Chapter 2: Literature Review
2.3 Managing Intellectual Capital
2.3.2 Knowledge Creation and Knowledge Sharing
This section examines the contribution of knowledge creation and knowledge sharing to an organisation‟s intellectual capital.
2.3.2.1 Knowledge Creation
Knowledge is a product of learning. Learning is acquired through a range of modes including life experiences, observation, reading, education, practice, training, reflection, research and social interaction. In whatever way it is acquired, knowledge derived from learning will add to the knowledge bank of an individual. In turn, the knowledge can be applied to the work situation, thus increasing the collective intellectual capital of the organisation. Organisations that understand the need to improve their capabilities and competencies recognise the importance of learning.
The view of many authors is that intellectual capital will be the key feature of companies in the future, and in order to survive, and to be successful, companies must be continually create knowledge (e.g., Nonaka, 1991; Drucker, 1994; Bender and Fish, 2000; Bhatt, 2002). This recognition of the importance of creating knowledge has contributed to the success of Japanese companies. Japanese employees traditionally have entered into a lifetime association with one company, and this has engendered a culture promoting identity and loyalty. It is associations such as these that that have provided the means through which Japanese companies can tap into the knowledge of their employees for the creation of products, and points to the importance placed on recognising employees as generators of knowledge creation (Inkpen, 1996).
For organisations wanting to move forward, and to enhance their competitive position, making knowledge available is fundamental (Nonaka, 1991; Inkpen, 1996; Nonaka and Konno, 1998).
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ccording to Nonaka (1994) organisations that are continually creating knowledge are doing so “by reconstructing existing perspectives, frameworks, or premises on a day-to-day basis” (p. 19). His view is based on the point that “Any organisation that dynamically deals with a changing environment ought not only to process information efficiently but also create information and knowledge” (p. 14). There is validity in what Nonaka is saying. As people work and interact there is a flow of knowledge that can generate questioning and new thoughts about how things are done and from this new knowledge can emerge.These views point to the organisational importance of information and knowledge. However, from this there follows the need to recognise what aspects are important by analysing the available information and knowledge. This will determine how the resulting knowledge can best be integrated into systems and processes. Knowledge should have meaning and relate to the current activities being undertaken, but any such meaning must also fit the beliefs and perspectives of employees if there are to be successful outcomes. Furthermore, if knowledge is solely dependent on existing knowledge then it is likely ideas will be scarce (Haapasalo and Kess, 2001).
There can be difficulties associated with determining whether knowledge is new, and it is often hard to distinguish between creating knowledge and applying it. People are all unique in their thinking. People respond differently due to background, education and experiences; therefore, there is an inevitable viewing of things from different perspectives. Being creative in one‟s thinking about existing knowledge leads to the desire to explore reasoning to determine new outcomes and the
creation of knowledge. Organisations should find ways in which this can be extended to the corporate level.
There is evidence in the literature that Japanese firms have tended to be more willing to make an investment in knowledge creation and that they appear more accepting of taking incremental steps in the development of knowledge (Inkpen, 1996). This incremental change approach can be linked to a perceived quest for quick results. Inkpen indicates in America there is a tendency for organisations to separate out knowledge that will enable them to take major steps forward. Taking such an approach can escalate costs well beyond the cost of the original research investment with returns that are less than satisfactory. The incremental approach by Japanese organisations may well have placed them in a more favourable position for assessing cost-benefit trade-offs (Inkpen, 1996).
2.3.2.2 Knowledge Sharing
As a catalyst for organisational growth, the sharing of knowledge is vital to an organisation. Knowing who in the organisation has the relevant knowledge is important to the operation of the organisation, and sharing that knowledge is necessary. A knowledge creating company is one that is a „living organism‟ (Nonaka, 1991). When sharing knowledge, the organisation is constantly evolving, and the development of ideas and knowledge creation is intended not solely to generate products, but also as a source of ideas for redesigning the organisation, its structure, its systems and its processes. Knowledge creation can promote the complete rethinking of how an organisation operates. The greater the knowledge embedded in a product or process, the greater the likely value of that product or process. It also suggests that the greater the knowledge embedded in products or processes, the more difficult it is for potential rivals to be able to replicate them.
It has been stated by Allee (1997) that, “Knowledge expands with use” (p. 123). This points to the knowledge phenomenon that enables people, when sharing their knowledge, not to lose what they have given, but in fact to be able to increase their knowledge as a result of reciprocity through the act of sharing. Encouraging knowledge sharing is viewed as important. As employees‟ knowledge is increased, so in turn will that knowledge be transferred to the activities in which the employees are engaged. Such actions will generate value to the organisation. Where there is good interaction in the workplace this provides employees with the opportunity to discuss “know-what” and “know- how” practices that can direct the organisation towards a sustainable future.
Although the concept of knowledge sharing is commendable, the process itself can be problematic. Bender and Fish (2000) point out that people may transfer data or information, but “the knowledge itself has to be created in the head of the individual” (p. 3). In this event there is a range of ways in which knowledge can be shared.