Knowledge and Value

Since definitions and views of knowledge vary, it will come as no surprise that the value claims have also been challenged by groups of scholars. There are several grounds for identifying and establishing the value-adding potential that have contributed to the intellectual debate in the field. The value factor has, first of all, been examined from the resource point of view (i.e. is it the most important resource?). Furthermore, it has been debated from the type of knowledge point of view (i.e. is tacit the most important?) and the level of knowledge point of view (i.e. is individual the most important?). The conclusions have highlighted that the shape of the most valuable knowledge assets is likely to vary. The broad organisational context, in terms of how it facilitates and handles the development of knowledge assets is likely to have bearing on knowledge preferences and what ia the most important type (Boisot 1998). Knowledge is an asset, but as a resource it shares criticisms that apply to all resources, and the variability that exists in their contribution to performance (Spender 1994b; Kraaijenbrink et al. 2010). There are too many variables in-between application and performance to be able to argue that it leads to the creation of competitive advantage, but there is no doubt it contributes to it (Eisenhardt and Santos 2002). In dealing with uncertainty, knowledge can increase the likelihood that such positions of advantage will be achieved, but are not by any means guaranteed.

An emphasis on organisational knowledge creation has perhaps minimised the role of individuals. But, organisational routines remain important as they bring individuals and different types of knowledge together in a task, or an activity (see e.g., Teece and Pisano 1994; Kogut and Zander 1996; Eisenhardt and Martin 2000; Helfat and Peteraf 2003). The

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dynamics of time imply some non path-dependent learning. From a strategy point of view, a firm would need to know what it wants to do, how it will achieve its objectives, what will make it different to competition, how it will roll out its strategy and importantly, how it will make money (Hambrick and Fredrickson 2005). The outcomes of these processes are not solely knowledge-dependent, but some knowledge is present at all times.

Individual knowledge is not considered to be the most important knowledge type in some research arenas. In line with Daft and Weick (1984) who conceptualise organisations as interpretation systems, Spender (1994b) proposes that it is the context or system of practice which influences what is done and how, by managers who have to do it. He argues that knowledge is a process of ongoing social construction. It is collective knowledge that remains unknown to individuals, that provides a co-ordinating mechanism for bundles of individual resources (Spender 1994b, 1996a). He further points out that individual and organisational knowledge are not two of the same (i.e. that one becomes the other), and that collective knowledge emerges at organisational level, independent of its members. Collective knowledge provides a system of practice for the application of different types of knowledge. It is argued to be the most important knowledge, and one which is not a direct result of actions of managers; rather, it guides their behaviour (Spender 1994b, 1996a). It attempts to add dynamic to knowledge application, but remains within the realms of dichotomies and is based on the assumption that clear-cut distinctions can be made between different types. The argument nevertheless advances the debates by linking collective knowledge to the context which provides mechanisms for coordination of individual resources. Further assessment of this collective element, that guides action, could therefore potentially be achieved through theoretical advancement of the field.

Knowledge creation, according to this view, is not necessarily a direct consequence of individuals’ actions and their relative contributions to organisational activity. Instead, collective knowledge as the primary source of value is a reliable representation of organisational skills and resources at a point in time. It is difficult to replicate knowledge without the social community. Similarly, Kogut and Zander (1996) suggest that knowledge is system-dependent, and that the system provides the context through which to structure, co-ordinate and communicate individual and organisational expertise. The context is important relative to knowledge application, but none of it would be possible without individual resources to co-ordinate; the two are mutually dependent, and complementary.

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Knowledge assets, such as technology and experience, are important sources of growth for organisations. However, they do not lead to success on their own. What competitors do and when they do it, can make a difference to own performance. Knowledge makes performance more reliable, by reducing variations, but an increase in reliability is not a guarantee of competitive advantage (March 1999: p.131). Scale matters, outcomes may be as a result of a placebo effect, and ignorance is often as useful as knowledge (Starbuck 1992; Alvesson 1993; March 1999, 2006). Ignorance eliminates bias (and inflexibility) inherent in existing knowledge and experience is not always the best teacher (March 2008).

March and others who highlight the importance of organisational experience have, like Spender, questioned the ability of individuals to change things. But whilst, organisations impose limits on application of knowledge, managers are required to act (within those limits) for decisions to be made and implemented. If the unexpected occurs, managers will need to make internal adjustments in order to respond and allocate resources to maximise the use of those resources and capabilities (Teece et al. 1997). If what they know becomes embedded in the organisational fabric, they do change it over time. The unclear links between knowledge and macro level outcomes suggest that studying processes which contribute to firm performance can provide some insight into its contribution.