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Definition: knowledge management from The Hutchinson Unabridged Encyclopedia with Atlas and Weather Guide

Process by which an organization gathers, organizes, shares, and analyses its knowledge. Data entered via a keyboard, a scanner, voice input, or other input device, can be catalogued, indexed, filtered, and linked. The information can then be refined, for example through data mining, in preparation for dissemination.

Summary Article: Knowledge Management
From International Encyclopedia of Organization Studies

The term knowledge management (KM) denotes the explicit strategies, tools, and practices applied by management that seek to make knowledge a resource for the organization. The field of KM is concerned with the development of concepts that illuminate or enhance the application of these practices.

Conceptual Overview

As this definition indicates, the theory and practice of KM encompasses multiple levels of analysis, ranging from overall organizational strategies through the development of different tools and ways of representing knowledge, to more microlevel practices of management. Equally, knowledge may be constituted as a resource in a variety of different ways—including a legally defined form of intellectual property, an accounting-based intangible asset, and valued lessons for practice. As such, KM is really an umbrella term to designate a number of different strands of managerial activity that seek to improve firms’ exploitation of knowledge. These include strategies for managing knowledge-based organizations, for representing knowledge assets or “intellectual capital” in accounting, and for capturing and distributing organizational learning.

Although some authors claim that KM is a timeless activity—that organizations have always done it—it is clear that the self-conscious attempt to exploit knowledge in this way is a relatively recent phenomenon. Many of the conceptual foundations were laid by a small group of writers in the early 1990s. This group included Ikujiro Nonaka, whose work has been especially influential as a way of explaining the conversion of the tacit knowledge of organization members into the explicit form, which can be widely applied by the organization. The notion of tacit knowledge was originally developed by the philosopher Michael Polanyi to highlight the importance of knowledge that cannot be easily verbalized—as Polanyi, put it, “we know more than we can say.” The distinction between tacit and explicit knowledge is often equated with the difference between “know-how” and “know-what.” Thus the classic example of tacit knowledge, as described by Polanyi, is knowing how to ride a bike.

Drawing on this account, Nonaka describes four stages of knowledge creation that he terms internalization (explicit to tacit), socialization (tacit to tacit), externalization (tacit to explicit), and combination (explicit to explicit). Nonaka argued that this cycle was central to the process of innovation within firms and applied it to analyzing the development of a new bread-making machine. The (re)discovery of tacit knowledge and its practical application to innovation did much to spark initial interest in KM. It seemed to offer businesspeople a new, hitherto hidden resource to be mined and exploited and gave academics a new focus for theoretical debates.

A further contribution to the debate on KM came from writers in the organization studies field who were not so much concerned with the functional outputs of knowledge, as with the diverse sources of knowledge within organizational settings. An important influence here was the work of Frank Blackler, who drew on a range of sociological studies to identify five different types of knowledge. These he termed embrained (conceptual skills and cognitive abilities), embodied (action oriented and only partly explicit), encultured (shared understanding through the development of an organizational culture), embedded (resides in systemic routines) and encoded (information conveyed by signs and symbols) knowledge. This and similar taxonomies extended the debate around organizational knowledge, but also implicitly extended the scope and opportunities for KM by highlighting new arenas for exploitation.

A similar trajectory—making knowledge manageable by breaking it down into components—is evident in the work of another influential writer, Karl-Erik Sveiby. Sveiby’s contribution was to advocate the development of accounting measures to give some recognition to the knowledge-based intangible assets of the firm. Sveiby’s work reflected the contribution that Scandinavian writers and firms, notably the financial services firm Skandia, made to pioneering attempts to evaluate the different components of a firm’s intellectual capital. By defining the firm’s knowledge-base as, at least metaphorically, akin to financial capital, these pioneers sought to demonstrate that traditional accounting methods radically undervalued key capabilities of the firm. More specifically, Sveiby and others argued that intellectual capital was an enduring resource for the firm and could be broken down into several contributory components: human capital (the skills of employees), structural capital (the learned operating routines of the firm), and customer capital (relationships with customers). By highlighting the difference between the book value (i.e., given by conventional accounting for assets) and market value (the firm’s valuation by the stock market) of companies, these pioneers were able to develop a strong critique of existing accounting methods as inappropriate to the emerging knowledge economy. Although the collapse of the dot-com bubble poured cold water on some of these ideas (suggesting that market values were sometimes wildly inflated), the persistent inability of accounting methods to adequately represent the key drivers of economic value within firms provides continuing support for the basic argument.

While the work of writers such as Nonaka and Sveiby highlighted the exploitation of knowledge through innovation and business strategy, others have been more skeptical about the manageability of knowledge. In particular, one important strand in the literature on KM (which also overlaps with debates on organizational knowledge) has to do with embeddedness of knowledge in specific social and organizational contexts. This strand can be traced back to the important ethnomethodological work of Lave and Wenger on the acquisition and sharing of knowledge within informal social and occupational groups. Where other KM studies framed knowledge within a business life-cycle model of creation, development, and diffusion, the work of Lave and Wenger drew on noncorporate examples such as alcoholics and tailors and located knowledge at the hub of daily life within particular social groups. Their work was originally presented as a rejoinder to existing views in the education field, especially narrowly cognitive views that saw learning simply as a transfer of information from the teacher to the learner in classroom settings. In contrast, Lave and Wenger sought to take learning out of the classroom and relocate it within everyday life at work and home. They argued that the acquisition of knowledge came from participating in what they termed the community of practice. The latter they saw as representing the strong ties between work and community created by shared identities, understandings, and meanings.

Subsequent writers sought to apply this original concept of the community of practice to the debate around KM. An important contribution here came from the work of John Seely Brown and Paul Duguid, who translated communities of practice into the business arena by relating the concept to Julian Orr’s ethnographic study of Xerox photocopier repair people (customer service reps). In this study, Orr had discovered that the Xerox rep’s working day typically revolved around informal meetings with other reps over breakfast, lunch, and coffee. At these meetings, the reps would continuously swap war stories about malfunctioning machines that could not be repaired simply by going through the know-what of the repair manual. Orr found that one of these informal conversations would be worth hours of training. While chatting, the reps posed questions to each other, offered solutions, laughed at mistakes, and generally kept each other up to date about what they knew and what they’d learned on the job. As a result, knowledge was shared extensively among the community about ways of dealing with unusual glitches and problems that simply were not covered in the photocopier repair manual. Significantly, Xerox management was unaware of this informal community and its value to the business. They believed that the reps worked independently and that any socializing during the day was therefore inefficient. When Xerox management attempted to stop the coffee-break sessions, however, they discovered that the reps’ efficiency (number of calls made) increased, but their effectiveness (number of calls required to complete a repair) was reduced. Brown and Duguid’s retelling of the story of the Xerox reps’ community and management’s response became one of the iconic stories that helped to stimulate both theoretical and practical interest in KM. They used this and similar stories to suggest that while communities of practice were not on organization charts, and were not officially sanctioned, they were nonetheless an important ingredient in business performance.

Since the seminal works of the early and mid-1990s, the volume and complexity of academic debate on KM has expanded hugely, making it, as Linda Argote notes, much more difficult to develop a holistic or integrated account of the field. However, while it is impossible to identify the many ways in which, the theory and practice of KM have evolved in recent years, it seems clear that the different strands of thinking outlined above are linked to the emergence of two major approaches to KM tools and practices, which, though variously labeled by different writers, can be briefly summarized as the cognitive versus the community approach.

In the cognitive approach, KM involves extracting, storing, and reusing the valuable knowledge located inside employees’ heads or in successful organizational practices via the use of IT tools and other artifacts. Tacit knowledge is codified into more explicit forms. “Lessons learned” exercises and “after action reviews,” for example, attempt to codify and capture experience in project and work activities. Typically, then, this form of KM involves centralizing knowledge that is currently scattered across the organization to make it more accessible by a variety of groups according to business needs. The development of centralized databases and corporate intranets is one example of this approach.

As outlined above, the community approach is a more recent development. This draws on workplace studies that have highlighted the socially constructed nature of knowledge within communities of practice. Such communities are seen as critical to the sharing of tacit knowledge within the organization, providing, as they do, a forum for the swapping of stories and experience. The community model thus highlights the importance of shared work practices and understandings to the acquisition and sharing of knowledge. KM initiatives drawing on the community model have often focused on the development of virtual or online communities aimed at promoting knowledge-sharing between geographically dispersed groups of practitioners.

Critical Commentary and Future Directions

Relevant background for explaining the emergence of KM is the combination of rising global competition with the increased availability of information systems and tools that enable new forms of virtual collaboration across and between organizations. These factors, and the associated restructuring of business sectors, have created new sources of uncertainty about the sources and drivers of economic value. This uncertain environment seems to have prompted many firms to seize on KM as a way of speeding up and extending their ability to exploit knowledge—either by improving the throughput rate of R&D and innovation processes, or by spreading best practices in operations.

Against this kind of background, KM became a profitable label to apply to many IT-based systems and the offerings of consultancy firms. These firms, and other business intermediaries such as business media, publishers, and professional associations, seem to have played an important part in the diffusion of KM ideas and tools. Many consultancies, for example, were persuasive advocates of KM because they were at the forefront of early applications within their own practices. Equally, the discovery of KM’s business potential prompted a huge growth in the number of books and articles on the topic, even extending to a Complete Idiot’s Guide to Knowledge Management.

The success of KM has not been without its critics, however. The sheer scale of KM’s diffusion into business arenas, for example, has lead researchers such as Scarbrough and Swan to dub it a management fashion. This is not necessarily a criticism because such fashions are a powerful way of spreading new ideas. In this respect, at least, KM has been very successful. Much of this success can be attributed to the ambiguity of the concept—the very fact that it can support the many different interpretations outlined above. In addition, as a new area of management thinking, KM has seen a contest for territory with a number of different professional and management disciplines trying to stake their claims and in the process further escalating the level of interest. Although these different forces promoting KM have sometimes created confusion rather than understanding, the continuing debate on KM’s scope and purpose has helped to create a valuable space for interaction between social science research and organizational practices, which is not found in some more established disciplines.

Against these positive aspects of KM’s spread, however, one negative implication of the management fashion tag must be recognized—namely, that KM’s implementation in practice has lagged a long way behind its diffusion. Despite the highly publicized success of a small number of firms in applying KM, adoption in practice has been much more limited than the spread of KM thinking would suggest, and many KM initiatives have run into major roadblocks. Many of the early KM initiatives, for example, were based on a cognitive approach to knowledge. Failure here often had to do with their tendency to equate knowledge with information, frequently overstating the potential benefits of IT systems. As Michael Polanyi pointed out, knowledge, unlike information, is personal—that is, it involves a knowing subject. It follows that knowledge tends to be embedded within the social contexts of individual action. Moreover, some writers, following Polanyi, have argued that the notion of converting tacit knowledge into explicit knowledge, which is axiomatic to many KM practices, is misguided. Hari Tsoukas, for example, argues that the terms tacit and explicit are not different forms, but simply coexisting dimensions of knowledge.

Although the community perspective avoids some of these pitfalls, it is also increasingly subject to criticism. In translating the concept of communities of practice to their own operations, managers have frequently neglected or ignored many of the original implications of the concept—for example, its informal, nonpurposive nature, and the importance of socialization, identity, and participation in practice. Instead, they have used the term as a label for new cross-functional or cross-national units, which are designed to encourage participation in collective problem-solving activities. As a result, writers such as Alessia Contu and Hugh Willmott argue that communities of practice have become “social objects” that extend managerial exploitation of the workforce.

This critique points to the need for the KM literature—both theoretical and practical—to be more sensitive to the role played by management in KM. Up to this point, much of the focus has been on the mechanisms of exploiting different types of knowledge. The active role of management, and indeed of management knowledge, has not been fully explored. Yet managers are not simply the passive recipients or executors of the concepts and tools of KM. They may apply them for political purposes, as noted by Contu and Willmott, or for reinforcing existing structures of control. They may equally be applied to programs of change and restructuring. In this sense, understanding the way in which existing forms of management knowledge mediate and shape KM ideas is critical to addressing their outcomes for different stakeholder groups. One example of this is the link that has emerged between the spread of KM ideas and the active role of IS professionals in using such ideas to justify investments in new IT systems. This link helps to explain the popularity of cognitive approaches to KM and the association with IT.

It follows that from the point of view of better understanding KM’s progress into practice, and even in attempting to speed up that progress, there is a need for greater attention to the active role that managers play in shaping its application to organizational practices. Addressing that role may lead in several different directions. For example, it may lead to greater interest in the economic evaluation of KM activities. If knowledge is indeed a valued resource for business, what are the barriers posed by existing accounting systems to adequately recognizing this value? And what are the implications for managers seeking to justify investments in KM?

A second approach might involve focusing on the role of discourse in KM. Because stories and language are crucial both in the sharing of knowledge—as highlighted by Orr’s study—understanding the way in which the discourse of KM develops is relevant not only to understanding its diffusion, but also to its application in practice. This approach would take the interest in the concepts around knowledge and KM as a function of organizations’ willingness and ability to be reflexive about their practices. It is ironic, for example, that an idea such as tacit knowledge has real consequences for organizational practices when managers begin to talk about it and apply it to their own business strategies.

In addition, an organizational perspective on KM might explore the dilemmas that managers face in explicitly constituting knowledge as a resource within organizations based on bureaucratic and Taylorist models. In organizations that are designed to minimize knowledge and that view it primarily as a cost to production, the reworking of KM may struggle to be anything more than cosmetic. While some writers have predicted the demise of such forms in an age of outsourcing and business networks, other evidence suggests that standardization, specialization, and deskilling remain the bedrock of many organizations. In this context, the aspirations of KM to make knowledge a resource may actually be a symptom of a wider struggle between old and new forms of organization and management.

    See also
  • Actionable Knowledge; Communities of Practice; Intellectual Property; Knowledge; Organizational Knowledge; Organizational Learning; Tacit Knowledge

Further Readings
  • Argote, L.; McEvily, B.; Reagans, R. Managing knowledge in organizations: An integrative framework and review of emerging themes. Management Science, 49(4), (2003). 571.
  • Blackler, F. Knowledge, knowledge work, and organizations: An overview and interpretation. Organization Studies, 16(6), (1995). 1021-1046.
  • Brown, J. S.; Duguid, P. Organizational learning and communities-of-practice: Towards a unified view of working, learning, and innovation. Organization Science, 2, (1991). 40-57.
  • Contu, A.; Willmott, H. Re-embedding situatedness: The importance of power relations in learning theory. Organization Science, 14(3), (2003). 283.
  • Nonaka, I.; Takeuchi, H. (1995). The knowledge-creating company. New York: Oxford University Press.
  • Orr, J. (1990). Sharing knowledge, celebrating identity: War stories and community memory in a service culture. In Middleton, D. & Edwards, D. (Eds.), Collective remembering: Remembering in a society (pp. 169-189). London: Sage.
  • Polanyi, M. (1958). Personal knowledge: Towards a post-critical philosophy. Chicago: University of Chicago Press.
  • Scarbrough, H.; Swan, J. Explaining the diffusion of knowledge management: The role of fashion. British Journal of Management, 12(1), (2001). 3-12.
  • Sveiby, K.; Lloyd, T. (1987). Managing knowhow: Add value by valuing creativity. London: Bloomsbury.
  • Tsoukas, H. (2003). Do we really understand tacit knowledge? In Easterby-Smith, M. & Lyles, M. A. (Eds.), The Blackwell handbook of organizational learning and knowledge management (pp. 410-427). Oxford, UK: Blackwell.
  • Harry Scarbrough
    Copyright © 2008 by SAGE Publications, Inc.

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