Post on 26-Feb-2023
Key Issues in Knowledge
Management
Introduction
Knowledge management (KM) has been drawn increased attentions
from the existing academic journals, especially since 2000.
Additionally, courses related to KM have become popular among
worldwide business schools and the topic is included in agenda
of firms. The topic also applicable to a wide range of job
field from private to public sectors and job positions related
to the topic include such as knowledge manager or officer
(Lussier, 2008).
There are some main arguments of this essay. KM is related to
business strategies and sharing knowledge effectively in firms
in order to gain profits. Characteristics of KM can help firms
further understand the issue of KM. The first feature, which
is strategy, refers to the effective use of intellectual
capital, the culture feature refers to workforce diversity and
the third feature, which is organizational learning, refers to
the exploration and exploitation of corporate knowledge. The
process of knowledge creation has close relationship with
tacit and explicit knowledge. The reason for the fail of KM in
western firms is the conflict of different cooperate culture
between eastern and western firms. Knowledge management system
(KMS) can be a good platform for companies to cooperate human
capitals and technological factors and in this case the role
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of information technology (IT) is also vital. However,
companies should carefully notice the target users and
specific business aims for using KMS. Furthermore, KM has
important empirical applications in the project based
organizations (PBO). The use of KM in the construction
industry can benefit firms to reduce costs and improve project
quality, but meanwhile firms should also consider the problem
of employees’ resistance to share knowledge and the framework
of their projects due to the complex characteristics of the
construction industry. Consulting firms use different KM
strategies according to codified and personalized knowledge.
The content of the essay can be considered as divided into
three parts. The first part refers to the key issues around
the concept of knowledge and KM, and the second part refers to
the topic around the relationship among KM, KMS and IT. The
final part refers to the empirical applications of KM in PBOs.
This essay will firstly discuss the basic definition of
knowledge and KM, and then focuses on the important features
of KM, the basic process of KM, some criticisms about KM, the
concept of KMS, relationship between IT and KM, some
disadvantages of using KMS and adopting IT into KMS. Then the
essay will focus on some empirical applications of using KM
strategies in the construction industry and in consulting
firms.
Definitions of Knowledge and KM
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It is important to know about the definition of knowledge
before studying the concept of KM. So far many literatures
have provided their definitions for knowledge that have
different conceptual focuses. For example, according to Awad
and Ghaziri (2004), knowledge can be considered as the
understanding or skills that individuals obtained during the
process of learning, which benefit individuals’ ability to
analyse contents and make related decisions. Moreover, Klicon
(1999) believed that knowledge is the cognitive process of
generating clear and deep understanding of complicated data
and information. Davenport and Prusak (1998) argued that when
referring to commercial organizations, knowledge often deeply
rooted into corporate documents, inventories, organizational
practices and routines.
There are also some important definitions about KM. Beijerse
(2000) argued that KM in organizations is based on information
management by directing strategies, framework, different
culture background, attitudes and capacities of the corporate
workforce. Therefore corporate goals can be achieved if
knowledge of workforce becomes productive. In general, the
basic definition of KM focuses on how to explorate and share
knowledge effectively within organizations.
Main Features of KM
KM has some important features that can reinforce the
understanding of the basic definition of the topic, and such
understanding is also significant to business organizations.Page 3 of 23
As Lussier (2008) argued that the topic has four main
dimensions: strategy, culture, organizational learning and the
support from technology or information systems.
The strategic aspects mainly refer to the effective use of
intellectual capital in order to improve the performance of
organizations. Intellectual capital refers to the total value
of knowledge of employees in corporations, or any types of
proprietary knowledge that can increase the competitive
advantage of corporations. Its subsets includes such as
information or human capital. Intellectual knowledge is a type
of capital that can be regarded as an asset that include all
the useful resources for a corporation to gain its
considerable profits, new productions and consumers. It is not
easy to measure intellectual capital since the process may
take quite a long period. Firms invest considerable amount of
money into their employee development and training about
specific business issues and the firm may benefit from such
investment after some years. In recent years intellectual
capital plays an increased important role in job market due to
the increasing use of technology.
Cultural aspect mainly refers to the management of diverse
workforce in corporations. Workforce can be diverse in terms
of employees’ nationality, age, physical conditions, gender
and religion. Diverse workforce often close related to equal
pay employment and wage discrimination. The advantage of
diverse workforce may benefit the process of knowledge sharing
from various cultural backgrounds especially for multinational
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corporations, but the disadvantage of the issue related to the
cultural shock or gap among different nations.
Organizational learning mainly focuses on the exploitation,
exploration and sharing of knowledge. The concept of
organizational learning is not only about the aggregate
information from employees, but also based on systematic
integration and corporate explanation of new knowledge that
may include any risks. In general, the process of
organizational learning has three basic factors for the
majority of firms: action, reflection and conceive.
Organizational learning successfully connects work tasks,
innovations and actions. When referring to the issue of KM, an
ideal environment for organizational learning should be
created.
Basic KM Process
Alavi (2000) provided a typical process for KM that widely
used by organizations, especially in Europe. The first step is
knowledge creation, the second one is knowledge storage, the
third one is the distribution of knowledge and finally is the
empirical application of knowledge. The foundation of
knowledge creation theory is tacit knowledge. Knowledge
creation can be defined as the process of creating,
disseminating within organizations and integrate it into
services and productions. Tacit knowledge is used to
understand the transform of individual knowledge into explicit
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knowledge, which is useful for organizations. Knowledge is
created through individual experiences and then stored in
human mind as values, skills or memories (Nonaka and Takeuchi
(1995). Konno et al. (2000) developed a dynamic model for
knowledge creation theory that focuses on dialectic analysis
of explicit and tacit knowledge. The model is assumed to be
used in an environment with the mixture of cultural, social
and historical aspects and social interactions among
individuals are assumed to be the negative factor that
influences the model.
Knowledge is then be stored and recycled and wait for use
within organizations. This process can be described as
organizational memory that contains personal memory and shared
knowledge that generate from social activities. However,
organizational memory needs to be carefully treated since any
bias attitude may prevent organizations benefit from
innovations. Therefore organizations should adopt a more
fixable approach to structure and outlook current knowledge
(Alavi, 2000). Alavi (2000) believed that the importance of
knowledge distribution has been underestimated and it has some
important factors such as the perceived value and motivational
characteristic of source, the availability of transform
channels and the learning ability of the knowledge receiver.
Criticisms about KM
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There are some critiques about KM. Clegg and Ray (2005)
pointed out some unsuccessful projects of KM in western firms
and concluded one significant and underlying reason for the
situation: the ineffective management of corporate culture. A
high and low context theory was used by Clegg and Ray (2005).
High context states mainly refer to Asia countries, for
example, China or Arab nations, while low context countries
mainly refer to the western countries, such as the UK or the
USA. High context countries require the information receiver
has deep understanding of local culture or traditions when
analysing the information, but the information in low context
countries is relatively more adequate and straightforward. It
seems possible to extract main options and code language from
individuals and then delivery the explicit knowledge to others
during KM process. However, Eastern countries, which are the
high context type, have more ability than low context western
states in terms of facing the relationship between tacit and
explicit knowledge, solve the problem of package and transform
of the essential tacit aspects. Cultures in low context
countries have lots of common knowledge that are very popular
among the public. The situation is named as ‘alignment’ of
tacit knowledge among individuals by Clegg and Ray (2005). By
doing so, the transform of explicit information between
individuals are more feasible than before. The insider-
outsider theory can be used to understand the above problem
and the concept is that high standard of knowledge alignment
are exist in insiders. Additionally, the building of culture
is a key issue in terms of KM approaches, but it has
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limitations since different individual has different views
about culture. Building culture is especially difficult to
achieve in low context countries where the code of message is
limited (Clegg and Ray, 2005).
Definitions of KMSKM has close relationship with KMS. The concept ‘Knowledge
management system’ has various definitions among literature.
In those literature focuses on KM, KMS means technological
aspect, for example, the IT based systems that provide support
and strengthen the process of knowledge in business
organizations (Alavi and Leidner, 2001). In contrast, in more
recent researches, the basic definition of KMS has been
integrated with additional factors, such as business
strategies, consumers or services, instead of only focus on
the technological part. Therefore, KMS can be known as provide
a good platform for the close and effective interactions among
technological software, networks, employees, employers,
resources and productions (Jennex, 2005). Additionally,
according to King (2009), KMS is a type of communications and
information system (CIS) that based on the use of computers
with the main aim to help different processes of KM in
organizations. KMS has the components of networks and
databases to help individuals in organizations to share and
argue ideas with experts from a wide range of fields. Compared
with CIS in organizations, KMS require more human interactions
during operation process.
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The Role of IT in KM
The role of IT in KM can be significant since it is deeply
rooted into every part of the process of knowledge. The
function of IT not just all about provide access to past data
or statistics with the main aim to understand consumer
opinions, but also classify and store explicit knowledge and
provide chances to effectively use tacit knowledge that based
on individual experiences and workforce cultures. The use of
KMS successfully link target users and process knowledge in a
sharing environment (Alavi and Leinder, 2001). Furthermore, as
Hagenhoff et al. (2003) argued that the use of technological
softwares in KM can be mainly divided into seven independent
parts: knowledge search, knowledge presentation, knowledge
integration, knowledge transform, the publication and
framework of knowledge, the cooperation and communication of
knowledge and finally the administration of knowledge. The
search of knowledge mainly focuses on the pull and push search
functions. Knowledge presentation shows the connections
between research results and main tents. Knowledge integration
can be automatic or manual type, and external resources will
be integrated by the process of data aggregation and analysis.
Individuals in corporations can be able to communicate and
corporate different knowledge and all the individual users are
meanwhile administrated by the centre management system.
Finally, KM could also related to other information
technological subjects, such as E-learning.
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Criticisms of using KMS and IT
However, KMS and the use of IT into it have some important
challenges or potential problems. Knowledge plays a vital role
in the survival of enterprises. Employees’ views may be
influenced by technological or social aspects. The most
considerable problem for firms is how to cooperate and
integrate the job task and social aspects of employees into
the pre designed corporate KMS (Tatnall, 2010). Firms may face
practical problems of implementation of KMS since it may be
not easy to identify the exact involved users of the KMS,
types of knowledge that should be used and the main aim to use
KMS. Individual employee’s learning behaviour in different
occasions is very important for firms to understand and the
KMS may also has negative influence on individual’s learning
process. Similar problems also apply to group learning. As a
result, firms may not fully benefit the technological
advantages of KMS. In this case managers have to interpret
their strategic goals by using archaic approaches that have
already been used many years ago (Datri and Sacca, 2010).
Organizations should consider the level of accessibility so as
to improve targeting useful knowledge. Additionally, knowledge
should be represented efficiently to end users without any
invalid or unreliable parts. Knowledge should also be able to
rescale based on any provided settings and secured by reliable
technological systems (Vahdatikhaki, 2011). Furthermore, as
Mckeen et al (2009) argued that finance performance can be a
good indicator for the degree of success of KM in
corporations. The success of KM in practical projects of firms
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is not only about a well operating database and active
employees who prefer sharing their information. The practice
of KM has a direct and positive impact on the performance of
corporations and this further leads to a direct connection
with corporate finance performance. Therefore, a bad financial
performance of firms can be a warning for these firms to
consider the adjustment of their corporate KM strategies or
approaches.
Empirical Applications of KM for PBO
KM has important empirical applications that have close
relationship with KMS. KM was used only by a limited amount of
technological companies in the past but for the recent years
the use of KM has become quite popular among organizations
with various size and business fields, especially for those
PBOs that require intensive use of the internet (Gottschalk,
2005).
KM plays a significant role in PBOs, for example, in
construction or consulting firms. According to Davenport et al
(1998), the success of PBOs can be shown by the financial
return of a new plan or process that is used to solve problems
in firms. Therefore it mains a positive of return of corporate
investment in KM projects indicates a relative high
possibilities of KM success for firms. Additionally, Davenport
et al (1998) further argued that the development of knowledge
content as well as project survival are two other important
indicators of successful KM practice. A development in
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knowledge content indicates an improvement in process and
facilities and therefore a better approach of using further
knowledge can be available. Project survival refers to whether
a KM initiative can prevent corporate knowledge from drying up
or not. The effective use of KM in construction projects can
help industrial firms to organise their business activities.
KM has some advantages for construction firms since it can be
more effective than other corporate assets, such as materials
or capitals. Moreover, the use of KMS could benefit
construction projects and other industrial firms by sharing
previous knowledge or experiences so costs and producing time
is reduced and quality of projects is improved. (Ahmad et al.
2007).
Problems of using KM in the Construction Industry
Construction organizations face some important challenges and
potential problems when integrating KM into corporate projects
despite those advantages of using KM in the industry.
Construction firms also face the problem of implementing a
successful KMS into their corporate framework since it
requires a considerable change in corporate culture in all
managerial levels within the corporation (Aronson et al., 2000).
Useful knowledge may be wasted due to the complicate nature of
the construction industry so it could be difficult for firms
to carry out formal KM project plans. Construction industry
has the nature of unrepeated projects that challenges the KM.
Therefore, projects with solutions or practices may be
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mistaken by employees who have similar solutions in their
projects with different features or contents. In this case KMS
should be integrated to find the associated solutions to
specific problems instead of only provide general solutions to
all problems (Klicon, 1999). In general British construction
firms lack well planned and formal strategies for KM
initiatives and the majority of these firms need knowledge
managers or department to carry out their KM strategies,
especially for small companies (Al-Ghassani et al., 2005).
Moreover, UK construction firms lack formal project process,
for instance, similar projects are produced by a large number
of procedures, and this situation negatively influences the
implementation of KM.
Additionally, in construction industry employees are not
willing to share their own knowledge to others and it may be
hard to change this view of employees. The majority of
employees in the industry consider their own knowledge as
private property. For some large British construction firms it
could took many years for their employees to accept the idea
of sharing knowledge (Anumba et al., 2000). Davenport and
Prusak (1998) argued some main reasons for this situation.
There is limit trust among workers and managers and employees
do not fully aware the significance as well as future
advantages of KM to their firms. Additionally, workers do not
willing to accept new ideas and have low intolerance for
managerial mistakes. The process of knowledge sharing can also
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be negatively influenced by discrimination for employees who
from lower positions.
KM Strategies for Consulting firms
Consulting firms have different KM strategies due to different
nature and use of knowledge. As Hansen et al (1999) argued
that there are mainly two types of knowledge for consulting
firms: codified and personalized knowledge. The former type
include accounting consulting companies, such as Ernst &Young
while the latter type included those management consulting
firms, such as McKinsey &Company. Codified knowledge is reused
by firms to produce high standard and reliable information
framework. Firms that based on this type of knowledge
establish electronic systems for disseminates and stores
documents, and they also set up large scale of professional
team to provide consulting services in order to gain high
value of aggregate revenues. In this case IT plays a very
important role in terms of connecting individuals and recycled
codified information. Moreover, firms with codified knowledge
type focus on hiring young graduates who are good at reusing
information and problem solving. These new employees are
trained into groups or distance learning and they are rewarded
for any contributions to the corporate document system (Hansen
et al., 1999).
In contrast, personalized knowledge refers to the development
of individual employee’s skills and experiences so as to
provide high quality of analytically and strategic suggestionsPage 14 of 23
for clients’ problems. For those firms with the type of
personalized knowledge, service fees are high and they are
based on relevant solutions to specific problems.
Additionally, these firms prefer to establish professional
teams in small scale with the main aim to maintain high
margins of profits. These firms also use face to face approach
to network employees and clients and share tacit knowledge.
Therefore, in this case the investment of IT is not as much as
in those firms that based on codified knowledge. The reason
for this situation is that the main aim for personalized type
of consulting firms is to establish communications and
exchange tacit knowledge, which may be not as clear or
straightforward as explicit knowledge. Besides, personalized
type firms prefer to hire business graduate who are good at
dealing with tacit information and who have some years of
relevant work experiences. Training in this case is based on
individual mentoring and rewards for employees are based on
sharing knowledge directly to other employees (Hansen et al.,
1999).
KM in McKinsey &Company
McKinsey &Company is a famous multinational consulting firm
that established from the USA with services focus on solving
the problems of senior management levels. The company has
covered its service in both business and government
organizations. KM contribute the company solve consumers’
problems more effectively and every individual employee in thePage 15 of 23
firm plays an important and specific role in developing and
practicing knowledge. McKinsey also developed some knowledge
centre in different countries. Researchers in those centres do
background study and data analysis and provide the results for
the firm’s worldwide consultants. Research topics cover from
financial issues, the management of supply chain, to overview
of specific industry. Additionally, McKinsey develop research
programmes that focus on the issue of globalization or
domestic economic growth for worldwide countries.
Technological softwares are also integrated into the analysis
of data intensive issues (Indu, 2007).
According to Indu (2007), the firm follows some certain steps
to apply KM. In the first step clients’ problem is defined,
any potential challenges are noticed and specific goal is
agreed on meetings that are held by client team. Then the
client team distribute the work task into specific pieces and
decide project plans to set hypotheses. Next the employees in
the target firm will be interviewed by the client team in
order to better understand the operating system of the target
firm. Data are also identified with the help of McKinsey’s
worldwide database network. The fourth step is the deep
analysis of selected data according to hypotheses. Possible
solutions and recommendations will be provided from the client
team based on the established trust relationship between
employees and the client team. Finally the client team will
also help the target firm to implement those solutions.
Although KM has contributed a lot for McKinsey’s success, the
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rapid increase in the total number of the company’s employee
and sub-offices around the world could have negative influence
on its corporate culture and its quality of KM. Moreover, the
majority of McKinsey’s assets are people and personal networks
despite the fact that the company sue IT systems and database.
Some researchers pointed out that McKinsey may face the
problem of retaining knowledge so the company should attempt
to storage knowledge by codification (Indu, 2007).
Conclusion
In conclusion, this essay has discussed the key issues in KM
in terms of three aspects: the basic concepts of knowledge and
KM, the relationship between KM and IT, and the empirical
application of KM in PBOs. The essay firstly focused on the
definition of knowledge as well as KM, four important
characteristics of KM that are strategies, culture,
organizational learning and technology support. Then the essay
discussed the basic process for KM that provided by Alavi
(2000) and the process includes the creation, the storage, the
distribution and empirical application of knowledge. Some
drawbacks of KM, the definitions of KMS, the role of IT in KM,
some potential challenges and problems of using KMS and IT are
also discussed. The empirical application part of the essay
focuses on the PBO especially in the construction industry and
consulting sector. Some challenges of using KM in the
construction industry and different KM strategies for
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consulting companies have been analysed. Finally, the essay
focuses on the case of McKinsey consulting company.
This essay has analysed and concluded some important
arguments. A large number of literatures have been provided
their own definitions about knowledge and KM. The concept of
Knowledge can be regarded as the learning process of master
new skills or understanding of new ideas. When referring to
corporate firms, knowledge is close related to business
practice and inventories. KM is used by firms to gain profits
based on the approach of sharing knowledge effectively. The
basic features of KM can help us to further understand the
concept of KM. The first feature, which is strategy, is mainly
based on the effective application of intellectual capital
within the firm, and the second characteristic, which is
culture, is mainly about workforce diversity that also related
to equal pay issues. The third feature organizational learning
refers to the exploitation and exploration of corporate
knowledge. The first step of KM process, which is the
knowledge creation theory, is closely associated with tacit
and explicit knowledge and knowledge storage is based on
organizational memory. The unsuccessful management of
corporate culture is the main reason for the fails of western
firms that use KM theories. The way that employees receive and
understand cultural values can be quite different between
firms in low and high context countries.
The concept ‘KMS’ can be defined in terms of technological
aspects or business strategies aspects. KMS can be a good
platform for firms to integrate human capitals, technologicalPage 18 of 23
software and corporate resources in order to gain profits. IT
plays a significant role in KM since it relates to the search,
the presentation, the integration, the transform, the
communication and administration of knowledge. However, firms
should carefully identify the target users and specific aims
for using their KMS, and their employees’ learning behaviours.
Moreover, financial performance of the firm can be a good
indicator of the effectiveness of corporate KMS.
KM has some important empirical applications in PBOs, for
example, the construction and consulting sectors. Project
survival and the development in knowledge content are two main
indicators of the effectiveness of KM practices. The effective
integration of KM into construction projects can help firms to
reduce costs and production time and therefore improve project
quality. However, the construction firms also face the
problems of employees’ resistance to share knowledge with
other persons and firms should also pay much attention to the
project framework, design and process due to the unrepeatable
characteristic of projects in this industry. Consulting
companies apply different KM strategies that based on two main
different knowledge types: codified and personalized
knowledge. Specific strategies for these firms have close
relationship with filed include economic models of
corporations, IT systems and human resource management. Some
large consulting firms, such as McKinsey, have developed their
own worldwide knowledge centre for data researches. However,
McKinsey may face the potential challenge for retaining
knowledge. Therefore, a combined framework of codified
Page 19 of 23
knowledge and personal networks for the company seems to be
necessary.
Word Count --- 4336
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