Chapter 5 - Knowledge Management

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Chapter 5 - Knowledge Management

5.1 Introduction

This chapter aims to give an overview of concepts, process and systems that involve
the area of Knowledge Management (KM). How to manage knowledge has become
an important issue in the pass few decades, and the KM community has developed a
wide range of technologies and applications for both academic research and practical
applications. The intention of this chapter is to explore some elements related to KM
such as technology, applications, motivations, benefits and barriers that are presented
in this emerging and multi-disciplinary area. It is also discussed important issues
such as the Data-Information-Knowledge-Technology model (DIKT) and the
Knowledge-creation process. The survey presented in Chapter 4, suggested that
knowledge is recognised as a critical factor in order to enhance performance and
competitiveness, therefore, the author considers the area of KM as a feasible
alternative in order to promote manufacturing excellence practices within SMEs. In
this context, KM from the perspective of SMEs will be also presented.

5.2 The importance of knowledge in organisations

Individuals and organisations are currently recognizing the importance of knowledge

as a key initiative for increasing competitiveness in the global economy. Peter
Drucker (1993) states that the manufacturing, service, and information sectors will be
based on knowledge in the coming age, and business organisations will evolve into
knowledge creators. He also argues that we are entering in the knowledge society, in
which the basic economic resource is no longer capital, or natural resources, or
labour, but is and will be knowledge, and knowledge workers will play a central role.
Peter Senge (1990) discusses the organization’s capacity to learn. He argued that the
“learning organization” has the capacity for both generative learning and adaptive
learning as the sustainable sources of competitive advantage.

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According to Nonaka & Treece (2001) knowledge, especially its tacit dimension, is
embedded in the individual and to be a source of competitive advantage it must be
transformed into organizational knowledge. They conclude that this is the essence of
knowledge management and to achieve this goal, organizations must provide a
context of shared identity that favours this process.

In addition, developments in technology are among the positive factors fuelling

interest in knowledge and its management. For example, networked computing
provides new ways for individuals to exchange information and knowledge within
and outside their organization. Technologies such as databases and the World Wide
Web, have made certain forms of structured knowledge easier to collect, store and
distribute. The recent dramatic rise in Internet and Intranet use is one manifestation
of the expanding role of electronic technology of communication and knowledge
seeking. Firms are becoming aware of the potential of this technology to enhance
knowledge work, and of the fact that, that potential can be realized only if they
understand more about how knowledge is actually developed and shared.

5.3 Knowledge management definition

It is not simple to define an emerging discipline which has been named with the
terms of Knowledge and Management, terms that have been the source of
philosophical reflection and debate since the ancient Greeks. According to T.
Beckman (Liebowitz, 1999) KM is an emergent discipline that has many ideas yet to
be tested, many issues yet to be resolved, and much learning yet to be discovered.
However, the mid-1990s saw a surge of publications, conferences and consultant
activity in the KM area, and many organisations woke up to the challenge of
managing their knowledge (Little et al., 2002). The publication of journal articles on
the subject also took off in 1996 as indicated in Figure 5.1.

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Figure 5.1 Growth in knowledge management literature (Gordon & Grant, 2002).

Karl Wiig (1999) argues that explicit and systematic KM is now recognized as an
important approach to improve enterprise performance through knowledgeable
people delivering work more effectively. There are a variety of disciplines that have
influenced and informed the field of KM thinking and praxis. As a result there are a
host of working definitions of KM, the following are the selections of definitions of
KM found in the literature review:

▪ KM is a collection of processes that govern the creation, dissemination and

utilization of knowledge to fulfil organizational objectives (Murray & Myers,
1997).

▪ KM is the formalization of and access to experience, knowledge, and

expertise that create new capabilities, enable superior performance,
encourage innovation, and enhance customer value (Beckman, 1997).

▪ KM is the systematic, explicit, and deliberate building, renewal, and

application of knowledge to maximize an enterprise’s knowledge-related
effectiveness and returns from its knowledge assets (Wiig, 1997).

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▪ KM is a conscious strategy of getting the right knowledge to the right people

at the right time and helping people share and put information into action in
ways that strive to improve organizational performance (O'Dell & Jackson,
1998).

▪ KM is the process of capturing a company’s collective expertise wherever it

resides: in data bases, on paper, or in others people heads, and distributing it
to wherever it can help produce the biggest payoff (Hibbard, 1997).

For purpose of this research KM will defined as:

“A formal and systematic process or practice of acquiring, capturing,

sharing and using knowledge to enhance learning and performance in
organisations”.

5.4 KM main objectives

From the literature review, authors agree that a KM system (KMS) within an
organization should pursue the following objectives:

• To provide efficient channels that promotes the interaction between tacit and
explicit knowledge in order to generate new knowledge

• To integrate information from different sources within a corporation, in order to

create a centralised knowledge repository

• To restructure informal (textual) information into more formal representations

and databases and discovering knowledge from previously untapped information
sources

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• To provide sophisticated classification and indexing capabilities so that

information contained within document collection can be easily identified and
retrieved

• To improve dissemination of knowledge from key personnel within a corporation

and generally making communication channels more effective and efficient.

In short, KM is concerned with changing the organisational culture where employees

have more relevant information available to them at the right place, at the right time
(Leger, 2002).

5.5 Motivations to use KM

According to Davenport and Prusak (1998) KM is a modern organization’s most

important resource, the only resource not readily replicated by rivals and therefore
the source of its uniqueness or competitive advantage. In a survey conducted by the
OECD and the Fraunhofer Institute in 2001, 497 companies in Germany where asked
to rate the importance of 19 different motivations to use KM (Table 5.1). The survey
indicates that there are eight most important motives for which 75% of the
companies have attributed an importance of 1 or 2. The single most important
driving force to employ KM practices is apparently the sharing and integration of
knowledge among the workforce within the company, represented by the two most
important single motives (transfer to new workers, integration of knowledge) plus
the support of intra-company collaboration across distances. The second most
important driving force, made up of three out of the top eight variables (motive 3, 6,
8), is rather defensive.

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Table 5.1 Motivation to use KM. Source (OECD, 2003)

Rank Motive top two a mean b

To accelerate and improve the transfer of knowledge to new
1 workers 91 1.64
2 To help integrate knowledge within your firm or organization 86 1.75
To protect your firm or organization for loss of knowledge
3 due to workers departure 82 1.77
To encourage managers to share knowledge as tool for
professional
4 promotion of their subordinates 80 1.91
5 To train workers to develop their human resources 77 2.00
To identify and/or protect strategic knowledge
6 present in your firm or organization 76 1.95
To ease collaborative of projects or teams that are physically
7 separated 75 2.03
8 To capture workers' undocumented knowledge 75 2.06
To ensure that knowledge resident in all international work sites
9 is accessible to the entire firm 69 2.29
To train workers to meet strategic objectives of your firm or
10 organization 68 2.21
11 To help managers to focus their attention to key information 67 2.28
To improve the capture and use of knowledge from sources
12 outside your firm or organization 67 2.22
13 To increase worker acceptance of innovations 65 2.33
14 To avoid information overload problems within you organization 59 2.45
Following merger or acquisition to help integrate knowledge
15 within your new firm or organization 47 2.92
16 To promote sharing and transfer of knowledge with suppliers 47 2.75
To improve sharing or transferring of knowledge with partners
17 in strategic alliances, joint ventures or consortia 37 3.05
18 To promote sharing and transfer of knowledge with customers 36 3.07
To update your firm or organization on KM tools
19 or practices used by competitors 31 3.23

a: top two indicates the percentage of companies who have rated one or two on the scale from 1
(extremely important) to 6 (not important at all).
b: scale ranging from 1 (extremely important) to 6 (not important at all).

Many companies rate the importance of stock taking of knowledge and its protection
as highly important Davenport and Prusak (1998). This reflects the increasing
fluctuation of the workforce as well as the growing importance of knowledge as a
strategic asset. Finally, companies grasp the opportunity provided by KM tools for
the upgrading of the workforce internally, as KM is a major tool for human resource

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development (motive 4,5). In short, according to the survey, companies are

employing KM driven by three major purposes:

1. Internal integration and internal transfer of knowledge

2. Taking stock and protection from loss of knowledge
3. Improvement of the work force

5.6 Data, information and knowledge

It is important to make a distinction between data, information and knowledge.

According to literature this distinction is not always perceived by organisations and
generally creates confusion. This distinction and transitions between these elements
is illustrated in Victor Newman’s model of data, information, knowledge and
technology (DIKT), Figure 5.2.

Figure 5.2 The DIKT model (Newman, 1997).

Data Analysis Information Relevance Knowledge

Given Patterns & structure Opportunities

Results Technology Exploitation

Application

According to Newman (1997), data can be viewed as unstructured streams of

numbers and characters that only have relevance when viewed within a specific
context. Thus, data in itself does not mean anything, however, once data is put into a
context it becomes information. Information only exists when we can either see or
create patterns or structures within the field of data. This information is highly
contextual and defined by the means of collection, the media of presentation, and the
purpose involved. According to Davenport (1998), information can be viewed as a
message, usually in the form of a document or an audible or visible communication.

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As with any message, it has a sender and a receiver. Information is meant to change
the way the receiver perceives something, to have and impact on his judgement and
behaviour. The next transition from information to knowledge involves a creative
thinking process that emerges when the user considers relevance in the existing
patterns or structures of the information and creates opportunities. The link between
information and knowledge is probably best expressed in the commonly accepted
idea that knowledge in the business context is nothing but actionable information
(Tiwana, 2003).

For purposes of this thesis it will be considered what Davenport & Prusak (1998) call
a working definition of knowledge: “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 organisations, it often becomes embedded not
only in documents or repositories but also in organizational routines, processes,
practices, and norms”.

5.7 The Knowledge-Creation process

The process of Knowledge Creation, described by Ikujiro Nonaka (Nonaka &

Takeuchi, 1995) and widely accepted by authors, provides a useful starting point for
theorizing about how an individual’s personal knowledge can be transformed into
organizational knowledge that is valuable to the company. Nonaka considers
knowledge as a dynamic human process of justifying personal belief toward the
“truth”, and the core of his theory of knowledge creation lies in describing this
dynamism, which emerges as a result of the interaction between two types of
knowledge: tacit knowledge and explicit knowledge (Nonaka et al., 2001).

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This interaction is developed within a conceptual framework of two dimensions:

‘epistemological’ and ‘ontological’ (Figure 5.3). The cornerstone of the
epistemology he draws on Michel Polany’s distinction between tacit knowledge and
explicit knowledge (Polanyi, 1966).

Explicit knowledge can be expressed in formal and systematic language and shared
in the form of data, specifications, manuals and such. In contrast, tacit knowledge is
highly personal and hard to formalize. Subjective insights, intuitions and hunches fall
into this category of knowledge. Tacit knowledge is deeply rooted in experience,
skills, actions, procedures, routines commitment, ideals, values and emotions.
Nonaka’s dynamic model of knowledge creation is anchored to a critical assumption
that human knowledge is created and expanded through social interaction between
tacit knowledge and explicit knowledge.

Figure 5.3 Nonaka’s model of knowledge creation. Source (Nonaka et al., 1995)

Furthermore, Nonaka describes the other dimension of the framework as ontological,

which is concerned with the levels of knowledge-creating entities (individual, group,
organizational and inter-organizational). When the interaction of tacit and explicit
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knowledge is elevated dynamically from a lower ontological level to higher levels, a

spiral of knowledge emerges. He calls this interaction ’knowledge conversion’, and
four modes of knowledge conversion are created when tacit knowledge and explicit
knowledge interact with each other Socialization, Externalization, Combination,
Internalization:

Socialization (from tacit to tacit knowledge)

Socialization is a process of sharing experiences and thereby creating tacit
knowledge such as shared mental models and technical skills. Socialization typically
occurs in traditional apprenticeships. Apprentices learn the tacit knowledge needed in
their craft as being exposed to hands-on experience rather than from written manuals
or textbooks.

Externalization (from tacit to explicit knowledge)

is a process of articulating tacit knowledge into explicit concepts. Tacit knowledge
becomes explicit taking the shapes of metaphors, analogies, concepts and models.
When tacit knowledge is made explicit, knowledge is crystallized, thus allowing it to
be shared by others, and it becomes the basis of new knowledge.

Combination (from explicit to explicit knowledge)

is the process of converting explicit knowledge into more complex and systematic
sets of explicit knowledge. Individuals exchange and combine knowledge through
such media as documents, computer networks. Reconfiguring of existing information
through sorting, adding, combining and categorizing of explicit knowledge (as
conducted in computer databases) can lead to new knowledge.

Internalization (from explicit to tacit knowledge)

is a process of embodying explicit knowledge into tacit knowledge. It is closely
related to “learning by doing”. When experiences of socialization, externalisation
and combination, are internalised into individual’s tacit knowledge bases in the form
of shared mental models or technical know-how, they become valuable assets. This

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tacit knowledge accumulated at the individual level can then set off a new spiral of
knowledge creation when it is shared with others through socialization.

5.8 The KM process

In order to formalize the management of knowledge in an organization, it is

important to define a framework which describes the functions and activities that
must be integrated into a KM process. Many authors, most notably Wiig (1993),
O’Dell (1998) , Tiwana (2003), Marquard (1996), Beckman (1997), have proposed
different frameworks for the KM process. However, within these frameworks, four
activities are suggested to form the core of the KM process, that is: knowledge
creation, knowledge storage, knowledge dissemination and knowledge application
(Figure 5.4). Hence, the aim of a knowledge management system (KMS), should be
orientated to support these activities.

Figure 5.4 KM core process activities.

Knowledge
Creation

Knowledge Knowledge
Utilization Storage

Knowledge
Sharing

1. Knowledge creation: in this part of the KM process, the spiral of knowledge

creation, mentioned by Nonaka, could take place. Organizational knowledge
creation involves developing new content or replacing existing content within the
organization’s tacit knowledge and explicit knowledge. Acquired knowledge
does not have to be newly created, only new to the organisation (Davenport et al.,
1998).

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2. Knowledge storage: while new knowledge is developed by individuals,

organisations play a critical role in articulating and amplifying that knowledge
(Nonaka, 1994). According to Stein & Zwass (1995), the storage, organisation,
and retrieval of organisational knowledge could be referred to as organizational
memory, which includes knowledge residing in various components forms,
including structured information stored including databases, written documents,
documented organisational procedures and processes.

3. Knowledge sharing: the process of disseminating and making available what is

already known. Knowledge should be shared and generalized within the
organization. According to Yeung, generalization occurs not only when single
ideas are moved, but also when the entire process of moving ideas becomes
institutionalised within an organization. However, Yeung and other authors do
not mention that the sharing process could take place beyond the boundaries of
the organisation, especially regarding SMEs. It is the aim of this research
(Chapter 7) to analyse the knowledge sharing process in an inter-organizational
context.

4. Knowledge utilization: new knowledge and knowledge already held by an

organisation must be applied in order to fulfil the organisation’s objectives.
Knowledge utilization means making knowledge more active and relevant for
firms in creating value, since organizational knowledge needs to be employed
into company’s products, processes and services (Bhatt, 2001).

In addition, the American Productivity & Quality Centre (APQC) and Arthur
Andersen co-developed in 1995 a more expanded framework which, they suggest,
provides a general context for thinking about KM (Figure 5.5). The KM process
begins with creating, finding and collecting internal knowledge and best practices;
sharing and understanding those practices so they can be used; and finally, adapting
and applying those practices to new situations. Surrounding the process are four
enablers that can either help or hinder it: strategy and leadership, technology, culture
and measurement. It is the technology enabler that this research will be focused on.

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Figure 5.5 APQC and Arthur Andersen KM framework. Source (O'Dell et al., 1999).

Strategy and
Leadership

Use
Create
Adapt

Measurement

Culture
Organizational
Knowledge Identify
Share

Organize Collect

Technology
Knowledge Management Enablers

Knowledge Management Process

5.9 Information Technologies for KM

KM is an interdisciplinary task, including human resources management, enterprise

organization and culture. However, authors such as Leger (2002) affirm that
advances in computer systems and communications technology have contributed to
the flourish of Knowledge Management Systems (KMS). For the purpose of this
thesis KMS will be considered as those systems based on computer and
telecommunications technology. According to Leger (2002), there is a wide-spread
consensus that Information Technology (IT) plays an important role as enabler for
many aspects of a KMS. The purpose of this section is to describe those software
technologies considered by authors as key elements to support a KMS. These
technologies will be classified as ‘intelligent tools’, ‘knowledge repository tools’ and
‘web-based systems’.

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5.9.1 Intelligent tools

While KM is a relatively recent field of study, attempts to use technology to capture

and manipulate knowledge have been underway for decades (Davenport et al., 1998).
Going under the name of “Expert Systems” (ES), a branch of Artificial Intelligence
(AI), these efforts concentrate in managing narrow domains of knowledge such as
configurations of computers or diagnosis of a particular type of disease. According to
Gupta & Sushil (2004), an ES is regarded as the embodiment within a computer of a
knowledge-based component from an expert skill in such a form that the system can
offer intelligent advice or make an intelligent decision.

There are a number of intelligent tools used within ES, for example, the ruled-based
tools such as fuzzy logic, genetic algorithms and neural networks, which are oriented
to increase the robustness of a decision-making process. However, some authors
(Davenport 1998, Tiwana 2003, Slack et al,. 1998) agree that these tools require a
high level of expertise in their development and implementation resulting in very
complex and expensive systems, not affordable for most of organisations specially
SMEs. On the other hand, recent developments in artificial intelligence have created
alternative tools (Table 5.2) such as ontologies and semantic networks that are
considered more suitable for KM proposes (Gupta et al., 2004). The aims of these
intelligent tools are, among others, to structure different domains of the knowledge
environment, to create intelligent searching and to design models for knowledge
sharing within organisations.

Alan Leger (2002) states that, whereas, in the past, information technologies (IT) for
knowledge management have focused on the management of knowledge containers
using text documents as the main repository and source of knowledge, in the future
semantic web technology, especially ontologies and relational metadata, pave the
way to KM solutions that are based on semantically related knowledge.

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Table 5.2 Intelligent tools

Intelligent Tools Description

Otology is a formal, explicit specification of a shared

conceptualisation. The main motivation behind ontologies is
that they allow for sharing and reuse of bodies of knowledge
Ontologies in a computational form. In the knowledge sharing effort
engineering ontologies are put forward as a means to share
knowledge bases between various knowledge-based
systems.

Semantic networks are formed from ideas and relationships

Semantic among them, but with far more semantic structure according
networks to meaning. Semantic networks are associated with detailed
analysis of text and networks of ideas.

Metadata is information added to a document (or smaller

Metadata unit of information) that makes it easier to access and reuse
that content.

Represents knowledge by experience such as events and

specific case problems and solutions. The technology
Case-base
involves extraction of knowledge from a series of narratives,
reasoning
or cases about the problem domain

Creates an overall framework though object technology for

Model-base representing and organizing domain knowledge in terms of
reasoning objects attributes, behaviours and relationships, as well as
simulating domain process.

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According to Tiwana (2003) case-base reasoning (CBR) approach allows companies

to take advantage of previous problems or cases and related attempts to solve them
through analogies. Davenport (1998) points out that, though most of the CBR
systems have been successfully implemented in on-line customer service systems,
there are other areas of applications such as planning, scheduling, design, story
understanding. The system proposed in this thesis for knowledge management
(Chapter 7) it will also use the model of CBR to guide people to the correct area of
the knowledge base.

5.9.2 Knowledge repository tools

According to Beckman (1997) a knowledge repository is a computer-based

storehouse of expertise, knowledge, experience, and documentation about a
particular domain of expertise. In creating a knowledge repository, knowledge is
collected, summarized and integrated across sources. Davenport (1998) states that
one of the best approaches to using technology in KM is the repository of structured,
explicit knowledge. It is suggested that a knowledge repository should be designed
considering two main functions, firstly the called ‘search and retrieve’ attribute,
which includes activities as capturing, filtering, editing, organizing, searching, and
delivering data and information. The second function, of a repository system, lies on
its ‘collaborative environment’, also referred as Groupware. The idea behind
Groupware, is that people should be able to work together in a group, but do not have
to be at one place or time (Ellis et al., 1991). People should interact with each other
by some means of a communication model, which is the same for all attendees. Core
functions of a Groupware include e-mail, group calendaring and scheduling, shared
folders/databases, threaded discussions, and custom application development.

Table 5.3 shows presents the typical tools that are resented in a repository system.
Companies have been developing repositories of internally sourced structured
knowledge, such as product knowledge, marketing knowledge, customer knowledge,
etc. However, few companies designs repositories in the context of their process and

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operations. One of the objectives of this thesis is to make a proposal for a repository
system designed to manage knowledge gathered from process and operations and
within an inter-organizational environment.

Table 5.3 Knowledge repository tools.

Repository Tools Description

The hypertext, that has made that the World Wide

Web, allows related content to be linked regardless of
Hypertext
its physical location. It is sometimes described as a
semantic network with content at the nodes.

Intranet, intra-company networks that use the

internet’s protocol (IP) standard, not only permit
sharing of information but they also view the
Intranets organization’s information (including structured
resources as relational databases as well as
unstructured text) through Web browsers like Internet
Explorer or Netscape

A data warehouse acts as unifier of multiple of

Data warehouse isolated, distributed databases, and aggregates,
cleans, scrubs, and consolidates disparate data.

Document management systems make vast amounts

of documents, such as literature, electronic forms,
specifications, and correspondence, easily accessible.
Document management
These systems often include workflow functionality
that allows documents to be intelligently routed to
select, relevant information.

Groupware is a computer-based system that supports

groups of people engaged in a common task (or
goal), and provide an interface to a shared
Groupware
environment. Some forms of groupware applications
are: interactive forums, e-mail and documents
interchange.

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5.9.3 Web-based systems

Web-based systems (WBS) are significantly affecting many areas of organisations,

including marketing, product development, and business process (Peng, 2002). In the
area of KM many authors such as Davenport (1998) agree that WBSs have been
instrumental in catalysing the KM movement. It is not only its collaborative
environment that makes a WBS so powerful, but also its capability to integrate
different applications such as databases, spread sheets, design software etc. Figure
5.6 presents the main layers that integrate a web-base architecture. In Table 5.4
different layers that conform a web-based architecture are described.

Figure 5.6 The Web-based systems architecture.

Web Browser (Explorer, Netscape) User Interface layer

Web Server (Internet Information Server, Java Server) Web Server layer

Knowledge
Manufacturing MS Office
Management
Repository Tools
Intelligent Tools

…
Power Point
Groupware

Process
Design

Excel

Word
MRP

Applications
layer

Data warehouse (XML and ODBC/JDBC/OLAP) Data interchange

Databases (Oracle, SQL, Access, etc) Database layer

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Table 5.4 The Web-based systems architect.

Web architecture layers Description

The interface layer is the top most and only

layer that the end user interacts. It can be
User interface layer carried out though the web-browsers Internet
Explorer (Microsoft) or Netscape (Netscape
Communications).

It provides web service to the browser such as

Web server layer navigation, static interaction and dynamic
interaction. a

It provides services to support different

Applications layer applications. The modular design allows the
system to incorporate additional applications.

The data interchange layer is designed to

make it easy to incorporate data from multiple
resources in multiple formats, and to organize
Data interchange layer data in a consistent way. The interchange of
data over a heterogeneous platform is
accomplished by using a generic XML format
converter.

It is composed of heterogeneous databases

Database layer from different sources such as SQL, Access
database, Oracle databases, etc.

a
static navigation refers that the user is allowed just for consulting or downloading activities.
Dynamic interaction means that the user is allowed to make inputs of data and to upload files into the
system.

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5.10 KM Projects

According to study cases reviewed in literature, companies are following two

strategies in order to establish a KMS. One strategy is to buy a KM-related software,
much popular Lotus Notes or Livelink, and customise the system to the company’s
needs. However, it was clear evident that organisations following this strategy are
large companies such as Siemens, HP, IBM, ADL. Table 5.5 presents some examples
of KMS applications, which are described in more detail in Appendix E.
Considering the complexity and cost of the systems, these options may not be
suitable for SMEs. According to Keane (2002), there is a need for the development
of KM systems that can realistically be applied within SMEs. Taking advantage of
repository tools and web-based systems, previously mentioned, the other strategy for
companies is to program and develop its own KMS. This option seems more
plausible for SMEs. Lim & Kolbas (2000) suggest that the greatest acknowledgeable
need of small organisations is for effective knowledge repositories. Therefore, the
system described in chapter 7, was developed considering economical and practical
factors in order to implement efficiently a KMS in SMEs.

Table 5.5 KM projects.

Company Project Platform Main content
BA&H Knowledge Intranet Bids, reports on industries and
Sector: Consulting Online functions, profiles of experts,
Size: Large (KOL) discussion forums, telephones and
office directories, and market of
ideas.
Arthur D Little ADL-Link Lotus The ADL Link serves as portal to
Sector: Notes knowledge repositories,
Consulting; Size: information bulletins, collaboration
Large tools and resources guides.

MediaOne SEEK Livelink Files/Webpages, best practices,

Sector: bright idea, lesson learned, experts
communications search, groups.
Size: large
IBM ICM Lotus Intellectual capital & assets,
Sector: computer Notes projects profiles and experiences,
systems discussion forums and
Size: large collaboration.
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5.11 KM Success factors, benefits and barriers

According to the projects presented in last section, this section presents those
elements considered by the organisations as: success factors, benefits and barriers, in
order to implement a KMS.

Success factors

✓ Company’s corporate culture

✓ Definition of individual steps necessary to develop and maintain the knowledge
base
✓ Description of roles required to be filled by participants of KM
✓ Rating performance and allocating earnings
✓ Users with similar level of education
✓ Measuring and rewarding of usage and contributions
✓ Information content should be dynamic rather than just archival
✓ Collaborative teams
✓ IT infrastructure
✓ bottom-up strategy rather than top-down approach
✓ Information activities are integrated with workflow.

Benefits

➢ Saving time and learning faster

➢ Increasing efficiency
➢ Increasing productivity
➢ Global integration
➢ Active community of practise
➢ Increasing information security
➢ Reducing costs

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Barriers

Most important barriers where identified as cultural barriers:

• Collaboration: Build on the ideas of others

• Admit that the thoughts of someone else might be better than ones’ own thoughts.

• Share one’s best though –often representing a personal competitive advantage –

with others
• It is deeply humiliating in some societies if one’s contribution to the system is

rejected
• Language: it is suspected that some members of the network have not sent in

contributions due to language barriers

• Not everyone has the right consciousness for KM

5.12 KM and SMEs

While the current literature provides insights into the KM strategies adopted by large
organisations, there is little attention being paid to the small business sector. Wong &
Aspinwall (2004) suggest that this situation has prevailed because large organisations
generally have more knowledge assets and intangibles to be manage and hence, a
predominant focus on them, seems appropriate. In addition, most large corporations
comprise many different business units, which can be scattered across different
countries and locations and thus, they need to implement a KM system to facilitate
the sharing and transfer of knowledge across their various sites.

However, as asserted by Moran (1999), “in small and medium enterprises, as in big
global corporations, SMEs need ways of remembering what they know”. Therefore,
not only do large organisations need to improve themselves through KM in their
pursuit for excellence, but also should small ones. The following two important
points can be drawn from the review of KM literature in the small business sector:

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(1) small business generally lack a proper understanding of KM, mostly in terms of
key concepts, and

(2) small business have been slow in adopting formal and systematic KM practices –
it does not feature highly as an important agenda in most of them.

Another key issue of KM related to SMEs is the “loss of knowledge”. Many authors
agree that this loss through the employees is an alarming issue for SMEs. This can be
corroborated in Table 5.6. Notably when key employees leave a company, they will
take with them all their a accumulated and valuable knowledge unless it is captured,
codified and shared (Wricket & Herschel, 2001).

Small companies have much smaller population to share and use knowledge,
although the rate of knowledge generation would be relatively high (per individual)
compared to some large organisations. Therefore, there is a need for a system that
will facilitate SMEs pooling their knowledge in a formal and structured way leading
to generate a much larger knowledge pool as a large company does. This should
increase the rate of learning and improve competitiveness.

Table 5.6 Selected reasons to implement knowledge management practices by firm size in Canada.
Source (OECD, 2003).

Loss of key personal Difficulty in capturing workers'

and their knowledge Loss of market share undocummented knowledge
2 000 and more 79% 64% 35%
500-1 999 83% 44% 56%
250-499 57% 59% 59%
50-249 72% 43% 72%
Less than 50 59% 49% 42%

Wong & Aspinwall (2004) summarize the most acute problem faced by SMEs in
order to implement KM. In the broad sense they suffer from a lack of financial and
human resources, time, technical expertise and knowledge. They generally have
limited cash flow and sources of finance. Typically, they have restricted financial
reserves to invest in long-term programmes or other projects which may not be

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viewed as important to them, such as KM. With limited human resources, the
assignment of dedicated staff to KM is hard to achieve.

Time constrains and administrative pressure often make it hard for them to devote
their time in KM issues. They also lack the knowledge and expertise (technical and
managerial) to deal with them. All these aspects need to be borne in mind when
development a KM approach for small business. However, Wong & Aspinwall
(2004) point out that it is also important to note that KM is not necessarily an
unaffordable luxury for SMEs.

According to Moran (1999), it all depends on the choices and needs of the individual
company. With the advert of the Internet, KM has indeed surpassed the high cost
paradigm and companies of all size can now use it to acquire and share valuable
information without undue expense. As previously mentioned this thesis presets an
alternative for implementing a KMS focused on SMEs conditions.

In summary there are certain unique characteristics which are the core of the small
business. Awareness understanding and sensitivity to their situation are crucial
before KM is implemented in their environment. A clear understanding of their
inherent features will help to provide a more optimal approach to KM.

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5.13 Conclusions

This chapter has presented an overview of Knowledge Management concepts and

systems. According to the OECD (2003) the main motivations of companies to
implement KM systems lie on the following aspects:

▪ To accelerate and improve the transfer of knowledge to new workers

▪ To help integrate knowledge within the firm or organization
▪ To protect the firm or organization for loss of knowledge due to workers
departure
▪ To encourage managers to share knowledge as tool for professional promotion of
their subordinates
▪ To train workers to develop their human resources

These aspects of motivation reflect the importance of Knowledge as within

organisations. This chapter has provided a better understanding of the KM area
presenting issues such as KM process, technology, benefits and barriers. It was
agreed that current technology plays an important role to develop a KM project,
particularly with advances in computer-based systems and telecommunication
technology. Whilst most of KM developments are focused on large enterprises, it
was revealed that, taking advantage of technologies such as the Internet and
repository systems, there are considerable opportunities for SMEs in order to adapt a
KM system and enhance its performance. In Chapter 7, a proposal for a knowledge
sharing system focused on the SMEs environment and oriented to promote
Manufacturing Excellence practices will be described.

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