CHAPTER II

THEORETICAL BACKGROUND TO KNOWLEDGE MANAGEMENT

2.0 Theoretical background to Knowledge Management

Knowledge Management is a conscious effort formulated to integrate the

employees of an enterprise in a systematic way to manage the knowledge resources of

the organization existing in expressive and implied form for achieving the organization

goals. KM per say can’t be summarized based on historical facts, since the knowledge

management is dynamic in nature; evolved over a period in a phased manner, taking

place within and outside the organization context.

KM as a concept emerged popularly between 1990 & 1995 (Schutt, 2003). This

phase is associated with technology and with a focus on identifying, capturing and

storing information to be used for decision making in the future (Hasan, 2011, Bedford,

2012). The second phase of knowledge management evolved during 1995 to 2000 and

it emphasised on knowledge that exists within the people, communities & organization

and made a shift from technology to people orientation and brought in considerable

insight on managing the tacit and explicit knowledge (Schütt, 2003). During this phase,

SECI model came to limelight. The model explains the methods to convert tacit

knowledge to explicit and vice versa, popularly referred to knowledge capturing

concept (Nonaka., et.al., 1995). The concept of KM focussed on the ways and means of

capturing and using knowledge that resides in people, communities and organizations.

The contemporary researchers focus the importance of managing the knowledge

from the perspective of content, methods and context in a holistic way (Snowden, 2002;

Handzic, 2006). Knowledge here is viewed as thing and flow. The flow as a concept in

defining knowledge can be visualized from Stacey’s (2001:4) phrases in defining the

knowledge as “an ephemeral active process of relating”. This implies the manner in

which the knowledge is transformed from an individual to other or from an individual

20
to tacit form. The idea is to manage the knowledge in an integrated manner without

delimiting and treating knowledge as a thing and flow. The optimal way of manging

knowledge would be focusing on the context than the content (Snowden 2002:101).

Before defining KM, it is appropriate to go into the constituents of knowledge

management namely knowledge and management. Knowledge or knowledge

management can't be defined in a single term or in a simplified manner. The word has

multitude of views and perspective based on the context and the researcher’s

interpretation. We can rationalize this diverse view since the concept of knowledge is

developed, shaped and evolved over a period of time by various thinkers and

researchers. Unlike any other scientific facts which are discovered, knowledge is a

concept developed and derived over the years. Hence, knowledge or Knowledge

Management is fraught with multiple definitions.

2.1 Definition of Knowledge

Knowledge is a multifarious term and the dictionary definition of knowledge is

“familiarity or understanding gained through experience or study or from instruction, a

person’s range or scope of information, learning, science, the sum of what is known,

instruction, wisdom, schooling, information, cognition, the process of knowing and the

philosophical view as certain or clear apprehension of truth or fact” (Cassell, 1998).

It is self-explanatory that the definition has multiple meaning. It is difficult to give

universally accepted definition for the term ‘knowledge’. Before we get into the various

perspectives on knowledge, the first step is to understand the basic definition of

knowledge.

21
 Figure:2.1 - Hierarchy of knowledge
(Source: http://www.systems-thinking.org/dikw/dikw.htm)

Data is defined as words, images, facts, numbers, sounds, derived from

observations or measurement. ‘Information is data classified with a meaning to it.

Knowledge is defined as using, analysing and obtaining insight of data and

information. In a way, the term knowledge is viewed as information or data coated with

intellectual cover on it, assisting the user in interpreting, attaching meaning and

visualizing in a structured manner linking with existing system of belief and knowledge

repositories. Knowledge therefore gives an insight to analyse the data, understand it,

provides perspectives about the casualty of events or actions and assists in actionable

decisions.

From epistemological perspective the knowledge is characterised in diverse

perspectives such as Positivist Vs Non positivists view or Objectivist vs Practice-based

view. The literature reviews throw up multitude of views shaped and developed by

various researchers and at times some concepts overlap others in narrating it.

2.2 Approach to Knowledge

The scholars, philosophers and industry experts had diverged views on

describing the knowledge and its manifestations. The substantial theme on the debate in

the literature revolves around two distinctive perspective namely positivist and non-

22
positivist in the early stage. The classification between these two groups of views is due

to two different themes namely ‘positivism and constructivism’ (Vera and et.al., 2003),

perceptive and cognitive verses social and constructionist, possession verses methods,

or cognitive possession versus social-methods (Chiva and Alegre, 2005). However,

many researchers take a combination of both thoughts and coined it pluralist

perspective. Hence, different standpoint of knowledge emerged leading to three

different perspectives on knowledge management (Alavi & Leider, 2001).

Positivist Perspective about Knowledge

The proponent of positivism theory reckoned “knowledge is justified true

belief”. They, believed knowledge as either an entity or a commodity. Hence, the

importance is given to possess this knowledge and to fortify it. Thus, knowledge is the

collective portrayal of the world comprising number of substance and occurrence. As

per this theory, knowledge is defined as universal, similar to scientific laws wherein

two perceivers cognitively view and understands an object or situation in a similar way.

In this, knowledge appears in an explicit form and adheres the law of objectivity.

Hence, the proponent of positivist thought views knowledge as explicit and it can be

captured, stored and reused by the people. Learning according to them is incremental

representations. Therefore, knowledge exists already and it is not dependent of the

subject. Hence, knowledge is not created newly by the subject or by acting on the

already existing knowledge (Chiva & Alegre, 2005). Knowledge can be transformed

into action that helps in decision making or practical problem solving in organization

(Tranfield & Starkey,1998).

Non-Positivist Perspective

The non-positivist perspective differs in treating knowledge as a commodity

that can be acquired and deployed into use like any other things. This school of thought

23
interpreted the knowledge as socially developed and over a period of time it is

collectively captured within the organization (Chiva et.al., 2005). Knowledge changes

based on the contexts the people operate. As per this school, knowledge is a process

created by acting or constructed by interacting. Thus, knowledge means something that

is in action and not based on possession (Chiva et.al., 2005). The non-positivist

believes practice and community of practice is the critical aspects of knowledge. The

members of the community come together based on their activity they perform to share

their knowledge is referred to community of practice. The members in the community

are interconnected in terms of their actions and the meaning of the action working for

the betterment and for the community as a large (Lave et.al., 1991).

To sum it up the non-positivist’s beliefs that the enquirer and the phenomenon under

enquiry are inseparable in the knowledge process. They disagree on the proposition of

knowledge coming before the action. The knowledge is developed through practice and

evolved in a systematic manner as an extension of practise.

Pluralistic Perspective

This school of researchers proposed an alternative perspective by combining

and synthesizing from positivist and non-positivist thinkers. They believe organizations

have varied knowledge. It is important to recognize this knowledge and evaluate it for

the purpose of applying it effectively. The effectiveness can be achieved by locating,

creating, making it available and putting into use for the organizational benefit.

(Orlikowski, 1996). The most popular taxonomy of the knowledge widely discussed in

the literature is the tacit and explicit knowledge. The knowledge that can be captured in

a formal and systematic way is referred to explicit knowledge. The knowledge exist in

abstract form, resides in the heads of the people, difficult to capture and formalize it is

24
referred to tacit knowledge. The process of converting tacit to explicit and vice versa is

proposed in the SECI model Nonaka, 1994).

Objectivist Perspective

Objectivist perspective considers knowledge as a thing possessed by people or a

group and is termed as “epistemology of possession”. As per this, knowledge exists in

the form of documents, figures, operating procedures, manuals, etc., that are explicit in

nature and it can be created and understood free from individual subjectivity (Cook and

Brown 1999). These ideas emanate from positivism philosophy founded by While

Comte a French philosopher and Durkheim adopted this in sociology. According to this

social episode is quantifiable and measurable, it agrees to the principles and laws

governing the science resulting in the formation of objective knowledge. The other

important characteristics of the objectivist knowledge is the emphasis of explicit

knowledge over the implied knowledge. Explicit is regarded as objective knowledge,

whereas implied or tacit knowledge is challenging to articulate in expressed forms,

exist more causal in nature, highly subjective, hidden within the cultural ethos and

based on the premise of those who possess and apply it (Sayer, 1992). The explicit

knowledge can be codified and documented in a methodical manner for future use

(Nonaka, 2000).

The objectivist consider knowledge as cognitive and intellectual entity that can

be codified. Knowledge is dynamic in nature and is continuously created in new form

through active interaction between explicit and implied knowledge (Nonaka and

Takeuchi 1996, Nonaka et.al., 2000). As per the objectivist perspective, the process of

managing the knowledge gives importance to codification of knowledge and sharing

within the organization for effective usage. Thus, technology is the backbone of KM

initiatives as per the objectivist perspective.

25
Knowledge as a Practice based perspective

The objectivist proponents defined knowledge as an entity separate from the

holder of it. The researchers differ on the objectivity concept and different

epistemological assumptions characterises knowledge in multiple ways. The concept of

practice is the result of human activity involving physical and cognitive components

that are inseparable. Knowledge is rooted in practice, implied and explicit knowledge

are inextricable, embodied in people, socially constructed and culturally integrated

(Donal Hislop, 2005). Knowledge is not something the people have, but it is something

they do. Knowledge and development of it is a continuous process occurring through

the routine activity that the humans do (Gherardi 2000). The knowledge is a

combination of two aspects namely expressed and implied and are inextricable and

reciprocally constituted (Tsoukas 1996, Werr and Stjerberg 2003).

The ability of the individual to make personal judgement is unique and depends

on the context. Even though there are written rules and procedures exists, it requires

applying judgement in implementing it, a unique feature of the individual

differentiating from others due to their expertise (Tsoukas 1996).

Knowledge is multidimensional in nature and poses a challenge to define in

simple terms. Many writers criticise defining knowledge is only of use from analytical

point of view and it doesn’t reflect the complexity of organizational knowledge. Also,

because the knowledge can be subjective and socially embodied, it opens up

uncertainty in describing the constituents of the real knowledge.

2.3 Definition of Management

A generally accepted definition of management from classical view comprises

collection of activities directed in amalgamating various resources of the organization

to achieve the objective of the organization in an efficient and effective manner. In this

26
way the organization consists of collection of people who work together in an

organized manner to achieve the organizational purpose. The organizational theory

refers this approach as unitarist view (Burrell and Morgan, 2009:204). The unitary

theorist standpoint, management neglect the existence of power in the organization and

it generally considers conflict as a rare event created occasionally and it can be easily

manageable. The political theory defines management as reflective social effort

denoting ‘influence over employees and through employees.

The pluralist theory states that organization consists of people loosely

associated with varied interest and they are guided to achieve the organizational

objectives through achieving their individual goals. This view recognizes the existence

of conflicts and it is inevitable in the organizational context and the power plays a

critical role in comprehending and handling the conflicts.

Organization is a political system that utilizes the power, influence and political

manoeuvring to achieve the goals. Hence, the theory based on political model considers

organizational theory from the pluralist standpoint and it gives rise to various sub units

each one of them having their own objectives, interests and sub cultures (Baldridge,

1972 in Varman and Bhatnagar, 1999:353). It is challenging to agree either unitarist or

pluralist perspectives of organization management. It gives varied perspectives and

subtle differences on the concept of organization (Burrell and et. al., 2009, Hatch and

et.al., 2006;14).

To summarize the management is a complex and highly diffused with multitude

of opinions. The unitarist perspective rules out the existence of power or control and

assumes the absence of conflicts in the organization. However, contrary to the above

belief, there exists conflicts and disagreement leading to the tactics of influence through

power and control.

27
2.4 Defining Knowledge Management

The literature reveals multitude of opinion based on varied ideologies. The

consensus to arrive at uniform definition eludes due to divergent conceptual approaches

to knowledge and management. In spite of the contradiction, the concept of knowledge

management deserves its due and it make sense in a larger context (Alveson and

Karreman, 2001).

Researchers disagrees to the idea of knowledge being unmanageable and it

depends on the way an individual comprehends the term ‘knowledge’ and

‘management’. The concept of KM is a derived one rather than an invented or

discovered one. Knowledge Management needs to be understood in holistic manner

rather than analysing its constituent parts. It is subjective in nature than objective and

accordingly it is context and situational based. Hence, the unified definition may not be

feasible due its subjectivity. The empirical evident indicates that universal concept of

KM is fragile, undesirable and leads to confusion. KM is situation based and hence,

defining it is a matter of subjective analysis of the concept within the organization

(Dalkir 2005).

The academic debate on KM definition is a never-ending storey and it only

leads to inconclusiveness. However, we capture the KM definitions put forward by

authors over the years in the following table 2.1.

28
 Table 2.1 Summary of Knowledge Management definition
Author Definition of knowledge management
Is the conceptual framework that encompasses all activities
and perspectives required in gaining an overview of,
Wiig (1995) creating, dealing with, and benefiting from the corporation’s
knowledge assets and their particular role in support of the
corporation’s business and operations.
KM is to discover, develop, utilize, deliver, and absorb
knowledge inside and outside the organization through an
Ouintas et al. (1997)
appropriate management process to meet current and future
needs
Sequential processes of organisational knowledge consist of
Demarest
underpinning, observation,
-1997 instrumentation and optimisation of this knowledge.

Processes through which the organisational intellectual

capital can be transferred into value. These processes could
Knapp (1998)
be innovation, knowledge creation, knowledge acquisition,
knowledge organisation and/or knowledge application.

KM is managing the corporation’s knowledge through a

Allee (1997)
systematically and organizationally specified process for
Davenport (1998)
acquiring, organizing, sustaining, applying, sharing and
Alavi and Leidner
renewing both the tacit and explicit knowledge of employees
(2001)
to enhance organizational performance and create value

KM is an organisations’ systematic effort to exploit the

Holsapple and Joshi
available knowledge in order to gain value and obtain
(2000)
positive results.
KM is a process that helps organizations find, select,
Gupta et al. (2000) organize, disseminate, and transfer important information and
expertise necessary for activities
KM is a process of knowledge creation, validation,
Bhatt (2001)
presentation, distribution and application
A managerial activity which develops, transfers, transmits,
stores and applies knowledge, as well as providing the
Hung, Huang, and Lin
members of the organization with real information to react
(2005)
and make the right decisions, in order to attain the
organization’s goals. (p165).
K Wong and Aspinwall Managing and optimising the organisations knowledge
(2006) resources through formal and active approach.

29
(John Girad & JoAnn Girard, 2015), attempted to define Knowledge Management in

most practical terms by enumerating more than 100 definitions given by thought

leaders from 13 countries and 23 domains. He critically evaluated all these definitions

by analysing root words that shapes the definition. There are 90 words repeatedly

mentioned more than 4 times and further iteration of considering words being repeated

for more than 30 times, he arrived at an Applied Knowledge Management definition.

“Knowledge Management is the process of creating, sharing, using and

managing the knowledge and information of an organization”.

“Knowledge Management is the management process of creating, sharing and

using organizational information and knowledge”.

Our study approach will be based on practical aspect hence, the collective and

simplistic definition distilled out of various thinkers is utilized for the current study

purpose.

2.5 Evolution of Knowledge Management

The KM definition has led to more divergent views than a pointed

understanding. In order to comprehend this in a holistic way it is appropriate to trace

the historical evolution of KM. Unlike other business topic, KM is relatively young

having just 30 years of presence with fluctuating popularity. However, the concept of

knowledge is time immemorial and it is linked to the human’s quest of knowledge and

betterment of growth. Managing knowledge has deep historical roots. If we purge

through the history, it is evident that our ancestors followed robust process of

transferring the knowledge to the peers and to the next generation (Land, Nolas and

Amjad, 2005). The human’s quest for ‘knowing and reasons for knowing’ is much

debated by various philosophers from western and eastern world. However, the

30
philosophical perspective of understanding what knowledge is abstract in nature. (Wiig,

1999)

In Indian context mythological literature throws the most popular knowledge

management process of gurukul system of learning. In this the teacher transfers the

knowledge through practice and intellectual debate. In addition, storey telling a part of

the Indian culture is used to transfer knowledge in the society. On further looking back,

in the history; hunting as a primitive profession, shared their knowledge on hunting,

tools and skills needed for the survival of their group.

Knowledge Management in the current scenario emerged at the end of twentieth

century (ibid; Dalkir, 2005). The emergence of ‘Knowledge Management’ and coining

the term is debatable. In the early days, KM is considered as a product to manage

knowledge through the use of technology (McInerney and Koenig, 2011:2).

(Snowden, 2002) outlined KM evolution in three phases namely first generation

focussed on capturing or codifying the knowledge and controlling it in a systematic

manner (McElroy, 1999). The second phase of KM was focused on creating and

capturing the knowledge and the process is influenced by human factor and culture

dimension. The third generation emphasizes KM as dual nature of thing and flow and

involves managing the content, the method and the context.

The chronological development clearly indicates that evolution of KM is work

in progress. KM as a concept is of interest for experts as a tool to manage knowledge

and an academic discipline for researchers. In the initial stage, KM evolved with the

help of technology for managing knowledge to improve the organizational efficiency.

Over a period of time, KM evolved to manage the abstract, unspoken and contextual

nature of the knowledge for the benefit of organization.

31
 (Nancy M. Dixon 2018), in her article “The three eras of knowledge

management’ succulently explained the evolution KM into three phases based on the

conceptualization of knowledge. The first phase reflects “leveraging explicit

knowledge” focusing on capturing knowledge in documented form and making it

available to all. The focus is connecting individual to the content. The next era

epitomizes “leveraging experiential knowledge” and this phase led to social networks

and ‘Communities of Practice’. This era focuses on connecting individual within the

group. The current era is all about ‘leveraging collective knowledge’ and epitomizes

“connecting ideas to other ideas”. The current era outlines the change in thought from

the initial to current era as “collection, to connection to conversation”, in other words

“learning as an individual task to learning in community to learning in public”. The

management of knowledge as a concept of controlling the content to creating mutual

faith among the organizational members to provide ways of thinking, moving from

short term manoeuvring of process to strategic approach.

2.6 KM Process and Practices

The importance of knowledge for both at the personnel level and at

organizational level is discussed extensively. Knowledge in any form in the

organization set up is critical, relevant and need to be managed. However, in an

organization, there are three critical areas of knowledge namely organizational,

marketing and technology need to be managed effectively.

Each firm has a unique knowledge and hence finding, aggregating, securing, acquiring,

distributing and reutilizing is critical for the effectiveness and efficiency of the

organization.

32
 Beijerse (2000) outlined simple stages to manage the knowledge in an

organization or by an entrepreneur in a SME. The organization need to explore the

necessity of the knowledge resulting in understanding of knowledge available within

the firm. Based on the need and its understanding of knowledge; organization can find

out the knowledge gap. The gap developed gives an insight of bridging it either through

internal development or acquiring externally. Once the knowledge is gained it needs to

integrated or captured within the organization through influencing factors such as

strategy, structure, and process. The knowledge captured eventually to be shared and

the sharing actively is largely affected by the organizational culture. Finally, the

effectiveness needs to be evaluated to form the basis for further knowledge exploration.

The process of KM is well researched; the authors have outlined various types

of KM process and choosing an appropriate KM process depends on the nature of the

organization and its context. Based on the choice of KM process, the KM practices

differs. A brief account of KM process by various authors is captured as under.

Table 2.2 - Summary of Knowledge Management Process

Nonaka & Takeuchi (1995):
Skyrme (1997):
Demarest (1997):
Ruggles (1998):
Zack (1999):
Alavi and Leidner (2001):
Bhatt (2001):
Beccara-Fernandez (2004):
Donate M.J, etal (2011):
Lee.S et al (2013), Gold et al
(2001), Mills A.M et al (2010):
Knowledge conversion (SECI spiral – socialisation,
externalisation, combination and internalisation).
Capturing information, generating ideas, storing information,
distributing information
Knowledge construction, embodiment, dissemination, use
Knowledge Generating, accessing, using, embedding,
representing, facilitating, transferring and measuring
Knowledge acquisition, conversion, discovery, synthesis,
elaboration,
preservation, mobilisation, presentation, evaluation
Knowledge creation, storage/retrieval, transfer, application
Knowledge creation, validation, presentation, distribution,
application.
Knowledge discovery, capture, sharing and application
Knowledge exploitation and exploration
Knowledge Acquisition, conversion, application and protection

33
 In short, we can conclude the KM Process proposed by authors are varied and it

differs based on the authors views. There is a general agreement on the importance of

managing the knowledge from academicians, KM consultants and business leaders.

Adopting KM process should be based on complete understanding and careful

assessment of the organizational knowledge and the purpose for managing it, failing

which the KM process may not give the desired outcome. The current study uses the

basic process reflecting the essence of managing the knowledge in a systematic

manner. The process comprises knowledge acquisition (KA), knowledge creation (KC),

knowledge storage (KST) and knowledge sharing (KSH). The following sections will

cover the individual KM process to understand the concept and its importance in

managing the knowledge (Khalil 2006).

Knowledge acquisition

Knowledge Acquisition is the fundamental process in KM and is also referred as

knowledge capture or seeking. Organizational learning approach research contributors

stated that the knowledge acquisition process comprises both internal knowledge

acquisition through learning and external knowledge. The internal knowledge is

attained through the intra-organizational interactions between the employees, between

employees and organizations by way of learning. The external knowledge acquisition

originates due to various business actions the enterprise undertakes leading to

interaction with external stakeholders such as customers, vendors, suppliers, etc. The

internal knowledge is attained by focussing on the process of learning within the

organization. According to Zollo and et. al. (2002) learning process in an organization

creates two sets of activities namely organizational routine and improvement of

routines through dynamic capabilities. The routines in an organization are of stable in

nature and it responds to both internal and external stimuli leading to two different

34
behaviours. The first behaviour comprises performance of organizational procedures

based on their accumulated experiences known to them and utilizing these experiences

to generate revenue for the organizations (Grant, 1996). The second behaviour attempts

to incorporate changes in routines in order to enhance the competitive edge of the firm.

(Teece et al., 1998).

The combined accumulation of experience assists the organization to develop

and establish routines within the organization and over a period becomes the tacit

knowledge. The entire process of accumulation of knowledge helps the organization to

innovate and move ahead on the technological front. The cumulative experience or

knowledge is dependent on the organizational capability to absorb knowledge

externally in addition to the internal learning. Organizations having higher ability to

absorb are more dynamic in nature and they proactively scan the environment for

opportunities.

The third approach to knowledge acquisition is through creative process where

knowledge is the answer to the problem in an organization. If the solution needs

moderate intensity of innovation and the organization have expertise in that problem

area, a simple strategy of sharing knowledge among individuals, groups and

organization will be sufficient in acquiring the knowledge. However, if the intensity of

the innovation needed is high, the transformation of specialized knowledge is required

and the transformed knowledge needs to be integrated within the organization Carlile &

Rebentisch, 2003).

Organizations are aware of the potential of knowledge, the need to acquire it

quickly and use it for business purposes to attain the competitive advantage. (McCall et

al., 2008; Schiuma et al., 2012). Thus, the new knowledge acquired enable the

35
organization’s ability to sense the opportunities and challenges more quickly to

generate timely strategies (Klein, 1980).

There are many practices outlined by researchers in the literature for the

knowledge acquisition process. Mentoring, inter-functional collaboration, Communities

of Practices, participating in R&D workshops or conferences etc., gives a great

opportunity for knowledge acquisition. Engaging a consultant, training and

development, designing specific knowledge sharing activities, informal relationship,

joint ventures, technology partnership, etc are other mode of sources for knowledge

acquisition.

Organisations need to bench mark against best performing competitors, analyse

the gap and designs strategies for adopting the best practices of the competitors is one

of the key sources of knowledge acquisition. (Beijerse, 2000) in his study identified

most commonly used knowledge acquisition practices and some of them are mentoring,

internship, apprentice, fresh talent hiring, job rotation, networking, engaging external

consultants or experts, attending training, workshops, conferences etc.

Knowledge Creation

The acquired knowledge from outside or synthesised within the organization

need to be applied in the business context, resulting in knowledge creation. The ability

of an organization to create new knowledge and integrate it with their product, services

or process is referred to knowledge creation (Nonaka & Takecuhi, 1996, p 58).

Creation of knowledge involves the transformation of latent knowledge to an active one

and utilizing it to increase the productivity, business growth and diversification

(Mathews, 2012). Creation of knowledge is a systematic process and is fundamental to

36
the organization. All the other KM process such as knowledge capturing, knowledge

acquiring and knowledge sharing enables knowledge creation in the organization.

(Nonaka & Takeuchi 1996), pioneered in researching the process of creating

knowledge through transformation and proposed the SECI model. The model explains

the method of converting tacit to explicit one and vice versa through continuous

interaction. The model comprises four basic components such as socialization,

externalisation, combination and internalization.

Socialisation involves converting tacit knowledge to explicit one,

externalisation process details the creation of explicit knowledge to explicit,

Combination stage outlines conversion of tacit knowledge to explicit one and

internalization involves methods of absorbing tacit knowledge by an individual or a

group through their internal mental mechanism.

Figure: 2.2 - SECI Model on Knowledge Creation Process

(Source: Nonaka and Takeuchi, 1996, p 71)

The knowledge creation to be effective requires a shared space for dynamic

interaction, interpretation and exchange referred to “Ba”. Absence of Ba is just an

information. The author proposes four type of “Ba: for the SECI model. The

37
Socialization phase requires face-to-face interaction, the externalisation process

requires dialogue and collaboration, combination process involves distribution of

knowledge through written form and internalization requires active and continuous

learning.

Knowledge Storing

Knowledge storing is one of the KM processes explained by many scholars.

There has been a debate that storage process involves more of technology and many

have attributed technology as a solution to the storage of knowledge. However, the

deeper insight on the type of knowledge namely tacit and explicit, the integration of it

within the organisation with the help of process, procedures, routines based on values,

believes resulted technology is not the only solution for knowledge storage. In an

organization knowledge is stored both in formal and informal means. The physical

memory systems represent the formal knowledge, the informal knowledge exists as

values, beliefs, procedures and rules created and facilitated through organization wide

culture and structure (Alavi and et. al., 2001; Argote et al., 2003).

(Grant 1996) explains that the objective of the organization is to integrate the

individuals specialized knowledge in to products and services through coordinated

effort. The structure, decision making process and reconciliation of individual goals

with the organizational goals influences the integration of the knowledge in the

organization.

Knowledge conversion is a business process making available knowledge for

the use of business. The conversion is done through the process of organizing,

arranging, storing, merging and connecting explicit knowledge such as indentures

documents, images and manuals with knowledge units. The purpose of storing is to

38
make available the knowledge to employees at the time of need. Hence, storing needs

to done appropriately through indexing and inter-linking various knowledge

repositories for easy retrieval and use (Lin, 2007).

The organizational memory appears in various forms such as formulated

procedures, policies, manuals, electronic repositories, expert systems and document

management system. IT enabled organizational memory influences performance of

individuals and organization as a whole. IT has an important role in knowledge storage

through encoding, sharing, creation of knowledge maps and network of knowledge

(Alavi & Leidner, 2001).

Based on the literature review, the knowledge storage can be grouped into three

basic principles in an organization. The first is the tacit knowledge retention essentially

based on individual’s capacity to absorb new knowledge through cognitive process.

The second principle is based on establishing suitable process in an organization

influenced through culture and organizational structure. The culture represents

organizational stored knowledge practiced through values, beliefs, symbols, etc that has

meaning to individuals or groups and the organizational structure represent knowledge

in the form of routines, procedures, rules, etc. The third principle is storing knowledge

in explicit form through IT as an enabler.

Knowledge Distribution

The knowledge is stored or manifested in various forms in the organization and

it is important to make it available for all through the process of knowledge transfer.

The explanation seems to be simple, but organizations are not aware what they know

and even if they are aware of their knowledge, it is challenging to locate, retrieve and

make it available when it is needed. The main driver of knowledge transfer is

39
communication process and flow of information within and outside the organization.

The communication flow is influenced by the characteristic of the knowledge provider,

medium of storage, transmission process and the ability of the knowledge receiver. The

transfer may be through formal or informal mode each having its own peculiarities and

advantages. The transfer of knowledge may be of personal or impersonal in nature.

Knowledge transfer can be effectively carried out through systematic manner by

creating sharing environment (Lee & Yang, 2000). The existence of knowledge alone

will not give desired performance attributes, unless the organization make sure the flow

of knowledge to influence the learning process among individuals and groups (Yuan

et.al., 2010).

The transfer of knowledge is based on the knowledge source or types. Expertise

represent tacit knowledge and the transfer happens through interaction and

collaborative action among the team members or individuals. Learned lessons represent

tacit or implied knowledge gained through accomplishing a task or project by the team

or individual. It can be captured and made available in explicit form or transferred

through informal interactions. The other types are documents and policies and

procedures representing mostly explicit knowledge (Freeze & Kulkarni, 2007).

The knowledge transfer is categorized in four themes based on knowledge

exchange terms involved. The first is self-learning, an individual acquire knowledge

through learning from explicit documents such as manuals, text book, etc. The second

is embedded knowledge. In this, the knowledge seeker approaches the intra

organizational social network and the transfer happens through the informal

interactions. The third theme is performative ties, where the knowledge is sought from

un known external source through network and the last theme is market exchange in

40
which the dynamics of transfer is influenced by economic or market consideration

between the knowledge giver and seeker (Levine & Prietula, 2011).

The knowledge distribution may be grouped into three heads namely transfer

through social contacts, community of practice and IT assisted sharing. The

communities of practice are a group comprising individuals having expert knowledge.

The CoP assist in facilitating learning among the members, sharing of knowledge and

create an identity for themselves (Gonazalez, 2017).

Knowledge Application

The organizations competitive edge is derived by applying knowledge in the

business rather knowledge by itself. KM implementation fails due to lack of use of

knowledge resource for the productive purpose. The knowledge usage depends on the

ability of individuals or firms to identify, retrieve and apply the knowledge existing in

the firm’s memory (Zack, 1999).

The use of knowledge can be exploitative or explorative. In the case of

exploitative an incremental new knowledge is created for decision making based on

existing knowledge. Explorative use of knowledge involves creating new knowledge

based on existing one through innovation.

The application of knowledge either by exploitative or explorative depends on

organization strategy to respond. The reactive strategy exploits the existing knowledge

adopts it for limited purpose without changing the existing routines. Innovative strategy

adopts explorative application of knowledge resulting newer methods or approach to

the business (Magnier-Watanable & Senoo, 2011).

The stored knowledge is retrieved and transformed for applying it newer area.

The use of knowledge for newer situation needs transformation of existing knowledge

41
in order to apply it in different situation. The transformation is influenced based on the

extend of novelty, the people involved and their learning ability (Carlile & Rebentisch,

2003).

Dynamic capabilities refer to the ability of the organization to respond to the

environmental changes by assimilating, constructing and reconfiguring the existing

knowledge. The dynamic capabilities not only require organizations applying the

existing set of skills and competencies, rather it involves developing and renewing of

newer skills and competencies to be competitive in ever changing environment. Some

of the dynamic capabilities adopted in the organization are research and development,

joint ventures, merger and acquisitions, alliances, technology adopting and routines

(Eisenhardt and et. al., 2000, and Zollo and et. al., 2002).

2.7 Knowledge Management Enablers

The implementation of KM in an organization is influenced with the help of

various factors referred to knowledge management enablers or influencers or critical

success factors. These are factors, act as enzymatic catalyst needed for effective

management of knowledge. Enablers are the fuels in the engine acting as a driving

force in knowledge management in inducing the creation of new capability and

propelling the organizational workforce to disseminate their skills and experiences

making sure the organizational knowledge is systematically utilized for the business

purpose (Ichijo et al., 1998; Stonehouse and Pemberton, 1999).

Enablers are the force in developing the knowledge and it influences the

environment of the organization for creating knowledge, retaining and transferring it.

The critical factors that influence the KM are appropriate linkage to business, vision

42
and mission, leadership support, culture, continuous learning, technology infrastructure

and structured processes (Skyrme and Amidon 1997).

There are various critical success factors (CSF) influences the implementation

of KM in SMEs. Any existence of these factors needs to be encouraged and absence of

it requires attention and efforts to establish these factors. CSFs are vital ingredients and

their deficiency may hamper the implementation of KM. It is relevant and important to

study these factors in a detailed manner to understand these enablers and their linkages

to KM process and organizational outcome. The study of the CSF, the way it influences

the outcome has generated many researchers interest and there is a plethora of article on

this front. In order to synthesize all these ideas and simplify for our research purpose,

all these factors are grouped in to internal and external factors (Wong, 2005).

The internal factors are in the realm of organization and it is evolved and

moulded with the help of organizational rules, polices, procedures and routines. The

internal factors are to large extent controllable and influenced in the organization

through members intervention accountable for managing the knowledge assets and

bases. Some of the important internal factors are culture, leadership support,

technology support, KM policy, structure, etc.

Organization Culture as KM Enabler

The culture of the organization is important for the success of KM (Davenport

et al., 1998 and Martensson 2000). Organizational culture is defined as pattern of

shared fundamental assumptions, values, beliefs, that are evolved, created or conceived

by a given group of people in order to handle problems arises from external

assimilation or internal integration. The firm’s culture is a vital element in developing

sustainable competitive advantage and in influencing the implementation of KM.

43
Culture impacts the KM implementation through changing the behaviour and value

systems of an individual.

A strong belief among the employees on the importance of knowledge in

creating competitive advantage influences positively the adoption of KM. Continuous

learning and openness to learn enhance the process of knowledge creation impacting

the decision-making process and innovation. It is evident that collaborative working is

critical for KM process. Collaboration enhances the interaction among individuals and

groups within the organization impacting the knowledge dissemination and creation.

The role of manager in creating conducive environment is of utmost importance

for effective knowledge sharing. The biggest challenge in today’s knowledge era is the

ability of an organization to find, share and extract the knowledge resource for the

benefit of the organization in creating sustainable competitive advantage.

Many KM projects fails due to lack of confidence and trust. It is imperative to

create an eco-system exhibiting confidence and trust among the members of the

organization for the successful implementation KM. Individualism as a corporate

culture inhibits the sharing attitude and expresses lack of trust among members.

Organization structure as KM enabler

Structure in an organization assists in managing knowledge through various

activities involving task assignment, synchronizing and monitoring to achieve the

organizational goal in a concerted manner. Organizational structure impacts the action

and gives direction through procedures, policies, routines, etc. The structure influences

trust among the members for knowledge sharing. An appropriate organizational

structure enhances the flow of knowledge through cross functional interaction. The

structural components and policies help creating knowledge networks and nurtures

44
community of practice within the firm (Skyrme el.al., 1997). Many organizational

structures are being explored and researched in the study of management and the

suitability of the structure differs depending on the culture and leadership style. The

hierarchical structure may aid flow of knowledge from top to bottom and creates

consistency and uniformity. However, flexible structure enhances the flow of

knowledge and invigorates sharing and working together among the members. (Gold

et.al., 2001). An amalgamation of hierarchical and non-hierarchical structure in

facilitating the knowledge creation process is appropriate for implementing KM

(Nonaka and Takuechi, 1996).

In addition to process and polices, an effective reward system found to have

positive impact on the KM process. The reward or incentives found to motivate the

employees in supporting KM process. Davenport 1998). Formulating appropriate

reward system to enhance the participation of employees in knowledge sharing is a

challenge for managers. Firms should design suitable reward system enabling

employees to volunteer their time and effort in creating new knowledge, sharing and

assisting the KM process. (Eisenhardt and et. al., 2001, Jarveenpa and et. al., 2003 and

Massey et. al., 2002). The reward system needs to be integrated with the performance

appraisal system for bringing in behavioural changes over a longer period of time

(Davenport 1998).

Technology as an Enabler

In the early phases of KM evolution, managing knowledge is perceived as

technology driven initiative. Over the years the importance of people and process came

to forefront and the current KM initiatives involve an integrated approach of unifying

people, process and technology for effective implementation. Many researchers

45
highlighted the use of Technology as an enabler. (Skyrme and et.al., 1997, Gold and et.

al., 2001; Lee & Choi, 2003; Wong & Aspinwall, 2005; Lee.S, et. al., 2012; Panahi et

al., 2013).

The role of technology in KM is multifarious and it is utilized in knowledge

creation, knowledge storage, knowledge sharing and facilitate creating knowledge

networks (Alavi & Leinder, 2001).

In the era of knowledge, technology usage is inevitable because value of the

organization is determined through intangible assets, the speed of innovation, ability of

catering to borderless market and providing personalised solution based on customer

preference. In view of this, the need for system arises to manage expressed and implied

knowledge existing in the individuals and organization. In the global context,

organization depends on external source of knowledge for survival. Newer technologies

such as high-speed data processing, networking systems and internet assists firms in

accessing and exploring external knowledge. (Metaxiotis et al., 2009).

KM systems facilitate the KM processes comprising knowledge creation,

assembling, classifying and spreading within the organization. (Gallupe, 2002; Alavi

and Leidener, 2001). Although technology influences KM, organization need to avoid

the mis conception of data management, management of information system and

information technology as KM. (Pillinia 2009). Many KM projects fails because of the

mis conceived idea of terming Information Technology as KM systems. Technology

provides solution to convert explicit knowledge into information repositories, ignoring

the complexity of capturing tacit knowledge. (Borghoff, 1998). The explosion of

technology such as electronic mails, audio video conferencing, digital chatting, and

other groupware applications has helped organization to connect the knowledge sources

46
across the globe thereby improving the efficiency and effectiveness of working

(Davenport,1998).

Usage of technology for knowledge management is based on either knowledge

centric or user centric. The tools used for knowledge centric purposes are data base

management for decision making, expert systems, corporate repositories, digital

catalogues, locating or guiding systems and corporate gateways. User centric tools are

of different category since it facilitates tacit knowledge transfer that are intuitive and

dispersed in nature. (Johanessen et al., 2001).

Many research studies emphasised technology as an enabler, but cautions the

role of IT in KM and not to fall on the trap of technology as solution for managing

knowledge. Hence, designing of technology solution should be based on understanding

of knowledge management concept and its processes (Alavi and Leidener, 2001).

Leadership as an enabler

Many authors emphasized the importance of leadership support in

implementing knowledge management. (Davenport., et. al., 1998, Wong & Aspinwall,

2005; Riege, 2005 & Nguyen et al., 2011). Top management navigates the

organizations in the competitive world dictated by continuous demand for better, faster

and quality products and services at competitive price. In these changed dynamics the

success of the organization depends on leader’s ability to drive or in other words they

should be knowledge enabled leader. Leaders visualize the future, articulates it through

their purpose statement and drives the organization in achieving the goals through

available resources. Leadership is the critical force in pushing the firm to excel in their

business. Lack of leadership results in contentment in the organization and it fails to

recognize their weakness and outside threats resulting extinction. In addition,

47
complacency in organization results in stagnation and resistance to recognize new

ideas, markets, clients and process. (Dato’ Nik Zainiah Nik Abdul Rahman 2008).

Leaders need to be adaptable, openness to learn and have clarity on the criticality of

knowledge and importance of managing knowledge resources during the challenging

time. (Carpenter and Fredrickson, 2001).

Implementing KM need cooperation from employees. The leaders through their

strategic thinking, direction, leading in front and allocating resources influence the

employees in achieving the KM objectives. (McKenzie et al., 2001). APQC outlines the

role of leader in managing the knowledge. They champion the training initiative

through knowledge agenda, create organizational structure and polices to promote

knowledge sharing culture, provide reward or incentives, give direction, coordination

and communication and evaluate the outcome of the process on a continuous basis.

In addition to top management support, the importance of middle management

needs to be considered for KM adoption. Middle level managers are the link between

top leadership and workers and they connect the chain of communication by

transmitting the objectives and executing it through the worker. The management style

in an organization comprises top down and bottom-up approach. Top-down

management style characterises hierarchical model and top leader decides the KM

strategy and the team executes it. In the bottom-up approach, the organization structure

will be flat and the knowledge management is facilitated in an informal manner. The

disadvantage is cross functional interaction will be poor.

(Nonaka, 1995) outlined a middle up down approach by recognizing the middle

managers importance in linking the top leadership and workers. The SECI model put

forth the argument that middle managers through their influence on top leaders and

48
front-line employees facilitate the KM. Nonaka also observes that top-down approach

influences explicit knowledge creation, bottom-up approach largely impacts tacit

knowledge conversion, whereas the middle level manager approach influences both

tacit and explicit knowledge creation. The leadership enabler is unique in a way that is

not only influences the KM process directly, they also influence the other enablers

through designing knowledge management strategy, creating conducive culture and

providing resources for KM systems and process.

External factors as KM enablers

Organization exists as part of environment and it continuously interact with it as

a consumer of finite resources and as a provider of products and services. The

environment is dynamic and changes violently. The factors influencing the

environment are referred to external factors and organization have little control on

influencing these factors. The ability of the organization in identifying opportunities,

overcoming threats, absorbing it internally provides competitive edge. The external

factors can be grouped into macro factors and meso factors (Mohammad Bashir

Sedighi et al., 2012). The macro factors include, political, legal, government policies,

economic conditions etc. Meso factors comprises strategic partnership and KM

benchmarking. Strategic partnership involves new knowledge absorption and

benchmarking helps to compare the performance of the firm with that of best in the

environment and adopting the best practices followed elsewhere.

Researches emphasised the role of government in creating KM eco system

through KM specific training initiatives, R&D support and incentive for technology

adoption (Ngah and Ibrahim, 2009). Indian government has established National

knowledge commission for facilitating effective use of various policy initiatives. The

49
framework facilitates knowledge creation in apex research institutions, foster

knowledge management in agriculture and industry, enhancing transparency and

efficiency in providing service to the citizens through effective knowledge

dissemination. The Government has designed sub policies in various department to

effectively utilize the knowledge. The efforts of the Government are laudable.

However, the knowledge management awareness and usage are at its early stages in

Indian context and organizations usage of Government knowledge repository is

minimal (Shailaja Dixit 2011).

2.8 Knowledge Management and its benefits

Knowledge represent collective intelligence of individuals within an

organization. In a market place a business survives based on creating a differentiation

in its products or services offering. One of the key sources of differentiation is the

collective intelligence of the organization often termed as knowledge. The ability of the

organization to harness these knowledge assets gives valuable insight on external

opportunity resulting in distinguished position in the customer mind. (Earnest and

Young 2013 Knowledge Advantage report) surveyed global leaders to find out the key

drivers of their business success. Majority leaders opined knowledge as the driver for

success. Knowledge drives business success through enhancing customer satisfaction,

innovation and revenue growth. Researches agree the importance of knowledge, its

management and uses for business purpose. However, explicitly defining the KM

benefits in simple terms seems to be a challenging task. (Shiva Yahyapour et. Al 2015).

In generic term benefits are referred as a quantifiable progress. Organization considers

benefit as a result or outcome leading to profits. (Sowden, 2007). Benefits are defined

as reward for a specific or group of stakeholders. It is inferred in these definitions that

benefits are outcomes expected for an individuals or organization on their investments

50
made. Measuring the KM benefits purely on financial parameters is inadequate since

KM adoption influences many non-financial outcomes such as learning, creativity and

innovation among others. The firm’s value in the market is many times more than their

book value reflecting the value perceived from intangible assets often attributed to

knowledge. (Lin and Tseng, 2005). It clearly shows market forces value an enterprise

based on intellectual capital it possesses and hence, evaluating KM benefits purely

based on financial parameters do not reflect the value of an organization holistically.

(Choy and Suk 2005). In view of this, many researchers proposed measurement models

capturing the soft and hard dimension of performance through unifying the intellectual

capital and knowledge parameters. (Schiuma 2001). Hence, it is critical to employ

evaluation that can measure the KM benefits in a holistic manner.

KM benefits and Innovation

Organization’s that depend on incremental improvement of product or services

through quality or productivity measures may find it increasingly challenging to

survive in the global open economy. It requires a paradigm shift of thinking from

incremental improvement to breakthrough innovation. The shift in thinking can be

achieved only through knowledge exploitation (Shigeo Takenaka (2007). Innovation is

a strategic initiative propelling the organization to seize market opportunities through

new product or services resulting performance enhancement (Kim et al., 2006).

Innovation is also referred as creation, development and execution of novel product,

process or services. An organization having ability and skill to acquire new knowledge

and absorb it (Lee.V.H, et al., 2013) or capability to convert individual ideas into

products and services (Zaugg and Thom, 2003) is considered to be innovative.

The significance of technological innovation in creating new or improved

products or services is the fundamental factor for creating sustainable competitive

51
advantage. (Damanpour and Gopalakrishnan, 2001). The innovation in product is

generally referred to new product that meets the customer needs and innovation in

processes is refereed to existing process improvement or finding alternative process to

satisfy the needs of the customers. Many research studies involving impact of KM

highlights innovation as one of the key outcomes among others.

There are many areas through which KM intensifies and support innovation in

enterprises. There is a substantial evidence of KM contributing to innovation process.

Knowledge management practices impacts the innovation capability. The application of

KM acts as a link between firm’s innovation and KM practices such as knowledge

formation, storage and dissemination. Among the KM process, knowledge formation,

storage and application critically impact the innovation process. However, knowledge

dissemination influences the innovation process indirectly through KM usage. Wisdom

of leaders directly influences the innovation capability of the firm. The wise leaders

understand the importance of knowledge for innovation and focuses on creating an

appropriate eco-system to facilitate sharing of knowledge in creating collective

wisdom. In addition, the KM capabilities such as knowledge acquisition, storage and

dissemination influence the innovation process (Weixu Ding et al., 2019).

Innovation capability is expressed in terms of speed and quality of innovation

process. Knowledge sharing culture brings in behavioural changes among the

employees for enhancing the innovation capability of an organization. The sharing of

knowledge facilitates the development of core competencies such as differentiated

expertise, skills, etc., a key element for organizational performance. Thus, the

knowledge sharing acts as a catalyst in mediating the innovation capability and

competitive advantage (Son Thanh Than et al., 2019).

52
 Innovation comprises idea generation and implementation. The idea generation

involves finding out new ideas through internal and external sources. The process of

idea generation is influenced and enhanced by knowledge acquisition. Locating the

sources of information efficiently within the firm is key to successful innovation.

Hence, openness to information enhances the employee’s behaviour and impacts the

innovation process. The knowledge acquisition has a powerful impact on innovation

behaviour at top management openness to information (Che. T, et al., 2019).

KM and Organizational Performance

Enterprise overall value comprises both tangible and intangible parameters. In

today’s knowledge era, we can observe market value of an enterprise is way higher

than conventional book value. The market perceives the ability of the organization to

sustain the business level and grow in the future. This ability is due to the combination

of various factors an enterprise possesses referred to intellectual capital. (Bassi and Van

Buren, 1999; Chong et al., 2006). The intellectual capital of an organization rests on its

knowledge and capability to manage the knowledge. A systematic management of

knowledge with information technology as an enabler creates various benefits to the

organization leading to enhanced intellectual capital.

The success of organization strategy rests on evaluating the enterprise

performance against industry best practices, thereby making the enterprise to

continuously improve the key drivers of performance. Technology improvement,

productivity enhancement, process improvement, introducing new products or services,

innovation capability etc., can be enhanced through knowledge management resulting

improvement in organizational performance.

53
 It is observed from various research articles, KM practices impacts indirectly

the financial parameters such as ROI, profitability, market share, growth rate, etc.

Decision making is a critical process guiding the managers efficiency and effectiveness

in the organization. The individuals may take decision either rationally or intuitively.

The KM enablers such as knowledge sharing, employees possessing deeper and wider

skills, learning culture and technology influences the organizational performance

through knowledge creation process. The decision-making style of the individual acts

as moderator between knowledge creation and organizational outcome (Abubakar et al.,

2019).

KM and Operational Performance

In the information and knowledge era, the organizations need to be agile to

respond to the dynamic business environment. The agility in an organization is

achieved through continuous training of their employees to upgrade their competencies

and their desire to perform. In today’s competitive environment, organizations face the

challenge of producing quality products at low cost with shorter lead time. KM enables

the organizations to achieve the agility and addresses the concern for productivity.

(Jennex M.E, 2002; Wiig and Jooste, 2003). Organizations can achieve the operational

efficiency and effectiveness through aligning KM initiatives with their work practices

(Mciver, 2013; Bosua and Venkitachalam, 2013). The key to achieve the operational

efficiency depends on employees’ skills and knowledge (Turner et al., 2010). The

knowledge and skills of the employees is achieved through continuous training to

upgrade the skills, open communication, recognizing employee’s contribution,

facilitating the creation of communities of practice and instilling a strong feedback

mechanism (Carbera A and Carbera E, 2002). Organization needs to focus on these

54
factors and create a positive culture for knowledge sharing through open

communication and motivation.

The operational efficiency can be enhanced through shared language that

facilitates knowledge transfer and absorption (Fugate et al., 2009). The practice of KM

helps to enhance the organizational memory through storing critical and relevant

knowledge related to the business. Hall et al (2013) and Li Z et al (2004) stated that

organization memory helps to improve the operational efficiency through enhanced

capacity utilization, improved quality of the product, management quality, team

coherence, research and development, morale of the employees, operational process,

etc. The improved operational performance has a positive and direct impact on the

innovation capability and organizational performance.

55