Learning Organisation in Estonian Organisations - Academic ...

Proceedings 

of the 

9th International Conference on 

Intellectual Capital, 

Knowledge Management 

& Organisational Learning 

The Universidad Del Rosario 

and the Universidad Jorge 

Tadeo Lozano 

Bogotá, Colombia 

18-19 October 2012 

Edited by 

Fernando Chaparro 

Universidad Del Rosario, Bogotá 

Colombia

Copyright The Authors, 2012. All Rights Reserved. 

No reproduction, copy or transmission may be made without written permission from the individual authors. 

Papers have been double-blind peer reviewed before final submission to the conference. Initially, paper abstracts 

were read and selected by the conference panel for submission as possible papers for the conference. 

Many thanks to the reviewers who helped ensure the quality of the full papers. 

These Conference Proceedings have been submitted to Thomson ISI for indexing. 

Further copies of this book and previous year’s proceedings can be purchased from http://academic-bookshop.com 

CD version ISBN: 978-1-908272-72-0 

CD version ISSN: 2048-982X 

Book version ISBN: 978-1-908272-71-3 

Book Version ISSN: 2048-9803 

Published by Academic Publishing International Limited 

Reading 

UK 

44-118-972-4148 

www.academic-publishing.org

Contents 

Paper Title Author(s) Page 

No. 

Preface iv 

Conference committee v 

Biographies viii 

Learning Organisation in Estonian Organisations Ruth Alas and Maris Zernand- 

Vilson 

Organizational Knowledge and Organizational Performance: A 

Dynamic Relationship 

On a Methodology for Measuring Innovation in Agricultural 

Firms 

Organizational Capital: Using Learning to Create Best Practices 

as a Strategic Tool 

Challenges and Opportunities: Designing and Delivering a 21st 

Century Knowledge Management Education Program 

i 

Fernando Arenas 6 

César Ariza, Laura Rugeles, Diana 

Saavedra and Bladimir Guaitero 

Bob Barrett 

1 

17 

26 

Denise Bedford 33 

The Gordian Knot of the Intellectual Capital of Universities Constantin Bratianu and Ivona 

Orzea 

The Value of Human Resources in Intellectual Capital and 


The Internationalization of Micro and Small Companies From 

Knowledge-Management Standpoint: A Multiple Case Study in 

Brazil 

Theoretical Base for Developing a Holistic Knowledge 

Management Strategy for Effective Learning in Organizations 

Organizational Growth: Dynamic Capabilities as a Source of 

Sustainable Competitive Advantages – Literature Review 

Social Capital and Absorptive Capacity in Value Adding Webs: 

An Empirical Investigation Based on the Case of the Djurs 

Offshore Wind-Energy Network in Denmark 

From Homo Habilis to Information age Hominids: Finding Links 

Between the Growth of Ic and the Evolution of the 

Architecture of the Mind 

Innovation in Service Firms: Perspective From Innovative 

Behavior 

Effects of Advances in Technology on Tacit Knowledge Transferability 

Australian Universities and Intellectual Capital Reporting: Case 

Study of the Group of Eight 

Inter-Sectorial Communication and Knowledge Sharing in 

Developing a Cross-Border Knowledge Region 

University-Company Relationship for Knowledge Integration on 

Biomedical Technologies 

43 

Delio Castaneda and Paul Toulson 52 

Camilla Sara Gonçalves Cunha 

and Rodrigo Pires de Campos 

60 

Johnson Dehinbo 70 

María Fernanda Díaz Delgado, 

Hugo Ernesto Martínez Ardila and 

Edna Rocío Bravo Ibarra 

Susanne Gretzinger 

Paul David Richard Griffiths 

Carolina Guzmán Pedraza, Edna 

Rocio Bravo, Heloisa Oliveira and 

Fabio Blanco 

77 

85 

93 

104 

Nowshade Kabir 113 

Siavash Karami and Alireza Vafaei 120 

Merle Krigul and Ruth Alas 128 

Clara López, Edna Bravo and 

Hugo Martínez 

136


No. 

A Technontological Framework to Conversations for KM: Conception 

and Potential Applications 

ii 

Gentil José Lucena Filho, Rodrigo 

Pires de Campos, Sheila da Costa 

Oliveira and Margarita Morales 

Social Network Analysis: A Tool for Organizational Coaching Gentil José Lucena Filho, Ruy 

Alcides de Carvalho Neto , 

Margarita Morales 1 and Maria 

Beatriz Maury 

How to Manage Intellectual Capital in Brazil? - Lessons Learned 

From the First Pilot-Implementations 

Kai Mertins, Eloi Fernández y 

Fernandez, Markus Will, and 

Camilo Augusto Sequeira 

Enhancing Client Care From the Knowledge Perspective Ludmila Mládková and Felipe 

Martínez 

Modeling Productivity Based on Intellectual Capital in the Public 

Sector of Educational Administration 

Knowledge Sharing in Crisis Management Networks- Mock 

Drills as Inter-Organizational Learning Platforms 

Fattah Nazem and Omalbanin 

Sadeghi 

144 

153 

163 

171 

179 

Martin Nkosi Ndlela 186 

Intergenerational Learning in Ageing Societies Ivona Orzea and Constantin 

Bratianu 

Knowledge Management Systems for Sustainable Financial 

Management in public Higher Education Institutions: Principles 

of a Framework for Incorporation 

Key Factors Influencing the Performance of Healthcare 

Organizations 

Modeling the Impact of Social Capital on Intellectual Capital in 

the Public Sector of Educational Administration 

Bridging the gap Between Knowledge Production and 

Knowledge use in Three Colombian Cities 

Designing a Seminar Programme on Customer Knowledge 

Management for the Hospitality Industry: A Theoretical 

Approach 

Trust in Renewing Human Intellectual Capital: Intangible Assets 

Creating Vitality and Innovativeness 

The Academic Institution Quality and Managerial Capability 

Valuation of University Management 

Measuring Human Centered-Assets as the Main Element of 

Intellectual Capital in a Consulting Firm 

Improving Knowledge Transfer Process With Knowledge 

Engineering Methods 

Transformational and Transactional Leaders; a Case Study in 

Higher Education 

The Influences of Intergroup Relations on an Organizational 

Structure 

Laura-Patricia Pinto-Prieto, Luis- 

Eduardo Becerra-Ardila and Luis- 

Carlos Gómez- Florez 

Boris Popesko, Zuzana Tučková 

and Tarmo Kadak 

Omalbanin Sadeghi, Fattah 

Nazem and Hassan 

Hashemidaran 

Luz-Helena Sánchez Gómez and 

Marta Lucia Ramírez Giraldo 

Tulen Saner and Serife Zihni 

Eyupoglu 

Taina Savolainen and Palmira 

Lopez-Fresno 

Jana Stefankova, Jan Porvaznik 

and Oliver Moravcik 

Ali Tajdari and Nasim Ghanbar 

tehrani 

193 

200 

208 

216 

224 

232 

236 

245 

254 

Thierno Tounkara and Inès Saad 265 

Asaf Varol and Serkan Varol 

274 

Nurhayat Varol and Serkan Varol 279


No. 

How Business Schools as Learning Organizations Meet new 

Challenges: A Worldwide Study 

Designing a Knowledge Management Syllabus: How Business 

Administration Students Learn at a Summer School 

Teaching Artificial Neural Networks Course: A Draft for Management 

and Organization Master Programs 

Impact on Organisational Learning in Ecotouristic Community: 

a Case Study Focusing on Social Technology 

iii 

Karen Voolaid and Üllas Ehrlich 286 

Recep Yücel 295 

Kürşad Zorlu 299 

Flávio de São Pedro Filho, Rolf 

Hermann Erdmann and Pei-Shan 

Kao 

PHD papers 315 

Knowledge Management and University: From Foresight Vision; 

its Experts 

Knowledge Management in Software Process Reference 

Models - a Review 

Dynamics Between Trust in Interpersonal Work Relations and 

Intellectual Capital 

306 

Álvaro Enriquez Martínez 317 

Ernesto Galvis-Lista and Marcela 

Sánchez-Torres 

Mirjami Ikonen 

Non Academic papers 343 

Just-in-Time Knowledge as a way of Increasing Quality and Relevance 

of Ideas in Open Innovation (OI) programs 

Paisa Culture: A Potential for Value Creation Based on 

Knowledge 

How to Utilize a Learning Organization and Reward System to 

Leverage Employee Self Learning 

326 

335 

Guillermo Beuchat 345 

Beatriz Elena Molina Patiño 

Juli Purwanti and Mochamad 

Fadillah Rizky 

Work in progress papers 369 

Retired Professors,? Still Part Of Higher Education Institution’s 

Intellectual Capital? 

JMarcela Sánchez-Torres and 

Luisa Fernanda Muñoz Terán 

351 

359 

371

Preface 

These proceedings represent the work of researchers participating in the 9th International Conference on Intellectual 

Capital, Knowledge Management & Organisational Learning – ICICKM 2012, which this year is co-hosted by the Universidad 

del Rosario and the Universidad Jorge Tadeo Lozano, Bogotá, Colombia. The Conference Co Chairs are Dr 

Cecilia María Vélez White from the Universidad Jorge Tadeo Lozano and Dr Hans Peter Knudsen from the Universidad 

del Rosario, Bogotá, Colombia. The Conference sessions are being held in the Universidad Jorge Tadeo Lozano and the 

Conference dinner will be held in the Universidad del Rosario. 

The conference will be opened with a keynote from Dr. Roberto D. Sainz, Director of Strategic Management of EM- 

BRAPA in Brazil. Roberto will address the topic of Building a Knowledge Management Model at Brazil's Embrapa (Brazilian 

Agricultural Research Corporation): Towards a Knowledge-Based View of Organizations. 

The ICICKM Conference constitutes a valuable platform for individuals to present their research findings, display their 

work in progress and discuss conceptual advances in many different branches of intellectual capital, knowledge management 

and organisational learning. At the same time, it provides an important opportunity for members of the KM 

community to come together with peers, share knowledge and exchange ideas. ICICKM has evolved and developed 

over the past nine years, and the range of papers accepted in this year’s conference ensures an interesting two-day 

event. 

Following an initial submission of 112 abstracts that have undergone a double blind peer review process, 38 research 

papers, 3 PhD research papers,1 work-in-progress papers and 3 non-academic papers are published in the ICICKM 

2012 Conference Proceedings, representing work from Australia, Brazil, Canada, Chile, Colombia, Czech Republic, 

Denmark, Estonia, Finland, France, Germany, Greece, Indonesia, Iran, New Zealand, North Cyprus, Norway, Romania, 

Slovakia South Africa, Spain, Turkey and the USA. 

I hope that you have an enjoyable conference. 

Fernando Chaparro 

Progamme Chair 

October 2012 

iv

Conference Committee 

Conference Executive 

Hans-Peter Knudsen, Universidad del Rosario, Bogotá, Colombia 

Cecilia María Vélez White, Universidad Jorge Tadeo Lozano, Colombia 

Fernando Chaparro, Universidad del Rosario, Bogotá, Colombia 

Jeannette Vélez, Universidad del Rosario, Bogotá, Colombia 

Manuel Garcia, Universidad Jorge Tadeo Lozano, Bogotá, Colombia 

Francisco Vásquez, Universidad Jorge Tadeo Lozano, Bogotá, Colombia 

Ángel Facundo, Universidad del Rosario, Bogotá, Colombia 

Eduardo Rodríguez, IQAnalytics Canada, EDC Canada 

Mini Track Chairs 

Dr. Mustafa Sagsan, Near East University, Cyprus 

Dr. Bob Barrett, American Public University, USA 

Eduardo Rodriguez, IQAnalytics Canada, EDC Canada 

Joao Pedro Albino School of Science, Campus Bauru, UNESP, Brazil 

Paul Toulson, Massey University, New Zealand 

Delio I. Castaneda, PontificiaUniversidad Javeriana, Bogotá, Colombia 

Mohamed Rabhi, SABIC Technology and Innovation, Riyadh, Saudi Arabia 

Conference Committee 

The conference programme committee consists of key people in the intellectual capital, knowledge management and 

organisational learning communities; the list includes leading academics, researchers, and practitioners from around 

the world. The following people have confirmed their participation: 

MohdHelmy Abd Wahab (Universiti Tun Hussein Onn Malaysia, Batu Pahat, Malaysia); Marie-Helene Abel (Compiegne 

University of Technology, France); Maria-Madela Abrudan (University of Oradea, faculty of Economics, Romania); Bulent 

Acma (Anadolu University, Turkey); Faisal Ahmed (Associate Director, CUTS International, , India); Ruth Alas (Estonian 

Business School, Tallin, Estonia); Joao Pedro Albino (UNESP, , Brazil); Mulhim Al-Doori (American University in 

Dubai, United Arab Emirates); Tahseen Al-Doori (American University in Dubai, United Arab Emirates); Alex Alexandropoulos 

(American University in Dubai, United Arab Emirates); Mohammed Allehaibi (Umm Alqura University, Makkah, 

Saudi Arabia); Luis Alvarado (Universidad Catolica del Norte , Chile); Xiaomi An (Renmin University of China, 

China); Gil Ariely (School of Government, Interdisciplinary Center Herzliya, Israel); Yousif Asfour (Injazat Data Systems, 

Abu Dhabi, United Arab Emirates); "Derek Asoh (Health Administration Program , Telfer School of Management, University 

of Ottawa , Canada);" Bijan Azad (AUB school of Business, Lebanon); Haragobinda Baidya (Minority Self Empowerment 

Foundation, Dhaka, Bangladesh); Michael Banutu-Gomez (Rowan University, USA); Bob Barrett (American 

Public University, USA,); Tomas Gabriel Bas (Pontificia Universidad Catolica de Chile, Chile); Abdullah Bayat (University 

of the Western Cape, Bellville, South Africa); Aurilla Bechina Arnzten (Hedmark University College, Norway); Esra Bektas 

(TU Delft, The Netherlands); Diana Belohlavek (The Unicist Research Institute, Argentina); David Benmahdi (Laboratoire 

Paragraphe EA349, Paris, France); Constantin Bratianu (Academy of Economic Studies, Bucharest, Romania, 

Romania); Jean Pierre Briffaut (Institut National des Telecommunications, France); Sheryl Buckley (Unisa, South Africa); 

Acma Bulent (Anadolu University, Eskisehir, Turkey); Francesco Calabrese (Institute for Knowledge and Innovation 

(GWU) - USA, USA); Delio Castaneda (Pontificia Universidad Javeriana, Colombia,); Saban Celik (Yasar University, 

Turkey); Eric Chan (Knowledge Management Development Centre, Hong Kong , Hong Kong); Fernando Chaparro (Universidad 

del Rosario, Bogotá, Colombia); Daniele Chauvel (SKEMA Business School , France); Phaik Kin Cheah (Universiti 

Tunku Abdul Rahman, Malaysia); Aw Yoke Cheng (Asia Pacific University College of Technology and Innovation 

(UCTI), Kuala Lumpur, Malaysia);Benny Cheung (The Hong kong polytechnic university, Hong Kong); Vikas Choudhary 

(National Institute of Technology,Kurukshetra, India); Rashid Chowdhury (Independent University, Bangladesh, Chittagong, 

Bangladesh); Dewi Chrisyanti (STIE IEU surabaya, Indonesia); Reet Cronk (Harding University, USA); Pablo da 

Silveira (Catholic University of Uruguay, Uruguay); Raymond D'Amore (The Mitre Corporation, McLean, VA,, USA); 

Geoffrey Darnton (Bournemouth University, UK); Kandy Dayaram (Curtin University of Technology, Perth, Australia); 

Basel Dayyani (American University in Dubai, United Arab Emirates); John Deary (Independent Consultant, UK & Italy); 

paola demartini (University of Rome 3, Faculty of Economics, department of Management and Law, Italy); Michael 

D'Eredita (Syracuse University, New York, USA); Kevin Desouza (University of Washington, USA); Charles Despres 

v

(Skema Business School, Sophia-Antipolis, Nice,, France); John Dumay (University of Sydney, Australia); Lian (Evangelia) 

Dumouchel (Thompson Rivers University, Canada); Neeraj Dwivedi (Indian Institute of Management Lucknow, India); 

Jamal El-Den (Charles Darwin University, Australia); Scott Erickson (Ithaca College, USA); Jean-Louis Ermine (Institut 

National des telecommunications, Evry, France); Geoff Erwin (Independent Consultant, South Africa); Mercy Escalante 

(Sao Paulo University, Brazil); Ibrahim Fahmi (Glasgow Caledonian University, UK); Nima Fallah (University of 

Strasbourg, France); Tony Feghali (AUB school of Business, Lebanon); Liliana Feleaga (Academy of Economic Studies, 

Romania,); Silvia Florea (Lucian Blaga University, Romania,); Ines Friss de Kereki (ORT Uruguay University, Montevideo, 

Uruguay); Liza Gernal (Skyline University College, United Arab Emirates); John Girard (Minot State University, , USA); 

Marco Giuliani (University of The Marche, Ancona, Italy); Adriana Giurgiu (University of Oradea, Faculty of Economic 

Sciences, Romania); Andrew Goh (International Management Journals, Singapore); Gerald Goh (Multimedia University, 

Melaka, Malaysia); Sayed Mahdi Golestan Hashemi (Faculty of Industrial Engineering - MA University & center for 

Creatology & triz & innovation Manage, Iran); Farshid Golzadeh Kermani (University of Sheffield, UK); Liliana Gomez 

(Universidad del Rosario, Bogotá, Colombia); Ken Grant (Ryerson University, Toronto, Canada); Michel Grundstein 

(Lamsade Paris Dauphine University, France); Anne Hakansson (Uppsala University, Sweden); William Halal (George 

Washington University, USA); Leila Halawi (American University in Dubai, United Arab Emirates); Igor Hawryszkiewycz 

(University of Technology, Sydney, Australia); Ilona Heldal (Chalmers University of Technology, Sweden); Liaquat Hossain 

(Syracuse University, USA); Yassaman Imani (University of Hertfordshire, UK); Brigita Janiunaite (Kaunas University 

of Tehnology, Lithuania); Dawn Jutla (University of Halifax, Canada); Konstantinos Kalemis (National Centre of Local 

Goverment and Administration, Greece); Amrizah Kamaluddin (Universiti Teknologi MARA, Malaysia); Silva Karkoulian 

(Lebanese American University Beirut Campus, Lebanon); Aino Kianto (Lappeenranta University of Technology, 

Finland); Hans-Peter Knudsen (Universidad del Rosario, Bogotá, Colombia); Andrew Kok (University of Johannesburg, 

South Africa); Eric Kong (University of Southern Queensland, Australia); Richard Lackes (Institute of Business Informatics, 

TU Dortmund, Germany ); Rongbin W.B. Lee (The Hong kong polytechnic university, Hong Kong); Rene Leveaux 

(University of Technology, Sydney, Australia); Rajabion Lila (Penn State University, Mont Alto , USA); Antti Lönnqvist 

(Tampere University of Technology, Finland); Ilidio Lopes ( Polytechnic Institute of Santarém; University of Coimbra, 

Portugal, Portugal); Fergal McGrath (University of Limerick, Ireland); Eunika Mercier-Laurent (University Jean Moulin 

Lyon, France,); Kostas Metaxiotis (National Technical University Athens, Greece); Marina Meza (Universidad Simón 

Bolívar, Venezuela,); Ian Michael (Zayed University, Dubai, United Arab Emirates); Sandra Moffett (University of Ulster, 

UK); Kavoos Mohannak (Queensland University of Technology, Australia); Maria Cristina Morariu (The Academy of 

Economic Studies, Romania); Elaine Mosconi (Université Laval, Quebec, Canada); Claudia Mueller (Innsbruck University 

School of Management, Austria); Hafizi Muhamad Ali (Yanbu University College, Saudi Arabia); Aroop Mukherjee 

(King Saud University, Saudi Arabia); Maria Mylopoulos (University of Toronto, Canada); Nader Nada (College of Computing, 

AAST, Egypt); Atulya Nagar (Liverpool Hope University , UK); Rivadavia Correa Drummond de Alvarenga Neto 

(Fundação Dom Cabral , Brazil); Artie Ng (The Hong Kong Polytechnic University, Hong Kong); Chetsada Noknoi (Thaksin 

University, Songkhla, Thailand); Kevin O’Sullivan (New York Institute of Technology, USA); Abdelnaser Omran 

(School of Housing, Building and Planning, Universiti Sains Malaysia, Malaysia); Ibrahim Osman (American University 

of Beirut, Lebanon); Haris Papoutsakis (TEI (Technological Educational Institute) of Crete, Greece); Jayanth Paraki 

(Omega Associates, Bangalore, India); Robert Parent (Université de Sherbrooke, Quebec, Canada); Shaun Pather (Cape 

Peninsula University of Technology, , South Africa); Dan Paulin (Chalmers University of Technology, Göteborg, Sweden); 

Parag Pendharkar (Pennsylvania State University at Harrisburg, USA); Pramuk Perera (Aviareps FZ LLC , Dubai, 

UAE); Milly Perry (The Open University of Israel, Israel); Monika Petraite (Kaunas University of Technology, Lithuania ); 

Prapon Phasukyud (The Knowledge Management Institute (KMI) - Thailand, Thailand); Rajiv Phougat (IBM Corporation, 

USA); V. Nguyen Phuc (Asian Institute of Technology and Management, Vietnam,); John Politis (Neapolis University, 

Pafos, Cyprus); Siwarit Pongsakornrungsilp (Walailak University, Thailand); Agnieta Pretorius (Tshwane University 

of Technology, Witbank, South Africa); Devendra Punia (Wipro Consulting Services, New Delhi, India); Mohamed Rabhi 

(Saudi Basic Industries Corporation (SABIC), Saudi Arabia); Bilba Radu (George Bacovia University, Romania); Gillian 

Ragsdell (Information Science, Loughborough University, UK); Azlina Rahim (Universiti Teknologi MARA, Malaysia,); 

Subashini Rajagopal (VIT University, India); Siriwan Ratanakarn (Bangkok University, Thailand, Thailand); Vincent 

Ribière (The Institute for Knowledge and Innovation Southeast Asia (IKI-SEA) of Bangkok University, Bangkok, Thailand); 

Waltraut Ritter (Asia Pacific Intellectual Capital Centre, Hong Kong ); Eduardo Rodriguez (IQ Analytics, Ottawa, 

Canada); Goran Roos (Cranfield University, UK); "Mustafa Sagsan (Near East University, Nicosia, Northern Cyprus, CY- 

PRUS);" Randa Salamoun Sioufi (American University of Beirut, Lebanon, Lebanon); Kalsom Salleh (University Technology 

MARA, Malaysia); Giovanni Schiuma (Universita dela Basilicata, Matera, Italy); Jeorge Secada (University of Virginia, 

USA); Enric Serradell-Lopez (Open University of Catalonia, Barcelona, Spain); Amanuddin Shamsuddin (Universiti 

Tenaga Nasional, Malaysia); Mehdi Shariatmadari (Islamic Azad University, Central Tehran Branch, Iran,); Michael 

Shoukat (UMUC, USA); Michael Shoukat (UMUC, USA); Niall Sinclair (IKI-SEA-Thailand, Thailand); Sharad Sinha (R.B.S. 

College of Education, Rewari, India); Jukka Surakka (Arcada-University of Applied Science, Helsinki, Finland); Marzena 

Swigon (University of Warmia and Mazury, Poland); Cheng Ling Tan (Universiti Sains Malaysia, Malaysia); Nya Ling 

Christine Tan (Multimedia University, Malaysia); Paul Toulson (Massey University , New Zealand); Nachiketa Tripathi 

vi

(Indian Institute of Technology Guwahati, India); Edward Truch (Lancaster University Management School, UK); Eric 

Tsui (Knowledge Management Research Centre ,The Hong Kong Polytechnic University, Hong Kong); Geoff Turner 

(University of Nicosia, Cyprus); Lucian Unita (University of Oradea, Faculty of Medicine and Pharmacy, Romania,); 

Mathias Uslar (OFFIS, Oldenburg, Germany); Herman van Niekerk (Suritec Pty Ltd, Cape Town, South Africa); Asaf Varol 

(Firat Univeristy, Elazig, Turkey); Jose Maria Viedma (Polytechnic University of Catalonia, Spain); Ismail Wekke 

(State College of Sorong, West Papua); Santoso Wibowo (CQUniversity, Australia); Tanakorn Wichaiwong (Kasetsart 

University, Thailand); Roy Williams (University of Portsmouth, UK); Tiparatana Wongcharoen (Bangkok University, 

Thailand, Thailand); Lugkana Worasinchai (The Institute for Knowledge and Innovation Southeast Asia (IKI-SEA) of 

Bangkok University, Bangkok,, Thailand); Les Worrall (University of Coventry, UK); An Xiaomi (Renmin University of 

China, China); Lin Yan (University Of Greenwich, UK); Mohammad Hossein Yarmohammadian (Health Management 

and Economic Research Center, Isfahan University of Medical Sciences, Iran); Pitipong Yodmongkon (College of Arts 

Media and Technology, Chiang Mai University, Thailand); Philip Zgheib (American University of Beirut,, Lebanon); Suzanne 

Zyngier (Latrobe University, France); 

vii

Biographies 

Conference Co-Chair 

Dr Cecilia María Vélez White the new Rector of the Jorge Tadeo Lozano University, is an Economist 

from Universidad Jorge Tadeo Lozano in Bogotá and Universidad de Antioquia, in Medellín. 

A former Minister of Education of Colombia, she has proposed new challenges, like aiming at 

improving quality, coverage and the enhancement of students’ skills. One of her priorities in her 

new capacity is internationalization. In this field, she believes in the importance of promoting 

joint research projects with foreign universities and to stimulate the exchange of teachers and 

students. 

Programme Chair 

Dr Hans-Peter-Knudsen is currently the Rector of the Universidad del Rosario, elected on November 

18, 2002. He graduated from th e Faculty of Business Administration from Rosario University, 

where he also completed the Specialization in University Teaching and studied in Renewal 

of Research Universities in the MIT (Massachusetts Institute of Technology) and University 

Management at Harvard University Management and the Inter-American Universities Organization 

(Quebec and Santiago de Chile). 

Dr Fernando Chaparro is the Director of the Knowledge Management and Innovation Centerof the 

University del Rosario in Bogotá, Colombia. He holds an M.A. and Ph.D. degrees in industrial sociology 

from the University of Princeton (N.J., USA), having done his undergraduate studies (Licence) 

in rural sociology in the University of Louvain in Belgium. Fernando has been Director General of 

COLCIENCIAS, Regional Director of IDRC (Canada) for Latin America and the Caribbean, Director of 

CORPOICA (Colombian Corporation of Agricultural Research) and Executive Secretary of the Global 

Forum on Agricultural Research (GFAR), based in the FAO Headquarters in Rome, Italy. His research 

field is in KM in research institutions and as a tool in the context of innovation strategies 

Mini Track Chairs 

Dr Joao Pedro Albino gained his Ph.D. in Business Administration, Quantitative Methods and 

Informatics in 1999. He did his Postdoctoral research at FEA-USP (2008) in Innovation and Information 

Technology Management and a Post-doctorate at the University of Aveiro, Portugal 

(2006-2007) in Knowledge Management. He is currently Associate Professor in the School of Science, 

Campus Bauru, UNESP. Has experience is in Information Systems and Industrial Engineering, 

Knowledge Management, specialising in Knowledge intensive business services, Manage- 

ment Information Technology (IT), Management Information Systems and Groupware. 

Dr. Bob Barrett lives in the United States. He is a professor in the School of Business with the 

American Public University, and he also teaches for the American Military University. He teaches 

and does research in the fields of strategic management, online education, disability, intellectual 

capital and knowledge management. He has been working in the consulting field for the past 20 

years by advising clients on strategic and knowledge management practices, as well as offering 

training and education plans of action and strategies. 

Delio Ignacio Castaneda 

holds a PhD in Organizational Behaviour from Universidad Autónoma de 

Madrid, Master in Education with focus in Organizations from University of Manchester in United 

Kingdom. At the moment he is Associate Professor at Pontificia Universidad Javeriana, invited 

professor on human aspects of KM and OL, and organizational consultant. 

viii

Dr Mohamed Rabhi holds an MS from Purdue University and a PhD from the University of Minnesota 

in Soil Science; has interest in environmental implication of mineral fertilizers on soil, water, 

and air. He worked for the University of Minnesota as research associate. Then joined SABIC as 

chemical fertilizer researcher; held the position of fertilizer technology manager. He championed 

the knowledge management project with SABIC R&D organization, and implemented a knowledge 

management system that was partially described in two articles presented and published in 

ICICKM proceeding in 2009 and 2010. He is currently the knowledge management leader in Global 

SABIC Technology and Innovation organization. 

Eduardo Rodriguez has experience in knowledge management, risk management and analytics in 

the insurance and banking industry. He has been Knowledge Management Advisor at EDC Export 

Development Canada in Ottawa, Regional Director of PRMIA (Professional Risk Managers International 

Association)in Ottawa, Director of Strategic Intelligence UNAD Colombia and currently, 

he is Quantitative Analyst for EDC, Principal of IQAnalytics, Mathematician, MBA, MSc. Mathematics, 

certification of the Advanced Management Program McGill University, PhD from Aston 

Business School in the UK with research in the field of Knowledge Management applied to Enterprise 

Risk Management. 

Asst.Prof.Dr.Mustafa Sagsan graduated from the Dept. of Library and Information Science at the 

Ankara University in 1997. He gained his Masters Degree in National Information Policy at the 

same University in 2001. He completed his Ph.D in Management and Organization Science at 

Baskent University in 2008.. He currently works as Chairperson at the Near East University Department 

of Knowledge Management in the Turkish Republic of Northern Cyprus. His research 

focuses on KM discipline and applications, organizational behaviour and e-government applications. 

Paul Toulson has a PhD in Psychology & Human Resource Management and is a Life Fellow of the 

Human Resources Institute (NZ). He is Associate Professor of HRM in Massey University (NZ), and 

his research portfolio is concerned with human resource valuation, measurement, and its pivotal 

role in intellectual capital. 

Biographies of Presenting Authors 

Ruth Alas is Head of The Department of Management at Estonian Business School. She has written twenty-six 

textbooks on management and more than 130 articles. Professor Alas lectures on Change Management. Her research 

focuses on change and innovation management, crisis management, employee attitudes, learning abilities, 

organisational culture, leadership, business ethics and corporate social responsibility. 

Fernando Arenas has a PhD(c) in Business Management, Universidad de Valencia, (Spain). M. Sc. in Environmental 

Engineering, Universidad Nacional (Colombia). Fernando is a Full time professor at Universidad ICESI in Cali (Colombia). 

He has more than twenty years of professional working experience, including operations management, technical 

management and R&D management. He is also a Consultant of the Ministry of Finance and the Central Bank of Colombia. 

César Ariza holds a first degree in Electronics (Javeriana University), a MSc in Economics (Manchester University) and 

is a PhD candidate in Econometrics (University of Amsterdam). He works at Jorge Tadeo Lozano University in Bogotá 

(Colombia) as a lecturer in the Economics Department and is a member of RAET research group. 

Denise Bedford is Currently Goodyear Professor of Knowledge Management at Kent State University. She teaches 

courses in economics of information, intellectual capital management, semantic analysis methods, communities of 

practice, and other knowledge management topics. Research interests include communities of practice, use of semantic 

analysis methods and technologies, multilingual architectures, business rules engineering, search architectures 

and governance models, intellectual capital and knowledge economies. 

ix

Constantin Bratianu is professor of Strategic Management and Knowledge Management at the UNESCO Department 

for Business Administration, and Director of the Research Center for Intellectual Capital, Academy of Economic Studies, 

Bucharest, Romania. He is co-editor of the international journal Management & Marketing. His academic interests 

are: knowledge dynamics, knowledge management, intellectual capital, and strategic management. 

Edna Bravo has a Ph.D. in Business Administration from the Technical University of Catalonia. She is also researcher at 

the Center for Technology and Innovation Management Research - INNOTEC in Universidad Industrial de Santander. 

Her current research interests include Innovation management, technology management and knowledge Management 

models. 

Delio I. Castaneda is an Associate Professor of HRM and KM, School of Management, Pontificia Universidad Javeriana, 

Colombia. 

Jenny Martínez Creso is a Ph.D. Candidate, Universidad Eafit – HEC Montreal, Canadá. Business Administrator, Universidad 

de Nariño (Pasto-Colombia), MBA, MSc in Organizations, Universidad del Valle (Cali-Colombia). She is also a fulltime 

researcher and professor Business Administration, Universidad de Medellin, Colombia. 

Camilla Sara Gonçalves Cunha: BA in International Relations; Executive MBA in Business Management; Master in 

Knowledge Management and Information Technology at the Catholic University of Brasilia. Professor at the Catholic 

University of Brasilia. Foreign trade consultant, Brazilian Service to Micro and Small Enterprises Support. 

Ruy Alcides de Carvalho Neto: M.Sc in Knowledge Management and Information Technology (Catholic University of 

Brasília, Brazil). Production Manager of Accounting and Information Management, Controllership of Bank of Brazil. 

Presently also works a researcher at the Labcon – Research Lab on Conversations in Organizations. Research Areas of 

interest: Social Networks Analysis applied to Organizations. 

Johnson Dehinbo is currently busy with his PhD studies. Appointed as a Lecturer and Senior lecturer in 1997 and 2003 

respectively at the Tshwane University of Technology, South Africa, Mr. Dehinbo previously worked as a Computer 

Programmer(1991-1996) and Graduate Assistant(1989-1991). Previous studies include B.Sc(Computer Science & Statistics-1989), 

B.Sc Hons(Information Systems), M.Sc. (Information Systems) and M.Phil(Informatics). 

María Fernanda Díaz Delgado has Industrial Engineer from the Universidad Industrial de Santander. Currently, she is 

MsC (c) in Industrial Engineer at the Universidad Industrial de Santander. She is also researcher at the Center for 

Technology and Innovation Management Research – INNOTEC. Her main stream of research is around the topics innovation 

and technology management. 

Üllas Ehrlich, graduated Tartu University in 1989, and defended his PhD in human geography at Tartu University in 

2007. Currently working as professor of environmental economics, Department of Public Economy at Tallinn University 

of Technology, Head of Chair of Environmental Economics. 

Alvaro Enriquez Martinez, psychologist, Masters of Psychology Catholic University of Leuven, Belgium. PhD in Psychology 

from the University of Sao Paulo Brazil. Professor of the Institute Psychology, Universidad del Valle, Colombia. 

Publications Articles and consultant in organizational psychology related areas. 

Fernández y Fernández is a Mechanical Engineer, and is Professor of Mechanical Engineering at PUC-Rio and General 

Director of ONIP (National Organization of the Petroleum Industry - Brazil). Fernandez was Director of ANP (National 

Petroleum Agency – Brazil), State Secretary for Science and Technology, and Manager Superintendent at FAPERJ 

(Foundation for Research Support – Rio de Janeiro). 

Flávio de São Pedro Filho is a Doctor in Business Management, laureate "Magna cum Laude" by Universidad 

Autónoma de Asunción (Paraguay). Doctor in Administration by University of São Paulo (Brazil). Invited by Harvard 

Business School to 5th China Goes Global Conference (2011) Cambridge, Massachusetts (USA). Flávio is also a Member 

of European International Business Academy. Associate Regional Director America (Southern Region:T021) at 

IIMP® 

Ernesto Galvis-Lista is an Assistant Professor in Engineering Faculty at the University of Magdalena in Santa Marta – 

Colombia since 2007. Also he is a PhD student at National University of Colombia. Galvis complete his undergraduate 

and master studies at Industrial University of Santander. His research interests lie in the area of Software Engineering 

Processes. 

x

Nasim Ghanbartehrani: is a PhD graduate in Industrial Engineering. She teaches Knowledge Management for Master 

Student in IMI, and designs practical workshops for managers as well. She works as a management consultant in 

Knowledge Management field 

Susanne Gretzinger is Associate Professor for Business Economics at the University of Southern Denmark at the Department 

of Border Region Studies. She holds a PhD from the University of Paderborn (Germany). Her research is 

within the field of "Strategic Management" and "Innovation Management”. Special issues are: Strategic Sourcing, Innovation 

Management, Networks and Value Adding Webs. 

Paul Griffiths, BSc, MEng, DBA, A.Dip.C Researcher and practitioner in knowledge and intellectual capital (IC) space. 

Helps organisations manage information and set up knowledge communities. Research interests are in the pre-history 

of IC and how its development connects to the evolution of the architecture of the mind. 

Oscar Guerra Chemical Engineer specialist in Strategic Thinking and Foresight and also in Environmental Evaluation of 

Projects. He works at the Knowledge and Technology Management Unit of ECOPETROL S.A. Nowadays he is the 

Leader of Corporate Program of Knowledge and Technology Management. 

Carolina Guzmán Pedraza is currently PhD student at the Department of Management and Business Administration 

Technical University of Catalonia (Spain). Her research interests include services innovation, leadership and organizational 

support. She is a lawyer with experience in management. 

Mirjami Ikonen is a PhD Candidate and University Lecturer of Management and Leadership at the University of Eastern 

Finland. Prior to working at UEF, Mirjami worked in plastic industry as a quality manager. Her current research 

focus is interpersonal trust development in intra-organizational relationships, especially within not-for-profit organizations 

and new methodologies applied in trust research. 

Nowshade Kabir is the CEO of Knolee Group, a Canadian consulting company focused on technology investment. He 

has M. Sc. in Computer Science, MBA and Ph. D. in Information Technology. His present interests are Innovation, 

Knowledge Management, Semantic Technologies, Entrepreneurship and Strategic Management. He is presently pursuing 

a DBA in the joint program of Grenoble Graduate School of Business and Newcastle University Business School. 

Tarmo Kadak is associate professor at the Tallinn University of Technology – Tallinn School of Economics and Business 

Administration (Department of Accounting), Estonia. He also acts as a consultant of managerial information systems. 

His research interests cover managerial accounting, costing and performance management. 

Siavash Karami is a Fellow of the Institute of Public Accountants in Australia (FIPA). He holds a Master degree in Accounting 

by Research awarded by La Trobe University, a Master degree in Business Research from University of Western 

Australia. He has over ten years of work experience in Accounting and Finance industry. 

Merle Krigul, PhD. Management Head of Centre for Management Research, Estonian Business School. Experience in 

public, private and non-governmental sectors. Lecturing communication management, knowledge management and 

marketing in public sector, Estonian universities about 20 years. Academic interests include formation of Knowledge 

regions and ideopolis, inter-sectorial and cross-border cooperation using Triple Helix model and knowledge transfer 

(sharing). 

Clara Isabel López, PhD student engineering, area: Technology Management UIS. Master´s Degree Materials Engineering 

UIS and Industrial designer. Researcher of Center for Technology and Innovation Management Student Research 

(INNOTEC). Lecturer Universidad Industrial de Santander. Research line: Technology management, Design and 

biomechanical simulation of biomedical implants 

Martha López Systems Engineer specialist in Knowledge Management (KM) and Intellectual Capital. She works at the 

Knowledge and Technology Management Unit of ECOPETROL S.A., giving supporting to the implementation of KM 

process in the Business of Exploration and Production within the company. 

Dr. Palmira López-Fresno President, Service Quality Committee – Spanish Association for Quality (AEC) and Vice President 

of AEC. Since January 2012 works in Central America as European Expert for International Cooperation, in project 

of strengthening Quality Infrastructure in Region. Author of several books on topics of service quality and leadership 

abilities. Spanish Quality Award Lead Assessor. 

xi

Gentil José Lucena Filho has a PhD in Systems Design (University of Waterloo, Canada), former Professor of the Master 

Course in Knowledge Management and Information Technology at Catholic University of Brasilia. Gentil is presently 

a Header of Research Lab on Conversations in Organizations / Coaching Company Homero Reis and Consultants. 

Research areas: Ontological Coaching, Conversations in KM Settings, Learning Organizations. 

Hugo Ernesto Martínez Ardila, is currently a PhD(c) student in Engineering in of innovation, and technology management 

at the Universidad Industrial de Santander. Since 2009, he is a researcher at the INNOTEC research group. His 

special fields of interest include technology and innovation management, open innovation and strategic alliances. 

Felipe Martinez.His research focus is Organisational Design(Procedures to set up the organisational structure). He 

teaches OrganisationalDesign, Competitiveness, Management and Operational Management. He is IndustrialEngineer 

(Pontificia Universidad Javeriana, Bogotá) and PhD candidate(University of Economics, Prague). He works as a 

consultant. He has workexperience in Colombia, India and the Czech Republic. 

Maria Beatriz Maury is a former Director of Environmental Education Institute of Brasilia. She is also a Professor of 

Secretary of Education of Federal District. Maria is presently PhD.Student at Center for Sustainable Development, University 

of Brasilia and Executive Editor of Journal on Sustainability Debate. She Develops research on Inter and Transdisciplinarity 

and Analysis of Social Networks applied to universities and organizations. 

Kai Mertins is head of the division “Corporate Management” at the Fraunhofer IPK. Since 1998 he is Professor for 

Production Management at the Technical University of Berlin, Germany. He special research focus is on management 

systems for SMEs. He was scientific coordinator of the EU Project “InCaS: Intellectual Capital Statement-Made in 

Europe”. 

Ludmila Mládková works at the University of Economics Prague, Czech Republic. She specialises in Knowledge 

Management, Management of Knowledge Workers, Managerial Leadership, and lectures and publishes in these 

topics. She strongly believes that only systemic approach to management brings benefits to organisations. 

Beatriz Elena Molina Patiño has a Master’s degree in Informatics from the Polytechnic University of Madrid, Spain; 

Business Administration from EAFIT University, Colombia, and experience in the public and private sectors, and in academia. 

She was an IADB Consultant in Washington. She is currently an international consultant, postgraduate studies 

professor and General Manager of Bio Gerencia Virtual ® . 

Margarita Morale is an Engineer and Master Coach. She is a Director of Homero Reis and Consultants Development 

Area. She is also a Master Organizational Coach by Newfield Consulting. Since 2001 has dedicated her work to coaching 

capacity building for managers. Presently is a researcher at the Labcon – Research Lab on Conversations in Organizations. 

Her research Areas of interest: Ontological Coaching, Conversations in Organizations and Communities. 

Oliver Moravcik, 1972-1976 Technische Hochschule Ilmenau/Germany, Dipl.-Ing. in Automation, 1978-1982 

Technische Hochschule Ilmenau/Germany, Dr.-Ing. in Computer Science, 1990 Slovak University of Technology, assoc. 

Professor/ Applied Informatics and Automation, visiting profesor in Koethen and Darmstadt/Germany, 1998 

Professor/Applied Informatics and Automation at Slovak University of Technology Bratislava, 2006 Dean of Faculty of 

Materials Science and Technology in Trnava, Slovak University of Technology Bratislava 

Luisa Fernanda Muñoz Terán is currently student of Universidad Nacional de Colombia – as a third year MsC student 

with thesis working area focus on the HEI’s Intellectual Capital measurement. Luisa at present is working at El Tiempo 

Casa Editorial as a Customer Service Coordinator and she also is focused on her studies. 

Fattah Nazem is an Associate Professor. He has been vice-president of the research department for the last five years. 

His research interests are in the field of Higher Education Management. He has written 2 books and 92 articles. He is 

Chief Executive of the Quarterly Journal of Educational Science. 

Martin Nkosi Ndlela is a PhD, associate professor and head of department of management and organization studies at 

Hedmark University College in Norway. Research interests include knowledge management in public sector, particularly 

aspects of knowledge sharing, communication, ICTs and communities of practice. Recent research focuses on 

knowledge sharing in inter-organizational relationships in relation to crisis response organizations. 

xii

Heloísa Oliveira is currently concluding her PhD in Business Administration at UPC (Universidad Politécnica de Cataluña). 

She is Professor of Economy of EUHT CETT-UB and founder of Brasil Consulting. Strategy, negotiation, leadership 

and ethics are some of her fields of interest of research. 

Sheila Costa Oliveira: D.Sc. University professor and researcher in the areas of Language and Literature, Media, Education 

and Organizational Learning, with 33 years of teaching experience at various levels. Sheila is currently a coordinator 

of Institutional Memory and History Project at the Catholic University of Brasilia. She is also a Independent consultant 

of the Brazilian Ministry of Education for distance education projects. 

Ivona Orzea is Assistant Professor of Knowledge Management at the UNESCO Department for Business Administration, 

and a member of the Research Center for Intellectual Capital, Academy of Economic Studies, and Bucharest, Romania. 

She is Associate editor for the international journal Management & Marketing. Her academic interests are: 

knowledge dynamics, knowledge management, intellectual capital, and strategic management. 

Flávio de São Pedro Filho is a Doctor in Business Management, laureate "Magna cum Laude" by Universidad 

Autónoma de Asunción (Paraguay). Also has a Doctor in Administration by the University of São Paulo (Brazil). Invited 

by Harvard Business School to 5th China Goes Global Conference (2011) Cambridge, Massachusetts (USA). Flávio is a 

Member of European International Business Academy. Associate Regional Director America (Southern Region: T021) 

at IIMP® 

Rodrigo Pires de Campos: BA in International Relations; MA and PhD in International Cooperation for Development 

(Nagoya University, Japan), Professor of the Master Course in Knowledge Management and Information Technology at 

the Catholic University of Brasilia. He is a Researcher at the Brazilian Institute of Applied Economic Research (Ipea). 

Rodrigo is also a Independent international cooperation consultant. 

Boris Popesko, Ph.D., (1978), (Associate Professor at the Department of Enterprise Economics, Faculty of Management 

and Economics in Zlín) is an expert in the area of management accounting and cost management. His major research 

interest is the cost behaviour, cost allocation principles, enterprise costing methods and healthcare management. 

Juli Purwanti graduated in Mathematical Science, University of GadjahMada Yogyakarta, and getting Master of Business 

Administration, Institute of Technology Bandung. Manager HR Communication Planning in Telkom Indonesia. Juli 

has had experience as a Trainer in Telkom learning Center for 10 years. Juli is very interested on Knowledge Management 

Practices. 

Marta Lucia Ramirez, Bachelor in Psychology from Los Andes University, Master in Science, Technology and Innovation 

Management from General Sarmiento University in Buenos Aires (Argentina) 

Omalbanin Sadeghi has got eight years of experience in education and research work in various high schools in 

Tehran – Iran and also she has published two scientific research articles . 

Luz Helena Sanchez Gomez, Medical Doctor from National University of Colombia, Master in Public Health with concentration 

in Behavioral Sciences and Epidemiology from Harvard School of Public Health 

Marcela Sánchez-Torres has a PhD in innovation Management, Master on Science and Technology Management. She 

works for the Universidad Nacional de Colombia as an Associate Professor and as an Adviser of Vice Presidency of Research. 

Taina Savolainen has a Professorship of Management and Leadership at University of Eastern Finland, Dpt. of Business. 

Taina specialized in trust within organizations, leadership, and organizational change, and global competitiveness 

management. Taina also has a Internationally recognized scholar, and leadership and trust educator. Her academic 

achievements have been recognized in Who’s Who in the World with over 100 international academic publications. 

Camilo Augusto Sequeira has a Master’s degree in Electronic Engineering from Catholic University, Rio de Janeiro, and 

has taught in both undergraduate and graduate programs. He has an MBA from Salford University, England. Camilo 

has been top executive for multinational companies. He is currently a consultant and a researcher for the Institute of 

Energy of PUC-Rio. 

xiii

Jana Stefankova 1986-1990 Slovak University of Technology Bratislava, Slovakia, Faculty of Materials Science and 

Technology (MTF) in Trnava. Head of Division of Academic Activities of MTF. Member of FP7 team- acronym 

DIVERSITY, and other projects related to university education, diversity, quality of university processes, quality of 

education. She has obtained the certificate "Quality CAF model Evaluator" with validity in Slovak Republik. 

Jiri Strouhal is a senior lecturer at the University of Economics in Prague (Department of Business Economics), Czech 

Republic. He is a reputed practitioner acting also as a President of the Chamber of Certified Accountants Czech Republic. 

His research interests are international accounting, measurement of financial securities. 

Ali Tajdari studied industrial engineering, while I am studying MITM in IMI. I am PMO at a consulting firm in Power 

Plant field 

Paul K. Toulson, Associate Professor of HRM, School of Management, Massey University, New Zealand. 

Zuzana Tučková PhD. doctoral studies programme, Economics and Management of Industrial Enterprises, Tomas Bata 

University (TBU), Zlín. Zuzana is experienced in project management services. She is a Solver of POST-DOC grant project 

(402/09/P406) “Knowledge Intensive Services–meaning and characterization”. Co-author grant project (NT12235- 

3/2011) “Application of modern calculation methods for optimization of costs in health care” registered at internal 

grant agency, Ministry of Health Czech Republic (IGAMZČR). 

Asaf Varol has been a Professor at the Department of Software Engineering of College of Technology and he has been 

a Financial Management of Revolving Funds Departments of Firat University Hospital in Turkey, since 2008. His research 

interests are Regional Development, Financing, Knowledge Management, and Software Engineering. 

Nurhayat Varol is an Instructor in the field of Information Technology at Firat University/Turkey since 1992. Teaches IT 

courses based on student and project centered learning methods using distance education. Research interests multimedia, 

computer aided learning and computer aided design, e-pedagogy, distance education, knowledge management, 

and technical communication. 

Serkan Varol is a studying doctor of engineering in Industrial Engineering at Lamar University in Beaumont, Texas. 

Serkan has a Master of Science degree of Engineering Management from Wilkes University in Pennsylvania where 

worked as a teaching assistant. Serkan received a bachelor’s degree in Industrial Engineering from West Virginia University. 

Research interests are Lean Management and Managerial Decisions in industry. 

José Alfredo Vásquez Paniagua is a PhD Candidate, Universidad Eafit – Hec Montreal, Canadá. Civil Engineer, and MSc 

Studies in Water Resources Planning, Universidad Nacional de Colombia. MSc in Economics, Universidad de Antioquia, 

Colombia. Master in Environmental Management, España. MSc Studies in Administration, Univesidad Eafit, 

Colombia. Jose is a full-time researcher and professor Business Administration, Universidad de Medellin, and a Consultant 

on risk analysis. 

Karen Voolaid, graduated from Estonian Business School(MBA) in 2001, and is currently doctoral student at Tallinn 

University of Technology. She is working as Head of International programs and Director of Dean`s office at Tallinn 

School of Economics and Business Administration of TUT. 

Markus Will is the head of Competence Center Knowledge Management at Fraunhofer IPK. He was project manager 

of various research and consulting projects for SMEs and international corporations. In 2011, Markus Will successfully 

completed his doctoral thesis on “Strategic Business Development Based on Intangibles in Small and Medium-Sized 

Enterprises”. 

Recep Yucel is an Asst. Prof. Dr. at the Department of Business Administration in Kırıkkale University. He is teaching 

Knowledge Management, International Business and Organizational Sciences. He received his PhD from Dokuz Eylül 

University on Business Administration in Turkey. He worked as Naval Major in Turkish Naval Forces Commander since 

from the 1988 to 2003. 

Kürşad Zorlu graduated in Public Administration at Selçuk University, Turkey (1998). He has a PhD in Management 

and Organization Science at Kırıkkale University (2009). Currently works as Chairman of Ahi Evran University Department 

of Business Management in the Turkey. His research focuses on KM discipline and applications, Artificial Neural 

Network, productivity, SMEs, organizational behaviour and Central Asia. 

xiv

Learning Organisation in Estonian Organisations 

Ruth Alas and Maris Zernand-Vilson 

Estonian Business School, Tallinn, Estonia 

ruth.alas@ebs.ee 

maris.zernand@ebs.ee 

Abstract: The aim of the current article is to explore how implementing the concept of learning organisation (LO) 

impacted organisations in Estonia. Results indicated that 54% of 204 organisations studied had implemented LO. 

This group of companies, which had introduced LO, showed differences in employee motivation, information 

sharing and displayed better results in describing processes. Using LO lead to focusing on the following areas of 

development: organisational culture, strategic management, public relations, human resource management and 

innovation. 

Keywords: organisational learning, motivation, informing, processes, Estonia 

1. Introduction 

Firm’s existing stock of knowledge and skills may become obsolete due to environmental changes 

(MacMillan et al 1985). In today’s conditions of uncertainty and rapid change, many organisations 

need to reassess focus and direction quickly, rethink how people work together and learn for 

innovation (Šebestová and Rylková 2011). Organisations need to build core competencies to 

outperform their rivals and for that they need organisations that are proactive, futuristic, strategic in 

thinking, and are capable of adaptability and flexible to acquire new knowledge (Akhtar and Khan 

2011). 

As the process of continuous change in Estonian companies since the end of 1980’s has required that 

members of organisations learn new skills and attitudes (Alas 2009), the current paper is 

concentrated especially on learning organisation ideas. There has been a growing emphasis on 

viewing an organisation as a total learning system and identifying its ‘core competencies’ which reveal 

its ‘collective learning’ capacities (Prahalad and Hamel 1990). 

The aim of the current article is to explore the implementation of Learning Organisation (LO) in 

Estonian organisations. The paper starts with theory, followed by analysis of empirical studies. 

2. Organisational learning and learning organisation 

There are three key criteria, which lead to success (Probst and Bücher 1997): firstly, responsiveness 

to the needs of the members of the organisation who will be affected by change; secondly, the 

learning capacity of the organisation; and finally, organisation’s capacity for action. 

The ability to learn continually means remaining open to experience, understanding instances when 

things do not work out as expected, spotting shifts in the environment, seeking new information, 

learning from customers and everyone else, challenging assumptions and beliefs, moving outside of 

comfort zone, and turning into inner creativity and wisdom in order to change behaviour in response 

to external changes and to develop ever-greater capacity to achieve results (Jaffe et al 1994: 221). 

Learning organisation is a human resource development intervention for organisational transformation 

within the domain of organisational development (Desimone et al 2002), which emerged from the 

organisation development movement (Ryan and Hurley 2004). 

There are several different level definitions about organisational learning (OL). According to Fiol and 

Lyles (1985) OL means the process of improving action through better knowledge and understanding. 

According to Snell and Chak (1998), OL entails meaningful change in the processes, structures, 

assumptions or concerns connecting individual members. Probst and Bücher (1997) see OL as the 

process by which the organisation’s knowledge and value base changes, leading to improved 

problem-solving ability and capacity for action. For Huber (1991) OL means processing information to 

increase the range of potential behaviours. According to Appelbaum and Goransson (1997), OL is an 

attempt to develop structures and systems that make large organisations more adaptable and 

responsive to change. By Duncan and Weiss (1979) OL is the process within the organisation by 

which knowledge about action-outcome relationship and the effect on the environment on these 

1


relationships is developed. DiBella and Nevis (1998) define OL as the capacity or processes within an 

organisation to maintain or improve performance based on experience. 

From these definitions we can see, that the OL has been seen as a process. According to Beer, 

Eisenstat and Spector (1990), change is about learning. Research in a transition economy has shown 

that as in a free market economy, values of organisational learning are related to organisational 

changes, which has also been seen as the process (Alas and Vadi 2006). Each process includes 

activities and outcome. The main activities and features Estonian managers considered to be related 

to a learning organisation were environment scanning, openness, self-development for all members of 

the organisation and also the creation of a learning climate and learning from past experiences and 

best practices. Other important features, such as information systems for sharing, storing and 

transforming information; creativity and learning together were less frequently considered (Alas and 

Sharifi 2002). 

An organisation skilled at creating, acquiring, and transferring knowledge, and at modifying its 

behaviour to reflect new knowledge and insights is called learning organisation (Garvin 1993). 

Learning organisation facilitates the learning of all its members and continuously transforms itself 

(Pedler et al 1991). 

The concept of learning organisation presumes an ability to adapt to change. Management should be 

able to anticipate or at a minimum recognize problems and use learning skills to solve them (DiBella 

and Nevis 1998). Learning organisation tries to model itself around the lessons from change (Hendry 

1996). 

There are also several definitions about learning organisation (LO). Jones and Hendry (1994) define it 

as a challenge to explore how we can create organisational structures, which are meaningful to 

people so they can assist, participate and more meaningfully control their own destiny in an 

unhampered way. According to Garvin (1993), an LO is an organisation skilled at creating, acquiring, 

and transferring knowledge, and at modifying its behaviour to reflect new knowledge and insights. 

Pedler, Bourgoyne and Boydell (1991) consider organisation as an LO if an organisation facilitates the 

learning of all its members and continuously transforms itself. Cummings and Worley (1997) find that 

an LO is created, when the results of learning are institutionalised. According to Maula (1999), an LO 

is skilled at creating new knowledge, modifying purposely and proactively its behaviour to reflect new 

knowledge and insights, evaluating its learning mechanism and its underlying values, and changing 

them. According to Jones and Hendry (1994), an LO is a challenge to explore how we can create 

organisational structures, which are meaningful to people so they can assist, participate and more 

meaningfully control their own destiny in an unhampered way. 

From these definitions we see that the authors have concentrated on features characterizing 

organisations. 

3. Empirical study 

The purpose of the interviews was to obtain initial ideas of management practice and input for general 

study. In order to accomplish the purpose, a semi-structured interview plan was devised, whose aim 

was to achieve an optimal length with the ability to discover and obtain input on all investigated issues 

of management. The main parts of the interview structure involved practice and planning in 

organisations, implementation plans, management development and changes. The principle used to 

create a sample of interviewees was to obtain information from different industries in the areas of 

service and production, and also from enterprises based on local capital. The production area 

provided representatives from chemistry-, food-, metallic- and clothing industries. The representatives 

from the service industry worked in banking, construction, information technology, transportation, 

trade and travel sectors. Interviews were conducted with 11 top managers in December 2010 and the 

contents were recorded and transcribed. Later the results were processed using CAQDAS program 

Nvivo. The qualitative data analysis software was used due to its benefits in the areas of efficiency, 

multiplicity, and transparency (Hoover and Koerber 2009). 

The questionnaire was designed for enterprises based on domestic capital. The selection of methods 

was aimed at the Estonian management experts’ opinions (Zernand and Terk 2009) and from the 

Bain and Company’s study of management tools (Rigby 2010). The questionnaire was divided into 

three main parts: first, it covered an overall assessment of the organisation in question; second, it 

2


focused on the reasons for strategic changes in the company; and third, it handled the usage of 

management techniques. The section on management method questions contained the name of the 

method implemented, a short explanation of its content and respondents’ reflection on its practice in 

the company. Learning organisation was defined as an organisation, which has specified rules about 

monitoring and sharing information on business environment, competitors and clients (Jaffe et al 

1994); Discussion of vision and mission and perspective courses of action on seminars-meetings 

(Snell and Chak 1998). Joint employee trainings and sharing of information to everyone who might 

need it are widespread (Desimone et al 2002). The respondents indicated whether certain 

management techniques were used or not. The latter served as the criterion according to which 

responses were divided into two groups. 

The questionnaire was intended for companies with 10 to 249 employees. Responses were expected 

from the manager or board members. Large enterprises, which employed more than 250 employees, 

were asked to present the questionnaire to a board member, and two of the main middle-managers. 

Enterprises with fewer than 10 employees were excluded, as they could not always establish stable 

management practices. According to the Statistical Office of Estonia (2011), in 2010, 6649 companies 

employed over 10 staff members. The creation of the initial sample was aimed at the ideal-minded 

point of view. 

Data was collected between February 7 and March 6, 2011. Enterprises in the sample received an email 

with a cover letter on behalf of the professors conducting the survey and a link to the 

questionnaire. As the initial number of respondents was extremely modest (20 companies in the first 

week) a recall was made and additional time was provided. The aim of a minimum of 200 valid 

respondents was achieved through personally addressing the companies. In total, the study covered 

204 companies, representing 16 different areas. Those 16 different areas of activity categorized three 

larger spheres of action: agriculture, production and service. 

4. Results 

Respondents were asked about implementing concept of learning organisation. The responses after 

the name of management technique and its definitions were either Yes or No. Results indicated, that 

54% of studied organisations had implemented LO. 

Correlation analysis was conducted between this question about using LO and other questions. The 

collected data was processed by SPSS. 

Respondents were asked to evaluate areas of development over the past few years. Using LO was 

connected with developments in organisational culture (r=.311, p


By the size of respondent companies the bigger companies were more active (74% with more than 

250 employees answered positively) than small companies (42% with 10 to 250 employees answered 

positively) in using LO technique in their practice. 

The results of the interviews reflected the use of LO features in Estonian organisations. Although the 

management practices of different organisations contained more peculiarities than similarities, 

employees’ methods of bringing and sharing new information were repeatedly described: “…if 

somebody goes to develop him/herself outside Estonia, then there is no sense in sending the big 

company. The person returns and offers a half-day or whole day internal training seminar; he/she 

speaks about what he/she saw, heard and learned…”. A further common learning method that is 

practiced is the following: “the development staff have smart days where they are informed about new 

technologies and a so-called camp or code is created, where the new information can be practiced 

together and they can see what is going in the world…”. 

5. Conclusions 

The most difficult part of the whole change process is getting it started (Hendry 1996). Past 

experiences and learning have a significant part here (Schein 1992). The organisations’ capacity to 

learn is a critical resource. An empirical study of 215 Estonian companies indicated the impact of 

implementing concept of learning organisation on certain characteristics of organisation. Using LO 

lead to focusing on the following areas of development: organisational culture, strategic management, 

public relations, human resource management and innovation. Model on Figure 1 below describes, 

how using LO is connected with motivation, informing, describing processes and areas of 

development in Estonian organisations. 

To conclude, the paper gave insights on which impact implementing concept of learning organisation 

had on organisations in Estonia. This group of companies, which had introduced LO, showed better 

results in management as whole and in development of products or services, which is important in 

crises situation (Alas and Gao 2012). 

Processes described in 

details: 

• main activities 

• sales 

• internal and external 

communication 

• product development 

and purchase 

Information about 

organisation’s plans 

reaches the employees 

using: 

in-house intranet 

(internal network) 

• training(s) 

• non-formal 

Learning 

Organisation 

Factors considered 

important for employee 

motivation: 

• good career 

prospects 

• versatile 

development and 

training 

opportunities 

Areas of development: 

• organisational 

culture 

• strategic 

management 

• public relations 

• human resource 

management 

Figure 1: LO in Estonian organisations: Impact on describing processes, employee motivation, 

information sharing and areas of development 

4

References 


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5

Organizational Knowledge and Organizational 

Performance: A Dynamic Relationship 

Fernando Arenas 

Universidad ICESI, Cali, Colombia 

faarenas@icesi.edu.co 

Abstract: The influence of variables related to knowledge (knowledge management, stocks of knowledge, 

organizational learning) on organizational performance, has been the subject of numerous studies. It has not 

been the case of the influence of the performance itself on these variables. It should then be asked, if 

organizational performance is just a result of these variables, or if it, in turn, influences them. If so, 

how this interaction occurs and what its dynamic behavior is. There are few studies exploring this relationship, 

although several authors suggest a relationship of mutual interaction between learning and performance, and that 

has raised the importance of considering performance as an endogenous variable (not just as a dependent one) 

within models formulated in strategic management research in general, and particularly in organizational learning 

research. Scarcity of research on the dynamic relationship between learning, knowledge and performance, 

despite its obvious relevance, could be justified in part by the methodological difficulties that longitudinal studies 

entail and, partly, by the high complexity involved in developing formal models capable of describing this 

relationship. To cope with these difficulties, several authors have used simulation models as a methodological 

proposal that allows, usually based on secondary data, development and verification of theory, and makes 

it possible the formulation of complex models involving, as in the case of this research, the integration of diverse 

but complementary theoretical perspectives. Within the existing simulation methods we have chosen the system 

dynamics approach in part because of the use it makes of the concept of stocks and flows for describing the 

evolution of strategic assets, as knowledge, and in part because it is the most suitable one for studying the 

behavior of systems with high dynamic and causal complexity. In this document we formulate a conceptual model 

that links, dynamically, organizational learning, knowledge and performance and we intend, based on related 

academic literature, to develop a simulation model that allows the application of a longitudinal study. The model 

made use of the prospect theory to explain how decision makers determine to increase, maintain or finally get out 

of investments in intellectual capital, founding these decisions in their perception of financial results as gains or 

losses, taking their own expectations of what the behavior of these results over time should be (managerial 

dynamic hypothesis), as the reference point for labeling a result as a gain or as a loss. Investments in intellectual 

capital determine the level of stocks of knowledge which, in turn, relates to the financial performance through the 

innovation capability of the firm as the mediator variable. Results of simulations using a simple linear managerial 

dynamic hypothesis and a more complex non-linear one are shown, and conclusions, based on these results, are 

formulated. 

Keywords: knowledge stocks, organizational performance, system dynamics, organizational knowledge, 

prospect theory, simulation 


The influence of variables related to knowledge (knowledge management, stocks of knowledge, 

organizational learning) on organizational performance, has been the subject of numerous studies. It 

has not occurred in the same way with the study of the influence of the performance itself on these 

variables. It should then be asked, is organizational performance just a result of these variables, or 

does it, in turn, influence them? If so, how this interaction occurs and what its dynamic behavior is? 

There are few studies exploring this relationship, although several authors suggest a relationship of 

mutual interaction between learning and performance and that has raised the importance of 

considering the performance as an endogenous variable (not just as a dependent variable) within the 

models formulated in strategic management research in general and particularly in organizational 

learning research (Bontis, Crossan and Hulland, 2002). Other authors, mainly from the perspective 

of organizational behavior theory, have studied the influence of performance on organizational 

change processes as a one-way relationship, with the exception, relevant for this research, of the 

work of Greve (2003) which establishes a dynamic feedback relationship between learning 

and organizational performance by means of the "theory of learning from performance feedback" 

(Greve, 2003, 10). The scarcity of research on the dynamic relationship between learning, knowledge 

and performance, despite its obvious relevance (Bontis, Crossan and Hulland, 2002) , may be 

justified in part by the methodological difficulties that longitudinal studies entail (von Krogh, Erat and 

Mackus, 2000), and partly by the high complexity involved in developing formal models capable of 

describing this relationship. To cope with these difficulties, several authors have made use of the 

development of simulation models as a methodological proposal that allows, usually based 

on secondary data, both development and verification of theory (Davis, Eisenhardt and Bingham, 

6


2007), and makes possible the formulation of complex models involving, as in the case of this 

proposal, the integration of diverse but complementary theoretical perspectives. Among 

the methodological approaches to the development of simulation models, it is of particular interest for 

this proposal the system dynamics approach. Developed by Forrester (1961), this methodology is 

based on the presence of structures of feedback between constituent variables of complex systems 

(e.g. organizations) and uses the concepts of stocks and flows to define the variables that constitute 

the core of the model. Simulation models based on system dynamics provide the methodological 

basis of some recent studies that are of special interest for the development of this research, like the 

one by Rahmandad, Repenning and Sterman (2009) that explores the effects of the delays in 

obtaining performance feedback on learning, and the one by Gary and Wood (2011) that explores the 

mutual influence between the accuracy of mental models of decision makers and organizational 

performance. These studies, although pose feedback relationships between variables of interest for 

this proposal, do not study explicitly the performance itself as a trigger factor of decisions 

that affect, a posteriori, through knowledge generation, the performance, in an iterative way. 

This document formulates a model that dynamically links organizational learning, knowledge and 

performance, and intends, based on the related academic literature, the development of a simulation 

model that allows the application of a longitudinal study. The object of study of this research is the 

firm, viewed from the perspective of those making investment decisions (budget) within it, and is 

framed within the strategic issue, that is, the achievement of the long-term objectives of the 

organization. 

Data for model construction are referred to pharmaceutical companies in Colombia. 

Pharmaceutical companies are chosen since this sector can be categorized as knowledge-based, 

that is, knowledge is considered a strategic asset and significant investments are made in its 

maintenance and development in order to achieve improvements in organizational 

performance (Boekestein, 2006), which makes the proposed model (knowledge -performance) 

relevant to this sector. Colombia is chosen due to the dynamism of the pharmaceutical sector in the 

country, the relevance of this study to the country and the ease of access to primary and secondary 

information. 

2. Conceptual model precedents 

2.1 Stocks, flows and sustainable competitive advantage 

The relationship between organizational performance and stocks of knowledge implies a strategic 

point of view. The theoretical proposition of Dierrickx and Cool (1989) is not only suitable but relevant 

for a strategic approach. They consider that in order to sustain a competitive advantage, a stock of 

strategic assets must be accumulated and that this accumulation is achieved by choosing time paths 

of flows that properly feed these stocks. The difference between stocks and flows is illustrated by the 

metaphor of the bathtub, where the stock of water is determined by the level of water in the bathtub, 

which is in turn the result of flows feeding and draining the tub, accumulated over time. For example, 

according to Dierickx and Cool, the amount of water in the tub could represent the stock of know-how 

at a given moment in time, while investment in R & D would be represented by the inflow and the 

depreciation of know-how by the outflow. 

An important point, illustrated by the bathtub metaphor, is the fact that stocks do not change 

instantaneously, since management wants a change in stocks it should make decisions affecting the 

flows that, in turn, modify these stocks, and since these changes only occur after a period of time, 

these decisions should take the form of policies that make these flows consistent over time. A 

competitive position, associated with a potential payoff, will come from selecting time paths that are 

appropriate to accumulate stocks of strategic assets, defined as assets that are non-tradable, nonimitable 

and not substitutable. Suffice it is to say here that the stocks of knowledge, those that are of 

particularly interest for this research, fit, in general, within the latter definition. From what has been 

described here it can be concluded that the proposal of Dierrickx and Cool, allows us, considering the 

stock of knowledge as a strategic asset stock, to close the dynamic cycle that concerns us (stocks of 

knowledge performance stocks of knowledge) through considering the investments in strategic 

assets as the variable that mediates between performance and the strategic assets themselves. We 

must remember that what may change are the flows in and out of stocks and not the stocks 

themselves, which means that investments will be the flows that affect the stocks. For our case then, 

investments are the flows that affect the stock of organizational knowledge and the 

7


dynamic causal structure of the proposed model (Model 1), will include the relationship between 

performance feedback and stocks of knowledge, mediated by investment flows in organizational 

knowledge (see Figure 1). 

Figure 1: Model 1. 

2.2 Intellectual capital 

Among the approaches to the subject of knowledge, are of particular relevance to this 

research those that Oltra (2002) calls "measurement focused approaches". Within this category, the 

one proposed by Roos et al (1997) that defines intellectual capital as the sum of human capital 

and structural capital, agrees with our proposal in the formulation of a 

dynamic feedback between knowledge (implicit in human capital and structural capital) and financial 

performance (financial capital). Figure 2 illustrates this relationship. There, human capital is defined 

as the sum of skills, attitudes and intellectual agility of employees, and structural capital as everything 

that is owned by the company and whose value for the company is greater than its material value. 

Financial 

Capital 

Human Capital 

Intellectual 

Capital 

Structural 

Capital 

Figure 2: Relationships between intellectual capital components. Adapted from Roos et al (1997) 

Furthermore, Sveiby (1998) mentions the tendency to consider only the static aspects of 

knowledge and emphasizes the desirability of approaching knowledge as a dynamic process. 

Although useful, the concept of intellectual capital brings its own difficulties. Roos et al 

(1997) highlight three of them: 

8


Delays: an increase in intellectual capital does not produce an immediate increase in total value 

Non-linearity: big investments in intellectual capital do not necessarily produce big results (and 

vice versa). 

Units of measurement: each company has its own definition of intellectual capital. Units of 

measurement of the intellectual capital components are heterogeneous. 

2.3 Dominant logic and investment decisions 

A concept related to the process of making investment decisions , appropriate for its inclusion in our 

model, is that of "general management dominant logic" or simply "dominant logic" (Prahalad and 

Bettis, 1986) , that considers the managers as groups of individuals who significantly influence the 

allocation of key resources (Donaldson and Lorsch, 1983), and is defined as "the way in which 

managers conceptualize the business and make critical decisions for allocating resources either in 

technology, product development, distribution, advertising or human resource management. 

"(Prahalad and Bettis, 1986, 490). It can be concluded then, that one of the decisions on allocation of 

key resources, influenced by the dominant logic is the investment in organizational knowledge. 

A relevant source within the scarce literature found related to empirical application of the concept of 

dominant logic is the work of von Krogh, Erat and Mackus (2000). The causal model proposed by von 

Krogh, Erat and Mackus, is shown in Figure 3. As can be seen, feedback influences are established 

between the strategic actions, including investments in organizational learning, performance, and the 

dominant logic, generating a dynamic cycle that is similar to the one previously defined as our Model 

1 (see Figure 1). For their empirical study, von Krogh, Erat and Mackus decided to take into account 

only the relationship between dominant logic and performance. This longitudinal work was based on 

secondary data collected over a period of three years in two companies in the telecommunications 

sector (Nokia and Ericsson). 

Dominant Logic 

Strategic Actions 

Performance 

Figure 3: von Krogh, Erat & Mackus causal model. Adapted from von Krogh, Erat and Mackus (2000) 

2.4 Dynamic hypothesis and prospect theory 

One element that we pose as relevant within the dominant logic is the dynamic hypothesis. The idea 

of incorporating this variable in the model comes from our experience in consulting and in teaching 

in graduate courses, through which we have noticed the existing gap between the actual 

behavior over time of the results of a given action, and the expected dynamic behavior of 

that action by those who have taken the decision to initiate such action. Then, we define the dynamic 

hypothesis as the dynamic behavior of the outcomes of a given action, expected by those who 

have taken the decision to initiate that action. The dynamic hypothesis thus defined, can be 

considered as a component of the dominant logic and then will determine what is the expected 

outcome of an investment in intellectual capital in terms of financial results, after a period of time. In 

turn, the gap between the expected and the actual outcome will determine the new flow 

of investment in intellectual capital. But how will this new flow of investment be determined? This 

decision, in the model, will be a function of the value curve proposed by the prospect theory 

(Kahneman and Tversky, 2000b;Tversky and Kahneman, 2000). A typical value function curve based 

on this theory is shown in Figure 4. 

9

Source: Kahneman andTversky (2000b). 

Figure 4: A hypothetical value curve. 


According to the expected utility theory (von Neumann and Morgenstern, 1947), commonly 

used in decision making studies, decision makers assign values of utility and probability of 

occurrence to the possible outcomes of their decisions and choose that decision with the 

greatest weighted value of utility and probability. However, despite its widespread use, numerous 

studies have shown that, in practice, decision makers do not follow the theory of expected 

utility. To fill the need for a theory that is closer to the criteria used in reality, Kahneman and Tversky 

(2000b) formulated the prospect theory, which, in contrast to the theory of expected utility, states 

that decision makers do not consider the expected monetary value resulting from the decision, but 

assign a subjective value to the result depending on whether it is above (gain) or below (loss) a 

value or reference point. The magnitude of the subjective value assigned to each gain or loss will be 

given by a curve similar to that shown in Figure 4. As can be seen, this figure is concave in the area of 

gains and convex in the area of losses, implying loss aversion, that is to say, the decision maker will 

assign a greater magnitude (loss) to a value lower than the reference point, than to a value that is 

at equal distance greater than the reference point (gain) and, moreover, in decisions involving 

only losses, the tendency will be to take risks (risk seeking behavior) and in decisions that involve 

only gains the trend will be avoid risk (risk aversion behavior). The shape of the figure implies a 

reduction in sensitivity, that is, to the extent that the values go far from the point of 

reference, either way, an increase or decrease in the result will represent an increasingly smaller 

increase or decrease in subjective value. 

Within this proposal, the reference point of the value function is the expected outcome in a given 

moment in time, in terms of financial performance, of an investment decision, and will be determined 

by the dynamic behavior of the decision maker hypothesis. 

The value function that defines the curve on which subjective values are assigned, follows the 

equation (Kahneman and Tversky, 2000) 

v(xj) = (xj) α if xj > 0, y v(xj) = −λ(−xj) β if xj < 0 (1) 

Where v(xj) is the subjective value assigned to xj, and α, β, y λ, are parameters that depend on 

decision maker. 

3. Methodology 

3.1 Simulation 

Because we are going to study a series of dynamic relationships between variables, the study should 

be longitudinal. In fact, von Krogh, Erat and Mackus (2000), state that any study involving the 

dominant logic as a variable, must be longitudinal (von Krogh, Erat and Mackus, 2000, 85). The object 

of study should be organizations located in highly dynamic sectors, where intellectual capital and 

innovation capability are considered as strategic resources. This is why we have chosen the 

pharmaceutical sector. 

10


Due to the difficulties inherent to conducting a longitudinal empirical study, we decided to use 

simulation as a research method. This method is gaining increasing acceptance within the academic 

community for studies like the one we are proposing, that involves dynamic and longitudinal 

phenomena (Repenning, 2002; Zott, 2003), and even for the study of complex theoretical 

relationships between constructs, where there are serious limitations in the availability of empirical 

data (Zott, 2003). When is simulation justified, what type of simulation to use and what should be the 

methodology for research that uses simulation, are questions that are answered in a paper written by 

Davis, Eisenhardt, and Bingham (2007), who argue that "simulation is particularly useful when 

the theoretical approach is longitudinal, nonlinear, or involves processes, or when empirical data are 

difficult to obtain " (Davis, Eisenhardt and Bingham, 2007, 481). 

3.2 System dynamics 

Within the existing simulation methods we have chosen the system dynamics approach in part 

because the use it makes of the hydraulic analogy posed by Dierickx and Cool (1989) for describing 

the evolution of strategic assets, as knowledge, and partly because it is the most suitable for studying 

the behavior of systems with high dynamic and causal complexity (Davis, Eisenhardt and Bingham, 

2007). Besides, simulation models based on system dynamics provide the methodological basis 

of some recent studies that are of special interest for the development of this research, like the one by 

Rahmandad, Repenning and Sterman (2009) that explores the effects of the delays in 

obtaining performance feedback on learning, and the one by Gary and Wood (2011) that explores the 

mutual influence between the accuracy of mental models of decision makers and organizational 

performance. Studies using system dynamics to build models that include prospect theory are 

scarce, the only one study found was that of Sawicka and Gonzalez (2003) that seeks to 

explain why people choose not to follow prescribed safety measures in high risk environments. 

3.3 Conceptual model 

As has been mentioned previously, the study of a dynamic relationship that involves feedback and 

delays between cause and effect, necessarily entails the application of a longitudinal study. Given 

the time constraints for conducting this research, we will use secondary data, so that the 

operationalization of the model should be based on the availability of data from empirical studies or 

databases. This limitation has been considered for the definition and subsequent measurement of the 

variables involved in the final model of this research. 

3.3.1 Relationship between investments in knowledge, stocks of knowledge and performance 

For the model we will use income from new products as the measure of organization’s financial 

performance that determines the flows of investments that feed knowledge stocks. Regarding 

investments in intellectual capital (knowledge stocks), and following the definitions of the extended 

model of VAIC (Pulic, 2000) proposed by Nazari et al (2007) that directly relates investments in R & D 

to structural capital (innovation capital) and investment in salaries and benefits to human capital, we 

will focus in these two types of investments within the model. Innovation capability (defined as a 

function of the level of stocks of knowledge) will mediate the relationship between intellectual capital 

and income from new products via new product development. 

3.3.2 Relationship between financial performance, dynamic hypothesis and investment in intellectual 

capital 

Earlier in this document, it was explained how the dynamic hypothesis will be related to investment 

decisions through the prospect theory, and the equation of the curve through which a value is 

assigned subjectively to a given outcome was described. There was mentioned that the curve is 

determined by the parameters α, β, and λ, that depend on the decision-maker. To define these 

parameters within our model, we will refer to the work of Bromiley (2009), who develops a model 

of resource allocation to R & D, previously defined as one of the investments that will be included in 

the model, based on the prospect theory. Therefore, we will adopt the range of values assigned 

by Bromiley (2009) for these parameters in our proposed model. 

Based then, on what has been previously exposed, the model of our proposal adds to 

the variables involved in the Model 1 (see Figure 1) the variable dynamic hypothesis as a mediator 

between the financial performance measured as income from new products, and the decision 

to invest in intellectual capital, specifically R & D, salaries and benefits. The level of organizational 

11


knowledge, is measured through the level of knowledge stocks. The final conceptual model (Model 2), 

including these modifications is shown in Figure 5. 

Figure 5: Proposed model. 

3.4 Simulation model 

3.4.1 Innovation capability, new products and financial performance 

In the simulation model, Human Capital stock is increased by the flow of Investments in Human 

Capital and reduced by Human Capital Erosion (personnel rotation, knowledge obsolescence) whilst 

Innovation Capital stock is increased by the flow of Investments in R&D (modeled through a function 

which makes them riskier than Investments in Human Capital) , and reduced by Innovation Capital 

Obsolescence. The level of knowledge stocks determines Innovation Capability that, in turn, 

influences how many new product projects start and how much time the development process takes, 

that is, how many new products are developed in a period of time. These New Products increase New 

Products Portfolio which is depleted by those products that have gotten a certain lifetime period (New 

Products Maturity Time) and must be classified as mature products. Income from New Products is 

used to measure financial performance 

3.4.2 Managerial dynamic hypothesis and investments in knowledge stocks 

The decision on how much, as a fraction of Income from New Products, will be invested in intellectual 

capital in each period, is determined by the Relative Value that management assigns to that income. 

This relative value is calculated through the prospect theory function (Equation 1) in which the 

reference point, used to calculate “x” is set according to the managerial dynamic hypothesis, and α, β, 

and λ, are the median of the values used by Bromiley (2009), that is α=β=0.88, and λ=2.25. 

Two different managerial dynamic hypothesis are used, an elaborated one (Hypothesis 1), that takes 

into account the delay between investments and their impact on financial performance, and a simple 

linear one (Hypothesis 2). Both hypotheses are shown in Figure 6. 

As it can be seen from Figure 6, the time unit used is quarter and the simulation time horizon 20 

quarters (five years). The Expected Income from New Products (goal) is 200 in the 20 th quarter for 

both of the hypothesis. An investment policy of 25%, as a maximum, of Income from New Products to 

be reinvested in knowledge stocks is assumed. 

A simplified version of the simulation model structure is shown in Figure 7. 

12

4. Results 

4.1 Financial performance 


Figure 8 shows simulation results for Income from New Products, comparing investment decisions 

made with Hypothesis 1 (blue line 1) and Hypothesis 2 (red dotted line 2). Income from New Products 

shows a growth behavior after the 10 th quarter as a result of investments delayed impact. This growth 

is higher in the case of Hypothesis 1, with a final result of 173.1, relatively close to the goal of 200. 

For Hypothesis 2, growth in income is lower with a final result of 156.9. 

200 

170 

140 

110 

80 

Expected Income from New Products 

0 2 4 6 8 10 12 14 16 18 20 

Time (Quarter) 

Expected Income from New Products : HYPOTHESIS 1 

200 

170 

140 

110 

80 

Expected Income from New Products 

0 2 4 6 8 10 12 14 16 18 20 


Expected Income from New Products : HYPOTHESIS 2 

Figure 6: Managerial dynamic hypothesis. Hypothesis 1 (left) and Hypothesis 2 (right) 

13

Investments in R&D 

Human Capital 

Increment 

Innovation Capital 

Increment 

Investments in 

Human Capital 

Human Capital 

Innov ation Capital 

Investments in 


Human Capital 

Erosion 

Innov ation Capital 

Obsolescence 

Figure 7: Simulation model structure. 

200 

170 

140 

110 

80 


Managerial Dy namic Hy pothesis 

Relative Value 

Expected Income 

f rom New Products 

Innov ation Capability 

New Products 

Income from New Products 

21 21 1 2 2 2 2 2 

1 1 1 

1 

1 

21 

2 

21 

Income from New Products 

New Products Portf olio 

New Products that 

Start Dev elopment 

Dev elopment Time 

2 

21 

New Products that 

Mature 

New Products in 

Dev elopment 

0 2 4 6 8 10 12 14 16 18 20 


Income from New Products : HYP-1 1 1 1 1 1 1 1 1 1 

Income from New Products : HYP-2 2 2 2 2 2 2 2 2 2 

Figure 8: Simulation results for Income from New Products 

1 

1 

2 

1 

2 

New Products Maturiry Time 

New Products 

Dev eloped 

4.2 Investments in knowledge stocks and fraction invested in innovation capital 

Behavior over time of Investments in Knowledge Stocks and Fraction Invested in Innovation Capital is 

shown in Figure 9. Investments in Knowledge Stocks shows a growing behavior from the 6th quarter 

on with a final value of 43.3 in the case of Hypothesis 1 (blue line 1), and a decreasing behavior from 

the 6 th quarter on with a final value of 22.2 that tends to be stable, in the case of Hypothesis 2 (red 

dotted line 2). This behavior follows what should be expected as an effect of the aversion to losses 

(section 2.6) affecting the Innovation Capability and explaining the results obtained for Income from 

New Products (Figure 8). On the other hand, the Fraction Invested in Innovation Capital shows a 

rather stable oscillatory behavior (around a value of 0.55) in the case of Hypothesis 1 (blue line 1) that 

follows the risk averse behavior predicted by the prospect theory, whilst in the case of Hypothesis 2 

(red dotted line 2) the results show a higher amplitude oscillation curve with a peak of 0.8 by the 10th 

quarter and a further stabilization around a value of 0.71, following the risk seeking behavior predicted 

by the prospect theory. 


A managerial dynamic hypothesis that does not take into account the delay between investments in 

knowledge stocks and its impact on financial performance, may lead to decisions, based on short 

14 

1 

2


term results, that reduce or cut investments in a premature way, resulting in poor financial 

performance. 

The results obtained from the simulation are consistent with those which should be expected from the 

application of the prospect theory. 

An empirical validation of the results should be made through experimentation with decision makers, 

using a management flight simulator based on this simulation model. 

60 

45 

30 

15 

0 

Investments in Knowledge Stocks 

21 21 1 2 12 12 1 1 1 1 

2 

2 

2 

1 

1 

2 2 2 

1 

1 

1 

1 

2 2 2 2 

0 2 4 6 8 10 12 14 16 18 20 


Investments in Knowledge Stocks : HYP-1 1 1 1 1 1 1 1 1 

Investments in Knowledge Stocks : HYP-2 2 2 2 2 2 2 2 2 

1 

0.85 

0.7 

0.55 

0.4 

2 

2 

1 1 1 

Fraction Invested in Innovation Capital 

2 

2 

1 

1 

2 

1 

2 

2 2 2 2 

1 1 

1 

2 

2 

1 1 1 

1 

2 2 2 

0 2 4 6 8 10 12 14 16 18 20 


Fraction Invested in Innovation Capital : HYP-1 1 1 1 1 1 1 1 1 

Fraction Invested in Innovation Capital : HYP-2 2 2 2 2 2 2 2 2 

Figure 9: Simulation results for investments in knowledge stocks (left) and fraction invested in 

innovation capital (right) 

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16

On a Methodology for Measuring Innovation in Agricultural 

Firms 

César Ariza, Laura Rugeles, Diana Saavedra and Bladimir Guaitero 

Universidad Jorge Tadeo Lozano, Bogotá, Colombia 

cesarj.ariza@utadeo.edu.co 

laura.rugeles@utadeo.edu.co 

dianap.saavedrac@utadeo.edu.co 

bladimirguaitero@gmail.com 

Abstract: Measuring innovation is a notoriously difficult task. Agricultural firms present additional complications 

due to the uncertainties linked to the sector. In this paper we propose a methodology for measuring innovation in 

agricultural firms, based on two main tools. The first one is the Innovation Matrix (IM), an approach to a 

structured catalogue of the current state of technology in the agricultural subsector under study. IM allows 

different views, according to diverse organization criteria, such as Oslo Manual, knowledge areas and subjects, 

agricultural paradigms, etc. IM is built upon an innovation survey and includes information about the quality of 

innovation, in particular in terms of its place on the technological spectrum of the subsector (technological level). 

IM appears to be an instrument capable of tracing the diffusion of technologies and innovations across firms, 

subsectors and territories. This feature will allow us to monitor changes in firm-based innovation processes 

through time. The second tool is the Innovation Index (II), a single number that combines information about the 

techonological level and frequency of the observed innovations. The basic idea of II is to assign higher values to 

firms that implement either less frequent or comparatively advanced innovations, relatively to the ones 

implemented by its competitors within the subsector. Since II is always a real non-negative number, it is possible 

to use OLS estimation procedures to enquire about the factors driving innovation processes in agricultural firms. 

In fact, we also present the results of the application of this methodology to four agricultural subsectors in 

Colombia, focusing on the determination of the factors that drive innovation on each of them. Although in general 

those factors are subsector-specific, there are still some general stylized facts for the whole agricultural sector. 

The main consequence of this finding is that innovation policy design for the agricultural sector must take into 

account the existence of both sectorial (common) and subsector (specific) factors. 

Keywords: innovation matrix, innovation index, measure of innovation, agricultural firms, innovation drivers 


Agriculture in Colombia, as in the rest of the world, is a strategic sector. It has different roles and 

opportunities for essential development of the nation, mainly in food safety and food quality, 

interdependence with other sectors of economy, control of inflation, bioenergy production, institutional 

stability, and custody of natural resources (Banco Mundial 2008a, 2008b; CAF 2006; Londoño 1985; 

Rugeles 1986; among others). 

Colombian agriculture has good perspectives facing these challenges. We need to be aware, in any 

case, about the necessity of overcoming major constraints in order to consolidate a modern 

agriculture capable of competing in a global market, producing quality food both for the internal 

market and for exports, and one that produces positive effects in the territories where it operates. Our 

agriculture, with some exceptions, is mainly composed of small productive units, dispersed over the 

territory, informal economies and low levels of technology. 

Agriculture is the fourth most important economic activity within the structure of Colombian GDP and 

represents 8% of the total (DANE 2007). If agriculture and agroindustry (4.5%) are combined, the 

share reaches 12.5% and occupies the first place. However, the annual growth of the agricultural 

sector in the long run has lagged behind the overall growth of the economy (Kalmanovitz 2010), 

particularly in the critical years 2009 and 2010 in which agriculture grew -0.7% and 1.0% respectively. 

Our research group belongs to a network of universities that studies different aspects of agribusiness 

firms and their relationship with territorial features in several Colombian regions. The last three years 

(2009-2012) our group has studied agricultural firms in six subsectors and five territories in Colombia. 

The sectors are tomato, potato, cut flowers, palm oil, beef meat and pork meat. The territories are 

Antioquia, Córdoba, Cundinamarca-Boyacá and Meta. The main objective of mentioned research has 

been examining the structure and nature of transactional models of agribusiness in order to 

understand whether these models influence the innovation process. Our fundamental assumption is 

that low capacity to generate innovation in colombian agricultural sector, is not so much related to 

17

César Ariza et al. 

lack of technology but lack of adequate transactional models. We are also interested in knowing the 

influence of regional innovation networks and inter-firm linkages on innovation processes. 

This paper wants to summarize the methodological tools that we have developed to achieve these 

goals. The main finding of our research is a new methodology for measuring innovation in 

agribusiness firms. The key pieces of this methodology are the innovation matrix and the innovation 

index. The first one is an ordered inventory that summarizes the nature of observed innovations in a 

particular subsector. The second one summarizes both the qualitative and quantitative aspects of the 

innovations implemented by a firm in a given subsector. 

There are four additional sections in this paper. The second one describes the current methodological 

approaches to study innovation processes in agribusiness firms. In the third section the innovation 

matrix is introduced and explained. Section four presents the innovation index as a new way of 

measuring innovation in the agribusiness sector. In section five we explain briefly a direct application 

of our proposed methodology, using an econometric model to identify the key variables that influence 

innovation in four agricultural subsectors. Section six concludes. 

2. Current methodological approaches 

There are two main types of econometric models in the literature concerning studies of innovation in 

agribusiness firms. The first one uses Probit (or Logit) models (Avermaete, et al. 2003). The second 

one uses Ordered Logit models (Nossal & Lim 2011). Both families share a common strategy that we 

can divide in four stages: 

1. For a given economic subsector, the researcher compiles an inventory of innovations in the firms 

that belong to it. 

2. The researcher defines a classification system for these innovations. Usually such classification is 

based on Oslo Manual (OECD, European Commission & Eurostat 2005) and Bogotá Manual 

(Jaramillo, Lugones & Salazar 2001). The main focus of the classification varies a lot. One possibility 

is to focus on the rupture level of the innovations (radical and non-radical innovations respectively). 

An alternative classification can focus on the type of innovation, that is, product, process, 

organizational or market innovation (Avermaete et al. 2003). It is also possible to subdivide the initial 

groups. For example, for the group of product innovations some subgroups can be defined, such as 

the change in visual appearance, new package materials, etc. 

3. The observed innovations in the sample are classified using the full inventory of innovations and 

the classification system as described in the first two stages. 

4. Finally, the observed innovations are used to compute the degree of innovation of every firm. The 

exact mechanics of measuring innovation depends on the final econometric model to be applied. One 

alternative is to construct an average innovation, allocating different weights to every innovation. 

Another possibility is to count the innovations and assign an innovation measure following preestablished 

rules. For example, the rule can dictates that the firm is high innovator if a minimum of 

three “great extent” innovations are observed (Nossal & Lim 2011). 

The two main types of econometric models already mentioned differ mainly on the fourth stage. Probit 

and Logit models use a discrete measure using 1 and 0 values, depending on whether or not the firm 

presents innovations and meets other criteria, like investment in R&D or registered patents. Ordered 

Logit models use a variable with discrete and ranked ordinal values (assigning higher values to firms 

with better innovation performance). 

The exogenous variables used in the previous econometric models depend on the goals of the 

researcher. In general these variables focus on the features of the firms (e.g. their size or antiquity), 

their leaders (age, experience, education, etc.), their integration to innovation or entrepreneurial 

networks, relevant aspects of their economic sector (its size, the nature of their clients) and regional 

and sectorial features. 

It can be argued that this basic methodology is, at to some point, arbitrary. In the Logit/Probit models 

the same firm can be innovative or non-innovative depending on the threshold used. On the other 

18


hand, in the ordered Logit models the degree of innovation of a firm can increase or decrease 

depending on the rules to assign the innovation rank of a firm. 

However, the main shortcoming of these strategies is that they do not take into account two 

fundamental properties of the innovation itself. The first one is that every innovation is different, in the 

sense that each innovation belongs to a different part of the technological spectrum of the economic 

subsector we are analyzing. Secondly, every innovation has a different frequency within the economic 

subsector. Some innovations can be very common whereas others will be extremely rare. In order to 

exploit these features we first need an additional tool, the innovation matrix. 

3. Innovation matrix 

The methodology used in our research follows closely the one explained in the previous section. We 

start constructing a list of innovations to capture the technological spectrum of the analyzed 

subsector, taking into account possible innovations in it. This list is called Innovation Matrix, and is 

different for every subsector analyzed. The elements that define the technological spectrum of the cut 

flowers subsector are entirely different to those of the potato subsector, for example. 

We followed closely both Oslo and Bogota manuals, technical or legal recommendations that ruled 

every subsector and suggestions of experts to construct every IM. 

Once the list of innovations is completed there are several ways of analyzing them. The usual practice 

is to focus on the Oslo Manual classification. We also analyze this list from alternative views, such as 

technological areas and subjects, paradigms and technological level, being the latest the starting 

point that we will use in this paper. 

3.1 Technological levels of the innovations 

As soon as every IM was designed, it was clear that innovations were different from a qualitative point 

of view. In particular, these differences allow classifying innovations in three big groups. 

First, there are innovations which are the closest to the technological frontier. Such innovations are 

usually used by a small amount of the firms in the subsector and they have advanced technological 

level in a certain aspect. We called them major innovations. 

On the other hand, we find innovations that are mainly implemented (but not exclusively) by 

technologically “laggards” firms (Diederen, et al. 2003). These innovations have basic technological 

level in a certain aspect. They represent minimal changes, those that firms must perform to stay in 

business. We called them minor innovations. 

Finally, there are innovations that cannot be easily categorized in any of the previous extremes. 

These innovations have average technological level in a certain aspect. They do not create a sudden 

change in the technological trend of the subsector and express themselves as incremental positive 

changes for the firm. We called them intermediate innovations. 

Once the surveys were processed, it was clear that innovations carry more information that their 

technological level. The frequency of an innovation within the subsector allows a total different 

analysis. Some are extremely rare, implement by a handful of firms. On the other hand, other 

innovations are very popular, with a huge diffusion within the subsector. 

However, there is no correlation between these two types of classification, technological level (IM) 

and quantitative (frequency). Both major and minor innovations can be either rare or extremely 

common within a subsector. This lack of correlation was the inspiration for a way of summarizing in a 

single numerical index both features. This is the Innovation Index (II), to be explained in the following 

section. 

4. Innovation index (II) 

The basic idea of the innovation index is to assign a single numerical value to the set of innovations of 

every firm. Such numerical valuation must assign higher numbers to innovations that push the 

technological frontier or to innovations that are relatively rare within the subsector. The same 

19


approach must be used for intermediate innovations. In this case those with lower frequency must be 

given a higher valuation than those that are common. 

The qualitative and quantitative ways of classifying the innovations present in each firm can be drawn 

in a plane. The horizontal axis will represent a measure of the relative frequency of the innovation, 

how the firm behaves with respect to its competitors. The vertical axis will represent a measure of the 

quality of the innovation, that is, if the firm implements a major, intermediate o minor innovation 

(according to the IM). 

We propose an innovation index that uses information of the two axes and summarize it in a single 

number. The innovation index (II) of an agribusiness firm in a given sector is defined by: 

where sub-index j refers to the j-th innovation in the IM, n is the total number of innovations in the 

analyzed subsector, is an indicator function that tells us whether or not innovation j-th is 

implemented by the firm and is the relative frequency of j-th innovation in the sample (in relation to 

the competitors of the firm within the subsector). Finally, power is equal to -1, -1/2 and 0 for major, 

intermediate and minor innovations respectively. Indicator function plays a key role, since a 

particular innovation adds value to II only when is implemented by the firm. This means that there is a 

third feature incorporated to the index innovation (besides the technological level and frequency of the 

innovations), the number of innovations implemented by the firm. 

Frequencies are measured in the interval . Since this frequency is raised to a particular power 

(depending on the technological level of the innovation), rare and major innovations are rewarded with 

the highest contributions to II (contributions higher than 1). Minor innovations add 1 to II, whether 

they are common or rare. Every innovation implemented by the firm increments the value of II, there 

are not negative innovations. 

4.1 Properties of II 

The following are some of the properties of the innovation index II from a mathematical point of view. 

First, the minimum value of II is 0, for a firm with no innovations. The maximum value of II is given by 

the extreme case when a single firm implements all possible innovations in the subsector and the 

remaining firms do not implement any one. Let us call the number of minor, intermediate and major 

innovations as respectively. Then, we will have: 

The number of firms in the sample is . Since only one firm implements all possible innovations and 

the remaining firms do not implement a single one, the frequency of every innovation will be . In this 

case, II will be: 

This value is the maximum in the general case. If all innovations are major, the maximum value of II is 

Hence, II belongs to the interval for every firm in the sample. 

20


It is very important to point out the dynamic nature of II. Our survey asks the firms about innovation 

activities in the last five years. Therefore, II only captures the innovation activities of the firm in this 

time frame. A highly innovative firm can have a low II if most of its innovations (or at least its major 

and rare ones) were implemented outside the observation period, or if a high number of innovations 

are minor or have relatively high frequency. 

It is also important to clarify that II is a random variable, since its final value depends on the observed 

sample. It is not strange for an index to be a random variable. For example, a Consumer Price Index 

(CPI) is a random variable, since every element of its computation is random: the products chosen, 

the observed prices, the selected cities and sellers, etc. 

5. Econometric model and results 

For the purpose of this section only four of the six analyzed subsectors are reported. The firms to be 

interviewed were chosen using a random stratified sampling. The key stratifying variable was the 

transactional models of agribusiness used by the firm. The different types of transactional models 

used in a particular subsector were determined in the initial research. Since every firm uses one and 

only one transactional model, it is a proper stratifying variable. 

The dependent variable (the innovation index II or some function of it) is continuous, hence the usual 

econometric models used to study innovation (Logit/Probit or Ordered Logit models) are no longer 

applicable. We propose a linear regression model where the main endogenous variable is II or a 

functional form of it. 

The key exogenous variable in our model is the transactional model used by the firm, since our goal is 

to determine the effect of such transactional models on the innovation of the firm. We use more 

exogenous variables as controls. All of them are used regularly in the literature on innovation. Such 

variables include those that describe the nature of the firm, its leader and those that capture their 

relation to innovation system. 

As in every linear regression model it is important to verify a number of assumptions that guarantee 

the quality of the numerical estimates of its parameters and the inferential processes applied to them. 

For purposes of our research, the following are the main assumptions to be used (we include for 

completeness the statistical tools to verify them): 

The linear regression model has the proper functional form. The Box-Cox test was used to 

determine the particular functional form, among linear, logarithmic or semi-logarithmic options. 

The disturbances of the linear regression are homoscedastic. We have used White and Breusch- 

Pagan tests depending on the features of the linear regression under study. 

The disturbances are normal (gaussian). We have used Jarque-Bera test to check this 

assumption. 

Using the Box-Cox test we have concluded that the proper functional form is a semi-logarithmic one. 

Therefore, our econometric model will be: 

where is the natural logarithm of the innovation index II, is the disturbance, is a matrix 

that summarizes all exogenous (explanatory) variables, and is a vector with the parameters of the 

model. The estimates of represent semi-elasticities of the innovation with respect to the exogenous 

variables. 

The exogenous variables to be included in depends on the subsector to be analyzed. However, it 

is worth mentioning briefly all possible variables to be included in the final econometric model. These 

variables, their concepts and descriptions are mentioned in table 1. 

Table 2 summarizes results for cut flowers, palm oil, potato and pork meat subsectors, when the 

variables PARTI and VIF are computed as the sum of the dummy variables that compose them, we 

call it aggregated case; we also computed them disaggregated, but it is not reported in this paper. We 

have included only those variables that are significant at least at 10%. We also report the p-values in 

square parentheses. 

21


Table 1: Exogenous variables for the linear regression model 

VARIABLE TYPE CONCEPT CONSTRUCTION 

Region 

Transactional 

model 

Scale of 

Production 

PARTI 

VIF 

R&D 

Education 

level of the 

leader. 

Age of leader 

Experience of 

leader 

Dummy, with 

values 0 and 

1. 

Dummy, with 

values 0 and 1 

for every type 

of model. 

Real variable, 

measured in 

millions of 

Colombian 

pesos. 

Integer values 

in the interval 

0-6. 

Integer values 

in the interval 

0-4. 

Dummy, with 

values 0 and 

1. 

Dummy 

variables, with 

values 0 and 

1. 

Integer 

variable 

Integer 

variable 

There are two regions in every 

subsector. The region with lower 

average II was used as reference. 

It distinguishes the transactional 

model used for the firms in the 

subsector. In all sectors model 1 

(M1) is used as reference. The exact 

definition of every model depends 

on the sector to be analyzed. 

The amount of annual sales of the 

firm. 

Acronym that stands for 

“Participación en Redes Territoriales 

de Innovación”. This variable 

summarized the number of actors 

the firm is involved with in Regional 

Innovation Networks. 

Acronym that stands for “Vínculos 

Inter Firma”. This variable 

summarizes the number of actors 

the firm is involved with in innovation 

activities. 

It evaluates whether or not the firm 

performs Research & Development 

activities. 

This set of dummy variables 

measure the highest educational 

level of the leader of the firm. Those 

levels are: none, primary, high 

school, technical degree, 

technological degree, university 

degree and postgraduate degree. 

The base level is different in every 

subsector. 

It measures the age (years) of the 

leader of the firm. 

It measures the experience (years in 

the sector) of the leader of the firm. 

Taken directly from the survey. 

We assign a transactional model 

to every surveyed firm, according 

to the interpretation of the 

survey’s answers. 

Information taken directly from the 

survey. 

The value of this variable is the 

sum of six dummy variables, one 

for each actor in Regional 

Innovation Networks: 

government, universities, 

research centers, guilds, NGO 

and research networks. 

The value of this variable is the 

sum of four dummy variables, one 

for each actor in innovation 

activities: suppliers, clients, other 

firms and consultants. 

Information taken from the 

survey. 

Variables built from the 

information in the survey. 


survey. 


survey. 

We report and whether or not White robust variance estimation procedure was used (if 

heteroscedasticity was detected). It is important to recall that if a firm does not present any 

innovations within the five years window, II is equal to zero and that firm is excluded from the sample 

used for the estimated model (the logarithm of II is not defined in that case). That is the case only for 

the potato subsector. 

Table 2: Econometric model results for four different agricultural subsectors, aggregated case 

Subsector 

Variable Cut Flowers Palm Oil Potato Pork Meat 

Constant 

1.879961 

[0.0000] 

2.476425 

[0.0000] 

2.160563 

[0.0000] 

3.478122 

[0.0000] 

Region 

0.563451 

[0.0037] 

― 0.54239 

[0.0049] 

― 

Business Model 2 

― 0.782182 

[0.0002] 

0.474906 

[0.0161] 

― 

Business Model 3 0.401043 0.709593 ― 0.798013 

22

Business Model 4 

Scale of production 

PARTI 

R&D 

Basic Education 

Technological Oriented Education 

High School Education 

Postgraduate Education 

No Education 

Age of leader 

Experience of leader 

Number of employees 


Subsector 

[0.0409] [0.0003] [0.0008] 

0.780057 ― ― 0.544716 

[0.0015] [0.0014] 

― 0.000027 0.000121 ― 

[0.0476] [0.0000] 

0.228626 0.148039 0.25903 0.174707 

[0.0007] [0.0119] [0.0038] [0.0168] 

0.337052 0.356451 ― ― 

[0.0434] [0.0523] 

-2.036604 ― ― ― 

[0.0000] 

0.801274 ― ― ― 

[0.002] 

― ― ― -0.908015 

[0.0031] 

― ― 1.096886 ― 

[0.0312] 

― ― ― -3.339088 

[0.0000] 

― -0.01337 ― ― 

[0.0463] 

0.016322 ― -0.017204 -0.020061 

[0.0557] [0.0207] [0.0421] 

― 0.001818 ― ― 

[0.0006] 

Observations 71 79 75 78 

R^2 0.726238 0.561467 0.529611 0.487436 

White Robust Variance Computation No No Yes Yes 

Even more interesting than the estimated coefficients is their interpretation. Since the model is semilogarithmic, 

every coefficient (say b) can be interpreted as a semielasticity: other things being equal, 

an extra unit in the respective independent variable will cause an increment/decrement (depending on 

the sign) of in the innovation index (with special care for the dummy variables, 

which refer always to the base category). Table 3 summarizes the semielasticities for the analyzed 

subsectors. 

Table 3: Semielasticities for four different agricultural subsectors, aggregated case 

Subsector 

Variable Cut Flowers Palm Oil Potato Pork Meat 

Constant 555.324928 1089.86506 767.602088 3139.88199 

Region 75.6724508 ― 72.0113023 ― 

Business Model 2 ― 118.623743 60.7863051 ― 

Business Model 3 49.3381483 103.316359 ― 122.112317 

Business Model 4 118.159661 ― ― 72.4118663 

Scale of production ― 0.00270004 0.01210073 ― 

PARTI 25.6871881 15.9558118 29.5672674 19.0897233 

23


Subsector 

R&D 40.0811904 42.8251544 ― ― 

Basic Education -86.9528961 ― ― ― 

Technological Oriented Education 122.837807 ― ― ― 

High School Education ― ― ― -59.6675972 

Postgraduate Education ― ― 199.48256 ― 

No Education ― ― ― -96.4530709 

Age of leader ― -1.32810186 ― ― 

Experience of leader 1.64559315 ― -1.70568562 -1.9861117 

Number of employees ― 0.18196536 ― ― 

Regional factors have an impact on the II for the cut flowers and potato subsectors. The transactional 

model used by the firm has an incremental effect on the innovation in all subsectors, taking as the 

base group the classical market model. When the transactional model is prone to avoid uncertainty 

(models 2 and superior have features such as existence of contracts, vertical integration, etc) the II 

increases. This finding suggests that a policy designed to increase the formalization of economic 

transactions in the agricultural sector will have positive effects on the innovation performance. Of 

course, there must be further research in this particular subject, since there are a lack of results in this 

matter. 

Education of the leader of the firm has, in general, a positive effect on the II, with the exception of the 

pork meat subsector (in particular, High School education has a negative effect) and the cut flowers 

subsector (basic education has a negative effect on the II, but in this case the base education is high 

school or higher education). 

Participation in research networks has a positive effect in all subsectors. Research & Development 

show a positive effect only in the cut flowers and palm oil subsectors, which are the most 

“industrialized” of the subsectors analyzed, have established research centers and are exportoriented. 

Pork meat and potato subsectors do not show a relevance of R&D for innovation, but this 

may be a product of weak R&D practices. Again, further research on this particular point is necessary. 

In any case, policies to stimulate innovation via R&D must take into account specific features of each 

subsector. 

Finally, in all subsectors whether the age of the leaders or their experience have negative effects on 

the II, with the exception of the cut flowers subsector. This may suggest that an experienced leader is 

more conservative and he is averse to implement innovations. 

6. Conclusion 

In this study we have proposed a new methodological approach to measure innovation in 

agribusiness firms. This approach is based on two tools: the Innovation Matrix (IM) and the Innovation 

Index (II). IM provides a landscape of the current state of technology in a given agricultural subsector. 

It catalogues and categorizes (in multiple ways) any possible innovation implemented by a firm of the 

subsector. The main objective of this categorization is to determine the technological level of the 

innovation, classified as major, intermediate or minor depending on its location within the 

technological spectrum. 

The second tool, II, is a way of summarizing both qualitative and quantitative properties of the 

innovations implemented in a particular firm. The qualitative properties are derived from IM, whereas 

the qualitative feature refers to the relative frequency of the innovation in the observed sample. The 

result of this summarizing method is a single number (an index) that captures innovation performance 

of every firm in the sample within a predefined time frame (in this research, five years). 

II can be used as a dependent variable in a semilogarithmic linear regression model. The factors 

driving innovation are in general subsector-specific, although some of them are quite general and 

have impact in the sector as a whole. This feature has an enormous impact on the design of policies 

for increasing innovation in each subsector. Some policies will work across the whole agricultural 

24


sector whereas others will have a more focused use, and will be designed exclusively for a given 

subsector. 

Further developments of this methodology are possible. We suggest applying it to other agricultural 

and even industrial subsectors, to evaluate its performance in such scenarios. It is also interesting to 

study the dynamics of innovations for the chosen subsectors, repeating a similar survey every three to 

five years. Such development will allow a panel data analysis. 

References 

Avermaete, T., Viaene, J., Morgan, E.F. and Crawford, N. (2003) “Determinants of innovations in small food 

firms”, European Journal of Innovation Management, Vol 6, pp 8-17. 

Banco Mundial (2008A) Incentivar la innovación agrícola - Cómo ir más allá del fortalecimiento de los sistemas 

de innovación, Mayol, Bogotá. 

Banco Mundial (2008B) Informe sobre desarrollo mundial 2008 Agricultura para el desarrollo, Banco Mundial, 

Washington. 

Corporación Andina de Fomento CAF (2006) Camino a la transformación productiva en América Latina, CAF, 

Caracas. 

Departamento Administrativo Nacional de Estadística –DANE (2007) “Cuentas nacionales”, [online], DANE, 

www.dane.gov.co 

Diederen, P., van Meijl, H., Wolters, A. and Bijak, K. (2003) “Innovation Adoption in Agriculture: innovators,early 

adopters and laggards”, Cahiers d’économie et sociologie rurales, Issue 67, pp 29-50. 

Jaramillo, H., Lugones, G. and Salazar, M. (2001) Normalización de Indicadores de Innovación Tecnológica en 

América Latina y el Caribe Manual de Bogotá, RICYT, OEA, CYTED y OCYT Colciencias, Bogotá. 

Kalmanovitz, S. (2010) Nueva historia económica de Colombia, Taurus, Bogotá, D.C. 

Londoño, J. L. (1985) “Ahorro y gastos en una economía heterogénea: el rol del mercado de alimentos”, 

Coyuntura Económica, Vol XV, No. 4, pp 129-179. 

Nossal, K. and Lim, K. (2011) “Innovation and productivity in the Australian grains industry”, [online], Australian 

Bureau of Agricultural and Resource Economics and Sciences, http://www.daff.gov.au/abares/publications/ 

OECD, European Commission, Eurostat and Grupo TRAGSA (2005) Manual de Oslo Guía para recogida e 

interpretación de datos sobre innovación. Empresa de Transformación Agraria TRAGSA S.A., España. 

Rugeles, L. (1986) Agricultura y macroeconomía, Unpublished masters thesis, Bogotá, D.C. 

25

Organizational Capital: Using Learning to Create Best 

Practices as a Strategic Tool 

Bob Barrett 

American Public University, Charles Town, USA 

docjob00@msn.com 

Abstract: While formal and informal learning are evident in many organizations, some companies are starting to 

recognize the importance of both types of learning in terms of creating and developing more innovative ways and 

strategies to help both human capital and organizational capital. The Free Library (2011) acknowledged that 

knowledge held by individuals helps to form what we know as human capital, and social capital is the “collective 

exchange” of knowledge between people (workers). However, what do organizations really own since they do not 

own their workers, but rather they hire them to work for them? This leads to yet another area for examination 

towards learning more about organizations, especially learning organization, and how they use their institutional 

memory, knowledge, and experiences which are formally or informally learned, shared, or documented as part of 

their company’s knowledge management. This type of information created, maintained, and stored can be found 

in the processes, procedures, policies, organizational documents, and other organizational documents that 

comprise what is called organizational capital. The organizational capital is sometimes that is tangible and owned 

by the organization and can be helpful to the organization and others. Thus, this leads us to explore and examine 

how organizations can used organizational capital in a learning organization, whether formally or informally, to 

best suit their current and future training needs. 

Keywords: organizational capital, best practices, strategies, online learning 


The National Bureau of Economic Research (2005) classified organizational capital into three different 

segments “workforce training, employee voice, and work design (including the use of cross-functional 

production processes). While each of these areas is important to learning and growth in organization, 

more companies are now focusing on workforce training and work design. There is a growing trend for 

many learning organizations to focus on what they have learned, both formally and informally, and 

how they can create best practices as strategic way to capitalize on what they have learned, used, 

and benefitted from their organizational capital. Thus, this paper will look at how learning 

organizations are using their “organizational capital” to help discover and create their own best 

practices to add to their current knowledge management, but also expand to other areas for 

improvement, discovery, and innovation. While many companies may collect data and focus on daily 

work functions and problems, a true “learning organization” will aim towards using information from a 

network of sources, namely their organizational capital, to create new and innovate ways of handling 

current and future problems and challenges. The next sections will provide some background on 

learning organizations and their role and function in today’s workplace and how they serve as a 

framework for the creation of organizational capital. 

2. Learning environments and the online learning industry 

The learning environments for both business and academia have changed drastically over the past 

two decades. Due to changes technology, economics, and education of employees, organizations are 

also considering the value of organizational learning in their overall organizational structure and how 

they can learn from themselves, as well as from others. Along with looked at these learning 

organizations, we need to also focus on the need to develop core competencies, as well as being 

innovative. In this context, we can examine how online learning is growing and changing, as well as 

the need to examine more closely why innovation will be a major factor in the growth of this industry 

and its intellectual capital. The following section will give a brief overview of the growth in this 

environment and why it has been undergoing a mission or change and renewal. 

Growth in the online (virtual) learning environment has been growing rapidly each year. As Greer 

(2010) noted that “Online college education is expanding—rapidly. More than 4.6 million college 

students were taking at least one online course at the start of the 2008-2009 academic year. That's 

more than 1 in 4 college students, and it's a 17 percent increase from 2007.” (pg. 1) In 2006, 38 states 

in the United States have established state-led online learning programs, policies regulating online 

learning, or both. Also, 25 states have state-led online learning programs, and 18 states are home to 

a total of 147 virtual charter schools serving over 65,000 students (http://www.nacol.org). In 2001, 

56% of traditional learning institutions offered distance learning programs. An additional 12% of 

26

Bob Barrett 

schools stated they planned on adding distance learning programs to their curriculum within the next 

three years (National Center for Education Statistics, 2003). Thus, more secondary- and postsecondary 

level teachers will need to seek additional education in order to obtain and master quality 

online teaching skills and strategies. As a result, more universities are offering online education 

courses and teacher training in order to help recruit and hire more online instructors. Thus, there is a 

growing need to increase the number of online instructors to teach at educational institutions. In the 

next section of this paper, the focus will be at examining how technology has been growing and how it 

has affected instructors and their need to update their skills. 

As more technology has become available in many parts of the globe, a new type of student 

population has emerged. The traditional student image of higher learning has been somewhat limited 

in many countries, but given the impact of the Internet, this traditional “student body” has changed to 

online communities. In the field of business and management, educators have recognized the 

demographical changes of the student population. As a result, they have been reaching out to 

external contributors, leaders in the various business industries, as experts on their curriculum 

committees to offer insights as to what they are seeking in new employees. In particular, they are 

forming their own community of practice or rather a network of practice. In these areas of practice, 

they exchange lessons learned and best practices developed along the way. In this regard, they are 

creating their own “interpretation” of knowledge management and forming another important type of 

work product knowledge as organizational capital. This organizational capital can be quite useful to 

many organizations, if is properly created and not left to be filed away for a rainy day, but rather 

actively used and maintained. In today’s learning organization, members of this type of organization 

are learning that their work and experiences can be helpful not only for work today, but for future work 

in general. In this line of thinking, more and more organizations are moving away from just being a 

standardized organization with certain normative policies and procedures. Rather, they are moving 

towards updating their role and function of their employees and involving them more strategically in 

the daily operations and asking for their input. Their input, which has been slightly acknowledged in 

some organizations, is being put to the test in terms of what they can do for the company in general. 

Namely, their ability to take their learning and work experiences in the workplace and translate and 

transform them in to a written product for future use is becoming more of a trend in many learning 

organizations. In particular, many online learning organizations are subject to review by accrediting 

bodies (i.e., HLS, MSA, SOCS, etc.), and they are quite focused in the development of their 

organizational capital for current and future needs. 

3. Online learning and its global impact on the world of work 

As more organizations consider the movement towards more global ventures and expansion, they 

have also realized that such movement involves more than just mere investment dollars – they have 

to think globally and competitively. In the business world, when “a brand expands it reach around the 

globe, it achieves favored perceptions that are greater than the sum of its national parts” (Holt, 

Quelch, and Taylor, 2004, p. 191). This branding, known as global branding, relies on the input of the 

various stakeholders and how their cultural differences can enhance the quality and acceptance of 

such a brand. In the field of education, one needs to understand how these new virtual learning 

communities have created a new type of global branding of education in terms of linking various 

stakeholders throughout the world into a stronger and more diversified learning environment. 

Contextually, one can see a new, global branding of course management systems, which affects and 

supplements the needs of growing, virtual learning communities. An example of these virtual learning 

communities may be viewed a form of supported organization learning known as communities of 

practice. 

4. Role and function of learning organizations in today’s workplace 

Organizations and academic institutions are searching for new ways of operating, expanding, and 

preparing for current and upcoming changes in the marketplace. One common point that they can 

agree upon is that learning is important. However, how can they realize or value this action of learning 

to the betterment of their organization? What they have learned is that many people are starting to 

latch onto a new concept that was formulated from the beginnings of the Human Resource 

Development (HRD) movement. Consequently, they are seeking to explore and examine more about 

the concept of what it takes to become a learning organization. Sokolowska (2006) viewed learning 

organizations in the context of two trends, which she stated that “such organizations are understood 

in dynamic organizational categories that are oriented at their development, searches for new 

chances on the market and continually increases their effectiveness, efficiency and flexibility. The 

27

Bob Barrett 

second group of learning organizations consists of such entities that choose growth through 

development of their employees.” (p. 158) One does have to wonder if this emphasis on dynamic 

categories, new market approaches, and employee development might affect other stakeholders in 

the framework of creating and maintaining trust in the workplace. However, as we consider the 

stakeholders in a learning organization in their various roles and functions, we also have to consider 

how the world view and technology also play a role. 

5. Changing world view and examination of learning and technological 

implications 

We see that technology has provided a powerful infrastructure for many companies, especially 

academic institutions. The emerging technologies have allowed educational institutions, educators, 

and students to provide education on a much higher playing field – in a virtual learning environment. 

Consequently, the business world has also worked with technology in this venture to help assist 

educational institutions in becoming more modern and adaptive for change. As a result, these 

changes only signify to the educational and learning communities that technology recognizes a need 

for change – but do we, as educators, recognize the need for change completely? Thus, many 

educational institutions, as well as the business world, are focusing on the learning process and its 

impact on their organizational structure and employees. 

Although online learning has been focused more on the academic setting, many companies are 

learning that online learning has many benefits in the corporate/business environments. Thus, many 

companies and organizations are focusing on the “learning” element of their employees’ daily work 

lives, as well as helping to build their knowledge management with a concentration on helping the 

organization learn from previous and current experiences. Thompson (1995) stated that 

“organizational learning involves the acquisition of new information and the ability to analyze that 

information creatively, learn from it, and apply that learning in useful ways.” (p. 95). As organizations 

realize that there is a need to “capture” and “utilize” this type of learning, they also realize the need for 

the organization, as a whole, to concentrate on building up this learning element to include everyone 

in their respective organization, as well as setting up informal and formal learning center or circles. 

While organizations and communities view the impact of online learning in the U.S., we also have to 

look at how type of learning is impacting the world and our global capital. 

As a result, more European companies have taken a more concentrated effort towards examining 

their Intellectual Capital in terms of a series of questions, which constitutes what is called the 

Intellectual Capital Summary (ICS). According to InCaS (2010), “An Intellectual Capital Statement 

(hereafter referred to as ICS) is a strategic management instrument for assessing and developing the 

Intellectual Capital (IC) of an organisation. It shows how Intellectual Capital is linked to corporate 

goals, business processes and the business success of an organization using indicators to measure 

these elements” (p. 7). Which leads us to the next step – how do we create an Intellectual Capital 

Statement for a company – especially for an online learning institution? InCaS (2010) offers the 

following guidance: 

helps you determine strengths and weaknesses of strategic IC factors (diagnosis) 

prioritises improvement opportunities with the highest impact (decision support) 

supports the implementation of actions for organizational development (optimisation and 

innovation) 

enhances transparency and the involvement of employees (internal communication) 

diminishes strategic risks and controls the success of actions (monitoring) 

Facilitates the communication of corporate value towards stakeholders (reporting) (p. 8). 

As we look at these areas, we are now able to focus on the relevance of and impact of this intellectual 

capital in the context of what is produced, maintained, and revised – organizational capital. This is 

what companies own, or try to maintain as their property, but sometimes the question of intellectual 

property can be challenged by various legal jurisdictions. However, for purposes of this paper, we will 

move along with the assumption that what is produced by various members of the given learning 

organization is maintained and nurtured by the given organization as their own. 

28

Bob Barrett 

6. Creating and nurturing organizational capital of organizations 

Many organizations today are starting to realize the importance of human capital as vital part of their 

entity’s learning process. Stewart (1997) noted that “human capital includes the dynamics of an 

intelligent (learning) organization in a changing competitive environment, its creativity, and 

innovativeness” (Stewart, 1997, p. 13). We will now look at how online learning organizations focus 

not only on the development of Intellectual Capital in the workplace, but how they can be affected, 

and even changed in terms of viability and movement, by various stakeholders in contact with the 

organization. While there has been literature focused on the human capital side of work, the next area 

that needs to be explored is the work product. What is it that companies pay for? Are they receiving 

their monies’ worth of data and analysis, or is it being maintained and not used? A true learning 

organization will be continuously improving, and they will search for best practices used by others, as 

well has forming benchmark studies to see what is “the best of the best” and what could world for 

them to form their own best practices to become “the best of the best” in their industry. 

One way that online learning providers help to develop human capital is by offering quality online 

training for new and current instructors. Barbara Smith (2000), chief learning officer for Burson- 

Marsteller stated that “If we don’t have the best people creating the best product, we can’t compete. 

What I’m after is creating the best people in the industry. E-Learning is an option that provides us with 

real competitive edge – it helps us maximize our intellectual capital” (Koprowski, 2000, pg. 1). This 

type of approach helps to raise the level of standards in the workplace, as well as cause more 

organizations to focus on their current workforce and future employee forecasting needs. Thus, there 

is a growing need for more investment and strategic development in the area of online learning 

training to help enhance the skills of online instructors and staff in general. 

7. Can learning organizations develop best practices to help survive in 

uncertain times and environments? 

Not all best practices are best practices for all organizations. Their acknowledgement by others in 

their industry is only one form of measurement. In order for them to serve other organizations, these 

other entities have to examine the contest in which they were created, maintained, and are updated in 

order to meet the needs of the given organization. In addition, organizations need to realize what was 

a best practices in a given company at a certain time may not always be applicable in other 

“uncertain” and harsh economic times. Jones (1993) described best practices as centered “on the 

very essence of good management: guiding employees toward greater productivity, liberating them 

from the burdens of disorganization without saddling them with restrictive bureaucracy, and helping 

them to overcome some measure of the troublesome flaws inherent in people and processes. These 

are the measures of effectiveness and efficiency (p. 11). The influence of changing technology and 

diminishing workforce in the workplace has caused many human resource professionals to search for 

information and ideas on best practices in human asset management (Fitz-enz, 1997). As changes in 

technologies have occurred in the workplace, as well as changes in federal, state, and local laws, 

there has been a shift from these changes to human problems. Chin and Benne (1969) described this 

shift to the human problems, such as dealing with the resistance, anxieties, threats to morale, 

conflicts, disrupted interpersonal communications, and so on, which prospective changes in patterns 

of practice evoke in the people affected by the change (p. 94). Thus, those individuals involved in 

technological and human asset management work as a change agents to help facilitate change in 

terms of best practices. 

Further, Selznick (1957) wrote that new practices can become Ainfused with value beyond the 

technical requirements of the task at hand (p. 17). As innovations start to spread, there becomes a 

point when, as DiMaggio and Powell (1983) stated, a threshold is reached beyond which adoption 

provides legitimacy rather than improves performance (p. 148). This point is further demonstrated by 

analyzing the historical background of a practice in industry. First, most organizations adopt a change 

in connection with a performance issue. Once the change has reached a critical mass of acceptance 

within the industry, the focus is not on its performance impact. Second, as more organizations adopt 

the same change, as following the acceptance by other organizations, it is because Athe stakeholders 

have defined the change as accepted practice (O’Neill, Pouder, & Buchholtz, 1998, p. 99). 

Fitz-enz (1997) described best practices as: an enduring commitment to a set of basic beliefs, traits, 

and operating stratagems. These are the guidelines for an organization: the driving forces that 

distinguish it from all others (p. 98). In 1990, The Saratoga Institute performed a formal research 

29

Bob Barrett 

project on common traits of the best human asset management companies. The question that they 

used over and over with each participant was, Who is good at what? The identified eight factors that 

appeared constantly in their study as: 1) value; 2) commitment; 3) culture; 4) communication; 5) 

partnering; 6) collaboration; 7) innovation and risk; and 8) competitive passion (Fitz-enz, 1997, p. 

100). They wanted to find out what was being done better in each of these factor areas. The study 

was to help them to identify what was being done right and if it was part of the individual’s interaction 

with their organizational culture. 

The concept of best practices is not really new. Employers have been looking for Anew ways to 

lighten the burden of work, (McCray, 1987, p. 5) and to improve the level of productivity. 

Organizational decision-makers have looked toward adopting changes from those organizations 

which have demonstrated best practices in the industry and have been accepted by others similar to 

themselves. Levinthal and March (1993) argued that some organizations may focus their aspirations 

on the comparison of their company versus superior performers in industry. However, they warned 

that such a comparison may cause the comparing company to fall short of reaching their aspiration. 

Consequently, Abrahamson and Rosenkopf (1993) wrote on factors that create bandwagon effects. 

They wrote that “Bandwagons are diffusion processes wherein adopters choose an innovation not 

because of its technical properties but because of the sheer numbers of adoptions that have already 

taken place. As more firms adopt innovations, pressure increases for other firms to adopt them. 

Bandwagons create self-reinforcing loops because the bigger the bandwagon gets, the larger the 

number of organizations tending to join the bandwagon” (p. 100). Cleveland, Barnes-Farrell and Ratz 

(1997) approached the problem of job accommodation by dividing it into three classes: 1) legal 

mandates (i.e., we must accommodate); 2) social/moral mandates (i.e., we should accommodate); 

and 3) business or economic considerations (i.e., accommodation is an investment with an economic 

payoff) (p. 79). Besides being a legal and social/moral mandate, the ADA has become a business and 

economic consideration for organizations. 

Edvinsson (2011) noted that “Intellectual capital (IC) is an offspring of the knowledge era. It is still in 

its formative phase, having first been formally recognized in 1991 when the large Swedish 

corporation, Skandia, started implementing a comprehensive set of innovative knowledge practices to 

account for its intangible assets” (pg. 1). As companies gather their best practices and share them 

with others, they start to learn not only what they may have done right or wrong – but the key 

operative term here is that they “learn” from the actions. How they determine what has been effective 

or not is important. Further this interpretation can be critical to their Intellectual Capital as a whole and 

perhaps it is time for some organizations to now only rely on current practices – but to step again 

“outside of the box” or perhaps “look at a different plain” for more answers. 

Daft and Weick (1984) defined organizational interpretation as the process of translating events and 

developing shared understanding and conceptual schemes among members of upper management 

(p. 286). The various interpretations of these stakeholders led to the formation of partnerships which 

have helped to accomplish the stakeholder’s shared goal of increasing the employment. While some 

organizations may take great pride in their organization and its many accomplishments – can 

organizations survive in a vacuum? Can their own development of their Intellectual Capital be enough 

for the current economic times or should they be strategically planning for a different approaches and 

ways of interpreting the current or future results? Thus, this leads one to wonder if Intellectual Capital 

can strengthen or weaken current or potential learning organizations? 

8. Can organizational capital strengthen or weaken current learning 

organizations? 

While harsh economic times and uncertainty in the market has definitely affected all organizations and 

businesses in general, we need to look at the value or relevance of organizational capital in helping 

these entities to survive and compete. We have to wonder, or at least raise the question, as to 

whether a learning organization is dependent upon its Organizational Capital or not? Further, we have 

to consider whether some learning organizations may be in name only and not really fully functioning 

entities that can learn or really “want to learn” from its various stakeholders and events/situations that 

affect their existence. Professor Mitleton-Kelly (2003) wrote “A learning organization is one that is able 

to change its behaviors and mind-sets as a result of experience. This may sound like an obvious 

statement, yet many organizations refuse to acknowledge certain truths or facts and repeat 

dysfunctional behaviors over and again” (pg. 1). Some organizations want to follow trends of others, 

30

Bob Barrett 

but are they willing to make the time and investment in learning and using the best practices of 

others? Some will and others may want to take the “quick fixe” approached, as noted by Senge 

(1995). While true learning organizations soon realize the benefits of trying “different approaches”, 

others organizations may call themselves a learning organization without realizing that they are not 

“tapping into” their Intellectual Capital at its fullest potential. 

Further, Mitleton-Kelly (2003) noted that “Learning organizations encourage self-organization, so that 

groups can come together to explore new ideas without being directed to do so by a manager outside 

that group. This is the process that occurs naturally around the coffee machine or the water cooler, 

but learning organizations actively encourage self-organization and do not see it as a waste of time. 

This is an essential part of the innovative process which is also an integral part of creating an 

environment that facilitates co-evolutionary sustainability” (page 2). However, many companies may 

view this “informal learning” as not being beneficial and not consider it as a learning event or situation. 

However, we have to consider – can all of the potential with our Intellectual Capital occur in a cubicle 

or office? Must it always occur in a physical location – or can it occur globally through the use of 

virtual meetings and interactions as well? Despite the location, whether virtual or physical, 

organizations need to compete in order to survive. They cannot compete if they are faced with so 

many factors and issues daily – and not have a good strategic plan to move forward. While many 

organizations may informally learn among their employees, a true learning organization is learning 

form their organizational capital. Are they learning from only their sales figures and focus on other 

factors when the figures are low? Hopefully, they are looking at these other factors, whether 

economics times are good or bad. As noted earlier, companies do not own their human capital, but 

rather they pay them for certain duties to be performed. It is the by-product, or output, created by 

these employees that can really matter for the success or failure of a company – but ultimately, it is 

how management uses this final work product that may determine whether their strategic decisionmaking 

is appropriate or not. 

9. Conclusion 

While formal and informal learning are evident in many organizations, some companies are starting to 

recognize the importance of both types of learning in terms of creating and developing more 

innovative ways and strategies to help both human capital and organizational capital. The Free 

Library (2011) acknowledged that knowledge held by individuals helps to form what we know as 

human capital, and social capital is the “collective exchange” of knowledge between people (workers). 

However, what do organizations really own since they do not own their workers, but rather they hire 

them to work for them? Organizational capital is sometimes viewed as tangible and owned by the 

organization and can be helpful to the organization and others. Further, while many organizations 

have succeeded in creating and maintaining well-operating (self-sustaining) learning organizations, 

some companies have not “captured” the same effect for their own form of such learning. More and 

more organizations are focus on what their human capital can produce for them in terms of services 

and/or products, as well as organizational capital. Organizational capital has existed over the 

centuries in many forms, but mainly in the form of institutional memory. As people come and go in 

organizations, the same is true with the institutional memory. However, as more organizations start 

movement towards becoming a learning organization, they are realizing the need to use learning to 

create their own “best practices” as a strategic tool. 

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management: A review of converging themes. International journal of management reviews, 4(1), p. 79. 

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/list/os/technology/reports/eLearning.html. 

32

Challenges and Opportunities: Designing and Delivering a 

21st Century Knowledge Management Education Program 

Denise Bedford 

Kent State University, Kent, USA 

Dbedfor3@kent.edu 

Abstract. In 2001 Kent State University established a graduate level program that granted a Master of Science 

degree in Information Architecture and Knowledge Management. The Knowledge Management concentration 

was a cornerstone of that degree program. The Knowledge Management concentration has sustained and 

thrived over the past ten years, though the path has not always been easy or clear. This case study describes the 

challenges encountered and the solutions developed over the past ten years. The case study discusses nineteen 

challenges and their solutions, in hopes that other institutions may benefit from Kent State University’s lessons 

learned and successes. 

Keywords: knowledge management education, knowledge management curriculum, course design, experiential 

learning, student learning models, knowledge management faculty credentials 

1. Historical context and evolution 

In 2001 the Information Architecture and Knowledge Management Master’s program was established 

at Kent State University. The program was originally conceived as a new and distinct program that 

focused broadly on information and knowledge, their use and architectures. The program was unique 

in that it was founded on recognition of the difference between knowledge and information. It was also 

different from other programs at that time in its intent to be non-sector specific, and to be cross-areas 

of practice. 

The knowledge management concentration was designed around some basic assumptions about 

knowledge management as a professional discipline. These assumptions provided a good grounding 

for all aspects of an academic program. They provided stability in a dynamic and evolving 

professional discipline. Some of the fundamental assumptions include: 

Knowledge Management is interdisciplinary -- a strong academic program must draw upon 

expertise in many disciplines; 

Knowledge management is a profession of practice – students must learn practice, as well as the 

theory; 

Knowledge management is an emerging field – faculty with academic credentials in knowledge 

management are scarce; 

Knowledge management research is grounded in practice -- this has implications for the 

traditional faculty model; 

Collaboration between public sector, business and academia is critical to advancing the discipline; 

Knowledge is different from information; 

Knowledge is a universal concept which pertains to and touches everyone and all aspects of life. 

The knowledge management program began in 2001 as an on-site, in person program located at the 

Kent State University campus in Kent Ohio. In 2007 the knowledge program transitioned to a fullyonline 

program. Furthermore, in 2007, there was sufficient interest to warrant the creation of a second 

academic product – a Graduate Certificate in Knowledge Management. In 2012, the program has 

grown to close to 100 students, has a faculty of twelve full and part-time instructors, and is engaged in 

research with public and private organizations. 

This case study discusses challenges faced and solutions implemented in five areas, including: (1) 

Curriculum Scope and Design; (2) Faculty Credentials and Recruitment; (3) Governance and 

Administration; (4) Learning Models and Delivery Channels; and (5) Student Models. The areas that 

have posed the most significant challenges are curriculum scope and design, faculty credentials and 

recruitment, and program governance. Fewer challenges have been encountered in learning models 

and delivery and student support due to the strong initial grounding. The goal in sharing these lessons 

learned and successes is to encourage other academic institutions beginning this journey or in 

progress. Knowledge management is a critical new profession in a 21 st century knowledge society 

33


and knowledge economy. The more academic programs we have, the more educated professionals 

we have to offer. 

2. Curriculum design and management 

Curriculum design and delivery is challenging for several reasons. First, there is no established 

standard for knowledge management education upon which to design a curriculum. Second, the 

traditional semester-long academic curriculum model does not align well with the needs of a 

profession like knowledge management. Third, knowledge management professionals need to learn 

both “technical” and “behavioral” competencies to be successful in their career. Finally, knowledge 

management is a practical profession and the curriculum must support practice. 

2.1 Challenge 1: No accepted scope and coverage description of the field 

Because there is no widely accepted professional standard for knowledge management, we look to 

the published literature for guidance. The published literature provides a picture of graduate level 

knowledge management education programs and curricula from the late 1990s through 2008 (Abel 

and Oxbrow 1999) (Gamal 2000) (Kenner and Fernandex 2011) (Lamphun and Lee 2002) Makkonen 

Siakas and Vaidza 2011) (Reynolds 2000) (Swanson and Hepner 2011) (Wright Peachey Hemminger 

2009). Al-Hamadweh (2005) suggests that most graduate level programs are courses in business 

intelligence, document and records management, knowledge economy and intellectual capital, 

organizational learning, and some aspect of data mining or semantics. Chaudhry and Higgins (2003) 

and Kgigongo-Bukenya and Kaddu (2011) suggest that curricula may be constructed around 

knowledge foundations, applications, strategies, processes and technologies. 

The original Kent State curriculum aligned with these models. However, feedback solicited in 2010 

from employers, from students enrolled in and who had graduated from the program suggested the 

need for a curriculum revision and redirection. The review included extensive interviews with 

knowledge management thought leaders, critical reviews of successes and failures of current and 

past programs, conversations with past, present and potential students. We learned two things. First, 

we learned that business needs have changed and grown. This is because knowledge management 

is now an integral part of every sector of the economy – it permeates all types of organizations. In 

2010 we find a rich set of knowledge professional roles and responsibilities. Some of these roles are 

strategic, some are aligned with business operations, some are specialized to particular areas of 

knowledge management, and some are general practice. Second, we heard that most current 

education programs are designed to train knowledge management directors or executives who may 

“talk about” but may not “to do or practice” knowledge management. 

In 2010, a curriculum review and revision were undertaken. In 2012, the revised curriculum was 

approved and implemented. The Knowledge Management curriculum is constructed around ten facets 

of knowledge management theory and practice. The ten facets (Figure 1) were identified through (1) a 

comprehensive review of the current and historical literature of knowledge management; (2) 

conversations with and lessons learned from other knowledge management educators and trainers, 

and (3) extensive consultations with business and organizations who hire knowledge professionals. 

The ten facets include: (1) Intellectual Capital and Knowledge Economics; (2) Knowledge Technology; 

(3) Knowledge Strategy; (4) Knowledge Asset Management; (5) Collaboration and Communities; (6) 

Organizational Culture and Communications; (7) Organizational Learning; (8) Knowledge Operations; 

(9) Knowledge Architecture; and (10) Innovation. Each of the ten facets is supported by a limited 

number of traditional three-credit courses, by several short (1 or 2 credit) courses, and by workshops. 

A sampling of course topics offered in each of the facets is presented in Figure 2. 

Forty-two credits are required to earn the Master of Science degree. Eight courses are core, including: 

Foundational Principles of Knowledge Management; Economics of Information; Foundations of 

Document and Records Management; Knowledge Assessment and Evaluation; Organizational 

Culture, Organizational Learning, Knowledge Organization Systems and Services, and Communities 

of Practice. The core courses provide students with a deep understanding of the facets. Students may 

then choose to focus on a particular facet of knowledge management, or design a generalist 

education. 

34

Figure 1: Ten facets of knowledge management 

Knowledge 

Architecture/ 

Technology 

Knowledge 

Architecture 

Enterprise 

Architecture 

Semantic 

Analysis 

Computational 

Linguistics 

Knowledge 

Discovery 

Models & Tools 

Multilingual 

Architectures 

Knowledge 

Org. Systems 

Asset 

Management 

Advanced 

D&RM 

Knowledge 

Transfer 

Content Mgmt. 

Complex 

Knowledge 

Structures 

Knowledge 

Preservation 

Personal 

Knowledge 

Management 

Doc/Record 

Mgmt. 

Knowledge 

Leadership & 

Strategy 

Knowledge 

Strategy 

Formulation 

Knowledge 

Audits 

Knowledge 

Mgmt. 

Maturity 

Methods 

Knowledge 

Metrics 

Knowledge 

Outcomes 

Futures 

Research 

Knowledge 

Assessment 


Communities/ 

Collaboration 

Social Network 

Analysis 

Social Capital 

Social Media & 

Knowledge 

Capture 

Knowledge 

Network 

Mapping 

Facilitation & 

Arbitration 

Methods 

Communities 

of Practice 

Foundational 

Principles of KM 

Culture/ 

Communication 

Storytelling/ 

Business 

Narrative 

Organizational 

Communication 

Global 

Communication 

Reward/ 

Recognition 

Systems 

Innovation/ 

Ideation 

Change Mgmt. 

Multicultural 

Oranizations 


Culture 



Problem 

Detection/ 

Solving 

Experiential 

& Lifelong 


Models 

Critical 

Thinking Skills 

Learning in 

Virtual 

Environments 

Elective Courses, Seminars and Workshops Aligned With Career Paths 

Knowledge Operations Electives 



Innovation Electives 

Intellectual 

Capital/Econ 

Network 

Economy 

Expertise 

Mgmt. 

Expertise 

Elicitation 

Knowledge 

Retention 

Strategies 

Intellectual 

Asset 

Valuation 

Competency 

Mgmt. 

Human Capital 

Analytics 

Economics 

of 

Information 

Figure 2: Curriculum support for 10 facets of knowledge management 

In a 2012 survey of Knowledge Management educational institutions we found that many of the topics 

covered in the program electives are also covered by other programs. However, they were most often 

covered as weekly topics in a single course. The opportunity to undertake a “deep dive” into the topic 

is rare in current knowledge management programs. 

35


2.2 Challenge 2: Misalignment of traditional course design 

Having updated the scope and coverage of the curriculum, our next challenge was to review the 

design and effectiveness of individual courses. We discovered that each instructor approached 

course design differently resulting in uneven treatment of theory and practice. There was also a 

significant amount of redundancy across courses. Furthermore, courses were not sufficiently rigorous 

to reflect a graduate level degree. As a result, students were not being introduced to the full body of 

professional knowledge or the extensive professional literature. 

Starting in 2011, all new faculty began working from a single course design template. The template 

derives from good instructional design practices and includes such common elements as: (1) clearly 

defined learning outcomes; (2) extensive required and recommended readings reflecting a graduate 

level education and providing students with a strong introduction to the body of knowledge and 

published literature; (3) a variety of rigorous exercises designed to provide students with not only 

resource based but also experiential and situational learning opportunities; (4) built in discussion and 

engagement models among students; and (5) weekly feedback loops from students to instructor and 

instructor to student. As a result of working from a common template, faculty members now have a 

common basis for discussing course development across the curriculum. Course updates are shared 

across the faculty. The approach to course design is now rigorous but predictable for faculty. As a 

result, students have a common high quality learning experience across all courses. 

2.3 Challenge 3: Shallow versus deep treatment of knowledge management subjects 

In 2010, the message from business and industry was clear – students graduating from the program 

needed to be more than “book ready” and theory rich, they needed to be “work ready” and able to “do 

knowledge management.” We also heard from students that there were not sufficient electives to build 

out a rich professional education. Addressing these concerns is not trivial challenges for a Master’s 

program- how to provide students with a rich practical learning experience within only forty-two 

credits? University administrations expect to see a very limited number of courses for Master’s 

degrees. The more courses that are offered, the greater the chance that a course will not meet 

expected capacity and not achieve a breakeven point. 

The solution we devised was to provide a variety of learning options within each facet of the 

curriculum. Each facet of the curriculum is supported by a few traditional three-credit semester long 

courses. Short 1 and 2 credit courses enable them to build out their skills. And, finally workshops – 

both for and non-credit provide opportunities to learn about emerging or hot topics related to a facet. 

The curriculum for Intellectual Capital and Knowledge Economy is described in Table 1. 

Table 1: Sample curriculum for intellectual capital and knowledge economy 

Basic Course Short Courses Workshop 

Economics of Information Management of Knowledge 

Workers 

Global Work Environment 


Management 

Talent Leadership Intergenerational Workforce 

The Knowledge Economy Talent Management Strategy 

and Execution 

Virtual Global Workforce 

Expertise Elicitation Mentoring and Coaching High Performance Organizations 

Competency Modeling and Information and Data Privacy 

Mapping 

Human Capital Analytics 

Workforce Planning 

Personal Knowledge 

Management 

2.4 Challenge 4: Curriculum for technical and behavioral competencies 

The most effective knowledge management strategies are those that are well aligned with an 

organization’s business goals and objectives. In order to succeed at knowledge management, 

knowledge professional must have not only strong technical skills – knowing how “to do” knowledge 

management, but they must have critical behavioral competencies. Education programs need to 

provide opportunities for students to learn these behavioral competencies. They need to learn how to 

36


make good business judgments, how to work in teams, how to exhibit leadership, and to create a 

knowledge organization by example rather than by dictate. 

The solution to this challenge is an immersion in working with and learning from instructors and 

colleagues. The instructors who teach in the program have been selected in part because of the 

strong behavioral competencies they possess. Instructors teach by example, they teach through 

engagement in projects, and through personal feedback. In addition, the program values the early 

promotion of students into professional associations, conferences and engagements so they have 

further exposure to good behavioral competencies. 

3. Learning models and delivery channels 

Over the past decade we encountered four challenges related to learning models and delivery 

channels, including: (1) learning how to learn knowledge management; (2) learning anywhere and 

anytime; (3) the need for both formal and informal learning opportunities; and (4) the learning path 

that leads to knowledge management. 

3.1 Challenge 5: Learning how to learn and unlearn 

Thought leaders in knowledge management have two characteristics that set them apart – they have 

a wealth of experiences, in different economic sectors, different types of organizations, in different 

cultures, and through those experiences they have learned how to learn and unlearn. Another 

characteristic of the program’s instructors is the willingness to learn from students, and continuous 

encouragement to students to come up with a new idea or a new perspective. Students are 

encouraged to challenge established knowledge – they learn to live McElroy’s Knowledge Life Cycle 

as they go through each class. This model places a heavier burden on the instructors than a 

traditional teacher-student model. However, the results in terms of student accomplishments and 

innovation are noteworthy. 

3.2 Challenge 6: Learning anywhere and any time 

By definition, programs which are confined to a single physical location, which can draw upon faculty 

who live locally and can only deliver to students who live locally, may be more restricted in their 

content and the experiences than those which can draw faculty and students from around the globe. 

We have also found that many of our students are mid-career professionals who have been given 

knowledge management responsibilities within their organization. They need to come up to speed 

quickly without relocating. 

In 2007, the program administrators understood that the future demand for knowledge management 

would be global and would come largely from within businesses and organizations. For this reason, 

the entire program was moved to an online degree. This means that all of the courses described in 

Figure 2 above are born and live digitally. The program administrators also understood that moving 

the program online meant creating a full electronic learning environment. There are four learning 

models in use today. 

When the program transitioned from onsite to online, a potential challenge was surfaced and 

addressed. The challenge was the potential for isolated and heavy “resource-based learning.” In other 

words, the potential for the online program to take on the format of a traditional “correspondence 

study course” similar to those used in the 1950s and 1960s. The potential for isolation has been 

countered with several solutions. First, all courses have optional class times set aside for interaction. 

Instructors and students, students and students, have several tools available to support interaction, 

including Blackboard’s electronic classroom, Skype, and WebEx. Second, instructors reach out to and 

interact with students in an advisor and mentoring capacity. Social networking across the student 

community is strongly encouraged and promoted. 

3.3 Challenge 7: Formal and informal learning opportunities 

Professional networking opportunities are among the values offered by a graduate degree program. 

This is challenging in an online program where students are scattered around the globe. We 

encourage students to participate in their local knowledge management communities, to represent the 

Kent State program in their actions, and to bring the value of those experiences back to their 

colleagues in the program. 

37

Model 1 

Asynchronous Lectures 

Student Online Discussions 

Weekly Optional Interactive Sessions 

Model 3 

Onsite Delivered 

Digitally Captured for Later Viewing 

Synchronous and Online Discussions 


Figure 3: Four learning models supporting the master’s program 

Model 2 

Synchronous Lectures 

Archived Lecture Capture for Playback 

Synchronous and Online Discussions 

Model 4 

Onsite Delivered with Live Participation 

Live Call‐In and Q&A 

Digitally Captured for Later Viewing 

In addition, by bringing in seasoned knowledge management experts to teach courses and lead 

workshops, our students have opportunities to build their professional networks. An important factor in 

selecting faculty is their interest in students and the promotion of student professional careers. This is 

not atypical of most part-time faculty models, but it is a foundational principle of the Kent State 

University program. 

3.4 Challenge 8: Not just for graduate students 

Another lesson we learned in our extensive conversations with business and industry was that 

knowledge management education is not just a program of graduate study. There must be pathways 

to graduate education programs from high school, from technical schools and colleges, and at the 

undergraduate level. Extending the educational model to lower level degrees is a major undertaking 

at any American university. 

To address this challenge, the Kent State program partners with other institutions and professional 

associations to provide a wide range of learning opportunities. Workshops and continuing enrichment 

courses are open to students, non-students and community members. While graduate programs are 

important for the research and professionals they produce, our knowledge society will be built around 

knowledge workers. There must be a learning path for knowledge workers as well. 

4. Faculty recruitment and credentials 

This is an area of significant challenges, not all of which have been resolved. The first challenge 

pertains to faculty credentials given the fact that this is a relatively young field with few programs of 

advanced study in knowledge management. The second pertains to whether those faculty serve in 

tenured or non-tenured positions. Thirdly, is the full-time faculty model appropriate to knowledge 

management, or is it more important to leverage experts on a part-time basis? Dual appointments 

across academic departments and disciplines were also explored at one time. Finally, the faculty 

model has significant implications for academic and applied research opportunities. 

4.1 Challenge 9: Faculty credentials 

It is important to balance theory and practice in knowledge management education. One of the 

greatest challenges in creating a Master’s program is finding faculty who have both a deep theoretical 

grounding in knowledge management, and relevant practical experience. In the early days of the Kent 

State University program, this was a major challenge simply because there were few institutions that 

offered an advanced degree in knowledge management. The University requires that instructors must 

38


have earned one degree higher than the students they are teaching. To teach in the knowledge 

management Master’s program, that meant that all faculty must have earned a doctorate. There were 

few individuals with both practical experience and an earned doctorate in knowledge sciences. 

Fulfilling the requirements for credentials and credibility was a major challenge in the early years. 

There are risks associated with moving beyond this balance in favor of either credentials or credibility. 

While knowledge management practitioners bring credibility to the classroom, they frequently find it 

challenging to speak to broad theory rather than individual experiences. And, they may have no 

teaching experience. Credentialed professionals may understand theory and have some teaching 

experience, but they are challenged to teach the professionals who enter the program. 

These challenges were somewhat alleviated in 2010 when we broke knowledge management down 

into the ten facets. By breaking the field down into its components, it was much easier for find highly 

credentialed faculty with teaching experience. In addition, we were fortunate to find individuals may 

have begun their careers as engineers or mathematicians but were drawn to the new field of 

knowledge sciences. As a result, we have been able to set high standards for both credentials and 

credibility. 

4.2 Challenge 10: Tenured versus non-tenured faculty model 

The agenda for any tenure-track faculty member is research, publishing, and teaching. Consulting 

and engaging with business and industry is not highly rewarded for tenure track faculty. In addition, 

tenure track faculty members are encouraged to identify a single research focus, to delve into that 

area and develop expertise over time. Broad based interdisciplinary research – exactly what is 

needed in knowledge management – is not highly rewarded in tenure processes and decisions. It is 

clear that at the present time, the needs of the knowledge management field do not align well with the 

traditional tenure track model. 

Faculty are key to advancing an emerging discipline such as knowledge management – through 

collaboration across disciplines, through experimentation, continuously learning and unlearning, by 

taking risks to move new ideas forward – and sometimes failing – but learning from failures. The 

traditional tenure track model benefits faculty members who take a safe and steady path by building 

upon previous research and incrementally advancing the current discipline. Tenure-track faculty 

positions may promote different goals and outcomes than what is currently needed in knowledge 

management. Agility rather than rigidity is needed in a faculty model for knowledge management. 

Kent State University’s solution to this challenge is to identify one tenure-track faculty member who 

coordinates administrative issues for the program, advises students, manages the curriculum and 

brings in faculty. All other faculty are internationally recognized experts in one or more of the facets. 

Kent State has the privilege of bringing these recognized experts onboard as part-time faculty. 

Because these are practicing professionals, they know the state of the field and make 

recommendations for new courses and workshops. They continuously update their course content to 

reflect the state of the profession. 

4.3 Challenge 11: Full Time versus part-time faculty 

The traditional academic faculty model includes at least one full-time faculty member for each facet of 

the discipline. This model does not yet work for a knowledge management graduate degree program 

for simple economic reasons. While the demand for knowledge management credentials is growing, it 

is unlikely to be such as to justify ten full-time faculty. This would presume a student enrollment of 300 

to 400 students. Should the enrollment reach those levels, the part-time expert faculty model will 

continue to be the preferred approach. At that level, an expansion of part-time faculty roles and 

responsibilities – specifically, to include advising and mentoring – would be requested. 

4.4 Challenge 12: Borrowed faculty or dual appointments 

In the early years of the program, the university explored borrowing faculty from other departments. 

This approach did not work and was abandoned for two reasons. The first reason was that faculty in 

other departments received no reward or recognition in their tenure decisions for teaching outside 

their home department. The second reason was that the courses had little or no knowledge 

management content – borrowed faculty were not able to translate their expertise to the new context. 

39


An approach which is being tried now is to collaborate with other faculty in developing new courses. 

This provides a common foundation from which to teach. 

4.5 Challenge 13: Academic and applied research 

Research in knowledge management is a relatively new effort at Kent State. While theoretical 

research is more highly valued for tenure decisions, its value to students and the academic program. 

The path that we see research following is rom practice to theory. Problems that need research are 

surfaced in the natural course of working with business and industry. This presents a risk for tenuretrack 

faculty. 

5. Student model 

We encountered several challenges when designing an academic model to support students in 

knowledge management. The first challenge pertained to the common practice of building student 

communities around cohorts. The second challenge pertained to the age group of potential students – 

young professionals, mature or mid-career or retirees defining a second career. The third challenge 

pertained to segregating students by economic sector. And finally, while there was agreement that we 

wanted a multicultural and international student body, achieving that presented several challenges. 

5.1 Challenge 14: Cohort or non-cohort model 

The 2012 survey of knowledge management graduate programs (Bedford 2012) found that the trend 

is going against using cohort models. We found that students were applying for admission to the 

program year round. Student enrollment would have been severely impacted if enrollment was limited 

only to fall semester. The value of a cohort model is that students develop lasting networks and build 

strong professional relationships. We found that this same result can be achieved when instructors 

take the additional step to build relationships among students. And, when course designs promote 

student interactions. Another solution which we hope to put in place in the near future is a synthetic or 

virtual student lounge. The idea is to give students a virtual space in which to socialize and organize 

their own activities. Given the high rate of use of social media today, we believe that there are other 

ways to create professional relationships beyond the traditional physical cohort model. 

5.2 Challenge 15: Non-traditional multigenerational community 

The transition from an industrial economy to a knowledge economy touches everyone – all ages, all 

generations. Knowledge management theory and practice are important to succeeding in this new 

economy. As a result, the typical student community in a knowledge management program will be 

multigenerational. This presents a challenge to instructors and administrations alike. We need 

different recruitment strategies for young professionals, for mid-career professionals, and for retirees. 

Instructors need to establish a learning environment which takes into account different values and 

expectations. And, most importantly, students must adapt to learning and collaborating across 

generations. While there are challenges, students who learn in this context are actually gaining 

behavioral competencies that will serve them well in their career. The learning environment is a 

microcosm of what they will encounter in business and industry. 

5.3 Challenge 16: Segregate students by economic sectors 

Knowledge management is practiced within an organization and aligned with its business goals and 

objectives. While there is value in learning what others in an economic sector have done, there is 

value in looking beyond and across sectors. We have encountered pressure to segregate students 

into classes which focus only on a particular economic sector such as health, intelligence or finance. 

We have resisted these efforts based on the belief that students benefit from seeing a concept from 

multiple perspectives. A much richer learning experience results when military service officers, 

ministers, engineers, nurses, teachers, and business leaders discuss a concept and share multiple 

perspectives. 

5.4 Challenge 17: Local or global student community 

Knowledge management is a universal concept and a global practice. The knowledge economy is a 

global economy. New knowledge professionals must learn to work in a multicultural and global 

economy. Learning in a multicultural and global economy is another opportunity to build key 

behavioral competencies. Creating a multicultural student community brings challenges, though. A 

40


primary challenge is the perspective on online education programs held in many countries. The 

perception is that online degree programs resemble the correspondence course models of the 1950s 

and 1960s. Where online degree programs are not held in high esteem students will attend local 

programs, and miss the opportunity to engage internationally. While some countries provide financial 

support for students to study abroad, this practice is not widespread. 

It is also important to be sensitive to cultural norms which may concern faculty-student relationships. 

For this reason, academic programs must ensure that the faculty, as well as students, has a 

multicultural representation. 

Articulation agreements are another important tool that universities with knowledge management 

programs can use to create a global student community. Programs which offer courses year round will 

be better positioned to address differences in academic year schedules. 

6. Governance and administration 

Governance and administration surfaced only two challenges over the past decade. These 

challenges, while few, are significant, and speak to the fundamental aspects of support. The first 

challenge pertains to the academic home of the knowledge management program. The second 

challenge pertains to the governance model that applies to the program. 

6.1 Challenge 18: Academic home of knowledge management 

One challenge we encountered in updating the curriculum derived from the administrative location of 

the program. This is simply due to the fact that knowledge management is a multidisciplinary field, 

and most of the academic homes have a more traditional disciplinary focus. The 2012 survey of 

knowledge management programs found that Knowledge Management education program primarily 

reside within schools or colleges of business, communication or information, engineering and 

technology. Where a program is located within a college of engineering or technology, it may be 

challenging to justify courses in organizational culture, organizational learning or knowledge economy. 

Where a program is located in a college of business, it may be challenging to justify courses in 

knowledge engineering and technology. 

The home location may also influence admission requirements for students. We found this to be a 

challenge particularly for mid-career and senior professionals returning to school. Admission 

requirements may be designed for young professionals, and for students with a strong academic 

background in the field. Most students entering a knowledge management program will not have a 

strong academic grounding in knowledge management – simply because such programs do not exist 

at the undergraduate level. Experience and exposure are key admission requirements – these may 

not be valued by the home department. For this reason, we found it important to become more 

involved in the admission process – and to establish pertinent admission requirements to the 

knowledge management program. 

6.2 Challenge 19: Administrative and governance model 

Most academic departments and schools have internal governance models which have evolved from 

practice over time. When a knowledge management program is introduced to an established school 

or department, the existing governance models will apply. These models may or may not serve the 

management of the knowledge management program well. We encountered two challenges. The first 

was in representation of external advisory board members. Given the fact that the departmental focus 

was different than knowledge management, this introduced the potential for advice that was not in line 

with the direction of industry and business. The second pertained to the overall approval process for 

new courses, faculty and initiatives. While this presented some initial challenges in terms of slowing 

down the rate at which the program could respond to business and industry demands, it ultimately 

provided strong quality control. It further provided opportunities to communicate with faculty about the 

focus and purpose of knowledge management. 

7. Observations and recommendations 

Although knowledge management and science has been a topic in the public discourse for sixty years 

now, it is just coming of age as an academic discipline. This case study presents several challenges 

that universities and colleges may encounter when establishing and managing an academic program. 

41


Each of the challenges may play out in a different way across academia. All of the challenges can be 

met effectively – none is insurmountable. Knowledge management is among those new disciplines 

that operates at the border of existing disciplines. Because of its close alignment with business and 

industry, it presents challenges to some of the traditional academic models. As an emerging discipline 

it also presents challenges to traditional models of governance, faculty recruitment and retention, and 

student recruitment and support. For guidance, we recommend that knowledge management program 

administrators and faculty should look to and partner with other cross-disciplinary academic models. 

Knowledge management has the potential to design new academic models which will serve well the 

knowledge society of the 21 st century. 

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42

The Gordian Knot of the Intellectual Capital of Universities 

Constantin Bratianu and Ivona Orzea 

Academy of Economic Studies, Bucharest, Romania 

cbratianu@yahoo.com 

ivona.orzea@gmail.com 

Abstract: The purpose of this paper is to demonstrate that the Gordian Knot of the intellectual capital of the 

universities is the structural capital. This idea comes from a new perspective on the intellectual capital structure 

and on the relative importance of each component of it, i.e. human capital, structural capital and relational capital. 

Many authors consider that the human capital is the most important and by far the dominant component of the 

intellectual capital of the universities. Our research based on the new concept of organizational intellectual capital 

integrators showed that a university may have a great potential of the intellectual capital based on the human 

capital component, and yet not to perform competitively due to the weak integrators and stiff structural capital. In 

our view, an integrator is a powerful field of forces capable of combining two or more elements into a new entity, 

based on interdependence and synergy. These elements may have a physical or virtual nature, and they must 

posses the capacity of interacting in a controlled way. The interdependence property is necessary for combining 

all elements into a system. The synergy property makes it possible to generate an extra energy or power from the 

working system. It makes the difference between a linear system and a nonlinear one. The Gordian Knot of the 

intellectual capital of universities is the structural capital. Only understanding the nature and the complexity of the 

structural capital we will be able to understand the full potential of the intellectual capital metaphor. Thus, the 

structural capital is the key component of the university intellectual capital and it is strongly related to the 

concepts of university governance and university autonomy. This paper is based on a conceptual research and 

on a solid experience one of the authors has got in the legislation and management of the university system of 

Romania, as a former General Director for Higher Education in the Ministry of Education and Research. 

Keywords: intellectual capital, human capital, structural capital, relationship capital, integrators 


According to Lakoff and Johnson (1999, p.3), “The fact that abstract thought is mostly metaphorical 

means that answers to philosophical questions have always been, and always will be, mostly 

metaphorical. In itself, that is neither good or bad. It is simply a fact about the capacities of the human 

mind”. The concept of the intellectual capital is a semantic extension of the economic concept of 

capital, as a direct result of an inspired metaphor. In classical Economics, the term capital means 

produced goods that are used to produce future goods. The concept of capital reflects a world of 

tangible objects, and a linear metric in evaluating economical processes. Thus, linearity becomes a 

frontier between the concept of capital and the concept of intellectual capital that reflects a world of 

intangible objects (Bratianu, 2009a). It is important to underlines this idea since inertial thinking and 

metaphorical extension of many authors have already induced linearity in the semantic domain of the 

intellectual capital, which is a barrier in understanding the true nonlinear nature of the intellectual 

capital. Interpreting knowledge and intellectual capital as stocks or stocks and flows is just an 

example of this conceptual difficulty (Andriessen 2006; Andriessen, 2008; Davenport & Prusak, 2000; 

Edvinsson, 2002; Nissen, 2006). 

Some inspirational ideas about intellectual capital have been developed since the second part of the 

last century, but the tipping point of the intellectual capital contributions can be considered 1997 when 

the seminal books of Edvinsson and Malone, Roos et al., Stewart, and Sveiby have been published. 

The Intangible Asset Monitor (Sveiby, 1997), and Skandia Navigator (Edvinsson & Malone, 1997) 

became the driving forces in promoting intellectual capital models. These models reflected inertial, 

deterministic, and linear thinking patterns (Bratianu, 2007a). Intangible Asset Monitor (IAM) contains 

three components: individuals competence, internals tructure, and external structure. Individual 

competence reflects employees capacity to perform their jobs. It includes knowledge, skills, 

experience and values. Competence is a holistic characteristic of each employee that cannot be 

owned by the company, but it can be partly controlled. Individuals are the one able to create 

knowledge and to process it in the decision making. Internal structure reflects all functional and 

organizational structures of the company, patents, concepts, models and managerial routines. Internal 

structure is a result of the managerial thinking. External structure reflects all relations of the company 

with suppliers, consumers and other external stakeholders. For evaluation of these components, 

Sveiby proposed a series of indicators for: growth, renewal, efficiency and stability. The Skandia 

Navigator divides intellectual capital into human capital and structural capital. Human capital reflects 

all the knowledge, skills and experience of all employees. Structural capital is defined metaphorically 

43


as what remains in the company when employees go home. Structural capital is composed of 

customer capital and organizational capital. Organizational capital is composed of innovation capital 

and process capital. Innovation capital is composed of intellectual property and intangible assets. 

Apparently Skandia Navigator is much more complex than IAM, but it reflects the same basic 

structure. Competence of individuals in Sveiby model corresponds to the human capital in Edvinsson 

model, internal structure corresponds to organizational capital, and external structure corresponds to 

customer capital. 

This similarity between the two models presented above explains the large consensus of researchers 

on the canonical structure of the intellectual capital we are going to use in our research. Starting with 

this canonical structure we introduce a difference between the potential intellectual capital and the 

operational intellectual capital, and the role of integrators in transforming the potential into operational 

intellectual capital. Then, we shall analyze in this new perspective the relative importance of human 

capital and structural capital in the university context. It is a conceptual analysis based on the 

operational dynamics of the structural capital of a university, and on a significant experience one of 

the authors has got as a General Director for Higher Education in the Ministry of Education. 

2. The canonical model of the intellectual capital 

The canonical model of the intellectual capital is composed of three basic entities: human capital, 

organizational/structural capital, and customer/relational capital (Andriessen, 2004; Bontis, 1998; 

Roos, Pike & Fernström, 2005; Roos & Pike, 2007; Stewart, 1997). For simplicity we shall choose the 

following taxonomy: human capital, structural capital, and relational capital. According to Viedma 

(2007, p. 246), “The main assumptions and principles that support the standard theory (or prevailing 

paradigm) can be summarised in seven points: the accounting view; the strategy implementation 

view; breakdown of intellectual capital; cause-and-effect relationships; relatively static approach to 

value-creation processes; limitation of concept of intellectual capital; use of the same models and 

methodologies to manage and produce reports; and attempts to treat intangible assets as if they were 

tangible.” We add to these assumptions the fact that canonical model is a product of the resourcebased 

theory of the firm (Barney & Delwyn, 2007; Grant, 1991; Grant, 1996; Hamel & Prahalad, 1994; 

Kogut & Zander, 1992; Spender, 1996; Teece, 2009). 

2.1 Human capital 

Human capital contains all the knowledge, experience, skills, intelligence and values of all employees. 

Human capital is important for its capacity for knowledge creation, sharing, transfer and 

transformation (Nonaka, 1991; Nonaka, 1994; Nonaka & Takeuchi, 1995; Nonaka &Toyama, 2007). It 

is important to stress the fact that knowledge as a resource is different than the physical resources. 

“The attributes of knowledge are such that it does not lose value when used by a large number of 

people, so it is a revenue-increasing resource; it transcends time and space, whether in the form of 

objects, writing, or traditions passed on through generations, so it is an infinite resource; it is produced 

and consumed simultaneously, making knowledge production and consumption interconnected and 

inseparable.” (Nonaka, Toyama & Hirata, 2008, p.7). Also, we emphasize the fact that knowledge has 

a large spectrum of semantics from cognitive to emotional, in concordance with the oneness theory of 

mind and body (Nonaka & Takeuchi, 1995). Thus, we may speak about a new dyad formed of 

cognitive knowledge and emotional knowledge, instead of just explicit knowledge and tacit knowledge 

(Bratianu, 2011a; Bratianu & Orzea, 2009). 

Human capital contains also intelligences of all employees. In our research we used the concept of 

multiple intelligences developed by Gardner. In his perspective, “Multiple intelligences theory 

pluralizes the traditional concept. An intelligence is a computational capacity – a capacity to process a 

certain kind of information – that originates in human biology and human psychology” (Gardner, 2006, 

p. 6). Gardner defined the following intelligences: logical-mathematical, linguistic, musical, bodilykinesthetic, 

spatial, interpersonal and intrapersonal. Each of these intelligences reflects a human 

capacity to process information and knowledge in a specific field and to make decisions. In other 

words, each intelligence is a capability to solve problems of different natures. Also, we may consider 

that this new perspective includes both cognitive and emotional intelligences. “In other words, there is 

a rational/emotional split in all of us, which we’re often not consciously aware of, and which makes 

getting to emotions crucial. Without knowing what the other party really feels, it’s hard to make 

progress.” (Hill, 2008, p.3). We have been told that decision making is a rational process, and that 

managerial thinking is a result of the cognitive intelligence. However, new research coming from 

44


cognitive science demonstrates that managers use both cognitive and emotional intelligences 

(Gladwell, 2000; Gladwell, 2005; Le Doux, 1998). 

Human capital contains values. Individuals have professional, cultural, moral and ethical values. 

Although value is a fuzzy concept, it is fundamental in decision making and then, in the behavioural 

pattern. Two managers having the same levels of knowledge and intelligences will make different 

decisions if they have different sets of values. It is like in physics when we put in the same electricity 

field two small balls, one of them being charged with positive electricity and the other one charged 

with negative electricity. These two balls will move in opposite directions, although they have exactly 

the same quantity of electrical charge. The signs of electricity put them apart. Experience 

demonstrated so many times that due to differences in value systems organizations may experience 

management or antimanagement (Bratianu, 2009b). In the first case the organization has all chances 

to go toward business excellence, in the second case the organization will go toward its life cycle end. 

Thus, values may be considered as driving forces of the decision making processes. “Values are 

more fundamental to a decision problem than are alternatives. Just ask yourself why you should ever 

make the effort to choose an alternative rather than simply let whatever happens happen. The answer 

must be that the consequences of the alternatives may be different enough in terms of your values to 

warrant attention.” (Keeney, 1992, p. 3). We are born in a certain culture and we learn the values 

specific to that culture through education in family, community and school. In time, they constitute our 

kernel of beliefs about life and work, and the reference system in decision making. Values can be 

changed, especially when an individual changes the cultural environment. 

2.2 Structural capital 

Structural capital contains all the intangible structures within a given organization, structures that 

reflect formal and informal relations established between people and groups of people, as well as 

operational routines and processes, software systems and platforms, intellectual property, and 

organizational culture. “Structural capital is the organizational knowledge contained in databases, 

practices, know-how, and culture. It stands for all organizational capabilities that enable it to respond 

and meet market needs and challenges.” (Al-Ali, 2003, p. 33). Intellectual property refers mainly to: 

patents, copyrights, trademarks, brands, registered design, trade secrets, and processes whose 

ownership is granted to company by law. All of these play a significant role in achieving a competitive 

advantage through innovation and legal protection. Operational routines incorporate both explicit and 

tacit knowledge. “Shared knowledge in organizations is expressed in routines and practices. 

Formalized routines include process manuals providing codified procedures and rules; informal 

routines would be tacit rules of behaviour or work flows through the organization.” (Marr & Roos, 

2005, p. 33). Structural capital reflects the functional characteristics of the whole organization. It is a 

holistic dimension of the organizational intellectual capital. Metaphorically, some authors consider 

structural capital to be that component of the intellectual capital that remains within organization when 

people go home. “But also, among the elements of structural capital are strategy and culture, 

structures and systems, organizational routines and procedures – assets that are often far more 

extensive and valuable than the codified ones.” (Stewart, 1999, p. 109). 

Swart (2006, p. 153) considers that structural capital and organizational capital should be used as two 

different concepts. In his taxonomy, structural capital can be defined as “work environment, in 

particular work organization and physical space”, and organizational capital can be defined as 

“embedded routines, processes and technologies within the boundaries of the firm.” However, if we 

adopt a systems thinking, then any organization can be conceived as a system with a certain 

structure. The intangible part of this structure constitutes the structural capital of that organization, 

and the distinction between the structural capital and organizational capital disappears. Structural 

capital integrates all the knowledge, intelligences and values embedded into the functional structure 

of the organization. It can stimulate or not the efficient use of organizational resources, especially of 

the intangible ones. 

2.3 Relational capital 

Relational capital reflects relations between the inner business environment and the external business 

environment of any company. It is the intellectual capital component crossing the functional interface 

between organization and its environment. Although it is important to develop a powerful relational 

capital, many companies don’t want to invest in such a capital. As Stewart remarks (1999, p. 144), 

“customer capital is probably – and startingly when you think about it – the worst managed of all 

45


intangible assets. Many businesses don’t even know who their customers are – newsstands, 

delicatessens, most supermarkets, bus companies, many retailers.” 

Knowledge is the most important ingredient of the relational capital and the databases built with this 

knowledge. This knowledge should reflect the specificity of the business field and, as a consequence, 

of the working relations with all external stakeholders. Due to the turbulent business environment 

relational capital is the most dynamic component of the intellectual capital, which means continuous 

up dates of the information and knowledge introduced into all databases. Intelligences play also an 

important role in negotiations with business partners and in developing new business networks. 

3. University intellectual capital 

A university is by its nature a knowledge intensive organization. “The mission of the university, as 

resulted from its historical evolution, is to create, preserve and transfer knowledge to students and to 

society. Since all of these mission components involve knowledge creation and knowledge 

transformation processes, the university is a knowledge intensive organization.” (Bratianu, 2011b, p. 

2). Thus, a university is characterized by a high level of intellectual capital, and its performance is 

directly related to it. Research on the university intellectual capital started in the last decade, mostly in 

Europe as a result of the Bologna process, and the need for more transparency in the university 

management (Bezhani, 2010; Bodnar et all., 2010; Leitner, 2004; Sanchez & Elena, 2006; Sanchez, 

Elena & Castrillo, 2009; Tejada, Ramirez & Baidez, 2011). 

3.1 Integrators of the intellectual capital 

The concept of integrator in the study of the organizational intellectual capital has been introduced by 

Bratianu (2008, p. 237): “An integrator is a powerful field of forces capable of combining two or more 

elements into a new entity, based on interdependence and synergy. These elements may have a 

physical or virtual nature, and they must posses the capacity the capacity of interacting in a controlled 

way”. The interdependence property is needed for combining all elements into a system. The synergy 

property makes it possible to generate an extra energy and power from the working system. The 

importance of integrators comes from their role of transforming the potential intellectual capital into 

operational intellectual capital. For a better understanding we may think metaphorically at the 

transformation of the potential energy into kinetic energy in nature and in engineering systems. 

The canonical pattern of the intellectual capital is based on the idea that all contributions of all 

employees in a generic organization yield the intellectual capital, that is then evaluated and reported. 

However, there is a significant difference between the potential intellectual capital and the operational 

intellectual capital, because only the operational capital relates directly to the organization 

performance. Unfortunately, the Sveiby model, the Edvinsson model, and the canonical model of the 

intellectual capital are static models, which means that intellectual capital is conceived as a stock, or 

stocks and flows, without any internal transformations. Like in science, integrators are capable of 

transforming the potential of organizational intellectual capital into operational organizational 

intellectual capital, contributing this way to a dynamic and realistic modelling of intellectual processes. 

Research carried out by Bratianu and his colleagues demonstrated that the most important integrators 

are: leadership, management, organizational culture, technology and processes (Bratianu, 2008; 

Bratianu, Jianu & Vasilache, 2011; Orzea & Bratianu, 2012). Leadership is the most important 

integrator since it acts mostly on the emotional and spiritual knowledge fields, generating vision and 

high level of motivation for all employees. Thus, leadership is able to contribute very much in 

transforming the potential intellectual capital into operational intellectual capital due to its powerful 

knowledge leverage. Management is the second best integrator for a university since it acts mostly on 

cognitive and emotional knowledge fields, and on the decision making process. Organizational culture 

contains values, beliefs, traditions, ceremonials, and symbols all of them creating a powerful force for 

integration. Organizational culture is a strongly nonlinear integrator. Technology and processes reflect 

the intangible aspects of the engineering technology and production processes. It is not a very 

powerful integrator but it is an important one for the cognitive knowledge. Specifically, it reflects the 

intangible aspects of the IT structures and all associated databases. A generic illustration of the 

dynamic structure of the intellectual capital is given in figure 1. In figure 2 there is an illustration of the 

work done by integrators in transforming the potential intellectual capital into the operational one. 

46


Figure 1: The dynamic structure of the intellectual capital 

Figure 2: Transformation of the potential intellectual capital into operational intellectual capital 

3.2 Structural capital as the Gordian Knot 

Integrators are constituents of the university structural capital, because they represent organizational 

field of forces able to integrate knowledge contributions from all the professors, researchers, students 

and administration staff. Leadership (L), Management (M), Organizational culture (OC), Technology 

and processes (T&P) act in an interdependent and interactive way (figure 3). 

Although they are internal field of forces, they depend on the external environment, mostly on the 

legislation and cultural contexts of the university. For instance, all activities within a university must 

respect the specific legislation of education and the general work legislation from a given country that 

are embedded into the governance of the university. According to Shattock (2003, p. 1), “University 

governance is defined as the constitutional forms and processes through which universities govern 

their affairs.” University governance depends primarily on the degree of university autonomy and on 

its leadership. Most of the European universities, and especially those from the former socialist 

countries, are state universities with a well defined centralized control from the government. In this 

situation, they do not have a full autonomy since the financing mechanisms depend on the 

47


governmental policies and strategies. As a consequence, the structural capital of the university 

imposes a series of limitations in the financial decision making process, and especially in the 

motivational systems for professors, researchers and students. In such a situation the potential 

human capital will be transformed into a low level of operational capital. Although general wisdom 

says that a university with a high level of human capital will perform highly, the structural capital 

introduces a series of limitations to the human capital. In other words, we may say that the key 

element in achieving a high level of operational capital is the university structural capital. 

Figure 3: Structural capital 

For most of European universities the governance is based on the academic management performed 

by university professors. In countries with traditions in selecting the rectors, deans and heads of 

departments or research institutes based on competition, chances are that the managerial positions to 

be given to professors with real managerial talent. However, in many countries these managerial 

positions are given to professors based on different criteria, ranging from academic image to political 

involvement. It is an axiom that a very good professor in his or her own field of expertise cannot be by 

definition a very good rector or dean of a faculty. Thus, chances are that the managerial process to 

suffer and to contribute very little in transforming the potential intellectual capital into operational 

intellectual capital (Bratianu, 2007b). Again, the university structural capital is not able to transform 

efficiently the potential intellectual capital into the operational intellectual capital. 

Organizational culture is a nonlinear integrator acting upon the emotional knowledge field of 

professors, researchers and students. It could be a powerful integrator since it generates significant 

synergies in knowledge production and sharing. However, it can be a strong limitation when the 

decision making process ignore this integrator. For instance, transforming a school or a university 

from a predominantly teaching entity into a research entity generates many resistances. If there is a 

deficit of transformational leadership, the potential human capital will not be transformed significantly 

into operational intellectual capital, and the university performance in the research area will be very 

low. Structural capital acts in such a situation like an inertial force instead of being a driving force for 

research performance. The arguments used for human capital can be used as well for the relational 

capital of the university. For both of them the structural capital is the key successful factor, or the 

controlling mechanism. Metaphorically, we may say that the structural capital is the Gordian Knot of 

the university intellectual capital. A simple illustration is given in figure 4. 


Universities are knowledge intensive organizations since their mission is to generate and transfer 

knowledge towards students and society. For such kind of organizations, general wisdom says that 

the dominant role is played by the human capital that is the only component of the organizational 

capital able to generate knowledge. However, experience and universities classification tables 

demonstrate that many universities with a very high level of human capital cannot score according to 

general wisdom. This situation can be explained using the following arguments: a) intellectual capital 

is a strong nonlinear entity and university performance cannot be direct proportional to the human 

capital; b) human capital, structural capital and relational capital are not independent entities; c) the 

48


potential intellectual capital is transformed into operational intellectual capital by integrators; d) all 

integrators form the structural capital of the university; e) structural capital may stimulate or may 

inhibit the transformation of the potential intellectual capital into operational intellectual capital. 

Figure 4: The pivotal role of the structural capital 

Structural capital is the Gordian Knot of the university intellectual capital. University leaders must be 

able to find the way of undoing this Gordian Knot if they want to achieve university performance. Also, 

the intellectual capital reports should be able to disclosure the limitations of the structural capital in 

order to increase the decision making transparency, and chances of a better integration process. 

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Tejada, A., Ramirez, Y., Baidez, A. (2011) “Intellectual capital reporting in Spanish higher education institutions: a 

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pp.548-554. 

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Knowledge Management, Vol.5, Issue 2, pp.245-256. 

51

The Value of Human Resources in Intellectual Capital and 


Delio Castaneda and Paul Toulson 

Pontificia Universidad Javeriana, Colombia, Massey University, New Zealand 

delio.castaneda@javeriana.edu.co 

p.toulson@massey.ac.nz, 

Abstract: It is recognised and accepted by business leaders and academic scholars alike that people (human 

resources) are an organisation’s most critical assets in the contemporary knowledge economy. While this may be 

true, this rhetoric is often not matched by the reality of employment practices related to this important yet 

ambiguous resource. In times of bottom line financial pressures, it is this resource that is often the first to be 

marginalised because of the dominance of the cost as opposed to the value mentality of human resources in 

conventional financial accounting measures. The central issue is that knowledge, ability, and motivation (which 

are essential components of employee value) and their interrelationships with relational and structural 

components of intellectual capital are intangible. Therefore, they are difficult to measure in conventional business 

metric in terms that are readily understood by and acceptable to major external and internal business 

stakeholders. The purpose of this paper is to review the current situation with respect to the question of people 

as valuable resources in the intellectual capital and knowledge management paradigms. Our contention is that 

human resources are a pivot to the success or otherwise of modern business enterprises, irrespective of their 

size. The empirical basis of this paper is achieved by presenting research data made by the authors on the 

relationship between psychosocial variables and human resource practices on behaviours associated with 

intellectual capital and knowledge management (ICKM). A positive relationship has been found between 

attitudes, subjective norms, and self-efficacy on knowledge sharing behaviour. Besides this, a positive correlation 

was found between the concept of psychological capital and knowledge sharing. Preliminary results will be also 

presented on a current research study on the influence of perceived organizational support and knowledge 

sharing. With respect to human resource practices, the paper includes a review of research undertaken on 

management’s perception on the importance of measuring human resources, some organisations’ attempts to 

achieve this, and the current barriers towards the measurement of value. Current research on the relationship of 

knowledge sharing and human resource practices will also be presented. The paper concludes with a discussion 

on the authors’ observations of the value of human resources in the current state of the theoretical and practical 

considerations of intellectual capital and knowledge management, and their suggestions on a way forward in this 

developing area of ICKM. 

Keywords: human capital, human resource value measurement, intangible assets, knowledge sharing, 

psychological capital 


Business leaders and academic scholars alike recognise and accept that people (human resources) 

are the most critical assets that organisations have in the contemporary knowledge economy. While 

this may be true, the rhetoric is often not matched by the reality of employment practices related to 

this important, yet ambiguous resource. This is manifested in times of financial pressure, when the 

human resource (HR) becomes the first resource to be marginalised because of the dominance of the 

cost as opposed to the value mentality of HR in conventional financial accounting measures. The 

central issue is that knowledge, ability, and motivation (the essential components of employee value) 

and their psycho-social interrelationships, through knowledge sharing with relational and structural 

components of intellectual capital are intangible. Therefore, they are difficult to measure in 

conventional business metric in terms that are readily understood and accepted by major external and 

internal business stakeholders. 

The purpose of this paper is to review the issue of people as valuable resources in the intellectual 

capital and knowledge management (ICKM) paradigms. Our contention is that HR are a pivot to the 

success or otherwise of modern business enterprises, irrespective of their size. To make our case, we 

will present research data on the relationship between psychosocial variables and human resource 

practices on behaviours associated with ICKM. This is a very broad area and so we will be focusing 

specifically on particular aspects we have been involved in. 

2. HR as value not cost 

The global economy has witnessed a radical change in the way people work and their employment 

relationships, from a psychological employment contract based on reciprocity to one on continuous 

improvement and workplace innovation (Sharkie, 2005). The management issues of this century 

52


focus on customer loyalty and retention, increasing flexibility of employment, identifying and attracting 

talented people, and reducing costs (Board, 2001). While CEOs’ roles are quite diverse, they still 

want: continued growth, increased profitability or productivity, and improved shareholder value (Xin, 

2007). Pfeffer (1998) has suggested a disturbing disconnect in the management of people in 

contemporary organisations. While the evidence in terms of research, experience, and plain common 

sense suggests a direct relationship between the financial success of organisations, and the 

commitment to practices that treat HR as assets, the reality is that many management practice trends 

are moving away from this. 

So HR practices have a vital role in selecting and training knowledge workers and winning their selfdiscipline 

and commitment. Given the drivers for CEOs to demonstrate increased productivity and 

improved shareholder value, a major development in HR focus is to demonstrate its added value to 

organisations as human capital in the ICKM paradigm (Ployhart, Iddekinge and Mackenzie, 2011, 

Fitz-enz, 1990, Bontis, Dragonetti, Jacobsen and Roos, 1999, Davenport, 1999, Sveiby 1997, 

Edvinsson and Malone, 1997). Thus the central issue is of having appropriate measures of HR in 

terms useful to stakeholders (Becker, Huselid and Ulrich, 2001, Toulson and Dewe, 2004). If human 

capital as crucial for success and a key source of competitive advantage in the information era, simply 

stating that people are an organisation’s most important assets is no longer sufficient. Instead, human 

capital needs to be measured and accounted for as are other capital assets. Increasing 

competitiveness demands that the HR function must analyse both the costs and benefits of its 

practices. This has challenged the traditional operational HR practices. Critics like Fitz-enz (1984, 

1990) stress the importance of HRM being able to demonstrate the value it adds in terms of business 

metric. 

The genesis of concept of human capital to connect the workforce contribution to the output of 

organisations is well documented (Mincer, 1958, Shultz, 1961, Becker, 1975). This has appeared in 

the HR management literature as the notion of intangibles, as part of intellectual capital (Edvinsson 

and Malone, 1997, Stewart, 1997, Fitz-enz, 2000). The essence is that people at work (human capital 

and their knowledge sharing capability) are items of value, rather than expenses (in accounting theory 

and practice). While there is little theoretical debate of the importance of human capability in 

organisations to innovation and sustained competitive advantage, putting this into practical and useful 

business metric terms is still problematic. So the utility of human capital is focussed on developing 

practical applications useable in organisational life. It is not the lack of theory that is hindering further 

development, but rather the lack of alignment of the concepts of human capital with current measures. 

As any accountant will tell you, it is impossible to measure the substance of intangible assets directly, 

and when they have been measured they are called goodwill. Therefore, there are no measures in 

common use that addresses the substance of an individual’s human capital in accounting terms. If the 

value of each individual’s contribution can be made visible as a measure clearly aligned with 

organisational success indicators, then this should enable further grounded research on human 

capital and subsequent theory development. This has profound implications for the measurement of 

individual employees’ added value in organisations. Measuring the value of people rather than 

measuring them as costs is a paradigm shift from the industrial to knowledge economy (Sveiby, 

1997). This is opposite to the current financial reporting paradigm that has been with us since the 

industrial revolution, and is a new way of thinking about the labour resource. 

3. Human capital theory 

The limitations in the theoretical basis for the practitioner concepts of human capital and intellectual 

capital are often cited (Bontis, Dragonetti, Jacobsen, and Roos, 1999, Grasenick and Low, 2004). 

While economic theory of human capital (Schultz 1961, Becker 1975, Mincer 1958) fails to explain 

current human capital value and measurement practice in today’s organisations at the individual 

employee level (Uziene, 2010, Koning ,1994, Asplund, 1994, Blaug, 1976, Chapman 1993), it still 

provides a basis for the most widely used macroeconomic measurement of human capital. This is the 

‘number of years of schooling’ (OECD, 1999, Johnston, 1998). The popularity of this macroeconomic 

human capital measure is its credibility, objectivity, and simplicity. It requires little calculation, is 

readily available from existing national data, and is suitable for comparisons and benchmarking. It is 

also very crude! 

There have been various attempts to address the substance of human capital. For instance human 

resource accounting (HRA) specifically provided a comprehensive model of the micro-economic value 

53


of individuals in a specific organisation (Flamholtz, 1985 based on the pioneering work of Hermanson 

(1964). HRA attempts to measure HR in financial terms, applying accounting principles to people in 

terms of their asset values. HRA in the 1990s, due to the turbulent business environment compelled 

HR practitioners to focus on their functional accountabilities in financial metric. However the idea of 

reducing HR to financial metric is not without its critics (Bueno, Salmador and Merino, 2008, Pfeffer, 

1997). 

It is our contention that the financial reporting system itself is limited in reporting HR as assets, 

because as assets people do not behave as do other assets in organisations. Flamholtz’s (1985) HRA 

treatise, while providing a forum of methods of accounting for people as assets, highlights some of the 

major issues and difficulties. If they are assets, how are people depreciated? Assets are consumed 

over their useful lives. Does this happen to people? Here is a glimpse of the accountants’ nightmare 

in trying to treat people as assets in financial terms. While the model may be theoretically justified, it 

has never been adopted due to its subjectivity, the complexity of the associated component 

measurements, and its focus on individuals’ firm-specific human capital. Thus benchmarking and 

generalising to other contexts has been limited (Fitz-enz, 2000, Sheedy-Gohil, 1996). Similarly, 

decision theory provided the basis for the various models of utility analysis, which measured the value 

of different staff management approaches (Cascio, 1998). However, these measures of human capital 

require complex formulae with components that include subjective measures, which often make 

assumptions that stretch senior managers’ credibility, and are therefore unattractive in practice (Lees 

2003). 

Bontis, Dragonetti, Jacobsen, and Roos (1999) suggest a range of tools available in the metrics of 

managing intangible resources, each based on the recognition that the value-creating capacity of an 

enterprise is based on the knowledge and capabilities of its people. The use of costing and utility 

models provides some basic tools for demonstrating how HRM can add value to the organisation in 

business metric (Cascio,1991, Cascio and Boudreau, 2008). The recognition that the level of 

knowledge-based assets is critical for the future success of an organisation has raised awareness of 

the importance of human capital, enabling HR practitioners to be recognised as strategic business 

partners (Ulrich, 1997). One of the problems in using financial metric, like HRA, encourages 

managers to focus on short-term, bottom-line results - not long-term drivers of business success. 

The resource-based view of the firm theory (Becker and Huselid, 1998, Becker and Huselid, 1999, 

Barney and Wright, 1998) emphasises the competitive capabilities of an organisation and its work 

processes. Human capital is not separated out from work processes. Consequently the use the term 

‘competency’ accompanied by different descriptors has resulted in confusion and a proliferation of 

terminology. Bontis (1999) proposes that the resource-based view theory of the firm can be adapted 

to a knowledge-based view of the firm to provide a basis for intellectual capital measures. 

There is a number of business reporting practitioner models (Starovic and Marr, 2004). The two most 

common models are the balanced score card (Kaplan and Norton, 1996) and its derivatives, and 

intellectual capital (or intangible assets) reporting (Sveiby 1997, Roos et al, 1997; Edvinsson and 

Malone, 1997, Stewart, 1997). Of these two models, the latter emphasises the measurement of 

human capital. In practice the balanced score card and intellectual capital/intangible assets reporting 

tend to draw on the same human capital measures (VanBuren, 1999, Edvinsson and Malone, 1997, 

Sveiby, 1997). In common usage are quantitative objective measures that are simple to calculate and 

interpret, which can be sourced from readily available data and can be compared between 

organisations; and, are therefore appropriate through benchmarking. Examples of these measures 

are: ‘percentage of payroll spent on training and development’, ‘number of employees with degrees’, 

‘number of training days’, and ‘economic value added’ (EVA). Any qualitative measures used tend to 

be standardised and normed. For example, climate surveys based on psychological paradigms of 

motivation, or the influences of the context on work performance. Essentially we are saying that the 

inclusion of the valuable contribution of individual employees in human capital terms is hindered by 

the lack of development and progress in measures that enable organisations to include in their 

decision-making the stocks and flows of human capital. 

There has been considerable work undertaken to align the efforts of people with organisational 

success through competencies that describe the valuable content of what people do in the workplace 

(in terms of knowledge, ability, and motivation). Competencies are considered in the major HR 

practices of acquisition, development, appraisal, remuneration, and utilisation of people in 

54


organisations. Various disciplines including psychology (Spencer and Spencer, 1993), education 

(McLagan, 1997), management science (Taylor, 1967, Campbell, Gasser, and Oswald, 1996), and 

training and development (Zemke and Zemke, 1999), define employees’ workplace competencies, 

performance and their measurement. Each discipline’s approach to competencies, however, has its 

critics (Barrett and Depinet ,1991, Barnett, 1994, Lawler, 1994, Arvey and Murphy, 1998). 

In New Zealand, Lees (2003) attempted to measure the substance of human capital to develop a 

generic way of measuring the value of HR across different organisations. Lees developed a human 

capital index (HCI), based on Nordhaug’s (1993) competence typology. The HCI framework was 

derived from performance ratings of competencies that were correlated with productivity measures. 

Because the value of people lies in their knowledge, ability and motivation, performance scores for 

competencies were gathered through 360-degree feedback. The HCI was developed with and applied 

to seven samples in five quite diverse organisations. Productivity measures were specific to each 

organisation. Reasonable correlations between the HCIs and organisational productivity results for 

some of the samples were reported. Against these same productivity measures, the OECD measure 

of human capital (equivalent years of tertiary education) correlated weakly. This suggests that under 

certain conditions an HCI based on competences is possible as a human capital measure. 

4. The valuing human resources (VHR) project 

To get some baseline data on perceptions about HR value, and what measurements were being used 

in New Zealand we therefore conducted a national baseline survey (Toulson and Dewe, 2004) to 

investigate what is being used in organisations to measure HR results, and how is HR measurement 

viewed as critical to management and success? This included information on how aware executives 

are of HR measurement and its concepts; what measurement techniques are in use and what 

techniques they would like to use; and, where does the support come from in terms of introducing 

such concepts in the organisation. Random samples of 1,000 members of each of three professional 

business groups: accounting and finance managers of the Institute of Chartered Accountants NZ, HR 

managers of the Human Resources Institute NZ, and senior line managers of the NZ Institute of 

Directors were surveyed. A small focus group of persons drawn from the three Institutes generated 

the questionnaire items that were pilot tested on a group of 40 HR managers. A glossary of definitions 

of capital measures used in the survey was supplied in each questionnaire. 

538 useable returns gave a response rate of 18 %. Almost half (47.6%) of these respondents believed 

that the measuring of HR is very important to their organisations. Two principal reasons reflected this 

thinking on the importance of HR measurement. First, measurement reflects the strategic and 

competitive importance of HR; and second, HR must be expressed in financial terms to achieve 

credibility. However, those surveyed also agreed that current HR measures: lack precision (58.8%) 

and are not widely accepted (50.6%). The six most frequently used measures were: accident 

frequency rates (60.3%), client satisfaction surveys (60.1%), absenteeism rates (56.3%), training and 

education costs (56.3%), cost of people (53.9%) and competencies (53.2%). Most of the respondents’ 

organisations did not measure factors like ROI in human capital, value added per employee, time to 

fill jobs, return on training and seniority. These results reflect some of the difficulties associated with 

developing appropriate valuation methodology for use in organisations. Comparisons across the three 

groups of professional managers indicated that HR managers were significantly more likely to believe 

in the importance of such measures and less likely to perceive barriers to measurement than did 

accounting/finance managers. Senior line managers were also more positive in their attitudes towards 

measuring HR than were accounting/finance managers (Toulson and Dewe, 2004). 

From these results, a second study to explore in depth the approaches to the measurement of HR in 

selected New Zealand organisations to provide further insights from the baseline survey was 

undertaken to investigate how organisations are measuring the value of human capital (Tootell, 

Blackler, Toulson, and Dewe, 2009). The findings suggest that there are no generally accepted HR 

measurement principles for organisations. This has important consequences relating to theoretical 

arguments for a generic human capital index capturing the essence of human capital, and also 

supports Lees (2003) work. The analysis also reported several barriers to HR measurement in the six 

organisations. First are difficulties in developing measures (both conceptually & practically) due 

limited knowledge and poor analytical skill in measurement design. Second, are difficulties in the 

acceptance by organisational members due to organisational history and the perceived role of HR. 

Third, are difficulties in the application of measures due to lack of adequate technology, time, and 

financial resources, and poor dissemination or inappropriate use of information. Nonetheless, factors 

55


that contributed to success of a measurement system are: a strong organisation’ commitment, 

especially by senior management; familiarity with, and use of, a single theoretical model; clearly 

defined communication pathways in the organisational structure; the involvement of multiple 

stakeholders in the design & development of measures; and, the allocation of resources (time, 

money, & technology) to support the measurement application and development. 

These findings have implications for HR practitioners. It can be argued theoretically that knowledge 

and the consequential HR measurement of intangibles is equally valid for traditional agricultural and 

industrial organisations; i.e. knowledge itself as a source of competitive advantage underscores the 

different paradigms. Yet the question remains: Is this reflected in the actual workplaces of 

contemporary organisations? Our limited data suggest that this appears more relevant and 

acceptable for knowledge based scientific or high tech organisations than for traditional organisations. 

The second implication relates to the question of how well the HR practitioners are equipped to do 

this work. The suggestions from both the literature (Fitz-enz, 1984, 1990, Cascio, 1991, Cleland, Pajo 

and Toulson, 2000) raises the question of the competence of those HR practitioners to do this, who 

have trained and developed on HR models emphasising process and best practice. It is interesting 

that in the baseline study (Toulson and Dewe, 2004) questions relating to the competence of HR 

practitioners to undertake this work were raised by more tangible and numerate managers like 

accounting professionals. Our conclusion is that HR metrics as the Holy Grail of HR management 

remain elusive. Not only is the objective elusive but there are a number of barriers on the trail. The 

important factor is that the metrics adopted in an organisation are meaningful, even if there is 

variation from industry to industry and organisation to organisation. What this research indicates is the 

importance of developing relevant HR measurement models accepting that the metrics used (unlike 

accounting measures) may vary from organisation to organisation. 

5. Knowledge sharing 

Knowledge sharing is strongly related to the collective creation and use of key knowledge in 

organisations. This behaviour is crucial for an organisation to be competitive (Liao, 2008). However, 

knowledge sharing is not an automatic behaviour, but highly dependent on human will and motivation 

(Dougherty, 1999; Scarbrough and Carter, 2000). This is why HR practitioners cannot be foreigners to 

the issue. Therefore, it is relevant to comprehend how psychosocial variables and organisational 

conditions impact knowledge sharing, which is central in knowledge management and intellectual 

capital. In this direction, HR practices have been recognized as essential for the promotion of 

knowledge sharing within an organisation (Liu and Liu, 2011). Despite the great research interest 

involved in knowledge sharing, there are not many studies that link this behaviour with psychosocial 

variables in organisations (Carbó and Osca, 2011; Steward, 2008) or that connect HR practices and 

knowledge sharing. 

Castaneda and Fernandez (2011) studied the relationship between some psychosocial variables 

(beliefs, attitudes, subjective norms, self-efficacy and perceived value of knowledge), some perceived 

organisational conditions (organisational learning culture, training, strategic clarity and organisational 

support) and the knowledge sharing behaviour, with 1057 knowledge workers in Colombia. All these 

relations were found significant from data. In another study in Colombia, the relationship between 

psychological capital (optimism, hope, resiliency and self-efficacy) and the knowledge sharing 

behaviour was investigated. Results confirmed the relationship. In addition, it was found that the 

psychological capital construct has greater potential for explanation of knowledge sharing behaviour 

than its four components separately (Delgado and Castaneda, 2011). 

In some topics, results of research on the relationship between HR practices, psychosocial variables 

and knowledge sharing are unclear. The role of incentives on attitude to knowledge sharing, for 

instance, needs a deeper understanding. Traditionally, there is a positive relation between incentives, 

attitude and knowledge sharing behaviour (Cabrera, Collins and Salgado, 2006; Huber, 2001). 

However, Kwok and Gao (2005) did not find the influence of extrinsic motivation on knowledge 

sharing attitude. On the other side, Bock, Zmud, Kim and Lee (2005) found that incentives made a 

negative impact on attitude to share knowledge. Osterloh and Frey (2000) stated that economic 

incentives adversely affected knowledge sharing motivation. Lin (2007) did not find a relationship 

between incentives and knowledge sharing intention. Chennamaneni (2006) gives some light on the 

issue, by suggesting that perception of organisational incentives has a positive effect on knowledge 

sharing attitudes, but when in a model some other variables are included, then the effect of incentives 

becomes weak. This is just an example of the necessity of research on the relationship between HR 

56


practices and knowledge sharing, a central behaviour in intellectual capital and knowledge 

management. If how and why people share knowledge in an organization is understood, successful 

HR practices may be more focal to achieving organizational goals based on knowledge, which is a 

goal of intellectual capital. 

6. Conclusion 

The paper provides theoretical support, empirical evidence and the authors’ observations, of the value 

of human resources in the development of intellectual capital and knowledge management. It also 

discusses the role of knowledge sharing in building intellectual capital and knowledge management. 

Finally, it is concluded that HR practices are central to enhance knowledge sharing, a fundamental 

behaviour associated to the fulfilment of organisational objectives based on knowledge. Further 

research on the relationship between HR practices and knowledge sharing behaviour is suggested, 

for the purpose of achieving a greater understanding of the role of HR in the fields of intellectual 

capital and knowledge management. 

Paper relevance: This provides an important contribution to the conference (particularly the mini-track 

session), by reporting research in two countries conducted independently and reported collaboratively 

from social psychology and HRM perspectives. It will stress the common threads of both human 

capital and psychological capital as being pivotal in ICKM. 

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59

The Internationalization of Micro and Small Companies 

From Knowledge-Management Standpoint: A Multiple Case 

Study in Brazil 

Camilla Sara Gonçalves Cunha and Rodrigo Pires de Campos 

Catholic University of Brasilia, Brasilia, Brazil 

camillas@ucb.br 

rpires@ucb.br 

Abstract: The paper explores the process of internationalization of micro and small companies from the 

perspective of knowledge. It consists of an investigation of the contributions of a knowledge-based approach to 

the internationalization process of micro and small sized (MSEs) firms, and how such knowledge manifests itself 

in the daily life of these firms. Knowledge is considered a strategic factor that promotes both the insertion and 

permanence of companies in the international market, specially regarding the reality of micro and small 

enterprises in Brazil. The coherence of this approach lies upon the usually limited resources available to MSEs, 

urging them to compensate their lack of tangible resources through the use of intangibles resources. Therefore 

knowledge represents a significant advantage for organizations that operate in the international market, mainly 

because it takes into account geographic scope, cultural aspects, operational costs and the risks involved in 

making highly complex decisions. Hence, the study of internationalization from the perspective of knowledge is a 

timely occurrence, given its potential to generate tangible contributions to the reality of companies and their 

international operations. Our research is exploratory in nature since it seeks to comprehend the potential roles of 

knowledge factors on the internationalization process of MSEs. For that purpose, we have conducted multiple 

case studies within three companies from the clothing segment of the Federal District – Brazil as the basis for 

applying and testing the knowledge-based model of MSEs’ internationalization, developed and proposed by Mejri 

and Umemoto (2010). As a result, it was confirmed that in fact there are other knowledge factors, beyond 

marketing knowledge, that contribute to the effectiveness of results in the internationalization process of MSEs. 

These factors are associated to a more holistic and integrated perspective of knowledge, where the results are 

linked to combinations of other kinds, or dimensions, of knowledge. Thus, we observed that different knowledge 

factors do strengthen, in a complex and integrated fashion, the insertion and permanence of Brazilian MSEs in 

the international market. 

Keywords: internationalization, knowledge, micro & small enterprises, model, application, multiple case study 


The high level of competitiveness that companies have to face in order to establish their own niche in 

the contemporary global market has strengthened the perception of the central role that knowledge 

plays as a strategic differentiator in the generation and maintenance of the ability to compete (Krogh 

et al, 2001; Prashantham, 2005; Sommer, 2010; Nonaka and Takeuchi, 1997, Firestone and McElroy, 

2003; Alle, 2003). For Choo (2006) knowledge provides a clear advantage, allowing companies to act 

with intelligence and creativity. 

Within the context of globalization, the ability to continuously learn and innovate is considered a 

fundamental strategy for the management of intangible resources, also being seen as a key element 

for an organization’s growth and sustainability (Firestone and McElroy, 2003). To Krogh et al. (2001) 

knowledge is a source of competitive advantage, making products hard to copy and keeping the 

company sustainable in a competitive global market. 

There has been an increase in the number of scholars engaged with the knowledge perspective 

model. The so-called "vision of internationalization based on knowledge" is considered an extension 

of the theory of internationalization developed in the 1960s from the so-called resource-based view 

(Penrose, 1966, in Mejri & Umemoto, 2010, p. 160). This perspective appeared during the 1990’s, 

simultaneously to the emergence of the topics of knowledge and knowledge management in 

organizations in general. 

For over two centuries, scholars have observed international trade amongst nations and have 

formulated explicative theories concerning this phenomenon. Efforts resulted in several theoretical 

currents of both economic (the oldest of them dating from the sixteenth century) and behavioral 

nature (especially after the 1960’s), focusing on innovation, networks and, more recently, dating to the 

1980’s and 1990’s, due to the growing number of micro and small companies, on international 

entrepreneurship (Mejri & Umemoto, 2010, p. 158; Cunha, 2011). 

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The proliferation of theoretical approaches allowed the understanding of internationalization from 

different angles. However, the increasing proliferation and fragmentation of theories vis-à-vis the 

increasing complexity of the issue produced the urgent need, among scholars, to seek greater 

integration between the different theoretical perspectives (according to Mejri & Umemoto, 2010). This 

perception led them to undertake the effort of building more integrated and holistic models of firm 

internationalization. 

Since the beginning of the twenty-first century, there has been an increasing emergence of models 

that attempt to integrate these various theoretical perspectives. For example, the Fletcher model 

(2001), the Bell et al. (2003) and the Etemad model (2004) (Mejri and Umemoto, 2010, p. 158). 

Among them, some scholars venture into building such integration by means of theoretical models 

based on knowledge. According to Mejri and Umemoto (2010, p. 158), the most well-known 

knowledge-based models are Kuivalainen et al. (2003), based on Blomqvist et al. (2000), Saarenketo 

et al. (2004), and Prashantham (2005) based on Yli-Renko et al. (2002). 

In a detailed review of these models, Mejri and Umemoto (2010) reveal that, despite their undeniable 

contribution to the clarification of different aspects of firm internationalization, “there is still a need to 

see the whole picture” (p. 158). Specifically regarding the internationalization of MSEs, the authors 

emphasize the relatively recent emergence of studies with such focus (only two decades) and, 

coincidentally, the central role attributed by the specialized literature to knowledge as a fundamental 

factor in understanding the topic. 

By being explicit and assuming their intellectual alignment to knowledge as a factor that drives 

companies to enter and remain in the international market, and imbued with the spirit of contributing 

to understanding the role of knowledge in the internationalization of MSEs, Mejri and Umemoto (2010) 

proposed an integrated knowledge-based model that could explain more holistically MSE’s 

internationalization processes. By the time the model was conceived and proposed, its application in 

real MSEs’ settings was yet to be undertaken. In fact, its application is recommended by the authors 

as the next step in future research initiatives. 

The objective of this paper is to explore the role of knowledge in the internationalization of Brazilian 

MSEs based on the model proposed by Mejri and Umemoto (2010). This model was chosen based on 

three reasons. First of all, based on our first impression of its potential contribution to understanding 

internationalization processes of MSEs in Brazil beyond the traditional scope in (explicit) market 

knowledge. Secondly, and answering to the suggestion made by the authors of the model, by 

providing to the necessity of conducting empirical studies to test the impact of variables in the model. 

Last, but not least, because of the long experience, and contact, that the main author of this article 

has had with the reality of MSEs in Brazil. 

The research is exploratory in nature, therefore seeking to achieve a more profound understanding of 

the role played by knowledge in the internationalization process of MSEs. We conducted multiple 

case studies in three companies belonging to the clothing segment of the Federal District, Brazil. The 

authors of the model have also indicated case studies as “more suitable since it allows a deep 

understanding of the factors that explain internationalization and therefore test the model proposed.” 

(p. 166) In each company, in-depth interviews were held with their owners, along with in-service and 

field observations, and the identification and analysis of internal documents. 

2. The internationalization of Mse from the perspective of knowledge: The 

Mejri-Umemoto Model and adjustments for purposes of our research in 

Brazil 

For Mejri and Umemoto (2010), internationalization is understood as the expansion of a firm’s 

business operations into international markets. Based upon this approach, their model is structured in 

three phases (pre-internationalization, embryonic internationalization, and mature 

internationalization), during which four knowledge factors would exert influence (extracted from 

literature on internationalization): market knowledge, and experiential knowledge, derived from 

personal experience, consisting of network knowledge, cultural knowledge and entrepreneurial 

knowledge (Figure 1). 

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Source: Mejri and Umemoto (2010, p. 162) 

Figure 1: A knowledge-based model of MSE internationalization 

According to the authors, the scope of the knowledge-based model outlined above relates to a 

particular market and not to all the markets in which the firm is involved (p. 161). The knowledge 

factors were extracted from the literature on internationalization. The proposed criterion used to 

establish phases is related to the experience level of internationalization: no experience (preinternationalization), 

short experience (embryonic internationalization), and long experience (mature 

internationalization). 

This model uses knowledge factors, characterized as follows: 1) Knowledge of the market: objective 

information about foreign markets such as market size, competitors, regulation, legislation and other; 

2) Experiential knowledge: resulting from practice and can only be learned through personal 

experience. It is subdivided in three factors: 2.1) Network Knowledge, which involves social and 

entrepreneurial networks that facilitate business and internationalization as well as the network itself; 

2.2) Cultural Knowledge refers to the culture, language, custom, values and people’s ways of 

thinking; and 2.3) Entrepreneurial Knowledge, which consists in the capacity of being aware of 

opportunities and having the means to exploit them, absorption skills, cognitive processes and 

intelligence. The authors define the acquisition and the utilization of each knowledge factor during the 

different phases of a firm’s internationalization process as their main dependent variables. 

Keeping in mind the objective of observing the role of knowledge in the internationalization of MSEs in 

Brazil, multiple case studies were conducted in three companies belonging to the clothing segment of 

the Federal District, Brazil. The companies were chosen for their accessibility and attending the 

classification proposed by the Merji and Umemoto model (2010): one has no experience with the 

internationalization process (pre-internationalization); the second is a newcomer to internationalization 

with little experience (embryonic internationalization); and the last is experienced at 

internationalization (mature internationalization). The real names of the companies were purposefully 

changed for the sake of anonymity. 

Data collection was performed by a combination of strategies such as interviews with the CEO, 

gathering of data and information available in the companies’ websites, documents provided by the 

companies and visits to facilities in order to observe their physical structure, departments, 

organization, employees and other factors that arose during the visits. 

During the first stage of the research, an analysis of each individual company was carried out. The 

analysis technique used was Pattern Combination, which according to Yin (2010) compares an 

empirically based pattern with a predicted pattern. We used strategies that included evidence 

sequencing, explanation and content analysis. In the second stage we used a Cross-Case Synthesis, 

in which comparisons were established between the case studies. 

This research was conducted aiming to identify the ways in which the acquisition and utilization of 

knowledge takes place in MSEs’ internationalization processes. However, it is worth noting that in 

some cases it is extremely challenging to describe or measure the tacit dimension of knowledge, 

because it is considered highly personal and difficult to formalize. Therefore some knowledge factors 

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were described and qualified the way they presented themselves in the companies without 

necessarily indicating in an explicit way their acquisition and utilization. 

In order to analyze the data and information collected from case studies, we conceived a visual map 

in which we could express the intensity of the existing knowledge in the selected companies (Figure 

2). The basic assumption behind the definition of such a strategy is that a map could be more 

instrumental since most of the knowledge factors are related to the tacit dimension of knowledge, 

which is often difficult to explain and capture. Nonetheless, for the purpose of this study, these 

dimensions were observed from first-hand accounts, actions, behaviors and business decisions taken 

by the firm. Moreover, this analysis concerns the intensity of these knowledge factors related to the 

company’s internationalization process, disregarding the company’s behavior in the domestic market. 

Source: Authors 

Figure 2: Visual map conceived for analyzing the intensity of each company’s knowledge factors 

For each knowledge factor dimension, the inner circle represents low intensity, the middle circle 

expresses average intensity and the outer circle represents high intensity. The colors were set to 

differentiate the dimensions of knowledge factors and to provide the opportunity of analysis through 

the intensity of the color tones, starting with a lighter tone, which means lower intensity, and ending 

with the darkest tone, representing high intensity. It is worth mentioning that in order to facilitate the 

analysis of the image we also established that the first quadrant concerns market knowledge, the 

second quadrant network knowledge, the third quadrant cultural knowledge and, finally, the fourth 

quadrant represents entrepreneurial knowledge. 

3. The internationalization of Mse in Brazil from the perspective of knowledge: 

Three case studies 

MSEs in Brazil are considered as one of the main pillars of the national economy. According to data 

from Sebrae (2007, 2010) this segment represents 98% of Brazilian companies, generates almost 

60% of formal employment, 20% of the Gross Domestic Product (GDP) and comprises 64% of all 

exporting firms, thus revealing the potential of this segment beyond the boundaries of the domestic 

territory. 

However, working beyond national borders has been a challenge for the Brazilian MSEs. Despite 

positive reactions to market stimuli by means of commercial activity in the international scenario, lack 

of sustainability and discontinuity have become regular practices in this process. Among these 

challenges are resource constraints, difficulty in accessing information that would support a 

competitive insertion in the international market and the absence of a formal strategy for 


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The “Alpha” firm has not made any formal commercial activity on the foreign market yet, but is 

preparing to internationalize itself. In this enterprise, market knowledge is acquired through training, 

including training courses, seminars and technical meetings held by governmental entities that 

support internationalization. Network knowledge can be detected in the firm’s participation in events in 

Brazil and abroad, also considered a timely opportunity to make contacts. Their use of Information 

and Communication Technologies (ICTs) is also considered as network knowledge, given the fact that 

the company is inserted in major social networks and uses several Internet resources. 

Communication is also a factor that enables the establishment of networks, since the company uses 

its website, business card and virtual catalog, all having translations in Portuguese, Spanish and 

English. The acquisition of entrepreneurial knowledge by the Alfa firm was observed in the use of the 

main executive’s entrepreneurial skills in the attempts to internationalize the brand. Figure 3 

expresses our analysis of the intensity of existing knowledge factors in the Alfa company. Considering 

that it is in its pre-internationalization phase, the goal here is to identify the contributions of these 

kinds of knowledge in preparing the company for the international market, and potentially exposing 

gaps that need to be filled in order for it to achieve its purpose. 

Source: Authors. 

Figure 3: Analysis of the intensity of knowledge factors at Alpha company 

The second company that was analyzed is the “Beta” firm, which is in the initial stage of 

internationalization. In this company, market knowledge was gained by participating in a program to 

support internationalization developed by the National Confederation of Industry (CNI), in which the 

company developed skills to perform key processes related to exportation. 

Participation in international fairs is the company’s main strategy for acquiring network knowledge, 

considered the most effective way to attract customers in the international market. Networks are also 

established during these trips abroad, in which the company makes important contacts with official 

institutions and Brazilian Embassies, chambers of commerce, banks, international trade fair 

organizers, potential importers, potential representatives, potential promoting agents and the press. It 

is also worth highlighting the importance of a network of personal contacts abroad used as travel 

support for translation, price information, regulations, insight into customs and habits. 

The company also participates in activities promoted by federal and regional authorities, aimed at 

strengthening the segment. It is connected to major social networks and makes extensive use of 

ICTs. Twice a year the brand’s fashion designer travels abroad to research new fashion trends, 

checking for new materials, colors of the season, showcases, prices, performing visits to retail outlets 

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and gathering other useful information for her business; such is their strategy used to acquire cultural 

knowledge. 

Entrepreneurial knowledge is acquired through the use of the main executive’s entrepreneurial skills 

in managing the internationalization processes that involve capturing new opportunities, securing their 

current customers’ fidelity, expanding markets and other activities that contribute to the sustainable 

integration of the company. Figure 4 shows the intensity of existing knowledge in the Beta company 

and, similarly to the first case, the potential for complementation by these dimensions of knowledge. 


Figure 4: Analysis of the intensity of knowledge factors at Beta company 

Finally, the company under analysis is “Gamma”, which already has experience in international 

operations. In this company market knowledge is acquired through training and contacts made with 

governmental entities that support internationalization. Cultural knowledge is essential for the 

development of Gamma’s fashion collections. In order to acquire such knowledge, the company 

carries out research to discover the habits and customs of their target audience. 

Premeditated work trips are conducted, aiming to map a specific segment of the market. Example: 

when developing swimwear collections, visits are made to clubs, beaches, gyms and saunas to check 

consumers’ preferences in that specific market segment. The acquisition of network knowledge 

occurs mainly through the participation in trade fairs, which is one of the elements that facilitated 

Gamma’s insertion into the international market. The company is socially well articulated and always 

participates in Union meetings; it is also present in social networks and makes broad use of Internet 

tools such as e-commerce and e-mails. 

Their products are frequently bought through e-commerce and are delivered with ease and agility. 

The Internet is fully exploited as a space where the company showcases its products to the 

international market, given that the company’s launched collections are immediately made available 

to their customers. Entrepreneurial knowledge is acquired through the main executive’s 

entrepreneurial skills, used to capture all available opportunities related to the company’s 

internationalization. Figure 5 shows the intensity of the knowledge that has been mapped in Gamma 

company. 

4. Discussion 

After having concluded the analysis of each individual case, it then becomes necessary to make a 

cross-case synthesis, in other words, to analyze the common and divergent points in the cases of 

companies Alpha, Beta and Gamma, correlating them with internationalization aspects derived from 

65


the perspective of knowledge presented by Mejri and Umemoto (2010). Figure 6 presents a visual 

comparison of the intensity of the knowledge factors in the three surveyed companies. 


Figure 5: Analysis of the intensity of knowledge factors at Gamma company 


Figure 6: Comparison of the level of knowledge factors among selected MSEs 

According to the results above, a comparison of Brazilian companies with the model developed by 

Mejri and Umemoto (2010) is made possible. In the Japanese model, acquisition of market knowledge 

occurs during pre-internationalization, the phase in which the company seeks to acquire as much 

information as possible due to the high risk of its first insertion into international market. Thus, for 

them, market knowledge is the starting point. This knowledge is also used in later stages. One can 

observe that it is more intense in the initial phase, and as the company moves towards achieving 

other required knowledge (network, cultural and entrepreneurial) on further phases. 

Our research carried out with Brazilian companies shows a different result, one in which companies 

do not carry out effective and structured research activities concerning the targeted market (market 

knowledge), seeking information about competitors, market size and regulations. In the Alpha and 

Gamma companies, market knowledge is considered low, whereas in Beta it is intermediate. This 

difference may be explained based upon the fact that Beta participated in a formal internationalization 

program, which helped it in developing market surveys. Nonetheless, during the program the 

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company only surveyed certain markets and since its end it has not further developed this kind of 

survey. Although this experience increased the company’s level of market knowledge, it still is located 

in an intermediate internationalization level, as shown in Figure 1. This result reinforces the central 

approach of this research, that marketing knowledge alone is not sufficient for a consistent 

international insertion; in other words, there is need of a more integrated knowledge based approach 

to internationalization. 

When concerning network knowledge, the results found in the research, conducted with companies in 

the Federal District, are well aligned with the Japanese model. It was identified that network 

knowledge presents itself as a critical aspect for the beginning of internationalization as it can 

encourage or force the company to kick-start its internationalization. In the Mejri and Umemoto model 

(2010), this knowledge is acquired both in the pre- and initial internationalization phases, where 

beginners are located. One can also observe that this kind of knowledge becomes more intense in 

later stages, resulting from the increasing opportunities presented to these companies. 

When dealing with cultural knowledge, similarities and differences arise as the Japanese model is 

compared to what was identified in the selected companies. The model states that the acquisition of 

cultural knowledge occurs when you start internationalization. However, it was observed that the Alfa 

company, which has not started its internationalization yet, is already aware of the importance of 

these cultural aspects and sought to acquire such skills even before its international insertion. 

Moreover, regarding the use of cultural knowledge, results converge, since its intensity is low during 

initial stages, and increases in magnitude in advanced stages. This happens because the company is 

slowly learning how to deal with other cultures and partners in foreign markets. The more a company 

acquires cultural knowledge, therefore, the greater it seems the intensity of its utilization. 

The results obtained from the research conducted with Federal District companies also converge in 

relation to entrepreneurial knowledge. The acquisition of entrepreneurial knowledge occurs in the prephase 

and ends in the early stages of internationalization. During the initial phase, this kind of 

knowledge is applied gradually, given that the identification of opportunities and the ability to exploit 

them is still low. When the company becomes more experienced it uses more intensely its 

entrepreneurial knowledge, therefore expanding its ability to detect and exploit opportunities. This 

situation is shown in Figure 5, where the Gamma company, located in a more advanced stage of 

internationalization, indicates possessing greater entrepreneurial knowledge. 

This survey and analysis of Federal District’s companies provides a more comprehensive outlook of 

the Brazilian reality, making it possible to understand internationalization from a more integrated 

approach based on knowledge. The results of these reflections, combined with a literature revision, 

have promoted a broadening of the concept of internationalization. Generally speaking, one can 

understand it as the various ways a company relates to the external market. Johanson and Vahlne 

(1977) argue that internationalization is a process of gradual involvement of an enterprise with foreign 

markets, where the evolution of international involvement focuses on the gradual acquisition, 

integration and use of knowledge on foreign markets. 

According to Alem’s and Cavalcante’s (2005) perspective, the internationalization process involves 

two main instances: the supply of foreign markets by exportation and direct investment abroad, either 

to install commercial representations or to develop production units. According to Iglesias and Veiga 

(2002) internationalization is a complex phenomenon, comprising steps ranging from direct production 

for foreign markets, to integration with the international economy such as participation in mergers, 

partnerships, cooperation agreements and technology transfers. Kraus (2006), on the other hand, 

argues that internationalization has been one of the many strategies that various companies around 

the world have used to cope with international competitors and improve competitiveness in their 

domestic markets. 

Thus, internationalization can be understood as the various possibilities used by a company to relate 

to the foreign market, whether selling or buying products and services, partnering, installing plants 

abroad or other means and ways of doing business globally. As a result, internationalization is 

perceived as a more comprehensive phenomenon than exportation, which is still the main strategy 

used by companies to enter international markets, especially those firms smaller in size. There are 

several ways a company can relate to the external market, such as exportation, importation, 

partnerships, strategic alliances, licensing, joint ventures, foreign direct investment and others. 

67


Based on this broader approach, one can understand that internationalization is associated with 

issues of global competitiveness, where firms seek strategies in foreign markets or even shares in the 

domestic market in order to prepare themselves to face increased competition due to the opening of 

their domestic economy. One can further explore knowledge factors from this broader approach to 


5. Conclusion 

Our research demonstrated that there are other factors of knowledge, beyond marketing knowledge, 

that contribute to the internationalization of MSEs. These factors are associated with a more 

integrated perspective of knowledge, where results are linked to a combination of various forms of 

knowledge. This approach reinforces the central role of knowledge in the internationalization of 

business and expands the perspectives of knowledge management in this process. In addition, it 

addresses the intrinsic limitation of MSE resources, which must compensate for the lack of tangible 

resources by making use of intangible resources. 

Cultural knowledge was shown to have a significant impact on the international performance of MSEs. 

This refers to the knowledge of values, customs and ways of thinking. The surveyed companies claim 

to be sensitive to cultural aspects, to undergo business trips to their target markets or to follow trends 

and information obtained through the channels of communication and Internet. It is worth mentioning 

the role of ICTs in the internationalization process of small-sized companies, mainly because they 

open up opportunities for acquisition, dissemination and information sharing, which are all core 

activities in knowledge management processes. 

It was also observed that, to obtain success in international operations, it is necessary to have or 

adopt an entrepreneurial profile towards the internationalization process, and such a profile, in turn, 

plays an important role in the company's entry into foreign markets. This competence is related to 

cognitive processes, namely the recognition of an opportunity and the capacity to absorb and to find 

ways to exploit it (entrepreneurial knowledge). 

Another important discovery by this study is that MSEs are now further using them as a means to 

overcome difficulties related to their size and to boost their insertion into foreign markets. It was 

observed that network knowledge helps to reduce the effects of physical distance, keeping in mind 

that networks contribute to entering into geographically distant and culturally distinct markets. 

Networks act as bridges enabling companies to access foreign markets. 

Finally, this study evidenced that the path to a successful internationalization is directly related to a 

combination of knowledge factors that are presented as significant differentials for companies that 

operate in the international market, mainly due to the high degree of competitiveness that firms are 

required to maintain as to remain competitive in their markets. The tacit dimension of knowledge, 

especially, presents itself as a major differential used by companies locked in international 

competition. However, the application of the Mejri and Umemoto model (2010) to Brazilian reality has 

found that it is not possible to identify precisely how the acquisition and use of such an inexpressible 

knowledge occurs. 

Attention should be given to the fact that much remains to be studied and other contributions should 

be made to deepen and enrich the topic. Future studies can be performed with other commercial 

segments and in different regions of Brazil and the world. Companies with different sizes can be 

surveyed in order to verify the contributions of knowledge to their internationalization process, 

especially considering the peculiarities of the unspoken dimension. Again, as a suggestion, this study 

can be replicated in a quantitative perspective, as a sample, to enable generalization of results and 

adequacy of the model. 

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Complexity, learning, and sustainable innovation, Butterworth Heinemann: Boston, Burlington-MA, USA, pp. 

3-67. 

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model’, Journal of International Entrepreneurship, vol. 8, no.2. pp. 156-167. 

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dinâmica da inovação, 20 th ed, Rio de Janeiro: Campus. 

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International Entrepreneurship, vol.3, no. 1, pp.37–52. 

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exportação brasileira _ Brasil: 1998-2009, Sebrae: Brasília, Brasil. 

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69

Theoretical Base for Developing a Holistic Knowledge 

Management Strategy for Effective Learning in 

Organizations 

Johnson Dehinbo 

Tshwane University of Technology, Pretoria, South Africa 

Dehinbooj@tut.ac.za 

Abstract: Organizations in today’s economy are realizing the importance of knowledge as a strategic resource 

for competitive advantage thereby necessitating sound knowledge management initiatives. It therefore becomes 

imperative for organizations to determine a suitable knowledge management initiative that would utilize their 

resources effectively towards satisfying the demands of the business strategy. Central to this is the determination 

of the suitable approaches to implement the knowledge management initiative. The newness of knowledge 

management as a conscious initiative does not give executives examples to learn from. An interpretive approach 

is used to study, explain and discuss relevant issues. This study therefore begins by discussing the main 

approaches to implement a knowledge management initiative. The nature and characteristics of knowledge that 

an organization deals with is found to relate to the type of approach to implement a knowledge management 

initiative. The essential components for developing a knowledge management initiative are discussed as well as 

the impact of developing a knowledge management strategy. It was found that the knowledge management 

strategy and business strategy must drive each other and this is possible only if the two are in perfect alignment. 

In the light of the need to primarily adopt one approach and use the other approach in a supportive role while 

recognizing the importance of even indigenous knowledge management also, this study concludes that without 

necessarily putting a specific ratio, a holistic approach involving codification, personalization and indigenous 

knowledge management would be of essence towards satisfying organizational learning goals. 

Keywords: organizational learning, knowledge management initiatives, indigenous knowledge management, 

alignment 


Organizations are populated by employees and people representing stakeholders who function at 

different levels including cognitive, affective, behavioral, spiritual, and so forth (van Tonder, 2004, 

p.155). Effective functioning of these organizational stakeholders would involve continuous learning to 

create new knowledge and the continuous management of the knowledge for future stakeholders to 

learn more. Learning in organizations is therefore very critical towards effective management of 

knowledge. Organizations in today’s economy are realizing the importance of knowledge as a 

strategic resource for competitive advantage thereby necessitating sound knowledge management 

initiatives. It therefore becomes imperative for organizations to determine a suitable knowledge 

management initiative that would utilize their resources effectively towards satisfying the demands of 

the business strategy. Central to this is the determination of the suitable approaches to implement the 

knowledge management initiatives. The newness of knowledge management as a conscious initiative 

does not give executives examples to learn from. The nature and characteristics of knowledge that an 

organization deals with is likely to relate to the type of approach to implement a knowledge 

management initiative. Using an interpretive approach to study, explain and discuss relevant issues 

towards developing a holistic knowledge management strategy for effective learning in organizations, 

this study therefore begins with the discussion of the background to the management of knowledge. 

A keyword in the term “knowledge” is “know” referring to a form of understanding. Nonaka and 

Takeuchi in Singh (2007) define knowledge as a “true and justified belief”. Kargbo (2005) asserts that 

“knowledge of the natural world is not only confined to modern science”. Therefore, although 

knowledge is of strategic importance in today’s business and organizations, it has its root in local and 

indigenous knowledge. A holistic approach to knowledge management should begin with a look at the 

root of knowledge in the form of local and indigenous knowledge. 

1.1 Local and indigenous knowledge 

Rao (2006) explains that “the basic component of any country’s knowledge system is its Indigenous 

Knowledge System”. This is very important given the fact that before civilizations, indigenous people 

in different countries have been surviving using knowledge that is local and peculiar to a group of 

people possibly related by a geographical location. For example, people who live close to river have 

local knowledge of swimming and fishing for their survival. Those in the rain forest have local 

70


knowledge such as farming and hunting to provide their means of livelihood. Such knowledge can be 

referred to as indigenous knowledge. People have therefore continued to harness knowledge over the 

years up to the level today where knowledge management is of critical importance in organizations. 

1.2 Knowledge management in business organizations 

Hansen et al (1999) confirms that “knowledge management is nothing new” as family business 

owners have been transferring their commercial wisdom unto their children for years just as master 

craftsmen have also been teaching their trades to apprentices. It is therefore not surprising that 

workers have been exchanging ideas, information and know-how on the job, but Hansen et al (1999) 

further asserts that chief executives of business organizations started emphasizing knowledge 

management in the 1990s. 

The current knowledge economy highlights the role of knowledge for efficiency and competitive 

advantage especially in large organizations. Milton et al (1999) identified Knowledge Management as 

becoming an important subject in the business community. As such, viewpoints and approaches to 

Knowledge Management focus around the notion that “the essence of Knowledge Management is to 

provide strategies to get the right knowledge to the right people at the right time and in the right format 

(Milton et al, 1999)”. A simple example is the provision of knowledge on the best supplier for a 

particular product offering reasonable price at a particular period. The management of knowledge 

leading to a degree of certainty on such knowledge is crucial to the profitability of such organization. 

1.3 Knowledge as strategic resource and its management in today’s knowledge 

economy 

Prominent shifting winds of change evident in today’s business environment were noted by Snyman 

and Kruger (2004) as responsible for making enterprises to realize the strategic value of knowledge 

as being the key organizational asset. Helms et al (2008) observes that fierce competition and change 

in today’s business environment suggest knowledge or intellectual capital as “an important 

organizational resource for creating strategic value”. Zack (1999) observes that while other traditional 

resources such as capital or money can be used to gain competitive advantage, such advantage may 

not be sustainable as competitors may imitate or acquire such resources to develop substitute 

products. On the other hand, superior knowledge can enable companies to coordinate and combine 

traditional resources and capabilities in new, innovative and distinctive ways with the potential to 

provide more value for the customers. Snyman and Kruger (2004) support this assertion with the 

works of Murray (2000) which “refers to knowledge as one of businesses’ most precious assets that 

allows them to be competitive”. This is because knowledge allows organizations to devise and offer 

innovative ways of meeting customers’ expectations leading to profitability (Dehinbo, 2011). 

Furthermore, the strategic value of knowledge is noted by Snyman and Kruger (2004) which attributes 

the advantage and sustainability of knowledge to the reason that “knowledge generates increasing 

returns and continuing advantage”. This is because knowledge cannot simply be depleted with use. 

Rather, its continuous use increases knowledge in circulation. When a knowledge owner gives it to 

another person, he/she still has the knowledge while the second person also has it. In actual fact, the 

knowledge owner may even now be having more of the knowledge as he/she rehearses as the 

knowledge is being shared with or given to the second person. This is the reason why knowledge as 

an asset increases with use because the more one knows, the more one can learn. Comparatively, 

material assets decrease in value as they are used, shared or given to others (Snyman & Kruger, 

2004). However, Hansen et al (1999) point out that in order for knowledge to be used and managed 

effectively, business executives have to examine the form of knowledge underlying their businesses. 

This is because the form of knowledge underlying the businesses would determine the form in the 

knowledge can be extracted, stored and made available to others. The next section therefore 

presents the nature and characteristics of knowledge. 

1.4 The nature and characteristics of knowledge 

An important question asked by Zack (1999) is: “What is it about knowledge that makes the 

advantage sustainable?” The answer to the question lies in the nature and characteristics of 

knowledge that makes it easy to be shared as itemized above. However, some forms of knowledge 

are easier to share than others. Drawing on the taxonomy of knowledge from various previous 

studies, Nonaka (1994) in Alavi and Leidner (2001) explains two types of knowledge as tacit and 

71


explicit. Tacit knowledge comprises of both cognitive and technical elements rooted in context-specific 

action, experience and involvement. The cognitive element consists of mental maps, paradigms, 

beliefs, and viewpoints while the technical component relates to concrete skills, know-hows and crafts 

as applicable to a specific context (Alavi & Leidner, 2001). Al-Hawamdeh (2003) in Singh (2007) 

summarizes the characteristics of tacit knowledge in the statement below: 

“Tacit knowledge is personal and embedded in the minds of people. It is intuitive, 

contextual, linked to experience and memories, and is difficult to formalize, document 

and communicate. Such knowledge is difficult to identify, quantify and convert into real 

value, unless a structured approach is not adopted to manage such knowledge. --- Such 

knowledge is acquired through experience, reading, learning, training and interaction. It 

is different from the knowledge available in written records, as it is hidden in minds and 

processes in the form of expertise, skills and competences.” 

Dalkir (2005, p.8) explains that characteristics of tacit knowledge include ability to adapt to new and 

exceptional situations, ability to collaborate and transmit / share vision, expertise, know-how, knowwhy 

as well as mentoring to transfer experiential knowledge on person-to-person basis. An example 

of tacit knowledge is the knowledge of a research supervisor. 

Explicit knowledge is one that can easily be expressed, articulated or encoded (codified), gathered, 

organized, transferred or communicated in symbolic form and shared with others (Alavi & Leidner, 

2001; Singh, 2007). Examples include owners’ manuals, study manuals, online database, patents etc. 

Dalkir (2005, p.8) also indicates that characteristics of explicit knowledge include ability to organize, 

systematize and document knowledge in easily accessible forms. 

According to Kothuri (2002) some theorists indicate a “subset of tacit knowledge that can be 

transformed into explicit knowledge”, referred to as “Implicit Knowledge”. The process of such 

conversion from tacit to explicit and vice-versa are called externalization and internalization 

respectively (Dalkir, 2005, p.53; Leibold et al, 2005, p.194). Conversion from tacit to tacit is called 

socialization. As stated by Dalkir (2005, p.54), socialization “consists of sharing experiences through 

observation, imitation and practice”. 

After discussing the nature and characteristics of knowledge, it is then important to consider the 

implementation of knowledge management. This is presented next. 

1.5 Implementing knowledge management 

Hansen et al (1999) note that the rise of networked computers has made it possible, easier and 

cheaper to codify, store, and share explicit knowledge. This is unlike the situation for tacit knowledge 

which requires social interaction. As a result, organizations using knowledge management are faced 

with the choice of whether to invest heavily in computer systems for managing explicit data or to 

invest in ways of enhancing interaction between knowledge experts and employees to transfer and 

share tacit knowledge. Hansen et al (1999) refer to these two approaches as codification strategy and 

personalization strategy respectively, but note that due to the newness of knowledge management as 

a conscious practice, executives lack successful models that can be used as guides. 

Therefore, this article discusses the two approaches namely the codification or technology-centric 

approach and the personalization of process-centric approach. Furthermore, the article proposes a 

strategy involving a holistic approach to enable a successful knowledge management implementation. 

2. Codification, personalization and other approaches 

2.1 Codification 

Codification is a people-to-document technology-centric approach. Hansen et al (1999) indicate that it 

involves extracting knowledge from the person who developed it, making the knowledge independent 

of that person by removing client sensitive information, converting it into the forms suitable for specific 

storage (e.g. database, spreadsheet, scanned image or word processing document) and storing it on 

desired medium which is usually a computer-related medium. By so doing, many people are able to 

search for and retrieve the stored codified knowledge directly without going through the original 

developer of the knowledge. Hansen et al (1999) observes that the approach enhances scalability in 

reuse of knowledge and therefore enhances the growth of business. PKM (2008) observes that 

72


reusing knowledge is faster than recreating it, thereby emphasizing the importance of capturing 

knowledge so that it can be transferred easily. 

A good example is the publication of research articles in journals. One can imagine how difficult it 

could have been if millions of people are requesting such articles from the authors directly. Hansen et 

al (1999) mention Ernst & Young Consulting and Anderson Consulting among companies that have 

successfully implemented the codification approach in their business, but with heavy investment in 

computing technologies, training and focus on generating large overall revenues from many small 

revenues derived from general solutions to clients. 

2.2 Personalization 

Personalization is the process-centric approach in which knowledge is tied to the knowledge 

developer (person) and is shared mainly through person-to-person dialogue / contact. Knowledge that 

has not been codified or which possibly couldn’t be codified is transferred through brainstorming 

sessions and one-to-one interactions (Hansen et al, 1999). 

A good example in higher institutions is the mentorship and supervision of research studies. Hansen 

et al (1999) mention McKinsey & Company and Bain & Company among companies that have 

successfully implemented the personalization approach in their management consulting businesses, 

but with heavy investment in building network of people via visits, hiring consultant directors, 

telephone, video-conferences etc. Technology use here is limited to helping people to communicate 

and not for storing knowledge objects. Hansen et al (1999) further note that deeper insights are 

collectively arrived at by going back and forth on problems that the people need to solve. This results 

in highly customized services that are charged exorbitantly in line with the logic of “expert economics”. 

2.3 Indigenous knowledge management in organizations 

The running of an organization involves the use of various forms of knowledge. While the formal 

education knowledge is predominantly commonly used, an organization definitely has local 

knowledge that may be considered “indigenous”. These include knowledge necessary to ensure 

participation and cooperation by all staff to ensure dignity with communality in the spirit of “ubuntu”. 

“Ubuntu” is an African idea of sharing resources among people in a community with the goal of 

satisfying every member. In an organization, this could be aimed at enhancing organization’s culture. 

A good example is the culture of contributing to buy presents for staff members celebrating one thing 

or the other e.g. marriages, birthdays etc. This gives a sense of belonging. 

Other indigenous knowledge in organizations could be used to manage the organization’s politics, 

and to encourage communications. Others include knowledge to encourage mentorship, to seek 

divine guidance and favor, to promote peaceful and joyful atmosphere, to ensure partnership with 

other organizations and to ensure relevance and support within the community in which the 

organization is situated (Ansari et al, 2002; Beets & le Grange, 2005; Schein, 1985; Hrebiniak, 2005, 

p.25; Rao, 2006). 

2.4 The need for a holistic approach to knowledge management 

The above discussions highlight the use of different approaches to manage knowledge. Organizations 

cannot restrict themselves to one approach only. Organizations that adopt codification approach 

would sometimes still have to adopt socialization for personalization by bringing people together to 

share knowledge via meetings, emails, electronic discussion forums, etc. These, according to Hansen 

et al (1999) are to ensure “that documents are not blindly applied to situations for which they are ill 

suited”. Organizations that adopt personalization approach still also need to develop electronic 

documents, but instead of using such documents to provide knowledge objects, they could use the 

documents to get up to speed on a particular issue and to find out previous works on the topic. 

Thereafter, they could continue with their personalization approach e.g. by consulting the experts on 

the previous works identified (Hansen et al, 1999). 

Hansen et al (1999) suggest an 80-20 split in which an organization achieves 80% adoption of one 

approach and 20% adoption of the other approach in a supportive role. However, in the light of the 

importance of even indigenous knowledge management also, we suggest that without necessarily 

putting a specific ratio, a holistic approach involving codification, personalization and indigenous 

73


knowledge management would be of essence. Towards this goal, we present essential components 

for knowledge management initiatives. 

3. Essential components for knowledge management initiatives 

3.1 Process 

The business problem being resolved with a Knowledge Management (KM) initiative needs to be 

addressed through a thorough understanding of the underlying intricacies of the business process 

(Perez & Hynes, 1999). However, KM involve a variety of possible processes involving activities 

through which knowledge is discovered or captured, shared and applied (Becerra-Fernandez & 

Sabherwal, 2006). These processes are supported by sub-processes. The “knowledge discovery” 

process is supported by combination and socialization, while the “knowledge capturing” process is 

supported by externalization and internalization. The “knowledge sharing” process is supported by 

socialization and exchange while the knowledge “application” process is supported by direction and 

routine. Becerra-Fernandez and Sabherwal (2006) note that socialization sub-process supports two 

KM processes namely discovery and sharing. Other categorization of KM processes are available in 

various KM literature and various technologies support one or more processes. 

3.2 Technology 

The business world is one of the spheres of our society benefiting tremendously from the use of 

Information and Communication Technology (ICT). In this era of knowledge economy, Singh (2007) 

states that: 

“To be successful in the emerging knowledge economy, new processes, skills, and 

techniques that help to generate, manage and handle new knowledge need to be 

developed and practiced by information specialists.” 

In this regard, Handzic and Zhou (2005, p.60) indicate that Information Technology (IT) is commonly 

used to “support the capture, creation and sharing of knowledge assets, e.g. locating useful 

knowledge, transferring best practices, connecting people with relevant interests and supporting 

intelligent problem-solving”. Similarly, Wasko and Faraj (2000) in Handzic and Zhou (2005, p.60) 

stress the fact that communication mediated by IT not only provides a quick way to receive valuable 

information but also provides “better access to knowledge from a large pool of people”. Becerra- 

Fernandez and Sabherwal (2006) highlight how the utilization of leading-edge Information 

Communication and Technology (ICT) systems enables dramatic improvement in Knowledge 

Management (KM) by supporting KM in new ways not earlier possible. 

KM systems targets the goal of tapping “into the knowledge of the individual and the organization and 

disseminate it throughout the organization to derive operational and market improvement” (Martin et 

al, 2005, p.227) thereby bringing past knowledge on present activities and subsequently leading to 

increased organizational effectiveness (Maier & Hädrich, 2006). Handzic and Zhou (2005, p.64) 

classified many technologies being used to facilitate and support Knowledge Management into seven 

categories according to the processes they support and the objective they aim to achieve. These 

include knowledge storage technologies, knowledge search / retrieval technologies, knowledge 

delivery / sharing technologies, knowledge discovery and visualization, knowledge utilization 

technologies, platform technologies and knowledge access technologies. The seven types of 

Knowledge Management technologies highlighted previously are not mutually exclusive. Some may 

be used to support multiple processes and some are often combined and used in a way that produces 

a synergic effect. However, Hansen et al (1999) stress the fact codification requires heavy investment 

in technology for managing explicit knowledge. 

3.3 Knowledge management context (corporate culture/climate) 

The environment in which a KM initiative is to be used has two relevant aspects namely culture and 

climate. Culture refers to the prevailing characteristics such as reading, talking, sharing, language, 

explorative attitude, promptness etc to support knowledge work, while climate refers to temporal 

aspect of current moods, financial state, leadership style etc. Culture and climate add up to the 

context that could either hamper or enhance KM initiative (Perez & Hynes, 1999). As an example, an 

organization has the culture of closing by 1pm on Fridays. The advent of a new leadership in this 

organization brings a new order of scheduling seminars by 1pm on Fridays but with refreshments to 

74


encourage attendance while gradually changing such organizational culture towards enhancing 

productivity. 

3.4 People 

Knowledge originates from people and is shared with other people. Fink and Disterer (2006) indicate 

that most professional services sell the expertise of their people. Perez and Hynes (1999) stress the 

need for motivating people to acquire and share knowledge just as Hansen et al (1999) suggest a 

system to get people to document their knowledge in electronic repository. 

3.5 Content 

The building blocks for a KM initiative are data and information which need to be identified and 

logically organized in a way that would make them actionable. This implies that content in a KM 

initiative changes and a successful knowledge undertaking should provide a system to accommodate 

changes (Perez & Hynes, 1999) thereby providing electronically accessible knowledge base (Snyman 

& Kruger, 2004). Just as Perez and Hynes (1999) stress the need for motivating people to acquire 

and share knowledge, people need to be encouraged to always search for new contents and seek 

innovations to put organization in position of competitive advantage. 

4. Developing a knowledge management strategy 

4.1 Aligning knowledge strategy with business strategy 

A well-formulated business strategy, according to Helms et al (2008), provides “focus and direction for 

resources utilization and business operations”. Strategy balances external environment (opportunities 

and threats) with internal capabilities (strengths and weaknesses) of an organization while knowledge 

strategy balances knowledge-based resources and capabilities to the required knowledge for 

providing superior products and services (Zack, 1999). Tiwana (2000, p.188) cited in Snyman and 

Kruger (2004) states that: “knowledge management and business strategy must drive each other”. 

This is possible only if the two are in perfect alignment. As an example, Hansen et al (1999) suggest 

that a fast, standard and reliable reuse business strategy aligns with codification while creative, 

innovative, rigorous and specialized business strategy aligns with personalization using tacit 

knowledge. 

4.2 Setting objectives 

Snyman and Kruger (2004) state that “vision without knowledgeable reasoning is at best nothing more 

than dreams” and therefore emphasize the need to formulate organizational goals brought into the 

perspective with knowledge of internal as well as external forces impacting on the organization. 

4.3 Establishing strategic initiatives 

Business strategy creates “demands” that can only be satisfied successfully with appropriate 

initiatives (Hrebiniak, 2005, p.47). Snyman and Kruger (2004) indicate that assessment of internal as 

well as external knowledge would enable identification of opportunities to create desired future. This 

would involve details of how the organization could use knowledge management initiates to achieve 

long-term organizational goals. 

4.4 Strategy institutionalization 

It is important that strategies should be institutionalized to ensure its effectiveness. Snyman and 

Kruger (2004) emphasize the need to communicate knowledge and understanding of strategy 

throughout an organization in order to ensure successful execution of the strategies. 

5. Conclusion 

Knowledge has been very important from ancient days, but organizations in today’s economy are 

realizing that knowledge is a vital strategic resource for competitive advantage thereby necessitating 

sound knowledge management initiatives. The nature and characteristics of knowledge that an 

organization deals with relates to the type of approach to implement the knowledge management 

initiative. Similarly, previous studies agree that knowledge management and business strategy must 

drive each other and this is possible only if the two are in perfect alignment. It therefore becomes 

75


imperative for organizations to determine a suitable knowledge management initiative that would 

utilize their resources effectively towards satisfying the demands of the business strategy. Central to 

this is the determination of the suitable approaches to implement the knowledge management 

initiative. In the light of the need to primarily adopt one approach and use the other approach in a 

supportive role while recognizing the importance of even indigenous knowledge management also, 

this study concludes that without necessarily putting a specific ratio, a holistic approach involving 

codification, personalization and indigenous knowledge management would be of essence. 

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76

Organizational Growth: Dynamic Capabilities as a Source 

of Sustainable Competitive Advantages – Literature Review 

María Fernanda Díaz Delgado, Hugo Ernesto Martínez Ardila and Edna Rocío 

Bravo Ibarra 

Universidad Industrial de Santander, Bucaramanga, Colombia 

maria.diaz@correo.uis.edu.co 

hugo.martinez@correo.uis.edu.co 

erbravoi@uis.edu.co 

Abstract: Nowadays, it is widely accepted that the determinants of organizational growth are highly related to the 

intangible assets of organizations. In this context, knowledge and innovation become central elements in 

organizations in order to obtain competitive advantages to create and wealth capture. The aim of this paper is to 

improve the understanding about the generation of sustained competitive advantages to promote organizational 

growth. This objective is approached from the view of the relationship between dynamic capabilities and 

innovation theories. By a systematic literature review method, a research agenda is developed from the study of 

articles retrieved from ISI Web of Knowledge and Scopus databases. The review comprises three main phases: 

the first phase was related to the equation search and identification of information; the second phase, which is 

related to the coding and processing of the information in the review, and, the third phase is the report of 

quantitative but mainly qualitative results supported by the review. The quantitative results were based on 

bibliometrics analysis and the qualitative results are explained from a narrative methodological perspective. The 

three methodological phases were followed and validated by an expert panel that advised fundamental criteria 

and parameters used in the review. The results obtained highlight innovation capability as a fundamental 

construct in the conceptual relationship between dynamic capabilities and innovation, and as the main 

mechanism to have sustained growth in organizations. Furthermore, a structural approach is used in a framework 

based on the principal components of innovation capability through the processes for knowledge creation, 

absorption, integration, and reconfiguration. 

Keywords: dynamic capabilities, innovation capability, organizational growth, competitive advantage 


This review aims at understanding relevant literature on the relationship between dynamic 

capabilities, competitive advantage and organizational growth. The review seeks to: enquire about the 

conceptual evolution of dynamic capabilities and its components: adaptive capability, absorptive 

capability and innovation capability; define the importance of dynamic capabilities for achieving and 

sustaining competitive advantage, and, investigate the relation between sustainable competitive 

advantage and growth through improved organizational performance. The evidence showed that 

organizational growth is a phenomenon that ensures the survival of firms competing in dynamic 

environments by generating increased interest in developing business literature (Geroski, 1995; 

Sutton, 1997). Organizational growth is the door to introduce innovation and technical change within 

companies seeking competitive advantage to meet the dynamic market from a better position 

(Pagano & Schivardi 2003). Currently, the performance of organizations in dynamic environments is 

characterized by having: undefined limits without a clear structure of the industry; business models 

with uncertain success; and, ambiguous and changing participants (suppliers, customers and 

competitors). Performance is affected by factors determined by the business cycle, technological 

innovation, regulatory change and competition, as well as variations in patterns of demand on the 

market within which an organization interacts (Wang & Ahmed 2004). 

From the theory of resources-based view, it is difficult to detect opportunities in both external threats 

and internal strengths and weaknesses (Cruz González & Lopez Saenz 2009) and therefore, we 

study the phenomenon from the dynamic capabilities theory that explains how capabilities are 

restructured according to environmental change. For organizations, it is important to build and renew 

their skills and resources in order to survive the market dynamism (DJ Teece 2007) since with time, 

resources lose their competitive significance (Ambrosini & Bowman 2009). However, the renewal of 

resources must keep pace with organizational change, a radical or incremental in order to maintain 

and achieve competitive advantage (Brown & KM Eisenhardt 1997). Literature trends show that 

dynamic capabilities are the main source for sustainable competitive advantage when the 

organization competes in fast paced environments (D. Teece & G. Pisano 1994). However, for some 

authors, the direct relationship between dynamic capabilities and achieving sustainable competitive 

advantage remains fragile because the dynamic capabilities do not lead directly to achieving a 

77

María Fernanda Díaz Delgado, Hugo Ernesto Martínez Ardila and Edna Rocío Bravo Ibarra 

competitive advantage, yet, they provide a basis for achieving it through the combination of new 

resources (Cepeda & Vera 2007). For purposes of highlighting the conceptualization of dynamic 

capabilities, several authors refer to the need to create a difference between dynamic capabilities and 

operational capabilities (Zahra et al. 2006; Zollo & Winter 2002). In order to define this conceptual 

gap, this review determined the development and re-conceptualization of dynamic capabilities and 

their components as well as the linkage between dynamic capabilities and organizational growth from 

a knowledge-based view of the scientific literature available at ISI Web of Science and Scopus 

databases retrieved through a systematic examination process. 


The literature review was carried out searching for studies in ISI Web of Science and Scopus. The 

search equation was performed by using keywords related with the topics: organizational growth, firm 

or corporate, dynamic capabilities and competitive advantage or sustainable competitive advantage. 

In the case of the ISI Web of Science, the articles were filtered from databases about social sciences 

and then, complemented with studies found in Scopus taking into account that the information overlap 

between the two databases is about 70%. In first selection of articles, we included studies that 

exposed conceptualizations about dynamic capabilities and also included some type of conceptual 

linkage between empirical or theoretical studies on dynamic capabilities, sustainable competitive 

advantages and organizational growth. However, the results of this search were minimal as there was 

not enough content meeting the criteria, which is why we continued our search with the snowball 

method with the aim of finding valuable information reviewing the references of selected studies. 

Exclusion and quality criteria were used to discard those papers without their own definitions; the 

ones having duplication of information. Only seminal papers with elaboration or conclusions from 

theoretical or empirical studies were selected. This way, the final phase was carried out with an expert 

panel that selected 82 scientific papers supporting the elaboration of a research agenda on dynamic 

capabilities, their components, and the theory about sustainable competitive advantage as basis for 

organizational growth. 

3. Descriptive analysis 

Figure 1: Intellectual structure of the articles under revision 

Bibliometric techniques were applied to quantify and analyze attributes embedded in articles from 

scientific journals (Abramo, D'Angelo, & Caprasecca, 2009). This methods help researchers describe 

and map some external and internal properties of a field under study (Estabrooks, Winther, & 

Derksen, 2004). We used the bibliometric co-word analysis technique that involves finding, counting 

and studying the occurrence of keywords in the articles under revision to get a depiction of the main 

topics included in the literature (Ding, Chowdhury, & Foo, 2001). The co-word analysis is based on 

the nature of words as key elements of knowledge, ideas and concepts (Callon, Courtial, & Laville, 

78


1991) and involves relations and interactions as an indication of the core themes in a specific domain 

(Bhattacharya, Kretschmer, & Meyer, 2003; Ding et al., 2001). In this study, we decided to map the 

cognitive structure of the papers analyzed during the revision stage in order to have a general picture 

of main concepts and their relationships to improve the understanding of each paper. Figure 1 shows 

the mapping (intellectual structure) of the co-word analysis carried out on the articles included in the 

references. In Figure 1 we observe the central concepts studied in the articles: innovation, dynamic 

capabilities, innovation capability, knowledge, organizational learning, R&D, and strategic 

management. These concepts are surrounded by others such as: absorptive capacity, competitive 

advantage, market, resources, and SME among others. This map gives us information about the links 

among concepts and the opportunity to either establish new links between the different topics or 

further test and support the ones which have been studied already. Figure 1 shows the relationship 

between keywords exposed by the authors of the articles selected for the literature review. The 

keyword with more occurrences is innovation, followed by dynamic capabilities. However, the 

occurrence of the latter and its link with keywords related to competitive advantage and organizational 

growth was not concurrent. A reason for this is the decision making level of authors and journals 

regarding keyword choice. From another point of view, the qualitative analysis explains the 

relationship of these terms and highlights a possible justification for that is not direct relationship 

between them. 

4. Organizational growth 

Sustained growth is a common goal in organizations. On this subject, there are two important 

consensus in the analysed literature: first, the acceptance that organizational growth does not depend 

on the size of the organization (a principle embraced upon the introduction of Gibrat's law) which 

asserts the existence of small and autonomous forces that produce either favorable or detrimental 

impact on the organization regardless its size (Lee 2010); the second agreement is that growth can 

be measured in terms of organizational performance improvement (J. Yang 2012) and can also be 

related to innovation since this leads to long-term business growth (Calantone et al. 2002, Cho & 

Pucik 2005). One way to generate growth, sustain and develop the performance of organizations in 

rapidly changing environments and maintain long-term success is through innovation (Akman & 

Yilmaz 2008). Thus, innovation is the main strategic tool to achieve sustainable competitive 

advantage (Hardaker 1998) that has moved on from being an election to a strategic necessity 

(Nijssen & Frambach 2000) which should be developed in both of technical and administrative levels 

(Naranjo-Gil 2009). 

5. Dynamic capabilities 

The literature review has shown different definitions about the dynamic capabilities construct, and 

these have been arranged chronologically in Table 1: Dynamic capabilities definitions. The dynamic 

capabilities construct evolved as a result of in-depth study conducted in the past two decades and 

now, it does not only comprise organizations’ skills to cope, but also the capabilities that enable the 

achievement of sustainable competitive advantages, namely: innovation, absorption and adaptation 

capacity (Wang & Ahmed 2007). 

5.1 Adaptation capability 

Chakravarthy (1982) defines adaptation capability as an organization’s ability to identify and capitalize 

on new market opportunities through the strategic flexibility of the company itself (Rindova & Kotha 

2001); the inherent flexibility of the resources available by their rapid adaptation to external demand 

(Camuffo & Volpato 1996), and flexibility in the application of these resources (Sanchez 1995). These 

features enable the organization to balance their exploration and exploitation strategies of 

opportunities (Staber & Sydow 2002). Adaptation capability can be measured by the ability to adapt 

products to market, manage customers and competitors, explore the market, respond rapidly to 

environmental changes (Oktemgil & Greenley 1997) and the ability of management systems to allow 

people to break with past paradigms and evolve quickly to business changes (Gibson & Birkinshaw 

2004). 

5.2 Absorption capability 

This ability was defined as the organizational ability to recognize the value of new information, 

assimilate it and apply it for commercial purposes (Cohen & Levinthal 1990, Szulanski 1996) enabling 

the organization to evaluate and use knowledge from outside, through past experiences (Boynton et 

79


al. 1994). The absorption capacity is needed to obtain the benefit of the complementarities between 

the external and internal organizational know-how (Veugelers 1997). Furthermore, Tu et al. (2006) 

determined that there is a positive relationship between absorptive capacity and organizational 

practices that reduce development time of a product; these practices increase the perceived value by 

customers, thus, there has been growing interest in studying this construct that has led to its reconceptualization. 

The absorption capacity was re-conceptualized by Zahra & George (2002) as 

ACAP. They identified two components in this ability: potential absorptive capacity (PACAP) and 

realized absorptive capacity (RACAP). The first refers to the receptivity of the organization to acquire 

and assimilate knowledge (Lane & Lubatkin 1998), however, it does not guarantee its operation. 

Moreover, the absorption capacity reflects on the ability of the organization to take advantage of the 

knowledge that has been absorbed beforehand. 

The ACAP construct has been used by researchers to explain organization phenomena from different 

topics: organizational learning (Huber 1991, Kim 1998), the industrial economy (RM IM Cockburn & 

Henderson 1998) and dynamic capabilities (Mowery et al. 1996). It is under this latter perspective that 

we developed the literature review presented in this document. 

Table 1: Definitions for dynamic capabilities 

Author Dynamic Capability 

Responsible for the process of creative destruction and characteristic of entrepreneurs 

Schumpeter 1934 

as key players in the process of continuous change. 

Built on hierarchical organizational routines, defined in terms of a Schumpeterian or 

Nelson 1991 

evolutionary context. Named essential capabilities. 

Leonard-Barton 

Organizational skills to achieve new and innovative forms of competitive advantage. 

1992 

Organizational skills to grow, regenerate and adapt knowledge continuously in order to 

Iansiti & Clark 1994 develop and retain organizational capabilities that convert knowledge into useful 

Pisano 1994 

Henderson 

& Cockburn 1994 

Teece et al. 1997 

Eisenhardt 

& Martin 2000 

Makadok 2001 

Zollo 

& Winter 2002 

Winter 2003 

Augier 

& Teece 2007 

Wang 

& Ahmed 2007 

actions. 

Antecedents and strategic routines of the firm, by which leaders alter the resource 

base of the organization (through both of integration and combination of resources) to 

create new strategies to generate value. 

The creation, evolution and recombination of resources to achieve new competitive 

advantages. Named architectural skills. 

A company's ability to integrate, build and configure its internal and external 

competencies to adapt to rapidly to changing environments. 

Strategic and organizational processes that create value in companies operating in 

dynamic markets by manipulating resources into new strategies for value creation. 

Processes through which firms create economic rents to be more effective than their 

rivals in deploying resources 

Patterns learned from collective activities through which the organization 

systematically generates and modifies its operating routines. 

High-level routines affected by change. These are investments made by the company 

to renew its stock of skills. 

Inimitable. The company relies on them to form, reform, configure and reconfigure 

their asset base and thus be able to respond to changing markets and technologies. 

Orientation of the company’s behavior in the continuous integration, reconfiguration, 

renovation and recreation of its resources and capabilities and, more importantly, 

upgrading and rebuilding its core capabilities in response to a changing environment 

to achieve sustainable competitive advantage. 

Augier&Teece 2009 Ability to detect, integrate and reconfigure knowledge. 

5.3 Innovation capability 

It is a dynamic capability that allows the sustainable growth of an organization (McEvily et al. 2004). It 

has also been considered as a strategic resource (Gopalakrishnan & F. Damanpour 1997), and an 

essential element in achieving competitive strategy. The terms innovation capacity, innovative 

capability, innovation capability and innovativeness are used interchangeably throughout the revised 

literature. For some authors, this has hampered the development of innovation theory (Dewett et al. 

2007), whereas for others the difference is minimal (Fariborz Damanpour 1991). There are some 

common points in all definitions of the construct innovation capability that have developed over the 

last 20 years: the innovation capability is a process that involves the application of collective 

knowledge allowing the organization to develop new products or services, through the alignment of 

their innovation strategy and organizational processes facilitating the acquisition and sustaining 

80


competitive advantage (Leskovar-Spacapan & Bastic 2007). These characteristics have generated a 

growing interest in studying, in depth, the practical and organizational factors that favor the creation 

and development of these benefits as part of the structuring of innovation capability. 

Some examples of recent studies of the factors and practices of innovation capability have been 

developed by Suñe et al. (2012), Anderson (2008), Koc (2007) and Garcia Morales et al. (2007). 

Lawson and Samson (2001) argued that innovation capability and innovation occur at different stages 

of the innovation process, where the innovation capability is critical to obtain a decisive result in this 

process. They also suggest that an organization’s innovation capability allows the creation of skills for 

the deployment of resources and reflects the skill to continuously transform knowledge and ideas into 

new products, processes and systems for the benefit of the company and its stakeholders (Hogan et 

al. 2011). 

Organizations with a high capacity to innovate develop efficient processes for continuous innovation, 

which in turn, requires the simultaneous presence of three fundamental processes of the organization. 

The first, is the creation and absorption of knowledge; the second, is the integration of knowledge, 

and the last one is the reconfiguration of knowledge (Verona & Ravasi 2003). The combination of 

these three processes based on knowledge, promote the achievement of innovation. The strategic 

processes of an organization must be managed continuously (Rejeb et al. 2008) to allow it to survive 

to the rapidly changing environment in the long term (Santos-Alvarez-Gonzalez Vijande & 2007). 

Table 2: Definitions of the construct innovation capability 

Author Innovation capability 

Adler & Shenhar 

1990 

The ability to develop new products that meet market needs, (2) the ability to apply 

processes and technologies to generate new products, (3) the ability to develop and adopt 

new products and processes to meet future needs, and (4 ) the ability to respond to 

accidental technology activities and unexpected opportunities created by competitors. 

Kogut & Zander The ability to mobilize the knowledge in employees and combine it to create new 

1992 

knowledge that fosters the creation of new products and innovation processes. 

Lall 1992 

The skills and knowledge necessary to effectively absorb, master and improve existing 

technologies and products. 

Lawson & The ability to transform continuously knowledge and ideas into new products, processes 

Samson 2001 

and systems that benefit the organization and its stakeholders. 

Romijn & Organizational knowledge and other skills needed to improve products and processes, 

Albaladejo 2002 

and develop new products. 

Weerawardena The ability to carry out a series of organizational routines in order to deliver products and 

2003 

services to the market in superior conditions. 

Wang & Ahmed An organization's ability to develop new products or markets through the orientation and 

2004 

alignment of their innovation strategy and innovation processes. 

Sher&Yang2005 The way to acquire and maintain competitive advantage in organizations. 

The way to acquire and maintain competitive advantage in organizations by adapting to 

Zhao et al. 2005 market changes, and, the consequent creation of value through the generation and 

application of knowledge. 

Koc 2007 

Continuous improvement of overall capabilities and resources of the firm to exploit 

opportunities to develop new products / services to meet the needs of the market. 

Xu et al. 2008 

The ability to access the development and implementation of innovative technologies for 

design and manufacturing processes. 

Chen 2009 A firm’s capacity based on its processes, systems and organizational structure. 

Ngo & O’Cass The integration process of applying the collective knowledge, skills and resources of the 

2009 

company. 


Innovation is the key to achieving sustainable competitive advantage (O'Regan et al. 2006). This fact 

has changed the focus of organizational theories from sustaining competitive advantage to innovation 

management (KM Brown & Eisenhardt 1997). Furthermore, there is growing interest in defining which 

organizational processes support continuous innovation, since it has been shown that organizations 

that quickly develop new products, processes or services enjoy competitive advantages and higher 

rates of success in innovation (Kessler & Bierly 2002). Trends such as globalization, increased 

competitiveness, reduced life cycles of products and the rapid pace of technological change, 

emphasize the importance of continuous innovation in today's economy (Carbonell & Rodriguez- 

81


Escudero 2009.) However, the challenge is to carry out the development tasks more quickly, without 

sacrificing quality or eliminating important steps in the development process (Gupta & Souder 1998). 

A key to the continuous development of innovations, are the processes based on the adoption, 

integration and reconfiguration of knowledge, which cyclically enable an organization to innovate 

constantly. However, innovation must be appropriate and consistent with the change of environment, 

for this purpose, organizations need to effectively adjust to survive the new challenges that arise. 

Through capabilities such as adaptation, absorption and innovation, or also called dynamic 

capabilities, an organization prepares to face the uncertain and unpredictable future. Dynamic 

capabilities are the skills an organization has to identify market opportunities, and renew their skills so 

that they are consistent with the opportunities found. In addition, these skills must change according 

to fluctuations in the environment in order to help the organization redefine its resources and renew in 

order to provide a basis to achieve sustainable competitive advantage (L.-M. Lin & Hsia 2011), 

thereby, increasing organizational growth. 

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84

Social Capital and Absorptive Capacity in Value Adding 

Webs: An Empirical Investigation Based on the Case of the 

Djurs Offshore Wind-Energy Network in Denmark 


University of Denmark, Denmark 

sug@sam.sdu.dk 

Abstracts: Economic business activities are embedded in social relations and structures. Therefore, the 

organisational units that create added value are not just isolated individual businesses, but also networks of 

actors. From a relational perspective, networks hold a variety of advantages for their members, such as access to 

valuable resources as information or knowledge. Empirically this paper is sticking to a network in the Danish offshore-sector. 

This network will be analysed from the business perspective as a value adding web. We found that 

trust and a cluster facilitator who is actively analysing the resources of the committed companies and is 

coordinating common training is a driving force in the process of improving absorptive capacity and social capital 

on the web level. 

Keywords: relational view of the firm, value adding web concept, absorptive capacity, social capital 

1. Introduction: The Offshore Wind Energy Business in Denmark 

Denmark is one of the pioneers in the wind energy business. Two of the largest global players of the 

industry are based in Denmark. Over the last 20 years the industry has grown strong and became a 

general contributor to the Danish economy. The branch accounts for 8.5 % of Denmark´s total exports 

(Cornett/Sørensen 2012: 168). 

Due to its long coastal line relatively to size, no deep sea areas and short distances to harbour 

facilities Denmark is an ideal country to further establish offshore capacity. This is especially the case 

for off-shore windmills (Cornett, 2012). Now and for the next decades the sector will undergo 

changes. Subsidy-policy on the European level as well as the development on the global energy 

markets will further create competition. As the huge utility companies and the turbine manufacturers 

will find huge potential for further off-shore business in Europe they will additionally have to explore 

new markets. It is no longer just OECD markets who are diversifying their national “energy – mix” by 

investing into wind energy technology. Especially China and India became important markets and 

production sites and North Africa is already firmly on the wind energy map (GWEC 2011). From the 

production site new low cost producer e. g. in countries like India are coming into play (CEPOS 2009). 

For the wind-mill sector this means to further innovate their products and the production site but also 

to investigate into their social capital. The process of adapting new frame-conditions very fast means 

that organisations have to put more stress on learning how to set-up new projects related to new 

conditions. Lane and Lubatkin (1998) are accentuating in this context, that the importance of 

cooperative alliances to capability development places a premium on a companies` skills in 

identifying, assimilating and utilizing a partner´s knowledge. Through learning within cooperative 

networks the firms can speed capability development and minimize technological uncertainties (Grant 

/ Baden-Fuller, 1995). 

From the perspective of the single member companies in Djurs Windpower, the participation in the 

service-network is not just an important investment in their social capital it is an investment in the 

know-how and especially in their absorptive capacity. 

Empirically this study is doing an investigation into the Djurs Windpower (service- network) related to 

the Anholt wind-farm situated in-between Grenå and Anholt in Denmark. This network is facilitated by 

a non-profit organisation which was founded to help the companies in all matters of developing 

common ground and identifying all kinds of potential for synergies. By exploring the relational 

structure of the network and the impact of common initiatives and the way how the network is 

facilitated the elaborated models and scales will be reflected. The exploration is basing mainly on in – 

depth interviews with the main actors of the network. 

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2. Value adding webs from the business perspective 

In the context of this research networks and/or clusters are understood as overlapping value adding 

webs around single network actors. We understand networks of companies and organisations as a 

certain number of value adding webs around single firms overlapping each other and being 

“constituted by a connection of horizontal, vertical and lateral value adding activities contributed by 

different actors in proximity to one another which all act in relation to a specific industry sector (Brown 

et al., 2010, Festing et al., 2010). 

“The actors have relationships characterised by interdependencies of different strength and quality 

that define the boundaries” (Brown et al., 2007: 20). This underlying definition does by purpose take 

the perspective of the single firm embedded into a value adding web. It makes an evaluation of 

valuable resources on different levels possible and is linked into the understanding that networks of 

actors and not single firms as such are the relevant unit of analysis regarding value creation. 

So the main motivation of the single firms to participate in collaborating networks and/or regional 

clusters is to get access to valuable resources like demand and/or the exploration of new businesses. 

Depending on the kind of collaboration the processes in networks encompass different kinds of how 

to combine resources. E. g. in the case of Djurs windpower we are looking on a network with different 

groups of companies. One group of companies (hotels and catering services) can stick to their 

standard service products, while another group of companies who are cooperating in the field of 

assembling, technical service and maintenance, have to adapt much more of the needs of their 

partners. Transactions of partners, which are related to processes of combining resources, need the 

exchange of information and learning. But if there is not common ground the process of identifying 

synergies can be limited. Especially the processes of scanning, decoding, combining and evaluating 

the partner skills can be fragmentary. In most of the cases where synergies are basing on firmspecific 

competences the initiation of a managed process of analysis and development is a need. 

Without being able to understand the competences of the partner it is not possible to find potential for 

synergies within the cooperation. In this context Cohen and Levinthal (1990) have coined the term of 

absorptive capacity. 

The cooperative network Anholt Wind-Farm is related to the Danish Windmill Cluster and its nonprofit-organisation 

Djurs Windpower can be seen as a pilot-project for this business in Denmark. 

Other offshore-farm owners have copied the concept and try to set this concept up in the near future. 

While the huge companies in the centre of the network have resources to schedule their own maps to 

further develop and to manage their cooperation, it is for SMEs extremely important to be supported 

in developing and fostering their internal and external networks (Gebauer, et. al., 2012). For SMEs 

providing standard services it is important just to get access to all the members and to develop a good 

functioning and reliable relationship. Other members came in with highly firm specific products from 

other branches – e. g. bridge-building – and had to adapt the competences of partner members 

before they could start to specify their product regarding the needs of the offshore-wind-farm. 

3. Value adding webs and the preconditions to create rents 

As economic interactions e. g. innovation, other kinds of strategic activity but also operational 

business is embedded in social relations and structures it is social capital and all matters of acquiring, 

assimilating, transforming and exploiting information which becomes a bottleneck in the process to 

rent creation (Granovetter, 1991; Hagedoorn, 2006; Flatten, et. al. 2011). 

On the relational level joint activities as well as the quality and strength of the underlying relationships 

between horizontal, vertical and lateral actors in a cooperative network do form relevant resources. 

Exchanging, combining and developing knowledge is not possible without social capital and/or 

absorptive capacity on the web level (Adler/ Kwon, 2002). 

We define social capital as the sum of (1) network based resources like relationship to actors 

(persons as well as companies, other kinds of organisations and the access to resources via these 

ties for example knowledge to the network, (2) trust and (3) norms and values which are creating 

reciprocal behaviour (Coleman, 1994). 

Absorptive capacity means the capacity to acquire, to assimilate, to transform and to exploit 

knowledge for commercial purposes (Flatten, et. al., 2011). 

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It is expected that relational rents, the more they are depending on inter-firm cooperation are 

depending on social capital. The more dynamically the process of developing social capital the more 

important is absorptive capacity on the web- as well as on the firm-level. 

Organisations with a similar stock of knowledge can relatively easy exchange knowledge, i.e. 

knowledge is mobile in these constellations (Tallman et al., 2004: 263). Regarding the different stocks 

of company-knowledge it is useful to differentiate between component and architectural knowledge. 

Component knowledge is related to industry characteristics and specificities and can be rather 

easily exchanged between the actors from the same industry environment with similar technological 

backgrounds, while architectural knowledge is firm-specific and more difficult to be shared even in a 

network context (Tallman et al., 2004). 

The stronger the dependence of a cooperative network on the (re-)combination of architectural 

knowledge in a setting of complementary resources to get synergies the more moderation and 

management is in need to acquire absorptive capacity on the web-level. 

To improve the social capital and the absorptive capacity does not just mean to learn and to share 

information it means also to manage classical resource-dependence where the knowledge-deficits are 

related to. It is not to expect that companies are going to share that kind of company-specific 

knowledge, where their competitive edge is basing on. It doesn´t matter if the network will lack 

absorptive capacity without sharing this knowledge or not (Pfeffer/Salancik, 1978). 

As we expect that the quality of absorptive capacity impacts the quality of the social capital and rent 

creation the question is what kind of rents are to expect? 

Actors can benefit from building relationships with multiple disconnected networks – or sub-networks 

– and use these connections to obtain information within this collaboration and to control advantages 

in relation to others (Dyer/Singh, 1998). This process needs a sound base of absorptive capacity, or 

at least a moderator able to bridge them. The Burt-rent literally results from bridging structural holes 

(Kogut, 2000). While it is sometimes important to bridge holes within the focal network or between 

networks in order to find and to manage new combinations of resources, in many cases it is from the 

perspective of focal companies or network-cooperation of relevance not to share firm- and/or networkspecific 

knowledge. In this case the focal organisation will seek to identify and to foster holes in order 

to exploit and protect the competitive edge (Burt, 1992). 

In cooperative network it is not just knowledge related to the process of (re-)combining inputresources 

which are leading to improved rents it is also information regarding future projects. 

Granovetter (1992) have coined the term “strength of weak ties”. 

The Coleman-rent systematises a resolution to collective action problems resulting from redundant 

ties among (cluster) actors (Kogut, 2000). Coleman (1994) suggests that value creation bases on 

dense inter-connected relationships. In the long run stable and trustworthy interaction within the 

cluster is of great importance for developing common capabilities. While non-redundant positions are 

of great importance in the field of developing competitive resources or resource bundles for the 

transformation of competitive advantage into marketable products redundant ties are characteristic for 

the coalition of actors who are depending one on each other, e. g. in the process of developing 

complementary resources (Coleman, 1988; Dyer/Singh, 1998). The base to generate Coleman-rent is 

trustworthiness regarding business partners and customers (Fombrun/Shanley, 1990; 

McEvily/Zaheer, 1999). 

To translate our approach into a manageable model we are adapting the concept of value adding 

webs regarding Brown et. al. (2010). 

Regarding the rent creation on the network level we do take into account the outlined 

interdependencies, i.e. pooled, sequential, reciprocal and team-oriented dependencies and 

operationalize them according to Brown et al. (2010). Further, we investigate relational resources with 

regard to knowledge-sharing routines and social capital as well as the impact of both on the process 

of identifying complementary resources and capabilities as well as effective governance. In this 

context we take into account the elaborated Burt-rent and Coleman rent concepts. 

87


With regard to the quality and strength of the investigated relationships we build on Thompson’s 

(1967) categorisation of interdependencies. Thompson differentiates between pooled, sequential and 

reciprocal interdependencies and thereby takes into account that value creation is not stopping at the 

borders of a firm but transcending these borders (Thompson, 1967: 25, Coleman, 1990). The quality 

of interdependencies is depending on how critical resources are distributed between horizontal, 

vertical and lateral actors to their resource-oriented perspective of value creation in clusters (Brown, 

2010, Emerson, 1962). 

Interdependencies in Thompson’s work are characterised as pooled when it is referred to “one in 

which each part renders a discrete contribution to the whole and each is supported by the whole” 

(Thompson, 1967: 54). Such interdependencies appear in the cluster context where involved cluster 

actors are competing for certain resources such as qualified employees or the budget of the 

customers (Brown et al. 2010: 23). For Thompson sequential interdependencies describe 

asymmetrical situations in which a firm supplies inputs to another (Thompson, 1967: 54). Transferred 

to the cluster context such sequential interdependencies occur when a cluster actor supplies inputs to 

another cluster member (Brown et al. 2010: 23). If symmetric relationships with two organisational 

units exchanging supply inputs Thompson calls them reciprocal interdependencies (Thompson, 

1967: 55). Reciprocal interdependencies in the cluster context are situations with a mutual exchange 

of inputs and outputs taking place between the members of a cluster (Brown et al. 2010: 23). 

Team-oriented interdependencies are not only reciprocal in nature but refer to activities which 

cannot be fulfilled by one actor alone but just when actors work together and thus bundle their 

resources, therefore they reflect the highest extend of interdependency. Transferred to the cluster 

context team-oriented interdependencies refer to situations where a certain activity can only be 

fulfilled by two or more cluster actors jointly (Ven and Ferry, 1980: 166-168). Taking into account this 

strongest form of interdependency it is useful to better understand the processes of how this 

(potential) teams could be identified and created. 

Building on that, we use the outlined extents of interdependencies ranging from rather low (pooled 

interdependencies) to very high (team-oriented interdependencies) to investigate the relationshipspecific 

resources for the analysed Danish windmill off-shore-service cluster. 

4. Case study: Empirical findings 

4.1 Methodology 

The company-network of the Grenå-Anholt wind-farm and included its network-organisation Djurs 

Windpower will be analysed regarding the different impact-factors on absorptive capacity, social 

capital and rent creation. In the following, the second research question regarding the usefulness of 

the described rent concepts is addressed by using the systematised relational rent concepts as idealtypical 

patterns to be contrasted with the reality of the investigated in-depth case study of real world 

clusters in Southern Denmark. 

Yin (2002) suggests the case study method as a useful approach when ‘how’ and ‘why’ questions are 

addressed and the researchers do not have control over events. For analysing Djurs Windpower the 

following data sources have been used: expert interviews, interview-data conducted by the manager 

of Djurs windpower, companies annual reports, newspaper articles, information about the cluster and 

cluster actors from the Internet in general as well as from the homepages of the cluster actors and the 

cluster web presence. The aim was a data triangulation which gives us a rich set of data as the basis 

for analysing underlying resources and resulting relational rents for the investigated cluster cases. 

Twelve in-depth interviews with experts from the off-shore sector in Denmark have been conducted. 

Seven of the ten in-depth interviews had been with members from the Djurs service network, the 

management of the cluster-organisation included. The interviews took place via telephone and based 

on a semi-structured questionnaire with the focus on businesses during the last decades, resources, 

knowledge, knowledge- and rent generation on the level of the relationships. In the interviews we 

have asked for the competences, skills and the vocational training in the different companies and how 

they have managed to adapt the knowledge of all participants to the efforts of the common task. 

Furthermore the experts had been asked how common ground developed since the organization had 

been founded and established. 

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We used the following quality criteria in our research (see e.g. Wrona, 2005). By the triangulation of 

data from different sources we aimed for internal validity of the findings. By the disclosure of the 

research process we strive for inter-subjectivity of the findings so that procedural reliability is given. 

The authors have analysed the data separately in a first step, before they compared and discussed 

them. By this procedure consensual validity has been reached. 

In summary, the reason for choosing the qualitative case-study approach is that a case study is an 

empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially 

when the boundaries between phenomenon and context are not clearly evident (Yin, 2003). 

Especially absorptive capacity in clusters has so many different manifestations. So which aspects of 

absorptive capacity are important to systemise and describe rents on the relational level of a cluster 

should be additional the output of this investigation. To measure absorptive capital as an impactfactor 

on rent creation the most important thing is to adapt the scales – measuring absorptive capacity 

– to the level of cooperative networks (Flatten, et. al., 2011). 

4.2 The case of Djurs Windpower in Denmark 

According to plan Denmarks´ largest offshore wind farm between Djursland and the island Anhold will 

be fully operational in autumn 2013 and will have a capacity to supply the annual power to 4 % of total 

Danish power production. The network of companies who are surveying, constructing, consulting, 

securing and shipping and providing services like maintenance is consisting of 30 companies. The 

network is facilitated by the manager of “Djurs Wind Power”, a registered non-profit organization, 

which is financed by member-fees. Djurs Wind Power was founded to support the process of common 

learning and develop – at least in midterm – trustful relationship. If a service or maintenance is 

needed the facilitator of the network is trying to find the right network-members to do the job. 

The “Klima- og Energiministeriet” gave in June 2010 the concession to build, to run and to exploit the 

wind farm for 25 years in 2010 to a huge Danish Energy company. The feed in tariffs had been fixed 

for 12 years (http://www.dongenergy.com/anholt/DA/baggrund1/Pages/default.aspx). The huge 

Danish Energy company committed one of the two huge wind-turbine manufacturers to produce the 

wind turbines. While While the huge supply company is the owner of the wind farm, the turbine 

manufactuerer can be seen as the most important contractor of Dong (Børsen, 8.5.2012). Further 

sub-contractors – all of them are SMEs - are legally bound by contracts to one of the two huge 

companies in the center of the network. 

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All in all the cluster can be described as hierarchical structured. All the members of the networkorganisation 

Djurs Windpower are strongly committed to the network. Regarding a long run 

perspective (25 years) the cluster can be described that way, that vertical sequential 

interdependencies are dominant. Regarding SMEs there are mainly two groups of companies and 

that is on the one hand regional companies like the port-company, hotels, catering and on the other 

hand “small global players”, who are providing services like installing, re-assembling, testing and 

servicing windmills and turbines. For the regional companies the wind-energy business will come to 

an end when the project comes to an end but all the other companies are interested in really longterm 

relationships with one of the two huge companies because they want to cooperate in the future 

in further projects. So from company perspective absorptive capacity and social capital can be seen 

as a long term investment. The better absorptive capacity and social capital the greater the chance of 

getting access to further business projects. Regarding the focal wind – farm all companies directly 

benefit from common learning. While the income via feed in taxes is fixed, it is the decrease of the 

cost – structure which can improve the rent. But just if the process of scanning and learning is 

seriously done in the very beginning and just when the process of cooperating is managed well the 

companies will be able to adapt synergies. Regarding the SMEs providing technical support and 

maintenance the substitution in a later decade will go along with decreased synergies regarding costminimizing 

(Gretzinger, et. al.1999). 

The resource-dependence-structure of the network is quite transparent and can be described as 

asymmetric. 

5. Discussion 

The manager in the centre of the non-profit-organization is doing a job as a pro-active moderator and 

broker. He is analysing the network regarding the needs of the members and keeping companies in 

contact. Furthermore he is actively initiating the process of analysing the resources, the competences 

and capabilities of the network-members. 

All the interviewees have mentioned that common ground for all the different kinds of interaction 

within the network have improved. 

Some companies – as hotels and catering services – just had to ask their customers what to serve 

and others had to adapt specific technical details from partners before they could start adapting their 

competences to the wind-farm, like in the case of a bridge-builder who is doing now the assembling of 

the wind-mills. Information of how the company has managed to bridge knowledge holes and of how 

they have managed to translate the findings regarding new opportunities into action plan is quite 

important to explore the absorptive capacity. 

If a facilitator can impact absorptive capacity positive on the web level seems not just to be depending 

on his or her abilities to analyse the resources / knowledge embedded in the value adding web, it 

seems to be that it is as well the resources – dependence – structure which is impacting or at least 

limiting the possibilities of cluster managers to improve social capital and absorptive capacity. In the 

analysed network there was no doubt about the resources-dependence-structure and furthermore 

competition within the network is not that high. Regarding the needs of the two most powerful 

companies in the centre of the network the companies are moving towards one goal: to construct and 

service the offshore-windmill-farm which is managed under the roof of Dong Energy and Siemens 

Windpower. “… Dong Energy or Siemens just needs to go to one point of contact and then they have 

a brought range of the services from 30 companies behind that”. Especially in the very beginning the 

service-companies have to adapt the needs and competences of the other partners: “…we have 

involved Offshore Center Denmark as a professional institution for development of competences. We 

have had a workshop program of six workshops running last year and into this year and we are 

expanding that with another four workshops” (interview with the manager from Djurs Windpower). And 

that is why the process of improving absorptive capacity becomes a natural thing and is therefore 

easy to integrate. 

Social capital was by the same time impacted by the common initiatives but by the same time had 

been fostered by trust, which was relatively easy to develop. A clear resource-dependence-structure 

with a low level of contradictive aims and conflicts between the companies can be seen as important 

precondition. 

90


This explorative study helped to understand ‘how’ and ‘why’ absorptive capacity is important to 

manage cooperative networks. While the classical set of methods and items how to measure social 

capital can be applied the scales regarding absorptive capacity have to be adapted to the context of 

cooperative networks. In the case it became clear that proxies like R&D intensity, HR-Management, 

Knowledge-Management are to general to measure absorptive capacity on the web-level. It is 

especially the aspects of “pro-actively” analysing the companies and the networks, cultivating the 

process of “pro-actively” searching for new information, cultivating regularly meetings where the 

process of decoding, understanding and evaluating of new information will be trained are important 

aspects which have to be adapted. 

Furthermore – as mentioned in the beginning – the aspect of moderating conflicts seems to be an 

important precondition in the process of impacting social capital in a positive way. Mistrust and 

conflicts among the actors will may lead to the dark side of social capital, negative social capital. Trust 

and a stable resource-dependence-structure can be seen as an important impact-factors regarding 

generation of Coleman-rent. 

The positive picture from today does not mean that the powerful enterprises in the centre do not 

decide for new business partners from outside. As the responsible manager from the public utility 

company is accentuating: “So normally when we have first made an agreement on a contract it is not 

normal that we are substituting them with anybody else, but we are not bound to the cluster- we can 

go to which company we want to and offer large and small jobs. So you could say that we are in many 

ways forced to use the cluster, and we also told the cluster that it is good to have contact – but when 

we are making a tender process also companies outside the cluster would be allowed to put in a 

tender. So from our side you could say that the cluster has been a good way of making contacts to 

companies, but it has not in any way giving any restriction in the competition between the companies 

and also companies outside the cluster”. As social capital includes all the resources and the 

knowledge embedded in the network, to improve social capital needs the process of learning and 

improving the competitiveness related to companies from outside. The more effective the process of 

developing absorptive capacity the greater the chance that the actors will learn about structural holes 

which are to bridge and will leading to synergies and improvement of Burt-rent. 

Djurs Windpower has just started. To explore if this positive picture is continuing the interviews with 

the participants should be repeated one year later again. It is not to expect that other networks with 

other resource-dependence-structures will show the expected effects with the same kind of intensity. 

Due to the classical limitation of explorative case-study research this projects needs follow-up projects 

based on a broader data set. 

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Tallmann, S., et. al. (2004): Knowledge Clusters and Competitive Advantage, in: The Academy of 

Management Review, Vol. 29 (2), 258-271. 

Thompson, J. D. (1967). Organisations in Action – Social Science Bases of Administrative Theory, Reprint 

2007, New Brunswik/New Jersey. 

Van de Ven, A. H. & Ferry D. (1980). Measuring and Assessing Organizations, New York. 

Wrona, T. (2005). Die Fallstudienanalyse als wissenschaftliche Forschungsmethode. ESCP-EAP Working 

Paper. European School of Management, Berlin. 

Yin, R.K.: Case study research, design and methods, 3rd edition, Newbury Park 2002. 

92

From Homo Habilis to Information age Hominids: Finding 

Links Between the Growth of Ic and the Evolution of the 

Architecture of the Mind 


The Birchman Group, Chile 

CENTRUM, Universidad Catolica, Peru; Visiting Faculty, Henley Business 

School, University of Reading, UK 

paul.griffiths@vtr.net 

Abstract: This paper assesses the pre-history of Intellectual Capital (IC) over the past million years based on the 

apparition of knowledge-rich artefacts and events of a social nature. In this way it arrives at an external, “outside 

of the mind” view on the development of intellectual capital. The paper then goes on to ask: Can we study the 

growth of intellectual capital without understanding what is happening inside the mind? Can we explain the 

growth in intellectual capital over the last million years without understanding how the mind has evolved over that 

period? Can the advent of those knowledge-rich artefacts and events be explained by changes in the architecture 

of the human mind? So the second part of this paper presents a model of the evolution of the architecture of the 

mind based on cognitive anthropology and evolutionary psychology, arriving at an internal, or “inside the mind” 

view on the development of intellectual capital. Finally, this paper engages in a discussion on how the “outside of 

the mind” and the “inside of the mind” views of growth of intellectual capital fit with each other, and extract 

lessons from this confrontation of views. It highlights the role of three factors (i.e., forethought, imagination and 

language) in getting us to where we are today. 

Keywords: intellectual capital, population, knowledge, knowledge management, architecture of the mind, 

evolution 


Some economists believe that since one million years ago and up to the early 19 th century growth in 

wealth was channelled nearly exclusively to increasing population at the expense of improving quality 

of life. This conjecture is based on that for the whole of that period over 95 percent of the human 

population led a life of mere subsistence. The corollary of this conjecture is that population can be 

taken as a proxy for total wealth on Earth during that period (Kremer, 1993; Warsh, 2006). By drawing 

a link between IC and wealth, it was also arrived at that population is a proxy for IC stock in prehistory 

(Griffiths, 2009). 

This paper identifies the invention or discovery by our ancestors of several major artefacts, as well as 

changes of a social nature (section 2), to explain the increase in wealth and thus in human population 

on our planet. This portrays an external, “outside of the mind” view on the development of intellectual 

capital. 

But can we study the growth of intellectual capital without understanding what is happening inside the 

mind? Can we explain the growth in intellectual capital over the last million years without 

understanding how the mind has evolved over that period? Can the advent of those knowledge-rich 

artefacts and events be explained by changes in the structure of the human mind? 

In order to tackle these questions section 3 presents a model of the evolution of the architecture of the 

mind based on cognitive anthropology and evolutionary psychology, and attempts to find links 

between the mentioned patterns in growth of intellectual capital and the evolution of the modules of 

the mind. In other words, an internal, or “inside the mind” view on the development of intellectual 

capital is arrived at. 

Finally, this paper will engage in a discussion on how the “outside of the mind” and the “inside of the 

mind” views of growth of intellectual capital fit with each other, and extract lessons from this 

confrontation of views. 

IC is a key concept in this research, but in the literature it has been defined in many different ways 

(Andriessen, 2004, pp.11-2; Edvinsson & Malone,1997, p.44; Griffiths, 2012; Roos et al.,1997, p.37; 

Stewart, 1997, p.10; Sullivan, 1998, p.4). This paper will assume the definition of stock of IC of 

humanity to be “the sum total of knowledge of its members that is useful for humans to meet their 

93


daily survival challenges and can be converted into improvement of their quality of life.” The contents 

of this paper are the result of reading and reflections undertaken over the past six years. Although my 

calling to this topic came from a Management perspective, studying the progress of IC in pre-historic 

times demanded delving into the anthropology and palaeontology literature, in addition to philosophy, 

economics, psychology, science and innovation. 

2. Knowledge packaged in the form of artefacts or social transformation 

events 

Evidences of tool-making span back for most of the Pleistocene Epoch and well over the last million 

years that comprise this study; but early tools did not carry a creative content and they hardly evolved 

in a million years. Hominids (as anthropologists now call humans and their ancestors) kept on 

chipping and flaking stones in exactly the same way, with no learning apart from the acquisition of the 

same ancient skill and no accumulation of collective knowledge or experience. Communications were 

limited to simple guttural sounds. So by the beginning of the period of this study Hominids were 

making elementary tools such as flint axes and scrapers, and their communications skills were 

primitive (Maynard-Smith, 1999, p.141; Parker, 2007, p.12; Seabright, 2004, p.174-5). Before the 

beginning of the study period Hominids became carnivorous, migrated out of Africa, and gradually 

learned to hunt and therefore moved up the food chain. As is characteristic of carnivorous hunters 

compared to herbivores, their brain grew in size reaching an average of 900 cubic centimetres, 

significantly larger than the 650 cubic centimetres of those who remained in Africa (Homo habilis) and 

not far from the average 1,350 cubic centimetres of present day adult humans. They also learned to 

hunt in communities - which would have improved their elementary communications skills - and there 

is fossil evidence that they used tools to butcher their kill (Fischman, 2005 1 , pp.26-27; Aiello, 1996, 

and Aiello & Dunbar, 1993). 

Up to some 75,000 years ago Hominids showed little, if any, gradual experimentation with culture 

(i.e., pictures, artworks, or personal decoration) or evidence of natural or metaphysical curiosity. 

When these interests arrived, they seem to have done so very suddenly. Griffiths (2009) does a 

detailed analysis of knowledge-rich artefacts as summarised in table 1. 

Table 1: The apparition of IC containing artefacts 

Epoch Artefact References 

Aiello (1996), Aiello & Dunbar (1993), 

> 1 m y.a. Early Tools Fischman (2005), Maynard‐Smith (2009) 

Parker (2007) 

70,000 y.a. Symbolic Artefacts Conard (2009), Henshilwood et al .,(2002) 

Parkington et al., ( 2005) 

40,000 y.a. Figurative Art Clottes (2001), Broglio (2002) 

Floss & Rouqueroi (2007), Seabright (2004) 

Connard, 2009; Del´porte, 1993; 

40,000‐35,000 y.a. Carved beads & Sculptures Floss & Rouqueroi (2007), Neugebauer‐ 

Maresch (1989), Seabright (2004) 

Forbes & Foxhall (1995), 

11,000 y.a. Granaries Kuijt & Finlayson (2009), Testart (1982) 

Winterhalder & Goland, 1997 

> = 5,000‐3,000 y.a. Money Buchan (1997), Lonergan (2009), 

Simmel (2004) 

5,000‐3,000 y.a. Writing Maynard‐Smith & Szathmáry (1999), 

Seabright (2004) 

2,300 y.a. Open Market for Books Ridpath (1903) 

1 Interview with David Lordkipanditze, paleo-anthropologist, Director of the Tbilisi Museum, in Georgia. 

94


As Hominids moved up the food chain, they had fewer predators and thus increased their longevity. It 

is not coincidental that longevity and menopause came together some 40,000 to 30,000 years ago, 

because reproduction and longevity are negatively co-related to each other, possibly because 

reproduction takes up a significant amount of energy. The advent of menopause and longevity is a 

biological change that had a significant impact on the building of IC: the elder members of the 

community did not have children to feed so they had time available to teach their grandchildren and 

other youths (Seabright, 2004; The Economist, 2008a). Griffiths (2009) does a deep review on 

evidence of knowledge as both a result and an enabler of social transformation events as 

summarised in table 2. 

Table 2: Notable events in the accumulation of IC 

Epoch Social Transformation Events References 

> 1 m y.a. Guttural communication Maynard‐Smith (2009) 

70,000 y.a. Symbolic Thinking Conard (2009), Henshilwood et al .,(2002) 

Parkington et al., ( 2005) 

40,000‐30,000 y.a. Longevity & Menopause Seabright, 2004; The Economist, 2008a 

35,000‐25,000 y.a. Story‐telling & Inventiveness Greenfield (2003), Maynard‐Smith (2009) 

20,000 y.a. Collective action & Strong Fischman (2005), Seabright (2004) 

social ties 

PPNA ‐ Living in large Bar‐Yosef (1998), Kuijt & Finlayson (2009) 

11,000‐10,000 y.a. settlements; agriculture & Russell (1954), Seabright (2004) 

artifical selection Darwin ([1859]1985), Lloyd (2009) 

10,500‐9,500 y.a. Concept of property Kuijt & Finlayson (2009), 

Seabright (2004), Weiss et al. ( 2006) 

10,500‐9,500 y.a. Leap in Forethought Roy (2009), Russell (1954), 

The Economist (2009) 

10,000 y.a. Hierarchy, serfdom and Maynard‐Smith & Szathmáry (1999), 

subjection of women Seabright (2004), Testart (1982) 

5,000‐3,000 y.a. Organised government Hirschman (1977), Seabright (2004) 

Plato (1997), Popper (1966), 

2,500 y.a. Concept of change Morton (2007) 

3. Evolution of the architecture of the mind 

This section presents a model of the evolution of the architecture of the mind based on cognitive 

anthropology and evolutionary psychology, in an attempt to find links between the patterns in growth 

of IC and the evolution of the structure of the mind. It requires a voyage into an even longer period in 

prehistory (approximately 6 million years) to understand consciousness, thought, problem solving and 

imagination. Our main guide on this voyage into the nearly complete darkness or mere flickering 

candle light of the prehistory of the mind will be Mithen (1996). 

When speculating about the evolution of the mind it seems reasonable to ponder the issue of brain 

size, even though the relationship between brain size, ‘intelligence’ and behaviour is not a simple one. 

If we look at the evolution of brain size over the past four million years we denote two major spurts in 

size. The first one happened between 2.0 and 1.5 million years ago, which seems to be related to the 

appearance of Homo habilis, and the second, a less pronounced one, between 500,000 and 200,000 

95


years ago. Archaeologists link the first spurt to the development of tool making as evidenced by fossil 

tools, but there does not seem to be a clear explanation for the second one, as people appear to 

continue with the same hunting and gathering life-style, and had the same limited range of tools. The 

two really dramatic changes happened much after the second spurt, well into the existence of Homo 

sapiens sapiens, as the cultural explosion of 60,000 to 30,000 years ago, and the origins of 

agriculture some 10,000 years ago (Aiello, 1996; Aiello & Dunbar, 1993; Fischman, 2005, pp.26-7; 

Mithen, 1996, pp. 6-8) 

There are diverse theories on the stages of evolution of the mind. Donald (1991) talks about the mind 

having passed through three major stages: An ‘episodic culture’ associated with Australopithecines, 

earliest known ancestor of Hominids; followed by a ‘mimetic culture’ associated with Homo erectus; 

and later by a ‘mythic culture’ associated with Homo sapiens. The last of these involves the ability to 

create conceptual models and is closely related to the evolution of language. A notable attribute of 

this third stage is that the mind became extended in the sense that external storage devices such as 

material symbols started to be used. 

Corballis (1992), the psychologist who draws on archaeological data to study the evolution of 

language, has argued that the origin of language was gesture, with speech only becoming the 

principal medium relatively late in human evolution, at the time of the Middle/Upper Palaeolithic 

transition (c.40,000 years ago). According to this view, tools improved significantly at that time due to 

that Hominids freed up their hands from communicating so therefore had them available for improving 

dexterity and producing better tools. 

Tooby & Cosmides, (1992) supports the Swiss army knife analogy of the mind, which would be 

constituted by several specialised domains. They justify it as a result of evolution of the mind to 

enable our hunter-gatherer ancestors in the Pleistocene to cope with the problems they confronted. 

They support this on three arguments: 

Each type of problem faced by our ancestors had a unique form that required timely and accurate 

response, so a Hominid with specialised mental modules would be more successful at solving 

them, which would give them selection advantages; 

Children learn so much about such complex problems as language rules and interpreting 

gestures that this could only be achieved with pre-programmed or hard-wired minds; 

It evolved to overcome the problem with general purpose learning rules that is that there are no 

bounds as to what information should be excluded from making decisions. 

From developmental psychology we see that in order to be able to manufacture an elaborate 

symmetrical-in-three-dimensions tool the individual needs to be able to make a mental image of what 

the finished tool is going to look like. And every time he is going to strike to chip-off a shred of stone, 

he must be able to anticipate what effect that particular strike is going to have on the shape. This is 

the ability to think about hypothetical objects and events. In terms of Piaget’s phases of development 

of the mind of a child, this is the ‘formal operational intelligence’ phase that a child reaches at the age 

of about 12 [the other phases being ‘sensorimotor intelligence’ from birth to 2 years old; 

‘preoperational intelligence’ from 2 to 6/7 years; ‘concrete operational intelligence’ from then until 12 

years (Mithen, 1996, pp. 35 & 267)] 

The work of developmental psychologists and evolutionary psychologists comes together in the 

theory that ontogeny recapitulates phylogeny. Recapitulation proposes that the sequence of 

development stages of a juvenile's mind in any species (its ontogeny) reflects the sequence of adult 

forms of its ancestors, or its phylogeny. First proposed by Ernest Haeckel in his biogenetic law of 

1866, as depicted in Gould (1977), this perspective has become the rule rather than the exception 

amongst scholars of cognitive and linguistic evolution and is widely accepted as applying to the 

evolution of the human mind (Gibson & Ingold, 1993). 

There is overwhelming evidence from development psychology that children are born with contentrich 

mental modules that reflect the structure of the real Pleistocene world in line with the proposals of 

Tooby & Cosmides (1992). This intuitive knowledge can be found in at least four domains of 

behaviour (i.e., language, psychology, physics and biology) and their intuitive knowledge appears 

closely related to a hunter and gatherer lifestyle: 

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Intuitive psychology: Children quickly develop an ability to read other people's mind that cannot be 

justified in experience. When they are impaired in this ability they suffer autism, and when living in 

social groups of increasing size (co-operative, collaborative, competitive and mutualistic 

relationships) "social forethought" or the ability to read other people's mind is linked to greater 

reproductive success (Humphrey, 1976) 

Intuitive biology: Children are born with the ability to differentiate living from inanimate things. A 

dog with three legs and no barking is still a dog, and humans are humans irrespective of their 

intelligence or athletic qualities, which implies that the notion of species essence is there. And 

different cultures share the same set of notions regarding the classification of the natural world, 

just as all languages have the same grammatical structures. Interpreting the slightest clues as to 

the presence of animals was key for the hunters’ success and directly related to their reproductive 

success. 

Intuitive physics: From very young children capture that physical objects are subject to a different 

set of rules than mental concepts and living things (concepts of solidity, gravity and inertia appear 

to be hard wired in the child's mind.) They classify physical objects differently than living beings. 

That the identity of an object depends on context (a crate can be packaging, or a stool, or a bed) 

as opposed to living things whose identity is independent of context. This means that the child 

can rapidly learn culturally transmitted knowledge about the uses of objects (e.g., flint tools) 

without having previously to learn how they differ from living things. 

Intuitive language: It is remarkable that by the age of four children master, to a great extent, the 

“ferociously complex” rules of linguistic syntax, which does not seem possible simply through 

practice and deduction as young children are simply not exposed to a broad enough sample. It is 

also found that children who are placed into a different society shortly after birth, for example 

through adoption, learn the rules in their adoptive parents’ language. This leads linguists such as 

the American Naom Chomsky to believe that there is a universal grammar that cuts across 

languages, and that it is hard-wired into the brain. (Ball, p.364) 

There are opinions that until the age of two years the mind is generic with the specific domains 

(blades of the Swiss army knife) coming into being after that (Greenfield, 1991). These are founded 

on that language learning and object manipulation before then rely on the same cognitive processes 

and assimilates the young infant's mind to that of a chimpanzee. It is only after age two that the four 

content rich modules overwhelm the general purpose intelligence. For Karmiloff-Smith (1992) this is 

only the first stage of change (i.e., from caterpillar to chrysalis) that will be followed by a greater one 

to butterfly. These developmental psychologists agree with the evolutionary ones in the nature of the 

four intuitive knowledge domains at the age of two – where both camps differ steeply is in that for the 

developmental psychologists the intuitive knowledge domains continue developing in tune with the 

child’s cultural context. 

But Mithen (1996) asks himself if the mind is indeed constituted by a series of specialised processes, 

how can we account for one of the most remarkable characteristics of the modern mind, which is its 

capacity for an almost unlimited imagination? 

The answer to this question is that the modules start working together, and this mapping across 

frontiers is a fundamental feature of cognitive development. Be it through ‘representational 

rediscription’ (RR) (Karmiloff-Smith, 1992; Cary & Spelke, 1994) or the introduction of a ‘module of 

metarepresentation’ (MMR) (Sperber, 1994) or the role of music in breaking down inter-modular 

barriers (Ball, 2010, pp241-51) it is this mapping across domains that explains human imagination, 

the use of metaphor, creativity and holism, so hard to explain for the evolutionists. 

There is evidence that the mind did not evolve in a linear manner but, like all complex systems, went 

through oscillating phases. It went through waves of increasing generalised intelligence followed by 

periods of development of more specialisation. It appears that primates started evolving some 65 

million years ago with a central nave of general intelligence. That was followed by a wave of 

modularisation where one can find the early traces of a social intelligence domain in the primates that 

roamed Africa some 35 million years ago. Close to two million years ago, in the transition from our 

ancestors the Australopithecines to H.habilis and H.erectus there is the emergence of a natural 

history intelligence domain and that of a technical intelligence. This was followed, between 500,000 

and 200,000 years ago, by the first traces of a language intelligence domain (Archaic H.sapiens, and 

H. Neanderthalensis). By 100,000 years ago specialisation must have reached its limits and thus 

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modularisation gave way to an increasing cognitive fluidity wave in H.sapiens sapiens through to 

modern humans (figure 1). 

Figure 1: The evolution of human intelligence (Mithen, 1996) 

According to Mithen (1996, p.222) and based on the study of Early Modern Humans of the Near East 

and before they spread into Asia and Europe, the first steps in cognitive fluidity happened some 

100,000 years ago and was the connection between the social and natural history intelligence 

domains. This was followed by the integration of the technical intelligence domain, which happened at 

different times depending on Early Modern Human groups, but can be placed at between 60,000 and 

30,000 years ago. 

The second spurt in brain size growth referred to above precedes the apparition of the language 

module, and could have been the enabler for the evolution of this ability. Mithen (1996) mentions that 

by 250,000 years ago language had extensive lexicon and grammatical complexity but he does not 

substantiate this. It can be inferred, however, that language remained restricted to social 

communication until snippets of non-social communication started arising from two sources. On the 

one hand is general intelligence as it conditioned behaviour at the domain interfaces (e.g., the use of 

tools for hunting or of food for establishing social relationships). On the other hand it may be that the 

specialised intelligence domains were not completely isolated and that the advent of language helped 

penetrate the weak boundaries. In this way, social language evolved to become a general purpose 

language sometime between 150,000 and 50,000 years ago. 

The timeline for the evolution of the mind depicted in this section is summarised in table 3. 

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Table 3: Timeline for the evolution of the architecture of the mind 

4. Discussion 

Epoch Effect 

65 m y.a. Origins of General Intelligence 

35 m y.a. Early traces of Social intelligence domain 

4.0 ‐ 2.5 m y.a. Australopithecines ‐ 'episodic culture' 

2.0 ‐ 1.5 m y.a. First spurt in brain size 

2.0 ‐ 1.5 m y.a. Early traces of Natural History intelligence domain 

Early traces of Technical intelligence domain 

1.8 m ‐ 300,000 y.a. Homo ercutus ‐ 'mimetic culture' 

500,000‐200,000 y.a. Second spurt in brain size 

500,000‐300,000 y.a. Early traces of Language intelligence domain 

Considerable lexicon & some grammatical complexity 

250,000 y.a. Language purely social 

Snippets of non‐social language (Nat.History, Technical 

150,000‐50,000 y.a. Language evolved from social to general purpose 

100,000 y.a. Homo sapiens‐sapiens: 'mythic culture' 

Specialisation reaches limits 

100,000 y.a. Modularisation gives way to increased cognitive fluidity: 

connection between Social and Nat. History domains 

60,000‐30,000 y.a. Cont. Cognitive fluidity: Integration of Technical domain 

40,000 y.a. Language shifts from predominately gesture to speech 

In this section an attempt is made to address the research question of understanding how the 

evolution of IC is connected to the evolution of the architecture of the mind. This is done by 

confronting the lessons that come out of the study of evolution of IC through the analysis of 

knowledge intensive phenomena (i.e., artefacts and social transformation events) presented in 

sections 2, with the model of the evolution of the architecture of the mind presented in section 3. 

99


The first issue that needs to be pointed out is that the evolution of IC and the evolution of the 

architecture of the mind have timescales of a different order of magnitude. While to understand the 

modern human mind we need to go back 65m years, there is hardly anything worth analysing of the 

pre-history of IC beyond 1m years ago. If population can be taken as a proxy for stock of IC in prehistoric 

times (Griffiths, 2012) it is indicative that the population of Hominids one million years ago is 

estimated at 125,000, reaching one million some 302,000 years ago (Kremer, 1993). Table 4 shows 

the human population and classifies periods of pre-history in terms of its rate of growth based on 

Griffiths (2012) and Kremer (1993). 

Table 4: Human population and its rate of growth 

Year Population (m) Growth Rate Description 

300,000 BC 1,00 0,00000439 

Very slow growth 

25,000 BC 3,34 0,00003100 

10,000 BC 4,00 0,00004500 

Strong growth 

5,000 BC 5,00 0,00033600 

5,000 BC 5,00 0,00033600 

Accelerated growth 

4,000 BC 7,00 0,00069300 

4,000 BC 7,00 0,00069300 

3,000 BC 14,00 0,00065700 Sustained growth 

2,000 BC 27,00 0,00061600 

2,000 BC 27,00 0,00061600 

Accelerated growth 

1,000 BC 50,00 0,00138600 

200 BC 150 0,000623 

Slow & Erratic growth 

1,650 AD 545 0,002253 

1,700 AD 610 0,003316 Steady, Accelerated 

growth 

1,990 AD 5333 0,018101 

Even if we decide to focus only on periods of more intense change, in the case of the evolution of the 

architecture of the mind that would start some 6m to 4m years ago, when Hominids would have had a 

general intelligence and a social intelligence domain module similar to those of modern apes (i.e., 

chimpanzees, gorillas) and an ‘episodic culture’. In the case of the pre-history of IC things started 

happening with some intensity in the last 100,000 to 70,000 years with the apparition of symbolic 

thinking. Again, to use population as a proxy for IC stock, it went from under two million 100,000 years 

ago, to some three million and a half 27,000 years ago; to four million population by 12,000 years 

ago, and to one hundred and seventy million by the beginning of the present era (Kremer, 1993). 

100


It is interesting that while the modular structure of the mind was well developed and reaching the 

limits of specialisation as recently as 100,000 years, very little progress had been made on the stock 

of IC. It is when this silo modularisation of the mind starts giving way to an increased cognitive fluidity 

with the breaking down of barriers between the Social and Natural History intelligence domains, that 

things start happening, albeit slowly. The clearest result of breaking down the walls between domains 

is symbolic thinking, and this took a further 30,000 years to manifest itself via primitive symbolic 

artefacts (i.e., abstract paintings on cave walls). The first samples of figurative art, which can be 

interpreted as the connection between the Social and Natural History intelligence domains, appeared 

some 40,000 years ago. Biological changes in the human body have had mixed effects in terms of 

impacting IC growth. Highly relevant biological changes such as Hominids’ turning carnivorous and 

then hunters leading to growth in brain size between 2.0m and 1.5m years ago, which was important 

in developing the modern architecture of the mind, had no significant impact on IC stock. Neither did 

the second spurt in brain size growth, which happened between 500,000 and 200,000 years ago, 

although it laid the basis for the apparition of a Language intelligence domain many millennia later. 

In contrast, the apparition of longevity and menopause between 40,000 and 30,000 years ago, at a 

similar timing that language changed from predominantly gesture-based to predominantly speech, 

was determinant in terms of IC growth. It gave the elder members of the community, free from the 

time and energy consuming business of bringing up their own offspring, time to teach the young. This, 

combined with continued cognitive fluidity in the form of breaking down the barriers between the 

technical intelligence domain and the other modules of the mind, enabled story-telling and 

inventiveness. It is also quite possible that it strengthened social bonds enabling the collective action 

revealed 20,000 years ago in the form of the healthy looking after the disabled elder members of the 

community. Reflecting on the events, artefacts and changes in the architecture of the mind that took 

place over the last few million years, the advent of forethought is possibly the event of most impact on 

IC growth. It started gradually over a million years ago in the manufacturing of primitive tools 

(elementary as they were, they required the craftsman to anticipate the shape he pursued and to 

anticipate what chipping effect each strike of the flint would cause.) Again, the advent of art, 

especially with figurative painting and carving some 40,000 years ago, required the artist to conceive 

the finished work before executing. But the great transformational leap in forethought came between 

10,500 and 9,500 years ago and is embodied in the advent of agriculture and food storage. 

Forethought brought with it the sense of uncertainty when looking into the future, an issue for which 

the human mind was not, and there is evidence that still is not, adapted for. Evolution of the mind from 

the Australopithecines of four or five million years ago to modern humans of barely 12,000 years ago 

was conditioned by the need to live the present. Dealing with uncertainty led Hominids to devise two 

forms of reaction. On the one hand, humans needed to give meaning and a sense of purpose to life 

that led to Religion. On the other hand, humans had a need to control and experiment with an 

uncertain future, which led to the rare development of farming and agriculture (11,000-10,000 years 

ago), and of trust in others with whom they did not share genes, and eventually to the apparition of 

money (5,000-3,000 years ago). Money, in turn, greatly accelerated division of labour, 

interdependence, productivity leap, surplus resources, leisure and the huge stocks of IC for which 

information age people are known today. 

The period between 11,000 and 9,500 years ago was extremely active in terms of IC as can be 

witnessed in the figures of population that reached 4 million. Farming and work on the land led to 

living in larger communities and the advent of hierarchy, serfdom and the subjection of women. It also 

gave place to artificial selection of crops and animals, creating significant wealth but laying the seeds 

for the problems in biological diversity we are suffering today. The concept of property derived from 

farming at approximately the same time. With the architecture of the mind already in its present form 

since 40,000 years ago, and the ability to foresee well in pace by 9,500 years ago, IC stock surged 

notoriously in the following millennia reaching a population of 170 million by 2,000 years ago. Writing, 

which appeared between 5,000 and 3,000 years ago extended the mind and memory, and helped 

support the setting up of organised government. Before the end of the last era there were already 

open markets for books and our ancestors were coming to grips with the concept of change, both of 

which are likely to have impacted IC stock. 

Language deserves a comment in its own right in the development of both IC and the architecture of 

the mind, for language is the other side of the coin of thought (Collins, [1998] 2002) and without 

thought there is no purpose for a mind and no foundations for the development of IC. Language went 

101


from basic guttural communication a million years ago, to the early traces of the apparition of a 

Language intelligence domain between 500,000 and 300,000 years ago. It had achieved a 

considerable development in terms of lexicon and grammatical complexity by 250,000 years ago, but 

it remained essentially a purely social device. Non-social language snippets (Natural history and 

technical) that emerged around that time announced the perforating of barriers with the other 

knowledge domains, which led language to become general purpose sometime between 150,000 and 

50,000 years ago. At around the time that Hominids started becoming long living and freed by 

menopause some 40,000 years ago, language shifted from being predominately gesture based to the 

fluidity of speech. 

5. Conclusions, limitations and future research 

The main conclusion of this piece of research is that it supports the fact that our understanding of the 

pre-history of the development of IC is compatible with established visions on the evolution of the 

structure of the mind presented by Mithen (1996) and developmental and evolutionary psychologists. 

Indeed, this research supports the fact that IC did not start developing until the mind was fully 

specialised along four knowledge domains modules that complemented general intelligence: social 

intelligence module, natural history module, technical module and language module. More 

importantly, it shows that IC took to vigorous growth only after the barriers between general 

intelligence and the specialised knowledge intelligence domains started breaking down. So IC is a 

product of both specialisation and the mapping across knowledge domains. There is a risk of 

circularity in the prior statement because, quite possibly, the present ideas on the evolution of the 

architecture of the mind was constructed on similar evidence as the construction of the development 

of the pre-history of IC depicted in sections 2 and 3 of this paper. But at the very least this paper 

shows that both sets of claims, developed in parallel, are compatible with each other. In this paper 

great care has been put into making sure that no claims as to the cause-effect relationships between 

the events in evolution of the architecture of the mind and in IC are made. The narrative, especially of 

the discussion section, aims at intertwining the developments of the architecture of the mind with 

those of the evolution of IC, but never claiming causality. Things may have happened by coincidence 

or by synchronicity, but most probably the “Architecture of the Mind-IC” system developed as most 

other complex systems: by iterations of incremental improvements in the architecture of the mind that 

enabled increases in IC, which in turn provoked new phases in the evolution of the mind. Proving 

causality was not stated as the purpose of this paper; its objective is more modest. It is simply 

demonstrating that the two streams of evolution are compatible, and this it appears to have achieved. 

One major reflection from this analysis is that the evolution of the architecture of the mind has had a 

defining role in the development of IC stock. That is not really a surprise. But what this research 

highlights is that the development of forethought with its enabling of the proposal of hypotheses, the 

development of imagination (understanding by this term the ability to have specialisation combined 

with cutting across knowledge domains to create opportunities that are significantly larger than the 

sum of the parts) and the evolution of language as an essential vehicle for thought, have been 

paramount in the development of IC. How does this connection between the evolution of the 

architecture of the mind and the growth of IC link back to the field of management? Clearly the 

infrastructure of the four modules of specialisation of the mind, together with the three holistic 

dimensions of forethought, imagination and language that have emerged from this study, have the 

potential to become the basis of a framework for knowledge management learning, for guiding 

innovation and for IC building. Developing such a framework offers a challenging area for future 

research. 

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103

Innovation in Service Firms: Perspective From Innovative 

Behavior 

Carolina Guzmán Pedraza 1 , Edna Rocio Bravo 2 , Heloisa Oliveira 1 and Fabio 

Blanco 3 

1 

Department of Management, Technical University of Catalonia, Barcelona – 

Spain 

2 

INNOTEC, Industrial University of Santander, Bucaramanga, Colombia 

3 

Department of Economy and Business, University of Barcelona, Spain 

carotul@gmail.com 

tulia.carolina.guzman@estudiant.upc.edu 

erbravoi@uis.edu.co 

heloisa.oliveira@upc.edu 

fblancme7@alumnes.ub.edu 

Abstract: The aim of this paper is to present a review of the literature related to innovative behavior and analysis 

in service firms due to the relevance of the studies and their implication as a line of business research. The 

methodology of the review is based on a detailed search by keywords related to "innovative behavior" and 

"innovative behavior" in the databases (ISI, SCOPUS), choosing the subject areas of business and management. 

The analysis of the review allows deducing that most of the research is empirical and its object of study are 

manufacturing firms, finding that research in service firms focuses primarily on the activities of the hospitality 

industry. The development of innovation in services research is growing, and in this way the innovative behavior 

arises as an unexplored element, that through the case studies could provide a more complete theory building. 

Keywords: innovative behavior; employee engagement; innovation, service firms 


Currently, innovation plays an important role in the management of organizations, allowing the 

generation of competitive advantages (Garcia, Sanzo, Trespalacios, 2008) in response to the 

challenges posed by technological change and dynamism evident in the globalization. Innovation in 

business has different manifestations (Damanpour and Gopalakrishnan, 1998), such that companies 

can implement or modify strategies to influence their performance or make use of technological 

innovation (Mone, McKinley and Baker, 1998). 

There are some strategies (such as procurement, imitations and research consortia) that can be used 

for innovations, although, organizations often have to develop new ideas within their own facilities 

(Bolton, 1993, Cohen and Levinthal, 1990, Pavitt, 1990). Hence, Mumford (2000) emphasizes the 

importance of individual, team, organization and the strategic environment, due to the selection of 

people with skills to manage change could be one of the most simple and effective strategies for 

human resources management to promote innovation. 

The innovative behavior (e.g. developing, adopting and implementing new ideas for products and 

work methods) (Yuan and Woodman, 2010) is an important asset that enables obtain success 

organizations in a dynamic business environment (West and Farr, 1990a). Researchers have 

investigated that employees have the ability to develop innovative behavior within its work 

environment (Yuan and Woodman, 2010), such that they are able to introduce new ideas and 

implemented in a specific organizational context as a result of employee commitment (Slåtten and 

Mehmetoglu, 2011a). 

The main contributions of this paper is submit the evolution of the studies in innovative behavior in 

recent years on issues related to management, making the verification of its existence and relevance 

in the development of service firms, in response to the need of increase and improve the investigation 

in this line (Tether, 2005). Regarding the above, the review of the literature indicates that the activity 

of employees relating to the supply of services is where it is usually implemented innovative behavior, 

while research on the implementation of innovative behavior in the design phase of the service is 

poor. Thereby, it’s important to make an exploration of innovative behavior, which could be carried out 

in relation to employee engagement across job autonomy, perceived role benefits, the company's 

vision and strategic attention. 

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2. Theoretical background 

2.1 Innovation and Services 

Carolina Guzmán Pedraza et al. 

Services are a growing sector of the economy and in many countries has become the main source of 

employment. The research on service innovation and development of new services has become a 

large and dynamic area in the last 20 years. This growth has arisen from the change in views on the 

services which were not known as innovative activities, but now, they are distinguished by its 

innovative potential (Schilling and Werr, 2009). 

Innovation in service firms is different from innovation in manufacturing companies, owing to the 

variety of services and features that distinguish them from traditional manufacturing products 

(Schilling and Werr, 2009). The services have three characteristics that are widely recognized in the 

literature, as indicated by Johne and Storey (1998): 

Intangibility. Services are mainly processes rather than products. The services can be exchanged 

more easily than a physical product or tangible, therefore, changes can be made faster by 

employees who provide them. 

Heterogeneity. In most cases, services are produced and consumed simultaneously, therefore the 

employee who provides the service and the customer have an active role in the service delivery, 

is known as the customization of service. 

Simultaneity. Services products often are produce and consumed simultaneously, this means that 

most services are inherently perishable and for this reason cannot be kept in stock. 

Therefore, the emphasis is on the intangibility and interactivity as essential characteristics of services, 

due to the firms in this sector tend to adapt and reform their activities to provide highly differentiated 

solutions that change according to the needs and diversity of customers. In fact, innovation is seen 

only in creating new technologies, however, it is important that the innovation is since the creative 

potential of the employees, which reflects the ability to interpret customer needs and are often poorly 

described (Tether, 2005) 

Through research on innovation, the differences between the nature of manufacturing activities and 

services have highlighted the importance of developing innovative models for service firms (Barras, 

1990; Gallouj and Weinstein, 1997; Miles, 2001). Damanpour, Walker and Avellaneda (2009) pointed 

out that innovation in service firms can not follow a technological imperative. Wong and Ladkin (2008) 

argue that with increased global competitiveness, the focus on product quality and service excellence 

resulting in addressing the need for improved service delivery through innovation. 

In the review of the literature, is observed that studies of innovation in services is being analyzed by 

the behavior of people, those involved in service provision, therefore, includes aspects of skills 

employees and their job performance. Slåtten and Mehmetoglu (2011a, 2011b) presented a work 

based on the employee engagement and their relationship with innovative behavior of employees 

acting as direct interaction with customers in the hospitality industry. Thus, this work answers the 

need expressed by several investigators with regard to the increase in studies related to service firms. 

2.2 Innovative behavior 

Innovative behavior is critical in achieving competitive advantages (Noefer, Stegmaier, Molter, and 

Sonntag, 2009). As organizations face the challenge of innovation, not only have to rely on some 

employees working in research and development departments but it is very important that their efforts 

are aimed at mobilizing the creative potential of all its human capital (Bessant, 2003). Innovative 

behavior has aroused the interest of researchers to be considerate as the point of connection 

between the behavior of individuals and business objectives. In the management of innovation, 

organizations must find a way to bridge the gap between the divergent interests of employees and 

organizations and the motivation for innovative behavior of employees, regardless of the potential 

risks that accompany this behavior (Pundt Martins and Nerdinger, 2010). 

The concept of innovation described by West and Farr (1990) has been the source used by some 

authors to define innovative behavior. Yuan and Woodman (2010) define innovative behavior as the 

deliberate introduction of the employees in implementing processes of new ideas, products and 

procedures in the role of work in the workplace or within the structure of the organization. This 

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behavior is employed in the search for new technologies, suggesting new ways to achieve the 

objectives, development of new methods for job applications and research, as well as obtaining 

resources to implement new ideas. In turn, point out that innovative behavior is part of the generation 

and application of new ideas. Innovative behavior is a multistage process (Nederveen et al., 2010) in 

which recognizing a problem and generate ideas or solutions (Scott and Bruce, 1994). This paper 

proposes the definition of innovative behavior of employees as attitudes about the new changes or 

improvements the production process, both in manufacturing and service firms, in order to make a 

profit within the internal structure of the organization in a business network, or as a result of the core 

business. 

Research has focused on studying the innovative behavior identifying a set of variables such as 

organizational effectiveness through support for the development of business innovation (Yuan and 

Woodman, 2010), resource exchange (Pundt et al. 2010), the quality of the relationship between 

employee and supervisor (Yuan and Woodman, 2010), the creation and monitoring of innovative 

behavior, the presence of leadership (Nederveen et al., 2010), the performance of work under time 

pressure (Noefer et al., 2009), among others, through which can be analyzed the functional activities 

of organizations and their level of competitiveness. 

Creativity is an important element to development employee behavior. This is defined as the 

production of new and useful ideas and is an important part of innovative behavior (Amabile, 1988; 

Oldham and Cummings, 1996), which in turn can be influenced by knowledge, skills and abilities 

(Amabile, 1983, Barron and Harrington, 1981). In this way innovative behavior is largely a question of 

motivation (Amabile, 1988). 

Researchers have observed that one of the most important reasons for people to innovate in their 

workplaces is to improve performance (Yuan and Woodman, 2010). Performance expectations are 

positive when employees believe their innovative behavior improves performance or efficiency in their 

work unit or function. Some examples related to improvements in performance might be to increase 

productivity and work quality, decrease error rate and an increase in the skills necessary to achieve 

the goals and objectives (Yuan and Woodman, 2010). In a communication environment is necessary 

to demonstrate that belief in innovation could make an organization more efficient and successful. 

These values and beliefs, once they are rooted in corporate culture can be transmitted and 

internalized by employees through socialization processes, seeking to obtain a good level of 

performance in their work (Chatman, 1991, Harrison and Carroll, 1991). 

Another important issue in the development of innovative behavior is related to beliefs, which 

influence the value of the commitment of the organization, through exchange processes occurring in 

the workplace. Employees’ value judgments made about the perception of organizational support, and 

thus determine the potential gains that could benefit if they increase their efforts at work (Eisenberger, 

Huntington, Hutchison and Sowa, 1986). Thereby, the perceived organizational support would be 

related to the development of innovative behavior. 

Likewise, innovative behavior has been investigated since influence of work under time pressure, the 

diversity of skills and feedback from supervisors with innovative behavior in the context of the 

generation of ideas (Noefer et al., 2009). However, working under time pressure could mean that 

there are multiplicity of tasks to be obtained in a short time, becoming an element of stress and 

degenerative to relationships. The time and resources available for performance job on can be 

positive background for the implementation of ideas. In some teams, it might be that the pressure of 

time promotes the implementation of ideas, developing a competitive work environment with short 

delivery times, requiring innovation in processes to meet demand (West, 2002). Idea generation can 

be considered as a prerequisite for the implementation of ideas (Anderson, De Dreu and Nijstad, 

2004). 

Innovative behavior is also related to leadership. Regard, Nederveen et al. (2010), indicate that the 

motivation of transformational leadership may be more effective in generating innovative behavior 

when followers feel more able to proactively influence their roles and work environments through a 

high level of independence in the performance of its functions (also named psychological 

empowerment). 

106

2.3 Employee engagement 


Organizations interested in human capital can verify the implementation of employee engagement 

through the positive results obtained with the generation of innovative behavior, which allows the 

prediction of intention to employee turnover, employee productivity, the financial performance and 

customer satisfaction (Richman, 2006). 

Employee engagement research has no definitive consensus on its definition. However, is often cited 

the content pointed out by Kahn (1990): the employee engagement implies “the harnessing of 

organizational members' selves to their work roles; in engagement people employ and express 

themselves physically, cognitively, and emotionally during role performances”. Gruman and Sacks 

(2011) describe that engagement as a state proportional to the expression of certain behaviors. 

Therefore, levels of employee engagement imply a response in the extent to which various elements 

of the process of performance management are designed to promote its appearance. 

Slåtten and Mehmetoglu (2011a) conducted a study linking employee engagement to innovative 

behavior in service firms, specifically in the hospitality industry and related to a particular group of 

employees whose performance is the role of customer service (frontline employees). In this way, the 

authors respond to the academic interests that seek to increase research on innovation in service 

businesses (Miles, 2000; Wong and Ladkin, 2008). The results of this study indicate a close link 

between the employee engagement and innovative behavior, obtained through an empirical 

demonstration that made an analysis of the concepts: job autonomy, strategy implementation and the 

perceived benefit of the role. 

Slåtten and Mehmetoglu (2011a) suggest that managers should consider that the exercise of inherent 

potential in the autonomy (freedom, flexibility and planning of activities that managers give to 

employees) is beneficial or has value to the company only if handled correctly and that it may begin 

with the dedication of time to activities involving the employee in the early stages of the strategic 

process. Likewise, the manager must spend time with his team for teach the strategy of the company 

and the role each employee. The results of the research point out that the strategic attention 

(perception of the degree of implementation of the strategy of the firm in a particular job role) is able 

to stimulate employee engagement and innovative behavior (Slåtten and Mehmetoglu, 2011a). 

The benefit of the role it is necessary for the employees can perceive their role as a resource for 

improving their condition and can feel according with their career aspirations. The manager must 

encourage employees to perceive their work as a resource to improve their condition, focusing on the 

employee's professional development (Slåtten and Mehmetoglu, 2011a). 

How to link innovative behavior and employee engagement? 

Slåtten and Mehmetoglu (2011a) found that a positive emotional state implicit in the employee 

engagement has two effects which are closely related and may produce innovative behavior: more 

positive attitude toward work opportunities, which leads to the wish to offer service to others, and 

positive emotions that are associated with creativity (Slåtten y Mehmetoglu, 2011a). Thus, the 

employee will have the ability to be creative when providing a service, ie, will have innovative 

behavior in the execution of their roles. 

The creativity is directly related to the innovative behavior in creation of ideas and in his 

implementation in the workplace (Slåtten and Mehmetoglu, 2011b). Motivation is the link between 

creativity and innovative behavior that has always been associated with employee creativity (Collins 

and Amabile, 1999). In keeping with to Amabile (1988) creativity is composed of three elements: 

personal experience (knowledge), skills (people’s approach to their problems or their ability to 

combine their ideas) and motivation (which means "to determine what people will actually do"). 

Motivation, knowledge and people skills are related to empowerment, which qualifies as the main 

factor related to excellence in service (Babakus et al, 2003, Pfeffer, 1994). Empowerment is the 

perception that the employee as to what extent does your organization provides the necessary 

freedom, autonomy or the means to make decisions and commitments (Forrester, 2000). Banker, 

Lee, Potter and Srinivasan (1996) pointed out that empowerment is needed on the role of frontline 

employees since the activities needed to improve customer satisfaction are not previously 

established. Slåtten and Mehmetoglu (2011b) suggest that if the firm encourages creativity, 

107


empowerment of employees increase. Therefore, empowerment is essential to generate new ideas 

and implement them in the workplace, but also is the opportunity for transformational leader motivates 

followers (Nederveen et al., 2010). 

The vision of a company is important, when considered as a synthesis of the firm goals (Locke and 

Kirkpatrick, 1995), reason for should be made available to all employees and should serve to guide 

members towards the expected results through a common aim to all (Slåtten and Mehmetoglu, 

2011b). According to Kotter (1990) the vision should "describe a business, technology, or corporate 

culture in terms [of] what it should become over the long term and articulate a feasible way of 

achieving this goal." Employee familiarity with the vision is positively related to creativity, to trigger 

innovative thinking and behavior employee in a specific job role (Slåtten and Mehmetoglu, 2011b). 

This is a practical effect of the strategic attention. 


The analysis of the literature review is presented as an initial phase of the research, to collect 

information to prepare the state of the art. Innovative behavior is the origin of this work, therefore we 

carried out a detailed search in the scientific literature to explore the scope of research and its 

trajectory over time, through the databases ISI (Institute for Scientific Information) Web of 

Knowledge’s Social Sciences Citation Index (SSCI) and SCOPUS. A search was conducted with the 

combination of the words "innovative behavior" and "innovative behaviour", taking into account that 

the individual search results are different so it was necessary to unify them. Also, it was included a 

thematic filter to define search in two main areas, business and management, likewise, we have been 

taken account some applied psychology articles in business management, however, we were not take 

account the marketing articles because the most studies in this area are involved with the analysis of 

consumer behavior. There was not a limit of time, selecting articles and literature reviews. 

The scientific production in innovative behavior has exponential trend, analysis of the number of 

publications is made between 1993 and 2012 (see Figure 1), showing a sustained growing line and 

sustained since 2001. 

Figure 1: Growth of publications on innovative behavior estimated until June 2012 

The appearance of innovative behavior is linked to keywords like leadership, organization, employee 

behavior, organizational culture, technological capacities, R&D. Also there are a connection between 

the keywords like technological capacities, industry, and information technology. In this way, the 

employee focus relates to the psychological context, the organizational context and the behavior of 

the employees. In organizational context, the relationship is with the organizational culture, the 

employee focus, validity and information technology. When it comes to the thematic categories (see 

Figure 2), the relation of innovative behavior is related to business issues, management, applied 

psychology and economy, industrial relations, information technology, industrial engineering, 

communications and some cases are linked three of the mentioned categories. 

108


Figure 2: Innovative behavior and thematic categories linked 

4. Results 

Support from supervisors and autonomy of employees (application of psychology empowerment) to 

decide how to improve service delivery are factors that encourage innovative behavior. In this regard, 

researchers have studied the phenomenon in the specific role of frontline employees (Slåtten y 

Mehmetoglu, 2011a). 

Employee engagement through the company's vision and strategic attention enables an approach by 

the employee to know the objectives of the company, with the participation and communication from 

supervisors who are responsible for persuading employees in meeting these targets, according to the 

strategic plan of the company. The dedication of time that managers give to employees as inherent in 

their role is significant for obtaining results for the company, generating the perception of benefit of 

their role (Slåtten y Mehmetoglu, 2011a). 

Employee engagement should be strengthened by managers to improve employee motivation in 

developing their creativity and generate innovative behavior. Creativity is included in studies 

examining innovative behavior as part of idea generation and implementation of ideas (Shalley, Zhou 

and Oldham, 2004; Zhou, 2003; Yuan and Woodman, 2010). 

The approach developed by academics describes the management of employees and the execution 

of their functions is important and necessary to have positive results and competitive advantages in 

the business environment (Mumford, 2000; Slatten and Mehmetoglu, 2011A). Therefore, there is a 

consensus that managers are the support that companies give to employees, which can sometimes 

act as leaders to promote the union of employees and the objectives of the firm through observation 

109


and communication (Chatman, 1991, Harrison and Carroll, 1991; Nederveen et al, 2010;. Pundt et al, 

2010). 

The perception of firms' innovative behavior of services is discussed in the role of frontline employees, 

why it is necessary to study the presence of innovative behavior at other levels of the organization, as 

in the design stage service, verification of the conditions of service delivery and acceptance or 

customer interaction. 


Innovative behavior is an important element in the investigation of the evolution of innovation in 

service firms. The characteristics of services (intangibility, heterogeneity, simultaneity) increase the 

importance of the role of innovative behavior in service delivery as demonstrated by studies of Slåtten 

and Mehmetoglu (2011a, 2011b). Therefore, the innovative behavior could determine the presence of 

innovation (technological resources unevaluated) highlighting the role of employees in the generation 

of competitive advantages. 

Research in business services are necessary in the analysis of the stages prior to service delivery, 

focusing on the design and planning of services as a business process step that is complemented by 

feedback of strengths and weaknesses described by frontline employees. The literature review is 

observed that the research has been directed towards the role of frontline employees, showing a gap 

in the research conducted so far and therefore it is an opportunity to expand the studies focused on 

design of services. 

The elements of analysis in the research of innovative behavior (leadership, work environment, job 

requirements, supervisor support, strategic attention, etc.) are related to the perception perceived 

organizational support that the firm gives its employees. Through the structure of the theory of 

organizational support is possible to study the generation and implementation of innovative behavior, 

therefore, be interesting to the relationship of these concepts in the development of service 

businesses. 

Researches of innovative behavior in service businesses can find other connections to theories such 

as transaction costs, networks, resource-based view, dynamic and capabilities. In order to initiate a 

theoretical approach of innovative behavior research approaches mentioned above, it is interesting to 

propose the implementation of the strategy of case study methodology which delivers results detailed 

observation of the phenomenon and the establishment of a framework specific theory to describe the 

innovative behavior of employees in service firms. 

Services studies reviewed in this article have been made in the hospitality firms. However, the great 

importance in the competitive area of business can be interesting to extend this research in areas 

such as financial institutions, educational institutions, medical services firms as well as government 

entities. The authors hope that this study will stimulate theory building and running tests to investigate 

the processes of innovation in service firms. 

References 

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Effects of Advances in Technology on Tacit Knowledge 

Transferability 

Nowshade Kabir 

Grenoble Graduate School of Business, France 

nowshade@gmail.com 

Abstract: The purpose of this paper is to facilitate understanding of tacit knowledge, the impact of technological 

advancement on tacit knowledge codification and what organizations should do to improve their use of available 

tacit knowledge. Introduction: The paper addresses the issue of tacit knowledge codification from a new 

perspective. Tacit knowledge is a crucial resource for any organization’s innovation, competitive advantage and 

growth. To create economic value from the tacit knowledge available to an organization it has to emphasize on 

efforts to codify and make it accessible to the organizational workers where necessary. To achieve this goal, 

organizations need to have a clear understanding of tacit knowledge, its place within organizational knowledge 

requirement and how to take advantage of this vital resource. The paper reviews tacit knowledge, its link with 

explicit knowledge and demonstrates the correlational between technological advancement and transmuting 

potential of tacit knowledge. Deconstructing some of the examples from past knowledge literature, the paper 

proclaims that many previously considered cases of tacit knowledge can be fully codified to explicit knowledge 

thanks to new technologies. It also contends that taking in consideration the advent of new technologies 

organizations should re-evaluate their stance in regards to transferability of many types of tacit 

knowledge. Findings: The author argues that with the advancement of technologies more types of tacit 

knowledge can be made transferable and accessible to workers across the organization. Originality/Value: By 

exemplifying the possibilities of tacit knowledge codification with emerging technologies the paper contributes to 

a better understanding of tacit knowledge and its transformability. 

Keywords: tacit knowledge, organizational knowledge, knowledge codification, knowledge transfer, knowledge 

growth 


Tacit Knowledge, its definition, domain, typology, and conceptual understanding have been the 

subject of much debate within knowledge related scholar community and among Knowledge 

management practitioners for quite some time. The complex, opaque and subjective nature of 

knowledge as an epistemological concept is one the main reasons of this dispute. The argument 

whether knowledge is “justified true believe”, where truth depends on either contingence or on 

necessity, whether knowledge evolves from experience or from reasoning and distinctions is very 

much alive and exacerbates recently with the increased need of organizations to capture, retain, 

transfer and use a vital part of their knowledge domain – tacit knowledge. 

Tacit knowledge, a key concept in organizational knowledge management is understood as 

subjective, informal and internalized – it is related to our social and physical experiences, our 

cognitive abilities, somatic skills and mental and physical perceptions. It is more personal, 

experiential, context specific and hard to formalize (Saviotti, 1998; Leonard & Sensiper, 1998). Tacit 

knowledge gets embodied in people by learning from experience, insights, heuristic procedures etc. 

and according to many scholars it is difficult to express and codify in a manner so that it could become 

transferable (Polanyi, 1962; Reed & DeFilippi, 1990). Others conclude some tacit knowledge is 

impossible to pass on due to its extreme stickiness (Szulanski, 1996) but most tacit knowledge is 

transferable (Nonaka & Takeuchi, 1995; Collins, 2010). At an organizational level, tacit knowledge is 

present not only in an individual but is also available in processes, culture and values. (Haldin- 

Herrgard, 2000) Since tacit knowledge is not easy to aggregate or disseminate and it embodies 

knowledge that creates sustainable competitive advantage in part through innovation, managing this 

type of knowledge is of utmost strategic importance for an organization. (Grant, 1996) 

Tacit knowledge is fundamentally different from explicit knowledge. The knowledge which is general, 

conventional and easy to express in commonly comprehensible language and possible to share, 

codify and convert as principles, formulae, data, processes and information is called explicit (Polanyi, 

1962a; (Nonaka & Takeuchi, 1995). Explicit knowledge is easy to access and transfer and also refers 

as "knowing about", subjective or declarative knowledge (Kogut & Zander, 1992). Although, it is a 

necessary prerequisite for innovation and value creation, unless protected by patents, copyrights or 

vigilantly guarded, it is also easy for competitors to imitate, thus any competitive advantage gained 

from using explicit knowledge as a result becomes short-lived (Dierick & Cool, 1989). 

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2. Tacit knowledge review 


Several prevailing views regarding conceptual notion of the term tacit knowledge exist. The first view 

is that tacit knowledge is the part of knowledge that has not been codified as yet. (Ambrosini & 

Bowman, 2001; Boisot, 1995; Davenport & Prusak, 1998; Leonard & Sensiper, 1998; von Krogh & 

Nonaka, 2009) This epistemological dyadic perception places tacit knowledge as a phenomenon 

directly opposite to explicit knowledge. 

The second view is tacit knowledge by very definition is tacit – ineffable. Any attempt to convert it to 

explicit is a futile effort. Tacit knowledge is the background or subsidiary knowledge of the focal 

knowledge of the act at hand, and because of this isn’t reducible to the level of explicit as it is only 

relevant to a specific context (Tsokas & Vladimirou, 2001; Cook & Brown, 1999; Brown & Duguid, 

2000; Jones & Miller 2007). 

The third view that corresponds with our suggestion in this paper: In any context where knowledge is 

applied, a part of tacit knowledge, which is overlaid on top of all the knowledge being utilized, will 

always stay ineffable and cannot be codified. We can call this fragment of knowledge the “meta tacit”. 

Apart from this, most tacit knowledge, depending on degree of difficulties in codification, its viability of 

codification and the availability of required resources, could be codified. Collins (2010) shows eight 

different possible reasons or "Cannot" ranging from inconvenience to impossibility to clarify what 

types of tacit knowledge are not explicable. 

The concept of the tacit knowledge in management science found its impetus in Polanyi's ideas 

elaborated in a series of lecture that were collected as a book under the name “Personal Knowledge: 

Towards a Post-Critical Philosophy” in 1958. From Polanyi’s works we can deduct three primary 

theses related to conceptualization of knowledge. The first one says, strictly logical and explicit 

approach cannot lead to genuine knowledge as scientific discoveries cannot be explained just by 

rules and analysis, second, knowing is highly personal and third, explicit and tacit knowledge are 

correlated and inseparable. (Sveiby, 1997) Polanyi asserts that explicit knowledge is knowledge, 

which is articulable and tacit, which is not and "All knowledge is either tacit or rooted in tacit 

knowledge. A wholly explicit knowledge is unthinkable". (Polanyi, 1969, p.144.) While Polanyi was 

clear in formulating his perception of explicit, his notion of tacit knowledge is quite equivocal. (Hall, 

2010) 

Parallel to his tacit and explicit dimensions of knowing he also offers a view differentiating two distinct 

kind of awareness: focal and subsidiary in the process of performing any action. Focal awareness 

relates to the consciously focused object of action and subsidiary awareness provides the background 

knowledge and skills necessary to perform the action. In this context according to Polanyi the focal 

awareness is the explicit knowing and subsidiary awareness is the tacit knowing. (Polanyi, 1962a) 

As interest in knowledge management science increased over the course of time there has been 

significant development in the understanding of tacit knowledge, its domain and its use in 

organizational sphere. Nelson and winter (1982) Referring to Polanyi's concept of tacit knowledge 

denotes that prevailing economic theory is flawed as it does not consider the dynamic change 

occurring within the organization. March and Simon (1993) asserts that organization develops certain 

operational processes that are difficult to articulate and these are organizational equivalent of 

personal tacit knowledge. 

Schein (1984) focused on the aspects of organizational culture and argues that organizational culture 

is embodied by unarticulated assumptions which being tacit are highly salient in an organizational 

structure. Winter argued that tacit knowledge facilitates competitive advantage for firms (Winter 1987) 

Kogut and Zander (1992) posits that value of the organization depends on its available knowledge 

and differentiating tacit and codified knowledge, they wrote about the easier transferability of tacit 

technological knowledge within firm's units thanks to shared values and understandings as oppose to 

outside partners. Grant (1996) propagating knowledge-based theory of the organization wrote that 

knowledge is strictly individual and organizations should focus more on knowledge application rather 

than knowledge creation. 

Numerous scholars have contributed to the development of knowledge management theory, but 

Nonaka's "Knowledge Creating Company" and the models described in it have managed to become 

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the most well known and widely cited pieces in knowledge based organizational strategy literature 

(Choo & Bontis, 2002). Nonaka and Takeuchi, in their seminal work, postulate that explicit knowledge 

and tacit knowledge are complementary. The dynamic interaction of these two types of knowledge 

causes a knowledge conversation that in turn creates knowledge. Their SECI model – so far the most 

accepted model in the knowledge management – includes four different modes of knowledge 

conversion: Socialization – transfer of knowledge by means of intermingling which results tacit to tacit 

knowledge conversation, Externalization – knowledge transfer by means of codification of tacit 

knowledge to explicit, Combination – knowledge conversion from explicit to explicit and finally 

Internalization – adoption of knowledge through learning. (Nonaka & Takeuchi, 1995) 

In a recent book, Harry Collins (2010) sets to demystify some of the confusions related to the term 

tacit knowledge. In order to bring clarification to the concept he proposes a categorization of three 

distinct types of tacit knowledge: relational tacit knowledge, somatic tacit knowledge and collective 

tacit knowledge. With this taxonomy Collins tried to differentiate explicable – both rational and somatic 

tacit knowledge fall in this category – tacit knowledge from the collective tacit knowledge which is 

context dependant and cannot be codified. 

3. Technological advancement and tacit knowledge 

Much of the growth in the organization can be attributed to its ability to capture, retain and exploit 

knowledge effectively. With the rapid development of new technologies, the potential for creating, 

aggregating and using new knowledge has increased substantially. However, the question of how to 

maximize the use of massive amounts of tacit knowledge residing within the organization and its 

workers and create economic value still remains unclear. If an organization wants to improve its 

potential use of tacit knowledge, it needs to undergo a paradigm shift and evaluate available 

knowledge from more technology-centric point of view. Many types of knowledge earlier considered 

as tacit and ineffable have become explicable thanks to the advancement of new technology. As our 

perception of tacit knowledge changes, we recognize and adopt new approaches in relation to how 

we handle tacit knowledge. To illustrate our view we have outlined several examples of explicable 

tacit knowledge considered inexplicable in previous knowledge related literature. 

To demonstrate the principle of ineffable tacit knowledge Polanyi uses topographic anatomy as an 

example. He writes "The major difficulty in the understanding, and hence in the teaching of anatomy, 

arises in respect to the intricate three-dimensional network of organs closely packed inside the body, 

...it is left to the imagination to reconstruct from such experience the three-dimensional picture of the 

exposed area as it existed in the unopened body, and to explore mentally its connections with 

adjoining unexposed areas around it and below it." Then continues, "The kind of topographic 

knowledge which an experienced surgeon possesses of the regions on which he operates is therefore 

ineffable knowledge." (Polanyi, 1962, p. 92). 

This was certainly a good example of ineffable tacit knowledge of the period when the text was 

written, but today, thanks to the technological advancement, this topographic knowledge is readily 

available to all students. In fact, thanks to recent 3D technologies we can study any part of our body 

from every possible angle. As we can see in this particular example Polanyi indirectly supports our 

view that a large portion of tacit knowledge considered as ineffable today may become explicit with 

further technological advancement. 

Tsoukas – a proponent of ineffability of tacit knowledge – argued in his paper "Do we really 

understand tacit knowledge?" that the interpretation of tacit knowledge as a knowledge waiting to be 

codified is a flawed perception. Tacit knowledge should not be perceived as the complete opposite of 

explicit knowledge, but rather two sides of a same coin. Tacit knowledge being subsidiary of focal 

knowledge cannot be separated and articulated. To support his view he shows an example, taken 

from Polanyi, of the use of geographical maps. He notes that if even we are proficient enough with 

maps to use them, we need to know how to relate a map with the real world (Tsoukas, 2003). In order 

to get from one place to another, we first need to identify our current position, then to find the itinerary 

on the map and finally to actually go to the intended place we will require proceeding by following 

various recognizable landmarks identifiable on the map. (via Tsoukas, 2003 Polanyi and Prosch, 

1975:30). He continues, "a map, no matter how elaborate it is, cannot read itself; it requires the 

judgement of a skilled reader who will relate the map to the world through both cognitive and sensual 

means" (Tsoukas, 2003). 

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Let's see how this would possibly work today, using a “smart” device supported with an Internet 

connection, GPS and Google Maps. Our location is identified by Google Maps automatically thanks to 

the embedded Geo-location feature. Once we insert our destination and select our route, the GPS will 

take us to the end point without having any need of us to recognize any landmarks. Again, it becomes 

evident that with technological advancement something that was considered tacit knowledge – our 

ability to navigate using a map – became completely explicit. However, there is still a residue of 

ineffability remaining here, which is our decision to travel from the point A to point B. This intention of 

ours – which is the prerequisite for the action to take place – we can call meta-tacit, a metaknowledge 

which is ineffable in this context. 

One of the most commonly cited examples from Polanyi's work on tacit knowing is bicycle riding 

where he claims that we learn to ride a bike without being given any explicit rules of riding and 

although we may know how to ride a bike we cannot explicate the process how exactly we do it, 

which means ability to ride a bike is tacit knowledge. Colin (2010) writes that the way Polanyi 

explained the rules of bike riding it is actually bike balancing and can be easily codified. The human 

difficulties of acquiring the skill of bike balancing are related to the nature and limitation of our brain 

and body. However, the real problem seems to be maneuvering through the traffic while riding a bike. 

This, according to him, is tacit knowledge, which is not transferable. But, Google's driverless car 

travelling guide system proves that with advances of technology even this seemingly complex type of 

tacit knowledge can also become fully transferable. 

Collins (2010), to illustrate another point of ineffability of collective tacit knowledge, gives an example 

from the well-known TV series "Star Trek: The Next Generation". In one episode, Commander Data – 

the fictional android – learns to dance from fellow crew Doctor Crusher. He not only manages to copy 

every movement instantly and repeats when it was shown to him, upon request from Dr. Crusher he 

also improvises additional new steps. Collins writes: "This is where "Star Trek" goes wrong, because 

it shows Data managing improvisation as flawlessly as he had managed the initial steps". According 

to Collins "improvisation is a skill requiring the kind of tacit knowledge that can only be acquired 

through social embedding in society". (Collins, 2010, p. 124) We argue that this is not exactly the 

case! 

If we understand that improvisation is a deliberate extemporaneous composition and execution of 

novel action (Moorman & Miner 1998a), then Data has indeed demonstrated his capability for 

improvisation in multiple occasions in various episodes of "Star Trek". Not to mention, just to engage 

oneself on a human level of conversation requires a functional improvisation capability. Besides, 

Artificial Intelligence researchers are already experimenting with a dancing robot named "SpiderCrab" 

which is capable of improvising while dancing with a partner, albeit in a limited scope. (Wallis, et. al., 

2010) 

Not too long ago putative notion was that grand master level of chess playing is the epitome of human 

brains capability of knowledge retention, calculation and use of strategic and tactical 

judgment. These skills are developed by practices and as such are tacit knowledge. Hubert Dreyfus 

(1971) famously proclaimed that no computer could ever beat a grand master in chess. As it turned 

out with the advancement of technologies it was not a difficult task at all when Deep Blue, developed 

by IBM did beat the world champion handily in 1997. Dreyfus may still argue that machine uses brute 

force – its sheer size of memory and calculative power – and by no means correspond or represent 

grand masters' unique cognitive process, moreover, it just follows the algorithm embedded in it by 

people, technically there is no supremacy of machine in this. However, from knowledge management 

perspective we are more interested in the outcome of the use of technology as this and Watson's win 

in Jeopardy – a game requiring intense level of cognitive analytical ability demonstrate new 

possibilities and open new horizons in relation to technology utilization in knowledge enhancement, 

codification and transfer. 

It is not just direct intervention of technology that can make highly tacit knowledge explicit, technology 

may also play rather supportive role in some contexts. The advancement of technology has allowed 

us to access vast amount of new knowledge momentarily. This constantly evolving new knowledge 

base helps us making knowledge transfer easier and new discoveries faster. There are many 

activities that augment organizational knowledge base and enhance its innovation capacity such as 

research and development collaboration, patenting and licensing, merger and acquisitions, training 

and consulting, spin-offs and new market entry, knowledge publication and diffusion, etc. In all of 

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these areas technology plays crucial role and makes transmuting tacit knowledge within organization 

and outside of it possible. 

The figure (Fig. 1) shows the linear correlation between advances in technology and knowledge 

tacitness. For knowledge, which is tacit but easily explicable, an example would be a critical feedback 

from an expert, the technology required to codify is not as complex as a highly tacit knowledge such 

as knowledge related to improvisation or emotion would need. The graph takes in consideration that 

for any knowledge to be codified for future use requires a minimum level of technology input. 

Figure 1: Relation between advances in technology and tacitness of knowledge 

4. Tacit knowledge and organizational knowledge management systems 

These examples demonstrate that organizations need to take a hard look at much of the knowledge 

they consider tacit and ineffable. While it might be difficult to cope with the ever emerging new 

technologies and assess their capabilities related to knowledge management, organizations need to 

be vigilant. As to stay competitive they have to augment their capabilities of tapping into and using 

effectively the knowledge available to them, particularly in spheres like innovation. 

In order to retain, use and simulate the critical knowledge of an expert, organizations often use expert 

systems within their knowledge management strategy. Mere use of expert systems does not always 

bring the expected outcome in revealing highly tacit knowledge. One solution for a new type of 

knowledge management systems is to combine expert systems with searchable multimedia 

knowledge files, where the expert's decision making process is documented in visual layout and the 

aspects that he considers most crucial is also explained step by step with physical demonstrations 

captured in multimedia format. By using a combination of these approaches along with other 

components of a knowledge management system, the capacity of the capturing process of expert’s 

tacit knowledge can be increased significantly. 

Organizational knowledge literature specifies that knowledge is a key strategic asset and firms have 

to learn how to effectively manage these resources in order to stay profitable (Bollinger & Smith, 

2001). Moreover, failures to create, integrate, manage, and use the knowledge endemic and that 

acquired from exogenous sources may cause demise of the competitive advantage of the firm (Alavi 

et al., 2001). The importance of knowledge in a firm was clearly noted by renowned management 

guru Drucker as he declared that knowledge is the only resource for sustainable competitive 

advantage (Drucker, 1993). 

Knowledge management is the mechanism and systematic approach of managing an organization’s 

tacit and explicit knowledge. It refers to the processes and practices through which firms generate 

value from knowledge (Gold et al, 2001). The Knowledge Management System (KMS) is an 

information technology based infrastructure designed to help manage knowledge related routines, 

processes and procedures. It focuses on knowledge creation, aggregation, storage and distribution in 

order to facilitate innovation and other activities that bring economic value to the firm. 

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Perception of what type of knowledge management system is required for an organization differs 

significantly from division to division. In order to maximize the benefits of a knowledge management 

system, priorities should come from the organization's leadership. The prevailing focus areas of 

knowledge management systems are business process management, decision support systems, 

business analytics, repository systems, etc. Many of these systems are an excellent source of primary 

tacit knowledge. (Nissen, 2006) and should be integral parts of knowledge management systems. 

However in relation to tacit knowledge, the required technologies are those which can support, 

capture and enhance activities such as group work, guided experiments, simulations, meetings, 

mentoring, apprenticeship and online and offline socialization. Importance should be given not just to 

have these activities captured in multimedia repositories but the knowledge management system 

must also facilitate access to all multimedia information upon request in a simple user-friendly 

manner. The technologies that can deliver answers to a significant portion of the challenges we are 

encountering in this regard are already available. Semantic web and its supportive technologies like 

knowledge ontologies, 3D technologies, predictive analytics, artificial Intelligence agents, 

telepresence, etc. are a few of them. The vision of organization’s leadership, an enduring knowledge 

focused strategy, emphasis on right type of tacit knowledge, proper selection of tools to convert the 

knowledge may have far reaching implication for an organization’s future competitive potential. 

5. Conclusion 

We have analyzed organizational tacit knowledge in this paper from a perspective that indicates a 

need to reassess the strategy used by most organizations towards their tacit knowledge 

management. We have also demonstrated that there exists clear correlation between the two 

dimensions: advances in technology and convertibility of tacit knowledge to explicit. This study argues 

that a notable amount of tacit knowledge, which is available within an organizational realm, can be 

codified. It also becomes clear that organizations should intensify their efforts in identifying and 

capturing tacit knowledge using emerging technologies to strengthen their knowledge base, as new 

technologies are indeed capable of delivering more. Furthermore, organizations should take in 

consideration that the strong knowledge foundation will work as a driving force to an organization’s 

competitive advantage. It should be noted that from the technology perspective we often pay more 

attention to knowledge transfer. In doing so we must also realize that knowledge sharing which in fact 

is one of the key reasons why we need to transfer knowledge is essential as well. The success of 

knowledge sharing depends largely on the followings issues: relationship between knowledge source 

and knowledge seeker, (Uzzi, 1996) the absorbance capacity of knowledge seeker, (Cohen & 

Levinthal, 1990) the sharing capability of the knowledge source, (Teece, et al., 1997) the motivation 

and mindset of the knowledge seeker, ((Yeung et al., 1999), the cultural, administrative and structural 

ecosystem where knowledge sharing takes place (Gupta & Govindarajan, 1991) and means and 

methods used for knowledge transfer. (Davenport & Prusak, 1998) Szulanski (1996), for 

example, indicates transfer of knowledge similar to transmission of a message from a source to a 

recipient and depends on the content of the message as well as the given context. The specificity of 

the message and related temporal and situational peculiarities at the time of actual delivery made, 

may impose constrain on the amount of knowledge that can be transferred, making the knowledge 

stickier. In this article we did not touch any of these matters but consider them imperative in any 

knowledge transfer endeavor. 

The points raised in the paper can be summarized as followings: the understanding and definition of 

tacit knowledge are still controversial, nebulous and require further study; technological advancement 

makes prior unconvertible tacit knowledge explicable to a larger extent than most organizations 

consider and the ability of organizations to tap into their tacit knowledge domain is improving 

significantly over time. 

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119

Australian Universities and Intellectual Capital Reporting: 

Case Studyhe Group of Eight 

Siavash Karami 1 and Alireza Vafaei 2 

1 

Australian National University (ANU), Canberra, Australia 

2 

La Trobe University, Melbourne, Australia 

u5240635@anu.edu.au 

skarami2@yahoo.com 

A.Vafaei@latrobe.edu.au 

Abstract: Australian universities are the major exporter of higher education in the country. As knowledge 

producers, they face the challenges of globalization, and the financial resources needed to maintain their 

competitive advantage. The current funding systems that use traditional resources like students’ fees and 

government grants are unable to meet these requirements. This could well force Australian universities to 

improve their structures; aiming for a higher international standard and recognition of a more visible and dynamic 

competitive system to attract funds. The purpose of this paper is to investigate the level of intellectual capital 

disclosure and the existence of any standalone intellectual capital report (ICR) by Australian universities. Four 

universities from the eight leading Australian universities known as the Group of Eight (Go8) have been chosen 

at random for this study. The universities in the Group of Eight compared to other Australian universities are 

highly research-concentrated and subsequently, have valued reputations. Findings indicate that sample 

universities disclose some intellectual capital information via their annual reports. However, there has been no 

attempt, at the institutional or systems-wide level, to produce a standalone intellectual capital report (ICR) with 

standard indicators. In fact, a low rate of innovation, poor human resources and a weak relationship with 

business need a new managerial approach. Accordingly, results suggest a change within the current system. 

This study strongly recommends Australian universities to utilize a universal framework for measuring, managing 

and reporting of intellectual capital information to meet the global and competitive challenges ahead. Currently, 

European universities – as Australian competitors - are required to disclose a standalone intellectual capital 

report to construct a harmonized national university system. Theoretical implications of this paper assist with the 

classification and search for appropriate indicators for measurement and disclosure of Intellectual capital in 

universities. The practical implication of this paper could be of interest to many different parties, such as 

institutional investors, managers, policy makers and university scholars. 

Keywords: intellectual capital, higher-education, Australian universities, intellectual capital reporting 


The first aim of this study is to investigate the intellectual capital reporting in Australian universities. 

Intellectual capital (IC) developed and became a major driver for competitive advantage, not only for 

business but for universities and other service industries. Universities are the major players in 

knowledge producing and innovation systems. Investment in human resources and research are the 

most important factors to generate and develop knowledge and IC (Cañibano and Sánchez, 2004). A 

standard report that analyses these investments and reveals the details to the interested parties can 

help the management and measurement of IC. A comparable system to create a universal 

communication mechanism, and facilitates mutual relationships between different parties such as 

business, practitioners and academics is essential. Intellectual Capital Reporting (ICR) as a 

comparable index can create this link. How universities measure and manage their IC and which tools 

and resources can be used in effectively measuring IC to improve reporting and performance is the 

second focus of this paper. 

The final scope and third area of focus to be examined is the relationship between accountability, 

transparency and IC disclosure. 

2. Definition of intellectual capital 

The 21 st century is recognised as the era of intangible assets and intellectual capital. Historically, an 

organisation’s value is measured by reference to their tangible assets, e.g., their physical capital, 

financial capital, returns on investment etc. This is recognised as a limited approach, which 

understates the true value of organisations, in particular, those concerned with services rather than 

physical outputs (Burton, 2001). Intangible asset terminology is derived from an accounting concept. 

Intellectual capital, on the other hand, is related to human capital and knowledge management. Both 

terms refer to the same intangible value in the employees’ heads regarding their working capability to 

perform the task for an organization (Fazlagic, 2005). 

120

Siavash Karami and Alireza Vafaei 

A diversity of players, such as academics, accounting bodies, policy makers, managers and investors 

with different interests make it hard to have a universally accepted definition for IC (OECD, 2008). In 

addition, there are differences between practical realities and theoretical definitions and 

classifications. Stewart (cited in Bontis, 1996), defined IC as “the intellectual material that has been 

captured, formalized and leveraged to produce a higher-valued asset.” Stewart (1997) classifies IC as 

a combination of Human Capital (HC), Structural Capital (SC) and Customer Capital (CC) (Figure 1). 

The elements of IC: 

Human Capital 


Structural Capital 

Customer Capital 

Figure 1: Elements of IC (Steward, 1997) 

Human capital is “the individual’s capability to provide solutions for their customers” (Stewart, 1997). 

Structural capital converts “know-how into the group's property; and customer capital allows relations 

with customers to be perpetuate” (Stewart, 1997). 

The Organisation for Economic Co-operation and Development (OECD, 1999) defines IC as “the 

economic value of two categories of intangible assets of a company: (a) organisational (‘structural’) 

capital and (b) human capital” (OECD, 2008). Structural capital is later divided into internal and 

external capital (Schneider, 2007). This definition is regarded by some researchers as one of the 

practical definitions and classifies IC as Human capital, internal and external capital (Edvinsson and 

Malone, 1997; Kaplan & Norton, 1992; Petty and Guthrie, 2000; Roos, 1997; Stewart, 1997; Sveiby, 

1997). This classification labelled as “Intellectual Capital Approach” is used by a number of 

companies and organizations (e.g., Skandia and Sys-Com) as an initial framework for measuring and 

reporting IC (Schneider, 2007). In summary, almost all definitions appear to be in agreement that 

intellectual assets are non- physical assets with three distinctive keys :1) potential for economic 

profits; 2) short in physical material; and 3) can be traded, retained by a firm, and generally include 

Research and Development (R&D), trademarks and patents (OECD, 2008). 

This study considers the Intellectual Capital Approach as a platform for measuring Intellectual Capital 

Reporting (ICR) in the educational sectors. Table 1 shows the detail of three aspects of an Intellectual 

Capital Approach. 

Table 1: Intellectual capital approach (Petty & Guthrie, 2000 cited in Schneider, 2007) 

Intellectual 

Capital 

Approach 

Internal 

Capital 

External 

Capital 

Human 

Capital 

Alternative 

label(s) 

Organisational 

capital 

Structural 

capital 

Internal 

relations 

Customer 

capital 

Relational 

capital 

External 

relations 

Employee 

competence 

Description 

Refers to the knowledge embedded in organisational structures and 

processes, and includes patents, research and development, 

technology and systems. 

Comprises elements of an organisation’s patrimony-related customer 

relations: relationships with customers and suppliers, brand names, 

trademarks and reputations. 

Refers to the set of all the knowledge and routines carried within the 

minds of the members of the organisation and includes 

skills/competencies, training and education, and experience and value 

characteristics of an organisation’s workforce/employees. 

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3. Why study the intellectual capital reporting of a university? 

Universities and other higher-education institutions need more financial resources to maintain their 

competitive advantage and face globalization challenges. The main reasons for measuring and 

disclosing the ICR of universities are: 

Intellectual property rights in higher education needs to develop to a higher level than before. The 

current funding systems which use traditional resources like students’ fees and government 

grants are unable to meet these requirements. Whenever public funds are engaged, full access to 

information is an essential right of stakeholders. 

Universities as knowledge producers are in the competitive market to attract funds. The main 

input and output of universities is knowledge, which consists of intellectuals (intangibles). 

Intellectual capital reporting (ICR) can give them a comparable index, and create a strong link 

between the industry and universities. 

A new comparable system can create a general language that facilitates a mutual relationship 

between business practitioner and academics (Fazlagic, 2005). 

Furthermore, measuring and reporting IC can help to identify what does not work properly and to 

improve what works. The clearly defined set of indicators in the standard reporting accepted by 

universities and industries would not allow for any deficiency or low performance areas in the 

organization (Fazlagic, 2005). This can improve performance, measurements, assessment of 

intangible assets, and allocation of resources in the universities. There has not been any previous 

research for ICR in Australian universities. This study contributes to the existing literature and 

encourages IC disclosure as a good foundation for future research in higher education. 

4. How to measure the intellectual capital of a university 

One of the methods used to measure the IC in a university is a framework (Measurement matrix) 

categorizing IC in the three forms of Resources, Activities and Results (developed by Danish Agency 

for Trade and Industry in Denmark, Cited in Fazlagic, 2005). Resources in a university are the number 

of staff and researchers, and the share of those researchers in a total number of employees. Activities 

are investment in human capital and relational capital. And Results are the objective achievement by 

resources and activities. Table 2 shows this framework (Measurement matrix cited in Fazlagic, 2005): 

Table 2: IC measurement matrix (Fazlagic, 2005) 

Types 

Categories 

Human 

Capital 

Structural 

Capital 

What is there? 

(Resources) 

Number of 

researchers 

Share of researchers in 

total employment 

Average age of a 

researcher 

Number of chairs 

(departments) 

Average employment in 

a chair (department) 

No. of PC per 

employee 

What has been invested? 

(Activities) 

Research spending per employee 

ITC spending per employee 

Time spent in internal seminars 

per employee 

Training & inbreeding (share of 

researchers who are graduates of 

the university) 

Total investment in research 

infrastructure 

Success ratio in project 

acquisition 

Research spending per chair 

(department) 

Participation in international 

conferences 

(no. of conferences attended, no. 

of researchers attending 

conferences) 

No. of research projects underway 

(including EU projects) 

122 

Which objectives have been 

achieved? 

(Results) 

Number of newly recruited 

staff 

Number of contracts turned 

down with regret 

Staff satisfaction 

Staff turnover 

Added value per employee 

Composite employee 

satisfaction index 

Average number of 

publications per researcher 

No. of international students 

Share of international staff 

Name recognition and 

reputation (based on press 

ranking lists) 

Student satisfaction index 

Number of students 

Number of courses 

Average number of 

publications per chair 

(department)


The most significant output of a university is knowledge in the forms of new publications, research 

results and educated students (Leitner, 2002). Based on qualities of diverse outputs in the university, 

IC can also be measured. For instance: financial outputs like income and profit, and non-financial 

results such as organizational outputs (training courses, Research & Development, publications), as 

well as human-relationship outputs (client and user, staff/student, problem-solving ability and client 

satisfaction). 

The natural steps to increase quality in higher education in a competitive and transparent way are 

measurement, management, and disclosure of IC (Sanchez, 2006). These factors are considered to 

contribute to the improvement in the core principles of the higher-education industry. IC has three 

major components in the universities: Human, Structural and Relational capital. Leitner (2002) offers a 

conceptual framework (Figure 2) for IC reporting in the universities, which consists of four main parts: 

“the goal, the intellectual capital, the performance processes and the impacts” (Leitner, 2002,). The 

model shows the intangible resources transformation process when delivering different activities like 

research, education and training, etc. The result of this process is a production of different outputs 

based on general and specific goals (Leitner, 2002). 

Framework conditions IC Performance processes Impact 

Political 

gaols 

Organis 

ational 

gaols 

Human 

Capital 

Structural 

capital 

Relational 

Capital 

Research 

Education 

Training 

Commercialising of 

research 

Knowledge transfer to the 

public 

Service 

Infrastructure 

Stakeholder: 

Ministry 

Students 

Industry 

Public 

Science 

Community 

Etc. 

Input output 

Figure 2: Model for IC reporting in the universities (Leitner, 2002) 

The organizational goals are guided by political agenda and educational ministry, which in Australia is 

based on the Australian educational policy. However, universities characterize their own goals. The IC 

in this model is divided into three elements of human, structural and relational capital. Human capital 

is the staff of the university; structural capital is the routine of the process system, and relational 

capital is the network and relationship between the researcher and business projects. The Leitner 

model outlined six performance processes – research, education, training, commercialising of 

research, knowledge transfer to the public, service and infrastructure – which can be developed and 

increased or decreased based on the university area of specification, such as Business School, 

Faculty of Education, Arts etc. These elements are mostly captured from the measures of process 

and output (Leitner, 2002). The achievements of these performance processes are measured in the 

category of Impact (result/effects). In this category the stakeholders of a university evaluate the 

performance on a quantitative basis. Thus, there is a need for a list of the indicators to be developed 

based on what was used in the universities, and what is proposed based on the literature and findings 

from the evaluation research (Leitner, 2002). 

Sanchez (2006) suggests a list of the indicators (Table 3) which can be an initial framework within 

universities for disclosure of IC and to produce the IC University Reporting (ICUR). Many of these 

indicators have been gathered by universities for some years, and they are not totally new, such as 

the number of researchers, publications, patents etc. However, they have previously been gathered 

by an unsystematic method and spread through different parts of annual reports. ICR should be 

prepared as a new homogeneous information model, in a standalone document (Sanchez, 2006). 

Sanchez’s indicators were part of an intellectual capital university (ICU) report that he designed for the 

Observatory of European Universities (OEU) project to propose an IC disclosure pattern for 

universities. The report was fully tested at the Autonomous University of Madrid and partly tested on 

other OEU universities (Sanchez, 2009). It was a guideline that covers management strategy and 

123


internal policy, such as setting goals and visions to indicators for disclosure. The three parts of the 

Sanchez ICU report are: 

“1) Vision of the institution, which aims to present the main general objectives and 

strategy and the key drivers to reach them. (2) Summary of intangible resources and 

activities, aiming to describe the intangible resources that the institution can mobilize and 

the different activities undertaken or plans to improve them. (3) System of indicators, 

aiming to allow the internal and external bodies to assess the performance and estimate 

the future of the institution correctly. Similarly, these indicators are classified into human, 

organisational and relational capital” (Sanchez, 2009). 

Sanchez’s guideline points out a university’s vision and goals, reviewing them and considering how 

the activities produced can meet the objectives. Associating the vision of the institution with the 

measurement of IC can show what should be measured and what should not, and it creates a 

structure for indicators. The indicators show what resources are priorities and subsequently what 

activities are launched. The indicators can provide the comparison in two ways: Among institutions, 

through comparing different organisations in a given period of time. Comparison along a time frame: 

for instance, it compares data through two different time periods. This comparison helps the public to 

observe progress in the performance of an organization based on the organizational objectives and 

goals (Sanchez, 2006). 

The IC Report creation is a dynamic process, “in which the university may learn” (Sanchez, 2006). 

The reasonable conclusion of the IC report disclosure in the university seems to be communication 

between resources, strategy and stakeholders. 

5. Case study and results 

Eight leading Australian universities are joined together and have launched a highly research 

concentrated coalition known as Group of Eight (Go8). They have trained Nobel Prize winners and 

have high reputation in education and research. Four Australian universities from Group of Eight 

(Go8) are randomly chosen for this study. Using within-case and cross-case analysis indicate a gap 

between the setting of goals (vision) and accomplishment of these objectives (mission), which has a 

direct impact on the output for a university. 

An institution’s vision looks at and discusses what the organisation is and what it wants to be in the 

future (Sanchez, 2006). The mission statement indicates the institution’s main strategy, objectives and 

the key factors (or vital intangibles) to achieve these objectives (Sanchez, 2006). 

In the vision section, all four university cases indicate the importance of international growth and 

financial sustainability. The four sample universities’ mission statements also signify attainment of 

international standards and recognition. However, the Go8 mission of statement only hints at global 

engagement, and does not mention the high achievement of international standards and recognition. 

Engagement in global issues and achieving international standards, especially at the highest level 

require the implementing of a similar reporting framework. This makes it clear why there is a need for 

a harmonized environment with international higher-education institutions and their reporting systems. 

The content analysis of annual reports of each sample university reveals the majority of IC indicators 

based on the three above ICR Models (Fazlagic, Leitner, and Sanchez) are not addressed in their 

annual reports. Table 3 shows the disclosure of IC in the chosen cases (UniA is first university 

randomly chosen from Go8, the second one called UniB, third one named UniC and the last one 

labelled UniD) based on the Sanchez ICU Report model: 

Notes: F – financial indicator; NF – non-financial indicator. 

The table shows only the Vision and Mission sections (section 1 and 2) have addressed some of the 

IC information, and that most of IC indicators were not addressed by any samples. The main reason is 

Australian universities still do not see a need for disclosure of IC based on unified and standard 

indicators as a common language. Although the content analysis of annual reports of each university 

shows that IC (specifically human & structural capital), to a limited extent, is reported. However, there 

is a lack of indicators and access to detail of IC for outside researchers and stakeholders. 

Furthermore, there is not a harmonized or a standard classification, which makes it difficult for the 

comparison. There is a need for a standard index (indicators) and common language to interpret the 

data for stakeholders. For instance, in all universities, total funds for research and development (R&D) 

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and researcher staff numbers are disclosed in the financial reports. Yet, there is not any standard 

index to show the percentage of the R&D’s funds to the researcher staff number in comparison to 

other cases. 

Table 3: The ICU report (Sanchez, 2009) 

Uni Uni Uni Uni 

Section 1. Vision of the institution A B C D 

What are the main objectives of the institution? 

What makes a difference with respect to other institutions? 

What resources (human, organisational and relational) are needed to reach the objectives and provide the 

target services while ensuring quality? 

How are those intangible resources related to the value of the institution? 

What is the combination of tangibles and intangible resources that 

creates value? 

Section 2. Summary of intangible resources and activities 

Which existing intangible resources should be strengthened? 

What new intangible resources are needed? 

What activities can be launched? 

What activities should be prioritised? 

Section 3. A system of indicators for IC resources 

Human capital 

Efficiency 

1. Total funds for research and development (R&D)/number of researchers. F 

2. Number of PhD students/number of researchers? NF 

3. Number of researchers / number of administrative personnel 

Openness 

NF 

4. Number of visiting fellows from other universities / number of researchers (per field), (A. national and B. 

international) NF 

5. Number of PhD students coming from other universities / total number PhD students (per field) (A. national 

and B. international) 

Organisational capital 

Autonomy 

NF 

6. Amount of resources devoted to R&D / total budget. F 

7. Structure of the research budget by scientific fields (by disciplines). F 

8. Amount of budget constraints (personnel+ equip cost) / research Budget F 

9. Research budget managed at the central level / research budget. F 

10. Lump-sum for research (A. governmental funding and B. non-governmental funding) / total funding for 

research. F 

11. Share of staff appointed through autonomous formal procedure (at the university level +(consider 

procedures dealing with positions and academics). NF 

12. Non-core funding / A. total budget and B. budget for research. F 

13. Thresholds imposed to fund-raising (including weight of tuition fees on total budget and incentives given to 

private donors to support research activities) NF 

14. Structure of non-core funding 

Codification of knowledge through publications 

NF 

15. Number of publications by disciplines / total publications of the uni. NF 

16. Number of co publications per field, 

(Six Frascati levels) (A. national and B. international). 

NF 

17. Number of citations of publications by discipline / total uni publications. NF 

18. Share of specialisation publication in a discipline / total uni publications. NF 

19. Indicators of production for books, chapters, e-journals, etc. NF 

20. Indicators of visibility for books, chapters, e-journals, etc. 

Codification of knowledge through intellectual property 

NF 

21. Number of active patents owned by the university (by field). NF 

22. Number of active patents produced by the university (by field). NF 

23. Returns for the university; licenses from patents, copyright. F 

24. Joint IPRs (Intellectual Property Rights) by uni professors. 

Strategic decisions 

NF 

25. Existence of a strategic plan for research. NF 

26. Existence of mechanisms to evaluate the strategic research plan, Frequency, Brief description of the 

process. 

Relational capital 

Spin-off 

NF 

27. Number of spin-offs supported by the university. NF 

28. Number of spin-offs funded by the university and percentage above the total number of spin-offs (funded + 

supported). NF 

125


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracts and R&D projects 

29. Number of contracts with industry (by field and by a competitive/non- competitive classification). 

NF 

30. Number of contracts with public organisations (by field and by a competitive/ non-competitive 

classification). NF 

31. Funds from industry / total budget for research. F 

32. Funds from public organizations / total budget for research. 

Knowledge transfer through technology transfer institutions 

F 

33. Existence of a technology transfer institution. NF 

34. Checklist of activities of the TTI, Intellectual property management, Research contract activities, Spin-offs, 

Others. NF 

35. Budget of TTI / total university budget. 

Knowledge transfer through human resources 

F 

36. Number of PhD students with private support / total PhD students. NF 

37. Number of PhD students with public support / total PhD students. 

Participation into policy making 

NF 

38. Existence of activities related to policy making. NF 

39. Checklist of activities related to policy making, Involvement into national and international standards setting 

committees, Participation in the formulation of long-term programs, Policy studies, Involvement in social and 

cultural life. NF 

40. Existence of special events serving social and cultural life of society. NF 

41. Checklist of special events serving social and cultural life of society, Cultural activities, Social activities, 

Sport activities, others. NF 

42. Existence of specific events to promote science. NF 

43. Checklist of specific events to promote science, to classical involvement of researchers in dissemination 

and other forms of public understanding of science, Researchers in media, Researchers in forums, Others. 

NF 

6. Conclusion 

The assessment and reporting of IC have a relatively long history, and cannot be considered as a 

new one. However, the identification of a university IC and its links with input, knowledge production, 

processes and output in the university sector is a new idea. A description of a university’s goals and 

strategies is an essential step for preparing the IC report. A framework for IC measurement and 

management within universities could identify and develop the culture to manage and report, as well 

as contributing to the demand for transparency. Leitner (2004) indicated: “proper management of IC 

at universities has a significant impact on the performance and efficient use of the invested financial 

funds.” This paper recognizes the necessity for a new reporting system and harmonized framework 

for disclosure in Australian universities. In addition, it supports the concept of accountability, 

considerable assessment of, and concern regarding the activities of Australian universities. 

Since the main input and output of universities are intangible, the disclosure of IC facilitates 

accountability to stakeholders. There are suggestions that by incorporating disclosure of IC items into 

the annual reports, accountability and transparency to stakeholders will be improved. This research 

has provided an initial insight into the extent and quality of IC disclosure in the annual reports of 

Australian universities. The area has been relatively unexplored in the literature both in terms of 

subject (IC reporting by universities) and situation (in Australia). Despite these limitations, this paper 

offers a valuable contribution to the research needed in this area, and recognizes a gap between the 

vision and mission of the Australian Universities. This study indicates a need for a framework through 

which IC disclosures can be made in the annual report of educational institutions and universities. 

Results of this study show that IC disclosed by local universities is neither in harmony with European 

ICU guidelines nor is it comparable amongst the universities themselves. In addition, the information 

does not occur in a consistent framework. This paper also highlights areas that are not being 

adequately disclosed in reports. The IC disclosure index used in European studies can also be 

utilised by local universities. The framework can be used for future IC disclosures to ensure they are 

addressing the needs of their stakeholders. 

These results have also revealed many potential areas for future research, including further studies 

on each of the independent indicators and their effect on IC investment. Another area for future 

research could be the relationship between ICUR and Results. A systematic investigation of the IC 

index can disclose which input and indicator are more significant in determining the higher-quality 

126


outputs, and whether the disclosure of a particular IC indicator has a positive relationship with the 

quality of the output. 

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Berrett Koehler, San Francisco, CA. 

127

Inter-Sectorial Communication and Knowledge Sharing in 

Developing a Cross-Border Knowledge Region 

Merle Krigul and Ruth Alas 

Estonian Business School, Tallinn, Estonia 

merle.krigul@ebs.ee 

ruth.alas@ebs.ee 

Abstract: Cross-border cooperation has usually focused on topics like mobility of people, employment and 

environmental problems, leisure and tourism, health and education, business cooperation or infrastructure 

developments. However, the topic of higher level regional cooperation of border regions and border cities where 

the focus is on joint development of technological or knowledge transfer (sharing), fostering of communication of 

universities-enterprises-local authorities, is academically insufficiently covered. Applying Knowledge concepts to 

cities and regions is a phenomenon of the last twenty years, applying to cross-border regions is rare. In the 

current article the authors study preconditions and obstacles for creation of a common Knowledge region 

between Helsinki and Tallinn capital regions under conditions where a special integration enhancing institution 

NPA Helsinki-Tallinn Euregio is part of the process, with the focus, particularly, on practices of creating, 

transferring and sharing knowledge in cross-border inter-sectorial communication. In the present paper 

communication and knowledge sharing enhancing the development process of a cross-border Knowledge region 

as a target status of integration is analysed and opportunities and difficulties in implementation of a cross-border 

Knowledge region ideology are illustrated with the cooperation experiences of Helsinki and Tallinn capital 

regions. This article adopts a mix of secondary evidence and primary research: Questionnaire among Euregio 

stake-holders and Elite interviews on regional development perspectives. The research showed that the 

preconditions exist for the development of a Helsinki-Tallinn Knowledge region. The model of traditional and nontraditional 

factors in developing a cross-border Knowledge region is provided. A limitation for this model is the 

lack of different layers that is typical for an extremely complicated process like the building of a Knowledge region 

is. Based on research and literature, practical steps are suggested. 

Keywords: inter-sectorial communication, cross-border cooperation, knowledge creation and sharing (transfer), 

knowledge region (KR), SECI, ba 


Knowledge related topics have fascinated, both academics and practitioners, for decades. Earlier 

applied to businesses, nowadays are they gradually gaining a central position also in developed 

countries’ public policies (Lang 2010). This trend is developing not only on a national level, but also 

on regional and municipal levels (Kok 2004). It also influences the content of cross-border 

cooperation (CBC) of cities and regions (Kok 2004). In addition to traditional CBC topics like mobility 

of people, employment and environmental problems, leisure and tourism, business cooperation, 

health and education, there are instances where Knowledge creation, preservation and transfer or 

sharing have become a greater priority for cross-border cooperation, e.g., USA-Canada cooperation 

basically in developing ICT cluster, or in Europe, ELAt network (Eindhoven/Netherlands, 

Leuwen/Belgium, Aachen/Germany), Helsinki/Finland-Tallinn/Estonia institutionalised cooperation 

since 2004 (networking since 1999), also Öresund (Copenhagen/Denmark-Malmö/Sweden) 

cooperation. We can predict that the trend will spread in the future. The traditional kind of Knowledge 

transfer can be self-regulating, or in connection with movement of people, or initiated by public 

institutions. In history, one finds many examples of cities having promoted this type of transfer with 

specific regulations, e.g., apprenticeship of craftsmen in another city or country, which was a typical 

practice in the Hanseatic Baltic Sea region (Terk and Krigul 2008, Niitamo and Schumacher 2008). 

On the higher level of collaboration the self-regulating processes diminish and the importance of a 

Knowledge agent (Reichert 2006) or a Knowledge activist (von Krogh et al 1997) raises in 

importance. 

The term Region can have different meanings: a territory within a country, or cross-border territory, or 

it includes several national territories (Perkmann 2003). “Regions” have become the basic economic 

building blocks of the (global) economy. Regionalisation in the European Union (EU) is an ongoing 

process with increasing importance as regions perform the role of platforms for intensified 

competitiveness in the whole EU and also in local settings. Besides, regional disparities and cultural 

differences may perform as barriers to implementation of EU strategies, thus, being also a source of 

management problems (Krigul 2011). Furthermore, key factors in determining productivity/output, 

such as diffusion of technology and knowledge transfer (knowledge sharing), co-operation among 

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enterprises, universities/R&D institutions and (local or national) governments, social capital 

development, allocation of labour and infrastructure, are likely to be sub-optimal because the 

economic space is divided. Integration should remove the fragmentation that constructs the economic 

space (OECD 2010). 

There are contradictory theories about the influence of globalization. On the one hand, it is stated that 

knowledge is global, talents move globally (Florida 2007), but on the other hand, the concept of a 

Place (in our case, region) becomes more important. According to Bode (2004) knowledge spill-over 

effects cause people to locate closely to each other and benefit from minimizing distance-related 

transaction costs and maximizing tacit knowledge flows and learning effects. Therefore, globalization 

and technological change have not only upgraded the knowledge intensity of the constituent 

companies, but also strengthened clustering effects to optimize knowledge spill-over (Dunning 2002). 

Geographical proximity facilitates the acquisition, accumulation, and use of knowledge as a region’s 

performance depends not only on that of enterprises and research institutes, but also on interactions 

between different stakeholders and organizations (OECD 2006). 

The article’s authors use the term „Region“ as a cross-border territorial unit composed of territorial 

units of different countries sharing a border (Lepik 2010). More specifically, the “Region” used in the 

empirical part includes the Capitals Helsinki (Finland) and Tallinn (Estonia) and the territories 

Uusimaa (Finland) and Harjumaa (Estonia) around the capitals, separated by the Gulf of Finland. A 

long-term vision of Estonian and Finnish leaders states that the Helsinki and Tallinn regions would 

form a united science and education area - a Knowledge region in the future (Krigul 2011). 

Helsinki and Tallinn are the centers of higher education and R&D activities; they also have 

concentrations of investments, entrepreneurship and wealth. Uusimaa region (Helsinki capital region) 

already introduces itself as a Knowledge region. Its qualification process is not documented, but the 

reasoning behind the title is as follows: Uusimaa offers a wide range of knowledge intensive public 

services (Virtual Finland, e-Finland), several universities and high schools (University of Helsinki, 

Aalto University, Hanken, Helsinki University of Technology) and expertise centers (TEKES, SITRA, 

Culminatum, Enterprise Finland, Nordregio, VTT, Technopoles and technology centres) are located 

here. 

Tallinn/Harjumaa has the potential for becoming a Knowledge region. Except for Tartu University, the 

main research and development institutions are located in Tallinn and Harjumaa. In January 2010, the 

Intelligent Community Forum’s evaluation committee chose Tallinn as one of the seven most 

intelligent communities in the world for the fourth time, based on 2009 activities. Intelligent Community 

Forum is a US think-tank dedicated to creating new jobs and promoting economic development in the 

field of broadband data communications. Being in the top seven shows that Tallinn is increasing its 

information technology capability and uses the newest systems, promotes adopting, implementing 

and perfecting e-services (Statistical Yearbook 2009-2010). 

Cooperation of regions is now a growing trend, supported not only by OECD, but also by different 

programs of the EU. In current debates, regions and regionalisation are important topics regarding the 

“best” spatial level of governance in addressing global competitiveness; cohesion and convergence 

are emphasised in EU (Herrschel and Tallberg 2011). Additionally, in developing a CB Knowledge 

region, at least two development phases should be considered: the phase of Cross-border cooperation 

(CBC), using more conservative tools for enhancing the process, like matchmaking, 

networking, organising joint events or projects of different kind, all well-known tools for a co-operationenhancing 

organisation, and on grass-root level people’s mobility either for leisure or for working. The 

next phase suggested is integration (OECD 2010). The latter prerequisites special activities. 

Still, the process is not smooth. The objective of current study is to increase the understanding of the 

factors in, and obstacles to, creating of a common Knowledge region on the example of Helsinki and 

Tallinn capital regions under conditions where a special integration-enhancing institution, the nonprofit 

organisation Helsinki-Tallinn Euregio, is part of the inter-sectorial communication process. 

2. Contextual framework 

In view of the shift towards a “Knowledge-driven economy” since the 1980s and 1990s, extraeconomic 

relations and the capacity of regions to support processes of learning and innovation have 

been identified as significant sources of competitive advantage (Amin and Thrift 1994; Jessop 2000). 

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Knowledge has been pointed out as an organisation’s sustainable source of competitive advantage 

(Drucker 1988; Nonaka 1991; Morey and Frangioso 1997; Zwass 1999; Argote and Ingram 2000; 

Davenport and Prusak 2000; Lahti and Beyerlein 2000; Rulke et al 2000) and academic attention on 

organisational knowledge creation, capture, and transfer prove the acceptance of this idea (Marchand 

and Davenport 2000). 

This view became dominant in the so-called Lisbon Strategy initiated in 2000 by the Lisbon 

Extraordinary European Council 2000. The Lisbon Strategy highlighted theories of Knowledge, 

Knowledge Management, Lifelong Learning and Learning/Knowledge organisations as future 

competitiveness and economic growth factors and sources. Unfortunately, the Lisbon process has not 

produced the expected change in pan-European world-class competitiveness (Kok 2004). In 2004, 

Kok advised broader involvement of the regional and local levels to implement the Strategy (Kok 

2004, 10-11). The revised Lisbon Strategy (2005) turns attention to local governments as basis for 

considering regions as an appropriate level for stimulating innovation. The idea was not new: it had 

been presented more than a decade earlier by scholars and policy-makers (Lundvall 1992; Cooke 

2003). 

According to Perkmann (2003), building a cross-border region is a re-scaling process; questions like 

what are the general circumstances in which new scales are constructed, and what are necessary 

ingredients of such scale construction should be asked. According to Perkmann, regionalisation may 

be analysed as a specific type of re-scaling process, involving political mobilisation (coalition building), 

institutional restructuring (channelling political interests into decision-making) and functional needs 

(construction of a new scale).The question remains: what are the pushing and pulling powers that 

give rise to regionalisation. In neo-functionalist paradigm, the creation of framework by institutions, 

authorities and policies may be considered as a starting point and the governing bodies of these 

processes (Perkmann 2007).The question of bringing the different counter-parts behind the same 

table remains as one of basic communication challenges. 

Knowledge creation, storage and transfer/sharing are key concepts in this type of regionalisation 

processes, aiming at creation of the “best” Space or Place or conditions for advancing the well-being 

of citizens and regional economic prosperity. Key authors in connecting different types of valuable 

Knowledge to Spaces (ba), are Nonaka, Konno and Takeuchi, later Etzkowitz. The starting point is 

distinguishing between explicit and tacit knowledge (Polanyi 1958). 

Explicit knowledge can be codified, stored, and transmitted using formal language or symbols. It can 

be captured in texts or charts and it is easy to transfer and retain in the organisation, but the process 

may be costly (it takes time to transform tacit knowledge into explicit form), and the results poorer in 

quality, because of a lack o f contextual elements (Benbya and Belabaly 2005). Tacit knowledge, 

instead, is rooted in action and gained through experiences. As individuals are the carriers and 

processors of knowledge, this Knowledge tends to be subjective, context dependent, socially 

constructed, and embedded in practice. In this view, knowledge is created and validated through 

social processes (Nonaka et a.l 1994). Tacit knowledge includes mental models and schemes that 

help individuals to perceive and interpret the world around them. “Tacit knowledge is highly personal 

and hard to formalize, making it difficult to communicate or to share with others. Subjective insights, 

intuitions, and hunches fall into this category of knowledge. Furthermore, tacit knowledge is deeply 

rooted in an individual’s action and experience, as well as in the ideals, values, or emotions he or she 

embraces” (Nonaka and Takeuchi 1995, 8). 

Nonaka, Toyama and Konno have proposed a model describing an organisation’s knowledge creation 

consisting of three elements: (1) the SECI process, the process of knowledge creation through 

conversion between tacit and explicit knowledge; (2) Ba, the shared context for knowledge creation 

that combines physical and intellectual space, creating favourable conditions for knowledge creation; 

and (3) knowledge assets, the inputs, outputs and moderators of the knowledge creating process. 

These three elements have to interact with each other to form the knowledge spiral that creates new 

knowledge (Nonaka 1991, Nonaka et al., 1994; Nonaka and Takeuchi 1995; Nonaka and Konno 

1998; Nonaka et al. 2001; Nonaka and Toyoma 2003, Nonaka and Ichijo 2007). 

The SECI involves knowledge transformation processes. Nonaka et al., (1994), and Nonaka and 

Konno (1998) propose that knowledge can be transformed from one type to another via conversion 

processing: Through socialisation, an individual gains tacit organisational knowledge; through 

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externalisation, an individual transforms tacit knowledge into explicit form; through combination, 

collective explicit knowledge resources are combined; and through internalisation, an individual 

transforms explicit knowledge into personal tacit knowledge (Nonaka et al. 2000). 

The second important part of knowledge creation is Ba, which is the context shared by those who 

interact with each other. Ba is a Japanese word for a place that is not only a physical space, but also 

a specific time and space. The intention with Ba is that knowledge is never absolute, objective or free 

from the context. Instead, the knowledge creation process is always bound to some type of 

connection - it is a local process. Another possible word to describe Ba is connection. Being present 

in a place is not enough; what is required is to produce an interactive, face-to-face connection 

between people, and between people and their environment. It is a place where people share tacit 

knowledge: their experience, feelings, emotions and mental models. Interaction is used to eliminate 

boundaries between people. 

Nonaka emphasises Place as a term even with regard to virtual interaction between people. Ba is a 

Place with several events in progress during interaction between people, including the generation of 

new knowledge. In this perspective, the concept of knowledge is strongly related to a given material 

and cultural context, beyond the fact that it is has been considered a personal belief. At its best, Ba is 

characterised by love, care, trust and commitment which provide the basis for knowledge conversion 

among individuals. The SECI process starts from Ba. 

The dual sphere of the space has been developed by Etzkowitz and Ranga (2010): Our vision of 

spaces reflects the sense conveyed by the Finnish notion of ”tila” as space, mode, status, but also 

passage from one status to another. The spaces are seen as the physical, but also virtual areas in 

which the three selection environments of industry, academia, and government interact. 

The third component, Knowledge assets, the inputs, outputs and moderators of the Knowledge 

creating process include among others important actors as enthusiasm of the workers and Knowledge 

agents or activists as moderators. 

The English words knowledge and management have in the Estonian language a multitude of 

equivalents of various degrees, plus a wide variety of philosophical and conceptual connotations. The 

Estonian equivalent of knowledge may be used to refer to a single or several items of knowledge, 

awareness, experience and mastery of something, plus related skills. Management can be translated 

as handling and manipulation, catering for, administration, leadership, wisdom, skillfulness, prudent 

action, and accurate attention. 


This article adopts a mix of primary research of three studies and secondary evidence provided by the 

literature, programs, strategic development documents (strategic plans of Tallinn, Helsinki, Uusimaa 

and Harjumaa), topical meetings, round-tables and fora. 

The article relies on generalisation of the results of previous studies, implemented since 2004 – 2009: 

Helsinki-Tallinn Science Twin-City Research 2004, Questionnaire among Euregio stake-holders 2007, 

Elite interviews on regional development perspectives 2009. The criteria for selecting the interviewees 

were: (a) they are experts in the studied field and had personal experiences in it, (b) they represent 

different operative functions or areas of expertise in the field, including high leadership positions, and 

(c) they are more or less interested in Estonian-Finnish Cross-border development issues. The 

interviewees were promised that the interviews would be confidential and that when reporting the 

results, the interviewees’ identities would not be linked to their statements in the interviews. 

All interviewes are recorded. Except for the 2004 research, where notes were taken, the interviews 

are tape-recorded and written down. 

To verify the results and identify new trends additional in-depth elite interviews were conducted in 

2011, this time with the aspiration to include the highest level and culturally integrated in both 

countries (Estonian and Finnish) experts: two Estonians on high positions in Finland, operating in all 

triple-helix fields: connection with local authorities, high-tech business and academia, the same level 

was attempted in Estonia, the connection with authorities by Finnish experts was significantly lower 

than Estonians' in Helsinki. To keep the expected criteria, it was difficult, if not possible to raise the 

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number of interviewees. Interviews were recorded, in accordance of the wish of interviewees as the 

topic was considered sensitive by everybody of the questioned four. Interviews lasted about an hour 

and a half within the private atmospere. 

The questions posed for research among elite experts in 2011 were: 

What factors are essential for developing a Cross-border Knowledge region between the capital 

regions of Helsinki and Tallinn? 

Which policy issues should be included in the regional cooperation spectrum? 

What are the preconditions, opportunities, and difficulties in developing a Cross-border Knowledge 

region? 

Content analysis was used to analyse the interviews. 

4. Results 

It is characteristic for regional co-operation that in addition to the movement of capital and goods also 

objects which are more difficult to transfer or receive/introduce like technology, skills and knowledge 

must move from one region to the other. When the co-operation deepens and the goals become more 

ambitious, the role of intangible components in co-operation increases, compared to the tangible 

ones. Instead of co-operation forms that can be dealt with separately (economic, cultural, 

administrative) complex tasks uniting several co-operation forms arise. 

The need for closer cooperation in science and high-tech business development in Helsinki and 

Tallinn capital regions stems from the fact that neither of them is big enough to compete alone 

internationally. Pooling of the resources enables to profit from the strengths of both regions and is 

mutually beneficial. The role of capital regions’ authorities is to raise competitiveness of the area and 

ensure well-being of citizens. In this process size matters, quality of life and availability of high quality 

services becomes important. Cross-border networks and functional integration in education, research 

and companies are essential for gaining competitive strength. 

Interviewees mentioned factors that drive integration as follows: participating interest groups, 

participants in decision-making processes, political parties and/or decisions and the role of 

governmental institutions, aspirations of politicians, acting cross-border, or attempting inter-sectorial 

division of roles, or at least information sharing. These aspects form ground for applying the Nonaka's 

models of SECI, ba and assets. 

Helsinki-Tallinn Euregio was considered as a mediatory body for enhancing integration. Initially 

created (1999) as a network by “Estophiles” and “Fennophiles” from the representatives of local 

governments for the aim of applying jointly for EU funding, as the sources available for Finland and for 

Estonia were different. In the beginning there was no mention of any kind of integration, and the 

knowledge flow was mostly from Finland to Estonia. Very soon, directions were taken to overcome 

regional disparities, with preparing Estonia for joining the EU. By joining different working cultures, the 

founding members became represented through high-level officials and politicians: vice-mayors, 

regional mayors and CEOs. 

By now, operating environment of Euregio is characterised by the need to invest more effort from both 

sides of the Gulf of Finland in common development of the Helsinki-Tallinn twin-region, in order to 

adjust to growing challenges of globalisation. Ageing population, declining labour force, brain drain 

are presenting the region with challenges, perceived as an obstacles to economic growth. In both 

cities there is growing need for both high quality and quantity of labour force. 

Euregio’s role is seen as an active stakeholder supporting inter-regional development and 

competitiveness, based on complementary strengths and common innovative and creative cultural 

environment, being a cross-border, triple helix driven tool – a Knowledege agent or activist. 

The research showed that the preconditions exist for the development of a Helsinki- Tallinn 

Knowledge region. Based on research, the following steps are suggested: 

132


Firstly, political decisions should be taken on as high a level as possible: in mayors’ offices, but also 

on the central government’s level. An existent initiating group (the Knowledge agent) alone is not 

enough as the policies co-construct the knowledge-based innovation systems by introducing 

infrastructure, human resources, and public demand into the innovation processes. 

Secondly, following sub-goals should be adopted: knowledge transfer cooperation, using the triplehelix 

principle and from this, or in parallel, for creating the Knowledge region, referred to as Ba. 

In a sense, the idea of Ba is essential in the process of creating the knowledge region: a space, both 

physical and conceptual, to bring the assets of the region together to create new economic value and 

perpetuate a cycle of innovation. 

Thirdly, high level decision-makers and experts should work out a Cross-border joint strategy for the 

development of theCross-border Knowledge region. Until now Euregio has been the only institution 

tasked to enhance regional integration. Euregio-type organisations should be part of the process, 

either as initiators or intermediaries, and also, for finding innovative ways for knowledge transfer and 

regional development. However, they cannot take charge of the processes without given the authority 

and being sufficiently upgraded with financial and human resources. 

Fourthly, an important trend to consider in the enhancement of innovation by the public sector should 

be innovation in the public sector itself and the enterprises belonging to it. Planned services should be 

designed not only to resolve a current problem, but also to restructure the whole sphere with 

innovative services. Several electronic and mobile phone services may be considered here. 

Fifthly, an institution like Euregio would serve as an agent of change for CB innovation transfer and 

for speeding the process of moving from one innovation phase to the next one. The broader positive 

context includes the general Estonian- Finnish (Tallinn-Helsinki) knowledge transfer and exchange of 

experiences, which has produced positive results in several fields. 

Difficulties in the implementation process were pointed out as follows: horizontal co-operation even 

within one institution’s borders (e.g., city’s different departments and agencies) is problematic; the role 

of path dependency is significant, i.e., how the institutions have developed over time, how the rules of 

the game were established, and the diffciulties in breaking a “gatekeeper’s” power; overestimation of 

cultural differences; different financial opportunities. Overcoming these barriers should be a subject 

for future research. 


Creation of a cross-border Knowledge region is a long-term and complicated process, where the main 

obstacle in most cases of at least EU member countries is not related to borders as physical barriers 

but rather as mental, informational, cultural (including organisations' culture), communicational, 

spatial-economic, administrative or political barriers. The working cultures have proved to be different 

in Estonia and Finland. The aspiration of a public sector to elaborate partnerships with private sector 

is especially low in Estonia, Finnish local governments have long-standing connections with 

universities and R&D institutions, also the the support of innovative enterprises is wide-spread habit of 

action. Obstacles are also differences in democratic inclusion processes in Estonia and Finland. 

From supporting side, the mental geography, basic values, political, cultural, even linguistic proximity, 

security issues – this all supports the aspiration to further integration, inter-sectorial communication 

and collaboration. The main driver in this process is the necessity – both countries are too small to 

answer the challenges of international demands. 

6. Limitations and proposals for further research 

Based on the interviews it may be stated that the first precondition for developing any regional 

integration is shared information and media space, sometimes called public space, is vaguely 

existing. Both countries' awareness of the others' possibilities is very low. To authors' knowledge this 

space has not been studied and literature on Cross-border public space is scarce. The problem is 

even more complicated, if one considers that in both countries exist at least two information spaces, 

based on languages: in Estonia, the Estonian and Russian speaking, and in Finland, Finnish and 

Swedish speaking. The situation is more pronounced currently in Estonia, however. And in both 

countries the English-speaking population is growing. There is one trend that has not been covered 

133


by academic research: according to the prognosis of the Helsinki Statistics department, the Russianspeaking 

population will be the second largest foreign language group in Helsinki by the year 2020. 

According to interviews, also horizontal alliances between different public organisations are difficult to 

design and implement; options to pursue this course need thorough research. The situation becomes 

more complicated with the attempt to enhance cross-sectorial communication and collaboration from 

different countries. 

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135

University-Company Relationship for Knowledge 

Integration on Biomedical Technologies 

Clara López, Edna Bravo and Hugo Martínez 


maemet25@uis.edu.co 

Edna.bravo@upc.edu 

hugo.martínez@correo.uis.edu.co 

Abstract: The main purpose of this research is to improve the understanding about the articulation of research 

projects based on integration of technologies. These projects are focused on developing products and solutions 

oriented to services in the orthopedic medical area. The articulation was achieved through the integration of 

human capital from research groups from the Universidad Industrial de Santander and the strategic vision of an 

entrepreneur. We used a case study as a research strategy. We analyzed a research project covering the design, 

modeling and biomechanical evaluation through simulation of a virtual model of an implant inserted in a bone. In 

this process, the technologies integrated were the Computer Aided Design (CAD) and the Computer Aided 

Engineering (CAE). These technologies are typically applied on product development in engineering. The 

methodological follow up consisted of, firstly the design of the implant geometry according to the ASTM F543 

(American Society for Testing Materials) norm established as reference for design to the orthopedics implants. 

The implant was modeled with computer aided design CAD software tools. Secondly, we built test models to 

carry out biomechanical analysis by simulation using a computer aided engineering CAE software tools. At this 

stage, the virtual models were developed using two methods differentiated by the technology employed in each 

of them. The first method was performed according to the methodology followed by the company, which 

consisted in the use of CAD/CAE software tools. The second method used advanced application technologies for 

related to imaging techniques based on the capture of tomographic images, and the use a biologically based 

system, Bio-CAD, called MIMI’S®, and 3MATIC® two software for medical image processing for 3D bone model 

creation or reconstruction. Finally, we performed a biomechanical analysis using CAE software as a simulation 

tool. Through the integration of 3D Bio-CAD and CAE technology, it was possible to apply techniques and 

methods that allowed us to obtain positive outcomes in the development of high-precision virtual models. The 

main research results brings an opportunity to manage R&D projects with innovators that contribute to both, 

knowledge generation and the application of this knowledge in the business environment. This contribution 

supports the dynamic of human capital and reduces the technology gap found in the integration of advanced 

technologies within the product development processes. 

Keywords: university - firm cooperation, Bio-CAD/CAE, implants, integration of technologies 


Since the last decades, it has been widely accepted that innovation facilitates the process of obtaining 

sustainable competitive advantages in organizations (Crossan & Apaydin, 2010; Suñe et al, 2012), 

These advantages support by innovation process, have been used for new products development, 

and research projects supported by activities such as R & D knowledge management and integration 

of technologies ( Mudambi & Swift, 2011; Vaccaro et al, 2010). Technology integration has been 

defined like as a sustainable and persistent change in the social system caused by the adoption of 

technologies for the construction of knowledge Bellan (2009). This definition can be explained through 

of technologies used for design and evaluation of products. This methodology of new product 

development has been supported in first step, through of computer aided software tools, applied on 

design, engineering, manufacturing among others (Gujarathi & Ma, 2011). The new product 

development supported by software tools (Rangaswamy & Lillen, 1997), allowing the strengthening of 

R&D and providing thus the necessary skills to consider a viable project (Donelli, 2003), and their 

outcomes contributing to knowledge generation (Bozeman, 2000). 

However, Prabhu (1999) in his study argues that technology-based small businesses may find it 

difficult to implement sustainable change due to lack of technological knowledge and resources to 

implement high technology. One way to overcome this barrier has been the generation of 

mechanisms leading to cooperation between firms and academic research groups (Miotti & Sachwald, 

2003; Veugelers & Cassiman, 2005). The value of the firm cooperation is oriented to use the 

knowledge, resources & technology of universities (Prabhu, 1999). Cooperation between institutions 

has occurred in terms of collaboration, participation, partnership and alliances (Ahirpova, 2010; 

Hagedoorn, 1990). These cooperation agreements, have contributed to a better integration of science 

and industry building knowledge for the development of products and processes that generate 

competitive advantages (Ahirpova, 2010; Mora et al, 2004). Simultaneously, academic research 

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groups obtain funding, generation of new projects, acquisition of new technology, and, enhancement 

of learning abilities regarding specific research skills. 

This synergic university –firm relationship is coherent with the innovation theory formulated by the 

quadruple helix model (Alfonso et al, 2010). The model defines the four fundamental pillars to 

promote the development of a sustainable economy (academy, business, government and society) 

(Low Hock et al, 2012). These model give recognition to the role of universities as knowledge 

producers to develop innovative research while firms enhance knowledge making it applicable and 

marketable (Prabhu, 1999; Veugelers & Cassiman, 2005). These initiatives are supported by the 

government through mechanisms such as national and regional systems of innovation that promote 

the development of joint projects (Cooke et. al, 1997). Finally, the society has been included to 

integrate innovation process to social transformation (Veugeles & Cassiman, 2005; Low, 2012). Some 

experiences of research projects based on the four pillars have led to the emergence of new scientific 

technology based companies, joint ventures and spin-offs (Veugelers, 2005; Mora et al, 2010; 

Segarra-Blasco, 2008; Xiaa & Jina, 2012). 

Even when there have been initiatives to settle the relationship between universities and companies 

in Colombia, the first state enterprise university committee, (CUEE: Comité Universidad Empresa 

Estado) was created in 2003 at the University of Antioquia UEA (Guerrero, 2009). This initiative has 

been followed by other higher education institutions (HEIs) during recent years with the formation of 

eight State-University-Industry-Committees (Ramirez, 2010). Since 2007, the Ministry of Education 

and the department of Science, Technology, and Innovation in Colombia “Colciencias”, have made 

official programs to support them, (National Programs like Research Training; Technology and 

Innovation in Health. Biotechnology Science: Science, Technology and Innovation in Education: Basic 

Sciences; Industrial Technological Development and Innovation: National Fund for Financing for 

Science, Technology and Innovation, Francisco José de Caldas and another programs). 

Despite the aforementioned examples, there is limited literature that demonstrates the learning from 

the university and industry cooperation relationships. Therefore, this study aims at describing the 

learning gained from a cooperation case study. In this instance, it was found that through the 

integration of technology in the product design and evaluation processes resulted in the development 

of models with greater precision and reliability. It is worth to mention that the results of this research 

have provided a platform to develop new research projects funded by the VIE aiming at continuing the 

processes of knowledge transfer from university to business. 

2. Integration of technology in university- industry 

The integration of technology has been defined as the potential of different technologies to be 

articulated in a common goal (Galanis et al, 2007). Moreover, the integration of technology can be 

considered a multidisciplinary concept since its definitions have been adapted to sectors such as 

education, administration, and software tools, among others. Bellan (2009) argues that there is lack of 

consensus on the term and defines the integration of technology as sustained and steady change in 

the social system caused by the implementation of technology that helps building knowledge. On the 

other hand, Ivarsson and Vahnle (2002) describe the integration of technology as links between 

organizations to coordinate and cooperate in linking technology. This integration can be measured 

through the commercial relationship and the time over which the integration has been performed. The 

above authors also specify that the integration of technologies, involves the transfer of expertise that 

is mainly dependent and integrated on individuals and teams. To do this, we need to create an 

organizational climate that facilitates communication and learning, trust, the assessment of the 

corresponding competencies, and the acceptance of common goals (Hakansson, 1995). 

The main factors determining the success of technology integration lie in the needs or specific 

purposes of software tools. The technologies CAD 2D drawing and 3D modeling are integrated to 

form a data structure chart which is, in turn, integrated with a non-graphic data structure to form an 

integrated CAD data structure. The integration continues in terms of achieving knowledge-based 

systems to set up an integrated design environment; object-oriented programming and improvements 

in the design of user interface and product development (Anumba, 1996). 

The cooperation analysis between Academy and Industry allows us to explore new opportunities that 

add value to the application of knowledge to new product development (Arhipova, 2010). Veugelers 

and Cassiman (2005), in their econometric study confirmed that technology-based companies are 

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more likely to maintain links with science, since this relationship provides greater efficiency in the 

development of innovative projects and reduces expenses and risk by sharing them. 

3. Case study to describe the integration of technology 

To carry out this research, we used data from a case study developed cooperatively by a Research 

Group at the university and an orthopedic firm. The firm (identified as QE onwards for confidentiality), 

has a primary line of business in the manufacture and distribution of implants for orthopedic use. The 

company created its R&D department in alliance with different research groups from Universidad 

Industrial de Santander. Since then, QE has undertaken several projects aimed at developing new 

products and processes following a scheme of continuous improvement and generation of value for 

customers in domestic and international markets. 

The case study as a field-based research methodology was selected to monitor the descriptive details 

of the technology integration processes. Furthermore, offers the opportunity to develop a theory 

based on observations, instead of imposing predetermined models in data (Huberman & Miles, 1995). 

This case study has the advantage of counting with the participation of a head investigator during the 

development process of the project that comprised the design and evaluation of the biomechanical 

behavior between implants and bone tissue. This project was developed through the integration of 

CAD and CAE Bio-CAD technologies allowing the methodological development of highly accurate 

virtual models. 

In this paper, we apply reverse engineering after reviewing CAE/Bio-CAD technique and methods 

proposed for the construction of virtual models and their evaluation through simulation which have 

been used in European companies in design processes to obtain more accurate models. 

Successively, we carried out a panel with local, national and international experts with knowledge in 

different areas such as: design and manufacturing of implants, bone physiology and anatomy, 

development of Bio-CAD virtual models, and, methods of analysis for CAE simulation. Data were 

obtained from reports on two sources. The first one was the state of the art and advances in 

experimental development. The second source comprised structured interviews with experts from 

each area of knowledge. The total number of interviews was six; the data sample was limited to a 

single case study because we wanted to explore the process of integration of technology in depth. 

The interviews were conducted at different times as we worked on the research; some were 

conducted directly or through the web according to the agenda of national and international events. 

The previous stage was followed by a preliminary analysis of the collected information; illustrative 

sentences were identified and imported to Qualitative Data Analysis Software QDAS software for 

analysis and encoding using the generic categories CAD, CAE and Bio-CAD imaging technique. 

Since our analysis focused on speech, we followed the complete process of Grounded Theory (Fendt 

& Sachs, 2008). 

In the next phase, we made a first attempt to follow a methodology based on the integration of 

technologies using Bio-CAD and CAE, diagnostic imaging techniques and tools for the design and 

biomechanical evaluation of an implant (Lopez, 2011) during the experimental development. 

4. Outcomes of the case study: Research on implant-bone interface 

biomechanical effect 

The techniques and tools used for the experimental development of the project are shown below: 

4.1 Diagnostic imaging technique 

The X-ray images used for radiographic diagnosis have had a positive impact on technology 

integration. This because the CT images obtained through computed tomography, micro CT scans or 

magnetic resonance imaging (MRI), are high resolution images utilized to differentiate soft tissues 

such as brain and hard tissues like bone (Robiony et al, 2007). Marrietta (2000), and Sun (2004), 

integrated technologies to obtain and process images, which has allowed building virtual 3D 

anatomical models using software tools known as CAD. 3D virtual models can be used as a guide to 

the design and manufacture of custom-made implants (Landers et al, 2012; Folch et al, 2000). 

138


4.2 CAD CAE tools for the development of implants 

Software tools used to make 3D virtual reconstruction of bone models from CT scans have an 

equivalent application to the tools of computer aided design Bio-CAD. Biomedical advances have 

created new uses of CAD, with applications to tissue engineering, known as CAD based bio-tissue 

(Sun et al, 2004). Even, through this graphical environment, 3D CAD implant models can be 

interactively inserted into the bone (Galanis et al, 2007). These models provide important information 

about biological tissue, biophysical and mechanical properties that can be used for anatomical 

modeling, clinical medicine, simulation, design and manufacture of complex tissue substitutes, 

custom-made implants (Sun et al, 2004). 

Once they are reconstructed, 3D virtual models are used in biomechanical analysis and simulations 

using CAE software tools to be evaluated by mathematical modeling methods as FEM - Finite 

Element Method (Xu & Wang, 2002). CAE analyses are used for evaluation of the mechanical 

properties of biomaterials, validation of the implant geometry and mechanical behavior of the interface 

with the bone tissue (Meyer, 2001). 

Although technological base companies have integrated of CAD/CAE tools for new product 

development, the software tools are limited to the development of standardized implants following a 

standard methodology based on the modeling of parts using only the tools of drawing software. 

However, it is not enough to implement these technologies in the product design process for purposes 

of standardization of the design of implants, because regarding to this, Marrietta (2000) argues the 

standard implants may loosen over time due to the lack of precise tightening which leads to the 

biomechanical mismatch of the implants (Pal et al, 2010). 

4.3 Outcomes obtained through the integration of Bio-CAD-CAE technologies 

In the case study was made the integration of technologies for applied a different methodology for the 

design and biomechanical evaluation of a dental implant inserted into the bone interface compared 

with the conventional technologies used for this kind of study. The resources for the research were 

obtained through the management of the research group, based on cooperative agreements with 

other entities that had the required technology. For example, the bone models were supplied by the 

amphitheater of the Faculty of Health of the UIS, CT scans were offered by courtesy of University 

Hospital, The Bio-CAD Software Mimic's and 3Matic were given by courtesy of the Belgian company 

Materialise®. Finally, the prototypes were manufactured in the company EQ. From images obtained 

by helical computed tomography (CT) in DICOM format, tissue reconstruction through the modeling of 

the virtual three-dimensional object was performed by Bio-CAD tools of the molar mandibular bone. 

The virtual model was used as a reference to design the custom-made dental implant and it was 

subsequently inserted in a virtual fashion into the 3D bone model. 

Figure 1, shows the methodological sequence followed by the reconstruction of images, from CT 

imaging obtaining, conversion of Dicom images through the software Mimic's, its subsequent 3D 

reconstruction in the software and the design of the implant based on the geometry of the virtual bone 

model reconstructed by CT. From the virtual model, biomechanical simulations were performed with 

CAE software, using the finite element method, the results used for its evaluation were the ones 

related to the effort and unit distortions produced in the bone-implant interface, as a result of static 

biomechanical loads (Machin, 2007) 

Figure 1: Sequence followed by the 3D reconstruction of jaw-Imaging, 3D calculation b-, c-editing 3D 

virtual d-insertion of implant and bone model refined to be exported 

139


4.4 Results obtained by the methodology based on use of conventional CAD / CAE 

tools 

This method is based on the modeling of the implant in CAD Solid Works ® software, following the 

routine methodology used in the company(see figure 2, left). In the same way, another virtual model 

of the bone was built by using cross-sectional images whose structures were drawn with Boolean 

tools from CAD. Finally, we obtained a model of the bone with the inserted implant, which was 

subsequently taken to the CAE software to perform simulations about the biomechanical behavior of 

the implant during the interface. Figure 2, shows two methodological sequences followed by the 

CAD/CAE conventional method and by the method based on the integration of technologies. In both 

cases, the models were taken to CAE, their feedback was carried out and then the model was taken 

to a production process. 

Figure 2: Comparison of methodologies used for the reconstruction of virtual models 

The results achieved a more precise model virtually reconstructed through imaging technique and 

Bio-CAD tools as it is shown in Figure 3. Thus, the data of the analysis obtained through simulation 

were closer to the experimentally obtained data, compared with the results achieved by simulation 

from the conventional CAD model (Lopez, 2011). 

Figure 3: Comparison of outcomes between CAD model and Bio-CAD model 

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From the results obtained in the research master project, it can be understood the potential that 

represents the development of a study carried out from the management and technological 

development to achieve the integration of technologies in an appropriate framework. In the same way, 

this process led to a more focused approach to support the innovation processes of the company, and 

the enhancement of an organizational behavior oriented to improve its innovativeness through the 

strategy, based on the idea of improving the development of products having as a purpose the 

appropriation of knowledge, through team and cooperative work with the university and the 

appropriation of the integration of technologies. 

5. Future project 

This integration technology pilot resulted in the development and adoption of a new project funded by 

the university and the QE Company. The project raised because the actors expect to strengthen this 

topic as part of a research line. The aim of developing of this project entails the acquisition of the 

technologies used for research and master’s thesis to contribute strengthen and enrich the state of 

the art about the research topic, and planning to create a spin off. 

Based on the experience outlined in this article, we see an opportunity to develop a methodological 

framework from technology management oriented to the integration of technology, from which we aim 

at contributing with the articulation of a viable mechanism that organized within a strategic framework 

may be established as a first approach to the formulation and development of projects in other fields 

requiring appropriation of technology. 

6. Discussion and conclusions 

According to the experimental methodology carried out in this exploratory case study, it can be 

argued that the use of Bio-CAD technologies contribute to obtain the accurate 3D virtual bone models 

as a reference to design orthopedics custom implants. In this way following a methodology based on 

software tools integration BIO-CAD CAE was possible to reduce the limitations and complexities 

related to modeling anatomical structures in classical CAD tools derivated from the lack of technics 

and draw tools to the 3D Models reconstruction. 

To sum up, the integration of technologies oriented to design customized implants in the biomedical 

area is an excellent opportunity to reduce the existing technological gap in the orthopedic business. 

European countries had successfully integrated technologies in their design and production implant 

processes obtaining advanced accurate medical complementary products, 3D visual reconstructions 

of anatomical structures, and surgery planning, among others. 

Given the phenomenon complexity studied, the researchers propose a new strategic research line 

supported by the Universidad Industrial de Santander through research groups articulation based on 

the multidisciplinary (managing, bioengineering, biomaterials, design) capabilities integration. In order 

to promote and take advantage of the application of biomedical technologies built through knowledge 

transfer from the university to local companies, allowing competitive advantage generation in 

dynamical markets. 

Acknowledgements 

The authors wish to thank the people whose cooperation contributed to the advancement and 

development of the research, the research group at the university; we give special thanks to the QE 

Company and the UIS University Hospital for providing us with CT imaging. We also thank the 

Materialise® for providing us with Bio-CAD technology. 

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143

Social Network Analysis: A Tool for Organizational 

Coaching 

Gentil José Lucena Filho 1 , Ruy Alcides de Carvalho Neto 2 , Margarita Morales 1 

and Maria Beatriz Maury 3 

1 

Research Laboratory on Conversations, Homero Reis & Consultants, Brasilia, 

Brazil 

2 

Comptroller's Office, Bank of Brazil, Brasilia, Brazil 

3 

Center for Social Development, University of Brasilia, Brazil 

gentil@homeroreis.com 

ruyalcides@bb.com.br 

margarita@homeroreis.com 

beatriz.maury@gmail.com 

Abstract: This article shows the application of Social Network Analysis (SNA) as a tool for Organizational 

Coaching (OC). Following a methodological standard typical of action research, a group was set up with 11 

executives from the information technology department of a large financial institution in Brazil, in which SNA was 

to be conducted, for the purposes of compiling an initial diagnostic of the network of institutional commitments 

that exists among them. This would then be used as a basis for the individual and organizational coaching that 

followed. The application of SNA in this group's network of commitments has revealed: (i) its ability to selforganize, 

given the hectic nature of this field (IT) and the size of the organization; and (ii) the ability to coordinate 

actions, by group members and by the group as a whole, in terms of its internal and external interfaces within the 

organization itself. We used metrics that demonstrate the structure of the informal network, the nature of the 

relationships in / of the group, and its critical players. The article also shows how this diagnostic was 

subsequently used to optimize the organizational learning and knowledge management processes, led by OC. 

Keywords: social network analysis, organizational coaching, knowledge management, learning organization 


Organisations are constantly undergoing changes and transformations, to overcome crises and to 

organize themselves at new levels of reality. Organizational Coaching (OC) works in this milieu, 

helping people; leaders and teams interrelate and develop ontological - conversational - competences 

which, in turn, enable them to effectively fulfil their professional commitments. These commitments - 

parts of a complex network of conversations that ultimately characterizes the organization - are 

composed of: tasks (T), determined by the nature of the business run by organization; interpersonal 

relationships (R), typically anchored to the needs of that organization, depending on the tasks it will 

have to carry out; and the actual institutional identity (I) of the organization at hand. 

OC, based on an ontological perspective of conversations, is a social technontology 1 which goes 

through several steps in this environment; among them is the perception and mapping of the 

organizational context in which the participants of the network of commitments that constitute the 

organization operate. During this mapping process, the following is revealed: (i) the current state of 

network of Relations (R), in terms of interpretive flaws and gaps, among the people involved; (ii) 

negative interferences due to these gaps and flaws in the coordination of actions, necessary to 

successfully perform the organization's Tasks (T); and (iii) indicators of the organizational harmony in 

the group which, to some extent, characterizes the actual Identity (I) of the organization. 

Correspondingly, this is also how SNA is applied within organizations. Typically, SNA is an 

interdisciplinary technique with which one can dynamically examine social interactions occurring in 

the network. Each organization has its own formal way to organize itself, with established structures, 

functions and responsibilities. At the same time, it brings with it an informal network of relationships, 

naturally determined by the types of connections and affinities that arise between people when they 

come together to accomplish collective tasks. SNA is committed to this second type of network in the 

organization. It is believed that, in essence, this network is where "things actually happen". 

1 

Technontologies – from technology and ontology – to strengthen both the technical and human aspects present in the flow of 

conversations inside organizations. 

144

Gentil José Lucena Filho et al. 

2. Conversational commitments and organizational coaching 

According to Kofman (2002), the ability to commit is one of the constitutive domains of a person, of 

groups or human organizations in their broadest sense. A person, group or organization that claims to 

commit shows this capacity in being effective in the tasks performed, in having confidence in the 

relational links forged in this undertaking, and in caring for the identity of the people and / or groups or 

organizations involved in the commitment. These three dimensions: Task (T), Relationship (R) and 

Identity (I) characterize what Kofman calls conversational commitments. In order to deal with these 

commitments, some conversational competences are necessary. These are: 

In terms of Task, the competences required are those capable of coordinating actions and 

perform tasks to ensure effective results, in line with the purpose of the organization. 

In terms of Relationship, the competences required are the ability to build trust from the fulfilment 

of promises, to actively participate in projects and to have the partnership recognized by the 

interlocutors, so that feedback can be received, for collective learning purposes. 

In terms of Identity, the competences are integrity in one's actions, i.e., coherence between the 

actions and intentions of the parties, as well as the ability to honour, with dignity, one's own 

commitments (whether or not they are fulfilled!). 

This means that T, R and I should be treated in unison, and that they support one another based on 

conversational competences. These competences carry the aforementioned technontological 

dimensions. They do not consist only of technological attributes (technical competences), but also of 

essentially human (ontological) characteristics such as, for example, attitudes and values. If they are 

used as such, they can be much more effective. 

The meaning historically attributed to the term "conversational competences" comes from the original 

work of Fernando Flores, described in Winograd and Flores (1988). More recently, based on a 

Resolution by the National Council of Education, CNE/CP 03/2002, in the context of the Brazilian 

Government, Lucena (2010) devised the following definition for conversational competences: 

"A conversational competence is the ability to, in a conversation, be able to talk, mobilize, 

articulate and implement - in a sustainable manner - the values, knowledge, skills, and 

attitudes necessary for the efficient and effective performance of activities required at 

work and in life in general." 

Conversational competences have several characteristics. The most important of them is the fact that 

they are universal and generic. They are universal because they do not depend on languages and 

other socio-cultural issues: anywhere in the world, people and organizations talk in order to attribute 

meaning to human coexistence. They are generic because, regardless of the language used, people 

(and organizations) think, reason, reflect, express feelings, discomfort, make requests, offers, 

promises, issue opinions, coordinate actions with one another, etc. - all within the context of a true 

conversational net which, ultimately, constitutes not only human organizations, but the actual 

coexistence of humans as they go through life. 

Conversational competences have also historical characteristics; in particular, due to the 

technological nature inherent to them, as part of their technontological essence. There are two 

interesting facets to consider here. Technology tends to change over time, which may require new 

skills (see, for example, the corporate revolution brought about by the advent of the internet). From an 

ontological perspective, skills like speaking, listening, making judgements, coordinating actions, etc., 

are perennial; regardless of time or place, people and organizations continue to talk so as to co-exist 

in a society. 

Ontological coaching, either practiced with individuals (personal coaching) or organizations (OC) may 

be seen, in general, as a conversational competence. As such, coaching carries such attributes as 

knowledge, skills, attitudes and values, the same as what can be found in the "CHAV ontology" 

described in the conceptualization by Lucena (2010) and mentioned earlier (previous page). 

Ontological coaching aims to develop and / or hone skills to enable deep learning by individuals, 

teams and organizations. These learning skills, both as individual learning and organizational learning 

(Senge, 1990) point to purposes and vocations in such a way as to achieve them with satisfaction and 

success. 

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In this sense, organizational coaching is a kind of conversational competence, on the grounds that the 

organization is a dynamic network of conversations (Winograd and Flores, 1988), well-defined and 

guided by the nature and purpose of the organization. This conversational network consists of the 

people who are part of the organization, as well as their relationships within it. For example, in a bank, 

people assume the identities of banking staff and interact in way so that the tasks they perform, based 

on this triad - Identity, Relations and Task - establish the Bank as a Bank (and not as a pharmacy, for 

example), with its own identity, and a unique culture and (sub-)system. 

Conversational competences through ontological coaching aim to learning. They have to do with the 

organization seeing itself as an apprentice, maintaining the organizational learning process and 

becoming able to design and implement new actions consistent with their institutional purposes and 

objectives. As such, the conversational commitments established by - or with - the organization form a 

map, allowing OC to develop from the recognition of current dynamics, as well as those desired by 

the organization. 

In this sense, first and foremost, OC allows the organization - through the people who constitute it - to 

develop the ability to observe itself and the relationships established both internally and externally. 

This ability to self-observe reveals behavioural and conversational commitment aspects that, as a 

rule, are blind spots which, if revealed, enable the organization to evolve from a state of "blindness" to 

that of being a learner. It is as if the organization has become aware that "it didn't know what it didn't 

know" (blindness) and moved to a state of "now it knows that it doesn't know" (ignorance). From that 

point on, it is able to evolve through gradual learning (Flores, 1996, p.142). 

Secondly, OC allows for the monitoring of the learner organization (or group), enabling it to observe 

itself and how it commits to the pursuit of the impeccable management of its commitments, in light of 

indicators related to their tasks, relationships and identity. Based on this recognition, organizational 

ontological coaching may progress towards making the organization capable of listening very 

intensely to what happens around it, identify potential gaps and flaws in the shared vision held by its 

constituents in relation to the organization's mission and vision for the future. It thereby builds new 

possibilities for change, translated into potentially more efficient and effective concrete actions. 

Third, coaching monitors the organization, so that it may advance through new conversational 

practices, so that consistency in the management of its commitment can remain aligned with its 

institutional purposes. Such monitoring is part of the group and executive coaching processes, in a 

way so that the three dimensions of conversational commitments (T-R-I) can develop concomitantly 

and in equilibrium. 

3. Social analysis network: A tool for organizational coaching 

3.1 Social networks 

As shown in the previous section, organizations seen as social networks, can also be considered 

dynamic conversation networks. There can be seen a natural convergence of social networking 

technologies - such as SNA, discussed in this article - with conversations - in particular, of a coaching 

nature - as social technontologies. On both cases, conversations can be considered a sort of 

amalgam necessary for constituting groups and organizations. 

But for that to happen smoothly and sustainably within the social environment in which they operate, it 

is necessary for them to have adequate means for creating and managing knowledge, for developing 

and giving greater effectiveness to information flows and to organizational management at various 

levels within the organization and, more generally, in managing commitments. 

Castells (2006) argues that networks are open structures able to expand indefinitely, integrating new 

nodes, or players, provided they can communicate within the network, i.e., so long as they share the 

same communication codes (e.g., language, values, information etc.). Kanter et al. (1998), in turn, 

point out that "not all networks are spontaneous." Organizational leaders must constantly monitor the 

areas where they operate, in order to contribute to the creation and maintenance of new networks. 

Therefore, it is no coincidence that social networks have become an important management tool, as 

well as a competitive differentiator for companies. Increasingly, large corporations analyze their 

networks, both internal and external, to support decision-making, making this knowledge increasingly 

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more strategic. Echeverria (2005), one of the key authors on the ontological vision described in the 

previous section, is also aligned with these social network characteristics; according to him, the ability 

to foster one's networks determines the success or failure of a company's business. 

3.2 Social network analysis 

Looking at groups and organizations from the perspective of social networks may bring about new 

challenges and opportunities. In this regard, and in addition to the formal and hierarchical structure of 

the organization, one can also consider the different informal channels, established through 

relationships that stem from informal conversations that often take place within organizations. 

Furthermore, some characteristics of social networks - such as flexibility, sustainability, connectivity 

and decentralization - tend to be gradually incorporated into the organization's governance process. 

To better understand the formation and dynamics of these relationships, the SNA methodology was 

developed. SNA is an interdisciplinary technique that provides a dynamic understanding of social 

interactions and an alternative to the "static" interpretation the social role played by an individual or 

group within a context. 

According to Scott (2000), SNA stemmed from three major theoretical perspectives that constitute the 

current body of knowledge and theory about social networks: the sociometric Analysts, the Harvard 

Researchers, and that of Manchester Anthropologists, all born in the thirties (1930). These 

perspectives, together with software and information exchanges among researchers, have created an 

environment conducive to research and to the dissemination of knowledge in the field of SNA. 

SNA has certain tools for analytical purposes. In general, the network can be analyzed visually or 

using quantitative indicators. A visual analysis provides a general overview of the social network to be 

analyzed. As for quantitative analysis, there are methods with sets of indicators, enabling a more 

accurate view of the network structure. In one of these methods, Silva (2003) proposes three types of 

analyses: structural analysis, relational analysis and the identification of critical stakeholders. 

The structural analysis focuses on network characteristics such as size, density, diameter and 

geodesic distance. The relational analysis explores cohesion and maps subgroups. The critical 

stakeholder analysis assesses the role of these players within the network. 

According to some authors, managers can leverage knowledge and act in order to use network 

dynamics to achieve their goals, build trust and share knowledge. Moreover, and depending on the 

issue at hand, a given person may have different partners for different subjects. For example: person 

A talks about sports with C, about politics with B and D, and about work with K. As a result, social 

networks of a particular group can be analyzed from different perspectives, depending on the aspects 

one wishes to address. Cross and Parker (2004) propose four dimensions, involving different 

perspectives or networks, to be mapped in accordance with whatever is being researched. For 

example, relationships that reveal the collaboration of individuals in a chain; relationships that reveal 

the potential of sharing information; relationships that reveal rigidity within a network; relationships 

that reveals well-being and leisure within a network. 

The choice of the dimensions to be researched in the network is crucial for a correct approach, since 

all the indicators to be calculated in the research initiative refer to the chosen context. 

In the case study presented in this paper and described below, we used the aforementioned approach 

proposed by Silva (2003). The three stages - structural analysis, relational analysis and analysis of 

critical stakeholders - were investigated. 

4. Case study 

The study presented in this paper comprises a closed group of 11 information technology executives 

linked to one of the vice-presidencies of a major public financial institution in Brazil. In order to 

prepare the OC with these executives, an initial diagnosis was conducted of the group's network of 

commitments, based on the analysis of the social networks (SNA) that these executives participated 

in within the organization. 

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For the purposes of SNA, the sequence of steps proposed by Cross and Parker (2004) was followed, 

including: group identification; definition of a questionnaire for obtaining initial information; information 

gathering; analysis of the results and presentation of the conclusions from the group analysis - the 

latter was part of the coaching stage, which took place subsequently. 

All study phases were anchored to a Laboratory for Research of Conversations in Organizations 

(Labcon), which, at the time, had been installed as a research group in one of the local universities, 

and later transposed to the partner coaching firm participating in the venture. 

The goal of SNA as applied to this group was to map the Commitments Dimension established within 

the group. For this mapping process, it was considered a synthesis of two other Social Network 

Dimensions: 

The group's ability to Self-organize, essentially consisting of the group's relationship network, its 

exchange of information and group identity; and 

The ability of group participants to carry out Tasks / Coordinate Actions, consisting primarily of 

networks of reliability, competence and sincerity in the relationships among its constituents and 

the sharing of their visions and goals. 

This junction was necessary because the Self-organization Dimension provides information about the 

network of relationships and identity, and the Tasks / Action Coordination Dimension provides 

information about the coordination of actions when performing tasks. As seen in Section 2, these 

three elements - Tasks, Relationships and Identity (T, R, I) comprise the Commitments Dimension 

established in the group. In each of these dimensions, the following was analysed: Structural Aspects; 

Relationships and Critical Stakeholders. 

4.1 Quantitative analysis 

4.1.1 Structural analysis 

Table 1 presents a set of the following indicators: Commitment, Self-organization and Tasks used in 

structural analysis. We observe that the Commitment Dimension (Self-organization + Tasks) boasts a 

relationship level with a density of 40% 2 , which means that only 40% of the people in this group are 

frequently establishing confirmed relationships including commitments to carrying out activities at 

work. This percentage is slightly lower than expected, when considering the small number of people 

in the group and the fact that they are part of a work team. 

Furthermore, based on (Wasserman and Faust, 2008), centralization 3 is measured at 52% of 

relationships, which applies to only a few people in the group, indicating a strong level of hierarchical 

relationships. This finding is supported by a diameter 4 measured at level 6 in the Task dimension, 

which shows a very large gap between people when performing tasks in a coordinated manner, 

showing a vertical action coordination process, i.e., among different hierarchical levels, and not as a 

team. 

Table 1 Structural indicators 

Structural Indicators 

Commitment (A + B) 

Self-Organization (A) 

Density 

40% 

39% 

Average 

distance 

Diameter Centralization 

1,7 3 52% 

1,8 4 42% 

Task / Action Coordination (B) 25% 2,4 6 38% 

2 

Density is a quotient between the number of existing connections divided by the number of possible connections. 

3 

Centralization: a measure of dispersion comparing the centralization of a player (quantity of relationships) with the maximum 

rate achieved by the player in the network. 

4 

Diameter: After calculating the distances of each X Y relationship in a relationship matrix, the diameter is the largest 

distance between players. 

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4.1.2 Relational analysis 

Table 2 analyses the following relationship indicators: Commitment, Self-Organization and Tasks. 

Based on (Wasserman and Faust, 2008), we can see that, although a 40% Density (Table 1) is less 

than ideal, the group has a good degree of Reciprocity 5 , 69%, which means that, normally, existing 

relationships are strong and mutual. This can also be seen by means of the indicator for Potential 

Formation of Transitive Triads 6 , at about 57%, which means that other relationships can potentially be 

created and strengthened by common, existing relationships. 

We identified four sub-groups in the Self-Organization and Commitment Dimension, which are aligned 

with the company's organizational chart, showing few interdepartmental relationships in these 

dimensions (Table 2). We observed that Sub-group 4 is formed in the three dimensions, showing that 

it boasts higher integration, stronger relationships with stronger commitments. In this Table, we 

identify the group elements. 

Table 2: Relational indicators 

Indicators 

Relational 

Reci- 

procity 

Transitivity 

Potential 

Transitive Triads 

Commitment (A + B) 69% 9.3% 57% 

Self-Organization (A) 72% 8.7% 56% 

Tasks / Action 

Coordination (B) 

Sub-group 

1: CX1CX2 CX3 CX8 

2: CX1 CX2 CX6 


4: CX2 CX5 CX6 CX10 

1: CX1CX2 CX3 CX8 




33% 3% 61% 1: CX5 CX6 CX10 

4.1.3 Identification of critical actors 

Table 3 benefits from concepts extracted from (Cross and Parker, 2004). It shows people who are 

Central Connectors 7 ; the ones that exert the Biggest Influence 8 and Border Expanders 9 . Leaders 

often go unnoticed in a network because influential people may not seem like leaders and people at 

higher hierarchical positions may exercise power even though they are not leaders. As in the case of 

CX1, despite being a central connector in the network, as shown in Table 3, due to the unilateral 

direction seen in Figure 1, one can conclude that, somehow, his/her commitment is not being 

recognized by the other network participants. This demonstrates isolation, despite that person despite 

in a central position, because the relationship is not reciprocal. 

Figure 1: Task / action coordination dimension 

5 Reciprocity: Quotient of the number of reciprocal (bidirectional) connections by the number of existing connections. 

6 Potential Transitive Triads: Indicates the number of existing triads. Triads are relationships such as a "friend of a friend", 

because they show the network’s growth potential. 

7 Central Connector: An indicator of the extent to which a person is in the shortest path between several network nodes. 

Provides a perspective of global centrality. 

8 Biggest Influence: An indicator of how much a particular node appears among several other nodes in the network. 

9 Border Expanders: An indicator of who makes the connection between the various sub-groups in a network. 

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Moreover, Figure 1 shows the peripheral position of CX9 and CX4, and that CX11 plays the role of 

integrator, playing the role of Border Expander and connecting them to the networks in the Tasks / 

Action Coordination Dimension. This was also detected by the "Border Expander" indicator shown in 

Table 3. The importance of these types of players is the ease with which they articulate network 

connections. 

Table 3: Central players 

Indicators 

Critical Players 

Central Connectors Biggest Influence Border Expanders 

Commitment (A + B) CX1 CX2 CX8 CX1 CX2 CX8 CX1 CX8 CX2 

Self-Organization (A) CX1 CX2 CX3 CX8 CX1 CX2 CX3 CX8 CX1 CX2 

Tasks / Action Coordination 

(B) 

- - CX11 

By uniting the information in Table 2, on sub-groups, and in Table 3, we highlight the participation of 

CX1, CX2 and CX8 as the central players who are the most influential in all three dimensions, both in 

the integration of sub-groups and in acting as connectors in this network. The central position of these 

participants can be seen in Figure 2. 

Figure 2: Network of commitments 

These are the main points raised by the group’s SNA. 

In summary, and based on the analyses performed, we can report that: (i) the group was structured 

with relationships centered on a few members and hierarchical relationships, (ii) it boasts good 

potential for creating new relationships from existing ones and from integration among the subgroups; 

and (iii) there is leadership by certain group participants, which may help and contribute to the 

process of "empowering" of the network. 

4.2 Qualitative analysis 

Based on the indicators collected during the SNA that took place prior to the coaching stage, we 

presented the SNA results to the Client, before starting the activities - what were his demands? what 

did he expect at the end of the interventions? 

The presentation of the SNA results had a strong impact on the Client, as it clearly depicted and 

illustrated the most profound articulation of what could be most meaningful to the organization and 

how, from that point forth, these could be addressed in the forthcoming OC sessions. In this light, it 

was easy to establish the purpose of the work and secure the necessary commitment to learning from 

the group, to conduct the activities that would follow. 

SNA is applied through a simple questionnaire, consisting of eight questions and whose answers are 

the names of people inside or outside the network that meet the characteristics required by each 

question. The results of the quantitative analysis were presented to the group of executives as an 

initial diagnostic, in a group session. During this presentation, the results were validated - they 

150


identified themselves by observing themselves and the system that is created when they are 

networked. There was a major impact when we observed the formality of the network, the presence of 

critical players in the network, as well as the lack of leadership derived from formal leaders. 

Once the diagnostic validation was concluded, the SNA itself served as a basis for the coaches that 

monitored individual staff members, so that they could have a basis for evaluating how each 

executive is seen and perceived within the network, as a critical player. The individual executive 

coaching processes were enhanced and the opening of talks that included the T, R, and I dimensions 

was facilitated. 

Finally, the coaching process ended with a conversation with the hiring unit, so that they could realize 

the current situation of the group and the potential for growth, given the measuring, development and 

monitoring made possible by OC. 

Testimonies by certain group members show the enrichment of OC when it is supported by significant 

technontologies used in the development of learning skills 

5. Final remarks 

In the search for "techno-ontological" instruments to support the coaching process, we used SNA as a 

tool to support the practice of OC. In it, we modelled the three dimensions of conversational 

commitments: the Task, in the action coordinating dimension; the Relationship, in trust; and Identity, 

in the capacity for self-organization of individuals and teams. 

Each organization has a formal way to organize itself, a staff chart with all the hierarchical levels that 

determine the responsibilities and authority assigned to different players. At the same time, there is an 

informal, natural network determined by the bonds of relationship, trust and leadership that permeates 

the organization. Much of the actual work, in any organization, is done through informal networks that 

transpose positions and departments. OC, supported by SNA, was effective in allowing the 

organization to gaze upon the second type of network, which is informal, the one that truly exists in 

practice. 

As applications of the Organizational Coaching instrument, we refer to these three dimensions: 

For the diagnostic: The SNA identifies three groups of organizational indicators: Structure, i.e., the 

way the network is constituted, in terms of possible relationships, the degree of centralization, 

distance between people, etc..; Relationships, those that exist, are reciprocal and used in the 

identification of transitive subgroups and triads; and Critical players, i.e., identifying the players 

located most centrally within the network, those that are involved in relationships, those who have 

great influence and make connections between subgroups. 

Development: The SNA provides initial guidance about the types of interventions that coaches should 

use in the organization. The coach has access to the relationship network of the coachee and / or 

group of coachees, its types of relationships, reciprocities, and degree of influence. This instrument 

show cases the power of social networking and guides leaders in developing individual and group 

skills. 

Validation: The SNA makes the coaching results plainly visible, by reapplying the instrument and 

making a comparison with the evolution and improvement of the quality of the organization's social 

network. However, other results can also be extracted, such as: supporting partnerships and 

alliances; managing changes; assessing strategic execution; improving strategic decision-making; 

integrating networks through key processes; promoting innovation; ensuring post-merger integration; 

developing a community of practices; competence management, etc.. 

We conclude this paper by pointing out the importance of SNA and CO as support technologies to 

human learning processes, both at individual and organizational levels. This support provides better 

comprehensive information and intuitive validation; allows learning blind spots to become clearer; and 

enables people and teams take responsibility for the way they interact within the organization, broadly 

speaking. Besides, by knowing the conversational structures and its dynamics underlying these 

features potentiates identification of collaborative networks, people expertise, and paths through 

which knowledge and information flow within the Organization. These, we believe, provide a rigorous 

151


foundation for analysis and implementation of practical methods of organizational learning and 

knowledge management. 

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A Technontological Framework to Conversations for KM: 

Conception and Potential Applications 

Gentil José Lucena Filho 1 , Rodrigo Pires de Campos 2 , Sheila da Costa 

Oliveira 3 and Margarita Morales 1 

1 

Research Laboratory on Conversations, Homero Reis & Consultants, Brasília, 

Brazil 

2 

Master Program in KM and IT, Catholic University of Brasilia, Brazil 

3 

Communication Department, Catholic University of Brasilia, Brasília, Brazil 

gentil@homeroreis.com 

rpires@ucb.br 

sheila@ucb.br 

margarita@homeroreis.com 

Abstract: Since the emergence of knowledge management (KM) as a field of study, the understanding and 

management of conversations is a quite recent concern. Practical ways in which conversations influence KM 

remains underexplored. In a comprehensive literature review on roles and rules of face-to-face conversations 

Mengis and Eppler (2008) proposed a seminal framework for conversational management based upon 

communication theory. By recognizing, on the one hand, their great contribution to the organization and 

structuring of a wide array of explicit rules of conversations in KM, and, on the other hand, some critical issues 

left underexplored by the authors, we attempt to contribute to the advancement of their original framework. Based 

upon the conception of organizations as networks of commitments (Winograd and Flores,1988), this framework 

benefits from Mengis and Eppler’s (2008) “key diagnostic questions” and from our own empirical and long 

experience with intervening into real organizational settings through the combination of three technological 

dimensions dimensions (or levels) of commitments (Kofman, 2003), and five ontological domains (Hidalgo, 2009). 

As a result, we have conceived and designed a technontological framework to conversations for KM with key 

questions that may help with managing conversations for KM in real organizational settings. We move into the 

description of a preliminary application of the framework in a real organizational setting, and suggest future paths 

of empirical and theoretical research. 

Keywords: conversations, knowledge management;,technology, ontology, technontology, framework 


Since the emergence of Knowledge Management (KM) as a field of study in the academy, the role of 

interpersonal conversations has increasingly received greater attention, specially in recent years 

(Nonaka and Takeuchi, 1995; Krogh and Roos, 1995; Allee, 1997; Krogh et al. 2000; McElroy, 2003; 

among others). Authors in this field of study tend to be restricted to a set of explicit actions, steps or 

stages that might help improving communication within organizational settings without considering the 

ontological dimension of conversations: attitudes and values (human skills) which accompany the 

human beings that hold those concepts and abilities when doing what they do. Nonaka and Takeuchi 

(1995), to some limited extent, apparently seem to consider this dimension when they introduce the 

concept of ba – “a shared space for emerging relationships” (p. 40), a sort of creative and sustainable 

“ambience” for holding human communication. 

More recently, Mengis and Eppler (2008) provided a comprehensive literature review on the role and 

management of conversations in the context of organizations that apply a knowledge perspective. 

The authors concentrated efforts upon four interrelated areas namely knowledge management, 

organizational learning, decision-making, and change management. By recognizing the existence of a 

“myriad of often unrelated conversational rules” (p. 1306) in organization science, and based upon 

insights from traditional and contemporary communication theory, the authors dive into an extensive 

literature in search for “explicit conversational rules”, organize and structure them into a seminal 

coherent and prescriptive six dimensional framework for the management of conversations in 

organizations (Figure 1). For each dimension (bold letters) the authors suggest a related critical 

question designed for the management of knowledge-intensive conversations. 

Irrespective of the innovation, significance and unquestionable contribution of Mengis and Eppler’s 

(2008) framework and related questions to the field of study, the authors point out some promising 

future research directions. Among them, they suggest empirical research to investigate whether 

“conversational behavior as prescribed by the presented framework actually facilitate social 

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knowledge processes” (p. 1306), “for conversers to acquire and interiorize effective conversational 

behavior” (p. 1306), and, finally, on “other means of improving the quality of conversations.” (p. 1306) 

Source: Mengis and Eppler (2008, p. 1299) 

Figure 1: Key dimensions and questions of conversation management 

Notwithstanding the fact that such proposals for future research are relevant and timely, our critical 

reflection upon issues that Mengis and Eppler (2008) left underexplored leads us to think that, first of 

all, one must dwell on the conceptual framework in order to advance and refine it prior to further 

research. We would like to point out three such issues on and in the conceptual framework that, in our 

understanding, deserve further attention. 

First of all, Mengis and Eppler (2008) take for granted and leave underexplored what they, and the 

authors they review, mean by “organizations”. Argyris and Schon (1978), for example, develop their 

organizational learning theory by approaching organizations as systems that receive inputs, process 

them, and provide outputs. In fact, among reviewed literatures, authors approach and define 

“organizations” in a wide array of different perspectives. And the design of conversational rules may 

vary depending upon such approaches and definitions. This explains why Mengis and Eppler identify 

“at times contradictory rules as discussed in the framework” (p. 1307). 

Secondly, despite their effort to draw from the literature explicit rules of conversation, Mengis and 

Eppler’s framework for conversation management brings, for each dimension, a set of powerful “key 

diagnostic questions” (p. 1300), that seem to go beyond simple conversational explicit rules. For 

example: “Is the content and form of the message aligned to task and people and is it rooted in 

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facts?” (Figure 1), is less an “explicit rule” than a very thought-provoking question that, in our 

understanding, may open up new and significant conversational fields. 

The third point concerns what we consider a limitation of the proposed framework in terms of 

intuitiveness for management purposes. There are no clear indications or considerations on “how the 

six dimensions of the framework interact” (p. 1306). Besides, their explanation for each dimension 

presented more in a rather descriptive and inferential fashion, than as a concrete indication of real 

issues amenable to management as, we believe, would be required in a “prescriptive approach,” as 

claimed by the authors. The alleged “prescriptive” nature of the framework is left quite unattended, 

undermining its potential use for management purposes in real organizational settings. 

Bearing this backdrop in mind, we attempt to contribute to the advancement of this discussion by 

conceiving and exploring KM conversational processes in organizations from both technological and 

ontological perspectives, in an integrated and holistic framework. A combination of conversational 

technologies and ontologies might help improving KM processes by simultaneously promoting: (i) 

greater and sustainable effectiveness in the realization of the “big organization´s tasks” (such as its 

“mission”, “vision”, implementation of strategies, objectives and pursued results, etc); (ii) better mutual 

respect, mutual understanding and dialogue among individuals, all of these envisaging to establish 

bonds of trust without which the necessary coordination of actions through which one pursues 

concrete results may be limited; and (iii) self-reliance, integrity and dignity of people within 

organizations. 

The objective of this paper is to conceive and design a conceptual framework to conversations for KM 

that take into consideration both technological and ontological dimensions of conversations. Our 

conversational framework benefits partially from Flores (1981), (Echeverria (1997), Kofman’s (2002) 

notions of public and private conversations, and conversational commitments, and Hidalgo’s (2009) 

five acting domains that constitute ontological management. 

We introduce the term “technontology” as a preliminary expression for such mix of conversational 

technological and ontological (human) approaches to the process of KM through human 

conversations. The article is organized as follow: Section 1 launches the technological and ontological 

foundations of our framework. Section 2 moves into the proposal of conceptual framework itself. 

Section 3 describes our initial efforts of empirically exploring the potential implications of such an 

approach to conversations for KM in real organizational settings, preliminary considerations, and a 

few directions for future research. 

2. Technological and ontological foundations of the framework 

It is clear that practical ways through which conversational processes positively influence KM can be 

further explored. Yet, the dominant approach to conversations in the KM literature seems rather 

technological, that is, with emphasis on techniques in terms of concepts and abilities (technical skills), 

with no explicit considerations on the attitudes and values (human skills) which accompany the 

human beings that hold those concepts and abilities when doing what they do. We coin the 

expression “conversational technontological approach”, a mix of technological and ontological 

approaches to the process of human conversations for KM in organizations. 

Our techonontological approach of conversations applied to KM is based on a rather complex 

definition of organizations as networks of commitments, as proposed by Winograd and Flores (1988, 

p.151): (i) to consider the organization as a network of commitments, and (ii) management as “taking 

care of the articulation and activation” of these commitments within this network, because “taking 

care” requires managers to incorporate essential responsibilities such as: openness to the new, 

capacity to listening carefully, and the authority to deal with activities and commitments within the 

network. Such responsibilities require, by their turn, to approach participation as “conversations of 

possibilities”, that open up backgrounds for “conversations for action”. 

Winograd and Flores (1988, p. 150) argue that when we think about “what managers do?” we must 

look at what goes on in an organization as a whole. On the contrary, the authors argue, one will 

observe “a certain kind of ‘recurrence’, or repetitive pattern of actions” that ends up pervading “our life 

as repetitive patterns of breakdowns.” Hence, the main reason for the dominant ineffectiveness of 

management, is the tendency to act upon these breakdowns as if they where something already 

known (or expected), triggering standard actions “automatically”. 

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This means that the role of managers should address not only tasks to be taken care of, but also, and 

mainly, personal relationships that emerge when carrying out those tasks. At the same time, to be 

effective, such relationships will be required to consider the identity of the organization as a whole and 

its individuals. In such an integrated view, managers’ behavior will promote the capacity of taking care 

of “a continuing reinterpretation of past activity, seen not as collection of past requests, promises, and 

deeds in action conversations, but as interpretations of the whole situation – interpretations that carry 

new possibilities for the future.” (Winograd and Flores, 1988, p. 151) 

In the same trend, from Kofman (2002) we understand that the capacity of making commitments is 

one of the basic constitutive domains of human beings, as individuals, groups or organizations. This 

innate capacity manifests itself through the effectiveness of executed tasks, the established bonds of 

trust, the relationships developed to accomplish those tasks, and the efforts that one makes to 

preserve and guarantee people’s identity while involved in those tasks and relationships. These three 

dimensions: Task (T), Relationship (R) and Identity (I) characterize, according to Kofman (2002), what 

he calls “conversational commitments” (p. 202). 

Such commitments give life to the networks that constitute organizations. Depending upon the quality 

of such networks – their vibration and the effectiveness of the results originated from executed tasks, 

the quality of their intrinsic relationships, the integrity (coherence between intention and action) and 

individual dignity of individuals in managing those commitments –, one may conclude about the 

organization’s real KM capacity. The triad (T-R-I), therefore, is less a set of conversational explicit 

rules than a structure upon which organizations manifest themselves. 

An important aspect to underscore in this form of KM is the notion that its dimensions (T-R-I) are 

constantly "dancing", and the dance only flows when there is an effective balance between them. 

Undertaking the task by breaking relationships ends up undermining identity. Giving up the task in 

order not to threaten other's identity is a way of ensuring mediocrity of results. Addressing identity 

without considering the impact it undergoes or causes in the relationship with the other, even if 

pressured to perform a task, is to pollute the live network with potentially conflicting and ineffective 

relationships. 

Finally, we borrow from Hidalgo (2009) the notion of “ontological management” (linguistic dimension 

of the managerial work) to sustain that triad. The author describes the ontological management in 

terms of five conversational domains which must be simultaneously considered in order to 

guaranteeing an effective ontological management: “Reality”, Possibilities, Action and Results, 

Relationships and Learning. 

Under this perspective, the main aspect to consider is how to manage information, people, 

relationships, action and results from a conversational point of view. The question to be answered is: 

what kind of conversational distinctions are predominantly present in dealing with – or taking care of – 

aspects related to information, people, relationships, actions and results in a network of commitments 

representing an organization? Figure 2 summarizes these distinctions. 

The domain of “Reality” seeks to capture that we, as human beings, do not have access to the 

ultimate Reality (without quotes). This follows Maturana and Varela´s (2001) theory of the observer. 

According to these authors, human beings are interpretive beings. The world we see is just that: the 

world we see. Nothing permits us to conclude that what we perceive is better or worse than the 

other´s perception. It relates to facts and events observed in the organization. These distinctions have 

very strong implications on the “doing” of people. These implications range from being intolerant, 

tolerant and respectful to the different other. 

In the domain of Possibilities, by means of language, better reveal our effectiveness in occupying the 

possibilities present on it. Under the basic principle that language is action, it is the one which permits 

(or not) us to be effective (or not) in our choices (in our actions) when we manage by means of 

conversation. It is the domain which concretely takes us to future or space of possibilities. 

In the domain of Action and Results emerges the action that goes to transform what now exists so 

that whatever it is aimed to happen, happen, as something that will transform what exists at present 

into what future can be. It is by means of action that results appear. There will be no results without 

action. 

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In the domain of Relations we become aware that we are not alone, that we are in permanent 

interaction with other beings, other observers so legitimate in their way of being as we are. It is here 

where it should come out an ethics of relationship based on the respect for the difference inside the 

organization. 

Source: Authors, built upon Hidalgo (2009, p. 46) 

Figure 2: Ontological domains and associated conversational tools 

The domain of Learning has to do with developing capacity of action – a capacity that is possible 

because we are able to assess, to judge, and to declare that we simply “don’t know”. It requires the 

competence to give and to receive assessments with love and respect. 

Those are, as we understand, the foundations for designing and conceiving a conversational 

management framework for KM: the management – taking care – of a network of commitments 

structured under integrated and mutually affected tasks, relationships and identity that take place in 

and through interpersonal conversations within organizations. 

The combination of these conversational perspectives invites one to see KM assets beyond the 

simpler notion of a set of information managerial tasks, pre-determined stages, cycles, aimed to 

maximizing organizations’ KM activities for the promotion of individual, group, and/or organizational 

changes. In this sense, we start from the seminal, basic and well-known concepts under which we 

assume that “knowledge is information in action”, to generalize it for: 

“Knowledge management “=” Management of (information in [inter-]action)”; 

Or, correspondingly, 

“Knowledge management “=” Management of (information) + Management of ([inter- 

]action)”. 

The ability to engage individuals or organizations is directly related to the ability to "Be in the world." 

Not only in KM settings, but in life in general, people or organizations have rights and duties towards 

others that must be honored. Not being able to do so means to discredit others and ourselves. 

Likewise, when we coordinate actions to perform tasks, we commit not only our technical skills, but 

our will and our intention to generate results that are effective, sustainable and balanced in the T-R-I 

triad. When we commit ourselves, what is at stake is not only our ability to generate the results we 

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seek, but also our ability to relate with one another within an ethic based on respect for ourselves and 

for others with whom we engage in commitments. 

3. Basic conception fo the technontological conversational management 

framework for KM 

We consider that the triad mentioned above indicates a potential conceptual fusion between 

conversational technologies, used by humans to know and to do (technologies of knowledge and 

skills), and conversational ontologies of being and living together (attitudes and values). To sum up, 

by assuming that organizations are interdependent networks of commitments, KM in organizational 

settings can be seen as taking constant care, through an ontological management basis, of a cyclical 

and relational triadic field composed of tasks, relations and identities among individuals and groups 

(Figure 3). 


Figure 3: An integrated view of triad dimensions and ontological management domains for KM 

Our preliminary conception of a conversational management framework for KM in organizations is 

summarized in Table 1, based on the combination between the three Triad dimensions (first line on 

the top) and the five ontological management domains (first column on the left). Each row in the Table 

brings a set of basic conversational distinctions (at the upper center of each row), and a set of “KEY 

QUESTIONS” (below those distinctions, written in italic style), inspired upon Mengis and Eppler 

(2008), and based upon our long experience with introducing this holistic approach through 

interventions in large public and private organizations in Brazil. 

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Table 1: Basic conception of the technontological conversational management framework for KM 

Dimensions 

Domains 

“Reality” 

Possibilities 

Actions and 

Results 

Relationships 

Task Relations Identity 

(Reality), distinctions, 

information and statements 

KEY QUESTIONS: 

Are information, evidences 

and facts that describe 

reality available and 

sufficient? 

Do people recognize the 

existence of unreached 

realities beyond their current 

capacity of observation? 

Suspending assessments, 

deciding and declaring 


Are people ready to observe 

and evaluate the past 

without prejudice, from a 

wide angle, as a possibility 

generating context? 

When observing the future, 

do people feel empowered to 

make decisions upon which 

commitments must be 

sustained? 

Requests, offers, promises 

and complaints 


Does the coordination of 

actions take place in a way 

that involved people, actions 

and results are clearly 

established? 

Are troubles, unattained risks 

and complaints worth of 

opportunities for mutual 

support and re-establishment 

of commitments? 

Listening and trust 

construction and 

reconstruction 


Are people available to 

clarify and share their 

interpretations of behavior 

and results through a 

process of effective 

listening? 

Do people recognize that 

expectations are not always 

New distinctions and 

connection 


Is there openness for people 

with new distinctions to make 

interpretations and establish 

connections diverging from 

reality? 

Is there openness to 

appreciate and embrace new 

perceptions from reality? 

Coherence between 

declarations and actions 


Are common purposes 

explicit and oriented to the 

co-creation of solutions? 

Is there space for 

spontaneity, silliness and 

irreverence, in a way that 

creative ideas and new 

possibilities may be 

expressed and, when 

appropriate, incorporated? 

Confidence, competence, 

responsibility and sincerity 


Is trust recognized as the 

basis for an effective 

coordination of actions? 

Is there openness to build 

conversations about trust on 

the basis of competence, 

responsibility and sincerity? 

Feedback and respect 


Is there openness and desire 

for sharing feedbacks and 

letting them flow 

spontaneously among 

people, consciously of their 

importance for developing 

networks of commitments? 

Even under discord, are 

159 

Respect 


Are people aware that 

their manner of observing 

reality derives from their 

own mental models? 

Are differences between 

people recognized and, 

as such, do they 

generate respect? 

Integrity 


Do people have the 

capacity to support their 

choices, and to commit 

themselves with the 

coherence of their 

actions? 

When incoherence is 

observed, is there 

openness for pointing it 

out without compromising 

people's integrity and 

organization's purposes? 

Dignity 


Do people have the 

capacity to commit 

themselves with results 

and behave themselves 

according to their 

promises? 

Is there openness to 

welcome a denial to a 

request not as a rejection 

or lack of commitment, 

but as an act of sincerity 

and responsibility? 

Authenticity 


Are people able to enjoy 

their own way of seeing 

and interpreting behavior 

and results in an 

authentic manner, 

without succumbing to 

the desire to please 

others?

Dimensions 

Domains 




Task Relations Identity 

explicit and that, for this very 

reason, they may be 

mistakenly led to raise 

doubts on trust bonds? 

Reflection, questions and 

assessments 


Are there formal and informal 

spaces in which questions, 

reflections and assessment 

sharing are stimulated with 

the purpose of evaluating 

results and identifying gaps 

of effectiveness? 

Are feedbacks taken as 

learning conversations and, 

for that reason, requested by 

those who expect the 

evaluation of their actions by 

others? 

people ready to listen to 

possibilities and new 

interpretations? 

Breakdowns, ground 

assessments, attribute 

authority for others teach 

something to us 


Are breakdowns taken as 

opportunities to activate help 

nets, in a way that it 

becomes possible to deal 

and learn from them? 

Do people recognize the 

importance of having 

someone with enough 

authority and experience to 

evaluate his/her own actions 

and results in a reasoned 

way? 

4. Exploring potential applications in real organizational settings 

Is there openness, 

tranquility and legitimacy 

for people to freely 

expose their own 

opinions, even when 

such opinions may be 

potentially divergent? 

Legitimacy 


Do results and actions 

based on competency 

reveal the potential and 

limits of people’s power 

of action and is this 

comprehended as selfrespect 

and selfcommitment? 

Does the recognition of 

learning spaces commit 

people and the 

community to which they 

belong towards a 

welcome and sustainable 

mutual learning process? 

The application of such framework into real organizational settings is not new to us. Intuitively, we 

have advanced into diagnosing, proposing, designing and implementing conversational management 

from a technontological perspective for more than ten years now. Recently, on a more conscious way, 

we have applied this framework in one specific social event, a kindergarden Waldorf School in 

Brasilia, Brazil. Below, we describe our experience in the form of a narrative, emphasized in italic 

style. Although not conclusive, it provides a few preliminary insights to be further explored later on the 

continuation of our research. 

Yesterday we attended a very interesting event at our children's school: a call to parents, teachers 

and School’s administrative staff to talk about the School's evolution and development, a topic that is 

related and depends on the commitments of all participants with the School. 

Except for the interveners, all participants were women, a detail that ended up conferring a “typically 

feminine tone" to the nutritious conversation that took place: a lot of emotion, passion, engagement, 

common sense and above all, a careful look, full of curiosity and warmth towards the theme, which 

evolved out of important questions: 

1 st . What is the School's major TASK? Has the School been able to accomplish its goals? Does it 

have clear indicators to verify that? Are such indicators being monitored and are they defined 

appropriately? Is the school community aware of what tasks and results require action and that the 

implementation of the School's TASK requires the coordinated action of all? Are they aware that this 

action is not trivial and requires distinctions that today might not be within the reach of this still young 

community? 

2 nd . How are the School's internal RELATIONSHIPS coming along (between parents and the School's 

staff and teachers) and external ones (with its providers, neighbors, the Ministry of Education and the 

educational system as a whole, to which it belongs)? Can one say that these relationships are good, 

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healthy, satisfactory, generating bonds of trust? Are the actions triggered by them well-coordinated, 

harmonious and generating good results? 

3 rd . How is the School's IDENTITY (INTEGRITY between its intentions and actions and DIGNITY as a 

living being) in view of its RELATIONSHIPS and its TASK? What is the existing "organizational 

atmosphere"? How do you, parent, teacher, staff, particularly, feel about the way the School works 

today? 

When asked about this, people, one by one, revealed their positions and perceptions. As the 

conversation progressed, the collective perception of the intersection or mutual confluence of the 

three aspects gradually became clearer: it was impossible to dissociate the TASK's accomplishment 

from the quality of RELATIONSHIPS between the people involved in this accomplishment and, also, 

from how these relationships impacted the IDENTITY of these same people and the School as a 

whole. 

Based on this first and interesting result, reflections continued, with the notion that this tripod that 

highlights the School's dynamics - task, relationships, identity - considered in light of the quality of the 

conversations about it, allowed inferring a degree of conversational immaturity of the group that was 

examining their School's 11-year journey, asking deep questions capable of operating significant 

changes. 

Next, always seeking to mirror situations experienced in the context of the School by those people 

gathered, a conceptual framework was presented for each of the areas where work would need to be 

done to increase the School's management effectiveness, based on the conversational network that 

constitutes it, and, after rich contributions from all, the meeting ended up with the presentation of a 

“harvest” collected from sentences spoken by the people in the group during the meeting, in which 

one could sense the group's highly positive tone at the end of the meeting: 

I want to help! Imagine everyone willing to help! Collective awareness is commitment. 

Commitment is what illuminates action. What do we do with the instruments we already 

have? Are they good? Why aren't they on our desks? Our commitment is with our 

pedagogical practice. We are all educators and expected to behave as adults. How are 

we going to build our cultivated trust? We have the role of rebuilding. What now? 

Directing the conversation towards meaningful questions generated from the Triad (T-R-I) allowed the 

group to perceive not only deep their reflections on the institution, but also the generation of a visibly 

favorable atmosphere for interaction and cooperation. This sort of “conversational field” strengthens 

commitments among people towards significant changes of their own realities. Its continual care and 

combination with knowledge technology and skills can, in our view, facilitate the KM in the School and 

make it more effective. 

5. Final remarks 

Even with current research and actions involving conversational management theme, conversations 

seem to remain “transparent” (i.e. invisible) in organizations in general. Mengis and Eppler`s (2008) 

literature review and framework proposal represented a very important step towards capturing 

conversations from a KM perspective and making them less transparent and more manageable. 

Notwithstanding the emerging stage of our conversational technontological framework to KM, it 

advances Mengis and Eppler`s (2008) framework in three perspectives: (i) it is based upon a clear 

and specific conception of organizations as networks of commitments structured upon the triad T-R-I, 

(ii) it is based upon a long and practical experience with conversational management interventions in 

real organizations, and (iii) it provides important practical tools for KM managers. 

We understand that through our framework one is capable of, in a more intuitive and conscious way, 

generating powerful questions that, by their turn, may open up new possibilities and potential for 

significant changes towards better standards of living together and value generation for organizations 

and society in a more general way. 

The narrative of a practical application of the framework in a specific organizational setting reveals 

that it is mostly welcomed and, above all, makes sense in order to reflect upon the actual stage of the 

organizational management in terms of its tasks, relationships and identity. One should be aware that 

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the proposed technontological framework is more than just a way of implementing simple 

organizational changes. Actually, it can generate new worlds, new realities, empowering people 

towards new actions but at the same time committing them towards an ethical social change. 

We conclude that the technontological conversational management framework for KM opens up 

unexplored research dimensions that deserve further attention. We are tempted to conduct empirical 

research in order to explore the extent to which questions generated from the framework may set up 

the stage and allow individuals, or groups of individuals, to unveil hidden knowledge (hidden 

conversations, yet-to-be-born conversations), to reveal private knowledge (private conversations), 

and to visualize more clearly explicit knowledge (public conversations). 

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Athena, São Paulo, Brasil. 

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Press, Amsterdan: Butterworth-Heinemann. 

Mengis, J, & Eppler, M.J 2008, Understanding and Managing Conversations from a Knowledge Perspective: An 

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Nonaka, I & Takeuchi, H 1995, The Knowledge-Creating Company: How Japanese Companies Create the 

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Von Krogh, G & Roos J 1995, Conversation management. European Management Journal, v. 13, n.4, p. 390 – 

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Norwood, NJ. 

162

How to Manage Intellectual Capital in Brazil? - Lessons 

Learned From the First Pilot-Implementations 

Kai Mertins 1 , Eloi Fernández y Fernandez 2 , Markus Will, and Camilo Augusto 

Sequeira 2 

1 

Division Corporate Management, Fraunhofer IPK, Berlin, Germany 

2 

Institute of Energy, Pontifical Catholic University, Rio de Janeiro, Brazil 

Kai.Mertins@ipk.fraunhofer.de 

Eloi@puc-rio.br 

markus.will@ipk.fraunhofer.de 

camilo@esp.puc-rio.br 

Abstract: Experiences from Europe have shown that it is becoming more and more important to develop 

systematic management procedures for intangible assets for fast growing small and medium-sized enterprises 

(SMEs) as they are the sound basis for an increasingly knowledge-based economy. Now, intangible assets 

become a key success factor for sustainable growth in the rapidly emerging Brazilian economy, and especially in 

the fast advancing city and state of Rio de Janeiro. Thus, the major management goal becomes to keep 

productivity at a constant high level in a dynamic and fast growing business environment in order to secure 

individual profits and national welfare at the same time. This goal can only be achieved if the intangible success 

factors, such as employees’ expertise and motivation, internal communication and management structures as 

well as external relations, all of which are summarized in the concept of Intellectual Capital (IC), are maintained 

and developed in a professional and adequate manner, meeting the specific demands of fast growing SMEs. This 

pent-up demand in management has been the starting signal for the first pilot-project on implementing the 

management tool “Intellectual Capital Statement” (ICS) in ten pioneer SMEs from Rio de Janeiro. On the basis of 

the experiences from the German pilot-project “Wissensbilanz – Made in Germany” as well as the European pilotproject 

“InCaS”, a special implementation procedure for micro and small companies has been designed and 

tested. The so-called “ICS Factory” aims at ensuring fast practical results in the companies as well as supporting 

rapid prototyping and an action research approach to be used for the development of an adapted Brazilian 

version of the ICS. In a two-day workshop concept, with three to five SMEs each represented by two to three 

senior managers and key people, a complete analysis of the company’s individual IC is produced. The structured 

self-assessment approach of the European method served as the basis to build on. First intermediate results of 

the first ten pilot-implementations are presented in this paper contributing to the improvement of the procedural 

concept and ensuring sustainable usage of the ICS in the upcoming next generation of pilot-implementations in 

60 Brazilian SMEs from the oil and gas sector. Hence, this paper provides a summary of the experiences from 

the first ten Brazilian ICS pilot-implementations, investigating the crucial role of the “ICS Moderator” who is 

assigned to each SME in the concept of the ICS Factory, being supported by a clearly structured, software-based 

implementation procedure. Furthermore, the paper will describe and discuss the challenge of integrating the ICS 

in a comprehensive strategic change process, taking into account the special circumstances of small, organically 

grown organizations in the Brazilian business environment. In order to initiate a continuous improvement cycle in 

the individual company, the ICS has to be used, focusing on practical actions for maintaining and developing its 

intangible assets to ensure future competition capability. In that way ICS supports sustainable business 

development in an emerging economy. 

Keywords: intellectual capital, intangible assets, knowledge economy, Brazil, oil and gas, SMEs 

1. Initial situation 

In recent years, the Brazilian economy has gained momentum in the world’s leading markets. This 

development particularly can be traced to the oil, gas and energy sectors. Besides Petrobras, the 

largest state-owned company, Brazil is host for several multinational corporations of this sector. 

Especially in Rio de Janeiro these companies have shown an increased effort to discover the 

enormous reserves of oil off the coast. As a result, new high-tech-oriented enterprises such as 

potential suppliers and other service orientated organizations are developing in this sector. In 

particular, these small and medium sized companies have a strategic importance for the development 

of the Brazilian economy. 

Unlike other industries, the oil and gas sector is characterized by its intensive technical requirements. 

Thus, technological innovations play a key role in order to differentiate from competitors. Obvious 

potential for improvement has been exhausted by most enterprises. In most cases additional 

improvement can only be achieved through the management of intangible success factors such as 

employees, team work, knowledge structures as well as relationships to customers, suppliers and 

cooperation partners. Due to these aspects the management of Intellectual Capital is of increasing 

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Kai Mertins et al. 

importance for the oil and gas sector in Brazil in order to ensure and improve the innovation capability 

of this sector. Consequently the demand for instruments to manage Intellectual Capital is strongly 

increasing. 

This management challenge has been the starting point for the first pilot-project on implementing the 

management tool “Intellectual Capital Statement” (ICS) in ten pioneer SMEs from Rio de Janeiro. 

Supported by the Brazilian SME association SEBRAE, Catholic University of Rio (PUC-Rio) and 

Berlin-based Fraunhofer IPK launched a pilot project to introduce ICS to the Brazilian market and to 

meet the requirements of the management challenge described above. Taking into account the 

experiences from the German pilot-project “Wissensbilanz – Made in Germany” as well as the 

European pilot-project “InCaS”, a special implementation procedure for micro and small companies 

has been designed and tested - the so-called ICS Factory. The “ICS Factory” aims at ensuring fast 

practical results in the companies as well as supporting rapid prototyping and an action research 

approach to be used for the development of an adapted Brazilian version of the ICS. 

The purpose of this paper is to describe the special implementation of the European ICS method, 

adapted for small high tech companies. After giving a short overview of the objectives of the first ICS 

implementation in Brazil, the paper describes the theoretical background of the methodology. Further, 

it explains the special procedure designed for this purpose. As part of this procedure the crucial role 

of the moderator as pivotal figure to monitor and lead the implementation is emphasized. 

Moreover, the paper will provide an insight of the main results, as well as the feedback of the 

companies expressed by a survey and video documentary testimony. The lessons learned as well as 

an outlook and future developments will be discussed in the last chapter. 

2. Objectives 

The challenge in the preparatory phase of the project has been the introduction of the method to 

managers, as they have traditionally been loath to deal and treat intangible resources, such as 

knowledge, or considered it in a subjective manner without applying methods capable of identifying 

the intellectual capital factors and aligning them with company’s goals systematically. 

Unlike conventional methods, “Intellectual Capital statement” (ICS) used in this pilot application 

allows, through a structured and straightforward procedure, to represent and manage the intellectual 

capital of the enterprise in a highly efficient way. Also, the community of external stakeholders benefit 

from the application, including funding institutions, providing more transparency on their investments. 

Therefore, both companies and interested parties may have a better understanding and management 

of their investments in knowledge assets, minimizing risks on expectations of returns. 

Therefore, the overall objective of the first project phase “ICS-Prototype Rio” was to implement 

Intellectual Capital Statements (ICS) based on the European InCaS methodology in ten micro and 

small enterprises in Rio de Janeiro in order to gain first experiences with this new management 

method and to derive requirements for developing and rolling out a Brazilian ICS methodology in 

subsequent projects. 

For those purpose the following tasks have been completed: 

Training a team of ICS moderators for the application of the InCaS methodology in Rio de Janeiro 

in a two day workshop with participants selected among senior consultants with experience in 

strategic management. 

Implementing prototypical ICS in ten Rio-based companies in a rapid prototyping approach (“ICS 

Factory”). 

Evaluating the experiences of the prototypical ICS implementation for setting up requirements for 

a Brazilian ICS methodology. 

The selected companies, from the oil & gas sector, participated in the first pilot project of this kind in 

Brazil. The main objectives to be achieved by this pilot application were: 

Show the benefits of the implementation of an ICS to Brazilian companies by providing them 

actual case studies. 

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Extract lessons learned on the implementation of the European method, and define the 

requirements for suitability of the method ICS-BR (Intellectual Capital Statement Brazil) to the 

Brazilian reality. 

Train and certify the first group of moderators, coaches and future auditors qualified to apply the 

method according to its quality standards. 

Test instructional material (including checklists, templates etc.) available in English for ICS 

coaches and moderators to implement the method and track results to produce the Portuguese 

version. 

Understand the features of the Toolbox and spreadsheets to support the implementation of the 

method. 

Prepare the team and tools to support the future implementation on a large scale. 

If the application is viable on a large scale, to verify the requirements and the possibility of 

developing a database for future benchmarking on the content of intellectual capital. 

3. Overview of the method 

It is common ground that Intellectual Capital has become the critical success factor for enterprises 

operating in an emerging economy. Especially for SMEs it is crucial to utilize and manage their 

intangible resources efficiently in order to obtain their competitive advantage (Mertins, Alwert, Will 

2006). Therefore, the Fraunhofer-Institute for Production Systems and Design Technology (IPK) has 

developed a special method during the German pilot-project “Wissensbilanz – Made in Germany” and 

the European pilot-project “InCaS”. In order to bridge the gap between the requirements for internal 

management purposes and external reporting, a team of experts developed instruments to assess, 

develop and report an organisation’s IC systematically. 

The method is supported by the software “ICS Toolbox” that provides further support for the ICS 

Moderator capturing the relevant data and producing analysis results in diagrams. The procedural 

model (see Figure 1) defines and describes eight steps as well as methodologies applied while going 

through the process of ICS implementation in detail (Mertins; Will; Meyer 2009). It starts with the 

formulation of the company’s business model, seeking to align intangible resources with significant 

value-generating processes and, crucially, with the objectives and desired business success of the 

company. This information forms the basis for the other steps that complete the procedure for 

applying the method, ending with the establishment of the actions and indicators, summarized in an 

ICS report and a management presentation, to be used as management tools for monitoring change 

and reporting results. 

Figure 1: The procedural model 

The summarizing visualization, derived from the Toolbox, is a portfolio of Intellectual Capital Factors 

which displays the factors having the greatest impact on company results compared to their current 

assessment in a four quadrant matrix. The IC Management Portfolio displays the IC factors identified 

and assessed in step 2 into a four-quadrant matrix according to the relative importance they have in 

achieving the company’s strategic objectives (impact analysis) and the assessment of their current 

status (QQS-Assessment). Figure 2 gives an example. 

In general, IC factors in the upper left typically represent future fields for intervention. If a factor 

appears in this section, the status quo is rather poor according to the QQS-Assessment while their 

relative importance is rather high. Therefore, it is crucial to develop these IC factors, as they have the 

highest potential of intervention. By systematically searching for the factors with the highest potential 

for intervention, the essential question for the top management can be answered: “Where should we 

start to invest? Where can we get the maximum impact at minimum costs?” 

The outcome of an ICS is a defined set of actions aiming at the systematic development of particular 

IC factors as well as a set of indicators that helps monitoring those factors. This set of measures can 

be viewed as a first rough IC strategy which can be elaborated over time. Based on those findings, 

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management might expand their business strategy taking into account IC related objectives and the 

opportunities deriving from systematic IC development. 

Figure 2: Example of an IC management portfolio 

4. ICS pilot-implementation in 10 Brazilian SME 

4.1 Procedure of ICS factory 

As part of the pilot-project, the method has been implemented in ten Brazilian SMEs in the so-called 

ICS Factory. Taking into account the characteristics of the Brazilian SME participants, we assumed 

that the target companies do not exceed the value of annual revenues of three million six hundred 

thousand Brazilian Reais. Hence, the companies are relying on their own resources in order to adhere 

to the ICS application. 

During the first part of the pilot-project, a group of ICS moderators was trained according to the 

European training program conducted by Fraunhofer Academy. The trained ICS moderator is 

responsible to lead the ICS implementation process in the company and to ensure the results, 

summarized in the final ICS report. Subsequently, the trained ICS moderators ran the prototypical 

implementations in the “ICS Factory” in 10 Brazilian pilot SMEs. 

During the “ICS Factory” each company was mediated individually by the previously trained ICS 

moderators and monitored by senior ICS coaches with in-depth experience in implementing the 

method. The Moderator accompanied the implementation process by managing the group and the 

process and by leading the workshops discussions towards an Intellectual Capital Statement. Each 

implementing company was represented by two or three senior professionals. The ICS Factory was 

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divided in several short plenary sessions for explaining each methodological step and discussing 

preliminary results among the 10 companies, and several break-out sessions for each company to run 

the analysis supported by their personal ICS Moderator. The IC factors considered as standard in 

previous applications, especially in European organizations, were adjusted for the two-day workshop 

in order to facilitate the initial analysis of the Intellectual Capital and to guarantee fast results. To meet 

the requirements set for the pilot-project, the companies prepared their business model description 

beforehand. Hence, the participating companies were able to focus on the examination of their 

Intellectual Capital, especially in regard to the assessment (QQS analysis), in order to identify 

strengths and weaknesses of their IC factors. 

4.2 Results for companies 

The ICS Factory proved to be effective and efficient to introduce companies to the ICS method. 

Further, it gave an overview of the intangible resources with the highest potential to deliver value. 

Likewise, it worked very well as a first consistency check of their business model, also stressing the 

importance of the systematic management, introducing the company into a new language and 

perspective, and making rapidly apparent the gains from ideas exchange within the project team. 

However, for a more detailed analysis of the results for the companies, the Brazilian SME were 

divided in two groups: companies in their early life cycle and companies of more mature nature. 

Hence, a first gross-cut can be made between the companies in an early stage of their life cycle and 

those in more mature life cycle stages. Former are often characterized by their failure to focus on 

aspects of general management. It became evident that the companies would have to solve 

deficiencies in human capital (e.g. management and professional competence) in order to realize their 

estimated growth expectations. The failure to focus on these aspects is an indicator for the high 

mortality rate of startups. Hence, the method is a tool to reveal critical factors that can decide about 

the failure or the success of a company in an early stage of its life cycle. In particular, the ICS helped 

these two startup companies to become aware of the fact that they lack the necessary management 

competence or intangible structures that would enable organic growth. 

Contrary to these companies, the second group reported that major gains derived from contributing 

crystal-clear evidence of possible failures in the company’s coordinating and communication 

mechanisms as well as of some rigidities or counterproductive effects of the corporate culture. Thus, 

the implementation of an ICS should channel open and democratic discussions and facilitate and 

promote structured and strategic argumentation. Besides, the ICS factory generates a beneficial “side 

effect” of exchanging experiences and learning from other companies. 

As a general result of the ICS Factory, the companies discovered that the human capital factor 

“Management Competence” is the one that needs to be developed the most. It appeared in most 

companies as the factor with the greatest relative impact on business results, but with low 

assessment. Hence, the companies should invest in the development of this factor as major benefits 

of this investment are high. 

4.3 Evaluation of the method 

The evaluation of the method and the dynamics of the ICS Factory by the participating companies 

were surprisingly good. All 10 companies stated in a questionnaire based survey that they would 

recommend the ICS Factory to other companies. 

As part of the survey the representatives of the participating companies were asked to cite where in 

the future they will use the ICS. The majority replied that they will use the ICS to enhance 

transparency by internal communication and to control strategic development (see Figure 3). A 

reason for this circumstance could be found in the fact that the participating enterprises are currently 

lacking necessary communication structures and therefore noticed difficulties in the strategic 

development internally. These lacks can be addressed with the help of an ICS. 

Further the companies indicated that the method helps to reflect and refine the business strategy, to 

analyze strengths and weaknesses, to derive and implement actions and to prioritize improvement 

opportunities (shown in Figure 4): 

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Figure 3: Perceived general benefits of ICS 

Figure 4: Perceived management support of ICS 


According to the results illustrated in Figure 5 steps 4, 5 and 6 were indicated as being the ones the 

companies would like to work on more in detail. Hence, the companies perceive these steps as being 

most important for the implementation of an ICS. Therefore, the moderator should focus on these 

steps to investigate the results and to conduct a more in-depth diagnosis. 

The feedback from the companies has led to the conclusion that the generic European ICS method 

also works for Brazilian companies. All the company representatives stated that they would like to 

implement a second ICS in the future. Overall, the benefits the Brazilian pilot SMEs have experienced 

so far do not differ much from those pointed out by European companies in similar settings after the 

pilot-project implementation. Of course, Brazilian SMEs have different characteristics than the 

European ones and the European definitions of SME are not appropriate for Brazil. However, those 

matters do not influence the method itself and rather only affect the classification of enterprises. 

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Figure 5: Desired level of detail of implementation steps 

5. Conclusion 

5.1 Lessons learned 

It is common that companies go through various stages of the business life cycle as they mature. The 

task of top management is to detect the different stages and thus implement the right strategy for 

each step. It is therefore fundamental that the top management understands what the implications of 

such a transformation process are. The companies of the first prototypical implementation in Brazil 

witnessed that in order to tap into market opportunities –and also ameliorate the impact of systematic 

risk – it is important that firms (especially SMEs) develop the necessary skills and acuteness to 

manage their IC. As the majority of SMEs still concentrates on conventional methods such as 

financial reports and traditional controlling systems to develop the company strategically, it became 

evident for the managers participating in the ICS Factory that systematically ignoring intangible 

resources bears the risk of failure in specific steps of strategic development, especially when crucial 

competencies are missing or the management procedures and structures do not meet the 

requirements of rapid growth scenarios. Therefore, implementing the ICS helped these managers to 

detect the critical success factors for their individual growth strategy and to derive the right actions for 

organizational development to ensure the successful realization of the respective strategy. 

The first implementation of an ICS of this kind in Brazil has shown that the format of an ICS Factory 

maximizes efficiency and the cost-benefit ratio of ICS implementation for the companies. 

Furthermore, the pilot implementation has shown that companies would need more time to investigate 

the results and to conduct a more in-depth diagnosis, i.e. analyzing impact maps and loops as well as 

designing actions. 

Therefore, in subsequent implementations it might be considered to concentrate the diagnosis on only 

one impact map for one field of intervention and to reduce the efforts on impact loops in order to focus 

on a more detailed design of concrete actions. This could either be realized by extending the ICS 

Factory by an additional workshop day or by using the original implementation procedure in three 

workshop days in the company. This would also allow integrating more employees in the 

implementation process as recommended by almost all pilot companies. 

It is crucial, that the ICS Moderators are well prepared for these diagnosis and action design steps in 

order to maximize practical benefits for the companies. Therefore, the moderators need to undergo 

various stages of learning and achieve higher levels of certification. The main feature of the ICS 

moderator is to keep equanimity during the debates of the company representatives. Rather than 

actively participating in the discussion or giving advice for certain topics, the facilitator should lead the 

group to consensus in a natural and unobtrusive manner, assuring a representative voting and 

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reasoning in the assessment process to help the participating staff to draw a representative picture of 

the whole company. 

Lessons learned about the role of the moderator pointed out two key aspects: the processes of 

selection and training should enhance the profile of the moderator to ensure the quality of his work, 

because this influences the quality of the result directly, i.e. the ICS report and derived conclusions on 

actions to be implemented. During the selection process the senior ICS coaches should observe 

whether the knowledge and skills of the prospective moderators meet the requirements to perform the 

job. At the same time, the training program needs to highlight and strengthen those attitudes and 

skills that the moderator should possess to ensure a high level of quality and maximum benefit for the 

company. 

5.2 Outlook and future developments 

The ICS has set the way for continuous knowledge-based transformation in the companies. Certainly, 

it is still very early to see whether the ICS will have an effective and long-lasting impact on the 

performance and competitiveness of the Brazilian SMEs but the business behavioral shifts already 

observed are very promising. This will mostly depend on how capable the SMEs are of delving into 

the knowledge processes that explain or contribute to business success as well as of the willingness 

of the top management to take the helm of the IC-based transformation. The results of the pilot 

project also pointed out that there is a need to promote the method in a larger number of companies. 

To facilitate the implementation, particularly in companies that are not familiar with the approach, the 

method should be provided in smaller modules applied sequentially as each step already delivers 

valuable results. Thus, the approach will be easier usable for the vast majority of small Brazilian 

companies. 

Based on these developments, it is necessary to understand the method in a broader sense by the 

implementing companies. The experience has shown that especially a systematic preparation of the 

Business Model and the IC Factors and the development of actions should be a subject of deeper 

investigation as it reveals the linkage between the strategic and operative level of the company’s 

general management and hence, has a major impact on the sustainable use and benefit of the 

method for the respective company. In this respect, it is necessary to further educate the ICS 

moderators on these aspects as they carry out and supervise the whole implementation process. An 

enhanced and extended training program for ICS moderators should be implemented in further 

projects in order to ensure the policy of quality assurance of the method as a whole. The method must 

be applied periodically to monitor the progress of companies in order to support sustainability of the 

prototypical implementations and to learn more about the specific aspects of ICS use in Brazil. In this 

way, the companies will be able to collect periodically data about the development of their Intellectual 

Capital. Data thus obtained will be used to design a database for a further benchmark of the 

companies IC. The aim has to be to compare the results and processes of those collected to one’s 

own results and processes in order to create a network of “best practices and lessons learned” for 

Brazilian companies. 

References 

Alwert, K.; Bornemann, M.; Will, M. (2008): Wissensbilanz – Made in Germany. Leitfaden 2.0 zur Erstellung einer 

Wissensbilanz, Guideline Published by the Federal Ministry for Economics and Technology, Berlin, [online] 

http://www.bmwi.de/BMWi/Redaktion/PDF/W/wissensbilanz-made-in-germanyleitfaden,property=pdf,bereich=bmwi,sprache=de,rwb=true.pdf. 

Edvinsson, L.; Malone, M. (1997): Intellectual Capital; New York, Harper Business. 

European Commission (2008): InCaS: Intellectual Capital Statement – Made in Europe. European ICS Guideline, 

[online] www.incas-europe.org 

Mertins, K.; Alwert, K.; Will, M. (2006): Measuring Intellectual Capital in European SME, Proceedings of I-KNOW 

'06, 6th International Conference on Knowledge Management, published by Tochtermann, K.; Maurer, H., 

Graz, Austria, pp 21-25. 

Mertins, K.; Will, M. (2008): Strategic Relevance of Intellectual Capital in European SMEs and Sectoral 

Differences. InCaS: Intellectual Capital Statement – Made in Europe, Proceedings of the 8th European 

Conference on Knowledge Management, Barcelona, Spain. 

Mertins, K.; Will, M.; Meyer, C. (2009): InCaS: Intellectual Capital Statement. Measuring Intellectual Capital in 

European small and medium sized enterprises. ECKM 2009, Conference Proceedings. 

Mertins, K.; Will, M.; Wuscher, S. (2007): Erfolgsfaktoren des intellektuellen Kapitals in mittelständischen 

Unternehmen, in: Bentele, M.; Hochreiter, R.; Riempp; G. Schütt, P.; Weber, M. (Hrsg.): Mit Wissen – mehr 

Erfolg! Kongressband zur KnowTech 2007, S.197-205. 

170

Enhancing Client Care From the Knowledge Perspective 

Ludmila Mládková and Felipe Martínez 

University of Economics Prague, Prague, Czech Republic 

mladkova@vse.cz 

felipe.martinez@vse.cz 

Abstract: Knowledge is recognized as the engine of the new economy or knowledge economy. Knowledge- 

Intensive Business Services (KIBS) base their services in the knowledge they have about their clients. The 

Information and Communication Technologies (ICT) are the best ally for knowledge sharing and learning. ICT 

increases the capacity and speed to develop knowledge. In this current knowledge era, organisations work with a 

lot of information in order to obtain their goals. Some organisations are well structured to deal with this 

information and have the necessary people who can perform in these matters. Other organisations do it without 

proper mechanisms. Moreover, organisations have information about their processes, their policies, and others; 

including one special set of information: The client. This includes their needs, their place in the organisation, their 

behaviour, their context, among others. It is about Knowledge on Client (KC). There are organisations that pay 

great attention to customer care by building extensive customer relationship management systems (CRM). These 

are useful tools that capture large amounts of knowledge on the client, but this knowledge is of an explicit 

character. It can be turned back to data in the form of words and figures but it has a big disadvantage. It is 

missing the human aspect. The story CRM tells is biased and incomplete. Tacit knowledge is missing and the 

organisation is losing the opportunity to build more enhanced relationships with the client; the trust. We strongly 

believe that companies, who want to know their clients better and want to serve them well, must work with KC in 

a systemic way. This article develops a theoretical framework for research on the systemic approach to KC. We 

will use this framework in our research. Our main research questions are: Do organisations use their capacity to 

know their client? If not, what obstacles do they face? The theoretical framework is based on current knowledge 

from literature review and the authors’ experiences and academic work. This article is focussed on the state of 

the art of KC. Then, the theoretical framework developed in the article presents a general alignment of the 

definitions of the terms related with KC for broader types of organisations. This framework provides a start-up 

point to multiple researches in other types of organisations that will enhance the body of knowledge of KC. 

Keywords: client, knowledge on client, explicit knowledge, tacit knowledge, CRM 


Knowledge has a positive impact in attaining organisational goals. The large amount of knowledge 

handled by an organisation requires ICT technologies for its management. 

In the era of the knowledge society, customers are an essential part of organisations. There is a large 

amount of knowledge about customers that organisations need to manage in order to get to know 

customers’ needs. The Information and Communication Technologies (ICT) facilitate the management 

of that knowledge. The concept of Customer Relationship Management (CRM) is contemporary with 

the concept of ICT and the knowledge economy. The development of ICT is related to the 

development of applications for CRM (Greenberg, 2004). Then, CRM is mainly a system or software 

tool to deploy relationships with customers (Dawson, 2005). However, the real essence of CRM is the 

concept of service. It is about the required knowledge to satisfy the customers’ needs. ICT facilitates 

this principle, but it is inadequate to argue the implementation of a real service philosophy to an ICT 

system. 

Knowledge-Intensive Business Services (KIBS) are types of organisations that use the knowledge 

about their clients to development their services (Bettencourt, et al., 2005). Organisations specialised 

in capturing the voice of the customer (VoC) have the processes to obtain that information. There are 

some SMEs that also deploy CRM without ICT. These types of organisations give the starting point of 

the knowledge on how to understand Knowledge on Client (KC). 

Organisations can capture and use the full potential of their KC and customers only when all aspects 

of knowledge work concerning the KC are treated properly. This can be achieved only when 

organisations work with their KC systematically. A systematic approach to KC requires paying 

attention to several aspect of knowledge work and knowledge management (KM) and combining them 

to the system that creates positive synergy. In this paper we offer a theoretical framework for the 

creation of such a system. The basic elements of the system will be defined based on theoretical 

literature. First, attention will be given to definitions and concepts of knowledge as knowledge is the 

underlying aspect of all our work. Another term defined is knowledge management because without 

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proper knowledge management KC cannot be captured and distributed. Then we will discuss the 

problems of knowledge workers (KW), as knowledge workers are employees who exploit and 

enhance KC. In our opinion, organisational structure is the crucial factor that influence work with KC in 

an organisation. We will discuss the potential of different types of organisational structures for work 

with KC later in the article. Finally, all these elements will be interlinked into the system. 

Our argument is that the organisation and the people involved in them have a good knowledge about 

KC. These two aspects are theoretically evaluated in this paper. This creates the framework to 

develop future research on KC. 

2. Knowledge on client 

The term client also has different definition frameworks. The term client is associated with the term 

customer. The term customer has transactional implications, while the term client has relational 

implications (Buckingham, 2001, p. 2). The delivery of goods and services in exchange for other 

goods and services (usually money) is the transactional position. At the main customer development 

stages, Kotler (1999) mentions the terms: first-time consumer and repeat customer. These are 

basically buyers of a product or service. Furthermore, Kotler (1999) determines the difference 

between customer and client with 3 arguments: Knowledge, Dedication and Relationship. It is about 

the amount of KC; the invested time to satisfy client needs and the development of the relationship 

with the client. 

Another term we must define is the term knowledge. Literature offers us a large number of definitions 

and concepts of knowledge. For example, Tobin (1996) sees knowledge as information plus intuition 

and experience. Beckman (1997) writes that knowledge is information plus choice, experience, 

principles, limitations and learning. Wolf (1990) sees knowledge as organised information used for 

problem solving. Turban (1992) writes that knowledge is information that is organised and analysed to 

become legible and usable for problem solution and decision making. Veber (2000) defines 

knowledge as a changing system with interactions among experience, skills, facts, relationships, 

values, thinking processes and meanings. For Wiig (1993) knowledge is the body of understanding, 

generalisation, and abstractions that we carry with us on a permanent or semi-permanent basis and 

apply to interpret and manage the world around us. Van der Spek and Spijkervet (1997) understand 

knowledge as a set of insights, experiences and procedures that are considered correct and true and 

that therefore guide the thought, behaviour, and communication of people. Nonaka and Takeuchi 

(1995) define knowledge as justified true belief. 

Knowledge can be classified into different groups. Concepts important for our work are suggested by 

Nonaka and Takeuchi (1995). They see knowledge as created through an interaction between the 

tacit and explicit dimensions. The explicit dimension can be expressed in formal and systematic 

language and can be shared in the form of data. The tacit dimension of knowledge is highly personal 

and hard to discover and formalize. Explicit knowledge and intuition, mental models, experience, 

crafts, skills, etc., create it. It is deeply rooted in action, procedures, routines, commitment, ideas, 

value and emotions. The explicit dimension is usually present in the form of data in some corporate 

informational systems; the tacit dimension is in the heads of employees (Mládková, 2005). 

Then, the term KC refers to all planned actions to capture the correct knowledge and to deploy the 

correct knowledge in order to satisfy client needs. It is about the specification of KM for clients. This 

includes the mechanisms to deploy retain and use that knowledge, as well as the people to deploy it. 

KC is about applying KM to clients and the knowledge developed at the organisation about their 

clients. 

3. Knowledge management 

Knowledge management is also defined differently by different authors. For example Newman (1991) 

and Kazi (1991) see knowledge management as a process of controlling the creation, dissemination, 

and utilization of knowledge. Snowden (1998) understands knowledge management as the 

identification, optimization, and active management of intellectual assets, either in the form of explicit 

knowledge held in artefacts or as tacit knowledge possessed by individuals or communities to hold, 

share, and grow the tacit knowledge. Kanter (1999) sees knowledge management to be concerned 

with the way an organisation gains a competitive advantage and builds an innovative and successful 

organisation. Tiwana (2000) understands knowledge management to be the management of 

organisational knowledge for creating business value and generating a competitive advantage. For 

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Klasson (1999) defines knowledge management as the ability to create and retain greater value from 

core business competencies (Al-Ghassani et al., 2006). All definitions focus on the fact that 

knowledge is a valuable asset that must be managed, and that knowledge management is important 

to provide strategies to retain knowledge and to improve performance (Al-Ghassani et al., 2006). 

4. Knowledge workers 

Definitions and approaches to knowledge workers can be classified into different groups. Brinkley et 

al (2009) distinguish between conceptual definitions and approaches, data (industry) driven 

approaches, and job content approaches. 

Conceptual approaches explain the term knowledge worker from the importance of an employee for 

an organisation, his style of work with knowledge and his education. Drucker (1954), Vinson (2009), 

Lowe (2002), Davenport (2005) and Reboul et al (2006) can be mentioned as representatives of this 

approach. They understand knowledge workers as highly educated or skilled people whose main 

work tool is their brain. By their understanding, tacit knowledge and the ability to develop it through 

learning is crucial for knowledge workers. 

Data driven approaches see knowledge workers as all those who work in particular organisations or in 

particular sectors or institutions and often make up the overwhelming majority of employees. Sveiby 

(1997) and Alvesson (1995) are authors who should be mentioned when discussing data approaches. 

Job content approaches see knowledge workers as people who do a certain type of job. Toffler 

(1990), Spira (2008), Reich (1992), Nomikos (1989) and Kidd (1994) adopt this approach. In their 

understanding the typical knowledge worker is the employee who is engaged in non-standardised 

problem solving or who manages other employees. 

Concluding it all together, a knowledge worker’s main work tool is his brain. A knowledge worker uses 

knowledge at his work – he creates, distributes or applies explicit as well as tacit knowledge. A 

knowledge worker’s position requires continuous learning and improving (Reboul et al, 2006). 

5. Organisational structures for knowledge on client 

The organisational structure (OS) is the platform where all organisational activities are preformed. 

Some organisations are more likely to develop KC than others. This article explores the possibilities of 

KC from the point of view of organisational structures. The approach is that there are some 

organisational structures more likely to deploy KC. The future research will focus on KC development 

and its support structures. This section reviews the typology of structures presented in the knowledge 

literature and analyses KC possibilities. The types of organisational structures are a framework of 

knowledge that allows researches and academics to deploy arguments. However, the deployment of 

OS should be an exercise of choosing the “right” structure and adapting it to the organisational 

context (Martinez, 2010). 

The OS is the arrangement of the parts of the organisation into a coordinated entity. There are two 

elements to consider: Differentiation and Integration (Hendriks, 2006). Differentiation is about the 

properties and specifications of each part of the organisation that determine an explicit entity. 

Integration is about synergy (Corning, 1998). The individual achievements of the separate parts are 

less that the achievements from the integrated parts. Organisational Design (OD) determines the OS. 

The development of OS is influenced by the knowledge about the organisation, its clients and external 

elements. OD is a management decision. It is performed by the process of gathering all the different 

elements of the organisation in a certain configuration to contribute to the organisational goals. 

Robbins (1990) argues that OD is about modifications to the OS to achieve goals. Galbraith (2008) 

includes processes, reward systems and people practices as other elements in this configuration. 

Naomi Stanford (2007, p. 12) defines OD as “the outcome of shaping and aligning all the components 

of an enterprise towards the achievement of an agreed mission”. 

KC is about collecting, processing and using the information about the client in order to obtain 

organisational goals. The deployment of KC requires an organisation with a specific structure or, an 

organisation with a specific structure is more likely to deploy KC. Therefore, it is necessary to take a 

look at OS and determine the affinity to deploy KC. From the theoretical point of view, each 

organisation has its own specific structure (Nadler, Tushman, 1980). The OS is setup by an OD 

Procedure (Martinez, 2010). Moreover, the basic OS typology allows the reviewing of KC by the 

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organisations. These types of structures are the general description of a larger group of structures 

with similar characteristics. 

Historically, the Functional OS is the result of the application of the scientific management or the 

classical approach of organisational design (Perrow, 1973). It is characterised by a higher value on 

the organisational parts in contrast to a lower value in the interaction between them. KM is about 

sharing. The power of knowledge relays in the accessibility and mutual communication between the 

different parts of the organisation. The operating principle of the functional structure prevents the 

development of the necessary connections to share knowledge. In addition to this, the customers’ 

needs are irrelevant for the classical model. The customer buys the goods that the manufacturer is 

willing to produce. This is opposite to the concept of the client. This type of OS has fewer possibilities 

to develop KC. 

Mintzberg (1980) argues that the Divisional structure is the result of the “pulling forces of the middle 

line management to achieve sufficient control, decision and performance power” without becoming an 

independent organisation. There are divisions by geographic location, market segment, product or 

industry. This divides the organisation into autonomous subparts. In this OS type, top management 

promotes the KC principles. However, the client is different for each division. Therefore, KC is 

developed per division and its structure is the reference in determining KC possibilities. 

The Matrix structure is characterised by the interaction of two main forces. The Process force and the 

Support force. The process force aims to deliver a concrete output (product or service). Tangentially, 

the support forces provide the process forces with the tools to perform and achieve the output. The 

usual complaint with this type of structure is the duplicity of authorities (Stanford, 2007). KM has a lot 

of possibilities in this type of structure. This structure uses KM to avoid authority duplicity. Essentially, 

this structure is developed under the process approach (ISO 9001:2008). Then, the customer’s needs 

are attached with the Process forces, while the support forces contribute to gain these goals. KC has 

possibilities at this OS type. The process approach is essential in KM (Truneček, 2003) as it is for KC. 

The extended power of the process approach is found in the Network type of organisational 

structures. Each part of the organisation (network node) has a specific role to contribute with the 

organisational goals. In these types of structures, the relationships between nodes have more value 

for the organisation than the independent deployment of nodes activities. It is an organisation based 

on relationships. Using this approach, the client is also a specific node of the network. The nodes see 

each other as clients. KM is a requirement for this OS type. KC has the possibility to be developed at 

this OS type. Furthermore, the Virtual structures are an evolution of the network structures. The main 

difference is the use of the real-time work through ICT. 

This system approach to the structure is also found in the Life-form structures. This OS type uses the 

analogy with natural systems. The OS recognises the evolution of its parts. Each part internally 

modifies and externally shares without losing connectivity (Truneček, 2003). Autopoiesis (selfcreation) 

is usually associated with the development of these structures. The Amoeba System 

(Hiroshi, 1998); (Truneček, 2003) is an application of the self-creation principle in organisations. 

Kyocera developed this system. This type of structure is considered an application of KM. All the 

members of the cell constantly share knowledge to deploy their work. KC has several opportunities to 

succeed in such environments. 

In a similar manner to network or virtual; Cluster structures also have emphasis on the relationships 

among the parts of the structure. Moreover, the development of clusters follows a sociological 

conformation. The top-down cluster politics are apt to fail in comparison with the bottom up cluster 

configuration (Porter, 2008). In this manner, the cluster structures are closer to the life-form 

structures. The parts of the organisation are different legal entities. Usually they are competitors. The 

cumulative outputs of each competing organisation produce the required amount of goods and 

services. Each part of the cluster contributes to the development of the cluster, as well as competing 

with it (Porter, 2008). KC practices develop institutions for collaboration. The competitors within the 

cluster use that knowledge for client satisfaction. 

6. Systemic approach to knowledge on client 

In management, a systemic approach involves holistic thinking and the understanding of situations, 

events and processes as interconnected. System can be defined as a set of elements and 

174


relationships among them that have as a whole certain qualities. These qualities determine the 

behaviour of the system. The element of the system is its part that does not presume further 

structuring. A system relation is a connection between two elements of their groups (subsystems). 

Relations show interaction between subsystems and their parts. The structure of the system is the 

organisation of elements and relations (Vodáček, Vodáčková, 2009). Senge (1990) stresses the 

importance of structure for behaviour of the system. He understands the structure as the key 

interrelationships that influence behaviour over time” (Senge, 1990). 

When elements and relationships of the system are well balanced, their interaction may result in 

positive synergy. Corning (2005) writes that “synergy broadly defined refers to combined effects that 

are produced by two or more particles, elements, parts of an organism - effects that are not otherwise 

attainable”. Bartol and Martin (1991) understand synergy as “the ability of the system to be more 

efficient than the sum of performances of its individual parts.” Gatewood, et al (1995) see synergy as 

“the ability of the whole system to do more than the sum of its parts.” Synergy can also be understood 

as “the difference between the combined effect and the sum of individual effects. Synergy is the 

behaviour of a compact system and it cannot be predicted from the behaviour of its individual parts”. 

(Vodáček, Vodáčková, 2009). Synergy brings the factor of interdependence. “It is not possible to 

realise the change of one subsystem without influencing other subsystems and the productivity of the 

organisation as a whole” (Truneček, 2009, Mládková, 2012). 

Organisations that want to use the full potential of their KC must take into account all elements of 

knowledge work; knowledge and its specifics, the character of their knowledge management, their 

knowledge workers and the management of these knowledge workers and of course the type of 

organisational structure. They must work with these elements in a systemic way. 

In our opinion the crucial prerequisite of work with KC is a proper organisational structure. As shown 

in the Figure 1, an organisational structure is the backbone of the organisation that predetermines the 

way how an organisation manages its knowledge and knowledge workers, e.g., the quality of 

knowledge channels and flow, the willingness of knowledge workers to share their knowledge and the 

functionality of an organisational knowledge market. We think that excessive focus on explicit 

knowledge leads to a loss of the most important KC available to an organisation that is in the tacit 

form. The tacit dimension of knowledge is difficult to share. It is hidden in the brains of knowledge 

workers, e.g., the style of management of knowledge workers is also one of the crucial factors. When 

mismanaged, knowledge workers tend to keep their knowledge to themselves and do not share it. 

The important factor of knowledge sharing is trust which leads us back to the organisational structure, 

as some types of organisational structure do not support it (Mládková, 2012). 

Figure 1: Relationships between organisational structure, KM, KW and KC. 

7. In conclusion 

A convenient organisational structure, proper knowledge management and the management of 

knowledge workers are important factors that support or limit work with KC in organisations. 

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As argued previously, organisational structures are developed. Therefore, it is necessary to go to the 

organisations and observe what they do in reference to KC. This observation also facilitates the 

description of the organisational structure of the KC application. 

There are some organisations reporting an interesting level of KC. Knowledge-Intensive Business 

Services (KIBS) base their services on the knowledge they have about their clients. KIBS are usually 

consulting firms or ICT companies (Bettencourt, et al., 2005). The deployment of KC is highly related 

to ICT (Dawson, 2005). The amount of data and the complexity of its analysis require a high level of 

technologies to achieve the understanding of the client (Fosstenløkken, et al., 2003). 

Organisations, specialised in the capture of the Voice of the Customer (VoC), are also considered in 

the research. The selling proposition of these organisations is their ability to provide accurate 

information about the customers. This includes call centres, marketing research agencies and 

research institutions. 

As discussed, neither KC nor KM, is about ICT. Both are about knowledge. KC is specifically about 

the KC. Then, SMEs have the largest contribution to KC. Their lack of possibilities to access large 

robust ICT solutions is compensated with the true value of the relationship with the client. Focus on 

SMEs is complicated. There are a large number of firms, but the lessons to learn from them are worth 

finding. 

In future works we would like to exploit how the administration of the mentioned elements influence 

the work with KC in organisations, what are the basic relationships between the mentioned elements 

and how and why they create a synergic effect. 


Created from the resources of Institutional Support for the development of the long-term concept of 

the research institution VŠE IP300040. 

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Modeling Productivity based on Intellectual Capital in the 

Public Sector of Educational Administration 

Fattah Nazem and Omalbanin Sadeghi 

Department of Education, Roudehen Branch, Islamic Azad University, 

Roudehen, Iran 

nazem@riau.ac.ir 

osadeghi82@yahoo.com 

Abstract: The research purpose is to construct a structural model to assess the employees’ productivity in the 

public sector of educational administration of Iran based on intellectual capital. The population comprised all the 

employees of the public sector of educational administration, out of which a sample of 382 employees’ was 

randomly drawn. The research tools consisted of a researcher-made questionnaire on employees’ productivity, 

this 47-item questionnaire was designed based on the theory of Hersey and Goldsmith (1980) and assesses the 

underlying factors of ability, clarity, help, incentive, evaluation, validity and environment(α = 0.93), the second 

questionnaire named Bontis’s (1997) intellectual capital questionnaire which consisted of 50 items with three 

underlying constructs of human capital, customer capital, and structural capital with Cronbach Alpha of 0.87. The 

results of path analysis using LISREL software indicated that dimensions of intellectual capital had a direct effect 

on productivity with the indices of 0.73. The model also showed that the factor of human capital in intellectual 

capital had the highest direct effect on productivity. It was also concluded that the proposed model showed full fit. 

Keywords: productivity, intellectual capital, public sector of educational administration 

1. Introduction and purpose of the study 

In the era of increasing competition and limited resources, enhancing employees' productivity in the 

organization is a critical issue for administrators (Bain, 1982; Kouzes&posner, 1988; Nanus, 1989; 

Ouchi 1981; Peters, 1992). The word “productivity” was first posed by Quesnay in 1776 (Sumanth, 

1998). Adam Smith introduced his ideas of work productivity, carrying out the assigned tasks and 

proficiency for profit rise, reducing tiredness, taking advantage of technology (Nayudamma, 1980). 

The revolution in productivity has been staged by Taylor in 1881 which can be considered as the 

history of formal and scientific studies on the productivity management (Taylor, 1947). In the 19 th 

century, Litter defined productivity as the power of production (Sumanth, 1998). Mahoney (1988) 

believes that productivity includes efficiency, effectiveness, and change. In addition, scientists like 

Mescon et al.(1986), Boone and Kurtz (1991), Monga (1997), Robbins (1991), Ranftl (1989), Koontz 

et al.(1986), Stoner and Freeman (1992), Schermerhorn (1989), and Landel (1986) believe that 

productivity includes efficiency and effectiveness of performance. According to Bell-Roundtree (2004) 

productivity can be defined as bringing about desired and optimal results or high levels of 

performance.Hersey and Goldsmith isolated seven variables related to effective performance: 

Ability (knowledge and skills): Ability refers to the follower's knowledge, experience, and skill; 

Clarity(understanding or role perception):Clarity refers to an understanding and acceptance of 

what to do, when to do, and how to do it; 

Help(organizational support): Help refers to the organizational help, or support, that the follower 

needs to effectively complete the task; 

Incentive(motivation or willingness): Incentive refers to the follower's task –relevant incentive; 

Evaluation(coaching and performance feedback): Evaluation refers to informal day-to-day 

performance feedback as well as formal periodic reviews; 

Validity(valid and legal personnel practices): Validity refers to appropriateness and legality of 

human resources decisions made by the manager; 

Environment (environmental fit): Environment refers to the external factors that can influence 

performance even if the individual has all the ability, clarity, help, and incentive needed to do the 

job (Hersey et al., 2001, 350-353). 

While withstanding a highly competitive environment, an increasing number of firms have recognized 

that intangible assets rather than tangible ones are vital to achieving competitive advantages. 

Intellectual capital has replaced physical capital as the primary basis of value creation. The 

importance of intellectual capital in ensuring superior competitive advantages is well-accepted (Wu et 

al., 2006). 

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The growing importance of intellectual capital has its foundations in several studies carried out since 

the 70s, which focused on so-called invisible assets. The concept of “intellectual capital” was 

advanced by Adam Mueller, Friedrich List (Kendrick, 1961, p. 105) and referred to technical 

knowledge, know-how skills, forms of organization and tangible capital goods. It is the result of the 

investment in advancing and sharing the productive knowledge. Among the studies on the intellectual 

capital, the works of Itarni and Roehl (1991) can be highlighted although the concept has gained a 

position of prominence only after the works of Sveiby (1997) in Sweden. 

Intellectual capital provides the concept of knowledge management that helps managers to identify 

and to classify the knowledge components of an organization. Intellectual capital concepts have given 

rise to a substantial number of interesting studies, some of which were published in the journal of 

Fortunein 1991 (Stewart, 1991). Intellectual capital, such as knowledge, skill, and relationship is more 

than ever, the vital strategic and competitive resource. Academics believe that all economic 

participants like employees, managers, investors, governments gain the benefits by accepting the 

intellectual capital as a resource and by measuring its efficiency (Pulic, 2004). In a knowledge-based 

economy, companies do not only produce products or services but create added value to survive in 

the reality of the new economic. Academics also believe that intellectual capital is the lever for 

maintaining competitive advantages and sustainable performance. Accordingly, identifying, valuing 

and managing intellectual capital is becoming increasingly important for companies (Bontis, 1996; 

Edvinsson and Sullivan, 1996; Prusak, 1998; Ross and Ross, 1997; and Stewart, 1991, 1995). In 

Fortune, Steward (1991) defines intellectual capital as “knowledge that transfers raw materials and 

makes them more valuable”. 

The concepts of intellectual capital seem to have been classified into three different groups 

(Edvinsson and Sullivan, 1996; Ross and Ross, 1997; and Steward, 1995): 

Human capital: Human capital simply comprises the competence, skills, experience, and 

intellectual abilities of the individual employees (Bounfour, 2003; Brooking, 1996; Edvinnson and 

Malone, 1997; and Ross et al., 1997). 

Structural capital: Structural capital includes processes, systems, structures, brands, intellectual 

property, and other intangibles that are owned by the firm but do not appear on its balance sheet 

(Bounfour, 2003; Brooking, 1996; Edvinsson and Malone, 1997; and Ross et al, 1997). 

Customer (social) capital: Customer capital is an intermediary form of intellectual capital 

consisting of knowledge in groups and networks of knowledge resources embedded within and 

derived from a network of relationships (Edvinsson and Malone, 1997; and Ross et al., 1997). 

Intellectual capital is an instruments to face the new challenge (Ramirez, 2010), and also indicator of 

corporate value (Khan, 2011); it’s also a factor in the success of new ventures (Hormiga et al., 2011). 

Herremans et al. (2011) found that if managers properly structure their organizational control system 

to help develop intellectual capital capabilities, these systems can lead to reduce internal uncertainty 

regarding human, structural, and relational capital. 

Intellectual capital has been described as intellectual material that has been formalized, captured and 

leveraged to produce a higher valued asset (Klein & Prusak, 1994). Intellectual capital is about how to 

let the knowledge of an organization work for it and have it create value (Roberts, 1999) and includes 

all intangible resources as well as their interconnections (Bontis et al., 1999). An interesting 

conceptualization sees intellectual capital as the combination of intangible resources and activities 

that allow an organization to transform a bundle of material, financial and human resources in a 

system capable of creating stakeholder value (European Commission, 2006) and organizational 

innovation (Lerro et al., 2009). In particular, intellectual capital can be thought as the economic value 

of two categories of intangible assets of a company, i.e. organizational capital and human capital 

(OECD, 1999).Thus, Intellectual capital includes a set of intangible elements (resources, capabilities 

and competences) that drive the organizational performance and value creation (Bontis et al., 2000; 

Roos & Roos, 1997). And this suggests causal relationships between intellectual capital and 

organizational value creation (Marr & Roos, 2005). 

Studies show that intellectual capital is significantly correlated to the factors such as performance 

(Cheng, 2010; Sharabati et al., 2010; Patricia, 2007; and Shu-Lien, 2007), financial performance, 

economic success (Maditinos et al., 2011; Zeghal and Maaloul, 2010; and Carlucci, 2010), value 

creation (Diez et al., 2010; and Schiuma et al., 2008), and entrepreneurial orientation (Hayton, 2002). 

180


The research results indicate that upgrading the quality of human capital (as one of the integrations of 

the newly developed 3-leaf model of intellectual capital) is likely to positively affect the productivity 

growth (Afrooz et al., 2010; Huang and Jim Wu, 2010; Sanromá and Ramos, 2007; Wu et al., 2006; 

Walker, 2001; and Donna, 1996). 

The necessity of carrying out such a research was born out of the fact that Iranian schools 

(elementary schools, junior high schools and high schools) are under the direct supervision of the 

public sector of educational administration. 

The research purpose is to construct a structural model to assess employees’ productivity in the 

public sector of educational administration of Iran based on the intellectual capital. 

2. Research questions 

1. What is the structural model of employees' productivity based on the intellectual capital in the public 

sector of educational administration? 

2. Which variable has the highest effectiveness on employees' productivity? 

3. How predictive is intellectual capital on promoting employees' productivity? 

4. How much is the goodness of fit in this study? 

3. Method of the study 

The research methods which were used in this study are: library research to access the theoretical 

framework and the related literature; and the survey method to collect, classify, describe, and analyze 

the data. 

The population under investigation in this study consists of official staff working in 20 administrative 

districts of the public sector of educational administrationin Tehran city, by which the schools in Iran 

2 2 

z σ 

d 

are under the direct supervision. In order to estimate the least volume of sample, 2 

formula was used. Regarding the minimum sample required for the staff’s group which was estimated 

at 382 individuals, the same number of questionnaires of intellectual capital and employees' 

productivity were administered to the staff members, who were selected using simple random 

sampling. 

The research instruments were as follows: A researcher-made questionnaire for employees' 

productivity which was designed and developed based on the theory of Hersey and Goldsmiths' 

(1980) with 47 items and underlying factors of ability, clarity, help, incentive, evaluation, validity and 

environment(α = 0.93), and Bontis’s (1997) intellectual capital questionnaire which consisted of 50 

items with three underlying constructs of human capital, customer capital, and structural capital and 

Cronbach Alpha of 0.87. The results of the study were calculated through path analysis using LISREL 

software. 

4. Findings of the study 

The data collected from the administration of the instruments were analyzed. These data included the 

different indexes of central tendency, variability and the distribution of staff’s groups, the staff 

members’ scores obtained from intellectual capital and employees' productivity questionnaires and 

their related components. The distribution of the staff members’ scores in the given variables had 

tendency toward normality. 

As shown in Figure 1, the Lambda rate of external latent variable of intellectual capital components 

was 0.85 for human capital, 0.77 for structural capital, and0.84 for customer capital, it’s worth 

mentioning that their accumulation form the intellectual capital variable with the effectiveness rate of 

0.73. It means that 73% of the variation in the dependant variable of employees' productivity is 

explained by a collection of these indices. The variable of human capital indicates the highest amount 

of internal consistency in the external latent variable. 

181 

n 

=


Figure 1: Path analysis model for components of intellectual capital and employees’ productivity 

The Lambda rate of internal latent variable of employees' productivity components was 0.74 for help, 

0.84 for incentive, 0.77 for evaluation, 0.86for validity, 0.61 for environment, 0.43 for ability and 0.26 

for clarity. Their accumulation form the employees' productivity variable. The validity of variable 

indicates the highest amount of internal consistency in the internal latent variable. 

Since the model’s goodness of fit index is 0.93, it can be stated that it has an acceptable fit. The 

calculated index indicates the direct effect of intellectual capital components on employees' 

productivity. Moreover, the model shows that the highest direct effect is related to human capital. 

The following table presents the indices related to the model’s fit: 

Table 1: Model’s fit indices 

Index 

Lewis-Tucker (Non-normed fit index) 

Bentler-Bonett’s (Normed fit index) 

Hoelter 

Root Mean Square Error (RMSE) 

GFI 

Rate 

0.92 

0.91 

0.72 

0.05 

0.93 

Interpretation 

High fit (more than 0.90) 



High fit (equal to or less than 0.05) 


The five goodness of fit indices presented model’s fit and empirical data. Therefore, desirability adaptation is 

provided for the designed model and empirical data and can approve it as an appropriate model for the 

employees' productivity. 


The results of path analysis method revealed that dimensions of intellectual capital have positive 

impact on employees' productivity. The findings of the present study, furthermore, indicated the 

influential role of intellectual capital on employees' productivity. The results of this study are in line 

with the research by Huang and Jim Wu (2010), Hall (2003), and Agor (1997). They have also found 

the significant relationship between intellectual capital and its strategies with the productivity. Hall 

(2003) has advanced and put forward a theoretical model in his research, documenting the effect of 

the intellectual capital upon the enhancement of the nurses’ productivity. Huang and Wu (2010) found 

that, all dimensions of intellectual capital positively and significantly influence knowledge productivity. 

The results also reveal that increase in human capital investment produces significant and positive 

effect on productivity (Afrooz et al., 2010; Huang and Jim Wu, 2010; Sanromá and Ramos, 2007;Wu 

et al., 2006; Walker, 2001;and Donna, 1996).Several studies suggest proofs regarding the point that 

the intellectual capital has positive impact on market value, productivity, return on assets and sales 

182


growth (Pulic, 2000; Sofian et al., 2002; Chen et al., 2005; Firer and Williams, 2003; Kremp and 

Mairesse, 2004; Diez et al., 2010; Laing et al., 2010). 

In an era of increasing competition and scarce resources, maximizing employees' productivity to the 

organization is a critical issue for administrators (Bain, 1982; Kouzes&posner, 1988; Nanus, 1989; 

Ouchi 1981; Peters, 1992).We are on the verge of an exciting time. Although financial resources 

available to the public and non-profit sectors is likely to remain flat or even decline in the immediate 

future, within our grasp, weave new capabilities that can help use these resources more effectively 

and efficiently. The use and development of intellectual capital (knowledge assets, management 

processes) offers us both a short-term and long-term resource that can be tapped for enhanced 

productivity. It will be the leadership challenge of this next century to learn how to do so (Agor, 1997, 

pp.185-186). 

One of the most promising recent developments in the management field is the effort to measure, use 

and develop what has been termed an organization's most valuable asset - intellectual capital. For 

public non-profit organizations, this effort has special potential for increased productivity. This is true 

for several reasons. These sectors are human capital intensive. Human capital is the primary source 

for organizational innovation and renewal (Agor, 1997, p.175). Intellectual capital is a firm's source of 

competitive advantage, to become knowledge driven, companies must learn how to recognize 

changes in intellectual capital in the worth of their business and ultimately in their balance sheets. A 

firm's intellectual capital – employees' knowledge, brain power, know- how, and process, as well as 

their ability to continuously improve those process-is a source of competitive advantage (Vargas- 

Hernández, and Noruzi, 2010). Successful organizations hire intelligent staff and this is the usual form 

of developing intellectual capital in the organization (Sveiby, 1997; Ross et al 1997; Stewart 1997; 

Edvinsson and Sullivan 1996; Edvinsson and Malone, 1997). Intellectual capital can foster 

organizational competitiveness (Vargas-Hernández, and Noruzi, 2010). 

The results of the present research with regard to the effect of the intellectual capital upon the 

productivity, is meant to suggest that for productivity growth, long-range plans are bound to be 

devised and developed in the Educational Bureaus regarding the efficient management strategies, in 

order to minimize the expenditure and the pursuit of cost reduction, growth of the average per capita 

income, promotion of innovative and novel ideas, facilitation of constant innovation, elimination of 

unnecessary and excessive bureaucracy, and creation of a favourable organizational climate. 

Moreover, through offering, guaranteeing and expanding the most efficient and quality services to 

schools (elementary schools, junior high schools and high schools) located in Tehran and also 

identifying and fulfilling their needs, their satisfaction can be fulfilled and their loyalty can be 

engendered. Furthermore, considering the fact that human capital exerted the most principal effect on 

the productivity, it can be suggested that in the public sector of educational administration, 

The staff members acquire the greatest level of competence. 

The close cooperation is encouraged. 

Their knowledge and information is updated through occupational and in-service training. 

Organizations carry out successful staff and executive recruitment. 

Try to maximize the organization-related success through practice. 

In conclusion, the newly-proposed results in this research can be effectively employed to enhance the 

productivity in similar organizations. 


The authors want to extend a heart-felt thank you to the members of Educational Bureaus for their 

commitment and efficient research assistance. They are truly appreciated as their partnership was 

vital to carrying out this research. 

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185

Knowledge Sharing in Crisis Management Networks- Mock 

Drills as Inter-Organizational Learning Platforms 

Martin Nkosi Ndlela 

Hedmark University College, Norway 

nkosi.ndlela@hihm.no 

Abstract: Crisis management has in recent years become one of the most important areas in public policy. The 

increasing number of man-made and natural disasters is compelling governments around the world to improve 

their contingency plans. Effective crisis management is essential for minimising the effects of disasters. More 

often these crises cut across traditional boundaries and require network response strategies and approaches. 

Crisis brings together different organizations and compels them to work collaboratively to resolve situations that 

affect them all. The type of these inter-organizational relationships (IRs), whether they are networks, consortia or 

alliances, and differences in social capital are often identified as key factors determining the success or failure of 

crisis management. An important ingredient to effective crisis management is knowledge sharing among crisis 

management networks. Training exercises provides a platform for inter-organizational learning and knowledge 

sharing processes. This paper is based on a case study of a full scale crisis response exercise, in which 

leadership, crisis coordination mechanism, coordination approaches, crisis communication and ICT support are 

explored. The paper concludes that crisis training exercises increases the threshold condition for interorganizational 

learning as well as reducing cognitive distances between crisis response agencies. 

Keywords: knowledge sharing, crisis communication, crisis network, inter-organizational learning 


Crisis management coordination has been widely researched in recent years and many scholars 

agree that successful inter-organizational cooperation will yield to excellence in handling conditions of 

uncertainty, anticipating crises and mitigating them. Complex crises require effective coordination of 

emergency-handling agencies. These agencies often operate under different constraints including 

institutional, managerial complexity, differing organizational strategies, and other factors that make it 

difficult for the network to effectively deal with crises situations. The complex environment in which 

organizations must operate demands new management techniques (Estivalete et al., 2008). Working 

efficiently and collaboratively is a challenging issue and hence inter-organizational learning process 

can be seen as a managerial instrument to induce organizations to create appropriate structures and 

strategies for facing this complex environment (ibid.). This paper is based on a case study of a full 

scale crisis response exercise, in which leadership, crisis coordination mechanism, coordination 

approaches, crisis communication and ICT support are explored. It examines the vital importance of 

training exercises and the complexities of knowledge sharing and learning in an inter-organizational 

network composed of local emergency agencies and local authorities. It identifies the basic 

challenges of knowledge sharing in crisis response networks and the basic difficulties of learning. The 

paper observes that in their quest for being prepared for action crisis management organizations 

encounter various challenges that affect knowledge sharing within the learning network. A recurrent 

question is how organizations that are basically unfamiliar with one another, have different duties and 

interests can learn from each other and remain in open communication in order to share useful 

knowledge. 

2. Inter-organizational relationships (IRs) in crisis management 

Crises have become an inevitable and permanent feature of modern society and are no longer an 

aberrant, rare, random, or peripheral feature of today’s society (Mitroff and Anagos, 2000). No-one is 

immune to these crises, be it governments, businesses or local societies. Crises can hit any 

organization or society in the form of human-caused crises, industrial accidents, terrorist attacks or 

natural disasters. Crises come in different forms. Despite these increases, a majority of organizations 

and institutions have not been designed to anticipate crises or to manage them effectively once they 

have occurred (ibid). With a marked increase in crises, more organizations, both public and private 

have come to a realization that efficiency in crisis management is dependent not only on the individual 

organization’s internal strengths but also on the way they collaborate with other organizations. 

Large scale crises are overwhelming for individual organizations and hence invariable require a 

network of crisis responders. Handling crises effectively require a multidisciplinary team working 

collaboratively to share ideas and experiences. As noted by Moynihan (2008) the idea of network 

response to crisis is not new and can be traced back as far as 1970 to the works of Dynes on the 

186


Organized Behaviour in Disaster. Hillyard (2000) describes the strength and limitations of 

organizations that work together to resolve crises citing networks in wildfire management, emergency 

management and public safety. With an increasing number of natural disasters and man-made crises, 

forms of inter-organizational cooperation or networking have become an essential feature of crisis 

management. As such Inter-organizational Relationships (IRs) have become an inevitable and 

permanent feature of modern crisis management given that most organizations can barely stand 

alone and hope to effectively handle crises. Inter-organizational relationships are defined as “formal 

arrangements that bring together assets (of whatever kind, tangible and intangible) of two or more 

legally independent organizations with the aim to produce joint value added (of whatever kind, 

tangible or intangible” (Bachmann and Witteloostuijn, 2006). Collaboration is crucial for handling of 

conditions of uncertainty and knowledge sharing within the network undoubtedly enhances the 

network’s efficiency in handling the crisis and maximises their capabilities. Networks are structures of 

interdependence involving multiple agencies or division of these agencies. Crises have to be handled 

within some forms of cooperative arrangements between involved agencies. Handling crises 

efficiently require a multidisciplinary team working collaboratively to share ideas and experiences. In 

networks, successful knowledge sharing entails a situation where the expertise, experience and 

know-how in one organization is made available to other parts of the network, thereby increasing 

inter-organizational learning. Learning is widely accepted an essential asset for organizations, and 

therefore success in crisis management increasingly depends on learning. 

In knowledge management literature there is a growing interests on how learning occurs with various 

forms of inter-organizational relationships (IRs). IRs comes in different forms. Barringer and Harrison 

(2000) distinguish some of the commonly found types of IRs such as joint ventures, networks, 

consortia, alliances, trade associations and interlocking directorates. The IRs used in this paper fit 

mostly as a network relationship. Barringer and Harrison (2000) describe a network as a ‘constellation 

of businesses that organize through the establishment of social, rather than legally binding, contracts’. 

Defining network organizations faces many challenges due to various meanings attached to the 

concept of network across different disciplines. A strategic view perceives networks as long term 

purposeful arrangements between organisations sharing similar goals. They are characterised by a 

structure, process and purpose. Carlsson (2001) categorises networks for knowledge management 

into three different types and these are (1) intra-networks, (2) extra-networks and (3) inter-networks 

Intra-networks refer to organisation-specific networks and do not transcend the organization’s 

boundaries. Extra-networks are networks that transcend the organization’s boundaries but have 

restricted participation, meaning that only individuals and groups from specific organizations are 

allowed to participate. Inter-networks are networks that transcend firm’s boundaries and are more or 

less open to anyone who wants to join and participate (ibid.). The network presented in this paper is 

an inter-network in that it involves more than five organizations and has restricted participation. 

However this network includes elements from extra-networks. The network presented in this paper 

can be described as a dynamic model, with Hedmark County Authorities playing the broker role. 

3. Knowledge management spectrum and crisis networks 

Given a broad range of definitions and associations that can be attributed to knowledge management 

(KM), it is practical to base this work on the knowledge management spectrum developed by Binney 

(2001), in which he describes different elements constituting KM. The KM spectrum is an attempt to 

categories different understanding of KM in literature and simplifies a rather diffuse and complex 

concept. Binney (2001) argues that the KM concept includes six distinct elements, each of which has 

a particular aim to fulfil, in order to allow organizations to cover the whole KM spectrum. The six 

elements in KM spectrum are (1) transactional KM, (2) Analytical KM, (3) Asset Management KM, (4) 

Process-based KM, (5) Developmental KM and (6) Innovation/creation KM. Using the elements in 

Binney’s KM spectrum, we are able to locate this paper within the fifth and sixth elements. 

Developmental KM applications focus on increasing the competences or the capabilities of an 

organization’s knowledge workers. This is often referred to as human capital in KM literature. 

Development KM activities focuses on skills development, and learning, and includes all means 

through which learning can occur. Developmental KM applications include the transfer or sharing of 

explicit knowledge through training interventions, or the planned development of tacit knowledge 

through developmental interventions such as experiential assignments or membership (ibid.36). In 

KM literature knowledge can exist as individual (tacit) knowledge and as codified (explicit) collective 

knowledge. According to Nonaka and Takeuchi (1998), tacit knowledge is seen as personal 

knowledge, based on individual experience and values and therefore not as easily transmitted. 

Extracting tacit knowledge is an important ambition in any organisation. Extracting tacit knowledge 

187


from employees and sharing it with other employees enhances the organizational memory. 

Developmental KM put emphasis on the development of learning organizations and collaborative 

skills. It also put emphasis on the existence of communities where people can interact and share 

ideas and learn from each other. All KM activities are dependent on the existence of an environment 

in which people can come together and collaborate in the creation of new knowledge. In Binney’s KM 

spectrum, this enabling environment is described as innovation/creation-based KM applications which 

enable individual innovation. 

Networks thus create an environment where knowledge creation and sharing can take place, through 

a variety of means including co-operation, interaction, communication and training. In such a network 

environment, “it is essential for organizations to share knowledge among themselves if they want to 

achieve the global objectives such as collaborative innovation and increased effectiveness and 

efficiency of operations” (Trkman and Desouza, 2012). Knowledge is now considered a strategic 

resource for crisis response organizations, and the management of this knowledge is crucial for the 

organizations’ capacity to respond and effectively handle crises. Ipe (2003) has argued that if 

organizations have to capitalize on the knowledge they possess, they have to understand how 

knowledge is created, shared, and used within the organization. In a crisis response network it is also 

imperative for organizations to systematically share their knowledge, both tacit and explicit 

knowledge. Knowledge is critical to the long-term sustainability and success of organizations (Nonaka 

and Takeuch, 1998). The recognition of the knowledge management as a strategic resource 

presupposes the need for establishment of processes that facilitate the knowledge sharing and 

leveraging of individual and collective knowledge. There is a growing realization that knowledge 

sharing is critical to knowledge creation, learning and performance achievement (Ipe, 2003). 

Knowledge sharing research has in recent years moved towards organizational learning perspective, 

with researchers arguing that knowledge sharing involves extended learning process rather than the 

simple communication process (Cummings, 2003). Organizational learning perspectives focus on 

conditions and the broader environment that enable learning to take place. Networks can be seen as 

platforms for inter-organizational learning. Iyer (2002) explores alliance learning priorities as the 

partnership unfolds in five key areas: environment, tasks, process, skills and goals. Alliances evolve 

over time and metamorphoses as partners learn. Crisis management theorists argue that a crisis 

response network is ‘necessarily a learning system’ because it depends upon the ability of its 

participants to generate valid information, facilitate informed choice, and foster timely commitment to 

action (Comfort, 1988). As argued by Moynihan a basic objective of crisis management is ‘to 

accumulate wisdom by learning together from the event in order to prevent, lessen the severity of, or 

improve upon responses to future crises (Moynihan, 2008). The mock drill discussed in the following 

session is thus perceived of as a knowledge-sharing activity, a means through which participating 

parties seek to facilitate learning. 

Theories of organizational learning provide a framework by managing information resources into 

acquisition, distribution, interpretation and memory (Van Alstyne, 1997). Acquisition and distribution 

describe the processes of obtaining and sharing information. Knowledge sharing is important, not only 

for completeness of access but also for generating new information. Interpretation is the process by 

which shared information acquires meaning and becomes translated into shared maps, frames, or 

schema. Organizational memory describes the storage of information for ready access and future use 

(ibid.). The transcendence of these elements in inter-organizational setting is crucial for network 

learning processes. Learning processes in IRs occur at both micro and macro levels. At the micro 

level of analysis, inter-personal links generally offer individuals the opportunity to share and learn 

skills that will improve their personal lives, while at the macro level IRs provide a forum for 

professionals to share and receive which may result in improving their companies’ competitiveness 

and profitability (Kehler, 2004). This paper addresses the latter level, focusing on how knowledge 

sharing through mock drills may enhance efficiency in emergency preparedness, mitigation and in 

handling crises. Kehler (2004) argues that IRs have the potential to add value to organizations in two 

ways, firstly, by providing the possibility for innovation and enhancement, and secondly by offering the 

employees the chances to discuss the current levels of professional practice with others in the related 

field, which may enable employees to perform better their various tasks (ibid. 2). Sharing tacit 

knowledge in inter-organizational relationships has its own KM challenges. 

As noted by Backlund and Strand (2002) performing knowledge management in network contexts is 

not a trivial task, due to the increased complexity inherited when organizations are to cooperate. Yet 

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several authors in knowledge management see cooperative arrangements as a powerful way of 

accessing and transferring organizationally embedded knowledge (Kogut, 1988);(Aadne, 1996). 

Aadne et al note that ‘some types of knowledge are rather explicit, articulated and packaged, and thus 

relatively easily to transfer between firms’. They also note that ‘some knowledge can be highly firmspecific 

and less diffusible across the boundaries of the firm’ (Aadne, 1996: 12). They further argue 

that given that tacit knowledge resides in individual and social relationships the only possible way to 

reveal and transfer this knowledge is to establish a closer and more interactive relationship with the 

one possessing it. Mock drills or any other forms of training that allow personal contacts can create 

platforms for the sharing of organizationally embedded knowledge which cannot be easily transferred 

in packaged formats. Mock drills create opportunities for interpersonal communication and learning. 

Knowledge ingrained on individuals can thus be shared to other participants. 

4. Case study- the case of Elverum mock-drill 

4.1 The method 

Case study approaches on crisis response exercises have explored different scenarios requiring a 

multidisciplinary response is necessary. For example, Gonzalez (2008) uses a multi-agency crisis 

response exercises in the Port of Rotterdam to explore coordination and its ICT support in crisis 

response (Gonzalez, 2008). He notes that coordinating the response of multiple agencies during a 

large scale crisis is a challenge (ibid.). This study proceeds from an assumption that learning takes 

place within specific learning practices such as mock drills. This case study was conducted through 

observation of a full scale crisis response exercise in a Norwegian municipality. The exercise brought 

together a network of response agencies (police, fire, ambulance, civil protection) and public 

authorities (county and municipalities). Observations were made on different locations including onsite 

response, on-site command centre, on-site ICT centre with a TV monitor and the police command 

centre which was visited after the drill. Observations were noted down, informal discussions and 

interviews were carried out with exercise organisers and participants. Observation focused on 

communication aspects, sequence of events, and interaction between different agencies. An after 

exercise meeting was also attended. An evaluation report was also used in the analysis of the case 

study. 

4.2 The case and context 

On 10th June, 2010 Elverum Municipality carried a full scale mock drill ‘Øvelse Elverum.’ Elverum 

Mock –drill brought together a constellation of organizations from Hedmark County whose objective 

was to enhance their capacities in handling crises. These organizations included county and 

municipal authorities, police, civil protection unit, ambulance services, hospital (pre-hospital services), 

Crisis Training AS and Hedmark University College. The last two participants provided research 

competence, products and ICT solutions. They assisted the agencies with planning and structural 

process in order to ensure that the preparations and implementation of the training exercise resulted 

in a methodical evaluation of the full-scale exercise. Hedmark county authorities played a coordinating 

role. Overall responsibility for planning, implementation and evaluation of the exercise lay with the 

emergency services, while leadership of the training lay with the county authorities and the police 

department. Observers were drawn from different organizations and other interest groups. 

The choice of the accident scenario, which replicated a fatal collision involving a train, a school bus 

and two passenger vehicles, meant that the participating organizations could concentrate on the key 

focus areas, distributed in four different locations, the accident scene, municipality’s crisis team room, 

the hospital, local emergence centre with numbers 110 (fire), 112 (police) and 113 (ambulance). The 

drill started with a call to the emergency centre, followed by a triple call to emergency numbers, and 

then a controlled movement to the accident scene. There were activities in all the four locations. The 

time-frame for the mock drill was set at between 10 am and 14 pm, with simultaneous exercises and 

activities in these different locations, thus providing opportunities for inter-organizational as well as 

sector-specific learning objectives. 

At inter-organizational level, the primary objective of the mock drill was to practice on the crisis 

leadership model, especially clarification of the leadership structure, and functions of the participating 

organizations. The other objective of the drill was to practice on the communication aspects, as well 

as general handling of the crisis. At sector-specific level, participating organizations had their own 

learning goals. The exercise gave the municipality an opportunity to tests its preparedness plans, 

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while local emergency agencies utilised the opportunity to also practice sector-specific skills, 

competences and preparedness. The drill thus enabled Elverum municipality to exercise its 

preparedness plan in line with new government requirements. To ensure an effective crisis 

management at all levels, the Norwegian government reformed its laws pertaining to crisis 

management. It introduced new legal provisions that obligate the municipalities to carry out a 

comprehensive risk and vulnerability assessments and preparation of emergency plan. The 

government challenges the municipalities to establish their own plans and procedures to analyse risk 

areas, develop crisis mitigation models. Essentially the government challenges the municipality to 

prepare for action, exercise on implementing crisis plans in the event of an actual crisis. 

From the knowledge management perspective, the key motive behind the exercise was to show how 

mock drills could be used to support explicit and implicit knowledge sharing. Learning was a central 

part of the exercise and the mock drill itself is a learning interaction. The key motives behind this interorganizational 

exercise was learning with the primary focus on building strength for managing future 

crises, given that crises are boundary stretching in nature and touch on tasks that are legal defined as 

duties for other agencies or units. 

5. “Reflection learning” in mock drills 

Full scale mock drill provides opportunities for individual learning by bringing in real life challenges to 

the participants. Elverum Øvelse mock drill was designed in such a manner in which instead of testing 

existing knowledge, it was also a platform for learning through reflection on one or more situations. It 

was designed to provide optimal learning experience and in this way it was transformed from being an 

ordinary training arena into a learning platform. Participants got information beforehand, and were 

able to fully prepare for the exercise. Participants gave a positive evaluation to this learning aspect 

and indicated that it gave them enough information required for optimal conduct of the training itself 

(Tone et al., 2010). Vold et al argue that to participate in a learning process, means that one has to be 

active in influencing the content and implementation of what one is expected to learn. In ordinary drills 

focus is mostly on the action component and expects that participants learn by doing. In Øvelse 

Elverum the focus was not just on the drill itself but also the processes around it, before, during and 

after the drill itself. 

Another distinguishing element in Øvelse Elverum mock drill was that it could be paused (freeze) or in 

other terminology also included During Action Review (DAR). Opportunities for corrections and 

supervisions along were also built in the training model. Siebert and Daudelin (1999) argue that “the 

key to whether an experience produces learning and development stretch people well beyond their 

current capabilities” (Seibert and Daudelin, 1999). The collision between the train, bus and two cars 

produces a challenging scenario, produced raw data which had to be analyzed, interpreted and 

handled within a short space of time. In order words the individuals have to give meaning to the 

experiences they encounter and they had to share those meanings. Siebert and Daudelin argue that, 

people learn from the meaning they give to experience, not from experience itself, and they give 

meaning to experience by reflecting (Seibert and Daudelin, 1999). In learning theories ‘reflection’ 

component has received less attention than has the ‘action’ component of the learning cycle. This is 

primarily because active involvement is equated to learning-by-doing, a concept which refers to the 

capabilities of individuals to learn and improve by repeating certain actions. In the theories of 

experiential learning, learning relates to a situation where the learner is directly in touch with the 

realities being studied, and makes use of that direct contact to acquire changed insights that are 

carried forward to subsequent encounters with other realities (Harvard and Hodkinson, 1994). A 

synthesis of concrete experiences, active experimentation, and reflective observation in Kolbi’s terms 

(Kolb, 1984), as well as other situational and individual based elements contribute to learning. Many 

educationist theorists argue that learning is dependent on integrating experience with reflection. The 

Elverum mock drill was therefore designed in such a way that it accommodated both the elements- 

concrete activities and reflective observation. 

Responses to the questionnaire administered after the Øvelse Elverum, show clearly that the 

respondents had a positive impression of the mock drill as a good learning arena. Out of the 83 

respondents, 60 (72%) of these, thought that the information given before the drill was useful in aiding 

learning processes and hence increased learning outcome(Tone et al., 2010). On the question of 

experienced learning during the drill, respondents were positive to the learning outcomes and could 

mention examples such as confidence in the role, interaction, and training on real experiences, 

communication and the importance of clear orders. 

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6. Conclusion and discussion 


The network which took part in Elverum Øvelse mock drill can be characterised as a horizontal interorganizational 

network. Horizontal inter-organizational relations are vital in the crisis management at 

local and county levels, given the multi-agency nature of many crises. Establishing horizontal IRs for 

crisis management purposes envisages a strong, motivated and stable leadership, where leaders at 

different levels should have plans to anticipate, prepare and mitigate any impeding crisis situation. 

Establishing partnership with internal and external agencies is one of the critical leadership 

responsibilities. Creating a network that ensures that relevant knowledge and resources are available 

in times of crisis. In inter-organizational networks support and involvement of leadership in partner 

organizational is vital for sustaining the network. Based on the theoretical discussions above, 

observation and conversation in the After Action Review (AAR) the paper identifies the explicit and 

implicit factors affecting knowledge sharing this crisis management network; 

(a) Technical Communication factors. Communication in modern days is highly dependent on 

information and communication technologies (ICTs). ICTs are increasingly becoming an important 

tool for crisis management being time and again tapped in managing crisis. Øvelse Elverum’s testing 

of the emergency numbers showed that the technologies performed very well during the drill. 

Improved expertise on handling these communication technologies was one of the sub-goals of 

participant organizations. It demonstrated the participants’ cognitive expertise in utilizing these 

communication systems more quickly and efficiently. There is however a danger that the network 

presumes that communication technologies will work as they are expected to. In real crises situations, 

communication networks may be knocked out of service rendering timely communication impossible. 

Ishikawa (2009) discusses the vulnerability of information and communication technologies using the 

case of Japan where natural disasters like earthquakes often disable communication networks. 

Massive system breakdown and failure to access other means of communication can paralyze the 

entire rescue plan. Developing relevant and compatible communication infrastructure for crisis 

management is also immediate challenge in crisis networks. As new communication systems are 

added into the workplaces of the organizations participating in the network, updated research into 

their compatibility is a necessity, as new technologies may or may not be conducive to handling crises 

situations. Knowledge communication between the organizations in the network and its effectiveness 

is highly dependent on the information and communication infrastructure. 

(b) Human communication factors: communication is a crucial aspect of crisis team performance. The 

performance of teams during the mock drill showed a strong interpersonal connection within and 

between the teams drawn from different organizations. Visibility factors during the mock drill enabled 

the observers to see how the teams exchanged meanings through body language throughout the 

operation. Interpersonal communication is a crucial factor that impacts on performance and efficiency 

of the teams. There are number of factors that can influence communication during crisis 

management. The individuals and teams they represent have their own particular characteristics, 

often shaped by the organizational work practices and culture. During a crisis it can be very costly not 

to communicate well. A better understanding of the complexity of interpersonal communication will 

arguably enhance communication efficiency and improve relationships in the network.Communication 

plays a significant part in sustaining the network and effective crisis management depends on an 

effective and elaborate communication strategy, which ensures timely communication with internal 

and external stakeholders, as well other members in the crisis network. An integration of knowledge 

sharing enablers in computer-mediated communication can alleviate some of the barriers existing 

between organizations participating in the network. The modalities of computer-mediated 

communication in the network organised are virtually closed for instantaneous communication 

between participants, leaving mainly Internet and emails as the predominant communication medium. 

It can be argued that crisis management information does not quickly diffuse into the entire 

organization, but rather resides within the nodes. 

(c) The Structure of the Network. As observed in this paper crisis management networks are complex 

structures of interdependence, involving a number of organizations that operate under different 

constraints and different strategies and policies. The sustainability of the network is dependent on the 

mechanism for coordination of the network and shared operative authority. No formal hierarch exists 

in the network and forms of sharing information occur at different levels of the participating 

organizations. The crisis network studied has so far had different forms of knowledge sharing. 

Besides the mock drill experience, participants highlighted the significant value of coordination and 

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planning meetings. Preparedness comprise of a whole range of activities taken in advance of a crisis, 

such as day-to-day training exercises, practices, and planning. A complex structure is inevitable in 

inter-organizational relationships preparing for crises before they happen. However it should be bone 

in mind that such structures are not static from crisis to crisis. Any crisis would present a different 

strategic context than the one experienced in Elverum mock drill. The context of the crisis would 

impact immensely on the network structure, thus affecting local capabilities and the ability to respond. 

It will also impact on the coordination dynamics. This illustrates the dynamic nature of crises and the 

necessity of sharing as much knowledge as possible between actors in the network. 

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192

Intergenerational Learning in Ageing Societies 

Ivona Orzea and Constantin Bratianu 

Academy of Economic Studies of Bucharest, Romania 

ivona.orzea@gmail.com 

cbratianu@yahoo.com 

Abstract. Statistics show that ageing becomes a new and complex process within world’s population structure. In 

line with the trends in the world’s population structure, the European Union’s (EU’s) population structure is 

changing and becoming progressively older. Statistics suggest that the number of people who retire is increasing, 

and the knowledge loss for many companies associated with this ageing process is also on an ascending slope. 

Furthermore, as a result of the demographic changes new views and beliefs about working in old age are 

emerging. Intergenerational learning (IGL) is a complex and interdisciplinary process of knowledge transfer, 

knowledge sharing, knowledge creation and knowledge restructuring at the team or organizational levels. The 

purpose of this paper is to present some results of our research in the field of IGL. In the first part of the paper we 

deal with IGL as a social process, and one of the possible interventions in organizations to increase knowledge 

retention when people retire. In the second part of the paper we present results of a qualitative research we 

performed in some of the most impotant universities in Romania, with respect to the impact of the new legislation 

that introduces compulsory retirement for professors being 65 years old and over. This law generated many 

negative effects in terms of knowledge loss, and universities were unprepared to reduce this loss by using IGL. 

Keywords: ageing, knowledge transfer, intergenerational learning, stakeholders awareness 


The world is in a constant change and the latest trends reveal a change in the world’s population 

structure. According to projections, across the globe, by 2050, one in every five people will be aged 

over 60 with a life expectancy of 76 years. There will be as many older people as children under age 

14 and, in many countries, older people will outnumber the young (UN, 1999). The European Union’s 

(EU’s) population structure is changing and becoming progressively older, since there were slightly 

more than 87 million persons aged 65, representing almost 17.4 % of the total 2010 population of EU- 

27 (Eurostat). These figures can be compared with data from 1 January 1985, when there were 59.3 

million persons aged 65 and over in the EU-27 (12.8 % of the total population). 

The EU’s current population structure is characterized by a particularly high number of people born in 

the decades following the end of the World War II. This generation is often referred to as the babyboom 

generation and comprises the population cohorts that were born between the mid-late 1940s 

and the late 1960s. Eurostat population projections foresee that the number of people aged over 60 

years will increase with around 2 million persons per annum in the coming decades, while the working 

age population will start to decrease, thus resulting in an increasing number of old persons (aged 80 

or over) and fewer young persons. In terms of employment rates of elder people, Eurostat’s 

population projections suggest that there will be less than two people of working age (15 to 64 years) 

for every older person aged 65 or more in the EU-27 by 2060, compared with a ratio of almost four to 

one in the present time. The most rapid changes in the size of the working age population are 

expected to take place during the period from 2015 to 2035, when a large part of the baby boom 

cohorts will retire. 

The European Union has recognized the importance of the ageing challenge for many years and has 

developed policy in several areas. The European Union designated 2012 as The European Year for 

Active Ageing and Solidarity between Generations, on September 23, 2011. This initiative aims to: 

help create better job opportunities and working conditions for the growing numbers of older people in 

Europe; help them play an active role in society, and encourage healthy ageing and independent 

living. One of the main goals of the European Year 2012 is to reverse the idea that older persons are 

a burden on society. As Europeans live longer and healthier lives, governments are looking for ways 

to involve older persons more in society and to keep them active. These changes could result in 

economic benefits for society as a whole, and wellbeing for older people. One of the main difficulties 

when discussing about an ageing population is delimitating the target group. The term ‘ageing 

employees’ is generally not based on psychological or anthropological criteria, but mostly on other 

aspects. An overall or generally accepted age classification is not available. Age is a social construct, 

in which the allocation of people to the group of ageing workers is made in relation to the respective 

theoretical concept, practical interests and empirical considerations (Bohlinger & van Loo, 2010). The 

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International Labour Organization applies differentiating perspectives between ageing employees 

between 55-64 years and older employees of 65 years or older (ILO, 2008). In official statistics 

released by the European Commission (Eurostat), the US Department of Labor and the Organization 

for Economic Co-operation and Development (OECD), those 55 years or older are considered ageing 

people. 

The purpose of this paper is to present a conceptual analysis of IGL, as a social process, and as a 

strategy of increasing organizational knowledge and reducing knowledge loss when old people retire. 

Since IGL becomes more important in knowledge intensive organizations, we performed a qualitative 

research in 10 main universities realizing interviews with their rectors and vicerectors. The paper is 

structured as follows: firstly, we discuss IGL as a social process, then we analyze IGL as a strategy to 

increase organizational knowledge, and finally we present the synthetic results of the interviews we 

had with the rectors and vicerectors of the main Romanian universities. 

2. Intergenerational learning as a social process 

Intergenerational learning (IGL) is a known process in family life, through which the elders share their 

values, beliefs and tacit knowledge with the youngsters. “Research on intergenerational learning 

within families includes a range of studies that focus on the transmission of beliefs and practices and 

the modeling of behaviors from generation to generation” (Gadsden & Hall, 1996, p. 1). In this 

context, the term generation refers to a person’s position in the family structure (i.e. grandfather, 

father, mother, child). It is a rank descent, and not a function of age. An individual is placed in a 

generation based on his or her position in the family framework and not on age. The term generation 

is also used with the idea of cohort, that is based on age-homogeneous groupings. For instance, 

“Children who are of the same age are assumed to have experienced certain social events in similar 

ways. These social events are thought to contribute to the life-views of individuals as family members, 

suggesting consistency within age cohort” (Gadsden & Hall, 1996, p. 6). Also, the term generation has 

been used with the meaning of developmental age or discrete time span. The concept developmental 

age combines both rank descent and cohort semantics, while the concept of discrete time span refers 

to the time it takes a new cohort to grow and to assume control, a time period of about 30 years. 

New demographic phenomena and the increasing size of the old population lead to the emergence of 

the new extrafamilial paradigm of IGL. In ageing societies new social planning models emerged in 

order to challenge this new paradigm. “Fundamental to the creation of Integenerational Programs 

(IPs) was the expectation that the generational synergy evident in familial settings could be captured 

in social planning models, thereby, creating opportunities for intergenerational learning and the 

development of meaningful relationships among non-familial older and younger generations” 

(Newman & Hatton-Yeo, 2008, p. 32). IGL programs reflect the social, educational, and cultural 

contexts of different countries and traditions. IGL can be considered as social vehicles that generate a 

purposeful exchange of knowledge among older and younger generations that yield individual and 

social benefits. IGL could be created in any kind of contexts in which young people and elderly people 

come together in sharing activities. The key component in any IGL process is knowledge sharing, 

based on the difference between the knowledge level of old people and the knowledge level of young 

people, and on the intrinsic motivation of the knowledge owner (Bratianu, 2010). Knowledge sharing 

is a rather complex process due to the stickiness of tacit knowledge. Stickiness is seen as an 

important determinant of the degree of diffusion and utilization of superior knowledge and more 

broadly the ability of a company to grow and prosper by replicating existing assets and capabilities 

(Szulansky, 1995; Szulansky, 1996; Jensen & Szulansky, 2004). 

Knowledge sharing is thought to be influenced by factors both at the individual and at the 

organizational level. At the individual level some of the factors that could enhance knowledge sharing 

are the trust level in co-workers, whether or not the negative prior experiences with knowledge 

sharing have influenced the willingness of the employee to share his or her knowledge and last but 

not least the intrinsic motivation of trust in the employee. The level of trust that exists between the 

organization, its subunits, and its employees greatly influences the amount of knowledge that flows 

both between individuals (Boström, 2003; Bratianu & Orzea, 2010; DeLong & Fahey, 2000). 

3. Intergenerational learning as a solution to knowledge loss 

IGL is an integral part of the organizational learning, and it contributes to the development of the 

learning organization (Armstrong & Foley, 2003; Ortenblad, 2001; Senge, 1990). In a strategic 

perspective, knowledge dynamics in a learning organization reflects the management effort of 

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balancing knowledge exploitation with knowledge exploration. “Recognizing and managing the 

tension between exploration and exploitation are two of the critical challenges of renewal and, 

become a central requirement in a theory of organizational learning” (Crossman, Lane & White, 1999, 

p. 522). Exploration means knowledge creation (Nonaka, 1991; Nonaka, Nonaka & Takeuchi, 1995), 

while exploitation means to get most out of the existing knowledge within organization. IGL is an 

integral part of the exploitation process, and it contributes directly to the increase of the organizational 

knowledge. When old workers retire, IGL contributes to the reduction of knowledge loss through 

knowledge retention. However, IGL must overcome many organizational and cultural barriers in order 

to be effective. As Ropes (2012, p. 3) underlines, “It seems that different generational perspectives on 

similar processes are a crucial factor for organizations to maintain competitive advantage but in an 

organization with a high percentage of older workers, these processes are less likely to occur 

because of lack of interaction among the generations.” One possible solution to these problems could 

be creating intergenerational communities of practice, that are social structures in which people 

mutually engage over longer periods of time in various activities around a common domain, sharing 

their cognitive, emotional and spiritual knowledge (Baumard, 1999; Ropes, 2012; Wenger, 1998). 

The trademark of a successful organization is the degree to which it generates, develops, maintains, 

grows, exploits and protects its knowledge base and develops its core skill and competencies. The 

people employed in the organization are the ingredient that ensures the future survival, expansion, 

competitiveness and continued success of the organization (McQuade et al., 2007). But, within any 

organization, employees operate in a dynamic environment of change and challenge. People are in a 

continuous movement within the organization through career progression, promotion, recruitment, 

resignation or retirement. In spite of the high volatility of people’s movement within the organization 

for this article of most interest will be retirement of employees. The main characteristics of this type of 

leaving include the fact that many of those retiring have spent many years in the same organization 

and some even in the same job, resulting, thus, in a vast amount of knowledge to be transferred; and, 

many are afraid of the change, thus complicating the process and making the integration of emotional 

aspects necessary for success in knowledge transfer (Levy, 2011). Thus, the challenge facing many 

organizations is not only the loss of some of their most experienced employees, but also many of 

these professionals and managers are taking with them new types of critical expertise and 

experiential knowledge that didn’t exist a generation ago. In the context of the new economy, future 

leaders are likely to face not simply a labor shortage, but a knowledge shortage, as organizations 

bleed technical, scientific, and managerial know-how at unprecedented rates (DeLong, 2004). 

An analysis of the equilibrium equation of the organizational knowledge dynamics (Bratianu, Agapie & 

Orzea, 2011) shows that when the knowledge loss is increasing it is necessary to stimulate 

knowledge creation and knowledge retention within organization in order to maintain the level of 

critical knowledge. Intergenerational learning is one of the most efficient approaches to increase the 

knowledge retention within organizations. Intergenerational learning is a complex and interdisciplinary 

process of knowledge transfer, knowledge sharing, knowledge creation and knowledge restructuring 

at the team or organizational levels. It is an integration of the lifelong learning and innovation that 

involves both explicit and tacit knowledge. It is a process that can be stimulated or inhibeted by many 

internal and external organizational factors. 

Differences among generations, where we include the fact that many elders feel they are forgotten 

and ignored, and many youth feel unheard and not understood by adults, are not allowed to escalade 

and develop or the links between them will fade (Greengross, 2003). This values clash between older 

and younger workers has serious implications as organizations try to expand their capabilities for the 

future. Because unless companies reconcile the differences between generations, this values conflict 

will result in increased erosion among younger workers. Thus, increased retirement rates put even 

greater pressure on organizations to address the problem of turnover among Gen-X and Gen-Y 

employees (DeLong, 2004). An intergenerational approach can address the isolation of elders and 

misunderstood youth by bringing together both ages through interesting and meaningful life 

experiences. 

Very seldom, intergenerational approaches focus on elders serving the youth through kin care or 

mentoring. Unfortunately, the helping approach attributed to the elders as service providers has done 

little to change the society’s stereotypes of the elders’ role in the society. Because of their age, the 

elders are often seen as a lesser alternative. Studies (Palmore, 1990 cited in Fletcher, 2007) have 

identified as specific stereotypes of the elderly being unhealthy, asexual, ugly, cognitively impaired, 

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useless, isolated, lonely, poor, and depressed. The younger generations also suffer from stereotypes 

and have reportedly been misunderstood by the elders. Therefore, ageist attitudes create a vicious 

cycle by limiting contact, and encouraging the stereotypes. In this context, the establishment of 

intergenerational programs that foster intergenerational relationships is crucial. Intergenerational 

programs may be defined as “organized activities between members of two generations that foster 

cooperation and promote attitudinal change” (Cummings et al., 2002, p. 93). Advocates for 

intergenerational programs assert that intergenerational programs are developed to foster meaningful 

interactions between members of different generations and to create positive attitudinal change 

among children and elders (Jenkins-Dellmann, 1997). Personal interactions between the young and 

old through intergenerational programs can impact and change attitudes and overcome some of the 

stereotypes that the young have about elders (Slaght & Stampley, 2006). 

Intergenerational relationships enable an exploration of different age groups discovering each other, 

and also help to address serious social policy issues, such as the reduction of older people’s isolation, 

and the lessons that younger people can learn from their elders through godparent or mentoring style 

relationships. ‘Age diversity’ should be part of an organization’s definition for diversity. Bringing back 

retirees for selected part-time positions or applying their knowledge as part of a knowledge 

preservation/oral history project could be important endeavors to bridge knowledge and skill gaps 

(Levy, 2011). Formal mentoring programs are popular techniques for knowledge retention, sharing, 

and transfer. Besides mentoring, another approach to knowledge retention is through oral histories. 

Oral histories are a form of interviews and are basically stories or narratives that describe various 

episodes as conveyed by the speakers. They are a form of storytelling or organizational narratives 

(Liebowitz, 2009). One of the benefits of intergenerational programs is that they work two ways since 

young people can often teach older people new issues, especially in the world of technology. There 

are many instances of local schools and colleges that bring together young and old to learn together– 

a true reflection of lifelong learning (Greengross, 2003). 

Categorization is the process people use to understand objects by determining commonalities and 

differences with other known objects, including people. When individuals classify themselves with 

others based on pre-conceived criteria, such as race or age, they maintain a shared categorization or 

shared social identity (Fletcher, 2007), which in turn can result in a strong power on behavioral, 

cognitive and affective reaction to the others. Evaluations of intergenerational programs have 

demonstrated the positive impact of intergenerational contact in attitudinal changes towards the 

elderly (Cummings et al., 2002). Allowing time for acquaintance with the background of the other 

leads to a mutual understanding and a reduction in the prejudicial attitudes. By working together 

towards a common goal, and uncovering the individual qualities of previously ‘unknown’ others, the 

attitudes of group members towards one another are likely to improve. For the elderly also leads to a 

generation of life meaning after retirement and a reduction in the isolation (Greengross, 2003), 

whereas for the younger generations leads to an increased sense of well-being. 

Social identity theory suggests that in order to avoid stereotypical behavior among intergenerational 

program participants, it is important to focus less on the age differential between participants (and 

thus, stereotypes) and more on the individual qualities of participants, regardless of their group 

differences (age) (Fletcher, 2007). Intergenerational programs promote the development of social 

cohesion, shared meaning, and cultural continuity. Furthermore, in order to be effective the 

intergenerational programs, as a means of knowledge retention programs, should be planned out in 

advance so that the employee’s knowledge is captured at least 2 to 3 years before they retire. In an 

idealistic way, the intergenerational learning programs should be planned from the first day of the 

employee’s arrival through the last, as employees may quit the organization or leave early well before 

retirement age. By capturing knowledge during the employee’s tenure, instead of a mad rush at the 

end, a greater likelihood for success exists in terms of retaining knowledge at different stages of the 

employee’s career. Questions that the employee had early in his/her career may not even be 

remembered at later stages; therefore, the ongoing capture of knowledge from day one may be useful 

to others instead of waiting until the end. 

4. Intergenerational learning in universities 

Universities are by their nature knowledge intensive organizations. Knowledge density and fluidity in 

any university hardly can be compare with any other organizations. Universities have a layered 

structure from full professors downward to students. This structure is very useful in knowledge 

transfer and learning processes. IGL is a natural part of the academic process. Since knowledge 

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flows against the gradient of the knowledge field, professors play the role of knowledge source for 

their younger colleagues and students. Also, due to their vast experience in research they play a 

leading role in performing research grants and doctoral programs. Due to their complex activities, 

there could be a problem when a significant number of professors retire and the university is loosing 

valuable knowledge. If such a situation can be anticipated then the university management should 

provide a series of incetives to accelerate the IGL process, not only between professors and students 

but also between professors and their younger colleagues. 

We experienced in the Romanian higher education system last year a very difficult situation due to a 

new legislation, based on discrimination against old professors. The old legislation allowed to full 

professors with excellent results in their academic and research activities to continue all their activities 

beyond the retirement age of 65, up to the age of 70. The new legislation published in February 2011 

requested compulsary retirement of all professors at the age of 65, regardless of their performances. 

This enforcement lead to a shock wave of retirements, over 1000 professors from main universities, 

that produced almost an academic earthquaque with many negative consequencies. Since most 

professors aged 65 years and over were academic advisers for doctoral students, and leaders of 

research teams in the most important universities, this legislation had direct negative effects upon 

doctoral programs and research activities, beyond the teaching courses. The interactions of these 

retired professor with their younger colleagues and students have been ended. As Sloniger remarks, 

“Unfortunatly, this dicontinuance of these interactions might be regarded as missed learning 

experiences for both students and faculty members because it is at this time that a professor’s 

knowledge and a student’s quest for knowledge are at their peak.” (Sloniger, 2010, p. 403). 

In order to understand how universities could solve the negative consequences of this unfortunate 

political context, we conducted 10 interviews with 4 former rectors and 6 vicerectors of the main 

universities, since these universities suffered mostly from the new legislation. We considered the 

unstructured format for these interviews in order to capture the specific issues of each university, and 

a time duration of about 60 minutes for each interview. All the people interviewed agreed upon the 

fact that this new legislation generated a shock wave of retirement, and a huge knowledge loss as a 

direct consequence. Professor Ioan Gh. Rosca, the former rector of the Academy of Economic 

Stduies of Bucharest, the largest university of economics and business having about 30 000 students 

declared that: “We had to send in pension 80 professors in 2011. All of them were academic advisers 

for doctoral students and have been leaders of research teams. For our university this was a huge 

unexpected loss of knowledge and experience”. Professor Andrei Marga, the former rector of the 

University “Babes-Bolyai” of Cluj-Napoca, the second largest comprehensive university of the country 

with over 40 000 students, declared: “In USA there is no compulsory retirement for old professors. 

They can continue their academic activieties if their performance is in concordance with the university 

requirements. There is no law of proportionality between the age of professors and their knowledge 

value. Even in Europe the retirement age for professors has been reconsidered up to 68 years. From 

this perspective, the new legislation is just unthinkable”. 

One of the first ideas stressed by all the rectors and vicerectors we interviewed is that universities 

were unprepared for such a situation, and all of them suffered a huge loss of knowledge and direct 

contributions to the research programs. As professor Adrian Graur, the former rector of the University 

“Stefan cel Mare” of Suceava remarked, “In preparing this new legislation, the former Minister of 

Education had no consultations with us like other ministers, and the law has been enforced in the 

Parliament without any debates. It is like the former Minister of Education wanted to demonstrate his 

power and not his wisdom in playing with the higher education legislation”. This largely explain the 

fact that universities were unprepared to do something about enhancing knowledge retention in 

universities. That lead to the necessity of developing awareness programs for all university managers 

concerning IGL and the need of increasing knowledge retention within organizations. Another idea 

extracted from these interviews is that academic value is not proportional with the age of professors, 

since value is a strong nonlinear entity. As a consequence, IGL should be stimulated for all the faculty 

staff regardless the age, such that benefits to be felt by individuals and the university. IGL should be 

promoted for all the knowledge fields: cognitive, emotional and spiritual. 

The most important issue is the motivation for promoting IGL. When asked about practical ways of 

stimulating professors to be engaged in IGL, most of the rectors and vicerectors could not answer. 

They recognized that these problems need new approaches and new visions for their universities, 

things for which they have been not prepared. IGL must be considered an integral part of the 

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organizational learning, and universities must become learning organizations by enhancing the 

nonlinear integrators like leadership, academic management and a dynamic organizational culture. 


Ageing societies develops new forms of IGL going beyond the traditional family paradigm. IGL 

became an important social process framed by some governments in complex education policies. As 

discussed during the International Conference on Intergenerational Programs organized by Odyssey 

Institute of Training and Education and UNESCO Institute of Education, Maastricht, The Netherlands, 

1999, IGL programs are social vehicles that create purposeful and ongoing exchange of resources 

and learning among older and younger generations that yield individual and social benefits. 

IGL constitutes a new strategy of increasing chances for achieving a competitive advantage in the 

knowledge intensive organizations. IGL becomes an integral component of the organizational 

learning, and thus a main contributor to the development of the learning organization. Our research 

shows that the organizational knowledge equilibrium equation requires not only knowledge creation 

and acquisition but knowledge retention as well from the old people who retire. Since a new 

legislation in the Romanian higher education produced last year a shock wave of retirement of over 

1000 professors from the main universities, with many negative consequencies, we conducted ten 

interviews with former rectors and vicerectors from these universities to discuss ways of promoting 

IGL and not only from professors to students, but between old professors and their younger 

colleagues as well. IGL could play an important role in the new paradigm of life long and life wide 

learning. In the same time the linear paradigm concerning professors value must be changed into a 

nonlinear one, such that value to be related with academic performance and not with the age of 

professors. 


This article is supported by project “Successful Intergenerational Learning through Validation, 

Education & Research” (SILVER), no. 517557-LLP-1-2011-1-NL-GRUNDTVIG-GMP. 

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Knowledge Management Systems for Sustainable Financial 

Management Institutions of Higher Education Public: 

Principles of a Framework for Incorporation 

Laura-Patricia Pinto-Prieto, Luis-Eduardo Becerra-Ardila and Luis- Carlos 

Gómez- Florez 


lauris2687@gmail.com 

lbecerra@uis.edu.co 

lcgomezf@uis.edu.co 

Abstract: Globalization and the changes in the funding policies at Public Higher Education Institutions –PHEI-, 

such as decreasing the state economic contribution funds and strategies focused to finance the demand are 

some of the factors that affect the sustainability of PHEIs. This situation requires the PHEI to manage the 

resources efficiently and to generate their own resources, reducing dependency on the state. Incorporating 

knowledge management in the financial management of PHEI contributes to the sustainability of such institutions 

in the sense that leverages the existing knowledge in the organization to reduce costs, to reduce rework and to 

identify patterns of useful behavior for decision-making, its help to improve organizational performance. 

However, there isn´t a framework in the literature reviewed that guides the process of incorporating knowledge 

management for sustainable financial management in PHEI. This paper presents the theoretical principles based 

on the approach of soft systems thinking that should have a framework that seeks to incorporate the knowledge 

management into sustainable financial management in PHEI. This research is developed under in the SUMA 

project - Towards Sustainable Financial Management of Universities in Latin America, project funded by the 

European Commission through the ALFA III program. This project is intended as a starting point for future 

research on how by managing knowledge can contribute to the financial sustainability of public higher education 

institutions. This paper is organized as follows: first, it presents the theoretical concepts of knowledge 

management and its effect on financial performance, secondly it exposes the sustainability problem at PHEI and 

shows how the knowledge management may contribute to the sustainability in these institutions, and finally it 

presents the conclusions and references. The results of this study provides a basis for future research focused 

on the development of frameworks, models and methodologies to relate the knowledge management with the 

financial performance in the organizations. 

Keywords: knowledge management systems, sustainable financial management, institutions of higher 

education, framework 


Throughout the time, there have been different theories and approaches that explain the competitive 

advantages of an organization. Among them, there is the knowledge-based approach, which 

considers knowledge as the most valuable asset an organization has, it highlights the need for 

organizations to create, codify and disseminate knowledge. 

This, coupled with the increasing development of information technologies, have given rise to 

Knowledge Management Systems, systems designed to facilitate and promote the generation, 

codification and transfer of knowledge within an organization. 

Moreover, several studies have worked on the relationship between knowledge management and 

financial performance. In the reviewed literature, some authors highlight the following benefits of 

knowledge management on financial performance: earnings growth (Drew, 1997; Peat Marwick 

Goerdeler Klynveld, 2003, Lee and Choi 2003. Choi et al, 2008), revenue growth (Peat Marwick 

Goerdeler Klynveld, 2003); market share (Drew, 1997, Lee and Choi, 2003. Choi et al, 2008); and 

reduction of costs (Peat Marwick Goerdeler Klynveld, 2003; Plessis, 2005, Hult et al, 2006). 

Regarding the sustainability of Public Higher Education Institutions (PHEI), defined as the ability of an 

organization to maintain, by itself, in time, without external aid or depletion of resources (Royal 

Spanish Academy), there are some factors that influence sustainability, among which we can highlight 

globalization, de-funding of public universities, the declining share of the nation in PHEI and changes 

in financing policies that focus on PHEI programs to offer more credit to subsidize the demand and 

not the supply. 

200

Laura-Patricia Pinto-Prieto, Luis-Eduardo Becerra-Ardila and Luis- Carlos Gómez- Florez 

This study proposes knowledge management as a strategy to contribute to sustainable financial 

management of public higher education institutions. 

The afore mentioned problem-situation prompted the Industrial University of Santander, along with 

other SUMA network member universities to seek strategies based on knowledge management in the 

context of the financial management at Higher Education Institutions -HEI- in Latin America. 

This is reflected in the objective of the project SUMA (Towards sustainable financial management), 

"Promoting the modernization and harmonization of financial management practices and 

diversification strategies based on knowledge management at Higher Education institutions in Latin 

America (Knowledge Structures) to sustainably strengthen higher education systems and maximize 

the social return on investment in higher education. 

"This research is developed under the SUMA project. It aims to be a starting point for future research 

on how by managing knowledge, it can contribute to the financial sustainability of Public Higher 

Education Institutions. 


This study presents some results obtained by systematic review of the literature following the 

methodological principles proposed by Tranfield, Denyer and Palminder (2003) which are covered in 

3 stages: Plan review, performance review and reporting of results. 

The planning stage of the review comprises two essential aspects: defining the purpose of the review 

and define the review protocol. In this sense the aim of this study was to analyze and describe the 

main scientific contributions around the theme of knowledge management and related financial 

performance with an emphasis on knowledge management systems. Also this paper explores the 

issue of financial sustainability in public higher education institutions and also through knowledge 

management can contribute to this problem. Moreover the review protocol comprises the following 

steps: 

To conduct a preliminary search in the ISI database Web of Knowledge, Scopus, OECD, the 

Elsevier (ScienceDirect), ACM and IEEE to identify the major studios and keywords. 

To define the key words to find, develop and refine the search equation. 

To do a descriptive analysis of the publications of the ISI Web of Knowledge. 

To categorize and tabulate the results, analyzing the number of publications by country, years, 

areas, types of documents and institutions. Additionally we examined the journals, authors and 

keywords most relevant to this issue in order to identify patterns which are based on research on 

the topic of interest. 

To apply inclusion / exclusion criteria such as: areas of knowledge, relationship among keywords 

on knowledge management and financial performance, years of publication, quality of 

publications, among others. 

To select items to be analyzed by reading the abstracts, titles and keywords. 

To read the full papers selected. 

To see the references of the read documents, taking into consideration, to read, the referenced 

articles. 

To make reporting of results based on selected items. 

The execution stage of the review involved the selection of the studies, assessment of the quality of 

the studies, data extraction and monitoring the process. Finally at the reporting of results stage, it 

shows the relationship of knowledge management with financial performance, analysis of the 

problems of financial sustainability in Public Higher Education Institutions and how the knowledge 

management can contribute to this problem. 

3. Knowledge management and financial performance 

The literature mentions various theories or approaches that explain the competitive advantages of an 

organization; the evolution of these approaches has led to the Competence-Based Approach which 

has become one of the dominant paradigms in Strategic Management (Camisón, 2002; Foss, 

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1996).Within the Competence-Based Approach there are different approaches among one of them is 

the Knowledge Based Approach, which considers knowledge as the main source of competitive 

advantage which has an organization. 

In this sense, knowledge management is a process that includes creates, apply and transfer 

knowledge in the company to obtain a benefit in allowing the organization to achieve competitive 

advantage according to their objectives (Andreu and Sieber, 1999, Alavi and Leidner, 2001: 113). 

Besides that the information technology -IT- has been considered one of the main enablers for 

knowledge management (Tseng Shu-Mei, 2008:151, Lindner and Wald, 2010:4, Kruger and Johnson, 

2010:57) they allow a greater communication and flow information in the organization, it leads some 

authors such as Khandelwal and Gottschalk (2003:262) state the application of IT to support 

knowledge management influences the results in the creation and transfer of knowledge in the 

organization , just as Lindner and Wald (2010:11) highlighted the IT is considered the second 

important success factor in implementing knowledge management projects. Acordind to Alavi y 

Leidner (2001: 2) “the information technologies may play an important role in effectuating the 

knowledge based view of the firm and advanced information technologies (e.g., the Internet, 

intranets, extranets, browsers, data warehouses, data mining techniques, and software agents) can 

be used to systematize, enhance, and expedite large-scale intra- and inter-firm knowledge 

management”. 

In the literature there are two concepts widely used to link knowledge management with information 

technology, these are the knowledge management systems (KMS), defined as " a class of information 

systems applied to managing organizational knowledge and they are IT- based systems developed to 

support and enhance the organizational processes of knowledge creation, storage/retrieval, transfer, 

and application" (Alavi and Leidner, 2001:114) and Knowledge-Based Systems defined as humancentered 

systems whose purpose is to understand and imitate human knowledge using artificial 

intelligence techniques in computer systems (Hendriks and Vriens, 1999:116 ; Huang, 2009:210; 

Chang, 2011:1182), this article focuses on the study of knowledge management systems. 

Given the importance of knowledge management to obtain competitive advantages in the 

organization, in the literature has been identified some studies focus on analyze the effect of 

knowledge management on organizational performance of the firm; some authors as (Cheng, et al, 

2009; Savvas and Bassiliades, 2009; Weissor Sheng-Tu, Kuan-Ju, 2008; Salwa Ammar, Duncombed, 

Jumpb and Wrigthta , 2004; Huang,2009; Vidovic, 2010; Kang, et al, 2011) state that knowledge 

management has a positive effect on organizational performance, specifically in financial 

performance. Also, (Maja Vidovic, 2010), who investigated the relationship between knowledge 

management and organizational performance; she conducted a comparative analysis of some 

authors who have worked in this field of research. This author found that 8 of the 9 authors analyzed 

confirm the relationship between knowledge management and organizational performance. 

Lee and Choi (2003) Confirmed impact of trust on knowledge creation, impact of information 

technology on knowledge combination, impact of organizational creativity on improving performance 

and Wen Chong, Holden, Wilhelmij and Schmidt (2000) mentions that the main benefits of 

knowledge management on organizational performance are (1) better client service, (2) enhanced 

communication flow and (3) shorter problem solving time. Likewise (Feng, Chen, and Liou,2004) in 

(Vidovic, 2010:7) studied the impact of KMS on organizational performance and concluded that 

“Knowledge management systems improve organizational performance by significantly reducing 

administrative costs and improve productivity in the second year after adopting knowledge 

management system”. 

Additionally Vidovic (2010:6) mentions that when it comes to measuring the impact of knowledge 

management on organizational performance, is made by any of the following three approaches: (1) to 

measure the overall performance of the organization, according to Jennex (in Vidovic, 2010,7) some 

measures used for organizational performance such as improving product quality and service, 

productivity, innovation capability, competitiveness and market position, proximity customers and 

customer satisfaction, employee satisfaction, communication and knowledge sharing, knowledge and 

transparency and retention, (2) to measure the financial performance of an organization (usually 

indicators used are: ROS, ROA, ROE and (3) the combination of measures of overall organizational 

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performance and financial performance. The table 2 presents the main contributions of knowledge 

management activities viewed from 5 organizational performances. 

Table 2: Knowledge management results 

Group of results Results 

Employee performance Better decision making 

New or better ways of working 

Improved communication 

Improved employee skills 

Enhanced collaboration 

Sharing best practices 

Organizational performance Increased profits Increased profits 

Reduced costs 

Increased empowerment of employees 

Better employee attraction/retention 

Improved productivity 

Return on investment of KM efforts 

Increased share price 

Business performance Faster response to key business issues 

Creation of new business opportunity 

Improved new product development 

Improved business processes 

Market performance Increased market size 

Increased market share 

Enhanced product or service quality 

Creation of more value to customers 

Entry to different market type 

Better customer handling 

Intellectual capital Enhanced intellectual capital 

Increased innovation 

Increased earning/adaptation capability 

Fuente: Tomado de Vidovic (2010:6) 

In relation to the relationship of knowledge management with the financial performance of the firm, 

Yang, Marlow and Lu (2009) highlights some benefits of knowledge management on financial 

performance, these include growth in earnings, revenue growth, and reduction of costs. Additionally 

,(Zack, James and Singh, 2009:393) mentions that “the KM has been linked positively to financial 

performance measures (Tanriverdi, 2005) and non-financial performance measures such as quality 

(Mukherjee et al., 1998), innovation (Francisco and Guadamillas, 2002), and productivity (Lapre and 

Wassenhove, 2001)”. 

Cheng, et al, (2009:2) mentions that much of the investment institutions lack a system that supports 

data mining provides the investment decision making, these authors introduce the concept of the 

Financial knowledge Management Systems (FKMS), it is a prototype of environment for KM 

specifically for research purposes based financial business intelligence techniques .The FKMS can 

contribute to financial institutions on issues related to: (i) lack of efficiency in managing vast financial 

data, (ii) lack of communication and knowledge sharing among analysts, (iii) lack of a mechanism to 

resolve synchronization problems when multiple users are accessing data, (iv) lack of a mechanism to 

efficiently manage generated research experiments, (v) lack of an automation to publish its reports to 

clients via its Web sites or email. 

Otherwise, (Zack, James and Singh, 2009:392), who through an exploratory study examining the 

relationship between knowledge management and organizational performance, they found that KM 

practices were found to be directly related to organizational performance which, in turn, was directly 

related to financial performance however There was no direct relationship between KM practices and 

financial performance, additionally these authors mention that there is a gap in the literature on KM la 

the lack of large-scale empirical evidence that KM makes a difference to organizational performance. 

Additionally in the literature review identified a strong use of business intelligence technologies, expert 

systems and web-oriented technologies to support knowledge management processes in the financial 

environment, and highlights the use the balanced scorecard as a strategic management system and a 

203


starting point for knowledge management. (Ammar, et al., 2004; Weissor, et al., 2008; Huang and 

Cheng, 2009; Cheng, Lu and Sheu, 2009; Savvas and Bassiliades, 2009). 

4. Financial sustainability of public higher education institutions and 

knowledge management 

The concept of sustainable development has become very important in recent years after its 

appearance and definition for the first time in the Brundtland report in 1987, defining it as: 

“development that meets the needs of the present without compromising the ability of future 

generations to meet their own needs”. This concept leads humanity to reflect on how such decisions 

are being taken and their potential impact on society, environment and economy (Strange and Bayley, 

2008:24). 

The Spanish Royal Academy defines sustainable as an organization's ability to sustain itself, by itself, 

in time, without external aid or depletion of resources. 

These concepts have been overlapped to different areas, mainly those related to the environment and 

economic growth; in the context of financial management; sustainability can be understood as the 

ability of an organization to be financially self-sufficient, it means that the organization is able to 

generate enough revenue to cover their costs to carry out missionary activities in the long term, 

achieve economic growth over time and reduce dependence on external funding agencies. 

In this sense, the financial sustainability of Public Higher Education Institutions (PHEI) has been 

influenced by some factors, among which we can highlight globalization, changes in funding policies 

such as the declining share of the nation in the PHEI, and new strategies that focus on offering more 

loan programs to subsidize demand (through loans rather than grants) and not the supply. 

Moreover, in recent years, the autonomy of PHEI has decreased, as in the case of Macro universities, 

implying that these are increasingly dependent governmental entities that control the development of 

the educational such as the Ministries of Education that are tied to the criteria for allocating resources 

of the ministries of Finance and Economics. (Didrikson, 2006). 

According to (Zerda, 2009:214) some of the above-mentioned-factors are developed within the 

context of globalization characterized by the basic criteria of competitiveness, leading to the need to 

enter external assessment processes: the processes of accreditation (Rama, 2009). Likewise, the 

fiscal deficit situation experienced by certain countries such as Colombia, where the State does not 

have enough income to cover their expenses and acquire debt, leads countries to seek new 

strategies to generate resources to sustain and repay foreign debt, achieving economic growth, all 

resulting in Competitiveness (Zerda, 2009:217) and in this sense, not only private companies must be 

competitive, so must the state-owned organizations, including Public Higher Education Institutions. 

Moreover, the Iberoamerican Higher Education report 2011 claims that Latin American higher 

education systems are presenting some problems compared to other parts of the world, including 

those related to competitive, partly because of the lack of capacity to productively incorporate the 

available knowledge and innovation. 

In the same report, the human capital is highlighted as the main component for economic growth and 

competitiveness in higher education systems, especially now that they depend on the productivity of 

people, innovation in enterprises and organizations and management of information flows, all 

processes based on knowledge-intensive. 

This implies that the PHEI must manage its resources in an efficient way, to stay in a changing 

environment, reduce rework and new ways of funding that will allow decreasing its dependence on 

the state; there is where knowledge management plays a key role, since, as stated earlier, knowledge 

is the main source of competitive advantage of the Organization. Knowledge Management contributes 

to the sustainability of these institutions, in the sense that leverages the knowledge that exists in the 

organization to reduce costs, rework and identify behavior patterns useful for decision-making, 

helping to improve organizational performance. 

However, despite the possible contributions of knowledge management for financial sustainability in 

Public Higher Education Institutions in the literature review identified a Knowledge Management 

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framework proposed to address this problem. Additionally, according to (Brunner, Howard, 2011:60) 

on the basis of the World Bank, Knowledge Assessment Methodology, 2011, the progress of Latin 

American countries into the global economy based on intensive use of knowledge (based on multiple 

indicators grouped in four key dimensions, namely, operation of the system of economic incentives, 

level of development of education and human capital, innovation capacity and use of ICTs) is not very 

significant. 

Based on the previously mentioned information and taking into account the influence of Knowledge 

Management on financial performance, it is important that higher education institutions to find 

strategies to manage knowledge in financial processes into more efficient by reducing rework , cost 

reduction, identification of other funding sources, and incorporating innovative practices. This 

research is intended as a starting point for future research on how by managing knowledge can 

contribute to the financial sustainability of Public Higher Education Institutions. 


As seen throughout the article, there are gaps in knowledge management systems where prevails a 

vision focused on technology, possibly for lack of a systemic view of the problem situation, which in 

management systems knowledge, which is why this study proposes to use the approach of soft 

systems thinking, since it focuses on the search for meaning of the system to define a transformation 

based on this meaning through discussion and agreement among stakeholders in the system, which 

leads to true ownership of the change in the organization. 

Similarly, it presented some factors affecting the financial sustainability of public higher education 

institutions, requiring that these be more competitive to survive in a changing environment, taking into 

account that knowledge has been considered in the literature as the main source of competitive 

advantage in the organization and the positive influence of knowledge management on financial 

performance, this study proposes knowledge management as an alternative to contribute to 

sustainable financial management of the HEIP. 

Finally, this paper presented some theoretical principles, approaches based on soft systems thinking, 

which should address the Frameworks designed to incorporate knowledge management IT supported 

to contribute to reducing the gaps identified. 


The authors express their gratitude to the Universidad Industrial de Santander, the European 

Commission through the SUMA project and Colciencias through Young Investigator program for 

funding and supporting this research. 

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Key Factors Influencing the Performance of Healthcare 

Organizations 

Boris Popesko 1 , Zuzana Tučková 1 and Tarmo Kadak 2 

1 

Tomas Bata University in Zlín, nám. T. G. Masaryka Zlín, Czech Republic 

2 

Tallinn University of Technology – TSEBA, Tallinn, Estonia 

popesko@fame.utb.cz 

tuckova@fame.utb.cz 

tarmo.kadak@tseba.ttu.ee 

Abstract: The study focuses on the definition of key factors influencing the performance of healthcare 

organizations. In the last decade, hospital organizations have been facing difficulties and challenges in balancing 

limited resources and costs to provide their demand for services. In face of these tendencies, many hospitals are 

under pressure to become more cost efficient. The hospital organizations are working as the complex systems of 

various inputs, tasks, activities and outputs with complicated interactions between individual segments of an 

organization. These attributes of hospital organizations are a key factor for the managers whose objective is to 

effectively manage the organization via defined objectives, with limited sources. In this situation it is essential for 

managers to process the information and knowledge about an organization. This information and knowledge 

could be provided by advanced management techniques which have to be adopted by an organization. 

Unfortunately, the majority of hospital organizations do not use any of advanced management techniques at all. 

The first part of the paper is focused on an analysis of information sources, which could be used by managers to 

effectively manage an organization. These sources are provided by advanced techniques such as process 

management, cost management, balanced scorecard, CRM systems and other managerial tools. The following 

part of the paper analyses the used techniques and defines the key performance factors used in hospital 

management. The major objective is to outline a model for effective hospital management based on utilization of 

key management techniques and definition of key factors for successful organization management. 

Keywords: hospital management, balanced scorecard, cost management, performance management systems 

1. General introduction 

Medical research has an effect on the introduction of modern medical techniques and medicines, 

which usually causes an increase in consumed costs and volume of performed activities. Health care 

costs are rising rapidly, driven by population ageing, rising relative prices and costly developments in 

medical technology. Increased demands on quality and the extent of health care go along with the 

reduction of the public funding of a healthcare system, which is mostly caused by the limited 

resources of public budgets. Public health care spending is projected to increase in the range of 3.5 to 

6 percentage points of GDP by 2050 in the OECD area. In such conditions the efficiency of services 

provided by healthcare organizations becomes a crucial phenomenon. Hospital organizations have to 

become more efficient in order to maintain the ability to provide the appropriate level of care with 

mostly fixed resources. Joumard et al. (2010) state that exploiting efficiency gains in health care will 

be crucial to meet rapidly growing health care demand, without putting the public finances on an 

unsustainable path. Improvement of hospital organization efficiency is not as easily measurable as 

the efficiency of business enterprises because of a variety of factors influencing the process of 

healthcare. One side of the problem is formed by cost-effectiveness of an organization. Cost– 

effectiveness analyses are intended to inform decision-makers on how much improvement in health 

can be expected for a given expenditure of resources (Grosse, 2008). Other side of the problem could 

be gauging the efficiency of health care spending by estimating the contribution of health care 

spending to life expectancy, taking into account lifestyle and socio-economic factors (Joumard et al. 

2010). Efficiency of the provided healthcare services which are dependent on many factors could be 

measured by specific performance management systems. Performance management systems are 

based on use of performance indicators. Van der Geer et al. (2009) states that performance indicators 

could be described as measures of how well organizational objectives are accomplished. These 

indicators are strongly emerging in healthcare. Performance of a healthcare organization is then 

influenced by many financial and non-financial factors. Appreciable effects have also factors such 

payment systems, innovation level, process efficiency or competitiveness. This study analyses 

important factors of hospital organization performance management provided by decision-making 

process of managers. These factors are used to outline a knowledge management model for hospital 

management. 

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2. Literature review 

Boris Popesko, Zuzana Tučková and Tarmo Kadak 

Performance of a healthcare organization is similarly as in business enterprises influenced by many 

factors. A key factor of the organizational performance is then effective decision making undertaken 

by the managers of an organization. Decision making can be regarded as mental processes 

(cognitive process) resulting in the selection of a course of action among several alternative 

scenarios. Every decision making process produces a final 

choice.http://en.wikipedia.org/wiki/Decision_making - cite_note-reason-0 The output can be an action or an 

opinion of choice. Managers then require adequate information to perform an effective decision 

making process. 

The traditional economic approach is based on the measurement of the financial results of an 

organization. A narrow focus on the financial results and their use as performance indicators is 

criticised by many authors. Permanter (2010) explains how financial results used as the performance 

indicators could lead into wrong decisions made by managers. Kocakülah and Austill (2007) state that 

in recent years there has been much debate on the most effective way of measuring not only 

company’s financial performance, but also how the company is satisfying its customers and 

employees. 

Opit (1993) claims, that a healthcare outcome can be defined as a “technical result of a diagnostic 

procedure or specific treatment episode”. Vittadini and Minotti (2005), however, state that healthcare 

outcomes are influenced by covariates concerning the “case-mix” of patients, definable as the 

variability of their clinical and socio-demographic aspects. In addition, healthcare outcomes are 

related to the organisational capacity, resources, facilities and other characteristics of hospitals 

(Zaslavsky, 2001). 

According to the high complexity of healthcare services and the fact that financial results are not key 

factors of an effective health care, multiple indicators had to be defined in order to measure the 

efficiency of a healthcare organization and define the key factors for decision making. 

Pavelková (2009) divides the performance measurement methods into two groups. First group consist 

of traditional metrics which are based on the financial analysis of an organization. These metrics, 

such as ROA, ROE, ROI, EPS, P/E, etc. are mostly based on the financial indicators, which could be 

unsuitable for the healthcare organizations. Second group of the indicators consist of so called 

modern indicators such as Economic value Added (EVA), Cash Flow Return on Investment (CFROI), 

Shareholders Value Added, Value Based Management or Balanced Scorecard. 

Most of the modern performance measures are similarly as the traditional metrics based of the 

financial indicators measurement and mostly measures the value of an organization for the 

shareholders. These performance measures are mostly constructed for use in traditional business 

and are not suitable for healthcare organizations which provide different type of outputs and are 

evaluated by different measures. 

Only Balanced Scorecard approach takes into consideration various influences which has impact on 

the organization performance without close focus on financial indicators. The balanced scorecard 

(BSC) was developed with the idea that companies should concentrate financial efforts usually on at 

least the following four areas (Kocakülah and Austill, 2007): 

Finance; 

Customer satisfaction; 

Internal business processes; and 

Growth/education. 

A similar approach is defined by other authors (Kaplan and Norton 2001, Smith and Kim 2005). The 

company’s management should usually focus on four main areas or perspectives (Kaplan and Norton, 

2001): 

Customer perspective; 

Internal operations; 

Innovation and learning; and 

209

Financial perspective. 


Smith and Kim (2005) state that the balanced scorecard is an innovative management tool that can 

help an organization convert its value drivers (such as financial performance, customer value, 

innovation, operational efficiency, and employee capabilities) into a series of defined metrics. This 

helps organizations by establishing certain criteria to measure while also setting standards or targets 

for each criterion. The balanced scorecard gives an organization the ability to communicate its 

objectives and expected performance to every level of the organization. The balanced scorecard uses 

traditional financial accounting measures of past performance, yet it also incorporates measures 

thought to drive future performance (Youngblood & Collins, 2003). 

As mentioned above, the balanced scorecard system consists of four perspectives. The financial 

aspect of the balanced scorecard can include net income, labour expenses, material expenses, total 

expenses, or other metrics, depending on the company’s financial objectives. Budgeting can also be 

tied to the scorecard, further aligning resource allocation to corporate strategy. In addition, since the 

scorecard includes both financial and other measures, management can see how decisions will affect 

not only the financial measures, but also the general health of the company (Cohen, 2003). The 

customer perspective of the balanced scorecard focuses on the question, “How do our customers 

perceive us?” Customers must perceive that the organization is offering them some sort of value. 

After all, customers are an important part of any operation, and employees can lose their jobs if 

customers choose to do business elsewhere. The customer perspective is brought into the balanced 

scorecard to give a company the benefit of having some leading indicators that can predict how 

profitable the company might be, given various levels of customer satisfaction (Smith and Kim, 2005). 

As hospital organizations are more service-oriented than product-oriented, some goals often seen in a 

customer perspective section of the balanced scorecard for a typical manufacturing or retail-oriented 

business do not apply. The learning and innovation perspective is much more than just training of 

employees, although employee capabilities heavily affect an organization’s ability to generate new 

business through increased sales. It includes cultivating an environment where mentoring and tutoring 

of employees by other employees is part of the corporate culture (The Balanced Scorecard Institute, 

2004) and where help is readily available for anyone in the organization who needs it. The business 

process perspective refers to internal business processes. The internal business perspective is about 

asking questions such as “What business processes must a company excel at to be able to satisfy the 

shareholders and customers?” Metrics based on this perspective allow managers to know how well 

their business is running and whether their products and services conform to customer requirements 

and the mission (“Clarifying and Communicating,” 2004). To meet organizational objectives and 

customers’ expectations, organizations must identify the key business processes at which they must 

excel. Key processes are monitored to ensure that outcomes are satisfactory. Internal business 

processes are the mechanisms through which performance expectations are achieved (United States 

Department of Energy, 2004). 

After the development of the BSC in the 1990´s (Kaplan and Norton, 1996) the healthcare application 

of BSC appeared. From 1996 more and more hospitals in the United States and Canada began to 

use BSCs. Kaplan and Norton (2000) later stated that as of the year 2000, only about 70 of the 

country’s nearly 6 000 hospitals were using the method (Kocakülah and Austill, 2007). 

One of the earliest BSC applications in healthcare has been developed by Liberatone and Miller 

(1998). Their model used following performance measures in all perspectives: financial viability, 

efficiency, liquidity, capital, process quality, outcome, hospital care, number of hospital partnership, 

housekeeping, intensity of information use, coordination of care, community relationships, 

readmissions, length of stay, complications, per day surgery, process yield. For all those measures 

the basement values had been recorded and compared with actual values. After that overall 

organization index has been calculated in order to quantify overall performance gap between base 

and current value. 

Smith and Kim (2005) published the study of BSC application in a health care delivery company. Even 

if this study does not concentrate on a healthcare organization itself, it shows a good example of BSC 

application. The study defined several performance indicators in four perspectives. Their BSC model 

monitors and measures three aspects of the financial perspective: Expenses, Retail cash sales, Fulltime 

equivalents (FTEs): An FTE is a labour expense that equates to one full-time employee working 

a full year; four customer perspective measures which are: how well a special/restricted diet was 

explained (when applicable); temperature of the food; quality of the food; and courtesy of the person 

210


who served the food; five different performance measures collected under two different learning and 

innovation areas— namely, employee work life and business growth. Under employee work life, the 

performance measures include: the number of accidents incurred in the current month; internal 

customer survey results; employee satisfaction; and the monthly employee turnover rate. Under 

business growth, the performance measures include only one measure: growth in the number of 

meals served per month; finally, the model concentrates on four sections of business process 

perspective: The first section is personal hygiene, which audits such things as hand-washing facilities, 

hand-washing practices, employee health, and disposable gloves. The second section is time and 

temperature control, which includes thermometers, handling of refrigerated and frozen food, the 

cooking of foods, maintenance of hot and cold foods during preparation and service, cooling and 

maintenance of potentially hazardous food, the reheating of foods, and refrigeration equipment 

temperatures. The third section is cross-contamination, which involves the department’s checks of its 

practices for storing foods, preparing and serving foods, and sanitizing food contact surfaces. The 

department also undertakes audits in the areas of record keeping, training, and self-inspection. 

Kocakülah and Austill (2007) published a summary of useful performance measures for hospital 

Balanced Scorecard. These measures are summarized in Figure 1. 

Figure 1: Performance measures for hospital balanced scorecard (Kocakülah and Austill, 2007) 

3. Construction and analysis of performance management systems (PMS) 

Many references can be found in literature indicating that there have been difficulties in 

implementation of performance management systems (PMS) not allowing to gain the full benefit from 

the system (Business Intelligence, 2000; Kaplan and Norton, 2001). There are certainly many 

success stories, but there is now growing literature addressing the difficulties of implementation and it 

is claimed by some that 70 per cent of performance measurement initiatives fail (McCunn, 1998). The 

same rate (70%) marks failures of Balanced Scorecard (BSC) implementation (Neely and Bourne, 

2000). Waal (2002) says that 56% of performance management projects fail. Research studies have 

shown that PMS implementation in industry still lags far behind expectations (Olsen et al., 2007). 

Insufficient implementation and/or lack of inefficient PMS may lead to the poor organisational 

performance and on the contrary. 

211


Before constructing the approach it is necessary to present how performance management and PMS 

are defined, what and how it consist of, related with strategy, some requirements to PMS and about 

the efficiency of PMS by different authors to frame the approach. Finally author itself defines the PMS 

and its parts. Verweire and Berghe defined performance management as a process that helps an 

organisation formulate, implement and change its strategy in order to fulfil stakeholders’ satisfaction 

(Verweire and Berghe, 2004, p. 7). 

4. Results 

Based on the literature review and the performance indicators defined by analysed studies, key 

performance indicators defined as factors influencing decision making in hospital management could 

be defined. Following part of the study analyses the four perspectives defined by Balanced Scorecard 

performance model and delimitates the specifics of the performance model in healthcare 


The financial perspective includes a number of indicators that are usually based on overall financial 

results of an organization. These indicators could be often summarized in financial analysis. Many 

performance management models use financial indicators such as profit, revenues, return on assets, 

volume of debts, turnover, etc. On the one hand, these indicators inform about overall company 

outcome, on the other hand, they could be insufficient to support manager’s decision making because 

of their insufficient ability to evaluate the individual segments of an organization such as individual 

departments, procedures or activities. Using these indicators managers could receive the information 

about financial results of an organization, but they are unable to receive the information about causes 

of the results. A modern managerial approach requires a more advanced business overview. 

Besides the traditional financial indicators healthcare organizations use management accounting 

techniques to gain more detailed and more appropriate information about performance of an 

organization. In this situation, attention to acceptable accounting and costing systems is paid, in order 

to improve the efficiency of existing operations. Gujral et al. (2010) comments that healthcare 

organizations use cost accounting to estimate the unit cost of services they provide. Such information 

helps establish a realistic budget; prices, identify inefficiencies and project the effect that changes in 

demand would have on resource requirement. Most fundamental features of the management 

accounting systems are costing and budgeting systems. Costing systems have a pure managerial 

function in estimating the product cost. The ability to accurately calculate the cost of provided services 

could be essential for hospital managers in order to provide decision making. Comparison of cost and 

revenues of provided services could be important for future financial performance of a hospital 

organization. Budgeting and planning could be also accepted as one of the key decision making 

factors. Budgets are used for planning purposes oriented on the increasing of cost-efficiency. Budgets 

are effective instruments for the control of organization expenditures. The expenditures of healthcare 

organizations could be uneasily controllable because of their uncertain relations to the performed 

outputs. 

The customer perspective in healthcare organizations could be seen as more important than the 

financial perspective. Voelker, Rakich and French (2001) compare the importance of the individual 

BSC factors in a profit and non-profit (healthcare) organization. While in case of a profit organization 

the financial perspective stays on the top of the priorities, the most important perspective in a nonprofit 

organization is the Mission. The most common customer perspective indicator is customer 

satisfaction. Customer satisfaction is relevantly dependent on the quality of provided services. 

Measurement of the quality of a service based on customer satisfaction could be accepted as an 

important decision making factor. The mission of a healthcare organization could be in this context 

understood as the ability to solve and eliminate patient’s problems. Other performance measure 

which is frequently used in many BSC applications in healthcare is a number of the errors of fails 

made by healthcare organization staff. This phenomenon also is very closely linked to the quality of 

provided services. 

Very important performance measures could be identified in internal process perspective. The most 

common measure used in this perspective is simple process effectiveness. Process performance is 

closely related to the productivity of processes, which is another frequent performance measure. 

Some of the models also work with quality, which was presented in the previous perspective. A very 

important issue which dramatically influences the process effectiveness is the process capacity 

212


utilization. Healthcare organizations could be very often ineffective if they acquire special equipment 

which they are not able to sufficiently utilize. 

The learning and growth perspective includes various performance measures which have important 

relation to decision making. One of the most frequently used indicators is personnel motivation and 

satisfaction and personnel training and education. Some studies also include innovation processes, 

which are in a different model included in other perspectives. 

Based on this brief analysis of performance indicators and its relation to managerial decision making, 

it is possible to outline the list of performance indicators usable in healthcare organizations. Generally 

used performance metrics have to be adjusted for use in healthcare. 

After the performed analysis, following factors had been defined: 

Financial analysis indicators 

Budgeting process indicators 

Costing system 

Customer satisfaction 

Quality of the services 

Number of errors 

Process effectiveness 

Process utilization rate 

Personnel satisfaction 

Personnel training and education 

Financial analysis indicators – are important for the measurement of the overall performance of the 

organization, managing the value of the indicators requests the decisions about main organizational 

results. Healthcare organizations are usually not focused so strictly on financial results. Large portion 

of these organization are public and non-profit. Based on that, the profitability indicators will have 

lower importance than in the case of business organizations. On the other hand, other financial 

analysis indicators, such as liquidity or debt indicators could be crucial. 

Budgeting process indicators – these indicators are important in measurement of cost 

effectiveness of individual departments of an organization, managing these indicators request the 

decisions about the sources allocated to individual departments in hospital organizations. Use of the 

budgets in the hospital organizations is partly different from business organizations. Departments in 

hospitals have usually limited possibilities to cut the expanses for treatment procedures. On the other 

hand they can save costs in provision of support services or by better organization of performed 

activities. 

Costing system - costing system is the key mechanism for estimating of the product cost, 

effectiveness of the hospital organization requires the adequate cost of provided services and actions, 

managerial decision in this field could be focused on the cost reduction in expensive services or in 

optimizing the structure of the provided services. Hospital organizations activities in the field of 

“product” costing are very sporadic. Many hospitals perform the costing procedures just for the 

refunding purposes without adequate analysis of product cost and revenues. 

Customer satisfaction – is another important performance factor. Performance indicators should be 

able to measure the satisfaction of the customer/patients with the hospital activities. Analysing those 

indicators could be very helpful in management decision making. Customer/patient satisfaction could 

be accepted as one of the key factors of hospital management. Hospitals, which are able to measure 

the customer/patient satisfaction, could implement the important performance measure. 

Quality of the services – is another important factor similar to customer satisfaction. Quality of the 

provided services could measured by external outputs (by measuring the customer satisfaction) or by 

internal quality indicators. As mentioned above customer/patient satisfaction belongs to most 

important performance measures. Hospital organizations could implement other internal quality 

indicators. For instance Agency for Healthcare Research and Quality (AGHG 2012) defines the four 

types of quality indicators: Prevention Quality Indicators which is a set of measures that can be used 

213


with hospital inpatient discharge data to identify quality of care for "ambulatory care sensitive 

conditions." Inpatient Quality Indicators such as inpatient mortality for certain procedures and medical 

conditions. Patient Safety Indicators which are a set of indicators providing information on potential in 

hospital complications and adverse events following surgeries, procedures, and childbirth. Pediatric 

Quality Indicators which are a set of measures that can be used with hospital inpatient discharge data 

to provide a perspective on the quality of pediatric healthcare. Specifically, PDIs screen for problems 

that pediatric patients experience as a result of exposure to the healthcare system and that may be 

amenable to prevention by changes at the system or provider level. 

Number of errors – performance indicator, which measures number of errors of fails could be 

accepted as another important measure in customer perspective. This indicator could be closely 

related to the other customer perspective indicators such as customer satisfaction or quality of 

service. Analysis of this indicator could have important impact on managerial decision about individual 

activities performed by hospital organization. Relative number of errors and fails is the crucial 

performance measure for hospital organization. 

Process effectiveness – this indicator is one of the most important measures in hospital 

management. Knowledge about how the processes and activities are performed is crucial factor for 

management decision making. Effectiveness of the processes could be measured by number of 

measurer. These measures are usually based on analysis of inputs and outputs of the process. 

Process measurement could be very similar with business organizations, which makes this measure 

different from previously described metrics. 

Process utilization rate – another important indicator related to the process perspective is process 

utilization rate. This indicator measures the level of utilization of any activity, where the maximum 

capacity could be estimated. Low level of activity utilization causes the increase of the unit costs of 

activity caused by allocation of fixed costs. Construction of this measure is again similar to business 

organizations. Sufficient utilization of expansive equipment could have important impact on hospital 

performance and influence also financial results of an organization. 

Personnel satisfaction – is one of the performance factors which influence quality of provided 

services. If the hospital staffs have low level of satisfaction, the quality of provided services could 

decrease. Managerial decision affecting the personnel satisfaction could have important influence on 

the quality of provided services and on performance of the organization as a whole. 

Personnel training and education – this indicator measures how staff is educated. Quality of 

training and education has similarly as the previous indicator important impact on quality of provided 

services. 

All above mentioned factors forms the Hospital organisation performance model. These factors had 

been summarized based on the performed research studies. Individual studies, mostly focused on 

Balanced scorecard applications are very often various and use very different performance measures. 

System of indicators presented in this study tries to summarize the performed performance systems 

and make the synthesis of existing studies. Despite that fact, modifications of defined performance 

indicators could be expected in order with deeper research in the field. One of the key features of the 

model is the interrelations between individual performance factors. Managers cannot manage the 

individual factors, but the system as a whole, because of interrelations which had been described 

above. 

5. Conclusion 

Presented study outlines the key performance indicators used in hospital management. The most of 

the factors are based on performance measure indicators. Some of the studies focused on Balanced 

Scorecard systems have been used for definition of those factors. Even if the study doesn’t represent 

the final outlet of the research, but only work-in progress results, defined factors could be accepted as 

the framework for the definition of the final factors and performance indicators. As showed, most of 

the factors are in close relation between each other. Ability to manage these measures is one of the 

crucial factors of hospital management and has close relations to knowledge management systems. 

Knowledge management and performance management system could be then managed only as the 

complex system. If the managers will manage defined factors independently without considering the 

relations to other factors, the final result of the decision making process could not be correct. 

214



This paper is a research output of the project GA402/09/P406 registered at Czech Science 

Foundation and Grant Agency of the Ministry of Health of the Czech Republic registered under the 

number NT 12235-3/2011. 

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215

Modeling the Impact of Social Capital on Intellectual 

Capital in the Public Sector of Educational Administration 

Omalbanin Sadeghi 1 , Fattah Nazem 1 and Hassan Hashemidaran 2 

1 

Department of Education, Roudehen Branch, Islamic Azad University, 

Roudehen, Iran 

2 

Department of Agriculture Economic Development, Roudehen Branch, 

Islamic Azad University, Roudehen, Iran 

osadeghi82@yahoo.com 

nazem@riau.ac.ir 

daran_14444@yahoo.com 

Abstract: The purpose of the present study was to provide a structural model for intellectual capital in the public 

sector of educational administration based on social capital in Iran . The population of the research included all 

employees in the public sector of educational administration in Tehran city. 382 employees were selected using 

simple random sampling method. The research instruments were two questionnaires which were administered in 

the public sector of educational administration in Tehran city: Sayyadi’s (2010) social capital questionnaire which 

consisted of 31 items with seven underlying constructs of trust ,networks ,cooperation, collective action, empathy, 

participation and social identity and Cronbach Alpha of 0.90, and Bontis’s (1997) intellectual capital 

questionnaire which consisted of 50 items with three underlying constructs of human capital, customer capital, 

and structural capital and Cronbach Alpha of 0.87. The results of path analysis using LISREL software indicated 

that dimensions of social capital had a direct effect on intellectual capital with the indices of 0.61 . The model also 

showed that the factor of collective action in social capital had the highest direct effect on intellectual capital. 

Keywords: social capital, intellectual capital, educational administration 

1. Introduction and purpose of the study 

The growing importance of intellectual capital has its foundations in several studies carried out since 

the 70s, which focused on so-called invisible assets. The concept of “intellectual capital” was 

advanced by Adam Mueller, Friedrich List (Kendrick, 1961, p. 105) and referred to technical 

knowledge, know-how, forms of organization and tangible capital goods. It is the result of investment 

in the discovery and spread of productive knowledge. Among the studies about the intellectual capital, 

the works of Itarni and Roehl (1991) can be highlight although the concept has gained prominence 

only after the works of Sveiby (1997) in Sweden. 

New economy imposes new requirements to the enterprises. The strategic role of intellectual capital 

in value creation is widely discussed both on theoretical (Bontis, 2001) and empirical (Chen et al., 

2005) levels. However, measuring the intangible resources presents a problem today. There are 

several methods both financial and nonfinancial ones that allow us to manage them, to provide 

benchmarking, and to analyze its value added function (Sveiby, 2007). Several studies suggest 

proofs regarding the point that the intellectual capital has positive impact on market value, 

productivity, return on assets and sales growth (Diez et al., 2010; and Laing et al., 2010). 

Intellectual capital (IC) provides the concept of knowledge management that helps managers to 

identify and to classify the knowledge components of an organization. Intellectual capital concepts 

have been an explosion of interesting studies since FORTUNE magazine published in 1991 (Stewart, 

1991). Intellectual capital — such as knowledge, skill, relationships — is, more than ever, the vital 

strategic and competitive resources. Academics believe that the benefits, which all economic 

participants –employees, managers, investors, governments - gain by accepting intellectual capital as 

a resource and by measuring its efficiency (Pulic, 2004). In knowledge-based economy, companies 

do not produce just products or services but create added value to survive in the new economic 

reality. Academics believe that intellectual capital is the lever for maintaining competitive advantages 

and sustainable performance. Accordingly, identifying, valuing, managing intellectual capital is 

becoming increasingly important for companies (Prusak, 1998; Ross and Ross, 1997; and Stewart, 

1991). In Fortune, Steward (1991) defines intellectual capital as “knowledge that transfers raw 

materials and makes them more valuable”. The concepts of intellectual capital seem to have 

classified as a consensus of dividing an intellectual capital into three different groups (Ross and Ross, 

1997). Human capital simply comprises the competence, skills, experience, and intellectual agilities of 

the individual employees (Bounfour, 2003; Brooking, 1996; and Ross et al., 1997), structural capital 

216

Omalbanin Sadeghi, Fattah Nazem and Hassan Hashemidaran 

includes processes, systems, structures, brands, intellectual property, and other intangibles that are 

owned by the firm but do not appear on its balance sheet (Bounfour, 2003; Brooking, 1996 and Ross 

et aL, 1997). The remaining type of intellectual capital is customer (social) capital resides either at the 

individual or the organizational level. Customer (social) capital is an intermediary form of intellectual 

capital consisting of knowledge in groups and networks of knowledge resources embedded within and 

derived from a network of relationships (Ross et al., 1997). 

Intellectual capital also is as an instruments to face the new challenge(Ramirez,2010), and an 

indicator of corporate value(Khan, 2011) , and even its also is a factor of the success of new 

ventures(Hormiga et al.,2011). Herremans et al. (2011) found that if managers structure their 

organizational control system appropriately for developing intellectual capital capabilities, these 

systems can lead to reduce internal uncertainty regarding human, structural, and relational capital. 

Intellectual capital has been described as intellectual material that has been formalized, captured and 

leveraged to produce a higher valued asset (Klein & Prusak, 1994). Intellectual capital is about how to 

let the knowledge of an organization work for it and have it create value (Roberts, 1999) and includes 

all intangible resources as well as their interconnections (Bontis et al., 1999). An interesting 

conceptualization sees intellectual capital as the combination of intangible resources and activities 

that allow an organization to transform a bundle of material, financial and human resources in a 

system capable of creating stakeholder value (European Commission, 2006) and organizational 

innovation (Lerro et al., 2009). In particular, intellectual capital can be thought as the economic value 

of two categories of intangible assets of a company, i.e. organizational capital and human capital 

(OECD, 1999). Intellectual capital includes thus a set of intangible elements (resources, capabilities 

and competences) that drive the organizational performance and value creation (Bontis et al., 2000; 

Roos & Roos, 1997). This suggests causal relationships between intellectual capital and 

organizational value creation (Marr & Roos, 2005). 

The evolution from an industrial society to a knowledge society is characterized by the rapid growth of 

intangible assets and social activities with regard to tangible resources and physical based processes 

(Eurostat, 2000). Although intuitive, the notion of social capital is difficult to define, particularly at 

aggregate levels, it could be defined as a sum of current and potential resources incorporated in, 

available in and derived from the network of relations possessed by an individual or social unity 

(Nahapiet and Ghoshal, 1996). From a corporative point of view, which means that social unity is the 

organization, social capital could be understood, according to Bourdieu and Wacquant (1992), as a 

sum of resources accumulated in the organization by a stable network of intraorganizational 

relationships. In the same vision, Coleman (1990) defines the concept as the appropriateness of 

social structure, strategically legitimized in the organization. 

According to Cohen and Prusak (2001), social capital represents the value of human connections 

based on confidence and on personal networks with a community vocation. Without social capital 

innovation, the sharing of knowledge and productivity can be dramatically reduced. According to 

Koening (1998) social capital facilitates the behavior rules of the organization, reducing transaction 

costs and promoting cooperation. These reasons justify the introduction of social capital into 

intellectual capital. Dimensions of social capital defined by Sayyadi (2010) include trust, cooperation, 

collective action, participation, empathy and networks. These concepts are defined as following: 

Trust: Trust has consistently been a part of efforts to measure relationships (Bruning & 

Ledingham, 1999; Grunig et al., 1992). As Simmel (1950) wrote, trust is “one of the most 

important synthetic forces within society” (p. 326). Trust has proven to be a reliable measure or 

indicator of social capital over time and across the world (Halpern, 2005). Trust is a precondition 

of any form of behavior (Rossteutscher, 2008). Without trust there are low levels of civic 

engagement (Putnam, 1993, 2000). 

Cooperation: In addition to trust, cooperation is one of the central positive manifestations of 

social capital. Cooperation is generally manifested in receiving support to accomplish individual 

initiatives or to solve collective problems. Several definitions of social capital are associated with 

receiving support from other actors to accomplish goals (Coleman, 1988; Putnam, 1993, 1994). 

Collective action: Collective action is a fundamental concept in social capital (Coleman, 1988) 

that lubricates cooperation among residents and their local institutions (Putnam, 1996). Collective 

actions refer to a situation in which people in a community work collaboratively and contribute 

resources to advance common efforts (Flora et al., 1997). Working collectively reconciles 

217


individual self-interest because people are dependent on one another for mutual gain (Bridger & 

Alter, 2006). In other words, building social capital constrains self-interested behavior and inspires 

a spirit of cooperation (Coleman, 1988). 

Participation: Community self-development efforts encourage residents' participation and 

involvement (Sharp et al., 2002). Community participation may take the form of involvement with 

religious or charitable institutions, voluntary associations, neighborhood associations and informal 

social activities (Gottlieb, 1981). Participation in these community-based activities allows people 

to work cooperatively towards a common goal (Zimmerman, 2000). People who participate in 

community-based activities display greater involvement with their community and enhance their 

sense of belonging to the place (Chavis & Wandersman, 1990). 

Empathy: According to the American Medical Association Complete Medical Encyclopedia: 

Empathy is the awareness and understanding of how another person thinks, feels, and behaves. 

People with autism, schizophrenia, and some other personality disorders often show a lack of 

empathy for others (Empathy, 2003, p. 503). In contrast, Black’s Medical Dictionary defines 

empathy as the facility to understand and be sympathetic to the feelings and thoughts of another 

individual. Empathy in the therapist is an essential component of successful psychotherapy and is 

a valuable characteristic in anyone who is a member of a caring profession. (Empathy, 2010, p. 

219). Empathy has been conceptualized as a trait, ability, or a cognitive or affective state that is 

contingent on the situation, and a multiphasic experiential process. Most notably, there is lack of 

consensus on the nature of empathy whether it is cognitive, affective, both, or one or the other 

depending on the situation (Davis, 1994). 

Social Identity Theory: Social identity theory states that people classify themselves and others 

into various social groups, such as organizational membership, religious, affiliation, gender, and 

age cohort (Tajfel and Turner 1985). This can take many forms, such as identifying oneself as a 

particular gender, part of a group of enthusiasts about a hobby, a parent, spouse, etc. However, 

these heuristics (especially about others' classifications) can lead to incorrect conclusions (Tajfel 

and Turner 1985). Classifying others into groups reduces uncertainty regarding their status, and 

classifying oneself gives rise to opportunity for self enhancement through comparison of groups 

(Hogg and Terry 2000). 

Networks: A central proposition of social capital theory is that networks of relationships constitute 

a valuable resource for the conduct of social affairs (Putnam, 1993). Social capital interprets 

networks of relationships and the resources they provide access to as social resources. The 

analysis of social capital is thus inherently tied to the structure and quality of relationships among 

social actors. As such, one of the most common ways in which social capital is studied is through 

social network analysis (Lin, 1999). 

Researchers highlight social capital as being a crucial resource for accessing, exploiting and 

leveraging individual and collective knowledge, thereby providing its strategic value for organizations 

(Burt, 1992; Nahapiet & Ghoshal, 1998). Empirical studies have shown social capital to positively 

influence knowledge search (Nebus, 2006), product innovation (Tsai & Ghoshal, 1998) and inter-unit 

feedback-seeking (Barner-Rasmussen, 2003). From a conceptual perspective, social capital is argued 

to affect the creation of intellectual capital due to the social resources (e.g., access to information) 

embedded within social capital (Nahapiet & Ghoshal, 1998). 

Leana and Van Buren (1999) introduce the term organizational social capital as an attribute of a 

social entity, and argue that the translation of individual into organizational social capital is crucial for 

an organization to reap the benefits that develop through its employees’ social exchanges. In this 

vein, organizational social capital can be understood as a resource reflecting the character of social 

relations within the firm that is realized through members’ levels of collective goal orientation and 

shared trust (Leana & Van Buren, 1999). Several findings of the studies show that social capital 

facilitates the creation of new intellectual capital in organizations (Reiche et al., 2009; Wu et al., 2008; 

Wu, & Tsai, 2005; Bueno et al., 2004; Nahapiet, & Ghoshal, 1998). The purpose of the present study 

was to provide a structural model of intellectual capital based on social capital in the public sector of 

educational administration. 

2. Research questions 

1. What is the structural model of intellectual capital based on social capital in the public sector of 

educational administration? 

218


2. Which variable has the highest effectiveness on intellectual capital? 

3. How predictive is social capital on promoting intellectual capital? 

4. How much is the goodness of fit in this study? 

3. Method of the study 

The research methods which were used in this study are: library research to access the theoretical 

framework and the related literature; Survey method to collect, classify, describe, and analyze the 

data. The population under investigation in this study consists of official staff working in 20 zones in 

the public sector of educational administration in Tehran city. In order to estimate the least volume of 

2 2 

z σ 

sample, n = 2 formula was used. Regarding the minimum sample required for the staff’s 

d 

group which was estimated as 382 people, the same number of questionnaires of intellectual capital 

and social capital were administered to the staffs. In order to select the research sample, method of 

simple random sampling method was used. The research instruments were as follows: Sayyadi’s 

(2010) social capital questionnaire which consisted of 31 items with seven underlying constructs of 

trust ,networks ,cooperation, collective action, empathy, participation and social identity and 

Cronbach Alpha of 0.90, and Bontis’s (1997) intellectual capital questionnaire which consisted of 50 

items with three underlying constructs of human capital, customer capital, and structural capital and 

Cronbach Alpha of 0.87. The results of the study were calculated through path analysis using LISREL 

software. 

4. Findings of the study 

The data collected from the administration of the instruments were analyzed. These data included the 

different indexes of central tendency, variability and the distribution of staff’s groups, the staffs’ scores 

obtained from intellectual capital and social capital questionnaires and their related components. The 

distribution of the staffs’ scores in the given variables had tendency toward normality. 

As shown in Figure 1, the Lambda rate of external latent variable of social capital components was 

0.65 for trust, 0.73 for networks,0.67 for cooperation,0.84 for collective action, 0.65 for empathy,0.54 

for participation and 0.64 for social identity whose accumulation form the social capital variable with 

the effectiveness rate of 0.61. It means that 61% of the variation in the dependant variable of 

intellectual capital is explained by a collection of these indices. The variable of collective action 

indicates the highest amount of internal consistency in the external latent variable. 

Figure 1: Path analysis model for components of social capital and intellectual capital 

219


The Lambda rate of internal latent variable of intellectual capital components was 0.85 for human 

capital, 0.76 for structural capital,and 0.85 for customer capital whose accumulation form the 

intellectual capital variable. The variables of human capital and customer capital indicate the highest 

amount of internal consistency in the internal latent variable. 

Since the model’s goodness of fit index is 0.92, it can be stated that it has an acceptable fit. The 

calculated index indicates the direct effect of social capital components on intellectual capital. 

Moreover, the model shows that the highest direct effect is related to collective action, the component 

of social capital, on intellectual capital in human capital and customer capital components. 

The following table presents the indices related to the model’s fit: 

Table 1: Model’s fit indices 

Index 

Rate 

Interpretation 

Lewis-Tucker (Non-normed fit index) 0.93 High fit (more than 0.90) 

Bentler-Bonett’s (Normed fit index) 0.92 High fit (more than 0.90) 

Hoelter 

0.71 High fit (more than 0.70) 

Root Mean Square Error (RMSE) 0.05 High fit (equal to or less than 0.05) 

GFI 

0.92 High fit (more than 0.90) 

The five goodness of fit indices presented model’s fit and empirical data. Therefore, desirability 

adaptation is provided for the designed model and empirical data and can approve it as an 

appropriate model for the intellectual capital. 


The results of path analysis method revealed that dimensions of social capital have positive impact on 

intellectual capital. The findings of the present study, furthermore, indicated the influential role of 

social capital on intellectual capita The results of this study is in line with the research by Reiche et 

al. ( 2009), Wu et al. (2008), Wu and Tsai ( 2005), Bueno et al.( 2004),and Nahapiet and 

Ghoshal( 1998). They have also found the significant relationship between social capital and its 

strategies with the intellectual capital. 

According to Bueno et al. (2004) model of intellectual capital expressly includes social capital. 

Moreover, Reiche et al. (2009) argue that social capital facilitates their creation of individual 

intellectual capital, which, in turn, translates into inter-unit intellectual capital. He concludes that 

individual social capital needs to be explicitly transferred to the organizational level to have a 

sustained effect on inter-unit intellectual capital. According to Wu and Tsai (2005) implementing 

higher levels of authority delegation and social capital tend to engage in more knowledge-creating 

activities and have more intellectual capital, furthermore, they conclude that different aspects of 

intellectual capital tend to significantly influence knowledge management effectiveness, what's more, 

social capital and delegation of authority are significant moderators of the relationships between 

knowledge-creating activities and intellectual capital. These results are consistent with Nahapiet and 

Ghoshal (1998) found that social capital facilitates the creation of new intellectual capital; moreover, 

organizations, as institutional settings, are conducive to the development of high levels of social 

capital. It is because of their more dense social capital that firms, within certain limits, have an 

advantage over markets in creating and sharing intellectual capital. 

Close attention to intellectual capital is an absolute necessity within all organizations. Intellectual 

capital is a firm's source of competitive advantage, to become knowledge driven, companies must 

learn how to recognize changes in intellectual capital in the worth of their business and ultimately in 

their balance sheets. A firm's intellectual capital – employees' knowledge, brain power, know- how, 

and process, as well as their ability to continuously improve those process-is a source of competetive 

advantage (Vargas-Hernández, and Noruzi, 2010). Successful organizations hire intelligent staff and 

this is the usual form of developing intellectual capital in the organization (Sveiby, 1997; Ross et al 

1997; and Stewart 1991). Intellectual capital can foster organizational competitiveness (Vargas- 

Hernández, and Noruzi, 2010). 

According to Eurostat (2000), knowledge society is characterized by the relevant growing of intangible 

assets and social activities; due to the above-mentioned factors, social capital is one of the forms of 

capital of the World Bank classification that is acquiring the greatest level of importance. As Lesser 

and Cothrel (2001) note that, social activities have an eminent role in the knowledge-based economy. 

They are a set of critical resources that enable the creation of essential competences. Moreover, 

220


social activities increase the capacities for the creation, sharing and management of knowledge 

generating sustainable competitive advantages (Bueno, 2002). Bueno’s findings are in line with those 

presented by Adler and Kwon, in this respect, social capital provides the organization with values 

such as solidarity and cooperation, especially when interactions fix patterns of obligations and 

expectations based on rules of reciprocity and equality (Adler and Kwon, 2002). As Lazerson (1995) 

remarks that social capital solves conflicts, improves consensus with surrounding organizations, 

enhances the understanding with public administration, supports the development of business 

strategy, mitigates the imperfections of information in the market, and reduces transaction costs. 

Having observed the significant impact of social capital on intellectual capital, it can be proposed that 

in order to increase the intellectual capital, the public sector of educational administration should take 

action to promote the communal solidarity, develop intimacy between individuals, gain common and 

shared understanding and arrive at collective and mutual agreement through long-range and efficient 

management plans and in-service training. Furthermore, since collective action has the highest direct 

impact on intellectual capital it’s proposed that, 

Total and mutual trust is established. 

Information is disseminated among the staff. 

People are ably assisted in dealing with their problems. 

Honoring the promises is encouraged. 

Social groups are constituted to assure achieving success. 

Joint decision-making is encouraged. 

Favorable organizational climate is fostered. 

Mutual cooperation is fascilitated so that volunteers provide support and participate in work 

groups. 

Beside, employing the findings of the present research can be of great value in increasing the 

intellectual capital considering the dominant role of educational organizations in pursuing and 

achieving social, political, economic, and cultural goals. 


The authors want to extend a heart-felt thank you to the members of the public sector of educational 

administration for their commitment and efficient research assistance. They are truly appreciated as 

their partnership was vital to carrying out this research. 

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223

Bridging the gap Between Knowledge Production and 

Knowledge use in Three Colombian Cities 

Luz-Helena Sánchez Gómez and Marta Lucia Ramírez Giraldo 

Asociacion Colombiana de la Salud, Bogota, Colombia 

assaludcolombia@hotmail.com 

Martaluciar@gmail.com 

Abstract: The aim of this paper is to present and discuss a partnership pilot experience in building capacities for 

research use in a diversity of health related organizations in three Colombian cities. The project was a 

collaborative enterprise made possible by pooling resources from a knowledge and practice network: a research 

center – ASSALUD, a women’s civil society organization - CASA DE LA MUJER/Women’s House, and a 

knowledge network - Colombian Health Policy and Systems Research Network, and funding from WHO-AHPSR. 

A multidisciplinary group of professionals belonging to a mix of local and national public, private and civil society 

organizations completed a diploma course with curriculum tailored to local needs, based on situation analysis 

and the application of a self-assessment tool focused on measuring institutional capacity for research use. The 

application of the self-assessment tool Ïs Research Working for You?” developed and validated by Canadian 

Health Services Research Foundation (CHSRF) provided a foundation for the development of an educational 

curriculum in the form of a 120-hour diploma course, split into ten modules and offered in Bogota, Cali and 

Manizales (three of the country’s largest cities). In keeping with participant profiles and the degree of 

professionalization and specialization of the health workers and others involved in the universe assessed, 

responses indicate all institutions are well staffed in terms of university professionals, although these 

professionals lack the proper infrastructure, skills and tools to tackle the goal of promoting informed policy 

decisions. Agreements were signed with seven prestigious universities that certified the completion of the 

academic program. A mixture of 17 public and private, national and local health-related institutions and civil 

society organizations were invited to participate. Sustainability of this experience with its pilot conditions is not 

realistic. The universities involved can only sustain the commitment in market conditions. But if change in this 

field is to come about, a larger effort must be made by those in research centers to try to influence the allocation 

of public funding to this effect.The paper is organized in three sections. First, it offers background information on 

the conceptual model and the context in which the project takes place. Second, it addresses the framework of the 

case and discusses main findings. Third, it points to lessons learned in the development of the project. 

Keywords: research to practice, health policy and systems research, capacity building, knowledge management, 

knowledge transfer 


Following publication of the first report on the 10/90 gap for health research by the Global Forum for 

Health Research, particular emphasis has been placed on the responsibility of academia not only in 

advocating for health policy and systems research but also in influencing policy formation. 

For more than two decades now, innumerous global and local meetings have taken place, and 

methods and tools have been made available in an attempt to bridge the gap between research 

production and utilization of results. 

Policy-makers have to make complex and at times conflicting decisions regarding health system 

interventions; senior-level managers and planners are compelled to make day to day service 

decisions and civil society organizations (CSOs) face questions of how best to secure a place for 

particular demands in the public arena, and whether to position a problem or monitor a specific policy 

under the legislative, executive or judicial domain or for public debate in media. 

The importance of interaction across the interfaces linking researchers and policy makers has been 

apparent for some time now and much debate has taken place regarding the best process for 

achieving the best possible outcomes. At issue are the quality of relationships and trust as facilitators, 

and organizational barriers and lack of confidence as barriers (Bowen 2010), as well as the absence 

of personal contact between researchers, policy-makers’ political instability and debates about what 

constitutes evidence, as argued by Armstrong et al (2006). 

Consequently, discussions have focused on strategies to change the academic paradigm of diffusion 

to peers in order to develop capacities for disseminating to society via the media and to policy-makers 

via knowledge management models that presume some degree of permeability in the interface 

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between the academic and the policy-making worlds --two traditionally independent cultures 

separated by ample distrust and prejudice. 

Choosing the best course of action possible in the policy-making process requires a capacity to base 

decisions on criteria adapted to social and political realities and supported by the best available 

information. 

Evidence-informed decisions require new skills of policy makers, senior managers and planners, 

members of civil society organization and researchers. The belief in knowledge as a strategic 

resource for modifying health/living conditions requires downplaying intuition and reliance on 

unsystematic experiences as well as changing the routine institutional rationale as the grounds for 

decision-making. 

2. Project background and context 

Colombia is a middle-income country with 44 million inhabitants, most of them in urban areas, a per 

capita GDP of 3,237 US dollars (December 2010), and a Gini coefficient of 0.58 (the second highest 

in Latin America). According to the National Dept. of Statistics, maternal mortality is 72.9 per 100.000 

live births and life expectancy is 75.2 yrs. 

In December 1993, the Colombian Congress approved a radical health sector reform leading to a new 

national health insurance system, which changed the government’s role from public provider to 

purchaser of private health services (AHPSR 2004). 

This system based on compulsory health insurance is modeled after the managed care ideology and 

is funded mainly with parafiscal taxes. Citizens from the informal sector of the economy and the poor 

are subsidized; those in the formal sector pay for their insurance through payroll deductions. 

The system is currently in crisis due to the behavior of key actors who have greatly misused the fiscal 

resources assigned by law. 

Increasingly, research findings challenge the widely publicized success of the Colombian health 

reform, which is not delivering according to social expectations and the enormous amount of money 

being invested. (Yepes, F.J., Sanchez, L.H. and Ramirez 2002.Yepes, F.J., Ramirez, M. et al 2010) 

3. Attempting to influence policy-making 

For two decades now, Colombian Health Policy and Systems researchers have tried to secure a place 

for debate on the necessary links between theory and practice, aiming to bridge the gap between 

academics and policy-makers through deliberate action. Emphasis has been on the agenda setting 

and prioritization in policy formulations by the National Department of Science and Technology 

(COLCIENCIAS, for its Spanish acronym) 

In 1995, Caldas University and COLCIENCIAS identified the need to promote research in public 

health and health systems and policies, to adapt research to priority needs, and to accompany the 

reform process with sound scientific information. (Gomez, S. and Velez A.L. 1999) 

In 2003, Colombian Health Association (Assalud, for its Spanish acronym) produced a report on 

guidelines for health research policy, commissioned by COLCIENCIAS. This study was part of a 

project led by International Development Research Center (IDRC) conducive to setting guidelines 

for health research in the Latin American region. (Yepes F.J. and Gonzalez B. 2003) 

In 2003, under the auspices of PAHO, the Colombian Health Systems and Policy Network. 

(RCIPSS, for its Spanish acronym) was created with nodes in five Colombian regions. 

In 2003, National University produced a combined matrix analysis for priority setting, under the 

auspices of COLCIENCIAS (Agudelo, C. et al 2009) 

In 2002, ASSALUD delivered a case study on the state of health systems and policy research in 

the country, commissioned by WHO-AHPSR (Yepes, F.J., Sanchez, L.H. and Ramirez M. 2002) 

In 2005, RCIPSS produced a report on strategic lines, funded by COLCIENCIAS (RCIPSS 2005) 

In 2005, RCIPSS used funding from COLCIENCIAS to develop a diploma course aimed at 

enhancing research capacities in researchers in the knowledge network. 

225


In 2008, CEDETES, a research center at the Valle University, delivered a report on strategic lines 

for research, commissioned by the Ministry of Social Protection. 

Not much progress has been made beyond rhetoric in documents and public declarations; a number 

of small-scale interventions were never successfully scaled up. 

4. Colombia lags behind in investment in science, technology and innovation 

A mismatch between needs and resources assigned to health research is widely documented across 

all countries and Colombia is no exception (Moloney 2009). Colombia is currently perceived as 

lagging behind in scientific and technological development, as indicated by the percentage allocated 

to research in the nation’s GDP (Yepes F.J., Sanchez, L.H. and Ramirez M. 2002) 

In a study conducted by Alvis and De la Hoz, (2003), they found that the health research production 

had increased, when measured by the number of Colombian papers cited in Medline and LILACS 

between 1993 to 2003. However, this production is still lower than in other Latin American countries 

with similar socioeconomic and demographic conditions. 

The 2011 Science and Technology Observatory Annual Report (Salazar, Lucio, Rivera et al 2011) 

showed that public investment in science, technology and innovation accounted for a mere 038% of 

the GDP in 2006, and for 0.487% in 2011, far from the goal formulated in the last COLCIENCIAS Plan 

for reaching 1% by 2014, and farther still from the OECD recommendation of 3%. 

In spite of efforts to find new sources of financing, such as the participation in revenues from lotteries 

which began in 2003, Colombia does not fare well compared to selected Latin American countries 

such as Brazil (1.46%), Venezuela (2.69%), Argentina (0.61%), and Cuba (0.72%). Recently, a 

percentage of mining and oil royalties was approved by Congress; we will have to wait and see how 

much additional funding translates into public health and health policy and systems research and 

knowledge translation projects. 

We can conclude, as did Reichel (2010), that Colombia’s investment in scientific and technological 

development, the size of its scientific community and its technological infrastructure are still clearly 

inadequate for a country of this size and relative development. 

5. Getting down to basics 

5.1 The project 

The above considerations led to the formulation of a pilot partnership project by a research center – 

(ASSALUD), a women’s civil society organization (CASA DE LA MUJER/-Women’s House) and a 

knowledge network (Colombian Health Policy and Systems Research Network). 

The Alliance for Health Policy and Systems Research (WHO-AHPSR) partially funded the project 

through the 2007 call to strengthen capacities for research use. The pooling of network resources in 

the form of time for city coordinators, availability of meeting spaces and computer and Internet 

facilities accounted for about half of the total amount invested. 

Agreements were signed with seven prestigious universities that certified the completion of the 

academic program. A mixture of 17 public and private, national and local health-related institutions 

and civil society organizations were invited to participate. 

The application of the self-assessment tool Ïs Research Working for You?” developed and validated 

by Canadian Health Services Research Foundation (CHSRF) provided a foundation for the 

development of an educational curriculum in the form of a 120-hour diploma course, split into ten 

modules and offered in Bogota, Cali and Manizales (three of the country’s largest cities). 

The tool is organized into four domains. Access: can your organization find and obtain the research 

findings it needs? Assess: can your organization assess research findings to ensure they are reliable, 

relevant and applicable to you? Adapt: can your organization present the research to decision-makers 

in a useful way? Apply: are there skills, structures, processes and a culture in your organization to 

promote and use research findings in decision-making? Each of the domains contains a number of 

items. Each item uses a five point Likert scale (one meaning a low capacity or frequency of activity 

226


and five signifying something the organization is well equipped to do or does often) (Kothari, A., 

Edwards, N. et al 2009). 

We invited a multidisciplinary group of 105 senior-level managers including physicians, lawyers, 

statisticians, psychologists, social workers, physical therapists, nurses, political scientists and 

administrators to complete the questionnaires in focus group sessions held on site under the 

guidance of a moderator (project director) and a rapporteur. 

Each participant completed the tool (previously sent by mail) individually prior to the group meeting, 

and then discussed each item before reaching a group consensus on its ranking. Discussion was very 

lively and provided an opportunity to share information from the institutional memory. Sessions lasted 

an average of four hours. 

Out of these 105 professionals, 45 were finally assigned fellowships on the basis of agreements 

signed both with them and with the directive level of each organization. In the letters of agreement the 

latter committed to allowing the professionals time to participate in the ten-month program, providing 

computer and Internet access and allowing participants to meet with their peers to socialize the new 

competencies; participants committed to fulfilling all teaching tasks, attendance at all sessions, 

promotion of teamwork and socialization of the acquired skills and tools. 

5.2 Findings 

The results revealed serious weaknesses in the use of research results in institutional settings, 

regardless of their nature and mission. These deficiencies relate both to structural resources such as 

a lack of policy formulation, plans or programs, up-to-date resources including fast Internet access, 

subscription to databases, and a deficit in skills, tools and work relations with the academic 

community. 

The average rating assigned to global use - defined as the capacity to access, analyze, adopt, and 

apply information- was 2.9/5, equal to “on an irregular basis” on the Likert scale. The majority of 

participants reported research information is used mainly for the writing of reports and the formulation 

of the mandatory Periodic Health Development Plan. 

Civil Society Organizations tend to hire consultants or commission research pieces when needed, 

due to funding constraints on hiring professionals dedicated solely to conducting much needed 

research. The reason for this, as it was explained, has to do with funder’s terms of reference and 

perspectives. 

Because of the action-oriented characteristics, these organizations tend to file a great amount of 

valuable qualitative information while systematization of the experiences is still lacking. 

One finding that attracted our attention was the difficulty in reading and interpreting, not to mention 

constructing the indicators used in most national and international institutional reports. 

Figure 1 shows the average scores for each city in each of the domains. 

1= No, never 

2= A little, scarcely 

3= Sometimes, on an irregular basis 

4= Almost always, generally 

5= Always, constantly 

Main problems identified: 

Lack of policy formulation and programs 

Poor infrastructure such as individual and up to date computers 

Limited fast Internet access 

227


Lack of stimulus i.e. time away from work to participate in research, attend conferences, etc. 

Lack of meeting spaces for policy makers and academics 

Limited or no skills to critically appraise research results 

Limited ability to communicate research results to other levels of the policy-making hierarchy 

Source: Sánchez, L.H., Ramírez, M.L., Cardona, Dora (2010) 

Figure 1: Average scores for access, assess, apply and adopt, by city 

The following diagram (Figure 2) by Potter and Brough (2004) depicts a four-tiered hierarchy of 

capacity-building needs. The capacity pyramid below is comprised of the following elements: 1- 

structures, systems and roles, 2 - staff and facilities, 3 - skills and 4 - tools. 

Figure 2: Capacity pyramid 

The diagram offers a visual idea of the hierarchy of needs for capacity-building clearly expressed in 

the results of application of the aforementioned tool. 

228

5.3 Curricular content 


Curricular content was defined based on the four domains in the assessment. The following diagram 

(Figure 3)shows how modules were constructed, based on the capacities expressed in the four As. 

Public policy policy-making 

context: political, economical, 

legal, ethical 

The social knowledge 

management field: beyond 

knowledge transfer-knowledge 

translation 

Identification of information needs, 

formulation of a relevant question 

for advanced search 

Reading for policy making: search 

for and critical appraisal of 

information 

Writing for policy making: 

Communicating results: The Policy 

Brief 

Applying information: the 

Institutional Project 

Figure 3: Flow of curricular content, modules and capacities 

In colloquial terms, the curricular content was designed to learn how to read and write for policymaking, 

based on the acquisition of competencies to access scientific information on the internet, 

applying criteria for the critical reading of both qualitative and quantitative information, acquiring skills 

to communicate the information, and applying the capacities to institutional projects. 

Context: An analysis of the health model in the framework of the national constitution, social, political 

and ethical considerations in public health policies and health care delivery. 

Accessing the Internet/Formulating the Question: A step-by-step manual was produced to accompany 

the learning-by-doing process. 

Analyzing: learning how to perform a critical appraisal of qualitative and quantitative (epidemiological) 

research results. 

Adapting: skills needed to write a policy brief as a preferred communication tool were exercised. 

Applying: an institutional project was formulated to transfer skills and competences and then 

socialized in each of the participating organizations. 

229


6. Conclusions and challenges 

Policy-makers and senior-level managers have to make complex decisions regarding a number of 

issues, from everyday work place programs and projects to macro interventions gearing health 

systems and care delivery. Political and ethical dilemmas related to the power structure are best faced 

when equipped with information that goes beyond intuition and anecdotal evidence. 

Choosing the best possible course of action in today’s knowledge society requires new management 

skills and tools. These skills and tools can only be acquired through deliberate actions set in motion to 

create enabling environments that facilitate the transition from research to practice. 

Overall, the organizational capacity to access, assess, adapt and apply research evidence is quite 

limited. There is a need for improving the institutional capacity for research use through development 

of educational and mentoring strategies. The research tool mentioned herein could be used as a road 

map for the institutionalization of knowledge management; it provides a clear understanding of 

facilitators that need strengthening and the barriers that must be overcome. 

In keeping with participant profiles and the degree of professionalization and specialization of the 

health workers and others involved in the universe assessed, responses indicate all institutions are 

well staffed in terms of university professionals, although these professionals lack the proper 

infrastructure, skills and tools to tackle the goal of promoting informed policy decisions. 

The replicability of a project like this depends on a number of factors: firstly, organizations to proceed 

with cultural changes and distance themselves from the routine intuition-based rationale with its poor 

attention to systematic organization of institutional memory and experiences and lessons learned; 

secondly, much depends on resource allotment in order to take advantage of the high degree of 

professionalization and specialization of civil servants in Colombia’s largest cities. 

In the meantime a number of small steps should be taken, including the creation of ¨trust fields¨ where 

researchers, managers, high level policy-makers and SCO can meet to try to build a common 

language and form quality alliances. After all, as we say in Spanish, it is through conversation that 

people understand each other. This implies we should be putting more emphasis in long-term 

behavioral and cultural changes. 

Sustainability of this experience with its pilot conditions is not realistic. The universities involved can 

only sustain the commitment in market conditions. But if change in this field is to come about, a larger 

effort must be made by those in research centers to try to influence the allocation of public funding to 

this effect. 


To WHO-AHPSR, for funding and technical assistance 

Gobernación Valle del Cauca, for additional funding 

Dr. Ruben Dario Gomez Executive Director RCIPSS 

Olga Sánchez, Director of Casa de la Mujer 

Regional coordinators: 

Dr. María Cristina Lesmes, Cali 

Dr. Dora Cardona, Manizales 

Autonoma and Catolica Universities, Manizales 

Santiago de Cali, Libre, San Martin and UNICOC Universities, Cali 

Fundacion Universitaria de Ciencias de la Salud, Bogotá D.C. 

References 

Agudelo, C., De la Hoz, F., Mojica, Martha et al (2009), “Health Research Priorities in Colombia from a 

Researcher’s Point of View”, Rev. Salud Publica 11 (2): 301-309 

Alvis, N., and De la Hoz, Restrepo, F. (2003), “Scientific Production in Health Science in Colombia”, 1993-2003, 

Revista de Salud Publica U. Nacional de Colombia 8 (1):25-37 

Alliance for Health Policy and Systems Research (2004) “Strengthening Health Systems: The Role and Promise 

of Policy and Systems Research”, on-line 

http://www.who.int/alliancehpsr/resources/Strengthening_complet.pdf 

230


Armstrong, R., Waters, E., Roberts, H. et al (2006), “The Role and Theoretical Evolution of Knowledge 

Translation and Exchange in Public Health”. Journal of Public Health 28(4): 384–389 on-line 

http://jpubhealth.oxfordjournals.org/content/28/4/384.full.pdf+html 

Bowen S., Martens, P. (2005). “Demystifying Knowledge Translation: Learning from the Community”. J. Health 

Serv. Res. Policy 10(4):203-11 

Canadian Health Services Research Foundation “Is Research Working for You? A Self-Assessment Tool and 

Discussion Guide for Health Services Management and Policy Organizations”, on-line 

http://www.chsrf.ca/Libraries/Documents/SAT-Self-Assessment-Tool.sflb.ashx 

Gómez, Arango S, Vélez, Arango A.L. (1999) “Programa nacional de investigación en salud publica y sistemas 

de salud”. Colombia Medica, (29) No. 2-3 

Kothari, A, Edwards, Hamel, N. et al (2009) “Is Research Working for You? Validating a Tool to Examine the 

Capacity of Health Organizations to Use Research. http://www.implementationscience.com/content/4/1/46 

Moloney, A. (2009) “Latin America Faces Hurdles in Health Research” The Lancet, 374(9695):1053-1054, on-line 

http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(09)61688-3/fulltext Retrieved on June 05 

2012. 

Organización Panamericana de la Salud (OPS 2007), Sistematización de las experiencias en desarrollo de 

políticas de investigación en salud pública de la red colombiana de investigaciones en Politices y Sistemas 

de Salud, Washington. on-line 

http://new.paho.org/hq/dmdocuments/2010/Red_Colombiana_Investigacion_Politicas_Sistemas_Salud.pdf 

Potter, and Brough, R. (2004) “Systemic Capacity Building: A Hierarchy of Needs” Health Policy and Planning 

19(5):336-345 on-line http://heapol.oxfordjournals.org/content/19/5/336.full.pdf+html 

Red Colombiana de Investigaciones en Políticas y Sistemas de Salud (2005) “Lineamientos de política nacional 

para la gestión del conocimiento en salud publica”.on-line 

http://guajiros.udea.edu.co/fnsp/cvsp/politicaspublicas/politica_nacional_red_colombia.pdf 

Reichel, M. (2010) “University Technology Transfer and National Innovation Policy: Success Stories from Brazil, 

Colombia and South Africa”, on-line http://iipi.org/wpcontent/uploads/2010/07/UniversityTechTransfer_072507.pdf 

Salazar, M., Lucio, J., Rivera, S.C. et al (2011) “Indicadores de ciencia y tecnología 2011” Observatorio 

Colombiano de Ciencia y Tecnología, on-line 

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Sánchez Gómez, L.H., Ramírez, M.L. and Cardona, D. (2010) “Informe de autodiagnósticos” on file. 

Yepes, Lujan F.J. and González, B. “Delineación de las políticas de investigación en salud publica para 

Colombia hasta el año 2010”, ASSALUD Bogotá, on file. 

Yepes, F.J., Sanchez, L.H., Ramirez, M.L. (2002)”Funding Research for Policy in Colombia’s Reformed Health 

Sector” Geneva AHPSR, Working Paper No. 11 

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Research Center (IDRC), on-line http://idlbnc.idrc.ca/dspace/bitstream/10625/43686/1/130255.pdf 

231

Designing a Seminar Programme on Customer Knowledge 

Management for the Hospitality Industry: A Theoretical 

Approach 

Tulen Saner 1 and Serife Zihni Eyupoglu 2 

1 

School of Tourism and Hotel Management, Near East University, Lefkosa, 

North Cyprus 

2 

Department of Business Administration, Near East University, Lefkosa, North 

Cyprus 

saner@neu.edu.tr 

serifeeyupoglu@neu.edu.tr 

Abstract: The management of knowledge has become highly important for all organizations. It is particularly vital 

for the hospitality industry with knowledge management playing a crucial role in achieving customer satisfaction, 

customer loyalty and ensuring repeat customers. This in turn creates a competitive advantage. The aim of this 

study has been to increase the awareness of knowledge management in the hospitality industry. The authors 

propose designing and implementing a seminar programme targeted at informing 5 Star hotel managers in North 

Cyprus on the necessity and utilization of customer knowledge. 

Keywords: knowledge management, customer knowledge management, hospitality industry, 5-star hotels, North 

Cyprus 


When organizations have a better knowledge of their customers this enables them to serve them 

better and, in turn, keep them loyal and satisfied longer. In fact, customer knowledge (CK) can be 

considered as one of the most important knowledge bases for any organization. The changing 

organizational environment has driven interest in organizational learning and knowledge management 

(KM) (Prusak,1997). According to Drucker (1993) the basic economic resource is no longer capital, 

natural resources or labor, but it is and will be knowledge. Customer knowledge management (CKM) 

is at the origin of most improvements in customer value (Novo, 2001), and it is important to sustain 

long-run customer loyalty. It refers to the management of knowledge from customers, i.e. knowledge 

resident in customers (Gibbet et al., 2002). CK can be classified into three groups, namely knowledge 

for the customer, knowledge from the customer, and knowledge about the customer. Corporations are 

now beginning to realize that the proverbial ‘if we only knew what we know’ also includes ‘if we only 

knew what our customers know’ (Gibbert et al., 2002). 

The hospitality industry is an example of an industry that can benefit from the implementation of CKM. 

From a customer’s perspective, the hospitality industry is perpetually inundated by many similar 

service offerings, therefore organizations need to be able to offer new and innovative features to 

customers (Saneyi and Karin, nd.) and to develop a long term relationship between customers and 

organizations. To realize these hospitality organizations need to assemble and utilize existing 

customer knowledge (explicit knowledge) as well as tap into the tacit aspect of their customers’ 

knowledge. Tacit knowledge is not easily visible and expressible; it is highly personal and hard to 

formalize making it difficult to communicate or share with others (Nonaka and Takeuchi, 1995). Tacit 

knowledge is deeply rooted in an individual’s action and experience, as well as in the ideas, values, or 

emotions he/she embraces (Nonaka and Takeuchi, 1995). In this respect, this study emphasizes the 

necessity of making hospitality managers aware of the advantages gained through the effective 

utilization to CK. This can be accomplished through the design and implementation of CK seminar 

programmes for hospitality managers, more specifically 5-Star hotels in North Cyprus. The seminar 

programmes should be designed in the context of establishing feedback mechanisms from the 

customers which aims at capturing knowledge about the customer as well as the tacit dimension of 

their knowledge. 

2. Customer data, customer information, and customer knowledge 

In order for service organizations to be more efficient and effective in delivering services to 

customers, and thus creating customer satisfaction, knowledge on customers will have to be 

managed to ensure that the services organizations provide are those that will address customer 

needs (Plessis and Boon, 2004). Knowledge evolves from information and data with the literature 

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Tulen Saner and Serife Zihni Eyupoglu 

diffentiating between the three. According to Davenport and Prusak (1997) data can be said to be a 

set of discrete, objective facts about events. In an organization context, data is described as 

structured records of transactions. Information is data endowed with relevance and purpose. It is a 

message with a sender and a receiver. Information is meant to change the way the receiver perceives 

something, to have an impact on his judgment and behavior. Knowledge is a fluid mix of framed 

experience, values, contextual information, and expert insight that provides a framework for 

evaluating and incorporating new experiences and information. In organizations, it often becomes 

embedded not only in documents but also in organizational routines, processes, practices, and norms 

about knowledge (Zanjani et al., 2008). Zanjani et al., (2008) classified CK into three. Firstly, 

knowledge for the customer which is a kind of knowledge that targeted customers attains in order to 

know the organization better. Secondly, knowledge from the customer which is a kind of knowledge 

that the organization attains in order to enhance its products and services, and finally, knowledge 

about the customer is a kind of knowledge that the organization attains in order to know its targeted 

customer better. 

Organizations do recognize knowledge as a crucial resource in competition. They also comprehend 

the importance of utilizing knowledge to gain a competitive advantage (Kogut and Zander, 1993). 

However, many organizations still ignore it. Cline and Warner (1999) found that the collection and use 

of customer information by organizations are frequently intermittent, delayed and fragmented. 

Research on CKM is limited, however, emerging research on customer knowledge management 

(CKM) emphasizes that firms should generate information not only about their customers but also 

from them (Rowley, 2002). Why then do many organizations either not access the knowledge of their 

customers, or delay it? The problem is that the existing mindset, as evidenced by the literature, 

provides very little assistance to these organizations (Gibbert et al., 2002). Converting enormous 

amounts of customer data into customer information and, furthermore, customer knowledge is very 

challenging (Davenport et al., 2001). Also, customer information and knowledge generated has to be 

integrated into that organization’s every day operations and processes at the right time to benefit both 

the company and the customer (Campbell, 2003). 

3. Hospitality management and its knowledge needs 

The hospitality industry is changing rapidly and managers will need to make proactive changes which 

focus even more intensely on customer preferences in order to stay competitive in such a dynamic 

environment (Karmarkar, 2004). Customers in the hospitality industry tend to patronize hotels that 

offer the best value proposition under existing budgetary constraints, therefore, in order to add value 

to the customers’ experience, hospitality managers must meet the challenge of determining which 

services are preferred by customers (Saneyi and Karin, nd). When hospitality managers have an 

understanding of customer preferences, their challenge then becomes deciding which of those 

preferences have the potential to add the greatest value to the organization’s existing service 

offering.(Saneyi and Karin, nd). Dev and Olsen (2000) reported that although hotels capture 

considerable amount of customer data those data are rarely assembled to create useful knowledge 

about customers. 

4. Designing a new seminar programme on CKM within 5 star hotels 

The study realizes the need for the hospitality industry to gather customer data and turn this data into 

information, and then into customer knowledge. The 5 Star hotels in North Cyprus should use 

information that readily exists in their archives about their customers to form a customer knowledge 

management system; however they also need to capture tacit knowledge from customers (knowledge 

from their customer) which in turn is used to create customer loyalty and satisfaction. This requires 

informing hospitality managers as to the methods of capturing this information through KM seminar 

programmes. 

More specifically, the issues to be addressed through the seminar programme should be; 

To provide an understanding of customer knowledge management, 

To provide an understanding of how to collect customer data, 

To provide an understanding of how to capture the tacit dimension of customer knowledge. 

To provide an understanding of how the utilization of IT will aid in transfering this data into 

information, and 

233


To provide an understanding of how this information can be documented and systemized to 

become an integrated part of the hotel’s routines, processes, practices, and norms (customer 

knowledge management system). 

The authors propose a 3 module seminar programme; 

Module 1: Knowledge Manangement (KM) 

KM Defined 

Distinguishing between Data, Information and Knowledge 

This module aims at arousing awareness towards the importance of knowledge and how this 

knowledge is a crucial resource in remaining competitive. The module continues by distinguishing 

between data, information, and knowledge, and how data is converted into information and in turn 

how information takes on the form of knowledge. Hospitality managers will be able to recognize that 

customer data is collected through, for instance, customer check-ins and feedback systems. This data 

can then be converted into information in order to personalize services offered to customers and to 

introduce future services. And this information can then be used to create knowledge resulting in the 

enhancement of organizational performance. At the end of this module the hospitality managers will 

see knowledge as having economic use in regards to the services offered by the organizations. 

Module 2: Customer Knowledge (CK) 

CK Defined 

Improvement in Customer Value Derived from CK 

Customer Satisfaction 

Customer Loyalty 

Customer Relations 

Customer Retention 

Repeat Customers 

Methods for Extraction Customer Data 

Explicit Knowledge 

Customer Profile Information 

Customer Records 

Tacit Knowledge 

Interview 

Observation 

Socialization 

Storytelling 

This module aims at familiarizing hospitality managers with the concept of customer knowledge and 

how this concept is at the origin of most improvements in customer value. The second part of the 

module will deal with data extraction from customers. Both the extraction of explicit and tacit 

knowledge will be covered. At the end of this module the hospitality managers will fully appreciate the 

benefits of customer knowledge as well as how to capture it. 

Module3: Customer Knowledge Management (CKM) 

CKM Defined 

From CK to CKM: Converting Information into Knowledge 

Creating a Customer Knowledge Management System 

This module aims to emphasize that customer knowledge management is concerned with the 

management and exploitation of customer related knowledge. This will enable hospitality managers to 

comprehend the necessity of capturing customer related knowledge and optimizing its utilization. This 

knowledge being knowledge about the customers and knowledge from the customer which come in 

234


two forms, namely explicit and tacit. Explicit knowledge (knowledge that is easily expressed and is 

visible, such as customer profiles and customer records), and tacit knowledge (the knowledge held in 

the customers’ minds). This module will further emphasize the necessity of the generated knowledge 

being integrated into the organization’s everyday processes, practices, and values, involving the 

establishment of a CKM system. This, in turn, enabling hospitality organizations to compose 

knowledge related to current customers, potential customers, and customer segments. At the end of 

this module the hospitality managers will comprehend the necessity for the enrichment of knowledge 

wealth of their organizations, and the need to organize and structure this customer knowledge. 

5. Discussions and conclusion 

In today’s highly competitive and dynamic business environment, all organizations need to respond 

precisely and rapidly to customer needs and demands in order to gain a competitive advantage. It has 

been recognized that knowledge can facilitate organizations in their efforts towards remaining 

competitive. Service organizations, in order to be more effective in the delivery of their services, 

require customer related knowledge in order to address their customer’s needs. The Hospitality 

industry can highly benefit from CK in creating customer satisfaction, customer loyalty and customer 

retention. 

Tourism is one of the main contributors to the economy in small islands. North Cyprus is a small 

island. Tourism and education are the priority sectors for the economic development of North Cyprus. 

The tourism industry is a main generator of income for North Cyprus and in 2010 it contributed $ 

177,649,192 (5.4 per cent) to the GDP of North Cyprus. Also North Cyprus tourism industry hosted 

1,119, 240 Tourist (Statistical Year Book 2010) 

This study has demonstrated the need for the awareness of the hospitality industry, more specifically 

5 Star hotels, to utilize existing customer related information and to capture the tacit dimension of their 

customer’s knowledge so as to integrate this CK into the organizations routines, processes and 

practices, thus designing a CKM system. The authors have proposed CKM seminar to be presented 

to 5 Star hotel managers to increase their awareness of the necessity and benefits of the utilization of 

knowledge within their organizations. 

References 

Campbell, A. (2003) “Creating Customer Knowledge: Managing Customer Relationship Management Programs 

Strategically”, Industrial Marketing Management, Vol 32, No. 5, pp 375 – 383. 

Cline, R. and Warner, M. (1999) Hospitality 2000: The Technology a Global Survey of the Hospitality Industry’s 

leadership, Arthur Andersen Consultancy, New York. 

Davenport, T., Harris, J. And Kohli, A. (2001) How Do They Know Their Customers So Well?. Sloan Management 

Review, Winter, Vol 42, No. 2, pp 63 – 73. 

Davenport, T and Prusak, L. (1997) Working Knowledge: How Organizations Manage What They Know, Harvard 

Business School Press, Boston, USA. 

Dev, C. and Olsen, M. D. (2000) “Marketing Challenges for the Next Decade”, Cornell Hotel and Restaurant 

Administration Quarterly February, pp 41 – 47. 

Drucker, P.F. (1993) Post-Capitalist Society, Oxford: Butterworth Heinemann. 

Gibbert, M., Leibold, M., and Probst, G. (2002) “Five Styles of Customer Knowledge Management,and How 

Smart Companies Use Them To Create Value”, European Management Journal Vol 20, No. 5, pp 459–469. 

Karmarkar, U. (2004) Will You Survive the Services Revolution? Harvard Business Review, Vol 82, No. 6, pp100 

-108. 

Kogut, B and Zander, U. (1993) “Knowledge of the Firm and the Evolutionary Theory of the Multinational 

Corporation”. Journal of International Business Studies, 24, pp 625–646. 

Nonaka, I and Takeuchi, H. (1995) The Knowledge-Creating Company. Oxford University Press, New York. 

Novo, J. (2001) The Source of Customer Value-Customer Knowledge, Retrieved from www.crm-forum in April 

2012. 

Plessis, M and Boon, J.A. (2004) Knowledge management in e-Business and Customer Relationship 

Management: South African Case Study Findings, International Journal of Information Management 24, 

pp73–86. 

Prusak, L. (1997) Knowledge in Organisations. Butterworth-Heinemann. 

Rowley, J. (2002) “Reflections on Customer Knowledge Management in e-business”, Qualitative Market 

Research: An International Journal, Vol 5, No. 4, pp 268 – 280. 

Sanayei, A and Karin, M.G. (n.d ) “Knowledge Oriented Customer Relationship Management: An Application 

Model for Hotels Management”, 4th International Management Conference, Retrieved from 

http://www.mba.mbairan.ir/Portals/0/354_Full_gholami.pdf in March 2012. 

State Planning Organization (2010) Statistical Year Book. North Cyprus 

235

Trust in Renewing Human Intellectual Capital - Intangible 

Asset Creating Vitality and Innovativeness 

Taina Savolainen 1 and Palmira Lopez-Fresno 2 

1 

University of Eastern Finland, Dpt. of Business, Finland 

2 

Spanish Association for Quality, Spain 

taina.savolainen@uef.fi 

correo@palmiralopezfresno.com 

Abstract: Trust has become an essential intangible asset in organizations and leadership. Trust promotes social 

order and cooperation in workplace relationships. It is a resource that creates vitality and enables innovativeness. 

The paper discusses and examines the highly timely topic of trust from the intellectual human capital (HIC) 

perspective. More specifically, the focus is on the role trust plays in renewing intellectual capital. In the paper, 

trust is viewed in a relational context describing the positive expectations of a respectful human behaviour also in 

situations of risk. Originality of the paper is based on the two ideas of both theoretical and practical significance. 

First, exploring and conceptualizing trust as intangible asset, resource and skill in organizations. Second, 

examining trust in leadership as enabler in human intellectual capital renewal. The paper provides a novel view 

into leading people resources, since trust as intangible resource and skill, and in relation to IC renewal have 

hardly been examined integrated. The main point highlights trust in enabling and facilitating the growth and 

utilization of HIC. The paper advocates the idea that, in leading people resources, it is important to increase 

understanding of intangibles, such as trust, as the value they add to HRM is multiple and still poorly understood. 

The paper presents also real life case studies of trust building in support of the renewal of HIC containing the 

sharing of tacit knowledge and co-creation with customers. 

Keywords: HRM, human intellectual capital, innovativeness, intangibles, leadership, renewal, trust, vitality 


Renewal capacity is more and more important quality in the organizational management and HRM. It 

is manifested in operations, procedures and processes. Renewal is an ability to implement strategy 

and respond to changes. Currently, competitiveness is based on quick capacity for renewing and 

effective usage of opportunities and capabilities that are mainly human and intellectual (Slockum et.al, 

2008). As organizations become more knowledge intensive, and event- and opportunity-oriented, the 

strategic challenge increases for gaining competitive advantages. People assets are crucial for 

achieving such advantages (Wright & McMahan, 2011). Development of human activity builds on 

knowledge and its sharing, and their varied invocation. This requires collaboration ability on which 

trust forms a foundation. From this perspective, trust is a significant intangible asset, as it is created, 

built and sustained by and between people. Trust building and maintaining deserve careful attention 

by HRM people and leaders in renewing human knowledge and capabilities for vitality and 

competitiveness (Savolainen, 2011; cf. Innocenti et.al, 2011). Therefore, the paper advocates the idea 

that building and sustaining trust in workplaces becomes more and more important in effective 

development and utilizing of human talents, skills, competences and capabilities (Häkkinen & 

Savolainen, 2008). 

In the knowledge era, trust plays an important role in intra- and inter-organizational networks and 

relationships. Trust has been identified as one of the most frequently examined constructs in the 

organizational literature lately (Burke et al. 2007). It is a multi-faceted and multi-disciplinary issue that 

has been widely studied in different fields of science over the last few years (Ebert, 2009). It is an 

antecedent of innovative work environments. Trust is an intangible, relational asset for co-operation 

between people. Relational trust means that it develops in interaction and reciprocal activity between 

individuals, and within groups and organizations. It is also a managerial resource and skill for 

developing human intellectual capital (HIC). Leadership work is mainly about relationships, 

interaction, communication, and collaboration with people. As competition challenges organizations to 

renew their intangible resources, relational activity such as interaction, co-creation, and network 

relationships are stressed more and more. Trust as relational resource is needed more but is enacted 

less. This paper focuses on trust as intellectual, human and relational, intangible resource. This 

includes leadership in the renewal activity of IC. 

The paper brings a new perspective into discussion, as trust is hardly examined and defined as 

intangible asset and forceful resource in the HRM and leadership context. Yet its role as a 

collaborative mechanism and in conflict resolving has been recognized. In leadership trust is seen 

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Taina Savolainen and Palmira Lopez-Fresno 

essential. Trust building is listed as one of the main tasks of leaders who enable the creation of 

trustful workplace climate (Yukl, 2010, cf. Dirks, 2006). The knowledge gap exists how leaders enact 

on trustful leadership showing trustworthiness in daily actions (Savolainen & Häkkinen, 2011, Ikonen 

& Savolainen, 2011). The gap is therefore evident in how trust functions as a valuable leadership 

resource and skill in HRM. The fact that is worth noticing is that leader-follower relationship is a key 

relationship within work organizations. Not until recently has the role of trust in HRM and leadership 

more widely recognized (cf. Rousseau et.al, 1998). It is seen as a well spring for vitality and 

competitiveness in organizations. In Finland, for example, a paradigm of ‘new leadership by trust’ for 

sustaining competitiveness in the future has raised by the Finnish Innovation Fund, SITRA (see the 

Report Vibrant Finland, Nurmio & Turkki, 2010). Trust building in leadership has been prioritized as 

the top theme in leadership development and education. 

The purpose of the paper is to add to discussion about trust from the intellectual capital and its 

renewal perspectives. The objective of the paper is to increase awareness of trust in organization and 

leadership as a valuable intangible resource for people management. The topical questions are 

posed: Does the organization set goals for people to give their best? Do culture and climate support 

building and maintaining trust or rather undermine trust? The paper discusses how trust, leadership, 

and renewal of IC are related and what it implies to managing people. Brief case studies are 

presented for sharing examples of trust building in organizational relationships. 

2. Theoretical discussion 

2.1 Concept of trust 

Trust has been defined in many ways. Yet, the concept remains without a generally accepted 

definition (McEvily et al., 2003). In this paper, the relational definition of trust is adopted from Mayer et 

al. (1995, 712) as follows: “the willingness of a party to be vulnerable to the actions of another party 

based on the expectation that the other will perform a particular action important to the trustor, 

irrespective of the ability to monitor or control that other party”. Mayer’s model looks at the formation 

of trust between actors in a relational context. This means that trust evolves over time based on 

repeated interactions and information available. Trust is a person’s assessment of another’s 

trustworthiness. Risk taking is at the core of trust, not taking risk per se, but rather a willingness to 

take risk (Mayer et al., 1995). Cooperation and confidence are concepts that are closely related to 

trust (see Schoorman, Mayer and Davis, 2007). 

Trust research involves many fields of science, several theoretical approaches, definitions, factors, 

and models (Rousseau et.al.,1998) Development of trust has been examined in economic, 

behavioural, transformational perspectives (Lewicki and Bunker, 1996, Lewicki et.al 2006). Trust is 

combined of several components – rational, cognitive and affective (McAllister, 1995), and has been 

researched in leadership from relationship-based and character-based perspectives (Dirks & Ferrin 

2002; Dirks, 2006).The elements that underlie trusting relationships are the individual’s feeling of 

being competent, safety and caring, a sense of autonomy, consistency and fairness in social relations 

(Gillespie & Mann 2004, Savolainen, 2011). 

2.2 Trust as intellectual, intangible asset 

Trust is a powerful intangible asset in the development of collaborative workplace cultures. In 

organizational renewal, trust is an internal motivational force for individuals. In developing intellectual 

capital it works through workplace climate with the sense of community and open communication. In 

defining human capital Wright & McMahan (2011) refer to Becker’s early definition of the concept 

consisting of knowledge, information, ideas, skills, and health of individuals. Human intellectual capital 

includes competences, motivations, communication, sharing of knowledge, and cooperation skills, 

among others. In e-, virtualizing and multicultural world, cooperation and co-creation skills will be the 

keys for innovations and for sustaining competitiveness. 

Trust is intangible resource for both individual and organization. In the workplace context, intellectual 

resources such as trust are used and “owned” by the organization, in principle. Trust is multi-level and 

reciprocal in nature. This means that the effects, means, and consequences of trust concern both the 

individual and organizational level. Interpersonal communication and norms create for people a sense 

of security and an opportunity to identify with a group (Savolainen, 2011). Rewards in work 

relationships are accumulated by individual players’ stable relationships and bonds through consistent 

237


interaction, which makes it possible to maintain them. Subsequently, in co-operation one party can 

trust the other that he or she will not act deceptively trying to gain short term advantage. 

Intangible assets are managed by the organizations and are accumulated from the human capital. 

Human capital is connected to an individual and disappears with him or her in contrast for example to 

technological capital and information, which is accessible to all (cf. Wright & McMahan, 2011). Even 

though intellectual assets are strongly grounded on the individual, they are also organizational. The 

individual builds and breaks trust, but the benefits and unfavourable effects spread to groups and 

organizations. When individuals build, maintain, or violate and break trust, they obtain benefits or 

losses. More broadly, the effects are seen in different structures and processes in the organizational 

and societal level. This especially applies ethical activities. An individual’s unethical actions propagate 

detrimental consequences to the organizational level and even the entire society. The most blatant 

examples of this in the sense of trust are the pyramid schemes, in which one individual’s severe 

violation of trust leads to very serious and vast negative consequences. 

In short, intrinsically trust is a fragile intangible asset. It can be built or broken by an individual, but he 

or she alone cannot utilize it or carry its unfavourable consequences. They influence relationships and 

structures, socially and collectively. Individual level trust can be invisible, even “tacit” and easily 

breakable (Savolainen, 2011). On an organizational level it is usually more tangible and can be 

sensed for example in the culture and atmosphere as well as in various relationships, say between a 

leader and a subordinate. Trust is invisible and intangible but its benefits and consequences may be 

multifaceted and become visible within and between organizations and actors. 

3. Trust in organizations and leadership 

Pertaining to intellectual capital, leadership by trust plays a two-fold role in organizations. First, trust is 

an influential force and intellectual resource for leaders in enabling and building trustful relationships 

and organizational climate. Second, leading with trust is a means and skill for leaders to develop 

human capabilities for the vitality and competitiveness of the organization. Considering that work 

today is largely expertise-based by nature and is strongly based on creating and sharing knowledge, 

development of human capabilities and the work environments for utilizing them become prioritized. 

Currently, trust is put on test and authority are re-evaluated in organizations due to major changes. 

When the understanding of intangible assets increased in the 1980s, it became obvious that the 

organizational performance was greatly affected by its intangible capital (Sullivan, 2000, Slockum 

et.al.2008). As a result, intangible capital became an issue to leadership. After Stewart (1997) defined 

intangible capital as mental, human and intellectual asset, it impacted the theories and practices of 

providing leadership for knowledge and know-how. From the point of view of leadership, human 

capital is multidimensional and interrelated combination of mental, structural and relational resources 

(Edvinsson & Malone, 1997). Trust provides an opportunity to get an access to valuable knowledge 

(political, economical), and relational resources. It is a way to create loyal relationships which do not 

deteriorate or break easily. In the long run, steady and firm relationships form a human, social and 

cultural intangible capital to be realized as inimitable competitive advantages (Savolainen, 2011, cf. 

Nahapiet & Goshal, 1998). 

3.1 Leadership role and trust 

Leadership is essentially about human intangible assets involving activity, customs and processes 

with which intangible capital is created for the benefit of an organization. Leaders are responsible for 

knowledge, guidance, motivating and commitment as well as creating a learning culture needed in 

renewing HIC. Especially in knowledge based operations critical assets are intangible, and the leader 

cannot base his/her authority anymore on management position. The organizational sources of power 

are more diversified and leadership is shared more and more. The power relations between expertsubordinate 

and leader are based on knowledge and know-how, while the power of the leader is 

based on trustworthiness, i.e., competence, integrity and benevolence (Mayer et. al, 1995). If the 

leader wants to be successful trustworthy behaviour cannot be disregarded. Leadership is an intraorganizational 

structure but has impact on external relationships, for example, on managing customer 

relationships. Practically, the effects and connections relate to, for example, developing personnel’s 

customer-orientation skills. Thus human capital requires and utilizes interchangeably other intangible 

capital (Stewart, 1997; Roos & Roos, 1998). This makes it more complex. For leaders it is often 

238


easier to influence internal structures and relationships through vision, mission, and strategy which 

direct individuals and the organization to the same direction. 

3.2 Trust building - a new focus in HRM and leadership 

In changing work environments, a new kind of leadership seeks its role. Leadership is undergoing 

major global transformation and renewing. Consequently, role of trust in leadership is apparently a 

part of this change in working environments. Leadership cannot function any longer solely through an 

individual leader, position power, or hierarchy. New competences and resources through which a 

leader gains his or her right to lead are to be discovered and developed. For leaders trust is a way of 

influence, i.e., trustworthiness helps to build mutual co-operation and make people to give the best of 

their competencies. The leader plays a significant and influential role in how the subordinates want to 

and actually perform. Subsequently the subordinate influences the way he or she benefits the 

organization. 

Leadership by trust can be defined as a leader’s ability and skill to enable interaction, co-operation, 

and productivity (Savolainen, 2011). Enabling is central in this. It means both the removal of obstacles 

and supporting new ideas, solutions and change. This is the new focus of leadership based on trust. It 

is a reciprocal process in nature. In everyday leadership, trust provides readiness and ability for social 

influence. In daily work, it is shown in trustworthiness. 

In major change, trust building faces some challenges at work places. They are largely leadership 

based. On one hand, leadership capacity and skills do need renewing because of dynamic change of 

leading. On the other hand, leaders initiate and enable the renewal of HIC. Thus maintaining a 

leadership capacity to deal with uncertainty and change calls for trust-oriented leaders in order to 

coach people and teams. Trust-based leadership assures readiness for change, thus, sustaining 

vitality, well-being, and competitiveness. As trust “belongs” equally to each member of the work 

community, everyone is responsible to build it. The most common challenges are cultural hindrances, 

such as communication (Ikonen & Savolainen, 2011). 

3.3 Trust in renewing human intellectual capital 

Despite of the fact that organizations aim to increase (tangible) capital which can be measured by 

financial indicators, strengthening co-operation between actors is among the most important attitudes 

and means to renew and internal, intangible capital. Education is indispensable to gain skills. 

Intangible capital, such as knowledge or trust can grow or disappear just like financial or other kind of 

capital. 

The relational resources essential for trust formation are created by human activity. The organization 

is built upon the people and their talents as well as their knowledge and expertise. Relational capital 

is quite generally defined to consist of the organization’s external relations to interest groups, such as 

customers (Edvinsson & Malone, 1997). However, relational capital is more multidimensional 

implying also intra-organizational interaction and relationships. This view has not been specifically 

emphasized when relation-based intellectual capital is discussed. It is noteworthy that individual 

human capital may also include inherited and personal character traits such as intelligence, flexibility, 

and relatively consistent temperamental characteristics such as openness or introvertedness. These 

factors are relatively permanent. However, they may be important prerequisites for renewing and 

development of HIC, as to potential to build trust. Current research shows the connection between 

trust and organizational performance (McEvily et al., 2003). Dirks and Ferrin (2002) studied the 

impact of trust on how talent, knowledge and expertise are utilized in their full potential in an 

organization. According to their empirical research covering 40 years, trust plays an important role in 

the employee attitudes and behaviour. It is seen in more positive work attitudes as well as in a 

willingness and ability to co-operate. 

Mobility of the work force is phenomenal in the global context. Kong & Thomson (2009) have found 

out that personnel and human capital are not as effectively and easily mobile as has been expected. 

Therefore organizations need other means in their human resource development, in addition to 

recruiting. Mutual trust secures the effective use of know-how and expertise (Reychav & Charkie, 

2010, Häkkinen & Savolainen 2008, Savolainen, 2008). This is an important notion on leadership and 

HRM. The effects of lack or failure in leadership can be even fatal for the organization’s performance. 

There are examples of failed leadership in the studies of crisis companies (Probst & Raisch, 2005). 

239


Too strongly centralized leadership structure can lead to a crisis, and a feeble (vitality lost) 

organization and, as a result, the failure may occur. 

Trust in knowledge sharing in renewing HIC 

As knowledge acquiring, creation, sharing and utilizing are central to the renewal of HIC, trust 

provides a strong potential for stimulating and enhancing these processes to create and renew 

competencies. Trust has similarity to tacit knowledge, as it is very unique personal knowledge and 

know-how embedded in relationships. As important as tacit knowledge is for gaining competitive 

advantages for organizations, it is elusive in nature and, consequently, tends to remain unarticulated; 

It is difficult to understand, observe, acquire and share, and diffuse in the organization. By definition, 

tacit knowledge is shared trough people and is a social process which enables renewal activity. It may 

specifically reveal how trust has been used in an organization as a human ‘talent’ in sharing 

knowledge.The entire idea to studying trust in tacit knowledge sharing is that unless shared tacit 

knowledge is not converted to explicit and cannot be utilized for HIC development. (See case study 

findings later in this paper, Case A). 

In the conceptualization by Nonaka and Takeuchi (1995) explicit knowledge is defined as easily 

identifiable, easy to articulate, detain and share. It is in written forms such as books, reports, etc. Tacit 

knowledge is defined as consisting of intuition, feelings, perceptions and beliefs deeply embedded in 

the ways of thinking, talking, and working, and in relationships. It is thus complicated to articulate and 

express which makes it difficult to convert, transfer and share between people. People need good 

grounds, motives and supporting atmosphere for sharing. Leaders are key supporters. A good 

example of enabling knowledge sharing in people management is trust building in newcomer’s job 

orientation process (Häkkinen & Savolainen 2008). It seems that for the new staff member job 

orientation is an invaluable and unique opportunity for trust building. When the newcomer is 

introduced to positive interaction and sharing of information from the beginning, at best it leads to 

effective learning and socializing. 

3.4 Trust creates vitality and innovativeness in organizations 

Organizations are in need for vitality in order to sustain renewal capacity, innovativeness and 

competitiveness. Vitality is about energy, will, spirit, emotions, activity, influence, collaboration, 

courage and ability to see opportunities and make changes. Vitality is enabled by different resources 

such as social and cultural foundation and heritage of organizations (Savolainen, 2011). Trust 

belongs in these intangible resources. Leaders enable and create (or ruins) vitality (Probst & Raisch, 

2005). 

Trust creates basic vitality and energy that enables revitalization of individuals and organizations, and 

profitable performance. It can be seen in people’s enthusiasm, as well as fully utilizing their different 

skills, abilities and talents. One example is a change process in which people are able to take risks 

while continuously facing the unpredictable. Trust gives birth to vitality and vitality strengthens trust. 

Practically speaking, it means courage and readiness to deal with different opinions and perspectives. 

Conflicts and tension in an atmosphere of trust can also produce positive energy which results in 

active interaction and courage to make a difference (cf. Nurmio & Turkki, 2010). 

If an organization’s vitality is depleted or is not maintained, these “feeble” organizations face 

unfavourable development, and even crisis. The organization’s overload or premature aging can lead 

to its impotence (Probst & Raisch, 2005). This can be a result of overheated growth speed or 

respectively of slowness, in other words, of strong change resistance. It takes creativity and flexibility 

to apply new ideas and decisions. Trusting relationships can empower the organization to success 

just in a time of great uncertainty. When people trust their colleagues, their energy can be focused on 

the core activity instead of games, politics, and control (Savolainen, 2011). 

In summary, trust building gives work places vitality and competitiveness. Continuous change 

requires for leadership to have understanding and new efforts to remove organization cultural 

obstacles from the way of trust-based leadership. The organization will benefit if each party invests in 

trust. Nahapiet & Ghoshal (1998) state that it is in the everyday routine of both where the skills to 

create and share human intellectual capital will be manifested. 

240

4. Case studies 


4.1 Case A: Trust in tacit knowledge sharing for renewing intellectual human capital 

4.1.1 Methodology, data, and the case company 

The case company is from the service sector, a Finnish small construction engineering company. This 

case study examines the role of trust in the sharing of tacit knowledge in a project-based organization. 

Qualitative methodology was selected (Yin, 1994; Eskola and Suoranta, 1998). The key questions are 

as follows: how does tacit knowledge appear (form), how is it shared (methods) and what role does 

trust play in sharing. The case company operates entirely in projects and project groups. The small 

company employs 19 people all focusing on structural design. There are some four project groups 

working in the company at the same time. The combinations of the groups may or may not vary 

between projects which may last from 6 months to over a year. 

4.1.2 Summarizing the key findings 

The results reveal four forms of tacit knowledge as follows: Professional knowledge (sound expertise 

and quality of work); Management of group dynamics (interaction skills and ability to collaborate); 

Management of entities (ability to see the essence and relations between parts); and management of 

knowledge resources and base (recognizing and meeting the need for key knowledge). A uniting 

factor for these four elements is experience and its importance in the evolvement of tacit knowledge. 

The knowledge evolves from experience and becomes evident as sound and fluent practical 

capability. 

The findings show that tacit knowledge is shared by several methods. Six main ways emerge as 

follows: interactive verbal advising, modelling, joint problem-solving, guiding to learn, job enrichment, 

and initiation into the company. In addition, mentoring, work in pairs, tutoring, and sparring may be 

used. E-mail is perceived as a ’hard’ and straight forward form of conveying knowledge yet used in 

sharing electronically. Tacit knowledge is shared in an interactive process between group members. 

Several individual- and organization & management-related factors are discovered that affect the 

sharing of tacit knowledge, as Figure 1. shows. 

Organization & 

Management- 

related factors 

Flat org. structure 

Organizing of 

project groups 

Age structure of 

the personnel 

Physical facilities 

& structures 

SHARING OF 

TACIT 

KNOWLEDGE 

Individual/Grouprelated 

Factors 

Commitment to 

common goals 

Relationships in the 

project group 

Open 

communication 

Initiative 

Figure 1: Trust and the main factors affecting tacit knowledge sharing (adapt. Savolainen, 2008). 

4.1.3 Conclusions and implications 

The findings show that trust facilitates the activity of sharing tacit knowledge in the group. Leaders 

play an important role in this. Sharing is an interactive process. The emerging process pattern is a 

new, interesting finding in the study. In conclusion, the group dynamics and workplace climate seem 

the most critical factors in sharing of tacit knowledge (Figure 1.) They are shown by open 

communication and commitment to common goals, and functioning relationships between group 

241 

R 

O 

L 

E 

O 

F 

T 

R 

U 

S 

T


members. Trust appears e.g., in a frequency of interaction, communication, keeping deals and 

promises, and guidance to learn. Most of the issues and challenges related to tacit knowledge sharing 

about interaction between people and (dys)functional workplace relationships. Trust creates 

openness and freedom and slackens control. Thus, it could be a powerful intangible asset for 

renewal of HIC through cooperation which reinforces good workplace climate and makes knowledge 

sharing more effective. 

The main implication from the case A to managers is that trust between group members is needed for 

stimulation of knowledge sharing and innovative ‘spirit’ in order to develop intellectual capital. Leaders 

should especially pay attention to developing and maintaining trusting relationships between and 

within groups to assure knowledge sharing. Leaders social and communication competencies should 

be developed as well. In daily practices, leaders should communicate informally and they need to be 

aware how they could show trustworthiness by small daily deeds. 

4.2 Case B: Trust in co-creation with customers 

4.2.1 Methodology, data, and the case companies 

The case is from the service sector, a Spanish airline company. This case examines the role of trust 

in knowledge sharing by stakeholders for co-creation, specifically customer co-creation. As in Case A, 

qualitative methodology was applied (Yin, 1994; Eskola and Suoranta, 1998), based on interviews of 

several directors and analysis of information from company’s web page, other internet material, and 

from personal attendance to conferences where company presented the co-creation program. 

The company was set up in 1986 and it was for years the second major airline in Spain, with over 40 

aircrafts and 1800 employees (López-Fresno & Fernández-González, 2002). Since the beginning, it 

was characterized by its vitality, grounded in employee’s strong motivation, commitment and 

experience in the airline sector, prepared to successfully face new opportunities with a spirit of 

collaboration. As of 2001, vitality started to decrease when the airline sector faced the global 

economical crisis. Company was downsized by new CEO in aircrafts and employees without a proper 

communication strategy. Motivation and commitment, and collaboration decreased. In 2009 the 

company was sold and top management was renewed almost entirely. Many employees were fired. 

The new owners intended to renovate the image of the company (new logo, headquarters, and 

values). Among several projects the new management team initiated open innovation with the 

implication of customers (co-creation). It was designed to increase loyalty; enrich improvement and 

innovation ideas with the implication of customers (Chesbrough, 2009, Ferràs, 2010). Giving the tight 

competition- the aim was to increase corporate visibility and reputation and a way to recover some 

internal vitality in terms of employee motivation, commitment, collaboration, and, as a result, to 

increase efficiency and productivity. Co-creation was inserted in the company’s web page. The 

program was based on the principles of: dialogue, transparency, innovation, involvement, 

sustainability and responsibility (Goula, 2009; La Vanguardia, 2010). 

4.2.2 Summarizing the key findings 

The results reveal several factors in reinforcing trust between customer-organization for 

innovativeness and vitality in organizations as follows: 

Commitment to common goals, that include top management commitment, as one of the prime 

prerequisites for successful implementation of any project with strong management implications, as 

they must provide the appropriate leadership in demonstrating its commitment to the vision and 

mission, willing to embrace change, and must provide the resources necessary to implement the 

project (Laszlo, 1999), and also commitment from all employees. In summary, commitment derived 

from leadership by trust. 

Strategy definition and deployment through goals, resourced with clear allocation of responsibilities 

and processes simple and user-friendly; An attempt to customer loyalty is useless if well-focused 

customer service policy is missing. 

Open and transparent communication, as a multidirectional dialogue between stakeholders and 

organization. 

242


Continuity and coherence with the image the company wants to transmit, considering all channels and 

every ‘moment of truth’ with every stakeholder. 

The findings show that trust reinforces and facilitates involvement of customers and other 

stakeholders in sharing knowledge. This increases co-operation which is an antecedent for cocreation 

and innovativeness and leads to improvement of business competitiveness and vitality. 

Customers deserve trustworthy care. In highly competitive environments, no one company can afford 

to ignore that today. 

4.2.3 Conclusions 

In conclusion, it is important to understand that trust is combined of rational, affective or emotional 

elements; It is seen as a foundation for co-creation, and a key for innovation. Trust as intangible asset 

and skill is an opportunity to create and reinforce loyal relationships. As to management commitment, 

transparency, shared goals, clear strategy and its deployment are the basic requirements to build 

trust. They will lead to sharing knowledge and foster innovativeness. A certain degree of homogeneity 

in service quality in each customer or other stakeholder interactions (moments of truth) will be 

assured, accordingly. 

4.3 Summary and managerial implications of the case studies 

The findings show the ways of how trust supports innovativeness and vitality (well springs of renewal) 

in organizations. Trust plays an important role in intra-organizational relationships in developing and 

utilizing human intellectual resources, and renewing competences and expertise. Trustworthy leaders 

play an important role in trust building which means in essence sharing knowledge openly and on the 

right time. In tacit knowledge sharing the findings show that trust between group members plays a 

main role in the engineering company. Group dynamics and functioning relationships between 

individuals facilitates the sharing of knowledge (Case A). The functioning relationships are extremely 

important because tacit knowledge is based on the individual’s professional experience and is 

complicated to transform into explicit and share. Moreover, trustful workplace climate characterized by 

open communication seems to be a critical organizational level factor affecting the sharing of tacit 

knowledge. 

The case study findings imply for leaders that openness, and transparency of information is important 

for developing intellectual human capital (Case B). Further, essential for HRM and leadership by trust 

is to enable, develop, and maintain work environments that nurture innovativeness. Open culture and 

trustful climate support functioning relationships and strengthen trust. The practical implication for 

group leaders is to understand how important it is to develop communication skills and sustain group 

relationships. In daily leadership work, it is the small deeds that make a difference in leading with trust 

- not the great promises! Finally, concluding by Hamel (2007, 97) ”if the organization wants members 

to trust each other in all issues at the workplace nothing should be kept secret.” 

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244

The Academic Institution Quality and Managerial Capability 

Valuation of University Management 

Jana Stefankova 1, 2 , Jan Porvaznik 1 and Oliver Moravcik 2 

1 Tomas Bata University in Zlin, Faculty of Management and Economics, 

Department of Management and Marketing, Zlin, Czech Republic 

2 Slovak University of Technology, Bratislava, Faculty of Materials Science and 

Technology in Trnava, Trnava, Slovakia 

jana.stefankova@stuba.sk 

porvaznik@fame.utb.cz 

oliver.moravcik@stuba.sk 

Abstract: International and national ratings of university institutions are now beginning to play a crucial role in the 

assessment and valuation of the quality of education and its research facilities. The authors give respect to the 

quality of universities and the quality of their management, and suggest different approaches to the selection of 

senior managers of universities in different parts of the world. The question arose of how managers are needed 

today and what general competences they have in general, relating to science, with an emphasis on their 

personal characteristics. Detailed discussions have taken place regarding the capability valuation of managers – 

based on their knowledge IQ, practical skills AQ and social intelligence SQ. They highlight their importance and 

also why social intelligence comes to the fore. Based on their knowledge to look inside the academic community, 

they criticize the current methods of selecting university managers which are based on the necessary changes 

regarding this. They point to somewhere partial or to a strong academic isolated area from the pragmatic 

business environment - this is especially so when as an opinion of the conservative view of "old colleagues" that 

are in managerial positions and are more plentiful in numbers than younger academics and authors who have 

re-considered the need to change their current thinking and attitudes. This article also ensures that specialized 

centres make a good choice, or if there are any other ways of finding quality managers in the university 

environment. Ways and means for selecting officials in the academic environment and what can be considered 

as a good choice or chosen strategy for selection are dealt with here. A correctly chosen strategy of choice 

regarding the fundamental objective is needed, which is similar to the example of industrial companies, that is to 

say – to increase the performance of university institutions, in other words, an increase in international and 

national ratings. 

Keywords: managerial capability, valuation, quality, skills, university management 


„Strong universities for Europe“ 

(EUA) 

Quality of tertiary institutions is a key term of the European and national importance in terms of 

assuring higher education. The processes of quality assurance are a frequently discussed topic. 

Universities together with the politicians and governments are looking for the new ways and strategies 

to increase the level of university education, to sustain its quality and improve its efficiency. 

Similarly to other technologically advanced fields, such as IT, new materials, etc., the education and 

research institutions contribute significantly to the country wealth. Knowledge-based society actively 

and pointedly invests into the personal potential development of each individual, thus developing its 

innovation capacity via the endorsement of educational and research activities. Therefore, the 

universities and institutions providing education are of the key interest of politicians and countries, as 

they assist in the transformation of an industrial society to a knowledge-based one. 

Though the field of education falls under the competency of the European Union (EU) member states 

governments, the disposes numerous tools for supporting the programmes of modernisation, e.g. the 

establishment of a system of quality assurance in the EU universities or providing information on the 

most suitable university for a given study programme anywhere in Europe. Important strategic 

documents are oriented particularly on this field of the society, e.g. the agenda published in 

September 2011 by the European Commission: “Supporting growth and jobs - an agenda for the 

modernisation of Europe´s higher education systems”. The new strategy for modernisation of higher 

education introduces the reforms enabling the EU member states to provide a sufficient number of 

graduates, contributing thus to innovation, social-economic growth and employment increase. 

245

Jana Stefankova, Jan Porvaznik and Oliver Moravcik 

Selected goals of the aforementioned extensive reform are to: 

increase graduate numbers to 40 % of the overall number of young generation by 2020, 

allow young people from different social groups to accomplish university study, as well as to 

reduce the number of the students dropping out of university for various reasons, 

improve the quality and relevance of university subjects reflecting the needs of individuals and 

labour markets, 

stimulate and valuate the quality in education and research, 

support the gaining of additional experience through study or training abroad, 

educate new researchers so that Europe can face future challenges, 

enhance the links of education, research and entrepreneurship, 

Ensure effectiveness and practicality of funding the education (EC, 2011). 

Besides the EU commissions, many other European, international and national organizations monitor 

and support the quality of universities. Below is the list of selected institutions and their brief 

characteristics: 

European Association for Quality Assurance in Higher Education (ENQA) – European network for 

ensuring quality in higher education. The mission of ENQA is to contribute significantly to the 

sustainability and improvement of the European university education and to act as a main power for 

quality development in all the Bologna Declaration signatory states. ENQA thus contributes to 

achieving the abovementioned goal, particularly by supporting the European co-operation in the field 

of quality assurance (QA) and in higher education aimed at developing and sharing verified QA 

approaches while strengthening the European quality. 

Being authorised by the signatory states of the Bologna Declaration, ENQA members in cooperation 

with EUA, EURASHE and ESIB constituted a collection of standards, procedures and regulations in 

February 2005 of quality assurance, and looked for the ways how to ensure the system of peerreviewing 

for quality assurance and/or accreditation agencies. 

European University Association (EUA) – is a representative organization of the European universities 

and national rector conferences. It was established on 31 March 2011 by merging the Association of 

European Universities (former CRE) with the Confederation of the EU Rector Conferences. EUA is 

aimed at supporting the development of the transparent European higher education and research 

system. To achieve the goal, EUA provides active support and consultancy to its members 

(autonomous institutions) in improving their education, study and research, thus enhancing their 

social contribution. EUA is building strong universities for Europe through the programme of activities 

aimed at supporting their development. 

European Society for Engineering Education (SEFI) – is the largest network of educational institutions 

and pedagogues in Europe. SEFI is the European forum for its members, institutions of higher 

engineering education, academics, teachers, students, stakeholders and societies in 47 countries. 

SEFI aims at contributing to the development and improvement of engineering education in Europe, 

while strengthening the status of engineers in the society, providing the services for SEFI members 

and information support for engineering education, as well as improving the teachers, researchers 

and students’ communication and knowledge exchange. 

Selected national agencies: 

QAA (The Quality Assurance Agency for Higher Education). QAA’ mission is to safeguard standards 

and improve the quality of the UK higher education. 

TEQSA (The Tertiary Education Quality and Standards Agency) is Australia’s regulatory and quality 

agency for higher education. TEQSA’s primary aim is to ensure that students receive a high quality 

education at any Australian higher education provider. 

Capacity and impact of higher education institutions and importance of their influence on the society’s 

development and progress is unambiguous and indisputable. Education today is being seen as a 

marketable commodity, which can be imported and exported. The quality of education is important 

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measure of productivity and prosperity of a nation. Social, political and economic changes and 

reforms are possible only through education (Ghaffari et al,2012:1787). 

Regarding this, every new and progressive element, every new approach positively influencing the 

higher education quality must be processed, researched and subsequently applied. 

One of the new trends and new research fields, quite unknown in the Slovak Republic so far, is the 

issue of assessing the managerial prerequisites of managers in higher education institutions. This 

means effecting the quality of institution via influencing the selection and quality of managerial 

positions in the universities. 

In the current conditions of developing the knowledge society, the issue of human resources (and 

their quality in particular) is of key interest not only for economy but for all sectors of society 

(politicians, education, tertiary sector, etc.). 

2. Knowledge society and human resources 

Knowledge society is characterized by the processes in both economics and educational and 

research institutions, where the productivity and knowledge transfer play the major role in building 

prosperity, economic growth and employability. Knowledge management will be the focus for 

harnessing individual talent and building competence. People with knowledge and competence will 

holde the power to shape the future. In fact it is a fundamental challenge for human resource leaders 

to identify and nurture talent. Leaders must accord top priority to management and development of 

talent at all levels (Ghaffari et al, 2012). 

In the field of human resources, knowledge society emphasises: 

Education and overall cultivation of intellect 

Different perception of a human capital – a man is no longer a part of a homogenous workforce; 

his individuality is desirable 

Purposeful investments in the personality potential development of an individual 

Effort for higher quality in education (modification of curricula and syllabi, increased pressure on 

quality of higher education) 

And therefore, 

Universities and higher education institutions are of key interest; 

By 2020, higher education will be required for 35 % of work positions in EU (according to the EU 

document of 2011, 26 % of population has university education) . 

Professor Milan Zelený stated: “The knowledge society represents one of the deepest transformations 

in the history of mankind. Knowledge and skills have replaced manual work, money and information, 

and have become the primary and most important forms of assets; knowledge-based processes form 

the basis of global competitiveness… knowledge has become the basic article of the most successful 

economies.“ 

3. Holistic managerial competence of management subjects and competence 

pillars 

Unlike the former managerial approaches to management entities (owner, student, employee and 

teacher), the wholesome approach rests upon three basic management pillars: professional (expert) 

knowledge, practical skills and social maturity as an expression of individual personality features. 

The real potential of an organization (company, corporation, university) is currently perceived rather 

through its employees and their qualifications than through its assets. The power of an institution is 

represented by both, its managers (in private higher educational institutions also by owners) and all 

employees. 

Holistic management should define what qualifications and competence is required for management 

entities. It points out at the necessity of complementing the expertise and application skills of 

managers and all management entities by personality features. A person may be a recognised expert 

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with excellent application skills, while acting unfairly, being egoistic and self-centred, breaking ethics, 

or possessing temper features interfering effective communication. 

The wholesome approach to managerial qualifications aims at determining the necessary dispositions 

of an individual for a specific position when working both individually and in a team. 

What is required is a careful yet strong, consistent, coherent and realistic approach that wins over 

employees´ hearts and minds. Good manager must be able to handle and read emotions, they need 

to know, how to draw the poison out of negative emotions and transform them into positive ones 

(Berner, 2004:138). 

Capability or competence is understood as the readiness of the management subject to control and 

manage their own work and the work of others so that it results in a real added-value rate. 

Prerequisites of the holistic managerial competence (CQ): 

level of social maturity SQ 

level of professional management skills IQ 

level of practical experience and ability to use knowledge in everyday life AQ 

Capability (competence) of each manager (and thus each worker managing his/her own work and 

personal life) is determined by the level of knowledge, intelligence (IQ), application skills (AQ), 

personality traits and his social maturity (SQ) (Porvazník, 2011: 26). 

The discrimination and structure of the competence pillars can be expressed by the following model: 

Professional Efficiency 

•knowledge of the management object 

•knowledge of the functions of 

management 

•knowledge of informations for 

management purposes 

•knowledge of the management system 

Social Maturity 

•character and wills qualities 

•perception and creative qualities 

•qualities of temperament and emotions 

•somatic (physical and spiritual) qualities 

Practical Skills 

•skills of communication 

•skills of motivation 

•skills of working in a team and 

leading a team 

•skills of self-management and timemanagement 

Figure 1: Model of discrimination (structure) of competence pillars (Porvaznik, 2012) 

The basic idea of a holistic approach to the management entities/subjects is a holistic view of a 

person (employee, manager, student etc.) as a complex consisting of individual elements. When 

balanced in harmony and synergy, these elements can form a complex positive whole. 

4. Practice in enterprises versus practice in academic institutions in Slovakia 

The need for capacity valuation of management subjects has been accepted as a key element in 

managerial practice in the Slovak institutions. Owing to the changes in the access to education in our 

society, there has been a relatively high number of qualified potential applicants, good at foreign 

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languages and work with software, seeking for job positions in our academic institutions. It is therefore 

necessary to find and promote other possible distinguished features of the candidates for managerial 

positions in particular, so that the chosen candidates positively contribute to the good results and 

performance of institutions. The target areas and processes, where the valuation is necessary and 

desirable, are as follows: 

selection of managerial and other professional positions in the organization 

career promotion - particularly for managerial positions 

comparison of the assumptions and performance evaluation 

qualifications growth - increasing the levels of competence, curriculum development 

determination of the order and comparability (e.g. staff remuneration, dismissal) 

Currently, there are institutions (e.g. assessment centres) that, in addition to the specific valuation of 

potential to hold managerial or professional positions, provide also further training for workers, e.g. in 

communication skills, coping with stress, etc. 

According to some authors, the investment into education returns in a two to three-fold rate (Medveď, 

Nemec, 2004:27). The tradition of assessing managerial skills is known mainly from the American, 

eventually British environment. In Slovakia and neighbouring Central European countries, such 

research is either just in the beginning or it is still the domain of small groups of scientists. 

The methods used in the area concerned markedly depend on the process, in which they are 

deployed, i.e. some are used for selection of work positions and others for the assessment of career 

advancement. In terms of scientific approach, we distinguish the intuitive methods (method of first 

impression, method of observation, interview, method of 360 º valuation), heuristic methods (methods 

of questionnaire and scoring) and experimental ones (standardized tests and valuation software) 

(Porvaznik, 2011:68, 69). 

4.1 Practice in enterprises 

Evaluation of the organization based on measurable tangible assets and expressed in a quantitative 

way has a long time tradition. However, the management of knowledge-based organizations has 

realized that the development and accumulation of tangible assets depend in considerable extent of 

the intangible (so called knowledge) assets, which inevitably include competence (capability) of 

workers. Both tangible and intangible assets should be assessed. When valuating the managerial 

skills, i.e. capabilities of management entities, problem is the measurement of the capabilities of 

individual subjects, since such measurement and evaluation are largely subjective and depend on the 

personality of evaluators. It should be explicitly said that the competence of workers in the 

knowledge-based organizations is becoming a key factor of their development. 

A company heading towards productivity and performance must focus on highly-competent, motivated 

and proactive employees. The management must therefore choose high quality personalities for key 

positions, direct them from the beginning, then deploy them optimally in the enterprise (according to 

their personal profile) and, as far as managerial positions are concerned, evaluate their leadership 

potential. Finally, the management must know the internal climate in the company and its impact on 

the employees’ performance in order to determine the performance of employees and their interaction 

with customers. 

The enterprises where management understands the importance and relevance of the proper 

selection of personnel frequently involve (in addition to their personnel departments) professional 

agencies and development career centres into the process of assessment. The latter provide 

comprehensive services of assessing personal potential of the candidates for recruitment, placement, 

career development and building a "reservoir" of managerial talents. 

Such agencies (assessment centres, consulting companies) started emerging in the Central Europe 

after the year 1989 as the centres where the candidates, especially those for the top positions, 

underwent rigorous testing, including the modelling of crises (Dolejš, 2011:24). Currently, these 

agencies also declare the capability of diagnosing the areas of the development plan for selected 

employees. The valuation is to provide the company management or a direct superior with an 

impartial and unbiased view of the potential personal development of the employee evaluated. 

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Many companies in the developed countries with a long tradition of utilising the consulting firms in this 

area focus on the personal qualities such as energy, ability to lead colleagues, communication skills 

etc. According to Profit Magazine, Ward Howell consulting company recommends three criteria to 

measure the performance of managers: the actual performance for the benefit of the company, the 

desirable performance defined by the requirements for individual workers, and the age of managers 

(Évaluating the effectiveness of personality of a manager´, 1999:55). The specific performance 

characteristics comprise e.g. the level of expertise, labour discipline, adaptability to change, ability to 

cope with mental workload, level of organizational characteristics, level of cooperation, access to 

people etc. The other criteria concern personality profile (moral profile, structure and level of intellect, 

sense of responsibility, etc.). 

To get the most out of both our emotional and our rational sides, we need managers who are 

genuine, honest, credible, inspiring, professional, wise, open, willing to learn, pragmatic, 

entrepreneurial, empathetic, mature, communicative, authoritative, resilient, experienced and 

honourable and who thus set an example of what they expect from others (Berner, 2004:139) 

The issue is aptly characterized by (Motejzíková, 2004:2): “The proposed candidates are not suitable 

for us. We want someone with a “character”. This is what the representatives of consulting 

companies specialising in recruitment of new employees and managers frequently hear from the 

companies looking for new staff. Nowadays, character of candidates seems to be more important for 

some western companies than ever before. There is a demand for the high quality personalities 

disposing with a character, high IQ and SQ. This was confirmed by the survey carried out by the 

Wirtschaftswoche Journal covering 250 personnel managers. The survey proved that character 

outshines professional competence, length of study and exam results." 

Of course the use of assessment services or counselling centres is not an exclusive and the only real 

way to choose the quality; however, it can help the organisation get a quality and competent 

candidate/employee. Although the methods for assessing managers often vary, a company can 

hardly implement an effective personnel policy and achieve better results without an objective 

evaluation and determination of its strengths and weaknesses. 

4.2 Practice in universities 

In Slovakia there is currently a framework for filling the key positions at higher education institutions in 

a legislative way (for illustration, only the level of the university/rector is concerned, but analogical 

methods can be applied to filling the positions at the faculty) governed by the Act No. 131/2002 of 

Coll. on Tertiary Education Institutions and on Modification and Amendment of Other Acts as 

amended (“Act”), which explicitly defines the four institutes of academic self-government: University 

Academic Senate, Rector, University Scientific Board and Student Disciplinary Commission. Direct 

election takes place only in the case of electing the members of the University Academic Senate. 

Rector is elected by the Academic Senate. University Scientific Board is constituted in the process of 

nominal secret approval of the Academic Senate. Rector is authorised to propose the members of 

expert commissions (i.e. his advisory bodies) based on the law, internal regulations of institution or his 

personal account ("ad hoc"). Rector nominates the candidates in accordance with the law and other 

documents. In some cases, the Academic Senate approves the nominations, in other cases, it 

approves or acknowledges them. (Note: Academic Senate is a body of the academic self-government 

of universities/faculties; consists of elected members of the academic community, teachers 2/3, and 

students 1/3). Managerial posts at the tertiary education institution are clearly defined by the law and 

are filled in a public tender/selection procedure. 

One of the weaknesses of the current University Act is the distribution of powers between the Rector 

and the University Academic Senate (Dean and the Faculty Academic Senate). When approving the 

original or modified proposals of Rector, the Senate is exempt from any liability for the approved 

changes, while the responsibility rests with the Rector. This can have unfavourable consequences, 

e.g. in approving the university budget or the rector's nominations for the positions of managers. The 

role of the Faculty Senate, at least in some academic circles, is even considered obsolete; having 

been effective and necessary in the revolutionary years 1989-1990, it is currently considered 

counterproductive owing to the legislation gaps. 

Academic community has adopted a reserved attitude to using the advanced methods for assessing 

managerial competence. As far as we know, the existing Slovak tertiary education institutions do not, 

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as already commonly done in business, involve professional assessment centres into filling the key 

positions. Instead, they focus mostly on traditional measurable indicators, such as the achievements 

in professional area and experience, thus limiting the selection criteria and the methods of selection. 

Moreover, the “valuation” is markedly influenced by the element of subjectivity: how far a member of 

the selection committee or a senator knows the candidate, whether they know each other on personal 

or professional terms, and how the candidate is generally perceived. Modern scientific theories of 

holistic assessment of overall managerial competency rest on three pillars (general and professional 

expertise, personal and social maturity, and practical and application skills)- these are not however 

the criteria for the selection committees, Academic Senates and HR departments of tertiary education 

institutions. 

Results of the international rating and ranking (just one Slovak university has appeared in the first 

group of 500 ones) prove that the optimum methods of filling the key positions for the top 

management of universities in Slovakia are hardly ever used. The charts should serve as a tool 

assuring the provision of quality and striving to provide a comparative look at the quality of tertiary 

education institutions. 

Here are the definitions of two basic concepts in the subject area according to the Glossary of the 

Slovak Academic Ranking and Rating Agency ARRA (ARRA, 2011): 

Rating - an independent assessment of various entities, classifying them into several categories, and 

thus allowing an approximate comparison, or ranking. 

Ranking - the relationship of the observed objects, where an object is “rated above”, “rated below” or 

“equally valued” as the other objects. In other words, ranking means to determine an order. 

Within the context of the current legislation, the election of senior officials of the tertiary education 

institutions by the Academic Senates appears to be rather counterproductive, as it cannot guarantee 

the choice of the best candidates. To contribute to the acceleration of education, the election of 

university leaders (rectors/deans) should be inspired by the Anglo-Saxon practice, since it is mostly 

the model of education that we have adopted. However, if considering a strongly conservative 

university environment in Slovakia and some other countries, the desirable legislative procedure is 

quite disputable; it would require a system change that, at first sight, might appear as ruining the 

academic freedom. 

We can state that our colleges and universities can be lead by outstanding scientists, experts in 

corresponding fields and perfect teachers; however, majority of them are amateurs with no or very 

limited experience and qualifications in the field of management, though most of their decision– 

making concerns planning and financial management in particular. Integral personality of a top 

university manager is not investigated. When filling managerial positions in the entrepreneurial 

practice, commonly applied is the total assessment of a candidate and his/her suitability for the 

position, including his/her social intelligence. A set of other features, such as the level and structure of 

intellect, moral profile, basic life philosophy, aspirations, sense of responsibility, basic human 

temperament, problem-solving ability etc. should contribute to the complex personality profile. 

The actual application of the valuation model requires the determination of the criteria to be met in 

three fields: a/professional managerial knowledge (knowledge of system theory, knowledge of the 

object to be managed, knowledge of the management functions and knowledge of information), b/ 

social maturity (character and will power, cognitive and creative features, behavioural and emotional 

characteristics, physical and mental qualities) and c/ application skills (application skills related to 

communication, self-control, motivation and teamwork ability). 

Porvazník, Frecka and Skorková (2012:11) have emphasized so-called “hard skills and goals”. The 

current chase for the biggest possible profit might be the cause of the today’s difficult financial and 

economic situation. Yet, it is rather due to the crisis of values and morals than a financial crisis. We 

should therefore focus on the personal wisdom, character and moral values. Integrating wholesome 

approach, the modern management is looking for new solutions. In order to overcome the difficult 

period of the lack of confidence and morale, we have to educate and shape the future generation in 

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the society where these values are firmly rooted. This concerns also the education of young 

managers and the application of holistic principles in their training. 

The involvement of professional agencies is definitely not the only way of applying the progressive 

methods used to assess the managerial potential of human resources in the academic environment. 

Regarding the specific features of the environment, we would recommend the application of modern 

methods for the tenders defined by the internal legislation of the tertiary education institutions, with 

clearly set up procedures and methods of selection. Co-operation with professional agencies and 

experts/scientists dealing with the holistic competence of managers seems to be the optimum way for 

elaborating a set of rules and procedures for the process of selection. It may be also useful to learn 

from the best practice of the universities in the countries with some experience in the holistic 

assessment of capabilities, where modern procedures of the selection of managers for the academic 

institutions are at least partially applied. 

5. Conclusion 

General aim of the European Union countries is the application of the principle of excellence by 

providing the optimum and effective conditions, improving the management systems including the 

implementations of quality management systems, and providing the conditions for the enhancement 

of the excellent human potential, so that to attract the high-quality researchers and experts from 

practice to schools (Markulik, Sinay and Zajac, 2009). The latest EUA Annual Conference 2011 held 

in March 2011 appointed Anne Glover, the Chief Scientific Adviser to the European Commission, who 

underlined the need for universities to engage with the public by acting as a hub within the society. 

She also challenged the universities to look after their human assets and to communicate the results 

of their research to the public better. 

Human resources are currently under-evaluated; such attitude might subsequently influence all the 

aspects and parameters of an institution. Selection of staff is an integral part of the human resources 

management. Each employee disposes a certain personal potential, qualifications and capacity, 

which is very individual and specific, expressing his/her working competence. Simultaneously, each 

position represents a specific set of requirements. Job assignment of an employee is appropriate if 

there is consistency between the requirements of the profession and the assumptions and 

qualifications of the individual. 

In the Knowledge society, overall ability of employees is becoming a decisive factor contributing to the 

knowledge assets of institution. Such attitude is not wide-spread in Slovakia so far, yet it is becoming 

topical, particularly regarding the fields of quality, higher efficiency and improvement of human 

potential, i.e. the search for the methods that might help in assessing and selecting competent 

employees. This concerns managers in particular, as they may markedly influence their teams, 

management bodies and organisation development. There is a search for the methods that would 

help achieve the excellence of tertiary institutions. 

An important objective of the article is to compare the method of selecting the chosen part of 

employees in the strong academic and isolated area within the pragmatic business environment - to 

attempt to take the "best practice" of the modern and progressive from two different environments 

which are strictly the business sector. It is necessary to grasp every opportunity for improving the 

level and quality of the academic institution. Valuation of holistic managerial competence is at the 

same time, according to experts dealing with these issues, one of the "cures" for the current economic 

problems. These modern methods of human resources in academic institutions must have the same 

goal, as in the business environment- (i.e.) to primarily affect the performance of an institution across 

the full range of its parameters, as will the secondary reflect in the increase of the international credit 

rating and then of course afterwards by influencing the whole economy. The basic product of the 

academic environment (students) and consequently employees in all areas of life and society as a 

main source of the labor market that have direct access to economic life, which they affect by their 

quality. 

The outcome of the EUA conference in April 2011, Aarhus declaration 2011 “Investing Today in 

Talent Tomorrow” claims: “Universities - crucial for the future of Europe, Universities - motors for 

economic recovery, Universities - central to the success of the EU2020 agenda...” José Manuel 

Barroso, President of the European Commission stated that universities have a key role to play in 

helping Europe exit the financial crisis (EUA, 2011). 

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The present contribution sketches one of the many ways of affecting positively the quality of academic 

institution via influencing the human potential and the management of institution in particular. The 

basic aim is clear- to overall performance of the academic institution. We discussed the personal 

qualities of managers, which are the concern of the vision of Ian Person, a British futurologist, so far 

in the level of science fiction: 

“... while machines/robots will take over manual work, the super-intelligent computers will take 

over intellectual work, and we, human beings, will have to concentrate on what is genuinely 

humane” . 

“Information economics will be replaced by so called “care economics” where the value will be 

neither information nor intellect, but a human emotion.” (Bella, 2005) 

A sci-fi or...? 

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253

Measuring Human Centered-Asset as the Main Element of 

Intellectual Capital a Consulting Firm 

Ali Tajdari and Nasim Ghanbar tehrani 

Moshanir Power Engineering Consultant (MPEC), Industrial Management 

Institute (IMI), Tehran, Iran 

Ali.Tajdari@Gmail.com 

Nasim.Tehrani@Gmail.com 

Abstract: Intellectual Capital has been the center of attention in the past 3 decades. In the knowledge economy, 

having intellectual capital is considered to help companies create more value. Many models and frameworks are 

presented to assess and measure the intellectual capital, but evidence shows there are many deficiencies in the 

models applying to the practical cases. In the current article, researchers develop a practical procedure to apply 

the Technology Broker model to measure the Human aspect of the Intellectual Capital of a consulting firm. 

Authors discuss the effects of IC on value creation in a scorecard model and focus on the human element as the 

main effective part of IC in the current case. 

Keywords: intellectual capital, technology broker model, human centered-asset, knowledge measurement, 

knowledge management, consulting firm 


Enterprise assets are consisted of Tangible assets and Intellectual Capital. Tangible and physical 

assets have been the center of focus for many years. Knowledge economy has derived organizations 

to pay attention to the intangibles (Brooking, 1996). 

Many service companies, especially project-based companies are mostly relied on their capable 

employees, their project management procedures and their technical expertise, which are named 

intellectual capital. The nature of project-based work, means that there are special due dates to 

reach, and after that the team should be decomposed and every member is going to join to another 

team and focus on different project. They obviously need human-centered assets to operate, which is 

rare and expensive commodity (Brooking, 1996). 

There have been many frameworks to evaluate and manage this kind of assets; this article tries to 

address this issue by focusing on a consulting firm as the case study. The deliverables of a sample 

project are identifies as the firm’s competencies, which are important for the client, and guarantee the 

income from the client. In the second step, these competencies are related to the aspects of 

intellectual capital, and the underlying processes of the project. 

This article starts by Literature Review, which briefly covers some of the most well-known IC models, 

including the Brooking’s model which is the focus of this study. The next section of this article 

provides the framework and data gathering methodology, which is implemented in the case study. 

The next session includes more details about the case study and highlights the empirical points of 

framework. The last session includes the conclusion and the further research proposed by authors. 

2. Literature review 

In this section intellectual capital models and IC management methods are briefly reviewed, and more 

closely Technology Broker method which is developed by Annie Brooking (1997). The aim of this part 

is to provide a profound theoretical background for the proposed framework. 

2.1 Intellectual capital and IC management 

Stewart (1997) as cited in Bontis (2000) defined defines intellectual capital as intellectual material – 

knowledge, information, intellectual property and experience which can be put to use to create wealth. 

Brooking (1996) believed that IC is the term given to the combined intangible assets which enable the 

company to function. 

Companies such as Intel, Merck, GTE, Microsoft, Wal-Mart, and Disney are all worth far more than 

the book value of their respective tangible assets, thus recognizing the undocumented contributions of 

their IC (Ross 1998 cited in Carrel, 2007). 

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Stam (2006) believes that these disagreements do not mean that their definitions are excludable. 

Despite the differences, many agreements have been seen about the nature of intellectual capital: 

Intellectual capital is about exploiting intangibles. Moreover, intellectual capital is about human-, and 

non-human resources. 

2.2 IC models 

Regarding to abound number of IC models, some of the well-known models are introduced, such as 

Skandia navigator, IAM, and ICI. 

2.2.1 Intangible assets monitor (IAM) 

In order to help organizations explain and justify the difference between market and book value, 

Sveiby (97) developed the Intangible Assets Monitor (BSC category). Within this monitor he makes a 

distinction between three different kinds of intangibles: 

Individuals Competence involves the capacity to act in a wide variety of situations to create both 

tangible and intangible assets. 

Internal Structure includes patents, concepts, models, and computer and administrative systems. 

External Structure includes relationships with customers and suppliers. 

For stress the importance of several universal attributes of an organization he added three different 

kinds of perspectives with (growth and renewal, efficiency, and stability) which the different kinds of 

intangibles could be analyzed. 

2.2.2 Skandia navigator 

Leif Edvinsson developed a dynamic and holistic IC reporting model called the Navigator (BSC 

category) with five areas of focus: financial, customer, process, renewal and development, and human 

capital (Bontis, 2000). 

Human Capital. The combined knowledge, skill, innovativeness, and ability of the company’s 

individual employees to meet the task at hand. Human capital cannot be owned by the company. 

Structural Capital. The hardware, software, databases, organizational structure, patents, 

trademarks, and everything else of organizational capability that supports those employees’ 

productivity – in a word, everything left at the office when the employees go home. Structural 

capital also includes customer capital, the relationships developed with key customers (Stam, 

2006). 

2.2.3 Intellectual capital index (ICI) 

IC-Index (BSC category) is an example of second generation practices that attempt to consolidate all 

the different individual indicators into a single index, and to correlate the changes in intellectual capital 

with changes in the market (Roos and Ross, 97; Bontis, 2000). 

The IC-Index approach is based on an IC distinction tree which splits IC into human capital and 

structural capital, separating “thinking” and “non-thinking” knowledge assets. Human capital is further 

split into competence, attitude, and intellectual agility. While Structural capital is seen as an 

aggregation of relationship, organizational capital, and the renewal and development value (Marr, 

Schiuma and Neely, 2004; Roos, Pike and Fernstrom, 2006). 

2.3 Technology broker 

Brooking (1996; 2010) defined IC as the combination of these components: market assets, intellectual 

property assets, human-centered assets, and infrastructure assets. 

Market assets are the potential an organization has due to market-related intangibles such as brands, 

customers and their loyalty, repeat business, backlog, distribution channels, contracts and 

agreements such as licensing and franchises. 

Intellectual property (IP) assets include know-how, trade secrets, copyright, patent and various design 

rights, trade and service marks. 

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Human-centered assets comprise the collective expertise, creative and problem-solving capability, 

and leadership, entrepreneurial and managerial skills embodied by employees of the organization. 

They also include psychometric data and indicators on how individuals may perform in given situation, 

such as in a team or under stress. 

Infrastructure assets are those technologies, methodologies, and processes which enable the 

organization to function such as corporate culture, methodologies for assessing risk. 

Figure 1: IC management process (Brooking, 1996, p. 131) 

2.3.1 Intellectual capital management (ICM) 

Brooking (1996) provide process for Intellectual capital management (ICM) that start with indentifying, 

indexing IC and continue by develop, manage, and acquisition of new ICs. This process is comprised 

of seven activities, which is depicted in Figure 1. 

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After identify and measure component of IC, Brooking offers three methods to calculate the dollar 

value for the IC: The cost approach, the market approach and the income approach (Bontis, 2000). 

2.4 The “right” model 

Dalkir (2005) expressed that Knowledge Measurement is one of least developed areas in KM. 

Intellectual Capital Models serve a huge part in Knowledge measurement methods. They are also a 

great opportunity for the consulting firms to make money by measuring IC of their client. Not 

surprisingly, there are a few full-descriptions in the literature. 

In this research, Technology Broker IC audit was chosen, mainly because of its availability with 

details. 

It also allows identifying the assets and subsequently the aspects. It means that the researcher could 

define the relevant indicators according to the case and requirements. 

The importance of human assets, in consulting firms which is described in section 4 is another reason 

to utilize Technology Broker audit process. 

Another point is the validity of Technology Broker model (different cases since it’s developed) and the 

dynamics of the theory (the authors still works on it and improve it). 

By using Technology Broker model, as a result of measuring process which is described in section 3, 

a big picture of the company would be created as called “Dream Ticket”. 

The target provides a quick view of the strengths and weaknesses in intellectual assets along with an 

assessment whether the situation is expected to become better or worse. Audit results for each 

intellectual asset provide the basis for actions to improve their value (Luthy, 1998). 

As will mention ahead in section 6, authors aim to acquire value of human centered aspects. In this 

regards it is better to use a DIC method which initiate step is an audit process, which is seen in 

Technology Broker model. 


Brooking (1996) as cited in Bontis (2000) begin the diagnostic process by having the organization 

answer twenty questions that make up the IC indicator. The results of this test suggest that the less a 

company is able to answer in the affirmative to the 20 questions, the more it needs to focus on 

strengthening it is intellectual capital. The Audit phase is the main concern of this research, so in this 

section it is described in details. As it is just a kick-off action, the scope of the preliminary audit could 

be restrained to one project, which is in line with the requirements of a consulting firm, which is mainly 

project-based. This means that the data gathering could be easier, and the requirements of the 

project (mostly the time consumption of employees) could be more realistic. 

Brooking (1996) defines the process of audit includes six steps as shown in Figure 2. These steps 

are customized due to the requirements of the case study, as described in the 4 th section. 

Figure 2: IC audit process (Brooking, 1996, p. 97) 

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3.1 Identify the transition, goals, domain and constraints 

The transition is the change in state which is required by the company. The goal is the goal of audit 

and should be as specific as possible. The domain is identified with constrains by expanding the 

question of audit. It is driven from the strategy and intents of management, and should be explicit, and 

be clarified to the all personnel. In order to extract the goals of audit for a project, the contract and 

project charter are reviewed by the researchers and the deliverables, in terms of cost, quality and time 

are declared. Improving these items is considered to be the main objectives of the audit in the future. 

3.2 Determine optimal aspect set 

An aspect is one facet of an asset. It is only necessary to look at the relevant aspects of an asset 

during the audit. Determine optimal aspect set, which audit is going to be done on them. As explained 

in the literature review section, each asset could have multiple aspects. There are several factors that 

should be considered in the engineering projects context. 

First of all, although the time frame of a construction project could be long (2-3 years in general) the 

average time for each role in the project (for example, the pipeline designer) is considered short 

(maybe 2-3 weeks in the planning phase and 2-3 days during the implementation and supervision 

phases). So, the turnover rate of them is really high in each project, which makes the preserving the 

related human capital a great issue. In addition, in the entire organization, the lack of budget forces 

the cut downs of salaries, which means the pay-offs are not much compatible in comparison to the 

other companies. When added to the tendency of expert work force to immigrate to the industrial 

countries, makes them unstable for the company. 

In the other words, there is no guarantee to have the same pipeline designer who designed the first 

plan, to supervise the implementation phase, for instance. This adds up to the importance of human 

aspect in these companies. 

The second issue is about the licensing and trademarks. Some engineering firms hold some patents 

or have bought some licenses for making their job done. These are part of intellectual properties of 

the organization. These assets could be identified by examining their deliverables, for instance 

designing some heating process could be done due to a license for the certain chemical reaction. 

The third issue rises about the market place. Usually, the great bids held by governmental agencies 

are won by certain engineering consulting firms, because the perquisites are really hard and the 

number of competitor is really few. This means the brand name of the company in this level, is a really 

great issue. At this step, the performance of the company in winning bids could be compared during 

time, and also due to its competitors to see if there are deficiencies to mark in the market assets. 

As a result, researchers decide to focus on the human aspect of the Technology Broker model, 

because of its importance for the projects. 

3.3 Assign high values to aspects 

In order to provide focus for the audit, it is called the “Dream Ticket” and they are the optimal state the 

aspect could be in, for a particular company. Brooking (2010) argues for small companies defining 

corporate strategy can be a challenge, especially where they have limited access to business mentors 

or consultants, so the CEO typically sets the scene by stating where the company needs to be in one 

or more years ahead. So, she said that the “Dream Ticket method” (the part of IC audit) enables 

management to share the firm’s story with employees”. 

These values are assigned due to the project charter, and are defined due to the deadlines and 

quality standards that are specified by the client in the contract (Brooking, 1996). 

The researchers have defined the high values of each aspect sets due to the data gathered by 

interviews with key project members, concluding the client’s requirements. They have been asked to 

describe the optimal state of each aspect in their own term (time, money and quality) and these 

objectives have been used as the high value of each aspect, by some modifications. 

258

3.4 Choose audit method 


Audit methods are those which enable the auditor to determine the current state of an aspect. There 

are 30 methods which map to particular aspects. These methods could be used due to the 

requirements of the audit, specially the data types and the knowledge holders. In this case, as the 

main knowledge holders are site experts, the interview method is considered as the dominant 

method. 

3.5 Audit aspect 

During this step the aspect is audited using one or more methods as above mentioned. The authors 

may choose more than one method to audit an aspect to check our results. For instance, some other 

data sources (like the documents) are checked to verify and validate the interviews, which added 

some details to the gathered data. 

3.6 Document asset value in IC knowledge base 

These results which outlined in previous steps need to be kept in IC knowledge base. Methods of 

viewing the big picture are essential when looking for trends in IC. To cover our ultimate goal that is 

“to put a financial value on every asset”, there is a useful intermediate step base on indices which 

helps to see the big picture. This is referred to as indexing. Using data from the audit, an index is 

constructed by comparing audit results with the “dream ticket” for each intellectual asset. If the status 

of the intellectual asset matches the “dream ticket,” it is given a high score. If the asset is very weak in 

relationship to the “dream ticket,” the asset may be given a score as low as zero. Every aspect of 

every asset has an index which can be ranked in a range from 0 to 5, 5 representing its highest value. 

Some aspects have strong relationships with each other; in some cases it may be impossible to have 

a strong aspect unless another aspect is also strong simultaneously. This bonding of aspects is called 

“Coupling”. It is important to know which aspects are strongly coupled and which can be independent. 

The performance of indices over time reflects change. Companies may have a large number of assets 

which they want to track, so in order to enable us to look at assets at a higher level of abstraction we 

can generate an average index for an asset by averaging all the aspects which have been graded 

with an index. Groups of assets could be ranked in this way and even all market or company assets. 

By using this way we could track IC trend over a time period. A target is constructed for each category 

of assets and each asset is plotted on the target. 

4. Practical case: A consultant company 

In this type of business, employees are project members. To identify IC indicators with considering to 

goals which is described in section 3.1, the authors begin by Brooking questionnaire with twenty 

questions which is briefly mentioned in section 3. The results show us the main element of IC in this 

case is referred to human centered asset. 

After the survey, some issues be reached as follows: based on the contract obligations, employees 

could design and estimate workload to establish tender, review the invoices of contractors and other 

consultants, prepare various reports, manage executive crisis and interact with client and contractors 

and internal departments of the company. These functions are related to work related competency. 

As mentioned before, the Technology Broker IC audit leaves space for the researcher to define its 

own indicators. 

To have more practically research, work scope should be minimized. Since the projects are the core 

component of organization, an ongoing project is selected for this study. It means that contract was 

closed and management do not consider to market research. In this case, project manager may 

provide best services based upon the contract terms and commitments. In addition, identification of 

the acceptable level of services follows-up three factors as quality, time and cost, which is also 

reflected in the “Dream Ticket” as mentioned before. It means during execution, services should be 

provided in high quality level, less duration time and less cost and most important, within high income 

for organization. 

In this case employee could interact with customer over time, using their own work related 

competencies. According to Brooking (1996) approach, major components of human-centered assets 

are work related competencies. As a result, it is clear that IC has main position in the collaborations. 

In fact Brooking (1996) somehow combines vocational qualifications, work related knowledge and 

259


personality profile, and use them in the organization is business field. Thus we could acknowledge 

that our focus is on work related competencies together with some other aspects. It should be noted 

that employees in this firm, mostly use work related competency to respond customer requirements. 

As described in the methodology section, the most comprehensive image is to look at deliverables, 

which is presented to client in form of services. The deliverables uses work related competency. 

Deliverables reflects project process, which creates, verify and develop human-centered competency. 

To be able to identify core wok related competency, the start point is using an interview include open 

questions with regarding to knowledge elicitation. Then, in order to data gathering for aspects 

assessment, we use a questionnaire with close questions which is shown in “Table 1”. The most 

questions (e.g. items 2 to 5) are referred to service not employee, because the CEO does not need 

that all employees do all duties. 

Table 1: Audit questions of human-centered assets 

item 

Human-centered 

assets 

1 Market Need 

2 

3 

4 

5 

6 

Work Related 

Competency 

Work Related 

Competency 

Work Related 

Competency 

Work Related 

Competency 

Work Related 

Competency 

Aspect 

Responding to organization 

need (conformity with job 

description) 

Tender Establishment 

(document preparation and 

reviewing ) –Technical 

knowledge 

Estimation and Calculation 

of Workloads–Technical 

Knowledge 

Invoice Review (contractor 

& consultant) –Technical 

Knowledge 

Report Preparation and 

Presentation 

Crisis management – 

Inquiring Knowledge 

7 Know How Documentation 

8 Organization Need 

9 

10 

Result Related 

Competency 

Organization Need 

(content 

employees) 

Team Working and 

Collaboration 

Communication Skills 

Relevant question 

What percentages of employees are actually 

doing the job they were originally hired to do? 

What percentages of tenders were established 

based on work/client requirements and the 

scheduled? 

What percentages of estimations was 

performed less than 10 % deviation? 

What percentage of invoices was reviewed 

quickly (in site & office) based on contract 

term? 

What percentages of reports were prepared 

and presented with high quality, high precision 

and speed according with commitments? 

What percentages of employees are able to 

solve relevant problems (in site and office) that 

are based on customer and organization 

requirements? 

What percentages of mentioned procedures 

were documented? 

What percentages of employee are generally 

able to work in group? 

What percentages of employees are able to 

interact inside/outside of the company? 

Employee retention rate How is the status of employee’s retention rate? 

Many aspects are identified, but just 10 of them are chosen, because other ones are embedded in 

together. 

5. Results 

In this section the gathered data are presented and analyzed. Audit methods which are mentioned in 

previous section are used to evaluate aspects. In order to have a big picture of aspects, indexing is 

applied which is mentioned in step 3.6 of methodology. “ 

Table 2 shows the high value and current state of each aspect, and finally the significance of their 

relationship to each other by “coupling”. 

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Table 2: Indexing and coupling aspect values, “dream ticket” for company with index (5 is strong 

index/5). 

Item Human-centered 

assets 

H1 Market Need 

H2 

H 3 

H4 

H5 

H6 

Work Related 

Competency 

Work Related 

Competency 

Work Related 

Competency 

Work Related 

Competency 

Work Related 

Competency 

Human-centered asset 

Aspect 

Responding to 

organization need 

(conformity with job 

description) 

Tender Establishment 

(document preparation 

and reviewing ) – 

Technical knowledge 

Estimation and 

Calculation of 

Workloads–Technical 

Knowledge 

Invoice Review 

(contractor & consultant) 

–Technical Knowledge 

Report Preparation and 

Presentation 

Crisis management – 

Inquiring Knowledge 

Dream Ticket Current 

state 

100 % 95 % 5 

90 % 75 % 4 

Index 

(5) 

90 % 69 % +3 

100 % 74 % 3 

100 % 66 % +2 

80 % 40 % +3 

H7 Know How Documentation 70 % 10 % +0 

H8 

Organization 

Need 

Team Working and 

Collaboration 

100 % 30 % +1 

Aspects 

Coupling 

H9 

Result Related 

Competency 

Organization 

Communication Skills 100 % 54.4 % +2 

H10 Need (content 

employees) 

Employee retention rate 100 % 76 % 3 

Table 3 shows all numbers of indexes as follows. In the other hand, in order to evaluate the workload 

estimation, data for last three years was used, and deviation from the plan was calculated. It should 

be considered that only the deviations by planning errors were mentioned, which is shown in Table 4. 

Finally for indexing, the differences which are greater than 10% are taken into account. 

Table 3: Number of index 

item occurrence 

Index 

0 

0 

Index 

1 

1 

Index 

2 

3 

Index 

3 

4 

Index 

4 

1 

Index 

5 

1 

Table 4: Samples of terminated contracts (monetary amounts to thousand dollars) 

14 71.8 71.8 0.0% 

15 246.5 210.3 

- 

14.7% 

16 28.1 29.9 6.4% 

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There is an asset (H1) which is located in the middle of the target with index of 5. And thereby clear 

that the project supports corporate need. It is obviously presented that project wisely hires staff and 

based on its need, and this is an asset. 

There are 2 points (H2 and H10) with index of 4 and 3 but represent 2 different issues. The asset H2 

tells us project seeks to keep and grow its competency based upon client requirements. But H10 

inform us CEO should plan comprehensive strategy to increase employee retention rate. From 

problem solving perspective, he must identify why employees leave organization, on the other hand it 

should be noted that, a part of project revenue is directly influenced by employee’s turnover. 

A large point (H7) as documentation with index of (1) is referred to record of project’s know-how which 

is occurred in daily functions. This is appreciable that organization is thinking about it, whilst 

organization as a whole, needs it. 

Regarding to H8, it could be understood that, employees are not tend to do each other’s function. This 

does not mean everyone should know all disciplines duties; also it refers to some kind of cooperation 

mood which is not seen throughout internal interactions. It typically reflects team work responsibility 

which helps organization to achieve its needs. 

As mentioned in section 3.6, it is possible to appraisal relation sheep between aspects. In the 

procedure of IC transformation to each other and traditional economical resource as referred in 

section 1, this recognition is fundamental. 

The relation between H1 and six others shows, H1 with index of 5 is an important aspect which affect 

the others, and which should be protected. As is shown in Figure 3 and referred to project experience, 

the relation sheep between H6, H8 and H10 represents that management of crisis needs well team 

working and finally these two assets affects employee’s stability and leads to retain them. 

Figure 3: Targeting for IC audit 

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The relation sheep between H2 and H3 shows, since you could not properly estimate workloads with 

regards to requirement, you could not prepare tender document and then establish it based on three 

properties named time, cost and quality. 

As illustrated in Table 2 the aspects which have positive prefix and also in Figure 3, those same have 

arrow to the center, represents that there is a need to improve assets, while CEO currently is trying to 

improve aspects position. 

This approach has caused to extracting some management implications as follows: 

Appropriate procedure for hiring staffs. 

Improving documentation practices. 

Strengthening the spirit of teamwork and individual replacement. 

Focus on planning to decrease human errors. 

This should be addressed by the next initiatives in the firm. 

6. Conclusion and further research 

Intellectual Capital has become more important in today’s knowledge driven economies. In fact IC, 

especially Human-Centered asset needs more attention to drive organization toward a successful 

future. 

In this article, Researchers have been focused on a project in an engineering consulting company and 

identified work-related competencies. The main contribution of this study is proposing a new method 

to identify the work competencies, which is to elicit them from deliverables. These competencies have 

been used to define the IC elements based on Brooking’s method. 

Also, the “Dream-Ticket” was built for 10 aspects of Human-Centered Asset. Another contribution is 

dedicated to definition of the Dream-Ticket, which is extracted from the deliverables. 

Finally in order to cover the gap between current state and optimal aspects some initiatives were 

suggested in the results. 

This process was illustrated through a case study, which was focused on the human-centered assets 

of Technology Broker model. 

Although this research is not finished due to the ICM procedure described in the literature sections, 

these implications could pursue the management to start management of each project’s intellectual 

assets. 

As the first step to complete this process, the identification of other assets of the project is going to be 

done. After this goal, the project team intends to define the whole process of ICM during the life cycle 

of the project, and implement it as a pilot in a sample project. This could be done considering the 

PMBOK as the guideline. After feedback and reforming the process, ICM process would hopefully be 

one of the main project management processes (according to the organizational processes which are 

currently base on the PMBOK standard) .As a results, a research could be dedicated to examine the 

state of ICM processes in PMBOK, and identify the deficiencies. 

This research could be extended to include the characteristics of every project based organization, as 

well as a general consulting firm in the ICM process. The researchers believe that the measurement 

criteria and methods could be improved, and covering some financial evaluations as well, due to the 

availability of more sophisticated performance management systems, which was not the case. 

References 

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Brooking, A. (1996) “Intellectual Capital: Core Assets for the Third Millennium Enterprise,” 

London: Thomson Business Press. 

Brooking, A. (2010) “On the Importance of Managing Intangible Assets as Part of Corporate Strategy,” Electronic 

Journal of Knowledge Management Vol. 8 Issue 2. 

263


Carrell, J. (2007) “Intellectual Capital: An Inquiry into Its Acceptance” The Business Renaissance Quarterly.Vol. 2 

Nbr. 1. 

Dalkir, K. (2005) "Knowledge Management in Theory and Practice” Boston, MA: Butterworth-Heinemann 

(Elsevier Science). 

Luthy, D.H. (1998) Intellectual capital and its measurement,” paper presented at the Asian Pacific 

Interdisciplinary Research in Accounting (APIRA) Conference, Osaka. 

Marr, B. and Schiuma G. and Neely A. (2004) Intellectual capital - defining KPIs for organizational knowledge 

assets,” Business Process Management Journal, V10, No 5. 

Roos, G. and Roos, J. (1997) “Measuring Your Company’s Intellectual Performance,” Journal of Long Range 

Planning, Vol 30, No.3. 

Roos, J. and Roos, G. and Edvinsson L. and Dragonetti, N. C. (1998) ”Intellectual capital:navigating in the new 

business landscape,” New York: New York University Press. 

Roos, G. and Pike, S and Fernstrom, L. (2006)”Managing Intellectual Capital in Practice,” Butterworth- 

Heinemann Publisher. 

Stam, C. (2006) “The Intellectual Capital Perspective. SPICE, EU Commission. 

Sveiby, K.E. (1997) “The New Organizational Wealth: Managing and Measuring Knowledge-basedAssets,” 

Berrett-Koehler,San Francisco. 

264

Improving Knowledge Transfer Process With Knowledge 

Engineering Methods 

Thierno Tounkara and Inès Saad 

TELECOM & Management SudParis, Evry cedex, France 

Thierno.Tounkara@it-sudparis.eu 

ines.saad@u-picardie.fr 

Abstract: Knowledge transfer is a real challenge for organizations and particularly for those who have based 

their strategy on knowledge codification using knowledge engineering methods. These organizations are facing 

one major problem: their knowledge repository is used by few persons. Why? In this article, we identify barriers 

for transfer and appropriation of codified knowledge referential. We show that codified knowledge transfer should 

be a specific collaborative process taking into account three aspects: complexity and specificity of codified 

knowledge, readers’ profiles, and exchange channels. Then, we propose an empirical methodology to optimize 

continuity between knowledge codification and knowledge transfer. 

Keywords: knowledge management, knowledge transfer, knowledge capture and codification, knowledge 

engineering, knowledge sharing, knowledge appropriation, organizational learning, organizational memories 


The concept of Knowledge Transfer was first introduced by Teece (1977). 

Knowledge Transfer can be defined as a process in which an organization recreates and maintains a 

complex, causally, ambiguous set of routines in a new setting (Szulanski 1996). 

This process is a key part of knowledge management cycle and allows organizations to absorb and 

make optimal use of crucial knowledge. 

Research on knowledge transfer focuses on three themes (Harrison and Hu 2012, Dalkir 2011, Alavi 

and Leidner 2001, Gupta and Govindarajan 2000, Zack 1999, Simonin 1999, Szulanski 1996, Mowery 

and al 1996, Zander and Kogut 1995): 

Factors which affect knowledge transfer; they are dimensions for measuring the degree to which 

knowledge can be easily communicated, understood and transferred 

Modes or processes of knowledge transfer which deal with mutual transformation between tacit 

knowledge and explicit knowledge 

Evaluation and measurement of the performance of knowledge transfer; the goal is to elaborate 

indicators to measure efficiency of knowledge transfer. 

Our research deals with the two first themes. We refer to knowledge transfer models which consider 

knowledge elicitation as a possible stage for sharing and transferring knowledge. Focusing on 

knowledge engineering techniques for knowledge elicitation and organizational memories elaboration, 

we explore their limits analyzing codification effects on factors which affect knowledge transfer. Then 

we propose an approach allowing an optimal continuity between knowledge capture using knowledge 

engineering methods and knowledge transfer at individual and organizational levels 

2. Factors influencing knowledge transfer 

Relying on literature review, we can group factors influencing knowledge transfer into 4 dimensions: 

Characteristics of knowledge 

Knowledge transfer channels 

Absorptive capacity of receivers 

Cultural and Organizational contexts 

2.1 Characteristics of knowledge 

With characteristics of knowledge we can measure different aspects which may be facilitators or 

barriers for knowledge transfer. 

265


Relying on the work of Zander and Kogut (1995) and Simonin (1999), we highlight three 

characteristics that would affect knowledge transfer: tacitness, complexity and specificity (or degree of 

contextualization). 

Tacitness versus explicitness 

Polanyi described tacit knowledge as “things that we know but cannot tell” (Polanyi, 1967) and thus 

can only be transferred through interaction. Tacit knowledge is not easily articulated or formalized and 

is difficult to put into words, text, drawings or other symbolic forms. In fact, tacitness is a property of 

the knower: it is easily articulated by one person but may be very difficult to externalize by another. 

Tacit knowledge is typically considered to be more valuable than explicit knowledge and requires 

more cognitive efforts of a sender and receiver to be transferred (Dalkir 2011, Harrison and Hu 2012). 

Explicit knowledge is associated with declarative knowledge and “know why”. Declarative knowledge 

and “know why” consist of descriptive elements (Garud 1997). Explicit knowledge represents content 

that has been captured in some tangible form such as words, audio recordings or images. 

Complexity 

Knowledge complexity can be defined as the number of tools and routines used in the process of 

knowledge transfer (Reed and Defillippi 1990). Routines are actions based on unstated conventions 

that were derived from previous experiences and can embody the application of knowledge within an 

organization (Szulanski 1996). 

Consequently, more routines are needed to interpret and appropriate knowledge more its transfer can 

be difficult (Argote and Ingram 2000). 

Specificity or Degree of contextualization 

Specificity describes the degree to which knowledge and routines in which it is embedded can satisfy 

the knowledge receiver. In other terms, “specificity” captures the degree to which knowledge is 

dependent or not on many different contexts of use (Zander and Kogut 1995). 

More the knowledge can be adapted to the context of the receiver, be absorbed and understood by 

the receiver the more it is valuable. 

For example, knowledge tightly connected with local experiences and culture, can be a barrier to 

transfer and be difficult to transplant to other environment. 

2.2 Knowledge transfer channels 

Communication processes and information flows drive knowledge transfer in organizations. Existence 

and richness of transmission channels are success factors for knowledge transfer (Gupta and 

Govindarajan 2000). 

Knowledge transfer channels can be informal or formal, personal or impersonal (Holtham and 

Courtney 1998). 

Informal mechanisms (such as informal seminars or coffee break conversations) refer to socialization 

and are more effective in small organizations (Fahey and Prusak 1998). 

However, such mechanisms may involve certain amounts of knowledge loss due to the lack of a 

formal coding of the knowledge (Alavi and Leidner 2001). 

Formal transfer mechanisms (such as training sessions) may ensure greater distribution of knowledge 

but may inhibit creativity. 

Personal channels (such as apprenticeships) may be more effective for distributing highly contextual 

knowledge whereas impersonal channels (such as knowledge repositories), may be most effective for 

knowledge that can be readily codified and generalized to other contexts. 

Information Technologies can support all four forms of knowledge transfer channels. 

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2.3 Absorptive capacity of knowledge receivers 

Gupta and Govindarajan (2000) identified absorptive capacity as a key element for knowledge 

transfer process. 

Absorptive capacity can be defined of as “the ability of a firm to recognize the value of new, external 

information, assimilate it, and apply it.” (Cohen and Levinthal 1990) 

It seems very difficult to control absorptive capacity because knowledge must go through a recombination 

process in the mind of the knowledge receiver. This re-combination depends on the 

recipient's cognitive capacity to process the incoming stimuli (Vance and Eynon 1998). 

2.4 Cultural and organizational contexts 

Inter-organizational knowledge transfer (across organizational boundaries) seems to be more 

complex compared to knowledge transfer within the organization. There are many reasons: 

Cultural distance can raise barriers for understanding partners and transferability of knowledge – 

based assets 

Organizational distance (centralized vs. decentralized, innovators vs. followers, entrepreneurial 

vs. bureaucratic) can accentuate the difficulty of transferring knowledge through 

interorganizational relationships (Simonin 1999) 

In our study we limit the scope to a context of knowledge transfer within the Organization. 

3. Modes of knowledge transfer 

For better understanding of Knowledge transfer it is important to explore first two complementary 

approaches: social exchange and codification. 

3.1 Social exchange versus codification 

We can share and transfer knowledge through social exchange which is a process of personal 

communication and interaction. It is a socialisation process (focusing on tacit knowledge) as 

described by Nonaka and Takeuchi (1995) in their SECI knowledge management model. 

Knowledge codification is the process for transforming knowledge into a tangible, explicit form such 

as document, that knowledge can then be communicated much more widely and with less cost. 

In our article, we analyse knowledge transfer strategy based on knowledge codification using 

knowledge engineering methods. 

3.2 Knowledge transfer models 

We present here two theoretical models with distinct perspectives. These models bring a conceptual 

framework for many knowledge transfer processes. They have been reviewed and discussed by 

academics and practitioners (Dalkir 2011, Harrison and Hu 2012). 

These two models give us a better understanding of knowledge codification role in knowledge transfer 

process. 

SECI model 

The SECI model of Nonaka and Takeuchi has proven to be one of the more robust in the field of KM. 

this model focuses on the knowledge conversion between tacit and explicit knowledge. It describes 

how knowledge is accumulated and transferred in organizations following four modes: socialization, 

Externalization, Combination and Internalization. 

Socialization is the sharing of tacit knowledge through social interactions such as face to face. 

Externalization is the process of converting tacit knowledge in a visible form: explicit knowledge. It is a 

way, for organizations, to make knowledge tangible and store it in manuals, databases in order to be 

easily shared. In this mode, knowledge engineering methods are useful. 

267


Combination is the process through which discrete pieces of explicit knowledge are recombined into a 

new form. 

Internalization is the last conversion process (from explicit knowledge to tacit knowledge) where 

knowledge is converted into personal mental models and then can be used in an optimal way to 

achieve tasks. 

BOISOT I-Space KM Model 

BOISOT KM model is a conceptual framework incorporating a theoretical foundation of social 

learning. Boisot (1998) suggested that knowledge is structured, understood and transferred through 

three dimensions: codification, abstraction and diffusion. 

Codification refers to the degree to which knowledge can be encoded (even if the receiver does not 

have the facility to understand it) while abstraction refers to a low level of knowledge contextualization 

(easy to be generalized to other contexts). 

The assumption is that well codified and abstract knowledge is much easier to understand than highly 

contextual knowledge. 

Consequently, for tacit knowledge with high contextual level (high degree of specificity), there is a risk 

of loss of context due to codification which is a barrier for knowledge transfer. That is one of the limits 

of knowledge transfer process relying on organizational memories built with knowledge codified 

principally using knowledge engineering techniques. 

Highly contextual knowledge need a shared context for its interpretation and that implies face-to-face 

interaction and in a general way a socialization approach as in the SECI model of Nonaka and 

Takeuchi (1995). 

In this model, codification and abstraction work together and facilitate the knowledge diffusion and 

transfer. 

4. Codifying with knowledge engineering methods: Barriers for knowledge 

transfer 

Understandability and diffusibility of codified knowledge with knowledge engineering techniques 

depend on many factors: 

accessibility and readability of used formalisms for the knowledge receivers (Dalkir 2011) 

knowledge receivers’ profiles (background, context of knowledge use, preferences for logical 

structuring and understanding’ profiles) (Tounkara and al 2002) 

level of description of complex and specific knowledge 

exchange channels between Knowledge sources (experts or specialists) and potential future 

users 

4.1 Multiplicity of formalisms 

Knowledge engineering methods lead to a set of models and each of them correspond to a specific 

type of knowledge. For example the Common KADS methodology proposes five types of models 

(Dieng and al 2000): 

Task model of the business process of the organization 

Agent model of the use of knowledge by executors to carry out the various tasks in the 

organization 

Knowledge Model that explains in detail the knowledge structures and types requires for 

performing tasks 

Communication model that represents the communicative transactions between agents 

Design model that specifies the architectures and technical requirements needed to implement a 

system including functions detailed by the knowledge and communication models 

268


So, expertise is codified through formalisms (which are often diagrams) depending on the type of 

knowledge. 

We can point out many difficulties associated with the multiplicity of models: Accessibility, readability 

and understandability/intelligibility. The profile of knowledge receivers can accentuate those barriers: 

are they familiar to the use of models? What about their cognitive preferences of apprenticeship: are 

they more textual than visual? 

Knowledge engineering methods only focus on the codification of the tacit knowledge of 

knowledgeable staff (experts or specialists) but they do not take into account appropriation and 

organizational learning capabilities of readers (potential future users). 

4.2 Heterogeneity of readers profiles 

In an Organization, readers do not have the same level of expertise and their profiles can be 

heterogeneous (background, contexts of knowledge use, preferences for logical structuring, 

understanding profile, familiarity with models, etc.) 

However, the logical structuring and the presentation of the tacit knowledge codified are not guided by 

learning levels of future readers but only by the concepts tackled when interviewing 

experts/specialists and by the models structure. 

4.3 Background 

A knowledge receiver with important prior knowledge (related to the knowledge domain) and familiar 

to the use of models may have a greater absorptive capacity. It may be easier for such receiver to 

decode and assimilate knowledge with high level of complexity. 

4.4 Contexts of use 

More the distance between the receiver’s context of use and the described one is important, more the 

knowledge receiver will make important cognitive efforts to adapt knowledge. This case happens 

when the codified knowledge is very specific to the knowledge source’s context. 

4.5 Preferences for logical structuring and understanding profile 

Preferences for logical structuring depend on the learning level of knowledge receiver. For a novice, 

understanding concepts before procedural tasks could be more logic. On the other hand, an expert 

would perhaps prefer a structuring guided by problems solving. 

Understanding profile can be assimilated to the cognitive preferences of the reader when learning: 

textual and/or visual preferences. 

When knowledge domain is codified taken into account logical structuring and cognitive preferences 

of the reader, knowledge transfer can be accelerated because the knowledge receiver makes less 

cognitive effort. 

4.6 Level of description of complex knowledge 

More the knowledge is complex more its transfer can be difficult. 

To reduce complexity, we propose complementary activities to enrich codified knowledge referential: 

Identifying sets of complex knowledge already codified 

Describing and illustrating routines in which identified complex knowledge is embedded 

Organizing exchange (with adequate knowledge transfer channels: informal or formal) between 

experts and users to help them build a shared context for interpretation. 

4.7 Level of description of specific knowledge 

It may be difficult for experts to explicit some sets of knowledge without strong link to situations they 

experienced. For those sets of knowledge with high degree of specificity, knowledge receiver has to 

269


make an important cognitive effort to generalize (abstract) the knowledge and to re-contextualize it for 

his personal use. 

We propose three activities to facilitate this abstraction step: 

Identifying sets of specific knowledge already codified 

Eliciting with experts general principles which guide the use of identified specific knowledge 

Identifying and illustrating with experts other possible contexts of use 

4.8 Exchange channels to increase diffusion/transfer 

Communication and transmission channels are necessary to accelerate knowledge transfer. They are 

an important basis for: 

Elaboration of a shared context for interpretation 

Legitimization of captured knowledge as best practice 

Evolution of codified knowledge through social interactions. 

In the grid below, we synthesise key points to analyse for codified knowledge transfer efficiency. 

Table 1: Analysis grid for codified knowledge transfer 

Activities for efficiency of codified Knowledge transfer 

Codified knowledge 

Complex knowledge 

identify sets of knowledge with high level of complexity 

explicit and illustrate associated routines 

create a shared context for interpretation (develop interactions between experts 

and knowledge receivers) 

Specific knowledge 

Identify sets of knowledge with high degree of dependence with the knowledge 

source’s context of use. 

Explicit general principles associated to specific knowledge 

Identify and illustrate other possible contexts of use 

Reader’s profiles 

Background 

Professional background 

level of expertise of the reader in the knowledge domain 

degree of familiarity with knowledge engineering models 

Contexts of use 

- Identify various work situations where the codified knowledge would be useful 

for the reader. 

Define preferences for logical structuring 

Define preferences for his understanding profile 

Visual representation of knowledge? 

Textual representation of knowledge? 

Audio preference (multimedia)? 

Illustration with concrete case studies? 

Exchange channels Identify existing communication and transmission channels 

Stimulate social interactions between knowledge sources (experts) and readers 

5. Methodology for knowledge transfer efficiency 

We propose, here, an empirical methodology for transfer and appropriation of codified knowledge 

referential at individual and organizational levels. It is a two steps approache (re-writing and sharing), 

guided by the previous analysis grid (§ table 1) and supported by a set of methodological tools tested 

in several companies and in various contexts with the “Knowledge Management Club”, in France. 

5.1 Adapting knowledge referential to readers (re-writing approach) 

This approach relies on two steps: 

Characterisation of readers: 

It is an important step for defining readers’ profiles (Background, context of uses, preferences for 

logical structuring). 

Elaboration of specifications for re-writing 

270


The goal, here, is to define: 

Additional contents for the description of highly complex and specific knowledge 

Additional illustrations (case studies, videos) to elaborate 

A logical structuring for the codified knowledge referential 

Re-writing and validation of the new knowledge referential 

5.2 Sharing the knowledge referential (sharing approach) 

Our sharing approach has three goals: 

create a shared context for interpretation 

make easier and accelerate organizational learning 

elaborate a dynamic framework to manage the evolution of the new knowledge referential 

Analysis grid 

for codified 

knowledge 

transfer 

Codified 

knowledge 

referential 

Characterisation 

of readers 

Redefinition of 

content 

-Identify complex knowledge and 

complete describtion 

-Identify specific knowledge and 

complete describtion 

Readers’profiles 

Elaboration of 

specifications for 

re-rewriting 

Illustration 

-Identify needed illustrations 

-Develop concrete case 

studies 

Reorganization of 

content 

-Define a logical structuring 

- Define a good balance between 

texts, visual models and 

multimedia 

Exchange 

channels 

(informal or 

formal) 

-Additional 

contents and 

illustrations 

- Logical 

structuring 

Input or output for an activity 

A B B is a sub activity of A 

Actor 

Re-writing 

Sharing of new 

codified knowledge 

referential 

Experts Readers 

New Codified 

knowledge 

referential 

Figure 1: Methodology for codified knowledge transfer 

6. Hydro Quebec case study 

Hydro Quebec is one of the biggest electricity producer and distributor in North America. Hydro 

Quebec is a public company and his principal shareholder is the Quebec Government. 

The Hydro Quebec study is part of a bigger project « support for critical knowledge capture » leaded 

by the Human Resources Department. The study lasted 2 months and concerned one operational 

unity. It was motivated by the future retirement of one of the unity’s experts. 

Interviewing this expert and using knowledge engineering techniques, a codified knowledge 

referential was elaborated in a first stage. 

Two objectives were assigned to our study: 

Optimise the use of the codified knowledge referential 

Accelerate the transfer of the knowledge referential to five future experts of the same unity 

271

6.1 Approach 


We mixed questionnaires and interviews to implement our knowledge transfer methodology. 

Questionnaires were used with the 5 future experts (readers of the codified knowledge referential) to 

characterize their profiles (Professional and study Background, contexts of use of the referential, etc.). 

Four of them had a technical background and the fifth had a managerial background. 

Interviewing the five future experts helped us identify additional needs for the codified knowledge 

referential more. Interviews were guided by our analysis grid for codified knowledge transfer. 

6.2 Results 

Our study leaded to new specifications for the codified knowledge referential to increase its 

transferability (§ table 2). 

Table 2: Synthesis of new specifications for the codified knowledge referential 

New specifications for the codified knowledge referential 

About the Content a list of additional descriptions to write 

a list of missing critical knowledge to integrate in the referential (needing new 

interviews of the expert) 

a list of sets of knowledge to complete by concrete case studies 

About the structuring Despite the multiplicity of models in the codified knowledge referential, readers 

find models readable because each them was associated with a textual 

description. 

For the logical structuring of the referential, they preferred a problem solving 

About the new 

referential sharing 

approach. 

It was proposed: 

a collective and collaborative re-writing of the codified knowledge referential (with 

the expert); 

a “Knowledge management facilitator” who will drive the sharing step and 

coordinate the evolution of the referential. 

The principal implication of Hydro Quebec Case Study is that the methodology for knowledge transfer 

must be performed as a collective and collaborative process which involves three categories of 

actors: 

knowledge sources (experts/specialists) 

knowledge management facilitators 

Knowledge readers 

7. Conclusion 

In our article, we first underlie factors which affect efficiency of codified knowledge transfer. Then we 

propose an operational methodology to optimize continuity between knowledge codification and 

knowledge transfer. This methodology relies on two robust theoretical frameworks: the SECI model of 

Nonaka and Takeuchi and the Boisot I-Space KM model (§ 3.2). 

Integrated with knowledge engineering techniques, the methodology can enhance knowledge 

codification by leading to the elaboration of a pertinent shared context for knowledge interpretation. 

The Hydro Quebec case study highlights the importance of defining an appropriate organization to 

support the knowledge transfer process. 

Economic aspect can be a limitation of the knowledge transfer model we propose. Implementing such 

a process transfer can be a heavy investment for companies: 

An organization (it can be a formal community) must be settled and this involves identifying actors 

and defining for them roles and responsbilities 

Actors must be available for the codification, the re-writing and the evolution of the knowledge 

referential. 

272


In the next step of our research, we will focus on the evaluation of knowledge transfer efficiency after 

an implementation of the proposed methodology. 

Acknowledgments 

Thanks to Jean-Luc Richard, the consultant with whom I performed the case study at Hydro Quebec 

Thanks to the Knowledge Management Club (in France) which gave us real opportunities to 

exchange with various business companies. 

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273

The Influences of Intergroup Relations on an 

Organizational Structure 

Nurhayat Varol 1 and Serkan Varol 2 

1 Firat University, Elazig, Turkey 

2 Lamar University, Beaumont, Texas, USA 

Nurhayat_varol@yahoo.com 

Serkanvarol23@gmail.com 

Abstract: Organizational structures have been used for centuries. It started from the early days of first age. One 

man would be given the task of leading the whole group and assigning tasks to each member of his team. 

Overall, an organizational structure consists of activities such as supervision, allocation and coordination which 

work for the achievement of organizational aims. Groups in organizations are not just made of a dozen 

employees. There are subtasks and subunits that really form the group. The way we are defining group and the 

characteristics we understand has been an ongoing debate for many years. Group can be described as work 

teams, subpart of departments or any organization members that value the existence of each other. There are 

two groups available in organizations. They are formal and informal groups. Under formal group, there are two 

subgroups; permanent and temporary formal, depending on the needs of the organizations where the rules and 

targets are clearly determined and given in a written format. Informal group consists of a small number of people 

who actively participate in activities and take active roles in sharing feelings for the purpose of the meeting. 

Group and intergroup relations have become an important concept for the discipline of social psychology, conflict 

resolution and group decision making. Most likely, intergroup relations are the ones that are influenced by the 

social identities and perceptions of groups. Thus, intergroup relations are becoming more problem for 

organizations. It is also believed that the quality of intergroup relations show the characteristic of the organization. 

As population increases along with technological advancements and economic volatility, the nature relation 

between group members can be altered, When intergroup relations are harmonious; members of different groups 

will be less sensitive about differences between in-groups and out-groups. However, when there is a conflict, 

identification with one’s group becomes stronger, out-group differences can become more obvious where 

intergroup conflict increases. The intergroup relations in the universities and within the departments of the 

universities are crucial. Team and group working influences the educational efficiency of the department. 

However, it may yield more ambiguity when this relations shape the organizational structure of the university. In 

this study, intergroup relations within the universities in Turkey are investigated. A survey is applied to the faculty, 

staff and students to find the positive and negative effects of the intergroup relations on the university, quality of 

the education, and faculty performance. Finally, some recommendations are submitted using findings of the 

survey. 

Keywords: group influence to the organization, intergroup relations, organizational structure 


Organizational structures have been used for centuries. It started from the early days of first age. One 

man would be given the task of leading a group and assigning tasks to each member in his team. 

Overall, an organizational structure consists of activities such as supervision, allocation and 

coordination that aim for organizational achievement. Nevertheless to say, all these are controlled and 

driven by organizational structures that are known formal and informal. The formal structure is present 

on organization charts in which job titles and descriptions are clearly identified. It is a fixed set of rules 

of procedures and unique for each organization. As such, it is usually specified in writing, with a 

language of rules that leave only some discretion for interpretation. Thus, intergroup relations become 

very significant in formal structures as each part of the organization is connected to each other by 

means of company’s acquisitions (Gulati & Puranam, 2009). 

On the other hand, informal structures consist of a small number of people who randomly participate 

in activities and take active roles in sharing feelings for the purpose of the meeting. The goals and 

tasks are clearly described. Informal groups in organizations increase dependency between workers 

which usually offer a decent work environment that lead to increase productivity. It should not be 

forgotten that informal groups always arise if opportunity exists. They have a powerful influence of the 

effectiveness of an organization. They are capable of changing the formal goals if necessary. Thus, 

the intergroup relations in informal groups can be more decisive in the fate of organizational structure 

(Pettigrew, 2010). 

Formal organizations such as industries, universities can have informal organization structures in the 

form of friendship groups. However, it is not easy to distinguish formal and informal groups. Because 

274

Nurhayat Varol and Serkan Varol 

the formal and informal groups can behave alike each other in most aspect, Schein divides the 

organization into different structures (Schein, 1996); formal, organizational functions, psychological, 

personal functions, and multiple or mixed functions. This led us to follow the progress of different 

types of organizational behaviors rather than characterizing the formal and informal structures. Based 

on Schein’s organizational schema, the influences of intergroup relations on organizational structure 

can be quite deducible as each structure has its own unique features. For example: Personal function 

group is emerged from organizational function group. Thus, it is very unlikely that the relationship 

between personal functions group and the organizational functions group can negatively influence on 

organization structure since they carry the same understanding about company’s objective 

(Natemeyer & Hersey, 2011). 

It is also important to determine whether formal or informal groups tend to be involved and fulfill 

organization’s various needs. These needs are dependent upon some factors that include 

environmental, membership, and dynamic factors which are transparently dealing with the 

organization of the group. In environmental factors, there are internal and external forces. The events 

that are under the control of the company are internal factors such as organizational culture, 

employee morale and management systems. External driving forces are the kinds of events that occur 

outside of the company and are large beyond the control of the organization. Examples of external 

driving forces can be sorted as the poor economic situation or unexpected political movements that 

aren’t controlled by the organizations. 

Although there are a few studies conducted on the affect of intergroup relations to commercial 

companies (Oerlemans & Peeters, 2010; Shapiro et al., 2011; Shapiro, 2011), in this particular study, 

the influence of intergroup relations to the organizational structure in non-profit universities and 

departments of these universities are discussed. Particularly, the focus is devoted on the informal 

groups’ impact on the university organization scheme and the outcomes of the changes. This includes 

a conducted survey on faculty, staff, and students to analyze their reactions and expectations with 

these changes. 

The remainder of the paper is organized as follows: Section (2) focuses on the personalities who form 

the groups. Section (3) discusses about the intergroup relations in the universities in Turkey. In 

Section (4), the current status of intergroup relations in the Turkish universities is analyzed by surveys 

conducted on the faculty and students, the conclusion and final recommendations are provided in 

Section (5). 

2. Individuals form formal and informal groups 

In organizations, do individuals matter? There is no doubt that individuals drive the needs of the 

organizations. There are many successful and unsuccessful organizations. They just did not happen 

to be in the position that they hold currently. Many internal and external factors took roles to 

determine the current level of these companies. All of these factors are human related. We can see 

examples of how personalities have affected team performances or how personalities made life in an 

organization unbearable. Intergroup relations are directly influenced by these behaviors. Recently, 

Steve Jobs, former CEO of Apple, is on the news with his success stories after his death. He was 

being accepted as one of the key people who formed today’s computer technology. Where would 

Apple stand today if Steve Jobs did not cooperate with Steve Wozniak, the inventor of first Apple I 

computers? This can’t be predicted as many other factors get involved, but it is like pulling a random 

brick off the game jenga. The whole structure may not be collapsed yet always damaged, unless it is 

one of the main girders that hold each piece together. 

There are different types of people in formal organizations that can dictate the behavior of individuals. 

By understanding how different personality types fit into the culture of the organization, we can get an 

idea of how individuals may fit into the organizational structure. Assuming that there is a high level of 

dissimilarity among the personalities of the culture and employees, this can influence the whole 

organization. Normally, the formal organization consists of recognized and established statuses of the 

members. The authority in formal organizations results in perfect ordination and subordination. 

The psychological satisfaction in groups is vital as it is a sign that the most basic needs are met in 

organizations. For example: A group member who is not as knowledgeable as other members would 

not want to make a speech among other coworkers. Because he or she has a fear of saying 

something wrong, an unavoidable pressure may occur and this is why sometimes the companies 

275


balance the teams according to workers’ background to avoid any unforeseen problems (Ariyanto et 

al., 2009). 

Nowadays, workplaces can have a mix of personalities. It is interesting that all these 

different personalities interact with each other on a daily basis. Depending on whom you are dealing 

with at the time, the diversity in organizations can lead to conflicts. One repugnant behavior can affect 

the entire organization. Before it happens, it is important that the organization is equipped with the 

necessary tools to identify, respond and resolve the problem (Schein, 1996). 

Today, the relationship between individuals and universities is more important than before. 

Universities are not just made of a dozen of people anymore. The people in the universities mean a 

lot to social and work life as they are also playing active roles in student decisions and universities’ 

investment decisions. In a different view of perspective, customers are not only interested in 

companies’ products, but also they want to empathize with the company. As consumers, we would 

want to understand the underlying processes by which individuals respond to organizational action. 

Developing such an understanding can be done by learning the importance of organizational 

identification. 

3. Intergroup relations in the Turkish universities 

The universities in Turkey have similar organization structure with the other universities in developed 

countries (Cankaya & Toremen, 2010; Dogramaci, 2007). President (rector), vice-presidents, deans, 

college faculty senates, and departmental curriculum committees can be counted as common 

administrative positions/groups in the university. Although the formal structure clearly defines the 

responsibilities among the administrators, faculty, and staff of the university, the informal structure 

created by the people in the organization have great influence of the direction of the university (Uste, 

2003). This direction may be in positive way; however, it may result in taking a few steps back as well. 

The main reasons of the wobbling rely on the power of the university presidents and president 

election system (Dogramaci, 2007; Uste, 2003). Particularly, a president of a Turkish university is 

selected by a general election conducted among faculty. Although the voting process is done secretly, 

each candidate devotes a good amount of time to persuade faculty members to vote for him/her. This 

can lead to given promises to faculty members during the campaign time and get to know who 

supports that particular candidate during the campaign (Uste, 2003). Unfortunately, this selection 

procedure may result in discrimination at the university. A president can conjecture who voted for him 

or her at the university. Specifically, since the president has the power to replace any administrative 

person in the university, the organizational structure can substantially change (Uste, 2003). This can 

lead to have more collaborative decisions and quicker actions in the administrative level. On the other 

hand, it may result in non-qualified people to take important roles in the university and create a 

discomfort among the other faculties who did not vote for the selected president. Because of the 

election style and power of the university president, the informal intergroup relations during the 

election have an enormous affect to the organization (Uste, 2003). 

On another side, when looking at these intergroup relations within the department, these can help to 

improve the quality of the education. For instance, these types of relationships can result in team 

taught courses, where every faculty only teaches their expertise area in a particular course. 

Therefore, when these informal groups act together, usually it will yield to a more friendly and 

successful department. In the next section, we will discuss these affects by a conducted survey 

among faculty, staff and students. 

4. Survey study: Affect of intergroup relations to the organizational structure 

With the non-profit university structure described above, one can easily claim that the intergroup 

relations have vital influence in the organizational structure at universities. In this study, we wanted to 

see these implications by a number of survey questions asked to the faculty, staff and the students. 

We have used Simple Random Sampling (SRS) for this study to allocate an equal probability to all 

each subsets. This will minimize the bias and will yield to simplified analysis of the results. Overall, 

there were 187 participants volunteered to take the survey. As shown in Figure 1, among the 

participants, 82 of them were faculty, 24 of them were staff members from various colleges, and the 

rest of them (81) were students at different level, namely freshmen, sophomore, junior, and senior. 

According to 79% of the participants, the intergroup relations among the faculty and staff do have 

direct affect on the organizational structure, while these belief increases to 96% at the faculty level 

276


participants and is around 62% among the students. It is also important to point out only less than 

45% of the freshmen and sophomore think this kind of intergroup relations will change the 

organizational structure as reflected in Figure 2. Also, we can conclude that the more experience you 

have within the university, you start to accept more on intergroup relations affect on the organizational 

structure. In addition, most of the participants think these changes will include, personal and structural 

changes, such as shifting/creating/eliminating some of the administrative positions which may conflict 

with the new university administration’s actions and goals. 

When we looked at the participants perspective on the change of the organizational structure, 41% of 

the faculty think these shifting will have positive change to the university, 35% of them think this will 

have negative effect on the goals of the university and 24% of them would rather see the performance 

of the new organizational structure before making a decision. According to the survey, 77% of the 

participants think that compared to the faculty, staff and students are less affected on these 

organizational changes. Only 18% of the staff and students, those claimed to be less affected people, 

think the administrative changes will have positive impact on the university. In other words, only a 

fraction of the staff and students believe the administrative changes will improve the quality of the 

university. 

Figure 1: Survey participants 

Figure 2: Acceptance rate of intergroup relations affect on the university structure 

When the organizational changes influence to the quality of the education is questioned, only 33% of 

the faculty thinks it will yield to better result, while rest of them thinks it will not make any change on 

277


the quality. On the other hand, only 14% of the staff and students think there will be an improvement 

in the education. However, 59% of the faculty accepts that the intergroup relations within the 

department will improve the quality of the education and provide more efficient and friendly work 

environment. This is an indication that faculty foresee an influence within the department is more 

conceivable compared to a change in the whole organizational structure. 

As shown in Table 1, out of 82 faculty members, 72% of them support the influence of intergroup 

relations to the organizational structure, because of the current president election style. However, 

49% of them prefer to have an election pointing system based on candidates’ accomplishments and 

then want to see the most equipped one as the president of the university. Among the staff and 

students, this new technique reaches an approval rate of 88% and 91%, respectively. 

Table 1: Participants opinion about the intergroup relations and president election style 

Faculty Staff Students 

Support rate of Intergroup Relations to the University’s Organizational 

Structure with the president election style 

72% 42% 55% 

Support rate of pointing system based election 49% 88% 91% 

Based on this outcome we can conclude that, compared to staff and students, since faculty may have 

administrative position expectations, they feel much better with the election type of selection, 

compared to their curriculum vitas. 


In this study, we have discussed about the intergroup relations influence on the university and 

departments. Most of the participants are agreed on the intergroup relations influence on the 

president election and followed by changes in the organization structure. With the current election 

system is still in charge, employers became aware of the importance of maintaining a positive work 

culture and relationship with workers for decades and this probably led to the emergence of the 

individuals and their positions in organizations. Also, we can conclude that when intergroup relations 

are harmonious and open to suggestions from out-groups; members of different groups will be less 

sensitive about differences between in-groups and out-groups. However, when there is a conflict or a 

closed-loop, identification with one’s group becomes stronger and out-group differences can become 

more obvious. 

References 

Ariyanto, A., Hornsey, M.J., & Gallois, C., 2009. Intergroup attribution bias in the context of extreme intergroup 

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karsilastirilmasi. Mustafa Kemal Universitesi Sosyal Bilimler Enstitusu Dergisi, 7 (13)., s. 151 – 163. 

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Akademik Bakis, 1(3): 39 – 46. 

278

Transformational and Transactional Leaders; a Case Study 

in the Higher Education 

Asaf Varol 1 and Serkan Varol 2 

1 

Firat University, Elazig, Turkey 

2 

Lamar University, Beaumont, Texas, USA 

varol.asaf@gmail.com 

Serkanvarol23@gmail.com 

Abstract: Understanding and analyzing the difference between transformational and transactional leadership is 

crucial in getting the whole concept of leadership theories in organizations. Transformational leadership is the 

most popular theory which has evolved from the elements of leadership such as traits, situational and 

transactional leadership that focuses on the role of organization and group performance. In transactional 

leadership, rewards and punishments are contingent upon the performance of the followers. On the other hand, 

transactional leadership makes clear that what is required and expected from their subordinates. If subordinates 

perform well, they receive reward. When they don't perform well, a punishment may apply. This method is not 

very often used in organizations In this research, first we have compared the transformational and transactional 

leadership theories and their applicability to the higher education institutions by integrating the characteristics of 

each model into the single instructor and having him to apply the assigned techniques to the class. Secondly, 

based on performance-productivity metrics and examination results, we have found that both transformational 

and transactional leadership techniques have their own strengths and weaknesses. Therefore, in this paper we 

proposed a hybrid approach which combines the best of each technique, which also provided better performance 

and productivity results. The findings are also deeply interpreted. 

Keywords: transformational and transactional leaders, management of higher education, leadership 


Leadership is one of the most complex human behaviors. Psychological tests have been used to 

show what characteristics are most likely noted among successful leaders in organizations. Seeing 

different leadership characteristics enhance us to learn about the key traits of acknowledged leaders. 

They are also used for developmental purposes in order to support managers gain insight and 

develop their leadership skills. Thus, if one wants be a successful leader, he or she needs study more 

than one leadership model or theory so that the needs of leadership can be understood. Recognizing 

different leadership enable us to understand clearly, what leadership is, and what constitutes effective 

leadership (McMahon, 2010). 

By definition, leadership is taking responsibilities and making choices on your own. It’s not a 

responsibility that was thrust upon you by someone. An important part of leadership is to influence the 

people around you so that they can understand and value your expressions. However, the influence 

of a leader can depend upon many factors including their personality and the power of your 

leadership skills (Low, 2010). 

It is known that confident leader wants to use authority to influence others’ behavior in order to reach 

organizational goals. These goals can only be accomplished with a good team working and the power 

of leadership skills. The interaction style or how you motivate others toward action is a major part of 

using leadership skills effectively. In order to be powerful and effective, you need develop techniques 

in communication and manage disagreements. This could be visible or invisible, but they must be 

relevant to the motivations of the power recipients (Low, 2010). 

Successful organizations usually rely on the effective management of its leader and subordinates. In 

the collaboration of academicians and psychologists, main styles of leadership, transformational and 

transactional, have been developed and adopted by formal and informal organizations. The most 

effecting styles is known to be transformational leadership which leads to positive changes by 

inspiring and motivating followers. Meanwhile, transactional leaderships assume that reward and 

punishment motive people positively. In this type of leadership, goals and objective are clearly 

identified and set for the followers. 

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2. Transformational leadership 


Transformational leadership is the most popular theory of leadership. It is a type of leadership 

style that leads to positive changes in those who follow. The concept itself focuses on a leader who 

actually changes the needs of organizations. It also motivates the followers to perform high level 

performance as well as it helps them to improve their own leadership potential. The obvious 

characteristics of transformational leaders are generally energetic and passionate. In this leadership 

style, the leader enhances the motivation, moral and performance of his follower group (Carter, 2009). 

By definition, transformational leadership theory is about leadership with values and meaning that 

focus on high order needs. Also, the theory has evolved from the elements of leadership such as 

traits, situational and transactional leadership. Transformational leaders care about followers and their 

personal needs and development. Because transformational leaders have strong beliefs about their 

followers, they have higher levels of performance and satisfaction than groups led by other types of 

leaders. Thus, they inspire and motivate their followers to go beyond normal levels of performance. 

There are four major components of transformational leadership. They are Idealized Influence, 

Inspirational Motivation, Individualized Consideration and Intellectual Stimulation (Carless, 1998). 

2.1 Idealized influence 

Idealized influence is an important part of the transformational leadership model espoused by Bass, 

and Avolio. Idealized influence is basically building confidence and trust as well as providing a role 

model that followers seek to emulate. In this type of leadership, leaders are admired, trusted. They 

also have enough confidence that provides a foundation for accepting organizational change. Thus, 

followers who are sure of the capabilities of their leader will be less likely to resist proposals for 

change from her/him (Avolio & Bass, 1999). 

Idealized leadership consists of two-component conceptualization of idealized attributes and idealized 

behaviors. This conceptualization is used because idealizing leadership is open to individual and 

external practical behaviors. Idealized leadership tends to influence his/her follower because leaders 

show followers an optimistic vision of the future in order to convince them to believe in their own 

prospects (Carless, 1998). 

Charisma is directly related to idealized influence. The relationship between charismatic and 

transformational leadership is very obvious during times of crisis within an organization. For example: 

When Lee Iacocca, a charismatic leader, took over Chrysler Corporation, it was a fresh start for the 

company. The company was on the edge of going out of business. They lost millions of dollars due to 

recalls of its Dodge Aspen and Plymouth Volare. He began rebuilding the entire company by starting 

from laying off many workers as well as selling the loss-making Chrysler Europe division to Peugeot, 

and bringing in many former associates from his former company. He had charisma that is the quality 

that makes people wants to follow him. He used his skills to inspire former employers who worked for 

Ford Motor Company. People followed him because they trusted him (Ruggieri, 2009). 

2.2 Inspirational motivation 

Inspirational motivation is the ability for a leader to provide meaning and context to the work of those 

under him/her. Idealized influence shows similarities with inspirational motivation whereas charisma is 

used to motivate individuals whereas inspirational leadership is about motivating the entire 

organization to come up with new ideas. Transformational leaders try the best to see the future as 

well as offering his/her followers the opportunity to see meaning in their work, and challenge them 

with high standards. By doing motivational speeches and highlighting positive outcome which 

stimulates the team work, followers become the part of the overall organizational (Carter, 2009). 

Motivation changes from one day to another one. Different situation creates different motivations on 

human beings. People are motivated towards something they can relate to and something they can 

believe in. For example: Martin Luther King’s “I have a dream” speech is an exceptional example of 

this characteristic .Even today, King’s speech is cited and widely showed by media sources (Ruggieri, 

2009). 

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2.3 Intellectual stimulation 


Intellectual stimulation is the ability for a leader to keep those following him or her thinking about the 

task at hand, asking questions, solving problems and finding alternatives if needed. Leaders with 

intellectual stimulation feature encourage creativity for their followers. They train and develop people 

who are capable of thinking independently. For such a leader, unexpected situations are seen as 

opportunities to learn. The followers learn from mistakes, they don’t suffer from their mistakes. They 

also ask questions and investigate to find alternative ways to execute their tasks (Avolio & Bass, 

1999). 

As a leader, you should have the courage to lead and accept responsibility all the time. Good leaders 

should not fear failure. In case they fail, they should know how to stand up again. Naturally, courage 

divides into two parts: physical and moral. Although physical courage is only a plus for leaders, moral 

courage is a fundamental requirement of all effective leaders. Moral courage is a commitment to doing 

what is right (Forck, 2011). 

The concept itself is in the middle of lives. In our relationships, the loves is built on love and trust, we 

have happy and unhappy moments. However, a relationship can become unsatisfactory to either 

partner on the grounds of intellectual incompatibility. This happens when dissimilarities arise. I think if 

one is having a problem like this, the person is lacking the intellectual stimulation. 

2.4 Individualized consideration 

Overall, the organizations need individuals to fulfill the requirements. The personalities of these 

individuals show diversity and they cannot be altered much. For example: As a human being, we 

cannot be more intelligent, but possibly we can become more educated. We cannot become more 

attentive, or less impatient, or more optimistic. As a result, there are certain physical characteristics 

that are determined by our brain structure (Gulati & Puranam, 2009). 

Individual consideration is the ability of a leader to mentoring and coaching to the needs of each 

individual person. This type leader gives his/her full support and keeps communication open. 

Individualized consideration can be looked into two parts: developmental leadership and supportive 

leadership. Developmental leadership has the most benefits for followers. It also has a strong effect 

on job satisfaction and career certainty. Developmental leadership is a major transformational 

behavior because it lets employee to show his/her skills (Avolio & Bass, 1999). 

Even though supportive leadership is strongly related to job satisfaction, it does not correlate with 

motivation or performance at all. As Bass discussed, individualized consideration occurs when a 

leader pays attention to the differences among followers and discovers what motivates each 

individual. Also, individualized attention allows leaders to become familiar with followers, enhances 

communication and improves information exchange (Avolio & Bass, 1999). 

3. Transactional leadership 

Leadership style is a very important element in the development of an organization. Transactional 

leadership is of the leadership style that is used by many successful companies. It focuses on the role 

of organization and group performance. This theory of leadership was introduced us by Max Weber 

who is a sociologist. In transactional leadership, rewards and punishments are contingent upon the 

performance of the followers. Transactional leadership makes clear that what is required and 

expected from their subordinates. The leader values the relationship between managers and 

subordinates as an exchange, in return to you give something for him or her. If subordinates perform 

well, they receive reward. When they don’t perform well, a punishment may apply (Hartof & Koopman, 

1997). 

Basically, transactional leadership is based on the fact that reward or punishment is dependent on the 

performance. Even though researchers have criticized the limitations and functions of it, it is still used 

by many employers. More companies seem to be adopting transactional leadership to increase the 

performance and productivity of its employees (Avolio & Bass, 1999). 

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3.1 Contingent reward 


Contingent reward is an exchange process between leaders and his/her followers in which efforts by 

followers is exchanged for specified rewards. In contingent rewarding behavior, leaders tend to make 

specific assignments about what needs to be done in exchange for implicit or explicit rewards. An 

example would be the relationship between a parent and child negotiating how much TV the child can 

watch after doing his/her homework assignment. If the child studies well for the day, then he/she will 

get the chance of watching TV as the exchanged reward of his effort (Hartof & Koopman, 1997). 

Contingent reward behavior has a strong relationship with some leader effectiveness such as 

charisma. Charisma added unique variance beyond of contingent-reward behavior for understanding 

leader effectiveness. On the other hand, contingent-reward behavior had no effect beyond that of 

charisma. Also, the present studies examined the impact of contingent rewards on perceived 

autonomy, which was measured in terms of reports (Avolio & Bass, 1999). 

3.2 Active management-by-exception 

Active management by exception occurs when goals are set and they are not being met so that 

corrective action may be required. It also consists of some items that encourage the leader focusing 

on monitoring task execution for any mistakes before any problems arise. For example: Mistakes of 

products cost time in terms of revisions and customer complaints. Managers should correct those 

mistakes before their consequences occur. This would save some time whereas it should increase the 

productivity in the organization (Avolio & Bass, 1999). 

3.3 Passive management-by-exception 

Passive management-by-exception type of leaders intervenes only when standards of the work are 

not satisfactory or expected the performance is below the limits. They can even use punishment as a 

response to unacceptable performance. We see this kind of behavior in sport games such as soccer 

or basketball. For example: If a soccer player does not perform well continuously, the team manager 

can start him as a substitute in the next games. This would impact player’s budget as most soccer 

players are getting incentives such as bonuses for each game he plays. This is a certain punishment 

for the player (Rowold, 2006). 

3.4 Laissez-faire 

Laissez-Faire is a French term that translates as "let things alone". The term is originated by the 

Physiocrats, who did not agree with the trade restrictions that supported older economic systems such 

as mercantilism (Ruggieri, 2009). Laissez-faire leadership is a type of leadership style in which 

leaders use hands-off approach and allow group members to make their own decision. This 

leadership type is also known as a delegative leadership. This type leadership may lead to the lowest 

productivity among group member (Ruggieri, 2009). 

4. Study 

A study was performed to measure the impact of transformational and transactional teaching style on 

a Robotic class project that is formed by four pop quizzes, eight homework assignments, two 

comprehensive exams, four laboratory works, one final report. The due dates were set for each 

assignment. The class of fifty two students was divided into three different groups in which random 

selection process took place with a single instructor. Group 1 was supervised by implementing 

transformational style of leadership’s requisites whereas group 2 was approached by transactional 

leadership style. Group 3 consisted of mix method with transformational and transactional styles. By 

measuring alternative approaches to student’s project, we aimed to discover the optimal teaching 

style for future classes. 

The first group, transformational type, was strictly examined by the instructor. A group member was 

selected among students with democratic voting system who was responsible for the empowering of 

each member of the team for efficient group work. Each group member was motivated towards the 

achievement of the team, thus they are built trust and confidence. The instructor showed passionate 

about the project. “Hands on” approach was utilized to help students whenever they need aid on 

solving problems or seeking alternatives. Each student is mentored individually to keep 

communications open and strong. 

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Group 2 is taught by transactional leadership model that is based on rewards awarding in exchange 

to work. The rules and procedures were strict. Group members met and exchanged ideas 

occasionally with the supervision of the instructor. The initial group leader candidate was nominated 

by the students. Following group leaders were selected based upon the peer evaluation and 

instructor’s overall observation. In each group leadership period that lasts twenty work days, the 

student was rewarded an extra of 10% of his or her final lab report grade. When the weekly goals are 

not met or the deadline passed, the group leader is withdrawn and the award is revoked unless the 

instructor is notified beforehand. 

The third method, hybrid, is adopted for the mixed group in which reward and “hands on” approaches 

were utilized under the same roof. Each student had a chance to be the team leader as the name list 

orders in the roster. The group leader was awarded an extra of 5% of his or her total final lab report 

when the goals were met. No time allowance was given for the late work unless it was already 

discussed with the instructor. The meeting days were determined by the group itself within the 

instructor’s office hours. 

A fair amount of each characteristic is inserted into the teaching model for each group as it can be 

seen in Figure 1. 

Figure 1: The distribution of characteristics to teaching models 

5. Findings and results 

In order to distinguish the performance among the groups, the average assignment scores were 

calculated to weight the positive and negative aspects of each style. 

Table 1: Average assignment scores of three groups 

Assignment(s) Transformational Group 

Avg Scores 

Transactional Group 

Avg Scores 

Hybrid Group 

Avg Scores 

Quizzes (4)- 10% 74 64 69 

Homework (8)-15% 88 79 80 

Exams (2)-30% 59 53 55 

Laboratory work (4)-20% 81 86 85 

Final lab report (1)-25% 83 89 89 

Total 76.4 77.1 79.7 

5.1 Transformational group 

The group was well organized and motivated towards the achievement of class. They participated in 

instructor’s meetings and mentored other group members when needed. These regular meetings 

283


enhanced students to perform well in the written examinations. On the other hand, the group was 

reluctant about the laboratory work and final lab.. The average quiz, homework and exams scores 

showed that “hands on” approach can push students to one side while ignoring other parts. Because 

the students are more likely teacher oriented and driven by some real life issue, they go far for 

external research and go outside of the topic, thus they struggle to understand some conceptual 

issues that are asked in written assignments. 

5.2 Transactional group 

The group had some irregular, but useful meetings. The contribution of the instructor was quite similar 

to transformational group. The group was mainly focused on the reward that was given on the final lab 

report; however there was no punishment for the bad piece of work. Because the students are goal 

oriented, they had no time to go outside of the lectures and meetings so do some external research. 

Thus they failed to solve some complicated problems in written examination. The competition for the 

reward reflected positively into grades. As expected, reward increased the performance in final lab 

report in which the question and goals were clear and simple whereas the performance dropped in 

other assignments. 

5.3 Hybrid group 

The group has semi strictly rules and procedures with little flexible deadlines. They had regular 

meetings and interactive study environment in order to discuss some internal and external research 

opportunities for the project. The competition among students was quite low because everybody had 

a chance to prove himself or herself as a team leader. Thus, the grades for written examination 

increased compared to transactional group in where the student were only final lab report oriented for 

the extra 10%. 

We’ve come across to better results in our hybrid group. The weight of the reward was set accordingly 

to keep the competition alive but also stabilize the degree of it at an acceptable level in order to get 

the best result. The issues with the written exam scores in transactional group carried on to our hybrid 

group. In spite of the fact that the averages rise about 3% to 4%, we could not reach the expected rise 

of 10%. Based on our findings, it can be claimed that a study group can be a positive learning 

experience which can be created with the vision of a transformational type of leader, because 

connecting with other students would enhance the quality of studying skills. Providing feedback 

throughout the work process would be another crucial suggestion. Our transactional group received 

detail feedback about their project whereas the transformational group had no desire to get more of a 

feedback that could be beneficial for the assignment. While providing feedback, it was essential to tell 

them about the reward that they could receive for their efforts. Unfortunately, we found this very risky 

due to fact that some students could get away from the purpose of the whole class. 

We have also come to a conclusion that both transformational and transactional instructors were lack 

in teaching in a steady, lasting way due to high motivation and over load features in both teaching 

styles. While the instructor can show enthusiasm for teaching, the next day, he or she can be 

overwhelmed because of adapting to an unusual teaching style. Thus, students’ performances vary 

along with the leader’s or instructor’s fluctuates in motivation and changes in daily life activities. 

Instructors should balance the teaching power in a way that they can alleviate stress off the students. 

Depending upon the class atmosphere and individual, the teacher should be able to alter and adjust 

the load of both transformational and transactional leadership teaching styles in an allowable zone 

that stay in the limits of each technique. 

It is also found out that some students have negative thoughts about the “team work” word especially 

in the hybrid group. It sounded like an obligation or restriction to them. However, based on the 

teacher’s in-class observation, single opinion minds usually failed after a point because they could not 

resist any other ideas other than his or hers. It is like manufacturing various car models with same 

exterior and interior design models. You would not get much interest on your product because your 

work is uninspiring and predictable. (Carter, 2009). Thus, we strongly recommend that a class hour 

should be spent to teach the importance of team working before the initial lectures. 

In this paper, we reviewed the effects of different teaching styles on a project class. Nowadays, 

traditional classroom style has started to shift to online teaching system. Therefore, the interactive 

classroom atmosphere is limited to technological advancements. We believe that implications of 

284


transactional teaching style can be harsh meanwhile the transformational model can be quite light. 

The hybrid model is a great role model for online teaching in which hands on and reward features are 

combined and integrated into one single system. 

References 

Avolio, B. J., & Bass, B. M. (1999). Re-examining the components of transformational and transactional 

leadership using the multifactor leadership questionnaire. Journal of Occupational & Organizational 

Psychology, 72(4), 441-462. 

Carless, S. A. (1998). Assessing the discriminant validity of transformational leader behavior as measured by the 

MLQ. Journal of Occupational & Organizational Psychology, 71(4), 353-358. 

Carter, J. (2009). Transformational leadership and pastoral leader effectiveness. Pastoral Psychology, 58(3), 

261-271. doi:10.1007/s11089-008-0182-6 

Forck, M. (2011). Courageous leadership three traits to expand your influence. Project Management, 56(3), 34- 

35. 

Gulati, R., & Puranam, P. (2009). Renewal through reorganization: The value of inconsistencies between formal 

and informal organization. Organization Science, 20(2), 422-440. 

Hartof, D., & Koopman, P. (1997). Transactional versus transformational leadership: An leadership: An analysis 

of the MLQ. Journal of Occupational & Organizational Psychology, 70 (1), 19-34. 

Low, A. (2010). What is leadership?. ReVision, 30(3/4), 20-27. 

McMahon, T. M. (2010). Leadership Classics (1st ed.), Long Grove, IL: Waveland Press, Inc 

Siop. (2011). Bernard M. Bass. Retrieved December 1, 2011, from http://www.siop.org/tip/Jan08/23obit.aspx 

Rowold, J. (2006). Transformational and transactional leadership in martial arts. Journal of Applied Sport 

Psychology, 18(4), 312-325. 

Ruggieri, S. (2009). Leadership in virtual teams: A comparison of transformational and transactional leaders. 

Social Behavior & Personality: An International Journal, 37(8), 1017-1021 

285

How Business Schools as Learning Organizations Meet 

new Challenges: A Worldwide Study 

Karen Voolaid and Üllas Ehrlich 

Tallinn School of Economics and Business Administration at Tallinn University 

of Technology, Tallinn, Estonia 

karen.voolaid@tseba.ttu.ee 

ullas.ehrlich@tseba.ttu.ee 

Abstract: Today there are more than 12,000 known business schools (hereinafter BS) across the globe, and the 

number is increasing every year. This is due to increasing demand from the global student population, people at 

work who wish to advance their careers and employers of graduates in business and management. BSs today 

are facing many challenges. Despite the positive impact of BSs on society, the current financial crisis and the 

eroding of corporate reputations have given rise to strong criticism of BSs and their role in those events. For 

these reasons, BSs will have to change if they want to keep having positive impact on people, firms and 

societies. The paper examines the organizational learning rate of BSs worldwide and dependence on various 

characteristics of the BSs. The authors measured, using a special instrument (questionnaire) elaborated by them, 

the learning rate of 105 BSs worldwide. The structure of the measuring instrument is based on Watkins` and 

Marsick’s learning organization questionnaire DLOQ. The questionnaire comprises three dimensions divided into 

seven levels, which in turn are divided into 45 characteristics. The paper analyses the dependence of the general 

learning rate of BSs, as well as the dependence of its individual components (dimensions and levels) on the 

geographical-cultural region of the school location, ownership form and the international accreditations the school 

has. The most reliable statistically was the dependence on school’s ownership form: private capital based BSs 

are more learning than state or public schools. Less significant is the dependence of learning on geographicalcultural 

region: BSs in Eastern Europe are slightly more learning than schools in other regions. A significant 

correlation was missing between the possession of international accreditations and the learning rate. The 

characteristics that gathered low scores in the questionnaire are addressed separately. Analysis of them enables 

to identify weaknesses in the organisational learning of BSs, indicating the ways for improving the 

competitiveness of BSs. 

Keywords: business school as learning organization, business school learning rate measurement instrument, 

organizational learning 


The current financial crisis and the eroding of corporate reputations have given rise to strong criticism 

of BSs and their role in those events. For these reasons, BSs have to change if they want to keep 

having positive impact on people, firms and societies (Canals, 2010). As institutions educating 

managers and business leaders, BSs have to rethink the role of companies in society, the job of 

business leaders and how to include these dimensions in their programmes. New challenges for BSs 

are integration, leadership development, a humanistic view of the firm, life-long learning and 

organizational structure (Sattelberger, 2011). The more forward-looking BSs are already beginning to 

implement changes to their curricula, their marketing strategies, their alliances and partnerships. They 

have realized that in the future the business education market will become increasingly competitive. 

More providers, new methods, creative strategies, global opportunities will provide a varied choice to 

students across the world (Cornuel, 2007). The BSs need to adopt strategies that allow them to 

distinguish themselves from their competitors and prove the value. 

The implementation of organizational changes in BSs requires from the BS members obtaining of new 

skills, changing of attitudes and manners. All this happens in the process of organizational learning. 

BSs, as well as people, should learn to be able to change as fast as the surrounding environment 

requires. The learning rate of BSs as organizations has been studied insufficiently so far. The authors 

of this paper in their previous research have measured the learning rate of BSs in Estonia, using for 

that one of the most popular learning measurement instrument in the world, Watkins and Marsick’s 

questionnaire (Watkins, Marsick, 1996). Many researchers of the learning organization have later 

specifically used Watkins and Marsick’s questionnaire in their research (Jamali, Sidani and Zouein, 

2009; Basim, Sesen and Korkmazurek, 2007; Hernandez, Watkins, 2003). It turned out that this 

questionnaire does not take into consideration the specific features of BSs and therefore the authors 

have worked out a special instrument for measuring the learning rate of BSs as organizations 

(Voolaid, Ehrlich 2011). Using this instrument the authors have carried out a worldwide empirical 

study of more than 100 BSs in 40 countries on all continents. 

286


The paper seeks to measure the organizational learning ability of BSs worldwide, map the learning 

rate of these BSs as organizations, analyse it based on the levels and dimensions, identify the 

learning-related bottlenecks and provide a basis for increasing their competitiveness. On the basis of 

the empirical information BSs across the world have been positioned on the basis of different 

characteristics and statistical correlation between the learning rate and various criteria (e.g. 

ownership, accreditations, cultural differences). 

The paper also provides the complete questionnaire for measuring business schools’ organizational 

learning with the average learning rate of all 45 characteristics and its percentage differences from the 

average learning rate of the study (Table 1). Considering the limitations of the paper in terms of 

volume, a more detailed analysis of business schools learning by characteristics will be done in the 

future. 


The authors have used the Watkins’ and Marsick’s questionnaire for measuring the learning rate of 

BSs before (Voolaid, Ehrlich, 2010), but it turned out that this questionnaire does not take into 

consideration the specific features of BSs. Therefore the authors worked out a special BS learning 

rate measurement instrument (Voolaid, Ehrlich, 2011). The authors replaced the characteristics in 

Watkins’ and Marsick’s questionnaire on the basis of the conducted survey. The authors have not 

changed significantly the structure and hierarchic setup of Watkins’ and Marsick’s questionnaire, since 

their objective was not to make a completely new questionnaire but to adjust Watkins’ and Marsick’s 

questionnaire to make it more suitable for measuring the BSs as a learning organization. In order to 

detect new BS specific characteristics for the questionnaire to measure BSs’ learning rate, all seven 

dimensions of Watkins’ and Marsick’s DLOQ were analyzed separately and discussed regarding their 

importance in the BS context. As a result, the authors provided new specific characteristics for 

measuring BSs´ learning rate (Voolaid, Ehrlich, 2011). Using this instrument the authors have 

measured the learning rate of 105 BSs in 44 countries worldwide. 

The questionnaire comprising 45 questions was sent to 719 BSs by e-mail and the representative of 

the school had been asked to complete it electronically and received 105 responses (14,6%). The 

survey was conducted from 1 February to 30 April 2012. 

3. Results 

In general it may be stated that the organizational learning rates of BSs worldwide are quite even, 

with the average learning rate of a majority of the schools not differing from each other more than 

three points on a six-point scale, while the highest learning rate measured was 5.7 and the lowest 2.7. 

The average learning rate of BSs studied was 4.62, while the average rates of individual questions 

varied very little – from 5.09 to 3.99. The results of analyzes are provided in Table 1. The 7th 

dimension “Provide strategic leadership for learning” received the highest score (4.80) among the BSs 

worldwide. Only the question 42 “In my BS, leaders mentor and coach those they lead” in this 

dimension need to be improved by BS leaders. Scores in BSs are high also in the 5th dimension 

“Foster movement toward a collective vision” and in the 2nd dimension “Foster inquiry and dialogue”. 

The survey results show that some improvement in the 5 th vision dimension should be mostly in the 

question 31 “in my BS, all employees can participate in formulating the objectives of the BS” and in 

the 2 nd dimension in question 8 “in my BS, people give open and honest feedback to each other”. 

Definitely more learning opportunities should be created in BSs (1 st dimension) and relationships with 

the external environment and corporate world need to be improved (6 th dimension). Educational 

organizations need to build internal and external partnerships to better accomplish overall goals 

(Baldridge, 1983). The survey results indicate in the 1 st dimension more powerful learning 

environment and learning processes that co-focus on academic/scientific methods and 

practice/applied connections should be created in BSs. Like the authors, having studied many 

universities as learning organizations, have pointed out, and as the BSs worldwide survey 

demonstrated, in order for the BSs to grow more learning first of all team-working opportunities must 

to be improved (Willcoxson, 2001; Lorange, 1997; White and Weathersby, 2005). Training for effective 

teamwork must be supported by the conscious development of teamwork strategies in each new 

teamwork context (Voolaid, Ehrlich, 2011). But the biggest improvement is required for creating 

systems to capture and transform learning, to create interdisciplinarity. BSs worldwide should 

continuously upgrade and improve teaching and learning processes, create and distribute new 

knowledge (Voolaid, Ehrlich, 2011). Although the 4 th dimension average was the weakest (4.44), 

question 26 in this dimension, “in my BS, adjustments to the program design have been made in the 

287


light of feedback from program teams and key stakeholders” was ranked 2–3 rd in the list of all 

questions by BS leaders worldwide. Very high rating was given also to the 6 th dimension question “my 

BS encourages people to think from a global perspective”. The lowest evaluated dimensions 18 and 

19 show that BSs need to develop team learning abilities and skills. Dimensions 24, 23 and 22 show 

that there is also a need to create systems to capture and transform learning and knowledge and 

information should be made available to all employees in BSs. There is also a need for BSs to 

develop better connections with outside community as dimensions 37, 38, 39 were also evaluated 

low. 

Table 1: BSs average learning rates (LR) by dimensions, levels and characteristics 

LR % from Or- 

Average der 

Individual level 4.64 100.4 

1.dimension: provide continuous learning opportunities 

1In my business school, people openly discuss mistakes in order to learn from 

4.59 99.2 

them 4.66 100.8 23. 

2 In my business school, people help each other learn. 

3 In my business school, people can get money and other resources to support 

4.78 103.6 15. 

their learning. 4.43 95.9 35. 

4 In my business school, people are given time to support learning. 

5 In my business school, people view problems in their work as an opportunity 

4.75 102.8 17. 

to learn. 

6 In my business school, powerful learning environment and learning 

processes that co-focus on academic/scientific methods and practice/applied 

4.30 93.0 39. 

connections are created. 

7 My business school keeps contributing to the development of managers` 

knowledge and capabilities: many continuous education opportunities are 

4.58 99.1 30. 

created for business school graduates. 4.60 99.6 26. 

2. dimension: foster inquiry and dialogue 4.70 101.7 

8 In my business school, people give open and honest feedback to each other. 4.51 97.6 31. 

9 In my business school, people listen to others' views before speaking. 

10 In my business school, people are encouraged to ask "why" regardless of 

4.58 99.1 29. 

rank. 

11 In my business school, whenever people state their view, they also ask what 

4.82 104.2 13. 

others think. 4.47 96.8 34. 

12 In my business school, people treat each other with respect. 

13 In my business school, active dialogue between business school and 

business is taking place and faculty members are working in the classroom with 

5.09 110.2 1. 

senior executives, which make the faculty more aware of corporate problems. 4.71 102.0 19. 

Team or group level 4.48 97.0 

3. dimension: promote collaboration and team learning 

14 In my business school, teams/groups treat members as equals, regardless 

4.48 97.0 

of rank, culture, or other differences. 

15 In my business school, teams/groups focus both on the group's task and on 

4.89 105.8 8. 

how well the group is working. 

16 In my business school, teams/groups revise their thinking as a result of 

4.65 100.6 24. 

group discussions or information collected. 

17 In a business school teaching integrated courses and helping people to 

4.64 100.4 25. 

think in an integrated way is supported in different ways. 

18 In my business school, team building activities, focusing on enhancing 

interpersonal communication, conflict resolution and problem-solving skills are 

4.67 101.1 21. 

organized for the staff. 

19 In my business school, rewards and performance management strategies 

3.99 86.3 45. 

are tied to effective teamwork. 4.04 87.6 44. 

Organizational level 4.65 100.7 

4. dimension: create systems to capture and transform learning 

20 My business school uses two-way communication on a regular basis, such 

4.45 96.4 

as suggestion systems, electronic bulletin boards, or town hall/open meetings. 

21 My business school enables people to get needed information at any time 

4.42 95.6 37. 

quickly and easily. 4.60 99.5 27. 

22 My business school makes its lessons learned available to all employees. 

23 In my business school, a mechanism for sharing interdisciplinary knowledge 

4.16 90.0 41. 

leading to the publication of interdisciplinary research is established. 4.11 89.0 42. 

24 In my business school, a mechanism for the sharing of interdisciplinary 

4.11 89.0 43. 

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LR % from 

Average 

knowledge in teaching leading to the development of a full interdisciplinary 

course is established. 

25 In my business school, links with industry, other education providers, and 

academic/industry exchange programs are developed and implemented. 4.77 103.3 16. 

26 In my business school, adjustments to the program design have been made 

in the light of feedback from program teams and key stakeholders. 5.02 108.6 2.-3. 

5. dimension: foster movement toward a collective vision 4.76 103.1 

27 My business school recognizes people for taking initiative. 4.94 107.0 6. 

28 My business school invites people to contribute to the organization's vision. 4.86 105.2 10. 

29 In my business school, members of the organization are involved in the 

process of creating a common vision. 4.85 104.9 11. 

30 In my business school, the views are made explicit and connected with its 

strategy, faculty development, program design, and research initiatives. 4.79 103.7 14. 

31 In my business school, all employees can participate in formulating the 

objectives of the business school. 4.48 97.0 33. 

32 In my business school, all employees have a common understanding of the 

business school mission and vision. 4.66 100.9 22. 

6. dimension: connect the organisation to its external environment 4.60 99.7 

33 My business school encourages people to think from a global perspective. 5.02 108.6 2.-3. 

34 My business school works together with the outside community to meet 

mutual needs. 4.86 105.2 9. 

35 My business school encourages people to get answers from across the 

organization when solving problems. 4.60 99.5 28. 

36 In my business school, important decisions are made with consideration of 

the key partners’ opinions, including the representatives of companies and 

alumni, who are also members in decision-making and advisory bodies of the 

business school. 4.73 102.4 18. 

37 My business school has developed a higher capability to scan the 

environment, and is able to act on early signals. 4.37 94.5 38. 

38 In my business school, leaders are also recruited from the corporate market, 

and many of them have taken up their careers in companies. 4.24 91.7 40. 

39 In my business school practices that are common to the corporate world 

have been incorporated into the daily routines. 4.42 95.8 36. 

7. dimension: provide strategic leadership for learning 4.82 104.3 

40 In my business school, leaders generally support requests for learning 

opportunities and training. 4.98 107.9 5. 

41 In my business school, leaders share up to date information with employees 

about competitors, industry trends, and organizational directions. 4.69 101.5 20. 

42 In my business school, leaders mentor and coach those they lead. 4.50 97.4 32. 

43 In my business school, leaders continually look for opportunities to learn. 4.90 106.0 7. 

44 In my business school, leaders ensure that the organization's actions are 

consistent with its values. 5.01 108.5 4. 

45 In my business school, good governance is created by the faculty who is 

strongly committed to the long-term development of the school and the leaders 

are willing to model collaborative action and inquiry, and involve all staff in the 

initial setting of directions. 4.84 104.8 12. 

Average 4.62 

3.1 Learning rate by Eduniversal academic zones 

A major purpose of the research is, in addition to measuring the learning rates of BSs worldwide, to 

identify the factors that influence the learning rate. In this paper the authors analyze the dependence 

of the learning rate on school’s geographical-cultural location (Table 2), as well as on its ownership 

and accreditations the school has (Tables 3, 4). 

To find the learning rate’s dependence on geographical-cultural location BSs were distributed into 

regions according to Eduniversal (Eduniversal, 2010) classification (Table 2). The table describes the 

average LR (hereinafter learning rate) of schools in the region on the basis of the whole questionnaire 

as well as its individual components (levels and dimensions), so as to get a better picture of the 

dependence of different aspects of the learning rates. 

289 

Order


Table 2: BS learning rate by academic zones (by Eduniversal) 

Academic zones 

(by eduniversal) 

Average learning rate 

Total By level By dimension 

Individual 

Team 

or 

group 


1 2 3 4 5 6 7 

Eastern Europe (22 schools) 4.9 4.9 4.8 4.9 4.8 4.9 4.8 4.8 4.9 4.9 5.0 

Far Eastern Asia (14) 4.7 4.6 4.6 4.7 4.5 4.8 4.6 4.6 4.9 4.7 4.9 

Latin America (4) 4.7 4.8 4.5 4.7 4.9 4.7 4.5 4.5 4.5 4.6 5.1 

North America (13) 4.7 4.7 4.3 4.8 4.6 4.7 4.3 4.3 5.2 4.7 4.9 

Western Europe (39) 4.6 4.6 4.4 4.6 4.5 4.7 4.4 4.4 4.6 4.5 4.7 

Eurasia&Middle East (3) 4.3 4.5 4.0 4.2 4.6 4.5 4.0 3.8 4.6 4.0 4.5 

Oceania (5) 4.1 4.3 4.0 4.1 4.5 4.2 4.0 3.7 4.6 4.0 4.1 

Central Asia (3) 4.0 3.8 3.8 4.1 3.8 3.8 3.8 3.9 4.2 4.0 4.4 

Somewhat surprisingly, the average learning rate was the highest (4.9) in East-European BSs, 

followed by Far East Asia, Latin and North America, equally with 4.7 points, with Western Europe (46) 

slightly lagging behind. The lowest learning rate level is in Central Asia (4.0). East-European BSs 

have the highest average learning rate also by all levels (individual 4.9, team or group 4.8 and 

organizational 4.9) and dimensions 2, 3, 4 and 6 (for descriptions of dimensions see Table 1). Only in 

dimensions 1 and 7 the highest average learning rate is in Latin America and in dimension 5 in North 

America. 

The higher average learning rate of East-European BSs, especially in comparison with West- 

European BSs, is somewhat surprising, but considering the sufficient number of schools studied 

within this research it cannot be regarded as accidental. Eastern Europe has been more unstable, 

both politically and economically, having experienced a transition from one political-economic 

formation to the other over the past couple of decades, i.e. socialism was replaced by capitalism. This 

has involved very big changes also in the higher education organization in Eastern Europe; it may be 

said even that BSs in the classical sense became largely possible in Eastern Europe only after the reestablishing 

of market economy. Due to fast changes in all society also BSs have had to learn and 

change fast, which explains their higher organizational learning rate compared to other regions. In 

regions with a more stable development, such as, for example, Western-Europe, BS have had no 

need for so fast and radical changes, which, as the research demonstrated, has exerted impact also 

on their organizational learning rate. The biggest difference in the learning rate level in comparison 

with West-European and North American BSs is in the Team or Group level (0.4 and 0.5 

respectively), which consists of one dimension: „promote collaboration and team learning“. Obviously 

just this dimension is extremely important for an organization in a very rapidly changing environment. 

The hypothesis is confirmed also by the fact that this dimension has higher average than in Western 

European and North American BSs also in Far East Asia and Latin America, which are also rapidly 

advancing regions. North America has the leading position in dimension 5: “foster movement towards 

a collective vision“, which got the highest average rating among the dimensions – 5.2. Obviously it is 

this organizational learning component that satisfies the needs of the North-American environment. 

Latin America received higher average than others (4.9) in dimension 1: „Provide continuous learning 

opportunities” and in dimension: 7 „provide strategic leadership for learning“. However, the small 

number of schools in the survey would not allow drawing any significant conclusions about Latin 

America. The same is true about BSs in Oceania and Central Asia where the learning rates are 

somewhat lower than in other regions. 

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3.2 Organizational learning rate dependence on ownership form 

It is often argued that privately owned enterprises are more effective in terms of economic 

performance than state-owned and publicly owned enterprises. This hypothesis was tested on the 

BSs learning rate, where the state-owned and public BSs were addressed together. To find out the 

connections the authors built a regression equation where in addition to ownership form they included 

such an important indicator for BSs as whether they have or not an international accreditation. 

Regression equations (OLS method) were made for the average of the questionnaire as well as 

separately for averages of all dimensions and levels as follows: 

( ) = β 0 + β1OWNERSHIP 

+ β2 

ACCREDITATIONS 

+ i 

ln LR μ 

The results of analysis are presented in Table 3, containing in addition to the regression parameters 

the arithmetic means of all dimensions and levels. The results demonstrate that the learning rate 

dependence on ownership form is statistically significant (prob.0.0787). The average learning rate of 

privately owned BSs as organizations (4.8) is higher than that of state-owned and public BSs (4.5). 

Private schools have a higher arithmetic mean of the learning rate also in all dimensions and levels 

(Table 3). The level that depends the most on ownership form is the first (individual) with the average 

rates 4.9 and 4.5 respectively (prob.0.0208). Dependence of both of the individual level dimensions 

(1st „provide continuous learning opportunities“, prob.0.0122 and 2 nd „foster inquiry and dialogue“, 

prob. 0.0626) on ownership form is also noteworthy. The significance of the team or group level 

dependence is smaller (prob.0.0927). The difference in the organizational level is statistically 

insignificant (prob.0.1541). 

Hence it may be said that the biggest learning rate difference between private and state/public BSs is 

related with the individual level – private schools have a higher learning rate. A reason may be that a 

profit oriented private capital based organization can better motivate the learning by their members 

than state or public organizations. At the same time, the difference in the learning rate may be caused 

also by smaller guarantees for individuals in the organization and the ensuing greater uncertainty for 

the future, which makes one constantly improve the individual learning level. Considering the privately 

owned BSs orientation to profit it may be assumed that the school owners and management are 

eager to and focused on raising the learning level of all members of the organization, since the 

school’s competitiveness is at stake. State and public schools are somewhat more inert in the 

development of the individual dimension of organizational learning. 

Table 3: BS learning rate by ownership form 

State/ Private Ownership (public-1, private-2) 

public 

average average Coefficient Std. Error t-Statistic Prob. R-squared 

Total 4.4750 4.7889 0.285191 0.160471 1.777214 0.0787 0.059421 

Individual level 4.4597 4.8533 0.355934 0.151491 2.349532 0.0208 0.103566 

Dimension 1 4.3929 4.8259 0.394307 0.154392 2.553934 0.0122 0.113478 

Dimension 2 4.5376 4.8852 0.311165 0.165133 1.88433 0.0625 0.075538 

Team or group 

level 

(Dimension 3) 

4.3078 4.6477 0.322007 0.189646 1.69794 0.0927 0.038489 

Organisatio-nal 

level 

4.5214 4.7893 0.24127 0.167966 1.436424 0.1541 0.042967 

Dimension 4 4.3272 4.5714 0.226494 0.191138 1.184979 0.2389 0.022806 

Dimension 5 4.6694 4.8690 0.158347 0.187173 0.845991 0.3996 0.045066 

Dimension 6 4.4389 4.8160 0.349754 0.179031 1.953591 0.0536 0.059576 

Dimension 7 4.6976 4.9326 0.213153 0.16815 1.267635 0.208 0.031624 

Statistically significant at the organizational level (prob.0.0536) is only dependence of the 6th 

dimension „connect the organization to its external environment“. Differences in other dimensions, like 

in the total level, are statistically insignificant and although arithmetically the private BSs’ learning rate 

is somewhat higher, it might be said that private ownership does not provide a definite advantage to 

the organizational level of learning. Comparison of the average rates of organizational learning still is 

291


clearly in positive dependence on ownership – this decreases, however, from the first to the third 

level. 

3.3 Learning rate dependence on BS accreditations 

Accreditation is one of the value proposition, and measure for success for BSs. Agencies such as 

AACSB in the USA, EFMD with its EQUIS and EPAS in Europe and AMBA in the UK offer 

professional accreditations for BSs and their certification is viewed as a valuable quality rating (and 

associated marketing tool) by many BSs. This is clear from web-site evidence showing that many 

leading BSs trumpet their ability to gain the „triple-crown“ of accreditation (from AACSB, AMBA and 

EQUIS) as a signal of their high quality and value to potential students (Howard, 2007). 

The dependence of the learning rate on accreditations was studied with the same regression analysis 

as the dependence on ownership. The results of analysis are provided in Table 4. Although the BSs 

which have an accreditation have a higher arithmetic mean of the learning rate at all levels and 

dimensions, the regression results show that the impact of accreditations on the whole is statistically 

insignificant (prob.0.1371). Notwithstanding that the average learning rate does not indicate any 

dependence on whether the BS has international accreditations or not, the dependence of individual 

learning components is different. The possession of accreditations quite obviously is related with the 

individual learning level (prob.0.0394) and with both dimensions of this level (descriptions of the 

dimensions, see Table 1). The results allow drawing a conclusion that the organizational learning 

ability at the individual level is important for getting and keeping accreditations. Somewhat 

surprisingly, the differences in other dimensions and levels are not statistically significant. 

Table 4: BS learning rate by accreditations 

With 

accreditations 

Without 

accreditations 

Accreditations (with-1, without-0) 

average average Coefficient Std. Error t-Statistic Prob. R-squared 

Total 4,7114 4,4923 0,23942 0,159693 1,49925 0,1371 0,059421 

Individual level 4,7589 4,4533 0,314742 0,150757 2,087738 0,0394 0,103566 

Dimension 1 4,7068 4,4031 0,323606 0,153644 2,106205 0,0378 0,113478 

Dimension 2 4,8197 4,5119 0,3044 0,164333 1,852343 0,067 0,075538 

Team or group 

level 

(Dimension 3) 

4,5362 4,3948 0,149199 0,188727 0,790555 0,4311 0,038489 


level 

4,7282 4,5343 0,222634 0,167152 1,331928 0,186 0,042967 

Dimension 4 4,5045 4,3793 0,148256 0,190212 0,779425 0,4376 0,022806 

Dimension 5 4,8720 4,6012 0,344672 0,186266 1,850423 0,0673 0,045066 

Dimension 6 4,6952 4,4694 0,228469 0,178164 1,282352 0,2028 0,059576 

Dimension 7 4,8852 4,7242 0,182297 0,167335 1,089413 0,2787 0,031624 

It is difficult to draw conclusions about the correlation looseness between the learning rate and 

possession of accreditations. The authors hypothesise that the BS which have accreditations as a 

rule are at a higher level than others and hence have a higher learning rate also. Attention should be 

focused on the reasons why this is not so in reality. A possible explanation is that a BS applying for an 

accreditation is more motivated to be learning than a BS which already has got the accreditation. This 

research examined all major BS international accreditations together; in the future it would be 

interesting to analyse the impacts of different accreditations on the total learning rate of BS as well as 

on its individual dimensions. 


The authors investigated 105 BSs across the world using a special instrument developed by them for 

measuring the organizational learning in BS, which is based on Watkins` and Marsick`s organizational 

learning model. Based on the model, the questionnaire covered all organizational learning aspects, 

comprising three levels, which in turn were divided into seven dimensions and 45 questions. 

292


The research measured the learning rate and structure of BSs and identified the strengths and 

weaknesses in the organizational learning ability of BSs. Also the dependence of the BS learning rate 

on the geographical-cultural location, ownership and possession of international accreditations was 

measured. 

In general it may be stated that the organizational learning rates of BSs worldwide are quite even, 

with the average learning rate of a majority of the schools not differing from each other more than 

three points on a six-point scale, while the highest learning rate measured was 5.7 and the lowest 2.7. 

The average learning rate of BSs studied was 4.62, while the average rates of individual questions 

varied very little – from 5.09 to 3.99. The highest average score (4.08) was received by the 7 th 

dimension: „provide strategic leadership for learning” and lowest (4.44) by the 4th dimension: „create 

systems to capture and transform learning“. The questions that received the least points were from 

several dimensions, which enabled to conclude that the organizational learning weaknesses of BSs 

are not related with one or a couple of specific aspects of learning. However, a more detailed analysis 

of the questions shows that there is a need to develop team learning abilities and skills, as well as to 

improve ability to create a system to capture and transform learning and knowledge. 

To measure the BS learning rate dependence on geographical-cultural location the schools were 

grouped into zones proposed by Eduniversal. The highest learning rate was discovered in East- 

European BSs (4.9), which in the authors’ opinion indicates that BSs in Eastern Europe respond to 

very fast and radical changes in the operating environment that have taken place in Eastern Europe 

over the past decades, with increased organizational learning ability. Eastern Europe was followed 

with equal scores (4.7) by Far East Asia, Latin America and North America. Western Europe was 

fourth. The smallest average score were collected by Central Asia BSs. 

Investigation of the learning rate dependence on ownership form revealed that privately owned BSs 

are more learning than public or state-owned BSs (average learning rate 4.8 and 4.5 respectively, 

prob.0.0787). Statistically significant was the difference at individual and team or group level, 

insignificant is the difference at the organizational level. The better learning ability of privately owned 

BSs may have several reasons; the authors believe the most important are the greater dependence of 

private schools on external environment and the small or non-existent state financing, inducing 

privately owned Bs to react to changes in the environment faster and more flexibly, which in turn has 

a positive impact on the learning ability. Private schools often are also profit earning organizations 

with owners interested in higher learning ability for the sake of profit and therefore invest in this. 

Statistically significant correlation was not found between the international accreditations and learning 

rate (prob.0.1371). However, there is a correlation between the possession of accreditations and the 

individual level of learning, and both dimensions of that level are also dependant. 

Information on the BS learning rate would help, in the opinion of authors, to analyse and improve BSs 

as organizations and as a result increase their global competitiveness. Hence the BSs themselves 

should be interested in investigating their organizational learning and where necessary, also perfect 

the measuring instrument. 

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294

Designing Knowledge Management Syllabus: How 

Business Administration Students Learn at Summer 

School? 

Recep Yücel 

Kırıkkale University, Kırıkkale, Turkey 

akademik71@gmail.com 

Abstract: Teaching knowledge management is one of the most growing interests in today’s universities program. 

A new syllabus for the bachelor degree (BA) business students at summer school should be covered in five 

different modules: (1) The knowing process (2) The hierarchy of knowledge (3A) The “knowledge management” 

definition and related discipline: history and roots (3B) The “knowledge management” definition and related 

discipline: Interdisciplinary perspectives and KM paradigms (4) KM in organizations: requirements and 

advantages of models (5) Knowledge mapping techniques and designing a new ‘Knowing Organization’: close 

session. The syllabus is suitable for creating awareness for the students on knowledge management discipline 

and practices at the introductory level. The syllabus provides high competitive advantage for the students’ 

professional career. 

Keywords: KM syllabus, summer school, BA business students, KM discipline, KM teaching 


This paper describes a knowledge management (KM) syllabus which could be introduced at any 

summer school for bachelor degree (BA) business students at the theoretical level. Teaching 

knowledge management (KM) plays a crucial role within the business and organizational context. It 

also requires investigating the KM discipline from the interdisciplinary perspective. The roots of this 

discipline rely on the different paradigms (Burrell and Morgan, 1979; Gioa, and Pitre, 1990; Gloet, and 

Berrell, 2003;). The basic research question of this study is how can KM syllabus be designed 

effectively by considering the KM discipline and implemented at the summer school for the BA 

business students? Although KM as an interdisciplinary field addresses business perspectives, the 

senior business students can benefit from this course at the awareness level. After taking this course, 

students will realize the importance of not only explicit form of knowledge but also tacitness (Polanyi, 

1962,1966) in organizations. In order to find a suitable answer to this question, we need to think about 

what the KM discipline and its root rely on and how KM creates a competitive advantage. This paper 

aims at designing a new syllabus on teaching KM for any summer school, whose period is very short 

compared to the normal semester. Generally, summer schools take seven weeks and 21 hours are 

allocated for weekly teaching. For this reason, creating awareness on teaching KM for the BA 

business students at the summer school would be useful to gain competitive advantage in their 

professional career. Furthermore, there is a more informal environment than the normal semester in 

the summer schools. As it is very well known in the literature, the capturing and teaching of tacit 

knowledge requires an informal environment. Thus summer schools are the most suitable 

environment to teach KM. For this reason; the syllabus has to rely entirely on the tacit form of 

knowledge by creating more informal environment during the summer school. In addition to this, teambased 

activities, collaborative environment, creating communities of practices have to be considered 

for designing this syllabus. 

2. KM discipline 

Teaching knowledge management from the interdisciplinary perspective is one of the most attractive 

approaches in the summer school. Although different perspectives, layers, dimensions, processes 

and models (Awad and Ghaziri, 2004; Becerra-Fernandez, Gonzalez, and Sabherwal, 2004; Bukowitz 

and William, 2000) have been mentioned within the literature on KM discipline (Capar, 2003; 

Chaudhry and Higgins, 2001; Chris, and Lee, 2005; ), only a few studies (Sagsan, 2009; Ives and 

Torrey, 1998, Koenig, 1999; Sattar and Higgins, 2001; Dalkir, 2005, Stankosky, 2005, Sagsan, 2007; 

Gloet and Berrell, 2003, Alavi and Leidner, 2001; Grossman, 2007) indicate the paradigms of KM 

discipline. All paradigms rigorously refer to teaching KM in the context of designing a new syllabus. 

According to Sagsan (2009), technological, socio technical, inter / intra organizational and humanist 

paradigms could be considered for designing a new curriculum program based on the KM discipline. 

Technological and socio-technical paradigms begin with data and information stages according to 

knowledge hierarchy and contain system theory, technology science, library and information science, 

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and sociology. On the other hand, organizational and human paradigms put forward the importance of 

knowledge and allow us to understand knowledge science, cognitive science, micro and macro 

organizational theories, psychology, individual and organizational learning theories. 

Jennex and Croasdell (2007) have investigated KM by considering Kuhn’s criteria in terms of being a 

separated discipline. According to them, knowledge management is completely supported by these 

criteria. There are four layers that help in establishing and advancing the discipline of knowledge 

management (Schwarts, 2007: 26) namely technology science, organization & management science, 

social science and philosophy. 

Sveiby (1996; 2001) argues that two important tracks, i.e. information technology and people should 

be considered. Stankosky (2005; see also Sagsan, 2009) detailed these sciences as a multi-discipline 

branch or theory such as communication theories, system theory, organizational psychology, strategic 

planning, decision support systems, data mining, system analysis, total quality management, 

database design and management and theories of management and organization. 

Achieving a knowledge management project in organizations entails identifying some critical factors. 

These are training, sharing, culture, transferring, top management supported, technology 

infrastructure, creating, knowledge strategy, knowledge infrastructure (Alazmi and Zairi: 203). 

In summary, the literature on KM tells us to understand it from the interdisciplinary perspectives. Thus, 

designing KM syllabus at the summer school requires more informal environment, which must be 

considered tacit form of knowledge, and creating communities of practices or collaborative action 

learning systems. In addition to this, individual learning systems and cognitive processes are very 

important to understand the KM discipline at the tacit form of knowledge. 

3. Designing KM syllabus 

Within the short period and informal environment, KM syllabus has to be designed at the introductory 

level for the BA business students. Fundamental topics such as knowing process, hierarchy of 

knowledge, KM history and its essentials, KM interdisciplinary perspectives, organizational knowledge 

management modals, and knowledge mapping technique should be considered in designing the 

syllabus which includes five different modules based on the Sagsan’s (2009) KM paradigms. 

Table-1: A sample KM syllabus for the summer school period 

MODULE-1 

Week: 1. The knowing process 

The main purpose of this module is to create awareness from the subjectivist point of view. How individual 

can learn is the specific idea of the module. The knowing process is very important at the introductory level, 

teaching the concept of knowledge. How do we know what we know? What factors affect individual learning? 

These are the questions which enable us to understand human knowing capacity. For example, the cognitive 

activities such as understanding, being able to recognize, being acquainted, being familiar, being aware, 

remembering, understanding, interpreting, being able to explain, being able to demonstrate, being able to talk 

about, being able to perform, recollecting, recognizing and distinguishing allow us to understand the knowing 

process. Individual learning theories are the obligatory to learn from this module. Cognitive theory and 

individual learning theories are important for starting to learn knowledge management by focusing on the 

human perspective because they are the basis of individual learning components. 

MODULE-2 

Week:2 The hierarchy of knowledge 

This module includes physical process, data, information, knowledge and wisdom. Through these stages, 

any decision in organizations could be effectively made by the organizational participation. Explaining how 

organizations can reach the knowledge level from data and information level is the most crucial topic in which 

awareness must be created for business students within this module. The importance of knowledge in all 

activities of creative solutions, the role of knowledge in organizational decision making process, the benefits 

of knowledge in the competitive environment, how knowledge could be integrated with organizational 

innovative activities would be introduced here to the students. When they become aware of distinguishing 

each of the stages in turn, they will understand the necessities of knowledge management discipline within 

the business and organizational theory. Furthermore, the types of knowledge in particularly tacit form would 

also be underlined here, because the creation and transfer of tacit to tacit knowledge through interaction is 

very vital for summer school education in an informal way. 

MODULE-3A 

Week 3: The “knowledge management” definition and related discipline: History and roots 

It is self evident that the history of the knowledge management discipline should be explained in contrast to 

the other scientific organizational theories. For example, knowledge economy, which allows us to understand 

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the fundamental roots of KM, intellectual capital theory, and resource-based theory of the firm, knowledge 

assets theory, organizational learning theory, contemporary management techniques like benchmarking and 

reengineering are some of the important issues that need to be explained with regards to the knowledge 

management activities. 

MODULE-3B 

Week 4: The “knowledge management” definition and related discipline: Interdisciplinary perspectives and 

KM paradigms 

Management information system, library management systems, archives management systems, information 

management, data management, etc. should be explain by comparing to KM discipline because there is also 

misunderstanding in the literature that KM is an advanced level of library and information science. After 

comparing the other disciplines, KM definition from the different scholars’ point of view will be easier to 

understand by the students in this module. 

MODULE-4 

Week 5: Knowledge Management in Organizations: Requirements & Advantages of the Models 

The questions such as why do organizations need to manage their knowledge, what are the advantages of 

organizational knowledge management, why do organizations need to create their own knowledge 

management models, etc. could be discussed within this module. Different organizational knowledge 

management models based on the different knowledge processes in organizations as well as the different 

knowledge flow system should be attracted attention here. For example, knowledge management life cycle 

models would be reflected on knowledge processes such as knowledge creating, sharing, structuring, 

codifying, justifying, mapping, generating, collecting, using, auditing, etc. Different KM models could be 

explained as examples here. 

MODULE-5 

Week-6: Knowledge Mapping Techniques & Designing a New ‘Knowing Organization’: Close Session 

This module firstly describes the “knowing organization” form which differs from the learning organizations. 

After giving information on knowledge mapping techniques to the students, this type of organization could be 

created as sample by the BA students during the last week of the period, using some knowledge mapping 

techniques. They will have ability to design a new “knowing organization” by benefiting from the KM discipline 

and models. Of course, the general advantage of creating a knowing organization will be discussed by the 

students under the direction of the lecturer. 

4. Conclusion and recommendations 

This syllabus does not intend to evaluate the students’ performance. It is only a general framework for 

teaching KM discipline in the summer school at the introductory level. The aim of the syllabus is both 

to give a specific understanding and to create awareness on KM discipline for the BA summer school 

business students who have a capability to learn KM. As it s well known in the literature, KM discipline 

contains interdisciplinary perspectives such as technological paradigm, human paradigm, intra/inter 

organizational paradigm and socio-technical paradigm. As for the knowledge hierarchy; physical 

processes, data and information allow us to understand the technological and socio-technical 

paradigms of KM discipline. However, according to knowledge and wisdom, inter/intra organizational 

paradigm and human paradigm help us to understand KM discipline within this syllabus. 

The syllabus could be applied in any academic business administration program at the undergraduate 

level. As an empirical study, syllabus could be tested though the students who took this course by 

designing a specific questionnaire or interview form. The questions within the interview form must 

represent satisfactions, benefits, advantages, and disadvantages of students. After collecting all data 

from the students, syllabus could be redesigned towards the students’ needs and demands. 

Through these modules, BA senior business students will realize not only the importance of 

knowledge in the organizations but also will understand the framework of knowledge management 

discipline at the multi disciplinary manner. Moreover, the students will have an opportunity to motivate 

intangible assets such as patent, innovative activities, copyrights, tacit knowledge, reputations, 

intellectual capital, and etc. within their firms. After giving this course, students will also catch a 

chance to manage all formal and informal knowledge which circulates within organization. 

References 

Alavi, M.; Leidner, D. E. (2001), “Review: Knowledge Management and Knowledge Management Systems: 

Conceptual Foundations and Research Issues”, MIS Quarterly, Vol.25, No:1: 107-136. 

Alazmi, M. and Zairi, M., 2003, Knowledge management critical success factors. Total Quality Management, 14, 

2, 199-204. 

Awad, M. A. and Ghaziri, H. M. (2004), Knowledge Management. Pearson Education, Prentice Hall, Upper 

Saddle River, New Jersey. 

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Becerra-Fernandez, I.- Gonzalez, A. and Sabherwal, R. (2004). Knowledge Management: challenges, solutions 

and technologies. Pearson, Printice Hall, New Jersey. 

Bukowitz, W., and William, R. (2000). The knowledge management fieldbook. London: Prentice Hall. 

Burrell, G., & Morgan, G. (1979). Sociological Paradigms and Organizational Analysis, Heinemann, 1-37. 

Capar, B. (2003), “Bilgi Yönetimi: Nasıl Bir İnsangücü?=Knowledge Management: What types of Manpower do 

we need?”, 2nd National Knowledge, Economy and Management Congress Published Papers In 421- 

432.ss., Kocaeli University, Faculty of Economic and Administrative Sciences, İzmit, Turkey. 

Chaudhry, A.S. and Higgins, S.E. (2001). “Perspectives on education for knowledge management”, Proceedings 

of the 67th IFLA Council and General Conference, Boston: MA, August 16-25, pp. 1-9. 

Chris, D. and Lee, W. (2005). “A discipline, not a technology; knowledge management can help a company gain 

insight and understanding”, South China Morning Post. Hong Kong, Apr. 9, 2005. pg. 8. 

Dalkir, K. (2005). Knowledge management in theory and practice. Amsterdam: Elsevier. 

Gioa, D. A. and Pitre, E. (1990). “Multi paradigm perspectives on theory building”, Academy of Management 

Review, 15 (1): 584-602. 

Gloet, M. and Berrell, M. (2003). “The dual paradigm nature of knowledge management: implications for 

achieving quality outcomes in human resource management”, Journal of Knowledge Management, 7(1): 78- 

89. 

Grossman, M. (2007). “The emergining academic discipline of knowledge management”, Journal of Information 

Systems Education, 18 (1): 31-38. 

Ives, W. Torrey, B. ve Gordon, C. (1998), “Knowledge Management: an emerging discipline with a long history”, 

Journal of Knowledge Management, Vol.1, No:4: 269–274. 

Jennex, M.E. and Croasdell, D. (2007). “Knowledge management as a discipline”, (Ed. Murray E. Jennex), in 

Knowledge Management in Modern Organization, in 10-17pp., Hershey, London: Idea Group publishing. 

Koenig, M. E. D. (1999), “Education Knowledge Management”, Information Services and Use, Vol.19: 17-31. 

Mutiran, A. and Zairi, M. (2003). Knowledge Management Critical Success Factors, Total Quality Management, 

14(2): 199-204. 

Nonaka, I. and Takeuchi, H. (1995). The knowledge creating company: how Japanese companies create the 

dynamics of innovation, New York, Oxford: Oxford University press. 

Polanyi, M. (1962). Personal Knowledge, London: Harper. 

Polanyi, M. (1966). The tacit dimension. London: Routledge. 

Sagsan, M and Yücel, R. (2010) “Bir Disiplin Olarak Bilgi Yönetimi ve Eğitimi=Knowledge Management and Its 

Education as a Discipline”, Bilgi Yönetimi Disiplini ve Uygulamaları: Kamu Kurumlarından 

Örneklerle=Knowledge Management Discipline and Application: Cases for Public Organizations, in pp.13-34 

(Editor Mustafa Sağsan), Ankara: Siyasal Kitabevi. 

Sagsan, M. (2007). “Knowledge management from application to discipline: a field study”, Amme İdaresi Dergisi,, 

40 (4): 103-131. 

Sagsan, M. (2009). “Knowledge management Discipline: Test for an Undergraduate Program in Turkey” 

Electronic Journal of Knowledge management, 7 (5): 627 – 636. 

Sattar, A. and Higgins, S. E. (2001), “Perspectives on education for knowledge management”, 67th IFLA Council 

and General Conference, 16-25 August, 1-9. 

Stankosky, M.A. (Ed.) (2005). “Advance in knowledge management: university research toward a discipline”, 

Creating the discipline of knowledge management: the latest in university research, in 1-14pp., Oxford: 

Elsevier. 

Sveiby, K.E. (1996, 2001). What is knowledge management?, [online] 

http://www.sveiby.com/articles/KnowledgeManagement.html 

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Teaching Artificial Neural Networks Course: A Draft for 

Management and Organization Master Programs 

Kürşad Zorlu 

Ahi Evran University, Kırsehir, Turkey 

kzorlu77@gmail.com 

Abstract: This study aims to develop an academic program which offers both theoretical knowledge and 

application to teach Artificial Neural Nets (ANN) with a different analysis method for the students studying in the 

fields of management and organization. The study firstly presents basic information on a lesson formed and 

named “Use of ANN in Organizational Research”, in which the aim of the lesson, output targets, method of 

measurement and evaluation, references are presented and basic concepts of ANN, bases in literature, 

characteristics, advantages and disadvantages of ANN types are introduced within a period of 14 weeks. 

Besides, case studies on determining correlations in organizational research are discussed and the subjectmatter 

lesson plan is completed with an application stage. The lesson introduces practical information on 

MATLAB, which is proposed as an analysis program in the lesson. Supposing that the ANN method of analysis is 

new in the field of management and organization and considering its advantages argued in comparative research 

into various disciplines, it is possible to asset that such a lesson will offer original contributions and advantages to 

graduate students and potential researchers in the filed. 

Keywords: organizational studies, designing master programs, knowledge management, artificial neural network 


The rapid transformation in knowledge management and technology requires the researchers to 

integrate knowledge in their areas with those coming from other disciplines to create new knowledge 

and to solve the problems requiring expertise using scientific research methods. Researchers from 

different disciplines need approaches to sort and categorize the information submitted or recorded in 

different media. Artificial Neural Networks (ANN) is based on the simulation of many functions of 

biological systems or human brain in a computer medium to meet these requirements (Fausett, 1994). 

It can be said that an analytical method capable of producing new knowledge by learning different 

information in areas that knowledge changes rapidly can implement functions similar to that of the 

human brain. 

In today’s management system, rightful usage of the information and knowledge are lays in basic 

management resources. Especially, with the development of computer based systems; production, 

transfer and safety of intelligence become more vital for managers. Classification of the information 

which gained via electronic environment or from target audience for organizational studies swiftly and 

safely, is very important for researchers. Nonetheless, its capacity for being analyzable and 

interpretability of its results also has vital benefits for researchers. (Guven, Onur and Sagıroglu, 2008: 

159). ANN method, which is one of the Artificial Intelligence methods, can provide researchers to use 

the intelligence that retrieved from the target audience in maximum benefit and also let them to 

classify the information in order to maximize usage for different departments of the organization. 

Therefore, ANN analyze method could be approved as a vital and useful tool for managers, 

professional researchers and students as well. 

The ANN that has been spreading for the last two decades is being used in the analysis of complex 

problems based on large amounts of data in some areas including medicine, engineering, 

mathematics, financing and marketing (Zurada, 1992). In the management and organizational fields 

however, it is seen that ANN is not commonly used (Wong, Bondowich and Selvi, 1997; Vellido, 

Lisboa and Vaughan, 1999; Wong, Lai and Lam, 2000). It can be said that students specializing in 

these areas frequently use the statistical analytical methods. However, it can also be said that ANN 

can be evaluated as an alternative tool for the statistical analytical methods thanks to its several 

advantages and superiorities. Researchers and students studying for master’s degrees in these 

areas, heading towards the relationships between the variables and estimation of probable factors in 

these theses, articles and other scientific studies which reinforce the usability of ANN. It has been 

shown within the studies, aiming at the comparison of the Linear Regression and ANN methods that 

ANN method provide smaller error margins and is capable of explaining the dependent variables 

more strongly (eg: Subramanian, Yajnik and Murthy, 2004; Chelgani, Hower and Hart, 2011; Jiao and 

Li, 2010; Pao, 2008; Brey, Teichmann and Borlich, 1996; Heiat, 2002). Since most of the empirical 

studies in this area are performed by applying questionnaires and data are obtained from the attitudes 

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and evaluations of the human resources within the organizations increase the importance of smaller 

errors and higher explanation levels. Capabilities of the artificial neural networks to tolerate errors, 

estimate non-linear relationships, operating with parameters and variables in unlimited numbers 

reflect the superiority of the re-learning based on new information (Haykin, 1999; Haykin, 2011; Co 

and Boosarawongse, 2007; Nabiyev, 2010). 

This study aims at creating an elective course of 14 weeks in the Master’s Degree program in 

Management and Organization department with the objective of teaching the basic approach of ANN 

and the practical information ensuring the utilization of the method and giving practical examples. In 

the scope of this study, the contents of the course designed teach the basic principles of ANN and 

representation of knowledge with the help of the method to the students specializing in the discipline 

of management, the learning way of the artificial systems are given, practical examples related to the 

solution of the relationships between the organizational variables are focused on, and it is planned to 

teach how the artificial systems are used for estimations, classifications, clustering and testing of 

hypotheses. It can be suggested that students will display more original and interdisciplinary 

approaches in their academic studies and will become manager candidates in the professional 

business life who are able to make accurate and quick decisions thanks to the more analytical and 

more dynamic style that will acquire. 

This study follows an approach that is rather original and interdisciplinary as regards the Management 

and Organization discipline. The issues included in the study provide the researchers, students and 

the academic circles in the area with new information. 

2. Basic information on the lesson 

The lesson developed and proposed under the name of “Use of ANN in Organizational Research” 

aims that graduate students studying in management and organization use the ANN method of 

analysis easier in organizational research. First, it is proved that it is possible to use ANN in the 

relevant field, because generally statistical analysis methods are used in organizational, research and 

researchers are inclined to use such methods. This lesson is required to be taught minimum to the 

level of graduate students due to its form of use and originality, because researchers who do not have 

basic statistical information and especially the gist of the regression technique in organizational 

research may experience logic problems in use of ANN. The fact that the lesson aims specifically 

organizational research and is based on the idea that correlations may be determined more reliably 

by means of ANN method may contribute to data analysis obtained by survey. 

The distinct superiority of the ANN method is seen in various researches based on comparisons 

between ANN and Regression methods in various disciplines in literature. (eg Liu, Kang and Li, 2009; 

Jiao and Li, 2010; Chelgani et al., 2008; Paruole and Tomasel, 1997; Brey, Teichmann and Borlich, 

1996) Such researches show that ANN is more reliable and consistent for various performance 

criteria, notably R (correlation coefficient), RMSE (root mean square error), MSE (mean square error) 

and MAPE (mean absolute percentage). One of the important reasons why ANN is introduced as a 

lesson to the students focused on organizational researches in the field of management and 

organization is that it presents a possibility to explain, think, comment and examine the data generally 

obtained from individuals by surveys and the nonlinear correlations, by tolerating errors, in details. 

The fact that ANN redirects itself to learning in the input of each new data during the input – output 

process continues until the truest findings appear. One of the distinctive properties of the lesson is 

that it is possible to teach the MATLAB package program as well as some programs used frequently 

in statistical studies. Researchers being able to use different package programs may be accepted as 

an important gain to be able to test the consistency of the analysis and to reach more reliable results. 

The proposed weekly hours within the scope of the study and the method of measurement and 

evaluation are in compliance with the general applications of the universities operating in Turkey. 

Thus, it is possible to determine different methods for different universities. In such universities, ANN 

is shown as a basic lesson especially in engineering programs. It is understood that such a lesson is 

not present yet in terms of management and organization discipline. Table 1 gives the references 

proposed to be used in the lesson. Such references are proposed to form a theoretical and 

conceptual frame as well as being a directive in applications. 

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Table 1: Basic introductory information on the lesson: course outline 

Description 

Department Management and Organization 

Education level Master 

Course name Use of ANN in Organizational Research 

Basic knowledge level 

Research method and general statistical information 

proposed (Prerequisite 

course) 

Package program 

MATLAB 

proposed 

The aim of the course: Showing the usability of artificial neural networks in the field of management 

and organization and especially in organizational correlations 

Teaching period 3 hours per week 

Measurement and 

Quiz, Final exam, Classwork, Project 

Evaluation 

Course outputs Understanding the Usability of artificial neural networks in determining 

correlations and interactions; establishing an artificial neural network model in 

traditional regression type and hypothesis-based problems; integrating the 

results from artificial neural networks into the field properly 

Main References 

proposed 

Haykin, S. (1999), Neural Networks, Prentice Hall, Second Edietion, N.J. 

Zurada J.M. (1992). Introduction to Artificial Neural Networks, West Publishing 

Company 

Nabiyev, V.V. (2010). Artificial Intelligence. Ankara; Seçkin Publication. 

Elmas Ç (2003). Artificial Neural Networks (Theory, Architecturue, Education, 

Application). Ankara: Seckin Publications. 

Hamzacebi, C. (2011). Artificial Neural Network, Ekin Publication, Bursa. 

Kızıl, A. Uzunoğlu, M and Onar, Ç.Ö. (2004). Her Yönüyle MATLAB, İstanbul: 

Türkmen Kitapevi 

Yüksel, İ. (2004). MATLAB ile Mühendislik sistemlerinin analizi ve çözümü, 

Ankara: NOBEL Yayıncılık. 

Case studies proposed Zorlu, K. (2012). The perception of self-esteem and self-efficacy as 

transforming factors in the sources of role strees and job satisfaction 

relationship of employees: A trial of a staged model based on the artificial 

neural network method. African Journal of Business Management. 6(8), 3014- 

3025. 

Zorlu, K. (2011) Effect of Strategic Learning System and Organization Structure 

on e-Government Performance. A Survey in Public Sector by Means of Articial 

Neural Network, 8 th International Conference On Intellectual Capital, 

Knowledge Management & Organizational Learning, Taiwan 

Zorlu, K (2011). A research on organizational cultural factors determining the 

level of development of the innovative studies in universities and on the 

instructors in Ahi Evran University Uluslar arası Yüksek Öğretim Kongresi, 

YÖK, 27-29 MAyıs, İstanbul 

Wong, B.K., Bodnovich, T.A. and Selvi, Y. (1997). Neural network applications 

in business: A review and analysis of the literature (1998-95). Decision Support 

Systems, 19, 301-320. 

Goul, M. Shane. B., and Tonge, F.M., (1986). Using a knowledge based 

decision support system in strategic planning decisions an empirical study. 

Journal of Management Information Systems, 2(4), 70-84. 

3. Lesson plan 

As it is seen in Table 2, the lesson is planned to be completed in 14 weeks. It may be said that this 

period is in line with similar applications in Turkey. In planning, first statistical information and 

methods used in organizational research are reminded, because graduate students studying this 

lesson have a certain level of statistical information. Determining a research topic, hypothesizing, data 

collection, validation and reliability tests, t-test, Anova test, correlation and regression techniques are 

reminded. In addition, the following topics are planned to be taught. 

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3.1 Basic concepts 


ANN has parallel structures formed by many transaction components interconnectedly. Components 

forming a biological nerve cell are Axon, Somai Dentrites nd Snaptic. Artificial Neural Networks based 

on the principle of transferring the learning and interpretation ability of biological neural nets (Figure 1) 

to the computer environment give result by processing the data for effectiveness during input and 

output, as shown in Figure 2 (Elmas 2007; Nabiyev, 2010).Meanwhile, changing weights between 

nerves and adapting to new information is called “learning”…. (Yegnanarayana, 2006). In this part of 

the lesson, basic concepts are discussed, notably the bases of artificial neural nets, artificial nerve cell 

and its effectiveness function, its characteristics, layers, iteration, learning concept and types, training 

and test data reliability. 

Figure 1: Biological neuron. (Li, 1994: 304). 

Figure 2: An artificial neural as a process component (Elmas,2007:31) 

3.2 Advantages and disadvantages 

Artificial Neural Nets have several advantages and disadvantages as fast spreading analysis 

techniques. ANN have not to work with a mathematical model, first of all. Correlation between 

developing events in the research topic is automatically established. They have a high error-tolerance 

level and produce solutions for nonlinear correlations. They may be retrained under new 

information(5). They may be adapted to unlimited number of variables and parameters. It is easy to 

use for real-time events. As to ANN’s disadvantages: (1) There is no a certain rule to select the 

samples used to train the net and to determine the structure of net (2) Training and test stage may 

take time.(3) It may be encountered with difficulties in explaining the behaviors of the net. (Li, 1994; 

Nabiyev, 2010; Tu, 1996; Ennett, Frize and Walker, 2001). Advantages and disadvantages specified 

in this part of the lesson are explained in details and the students are allowed to develop solutions. 

3.3 Fields of use and types 

ANN give successful results in foreseeing, classifying, integrating data, conceptualizing data, 

processing pictures or images. Its areas of usage in general are transportation, aviation, industrybased 

applications, finance, medicine, biomedical and drug industry, communications industry and 

engineering applications. (Elmas, 2007). In the field of business, it is commonly used in production, 

marketing and finance. The studies in the field of management and organization generally information 

management, human resources and strategic management (Wong and Monaco, 1995: Wong, 

Bondowinch and Selvi, 1997; Vellido, Lisboa and Vaughan, 1999; Wong, Lai and Lam, 2000). It is 

understood that studies on organizational behaviors are very insufficient in number (Collins & Clark, 

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1993; Tung, Huang, Chen and Shih, 2005; Lane and Scott, 2007; Zorlu, 2010; Zorlu, 2011, Zorlu, 

2012). This lesson discusses the fields where ANN are used, explains feed-forward and feedback 

nets, cascade net model and learning types and tries to present its place and importance within the 

managerial and organizational discipline. 

3.4 Single-layer perceptions 

Each center where nerves come together in ANN is called a layer. Nerves in a layer are processed in 

conjunction with the nerves in another layer, but disconnectedly from the nerves in its own layer. 

Single-layer perceptions consist of an input and output unit as seen in Figure 2. Some deficiencies of 

single-layer perceptions were tried to be satisfied when the first ANN was made in 1943. However, 

their success level in solving complex and mathematical functions is low. In terms of s ingle-layer 

perceptions, “Perception” and “ADALINE” ad associated Delta Learning Rule are important topics in 

this part (Boone and Roehm, 2002; Öztemel, 2003; Hamzaçebi, 2011). 

3.5 Multilayer perceptions 

This part discusses multilayer perceptions and backprop algorithms. Multilayer perceptions shown in 

figure 3 consist of an input layer, an output layer and one or more latent layers among those, intended 

for satisfying the deficiencies of single-layer perceptions. It is seen that multilayer nets are used 

mostly in estimation problems. Each neuron in multilayer nets is characterized by not being linear. 

Latent neurons succeed in solving a complex structure. The most used algorithm used for training in 

multilayer nets is the backprop algorithm. (Hamzaçebi, 2011). Errors happened in backprop nets are 

propagated backwards by arranging weights at each layer. This operation is continued until total error 

is minimized. Though using backprop algorithms in determining correlations presents some 

advantages, it is important to determine the number of layers in net correctly (Elmas, 2007). 

Figure 3: A typical three-layer ANN with N inputs units, M output units and P units in the hidden layer 

(Wong, Wong and Chin,2011: 13065) 

3.6 Use of ANN in MATLAB program 

MATLAB (Matrix Laboratory) is an interaction package program, developed in 1985 and sensible to a 

mathematical environment. MATLAB is used in engineering, numeric calculations, data solutions and 

graphic processes. MATLAB can obtain results with less number of commands is statistical 

calculations and solution of nonlinear problems, compared to many other programs. The fact that last 

releases of MATLAB can use WINDOWS and DOS-based operating systems together accelerates 

the processes at a certain level. MATLAB, which is proposed as an analysis program within the scope 

of lesson, offers an understandable, accessible and easy-to-learn information standard with a 

developed Neural Network Toolbox. The fact that students and potential researchers try the MATLAB 

program in statistical studies strengthens the possibility to select the optimal analysis program among 

others (Beale, Hagan and Demuth, 2012; Yüksel, 2004). 

3.7 Case studies and students applications 

The last 4 weeks of the lesson aim to give experience to students in case studies. At this stage, the 

way and method to be used to determine correlations between organizational variables specified by 

students are presented. Respectively, determining the topic of research, obtaining data on specified 

variables, entering and processing data in MATLAB program, analyzing validity and reliability (most 

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used methods are factor analysis and Cronbach alpha coefficient), determining a proper net type, 

determining layer and iteration number, producing correlations, measuring relevant graphics and 

reliability values and finally interpreting such obtained findings include use of a simple artificial neural 

net intended for correlations in organizational researches. Such an approach generally allows the 

students who are canalized into statistical analysis and techniques to adapt themselves easirely. 

Table 2: Lesson plan 

Weeks Topics to be discussed 

1 Traditional (statistical) methods used in organizational studies 

2 Basic concepts of artificial neural nets 

3 Advantages and disadvantages of artificial neural nets 

4 Areas of usage and types of artificial neural nets 

5 Single-layer perceptions 

6 Multi layer perceptions 

7 Quiz 1 

8 Using artificial neural nets in MATLAB package program (I) 

9 Using artificial neural nets in MATLAB package program (II) 

10 Samples of artificial neural nets used in organizational studies 

11 Students practice (determining research topic, collecting a data and entering them in MATLAB 

package program) 

12 Students practice (Arranging and processing data, selecting optimal net, determining layers and 

iterations, starting analysis) 

13 Students practice (Interpreting obtained findings and graphics) 

14 Final exam 

4. Discussion 

This study aims to form a lesson named “Use of Artificial Neural Nets in organizational Researches” 

for graduate students in management and organization to acquire basic information on the ANN 

analysis technique and to practice on case studies. The ANN method can provide some superiority for 

the researchers who focused on organizational studies and specialize in management field. Those 

superiorities can be summed as; rightful classification of information and data (mostly gained via 

surveys), deselection of false data, exposing the relation between variables in swift, performing 

different tries on same model with new data sets.The study specifies the conceptual framework of the 

ANN method, its characteristics, its advantages and disadvantages and tries to present its usability in 

management and organizational studies. It is seen that various advantages of the ANN method are 

supported in the studies conducted on different areas. The study gives some theoretical information 

on the introduction and planning stage of the lesson. It may be aid that the basic introduction 

information on the proposed lesson is convenient and understandable. The fact that the content of the 

lesson is taught during 14 weeks, that references are specified, that literature bases are shown and 

that explanatory information on relevant topics is given are important, because they show that the 

purposes for the study are receptive and applicable. In literature, likewise studies are quite rare and 

also especially in organizational studies, ANN usage is not much that common; therefore, there might 

be few deficiency. However, those can only be surpassing by testing the education program. 

It may be asserted that the study will provide original contributions to students and potential 

researchers in organizational studies, especially to specify correlations, to determine correlations 

which are hard to understand, to specify nonlinear correlations more easily, to reach stronger findings 

in terms of reliability and consistency and to use the MATLAB program in analysis. 

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305

Impact on Organisational Learning in Ecotouristic 

Community: a Case Study Focusing on Social Technology 

Flávio de São Pedro Filho 1 , Rolf Hermann Erdmann 2 and Pei-Shan Kao 3 

1 Foundation Federal University of Rondônia, Brazil 

2 Universidade Federal de Santa Catarina, Brazil 

3 National Chiao Tung University, Taiwan 

flavio1954@gmail.com 

erdmann@eps.usfc.br 

pkao@mail.nctu.edu.tw 

Abstract: Sustainable tourism systems have many variables of significant implications, with poverty being one of 

the most latent, which in conjunction with hunger will eventually lead to inevitable social chaos. Therefore the aim 

of this research is to explore modern techniques for the development of sustainable tourism and then work on 

great ideas to help people to reduce the problem of poverty. It therefore will apply the theory of Planned 

Behavior, derived from the theory of Reasoned Behavior that created by two scholars, namely Icek Azjen and 

Marin Fishbein’s, to examine the questions. The study will use the North Shore of Bahia State in Brazil as the 

study area and the conclusion of this research is that the residents’ practice of the given technologies will 

maximise the available means from the environment, and will also reduce poverty and improve the quality of life. 

Therefore this is a plan for socioeconomic transition to sustainability in ecotouristic communities by means of 

social technologies to reduce poverty. 

Keywords: Ecotourism, knowledge, Learning, permaculture, social technology 


The presented work turns itself to economically leveraged instruments by means of applied social 

technologies in ecotourism management. It includes participative ecotourism, culture, training, 

domestic family production and others. The objectives of the study is to reduce poverty in rural 

communities by means of effective tools. This paper therefore will use the North Shore of Bahia 

State in Brazil, to be the research area. By means of examining the regions where need assistance 

to improve their development as although these communities are blessed by ambient exuberance, 

with fertile soils, scenic beauty and rich biotic attributes exclusive to that region; however, the 

problem of poverty still cannot be resolved until present. For example, in October 2002, the 

government of Brazil has already invested a large amount of money, funded by the Inter-American 

Development Bank, to explore modern techniques to improve the situation of these places. 

However, the money has been invested in the infrastructure which later came only to aggravate the 

residents’ situation, while entrepreneurial groups enjoyed the lucrative benefits obtained from luxury 

hotels built in natural areas. The National Research by Domicile Sampling (PNAD – Pesquisa 

Nacional por Amostragem em Domicílio, Brazil) and the information from the Brazilian Institute of 

Geography and Statistics (IBGE – Instituto Brasileiro de Geografia e Estatística, Brazil) for Bahia 

State, point to this logic. At that time, Bahia State’s population was about 13.2 million, with 

characteristics incompatible with predominant wealth; however, 181 thousand families were found to 

be beneath the poverty line, with unemployment being the primary reason, further exacerbated by 

the approximately 2.1 million illiterates and about the same number without electric power; 0.7 million 

without sanitation and 1.1 million without potable water. Many popular movements therefore have 

been organised to fight famine. 

Although the government has attempted to make donations through the “Bolsa Família” project in the 

Program of Acceleration on Economic Growth, it is still difficult to improve the situation. The 

country’s northeast region, the Bahia State is shown on PNAD/IBGE with a simple monthly income of 

approximately $289, or $9.6 per day, significantly less than the legal minimum payment, which is 

$324, or $10.8 per day. Therefore, in the studied region the deficit surpass the calculus for the 

medium daily survival amount registered, which points out that the lesser value obtained is about 

$7.3 per day. The residents’ daily activities still remain associated with violence such as robbery, 

burglary, and drug trafficking. In October 2011, the United Nations for Human Development Report 

(HDR), pointed out that the Human Development Index (HDI) was higher in general; however it was 

27.7% lesser for the specific indexes regarding life conditions. Even in the face of such adverse 

conditions, these communities continue to welcome arrivals of visitors and also, ecotourism trackers, 

naturalists, cultural tourists and adventure athletes. The exposed geography offers a matrix for 

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Flávio de São Pedro Filho, Rolf Hermann Erdmann and Pei-Shan Kao 

ecotourism activities; for example, the data obtained from the Bahia Secretary for Tourism revealed a 

total revenue of $702 million in 2000, with ecotourism representing approximately $ 491 million of the 

above totals. In the year of 2001, total revenue from tourism was $ 842 million, a growth of 70% 

which none of the other economic sectors in the country can obtain. And in 2008, the tourism 

revenue was $ 2.929 billion, a growth rate above 347% compared with that of 2001. The increase of 

visitor numbers therefore demands for the supply of much more accommodation and food, and also 

the immediate need for reconfiguration of infrastructure. 

2. Concepts regarding innovation and technology 

Currently, technological innovations originating from folk knowledge is not being considered with due 

attention; therefore, in the applied research field, the Massachusetts Institute of Technology keeps 

the MIT Center for Civic Media conducting the Appropriate Technology approach which has linked to 

this work, a decisive step which will include folk knowledge regarding technology. What occurs is 

that, by simple prejudice the individual situated in the given indigenous social infrastructure 

continues to be viewed as such. Lack of investment on education in developing regions and the 

deficits in training the work force result in further distancing from the formal economy. What 

predominates in the formal economy is the oriented form to methods and productive processes 

directed by engineering in the academia. It would be an excuse to see the individual as mere 

service providers, born for the satisfaction of large scale consuming while destroying the 

environment with its wastes and causing great ecological harm. In addition, the inconsistency of the 

government’s proposal is also clear, with their interests geared towards political and economic 

advantages which will bring ready benefits, but at the expense of the indigenous peoples, along with 

their culture, tradition and time-tested knowledge. This categorisation hopes for neutrality’s 

disruption, to find in social technologies an access point to the managed elaboration of goods 

produced with raw materials obtained from the environment, while new jobs are created, promoting 

the equilibrium by environmental quality with widespread benefits. It is from this perspective that 

symmetry between the excluded and included is seen, through a differentiated intervention format, 

whose basis is on alternative folk knowledge, to further transform the people’s knowledge in 

progressive elements to the new generation, to a new creative products’ supply and demand. 

Leonard, Dorothy (2003), from the Harvard Business School conceptualises creativity as a 

development process and as new ideas of expressions of possibility and utility. The authors 

describes four important characteristics to the creative action process: divergent thought, ideas 

transmission, convergent thought and utile ideas options, and suggests five steps to be taken: 

preparation, innovation opportunity, divergence to options creation, creative ideas incubation and 

convergence to new options selection. These indicatives from the author are considered for the 

comprehension of studies like the one presented, which incites the fomentation to new operational 

tools of development, amongst those, the Social Technologies. 

2.1 Social technologies concepts 

Social Technologies are creative techniques and their innovative adaptors actively consider the 

environment, indigenous culture and affirmative action, which respond to the immediate needs from 

the authors, included in the environmental availability transformation process; it is the route by which 

endogenous communitarian benefits are looked for. The first theoretical definitions of Social 

Technologies were born on the Appropriated Technologies introduced on India, with the following 

conceptualisation: 

“Gandhi’s development concept included a scientific and technological implicit politics which were 

essential to its implementation. Gandhi’s insistence on protecting handcraft work from the villages 

didn’t mean a still conservation of traditional technologies. On the contrary, implied on local 

techniques improvement, the modern technology adaptation to the environment and the conditions 

on India, and foment to scientific and technological research to identify and answer the immediate 

important problems. His final objective was Hindi society transformation, through an organic growth 

process, made from inside and not from an external imposition” (HERRERA, 1983). 

Although born from an endogenous counterpart, that being autochthonous community knowledge, 

Brazilian Social Technologies concepts are offered by Banco do Brasil Foundation, one of the main 

fomenting bodies for this popular initiative. This entity emphasises products, methods and 

techniques locally developed, proven to spark social transformation through innovative proposals of 

an organisational basis, ranging from providers’ development to food supply, education, income 

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generation and valid environment resources, amongst others. This concept is being adopted by the 

Brazilian Service of Support for Micro and Small Enterprises (SEBRAE), to develop productive 

systems through sustainable use of refuse, bio-energy generation, agro ecological cultivation and 

sustainable use of forests. The Brazilian Science and Technology Ministry created on its structure a 

secretary to administer to issues related to social technologies with transforming concepts generated 

by communitarian interaction as a low cost solution, with simplicity and facility integral to its 

application. It uses the input and local labor and techniques born from folk knowledge, bringing as 

an effect environmental and social solutions ill-considered for the emancipation of all involved. This 

study resumes the above-cited concepts by adding a correct environmental attitude to see if it is 

possible through sustainability concepts and the application of disciplined techniques, thereby 

obtaining valid environmental results. 

2.2 Concepts about ecotourism and environment 

Lindberg, Krey (1995) has compared the expansion of ecotourism activity through travel and 

conservation worlds to that of a tsunami. In fact, ecotourism activities can be traced back to the 

wagon caravans in Yellowstone, and in the National Park of Yosemite situated in the Nevada 

Mountains. In Brazil, this activity is preferred by the consumer elites who love the environment and 

nature, since exuberant views can motivate the wealthy to expend large amounts of money. Food 

production by micro-businesses under actual conditions would be insufficient to supply the everexpanding 

numbers of these visitors. This multidisciplinary phenomenon must have a coherent 

interpretation, redesigning local production and adjusting the main infrastructure to maintain its own 

sustainability. Thus, the search for alternative energies, efficient rain recycling techniques, refined 

domestic and commercial waste disposal management, and ceramics-based building techniques 

continues. The cost of environmental degradation has been overpowering the benefits of nonplanned 

ecotourism activities, so much so that the World Wildlife Fund found considerable points of 

intersection, such as protected areas management, sustainable development, environmental 

education and political decisions, as cited by Linberg (1995). It was found in Administration Science 

the arguments brought on this work, in ways of production with a systemic view, once the 

implemented studies had been offered straight orientations. As proposed by Morgani, Gareth 

(1996), the systems theories use subsystem configurations to describe connection-systems, as will 

be treated along. Egri, C.P. & L.T. Pinfield (1998) affirmed that organisational activities rely on social, 

economic, cultural, politic and techniques-based systems. In this context, efficient system 

configuration aggregates residents on their natural state with no impact to their routine or way of life. 

To the visitor it is possible to adapt himself to the community by means of an identity appropriation, It 

may be a stimulus to this identification, when the tourist learns how to work with the resident and to 

share the product amongst themselves. 

3. Methodology design 

The study at hand results from data and information appropriation collected between 2001 and 2011 

on North Shore, a geographical space of the most significant attraction to formal tourism in Bahia 

State, in the Brazilian Northeast. This task required as a first step a literature review which worked 

as orientation to the remaining steps, diagramed on this topic, which allowed comprehension of the 

focalised region’s case in face of the paradox. To Leenders & Erskine (1973) a case is an 

administrative situation description, usually involving a problem or decision. However, this exposes 

the investigator to common critiques in methodology, and offers significant opportunities to 

Administration Science. It allows the study of a difficult approach by another qualitative method; the 

research scenery, the researched population and the facts actors meet themselves far away from the 

Research Center, which requires building the history, appropriating data and other elements to be 

treated as the procedures and the scientific research method. So, it was decided that the Study of 

Case Method, with a qualitative approach on constructivist phenomenological line, based on 

literature, data collection and observation, was the best choice. It is hoped that, at the end of such a 

study, beyond offering some subsidy to those interested on the theme, an answer to the following 

question can be obtained. That is, how does one apply social technologies associated with 

ecotourism in order to reduce poverty on the North Shore of Bahia State? To answer the question, 

questionnaires and interviews will be made, and interviews will be open, with information checks 

performed when needed. Visits were made to know, on-site, the cultural and environmental 

attributes. Information analysis demanded cross-checks with official bodies of data, though while illstructured 

in general, points to a way where hidden facts can be brought to light. 

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4. Productive systems through social technologies for ecotourism 

In this topic the cited subsystems which complement the production system proposed will be 

analysed as a solution to the poverty state in which the residents from the micro region studied is 

placed. Issues related to environmental education and preparation for visitors and residents to 

adjust themselves to the social model here proposed will be analysed. A system of full employment, 

socioeconomically leveraged, uses what is available in the environment. By doing this, it is 

necessary to identify the first tools for collective action, brought to context, as the constitution for the 

program of eco-villages and permaculture philosophy. Such construction will be complemented with 

resolution of domestic orchards and gardens as an organized approach in order to achieve those 

objectives. 

4.1 Ecotourism business management as a success tool 

Swarbrooke, John (2000) cites Bramwell et all (1996), with the latter discussing the principles for 

sustainable ecotourism management. These principles were analysed and interpreted in this study, 

for Administration Science can support further knowledge in areas which involve planning, 

organization and directing processes, and the control of economic activities. There are still doubts 

about these processes’ applications, because the research of this work indicated little adherence to 

the rules of intervention through touristic investment on the North Shore. Theoretical notes 

recommend the following procedures: To approach politics, with participative planning and 

management as answers to solving natural and human resources on ecotourism use, one must 

reflect on the steps required for the realisation of an ISO 14000 certification (1); to work on growth, 

emphasis is on managed ecotourism that continues operations within its load capacity limits (2); to 

admit a long term plan, not a short one (3); to change to a mindset recognizing that sustainable 

ecotourism management isn’t only environmental, but economic, social, cultural, political and 

administrative. 

The first subsystem to be treated in this study was ecotourism, for as stated by Morgani 

Gareth.(1996), information about this sustainable activity would only be possible through a product 

systematisation or design. On the other hand, it is good to register all themes involving environment, 

as all must be the result of educational, informational and attitudinal concepts. To structure a 

subsystem which can be aggregated to the Productive Organisation System, as the actual 

proposition has dictated, may result in a new attitude to complete information and education for all 

interested parties. The studied developmental strategy did not very clearly distinguish ecotourism 

from traditional tourism. Ecotourism is any activity turned to exploration of environmental attributes, 

both natural and cultural, made available to the visitor, for leisure and entertainment. The official 

tourism body registers that ecotourism is amongst the most rapidly expanding tourism sectors. This 

projection translates to a disproportionately small revenue, further exacerbated in some regions by 

unsustainable development and wealth generation. Therefore, to organize actions directed towards 

ecotourism on this space can lead tourism to the first source of income, for ninety five per cent of the 

visitors that came to Brazil up until 2001, declared that their motive for coming to Bahia was because 

of knowing its natural charms, as documented by the tourism body. Ecotourism integration with 

communities began at this point of the visitor dissemination. 

Investments in transportation, electricity and environmental recovery further added to ecotourism 

business. As a result of this infrastructure, ecotourism became responsible for nearly seventy per 

cent of all tourist-based income in Bahia State in 2001, being the most attractive option for leisure 

and entertainment for Brazilians and foreigners in transit to Bahia, presenting a growth on a 

geometric scale. All the infrastructural investment, however, didn’t point to the misery in fighting 

efficacy. Characteristic of the majority of tourist plans in developed countries, the locals were 

forgotten early on in the process. Capitalisation on ecotourism focuses on exhibition of natural 

charms, as if the visitor could be contented in being a recluse on resorts. This error represents a 

great social burden, considering the recently identified calamity; the same that motivated the creation 

of a body capable of containing the advanced stagnation of the country. The investments made in 

new roads and airports open doors to the visitors, the socio-economical aspect from each village 

permitting to them to see closely the local’s livelihood, their culture and language. On the other hand, 

as observed on the researched registers, the warming of the sector demands larger food generation. 

Local production, with hand-on assistance from visitors, integrates and socializes him with the 

resident producers, ranchers, and growers. This could potentially define the philosophy of what is 

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really participative ecotourism. The visitor would learn the handcraft techniques from the residents 

while enjoying entertainment based on agriculture. 

4.2 Education for behavioral change and integration 

As observed during the present study, local and foreign users of the ecotourism services did not 

influence each other with matters of environmental education, which is the second subsystem of this 

work. The community integration politics on the regions’ charms deserve reviews, as that of Costa 

dos Coqueiros, situated on the North Shore, Chapada Diamantina in the central western regions and 

others in Bahia State. However, conservationists and tourists must not use nature against the local 

population. They must be integrated into it, participating in the process while transforming the 

community as beneficiaries of conservation. Hence, the encouragement of an infrastructural-minded 

conservationist pact is made logical, reversing any past ills done and offering something in return to 

further the environments’ users for the common good of all. Few things are as socially repugnant as 

a bold investment made at the expense of local livelihood, especially when investors themselves are 

ignorant of the villages’ customs. The magnificent sophistication of such tourist ventures oftentimes 

breaks the villages, while generating astronomic surplus with no visible local benefits. 

To Alencastro (1997), those who preoccupy themselves with profit generally tend to have mitigated 

group conscience. Being overly preoccupied with monetary gains, social impacts resulting from their 

actions mean little to them. This truth is especially relevant when considering certain intervention 

methods and their effects, such as the implementation of economic structures without considering a 

previous adjustment, or when those structures delay local integration for the individual. Ruschmann 

Doris (1997) too, notes that one must be sensible to tourism’s consequences on the environment 

resulting from poor pre-evaluation of possible sustainable management plans. General adjustment 

propositions and scientific authorities aside, the majority of the villages’ habitants remain 

enthusiastic, albeit wary, of the tourist venture plans. Other works from ecotourism business scholars 

were brought to this context. Ro reviewed the wealth occupation forms involving social responsibility, 

partnership between the productive agents and communitarian individuals. Non-predatory 

interventions are indispensable, oriented towards the participation of all involved parties in crucial 

decisions, as that proposed in this work. In fact, the population from various settlements studied 

remains penalised, with the economic interventionism of hotel complexes in the region being of 

particular interest; The inhabitants weren’t prepared for the mismatch and weren’t even informed of 

awareness measures. Since the consulting professional bodies didn’t offer the needed support with 

procedural means to integration, the ecotourism activity turned into a risk factor for the environment, 

with the possibility of severe consequences had immediate adjustments not been made. The worse 

phase will be when foreign visitors eventually see through the facade, and realize the authorities did 

little to stop it. 

4.3 Social technologies for eco villages 

Eco villages are villages or settlements situated out of urban areas. They consist of simple 

residential homes, the majority being of pug or wattle and daub, where the individuals who will be 

integrated into the new socio-economic model live. Visitors will also see sustainable environment 

factors, such as alternative energy sources, eco-friendly irrigation and fertilization. Permaculture 

concepts are also implemented, in association with participative ecotourism, entrepreneurship, 

handicraft, cooperative business, hygiene, health care and literacy, resulting in improved life quality 

and developed touristic clusters. Completing the effect is the local landscape and its natural 

attributes, which will be admired by the visitor while exhibiting the inhabitants’ quality of life. The eco 

villages constitute the third subsystem in this work. 

4.4 Social technologies for permaculture 

Permaculture was developed by the Australian Bill Mollison and David Holmgren. In their study, 

permaculture looks the philosophical concepts and starts to build a practice set known here as valid 

social technologies. It is the synthesis between traditional activities which bring innovative ideas. It 

involves the planning, implementation and consistent management of productive systems which 

have diversity, stability and resistance as that of the natural ecosystems. The concept was found to 

be very proper for the ecotourism sector, because it harmoniously integrates people to the 

landscape, promoting food, energy and habitation in a sustainable way. The recent rural exodus 

towards cities negatively reflects on the quality of life in urban zones. Permaculture will be the 

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solution for the individual, creating a feeling of love for his rural space, generates systemic solutions 

since the environment offers him all of what he needs to live in dignity, which discourages him from 

moving into the cities. It will be the solution to the individual’s fixation on his space, in harmony with 

the ecosystem. It is possible to use permaculture in self-sustaining food production, cooperating 

towards improvement of living conditions while the resident individual expresses his joy to partake in 

the tourist industry. That is what Soares (1998) indicated when he stated “Practical solutions are 

needed for rural people. Solutions contribute with each region’s cultural, social and environmental 

reality. Systemic solutions, accessible and simple, are what brings security for the families and a 

sustainable human development potential”. Soares (1998) suggested “the Yeoman Methodology.” 

Such methodology was born in Elizabethan England, based on the heavy labor in fertile fields, 

arduously developed by the Crown’s laborers and which in time would be theirs. These royal 

laborers practiced rural techniques such as infiltrative canal building and cultivation by key line and 

interconnected ponds, works that later became reference for geo-agricultural space productiveness. 

Soares (1998) yet again offers examples of techniques by ecologist Howard Odum, who was the first 

to analyze human and environmental interactions. The practices for obtaining energy from a sensible 

and fragile environment fascinate this north-American scholar, who developed studies in Silver 

Spring, Florida and other ecologically sensible spaces in the United States. With Odum’s theories put 

into practice, it is possible to transform a waterfall into an energy source. With a simple battery, a 

waterwheel and some wiring, it is possible to obtain power from such a source for an eco-village, so 

that it supply the basics through low-impact techniques. Oil lamps are also eco-friendly, though they 

are more “low-tech” as well as being in common use in the regions of interest. 

Solar energy panels and wind turbines that can be installed on mountaintops in the region are also 

being considered. Correct environmental ideas for energy, such as those suggested by Odum, must 

supply the local demand amongst the villagers. To introduce permaculture in the eco villages 

requires innovation on the part of their residents, as well as the introduction of an adequately 

configured productive system adapted to the given environment. As with all systems, we propose 

three stages of action called Entry, Processing and Outing. The “Entry” is the stage where seeds are 

planted and the soil readied. The “Producing” stage consists of cultivation and eventual harvesting 

of the given crop, while the “Outing” phase is the result of the previous two stages, where the crop is 

consumed by the cultivator and his community or sold as a source of income. Nuttall Carolyn (1999), 

a prominent permaculture researcher, offers various utile orientations for horticulture work. In his 

work, Nuttal discusses gardens covered in mulch (without excavation), mandala garden and 

composting, techniques which were already implemented in an eco-resort researched on Bahia’s 

North Shore. He puts emphasis on the vertical, horizontal and temporal densification of forms 

regarding plant placement, and suggest conducting horticulture in pots and the further expansion of 

permaculture, configuring an herb spiral;. Nuttal also teaches how to aggregate chicken pens, 

earthworms and other natural fertilizers, as well as proper recycling and disposal methods for space 

conservation. All referred social technologies on this work contribute to the quality of domestic 

horticulture and the resulting agricultural products. Permaculture is the fourth subsystem in this 

work, we have its constitution elements 

4.5 Social technologies for domestic orchard and gardens 

The research conducted has pointed out the importance of domestic production. This study 

indicates that the main problem in the population of interest is famine. The present work searches to 

confront this problem with the multiple beneficial effects of the varied fruit and vegetable production 

systems. Actually, vegetables and fruits obtained for consumption come from dubious sources, as 

many non-certified individuals were found to be selling product of equally dubious quality. There is no 

doubt that numerous establishments acquire these sub-par, often infected products, because many 

of them are cultivated with irrigation from sanitary sinks, which inevitably results in epidemics in local 

populations. An interview with a sanitations engineer indicated that the epidemics were due to worms 

which contaminate the residents’ food. The research revealed that they do not know anything about 

such risks, a result of poor supervision and education. Therefore, the actual practices, conscientious 

or not, also harm the consumer eco-tourist, potentially giving him dysentery, hepatitis or other grave 

infections. A recent incident in the Sauipe Hotel Complex says that a C meningitis outbreak was the 

result of poor quality animal products. 

Famine can also be reverted through production in domestic orchards and gardens. A solution could 

be undertaken in the form of domicile permaculture production, mainly in municipalities situated near 

the touristic clusters. Through such enterprise, resources would be stimulated for construction of 

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organic orchards and gardens, using natural pesticides together with permaculture techniques. 

These products are destined for local consumption, though any excess can serve to supply a 

horticultural cooperative center in each Touristic Zone. This center would sell quality produce, 

including but not limited to pumpkin, lettuce, potatoes, eggplant, avocado, pineapple, banana, 

cashew, and coconut. Buyers would be primarily hotel centers, resorts and hostels located nearby. 

Another significant crop which must enter into domestic orchards is the humble bamboo plant, a 

hardy plant which is useful in a variety of applications, including use as a food source and as ecofriendly 

construction material. Laboratory research in nanotechnology has also proved that bamboo 

is applicable for use in high efficiency filters. However, despite its versatility, many locals are 

unaware of bamboo’s potential and thus do not cultivate it, even when the government, under the 

Bamboo Law, has encouraged management and production of this plant in Brazil. The training for 

the cultivation and use of bamboo can encourage synergy for the improvement in the Familiar 

Agriculture Program with all possible advantages. 

The considerable returns from such an initiative would offer to the local economy synergistic inductor 

agents, mainly regarding pesticide-free organic production. Their production costs, under realizable 

actual conditions, are of little or no consequence, as indicated by experiments involving compost. 

Other advantages of domestic produce are seen, such as fertilization with natural composts, thus 

decreasing dependence on industrial fertilizers, and an increase in food quality for the local 

population and for the visitor. The competitive prices of these products on the regular market would 

be noticeable, giving a distinct advantage to the rural producer to initiate business with metropolitan 

consumers. Professor Alfons Balbach, a researcher of domestic gardens, offered robust orientation 

regarding the effect from fruit and vegetables produced on the studied conditions. He lent to this 

research, clear boards for evaluation and reflection for those interested. The author listed cultivatable 

products in a domestic garden, with all the essential nutrients sufficient for solving famine. Among 

others, there are Swiss chard, watercress, celery, artichokes, garlic, purslane, eggplant, beets, 

broccoli, amaranth, onions, chicory, cauliflower, dandelion, asparagus, spinach, beans, turnip, 

cucumber, peppers, radish, horseradish, cabbage, parsley, soybeans, and edible mushrooms. It 

pointed out a variety of cultivatable fruits in domestic orchards, including crops such as plum, 

cambucá, persimmon, fig, custard apple, genipap, jaboticaba, mangaba, passion fruit, pitanga, 

sapodilla, tamarind, and grapes. This activity organization, oriented or not, comes to be a gratifying 

pastime for all and choosing one or another of these items for cultivation contributes to fighting food 

shortage. 

During World War II the English immediately transformed their parks and gardens into vast produce 

gardens. This initiative helped to alleviate food shortages caused by the appropriation of vital 

commodities towards the war effort. Today, the food shortage crisis demands rigorous initiatives 

comparable to those implemented during wartime. Some individuals turn themselves to canned food, 

which can prove harmful to their health. However, many ranchers exhibit long life spans with their 

domestic gardens while contributing to solve the food shortage, creating harmony between pure 

nature and a healthy environment. With the materialization of the present proposition, it hopes to 

change social and political attitudes and initiate important economic reflexes. Any produce surplus 

may be commercialized, completing the production chain. An efficient orientation is to compose an 

integrative ecotourism design and stimulate cultivation through endogeneity, in “backyard gardens,” 

or on whatever space available and suitable for this task. Domestic gardens and orchards comprise, 

in this form, the main subsystem for this study. 


This study doesn’t end here, because it is part of an ecotourism integrated support system. In 

another opportunity, new configurations for Productive Systems Organization, developed by the 

Ecotourism Business Management, will be considered, such as domestic florists, folk handicraft and 

artisanal fishing, delicacies from candy makers and cooks, flour mills, and home-made goods such 

as embroidery and crochet. In the end an approximate design of what will be integrated, along with 

promotion of small businesses, can be realized. However, in this first step, we hope that this work 

can have contributions to those administrators, agronomists, landscape architects, economists, 

sociologists, social workers, and policy-makers for reflection on their work to improve life conditions 

of those humble people. They, more than anyone else, are hoping to participate in and offer their part 

in such collaborations. We also hope to suggest a great integration between innovators, visitors and 

villages residents with ecotourism vocation. Modern society is increasingly turning to traditional 

practices, so much so that the Massachusetts Institute of Technology continues work at the MIT Civic 

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Laboratory to develop studies and improvement for such technologies. It is hoped that interinstitutional 

partnership will significantly enhance people’s knowledge and promote innovation. The 

cosmetics industry extensively use social technologies. Innovative food industry will also obtain from 

local ranchers an unending source of knowledge that can be spread through means of oriented 

cooperation for successful application. These inductors entail cooperation for results sharing. 

Intervention as proposed in this study requires governmental decision. The case of Brazil requires 

political influence from leadership bound to the levels of state governor or the Republic President. 

However, in the case of body actions bound to the UN, any and all hindrances can be surpassed in 

the face of the importance in exposing a good image in the International Community. So we suggest 

an international agreement with a duration of 60 months, under direct supervision of UNESCO by its 

Education and Human Development Program on Social Inclusion and Poverty Reduction, with the 

Brazilian Education Ministry, by means of the Foundation Federal University of Rondônia with 

support of research centres, with supervision through PPGMAD – Program Post Graduation 

Master’s in Administration and other institutions interested in working together. This agreement will 

seek composition of a technical team to elaborate on an integrated actions study and accompanying 

programs to reduce poverty on Bahia’s North Shore, through practical applications offered on the 

present study with motivational stimuli for human development, citizenship and poverty reduction, 

with focus on social technologies. Critical aspects of such a plan include establishing a head 

Chairperson amongst the involved universities, with compromise for the constitution of models based 

on the Planned Behavioral Theory, applied on similar socio-technical systems; costing for the applied 

research activities; consistent video making of the developed practices for sharing, improvement and 

innovation; emission of joint research reports; and results publication. 

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PhD 

Research 

Papers 

315

316

Knowledge Management and University: From Foresight 

Vision; its Experts 

Álvaro Enriquez Martínez 

Universidad del Valle, Cali-Colombia 

aenriquez @univalle.edu.co 

Abstract: This study is an approach to understanding the role of the university in knowledge management aimed 

at society in general. The approach is based on a two-fold source: information coming from university experts 

and literature on knowledge management. The results reveal that knowledge in the university is not a 

homogeneous object; it is rather possible to categorise it under different aspects. This diversity highlights social 

learning as a preferential way of obtaining it. Knowledge appears closely linked to processes that produce it in 

the university: knowledge vision, generation of dialogue and context creation. Vision refers to a development 

guide along with internal normative policies intended to encourage research. Dialogue generation boils down to 

breaking through an exclusively inner style of communication towards an opening to sectors outside academia. 

Creating context refers to new flexible organisational arrangements inside as well as outside universities. In order 

to generate knowledge, the university needs to understand what happens outside and promote changes in its 

inner culture such as discussing processes and making decisions on various scenarios. Understanding the role of 

the university in knowledge management highlights its key role in social and economic development through 

research and points out the complexity of this task. The pursuit of options is linked to the way the university might 

face this call by making internal as well as external adjustments with social responsibility. The social sector 

comprises a manifold of entities, as well as a variety of institutions and associations with which the university can 

establish relationships directed towards its own development and well-being. 

Keywords: knowledge management, knowledge production, university 


This study takes the key concepts and aspects of society-aimed knowledge management and 

generation as its conceptual and analytical referent, as well as the university in so far as an 

organisation whose role is to produce knowledge for society. Through narratives elaborated by 

experts in university knowledge management, information is obtained on key concepts inferred from 

the analysis performed herein. The study focuses on producing data coming from people who work in 

the interface between academia and enterprises and perform knowledge management related 

activities primarily, so bringing about more robust reflexion. 

One of the problems in the knowledge production field is the tension between professionals working 

for universities in charge of such production and professionals working for enterprises that demand 

those products. Professionals whose work is placed in the border where this tension occurs might 

enrich the vision here developed, as they know both sides of the demand for knowledge. 

Meanwhile, the theory of knowledge management points out three interlinked elements: 1) people, 

their knowledge and their capacity to generate it; 2) the organisation and its designs intended to 

spread expert knowledge and help it to accomplish its goals; 3) information technologies for capturing 

and organising information, as well as making generated knowledge available. The interplay between 

these components and the focus on a specific aspect lead to specific models of knowledge 

management. 

2. Components of a knowledge management model 

2.1 Types of knowledge 

The production of knowledge is understood as the exchange of implicit as well as explicit knowledge 

between individuals and groups in an organisation. In this way, it is intended to identify the adjustment 

of the knowledge management model they have in relation to the type of knowledge they produce 

(Lam 2000). 

2.2 Knowledge processes in an organisation 

Adair (2004) holds that if the way an organisation understands knowledge and its processes is 

presented more precisely, the probability of consistent management practices will be higher. 

Managing knowledge requires taking into account the structure and culture of the organisation: its 

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environments, levels, networks, communities, processes, by means of which it pushes on people who 

produce knowledge and the technologies put at their avail for handling the knowledge produced. The 

strength of management might then lie in the capacity to focus on the conditions that facilitate the 

creation of a context for the effective production of knowledge in the organisation (Krogh, Ichijo, 

Nonaka 2000). 

2.3 Knowledge generation 

The concept of knowledge and its production methods within an organisation have led to 

categorisations of knowledge management models. Rodney and McCreed (1999) propose to 

recognise three types thereof according to their main focus, be it the concept of knowledge or rather 

the particularities of each method concerning either knowledge generation or management. As to the 

category centred on knowledge development, Nonaka and Takeuchi's (1995) model specifies three 

composing elements of processes: meaning creation –as an indispensable stage for sharing concepts 

and values in an organisation–, knowledge generation and finally decision making, accounting in this 

way for the whole process of knowledge management at the organisational level. 

Concerning meaning creation, Weick (1995) and Choo (2003) point out that organisations should 

articulate interpretations of their environment, give them meaning, generate a certain social order 

inside the organisation –composed of individuals with heterogeneous values and beliefs by means of 

interrelated processes ranging from information acquisition, selection of relevant information, relating 

information to processes performed by the organisation and storage of individual and organisational 

records. In reference to knowledge generation, the model proposed by Nonaka and Takeuchi (1995) 

highlights the interaction of the different types of knowledge for the generation of new knowledge by 

means of four ways in which they combine and feedback continually. First, socialisation, a process by 

means of which implicit knowledge is obtained from previous implicit knowledge by sharing 

experiences. Second, exteriorisation, a process through which implicit knowledge is put in terms of 

explicit knowledge; this stage is indispensable for the creation of new knowledge and its achievement 

is the elaboration of a concept. The third type, combination, is the process by which explicit 

knowledge is built through the exchange of explicit knowledge; people have different ways to 

generate it and spread it throughout the organisation, based on logical and analytical systems. Finally, 

interiorisation is the process by which explicit knowledge is incorporated to implicit knowledge. 

Experiences making part of the organisation's culture are shared. Furthermore, an organisation needs 

to make decisions by means of choosing among several offers of products and services. Decision 

processes in organisations (Choo 2003) recognise that the capacity of an organisation to make 

simplified decisions is limited and so it needs to make choices grounded on its expertise. 

Table 1, shows the aspects intervening in the development of knowledge management. Knowledge 

management is the central part of a process made of several components that interact and sort out 

subcomponents, so obtaining innovative or problem-solving results. The existence of different types of 

knowledge, available or yet to create, is related to the processes that an organisation sets in motion 

for its design, so affecting its culture, providing technology in such a way that the organisation as well 

as its members understand, in specific moments, the outer context and transform it in knowledge 

production according to their needs. This process comes alongside the dynamic relationships 

between types of learning from the individual to the collective and affects the social understood as a 

network of relationships that configure the culture and structure of an organisation in so far as its work 

is immersed in organisational and technical processes that it requires (van der Krogt 1998). 

Table 1: Relationships and processes in the development of knowledge management 

Types of knowledge 

Types of learning 

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Embrained, 

Embeded, 

Embodied 

Encoded. 

Individual 

Collective 

Social 

Structural

Processes in an 

organisation 

Processes of 

knowledge generation 


3.1 Participants 


Processes 

Structure 

Knowledge vision 

Dialogue generation 

Activists mobilisation 

Context creation 

Knowledge globalisation 

Culture Creativity as a value in the organization 

Technology Information and communication 

technologies 

Signify 

Generate 

Decide 

Obtain 

Interpret 

Relate 

Store 

Share 

Create concepts 

Justify concepts 

Build prototypes 

Level knowledge 

Simplified course of action 

Premises choice 

Nature of decision 

As the objective here is to produce data that may enrich and complete the understanding of the role 

the university plays in the knowledge management demanded by society nowadays, it seemed 

important to collect data from a limited set of experts. According to this design, an important aspect 

was having a diverse group. 

This criterion was applied through the search of experts coming from various university contexts. The 

subjects searched for the study had to be experienced in the production of knowledge management 

models, university life and work experience in various contexts. Therefore, they had to be leaders 

within their universities in the discussion and solving of problems associated to knowledge 

management in several Latin American countries. This delimitation was intended to render the sample 

homogeneous and diverse at the same time. Leadership was measured by means of an evaluation of 

each candidate's scientific production in the area for no less than ten years. 

Professionals fulfilling such requirements were looked for in Brazil, Colombia, Spain and Mexico. 

Initially, the goal was to select two people from each country, but in the end the group was reduced to 

five experts: a Brazilian, a Spanish, a Mexican and two Colombians. All of them had a professional 

experience of over 10 years and their scientific and practical production is highly reputed in the field of 

knowledge management, specifically its analysis and its role in society. 

3.2 Instrument 

The interview to the group of experts was the adequate methodological instrument. As the opinions 

here expected are full of significations and connotations, the interview is by its own nature able to 

generate information as widely as needed for confrontation to the literature of the field. 

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The interview format chosen was the semi-structured. This format is a technique consisting of the 

production of narratives coming from the subject interviewed. Discourse through narratives is one of 

the most important instruments in the Social Sciences (Harré 1980). 

3.3 Procedure 

The participating subjects were interviewed personally or online through Skype. A previously prepared 

script was applied to the whole group. The interviews were electronically recorded and subsequently 

transcribed. The narratives obtained through the interviews were the initial contribution to the 

empirical data of this study. 

4. Analysis and interpretation of data 

The analysis of the data obtained in the narratives was programmed with two different techniques. 

The first was the software package NUD*IST (Non-numerical unstructured data –indexing, searching 

and theorising). The other technique was an analysis based on a set of procedures called 

“interviewing the interview” 1970 (Malvezzi 1979; Sabbag 2002). 

The NUD*IST 6 package is useful for identifying categories of analysis described in the theoretical 

sections as important aspects of the understanding of knowledge management. 

The analysis of data categorised as qualitative consists of a set of techniques that investigate the 

contents and the modes of expression used to communicate them. The narrative is one of its primary 

forms as a data source (Bardin 1977; Symon & Cassel 1998, Bauer & Gaskell 2000). 

After analysing all the interviews, each was summarised so as to synthesise the main ideas in each 

subject's narrative concerning the issues proposed during the interview. 

5. Results 

The data are shown in tables and in the conclusions. A set of figures was created to communicate the 

results rendered by NUD*IST 6. Finally, the conclusions are offered as synthesised results of the 

most representative items of the interviews. 

5.1 Results of NUD*IST 6 analysis 

The results of processing the interviews with NUD*IST 6 are here presented. The unit used was the 

text of each topic and the frequency enumeration rule was applied (Bardin 1977). The category and 

number of references to participants are presented. These results help to show the tendency in the 

analysis that the participants perform on the elements of analysis. 

Figure 1 Category: types of knowledge 

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Figure 2 Category: types of learning 

Figure 3 Category: processes in the organization 


Figure 4 Category: processes of knowledge generation 

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5.2 Analysis of results of analysis of contents of interviews processed with NUD*IST 

6 

The results amount to six inferences from tables produced by the analysis of content processed with 

NUD*IST 6. 

6. Types of knowledge 

The frequency analysis reveals that knowledge is not a homogeneous object, but it is rather possible 

to categorise it under different aspects. The data reveal that the interviewed subjects differentiate the 

collective, explicit and implicit types of knowledge, thus confirming the categories and analysis 

released in the literature of knowledge management. 

The subjects' allusion to three different types of knowledge reveals the ambiguity of knowledge, 

analysis categories and different possible ways of locating them, as the cause of phenomena and 

events explained by the cognitive skills of people. For this reason, there are different paradigms of 

knowledge. 

A third possible reading of the tables is the agreement of the interviewed subjects on the idea that 

collective knowledge –produced out of shared experiences– plays and outstanding role in the demand 

for understanding the world, an aspect that coincides with the literature on the topic. Secondly, the 

subjects –not all but at least most of them– locate codified knowledge. 

The knowledge of experience is the set of connections that production models expect individuals to 

have learned. This knowledge is an implicit stock required for task completion, as most of the time 

these are multiple and complex. 

Furthermore, the high frequency of explicit codified knowledge expressed by the interviewed subjects 

reveals the formal aspect of knowledge delivery as performed by the university. Knowledge is 

communicated and transmitted through discourse, be this codified as specialised scholarly 

publications, delivered as a research product to be applied, or either in teaching and debates among 

scientists. The university has nowadays broadened its communication channels: networks, 

publications, libraries and so on. These resources are created in order for knowledge to be spread, 

sent, received and stored; it is the symbolic expression of their content. 

A surprising result of these data is the omission of implicit individual knowledge by the interviewed 

subjects. This result suggests that the university is probably not being acknowledged as a leader in 

the production of outstanding intellectual knowledge. The university is possibly being pushed by 

society to change its roles so that it turns to multidisciplinary research intended to be applied; hence it 

cannot stick to an abstract development of disciplines restricted to academia. 

6.1 Types of learning 

Another important result revealed by the information processing by content analysis is the unanimous 

opinion that knowledge is a social good. Concerning the type of learning, the results decisively 

highlight social learning without excluding other types such as individual learning. 

There are various factors that explain this fact. First, the perception of continuous change to which 

organisations are subject to; requests for knowledge through research have a temporary and variable 

character, a condition that demands continuous work on cooperative projects with clear schedules 

and a variety of participants. This in turn requires continuous social learning. Moreover, State or 

internal university policies provide recognition to research groups or centres which due to their 

competitiveness or their fulfilment of legal conditions such as having interdisciplinary groups, can 

respond to society's demands more responsibly than the individual researcher, a fact that also has an 

influence on the achievement of interactive social learning. 

The relation of the university to outer sectors, either social or entrepreneurial, demands constant 

dialogue that can only be resolved if apart from research skills, social learning skills are developed in 

order to understand the university's outer context and so respond to requests and produce relevant 

knowledge. 

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6.2 Processes within the organisation: Vision, dialogue and context 

Knowledge is closely related to the processes that produce it within a university: knowledge vision, 

dialogue generation and context creation, three indispensable conditions for the generation of 

knowledge as demanded by society, being also the foundations of competitiveness. Vision can be 

materialised as an aspect of the university's mission and a development guide along with internal 

policies aimed at regulating and fostering research. 

Dialogue generation boils down to breaking through an exclusively inner style of communication 

towards an opening of the university to sectors outside academia so as to establish a productive 

exchange of ideas; this leads to modes of communication that reconfigure how the realities to be 

researched are understood, so generating innovative perceptions. 

The organisational process requires context creation. It alludes to finding new and flexible 

organisational arrangements inside the university so as to facilitate the work of researches; and also 

outside the university, so as to foster contact and the establishment of dynamic relationships to social 

sectors and then create adequate conditions for the generation of relevant knowledge. 

The university is perceived as being in a process of change. It suggests and designs new 

organisational modes of relating to the outside and to its own inside in an interactive way and by using 

networking strategies. This condition is materialised in new university structures whose names reveal 

context generation: Office for University-Enterprise Fair Practices, Knowledge Centres, Innovation 

Offices, and Office for the Transference of Research Results. 

6.3 Knowledge generation 

6.3.1 Signifying 

Signification allows the understanding of what happens in the outside by means of conceptual 

representations and is related to the university’s mission of knowledge generation. It is an active 

process, as it consists not only of obtaining information about the outside, but also keeping a critical 

spirit and renewing, if needed, its conceptual representation of the constantly changing outside. 

Interpreting is the process most frequently mentioned by the interviewed subjects, as it allows 

research activities to fit the understanding of what occurs in the environment and at last to exert an 

influence on it by means of the knowledge produced. This point confirms what the corresponding 

literature says, namely that only by interpreting the events, research and knowledge produced by the 

university can an adequate response be offered, so that it contributes to the outer environment and at 

the same time generates changes in its internal structure. 

6.3.2 Socialising 

As the university is a reflective and collective institution concerning what it says, does and produce, it 

is natural that the interviewed subjects show awareness of the fact that the socialisation process is a 

crucial element. Social learning and collective reflection are among the main skills demanded for the 

production and application of knowledge; the subjects are aware of this process. Socialisation is a 

process that gains importance as an organising and integrative element within a context characterised 

by innovative realities and a wide range of opinions and possibilities. 

6.3.3 Choosing premises 

Another result is the opinion that knowledge is a fundamental element for the interpretation and 

critical reading of data. Given its relation to knowledge and its reflective character, the university 

analyses and discusses processes and decisions in various bodies and scenarios, this being a natural 

way of sharing knowledge so as to reach agreements in a variety of institutional levels. In this way, 

the amount of implicit organisational knowledge is incremented. Similarly, the participation of 

researchers in groups is consolidated through long processes of sharing and performing research 

projects; in order to achieve so, they generate shared implicit knowledge that turns into particular 

modes of specialised understanding created within groups as a natural style. This result confirms the 

ideas present in knowledge management literature as they reveal that information is not enough as an 

element for understanding reality. Conceptual models play a role as sources of significations. 

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The results of the data produced by the analysis of content through NUD*IST confirm the coherence 

between knowledge management literature and the interviewed subjects, which reveals how 

knowledge managers in universities think. 

7. Discussion 

The understanding of the university’s role in knowledge management comes from a two-fold source: 

information from university experts and specialised literature. Both coincide in highlighting the 

university’s key role in social and economic developments through its research and point out the 

complexity of this task. 

The problem consists of the re-vision the university has to perform on itself so as to define its own 

work as a researching agent and find a way of managing it according to its principles. There is not a 

knowledge management model ideal or preconceived for the university. It is not feasible to transpose 

acknowledged and established knowledge management models into it, either. Models found in the 

relevant literature aim at finding the best management conditions for the generation of knowledge, but 

the university is oriented towards producing knowledge. Therefore, the problem to be solved here is 

how to manage knowledge that it already produces or is able to produce. 

The pursuit of options is linked to the way the university can face this request by bringing about 

internal as well as external adjustments with social responsibility. 

The “social” is understood as a wide range of agents that make part of it: enterprises, society sectors, 

groups of citizens and the countless, variegated institutions and associations with which the university 

can establish relationships aimed at contributing to its own development and well-being. It seems that 

here are the best opportunities for the university because if it establishes such relationships, they 

imprint dynamicity and productiveness to it. 

Research as an outstanding mode of relationship between the university and the social has gone 

through several stages according to the so called “knowledge production linear model”, which 

acknowledges the following participants: university, State, enterprises; and identifies the specific tasks 

of each. As it was implemented, the model itself brought about other consequences when it was 

observed that processes of knowledge production and delivery do not merely occur as delivery 

actions, but also require the interaction of the different participants so as to apply the delivered 

results. 

This fact led to the generation of other ways of relating the university to external organisations. The 

participating organisations change and are affected by this way of relating, in the organisational 

modes necessary for this exchange as well as the vision and choice of university scenarios in which 

to act. As the university and its research groups engage in basic research, they contribute to the 

progress of science; however, when they engage in applied research and establish contacts with 

other sectors for both problem solving and innovation, it generates other type of results. First, the 

increase of interaction with other external agents as a result of research activities. Second, an internal 

incidence in research groups as the interaction between each other leads to the detection of higher 

complexity problems, thus creating the need for interdisciplinarity and teamwork, that is, the research 

groups alter the research procedures proper of their respective disciplines in a way that expands the 

range of problems they deal with, as well as their contacts network and the different modes of 

association aimed at designing responses; this in turn instils a sense of collectivity into the groups’ 

culture and values. 

Being exposed to responding through research, the university needs to foster new ways of collective 

learning and is able to strengthen cooperation among researchers. This demands the creation of new 

organisational structures oriented to teams and projects, a situation that is not possible to solve 

merely at the level of research groups, but also requires a management process along with university 

policies proposing measures to make the process more dynamic. 

According to the experts, nowadays the university is facing the challenge: it is interpreting its 

environment by creating a vision and contextualising the social expectations and demands manifested 

as innovative; it is orienting management to the creation of a research agenda; it is making 

organisational structures more flexible; it is fostering research and choosing premises so as to be able 

324


to choose a future path. The possibilities of change in this direction lie in the university’s plural, 

reflective, multidisciplinary attitude towards knowledge and research. 

The university can focus on several aspects constituting processes of knowledge management at 

different levels: researchers that produce knowledge; the development of research skills that 

contribute with applied or innovative knowledge to different social sectors. It can provide a more fluid 

organisational structure for research; support the creation of processes of communication with social 

sectors with the aid of information and communication technologies –which have manifestly become 

innovative means of communication with academic sectors, thus broadening the channels for the 

spread of knowledge to non-academic sectors through publications oriented to various audiences 

interested in the productivity of universities. 

Several needs are presented for the establishment of a context that allows knowledge management, 

be that by means of: agreeing on a research agenda contributing to social development and wellbeing; 

fostering the needed joint action of governmental, social and academic agents; creating new 

research groups and centres according to the university’s own strengths and external conditions – 

thus requiring a close link to economic and social sectors–; providing helping environments for the 

production of knowledge to the level of infrastructure and research valorisation; fostering social 

interaction inside and outside the university by means of links between different sectors; fostering 

networking-based work; facilitating teamwork; creating organs that help to deal with the difficulties that 

external agents might experience while trying to transfer or absorb the knowledge produced in the 

university. 

References 

Adair, K. (2004). Knowledge management: misjudged instrument of strategic change? Organization, 11(4), 565- 

574. 

Bardin, L. (1977). L’ Analyse de Contenu. Paris: PUF. 

Blacker, F. (1995). Knowledge, Knowledge Work and Organizations; An overview and Interpretation. 

Organization Studies, 16(6), 1021-1046. 

Bradley, K. (1997). Intellectual Capital and the New Wealth of Nations II. Business Strategy Review, 8(4), 33-44. 

Bueno, E., Salmador, M. P. (Eds). (2000). Perspectivas sobre Dirección del Conocimiento y Capital Intelectual. 

Madrid: I.U. Euroforum Escorial. 

Choo, C. (2003). Organização do conhecimento: como as organizações usam a informação para criar 

significado, construir conhecimento e tomar decisões. São Paulo: SENAC. 

Harré, R. (1980). Social Being: a theory for social psychology. New York: Cambridge University Press. 

Krogh, G., Ichijo, K., Nonaka, I. (2000). Enabling Knowledge Creation: How to Unlock the Mystery of Tacit 

Knowledge and Release the Power of Innovation. New York: Oxford University Press. 

Lam, A. (2000). Tacit knowledge, organizational learning and societal institutions: an integrated Framework. 

Organization Studies, 21(3), 487-513. 

Malvezzi, S. (1979). O Papel dos Psicólogos Profissionais de Recursos Humanos. Dissertação (Mestrado em 

Psicologia) – Pontifícia Universidade de São Paulo-PUCSP, São Paulo. 

Nonaka, I., Takeuchi, H. (1999). La organización creadora de conocimiento: cómo las compañías japonesas 

crean la dinámica de la innovación. México, D. F.: Oxford University Press. 

Nonaka, I. (2005). Knowledge management: a critical perspective on business and management. New York: 

Routledge. 

Rodney, M., Mccreedy, S. (1999). A critical review of knowledge management models the learning Organization. 

MCB University Press, 6(3), 91-100. 

Salmador, M. (2001). Raíces epistemológicas del conocimiento organizativo. Madrid: Universidad Autónoma de 

Madrid. 

Spink, M.J. (2000). Práticas Discursivas e Produção de Sentidos no Cotidiano. Sao Paulo: Cortez Editora. 

Symon, G., Cassell, C. (1998). Qualitative Methods and Analysis in Organizational Research. London: Sage. 

Van Der Krogt, F. J. (1998). Learning network theory. Human Resource Development Quarterly, 9(2), 156-176. 

Weick, K. E. (1995). Sensemaking in organizations. Thousand Oaks: Sage. 

325

Knowledge Management in Software Process Reference 

Models - a Review 

Ernesto Galvis-Lista 1 and Marcela Sánchez-Torres 2 

1 

Universidad del Magdalena, Facultad de Ingeniería, Santa Marta, Colombia 

2 

Universidad Nacional de Colombia, Facultad de Ingeniería, Bogotá, Colombia 

egalvis@unimagdalena.edu.co 

jmsanchezt@unal.edu.co 

Abstract: Knowledge Management is a young discipline that nowadays it is important for many kinds of 

organizations. For software development organizations (SDO) the effective use of knowledge is a fundamental 

aspect to improve their processes and obtain sustainable competitive advantages. In this sense, this paper 

presents a critical review about how the knowledge management has been included in the processes 

established/ defined by several Software Process Reference Models. For this study, five software process 

reference models, broadly used in Latin-American countries, were selected: the standard ISO/IEC 12207, the 

Capability Maturity Model Integration for Development (CMMI-DEV), the Brazilian Model for Software Process 

Improvement (MPS-BR), the Mexican Software Process Model (MoProSoft), and the Latin-American software 

process improvement model for small and medium enterprises (COMPETISOFT). To obtain the review, the follow 

three stages were defined: 1) selection of process reference model to analyze; 2) analysis of each process 

proposed in process reference models, in order to identify the aspects related to knowledge management; 3) 

mapping the knowledge management aspects in relation to the taxonomy of knowledge management schools 

proposed by Earl and the classification of organizational capabilities linked to knowledge management, proposed 

by Gold, Malhotra and Segars. The findings of this study show that in all models there are elements of knowledge 

management processes, and there are two models, MoProSoft and Competisoft, that have a process area 

named Knowledge Management. Nevertheless, the knowledge management aspects included in these models is 

grounded in statements from Earl’s systems and engineering schools. Likewise, in terms of Gold’s knowledge 

management capabilities, the technology, knowledge acquisition and knowledge conversion capabilities are 

broadly covered but elements for others capabilities are not included in these reference models. This work 

constitutes an important reference for research and practice because presents a synthesis of the knowledge 

management topics included in software process reference models and helps practitioners, from software 

development organization, to identify the foundations and the options to implement knowledge management 

initiatives within their organizations. Likewise, this study helps researchers to identify trends and topics to 

formulate new research projects about include the different “flavors” of knowledge management in software 

process reference models or to develop a knowledge management process reference model relevant for 

software development organizations. 

Keywords: knowledge management process, software process reference model, knowledge management in 

software organizations 


Software development organizations (SDO) have been concerned about the capability and maturity in 

their processes. In this sense, a growing number of software-process reference models (SPRM) and 

process-evaluation models (PEM) have emerged to offer the necessary elements needed to 

implement and/or to evaluate software processes within a SDO. Most of the SPRM and PEM are 

based on the international standard ISO/IEC 15504 (ISO/IEC 2004a), which means every models 

share a common structure even if they have been proposed for processes of different nature. The 

content of most of these models covers processes of engineering, management, and support from all 

“software disciplines” defined in the Software Engineering Body of Knowledge (Abran et al. 2001). 

Furthermore, in the last decade, Knowledge Management (KM) has become one of the management 

processes in Software Engineering (SE). Several scientific and professional publications have 

developed this topic from diverse perspectives. One synthesis of the scientific work about KM in SE 

can be found in the systematic literature review developed by Bjornson y Dingsoyr (Bjørnson & 

Dingsøyr 2008).That work points the predominant interest in topics such as knowledge codification, 

knowledge storage and retrieval using IT tools. However, knowledge creation, knowledge transfer and 

knowledge application, are processes that have had little coverage by the academic community. 

Furthermore, the authors concluded that most of the empirical research works are focus on KM in 

software process improvement (SPI). 

In this regard, KM in software processes and KM in SPI were identified by (Aurum et al. 2008) as 

important research topics. According to that, KM is the main component of SPI initiatives, and the 

326

Ernesto Galvis-Lista and Marcela Sánchez-Torres 

application of KM in SE is useful in software process definition, the application of a process approach 

in software engineering, and the adaptation of software process for future uses. However, in a deeper 

review of papers in which the main topic is KM in SPI, published in the last five years, we found out 

that the predominant approach is knowledge codification, as can be seen in (Alagarsamy et al. 2007; 

Alagarsamy et al. 2008b; Alagarsamy et al. 2008a; Capote et al. 2008; Montoni et al. 2008; Cruz 

Mendoza et al. 2009; Ivarsson & Gorschek 2011). In addition, there are works about knowledge 

mapping by the construction of organizational knowledge directories (Alagarsamy et al. 2008a; Li 

et al. 2008) and the creation and empowerment of organizational structures to promote knowledge 

sharing (Li et al. 2008; Capote et al. 2009; Nielsen & Tjørnehøj 2010; Basri & O’Connor 2011). 

Summing up, the research work about KM in SPI has been focused on the application of KM as a 

technological and managerial tool in SPI initiatives. Nevertheless, there are not statements about KM 

as a process within the scope of SPI initiatives. For that reason, the purpose of this work is to present 

a critical review about how KM has been included in the processes established/defined by several 

SPRM. It is important to say that the SPRM are the basis for SPI initiatives because they contain the 

definitions of all software engineering processes that a SDO could implement and improve to gain 

process capability and organizational maturity. 

The remainder of this article is structured as follows. Section 2 presents the theoretical background 

about KM, useful to put a common framework to compare the diverse statements about KM in the 

analyzed SPRM. Section 3 describes the methodology used for the review and presents the chosen 

SPRM. Section 4 presents the results of the review according to our chosen theoretical background 

from section 2. Section 5 concludes. 


This section presents a synthesis of two theoretical statements needed for the later analysis of the 

selected SPRM. In the first part, a classification of KM work into schools of thought that was proposed 

by (Earl 2001) is presented. In the second part, a complementary perspective, composed by a set of 

KM organizational capabilities, proposed by Gold, Malhotra and Segars (Gold et al. 2001), is 

described. 

The first referent is a “KM strategies taxonomy” proposed by Earl in 2001 (Earl 2001). The used 

methodology and the variety of data sources make this classification one of the most detailed. Further 

classifications can find in (Sieber & Andreu 1999; McAdam & McCreedy 1999; Apostolou & Mentzas 

1999; Alvesson & Kärreman 2001; Takeuchi 2001; Choi & Lee 2003; N. K. Kakabadse & A. 

Kakabadse 2003; Rodríguez Gómez 2007; Barragán Ocaña, 2009), but Earl’s taxonomy is 

considered the most complete, because It was constructed based on descriptive data from: (1) six 

case studies in companies; (2) interviews with 20 chief knowledge officers; (3) Workshops about KM 

programs in organizations; and (4) a review of publications about KM from research and practice. The 

identified KM schools are categorized as “Technocratic”, “Economic” and “Behavioral”. 

The technocratic schools are focused on IT tools to support employees in their knowledge-based 

tasks. The technocratic schools are the systems school, the cartographic school and the engineering 

school. The systems school is focused on technology for knowledge codification and sharing using 

knowledge bases. The cartographic school is focused on the creation and maintenance of knowledge 

maps using knowledge directories. The engineering school is focused on knowledge processes and 

knowledge flows within organizations. 

The economic schools are focused on the exploitation of knowledge as intellectual capital to create 

revenues streams. In the economic schools Earl identified only the commercial school. 

The behavioral schools are focused on the promotion and encouragement of knowledge creation and 

sharing and all organizational and personal issues to use knowledge as an organizational resource. In 

the last category there are three schools identified as organizational school, spatial school and 

strategic school. The organizational school is focused on the creation of networks for sharing 

knowledge. The spatial school is focused on the design of work spaces to promote knowledge 

sharing. The strategic school is focused on the development of the organizational strategy based on 

knowledge as its essence. A synthesis of Earl’s taxonomy is showed in Table 1 

327


Table 1: Knowledge management schools (Earl 2001) 

Category School Focus Aim 

Systems Technology Knowledge bases 

Technocratic Cartographic Maps Knowledge directories 

Engineering Processes Knowledge flows 

Economic Commercial Income Knowledge assets 

Organizational Networks Knowledge Pooling 

Behavioral Spatial Space Knowledge exchange 

Strategic Mindset Knowledge Capabilities 

The second referent is the work of Gold, Malhotra and Segars that was published in 2001 (Gold et al. 

2001). In this work, the authors argue that organizations must leverage their knowledge and create 

new knowledge to compete in their markets. In order to accomplish this, organizations must develop 

two types of KM capabilities: knowledge infrastructure capabilities and knowledge process 

capabilities. Knowledge infrastructure capabilities enable maximization of social capital, understood 

as “the sum of actual and potential resources embedded within, available through, and derived from 

the network of relationships possessed by a social unit” (Gold et al. 2001). Complementary, 

knowledge process capabilities are the dynamic elements that leverage the infrastructure capabilities 

to make knowledge an active organizational resource. 

The three infrastructure capabilities are technology, structure and culture. The technological 

dimension addresses the tools and means that enable knowledge flows in an efficient way. The 

structural infrastructure focuses on the existence of norms, and trust mechanisms, as well as, formal 

organizational structures, which enable and encourage people to create and share knowledge. The 

cultural dimension refers to the presence of shared contexts within organization. 

The four process capabilities are knowledge acquisition, knowledge conversion, knowledge 

application, and knowledge protection. The knowledge acquisition process is oriented toward 

obtaining knowledge from diverse sources both within and outside organizations. The knowledge 

conversion process is focused on making existing knowledge useful based on knowledge encoding, 

combination, coordination and distribution. The knowledge application process is oriented toward the 

actual use of knowledge, and the knowledge protection process is designed to protect the 

organizational knowledge from illegal or inappropriate use or theft. As illustrated in Figure 1, in terms 

of Gold et al, infrastructure and process dimensions reflect an additive capability to launch and 

sustain a program of change through KM in order to gain organizational effectiveness. 

Technology 

Structure 

Culture 

Acquisition 

Conversion 

Application 

Protection 

Knowledge 

infrastructure 

capabilities 

Knowledge 

process 

capabilities 


effectiveness 

Figure 1: Knowledge management capabilities and organizational effectiveness. (Gold et al. 2001). 


The methodology designed for this work consists of three stages: 

328


SPRM selection: The purpose of this stage was to select a set of SPRM used at Colombian and 

Latin American levels. To do this, a set of publications of the last decade, which main topic was 

SPI in Latin America’s SDO was reviewed. The five most mentioned SPRM were selected. 

Analysis of SPRM Processes and KM: The description of each process within each SPRM was 

analyzed to find aspects related to KM. The review was focused on the statement of process 

purpose and the descriptions of process outcomes. A subset of KM-related processes was 

selected. 

Mapping of SPRM process and KM: In this stage, the KM-related processes selected in the 

second stage were analyzed in relation to the KM schools proposed by (Earl 2001) and the 

organizational KM capabilities, proposed by (Gold et al. 2001). To do this, a single mention of 

some idea from KM schools or KM capabilities, was enough to map the process. 

4. Results 

The main results of this work were: 1) the selection of five SPRM; 2) the identification of 19 processes 

related to KM within SPRM; and 3) the mapping of the 19 processes to KM schools and KM 

organizational capabilities. In the next three subsections the detailed results of each stage are 

described. 

4.1 SPRM selection 

The first result was the selection of five SPRM from a set of 155 documents from SCOPUS database. 

The selected models were: 1) the ISO/IEC 122007 standard; 2) the Capability Maturity Model 

Integration for Development (CMMI-DEV); 3) the Brazilian SPRM (MPS.BR, acronym of the 

Portuguese expression “Melhoria de Processo do Software Brasileiro” or Brazilian Software Process 

Improvement); 4) the Mexican Software Industry Process Model (MoProSoft, acronym of the Spanish 

expression “Modelo de Procesos para la Industria del Software”); and 5) the SPRM from the program 

“Process Improvement for Promoting Iberoamerican Software Small and Medium Enterprises 

Competitiveness” (Competisoft). All these models were developed in collaborative works between the 

software industry and academic institutions. Also, they have been developed under the general 

structure defined in ISO/IEC 15504 standard (ISO/IEC 2003; ISO/IEC 2004a; ISO/IEC 2004b). In 

Table 2, the selected SPRM are described. 

Table 2: Description of selected SPRM 

Model Last update Institution Country Processes Used References 

ISO/IEC 

12207 

2008 

CMMI-DEV 2011 

MPS.BR 2011 

MoProSoft 2005 

Competisoft 2008 

International 

Organization for 

Standarization 

Software 

Engineering 

Institute 

Association for 

Promoting the 

Brazilian 

Software 

Excellence 

Mexican 

Association for 

Software 


Quality 

An Ibero 

American 

Research 

Network on 

Software Quality 

International 43 

USA 22 

Brazil 19 

Mexico 8 

Spain – 

Latin America 

329 

9 

(F. J. Pino et al. 2005); 

(F.J. Pino et al. 2006); 

(ISO/IEC 2006); 

(ISO/IEC 2008); 

(Baldassarre et al. 2009); 

(CMMI Product Team 

2010) 

(Chrissis et al. 2011) 

(SCAMPI Upgrade Team 

2011) 

(Kival C. Weber et al. 

2005) 

(Santos et al. 2010) 

(SOFTEX 2011a) 

(SOFTEX 2011b) 

(Oktaba et al. 2005a) 

(Oktaba et al. 2005b) 

(Oktaba et al. 2006) 

(Oktaba 2006) 

(Oktaba et al. 2007) 

(Competisoft 2008b) 

(Competisoft 2008a) 

(Oktaba 2009) 

(Aguirre et al. 2010)


4.2 Analysis of SPRM Processes and KM 

The analysis of the processes to identify those with some KM ideas resulted in a set of 19 processes 

from the 101 processes included in the five selected models. In Table 3, the selected processes, for 

each SPRM, are presented. 

Table 3: Processes related to KM ideas 

Model Process related to KM 

Software Configuration Management 

Software Problem Resolution Process 

Life Cycle Model Management 

ISO 12207 

Human Resource Management 

Reuse Asset Management 

Domain Engineering 

Configuration Management 

CMMI-DEV 

Organizational Process Definition 

Organizational Training 

Configuration Management 

Organizational Process Definition 

MPS.BR 

Human Resource Management 

Development for reuse 

Process Management 

MoProSoft Human Resources and Work Environment Management 

Organizational Knowledge 

Process Management 

Competisoft Human Resources and Work Environment Management 

Organizational Knowledge 

4.3 Mapping of SPRM process and KM 

Related to the analysis of SPRM and KM schools, we found out that most of the KM aspects are 

related to systems school. In other words, the predominant approach is knowledge codification. In 

fact, even in several SPRM there is an explicit reference to KM or to organizational knowledge 

(MoProSoft, Competisoft), the scope of this process is limited to keep available and manage a 

knowledge repository. The content of this knowledge repository is, mainly, best practices, lessons 

learned, knowledge work products, and knowledge about process definitions. Also, ISO/IEC 12207, 

CMMI-DEV and MPS.BR included the concept of an organizational knowledge repository as part of 

two processes: configuration management process and organizational process definition process. In 

addition, all SPRM include aspects related to engineering school. In particular, this school appears in 

the form of training activities and the provision of qualified personnel to do knowledge activities. 

These statements are part of human resource management processes. In Table 4, the relations 

between the selected SPRM and the KM schools are presented. 

Table 4: Relations between SPRM’s process and KM schools 


ISO 12207 

CMMI-DEV 

MPS.BR 

Systems 

Cartographic 

KM Schools 

Configuration Management X - - - - - - 

Software Problem Resolution Process X - - - - - - 

Life Cycle Model Management - - X - - - - 

Human Resource Management X - X - - - - 

Reuse Asset Management X - - - - - - 

Domain Engineering X - - - - - - 


Organizational Process Definition X - - - - - - 

Organizational Training - - X - - - - 


Organizational Process Definition X - - - - - - 

Human Resource Management - - X - - - - 

Development for reuse X - - - - - - 

330 


Commercial 


Spatial 

Strategic



Systems 

Cartographic 

KM Schools 

Process Management X - - - - - - 

MoProSoft 

Human Resources and Work Environment 

Management 

- - X - - - - 

Organizational Knowledge X - - - - - - 

Process Management X - - - - - - 

Competisoft 


Management 

- - X - - - - 

Organizational Knowledge X - - - - - - 

The analysis of the SPRM in relation to KM capabilities found out that most of the KM aspects are 

related to technology infrastructure capability and knowledge conversion process capability. These 

findings are coherent with the emphasis on Systems School. Another important element is that all 

SPRM have at least a process concerning to the design and implementation of a process-based 

organizational structure. Likewise, the acquisition and application process capabilities are covered 

explicitly within the models. The relations between the processes from SPRM and the KM capabilities 

are presented in Table 5. 

Table 5: Relations between SPRM’s process and KM capabilities 


ISO 12207 

CMMI-DEV 

MPS.BR 

MoProSoft 

Competisoft 


Technology 

Culture 


Commercial 


KM Capabilities 

Configuration Management X - - - X - - 

Software Problem Resolution Process X - - - X - - 

Life Cycle Model Management - - X X - - - 

Human Resource Management - - - X - - - 

Reuse Asset Management X - - - X X - 

Domain Engineering X - - X X - - 


Organizational Process Definition X - X - X - - 

Organizational Training - - - X - - - 


Organizational Process Definition X - X - X - - 

Human Resource Management - - - X - - - 

Development for reuse X - - - X X - 

Process Management X - X - X - - 


- - - X - - - 

Management 

Organizational Knowledge X - - - X - - 

Process Management X - X - X - - 


Management 

- - - X - - - 

Organizational Knowledge X - - - X - - 

From an Earl’s KM schools perspective, the topics included in SPRM are limited to the content of two 

schools: systems and engineering. Hence, any software organization involved in a SPI initiative 

cannot include KM strategies from another KM schools in the implementation, evaluation and 

improvement of its processes. For instance, the physical design of workspaces to promote knowledge 

creation and knowledge sharing, from spatial school, are not include in the studied SPRM, even 

though a grown number of companies have been applied it. In addition, many authors have argued, in 

many publications, that the software industry is, by definition, a knowledge-intensive industry. Hence it 

is surprising that the statements of commercial school are not explicitly included in the studied SPRM. 

331 

Structure 

Acquisition 

Conversion 

Spatial 

Application 

Strategic 

Protection


Also, it is remarkable that the statements of organizational and strategic schools have a closed 

relation to the principles and practices of agile methods to software development, but these schools 

are not included in the studied SPRM too, even though, the agile methods have an important 

influence in software industry, especially in small and medium SDO. 

In terms of the organizational KM capabilities, the studied SPRM do not include explicitly the cultural 

knowledge management capability. Nevertheless, in recent years the research literature in software 

engineering process design and improvement, especially all “agile” movement, has emphasized the 

crucial role of organizational culture in SDO. For this reason, this absence is a big gap to fill soon. 

Moreover, the studied SPRM do not include two crucial process capabilities: knowledge application 

and knowledge protection. 

Along these lines, this work has showed that the studied SPRM include, within their scope, some 

aspects related to KM. This fact reaffirms the importance of KM for SDO, and, in particular, the 

importance of KM in SPI. Mainly, the topics of interest about KM in SPRM are: 1) knowledge 

codification, 2) use of knowledge repositories, and 3) organizational training. These interest topics are 

located, in terms of Buono and Poulfelt (Buono & Poulfelt 2005), in a first generation KM. In this type 

of KM, knowledge is considered as a possession or something that could be caught and stored in ITbased 

knowledge repositories. On contrary, in the second generation KM, knowledge is considered a 

complex phenomenon concerning to socio-cultural, politic and technological aspects. Hence, a gap is 

evidenced in the content of the analyzed SPRM because they do not take into account elements from 

the second generation KM. 

These arguments allow us to formulate three questions that serve as a source of motivation for future 

research: 1) what KM outcomes and purposes should be included in the existing SPRM to have a 

more complete reference in processes design, implementation, evaluation and improvement within a 

SDO?; 2) is it possible to incorporate the KM purposes and outcomes as a new KM process within 

existing SPRM? Or, maybe is it necessary a KM process reference model for SDO?; 3) if the resultant 

KM process reference model would be used in an process capability determination initiative, how 

could be the correspondent KM process evaluation model?. The answers of all these questions have 

high value in KM research and would constitute a contribution aligned to the KM research trends 

identified by (Dwivedi et al. 2011). They argue that future research in the field of KM requires studies 

related to unifying different KM models in the existing literature and understanding the determinants of 

the evolution of KM in organizations. Also, studies pertaining to KM effectiveness and associated 

organizational and IT support are needed. 

Summing up, this work constitutes an important reference for research and practice because it 

presents a synthesis of the knowledge management topics included in software process reference 

models, and helps practitioners, from software development organization, to identify the foundations 

and the options to implement knowledge management initiatives within their organizations. Likewise, 

this study helps researchers to identify trends and topics to formulate new research projects about 

include the different “flavors” of knowledge management in software process reference models or to 

develop a knowledge management process reference model relevant for software development 


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334

Dynamics Between Trust in Interpersonal Work Relations 

and Intellectual Capital 


University of Eastern Finland, Joensuu, Finland 

mirjami.ikonen@uef.fi 

Abstract: Trust as an organizational issue has been widely studied in different fields of science over the last 

years. However, trust is a complex, multifaceted phenomenon, and different conceptualizations of the nature of 

trust exist in interpersonal relations. Trust is also embedded in all classifications of intellectual capital as trust 

building is seen as a leadership skill within human capital; an intangible asset within structural capital; and 

customer interaction and inter-organizational relationships within relational capital. Trust is a key element in cooperation 

and communication in organizations contributing to knowledge sharing in different types of 

relationships between actors. This paper deals with dynamics and development of interpersonal levels of trust. 

Reciprocal cooperation builds trust and affects positively on the organizational performance by the processes of 

renewing human capital. Within the organizations, the role of trust is crucial in generating intellectual capital, 

among other things, by enabling more open interpersonal communication for transferring tacit knowledge. The 

study focuses on trust in organizational relationships as a basis for collaboration and organizational interactions. 

The study (aiming to be a doctoral dissertation) adopts an explorative, qualitative approach. It aims to gain 

understanding of the perceptions of organizational actors in their own, real life contexts. The empirical data is 

originated longitudinally and analyzed by narrative method. The data were collected by open-ended face-to-face 

interviews and participant observations. An additional data was gathered to investigate trust breaches and the 

process of trust repair. Sensitive topic requires new methodology; therefore, method of empathy-based stories 

was used. Nevertheless, the current paper is mainly based on the results of the interview data. Several trust 

theorists have stated that trust develops incrementally over time. Trust is seen as an ongoing process. However, 

time itself does not make trust to develop, but continuous interaction is needed. The findings of the study indicate 

that the process of trust development seems to include various cycles and spirals instead of distinctive 'linear' 

progressing stages. The consequences of trust building appear reciprocity, mutual appreciation, motivation and 

positive emotions such as safety and boldness which can create the atmosphere more encouraging and foster 

innovativeness. As managerial implications, the study shows standing with subordinates and giving both 

responsibility and help are crucial in trust development in leader-follower relationships. From the follower’s 

perspective, the leader’s support is highly appreciated whereas ability and competence were appreciated by 

leaders and followers. Superior-subordinate dyads communicate on a regular basis without avoiding 

disagreeable issues. Furthermore, the dyads have their own sense of humour which is seen in their usage of 

special words. The findings emphasize the importance of raising the level of awareness of the significance of 

trust and developing trust building skills in organizations which may remove obstacles in pursuing trusting 

network relationships. Therefore, it is essential to discover how trust as an intangible asset can be integrated in 

leadership to facilitate organizational performance. 

Keywords: trust building, intellectual capital, trust development, interpersonal trust, qualitative methods 


Trust is a complex and multifaceted phenomenon has been widely studied in different fields of 

science during the past decades (Ebert, 2009). Trust is an important element of human and social 

capital. It is also the essence of leadership, as managerial leaders are responsible for knowledge 

sharing, motivating and creating learning culture. The current study poses the question of how leaders 

and managers enact on building and sustaining trust, especially in order to generate and renew 

intellectual capital. 

Trust plays multiple roles within organizations (Möllering, Bachman & Lee, 2004, among others) 

enabling more open interpersonal communication in teams and organizations contributing to 

information and knowledge sharing in different types of relationships between actors (Savolainen, 

2011). There is a fair degree of consensus across disciplines that trust is an important factor in 

organizations. On the individual level, trust predicts outcomes such as job satisfaction, organizational 

behaviours and commitment, turnover and job performance (Lewicki, Tomlinson & Gillespie, 2006, 

992). On the organizational level, research recognizes trust in leadership as a facilitator for extra-role 

behaviour or, in other words, organizational citizenship behaviour (Burke et al, 2007). Although we 

know that trust is important thing in organizations, many themes remain which are worth of studying. 

Trust in organizations is crucial as an intangible asset and leadership skill for building and maintaining 

relationships between actors in workplace and enabling co-operation; and secondly, for creating and 

strengthening vitality for competitiveness (Savolainen, 2011). That enables job commitment, and 

335


vitality which energizes personnel and organization. Reciprocal cooperation builds trust and affects 

positively on the organizational performance by the processes of renewing human capital (Savolainen 

2011). In the knowledge era, expertise- and knowledge-based organizations are mainly involved in 

the creating, sharing and utilizing of knowledge which individuals and groups have (Savolainen 2011). 

Nahapiet & Ghoshal (1998) state, that the skills and knowledge are created and shared mainly in the 

everyday routine of work relationships. Therefore, trust has a significant role in interpersonal 

interaction. In the renewal of intellectual capital trust is a relational asset which enables creating open 

culture for renewing, and knowledge sharing through interaction (Savolainen 2011). On the contrary, 

the lack of trust may hindrance utilizing the potential of intellectual capital embedded in organizations. 

The study deals with the dynamics and development of interpersonal trust over time. The study 

focuses on trust in intra-organizational relationships as a basis for collaboration and organizational 

and means for renewing human capital. More specifically, the empirical study concentrates on the 

process of trust development, i.e., building, maintaining and repairing dyadic level trust in intraorganizational 

relationships within the Finnish organizational contexts. The study also examines 

practices of trust in building relationships within organizations from a relational perspective. 


Trust drives collaborative, trustworthy interactions within groups and between individuals in 

organizations. As trust forms a foundation for cooperation and is part of a social moral order more 

widely (Rousseau et al 1998), it facilitates intellectual capital and organizational learning. By 

definition, willingness to take risk is in the core of trust (Mayer, Davis & Schoorman, 1995). Therefore, 

understanding practices of trust more deeply may provide a way for societal encouragement to risk 

taking which is needed for generating and renewing intellectual capital. Trust plays also a role in 

enhancing business competitiveness. According to Savolainen (2011), organizational vitality is a force 

which enables organizations to compete and succeed. Such vibrancy is needed in organizations for 

utilizing all the different skills, abilities and talents of individuals (Nurmio & Turkki 2010). Vitality and 

vibrancy refer to human energy, enthusiasm, and strength of will including both emotions and actions 

involved in creativeness. In the knowledge era, vitality is built more on intellectual capital and 

intangible assets (Savolainen 2011). Therefore, trust is seen as enabler of intellectual capital and 

organizational learning. 

Trust is dynamic, volatile and contextual in nature (Lewicki, Tomlinson & Gillespie, 2006, 992). In 

interpersonal relations, trust has been defined and examined, for example, between peers, 

supervisors and subordinates, and at managerial and organizational levels (Dirks & Ferrin 2002; 

Bijlsma & Koopman 2003). The attributes of uncertainty, complexity and risk describes the concept. 

Trust involves a risk to become betrayed or wounded despite of the positive endeavours of trust in 

developing openness, and effective co-operation (Savolainen 2010). Uncertainty originates from the 

risk and expectations (Savolainen 2008, 3). Trust is about taking risk (McAllister 1995, 184) and 

involves willingness to take risk (Mayer, Davis & Schoorman, 1995). Thereby trust is exposed to 

blindness and deceptive action (Ferrin, Bligh & Kohles, 2007). Among the advantages of trust within 

and between organizations, some researchers have discussed the dark side of trust as well. Gargiulo 

& Ertug (2006) argue that there is an optimal level of trust in different levels of relationships, both on 

organizational and personal levels. According to this perspective, risk included in trust is emphasized. 

‘Too much’ of trust may facilitate abusing. As noted, trust is a hybrid phenomenon, including both 

calculation and benevolence (Bachmann 2000). 

Mayer, Davis & Schoorman, (1995) have developed a model of organizational trust in which several 

characteristics of the both parties lead to trust, which is defined as “The willingness of a party to be 

vulnerable to the actions of another party based on the expectations that the other will perform a 

particular action important to the trustor, irrespective of the ability to monitor or control that other 

party” (Mayer, Davis & Schoorman, 1995, 712). The key component of trust is willingness to be 

vulnerable. Several trust theorists have stated that trust develops incrementally over time. Trust is 

seen as an ongoing process (Connell, Ferres, & Travaglione, 2003). However, time itself does not 

make trust to develop, but continuous interaction is needed. According to Lewicki & Bunker (1996), 

trust develops incrementally trough three phases, which are calculative-based, trust, knowledgebased 

trust and identification-based trust. Identification-based trust is reached in a few relationships; 

knowledge-based trust develops in many relationships and calculus-based trust in some relationships 

(Lewicki & Bunker, 1996). Trust has important effects on behavioural outcomes such as higher levels 

of cooperation (Dirks & Ferrin, 2002). Trust is seen as social glue, which is crucial to successful 

336


progress and performance of teams (Laine 2008, among others). Savolainen (2011) states, that trust 

is seen largely as a part of leadership work but is actually intellectual capital for the entire 

organization, both leaders and subordinates as intellectual capital is rooted in the relationships and 

networks of the work place through mutual trust. 

In organizations, the dynamics between leader and follower is one of its basic elements; and, an 

important aspect of the leadership process is the dyadic relationship that leaders have with their 

individual follower. Trust is (implicitly) included in many approaches in the field of leadership and 

organization research: Leader-Member Exchange (LMX), Transformational Leadership, and Servant 

Leadership, among others (Avolio, Walumbwa & Weber, 2009). Trust is included and related into 

social exchange theory that states that social exchange depends and promotes trust (Blau, 1964). 

Leader-Member Exchange theory (LMX) describes leadership as a process based on unique, mutual 

relationship and interaction between a leader and a follower. According to Graen & Uhl-Bien (1995), a 

leader develops a unique and dyadic exchange relationship with every follower. Traditionally, this 

dyadic relationship between the leader and the follower is seen fairly quickly developed and remained 

relatively stable over time. LMX theory emphasizes the importance of interactions and communication 

in relationships described by reciprocity, mutual respect, commitment, support and trust (Graen & Uhl- 

Bien, 1995, 230). However, the theory does not explain how to develop trust but the concepts are 

suitable to the process view of trust development over time. 

To summarize, LMX theory offers a novel and helpful approach to get an in-depth understanding of 

what happens in organizations when focusing on trust development between supervisors and 

subordinates. Savolainen (2008) has integrated LMX theory stages and the model of trust 

development by Lewicki & Bunker (1996). In Savolainen’s (2008) framework, these are combined into 

LMX-stages: stranger-calculative, acquaintance-knowledge and mature-identification phases. 

Research integrating trust and LMX is current and arguable (Scandura & Pellegrini 2008, 102). The 

theory also highlights the significance of communication in leadership. Trust building and maintaining 

are also significant means in developing intangible assets benefitting the organization as work today 

is largely expertise-based by nature and strongly rests on creating and sharing especially tacit 

knowledge (Savolainen 2011). 

The current study poses such questions as how leaders and managers enact on building and 

sustaining trust in organizations and how leaders and subordinates describe their experiences and 

perceptions of intra-organizational trust and distrust. 

3. Methodological choices 

The study adopts an explorative, qualitative approach. It aims to gain understanding of the 

perceptions of organizational actors in their own, real life contexts. Much of the discussion about trust 

rests upon survey data. Survey analysis typically takes into account only a few variables at a time. 

Thus it is inadequate for gaining a deep understanding of the complex nature of trust and the subtle 

distinctions that are critical for understanding a particular situation in an organization. 

The empirical data is originated longitudinally and ethnographic and narrative methods are combined 

in the analysis. The data were collected open-ended face-to-face interviews and participant 

observations during 2009-2011 from leader-follower dyads in a foundation organization. All who were 

interviewed and observed were dyads of leader-follower relationship. Preliminary understanding was 

mainly reached during interviews and transcription and finally, during analyzing process. An additional 

data was gathered to investigate trust breaches and the process of trust repair. Sensitive topic 

requires new methodology; therefore, method of empathy-based stories was used as well. 

Nevertheless, the current paper is mainly based on the results of the interview data. 

The data is analyzed holistically in qualitative research. Classic content analysis (regarded as a 

qualitative analytical methodology) is often the first qualitative technique for analyzing qualitative data 

when other methods are also utilized. During the analysis, the attention is drawn to essential issues 

and details on the basis of the theoretical framework and the research questions. The ethnographic 

data is analyzed by narrative method. The purpose is to offer one version of reality told from particular 

perspective (Eriksson & Kovalainen, 2008, 223). The current study poses such questions as how 

leaders and managers enact on building and sustaining trust in organizations and how leaders and 

subordinates describe their experiences and perceptions of intra-organizational trust and distrust. 

337

4. Main findings 


The study indicates that the importance of keeping promises and communication provides support for 

trust to develop. Through their interaction, leaders and members share their values for mutual trust 

building, and use it on a daily basis. Trust between leader and follower requires time and reciprocal 

interaction. In the initial trust formation model by McKnight & Chervany (2006) this has been taken 

into account. Cooperation and confidence are often used synonymously with trust. In current 

research, reputation and pre-perceptions are emphasized as elements of initial trust building. Almost 

all of the new workers in the target organization were somehow known beforehand even all these 

leader-member relationships were new ones. Mayer, Davis & Schoorman (1995) argue that integrity is 

judged by previous behaviours, reputation, similarity of values and consistency between word and 

actions. In addition, ability and competence were appreciated by leaders and followers in both 

organizations. For example, first impression about the new leader filled with sense of competence 

enables trust to develop. 

In this chapter, the story of Dianne 1 is presented as an example of a narrative analysis (see also 

Ikonen 2010). In the analysis, I have focused on the meanings the leaders and followers give to trust 

and the way how they construct trust in their stories (Hytti, 2003). I have analyzed these stories with 

regard to the contents (what is told) and the interpersonal function of the language (Kohler Riessman, 

2004). 

Dianne is a new leader of a team in the main office of the foundation organization. When we have an 

appointment for interview, I walk after Dianne to the same room where I have interviewed Carol a few 

weeks ago. Immediately in the beginning of the interview, I realize that Dianne has read rather lot of 

leadership literature. Dianne is enthusiastic in her job and, especially, all the new things related to her 

new position as a leader. She is deeply committed to the organization. She firmly says that she wants 

to become a good leader. Therefore, Dianne obviously has a mission. She seems to be open-minded 

and honest which strengthens trustworthiness and she is also able to create an open atmosphere by 

chatting informally. She speaks the local dialect rather strongly which makes me feel cosy and 

relaxed. 

Dianne is wondering how to find the right way to be a leader. She refers to trust as an essential key 

element of leadership. She has found her new position as an example for other employees in her 

organizational unit. How often do we think what we are? Within this interview I am not anymore so 

nervous than I was before. I have accepted my role as a researcher and I do enjoy it. I feel 

comfortable listen to her and then I consider it my mission to ask more about the themes the 

interviewee talks. It is fascinating to concentrate on listening to her when she is “thinking aloud” (as 

she said) and getting ideas throughout the interview. 

As trust is to build over time, both parties must be able to share the feelings and thoughts concerning 

their relationship. As Jones & George (1998, 537) conceptualized trust as an evolving experience, in 

which values, attitudes, and moods and emotions operate simultaneously to produce an overall state 

of trust. Trust between leader and follower requires time and reciprocal interaction. 

For me it has been good to see that people dare to speak things out in our team. When 

you look backwards I believe that we have not been courageous enough to speak aloud 

all we have got to say to our boss. We have found that the manager is a little distant to 

us. [Translation Taina Savolainen] 

In an organizational context, trust and cooperation will not operate in a vacuum. Findings of the study 

indicate that integrity, mutual support, reciprocity, and initiative are the main elements of efficient 

relationship between team leader and team members. Integrity, one of the dimensions of 

trustworthiness, emerges in our data of showing trustworthiness as keeping promises. Trust is 

induced trough actions which are in line with the spoken words. Furthermore, leader’s expressions of 

emotions have an influence on follower’s experience of trust (Häkkinen, Ikonen & Savolainen, 2010; 

Savolainen & Häkkinen, 2011). Trust is argued to facilitate cooperation because a team member who 

believes another member is trustworthy will have willingness to risk (Mayer, Davis & Schoorman, 

1995; Ferrin, Bligh & Kohles 2007). 

1 The names of the participants have been changed. 

338


I have tried just to go downstairs and chat with them informally. One of my employees 

had a wish to meet regularly and we have done that. And I have walked around and 

asked at the doors how you are doing. I wonder if there could be too much of that. I need 

to keep doing that and develop it. [Translation T.S.] 

Leader-member dyads communicate on a regular basis without avoiding disagreeable issues. The 

dyads have their own sense of humour which is seen in their usage of special words. Furthermore, 

the leader individually takes into consideration the needs of subordinates. Dianne, as a leader, builds 

trust by visibility and being approachable. Moreover, the leader never criticizes those members who 

bring out truth. 

In this study, it is possible that the participants told me their perceptions how the things between them 

should be or how they hope they could be. Hence, I have made interpretations about what the 

participants wanted to share with me and what I observed. However, these findings support the prior 

results indicating that integrity, listening to subordinate, appreciating his or her opinion, and keeping 

promises are the main elements of efficient functioning relationship in organizations. These findings 

by themselves are quite unsurprising indicating that informal discussion with subordinates, 

appreciation of their work and opinions and honesty are the most important elements of trust building. 

Furthermore, standing with subordinates and giving both responsibility and help are crucial in trust 

development especially in new leader-follower relationships. These findings have been reported in 

other studies (Brower, Schoorman & Tan, 2000; Gillespie & Mann, 2004). 

In conclusion, the findings suggest that a leader may show trustworthiness by visibility and presence 

and by supporting, encouraging and delegating responsibility, and giving feedback. In the data, the 

leaders “show their heart,” but they do not lose their professionalism. They show trustworthiness by 

humility behaviour, humility of a special type. For an authentic leader, talking is an important way of 

share his or her values and the vision with the subordinates. These findings suggest that openness 

and affectivity of communication are crucial for trust development in leader-follower relationships, 

according perceptions of both parties of trust building. From the follower’s perspective, the leader’s 

support is highly appreciated whereas ability and competence were appreciated by leaders and 

followers. The data will be deeply analyzed in the doctoral dissertation by the end of 2012. 

5. Conclusions and discussion 

The findings imply that in development of leadership skills building trust needs to be considered as 

intangible asset and a skill for leaders. To strengthen trust in leader-follower relationships in 

organizations, concrete actions are needed though they might be mundane. On the contrary, 

deteriorating trust in work relationships necessarily does need nothing due to self-sustaining nature of 

distrust. The findings indicate the nature of distrust to be more or less self-intensifying. Distrust may 

appear if interaction is low. Leadership by trust is resource and asset enabling the renewing and 

developing of intellectual capital and competencies (Savolainen, 2011). 

In general, building trust among leaders and followers in organizations takes time; yet, trust is tested 

in relationships and can be broken in a moment. Leaders should be encouraged not only to build trust 

in their relationships with subordinates but also learn to sustain it as Scandura & Pellegrini (2008, 

107) suggest. The consequences of trust building appear reciprocity, mutual appreciation, motivation 

and positive emotions such as safety and boldness which can create the atmosphere more 

encouraging and foster intellectual capital in organizations. 

The findings support the results emphasizing the cycles of trust development with times of stable 

maintaining (Ikonen & Savolainen, 2010a, 2010b, Savolainen & Ikonen, 2012, Laaksonen, 2010). In 

the study, trust appeared as a positive spiral, and on the contrary, distrust as a negative spiral in 

leader-subordinate relationship. Even minor actions might have a powerful affection how trust 

develops and how organizational culture enables in turn the development of intellectual capital. Trust 

is crucial for creativeness in organizations as allowing taking risks and making mistakes is needed for 

new ideas. 

At the organizational level, discussion and development of organizational practices concerning initial 

trust is also needed. In practice, importance of recruitment and guidance of a newcomer in 

organizations could be understood more deeply. For example, leader’s support and regular interaction 

from the very beginning of leader-follower relationship could be one essential element of trust 

building. Consequently, leadership skills and especially, communication skills are highly appreciated. 

339


Taking a follower’s perspective in general, usually, manager’s first actions and the first impressions 

have an impact on trust development as well. 

As managerial implications, trust is crucial to develop and encourage in organizations; practices of 

trust show also how intra-organizational trust in work relationships affects inter-organizationally, 

customer interaction, in this case. Dynamics seem to work through organizational climate, functioning 

of interpersonal relationships which involve also trustful behavior towards peers. Within organizations 

trust is seen largely as a part of leadership work but is actually intellectual capital for the entire 

organization, both leaders and subordinates. Trust formation between individuals is reciprocal in 

nature. Intellectual capital is rooted in the relationships and networks of the work place through mutual 

trust. Trust building and maintaining are also significant means in developing intangible assets 

benefitting the organization as work today is largely expertise-based by nature and strongly rests on 

creating and sharing especially tacit knowledge (Savolainen, 2011). 

Trust enhances both vitality and competiveness in organizations through increases in intellectual 

capital. Accordingly, intellectual capital enhances trust building in work relationships. Nevertheless, 

ignoring the significance of trust building as a leadership skill may hindrance the exploitation of 

intellectual capital in its entirety. Trust provides a strong potential for renewing intellectual capital 

(Ikonen & Savolainen, 2011) since it forms a foundation for co-operation, most importantly in 

knowledge creation and sharing. Therefore, it is essential to discover how trust as an intangible asset 

can be integrated in organization and leadership to facilitate organizational performance. 

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344

Just-in-Time Knowledge as a way of Increasing Quality and 

Relevance of Ideas in Open Innovation (OI) programs 

Guillermo Beuchat 

Universidad Adolfo Ibáñez, Santiago, Chile 

TRANSFORME Consultores 

gbeuchat@transforme.cl 

www.transforme.cl 

Abstract: The concept of just-in-time knowledge management has been around in corporate environments 

(although not implemented extensively), as a way of solving a crucial dilemma: how to provide the right 

knowledge to the right people at the right time, just in time, so they can make informed decisions and take action 

based on that specific knowledge, conveniently “pushed” to their workplace. Coupled with the idea of delivering 

that same knowledge in small “clips” or “nuggets”, the resulting methodology can have very high impact in 

decision making at all levels in an organization. Open Innovation, on the other hand, has also been around for 

some years and is currently gaining momentum in the corporate environment as a mechanism to collect ideas 

from employees, suppliers, consumers or business partners. Challenges are designed in such a way that they 

will stimulate the target audience to submit innovations under the correct incentives. The problem, however, is 

that many times these challenges have difficulty in obtaining relevant or high quality ideas, even if the scope of 

the challenges is reduced. This paper discusses the use of just-in-time knowledge as a way to increase the 

relevance and quality of ideas submitted in open innovation programs, avoiding the common pitfalls of this 

method, due to the fact that participants have heterogeneous levels of knowledge relevant to the idea challenge 

subject matter: they submit ideas not relevant to the challenges, ideas that “re-invent the wheel”, ideas that are 

not new or have been implemented by other companies in the same industry, ideas that do not consider market 

or technology issues relevant to the challenge. Use cases and lessons learned of this approach are presented in 

the aviation, petrochemicals and construction materials industries in Latin America. 

Keywords: just-in-time knowledge, open innovation, knowledge “clips”, innovation management 

1. Background 

Open Innovation (OI) is a relatively new concept in the corporate environment (2003, Chesebrough), 

which companies have been struggling to implement ever since it was introduced. Essentially, it 

suggests that innovative ideas may come from anybody within an organization or its “extended” 

network, including employees, customers, end-users or consumers, suppliers, universities and 

research centers, as well as many other business partners or stakeholders. This in opposition to the 

traditional notion that innovation will arise from centrally managed internal organizations, in which a 

“selected few” are given the role of creating and developing new designs, products, services, 

business models and processes, many times with the help of a reduced-scope external “ecosystem”. 

This model has been the standard R&D structure for decades. But innovation is definitely not R&D, as 

many companies are discovering in the post-internet business environment. 

Idea quality is a complex construct consisting of four distinct dimensions: novelty, feasibility, relevance 

and elaboration (Blohm et al. 2011). In this context, one of the issues that must be tackled in 

implementing Open Innovation is the apparent lack of rigour in the process of idea generation, which 

in turn derives into a relevance and quality problem in the ideas gathered from these “open” sources 

(2011, Birkinshaw et al). Many times, individuals or groups asked to submit ideas in focalized 

“innovation challenges”, which is the standard way of organizing open innovation efforts, have little or 

no formal knowledge of the challenge subject matter; of the business environment; of the relevant 

technologies for that particular challenge; or even of the innovation activities of direct competitors or 

related industry players in the same area. So after the idea capture phase of a challenge is over, 

innovation managers find themselves with a large number of irrelevant, incomplete, duplicated ideas 

or, what´s even worse, ideas that are clearly “re-inventions of the wheel”, that are definitely not 

original or new to the industry. Thus, Open Innovation (OI) challenges tend to produce large quantities 

of unusable ideas, rather than a smaller number of original, relevant and quality ideas that will 

eventually turn into implemented projects, with a higher probability of success. 

This is not a trivial dilemma. The effort involved in evaluating hundreds of ideas in this type of 

innovation challenge is such that some focus is required and ways of solving this problem with the 

ideas gathered must be implemented to avoid losing credibility in the innovation program itself. 

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The concept of “Just-in-Time Knowledge” has been around for some time and efforts have been 

made to implement decision-support systems based on it at a corporate level for at least a decade 

(1997, Cole et al). Essentially, in means that the “right” information should be delivered to the right 

people, in the right moment, just when they need it to increase the quality of their decision making 

process. The same authors describe a case where efforts have also been made to automate and 

systematize this process, where information delivery is based on “triggers” in the decision making 

process itself. 

Open Innovation and Just-in-Time Knowledge Delivery, as described, can be successfully integrated 

to solve the OI quality and pertinence dilemma: if pertinent, opportune knowledge is provided to 

people participating in OI communities, just-in-time, you can actually improve quality and pertinence of 

ideas submitted to innovation challenges. This paper describes a methodology and provides empirical 

evidence on this new use of knowledge management discipline, obtained on three different OI 

programs. 


A process has been developed and incorporated into our “Innovation with Results © ” methodology, 

which enables and implements the concept discussed in the context of formal, long-term innovation 

management programs in a corporate environment, as shown in figure 1: 

Figure 1: Just-in-time knowledge management for open innovation 

The method proposed has two initial implementation phases and a two-phase cycle that repeats itself 

throughout the Open Innovation idea challenge timeframe, using a simple Knowledge Map to guide 

the process. 

As part of the initial challenge design, this Knowledge Map shows and relates knowledge sources 

relevant to the specific challenge focus, and is built using appropriate software tools. For example, if 

the innovation challenge proposed is “How do we reduce our logistics cost by 50%”, then relevant 

entities to monitor will probably include main competitors, main suppliers, strategic supply chain 

actors, customers, 3PL operators and other logistics services suppliers, industry-wide benchmarking 

sources, logistics or supply chain research in academia, for example. 

The Create-Deliver Cycle implements a semi-automated “monitoring” process which will “pull” relevant 

data from those sources into an analytical process, designed to filter content for relevance to the 

specific open innovation challenge. “KnowledgeClips” are then prepared in such a way that a twolevel 

reading or usage scheme is provided: innovators receive or access small doses of information in 

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these “clips” – normally a header, image and short paragraph, but can click on the header to access 

full content and sources in the main content repository, if they require to delve deeper into the subject 

matter covered in the KnowledgeClip. 

The Learn-Improve Cycle, on the other hand, provides a way to capture feedback from the innovator 

communities to accelerate the learning curve in the knowledge management process, deliver more 

and better relevant or pertinent knowledge clips, and perform a “continuous improvement” process on 

the Knowledge Map, content gathering and delivery scheme. 

This specialized form of knowledge management, in which relevant information is “fed” into and 

directly focused on improving the creative process of innovators, needs to be implemented using the 

same technological platform used to gather the ideas from participants in the first place, 

complemented with a well-designed “media mix” that will ensure these KnowledgeClips are delivered 

correctly. 

3. Use cases and empirical evidence 

Our experience in implementing Open Innovation management programs in medium to large Latin 

American companies has clearly shown that this methodology can have significant impact on specific 

challenges. Here are some examples of recent applications, in the context of a formal innovation 

management process, using a formal “stage-gate” type methodology to gather, filter and evaluate 

ideas in a succession of open challenges that were proposed to company staff and implemented in a 

world-class IMS (Innovation Management Software) platform by BrightIdea, Inc. 

3.1 Construction Materials Industry, Mexico 

The company is a diversified conglomerate with 22 industrial plants in 9 countries, which produces a 

wide variety of fibrocement, plastics, metals and cement products for construction, with over 7.000 

employees in the LATAM region and over 1.2bn annual turnover. 

Two challenges were organized in the first four months of the program: the first, an open, company 

wide effort to gather ideas on “how to make our company accident-free - the zero accident challenge”; 

the second, a challenge to gather ideas for new products in each one of the four production 

categories. Both challenges were open to participants from all over the company with no distinction. 

Table 1 illustrates the impact of “feeding” just-in-time knowledge in a structured way to participants in 

the second challenge, and the quality/relevance (as judged by a designated, 22 person panel of 

experts in industrial safety) problem with the first challenge, where no program was implemented and 

people participated simply using their available knowledge of the subject matter. 

Table 1: The impact of “feeding” just-in-time knowledge 

In this application of our methodology, over 36 “KnowledgeClips” were prepared and delivered using a 

media mix with three main channels over a three week period: publishing the content in the BrightIdea 

innovation platform, delivering it through clickable emails using the iContact mass-mailing software 

platform, and printed posters that were deployed in all plants and offices of the organization. 

3.2 Petrochemicals Industry, Chile 

The company is a US$ 160mn annual turnover polypropylene plant, with only 100 employees, mainly 

serving the domestic Chilean market with several grades of this polymer in the form of pellets. A 

formal innovation management program has been in place for some years, using the Open Innovation 

method with an operational & process focus. Six challenges have been deployed to date, with varying 

347


results. Two of them are of a technical nature: “how to give a profitable use to surplus ethylene and 

propylene in the production plant”, and “re-inventing the finished product distribution chain”. The first 

had groups of 5 people with sufficient technical and business expertise participating in the idea 

generation phase, while the second was open to all company employees. Only the second challenge 

was implemented with a complete JIT knowledge complement. The results can be seen in Table 2: 

Table 2: Results 

The media mix used to deliver JIT knowledge in the second challenge was designed to accommodate 

the more technical nature of the ideas and knowledge required to boost idea quality and relevance: 

not only were “KnowledgeClips” published in the BrightIdea platform and delivered through email 

bulletins, but a series of four “learning workshops” were delivered, also “just-in-time”, to all 

participants, where “hard” information (performance KPI’s, logistics costs, third-party subcontractor 

data) about the outbound logistics process was delivered and analyzed with all members of the 

innovator community invited to participate in the OI challenge. 

Less ideas were received during the 8-week period that the idea-gathering stage was open, 

compared to the first challenge (which included essentially the same participants), but idea quality 

and relevance were definitely better. 

3.3 Aviation Industry, Latin America 

The company is a large regional airline, leading in the Latin American region with operations in 9 

countries, with a total fleet (passenger & cargo business) of 149 airplanes, annual (2011) revenue of 

US$ 5,72 billion and over 22.000 employees. An Open Innovation program has been in place since 

late 2010, which to date has a total of 485 participants, 578 ideas submitted in eleven different 

challenges. This initiative covers several areas of the company, but has a strong focus on IT-based 

innovation – new, strategic IT applications in critical business processes, passenger experience, 

energy savings, fleet maintenance and other areas. Several of the challenges deployed used the JIT 

Knowledge delivery method, used to increase participant awareness of IT’s potential to significantly 

increase performance in those areas. Table 3 shows the results for two of these challenges, one 

without a specific knowledge delivery program and the other enriched by using the proposed method: 

Table 3: Results 

In this case, the challenge supported by our KM program (IdeaBOX) is a general idea box in which 

users could submit any type of IT-based innovation idea not categorized in other, more specific 

challenges. User participation is company-wide. A complete knowledge delivery scheme was 

implemented using the standard proposed method and media mix. However, two new types of 

delivery method were implemented and integrated into the JIT knowledge delivery media mix: 

The standard blog authoring tool available within the BrightIdea Innovation Management platform 

was used, an internal “guru” and opinion leader from the IT area of the company was assigned to 

frequently write a blog on the potential impact of IT, new technologies available in the aviation 

sector, IFE (In Flight Entertainment) technologies and other complementary information. This blog 

348


became the most visited page on the Innovation Program platform and users in the innovator 

community participated intensely, submitting comments to the blog, offering and uploading 

additional content, and interacting directly with the blog author, generating a personalized, 

interactive knowledge delivery platform inside the general innovation platform site. 

RSS feeds were implemented in the innovation platform website, and a full selection of IT and 

innovation news was captured and fed into the innovation platform and into specific challenges 

(called “webstorms” in the BrightIdea platform) using this channel. Language was not an issue in 

this case (content is all in English), because although the company operates in Spanish and 

Portuguese-speaking countries in Latin America, in the aviation industry most participating 

employees have no problems with English language content. 

4. Lessons learned 

The deployment of this methodology 

in Open Innovation programs has enabled us to perfect the 

practical sides of the implementation and develop a replicable, simple and effective method to apply 

the concept of Just-in-Time Knowledge to support open innovation efforts in a corporate environment. 

Some lessons learned can be of use to practitioners wishing to implement this model: 

Information sources and feeds need to be analyzed and monitored carefully, to filter 

out irrelevant 

content. Aligning KnowledgeClips to specific innovation challenges is critical for users to actually 

benefit from them. 

The media mix is also critical. Not all participantes in innovation communities or specific 

challenges need or can use the same level of knowledge, or have access to the same delivery 

media. Also, the use of real-time formats (virtual or not) like physical workshops, webinars or 

conferences, can have a higher impact on knowledge usage to generate better or more relevant 

ideas. 

Most people 

participating in Open Innovation challenges will not “click” on KnowledgeClips to 

pursue further information. Our analysis indicates a click-thru rate in website and email delivery 

media not bigger that 5%, meaning users mostly read the title and small clip or “nugget” of 

knowledge and do not need or want more detail. Thus, there might not be a need to prepare 

additional content in most cases. 

The concept of “just-in-time knowledge” 

has a down-side, which was discovered in these 

applications, as part of the Learn-Improve Cycle: the fact that innovation community members 

and challenge participants are heterogeneous, belong to different areas in the company and have 

different professional or labor profiles, implies that the KnowledgeClip creation process must use 

a “cutoff-point” in content that is a minimum common denominator: the level of “difficulty” in the 

content must be tailored for different targeted audiences, unless a segmented delivery “media 

mix” is devised. The level of effort involved in this type of data and information processing during 

the Create-Deliver cycle can be higher than the benefit derived from these KnowledgeClips in the 

context of a specific Open Innovation challenge. 

5. Conclusions and future developments 

During the implementation of this method in specific 

Open Innovation programs in a corporate 

environment, a discussion arose as to whether the use of Just-in-Time Knowledge as proposed could 

actually inhibit innovation, because the information input could actually put restraints on the variety 

and quantity of ideas generated. It was argued that creativity could be stifled and “outlier”, nonmainstream 

ideas simply would not appear in the challenges. Our opinion, however, is that Open 

Innovation needs to increase its capacity to produce concrete, measurable results in a reasonable 

timeframe. In a corporate environment, generating ideas with high impact on the company bottom line 

is the priority, rather than prioritizing the quantity and variety of ideas captured in the process. Quality, 

relevance and implementation feasibility of ideas is more important, even if some “lateral” ideas might 

be lost. On the other hand, there is a need to reduce the effort involved in idea evaluation in a multiple 

stage-gate process. The use of the proposed “Just-in-Time Knowledge” method has proved to be a 

significant advance in this direction. 

Future 

developments of this method include better strategic alignment between content capture and 

processing with challenge objectives, to increase relevancy of ideas even more; and developing new 

and alternative delivery channels to include all possible audiences, segmenting these at a more 

granular level and delivering user-specific just-in-time KnowledgeClips. 

349

References 


Chesbrough, H., 2003. 

“Open Innovation: The New Imperative for Creating and Profiting from Technology”, 

Boston: Harvard Business School Press, ISBN: 1-57851-837-7. 

Birkinshaw, J., Bouquet, Cyril and Barsoux, J.L., 2011. “The 5 Myths of Innovation”. MIT Sloan Management 

Review, SloanSelect Collection Winter 2011. Massachusets Institute of Technology. 

Blohm, I., Bretschneider, U., Leimeister, J.M., and Krcmar, H. 2011. "Does Collaboration among Participants 

Lead to Better Ideas in It-Based Idea Competitions? An Empirical Investigation" International Journal of 

Networking and Virtual Organizations (9:2), pp. 106-122. 

Cole , K., Fischer, O., and Saltzman, P., 1997. “Just-in-Time Knowledge Delivery”. Communications of the ACM, 

Vol. 40, No. 7. 

350

Paisa Culture: A Potential for Value Creation Based on 

Knowledge 


Bio Gerencia Virtual ®, Medellin, Colombia 

bmolina@biogerenciavirtual.com 

Abstract: Even though, in theory, the current era is considered to be the era of knowledge and innovation, many 

countries, regions, and companies have barely made their way into this era. Therefore, neither models of 

thought, nor available data, nor management tools are being updated for the new approach. Consistent with the 

above and based on its vision and mission statements, Bio Gerencia Virtual ®, started the elaboration of The 

Paisa Culture Prototype, a knowledge management for innovation prototype, applied to a specific culture, which 

is mainly based in the Antioquia Department of Colombia. The ability of this culture to do business distinguishes it 

from among other cultures, when one analyzes the Colombian identity. This document was the result of the first 

attempted use of secondary data, not knowledge-oriented data, to explore the potential for value creation based 

on knowledge on the part of Colombia and Antioquia. From analysis of environmental variables, signals were 

deduced that turned into indicators that became the basis for proposing a path of positive evolution. In the 

second part of the document, the principal contexts were listed, those that could be deduced from the analysis, 

and one way of understanding this was from the point of view of the intelligent organization as opposed to a 

traditional one. Although there will be a long way to go, the findings generally showed a game-changing business 

that is promoted by the government, and that is aimed at increasing competitiveness in Colombia. The plan of the 

document will provide elements that limited themselves to the Function To Detect inside the learning cycle of 

companies, proposed by Haeckel and Nolan, which served as a starting point for structuring the prototype. It will 

also refer to the collective knowledge that was perceived from the analysis. A perspective that promotes the 

awakening of countries like Colombia to use knowledge in the construction of welfare will be proposed. 

Keywords: contextual analysis, value-based on knowledge, competitiveness, innovation, Paisa culture, prototype 


Peter Drucker's proposal to create value through productivity and innovation in a society where the 

only significant resource is knowledge, should materialize in a specific locality, bearing in mind that 

the author predicts a final transformation by the year 2010 or 2020 (1994). However, many countries, 

regions, and companies are just beginning to notice this transformation. Specifically in Colombia, an 

historic moment where prosperity is a national aspiration is taking shape. (National Planning 

Department, 2011). An increase in competitiveness, prosperity, and innovation is sought; but 

knowledge is not the basis for attaining these. Neither is it known what the capacity of generation of 

value based on knowledge by Colombia or its regions and departments might be. The department of 

Antioquia, the central cradle of a naturally entrepreneurial and innovative culture which has 

distinguished itself in Colombia for his ability to do business, is projected to be a symbol of knowledge 

in its vision for 2020 (Chamber of Commerce of Medellín for Antioquia, 2009, p. 62). Bio Gerencia 

Virtual ®, a strategic consulting business, meanwhile has initiated the development of the Paisa 

Culture Prototype (PCPK), a prototype of innovation (Molina Patiño, 2004) based on knowledge 

applied to a specific culture, one historically rich in tacit knowledge. The term Culture is interesting 

from its relationship with knowledge, learning, values, symbols, meanings and behaviors that 

characterize a society (Molina Patiño, 2007). The term Paisa, in Colombia, denotes mainly the 

inhabitants of Antioquia (Figure 1). 

The Paisa Region is located in one of the most mountainous regions of the world, which has tested 

the audacity and historic tenacity that characterizes the culture found there. The probable impact of 

the Paisa culture in the creation of knowledge for innovation or the competitiveness of the region is 

not known. Because the ability to generate value-based knowledge depends largely on each country 

or region (Molina Patiño, 2010a), the main focus of this document is: What possibilities does the 

environment of Colombia and Antioquia provide for the creation of value, through the transformation 

of knowledge into innovation of products, services and processes useful for the market and society? 

The beginnings of an answer could be found in macro analysis (Molina Patiño, 2010a), which 

considers the most important variables that represent the environment in which organizations must 

operate in a specific country or geographical location. The macro is external to the organization that 

impacts its probable performance and is at the center of the Function To Detect within the learning 

cycle of the companies of Haeckel and Nolan (1993). In analyzing the macro, the result of collective 

knowledge that is itself of the culture of a region or country is discovered. This document relates to the 

351


first component of macro analysis: the analysis of external variables (EV) that are relevant variables 

that affect all sectors of the country or region of interest which were obtained through research from 

the available secondary data that are not oriented to knowledge. Deduced from the external variables 

were the signals from the environment (SE) which refer to warning indicators that deliver the 

environment which is analyzed in order to discover probable opportunities, threats, needs, trends, or 

knowledge-based efforts (Molina Patiño, 2010b). Of these SE, the principal contexts, or frames of 

variables, were deduced from the analysis, and one way of understanding this was formulated from 

the point of view of the intelligent organization as opposed to a traditional one. 

Figure 1: Map of the Paisa Region 

For an intelligent organization, consider first the organization that understands, that makes learning 

an ongoing practice as suggested by Senge, et al. (2004, pp. 4-5). The findings showed that in 

Colombia, knowledge has not been used to create value, nor has the culture as knowledge been 

perceived, but there is evidence of a game-changing business that is promoted by the government to 

increase the competitiveness of Colombia. This change of play will offer enormous opportunities for 

innovation and knowledge-based productivity, and more specifically for organizational learning. 

If the capacity of generating value based on knowledge in Colombia and Antioquia is discovered, and 

the use of knowledge to innovate is learned, the capacity to compete and, therefore, our prosperity, 

will increase. If we look at the culture as an essential and differential ingredient of intellectual capital 

of the country/region, and of its crucial knowledge (Grundstein, 1998), its impact in competitiveness 

will be greater than it is today. 

2. Research method 

This document refers to the first part of macro analysis which is the preliminary stage of the research 

underlying the PCPK. Steps toward secondary research have been completed (Bio Gerencia Virtual 

®, 2012), and they were based mainly on the electronic search of the sources of interest. Also used 

as a source was the knowledge of the clients, especially to present the interpretation of the contexts 

found and their comparison, in the discussion section of this document. Note that the data found on 

the EV are not oriented to knowledge. Therefore, we have developed Interpretative Frameworks 

(Grundstein, 2009) to guide them to knowledge. From the external variables, the signals of the 

environment were obtained, and, based on them, the contexts and their interpretation were proposed. 

2.1 External Variables (EV) 

The macro analysis began with the consideration of the EV arranged in categories or groups. (Figure 

2) 

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Figure 2: Categories of external variables 

Within each category of EV, there is a list of specific EV or datum (Bio Gerencia Virtual ®, 2012). 

2.2 Environmental signals (ES) 

Some of the most relevant ES that I obtained from the external variables and that will serve as 

possible indicators that permit an evolution and later comparison are: 

First ES: Global Impact Signal 

Global Competitiveness Index = 4.2 / 7; Position 68/142 economies 

Global Innovation Index = 3.26 / 7; Position 57/142 economies 

(World Economic Forum, 2011) 

The lowest score Colombia gets is in innovation. 

The objective of Colombian competitiveness policy is to accomplish productive transformation, that is, 

to find a way to make new goods. (National Planning Department, 2008) 

Second ES: Investment in Knowledge Signal 

Investment in research and development (R&D) = 0.18% of GDP 

Investment in science, technology and innovation (ST&I) = 0.47% of GDP 

(National Planning Department, 2009) 

Since 2008, Colombia has been creating the conditions for knowledge to generate development. The 

goal for 2019 is to increase the investment in ST&I activities to 2% of Colombian GDP (ibid). In 

Colombia, 0.1% of the inhabitants are engaged in R&D (Privy Council of Competitiveness, 2011, p. 

101). Antioquia, which represents 13% of Colombia's population, accounts for 19% of researchers. 

The highest concentration is in Bogota with 37.9% (op.cit.). 

353

Third ES: Use of Knowledge Signal 


Converting knowledge into products, services, or processes = Low 

Conversion of knowledge into quality of life = Low 

(Bio Gerencia Virtual, 2012) 

Quality of life in Antioquia: 

In 2011 = 66.76/100 

In 2007 = 68.38/100 

(Government of Antioquia, 2012) 

High-tech items account for 7.9% of Colombia’s exports while 88% of exports correspond to low 

innovation goods. (Privy Council of Competitiveness, 2011, p. 103) 

In Antioquia, since the declaration of Vision 2020, the strong connection between knowledge, human 

development, and competitiveness has been recognized. However, the region admits that it is still far 

from what was proposed for it, and that it does not have the people or resources to progress to a 

stage of innovation (Chamber of Commerce of Medellín for Antioquia, 2009). In Antioquia, 90.5% of 

businesses in 2012 are micro-businesses whose value is considered as low value added. Only 0.6% 

are large companies (Chamber of Commerce of Medellín for Antioquia, 2012). 

Fourth ES: Human Enhancement Signal 

Emphasis on human development through the creation of added value = Low 


Integral Human Development (HDI) for Medellin: 

In 2011 = 86.32/100 

In 2004 = 81.11/100 

(Mayor of Medellin, 2012) 

Gini coefficient for Medellin: 

In 2010 = 0.538 

In 2002 = 0.547 

(ibid) 

The great challenge of Medellin is HDI. Medellin has been recognized as the industrial city of 

Colombia, its next big goal is to become the city of knowledge. (Ruta N, 2012) (Medellin Digital, 2012) 

Fifth ES: Performance in Knowledge Signal 

Cultural potential of Colombia and Antioquia = High 


Knowledge Economy Index = 4.94/10; Position 76/145 economies 

Knowledge Index = 5.18/10; Position 76/145 economies 

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(The World Bank, 2012) 


Notably absent from the sources cited for the environmental signals is the measurement of culture as 

a valuable input for the creation of a knowledge-based society. However, culture is recognized as a 

factor of development. (National Planning Department, 2011, p. 400) (Mayor of Medellin & Antioquia 

University, 2011). Colombia is the second most biodiverse country on the planet (Biodiversity 

Information System of Colombia, 2000), from which it derives its high cultural diversity. The Paisa 

Region, meanwhile, is home to vivacious human beings, always looking ahead, who from their origins 

as carriers, learned to be open roads; a culture of wanderers with a capacity for hard work, cheerful 

and with an ability to learn quickly, tell the truth, and solve difficulties in a practical way. The Paisa 

culture’s ability to do business is evident from its origins. It is an important distinction that today big 

business groups are represented there. The uniqueness and historical importance of the Paisa culture 

make it attractive to begin to understand applied Knowledge Management. 

3. Comments 

From the above results, it was found that in Colombia/Antioquia, Investment in Knowledge was 

insufficient, Performance in Knowledge was low, the Use of Knowledge for the generation of value 

was minimal, Human Enhancement was reduced, and the Global Impact, therefore, was low. That is, 

the results of collective knowledge still did not reflect what the country/region wants to build. Without 

competitiveness, there will be no prosperity; without innovation there will be no competitiveness, and 

without knowledge, there will be no innovation. With a high cultural potential, but without adequate 

generation of value, efforts that are made to increase competitiveness will not be sufficient wealth 

creators. All this means that Colombia/Antioquia will have to learn to create the prosperity that they 

are planning. And consequently, they will have to update their models of thought. Certainly, culture 

will play a determining role. If we can become familiar with the learning cycle of a culture, the capacity 

of learning will be increased from the source region of the culture. If tacit knowledge is discovered and 

made explicit, it may be useful for differentiating and increasing the competitiveness of the region. 

4. Relevant contexts 

The PCPK is designed for organizational environments. Therefore, the ES will provide input for the 

learning organization. With the ESs as a base, a first level of the contexts that explore the possibilities 

offered by the environment of Colombia and Antioquia for value creation based on knowledge was 

formulated. No doubt the perception (Figure 3) will play a central role in the detection of these 

contexts. 

Figure 3: How many faces can you see? 

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1. Context of opportunity 


For the traditional organization (TO) For the learning organization (LO) 

With a backdrop still so weak and unpredictable, in 

order to face competitiveness, and where value 

addition is an emerging challenge, it is common to 

follow the game of volume, cost-effectiveness and 

efficiency. We should wait to see how competitors, 

suppliers, and other stakeholders react. 

2. Context of need for innovation 

What is happening in Colombia in terms of the 

competitiveness approach is a shift away from the 

business game, from a macro point of view which 

can represent many opportunities for organizations. 

The sooner we invest in the new game, the more 

impact we can generate, and the more learning 

advantages we can create. The game of value based 

on knowledge is just beginning 

TO LO 

If you are starting from scratch, it is good to manage 

the risk prudently. 

It is better to copy a solution that has worked well in 

other countries or in other companies than to 

undertake something that is untested and that has 

the risk of failure. 

3. Context of the need for Bio Sciences 

When there is much to be done, innovation is 

imperative. 

One must obtain custom solutions that the market 

values and that represent new knowledge 

advantages in order to compete. 

TO LO 

Having the latest technology helps us to increase 

our ability to compete. 

Similarly, participating in social networks and 

increasing our visibility is key in this digital age. 

We must place more emphasis on technology and 

leave the responsibility for the matter to the 

technicians. 

4. Context of the collective 

To differentiate ourselves, we should look for more 

opportunities based on science relevant to our 

organization. The sensitization on sciences is a 

valuable input to our learning cycle. 

Colombia, while enjoying the privileges of 

biodiversity, can be a strategic location to create new 

benefits and ways of interacting with customers, 

especially in the bio sciences. 

If these sciences are enhanced with appropriate ICT, 

the impact on prosperity will increase. More than a 

technical responsibility, it is a strategic responsibility. 

TO LO 

Knowledge is not the main resource of Colombian 


Networks of power and lobby are increasingly 

important to ensure a good position in 

competitiveness rankings. 

Intellectual capital is much less important than 

financial capital that we need in the day-to-day 

operations. 

5. Context of the need for Humanization 

The first such organization which values knowledge 

from one's cultural identity will have its efforts 

reflected in more income, more growth and better 

market potential. 

The collaborative networks and the ability to work in 

groups will be essential. 

Without intellectual capital, financial capital has no 

power to achieve prosperity. 

We will have to favor collective learning techniques 

to promote the creation of meanings and more 

knowledge. 

TO LO 

We must use a language of innovation, knowledge, 

science and technology, value added, etc., 

characteristics of the postindustrial age. 

However, this language should be conducive to profit 

and sales results, which are what, allow us to stay on 

the market. 

356 

It is indisputable that the language of the new 

economy can not be handled without motivated 

human beings, well managed and in an appropriate 

environment for the implementation of new ideas. 

From the market perspective, the priority is to 

measure the impact of our products and services in 

the living conditions of human beings. If the impact 

is negative, there is no point investing in ST&I.

5. Conclusion 


It can be said that the ES which served as the base of the contexts showed a resulting collective 

construction, be it conscious or unconscious, in which the culture participates. 

It is clear that only in the perspective of the LO were there encouraging possibilities that the 

environment of Colombia and Antioquia offer to the creation of value. The game changer that is now 

being experienced from the macro side provides learning opportunities that each organization must 

build to meet the new paradigms, as those indicated by Grundstein (2012). It is certainly innovation, 

and therefore, knowledge for action that is the new direction. (Molina Patiño, 2004) 

We are just beginning the work to discover the learning cycle which is peculiar to the Paisa culture 

and convert it into innovation (Molina Patiño, 2010a). It is a strategic issue that will represent great 

challenges not only from theory relevant to the new paradigms, but since the dawn of this culture to a 

new reality based on dynamic knowledge (Molina Patiño, 2005). 

Will more Paisa sectors and companies that are intelligent rather than traditional be found? This will 

be one of the questions to answer. 

And if there are more traditional companies than intelligent ones, are the best theories available for 

quick learning of best business practices that build welfare? 


I thank God for giving me a great dream and for walking with me; I thank my family for always 

believing in me and for helping me to reach my goals; I thank Liz Konstantinov, an exceptional human 

being, who has always helped me like a sister; I thank Michel Grundstein for his companionship and 

for compelling me to write for publication and I admire him for his discipline and loving dedication to 

knowledge. 

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358

How to Utilize Learning Organization and Reward System 

to Leverage Employee Self Learning 

Juli Purwanti and Mochamad Fadillah Rizky 

PT Telekomunikasi Indonesia, Tbk., Bandung, Indonesia 

yuli_purwanti@telkom.co.id 

mfrizky@telkom.co.id 

Abstract: After Indonesian government issued Law No.5 of 1999 on the Prohibition of Monopoly and Unfair 

Business Competition Practices in March 1999, Telkom experienced difficult times in terms of expanding its 

business. In addition, many competitors started to enter Indonesian telecommunication industry. As a result, 

Telkom revenue was continuously dropped for several years. Telkom employees must have high learning 

capability that encourages the emergence of innovative ideas as a solution to the problem of industrial dynamics. 

Telkom innovative products as a competitive advantage are expected to boost Telkom revenue. Telkom believes 

that learning organization system is able to create employees with high learning capability. Telkom has given 

best effort in building a learning organization culture and system. Telkom commits to give 1.5% revenue each 

year for training and development of human capital competency program in order to support the business. 

Moreover, ELearning facility has been developed to enrich employee knowledge. In addition, Telkom has another 

self-learning method that can be utilized by all employees, which is called KAMPIUN. This collaboration tool 

allows employees to acquire and share their knowledge with others online. All programs are perfectly design but 

are that enough? In fact, only a few employees are interested in Telkom Learning Organization Facility. For 

example, only a few employees who are consistently utilized eLearning facility. Employees no longer frequently 

utilize KAMPIUN. Establishment of Community of Practice is not greeted with enthusiasm. The declining number 

of innovative product, employees performance tend to be flat in the average score, recurring problems on 

operational activity, and customers are not satisfied with employee assistance in solving issue. Those are 

happened due to lack of new and updated knowledge. Telkom needs employees with high learning capability, 

which is eager to learn new things to support their work, to improve performance, to learn from failure to prevent 

potential problem and always do self-learning continuously. So then, what is required for employees to 

consciously move to self-learning? Based on the facts above, it can be concluded that the existing Telkom 

learning organization system has not uniformly boost employee self-learning. Utilization of the facilities is carried 

out based on mandatory and basic needs. Although the benefit of learning is very clear, most employees are not 

motivated to enrich their knowledge. How to boost self-learning? To cope with the above problems, this paper 

provides some proposed solutions. It is a contribution of practitioner to the enrichment of human resource 

management science in the academic world. This paper also shows that it is theoritically possible to do so but it 

needs many factors to make it success in practice. 

Keywords: learning organization, knowledge management, employee self learning, eLearning, learning award 


The uncertainty of industrial dynamics and tight business competition that is likely headed to hypercompetition 

is challenge for Telkom, which is the market leader of telecommunication business in 

Indonesia. 

Figure 1: Corporate lifecycle 

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Telkom has been running a series of transformation agenda by finding a new curve and capture 

potential business opportunity to face the competition and avoid a revenue decline. 

Figure 2. Telkom business transformation journey 

During a transformation, Telkom has asked its employees to support the transformation process with 

high learning capability, which is able to rapidly adapt to changing business environment and 

intelligently respond to customer needs. Employees should be turned into a fast learner because most 

of the time, the speed of learning moves slower than the pace of change. Therefore, the changing 

demands of business environment must be responded as fast as possible in order to sustain 

business. 

Telkom believes by creating a learning organization culture and system is able to create employees 

with high learning capability. Therefore, Telkom has been trying to create a learning organization 

environment that allows employees to update themselves either through the classical training and 

self-learning method. Telkom seriously focuses creating a learning organization system by developing 

a supported system and media. Telkom started implementing Competency Based on Human 

Resource Management (CBHRM) in 2004, which is guidance for determining a pattern of employee 

competency development. Moreover, Telkom decided to become a Knowledge Enterprise in 2007. 

The main role of Telkom knowledge management mechanisms is to make employees able to do 

acquisition, sharing and utilization of knowledge as employee learning methodology. 

By implementing the process above, Telkom is expected to acquire employees who are continuously 

delivered many innovative ideas for the company. Telkom innovative products as a competitive 

advantage are expected to boost Telkom revenue. 

Theoretically, learning organization system will give a positive impact in the business for the company 

because it will spur the employee performance, competency and innovation but in fact, it is not as 

smooth as expected. The tendency of diminishing amount of innovative idea and product from year to 

year and no employee willingness to take a benefit from learning facilities provided by the company 

becomes the main issue. This paper tries to analyze the causes and some proposed solutions and 

recommendations on the issue from the perspective of practitioner rather than academic. 

360



Learning organizations are organizations where people continually expand their capacity to create the 

results they truly desire, where new and expansive patterns of thinking are nurtured, where collective 

aspiration is set free, and where people are continually learning to see the whole together (Senge, 

1990). 

The learning company is a vision of what might be possible. It is not brought about simply by training 

individuals, it can only happen as a result of learning at the whole organization level. A learning 

company is an organization that facilitates the learning of all its members and continuously transforms 

itself (Pedler et. al. 1991). 

Learning organizations are characterized by total employee involvement in a process of 

collaboratively conducted, collectively accountable change directed towards shared values or 

principles (Watkins and Marsick, 1992). 

According to Senge (1990), the learning organization is “the organization in which you cannot not 

learn because learning is so insinuated into the fabric of life”. Also, Senge (1990) added that 

organization can be defined as “a group of people continually enhancing their capacity to create what 

they want to create”. As a conclusion, Senge (1990) gave clear statement that learning organization 

as “an organization with an ingrained philosophy for anticipating, reacting and responding to change, 

complexity and uncertainty”. Maholtra (1996) reinforced Senge’s statement by stating that “concept of 

learning organization is increasingly relevant given the increasing complexity and uncertainty of the 

organizational environment”. Senge (1990) believes that “the rate at which organizations learn may 

become the only sustainable source of competitive advantage”. 

Based on McGill et al. (1992), the learning organization is "a company that can respond to new 

information by altering the very programming by which information is processed and evaluated". 

Senge (1990) stated that “organisations must develop a capacity for fast-paced innovation and learn 

to love change". Hamel and Prahaled (1994) gave a clear perspective about the importance of 

learning organization by stating that "as the competitive environment becomes more complex and 

variegate, the need for greater genetic variety - a broader range of managerial beliefs, and a greater 

repertoire of managerial actions - grows apace". Waterman (1986) reinforced Hamel and Prahaled’s 

statement by stating that “top companies seem to organise around people honouring these needs - 

feeling of control, something to believe in, challenge, lifelong learning, and recognition". 

According to Dixon (1994), the essence of organisational learning is “the organization's ability to use 

the amazing mental capacity of all its members to create the kind of processes that will improve its 

own”. 

Based on Garvin et. al. (2008), there are three board factors that are essential for organizational 

learning and adaptability, which are “a supportive learning environment, concrete learning proccess 

and practices, and leadership behavior that provide reinforcement”. 

3. Telkom learning organization system and it’s problem analysis 

In the framework of increasing employee competency, Telkom has given its best effort in building 

learning organization system. Telkom issued policy and made media, which are expected to support 

forming a learning culture among employees. To speed up learning process, Telkom expects its 

employees to utilize all learning facilities that have been provided as a self-learning tool. 

Points that Garvin highlighted in 2008 about Learning Organization Building Block Concept in 

his publication “Is Yours a Learning Organization?” have been applied in the development of Telkom 

Learning Organization System since 2004. 

In 2004, Telkom improved human resources management system by implementing 

Competency Based on Human Resource Management (CBHRM). Competency development is 

one of the CBHRM process and it is part of learning organization system. Telkom commits to 

give 1.5% revenue each year for training and development of human capital competency program in 

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order to support the business. This is clearly stated in Telkom Collective Bargaining Agreement 

between Management and Employee Union. 

The linkage between employee participation in knowledge sharing and performance management is 

an attempt to force employees to share their knowledge for others because it determines their 

performance appraisal. Telkom strongly believes that it will automatically create a learning culture 

among employees. Moreover, there is another linkage between the participation of employees in the 

eLearning and element of performance appraisal. 

From year to year, Telkom continues to develop a strong culture of learning. Telkom seriously gives 

its best effort in developing a variety of media to facilitate the learning process of employee. Approach 

for encouraging continuous learning is done both with conventional and non-conventional. 

Conventional approach for continuous employee learning activity was carried out under an annual 

program that is packaged in Human Capital Development Program regarding to the analysis of 

organizational assessment and individual assessment framework as follows: 

Figure 3: Telkom human resource development framework 

Non-conventional approach for continuous learning activity was carried out through Coaching and 

Mentoring, Built In Training, On The Job Training, Field In Training, and as well as through the activity 

of Community of Practice (CoP). Since 2005, Telkom has implemented Knowledge Management and 

built IT based Knowledge Management System (it is called KAMPIUN). KAMPIUN is also able to 

accommodate the needs of Community of Practices. 

KAMPIUN is a realization of employee innovative idea that designed for media acquisition, knowledge 

sharing and utilization of employee knowledge. In addition, KAMPIUN is a collaborative media, which 

has been stored many articles, policies, and required references for employees. Sharing knowledge 

by writing an article in KAMPIUN is one of the many competency assessment parameters. 

The existence of KAMPIUN is expected to be able to capture tacit knowledge of employees, turn it to 

a company’s intellectual capital, and create Knowledge Worker, which is clearly illustrated below. 

362

Figure 4: Telkom knowledge management system 


During implementation along with the change of corporate culture, Telkom Knowledge Management 

System has been continuously developed based on the Cultural Strategic Approach as follows. 

Figure 5: Telkom knowledge management culture strategic approach 

Other non-conventional method of continuous learning, which is used to support the competency 

development process, is eLearning program. This program is expected to increase willingness from 

employees to utilize it. ELearning module refers to Telkom Competency Directory and it is presented 

in a very interesting way. 

To give widely information about the company, Telkom provides an intranet portal and all Telkom 

employees can access it from anywhere around the world. The intranet portal is integrated to various 

websites from each Telkom department. It gives employees much valuable information about the 

company from various perspectives. Employees are able to express their opinion, critics or 

363


suggestion to management through this media. In addition, Telkom also issues a monthly magazine, 

which its contents are from employees. 

So far, the efforts made to develop Learning Organization System Telkom has seen very maximum, 

but it has not been fully utilized by the employee. 

In fact, only a few employees are interested in the Learning Organization System facilities provided by 

the company. For example, only a few employees who are interested using eLearning facility even 

though the module has been designed in such an attractive way with up-to-date material. The number 

of eLearning user has been slowly increased from year to year but it is still too little considering the 

number of Telkom employees who is nearly 20,000 employees. Based on the illustration below, the 

average number of using eLearning module per employee last year is two. Meanwhile, the number of 

module that has been provided is quite a lot and in accordance with the needs of competency 

development. 

Figure 6: The participant of eLearning 

Employees no longer frequently visit Knowledge Management System or KAMPIUN and contribution 

of their writing keeps decreasing from time to time. Establishment of Community of Practice is not 

greeted with enthusiasm. Line chart below shows that from year to year, most of employee log in or 

use KAMPIUN maximum twice a year (Telkom employee is about 20.000). It indicates that employees 

not interested utilizing KAMPIUN to update their knowledge. 

According to the line chart above, the highest number of access in July caused only on that time is the 

due time for submitting article, which would be used as evidence of sharing in competency 

assessment. As a conclusion, Telkom employees will be motivated in learning if there is an impact on 

them, which is crystal clear, such as leverage their performance score or affect their remuneration. 

Therefore, Dixon’s statement, which is described the essence of organisational learning is “the 

organization's ability to use the amazing mental capacity of all its members to create the kind of 

processes that will improve its own”, has not there yet. Employee self-learning is not a culture in 

Telkom for now. 

Fact that occurred, which is directly or not directly affected by the things mentioned above probably 

still a conjecture, is the declining number of innovative idea and product from year to year. 

Although there is not very significant increase, performance of employee tends to be flat in the 

average score, performance of business stays stagnant or even decline, and the number of customer 

service complaint has increased. Based on operational data, completion problems are also 

encountered recurring problem, many customers are not satisfied with the answers from customer 

services, many who complained about the reliability of services provided by Telkom, the lack of good 

quality and so forth. 

364

Figure 7: The Number of Kampiun User Access 


Figure 8: Number of employee innovation 2006 - 2011 

Why are these things happened? Employees become one of the key, the key to success and the key 

to destruction, depending on the capabilities of all employees who handle from planning through to 

execution and evaluation. Capable employees are employees who have a high learning capability, 

which is eager to learn new things to support the success of their work, to improve the performance of 

work, and willing to study the failures that happened to prevent similar failures in the future. Capable 

employees are employees who always do self-learning continuously to update themselves. So then, 

what is required for employees to consciously move to self-learning? The answer is a learning 

organization system. The next question is what kind of learning organization system needed because 

Telkom has a learning organization system that can be perfect. 

Telkom Learning Center is the largest and most comprehensive in Indonesia that will soon be 

developed into a Corporate University, knowledge management system that many other companies 

learn as a subject of benchmarking, the method of eLearning modules that are rich and very 

attractive, plus the reward systems that encourage employees to do sharing and learning. 

Based on the facts above, it can be concluded that the learning organization system built by Telkom 

has not been uniformly boost employee self-learning. Utilization of the facilities was carried out 

mandatory and basic needs, such as writing KAMPIUN article is limited to meet the requirements of 

365


competency evaluation, following the eLearning is limited to assignment from manager of human 

resources. Most employees are not motivated to push themselves to independently learn. Employees 

still do not feel the need to learn. 

4. Proposed solution 

How to use learning organization system to boost employee self-learning? Using the concept of 

Learning Organization Building Block Implementation (Garvin et. al.,2008), alternative solutions are 

expected to increase role in growing Learning Organization System Employee Self-Learning is as 

follows: 

Creating Supportive Learning Environment 

Re-evaluate policies and management system of competency human resource development. Efforts 

to improve employee self-learning is a key solution to be addressed. 

This may be delivered too early, but as an effort, Telkom can assess its application, which is 

implementing Learning Award. The idea is still simple: every employee is given a kind of learning 

initiatives which equals to point and after collected will be exchanged for various rewards according to 

the needs of employees, such as a family vacation package, the package of money for children 

school, pack a holy pilgrimage and so on. What learning initiatives that can be given a point? For 

example, discuss about a book, writing articles on KAMPIUN, develop innovations, sharing 

knowledge after training, complete eLearning module, and so on. 

Giving a free time for learning to employee is one of the many ways to give an opportunity to 

employees to develop by their own way and probably they can be more relax and enjoy in developing 

their selves. 

In addition, creating a comfortable office design or layout that supports knowledge sharing 

environment is one of many ways to contribute to concrete learning process. 

Accelerate Concrete Learning Process 

Providing various data and information as a reference for employee to study is a simple and powerfull 

way to leverage employee knowledge. It can be done by providing online library. 

Telkom can develop a mobile eLearning program to improve the current ones. Mobile eLearning 

enables employees to access eLearning modules through a smart phone and it can be freely 

accessed anywhere and anytime. With such ease that is expected of employees interested in 

developing themselves independently. 

Immediately realize the concept of Corporate University that is currently being studied for further 

implementation. Corporate University is expected to be able to promote organizational learning in 

corporate environments that have a direct impact on business performance and implementation of a 

new culture. Besides, it will also ensure Corporate University expected rate of learning faster than the 

rate of change at a much more efficient. 

Fostering Leadership that Reinforce Learning 

In the process of learning or transfer knowledge, Board of Directors and senior leaders must involve 

by giving a lecture or insight about certain issue or information. It shows to the employees the top 

management commitment in developing and running knowledge management system. Moreover, 

everytime Board of Directors or senior leaders attend a seminar, training or short-term study, they 

must share the knowledge to employees. The cycle does not stop right there. BODs and senior 

leaders acts will be a trigger for employee to start doing self-learning. 

In competitive and fast-changing bussines environment, Telkom should act based on Gary Hamel and 

Prahalad’s statement, which is “top companies seem to organise around people honouring these 

needs - feeling of control, something to believe in, challenge, lifelong learning, and recognition". 

Telkom should incessantly campaign self learning culture and learning facilities that have been 

established. Top mangement will be the key to the success of this campaign. Telkom learning culture 

can be speed up by implementing concept Leader as a Teacher, which means in the middle of 

working activity, learning process or transfering knowledge happens. 

366


For stimulating those efforts above, based on internal data, Telkom employees are still motivated by 

basic needs. Therefore, developing Learning Award could be a solution to increase employee interest 

on self learning. This reward or recognition is gave to the employee who shows the highest curve on 

learning process in a year. 

5. Conclusion 

Creating employee self learning culture is not an easy task for any company to do and it may take 

many years to complete the process. However, it does not mean we cannot speed up the process. By 

utilizing learning organization and reward system, we can leverage employee self-learning. 

Based on the concept of Learning Organization Building Block, program that reinforces self-learning 

can be created and delivered to the employees. For supportive learning environment, contribution of 

knowledge sharing gives employee Learning Award and giving a free time may increase the interest 

of study. Company must also focus providing source of information and data and create a knowledge 

sharing environment through office layout and realizing the Corporate University implementation 

soon. 

Role of the leader also determines the success of knowledge management system and to push top 

management as a role model is possible through Leader as a Teacher program. 

Developing Learning Award as one of the motivation tool for employee to do self-learning is 

necessary. 

The last, commitment is a final ingredient to execute any kind of program and it has a huge 

contribution to the success. 

References 

Dixon, N. (1994). The Organizational Learning Cycle. London: McGraw-Hill. 

Garvin, D.A., Edmondson, A.C. and Gino, F. (2008). Is Yours a Learning Orgnization?. United States of America: 

Harvard Business Review. 

Hamel G. and Prahaled, C.K. (1994). Competing for the Future. United States of America: Harvard Business 

Review. 

Maholtra, Y. (1996). Organizational Learning and Learning Organization: An Overview. Retrieved on May 27th, 

2012 from http://www.brint.com/papers/orglrng.htm. 

McGill, M. E., Clocum, J. W. and Lei, D. (1992). Management Practices in Learning Organizations. 

Organizational Dynamics. New York: Elsivier. 

Pedler, M., Burgoyne, J. and Boydel, T. (1991). The Learning Company: A Strategy for Sustainable 

Development. London: McGraw-Hill. 

Senge, P. M. (1990). The Fifth Discipline: The Art and Practice of the Learning Organization. New York: 

Doubleday. 

Waterman, D.A. (1986). A Guide to Expert Systems . Boston: Addison-Wesley. 

Watkins, K. E. and Marsick, V. J. (1992). Building the Learning Organization: A New Role for Human Resource 

Developers. Studies in Continuing Education. New York: Routledge. 

367

368

Work 

in 

Progress 

Papers 

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370

Retired Professors, ¿Still Part Of Higher Education 

Institution’s Intellectual Capital? 

JMarcela Sánchez-Torres and Luisa Fernanda Muñoz Terán 

Universidad Nacional de Colombia, Colombia 

jmsanchezt@unal.edu.co 

lfmunozt@unal.edu.co 

Abstract: In this paper, we present a proposed methodology, supported by a system of indicators, to 

characterize the professional activity developed by the retired professors of Higher Education Institutions -HEI-, 

and some results of applying it in one of the most important institutions of Colombia, this in order to establish 

whether pensioners may still be taken into account as the Intellectual Capital of HEI after retirement. 

Keywords: intellectual capital, intellectual capital at HEI, professor’s life cycle, professor’s scientific career, 

retired professors, professional activities of retired professors 


As a part of the Higher Education Institution’s –HEI- Human Capital, professors throughout their 

career play an important role talking about Intellectual Capital. However, at Colombian context there 

was no found any study of the research activity after retirement. Because of that we have some 

question such as ¿Are the retired professors continue working after their retirement? ¿Do they still 

develop academic activities? or ¿have they still got scientific production? ¿Do they involve UNAL or 

another HEI? ¿do they still work in research groups and networks? 

Trying to answer these questions we developed a methodological proposal, based on a literature 

review 1 , to characterize the professional activity of retired professors establishing an indicator system, 

to determine if they still could be taking in count as a part of the Intellectual Capital of the HEI, or if 

they definitely abandoned the academic career and the research activity after retirement. 

The aim of this paper is to show results of applying the methodological proposal on a group of 

pensioners between 2001 and 2011 of the Universidad Nacional de Colombia –UNAL. One of the 

most important HEI in Colombia. A 144 years old institution distributed in 8 branches around the 

country, and with up to 50000 students (40000 of them are undergraduate students and 

approximately 10000 are postgraduate students), one of the most important HEI in Colombia. With 

this work we expect that the HEI analyze the actual situation of retired professors to have inputs for 

designing and implementing policies related to them taking in count their experience and scientific 

career. 

This paper has the following sections: fist of all we talk about the methodology used, then we focus on 

results, and finally, we propose a discussion topic for future work. 


The development of this study had two main stages: first the design of the proposed methodology to 

achieve the characterization of retired professors, and the application of it, in one of the leading HEI in 

Colombia. Below are briefly explained each of the steps: 

2.1 To design the methodological proposal 

To design the proposed methodological, some steps were followed: first, we built a conceptual 

framework and also we analyzed previous studies, where we established the aspects and dimensions 

of analysis, and the indicators and variables needed to build a system of indicators. In (Sanchez- 

Torres & Muñoz, 2011) we explain in detail the methodology. 

2.2 To apply the model 

To apply the proposed methodology, the research instrument was built; the sample was selected, the 

data were collected and the results were analyzed. The following explains each step in detail. 

1 The literature review and the references cited can be find out in (Sanchez-Torres & Muñoz, 2011) 

371


To build a research instrument: To perform the measurement of the indicators proposed, taking 

into account the ease of access to information, we designed a web survey to collect information 

for retired professors. 

To collect the data: After selecting the population for the study, data collection was conducted in 

two ways: one from internal databases of the institution; and the other, from the application of the 

research tool in the selected sample. 

To analyze the information: Finally, we analyzed the collected data and we performed the 

characterization of retired professors according to the aspects and dimensions of the proposed 

methodology. 

3. Results 

Here, we present the methodological proposal that was designed from the previously explained steps. 

Likewise, we show some results that were found out after applying the methodology, which examines 

the professional activities of retired professors, to establish whether they can be considered as part of 

the Intellectual Capital of the HEIs. 

3.1 Methodological proposal 

As we explained in (Sanchez-Torres & Muñoz, 2011), the proposed methodology was built from a 

conceptual framework and a review of previous similar studies in other HEIs (Benz, 1958) (Burke, 

et.al, 1984)(Day & Gu, 2007) (Dorfman et.al, 1981; 1984; 1985; 2002) (D’Onofrio, 2010) (Gernant, 

1972) (Huberman, 1989) (Leitner, 2004) (Moore, 1951) (Rowe, 1976) (Sanchez-Torres & Rivera 

Torres, 2009) (Sikes, 1985) (Sikes, 1985) (Tizard & Owen, 2001). Figure 1 shows the diagram of the 

proposed methodology. 

Prepared by authors. 

Figure 1: Retired professor’s characterization methodology. 

3.2 Application of the methodology 

Our interest group was formed by a set of the UNAL- retired professors between the 2001 and the first 

half of 2011. Given the proposed system of indicators, we climbed the proposed questionnaire to a 

website where teachers could access in an easy fill it. After this, taking into account the emails of 

teachers, from late November 2011 to late February 2012, pausing in December for the holidays, 

every day the invitation was sent to 20 teachers to complete the survey.(See survey data sheet in 

Table 1) 

3.3 Results analysis 

According to Sanchez-Torres & Rivera Torres(2009) the dimension of Intellectual Capital is divided 

into: Human Capital, Structural Capital and Relational Capital, which will discuss below, taking into 

372


account that in these lies the main reason why HEIs should continue analyzing the importance of 

relying on the teachers after retirement. 

Table 1: Survey data sheet 

Survey data sheet 

Requested and Conducted by: Luisa Fernanda Muñoz Teran, as part of their master's final 

work, UNAL 

Goal: To validate the proposed methodology, designed to meet the professional activity 

developed by the retired professors of Higher Education Institutions 

Date: November 20, 2011 to February 15, 2012 

Data collection technique: Online Survey 

Universe: Retired professors of UNAL from 2001 to 2011 at national level (889) 

Population: Professors with active email databases present in the UNAL (362) - searched the 

internet (135). Total (497) 

Sampling Unit: Retired professors 

Sample Type: Non probabilistic. By subject and type. 

Number of questions: 28 questions divided into 8 sections 

Collected responses: 74 responses, of which 3 were abandoned before completion. Total 

questionnaires answered until the end 71. 

Prepared by authors 

The Human Capital aspect, that represents “the know-how, knowledge, abilities, values and attitudes 

of the people working in the University” we found out that pensioners have more than 20 years of 

experience inside the institution, at the same time that at this moment in average are still young (61 

years old), taking in count that the 72% of them continue having good health and a 62% good energy 

to be active. On the other hand, we observed that independent of their new status, in activities like the 

consulting, teaching or research, almost a half are still active, highlighting their academic level, MSc 

and PhD. 

In second place, we have the Relational Capital or “The University’s set of external relationships“. 

After retirement, the relationship with the institutions, students and colleagues, and also with other 

institutions in no one of the cases is absolutely null. Almost a 61% of respondents has relationships 

with other HEI. A relevant aspect is that a 30% of this group joined to another institution after 

retirement and almost a 50% of them joined other kind of organizations. 

Finally, we have that, in the Structural Capital that is related to “the formal and informal organizational 

structure, methods and procedures, specialized software, databases, information systems, Research 

& Development (R&D) products, Management and leadership systems, The University’s work 

culture.“, professors in the most of the cases continue having scientific production, but as we saw 

before not necessarily in the same institution, especially in terms of papers publication and 

collaborations. Looking for the relationship between the accompaniment provided by the institution at 

the time of retirement and the fact remain connected to the institution, we found out that 32% of those 

who continued working for the institution, it is immaterial if it accompanied in the process of 

retirement, while 28% of those who did not remained tied, do not feel at all that the institution finds 

them together in this process. 

4. Discussion 

With this work, We found out that UNAL retirees are a group of young teachers in general, where 

more than half continues to exercise the professional work after retirement, developing scientific 

production with some frequency, but with nearly a third as it does in other Institutions, which may be 

leveraging the intellectual capital represented by these people, but for more than 20 years grown 

UNAL, this is clearly shown in the academic level of most of them (MSc and PHD) and time in the 

Institution. 

According to the above, this study is the appetizer to start a review profoundly HEI Intellectual Capital 

models regarding the inclusion of retired professors in the same, which should lead to the analysis of 

the current relationship which has with the same institution and policies and procedures related to 

them. 

373


Aims to identify mechanisms to maintain the institution linked to professors who wish to do so after 

retirement and not necessarily as teachers, anticipating to other entities that can reach to recruit and 

them finally accepting for having no choice in the institution where they worked a lifetime. Also give 

them that recognition of faculty emeriti, open meeting spaces with their peers and create channels of 

communication with their colleagues and students. 

It would be interesting to complement the actual work: 

Identifying and analyzing the actual policies and procedures that UNAL has in relation with 

retirees and validate if those are in accordance with the real situation this work has shown. 

Extending the methodological proposal to other HEI in Colombia to verify the usability of the 

proposed methodology and thus can perform comparative studies between them. 

Comparing the results with US and UK HEI to identify transnational similarities and differences 

between retirees. 


The thorough review of the concepts of intellectual capital, professional life cycle and scientific career, 

allowed us to have a theoretical support to substantiate the proposed methodology and in turn made it 

more robust. Likewise, gave inputs to establish the dimensions and aspects to quantify and analyze 

the system of indicators. The formulation of the indicator system based on the variables and indicators 

of previous studies in other HEI was a great help, since facilitated the task in terms of building the 

information collection instrument taking into account the three dimensions of analysis and ten areas of 

study, in a standardized manner, logically and systematically. The application of the methodology 

proposed in the UNAL, allowed to have the collaboration of teachers nationwide, with a great career 

and a great willingness to collaborate with exercise. This group of people projects a great appreciation 

for his career, also, to the institution and life in general. 

In fact, based on the case study we conclude that more than half of retired professors continue to 

exercise the professional activity, in addition to conducting scientific output such as publications and 

collaborations, but not necessarily in the same institution, as though projecting a great appreciation 

and affection about the same, in some cases do not feel taken into account, which is reflected in the 

views they give us, where in most cases express their desire to stay connected to the institution, not 

necessarily as teachers, they are aware that they have a great experience that can be used in 

different ways enriching the institution, that if, taking into account that the most valued aspect of 

retirement is the ability to dispose freely of their time, which shows that academic activities for them is 

not an obligation but a lifestyle and a vocation. 

References 

Benz, M. (1958). A study of faculty and administrative staff who have retired from NYU. Journal of Educational 

Sociology , 282-293. 

Burke, P. J., Christensen, J. C., & Fessler, R. (1984). Teacher Career Stages: Implications for Staff 

Development. Bloomington, Indiana: Phi Kappa Educational Foundation. 

Constantin, B. (2009). The Intellectual Capital of Universities. Annals of the University of Oradea : Economic 

Science , 63-70. 

D’Onofrio, M. G. (2010). Indicadores de trayectorias científicas y tecnológicas e índices de producción de los 

investigadores iberoamericanos. Buenos Aires: IIº ENCUENTRO IBEROAMERICANO DE EDITORES 

CIENTIFICOS -EIDEC 2010-. 

Hacia el Manual de Buenos Aires. Indicadores de Carreras de Recursos Humanos en Ciencia y Tecnología en 

Iberoamérica. (2009). Red Iberoamericana de Indicadores de Ciencia y Tecnología (RICYT) , 117. 

Huberman, M. A. (1989). The professional life cycle of teachers. Teachers College Record , 31-57. 

Leitner, K.-H. (2004). Intellectual capital reporting for universities:conceptual background and application for 

Austrian Universities. Research Evaluation , 129-140. 

Moore, E. H. (1951). Professors in retirement. The Journal of Gerontology , 243-252. 

Rowe, A. R. (1976). Retired Academics and Research Activity. Journal of Gerontology , 456-461. 

Sanchez, P., & Elena, S. (2006). Intellectual Capital in Universities. Journal of Intellectal Capital , 529-548. 

Sanchez-Torres, J. M., & Muñoz, L. F. (2011). Caracterización de las actividades ralizadas por los docentes 

jubilados en IES. Una propuesta metodológica. XIV Congreso Latino-Iberoamericano de Gestión 

Tecnológica. (p. 552). Lima: Interactiva Studio. 

Sanchez-Torres, J. M., & Rivera Torres, S. C. (2009). A model for measuring research capacity using an 

intellectual capital-based approach in a colombian higher education institution. Innovar , 179-197. 

Sikes, P. (1985). The life cycle of the teacher. In S. J. Ball, & I. F. Goodson, Teacher's lives and careers (p. 282). 

London: Falmer press. 

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