou (1992) and Voorhees (1994) on subsets of the TREC collection showed that not only an
improvement but also a degradation of the precision or recall can result from using thesauri for IR.
In more recent papers other authors like Taghva, Borsack and Condit (1998) showed that thesauri-
aided retrieval does not considerably change either the recall or the precision of information
retrieval engines. Our results show that a considerable improvement of the precision can be
achieved even on small data sets.

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Some approaches use more formal semantic models. For example the Thyssen-Krupp-
Community-World project (Muehlhoff, 2004) exploits a distributed semantic model that networks
information sources and people in a knowledge map that can be used to retrieve relevant
information in an efficient manner. The use of formal models implies high modeling costs. We aim
at striking a balance between complexity and costs. The use of ontologies guarantees the minimal
complexity necessary to describe the semantics of high-level concepts. Yet modeling out each and
every one of these concepts manually would have been too costly and thus not practically feasible.
Thus we decided to compute and learn the relations between concepts and terms automatically.
The quality of the corpus influences our results heavily. Our tests on the OHSU-TREC-9 corpus for
filtering and the CLMET showed that domain specific corpuses are more suitable for retrieval tasks,
since they contain less poly-semantic words. The precision of the engine is enhanced by 0 to 15%
depending on the corpus used and on the ontology model.

6.2 Feedback
Another category of methods aiming at improving retrieval quality is based on user feedback. Since
the invention of relevance feedback (Rocchio, 1971), different methods to explicitly collect and
process user feedback have been developed. Yet such methods do not usually produce the
needed amount of data, since users are normally reticent to evaluate documents. Thus implicit
methods were developed. They collect data from the user without having him to explicitly evaluate
documents. Most techniques of this type monitor the time spent reading a document and some
basic direct interactions such as clicking, scrolling, printing etc. (Morita and Shinoda, 1994)
(Claypool et al., 2001). Kelly and Teevan (2003) give a good overview over actual techniques used
in this domain. Our technique differs from all those presented in both papers, because it operates
on smaller pieces of information and uses the navigational behavior of the user along the nested
tree representation to determine the feedback value. Furthermore, we do not learn the similarity
between queries and documents. Instead we learn the semantics of the concepts used in the
documents and try to map it to the semantics of the users.

6.3 Document segmentation

White et al. (2004) evaluated six implicit feedback techniques on a new document representation
for retrieval results. Their presentation approach is similar to the one presented here, since they
present different views on the documents. Yet they do not segment documents to more granular
pieces of information.

There exist a few algorithms to create chunks from unstructured documents, especially from PDF-
documents. One was introduced by Liensberger (Liensberger 2005). He detects segments by
using a whitespace density graph and is cutting the document by the “rivers of whitespace”. This
method is especially effective with documents with more than one column.

With “Outside In”, Stellent created a very powerful text conversion tool (Stellent 2006). Until
recently, the output of this transformation engine would have been plain text with no semantic
information. It is now possible to convert documents to the “FlexionDoc” XML-Schema developed
by Stellent, which contains a lot of additional and useful information. We consider using this output
as a base for our chunk creation.

7. Further work
We shall be concerned with implementing the rest of the functionality necessary to test out system
in the firm context. This includes the automatic labeling of term clusters and the addition of other
learning techniques for concept description. The document browser will be customized, to enable
an intuitive work. A main focus will be improving the performance of the document segmentation,
both in performance and accuracy. Plans are to put aside the COM-object-model and use the XML-
functionality of Word2003 or the Stellent Tool “Outside In”. Improved algorithms to create
semantically coherent chunks will be tested. Later, we plan to implement a “chunkify-on-the-fly”
feature, which will allow the segmentation of documents just in time.

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References
Claypool, M., Le, P., Wased, M., Brown, D. (2001) “Implicit interest indicators”. In Proceedings of
the 6th international conference on Intelligent user interfaces, pp. 33–40.
Kelly, D., Teevan, J. (2003) “Implicit feedback for inferring user preference: a bibliography”. SIGIR
Forum, 37(2):18–28
Liensberger C. (2005) “Ideas for extracting data from an unstructured document”, [online],
http://www.chilisoftware.net/Private/Christian/ideas_for_extracting_data_from_unstructured
_documents.pdf
Microsoft (2006) Microsoft COM Object Model Technologie, [online],
http://www.microsoft.com/com/default.mspx
Morita, M., Shinoda, Y. (1994). “Information Filtering Based on User Behaviour Analysis and Best
Match Text Retrieval”. In W. Bruce Croft and C. J. van Rijsbergen, editors, Proceedings of
the 17th Annual International ACM-SIGIR Conference on Research and Development in
Information Retrieval, pp. 272–281, Dublin, Ireland
Muehlhoff, T. (2004). "Ein Konzern will wissen, was er weiß“. In Petkoff B. Gronau N. and T.
Schildbauer, editors, Proceedings of KnowTech 2004, pp. 45–53, Munich, Germany.
PDFBox (2005) PDFBox Java PDF Library Online-Ressource, [online], http://www.pdfbox.com/
Rocchio, J.J. (1971) The SMART Retrieval System, Experiments in Automatic Document
Processing. Prentice Hall
Salton, G. (1983) Introduction to Modern Information Retrieval. McGraw-Hill
Stellent (2006) Stellent “Outside In”, [online],
http://www.stellent.com/de/produkte/outside_in/transform_server/index.htm
Taghva, K., Borsack, J., Condit, A. (1998) “The Effectiveness of Thesauri-Aided Retrieval”.
Technical Report TR-98-01, Information Science Research Institute of the University of
Nevada, Las Vegas.
Voorhees, E.M. (1994). “On expanding query vectors with lexically related words”. In Harman D.K.,
editor, “Proceedings of the TREC-2”, pp. 223–231, Gaithersburg, Maryland, USA
Voorhees, E.M., Hou, Y.-W (1992) “Vector Expansion in a Large Collection”. In Harman D.K.,
editor, Proceedings of the TREC-1, pp. 343–352, Gaithersburg, Maryland, USA
Wang, Y.-C., Vandendorpe, J., and Evens, M. (1985) “Relational thesauri in information retrieval”.
J. American Society for Information Sciences, 36(1):15–27, 1985.
White, R.W., Jose,J.M. , van Rijsbergen, C.J., Ruthven, I. (2004) “A Simulated Study of Implicit
Feedback Models”. In Proceedings of the ECIR 2004. Sunderland, United Kingdom.
Zell, A. (1997) Simulation neuronaler Netze. Oldenbourg: Addison-Wesley.

747
A Holonomic Approach to Strategic Knowledge Elicitation
Rosane Pagano and Alberto Paucar
Manchester Metropolitan University Business School, UK
[email protected]
[email protected]

Abstract: It has been pointed out the strategic importance of the cyclic transformation of tacit
knowledge into explicit knowledge for the knowledge-creation organisations. Such complex
transformation is in many instances supported by informal settings like knowledge cafes. Its
criticality however deserves a more methodological approach. This paper examines the holon
framework with the view of informing the systematic elicitation of strategic knowledge. It draws
upon the experience and practical application of elicitation methods – in particular causal mapping
and scenario building techniques – to elicit middle-high managers’ strategic knowledge by
candidates to a Masters in Business Administration. The two methods are benchmarked against
the holonomic cycle of knowledge development with regards to their inclusiveness of strategic
variables, leading to a more integrative approach to strategic knowledge elicitation. A
predominantly qualitative methodology is used in this comparison.

Keywords: Knowledge elicitation methods, knowledge management, systems thinking

1. Introduction
In the last twenty years there has been a change of strategic thinking paradigms in management.
The turbulence and discontinuities encountered in the global business scenario made all the more
clear the need for systematic knowledge of strategic planning. Despite the questioning of the
feasibility of such planning in very chaotic times, Drucker (1968) has since recognized that there is
no alternative to managers but to anticipate possible future scenarios and attempt to intervene in
the business processes, if their organizations were to survive. It was an urge for strategic planning
to go beyond the traditional approach of mainly extrapolating past experience. Over this period of
time, strategy became closer and closer to operations, strengthening the feedback loop that should
exist between the two – effective operations may trigger a strategic issue and vice-versa. A
manifestation of such close interaction is data warehousing in the retail sector. Thus, one can
speak of strategic knowledge at various levels of the organisational structure.

It is in this context that Masters candidates at Manchester Metropolitan University Business School
(MMUBS) carry out their research project, which quite often focus on strategic issues and involve
eliciting strategic knowledge at different management levels of the organisation they work in. As
action researchers, they influence strategy formulation and seek convergence from strategists.
Typically the issues investigated stem from the perceived need of harnessing strategic competence
(Hodgkinson and Sparrow, 2002), that is, achieving strategic responsiveness (renewal capacity in
chaotic times). It means picking up and interpreting weak signals, which are indicative of change,
and acquiring actionable knowledge (knowledge which is scientifically sound and also useful to
practitioners). Nonaka (1995) has highlighted the importance of the transformational cycle tacit-to-
explicit in knowledge creation and in organisational learning. The more effective the transformation
the more effective management intervention is likely to be. Hence the importance of methods and
techniques. Representations of strategic knowledge improve the practice of strategic management.
Application of knowledge elicitation methods as a basis for affecting the strategy process assists in
overcoming cognitive bias and inertia, forcing strategists to explicitly recognize them.

This paper draws upon the experience of samples of Masters candidates, who used one of the two
techniques – causal mapping, and scenario planning – for strategic knowledge elicitation. Although
limited, this collection of field experiences in live organizations provided the authors (as
supervisors) with some evidence to suggest that these methods should be positioned in a more
encompassing framework that expresses the cycle of organisational learning. We argue for the
holonomic framework. This could help practitioners, such as many of MMUBS Masters candidates,

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contributing to a more systematic and integrative approach to the elicitation of strategic knowledge
held by decision-makers in organisations.

2. The integral holon in organisational learning

The holon construct is not new. It has been introduced by Koestler (1967) and since then it has
evolved within organisational studies in an attempt to theorise at different levels the complex
relations between organisational units. Recently Edwards (2005) has used such a construct to
integrate the essential characteristics of each of the most currently used research paradigm in
organisational studies. This ensemble is referred to as his holonomic framework. In this paper we
draw upon the aspect of the framework that deals with how the holon construct accommodates the
organisational learning cycle, and go on to propose an integrative conceptual umbrella to two
frequently applied methods of capturing strategic knowledge (scenario building and causal
mapping). This is referred to in this paper as the honomic cycle of knowledge development. The
experience of practitioners on the Masters programme corroborates the view that a systematic
approach to intelligence gathering can help implement an effective future thinking strategy.

The quadrants of the integral holon are consciousness, cultural, social, and behavioural as
indicated in Figure 1. They are the major areas in which development occur. The coordinates of
such quadrants encompasses two dimensions: the interior- exterior dimension and the individual-
collective dimension. The former represents the degree of subjective experience (or increasing
objective behaviour). The latter represents the degree of self-agency (or increasing social
communion). The mapping of a particular holon quadrant onto a particular phase of the learning
cycle is summarized in Table 1. The mapping of a particular developmental dimension onto a
particular set of learning skills is summarized in Table 2.

Figure 1: Developmental quadrants (adapted from Edwards 2005)

Table 1: Association between holon quadrants and learning phases (adapted from Edwards 2005)
HOLON QUADRANT LEARNING PHASE
Consciousness Reflecting -
experiential learning; observation; collecting the data
Cultural Meaning -
interpreting the results; meaning-making
Social Testing -
testing implications; discussing the findings
Behavioural Acting -
physical action and involvement; performing the method

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 Rosane Pagano and Alberto Paucar

Table 2: Association between holon quadrants and learning phases (adapted from Edwards 2005)
DEVELOPMENTAL LEARNING SKILLS
DIMENSION
Individuality Agentic - unifocal / sequential
Communality Communal - multifocal / random networks
Interior Abstract - imaginal / conceptual
Exterior Concrete - physical / interacional
The work of psychologists such as Piaget and Kolb have been influential in explaining individuals’
learning processes, and have been used as a basis to extend its explanatory power to the
collective, such as organisational learning. One can recognise underlying Edwards’ integral cycle of
learning a typical Kolb (1984) cycle, which is practical experience, reflection on the experience,
forming generalizations, preparation for active experimentation, then further practical experience. In
essence Edwards’ framework seems to extrapolate Kolb’s learning cycle from the individual to the
social (organisations), although there are a few distinctions in the use of terminology.

The use of scenario building and of cognitive mapping techniques in gathering business
intelligence carries the challenge of capturing collective knowledge through individual experiences.
Argyris and Schön (1974) suggested that workers have mental maps, which inform workers’
actions in particular, situations. Their theories of action have later evolved to the organisational
learning perspective. They argued that ‘learning agents, discoveries, inventions, and evaluations’
should be encoded in individual images and the maps they construct with others. “There must be
public representations of organisational theory-in-use to which individuals can refer. This is the
function of organisational maps. These are the shared descriptions of the organisation which
individuals jointly construct and use to guide their own inquiry.” (Argyris and Schön, 1978).
Scenario building and cognitive mapping techniques viewed as the holonomic cycle of learning can
help knowledge management practitioners, facilitators, or interventionists, to build such an
important reference, especially in the organisational strategy.

In sections 3 and 4 we will be reviewing those two techniques respectively, and interpreting them in
the light of the holonomic framework. This interpretation is based on some of the experience of
practitioners on the MMUBS Masters programme. Although they can be employed for the benefit of
one individual alone, the use of these techniques in organisations often aim to reach a collective
agreed view hold by a team of managers (strategic decision-makers). In this sense, they are a
group technique to facilitate a group learning process.

3. Scenario building and the holonomic framework

In the context of this study, scenarios are understood as alternative future-oriented views of the
world which provide some grounds for better informed strategic planning and decision-making, and
for circumventing future uncertainties. Scenario thinking has been applied since 1960s. In the last
ten years however it has increasingly been used as a tool for strategic planning, knowledge
management, and a means of constructing a shared view among team members. The benefit of
the scenario approach reported by practitioners is that it contributes to a more effective change
management; more effective assessment of existing strategies and options; more effective risk
management; more cohesive mental maps of a management team and a more speedy learning
cycle. In the shorter term, it increases organisational adaptability through a more skilful observation
of the business environment, and in the longer term, it develops organizational resilience. Despite
the perceived benefits, it is worth noting though that there is very little in terms of formal
comparative evaluation of this technique with others.

The appeal to managers of a scenario-based intervention is that it is systematic yet highly flexible,
and also highly participative. It forces strategists to explicitly confront the implications of their
options for the current strategy and to confront the operating beliefs underlying their decision-
making process. It does involve though extensive data gathering. Scenario building consists of
three broad stages, as identified by Hodgkinson and Sparrow (2002). First, to develop a master list
of key forces (around 100) that would be likely to determine the longer-term shape of the industry
(social, political, technological and economic). Second, the key forces identified are rated for their

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overall importance in terms of shaping the future and classified into trends and uncertainties.
Trends are forces that were deemed to be predictable (overall direction and impact within the time
frame under consideration). Uncertainties are forces that are deemed to be unpredictable. In the
third stage this material is then used to develop a range of scenarios along two orthogonal
dimensions. One dimension goes from the traditional to a new business model and the second
goes from minor to major changes. Typically there would be four predominant scenarios, one on
each quadrant. This ‘orthogonality’ means that scenarios are reasonably distinctive and probably
more helpful to decision-makers.

Ringland (2002) provides a more detailed account of the scenario building process, helpful to
practitioners, describing it as a series of twelve stages rather than the three broad ones envisaged
by Hodgkinson and Sparrow. Also, Ringland includes stages beyond the production of the
scenarios themselves, that is, ones that we relate to the learning phases of ‘Testing’ (implications
of the findings) and ‘Acting’ (choice of options and implementation plan). What Hodgkinson
portraits is essentially Ringland’s stages two to five. Ringland’s twelve stages for developing
scenarios have been well tried. We adapted and mapped them onto the holonomic cycle of
knowledge development. Each stage is associated to a holon quadrant as indicated in Table 3.
Table 3: Scenario building as a holonomic cycle of knowledge development
HOLON QUADRANT STAGES OF SCENARIO BUILDING
Consciousness 1. Identify focal strategic issue
2. Identify key micro economic forces
3. Identify driving macro economic forces
Cultural 4. Rank by importance and uncertainty
5. Select the scenario logic
6. Flesh out the scenarios
Social 7. Test implications for strategy
8. Selection of leading indicators
Behavioural 9. Feed the scenarios back to those consulted
10. Discuss the strategic option
11. Agree the implementation plan
12. Publicize the scenarios
The Consciousness quadrant (‘Reflecting’ learning phase) encompasses stages one to three.
Stage one involves identifying the major decision or the big strategic question, for example “What
are the long-term structural options for Texaco’s participation and leadership in the energy
industry?” (Ringland, 2002). This is followed by the elicitation of forces (stage two) in the local
environment, which are key to influencing the success of decisions, the choice of options opened
up by the strategic question. These microeconomic forces are characteristically elicited by
interviews, workshops, and observations. Research methods for data gathering and data analysis
are used here. Research is also required in stage three to elicit macroeconomic forces that will
affect forces in the local environment. Typically a PEST analysis is used to identify major trends.
This quadrant (consciousness) requires a combination of agentic (individual) and abstract (interior)
learning skills from the ones involved in the process in order to reflect and tease out the elements
that will make up the fabrics of collective knowledge (added value) later in the development cycle.

The Cultural quadrant (‘Meaning’ learning phase) encompasses stages four to six. In stage four
microeconomic forces and macroeconomic forces are rated on their level of importance in shaping
the future (influencing the outcome of the strategic question defined in stage one), and on their
level of uncertainty. Then, in stage five, typically two predominant macroeconomic forces are
selected as the two orthogonal axis (dimensions) against which four perceptively different
scenarios are devised. Interweaving the prioritized microeconomic forces into a story line fleshes
each scenario out. The Cultural quadrant requires a high degree of abstraction and
conceptualization from the ones involved (as in the Consciousness quadrant) but here in
combination with communal, multifocal learning skills, working towards a shared vision (scenario).
Micro and macro economic forces need to be networked in a narrative involving usually cause-
effect relationships and a characterization of the people involved.

The Social quadrant (‘Testing’ learning phase) encompasses stages seven and eight. It entails
rehearsing the answers to the strategic question against each scenario and testing the implications

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to the organisation. It also entails finding a way of monitoring which scenario is looming in the real
world. This is accomplished by selecting economic indicators that are specific to a particular
scenario. The Social quadrant requires intense communal, multifocal learning skills from the ones
involved, combined with interactional skills, in order to discuss and validate the findings.

The Behavioural quadrant (‘Acting’ learning phase) encompasses stages nine to twelve. The
underlying principle of this quadrant is to turn the findings and collective knowledge into actions
that can be carried out by individuals. In stage nine, a one-to-one feedback to those interviewed or
consulted in stage two on the scenarios created, so that they can apply to a decision they
mentioned. A set of options is generated against each scenario and each option is graded from
very negative to very positive. The choice of options will depend on organisational capabilities. The
scenario project owner then agrees a plan to implement the selected options and to publicize the
scenarios widely. The Behavioural quadrant requires a high degree of concrete learning skills
outward looking, combined with a degree of self-agency.

4. Causal mapping and the holonomic framework

Causal mapping is a technique that can be particularly helpful in developing effective strategies. Its
operators are in essence quite simple. A causal map – the outcome of causal mapping – is an
influence diagram in which actions or ideas, represented as statements, are connected through
arrows representing a causal relationship. Actions or ideas are sometimes referred to as strategic
variables, which are depicted as nodes in the influence diagram. The arrowheads connecting
variables depict the directions of causality, terminating on dependent variables. There can be a
perceived positive causal relationship or a perceived negative causal relationship on depend
variables. An example of a situation to be mapped could be the impact of environmental change on
organizational performance of a railway company. Variables might be floods; droughts; freight
revenue; costs of physical repairs; encroachment of the highway carrier; inflationary spiral of
wages; etc. (Hodgkinson and Sparrow, 2002). The purpose of causal mapping is to make explicit
pathways between strategic thinking and actions. It is a structured mechanism for intervening in the
strategic management process, which has increasingly been used to elicit managers’ strategic
knowledge in consultancy projects. Masters candidates often take up the role of internal
consultants when researching and writing their dissertation. Maps help teams reflect critically and
systematically on strategic issues, investigate collective logics of organizations, and capture
managers’ causal belief systems. The technique draws upon documentary sources of evidence or
interviews, makes use of dynamic media (interactive computer software, whiteboards) and requires
a facilitator. Usually maps are developed iteratively over a period of two or three days. Hodgkinson
and Sparrow (2002) point out some limitations of each source of evidence. Documentary sources
are non-intrusive, but often prepared for particular audiences, and therefore potentially biased.
Direct elicitation procedures, on the other hand, are intrusive, but focused on issues of concern to
the investigation.

Bryson et al (2004) provides a detailed account of the causal mapping technique for practical
business results, helpful to practitioners, identifying process guidelines for constructing causal
maps. We have translated Bryson’s well-applied guidelines into ten steps for applying this
technique and have mapped them onto the holonomic cycle of knowledge development. Each
stage is associated to a holon quadrant as indicated in Table 4. The Consciousness quadrant
(‘Reflecting’ learning phase) encompasses steps one to three. Step one involves identifying when a
situation or strategic issue is suitable for mapping. Maps have the potential to be a lot more
detailed than scenarios due to the causal links. This level of detail may not be required. In step two,
members of the team responsible for constructing the map are asked to brainstorm individually as
many ideas as possible, with little censure, as the objective is to encourage creative thinking in
terms of options (who, what, where, when). Ideas (statements) are labelled (usually numbered) to
facilitate linking. In step three the facilitator organises ideas according to their level of generality,
establishing a preliminary causal linkage. Goal related statements will tend to be at the top of the
map whilst action related statements will tend to be nearer the bottom. Performing the steps in this
quadrant (consciousness) requires mainly a agentic (individual) and abstract (interior) learning
skills from the ones involved in the process in order to tease out the nodes which will make up the
scope (number of nodes) and depth (nature of the nodes) of the causal network.

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Table 4: Causal mapping as a holonomic cycle of knowledge development

HOLON QUADRANT STEPS FOR CAUSAL MAPPING
Consciousness 1. Identify the situation to be mapped
2. Brainstorm ideas
3. Establish a preliminary hierarchy of ideas
Cultural 4. Categorize clusters of ideas
5. Identify goals, options, actions and assertions
6. Link statements
Social 7. Check the map for consistence and completeness
8. Analyse the map
Behavioural 9. Use the map to inform decision-making
10. Publicize the mapping exercise
The Cultural quadrant (‘Meaning’ learning phase) encompasses steps four to six. In step four the
group collectively is asked to recognize a theme or subject for a cluster of connected nodes
(ideas). This will become the cluster heading and will encompass goals and actions. Redundant
statements should be removed at this stage. Possibly a statement will need to be broken down in
order to make clearer their connection to others. In step five, the team should come to an
agreement on the nature of each node in the causal network, that is, as a goal, an option (strategic
issue), an action or an assertion. “Much of the power in a map comes from showing how bundles of
actions add up to strategies, and how strategies can lead to the achievement of goals or purposes.
[…] In order words, the strategic issue is a bundle of possible actions from which comes the set of
actions actually chosen – the strategy.” (Bryson, 2004). Step six is the (non-trivial) team exercise of
determining the direction of an arrow, that is, determining the influence of one node on another.
The argument underlying how two nodes are connected should be well rehearsed at this stage.
The Cultural quadrant requires a high degree of abstraction and conceptualization from the team
(as in the Consciousness quadrant) but here mainly in combination with communal, multifocal
learning skills (distributed learning).

The Social quadrant (‘Testing’ learning phase) encompasses steps seven and eight. Step seven is
to test out the map for completeness – all statements or nodes are associated to at least one
connection – and for consistence – each goal is the logical consequence of a bundle of actions as
in a logical story line (causal thinking). Step eight is to look at priorities, ranking goals in terms of
importance and considering trade-offs that can affect team’s subsequent commitment to a course
of action (negative goals). Statements displaying a large number of links might be a critical option
or action to embrace in order to achieve several goals. The Social quadrant requires intense
communal, multifocal learning skills from the ones involved, combined with interactional skills,
concrete and externally oriented. The Behavioural quadrant (‘Acting’ learning phase) encompasses
stages nine and ten. The underlying principle of this quadrant is to turn the findings and collective
knowledge into actions that can be carried out by individuals. Options are chosen and tasks
assigned to individual participants. The causal map should then be published to the wider
organisational environment, reinforcing important learning points. The Behavioural quadrant
requires a high degree of concrete learning skills outward looking, with more focus on a degree of
self-agency. The strong principle underlying cognitive mapping is that of system thinking, as
pointed out by Sherwood (1999). The notion of a cognitive map as being a diagram of influences
among entities belonging to the system reflects the view that, in order to understand (predict and
control) a system, one needs to understand more than the individual parts alone. The concept of
connectedness is as fundamental to causal mapping as it is to system thinking. One of the
landmarks in the use of such approach in management is the work of Checkland (1981), which is
embodied by his Soft Systems Methodology (SSM). SSM is a process for managing in the broad
sense: a process of achieving organised action. According to Checkland, life world is an ever
changing flux of events and ideas and ‘managing’ means reacting to that flux. We perceive and
evaluate, take action(s) which itself becomes part of this flux which lead to next perceptions and
evaluations and to more actions and so on. It follows that SSM assumes that different actors of the
situation will evaluate and perceive this flux differently creating issues that the manager must cope.
Here, SSM offers to managers the systems ideas as a helpful weapon to tackle problematic
situations arising from the issues. The world outside seems highly interconnected forming wholes,
therefore it seems that the concept “system” can help us to cope with the intertwined reality we
perceive. The methodology is summarised as follows: identify the situation considered problematic;

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express the problem situation; name relevant human activity systems in ‘root definitions’; build
conceptual models from the root definitions; compare models of the situation and the real world;
identify systematically desirable and culturally feasible changes; take action in the situation to bring
some improvement. The basic structure of SSM rests on the idea that in order to tackle real-world
situations, we need to make sure that the ‘real-world’ is separated from the ‘systems thinking
world’. This distinction is crucial for SSM because that assure that we won’t see systems ‘out there’
that are in the real world. SSM urges us to consider ‘systems’ as abstract concepts, which use can
eventually help us to bring some improvements to the situation concerned. Although Checkland
has expressed a most flexible way of applying his ideas in his later work, the seven stage
methodology is still the most convincing and helpful account of the systems thinking enquiry.

5. Summary
We have described and examined the steps for the application of two strategic knowledge
elicitation techniques – scenario building and causal mapping – with regards to the learning skills
required at each step. This led us to represent the application process of these techniques as a
holonomic cycle of knowledge development, giving them a common integrative approach. Each
methodological step was associated to one of the holon quadrants – consciousness, cultural,
social, and behavioural. In scenario bulding, steps one to three require a combination of agentic
(individual) and abstract (interior) learning skills in order to tease out the elements that will make up
the fabrics of collective knowledge later in the development cycle. Thus these steps have been
positioned in the consciousness quadrant. Steps four to six resort to a high degree of abstraction
and conceptualization in combination with communal, networking learning skills. Thus these steps
have been positioned in the cultural quadrant. Steps seven and eight make intensive use of
participants’ communal, multifocal learning skills combined with interactional skills, in order to
discuss and validate the findings. Thus these steps have been positioned in the social quadrant.
Finally, in steps nine to twelve team members should display a high degree of concrete learning
skills, outward looking with emphasis on self-agency. Thus these steps have been positioned in the
behavioural quadrant. In causal mapping, performing steps one to three requires mainly an agentic
(individual) and abstract (interior) set of learning skills from the ones involved in the process in
order to elicitate the scope (number of nodes) and depth (nature of the nodes) of the causal
network. Thus these steps have been positioned in the consciousness quadrant. In steps four to
six, a predominant abstractive and multifocal learning skills are required from the team. Thus these
steps have been positioned in the cultural quadrant. Steps seven and eight calls upon networking
skills combined with practical and externally oriented skills. Thus these steps have been positioned
in the social quadrant. Finally, steps nine and ten makes intensive use concrete outward looking
learning skills, with emphasis on self-agency, positioning them in the behavioural quadrant.

References
Argyris, C. and Schön, D. (1974) Theory in Practice: increasing professional effectiveness, Jossey-
Bass, San Francisco.
Argyris, C. and Schön, D. (1978) Organizational Learning: a theory of action perspective, Jossey-
Bass, San Francisco.
Bryson, J. et al (2004) Visible Thinking, John Wiley, Chichester.
Checkland, P. (1981) Systems Thinking, Systems Practice, John Wiley, Chichester.
Drucker, P. (1968) The Practice of Management, Pan, London.
Edwards, M. (2005) “The Integral Holon: a holonomic approach to organisational change and
transformation”, Journal of Organizational Change Management, Vol 18, No.3, pp269-288.
Hodgkinson, G. and Sparrow, J. (2002) The Competent Organization, Open University Press,
Buckingham.
Kolb, D. (1984) Experiential Learning, Prentice Hall.
Koestler, A. (1967) The Ghost in the Machine, Arkana, London.
Nonaka, I. and Taukeuchi, H. (1995) The Knowledge-creating company: how Japanese companies
create the dynamics of innovation, Oxford University Press, Oxford.
Ringland, G. (2002) Scenarios in Business, John Wiley, Chichester.
Sherwood, D. (1999) Seeing the Forest for the Trees: a manager’s guide to applying systems
thinking, Nicholas Brealey, London.

754
Facilitating the Generation of Research Questions using
a Socratic Dialogue
Dan Remenyi
School of Systems and Data Studies, Trinity College Dublin, Ireland
[email protected]

Abstract: The Socratic Dialogue may be used as a technique for facilitating conversation and reflection as a
means of developing suitable research questions. The essence of this approach is that the discussants share
experiences and in so doing they not only learn from each other but also identify interesting areas for
research. The technique is affected through a structured conversation or discourse which is used to explore
an agreed issue. The Socratic Dialogue ‘conversation’ consists of three steps or stages and is suitable for six
to eight participants who may be colleagues or knowledge informants. It also requires a competent facilitator
who can guide the group through its conversation and reflection.

Keywords: Socratic dialogue, discourse, learning, discovery, reflection, research questions, dialectic,
conversation, experiences

1. Introduction
In business and management studies research questions often arise as a result of conversations
and reflection. This paper discusses how the Socratic Dialogue, which is technique for the
encouragement of conversation and reflection (Saran and Neisser 2004), may be used to facilitate
the developments of research questions. Developing a research question is a very personal matter
and mechanistic approaches will not often facilitate useful questions and thus the Socratic Dialogue
alone would not be an ideal approach to settling on a research question. However if it is used
correctly it can point the way to topics and issues which may then lead to research questions.

Finding a suitable research question is a non-trivial part of any research project or research
degree. The difficulty arises because the research question needs to have a number of
characteristics which are sometimes hard to fulfil. It is important that a research question has
most if not all of the following attributes. The research question needs to be 1 :-
1. of direct interest to the researcher and to his/her supervisor;
2. based on a real problem recognised by the academic community or practitioners in the field,
and preferably both;
3. associated with one or two established fields of academic study, and preferably not more
than two;
4. referred to directly or indirectly in the academic literature;
5. answerable by academic research practice;
6. if empirical then appropriate evidence is, or will become, available;
7. neither too wide ranging or so complex that it is unreasonable to expect it to be answered
within the usual time allowed for a research degree;
8. reducible to sub-questions which may be answered directly by the collection of evidence;
9. Capable of being expressed in a clear and unambiguous manner.
Because of the difficulty in finding a suitable research question, research degrees are sometimes
started without having established a clear question in the hope that one may arise as a result of
exploratory research during the first few years of the degree. However it is not unusual for
research degree candidates to be still struggling for a suitable research question some years
after the research degree has been formally commenced 2 .

1
Some of these atributes of a reseach question are interdependent and the list should not be considered to be in order of
importance.
2
Research degree practice in the United Kingdom today normally required a research degree candidate to have submitted
a research proposal which should include a fully developed research question. However even where this is strictly adhered

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2. The question of the question

Advice offered to those commencing a research degree has traditionally been that a research
question needs to be found through a thorough investigation and understanding of the academic
literature. This meant that a research question would be discovered with the aid of some previous
researcher identifying a problem and pointing out its potential for future research either in a
published paper or perhaps in the final chapter of a research dissertation. A strict implementation
of this approach meant that real problems experienced by practitioners, unless they were also
referred to in the literature, were not eligible to be considered as a suitable research degree
subject.

It is now thought that this approach is too restrictive. Insisting that the research question
originated in the academic literature, assisted in establishing and maintaining rigorous research
standards, but at the same time it also lead to research questions being less relevant than they
could or indeed should have been. It has now been established in the business and management
field of study that a research question may be found by reference to current business situations –
problems, challenges or opportunities. This does not, of course, release the research degree
candidate from knowing the literature, but it does give the individual a different starting point. The
problem which is now faced is that current business problems, challenges or opportunities are
often not understood or expressed in such a way that they can be easily reduced to useable
academic research questions. Sometimes what management suggests as a problem is actually
not the case 3 . Sometimes managers are not especially articulate about their problems and
challenges. Sometimes the expression of the issues is too vague or high level to be used as a
research question. In these circumstances the research question has to be teased out so that the
issues are clear and the question complies with all or most of the question characteristics
described above. Teasing out questions usually means discussing the issues with several people
and trying to find some degree of consensus. The Socratic Dialogue is a technique for facilitating
this as an appropriately structured conversation and subsequent reflection can assist in
highlighting the real research issues.

3. What is this Socratic Dialogue?

The Socratic Dialogue is so called because it is based on a question and answer process which
is not entirely dissimilar to that described by Plato as the dialectic and who attributed the
development of that technique to Socrates. The traditional dialectic was originally conceived as a
conversation between two people. Socrates, when he visited the marketplace in Athens, is
reputed to have engaged individuals in controversial conversation and argued with them one at a
time. He is said to have been a past master at this and was always able to point out the
weaknesses and the fallacies in other people’s arguments 4 . Socrates normally achieved this by
pointing to experiences which he and his victim could agree supported Socrates argument.

In the 21st century this one-to-one approach would take too long to have any real impact even
among relatively small groups of academics and their informants. In any event, it is now felt that
perhaps more depth as well as breadth can be achieved when a group of individuals are involved
in these dialogues as this offers a wider range of different insights. The original Socratic model
relied on one ‘master’ who dialogued with the learners. The new approach allows multiple
individuals to benefit from multiple experiences. There is quite intentionally no ‘master’.
Everyone’s experience is equally valid and the facilitator plays a background role. The Socratic
Dialogue is specifically not a debate – it an exchange and exploration of experiences.
Although insights will come from participants hearing they speak as well as engaging in
discussion, most of the benefit comes from active listening. What is said by the participants
of the Socratic Dialogue is of course key to its success and here the facilitator needs to be
careful that only experiences of the participants are discussed. Thus to be a member of a

to, research degree candidates can change their minds and find themselves without a research question well into their
degree registration.
3
It has sometimes been said that management is not really the art of solving problems but rather the art of finding out
exactly what the problem is.
4
As Socrates did not write an account of this himself we only have Plato’s account of what actually took place.

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Socratic Dialogue and to get full benefit from it, an individual needs to be enthusiastic about
sharing experiences and hearing the thoughts of others 5 .

It is also the case that all the individuals who participate in the Socratic Dialogue may benefit
from the conversation and reflection. It is not simply a tool which will benefit the researcher
alone.

4. The Socratic Dialogue applied to research questions

The first step in the Socratic Dialogue involves bringing a group of appropriate people together,
say, six to eight, to closely examine an opening question 6 . Ideally the question should be made
known to the individuals in advance and they all need to be familiar with the issues involved and
be prepared to share their experiences with each other. The questions which are amenable to
this are wide ranging and many. A few examples of such questions are:-
1. What is the nature of effective knowledge management?
2. How could the real benefits of intellectual capital be harvested?
3. What is the nature of good leadership?
4. How are we to improve our understanding of our client base?
5. What would help us achieve a greater commitment from our colleagues to our corporate
strategy?
6. In what way could we obtain a greater delivery of benefits from our information systems?
7. What are the most critical human resource challenges which we currently face?
These examples of an opening question are, in academic research parlance, possible research
topics that can be explored with a view to helping in the establishment of a research question.

It is important to focus on the fact that the conversation generated during the Socratic Dialogue is
required to be entirely experientially based. This means that participants are not allow to discuss
the question in terms of anything other than their own personal experiences with the issues
involved. Mentioning theoretical views on the subject is generally not allowed.

5. Discovery as a way to knowledge

At the heart of the Socratic Dialogue is the notion of learning through discovery. This discovery
operates by creating an opportunity for debate and reflection in a non-threatening conversational
setting. This objective enhances understanding by discussing the actual experiences of the group.
The group needs to be open, non-adversarial and needs to treat all opinions as equally valid and
important. Ideally the group should be relatively small. Members of the group may come from
diverse backgrounds but care has to be taken with individuals from different status levels.

In addition to examining research topics and research questions the Socratic Dialogue is
generally used to:-
1. encourage participants to think independently and critically, and to then reflect on that thinking;
2. build self-confidence in individuals own thinking;
3. answer a philosophically oriented question and to endeavour to reach consensus,- i.e. to reach
an outcome;
4. engage in the co-operative activity of seeking answers to questions and to understand each
other through the exploration of concrete experiences;
5. Deepen individual insights and understandings.

5
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Ideally the Socratic Dialogue leads to a consensus among the individuals. But participants may not
always reach a definitive outcome in the form of totally agreed research question or even a set of
possible research questions. This should not necessarily be seen as a failure, as the Socratic Dialogue
experience itself promotes reflective learning which is useful in the research process.

6. The process of a Socratic Dialogue 7

The process of a Socratic Dialogue requires the use of a set of guidelines or rules which, although not
inflexible, need to kept consciously in the mind of the facilitator.

At the outset it needs to be said that no philosophical training 8 is needed to be part of a Socratic
Dialogue. Openness and an interest in learning from others are perhaps the only qualifications
required to derive benefit from a Socratic Dialogue. A firm but sensitive facilitator is required who
can ensure that the group does not stray too far off the subject and that no one person dominates
the discourse.

Before the group assembles an appropriate question needs to be established. This question
needs to be well-formulated and general in nature. As it is effectively a research topic it
should not be a long and complex question. Each member of the group needs to be made
aware of the question in advance and be asked to reflect on their experience regarding the
issue in the question. The only qualification for being a participant in a group is that the
individual has some direct experience of the subject matter being discussed.

7. Discourse in five parts

There are five parts to a Socratic Dialogue. These are:-
1. The telling of the original stories;
2. The choosing of one story to explore in detail;
3. The retelling of the story and the detailed conversation and reflection;
4. The compiling of what has been understood and learnt from this detail;
5. The confirmation of how these understandings relate to all the original stories.
When the group assembles each participant is asked to recall a real life experience which is
directly related to the question or topic. Each story should be told in no more than three minutes
and the facilitator should keep the speakers to the time limit. A list of titles or key words for these
different stories should be compiled by the facilitator as they are being told.

When all the stories have been told the group itself chooses one of these stories/experiences to
examine in detail. Specifically the facilitator should not influence the choice of the story. It may
take a while for consensus to be reached as to which experience is the most relevant or the most
effective to closely examination. The member of the group who has provided this story, and who
is referred to as the example giver, needs to be prepared to recount the story in as much detail as
he or she can recall, and also be prepared to be questioned about this experience by the other
members of the group.

The story is now retold by the example giver in five to ten minutes. This provides a broader and a
more in-depth perspective of the experience being discussed.

Members of the group are encouraged to ask questions which come into their mind without too
much analytical thought. These questions may seek background information or details of the

7
A Socratic Dialogue is not to be confused with the Socratic Dialogues (Greek Σωκρατικός λόγος or Σωκρατικός
διάλογος), which are prose literary works developed in Greece at the turn of the fourth century BCE, preserved
today in the dialogues of Plato and the Socratic works of Xenophon - either dramatic or narrative - in which
characters discuss moral and philosophical problems, illustrating the Socratic method. Socrates is often the main
character. http://en.wikipedia.org/wiki/Socratic_Dialogue viewed 25 March 2006
8
See website http://www.sfcp.org.uk/socratic_dialogue.htm viewed 25 March 2006

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actions, attitudes and values of the individuals involved in the example. This part of the Socratic
Dialogue may take between one or two hours.

The retelling of the story of the real life experience needs to be transcribed, at least in summary,
as do all significant comments made by the other members of the group. The discourse between
the members of the group needs to unfold slowly and carefully with as much consensus in
understanding as possible being established on a step by step basis. Here any conflicts
(differences of opinion or differences in usage of language) should be resolved if possible and a
genuine attempt be made to formulate shared insights and knowledge. This will become the
overview of the discourse or dialogue and is used to summarise the key issues raised during the
dialogue. This activity will need about half an hour. Each member of the group is now asked if
their individual story relates to the summary created. The extent to which the summary reflects the
essence of each story is discussed and the summary changed if this discussion reveals new
dimensions of the story. This process may require up to half an hour.

8. Drawing out research questions

Once the overview has been established then the discussion needs to turn to the issue of
research questions. The overview as a statement based on a summary of individual experiences
will inevitably contain issues which could be further explored. Identifying these issues will produce
a list of possible research questions. As mentioned above the Socratic Dialogue cannot be relied
on to produce research questions in any mechanistic way. What it does is produce a collective
understanding of a topic which will usually lend itself to further exploration and thus to research
questions.

9. Making the Socratic Dialogue work

The Socratic Dialogue is actually an exercise in learning through exchanging experiential
knowledge that leads to new insights or discoveries by reflection. The group members need
to be honest in the recounting of their experiences and to be honest in describing their
personal reactions to the experiences of other members. The Socratic Dialogue should be as
judgement free as possible. Any suggestion that a member of the group is being judged by
the other or by the facilitator will reduce the value of the event. Members’ thoughts need to
be expressed as clearly and simply as possible. If something is not clear then it should be
discussed until everyone understands the point being made. This requires at all times careful
attention to the discussion. If members of the dialogue become tired then they should advise
the facilitator who may call for a break for refreshments. There should in fact be a number of
refreshment breaks as in general running a Socratic Dialogue for more than an hour and a
half without a break is not advised.

It is important that no one individual or group of individuals dominate the Socratic Dialogue. If
this occurs then any member of the dialogue may ask the facilitator for a break for the
purposes of having a meta-discussion. A meta-discussion involves talking about how the
Socratic Dialogue is proceeding. Normally there is little need to have these meta-
discussions. When they do arise they should be concluded as quickly as possible so that the
group may return to the main purpose of the event. If any member of the dialogue feels that
the discussion is drifting way from its original purpose then he or she may also call for a
strategy-discussion. Strategy discussions are used to refocus the dialogue if it has wandered
away from the original point.

10. The facilitator and the Socratic Dialogue

A skilled facilitator greatly enhances the Socratic Dialogue. The function of the facilitator is to
ensure the smooth running of the meeting and to bring all the members of the group into the
discussion.

The facilitator will normally keep the record of the different experiences and will also act as
scribe for the overview of the detailed study on the chosen experience. It is important that
the facilitator does not attempt to influence the direction of the discourse. The discussion

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may stray off the subject and provided these lapses are not for long or too far from the
question they may be tolerated. However in the end the facilitator should bring the
discussion back to the issue for which the Socratic Dialogue was initiated.

11. Timing and the Socratic Dialogue

A Socratic Dialogue may be structured in several different ways. Firstly a Socratic Dialogue
may be run as one continuous event. Of course this does not imply that there are no
refreshment breaks. In such a case using a large group, say ten people, then a whole day of
eight hours would be required to complete an event. Some events may require a little longer,
perhaps twelve hours. Smaller groups may require less time say three or four hours. In some
circumstances it may not be possible for individuals to make such a long period of time
available. In these cases the Socratic Dialogue may be conducted in a number of parts or a
number of sessions. The first session might run until the group has listed its experiences and
perhaps chosen the one which they wish to study in detail. Then two or three sessions of
one hour each could be put aside to elaborating on the one chosen example. In this way the
Socratic Dialogue experience could be obtained over an extended period.

12. Some final points

The Socratic Dialogue facilitates learning through discovery by reflecting on actual
experiences. Therefore the conversation needs to be based on real experiences, which
means avoiding what Shakespeare referred to in Othello as, “Mere prattle without practice 9 ”.
These experiences need to be discussed actively by all the members of the group who need
to say what they really think and in an ideal situation the discussion needs to proceed until a
high degree of understanding and consensus is reached. Thus in a Socratic Dialogue there
is a need to start with the concrete experience and remain in contact with this experience
throughout the entire event. Proper insight is gained only when the link between any
statement made and personal experience is explicit 10 . This means that a Socratic Dialogue
is a process which concerns the whole person. The members of the Socratic Dialogue
should attempt a full understanding of each other. This involves much more than a simple
verbal agreement. Participants should try to be clear about the meaning of what has just
been said by testing it against their own experiences. In ideal circumstances the limitations
of individual personal experience which stand in the way of a clear understanding should be
made conscious and thereby it is hoped that this limitation will be transcended.

Beware of being distracted by less important questions. Following a subsidiary question until a
satisfactory answer is found may be useful, but again it may not be. Groups often bring great
commitment to their work and gain self-confidence in the power of their intellect or reason. This
may mean not giving up when the work is difficult. Sometimes the discussion has to move on, but it
may return to the problematic issue again. An honest examination of one’s thoughts and the
thoughts of others is essential. This honesty may help with the striving for consensus although
consensus itself may not necessarily arise.

13. Conclusions
As a final thought it is worth pointing out that this type of shared learning will not suit all research
topics or indeed all researchers. Some researchers find listening to members of a group such as
this tedious. There are also situations in which the Socratic Dialogue will be cumbersome –
perhaps if there are too many views for the Socratic Dialogue to be effective. However there are
many situations in which the Socratic Dialogue will help tease out research questions from a
research topic and will thus be of use to a researcher.

Reference
Saran R and Neisser B, (2004), Enquiring Minds, Trentham Books, Stoke-on-Trent.

9
Othello Act 1, Scene 1 line 26
10
See http://www.sfcp.org.uk/socratic_dialogue.htm viewed 25 March 2006

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