Organisational Knowledge

Currently, knowledge assets are very important in most organisations; these organisations hire brains, not hands. Knowledge is seen as one of the assets of the organisation, while information technology is seen as a factor in creating and sharing knowledge, and linking knowledge contributes to the strategic objectives of the organisation creating a clearly defined increase in the enthusiasm of the work force.

Organisational knowledge is used to understand the relationship between interna l structures, processes and procedures, laws and standards, cultures, products, systems, and the basic elements which are owned by individuals, or it can be take n advantage of to carry out activities related to work (Hislop et al., 2000, p. 15). The activities of organisational knowledge are indeed dedicated to the higher menta l processes in the brains of managers and members of the organisation, who realise that education and ideas contribute to the formation of opinions, attitudes, and expectations to provide an accurate view from the periphery of the organisation, strategic enhanced survival, and durability (Al-Khafaji, 1996, p. 5). Knowledge is a crucial item that cannot be ignored by any organisation and is often called intellectual capital. After the trade name, trademark, and the physical assets of the organisation, knowledge is acquired from years of experience in the fields o f different production and marketing. This accumulated knowledge in combinatio n with information gathered from external sources is one of the most important resources of the organisation. The a ccumulation and utilisation of knowledge ca n contribute to the intellectual capital of the organisation (Davenpart and Prusak, 1998). Intellectual capital refers to the knowledge that can be converted into profit which enables an organisation to achieve its goal and compete with other organisations. Indeed, knowledge is a main source of competitive advantage and intellectual capital of an organisation and is the sum of human capital, structura l capital, and customer capital. (McShane and Glinow, 2000, p. 20). Furthermore,

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human capital is the knowledge possessed by individuals who generate it, and includes skills, experience, and creativity. Structural capital is the knowledge that is captured and kept in the systems and organisational structures. The customer’s capital represents the amount derived from satisfied customers, appointed exporters, and external resources, which provide an added value to the organisation. Building intellectual capital requires the organisation to follow the following steps (Linder & Jennifer, 1998, pp. 2-4):

1. To set high performance standards for all, while continuing to improve to arrive at the possible best method.

2. Staff development through new, difficult, and challenging assigned tasks.

3. Modification of each point of the interfaces of work (organisational culture, structure, and strategy).

4. Provide each level of the organisation new talent and recruitment of suitable individuals to solve problems.

5. Ensure the workers in the organisation are collectively involved in the process of change.

If intellectual capital disappears and its ideas and results become worthless, this affects the market value of the organisation because intellectual capital is essentia l for an existing organisation (Koenigi, 2000, p. 1). Intellectual capital may go to other organisations and countries because the organisation was unable to convert their experience and skills to the practice of executive functioning (Enzi, 2001, p. 17). The seriousness of this issue lies in the possibility of transferring these people, ideas, and experiences (that they personally own) as well as data and informatio n pertaining to the previous organisation to the new organisation, thus giving the new organisation a strategic opportunity and additional advantage against the threat and vulnerability of the previous organisation.

The question that arises is how organisations can maintain intellectual capital. I n order to keep and preserve the organisation’s intellectual capital, it is important to maintain qualified staff with good knowledge, but arguably it is more important to convert their knowledge into a structural capital wher e inculcated knowledge ca n be organised and sorted out in a manner that can be accessible to others. Considerably, the skills and expertise of Japanese companies brought out organisational knowledge that distinguished them from America n

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companies. While the latter focused on generating and converting explicit knowledge, the former focused on generating and converting the implicit knowledge embedded in the minds of individuals. In this context, Saleh (2001, p. 83) has identified the most important factors that help organisations maintain intellectual capital, namely:

 Activating material and moral stimulation,  Intercepting organisational traditionalism,  Facing organisational frustration,

 Reducing the chances of organisational alienation, and  Enhancing organisational discrimination.

Since capital is a term of the industrial age, and the world is moving towards the era of knowledge, it is preferable (Sveiby, 1998; Barroso & Gomes, 1998, p. 5) to use the term intangible assets, rather than intellectual capital; the term externa l construction, instead of the customer’s capital; internal construction, rather tha n structural capital; and competitive individuals rather than human capital. The reason that knowledge, in some cases, can become reverse capital is because knowledge grows by sharing (participation) and usage, and knowledge can be used to damage capital.

The new term knowledge capital refers to the settlement of knowledge in organisations and has appeared in recent years in writings and research on this subject that attempted to explain and highlight it as a subject worthy of attention in the foreseeable future.