2 The Nature of Knowledge
L OCATIONS OF K NOWLEDGE
Knowledge resides in several different locations or reservoirs, which are summarized in Figure 2.5. They include people, including individuals and groups; artifacts, includ-ing practices, technologies, and repositories; and organizational entities, includinclud-ing organizational units, organizations, and interorganizational networks. These locations of knowledge are discussed in the rest of this section.
KNOWLEDGE IN PEOPLE
A considerable component of knowledge is stored in people. It could be stored either at the individual level or within a group or a collection of people (Felin and Hesterly 2007).
Some knowledge is stored in individuals within organizations. For instance, in professional service firms, such as consulting or law firms, considerable knowledge resides within the minds of individual members of the firm (Argote and Ingram 2000;
Felin and Hesterly 2007). The knowledge stored in individuals is the reason several companies continually seek ways to retain knowledge that might be lost because of individuals retiring or otherwise leaving the organization.
In addition, considerable knowledge resides within groups because of the rela-tionships among the members of the group (Felin and Hesterly 2007). When three individuals have worked together for a long time, they instinctively know each other’s strengths and weaknesses, understand the other’s approach, and recognize aspects that need to be communicated and those that could be taken for granted (Skyrme 2000).
Consequently, groups form beliefs about what works well and what does not, and this knowledge is over and above the knowledge residing in each individual member. In other words, the collective knowledge is synergistic—greater than the sum of their individual knowledge. Communities of practice that first develop as individuals in-teract frequently with each other (physically or virtually) to discuss topics of mutual interest, and they illustrate such embedding of knowledge within groups.
KNOWLEDGE IN ARTIFACTS
Over time, a significant amount of knowledge is stored in organizational artifacts as well. Some knowledge is stored in practices, organizational routines, or sequen-tial patterns of interaction. In this case, knowledge is embedded in procedures, rules, and norms that are developed through experience over time and guide future behavior (Levitt and March 1988). For example, fast-food franchises often store knowledge about how to produce high-quality products in routines (Argote and Ingram 2000).
Considerable knowledge is also often stored in technologies and systems. As discussed earlier in this chapter, in addition to storing data, information technologies and computer-based information systems can store knowledge about relationships. For example, a com-puterized materials requirement planning system contains considerable knowledge about relationships among demand patterns, lead times for orders, and reorder quantities.
THE NATURE OF KNOWLEDGE 33
Knowledge repositories represent a third way of storing knowledge in artifacts.
Knowledge repositories could either be paper based such as books, papers, and other documents, or electronic. An example of a paper-based repository is a consultant’s set of notes to herself about the kind of things the client might focus more on, when examining the proposals submitted by the consultant firm’s and its competitors. On the other hand, a Web site containing answers to frequently asked questions (FAQs) about a product represents an electronic knowledge repository.
KNOWLEDGE IN ORGANIZATIONAL ENTITIES
Knowledge is also stored within organizational entities. These entities can be consid-ered at three levels: organizational units (parts of the organization), an entire organi-zation, and in interorganizational relationships (such as the relationship between an organization and its customers).
Within an organizational unit, such as a department or an office, knowledge is stored partly in the relationships among the members of the units. In other words, the organizational unit represents a formal grouping of individuals, who come together not because of common interests but rather, because of organizational structuring.
Over time, as individuals occupying certain roles in an organizational unit depart and are replaced by others, the incumbents inherit some, but not all, of the knowledge developed by their predecessors. This knowledge may have been acquired through the systems, practices, and relationships within that unit. Moreover, contextually specific knowledge is more likely to be related to the specific organizational unit.
An organization, such as a business unit or a corporation, also stores certain knowledge, especially contextually specific knowledge. The norms, values, prac-tices, and culture within the organization, and across its organizational units, contain knowledge that is not stored within the mind of any one individual. The way in which
Figure 2.5 The Reservoirs of Knowledge
Organizational Entities People
Knowledge Reservoirs
Groups
Individuals Organizational Units
Interorganizational Networks
Organizations Artifacts
Practices Technologies Repositories Individuals
the organization responds to environmental events is dependent, therefore, not only upon the knowledge stored in individuals and organizational units but also in the overall organizational knowledge that has developed through positive and negative experiences over time.
Finally, knowledge is also stored in interorganizational relationships. As organi-zations establish and consolidate relationships with customers and suppliers, they draw upon knowledge embedded in those relationships. Customers who use the focal organization’s products, and suppliers who provide the basic components from which the products are made, often have considerable knowledge about the strengths and weaknesses of those products. Consequently, organizations often learn from their customers’ experience with products about how these can be improved. They can also learn about new products that might be appealing to customers.
KNOWLEDGE IN COMMUNITIES OF PRACTICE
A community of practice (CoP) is an organic and self-organized group of individu-als who are dispersed geographically or organizationally but communicate regularly to discuss issues of mutual interest (Lave and Wenger 1991). Lave and Wegner ar-gue that learning is not a process solely within an individual’s mind but is instead a process that occurs through social interactions. This process of learning is facilitated by discussions with colleagues and mentors or by observing how others apply the knowledge and then try it themselves (Kimble, Hildreth, and Bourdon 2008). There are many examples of communities of practice in real life, such as the community of researchers at a scientific conference and investors at forums related to the stock market. The members of a community of practice do not need to be co-located but they necessarily interact to learn, share, and communicate their tacit and explicit knowledge about shared interests.
Communities of practice have become associated with finding, sharing, transferring, and archiving knowledge, as well as making explicit or tacit knowledge. Therefore, communities of practice have significant value as they possess a rare source of tacit knowledge.
KNOWLEDGE LOCATIONS AND FORMSOF INTELLECTUAL CAPITAL
An organization’s intellectual capital refers to the sum of all its knowledge resources, which may be within or outside the organization (Stewart 1997; Subramaniam and Youndt 2005; Youndt et al. 2004). Intellectual capital has been viewed as being of dif-ferent types in terms of where the knowledge resides. Intellectual capital has recently been classified into three types: human capital, or the knowledge, skills, and capabili-ties possessed by individual employees; organizational capital, or the institutionalized knowledge and codified experience residing in databases, manuals, culture, systems, structures, and processes; and social capital, or the knowledge embedded in relation-ships and interactions among individuals (Hsu and Sabherwal 2001; Subramaniam and Youndt 2005; Youndt et al. 2004). These three types of intellectual capital relate directly to the locations discussed above: Human capital relates to knowledge in
THE NATURE OF KNOWLEDGE 35 people, structural capital relates to knowledge in artifacts, and organizational capital relates to knowledge in organizational entities.
SUMMARY
In this chapter, we have explained the nature of knowledge in considerable detail. Knowl-edge is distinguished from data and information; highlighting that knowlKnowl-edge should best be considered as fundamentally different from data and information rather than considering data, information, and knowledge as being part of a hierarchy. We defined knowledge in an area as justified beliefs about relationships among concepts relevant to that particular area. Furthermore, we examined subjective and objective perspectives for viewing knowledge, including perspectives that consider knowledge as a state of mind, as practice, as an object, as access to information, and as a capability. We then distinguished between procedural and declarative knowledge, between tacit and explicit knowledge, and between general and specific knowledge. Some other ways of classify-ing knowledge were also described. Based on the various classifications of knowledge, we introduced knowledge characteristics such as tacitness, specificity, and so on. This chapter also described the possible locations of knowledge including people, artifacts, and organizational entities, and related these locations to different types of intellectual capital. The next chapter builds on this one by explaining knowledge management and describing the various aspects of KM infrastructure.
REVIEW
1. How do the terms data and knowledge differ? Describe each term with the help of a similar example, elucidating the difference between the two.
2. Information contains data but not all data are information. Justify this statement.
3. Explain why the same set of data can be considered as useful information by some and useless by others. Further, could this useful information be termed as knowledge? Why?
4. Describe the ways in which knowledge differs from data and information.
Justify your answer with a relevant diagram.
5. Explain the importance of knowledge in creation and utilization of information.
6. How does the subjective view of knowledge differ from the objective view?
Explain how knowledge can be viewed as a state of mind, as a practice, as objects, as access to information and as capability.
7. What is the difference between knowledge characterized as know what and know-how? In the above situations, how would you classify the knowledge a computer programmer has?
8. Does a player in a card game use tacit or explicit knowledge? Why? Define and explain the difference between the two.
9. What is general knowledge? How does it differ from specific knowledge?
Describe the types of specific knowledge with suitable examples.
10. What is expertise? Distinguish among the three types of expertise.
11. What is a community of practice? What role does it play in knowledge management?
12. Contrast the differences between knowledge in people and knowledge in ar-tifacts. Describe the various repositories of knowledge within organizational entities.
13. What is intellectual capital? What are the three types of intellectual capital, and how do they relate to different knowledge locations?
APPLICATION EXERCISES
1. Consider five decisions you have made today. (They could be simple things like taking a turn while driving or even choosing a soda at a convenience store.) In each case determine the data, information, and/or knowledge that were involved in the decision. Now consider how those decisions would have been influenced by the lack of pre-existing data, information, or knowledge.
2. You have recently invented a new product. Collect demographic data from a sample population and determine how you would use this data and convert it into information for marketing the product. Give an example about knowledge that may be useful in converting the data into information.
3. Interview a manager in a manufacturing organization and one in a services-based organization. Determine the contrasting views of knowledge between the two due to the nature of their businesses.
4. Determine the various locations of knowledge within your organization (or that of a friend/family member). Classify them appropriately. Now speculate on the negative effects of not having one or more of those knowledge reposi-tories and accordingly determine which repository is the most critical to the organization. Which is the least?
5. Determine the various types of knowledge you used to read this chapter. You should be able to state at least one of each type.
6. You are considering buying a new Ford Taurus. Gather tacit knowledge and explicit knowledge on buying cars from various resources: for example, Ford Web site (http://www.ford.com). List your findings and explain what source of knowledge is important for your choice.
7. Suppose you desperately need technical advice on an Apple Inc. product. You have several options. Four of them are: (a) Call Apple’s technical support; (b) use Apple’s online customer support; (c) use Apple’s online discussion groups;
and (d) visit the genius bar at the nearest Apple store. Define your preferred option and briefly explain your choice with the concepts of accessibility to knowledge reservoir.
8. Wal-Mart Stores, Inc. (www.walmart.com) is said to be one of the leading employers of older workers and considers seniors vital to its unique corporate culture. Store managers are encouraged to recruit from senior citizen groups, local AARP chapters, and churches. Analyze Wal-Mart’s above strategy in terms of knowledge management.
THE NATURE OF KNOWLEDGE 37 9. Use any organization with which you are familiar to answer this question. This
organization could be one where you currently work or one where you have previously worked. For this organization, describe one example of knowledge that would be classified as structural capital, one example of knowledge that would be classified as organizational capital, and one example of knowledge that would be classified as social capital.
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