Proceedings of the 8th International Conference on Intellectual ...

<strong>Proceedings</strong>
<strong>of</strong> <strong>the</strong>
<strong>8th</strong> <strong>International</strong>
<strong>Conference</strong> on Intellectual
Capital, Knowledge
Management &
Organisational Learning
The Institute for Knowledge and Innovation
Sou<strong>the</strong>ast Asia (IKI-SEA) <strong>of</strong> Bangkok
University, Bangkok
Thailand
27-28 October 2011
Volume one
Edited by
Vincent Ribiere and Lugkana Worasinchai
The Institute for Knowledge and Innovation Sou<strong>the</strong>ast Asia
(IKI-SEA) <strong>of</strong> Bangkok University
Bangkok, Thailand

Copyright The Authors, 2011. All Rights Reserved.
No reproduction, copy or transmission may be made without written permission from <strong>the</strong> individual authors.
Papers have been double-blind peer reviewed before final submission to <strong>the</strong> conference. Initially, paper
abstracts were read and selected by <strong>the</strong> conference panel for submission as possible papers for <strong>the</strong>
conference.
Many thanks to <strong>the</strong> reviewers who helped ensure <strong>the</strong> quality <strong>of</strong> <strong>the</strong> full papers.
These <strong>Conference</strong> Proceeding have been submitted to <strong>the</strong> Thomson ISI for indexing.
Fur<strong>the</strong>r copies <strong>of</strong> this book can be purchased from http://www.academic-bookshop.com
ISBN: 978-1-908272-20-1 Book
Published by Academic Publishing Limited
Reading
UK
44-118-972-4148
www.academic-publishing.org

Contents
Paper Title Author(s) Page
No.
Preface vii
Biographies <strong>of</strong> <strong>Conference</strong> Chairs, Programme Chair,
Keynote Speaker and Mini-track Chairs
Biographies <strong>of</strong> contributing authors xii
Volume One
Manpower Discipline Based on Knowledge Skills: The
Case <strong>of</strong> a Consulting Company in Iranian Commercial
Marine Industry
Attitudes Towards Changes and Organisational Learning:
China and Turkey
Beyond KM: The Management <strong>of</strong> BA in Knowing
Organizations
Toward a Meta-Syn<strong>the</strong>tic Support System for Reuse <strong>of</strong>
Government Information Resource on City Travel And
Traffic: Knowledge Asset Management Approaches for
Beijing
i
Peyman Akhavan, Reza Hosnavi,
and Amir Pezeshkan
Ruth Alas, Maaja Vadi, Halil Demirer
and Necdet Bilgin
Rivadávia Correa Drummond de
Alvarenga Neto
Xiaomi An, Shaotong Xu, Yong Mu,
Wei Wang, Xian Yang Bai, Andy
Dawson, Hongqi Han
Knowledge-Based Construction Element Database Marko Anzelak, Gert Morak and
Wolfgang Ebner
The Intellectual Capital for University Ranking: A
Conceptual Framework Study for Indonesian Higher
Education Insitutions
The Management <strong>of</strong> Trust in <strong>the</strong> Knowledge-Intensive
Industrial Clusters: Institutional vs. Personal Approaches
Knowledge Management, Cultural Knowledge and
Intercultural Competence
Impact <strong>of</strong> Knowledge Management Created by
Communities <strong>of</strong> Practice in Virtual Learning Environments
The Role <strong>of</strong> Social Networking Tools on Purchasing
Decision Making Process
Exploring <strong>the</strong> use <strong>of</strong> <strong>the</strong> Academic Body <strong>of</strong> Knowledge by
Practitioners: The Case <strong>of</strong> Chartered Business Valuators
in Canada
Strategic Thinking Dimensions in Emergent Economies
Business Education
The Organizational Learning Process in <strong>the</strong> Design <strong>of</strong> a
new Service
Quality in Teacher Education: A Systems Thinking
Approach
Developing Personal Knowledge Management Strategies
Through Problem-Based Learning
The Relationship Between Knowledge Management and
Intellectual Capital in Listed Companies <strong>of</strong> Mainland
China
Gabriel Prananingrum Aryanindita
and Andy Susilo Lukito Budi
Rita Babiliūtė and Kęstutis
Kriščiūnas
Leonard Barnett and Edward Carter
Bob Barrett
Aurilla Aurelie Bechina and Eli
Hustad
Lorne Booker, Nick Bontis and
Alexander Serenko
Constantin Bratianu and Valentin
Hapenciuc, Ivona Orzea, Ruxandra
Rauliuc and Ovidiu Ghita
Delio Ignacio Castañeda and
Sandra Patricia Duarte
Rajendra Chetty
Thira<strong>the</strong>p Chonmaitree
Samuel Kai Wah Chu, Wendy Wu,
Kin Hang Chan, and Olina Fu
x
1
11
20
33
42
50
56
65
75
82
90
99
108
115
123
129

Paper Title Author(s) Page
No.
Value Creation Through Collaborative Supply Chain:
Holistic Performance Enhancement Road Map
Organizational Learning and Transformational Leadership
in Higher Education
Knowledge Acquisition and Sharing: A Sustainable
Source <strong>of</strong> Competitive Advantage in Supply Chains
Influence <strong>of</strong> Organisational Changes on Social Networks
– A longitudinal Study <strong>of</strong> Knowledge Sharing and
Cooperation <strong>of</strong> PhD. Students
The complex Intellectual Capital Characteristic <strong>of</strong> an
Innovative Firm
Appropriation <strong>of</strong> S<strong>of</strong>tware Process Improvement
Standards: An Empirical Study in S<strong>of</strong>tware Development
Organizations
An Examination <strong>of</strong> Knowledge Management as a
Management Fashion
Towards a Technological, Managerial, and Socio-
Technical Well-Balanced KM Initiative Strategy Within
Organizations
Intellectual Property Valuation Decision Support System:
Towards Dynamic SMEs in Malaysia
Managing an Assessment Process <strong>of</strong> Science Educator
Needs in South Africa
ii
Ridha Derrouiche, Pongsak
Holimchayachotikul and Komgrit
Leksakul
139
Irra Chrisyanti Dewi 149
Ikechukwu Diugwu
Eva Eckenh<strong>of</strong>er
Irene Y.H. Fan and Rongbin W.B.
Lee
Ronny Gey
Kenneth Grant
Michel Grundstein
Hezlin Harris, Kamarulzaman Ab
Aziz and Mariati Norhashim
157
164
172
182
190
200
211
Shaheed Hartley 219
A Community Framework for Knowledge Creation Igor Hawryszkiewycz 227
Facilitating Distributed Networks <strong>of</strong> Knowledge: A
Boundary Management Perspective
Does Knowledge Stickiness Affect a Firm’s Innovation
Capability? Empirical Evidence From Indonesian
Furniture SMEs
Organizational Learning in Pr<strong>of</strong>it and Non-Pr<strong>of</strong>it
Organizations: The Perspective <strong>of</strong> Innovative Culture
Development
Balancing <strong>the</strong> Incentives and Controls in <strong>the</strong> Knowledge
Partnership-Based Business Models
Eli Hustad and Aurilla Aurelie
Bechina
Nurul Indarti
Brigita Janiunaite, Gintautas
Cibulskas and Monika Petraite
Giedrius Jucevičius
Organization’s Knowing or Organizational Knowing? Palmira Juceviciene and Vyda
Mozuriuniene
Sourcing Knowledge for <strong>the</strong> Cluster or Business System Robertas Jucevicius 284
Let’s innovate! Should Development Projects be Creating
Learning? – a Case Study on Employee and Employer
Perceptions Within a City Organization
Managing Information Overload - Teachable Media
Agents
Farmers’ Knowledge Management in Fish Disease
Treatment: The Case <strong>of</strong> Smallholder Farmers in <strong>the</strong>
Mekong River Delta, Vietnam
Developing Human Capital through Neuro-Linguistic
Programming
Annukka Jyrämä, Pia Bäcklund,
Heini Väisänen, and Henrikki
Tikkanen
Harri Ketamo
Le Nguyen Doan Khoi
234
243
253
265
274
292
301
309
Eric Kong 319

Paper Title Author(s) Page
No.
Main Descriptors <strong>of</strong> Pr<strong>of</strong>essional Gestures, Regarding to
Their Intergenerational Transfer
An Integration <strong>of</strong> Domain Ontology-Based Knowledge
Management and SQuaRE for Thai Local S<strong>of</strong>tware
Companies
The Influence <strong>of</strong> Intellectual Capital on Organizational
Performance in two Contexts
A Lean Knowledge Life Cycle Methodology in Product
Development
Knowledge Leadership in Value Networks: The Joint
Effect <strong>of</strong> Trustworthiness Factors and Levers <strong>of</strong> Control.
Generating Wealth Through Innovations: Is it Necessary
to Manage Intellectual Capital?
A Knowledge Management System to Manage
Knowledge in a Collaborative S<strong>of</strong>tware Maintenance
Environment
Measuring Intellectual Capital Performance in <strong>the</strong> Case <strong>of</strong>
Romanian Public Companies
The Arrival <strong>of</strong> <strong>the</strong> Generation “Y”: The Managerial
Implications for French Health and Social Organizations
An Activity Based Costing System for Research
Competency Enhancement : A Case Study <strong>of</strong> Knowledge
Workers in Boromarajonani College <strong>of</strong> Nursing, Chiang
Mai
The Dark Side <strong>of</strong> Social Capital in Thai Culture: an
Obstruction <strong>of</strong> Learning Process within <strong>the</strong> Social
Network
Volume Two
Evaluation and Response from Students and Teachers on
a Preliminary Launch <strong>of</strong> an ELT Resource-based Website
Strategic and Operational Risk in an <strong>International</strong>
Cooperation Agency: A Knowledge Management Solution
The Role <strong>of</strong> Knowledge Hierarchy Within <strong>the</strong> OLCs:
Critical Success Stories <strong>of</strong> Turkish Cypriot Firms
iii
Sophie Le Bellu and Benoit Le Blanc
Pornpen Lertthasanawong and
Nopasit Chakpitak
Ya-Hui Ling
Maksim Maksimovic, Ahmed Al-
Ashaab, Essam Shehab and Robert
Sulowski
Maurizio Massaro and Andrea Moro
326
336
344
352
358
Helen Mitchell and Dennis Viehland 366
Mohd Zali Mohd Nor, Rusli Abdullah,
Masrah Azrifah Azmi Murad and
Mohd Hasan Selamat
Maria Cristina Morariu
Bertrand Pauget and Ahmed
Dammak
Wannapa Pipattanawong, Pitipong
Yodmongkon and Nopasit Chakpitak
374
382
395
404
Siwarit Pongsakornrungsilp 411
Preawpan Pringprom
Eduardo Rodriguez, John Edwards
and Angel Facundo
Mustafa Sağsan and Ahmet Ertugan
Migrant Labour in <strong>the</strong> Workforce Per Øystein Saksvik, Carla Dahl-
Jørgensen and Sturle Danielsen
Tvedt
Knowledge Management Process and Audit Firm’s
Performance: An Empirical Evidence
Value Creation Through Knowledge Management And
Intellectual Capital: An Empirical Investigation
Learning Organisation, Knowledge Management Process
and Organisational Performance: Empirical Evidence
From a Public University
Application <strong>of</strong> Knowledge Management to Intellectual
Corpus Valorisation
418
427
443
458
Kalsom Salleh and Fathiah Hashim 468
Kalsom Salleh and Ching Choo
Huang
Kalsom Salleh and Ching Choo
Huang
Pierre Saulais and Jean-Louis
Ermine
478
485
494

Paper Title Author(s) Page
No.
Leadership Behaviour Practices in Knowledge-
Management Implementation
iv
Joyce Nesamani Simson, Alan Giffin
Downe, and Rohiza Ahmad
Why are Workers Resistant to Sharing Knowledge? Vijayeta Srivastava 513
Critical Success Factors <strong>of</strong> Knowledge Management in
Malaysian Tourism Industry
Investigation <strong>of</strong> Critical Attributes <strong>of</strong> <strong>the</strong> Organizational
Knowledge Culture
Learning in <strong>the</strong> Context <strong>of</strong> Inappropriate Internet use
Among Students <strong>of</strong> a Provincial High School in Nor<strong>the</strong>rn
Thailand
Intellectual Capital Reporting in Spanish Higher Education
Institutions: A User Perspective
Evaluating <strong>the</strong> Knowledge Sharing Performance <strong>of</strong> <strong>the</strong>
Prince <strong>of</strong> Songkla University Using a Hybrid MCDM
Model
The Competence Approach to <strong>the</strong> Creation and Updating
<strong>of</strong> Academic Knowledge in <strong>the</strong> Smart Economy
Adopting Cell Phones in <strong>the</strong> Classroom: A Study <strong>of</strong>
Students’ Attitudes and Behaviors on Using Cell Phones
Both in and out <strong>of</strong> <strong>the</strong> Classroom
Subhacini Subramaniam, Sharmila
Rani Moganadas and Kalaiarasi
Sonaimuthu Anbananthan
Šajeva Svetlana and Robertas
Jucevičius
Amarin Tawata and Pitipong
Yodmongkon
Ángel Tejada, Yolanda Ramírez and
Agustín Baidez
504
521
529
539
547
Thoedtida Thipparate 563
Natalia Tikhomirova, Vladimir
Tikhomirov, Valentina Maksimova
and Yury Telnov
Willard Van De Bogart
Human Capital Organization <strong>of</strong> Hospital Management Asaf Varol 580
Experiential Learning on Distance Education Nurhayat Varol 587
Organizational Learning Rate Measurement Instruments
for Business Schools
A Sense-Making Analysis <strong>of</strong> Knowledge Transfer in
Global Supply Chain Relationships: Case <strong>of</strong> Scientific
Equipment Resellers in Thailand
Knowledge Elicitation in Unstructured Business
Processes: The Preliminary Findings From a Case Study
Some Principles Underpinning Knowledge Management
Systems Development
Effect <strong>of</strong> Strategic Learning System and Organization
Structure on e-Government Performance: A Survey in
Public Sector by Means <strong>of</strong> Artificial Neural Network.
Karen Voolaid and Üllas Ehrlich
Lugkana Worasinchai and Farhad
Daneshgar
Jessica Yip, W.B. Lee, Eric Tsui,
and Cherie Lui
Aboubakr Moteleb Zade and Mark
Woodman
Kursad Zorlu
PhD papers 637
Exploring Employee Perceptions <strong>of</strong> <strong>the</strong> Relationships
Among Knowledge Sharing Capability, Organisational
Culture and Knowledge Sharing Success: Their
Implications for HRM Practice
Knowledge Boundaries <strong>of</strong> <strong>the</strong> Firm in Russian Heavy
Engineering Companies
A Framework Linking Knowledge Management Practices
and Healthcare Delivery Performance
Slide Presentation as a Knowledge Visualization Tool for
Knowledge Transfer: The Case <strong>of</strong> Information Processing
Enhancement <strong>of</strong> Field Sales Force
Hayati Abdul Jalal, Paul Toulson and
David Tweed
Evgeny Blagov
Prantik Bordoloi and Nazrul Islam
Daranee Delorme
Dhurakij Pundit
555
571
593
601
611
617
626
639
647
655
663

Paper Title Author(s) Page
No.
Knowledge Management in e-Tourism Curriculum Design:
A Knowledge Supply Chain
Knowledge Sharing in Ego-Centered Knowledge
Networks <strong>of</strong> Pr<strong>of</strong>essionals: Role <strong>of</strong> Transactive Memory,
Trust, and Reciprocity
Measuring Intellectual Capital for Romanian SMEs: A
Comparative Analysis by Field <strong>of</strong> Activity
HRM Practices and Individual Knowledge-Sharing: An
Empirical Study <strong>of</strong> Higher Education Institutions in
Pakistan
Components <strong>of</strong> Knowledge Management in Designing a
Health Volunteer Network for an Alcohol Drinking
Behavior Modification Learning System
Market Capital, Intellectual Property Rights and Economic
Growth <strong>of</strong> OPEC Member Countries: A Panel Data
Approach
Raising <strong>the</strong> Research Pr<strong>of</strong>ile <strong>of</strong> <strong>the</strong> Faculty <strong>of</strong> Humanities,
Chiang Mai University
Systems Archetypes and Learning Templates for
Enhancing Environmental Security
Critical Success Factors in KM-Based Innovative
Business: Evidence From Systematic Reviews
Voluntary Intellectual Capital Disclosure Patterns:
Empirical Evidence From <strong>the</strong> United Arab Emirates
A KM Perspective on <strong>the</strong> Progression Towards an
Electronic Patient Record Within an NHS Hospital
Organisational Learning Capabilities (OLC) Toward
Knowledge Performance <strong>of</strong> Librarians: A Research Model
The Role <strong>of</strong> key Intangible Performance Indicators for
Organisational Success
Intellectual Capital Efficiency, Innovation Capital and
Firm’s Performance in Malaysian Technology
GRC: An Intellectual Capital Model for <strong>the</strong> Faculty <strong>of</strong>
Affiliated Universities in Thailand
Using Ontologies for Knowledge Management: The
Chaipattana Aerator Project
Knowledge Management in <strong>the</strong> East: A Chinese
Manufacturing Case Study
v
Jing Fu, Nopasit Chakpitak, Paul
Goldsmith, Pradorn Sureephong and
Taksina Kunarucks
Mahmood Ghaznavi, Martin Perry,
Keri Logan and Paul Toulson
Bogdan-Vasile Ileanu, Claudiu
Herteliu and Tudorel Andrei
Salman Iqbal, Paul Toulson and
David Tweed
Thunyaporn Jaimung and Pitipong
Yodmongkon
Iman jokar Tang karami, Mehdi
Taghavi and Farhad Ghaffari
Krith Karnjanakitti, Pitipong
Yodmongkon and Nopasit Chakpitak
Marissara Kummool, Pitipong
Yodmongkon, Nopasit Chakpitak,
Paul Goldsmith and Walaiporn
Tantikanangkul
Chaiyatorn Limapornvanich, Mark
Gannon and Margaret Lumbers
George Majdalany, Armond
Manassian and Ramzi Nekhili
Sara McCracken and John Edwards
Mohd Shamsul Mohd Shoid, Norliya
Ahmad Kassim, Mohd Idzwan Mohd
Salleh
Hee Song Ng, Daisy Mui Hung Kee
and Mat<strong>the</strong>w Brannan
Azlina Rahim, Ruhaya Atan and
Amrizah Kamaluddin
Paipan Thanalerdsopit, Napat
Harnpornchai, Pitipong Yodmongkol
and Komsak Meksamoot
Jirawit Yanchinda, Pitipong
Yodmongkon, Nopasit Chakpitak
and Paul Goldsmith
Lei Ye, David Tweed and Paul
Toulson
672
681
689
699
709
715
724
731
742
750
762
771
779
788
797
806
818

Work in Progress Papers 827
Knowledge Sharing for <strong>the</strong> Public Sector: Cross- Border
Cooperation Between Hungarian and Romanian
Academics in <strong>the</strong> Field <strong>of</strong> new Public Management
Creating Computational Support for <strong>the</strong> Decision Making
<strong>of</strong> <strong>the</strong> Cross-Border: SMEs as key Driver For Sustainable
Regional Development
Evaluating <strong>the</strong> Impact <strong>of</strong> a new Technology Within a
Business Environment: A Methodology Supporting
Strategic Choices
Requirements <strong>of</strong> Knowledge-Management in Industrial
Organisations and <strong>the</strong> Sector <strong>of</strong> Public Safety and
Security: Same or Different?
vi
Madela Abrudan, Mária Ujhelyi,
Anca Dodescu and Enikő Szilágyi
Elena Botezat, Anca Dodescu,
Veronika Fenyves, and Andras
Nabradi
Angelo Corallo and Fabrizio Errico
Christian Lindemann, Christina
Schäfer and Rainer Koch
Measuring Knowledge Víctor Reyes-Alcázar, Antonio
Romero-Tabares and Antonio
Torres-Olivera
Tracking Online Learning Communities Using Ontologies José Braga de Vasconcelos, Sónia
Sousa, David Ribeiro Lamas and
Ilya Shmorgun
Non Academic papers 857
Development and Implementation <strong>of</strong> an Intellectual
Capital Model from Balanced Scorecard: ECOPETROL
S.A. a Practical Experience
The Challenges <strong>of</strong> Locating Experts in a Global Research
and Development Organization
Martha López, Oscar Guerra and
Sonia Castro
Mohamed Rabhi
829
832
836
841
845
850
859
873

Preface
These proceedings represent <strong>the</strong> work <strong>of</strong> researchers participating in <strong>the</strong> <strong>8th</strong> <strong>International</strong> <strong>Conference</strong> on
Intellectual Capital, Knowledge Management & Organisational Learning – ICICKM 2011, which is being
hosted by <strong>the</strong> Institute for Knowledge and Innovation Sou<strong>the</strong>ast Asia (IKI-SEA) <strong>of</strong> Bangkok University,
Bangkok, Thailand.
The conference will be opened with a keynote from Patrick Lambe, Straits Knowledge, Singapore on <strong>the</strong>
topic <strong>of</strong> The three tribes: learning, knowledge management and intellectual capital. The keynote address on
<strong>the</strong> second day is delivered by William E. Halal from The George Washington University, Washington, DC,
USA on <strong>the</strong> subject <strong>of</strong> Collective Intelligence for Research and Strategy: With Highlights from <strong>the</strong> TechCast
Project.
The ICICKM <strong>Conference</strong> constitutes a valuable platform for individuals to present <strong>the</strong>ir research findings,
display <strong>the</strong>ir work in progress and discuss conceptual advances in many different branches <strong>of</strong> intellectual
capital, knowledge management and organisational learning. At <strong>the</strong> same time, it provides an important
opportunity for members <strong>of</strong> <strong>the</strong> KM community to come toge<strong>the</strong>r with peers, share knowledge and exchange
ideas. ICICKM has evolved and developed over <strong>the</strong> past eight years, and <strong>the</strong> range <strong>of</strong> papers accepted in
this year’s conference ensures an interesting two-day event.
Following an initial submission <strong>of</strong> 272 abstracts that have undergone a double blind peer review process, 71
research papers, 21 PhD research papers,6 work-in-progress papers and 2 non-academic papers are
published in <strong>the</strong> ICICKM 2011 <strong>Conference</strong> <strong>Proceedings</strong>, representing research results from Australia, Brazil,
Canada, China, Columbia, Czech Republic, Estonia, Finland, France, Germany, Hong Kong, India,
Indonesia, Iran, Italy, Jordan, Lithuania, Malaysia, New Zealand, Nigeria, Norway, Portugal, Romania,
Russia, Saudi Arabia, South Africa, Spain, Taiwan, The Ne<strong>the</strong>rlands, Thailand, UK, UAE, USA and Vietnam.
We hope that you have an enjoyable conference.
Vincent Ribiere and Lugkana Worasinchai
Co-Progamme Chairs
vii

<strong>Conference</strong> Committee
<strong>Conference</strong> Executive
Dr. Tiparatana Wongcharoen, Bangkok University - Thailand
Dr. Siriwan Ratanakarn, Bangkok University - Thailand
Pr<strong>of</strong>. Aurilla Bechina Arntzen, College University i Buskerud, Kongsberg – Norway
Niall Sinclair, IKI-SEA - Thailand
Pr<strong>of</strong>. Michael Stankosky, George Washington University - USA
Dr. Francesco Calabrese, Institute for Knowledge and Innovation (GWU) - USA
Dr. Prapon Phasukyud, The Knowledge Management Institute (KMI) – Thailand
Pr<strong>of</strong>. W.B. Lee, Knowledge Management Research Centre, The Hong Kong Polytechnic University, Hong Kong, China
Pr<strong>of</strong>. Jean-Louis Ermine, Telecom Business School – France
Danièle Chauvel, SKEMA Business School - France
Charles Despres, SKEMA Business School – France
Dr. Kevin C. Desouza, University <strong>of</strong> Washington, USA
Dr. Suzanne Zyngier, Latrobe University, Australia
<strong>Conference</strong> Members
The conference programme committee consists <strong>of</strong> key people in <strong>the</strong> intellectual capital, knowledge management and
organisational learning communities; <strong>the</strong> list includes leading academics, researchers, and practitioners from around <strong>the</strong>
world. The following people have confirmed <strong>the</strong>ir participation:
Mohd Helmy Abd Wahab (Universiti Tun Hussein Onn , Malaysia); Marie-Helene Abel (Compiegne University <strong>of</strong>
Technology, France); El Sayed Abou-Zeid (Concordia University, Montreal, Canada); Maria-Madela Abrudan (University
<strong>of</strong> Oradea, Romania); Bulent Acma (Anadolu University, Turkey,); Faisal Ahmed (Asia-Pacific Institute <strong>of</strong> Management,
New Dehli, India); Joao Pedro Albino (UNESP , Brazil); Mulhim Al-Doori (American University in Dubai, UAE); Tahseen
Al-Doori (American University in Dubai, UAE); Alex Alexandropoulos (American University in Dubai, UAE); Mohammed
Allehaibi (Umm Alqura University, Makkah, Saudi Arabia); Luis Alvarado (Universidad Catolica del Norte , Chile); Xiaomi
An (Renmin University <strong>of</strong> China, China,); Xiaomi An (Renmin University <strong>of</strong> China, China,); Gil Ariely (School <strong>of</strong>
Government, Interdisciplinary Center Herzliya, Israel); Aurilla Arntzen (Hedmark University College, Norway); Yousif
Asfour (Injazat Data Systems, Abu Dhabi, UAE); "Derek Asoh (University <strong>of</strong> Ottawa , Canada);" Bijan Azad (AUB school
<strong>of</strong> Business, Lebanon); Haragobinda Baidya (Minority Self Empowerment Foundation, Dhaka, Bangladesh); Michael
Banutu-Gomez (Rowan University, USA); Tomas Gabriel Bas (Pontificia Universidad Catolica de Chile, Chile); Abdullah
Bayat (University <strong>of</strong> <strong>the</strong> Western Cape, Bellville, South Africa); Esra Bektas (TU Delft, Ne<strong>the</strong>rlands); Diana Belohlavek
(The Unicist Research Institute, Argentina); Jean Pierre Briffaut (Institut National des Telecommunications, France);
Sheryl Buckley (University <strong>of</strong> Johannesburg, South Africa); Acma Bulent (Anadolu University, Eskisehir, Turkey);
Francesco Calabrese (Institute for Knowledge and Innovation (GWU), USA); Ivy Chan (Chinese University <strong>of</strong> Hong
Kong, China); Eric Chan (Knowledge Management Development Centre, , Hong Kong); Daniele Chauvel (SKEMA
Business School , France); Phaik Kin Cheah (Universiti Tunku Abdul Rahman, Malaysia,); Benny Cheung (The Hong
kong polytechnic university, Hong Kong); Vikas Choudhary (National Institute <strong>of</strong> Technology,Kurukshetra, India); Rashid
Chowdhury (Independent University, Bangladesh, Chittagong, Bangladesh); Sam Chu (The University <strong>of</strong> Hong Kong,
Hong Kong); Reet Cronk (Harding University, USA); Pablo da Silveira (Catholic University <strong>of</strong> Uruguay, Uruguay);
Raymond D'Amore (The Mitre Corporation, McLean, VA, USA); Ge<strong>of</strong>frey Darnton (Bournemouth University, UK); Kandy
Dayaram (Curtin University <strong>of</strong> Technology, Perth, Australia); Basel Dayyani (American University in Dubai, UAE);
Rivadavia Correa Drummond de Alvarenga Neto (Fundação Dom Cabral , Brazil); John Deary (Independent Consultant,
UK & Italy); Paola demartini (University <strong>of</strong> Rome 3, Faculty <strong>of</strong> Economics, department <strong>of</strong> Management and Law, Italy,);
Michael D'Eredita (Syracuse University, New York, USA); Kevin Desouza (University <strong>of</strong> Washington, USA); Charles
Despres (Skema Business School, Sophia-Antipolis, Nice, France); Lian (Evangelia) Dumouchel (Thompson Rivers
University, Canada,); Jamal El-Den (Charles Darwin University, Australia); Scott Erickson (Ithaca College, USA); Jean-
Louis Ermine (Institut National des telecommunications, Evry, France); Ge<strong>of</strong>f Erwin (Independent Consultant, South
Africa); Mercy Escalante (Sao Paulo University, Brazil); Ibrahim Fahmi (Glasgow Caledonian University, UK); Nima
Fallah (University <strong>of</strong> Strasbourg, France); Tony Feghali (AUB school <strong>of</strong> Business, Lebanon); Ines Friss de Kereki (ORT
Uruguay University, Montevideo, Uruguay); John Girard (Minot State University, , USA); Marco Giuliani (University <strong>of</strong> The
Marche, Ancona, Italy); Andrew Goh (<strong>International</strong> Management Journals, Singapore); Sayed Mahdi Golestan Hashemi
(Faculty <strong>of</strong> Industrial Engineering - MA University & center for Creatology, Iran); Fátima Gonçalves (ISCAC, Portugal);
Ken Grant (Ryerson University, Toronto, Canada); Michel Grundstein (Lamsade Paris Dauphine University, France);
Anne Hakansson (Uppsala University, Sweden); Leila Halawi (American University in Dubai, UAE); Igor Hawryszkiewycz
(University <strong>of</strong> Technology, Sydney, Australia); Ilona Heldal (Chalmers University <strong>of</strong> Technology, Sweden,); Ilona Heldal
(Chalmers University <strong>of</strong> Technology, Sweden,); Liaquat Hossain (Syracuse University, USA); Yassaman Imani
(University <strong>of</strong> Hertfordshire, United Kingdom,); Yassaman Imani (University <strong>of</strong> Hertfordshire, United Kingdom,); Brigita
Janiunaite (Kaunas University <strong>of</strong> Tehnology, Lithuania,); Brigita Janiunaite (Kaunas University <strong>of</strong> Tehnology, Lithuania,);
Dumay John (University <strong>of</strong> Sydney, Australia,); Dumay John (University <strong>of</strong> Sydney, Australia,); Dawn Jutla (University <strong>of</strong>
Halifax, Canada); Amrizah Kamaluddin (Universiti Teknologi MARA, Malaysia,); Amrizah Kamaluddin (Universiti
Teknologi MARA, Malaysia,); Silva Karkoulian (Lebanese American University Beirut Campus, Lebanon); Aino Kianto
(Lappeenranta University <strong>of</strong> Technology, Finland); Andrew Kok (University <strong>of</strong> Johannesburg, South Africa); Eric Kong
(University <strong>of</strong> Sou<strong>the</strong>rn Queensland, Australia,); Eric Kong (University <strong>of</strong> Sou<strong>the</strong>rn Queensland, Australia,); Richard
Lackes (Institute <strong>of</strong> Business Informatics, TU Dortmund, Germany, ); Richard Lackes (Institute <strong>of</strong> Business Informatics,
viii

TU Dortmund, Germany, ); Wing Bun Lee (Hong Kong Polytechnic University, Hong Kong); Rongbin W.B. Lee (The
Hong kong polytechnic university, Hong Kong); Rene Leveaux (University <strong>of</strong> Technology, Sydney, Australia); Rita Yi Man
Li (Hong Kong Shue Yan University, Hong Kong); Antti Lönnqvist (Tampere University <strong>of</strong> Technology, Finland); Ilidio
Lopes ( Polytechnic Institute <strong>of</strong> Santarém; University <strong>of</strong> Coimbra, Portugal, Portugal); Felipa Lopes dos Reis (University
Aberta, Portugal); Bernard Marr (The Advanced Performance Institute, UK); Fergal McGrath (University <strong>of</strong> Limerick,
Ireland); Kostas Metaxiotis (National Technical University A<strong>the</strong>ns, Greece); Ian Michael (Zayed University, Dubai, UAE);
Sandra M<strong>of</strong>fett (University <strong>of</strong> Ulster, UK); Kavoos Mohannak (Queensland University <strong>of</strong> Technology, Australia,); Kavoos
Mohannak (Queensland University <strong>of</strong> Technology, Australia,); Elaine Mosconi (Université Laval, Quebec, Canada);
Pumela Msweli-Mbanga (University <strong>of</strong> KwaZulu-Natal, Durban, South Africa); Claudia Mueller (Innsbruck University
School <strong>of</strong> Management, Austria); Hafizi Muhamad Ali (Yanbu University College, Saudi Arabia,); Hafizi Muhamad Ali
(Yanbu University College, Saudi Arabia,); Maria Mylopoulos (University <strong>of</strong> Toronto, Canada); Nader Nada (College <strong>of</strong>
Computing, AAST, Egypt); Atulya Nagar (Liverpool Hope University College, Liverpool, UK); Artie Ng (The Hong Kong
Polytechnic University, Hong Kong,); Chetsada Noknoi (Thaksin University, Songkhla, Thailand); Kevin O’Sullivan (New
York Institute <strong>of</strong> Technology, USA); Abdelnaser Omran ( Universiti Sains Malaysia, Malaysia); Ibrahim Osman (American
University <strong>of</strong> Beirut, Lebanon); Haris Papoutsakis (TEI (Technological Educational Institute) <strong>of</strong> Crete, Greece); Jayanth
Paraki (Omega Associates, Bangalore, India); Robert Parent (Université de Sherbrooke, Quebec, Canada); Shaun
Pa<strong>the</strong>r (Cape Peninsula University <strong>of</strong> Technology, , South Africa); Dan Paulin (Chalmers University <strong>of</strong> Technology,
Göteborg, Sweden); Parag Pendharkar (Pennsylvania State University at Harrisburg, USA); Tzu-Ju Ann Peng ("National
Cheng-Chi University (NCCU)"., Taiwan); Milly Perry (The Open University <strong>of</strong> Israel, Israel); Monika Petraite (Kaunas
University <strong>of</strong> Technology, Lithuania, ); Prapon Phasukyud (The Knowledge Management Institute (KMI) - Thailand,
Thailand); Rajiv Phougat (IBM Corporation, USA); John Politis (Neapolis University, Pafos, Cyprus); Agnieta Pretorius
(Tshwane University <strong>of</strong> 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); Subashini Rajagopal, (VIT University, India); Gillian Ragsdell (Information Science, Loughborough
University, UK); Siriwan Ratanakarn (Bangkok University, Thailand, Thailand); Vincent Ribière (The Institute for
Knowledge and Innovation Sou<strong>the</strong>ast Asia (IKI-SEA) <strong>of</strong> 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, Nor<strong>the</strong>rn Cyprus, CYPRUS);" Randa
Salamoun Sioufi (American University <strong>of</strong> Beirut, Lebanon, Lebanon); Kalsom Salleh (University Technology MARA,
Malaysia,); Mathana Santiwat (President, Bangkok University, Bangkok, , Thailand); Giovanni Schiuma (Universita dela
Basilicata, Matera, Italy); Jeorge Secada (University <strong>of</strong> Virginia, USA); Enric Serradell-Lopez (Open University <strong>of</strong>
Catalonia, Barcelona, Spain); Amanuddin Shamsuddin (Universiti Tenaga Nasional, Malaysia,); Niall Sinclair (IKI-SEA-
Thailand, Thailand); Sharad Sinha (R.B.S. College <strong>of</strong> Education, Rewari, India); Michael Stankosky (George Washington
University, USA); Jukka Surakka (Arcada-University <strong>of</strong> Applied Science, Helsinki, Finland); Nya Ling Christine Tan
(Multimedia University, Malaysia,); Cheng Ling Tan (Universiti Sains Malaysia, Malaysia,); Paul Toulson (Massey
University , New Zealand); Nachiketa Tripathi (Indian Institute <strong>of</strong> Technology Guwahati, India); Edward Truch (Lancaster
University Management School, UK); Eric Tsui (Knowledge Management Research Centre ,The Hong Kong Polytechnic
University, Hong Kong); Ge<strong>of</strong>f Turner (University <strong>of</strong> Nicosia, Cyprus); 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 <strong>of</strong> Catalonia, Spain); Doug Vogel (City University <strong>of</strong> Hong Kong, Hong Kong); Ismail
Wekke (State College <strong>of</strong> Sorong, West Papua); Roy Williams (University <strong>of</strong> Portsmouth, UK); Tiparatana Wongcharoen
(Bangkok University, Thailand, Thailand); Lugkana Worasinchai (The Institute for Knowledge and Innovation Sou<strong>the</strong>ast
Asia (IKI-SEA) <strong>of</strong> Bangkok University, Bangkok,, Thailand); Les Worrall (University <strong>of</strong> Wolverhampton, UK); An Xiaomi
(Renmin University <strong>of</strong> China, China,); An Xiaomi (Renmin University <strong>of</strong> China, China,); Lin Yan (University Of
Greenwich, UK); Mohammad Hossein Yarmohammadian (Isfahan University <strong>of</strong> Medical Sciences, Iran,); Pitipong
Yodmongkon (College <strong>of</strong> Arts Media and Technology, Chiang Mai University, Thailand,); Philip Zgheib (American
University <strong>of</strong> Beirut, , Lebanon); Suzanne Zyngier (Latrobe University, France)
ix

Biographies <strong>of</strong> <strong>Conference</strong> Chair, Programme Chairs and
Keynote Speakers
<strong>Conference</strong> Chair
Mathana Santiwat is <strong>the</strong> President <strong>of</strong> Bangkok University, Thailand, and holds a Doctor
<strong>of</strong> Philosophy in Higher Education Administration from University <strong>of</strong> Kansas; Lawrence,
Kansas, U.S.A. President Santiwat has her undergraduate and graduate educational
background in Accounting and served as a Certified Public Accountant <strong>of</strong> Thailand. She
started her career at Bangkok University in 1972 as a junior lecturer in Accounting; in
1985 she assumed <strong>the</strong> position <strong>of</strong> Dean <strong>of</strong> <strong>the</strong> School <strong>of</strong> Accounting. She became <strong>the</strong>
Vice President for Academic Affairs in 1988 which position she held for 19 years. Besides
her very active work for Bangkok University, President Santiwat is also involved in several government
related committees, including her position as a National Quality Assessor for Thai Higher Education
Institutions and she is <strong>the</strong> current President <strong>of</strong> <strong>the</strong> Association <strong>of</strong> Private Higher Education Institutions <strong>of</strong>
Thailand. It is to be noted that Mathana Santiwat is a longtime supporter <strong>of</strong> <strong>the</strong> rights <strong>of</strong> Thai women and is a
Member <strong>of</strong> <strong>the</strong> Executive Board <strong>of</strong> <strong>the</strong> Thai Women Watch.
Programme Co Chairs
Dr. Vincent Ribière. After teaching for 10 years in <strong>the</strong> United States, first at American
University (Washington, DC) and later on at <strong>the</strong> New York Institute <strong>of</strong> Technology (NYIT)
in New York and in <strong>the</strong> Kingdom <strong>of</strong> Bahrain, Vincent joined Bangkok University in 2007
as <strong>the</strong> Managing Director and co-founder <strong>of</strong> <strong>the</strong> Institute for Knowledge and Innovation –
Sou<strong>the</strong>ast Asia (IKI-SEA). Vincent received his Doctorate <strong>of</strong> Science in Knowledge
Management from <strong>the</strong> George Washington University, and a Ph.D. in Management
Sciences from <strong>the</strong> Paul Cézanne University, in Aix en Provence, France. Vincent
teaches, conducts research and consults in <strong>the</strong> area <strong>of</strong> knowledge management, innovation management
and information systems He is a KM columnist for CIO World & Business magazine (Thailand) and he is part
<strong>of</strong> <strong>the</strong> editorial board <strong>of</strong> <strong>the</strong> <strong>International</strong> Journal <strong>of</strong> Knowledge Management (IJKM) and <strong>of</strong> VINE: The
Journal <strong>of</strong> Information and Knowledge Management Systems
Asst. Pr<strong>of</strong>. Lugkana Worasinchai, Ph.D is <strong>the</strong> Director <strong>of</strong> <strong>the</strong> Institute <strong>of</strong> Research
Promotion and Innovation Development (IRID), Bangkok University. In addition, Lugkana
Worasinchai is <strong>the</strong> Co-Founder and Co-Managing Director <strong>of</strong> <strong>the</strong> Institute for Knowledge
and Innovation South-East Asia (IKI-SEA), Bangkok University. She teaches
undergraduate and graduate courses in Business Administration, and is actively involved
in research on <strong>the</strong> relationship between knowledge management and business
strategies. Lugkana Worasinchai is a published scholar, her articles appearing in major
academic journals; she gives seminars to firms and public sector organizations, and is regularly invited as a
guest lecturer by reputable international universities
Keynote Speakers
Patrick Lambe is a world renowned knowledge management expert, consultant, author,
facilitator and keynote speaker. His specializations are facilitation skills for building
common ground and knowledge sharing, decision-making in complexity, building
knowledge strategies, knowledge organization and <strong>the</strong> management <strong>of</strong> expertise. He
regularly works with senior leadership teams in <strong>the</strong>se areas, and has deep experience in
<strong>the</strong> government and non pr<strong>of</strong>it sectors. Patrick is founder and Principal Consultant <strong>of</strong> KM
consulting and research firm Straits Knowledge, based in Singapore. He is a prolific
writer, international keynote speaker and teacher in knowledge management, and an
active member <strong>of</strong> several pr<strong>of</strong>essional communities, including iKMS, actKM Forum and <strong>the</strong> Taxonomy
Community <strong>of</strong> Practice. Patrick was educated at <strong>the</strong> University <strong>of</strong> Oxford and holds Master’s degrees from
both Oxford and London
x

William Halal is Pr<strong>of</strong>essor Emeritus <strong>of</strong> Management, Technology, and Innovation at
George Washington University, Washington, D.C. An authority on emerging technology,
strategic planning, knowledge, and institutional change, he has worked with General
Motors, AT&T, SAIC, MCI, Blue Cross/Blue Shield, <strong>International</strong> Data Corporation, <strong>the</strong>
DoD, <strong>the</strong> Asian Development Bank, foreign companies, and various government
agencies. Halal’s work has appeared in journals such as Nature/BioTechnology,
California Management Review, Strategy & Business, Knowledge Management Review,
Academy <strong>of</strong> Management Executive, Journal <strong>of</strong> Corporate Citizenship, Human
Relations, Systems & Cybernetics, and Technological Forecasting & Social Change. Pr<strong>of</strong>. Halal is <strong>the</strong>
founder <strong>of</strong> TechCast, a web-based system that pools <strong>the</strong> knowledge <strong>of</strong> experts to forecast breakthroughs in
all technical fields – “A Virtual Think Tank Tracking <strong>the</strong> Technology Revolution.” He also co-founded <strong>the</strong>
Institute for Knowledge & Innovation as a collaborative effort between <strong>the</strong> GW School <strong>of</strong> Business and <strong>the</strong>
School <strong>of</strong> Engineering.Bill studied engineering, economics, and <strong>the</strong> social sciences at Purdue and Berkeley.
Previously, he was a major in <strong>the</strong> U.S. Air Force, an aerospace engineer on <strong>the</strong> Apollo Program, and a
Silicon Valley business manager. He serves on advisory boards <strong>of</strong> AMD Corporation, <strong>the</strong> World Future
Society, and o<strong>the</strong>r organizations. Macmillan’s Encyclopedia <strong>of</strong> <strong>the</strong> Future ranked him among “The World’s
100 Most Influential Futurists“
Mini Track Chairs
Eduardo Rodriguez has experience in knowledge management, risk management and
analytics in <strong>the</strong> insurance and banking industry. He has been Knowledge Management
Advisor at EDC Export Development Canada in Ottawa, Regional Director <strong>of</strong> PRMIA
(Pr<strong>of</strong>essional Risk Managers <strong>International</strong> Association)in Ottawa and currently, he is
Quantitative Analyst for EDC, Director <strong>of</strong> IQAnalytics, Director <strong>of</strong> Strategic Intelligence
UNAD Colombia. Ma<strong>the</strong>matician, MBA, MSc. Ma<strong>the</strong>matics, certification <strong>of</strong> <strong>the</strong> Advanced
Management Program McGill University. PhD Candidate at Aston Business School in
<strong>the</strong> UK research in <strong>the</strong> field <strong>of</strong> Knowledge Management applied to Enterprise Risk
Management.
Dr Mustafa Sagsan graduated in Library and Information Science at Ankara
University, Turkey in 1997. He gained his Masters Degree in National Information
Policy from <strong>the</strong> same University in 2001. He completed his Ph.D in Management and
Organization Science at Baskent University in 2008. He was <strong>the</strong> co-founder <strong>of</strong> <strong>the</strong>
Department <strong>of</strong> Knowledge Management in Baskent University in 2002. He currently
works as Chairman <strong>of</strong> <strong>the</strong> Near East University Department <strong>of</strong> Knowledge
Management in <strong>the</strong> Turkish Republic <strong>of</strong> Nor<strong>the</strong>rn Cyprus. His research focuses on KM
discipline and applications, MIS, organizational behaviour and e-government
applications. He consults on knowledge management and organizational communication.
Dr Mohamed Rabhi holds a MS from Purdue University and a PhD from <strong>the</strong> University
<strong>of</strong> Minnesota in Soil Science; has interest in environmental implication <strong>of</strong> mineral
fertilizers on soil, water, and air. He worked for <strong>the</strong> University <strong>of</strong> Minnesota as research
associate. Then joined SABIC as chemical fertilizer researcher; held <strong>the</strong> position <strong>of</strong>
fertilizer technology manager. He championed <strong>the</strong> 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 <strong>the</strong> knowledge management leader in SABIC Technology and
Innovation organization.
xi

Biographies <strong>of</strong> contributing authors (in alphabetical
Hayati Abdul Jalal Master’s degree in Human Resource Development from University Putra Malaysia.
Currently PhD candidate at School <strong>of</strong> Management, College <strong>of</strong> Business, Massey University New Zealand.
PhD research aims at bringing <strong>the</strong> role <strong>of</strong> human agency in <strong>the</strong> knowledge management equation, as well as
identification <strong>of</strong> an acceptable and desirable organisational culture values for successful knowledge sharing
within knowledge based organisations. Researches HRM, knowledge management and cross-cultural
management.
Maria-Madela Abrudan. born in Oradea, Romania, 05.03.1973. Senior lecturer phd., Chief <strong>of</strong> Management-
Marketing Department, University <strong>of</strong> Oradea, Faculty <strong>of</strong> Economics. Area <strong>of</strong> research: Human Resources
Management and Project Management. Partner project manager <strong>of</strong> project titled: Establishment <strong>of</strong> R&D
programmes in <strong>the</strong> field <strong>of</strong> new public management between economic faculties <strong>of</strong> higher education in
Hajdu-Bihar and Bihor counties
Peyman Akhavan, faculty <strong>of</strong> industrial engineering department, Iran University <strong>of</strong> Science and Technology,
received his M.Sc. and Ph.D. degrees in industrial engineering from Iran University <strong>of</strong> Science and
Technology, Tehran, Iran. His research interests are in knowledge management, information technology, and
strategic planning. He has published 4 books and has more than 45 research papers in different conferences
and journals.
Ruth Alas is <strong>the</strong> Vice-Rector for Research and Head <strong>of</strong> Management Department and in Estonian Business
School. She has written twenty six management textbooks and more than 100 articles. Ruth Alas is
teaching change management. Her research is focusing on change management, employee attitudes,
learning abilities, organisational culture, leadership, ethics and corporate social responsibility.
Rivadávia Correa Drummond de Alvarenga Neto. Pr<strong>of</strong>essor at Fundação Dom Cabral, Brazil. He holds a
Ph.D. in Information Science (UFMG, Brazil) and a PostDoctoral Fellowship (University <strong>of</strong> Toronto, Canada).
His books and papers have been published in Brazil, Spain, France, England, Chile, South Africa, Canada,
United States, Malta, Ireland, China and Portugal, among o<strong>the</strong>rs.
Xiaomi An, is pr<strong>of</strong>essor <strong>of</strong> <strong>the</strong> Key Laboratory <strong>of</strong> Data Engineering and Knowledge Engineering (Ministry <strong>of</strong>
Education) and <strong>the</strong> School <strong>of</strong> Information Resources Management at Renmin University <strong>of</strong> China, project
leader <strong>of</strong> knowledge management, committee member <strong>of</strong> ISO/TC46/SC11 and SAC/TC 86 /SC 5. She holds
a PhD degree from University <strong>of</strong> Liverpool, UK.
Marko Anzelak holds a Master's degree in Computer Science from <strong>the</strong> Alpen-Adria-University <strong>of</strong> Klagenfurt,
where he also worked for several years as a project leader in <strong>the</strong> field <strong>of</strong> application engineering. Since
2006 Marko Anzelak is a researcher at <strong>the</strong> eBusiness-department (biztec) in <strong>the</strong> field <strong>of</strong> databases,
information systems, CMS, knowledge engineering/management and e-learning.
Gabriel Prananingrum Aryanindita Lecturer and researcher at School <strong>of</strong> Economics, Atma Jaya Catholics
University <strong>of</strong> Indonesia. She earned Magister <strong>of</strong> Accounting Science from <strong>the</strong> Graduate School <strong>of</strong>
Economics, Gadjah Mada University. Her research interest includes valuation <strong>of</strong> intellectual capital,
international accounting reporting, and economics consequences <strong>of</strong> new standards. She published articles in
those areas.
Rita Babiliūtė PhD student in management and administration at <strong>the</strong> Institute <strong>of</strong> Europe at Kaunas
University <strong>of</strong> Technology (Lithuania). She was a Fellow student at University <strong>of</strong> Geneva and University <strong>of</strong>
Lausanne as well as an intern at <strong>the</strong> <strong>International</strong> Labour Organization at <strong>the</strong> United Nations. The areas <strong>of</strong>
research interest cover trust management, inter-organizational relations.
Leonard Barnett is an expert in intercultural management and cultural knowledge, having been responsible
for social and academic developments in culturally and politically complex environments in Asia Pacific
region, e.g. Aboriginal development programs and management degree courses, teaching and research in
cultural knowledge, intercultural management and communication in SEA. Recent publications include
intercultural competence in <strong>the</strong> Thai tourism industry and <strong>the</strong> postmodern traveler.
Bob Barrett is a pr<strong>of</strong>essor in <strong>the</strong> School <strong>of</strong> Business at <strong>the</strong> American Public University. Dr. Barrett's current
research interests are: Online Learning, Intellectual Capital, Disability in <strong>the</strong> Workplace, and Knowledge
Management. Dr. Barrett currently teaches and writes on <strong>the</strong> subject <strong>of</strong> global business and e-learning in
today’s changing economic times.
xii

Evgeny Blagov has obtained a specialist degree in international management at <strong>the</strong> Graduate School <strong>of</strong>
Management <strong>of</strong> Saint Petersburg State University in 2007, a Master <strong>of</strong> Research in Management Sciences
degree at ESADE Business School in 2010 and finished a PhD program at <strong>the</strong> Graduate School <strong>of</strong>
Management <strong>of</strong> Saint Petersburg State University in 2010.
Prantik Bordoloi is a Doctoral Candidate at <strong>the</strong> School <strong>of</strong> Management, Asian Institute <strong>of</strong> Technology,
Thailand. He has previously received an MBA in Management <strong>of</strong> Technology from Asian Institute <strong>of</strong>
Technology, Thailand. His current research interests include knowledge application and translation, modeling
<strong>of</strong> barriers in implementing KM practices, and knowledge management issues in hospitality and tourism.
Elena Botezat is a Pr<strong>of</strong>essor at <strong>the</strong> Faculty <strong>of</strong> Economic Science, University <strong>of</strong> Oradea, Romania. Her
activities include research on social entrepreneurship education, counseling, tutoring, usage <strong>of</strong> virtual
learning environments, coordinating projects financed by <strong>the</strong> European Commission aiming to provide
practical instruments to beneficiaries that can be used for decision making in SMEs.
Constantin Bratianu is pr<strong>of</strong>essor <strong>of</strong> Strategic Management and Knowledge Management at <strong>the</strong> Academy <strong>of</strong>
Economic Studies, Bucharest, Romania. He is <strong>the</strong> Head <strong>of</strong> UNESCO Department for Business
Administration, and Director <strong>of</strong> <strong>the</strong> Research Center for Intellectual Capital. His main academic interests are:
knowledge dynamics, knowledge management, intellectual capital, strategic management and university
management.
Delio Ignacio Castaneda .PhD (Cum Laude) in Organizational Behavior: Universidad Autónoma de Madrid,
Spain. Master (with Distinction) in Education: University <strong>of</strong> Manchester, England. Psychologist: Universidad
Católica de Colombia. At <strong>the</strong> moment Delio is an Associate Pr<strong>of</strong>essor at Pontificia Universidad Javeriana
and invited pr<strong>of</strong>essor in <strong>the</strong> fields <strong>of</strong> Knowledge Management and Organizational Behavior.
Sonia Castro Chemical Engineer, MSc. in Technology Management. Currently retired from ECOPETROL,
where culminated her 21 years working career as Manager <strong>of</strong> Knowledge Management Unit and Leader <strong>of</strong>
<strong>the</strong> Corporate Program <strong>of</strong> Knowledge and Technology Management (2008). She was also strategic planning
pr<strong>of</strong>essional and intellectual property leader in <strong>the</strong> Research Center <strong>of</strong> ECOPETROL.
Nopasit Chakpitak, is a PhD Supervisor and <strong>the</strong> Dean at College Arts, Media and Technology <strong>of</strong> Chiang
Mai University, Thailand. He received his PhD in Knowledge Engineering from Strathclyde University, U.K.,
and has supervised many National Knowledge Management Projects in Thailand.
Tirapot Chandarasupsang, is a PhD at College Arts, Media and Technology <strong>of</strong> Chiang Mai University,
Thailand.
Rajendra Chetty is Pr<strong>of</strong>essor and Head <strong>of</strong> <strong>the</strong> Department <strong>of</strong> Research at CPUT. He holds a PhD (UNISA),
MA (UKZN) and MBA (Executive) from <strong>the</strong> University <strong>of</strong> Cape Town Graduate School <strong>of</strong> Business. His
research interests are Quality in Teacher Education, Commonwealth writings and social issues in Education.
Thira<strong>the</strong>p Chonmaitree. Lecturer at College <strong>of</strong> Arts, Media and Technology in Chiang Mai University in <strong>the</strong>
S<strong>of</strong>tware Engineering Department. Graduated with master degree in Computer Science concentrated in
Computer Graphics from George Washington University. MBA in Management from <strong>the</strong> USA.. Research
interests are in Education and Multimedia s<strong>of</strong>tware, Computer Graphic in application side, Graphic Design
and Art and Technology.
Angelo Corallo Pr<strong>of</strong>essor in <strong>the</strong> Department <strong>of</strong> Innovation Engineering, University <strong>of</strong> Salento. Main research
interests are related to technologies, methodologies and organizational models supporting <strong>the</strong> New Product
Development process in complex industries (with specific focus on aerospace industry); knowledge
management and collaborative working environments in project and process-based organizations.
Daranee Delorme is a PhD candidate <strong>of</strong> Dhurakij Pundit University, Bangkok, Thailand. The research is
presenting a partial fulfillment <strong>of</strong> <strong>the</strong> degree <strong>of</strong> Doctor <strong>of</strong> Philosophy in Business Informatics <strong>of</strong> <strong>International</strong>
College. This research has been thoroughly supervised by qualified advisors. Research procedure has
been carefully followed to derive to interesting findings as she presents.
Paola Demartini is Associate Pr<strong>of</strong>essor at <strong>the</strong> University <strong>of</strong> Rome 3. She is executive Editor <strong>of</strong> <strong>the</strong> review
Small Business/Piccola Impresa and vice president for Italy <strong>of</strong> <strong>the</strong> European Council for Small Business
(ECSB). Her research interest includes small business management, corporate financial communication and
intellectual –based management.
xiii

Ridha Derrouiche is currently Assistant-Pr<strong>of</strong>essor <strong>of</strong> Supply Chain Management and Operations
Management at Saint-Etienne School <strong>of</strong> Management (SESOM). He is a member <strong>of</strong> LSTI laboratory
(France). He got a PhD in Industrial Engineering in 2007 at <strong>the</strong> University Lyon II. His research interests are
mainly related to Supply Chain, Performance & Value Creation through Collaborative.
Ikechukwu Diugwu is a Lecturer in <strong>the</strong> Department <strong>of</strong> Project Management Technology, Federal University
<strong>of</strong> Technology, Minna, Nigeria. His research interest is in <strong>the</strong> area <strong>of</strong> performance improvement strategy in
organisations, especially small and medium sized enterprises (SMEs). He holds a PhD (UK), MSc (UK), and
BEng (Hons) (ESUT, Nigeria).
Maria Eckenh<strong>of</strong>er is an Austrian citizen, graduated in Media Management from University <strong>of</strong> Applied
Sciences in St.Pölten (Austria) in 2008 and works at <strong>the</strong> moment as a PhD Student on Tomas Bata
University in Zlín (Czech Republic) on <strong>the</strong> Faculty <strong>of</strong> Management and Economics in <strong>the</strong> fields network
management, organizational networks, corporate culture and cluster.
Üllas Ehrlich graduated Tartu University in 1989, and defended his PhD in human geography at Tartu
University in 2007. Currently working as pr<strong>of</strong>essor <strong>of</strong> environmental economics, Department <strong>of</strong> Public
Economy at Tallinn University <strong>of</strong> Technology, Head <strong>of</strong> Chair <strong>of</strong> Environmental Economics. Field <strong>of</strong> Research:
Environmental economics, ecological economics, organizational development
Fabrizio Errico, Research Fellow, Centro Cultura Innovativa d’Impresa - University <strong>of</strong> Salento (Italy). Junior
accountant and he had an advanced post degree course in “e-business management”, ISUFI (University <strong>of</strong>
Lecce); Research is characterized by cross-disciplinary focus, with major interest on Methodologies,
technologies and tools supporting Internetworked Enterprise; <strong>the</strong> New Product Development process in
complex industries; Cost models and change management methodologies.
Irene Fan is a PhD candidate in <strong>the</strong> ISE Department <strong>of</strong> <strong>the</strong> Hong Kong Polytechnic University. Her research
interest includes innovation, knowledge, and intellectual capital management. She is experienced in R&D
management in <strong>the</strong> ICT industry. She received her bachelor and master degree in Industrial Engineering
(Operations Research/Management Science) from <strong>the</strong> University <strong>of</strong> Toronto.
Ronny Gey is a PhD student at <strong>the</strong> University <strong>of</strong> Technology, Chemnitz, Germany, doing research on <strong>the</strong>
impact <strong>of</strong> standardisation and innovation in organisations. He holds a MA in Business Information
Management from <strong>the</strong> same university. Currently he is employed as s<strong>of</strong>tware and quality engineer at Phacon
GmbH, Leipzig, Germany.
Mahmood Ghazavi has 12 years <strong>of</strong> pr<strong>of</strong>essional work experience in industry and academics. He is currently
doing PhD in knowledge management. His PhD research is about exploring <strong>the</strong> utility <strong>of</strong> knowledge
networking among pr<strong>of</strong>essionals. The title <strong>of</strong> his <strong>the</strong>sis is Knowledge Sharing in Ego-centered Knowledge
Networks <strong>of</strong> Pr<strong>of</strong>essionals: Role <strong>of</strong> Transactive Memory Systems, Trust, and Reciprocity
Paul Goldsmith gained his PhD in Hyper-spectral Satellite Remote Sensing, from London, U.K. He was
also a systems engineer for a U.K. defense firm, and working on virtual knowledge-based projects and
counter surveillance in U.K. He is now supervising PhD students at <strong>the</strong> College <strong>of</strong> Arts, Media and
Technology, Chiang Mai University, Thailand.
Ken Grant is a pr<strong>of</strong>essor and <strong>the</strong> Faculty Teaching Chair in <strong>the</strong> Ted Rogers School <strong>of</strong> Management at
Ryerson University, Toronto, Canada. Prior to joining <strong>the</strong> School he held partner-level positions in
management consulting with AT Kearney and KPMG. His teaching and research focus is on Strategy and
Innovation, eBusiness and Knowledge Management.
Michel Grundstein Consulting Engineer/Associate Researcher, LAMSADE (laboratory focused on
analyzing/modeling decision aid systems), Paris Dauphine University, France. Co-funder SIGECAD Group,
domain topics are information systems, knowledge management and decision aid. Researches knowledge
management. Was Corporate Advisor, responsible for innovative methods/applications and information
technology, French nuclear power plant company.
Oscar Guerra Chemical Engineer specialist in Strategic Thinking and Foresight and also in Environmental
Evaluation <strong>of</strong> Projects. He works at <strong>the</strong> Knowledge and Technology Management Unit <strong>of</strong> ECOPETROL S.A.
Nowadays he is <strong>the</strong> Leader <strong>of</strong> Corporate Program <strong>of</strong> Knowledge and Technology Management.
Shaheed Hartley is Director <strong>of</strong> <strong>the</strong> Science Learning Centre for Africa (SLCA) at <strong>the</strong> University <strong>of</strong> <strong>the</strong>
Western Cape in South Africa and Associate Pr<strong>of</strong>essor in Science Education. His centre supports practicing
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science and ma<strong>the</strong>matics teachers through a series <strong>of</strong> developmental interventions and drives a number <strong>of</strong>
learner projects to improve <strong>the</strong> participation and interest <strong>of</strong> learners in science.
Fathiah Hashim Graduated in Bacherlor <strong>of</strong> Accounting at Multimedia University, Malaysia in 2000. She
gained Master Degree in Accounting from Universiti Teknologi Mara, Malaysia in 2011. Currently, she works
as an Assistant Lecturer at Center for Diploma Programme (CDP), Multimedia University, Malaysia. Her
research focuses on KM disipline and Accountants’ Ethics.
Hezlin Harris received her first and second degrees in Finance, Economics and Applied Statistics from
Syracuse University, NY and Multimedia University, Malaysia respectively. She <strong>the</strong>n became a lecturer in
Statistics at <strong>the</strong> Faculty <strong>of</strong> Management, Multimedia University. Currently, she teaches courses related to
Statistics. Her research interests include e-business, innovation management and intellectual property.
Ching Choo Huang Associate pr<strong>of</strong>essor Faculty <strong>of</strong> Accountancy, Universiti Teknologi MARA. MSc.
Accounting/Management Science (distinction), University <strong>of</strong> Southampton, UK. Intellectual Capital Reporting
PhD, University <strong>of</strong> <strong>the</strong> West <strong>of</strong> England, Bristol, UK. Research incorporates reporting, financial reporting
standards, voluntary disclosures and intellectual capital.. Published papers in international journals; paper
“An Evidence-based Taxonomy <strong>of</strong> Intellectual Capital” published in Journal <strong>of</strong> Intellectual Capital was
awarded “Highly Commended Paper” by Emerald (2008).
Eli Hustad is an Associate Pr<strong>of</strong>essor at <strong>the</strong> University <strong>of</strong> Agder in Kristiansand, Norway. She holds a Ph.D.
from <strong>the</strong> University <strong>of</strong> Oslo. Her research and teaching focus on enterprise-wide information systems,
knowledge networking, KM 2.0 and utilization <strong>of</strong> social media in business
Bogdan-Vasile Ileanu is a PhD Candidate in applied statistics and econometric in economic field. He is
working since 2006 as assistant teacher at Academy <strong>of</strong> Economic Studies from Bucharest, Romania. His
main interests’ areas are lying around: Quantitative techniques applied in economics and religion, intellectual
capital measure, labor force migration, etc.
Nurul Indarti Lecturer Department <strong>of</strong> Management, Faculty <strong>of</strong> Economics and Business, Universitas Gadjah
Mada, Indonesia. PhD degree in Knowledge and Innovation from University <strong>of</strong> Groningen, The Ne<strong>the</strong>rlands.
Master degrees from University <strong>of</strong> Agder, Norway and Norwegian School <strong>of</strong> Economics and Business,
Norway. Her research interests are knowledge management, innovation, entrepreneurship, and small
business development.
Salman Iqbal Lecturer in Pakistan, doing PhD in HRM, Massey University, Palmerston North, New Zealand.
BE degree, Pakistan and MBA. from University <strong>of</strong> Wollongong, Australia. Research includes HRM,
knowledge management and individual capability. Attended couple <strong>of</strong> international conferences, presented
work to pr<strong>of</strong>essional audience in New Zealand. Writing Journal articles and book chapters with supervisors..
Thunyaporn Jaimung, <strong>the</strong> 3 rd year PhD student in Knowledge Management. She is a research assistant at
College <strong>of</strong> Arts, Media and Technology, Chiang Mai University, Thailand.
Brigita Janiūnaitė Pr<strong>of</strong>essor/director, Institute <strong>of</strong> Educational Studies, Department Head, Educational
Systems, Faculty <strong>of</strong> Social Sciences, Kaunas University <strong>of</strong> Technology. Research focuses on change
management and social innovation implementation. Active in international/national research/study projects
and evaluation <strong>of</strong> study programmes. Published monograph on ‘Educational Innovation Implementation’
(2004, Lithuanian) and research study ‘Citizen’s innovative culture’ (2007, Lithuanian). Elected
Fu Jing is a PhD student in Knowledge Management at <strong>the</strong> College <strong>of</strong> Arts, Media and Technology, Chiang
Mai University, Thailand. She is a lecturer and researcher at <strong>the</strong> <strong>International</strong> e-Tourism Research Center in
Chengdu University, China and came to Thailand to study a PhD in Knowledge Management in 2009.
Iman Jokar Tang Karami. BA from Persian Gulf University, Iran, MBA from institute for management and
Planning Studies, Iran. Currently Ph.D. student in Finance at Islamic Azad University, Science and research
branch, Tehran, Iran. 4 years experience in Finance and Investment Management. Teaching and research
interests are in Finance and Investment, Accounting, E-Commerce, Intellectual Capital and Knowledge
Economy.
Palmira Juceviciene PhD., Habil. Dr., full pr<strong>of</strong>essor, Director <strong>of</strong> <strong>the</strong> Institute <strong>of</strong> Educational Studies at
Kaunas University <strong>of</strong> Technology. Research interests – individual and organizational learning, knowledge
creation and management, learning organizations and regions, human resource development, higher
education. Dr. Juceviciene has published more than 200 scholarly articles and 10 books.
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Roberta Jucevičius Habilitated doctor (Social Sciences, Management), Full pr<strong>of</strong>essor, Head <strong>of</strong> <strong>the</strong> Institute
<strong>of</strong> Business Strategy, Faculty <strong>of</strong> Social Sciences, Kaunas University <strong>of</strong> Technology, Lithuania. Research
interests: knowledge management, strategic management, entrepreneurship
Annukka Jyrämä works as a senior research fellowat Aalto Unversity School <strong>of</strong> Economics, Finland, and is
a Research Fellow to <strong>the</strong> Arts, Culture & Management in Europe Chair <strong>of</strong> BEM Bordeaux Management
School. Her current research interests include knowledge creation processes and <strong>the</strong> role <strong>of</strong> mediators from
institutional and network <strong>the</strong>ory perspectives. She has conducted studies in such contexts as cultural, city
and business and published in refereed journals for example, Industrial Marketing Management and
Management Learning.
Krith Karnjanakitti is a PhD student in Knowledge Management <strong>of</strong> College <strong>of</strong> Art Media and Technology,
Chiang Mai University. His research topic is Raising <strong>the</strong> Research Pr<strong>of</strong>ile <strong>of</strong> <strong>the</strong> Faculty <strong>of</strong> Humanities, Chiang Mai
University: Building Community Links and Empowering Knowledge Workers.
Harri Ketamo, PhD, is a Director <strong>of</strong> Education at Satakunta University <strong>of</strong> Applied Sciences. His research
focuses on conceptual learning, complex adaptive systems, user modeling and game AI's. Before coming to
Satakunta University <strong>of</strong> Applied Sciences, Harri was co-founder and director <strong>of</strong> GameMiner Ltd., a game
development company focused on game AI’s and Data Mining.
Nguyen Doan Khoi is <strong>the</strong> author <strong>of</strong> book entitled “Quality management in <strong>the</strong> Export Supply Chain in
Vietnam: The case <strong>of</strong> Pangasius small-scale farming system”. He is a creative, competent researcher
involved in various research/development projects/programs. His strength is in terms <strong>of</strong> self-decision making
and active and independent work. He has experiences <strong>of</strong> collaborations, in-country and international.
Eric Kong BA (Hons), PG Dip, MSc, PhD Monash. Senior Lecturer at <strong>the</strong> School <strong>of</strong> Management &
Marketing, University <strong>of</strong> Sou<strong>the</strong>rn Queensland, Australia. He taught at Monash University and Charles Sturt
University. Eric completed his Ph.D. in Strategic Management at Monash University, Australia. His current
research interests include intellectual capital, knowledge management, non-pr<strong>of</strong>it management, and strategic
management.
Kęstutis Kriščiūnas is <strong>the</strong> Director <strong>of</strong> <strong>the</strong> Institute <strong>of</strong> Europe at Kaunas University <strong>of</strong> Technology as well as
its former Rector. The research interests include knowledge based economy, management <strong>of</strong> intellectual
capital, internationalisation <strong>of</strong> higher education, management <strong>of</strong> higher education; engineering education;
European integration, European dimensions in quality <strong>of</strong> higher education and research.
Marissara Kummool, <strong>the</strong> 2 nd year PhD student in Knowledge Management. She is assistant researcher at
College <strong>of</strong> Arts, Media and Technology, Chiang Mai University, Thailand.
Pornpen Lertthasanawong is a PhD student (2009) in Knowledge Management at College <strong>of</strong> Arts, Media
and Technology <strong>of</strong> Chiang Mai University, Thailand. She is <strong>the</strong> Managing Director <strong>of</strong> Neo-Net S<strong>of</strong>t Co.,LTD.
which is <strong>the</strong> first s<strong>of</strong>tware house in Samut Sakhon.
Chaiyatorn Limapornvanich is a PhD student in School <strong>of</strong> Management at <strong>the</strong> University <strong>of</strong> Surrey. With
six-year experience <strong>of</strong> working collaboratively with indigenous innovative companies in Thailand, his
research focuses on <strong>the</strong> implementation <strong>of</strong> knowledge management for enhancing innovative businesses in
Thailand and receives support from National Innovation Agency (NIA), Thailand.
Christian Lindemann is a PhD candidate at chair <strong>of</strong> Computer Application and Integration in Construction
and Planning at University <strong>of</strong> Paderborn. He worked in <strong>the</strong> Projects Lage and Mobis Pro, dealing with
standardization and knowledge management for fire fighters. He studied mechanical engineering and
business at University <strong>of</strong> Paderborn and Queensland University <strong>of</strong> Technology Brisbane.
Ya-Hui Ling is an assistant pr<strong>of</strong>essor in <strong>the</strong> Department <strong>of</strong> Business Administration, I-Shou University. Her
research interests include intellectual capital and knowledge management. She has published journal
articles in <strong>the</strong> <strong>International</strong> Journal <strong>of</strong> Human Resource Management, Personnel Review, Sun Yat-Sen
Management Review, Asia Pacific Management Review, and Journal <strong>of</strong> Human Resource Management.
Martha López is a Systems Engineer specialist in Knowledge Management (KM) and Intellectual Capital.
She works at <strong>the</strong> Knowledge and Technology Management Unit <strong>of</strong> ECOPETROL S.A., giving supporting to
<strong>the</strong> implementation <strong>of</strong> KM process in <strong>the</strong> Business <strong>of</strong> Exploration and Production within <strong>the</strong> company.
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George Majdalany is a PhD candidate in Accounting and Finance at <strong>the</strong> University <strong>of</strong> Wollongong. He holds
his Certified Management Accountant (CMA) certification from <strong>the</strong> USA. His career includes working in
Lebanon, Jordan, and United Arab Emirates in managerial positions in Finance and Accounting since 2001.
He is also a senior CMA instructor since 2008.
Maksim Maksimovic is a graduate mechanical engineer from Coventry University, UK and <strong>the</strong> University <strong>of</strong>
Applied Sciences in Constance, Germany. He has years <strong>of</strong> experience in <strong>the</strong> German automotive supplier
industry. He joined <strong>the</strong> EU funded, Lean Product and Process Development (LeanPPD) project in 2009 as a
researcher at Cranfield University, UK, focusing on <strong>the</strong> management <strong>of</strong> product development knowledge in a
lean environment.
Maurizio Massaro, Ph. D., aggregate pr<strong>of</strong>essor at Udine University since 2008, having worked as teacher at
Udine University since 2001. Visiting scholar at <strong>the</strong> Florida Gulf Coast University, Florida, USA, in 2010.
Academic interests primarily in field <strong>of</strong> measurement <strong>of</strong> business performance, intangible assets and
entrepreneurship. Wrote several publications on <strong>the</strong>se topics, and has some more forthcoming.
Sara McCracken has an Honours degree in Economics and Computer Science toge<strong>the</strong>r with an MBA from
Aston Business School. She is currently reading for a PhD in Knowledge Management in Healthcare and
specifically Knowledge Management Systems. She has worked as a consultant in Health, Technology in
Healthcare, and Project Management..
Helen Mitchell is a Senior Lecturer in <strong>the</strong> Department <strong>of</strong> Management and Marketing at Unitec Institute <strong>of</strong>
Technology, Auckland, New Zealand. Her lecturing areas focus on management and innovation and her
doctoral study was in managing intellectual capital. Helen is works closely with local business associations
arranging for students to undertake special projects and research.
Cristina Morariu is a lecturer <strong>of</strong> Academy <strong>of</strong> Economic Studies (ASE) - Bucharest and is currently finalising
her PhD at <strong>the</strong> same institution. Her current research interest relate to measurement and disclosure <strong>of</strong>
intellectual capital. Her writing on <strong>the</strong> topic <strong>of</strong> intellectual capital has been published in academic journals
and presented at international conferences.
Andrea Moro holds a degree in Economics (University <strong>of</strong> Trieste - Italy) an MBA at (Open University
Business School - UK) and a PhD (Lancaster University Management School - UK). His research interests
are about <strong>the</strong> impact <strong>of</strong> information asymmetry on SMEs’ relationships with lenders, suppliers and customers
and on SMEs’ capital structure.
Samira Nadirkhanlou was born on December 18, 1984, in Zanjan, Iran. She took her BA in Management, in
2007 and <strong>the</strong>n was graduated in entrepreneurship management from university <strong>of</strong> Tehran. She is interested
in knowledge commercialization and academic entrepreneurship
Vyda Mozuriuniene, Comfort Heat Ltd. Managing Director, Ph.D. in Management. Research interests –
knowledge creation and management, process management, strategic management. Consultant in <strong>the</strong> areas
<strong>of</strong> organization’s knowledge management, process management, franchise.
Mauro Paoloni is Full Pr<strong>of</strong>essor at <strong>the</strong> University <strong>of</strong> Rome 3. He is member <strong>of</strong> <strong>the</strong> Board <strong>of</strong> <strong>the</strong> Italian
Academy <strong>of</strong> Management (AIDEA). His research interest includes general management, corporate
accounting and intellectual-based management.
Bertrand Pauget is pr<strong>of</strong>essor <strong>of</strong> management at <strong>the</strong> European business school Paris.
Onnarin Phuatngam, a PhD student (2009) in Knowledge Management at College <strong>of</strong> Arts, Media and
Technology <strong>of</strong> Chiang Mai University, Thailand.
Siwarit Pongsakornrungsilp is Assistant Pr<strong>of</strong>essor <strong>of</strong> Marketing at Walailak University, Thailand. He
receives his PhD from University <strong>of</strong> Exeter, UK. He is a founder and head <strong>of</strong> <strong>the</strong> Consumption and
Sustainable Economy Research Group. His research interests focus on Value Creation, Working
Consumers, Social Network and Theory <strong>of</strong> Capital.
Preawpan Pringprom holds an M.A. in Teaching English as a Second Language from Fairleigh Dickinson
University, New Jersey and a Ph.D. in Curriculum and Instruction from Kasetsart University, Bangkok. She
is an Assistant Pr<strong>of</strong>essor at <strong>the</strong> Language Institute, Bangkok University. She teaches English for Specific
Purposes (ESP), and o<strong>the</strong>r general English courses. Her research interests are strategy training for L2learners
and <strong>the</strong> application <strong>of</strong> ICT to English teaching and learning.
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Mohamed Rabhi. MS from Purdue University and PhD from University <strong>of</strong> Minnesota in Soil Science;
interested in environmental implication <strong>of</strong> mineral fertilizers on soil, water, and air. Worked as research
associate, University <strong>of</strong> Minnesota. Joined SABIC as Fertilizer Technology Manager researching chemical
fertilizers. Championed knowledge management project with SABIC R&D organization, and implemented
knowledge management system partially described in two articles presented and published in ICICKM
proceedings (2009&2010).
Azlina Rahim is currently in her final year <strong>of</strong> full time PhD programme at Universiti Teknologi MARA,
Selangor, Malaysia. Although her PhD research focuses on intellectual capital efficiency, her research
concern focuses on intellectual capital, innovation capital and corporate reporting in Malaysia. She has been
a teaching staff at <strong>the</strong> university since 1998 and specializes in financial accounting.
Yolanda Ramírez is an Assistant Pr<strong>of</strong>essor at <strong>the</strong> Faculty <strong>of</strong> Economics and Business Administration,
University <strong>of</strong> Castilla-La Mancha, Spain. She completed her doctorate in Intellectual Capital Management.
Her current research interests include intellectual capital, knowledge management and quality management.
Her research work is focused on methods and techniques for building models <strong>of</strong> measuring and
management intellectual capital in <strong>the</strong> universities.
Victor Reyes-Alcázar . Knowledge Management Officer,Andalusian Agency for Healthcare Quality, Sevilla,
Spain. MD, PhD, Master in Emergency and Catastrophe Medicine. Degree in Hospital and Healthcare
Management. In <strong>the</strong> research field, his main topics are Healthcare Quality, Knowledge Management,
Balanced Scorecard, Social Capital, Accreditation Programmes and health outcomes.
Eduardo Rodriguez. Over twenty years management experience in insurance and banking industry working
on top management and analytics positions. Currently Principal <strong>of</strong> IQAnalytics in Canada, Quantitative
Analyst at EDC Export Development Canada in Ottawa BSc. Honors Ma<strong>the</strong>matics, MBA, MSc Degree in
Ma<strong>the</strong>matics, certification from Advanced Management Program at McGill University and PhD at Aston
Business School, UK writing <strong>the</strong>sis in field <strong>of</strong> Knowledge Management applied to Enterprise Risk
Management.
Jesús Rosales Carreón studied Chemical Engineering at <strong>the</strong> National University <strong>of</strong> Mexico. He has worked
for Degremont and for Owens Corning. He received his Master <strong>of</strong> Science in Energy and Environmental
Sciences. Jesús is conducting a PhD about Knowledge and Sustainability at <strong>the</strong> University <strong>of</strong> Groningen
under <strong>the</strong> supervision <strong>of</strong> Pr<strong>of</strong>. René Jorna.
Per Øystein Saksvik is a pr<strong>of</strong>essor at The Department <strong>of</strong> Psychology, Norwegian University <strong>of</strong> Science and
Technology where he also reached his Ph.D. in 1991 in Occupational Health Psychology. He has ten years
<strong>of</strong> experience as contract researcher. He does research in occupational health and safety, organizational
interventions, sickness absenteeism and presenteeism, and organizational change.
Mustafa Sagsan graduated in Library and Information Science at Ankara University, Turkey (1997) and
Masters Degree in National Information Policy (2001). Completed PhD in Management and Organization
Science at Baskent University ( 2008). Co-founder <strong>of</strong> Department <strong>of</strong> Knowledge Management in Baskent
University. Works as Head <strong>of</strong> Department <strong>of</strong> Knowledge Management, Near East University, Turkish
Republic <strong>of</strong> Nor<strong>the</strong>rn Cyprus.
Kalsom Salleh is a Senior lecturer in Faculty <strong>of</strong> Accountancy, Universiti Teknologi MARA, Shah Alam,
Malaysia. Registered Chartered Accountant and also an appointed council member with Malaysian Institute
<strong>of</strong> Accountants. Research interests are Knowledge Management, Intellectual Capital and Electronic
Government. Presented and published many research papers at international conferences and in highindexed
journals & international books.
Christina Schäfer is currently writing her PhD <strong>the</strong>sis in <strong>the</strong> working-group <strong>of</strong> computer application and
integration in construction and planning from university <strong>of</strong> Paderborn, Germany. In this circumstance she is
involved in <strong>the</strong> projects AirShield and OrGaMIR, which consider information-systems for firefighters. Since
2009 she has a Master degree on computer-science with focus on human-computer-interaction.
Alexander Serenko is an Associate Pr<strong>of</strong>essor <strong>of</strong> MIS in <strong>the</strong> Faculty <strong>of</strong> Business Administration at Lakehead
University, Canada. He holds a Ph.D. in Management Information Systems from McMaster University.
Alexander has published over 50 journal articles and received best paper awards at various conferences. He
has been recognized as one <strong>of</strong> <strong>the</strong> university’s leading researchers.
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Joyce Nesamani Simson is a PhD candidate at Universiti Teknologi Petronas. She has an MBA from
Charles Sturt University, Australia. Her research interests are in knowledge management with emphasis on
leadership behaviour. She is a Chartered Marketer and a member <strong>of</strong> <strong>the</strong> Chartered Institute <strong>of</strong> Purchasing
and Supply.
Ng Hee Song is a PhD student from Universiti Sains Malaysia. He holds an MBA from <strong>the</strong> same university,
and Bachelor <strong>of</strong> Mechanical Engineering from Universiti Teknologi Malaysia. He worked for industries for 20
years and presently, he is a lecturer <strong>of</strong> a private college. His research interest is leadership and work values.
Sonia Sousa Currently researching on <strong>the</strong> influence <strong>of</strong> trust in online communities and holds a PhD in
Education from Sheffield Hallam University, UK and an honors degree in Communication Engineering from
Universidade Fernando Pessoa, Portugal. R&D work record includes <strong>the</strong> United States <strong>of</strong> America (Michigan
State University's MIND Lab), Portugal (Universidade Fernando Pessoa Multimedia Research Center) Cape
Verde and Mozambique (Jean Piaget University
Somsak Sriborisutsakul is an assistant pr<strong>of</strong>essor in <strong>the</strong> Department <strong>of</strong> Library Science at Chulalongkorn
University, Thailand. His research and teaching interests are in knowledge management for library and
information pr<strong>of</strong>essionals, evaluation <strong>of</strong> information services, and organization <strong>of</strong> information resources. Dr.
Somsak earned his PhD in information studies from <strong>the</strong> University <strong>of</strong> Sheffield.
Vijayeta Srivastava is currently working as a Business Consultant at TechnologyOne in Melbourne,
Australia. She has attained her degree <strong>of</strong> Master’s in Business Information Management and Systems from
La Trobe University in Melbourne, Australia. She is an active member <strong>of</strong> Australian Computer Society and
Enterprise Information Management - Special Interest Group.
Subhacini Subramaniam received a Bachelor’s degree in business administration and a Master <strong>of</strong> business
administration from <strong>the</strong> Nor<strong>the</strong>rn University <strong>of</strong> Malaysia (UUM) in 2003 and 2009, respectively. Currently, she
is working as a Lecturer in Multimedia University, Malaysia. Her research interests include issues related to
knowledge management and entrepreneurship.
Šajeva Svetlana PhD in Social Sciences (Management and Administration), researcher at <strong>the</strong> Institute <strong>of</strong>
Business Strategy, Faculty <strong>of</strong> Social Sciences, Kaunas University <strong>of</strong> Technology, Lithuania. Research
interests: knowledge management, development <strong>of</strong> knowledge management system in <strong>the</strong> organization,
management <strong>of</strong> <strong>the</strong> knowledge workers.
Walaiporn Tantikanangkul, MA Linguistics in Education, Surrey University, UK. Worked at School <strong>of</strong>
Oriental and African Study, London and Communicaid (a private consultancy in London ) teaching Diplomats
and students <strong>of</strong> Thai study. Rresearch includes genre analysis, cultural studies, gender studies, and
psychoanalysis. Co-supervising PhD students at <strong>the</strong> College <strong>of</strong> Arts, Media and Technology, Chiang Mai
University, Thailand
Amarin Tawata is a PhD student in Knowledge Management <strong>of</strong> College <strong>of</strong> Art Media and Technology,
Chiang Mai University. His research area relates to learning in action to improve self-directed learning <strong>of</strong> high
school students.
Paipan Thanalerdsopit, a PhD student in Knowledge Management at College <strong>of</strong> Arts, Media and
Technology <strong>of</strong> Chiang Mai University, Thailand. She is a lecturer and researcher in Rajamangala University
Technology Lanna and was sent to study a PhD in Knowledge Management in Thailand in 2008.
Paul Toulson Associate pr<strong>of</strong>essor; registered industrial/organisational psychologist and member <strong>of</strong> College
<strong>of</strong> Business, Massey University since 1985. Prior employed in New Zealand Armed Forces as
industrial/organisational psychologist and personnel director. Life Fellow, Human Resources Institute New
Zealand, Associate Fellow New Zealand Psychological Society. Founding editor New Zealand Journal <strong>of</strong> HR
Management. Member <strong>of</strong> Institute’s research//publications committee, and Academy <strong>of</strong> Management. Vice
President Academic Branch <strong>of</strong> HRINZ. Research interests HR management practices, methods in HR
management, valuing HR management, and strategic HR management.
David Tweed Associate Pro- Vice-Chancellor executive education College <strong>of</strong> Business , Massey University.
Iinvolved in SME development over 20 years and a practicing researcher (25years). Involved in teaching,
research and extension activities. Was part <strong>of</strong> team awarded a (3year) FRST contract for $675,000
investigating management competencies facilitating <strong>the</strong> uptake <strong>of</strong> new technology by small firms. Written
widely for academic/practitioner audiences including contributions to six books.
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Willard Van De Bogart MFA California Institute <strong>of</strong> Arts, Los Angeles (Educational Technology Design).
Masters in Information Science Counseling and Data Base Retrieval, University <strong>of</strong> Pittsburgh. Obtained
TESOL certification , Sonoma State University,California. In Thailand researching retrieval and digital literacy
techniques for learning English as second language. Taught at Rajabhat University Nakhon Sawan and
Bangkok University. Published in Thammasat,Chulalongkorn, Rajabhat and Cyber University, IT branch,
Ministry <strong>of</strong> Education, Thailand.
Nurhayat Varol Instructor in <strong>the</strong> field <strong>of</strong> Information Technology at Firat University/Turkey since 1992.
Teaches IT courses based on student and project centered learning methods using distance education.
Research interest is in multimedia, computer aided learning and computer aided design, e-pedagogy,
distance education, knowledge management, and technical communication. Published over 40 journal and
conference publications.
Lugkana Worasinchai Co-Director, PhD program Knowledge Management and Innovation Management
(KIM) plus Director, Institute <strong>of</strong> Research Promotion and Innovation Development (IRID), Bangkok
University. Co-Founder/co-Managing Director, Institute for Knowledge and Innovation South-East Asia (IKI-
SEA), Bangkok University. Teaches undergraduate/graduate courses in Business Administration, actively
involved researching relationships between knowledge management/business strategies. Many articles in
major academic journals and seminars to firms/public sector organizations. Guest lecturer at reputable
international universities
Wendy W.Y. Wu earned a Bachelor’s degree with department citation in Economics at <strong>the</strong> University <strong>of</strong>
California, Davis. She also earned a Master’s degree in Information and Technology Management at <strong>the</strong>
Chinese University <strong>of</strong> Hong Kong. Experienced in knowledge management in <strong>the</strong> commercial sector, she
has published in one <strong>of</strong> <strong>the</strong> top IC journals.
Jirawit Yanchinda, <strong>the</strong> 2nd year PhD candidate in Knowledge Management at College <strong>of</strong> Arts, Media and
Technology <strong>of</strong> Chiang Mai University, Thailand.
Lei Ye is a PhD candidate in <strong>the</strong> School <strong>of</strong> Management at Massey University, New Zealand. She also
received her Master’s degree from Massey University. Her research interests include Chinese small and
medium enterprises, cultural and its impact on management, and <strong>the</strong> impact <strong>of</strong> government policies on
businesses in China
Jessica Yip is a MPhil student in <strong>the</strong> Department <strong>of</strong> Industrial and System Engineering <strong>of</strong> <strong>the</strong> Hong Kong
Polytechnic University. Her research interests include knowledge audit, intellectual capital and organizational
learning. She has been attached to <strong>the</strong> Mass Transit Railway Corporation (MTRC) and <strong>the</strong> Hong Kong and
China Gas Company Limited (Towngas), responsible for conducting various knowledge management
projects.
Pitipong Yodmongkon, <strong>the</strong> PhD Supervisor and Deputy Dean for Research & <strong>International</strong> Relations <strong>of</strong>
College <strong>of</strong> Arts, Media and Technology <strong>of</strong> Chiang Mai University, Thailand. He got his PhD in Knowledge
Management from Chiang Mai University, Thailand.
Aboubakr A. Moteleb Zade Consultant, researcher & lecturer in knowledge management systems (KMS).
Consulted for various international organizations including <strong>the</strong> UN, <strong>the</strong> Industry Modernization Centre <strong>of</strong> <strong>the</strong>
EU, Japan <strong>International</strong> Cooperation Agency, Lloyds TSB and Panasonic. PhD and research published in
international conferences and journals resulted in a grounded methodology for developing KMS that deliver
value to organizations.
Mohd Zali is an I.T Development Manager in a global shipping organization. He is also pursuing his PhD in
<strong>the</strong> area <strong>of</strong> Knowledge Management in collaborative S<strong>of</strong>tware Maintenance in Universiti Putra Malaysia. As
an avid cyclist and keen carpenter, he finds it a challenge to balance <strong>the</strong> work, sport, hobby and study. He’s
hoping to complete <strong>the</strong> PhD this year.
Kürşad Zorlu graduated in Public Administration at Selçuk University, Turkey in 1998. He completed his
Ph.D in Management and Organization Science at Kırıkkale University in 2009. He currently works as
Chairman <strong>of</strong> <strong>the</strong> Ahi Evran University Department <strong>of</strong> Business Management in <strong>the</strong> Turkey. His research
focuses on KM discipline and applications, productivity, SMEs, organizational behaviour and Central Asia.
xx

Manpower Discipline Based on Knowledge Skills: The
Case <strong>of</strong> a Consulting Company in <strong>the</strong> Iranian Commercial
Marine Industry
Peyman Akhavan, Reza Hosnavi, and Amir Pezeshkan
Iran University <strong>of</strong> Science and Technology, Tehran, Iran
akhavan@iust.ac.ur
r_hosnavi@yahoo.com
amir_pezeshkan@yahoo.com
Abstract: In today’s world, some industries have been shifting to <strong>the</strong> knowledge based industries. Marin industry
as a knowledge-dependent industry in which <strong>the</strong> knowledge and technology changes have a noticeable pace, is
a good example <strong>of</strong> <strong>the</strong> knowledge based industries. In knowledge based organization and industries, <strong>the</strong>
knowledge manpower plays <strong>the</strong> most important role in <strong>the</strong> organization. In fact, <strong>the</strong> knowledge workers are <strong>the</strong>
real owner <strong>of</strong> <strong>the</strong> organization’s knowledge domains. So, to achieve a sustainable competitive position,
organizations in commercial marine industry have to articulate suitable human resources strategies. In this
article, a practical approach is defined to evaluate <strong>the</strong> knowledge capabilities based on which <strong>the</strong> appropriate
strategies for manpower can be made. The case <strong>of</strong> this article is a consulting company which is working in
commercial marine industry area in Iran. As <strong>the</strong> result <strong>of</strong> doing this research, this company articulates suitable
strategies for its manpower after identification <strong>of</strong> <strong>the</strong> knowledge capabilities and domains available in <strong>the</strong>
organization. According to this process, <strong>the</strong> manpower <strong>of</strong> <strong>the</strong> company is divided to 4 categories: workers who
should be trained, workers who should be maintained and promoted, workers who should be dismissed, and
specialists who should be hired due to knowledge requirements <strong>of</strong> <strong>the</strong> organization. The results <strong>of</strong> this study can
highlight <strong>the</strong> roadmap <strong>of</strong> manpower strategy definition and application based on employees’ knowledge skills,
which can be beneficial for both academics and practitioner in knowledge management and human resource
strategic planning areas.
Keywords: manpower, knowledge skills, human resource strategies, commercial marine industries, Iran
1. Introduction
Nowadays, organizations are being transformed to knowledge based organization. Knowledge and
knowing are not competing, but complementary and mutually enabling (Currie and Kerrin, 2004) and
knowledge is regarded as <strong>the</strong> most important resource <strong>of</strong> competitive advantage in organizations
ei<strong>the</strong>r large ones or SMEs (Renzl, Matzler and Hinterhuber, 2006; Akhavan and Jafari, 2008; Jafari et
al, 2007). Knowledge is prerequisite to creating products or services, an essential input, a "silent
production factor" (Lugger, 2001).
In this knowledge-driven economy, organizations’ intangible assets are increasingly becoming a
differentiating competitive factor (Akhavan et al, 2006), particularly in services industries, and even at
national level (Akhavan and Jafari, 2006; Jafari and Akhavan, 2007). Indeed, intangible assets such
as trademarks and companies’ reputation, and skills pertaining to employees’ know-how and <strong>the</strong>
corporate culture, are both recognised as <strong>the</strong> quintessence <strong>of</strong> competitive advantage (Nahapiet and
Ghoshal, 1998)
We can survey this transformation in organization from two perspectives:
First perspective is <strong>the</strong> importance <strong>of</strong> knowledge in new organizations. Organizations are more
concerned about building <strong>the</strong> knowledge assets for <strong>the</strong>ir competiveness (Singh & Kant, 2008).
Therefore obtaining, preserving and developing suitable knowledge domains are vital for <strong>the</strong>m.
The second perspective is <strong>the</strong> role <strong>of</strong> human resources management (HRM) in new organizations.
The 1980s saw <strong>the</strong> emergence <strong>of</strong> <strong>the</strong> concept <strong>of</strong> strategic HRM. Biswas and Cassell (1996) cited that:
“Increased competition in both national and global arenas has forced managers to reconsider <strong>the</strong>
management <strong>of</strong> all resources within <strong>the</strong> organization, paying specific attention to <strong>the</strong> effective
management <strong>of</strong> <strong>the</strong> human resource, leading to declarations such as people are our most valuable
asset”.
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Peyman Akhavan et al.
In today’s business world, most <strong>of</strong> traditional capital and resources can be copied by o<strong>the</strong>r
competitors and are available among most <strong>of</strong> <strong>the</strong>m and since an organizational resource can creates
competitive advantage when it is unique, <strong>the</strong> organizations cannot rely on <strong>the</strong>se resources as <strong>the</strong>
makers <strong>of</strong> <strong>the</strong>ir competitive advantages. In this situation innovative knowledge can be a reliable
advantage for an organization in competition. The important point is that <strong>the</strong> workers are <strong>the</strong> owner <strong>of</strong>
this knowledge who create and use it. Strategic Human Resource Management (SHRM) considers
workers as strategic resources in organization and its goal is aligning <strong>the</strong>ir functions and performance
to organization’s strategic goals and plan. SHRM specially in knowledge based organization can
make such atmosphere in which workers create innovative knowledge related to organizational goals
and use it to make organization more competitive.
Commercial marine industry, because <strong>of</strong> <strong>the</strong> its fast developing technologies and knowledge domains,
can be categorized as one <strong>of</strong> <strong>the</strong> knowledge based organizations. In this article, authors has tried to
develop a framework by which <strong>the</strong> knowledge based organizations can decide about <strong>the</strong>ir manpower
and as a case we select one <strong>of</strong> <strong>the</strong> organizations working in <strong>the</strong> commercial marine industries in Iran.
The main tools in suggested framework are knowledge maps and <strong>the</strong> framework has been examined
in a commercial marin company which by following <strong>the</strong> suggested framework could identify its
knowledge requirements and also evaluate its manpower’s knowledge capabilities and assets and
<strong>the</strong>n by combining this information it was able to make suitable strategic decision about its workers.
As mentioned, in this paper we are concerning with two major concepts. First, concepts <strong>of</strong> <strong>the</strong>
manpower strategies and second, concepts about knowledge management and its tools we need for
developing <strong>the</strong> framework.
2. Strategic manpower management: Concept and definition
In this section, some definitions <strong>of</strong> SHRM are mentioned and <strong>the</strong>n with considering <strong>the</strong> conceptual
linkage between HRM and HR strategy, <strong>the</strong> main HR strategies are explained. The definitions below
are about this concept:
Strategic HRM is <strong>the</strong> key to improve business performance within which <strong>the</strong>re is comprehensive
coverage <strong>of</strong> <strong>the</strong> various definitions and approaches to HRM, strategy and strategic HRM
(Armstrong and Baron, 2002).
All those activities affecting <strong>the</strong> behavior <strong>of</strong> individuals in <strong>the</strong>ir efforts to formulate and implement
<strong>the</strong> strategic needs <strong>of</strong> business (Schuler, 1992).
Boxall and Purcell (2003) argue that strategic HRM is concerned with explaining how HRM
influences organizational performance. They also point out that strategy is not <strong>the</strong> same as
strategic plans. Strategic planning is <strong>the</strong> formal process that takes place, usually in larger
organizations, defining how things will be done. However strategy exists in all organizations even
though it may not be written down and articulated. It defines <strong>the</strong> organization’s behavior and how
it tries to cope with its environment.
“Effective HRM strategy systematically coordinates all individual HRM measures and implements
<strong>the</strong>m so as to directly influence employee attitude and behavior in a way that helps a business to
achieve its competitive strategy” (Huang, 2001).
2.1 Human resources management and human resources strategy
It is known that we are living in increasingly turbulent and complex business environment
characterized by continuous change (Heraty and Morely, 2000; McCracker and Wallace, 2000;
Drucker, 1992). In order to deal with <strong>the</strong>se challenges, both commentators and practitioners advise
that organizations must understand <strong>the</strong> important role that learning and development will play for <strong>the</strong>ir
survival (salamon and butler, 1990). Accordingly, every firm must identify <strong>the</strong> significance <strong>of</strong>
developing <strong>the</strong> knowledge, skills and abilities <strong>of</strong> its employees (Morgan, 1991). The focus <strong>of</strong> human
resource training is placed on developing people who are capable <strong>of</strong> tapping internal and external
information and turning it into useful organizational knowledge (López, Peón and Ordás, 2006). In this
situation Human resource strategy has come to play a vital role in enhancing a firm’s competitive
advantage. Traditionally, companies did not grasp <strong>the</strong> fact that development and support <strong>of</strong> effective
human resources were crucial for success (Gannon, Flood, and Paauwe, 1999) but this present
realization is <strong>the</strong> direct result <strong>of</strong> intense competition; economic globalization, and <strong>the</strong> transformation <strong>of</strong>
most <strong>of</strong> <strong>the</strong> industrial countries to knowledge based societies. In fact, <strong>the</strong> industries <strong>of</strong> <strong>the</strong> future are
all based on brainpower (Thurow, 1999). New sources <strong>of</strong> wealth for business organizations are <strong>the</strong>
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Peyman Akhavan et al.
brains, knowledge and skills <strong>of</strong> employees and workers. In <strong>the</strong> era <strong>of</strong> globalization, knowledge
workers are <strong>the</strong> real assets; <strong>the</strong> real creators <strong>of</strong> wealth. Organizations traditionally owned controlled
capital and property. In <strong>the</strong> 21st century, however, organizations do not own intelligence; <strong>the</strong> owners
are <strong>the</strong> people who work for <strong>the</strong> organization. This raises a real challenge to <strong>the</strong> “traditional”
organizations, ways <strong>of</strong> conducting <strong>the</strong>ir affairs. In today’s business environment, organizations’
primary human resource strategy is to train and educate workers; nurturing intelligence (Ali et al,
2000). We can say that human resource should be considered as a strategic factor, not only for <strong>the</strong>
role it plays in putting managerial strategy into effect, but also for <strong>the</strong> potentiality it becomes a source
<strong>of</strong> sustainable competitive advantage (Wang and Shyu, 2008). Over <strong>the</strong> past decade, HR researchers
and practitioners have focused <strong>the</strong>ir attention on o<strong>the</strong>r important questions. First, how does an
organization adopt a strategic approach to HRM and what are <strong>the</strong> determinants, and how is HR
strategy formulated? Researches denoted that for organizational practitioners who are looking for
ways to gain a competitive advantage, <strong>the</strong> implication <strong>of</strong> HR strategic choices for company
performance is certainly <strong>the</strong> key factor.
2.2 Human resource issues and strategies
Hax and (1996) cited that major categories <strong>of</strong> decision link to human resources are divided into 7
main categories as “human resource intelligence”, “selection, promotion and placement”, “appraisal”,
“rewards”, “management development”, “labor relation and voice” and human resource management
organization and managerial infrastructure.
In figure 1 we can see major issues that are about and around <strong>the</strong> human resource so <strong>the</strong>y are basis
<strong>of</strong> strategies which can be developed in organization in various situations. According to figure 4 in one
hand and Armstrong (2001) in ano<strong>the</strong>r hand, we can summarize <strong>the</strong> main human resources strategies
in 3 categories as:
Encouragement and Promotion
Training and Development
Ejection and Replacement
It is important to mention that in each situation and in each business strategy and mission, a suitable
human resource strategy should be selected.
Human resource management intelligence: oriented at understanding <strong>the</strong> practices <strong>of</strong> management
prevailing in human resource markets, and <strong>the</strong> expected changes in <strong>the</strong>m. Important issues are: reward
structures, levels or compensations for different positions and jobs, alternatives for training and capacities
development, changes in legislation related to human resources management, trends in unionization,
external focuses <strong>of</strong> attraction <strong>of</strong> key specialists, obsolescence <strong>of</strong> skills in lower level personnel, and
retraining practices.
Selection, Promotion and placement: for managing <strong>the</strong> flow <strong>of</strong> people in, through, and out <strong>of</strong> <strong>the</strong>
organization, and matching available human resources to jobs in <strong>the</strong> organization.
Appraisal: for evaluating <strong>the</strong> performance <strong>of</strong> people within <strong>the</strong> organization, thus enabling <strong>the</strong> proper
allocation <strong>of</strong> rewards, <strong>the</strong> design <strong>of</strong> effective management development programs, <strong>the</strong> maintenance <strong>of</strong>
current inventory <strong>of</strong> talent, and <strong>the</strong> proper promotion and placement <strong>of</strong> personnel.
Rewards: providing compensation in different forms, such as: monetary, promotion, management praise,
career opportunities, appreciation form customers, personal sense <strong>of</strong> well-being, opportunities to learn,
security, responsibility, respect and friendship with coworkers.
Management development: creating mechanisms to enhance skills, promotional opportunities, and career
paths.
Labor/employee relation and voice, aimed at establishing a cooperative climate between managers and
employees.
Human resource management organization and managerial infrastructure, focused on defining <strong>the</strong>
location <strong>of</strong> human resources management in <strong>the</strong> organizational structure, and <strong>the</strong> procedures and systems
required for its smooth administration, mainly <strong>the</strong> responsibilities that fall in a centralized human resource
unit, and <strong>the</strong> participation required from o<strong>the</strong>r units <strong>the</strong> firm.
Figure 1: Major categories <strong>of</strong> decisions link to human Source: Hax & Majluf, 1996
3. Knowledge maps
Definition and application
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Peyman Akhavan et al.
Knowledge <strong>of</strong> an organization can be segmented into different topics or knowledge areas (H<strong>of</strong>er,
2008). Speel (1999) defined knowledge mapping as <strong>the</strong> process, method and tools for analyzing
knowledge areas in order to discover features or meaning and to visualize <strong>the</strong>se in a comprehensive,
transparent form, such that <strong>the</strong> business relevant features are clearly highlighted. In ano<strong>the</strong>r opinion,
Eppler (2001) defined <strong>the</strong> terms knowledge map or knowledge cartography are as a visual
architecture <strong>of</strong> knowledge domain that enables us to examine <strong>the</strong> knowledge on a global scale and
from different perspectives.
Grey (1999) argued that, a knowledge map is a navigation aid to explicit and tacit knowledge,
illustrating how knowledge flows throughout an organization.
In o<strong>the</strong>r definition a knowledge map is a kind <strong>of</strong> influence diagram representing <strong>the</strong> possible actions a
person may take and <strong>the</strong> information or knowledge that person possessed when he/she took <strong>the</strong>
actions (Howard, 1989).
Davenport and prusak (1998) note that developing a knowledge map involves locating important
knowledge in <strong>the</strong> organization and <strong>the</strong>n publishing some sort <strong>of</strong> list or pictures that shows where to
find it. Knowledge map typically point to people as well as document and database.
Knowledge maps are visual representations <strong>of</strong> “knowledge about knowledge”, ra<strong>the</strong>r than <strong>of</strong> <strong>the</strong>
knowledge itself. They provide abstract models <strong>of</strong> a domain that simplify a complex reality, downsize it
to <strong>the</strong> important aspects, add relevant information and thus help to find locations and <strong>the</strong> paths that
lead to <strong>the</strong>m (Jetter, 2006). Knowledge maps can be employed to analyze shifting knowledge
territories by codifying <strong>the</strong> different individual views or “mental models” people have about reality.
These models can be transferred to o<strong>the</strong>r people, assessed, updated, and improved, subsequently
leading to increasingly adequate shared mental models <strong>of</strong> reality (Schreyögg and Geiger, 2003) A
knowledge map assists individual employee, a team, or an organization unit in understanding and
using <strong>the</strong> knowledge available in an organizational setting (Eppler, 2006).
3.1 Types <strong>of</strong> knowledge maps
This section surveys <strong>the</strong> types <strong>of</strong> knowledge maps considering <strong>the</strong>ir application. The main purpose <strong>of</strong>
preparation <strong>of</strong> knowledge maps shows which type should be selected. The following types are
mentioned by Jetter (2006) as usual knowledge maps:
Hierarchical or Radial Knowledge Structure
Knowledge Structure Maps: Causal Maps
Knowledge Flow Map or Knowledge Application Map
Knowledge Development Map
Knowledge Source Maps
We will use this type <strong>of</strong> knowledge maps. The knowledge source map structures company experts
along relevant search criteria, such as <strong>the</strong>ir domains <strong>of</strong> expertise, proximity, seniority, or regional
distribution. Knowledge source maps denote knowledge types in organization, workers who have this
knowledge and where this knowledge is (Eppler, 2003). Jetter (2006) cited that Knowledge source
maps point towards <strong>the</strong> location <strong>of</strong> explicit, as well as tacit knowledge and are clearly intended for
detection purposes. When knowledge about <strong>the</strong> expertise <strong>of</strong> employees is available, it can, however,
also be used to assess capabilities in given knowledge domains. Figure 2 shows a simple knowledge
source map for a management consultant company that performs managerial projects.
4. Framework development
In this research, first, we studied <strong>the</strong> literature <strong>of</strong> knowledge mapping and human resource strategy.
Then regarding to available concepts <strong>of</strong> <strong>the</strong>se field we articulated our framework to develop an
approach by which organizations can articulate efficient strategic decisions about <strong>the</strong>ir manpower
regarding <strong>the</strong>ir knowledge capabilities and also according to <strong>the</strong> company’s business strategies. To
evaluate <strong>the</strong> suggested framework, we executed this framework in SDI Consulting Company whose
business is in commercial marine industry in Iran. This company has 31 employees and we tried to do
human resource strategy planning according to <strong>the</strong> suggested framework step by step. The results
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Peyman Akhavan et al.
showed that our developed framework can be used in real business world as a useful tool, for human
resource strategy planning, especially in knowledge based organizations.
Financial Management
Ms. Rock
Mr. Joe
Human Resource Management
Mr. Tom
Ms. Kant
Strategy Planning
Mr. Pong
Mr. Jim Mrs. Kate
Mr. Bean
Mr. Edward
Mr. Tom
Quality Management
Mrs. Walker
Organizational
Architecture
Figure 2: Knowledge source map Adapted from Eppler (2003
In this section <strong>of</strong> paper we endeavor to develop a framework for planning human resource strategy
based on organization’s knowledge position considering knowledge maps. So, as <strong>the</strong> first step we can
see <strong>the</strong> zero level <strong>of</strong> <strong>the</strong> framework in figure 3, which shoe <strong>the</strong> main components <strong>of</strong> <strong>the</strong> framework
and <strong>the</strong>ir relation.
Business Strategy
Manpower Knowledge
capability
HR Strategy
Figure 3: Zero level <strong>of</strong> conceptual framework
In <strong>the</strong> figure 4 we can see <strong>the</strong> next level which shows <strong>the</strong> framework completely.
As it can be understood from <strong>the</strong> figure 4, <strong>the</strong> suggested framework has 4 steps. First, <strong>the</strong> knowledge
requirements <strong>of</strong> <strong>the</strong> organization should be extracted from <strong>the</strong> business strategies. In this step, <strong>the</strong>
experts <strong>of</strong> <strong>the</strong> organization should survey <strong>the</strong> business strategies and determine what knowledge
domains organization for implementation each strategy. These domains should be classified. Second,
<strong>the</strong> department <strong>of</strong> <strong>the</strong> human resource management in <strong>the</strong> organization should articulate a knowledge
source map. As mentioned, a knowledge source map demonstrates what knowledge domains are
available in <strong>the</strong> organization and in what level are <strong>the</strong>y? Who has each knowledge domain in <strong>the</strong>
organization?
After <strong>the</strong>se two steps, <strong>the</strong> ga<strong>the</strong>red information should be integrated. In this step, <strong>the</strong> knowledge
requirements <strong>of</strong> <strong>the</strong> company should be compared with <strong>the</strong> available knowledge domains in <strong>the</strong>
company. In this step, we try to identify <strong>the</strong> gap which Zack (1999) has named “knowledge gap”.
5

Peyman Akhavan et al.
And finally based on knowledge situation <strong>of</strong> <strong>the</strong> organization, 4 strategic decisions (maintain and
promote, dismiss, train and development, and employment).
Business
Strategy
Organization’s
Knowledge
capability
Extracting <strong>the</strong>
organization’s
knowledge
requirement
Forming a
knowledge
source map
Figure 4: First level <strong>of</strong> <strong>the</strong> conceptual
Integration
<strong>of</strong> <strong>the</strong>
information
5. Case study: SDI Consulting Company
HR
Strategies
Maintain &
Promote
Train &
Development
Dismiss
Employment
SDI Consulting Company is a knowledge based organization which works in commercial marine
industry in Iran. Commercial marine industry is one <strong>of</strong> <strong>the</strong> most knowledge based businesses in Iran
because it contains various and pr<strong>of</strong>essional fields which change rapidly.
SDI Consulting Company was established in 1999. This firm has 13 workers. The main activity <strong>of</strong> this
organization is consulting service providing about production and maintenance in commercial marine
industry.
After this short introduction for SDI Consulting Company, we start describing <strong>of</strong> <strong>the</strong> implementation <strong>of</strong>
<strong>the</strong> suggested framework in this company step by step according to <strong>the</strong> proposed framework.
5.1 Step 1
In this step it is mentioned that <strong>the</strong> knowledge requirements <strong>of</strong> <strong>the</strong> company should be extract from
business strategy. So, at first, we need to access to <strong>the</strong> business strategy <strong>of</strong> <strong>the</strong> SDI Consulting
Company. This company has prepared a strategic plan in SDI. The main strategies which have been
determined in this document are:
Being among top 3 consulting companies in <strong>the</strong> Rescue and Safety systems in Iran.
Establishing a SBU within <strong>the</strong> company in <strong>the</strong> field <strong>of</strong> communication system which will be able to
provide consultation about <strong>the</strong> maintenance <strong>of</strong> this system.
Providing <strong>the</strong> consulting service to <strong>the</strong> firms which are going to produce mast system equipment.
A questionnaire was prepared and published among <strong>the</strong> company’s experts whom CEO was chosen.
According to this questionnaire, experts should determine <strong>the</strong> knowledge domains required for each
strategy to implement. Fur<strong>the</strong>rmore, experts in each domain identify <strong>the</strong> level <strong>of</strong> <strong>the</strong> workers’
knowledge which organization needs.
Table 1 summarizes <strong>the</strong> result <strong>of</strong> analyzing <strong>the</strong> experts’ opinion.
5.2 Step 2
In this step, we need to identify <strong>the</strong> knowledge types available in <strong>the</strong> organization and workers who
own this knowledge and <strong>the</strong> level <strong>of</strong> <strong>the</strong> knowledge available in <strong>the</strong> organization. Therefore a
knowledge source map which shows knowledge domains, workers who have <strong>the</strong>m and <strong>the</strong>ir level in
each domain, was articulated. Figure 5 illustrates <strong>the</strong> SDI Company’s knowledge source map.
In each part <strong>of</strong> <strong>the</strong> diagram showed in figure 5, <strong>the</strong> knowledge domains available in <strong>the</strong> organization
can be seen and in <strong>the</strong> colored part <strong>of</strong> each section <strong>the</strong> number <strong>of</strong> workers which are available in <strong>the</strong>
6

Peyman Akhavan et al.
appropriate level have been specified. To determine <strong>the</strong> level <strong>of</strong> workers, supervisors and middle
managers was had to give a score from 1 to 9 to <strong>the</strong> workers in <strong>the</strong>ir units. Table 2 shows <strong>the</strong>
meanings <strong>of</strong> <strong>the</strong> numbers.
Table 1: Strategies and <strong>the</strong>ir knowledge requirements
Strategy Knowledge requirements Level <strong>of</strong> <strong>the</strong> knowledge
Being among top 3 consulting
companies in <strong>the</strong> Engine, Rescue, and
Safety systems in Iran
Establishing a SBU within <strong>the</strong> company
in <strong>the</strong> field <strong>of</strong> satellite system
Providing <strong>the</strong> consulting service to <strong>the</strong>
firms which are going to produce
electric and communication system
equipment.
Beginner
Specialist
Expert
Sonar
Alarm systems
Figure 5: SDI knowledge source map
Table 2: leverage <strong>of</strong> <strong>the</strong> knowledge domains
2
4
Alarm systems Expert
Towing and tracker devices Beginner
Diesel engine Specialist
Intercom system Specialist
Radio telephones Expert
Satellite communication system Specialist
1
VHF and HF antennas Expert
Electric drive Expert
Sonar Specialist
Radar Beginner
1
VHF and HF antennas
2
Radio telephones
1
Electric drive
Number Level <strong>of</strong> <strong>the</strong> knowledge domain
1-3 Beginner
4-6 Specialist
6-9 Expert
7
2

5.3 Step 3
Peyman Akhavan et al.
As illustrated in figure 4, in this step <strong>the</strong> information ga<strong>the</strong>red in previous steps should be integrated.
So, <strong>the</strong> knowledge source map should be compared with <strong>the</strong> table 1 which contains <strong>the</strong> knowledge
requirement <strong>of</strong> <strong>the</strong> SDI Company. After this comparison, we formed 3 tables as follow:
1. Table 3: In this table we placed <strong>the</strong> number <strong>of</strong> persons whose knowledge and its level is showed in
<strong>the</strong> table 1 as <strong>the</strong> required knowledge <strong>of</strong> <strong>the</strong> SDI Company.
Table 3: Workers who have suitable knowledge
Knowledge domains
Beginner
workers
Specialist Expert
Sonar 2 1
VHF and HF antennas 1
Radio telephones 2
2. Table 4: This table contains <strong>the</strong> name <strong>of</strong> <strong>the</strong> persons whose knowledge is identified needed for SDI company,
based its strategies, in table 1 but <strong>the</strong>ir levels in those knowledge domains are lower than those are needed.
Table 4: workers whose knowledge level is lower than needed
Knowledge domains
Beginner
workers
Specialist Expert
VHF and HF antennas 4
Alarm system 1
Electric drive 2
3. Table 5: This is table accommodating <strong>the</strong> knowledge domains determined as required fields to achieve future
goals and strategies but <strong>the</strong>re is no worker in organizations who has <strong>the</strong>se knowledge fields.
Table 5: required knowledge domains which are not available in SDI company
5.4 Final step
Knowledge domains
Beginner
Level
Specialist Expert
Towing and tracker devices
Diesel engine
Intercom system
Satellite communication system
Radar
Finally, we should make suitable strategic decisions about <strong>the</strong> manpower <strong>of</strong> <strong>the</strong> SDI Consulting
Company. In previous step, in fact, we categorized personnel <strong>of</strong> <strong>the</strong> SDI Company according to <strong>the</strong>ir
knowledge compared with <strong>the</strong> organizational required knowledge. Therefore we can interpret that <strong>the</strong>
workers classified in each table have a same situation facing to <strong>the</strong> future organizational strategies
and plan so <strong>the</strong> same strategic decision can be made about <strong>the</strong>m in each group.
As mentioned before in this article, <strong>the</strong>re are 3 major strategies in manpower strategy planning. In this
step <strong>the</strong> main task is relating <strong>the</strong> worker groups to <strong>the</strong>se strategies.
In table 3 <strong>the</strong>re are employees whose knowledge and its level is matched to <strong>the</strong> future SDI company
knowledge requirements. As a result, <strong>the</strong>se workers are valuable and have enough competencies to
help organization for implementing its business strategy and compete to maintain and improve its
competitive position. The best strategy for this group is maintaining <strong>the</strong>m and enhancing <strong>the</strong>ir position
in <strong>the</strong> firm. These workers should be encouraged in financial and none financial ways.
After comparing <strong>the</strong> knowledge source map with table 1, we identified some workers whose
knowledge and pr<strong>of</strong>iciency is among company’s required knowledge domains but <strong>the</strong> extent to which
<strong>the</strong>y were familiar with those knowledge domains was insufficient for <strong>the</strong>m to help company efficiently.
If <strong>the</strong>se workers can be trained and <strong>the</strong>ir ability and knowledge can be developed <strong>the</strong>y will be reliable
8

Peyman Akhavan et al.
sources for company in future. The best decision for <strong>the</strong>m is designing suitable train and development
programs enhancing <strong>the</strong>ir knowledge levels.
In third step, after confirming <strong>the</strong> information <strong>of</strong> <strong>the</strong> company’s workers and its future knowledge
requirement we did not find any worker whose field <strong>of</strong> knowledge was not useful for company in <strong>the</strong>
future. So, in this time company has no dismiss decision for workers.
6. Conclusion
The main objective <strong>of</strong> this research is suggesting an approach by which organizations especially
knowledge based ones, can make suitable strategic decision about <strong>the</strong>ir manpower which is <strong>the</strong> main
goal and function <strong>of</strong> SHRM based on literature review. The framework developed during this research
enables <strong>the</strong> HR managers to manage <strong>the</strong>ir workers based on <strong>the</strong>ir knowledge abilities and assets
which is very vital to knowledge based firms as we saw in literature. Based on this ability which <strong>the</strong>
framework provide organizations can centralized <strong>the</strong>ir workers endeavor on future strategies and
plans.
Using <strong>the</strong> past researches result <strong>the</strong> suggested framework tries to relate <strong>the</strong> HR strategies to
businesses strategies, so resulted strategies can be implemented successfully and create
organizational values. .
However, this research like many o<strong>the</strong>rs researches has some limitations. The research has been
done in a consulting company, and it is hard to generalize <strong>the</strong> results for all kinds <strong>of</strong> organizations.
The study also does not consider different dimensions <strong>of</strong> strategic versus operational KM issues nor
does it consider KM process completely. Although it is not a comprehensive analysis <strong>of</strong> <strong>the</strong>
connections between HRM and KM; however, it can be assumed as a good first step in that direction
and <strong>the</strong> results <strong>of</strong> this study can highlight <strong>the</strong> roadmap <strong>of</strong> human resources strategy based on
employees’ knowledge capabilities.
Moreover, we can consider <strong>the</strong>se suggestions as fur<strong>the</strong>r study as well:
To streng<strong>the</strong>n this framework <strong>the</strong> knowledge aspect <strong>of</strong> human resources can be combined with
o<strong>the</strong>r aspects <strong>of</strong> <strong>the</strong>m in HR strategy planning and enrich it.
More implications are needed for better evaluation <strong>of</strong> this framework in similar and o<strong>the</strong>r kinds <strong>of</strong>
companies.
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10

Attitudes Towards Changes and Organisational Learning:
China and Turkey
Ruth Alas 1 , Maaja Vadi 2 , Halil Demirer 3 and Necdet Bilgin 3
1
Estonian Business School, Tallinn, Estonia
2
University <strong>of</strong> Tartu, Tartu, Estonia
3
Mustafa Kemal University, Hatay, Turkey
ruth.alas@ebs.ee
Abstract: Changes have become a normal part <strong>of</strong> life in organisations. Employees’ attitudes are considered an
indicator <strong>of</strong> <strong>the</strong> future success <strong>of</strong> an organisation (Hurst 1995). This paper studies <strong>the</strong> connections between
attitudes towards changes and organisational learning in Chinese and Turkish organisations. The paper starts
with a <strong>the</strong>oretical framework for <strong>the</strong> study, including literature about attitudes towards changes and organisational
learning. Special attention has been paid to institutional development in China and Turkey. This is followed by an
empirical study <strong>of</strong> Chinese and Turkish organisations. The empirical study <strong>of</strong> Chinese organisations and <strong>the</strong>
Turkish hotel industry indicated <strong>the</strong> importance <strong>of</strong> attitudes toward changes for organisational learning. The
scales for <strong>the</strong> measurement <strong>of</strong> organisational learning and attitudes towards changes were designed according to
<strong>the</strong> factor analysis. Attitudes towards change fall into two broad categories, which reflect <strong>the</strong> employees’ feelings
and dispositions with regard to interest in changes and <strong>the</strong>ir trust in change. Attitudes towards changes included
trust in change and an interest in changes. These attitudes toge<strong>the</strong>r predict almost half <strong>of</strong> organisational learning.
The impact <strong>of</strong> socio-demographic characteristics was tested. Although socio-demographic characteristics
differentiate in various respects, <strong>the</strong>se do not play an important role in <strong>the</strong> prediction <strong>of</strong> organisational learning.
When performing <strong>the</strong> regression analysis (dependent variable organisational learning) <strong>the</strong> Adjusted R Squares
were .54 for <strong>the</strong> both samples, while after entering <strong>the</strong> socio-demographic characteristics it decreased in both <strong>the</strong>
Turkish and Chinese samples. At <strong>the</strong> same time, generic characteristics (gender and age) and additionally, <strong>the</strong>
education and type <strong>of</strong> contract do not predict organisational learning in this study. Significant differences
emerged between <strong>the</strong> two countries. Attitudes towards changes are <strong>the</strong> main predictors <strong>of</strong> organisational learning
in Turkey, and <strong>the</strong>se predict a higher assessment <strong>of</strong> <strong>the</strong> organisational learning scale. In China, attitudes also
predict organisational learning, but contrary to Turkey, <strong>the</strong>se predict a lower level <strong>of</strong> assessment <strong>of</strong> <strong>the</strong>
corresponding scale.
Keywords: China, Turkey, attitudes towards change, organisational change, organisational learning
1. Introduction
Eagly and Chaiken (1993) define attitudes as “a psychological tendency that is expressed by
evaluating a particular entity with some degree <strong>of</strong> favour or disfavour”. Attitudes serve as schemas
that are needed to enable people to represent and organise <strong>the</strong> information <strong>the</strong>y encounter. Katz
(1960) named this as “knowledge function” <strong>of</strong> attitudes that is very important for an individual in
making decisions in a rapidly changing work environment.
Change requires learning new skills and adapting to new situations. The universal challenge <strong>of</strong>
change is to learn how organisations and employees can change faster than business conditions
change in order to become more competitive (Beatty and Ulrich 1993). In literature, an organisation’s
ability to adapt to change is enhanced through <strong>the</strong> learning organisation, <strong>the</strong> anti<strong>the</strong>sis <strong>of</strong> <strong>the</strong>
traditional bureaucratic organisation (Driver 2002).
The aim <strong>of</strong> this paper is to study <strong>the</strong> connections between attitudes towards changes and
organisational learning in Chinese and Turkish organisations.
2. Theoretical framework
2.1 Attitudes towards organisational changes
Attitude towards change is defined as “a person’s cognition <strong>of</strong> change, affective reactions to change,
and behavioural tendency towards change (Dunham et al. 1995). Understanding how individuals
perceive <strong>the</strong> possible outcomes <strong>of</strong> a change in <strong>the</strong> organisation may help managers to make better
intervention designs to manage <strong>the</strong> resistance to <strong>the</strong> change. An individual’s attitude towards change
and its impacts are examined as employee involvement, employee participation or support in <strong>the</strong>
context <strong>of</strong> organisational change, which includes restructuring, downsizing, self-empowered teams,
automation and some o<strong>the</strong>r changes in organisations. Mullan and Gorman (1972) define openness
towards change as support for and a positive effect on <strong>the</strong> potential consequences <strong>of</strong> <strong>the</strong> change.
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Ruth Alas et al.
In motivating individuals to support changes, <strong>the</strong> first priority should be given to keep employees in
<strong>the</strong> organisation. To do so, <strong>the</strong> positive affective commitment <strong>of</strong> individuals to <strong>the</strong> organisation should
be attained, which in turn result in satisfaction at <strong>the</strong> workplace. Since, affective commitment is
viewed as a good indicator <strong>of</strong> intention to stay or leave <strong>the</strong> organisation (Meyer and Allen 1997).
2.2 Organisational learning
The ability to adapt to change is enhanced through learning, both at individual and organisational
levels, which in turn could foster a competitive position through improvements in efficiency,
productivity and innovation (Garvin 1993; Senge 1992; Soloman, 1994). Both <strong>the</strong> research and <strong>the</strong>ory
on management admit that improving <strong>the</strong> adapting skills <strong>of</strong> an organisation largely depends on its
ability to learn (Stata, 1989).
Senge (1992) defined a learning organisation as “an organisation that is continually expanding its
capacity to create its future”. He argues that unless people change <strong>the</strong>ir thinking and interactions, <strong>the</strong>
organisation cannot change or learn on its own. Senge also claims that individual learning does not
guarantee organisational learning. Organisational learning occurs through <strong>the</strong> sharing <strong>of</strong> experience
and dialogues among different employees in an organisation.
The barriers to learning in <strong>the</strong> change process in areas mentioned above have <strong>the</strong>ir roots in <strong>the</strong>
culture and structure <strong>of</strong> <strong>the</strong> organisation: focusing on fragmentation ra<strong>the</strong>r than systems, emphasising
competition over collaboration, and tending to be reactive ra<strong>the</strong>r than proactive (Salaman and Butler
1999; Keys, et al. 1996). In overcoming <strong>the</strong>se barriers and promoting organisational learning,
management <strong>of</strong> <strong>the</strong> organisations should facilitate certain factors (systems perspective, climate <strong>of</strong>
openness, continuous education, operational variety etc.) assuming that close links between work and
learning will inevitably continue (Moingeon and Edmondson 1996; Blackman and Lee-Kelley 2006).
2.3 Institutional impact on changes
Previous studies have shown <strong>the</strong> institutional impact on <strong>the</strong> connections between attitudes towards
change and organisational learning (Alas and Vadi 2006; Alas et al. 2008), as <strong>the</strong> authors study
organisational changes and learning in an institutional framework. Institutions include both a structural
and social component. The structural component is connected with institutions as institutionalised
forms <strong>of</strong> ‘external social constraints’ and <strong>the</strong> social component may take <strong>the</strong> form <strong>of</strong> ‘cultural rules’
(Meyer et al. 1994).
2.3.1 Institutional development in China
The Chinese economy, previously a relatively closed system, is on a reform path towards an open,
market-driven system. After <strong>the</strong> war and revolution, China experienced a recovery period <strong>of</strong> thirty
years from 1949 to 1978 (Qin 2005). In 1978, China initiated an experiment with private ownership
and opened up to <strong>the</strong> outside world (Waldman, 2004).
The economic reforms Deng Xiaoping started in 1978 have increasingly introduced market forces into
<strong>the</strong> socialist system. China’s emerging “network capitalism” represents a unique blend <strong>of</strong> Western
market capitalism and collectivist values (Boisot and Child 1996).
Owing to <strong>the</strong> reforms in <strong>the</strong> Chinese economy since <strong>the</strong> 1970s, a fundamental transition has
transformed <strong>the</strong> economic landscape <strong>of</strong> <strong>the</strong> People's Republic <strong>of</strong> China. One <strong>of</strong> <strong>the</strong> central aims <strong>of</strong> <strong>the</strong>
reforms in China is to improve <strong>the</strong> performance <strong>of</strong> <strong>the</strong> economy, which ultimately boils down to <strong>the</strong>
performance <strong>of</strong> <strong>the</strong> firm, especially <strong>the</strong> previously inefficient state-owned enterprises (SOEs) (Tan and
Tan 2003). Over <strong>the</strong> past several decades China has experienced significant changes in transforming
its bureaucratic system <strong>of</strong> state planning into a more market-oriented economic regime.
2.3.2 Institutional development in Turkey
In <strong>the</strong> 19th century <strong>the</strong> Ottoman Turks attempted to narrow <strong>the</strong> increasing gap that existed between
Europe and <strong>the</strong> Ottoman Empire in technological and scientific developments. This was carried out by
<strong>the</strong> “Tanzimat” reform movements, which proposed radical changes in <strong>the</strong> society (Altıparmak 66;
Kabasakal and Bodur 2002). The Ottoman Turks obviously failed to transform <strong>the</strong>ir administrative
structures towards capitalism, which would have enabled entrepreneurship to prosper (Ülgener 1951).
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Ruth Alas et al.
During <strong>the</strong> 1930s <strong>the</strong> newly founded Republic pursued westernisation policies based on <strong>the</strong> principles
<strong>of</strong> modernisation, secularism and nationalism (Kabasakal and Bodur 2002). Import substitution
policies were pursued until <strong>the</strong> 1980s, which were a common aspect <strong>of</strong> <strong>the</strong> socialist economies <strong>of</strong> <strong>the</strong>
era. Industrialisation was limited to <strong>the</strong> Marmara region, an area under government protection.
Subsequent to <strong>the</strong> 1980s, structural reforms in <strong>the</strong> liberalisation process were carried out, thus
reducing state intervention. Integration into <strong>the</strong> conditions <strong>of</strong> <strong>the</strong> global economy was achieved by
radical liberalisation policies in <strong>the</strong> domestic economy (Akyıldız ve Eroğlu 2004). Integration into <strong>the</strong>
European and common market was appreciated by industrialists (Pamuk 2007).
The research question deals with how attitudes towards changes influence organisational learning in
China and Turkey and where <strong>the</strong> similarities and differences lie. The authors apply <strong>the</strong> institutional
<strong>the</strong>ory when discussing <strong>the</strong> results.
3. Empirical study
Research was conducted in 29 Chinese companies in 2005-2006 with 1034 respondents. The
companies were from two areas: Peking and Jinan. From among <strong>the</strong> respondents, 46.4% were from
production companies, 7.2% from consulting companies, 5.2% from <strong>the</strong> retail and wholesale industry,
2.1% from telecommunications, 1.2% from transportation and <strong>the</strong> remainder were from <strong>the</strong> service
sector, including hotels and insurance companies. Of <strong>the</strong> respondents, 40.9% were men and 51.1%
women, and 79.4% were younger than 36 years.
Concerning <strong>the</strong> Turkish sample, 1126 respondents were from 40 hotels located throughout Turkey.
Male respondents constituted 64.7% and female respondents constituted 35.3% and89.4% were
younger than 36 years.
3.1 Measures
Respondents filled out a questionnaire about <strong>the</strong>ir attitudes towards changes and a questionnaire
about organisational learning. The questions were translated from English into Mandarin and Turkish
and retranslated into English. The retranslations were compared to <strong>the</strong> original English version. In
order to make <strong>the</strong> questions understandable to employees at all levels <strong>of</strong> <strong>the</strong> organisations, specific
management terms were not used in <strong>the</strong> questions.
3.1.1 Attitudes towards changes
The authors used a questionnaire designed on <strong>the</strong> basis <strong>of</strong> <strong>the</strong> statements about satisfaction with
leadership, with <strong>the</strong> job itself and with previous changes (Alas and Vadi, 2004). The entire
questionnaire contains 15 items on a 5-point scale, which forms four subscales.
Table 1: The results <strong>of</strong> factor analysis <strong>of</strong> change attitudes
Component
1 2
How satisfied are you with <strong>the</strong> top managers <strong>of</strong> your company? ,810 ,157
Have <strong>the</strong> general objectives and development plans <strong>of</strong> your
organisation been explained?
,799 ,156
How necessary in your opinion are <strong>the</strong> changes in <strong>the</strong>
organisation?
,758 ,122
How actively does your management solve company problems? ,699 ,228
Do you believe that <strong>the</strong> planned reforms influence <strong>the</strong>
performance <strong>of</strong> <strong>the</strong> organisation positively?
,678 ,165
Do you trust <strong>the</strong> management and think that <strong>the</strong>ir decisions are
<strong>the</strong> best for <strong>the</strong> organisation?
,650 ,187
Do you have enough information about <strong>the</strong> reasons, content and
objectives <strong>of</strong> <strong>the</strong> changes?
,192 ,744
How satisfied are you with your present position in this
organisation?
,169 ,738
Will your work conditions be improved after <strong>the</strong> changes? ,145 ,726
Two components are identified in <strong>the</strong> questionnaire according to <strong>the</strong> factor analysis. The first
component is named trust in changes and <strong>the</strong> second called interest in changes. These two
13

Ruth Alas et al.
components cover 57 per cent <strong>of</strong> variation and reliability was .84 (six items) and .63 (three items)
respectively. Therefore <strong>the</strong>se are considered as <strong>the</strong> scales that measure a corresponding
phenomenon. The impact <strong>of</strong> <strong>the</strong> socio-demographic characteristics was tested by using Krutskal-
Wallis Test and here samples are tested separately, which means that a variation in attitudes is
analysed in <strong>the</strong> Turkish and Chinese sample individually. Characteristics differentiate <strong>the</strong> scales for
<strong>the</strong> both Chinese and Turkish samples. Trust in changes differs along all <strong>the</strong> socio-demographic
characteristics (except pr<strong>of</strong>essional interest) in <strong>the</strong> Chinese sample, while for <strong>the</strong> Turkish sample a
totally opposite picture emerges and <strong>the</strong>ir pr<strong>of</strong>essional interest is <strong>the</strong> only characteristic that shows
differences. Here we see that one sample shows homogeneous understanding (Turkey) and <strong>the</strong> o<strong>the</strong>r
presents diverse opinions about trust in changes. Interest in changes varied along age, tenure,
opposition, and pr<strong>of</strong>essional interest in both samples, while gender and education do not differentiate
this scale in Turkey and <strong>the</strong> type <strong>of</strong> contract does not differentiate interest in changes in China. In
respect to interest in changes <strong>the</strong> pattern <strong>of</strong> variation along socio-demographic characteristics is not
so clear cut as it is for <strong>the</strong> trust in changes.
3.1.2 Organisational learning
To evaluate organisations` learning abilities <strong>the</strong> authors used <strong>the</strong> measure developed by Alas and
Sharifi (2002). Authors let respondents evaluate 20 indicators <strong>of</strong> organisational learning on a 10-point
scale. The factor analysis allowed <strong>the</strong>m to construe one component solution because all <strong>the</strong>
statements were very tightly related to each o<strong>the</strong>r. For <strong>the</strong> twenty statements <strong>the</strong> factor loading varied
from .87 to .66. The reliability <strong>of</strong> <strong>the</strong> scale was very high (.97) and m= 6.06, SD= 1.99. Here again a
very different picture emerges if one considers <strong>the</strong> socio-demographic characteristics. In <strong>the</strong> Chinese
sample all <strong>the</strong> characteristics (gender, age, education, tenure, contract, position, and pr<strong>of</strong>essional
interest) differentiate <strong>the</strong> assessment <strong>of</strong> <strong>the</strong> scale <strong>of</strong> organisational learning. In <strong>the</strong> Turkish sample,
only <strong>the</strong> pr<strong>of</strong>essional interest differentiates <strong>the</strong> assessment <strong>of</strong> <strong>the</strong> scale, while <strong>the</strong> o<strong>the</strong>r
characteristics do not play a role in <strong>the</strong> differentiation <strong>of</strong> respondents’ assessment <strong>of</strong> organisational
learning scale. One <strong>of</strong> <strong>the</strong> samples (Turkish) seems to be very homogeneous with respect to
organisational learning and <strong>the</strong> o<strong>the</strong>r (Chinese) presents <strong>the</strong> opposite tendency – <strong>the</strong> employees have
quite different and heterogeneous understandings about organisational learning.
3.2 Results
3.2.1 Attitudes towards organisational change and learning from <strong>the</strong> perspective <strong>of</strong> location
The analysis <strong>of</strong> attitudes and learning scales revealed that Turkish and Chinese samples may differ in
various respects. Therefore, it is reasonable to find both samples described from <strong>the</strong> perspective <strong>of</strong>
<strong>the</strong> characteristic features that have been studied. This analysis would present <strong>the</strong> possibility to
evaluate which specific groups <strong>of</strong> employees may have a particular disposition to organisational
learning. Table 2 presents results <strong>of</strong> comparisons (ANOVA analysis) for <strong>the</strong> Turkish sample and Table
3 for <strong>the</strong> Chinese sample.
Table 2: Comparisons <strong>of</strong> assessments <strong>of</strong> organisational learning and scales <strong>of</strong> organisational
change: Turkish sample
Learning Trust in changes Interest in changes
Gender males vs. females ↑ males vs. females ↑ -
Age …25 vs. 26-35 ↑ …25 vs. 26-35 ↑
…25 vs. 26-35 ↑
…25 vs. 36-45 ↑
Education - - -
Tenure Less than 1 year vs. 2-3
years ↑
Contract Permanent vs. temporary
↓
Position Top manager vs. middle
manager ↓
Top manager vs. frontline
manager ↓
Less than 1 year vs. 2-3
years ↑
Less than 1 year vs. 4-5
years ↑
Less than 1 year vs. 2-3
years ↑
Less than 1 year vs. 4-5
years ↑
Less than 1 year vs. 6-10
years ↑
16-20 years vs. more than
20 years ↑
Permanent vs. temporary ↓ Permanent vs. temporary
↓
Top manager vs. middle Top manager vs. middle
manager ↓
manager ↓
Top manager vs. front-line Top manager vs. technical
manager ↓
worker ↓
14

Pr<strong>of</strong>essional
interests
Top manager vs.
technical worker ↓
Front-line manager vs.
technical worker ↓
Ruth Alas et al.
Top manager vs. technical
worker ↓
Deputy top manager vs.
technical worker ↓
Front-line manager vs.
technical worker ↓
Middle manager vs.
technical worker ↓
Front-line manager vs.
technical worker ↓
Learning Trust in changes Interest in changes
Have interest vs. not have
interest ↓
Have interest vs. not have
interest ↓
Have interest vs. not have
interest ↓
Note: The arrows indicate a representative <strong>of</strong> what role has higher or lower assessment <strong>of</strong> a certain
scale.
Education does not play a role in <strong>the</strong> evaluation <strong>of</strong> attitudes and organisational learning and gender in
<strong>the</strong> interest towards change in <strong>the</strong> Turkish sample. At <strong>the</strong> same time, <strong>the</strong> type <strong>of</strong> contract and
existence <strong>of</strong> pr<strong>of</strong>essional interest differentiate respondents on all <strong>the</strong> scales, while employees with
temporary work assignments and without pr<strong>of</strong>essional interests have evaluated both attitudes and
organisational learning lower than <strong>the</strong>ir counterparts having opposite characteristics. Females also
evaluate learning and trust in changes higher than males and older employees who tend to assess a
focused phenomenon higher than younger respondents. In respect to position, it appears that a
higher organisational role is related to higher scores <strong>of</strong> scales <strong>of</strong> attitudes and learning.
Table 3 illustrates that Chinese employees have expressed diverse understandings about <strong>the</strong>
analysed <strong>the</strong>mes. These tendencies provide some interesting ideas about Chinese employees. First
<strong>of</strong> all, younger employees feel more trust in changes, while older employees have reported a higher
interest in changes. The latter tendency is also related to <strong>the</strong> tenure, and attitudes make differences
between males and females. Education and position tend to indicate that when <strong>the</strong>se are higher,
assessment <strong>of</strong> all scales is higher. For example, top and deputy managers evaluate learning and
attitudes higher than technical workers and front-line managers. The pr<strong>of</strong>essional interest and type <strong>of</strong>
work contract indicate mixed tendencies and organisational learning is more highly evaluated by
employees who have no permanent work contract and no pr<strong>of</strong>essional interest. Attitudes towards
change have <strong>the</strong> opposite pattern in respect to <strong>the</strong> existence <strong>of</strong> pr<strong>of</strong>essional interests and a
permanent work contract.
Table 3: Comparisons <strong>of</strong> assessments <strong>of</strong> organisational learning and scales <strong>of</strong> organisational
change: Chinese sample.
Learning Trust in changes Interest in
changes
Gender males vs. females ↓ males vs. females ↑ males vs. females ↓
Age …25 vs. 26-35 ↑
…25 vs. 36-45 ↑
…25 vs. 46-55 ↑
26-35 vs. 36-45 ↑
26-35 vs. 46-55 ↑
36-45 vs. 56-…↓
46-55 vs. 56-…↓
Education Vocational school vs.
university ↑
Tenure Less than 1 year vs. 2-3
years ↓
Less than 1 year vs. 4-5
years ↓
Less than 1 year vs. 6-10
years ↓
Less than 1 year vs. 11-15
years ↓
Less than 1 year vs. more
than 20 years ↑
2-3 years vs. 6-10 years ↓
15
…25 vs. 26-35 ↓
…25 vs. 36-45 ↓
…25 vs. 46-55 ↓
26-35 vs. 36-45 ↓
High school vs. vocational
school ↓
High school vs. university ↓
Vocational school vs.
university ↓
Less than 1 year vs. 2-3 years
↑
Less than 1 year vs. 4-5 years
↑
Less than 1 year vs. 6-10
years ↑
Less than 1 year vs. 11-15
years ↑
Less than 1 year vs. 16-20
years ↓
Less than 1 year vs. more
…25 vs. 26-35 ↑
…25 vs. 36-45 ↑
…25 vs. 46-55 ↑
…25 vs. 56… ↑
26-35 vs. 46-55 ↑
26-35 vs. 56-…↑
36-45 vs. 46-55 ↑
36-45 vs. 56… ↑
High school vs.
vocational school ↓
High school vs.
university ↑
Vocational school
vs. university ↑
Less than 1 year vs.
4-5 years ↑
Less than 1 year vs.
6-10 years ↑
Less than 1 year vs.
11-15 years ↑
Less than 1 year vs.
more than 20 years
↑
2-3 years vs. 4-5
years ↑

2-3 years vs. more than 20
years ↑
4-5 years vs. 6-10 years ↓
4-5 years vs. more than 20
years ↑
Tenure 6-10 years vs. 11-15 years
↑
6-10 years vs. more than
20 years ↑
11-15 years vs. more than
20 years ↑
Ruth Alas et al.
than 20 years ↑
2-3 years vs. 6-10 years ↑
2-3 years vs. 16-20 years ↓
4-5 years vs. 6-10 years ↑
4-5 years vs. 16-20 years ↓
6-10 years vs. 16-20 years ↓
11-15 years vs. 16-20 years ↓
16-20 years vs. more than 20
years ↑
2-3 years vs. 6-10
years ↑
2-3 years vs. 11-15
years ↑
2-3 years vs. more
than 20 years ↑
4-5 years vs. 11-15
years ↑
4-5 years vs. more
than 20 years ↑
6-10 years vs. more
than 20 years ↑
11-15 years vs.
more than 20 years
↑
16-20 years vs.
more than 20 years
↑
Learning Trust in changes Interest in
changes
Contract Permanent vs. temporary ↑ Permanent vs. temporary ↓ -
Position Deputy top manager vs.
front-line manager ↓
Deputy top manager vs.
technical worker ↓
Middle manager vs. frontline
manager ↓
Middle manager vs.
technical worker ↓
Pr<strong>of</strong>essional interests Have interests vs. not have
interests ↑
Top manager vs. deputy top
manager ↓
Top manager vs. middle
manager ↓
Top manager vs. front-line
manager ↓
Top manager vs. technical
worker ↓
Deputy top manager vs. frontline
manager ↓
Deputy top manager vs.
technical worker ↓
Middle manager vs. front-line
manager ↓
Middle manager vs. technical
worker ↓
Have interests vs. not have
interests ↓
Top manager vs.
deputy top manager
↓
Top manager vs.
middle manager ↓
Top manager vs.
front-line manager ↓
Top manager vs.
technical worker ↓
Deputy top manager
vs. front-line
manager ↓
Middle manager vs.
front-line manager ↓
Have interests vs.
not have interests ↓
Note: The arrows indicate a representative <strong>of</strong> what role has higher or lower assessment <strong>of</strong> a certain
scale.
In different cultural contexts employees have a different disposition towards organisational learning
and change attitudes, but <strong>the</strong> variation within <strong>the</strong> cultures is also quite high.
3.2.2 Relationships between organisational learning and attitudes towards change
This study aims to explore how organisational learning is related to attitudes towards change in
Turkey and China. At <strong>the</strong> first stage, <strong>the</strong> correlation analysis is performed and results are presented in
<strong>the</strong> Table 4.
The results show that trust in changes is important in both countries, while it holds opposite meanings
for China and Turkey. The Turkish employees who have assessed trust in changes highly and are
eager to support organisational learning, but <strong>the</strong> Chinese organisational members are not so
absolutely eager. In China interest in changes does not correlate with organisational learning to <strong>the</strong>
same extent as it does in Turkey.
The linear regression models were composed for <strong>the</strong> both samples. Organisational learning
(dependent variable) is predicted by attitudes towards change (independent variables) in Turkey and
China at a very high level. Namely, <strong>the</strong> Adjusted R Squares were .54 for <strong>the</strong> both <strong>of</strong> samples. These
relationships are illustrated by Figures 1 and 2.
16

Ruth Alas et al.
Table 4: Correlations between organisational learning scale and attitudes towards changes
China
Turkey
Organisational Trust in changes Interest in changes Scales <strong>of</strong>
learning
measurement
X -.71** .17** Organizational
learning
n=1029 x .00 Trust in changes
n=1031 n=1029 x Interest in changes
X .71** .69** Organisational
learning
n= 1118 x .82** Trust in changes
n=1113 n=1121 x Interest in changes
Note: **. The correlation is significant at <strong>the</strong> 0.01 level (2-tailed)
Figure 1 indicates <strong>the</strong> important issue ̶ attitudes predict <strong>the</strong> lower level assessment <strong>of</strong> organisational
learning. It confirms <strong>the</strong> result gained by correlation analysis that attitudes towards change may
contradict attitudes towards organisational learning.
Figure 1: Organisational learning predicted by attitudes towards changes: <strong>the</strong> Chinese sample
Figure 2 exemplifies that attitudes towards change predict a ra<strong>the</strong>r higher assessment <strong>of</strong>
organisational learning than <strong>the</strong> lower level in Turkish sample. It means that <strong>the</strong>se attitudes may
support organisations when <strong>the</strong>re is intent to increase <strong>the</strong> level <strong>of</strong> organisational learning.
If <strong>the</strong> list <strong>of</strong> independent variables is extended by entering all <strong>the</strong> socio-demographic characteristics,
<strong>the</strong>n it decreases for China to .23, and for Turkey it does not change at all (R 2 = .54).
17

Ruth Alas et al.
Figure 2: Organisational learning predicted by attitudes towards changes: <strong>the</strong> Turkish sample
Regarding <strong>the</strong> Chinese model, gender, age, education, and type <strong>of</strong> contract were not statistically
significant predictors, while only tenure, position, and <strong>the</strong> existence <strong>of</strong> a pr<strong>of</strong>essional interest have
statistically played a significant role in <strong>the</strong> prediction <strong>of</strong> organisational learning. In Turkey, sociodemographic
characteristics were statistically significant, and <strong>the</strong>refore we can conclude that attitudes
are <strong>the</strong> main predictors <strong>of</strong> organisational learning in Turkey.
4. Conclusions
The empirical study in Chinese organisations and in <strong>the</strong> Turkish hotel industry indicated <strong>the</strong>
importance <strong>of</strong> attitudes towards changes for organisational learning. Attitudes towards changes were
trust in change and interest in changes. These attitudes toge<strong>the</strong>r predict almost half <strong>of</strong> <strong>the</strong>
organisational learning. There were significant differences between <strong>the</strong> two countries. Attitudes
towards changes are <strong>the</strong> main predictors <strong>of</strong> organisational learning in Turkey, and <strong>the</strong>se predict a
higher assessment <strong>of</strong> <strong>the</strong> organisational learning scale. In China, attitudes also predict organisational
learning, but contrary to Turkey, a lower level <strong>of</strong> assessment <strong>of</strong> <strong>the</strong> corresponding scale. In China,
some work-related socio-demographic factors are not important in <strong>the</strong> prediction <strong>of</strong> organisational
learning. At <strong>the</strong> same time, generic characteristics (gender and age) and additionally, education and
<strong>the</strong> type <strong>of</strong> contract do not predict organisational learning in this study.
A comparison <strong>of</strong> <strong>the</strong> results with results <strong>of</strong> a similar study in Estonia indicates similarities and
differences. There are differences in <strong>the</strong> scales. In Estonia <strong>the</strong>re were 4 scales, two scales dealing
with satisfaction and two dealing with changes (Alas and Vadi 2004). In <strong>the</strong> sample formed from
respondents from China and Turkey, <strong>the</strong> authors got only two attitude scales: one scale dealing with
satisfaction and one dealing with changes. Fur<strong>the</strong>rmore, <strong>the</strong>re were two learning scales in Estonia
(Alas and Sharifi 2002), but only one in <strong>the</strong> current sample from <strong>the</strong> Chinese and Turkish
respondents. To conclude, institutional environments have an impact on attitudes towards change
and organisational learning and also on <strong>the</strong> connections between attitudes and learning.
18

Research was supported by ETF Grant 7537.
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19

Beyond KM: The Management <strong>of</strong> BA in Knowing
Organizations
Rivadávia Correa Drummond de Alvarenga Neto
Fundação Dom Cabral (FDC), Brazil
rivadavia@fdc.org.br
Abstract: This paper investigates and analyses <strong>the</strong> concept <strong>of</strong> ba – or enabling context - in <strong>the</strong> fields <strong>of</strong>
information science, management/business and information systems literature in order to understand its
conceptual evolution, discussions, applications and expansion since its introduction in 1998 by Nonaka et al. The
qualitative methodology is bibliographic and comprises – among o<strong>the</strong>rs - <strong>the</strong> methods <strong>of</strong> citation analysis and
content analysis. Data analysis consisted <strong>of</strong> three flows <strong>of</strong> activities: data reduction, data displays (conceptual
maps) and conclusion drawing/verification. The results point out to <strong>the</strong> identification <strong>of</strong> four major groups <strong>of</strong>
enabling conditions – social/behavioral, cognitive/epistemic, informational and business/managerial - which can
be singly or freely combined into different knowledge processes – creation, sharing/transfer and use – occurring
in different levels <strong>of</strong> interactions – individual, group, organizational, inter-organizational. The conclusions suggest
that <strong>the</strong> concept <strong>of</strong> ba and its underlying concepts are indeed sine qua non conditions for organizational
knowledge creation and innovation processes, though ba is still both <strong>the</strong>oretically and empirically under-explored.
Keywords: knowledge management; enabling context; ba; enabling conditions
1. Introduction
Knowledge creation is a fragile organizational process, particularly towards <strong>the</strong> nature <strong>of</strong> knowledge
itself: fluid, dynamic, intangible, tacit and explicit, embodied in individual and groups, socially
constructed, and constrained by individual and organizational barriers (von Krogh et al.1997,2000). In
this paper, knowledge is approached through a constructionist perspective, as human cognition is not
an act <strong>of</strong> representation and not just a machine for information processing and logical reasoning. In
<strong>the</strong> constructionist perspective, cognition is an act <strong>of</strong> construction and creation (Maturana and
Varela,1987), as well as knowledge is tacit, explicit and cultural (Choo,1998).
Organizational knowledge creation is generally associated with Knowledge Management (KM), which
is a controversial, complex and multifaceted subject. In spite <strong>of</strong> <strong>the</strong> fact that <strong>the</strong> term (KM) is not yet
stable, <strong>the</strong>re’s been a growing interest worldwide within <strong>the</strong> past two decades - from academics to
practitioners - in <strong>the</strong> management <strong>of</strong> organizational knowledge and its related topics, such as
“organizational epistemology” (Tsoukas,2005), “knowledge creation processes” (Choo,1998),
“knowledge-based <strong>the</strong>ory <strong>of</strong> <strong>the</strong> firm” (Nonaka et al.,2006), “enabling context and conditions” (von
Krogh et al., 2000)”, “knowledge types” (Blackler, 1995), “knowledge assets” (Boisot, 1998) and
“knowledge taxonomies” (Alavi and Leidner, 2001), among o<strong>the</strong>rs.
In our studies within <strong>the</strong> last ten years, concerning <strong>the</strong> management <strong>of</strong> knowledge in world-class
organizations, similar topics and approaches have been discussed, but above all, we’ve stressed out
three main concerns: (i) a long standing misinterpretation that considers knowledge management and
information management (IM) as synonyms. We shall call this “information reductionism”, as <strong>the</strong> “map
is not <strong>the</strong> territory” (Tsoukas, 2005). IM is just one <strong>of</strong> <strong>the</strong> components <strong>of</strong> KM, as KM also incorporates
concerns as to <strong>the</strong> creation, sharing and enabling context/conditions for organizational knowledge
creation; (ii) a long overlooked topic in <strong>the</strong> KM literature: KM implementation processes (Alvarenga
Neto et al.,2009); and finally (iii) an empirically under-explored concept: “<strong>the</strong> concept <strong>of</strong> ba” or
“enabling context”, <strong>the</strong> ontological platform for knowledge creation.
As we have addressed <strong>the</strong>se first two concerns in different publications within <strong>the</strong> past decade, we
have decided to move on and thoroughly examine/discuss <strong>the</strong> concept <strong>of</strong> ba or <strong>the</strong> enabling context
for organizational knowledge creation. To justify our decision, we argue that <strong>the</strong> literature concerning
<strong>the</strong>se specific topics is scarce, not publicized in mainstream business or information science journals
– with a few exceptions - and not regarded as academically relevant through <strong>the</strong> use <strong>of</strong> bibliometric
methods, such as citation analysis. There is also a knowing-doing gap concerning a process that is
highly embedded and firm-specific.
Therefore, our main objective in this paper is to investigate and analyze <strong>the</strong> concept <strong>of</strong> ba – or
enabling context - in <strong>the</strong> fields <strong>of</strong> information science, management/business and information systems
literature in order to understand its conceptual evolution (if any), discussions, applications and
20

Rivadávia Correa Drummond de Alvarenga Neto
expansion since its introduction in 1998 by Nonaka et al. (Nonaka and Konno, 1998; Nonaka et al.,
2000; Nonaka and Toyama, 2002; Nonaka et al., 2006).
2. Methodology
The qualitative methodology is bibliographic in nature, comprising – among o<strong>the</strong>rs – bilbiometric
methods <strong>of</strong> citation analysis and content analysis. To begin with, tools such as “citation report” and
“cited reference search”, among o<strong>the</strong>rs, available at <strong>the</strong> ISI Web <strong>of</strong> Knowledge e-resource were used.
Part <strong>of</strong> <strong>the</strong> research’s rationale involved searching <strong>the</strong> Web <strong>of</strong> Knowledge (ISI) having “ba” or <strong>the</strong>
“concept <strong>of</strong> ba” as descriptors combined along with its mainstream author in <strong>the</strong> business and
management field, Ikujiro Nonaka. The following results were found (FIGURES 1 and 2):
Figure 1: Citation report for “Nonaka” and “ba” (source: Web <strong>of</strong> Knowledge. Access in March, 2009)
Figure 2: Citation report for “Nonaka” and “ba” (source: Web <strong>of</strong> Knowledge. Access in March, 2009)
The results demonstrate that with an H-Index <strong>of</strong> 4 (which means that four papers have been cited
more than four times, excluding self-citations), four <strong>of</strong> Nonaka’s papers (with <strong>the</strong> search criteria
adopted above) have been cited 592 times since 1998 in papers all over <strong>the</strong> world, with an average <strong>of</strong>
49,33 citations per year. Therefore, to begin with, <strong>the</strong> research’s database comprised a total <strong>of</strong> 598
papers, as we also chose to include two <strong>of</strong> Nonaka’s papers about ba that were not contemplated by
an H-index <strong>of</strong> 4, but, after all, regarded as relevant in order to analyze <strong>the</strong> evolution <strong>of</strong> <strong>the</strong> author’s
ideas, concepts and applications through a chronological perspective. Hereafter, we’ll refer to
Nonaka’s original papers about ba as “<strong>the</strong> first generation papers” and all <strong>of</strong> <strong>the</strong> o<strong>the</strong>r citing papers <strong>of</strong>
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Rivadávia Correa Drummond de Alvarenga Neto
Nonaka’s ba or enabling context concepts as “<strong>the</strong> second generation papers”. These 592 papers (H-
Index 4) were grouped by <strong>the</strong> number <strong>of</strong> times <strong>the</strong>se second generation papers were cited by o<strong>the</strong>rs:
more or less than 20 citations. The number 20 was intentionally chosen, as to have a minor group <strong>of</strong>
second generation papers (32 papers) that were highly cited by o<strong>the</strong>rs, and a major group <strong>of</strong> papers
that haven’t had <strong>the</strong> same repercussion. This criterion was helpful in order to reinforce our initial
presumption <strong>of</strong> empirical under-exploration <strong>of</strong> ba. Consequently, we also decided to examine <strong>the</strong>
citation report <strong>of</strong> Nonaka’s two papers not contemplated with an H-index <strong>of</strong> 4 and all <strong>of</strong> <strong>the</strong> papers
that cited those two.
These
“second generation papers” were examined by searching within each document for <strong>the</strong>
descriptors mentioned above with <strong>the</strong> aid <strong>of</strong> “EndNoteWeb” and “EndNote” s<strong>of</strong>twares, besides <strong>the</strong>
search tools available in “Adobe Acrobat” and “Micros<strong>of</strong>t Office”. Duplicates were eliminated and a
few papers were not available. At this point, it’s important to mention that even Shimizu’s(1995) paper
- uncountably cited and regarded by <strong>the</strong> first generation papers as <strong>the</strong> cornerstone <strong>of</strong> <strong>the</strong> ba-principle
in Nonaka’s work (along with Nishida’s, 1990) - was not available, even in e-resources such as
Factiva, Business Abstracts and Proquest, among o<strong>the</strong>rs. An extra-search effort in different
interconnected libraries and e-resources was also conducted showing no results. After this criterion -
a data reduction process in data analysis - <strong>the</strong> number <strong>of</strong> second generation papers selected so far
for manual analysis went from 593 to 50 papers, which added to <strong>the</strong> 4 “first generation papers”
comprised a total <strong>of</strong> 54 papers to begin with.
After
<strong>the</strong>se first search criteria partial results, it was our decision to go beyond bibliometrics and
expand our research database in order to look for more papers discussing <strong>the</strong> concept <strong>of</strong> ba and its
underlying concepts. For this purpose, we also decided to include descriptors such as “enabling
context”, “enabling conditions” and “enabling knowledge creation” to <strong>the</strong> existing descriptors (“ba”,
“concept <strong>of</strong> ba” and “Nonaka”), as <strong>the</strong>se descriptors were highly cited in <strong>the</strong> references <strong>of</strong> <strong>the</strong> “first
generation papers”. Consequently, based on <strong>the</strong> same criteria described above, <strong>the</strong> search was
expanded to <strong>the</strong> following (FIGURE 3): (i) e-resources; (ii) e-journals containing “Knowledge
Management” in <strong>the</strong>ir titles. Search criteria involved <strong>the</strong> use <strong>of</strong> descriptors’ search within title, abstract
and keywords; (iii) Google Scholar (page rank/relevance - availability <strong>of</strong> paper online considered,
elimination <strong>of</strong> duplicates) and Google Book Search (searching for material not previously published in
<strong>the</strong> form <strong>of</strong> papers in journals) – extra search criteria using authors’ names from <strong>the</strong> “first generation
papers” or authors cited by <strong>the</strong> “first generation papers”; (iv) papers cited in <strong>the</strong> references <strong>of</strong> <strong>the</strong> “first
generation papers”, papers sent to us by peers or simply “serendipity”.
Figure 3: Research’s database assemblage (source: developed by <strong>the</strong> authors)
A resulting selection <strong>of</strong> 135 papers, 4 dissertations/<strong>the</strong>ses and 4 books constituted <strong>the</strong> research’s
database, which were all selected for manual analysis. It’s important to heed attention to <strong>the</strong> fact that
<strong>the</strong> bibliographic research proposed here intends to be comprehensive, but never exhaustive. The
time-span comprehends papers published from 1991 to 2009 and <strong>the</strong> authors were academics and
practitioners from many different counties such as Japan, Finland, Portugal, Brazil, Canada, <strong>the</strong>
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Rivadávia Correa Drummond de Alvarenga Neto
Ne<strong>the</strong>rlands, Spain, France, Greece, Great Britain, South Korea, USA, Australia, China, Italy, Israel,
Germany and South Africa among o<strong>the</strong>rs.
As for data analysis <strong>of</strong> <strong>the</strong> research’s database, it consisted <strong>of</strong> three flows <strong>of</strong> activities: data reduction,
data displays (conceptual maps) and conclusion drawing/verification (Miles and
Huberman,1984).Displays in <strong>the</strong> form <strong>of</strong> conceptual and mind maps were built and proved useful for
all <strong>of</strong> <strong>the</strong> three flows <strong>of</strong> activities, constituting analytical categories. Seven data reduction cycles were
necessary in order to make <strong>the</strong> research data feasible to incorporation in this paper. In <strong>the</strong> following
section, <strong>the</strong> literature review will be presented, followed by a discussion <strong>of</strong> data analysis.
3. Literature review
Following <strong>the</strong> methodological choices stated above, <strong>the</strong> literature review presented hereafter is based
on <strong>the</strong> “first generation papers” written by Nonaka and colleagues (Nonaka and Konno, 1998; Nonaka
et al., 2000; Nonaka and Toyama, 2002; Nonaka et al., 2006) about <strong>the</strong> concept <strong>of</strong> ba. Their
propositions for a dynamic organizational knowledge creation <strong>the</strong>ory are syn<strong>the</strong>sized in FIGURE 4,
where ba is one <strong>of</strong> <strong>the</strong> components:
Figure 4: Syn<strong>the</strong>sis <strong>of</strong> Nonaka’s et al. (2000, 2002, 2006) propositions towards a knowledge-based
<strong>the</strong>ory <strong>of</strong> <strong>the</strong> firm having ba as one <strong>of</strong> <strong>the</strong> components (source: adapted by <strong>the</strong> authors)
Nonaka and Konno (1998) started <strong>the</strong> discussion about <strong>the</strong> concept <strong>of</strong> ba by presenting a seminal
question: “Is it possible to actually manage knowledge like o<strong>the</strong>r resources?” In order to address this
question, <strong>the</strong>y introduced <strong>the</strong> concept <strong>of</strong> “ba”, roughly translated into <strong>the</strong> English word “space”. They
state that <strong>the</strong> concept <strong>of</strong> “ba” was proposed by Japanese philosopher Kitaro Nishida (1990) and
fur<strong>the</strong>r developed by Shimizu (1995). This “space for emerging relationships” can be physical (e.g.,
<strong>of</strong>fice, dispersed business space), virtual (e.g., e-mail, teleconference), mental (e.g., shared
experience, ideas, ideals), or any combination <strong>of</strong> <strong>the</strong>m. It is stressed that <strong>the</strong> difference between “ba”
and ordinary human interaction is <strong>the</strong> concept <strong>of</strong> knowledge creation. From such perspective,
knowledge exists and resides in “ba”, or, put in <strong>the</strong> authors’ words, “knowledge is embedded in “ba” or
<strong>the</strong> shared spaces”. From <strong>the</strong>ir epistemological perspective, Nonaka and Konno (1998) outline <strong>the</strong>
fact that knowledge cannot be separated from “ba”, or o<strong>the</strong>rwise it will become information.
Information resides in media and it’s tangible and, in its turn, knowledge resides in “ba” and it is
intangible.
In Nonaka & Konno’s (1998) view, ‘Ba’ <strong>of</strong>fers an integrating conceptual metaphor for Nonaka’s
(1991) SECI model <strong>of</strong> dynamic knowledge conversions .Four types <strong>of</strong> “ba” correspond to <strong>the</strong> four
stages <strong>of</strong> <strong>the</strong> SECI Model (FIGURE 5):
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Rivadávia Correa Drummond de Alvarenga Neto
Figure 5: The Fours Characteristics <strong>of</strong> Ba (source: Nonaka and Konno, 1998)
Nonaka et al.(2000) enhanced <strong>the</strong> idea <strong>of</strong> ba proposed by Nonaka & Konno (1998) in order to
understand <strong>the</strong> dynamic process in which an organization creates, maintains and exploits knowledge.
Their model consists <strong>of</strong> three elements (i) <strong>the</strong> SECI Process, (ii) ‘ba’- <strong>the</strong> shared context in motion for
knowledge creation and (iii) knowledge assets. To certain extent, Nonaka et al. (2000) shed more
light on <strong>the</strong> concept <strong>of</strong> ba by suggesting that <strong>the</strong> four types <strong>of</strong> ba are defined by two dimensions <strong>of</strong>
interactions: (i) <strong>the</strong> type <strong>of</strong> interaction (individually or collective) and (ii) <strong>the</strong> media used in such
interactions, whe<strong>the</strong>r face-to-face contact or virtual media such as books and e-mails.
Nonaka and Toyama’s (2002) goal is <strong>the</strong> proposition <strong>of</strong> a dynamic <strong>the</strong>ory <strong>of</strong> <strong>the</strong> firm (or a knowledgebased
view <strong>of</strong> <strong>the</strong> firm) where ba is quintessential (FIGURE 4). They argue that a firm can create new
knowledge and capability that go beyond <strong>the</strong> balancing point in <strong>the</strong> existing frontier with its
syn<strong>the</strong>sizing capability, which is embedded in its knowledge vision, its ba, its creative routines, its
incentive systems and its distributed leadership. Finally, Nonaka et al. (2006) discuss ba and enabling
conditions such as care, trust, courage, teams atmosphere and information technology, among
o<strong>the</strong>rs, as well as o<strong>the</strong>r issues such as <strong>the</strong> concepts <strong>of</strong> “knowledge vision”, “knowledge activist” and
<strong>the</strong> “hypertext organization”.
At this point <strong>of</strong> our literature review, it is already possible to establish links between an
eastern/Japanese concept <strong>of</strong> ba and its similar western approach - mainly represented in <strong>the</strong> works <strong>of</strong>
von Krogh (1998) and von Krogh et al. (1997, 2000) - involving concepts and ideas such as “enabling
context”, “enabling conditions”, “knowledge activists” and “care in knowledge creation”. These
discussions and <strong>the</strong> analysis <strong>of</strong> <strong>the</strong> “second generation papers” will be our goal in <strong>the</strong> next section, as
we’ll try to understand <strong>the</strong> concept <strong>of</strong> ba’s discussion, development, applications and expansion since
its introduction by Nonaka et al. (1995, 1998, 2000, 2002, 2006).
4. Data analysis
In this section, we’ll briefly analyse “<strong>the</strong> second generation papers” comprised in our research’s
database. Through our data analysis processes, particularly in <strong>the</strong> phases <strong>of</strong> data reduction, five
major categories emerged as ways <strong>of</strong> grouping our research findings, namely (FIGURE 6): (i)
conceptual/<strong>the</strong>oretical: where <strong>the</strong> concept <strong>of</strong> ba was used for – or as a basis <strong>of</strong>/part <strong>of</strong> - new
conceptual or <strong>the</strong>oretical propositions/ discussions; or papers where fur<strong>the</strong>r <strong>the</strong>oretical and empirical
support was proposed to <strong>the</strong> concept <strong>of</strong> ba by Nonaka and colleagues; (ii) social/behavioral: related
to norms and values that guides interactions and relationships, such as trust, care, empathy, attentive
enquiry and “tolerance to “honest mistakes”, among o<strong>the</strong>rs; (iii) cognitive/epistemic: related to
common knowledge or shared epistemic values and commitments; (iv) informational: regarding IM
(information management), IT (information technology) and IS (information systems), as well as
information/communication processes, and (iv) business/managerial: related to general organizational
issues, such as strategy, processes, structure, support, resources and organizational culture, among
o<strong>the</strong>rs.
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Rivadávia Correa Drummond de Alvarenga Neto
With <strong>the</strong> exception <strong>of</strong> <strong>the</strong> first major category (conceptual/<strong>the</strong>oretical), <strong>the</strong> remaining four -
henceforth called “<strong>the</strong> four groups <strong>of</strong> enabling conditions” - were observed in different knowledge
processes – creation, sharing/transfer, use – and in different levels <strong>of</strong> interaction – individual, group,
organizational, inter-organizational (FIGURE 7). They were also not solely use in <strong>the</strong> context <strong>of</strong> <strong>the</strong>
SECI process (e.g. Jyrama and Ayvari, 2006; Miles et al., 2000), as advocated by Nonaka and
colleagues (1998, 2000, 2002, 2006). This might be seen as an evolution in terms <strong>of</strong> application <strong>of</strong> ba.
Figure 6: “Four Major Groups <strong>of</strong> Enabling Conditions” as a result <strong>of</strong> data analysis processes (source:
developed by <strong>the</strong> authors)
Concerning <strong>the</strong> first major category – conceptual/<strong>the</strong>oretical (FIGURE 8), our analysis demonstrates
that <strong>the</strong> concept <strong>of</strong> ba is still <strong>the</strong>oretically under explored, although its discussion has somehow been
expanded to different contexts or as a component <strong>of</strong> o<strong>the</strong>r <strong>the</strong>oretical propositions. Most <strong>of</strong> what has
been added to <strong>the</strong> <strong>the</strong>oretical development <strong>of</strong> <strong>the</strong> concept <strong>of</strong> ba is credited to Nonaka and colleagues,
through <strong>the</strong> means <strong>of</strong> concepts, discussions and case studies. At this point <strong>of</strong> our analysis, it’s
important to bear in mind that different groups <strong>of</strong> enabling conditions support different ba in different
ways, as well as <strong>the</strong> fact that ba and enabling context are used as synonyms. These
<strong>the</strong>oretical/conceptual findings are syn<strong>the</strong>sized in FIGURE 7:
As mentioned above, <strong>the</strong> four remaining major categories constitute four different groups <strong>of</strong> enabling
conditions. These groups <strong>of</strong> enabling conditions can be used singly or in any combination with <strong>the</strong>
purpose <strong>of</strong> creating or enhancing an organization’s enabling context or ba.
The first group <strong>of</strong> enabling conditions is social/behavioral and involves norms and values that guide
relationships and interactions in order to create a fertile ground for knowledge creation, sharing and
use, as well as for facilitating innovative thinking. Our main findings suggest that <strong>the</strong> following issues
should be taken into account, as <strong>the</strong>y give rise to particular behaviors that should be communicated to
and pursued by personnel and managers, as well as serve as guidelines for HRM assessments, such
as hiring, training, utilizing, maintaining and compensating:
Care, mutual trust, lenience in judgment, active empathy, courage and access to help (Inkpen,
1996; von Krogh, 1998; Burton, 2002; Lee and Choi, 2003; von Krogh et al., 2008);
Tolerance to “honest” mistakes and mutual respect (Alvarenga Neto, 2005);
Actively encouragement <strong>of</strong> participation, nurture <strong>of</strong> innovating language while avoiding
hypercorrection (von Krogh et al., 2000);
Accessibility <strong>of</strong> individuals and attentive inquiry (Nonaka and Nishiguch, 2001);
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Rivadávia Correa Drummond de Alvarenga Neto
Interaction and open dialogue (Gold et al., 2001; Sabherwal and Becerra-Fernandes, 2003),
Collaboration (Lee and Choi, 2003);
Autonomy <strong>of</strong> freedom (Ford and Angermeir, 2005);
Contextual social interactions and evolving relationships (Peltokorpi et al., 2007).
Figure 7: Theoretical/conceptual analysis – ource: developed by <strong>the</strong> authors
Our second group <strong>of</strong> enabling conditions – cognitive/epistemic, is related to common knowledge or
shared epistemic values and commitments. It’s a sine qua non condition <strong>the</strong> existence <strong>of</strong> shared
beliefs and ideas, as well as people with different backgrounds and mental models, enabling a context
where contradictions and diverging ideas are seen as positive issues, not as obstacles for knowledge
creation and innovation. Our findings are structured around <strong>the</strong> following issues that might constitute
guidelines, especially into addressing complex problems and <strong>the</strong> need for developing an
organization’s accelerated solutions environment:
Exposure to a great variety <strong>of</strong> data, insights, questions, ideas and problems (von Krogh et al.,
1997);
Application <strong>of</strong> creative techniques for metaphors, analogies and insights (von Krogh et al., 1997;
Burton, 2002)
Existence <strong>of</strong> a sound mix <strong>of</strong> people from various cultural backgrounds and functional areas (von
Krogh et al., 1997), existence <strong>of</strong> diverse perspectives and backgrounds (Gold, et al., 2001;
Peltokorpi et al., 2007) and existence <strong>of</strong> inter-organizational communities formed by people with
different mind-sets and mental models (von Krogh et al., 2008);
Existence <strong>of</strong> formal and informal groups or communities (e.g., microcommunities <strong>of</strong> knowledge)
with <strong>the</strong>ir own rituals, languages, norms and values (von Krogh et al., 1997); creation <strong>of</strong> shared
spaces and shared goals (Lechner and Dowling, 2003; von Krogh et al., 2008; Balestrin et al.,
2008; Brannback et al., 2008), and <strong>the</strong> sharing <strong>of</strong> mental models (Burton, 2002);
Development <strong>of</strong> dialectical thinking (Nonaka and Toyama, 2002) and a legitimate language (von
Krogh et al., 2000), as well <strong>of</strong> awareness <strong>of</strong> a company paradigms, in terms <strong>of</strong> values, strategic
intention and mission (von Krogh et al., 2000);
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Provision <strong>of</strong> enabling conditions such as creative chaos (Inkpen, 1996), intention and requisite
variety (Johnson, 2000);
Production and sharing <strong>of</strong> practical knowledge, meeting in different constellations and creation <strong>of</strong>
common knowledge (Alavi and Leidner, 2001; Roth, 2003).
The third group <strong>of</strong> enabling conditions is informational, regarding IT (information technology), IS
(information systems) and IM (information management), as well as information/communication
processes. Our findings are suggestive that a combination <strong>of</strong> multiple IT/IS tools, systems and
applications - guided by IM processes design based on a company’s strategic issues, knowledge
vision and communication strategy - are powerful enabling conditions, especially in <strong>the</strong> knowledge
processes <strong>of</strong> sharing/transferring and use, within <strong>the</strong> interactional levels <strong>of</strong> groups and organizations.
It’s important to bear in mind that IT is only an enabler and not an end in itself. Here’s a summary <strong>of</strong>
tools, systems and applications cited in our analysis along with a few suggestions on <strong>the</strong> way <strong>the</strong>y
can be effectively applied:
Internet, intranet, yellow pages, business information systems, groupware, databases,
datawarehousing, datamining, document repositories, s<strong>of</strong>tware agents, repositories <strong>of</strong>
information, best practices and lessons learned (von Krogh et al., 1997,2000; Nonaka et al., 1998;
Alavi and Leidner, 2001; Sabherwal and Becerra-Fernandez 2003; Chou and Wang, 2003; Lee
and Choi, 2003);
Information systems designed to support collaboration, coordination and communication
processes as a mean to facilitate teamwork and increase an individual’s contacts with o<strong>the</strong>r
individuals (Alavi and Leidner, 2001);
eMails and group support system in order to to increase <strong>the</strong> number <strong>of</strong> weak ties in organizations
(Alavi and Leidner, 2001; Chou and Wang, 2003);
Computer simulation and smart s<strong>of</strong>tware tutors to support individual learning in intranet
environments (Alavi and Leidner, 2001; Tee, 2005);
Computer-mediated communication as a way to increase <strong>the</strong> quality <strong>of</strong> knowledge creation by
enabling a forum for constructing and sharing beliefs, for confirming consensual information and
for allowing expressing <strong>of</strong> new ideas (Alavi and Leidner, 2001);
Problem-solving systems based on a technology like case-based reasoning (Sabherwal and
Becerra-Fernandez, 2003);
Virtual communities <strong>of</strong> practice (Pam and Leidner, 2003; Alvarenga Neto, 2005).
At last, <strong>the</strong> fourth major group <strong>of</strong> enabling conditions is business/managerial and <strong>the</strong> issues
considered are ways that managers can, in fact, directly construct, influence, interfere and manage an
organization’s effective ba or enabling context by commitment and action. This group <strong>of</strong> enabling
condition also considered businesses processes where <strong>the</strong> concept <strong>of</strong> ba was actually applied in
different researches. Here is a summary <strong>of</strong> our findings that can be useful guidelines for <strong>the</strong>
management <strong>of</strong> enabling contexts in knowledge organizations:
Organizational culture: a critical issue to facilitate knowledge creation, a central issue to be
shaped in a firm’s ability to manage its knowledge more effectively and <strong>the</strong> most prominent
enabler (Inkpen, 1996; Perez Bustamante, 1999; Gold et al., 2001; Lee and Choi, 2002; Roth,
2003; Alvarenga Neto, 2005; Adenfelt and Lagerstrom, 2006 von Krogh et al., 2008;);
Organizational structure: involves organizational structure that foster solid relationships and
effective collaboration, such as project teams, cross-divisional units and empowered divisions,
among o<strong>the</strong>rs (von Krogh et al., 2000; Lee and Choi, 2003); systems-based approach, hypertext
organization (Gold et al., 2001, Nonaka et al., 2006); autonomous and self-organizing teams
(Peltokorpi et al., 2007);
Organizational and inter-organizational processes: involves <strong>the</strong> application or studies/research <strong>of</strong>
<strong>the</strong> concept <strong>of</strong> ba into business processes such as <strong>the</strong> management <strong>of</strong> salesforces (Bennet,
2001), ex ante project risk (Cuellar and Gallivan, 2005), supply-chain (Wu, 2008), interorganizational
healthcare communities (von Krogh et al., 2008), firms in networks (Lechner and
Dowling, 2003), transnational projects (Adenfelt and Lagerstrom, 2006), family business context
(Brannback,et al., 2008), industrial districts (Corno et al., 1999) and collaborative interorganizational
R&D projects (Johnson, 2000);
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Rivadávia Correa Drummond de Alvarenga Neto
Human Resources Management and organizational learning initiatives/projects: regards reward
systems linked to knowledge-sharing (von Krogh et al., 2008) and <strong>the</strong> existence <strong>of</strong> flexible
learning objectives (Inkpen, 1996); <strong>the</strong> cultivation <strong>of</strong> care through incentive systems, mentoring
and training programs in care based behavior, project debriefing and o<strong>the</strong>r forms <strong>of</strong> learningoriented
conversations (von Krogh, 1998); use <strong>of</strong> apprentice and mentors to transfer knowledge,
brainstorming retreats or camps, employee rotation areas, OJT, learning-by-doing and learning by
observation (Sabherwal and Becerra-Fernandez, 2003); development <strong>of</strong> adequate teamatmosphere
(Zárraga and Bonache, 2005);
Architectural innovations: creation <strong>of</strong> meeting and sharing organizational spaces/points (Balestri
et al., 2003; Lechner and Dowling, 2003; Alvarenga Neto, 2008); design <strong>of</strong> virtual and physical
layout and workplaces environments (von Krogh et al.,1997; Alvarenga Neto, 2005); promotion <strong>of</strong>
regular knowledge conferences and supporting <strong>of</strong> microcommunities <strong>of</strong> knowledge (von Krogh et
al., 2000); stimulus to social and informal ga<strong>the</strong>rings (Bennet, 2001);
Emergence <strong>of</strong> Knowledge Facilitators and Knowledge Activists: such as epistemologists, care
specialists, knowledge managers, information analysts, CEO, CKO, project managers and middle
managers,among o<strong>the</strong>rs (von Krogh et al., 1997, 2000; Roth, 2003; Alvarenga Neto, 2005,
Nonaka et al., 2006); a company as a knowledge activist (von Krogh et al., 2008); role <strong>of</strong>
mediators as enablers in knowledge creation (Jyrama and Ayvaari, 2007);
Leadership: concerns leadership styles and roles <strong>of</strong> leadership (von Krogh et al., 2008; Ford and
Angermeier, 2004); leadership commitment (Inkpen, 1996); “selling <strong>of</strong> foresight” by providing
overall direction and <strong>the</strong> knowledge vision <strong>of</strong> a firm (von Krogh et al., 1997,2000); leadership’s
tasks in constructing ba, creating enabling conditions and setting <strong>the</strong> pace for knowledge
dynamism (Nonaka et al., 1998); phronesis (intellectual virtue) and flexible and distributed
leadership (Nonaka and Toyama, 2007); role <strong>of</strong> top-management directing <strong>the</strong> knowledgecreation
processes by creating visions and <strong>the</strong> role <strong>of</strong> middle-managers bridging top-management
visions with <strong>the</strong> chaotic reality at front line, also managing and interlinking ba (Peltokorpi, et al.,
2007);
Strategy and knowledge Vision: communication <strong>of</strong> <strong>the</strong> company’s strategy and knowledge visions
(Alvarenga Neto, 2005); instill a knowledge vision (von Krogh et al., 2000; Peltokorpi et al., 2007).
FIGURE 8 illustrates <strong>the</strong> four different groups <strong>of</strong> enabling conditions:
Figure 8: Analysis Of The Four Major Groups Of Enabling Conditions - source: Developed by <strong>the</strong>
authors
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5. Conclusions
Rivadávia Correa Drummond de Alvarenga Neto
The conclusions suggest that <strong>the</strong> concept <strong>of</strong> ba and its underlying concepts are indeed sine qua non
conditions for organizational knowledge creation and innovation processes, though ba is still both
<strong>the</strong>oretically and empirically under-explored. Never<strong>the</strong>eless, we have found that <strong>the</strong> concept has
somehow been expanded as part <strong>of</strong> o<strong>the</strong>r <strong>the</strong>oretical discussions and/or in different contexts, but still
demands fur<strong>the</strong>r exploration and development. FIGURE 9 syn<strong>the</strong>sizes <strong>the</strong> overall study and <strong>the</strong>
expansion <strong>of</strong> <strong>the</strong> concept <strong>of</strong> ba, bringing light to its unique features such as concepts, forms,
emergence, types, case studies, multiple discussions and applications, as well as suggestions for
future research:
Figure 9: Expanding <strong>the</strong> Concept <strong>of</strong> ba – Source: developed by <strong>the</strong> authors
The results pointed out to <strong>the</strong> identification <strong>of</strong> four major groups <strong>of</strong> enabling conditions –
social/behavioral, cognitive/epistemic, informational and business/managerial - which can be singly or
freely combined into different knowledge processes – creation, sharing/transfer, use – that occur in
different levels <strong>of</strong> interactions – individual, group, organizational, inter-organizational. (FIGURE 10):
These findings can be insightful for managers interested in creating and/or developing effective ba or
enabling contexts to foster knowledge creation and innovation in <strong>the</strong>ir organizations, as <strong>the</strong>y can
utilize <strong>the</strong>se frameworks to analyze, discuss, apply, manage and commit to specific combinations <strong>of</strong>
enabling conditions based on <strong>the</strong>ir awareness <strong>of</strong> knowledge processes and levels <strong>of</strong> interaction.
Concerning <strong>the</strong> management <strong>of</strong> enabling contexts in knowledge organizations, <strong>the</strong> study revealed that
<strong>the</strong> main arising challenges rely on all <strong>of</strong> <strong>the</strong> issues comprised on <strong>the</strong> four groups <strong>of</strong> enabling
conditions identified, most especially social/behavioral – norms and values that guide social
contextual interactions, thus providing a fertile ground for knowledge creation and innovation - and
business/managerial – concerning organizational culture and structure, change management,
leadership and <strong>the</strong> development <strong>of</strong> new HRM systems for connecting knowledge assets and
performance, thus achieving <strong>the</strong> necessary speed to agile, flexible and innovative in <strong>the</strong> 21 st century’s
knowledge society. A research agenda for ba is suggested in <strong>the</strong> fields <strong>of</strong> open innovation, social
networks – such as wikis, blogs, social tagging, among o<strong>the</strong>rs - and epistemic communities.
29

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Rivadávia Correa Drummond de Alvarenga Neto
Figure 10: Framework for designing an enabling context in KM
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32

Toward a Meta-Syn<strong>the</strong>sis Support System for Reuse <strong>of</strong>
Government Information Resource on City Travel And
Traffic: Knowledge Asset Management Approaches for
Beijing
Xiaomi An 1, 2 , Shaotong Xu 1, 2 , Yong Mu 3 , Wei Wang 3, , Xian Yang Bai 1, 2 , Andy
Dawson 4 1, 2
and Hongqi Han
1
Key Laboratory <strong>of</strong> Data Engineering and Knowledge Engineering <strong>of</strong> <strong>the</strong>
Ministry <strong>of</strong> Education, Renmin University <strong>of</strong> China, Beijing, China
2
School <strong>of</strong> Information Resource Management, Renmin University <strong>of</strong> China,
Beijing, China
3
Beijing Information Resources Management Center, Beijing, China
4
CIBER (Department <strong>of</strong> Information Studies, UCL), London, UK
anxiaomi@ruc.edu.cn
xushaotong2003@126.com
muy@beijingit.gov.cn
wangw@bjeit.gov.cn
baiyangcn@ruc.edu.cn
andrew.dawson@ucl.ac.uk
hanhongqi@126.com
Abstract: The authors propose knowledge asset management approaches to develop a meta-syn<strong>the</strong>sis support
system for <strong>the</strong> reuse <strong>of</strong> government information resources on city travel and traffic for Beijing City in China. An
analysis <strong>of</strong> various existing surveys about reuse <strong>of</strong> government information resources for city travel and traffic in
Beijing suggests <strong>the</strong> need for such a system. A critical review <strong>of</strong> o<strong>the</strong>r literature and <strong>of</strong> successful experiences in
o<strong>the</strong>r countries suggests three fur<strong>the</strong>r justifications for <strong>the</strong> development <strong>of</strong> such a system. Firstly, it is needed in
conceptual frameworks for awareness <strong>of</strong> government information data resources in administration, economy, and
legal right protection as knowledge asset. Secondly, it is needed in management frameworks for proper process
control <strong>of</strong> <strong>the</strong> reuse <strong>of</strong> government information resources for value added in services innovation in general.
Finally, it is needed in regulatory and standardized environments for accountability <strong>of</strong> stakeholders to maximized
benefits to city travellers and to sustainable development <strong>of</strong> a low carbon economy. The creation and
development <strong>of</strong> a meta-syn<strong>the</strong>sis system is proposed, aiming at collaboration, optimization and innovation in <strong>the</strong>
reuse <strong>of</strong> government information resources on city travel and traffic for Beijing through <strong>the</strong> creation <strong>of</strong> three
integrated levels <strong>of</strong> knowledge asset management systems: a quality oriented standards system for knowledge
asset value creation based on information collected at micro-level; a process oriented regulatory framework to
encourage knowledge asset value sharing at meso-level; and a service-oriented licensing system for knowledge
asset value addition through delivery and reuse at macro-level. The suggested knowledge asset management
approaches would support <strong>the</strong> efficiency, effectiveness and economy <strong>of</strong> intelligent traffic administration, support
good governance <strong>of</strong> value added services based on government information resources, and support intellectual
activity around smart city travel and traffic.
Keywords: Government information resources, information reuse, support system, knowledge asset
management, city travel and traffic, Beijing
1. Introduction
Government city travel and traffic information consists <strong>of</strong> data created or collected from government
functions and activities in pursuance <strong>of</strong> <strong>the</strong>ir legal obligations relevant to city travel and traffic,
including location data needed for travel(e.g. commercial centres, entertainment centres,
restaurants, hospitals, education and training centres, etc)and traffic data(e.g. real-time traffic,
traffic events, traffic facilities, etc,. They have great societal and economic value as public data assets
and can be reused by society above and beyond governmental use.
A growing number <strong>of</strong> international studies have focused on reuse systems for government information
resources(Chen and Huang, 2008; Chen and Ran, 2008; Chen and Wang, 2010; Ding, 2007; Ding,
2009; Gao, 2005; Mu2009, 2010; Rang 2007, 2008, 2010; Xia 2009a &b; Zhao 2007, Zhou, 2008;
Zhou 2009a&b). However, most previous studies focus on single reuse systems ( e.g. for non-pr<strong>of</strong>it
reuse or for commercial reuse ) and do not consider <strong>the</strong> relationships <strong>of</strong> different systems and <strong>the</strong>ir
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Xiaomi An et al
integrated use in conformity with Chinese legal, regulatory and standards environments. Nothing has
been written on reuse systems for government information on city travel and traffic.
This paper proposes using a knowledge asset management approach to develop a meta-syn<strong>the</strong>tic
support system for <strong>the</strong> reuse <strong>of</strong> government information resources on city travel and traffic for Beijing
City in China. It aims to provide <strong>the</strong>oretical guidance for developing policies and measures to support
<strong>the</strong> reuse <strong>of</strong> government city travel and traffic information resources in <strong>the</strong> implementation <strong>of</strong> 2010
Beijing Green Travel Information Services Engineering Working Plan. The paper is written based on
recent studies involving <strong>the</strong> Beijing Information Resources Management Centre and <strong>the</strong> Beijing
Municipal Commission <strong>of</strong> Economy and Information Technology (November 2010-May 2011). It
reports some preliminary findings from analysis <strong>of</strong> existing surveys; laws, regulations and policies;
and literature and case studies.
2. Rationale for developing a meta-syn<strong>the</strong>tic support system for practice
2.1 Major problems in Beijing city travel and traffic information services
Reports from surveys (Mu, 2009; The Beijing Information Resources Management Centre 2010) show
that Beijing city traffic information distribution (including simple release) by different government
departments is inconsistent, incomplete and inaccurate.
Different government departments use different technologies and standards with different coverage,
which for instance can even result in different real-time traffic information about <strong>the</strong> same road.
Companies and research institutions are key players in <strong>the</strong> supply <strong>of</strong> Beijing city travel and traffic
information services, and have great interest in investment in value-added green travel information
services, but <strong>the</strong>re are few channels for <strong>the</strong>m to get <strong>the</strong> city travel and traffic information from
government. What <strong>the</strong>y can get is not complete and lacks integration.
The problems <strong>of</strong> poor quality traffic information and difficulties in its usage are urgent problems that
needed to be solved by <strong>the</strong> Beijing municipal government.
2.2 Major problems in relevant laws, regulations and policies
An investigation <strong>of</strong> relevant laws show that <strong>the</strong>re is no relevant legislation relating to access and
reuse <strong>of</strong> government information resources in China.
The earliest relevant <strong>of</strong>ficial document is “Opinions on Enhance <strong>the</strong> Exploration and Use <strong>of</strong>
Information Resources (2004)”, which points out <strong>the</strong> economic and social value <strong>of</strong> government
information resources and suggests <strong>the</strong>ir value-added exploration and utilization by society. The
document requests relevant government departments to develop polices and management measures
to license <strong>the</strong> reuse <strong>of</strong> relevant government information resources as well as normalize <strong>the</strong>
behaviours <strong>of</strong> value-added social information services.
The second relevant <strong>of</strong>ficial document is Guiding Opinions on Enhancing Transport Information
Resources ( 2005), which requests government departments to enhance <strong>the</strong> exploration and
utilization <strong>of</strong> transport information resources through collection, sharing, open access, standards
system development, public services and commercial services. It is an industry specific document
relating to <strong>the</strong> implementation <strong>of</strong> <strong>the</strong> previously cited document above .
The most relevant <strong>of</strong>ficial document is Regulations on Open Access <strong>of</strong> Government Information <strong>of</strong>
People’s Republic <strong>of</strong> China (2007). Article 10 <strong>of</strong> this document provides a list <strong>of</strong> 11 types <strong>of</strong>
government information for open access, although <strong>the</strong> list does not include travel and traffic
information. According to article 11, citizens, corporate bodies and o<strong>the</strong>r organisations can apply for
relevant government information according to <strong>the</strong>ir particular personal and research needs, but
whe<strong>the</strong>r information requested can be used for commercial services is not addressed in <strong>the</strong>
document.
The above <strong>of</strong>ficial documents rationalize <strong>the</strong> needs for developing policies, management measures
and licensing frameworks for reuse <strong>of</strong> government information resources, but exactly how such
development might take place needs to be identified.
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Xiaomi An et al
2.3 Reasons for developing a meta-syn<strong>the</strong>tic support system to guide practice
The above problems indicate that a knowledge asset management approach to building a metasyn<strong>the</strong>tic
support system is needed in practice for three reasons. Firstly, government information
resources on city travel and traffic are <strong>of</strong> poor quality, inconsistent and inaccurate, and in need <strong>of</strong>
development as knowledge assets to add value and promote quality control. Secondly, <strong>the</strong> activities
<strong>of</strong> collecting, processing, maintaining, updating and delivering government information resources are
separate, with disparate approaches, resulting in isolated yet overlapping systems, which require
more holistic, consistent approaches to knowledge asset sharing to allow <strong>the</strong> construction <strong>of</strong> a
workable process control system. Finally, no <strong>of</strong>ficial mechanism <strong>of</strong> licensing for reuse <strong>of</strong> government
information resources for value-added services exists, and one needs to be developed to guide and
promote such activities.
3. Foundations for developing a meta-syn<strong>the</strong>tic support system
3.1 Needs identified in relevant Chinese literature
The following studies are based on 134 papers, 55 relevant laws, regulations, policies, standards and
guidelines relating to reuse systems <strong>of</strong> government information resources and city travel and traffic
information reuse and services taken from Chinese literature.
3.1.1 Research in and about reuse <strong>of</strong> government information systems and support
The most heavily discussed topics on reuse <strong>of</strong> government information systems in Chinese literature
are <strong>the</strong> value-added reuse <strong>of</strong> government information practices and systems <strong>of</strong> European Union and
U.S. (Gao, 2005; Chen & Huang, 2008; Chen & Ran, 2008; Chen and Wang, 2010; Ran, 2007, 2008,
2010; Yang, 2009, 2010). Differences <strong>of</strong> reuse practices <strong>of</strong> European Union and U.S. and <strong>the</strong>ir
practical effects have been discussed in terms <strong>of</strong> policy system, policy direction, reuse models and
benefits (Ding, 2009; Mu, 2010; Mu, Wang, Shao, Zhao, 2010; Shao and Wang, 2010).
Four types <strong>of</strong> reuse systems models have been studied, including a government administration
system model (Fu, 2006; Zhou, 2008; Chen and Wang, 2010), a non-pr<strong>of</strong>it public service system
model (Fu, 2006; Zhou, 2008; Chen, 2010), a marketing commercial service system model (Fu, 2006;
Zhou, 2008; Huan, 2008; Chen and Wang 2010; Rang, 2010), and a licensing system model (Huan,
2008) .
The following issues relating to support for government information reuse have been discussed: open
access to government information, public access rights to government information, participation rights
for public reuse <strong>of</strong> government information for value-added services, and security <strong>of</strong> government
information services (Chen and Huang, 2008; Xia, 2009a &b; Zhang, 2009a &b; Zhang, Zhao, Zhang,
2009).
The above studies indicate that current research is based on studies <strong>of</strong> international experiences from
abroad with little concern for <strong>the</strong> particular needs <strong>of</strong> Chinese practice, and <strong>the</strong> comprehensive
requirements <strong>of</strong> <strong>the</strong> Chinese legal, regulatory and standards environments. The focus has been on
<strong>the</strong> difference between reuse system models with little concern for <strong>the</strong>ir relationships and integrated
use, shared values and impacts.
3.1.2 Research in and about city travel and traffic information reuse and services
Five papers have been found relevant. Guan (2004) studied <strong>the</strong> display <strong>of</strong> road traffic information for
release and <strong>the</strong> releasing services. Li and Yu (2006) analysed features <strong>of</strong> <strong>the</strong> information needs <strong>of</strong>
traffic information services, <strong>the</strong> means to release, and models for information services. Yang (2007)
studied <strong>the</strong> traffic information services model <strong>of</strong> <strong>the</strong> U.S. and Japan and <strong>the</strong>ir operating systems. Li
(2010) introduced <strong>the</strong> concept <strong>of</strong> traffic information resources and analyzed <strong>the</strong> problems <strong>of</strong> low use
<strong>of</strong> traffic information, She pointed out that lack <strong>of</strong> support systems for <strong>the</strong> communication <strong>of</strong>
information resources is <strong>the</strong> main reason for <strong>the</strong> existing problems. Liu (2010) studied <strong>the</strong> marketing
model, forms, products and pricing issues <strong>of</strong> road travel and traffic information services.
The research perspectives <strong>of</strong> above studies are limited to ei<strong>the</strong>r information technology or data
management, with little awareness <strong>of</strong> managing government information resources for city travel and
traffic as knowledge assets. Previous studies have focused on final control <strong>of</strong> traffic information
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Xiaomi An et al
services with little concern <strong>of</strong> initial and full-process control, and <strong>of</strong> quality assurance <strong>of</strong> information,
and failed to consider normalization <strong>of</strong> core business processes and <strong>the</strong> coordination <strong>of</strong> <strong>the</strong>
relationships and benefits <strong>of</strong> different stakeholders. A <strong>the</strong>oretical framework to guide building a
support system for government information reuse for city travel and traffic is needed to
comprehensively address <strong>the</strong> concerns <strong>of</strong> complex management issues at <strong>the</strong> strategic level.
3.2 <strong>International</strong> experiences from relevant English literature and case studies
The following studies are based on 113 relevant papers, 98 items <strong>of</strong> relevant laws, acts regulations,
standards and guidelines collected from English literature, as well as case studies <strong>of</strong> support systems
for government information reuse <strong>of</strong> city travel and traffic data in Hong Kong and Singapore.
3.2.1 Legal frameworks for reuse <strong>of</strong> public sector information in Europe and <strong>the</strong> UK
Research shows complete planning, doing, checking and improving (PDCA) studies have been done
on mapping, building and putting into practice legal frameworks for reuse and exploitation <strong>of</strong> public
sector information in European countries. Janssen and Dumortier (2003) wrote on progress toward a
Europe framework for <strong>the</strong> reuse <strong>of</strong> public sector information(PSI), Pas (2004) studied <strong>the</strong> legal and
policy reflections <strong>of</strong> PSI, Fornefeld, et al (2008) reported on assessment <strong>of</strong> <strong>the</strong> reuse <strong>of</strong> PSI in <strong>the</strong>
geographical, meteorological and legal information sectors in conformity with <strong>the</strong> European Directives
on <strong>the</strong> Reuse <strong>of</strong> Public Sector Information (2003).
Experience can be gained from <strong>the</strong> UK from <strong>the</strong>ir comprehensive legal support system established for
reuse <strong>of</strong> PSI. The Reuse <strong>of</strong> Public Sector Information Regulations (2005) sets out a legal framework
for <strong>the</strong> reuse <strong>of</strong> PSI under <strong>the</strong> European Directives on <strong>the</strong> Reuse <strong>of</strong> Public Sector Information (2003),
<strong>the</strong> UK Government Licensing Framework (2010) sets out best practice, standardises <strong>the</strong> licensing
principles for government information and recommends <strong>the</strong> use <strong>of</strong> <strong>the</strong> UK Open Government Licence
for PSI. It provides a policy and legislative overview for licensing <strong>of</strong> public sector information both
within central government and in <strong>the</strong> wider public sector.
3.2.2 Access and reuse <strong>of</strong> transportation information resources in <strong>the</strong> U.S.
Problems <strong>of</strong> a lack <strong>of</strong> support systems for access to and reuse <strong>of</strong> transportation information resources
and lack <strong>of</strong> pr<strong>of</strong>essional information services were first mentioned in Baldwin’s Access to U.S.
Transportation Information Resources (2000). Later, <strong>Conference</strong>s on Accessing Transportation
Information Resources Worldwide (2001) indicated that such phenomena were universal in <strong>the</strong>
international arena. To address <strong>the</strong> problems, Scoping Study for a National Strategic Plan for
Transportation Information Management was published in 2003, Transportation Knowledge Networks:
A Management Strategy for <strong>the</strong> 21 century in 2006, Asset Management Position Paper in 2008, Asset
Management Data Collection for Supporting Decision Processes in 2009, and DOT Open
Government Plan in 2010.
Experience taken from <strong>the</strong> U.S. relates to <strong>the</strong>ir evolution and development processes, which can be
seen as four stages. The first stage is data management, <strong>the</strong> second information management, <strong>the</strong>
third knowledge management, and <strong>the</strong> fourth asset management.
3.2.3 City travel and traffic information services in Hong Kong and Singapore
Studies <strong>of</strong> Hong Kong experiences show that a united transportation information services system is
established in Hong Kong for exchange <strong>of</strong> transportation information, sharing transportation facilities
and producing social and economical benefits. A unified information distribution system with a variety
<strong>of</strong> mechanisms <strong>of</strong> release, partnerships with companies and public for value-added services, and free
public services are key features <strong>of</strong> <strong>the</strong>ir information services. Government departments play important
roles in supervision <strong>of</strong> information collection, processing, integration and delivery, as well as auditing
<strong>the</strong> value-added private enterprises information services and non-pr<strong>of</strong>it public information services.
Experience can be taken from Hong Hong regarding <strong>the</strong>ir whole life cycle control <strong>of</strong> information
products and services under one unified administrative system.
Studies <strong>of</strong> Singapore experiences show that an independent body responsible for regulating bus
services, bus service operators, ticket payment services, and bus and rapid transit system fairs was
established as <strong>the</strong> Public Transport Council (PTC) in 1987 under <strong>the</strong> Public Transportation Council
Act. PTC operates within <strong>the</strong> framework <strong>of</strong> <strong>the</strong> PTC Act and prevailing public transportation polices.
36

Xiaomi An et al
PTC works closely with players in <strong>the</strong> public transport industry and in partnership with o<strong>the</strong>r public
agencies to bring about quality basic bus services and an affordable public transportation system.
Core functions <strong>of</strong> PTC include: licensing <strong>of</strong> bus services that charge fares, regulating bus services
standards, licensing <strong>of</strong> bus service operators, licensing <strong>of</strong> transit ticket payment service providers and
regulating bus and train fares. Experience can be taken from Singapore regarding <strong>the</strong>ir one single
administrative authority exercising legitimate control over all processes <strong>of</strong> information resource access
and reuse.
3.3 Justification <strong>of</strong> developing a meta-syn<strong>the</strong>tic support system
Firstly, it is needed in conceptual frameworks for awareness <strong>of</strong> government information data
resources in administration, economy, and legal right protection as knowledge asset. Secondly, it is
needed in management frameworks for proper process control <strong>of</strong> <strong>the</strong> reuse <strong>of</strong> government information
resources for value added in services innovation in general. Finally, it is needed in regulatory and
standardized environments for <strong>the</strong> accountability <strong>of</strong> stakeholders to maximized benefits to city
travellers and sustainable development <strong>of</strong> a low carbon economy.
4. A knowledge asset management approach to a meta-syn<strong>the</strong>tic support
system
Based on <strong>the</strong> above studies and a fur<strong>the</strong>r survey <strong>of</strong> 12 Beijing municipal government departments, 3
group meetings with experts and 2 meetings with municipal government bodies, three meta-syn<strong>the</strong>tic
support system frameworks forming a complete set <strong>of</strong> knowledge asset management approaches are
proposed. These consist <strong>of</strong>: a conceptual framework for mapping objectives <strong>of</strong> reuse subjects for
added value in compliance with laws and regulations; a management framework for building key
components and relationships <strong>of</strong> reuse activities and processes to protect value and comply with
rules; and an implementation framework for instituting systems and workflows for reuse objects to
create added value in compliance with standards.
4.1 Conceptual framework for mapping knowledge asset management objectives
A conceptual framework for creation and development <strong>of</strong> a meta-syn<strong>the</strong>tic system is proposed based
on previous studies on knowledge asset management (An, 2010, An, et al, 2010) aiming at
collaboration, optimization and innovation in <strong>the</strong> reuse <strong>of</strong> government information resources on city
travel and traffic for Beijing through creation <strong>of</strong> three integrated levels <strong>of</strong> knowledge asset
management system: a quality oriented standards system for knowledge asset value creation based
on information collected at micro-level for government departments; a process oriented regulatory
framework to encourage knowledge asset value sharing at meso-level for trans-government
departments; and a service oriented licensing system for knowledge asset value addition through
delivery and reuse at macro-level for societal services.
Figure 1: Conceptual framework for mapping knowledge asset management objectives
37

Xiaomi An et al
4.2 Management framework for building core components and <strong>the</strong>ir relationships
A management framework for building core components and <strong>the</strong>ir relationships is proposed based on
<strong>the</strong> idea <strong>of</strong> managing government information resources as knowledge assets with integration
controls to ensure value creation, protection and sharing, and increasing value throughout <strong>the</strong> entire
process <strong>of</strong> collecting, processing, storage, updating and distribution (including releasing and reuse
licensing), in compliance with laws, regulations, rules and standards. The integration controls would
combine to form a whole set <strong>of</strong> solutions helping to maximize administrative, economic and social
effectiveness and efficiency at lower cost, move towards intelligent traffic controls, intellectual travel
services and smart travelling, reduce travel costs and increase travel efficiency and effectiveness, in
line with <strong>the</strong> goals <strong>of</strong> green travelling and low carbon economy.
Intellectual travel services and travelling and intelligent traffic
facilities
Micro level:
quality control
standards system
compliance
with
standards
collection
value
creation
Promote green travelling and
low-carbon economy
Reduce city travel cost and increase travel
efficiency and effectiveness
Meta-syn<strong>the</strong>tic support
system for reuse
consistency
consistency consistency consistency
Meso level:
activity
standardization
system
compliance
with rules
Control Standardize
process,
storage and
update
value
protection
&sharing
Knowledge asset management
approach
Maximize administrative,economic and
social effectiveness at low costs
compliance
with laws&
regulations
distribution
and licensing
value
increasing
reuse
management
syn<strong>the</strong>sis
integration
management
integration integration
integration optimization
consistency
consistency
consistency
consistency
Macro level:
Regulatory
requirements
system
guidance innovation
Figure 2: Framework for building core components and <strong>the</strong>ir relationships
4.3 Implementation framework for operational systems
knowledge
asset
management
solution
method
An implementation framework consists <strong>of</strong> three operational systems for building workflows in
compliance with laws, regulations, rules and standards, aiming for adaptability to ensure consistency,
completeness and accuracy <strong>of</strong> government information on city travel and traffic and <strong>the</strong>ir real-time
accessibility and availability.
38
idea

Xiaomi An et al
The first is an administration system to control collection, processing, integration, storage, updating
and distribution (including release and reuse licensing), which would be embedded in e-government
business processes and <strong>the</strong> governance <strong>of</strong> traffic facilities enabling intelligent traffic controls and
maximized administrative effectiveness and efficiency.
The second is a non-pr<strong>of</strong>it public service system for <strong>the</strong> public good, and <strong>the</strong> third is a value-added
commercial marketing service system, which would be embedded in intellectual travel services and
smart travelling for maximized social and economic effectiveness and efficiency.
Information
source 1
Information
source 2
Information
source 3
……
compliance with
standards
collection
Requirement
analysis
completeness, accuracy,
consistency, real-time
accessibility and availability
process
integration
compliance
with rules
storage
and
updating
government traffic departments:
intelligent traffic controls
compliance with laws
& regulations
distribution
traveller:
smart travelling
Reuse support
system
Administration
system
releasing
& reuse
licensing
companies and third
parties:
intellectual service
non-pr<strong>of</strong>it
public service
value-added
commercial service
Marketing system
Public good system
Figure 3: Implementation framework for operational systems
Mechanisms <strong>of</strong> data integration, polices <strong>of</strong> unified information delivery, measures <strong>of</strong> reuse licensing
for permission <strong>of</strong> value added commercial services have been proposed to Beijing municipal
government in <strong>the</strong> development <strong>of</strong> Management Measures for Delivery <strong>of</strong> City Travel and Traffic
Information for Beijing Government Departments and Guidance for Implementation <strong>of</strong> Management
Measures for Delivery <strong>of</strong> City Travel and Traffic Information for Beijing Government Department under
<strong>the</strong> above frameworks, which are under discussions.
5. Conclusions
5.1 Research contribution and implications
Though demands for developing policies and management measures for reuse <strong>of</strong> government
information resources have been identified in government agenda and discussed in papers, current
studies are fragmental with disparate perspectives, with focus on different initiatives without concern
<strong>of</strong> value chains <strong>of</strong> reuse <strong>of</strong> government information resources along lifecycle <strong>of</strong> information resources
management. This paper provides knowledge asset management perspectives to tie all <strong>of</strong> <strong>the</strong>
different initiatives and different components into one holistic system for multiple levels <strong>of</strong>
management support to efficiency, effectiveness and economy <strong>of</strong> intelligent traffic administration,
good governance <strong>of</strong> value-added services based on government information resources, and
intellectual activity around smart city travel and traffic.
5.2 Research limitations and future research
Lack <strong>of</strong> regulations, polices and measures for reuse <strong>of</strong> government information resource in China,
this paper is limited to knowledge asset management approaches to build a comprehensive
overseeing system to support policies and measures developing and implementing. Case studies for
<strong>the</strong> use <strong>of</strong> <strong>the</strong> three frameworks in practice will be discussed in future paper.
6. Acknowledgements
This work is partly supported by <strong>the</strong> Science and Technology Key Project (project number: 109005) ,
<strong>the</strong> 2008 Program for New Century Excellent Talents in University from <strong>the</strong> Ministry <strong>of</strong> Education <strong>of</strong>
China and <strong>the</strong> Beijing Municipal Commission <strong>of</strong> Economic and Information Technology, <strong>the</strong> National
Natural Science Foundation <strong>of</strong> China project (project number: 71073168/G031402) . The authors
39

Xiaomi An et al
thank Hongyu Guan, Yangliang Wei and Yongjing Wang for participating data collecting and case
studies.
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41

Knowledge-Based Construction Element Database
Marko Anzelak, Gert Morak and Wolfgang Ebner
Industriestiftungsinstitut eBusiness(biztec), Klagenfurt, Austria
marko@biztec.org
gmorak@biztec.org
wolfgang.ebner@biztec.org
Abstract: Technical drawings contain a wealth <strong>of</strong> implicit knowledge, which is subsequently ei<strong>the</strong>r not used by
production plants, or only in a limited manner. Fur<strong>the</strong>rmore, even though companies specialised in a particular
field <strong>of</strong>ten use similar constructions to fulfil <strong>the</strong> same purpose, <strong>the</strong>y tend to start from scratch each time. To
ensure that drawings can be utilised by more persons than merely <strong>the</strong> original design engineer, <strong>the</strong> descriptions
would have to be very precise, in order to capture <strong>the</strong> ideas <strong>of</strong> <strong>the</strong> designer and allow for <strong>the</strong> subsequent
comprehension by o<strong>the</strong>rs. This would allow ano<strong>the</strong>r designer to rapidly understand <strong>the</strong> idea and introduce any
required adaptations. In reality, projects that are commonly used as templates are own projects, <strong>of</strong>ten limited to
those from recent years. Older projects and drawings are frequently disregarded or simply not found. In order to
utilize this wasted knowledge and potential, a knowledge database was designed, taking into account <strong>the</strong>
following aspects: Construction elements and component groups must be indexed and described using
meaningful meta information. The construction elements are managed in an object tree, which takes into account
a variety <strong>of</strong> search parameters. Construction elements are categorised by function, type, size or properties and
can be searched for accordingly. The meta data <strong>of</strong> <strong>the</strong> drawing are automatically transferred and assigned by
means <strong>of</strong> a construction element recognition algorithm. In <strong>the</strong> best case, <strong>the</strong> user is merely required to check <strong>the</strong>
data. The database can be accessed through a web client and is <strong>the</strong>refore location-independent. The additional
benefit provided by <strong>the</strong> system, besides saving time and effort, is <strong>the</strong> increased communication between design
engineers. When re-using a drawing, a designer is encouraged to communicate directly with <strong>the</strong> original
designer, thus generating practical knowledge. Ideally, errors and problems, which occurred when <strong>the</strong> drawing
was first created, will also have been documented. However, this is a cultural issue, which is difficult to regulate.
In our case <strong>the</strong> problem is solved by entering into a one-to-one discussion <strong>of</strong> errors and deficiencies experienced
during <strong>the</strong> design stage (Gentsch 1999).
Keywords: knowledge management project, construction database, technical knowledge in drawings, knowledge
management system
1. Introduction and motivation
In all areas <strong>of</strong> knowledge management, and thus also in <strong>the</strong> case <strong>of</strong> technical drawings, <strong>the</strong>re is a
problem <strong>of</strong> structured storage. The data quality <strong>of</strong> any given system depends to a large extent upon
<strong>the</strong> precision and volume <strong>of</strong> <strong>the</strong> entered meta data. For technical draughtsmen it is <strong>of</strong>ten especially
difficult to create a “table <strong>of</strong> content” for <strong>the</strong>ir drawing, or to find suitable keywords, which reflect <strong>the</strong>
content or <strong>the</strong> function <strong>of</strong> <strong>the</strong> designed element. In addition, technical drawings are required to feature
o<strong>the</strong>r information, such as <strong>the</strong> current revision status, <strong>the</strong> list <strong>of</strong> parts, etc. These special requirements
are usually fulfilled by bespoke drawing management programs. However, most <strong>of</strong> <strong>the</strong>se do not <strong>of</strong>fer
sufficient functionality to meet <strong>the</strong> needs <strong>of</strong> a knowledge management system. These formal
requirements are subsequently joined by <strong>the</strong> requirements <strong>of</strong> <strong>the</strong> design engineers. Their main priority
is <strong>the</strong> ability to re-use an existing drawing. In order to avoid breaching copyright or patent rights, <strong>the</strong>
database is restricted to individual companies. However, one company may employ several design
engineers at different locations. In view <strong>of</strong> <strong>the</strong> technical implementation it is <strong>the</strong>refore necessary to
ensure that decentralised access to <strong>the</strong> database is possible. Fur<strong>the</strong>rmore, design engineers need to
be able to access all associated documents quickly. During <strong>the</strong> process <strong>of</strong> creating a drawing many
different documents are relevant, ranging from general guidelines for <strong>the</strong> design to specific
instructions and regulations. In most cases, <strong>the</strong>se documents are well managed. However, <strong>the</strong>re are
instances when ideas, which occur to a design engineer during <strong>the</strong> drawing process, are recorded but
are not stored in a structured manner, and <strong>the</strong>refore cannot be included in <strong>the</strong> relevant guidelines.
Drawing archives, where drawings are stored in <strong>the</strong>ir paper form are only searched in very urgent
cases. If <strong>the</strong> archived drawing has already been scanned and is available in an electronic format, <strong>the</strong>n
<strong>the</strong> resulting electronic files are more likely to be searched. Here, <strong>the</strong> quality <strong>of</strong> <strong>the</strong> scans and <strong>the</strong>
incorrect labelling <strong>of</strong> <strong>the</strong> file is a big issue. These activities are usually carried out by interns, although
it would be more helpful if a pr<strong>of</strong>essional viewed <strong>the</strong> archive, and attributed <strong>the</strong> relevant file name at
<strong>the</strong> time <strong>of</strong> scanning, ideally adding keywords and <strong>the</strong> correct assignment at <strong>the</strong> same time.
The technical drawing below (Figure 1) provides an example <strong>of</strong> a drawing, which does not provide
much useful information without additional data.
42

Figure 1: Transmission gear
Marko Anzelak et al.
This has given rise to three different approaches. A design engineer decides – in accordance with his
or her personal standard <strong>of</strong> knowledge – which approach to select.
Variation 1: The new design is so simple that a time-consuming search for a template is not
worthwhile. On average, <strong>the</strong> completion <strong>of</strong> such a drawing takes less than 30 minutes.
Variation 2: The planned design is simple, but <strong>the</strong> designer has a suitable template in mind. A
search is initiated, but if it takes longer than 10 - 15 minutes, <strong>the</strong> search is discontinued and
variation 1 is selected.
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Variation 3: The brief requires a complicated, sophisticated design. In this case, <strong>the</strong> design
engineer invests far more time in a template search. Several templates may be selected,
elements <strong>of</strong> which are incorporated in <strong>the</strong> new design.
These three variations permit <strong>the</strong> conclusion that even simple drawings justify <strong>the</strong> search for a
template, as long as <strong>the</strong> time required for <strong>the</strong> search and <strong>the</strong> subsequent adaptation does not exceed
<strong>the</strong> time required to create a new drawing from scratch. In <strong>the</strong> case <strong>of</strong> drawings with a higher degree
<strong>of</strong> sophistication, <strong>the</strong> benefit takes <strong>the</strong> form <strong>of</strong> a more efficient search, or <strong>the</strong> faster retrieval <strong>of</strong> <strong>the</strong>
relevant drawings (Figure 2).
Figure 2: Actual situation
The search for documents associated with <strong>the</strong> creation <strong>of</strong> drawings represents an additional time
component. This is closely linked to <strong>the</strong> knowledge status <strong>of</strong> <strong>the</strong> design engineer, and can also be
supported by <strong>the</strong> drawings database, which links every drawing with <strong>the</strong> relevant documentation.
Drawings that are created from scratch are initiated in a specific category. The required and <strong>the</strong> useful
types <strong>of</strong> documentation for this category are predefined within <strong>the</strong> system, and are thus automatically
available to <strong>the</strong> design engineer.
2. The initial situation
Technical drawings are primarily constructed with CAD programmes, which have <strong>the</strong>ir own file
formats. Most companies use a traditional file system for <strong>the</strong> storage <strong>of</strong> <strong>the</strong>ir drawings, relying on a
project-based system for archiving. Alternatively, it is possible to use drawing management systems
with a parallel storage system for regulations, guidelines, and standards as well as a quality manual.
There is no direct connection between <strong>the</strong> individual components. In order to create a new design, a
design engineer must first find <strong>the</strong> data in this storage system, before commencing with <strong>the</strong> design <strong>of</strong>
<strong>the</strong> drawing. New employees and those with little experience <strong>of</strong>ten describe this search as an unsafe
process, in which <strong>the</strong>y can never be sure that <strong>the</strong>y have located all relevant documentation. In our
partner organisation, <strong>the</strong> weekly meetings with <strong>the</strong> head designer were reduced to monthly meetings
due to time constraints, thus removing <strong>the</strong> opportunity for face to face communication. Unfortunately,
face to face communication is not actively encouraged by most organisations, even though this is
such a vital factor. For this reason, our project includes targeted communication as one <strong>of</strong> <strong>the</strong> defined
workflow stages (Figure 3).
The meetings are recorded in writing and <strong>the</strong>se minutes are filed in a structured system. However, <strong>the</strong>
content <strong>of</strong> <strong>the</strong> minutes is not indexed in accordance with <strong>the</strong> <strong>the</strong>matic content. This means that
content-related searches can only be carried out with prior knowledge <strong>of</strong> <strong>the</strong> date <strong>of</strong> <strong>the</strong> meeting or by
using specific keywords or full-text searches. Not only meeting minutes, but also many o<strong>the</strong>r
documents are handled in this way, e.g. training course materials, reports, various types <strong>of</strong>
documentation. Virtually all <strong>of</strong> <strong>the</strong>se are directly related to a construction element and thus to a
drawing. The most obvious solution <strong>the</strong>refore, is to link <strong>the</strong>se “free” documents with <strong>the</strong> construction
elements database, and thus improve <strong>the</strong> searchability. This step has to involve a partitioning <strong>of</strong> <strong>the</strong>
contents, but this and <strong>the</strong> associated effort are necessary to achieve clearly structured data and a
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knowledge basis <strong>of</strong> superior quality. In this way, it is possible to ensure <strong>the</strong> rapid retrieval <strong>of</strong> stored
knowledge in <strong>the</strong> long term (Collins 1993).
Data that are specific to production processes or customers are stored in an ERP system toge<strong>the</strong>r
with <strong>the</strong> construction element. Customers may have special requirements, which are stored in <strong>the</strong>
ERP-System and are important needs for <strong>the</strong> design (Handlbauer 2009). The link to <strong>the</strong> associated
drawings is established through <strong>the</strong> use <strong>of</strong> a unique parts number. Automatic linking is not provided,
and documents or guidelines are also not linked. However, at this time, <strong>the</strong> ERP system is <strong>the</strong> only
system that allows <strong>the</strong> user to represent <strong>the</strong> connection between <strong>the</strong> parts and <strong>the</strong> construction
groups. This functionality is well-used, though it is subject to one point <strong>of</strong> criticism with regard to <strong>the</strong>
difficulty <strong>of</strong> finding associated drawings.
Figure 3: Target situation
It is our aim to provide <strong>the</strong> designer with one system, which is able to meet <strong>the</strong> entire range <strong>of</strong>
requirements. In our project, one option would have been to use an existing ERP system as our basis,
adding <strong>the</strong> additional information by using meta data sheets. Option 2 is <strong>the</strong> development <strong>of</strong> a
separate application. We opted for <strong>the</strong> separate application, because we want to <strong>of</strong>fer all users
unrestricted access and maximum comfort during data entry and data searching, which would not
have been possible given <strong>the</strong> limited flexibility <strong>of</strong> <strong>the</strong> ERP system. The application provides <strong>the</strong> user
with a tree structure, in which drawings and associated meta data are stored. The meta data are
semi-structured, which means − on <strong>the</strong> one hand − that <strong>the</strong> range <strong>of</strong> data to be entered is reduced
with predefined selection options. On <strong>the</strong> o<strong>the</strong>r hand, this allows greater scope for <strong>the</strong> storage <strong>of</strong>
information. Fur<strong>the</strong>rmore, <strong>the</strong> meta data are stored toge<strong>the</strong>r with all links to <strong>the</strong> additionally relevant
documents, which means that all required information is available at a glance. This also ensures a
connection to <strong>the</strong> ERP system, as it is possible to transfer between <strong>the</strong> systems using <strong>the</strong>se links.
The possibility also exists to link different parts by using this structure. However, <strong>the</strong> individual part is
embedded in a hierarchy due to its component group, and this type <strong>of</strong> data entry is only really feasible
and comprehensive when a very good knowledge <strong>of</strong> all available parts is available. Even when
designers have knowledge <strong>of</strong> virtually every part, it remains difficult to justify <strong>the</strong> necessary
expenditure <strong>of</strong> time required for setting up <strong>the</strong> links. This is why <strong>the</strong> project intends to use an
automation algorithm in order to reduce <strong>the</strong> amount <strong>of</strong> time required to merely checking <strong>the</strong> data.
Although this process is not much less time-intensive than <strong>the</strong> process <strong>of</strong> establishing <strong>the</strong> links, it is
subjectively perceived as a far simpler and more pleasant task. While <strong>the</strong> system does require greater
effort on <strong>the</strong> part <strong>of</strong> <strong>the</strong> designers, <strong>the</strong> majority never<strong>the</strong>less realise that this is necessary in order to
achieve greater overall efficiency in terms <strong>of</strong> effort and time. Most employees <strong>the</strong>refore have a
positive attitude towards <strong>the</strong> project, with many even regarding it as an urgently required measure
(Dong 2009).
The project is implemented in two phases. During <strong>the</strong> first phase, a data sheet was developed for <strong>the</strong>
construction elements to record <strong>the</strong> meta data belonging to a drawing (Figure 4). A directory tree was
created, in which <strong>the</strong> drawings were classified. Depending on <strong>the</strong> requirements, this directory tree can
be based on a range <strong>of</strong> criteria. This allows both an organisation-structure-view, and a project-
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structure-view. The meta data can be categorised in two areas − specific to a drawing or related to a
category. Each drawing is assigned to a category, which means that <strong>the</strong> category-related meta data
are automatically included. Category-related meta data primarily include <strong>the</strong> associated categoryspecific
documents. The ideas and experiences <strong>of</strong> <strong>the</strong> design engineer can be stored directly with <strong>the</strong>
drawing-specific meta data. If <strong>the</strong>se data also apply to o<strong>the</strong>r drawings, <strong>the</strong>y can be transformed into
category-related data. We should point out that this requires an additional investment <strong>of</strong> time. Though
<strong>the</strong>re is no immediate benefit to justify this effort, in <strong>the</strong> long term it does save a greater amount <strong>of</strong>
time. Generally speaking, <strong>the</strong> time required for <strong>the</strong> entry <strong>of</strong> meta data is a common concern, and any
improvement <strong>of</strong>fered to <strong>the</strong> performance <strong>of</strong> this task is <strong>of</strong> great value. For this reason, phase 2 <strong>of</strong> <strong>the</strong>
project focuses precisely on this issue.
Figure 4: Metadata model
In phase 2 it is intended to establish an interface to <strong>the</strong> drawing files, which is able to extract a variety
<strong>of</strong> data from <strong>the</strong> drawings and can thus automatically pre-fill <strong>the</strong> data from phase 1. Fur<strong>the</strong>rmore, an
algorithm will be developed, which will suggest a part category based on <strong>the</strong> content <strong>of</strong> <strong>the</strong> drawings.
In order to be able to meet all <strong>the</strong> requirements <strong>of</strong> technical draughtsmen, an evaluation survey was
carried out to record <strong>the</strong>ir specific needs.
3. Requirement analysis <strong>of</strong> technical designs
Within <strong>the</strong> scope <strong>of</strong> <strong>the</strong> requirement analysis, a study was carried out involving more than 30 design
engineers. The objective <strong>of</strong> <strong>the</strong> survey was to establish whe<strong>the</strong>r <strong>the</strong> requirements <strong>of</strong> different
designers are similar, and whe<strong>the</strong>r it is possible to define requirement categories. The core results <strong>of</strong>
this survey are stated below:
99% <strong>of</strong> <strong>the</strong> designers use AutoCad as <strong>the</strong>ir design programme
82% <strong>of</strong> those surveyed spend 80 - 100% <strong>of</strong> <strong>the</strong>ir time designing
Only 25% <strong>of</strong> <strong>the</strong> organisations use a drawing management system
47% use old drawings for new designs
22% also use drawings created by colleagues as templates
50% spend 20 to 40 minutes on <strong>the</strong>ir search for templates every day and 50% devote 40 to 60
minutes to this task
100% <strong>of</strong> <strong>the</strong> designers need additional documents in order to create <strong>the</strong> drawing
In <strong>the</strong> case <strong>of</strong> queries or difficulties, 12% turn to colleagues for assistance, 17% find answers in
meetings and 71% carry out an independent search
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72% recognise <strong>the</strong> benefits <strong>of</strong> simply using a commercially available drawing management
system.
These results produced <strong>the</strong> following key questions:
Which drawings exist? A design engineer knows his or her own drawings, but may only know a
few <strong>of</strong> those created by colleagues. If an organisation is subdivided into design groups, <strong>the</strong> same
also applies to <strong>the</strong> group level, though <strong>the</strong>re is less knowledge <strong>of</strong> drawings outside <strong>the</strong> group than
is <strong>the</strong> case for individuals − this is because queries and issues can be resolved within <strong>the</strong> group.
To gain an overview <strong>of</strong> all <strong>the</strong> drawings within one organisation, appropriate search options must
be available, as <strong>the</strong>re is not sufficient time to manually search through all <strong>the</strong> drawings. Therefore,
<strong>the</strong> option to search for a drawing by keyword or by defined pattern must be made available.
How do I find a solution to an issue I have with a drawing? A design <strong>of</strong>ten gives rise to similar
questions about <strong>the</strong> best way to solve a problem. In many cases it is only possible to assess <strong>the</strong>
best possible solution to a problem in retrospect, once a prototype has been constructed based
on <strong>the</strong> drawing. The problems can also be similar across different departments, even if <strong>the</strong>
departments’ work focuses on entirely different areas. Never<strong>the</strong>less, <strong>the</strong> design for a rotating
mechanism, for example, will still be similar. The design engineer entrusted with <strong>the</strong> task <strong>of</strong>
designing a rotating mechanism now has to consider which drawings include this kind <strong>of</strong> element.
A rotating mechanism consists <strong>of</strong> several elements, and is <strong>the</strong>refore not considered as a single
part, but as a component group. A component group is usually viewed as physically linked
components, and only rarely represents a number <strong>of</strong> logically linked components. Consequently,
<strong>the</strong> content <strong>of</strong> <strong>the</strong> drawing must be described in a certain way in order to facilitate a
corresponding search.
What is <strong>the</strong> most efficient way to design a new drawing? No one wishes to reinvent <strong>the</strong> wheel,
especially when an appropriate solution already exists. The fastest route leads via existing
drawings and <strong>the</strong>ir underlying design ideas. Unfortunately, <strong>the</strong>se can hardly ever be deduced
from <strong>the</strong> title <strong>of</strong> <strong>the</strong> drawing. In order to be able to search using <strong>the</strong>se criteria, this information
must somehow be stored toge<strong>the</strong>r with <strong>the</strong> drawing. Attaching keywords to <strong>the</strong> function or
purpose <strong>of</strong> a drawing can be done in a structured manner, however a design idea can surely only
be formulated in free text. This type <strong>of</strong> text is problematic for search functions, and would have to
be supported with a semantic search function.
Which types <strong>of</strong> documentation are relevant for my drawing? There are production rules,
operational rules, procedural instructions and fur<strong>the</strong>r guidelines. Which documents are relevant
for <strong>the</strong> new drawing? Have <strong>the</strong> guidelines changed, and is my knowledge up to date?
Who else has encountered a similar problem and managed to find a solution? There are usually
several ways to solve a problem. In order to avoid having to try every single option, it would be
helpful if one could ask someone who has solved this type <strong>of</strong> problem in <strong>the</strong> past. This leads to
<strong>the</strong> question <strong>of</strong> how to find such a person. It is virtually impossible that a person will provide a
comprehensive description <strong>of</strong> all his or her knowledge, so that this information can be searched
for. It should be easier to find a way using <strong>the</strong> created drawings. The designer <strong>of</strong> a new drawing is
required to expend more effort in describing <strong>the</strong> drawing, but <strong>the</strong> overall time consumption will be
lower.
Using this as a starting point, we defined relevant objectives and divided <strong>the</strong> implementation into two
phases.
4. Design engineers objectives
The main objective <strong>of</strong> <strong>the</strong> construction element database is to support <strong>the</strong> design engineers in <strong>the</strong>ir
daily work. This is achieved, firstly, by ensuring that <strong>the</strong> knowledge about existing drawings increases
and secondly, by improving <strong>the</strong> quality <strong>of</strong> <strong>the</strong> information about <strong>the</strong> drawings. Thirdly, <strong>the</strong> design <strong>of</strong>
new drawings, which are based on existing drawings, will be accelerated, and fourthly, all required
documents would be available at a glance. Finally, communication between <strong>the</strong> design engineers is
facilitated.
In order to meet <strong>the</strong>se objectives we decided to implement <strong>the</strong> construction element database with
our own s<strong>of</strong>tware, as <strong>the</strong> ERP proved not to be flexible enough, its operation proved too complicated
and <strong>the</strong> permission management may have prevented access. It is intended that <strong>the</strong> designer has one
access point, from which he or she can quickly retrieve all information about <strong>the</strong> drawings as well as
<strong>the</strong> drawings <strong>the</strong>mselves.
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The system should <strong>of</strong>fer a simple, technically supported allocation <strong>of</strong> drawings to categories, or
respectively, <strong>the</strong> assignment <strong>of</strong> key words, in order to allow drawings to be re-used (Sage 2009). In
addition, all necessary documents should be linked, to present all relevant information at a glance.
This results in a more efficient search and consequently a more efficient performance. Of course, <strong>the</strong>
effectiveness <strong>of</strong> <strong>the</strong> search depends on <strong>the</strong> quality <strong>of</strong> <strong>the</strong> entered data.
5. Technologic Implementation <strong>of</strong> KnowCad
An evaluation <strong>of</strong> <strong>the</strong> widely used ERP systems soon revealed that none <strong>of</strong> <strong>the</strong> commercially available
systems could combine all <strong>of</strong> <strong>the</strong> requirements described in section 2 above. Therefore, it was
decided to develop a web application named KnowCad (Figure 5), which contains an ERP system as
well as a knowledge database. The web application KnowCad was designed from scratch, which
means that from <strong>the</strong> very start, using <strong>the</strong> well thought out solution, <strong>the</strong> implementation could be
selected in such a way that KnowCad could be integrated optimally in any system environment.
During <strong>the</strong> implementation <strong>of</strong> any web-based self-designed development such as KnowCad, a variety
<strong>of</strong> obstacles must be met. On <strong>the</strong> one hand, different technologies (database, server, etc.) are used,
on <strong>the</strong> o<strong>the</strong>r hand, it takes a lot <strong>of</strong> effort to maintain and expand self-designed developments. In order
to manage <strong>the</strong>se kinds <strong>of</strong> problems <strong>the</strong> Model-View-Controller concept (MVC-Model-Struts2) was
used as a framework for <strong>the</strong> implementation. The objective was to ensure a clear separation <strong>of</strong> <strong>the</strong>
application into sub-systems with clearly delineated functionality, in order to be able to implement
subsequent functions at a later stage.
Figure 5: KnowCad development screenshot
The web application KnowCad used <strong>the</strong> Open Source framework Struts2 (Brown 2008), which is
based on J2EE technologies. The reason for using this framework can be found in <strong>the</strong> simple
implementation <strong>of</strong> dynamic web pages using <strong>the</strong> MVC paradigm. Struts2 provides good support for
<strong>the</strong> core functionality <strong>of</strong> handling forms, and <strong>of</strong>fers a range <strong>of</strong> functionality relevant to applications.
In order to ensure independence from <strong>the</strong> system environment with regard to databases, <strong>the</strong> Open
Source Persistence ORM Framework Hibernate (Kuaté 2009) was used, which is compatible with
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virtually all relational database systems. This means that <strong>the</strong> web application KnowCad can easily be
integrated into and used within any relational system environment. The Templating Engine Velocity
(Harrop 2004) was used for <strong>the</strong> GUI output (View), to separate <strong>the</strong> Java Code from <strong>the</strong> Markup. By
employing Velocity components it was possible to achieve an optimal adjustment to <strong>the</strong> “Cooperative
Design”, without impacting <strong>the</strong> functionality.
6. Experiences / conclusion
Every knowledge management system has to be able to handle similar requirements and solve a
number <strong>of</strong> problems. Never<strong>the</strong>less, no ready system exists that can be purchased and used in a
simple manner. There are too many different branches and requirements, making it impossible for
one complete system to fulfil every single requirement perfectly. Knowledge management cannot be
compared with bookkeeping, where it is possible to adapt a huge s<strong>of</strong>tware tool accordingly.
Knowledge management depends on <strong>the</strong> human component and on <strong>the</strong> motivation to enter data.
In o<strong>the</strong>r words, we are dealing with <strong>the</strong> two issues <strong>of</strong> internalisation and externalisation. The better <strong>the</strong>
design engineer is able to externalise, <strong>the</strong> better are <strong>the</strong> search results as well as <strong>the</strong> quality <strong>of</strong> <strong>the</strong>
solutions found, and thus <strong>the</strong> swift internalisation <strong>of</strong> <strong>the</strong> stored information. This dependency is <strong>the</strong>
reason why our approach to a solution focuses on <strong>the</strong> first part <strong>of</strong> <strong>the</strong> problem: The search is
dependent on this to ensure that improvements in <strong>the</strong> area <strong>of</strong> data entry also lead to improved search
functionality.
Humans are unique in <strong>the</strong> way that <strong>the</strong>y work, think and search. Without standardisation and
regulation <strong>of</strong> <strong>the</strong> entered data, even <strong>the</strong> best system has no chance <strong>of</strong> success. It is <strong>the</strong>refore not just
up to <strong>the</strong> system, but also depends on <strong>the</strong> users and <strong>the</strong>ir data entry quality. This entered data has to
be quality checked − at least during <strong>the</strong> introductory phase – to safeguard quality and to ensure that
all instructions are observed.
In this project it is difficult to precisely measure <strong>the</strong> improvements and <strong>the</strong> amount <strong>of</strong> time saved by
<strong>the</strong> introduction <strong>of</strong> <strong>the</strong> system, as no two queries are <strong>the</strong> same. Every query is unique and even if <strong>the</strong>
same solution is sought twice, <strong>the</strong> user has already ga<strong>the</strong>red some knowledge during <strong>the</strong> first search,
which he or she uses – albeit subconsciously – when entering <strong>the</strong> second query. The objective here is
not <strong>the</strong> measuring <strong>of</strong> performance but ra<strong>the</strong>r <strong>the</strong> subjective improvement or simplification <strong>of</strong> <strong>the</strong>
programme operation. If <strong>the</strong> operation is simple and logical, <strong>the</strong> process is subjectively perceived as
being short. As soon as something becomes unclear or complicated, <strong>the</strong> process is <strong>of</strong>ten described
as being prolonged.
References
Brown, D., Davis, C.M. and Stanlick, S. (2008) Structs2 in Action, Manning Pubn.
Collins, H. (1993) The structure <strong>of</strong> knowledge: Social research 60, pp. 95-116.
Dong, T., Zhang Y., Li G. and Li, B. (2009) The Research and Development <strong>of</strong> Parts Library System oriented to
High Voltage Switchgear, IEEE CAID & CD.
Gentsch, P. (1999) Business Intelligence: Aus Daten systematisch Wissen entwickeln, in Scheer, A.-W. (Hrsg.):
Electronic Business and Knowledge Management – Neue Dimensionen für den Unternehmenserfolg,
Heidelberg, pp 167-195.
Handlbauer, G. (2009) Kundenorientiertes Wissensmanagement, Gabler, pp 100-102.
Harrop, R. (2004) Pro Jakarta Velocity: From Pr<strong>of</strong>essional to Expert, Apress; 1 Edition, Chapter 6.
Kuaté, P. H., Bauer, C., King, G. and Harris, T. (2009) NHibernate in Action, Manning Publications -1 Edition
Müller, B. (2007) Java-Persistence-API with Hibernate - standardised persistence. Addison-Wesley, Munich.
Sage, A. and Rouse W. (2009) Handbook <strong>of</strong> System Engineering and Management, Wiley.
49

The Intellectual Capital for University Ranking: A
Conceptual Framework Study for Indonesian Higher
Education Insitutions
Gabriel Prananingrum Aryanindita and Andy Susilo Lukito Budi
Atma Jaya Catholic University <strong>of</strong> Indonesia, Jakarta, Indonesia
gabriel.prananingrum@atmajaya.ac.id
andy.susilo@atmajaya.ac.id
Abstract: Intellectual Capital (IC) has been widely discussed by researchers, both from business and academia.
It becomes part <strong>of</strong> intangible assets that are difficult to measure and manage. In <strong>the</strong> academic world, <strong>the</strong>
management <strong>of</strong> intellectual capital is rarely a concern <strong>of</strong> researchers and as a result <strong>the</strong>re are no solid ad generic
indicators to be used so far. This study explores <strong>the</strong> components <strong>of</strong> IC consisting <strong>of</strong> human capital, structural
capital and relational capital proposed by Bodnar et al (2008) and developes indicators <strong>of</strong> university's
performance rating by <strong>the</strong>se components. This study compares <strong>the</strong> indicators with <strong>the</strong> existing university ranking
model from Times Higher Education (THE) University World Ranking. Discussion has been done to compare
between <strong>the</strong> proposed model and <strong>the</strong> THE ranking. The results showed that <strong>the</strong> IC component can be used as a
guide in assessing <strong>the</strong> performance <strong>of</strong> <strong>the</strong> university. It shows similarities with method used in THE ranking. As a
result, <strong>the</strong> proposed model is potential for fur<strong>the</strong>r empirical studies on universities. In <strong>the</strong> effort to expose <strong>the</strong>
intelectual capital <strong>of</strong> <strong>the</strong> universities, <strong>the</strong> study can vary from between to across countries. Fur<strong>the</strong>r study is also
suggested in expanding <strong>the</strong> comparison model with o<strong>the</strong>r existing university ranking model.
Keywords: intellectual capital, university rankings, human capital, intangible asset, THE ranking
1. Introduction
Intangible asset has pr<strong>of</strong>oundly become big issue over <strong>the</strong> last ten years. One important hot issue, for
example, is how to measure and present in <strong>the</strong> effort to achieve organization goals. It does matter
nowadays because we also noted that <strong>the</strong>re is a shifting paradigm in organization reporting focus
from traditional measurement (such as financial measurement, business performance) to intangible
asset. Indeed, <strong>the</strong>re are many research works to support <strong>the</strong> shifting phenomenon.
European Commission in 2005 develops measurement <strong>of</strong> intellectual capital (IC). They define IC as
<strong>the</strong> combination <strong>of</strong> intangible resources and activities that allows an organization to transform a
bundle <strong>of</strong> material, financial and human resources in a system capable <strong>of</strong> creating stakeholder value.
They argued <strong>the</strong> valuation <strong>of</strong> IC will increase <strong>the</strong> performance <strong>of</strong> organization. Universities as one <strong>of</strong>
knowledge-intensive businesses should be also aware that <strong>the</strong>ir performance and competitiveness
depend even more on management <strong>of</strong> <strong>the</strong>ir knowledge resources. So, <strong>the</strong>y need relevant information
about <strong>the</strong> knowledge resources.
Universities and research organizations are producing knowledge; however, it is only a very small
proportion considering identifying, measuring and valuing intangible as part <strong>of</strong> an overall knowledge
management program (Canibano et.al, 2008). It is extremely important to measure intangibles since
<strong>the</strong>y are very hard to manage assets that cannot be described or measured. The European
Commission (EC) is pushing <strong>the</strong> reporting <strong>of</strong> IC by universities. A High-Level Expert Group set up by
<strong>the</strong> Commission Universities to use IC reporting both for <strong>the</strong>ir internal management and for diffusing
<strong>the</strong>ir activities.
Bodnar et.al. (2008) reported <strong>the</strong> management <strong>of</strong> IC in Corvinus University. Their research was based
on document analysis, survey and executive interviews. They found that although EC has pushing <strong>the</strong>
IC reporting, <strong>the</strong> case <strong>of</strong> Corvinus University revealed that <strong>the</strong> university has not developed a
standardized framework <strong>of</strong> IC’s management. None<strong>the</strong>less <strong>the</strong>re are some indicators, which strive to
measure <strong>the</strong> intangible resources but mainly occasionally.
Recently, World Rankings University measured by its teaching-learning activities and research. Times
Higher Education (THE) is one <strong>of</strong> world rankings university organization. It developed <strong>the</strong>ir rankings
by survey to <strong>the</strong> university around <strong>the</strong> world. They conducted questionnaire that’s filled by lecturers
and pr<strong>of</strong>essors at university. THE announced <strong>the</strong>ir rankings per year based on it survey.
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Gabriel Prananingrum Aryanindita and Andy Susilo Lukito Budi
This paper aimed to proposed new model <strong>of</strong> university rankings by <strong>the</strong>ir intellectual capital. The study
conducted by first, exploring <strong>the</strong> components <strong>of</strong> IC consisting <strong>of</strong> human capital, structural capital and
relational capital that been proposed by Bodnar et.al (2008). Three components are breaking down
into indicators <strong>of</strong> university's performance assessment. Fur<strong>the</strong>rmore, we proposed <strong>the</strong> university
rankings model based on <strong>the</strong>se indicators. Second, we analyzed <strong>the</strong> existing university rankings. We
used Times Higher Education (THE) University World Ranking components to compare.
The rest <strong>of</strong> this paper is composed according to <strong>the</strong> above framework. First, we present some
information about IC concept, implementation <strong>of</strong> IC in university, and THE ranking method. Fur<strong>the</strong>r,
we discuss <strong>the</strong> comparison <strong>of</strong> IC model and THE model and come up with suggestion for fur<strong>the</strong>r
research.
2. Literature review
2.1 Definition <strong>of</strong> intellectual capital
In <strong>the</strong> last twenty years, <strong>the</strong>oretical and practical framework <strong>of</strong> intangible assets has been in a large
debate. The practice <strong>of</strong> business found key point that knowledge becomes competitive advantage.
Fur<strong>the</strong>rmore, <strong>the</strong> development <strong>of</strong> competence-based <strong>of</strong> <strong>the</strong> firm, resource-based <strong>of</strong> <strong>the</strong> firm,
management <strong>of</strong> intangible assets as competitive source and multidimensional framework are <strong>the</strong>
explanatory aspect in performance diversity.
The development <strong>of</strong> IC is focusing on determinant intangible asset in organizational succeed.
Especially in creating value in intangible asset and knowledge improvement (Nonaka and Takeuchi,
1995). Galbraith is people who use <strong>the</strong> word (intellectual capital) for <strong>the</strong> first time. He wrote a letter to
a friend, Michael Kalecki, in 1969. He wrote “I wonder if you realize how much those <strong>of</strong> us <strong>the</strong> world
around haved owed to <strong>the</strong> intellectual capital you have provided over <strong>the</strong>se last decades” (Hudson,
1993).
Then, <strong>the</strong> intellectual capital becomes main issue in <strong>the</strong>oretical and empirical research. A number <strong>of</strong>
classifications <strong>of</strong> IC have been proposed by scholars but usually accepted constituent parts are
human, structural and relational capital (Intellectual Asset and Value Creation, OECD, 2006).
Intellectual Capital
Figure 1: The components <strong>of</strong> Intellectual Capital (Intellectual Assets and Value Creation, OECD,
2006, p13-14)
Human capital (HC) is <strong>the</strong> heart <strong>of</strong> IC. HC bring <strong>the</strong> potential <strong>of</strong> personnel’s activity to augment
competitiveness and to bring an organization to unique one. IC is human-based and particularly refers
to <strong>the</strong> use <strong>of</strong> skills and generation <strong>of</strong> new knowledge. It is an intangible asset consisting <strong>of</strong>
experience, thoughts, creative ability, intelligence and a set <strong>of</strong> insights which are known by a person
or a group <strong>of</strong> people in company (Maksimova and Tikhomirova, 2008).
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Gabriel Prananingrum Aryanindita and Andy Susilo Lukito Budi
We define IC as <strong>the</strong> organizational and individual knowledge elements and <strong>the</strong> potential for creating
value that derives from <strong>the</strong> internal and external relations and connections <strong>of</strong> <strong>the</strong> organization. We
define it as proposed by Bodnar et.al in European <strong>Conference</strong> in Intellectual Capital. We suggest
using <strong>the</strong> components to make a model <strong>of</strong> IC’s rankings.
Table 1: The elements <strong>of</strong> Intellectual Capital
Elements <strong>of</strong> Intangible Assets Content, meaning and feature <strong>of</strong> category
Human capital Human capital includes <strong>the</strong> education, knowledge, ability,
competency, motivation, commitment and willingness for growth and
learning processes <strong>of</strong> employee basis.
Structural capital Structural capital consists <strong>of</strong> <strong>the</strong> attributes <strong>of</strong> internal business
operations including <strong>the</strong> processes, internal cooperation and
organization culture
Relational capital In <strong>the</strong> narrow sense it stands for <strong>the</strong> external relations <strong>of</strong> <strong>the</strong>
organization-since <strong>the</strong> student related data shall not be considered
here, but among <strong>the</strong> outputs-however, <strong>the</strong> students satisfaction,
pass/fail ratio and even <strong>the</strong> quality and quantity <strong>of</strong> <strong>the</strong> students foreign
study experiences can be included.
Source: Bodnar.et.al (2008)
2.2 Intellectual capital in university
2.2.1 Intellectual capital and <strong>the</strong> knowledge economy
Knowledge economy is an economy in which knowledge is acquired, created, disseminated and
applied to enhance economic development (Maksimova and Tikhomirova, 2008). The knowledge
economy is being built on four pillars: <strong>the</strong> education and training base, information and
telecommunication infrastructure, <strong>the</strong> innovation system and <strong>the</strong> overall business and governance
framework.
Knowledge economy requires certain pr<strong>of</strong>ound in education systems. Knowledge has always been
important aspect for progressive development <strong>of</strong> <strong>the</strong> economy and society as a whole. Knowledge is
<strong>the</strong> result <strong>of</strong> cognitive processed triggered by <strong>the</strong> inflow <strong>of</strong> new data and information, integration and
reuse <strong>of</strong> ideas, experience, skills, institution and lesson learned by a person. As a result, it has always
been important aspect for progressive development <strong>of</strong> <strong>the</strong> economy and society as a whole.
Higher education institutions face challenge to prepare young people for <strong>the</strong> life in a world where
technologies <strong>of</strong> information and communication put a high respect on creative and innovative thinking
to educate <strong>the</strong>n for a digital world (OECD, 2008). It was because at present, knowledge becomes a
basic factor for production, <strong>the</strong> driver <strong>of</strong> <strong>the</strong> knowledge economy that enhances competitiveness.
Universities as a higher education institutions are producing knowledge where <strong>the</strong>ir budget should
focus mainy on research related acitivities, innovation and human resources. Therefore, <strong>the</strong>ir most
valuable assets are most <strong>of</strong>ten intangible by natures, as well as <strong>the</strong>ir outputs. It improves
universitiesto have a better management capability andto diffuse <strong>the</strong>ir knowledge creation processes
to <strong>the</strong>ir stakeholders and society at large (Sanchez, et.al, 2008).
2.2.2 IC indicators as components <strong>of</strong> university rankings
In best practices, it can be argued that IC management and reporting make sense for companies
when <strong>the</strong> exercise creates value for <strong>the</strong> stakeholders, and <strong>the</strong> value creation happens when pr<strong>of</strong>it
increases or market value increases or both (Canibano et. al, 2008]). However, universities as
business had known as nonpr<strong>of</strong>it oriented organization. As a result, universities do not make pr<strong>of</strong>its
and <strong>the</strong>re is no market value for <strong>the</strong>ir inexistent shares. Therefore, it is more complicated to extracting
value from intangibles asset.
However to measure <strong>the</strong> intangibles is a very important matter, for several reasons. First, it is
extremely hard to manage assets that one cannot describe or measure or to determine success or
failure in asset management activities. Also, if intangibles are not measure correctly, an organization
might appear to be doing poorly when in fact it is simply investing in intangibles (Augier and Teece,
2005).
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Gabriel Prananingrum Aryanindita and Andy Susilo Lukito Budi
The main differences for IC management in Universities (compare with companies) would be <strong>the</strong>
indicators to measure performance. We used indicators on intellectual capital in external reporting that
proposed by Bodnar (2008). We develop this indicator with adding several indicators. For example, in
human capital we add number <strong>of</strong> articles produced by staff and number <strong>of</strong> citation as indicators. We
proposed <strong>the</strong>se indicators to measure <strong>the</strong> lecturer’s competence.
Table 2: Indicators on intellectual capital
Indicators <strong>of</strong> intangibles
Human capital:
Total number <strong>of</strong> employees in full time equivalent (FTE)
Academic staff’s’ FTE
The academic staff’s’ age distribution
Number and ratio <strong>of</strong> academics staff with PhD
Number staff in research centers (total)
Number <strong>of</strong> PhD students
Number <strong>of</strong> staff’s’ publication
Number <strong>of</strong> citation
Number <strong>of</strong> staff presented in international conferences per year
Fluctuations <strong>of</strong> students body
Structural capital:
Educational area per number <strong>of</strong> students
Educational area per number <strong>of</strong> academic staff
Number <strong>of</strong> computers in <strong>the</strong> university network
Number <strong>of</strong> computers provided for students
Number, area and capacity <strong>of</strong> computer laboratories and laboratories for o<strong>the</strong>r purposes
Library area per number <strong>of</strong> students
Weekly library opening hours
Number <strong>of</strong> seats in <strong>the</strong> library
Number <strong>of</strong> database in library
Number and change in <strong>the</strong> number <strong>of</strong> library resources
Number <strong>of</strong> ordered journals (traditional and digital)
Cost <strong>of</strong> journals
Annual cost <strong>of</strong> research and development investments
Number and average <strong>of</strong> educational equipment
Number <strong>of</strong> research centers
Number <strong>of</strong> staff in PhD
Relational capital:
Number and sum <strong>of</strong> tuition fee
Number and income <strong>of</strong> innovation research (total and actual)
Chair-income
Number <strong>of</strong> memberships in scientific and pr<strong>of</strong>essional organizations
Number <strong>of</strong> academic staff who are members in editorial boards
Number <strong>of</strong> library exchange programmes
Number <strong>of</strong> partner universities from abroad
Number <strong>of</strong> alumni-members
Number <strong>of</strong> third-parties cooperation
Number <strong>of</strong> external funding
Number <strong>of</strong> winner tenders
Income <strong>of</strong> <strong>the</strong> tenders
Number <strong>of</strong> international students
The indicators should be used as proxy <strong>of</strong> IC in university. Human capital is not just measuring
number <strong>of</strong> lecturers but also <strong>the</strong>ir competencies. It has been widely accepted that lecturers are <strong>the</strong>
center <strong>of</strong> university’s activities. The rank <strong>of</strong> university depend on how competence <strong>the</strong>ir lecturer.
Structural capital measures university capacity to make better teaching learning activities. Also, we
put facilities that enable universities to perform <strong>the</strong>ir duty into account. Finally, we propose relational
capital as measurement <strong>of</strong> university capacity to make good relation with o<strong>the</strong>r parties. The relation is
not only between universities but also between business industries.
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Gabriel Prananingrum Aryanindita and Andy Susilo Lukito Budi
3. Times Higher Education (THE) rankings
The Times Higher Education (THE) World Reputation Rankings are a subsidiary <strong>of</strong> <strong>the</strong> annual World
University Rankings, and <strong>the</strong>y are based on entirely on <strong>the</strong> results <strong>of</strong> a worldwide survey <strong>of</strong>
academics. THE is a measure <strong>of</strong> a university’s reputation for excellence, in both teaching and
research, among experienced university academics around <strong>the</strong> world.
The reputation rankings are drawn from an Academic Reputation Survey carried out by polling
company Ipsos for <strong>the</strong>ir rankings data provider, Thomson Reuters, as part <strong>of</strong> <strong>the</strong> Thomson Reuters
Global Institutional Pr<strong>of</strong>iles Project. The survey results formed two <strong>of</strong> <strong>the</strong> 13 performance indicators
used to create <strong>the</strong> THE World University Rankings 2010-2011, published on September 16, 2010.
The invitation-only survey was sent to tens <strong>of</strong> thousands <strong>of</strong> experienced academics, based on <strong>the</strong>
United Nations’ estimate <strong>of</strong> global academic researchers by geographical area. The survey was
<strong>of</strong>fered in eight languages: Japanese, Simplified Chinese, Spanish, French, German, Brazilian
Portuguese, European Portuguese and English. The survey was distributed between March and May
2010 and 13,388 people from 131 countries provided usable responses. The average respondent had
been working at a higher education institution for more than 16 years and had published more than 50
research papers (Baty, 2010).
The questionnaire breaks into five categories with 13 separate indicators designed to capture a broad
range <strong>of</strong> activities from teaching and research to knowledge transfer. The five categories and <strong>the</strong>ir
weightings are:
Teaching-<strong>the</strong> learning environment (worth 30 per cent <strong>of</strong> <strong>the</strong> final ranking score).
Research-volume, income and reputation (worth 30 per cent)
Citations-research influence (worth 32.5 per cent)
Industry income-innovation (worth just 2.5 per cent)
<strong>International</strong> mix-staff and students (worth 5 per cent)
The weightings for five categories and <strong>the</strong> 13 indicators within <strong>the</strong>m vary considerably. High
weightings are given for <strong>the</strong> valuable proxy and clear confidence <strong>of</strong> <strong>the</strong> data. Low weightings are
employed where confidence in <strong>the</strong> data or <strong>the</strong> usefulness <strong>of</strong> <strong>the</strong> indicator is less pronounced. The
weighting scheme for ranking scoreis shown in Figure 2.
Figure 2: The methodology <strong>of</strong> THE world university rankings
Source: THE world university rankings (http://www.timeshighereducation.co.uk/world-universityrankings/2010-2011/analysis.html)
54

Gabriel Prananingrum Aryanindita and Andy Susilo Lukito Budi
4. Discussion and fur<strong>the</strong>r research directions
Times Higher Education (THE) World University Rankings had analyze <strong>the</strong>ir rating with five categories
<strong>of</strong> elements. These elements are teaching, research, citations, industry income and internal mix.
Analysis <strong>of</strong> <strong>the</strong>se elements revealed that indicators <strong>of</strong> each element are quite similar with IC. They
break down <strong>the</strong> university performance with teaching learning activities. For instance, <strong>the</strong> first to third
components <strong>of</strong> THE are similar with Human Capital and Structural Capital whereas <strong>the</strong> fourth and <strong>the</strong>
fifth <strong>of</strong> THE components highly relate with Relational Capital and some <strong>of</strong> Structural Capital.
Thus, <strong>the</strong> analysis <strong>of</strong> intangibles asset in university revealed that IC can be widely used as indicators
<strong>of</strong> university ranking from new angle, i.e. <strong>the</strong>ir intangibles. Three major capitals (human capital,
structural capital and relational capital) have significant impacts on university performance and <strong>the</strong>y
are using <strong>the</strong> same concern as <strong>the</strong> THE ranking.
Data needed for <strong>the</strong>se indicators are possibly ga<strong>the</strong>red in university. Since <strong>the</strong> university had made
an <strong>of</strong>ficial website, we can collect <strong>the</strong> data from it. If we will make wide judgments, we also could send
questionnaire to <strong>the</strong> universities. The experience <strong>of</strong> Indonesian universities, <strong>the</strong>y made external
reporting to higher education authority.
Based on comparison <strong>of</strong> two rankings, it can be said that IC indicators can be used as much as THE
elements to asses’ university performance. We need to focused on planning, manage and report <strong>the</strong>
IC <strong>of</strong> university. When <strong>the</strong> reporting based on real data <strong>of</strong> <strong>the</strong> universities, it can be used to evaluate
<strong>the</strong>ir performance. The o<strong>the</strong>r advantage <strong>of</strong> reporting is universities could make decision on improving
<strong>the</strong>ir staff.
This study only compared IC indicators with THE rankings. Next research could use ano<strong>the</strong>r ranking
such as Webometrics to compare with. Also, next study can focuses on collecting data from
universities across countries so <strong>the</strong>y can generalize <strong>the</strong> result. As <strong>of</strong> our effort, we have tried to collect
data from <strong>of</strong>ficial website <strong>of</strong> top 100 World University but we were not able to collect much <strong>of</strong> data we
need. Therefore we suggest making cooperation with university formally. This finding revealed that
<strong>of</strong>ficial website <strong>of</strong> university cannot clearly describe <strong>the</strong>ir real activity and business. These limitations
did not make IC indicators can’t used. O<strong>the</strong>rwise it needs to prove with data collection.
References
Augier, M.and D. J. Teece. (2005). “An Economic Perspective on Intellectual Capital”, in Marr, B. (ed.), pp. 3-27.
Baty, Phill. (2010). “THE Rankings: Behind <strong>the</strong> numbers: reputation ranking methodology explained” [online],
Times Higher Education World University Rankings, (http://www.timeshighereducation.co.uk/worlduniversity-rankings/2010-2011/analysis.html)
Bodnar, V., TamasHArangozo.,TamasTirnitz., Eva Ravesz and GergelyKovats. (2008). Managing Intellectual
Capital in Hungarian Universities-<strong>the</strong> Case <strong>of</strong> Corvinus University i<strong>of</strong> Budapest.<strong>Proceedings</strong> <strong>of</strong> <strong>the</strong>
European conference on intellectual capital.
Bounfour, Ahmed and Leif Edvinsson. (2005). Intellectual Capital for Communities.Elsevier, London.
Canibano, Leandro., and Paloma Sanchez. (2008). “Intellectual Capital Management and Reporting in
Universities and Research Institution”.Estudios de EconomiaAplicada, Vol 26-2, pp 7-26.
Maksimova, Valentina and Natalia Tikhomirova. 2008. The Intellectual Capital <strong>of</strong> <strong>the</strong> University’s Department. .
<strong>Proceedings</strong> <strong>of</strong> <strong>the</strong> European conference on intellectual capital.
Nonaka, I. and Takeuchi, H. (1995). The Knowledge-Creating Company, oxford University Press, Boston,
Massachussets.
OECD (2006). “Intellectual Assets and Value Creation: Implications for Corporate Reporting”,
http://www/oecd.org/daf/corporate-affairs.
OECD (2008). “What futures for Quality Access in <strong>the</strong> Era <strong>of</strong> Globalization?”.France <strong>International</strong> <strong>Conference</strong>.
Ramirez., Carmen Lorduy., and Jose Antonio Rojas. (2007). “Intellectual Capital Management in Spanish
Universities”.Journal <strong>of</strong> Intellectual Capital, Vol. 8., No 4, pp 732-748.
Sanchez, M.P and Basilio O. (2008). “Intellectual Capital and Innovation. A Literature review for Policy
Purposes”, Paper presented to <strong>the</strong> <strong>International</strong> Forum on Knowledge Asset Dynamics, Matera, Italy, pp.26-
27, June.
Stewart, Thomas A. (1997). Intellectual Capital, <strong>the</strong> New Wealth <strong>of</strong> Organization. Doubleday Currency, New
York.
55

The Management <strong>of</strong> Trust in <strong>the</strong> Knowledge-Intensive
Industrial Clusters: Institutional vs. Personal Approaches
Rita Babiliūtė and Kęstutis Kriščiūnas
Institute <strong>of</strong> Europe, Kaunas University <strong>of</strong> Technology, Kaunas, Lithuania
rita.uni@gmail.com
kestutis.krisciunas@ktu.lt
Abstract: The issues <strong>of</strong> trust and trust building are becoming <strong>of</strong> ever greater importance in <strong>the</strong> social sciences
and practice, especially in <strong>the</strong> areas related to knowledge exchange. The lack <strong>of</strong> trust may lead to a vicious circle
in organizational relationship and preclude any knowledge diffusion from taking place. The main focus <strong>of</strong> this
paper is on <strong>the</strong> knowledge-intensive industrial clusters because <strong>the</strong>y are characterised by <strong>the</strong> inter-organizational
knowledge interactions where <strong>the</strong> element <strong>of</strong> trust is omnipresent. Both researchers and practitioners
acknowledge <strong>the</strong> importance <strong>of</strong> trust in <strong>the</strong> activities characterized by <strong>the</strong> high possibility <strong>of</strong> risk, in this case
organizations where <strong>the</strong> main “product/outcome” is intangible and related to knowledge generation, sharing and
management. Thus, <strong>the</strong> environment <strong>of</strong> knowledge exchange involves multiple risks and trust is a central tool
and precondition for minimising <strong>the</strong> risks in interactions. The paper provides a comparative analysis <strong>of</strong> two
competing approaches as far as <strong>the</strong> trust building in inter-organizational environment is concerned. The first
approach, dominated by <strong>the</strong> psychology-related stream <strong>of</strong> literature in social sciences, stresses <strong>the</strong> importance <strong>of</strong>
personal qualities and characteristics in trust building, e.g. <strong>the</strong> aspects <strong>of</strong> leadership. The second approach, on
<strong>the</strong> o<strong>the</strong>r hand, focuses on <strong>the</strong> institutional aspects <strong>of</strong> trust that are as important for <strong>the</strong> performance <strong>of</strong> <strong>the</strong> social
system as are <strong>the</strong> personal interactions. The literature analysis has shown that mainstream management
literature is largely dominated by <strong>the</strong> first perspective. However, <strong>the</strong> successfully established industrial clusters
are complex inter-organizational entities that tend to possess a high degree <strong>of</strong> institutionalization. The paper
establishes <strong>the</strong> linkages between <strong>the</strong> different typologies <strong>of</strong> trust and <strong>the</strong> nature <strong>of</strong> industrial clusters, based on
<strong>the</strong> analysis <strong>of</strong> research literature and several empirical case studies <strong>of</strong> <strong>the</strong> industrial clusters. It also seeks to
structure <strong>the</strong> personal and institutional trust-related incentives that could be used to ensure successful
knowledge-based co-operation within <strong>the</strong> clusters.
Keywords: trust, industrial/knowledge intensive clusters, trust management
1. Introduction
The phenomenon <strong>of</strong> trust has been extensively analysed by a variety <strong>of</strong> social disciplines, such as
psychology, sociology, political science, economics, anthropology, history and even socio-biology. Not
surprisingly, <strong>the</strong>re have been numerous attempts to define and conceptualize trust, as well as its
antecedents and outcomes. This paper relies on <strong>the</strong> concept suggested by Mayer, Davis and
Schoorman (1995) who claim that trust is “<strong>the</strong> willingness <strong>of</strong> a party to be vulnerable to <strong>the</strong> actions <strong>of</strong>
ano<strong>the</strong>r party based on <strong>the</strong> expectation that <strong>the</strong> o<strong>the</strong>r will perform a particular action important to <strong>the</strong>
trustor, irrespective <strong>of</strong> <strong>the</strong> ability to monitor or control that o<strong>the</strong>r party”. The authors predicate that
being vulnerable implies that <strong>the</strong>re is something <strong>of</strong> importance to be lost and making itself vulnerable
is taking risk. Besides, as it is emphasized, trust is not taking risk per se, but ra<strong>the</strong>r – a willingness to
take risk.
There is a bulk <strong>of</strong> academic literature regarding <strong>the</strong> positive impact <strong>of</strong> trust on <strong>the</strong> economic
performance <strong>of</strong> firms. The presence <strong>of</strong> trust reduces <strong>the</strong> transaction costs (Williamson, 1985),
promotes flexible specialization (Sabel, 1989), collaborative behaviour <strong>of</strong> system actors (Child and
Faulkner, 1998), which results in <strong>the</strong>ir increased productivity (Fukuyama, 1995) and national
economic growth (Knack and Keefer, 1996). Rus and Iglič (2005) note that trust affects economic
performance in direct (e.g. reducing costs <strong>of</strong> transactions) and indirect way, e.g. by enabling actors to
adopt complex governance mechanisms that would o<strong>the</strong>rwise be impossible under <strong>the</strong> conditions <strong>of</strong>
low trust.
Thus, trust is key to any cooperation-based inter-organizational mechanisms <strong>of</strong> governance, such as
strategic alliances, networks, knowledge partnerships and clusters. The concept <strong>of</strong> industrial cluster,
made popular by Porter (1990), relies heavily on <strong>the</strong> regional social capital where trust is <strong>the</strong> key
ingredient.
As far as trust is concerned, most case studies on industrial clusters fall into two major categories. On
one hand, <strong>the</strong>y analyse <strong>the</strong> established industrial structures that are successfully supported by <strong>the</strong>
existing socio-economic relations, including trust. On <strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong>re are studies that focus on
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Rita Babiliūtė and Kęstutis Kriščiūnas
<strong>the</strong> emerging clusters, and mention <strong>the</strong> lack <strong>of</strong> inter-actor trust as one <strong>of</strong> <strong>the</strong> main obstacles for
industrial development. There is, however, a missing middle between <strong>the</strong> two perspectives that would
look into <strong>the</strong> possible ways <strong>of</strong> building and sustaining trust-based relations. Answering this question is
not easy because both trust and clusters are complex constructs with a variety <strong>of</strong> possible
combinations under different industrial and institutional contexts.
Therefore, this paper aims to establish <strong>the</strong> linkages between <strong>the</strong> different typologies <strong>of</strong> trust and <strong>the</strong>
variables <strong>of</strong> knowledge-intensive industrial clusters. Besides, it seeks to promote <strong>the</strong> discussion
regarding <strong>the</strong> possible approaches to management <strong>of</strong> trust. It builds on two <strong>of</strong> <strong>the</strong> major dimensions
<strong>of</strong> trust: inter-personal and institutional, as distinguished by various researchers (e.g. Rus and Iglič,
2005; Bachmann and Inkpen, 2011).
The first part <strong>of</strong> <strong>the</strong> paper is devoted to <strong>the</strong> discussion <strong>of</strong> <strong>the</strong> role and varieties <strong>of</strong> trust in <strong>the</strong> interorganizational
relations. The second part discusses <strong>the</strong> phenomenon <strong>of</strong> trust in knowledge-intensive
industrial clusters. Finally, we try to link <strong>the</strong> aspects <strong>of</strong> trust with different variables <strong>of</strong> <strong>the</strong> industrial
clusters and to see <strong>the</strong> relative importance <strong>of</strong> inter-personal and institutional trust. Some insights into
building and sustaining trust are also presented.
Dimensions <strong>of</strong> trust: inter-personal vs. institutional
The academic literature on trust provides a number <strong>of</strong> definitions and typologies <strong>of</strong> trust. The
sociologist Zucker (1986) makes a distinction between three major types <strong>of</strong> trust: 1) characteristicbased
trust that relies on <strong>the</strong> common social backgrounds <strong>of</strong> <strong>the</strong> actors (i.e. common ethnicity,
religion, language, family, etc.) as <strong>the</strong> basis for trust; 2) process-based trust that relies on <strong>the</strong>
experience <strong>of</strong> exchange; and 3) institution-based trust where trust is derived from formal social
structures (e.g. legal provisions, pr<strong>of</strong>essional associations, etc.). The latter represents not so much
trust in institutions (a different aspect <strong>of</strong> trust), but <strong>the</strong> inter-actor trust that is enabled by <strong>the</strong>
institutional environment.
Rus and Iglič (2005) note that <strong>the</strong> information and expectations regarding <strong>the</strong> potential trustworthiness
<strong>of</strong> a partner comes from two fundamentally different sources: a) obtained directly by personal
experience and communication with an actor or group <strong>of</strong> actors, and b) obtained indirectly, via <strong>the</strong>
institutional framework that enables (or hinders) trust-based relations. The first is usually referred to
as inter-personal trust, whereas <strong>the</strong> latter – institutional trust.
Inter-personal trust is a process-based trust linked with <strong>the</strong> aspects <strong>of</strong> personal communication, i.e.
persons’ ability to create and maintain trustworthy relationships by emphasizing such practised by
personal qualities as integrity and benevolence. This kind <strong>of</strong> trust usually is very endogenous to each
firm or industry and depends on family, group or o<strong>the</strong>r personal relations, when individuals meet in <strong>the</strong>
different types <strong>of</strong> environments (e.g. workplace, business meetings, informal networks, golf clubs,
family/groups organized events etc.) that in turn makes positive influence <strong>the</strong> economic performance
<strong>of</strong> <strong>the</strong> organization (Bennett and Robson, 2004). According to Abrams et al. (2003), inter-personal
trust encompasses two forms <strong>of</strong> trust: trust in a person’s competence and trust in a person’s
benevolence, which are both <strong>of</strong> crucial importance in <strong>the</strong> knowledge-sharing networks. The interpersonal
trust is <strong>of</strong>ten characterised by <strong>the</strong> strong ties and closeness <strong>of</strong> relations and is embedded in
highly cohesive groups. In sociological terms, it is more characteristic to <strong>the</strong> Gemeinschaft type <strong>of</strong>
communities. Yet <strong>the</strong> over-reliance on inter-personal trust may lead to <strong>the</strong> exclusion <strong>of</strong> outsiders with
<strong>the</strong> potentially valuable resources (Rus and Iglič, 2005).
Institutional trust represents <strong>the</strong> opposite to inter-personal trust in that it is related to <strong>the</strong> existence <strong>of</strong>
legal, political and economic bureaucratic systems and is derived from institutional environment <strong>of</strong>
laws, norms and standards (Luhmann, 1979). Thus, <strong>the</strong> institutional trust is closely related to formal
environment, in which <strong>the</strong> interactions <strong>of</strong> individuals and organizations are taking place. The
institutions provide <strong>the</strong> “rules <strong>of</strong> <strong>the</strong> game” to <strong>the</strong> parties <strong>of</strong> <strong>the</strong> transaction and perform <strong>the</strong> role <strong>of</strong> <strong>the</strong>
“third-party guarantor”. Usually, <strong>the</strong>y stem from <strong>the</strong> external environment <strong>of</strong> <strong>the</strong> firm, that, for example,
includes memberships <strong>of</strong> business associations, governmental regulation mechanisms, various
systems <strong>of</strong> product standardization (e.g. ISO) etc. When relying on institutional trust, firms can
diminish <strong>the</strong> chance <strong>of</strong> risk, as various control bodies, through incentives and sanctions, may ensure
organizations’ compliance with <strong>the</strong> basic “rules <strong>of</strong> <strong>the</strong> game”. The institutional trust promotes <strong>the</strong>
Gesellschaft-type <strong>of</strong> social relationships. Bachmann and Inkpen (2011) note that institutions play a
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key role as facilitators <strong>of</strong> trust in that <strong>the</strong>y produce shared “taken for granted” knowledge. Thus,
institutional environment plays an important stabilising effect on inter-firm transactions by minimising
<strong>the</strong>ir risk (especially when <strong>the</strong>re is no previous experience between <strong>the</strong> parties <strong>of</strong> <strong>the</strong> exchange).
However, <strong>the</strong>re is no consensus regarding <strong>the</strong> limitations <strong>of</strong> institutional approach to trust-based
relations.
On one hand, Rus and Iglič (2005) emphasise <strong>the</strong> advantages <strong>of</strong> institutional trust over inter-personal
trust because it generalizes trust, embodies values <strong>of</strong> impartiality, justice and truth, enable <strong>the</strong>
transactions <strong>of</strong> parties with no prior experience <strong>of</strong> cooperation and is much more open to <strong>the</strong>
outsiders. Thereby institutional trust enables to bridge different social circles and different pools <strong>of</strong>
resources, and promotes <strong>the</strong> more modern forms <strong>of</strong> organization. Bachmann and Inkpen (2011)
support <strong>the</strong> advantages <strong>of</strong> institutional trust by claiming that “macro/institutional trust in <strong>the</strong> advanced
socio-economic systems can hardly rely on interaction-based forms <strong>of</strong> trust creation alone”. Authors
argue that <strong>the</strong> individual trust building process can consume a lot <strong>of</strong> time and money, while <strong>the</strong>re is no
guarantee <strong>of</strong> success. Alternatively, <strong>the</strong> presence <strong>of</strong> institutionalized trust may be much more
effective as <strong>the</strong> parties willing to cooperate can refer to <strong>the</strong> institutional safeguards, hereby developing
trust without any previous mutual experiences. Thus, <strong>the</strong> argument goes that trust induced by <strong>the</strong>
institutional environment provides positive experiences <strong>of</strong> interaction and help to build inter-personal
trust. In o<strong>the</strong>r words, following this approach, inter-personal trust stems from institutional trust.
On <strong>the</strong> o<strong>the</strong>r hand, Humphrey and Schmitz (1998) associate <strong>the</strong> institutional framework with minimal
trust that is necessary for <strong>the</strong> basic, on-<strong>the</strong>-spot transactions to take place, but does little to promote
<strong>the</strong> more complex and long-term interactions. The institutional trust depends to a large extent on <strong>the</strong>
legal contracts and sanctions that are hard to enforce in <strong>the</strong> case <strong>of</strong> e.g. knowledge exchange. The
more sophisticated forms <strong>of</strong> governance call for trust on both micro- (e.g. personal interaction,
“shadow <strong>of</strong> <strong>the</strong> future”) and meso-levels (e.g. reputation in <strong>the</strong> pr<strong>of</strong>essional group). In knowledge
partnerships it is very hard to rely on legal-institutional safeguards due to <strong>the</strong> intangible nature <strong>of</strong>
knowledge, while losing business partners or social ejection from <strong>the</strong>ir group are potentially more
grave sanctions against opportunist behaviour.
What can we draw from this debate regarding <strong>the</strong> trust and reliance on institutional framework? To
what extent are <strong>the</strong> institutional measures capable <strong>of</strong> reinforcing trust? One can assume that <strong>the</strong>
functioning institutional framework, as a context for interaction <strong>of</strong> parties to <strong>the</strong> exchange, plays an
important role in promoting inter-personal trust. However, it does not substitute <strong>the</strong> inter-personal trust
and over-reliance on institutional-legal instruments may imply <strong>the</strong> insufficient extended trust in <strong>the</strong>
system.
To conclude, both inter-personal (micro-level) and institutional (macro-level) approaches to trust may
prove <strong>the</strong>ir use at explaining <strong>the</strong> inter-organizational interactions. However, as far as trust
development in inter-organizational relations is concerned, <strong>the</strong>re is no clear consensus as to whe<strong>the</strong>r
<strong>the</strong> emphasis on personal or institutional trust would prove as being more effective. It may well
depend on <strong>the</strong> specific national and industrial contexts <strong>of</strong> firms, which will be later explored in this
paper, with a specific focus on trust in <strong>the</strong> knowledge-intensive industrial clusters.
2. Trust in industrial clusters: Theoretical considerations
Over <strong>the</strong> last decade, <strong>the</strong> globalising competition environment was accompanied by a seemingly
opposite trend - <strong>the</strong> growing importance <strong>of</strong> local inter-organizational structures, such as industrial
districts or clusters. Firms’ ability to cooperate and build sustainable business partnerships is
regarded as one <strong>of</strong> <strong>the</strong> key factors underlying <strong>the</strong>ir competitive advantage.
The industrial clusters can be regarded both as economic agglomerations <strong>of</strong> industrial actors that are
specialising in specific activities (e.g. car manufacturing cluster in Detroit) and as <strong>the</strong> reservoirs <strong>of</strong>
specialised knowledge and competence, where <strong>the</strong> unique innovative activities are taking place (e.g.
Silicon Valley). The latter are usually referred to as “innovative clusters” or “knowledge-intensive
clusters”. Preissl and Solimene (2003) define innovative cluster as “a set <strong>of</strong> interdependent
organizations that contribute to <strong>the</strong> realisation <strong>of</strong> innovations in an economic sector or industry”. The
importance <strong>of</strong> innovative clusters is also supported by <strong>the</strong> paradigm <strong>of</strong> “open innovation”
(Chesbrough, 2003), which claims that much <strong>of</strong> valuable knowledge is located outside <strong>the</strong> boundaries
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<strong>of</strong> <strong>the</strong> firm and that new forms <strong>of</strong> collaboration are needed in order to make a productive use <strong>of</strong> this
knowledge.
Trust performs <strong>the</strong> role <strong>of</strong> “social glue” in inter-organizational relations. In <strong>the</strong> absence <strong>of</strong> trust,
exchanging knowledge in knowledge-intensive clusters maybe a risky undertaking due to possible
free-riding <strong>of</strong> <strong>the</strong>se intangible assets. The high trust environment prevailing in <strong>the</strong> cluster might serve
as <strong>the</strong> engine stimulating its development, innovativeness and competitiveness. Han et al. (2008)
supplements <strong>the</strong> above mentioned statement by concluding that successful clusters usually are
characterized by strongly embedded networks and relationship systems, with highly developed trust
and inter-personal relationships.
Trust is <strong>of</strong>ten regarded as a public resource that is historically embedded in <strong>the</strong> industrial cluster that
firms can build upon once <strong>the</strong>y become part <strong>of</strong> <strong>the</strong> cluster. The established social and institutional
“rules <strong>of</strong> <strong>the</strong> game” limit <strong>the</strong> incentives for opportunist behaviour, so in a way firms are capable <strong>of</strong>
“borrowing” <strong>the</strong> public trust for <strong>the</strong>ir private transaction. However, as already mentioned, most <strong>of</strong> <strong>the</strong>
literature on clusters ei<strong>the</strong>r celebrates <strong>the</strong> presence <strong>of</strong> trust (in <strong>the</strong> mature and productive clusters) or
bemoans <strong>the</strong> lack <strong>of</strong> it (in <strong>the</strong> emerging or malfunctioning clusters), but not too many researchers
seek to explain <strong>the</strong> background <strong>of</strong> trust and <strong>the</strong> mechanisms that enable its emergence.
3. Relationship between cluster variables and dimensions <strong>of</strong> trust
Trust and <strong>the</strong> cultural environment <strong>of</strong> cluster
Numerous authors (e.g. Beugelsdijk and Hospers, 2005; Dwivedi et al. 2003; Jimenez and Junquera,
2010; Murphy, 2006) admit that every industrial cluster is deeply embedded in a specific cultural
environment, which is shaped by norms, values and shared understandings <strong>of</strong> <strong>the</strong> social group.
Clusters are first <strong>of</strong> all influenced by <strong>the</strong> national and regional culture. Besides, different cultures can
be characterised by <strong>the</strong> prevalence <strong>of</strong> different types <strong>of</strong> social capital and trust.
On <strong>the</strong> level <strong>of</strong> national culture, Lewis (2006) distinguishes tree types <strong>of</strong> culture: a) linear-active, b)
multi-active and c) reactive – all <strong>of</strong> <strong>the</strong>m relying on various aspects <strong>of</strong> trust.
Linear-active cultures (e.g. Germany, Switzerland, USA) are dominated by <strong>the</strong> institutional trust and
are characterized by strongly expressed aspect <strong>of</strong> formality, when agents tend to rely on institutional
and legal values that diminish <strong>the</strong> risk. or ensure <strong>the</strong> compensations/deterrence system in case <strong>the</strong>
agent violates/suffers from <strong>the</strong> inappropriate behaviour within a cluster.
Multi-active cultures (e.g. most South European, Latin American countries) emphasize <strong>the</strong> interpersonal
trust, i.e. <strong>the</strong> importance <strong>of</strong> social ties in business interactions. Firms prefer to cooperate
with <strong>the</strong> agents/entrepreneurs based on a prior personal experience <strong>of</strong> communication.
Reactive cultures (e.g. China, Japan, Vietnam) tend to rely on <strong>the</strong> long-term trust, which is built via
<strong>the</strong> extended family and pr<strong>of</strong>essional networks <strong>of</strong> peers (i.e. old time friendships, school friendships,
etc.), usually in a highly collectivist environment. It means that <strong>the</strong> process <strong>of</strong> building trust as well as
entering <strong>the</strong> established reputation- and affiliation-based networks takes a longer period <strong>of</strong> time.
Putnam’s (1993) classical distinction between bridging and bonding social capital also provides
valuable insights into <strong>the</strong> different nature <strong>of</strong> trust in different social settings. The bridging social capital
is usually created in <strong>the</strong> social networks that span different communities and shows positive
correlation with <strong>the</strong> economic performance (Beugelsdijk and Smulders, 2003). The bonding social
capital arises from networking within closed communities <strong>of</strong> family and friends. However, researchers
claim that <strong>the</strong> bonding social capital does not reduce <strong>the</strong> opportunist behaviour at <strong>the</strong> society as a
whole and <strong>the</strong>refore results in worse economic performance. The economically developed Western
societies (e.g. Germany, Sweden, Denmark, Switzerland) that possess strong institutional framework
and civil participation can be characterised by bridging social capital, whereas <strong>the</strong> bonding social
capital is present in most South European regions (e.g. Sou<strong>the</strong>rn Italy or Mediterranean France). One
can see clear parallels between <strong>the</strong> above mentioned institutional trust and <strong>the</strong> bridging social capital,
as well as between <strong>the</strong> inter-personal trust and <strong>the</strong> bonding social capital.
Naturally, one can expect that clusters will be embedded in <strong>the</strong> corresponding cultural environment
and <strong>the</strong>ir inter-organizational relations will be built on <strong>the</strong> type <strong>of</strong> trust that prevails in a given context.
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Some empirical research proves <strong>the</strong> case. For example, in Japan, <strong>the</strong> relational contracting is based
on “moralised trading relationships <strong>of</strong> mutual goodwill, specific to <strong>the</strong> Japanese society” (Dwivedi et
al., 2003). In India, <strong>the</strong> caste relations play an important role in providing binding “social glue” to <strong>the</strong>
clusters, but in some successful cases <strong>the</strong>y evolve into <strong>the</strong> shared identity <strong>of</strong> “educated elite” (Gorter,
1998, in Dwivedi et al., 2003). In <strong>the</strong> case <strong>of</strong> culturally diverse cluster environment (i.e. Italian, Jewish
establishment and Vietnamese, Lebanese and Syrian newcomers in Lehigh valley in US, specialising
in supplying <strong>the</strong> large fashion garment firms) trust is being not so much through shared identity, but
through communication and shared understanding. The studies <strong>of</strong> Pakistani cluster <strong>of</strong> surgical
instruments (Nadvi and Schmitz, 1998) and Brazilian shoe manufacturing cluster (Bazan and Schmitz,
1997) have found that characteristics-based trust (i.e. membership in <strong>the</strong> local community) was very
important in <strong>the</strong> early stages <strong>of</strong> cluster development, but <strong>the</strong> nature <strong>of</strong> trust has evolved toge<strong>the</strong>r with
<strong>the</strong> growth <strong>of</strong> <strong>the</strong> cluster.
Thus, cultural variables play a definitely significant role in cluster development, yet <strong>the</strong>ir overall
importance should not be overestimated, while o<strong>the</strong>r variables should also be taken into account.
Trust and <strong>the</strong> maturity <strong>of</strong> cluster
There is enough empirical evidence, which suggests that in <strong>the</strong> initial stages <strong>of</strong> cluster development
<strong>the</strong> characteristics-based trust prevails, however, in <strong>the</strong> later stages as cluster grows and become
increasingly export-oriented, <strong>the</strong> process-based becomes increasingly more important <strong>the</strong> success <strong>of</strong>
transactions.
Bazan and Schmitz (1997) provide an example <strong>of</strong> <strong>the</strong> Brazilian shoe manufacturing cluster, which
developed on <strong>the</strong> basis <strong>of</strong> strong socio-cultural identity <strong>of</strong> <strong>the</strong> German émigré community in Brazil and
<strong>the</strong>ir shared experiences <strong>of</strong> mutual help (i.e. characteristics-based trust). In <strong>the</strong> initial stages, <strong>the</strong>
social control by local community prevented fraud and opportunism from happening. However, <strong>the</strong>
social ties that were so important in <strong>the</strong> beginning have gradually lost <strong>the</strong>ir significance as exports
began to grow. The growing value <strong>of</strong> international buyer-supplier relations meant that firms had to
invest in bilateral relations with <strong>the</strong> suppliers that are located outside <strong>the</strong> local industrial system.
Authors note that trust has become more selective and was constructed bilaterally, on <strong>the</strong> basis on
mutual experience <strong>of</strong> interaction (i.e. process-based trust). The same trend from characteristics-
towards process-based trust has been observed in <strong>the</strong> case <strong>of</strong> Pakistani cluster <strong>of</strong> surgical
instruments (Nadvi and Schmitz, 1998).
As far as interpersonal vs. institutional trust in <strong>the</strong> emergent vs. mature clusters is concerned, <strong>the</strong>re is
no definite answer.
On one hand, <strong>the</strong> presence <strong>of</strong> institutional trust may prove to be very useful for mobilising interorganizational
networks and helping build <strong>the</strong> relations based on inter-personal trust. Bachmann and
Inkpen (2011) claim that “substantial parts <strong>of</strong> <strong>the</strong> trust literature assume that <strong>the</strong> development <strong>of</strong> trust
is essentially a micro-level phenomenon based on frequent contacts between individual actors, thus
regard trust chiefly as a psychological phenomenon”. However, <strong>the</strong> argument goes that advanced
socio-economic systems can hardly rely on interaction-based forms <strong>of</strong> trust creation alone (i.e. parties
need institutional safeguards before any relationship happens). The creation <strong>of</strong> clusters depends on
<strong>the</strong> extended trust that <strong>of</strong>ten has to be built with <strong>the</strong> help <strong>of</strong> institutional leadership. Bachmann and
Inkpen (2011) conclude that a specific type <strong>of</strong> situation (e.g. crisis <strong>of</strong> trust) may require a specific
dominant mechanism to effectively produce institutional trust in business relationships.
Trust and <strong>the</strong> role <strong>of</strong> state in cluster building
There are two distinctive ways that clusters emerge: ei<strong>the</strong>r through <strong>the</strong> initiatives launched by <strong>the</strong>
responsible authorities <strong>of</strong> <strong>the</strong> government (top-down) or by industrial firms <strong>the</strong>mselves (bottom-up).
Both <strong>the</strong>se approaches suggest <strong>the</strong> prevalence <strong>of</strong> different type <strong>of</strong> trust relations.
In <strong>the</strong> case <strong>of</strong> top-down approach, <strong>the</strong> governments decide over <strong>the</strong> priority areas <strong>of</strong> cluster
development that are in line with national goals and visions, envisage <strong>the</strong>ir structure and support <strong>the</strong>
establishment <strong>of</strong> cluster institutions. Following this approach, <strong>the</strong> clusters are initiated by government
institutions ra<strong>the</strong>r than business organizations. The role <strong>of</strong> <strong>the</strong> state is particularly pronounced in
traditionally interventionist economies, e.g. in <strong>the</strong> Singaporean clusters <strong>of</strong> biomedical sciences and
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marine engineering. Wong et al. (2009) notes that <strong>the</strong> above-mentioned knowledge-intensive clusters
are regarded as <strong>the</strong> engines <strong>of</strong> growth at <strong>the</strong> national level, what provides legitimacy for <strong>the</strong> state
support. The success <strong>of</strong> top-down approach largely depends on <strong>the</strong> degree <strong>of</strong> trust that government
institutions manage to induce into <strong>the</strong> upcoming cluster initiative. It means that <strong>the</strong> actors in <strong>the</strong>
system (firms, research bodies, academia, etc.) should already possess quite strong institutional trust.
It does not deny <strong>the</strong> importance <strong>of</strong> personal trust in <strong>the</strong> specific leaders <strong>of</strong> governing bodies, however,
<strong>the</strong> overall trust in institutional environment remains <strong>of</strong> paramount importance. The emergence <strong>of</strong>
successful state initiated clusters is hardly possible when its key actors have no trust in institutional
system.
Most <strong>of</strong> <strong>the</strong> sustainably successful industrial clusters, however, emerge as <strong>the</strong> bottom-up initiatives,
where <strong>the</strong> role <strong>of</strong> <strong>the</strong> state is quite modest. Fromhold-Eisebith and Eisebith (2005) note that <strong>the</strong>
bottom-up approach refers to <strong>the</strong> dynamic aspect <strong>of</strong> <strong>the</strong> cluster, when actors decide to cooperate in
order to draw on certain collective advantages. Usually this process is naturally evolved, when
organizations/entrepreneurs share common experience while at <strong>the</strong> same time developing personal
trust that facilitates business transactions etc. Thus, <strong>the</strong> decision to participate in cluster is determined
by <strong>the</strong> economic rationale <strong>of</strong> participating organizations ra<strong>the</strong>r than some visionary government
initiative. Again it does not deny <strong>the</strong> potential importance <strong>of</strong> institutional trust; however, in <strong>the</strong> case <strong>of</strong>
naturally emerged clusters, <strong>the</strong> individual business logics and inter-personal relations (quite <strong>of</strong>ten,
based on trust in pr<strong>of</strong>essional competence) played key role. For example, in some classical industrial
clusters, such as Silicon Valley, <strong>the</strong> institutional environment had a trigger effect on cluster
development (e.g. Pentagon financing to military radio-electronics research at Stanford or venture
funds found in <strong>the</strong> region), but <strong>the</strong> very fabric <strong>of</strong> cluster was and remains highly dependent on
entrepreneurial initiatives and pr<strong>of</strong>essional inter-personal relations “on <strong>the</strong> shopfloor” level. It is <strong>the</strong>
case when an appropriate institutional environment supports <strong>the</strong> productive inter-personal
interactions.
Trust and <strong>the</strong> type <strong>of</strong> knowledge in industrial cluster
The relative importance <strong>of</strong> inter-personal vs. institutional trust within <strong>the</strong> cluster may depend on <strong>the</strong>
type <strong>of</strong> knowledge that is subject to inter-organizational interaction, which at <strong>the</strong> same time is <strong>of</strong>ten
related to <strong>the</strong> nature <strong>of</strong> <strong>the</strong> specific industry. In this context, Laestadius (1998) makes a distinction
between syn<strong>the</strong>tic and analytical knowledge.
The analytical knowledge prevails in <strong>the</strong> areas, such as biotechnologies, ICT or genetics (<strong>of</strong>ten
referred to as radical innovations), and <strong>the</strong> explicit, codified knowledge is <strong>of</strong>ten <strong>the</strong> main subject to
inter-organizational interaction. The firms maintain both formal and informal relations with R&D
institutions and university research centres (e.g. <strong>the</strong> case <strong>of</strong> Silicon Valley). Therefore, a high degree
<strong>of</strong> institutional trust is important in such kind <strong>of</strong> relations.
The syn<strong>the</strong>tic knowledge, on <strong>the</strong> o<strong>the</strong>r hand, prevails in <strong>the</strong> more traditional industries and leads to
incremental ra<strong>the</strong>r than radical innovations. The industrial knowledge is less codified and less explicit,
<strong>the</strong>re is less formal R&D involvement in inter-organizational relations, while many (incremental)
innovations happen by applying existing knowledge or looking for new combinations <strong>of</strong> “existing
pieces” via trial and error. The relations among actors are thus less <strong>of</strong> an institutional, but more <strong>of</strong> an
inter-personal nature in such type <strong>of</strong> environment.
Along similar lines, Cooke et al. (2004) distinguishes between two types <strong>of</strong> regional innovation
systems (RIS): institutional RIS and entrepreneurial RIS and claims that <strong>the</strong>y differ by a different
degree <strong>of</strong> institutional involvement. The institutional systems are more oriented to science, while
entrepreneurial systems more focus on applied research.
For example, <strong>the</strong> innovative clusters <strong>of</strong> “third Italy” fall into <strong>the</strong> category <strong>of</strong> entrepreneurial systems
and are characterized by <strong>the</strong> predominance <strong>of</strong> strong personal ties. Han et al. (2008) claim that
informal channels held by entrepreneurs play <strong>the</strong> crucial role in <strong>the</strong> process <strong>of</strong> trust building as it
facilitates <strong>the</strong> transfer <strong>of</strong> knowledge around <strong>the</strong> cluster. Ano<strong>the</strong>r relevant aspect is <strong>the</strong> impact <strong>of</strong>
informal collaboration and extensive contact networks that might be <strong>the</strong> precondition for <strong>the</strong>
knowledge communities to emerge. As Preissl and Solimene (2003) highlight, <strong>the</strong> informal information
exchanged within a cluster leads to a quick diffusion <strong>of</strong> new ideas and to dynamic innovation paths,
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and, <strong>the</strong>refore, to an intensification/reinforcement <strong>of</strong> competition which, in turn, postulates
innovativeness.
On <strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong> German cluster <strong>of</strong> automotive component manufacturing is characterised by a
high degree <strong>of</strong> institutionalization and thus, institutional trust. In this cluster <strong>the</strong> agents are related and
prefer to regulate <strong>the</strong>ir relations with <strong>the</strong> help <strong>of</strong> formal (e.g. standardisation institutions and <strong>the</strong>
regulatory authorities) mechanisms. As this cluster is continuously searching how to improve <strong>the</strong>
products, many participants from various economic groups (e.g. research institutions,
service/application providers, mobile operators, resellers, end users etc.) are taking place within
(Preissl and Solimene, 2003). As a result, it all requires a strong institutional basis in order to ensure
all <strong>the</strong> shareholders’ compliance with „<strong>the</strong> rules <strong>of</strong> <strong>the</strong> game“, <strong>the</strong> leakage <strong>of</strong> information etc. and in
turn to maintain high trust relationships.
One can expect that all <strong>of</strong> <strong>the</strong> above-mentioned different regional and industrial contexts may lead to
different strategies as far as <strong>the</strong> management <strong>of</strong> trust is concerned.
4. Management <strong>of</strong> trust in knowledge-based industrial clusters
The literature is dominated by two different perspectives towards inter-organizational trust building.
One approach suggests that trust inside clusters should better be built via repeated inter-personal
interactions, possibly with <strong>the</strong> leader at <strong>the</strong> forefront, maybe under some guidance by <strong>the</strong> neutral third
party.
Ano<strong>the</strong>r approach suggests that inter-actor trust should first <strong>of</strong> all be created with <strong>the</strong> help <strong>of</strong>
institutions as <strong>the</strong> core <strong>of</strong> trust in <strong>the</strong> system (e.g. Bachmann and Inkpen, 2011). The proponents <strong>of</strong>
<strong>the</strong> later approach claim that modern economies are too sophisticated in order to rely in building <strong>the</strong>
systemic trust only on inter-personal interactions.
Beugelsdijk and Hospers (2005) draw attention to <strong>the</strong> fact that not all firms in all countries are equally
good at cooperating and that, partly based on cultural and institutional features, in some countries
entrepreneurship and innovativeness are more prevalent than in o<strong>the</strong>rs. Indeed, <strong>the</strong> type and intensity
<strong>of</strong> cooperation, as well as <strong>the</strong> ways in which cooperation and innovation are successfully achieved,
differ between countries. In Germany, for example entrepreneurship and innovation in biotechnology
sector only developed after significant government involvement and adaptation <strong>of</strong> institutions at <strong>the</strong>
sector level. The Japanese keiretsu, on <strong>the</strong> o<strong>the</strong>r hand, are a different type <strong>of</strong> inter-organizational
cooperation and that developed in response to <strong>the</strong> lack <strong>of</strong> efficiently functioning institutions after <strong>the</strong>
Second World War, combined with market-distorting government policies. Thus, in <strong>the</strong> German and
Japanese contexts <strong>the</strong> inter-actor trust was to a significant extent institutionally induced.
However, it may also be partly due to <strong>the</strong> “special situation”, such as crisis, as mentioned by
Bachmann and Inkpen (2011), that <strong>the</strong> institutions are given <strong>the</strong> social legitimacy for intervention in
(re-)constructing trust. Under stable circumstances <strong>the</strong>re may be no social consensus justifying <strong>the</strong>
institutional intervention.
As we look at numerous “entrepreneurial” clusters (e.g. Third Italy or Silicon Valley) we can see that
trust is institutionalised via successful repeated inter-personal relations (in a relatively stable cultural
and institutional environment). Thus, over multiple iterations, a productive equilibrium is achieved
when actors are capable <strong>of</strong> predicting each o<strong>the</strong>r’s behaviour. The problem with many developing
countries, including <strong>the</strong> former transition economies, is that under uncertain or, even worse, corrupt
institutional environment <strong>the</strong> opportunist behaviour is too <strong>of</strong>ten rewarded; <strong>the</strong>re are many “one-<strong>of</strong>f”
transactions without “shadow <strong>of</strong> <strong>the</strong> future”, while <strong>the</strong> broken old networks do not provide enough
reputational monitoring (Humphrey and Schmitz, 1998). However, after <strong>the</strong> EU accession, <strong>the</strong>
situation in new member states is becoming more stable; less so in o<strong>the</strong>r Eastern parts <strong>of</strong> post-Soviet
Europe.
Therefore, trust building in a not-yet-mature institutional environment has to rely on any level <strong>of</strong>
initiative (i.e. macro/institutional, micro/personal or meso/industrial), depending on where <strong>the</strong> sufficient
“capital <strong>of</strong> trust” has been accumulated.
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Rita Babiliūtė and Kęstutis Kriščiūnas
On inter-personal level, much depends on <strong>the</strong> managerial behaviours that promote inter-personal
trust (i.e. discretion, personal integrity, communication, transparency, establishing shared vision and
accountability schemes, promoting <strong>the</strong> culture <strong>of</strong> sharing, etc.). These managerial behaviours, on <strong>the</strong>
o<strong>the</strong>r hand, should normally stem from rational interest in a long-term collaboration with partners.
Trust building usually depends on <strong>the</strong> initiative from <strong>the</strong> dominant partner in <strong>the</strong> relationship because
one <strong>of</strong> <strong>the</strong> key preconditions for trust-based relationship is <strong>the</strong> reduction <strong>of</strong> vulnerabilities and
establishment <strong>of</strong> positive expectations. Formal contracts with mutual obligations may help in <strong>the</strong>
beginning, but may never solve all aspects <strong>of</strong> trust (especially, in <strong>the</strong> knowledge exchange because
<strong>the</strong>re are too many intangibles to be put into contract). There must anyway be repeated interactions
and situations when parties refuse to behave opportunistically (despite <strong>the</strong> potential-short term
benefits) before positive expectations and trust is built.
On <strong>the</strong> institutional level, however, trust building depends on two major pillars. First, providing a stable
and fair legal-institutional framework upon which <strong>the</strong> inter-personal trust can be built. Second,
undertaking <strong>the</strong> efforts <strong>of</strong> network coordination, which means - mobilising <strong>the</strong> potential members <strong>of</strong>
cluster, helping identify <strong>the</strong>ir collective business interests and, possibly, mediating <strong>the</strong> processes that
involve inter-personal trust building.
It is also worth mentioning that much <strong>of</strong> <strong>the</strong> trust building can occur on <strong>the</strong> meso-level or <strong>the</strong> level <strong>of</strong>
industry (e.g. pr<strong>of</strong>essional associations). As many <strong>of</strong> <strong>the</strong> above-mentioned successful cases in cluster
development have shown, one may start with <strong>the</strong> characteristics-based trust that will later evolve into
<strong>the</strong> process-based trust as cluster grows. It means finding groups <strong>of</strong> people / organizations that
possess certain shared identity and shared understanding (and thus, a degree <strong>of</strong> trust, which can be
both based on <strong>the</strong>ir previous common experiences or just membership in collective). This group <strong>of</strong>
people or “club” may serve as <strong>the</strong> core and “springboard” <strong>of</strong> trust in <strong>the</strong> emerging cluster that will later
expand and evolve.
5. Concluding remarks
The discussion provided in this paper has shown that inter-personal and institutional trust are two
mutually complementary ra<strong>the</strong>r than exclusive concepts. However, <strong>the</strong> analysis has shown that <strong>the</strong>y
can be found in diverse industrial contexts and be related to different variables <strong>of</strong> <strong>the</strong> industrial
clusters.
Under normal circumstances, <strong>the</strong> presence <strong>of</strong> institutional trust provides foundation for <strong>the</strong> emergence
<strong>of</strong> inter-personal trust. However, under immature institutional environment <strong>the</strong> management <strong>of</strong> trust
has to be based on identifying <strong>the</strong> “islands” or “nuclei” <strong>of</strong> trust in <strong>the</strong> socio-economic system on all –
personal, institutional and industrial – levels, and promoting <strong>the</strong>ir expansion.
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64

Knowledge Management, Cultural Knowledge and
Intercultural Competence
Leonard Barnett and Edward Carter
Bangkok University <strong>International</strong> College, Bangkok, Thailand
lenbarnett@yahoo.com.au
eglcarter@yahoo.com
Abstract: This study explores conceptual and etiological linkages between knowledge management, cultural
knowledge and intercultural competence, drawing on recent research to support <strong>the</strong> investigation. The paper is
positioned <strong>the</strong>oretically among knowledge management, cultural knowledge, intercultural communication,
intercultural competence and intercultural management. The research methodology employs a qualitative
interpretivist approach, using in-depth, semi structured interviews and non-participant observation. Content
analysis and a reiterative multi-step coding technique are applied to <strong>the</strong> data. The data analysis yields seven
major findings, and <strong>the</strong>oretical constructs from intercultural competence and knowledge management are used to
explain <strong>the</strong>se. Analysis uncovers <strong>the</strong> importance <strong>of</strong> a range <strong>of</strong> cultural variables affecting aspects <strong>of</strong> knowledge
management, including knowledge sharing, transfer, innovation and development. The study is significant as <strong>the</strong>
impact <strong>of</strong> cultural factors and <strong>the</strong> requirement for intercultural competence among knowledge management
practitioners has been relatively neglected. This research clearly demonstrates that one size does not fit all and
that considerable intercultural competence is required <strong>of</strong> practitioners. Knowledge management, particularly
knowledge sharing, transfer, development and innovation must account for <strong>the</strong> specific cultural characteristics <strong>of</strong>
<strong>the</strong> countries and regions in which applications are to be deployed. The paper concludes by identifying future
opportunities for study, including cultural assessments and strategies which enable <strong>the</strong> adaptation <strong>of</strong> knowledge
management systems to local populations in an interculturally competent fashion.
Keywords: knowledge management, cultural knowledge, intercultural competence
1. Introduction
This paper explores <strong>the</strong> linkages between knowledge management (KM), cultural knowledge and
intercultural competence. It draws on recent research into intercultural interactions and intercultural
competence in <strong>the</strong> Thai tourism industry and identifies implications for KM, particularly knowledge
transfer, sharing, development and innovation.
The objectives <strong>of</strong> <strong>the</strong> study are to 1) examine <strong>the</strong> relationship between KM, cultural characteristics
and intercultural competence, 2) describe <strong>the</strong> <strong>the</strong>oretical context <strong>of</strong> intercultural competence and KM,
3) identify culturally based obstacles to KM and 4) provide guidance to KM practitioners on
intercultural competence. The particular research questions addressed are:
What are <strong>the</strong> characteristics <strong>of</strong> intercultural competence and intercultural interactions, as
identified by <strong>the</strong> participants in this study?
What cultural factors do <strong>the</strong>se interactions reveal?
How might <strong>the</strong>se factors enhance or impede KM activities, particularly knowledge transfer,
sharing, development and innovation?
What are <strong>the</strong> conceptual and etiological linkages between KM and intercultural competence?
Significant findings, cultural barriers to knowledge transfer and <strong>the</strong> requirement for intercultural
competence are discussed and future research opportunities identified.
2. Theoretical framework
In positioning this research academically, <strong>the</strong> relevant fields include KM, intercultural communication
competence, intercultural competence and intercultural management. As <strong>the</strong> research comes from
<strong>the</strong> tourism and hospitality industry, relevant contributions from that area are also noted.
2.1 Knowledge Management
Globalization has produced unprecedented volumes <strong>of</strong> trade, intercultural interactions and information
flows occurring at astounding velocity. To remain globally competitive, companies must ask: what do
we know? Need to know? Who knows it? How do we get it? (Prusak 2001). As Leonard (1999) notes,
“firms are knowledge as well as financial institutions”. Not only do organizations need access to
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Leonard Barnett and Edward Carter
codified and digitized information but, just as importantly, <strong>the</strong>y need to handle components which are
not digitized or fully documentable, for example intercultural awareness, judgment and intercultural
communication.
KM, intercultural understanding and intercultural competence are integral to being an international
“organization that knows how to do things” (Winter 1993). Among <strong>the</strong> strategies developed to
manage, <strong>the</strong>se types <strong>of</strong> knowledge have been group and network based systems. Knowledge,
particularly tacit cultural knowledge, grows in <strong>the</strong>se structures (Prusak 2001). They are effective
methods <strong>of</strong> managing <strong>the</strong> processes required to learn <strong>the</strong> tacit understandings embedded in cultural
knowledge which underlies intercultural competence (Ardichvili et al. 2006).
The practice foundations <strong>of</strong> KM include information management, <strong>the</strong> quality approach and <strong>the</strong>
human capital movement (Prusak 2001). While <strong>the</strong> first two have concentrated on structured data,
customer focus and improving work practices, <strong>the</strong> human capital movement portrays knowledge
development, particularly training and education, as an investment leading to skills development,
innovation, creativity and pr<strong>of</strong>itability, e.g. <strong>the</strong> positive correlation between intercultural competence
training, employee effectiveness and increased pr<strong>of</strong>itability in tourism (Baum and Devine 2008).
Given <strong>the</strong> range <strong>of</strong> approaches and <strong>the</strong> multi-dimensional nature <strong>of</strong> KM, it is unsurprising that <strong>the</strong>re is
little agreement in <strong>the</strong> literature on a single clear definition. For <strong>the</strong> purposes <strong>of</strong> this paper, Ardichvili
et al. (2006)’s definition is adequate: KM can be understood as a collection <strong>of</strong> processes that
comprise a “complex socio-technical system that encompasses various forms <strong>of</strong> knowledge
generation, storage, representation and sharing”.
In an effort to bring a typology to this complicated field, Binney (2001) proposes a spectrum <strong>of</strong> KM
elements:
Transactional: emphasizing use <strong>of</strong> knowledge in application <strong>of</strong> technology
Analytical: creation <strong>of</strong> new knowledge or interpretations from data
Asset management: management <strong>of</strong> explicit knowledge assets and intellectual property
Process-based: associated with total quality management, including improvement <strong>of</strong> work
practices
Developmental: emphasizing human capital, benefits <strong>of</strong> training, experiential learning, use <strong>of</strong>
communities and networks, and transfer <strong>of</strong> tacit knowledge
Innovation/creation: enabling diverse workers to collaborate in new knowledge creation
2.2 Knowledge Management and cultural knowledge
Binney’s developmental and innovative approaches are especially appropriate in nurturing
intercultural competence, as sharing and internalizing tacit cultural knowledge, embedded personal
beliefs and opinions require individuals to interact (Wenger et al. 2002). Cultural knowledge transfer
should be enabled by collaborative activities, group-based learning, mentoring and communities <strong>of</strong>
practice (Hildreth et al. 2000). However, <strong>the</strong> assumption that <strong>the</strong>se methods will involve free and full
exchange <strong>of</strong> tacit cultural knowledge between <strong>the</strong> experienced and knowledgeable with <strong>the</strong> less so
may not always apply, as this research indicates.
Communication, knowledge sharing and learning in organizations is influenced by <strong>the</strong> employees’
culture (H<strong>of</strong>stede 2001; Trompenaars 1993), as are cognitive styles and communication modes
(Korac-Kakabadze and Kouzmin 1999; Holmes and Tangtongtavy 1997). Thus, intercultural
competence presents KM with some special challenges. Cultural knowledge, <strong>the</strong> information, skills,
attitudes, conceptions, beliefs, values, etc. acquired during enculturation, underlie intercultural
competence (Pederson 1994).
Unfortunately, <strong>the</strong> field <strong>of</strong> intercultural competence is populated by a baffling array <strong>of</strong> terms and
overlapping descriptions. (It should be noted that intercultural refers to <strong>the</strong> study <strong>of</strong> distinct cultures in
interaction, while cross-cultural is <strong>the</strong> comparative investigation <strong>of</strong> different cultures.)
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Leonard Barnett and Edward Carter
2.3 Intercultural communication competence
Studies <strong>of</strong> intercultural communication competence emphasize traits, perceptions, behaviors or <strong>the</strong>
culture-specific (Lustig and Koester 1993). For example, approaches include uncertainty reduction
strategies (Gudykunst 1994), non-verbal communication (Anderson 1994), identity maintenance
(Ting-Toomey et al. 2004) cultural knowledge, skills and motivation (Wiseman 2001) and many more
(Cegala 1984; Hammer 1987; Kim 1993). O<strong>the</strong>rs emphasize interactional and relational aspects
(Imahori and Lanigan 1989) while Chen and Starosta (1999) stress affect and social relaxation in
intercultural dealings.
2.4 Intercultural competence
Trait, interactional and developmental approaches predominate in intercultural competence. Fantini,
Arias-Galicia and Guay (2001) define intercultural competence as “multiple abilities that allow one to
interact effectively and appropriately across cultures.” Kohls (1996) adds humor and accepting failure.
O<strong>the</strong>r notable trait studies include Fantini (2000) and Samovar and Porter (2001). Pusch (2004) and
Lustig and Koester (2003) stress <strong>the</strong> milieu, context and interactional aspects <strong>of</strong> intercultural
competence. Developmental and process approaches include increasing awareness, cultural
knowledge and skill (Pederson 1994), ‘intercultural transformation’ (Kim and Rubin 1992) and
movement, through <strong>the</strong> acquisition <strong>of</strong> cultural knowledge and perceptual change, from ethnocentric to
ethnorelative (Bennet 1993; Fennes and Hapgood 1997)—stressing changing one’s internal frame <strong>of</strong>
reference. O<strong>the</strong>r process approaches are reconciling cultural differences (Trompenaars and
Hampden-Turner 2001), “global people skills” (Gundling 2003) and “global literacy” (Rosen et al.
2000).
Regarding second language pr<strong>of</strong>iciency, some (Gudykunst 1994) ignore it while o<strong>the</strong>rs promote it
(Lambert 1994; Gannon 2008; Bryam 1997; Piller 2007). Roberts et al. (2005) report that most socalled
cultural misunderstandings are due to language difficulties.
2.5 Intercultural competence and tourism
Tourism provides millions <strong>of</strong> intercultural interactions each year. Notable studies from this important
area deal with intercultural competence and adaptation (Hottola 2004), cultural knowledge,
sustainable tourism and customer satisfaction (Shapero 2006; Tse, E. C-Y. and Ho, S-C. 2009;
Samovar and Porter 2001). Gannon (2008) laments that business and educational institutions
devalue <strong>the</strong> importance <strong>of</strong> knowledge transfer in <strong>the</strong> area. Baum and Devine (2008) note that an
“employee’s ability to be productive depends on <strong>the</strong> level <strong>of</strong> cultural awareness learning/training
received.”
2.6 Intercultural competence and management
Intercultural management is concerned with <strong>the</strong> effective functioning <strong>of</strong> diverse groups <strong>of</strong> people in
organizations (Jacob 2004). H<strong>of</strong>stede (1980), arguing for culturally appropriate management styles,
introduces ‘dimensions <strong>of</strong> culture’. Wong (1991) stresses similarities, not differences, between
international managers. Bartlett and Ghoshal (1989) state that management must integrate diversity
by understanding target markets’ cultures.
Trompenaars (1993, 2001)’s studies investigate intercultural relationships, reconciling cultural
dilemmas and patterns <strong>of</strong> organizational culture and structure. His renowned ‘dilemmas <strong>of</strong> culture’
are: 1. Communitarianism vs. individualism, (group vs. individual), 2. Universalism vs. particularism
(rules vs. relationships), 3. Neutral vs. emotional (how and what feelings are expressed), 4. Diffuse
vs. specific (range <strong>of</strong> involvement we have with each o<strong>the</strong>r), 5. Achievement vs. ascription (how
status is accorded), 6. Time (sequential vs. synchronic and orientation to <strong>the</strong> past, present and future)
and 7. Environment: (internal vs. external locus <strong>of</strong> control). Although at times controversial, even his
critics call him a “luminary in <strong>the</strong> field” (Jacob, 2004).
3. Methodology
This section describes <strong>the</strong> study’s overall research methodology and rationale, methods employed,
data collection processes, validity and reliability, limitations and ethical issues. The research
questions and objectives were specified in this paper’s Introduction.
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Leonard Barnett and Edward Carter
A qualitative interpretivist approach, using an inductive method, is <strong>the</strong> most appropriate for this type <strong>of</strong>
study. It enables researchers to gain a deeper understanding <strong>of</strong> <strong>the</strong> issues and <strong>the</strong> meanings
respondents attach to events (Saunders et al., 2007) and is suitable for use with a small sample
where <strong>the</strong> focus is on interactions (Bryman, 2004). The methodology is appropriate for an interpretive
study which aims to access deeply embedded data. (Daymon and Holloway, 2002); Bryman and Bell,
2003, 2007; Bryman, 2004; Saunders et al., 2007).
3.1 Sample selection
As <strong>the</strong> first part <strong>of</strong> a comprehensive investigation, <strong>the</strong> research focuses on managers’ perceptions
(later studies will deal with customers and staff). Using purposive sampling, it is very important for <strong>the</strong>
study’s credibility that <strong>the</strong> five respondents are experienced, international senior managers with a
deep understanding <strong>of</strong> <strong>the</strong> research area.
3.2 Data collection
The research was triangulated, employing two principal methods <strong>of</strong> data collection: in-depth, semistructured
interviews and non-participant observation.
In <strong>the</strong> in-depth, semi-structured interviews, <strong>the</strong> researchers used an interview guide to obtain
standardized data from participants and adjust or revise questions as new insights arose (Daymon
and Holloway, 2002). In each interview, <strong>the</strong> respondents answered open-ended questions and were
free to elaborate, express personal opinions and feelings and display <strong>the</strong>ir expertise (Crouch and
Housden, 1996; Chisnall, 2001). There were five in-depth, semi-structured interviews, each lasting a
minimum <strong>of</strong> one hour, with five senior managers <strong>of</strong> first class hotels in Bangkok and three nonparticipant
observations in <strong>the</strong>se hotels.
In <strong>the</strong> three one and a half hour non-participant observations additional and confirmatory data was
recorded systematically, in narrative form and using a checklist, based on <strong>the</strong> interview guide (Hair et
al., 2003). A researcher observed staff in work settings, at audible distance, about 10-15 meters, from
<strong>the</strong>m. Staff were not informed that <strong>the</strong>y were being observed. For ethical reasons, <strong>the</strong> observation
sites and <strong>the</strong> names <strong>of</strong> those observed can not be identified.
3.3 Data analysis
The interviews were tape-recorded with <strong>the</strong> permission <strong>of</strong> <strong>the</strong> respondents and supported with notes.
All interviews were transcribed and were supplemented by written notes and checklists from <strong>the</strong> nonparticipant
observations to enable fuller data analysis.
3.3.1 Content analysis and coding
Content analysis and standard, systematic, qualitative coding techniques were applied (Richardson,
2000) to enable <strong>the</strong> sorting and re-presenting <strong>of</strong> raw data for interpretation and data analysis. As part
<strong>of</strong> <strong>the</strong> coding process, data presented in Word format were labeled and numbered, recording item
names, page numbers, paragraphs and line numbers in <strong>the</strong> transcripts, checklists and notes.
Exhaustive reiterative processing <strong>of</strong> <strong>the</strong>se coded items uncovered etiological and conceptual linkages
between <strong>the</strong>m, facilitating gradual categorization into seven major <strong>the</strong>mes and associated items or
sub-<strong>the</strong>mes. For example:
1. Positive feedback from and experience <strong>of</strong> customers: interactions, honesty, attitude to work, duty
managers’ efficiency and calm under pressure. 2. Friendliness and <strong>the</strong> power <strong>of</strong> <strong>the</strong> “smile”:
friendliness, smiling behaviors, gracefulness, courtesy, empathy, masking <strong>of</strong> negative feelings,
spontaneity, relevance <strong>of</strong> Buddhism, skepticism re: genuineness and different meanings <strong>of</strong> Thai
smile. 3. Proactivity and Initiative: lack <strong>of</strong> proactivity and initiative, need for clear structure, inflexible
adherence to procedures, lack <strong>of</strong> ambition, reluctance to work outside Bangkok, uncertainty
behaviors, e.g. getting <strong>the</strong> manager, freezing, hiding, smiling and ignoring; possible causes: education
system, culture and status, attachment to family and home, insularity, lack <strong>of</strong> common sense,
overcoming this through financial reward and empowerment, banning “mai dai” (“it cannot be done”).
4. Management, responsibility and accountability: staff cooperative, hard working, motivated, very
loyal, responding well to training, unwilling to enter senior management, satisfied with supervisor
level, wanting <strong>the</strong> protection <strong>of</strong> a senior manager, fear <strong>of</strong> accountability, different to o<strong>the</strong>r employees
in Asia and <strong>the</strong> region, loss <strong>of</strong> face and staff evaluation, using humiliation for change, wanting
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participation in decision-making but not accepting consequences, seeing positions as life tenure,
staying too long; foreign manager’s intercultural competence crucial: relationship development,
encouraging cultural observances, judgments about status and flexibility. 5. Communication: fear <strong>of</strong>
complaining, ‘kill <strong>the</strong> messenger’, avoiding confrontation, difficulties obtaining full information about
problems or complaints, staff not telling management <strong>the</strong> full story. 6. Status: differential treatment <strong>of</strong>
guests, hi-so lo-so, status relations among staff, phi-nong (superior-subordinate, senior-junior),
ethnicity - treatment <strong>of</strong> Westerners, Indians and Arabs, status <strong>of</strong> job, company brand loyalty. 7.
Relationships: Relationship and trust building, relationship management, ‘screwing over,’ group and
family loyalty, cronyism, in- and out-groups, company as family, astute observers <strong>of</strong> relationships.
3.4 Research validity and reliability
3.4.1 Multiple methods <strong>of</strong> data collection
This study incorporated rigorous data collection and analysis methods, such as triangulation and
participant validation to ensure <strong>the</strong> validity and reliability (Silverman, 2000; Krippendorff, 2004;
Richardson, 2000). Multiple methods enabled <strong>the</strong> comparison and checking <strong>of</strong> findings, revealing high
consistency across all items.
3.4.2 Participant validation
The initial analysis <strong>of</strong> findings was made available to participants who verified and commented on
both <strong>the</strong> analysis and <strong>the</strong> interpretation. Participant validation was invaluable in streng<strong>the</strong>ning
research validity as it confirmed <strong>the</strong> accuracy <strong>of</strong> <strong>the</strong> categorizations (<strong>the</strong>mes and sub-<strong>the</strong>mes)
recorded and <strong>the</strong> conclusions and clarified some matters (Richardson, 2000; Krippendorff, 2004).
3.4.3 Presentation <strong>of</strong> evidence
This study’s credibility is bolstered by <strong>the</strong> maintenance <strong>of</strong> rich and detailed accounts <strong>of</strong> interview data
in transcripts and recordings, and observational notes (Richardson, 2000).
3.4.4 The quality <strong>of</strong> interview participants
The quality <strong>of</strong> <strong>the</strong> interview respondents, as ‘competent judges’ and knowledgeable senior managers,
supports <strong>the</strong> research’s validity.
3.4.5 Reliability
Fur<strong>the</strong>r reliability <strong>of</strong> this study derives from <strong>the</strong> consistency or replicability <strong>of</strong> findings from different
participants and observations (Bryman 2004; Silverman 2000; Krippendorff, 2004). The researchers
applied one set <strong>of</strong> interview questions to each <strong>of</strong> <strong>the</strong> five respondents whose overlapping or
consistent answers enhances <strong>the</strong> reliability <strong>of</strong> particular findings. In addition, findings from nonparticipant
observations supported and confirmed those from <strong>the</strong> interviews. Systematic coding and
data collection techniques fur<strong>the</strong>r improved reliability (Silverman (2005). To assist <strong>the</strong> research
process and streng<strong>the</strong>n reliability, a research diary was kept throughout <strong>the</strong> study.
4. Findings
Seven major findings emerged from analysis <strong>of</strong> 113 data items. These are described here while <strong>the</strong>
next section distils <strong>the</strong> implications for KM.
4.1 Positive information from and experience <strong>of</strong> customers
This finding is expected as <strong>the</strong>se staff are from <strong>the</strong> region’s best hotels. As Thais strongly value
ascribed status (Trompenaars 1993) high paying guests are treated deferentially and respectfully.
Trompenaars’ particularism complements ascribed status as lower rank persons (staff) go to great
lengths to relate positively to <strong>the</strong>se customers. Communitarianism and <strong>the</strong> ‘organization as family’
(Trompenaars 2001) reinforce staff’s welcoming attitudes. Shapero (2006) and Baum and Devine
(2008) note that intercultural competence increases customer satisfaction. Are <strong>the</strong> staff highly
interculturally competent or do <strong>the</strong>y simply appear to be so for cultural reasons? Given <strong>the</strong> importance
<strong>of</strong> <strong>the</strong> particular context in intercultural competence (Pusch 2004; Lustig and Koester 2003), positive
customer information may reflect that <strong>the</strong>se staff in <strong>the</strong>se hotels, interacting with <strong>the</strong>se guests, display
significant intercultural competence in this situation. Do particularism, communitarianism and ascribed
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status predispose <strong>the</strong>se staff to appear interculturally competent with <strong>the</strong>se guests in this situation?
This latter explanation is underscored by a respondent’s view that <strong>the</strong> finding was due to staff’s
personal qualities and selection.
4.2 Friendliness and <strong>the</strong> “smile”
Findings 1 and 2 are interrelated as customer feedback is affected by <strong>the</strong> friendliness <strong>of</strong> <strong>the</strong> staff and
<strong>the</strong> famous Thai smile, while incompetence is masked by <strong>the</strong>se. Ascribed lower status individuals
must present positive emotions, facial expressions, etc. to higher rank and avoiding negative display.
The cultural dilemma <strong>of</strong> affective vs. neutral, dictates <strong>the</strong> amount and type <strong>of</strong> feeling that can be
displayed. To preserve communitarian harmonious relationships, negative emotional signals are
suppressed and positive feelings and smiles encouraged.
All respondents noted <strong>the</strong> variations in <strong>the</strong> Thai smile, with one reporting five types. However, <strong>the</strong>
comment that “It’s amazing what we get away with” indicates that <strong>the</strong> iconic smile is an interculturally
effective marketing behavior. The zone <strong>of</strong> tolerance is widened if <strong>the</strong> customer perceives service
failure as due to cultural misunderstanding (Warden et al. 2003). Recovery after service failure is
crucial (Warden et al. 2003). In this study, where <strong>the</strong>re was failure, staff’s smiling behavior increased
as did <strong>the</strong> staff numbers smiling. This influenced customers to cease information seeking and be
patient. The Thai smile smoothly halts inquiries and portrays failure as intercultural misunderstanding.
4.3 Lack <strong>of</strong> innovation, creativity, proactivity and initiative
Communitarians do not value innovation and initiative as highly as <strong>the</strong>ir individualistic managers. In
an ascribed status setting, it is expected that externally (locus <strong>of</strong> control) focused staff will follow
orders without criticism or expecting delegation. Rigid adherence to procedures reflects <strong>the</strong> perceived
centralization <strong>of</strong> power (ascribed status) and <strong>the</strong> dilemma, relating to nature, whereby staff recognize
<strong>the</strong>ir locus <strong>of</strong> control (e.g. <strong>the</strong> procedures) as external. Consequent behaviors - freezing, hiding and
ignoring - are accounted for by H<strong>of</strong>stede (1997)’s uncertainty avoidance. Fur<strong>the</strong>rmore,
communitarianism and uncertainty avoidance explain staff’s unwillingness to work outside Bangkok.
4.4 Management, responsibility and accountability
Communitarianism accounts for reluctance to assume senior management responsibility and
accountability as <strong>the</strong>se are strongly individualistic notions. Status aspirations are fulfilled by current
positions or achieving supervisor level where accountability can be pushed upwards. Fur<strong>the</strong>rmore, <strong>the</strong>
‘boss’ must <strong>of</strong>ten transfer unwelcome information which disturbs communitarian harmony. Problems
with staff evaluation are explained by <strong>the</strong> dilemma <strong>of</strong> diverse vs. specific, where <strong>the</strong> personal and <strong>the</strong>
pr<strong>of</strong>essional are not distinct (Trompenaars 1993). Criticism is avoided or taken personally with
consequent loss <strong>of</strong> face or perceived social regard. Staff immobility and ‘staying too long’ are
reinforced by communitarianism and ascribed status which underlie <strong>the</strong> model <strong>of</strong> <strong>the</strong> organization as
a family. Here loyalty is more important than performance. In addition, Trompenaars’ indicates that
cultures with long time orientations perceive past loyalty and effectiveness as relevant to current
evaluations and decisions about staff. Participation in decision-making but reluctance to take
consequent responsibility reflects an unreconciled cultural dilemma within communitarianism vs.
individualism or an incomplete intercultural competence transformation (Kim and Rubin 1992). Here
we have staff who perceive <strong>the</strong>ir participation, not as individualistic with resultant accountability, but
as communitarian, demonstrating unity and toge<strong>the</strong>rness.
The finding that senior managers’ intercultural competence, especially in handling information, is
crucial for effectiveness is supported by much <strong>of</strong> <strong>the</strong> literature (e.g. Gannon 2008, Baum and Devine
2008) and by Trompenaars’ multicultural management.
4.5 Communication
In a high context culture, much knowledge is not ‘spelt out’ in words but in context, or not at all,
whereas in low context cultures (respondents are Nor<strong>the</strong>rn European and North American), <strong>the</strong> focus
is on words and precision (H<strong>of</strong>stede 1997; Trompenaars 1993). Consequently, much information is
not communicated to or not understood by low context managers. The tendency to ‘shoot <strong>the</strong>
messenger,’ <strong>the</strong> bearer <strong>of</strong> negative information, is explained by staff’s communitarian concern to
maintain harmony and balanced relationships. Communitarianism, toge<strong>the</strong>r with <strong>the</strong> neutral vs.
affective dilemma, which determines what feelings may not be expressed or provoked, accounts for
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problems <strong>of</strong>ten not being reported and, when <strong>the</strong>y are, <strong>the</strong> communicator being censured. Staff’s
reluctance to express negative feelings extends to <strong>the</strong> management <strong>of</strong> negative information.
4.6 Status
Ascribed status permeates Thai culture and behavior. Phi-nong washes through inter-staff
relationships and interactions with customers. If <strong>the</strong> guest is high status, <strong>the</strong>y receive more
information and attention than low status. Staff’s favoring Western customers above Indians and
Arabs reflects <strong>the</strong> status ascribed to particular groups by <strong>the</strong> culture. Conversely, <strong>the</strong> employer’s high
status brand elicits considerable motivation and pride.
4.7 Relationships
Relationship development is a core intercultural competency. Due to high communitarianism and
particularism, strong relationships are a cornerstone <strong>of</strong> <strong>the</strong> society and crucial in <strong>the</strong> local business
culture, with Thais preferring informal and personal relationship-based communication (Holmes and
Tangtongtavy 1997). Reflecting <strong>the</strong>ir own intercultural competence, all respondents understood this
and <strong>the</strong> consequences <strong>of</strong> not being able to establish strong relationships.
The staff are astute observers <strong>of</strong> relationships and communication, displaying high emotional
intelligence (Mayer and Salovey 1993) and are impressive relationship managers (Sammapan 1996),
a core competency in a particularist culture. This is illustrated in situations where personnel not
accepted into <strong>the</strong> in-group (e.g. Thais returning from overseas trying to change things, interculturally
incompetent foreign staff) are controlled, changed or ostracized through relationship management
and manipulating knowledge sharing. “They get really ‘screwed over’”. The importance <strong>of</strong> relationship
management, empathy and trust are accounted for by particularism, i.e. <strong>the</strong> particular persons and
relationships are more important than innovation.
5. Discussion - implications for knowledge management
This research identifies a number <strong>of</strong> cultural characteristics that affect KM. As Ardichvili et al. (2006)
note, KM and KM systems need to be tailored to <strong>the</strong> particular values and cultural preferences <strong>of</strong>
national employees, accounting for <strong>the</strong> range <strong>of</strong> cultural implications, emerging from this research and
<strong>the</strong> literature.
5.1 Status
A deep understanding <strong>of</strong> ascribed status and related concepts, such as high power distance
(H<strong>of</strong>stede 2001) and vertical cultures (Triandis 1995), is essential for <strong>the</strong> effective implementation <strong>of</strong>
KM systems in <strong>the</strong>se cultures.
As noted in this study, knowledge transfers between people from opposite cultures (ascribed vs.
achieved status, high vs. low power distance, etc.) are complicated by <strong>the</strong> varying ways in which each
manages knowledge. For example, in ascribed status societies, information flows overwhelmingly
from top to bottom, while in achieved status, <strong>the</strong> flow is multi-directional (Bhagat et al. 2002). Within a
high power distance culture, status will determine what knowledge is shared and <strong>the</strong> direction <strong>of</strong>
information flow. Knowledge transfer is problematical where content is tightly controlled by <strong>the</strong>
hierarchy, preventing employees accessing critical information (H<strong>of</strong>stede 2001). Adapting to open
online knowledge sharing systems may challenge upper management and <strong>the</strong>re is pressure on
employees to self-censor.
A subtle phenomenon, noted by Trompenaars (2001), is that, in an ascribed status organization,
superiors are expected to be expert and not display ignorance. Similarly, employees avoid revealing
superiors’ deficiencies and concede to <strong>the</strong>m, on <strong>the</strong> basis <strong>of</strong> <strong>the</strong>ir status not <strong>the</strong>ir expertise. Just as
this phenomenon has contributed to some famous but tragic plane crashes, so it impedes innovation
and <strong>the</strong> open sharing and development <strong>of</strong> knowledge and competence in organizations.
5.2 Communitarianism
Members <strong>of</strong> communitarian or collectivist cultures share information and construct knowledge
differently to individualists. Bhagat et al. (2002) note that individualists identify each piece <strong>of</strong>
information, independent <strong>of</strong> its context, and give special importance to writing, while communitarians
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perceive a message embedded in context and may disregard written information. Knowledge is more
likely to be understood and shared by communitarians when accompanied by a human face and
voice. e.g. obtaining information may be unsuccessful if relying on email or forms. A personal contact
is <strong>of</strong>ten required.
5.3 In-groups and out-groups
Communitarians are interdependent on o<strong>the</strong>r group members and Thais are astute relationship
managers, adroitly manipulating in- and out-group distinctions. Consequently, while knowledge is
readily developed, learnt and shared between in-group members, it may not reach employees from
ano<strong>the</strong>r section. This exclusion is not malevolent but simply reflects in-group loyalty and reluctance to
‘lose’ group property. Similarly, out-group members may intentionally exclude <strong>the</strong>mselves from
participating in certain KM activities, if <strong>the</strong>y perceive <strong>the</strong>mselves as not belonging (Ardichvili et al
2006).
This research found that Western customers received fuller knowledge sharing than Indians and
Arabs. Ethnocentrism, when combined with ascribed status and particularism, throws up formidable
knowledge barriers for certain out-groups.
5.4 Particularism
Participants stressed <strong>the</strong> importance <strong>of</strong> relationships in management. Thais, being strongly
particularist do business through informal and personal relationship-based communication (Holmes
and Tangtongtavy 1997). Thai companies and sub-sections run on a family based model reflecting
both communitarian and particularist values. Consequently, KM systems, which are impersonal,
universalist and reliant on written rules, will be less successful than those that incorporate informal
relationship management.
5.5 High and low context
Managers reported considerable difficulty with <strong>the</strong> issue <strong>of</strong> high and low context communication.
Words, emails and online verbal KM applications are more valued by low than high context staff.
Interculturally competent KM needs to account for this cultural variation in rolling out KM systems.
5.6 Diversity and face
In a diverse, as opposed to specific, culture, <strong>the</strong> perception <strong>of</strong> work performance and personal regard
is integral to self concept and self esteem. Pr<strong>of</strong>essional praise or criticism is taken personally and
affects face (Miller 2005). Face is crucial in decisions made about communication, learning and
knowledge sharing. For example, willingness to ask questions varies greatly across cultures (Wenger
et al. 2002). Those from specific cultures perceive asking questions as valid inquiry and <strong>of</strong>ten faceenhancing
behavior. Diverse culture individuals avoid doing so, especially in public, as it is not
modest (Kurman 2003) and, if it betrays ignorance or embarrasses, is a face-losing behavior. Asking
questions may distinguish one from <strong>the</strong> group and so break communitarian principles or it might
<strong>of</strong>fend against kreng jai (no precise English equivalent – approx. consideration, self effacement).
Similarly, relaying negative and critical information is discouraged (‘shoot <strong>the</strong> messenger’) if it reflects
badly on somebody or might provoke prohibited emotional display. Knowledge relating to
performance, particularly appraisal or mistakes, becomes very delicate when face is so crucial.
Criticism is avoided and incompetence may be covered up or ignored.
5.7 Uncertainty avoidance and external locus <strong>of</strong> control
Managers expressed frustration with staff’s lack <strong>of</strong> innovation, creativity, proactivity and initiative,
despite innumerable training courses, and <strong>the</strong>ir rigid adherence to procedures and unwillingness to
accept promotion to more accountable positions. Uncertainty avoidance, preferring external control
and reluctance to assume internal control provide significant obstacles to innovation and creativity in
KM.
6. Conclusion and areas for future research
This research demonstrates that one size does not fit all and that considerable intercultural
competence is required <strong>of</strong> KM practitioners. KM, particularly knowledge sharing, transfer,
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Leonard Barnett and Edward Carter
development and innovation must account for <strong>the</strong> specific cultural characteristics <strong>of</strong> <strong>the</strong> countries and
regions in which applications are to be deployed. This should follow a thorough cultural assessment
which enables knowledge pr<strong>of</strong>essionals to adapt KM systems to local populations in an interculturally
competent fashion.
Similar research is planned with customers and staff. Among future opportunities, study is required to
clearly specify how an interculturally competent KM system would vary from traditional systems, how
cultural dilemmas can be more effectively reconciled, e.g. staff’s reluctance to assume top positions,
and, on a lighter note, <strong>the</strong> behavioral, KM and marketing aspects <strong>of</strong> <strong>the</strong> ‘Thai smile.’
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74

Impact <strong>of</strong> Knowledge Management Created by
Communities <strong>of</strong> Practice in Virtual Learning Environments
Bob Barrett
School <strong>of</strong> Business, American Public University, Charles Town, USA
docjob00@msn.com
Abstract: As more organizations move forward with technological advancements, as well as strategically
planning for competitiveness in <strong>the</strong> marketplace, <strong>the</strong>se entities realize that real world applications and learning
are important. Thus, many are starting to focus on <strong>the</strong> importance and potential application <strong>of</strong> a new approach to
managing in <strong>the</strong> 21 st century with <strong>the</strong> use <strong>of</strong> knowledge management, instead <strong>of</strong> just relying only on key
managers and <strong>the</strong>ir experiences individually. According to AllKM.com (2011), knowledge management can be
viewed as a ‘system to facilitate learning, innovation and sharing to achieve <strong>the</strong> strategic objectives <strong>of</strong> an
organization” (p. 2). While many business and academic pr<strong>of</strong>essionals still gravitate towards <strong>the</strong>oretical
approaches, industry is starting to see more movement towards practical and meaningful approaches to learning
from knowledge gained by <strong>the</strong> collective whole. KMNetwork (2011) noted that knowledge management as being
“more about <strong>the</strong> pragmatic and thoughtful application as it is not in <strong>the</strong> <strong>the</strong>oretical definition but in real world
execution wherein lie <strong>the</strong> greatest opportunities and challenges” (p.2). With this strategic change in managerial
approach, companies are learning how to rely upon <strong>the</strong>ir employees, as a whole, to create <strong>the</strong>ir own knowledge
management work product and sustain it within <strong>the</strong>ir own learning and work environments. One way that many
organizations, whe<strong>the</strong>r in <strong>the</strong> business or academic setting, are capturing and sustaining <strong>the</strong> intellectual work
products and thoughts processes <strong>of</strong> <strong>the</strong>ir employees is through <strong>the</strong>ir engagement in “communities <strong>of</strong> practice”.
Wenger (2006) defined communities <strong>of</strong> practice as being formation <strong>of</strong> “people who engage in a process <strong>of</strong>
collective learning in a shared domain <strong>of</strong> human behavior . . .” (para. 3). These communities can create, share,
maintain, develop, and evaluate all types <strong>of</strong> knowledge through various activities, such as problem solving,
sharing developments, documenting and working on projects, and mapping out knowledge and seeking
improvements, as well as striving for better achieve <strong>of</strong> organizational objectives and goals. Interestingly, many
businesses and educational institutions have streng<strong>the</strong>ned <strong>the</strong> use <strong>of</strong> communities <strong>of</strong> practice as “think tanks”
and “creators <strong>of</strong> organizational knowledge” through <strong>the</strong> use <strong>of</strong> virtual work groups, departmental discussion
forums, and specialized group boards. Finally, this leads to <strong>the</strong> question as to whe<strong>the</strong>r this change in knowledge
management approach from <strong>the</strong>ory to practical application is stemming from a need to reexamine <strong>the</strong> value <strong>of</strong>
Intellectual Capital in <strong>the</strong> workplace or education – or just a chance to challenge <strong>the</strong> status quo <strong>of</strong> what we have
all learned to do in <strong>the</strong> past.
Keywords: community <strong>of</strong> practice, network <strong>of</strong> practice, intellectual capital, virtual learning
1. Introduction <strong>of</strong> Knowledge Management and industry
The concept and application <strong>of</strong> knowledge management has been vastly used in industries,
organizations, and academic settings with different interpretations and applications. The creation <strong>of</strong>
and <strong>the</strong> various uses have been instituted, ra<strong>the</strong>r than just relying only on key managers and <strong>the</strong>ir
experiences individually. According to AllKM.com (2011), knowledge management can be viewed as
a ‘system to facilitate learning, innovation and sharing to achieve <strong>the</strong> strategic objectives <strong>of</strong> an
organization” (p. 2). While many business and academic pr<strong>of</strong>essionals still gravitate towards
<strong>the</strong>oretical approaches, industry is starting to see more movement towards practical and meaningful
approaches to learning from knowledge gained by <strong>the</strong> collective whole. The question to be examined
during this article is whe<strong>the</strong>r <strong>the</strong>re is sharing <strong>of</strong> knowledge and how is distributed to <strong>the</strong> group.
Fur<strong>the</strong>r, one needs to consider whe<strong>the</strong>r <strong>the</strong>re is some “holding <strong>of</strong> certain elements <strong>of</strong> knowledge” that
could be seen as beneficial or detrimental to <strong>the</strong> group or organization.
KMNetwork (2011) noted that knowledge management as being “more about <strong>the</strong> pragmatic and
thoughtful application as it is not in <strong>the</strong> <strong>the</strong>oretical definition but in real world execution wherein lie <strong>the</strong>
greatest opportunities and challenges” (p.2). With this strategic change in managerial approach,
companies are learning how to rely upon <strong>the</strong>ir employees, as a whole, to create <strong>the</strong>ir own knowledge
management work product and sustain it within <strong>the</strong>ir own learning and work environments. One way
that many organizations, whe<strong>the</strong>r in <strong>the</strong> business or academic setting, are capturing and sustaining
<strong>the</strong> intellectual work products and thoughts processes <strong>of</strong> <strong>the</strong>ir employees is through <strong>the</strong>ir engagement
in “communities <strong>of</strong> practice”. Wenger (2006) defined communities <strong>of</strong> practice as being formation <strong>of</strong>
“people who engage in a process <strong>of</strong> collective learning in a shared domain <strong>of</strong> human behavior . . .”
(para. 3). These communities can create, share, maintain, develop, and evaluate all types <strong>of</strong>
knowledge through various activities, such as problem solving, sharing developments, documenting
and working on projects, and mapping out knowledge and seeking improvements, as well as striving
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Bob Barrett
for better achieve <strong>of</strong> organizational objectives and goals. Later in this paper, <strong>the</strong> concept <strong>of</strong>
communities <strong>of</strong> practice, as well as <strong>the</strong> use <strong>of</strong> “networks <strong>of</strong> practice” may also contribute to and from
o<strong>the</strong>r communities <strong>of</strong> practice.
Finally, we can see <strong>the</strong> use <strong>of</strong> <strong>the</strong>se communities <strong>of</strong> practice in <strong>the</strong> academic work, specifically in <strong>the</strong>
online learning environment. Many businesses and educational institutions have streng<strong>the</strong>ned <strong>the</strong> use
<strong>of</strong> communities <strong>of</strong> practice as “think tanks” and “creators <strong>of</strong> organizational knowledge” through <strong>the</strong> use
<strong>of</strong> virtual work groups, departmental discussion forums, and specialized group boards. Finally, this
leads to <strong>the</strong> question as to whe<strong>the</strong>r this change in knowledge management approach from <strong>the</strong>ory to
practical application is stemming from a need to reexamine <strong>the</strong> value <strong>of</strong> Intellectual Capital in <strong>the</strong>
workplace or education – or just a change to challenge <strong>the</strong> status quo <strong>of</strong> what we have all learned to
do in <strong>the</strong> past. In order to first view <strong>the</strong>se communities <strong>of</strong> practice, an examination <strong>of</strong> what makes up
<strong>the</strong> intellectual capital in an organization will be helpful in order to understand what is valued and held
important in orders. Fur<strong>the</strong>r, this will service as a basis towards understanding <strong>of</strong> how intellectual
capital works toge<strong>the</strong>r to help organize, grow, and maintain this idea <strong>of</strong> community <strong>of</strong> practice, which
will be discussed later in this paper.
2. Intellectual Capital and its impact <strong>of</strong> Knowledge Management
Stewart (1997) classified Intellectual Capital into three key areas: human capital, structural capital,
and customer capital. Consequently, many organizations are starting to place a larger “value” on <strong>the</strong>
human capital element in <strong>the</strong>ir organizational schema, especially we can see this action in <strong>the</strong> online
learning environment. Human capital is explained as “<strong>the</strong> capabilities <strong>of</strong> <strong>the</strong> company’s employees
necessary to provide solutions to customers, to innovate and to renew. As a result <strong>of</strong> changing
technology and economic times, many organizations are realizing <strong>the</strong> need to update, innovate, and
rejuvenate. InCaS (2010) noted that “As a result <strong>of</strong> constant changes caused by globalisation,
emerging technologies and shorter product life-cycles, knowledge and innovation have already
become <strong>the</strong> main competitive advantages <strong>of</strong> many companies. In particular, we can see that certain
European small and medium-sized enterprises (SME) are highly dependent on <strong>the</strong> ability to identify
changes in <strong>the</strong>ir global economic environment quickly and respond to <strong>the</strong>se changes with suitable
solutions.” (p. 4) Similar to <strong>the</strong>ir European counterparts, American enterprises and organizations are
scanning <strong>the</strong>ir environments and focusing on responding to potential changes in order to capture and
maintain <strong>the</strong>ir market share and prepare for <strong>the</strong> future. In additional in individual capabilities, human
capital includes <strong>the</strong> dynamics <strong>of</strong> an intelligent (learning) organization in a changing competitive
environment, its creativity, and innovativeness” (Stewart, 1997, p. 13). Thus, <strong>the</strong>re has been an
increase in <strong>the</strong> focus as to how online learning providers are investing more money and time in
preparing <strong>the</strong>ir online instructional staff.
As more organizations start to focus on <strong>the</strong> role and function <strong>of</strong> intellectual capital, as well as <strong>the</strong>
creation <strong>of</strong> knowledge management, we have a trend with <strong>the</strong>se organizations in terms <strong>of</strong> creating
and maintaining learning organizations. Sokolowska (2006) commented that “if we look at learning
organizations we can see two types <strong>of</strong> trends. She stated that “such organizations are understood in
dynamic organizational categories that are oriented at <strong>the</strong>ir development, searches for new chances
on <strong>the</strong> market and continually increases <strong>the</strong>ir effectiveness, efficiency and flexibility. The second
group <strong>of</strong> learning organizations consists <strong>of</strong> such entities that choose growth through development <strong>of</strong>
<strong>the</strong>ir employees.” (p. 158) This paper will examine how <strong>the</strong> online learning (virtual) environment is
responding to own Intellectual Capital, creating specific communities with similar interests and
practices, as well as increasing <strong>the</strong>ir own knowledge base and share accordingly with interested
parties. As a result <strong>of</strong> this movement, more networking opportunities are appearing – and more
opportunities for advancement for individuals, groups, and organizations may be <strong>of</strong>fered. The
increase use <strong>of</strong> technology in organizations has motivated more <strong>of</strong> <strong>the</strong>m to reach for o<strong>the</strong>r ways <strong>of</strong>
developing <strong>the</strong>ir human capital. Thus, virtual learning has become more <strong>of</strong> a training opportunity in
today’s workplace than ever before. The following section will examine how <strong>the</strong>se new technological
tools can be <strong>of</strong> use to today’s business leaders and <strong>the</strong>ir employees.
3. Online (virtual) learning and changes in <strong>the</strong>ir environmental
As more changes occur in organizations due to economic and technological factors have caused
many to rethink <strong>the</strong>ir way <strong>of</strong> working and search for “best practices” with <strong>the</strong>ir industries in order to
remain competitive and move forward productively. As a result <strong>of</strong> changing technology and economic
times, many organizations are realizing <strong>the</strong> need to update, innovate, and rejuvenate. InCaS (2010)
noted that “As a result <strong>of</strong> constant changes caused by globalisation, emerging technologies and
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Bob Barrett
shorter product life-cycles, knowledge and innovation have already become <strong>the</strong> main competitive
advantages <strong>of</strong> many companies. Especially European small and medium-sized enterprises (SME) are
highly dependent on <strong>the</strong> ability to identify changes in <strong>the</strong>ir global economic environment quickly and
respond to <strong>the</strong>se changes with suitable solutions.” (p. 4) Like <strong>the</strong>ir European counterparts, American
enterprises and organizations are scanning <strong>the</strong>ir environments and focusing on responding to
potential changes in order to capture and maintain <strong>the</strong>ir market share and prepare for <strong>the</strong> future.
Thus, <strong>the</strong> key question is whe<strong>the</strong>r we are better <strong>of</strong>f today than before in terms <strong>of</strong> developing our
intellectual capital? Has <strong>the</strong> onset <strong>of</strong> technological advancements really helped or hindered our
learning and knowledge building process? In consideration <strong>of</strong> <strong>the</strong>se questions, we will focus on <strong>the</strong>
online (virtual) learning environment and reasons why <strong>the</strong>y have to be constantly seeking
improvement and new ways <strong>of</strong> working in order to remain viable, competitive, and productive. As a
result, many <strong>of</strong> <strong>the</strong>se online organizations are focus on what <strong>the</strong>ir human capital can bring to <strong>the</strong> table
in order to achieve <strong>the</strong>se goals.
Human capital is explained as “<strong>the</strong> capabilities <strong>of</strong> <strong>the</strong> company’s employees necessary to provide
solutions to customers, to innovate and to renew. In additional in individual capabilities, human capital
includes <strong>the</strong> dynamics <strong>of</strong> an intelligent (learning) organization in a changing competitive environment,
its creativity, and innovativeness” (Steward, 1997, p. 13). Thus, <strong>the</strong>re has been an increase in <strong>the</strong>
focus as to how online learning providers are investing more money and time in developing <strong>the</strong>ir
employees. Barbara Smith (2000), chief learning <strong>of</strong>ficer for Burson-Marsteller stated that “If we don’t
have <strong>the</strong> best people creating <strong>the</strong> best product, we can’t compete. What I’m after is creating <strong>the</strong> best
people in <strong>the</strong> industry. E-learning is an option that provides us with real competitive edge – it helps us
maximize our intellectual capital” (para. 2). Thus, <strong>the</strong>re is a growing need for more investment and
strategic development in <strong>the</strong> area <strong>of</strong> online learning training to help enhance <strong>the</strong> skills <strong>of</strong> online
instructors.
This paper will provide an overview <strong>of</strong> how several online universities invest in <strong>the</strong>ir online
instructional training, as well as creating ongoing educational opportunities, in order to develop one
segment <strong>of</strong> <strong>the</strong>ir intellectual capital – <strong>the</strong>ir instructors. While online instructors have been empowered
with various technological tools, as well as given <strong>the</strong> task <strong>of</strong> facilitating learning, <strong>the</strong>y also serve as
<strong>the</strong> frontline for customer service questions and guidance. Thus, many online schools have realized
<strong>the</strong> need to develop and implement better strategies for <strong>the</strong>ir online intellectual capital, and some
have spent extra time focused on <strong>the</strong> frontline provides to <strong>the</strong>ir instructors. In <strong>the</strong> next section, <strong>the</strong>re
will be a brief overview <strong>of</strong> what is happening with online learning in <strong>the</strong> United States.
4. Learning environments and <strong>the</strong> online learning industry
The learning environments for both business and academia have changed drastically over <strong>the</strong> past
two decades. Due to changes technology, economics, and education <strong>of</strong> employees, organizations are
also considering <strong>the</strong> value <strong>of</strong> organizational learning in <strong>the</strong>ir overall organizational structure and how
<strong>the</strong>y can learn from <strong>the</strong>mselves, as well as from o<strong>the</strong>rs. Along with looked at <strong>the</strong>se learning
organizations, we need to also focus on <strong>the</strong> 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
<strong>the</strong> need to examine more closely why innovation will be a major factor in <strong>the</strong> growth <strong>of</strong> this industry
and its intellectual capital. The following section will give a brief overview <strong>of</strong> <strong>the</strong> growth in this
environment and why it has been undergoing a mission or change and renewal.
The growth in <strong>the</strong> 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 <strong>the</strong> start <strong>of</strong> <strong>the</strong> 2008-2009 academic year. That's
more than 1 in 4 college students, and it's a 17 percent increase from 2007.” (para. 1) In 2006, 38
states in <strong>the</strong> 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 <strong>of</strong> 147 virtual charter schools serving over 65,000 students (http://www.nacol.org). In
2001, 56% <strong>of</strong> traditional learning institutions <strong>of</strong>fered distance learning programs. An additional 12% <strong>of</strong>
schools stated <strong>the</strong>y planned on adding distance learning programs to <strong>the</strong>ir curriculum within <strong>the</strong> 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 <strong>of</strong>fering online education
courses and teacher training in order to help recruit and hire more online instructors. Thus, <strong>the</strong>re is a
growing need to increase <strong>the</strong> number <strong>of</strong> online instructors to teach at educational institutions. In <strong>the</strong>
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next section <strong>of</strong> this paper, <strong>the</strong> focus will be at examining how technology has been growing and how it
has affected instructors and <strong>the</strong>ir need to update <strong>the</strong>ir skills.
As more technology has become available in many parts <strong>of</strong> <strong>the</strong> globe, a new type <strong>of</strong> student
population has emerged. The traditional student image <strong>of</strong> higher learning has been somewhat limited
in many countries, but given <strong>the</strong> impact <strong>of</strong> <strong>the</strong> Internet, this traditional “student body” has changed to
online communities. In <strong>the</strong> field <strong>of</strong> business and management, educators have recognized <strong>the</strong>
demographical changes <strong>of</strong> <strong>the</strong> student population. As a result, <strong>the</strong>y have been reaching out to
external contributors, leaders in <strong>the</strong> various business industries, as experts on <strong>the</strong>ir curriculum
committees to <strong>of</strong>fer insights as to what <strong>the</strong>y are seeking in new employees. In particular, <strong>the</strong>y are
forming <strong>the</strong>ir own community <strong>of</strong> practice or ra<strong>the</strong>r a network <strong>of</strong> practice, which will be later discussed
in this paper.
5. Changing world view and examination <strong>of</strong> learning and technological
implications
As technology has provided a powerful infrastructure, <strong>the</strong> emerging technologies have allowed
educational institutions, educators, and students to provide education on a much higher playing field –
in a virtual learning environment. Consequently, <strong>the</strong> 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, <strong>the</strong>se changes only signify to <strong>the</strong> educational and learning communities that
technology recognizes a need for change – but do we, as educators, recognize <strong>the</strong> need for change
completely? Thus, many educational institutions, as well as <strong>the</strong> business world, are focusing on <strong>the</strong>
learning process and its impact on <strong>the</strong>ir organizational structure and employees.
While online learning has been focused more on <strong>the</strong> academic setting, many companies are learning
that online learning has many benefits in <strong>the</strong> corporate/business environments. Thus, many
companies and organizations are focusing on <strong>the</strong> “learning” element <strong>of</strong> <strong>the</strong>ir employees’ daily work
lives, as well as helping to build <strong>the</strong>ir knowledge management with a concentration on helping <strong>the</strong>
organization learn from previous and current experiences. Thompson (1995) stated that
“organizational learning involves <strong>the</strong> acquisition <strong>of</strong> new information and <strong>the</strong> ability to analyze that
information creatively, learn from it, and apply that learning in useful ways.” (p. 95). As organizations
realize that <strong>the</strong>re is a need to “capture” and “utilize” this type <strong>of</strong> learning, <strong>the</strong>y also realize <strong>the</strong> need for
<strong>the</strong> organization, as a whole, to concentrate on building up this learning element to include everyone
in <strong>the</strong>ir respective organization, as well as setting up informal and formal learning center or circles.
While organizations and communities view <strong>the</strong> impact <strong>of</strong> online learning in <strong>the</strong> U.S., we also have to
look at how type <strong>of</strong> learning is impacting <strong>the</strong> world and our global capital.
As a result, more European companies have taken a more concentrated effort towards examining
<strong>the</strong>ir Intellectual Capital in terms <strong>of</strong> a series <strong>of</strong> questions, which constitutes what is called <strong>the</strong>
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 <strong>the</strong>
Intellectual Capital (IC) <strong>of</strong> an organisation. It shows how Intellectual Capital is linked to corporate
goals, business processes and <strong>the</strong> business success <strong>of</strong> an organization using indicators to measure
<strong>the</strong>se elements” (p. 7). Which leads us to <strong>the</strong> next step – how do we create an Intellectual Capital
Statement for a company – especially for an online learning institution? InCaS (2010) <strong>of</strong>fers <strong>the</strong>
following guidance:
Helps you determine strengths and weaknesses <strong>of</strong> strategic IC factors (diagnosis)
Prioritises improvement opportunities with <strong>the</strong> highest impact (decision support)
Supports <strong>the</strong> implementation <strong>of</strong> actions for organizational development (optimisation and
innovation)
Enhances transparency and <strong>the</strong> involvement <strong>of</strong> employees (internal communication)
Diminishes strategic risks and controls <strong>the</strong> success <strong>of</strong> actions (monitoring)
Facilitates <strong>the</strong> communication <strong>of</strong> corporate value towards stakeholders (reporting) (p. 8).
As we look at <strong>the</strong>se areas, we are now able to focus on <strong>the</strong> relevance <strong>of</strong> and impact <strong>of</strong> communities
<strong>of</strong> practices in <strong>the</strong> creation, development and maintenance <strong>of</strong> knowledge management within groups,
organizations, and similar organizations and organizations.
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6. Concept <strong>of</strong> community <strong>of</strong> practice in today’s workplace
A community <strong>of</strong> practice can be defined as “groups <strong>of</strong> people who share similar goals and interests. In
pursuit <strong>of</strong> <strong>the</strong>se goals and interest, <strong>the</strong>y employ common practices, work with <strong>the</strong> same tools, and
express <strong>the</strong>mselves in common language. Though such common activity, <strong>the</strong>y come to hold similar
benefits and value systems.” (Collaborative Visualization Project, n.d., para. 4). According to Lave and
Wenger (1991), situated learning is a typed <strong>of</strong> learning that takes place in <strong>the</strong> workplace. One way to
view this is in <strong>the</strong> lens <strong>of</strong> an apprentice learning on <strong>the</strong> job for use later in <strong>the</strong>ir pr<strong>of</strong>essional
pr<strong>of</strong>ession. As one continues to work in a given environment, skills and experiences are learned or
shared, as well as contributions to <strong>the</strong> collective whole can occur. While it may not be on <strong>the</strong> same
level at more experienced, skilled, or educated pr<strong>of</strong>essionals, this type <strong>of</strong> experience does
demonstrate <strong>the</strong> beginnings <strong>of</strong> one’s contribution and participation in knowledge management in one
sense or ano<strong>the</strong>r. Consequently, we can see participation in <strong>the</strong> workplace, academia or even in a
virtual ga<strong>the</strong>r (learning situation) as a form <strong>of</strong> Legitimate Peripheral Participation (LPP), as described
by Lave and Wenger (1991). In this type <strong>of</strong> participation, we can view it as a social process in <strong>the</strong>se
described environments, whereas people join toge<strong>the</strong>r for a common goal(s) and proceed to build
upon each o<strong>the</strong>r’s participation, contributions, and experiences. In fact, this is <strong>the</strong>ir “own” community
<strong>of</strong> practice starting to be built by <strong>the</strong>m, which tell not only a story about <strong>the</strong>m and <strong>the</strong>ir interactions –
but also how <strong>the</strong>y create, value, and share <strong>the</strong>ir knowledge gained.
Legitimate Peripheral Participation (LPP) can be viewed in three aspects. According to Lave and
Wenger (1991), LPP is composed <strong>of</strong> legitimation, peripherality , and participation separately.
“Legitimation refers to <strong>the</strong> power and <strong>the</strong> authority relations in <strong>the</strong> community. Peripherality refers to
<strong>the</strong> individual’s social, ra<strong>the</strong>r than physical peripherlity in relation to <strong>the</strong> community. This in turn is
dependent on <strong>the</strong>ir history <strong>of</strong> participation in <strong>the</strong> group and <strong>the</strong> expectation <strong>of</strong> <strong>the</strong>ir future participation
in and interaction with <strong>the</strong> community.” (p. 3). Out <strong>of</strong> this participation in <strong>the</strong> given environment, we
need to look at <strong>the</strong> given action, product or experience. What is shared, distributed, or learned tells
one about <strong>the</strong> community <strong>of</strong> practice and its relevance as a whole. In order to do this we look at what
is common or <strong>the</strong> basis called by Clark and Brennan (1991) as <strong>the</strong> common ground. With this concept
in mind, we look at <strong>the</strong> environment, how information is shared or distributed, and <strong>the</strong> dynamics <strong>of</strong> <strong>the</strong>
group in general. Thus, we need to understand <strong>the</strong> rule and function <strong>of</strong> <strong>the</strong>se communities <strong>of</strong>
practices and how relevant <strong>the</strong>y are to organizations and <strong>the</strong>ir employees.
7. Role and function <strong>of</strong> network <strong>of</strong> practice in Knowledge Management
While <strong>the</strong> contributions <strong>of</strong> <strong>the</strong> group are quite important to <strong>the</strong> sharing, distribution, and maintaining <strong>of</strong>
knowledge <strong>of</strong> <strong>the</strong> organization or environment in general, <strong>the</strong>re is also a form <strong>of</strong> interaction with o<strong>the</strong>rs
outside <strong>of</strong> <strong>the</strong> given environment. As members <strong>of</strong> a group, or community <strong>of</strong> practice, interact within
<strong>the</strong>ir community, <strong>the</strong>y are also part <strong>of</strong> networks out <strong>of</strong> <strong>the</strong>ir community. O<strong>the</strong>rwise, without this
external interaction, <strong>the</strong> learning or knowledge gained within <strong>the</strong>ir communication <strong>of</strong> practice may be
stagnant or being formed within a vacuum. Brown and Duguid (2000) looked at <strong>the</strong> value <strong>of</strong> <strong>the</strong>se
external networks and named <strong>the</strong>m as Network <strong>of</strong> Practice (NoP). What we can see as potential NoP
are specialized groups or perhaps specific technological networks, suppliers or organizations from
which certain communities <strong>of</strong> practices can gain or share valuable information in which to improve
upon <strong>the</strong>ir own community and perhaps set up “particular networks” <strong>of</strong> value to <strong>the</strong>m and <strong>the</strong>ir
organization as a whole.
Who are members <strong>of</strong> NoP? According to <strong>the</strong> works <strong>of</strong> Markus (2001), we can examined <strong>the</strong> work <strong>of</strong>
<strong>the</strong>se “shared work practitioners” as seeking o<strong>the</strong>rs like <strong>the</strong>m in characteristics, interests, and work
goals. Markus (2001) described <strong>the</strong>se shared work practitioners as doing similar work, but in different
work settings. They are all seeking new knowledge and ways <strong>of</strong> performing <strong>the</strong>ir work goals, but yet
learn o<strong>the</strong>r ways <strong>of</strong> enhancing <strong>the</strong>ir own community. They actively seek o<strong>the</strong>rs in similar industries or
organizations to interact or network with in meeting <strong>the</strong>ir own goals and perhaps learning more about
new forms <strong>of</strong> technology and best practices. As a result, <strong>the</strong>y help not only <strong>the</strong>mselves, groups, and
organizations, <strong>the</strong>y also contribute to sometimes more than one NoP or CoP and increase value for
all. Thus, we need to look a bit closer at who are <strong>the</strong> contributors to <strong>the</strong>se communities <strong>of</strong> practice and
how <strong>the</strong>ir contributions can add to <strong>the</strong> intellectual capital <strong>of</strong> <strong>the</strong>ir organizations and o<strong>the</strong>r related
parties.
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8. Contributors <strong>of</strong> community <strong>of</strong> practice in groups and organizations
Who are <strong>the</strong>se contributors to <strong>the</strong> community <strong>of</strong> practice? If we look at <strong>the</strong> academic approach to
communities <strong>of</strong> practice, <strong>the</strong>re seem to be a growing eagerness to form such communities <strong>of</strong> various
reasons. However, one key reason for academic groups to form such communities to help pair up
new faculty members with seasoned faculty to help learn from <strong>the</strong>m and perhaps build <strong>the</strong>ir own “form
<strong>of</strong> expertise” within <strong>the</strong>ir group. Spased, Bessant, Partington, Tranfield, and Young (2002) noted that
“academic communities typify <strong>the</strong> dynamics <strong>of</strong> collectively sharing identity, know-how, and ways <strong>of</strong>
working independently <strong>of</strong> local contact” (p. 79). Besides having this sharing only focused on new
technology, as we seen with <strong>the</strong> advent and implement <strong>of</strong> online learning, many face-to-face and
online groups are forming such communities.
We should look at <strong>the</strong> value to <strong>the</strong> individual contributors <strong>of</strong> creating and maintaining knowledge
within <strong>the</strong>ir groups and organizations, as well as working with external groups in efforts to improve
<strong>the</strong>ir company goals internally and externally. While shared knowledge is beneficial to individuals,
groups, and <strong>the</strong> organization as a whole, one needs to consider <strong>the</strong> importance <strong>of</strong> it and how <strong>the</strong>
various members are rewarded and given recognition for <strong>the</strong>ir efforts. Davidson and Voss (2002)
noted that “a knowledge management initiative will not get very far if – however actively you champion
knowledge sharing – <strong>the</strong> existing remuneration system rewards knowledge hoarding” (p. 146). As a
result, educational institutions are focusing on help teambuilding within <strong>the</strong>ir organizations and helping
individuals and groups learn and grow from each o<strong>the</strong>r’s experiences, as well as <strong>the</strong> richness <strong>of</strong>
opportunities being afforded to <strong>the</strong>m by technology and <strong>the</strong>ir respective institution.
Many academic organizations are creating and implementing <strong>the</strong>ir own communities <strong>of</strong> practice within
<strong>the</strong>ir various academic divisions and schools. In fact, some <strong>of</strong> <strong>the</strong>se communities are interacting
within <strong>the</strong>ir various schools, as well as crossing over to o<strong>the</strong>r schools and external communities to
seek and share knowledge to advance and improve <strong>the</strong>ir own best practices. For example, <strong>the</strong>
American Public University System (APUS) in <strong>the</strong> United States, has taken <strong>the</strong> initiative <strong>of</strong> creating
separate communities <strong>of</strong> practices within <strong>the</strong>ir various schools in both <strong>of</strong> its universities – American
Public University (APA) and American Military University (AMU). In addition to specific schools within
<strong>the</strong>ir own university entity, <strong>the</strong>y have created common areas (based on <strong>the</strong> concept <strong>of</strong> common
ground) for particular interest areas where faculty and staff members in both universities can meet
and exchange ideas and experiences. Some <strong>of</strong> <strong>the</strong>se communities <strong>of</strong> practices consist <strong>of</strong> legal
studies, career ideas, sports management, criminal justice, hospitality management, etc.
(www.apus.edu). As a result, various members <strong>of</strong> <strong>the</strong>se communities meet and exchange ideas within
certain designated areas, as well as share with <strong>the</strong> community at large <strong>of</strong> <strong>the</strong>ir findings and plans for
future activities.
9. Conclusion
What do communities <strong>of</strong> practices, as well as networks <strong>of</strong> practices, <strong>of</strong>fer individuals, groups, and
organizations? As more companies promote <strong>the</strong> importance <strong>of</strong> training and education, many entities
are rethinking and re-evaluating <strong>the</strong> use <strong>of</strong> <strong>the</strong>ir funds to help support <strong>the</strong>ir employees (human capital)
and demonstrate <strong>the</strong>ir interest in <strong>the</strong>ir value and contributions to <strong>the</strong> overall organizational goals. .
Educational institutions, like o<strong>the</strong>r businesses and organizations, are taking note <strong>of</strong> <strong>the</strong>ir various
resources that determine <strong>the</strong> value and competitiveness <strong>of</strong> <strong>the</strong>ir industry. While <strong>the</strong>y examine what
works and does not function, <strong>the</strong>y are starting to look more at <strong>the</strong> collective whole and what can be
gained from <strong>the</strong>ir contributions. As a result, <strong>the</strong>y are now more focused in ever before to learn and
grow <strong>the</strong> knowledge currently held, in some cases individually, into a “product” or “experience” that
can help o<strong>the</strong>r employees, groups, as well as <strong>the</strong> entire organization. As a result, we are seeing more
organizations latch onto <strong>the</strong> concept <strong>of</strong> communities <strong>of</strong> practices and actually implementing – as well
as encouraging <strong>the</strong>ir efforts. While many concepts and trends come and go in <strong>the</strong> business and
academic environments, <strong>the</strong> impact <strong>of</strong> knowledge being created and shared by <strong>the</strong>se communities <strong>of</strong>
practices are being viewed as having more value and respect in today’s technological age.
Drawbacks may be how <strong>the</strong> various produced components <strong>of</strong> knowledge are held or controlled by
o<strong>the</strong>rs, but this opens up yet ano<strong>the</strong>r stream <strong>of</strong> research to be explored.
References
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Brown, J.S. and Duguid P. (2000). The social life <strong>of</strong> information, Boston, MA: Harvard Business School Press.
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81

The Role <strong>of</strong> Social Networking Tools on Purchasing
Decision Making Process
Aurilla Aurelie Bechina 1 and Eli Hustad 2
1
Buskerud University College, Faculty <strong>of</strong> Technology, Kongsberg, Norway
2
University <strong>of</strong> Agder, Kristiansand, Norway
aurillaa@hihm.no
Abstract: Today <strong>the</strong>re is a growing recognition that <strong>the</strong> company’s competitiveness is linked to elaborating
relevant strategies in keeping <strong>the</strong>ir customers or acquiring new ones. The recent years have seen a new trend
where consumers are increasingly searching and sharing product/service information over Internet. It is
recognized that <strong>the</strong> quality and <strong>the</strong> nature <strong>of</strong> <strong>the</strong> acquired knowledge could influence <strong>the</strong> decision making
process to purchase or not <strong>the</strong> products or services. Therefore, exploiting <strong>the</strong> concept <strong>of</strong> collective intelligence,
several companies are integrating Web2.0 technologies with o<strong>the</strong>rs means <strong>of</strong> communication in order to provide
a social networking environment where <strong>the</strong> consumers can share <strong>the</strong>ir experiences and insights about
products/services. This paper discusses <strong>the</strong> influence <strong>of</strong> using social network in <strong>the</strong> decision making process
while considering purchasing a product or a service.
Keywords: Web 2.0, social networking, decision making, Knowledge sharing, customers
1. Introduction
During <strong>the</strong> last decade, enterprise strategists started to recognize that business success and
performance improvement was more and more related to <strong>the</strong> degree to which new technological
trends were used by companies in order to communicate with potential customers. Marketing is
essential for organisations within this very competitive business world. Therefore, large companies do
not hesitate to spend a consequent budget in <strong>the</strong> branding strategy or marketing specific products or
services. Smaller organisations with limited resources tend generally to use more creative approach
to reach potential customers. The use <strong>of</strong> Internet and Information communication has provided
different mechanisms for more efficient marketing or communication strategies.
The advances in information and communication technology (ICT) have influenced <strong>the</strong> emergence <strong>of</strong>
<strong>the</strong> contemporary networking society based upon a decentralized, information-driven and knowledgebased
economy (Castells, 2000). Indeed, <strong>the</strong> role <strong>of</strong> <strong>the</strong> information communication technologies has
increased in improving <strong>the</strong> social and business life <strong>of</strong> people. Internet and Web2.0 have brought a
revolution in <strong>the</strong> way people are interacting with each o<strong>the</strong>r or with vendors in order to ga<strong>the</strong>r
information about products or services <strong>the</strong>y intend to buy.
The evolution <strong>of</strong> Internet as a large scale information infrastructure provides opportunities for social
networking where individuals take part in online communication to share information and knowledge
across spatial and temporal boundaries.
Several studies reported that social network websites are more and more used by consumers in order
to communicate <strong>the</strong>ir questions or opinions before or after making a decision to purchase a product
/service.
Internet technologies and web-based applications are continuously developing and advancing. This
innovation has caused improved usability attracting several communities to popular online activities.
Individuals make new friendships differently than before by sharing personal pr<strong>of</strong>iles (e.g.
Facebook.com), exchanging multimedia files (YouTube.com) and by taking part in virtual games
(World<strong>of</strong>WarCraft.com). People share common interests by participating in different discussion forums
and by making <strong>the</strong>ir own blogs. Fur<strong>the</strong>rmore, Wikis are increasingly used for easy creation and
frequently updating <strong>of</strong> information content at web-sites (e.g. Wikipedia). People are making and
sharing <strong>the</strong>ir own metadata in terms <strong>of</strong> social tagging and bookmarks (i.e. Folksonomies). Scholars
and practitioners alike suggest that <strong>the</strong>se contemporary trends <strong>of</strong> Internet development represent a
paradigm shift towards <strong>the</strong> second generation <strong>of</strong> <strong>the</strong> web conceptualized as <strong>the</strong> Web 2.0
phenomenon (Musser & O’Reilly, 2006).
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Aurilla Aurelie Bechina and Eli Hustad
Hence, Web2.0 has enabled interacting people to form a dynamic social network seen sometimes as
<strong>the</strong> intelligence <strong>of</strong> connection where knowledge is flowing. Thus, <strong>the</strong> concept <strong>of</strong> collective intelligence
is emerging and could be defined as a wealth <strong>of</strong> insights, experiences shared among people.
The concept <strong>of</strong> collective intelligence has been around for long time; however <strong>the</strong> use <strong>of</strong> <strong>the</strong> collective
Intelligence (CI) as a tool facilitating <strong>the</strong> decision making is being fur<strong>the</strong>r investigated as new
marketing or communication approach by organisations (Eric Bonabeau, 2009).
In order, to understand how social media tools and <strong>the</strong> collective intelligence could contribute to
influence <strong>the</strong> purchasing decision, we have adopted a qualitative approach by conducting interviews
with several people. In addition, we have analysed various websites providing some means allowing
<strong>the</strong> consumers to interact with each o<strong>the</strong>rs or with <strong>the</strong> vendors. This is an ongoing study; <strong>the</strong> initial
data analysis should contribute to design a survey instrument that will be sent to customers <strong>of</strong> several
companies selling online. The paper is still at <strong>the</strong> conceptual level and presents only preliminary
results that would need to be validated for a larger sample.
In <strong>the</strong> domain <strong>of</strong> <strong>the</strong> consumers buying behaviour, it is important to understand how <strong>the</strong> consumer
makes a purchasing decision in an online shopping environment.
The next section <strong>of</strong> <strong>the</strong> paper outlines <strong>the</strong> basic concepts <strong>of</strong> decision making processes and Web2.0.
The third part discusses <strong>the</strong> implication <strong>of</strong> using social network on purchasing decision making
2. Decision and social network tools
1.1 Decision making process
Thanks to Internet and new information communication technologies, consumers have access to all
kind <strong>of</strong> information or data about products and services. Today <strong>the</strong> main concerns is not anymore to
find information about for instance <strong>the</strong> availability, <strong>the</strong> price or technical details about a product but
ra<strong>the</strong>r to be able to take a purchasing decisions while being confronted to large varieties <strong>of</strong> a product.
Decision is defined as a position or opinion reached after consideration. The decision making process
is defined as a cognitive process including a high level <strong>of</strong> mental activity in choosing between several
options. Though, <strong>the</strong> way people are finally making decision is still not fully understood as quite <strong>of</strong>ten
emotional or irrational feelings play a role in <strong>the</strong> process <strong>of</strong> making decision (Zeelenberg, Nelissen,
Breugelmans, & Pieters, 2008)
Several studies have described <strong>the</strong> various phases involved in a decision making process (Huitt,
1992) that are delineated as such:
Step 1: Identification <strong>of</strong> a problem and preliminary understanding <strong>of</strong> <strong>the</strong> problem context and
possible related solution
Step 2: analysis and processing phase in which various options or alternatives are investigated.
After evaluation, a solution to <strong>the</strong> stated problem is selected
Step 3: as an output <strong>of</strong> <strong>the</strong> step 1 includes <strong>the</strong> planning and <strong>the</strong> implementation <strong>of</strong> <strong>the</strong> selected
solution.
Step 4: <strong>the</strong> solution is evaluated and if needed some modifications are made.
Decision making <strong>of</strong> customers is a cognitive process <strong>of</strong> selecting a course <strong>of</strong> action from among a set
<strong>of</strong> multiple product or service alternatives (Thompson & Yon Ding, 2003)
In <strong>the</strong> domain <strong>of</strong> <strong>the</strong> consumers buying behaviour, it is important to understand how <strong>the</strong> consumer
makes a purchase decision. The consumers’ decision making is characterised by several phases
such as: 1) need recognition and problem awareness, 2) information search, 3) evaluation <strong>of</strong>
alternatives, 4) purchase, and 5) post-purchase evaluation.
There is a clear evidence that <strong>the</strong> decision making process regarding a purchase or not, is closely
linked to <strong>the</strong> relevance and <strong>the</strong> quality <strong>of</strong> <strong>the</strong> information found. The level <strong>of</strong> information needed by
<strong>the</strong> consumer to make his purchasing decision depends not only to <strong>the</strong> scope and <strong>the</strong> need but at as
well to financial element.
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Aurilla Aurelie Bechina and Eli Hustad
The traditional search <strong>of</strong> information about product or a service is done ei<strong>the</strong>r through <strong>the</strong> vendors, ,
news papers, consumer organisations and so forth (Stefan Stieglitz & Anna-Maria Schneider, 2008).
Today thanks to <strong>the</strong> increasing growth <strong>of</strong> electronic commerce and social s<strong>of</strong>tware, <strong>the</strong> consumers
can search <strong>the</strong> needed information by interacting more closely ei<strong>the</strong>r with <strong>the</strong> vendors in an online
shopping environment or with o<strong>the</strong>rs consumers via special website (Häubl & Trifts, 2000).
Therefore, companies are investigating <strong>the</strong> needed features <strong>of</strong> <strong>the</strong>ir electronic shopping environment
in order to assist consumers in <strong>the</strong>ir purchasing decisions. New social tools have brought a new
revolution on <strong>the</strong> way consumers search for product information and make purchase decisions.
However, one <strong>of</strong> <strong>the</strong> issues encountered by <strong>the</strong> consumer is to find trustable information without being
too much influenced by <strong>the</strong> claim made by <strong>the</strong> vendor about <strong>the</strong> superiority <strong>of</strong> its product.
Thanks to <strong>the</strong> emergence <strong>of</strong> social network media tools such as facebook, twitter, wiki and so forth,
people have <strong>the</strong> opportunity to tap into <strong>the</strong> collective knowledge generated by users before and after
<strong>the</strong>ir product purchasing. Today, users can not only generate content (UGC) but as well provide
additional information such comments about a product or a service. Web2.0 technologies provide
several mechanisms allowing <strong>the</strong> ranking, vote or tagging <strong>of</strong> a social object.
The last couple <strong>of</strong> years, several research studies discussing <strong>the</strong> new trends based on <strong>the</strong> usage <strong>of</strong>
social media within business context have been published (Grossman & McCarthy, 2007; Harrison &
Thomas, 2009; Sau-ling, 2010). However <strong>the</strong>re is a still a need to fur<strong>the</strong>r understand whe<strong>the</strong>r <strong>the</strong> use
<strong>of</strong> social media and collective intelligence could contribute to <strong>the</strong> purchasing decision making.
Bonabeau discusses how <strong>the</strong> use <strong>of</strong> collective Intelligence can help to make better decisions (Eric
Bonabeau, 2009). He suggests that decision making can be broken in two tasks: The generation <strong>of</strong>
potential solutions and <strong>the</strong> evaluation <strong>of</strong> <strong>the</strong>m. Each <strong>of</strong> those tasks can be negatively influenced by
human biases such for instance availability bias (satisfied with an easy solution). In order to mitigate
<strong>the</strong> bias, <strong>the</strong> three collective intelligence approaches such as outreach, additive aggregation and selforganization
can be used.
Outreach is understood as <strong>the</strong> process <strong>of</strong> collecting ideas across different platforms. Its value resides
in <strong>the</strong> broadening <strong>the</strong> number <strong>of</strong> sources (individuals) who are generating contents about a product or
providing evaluations. The underlying approach is that <strong>the</strong>re are people that could generate useful
information for <strong>the</strong> consumers.
Additive aggregation is understood as <strong>the</strong> process <strong>of</strong> collecting information from multiple sources and
<strong>the</strong>n performing some kind <strong>of</strong> average as stated by Bonabeau. In reality, <strong>the</strong> aggregation is much
more complex if we would consider <strong>the</strong> nature <strong>of</strong> <strong>the</strong> evaluation that can be qualitative or quantitative.
Therefore quite <strong>of</strong>ten while analyzing <strong>the</strong> various options, <strong>the</strong>re as some o<strong>the</strong>rs elements that enter
into account such as reliability, likelihood, trustable <strong>of</strong> <strong>the</strong> sources.
Self organization processes allowing people to interact with each o<strong>the</strong>rs and contributing to add
overall value to <strong>the</strong> group such for instance Wikipedia and collaborative workspaces. These
applications allow people to generate or delete content generated by o<strong>the</strong>rs members.
The following part introduces <strong>the</strong> Web2.0 concepts and technologies
1.2 Web2.0 concepts
Web 2.0 and its related elements were introduced through a brainstorming session at a conference
launched by <strong>the</strong> computer book publisher O’Reilly and <strong>the</strong> event organizer MediaLive <strong>International</strong> in
2004 (O'Reilly, 2005).
The Web 2.0 phenomenon has gained tremendous visibility and has attracted strong interests not
only from <strong>the</strong> scientific community but as well from businesses and IT vendors (Smith, 2008). This has
generated some conflicting definitions <strong>of</strong> Web 2.0 since IT vendors are trying to capitalize on this
trend by associating <strong>the</strong>ir products with Web 2.0 attributes, like <strong>the</strong>y did with KM technologies in <strong>the</strong>
mid 90’s. Web2.0 is a controversial term, and <strong>the</strong>re exists different definitions. To elaborate <strong>the</strong>
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Aurilla Aurelie Bechina and Eli Hustad
ramifications from this debate, however, is beyond <strong>the</strong> scope <strong>of</strong> this paper, and we apply <strong>the</strong> following
definition <strong>of</strong> Web 2.0 as introduced by Musser and O’Reilly (2006):
Web 2.0 is a set <strong>of</strong> economic, social, and technology trends that collectively form <strong>the</strong> base for <strong>the</strong> next
generation <strong>of</strong> <strong>the</strong> Internet – a more mature, distinctive medium characterized by user participation,
openness, and network effects.
The Web 2.0 reflects this new concept <strong>of</strong> gravitational core identified as <strong>the</strong> web as platform, user
controlled data, architectures <strong>of</strong> participation, cost-effective scalability, re-mixable data source and
data transmissions, and harnessing collective intelligence (Tapscott, 2006).
Web 2.0 should be seen as <strong>the</strong> convergence <strong>of</strong> two driving trends, one technological oriented and
one emphasizing social dimensions. This convergence leads to new business models with usercontributed
content. The features leverage a diverse participatory intellectual capital to enhance <strong>the</strong>
transparency <strong>of</strong> business processes and to distribute participatory services and products design.
In opposition to Web 1.0, users can easily generate and publish content. The second generation <strong>of</strong>
<strong>the</strong> web tends to be more dynamically and user-centric in orientation compared to its first generation,
Web 1.0.
Fur<strong>the</strong>rmore, <strong>the</strong> users are becoming so-called prosumers (T<strong>of</strong>fler, 1981), referring to a phenomenon
where a customer represents both producer and consumer. Transferred to <strong>the</strong> context <strong>of</strong> Internet, it
follows that a user is now both producing and consuming information at a website (Tapscott &
Willams, 2006). The second generation <strong>of</strong> <strong>the</strong> web corresponds more to <strong>the</strong> original objective and
vision <strong>of</strong> <strong>the</strong> Internet which did not originally differentiate between <strong>the</strong> users and creators <strong>of</strong>
information since <strong>the</strong> same s<strong>of</strong>tware was to be used to browse <strong>the</strong> web and to create new web-pages
(Berners-Lee, 2000). Nor did he distinguish between internal business resources and <strong>the</strong> external
web, while companies did develop and still have closed intranets.
Web 2.0 is a platform for interacting with content. Information is broken up into “micro-content” units
that may be distributed across <strong>the</strong> Web. A new set <strong>of</strong> tools such as RSS (Really Simple Syndication)
provide mechanisms that creates a "feed" <strong>of</strong> updates from specified news sites, blogs and so forth.
RSS contributes to publishing, aggregating and combining micro-content in new and useful ways.
The collective intelligence <strong>of</strong> users encourages more democratic use and participation (Boulos &
Wheeler, 2007). Initially, <strong>the</strong> primarily goal <strong>of</strong> <strong>the</strong> World Wide Web (WWW) was to foster a better
collaboration among <strong>the</strong> scientific communities by sharing ideas and knowledge. However, it is only
with <strong>the</strong> emergence <strong>of</strong> Web 2.0 technologies that people start to recognize its impacts on leveraging
knowledge exchanged between users and potentially could improve <strong>the</strong>ir purchasing decision making.
Web 2.0, could be seen as <strong>the</strong> emergence <strong>of</strong> mass collaboration (Tapscott & Willams, 2006), in
which several users participate actively and <strong>the</strong>reby create mutual benefits in terms <strong>of</strong> increasing
returns (Shapiro & Varian, 1999). Web 2.0 relies on network effects that cause increasing returns as a
consequence <strong>of</strong> mass collaboration (Tapscott & Willams, 2006). It follows that data directories and
web-sites get richer <strong>the</strong> more people interact with <strong>the</strong>m. The foundation for mass collaboration is <strong>the</strong>
overlapping structure <strong>of</strong> social networks that constitutes <strong>the</strong> overall Internet representing an
information infrastructure <strong>of</strong> web-based communities, technologies and hosted services.
Through social networking sites, Wikis, Facebook and Folksonomies <strong>the</strong> second generation <strong>of</strong> <strong>the</strong>
web aims to facilitate collaboration and sharing <strong>of</strong> knowledge and best practices between users, and
<strong>the</strong> web is becoming a platform for user-created content.
Thus, Web 2.0 as such represents a renaissance <strong>of</strong> <strong>the</strong> original idea – which needed to mature
gradually for being implemented in practice in order to foster collaboration amongst <strong>the</strong> users.
Social s<strong>of</strong>tware applications and tools are perceived as <strong>the</strong> outcome <strong>of</strong> <strong>the</strong> popularity and <strong>the</strong> rapid
development <strong>of</strong> Web 2.0 concepts.
Although <strong>the</strong> term Web 2.0 implicitly symbolizes an upgrade to a new version <strong>of</strong> <strong>the</strong> World Wide Web,
it does not refer to an update <strong>of</strong> technical specifications or new releases <strong>of</strong> s<strong>of</strong>tware, but ra<strong>the</strong>r “<strong>the</strong>
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Aurilla Aurelie Bechina and Eli Hustad
2.0” intends to illustrate <strong>the</strong> changes in <strong>the</strong> ways s<strong>of</strong>tware developers and end-users are using <strong>the</strong>
web.
Typical technologies that support user-created content are: wiki’s, like Wikipedia; blogging, such as
Blogger; social networking such as Facebook; and social bookmarking, such as Del.Icio.Us.
There are many tools that are available; however, it is important to understand <strong>the</strong> need <strong>of</strong> <strong>the</strong> Web
2.0 users and what type <strong>of</strong> limitation are encountered while using for instance social s<strong>of</strong>tware tools.
For example one example <strong>of</strong> limitation in using social s<strong>of</strong>tware tool is related to <strong>the</strong> perceived
difficulties in using such system by some people. Therefore it is important to understand who are <strong>the</strong>
users and <strong>the</strong>ir literacy in term <strong>of</strong> computer technologies.
More and more studies highlight that <strong>the</strong> young generation is more inclined to use new information
communication technologies.
With <strong>the</strong> expansion <strong>of</strong> computer technologies, <strong>the</strong> concepts <strong>of</strong> Digital Natives and Digital Immigrants
have emerged (Prensky, 2001). Digital Natives are individuals who were born and grew up during <strong>the</strong>
era <strong>of</strong> <strong>the</strong> Web, in which instant online access, instant communication with multiple peer groups are
part <strong>of</strong> <strong>the</strong>ir thinking mode. Computers, mobile phones, and video gaming are part <strong>of</strong> <strong>the</strong>ir lives.
Digital Immigrants were born and grew up before this era; thus, <strong>the</strong>se technologies and concepts are
not native to <strong>the</strong>m. Individuals belong ei<strong>the</strong>r to Digital Native or to Digital Immigrant groups (Prensky,
2001). Digital native have a more intuitive potential than digital immigrant to adopt quickly what Web
2.0 <strong>of</strong>fer (Phifer, 2008).
For a successful deployment and use <strong>of</strong> Web 2.0 technologies, it is crucial to categorize <strong>the</strong> Web 2.0
users in order for enterprises to understand how to deal with employees, customers. Psychographics
are essential, because <strong>the</strong>y relate to <strong>the</strong> user's lifestyle, interests, aspirations and attitudes towards
<strong>the</strong> use <strong>of</strong> tool such blogs, wiki, and social networks. It is not <strong>the</strong> age <strong>of</strong> <strong>the</strong> person that determines
<strong>the</strong> categories but ra<strong>the</strong>r <strong>the</strong> people inclination to use Web 2.0 technologies (Zhiyuan, Meiyan, Yang,
& Shao, 2009).
However, motivation <strong>of</strong> using Web 2.0 technologies is <strong>the</strong> decisive element. Today shopping in an
online environment is getting more and more popular and <strong>the</strong>refore, different types <strong>of</strong> users are now
more present in this virtual market place. Vendors and customers started to realise <strong>the</strong> potential <strong>of</strong>
WEB2.0 and social s<strong>of</strong>tware provide features allowing <strong>the</strong>m to tap into <strong>the</strong> collective knowledge
generated by customers in order to make a purchasing decision. However, <strong>the</strong>re are many challenges
and issues to understand and to overcome.
3. Implications <strong>of</strong> using social network on purchasing decision making
1.3 Research methodology
This paper describes at an early stage our explorative research study aiming to determine <strong>the</strong> factors
influencing <strong>the</strong> purchasing decision making in an online environment. At <strong>the</strong> preliminary stage <strong>of</strong> <strong>the</strong>
study, we aimed at understanding <strong>the</strong> opportunities and challenges in using social network before or
after making a purchasing decision making. This paper reports <strong>the</strong> preliminaries outcomes <strong>of</strong> <strong>the</strong>se
investigations.
The nature <strong>of</strong> <strong>the</strong> study is exploratory; <strong>the</strong>refore we adopted an inductive approach in using interview
as <strong>the</strong> primary tool from which data has been ga<strong>the</strong>red. Analysis <strong>of</strong> websites and literature reviews
has complemented <strong>the</strong> data collection. Our goal was to delineate <strong>the</strong> relationship between usage <strong>of</strong>
<strong>the</strong> social s<strong>of</strong>tware and <strong>the</strong> purchasing decision making.
The interview questions were communicated in advance to potential participants in order to give some
time for some thoughts.
The interview encompasses a mix <strong>of</strong> open-ended and close-ended questions. People responded to
some questions in a Liket scale manner. For example, we used 5-point Likert scaled questions on
which <strong>the</strong> participants were asked to measure <strong>the</strong>ir satisfaction in using <strong>the</strong> feedbacks <strong>of</strong> user’s
community before taking <strong>the</strong> decision to buy or not a product or a service.
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We want as well to investigate <strong>the</strong> participant’s opinion in using social s<strong>of</strong>tware and <strong>the</strong> factors
affecting <strong>the</strong>ir purchasing making decisions. We used <strong>the</strong> scale as such “1” means “very dissatisfied”
while “5” means “very satisfied”. The open-ended questions gave to <strong>the</strong> responds <strong>the</strong> possibility to
fur<strong>the</strong>r elaborate upon such responses. The length <strong>of</strong> <strong>the</strong> interviews was between 30 and 45 minutes.
Interviews took place during <strong>the</strong> period <strong>of</strong> march and June 2011
The final selection <strong>of</strong> interviewees in <strong>the</strong> primary data collection process was based upon <strong>the</strong> selected
problem area; <strong>the</strong>refore we have mainly selected people that have already make a purchase in an
online environment. In addition, <strong>the</strong> common point <strong>of</strong> <strong>the</strong> selected participants were <strong>the</strong>ir good level <strong>of</strong>
pr<strong>of</strong>iciency in using internet and if <strong>the</strong>y were active members <strong>of</strong> a social community such as
Facebook, LinkedIn, Viadeo and so forth.
We have selected 12 people following <strong>the</strong> criterion difference <strong>of</strong> gender, age, education, sociopr<strong>of</strong>essional
category, work situation. The sample encompasses 3 employees <strong>of</strong> <strong>the</strong> university
(1pr<strong>of</strong>essor and 2 secretaries), 3 students from 3 different schools (Business, engineering, medical), 1
house wife, 2 retired persons, 3 unemployed from low tech industry. Education level ranges from
secondary school to university.
3.1 Data analysis and discussion
The data analysis was a complex process and making sense out <strong>of</strong> <strong>the</strong> ga<strong>the</strong>red data was quite
challenging. However, <strong>the</strong> preliminary study and investigation <strong>of</strong> literature reviews help us to identify
several factors playing a role in using or not <strong>the</strong> social network tools in making a better purchasing
decision making.
Technology platform
Even if <strong>the</strong> user is strongly motivated to tap into <strong>the</strong> collective intelligence before any purchase, poor
technical features might hamper visit or <strong>the</strong> buy in some online shopping environment. The concerns
have been expressed by several respondents. During <strong>the</strong> interviews, we have identified several
technical features that are considered as important for using social network tools in order to help <strong>the</strong>
purchasing decision making. Product ranking by users is seen as a major factor helping for <strong>the</strong>
decision making. Recommender systems such as seen in Amazon are interesting for <strong>the</strong> users as it
opens up for more alternatives to investigate. Vote systems are <strong>the</strong> least used but some participants
said it could help to raise a doubt about whe<strong>the</strong>r to buy or not a product. Real time chat fostering
knowledge exchange about <strong>the</strong> product Features to support online customer relationship
management, complaint management are as well <strong>of</strong>ten considered as essential in <strong>the</strong> decision
making. Today vendors have understood <strong>the</strong> potential use <strong>of</strong> social s<strong>of</strong>tware in order to improve
knowledge sharing and foster collaboration between companies, employees, <strong>the</strong>irs customers, and
partners. To illustrate this approach, Tapscott (2006) introduce “<strong>the</strong> term <strong>of</strong> wikinomics to describe an
economy in which companies are gaining competitive advantage by successfully managing a trustbased
relationships with external collaborators and customers” (Johnston, 2007; Tapscott, 2006).
However, Knowledge sharing process is considered as a challenging task, difficult to nurture within an
online environment and especially in a shopping context. It requires pro-social behaviour through
social processes, for example by cultivating a sense <strong>of</strong> community. Strong user’s participations is
essential <strong>the</strong>refore, <strong>the</strong>ir motivations to generate content or to tape into <strong>the</strong> collective knowledge need
to be better understood. As stated in (Stieglitz, Schneider, & Lattemann, 2008), although <strong>the</strong>re is a
strong recognition that using different components <strong>of</strong> social s<strong>of</strong>tware to build up virtual communities
may directly influence <strong>the</strong> buying decisions <strong>of</strong> its members, <strong>the</strong>ir study showed that companies hardly
use Web 2.0 technologies to establish a dialogue among consumers. The authors have included in
<strong>the</strong>ir sample companies that are highly ranked in <strong>the</strong> “in <strong>the</strong> Fortune’s ‘most accountable companies’
or <strong>the</strong> ‘100 Best Corporate Citizen’such as Nike, Vodafone, Unilever and Intel.
Motivations for technology use are both intrinsic and extrinsic. Adaptability <strong>of</strong> technology to user
needs, user confidence, and motivation to its adoption are key factors to understand. Kanter’s has
identified five characteristics <strong>of</strong> successful technology adoption, <strong>the</strong> five Fs -: Focused, Fast, Flexible,
Friendly, and Fun (Kanter, 1990). The deployment <strong>of</strong> novel Web 2.0 tools requires understanding <strong>the</strong>
factors that will facilitate or inhibit <strong>the</strong> full adoption by customer before or after a purchasing decision.
Therefore, companies should redesign <strong>the</strong>ir online shopping environment by including some social
features allowing customer’s to exchange information and opinions. Companies should as well
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Aurilla Aurelie Bechina and Eli Hustad
address <strong>the</strong> concerns <strong>of</strong> potential customers expressed during <strong>the</strong> interviews such as risks, security,
privacy and trust.
Quality <strong>of</strong> <strong>the</strong> available information
The big complain expressed by <strong>the</strong> respondents is not anymore about <strong>the</strong> lack <strong>of</strong> information but
ra<strong>the</strong>r about <strong>the</strong> abundance <strong>of</strong> it. There was a general consensus amongst <strong>the</strong> participants to agree
that because <strong>of</strong> <strong>the</strong> fierce competition between vendors, <strong>the</strong>y can find in <strong>the</strong> market similar product
with a description product quite confusing and claiming that <strong>the</strong> product is <strong>the</strong> best. Facing <strong>the</strong>
tremendous amount <strong>of</strong> knowledge, most <strong>of</strong> customers are looking for <strong>the</strong> information that will help
<strong>the</strong>m to make <strong>the</strong>ir purchasing decision and <strong>the</strong>y want reliable information. Therefore, being able to
assess <strong>the</strong> quality <strong>of</strong> <strong>the</strong> information is crucial for <strong>the</strong> customers. This is quite <strong>of</strong>ten done by
considering <strong>the</strong> reliability <strong>of</strong> <strong>the</strong> sources generating <strong>the</strong> contents.
Hence, <strong>the</strong>re is a need to provide some kind <strong>of</strong> mechanism control <strong>of</strong> <strong>the</strong> information generated by
users that goes in contradiction with <strong>the</strong> concept <strong>of</strong> free expression.
User’s background
Some respondents admitted that sometimes, <strong>the</strong>y might have a naïve approach in just following <strong>the</strong>
comments or advices expressed by some members <strong>of</strong> <strong>the</strong> community or on <strong>the</strong> website <strong>of</strong> <strong>the</strong>
vendors. The lack <strong>of</strong> knowledge or self-confidence could push <strong>the</strong> users to trust <strong>the</strong> comments and
<strong>the</strong>refore <strong>the</strong> personality is a factor to consider.
Personality: Within <strong>the</strong> context <strong>of</strong> different collective Intelligence forms, <strong>the</strong>re is a potential lack <strong>of</strong>
personnel control. The consumer opinion can be influenced by too many different sources. Therefore,
some human aspects such as personality <strong>of</strong> <strong>the</strong> consumer should be considered. For example, selfconfidence
lack and <strong>the</strong> need to rely too much on <strong>the</strong> collective knowledge could imply that <strong>the</strong> user
might take a wrong purchasing decision. Huitt has identified several aspects <strong>of</strong> personality important
for decision making and problem solving. They include for instance extravert, Introvert, intuitive,
feeling, sensing and so forth (Huitt, 1992).
The participants were asked to wish degrees <strong>the</strong>y are contributing to enrich <strong>the</strong> vendors website <strong>of</strong>
social s<strong>of</strong>tware with contents. Motivation was essential for most <strong>of</strong> <strong>the</strong> respondents.
Motivations <strong>of</strong> <strong>the</strong> consumers can take various and diverse. Some people said that <strong>the</strong>y like to use
<strong>the</strong> social tools in order to share good deals with o<strong>the</strong>rs consumers. Therefore, when <strong>the</strong>y see
immediate benefits or usefulness <strong>the</strong>y will likely use <strong>the</strong> collective knowledge before making a
purchase. Contributions to <strong>the</strong> content can be ei<strong>the</strong>r because <strong>the</strong>y feel belonging to a community or
because <strong>the</strong>y are unhappy with a product thus want to warm o<strong>the</strong>rs. Time is a needed requirement for
both collecting enough information or for content contribution. Rewards can boost contribution to
content generation. Some websites <strong>of</strong>fer some money if <strong>the</strong>ir customers comment about a product
<strong>the</strong>y bought.
Law and regulations
With <strong>the</strong> growing recognition that solely technologies have not fully delivered <strong>the</strong>ir promises to
improve customer relationships, vendors started to investigate new ways to retain <strong>the</strong>ir customers or
invite new ones to visit <strong>the</strong>ir website (Rigby & Bilodeau, 2007). Hence, several websites provide a
discussion Forum allowing people to share knowledge. In consequence, <strong>the</strong>re is an important issue
related to <strong>the</strong> liability. Thus, <strong>the</strong> question <strong>of</strong> responsibilities is worth to be raised. What if <strong>the</strong> collected
information would lead to a purchasing decision that revels to be disastrous for <strong>the</strong> consumer? For
example, The French independent public authority tasked with investor protection is considering some
regulation within <strong>the</strong> forum <strong>of</strong> investors. It claims that investment advices were given by people with a
dishonest agenda.
5. Conclusion
During <strong>the</strong> past few years, <strong>the</strong>re has been a growing interest in social s<strong>of</strong>tware under <strong>the</strong> name <strong>of</strong>
Web2.0 for both <strong>the</strong> business world and <strong>the</strong> academic communities. Web2.0 represents <strong>the</strong> revolution
that is happening since more and more users are transforming from passive consumers status to
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active participants. This paper has discussed <strong>the</strong> encountered challenges and issues while using
social network tools for customer’s decision making. The paper presents very preliminary results due
to <strong>the</strong> limitation <strong>of</strong> <strong>the</strong> study. The sample is quite small with only 15 people interviewed; thus this has
generated some limitations and weakness in <strong>the</strong> finding. The qualitative approach produced limited
results <strong>the</strong> determined factors are only propositions that need to be fur<strong>the</strong>r investigated. Therefore,
we aims at a later stage to design a survey that will be send out to hundred <strong>of</strong> people. The
quantitative approach will <strong>the</strong>n be used to seek empirical support for <strong>the</strong> determined research
hypo<strong>the</strong>ses.
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89

Exploring <strong>the</strong> use <strong>of</strong> <strong>the</strong> Academic Body <strong>of</strong> Knowledge by
Practitioners: The Case <strong>of</strong> Chartered Business Valuators in
Canada
Lorne Booker 1 , Nick Bontis 1 and Alexander Serenko 2
1
Michael G. DeGroote School <strong>of</strong> Business, McMaster University, Hamilton,
Canada
2
Faculty <strong>of</strong> Business Administration, Lakehead University, Thunder Bay,
Canada
bookerld@mcmaster.ca
nbontis@mcmaster.ca
aserenko@lakeheadu.ca
Abstract: A number <strong>of</strong> practitioners and academics have accused business research <strong>of</strong> being irrelevant to <strong>the</strong>
needs <strong>of</strong> industry pr<strong>of</strong>essionals. In order to empirically investigate this issue and assess <strong>the</strong> use <strong>of</strong> <strong>the</strong> scholarly
body <strong>of</strong> knowledge by practitioners, fifteen semi-structured interviews with Chartered Business Valuators in
Canada were conducted. Knowledge market <strong>the</strong>ory was applied to develop a <strong>the</strong>oretical background and inform
<strong>the</strong> interview coding practice. A framework was created based on <strong>the</strong> findings. Business valuation pr<strong>of</strong>essionals
were found to make greater use <strong>of</strong> scientific evidence but <strong>the</strong>y access it primarily through indirect channels. Two
discrete knowledge markets were discovered: practitioner and academic. There are several important knowledge
translation mechanisms, such as books, conferences, consultant services, newsgroups, pr<strong>of</strong>essional
associations, training programs, trade journals, webinars and workshops, which play <strong>the</strong> role <strong>of</strong> market
intermediaries.
Keywords: academic research relevance, business valuation, knowledge market, knowledge management
1. Introduction and literature review
Business valuation is an industry in which pr<strong>of</strong>essionals estimate <strong>the</strong> economic value <strong>of</strong> businesses
and intangible assets, such as patents, copyrights, trademarks, securities and goodwill. Business
valuators prepare merger and acquisition studies, estate valuations, and assist with matrimonial
settlements. Business valuation is a self-regulating pr<strong>of</strong>ession. In Canada, for example, Chartered
Business Valuators (CBVs) must meet pr<strong>of</strong>essional standards, follow a code <strong>of</strong> conduct and have a
current knowledge <strong>of</strong> <strong>the</strong>ir field to remain certified.
The business valuation research area is young but vibrant. Although <strong>the</strong> number <strong>of</strong> journals dedicated
to this area is small, <strong>the</strong>y cover a broad array <strong>of</strong> business valuation topics, for example, acquisitions
and divestitures, appraisals, <strong>the</strong> arbitration process, business loss quantification, risk premiums,
mergers and acquisitions, litigation, and taxation. The purpose <strong>of</strong> this study is to assess <strong>the</strong> level <strong>of</strong>
practical relevance <strong>of</strong> business valuation research and to broaden our understanding <strong>of</strong> <strong>the</strong> academic
relevance problem.
1.1 Defining relevance
The relevance problem can be defined using <strong>the</strong> knowledge-based view <strong>of</strong> <strong>the</strong> firm. According to this
view, businesses exist for two reasons. First, some forms <strong>of</strong> knowledge are immobile and cannot be
integrated in <strong>the</strong> marketplace (Nonaka 1994). Businesses are able to coordinate and govern
knowledge-related activities (Spender 1994) including <strong>the</strong> integration <strong>of</strong> knowledge possessed by
specialists (Grant 1996). Second, firms apply specialized knowledge to provide goods and services.
Managers within a firm identify high value problems and govern <strong>the</strong> search for a solution by mobilizing
knowledge resources (Nickerson and Zenger 2004). The integration and application <strong>of</strong> specialist
knowledge is a social process that is achieved through social interactions and is facilitated by social
capital (Robert Dennis, and Ahuja 2008). Knowledge is a social construct (Miranda and Saunders
2003). Businesses are social institutions in which social networks interpret information and assign
meaning to it. Knowledge is also associated with human agency and collective action. Knowledge is
an enacted capability situated in <strong>the</strong> practices <strong>of</strong> individuals within an organization. Knowledge is a
social accomplishment embedded in organizational practices. Knowledge and action are intertwined
and inseparable (Orlikowski 2002).
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Lorne Booker et al.
Knowledge is useful to practitioners only if it creates capabilities and guides action. Therefore,
business research can be deemed to be relevant to practice if it influences decisions or guides
actions <strong>of</strong> industry pr<strong>of</strong>essionals.
1.2 Paths <strong>of</strong> relevance
There are two paths through which practitioners can be influenced by academic research - direct and
indirect knowledge transfer. Direct knowledge transfer takes place when practitioners use academic
research directly. For example, it occurs when industry pr<strong>of</strong>essionals read peer-reviewed journal
articles or attend academic conferences. Indirect knowledge transfer occurs when academic research
is translated through intermediaries into a form that is more readily interpreted and applied by industry
pr<strong>of</strong>essionals. Some examples <strong>of</strong> indirect knowledge transfer include workshops, classes, consultants
or think tanks. Indirect knowledge transfer occurs when practitioners learn about academic research
in any way except through direct utilization.
The proposition that business research is irrelevant is predicated on <strong>the</strong> assumption that research is
relevant only when direct knowledge transfer occurs. Research is deemed to be relevant if
practitioners access research directly. A recent study concluded that this mechanistic assumption is
inappropriate (self-citation). Academic research is also relevant to practice when indirect knowledge
transfer takes place. This study investigates <strong>the</strong> indirect route to knowledge transfer. It seeks to
understand how academic research becomes relevant to practice by investigating routes <strong>of</strong> indirect
knowledge transfer.
1.3 Knowledge markets and <strong>the</strong> relevance issue
The knowledge market model is a useful <strong>the</strong>oretical lens for studying <strong>the</strong> distribution <strong>of</strong> academic
discoveries. It is based on <strong>the</strong> recognition that when <strong>the</strong>re are providers <strong>of</strong> knowledge and consumers
<strong>of</strong> knowledge, a market must exist (Davenport and Prusak 1998, p. 25). Knowledge market <strong>the</strong>ory
views knowledge management as a market coordination problem (Fang and Su 2008). Knowledge
utilization is optimized by maximizing <strong>the</strong> efficiency <strong>of</strong> knowledge markets.
Markets must perform three functions: i) to match buyers and sellers; ii) to facilitate transactions; and
iii) to provide a legal and regulatory institutional infrastructure to facilitate and regulate transactions
(Bakos 1998). In order to perform those functions, markets must match buyers and sellers, furnish
information about supply and demand, and provide a mechanism for exchange and for <strong>the</strong> settlement
<strong>of</strong> accounts. When <strong>the</strong>se functions are performed well, markets are efficient but when <strong>the</strong>y are unable
to balance supply with demand, <strong>the</strong> markets fail. Examples <strong>of</strong> market failures include externalities,
public goods, merit and demerit goods, and non-competitive markets. When people state that a
market has failed <strong>the</strong>y make a normative judgment that an intervention is required to correct <strong>the</strong>
situation (Dahlman 1979).
Knowledge markets perform <strong>the</strong> same functions as regular markets. Knowledge markets facilitate <strong>the</strong>
promotion, distribution, communication and acquisition <strong>of</strong> knowledge (Davenport and Prusak 1998). In
efficient knowledge markets, <strong>the</strong> demand for knowledge should trigger people to specialize in <strong>the</strong> area
where expertise is needed. It should inspire <strong>the</strong>m to dedicate time and effort to solve high quality
problems. The knowledge market perspective can be applied to markets inside organizations (internal
knowledge markets) or markets between organizations (external knowledge markets).
Knowledge markets are also subject to market failures (Matson Patiath, and Shavers 2003). These
include ineffective codification mechanisms, poor incentives to codify/share knowledge, limited
external knowledge sources, unproductive delivery systems, lack <strong>of</strong> awareness <strong>of</strong> <strong>the</strong> existence <strong>of</strong>
knowledge, insufficient number <strong>of</strong> brokers/intermediaries, and unprotected intellectual property.
Declarations <strong>of</strong> academic irrelevance can be interpreted as assertions that academic knowledge
markets have failed and that intervention is required.
1.4 Chartered Business Valuators
Chartered Business Valuators are pr<strong>of</strong>essionals who are members <strong>of</strong> <strong>the</strong> Canadian Institute <strong>of</strong>
Chartered Business Valuators (CICBV). They are experts at quantifying <strong>the</strong> worth <strong>of</strong> a business, part
<strong>of</strong> a business, <strong>the</strong> securities <strong>of</strong> a business, or <strong>the</strong> tangible or intangible assets <strong>of</strong> a business. The role
<strong>of</strong> CBVs is to increase <strong>the</strong> objectivity (and reduce <strong>the</strong> subjectivity) <strong>of</strong> business valuations. In order to
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accomplish <strong>the</strong>ir tasks, <strong>the</strong>y have to keep up-to-date with <strong>the</strong> body <strong>of</strong> knowledge in <strong>the</strong>ir field. The
latest discoveries, however, first appear in form <strong>of</strong> scholarly publications, for example, refereed
journals, conference proceedings and academic books, which should be <strong>of</strong> primary importance to
CBV pr<strong>of</strong>essionals.
1.5 Purpose <strong>of</strong> <strong>the</strong> study
This study seeks to understand how business valuation research influences business practice.
Specifically, <strong>the</strong> objective is to understand <strong>the</strong> role that indirect knowledge transfer plays in influencing
practice by identifying <strong>the</strong> channels through which academic knowledge reaches CBVs. It aims to
evaluate <strong>the</strong> utility <strong>of</strong> <strong>the</strong> knowledge market perspective in examining <strong>the</strong> relevance problem.
2. Methodology
Fifteen semi-structured phone and face-to-face interviews with CBVs were conducted from November
2009 to May 2010. The first interviewees were identified by querying <strong>the</strong> “Find a CBV” feature <strong>of</strong> <strong>the</strong>
CICBV website. Snowball sampling was used to identify <strong>the</strong> remaining interviewees. Interviewees
were located in Ontario, British Columbia and Alberta. Each interview lasted approximately one hour.
The interview questions were developed to determine <strong>the</strong> extent to which each distribution channel
was used, and <strong>the</strong> degree to which <strong>the</strong> channel was viewed as useful and credible. The interviewees
were asked about academic sources, practitioner sources, books, conferences, word-<strong>of</strong>-mouth
communications, etc. Respondents were encouraged to share <strong>the</strong>ir views on <strong>the</strong> role <strong>of</strong> <strong>the</strong>ir
pr<strong>of</strong>essional association in influencing <strong>the</strong> direction <strong>of</strong> academic research and in communicating
research findings. The interviews were tape-recorded and transcribed into NVIVO. The interpretive
paradigm was used. A draft a-priori list <strong>of</strong> codes was developed based on <strong>the</strong> previous projects <strong>of</strong> <strong>the</strong>
research team (self-citation). As <strong>the</strong> coding process progressed, new codes were developed, and <strong>the</strong>
first interviews were re-coded using <strong>the</strong> codes that emerged from <strong>the</strong> later interviews. The coders kept
<strong>the</strong> goal <strong>of</strong> assessing <strong>the</strong> relevance <strong>of</strong> business valuation research among CBV pr<strong>of</strong>essionals in mind
and tried to understand <strong>the</strong> mechanisms by which academic discoveries get disseminated.
3. Findings
A framework summarizing <strong>the</strong> key research findings emerged (Figure 1). It consists <strong>of</strong> five interacting
elements: practitioners, academics, practitioner knowledge markets, academic knowledge markets,
and knowledge translation mechanisms.
3.1 Academics
There are several well recognized and respected business valuation academics, such as Shannon
Pratt, Aswath Damodaran, Laurence Booth and Ian Campbell, whose names were mentioned by most
<strong>of</strong> <strong>the</strong> participants.
“One <strong>of</strong> <strong>the</strong> people that <strong>the</strong> valuation pr<strong>of</strong>ession as a whole respects is Shannon Pratt. ...
He is a PhD. His books are up <strong>the</strong>re.”
“His name is Asworth Damodaran, his work is amazing.”
CBVs also mentioned several academics who have written textbooks or provided pr<strong>of</strong>essional
services. They were not sure whe<strong>the</strong>r <strong>the</strong>se individuals may be considered academics since <strong>the</strong>y
focus on both scholarly research and business practice.
“Now whe<strong>the</strong>r you would consider him [Shannon Pratt] to be an academic now is
unlikely. He could probably be called a practitioner.”
3.2 Practitioners
Practitioner CBVs are engaged in <strong>the</strong> pr<strong>of</strong>essional practice <strong>of</strong> valuating businesses. Ideally,
practitioners should be <strong>the</strong> beneficiary <strong>of</strong> business valuation research. CBVs need impartial
authoritative sources that <strong>the</strong>y can use to defend <strong>the</strong>ir valuations in court. Academics provide critical
insights into <strong>the</strong> fundamental financial principles that CBVs use to confirm <strong>the</strong>ir valuation
methodology. For example, business scholars provide <strong>the</strong> <strong>the</strong>ory that guides equity risk premiums,
<strong>the</strong> capital asset pricing model, and marketability discounts. CBVs use academic findings to make
better decisions, protect <strong>the</strong>mselves against future legal actions and reduce subjectivity in <strong>the</strong>ir work.
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Figure 1: Business Valuation Knowledge Markets
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“… we can demonstrate to <strong>the</strong> judge that we have considered various sources.”
“I mean it’s not always in court [that] we have to defend it but if it’s not in court it’s to a
client, to regulator or to a taxing authority.”
CBVs encounter academic material in two ways. Some use services that distribute findings to <strong>the</strong>m.
When new material arrives, most CBVs do not read it in depth but only skim through it. More
commonly, CBVs search for academic material when <strong>the</strong>y have a need to learn about a specific topic.
That need is usually associated with <strong>the</strong> needs <strong>of</strong> <strong>the</strong>ir client at <strong>the</strong> time. Self-education is not <strong>the</strong>ir
primary goal, it’s a by-product.
“I’ve never sort <strong>of</strong> sat down, gone through a whole bunch <strong>of</strong> journals and said, ‘this is
useful.’ Usually, I’m looking for a topic.”
“When I’m looking for research, I have a specific topic, and I’ll go on <strong>the</strong> Internet and I’ll
look for that particular topic.”
Many CBVs reported that <strong>the</strong>y use academic material. They do not use it as a matter <strong>of</strong> routine. They
use it only when <strong>the</strong>y have a need.
3.3 Academic knowledge markets
Academic knowledge markets are external entities through which business research is distributed for
consumption by o<strong>the</strong>r academics. Academic knowledge markets are also <strong>the</strong> mechanism through
which direct knowledge transfer occurs between academics and practitioners. When practitioners
read academic publications, <strong>the</strong>y are making direct use <strong>of</strong> scholarly research. Traditionally, academic
knowledge markets were considered <strong>the</strong> mechanism by which academic work is believed to be
delivered to practitioners.
When academic research is described as irrelevant to business practice, <strong>the</strong> presumption is that <strong>the</strong>
direct knowledge transfer does not occur between academics and practitioners in <strong>the</strong> academic
knowledge market. Previous research has described some <strong>of</strong> <strong>the</strong> elements that discourage
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practitioners from using academic research (self-citation). On <strong>the</strong> one hand, CBVs attempt to access
<strong>the</strong> academic knowledge market directly; frequently, <strong>the</strong>y succeed. On <strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong>re are
obstacles preventing <strong>the</strong>m from fully harvesting <strong>the</strong> academic knowledge market’s potential, which
can be interpreted as knowledge market failures.
One <strong>of</strong> <strong>the</strong> key barriers to academic relevance remains access to academic materials, which varies
considerably from practice to practice. Large consulting firms enjoy large libraries, dedicated
proprietary databases, and academic sources. For small firms or individuals, access to academic
materials is limited to <strong>the</strong> CICBV publications.
“We don’t have access to it, that’s number one, okay. We don’t have any way to get into
those journals.”
“We are limited in our ability to access academic research papers.”
The inability <strong>of</strong> practitioners to access academic materials indicates that <strong>the</strong> delivery system for
academic material is ineffective. This is a sign <strong>of</strong> knowledge market failure (Matson, et al. 2003).
Ano<strong>the</strong>r significant market failure refers to <strong>the</strong> way <strong>the</strong> academic knowledge is packaged. The
comments made by this study’s respondents mostly mirror conclusions made in past studies.
Research papers written by business researchers include complicated statistics, ma<strong>the</strong>matics, and
technical jargon (Ankers and Brennan 2002; Cohen 2007; Kelemen and Bansal 2002), unnecessary
detail, and too much abstraction (Pearson Pearson, and Shim 2005; Worren Moore, and Elliott 2002).
Academics create <strong>the</strong>oretical ra<strong>the</strong>r than practical knowledge (Bolton and Stolcis 2003). Practitioners
require tacit procedural knowledge, or knowledge-in-practice, yet academics provide explicit
propositional knowledge (Breu and Peppard 2003). In essence, academics and practitioners do not
share a common context with which to represent knowledge (Jennex 2008, p. 9).
“I think what that <strong>the</strong> information gets lost in communication. I’ve gone to conferences
where I’ve been very interested in <strong>the</strong> topic but <strong>the</strong>n when I went to hear <strong>the</strong> individual
speaker, I didn’t know what <strong>the</strong>y were saying to me.”
“Some <strong>of</strong> <strong>the</strong> things that are put out by <strong>the</strong> academics you’d need a Ph.D. in
ma<strong>the</strong>matics to even begin to comprehend what <strong>the</strong>y are doing.”
If academics want to meet <strong>the</strong> needs <strong>of</strong> practitioners, <strong>the</strong>y should understand business valuation
work, which is a highly specialized field. It takes a long time to become pr<strong>of</strong>icient at it. When CBVs
were asked if <strong>the</strong>y believed that academics were knowledgeable about business valuation, some <strong>of</strong>
<strong>the</strong>m suggested that it depends on <strong>the</strong> research report or <strong>the</strong> author. Overall, <strong>the</strong>y stated that many
researchers do not have <strong>the</strong> practical experience to understand this domain. As such, <strong>the</strong> supply and
demand sides <strong>of</strong> <strong>the</strong> knowledge market were sometimes misaligned.
“…<strong>the</strong>y don’t have <strong>the</strong> practical experience…”
“They haven’t got a clue about <strong>the</strong> practice <strong>of</strong> business valuation.”
Most respondents were not completely satisfied with academic research on topics related to business
valuation. Their complaints <strong>of</strong>ten related to <strong>the</strong> amount <strong>of</strong> research being undertaken. The number <strong>of</strong>
researchers working in this field is relatively small, and most are located in <strong>the</strong> United States. There is
a need for more research in Canada.
“I’m moderately dissatisfied because <strong>of</strong> <strong>the</strong> difficulty in understanding and <strong>the</strong> difficulty in
finding relevance to a practical situation.”
“Am I satisfied? No.”
Although <strong>the</strong> interviewees felt that scholarly articles are not well suited to <strong>the</strong>ir needs in <strong>the</strong> form <strong>the</strong>y
are published, <strong>the</strong>y did not express a desire for academics to change what <strong>the</strong>y do. In fact, <strong>the</strong>y
unanimously recognized that research publications are presented <strong>the</strong> way that <strong>the</strong>y are in order to
advance science. Giving <strong>the</strong> irreconcilable differences between <strong>the</strong> academic and practitioner
knowledge markets, <strong>the</strong>re should be a mechanism to transform <strong>the</strong> scholarly knowledge and move it
from <strong>the</strong> academic to <strong>the</strong> practitioner market.
“My advice … would be, you do your research <strong>the</strong> way you typically do your research
and you have that paper available. And <strong>the</strong>n from that, do your different articles and <strong>the</strong>
different venues that have a s<strong>of</strong>ter touch to it with reference to <strong>the</strong> technical journal so
that people can get interested and understand it. And if <strong>the</strong>y want to know more, <strong>the</strong>y can
go to <strong>the</strong> source.”
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Many practitioners are engaged in knowledge creation and distribution. Their efforts emulate
academic knowledge dissemination processes. CBVs write articles on topics within <strong>the</strong>ir area <strong>of</strong>
expertise; <strong>the</strong>y publish <strong>the</strong>ir work for <strong>the</strong>ir peers in trade journals; trade journals subject <strong>the</strong>ir work to
peer review before it is published; and <strong>the</strong>y cite <strong>the</strong>ir non-academic sources. Examples <strong>of</strong> <strong>the</strong>se
outlets include <strong>the</strong> magazines associated with <strong>the</strong> Canadian Institute <strong>of</strong> Chartered Accountants (CA
Magazine) and <strong>the</strong> Canadian Institute <strong>of</strong> Chartered Business Valuators (Business Valuation Digest).
The main attributes <strong>of</strong> <strong>the</strong>se publications are that <strong>the</strong>y are written by business valuation pr<strong>of</strong>essionals
for business valuation pr<strong>of</strong>essionals in a tone and style that is appropriate for this audience.
“People will start thinking about issues and <strong>the</strong>n <strong>the</strong> more senior practitioners in <strong>the</strong> field
will start thinking about <strong>the</strong>m, and <strong>the</strong>y will write what is <strong>the</strong> equivalent <strong>of</strong> an academic
paper with a lot <strong>of</strong> research in it, but <strong>the</strong>y’re not from academia per say.”
“So whe<strong>the</strong>r it’s Richard Wise, for instance, lots <strong>of</strong> articles – Howard Johnson, lots <strong>of</strong>
articles. So we kind <strong>of</strong> bypass academia. Does that mean that <strong>the</strong>re’s no relevance for it”
“I find articles from a practitioner much easier to read.”
3.5 Knowledge translation mechanisms
Although <strong>the</strong> term knowledge translation has not been authoritatively defined (Estabrooks Thompson
Lovely, and H<strong>of</strong>meyer 2006) it can be described as <strong>the</strong> process through which scientific evidence is
made more readily usable by practitioners. Since academic papers are not directly useful to
practitioners, <strong>the</strong>y have to be repackaged for fur<strong>the</strong>r use; <strong>the</strong> findings should be communicated and
contextualized differently.
From <strong>the</strong> knowledge market perspective, <strong>the</strong> knowledge translation mechanism can be viewed as
performing <strong>the</strong> wholesale function. Wholesalers facilitate buying and selling by buying in bulk,
repackaging goods, distributing goods to market, and managing information. Knowledge translation
mechanisms summarize accumulated scientific evidence, and convert it from abstract <strong>the</strong>oretical
notions or decontextualized facts to context-based information expressed in <strong>the</strong> language <strong>of</strong> <strong>the</strong> end
user. In <strong>the</strong> paragraphs that follow, <strong>the</strong> translation mechanisms in <strong>the</strong> business valuation field are
explored.
The most commonly reported translation mechanism utilized by <strong>the</strong> CBVs was conferences. One
average, CBVs attend one conference per year. When asked how <strong>the</strong>y stay up-to-date, most
mentioned <strong>the</strong> CICBVs conference, which also hosts workshops throughout <strong>the</strong> year that some
interviewees attend on an ad hoc basis.
“For me personally, it would probably be more <strong>of</strong> <strong>the</strong> conferences. So, I would become
aware <strong>of</strong> new knowledge through a conference ... as opposed to reviewing <strong>the</strong> academic
research.”
“That’s what I sometimes get out <strong>of</strong> conferences. Sometimes <strong>the</strong>re’s an academic,
whe<strong>the</strong>r it’s Shannon Pratt or whe<strong>the</strong>r it’s Damodaran who will speak and will try to
translate what <strong>the</strong> latest studies mean to us as, as practitioners.”
Pr<strong>of</strong>essional services are ano<strong>the</strong>r important source <strong>of</strong> academic knowledge. Pr<strong>of</strong>essional services
compile useful information about academic discoveries, legal rulings, and practice. Examples include
Done Deals, <strong>the</strong> Canadian Valuation Service, and Ibbotson, which charge an access fee.
“… <strong>the</strong>re are websites out <strong>the</strong>re, … and what you do is you become a member, and you
get to search <strong>the</strong>ir databases. And in those databases, <strong>the</strong>y’ve got articles by
practitioners or academic papers or even court cases in some.”
“Well less <strong>of</strong>ten journal articles <strong>the</strong>mselves. Usually we access <strong>the</strong>m through a
publication <strong>of</strong> some sort. For instance, we subscribe to <strong>the</strong> Canadian Valuation Service.”
The role that person-to-person communication or word-<strong>of</strong>-mouth plays in knowledge dissemination
depends on <strong>the</strong> preferences <strong>of</strong> <strong>the</strong> practitioner, <strong>the</strong> nature <strong>of</strong> practice and <strong>the</strong> type <strong>of</strong> conveyed
knowledge. In business valuation practices that have more than one CBV word-<strong>of</strong>-mouth plays a
larger role. Each CBV has his/her own practice within <strong>the</strong> firm but <strong>the</strong>y draw upon one ano<strong>the</strong>r’s
wisdom. Many <strong>of</strong> <strong>the</strong>m call on <strong>the</strong>ir fellow CBVs for <strong>the</strong>ir insight or perspective. The word-<strong>of</strong>-mouth
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channel is <strong>the</strong> translation channel that most strongly exemplifies <strong>the</strong> socially constructed nature <strong>of</strong>
knowledge in practice.
“I think it plays a fairly significant role. If you were to ask most practitioners I think <strong>the</strong>y’d
say, <strong>the</strong> discussion with o<strong>the</strong>r practitioners is pretty important.”
“That yea I think, <strong>the</strong>re’s a fairly high level <strong>of</strong> that. If ever I run into an issue <strong>the</strong>n I call on
a colleague. I do that on a fairly regular basis.”
Email-based newsgroups are ano<strong>the</strong>r popular mechanism for transmitting knowledge. The
newsgroups are popular because <strong>the</strong>y are easy to access and present timely material. CBVs do not
have to expend effort to look for <strong>the</strong> material. It simply arrives in <strong>the</strong>ir inbox; <strong>the</strong>y can peruse it when it
is convenient and select topics <strong>of</strong> interest. Many <strong>of</strong> messages provide summaries <strong>of</strong> scholarly articles
with links to <strong>the</strong> source material.
“I subscribe to a number <strong>of</strong> email news postings which sometimes have links to <strong>the</strong>
journal articles. That’s really where I access <strong>the</strong>m.”
“I get those monthly emails. They have executive summaries <strong>of</strong> articles and if <strong>the</strong>re is
something that peaks my interest <strong>the</strong>n that would be a way to read that.”
A surprising discovery was that webinars have become a popular avenue for pr<strong>of</strong>essional
development. Webinars allow practitioners to access relevant information without having to travel.
They are popular because <strong>the</strong>y are accessible and useful.
“There are certainly a lot <strong>of</strong> webinars available…”
“I think those webinars are more accessible.”
The use <strong>of</strong> books and textbooks varies considerably among pr<strong>of</strong>essionals. CBVs most frequently use
textbooks when writing a report. Textbooks are favored because <strong>the</strong>y are viewed as authoritative.
Later in <strong>the</strong>ir careers, CBVs use textbooks as a means <strong>of</strong> refreshing <strong>the</strong>ir memory on selected topics.
“... if I reference a textbook a judge will challenge it less because it is accepted as a
general valuation practice methodology.”
The larger firms report that <strong>the</strong>y supplement <strong>the</strong> CIBCV conferences with internal training programs
that <strong>the</strong>y develop in-house. These programs are more practical and applied than <strong>the</strong> conferences
provided by <strong>the</strong> CICBV. The CICBV has a lot more academic material.
“We, we at times have internal training. We had two days <strong>of</strong> business valuation training in
<strong>the</strong> summer.”
When asked who should translate academic material, most <strong>of</strong> <strong>the</strong> CBVs gave a variety <strong>of</strong> responses.
The majority suggested that practitioners are better able to perform <strong>the</strong> translation role.
“…probably, <strong>the</strong> practitioners because <strong>the</strong>y are <strong>the</strong> people who are living you know really
living in <strong>the</strong> same world so that would be my preference…”
“Well I think that it would be great if it was <strong>the</strong> academics …I suspect practitioners better
know how it’s to be applied.”
3.6 Pr<strong>of</strong>essional associations
The Canadian Institute <strong>of</strong> Chartered Business Valuators has a mandate to advance <strong>the</strong> pr<strong>of</strong>ession <strong>of</strong>
business valuation. In order to achieve that goal, it attempts to deliver business valuation knowledge
to its members through various channels. Also, it tries to advance knowledge by identifying relevant
research topics and by sponsoring research in <strong>the</strong> areas <strong>of</strong> need that <strong>the</strong>y have identified.
“There is a committee that deals with academics and tries to bring forward topics that are
<strong>of</strong> interest to <strong>the</strong> practitioners that <strong>the</strong> academics could possibly study.”
“These are topics <strong>of</strong> relevance as <strong>of</strong> October 2009 that <strong>the</strong> Canadian Institute has found
appropriate for research. It’ll give you what it is that we, in <strong>the</strong> business valuations
community, feel are important topics.”
Many <strong>of</strong> <strong>the</strong> initiatives taken by <strong>the</strong> CICBV to advance <strong>the</strong>ir pr<strong>of</strong>ession resemble knowledge
coordination mechanisms. They try to advance <strong>the</strong>ir pr<strong>of</strong>ession by creating effective knowledge
markets and by making those knowledge markets accessible to <strong>the</strong>ir members. The CICBV attempts
to correct knowledge market failures.
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4. Implications
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The overall goal <strong>of</strong> this study was to understand how academic research influences <strong>the</strong> state <strong>of</strong>
practice in <strong>the</strong> field <strong>of</strong> business valuation. The role <strong>of</strong> direct and indirect knowledge transfer
approaches was investigated by identifying <strong>the</strong> channels through which academic knowledge reaches
CBVs. The utility <strong>of</strong> <strong>the</strong> knowledge market perspective in examining <strong>the</strong> relevance problem was
evaluated. For this, 15 semi-structured interviews with CBVs were conducted. The following
implications are <strong>of</strong>fered:
Implication 1: Academic research on business valuation is relevant to <strong>the</strong> needs <strong>of</strong> practitioners.
Business valuation pr<strong>of</strong>essionals are aware <strong>of</strong> <strong>the</strong> academic findings and make use <strong>of</strong> <strong>the</strong>m in <strong>the</strong>ir
practice. They are familiar with <strong>the</strong> major scholars in <strong>the</strong> field. Despite some difficulty in accessing
peer-reviewed articles and comprehending <strong>the</strong>ir content, most CBVs benefit from scientific research in
<strong>the</strong>ir domain.
Implication 2: The overall knowledge market for business research is not a single homogeneous
body. Instead, <strong>the</strong> knowledge market consists <strong>of</strong> two discrete markets: practitioner and academic.
They dramatically differ in terms <strong>of</strong> <strong>the</strong>ir objective, type <strong>of</strong> knowledge, and clientele. Surprisingly,
business valuation practitioners are engaged in codifying and communicating <strong>the</strong>ir knowledge to <strong>the</strong>ir
colleagues.
Implication 3. The indirect knowledge distribution channel plays a key role. Scholarly knowledge
reaches business valuation pr<strong>of</strong>essionals through direct and indirect knowledge dissemination
channels. However, practitioners obtain most <strong>of</strong> <strong>the</strong>ir knowledge by means <strong>of</strong> <strong>the</strong> indirect knowledge
dissemination method.
Implication 4: Knowledge translation mechanisms play <strong>the</strong> role <strong>of</strong> market intermediaries. The inability
<strong>of</strong> scholarly knowledge to directly reach industry pr<strong>of</strong>essionals results in academic knowledge market
failure. In this case, <strong>the</strong> knowledge translation mechanisms play a key role as intermediaries that
correct this imperfection. When an existing market cannot meet customer demand, a new market and
new intermediaries emerge and modify <strong>the</strong> supply chain.
Implication 5: Academics should not change <strong>the</strong> manner in which <strong>the</strong>y publish scholarly articles.
Business pr<strong>of</strong>essionals believe that researchers following a strict scientific format for a reason, and
<strong>the</strong>y do not ask academics to change <strong>the</strong>ir methods. Instead, <strong>the</strong>y prefer accessing scientific findings
through <strong>the</strong> practitioner knowledge market. The solution to <strong>the</strong> academic research relevance problem
<strong>the</strong>refore resides in having a healthy, effective and efficient practitioner knowledge market.
Implication 6: The knowledge market perspective provides a useful approach to <strong>the</strong> study <strong>of</strong>
academic relevance. In this project, <strong>the</strong> <strong>the</strong>ory <strong>of</strong> knowledge markets was adapted to investigate <strong>the</strong>
existing knowledge distribution channels. In <strong>the</strong> result, <strong>the</strong> framework explicating knowledge
distribution processes was constructed, and a number <strong>of</strong> novel, unexpected findings emerged.
Therefore, <strong>the</strong> knowledge market perspective is recommended as a fruitful approach to fur<strong>the</strong>r
investigate <strong>the</strong> relevance issue.
Acknowledgements
This study is kindly supported by a research grant from <strong>the</strong> AIC Institute for Strategic Business
Studies, McMaster University and <strong>the</strong> grant 864-07-0181 from <strong>the</strong> Social Sciences and Humanities
Research Council <strong>of</strong> Canada (SSHRC). Sincere thanks go to <strong>the</strong> attendees <strong>of</strong> <strong>the</strong> seminar on <strong>the</strong>
relevance <strong>of</strong> KM scholarly research held on November 25, 2010 at Monash University – Caulfield,
Australia who provided very valuable insights on this project.
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98

Strategic Thinking Dimensions in Emergent Economies
Business Education
Constantin Bratianu 1 and Valentin Hapenciuc 2 , Ivona Orzea 1 , Ruxandra
Rauliuc 2 and Ovidiu Ghita 2
1
Academy <strong>of</strong> Economic Studies, Bucharest, Romania
2
Stephen <strong>the</strong> Great University <strong>of</strong> Suceava, Romania
cbratianu@yahoo.com
Abstract: Knowledge Management focused mostly on knowledge as <strong>the</strong> main business resource and
competitive advantage. Less attention has been directed toward <strong>the</strong> way managers process knowledge using
<strong>the</strong>ir thinking patterns in decision making. Practice demonstrated many times that at <strong>the</strong> heart <strong>of</strong> any managerial
process is <strong>the</strong> decision making, and that <strong>the</strong> effectiveness <strong>of</strong> any decision depends directly on <strong>the</strong> power <strong>of</strong> <strong>the</strong>
thinking pattern used by managers. These thinking patterns constitute a result <strong>of</strong> <strong>the</strong> education system,
especially <strong>the</strong> university business education. The purpose <strong>of</strong> this paper is to present results <strong>of</strong> our research
concerning <strong>the</strong> way in which university business education contributes directly to <strong>the</strong> developing <strong>of</strong> <strong>the</strong> strategic
thinking process for business in emergent economies. We designed a questionnaire containing 47 items able to
reveal <strong>the</strong> dimensions <strong>of</strong> <strong>the</strong> strategic thinking pattern we consider <strong>of</strong> being significant for <strong>the</strong> managers in this
new knowledge economy. These dimensions are <strong>the</strong> following: time, complexity, uncertainty, and innovation. On
<strong>the</strong> time dimension we considered three main thinking models: inertial thinking, dynamic thinking and entropic
thinking. On <strong>the</strong> complexity dimension we considered <strong>the</strong> linear and nonlinear models. Linearity is characteristic
for <strong>the</strong> tangible economy while <strong>the</strong> nonlinearity is a specific property <strong>of</strong> <strong>the</strong> intellectual capital. On <strong>the</strong> dimension
<strong>of</strong> uncertainty we deal with deterministic and probabilistic models. In business, events are not certain and <strong>the</strong>re is
always a degree <strong>of</strong> uncertainty. Finally, on <strong>the</strong> innovation dimension we are looking for intelligent and creative
thinking models. In <strong>the</strong> knowledge management <strong>the</strong> process <strong>of</strong> knowledge creation is directly related to <strong>the</strong>
creative thinking models. We distributed 5000 questionnaires to <strong>the</strong> students in <strong>the</strong> main schools <strong>of</strong> business
from our country and obtained back 3240 questionnaires. We processed <strong>the</strong>se questionnaires using <strong>the</strong> SPSS
program, and interpreted <strong>the</strong> results in <strong>the</strong> perspective <strong>of</strong> business education.
Keywords: business education, complexity, innovation, strategic thinking, thinking patterns, uncertainty
1. Introduction
It is axiomatic that we understand <strong>the</strong> complexity <strong>of</strong> <strong>the</strong> external world by using thinking models
(Bratianu, 2007; Bratianu & Murakawa, 2004; Ohmae, 1982), or mental models (Gharajedaghi, 2006;
Johnson-Laird, 1983; Senge, 1990; Sherwood, 2002). According to Senge, “Mental models are
deeply ingrained assumptions, generalizations, or even pictures or images that influence how we
understand <strong>the</strong> world and how we take action.” (Senge, 1990, p.8). These models are developing
continuously from our childhood through education in family, in school, in university and by direct
experience <strong>of</strong> life. They are at <strong>the</strong> interface between <strong>the</strong> inner world <strong>of</strong> knowledge <strong>of</strong> any individual
and <strong>the</strong> external world. Thus, <strong>the</strong> more powerful <strong>the</strong>se thinking models are, <strong>the</strong> better our
understanding <strong>of</strong> what happens in our environment and <strong>the</strong> more knowledgeable we become. For
leaders and managers, making decisions in emergent economies or turbulent business environments
it is necessary to develop <strong>the</strong>ir strategic thinking. According to Ohmae (1982, p.78) “Top management
and its corporate planners cannot sensibly base <strong>the</strong>ir day-to-day work on blind optimism and apply
strategic thinking only when confronted by unexpected obstacles. They must develop <strong>the</strong> habit <strong>of</strong>
thinking strategically, and <strong>the</strong>y must do it as a matter <strong>of</strong> course.” That emphasizes <strong>the</strong> importance <strong>of</strong>
education in developing <strong>the</strong> pattern <strong>of</strong> strategic thinking, especially in this new knowledge economy.
Knowledge economy is shifting <strong>the</strong> interests from traditional tangible resources to <strong>the</strong> new valuable
intangible resources. Knowledge became <strong>the</strong> most important strategic resource <strong>of</strong> many companies
that are searching intelligent ways for creating competitive strategies (Becerra-Fernandez &
Sabherwal, 2011; Bratianu & Orzea, 2010; Jashapara, 2011; Roos, Pike & Fernstrom, 2005;
Wickramasinghe & Geisler, 2009). As Porter noted, “Competitive strategy is <strong>the</strong> search for a favorable
competitive position in an industry, <strong>the</strong> fundamental arena in which competition occurs. Competitive
strategy aims to establish a pr<strong>of</strong>itable and sustainable position against <strong>the</strong> forces that determine
industry competition” (Porter, 1985, p.1). Successful companies develop strategic groups <strong>of</strong> experts
searching for possible future business dynamics, and take measures for being prepared for <strong>the</strong>se
future challenges.
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Integrating <strong>the</strong>se above ideas we get <strong>the</strong> following sequence: a) people develop different thinking
patterns, through education and personal efforts; b) strategic thinking is a pattern needed especially
to managers and leaders in a dynamic business environment; c) <strong>the</strong> new knowledge economy is
stressing <strong>the</strong> value <strong>of</strong> intangibles, and <strong>the</strong> need <strong>of</strong> processing knowledge using advanced thinking
patterns, like strategic thinking; d) university programs in economics, management, marketing and
business have an important contribution in developing strategic thinking. The purpose <strong>of</strong> this paper is
to present <strong>the</strong> main dimensions <strong>of</strong> <strong>the</strong> strategic thinking, <strong>the</strong> main components <strong>of</strong> <strong>the</strong> strategic
thinking pattern, and what could be <strong>the</strong> main contributions <strong>of</strong> <strong>the</strong> university education in developing
<strong>the</strong> strategic thinking <strong>of</strong> <strong>the</strong> future economists, managers, marketers, and business people.
2. Thinking patterns
Strategic thinking is <strong>the</strong> fundamental thinking pattern for strategic management. If <strong>the</strong> operational
management deals with <strong>the</strong> day-to-day decisions, <strong>the</strong> strategic management deals with <strong>the</strong> future
possible business <strong>of</strong> <strong>the</strong> company (Carpenter & Sanders, 2007; Johnson, Scholes & Whittington,
2008; Warren, 2008). However, <strong>the</strong> future does not exist in <strong>the</strong> real world. It exists only as a possible
development in our minds. Moreover, we may anticipate a complex business environment that can be
handled only by creating new solutions. That means that strategic thinking must have at least four
dimensions: time, complexity, uncertainty, and innovation. On <strong>the</strong> time dimension we considered three
main thinking models: inertial thinking, dynamic thinking and entropic thinking. On <strong>the</strong> complexity
dimension we consider <strong>the</strong> linear and nonlinear models. On <strong>the</strong> dimension <strong>of</strong> uncertainty we deal with
deterministic and probabilistic models. Finally, on <strong>the</strong> innovation dimension we are looking for
intelligent and creative thinking models. These above models may co-exist as components <strong>of</strong> <strong>the</strong>
aggregate thinking pattern, but <strong>the</strong> dominant models will contribute mostly to <strong>the</strong> managerial decision
making. Thus, one <strong>of</strong> our research objectives was to identify <strong>the</strong> dominant thinking models used by
our students, and <strong>the</strong>n to learn what is necessary to improve in our university programs in order to
reach <strong>the</strong> specific levels <strong>of</strong> <strong>the</strong> strategic thinking pattern. Before analyzing <strong>the</strong> quantitative research it
is necessary to present <strong>the</strong> main characteristics <strong>of</strong> <strong>the</strong> thinking models defined for <strong>the</strong>se four
dimensions.
2.1 Time dimension
The simplest time model is inertial thinking. In this model time is not an operational variable, and
events have <strong>the</strong> tendency <strong>of</strong> maintaining <strong>the</strong>ir status quo due to <strong>the</strong> inertia force. The inertial thinking
is timeless. It is very attractive for many people since it <strong>of</strong>fers stability and safety. However, any event
development in life or any phenomenon in nature involves change, and change can occur only in
time. There is no possible change in a static or inertial environment (Burnes, 2009; Kotter, 1996;
Senior & Swailes, 2010). As a result <strong>of</strong> this situation, an inertial thinking model cannot accept change
and it cannot explain change.
Dynamic thinking model does incorporate time as a fundamental variable. All events and processes
develop in time since <strong>the</strong>y generate change. “Change is happening everywhere; its speed and
complexity are increasing; and <strong>the</strong> future success <strong>of</strong> our organizations depends on how successful
leaders are at leading that change. In today’s marketplace, change is a requirement for continued
success, and competent change leadership is a most coveted executive skill” (Anderson & Anderson,
2001, p.1). When a process can develop from an initial state to a final state and <strong>the</strong>n can develop in
<strong>the</strong> reverse direction going through all same intermediate equilibrium states until it reaches <strong>the</strong> initial
state, it is a reversible process. Science education in schools is based mostly on reversible
processes. Time is considered only as a quantitative variable, measurable in seconds, minutes, hours
etc. Dynamic thinking allows us to understand change, but only associated to reversible processes.
Entropic thinking model constitutes an advanced dynamic model since it is able to deal with
irreversible processes. All processes we know in life, society and nature are irreversible processes.
Biologically, we grow and get older and we can never reverse our life into childhood. Time means
more <strong>the</strong>n just intervals elapsed between different moments or stages <strong>of</strong> some considered processes.
Time has direction, from past toward present and from present toward future. We may say that real
processes have orientation or direction in time. Irreversibility can be measure by using entropy, a
concept introduced first in Thermodynamics and <strong>the</strong>n generalized in many o<strong>the</strong>r fields <strong>of</strong> science and
engineering (Handscombe & Patterson, 2004). Actually, <strong>the</strong> entropy measures <strong>the</strong> degree <strong>of</strong>
irreversibility for a given process and not its absolute irreversibility. Since irreversibility generates a
kind <strong>of</strong> history <strong>of</strong> developing different processes, scientists say that entropy is a kind <strong>of</strong> time arrow. It
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shows <strong>the</strong> direction <strong>of</strong> future development. In any production engineering field or any management
activity people do make decisions which have consequences. These decision making processes are
irreversible and we have to develop entropic thinking models in order to understand and to find <strong>the</strong>
best solutions.
2.2 Complexity dimension
Linear thinking model is used to approximate complexity <strong>of</strong> our environment. It is like we use
frequently linear segments to approximate curves <strong>of</strong> different shapes. Linear thinking has been
defined in literature in two different ways. One is starting from <strong>the</strong> ma<strong>the</strong>matical definition <strong>of</strong> linear
spaces (Bratianu, 2009; Bratianu & Vasilache, 2010), and o<strong>the</strong>r considers a broader perspective
given by <strong>the</strong> Cartesian dualism mind and body (Groves et al., 2008; Vance et al., 2007). In this
second case, <strong>the</strong> distinction is being made between cognitive intelligence and emotional intelligence.
Basically, linear thinking assumes that for a given transformation process, <strong>the</strong> output variables are
proportional with <strong>the</strong> input variables. Thus, if we know <strong>the</strong> input variables and <strong>the</strong> process constants
we just multiply <strong>the</strong>m and get <strong>the</strong> outputs variables. It is such an easy thinking model that most <strong>of</strong> our
everyday life is based on it. All measurements systems are developed according to linear thinking. In
research, we use frequently linear models especially to express physical material properties and <strong>the</strong>ir
behavior under different fields <strong>of</strong> mechanical, <strong>the</strong>rmal or electromagnetic forces. There are many
o<strong>the</strong>r fields <strong>of</strong> activities where people are using linear thinking, without even questioning its legitimacy
or accuracy. For instance, budgetary salaries are based on linear thinking, making hard any
differentiation among different people according to <strong>the</strong>ir individual experience, competence,
contribution and performance. Due to this fact, incentives and motivation are very low in any
budgetary systems, by comparison with performance based evaluation and payment in business
organizations. The most characteristic operation in linear thinking is addition.
Nonlinear thinking model uses correlations between output variables and input variables which have
nonlinear ma<strong>the</strong>matical formulations, like polynomials, exponentials, logarithms, sine and cosine
functions, integrals, derivatives etc. Of course, that is a much more difficult approach but it is closer to
real phenomena. The point we try to make is that a person who thinks only in a linear way cannot
understand accurately complex phenomena which have a nonlinear nature. Intellectual, emotional
and creative processes are highly nonlinear (Bratianu, 2011; Gardner, 2006; Goleman, 1995). It is a
mistake to evaluate <strong>the</strong>m based on linear models. Innovation and creativity are highly nonlinear
processes. Thus, for a successful management which develops innovative strategies in order to
obtain a strategic competitive advantage nonlinear thinking is <strong>the</strong> only possible approach. In <strong>the</strong> same
time managers must develop new metrics for progress evaluation and for excellence stimulation.
2.3 Uncertainty dimension
Deterministic thinking model is based on idea that things and events must be well defined and
determined before <strong>the</strong>y happen. Actually, <strong>the</strong>y happen due to our way <strong>of</strong> determining <strong>the</strong>m. Their
occurrence is certain. That means that <strong>the</strong>ir probability <strong>of</strong> happening is always equal to one. Also, we
may say that chances to occur such an event are 100%. There is no uncertainty and thus no risk
associated to such a deterministic thinking. For instance, 2+2=4 is true anytime, and everywhere.
There is no question about it. Actually, deterministic thinking is a social invention made in order to
reduce chaos and to enable some kind <strong>of</strong> activities to take place. One <strong>of</strong> <strong>the</strong> best examples <strong>of</strong>
deterministic thinking is <strong>the</strong> time schedule for trains and for airplanes. Without such a time schedule
no coordination <strong>of</strong> <strong>the</strong>ir circulation or flight can be done. Deterministic thinking is necessary in
organizing <strong>the</strong> traffic on public roads and highways. The rules established for car driving by legislation
is a clear model <strong>of</strong> a deterministic thinking. And we have to emphasize <strong>the</strong> fact that we need such
kind <strong>of</strong> thinking at social level. The question is how much <strong>of</strong> our social life, organizational life or family
life should be ruled by such a deterministic thinking? We should not forget that deterministic thinking,
excessive discipline and order in any organization kill incentives and innovation which might produce
outcomes in conflict with <strong>the</strong> well established order. Deterministic thinking has been used extensively
by scientists and engineers. Most <strong>of</strong> all <strong>the</strong> science laws we studied in schools and universities are
actually a product <strong>of</strong> a deterministic thinking.
Probabilistic thinking model is based on <strong>the</strong> fact that uncertainty is <strong>the</strong> rule and not <strong>the</strong> exception.
In nature, society and life events do not have certain outcomes. Events occurrence has a probabilistic
nature and <strong>the</strong>y may happen with some probabilities (Taleb, 2004). One <strong>of</strong> <strong>the</strong> most known example
is <strong>the</strong> wea<strong>the</strong>r forecast. We learn from TV programs or from newspapers how <strong>the</strong> wea<strong>the</strong>r will
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probably be next days, but nobody can assure us that <strong>the</strong> forecast is going to be 100% accurate. To
understand and to use properly such a wea<strong>the</strong>r forecast we must develop a probabilistic thinking.
That means to accept <strong>the</strong> fact that some events or some outcomes may happen with some
probabilities, which actually means to accept <strong>the</strong> uncertainty related to <strong>the</strong>ir occurrence. However, any
uncertainty has an associated risk we must understand and in <strong>the</strong> same time we try to reduce
possible negative outcomes generated by this risk. Thus, probabilistic thinking is much more difficult
and sometimes it is hard to accept it, but developing such kind <strong>of</strong> thinking model we will be better
prepared for a future which is unknown and uncertain. For any company or nonpr<strong>of</strong>it organization <strong>the</strong>
external environment becomes more dynamic and changeable, which means more uncertainty for its
future configurations. In order to understand this new trend and to take sound decisions concerning
future developments <strong>of</strong> our activities we must be able to deal with probabilistic events and with <strong>the</strong>ir
associated risks.
2.4 Innovation dimension
Intelligent thinking model reflects <strong>the</strong> processing capability <strong>of</strong> a decision maker in choosing <strong>the</strong> best
solution for a given operational context. Intelligent thinking operates with known explicit and tacit
knowledge. There is no new knowledge creation. Intelligent thinking is based on <strong>the</strong> multiple
intelligence concept developed by Gardner (2006), and on <strong>the</strong> new findings <strong>of</strong> <strong>the</strong> cognitive sciences
(Pinker, 1997; Pinker, 2007; Frith, 2007). Intelligent thinking is very flexible. It searches for many
alternatives <strong>of</strong> <strong>the</strong> given problem and for many possible combinations <strong>of</strong> all known data, information
and knowledge such that from all <strong>the</strong>se combinations to produce <strong>the</strong> best answer. Intelligent thinking
cannot be developed and used in inertial and deterministic business environments characterized by
mediocrity. Intelligent thinking is necessary in research environments. Here it is very important to find
all possible combinations for <strong>the</strong> given facts and information and to find <strong>the</strong> best interpretations for <strong>the</strong>
laboratory or numerical experiments done.
Creative thinking model implies production <strong>of</strong> new knowledge. The production <strong>of</strong> new knowledge can
be delivered by continuous increments or by significant jumps. Knowledge creation becomes more
and more important in any fields <strong>of</strong> activity, but mostly in R&D due to stronger competition and forces
and globalization processes. Creative thinking is mostly needed when we are experiencing changing
environments, characterized by new aspects and phenomena. Creative thinking does not provide <strong>the</strong>
best solution for a given problem, like intelligent thinking does, but it provides a new way <strong>of</strong> solving
that problem or even a completely new solution (De Bono, 1994; Christensen, 2003; Tidd, Bessant &
Pavitt, 2001). We would like to emphasize <strong>the</strong> fact that intelligent thinking and creative thinking are
complementary thinking models, since intelligence implies creativity and creativity implies intelligence.
2.5 Strategic thinking
Strategic thinking represents an integration process <strong>of</strong> <strong>the</strong> most advanced thinking models we
presented above. Strategic thinking deals with <strong>the</strong> future, and that means to incorporate time both
quantitatively and qualitatively. Time is very important as a measure and as a direction <strong>of</strong>
development and improvement. Also, it is important to think <strong>of</strong> change not as a uniform variable
process with zero acceleration, but as a variable process with its own rate <strong>of</strong> change. Thus, strategic
thinking must incorporate <strong>the</strong> entropic thinking model. On <strong>the</strong> complexity dimension, strategic thinking
must incorporate nonlinear thinking model since it is able to approach complexity much better than
<strong>the</strong> linear cognitive approximation. In <strong>the</strong> future all events are probable, that means that <strong>the</strong>y are
uncertain. The incorporated model will be probabilistic thinking. Finally, <strong>the</strong> future needs smart and
creative solutions. In conclusion, strategic thinking will incorporate <strong>the</strong> following thinking models:
entropic thinking, nonlinear thinking, probabilistic thinking, intelligent thinking and creative thinking.
3. Research design and results
The purpose <strong>of</strong> this research is to evaluate <strong>the</strong> degree <strong>of</strong> development <strong>of</strong> strategic thinking <strong>of</strong>
students enrolled in economics and business in <strong>the</strong> main university programs <strong>of</strong>fered in Romania. We
considered both undergraduate students and graduate students in master programs. We elaborated a
questionnaire based on our own experience containing 47 items, such that we could cover all <strong>the</strong>
thinking models presented above on <strong>the</strong> four dimensions: time, complexity, uncertainty and
innovation. For evaluation we used a Likert scale with 5 possible choices (from totally agreement to
totally disagreement). Also, we formulate some questions for student identification (gender, age,
undergraduate/ graduate, university, rural/ urban area). For checking <strong>the</strong> validity <strong>of</strong> our questionnaire
we performed a pilot testing on a group <strong>of</strong> 125 students from <strong>the</strong> Faculty <strong>of</strong> Business Administration,
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Constantin Bratianu et al.
Academy <strong>of</strong> Economic Studies, Bucharest. Based on this pilot research we made some minor
changes in this questionnaire. We distributed 5000 questionnaires to all important schools <strong>of</strong>
economics and business from Romania (i.e. schools having both undergraduate and graduate
programs). We received back 3240 questionnaires (64.8%). We processed <strong>the</strong>se questionnaires
using a SPSS program. For testing <strong>the</strong> internal reliability we computed <strong>the</strong> Cronbach’s alpha, and we
got <strong>the</strong> value <strong>of</strong> 0.87, which was considered a good one.
The first part <strong>of</strong> our investigation is concerned with <strong>the</strong> average values for <strong>the</strong> four dimensions,
evaluated for <strong>the</strong> whole set <strong>of</strong> questionnaires, and <strong>the</strong>n for each category considered: male, female,
undergraduate, graduate, urban, and rural. Final results are presented in table 1. Considering that <strong>the</strong>
maximum value for each dimension for strategic thinking is 5, we can see that <strong>the</strong> highest value for
<strong>the</strong> average thinking dimensions is 3.21, for <strong>the</strong> time dimension, and <strong>the</strong> lowest average value is 2.53
for <strong>the</strong> uncertainty dimension. These values demonstrate <strong>the</strong> fact that our students are almost halfway
to <strong>the</strong>ir strategic thinking pattern development. Illustrations for <strong>the</strong>se average values are given in
figures 1-4.
Table 1: Average values for <strong>the</strong> strategic thinking dimensions
Dimensions General Male Female Undergrad Graduate Urban Rural
Time 3.21 3.22 3.21 3.18 3.30 3.24 3.09
Complexity 2.68 2.74 2.65 2.65 2.73 2.71 2.52
Uncertainty 2.53 2.62 2.50 2.53 2.54 2.56 2.39
Innovation 2.86 2.83 2.87 2.82 2.96 2.89 2.72
For <strong>the</strong> time dimension, students have developed mostly a dynamic thinking model which means that
for many <strong>of</strong> <strong>the</strong>m events entropy and future focus is not yet developed. Most <strong>of</strong> <strong>the</strong>m are focused on
solving operational problems for present being. It is interesting to see that for <strong>the</strong> item In solving
problems I use always <strong>the</strong> successful solutions from <strong>the</strong> past <strong>the</strong> average value is 2.76, while <strong>the</strong>
general value is 3.21, and <strong>the</strong> maximum value is 5.0. This is a very important finding for pr<strong>of</strong>essors
who teach courses in Business and Management, in order to stimulate through <strong>the</strong>ir study cases <strong>the</strong>
need for future orientation and working out new solutions for new problems.
Figure 1: Diagram for <strong>the</strong> average values <strong>of</strong> all students
This result correlates very well with that obtained for <strong>the</strong> item Not everybody in a company can create
new solutions, from <strong>the</strong> innovation dimension for which we got <strong>the</strong> average value <strong>of</strong> 2.12. For a real
business education based on strategic thinking it is necessary much more than just to have a course
about Strategic Management, especially for students in emergent economies where future orientation
is becoming a must. This need is higher for students coming from rural areas, where <strong>the</strong> time
perception is a little bit different than in urban areas.
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Figure 2: Diagram for <strong>the</strong> average values <strong>of</strong> male/ female students
Figure 3: Diagram for <strong>the</strong> average values <strong>of</strong> undergraduate/graduate students
Performing a factorial analysis for all <strong>the</strong> items <strong>of</strong> <strong>the</strong> time dimension, we got that <strong>the</strong> most important
factors to describe <strong>the</strong> students thinking pattern are <strong>the</strong> following: a) students are focused mostly on
solving day-to-day problems, and not to think for <strong>the</strong>ir future; b) students fear changes due to <strong>the</strong>ir
strong inertial thinking; c) students think that events may repeat <strong>the</strong>mselves and thus <strong>the</strong>y may use
same successful solutions like in <strong>the</strong> past.
For <strong>the</strong> complexity dimension <strong>the</strong> general average value is 2.68. Relative higher values have male
students with respect to female students, graduate students with respect to undergraduate students,
and students coming from urban areas with respect to rural areas. The general value is almost half <strong>of</strong>
<strong>the</strong> maximum value for this dimension. That means that business education should streng<strong>the</strong>n study
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cases with a higher degree <strong>of</strong> complexity, and with <strong>the</strong> focus on developing <strong>the</strong> nonlinear thinking. For
instance, for <strong>the</strong> item Efficiency <strong>of</strong> any process increases when <strong>the</strong> outcomes are proportional with <strong>the</strong>
efforts done <strong>the</strong> general value is only 2.13, which reflects a clear dominance <strong>of</strong> <strong>the</strong> linear thinking.
Closed value has got <strong>the</strong> item Learning outcomes are proportional with <strong>the</strong> time spent for it, although
learning is a strongly nonlinear process. Managers that have a dominant linear thinking pattern will
not be able to find <strong>the</strong> best solutions for complex problems <strong>the</strong>y are facing. Factorial analysis
performed for <strong>the</strong> complexity dimension reflects <strong>the</strong> following dominant ideas: a) students prefer
mostly simple ways <strong>of</strong> solving problems; b) students prefer to belong to networks.
Figure 4: Diagram for <strong>the</strong> average values <strong>of</strong> <strong>the</strong> students coming from urban/rural areas
For <strong>the</strong> uncertainty dimension <strong>the</strong> general average value is 2.53 which reflects a clear dominance <strong>of</strong>
<strong>the</strong> deterministic thinking, and an attitude <strong>of</strong> avoiding uncertainties. There are slight higher values for
male students (2.62) with respect to female students (2.50), and for students coming from urban
areas (2.56) with respect to those coming from rural areas (2.39). Deterministic thinking is strongly
influenced by <strong>the</strong> cultural values <strong>of</strong> society, and unfortunately our society is coming from a socialist
culture where deterministic and linear thinking models were by far <strong>the</strong> most important in our
education. For <strong>the</strong> item I do prefer clear problems, well formulated and with complete data we got <strong>the</strong>
general value <strong>of</strong> 1.87 which demonstrates very clearly <strong>the</strong> dominance <strong>of</strong> <strong>the</strong> deterministic thinking
pattern. A similar conclusion we got from <strong>the</strong> item I like events that can be predictable and under
control, that has a general value <strong>of</strong> 2.25. The factorial analysis performed revealed <strong>the</strong> following main
ideas: a) students prefer problems clearly defined and with complete information; b) students
situations associated with small risks. However, business environment and emergent economies
require a probabilistic thinking pattern, and an attitude more favorable for assuming higher risks.
For <strong>the</strong> innovation dimension <strong>the</strong> general average value is 2.86, which reflects a dominance <strong>of</strong> <strong>the</strong>
intelligent thinking pattern. Relative higher values are for graduate students (2.96) with respect to <strong>the</strong>
undergraduate students (2.82), and for students coming from urban areas (2.89) with respect to those
coming from rural areas (2.72). The item Not everybody in a company can create new solutions got a
value <strong>of</strong> 2.12, which means <strong>the</strong> believe that knowledge creation in a company can be done only by
some special people. Interesting is also <strong>the</strong> item The job description should be very clearly
formulated, such that <strong>the</strong> individual initiative to be reduced that got <strong>the</strong> general value <strong>of</strong> 2.59. The
factorial analysis revealed <strong>the</strong> following main ideas: a) students prefer job descriptions very clearly
detailed, with minimum requirement for creativity; b) in management controlling is more important than
knowledge creation; c) <strong>the</strong>re is a general fear for new problems and change. That means that
business education should develop more <strong>the</strong> creative thinking and <strong>the</strong> entrepreneurial culture. Study
cases should emphasize <strong>the</strong> need for knowledge creation and entrepreneurship than <strong>the</strong> standard or
classical solutions for old problems. In <strong>the</strong> emergent economies <strong>the</strong>re is a clear challenge coming
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Constantin Bratianu et al.
from new problems <strong>of</strong> economical development and global competition, such that <strong>the</strong> creative thinking
pattern to be more developed and integrated with <strong>the</strong> intelligent thinking one.
4. Conclusions
Strategic thinking pattern is an outcome <strong>of</strong> <strong>the</strong> education and individual efforts. This thinking pattern
allows managers and business people to make decisions that are future oriented and focused on
competitive advantage. In emergent economies strategic thinking is necessary if decision makers
want to be competitive in a globalized market. Business education plays an important role in
developing strategic thinking. The purpose <strong>of</strong> this research is to evaluate <strong>the</strong> degree <strong>of</strong> development
<strong>of</strong> strategic thinking to our students enrolled in economics, management and business programs. In
<strong>the</strong> first stage <strong>of</strong> our research we create a spectrum <strong>of</strong> thinking models as components <strong>of</strong> strategic
thinking on four main dimensions: time, complexity, uncertainty and innovation. The most advanced
models <strong>of</strong> this spectrum – entropic thinking, nonlinear thinking, probabilistic thinking, intelligent
thinking, and creative thinking – are components <strong>of</strong> <strong>the</strong> strategic thinking pattern. In <strong>the</strong> second stage
<strong>of</strong> our research we elaborated a questionnaire, and we distributed 5000 questionnaires to <strong>the</strong>
students from <strong>the</strong> main schools <strong>of</strong> economics, management and business from Romania. We
received back 3240 questionnaires, and we processed <strong>the</strong>m using <strong>the</strong> SPSS program. The general
average values obtained from this analysis are <strong>the</strong> following: time dimension – 3.21, complexity
dimension – 2.68, uncertainty dimension – 2.53, and innovation dimension – 2.86. By comparison
with <strong>the</strong> maximum <strong>the</strong>oretical values on our scale – 5.00, <strong>the</strong>se values demonstrate that business
education should contribute much more to <strong>the</strong> development <strong>of</strong> <strong>the</strong> strategic thinking pattern,
especially on <strong>the</strong> complexity, uncertainty and innovation dimensions.
Acknowledgements
We would like to acknowledge <strong>the</strong> support received for this work from <strong>the</strong> UEFISCSU Project PN II-
ID-1812/2008.
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107

The Organizational Learning Process in <strong>the</strong> Design <strong>of</strong> a
new Service
Delio Ignacio Castañeda 1 and Sandra Patricia Duarte 2
1
Department <strong>of</strong> Business Administration, Pontificia Universidad Javeriana,
Bogota, Colombia
2
Magister in Psychology, Universidad del Valle, Cali, Colombia
delio.castaneda@javeriana.edu.co
psandra9@yahoo.es
Abstract: This paper explores <strong>the</strong> organizational learning process experienced in <strong>the</strong> design <strong>of</strong> a new packing
service for <strong>the</strong> pharmaceutical sector, using <strong>the</strong> 4I model designed by Crossan, Lane and White (1999) and its
fur<strong>the</strong>r developments. According to <strong>the</strong> 4I model, learning occurs at <strong>the</strong> individual, group and organizational
levels. Each level shows different learning processes. We carried out an exploratory study using qualitative
research methods. In-depth interviews were conducted with four workers <strong>of</strong> <strong>the</strong> company who participated in <strong>the</strong>
creation <strong>of</strong> a new packing service. In addition, a focus group was conducted with six workers <strong>of</strong> <strong>the</strong> same firm.
We found evidence supporting <strong>the</strong> learning processes stated by <strong>the</strong> original model and its fur<strong>the</strong>r developments.
The interviews and focus group results suggested that organizational learning is not always a lineal process as
stated by <strong>the</strong> model. Individual and group learning are parallel interacting and unfinished processes. This study
contributed to adding empirical evidence to <strong>the</strong> 4I model <strong>of</strong> organizational learning and its fur<strong>the</strong>r developments,
in a manufacturing firm. Since <strong>the</strong> nature <strong>of</strong> this study was exploratory and <strong>the</strong> results are based on one
company, <strong>the</strong> scope is limited; fur<strong>the</strong>r research is needed for a deeper understanding <strong>of</strong> <strong>the</strong> findings and its
relevance in o<strong>the</strong>r sectors.
Keywords: organizational learning, processes <strong>of</strong> learning
1. Introduction
In <strong>the</strong> last two decades, <strong>the</strong> concept <strong>of</strong> organizational learning grew in academic publications as itself
(Easterby and Lyles, 2003), and as a process <strong>of</strong> knowledge management (Dingsoyr, Bjornson and
Shull, 2009). Since organizational learning is a multidisciplinary concept, <strong>the</strong>re is not a unified
definition for <strong>the</strong> term (Aramburu, 2000; Salk and Simonin, 2003). Organizational learning is
understood as changes associated to environment adaptation (Cyert and March, 1963; Hedberg,
1981; Lloria, 2001), environment adaptation and transformation (Argyris and Schön, 1978; Argyris
and Schön, 1996), knowledge acquisition (Huber, 1991), environment adaptation and knowledge
acquisition (Garvin, 2000), environment adaptation or transformation and knowledge acquisition
based in people, depending on <strong>the</strong> organizational grade <strong>of</strong> development (Castañeda and Pérez,
2005), or <strong>the</strong> process <strong>of</strong> change in individual and shared thought and action, which is affected by and
embedded in <strong>the</strong> institutions <strong>of</strong> <strong>the</strong> organization (Vera and Crossan, 2003). In this paper
organizational learning is understood as a process that occurs in <strong>the</strong> following levels: individual, group
and organization (Crossan, Lane and White, 1999). At <strong>the</strong> same time, organizational learning is a
process that implies changes in cognition and behavior (Bandura, 2005; Castañeda and Fernández,
2007; Vera and Crossan, 2003).
Organizational learning is a process involved in <strong>the</strong> creation <strong>of</strong> a new service (Pohlmann, Gebhardt
and Etzkowitz, 2005). A well-known model <strong>of</strong> organizational learning in academic contexts, which
integrates <strong>the</strong> three levels <strong>of</strong> learning as well as cognitive and behavioral changes as parts <strong>of</strong> <strong>the</strong>
learning process, is <strong>the</strong> 4I Model <strong>of</strong> Crossan, Lane and White (1999). This model has been enriched
with some contributions (Zietsma, Winn, Branzei and Vertinsky 2002; Castañeda y Pérez, 2005;
Castañeda and Fernández, 2007). The purpose <strong>of</strong> <strong>the</strong> present study was to explore <strong>the</strong> pertinence <strong>of</strong>
<strong>the</strong> 4I model and its fur<strong>the</strong>r developments to describe <strong>the</strong> organizational learning processes in <strong>the</strong>
creation <strong>of</strong> a new service in a particular firm.
2. The 4I model <strong>of</strong> organizational learning and its fur<strong>the</strong>r developments
The 4I model <strong>of</strong> Crossan, Lane and White (1999) identifies four processes <strong>of</strong> learning: intuiting,
interpreting, integrating and institutionalizing (figure 1). The first process, intuiting, takes place at <strong>the</strong>
individual level and it is defined as “<strong>the</strong> preconscious recognition <strong>of</strong> <strong>the</strong> pattern and/or possibilities
inherent in a personal stream <strong>of</strong> experience” (p. 525). Even though, some human learning is
preconscious, most <strong>of</strong> learning is conscious (Bandura, 1986). Subsequent improvements <strong>of</strong> <strong>the</strong> 4I
model take into consideration this point. The second process, interpretating, occurs at <strong>the</strong> individual
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Delio Ignacio Castañeda and Sandra Patricia Duarte
and group levels. It is defined by Crossan et al. (1999) as “<strong>the</strong> explaining through words and/or
actions, <strong>of</strong> an insight or idea to one’s self and to o<strong>the</strong>rs” (p.525). Although some conversations in
groups are about intuitions, most conversations are based on current situations, ideas, beliefs and
o<strong>the</strong>r complex cognitive processes associated to human capacities (Bandura, 2006). Accoring to
Crossan et al (1999) <strong>the</strong> third concept <strong>of</strong> <strong>the</strong> model is integrating, defined as “<strong>the</strong> process <strong>of</strong>
developing shared understanding among individuals and <strong>of</strong> taking coordinated action through mutual
adjustment” (p. 525). The fourth concept, institutionalizing, “is <strong>the</strong> process <strong>of</strong> ensuring that routinized
actions occur. This is <strong>the</strong> process <strong>of</strong> embedding learning that has occurred by individuals and groups
into <strong>the</strong> organization and it includes systems, structures, procedures and strategy” (Crossan, et al.,
1999, p.525).
Zietsma, et al. (2002) presented an improvement proposal <strong>of</strong> <strong>the</strong> 4I model <strong>of</strong> Crossan, et al. (1999)
adding two processes: attending and experimenting. Attending is an active process at <strong>the</strong> individual
level <strong>of</strong> seeking information from <strong>the</strong> environment. In relation to experimenting, Zietsma, et al. (2002)
stated that “individuals and <strong>the</strong> groups experiment and <strong>the</strong> result <strong>of</strong> <strong>the</strong>ir actions add substance to
<strong>the</strong>ir cognitive interpretations” (p.63). The main contribution <strong>of</strong> <strong>the</strong> work <strong>of</strong> Zietsma et al. (2002)
consisted <strong>of</strong> emphasizing <strong>the</strong> importance <strong>of</strong> active learning.
Figure 1: 4I Model <strong>of</strong> organizational learning
Castañeda and Pérez (2005) based on <strong>the</strong> social cognitive <strong>the</strong>ory <strong>of</strong> Bandura (1986, 2005) stated that
human learning is a complex process that may not be explained only based on intuitions and
attention. Intuition is characterized by a lack <strong>of</strong> awareness about how judgements and results are
acquired (Hogarth, 2001). In this sense, intuition only explains a kind <strong>of</strong> learning where attention is not
required; most learning in <strong>the</strong> context <strong>of</strong> organizations, however, is based on direct experience and
conscious observation. Organizations are changed by people’s behaviour (Bandura, 1988; Bandura,
1997). Organizational learning is a collaborative effort where individuals create new ideas by sharing
<strong>the</strong>ir knowledge through interaction with o<strong>the</strong>rs. In this context, Castañeda and Pérez (2005) added to
<strong>the</strong> individual level <strong>of</strong> <strong>the</strong> 4I model <strong>of</strong> Crossan, Lane and White (1999) <strong>the</strong> concepts <strong>of</strong> human
capabilities and learning processes (Bandura, 1986, 2005). Bandura (1986) stated that humans are
capable <strong>of</strong>: symbolizing, forethought, learning through modeling, self-regulation and self-reflection.
Symbolizing means: using codes as a mechanism <strong>of</strong> individual change and adaptation to <strong>the</strong>
environment. Through symbols people give significance, shape and continuity to <strong>the</strong>ir own
experiences. At <strong>the</strong> same time, people use previous knowledge and <strong>the</strong> capacity to symbolize to
decide what actions to take. It is not necessary to perform a certain action in order to solve a problem,
but people symbolize multiple situations in <strong>the</strong>ir mind before acting. Forethought means <strong>the</strong> capacity
to regulate future actions. People use forethought to predict consequences <strong>of</strong> actions, to formulate
goals and to motivate <strong>the</strong>mselves in an anticipatory way. Additionally, people not only learn from <strong>the</strong>ir
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Delio Ignacio Castañeda and Sandra Patricia Duarte
own behaviour, but <strong>the</strong>y can learn through modeling, observing o<strong>the</strong>r’s behaviour and through <strong>the</strong>
consequences <strong>of</strong> <strong>the</strong>ir own actions. Through modeling, individuals can learn <strong>the</strong> rules <strong>of</strong> behaviour
just by observing. Self-regulation means that part <strong>of</strong> people’s behaviour is self-motivated and
regulated by self-evaluation. Finally, self-reflection relates to people capacity to know <strong>the</strong>mselves.
Individuals can observe <strong>the</strong>ir ideas and predict <strong>the</strong>ir actions accordingly.
Figure 2: 4I model <strong>of</strong> organizational learning and its fur<strong>the</strong>r developments
In addition, observational learning is governed by four component processes: attention, retention,
motor reproduction and motivation (Bandura, 1986). Attention is a cognitive process which regulates
exploration and perception. Attention determines in a selective way what is observed. Retention
consists <strong>of</strong> transforming <strong>the</strong> information <strong>of</strong> an event in order to be represented to memory as rules or
concepts. Motor reproduction or production is about conversion <strong>of</strong> symbolic representations into
actions. In order to act, it is necessary for <strong>the</strong> individual to recover information from <strong>the</strong> memory.
Motivation is <strong>the</strong> fourth process. An existing learning turns into behaviour depending on <strong>the</strong>
importance <strong>of</strong> perceived consequences <strong>of</strong> actions (Bandura, 1986).
Castañeda and Fernández (2007) added to <strong>the</strong> group level <strong>of</strong> <strong>the</strong> 4I model <strong>of</strong> Crossan, Lane and
White <strong>the</strong> concepts <strong>of</strong> conversation and social modeling. In <strong>the</strong> original proposal, Crossan, Lane and
White (1999) stated that group learning can be explained by a process called interpretation. The
authors stated “interpretation has to do with refining and development <strong>of</strong> intuitive insights” (p. 525).
The raw material for interpretation is intuition, a preconscious process. However, conversation, a
conscious process, is a central aspect <strong>of</strong> a functioning organization (Denning, 2005). Most
organizational actions are based on conversation. In this sense, conversation is a learning opportunity
in groups. In addition, authors like Harris (1995) and Bandura (2003) emphasize <strong>the</strong> role <strong>of</strong> modeling
and observation in group learning. People in groups learn by observing o<strong>the</strong>rs. Figure 2 shows <strong>the</strong> 4I
model with its fur<strong>the</strong>r developments.
3. Methodology
We carried out an exploratory study using qualitative research to evaluate <strong>the</strong> relevance <strong>of</strong> <strong>the</strong> 4I
model and its fur<strong>the</strong>r developments, to describe <strong>the</strong> organizational learning process in <strong>the</strong> creation <strong>of</strong>
a new packing service in a firm. The description <strong>of</strong> <strong>the</strong> organizational learning processes was based
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Delio Ignacio Castañeda and Sandra Patricia Duarte
on <strong>the</strong> case study <strong>of</strong> DFE, a Colombian firm dedicated to <strong>the</strong> design, development and administration
<strong>of</strong> packing services for <strong>the</strong> pharmaceutical sector.
4. Participants and instruments
In-depth interviews were conducted with four workers who participated in <strong>the</strong> creation <strong>of</strong> a new
packing service in DFE. In addition, a focus group was conducted with six workers <strong>of</strong> <strong>the</strong> firm who
also were part <strong>of</strong> <strong>the</strong> process <strong>of</strong> creation <strong>of</strong> <strong>the</strong> same new packing service in DFE. The chosen
categories to design <strong>the</strong> interviews and <strong>the</strong> fur<strong>the</strong>r content analysis were <strong>the</strong> learning processes <strong>of</strong>
<strong>the</strong> 4I model <strong>of</strong> Crossan, Lane and White (1999) and its fur<strong>the</strong>r developments (Zietsma, et al, 2002;
Castañeda and Pérez, 2005; Castañeda and Fernández, 2007): intuiting, interpreting, integrating,
institutionalizing, attending, experimenting, symbolizing, forethought, modeling, self-regulation, selfreflection,
retention, production, motivation, conversation and social modeling.
5. Procedure
The first stage was approaching <strong>the</strong> firm to study <strong>the</strong> organizational learning processes in <strong>the</strong> creation
<strong>of</strong> a new service, following <strong>the</strong> 4I model and its fur<strong>the</strong>r developments. The second stage was <strong>the</strong>
definition <strong>of</strong> categories for <strong>the</strong> analysis. The chosen categories were <strong>the</strong> organizational learning
processes stated in <strong>the</strong> last version <strong>of</strong> <strong>the</strong> 4I model. The third stage was <strong>the</strong> design <strong>of</strong> an interview
guide and its validation by academic pairs. The fourth stage was <strong>the</strong> interview process. Permission
was asked to record <strong>the</strong> interviews. Then, interviews were transcribed and information was verified
based on <strong>the</strong> audio records. The fifth stage was <strong>the</strong> codification <strong>of</strong> <strong>the</strong> information based on <strong>the</strong>
categories. The sixth stage was <strong>the</strong> content analysis using <strong>the</strong> program called S<strong>of</strong>tware for Qualitative
Research Nvivo 8. The seventh step was <strong>the</strong> focus group. The eighth step was <strong>the</strong> analysis <strong>of</strong> <strong>the</strong>
information <strong>of</strong> <strong>the</strong> focus group and its relationship with individual interviews.
6. Results
Interviews and focus group were conducted according to <strong>the</strong> plan. Evidence was found for each <strong>of</strong> <strong>the</strong>
processes <strong>of</strong> <strong>the</strong> 4I model and its fur<strong>the</strong>r developments. Here are <strong>the</strong> categories and examples from
<strong>the</strong> narratives <strong>of</strong> workers.
The idea conception <strong>of</strong> <strong>the</strong> new packing service arose as an intuition <strong>of</strong> one <strong>of</strong> <strong>the</strong> owners <strong>of</strong> <strong>the</strong>
company. In <strong>the</strong> interview <strong>the</strong> owner said “<strong>the</strong> idea came from my experience. I worked in a lab
dedicated to <strong>the</strong> overwrapping processes <strong>of</strong> medicines. My job was repairing <strong>the</strong> machines. Later, I
decided to have my own company and designing machines for <strong>the</strong> pharmaceutical sector. One day I
though, if I can build <strong>the</strong> machines, why not to do <strong>the</strong> packing service myself? It may be pr<strong>of</strong>itable”.
According to Crossan et al (1999), <strong>the</strong> expert view <strong>of</strong> intuiting is a process <strong>of</strong> past pattern recognition.
In <strong>the</strong> example, <strong>the</strong> experience <strong>of</strong> <strong>the</strong> owner was fundamental as an explanation <strong>of</strong> <strong>the</strong> origin <strong>of</strong> <strong>the</strong>
intuition.
Individuals share <strong>the</strong> intuitions with o<strong>the</strong>rs, engaging in collective interpreting what facilitates
collective understandings (Zietsma, et al, 2002). In DFE <strong>the</strong> owner <strong>of</strong> <strong>the</strong> idea talked to <strong>the</strong> person in
charge <strong>of</strong> finance. In <strong>the</strong> interview <strong>the</strong> second person expressed: “He discussed <strong>the</strong> idea with me. At
<strong>the</strong> beginning we did not agree, since <strong>the</strong> process seemed to be costly. Over time, we agreed <strong>the</strong>
project was important but difficult to implement because adapting <strong>the</strong> plant could be expensive”.
Language plays a fundamental role in interpreting (Crossan, et al, 1999). At <strong>the</strong> beginning, based on
<strong>the</strong>ir established cognitive maps, <strong>the</strong> same idea may evoke different meanings for different people
(Walsh, 1988). Language helps to solve differences.
The essential characteristic <strong>of</strong> integrating is shared understanding <strong>of</strong> <strong>the</strong> members in a group
(Crossan, et al, 1999). One <strong>of</strong> <strong>the</strong> workers <strong>of</strong> DFE expressed: “Everybody helped, management,
production and finance. It was something we had to move forward toge<strong>the</strong>r”. Ano<strong>the</strong>r worker said: “In
order to get <strong>the</strong> certification, all <strong>of</strong> us had to learn what was recommended by <strong>the</strong> World Health
Organization”. When integrating consolidates, organization moves from group learning to
organizational learning.
Institutionalizing occurs when new actions become part <strong>of</strong> <strong>the</strong> organization routines and systems
(Crossan, et al, 1999). One interviewee said: “with <strong>the</strong> good manufacturing practices we had to learn,
everybody changed habits, even <strong>the</strong> way to do things”. The new service <strong>of</strong> packing become
institutionalized, and once implemented, it was a pr<strong>of</strong>itable business.
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Attending is an active process <strong>of</strong> information seeking from <strong>the</strong> environment (Zietsma, et al, 2002). In
DFE a worker made a comment: “we went to many laboratories. We paid attention especially to <strong>the</strong>
distribution <strong>of</strong> areas and <strong>the</strong> management <strong>of</strong> locks”. Through attending, <strong>the</strong> persons in charge <strong>of</strong> <strong>the</strong>
project learned fundamental characteristics <strong>of</strong> <strong>the</strong> potential business.
Experimenting is an active process based on action (Zietsma, et al, 2002). A worker expressed:
“Once we had <strong>the</strong> procedures, some <strong>of</strong> <strong>the</strong>m were tested. For example, when we evaluated <strong>the</strong>
income <strong>of</strong> materials procedure, we found backflow, which was not accepted because contamination
could occur”. Experimenting was in DFE a process which leveraged <strong>the</strong> group learning.
In relation to <strong>the</strong> learning process at <strong>the</strong> individual level incorporated to <strong>the</strong> 4I model by Castañeda
and Pérez (2005) based on Bandura (1986), <strong>the</strong>re is a common process with Zietsma et al (2002):
attending. The second process is retention. What is learned by <strong>the</strong> individual is represented in
memory in symbolic form. A worker said: “Once, what I did was to see <strong>the</strong> machine working, and <strong>the</strong>n
went back to my <strong>of</strong>fice and draw up plans based in what I remembered”.
Reproduction is a cognitive process by which, what it is in memory, is recovered to facilitate action
(Bandura, 1986). An interviewee said: “The supervisor expressed, you know <strong>the</strong> procedure, so come
here and do it”. Sometimes, <strong>the</strong> individual knows <strong>the</strong> answer but he or she is not able to reproduce
<strong>the</strong> answer that is already in <strong>the</strong> memory. In this case <strong>the</strong>re is no evidence <strong>of</strong> learning.
Motivation is <strong>the</strong> process that leads <strong>the</strong> individual to action (Bandura, 1986). An interviewee
expressed: “The design <strong>of</strong> <strong>the</strong> new service was difficult but interesting. At <strong>the</strong> beginning <strong>the</strong> idea was
crazy but we carried it out with effort. We made it”. Motivation was a key factor to maintain people
working in <strong>the</strong> project when problems arose.
In relation to human capabilities, <strong>the</strong>y were identified in interviews and focus group through
spontaneous comments. Symbolizing is <strong>the</strong> capacity to represent things and concepts in <strong>the</strong> brain
without seeing <strong>the</strong>m (Bandura, 1986). An employee said: “To create a new service pushes people to
think differently and learn new concepts”. Without symbolizing <strong>the</strong>re is no complex learning.
Forethought is <strong>the</strong> capacity to regulate future actions (Bandura, 1986). Somebody at DFE said: “Once
I said, I think we should plan a pilot test to evaluate if what it is written corresponds with reality. In this
way we can anticipate problems and solutions”. Forethought is a human capacity helpful in any
planning process, for example <strong>the</strong> design <strong>of</strong> a new service.
Learning through modeling is a process based on observation and imitation. Most <strong>of</strong> human behavior
is learned in a conscious way observing o<strong>the</strong>rs (Bandura, 1986). A worker at DFE said: “What I do is
to observe <strong>the</strong> specialists and to try to do <strong>the</strong> same. If I cannot, I ask <strong>the</strong>m to explain it to me”.
Modeling indeed is a good method <strong>of</strong> learning when <strong>the</strong> action is not to complex, o<strong>the</strong>rwise mistakes
can be made.
Self-regulation is <strong>the</strong> capacity that allows an individual to control his or her own actions (Bandura,
1986). One <strong>of</strong> <strong>the</strong> interviewee said: “With so many problems that arose in <strong>the</strong> process I sometimes
wanted to give up, but I didn’t”. People behavior is regulated by external contingences and personal
direction (Bandura, 1986).
Self-reflection is <strong>the</strong> most distinctly human capability (Bandura, 1986). One worker expressed: “When
one works with good manufacturing practices, <strong>the</strong> way <strong>of</strong> thinking changes. Before that, I never
thought about bacteria or cross contamination topics”. Through self-reflection, people make sense <strong>of</strong>
<strong>the</strong>ir experiences, and explore <strong>the</strong>ir own cognitions and beliefs (Bandura, 1986).
It was also found support for <strong>the</strong> two processes at <strong>the</strong> group learning, incorporated to <strong>the</strong> 4I model by
Castañeda and Fernández (2007): conversation and social modeling. Conversation is a central
aspect <strong>of</strong> organizational functioning (Denning, 2005), and learning is not an exception. An interviewee
said: “In <strong>the</strong> good manufacturing practices committee we talk about <strong>the</strong> presented ideas, <strong>the</strong> cost <strong>of</strong>
initiatives and <strong>the</strong> time we need to implement <strong>the</strong>m”. Learning occurs in <strong>the</strong> interaction <strong>of</strong> people who
work toge<strong>the</strong>r (Brown and Duguid, 2000).
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People in groups learn by observing what o<strong>the</strong>rs do. This is called social modeling. Effective modeling
teaches general rules for dealing with different situations (Bandura, 2000). One <strong>of</strong> <strong>the</strong> workers said: “I
had knowledge <strong>of</strong> <strong>the</strong> process, but I gained experience by observing my teammates run <strong>the</strong>
machines”. Finally, some interviewee reported that frequently conversation and social modeling occur
simultaneously. This is an example: “People I work with know a lot. What I do is to observe <strong>the</strong>m and
ask questions; this is <strong>the</strong> way I learn what it is needed”.
7. Discussion and conclusions
According to <strong>the</strong> 4I model (Crosan, et al, 1999) organizational learning is a process nourished from
individual and group learning to become institutionalized. In DFE, <strong>the</strong> new packing service for <strong>the</strong>
pharmaceutical sector may be understood as an output <strong>of</strong> a process that began with individual
learning, continued with group learning and <strong>the</strong>n became an institutionalized pr<strong>of</strong>itable business.
However, learning is a complex process that cannot be understood only from preconscious dynamics.
In this research, it was found evidence <strong>of</strong> conscious process <strong>of</strong> learning at <strong>the</strong> individual (attending)
and group (experimenting) levels <strong>of</strong> learning as proposed by Zietsma, et al (2002). However, <strong>the</strong>
previous concepts are not enough to explain complex learning, like <strong>the</strong> design <strong>of</strong> a new service in a
firm. The proposals <strong>of</strong> Castañeda and Pérez (2005) and Castañeda and Fernández (2007) based on
<strong>the</strong> concepts <strong>of</strong> human capabilities and <strong>the</strong> learning process <strong>of</strong> Bandura (1986, 2005) enhanced <strong>the</strong>
understanding <strong>of</strong> <strong>the</strong> individual and group learning, which are indispensable for <strong>the</strong> organizational
learning. The design <strong>of</strong> a new service is better understood when taken into consideration complex
human capabilities as <strong>the</strong> ones studied here, and cognitive processes like retention and reproduction.
From interviews and <strong>the</strong> focus group it was also found that organizational learning is not always a
lineal process that begins with individual learning, becomes group learning and <strong>the</strong>n organizational
learning. Individual and group learning are parallel interacting and unfinished processes.
A contribution <strong>of</strong> <strong>the</strong> present study is to provide a better understanding <strong>of</strong> <strong>the</strong> dynamics <strong>of</strong>
organizational learning in a firm based on a <strong>the</strong>oretical model. The 4I model and its fur<strong>the</strong>r
developments is a useful tool to understand how an organization, based on people, creates
knowledge and transforms <strong>the</strong> environment (Castañeda and Pérez, 2005), to design a new service, in
this case a packing service. Since <strong>the</strong> nature <strong>of</strong> this study was exploratory and <strong>the</strong> results are based
on what was found in one company, <strong>the</strong> scope is limited. Fur<strong>the</strong>r research is recommended for a
deeper understanding <strong>of</strong> <strong>the</strong> findings.
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114

Quality in Teacher Education: A Systems Thinking
Approach
Rajendra Chetty
Faculty <strong>of</strong> Education and Social Sciences, Cape Peninsula University <strong>of</strong>
Technology, Cape Town, South Africa
chettyr@cput.ac.za
Abstract: Systems Thinking and S<strong>of</strong>t Systems Methodology were used in this paper to view <strong>the</strong> complex
situation <strong>of</strong> Teacher Education in South Africa from a holistic and objective perspective. Systems thinking
ensured that <strong>the</strong> level <strong>of</strong> perceptiveness <strong>of</strong> <strong>the</strong> problem context was increased. The methodological process was
critical and emancipatory and ensured that <strong>the</strong> study interpreted situations from <strong>the</strong> viewpoint <strong>of</strong> o<strong>the</strong>rs,
interrogated boundary judgements and considered <strong>the</strong> voices <strong>of</strong> those who lie on <strong>the</strong> fringe <strong>of</strong> <strong>the</strong> problem
situation. The key concern that this paper addresses is <strong>the</strong> poor quality training <strong>of</strong> teachers and inappropriate
normative principles and philosophies in <strong>the</strong> management <strong>of</strong> <strong>the</strong> Higher Education sector. The quality issue is
complicated by <strong>the</strong> fact that ethics, corporate social responsiveness and governance do not adequately inform
<strong>the</strong> decision making process in institutions. If <strong>the</strong> quality <strong>of</strong> Teacher Education is not effectively addressed, it
would have an adverse effect on <strong>the</strong> school system, society, <strong>the</strong> national economy and global competitiveness.
The research question, ‘How can quality be ensured in teacher education programmes in South Africa?’ was
answered using <strong>the</strong> postmodern systems thinking approach. In postcolonial contexts this methodology is highly
effective for qualitative studies as it works from <strong>the</strong> assumption that <strong>the</strong> real-world is constructed in such a way
through discourse that particular groups/individuals are marginalized. Data from <strong>the</strong> primary sources (interviews
with academics and students), <strong>the</strong> case study and my own reflection on <strong>the</strong> sector are presented. Key elements
relevant to <strong>the</strong> paradigm shift towards quality teacher education are posited in <strong>the</strong> paper. A robust model for <strong>the</strong>
functioning <strong>of</strong> Teacher Education faculty using an appropriate normative management approach derived from
systems thinking is developed to ensure quality in <strong>the</strong> sector. By only looking at knowledge around Teacher
Education that concerns how and why things are <strong>the</strong> way <strong>the</strong>y are, in an impersonal manner, is characteristic <strong>of</strong> a
scientific/technical perspective. When <strong>the</strong> views <strong>of</strong> stakeholders are included and <strong>the</strong>re is discourse around <strong>the</strong>ir
engagement with each o<strong>the</strong>r within <strong>the</strong> problem context, <strong>the</strong> power relationships with each o<strong>the</strong>r, <strong>the</strong> role <strong>of</strong>
institutions like <strong>the</strong> academe in knowledge production and teacher training and <strong>the</strong> construction <strong>of</strong> society within
postcolonial contexts, an interpersonal/social perspective to <strong>the</strong> problem is employed. More importantly, from a
systemic knowledge perspective, questions have to be asked around how actions and ideas in <strong>the</strong> paradigm shift
<strong>of</strong> Teacher Education in South Africa (<strong>the</strong> small context) engage with <strong>the</strong> larger global picture.
Keywords: teacher education, systems thinking, quality, ethics
1. Introduction
Systems thinking helps us sense as well as appreciate our connection to a wider whole. We can only
meaningfully understand ourselves by contemplating <strong>the</strong> whole <strong>of</strong> which we are an integral part. It is
<strong>the</strong> discipline which makes visible that our actions are interrelated to o<strong>the</strong>r people’s actions in patterns
<strong>of</strong> behaviour and are not merely isolated incidents (Flood 2003:2). Properties have no meaning in
terms <strong>of</strong> <strong>the</strong> parts which make up <strong>the</strong> whole but when <strong>the</strong> parts are linked toge<strong>the</strong>r in a particular
structure <strong>the</strong>re is potential for value from <strong>the</strong> emergent property <strong>of</strong> <strong>the</strong> whole (Checkland 1997)
There exist many accounts about <strong>the</strong> systemic character <strong>of</strong> <strong>the</strong> natural and social worlds – e.g.
complexity <strong>the</strong>ory, open systems <strong>the</strong>ory, organizational cybernetics, interactive planning, s<strong>of</strong>t systems
approach, and critical systemic thinking. Each one yields different and potentially valuable insights.
Toge<strong>the</strong>r, <strong>the</strong>y <strong>of</strong>fer a diversity and strength vital to our ability to cope within an exceedingly complex
world (Flood 2003:2).
For systems to be adaptive, <strong>the</strong>y require a level <strong>of</strong> self-organisation, which is usually provided through
sub-units, which are <strong>the</strong>mselves systems, referred to as sub-systems. Sub-systems contain fur<strong>the</strong>r
sub-systems. Thus systems thinking <strong>of</strong>ten refers to a hierarchy, or sequence <strong>of</strong> levels, <strong>of</strong> systems and
sub-systems, all <strong>of</strong> which exhibit <strong>the</strong> characteristic <strong>of</strong> adaptive wholes with emergent properties.
Within this hierarchy <strong>the</strong>re are processes <strong>of</strong> communication and control in order for <strong>the</strong> system to be
able to respond adaptively to changes in its environment. The essential aspect <strong>of</strong> complex adaptive
systems is that <strong>the</strong> human-activity system needs to be approached in terms that are quite different
from <strong>the</strong> normal linear, mechanical framework used (Chapman 2004:39).
The resistance to change in organisations is actually a measure <strong>of</strong> its ability to adapt; it is a measure
<strong>of</strong> its resilience. This resilience is <strong>the</strong>refore expected to be greater <strong>the</strong> longer <strong>the</strong> institution has
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Rajendra Chetty
existed and been required to adapt. In a university for example, <strong>the</strong> way issues are formulated, <strong>the</strong>
terms <strong>of</strong> reference <strong>of</strong> committees, <strong>the</strong> mindsets <strong>of</strong> <strong>the</strong> people involved and <strong>the</strong> network <strong>of</strong> working
relationships between <strong>the</strong>m all serve to keep <strong>the</strong> existing structures and processes in place.
S<strong>of</strong>t Systems Methodology (SSM) is a structured way to establish a learning system for investigating
messy problems. It is a methodology that aims to bring about improvement in areas <strong>of</strong> social concern
by activating in <strong>the</strong> people involved in <strong>the</strong> situation a learning cycle which is iterative. Learning takes
place through <strong>the</strong> never-ending, but ever-refining process <strong>of</strong> using systems concepts to reflect upon
and debate perceptions <strong>of</strong> <strong>the</strong> real world, taking action in <strong>the</strong> real world, and again reflecting on <strong>the</strong>
happenings using systems models. The key value <strong>of</strong> S<strong>of</strong>t Systems Methodology for this study is its
ability to bring to <strong>the</strong> surface different perceptions <strong>of</strong> <strong>the</strong> problem and structure <strong>the</strong>se in a way that all
involved find fruitful and also to consider stakeholder ownership <strong>of</strong> improvements as an essential
prerequisite for change. The latter value supports <strong>the</strong> implicit premise <strong>of</strong> SSM that action learning and
organizational development are parallel and interconnected processes (Checkland 1981).
In <strong>the</strong> postmodern systems methodology <strong>the</strong>re is <strong>the</strong> assumption that <strong>the</strong> real-world is constructed in
such a way through discourse that particular groups/individuals are marginalized. Intervention in <strong>the</strong>
problem situation is designed to reveal who is marginalized by existing power/knowledge structures.
Diverse forms <strong>of</strong> pluralism are used to surface subjugated discourses, allow marginalized voices to be
heard, allow relevant stakeholders to express <strong>the</strong>ir diversity and, possibly, grant ‘consent to act’.
Quantitative analysis is unlikely to be used except as part <strong>of</strong> <strong>the</strong> process <strong>of</strong> deconstruction. The
process <strong>of</strong> intervention takes <strong>the</strong> form <strong>of</strong> local strategizing and subversion in an endeavour to promote
diversity and <strong>the</strong> intervention is conducted in such a way that conflict is reclaimed, and diversity and
creativity are encouraged. Changes are evaluated on <strong>the</strong> basis <strong>of</strong> exception and emotion. (Jackson
2003:311).
2. Viable systems methodology
Stafford Beer (a cybernetician working in <strong>the</strong> field <strong>of</strong> operational research and management sciences)
posited <strong>the</strong> Viable System Model (VSM) which draws correspondence between ‘management and
organisation’, and human brain structure and function. The VSM stipulates rules whereby an
organisation (biological or social) is ‘survival worthy’ – it is regulated, learns, adapts and evolves. Beer
invented team syntegrity to complement <strong>the</strong> VSM when applied in organizational contexts, adding his
statement <strong>of</strong> participatory democracy (Flood 2003:4). In Cybernetics and Management (1959) Beer
outlines three main properties <strong>of</strong> a cybernetic system: exceedingly complex, probabilistic, and selfregulatory.
They are also purposive, meaning that from a particular viewpoint <strong>the</strong> system is organised
to achieve some end. Cybernetic systems are characterized by feedback and control that guide <strong>the</strong>
purposive system (Flood 2003:37).
The VSM enabled me to see <strong>the</strong> Teacher Education system from an objective perspective. Teacher
Education is just one part <strong>of</strong> <strong>the</strong> educational system and <strong>the</strong>re are a multitude <strong>of</strong> links with society, <strong>the</strong>
school system and <strong>the</strong> state. The essential components <strong>of</strong> <strong>the</strong> VSM that underpin this study are
complexity and recursivity. The educational system, similar to all living systems, consists <strong>of</strong> a series <strong>of</strong>
sub-systems that have self-organising and self-regulatory characteristics. The VSM structures <strong>the</strong>
functions and interactions <strong>of</strong> policy, intelligence and control in such a way to make paradigm shifts
more effective. The parts within <strong>the</strong> system must be highly interconnected, interact effectively and
information loops must be open for each o<strong>the</strong>r.
Two key factors in <strong>the</strong> effective working <strong>of</strong> organizations that <strong>the</strong> VSM addresses are control and
communication. In order to effectively implement a normative management approach in <strong>the</strong> institution,
we need to achieve <strong>the</strong> cohesion <strong>of</strong> <strong>the</strong> whole system as well as <strong>the</strong> autonomy <strong>of</strong> <strong>the</strong> individual in it.
Every component <strong>of</strong> <strong>the</strong> system must consider <strong>the</strong> needs <strong>of</strong> all <strong>the</strong> stakeholders and <strong>the</strong> key
stakeholder, <strong>the</strong> customer (<strong>the</strong> student in this context), must be seen as <strong>the</strong> centre <strong>of</strong> <strong>the</strong>ir activities.
They must also balance this with <strong>the</strong> maintenance <strong>of</strong> <strong>the</strong>ir autonomy, not in a self interested manner,
but ra<strong>the</strong>r in a manner that creates value for <strong>the</strong> student. Management relies on departments like
Finance, Research and Marketing to address operational problems in <strong>the</strong> academe. Unless <strong>the</strong>re is a
shared understanding <strong>of</strong> customer value, each <strong>of</strong> <strong>the</strong>se departments will work as a functional silo. The
VSM structures <strong>the</strong> functions and interactions <strong>of</strong> policy, intelligence and control in such a way to make
normative management more effective.
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The mechanism <strong>of</strong> monitoring-control is applicable to <strong>the</strong> context <strong>of</strong> <strong>the</strong> academe given <strong>the</strong> emphasis
on certification, evaluations, assessments, budgets, reviews, design, structures, etc. The focus on
how primary activities add value to <strong>the</strong> customer concomitant with <strong>the</strong>ir capacity to remain viable is
relevant to <strong>the</strong> concern as well.
3. The pr<strong>of</strong>essional bureaucracy: University management
The gap in university management is <strong>the</strong> lack <strong>of</strong> dynamic strategic management skills and <strong>the</strong>
escalating number <strong>of</strong> South African universities that are experiencing management crises is evidence
<strong>of</strong> this. Du Plessis (2005:14) accurately notes that most senior university administrators have
impressive academic track records, but few have ei<strong>the</strong>r <strong>the</strong> talent or <strong>the</strong> credentials for dynamic
strategic management <strong>of</strong> <strong>the</strong> institutions <strong>the</strong>y lead. There is <strong>the</strong>refore <strong>the</strong> tension between managing
<strong>the</strong> university as an egalitarian institution for academics and intellectuals (old paradigm) and ensuring
that <strong>the</strong> institution is sustainable within <strong>the</strong> transforming international Higher Education scenario and a
competing global economic market (new paradigm).
Henry Mintzberg (1979) identified five types <strong>of</strong> organisations (i.e. <strong>the</strong> machine bureaucracy, <strong>the</strong>
divisionalised form, <strong>the</strong> pr<strong>of</strong>essional bureaucracy, <strong>the</strong> simple structure, and <strong>the</strong> adhocracy). The
pr<strong>of</strong>essional bureaucracy modifies <strong>the</strong> principles <strong>of</strong> centralised control to allow greater autonomy to
staff and is appropriate for dealing with relatively stable conditions where tasks are relatively
complicated. This has proved an appropriate structure for universities and o<strong>the</strong>r pr<strong>of</strong>essional
organisations where people with key skills and abilities need a large measure <strong>of</strong> autonomy and
discretion to be effective in <strong>the</strong>ir work. Morgan (1998: 51) notes that since <strong>the</strong> 1980s, <strong>the</strong> pr<strong>of</strong>essional
bureaucracy’s effectiveness has been severely challenged by <strong>the</strong> changing environments with which
<strong>the</strong>se kinds <strong>of</strong> organisations have had to deal. The structure <strong>of</strong> <strong>the</strong> pr<strong>of</strong>essional bureaucracy tends to
be fairly flat with tall hierarchies being replaced by a decentralized system <strong>of</strong> authority.
Standardisation and integration are achieved through pr<strong>of</strong>essional training and <strong>the</strong> acceptance <strong>of</strong> key
operating norms ra<strong>the</strong>r than through more direct forms <strong>of</strong> control.
Fritzche’s (1991:842) decision making model maintains that <strong>the</strong> human values within an individual are
<strong>the</strong> linchpin <strong>of</strong> ethical decision making. The Weiland model (2001:73) extends it to <strong>the</strong> wider
management and feels that <strong>the</strong> incorporation <strong>of</strong> moral conditions and requirements in <strong>the</strong>
management, governance and control structures <strong>of</strong> a firm are essential for effective normative
management. I find <strong>the</strong> Kenyon model (1998) relevant to <strong>the</strong> university as it questions <strong>the</strong> following
assumptions:
The organisation can be equated with <strong>the</strong> person/s who manage it;
The organisation is <strong>the</strong>refore a moral agent;
Management teams which run organisations have a collective set <strong>of</strong> values and commitments
which can be distinct from <strong>the</strong> value systems <strong>of</strong> its individual members; and
The organisation forms a community as it can rely on its accountability in future for its actions.
The ethical attitude <strong>of</strong> top management determines <strong>the</strong> corporate, ethical and social responsibilities <strong>of</strong>
any organisation. The moral integrity at top levels impacts on <strong>the</strong> lower echelons through <strong>the</strong>
corporate hierarchy (Agrawal & Bajaj 2004:141).
4. Methodology
A grounded <strong>the</strong>ory research approach was used to explore <strong>the</strong> social processes that present within
human interactions in <strong>the</strong> case study. Grounded <strong>the</strong>ory is inductively derived from <strong>the</strong> study <strong>of</strong> <strong>the</strong>
phenomenon it represents. That is, it is discovered, developed, and provisionally verified through
systematic data collection and analysis. There is also a reciprocal relationship between <strong>the</strong>ory, data
collection and analysis. One does not begin with a <strong>the</strong>ory. Ra<strong>the</strong>r, one begins with an area <strong>of</strong> study
and what is relevant to that area is allowed to emerge.
Primary data was collected via semi-structured interviews with 3 key representatives <strong>of</strong> <strong>the</strong>
stakeholders (25 students, 10 academics and 5 management members) selected through purposeful
sampling <strong>of</strong> quality rich cases as well as a focus group interview (25 masters degree candidates
volunteered to be part <strong>of</strong> <strong>the</strong> sample).
The interviews ensured a dialogue between <strong>the</strong> ‘systems rationality’ <strong>of</strong> <strong>the</strong> planner (researcher)
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and <strong>the</strong> ‘social rationality’ <strong>of</strong> those who have to live in and experience <strong>the</strong> social system design
(students, academics and management). All <strong>the</strong> questions in <strong>the</strong> interviews were open-ended to
provide an opportunity for probing where necessary.
The questions to <strong>the</strong> academics covered issues around management styles (What style <strong>of</strong>
management is used in <strong>the</strong> faculty?), attitudes (In what ways are <strong>the</strong> relationships with management
collegial?), support (What kind <strong>of</strong> support do you receive from management?), human resources (The
adequacy <strong>of</strong> <strong>the</strong> training and capacity development opportunities.), organizational structures (In what
ways are <strong>the</strong> organizational structures in <strong>the</strong> faculty appropriate?) and resources (In what ways are
<strong>the</strong> resources adequate for training?).
Questions to students covered issues around <strong>the</strong> teaching staff (In what ways are <strong>the</strong> teaching
staff appropriately skilled to train teachers?), programme organization (How is <strong>the</strong> teacher education
programme organised?), student welfare (Why is it appropriate and supportive?), management (How
would you describe your interaction with management? In what ways do management communicate
with you?) and administration (In what ways are <strong>the</strong> administration <strong>of</strong> <strong>the</strong> faculty efficient and
effective?).
Validity <strong>of</strong> <strong>the</strong> research findings was ensured through transparency and coherence in terms <strong>of</strong>
researcher engagement with <strong>the</strong> study, completeness <strong>of</strong> <strong>the</strong> data collection and analysis, careful
description <strong>of</strong> <strong>the</strong> research process and intellectual coherence <strong>of</strong> <strong>the</strong> arguments presented through
<strong>the</strong> analysis (Cassell & Symon 2005:5). The study was based on a small sample and it was tightly
controlled for dimensions relevant to <strong>the</strong> systems thinking model used. The value <strong>of</strong> this approach is
that it yielded rich insights into <strong>the</strong> process and deep understanding <strong>of</strong> <strong>the</strong> stakeholders’ viewpoints,
and as a coherent account, it has face validity.
5. Concept development
During data analysis, an overwhelming number <strong>of</strong> categories emerged that needed to be reduced in
number. The core variable for this study is <strong>the</strong> need for an appropriate normative management
approach.
The categories that emanated from <strong>the</strong> student interviews were:
Open and transparent dialogue with management
Students commented that <strong>the</strong>y did not know management and that it was through instructions and
an <strong>of</strong>ficial communication process that information was shared with <strong>the</strong>m.
Humane treatment from management and lecturers
Some lecturers have not evolved from <strong>the</strong> high school and College <strong>of</strong> Education ‘mentality’ in <strong>the</strong>ir
treatment <strong>of</strong> students.
Holistic approach to training
Subject disciplines worked in functional silos with little synergy and interaction between subjects
within a programme.
Efficiency <strong>of</strong> administration and management
Administration was seen to be generally nonchalant <strong>of</strong> student needs.
Competency <strong>of</strong> lecturers
A critical approach to training and a cognitive perspective to <strong>the</strong> lessons was lacking among some
lecturers.
Educational discourse, philosophy and pedagogy in <strong>the</strong> content
There was too much emphasis on subject matter content with limited pedagogical/philosophical
perspectives and contemporary educational discourses in <strong>the</strong> content.
Student wellness and welfare to be considered.
Student needs, welfare, issues around funding, recreation and social activities were generally
ignored.
Categorisation <strong>of</strong> <strong>the</strong> data collected from academics led to <strong>the</strong> following concepts:
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Too much emphasis on administration and functional management and limited inspired academic
leadership.
Management principles
Stuck in traditional moulds <strong>of</strong> bureaucracy and hierarchies.
Shared vision and mission
Individualistic notions <strong>of</strong> <strong>the</strong> nature <strong>of</strong> education and teacher training are present with limited
shared understanding <strong>of</strong> a philosophy <strong>of</strong> teacher training among academics.
Heavy teaching loads and content/skills dichotomy
Ethics
Ethical dilemmas are not interrogated in an open manner and decisions are taken without
information sharing and rigorous debate <strong>of</strong> issues.
Policy and curriculum changes
Limited transparent discussions on new policies and changes in <strong>the</strong> curriculum led to destruction
<strong>of</strong> creativity and value adding activities among academics. The unquestioning allegiance to state
policy with regards to teacher training also militates against academic freedom in teacher training.
Organisational understanding and collegiality
A major concern was <strong>the</strong> lack <strong>of</strong> collegiality among some academics and <strong>the</strong> urgent need for
harmonious workplace relationships among colleagues.
Relationships with schools/community and students
Limited consideration <strong>of</strong> <strong>the</strong> needs <strong>of</strong> key stakeholders in <strong>the</strong> system during strategic decision
making.
Lack <strong>of</strong> resources
Basic resources to ensure successful rendition <strong>of</strong> services to <strong>the</strong> students are sometimes not
available. The limited physical space is also detrimental to quality training.
From <strong>the</strong> Management perspective, <strong>the</strong> issue <strong>of</strong> quality teacher training is imperative to both <strong>the</strong>
vision and mission <strong>of</strong> <strong>the</strong> institution. The interests <strong>of</strong> students, society and <strong>the</strong> state should enter <strong>the</strong>
management’s decision making agenda prior to strategic considerations, and <strong>the</strong>y should form a
moral foundation for <strong>the</strong> faculty’s existence. Management should not use stakeholders solely to
maximize pr<strong>of</strong>it, like is currently <strong>the</strong> case with large intakes, especially at postgraduate level since it
brings in more funding. The principle <strong>of</strong> selection should be quality both in input and output, not only
quality. They should establish fundamental moral principles with respect to how <strong>the</strong>y treat
stakeholders since decisions affect stakeholder outcomes, e.g. <strong>the</strong> quality <strong>of</strong> <strong>the</strong> graduates. If
management is underpinned by relationships <strong>of</strong> trustworthiness, honesty and respect, <strong>the</strong>y portray to
students that <strong>the</strong>y work from <strong>the</strong> premise that human values are fundamental and <strong>the</strong>y challenge <strong>the</strong>
student’s own disposition and tendencies in <strong>the</strong>ir future vocations.
6. Human values approach to management
The values, norms and beliefs <strong>of</strong> an individual are pivotal to successful management. The global
business world faces <strong>the</strong> challenge <strong>of</strong> reconnecting <strong>the</strong> creation <strong>of</strong> wealth with <strong>the</strong> power <strong>of</strong>
conscience (Prozesky 2001:7). It is generally accepted that organisations cannot be successful if
<strong>the</strong>re are no sound moral values. A management style based on people directed goals and
orientations emphasise <strong>the</strong> importance <strong>of</strong> emotional intelligence. Leaders need to display both
emotional clarity and conceptual clarity and <strong>the</strong>re should be an axiological underpinning for <strong>the</strong>ir
actions. When leaders lean heavily on emotional feelings, it has a negative impact on <strong>the</strong> rationality <strong>of</strong>
<strong>the</strong>ir decisions, hence <strong>the</strong> need for emotional intelligence.
Four key human values for effective management, according to Bhatia (2004), are justice (fairness),
mutual respect (consideration), stewardship (trusteeship) and honesty (truthfulness). Bhatia (2004)
maintains that managers that use human values as drivers for performance ensure significant gains in
an organisation. He posits <strong>the</strong> following values for effective interaction among stakeholders: selfdevelopment;
good inter-personal relations; worker, customer and citizen satisfaction; and credible
reputation, goodwill and positive image <strong>of</strong> an organisation (Bhatia 2004:103).
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7. Ethics and decision making in organisations
Ethical choices in <strong>the</strong> academe are <strong>of</strong>ten between right and right, and not only <strong>the</strong> dichotomous right
and wrong. Given <strong>the</strong> need for a consideration <strong>of</strong> students, faculty needs to shape its strategy for
<strong>the</strong>m around customer satisfaction, humane treatment, human values, efficiency, competency and
respect. Management that creates and sustains co-operative stakeholder relationships and a genuine
commitment to ethical principles will have a competitive advantage over o<strong>the</strong>r institutions.
Management, academics and students need to take ethics more seriously. All curriculum, financial,
resource allocation and strategic decisions should be based on an ethical imperative. Kant
encapsulates ethical behaviour succinctly: ‘act so that you treat humanity, whe<strong>the</strong>r in your own person
or in that <strong>of</strong> ano<strong>the</strong>r, always as an end and never as a means only’ (Kant 1969:54).
8. The co-creation paradigm
Prahalad and Ramaswamy (2000) maintain that <strong>the</strong> co-creation paradigm is a consumer-centric view
that contrasts with <strong>the</strong> company-centric view. Essential factors <strong>of</strong> <strong>the</strong> customer-centric paradigm that
should underpin relationships in <strong>the</strong> teacher training sector are:
The student is an integral part <strong>of</strong> <strong>the</strong> system for value creation;
The student must be active and should influence how value is generated;
Creative students should be allowed to transcend <strong>the</strong> boundaries <strong>of</strong> <strong>the</strong>ir training; and
There are multiple points <strong>of</strong> exchange where <strong>the</strong> student and <strong>the</strong> academics can co-create value
ra<strong>the</strong>r than single point extraction <strong>of</strong> value from <strong>the</strong> student.
Student passivity is characteristic <strong>of</strong> <strong>the</strong> traditional paradigm. Greater information access enables
more informed decisions, a global view, <strong>the</strong> growth <strong>of</strong> student networks, experimentation with skills
and teaching styles and heightened activism in social issues. Prahalad and Ramaswamy (2002:1)
assert that <strong>the</strong> key strategy to counter passivity is constant feedback.
9. New horizons through students’ eyes
Teacher training must shift from content-based training to skills and experiences. To co-create value
and optimal student experiences, academics must focus on student competencies and strategies to
harness <strong>the</strong>m through mentoring and radical pedagogies. Student competencies include <strong>the</strong>ir
knowledge and skills, willingness to learn and experiment and ability to engage in dialogue around
larger educational and social issues.
Prahalad and Ramaswamy (2002:2) also identified four building blocks for co-creating value, which
are beneficial in <strong>the</strong> shift towards a holistic Teacher Education model:
Management must engage with students in an active and ongoing dialogue;
Access to all forms <strong>of</strong> information and knowledge as well as transparency <strong>of</strong> information; and
Risk reduction – students can make more informed choices about risks and can take on more
responsibility for <strong>the</strong>m.
The strategic development <strong>of</strong> <strong>the</strong> sector using Hoebeke’s (1994) strategy would enable us to step
outside internal perspectives <strong>of</strong> power, traditional frameworks, narrow notions <strong>of</strong> <strong>the</strong> concepts
‘teacher’ and ‘education’ to get a clear view <strong>of</strong> new horizons through students’ eyes. There is a need
for a student feedback-influenced-design instead <strong>of</strong> <strong>the</strong> narrow lecturer-traditional-framework.
The aim <strong>of</strong> Hoebeke’s (1994) framework is an understanding <strong>of</strong> workers’ contribution to <strong>the</strong> work
system. The paradigm shift actively debunks <strong>the</strong> justification for a meritocratic class society in which
<strong>the</strong> abstract and complex thinkers are seen to have <strong>the</strong> ‘right’ to manage or even direct o<strong>the</strong>rs. Every
component <strong>of</strong> <strong>the</strong> faculty has a role to play in <strong>the</strong> strategic development and a shared understanding
<strong>of</strong> <strong>the</strong> new Teacher Education is vital. The shared understanding would include:
The shift towards a holistic Teacher Education training model;
An interrogation <strong>of</strong> <strong>the</strong> notions <strong>of</strong> ‘education’ leading to a deep understanding <strong>of</strong> <strong>the</strong> concept; and
Transcending faculty boundaries for students.
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There must be a re-think <strong>of</strong> <strong>the</strong> traditional domains <strong>of</strong> work: <strong>the</strong> doers do not necessarily work within
<strong>the</strong> lowest domain or thinkers within <strong>the</strong> highest. The paradigm shift can be adequately explained with
Hoebeke’s (1994) concept <strong>of</strong> Domains and Levels <strong>of</strong> Work. The key concepts for <strong>the</strong> paradigm shift
are understanding <strong>the</strong> concept emergence and continuously improving <strong>the</strong> current practice through
feedback and a strategic intent to create value and provide a better service to <strong>the</strong> current customers.
The use <strong>of</strong> technological innovations and radical thinking would enhance <strong>the</strong> process. When value is
created for <strong>the</strong> students (present domain according to Hoebeke), we also add value to <strong>the</strong> system <strong>of</strong>
Teacher Education, we enable a positive change in <strong>the</strong> public school system and we add value to
society (future domain).
10. Conclusion
Figure 1: Recommendation in <strong>the</strong> form <strong>of</strong> a causal loop diagram
There is a need to be more reflective about <strong>the</strong> social processes within teacher training institutions
and to better understand <strong>the</strong> positioning <strong>of</strong> management philosophies and principles and <strong>the</strong>ir role in
producing quality graduates in <strong>the</strong> sector. This reflexivity is important within <strong>the</strong> research process and
most significantly in <strong>the</strong> role <strong>of</strong> <strong>the</strong> researcher as participant since I am also a manager in <strong>the</strong> teacher
training sector. A key argument in this study that used a systems thinking approach is that deep
understanding can only come about if <strong>the</strong> specific historical and cultural context or organisations are
considered.
Quality in Teacher Education cannot be seen in a vacuum. It must be understood with all its
complexities, and within <strong>the</strong> context <strong>of</strong> social, political and economic forces that shape national and
global priorities and policies. Marketisation as well as new managerialism <strong>of</strong> Teacher Education is
inevitable if <strong>the</strong> sector wants to ensure sustainability. Universities are becoming more entrepreneurial
in <strong>the</strong> face <strong>of</strong> reduced government funding. The impact <strong>of</strong> this on traditional management structures
and quality <strong>of</strong> <strong>the</strong> graduates needs far fur<strong>the</strong>r exploration than attempted in this study. Clark (1998)
maintains that market values and traditional values can co-exist. A critical question that remains
unanswered is how does <strong>the</strong> competition for limited resources, corruption <strong>of</strong> academic values and
massification in South African universities impact on <strong>the</strong> cultures and values <strong>of</strong> institutions.
This paper was underpinned by <strong>the</strong> notion <strong>of</strong> quality as a core factor in teacher education and it
explored <strong>the</strong> role <strong>of</strong> normative management principles to address issues <strong>of</strong> quality in <strong>the</strong> training <strong>of</strong>
teachers. It is acknowledged that management is a key stakeholder in <strong>the</strong> sector and effective
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leadership skills toge<strong>the</strong>r with appropriate normative management philosophies and principles will
contribute significantly towards student and academic satisfaction, will ensure quality teacher
education graduates and help to create a vibrant academic/research ethos in institutions.
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122

Developing Personal Knowledge Management Strategies
Through Problem-Based Learning
Thira<strong>the</strong>p Chonmaitree
College <strong>of</strong> Arts, Media and Technology, Chiang Mai University, Chiang Mai,
Thailand
t.dessiner2010@gmail.com
Abstract: Traditional Teacher-based Learning (TBL) methods require <strong>the</strong> teacher to take control over <strong>the</strong>
classroom and direct student learning. The teacher <strong>of</strong>ten sub-consciously dictates <strong>the</strong> thought, behavior and
beliefs <strong>of</strong> students based on <strong>the</strong> teacher’s background. More recently, in knowledge based societies, a number
<strong>of</strong> new educational ideas have been proposed. One teaching methodology gaining considerable attention is
Problem Based Learning (PBL). This method <strong>of</strong> learning aims to allow students to explore <strong>the</strong>ir own problem
solving techniques and more importantly, fosters personal knowledge management strategies. These personal
knowledge management strategies are useful for lifelong learning, however <strong>the</strong>re are currently several barriers to
implementing effective PBL systems and <strong>the</strong> resulting development <strong>of</strong> personal learning strategies. This paper
examines <strong>the</strong>se barriers through <strong>the</strong> lens <strong>of</strong> a case study at College <strong>of</strong> Arts Media and Technology (CAMT),
Chiang Mai University. The S<strong>of</strong>tware Engineering Program at CAMT is an international program with <strong>the</strong> majority
<strong>of</strong> students being non-native speakers <strong>of</strong> English. This adds additional difficulties to implementing PBL and
developing personal knowledge management strategies. The research specifically looks at PBL in <strong>the</strong> S<strong>of</strong>tware
Engineering Program and begins with a consideration <strong>of</strong> how PBL can help students to develop personal
knowledge management strategies. It <strong>the</strong>n outlines key barriers to successful implementation <strong>of</strong> PBL. The two
major barriers identified are motivating students’ to collect and structure <strong>the</strong> necessary knowledge (e.g. reading)
and how teaching staff can effectively manage differing ability levels throughout <strong>the</strong> learning process. The paper
utilizes qualitative research methods to assess students’ perceptions and responses to PBL systems and
personal knowledge management. The research concludes with a consideration <strong>of</strong> future research necessary to
create successful PBLs and links <strong>the</strong> results to <strong>the</strong> wider educational and knowledge management literature.
Keywords: personal knowledge management, knowledge management strategy, problem-based learning,
reading efficiency, reading motivation, multi-ability level <strong>of</strong> English
1. Introduction
In <strong>the</strong> past, <strong>the</strong> majority <strong>of</strong> Thai students learned via a method known as Teacher based learning
(TBL). This does not depend on any student’s learning style. The key characteristic <strong>of</strong> this method is
that teachers take control <strong>of</strong> <strong>the</strong> classroom as well as directing student thinking. By placing <strong>the</strong>
teacher at <strong>the</strong> centre <strong>of</strong> <strong>the</strong> classroom, <strong>the</strong>y can dictate <strong>the</strong> thought, behavior and beliefs <strong>of</strong> <strong>the</strong>
students. Knowledge about teaching and learning styles is widely known and most <strong>of</strong> teaching style
will be teacher centered learning which means teacher has authority to do anything in <strong>the</strong> classroom,
mostly lecture. Individual student formed <strong>the</strong>ir own learning style to correspond to <strong>the</strong> teacher
centered learning. Once Thailand learned more about learning style <strong>of</strong> each student, different
teaching styles have been emerged and considered. Each student <strong>the</strong>n began to develop his/her own
different approaches to learning style. Different teaching styles might be suited to multiple learning
styles. In this new era, <strong>the</strong> Information age or knowledge-based society, teacher centered learning
became insufficient to <strong>the</strong> students’ learning styles. Each student can obtain and share knowledge
with <strong>the</strong>ir friend to gain boundless knowledge in a topic. Knowledge based society has changed and
shaped a new way <strong>of</strong> learning for <strong>the</strong> students <strong>of</strong> this new era.
Knowledge-based society has been emerging into this 21 st century, leading to student-centered
learning. With a knowledge-based society, many new ideas have been introduced to <strong>the</strong> education
system. One <strong>of</strong> <strong>the</strong>se teaching methods is Problem-based Learning (PBL), which will be <strong>the</strong> focus <strong>of</strong>
this research. This method <strong>of</strong> learning aims for students to explore <strong>the</strong>ir own way <strong>of</strong> solving problems.
This method believes that each student has his/her own way <strong>of</strong> solving problem and <strong>the</strong>re is no one
correct method to solve <strong>the</strong> problem. Individual students can each have <strong>the</strong>ir own learning style to
solve a problem that leads to many possible solutions. This teaching method causes students to have
free thinking within a framework <strong>of</strong> reasonable doubt. Although many suggest PBL to be more
effective than TBL, <strong>the</strong>re are still some issues with this teaching style. In order for students to solve a
problem effectively, <strong>the</strong>y need to develop <strong>the</strong>ir own knowledge management style and strategies
through team work, or individually.
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In practice, each individual student team member needs to share his/her own thoughts, ideas or
knowledge with <strong>the</strong> group; seeking <strong>the</strong> best possible method to solve <strong>the</strong> problem. As each individual
group member develops his/her own personal knowledge management, brainstorming begins and <strong>the</strong>
process <strong>of</strong> analyzing knowledge to find <strong>the</strong> best possible solution begins. At <strong>the</strong> same time, problems
in personal knowledge management processes also begin. The main aim <strong>of</strong> this research paper is to
present and explore some <strong>of</strong> <strong>the</strong> issues students face as <strong>the</strong>y start to develop personal knowledge
management strategies in order to solve problems in problem-based learning environments.
2. Identifying and defining <strong>the</strong> issues
There are two main issues involved in developing personal knowledge management strategies in
PBL. One significant problem is reading, especially when reading is in a second language. English as
a second language students in academic settings <strong>of</strong>ten have difficulty reading text in English, or are
not motivated enough to read. This means students do not complete <strong>the</strong>ir reading <strong>of</strong> challenging
reading material (Komiyama 2009). National Reading Statistics show that Thai students read eight
lines per year. This is insufficient to meet national reading goals. Reading in Thailand has <strong>of</strong>ten been
described as boring for Thai students. The most significant element that influences reading is
education, regardless <strong>of</strong> any o<strong>the</strong>r geographic information (Asheim 1953). Over <strong>the</strong> past several
years, Thailand has conducted a National Reading Exhibition in Bangkok. Participants <strong>of</strong> all ages
have been increasing in number each year and <strong>the</strong> age <strong>of</strong> participants has become younger and
younger, thus increasing Thai government reading support and helping growth in national reading
index. Reading textbooks is very important in studying English as a Second Language program in an
academic setting. Most students gained a positive perception <strong>of</strong> reading ability after extensive reading
(DoHuy 2006). Despite <strong>the</strong> fact that most Thai students may not enjoy English language learning,
<strong>the</strong>y must understand how important it is as a pathway to great knowledge gain around <strong>the</strong> world. The
importance and concern for English language is one <strong>of</strong> <strong>the</strong> most critical elements in developing
personal knowledge management.
Having different levels <strong>of</strong> English comprehension when learning academic content in an international
program can be a great challenge for teachers who need to know how to deliver English content to all
students at one time. Considering <strong>the</strong> learning style <strong>of</strong> each student and different levels <strong>of</strong> English
background, make studying in international academic settings difficult even for teachers. In reading
English text as a second language, which use concurrent think-aloud methods, immediate
retrospection and delayed retrospection techniques have been used to teach different vocabulary
(Wesche 2000). The level <strong>of</strong> English has <strong>the</strong> most impact on each student’s comprehension <strong>of</strong> <strong>the</strong>
content taught by teachers. Learning in an international environment, especially through problembased
learning means it is important that students are fluent in English, or at least understand English
at <strong>the</strong> intermediate level. Lesson planning, fostering group identity, grouping, mixed ability groups or
pairs, similar ability groups or pairs and individual work can help teachers manage multilevel
classroom (TEA 2008). They should be able to listen and interact with people, interpret/analyze <strong>the</strong>
problem and interchange <strong>the</strong> comprehension <strong>of</strong> <strong>the</strong> problem with <strong>the</strong> information as components a
future solution. Something to determine as factors for multilevel classes are level <strong>of</strong> literacy and
education in <strong>the</strong> native language, language level in English, Age and Culture (Ma<strong>the</strong>ws-Aydinli and
Horne 2006). This process would help individuals develop <strong>the</strong>ir own personal knowledge
management within learning through solving <strong>the</strong> problem provided. Interpretation and comprehension
<strong>of</strong> <strong>the</strong> problem and supporting solutions is challenging. Utilization <strong>of</strong> new technology could be one
method to improve student English. Using new media in improving students’ English has potential to
motivate students directly through <strong>the</strong>ir tools <strong>of</strong> <strong>the</strong>ir era.
3. Personal Knowledge Management and its strategies
“Personal knowledge management is best viewed as based on a set <strong>of</strong> problem solving skills that
have both a logical or conceptual as well as physical or hands-on component.” (Avery et al. 2000)
Based on Lui, “Personal knowledge management (PKM) is an advanced concept and efficient tool to
assist students to carry out <strong>the</strong>ir individual career goals and academia interests. The practice <strong>of</strong> PKM
on <strong>the</strong>ir own learning and career planning allows college students to update and improve personal
knowledge system, increase competitive power, and adapt to <strong>the</strong> emerging knowledge economy era.”
(Liu 2011). Jerome Martin said that “personal knowledge includes knowledge gained from formal and
informal instruction. Personal knowledge also includes memories, stories we have been told or have
told, personal contacts and relationships, books we have read or written, notes, documents,
photographs <strong>of</strong> us or by us, intuitions, what we have learned from our colleagues yesterday, and what
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we know about everything in our world, from garden plants to nuclear physics.” (Martin 2008) On <strong>the</strong>
contrary, Cheong (2010) discussed about personal knowledge management from Efimova (2005)
whom said about PKM is an interactive process between individuals, o<strong>the</strong>r people and ideas. This is
an approach which focuses on supporting knowledge worker productivity by taking an active
perspective in studying <strong>the</strong>ir work. To develop ideas to answer <strong>the</strong> questions in <strong>the</strong> discussion forum
<strong>of</strong> a social network site, all individual students need to study <strong>the</strong> question and develop <strong>the</strong>ir
knowledge based on <strong>the</strong>ir research and develop <strong>the</strong>ir own personal knowledge management
strategies to form <strong>the</strong>ir own idea <strong>of</strong> answers. The personal knowledge management strategies that
each student conducts will be different in style and way <strong>of</strong> thinking. This is mainly based on each
individual’s background knowledge management from his/her previous study.
4. Research objective and methodology
Using 58 S<strong>of</strong>tware Engineering Program students as <strong>the</strong> sample space <strong>of</strong> this research was suitable
for conducting <strong>the</strong> problem-based learning and observing <strong>the</strong> behavior <strong>of</strong> students in dealing with
English as a second language for solving problems. First objective <strong>of</strong> this research was observing <strong>the</strong>
problem <strong>of</strong> personal knowledge management strategies in learning styles <strong>of</strong> problem-based learning.
Second was to focus on <strong>the</strong> personal knowledge management strategies in group sharing under <strong>the</strong>
problem-solving purpose. Third was to examine two major problems <strong>of</strong> personal knowledge
management strategies found in student <strong>of</strong> <strong>the</strong> College <strong>of</strong> Arts, Media and Technology – reading
comprehension and English efficiency/literacy. Fourth was to motivate students <strong>of</strong> international
program to develop Personal Knowledge Management.
In order to reach those objectives, <strong>the</strong> following methodologies were conducted. First, <strong>the</strong> class had
been divided into two groups – Lecture-based Learning in <strong>the</strong> first group and Problem-Based
Learning in <strong>the</strong> second group. Second, a discussion forum was used in social network section <strong>of</strong>
Facebook to deliver questions for students in Computer Organization to discuss in <strong>the</strong> conversation
and answer questions. All students also needed to do research, read <strong>the</strong>ir relating articles, and refer
<strong>the</strong>ir supporting ideas based on <strong>the</strong>ir research. All answers needed to have references from <strong>the</strong> web;
one or two references at <strong>the</strong> least. All students needed to read and comprehended <strong>the</strong> article in
English in order to write <strong>the</strong> answer comprehensively without copying and pasting from <strong>the</strong> original
articles. Each student needed to write his or her own answer in his or her own words. This research
collected data using a questionnaire. Each questionnaire contained questions regarding each
student’s opinion about teaching style, English as a second language experience in this course and
reading comprehension that occurred in this research study. All students’ feedback was answered
anonymously for all questionnaire questions. All students were not influenced by <strong>the</strong> lecturer in any
way.
5. Research result
This research result collected from 58 questionnaires <strong>of</strong> S<strong>of</strong>tware Engineering Program, College <strong>of</strong>
Arts, Media and Technology, Chiang Mai University in Computer Organization course. The results are
as followed both by <strong>the</strong> number and by <strong>the</strong> percentage.
Table 1: Result <strong>of</strong> this research in number <strong>of</strong> students
Level 1 2 3 4 5 6 7 8
Most 5 4 6 3 3 4 6 19 11
More 4 29 16 10 19 28 18 23 29
Moderate 3 23 21 28 29 21 31 14 17
Less 2 2 14 15 5 4 3 2 1
Least 1 0 1 2 2 1 0 0 0
Level 9 10 11 12 13 14 15 16
Most 5 8 12 3 6 17 6 9 9
More 4 26 9 21 24 25 18 20 23
Moderate 3 22 19 26 25 12 30 23 20
Less 2 2 15 8 3 3 4 6 5
Least 1 0 3 0 0 0 0 0 1
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Table 2: Result <strong>of</strong> this research in percentage
Thira<strong>the</strong>p Chonmaitree
Percentage 1 2 3 4 5 6 7 8
Most 5 6.90% 10.34% 5.17% 5.17% 6.90% 10.34% 32.76% 18.97%
More 4 50.00% 27.59% 17.24% 32.76% 48.28% 31.03% 39.66% 50.00%
Moderate 3 39.66% 36.21% 48.28% 50.00% 36.21% 53.45% 24.14% 29.31%
Less 2 3.45% 24.14% 25.86% 8.62% 6.90% 5.17% 3.45% 1.72%
Least 1 0.00% 1.72% 3.45% 3.45% 1.72% 0.00% 0.00% 0.00%
Percentage 9 10 11 12 13 14 15 16
Most 5 13.79% 20.69% 5.17% 10.34% 29.82% 10.34% 15.52% 15.52%
More 4 44.83% 15.52% 36.21% 41.38% 43.86% 31.03% 34.48% 39.66%
Moderate 3 37.93% 32.76% 44.83% 43.10% 21.05% 51.72% 39.66% 34.48%
Less 2 3.45% 25.86% 13.79% 5.17% 5.26% 6.90% 10.34% 8.62%
Least 1 0.00% 5.17% 0.00% 0.00% 0.00% 0.00% 0.00% 1.72%
6. Discussion
Of all <strong>the</strong> students who studied Computer Organization subject 10 percent preferred to learn this
subject in problem-based learning. Students who did not prefer problem-based learning was less than
2 percent, which is quite successful. The Educational Reform <strong>of</strong> Thailand 2542 emphasized selflearning,
problem-based, and project-based learning. Students need to research <strong>the</strong> information on
<strong>the</strong>ir own and find <strong>the</strong> solution <strong>of</strong> <strong>the</strong> problem based on <strong>the</strong>ir thoughts and ideas with supporting
information from <strong>the</strong>ir own research. Some educators disagree about comparing both teaching
methodologies toge<strong>the</strong>r; because each learning methodology focuses and affects students differently.
Researchers would like to focus on how students can develop <strong>the</strong>ir own personal knowledge
management strategies through problem-based learning in order to achieve <strong>the</strong> goal <strong>of</strong> Life Long
Learning. It might be good to think about how to help our new generation to learn and collect
knowledge <strong>the</strong> right way. The goal is to push <strong>the</strong> students to get accustomed to <strong>the</strong> new idea <strong>of</strong>
learning. At <strong>the</strong> same time, teachers or lecturers should also change <strong>the</strong>ir way <strong>of</strong> thinking and
teaching students. They need to learn how to deal with different thoughts and ideas from students.
Open-mindedness is <strong>the</strong> most important quality <strong>of</strong> this learning methodology. This might take some
time and training for Thai teachers and lecturers to adjust. Researchers believe that it would not be
difficult to adjust if <strong>the</strong>y focus all <strong>the</strong>ir thoughts and ideas to <strong>the</strong>ir students’ benefit. One o<strong>the</strong>r
important thing in problem-based learning is to know enough to discuss <strong>the</strong> problem. Gaining
knowledge is one thing. Interpreting and turning <strong>the</strong> knowledge into information is ano<strong>the</strong>r. It requires
many factors to deliver good quality interpretation and comprehension <strong>of</strong> knowledge and increase <strong>the</strong>
potential and efficiency <strong>of</strong> analyzing its solution. Two significant problems that researcher found in this
research are reading comprehension and English as a second language skill. Both <strong>of</strong> <strong>the</strong>se problems
are inseparable. In order for students to gain knowledge and develop <strong>the</strong>ir own personal knowledge
management, <strong>the</strong>y need to interpret <strong>the</strong> problem in English correctly and to comprehend English as
well as <strong>the</strong>ir own mo<strong>the</strong>r tongue.
7. Conclusion
This research deals with multi-ability levels <strong>of</strong> English students in <strong>the</strong> same subject area. Students’
responsibilities in learning and studying are <strong>the</strong> most influential factors in developing personal
knowledge management strategies for each student. “Learning ability is not <strong>the</strong> only variable by which
a class can be multilevel.” (TEA 2008) Their previous education can also indicate a problem in multiability
English level. This Multi-ability <strong>of</strong> English level can cause a significant problem <strong>of</strong>
understanding <strong>the</strong> problem and finding <strong>the</strong> right solution to <strong>the</strong> problem, let alone ga<strong>the</strong>ring <strong>the</strong>
knowledge. The ambition in learning is perceived to be successfully improved <strong>the</strong> quality <strong>of</strong> study and
understanding in <strong>the</strong> academic subject. Most <strong>of</strong> <strong>the</strong> students do not understand English very well. At
<strong>the</strong> same time, throughout this subject, students seemed to develop <strong>the</strong>ir own individual
understanding <strong>of</strong> <strong>the</strong> relationship between understanding <strong>the</strong> subject and knowing <strong>the</strong> English as a
second language clearly. One should lend each o<strong>the</strong>r a hand in cognitive learning <strong>of</strong> <strong>the</strong> academic
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subject. One might come before ano<strong>the</strong>r; however, understanding in language should come first and
parallel with <strong>the</strong> academic understanding at <strong>the</strong> end. Many research in reading found that reading is a
basis for cognitive learning. Motivating children to read is <strong>the</strong> significant and difficult aspect to do in all
countries around <strong>the</strong> world. This is also believed to be <strong>the</strong> basic activity in developing personal
knowledge management.
8. Appendix 1
Questionnaire about Computer Organization Studying
Satisfactory Level
Most More Moderate Less Least
No Question
Before Midterm Teaching technique (Lecture based
5 4 3 2 1
1
2
Learning)
After Midterm Teaching technique (Problem based
Learning)
3 Understand <strong>the</strong> course content before studying in class
4 Understand <strong>the</strong> course content after studying in class
5 You prefer to learn by lecture
6 You prefer to learn by yourself
7 You realize <strong>the</strong> important <strong>of</strong> reading from this course
8 You like to do more research
9 You gain more enthusiastic in studying/learning
10 English is your barrier in studying this course
11 Your english is better after you complete this course
12 You gain a better attitude toward English from this course
You would like to study better in any subject after this
13
course
You can analyze and solve problem about computer
14
organization in <strong>the</strong> future
You can select appropriate computer organization for
15
s<strong>of</strong>tware usage
You can understand computer organization for computer
16
programming in <strong>the</strong> future
Acknowledgements
Any comment for this subject :
The author would like to thank Asst Pr<strong>of</strong>. Dr. Napat Harnpornchai, Dr. Paul Goldsmith and Ms. Lorna
Townson for <strong>the</strong>ir great support.
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128

The Relationship Between Knowledge Management and
Intellectual Capital in Listed Companies <strong>of</strong> Mainland China
Samuel Kai Wah Chu 1 , Wendy Wu 1 , Kin Hang Chan 2 , and Olina Fu 1
1 The University <strong>of</strong> Hong Kong, Hong Kong, China
2 Institute for China Business, School <strong>of</strong> Pr<strong>of</strong>essional and Continuing
Education, The University <strong>of</strong> Hong Kong, Hong Kong, China
samchu@hku.hk
wendywu@hku.hk
hkukin@hku.hk
huijuanfu@gmail.com
Abstract: As <strong>the</strong> global economic power reshuffles, mainland China stood as <strong>the</strong> world’s biggest exporter in 2010,
and has emerged as <strong>the</strong> second-largest economy in <strong>the</strong> world (CIA, 2010). In its transformation from a
manufacturing-based economy to a knowledge-based economy, how well a business manages its knowledge or
utilizes its intellectual capital may be an important factor in determining a business’ comparative advantage. Hence,
<strong>the</strong> evaluation <strong>of</strong> <strong>the</strong> level <strong>of</strong> knowledge management (“KM”) <strong>of</strong> a business may be helpful for business managers
to improve business competitiveness. Rastogi (2000) considers KM as <strong>the</strong> foundation toward successful leveraging
<strong>of</strong> intellectual capital (“IC”). If we take <strong>the</strong> view that knowledge forms <strong>the</strong> basis <strong>of</strong> IC, as in Ramezan (2011), <strong>the</strong>n
<strong>the</strong> level <strong>of</strong> knowledge utilization <strong>of</strong> an organization should be correlated with its level <strong>of</strong> intellectual capital. To test
this empirically, a self-assessment on KM maturity level was used to gauge knowledge utilization <strong>of</strong> an
organization, while Value Added Intellectual Coefficient (VAIC) was used to assess <strong>the</strong> level <strong>of</strong> IC. The purpose
<strong>of</strong> this research is to explore <strong>the</strong> presence <strong>of</strong> a relationship between KM maturity level and IC performance in listed
companies in mainland China. In selecting companies representative <strong>of</strong> <strong>the</strong> economy in mainland China, <strong>the</strong>
constituent companies <strong>of</strong> <strong>the</strong> CSI 100 (China Securities Index Co., Ltd.) were chosen. The Value Added Intellectual
Coefficient (VAIC) methodology was used to measure IC performance for its suitability in statistical analysis
(Andriessen, 2004). VAIC <strong>of</strong> constituent companies <strong>of</strong> <strong>the</strong> CSI 100 was calculated by summing <strong>the</strong> totals <strong>of</strong>
human capital efficiency, structural capital efficiency and capital employed efficiency. Questionnaires were
collected to evaluate <strong>the</strong> level <strong>of</strong> KM in <strong>the</strong> surveyed organizations. The questionnaire was developed from <strong>the</strong> KM
self-assessment framework proposed by Collison and Parcell (2004), and was used to measure <strong>the</strong> maturity level
<strong>of</strong> KM. Overall, <strong>the</strong>re were 26 questionnaires completed, which accounts for 25% <strong>of</strong> <strong>the</strong> sample. Finally, correlation
analysis with SPSS was performed to examine if <strong>the</strong>re is a correlation between IC and <strong>the</strong> maturity level <strong>of</strong> KM in
<strong>the</strong> sampled companies in mainland China. The results showed that correlation between <strong>the</strong> two variables was not
statistically significant.
Keywords: knowledge management, intellectual capital, intangible asset, mainland China, VAIC
1. Introduction
There has been vast amount <strong>of</strong> studies conducted in <strong>the</strong> fields <strong>of</strong> corporate knowledge management
(KM) and intellectual capital (IC) over <strong>the</strong> past decade (Sveiby , 1997; Pulic, 1998; Bontis, 1999;
Chen et al., 2005; Chu et al., 2011; Ramezan, 2011). Knowledge-based resources have emerged
as an important factor <strong>of</strong> production to maintain a company’s competitive advantage, and have
displaced traditional production inputs such as land and physical capital <strong>of</strong> <strong>the</strong> classical economic
model, especially in service-oriented industries (Kujansivu and Lo¨nnqvist, 2007; Reinhardt et al., 2001;
Young et al., 2009; Boulton et al., 2000; Drucker, 1993). To improve market competitiveness, corporate
leaders may benefit from assessing how well <strong>the</strong>ir companies leverage on intellectual capital, or viewing
from ano<strong>the</strong>r perspective, how well a company manages its knowledge. This can be accomplished
assessing <strong>the</strong> KM maturity level <strong>of</strong> <strong>the</strong> company, and estimating IC performance <strong>of</strong> <strong>the</strong> company.
This study focused on companies in mainland China as <strong>the</strong> country was undergoing massive economic
development. Mainland China has become <strong>the</strong> world’s largest exporter, contributing to 12% <strong>of</strong> world’s
exports in 2009, as compared to 3% in 1995 (IMF, 2011). The purpose <strong>of</strong> <strong>the</strong> research is to explore <strong>the</strong>
existence <strong>of</strong> a correlation between KM maturity level and IC performance in listed companies in
mainland China.
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2. Literature review
2.1 What is “Knowledge Management”?
Samuel Kai Wah Chu et al.
KM has been discussed widely in <strong>the</strong> literature. Wiig (1997: 1), regarded as one <strong>of</strong> <strong>the</strong> earliest reviews
<strong>of</strong> <strong>the</strong> developments in KM, puts forward that <strong>the</strong> objectives <strong>of</strong> KM is to “realize <strong>the</strong> best value <strong>of</strong> its
knowledge assets” so as to secure an organization’s viability. A more precise definition <strong>of</strong> KM may be:
“a systematic and integrative process <strong>of</strong> coordinating organization-wide activities <strong>of</strong> acquiring, creating,
storing, sharing, diffusing, developing, and deploying knowledge by individuals and groups in pursuit <strong>of</strong>
major organizational goals” (Rastogi, 2000: 40).
2.2 Importance <strong>of</strong> measuring Knowledge Management
There has been an increasing recognition on measuring KM performance <strong>of</strong> an organization to
investigate <strong>the</strong> effectiveness and maturity <strong>of</strong> KM. There is a common saying: “If it can’t be measured it
can’t be managed”. Therefore <strong>the</strong>re is a need to measure KM so that corporate leaders can have a
basis on which performance can be monitored. Scholars and practitioners have developed different
models <strong>of</strong> performance metrics aiming to measure effectiveness <strong>of</strong> KM. Among <strong>the</strong> different
measurement methodologies on KM performance proposed in <strong>the</strong> literature, this study adopted <strong>the</strong>
knowledge management maturity model (“KMMM”) to measure <strong>the</strong> KM maturity level <strong>of</strong> listed
companies in mainland China.
2.3 Methods <strong>of</strong> measuring KM - KM maturity model
Kuriakose, Raj, Murty and Swaminathan (2010) proposed that a KMMM is a structured approach for
implementing KM. Various forms, structures and characteristics <strong>of</strong> KM maturity model (“KMMM”) has
been developed, and a few <strong>of</strong> <strong>the</strong>m are summarized in Table 1.
Table 1: Summary <strong>of</strong> <strong>the</strong> selected KMMMs
Name <strong>of</strong> models and <strong>the</strong> work in Dimensions Maturity stages Research method(s)
which it was cited
Knowledge Management
Framework Assessment and
Knowledge Journey in
KPMG (2000)
People
Process
Content
Technology
KNM TM in Hsieh, Lin and Lin (2009) Process
Information
technology
Culture
KM 3 in Gallagher and Hazlett
(2000)
Knowledge Management
Capability self-assessment
Framework in Collison and
Parcell (2004)
Infrastructure
Culture
Technology
KM strategy
Leadership
behaviors
Networking
Learning
before, during
and after
Capturing
knowledge
Knowledge chaotic
Knowledge aware
Knowledge focused
Knowledge managed
knowledge centric
Knowledge chaotic stage
Knowledge conscientious
stage
KM stage
KM advanced stage
KM integration stage
K-Aware
K-Managed
K-Enabled
K-Optimised
Level 1
Level 2
Level 3
Level 4
Level 5
Survey
In-depth interview
Focus group
Questionnaire
Critical success
factors analysis
Fill in <strong>the</strong> self
assessment
individually, and
<strong>the</strong>n conduct focus
group discussion
KPMG (2000) defines people, process, content and technology as <strong>the</strong> four key areas <strong>of</strong> KM. Based on
<strong>the</strong> implementation <strong>of</strong> organizational activities, <strong>the</strong> surveyed firm is placed in a five-level model called
<strong>the</strong> ‘Knowledge Journey’ which starts from knowledge chaotic level and progresses to knowledge
aware, knowledge focused, knowledge managed, and knowledge centric level.
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A knowledge navigator model (“KNM TM ”) was put forward in Hsieh, Lin and Lin (2009) to evaluate KM
maturity. The model incorporates three target management objects, which are KM process, information
technology (“IT”) and culture. Through an in-depth focus group interview, and administering <strong>of</strong> a
questionnaire, a weighted average or principal component score <strong>of</strong> <strong>the</strong> maturity level <strong>of</strong> each <strong>of</strong> <strong>the</strong>
three target management objects would be formulated. The above model emphasizes that technology,
culture, process and people as <strong>the</strong> common dimensions for measuring KM maturity level.
Gallagher and Hazlett (2000) proposes KM 3 for organizations to self-assess <strong>the</strong>ir progress in KM. The
model aims at a balanced analysis <strong>of</strong> infrastructure, culture, and technology. However, <strong>the</strong> model may
post a complication if an organization is at different maturity stages for <strong>the</strong> three components <strong>of</strong> KM
development.
Collison and Parcell (2004) developed <strong>the</strong> KM capability self-assessment framework to measure <strong>the</strong>
KM maturity level <strong>of</strong> an organization. The KM self-assessment is a strategic planning and benchmarking
tool that allows organizations to assess <strong>the</strong>ir KM maturity level based on five competencies. This study
adopts such framework to develop a self-assessment tool to measure <strong>the</strong> maturity level <strong>of</strong> listed
companies in mainland China.
2.4 What is Intellectual Capital (IC)?
The term IC was first coined by <strong>the</strong> economist John Kenneth Galbraith in his letter dated 1969 (Sveiby,
2001). Probably it was Thomas A. Stewart who pioneered <strong>the</strong> field <strong>of</strong> IC when he wrote a Fortune article
in 1991, putting IC in <strong>the</strong> context <strong>of</strong> gaining market competitive advantage (Stewart, 1991). IC is <strong>the</strong>
collective brainpower, which includes information, practical technique, expertise, intellectual property,
and everything members <strong>of</strong> <strong>the</strong> organization know that can generate pr<strong>of</strong>it (Stewart, 1997). Bontis
(1999) points out that IC is an intangible organizational resource, and is commonly classified into
human capital (HC), structural capital (SC), and relationship capital (Sveiby, 1997; Saint Onge, 1996).
2.5 Importance <strong>of</strong> measuring IC
IC provides <strong>the</strong> organization with market value-added. Although <strong>the</strong> components are not included on
<strong>the</strong> balance sheet, <strong>the</strong>y have significant influence on company’s performance and overall business
achievement (Jelcic, 2007). Also, Klein and Prusak (n.d., P. 67 as cited in Stewart, 1997) identifies IC as
<strong>the</strong> “intellectual material that has been formalized, captured, and leveraged” to create property by
generating a higher-valued asset, which is essential to company success. In order to monitor such
asset, measurement metrics need to be developed.
2.6 Methods <strong>of</strong> measuring IC
There are many IC measurement methodologies in <strong>the</strong> literature (e.g. EVA, CIV, Skandia Navigator,
etc.), as reviewed in Sveiby, 2010. However, it is complicated to measure intangibles (Ze´ghal &
Maaloul, 2010), so only few <strong>of</strong> <strong>the</strong>se methods can empirically link <strong>the</strong> value <strong>of</strong> IC to business
performance. Among <strong>the</strong> different methodologies proposed in <strong>the</strong> literature, Value Added Intellectual
Coefficient (“VAIC”) as an indicator <strong>of</strong> IC is opted for <strong>the</strong> data required is easily accessible (since
financial data can be easily found in annual reports <strong>of</strong> listed companies). VAIC is used to measure <strong>the</strong>
value creation efficiency <strong>of</strong> a company. For a detailed discussion <strong>of</strong> <strong>the</strong> methodology, please refer to a
similar study on VAIC <strong>of</strong> Hong Kong listed companies (Chu et al., 2011).
2.7 Correlation between IC and KM
Sveiby (2001) regards KM and IC as “two branches <strong>of</strong> <strong>the</strong> same tree”. Many scholars or practitioners
have also argued that KM is a part <strong>of</strong> IC. Rastogi (2000) considers KM as <strong>the</strong> foundation toward
successful leveraging <strong>of</strong> intellectual capital (“IC”). Written for <strong>the</strong> audience <strong>of</strong> knowledge practitioners,
Levinson (2007) on CIO.com defines KM as “<strong>the</strong> process through which organizations generate value
from <strong>the</strong>ir intellectual and knowledge-based assets”. Ariely (2003: 4) argues that since knowledge
contributes to HC, and managing knowledge contributes to SC, <strong>the</strong>n “successful KM is in itself, part <strong>of</strong>
<strong>the</strong> organization’s IC”.
Taking <strong>the</strong> above view, it is reasonable to postulate that <strong>the</strong>re is a correlation between <strong>the</strong> level <strong>of</strong>
knowledge utilization and <strong>the</strong> level <strong>of</strong> intellectual capital <strong>of</strong> an organization. To test this empirically,
sampled companies <strong>of</strong> this study would be assessed on both <strong>the</strong>ir levels <strong>of</strong> knowledge utilization and IC
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(through self assessment <strong>of</strong> KM maturity level, and calculation <strong>of</strong> VAIC, respectively). The two sets <strong>of</strong>
data would be analyzed statistically to test for correlation.
2.8 Research gap
There were a number <strong>of</strong> studies investigating KM maturity levels in organizations. For example,
Robinson, Carrillo, Anumba and Al-Ghassani (2005) focused on US companies while Salojärvi, Furu
and Sveiby (2005) focused on Finnish small and medium-sized enterprises. However, to <strong>the</strong> best <strong>of</strong> <strong>the</strong>
authors’ knowledge, <strong>the</strong>re was rarely any research done on <strong>the</strong> maturity levels <strong>of</strong> listed companies in
mainland China. Fur<strong>the</strong>rmore, no prior studies have established a statistical pro<strong>of</strong> showing <strong>the</strong> actual
relation between IC performance and <strong>the</strong> KM maturity level. Their correlation <strong>the</strong>refore warrants fur<strong>the</strong>r
investigation.
3. Research methods
This study consisted <strong>of</strong> 3 parts: (1) Estimating IC performance <strong>of</strong> <strong>the</strong> sampled companies; (2) assessing
KM maturity level <strong>of</strong> <strong>the</strong> sampled companies using KM self-assessment framework; (3) investigating if a
correlation existed between KM and IC. Constituent companies in <strong>the</strong> CSI 100 index are chosen as
samples <strong>of</strong> this study for <strong>the</strong>ir representativeness <strong>of</strong> <strong>the</strong> PRC economy.
3.1 Data source
In part 1, financial data was ga<strong>the</strong>red from annual reports <strong>of</strong> <strong>the</strong> constituents <strong>of</strong> CSI 100 in years
2007-2009. IC performance was assessed using <strong>the</strong> VAIC (value added intellectual coefficient)
methodology developed by Ante Pulic (Pulic, 2000). Detailed discussion on <strong>the</strong> calculation <strong>of</strong> VAIC
can be found in section 2.2 <strong>of</strong> Chu et al. (2011). An average VAIC over <strong>the</strong> 3 years for each company
was calculated. In part 2, a questionnaire was developed from <strong>the</strong> KM self-assessment framework
(Collison and Parcell, 2004) to assess KM utilization within an organization. All <strong>the</strong> companies from part
1 were invited to respond to <strong>the</strong> questionnaire. 26 sets <strong>of</strong> questionnaires were completed, which
accounts for 25% <strong>of</strong> response rate. An average score from <strong>the</strong> 25 closed end questions were computed
for each respondent. In part 3, VAIC and scores from questionnaire on KM self-assessment were
compiled for correlation analysis.
3.2 The instrument
Part 2 <strong>of</strong> this study involved a questionnaire as an instrument to assess <strong>the</strong> KM maturity level <strong>of</strong> <strong>the</strong>
sampled organizations. The questionnaire was built on <strong>the</strong> KM self-assessment framework proposed by
Collison and Parcell (2004). There were 25 questions in total, which were separated into five
dimensions. Similar to <strong>the</strong> KNM TM (Hsieh, Lin and Lin, 2009), a five-point Likert’s rating scale was used
to ga<strong>the</strong>r interval data about <strong>the</strong> company’s KM capability. The five-point scale was presented with
“strongly disagree” or “strongly agree” statements (i.e. strongly disagree, disagree, neutral, agree,
strongly agree). In addition, if respondent chooses <strong>the</strong> choice “no opinion”, <strong>the</strong>n <strong>the</strong> scoring from that
particular question would be omitted. The use <strong>of</strong> five-point Likert’s scale was to match with <strong>the</strong> five
maturity levels. The sample mean, which summarized <strong>the</strong> collected data from <strong>the</strong> sample, should be
calculated for finding out <strong>the</strong> maturity level. For example, if <strong>the</strong> mean was 3, <strong>the</strong> maturity level <strong>of</strong> that
company was indicated to be 3. The questionnaire was <strong>the</strong>n translated into Simplified Chinese for ease
<strong>of</strong> administration to participants in mainland Chinese organizations.
3.3 Statistical model
Finally, <strong>the</strong> existence <strong>of</strong> a correlation between VAIC and <strong>the</strong> KM maturity level <strong>of</strong> <strong>the</strong> sampled
companies was investigated using SPSS. VAIC was set to be independent variable and <strong>the</strong> maturity
level <strong>of</strong> KM was dependent variable. It was hypo<strong>the</strong>sized that <strong>the</strong>re is a relationship between KM
maturity level and IC performance in listed companies in mainland China.
4. Findings and analysis
4.1 VAIC as a measure <strong>of</strong> IC performance
VAIC <strong>of</strong> <strong>the</strong> sampled companies which also participated in part 2 <strong>of</strong> <strong>the</strong> study was computed and
listed in Table 2. There are several reasons why some entries were left blank. Some <strong>of</strong> <strong>the</strong> companies
have not become a constituent <strong>of</strong> CSI 100 in <strong>the</strong> earlier years, hence, <strong>the</strong>ir data in earlier years were not
included in this study. Also, as noted in Chu et al. (2011), VAIC is invalid for companies which had a
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negative value-added due to a negative book value <strong>of</strong> equity for <strong>the</strong> year. Hence such invalid entries
were removed from Table 2, before computing <strong>the</strong> mean VAIC for each company. The average
VAIC ranged from 1.735 to 24.273.
Table 2: Average VAIC (over <strong>the</strong> years 2007-2009) <strong>of</strong> sampled companies
Company 2007 2008
VAIC
2009 Average
KM Maturity Level
Score
KM dept?
A 5.27 4.47 4.44 4.728 3.24 N
B 4.79 4.64 5.25 4.891 3.60 N
C 3.71 0.53 4.01 2.752 4.60 Y
D 5.37 5.09 5.15 5.206 3.84 Y
E 3.95 4.64 4.69 4.426 4.54 N
F - 0.97 3.54 2.255 3.04 N
G - 4.46 4.65 4.554 4.28 N
H 4.39 4.09 4.37 4.282 3.57 N
I 1.74 1.71 1.76 1.735 4.24 Y
J 12.47 13.83 13.96 13.420 3.64 N
K - 3.09 3.48 3.286 4.16 Y
L 6.02 3.93 5.23 5.060 2.96 N
M 6.86 5.04 4.62 5.508 3.20 N
N 4.95 3.95 2.53 3.814 3.44 N
O 9.12 5.27 4.78 6.392 2.12 N
P 7.48 5.65 4.12 5.749 3.12 N
Q 13.87 13.91 12.03 13.272 3.80 N
R 23.11 15.48 34.23 24.273 3.63 N
S 8.32 6.31 6.34 6.986 2.00 N
T 4.27 0.91 3.31 2.830 4.96 Y
U 9.54 7.63 3.36 6.841 4.26 N
V 3.08 1.05 2.15 2.094 3.36 N
W 5.13 3.21 4.67 4.336 2.64 N
X 23.23 16.55 12.32 17.367 4.82 N
Y 4.42 4.06 4.24 4.238 3.36 N
Z - - 2.25 2.253 3.18 Y
4.2 Scores <strong>of</strong> KM maturity level assessment as a measure <strong>of</strong> KM maturity
In part 2, questionnaires were administered during <strong>the</strong> data collection period (from Jan to April
2011). 26 completed questionnaires were collected, equivalent to a response rate <strong>of</strong> approximately
25%. The low response rate can be attributed to <strong>the</strong> controlled management style with mainland
Chinese organizations. Many <strong>of</strong> <strong>the</strong> respondents were reluctant to respond and required approval from
<strong>the</strong> management to participate in <strong>the</strong> survey. An overall score <strong>of</strong> KM maturity level for each company
was computed, and shown in Table 2, along with <strong>the</strong> respective VAIC. Respondents were also asked
whe<strong>the</strong>r <strong>the</strong>ir organization has a KM department. It was found that 5 <strong>of</strong> <strong>the</strong> 26 surveyed companies had
a KM department. Companies which have a KM department were found to have higher scores <strong>of</strong> KM
maturity level (average score <strong>of</strong> this group was 4.16). In <strong>the</strong> group without KM department, <strong>the</strong>ir
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average score <strong>of</strong> KM maturity level was 3.43. Hence staff in companies with a KM department generally
perceived <strong>the</strong>ir organization at a higher maturity level in KM.
Table 3: Score statistics <strong>of</strong> each question in <strong>the</strong> questionnaire
Mean SD*
Score
1. Knowledge Management Strategy
a The company has clearly identified intellectual assets. 3.67 1.05
b The company has embedded knowledge management (“KM”) into its business strategy. 3.50 0.83
c The company has communicated a clear KM framework to its staff to encourage learning
and knowledge sharing.
d Most employees believe that sharing know-how is important to <strong>the</strong> success <strong>of</strong> <strong>the</strong>
organization.
e The company has implemented a set <strong>of</strong> KM tools to enable learning before, during, and
after.
2. Leadership Behaviors
3.60 1.12
3.64 0.91
3.80 1.08
a Company leaders recognize <strong>the</strong> link between KM and performance. 3.57 0.90
b The company advocates <strong>the</strong> practice <strong>of</strong> knowledge sharing, and KM activities are
encouraged and rewarded.
3.88 1.03
c Managers set <strong>the</strong>mselves as good examples <strong>of</strong> frequently conducting KM activities. 3.42 0.83
d Managers <strong>of</strong>fer <strong>the</strong> time and support to its staff on learning and knowledge sharing. 3.56 1.00
e The company nurtures <strong>the</strong> right attitudes among <strong>the</strong> employees to facilitate sharing and
using o<strong>the</strong>rs’ know-how.
3. Networking
3.58 0.86
a Employees seem to be rewarded for performing networking activities that results in
knowledge exchange.
2.52 1.12
b Networking on a needs basis helps employees know each o<strong>the</strong>r. 3.60 1.35
c The company has put in place technology to support networking, and <strong>the</strong>y are well utilized. 3.58 1.17
d Networks have a clear governance document, with clearly defined purpose, roles and
responsibilities.
3.46 1.18
e Networks meet regularly, and <strong>the</strong>y are organized around business needs. 3.48 1.29
4. Learning before, during and after
a The company values knowledge, and require formal learning on some occasions. Some
business processes prompts for learning (e.g. <strong>the</strong> company has established mentoring /
apprenticeship programs).
3.92 1.06
b The company has implemented templates and guidelines, and established common
language to facilitate knowledge sharing.
3.38 0.97
c Not only <strong>the</strong> employees are engaged in learning, customers and partners participate in
review sessions as well.
3.38 0.94
d Employees are encouraged to capture <strong>the</strong> knowledge that <strong>the</strong>y learn for o<strong>the</strong>rs to access. 4.23 0.82
e The company nurtures an atmosphere <strong>of</strong> learning before, during, and after. 3.58 1.10
5. Capturing Knowledge
a Knowledge capturing occurs at <strong>the</strong> individual, team, and network level. 4.08 0.91
b Depositing and retrieving knowledge can be conducted at ease (e.g. it is easy to locate
accurate and up-to-date information from <strong>the</strong> Intranet).
c The company dedicates resources to collect and disseminate knowledge. Relevant
knowledge is pushed to you.
d The company promotes establishing communities <strong>of</strong> practice. Such networks collect <strong>the</strong>ir
subject’s knowledge in one place in a common format.
e Following item “d” above, social networks act as guardians <strong>of</strong> <strong>the</strong>ir knowledge (e.g. <strong>the</strong>y
regularly update <strong>the</strong> content to keep it current, and validate <strong>the</strong> knowledge).
134
3.73 1.04
3.77 0.91
3.20 1.08
3.25 1.15

Samuel Kai Wah Chu et al.
Questionnaire developed based on <strong>the</strong> Knowledge Management Capability self-assessment framework
(Collison and Parcell, 2004)
*Note: “SD” denotes standard deviation
Score statistics on each question are shown in Table 3. A summary <strong>of</strong> score by <strong>the</strong> five dimensions <strong>of</strong>
<strong>the</strong> framework is illustrated in Table 4. The maturity level was ranked from level 1 to level 5, where level
5 represented <strong>the</strong> best performance. The overall KM maturity level in Mainland China was 3.60.
Table 4: Sample mean <strong>of</strong> KM maturity level in China listed companies (N=26)
Five dimensions <strong>of</strong> KM Mean score
KM Strategy 3.64
Leadership Behaviours 3.60
Networking 3.33
Learning Before, During and After 3.70
Capturing Knowledge 3.61
Overall Performance 3.58
4.3 Correlation <strong>of</strong> scores <strong>of</strong> KM maturity level and VAIC
Scores <strong>of</strong> KM maturity level and VAIC were collected for <strong>the</strong> same 26 companies. Descriptive
statistics were compiled through SPSS, and <strong>the</strong> results are shown in Table 5.
Table 5: Descriptive statistics <strong>of</strong> scores <strong>of</strong> KM maturity level and VAIC
Descriptive Statistics
Mean Std. Deviation N
AVG_VAIC 6.2518 5.22895 26
KM 3.6000 .75303 26
A scattered plot does not reveal a strong relationship between scores <strong>of</strong> KM maturity level and VAIC,
as shown in Figure 1.
Figure 1: Correlation between scores <strong>of</strong> KM maturity level and VAIC
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Statistical analysis reveals a correlation coefficient <strong>of</strong> 0.086, which does not support a strong
relationship between scores <strong>of</strong> KM maturity level and VAIC, as shown in Table 6. The strength <strong>of</strong>
linear relationship between KM and IC was extremely weak.
Prior study by Turner and Minonne (2010) claims an interrelationship between IC and KM. As reviewed
earlier, many scholars proposed KM as a foundation for IC. Our results contradicted with <strong>the</strong> hypo<strong>the</strong>sis
<strong>of</strong> a relationship between KM and IC.
Table 6: Correlation statistics between scores <strong>of</strong> KM maturity level and VAIC
Pearson Correlation
VAIC KM Maturity Level score
VAIC - 0.086
KM Maturity Level score 0.086 -
5. Limitation
Merely 26 companies were willing to complete <strong>the</strong> questionnaires. The sample size was small. One
representative from each company was invited to fill out <strong>the</strong> questionnaire. The results collected may be
affected by <strong>the</strong> prejudice and positions <strong>of</strong> <strong>the</strong> respondents. Ideally, such bias can be minimized if data
from employees <strong>of</strong> various grades working at <strong>the</strong> same organization can be collected. The employment
grade <strong>of</strong> respondent from each company is shown in Table 7.
Table 7: Employment grade distribution <strong>of</strong> survey respondents
Frequency
Employment grade
1
Director
12
Manager
13
Executive
Fur<strong>the</strong>rmore, <strong>the</strong> questionnaire was designed with ease <strong>of</strong> administration in mind; <strong>the</strong>refore <strong>the</strong>re was a
constraint in word count. KM concepts may not be easily communicated to <strong>the</strong> layman under word limit
constraint. Hence, some KM terminologies have been used to express concepts concisely. However,
participants may not be able to grasp <strong>the</strong>se abstract concepts without a background in <strong>the</strong> discipline.
Fur<strong>the</strong>rmore, <strong>the</strong> questionnaire was translated from English into Simplified Chinese as that was <strong>the</strong>
main language used in mainland China. This fur<strong>the</strong>r contributed to an additional layer <strong>of</strong> complexity.
Therefore it may be possible that <strong>the</strong>re were some misinterpretations <strong>of</strong> meanings, and <strong>the</strong> scores <strong>of</strong>
<strong>the</strong> KM maturity level may not fully reflect <strong>the</strong> reality. In <strong>the</strong> future, data accuracy may be enhanced if a
briefing about KM concepts can be conducted to participants before data collection.
With regards to using VAIC to gauge IC performance, some scholars have questioned about <strong>the</strong>
basic assumptions <strong>of</strong> <strong>the</strong> VAIC methodology. There was no clear justification for how <strong>the</strong> various
components <strong>of</strong> VAIC are determined, and <strong>the</strong>se components are interdependent (Kujansivu, 2006).
There is no verification <strong>of</strong> how good VAIC is as an IC performance assessment. Hence <strong>the</strong> VAIC
figures in this study may not reflect <strong>the</strong> true level <strong>of</strong> IC performance <strong>of</strong> <strong>the</strong> surveyed organizations.
6. Conclusion and fur<strong>the</strong>r studies
The research result provides insight for companies in evaluating <strong>the</strong>ir KM strategy and developing <strong>the</strong>
IC potential. All <strong>of</strong> <strong>the</strong> surveyed companies had an overall KM maturity level <strong>of</strong> above 3. In order to
sustain market competitiveness in today’s fast-paced world, mainland Chinese organizations may need
to streng<strong>the</strong>n <strong>the</strong>ir KM strategy to harness more value from IC. As a starting point, organizations may
explore integrating KM practices into business strategy.
As networking was found to be less matured KM dimension in <strong>the</strong> surveyed companies, mainland
Chinese organizations may wish to nurture <strong>the</strong> concept <strong>of</strong> knowledge sharing among employees to
encourage development <strong>of</strong> knowledge networks. Also, such networking activities may be streng<strong>the</strong>ned
with formation <strong>of</strong> communities <strong>of</strong> practice, infrastructure development and technological support.
This study extends prior research through conducting an empirical investigation <strong>of</strong> <strong>the</strong> existence <strong>of</strong> a
relationship between scores <strong>of</strong> KM maturity level and VAIC. Moreover, this study may be one <strong>of</strong> <strong>the</strong>
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few done on surveying <strong>the</strong> status <strong>of</strong> knowledge management in mainland Chinese organizations. The
results <strong>of</strong> this study may very well serve as a basis for baseline comparison with future studies in <strong>the</strong>
region. Though a correlation between KM maturity level and VAIC is not substantiated in this study, it
may point to <strong>the</strong> need to adopt accounting-based quantitative measurements <strong>of</strong> both IC and KM to
fur<strong>the</strong>r correlation studies.
References
Andriessen, D. (2004) Making Sense <strong>of</strong> Intellectual Capital: Designing a Method for <strong>the</strong> Valuation <strong>of</strong> Intangibles,
Elsevier Butterworth-Heinemann, MA, Burlington.
Ariely, G. (2003) “Knowledge Management as a Methodology towards Intellectual Capital”, 3 rd European
Knowledge Management Summer School, San Sebastian, Spain, 7 – 12 September, [online],
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138

Value Creation Through Collaborative Supply Chain:
Holistic Performance Enhancement Road Map
Ridha Derrouiche 1 , Pongsak Holimchayachotikul 2 and Komgrit Leksakul 2
1
ESC – LSTI, Saint Etienne, France
2
Department <strong>of</strong> Industrial Engineering, Faculty <strong>of</strong> Engineering, Chiang Mai
University, Thailand
ridha_derrouiche@esc-saint-etienne.fr
holimchayachotikul@hotmail.com
komgrit@eng.cmu.ac.th
Abstract: This paper proposes an integrated novel framework between B2B-SCM using data mining techniques
such as K-Means based on particle swarm intelligence (PSO) and association rule. It constructs relationship rules
<strong>of</strong> holistic performance enhancement road map. The data set <strong>of</strong> relationships between enterprise and its direct
customers <strong>of</strong> <strong>the</strong> case study organizations in France was used for demonstration. The experiment results show
how domain managers powerfully utilize <strong>the</strong> graphical analysis results to provide <strong>the</strong> holistic performance
improvement and weakness resolution relationship rules. In <strong>the</strong> long run, organizations are able to use this
framework to design and adjust <strong>the</strong>ir units to conform <strong>the</strong> exact customer needs. This paper introduces and
explains a new idea <strong>of</strong> measuring value added along <strong>the</strong> supply chain from a collaborative perspective. The
extended model is adapted from our previous model and from Balanced Score Card (BSC) model. It provides a
tool to measure tangible and intangible value between partners.
Keywords: supply chain collaboration, value creation, holistic performance enhancement road map k-means,
particle swarm intelligence, association rules
1. Introduction
In recent decade, many global organizations have extensively integrated performance measurement
and management system (PMM) to SCM which is time completive weapon. On <strong>the</strong> o<strong>the</strong>r hands, <strong>the</strong>y
have also accumulated a ton <strong>of</strong> data from PMM reports which came from each unit in SCM. These
result from <strong>the</strong> lack <strong>of</strong> holistic performance improvement (PM) which takes advantage from <strong>the</strong> right
direction <strong>of</strong> collaborative PM. They still independently and individually build <strong>the</strong>ir performance up;
some <strong>of</strong> <strong>the</strong>ir linkages <strong>of</strong> performance attributes between supply chain (SC) units still lack vital
information extraction to improve <strong>the</strong>irs. Consequently, each SC unit does not have <strong>the</strong> applicable
holistic PM roadmap development toge<strong>the</strong>r. This leads to <strong>the</strong> primary question <strong>of</strong> this article which is
“How can we extract <strong>the</strong> vital information from a ton <strong>of</strong> PMM database using DM <strong>the</strong>ory and concept”
However, <strong>the</strong> DM concept and <strong>the</strong>ory are applicable directly to marketing and business problems, but
<strong>the</strong> PMM in SCM problem structure and database does not differ from <strong>the</strong> former. Clustering and
association rules have been becoming <strong>the</strong> popular techniques in business research field. The PMM in
SCM researches are still not certain <strong>of</strong> tangible and intangible benefits. These may achieve. To
promote <strong>the</strong> use <strong>of</strong> <strong>the</strong> integration between K-Means base on PSO and association rules with PMM in
SCM context is <strong>the</strong> challenge. All said before is why DM concept and <strong>the</strong>ory should consider as <strong>the</strong>
potential approach to <strong>the</strong> PMM in SCM.
Therefore, this article proposes <strong>the</strong> implementation and deployment <strong>of</strong> holistic performance
enhancement road map using K-Means base on PSO and association rules for B2B-SCM context.
The rest <strong>of</strong> this paper is organized as follows. In <strong>the</strong> second section illustrates <strong>the</strong> fundamental <strong>of</strong> this
research and reviews related literatures. The methodology <strong>of</strong> <strong>the</strong> proposed means is described in <strong>the</strong>
third section. Results and discussion are provided in <strong>the</strong> fourth section. The fifth section introduces
and explains a new idea <strong>of</strong> measuring value added along <strong>the</strong> supply chain from a collaborative
perspective. The extended model is adapted from our previous model and from Balanced Score Card
(BSC) model. It provides a tool to measure tangible and intangible value between partners. Finally,
<strong>the</strong> conclusions and fur<strong>the</strong>r research direction are warped up in <strong>the</strong> fifth section..
2. Context and literature review
Supply chain collaboration is <strong>of</strong>ten defined as two or more enterprises working toge<strong>the</strong>r to create a
competitive advantage and higher pr<strong>of</strong>its that cannot be achieved by acting alone (Simatupang and
Sridharan 2005). In this paper <strong>the</strong> term collaboration is chosen to describe <strong>the</strong> close cooperation
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Ridha Derrouiche et al.
among autonomous partners involved in joint efforts to effectively meet end customer needs with
lower costs (Figure 1).
Figure 1: Supply chain collaboration (Matopoulos et al, 2007)
The advent <strong>of</strong> supply chain collaboration creates <strong>the</strong> need, at inter-enterprises level, to pay special
attention to <strong>the</strong> understanding <strong>of</strong> collaboration in order to prepare <strong>the</strong> partners to create collaborative
efforts successfully (Lambert et al. 2004). This section presents a review <strong>of</strong> literature relevant to this
research. This embraces many subjects in relative to main cores <strong>of</strong> <strong>the</strong> study which are momentarily
described as follows.
2.1 A framework for measuring impact <strong>of</strong> collaboration on B2B-SCM interaction
The academic review and <strong>the</strong> empirical studies related to internal and external collaborations, led us
to note that <strong>the</strong> different researchers analyzed do not agree on a same set <strong>of</strong> attributes to
characterize <strong>the</strong> various relations. Even more, <strong>the</strong> attributes used to characterize a same relation, are
<strong>of</strong>ten not <strong>the</strong> same ones.
Indeed several authors developed this question under various points <strong>of</strong> view such as: <strong>the</strong> degree <strong>of</strong>
engagement in a relation (Morgan and Hunt, 1994), <strong>the</strong> long-term orientation <strong>of</strong> a relation (Ganesan,
1994), <strong>the</strong> dependence between <strong>the</strong> partners (Crowston, 94; Lusch and Brown, 1996), <strong>the</strong> degree <strong>of</strong>
exchange and share information (Lee and al., 1997 and Li, 2002), <strong>the</strong> duration <strong>of</strong> <strong>the</strong> relation (Ching,
96); its formalization (Venkatraman and Bensaou, 1996); <strong>the</strong> centralization <strong>of</strong> decisions (Angeles and
Nath, 2001). The confidence between partners (Doney and Cannon, 1997) appears as an important
variable for analyzing relationship (Uzzi, 1997). The table below (Table 1) syn<strong>the</strong>sizes and classifies
<strong>the</strong> various studies according to <strong>the</strong> attributes used. In <strong>the</strong>se works, it is obvious that <strong>the</strong> majority <strong>of</strong>
researches on <strong>the</strong> collaborative relations do not agree on a unique set <strong>of</strong> criteria (attributes) to typify
relations between partners <strong>of</strong> <strong>the</strong> same supply chain. After analyzing <strong>the</strong> independent attributes that
can characterize a relation, this research will give a brief presentation <strong>of</strong> various frameworks
characterizing a relation.
The outline proposed in this subsection climaxes diverse scopes which can portray each type <strong>of</strong>
relation; it is based on <strong>the</strong> above mentioned two levels: <strong>the</strong> context <strong>of</strong> <strong>the</strong> relation and its performance
(Figure 1). The chief level is composed <strong>of</strong> <strong>the</strong> following five dimensions: 1) Climate <strong>of</strong> <strong>the</strong> relation, 2)
Structure <strong>of</strong> <strong>the</strong> relation, 3) Information Technologies (IT) used 4) Lifecycle <strong>of</strong> <strong>the</strong> relation and
External context. The subsequent level is based on dual attributes: “<strong>the</strong> perceived satisfaction <strong>of</strong> <strong>the</strong>
relation” and “<strong>the</strong> perceived effectiveness <strong>of</strong> <strong>the</strong> relation”. In this framework <strong>the</strong> same dimensions and
attributes can be used to analyze different types <strong>of</strong> relations; <strong>the</strong>ir differences rely on <strong>the</strong> maturity
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Ridha Derrouiche et al.
level for each attribute: <strong>the</strong> different dimensions <strong>of</strong> this framework explain different degrees <strong>of</strong>
collaboration between partners (Derrouiche et al, 2010).
Table 1: syn<strong>the</strong>sis <strong>of</strong> different attributes used in <strong>the</strong> literature review
Relation context
Relation Climate
Commitment
Confidence
Power Sharing
Goal Compatibility and
Solidarity
Conflicts Intensity
Conflicts Solving
Relation Structure
Flexibility
Formalization
Reconfiguration Efforts
Control Activities
Participation
Exchange Information
Interdependence
Finality (Objectives)
Centralization <strong>of</strong> Decisions
Duration
Sales Turnover
IT Used in <strong>the</strong> Relation
Levels <strong>of</strong> IT Used
Satisfaction about IT Used
Performance perceived
Perceived Satisfaction
Perceived effectiveness
Negative Opinion
Contronation
Opportunist
Being wary
Submission
Non compatible
Intense
Negigence
Controlled
Rigid
Explicit
Minimum
Controlled
Individualized
Occasional
Weak
Contractor
Centralized
Short
Less
Limited
Not useful at all
Not satisfied at all
Limited performance
Not benefit at all
Not efficiect at all
Positive Opinion
Cooperation
Committed
Entrusting
Equitable
Compatible
Rare
Cooperative
Collaborative
Flexible
Normative
Maximum
Liberated
Participative
Frequent
Intensive
Complementary
Shared
Long
Important
High
Very useful
Very satisfied
High performance
Very benefit
Very efficiect
Figure 2: The framework to analysis a dyadic relation and to evaluate its performance
141

2.2 Sequencing association rules
Ridha Derrouiche et al.
To discovery sequencing association rules (Agrawal, 1993) is a noteworthy data mining approach.
There are some evidences <strong>of</strong> <strong>the</strong> trend <strong>of</strong> association rule in many business researches. This review
indicated that association rule techniques used in various business, but ra<strong>the</strong>r rely on <strong>the</strong> popular
used in supply chain management in performance measurement have not done very much. For
example: depend on organizational strategies were mainly concentrated on improvement <strong>of</strong> customer
service levels as well as reduction <strong>of</strong> operational costs in order to maintain pr<strong>of</strong>it margins. Therefore,
Ko, et al. (2010) summarized <strong>the</strong> findings by a systematic review <strong>of</strong> existing research papers
concerning <strong>the</strong> application <strong>of</strong> s<strong>of</strong>t computing techniques to supply chain management. The amount <strong>of</strong>
studies in <strong>the</strong> supply chain management area using s<strong>of</strong>t computing approaches rose significantly and
reached a peak in 2008, while some areas in supply chain management that had rarely been exposed
in existing papers, such as customer relationship management and reverse logistics. So <strong>the</strong>y can
bring <strong>the</strong> association rule data mining techniques to applications in <strong>the</strong> supply chain for example. The
greater <strong>the</strong> uncertainties in supply and demand, globalization <strong>of</strong> <strong>the</strong> market in complex international
supply network relationships have led to higher exposure to risks in <strong>the</strong> supply chain. Therefore, He
and Song (2009) used association rules application for managing supply chain risk. Supplier selection
is not only a significant work in supply chain management but also a complex decision making
problem which includes both qualitative and quantitative factors. Xu and Lin (2009) viewed as <strong>the</strong>
problem <strong>of</strong> ranking <strong>the</strong> candidate supplier and mining a large <strong>of</strong> database <strong>of</strong> shipment by using
association rule mining. The paper has employed a numerical example for <strong>the</strong> integrated method for
suitable supplier set.
2.3 K-Means algorithm
K-Means is one <strong>of</strong> <strong>the</strong> modest unsupervised learning algorithms, solved <strong>the</strong> famous clustering
problem. The procedure like this a basic practice to establish a given data set through a certain
number <strong>of</strong> clusters (assume k clusters) fixed a priori (Ben-David et al, 2007 and Borah and Ghose,
2009). The chief idea is to outline k centroids, one for each cluster. These centroids should be placed
in a cunning method on <strong>the</strong> ground <strong>of</strong> dissimilar site causes different result. So, <strong>the</strong> better choice is to
place <strong>the</strong>m as much as possible far away from each o<strong>the</strong>r. The next step is to take each point
belonging to a given data set and associate it to <strong>the</strong> nearest centroid. When no point is pending, <strong>the</strong>
first step is completed and an early group age is done. At this point it is necessary to re-calculate k
new centroids as bar centers <strong>of</strong> <strong>the</strong> clusters resulting from <strong>the</strong> previous step. After obtaining <strong>the</strong>se k
new centroids, a new binding has to be done between <strong>the</strong> same data set points and <strong>the</strong> nearest new
centroid. A loop has been generated. As a result <strong>of</strong> this loop, one may notice that <strong>the</strong> k centroids
change <strong>the</strong>ir location step by step until no more changes are done. In o<strong>the</strong>r words centroids do not
move any more. Finally, this algorithm aims at minimizing an objective function, in this case a squared
error function
2.4 Particle swarm intelligence
Particle swarm optimization (PSO) is a social behavior based stochastic optimization method
developed by (Eberhart and Kennedy in 1995), At each step, each <strong>of</strong> <strong>the</strong>se particle locations is
recorded to get a fitness value based on how well it can resolves <strong>the</strong> problem. By means <strong>of</strong> <strong>the</strong> local
best position (Lbest : Pid) and <strong>the</strong> global best position (Gbest : Pgd), a novel velocity for each particle is
updated by equation 1 Such f1 and f2 are called <strong>the</strong> coefficient <strong>of</strong> inertia, cognitive and society
revision correspondingly. The rand ( ) stands uniformly distributed random numbers in [0,1]. The term
Vid is restricted to <strong>the</strong> possible rang <strong>of</strong> Vmax . If <strong>the</strong> velocity disrupts this limit, it will be set at its proper
limit. The concept <strong>of</strong> <strong>the</strong> updated velocity is illustrated in Figure 2. Varying velocity allows every
particle to hunt around its distinct best position and global best position. Depended on <strong>the</strong> updated
velocities, each particle changes its position according to equation 2
( )
( )
new old V = V + c 1⋅rand 1 P − X + c 2⋅rand 2 P −X
new old new
X = X + V
id id id id gd id
id id id
(1)
(2)
Every particle is updated; <strong>the</strong> fitness value <strong>of</strong> each particle is recalculated. Providing that <strong>the</strong> fitness
value <strong>of</strong> <strong>the</strong> new particle is superior to those <strong>of</strong> local best, formerly <strong>the</strong> local best will be substituted
with <strong>the</strong> new particle. Supporting <strong>the</strong> fitness value <strong>of</strong> <strong>the</strong> new particle is higher than those <strong>of</strong> global
142

Ridha Derrouiche et al.
best, <strong>the</strong>n <strong>the</strong> global best will be also replaced with <strong>the</strong> new particle. The procedure repeat above
updating process step by step, <strong>the</strong> whole population evolves toward <strong>the</strong> optimum solution.
Figure 3: The means <strong>of</strong> <strong>the</strong> updated velocity in <strong>the</strong> PSO
3. Methodology
This proposed methodology for holistic performance enhancement road map using K-Means base on
PSO and association rules for B2B-SCM context, as shown in Figure 4, <strong>the</strong> methodology is as
follows.
Parameters <strong>of</strong> PSO
Population Size 50
Number <strong>of</strong> Iterations 200
Wmax
Wmin
C1
C2
0.9
0.4
1.2
1.2
Number Cluster 3
A. Main Research Step B. K-Means based on PSO
Figure 4: Main flow chart <strong>of</strong> research methodology
143

Ridha Derrouiche et al.
Firstly, B2B-SC performance evaluation questionnaires based on two levels able to characterize
collaborative relation between two or more partners in <strong>the</strong>ir SC were ga<strong>the</strong>red from <strong>the</strong> case study
companies. The data set <strong>of</strong> relationship between enterprise and its direct customers, from
(Derrouiche et al., 2009), PM model and questionnaire, was used for demonstration. Secondly, data
cleaning and preparations for rule extraction were performed on <strong>the</strong> questionnaire database. Each
performance perspective score and <strong>the</strong> total collaborative performance degree were calculated from
<strong>the</strong> simple additive weighting, based on <strong>the</strong> attribute ranking algorithms by means <strong>of</strong> information gain
based on ranker search, as well.
Then <strong>the</strong> multi attribute decision making, named simple additive weighting using was employed to
build <strong>the</strong> PMM model in Figure 5. Its output is overall performance scoring, which derived from <strong>the</strong>
result <strong>of</strong> desirability function which combined <strong>the</strong> impact <strong>of</strong> each major criterion. Its output derived
from <strong>the</strong> result <strong>of</strong> desirability function which combined <strong>the</strong> impact <strong>of</strong> each major criterion with <strong>the</strong>
expert validation as follows:
sub perspective = weight from Information Gain based on Attribute Ranking
i i
weight <strong>of</strong> sub perspective = sub perspective sub perspective
i i i
i=
1
n
∑
n
∑
weight <strong>of</strong> minor perspective = weight <strong>of</strong> sub prespective ∀ : j = 1,..., m (5)
j ij j
i=
1
m
∑
weight
<strong>of</strong> major perspective = weight <strong>of</strong> minor prespective ∀ : k = 1,..., p (6)
k jk k
j = 1
M
∑
Overall Performance Score = weight <strong>of</strong> major prespective (m )
Desirability function
y = f ( Overall Performance Score )
l lk lk normal from
3 rd step k
k = 1
l d l
⎧0
y < L
⎪
⎪ ⎛ y−L⎞ L< y < T
⎪
⎜ ⎟
⎝T − L⎠
di = ftarget
(y l)=
⎨
⎪ ⎛U − y ⎞
T < y < U
⎪⎜ ⎟
⎝U −T
⎠
⎪
⎩0
U> y
(3)
(4)
∀ : k = 1,..., p (7)
Thirdly, K-Means based on PSO was opted for performance cluster construction, using parameter
setting in Figure 5, and <strong>the</strong> domain experts defined <strong>the</strong> performance <strong>of</strong> each cluster based on <strong>the</strong>
statistical information. Before web graph and association rules process, Fixed-width binning method
was use as attribute type convertor from continuous (Variable) to discrete value (Attribute). Fourthly,
web graph analysis was performed on this data to confirm <strong>the</strong> strong perspective relationship. Next,
sequencing association rule was deployed to extract performance perspective relationship rules for
each relationship type.
The quality <strong>of</strong> each recognized rule is tested and, from numerous rules, only those that are
statistically very strong and contain vital information are selected. Last but not least, <strong>the</strong>se rules are
interpreted by domain experts and studied by domain engineers to build a holistic performance
perspective enhancement road map. Fur<strong>the</strong>rmore, <strong>the</strong> final rule set <strong>of</strong> extracted rules contains very
interesting information relating to SCs and also point out <strong>the</strong> critical existing SC attribute
improvement.
4. Results and discussions
Performance cluster model was built by K-Means based on PSO which used parameters following
200 <strong>of</strong> iterations, 50 <strong>of</strong> particles, 0.9 <strong>of</strong> Wmax 0.4 <strong>of</strong> Wmin and 1.2 for both <strong>of</strong> C1 and C2. After
performance cluster model construction <strong>of</strong> this setting, <strong>the</strong> experimental result shown this process
consumed approximately 0.759 seconds <strong>of</strong> computational time and <strong>the</strong> percentage membership
volume in each cluster was 50, 29 and 11 percentages.
From Table 2, it is found that <strong>the</strong> top minor perspective impact on holistic performance score to <strong>the</strong>
best relationship types are engagement & commitment, confidence, power exerted, compatibility &
solidarity and interdependence while <strong>the</strong> top minor perspective impact on holistic performance score
to <strong>the</strong> worst relationship types are engagement & commitment, confidence, power exerted, time
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Ridha Derrouiche et al.
experience and turnover. The maximum holistic performance score is 68.0651 from cluster A (best
relationship) while <strong>the</strong> minimum <strong>of</strong> holistic performance score is 39.5327 from cluster B (worst
relationship). Primarily, <strong>the</strong> difference <strong>of</strong> top minor perspective values between cluster A (best
relationship) and cluster B (worst relationship) can provide and guide <strong>the</strong> domain managers. One <strong>of</strong>
main contribution <strong>of</strong> performance cluster model is to answer <strong>the</strong> question “Where we are in industry in
term <strong>of</strong> B2B-SCM performance”.
Figure 5: PMM and performance cluster model
If <strong>the</strong>y are member <strong>of</strong> cluster B (worst relationship), <strong>the</strong>y should improve some <strong>of</strong> minor perspective
performance such as engagement & commitment, confidence, power exerted, finance and <strong>the</strong> o<strong>the</strong>rs
in order to move <strong>the</strong>ir position to better position in <strong>the</strong> new cluster. This holistic performance
improvement tendency was proposed from <strong>the</strong> mean <strong>of</strong> each cluster analysis. In real practice, domain
managers should concern and take account into standard deviation <strong>of</strong> minor perspectives in each
cluster to pros and cons <strong>the</strong> expected results <strong>of</strong> mean analysis usage. To know and learn from <strong>the</strong>
repeated event and pattern which happen in <strong>the</strong>ir PMM model is <strong>the</strong> promising way to understand
why <strong>the</strong> hidden relationship among minor perspectives.
Fixed-width binning method was use as attribute type convertor from continuous (Variable) to discrete
value (Attribute). Five was assigned as bin number for this process. As a result, this stage obtain <strong>the</strong>
new discrete minor perspective factors, for example <strong>the</strong> holistic over performance was converted into
5 bins, Matrix plot among <strong>the</strong> holistic overall performance bin, cluster number, relationship type and
<strong>the</strong> top impact <strong>of</strong> minor perspective bin factors were conducted to investigate “why do <strong>the</strong>ir
performance perform like that?”. What is more, <strong>the</strong> domain mangers and experts in this B2B-SCM can
use <strong>the</strong> graphical matrix to find <strong>the</strong> approximated ways to move <strong>the</strong> performance position as <strong>the</strong>y
designed, for instance <strong>the</strong>ir present performance position are in cluster A with worst relationship; <strong>the</strong>y
can efficiently use this chart to understand how member in cluster A perform good performance in
term <strong>of</strong> B2B-SCM and sustain <strong>the</strong>ir best relationship by keeping <strong>the</strong> both level <strong>of</strong> engagement and IT
utilization at 5th bin. On <strong>the</strong> o<strong>the</strong>r hands, we can understand how member in cluster B perform bad
performance by using <strong>the</strong> matrix plot <strong>of</strong> worst relationship. We can notice that both level <strong>of</strong>
engagement and IT utilization <strong>of</strong> cluster B with worst relationship performed at 1st bin.
Finally, <strong>the</strong> sequencing association rules method was accomplished based on <strong>the</strong> two datasets. The
former was <strong>the</strong> best relationship and <strong>the</strong> later was <strong>the</strong> worst relationship data set to develop <strong>the</strong> B2B-
SCM performance improvement road map and recognize <strong>the</strong> top s<strong>of</strong>tness and glitches between
enterprise and its direct customers. In this research <strong>the</strong> value support and confidence was assigned
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Ridha Derrouiche et al.
as 40 percentages and 80 percentages, respectively. Consequently, <strong>the</strong> sequencing association
prototype model delivered that <strong>the</strong> attentive rules have also purely taken out following 40 percentages
<strong>of</strong> minimum support and 80 percentages <strong>of</strong> minimum confidence construction element <strong>of</strong> sequencing
association rule induction.
5. Extended framework: Exploring value creation using balanced scorecard
perspective
This section introduces and explains <strong>the</strong> concept <strong>of</strong> measuring value added along <strong>the</strong> supply chain
from a collaborative perspective. The extended model is adapted from our previous model (Figure 2)
and from Balanced Score Card (BSC) model (Kaplan and Norton, 1996) and (Brewer and Speh,
2000). It provides a tool to measure tangible and intangible value between partners (Figure 6).
According to Clements and Price (2007), Value added refers to any additional value created at a
particular stage <strong>of</strong> production by key production factors including; tangible value added through raw
material transformation, labour and capital goods and intangible value added through intellectual
capital and relational exchange i.e. <strong>the</strong> building <strong>of</strong> collaborative relationships.
Table 2: PMM and performance cluster model results
The BSC proposed by (Kaplan and Norton, 1996) is introduced by Brewer and Speh (2000) as a
viable basis to develop a framework which assists in <strong>the</strong> measurement <strong>of</strong> tangible and intangible
value added in supply chains from <strong>the</strong> transfer pricing perspective. Brewer and Speh (2000) highlight
how a BSC approach can improve <strong>the</strong> supply chain through improving collaboration and leveraging
<strong>the</strong> knowledge <strong>of</strong> supply chain partners, redesigning products and processes, improving information
management to compliment decision making and better monitor <strong>the</strong> external market. In our context,
we introduce Brewer and Speh (2000) framework’s to replace <strong>the</strong> second level <strong>of</strong> our previous
framework “Performances perceived: Perceived satisfaction and Perceived effectiveness” by “Total
Value-Added: Tangible Value-added and Intangible Value-added”.
Figure 6: A collaborative supply chain balanced scorecard framework
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Ridha Derrouiche et al.
Of course, this is just a first draft <strong>of</strong> a tool to measure a total value-added tangible and intangible
value between partners. The problem <strong>of</strong> <strong>the</strong> performance is very difficult to fix in such a case,
because in most cases, it is not possible to get a quantitative measure <strong>of</strong> <strong>the</strong> performance <strong>of</strong> one
interaction. This point could be improved by proposing Key Performance Indicators, not for a process
or an activity, but for an interaction.
6. Conclusion
This article has designated and constructed <strong>the</strong> novel application <strong>of</strong> holistic performance
enhancement road map using K-Means base on PSO and association rules for B2B-SCM, developing
relationship rules <strong>of</strong> <strong>the</strong> holistic performance attribute enhancement road map. Subsequently <strong>the</strong>
implementation, <strong>the</strong> result is prolonged to <strong>the</strong> B2B-SCM development road map strategies to endorse
<strong>the</strong> right way for holistic performance upgrading, to solve <strong>the</strong> conflict among <strong>the</strong> attributes and
eradicate <strong>the</strong> weakness issues. It is powerful and easy for <strong>the</strong> B2B-SCM invokers to implement since
<strong>the</strong> outcomes are revealed in <strong>the</strong> energetic rules and <strong>the</strong> basic graphical matrix plot, which derived
from <strong>the</strong> results <strong>of</strong> binning and K-Means base on PSO and expert validation. This demonstration is
constructed by a qualitative and very subjective method on in what way domain managers reflect <strong>the</strong>
role <strong>of</strong> each performance perspective and its influence on <strong>the</strong> performance. There are many regarding
facts from <strong>the</strong> association rules procedure for instance <strong>the</strong> fundamental success aspect <strong>of</strong> this
method relies on <strong>the</strong> quality <strong>of</strong> <strong>the</strong> primary database, data cleaning, and data preparation. The fuzzy
<strong>the</strong>ory can be practical to model <strong>the</strong> subjective perspectives before <strong>the</strong> association rule process. The
future research is to modify and upgrade this framework using <strong>the</strong> o<strong>the</strong>r modern evolutionary and
fuzzy <strong>the</strong>ory.
This paper has introduced <strong>the</strong> concept <strong>of</strong> measuring value added along <strong>the</strong> supply chain from a
collaborative perspective. The extended model was adapted from our previous model and from
Balanced Score Card. Of course, it was just a first draft <strong>of</strong> a tool to measure tangible and intangible
value between partners. The problem <strong>of</strong> <strong>the</strong> performance is very difficult to fix in such a case,
because in most cases, it is not possible to get a quantitative measure <strong>of</strong> <strong>the</strong> performance <strong>of</strong> one
interaction. This point could be improved by proposing Key Performance Indicators, not for a process
or an activity, but for an interaction.
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148

Organizational Learning and Transformational Leadership
in Higher Education
Irra Chrisyanti Dewi
Department <strong>of</strong> Management, STIE IEU Surabaya, Indonesia
irra_c_dewi@yahoo.co.id
Abstract: This study aims to provide in-depth review <strong>of</strong> transformational leadership style and its relationship with
organizational learning on library staff. By expanding <strong>the</strong> library literature related to leadership style, learning and
organizational transformation, with concepts derived from <strong>the</strong> relevant management literature and according to
<strong>the</strong> perceptions <strong>of</strong> respondents based on questionnaires that have been distributed. The librarian is undergoing
organizational learning and transformational leadership style that seeks to adapt to rapid change.
Transformational leadership style can be learned and applied by <strong>the</strong> librarian. Self-assessment tool based on <strong>the</strong>
adaptation <strong>of</strong> multi-factor leadership questionnaire (MLQ) is actually made by Bass and Avolio and developed by
Castiglione (2006) to study leadership styles in business, industry and military. The relevance <strong>of</strong> environmental
assessment tools with a library should be clarified using <strong>the</strong> "simple regression analysis" as a formal statistical
studies that assess <strong>the</strong> leadership styles and organizational learning. This research provides a useful literature
review for <strong>the</strong> library and management related to organizational learning and leadership styles. This information
is presented with <strong>the</strong> aim <strong>of</strong> increasing awareness, debate and additional research. This tool will allow library
pr<strong>of</strong>essionals to determine informally <strong>the</strong> level <strong>of</strong> organizational culture that is transformational or transactional.
Keywords: organizational learning, transformational leadership, librarian, higher education
1. Introduction
Technical and managerial skills are needed in running <strong>the</strong> library. Apart from inter-library loan service
more efficient, <strong>the</strong> nature and level <strong>of</strong> technological change is only a small impact on <strong>the</strong> operation <strong>of</strong>
<strong>the</strong> library. Thus, self-satisfaction may have dominated pr<strong>of</strong>essional thinking. For example, McMullen
(1995), associate pr<strong>of</strong>essor <strong>of</strong> library science at Indiana University, stated that <strong>the</strong> librarian in 2005,
will manage <strong>the</strong> library using <strong>the</strong> same mechanical devices that have been <strong>the</strong>re before. According to
Zhao and Resh (2001), <strong>the</strong> Internet has changed <strong>the</strong> entire process <strong>of</strong> creating, distributing, searching
and dissemination <strong>of</strong> knowledge. Information paradigm shift emphasis on digital resources and
electric transmission system to be representative <strong>of</strong> what has been called by Andrew Grove, Intel's
old leader, as a strategic point. Grove (1996) find strategic points during <strong>the</strong> foundation <strong>of</strong> business
life will change. According to <strong>the</strong> Grove (1996), changes are <strong>of</strong>ten <strong>the</strong> basis for <strong>the</strong> development <strong>of</strong>
strategic points which deliver competition, new products or services to <strong>the</strong> process <strong>of</strong> innovation and
substitution. Strategic point may mark <strong>the</strong> beginning <strong>of</strong> <strong>the</strong> cycle <strong>of</strong> new information and market
success in a career person, corporation or industry, or may be <strong>the</strong> start <strong>of</strong> a long decline for those
involved in business and management practices that are not flexible. Impact <strong>of</strong> strategic points,
affecting <strong>the</strong> enterprise and spread to all industries, as well as changing <strong>the</strong> competitive field.
Although <strong>the</strong> librarian argued about what level <strong>of</strong> technological change and <strong>the</strong> emergence <strong>of</strong>
corporate competition (Google) and o<strong>the</strong>r content acquisition program will affect <strong>the</strong> practice
keperpustakaan (Bell, 2005), reviews <strong>the</strong> literature on <strong>the</strong> library shows that many colleagues who
adapt <strong>the</strong>ir service model strategically as an effort to identify and serve <strong>the</strong> needs <strong>of</strong> new customers.
Similarly, services that facilitate <strong>the</strong> adaptation <strong>of</strong> a desire most senior librarian for out <strong>of</strong> <strong>the</strong>
technique <strong>of</strong> rigid command and control and trying new management system based on <strong>the</strong> concept <strong>of</strong>
organizational learning. Although <strong>the</strong> pr<strong>of</strong>ession in general, <strong>the</strong> authors give a good response to <strong>the</strong>
ongoing technical change, lack <strong>of</strong> resources and <strong>the</strong> librarian create a new managerial challenge for
librarians, which raises serious concerns on <strong>the</strong> ability <strong>of</strong> academic libraries to recruit and retain an
adequate number <strong>of</strong> librarians in an effort to bridge <strong>the</strong> gap labor between <strong>the</strong> number <strong>of</strong> librarians will
be retiring and <strong>the</strong> number <strong>of</strong> librarians who will be hired in <strong>the</strong> coming years. The report shows that
those who have certification as a librarian would occupy key positions managing <strong>the</strong> workforce
consists <strong>of</strong> people with different pr<strong>of</strong>essional skills. Lack <strong>of</strong> labor will affect public libraries, schools
and special. It seems clear that <strong>the</strong> management tools and skills <strong>of</strong> senior library staff will determine
<strong>the</strong> continuation rates in developing library services that are useful when facing technical changes
that continue to occur, <strong>the</strong> limited budget and lack <strong>of</strong> project personnel.
Changes in management, according to Shoaf (2004) requires a different set <strong>of</strong> leadership skills. In
response, librarians use management techniques that do not much depend on command and control
protocol, especially <strong>the</strong> emphasis on management practices that encourage communication among
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Irra Chrisyanti Dewi
staff, collaboration and consensus decision-making. In every aspect <strong>of</strong> academic library management,
self-satisfaction should be avoided (Michael and Higgins, 2002). Thus, <strong>the</strong> authors emphasize <strong>the</strong>
importance <strong>of</strong> continuous learning in organizations. Focused on <strong>the</strong> background <strong>of</strong> <strong>the</strong> problems
described above, <strong>the</strong>n <strong>the</strong> problem <strong>of</strong> this research can be formulated as follows: "Is <strong>the</strong>re a
relationship between organizational learning and transformational leadership style on college librarian
in Surabaya?".
2. Organizational Learning
Companies that make <strong>the</strong> learning organization is a company that has expertise in creating, taking,
and transferring knowledge, and modify <strong>the</strong>ir behavior to reflect new knowledge and experience.
Learning organizations reject stability by continually evaluating ourselves and experimentation.
Baldwin et al. (1997) states that members <strong>of</strong> organizations <strong>of</strong> all levels, not just top management,
continues to perform environmental observations in order to obtain important information, changes in
strategies and programs necessary to obtain a benefit from changes in <strong>the</strong> environment, and working
with methods, procedures and evaluation techniques continuously improved. Organizations that are
willing to experiment and be able to learn from her experiences will be more successful than
organizations that do not do it (Wheelen and Hunger, 2002). In order to achieve and maintain
competitive advantage in a business environment changing rapidly, organizations must be able to
increase <strong>the</strong> capacity <strong>of</strong> learning (Marquardt, 1996).
Some academic libraries, continue to move actively in <strong>the</strong> management model <strong>of</strong> organizational
learning. Facilitating this transition to be a commitment from library staff to encourage staff to master
new skills, develop self-management teams and flattening organizational hierarchy (Baughman and
Kaske, 2002). Organizations that adapt to <strong>the</strong> changes with new knowledge to drive continuous
improvement and enhance service delivery. Organizational learning process depends heavily on
workplace culture that encourages staff at all levels <strong>of</strong> <strong>the</strong> organization, share ideas and knowledge.
Library literature review on learning and organizational change indicates that facilitate organizational
learning, among o<strong>the</strong>rs: Environmental monitoring, Focusing on customers, Vision organization, Open
communication and cooperation between and among working groups, The participation <strong>of</strong> employees
in management decision, Research, Pr<strong>of</strong>essional development and mastery <strong>of</strong> new skillsh,
Pr<strong>of</strong>essional growth opportunities, Appropriate work environment, and Employee Diversity.
Learning and organizational transformation is only possible if <strong>the</strong> librarian shift from command and
control management techniques, and using a systems approach to organizational learning. Although
Pr<strong>of</strong>essor Haynes McMullen misjudged <strong>the</strong> impact <strong>of</strong> technology on library operations at <strong>the</strong>
beginning <strong>of</strong> <strong>the</strong> 21 st century, he stated correctly that <strong>the</strong> library may be influenced by external
changes are still not visible for long periods <strong>of</strong> time (McMullen, 1955). It is implicit in <strong>the</strong> statement
McMullen is <strong>the</strong> idea that librarians have to look beyond <strong>the</strong>ir pr<strong>of</strong>essional boundaries to gain
knowledge that will help <strong>the</strong>m anticipate and manage change. Senge in his book The Fifth Dicipline:
The Art and Practice <strong>of</strong> <strong>the</strong> Learning Organization, specifically describe systems thinking as a basis
for learning and organizational transformation. According to Senge, we must abandon <strong>the</strong> <strong>the</strong>ory <strong>of</strong>
<strong>the</strong> phenomenon, <strong>the</strong> strength or <strong>the</strong> process <strong>of</strong> exile. Once this is achieved, organizations can begin
<strong>the</strong> process <strong>of</strong> learning.
3. Transformational leadership
Transformational leadership is defined as involving a change <strong>of</strong> leadership in organizations. How far
<strong>the</strong> leader said to be a transformational leader, Bass (1990) and Koh, et al. (1995) in Hugo et al.
(2009) suggested that this could be measured in relation to <strong>the</strong> influence <strong>of</strong> <strong>the</strong>se leaders to
employees. Therefore, Bass (1990) in Hugo, et al. (2009) suggests <strong>the</strong>re are three ways a
transformational leader motivates employees, namely by encouraging employees to be more aware <strong>of</strong>
<strong>the</strong> importance <strong>of</strong> <strong>the</strong> results <strong>of</strong> operations, encouraging employees to put <strong>the</strong> interests <strong>of</strong> <strong>the</strong> group,
and increases <strong>the</strong> needs <strong>of</strong> employees such as higher self-esteem and self-actualization.
Attention people in leadership in <strong>the</strong> change process (management <strong>of</strong> change) began to emerge
when people start to realize that <strong>the</strong> mechanistic approach that has been used to explain <strong>the</strong>
phenomenon <strong>of</strong> change, <strong>of</strong>ten contrary to <strong>the</strong> opinion <strong>of</strong> those that change is actually making it more
humane workplace. In formulating <strong>the</strong> process <strong>of</strong> change, usually use a humane transformational
approach, in which <strong>the</strong> participatory work environment, opportunities for personal development, and
openness is considered as <strong>the</strong> conditions underlying <strong>the</strong> process, but in practice, <strong>the</strong> change process
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Irra Chrisyanti Dewi
was carried out by relying on <strong>the</strong> transactional approach mechanistic and technical nature, which men
tend to be viewed as an economic entity that is ready to be manipulated by using a system <strong>of</strong> rewards
and negative feedback, in order to achieve economic benefits as much as possible (Bass, 1990; Bass
and Avolio, 1990; Hater and Bass, 1988, as quoted by Hartanto, 1991).
Fur<strong>the</strong>rmore, according to Bass (1998) in Tschannen-Moran (2003) to be able to generate
productivity, transformational leadership has been defined as "fours I's" (individualized influence,
inspirational motivation, intellectual stimulation, and individualized consideration).
The library staff are using transformational management elements that are stated by Burns (1978)
and Avolio et al., (1999) to inspire, motivate and facilitate <strong>the</strong> renewal strategy by empowering <strong>the</strong>ir
staff to question old assumptions. Transformational managers who regard change as a process and
give staff an opportunity to express <strong>the</strong>mselves and create a vision <strong>of</strong> possible future interest for
<strong>the</strong>mselves and <strong>the</strong>ir stakeholders.
4. Relationships Between Organizational Learning and Transformational
Leadership
According to <strong>the</strong> meta-analysis <strong>of</strong> Burke et al. (2006) in Hugo, et al. (2009) investigated <strong>the</strong>
relationship between leadership behavior within <strong>the</strong> team with <strong>the</strong> results <strong>of</strong> team performance.
Results are from 50 empirical studies (until <strong>the</strong> year 2004), only three were included as an
organizational learning outcome variables and nine <strong>of</strong> <strong>the</strong>se studies examined <strong>the</strong> relationship
between transformational leadership and organizational learning. From a number <strong>of</strong> recent studies,
Aragon-Correa et al. (2005) in Hugo, et al. (2009) using data <strong>of</strong> 408 large Spanish firms and found
that transformational leadership facilitates <strong>the</strong> ability <strong>of</strong> member organizations to create and use
knowledge. Likewise, a study that examined 202 Spanish companies that build a strong and positive
impact <strong>of</strong> leadership that supports organizational learning (Llorens Montes et al., 2005 in Hugo, et al.,
2009). Recent studies in <strong>the</strong> non-pr<strong>of</strong>it Israel (school) indicates that transformational leadership
provides a significant positive direct effect on organizational learning (β = 0.21) (Kurland / Retz-
Lazarowitz 2006 in Hugo, et al., 2009). Effect <strong>of</strong> transactional leadership is still positive, but weaker (β
= 0.15).
Organizational learning will not occur in a vacuum. The librarian who accept <strong>the</strong> importance <strong>of</strong>
organizational learning for transformation and renewal strategy must also understand and apply
transformational techniques. At this time, <strong>the</strong> librarian who managed differently by <strong>the</strong> librarian mostly
due to <strong>the</strong>ir ability to move forward and anticipate <strong>the</strong> information needs <strong>of</strong> students, lecturers and
o<strong>the</strong>r stakeholders as appropriate. In an excellent review <strong>of</strong> leadership, Vera and Crossan (2004)
makes a direct connection between organizational learning and leadership styles.
Burns (1978) suggested that <strong>the</strong> <strong>the</strong>ory <strong>of</strong> transformational leadership and organizational
effectiveness is very important, although Burns studied transformational and transactional leadership
as opposite management styles. Bass (1998) and Howell and Avolio (1993) supports <strong>the</strong> idea that
managers who truly effective must be capable <strong>of</strong> using transformational and transactional leadership
styles. Although <strong>the</strong> statement Bass, Howell and Avolio probably right, at <strong>the</strong> level where <strong>the</strong> librarian
can change <strong>the</strong> management style <strong>of</strong> <strong>the</strong> time required by <strong>the</strong> state is important both practically and
<strong>the</strong>oretically. This is not an easy thing, because transformational and transactional management style
is very different as a result <strong>of</strong> business conditions that increasingly makes <strong>the</strong>m different.
5. Research methods
Based on <strong>the</strong> identification <strong>of</strong> classification variables, <strong>the</strong> operational definition <strong>of</strong> each variable
studied were:
Organizational learning is <strong>the</strong> perception <strong>of</strong> respondents regarding <strong>the</strong> ability <strong>of</strong> his boss (Head <strong>of</strong>
Library) to create, acquire, interpret and share knowledge aimed at modifying behavior, through
<strong>the</strong> development <strong>of</strong> science, <strong>the</strong>ories practical and cognitive skills in library staff member.
Transformational leadership style is <strong>the</strong> perception <strong>of</strong> respondents about <strong>the</strong> boss who is likely to
provide motivation to subordinates to work better and focus on behavior to help <strong>the</strong> transformation
<strong>of</strong> individuals and organizations.
The population in this study was college librarian in Surabaya. Based on data in Kopertis VII region <strong>of</strong>
East Java, <strong>the</strong>re are 84 universities <strong>of</strong> 26 Universities, 5 Institute, 31 High School, 15 Academy and 6
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Polytechnic. The sample in this study conducted in two phases (two-stage sampling). The first stage
determines sample college units by purposive sampling. By considering <strong>the</strong> representation <strong>of</strong> any
form <strong>of</strong> higher education in proportion and factor <strong>of</strong> management's willingness to accept as a place to
study, <strong>the</strong>n <strong>the</strong> college sample as in <strong>the</strong> table below.
Table 1: Distribution <strong>of</strong> Sample Units Higher Education
No Names <strong>of</strong> Higher Education Types <strong>of</strong> Higher Education
1 Airlangga University University
2 Petra University University
3 Surabaya University University
4 Ciputra University University
5 Surabaya Institute <strong>of</strong> Technology Institute
6 STMIK Surabaya High School
7 STIBA Satya Widya High School
8 STIE Perbanas High School
9 STIKES ABI High School
10 STIE IBMT High School
11 STIE Indonesia High School
12 Academy Secretary Widya Mandala Academy
13 Nursing Academy Hangtuah Academy
14 Polytechnic Sakti Polytechnic
Source: Primary Data, 2010
The second phase, determine <strong>the</strong> unit sample library staff members from <strong>the</strong> college sample units are
drawn as a sample at <strong>the</strong> first stage by census. Data collected in this study are primary and
secondary data. Primary data were collected through direct observation by referring to <strong>the</strong> instrument
using a questionnaire study. This questionnaire is intended to obtain data from respondents relating to
<strong>the</strong> object <strong>of</strong> organizational learning and transformational leadership style. Distributing questionnaires
conducted through <strong>the</strong> assistance <strong>of</strong> students who send and retrieve directly <strong>the</strong> questionnaires are
accompanied by some questions that are not structured to each <strong>of</strong> <strong>the</strong> college library.
The instrument used to collect data in this study is a questionnaire in <strong>the</strong> form <strong>of</strong> a written
questionnaire, where respondents were asked to answer or fill in a few things with regard to <strong>the</strong>ir
identities and respond to indicators <strong>of</strong> organizational learning and transformational leadership style.
The questionnaire addressed to <strong>the</strong> respondents (college library staff member) to get <strong>the</strong> perceptions
<strong>of</strong> <strong>the</strong> supervisor (Head <strong>of</strong> <strong>the</strong> college library.) In a written question in <strong>the</strong> questionnaire, <strong>the</strong> authors
adapt <strong>the</strong> questions according to <strong>the</strong> basic <strong>the</strong>ory and <strong>the</strong> indicators that have been described in <strong>the</strong>
operational definition.
We use regression analysis to determine how <strong>the</strong> dependent variable/criteria can be predicted by
independent variables or predictors, individually. Simple linear regression based on <strong>the</strong> functional
relationship or a causal one independent variable with one dependent variable.
Based on <strong>the</strong> <strong>the</strong>oretical description above, <strong>the</strong> hypo<strong>the</strong>sis <strong>of</strong> this research can be formulated as
follows:
Ho: There is no significant relationship between organizational learning and
transformational leadership style on college librarian in Surabaya.
Ha: There is a significant relationship between organizational learning and
transformational leadership style on college librarian in Surabaya.
6. Research Results and Discussion
After seeing <strong>the</strong> picture <strong>of</strong> <strong>the</strong> characteristics <strong>of</strong> <strong>the</strong> study sample, <strong>the</strong>n <strong>the</strong> next step in this research
is to test <strong>the</strong> validity and reliability <strong>of</strong> items and variables, this test done as part <strong>of</strong> <strong>the</strong> test data quality.
Test <strong>the</strong> validity <strong>of</strong> <strong>the</strong> research is done using product moment correlation. The following table below
is a picture <strong>of</strong> <strong>the</strong> validity <strong>of</strong> test results for <strong>the</strong> study sample, as follows:
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Table 2: Validity Test Results Variable Learning Organization
No Indicator rCompute rTable
1 ST 1,000 0,361
2 MM 0,429 0,361
3 PM 0,383 0,361
4 TL 0,383 0,361
5 SV 0,418 0,361
Based on Table 2 can be seen that all indicators have Product Moment correlation values above
0.361. This means that all indicators have construct validity, in <strong>the</strong> language <strong>of</strong> statistics means that
<strong>the</strong>re is internal consistency (internal consistency) are all indicators measuring <strong>the</strong> same aspects.
Thus, it can be concluded that <strong>the</strong> questionnaire was valid. Then to test <strong>the</strong> validity <strong>of</strong> <strong>the</strong>
transformational variables are as follows:
Table 3: Validity Test Results Transformational Leadership Style
No Indicator rCompute rTable
1 II 1,000 0,361
2 IS 0,474 0,361
3 IC 0,264 0,361
4 IM 0,294 0,361
Based on Table 3 can be seen that all indicators have Product Moment correlation values above
0.361. This means that all indicators have construct validity, in <strong>the</strong> language <strong>of</strong> statistics means that
<strong>the</strong>re is internal consistency (internal consistency) are all indicators measuring <strong>the</strong> same aspects.
Thus, it can be concluded that <strong>the</strong> questionnaire was valid.
Test Reliability indicates <strong>the</strong> accuracy, stability, and homogeneity <strong>of</strong> measuring instruments used.
Reliability instrument is a requirement for testing <strong>the</strong> validity <strong>of</strong> <strong>the</strong> instrument. <strong>the</strong>refore a valid
instrument, although generally reliable, but reliability testing <strong>of</strong> <strong>the</strong> instrument needs to be done.
instrument used to measure <strong>the</strong> reliability <strong>of</strong> <strong>the</strong> method split (split half). Recapitulation Product
Moment correlation values for <strong>the</strong> variables organizational learning and transformational leadership
style can be seen in <strong>the</strong> following table.
Table 4: Reliability Test Results
No Variable rxy Mark
1 OL 0,878 Very Strong
2 TL 0,743 Strong
From Table 4 note that <strong>the</strong> questionnaire used is reliable. Once <strong>the</strong> questionnaires are made valid
and reliable, <strong>the</strong>n <strong>the</strong> questionnaire is appropriate for distribution and actual data from questionnaires
will be processed to <strong>the</strong> next process is linear regression.
Simple Linear Regression Calculation done when <strong>the</strong> relationship between two variables or functional
form <strong>of</strong> causal relationship. To set <strong>the</strong> two variables have a causal relationship or not, it must be
based on <strong>the</strong>ories or concepts <strong>of</strong> <strong>the</strong>se two variables. The study was conducted to determine <strong>the</strong>
relationship between organizational learning and transformational leadership style. Based on <strong>the</strong>
model that has developed <strong>the</strong> test results obtained by simple linear regression for this study as shown
in <strong>the</strong> table below.
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Table 5: Simple Linear Regression Test Results
Irra Chrisyanti Dewi
Unstandardized
Coefficients
Variable
Β Std. Err t Sig.t
(Constant)
Organizational
3.934 0.307 12.821 0.000
Learning
Model <strong>of</strong> Result
3.434 0.064 0.538 0.592
R R 2 Adj R 2
0.47 0.002 -0.005
Based on Table 5, <strong>the</strong> results <strong>of</strong> simple linear regression analysis equation formulation is obtained as
follows:
Y = 3934 + 3434 X
From <strong>the</strong> equation it means that organizational learning has a significant relationship with
transformational leadership style, when transformational leadership style adopted by <strong>the</strong> Head <strong>of</strong> <strong>the</strong>
University Library in Surabaya right and as expected by members <strong>of</strong> library staff and in accordance
with <strong>the</strong> objectives <strong>of</strong> each college . So when a transformational leadership style increased by 10,
<strong>the</strong>n <strong>the</strong> learning organization is:
Y = 3,934 + 3,434 (10) = 38,274
From <strong>the</strong> regression equation above can be concluded that transformational leadership style has a
significant relationship with organizational learning at 38,274.
Head <strong>of</strong> Libraries that use elements such as transformational leadership to inspire, motivate and
facilitate <strong>the</strong> renewal strategy by empowering <strong>the</strong>ir staff members to question old assumptions,
consider <strong>the</strong> change as a process and give staff an opportunity to express <strong>the</strong>mselves and create a
vision <strong>of</strong> future possibilities interesting for <strong>the</strong>mselves and for <strong>the</strong>ir interests. At this time, librarians
must manage <strong>the</strong> traditional information services and develop new services that may only exist
through <strong>the</strong> use <strong>of</strong> technological advances. This implied that <strong>the</strong>re is in <strong>the</strong> view <strong>of</strong> leadership and
organizational learning Vera and Crossan (2004) is a concept that transformational leadership is
important at different points in <strong>the</strong> organizational life cycle. In particular, transformational leadership
will work best when an organization experiencing rapid changes.
Head <strong>of</strong> Library Ability to adapt leadership style depends on many factors. Differences in education,
managerial experience, years <strong>of</strong> entry as personnel <strong>of</strong> libraries, personal values and o<strong>the</strong>r factors may
have a significant impact on <strong>the</strong> ability or willingness Head <strong>of</strong> <strong>the</strong> Library to move to <strong>the</strong> transactional
or transformational style. Variations <strong>of</strong> leadership style and effectiveness <strong>of</strong> leadership in libraries and
private library sectors seems inevitable. If <strong>the</strong> transformational leadership style is more effective when
large changes occur, as stated in <strong>the</strong> literature. Fur<strong>the</strong>rmore, transformational leadership skills,
according to Bass (1990) can be studied. As has been stated in this study, most <strong>of</strong> <strong>the</strong> Head <strong>of</strong>
Library librarian switch to transformational leadership style. However, <strong>the</strong> depth and speed <strong>of</strong> this
displacement in all <strong>the</strong> libraries in Indonesia is still unclear. Analysis <strong>of</strong> questionnaires that were
distributed showed that transformational leadership style characterized by his charisma, intelligence
stimulation <strong>of</strong> members <strong>of</strong> staff and leadership style that considers <strong>the</strong> opinions <strong>of</strong> staff members.
Individualized influence
Head <strong>of</strong> University Library staff members in Surabaya perceived as <strong>the</strong> highest rating, that he is
an admired model subordinates. This is because he is facilitating <strong>the</strong> work team with a library full
<strong>of</strong> confidence, thus achieving <strong>the</strong> enthusiasm on <strong>the</strong> mission, goals, and objectives <strong>of</strong> <strong>the</strong> library
itself. In addition, <strong>the</strong> Head <strong>of</strong> <strong>the</strong> University Library is perceived in leadership always consider <strong>the</strong>
moral and ethical issues when making decisions.
Inspirational motivation
In this indicator, Head <strong>of</strong> <strong>the</strong> University Library is <strong>the</strong> highest perceived he had an understanding
that change is not something to be feared. By bringing to focus and lead members <strong>of</strong> his staff to
anticipate and study <strong>the</strong> possibility <strong>of</strong> <strong>the</strong> emergence <strong>of</strong> new services. Head <strong>of</strong> <strong>the</strong> University
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Irra Chrisyanti Dewi
Library is expected as an innovator with <strong>the</strong> appearance <strong>of</strong> change, but he also wanted on his
staff members to experience and take risks for <strong>the</strong> new service.
Intellectual stimulation
Head <strong>of</strong> <strong>the</strong> University Library is perceived always encourage staff to participate in and adapt
quickly to change <strong>the</strong> scrolling. To that end, staff are expected to develop some new skills. With
attitudes like this. The impact to give impetus to <strong>the</strong> culture <strong>of</strong> <strong>the</strong> organization to always be
improved and sustained. Finally, with so encourage staff members to always be high performing
and <strong>the</strong>re are initiatives Head <strong>of</strong> University Library staff to evaluate.
Individualized consideration
As a leader and Head <strong>of</strong> University Library perceived supervisor has provided a conducive
environment in parts. Staff members feel comfortable, quiet and pr<strong>of</strong>essional work if <strong>the</strong> Head <strong>of</strong>
<strong>the</strong> University Library and assess empower staff members with full openness, good attitude and
polite.
7. Conclusion
So, if <strong>the</strong> leadership style adopted by <strong>the</strong> Head <strong>of</strong> University Library in Surabaya right, like <strong>the</strong>
example has a vision far ahead, have good communication links and developing nature-friendly library
staff members, has <strong>the</strong> managerial skills, conceptual and social, have a responsibility and discipline,
has a creative and innovative nature, dare to take risks and love to work hard, it is automatically a
member <strong>of</strong> library staff will feel <strong>the</strong> presence <strong>of</strong> his superior organizational learning and also to work.
To increase organizational learning, Head <strong>of</strong> University Library to make transformational policy by
providing an appropriate reward and provide <strong>the</strong> freedom for members <strong>of</strong> library staff to complete <strong>the</strong>
work by <strong>the</strong>mselves, do something beyond what has been defined by his superiors and take <strong>the</strong>
initiative in doing <strong>the</strong>ir jobs.
Fur<strong>the</strong>r research needs to be done for things that still can not be concluded in this study. This
happens because <strong>of</strong> <strong>the</strong> limitations <strong>of</strong> research in <strong>the</strong> definition <strong>of</strong> organizational learning. Research
carried out only at <strong>the</strong> college library in Surabaya, so that needs to be done on a larger population
and greater number <strong>of</strong> samples in order to provide a true picture.
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156

Knowledge Acquisition and Sharing: A Sustainable Source
<strong>of</strong> Competitive Advantage in Supply Chains
Ikechukwu Diugwu
Department <strong>of</strong> Project Management Technology, Federal University <strong>of</strong>
Technology, Minna, Nigeria
hushilld@aim.com
Abstract: The level <strong>of</strong> success enjoyed by an organisation is dependent upon <strong>the</strong> level <strong>of</strong> competitive advantage
it enjoys over its competitors. Competitive advantage is known to be a function <strong>of</strong> <strong>the</strong> extent to which an
organisation adapts and applies its resources in <strong>the</strong> exploitation <strong>of</strong> prevailing market conditions; and this is in turn
dependent on <strong>the</strong> level <strong>of</strong> knowledge about existing market conditions, modern production techniques and
processes. Although it was previously believed that tangible or physical economic assets <strong>of</strong> an organisation were
<strong>the</strong> major sources <strong>of</strong> sustainability and pr<strong>of</strong>itability, <strong>the</strong>re has, however, been a gradual but steady change in
perception <strong>of</strong> a firm’s real source <strong>of</strong> competitive advantage, sustainability and pr<strong>of</strong>itability. The contemporary
view is that sustainability, pr<strong>of</strong>itability, as well as competitive advantage no longer come from tangible economic
assets but ra<strong>the</strong>r from sources that ensure adequate utilisation <strong>of</strong> <strong>the</strong> knowledge or intellectual capital inherent in
an organisation. While it is possible that several organisations may have access to <strong>the</strong> same or similar
knowledge at <strong>the</strong> same time, <strong>the</strong> level <strong>of</strong> utilisation <strong>of</strong> this knowledge varies from organisation to organisation. It
is this variation that holds <strong>the</strong> key to sustainable competitive advantage. Although more <strong>of</strong> a <strong>the</strong>oretical and
qualitative work, this paper shall, through a literature review <strong>of</strong> competitive advantage, knowledge acquisition and
sharing, learning, partnerships and networking, supply chain management, as well as citing results from earlier
research surveys, as well a PhD research conducted by <strong>the</strong> author, highlight how organisations in supply chains
can improve <strong>the</strong>ir competitiveness by leveraging on <strong>the</strong> intellectual capabilities and resources <strong>of</strong> <strong>the</strong>ir partners.
Sustained competitive advantage through improved customer relationship/loyalty, greater awareness <strong>of</strong> business
processes and performance, faster and better management decision making, as well as effective product/service
development are some <strong>of</strong> <strong>the</strong> motivations for engagement in knowledge acquisition and sharing activities by
organisations.
Keywords: competitive advantage, competitors, competitiveness, knowledge acquisition, knowledge sharing,
supply chain, learning, sustainability, partnerships, networking
1. Introduction
There has been a relative increase in <strong>the</strong> number <strong>of</strong> organisations and this has increased <strong>the</strong> level <strong>of</strong>
competition for consumers <strong>of</strong> <strong>the</strong>se good and services among organisations. None<strong>the</strong>less, firms can
still out-perform o<strong>the</strong>rs in terms <strong>of</strong> sales margins, and retention <strong>of</strong> more customers. Competitive
advantage is ordinarily ensured by factors like cost, quality, novelty, handiness, circulation network,
as well level <strong>of</strong> customer support. Competitive advantage is simply an advantage enjoyed by an
organisation over o<strong>the</strong>rs, derivable from <strong>the</strong> ability to <strong>of</strong>fer consumers greater value for money
through reduced prices or <strong>the</strong> provision <strong>of</strong> services/products that may justify higher prices.
It was previously believed sustainability and pr<strong>of</strong>itability were solely dependent on tangible or physical
economic assets <strong>of</strong> an organisation. There has been a change in awareness <strong>of</strong> <strong>the</strong> real source(s) <strong>of</strong>
sustainability, pr<strong>of</strong>itability, and competitive advantage. Consequently, sustainability and pr<strong>of</strong>itability <strong>of</strong>
a firm is dependent on <strong>the</strong> level <strong>of</strong> competitive advantage over its competitors; <strong>the</strong> more sustainable a
competitive advantage is, <strong>the</strong> harder it is to be neutralised. Because sustainability, pr<strong>of</strong>itability, and
competitive advantage are no longer determined by tangible economic assets, it should, <strong>the</strong>n,
emanate from an ability to adequate utilise inherent knowledge or intellectual capital.
Porter (1998) suggests that sustainable competitive advantage can be attained ei<strong>the</strong>r through cost
leadership, differentiation approach, or focus approaches. The contributions <strong>of</strong> tangible and
intangible resources to <strong>the</strong> competiveness <strong>of</strong> organisations have been compared. Arising from <strong>the</strong>se,
it has been argued that competitive advantage is more likely to emanate from intangible resources
(e.g. knowledge) than from tangible resources because intangible resources ensures that value are
added to inward factors <strong>of</strong> production, (Hitt et al., 2001). A resource is a scarce, non-substitutable,
hard to copy, non-tradable, durable, advantageously rent-generating asset which provides superior
firm performance (Teece et al., 1997).
While Shepherd (1970) believes that many forms <strong>of</strong> competitive advantage cannot be sustained
indefinitely as <strong>the</strong>y will invariably be duplicated by competitors, D’Aveni (1994) alluded to this in his
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hypercompetitive model. Consequently, Wessels (2000) notes that a sustainable competitive
advantage is only created when <strong>the</strong> value-creating processes and position <strong>of</strong> a firm have nei<strong>the</strong>r been
replicated nor copied by o<strong>the</strong>r. It is doubtful that any process cannot be replicated, or any position not
equalled or surpassed. But, through a continuous learning culture or habit, new knowledge and skills
on how existing processes and practices can be improved upon are acquired, ensuring <strong>the</strong>
maintenance <strong>of</strong> a market leader position. This is because inherent knowledge is <strong>of</strong>ten harnessed
and transformed into processes and activities that become norms, <strong>of</strong>ten peculiar to an organisation,
and representing <strong>the</strong> source <strong>of</strong> its core competencies and capabilities. The process through which
knowledge is acquired and transferred varies from organisation to organisation (Autio et al., 2000). It
is this variation that makes knowledge a valuable, unique, and non-substitutable resource (Barney,
1991), capable <strong>of</strong> ensuring a sustainable competitive advantage (Prahalad and Hamel, 1990).
However, knowledge is not self-creating. It must be acquired through a learning process.
As an example, DeCarolis and Deeds (1999) as well as Hurley and Hult (1998) observe that <strong>the</strong>re is a
relationship between new knowledge creation and firm size, such that large firms have more
resources to spend on Research and Development (R&D) than small firms. Again, <strong>the</strong>re are pointers
that <strong>the</strong> ability to apply knowledge is also affected by <strong>the</strong> size <strong>of</strong> a firm, perhaps because large firms
are more likely to engage in expenditures that are associated with strategic and operational changes,
and can also boast <strong>of</strong> having <strong>the</strong> calibre <strong>of</strong> human resources to understand, implement, and manage
such changes (Finch, 1986; Gargeya and Thompson, 1994).
2. Knowledge and learning: Two sides <strong>of</strong> <strong>the</strong> same coin
It is observed that knowledge is enhanced by learning (Terra and Angeloni, 2003), and learning is <strong>the</strong>
process <strong>of</strong> developing and enhancing routines over time (Harberberg and Rieple, 2001). Learning
increases <strong>the</strong> ability and enthusiasm <strong>of</strong> individuals and groups to gain and creatively apply new
knowledge and skills towards successful adaptation to changes and challenges as well as growth.
Learning is a lasting practice that enhances <strong>the</strong> ability to be smart, increase problem solving abilities,
and <strong>the</strong> capacity to anticipate and adapt to changes. While learning enhances <strong>the</strong> capacity to take
action (Kim, (1993), <strong>the</strong> ability <strong>of</strong> organisations to change and expand <strong>the</strong>ir boundaries are dependent
on <strong>the</strong> generation and effective utilisation <strong>of</strong> knowledge (Barney, 1999). Fur<strong>the</strong>rmore, while
knowledge encompasses what we know and what we can do; an indication <strong>of</strong> a state and, <strong>the</strong>refore,
potential for action and decision, learning, on <strong>the</strong> o<strong>the</strong>r hand, describes <strong>the</strong> change in a given
knowledge state (Keating et al., 1999). Again, learning enhances <strong>the</strong> ability to survive <strong>the</strong> challenges
<strong>of</strong> change (Clark, 1991; Cunningham, 1994; Heywood, 1989), and for an effective change to take
place, organisations and individuals must first learn (Argyris, 1993; Fiol and Lyles, 1985; Srivastva et
al., 1995).
Studies aimed at identifying sources <strong>of</strong> a firm’s competitive advantage have been carried out on those
unique and value-adding characteristics that are capable <strong>of</strong> being transferred between firms (Coplin,
2002; Peteraf, 1993; Porter, 1985). This led to <strong>the</strong> development <strong>of</strong> resource-based and knowledgebased
<strong>the</strong>ories that examine <strong>the</strong> association among core resources, capabilities, sustainable
competitive advantage, and above average performance (Njuguna, 2009). It is generally accepted
that learning plays a central role in <strong>the</strong> success or o<strong>the</strong>rwise <strong>of</strong> organisations. Subsequently,
according to Jorma Ollila (see Harung and Gustavsson, 1994), <strong>the</strong> only source <strong>of</strong> sustainable
competitive advantage available to an organisation is <strong>the</strong> rate at which it learns, and this has pushed
many organisations into adopting continuous learning (Goh, 2003) as survival strategies.
Knowledge is simply a fluid mix <strong>of</strong> framed experience, values, contextual information, and expert
insight that provides a structure for evaluating and incorporating new experiences and information,
and <strong>of</strong>ten becomes embedded in documents, repositories, organisational routines, processes,
practices, and norms with <strong>the</strong> mind <strong>of</strong> <strong>the</strong> knower serving as <strong>the</strong> origin and centre <strong>of</strong> application
(Davenport and Prusak, 1998). Knowledge dwells in <strong>the</strong> mind <strong>of</strong> an individual and describes <strong>the</strong>
combined effect <strong>of</strong> human experience and reflection based on a set <strong>of</strong> individual and collective beliefs
(Terra and Angeloni, 2003).
Polanyi (1967) distinguishes between tacit and explicit knowledge. A knowledge that cannot be
adequately expressed or articulated is known as tacit knowledge (Nickols, 2000) as it is based on
individual experiences, and involves personal beliefs, perspectives and values (Polanyi, 1967).
Implicit Knowledge is knowledge that can be articulated but is yet to be and can only be inferred from
observable behaviour or performance (Nickols, 2000). Knowledge becomes explicit if it has been
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articulated and stored in a form that can be transmitted. Thus, explicit knowledge is formal and
systematic knowledge (Nonaka, 1991), which is dependent on norms, attitudes, flow <strong>of</strong> information,
and ways <strong>of</strong> making decisions that shape how people deal with one ano<strong>the</strong>r.
Irrespective <strong>of</strong> <strong>the</strong> differing views on tacit and explicit forms <strong>of</strong> knowledge, competitive advantage is
determined more by tacit knowledge than by explicit knowledge (Grover and Davenport, 2001),
probably because <strong>the</strong> uniqueness in how things are done that makes it difficult to copy is ensured by
<strong>the</strong> knowledge that is resident in individuals that ensures <strong>the</strong>. Despite <strong>the</strong> differing views, Alavi and
Leidner (2001) note that tacit and explicit forms <strong>of</strong> knowledge are not two dichotomous states <strong>of</strong>
knowledge, but are reciprocally dependent and reinforcing qualities <strong>of</strong> knowledge. This reinforces an
earlier view that <strong>the</strong> structure necessary to develop and interpret explicit knowledge is built around
tacit knowledge (Polanyi, 1967). The author believes that explicit knowledge contributes more to
performance improvement in organisations than tacit knowledge because knowledge can only bring
about improvement in performance if it has been captured, organised, disseminated, and used
appropriately (Wagner, 2003).
Consequently, learning and knowledge are major means <strong>of</strong> responding to <strong>the</strong> uncertainties <strong>of</strong> <strong>the</strong>
business environment (Antonacopoulou, 1999) and <strong>the</strong> attainment and sustenance <strong>of</strong> a competitive
edge over competitors are affected by <strong>the</strong> possession and effective utilisation <strong>of</strong> requisite knowledge.
The impact <strong>of</strong> learning and knowledge on survival <strong>of</strong> organisations is more pronounced in innovation
drive sectors (Terra and Angeloni, 2003). This corroborates <strong>the</strong> result <strong>of</strong> <strong>the</strong> Third Community
Innovation survey which shows that 23% (comprising 35% innovating companies and 13% noninnovating
companies) <strong>of</strong> industrial companies forged partnerships or alliances for knowledge
acquisition (Sessi, 2002).
3. The connection between knowledge and competitive advantage
The attainment <strong>of</strong> sustainable competitive advantage by an organisation depends on <strong>the</strong> recognition
<strong>of</strong> knowledge as a strategic resource to be created and harnessed effectively. Fur<strong>the</strong>rmore, <strong>the</strong>
acquisition and preservation <strong>of</strong> superior performance which ensures competitive advantage depends
on <strong>the</strong> level <strong>of</strong> available resources and capabilities (Aaker, 1989). This situation depends on inherent
knowledge because knowledge resources and capabilities, broadens an understanding <strong>of</strong> <strong>the</strong>
peculiarities <strong>of</strong> any business environment, and improves <strong>the</strong> ability <strong>of</strong> individuals and organisations to
respond to different circumstances (Sinkula, 1994), and sustain its competitive position over <strong>the</strong>ir
competitors (Spender and Grant, 1996). The ability to continuously acquire, assimilate, disseminate,
share and use knowledge is determinant to success as it leads to innovation <strong>of</strong> products, better
product development procedures, improved quality, flexibility in a dynamic market and improved
customer service (Huber, 1991; Senge et al., 1994). The ability to convert intellectual resources into
a chain <strong>of</strong> services in a form useful for customers differentiates successful enterprises (Quinn, 1992),
and for optimum performance and growth, <strong>the</strong>re is need for organisations to integrate and share
knowledge (Zack, 1999). Survey result shows that firms believe that <strong>the</strong>re are substantial rewards
from sharing knowledge (Economist Intelligence Unit, 2005). The implies that <strong>the</strong> establishment <strong>of</strong>
customer loyalty, improved turn-over, increased pr<strong>of</strong>it, as well as competitive advantage requires an
ability to recognise changes, identify customer behaviour patterns, and adopt appropriate measures
to address <strong>the</strong>se. Although, <strong>the</strong> ability to understand customers’ needs, and predict changes in <strong>the</strong>ir
behaviour could create a decisive advantage over competitors, this is an area where firms’
knowledge-management capabilities are <strong>of</strong>ten weakest (Economist Intelligence Unit, 2005).
Possession <strong>of</strong> assets does not create sustainable competitive advantage; this comes from <strong>the</strong> ability
to control assets and use <strong>the</strong>se to formulate and apply value-enhancing strategies (Barney, 1991;
Wernerfelt, 1984). A firm's ability to create and apply knowledge are key to creating and sustaining its
competitive advantage (Grant, 1996a; Nonaka, 1994; Teece, 1998, 2000; Teece et al., 1997;
Wernerfelt, 1984, 1995). Liebeskind (1996) attributes this to <strong>the</strong> fact that competition has become
more knowledge-based, causing a shift in focus from physical or labour resources to knowledge
resources as <strong>the</strong> real sources <strong>of</strong> sustainable competitive advantage. Again, <strong>the</strong> effective application
<strong>of</strong> knowledge leads to a sustainable competitive advantage (Grant, 1995, 1996b)., and determinants
to successful implementation <strong>of</strong> business strategies by organisations are <strong>the</strong> acquisition and
development <strong>of</strong> knowledge (Doz, 1996). In view <strong>of</strong> this, in <strong>the</strong> contemporary global economy,
knowledge has become a pre-requisite to achieving a sustainable competitive advantage
(Chakravarthy et al., 2003) and <strong>the</strong> proper management <strong>of</strong> intellectual capital plays a fundamental
role in improving <strong>the</strong> competitive advantage <strong>of</strong> leading organisations (KPMG, 2000).
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Knowledge, however, must flow into actions for it to be useful and pr<strong>of</strong>itable (Demarest, 1997). In a
free market economy, irrespective <strong>of</strong> <strong>the</strong> fact that knowledge creation produces and sustains pr<strong>of</strong>it
potential, it is only those organisations that have successfully applied acquired knowledge that make
pr<strong>of</strong>its (Spender, 1994). This implies that learning new skills alone cannot create needed competitive
edge over competitors; this comes through <strong>the</strong> translation <strong>of</strong> acquired skills/knowledge into new
technologies, goods/services, and proper dissemination (Grant, 1996b; Nonaka, 1991; Spender,
1994). Thus, <strong>the</strong> creation and application <strong>of</strong> knowledge should be <strong>the</strong> cardinal point <strong>of</strong> a firm’s
strategy (Droge et al., 2003).
There is a belief that <strong>the</strong> discrepancy in <strong>the</strong> level <strong>of</strong> inherent knowledge accounts for performance
differences among firms. Kogut and Zander (1992) note that <strong>the</strong> heterogeneous and inimitable nature
<strong>of</strong> knowledge resources makes knowledge <strong>the</strong> primary source <strong>of</strong> value as well as a determinant <strong>of</strong>
performance differences across firms. Thus, only firms that can create new knowledge at a lower
cost and a faster rate, and apply this knowledge more effectively and efficiently than <strong>the</strong>ir competitors,
become successful at creating competitive advantages. So long as knowledge continues to remain
<strong>the</strong> most important resource that a firm can possess, <strong>the</strong> continual creation <strong>of</strong> new knowledge
remains critical to a firm’s sustainability (Liebeskind, 1996; Nonaka, 1991). Although Bierly (1999)
argues that for a knowledge competence to remain unique to a firm, it must not be obtained from a
source which is also available to competitors, but should be internally developed, it is worth noting
that competitive advantage does not depend on <strong>the</strong> source <strong>of</strong> knowledge or skill, but ra<strong>the</strong>r on <strong>the</strong>
extent <strong>of</strong> application <strong>of</strong> acquired knowledge or skill (Spender, 1994; Teece, 2000).
While <strong>the</strong> observation by Droge et al. (2003) that empirical research does not always support <strong>the</strong>
claimed positive effect <strong>of</strong> knowledge on performance could <strong>the</strong> desire to learn and acquire <strong>of</strong>
knowledge (Gold et al., 2001), it should be noted that <strong>the</strong> acquisition <strong>of</strong> new knowledge has an
anecdotal positive effect on performance. This discrepancy between empirical and anecdotal
evidence is attributable to <strong>the</strong> fact that what was empirically measured was applied knowledge,
whereas it is applied knowledge (not knowledge creation) that is related to performance (Droge et al.,
2003). None<strong>the</strong>less, knowledge creation and firm effectiveness are hypo<strong>the</strong>sized to relate positively
(Droge et al., 2003). This contribution <strong>of</strong> knowledge to improved performance comes from an
increased speed <strong>of</strong> product/service delivery at lower costs and higher pr<strong>of</strong>it margins (Nonaka, 1994).
4. Networking and partnering for improved competitiveness
One way <strong>of</strong> developing and sustaining knowledge is through research and development (R&D)
programmes (Hitt et al., 2000). However, Diugwu (2008) shows that lack <strong>of</strong> resources deter firms
from embarking on improvement initiatives, including R&D. Under this circumstance,
creating/enhancing knowledge can be through training <strong>of</strong>fered by training providers or business
associates. Mentzer et al., (2000:550) describe partnership as “inter organizational entity developed
between two independent organizations in a vertical relationship within a supply chain”. Learning in
partnership arrangements could involve learning about one’s partner, where most <strong>of</strong> <strong>the</strong> information is
tacit; learning about tasks, predicated upon established objectives and goals expected <strong>of</strong> <strong>the</strong> partners;
and learning about <strong>the</strong> outcome <strong>of</strong> such relationships (Doz, 1996). Learning in supply chains is
enhanced when organisations collaborate and a leading partner acts as a coordinator; this ensures
that a process <strong>of</strong> learning occurs throughout <strong>the</strong> chain (Gereffi, 1995). Partnerships and networks
facilitate <strong>the</strong> pooling toge<strong>the</strong>r and interaction <strong>of</strong> complementary skills to produce a shared
understanding that was nei<strong>the</strong>r previously possessed individually nor could have been acquired
single-handedly (Schrage, 1990). Partnering and networks add value to an organisation’s activities
and also help in <strong>the</strong> improvement <strong>of</strong> its competitiveness through an effective sharing <strong>of</strong> information,
skills and resources (Department <strong>of</strong> Trade and Industry, 2004). By <strong>of</strong>fering through better access to
complementary skills and knowledge (Clark et al., 1991; Powell, 1987), partnering and networks <strong>of</strong>fer
direct benefits to organisations and remain <strong>the</strong> most significant channels <strong>of</strong> improving performance <strong>of</strong>
organisations (Larson and Drexler, 1997). Also Chen et al., (2006) note that social and electronic
networks were important channels through which firm acquire knowledge.
Knowledge has a positive impact on <strong>the</strong> creation and sustenance <strong>of</strong> competitive advantage and
pr<strong>of</strong>itability <strong>of</strong> organisations (Grant, 1991). Consequently, as important as learning/acquiring new
knowledge is <strong>the</strong> establishment <strong>of</strong> structures capable <strong>of</strong> sustaining this new knowledge over time
(Black and Boal, 1994). Again, enhancing competitive advantage through partnerships needs
concerted efforts because facilitating/coordinating learning in organisational networks made up <strong>of</strong>
discrete and independent entities having different cultures is not always easy because <strong>of</strong> difficulties in
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establishing setting up systems that promote <strong>the</strong> development and implementation <strong>of</strong> knowledge
sharing (Lehaney, 1999). Learning is facilitated by shared norms and values (Wagner, 2003); hence
<strong>the</strong> importance <strong>of</strong> establishing partnerships or joining networks sharing similar norms and values.
Reasons why organisations establish co-operative arrangements with o<strong>the</strong>r organisations include <strong>the</strong>
creation <strong>of</strong> internal knowledge (Richter and Vettel, 1995). Siekman (2002) highlights where
improvement between programme launch and first delivery time was achieved owing to improvements
in organisational capabilities brought about by collaborations. Fur<strong>the</strong>rmore, Gold et al. (2001) show a
positive relationship between knowledge application and firm effectiveness, while Tan et al., (1999)
observe a positive relationship between growth and financial performance <strong>of</strong> organisations and <strong>the</strong>ir
ability to integrate and apply knowledge from major supply chain members.
5. Conclusion
Knowledge will be critical for organisational success in <strong>the</strong> coming years, and organisational
effectiveness would require <strong>the</strong> improvement <strong>of</strong> organisational capabilities for leveraging and
exploiting knowledge. The ability <strong>of</strong> an organisation to attain and maintain a vantage position in a
business environment is dependent on its ability to create, and when necessary transfer knowledge
(internally or externally). Thus, <strong>the</strong> creation <strong>of</strong> an environment that facilitates learning and adaptation
<strong>of</strong> skills and knowledge than competitors’ becomes a great source <strong>of</strong> sustainable competitive
advantage. This is because learning and knowledge improves <strong>the</strong> ability to respond to uncertainties
<strong>of</strong> <strong>the</strong> business environment.
Organisations ought to imbibe a continuous learning culture because whereas a single instance <strong>of</strong>
organisational learning may lead to <strong>the</strong> skills, practices and processes that are relatively easy to
replicate, continuous learning leads to ingrained skills that are difficult to copy. Thus, <strong>the</strong> possession
and effective utilisation <strong>of</strong> necessary knowledge can, and indeed does <strong>of</strong>fer an organisation a
competitive edge over its competitors.
Partnering and collaborations engender improved competitiveness through effective sharing <strong>of</strong>
information, skills and resources.
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163

Influence <strong>of</strong> Organisational Changes on Social Networks –
A longitudinal Study <strong>of</strong> Knowledge Sharing and
Cooperation <strong>of</strong> PhD. Students
Eva Eckenh<strong>of</strong>er
Tomas Bata University, Zlín, Czech Republic
eckenh<strong>of</strong>er@fame.utb.cz
Eva_Eckenh<strong>of</strong>er@hotmail.com
Abstract: Knowledge sharing and co-operation within groups are to some extend <strong>the</strong> result <strong>of</strong> social capital as
studies have shown. One reason is that due to trust <strong>the</strong> risks <strong>of</strong> opportunistic behaviour are minimized. Shared
norms, values and understandings are o<strong>the</strong>r reasons, as Social Capital is defined as <strong>the</strong> outcome for individuals
from networks which fulfil <strong>the</strong>se criteria. O<strong>the</strong>r conditions are proximity, <strong>the</strong> quality <strong>of</strong> relationships in
psychological, cultural, social and physical dimensions which influences quality and quantity <strong>of</strong> communication
and common target, areas <strong>of</strong> interest and expertise. Ano<strong>the</strong>r criterion is space, as networking needs real, virtual
or mental space to develop and spread. Informal networks, which are a powerful source <strong>of</strong> collaboration and a
gateway for information and knowledge, always depend on communication, as <strong>the</strong> development <strong>of</strong> trust is highly
influenced by unconscious artefacts (e.g.: body language). Therefore <strong>the</strong> design and architecture <strong>of</strong> <strong>of</strong>fices play a
vivid role for <strong>the</strong> creation <strong>of</strong> informal intra-organisational networks. As a result changes to <strong>the</strong> items that influence
social networks will also affect knowledge sharing and co-operation within groups. The aim <strong>of</strong> this paper 1
is to
evaluate <strong>the</strong> <strong>the</strong>sis that organizational changes have an effect on informal social networks, especially relations
focused on information exchange and knowledge sharing. On <strong>the</strong> basis <strong>of</strong> a longitudinal survey <strong>of</strong> a group <strong>of</strong> PhD
students at <strong>the</strong> Faculty <strong>of</strong> Management and Economics at Tomas Bata University this topic will be analysed. Via
online questionnaire data about <strong>the</strong> social relations prior to and after organizational changes, which include
relocation <strong>of</strong> <strong>of</strong>fices, implementation <strong>of</strong> joint meetings and un<strong>of</strong>ficial ga<strong>the</strong>rings, has been collected. The special
characteristic about this group <strong>of</strong> students is that almost a third <strong>of</strong> <strong>the</strong>m are from different countries o<strong>the</strong>r than <strong>the</strong>
Czech Republic. The lack <strong>of</strong> integration <strong>of</strong> those students, due to linguistic and cultural barriers made
organisational changes necessary for <strong>the</strong> benefit <strong>of</strong> both, <strong>the</strong> local students and <strong>the</strong> foreign students. In an online
questionnaire to all full-time Ph.D. Students, <strong>the</strong> respondents were asked to declare specific relations <strong>the</strong>y had to
<strong>the</strong>ir colleagues, such as pr<strong>of</strong>essional and private communication, <strong>of</strong>fice sharing and joint-publication activities.
Based on Social Network Analysis <strong>of</strong> whole networks using Ucinet and netdraw, <strong>the</strong> findings showed that <strong>the</strong>re is
positive effect <strong>of</strong> specific organisational changes on knowledge-sharing and co-operation <strong>of</strong> students as well as
productivity in terms <strong>of</strong> publication outputs.
Keywords: social networks, knowledge sharing, co-operation, social network analysis (sna), organizational
change
1. Introduction
Leaving apart <strong>the</strong> chicken and egg question whe<strong>the</strong>r Social Capital, defined as <strong>the</strong> outcomes for
individuals from networks with shared norms, values, and understandings that facilitate co-operation
within and among groups (OECD, 2001), or Social Networks, defined as a set <strong>of</strong> persons, and <strong>the</strong>
linkages between <strong>the</strong>m (Tichy et al. 2001), were first (Robinson et al., 2002), it is clear that <strong>the</strong>ir
interplay can lead to positive outcomes such as knowledge sharing (Chow and Chan, 2008),
productivity (Granovetter, 2005), resources-access (Lin et al., 2001), knowledge-transmission
(Halpern, 2005) and innovation (Cooke, 1999). The positive effects result mainly from embeddedness
in terms <strong>of</strong> structural, cultural, political and cognitive aspects, in a network under <strong>the</strong> existence <strong>of</strong>
trust, norms and values, proximity and reciprocity (Uzzi, 1997). Structural aspects are advantages
resulting from <strong>the</strong> fruitful combination <strong>of</strong> strong and weak ties (Granovetter, 1985), as well as benefits
from structural holes (lack <strong>of</strong> network closure), which lead to brokerage opportunities according to
Burt’s structural holes <strong>the</strong>ory (Burt, 1992).
Trust can be defined on a general network or societal level as an "expectation that arises within a
community <strong>of</strong> regular, honest and cooperative behaviour based on commonly shared norms on <strong>the</strong>
part <strong>of</strong> o<strong>the</strong>r members <strong>of</strong> that society," (Fukuyama 1995, p.26) but also at an individual relationship
level as an attribute <strong>of</strong> a relationship, which is an expectation that alleviates <strong>the</strong> fear that <strong>the</strong> o<strong>the</strong>r one
1 The preparation <strong>of</strong> this paper was financially supported by <strong>the</strong> Internal Grant Agency <strong>of</strong> Faculty <strong>of</strong> Management
and Economics on Tomas Bata University, Project-No. IGA/49/FaME/11/D “Social Network Analysis in
Performance Measurement and Network Visualisation”.
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Eva Eckenh<strong>of</strong>er
could behave opportunistically. The emergence <strong>of</strong> trust itself is influenced by common norms and
values recognized as valid within a network or society, and <strong>the</strong> trustworthiness <strong>of</strong> an actor which can
be considered as an individual attribute (Tsai and Goshal, 1998).
Ano<strong>the</strong>r factor <strong>of</strong> influence beside interpersonal communication is proximity which is defined as <strong>the</strong>
quality <strong>of</strong> relationships in psychological, cultural, social and physical dimensions that influences <strong>the</strong>
quality and quantity <strong>of</strong> communication (Becerra and Huemer, 2002), (Lechner and Dowling, 2003),
(Gössling, 2007). This implies that real, virtual or mental space is needed for <strong>the</strong> emergence and
development <strong>of</strong> social networks. While modern information and communication technologies can be
used in order to support networking and knowledge sharing (Seufert et al., 1999), more trivial things
have to be taken into consideration beforehand. Cultural differences, language barriers and
physiological distances can hinder proximity and <strong>the</strong> emergence <strong>of</strong> social networks. Network
development, especially <strong>the</strong> emergence <strong>of</strong> informal (not organized) networks, always depends on
personal communication, as <strong>the</strong> development <strong>of</strong> trust is highly influenced by unconscious artefacts
(e.g.: body language). Therefore <strong>the</strong> design and architecture <strong>of</strong> <strong>of</strong>fices plays a vivid role for <strong>the</strong>
creation <strong>of</strong> informal intra-organizational networks.
The influence <strong>of</strong> those factors <strong>of</strong> influence will be analysed in this paper by way <strong>of</strong> a longitudinal
survey <strong>of</strong> a group <strong>of</strong> PhD. Students studying at Tomas Bata University in Zlín (Czech Republic). 72
PhD Students are studying in <strong>the</strong> academic year 2010/2011 at <strong>the</strong> Faculty <strong>of</strong> Management and
Economics. 35% <strong>of</strong> <strong>the</strong>m do not come from <strong>the</strong> Czech Republic, but have a different nationality.
Seven students are from <strong>the</strong> Slovak Republic, 5 from Sri Lanka, 3 from Russia and <strong>the</strong> o<strong>the</strong>rs are
from Austria, China, Colombia, Egypt, Georgia, Ghana, Mongolia, Poland and Vietnam. Foreign
students on Tomas Bata University have a long history as Thomas Bata, founder <strong>of</strong> <strong>the</strong> Bata Shoe
Empire, already attracted numerous foreigners to his business academy (Rybka, 1999; Lesingrova,
2008). Never<strong>the</strong>less in recent years foreign students have been poorly integrated as <strong>the</strong>y visited
different lectures, had <strong>the</strong>ir <strong>of</strong>fices in different buildings than Czech students, and had <strong>the</strong>ir own
meetings; even Christmas parties were organized separately for foreign students.
Beside <strong>the</strong>se organizational barriers language barriers came into action too. Figure 1 shows a plot <strong>of</strong>
<strong>the</strong> average valued language skills <strong>of</strong> <strong>the</strong> PhD Students. In an online questionnaire <strong>the</strong> students were
asked to indicate <strong>the</strong>ir languages skills as mo<strong>the</strong>r tongue (4), fluent (3), advanced (2) and basic (1).
Figure 1: Language Skills <strong>of</strong> PhD Students on UTB/Fame
The graph shows that foreign students speak Czech on a very low level and fall behind also in
German and Slovak language. The language skills <strong>of</strong> Slovak and Czech students are lower in
Spanish, Russian and o<strong>the</strong>r languages (Vietnam, China, Sri Lanka...). Not only do <strong>the</strong> language skills
<strong>the</strong>mselves play a vivid role, but moreover <strong>the</strong> willingness and self-confidence to speak a foreign
language. Moreover cultural differences as measured and analysed by H<strong>of</strong>stede (1984) have a great
impact on inter-cultural communication and cooperation.
In <strong>the</strong> academic year 2009/2010 organizational changes were made in order to integrate those
students, for mutual benefits. PhD Students were assigned to <strong>of</strong>fices according to <strong>the</strong>ir dissertation
topic so that Czechs and foreigners started to share <strong>the</strong>ir <strong>of</strong>fices. The changes were not aimed solely
for <strong>the</strong> better integration <strong>of</strong> foreigners, but moreover to improve language skills <strong>of</strong> Czech PhD
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Eva Eckenh<strong>of</strong>er
Students and to trigger <strong>of</strong> cooperation on scientific projects and papers. Ing. Adriana Knápková,
Ph.D., Vice-Dean for Research and Business Liaison explains <strong>the</strong> need for organizational changes as
follows, “Our foreign students are part <strong>of</strong> our university, and <strong>the</strong>y have to be involved in teaching and
research, for <strong>the</strong> benefit <strong>of</strong> both, foreign and Czech students. The most important step was to mix
foreign and Czech students in <strong>the</strong>ir <strong>of</strong>fices, so that communication and discussion about research was
enabled, as research is always better when performed in a team.”
The aim <strong>of</strong> this paper is to analyse <strong>the</strong> impact <strong>of</strong> this organisational changes by comparing density
and homophily <strong>of</strong> <strong>the</strong> whole social networks <strong>of</strong> students prior to and after <strong>the</strong> changes had taken
place.
2. Objective and methodology
Social network analysis is a social ethnological method, which can be used to measure and visualize
<strong>the</strong> social structure <strong>of</strong> a group as a whole and <strong>the</strong> social embeddedness <strong>of</strong> its individuals / actors
(Wasserman and Faust, 1994; Lang and Schnegg, 2002; Jansen, 2006).
In <strong>the</strong> focus <strong>of</strong> social network analysis can be a single actor or an aggregate <strong>of</strong> persons like
household or whole groups. For this study <strong>the</strong> focus <strong>of</strong> a sociocentric (total or whole) network analysis
has been chosen, were specific relations between a defined set <strong>of</strong> persons are analysed. In an online
questionnaire all full-time PhD Students on <strong>the</strong> Faculty <strong>of</strong> Management and Economics (73 in year
2010 and 72 in year 2011) have been asked to tick in a list with all <strong>the</strong>ir colleagues, which kind <strong>of</strong>
relation <strong>the</strong>y have to <strong>the</strong>ir colleagues, if any. The seven relations (knowing, going out, working on a
joint project/paper, discussing <strong>the</strong> dissertation topic, asking for advice in pr<strong>of</strong>essional matters, asking
for private advice, lending a sum <strong>of</strong> 2500 Czech Crown and sharing <strong>the</strong> <strong>of</strong>fice) were available and <strong>the</strong>
selection <strong>of</strong> multiple relations to one actor was possible. The findings were analysed and visualized by
<strong>the</strong> social network analysis s<strong>of</strong>tware Ucinet and Netdraw.
In both two years <strong>the</strong> minimum return rate <strong>of</strong> 70%, necessary for valid analysis <strong>of</strong> whole social
networks, was achieved (Lang and Schnegg, 2002). As some students graduated and new students
started <strong>the</strong>ir study in total 55 Students participated in both surveys 2010 and 2011.
Table 1: Number <strong>of</strong> students and country <strong>of</strong> origin
2010 2011
Czech Republic 45 Czech Republic 47
Slovak Republic 7 Slovak Republic 7
Russia 4 Sri Lanka 5
Sri Lanka 3 Russia 3
China 2 China 2
Romania 2 Austria 1
Austria 1 Colombia 1
Bulgaria 1 Egypt 1
Colombia 1 Georgia 1
Egypt 1 Ghana 1
Georgia 1 Mongolia 1
Ghana 1 Poland 1
Mongolia 1 Vietnam 1
Poland 1 Total 72
Turkey 1
Vietnam 1
Total 73
Table 1 gives an overview <strong>of</strong> <strong>the</strong> number <strong>of</strong> students and <strong>the</strong>ir nationality. As it could be seen in Table
1, after Czechs most students come from neighbouring Slovakia followed by Russia, Sri Lanka and
China during <strong>the</strong> years, but with slightly different order, as <strong>the</strong> number <strong>of</strong> Sri Lankan students
increased over time.
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Eva Eckenh<strong>of</strong>er
The analysis <strong>of</strong> <strong>the</strong> social network focuses on two measures, <strong>the</strong> density <strong>of</strong> <strong>the</strong> network and <strong>the</strong>
homophily prior to and after <strong>the</strong> organisational changes. Density describes <strong>the</strong> ratio between existing
relations and possible relations as a percentage and <strong>the</strong> degree <strong>of</strong> homophily describes whe<strong>the</strong>r
actors with similar attributes are connected to each o<strong>the</strong>r to a greater extent than to actors with
different attributes (Wasserman and Faust, 1994; Jansen, 2006). Hereby we wanted to see whe<strong>the</strong>r
actors who are not from <strong>the</strong> Czech Republic, and can be counted <strong>the</strong>refore as foreigners, are more
connected to o<strong>the</strong>r foreigners or whe<strong>the</strong>r Czech, Slovak and foreign students are mixed. Therefore
three groups have been formed: Czechs, Slovaks and Foreigners. The reason why Slovak students
were defined as a separate group is that even though <strong>the</strong>y could be counted as foreigners due to <strong>the</strong>ir
nationality <strong>the</strong> language barrier does not count for <strong>the</strong>m as Slovak and Czech language is close and
can be understood by both nationalities. This fact can be also observed in Figure 1.
3. Organisational changes
In <strong>the</strong> middle <strong>of</strong> <strong>the</strong> academic year 2009 and 2010, after <strong>the</strong> completion <strong>of</strong> <strong>the</strong> first survey, <strong>the</strong> biggest
organisational change took place and <strong>the</strong> <strong>of</strong>fices <strong>of</strong> foreign students, which originally were in a
different building, approximately 700 meter away from <strong>the</strong> Faculty building where <strong>the</strong> Czech students
had <strong>the</strong>ir <strong>of</strong>fices, were moved to <strong>the</strong> main faculty building. Following <strong>the</strong> field <strong>of</strong> dissertation, but not
merely according to <strong>the</strong> department a PhD student belongs, students were assigned to <strong>of</strong>fices. On
average ten students share an <strong>of</strong>fice, equipped with personal computers and printers. For ga<strong>the</strong>ring
information about <strong>the</strong> motivation and purposes <strong>of</strong> <strong>the</strong> organizational changes an open interview has
been hold with <strong>the</strong> Vice-Dean for Research and Business Liaison, Ing. Adriana Knápková, Ph.D.
During <strong>the</strong> interview she pointed out that it was necessary to have all <strong>of</strong>fices in one building and that
Czech and foreign students have to share <strong>of</strong>fices, so that communication between Czech and foreign
students within <strong>the</strong> <strong>of</strong>fice is assisted.
Ano<strong>the</strong>r organisational change was that a compulsory attendance <strong>of</strong> 20 hours per week in <strong>the</strong> <strong>of</strong>fice
was introduced. This regulation aimed on <strong>the</strong> one hand to ensure that <strong>the</strong> PhD study is <strong>the</strong> main
activity <strong>of</strong> students and on <strong>the</strong> o<strong>the</strong>r hand to provoke that students meet in <strong>the</strong>ir <strong>of</strong>fices and have <strong>the</strong>
possibility to talk and exchange ideas about <strong>the</strong>ir research.
Beside <strong>the</strong> introduction <strong>of</strong> <strong>of</strong>ficial meetings with all PhD students, <strong>the</strong> dean and vice-dean, where <strong>the</strong>
changes <strong>of</strong> regulations, projects and publication opportunities are on <strong>the</strong> agenda and which take
place at <strong>the</strong> beginning <strong>of</strong> each term. Also informal ga<strong>the</strong>rings have been introduced; motivation for
<strong>the</strong>se ga<strong>the</strong>rings came from <strong>the</strong> students <strong>the</strong>mselves who wanted to have joint celebrations as for
instance <strong>the</strong> Christmas parties. Moreover PhD students started to meet every week and give <strong>the</strong>
possibility to one colleague to present his/her topic or ideas and get feedback from fellow students.
These meetings turned out to be really fruitful, even when <strong>the</strong> number <strong>of</strong> participants stagnated
around ten students.
4. Evaluation <strong>of</strong> <strong>the</strong> changes (findings)
The effect <strong>of</strong> <strong>the</strong> organisational changes outlined in section 3 will be evaluated by analysing <strong>the</strong>
changes in <strong>the</strong> social networks <strong>of</strong> <strong>the</strong> PhD students. The first step <strong>of</strong> evaluation is <strong>the</strong> graphical
illustration <strong>of</strong> <strong>the</strong> social networks. In figure 2 on <strong>the</strong> left side <strong>the</strong> aggregated network <strong>of</strong> PhD students
in <strong>the</strong> year 2010 and on <strong>the</strong> right side <strong>the</strong> aggregated network <strong>of</strong> <strong>the</strong> year 2011 can be seen. An
aggregation <strong>of</strong> relations means <strong>the</strong> sum <strong>of</strong> all relations, in our case eight relations. The graph<strong>the</strong>oretical
layout <strong>of</strong> <strong>the</strong> network was generated by spring embedding, an algorithm that uses iterative
fitting to locate <strong>the</strong> points to each o<strong>the</strong>r according to <strong>the</strong>ir smallest geodesic distance (Trappmann et
al., 2005).
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Eva Eckenh<strong>of</strong>er
Figure 2: Aggregated Network in 2010 (left) and 2011 (right)
The colour and <strong>the</strong> shape <strong>of</strong> <strong>the</strong> nodes in <strong>the</strong> networks in Figure 2 was chosen according to <strong>the</strong>
country. Red, round nodes indicate Czech students, grey squared ones are Slovak students and
green, triangle-shaped nodes are foreign students. It can be observed that in <strong>the</strong> year 2010 (on <strong>the</strong>
left side) <strong>the</strong>re was a gap between foreign students (green, triangle nodes), Czech students (red,
round nodes) and Slovak students (grey, squared nodes), who are well integrated into <strong>the</strong> network
and mixed with Czech students. Even though still being connected by a few relations <strong>the</strong>re is a
distance between Czech and Slovak students and <strong>the</strong>ir foreign colleagues. This distance got smaller
in year 2011 (network on <strong>the</strong> right side). Moreover <strong>the</strong> density (number <strong>of</strong> relations) increased from
892 ties to 1103 ties. Some foreign students (green, triangle nodes) are well integrated in <strong>the</strong> network
<strong>of</strong> 2011, while still several green, triangle-shaped nodes are pushed to <strong>the</strong> periphery <strong>of</strong> <strong>the</strong> network
due to lack <strong>of</strong> relations to Czech and Slovak students.
Table 2: Density and Homophily Values
Density Homophily
2010 2011 2010 2011
Aggregate 0.4089 0.4773 -0.2974 0.0788
R1 (knowing) 0.1516 0.2085 -0.4286 0.1500
R2 (going out) 0.0586 0.0469 -0.2152 -0.0872
R3 (Project) 0.0301 0.0291 -0.4438 0.0435
R4 (talking) 0.0322 0.0405 -0.4685 0.0980
R5 (pr<strong>of</strong>. advice) 0.0272 0.0299 -0.5817 0.0833
R6 (private advice) 0.0291 0.0329 -0.5804 0.0719
R7 (lending money) 0.0272 0.0299 -0.3237 0.0197
R8 (sharing <strong>of</strong>fice) 0.0529 0.0595 -0.3755 0.0664
Table 2 shows <strong>the</strong> calculation <strong>of</strong> density and homophily values for all relations in both years. It can be
observed that <strong>the</strong> density increased from 2010 till 2011 in all relations except relation 2, going out and
relation 3, working on a joint project or paper. On <strong>the</strong> one hand one might say that it is not a negative
change when <strong>the</strong> relations <strong>of</strong> students going out toge<strong>the</strong>r decreases, but on <strong>the</strong> o<strong>the</strong>r hand going out
toge<strong>the</strong>r builds a basis for informal and private communication, which contributes to <strong>the</strong> development
<strong>of</strong> trust and has <strong>the</strong>refore an impact on pr<strong>of</strong>essional communication and cooperation as asking for
advice in pr<strong>of</strong>essional matters is enabled.
The degree for homophily is indicated by <strong>the</strong> index E-1 whereas -1 means homophily and +1
heterophily (Hanneman, 2007). In 2010 all homophily measures were negative indicating a tendency
towards homophily. The strongest signs <strong>of</strong> homophily were in <strong>the</strong> relations 5 and 6, pr<strong>of</strong>essional and
private advice. These tendencies improved into <strong>the</strong> year 2011, when in all but relation 2 (going out)
positive homophily indices E-1 have been measured. The best value, in <strong>the</strong> means <strong>of</strong> heterophily is
reached in <strong>the</strong> relation 1 (knowing). In this relation a density <strong>of</strong> 0.21 was measured in 2011, which
means that 21% <strong>of</strong> all possible relations are realized. The next highest E-1 index is from <strong>the</strong> relation
4, talking about <strong>the</strong> dissertation topics, where <strong>the</strong> value is 0.09.
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Eva Eckenh<strong>of</strong>er
The positive changes <strong>of</strong> this relation <strong>of</strong> pr<strong>of</strong>essional talk (4) towards heterophily and better integration
<strong>of</strong> foreign students is visible in Figure 3:
Figure 3: Relation 4 (Discussing Topic) in 2010 (left) and 2011 (right)
The nodes in figure 3 are arranged by spring embedder and <strong>the</strong> colour <strong>of</strong> <strong>the</strong> node and its shape
indicates <strong>the</strong> country <strong>of</strong> origin <strong>of</strong> <strong>the</strong> PhD student (red and round – Czech; grey and squared – Slovak;
green and triangle-shaped - Foreigner). In <strong>the</strong> year 2010 <strong>the</strong> foreign students built a clique in which
<strong>the</strong>y discussed <strong>the</strong>ir dissertations between each o<strong>the</strong>r, while during <strong>the</strong> year 2011 this clique opened
up and more Czech and Slovak students discuss <strong>the</strong>ir topics with foreign students. Related to <strong>the</strong>
discussion <strong>of</strong> <strong>the</strong> topic is also <strong>the</strong> next relation <strong>of</strong> asking for pr<strong>of</strong>essional advice which is displayed in
figure 4.
Figure 4: Relation 5 (Pr<strong>of</strong>essional Advice) in 2010 (left) and 2011 (right)
While in figure 4 on <strong>the</strong> left side (2010) foreign students build a cluster for giving pr<strong>of</strong>essional advice
this is changed and opened on <strong>the</strong> right side for <strong>the</strong> year 2011. Several foreign students (green
nodes) are located in <strong>the</strong> centre <strong>of</strong> <strong>the</strong> network, surrounded by red and grey nodes (Czech and
Slovak students). In both <strong>the</strong> years Slovak students are mixed with Czech students. In 2011 (right
side), additionally we find a separated component consisting <strong>of</strong> Czech and foreign students.
Beside <strong>the</strong> relational questions, students were also asked a question concerning trust, which is used
by <strong>the</strong> European Value Studies (Beugelsdijk et al. 2004): “Generally speaking, would you say that
most people can be trusted or that you can't be too careful in dealing with people?”
Table 3: Trust Values
2010 2011
Most people can be trusted 44.00% 42.22%
Can't be too careful 28.00% 24.44%
Don't know 28.00% 17.78%
O<strong>the</strong>r 15.56%
Table 3 shows that on a general level trust has sunk, but also <strong>the</strong> attitude that one can’t be too careful
when dealing with people, this share was moved to o<strong>the</strong>r answers, which were for instance: “I don't
trust people until we have a personal relationship”, “I set different level <strong>of</strong> trust based on information
169

Eva Eckenh<strong>of</strong>er
about <strong>the</strong> person”, “I always try to rely mostly on myself.” and “It takes time for me to trust someone, I
must have regular interaction to build trust”. The answers show <strong>the</strong> importance <strong>of</strong> proximity in physical
matters for <strong>the</strong> building <strong>of</strong> trust. Regular interaction is needed to enable communication, emergence
<strong>of</strong> relations and trust.
For analyzing whe<strong>the</strong>r simultaneously with <strong>the</strong> organizational and network changes, also <strong>the</strong>
productivity <strong>of</strong> PhD students in terms <strong>of</strong> publication outputs changed, <strong>the</strong> number <strong>of</strong> publications <strong>of</strong> all
full-term PhD students from <strong>the</strong> year 2009 has been compared to that <strong>of</strong> 2010. The year 2009
represents <strong>the</strong> productivity prior to <strong>the</strong> changes and <strong>the</strong> year 2010 <strong>the</strong> productivity after organizational
changes had taken place.
Table 4: Publications <strong>of</strong> all full-time PhD Students. Source: Publication Database <strong>of</strong> FAME/UTB.
2009 2010
Articles in Journals 6 22
Articles in <strong>Proceedings</strong> 79 99
Book chapters 4 9
Scientific Monograph 3 7
Total 92 137
Table 4 shows <strong>the</strong> summarized publication outcomes from all full-time PhD students on <strong>the</strong> Faculty <strong>of</strong>
Management and Economics on Tomas Bata University in four categories for <strong>the</strong> year 2009 and
2010. It can be observed that <strong>the</strong> total number <strong>of</strong> publications rose about almost 50%. The highest
increase happened in <strong>the</strong> category “Article in Journal”, where <strong>the</strong> number increased from 6 to 22
articles, which means an increase <strong>of</strong> 267%. An increase <strong>of</strong> 125% was achieved in <strong>the</strong> category “Book
chapters” and an increase <strong>of</strong> 133% in “Scientific monographs”. In total it can be pointed out that <strong>the</strong>
overall improvement <strong>of</strong> publications and productivity in a row was significant.
5. Conclusion
The survey showed <strong>the</strong> positive influence <strong>of</strong> <strong>the</strong> organizational changes done in <strong>the</strong> middle <strong>of</strong> <strong>the</strong>
academic year 2009 and 2010 on <strong>the</strong> informal social networks. Density increased in almost every
relation and homophily changed towards heterophily in 2011 compared to 2010. Especially <strong>the</strong>
changes in <strong>the</strong> relations “talking about dissertation topics” and “pr<strong>of</strong>essional advice” are important as
those relations contribute to communication, discussion and cooperation, which are not only highly
important for research and innovation purposes, but moreover for <strong>the</strong> aspect <strong>of</strong> knowledge sharing.
Those two relations, visualized and analysed by social network analysis using <strong>the</strong> s<strong>of</strong>tware Ucinet
and netdraw, represent <strong>the</strong> knowledge sharing within <strong>the</strong> group <strong>of</strong> Ph.D students on Tomas Bata
University. It has been found that toge<strong>the</strong>r with <strong>the</strong> improvement on <strong>the</strong> social network characteristics,
especially in <strong>the</strong> knowledge-sharing relations, <strong>the</strong> publication outputs <strong>of</strong> students increased.
The study showed that <strong>the</strong> organisational changes were a step into <strong>the</strong> right direction for integrating
foreign PhD students. Never<strong>the</strong>less as <strong>the</strong> graphical illustrations as well as <strong>the</strong> homophily indices
show, <strong>the</strong>re is still a need for fur<strong>the</strong>r action. As Ing. Adriana Knápková, Ph.D., Vice-Dean for
Research and Business Liaison stated “The goal has to be that foreign students are as well integrated
as Slovak Students”. The author proposes two major changes, on <strong>the</strong> one hand building on <strong>the</strong>
improvement <strong>of</strong> <strong>the</strong> Czech language skills <strong>of</strong> foreign students and on <strong>the</strong> o<strong>the</strong>r hand an increase <strong>of</strong>
joint private activities <strong>of</strong> all PhD students. These activities have to be designed to lower <strong>the</strong> linguistic
and cultural barriers, so that communication and networking is triggered in a row. Trips, tours,
expeditions would serve this goal as well as teambuilding activities like a visit in a rope climbing
garden, which was organized in previous years for foreign students. That <strong>the</strong>se investments do not
serve only philanthropic purposes, showed <strong>the</strong> increase in number <strong>of</strong> publications <strong>of</strong> all full-time PhD
students, which numbered to 92 in <strong>the</strong> year 2009 and 137 for <strong>the</strong> following year. For an increase <strong>of</strong>
cooperation a solid basis <strong>of</strong> communication and trust is needed, but as this survey showed networks
depend on proximity and <strong>the</strong> time spent toge<strong>the</strong>r.
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171

The complex Intellectual Capital Characteristic <strong>of</strong> an
Innovative Firm
Irene Y.H. Fan and Rongbin W.B. Lee
Department <strong>of</strong> Industrial and Systems Engineering,
The Hong Kong Polytechnic University, Hung Hom, Hong Kong
irene.fan@polyu.edu.hk
wb.lee@polyu.edu.hk
Abstract: Innovation is considered <strong>the</strong> key element to ensure sustainable growth and competitive advantages.
The innovation performance <strong>of</strong> an organization determines not only <strong>the</strong> current value but <strong>the</strong> capability and
strength for <strong>the</strong> future. Researches have shown a correlation between intellectual capital and innovation
performance. In a knowledge economy, intellectual capital adds more value to an organization than tangible
assets. It is defined as attributes <strong>of</strong> an organization and knowledge that can be converted into future value.
Organization has unique and complex intellectual capital characteristic, making it difficult to be imitated. Merely
increase intellectual capital cannot guarantee better innovation performance. It is important to identify <strong>the</strong>
complexity <strong>of</strong> intellectual capital and <strong>the</strong> relationship among knowledge flow, intellectual capital and innovation
performance. The objective <strong>of</strong> this paper is (1) to perform a study on intellectual capital and innovation
performance with an innovative firm; (2) to demonstrate <strong>the</strong> complex intellectual capital characteristic and its
relation to knowledge flow and innovation performance; and (3) to propose <strong>the</strong> use <strong>of</strong> complexity <strong>the</strong>ory to be <strong>the</strong>
method for future research. A survey was conducted with an R&D firm in Hong Kong. Partial Least Square
analysis identified <strong>the</strong> intellectual capital measurements and <strong>the</strong> major factors contributing to innovation
performance <strong>of</strong> <strong>the</strong> organization. It was observed that <strong>the</strong> R&D firm gained <strong>the</strong>ir innovation performance through
human capital not directly but via structural and more importantly relational capital. The factors contributed to
innovation performance in a non-linear nature and had interdependencies among <strong>the</strong>mselves. In addition, a
complex relationship between knowledge creation and knowledge sharing was observed with <strong>the</strong>ir impact to
innovation performance. These findings prove that complexity study is appropriate and should be used for future
research in intellectual capital and innovation, leveraging <strong>the</strong> existing quantitative and statistical studies.
Keywords: Innovation performance, Intellectual capital, Knowledge flow, Relational capital, Complexity
1. Theoretical background
1.1 Innovation <strong>of</strong> organizations
Innovation has been identified as <strong>the</strong> driving force for value creation (Schumpeter 1976) and future
survival <strong>of</strong> an organization (Terziovski 2007). It is “<strong>the</strong> act that endows resources with a new capacity
to create wealth.” (Drucker 1985, p.30) There is a growing awareness that competitive advantage is
directly linked to <strong>the</strong> learning and innovation capability <strong>of</strong> organizations. Knowledge is <strong>the</strong> ultimate
source <strong>of</strong> competitiveness and sustainability (Johannessen, Olaisen & Olsen 2001). As distinguished
from invention, innovation can be systemic. Developing systemic innovation capability is <strong>the</strong> key
element for sustainable growth in enterprises (Skarzynski & Gibson 2008). There is a recent renewal
<strong>of</strong> interest in innovation and sustainability with systemic perspectives (Smith, Vob & Grin 2010;
Nidumolu, Prahalad, & Rangaswami, 2009). Successful organizations compete on <strong>the</strong> underlying
capabilities that make <strong>the</strong>ir products, services and business sustainable.
Resource-based <strong>the</strong>ory (Grant 1991; Leiblein 2011) suggests that <strong>the</strong> development and intelligent
application <strong>of</strong> core resources and capabilities are critical for organization strategy planning. The
understanding <strong>of</strong> external environment and internal structure are both crucial (Burgelman, Kosnik &
van den Poel 1988; Albaladejo & Romijn 2000). More recent resource-based <strong>the</strong>ory researches have
turned to <strong>the</strong> micro-foundation aspects for strategic management (Barney, Ketchen & Wright 2011).
Intangible assets have become critical resources and demand a multidisciplinary approach (Molloy et
al. 2011).
The importance <strong>of</strong> <strong>the</strong> involvement <strong>of</strong> external parties in innovation becomes one <strong>of</strong> <strong>the</strong> major
research areas in innovation study. von Hippel (1988) <strong>of</strong> MIT coined <strong>the</strong> term “user innovation” and
pointed out that most products and services are actually developed by users instead <strong>of</strong>
manufacturers. Chesbrough (2003) used “open innovation” to contrast with traditional “closed
innovation” and argued that company can no longer rely entirely on <strong>the</strong>ir internal innovation and
research. These researchers over <strong>the</strong> past few decades have evolved <strong>the</strong> innovation from process to
network; and from closed to open systems.
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1.2 Intellectual capital and innovation
Irene Y.H. Fan and Rongbin W.B. Lee
Although <strong>the</strong> term intellectual capital (IC) has been used since 1969 by Kenneth Galbraith, <strong>the</strong>re is a
lack <strong>of</strong> consensus among researchers and practitioners on its components and definitions (Martı´nde-Castro
et al. 2011). Intellectual capital is defined by Andriessen and Stam (2004, p.10) as “all
intangible resources that are available to an organization, that give a relative advantage, and which in
combination are able to produce future benefits”. The major components <strong>of</strong> intellectual capital include
an individual perspective and a collective perspective. The collective part can be fur<strong>the</strong>r separated
into internal and external perspectives. (Martı´n-de-Castro et al. 2011) In this paper, definition <strong>of</strong>
intellectual capital with three components: human capital, structural capital and relational capital
(Roos, Fernstroem & Pike 2005; Bontis 1998) is used, with relational capital includes both internal
and external facets.
Studies <strong>of</strong> intellectual capital as determinants to business performance and competitiveness are
plenty (Hayton 2005), but studies between intellectual capital and innovation performance remain
relatively meagre (Serenko, Bontis & Grant, 2009). Innovation was thought to be embedded in <strong>the</strong>
human capital, <strong>the</strong> brainpower <strong>of</strong> employees. Early intellectual capital researchers and practitioners
proposed that structural capital, knowledge that remains with <strong>the</strong> organization after <strong>the</strong> employees left
<strong>the</strong> <strong>of</strong>fice, holds <strong>the</strong> corporate innovation assets. Recent development <strong>of</strong> intellectual capital <strong>the</strong>ory
that share <strong>the</strong> views <strong>of</strong> researchers in sociology (Burt 1992; Coleman 2000) and management
(Nahapiet & Ghoshal 1998; Subramaniam & Youndt 2005) argue that <strong>the</strong> external social capital with
customers, partners and suppliers is an important part <strong>of</strong> relational capital. The relational capital a firm
owns, including both internal and external ties, are viewed as cause <strong>of</strong> employees’ ability to learn and
innovate (Reed et al. 2006).
1.3 Knowledge and innovation
Innovation relates closely to knowledge creation and dissemination (Jantunen 2005; Sa´enz et al.
2009; Frenz & Ietto-Gillies 2009). Sayer and Walker (1992, p.115) describe innovation as
“fundamentally a social process built on collective knowledge and co-operative effort”. Innovation
building process is <strong>the</strong> wellsprings <strong>of</strong> knowledge that enable companies to develop competitively
advantageous capabilities (Leonard-Barton 1995). Researchers have developed multi-dimensional
models to outline <strong>the</strong> knowledge development and process. Nonaka (2006) defines a model with
epistemological and ontological dimensions. These two dimension forms a spiral model with
socialization, externalization, combination and internalization <strong>of</strong> knowledge. Amidon (1997) illustrates
<strong>the</strong> relationship between knowledge, innovation and learning in a three dimensional model.
Two dichotomy views <strong>of</strong> learning, sharing and hoarding <strong>of</strong> knowledge, cause different styles <strong>of</strong>
knowledge flow (March 1991; Boisot 1998; Nonaka, Toyama and Hirata 2008), and <strong>the</strong>refore affecting
<strong>the</strong> generation and usage <strong>of</strong> knowledge assets and <strong>the</strong> innovation capability <strong>of</strong> <strong>the</strong> organization.
Boisot also saw that knowledge creation is more than a simple system <strong>of</strong> input and output, but a
complex social learning cycle. (Boisot 2011)
2. The complex IC characteristic and relationship with innovation performance
Researchers have studied <strong>the</strong> influential factors <strong>of</strong> innovation performance in many different
perspectives. The empirical studies usually adopts regression model with linear direct causal effect.
Two problems stand out with this research methodology. Organization is a complex adaptive system
(Maguire et al. 2009) and <strong>the</strong> assumptions <strong>of</strong> linearity and unidirectional are not immutable. However,
<strong>the</strong>re have not been sufficient studies using complex model in <strong>the</strong> area <strong>of</strong> intellectual capital and
innovation research. Secondly, such studies were conducted with particular organizations, industry
sectors or innovation systems; and <strong>the</strong> research outcome should not be over generalized. A systemic
view <strong>of</strong> impacting factors interacting toge<strong>the</strong>r in a complex dynamic world is essential. Andreous and
Bontis (2007) identified that only five published studies researched <strong>the</strong> relationship between
intellectual capital stocks and flows by analyzing <strong>the</strong> relationship among intellectual capital
components. The complexity <strong>of</strong> intellectual capital components warrants a deeper and more thorough
investigation. This paper aims to contribute to <strong>the</strong> study <strong>of</strong> innovation and intellectual capital by
proposing a complex model with <strong>the</strong> study <strong>of</strong> an R&D organization in Hong Kong.
Base on <strong>the</strong> literature reviewed, <strong>the</strong> three components <strong>of</strong> intellectual capital are human, structural and
relational capitals. Different measurements have been used for <strong>the</strong>se components. The degree <strong>of</strong>
computational complexity increases as <strong>the</strong> number <strong>of</strong> components and <strong>the</strong>ir interactivities increase.
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Irene Y.H. Fan and Rongbin W.B. Lee
Two elements under each <strong>of</strong> <strong>the</strong> three components are identified in this model, expanding intellectual
capital to <strong>the</strong> next level <strong>of</strong> three pairs. The six key factors selected in <strong>the</strong> study include:
Intrinsic motivation <strong>of</strong> knowledge workers (KW)
The term knowledge worker is first used by Drucker half century ago. We refer knowledge workers as
participants in <strong>the</strong> knowledge economy. The characteristic <strong>of</strong> knowledge workers include ability and
motivation. KW measures <strong>the</strong> self-efficacy and intrinsic motivation <strong>of</strong> <strong>the</strong> staff.
Intellectual Stimulation <strong>of</strong> transformational leadership (TL)
Transformational leadership was first introduced by Burns and defined as “leaders and followers make
each o<strong>the</strong>r to advance to a higher level <strong>of</strong> moral and motivation" (Burns 1978, p.20). TL measures <strong>the</strong>
degree leaders stimulate and encourage creativity in <strong>the</strong>ir followers (Bass 2006).
Innovative-supportive culture (OC)
Amabile et al. (1996) identified six stimuli that influence innovation-supportive culture as work group
supports, challenging work, organizational encouragement, supervisory encouragement, freedom,
and sufficient resources. OC measures <strong>the</strong> innovation-supportive culture with <strong>the</strong> perception <strong>of</strong>
support <strong>of</strong> innovative activities by <strong>the</strong> rest <strong>of</strong> <strong>the</strong> organization.
Systems and processes (SP)
Structural capital includes <strong>the</strong> infrastructure and processes <strong>of</strong> <strong>the</strong> organization that support <strong>the</strong>
capturing, sharing and storage <strong>of</strong> knowledge. SP measures <strong>the</strong> availability <strong>of</strong> systems and processes
for knowledge management.
Internal social network (ISN)
Social networks are leveraged for networking, sharing, communication and collaborations. Internal
social networks enable <strong>the</strong> informal exchange within <strong>the</strong> organization. The ISN dimension measures
<strong>the</strong> actual practices and application <strong>of</strong> <strong>the</strong> systems built for <strong>the</strong> purpose.
External social network (ESN)
The ESN extends <strong>the</strong> network beyond <strong>the</strong> organization, including customers, partners and suppliers.
The means <strong>of</strong> networking also include industrial conferences and public seminars for knowledge
ga<strong>the</strong>ring and dissemination.
3. Study <strong>of</strong> an R&D firm in Hong Kong
3.1 Scope <strong>of</strong> study
A web-based survey was conducted with a Hong Kong government funded R&D organization. Letters
<strong>of</strong> invitation was sent to <strong>the</strong> management and agreement sought. Subsequently <strong>the</strong> survey was sent
to all mangerial and technical staff. Anonymity was assured. Survey responses were collected in <strong>the</strong>
first quarter <strong>of</strong> 2011. Data was <strong>the</strong>n analyzed to identify <strong>the</strong> unique IC characteristic <strong>of</strong> <strong>the</strong>
organization. SPSS 18 was used for regression analysis and warpPLS 1.0 for Partial Least Square
analysis.
3.2 Regression analysis and findings
3.2.1 Descriptive Statistics
A total <strong>of</strong> 48 survey responses were collected out <strong>of</strong> 120 targeted staff, with 24% (12) managerial and
76% (37) non-managerial staff. Each factor was measurement with a number <strong>of</strong> items: KW (KW1,
KW2, KW3), TL (TL1, TL2, TL3), OC (OC1, OC2, OC3, OC4, OC5, OC6, OC7), SP (SP1, SP2, SP3),
ISN (ISN1, ISN2, ISN3, ISN4) and ESN (ESN1, ESN2, ESN3, ESN4). The means <strong>of</strong> <strong>the</strong> items lied
within 3.17 to 5.29 on a Likert 7 scale. Items in KW, KW1 (5.29) and KW2 (5.19), were <strong>the</strong> two highest
scored items. Two <strong>of</strong> <strong>the</strong> five items in INP, INP5 (3.17) and INP1 (3.46), were <strong>the</strong> two lowest scored
items. Standard deviation <strong>of</strong> <strong>the</strong> means ranged from 1.051 to 1.767. Skewness and Kutorsis <strong>of</strong> <strong>the</strong>
items were within <strong>the</strong> -1 to +1 range, except KW1 (-1.064 and 1.286).
Independent sample T-test was done and <strong>the</strong>re is no significant difference found between managerial
and non-managerial groups. In <strong>the</strong> four categories <strong>of</strong> years with <strong>the</strong> organization, 16% (8) worked less
than 1 year with <strong>the</strong> company, 39% (19) 2-4 years, 22% (11) 5-6 years and 22% (11) more than 7
years. One-way ANOVA test was conducted and <strong>the</strong>re was no significant difference among <strong>the</strong> four
groups in majority <strong>of</strong> <strong>the</strong> items, except ESN1, ESN2 and INP1 between Group 1 and 4.
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3.2.2 Reliability
Irene Y.H. Fan and Rongbin W.B. Lee
The constructs were tested for reliability with Cronbach’s Alpha values <strong>of</strong> 0.841 in KW, 0.966 in TL,
0.919 in OC, 0.820 in SP, 0.925 in ISN, 0.919 in ESN, and 0.915 in INP; indicating internal
consistence and reliability <strong>of</strong> <strong>the</strong> items forming <strong>the</strong> constructs.
3.2.3 Factor Analysis
All data items were normally distributed. The Kaiser-Meyer-Olkin (KMO) measure <strong>of</strong> sampling
adequacy <strong>of</strong> .843 was good for factor analysis. The intellectual capital related items underwent factor
analysis and six factors were confirmed using extraction method <strong>of</strong> Principal Axis Factoring and
rotation method <strong>of</strong> Promax with Kaiser Normalization. Oblique rotation was used because <strong>the</strong>
literature review has indicated <strong>the</strong> correlations among <strong>the</strong> factors, in particular <strong>the</strong> pairs in each IC
category. The communalities <strong>of</strong> <strong>the</strong> items were all above 0.6 except OC1 and SP3. The maximum
value <strong>of</strong> communalities was .951, and <strong>the</strong> mean value <strong>of</strong> communalities was .782 with a standard
deviation <strong>of</strong> .108. 78.16% <strong>of</strong> <strong>the</strong> total variance was explained by <strong>the</strong> six factors. Dropping SP3
resulted in an increased Cronbach’s alpha <strong>of</strong> SP from .820 to .842 and dropping ESN4 decreased
Cronbach’s alpha from .919 to .916. ESN4 was kept for fur<strong>the</strong>r analysis.
Figure 1 illustrates <strong>the</strong> current IC status <strong>of</strong> <strong>the</strong> organization. The highest mean result <strong>of</strong> <strong>the</strong> six
dimensions was “intrinsic motivation <strong>of</strong> knowledge workers” (KW=5.24), followed by “innovativesupportive
culture” (OC=4.81), and “intellectual stimulation <strong>of</strong> transformative leaders” (TL=4.60).
“External social network (ESN=4.43) and Systems and Processes (SP=4.24) followed with medium
rating. “Internal social network” (ISN=4.08) rated <strong>the</strong> lowest.
The innovation model indicated that <strong>the</strong> organization adopted collaboration and open innovation with
external parties along with in-house R&D and innovation. The organization is relatively nonaggressive
in licensing out innovated technologies.
Figure 1: current IC status <strong>of</strong> <strong>the</strong> organization
3.3 Partial Least Square analysis
3.3.1 Direct causal relationship
Partial Least Square (PLS) was used for <strong>the</strong> Structural Equation Modelling (SEM) as it <strong>of</strong>fers analysis
with smaller sample size (Chin and Newsted 1999). In this study, <strong>the</strong> sample size was less than 50;
yet <strong>the</strong> Cronbach’s alphas have indicated a high reliability <strong>of</strong> <strong>the</strong> items for <strong>the</strong> constructs. On curve
estimation, all six constructs fitted both linearly and non-linearly. KW, TL, SP and ESN fitted better
non-linearly, OC and ISN were indifferent in both. To estimate <strong>the</strong> causal relations and weighting <strong>of</strong>
<strong>the</strong> latent variables (IC factors) onto <strong>the</strong> dependent variable (INP), a nonlinear variance-based
structural equation modelling tool warpPLS was used.
A simple SEM model testing <strong>the</strong> direct effects <strong>of</strong> <strong>the</strong> six constructs with innovation performance was
done. Figure 2 displays <strong>the</strong> results. The six intellectual capital constructs contributed 65% variance
explanation on INP. ESN demonstrated a definite strong contribution <strong>of</strong> 58.9% path coefficient,
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Irene Y.H. Fan and Rongbin W.B. Lee
seconded by SP with 24.1%. The o<strong>the</strong>r four constructs, however, did not have high path coefficients
and also had significance level higher than 0.05. Correlations among <strong>the</strong> variables were also
observed with no multicollinearity but substantial bidirectional correlations.
Figure 2: Result <strong>of</strong> Model 1
3.3.2 Mediating effects
A second model <strong>of</strong> SEM was tested (Figure 3) with indirect causal effects where OC and SP as
structural capital (SC) items, and ISN and ESN as relational capital (RC) items mediated KW and TL
as human capital (HC) items.
Figure 3: SEM <strong>of</strong> Model 2 (6 IC elements model)
Figure 4 details <strong>the</strong> results <strong>of</strong> Model 2 latent variable coefficients. The total variance <strong>of</strong> INP explained
by <strong>the</strong> constructs was 70.6%. As previous simple model indicated that KW and TL did not directly
affect INP, this model looked at <strong>the</strong> relationship <strong>of</strong> <strong>the</strong> HC pair to INP through RC and SC pairs. The
R 2 coefficients <strong>of</strong> <strong>the</strong> four constructs OC, SP, ISN and ESN were 0.719, 0.376, 0.622 and 0.597
respectively. The Composite reliability, Cronbach’s Alpha coefficients and AVEs were all indicating
internal consistence and reliability <strong>of</strong> <strong>the</strong> items for <strong>the</strong> constructs. The coefficients <strong>of</strong> Model 2 are
displayed in Figure 5.
176

Figure 4: latent variable coefficients for Model 2
Figure 5: path coefficients for Model 2
Irene Y.H. Fan and Rongbin W.B. Lee
The result confirms <strong>the</strong> first model that ESN and SP were major contributors to INP. Fur<strong>the</strong>rmore, it is
observed that TL played critical role in <strong>the</strong> model affecting all four constructs. KW affected OC and to
some degree ESN. SP affected ISN to some degree. However, due to <strong>the</strong> high significance values,
we cannot confirm <strong>the</strong> impacts <strong>of</strong> KW on SP and ISN; OC on ISN and ESN; nor SP on ESN. The
influence <strong>of</strong> OC and ISN toward INP also cannot be confirmed.
Visual outputs depict <strong>the</strong> nonlinear relationships among <strong>the</strong> variables studied. It is observed that OC,
ISN and ESN all exhibited positive relations on INP; <strong>the</strong> higher <strong>the</strong> values <strong>of</strong> <strong>the</strong>se constructs, <strong>the</strong>
higher <strong>the</strong> value <strong>of</strong> INP. However, SP demonstrated an inverted U shape relationship with INP; when
SP increased to a certain point INP decreased. This will imply that processes and standards are
necessary to a certain extend, but will hinder <strong>the</strong> innovation performance growth when excessively
used. An inverted U shape relationship was shown in KW on OC, KW on ESN, and SP on ESN. This
will indicate that excessive intrinsic motivation <strong>of</strong> knowledge workers will damage innovation
supportive culture and <strong>the</strong> external social network. Excessive systems and processes will also inhibit
external social network. A diminishing rate <strong>of</strong> increase return was shown in KW, OC and SP on ISN,
implying intrinsic motivation, innovation supportive culture and systems and processes helped internal
social network but reached saturation at certain point. OC and KW on ESN had an S-shape curve that
exhibited a most complicated relationship, as KW or OC increase, ESN first dropped and <strong>the</strong>n
increased to a certain peak and <strong>the</strong>n dropped again.
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Irene Y.H. Fan and Rongbin W.B. Lee
3.3.3 Effects <strong>of</strong> human, structural, and relational capitals on innovation
Figure 6: SEM <strong>of</strong> model 3 (HC/SC/RC on INP)
Figure 6 illustrates <strong>the</strong> three IC components model. Cronbach’s Alphas were 0.843 (HC), 0.886 (SC)
and0.935 (RC) representing an internal reliability <strong>of</strong> <strong>the</strong> three IC constructs. R 2 <strong>of</strong> INP=0.575,
SC=0.695 and RC=0.653. Path coefficient resulted in 0.656 <strong>of</strong> RC with a significance level <strong>of</strong>

Irene Y.H. Fan and Rongbin W.B. Lee
Figure 7: (a) direct causation; (b) circular causation (c) reverse circular causation
4. Discussion and conclusion
In this paper, we have presented a study <strong>of</strong> intellectual capital and innovation performance with an
R&D firm in Hong Kong. The results indicate that <strong>the</strong> organization had high Intrinsic Motivations (KW),
Innovative Culture (OC) and Transformational Leadership (TL). Internal Social Network (ISN) rated
<strong>the</strong> lowest among <strong>the</strong> six. The highest three dimensions relate to knowledge creation where <strong>the</strong> lower
three knowledge capturing and sharing. However, Figure 8 shows that although <strong>the</strong> organization’s
perceived knowledge creation capability were strong, <strong>the</strong>y did not contribute to <strong>the</strong> performance <strong>of</strong>
innovation as high as <strong>the</strong> knowledge sharing elements. This confirms <strong>the</strong> PLS results that knowledge
sharing has a larger contribution on innovation performance than knowledge creation in direct causal
model.
Figure 8: IC impact to innovation
The respondents <strong>of</strong> <strong>the</strong> survey considered <strong>the</strong>y were in a good innovative environment, had
transformational leaders, and had confidence in <strong>the</strong>ir own innovative capability; yet appraised poor
innovation performance. It is important for management to examine <strong>the</strong> organization and networking
strategy to eliminate hindrances. On <strong>the</strong> o<strong>the</strong>r hand, although <strong>the</strong>se high knowledge creating
attributes (self-motivated knowledge workers, transformational leaders and innovation supportive
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Irene Y.H. Fan and Rongbin W.B. Lee
culture) do not directly impact <strong>the</strong> innovation performance, one cannot discard <strong>the</strong> continuous
cultivation <strong>of</strong> such; as <strong>the</strong>y are crucial to <strong>the</strong> knowledge sharing mechanism and thus innovation
performance. The complexity and interdependencies among <strong>the</strong> intellectual capital elements forms a
‘rugged landscape’ (Kauffman 1993; Levinthal 1997) that makes <strong>the</strong> search <strong>of</strong> a higher performance
value difficult.
This study goes beyond <strong>the</strong> intermediate effect <strong>of</strong> structural and relational capitals and looks at <strong>the</strong>
reciprocal and circular causation <strong>of</strong> knowledge creation, knowledge sharing and innovation
performance. The result demonstrates that an organization, viewing from <strong>the</strong> perspective <strong>of</strong>
intellectual capital, is a Complex Adaptive System characterized by its nonlinearity and
interdependency (Heylighen 2010; Thietart & Forgues 2011). Study <strong>of</strong> <strong>the</strong> relationship between
intellectual capital and innovation performance using complexity <strong>the</strong>ory is <strong>the</strong>refore warranted. Future
studies shall fur<strong>the</strong>r investigate <strong>the</strong> complex nature and <strong>the</strong> interdependencies among <strong>the</strong> intellectual
capital components and <strong>the</strong>ir combined effects on innovation performance.
Acknowledgements
The work described in this paper was substantially supported by a grant from <strong>the</strong> Research Grants
Council <strong>of</strong> <strong>the</strong> Hong Kong Special Administrative Region, China (PolyU5206/10E).
List <strong>of</strong> Abbreviations
ESN variable name for External Social Network
HC Human Capital
IC Intellectual Capital
ICT Information and Communication Technologies
INP variable name for Innovation Performance
ISN variable name for Internal Social Network
KC variable name for Knowledge Creation
KS variable name for Knowledge Sharing
KW variable name for intrinsic motivation <strong>of</strong> Knowledge Workers
OC variable name for innovative-supportive Organizational Culture
PLS Partial Least Square
RC Relational Capital
SC Structural Capital
SEM Structural Equation Modelling
SP variable name for Systems and Processes
TL variable name for intellectual simulation <strong>of</strong> Transformational Leadership
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181

Appropriation <strong>of</strong> S<strong>of</strong>tware Process Improvement
Standards: An Empirical Study in S<strong>of</strong>tware Development
Organizations
Ronny Gey
Chemnitz University <strong>of</strong> Technology, Chemnitz, Germany
<strong>the</strong>ogey@gmail.com
Abstract: The paper reports on preliminary results <strong>of</strong> a research project which explores empirically <strong>the</strong> relationship
between standardization and innovation. The focus lies on <strong>the</strong> implementation <strong>of</strong> standards as a subject in
<strong>the</strong> research area <strong>of</strong> technology and organizing. We show that differences in <strong>the</strong> appropriation <strong>of</strong> a standardization
approach, namely <strong>the</strong> Capability Maturity Model Integration (CMMI), can occur and thus influence <strong>the</strong> latter
use <strong>of</strong> <strong>the</strong> standard in <strong>the</strong> organisation. The practical localization <strong>of</strong> standardization in this paper is derived from
standards towards s<strong>of</strong>tware process improvement (SPI). In general process improvement models aim at <strong>the</strong> introduction
<strong>of</strong> effective processes and <strong>the</strong>ir continuous improvement. CMMI was selected as a prominent example
<strong>of</strong> a SPI standard. A differing use <strong>of</strong> SPI in contrast to what was intended by <strong>the</strong> SPI designer is meant to be a
major influence factor for how innovative capabilities are generated. For our empirical investigations we used a
qualitative and explorative approach. Therefore organizations from different industry sectors and from different
countries were selected. A semi-structured questionnaire was used to analyse occurrences <strong>of</strong> innovation before
and after <strong>the</strong> implementation <strong>of</strong> CMMI. Analysis <strong>of</strong> data results in a single case study for each organization.
Based on our ongoing study first results show direct coherence between <strong>the</strong> general understanding and acceptance
<strong>of</strong> CMMI and its implementation as an approach to s<strong>of</strong>tware process improvement. The data shows that
companies which interpret, implement and fur<strong>the</strong>r utilize CMMI as mere standard struggle with <strong>the</strong> daily use <strong>of</strong> it.
CMMI was implemented differently than intended by its designers. This affects <strong>the</strong> motivation and probability to
obtain a recertification or even to ascent <strong>the</strong> maturity level. In contradiction, companies which focused on <strong>the</strong>
process improvement aspect <strong>of</strong> CMMI ra<strong>the</strong>r than following constrainedly and blindfolded what is supposed to be
<strong>the</strong> standard reported a continuous use <strong>of</strong> CMMI as SPI model.
Keywords: process improvement, standardization, CMMI, s<strong>of</strong>tware development, appropriation, structuration
1. Introduction
This paper is about process management in s<strong>of</strong>tware development and its standardization. Since <strong>the</strong>
‘s<strong>of</strong>tware crisis’ in <strong>the</strong> 1960s (Dijkstra 1972) organisations in <strong>the</strong> s<strong>of</strong>tware development industry are
forced to adopt quality standards, to have cooperative interfaces to <strong>the</strong>ir customers and fur<strong>the</strong>r to
prove <strong>the</strong>ir reliability in <strong>the</strong>ir development efforts. They have to deal with <strong>the</strong> fact that s<strong>of</strong>tware is a
virtual product where development and production are not de-coupled in <strong>the</strong> classical production
sense. The s<strong>of</strong>tware development sector nowadays is one <strong>of</strong> <strong>the</strong> most dynamic sectors when it
comes to standardization and technical innovation.
S<strong>of</strong>tware process improvement (SPI) has thus gained an immense ground among <strong>the</strong> organisations
world wide. Its goal is to implement a continuous and long lasting improvement culture in <strong>the</strong> company.
They influence <strong>the</strong>refore <strong>the</strong> behaviour <strong>of</strong> organisations in <strong>the</strong> way <strong>the</strong>y shape <strong>the</strong>ir understanding
<strong>of</strong> how processes need to be defined and enacted. As every major introduction in terms <strong>of</strong> technologies
into a company, a companies intentions about <strong>the</strong> implementation can differ for various reasons.
This is where we start from in this paper.
2. Theoretical approach
This paper is trying to explore <strong>the</strong> use <strong>of</strong> standards for S<strong>of</strong>tware Process Improvement (SPI) in s<strong>of</strong>tware
development organisations. It takes an action based viewpoint <strong>of</strong> <strong>the</strong> organisation since standards
should not only be considered as a given structure. People actively modify meanings, purposes
and <strong>the</strong> way how standards actually live in <strong>the</strong> organisation. Fur<strong>the</strong>r, standards as structures can only
be examined in human actions and <strong>the</strong>refore do not exist without <strong>the</strong>ir enactment (Giddens 1984). By
applying this perspective on <strong>the</strong> field we argue that <strong>the</strong> way people interpret a standard affects <strong>the</strong>
actual use <strong>of</strong> it. As a consequence, this can differ from <strong>the</strong> way <strong>the</strong> designers <strong>of</strong> <strong>the</strong> standard meant it
to be (Leonardi and Barley 2010). For a better understanding it is now vital to frame our ideas on appropriation,
a perspective <strong>of</strong> constructivist studies <strong>of</strong> technology and organising, and finally on standards
as <strong>the</strong> subject <strong>of</strong> interest.
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Ronny Gey
From a social constructivist point <strong>of</strong> view research on technology, its implementation and its affects on
organisations, can be classified into five different perspectives whereas appropriation is <strong>the</strong> one <strong>of</strong> interest
in this study. The appropriation perspective on technologies is engaged after <strong>the</strong> decision to adopt
<strong>the</strong> technology is made and asks “[...] whe<strong>the</strong>r people use <strong>the</strong> technology as its designers or adopters
intended” (Leonardi and Barley 2010, p. 15). This category goes back to <strong>the</strong> work <strong>of</strong> Poole and
DeSanctis (Poole and DeSanctis 1990; DeSanctis and Poole 1994) who based <strong>the</strong>ir Adaptive Structuration
Theory on <strong>the</strong> work <strong>of</strong> Giddens (1984) on structuration. Social structures provided by technology
are described by <strong>the</strong>ir structural features, <strong>the</strong> “rules and resources, or capabilities, <strong>of</strong>fered by <strong>the</strong>
system” and by <strong>the</strong>ir spirit, namely <strong>the</strong> values and goals which are connected to <strong>the</strong> structural features
(DeSanctis and Poole 1994, p. 126). The user can deviate from <strong>the</strong> spirit <strong>of</strong> a technology as it
was originally intended by <strong>the</strong> designer and use <strong>the</strong> structural features in a different way. While doing
so Poole and DeSanctis (1990) speak about unfaithful appropriation, when <strong>the</strong> user's intentions doesn't
match <strong>the</strong> designers' and faithful appropriation, when <strong>the</strong> intentions are reflected.
Parallel to this, Orlikowski also based her work on <strong>the</strong> <strong>the</strong>ory <strong>of</strong> structuration and hence brought similar
ideas to technology research in organisations (Orlikowski and Robey 1991; Orlikowski 1992). She
spoke about <strong>the</strong> design and use mode, as <strong>of</strong> what is intended by those who design a technology and
those who use it afterwards. Technology to her is enabling and constraining human actions (Orlikowski
1992, p. 416) and she applies less normative lenses on <strong>the</strong> matter than Poole and DeSanctis
which favoured faithful to unfaithful appropriation. We henceforth support her articulation <strong>of</strong> appropriation.
As appropriation is <strong>the</strong> only constructivist perspective that considers explicitly <strong>the</strong> designers images <strong>of</strong>
<strong>the</strong> way a technology should be (Leonardi and Barley 2010, p. 15) we decided to choose this viewpoint.
Also we were arguing about <strong>the</strong> enactment perspective subsequently and mainly developed by
Orlikowski and Yates (e.g. Orlikowski and Yates 1995; Orlikowski and Barley 2001). But as we are
only equipped with <strong>the</strong> results <strong>of</strong> a short term research so far we dropped <strong>the</strong> idea <strong>of</strong> applying <strong>the</strong> enactment
approach which favours longitudinal studies (cp. fur<strong>the</strong>r research topics in chapter 5).
As our perspective on <strong>the</strong> subject is set we now need to define standards as <strong>the</strong> specific technology
<strong>of</strong> interest in this study.
2.2 Standards and s<strong>of</strong>tware process improvement
In this study we are concentrating on process standards as opposed to product standards. Process
standards set rules about how an organisation should design its processes (Brunsson and Jacobson
2000) and <strong>the</strong>refore define <strong>the</strong> organisational behaviour. The process which produces <strong>the</strong>se rules is
specified as standardisation and standards can thus be distinguished from social norms because <strong>the</strong>
designer can be identified as <strong>the</strong> organisational arrangement who executes <strong>the</strong> standardisation.
We are fur<strong>the</strong>r following <strong>the</strong> distinction <strong>of</strong> Nielsen and Kautz (2008) who speak about standards, processes
and practices as three different items in <strong>the</strong> implementation <strong>of</strong> standards in an organisation
(Nielsen and Kautz 2008, p. 30). First, a standard is external to a specific organisation in terms <strong>of</strong>
where <strong>the</strong> creation <strong>of</strong> <strong>the</strong> rule set takes place, like <strong>the</strong> different ISO standards or CMMI which are all
designed by a single standardisation body. Second, a process is what <strong>the</strong> specific organisation sets
as <strong>the</strong>ir specific organisational process. They can comply or not to what is written in <strong>the</strong> standard process.
And third, <strong>the</strong> concrete practice is what is actually being executed in <strong>the</strong> organisation. Their
members can in practice also deviate or comply to <strong>the</strong> organisational processes. Barley and Tolbert
(1997, p. 98) support this distinction by referring to practices as scripts through which institutions are
enacted. In conclusion, organisations decide whe<strong>the</strong>r and to what extent standards change <strong>the</strong>ir processes
as well as <strong>the</strong>ir existing practices. They socially construct it and reflect <strong>the</strong> intention <strong>of</strong> <strong>the</strong> creator
<strong>of</strong> <strong>the</strong> standard or not. As already mentioned, Orlikowski (1992) referred to it as design and use
mode whereas Poole and DeSanctis (1990) called it spirit and structural feature <strong>of</strong> a technology. So
human action can occur before and after <strong>the</strong> concrete enactment <strong>of</strong> <strong>the</strong> organisational processes.
The use mode is <strong>of</strong> specific interest for us since it is <strong>the</strong> observable one and since it provides <strong>the</strong> evidence
<strong>of</strong> how appropriation <strong>of</strong> standards takes place in an organisation. The social reproduction <strong>of</strong> <strong>the</strong>
standard into <strong>the</strong> organisation is a two folded process. First, it occurs in <strong>the</strong> reproduction <strong>of</strong> <strong>the</strong> stan-
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dard into <strong>the</strong> organisational process. Second, it is embodied in <strong>the</strong> reproduction <strong>of</strong> <strong>the</strong> organisational
process into <strong>the</strong> concrete practice which is <strong>the</strong>n observable as action.
The standards <strong>of</strong> interest in this paper are <strong>the</strong> standards for s<strong>of</strong>tware process improvement (SPI). SPI
is a term highly connected to <strong>the</strong> work <strong>of</strong> <strong>the</strong> S<strong>of</strong>tware Engineering Institute (SEI) at <strong>the</strong> Carnegie Mellon
University in Pittsburgh (Humphrey 1992). SPI “[...] deals primarily with <strong>the</strong> pr<strong>of</strong>essional management
<strong>of</strong> s<strong>of</strong>tware firms, and <strong>the</strong> improvement <strong>of</strong> <strong>the</strong>ir practice, displaying a managerial focus ra<strong>the</strong>r
than dealing directly with <strong>the</strong> techniques that are used to write s<strong>of</strong>tware” (Hansen 2004). In practice
<strong>the</strong> Capability Maturity Model Integration (CMMI) is <strong>the</strong> most <strong>of</strong>ten used approach to SPI (Rose et al.
2008) which is why we choose to base our research on it.
The ga<strong>the</strong>red empirical data will demonstrate how appropriation <strong>of</strong> SPI and in concrete <strong>of</strong> CMMI in organisations
appears. Prior to that we will exemplify our research design which enabled <strong>the</strong> processing
<strong>of</strong> <strong>the</strong> relevant data.
3. Research design
The goal <strong>of</strong> our research is to examine appropriations <strong>of</strong> SPI, in concrete CMMI, as a technology being
designed and used with certain intentions. Therefore we use <strong>the</strong> qualitative case study approach
which investigates such contemporary phenomenon’s within its real-life context where <strong>the</strong> relevant
behaviour cannot be manipulated (Yin 2003). The research is explorative in nature and relies on a
deep "three-case" case study. The data is <strong>the</strong>n analysed with a qualitative content analysis to explore
qualified hypo<strong>the</strong>ses (Glaser and Strauss 1967). It enables <strong>the</strong> researcher to include textual information
and systematically identify its properties, e.g. <strong>the</strong> frequencies <strong>of</strong> most used keywords.
The 22 interviews in 3 different organisations were conducted between August 2010 and December
2010 and lasted between 50 and 100 minutes. They involved strategic planners, managers responsible
for implementation <strong>of</strong> process management standards, team leaders and s<strong>of</strong>tware engineers <strong>of</strong>
one working context. They were semi-structured to allow flexibility and to ensure that we get <strong>the</strong> focus
on interesting phenomena. Fur<strong>the</strong>r, a narrative interview style was chosen in order to stimulate reports
about a variety <strong>of</strong> expressions and experiences in terms <strong>of</strong> process standards by open, nonassessing
questions. The recorded interviews were transcribed by a single team member and afterwards
coded and pre-analysed by each team member with Atlas.ti, a s<strong>of</strong>tware tool for analysing qualitative
data by keywords (Muhr 1991). Anonymisation was chosen since it was requested by at least
one organisation.
The subject <strong>of</strong> <strong>the</strong> interviewees’ narrations and requests by <strong>the</strong> interviewer were innovations in s<strong>of</strong>tware
development, <strong>the</strong> history, implementation and usage <strong>of</strong> process management standards, <strong>the</strong>
procedure <strong>of</strong> certification audits and <strong>the</strong> individual and organizational experiences with process management
standards. The interviewees were preferably brought into <strong>the</strong> position where <strong>the</strong>y could
compare circumstances for technical innovations before standard implementation and after.
To achieve an adequate level <strong>of</strong> validity we used multiple sources <strong>of</strong> evidence (interviews, guided
tours and introduction <strong>of</strong> <strong>the</strong> company, observation <strong>of</strong> <strong>the</strong> context <strong>of</strong> each interview and company) and
had key interviewees as reviewers. Internal validity was assured by first, varying interview groups,
second, a mutual keyword schema for coding which was inductively extended, third, a final research
workshop <strong>of</strong> four days where pre-findings were discussed and iteratively assessed.
We started to contact s<strong>of</strong>tware developing organizations in February 2010 by asking <strong>the</strong>m whe<strong>the</strong>r
<strong>the</strong>y develop s<strong>of</strong>tware according to <strong>the</strong> CMMI regulations. We identified three organisations, an automotive
supplier (A-Suppliers), a retail s<strong>of</strong>tware company (B-Retailers) and a financial service institution
(C-Bankers). See (Table 1) for fur<strong>the</strong>r details on each organisation.
We now will continue with <strong>the</strong> findings <strong>of</strong> <strong>the</strong> case studies. Due to space regulations <strong>the</strong>y are only a
minor portion <strong>of</strong> what was actually analysed and <strong>the</strong>refore do not present a complete view on this
study. References to, for example, A2, B3 and C5 refer to transcripts <strong>of</strong> interviews held with particular
interviewees in <strong>the</strong> firms A-Suppliers, B-Retailers and C-Bankers respectively. Also we use <strong>the</strong> term
CMMI to relate to CMMI as well as to CMM, <strong>the</strong> predecessor <strong>of</strong> CMMI, which does not affect <strong>the</strong> study
in any way.
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Table 1: Characterization <strong>of</strong> research sites and interviewees
A-Suppliers B-Retailers C-Bankers
Sector Automotive technology Retail Finance/ banking
Area <strong>of</strong> s<strong>of</strong>tware dev. Electronics/ electronic
control units
Number <strong>of</strong> employees
(total)
Number <strong>of</strong> employees in
s<strong>of</strong>tware dev.
S<strong>of</strong>tware and services
to <strong>the</strong> retail sector
Application banking s<strong>of</strong>tware
for internal and external
customers
ca. 5.000 ca. 3'000 ca. 20.000
ca. 3.000 ca. 500 ca. 300
Number <strong>of</strong> interviews 9 7 6
4. Findings
4.1 A-Suppliers
A-Suppliers produces electronic control units for <strong>the</strong> automotive supplier industry. They employ about
3000 system developers with a strong focus on s<strong>of</strong>tware development. The CMMI journey started in
1999 when a department leader strived <strong>the</strong> idea <strong>of</strong> process improvement:
“I think our big success factor for <strong>the</strong> implementation was really that we didn't want to introduce
CMM, we wanted to improve our SW quality. That was an extreme important
driver [….] ” (A3:63)
Even though external customers were also demanding for <strong>the</strong> certification at that time, A-Suppliers
took CMMI foremost as an important driver for <strong>the</strong>ir quality emphasizing <strong>the</strong> improvement aspect <strong>of</strong> it
ra<strong>the</strong>r than seeing it as means to fulfil customer demands. Therefore an elaborate and slow preparation
and implementation was chosen: “[…] So we wanted to have it in <strong>the</strong> whole organisation. Slowly
and not implemented everything which is written in <strong>the</strong> book [.…] So we did it <strong>the</strong> slow way.” (A1:109)
While doing so <strong>the</strong>y complied with <strong>the</strong> spirit <strong>of</strong> CMMI as SPI approach. When it came to <strong>the</strong> assessment,
<strong>the</strong>y were even thinking to refuse an unexpected extra level:
“We made assessment in <strong>the</strong> end <strong>of</strong> 2003. And we strived for level 2. And <strong>the</strong> day before
<strong>the</strong> announcement <strong>of</strong> <strong>the</strong> result, this department manager which was <strong>the</strong>n also <strong>the</strong> project
manager […] said [...] we have really a problem [....] We will get level 3 and I am not
sure if we are mature enough to get this level now.” (A3:63)
They got level 3 certified and an entire process group was established aiming for <strong>the</strong> newly introduced
CMMI certification which <strong>the</strong>y again achieved after a single assessment in <strong>the</strong> end <strong>of</strong> 2004. But this
time <strong>the</strong>ir focus lied more on achieving <strong>the</strong> level than improving <strong>the</strong>ir quality:
“So in that year, we focused pretty much on <strong>the</strong> level. And we have seen it in <strong>the</strong> quality.
[...] after hunting <strong>the</strong> CMMI level it was a little bit decreasing again.” (A3:67)
The improvement aspect obviously played a minor role and <strong>the</strong> quality decreased. They referred to
this practice as level hunting and it “ […] does not really lead to good results. So it is not just <strong>the</strong> level,
it is <strong>the</strong> things behind” (A3:79). This certain practice is not intended by <strong>the</strong> designers <strong>of</strong> CMMI as SPI
standard:
“So, well, most people still don't understand, even nowadays. They require CMMI like a
standard. But CMMI [...] is not a standard. It is […] an improvement model. And if I find
out, I have a problem somewhere, CMMI or <strong>the</strong> model helps me to improve something.
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But, it is still seen as a standard within most <strong>of</strong> <strong>the</strong> management, within most <strong>of</strong> <strong>the</strong> customers.”
(A1:73)
Whereas <strong>the</strong> term standard in this context relates to <strong>the</strong> characteristics <strong>of</strong> many industry standards
where certification is inevitable for acting in this specific industry and process steps are formulated in
a more detailed and primarily fixed manner. Thus A-Supplier was also reporting on a miss-perception
among <strong>the</strong>ir employees in <strong>the</strong> beginning:
“So we had basically a negative tension let's say regarding processes. And CMMI was
perceived only as process monster and not as it is.” (A8:375)
To overcome this specific perception, A-Suppliers chose different techniques to influence <strong>the</strong> alignment
<strong>of</strong> <strong>the</strong>ir employees with <strong>the</strong> CMMI approach:
“I, as <strong>the</strong> boss <strong>of</strong> this unit, I was personally pretty much involved in this CMMI issue. I
didn't give it to my team, [...] please make CMMI in our unit. I was personally weekly involved
in that issue. And I think that helped <strong>the</strong> organisation to see, ok this is not just one
thing, it is a thing which is very important for our boss. [...] he shares also our working
task in CMMI.” (A3:137)
“But we tried to involve especially [<strong>the</strong> key persons] because <strong>the</strong>y influence especially
<strong>the</strong> perception <strong>of</strong> <strong>the</strong> people.” (A8:69)
With that <strong>the</strong>y recognized <strong>the</strong> importance <strong>of</strong> attitudes, beliefs and values among <strong>the</strong> users <strong>of</strong> a certain
technology, namely <strong>the</strong> CMMI as s<strong>of</strong>tware process improvement approach.
4.2 B-Retailers
B-Retailers is <strong>the</strong> s<strong>of</strong>tware manufacturing subsidiary <strong>of</strong> a cluster <strong>of</strong> IT businesses focusing on <strong>the</strong>
manufacturing, selling, integration and support <strong>of</strong> s<strong>of</strong>tware and <strong>the</strong> provision <strong>of</strong> s<strong>of</strong>tware solutions and
outsourcing services mainly to <strong>the</strong> retail market. They pride <strong>the</strong>mselves in developing tools and technology
based on continuous innovations adjusted to <strong>the</strong>ir customers’ preferred technological platforms.
They boast a 90% local market share for s<strong>of</strong>tware solutions and services to <strong>the</strong> retail sector
which could to a great extent be ascribed to <strong>the</strong>ir development <strong>of</strong> modular re-usable components and
successful re-use <strong>of</strong> such components in a cost-effective way:
“The strategy <strong>of</strong> UCSSM was initially get a CMMI certified factory which delivers SW fast
and cheaper. That was <strong>the</strong> whole.” (B6:203)
CMMI apparently played a significant role in achieving this goal to become a s<strong>of</strong>tware factory. But <strong>the</strong>
major reason for <strong>the</strong> implementation <strong>of</strong> CMMI seems to be ra<strong>the</strong>r external pressure from <strong>the</strong> customers:
“They [<strong>the</strong>ir customers] did come to us to outsource <strong>the</strong> product development because
our CMMI certification went in time. And it did help us to actually gain <strong>the</strong> original projects
and <strong>the</strong>n continue delivering.”(B6:73)
It was even mentioned that <strong>the</strong>y didn't had any o<strong>the</strong>r option than taking <strong>the</strong> CMMI track because “[...]
if you don't do it <strong>the</strong>n somebody else in <strong>the</strong> market will do it” (B3:117). So to stay on <strong>the</strong> market <strong>the</strong>y
felt that a certification was absolutely needed contrasting <strong>the</strong> original spirit <strong>of</strong> SPI which lies essentially
in <strong>the</strong> improvement aspect. For B-Retailers CMMI appears to be a must-have standard which
<strong>the</strong>y absolutely have to comply with. Inherent to that is an overvaluation <strong>of</strong> measurements:
“[...] you maybe came up with a very good solution to a problem. But it took you three
times longer than you initially thought. So in <strong>the</strong> eyes <strong>of</strong> <strong>the</strong> management it is just, <strong>the</strong>y
just see your numbers, <strong>the</strong>y don't see quality <strong>of</strong> work, which is frustrating.” (B4:109)
As a consequence and again supporting <strong>the</strong> missing understanding <strong>of</strong> <strong>the</strong> s<strong>of</strong>tware process improvement
background <strong>of</strong> CMMI, <strong>the</strong> process seems to be more important than <strong>the</strong> product itself:
“So you serve <strong>the</strong> process instead <strong>of</strong> serving <strong>the</strong> product in <strong>the</strong> end. In <strong>the</strong> end it is like,
wow, we followed this amazing process, we tick all <strong>the</strong>se boxes but our product doesn't
work. We are not finished or this piece is missing.” (B4:333)
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The developers feel that <strong>the</strong>y generally spend more time on non-engineering tasks and “[...] <strong>the</strong>re is a
high staff turnover here and that is maybe one <strong>of</strong> <strong>the</strong> reasons” (B4:181). Also it was mentioned that
process definitions are declared from a higher management level and that <strong>the</strong> influence <strong>of</strong> <strong>the</strong> employees
on possible process improvements is ra<strong>the</strong>r low. Again, it doesn't reflect <strong>the</strong> intentions <strong>of</strong> <strong>the</strong>
developers <strong>of</strong> CMMI which claim for an overall participation in <strong>the</strong> improvement process. It could be
concluded that B-Retailers in general have a different perception <strong>of</strong> s<strong>of</strong>tware process improvement in
an organisation which might be related to <strong>the</strong>ir overall attitude towards processes and standards:
“So, it is not that <strong>the</strong> processes <strong>the</strong>mselves are restrictive [to improvement]. But yeah, it
is more <strong>the</strong> way it is implemented in <strong>the</strong> company culture [...]” (B4:227)
This could be a first indicator why an unfaithful appropriation <strong>of</strong> CMMI in <strong>the</strong> organisation <strong>of</strong> B-Retailers
appeared.
4.2 C-Bankers
In <strong>the</strong> year 2000 D-Bankers started with <strong>the</strong> implementation <strong>of</strong> CMMI within one department <strong>of</strong> <strong>the</strong> IT
group, <strong>the</strong> development shop. The approximately 300 employees were basically concerned with s<strong>of</strong>tware
development for <strong>the</strong> mainframe environment. The motivation for CMMI came:
“[...] during <strong>the</strong> beginning <strong>of</strong> 2000, we started to setting up relationships to Indian companies
to outsource development [....] And <strong>the</strong> directive was basically saying to <strong>the</strong> development
shop guys, if you don't show that you can compete internationally <strong>the</strong>n we will
At those days <strong>the</strong>y were confronted with <strong>the</strong> external pressure from <strong>the</strong> market. CMMI was becoming
<strong>the</strong> widely accepted SPI approach and while applying it <strong>the</strong>y could compare to <strong>the</strong> competitors. The
CMMI certification helped C-Bankers to gain a major project and <strong>the</strong>y rapidly implemented <strong>the</strong> CMMI
practices level by level achieving maturity level 4 in 2004. This is what made some <strong>of</strong> <strong>the</strong> employees
doubt that “[...] <strong>the</strong> emphasis in <strong>the</strong> implementation was on <strong>the</strong> quality. It was in getting <strong>the</strong> level”
(C5:183). For most <strong>of</strong> <strong>the</strong> interviewees, implementation was not optimal:
“[...] maybe I would have done it slightly different. I don't think that all <strong>the</strong> areas actually
fully understood <strong>the</strong> goal properly before attaining <strong>the</strong> goal. [...] It was always, you need
to do it, do it! […] <strong>the</strong> implementation maybe wasn't good. Maybe do it slowly, ensure that
<strong>the</strong> people understand <strong>the</strong> goals and <strong>the</strong> objectives before attaining <strong>the</strong> goal.” (C5:45)
As it seems implementation was too fast to fully align <strong>the</strong> employees with <strong>the</strong> idea <strong>of</strong> process improvement
and <strong>the</strong> different steps towards <strong>the</strong> higher maturity levels. Ra<strong>the</strong>r <strong>the</strong> interviewees felt that
CMMI was “just a dictate from <strong>the</strong> top kind <strong>of</strong> thing” (C3:259). C-Bankers treated CMMI as a standard
that needs to be achieved by all means:
“What happened was, we kind <strong>of</strong> came in and put down a standard process. Now that is
probably a half correct implementation <strong>of</strong> CMMI.” (C3:171)
An important influence factor was also <strong>the</strong> business units which were not CMMI aligned and thus
were not patient enough to carry <strong>the</strong> change process within <strong>the</strong> development shop:
“'We don't want to know what your are doing on <strong>the</strong> background in terms <strong>of</strong> how you
come to that point, OK.' So <strong>the</strong>re was bad selling <strong>of</strong> what CMMI could give to <strong>the</strong> organisation.”
(C1:155)
So it seems that not only <strong>the</strong> organisation itself (<strong>the</strong> development shop) should understand <strong>the</strong> spirit
<strong>of</strong> CMMI but also <strong>the</strong>ir cooperation partners (<strong>the</strong> business units). Which is also <strong>the</strong> case for <strong>the</strong> different
maturity levels and <strong>the</strong>ir impact on <strong>the</strong> organisation's performance:
“And that's why <strong>the</strong> real benefit <strong>of</strong> CMMI actually comes after 3. Well, you get <strong>the</strong> benefit
in 3 because you actually get <strong>the</strong> disciplines and standards in <strong>the</strong> organization. But 4 and
5 actually makes you go faster. […] And that's why companies like to stop at 3, you
know, that's sort <strong>of</strong> a good place. But actually a very bad place to stop because you end
up now with just this lamp.” (C4:534)
This is what happened to C-Bankers, <strong>the</strong>y actually got shortly level 4 certified but dropped it after senior
management was replaced in <strong>the</strong> end <strong>of</strong> 2004. Since, CMMI was not <strong>of</strong>ficially used in <strong>the</strong> company.
It even got such a bad reputation that:
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“[...] <strong>the</strong> first thing I was asked is, use <strong>the</strong> CMMI in your background but don't ever utter
<strong>the</strong> word CMMI. Ok. This is how CMMI was received in <strong>the</strong> business. […] So it
died.”(C1:53)
5. Discussion and conclusion
While analysing our findings we can draw several conclusions so far. There are two main reasons for
a CMMI certification in <strong>the</strong> studied companies (see Table 2). First, organisations wish to introduce a
s<strong>of</strong>tware process improvement technology to enhance quality <strong>of</strong> processes and to assure a continuous
improvement. Within A-Suppliers this reason can be clearly identified (++). The o<strong>the</strong>r two case
companies also referred to this intention but not first and foremost (+). Here, <strong>the</strong> second factor played
a more significant role, <strong>the</strong> external pressure from ei<strong>the</strong>r customers demanding <strong>the</strong> certification and
CMMI as a reaction, C-Bankers (++) and A-Suppliers (+), or from sensing that staying successful in
<strong>the</strong> market demands a certificate to prove <strong>the</strong> organisations' maturity, B-Retailers (++) and C-Bankers
(++).
Table 2: Reasons for <strong>the</strong> implementation <strong>of</strong> CMMI in <strong>the</strong> case organisations
Reasons for CMMI A-Suppliers B-Retailers C-Bankers
Improvement aspect ++ + +
External
pressure
proactive o ++ ++
reactive + o ++
(++) applies fully, (+) applies partly, (o) doesn't apply at all
After implementation, <strong>the</strong> history <strong>of</strong> CMMI in <strong>the</strong> organisation and <strong>the</strong> use <strong>of</strong> it as SPI tool differed. A-
Suppliers holds no certification nowadays but still uses <strong>the</strong> CMMI conform processes as means to
continuous improvement. They actually do not necessarily need a certificate to prove <strong>the</strong>ir quality to
<strong>the</strong> customers but still see <strong>the</strong> advantages <strong>of</strong> process improvement. They are aligned with what <strong>the</strong>
creators <strong>of</strong> CMMI originally intended, to implement a culture <strong>of</strong> improvement within an organisation. A-
Suppliers use mode reflects <strong>the</strong> intended design mode.
B-Retailers and C-Bankers stand in contradiction to this setting. C-Bankers are not certified any more
and <strong>the</strong>y, as a whole organisation, do not make use <strong>of</strong> CMMI any more. Still, some <strong>of</strong> <strong>the</strong> interviewees
reported that on a personal level <strong>the</strong>y still use what <strong>the</strong>y learnt about process improvement where
it is applicable but <strong>the</strong>y would never <strong>of</strong>ficially announce it. However, B-Retailers are still CMMI certified
but, as what we discovered so far, do not apply it in <strong>the</strong> sense <strong>of</strong> an elaborated process improvement
tool. Both organisations emphasised <strong>the</strong> importance <strong>of</strong> <strong>the</strong> certification to <strong>the</strong>ir role in <strong>the</strong>
market and <strong>the</strong> improvement <strong>of</strong> processes was not <strong>the</strong> main driver <strong>of</strong> <strong>the</strong> CMMI campaign. To focus
on <strong>the</strong> certification itself ra<strong>the</strong>r than on improving <strong>the</strong> processes is a practice which was not intended
by <strong>the</strong> SEI, <strong>the</strong> fa<strong>the</strong>rs <strong>of</strong> CMMI. The appropriation <strong>the</strong>refore shows an unfaithful character in <strong>the</strong>
sense <strong>of</strong> Poole and DeSanctis (1990).
As a consequence, <strong>the</strong> reasons why <strong>the</strong> analysed organisations introduced CMMI influenced <strong>the</strong> daily
work <strong>of</strong> <strong>the</strong> employee and also <strong>the</strong>ir perception on CMMI. Interviewees <strong>of</strong> B-Retailers and C-Bankers
had <strong>the</strong> impression that process was more important than <strong>the</strong> product in <strong>the</strong> end. They felt that it was
more important to absolutely comply to <strong>the</strong> process (“A tick in <strong>the</strong> box”) no matter whe<strong>the</strong>r it will result
in improvements in <strong>the</strong> product or not. CMMI was perceived as <strong>the</strong> “process monster” which is dictated
from <strong>the</strong> top and questioning processes and as a result improving <strong>the</strong> processes was not intended.
As a conclusion, our analysis leads us to <strong>the</strong> following qualified hypo<strong>the</strong>ses:
The more CMMI is interpreted and implemented as a process improvement approach, <strong>the</strong> more its
actual use is likely to continue.
The more CMMI is interpreted and implemented as a process improvement approach, <strong>the</strong> more employee
alignment to process improvement it creates.
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Ronny Gey
A first limitation we were confronted in this study was that we could only consult a few s<strong>of</strong>tware developers
among all <strong>the</strong> interviewees (one or two per company). Thus we do not have sufficient data to
draw a broader picture <strong>of</strong> this specific and very important group's viewpoint in s<strong>of</strong>tware development.
Fur<strong>the</strong>r, we experienced that some companies were using several standards for different purposes
and CMMI and <strong>the</strong> o<strong>the</strong>r standards hence were hidden in an organisation wide standard script (e.g. A-
Suppliers). Fur<strong>the</strong>rmore <strong>the</strong> research conducted didn't explicitly focus on <strong>the</strong> implementation <strong>of</strong> CMMI
from an appropriation perspective. Still, implementation <strong>of</strong> CMMI was <strong>the</strong> main subject <strong>of</strong> interest and
<strong>the</strong> data proved quite well for this particular issue. Thus a more focused research setting needs to be
applied. Also ra<strong>the</strong>r longitudinal studies in <strong>the</strong> enactment sense could be highly valuable. Finally, a
verification <strong>of</strong> <strong>the</strong> generated hypo<strong>the</strong>ses would consequently be <strong>the</strong> next step considering also a
broader variety <strong>of</strong> companies.
Fur<strong>the</strong>r research could as well explore <strong>the</strong> different perceptions and interpretations <strong>of</strong> <strong>the</strong> employees
towards CMMI and how those attitudes are concretely shaped during <strong>the</strong> implementation process.
Within this study we also discovered first references for <strong>the</strong> influences <strong>of</strong> different pr<strong>of</strong>essional or educational
groups on <strong>the</strong> interpretation process towards CMMI. Especially within B-Retailers and C-
Bankers we could <strong>of</strong>ten clearly distinguish between <strong>the</strong> 'process-guys' and <strong>the</strong> developers as having
different opinions towards processes and s<strong>of</strong>tware process improvement.
By referring a last time to our interviewees we want to conclude this study for now:
“Continuous improvement, it's, it's a way <strong>of</strong> living. I mean, that is even you, it is a way <strong>of</strong>
living and working. You should never stop with that.” (C1:151)
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189

An Examination <strong>of</strong> Knowledge Management as a
Management Fashion
Kenneth Grant
Ryerson University, Toronto, Canada
kagrant@ryerson.ca
Abstract: Knowledge Management (KM) emerged as a significant topic <strong>of</strong> management interest in <strong>the</strong> mid-
1990s. By <strong>the</strong> early 2000s, KM practices were widespread across organizations and have become a topic <strong>of</strong>
widespread interest to researchers in several disciplines. However, this widespread interest and adoption also
raised significant concerns. Researchers identified many failures in KM implementation and some argued that
KM was simply <strong>the</strong> latest in a series <strong>of</strong> management fads. KM is a management innovation -- a concept <strong>of</strong>fering
opportunities to improve organizational performance and competitive position. Innovation adoption is <strong>of</strong>ten as a
rational phenomenon, following patterns identified by Rogers (2003). However, an alternate view on innovation is
proposed by Abrahamson (1991), who suggests that such decisions are <strong>of</strong>ten not rational but ra<strong>the</strong>r driven by
managers’ need to be seen to be innovative, following management fads and fashions. This paper examines
whe<strong>the</strong>r KM is a management fad or fashion. It uses <strong>the</strong> two-stage framework proposed by Abrahamson (1991)
to examine <strong>the</strong> discourse and <strong>the</strong> diffusion <strong>of</strong> specific innovations. An extensive bibliographic review was carried
out over a 20-year period, from 1990-2009, to determine patterns in <strong>the</strong> discourse. Next, using a set <strong>of</strong> seven
Themes developed from this review, <strong>the</strong> actual patterns <strong>of</strong> diffusion <strong>of</strong> KM in five pr<strong>of</strong>essional services firms were
examined. While <strong>the</strong> bibliometric analysis demonstrated that KM has sustained a high level <strong>of</strong> interest over <strong>the</strong>
last 10 years and is not seen to present <strong>the</strong> typical characteristics <strong>of</strong> a management fad, actual practice in <strong>the</strong>
field differs from what is recommended within <strong>the</strong> literature.
Keywords: knowledge management, strategy, innovation, management fashion
1. Introduction
Using knowledge effectively is <strong>of</strong>ten argued to be key to competitive success in today’s global
economy. Not only is <strong>the</strong> effective management <strong>of</strong> knowledge argued to be a critical element <strong>of</strong> <strong>the</strong>
innovations needed to be successful, Knowledge Management (KM) is, <strong>of</strong> itself, a major "innovation”.
The field <strong>of</strong> KM emerged into prominence in <strong>the</strong> mid-1990s with a dramatic growth in interest in both
business and academe. By <strong>the</strong> early 2000s, concerns were being expressed by both industry leaders
and researchers about <strong>the</strong> field, questioning its level <strong>of</strong> success, and, in some cases, its true value.
Some argued that it was not something <strong>of</strong> true value and was merely a management fad, <strong>the</strong> latest in
a long line <strong>of</strong> proposed innovations that were attractive to managers as possible solutions to common
problems but had no sustainable value. This paper examines KM as a Management Fashion Theory.
2. Literature review
2.1 Innovation as management fashion
Innovation diffusion is <strong>of</strong>ten presented as a rational phenomenon. Perhaps <strong>the</strong> most frequently used
tool to examine adoption <strong>of</strong> new innovations is <strong>the</strong> Theory <strong>of</strong> Diffusion <strong>of</strong> Innovations, developed by
Rogers in <strong>the</strong> 1960s (Rogers, 2003). For Rogers, “an innovation is an idea, practice, or object that is
perceived as new by an individual or o<strong>the</strong>r unit <strong>of</strong> adoption” and “diffusion is <strong>the</strong> process by which an
innovation is communicated through certain channels over time among <strong>the</strong> members <strong>of</strong> a social
system”. A successful innovation is adopted by a high proportion <strong>of</strong> its target population, with several
stages <strong>of</strong> adoption.
Abrahamson (1991), arguing that <strong>the</strong> management innovation-diffusion literature is dominated by a
perspective that assumes that rational adopters make independent and technically efficient choices,
suggests that, frequently, this is not <strong>the</strong> case. He proposes that <strong>the</strong> diffusion <strong>of</strong> “innovative
administrative technologies” (prescriptions for designing organizational structures and cultures) can
<strong>of</strong>ten be described as management fads or fashions, arguing that innovation in organisations is <strong>of</strong>ten
driven by management fashion, “largely a cultural phenomenon, shaped by norms <strong>of</strong> rationality”
(Abrahamson, 1996).
Questioning <strong>the</strong> commonly held management view that “innovation” is a good and necessary activity,
he suggests that researchers should take a more skeptical view, especially about <strong>the</strong> “big ideas” that
form <strong>the</strong> subject <strong>of</strong> much management attention. While some innovations diffuse widely and become
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Kenneth Grant
part <strong>of</strong> normal management practice, o<strong>the</strong>rs fade and disappear. Management must be seen to be
always looking for improvement, creating a constant demand for new management fashions, which is
met by a supply <strong>of</strong> new ideas promoted by management fashion setters. These fashion setters may
“invent, rediscover or reinvent <strong>the</strong> management technique <strong>the</strong>y attempt to launch into fashion”. The
expectation is that, over time, <strong>the</strong> use <strong>of</strong> a specific management fashion will decline and new fashions
emerge to meet <strong>the</strong> demand for innovative ideas.
Figure 1 illustrates <strong>the</strong> general argument. Following a period <strong>of</strong> latency, where initial concepts are
formulated but do not receive widespread attention, some trigger drives a period <strong>of</strong> rapid growth in
popularity, followed by a period <strong>of</strong> widespread use and <strong>the</strong>n a period <strong>of</strong> decline. During this period <strong>of</strong>
decline <strong>the</strong> management fashion may be subject to a re-examination and redefinition that may <strong>the</strong>n
act as a trigger for a new a wave <strong>of</strong> popularity. As a result, some fashions can achieve widespread
adoption and continued use for a considerable period <strong>of</strong> time. O<strong>the</strong>rs will decline quite quickly and
<strong>the</strong>se are considered to be "fads". Finally, in a given subject area during a period <strong>of</strong> decline, a
redefinition can take place and multiple cycles or generations <strong>of</strong> innovation are visible where, as one
proposed approach declines, fashion setters introduce a new innovation.
Figure 1: The management fashion cycle (Abrahamson and Fairchild, 1999)
Of particular importance in <strong>the</strong> supply <strong>of</strong> management fashion is <strong>the</strong> role <strong>of</strong> <strong>the</strong> "management guru.”
Huczynski (1993) describes three kinds <strong>of</strong> management guru:
The Academic Guru: An academic from a major educational institution, who has developed and
popularized his or her ideas on some aspect <strong>of</strong> management, such as Porter, Mintzberg or Blanchard.
The Consultant Guru: Senior pr<strong>of</strong>essionals and prestigious firms who have established a reputation
for creative insight and extensive experience in particular fields, such as Peters and Waterman,
Deming, Drucker or <strong>the</strong> consulting firms <strong>of</strong> McKinsey or BCG.
The Hero-Manager Guru: A senior executive who has committed <strong>the</strong>ir thoughts to print, ei<strong>the</strong>r directly
or through a biographer, and whose authority comes from apparent success such as Iacocca, Welch
and Trump.
Between 1996 and 2010, at least 21 studies <strong>of</strong> management fashion have been carried out,
examining 32 different management topics. In almost every case, a period <strong>of</strong> latency (perhaps 5 years
or more) is followed by a rapid growth in popularity (typically from 3-5 years) with a very short peak
(sometimes for as little as 1 year) and <strong>the</strong>n a steady decline in interest to a much lower steady state
(perhaps over a 5- 7 year period).
2.2 The case <strong>of</strong> knowledge management
Consideration <strong>of</strong> KM as a strategic issue is a relatively new phenomenon in business. While
philosophers have long debated <strong>the</strong> origin and nature <strong>of</strong> knowledge, its consideration as a topic
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Kenneth Grant
worthy <strong>of</strong> its own management focus is relatively recent – perhaps some fifteen years. Its increased
visibility, as an important topic for both management and academic consideration, <strong>of</strong>ten closely linked
to innovation, is frequently presented in <strong>the</strong> context <strong>of</strong> a new type <strong>of</strong> economy or society.
While “knowledge management” has become a frequently discussed business topic, it has proved
difficult for executives and managers to determine how best to address this new management
challenge. Indeed, business leaders, while expressing a strong interest in understanding how best to
address knowledge management within <strong>the</strong>ir organizations, have raised significant concerns about
<strong>the</strong> effectiveness <strong>of</strong> <strong>the</strong>ir KM interventions to date. Spender (2005) has observed, “As KM has risen in
importance and managerial fashionability <strong>the</strong> hype and confusion has multiplied, leading some to
argue that KM is a fad <strong>of</strong> little long-term significance.” Wilson (2002) claimed that KM is, "in large part,
a management fad, promulgated mainly by certain consultancy companies, and <strong>the</strong> probability is that
it will fade away like previous fads." This has led to some early assessments <strong>of</strong> <strong>the</strong> fad/fashion
phenomenon, with Scarbrough & Swan (2001) and Ponzi & Koenig (2002) who suggested that KM
might be passing from a fad to something more enduring.
Worrall (2008) examines business knowledge, commenting that “In <strong>the</strong> recent past, <strong>the</strong>re has been a
growing appreciation in <strong>the</strong> business strategy literature, typified by Nonaka and Takeuchi (1995), that
knowledge is an essential, non-imitable element <strong>of</strong> a firm’s competitive strategy” and that “<strong>the</strong>re has
been insufficient analysis <strong>of</strong> <strong>the</strong> nature <strong>of</strong> pr<strong>of</strong>essional or practical knowledge which is <strong>of</strong>ten
experience-based, tacit, difficult to articulate explicitly”. He is concerned that “<strong>the</strong>re is ample evidence
to suggest that <strong>the</strong> management research has had, and continues to have, little effect or impact on
management practice”. Fur<strong>the</strong>r, he suggests that management fads <strong>of</strong>ten have a greater ability to
capture management attention than does more traditional management research.
No single widely accepted definition <strong>of</strong> KM exists. As Smith (2004) suggests, “knowledge
management (KM) is a rapidly growing field that crosses diverse disciplines,” from psychology to
information systems, and can be “viewed as a conceptually complex broad umbrella <strong>of</strong> issue and
viewpoints”. Sims (2008) collected 53 definitions <strong>of</strong> KM, with 54 attributes, commenting, “These are
substantially different. There are only five attributes that are seen in 30% or more <strong>of</strong> <strong>the</strong> definitions.”
3. Methodology
This paper presents <strong>the</strong> results <strong>of</strong> an in-depth examination <strong>of</strong> KM as a management fashion, using <strong>the</strong>
framework developed by Abrahamson & Fairchild (1999), who distinguish between <strong>the</strong> discourse and
<strong>the</strong> actual use <strong>of</strong> a fashion and recommend that management fashions be studied by examining two
parallel life cycles – <strong>the</strong> evolution <strong>of</strong> <strong>the</strong> discourse surrounding <strong>the</strong> innovation and its diffusion, <strong>the</strong>
degree to which <strong>the</strong> innovation is actually adopted for continued use:
Discourse life-cycle analysis is an approach used to examine <strong>the</strong> volume and nature <strong>of</strong> discourse
about a particular fashion over time. This is typically done by bibliographic and content analysis,
separating <strong>the</strong> various modes <strong>of</strong> discourse -- mass media, Internet, trade/business press, academic
press (journals and dissertations). This use <strong>of</strong> <strong>the</strong> term “discourse” is quite distinct from <strong>the</strong> post
modernist <strong>the</strong>ories <strong>of</strong> Discourse Analysis (see, for example: (Brown, G. and Yule, 2003)).
Diffusion life-cycle analysis is an approach used to determine <strong>the</strong> degree to which an innovation is
actually adopted by organizations (fashion followers) and <strong>the</strong> level <strong>of</strong> use over time. This can be done
through surveys, case studies or analysis <strong>of</strong> secondary data, such as growth/decline in <strong>the</strong>
businesses <strong>of</strong> service or product suppliers and specific market sales data. Of 21 management fashion
studies reviewed, while all examine <strong>the</strong> discourse life cycle, only five examine <strong>the</strong> diffusion, usually by
referencing secondary data. This is a significant weakness in <strong>the</strong> application <strong>of</strong> management fashion
<strong>the</strong>ory, since, from a practitioner viewpoint, it is <strong>the</strong> diffusion <strong>of</strong> <strong>the</strong> innovation that is important, not <strong>the</strong>
discourse.
This paper provides a brief discourse life cycle analysis that examines <strong>the</strong> literature on knowledge
management, <strong>the</strong>n presents a diffusion life-cycle analysis based on fieldwork in five major
pr<strong>of</strong>essional services firms. The discourse life cycle bibliographic analysis was done using <strong>the</strong> online
ProQuest Research Library Complete, which provides abstracts, indexing and full text for more than
1,800 titles from academic journals, popular magazines, business publications and newspapers and
allows a separation <strong>of</strong> sources.
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The diffusion was studied in Knowledge Intensive Firms (KIFs), businesses that depend on <strong>the</strong>
effective creation and use <strong>of</strong> knowledge to succeed in <strong>the</strong>ir markets. Five major pr<strong>of</strong>essional services
firms participated in <strong>the</strong> study:
STRATFIRM: One <strong>of</strong> <strong>the</strong> world’s leading global management consultant firms, with a strong focus on
strategic and o<strong>the</strong>r high-end services, with several thousand employees worldwide.
GENFIRM1: A very large and global pr<strong>of</strong>essional service firm, providing audit, tax and management
advisory services, with more than 100,000 employees worldwide.
GENFIRM2: A second large global pr<strong>of</strong>essional service firm, providing audit, tax and management
advisory services, also with more than 100,000 employees worldwide
ITFIRM: A global information technology pr<strong>of</strong>essional service firm, providing services in outsourcing,
systems integration and consulting, with nearly 30,000 employees worldwide.
LAWFIRM: A large Canadian-based diversified law firm, operating across Canada, with some
international links, with almost 1,000 pr<strong>of</strong>essionals worldwide, with most located within Canada.
A total <strong>of</strong> 34 pr<strong>of</strong>essionals across <strong>the</strong> five firms were interviewed. In addition, evidence was also
collected from internal documentation and physical inspection <strong>of</strong> KM portals and systems. The
interviews were transcribed and analysed using a set <strong>of</strong> seven <strong>the</strong>matic codes identified in <strong>the</strong>
literature review. Some 2,685 codable comments were identified and analysed using a coding
scheme developed following <strong>the</strong> recommendations <strong>of</strong> Boyatzis (1998).
The results <strong>of</strong> this analysis were used along with <strong>the</strong> bibliographic discourse analysis <strong>of</strong> <strong>the</strong> literature,
to determine <strong>the</strong> degree <strong>of</strong> diffusion <strong>of</strong> KM innovation as well as <strong>the</strong> patterns <strong>of</strong> diffusion.
4. Research findings
4.1 An analysis <strong>of</strong> <strong>the</strong> discourse in KM Since 1990
The late 1980s and early 1990s saw pioneering efforts that led to <strong>the</strong> concept <strong>of</strong> KM emerging as a
distinct recognizable discipline by <strong>the</strong> mid-to-late 1990s. Figure 2 shows <strong>the</strong> results <strong>of</strong> a search for <strong>the</strong>
term "knowledge management" on <strong>the</strong> ProQuest online database in April 2010, producing almost
25,000 citations. Visual inspection <strong>of</strong> <strong>the</strong> graph presented suggests that a period <strong>of</strong> latency continued
to about 1995, followed by a rapid growth from 1995 to 2001 and <strong>the</strong>n a decade <strong>of</strong> consistent interest
at about 2,000 citations per year. (Note: The spike in trade publications in 2008 is due solely to <strong>the</strong>
inclusion in that year in <strong>the</strong> ProQuest databases <strong>of</strong> a single extra set <strong>of</strong> electronic journals, consisting
largely <strong>of</strong> multiple listings <strong>of</strong> trade/industry announcements.)
The plots suggest that popular interest, as demonstrated by newspaper articles, peaked in 2001 and
has since declined. Discourse within industry sources (magazines, trade and reports) initially
exceeded that from academics; however, industry interest has plateaued since about 2002, while
academic interest (scholarly papers and dissertations) rose steadily until 2006, after which it has also
plateaued. This is consistent with Abrahamson and Fairchild’s (1999) description <strong>of</strong> <strong>the</strong> management
fashion cycle, but with no evidence <strong>of</strong> any decline. When compared with <strong>the</strong> cycles developed for
o<strong>the</strong>r management fads and fashions (such as quality circles and business process re-engineering)
this demonstrates a significantly longer period <strong>of</strong> popularity within <strong>the</strong> discourse life cycle analysis
than has been evident for o<strong>the</strong>r innovations that have been described as management fads or
fashions in o<strong>the</strong>r studies, which typically peaked for a period <strong>of</strong> only 1-3 years before a rapid decline
in interest.
From a literature review and content analysis <strong>of</strong> five major KM publications, seven KM Themes were
identified:
A need for <strong>the</strong> Strategic Management <strong>of</strong> Knowledge
Managing Intellectual Capital and/or Intellectual Assets
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Kenneth Grant
Recognition <strong>of</strong> <strong>the</strong> Personal and Social Nature <strong>of</strong> Knowledge, with particular emphasis on
Communities <strong>of</strong> Practice and Organisational Learning
An emphasis on Knowledge Models
The importance <strong>of</strong> Knowledge Work, supported by Knowledge Processes
Knowledge Management as an IT-based activity
Several <strong>of</strong> KM’s “guru” champions saw it linked to complexity and chaos <strong>the</strong>ory.
Figure 2: KM discourse analysis 1990-2009, Search Term “Knowledge Management”
A bibliometric analysis <strong>of</strong> each <strong>of</strong> <strong>the</strong>se Themes produced following results:
For each <strong>of</strong> <strong>the</strong> topics, <strong>the</strong>re is strong evidence <strong>of</strong> <strong>the</strong> influence <strong>of</strong> management fashion setters. The
KM field has been strongly influenced by <strong>the</strong> work <strong>of</strong> a small number <strong>of</strong> gurus, initially hero-manager
gurus and consultant gurus, with some academic gurus adding <strong>the</strong>ir influences in <strong>the</strong> mid to late
1990s.
With <strong>the</strong> possible exception <strong>of</strong> “organizational learning” every one <strong>of</strong> <strong>the</strong> topics analysed
demonstrated a latency period followed by a rapid growth in popularity, consistent with <strong>the</strong> concept <strong>of</strong>
a management fad or fashion.
None <strong>of</strong> <strong>the</strong> topics analysed demonstrates any decline in overall publication interest over at least a
10-year period, thus providing no evidence <strong>of</strong> a management fashion decline.
In each topic, <strong>the</strong> early growth in discourse took place in industry and <strong>the</strong> popular press, with
academic discourse initially lagging and <strong>the</strong>n increasing to pass <strong>the</strong> discourse rates <strong>of</strong> <strong>the</strong> o<strong>the</strong>r
communities.
For <strong>the</strong> three most frequently occurring topics (Knowledge Management, KM-related IT and
Intellectual Capital), overall levels <strong>of</strong> discourse in academe and industry were quite similar. For <strong>the</strong>
o<strong>the</strong>r topics, much more discourse took place within academe than in industry.
With <strong>the</strong> single exception <strong>of</strong> Intellectual Capital, popular press interest in <strong>the</strong> topics was fleeting,
typically lasting no more than two or three years, peaking in 1999/2000 and <strong>the</strong>n declining to very low
levels.
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A detailed computer-supported content analysis using <strong>the</strong> Crawdad s<strong>of</strong>tware tool was used to carry
out a cross- journal analysis <strong>of</strong> <strong>the</strong> five highest ranked KM journals, and identified significant
differences in <strong>the</strong> most important words in each <strong>of</strong> three KM-centric journals when compared to <strong>the</strong>
Intellectual Capital and Organisational Learning journals, raising questions as to <strong>the</strong> degree to which
<strong>the</strong> authors perceive that <strong>the</strong>y are actually working in <strong>the</strong> same discipline.
Thus, this bibliographic discourse analysis seems to indicate a set <strong>of</strong> Themes, <strong>of</strong>ten grouped under
<strong>the</strong> generic title <strong>of</strong> Knowledge Management have been sustained topics <strong>of</strong> interest for more than a
decade, and does not indicate <strong>the</strong> typical discourse pattern <strong>of</strong> a fad or fashion.
An Analysis Of The Diffusion Of KM In Five Pr<strong>of</strong>essional Services Firms
The actual diffusion <strong>of</strong> KM within <strong>the</strong> Five Pr<strong>of</strong>essional Services Firms studied was examined using
<strong>the</strong> 7-Theme framework identified in <strong>the</strong> literature review.
In general, <strong>the</strong> case study findings demonstrate a broad level <strong>of</strong> diffusion and adoption <strong>of</strong> KM within
<strong>the</strong> firms studied, thus demonstrating that <strong>the</strong> practice <strong>of</strong> KM appears to be a sustainable business
innovation. However, <strong>the</strong> detailed examination also demonstrated that <strong>the</strong> levels and nature <strong>of</strong> this
diffusion vary considerably within <strong>the</strong> 7-Themes examined.
Four Themes stand out as having a broad level <strong>of</strong> adoption in practice:
Recognition <strong>of</strong> <strong>the</strong> Personal and Social Nature <strong>of</strong> Knowledge
The Use <strong>of</strong> IT
The Importance <strong>of</strong> Knowledge Processes
The need for a Strategic Focus
One Theme had broad recognition as an important concept, but <strong>the</strong> practical diffusion seems to lack
many <strong>of</strong> <strong>the</strong> characteristics that KM proponents argue are necessary:
The Management <strong>of</strong> IP
Finally, <strong>the</strong>re was very limited support for <strong>the</strong> diffusion <strong>of</strong> two Themes:
The Use <strong>of</strong> KM Models
The Complexity <strong>of</strong> Knowledge
Three Themes stand out in <strong>the</strong> overall level <strong>of</strong> interest expressed by participants -- <strong>the</strong> personal and
social nature <strong>of</strong> knowledge, <strong>the</strong> use <strong>of</strong> KM processes and <strong>the</strong> use <strong>of</strong> IT. In many <strong>of</strong> <strong>the</strong> comments, all
three Themes were linked. For <strong>the</strong> participants from all <strong>of</strong> <strong>the</strong> firms, <strong>the</strong>se Themes were part <strong>of</strong> <strong>the</strong>ir
daily work activities. They carried out many <strong>of</strong> <strong>the</strong>ir pr<strong>of</strong>essional duties following processes, both
formal and informal, relating to knowledge assets – whe<strong>the</strong>r those <strong>of</strong> <strong>the</strong>ir own firm or <strong>the</strong>ir clients. In
some cases <strong>the</strong> processes were highly formal and embedded in <strong>the</strong>ir quality assurance processes.
Frequently, <strong>the</strong>y described a close affinity between knowledge processes and IT systems. IT systems
were seen as part <strong>of</strong> most major processes, whe<strong>the</strong>r as repositories or as communication tools.
Throughout <strong>the</strong> interviews, participants repeatedly emphasised <strong>the</strong> importance <strong>of</strong> <strong>the</strong> individual. In
STRATFIRM, this was seen as an essential part <strong>of</strong> <strong>the</strong>ir market differentiation. The specific skills and
expertise <strong>of</strong> <strong>the</strong> experienced pr<strong>of</strong>essional was combined with access to available intellectual assets
(processes, repositories and o<strong>the</strong>r pr<strong>of</strong>essionals). Even in ITFIRM, which was highly procedural, <strong>the</strong>re
was an increasing recognition <strong>of</strong> <strong>the</strong> importance <strong>of</strong> personal contributions and staff structures. Expert
directories, as well as informal network contacts, were seen as key to success by most participants.
Participants frequently mentioned <strong>the</strong> need to get to <strong>the</strong> right expert to serve <strong>the</strong>ir clients. All <strong>of</strong> <strong>the</strong>
firms had strategies and processes in place to facilitate <strong>the</strong> formation <strong>of</strong> formal and informal
communities <strong>of</strong> practice, very much along <strong>the</strong> lines caused by Brown and Duguid (1991).
To a large degree, <strong>the</strong> high level <strong>of</strong> diffusion <strong>of</strong> <strong>the</strong>se three Themes is a reflection <strong>of</strong> a strong interest
in KM at <strong>the</strong> strategic level. At a strategic level, <strong>the</strong> case analyses demonstrate <strong>the</strong> diffusion <strong>of</strong> a
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number <strong>of</strong> specific strategic recommendations across all <strong>of</strong> <strong>the</strong> firms. All have appointed chief
knowledge <strong>of</strong>ficers (Earl and Scott, 1999); all include KM in <strong>the</strong>ir strategic planning (Grant, 1996). Earl
(2001) proposed seven Schools <strong>of</strong> Knowledge Management in three categories –Technocratic,
Economic and Behavioural. The KM strategies adopted by <strong>the</strong> five firms studied seem to draw from all
three categories (specifically from: <strong>the</strong> Systems School, <strong>the</strong> Commercial School and <strong>the</strong>
Organizational school).
These findings do, to some degree, refute <strong>the</strong> work <strong>of</strong> Hansen et al (1999), who argued for consulting
firms to choose ei<strong>the</strong>r a personalization or codification strategy. In <strong>the</strong>ir work, <strong>the</strong>y closely associated
<strong>the</strong> codification strategy with <strong>the</strong> extensive use <strong>of</strong> IT systems for KM, suggesting that firms who follow
a “strategy <strong>of</strong> reuse” should adopt <strong>the</strong> codification model with extensive and formal IT systems, while
those who are expected to “create a highly customized solution to a unique product,” should follow a
personalization strategy with a lesser focus on IT. In examining <strong>the</strong> KM strategies <strong>of</strong> <strong>the</strong> five firms,
while more elements <strong>of</strong> a personalization strategy are visible within STRATFIRM and ITFIRM exhibits
many <strong>of</strong> <strong>the</strong> elements <strong>of</strong> <strong>the</strong> codification strategy cast this is clearly not an ei<strong>the</strong>r/or situation. All <strong>of</strong> <strong>the</strong>
firms are highly dependent on effective use <strong>of</strong> IT systems for effective knowledge sharing. All <strong>of</strong> <strong>the</strong>
firms, to some degree, recognize <strong>the</strong> need for culture and tools to share knowledge and access <strong>the</strong>
personal knowledge needed to serve <strong>the</strong> client. Hansen et al suggest <strong>the</strong> need for an 80-20 split
ei<strong>the</strong>r way, suggesting “Executives who try to excel at both strategies risk failing at both.” and
“Management consulting firms have run into serious trouble when <strong>the</strong>y failed to stick with one
approach.” In hindsight, <strong>the</strong>ir paper seems to be an attempt to correlate two concepts that may be
more dissimilar and less connected than <strong>the</strong>y believed. By combining <strong>the</strong> different nature <strong>of</strong> <strong>the</strong>
services <strong>of</strong>fered by different types <strong>of</strong> consulting firm with poor experiences in implementing KMrelated
IT systems, <strong>the</strong>ir arguments may be more reflective <strong>of</strong> that time (<strong>the</strong> late 1990s) than <strong>of</strong> <strong>the</strong>
fundamental strategic issue.
Examination <strong>of</strong> <strong>the</strong> Intellectual Property Theme produced some quite mixed results. Declarations <strong>of</strong>
<strong>the</strong> importance <strong>of</strong> IP were widespread, both within <strong>the</strong> firms’ <strong>of</strong>ficial documents and in <strong>the</strong> interview
discussions. Terminology varied, with intellectual property (IP), intellectual capital (IC) and intellectual
assets being mentioned frequently, as well as firm-specific terms. None <strong>of</strong> <strong>the</strong> firms appear to
measure <strong>the</strong>ir intellectual property, whe<strong>the</strong>r in terms <strong>of</strong> knowledge inventories, knowledge creation or
knowledge use. In most cases, while <strong>the</strong>y may have had employee agreements that addressed <strong>the</strong>
topic <strong>of</strong> confidentiality, this did not seem to be a concern in practice, with <strong>the</strong> exception <strong>of</strong> ITFIRM.
Typically participants were more concerned about client confidentiality than about misuse <strong>of</strong> <strong>the</strong>ir own
intellectual assets. Nor did <strong>the</strong>y consider areas such as methodology development and staff training
as knowledge management activities. This largely contradicts <strong>the</strong> views <strong>of</strong> proponents <strong>of</strong> an
intellectual capital perspective on KM, such as that presented by Stewart (1997) and Edvinsson &
Malone (1997).
The two Themes that might be considered to be <strong>the</strong> most <strong>the</strong>oretical -- Better Use <strong>of</strong> KM models and
<strong>the</strong> Complexity <strong>of</strong> Knowledge – proved to be <strong>of</strong> very limited interest to <strong>the</strong> participants, with most
related comments being made by <strong>the</strong> KM-expert pr<strong>of</strong>essionals. In general, pr<strong>of</strong>essionals were familiar
with <strong>the</strong> concept <strong>of</strong> tacit explicit knowledge and <strong>of</strong> <strong>the</strong> need to access knowledge at various levels <strong>of</strong>
abstraction, as well as <strong>the</strong> usefulness <strong>of</strong> metadata to help set <strong>the</strong> context for <strong>the</strong> use <strong>of</strong> retrieved
knowledge objects.
Underlying much <strong>of</strong> <strong>the</strong> discussion on <strong>the</strong> Themes was a somewhat paradoxical refrain that, while
participants were unanimous in recognizing <strong>the</strong> importance and practice <strong>of</strong> knowledge management
within <strong>the</strong>ir firms, <strong>the</strong>re was a significant degree <strong>of</strong> reluctance to treat much <strong>of</strong> what <strong>the</strong>y were doing
as “knowledge management”. Despite <strong>the</strong> fact that <strong>the</strong>se are knowledge dependent, businesses,
while <strong>the</strong>y expressed interest in <strong>the</strong> use <strong>of</strong> knowledge in <strong>the</strong>ir work, <strong>the</strong> pr<strong>of</strong>essionals did not
demonstrate a great deal <strong>of</strong> knowledge regarding <strong>the</strong> discipline <strong>of</strong> KM. It was notable that <strong>the</strong> KM
pr<strong>of</strong>essionals interviewed frequently described attempts to downplay <strong>the</strong> concept <strong>of</strong> formal KM.
In summary, <strong>the</strong> fieldwork indicates that KM is a widely recognised practice and that specific elements
<strong>of</strong> <strong>the</strong> KM discipline are broadly diffused within all <strong>of</strong> <strong>the</strong> firms studied. KM was seen as a subject <strong>of</strong>
strategic importance in all <strong>the</strong> firms and extensive investments had been made, with reasonable
success, in KM activities. The study identified some significant differences in levels <strong>of</strong> interest and
practice within <strong>the</strong> various Themes identified within <strong>the</strong> KM literature. While several <strong>of</strong> <strong>the</strong> firms
studied had, in <strong>the</strong> past, provided pr<strong>of</strong>essional services in KM, none <strong>of</strong> <strong>the</strong>m currently do so. Clients
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did not come to <strong>the</strong>m for KM projects, nor was KM seen as a specific discipline that should be brought
directly to bear within <strong>the</strong>ir consulting projects. Thus, to <strong>the</strong> degree that KM was seen as a
management consulting fad, advocated by consultants for market advantage and to sell services, this
is no longer a significant factor and <strong>the</strong> brief window for specific services in <strong>the</strong> KM area has
disappeared, at least from <strong>the</strong> perspective <strong>of</strong> major service providers.
Contrasting <strong>the</strong> Discourse and <strong>the</strong> Diffusion
KM and Strategy
KM continues to be a topic <strong>of</strong> strong interest for both academics and practitioners.
This is demonstrated by <strong>the</strong> discourse analysis and <strong>the</strong> five case studies. All <strong>the</strong> firms studied
recognize <strong>the</strong> importance <strong>of</strong> knowledge to <strong>the</strong>ir business success and had developed strategies for
KM that represented a significant element <strong>of</strong> <strong>the</strong>ir business strategies and strategic intent. While <strong>the</strong>
specific strategies adopted did vary somewhat between <strong>the</strong> firms <strong>the</strong>re were a number <strong>of</strong> consistent
elements. Explicit strategies for KM were present, sometimes embedded within <strong>the</strong> firm’s wider
strategies, senior executives had responsibility for KM and organizational units had been established
to support KM activities in each firm.
KM and IT
The discourse analysis and case studies, demonstrate that a continued focus on IT is a dominant
<strong>the</strong>me within KM. Widespread use <strong>of</strong> IT to support KM is present in all firms. In most cases, this is not
<strong>the</strong> sub optimal "single community focus" criticised by Swan and Scarbrough (2002) and Binney
(2001). Ra<strong>the</strong>r, much more coordinated efforts are visible, with a focus on user needs and <strong>the</strong>
recognition that <strong>the</strong> use <strong>of</strong> such systems is voluntary.
While much <strong>of</strong> <strong>the</strong> IT implementation for KM during <strong>the</strong> early years focused on building <strong>of</strong> repositories
in which to store explicit knowledge, all five cases indicated a much increased importance <strong>of</strong> a variety
<strong>of</strong> communication tools, mixing <strong>the</strong> presentation <strong>of</strong> explicit knowledge with <strong>the</strong> views and experiences
<strong>of</strong> <strong>the</strong> pr<strong>of</strong>essionals in <strong>the</strong> firm. While some criticisms <strong>of</strong> <strong>the</strong> effectiveness <strong>of</strong> <strong>the</strong>se tools were present,
overall <strong>the</strong>re was strong support for <strong>the</strong> usefulness <strong>of</strong> <strong>the</strong> IT tools for each firm's knowledge practices.
KM and Processes
A similar picture emerges when examining <strong>the</strong> role <strong>of</strong> KM processes. There is strong academic
interest and a solid level <strong>of</strong> practitioner interest demonstrated in <strong>the</strong> discourse and this is strongly
supported in <strong>the</strong> case studies. While it is reasonable to argue that KIFs, like <strong>the</strong> pr<strong>of</strong>essional services
firms studied, have always had processes to deal with knowledge creation and knowledge transfer,
<strong>the</strong> emphasis has changed over <strong>the</strong> last 10-15 years, with firms establishing formal processes to
support knowledge creation and transfer, along with <strong>the</strong> introduction and support <strong>of</strong> less formal
processes across <strong>the</strong> firms. These processes address both <strong>the</strong> capture <strong>of</strong> knowledge and <strong>the</strong>
establishment <strong>of</strong> tools, techniques and communities to ensure its sharing.
Use <strong>of</strong> KM Models
The findings demonstrate a significant contradiction between <strong>the</strong> discourse and diffusion regarding
knowledge models. The literature review indicated a broad range <strong>of</strong> views as to <strong>the</strong> nature and use <strong>of</strong>
knowledge models with critics identifying ontological differences, discipline differences and a general
lack <strong>of</strong> evidence supporting <strong>the</strong> validity <strong>of</strong> models presented or <strong>of</strong> <strong>the</strong>ir usefulness in practice. The
study indicates that, in this area, little has changed. The practitioners had little knowledge <strong>of</strong> <strong>the</strong> field
<strong>of</strong> KM, o<strong>the</strong>r than that which related to <strong>the</strong>ir own pr<strong>of</strong>essional discipline. Most <strong>of</strong> <strong>the</strong>ir discourse about
knowledge and knowledge management used discipline or firm-specific concepts and terms. Only
pr<strong>of</strong>essionals with specific responsibility for KM demonstrated any familiarity with <strong>the</strong>se concepts and
<strong>the</strong>y reported a reluctance to use <strong>the</strong>se terms within <strong>the</strong> firm.
Each firm did hire KM pr<strong>of</strong>essionals who were expected to provide a bridge between <strong>the</strong> firms internal
models and practices and any relevant <strong>the</strong>ory from <strong>the</strong> KM field.
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KM and Theories <strong>of</strong> Complexity or Chaos
Kenneth Grant
Outside <strong>of</strong> <strong>the</strong> work <strong>of</strong> <strong>the</strong> guru-proponents <strong>of</strong> Next Generation KM, <strong>the</strong> application <strong>of</strong> complexity or
chaos <strong>the</strong>ory in <strong>the</strong> KM field saw limited interest within ei<strong>the</strong>r <strong>the</strong> academic or practitioner discourse.
In <strong>the</strong> fieldwork, this proved, by far, to be <strong>the</strong> most difficult area to discuss. Most participants
demonstrated little knowledge <strong>of</strong> <strong>the</strong> underlying <strong>the</strong>ories and were reluctant to see <strong>the</strong>m as relevant to
<strong>the</strong>ir KM activities. Those who were willing to take part in such a discussion tended to emphasise that
<strong>the</strong>y saw KM as a relatively simple activity.
Personal and Social Knowledge
Within <strong>the</strong> discourse analysis, this <strong>the</strong>me demonstrated a high and steady level <strong>of</strong> interest from <strong>the</strong>
academic community and a significant, though lower level, interest in <strong>the</strong> practitioner literature.
The case studies demonstrated strong support for <strong>the</strong> diffusion <strong>of</strong> this <strong>the</strong>me. In all firms and at all
levels <strong>the</strong> role <strong>of</strong> <strong>the</strong> individual in creating, sharing and understanding knowledge was seen as highly
important. Even when discussing explicit knowledge, <strong>of</strong>ten addressed in methodologies or
repositories, <strong>the</strong> need for <strong>the</strong> individual to provide commentary, to interpret or to modify according to
<strong>the</strong> context <strong>of</strong> use was consistently emphasized. Significant efforts were made to establish formal and
informal communities <strong>of</strong> practice to allow individuals to share and mutually develop useful knowledge.
The Role <strong>of</strong> Intellectual Assets/Capital
To some degree, <strong>the</strong> findings in this area are paradoxical.
In terms <strong>of</strong> citation counts, <strong>the</strong> discourse in both academic and practitioner publications is at a highlevel
over a long period. The academic discourse is rich, involving a significantly different set <strong>of</strong> terms
and making recommendations, <strong>of</strong>ten quite prescriptive, on how IA/IC assets should be developed and
managed. In contrast, <strong>the</strong> practitioner discourse is more general, making frequent reference to <strong>the</strong>
importance <strong>of</strong> intellectual assets and capital but seldom addressing more specific issues.
The diffusion analysis found that, while terms such as intellectual property and intellectual capital
were frequently used to describe <strong>the</strong> firms’ knowledge assets, <strong>the</strong> firms demonstrated very limited use
<strong>of</strong> <strong>the</strong> key techniques proposed to protect and manage such assets. Indeed, by far, <strong>the</strong> most
frequently referenced activity related to IP/IC was <strong>the</strong> various forms <strong>of</strong> recognition for <strong>the</strong> individual
practitioner in developing new IP/IC, whe<strong>the</strong>r in terms <strong>of</strong> immediate reward or consideration during
annual reviews.
5. Implications <strong>of</strong> <strong>the</strong> research findings
This study has examined popular and academic publications on KM over a 20-year period, as well as
<strong>the</strong> actual KM practices inside five major pr<strong>of</strong>essional services firms. It demonstrates that KM has
been a relatively pervasive and enduring innovation with an extensive period <strong>of</strong> discourse and a
significant level <strong>of</strong> adoption in practice.
As an applied discipline, drawing on a wide range <strong>of</strong> perspectives, KM has caught <strong>the</strong> sustained
attention <strong>of</strong> both practitioners and researchers. Many <strong>of</strong> <strong>the</strong> core concepts developed in <strong>the</strong> discourse
have been widely adopted in <strong>the</strong> field. The firms studied have strategies for KM, processes and
information systems for knowledge development and diffusion, and recognize <strong>the</strong> importance <strong>of</strong> <strong>the</strong>
individual in <strong>the</strong> effective use <strong>of</strong> knowledge in practice. The patterns <strong>of</strong> discourse and adoption
correspond closely to those described in management fashion <strong>the</strong>ory – a period <strong>of</strong> latency, a period <strong>of</strong>
rapid growth and a plateauing <strong>of</strong> interest, but with no significant evidence <strong>of</strong> a decline. The study has
also demonstrated quite different behaviours than those identified in o<strong>the</strong>r management fashion
studies, such as Business Process Reengineering and Quality Circles.
The diffusion <strong>of</strong> KM concepts has, however, been selective; a number <strong>of</strong> significant <strong>the</strong>mes were
identified in <strong>the</strong> discourse that are not matched by any high degree <strong>of</strong> adoption.
New ideas in business that achieved rapid and widespread recognition are <strong>of</strong>ten claimed to be fads or
fashions, and, in most cases, after <strong>the</strong>ir “moment in <strong>the</strong> sun” <strong>the</strong>y largely disappear. (Consider
present value accounting and zero-based budgeting in <strong>the</strong> 1980s.) O<strong>the</strong>rs become established parts
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Kenneth Grant
<strong>of</strong> mainstream business thinking and, over a period <strong>of</strong> many years, can be seen to have developed
and evolve through a number <strong>of</strong> distinct stages.
Some proposed innovations fall somewhere between <strong>the</strong>se two situations. After a rapid rise to
significant visibility, at <strong>the</strong> highest levels <strong>of</strong> organizations, <strong>of</strong>ten causing major change to take place,
over time <strong>the</strong>y become less strategic and more operational. They become part <strong>of</strong> <strong>the</strong> environment,
having changed <strong>the</strong> way in which organizations and individuals approached <strong>the</strong> specific topic. For
example, even if business process re-engineering can be argued to have been a fad in <strong>the</strong> mid-
1990s, this has produced a continuing focus on business processes as key organizational activities.
The situation for KM is less clear. Researchers and practitioners should be concerned that, while
interest and levels <strong>of</strong> practice are high, <strong>the</strong>re seems to be an increasing divergence between <strong>the</strong>ory
and practice and should work more closely to ensure that <strong>the</strong> research carried out is both rigorous
and relevant.
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199

Towards a Technological, Managerial, and Socio-Technical
Well-Balanced KM Initiative Strategy Within Organizations
Michel Grundstein
MG Conseil, Nogent sur Marne, France
LAMSADE Paris Dauphine University, Paris, France
mgrundstein@mgconseil.fr
Abstract: In this paper, following a constructivist approach that is deeply rooted in our pragmatic experience
within a large industrial Company, we argue that Knowledge is not manageable as if it was data or information.
This leads to suggest KM as <strong>the</strong> management <strong>of</strong> activities and processes that help organization’s support and
business processes enhancing <strong>the</strong>ir capabilities to utilize and create knowledge, more than focusing on
knowledge itself. This change <strong>of</strong> paradigm induces to conceive a technological, managerial, and socio-technical
well-balanced KM initiatives strategy. This pragmatic vision needs thinking about <strong>the</strong> architecture <strong>of</strong> an
Enterprise’s Information and Knowledge System (EIKS), which must be a basis <strong>of</strong> discussion during <strong>the</strong> strategic
orientation phase <strong>of</strong> a general KM initiative.
Keywords: Knowledge Management (KM), individual’s tacit knowledge, commensurability <strong>of</strong> individual’s
interpretative frameworks, strategic KM Initiative orientations phase, information tacit and explicit knowledge
process (DITEK process)
1. Introduction
In <strong>the</strong> foreword <strong>of</strong> <strong>the</strong> book untitled “The New Age in Knowledge” (O’Dell and Hubert 2011) Larry
Prusak describes some <strong>of</strong> <strong>the</strong> main principles focused on knowledge management at <strong>the</strong> beginning
days (p. xi): i) Knowledge is a fixed pool, a collection <strong>of</strong> resources that can be measured and used by
standard management techniques; ii) Technology is <strong>the</strong> key tool to unlock <strong>the</strong> value <strong>of</strong> this resource
– more technology, <strong>the</strong> better; and iii) Individuals are <strong>the</strong> critical unit <strong>of</strong> analysis in working with
knowledge – <strong>the</strong> more productive <strong>the</strong> individual is <strong>the</strong> more knowledge is being used. He concludes:
“It is now clear in hindsight that <strong>the</strong>se principles were developed with information in mind, not
knowledge, and that <strong>the</strong>y were not at all suitable to working with such elusive intangible. It is because
<strong>of</strong> <strong>the</strong>se ideas that many knowledge management efforts ran into problems and that <strong>the</strong> whole subject
began to fade in <strong>the</strong> minds <strong>of</strong> busy executives.”
However, although it does not always get <strong>the</strong> expected outcomes when put at work in organizations,
<strong>the</strong> positivist paradigm <strong>of</strong> KM, influenced by computer science and information technology, is <strong>the</strong> most
implicit recognized paradigm by researchers and practitioners in KM. From our viewpoint, this
paradigm needs to be enlarged to a general view resting on a constructivist paradigm
In this paper we put down background <strong>the</strong>ory and assumptions; notably, we introduce <strong>the</strong> concept <strong>of</strong>
“commensurability <strong>of</strong> interpretative frameworks,” and we propose an empirical model (DITEK) that
attempts to describe <strong>the</strong> transformation process from data to information and from information to tacit
and explicit knowledge. Then, we suggest a constructivist paradigm <strong>of</strong> KM within organizations based
on three fundamental postulates. This leads to envisage new KM perspectives and to sketch out <strong>the</strong>
architecture <strong>of</strong> an enterprise’s information and knowledge system (EIKS). Finally, we propose a wellbalanced
KM initiative strategy within organizations
2. Background <strong>the</strong>ory and assumptions
2.1 Research motivations, method, and objectives
Our research follows a constructivist paradigm that is deeply rooted in our pragmatic experience in <strong>the</strong>
real field. As a practitioner having to manage deployment <strong>of</strong> innovative technologies (such as
computer aided design, knowledge based systems, and o<strong>the</strong>rs) in large companies just when <strong>the</strong>se
technologies were conceived into universities and laboratories, we observed that we always needed
to elaborate a model with socio-technical perspectives, which could be used as a pattern <strong>of</strong> reference
for all stakeholders in order to engender <strong>the</strong> essential learning process that leads people to
appropriate and use <strong>the</strong>se technologies. Later on, when becoming Associate Researcher in <strong>the</strong>
domain <strong>of</strong> KM, we perceived <strong>the</strong> lack <strong>of</strong> general model <strong>of</strong> KM that integrates socio-technical
perspectives. This point <strong>of</strong> view is <strong>of</strong>ten disregarded when considering <strong>the</strong> technical approach <strong>of</strong> KM,
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although hundred <strong>of</strong> frameworks can be found in <strong>the</strong> literature (CEN-CWA 14924-1, 2004). As a
practitioner we always had to consider <strong>the</strong> constructivist paradigm that underlies <strong>the</strong> creation <strong>of</strong>
knowledge, and consequently KM approach. As a researcher we always had to be confronted with <strong>the</strong>
positivist paradigm that most <strong>of</strong>ten considers knowledge independently <strong>of</strong> its links with action, and <strong>the</strong>
context <strong>of</strong> organizations. Thus, our researches, notably in <strong>the</strong> domain <strong>of</strong> KM, are continuously
oriented towards a well-balanced use <strong>of</strong> positivist and constructivist paradigms within organizations.
2.2 The dominant positivist paradigm <strong>of</strong> KM
Numerous authors analyzed <strong>the</strong> notions <strong>of</strong> data, information and knowledge. Let us quote notably
Davenport and Prusak (1998, pp.1-6), Sena and Shani (1999), Takeuchi, and Nonaka, (2000), Amin,
and Cohendet, (2004, pp. 17-30), Laudon and Laudon, (2006, p. 416). Besides, Snowden (2000,)
makes <strong>the</strong> following syn<strong>the</strong>sis: “The developing practice <strong>of</strong> knowledge management has seen two
different approaches to definition; one arises from information management and sees knowledge as
some higher-level order <strong>of</strong> information, <strong>of</strong>ten expressed as a triangle progressing from data, through
information and knowledge, to <strong>the</strong> apex <strong>of</strong> wisdom. Knowledge here is seen as a thing or entity that
can be managed and distributed through advanced use <strong>of</strong> technology…The second approach sees
<strong>the</strong> problem from a sociological basis. These definitions see knowledge as a human capability to act
(pp. 241-242).”
The dominant positivism paradigm <strong>of</strong> KM is implicit in <strong>the</strong> DIKW (Data-Information-Knowledge-
Wisdom) hierarchy model. This model induced numerous computers and information researches. For
example, (Rowley, 2007) revisiting <strong>the</strong> DIKW hierarchy by examining <strong>the</strong> articulation <strong>of</strong> <strong>the</strong> hierarchy
in a number <strong>of</strong> widely read textbooks in information systems and knowledge management preferably
published in 2003 and later, noted that “<strong>the</strong>re is a consensus that data, information and knowledge
are to be defined in terms <strong>of</strong> one ano<strong>the</strong>r, although data and information can both act as inputs to
knowledge; <strong>the</strong> tangle <strong>of</strong> concepts can be explored at two levels – <strong>the</strong> relationship between data and
information, and <strong>the</strong> relationship between information and knowledge p.174);” and she raised <strong>the</strong>
question: “Is <strong>the</strong>re a sharp divide between data, information and knowledge, or do <strong>the</strong>y lie on a
continuum with different levels <strong>of</strong> meaning, structure and actionability occurring at different levels (p.
175)?”
More recently, (Muller and Maasdorp 2011) point out <strong>the</strong> dominance <strong>of</strong> <strong>the</strong> DIK model in information
science. They have three conjectures as to why knowledge management practitioners and authors
prefer <strong>the</strong> DIK model. The first one concerns information <strong>the</strong>ory background, <strong>the</strong> second one is about
simplicity, and <strong>the</strong> third one rests on accumulative worldview. Their ideas are closely akin to ours.
Let’s quote some <strong>of</strong> <strong>the</strong>ir conjunctures: “<strong>the</strong> first possible explanation for <strong>the</strong> dominance <strong>of</strong> <strong>the</strong> DIK
model in KM is that it is an effect <strong>of</strong> background in information <strong>the</strong>ory or communication <strong>the</strong>ory <strong>of</strong> <strong>the</strong>
practitioner or <strong>the</strong> author; <strong>the</strong> second conjecture is that simplicity counts in management and that this
has <strong>the</strong> effect <strong>of</strong> privileging a <strong>the</strong>oretical position that is clearly linked to a working and productive
legacy in information system but more importantly, clears up <strong>the</strong> messy situation <strong>of</strong> exactly
understanding <strong>the</strong> notion <strong>of</strong> knowledge in organizations; <strong>the</strong> third conjecture is painted on an even
broader canvas. If one has a worldview that is cumulative and sees <strong>the</strong> world as consisting <strong>of</strong>
innumerable little bits (now not in <strong>the</strong> technical sense) <strong>of</strong> matter that all add up to <strong>the</strong> while by <strong>the</strong>
process <strong>of</strong> accumulation and simple organization and categorization, <strong>the</strong>n a data information
knowledge model would make sense…That means that a mechanistic and positivist worldview is to
be found at <strong>the</strong> base <strong>of</strong> <strong>the</strong> easy acceptance <strong>of</strong> <strong>the</strong> DIK model.”
In fact, we think that, beyond all <strong>the</strong>se studies, we have to position our thoughts in <strong>the</strong> contextual field
where <strong>the</strong> notion <strong>of</strong> data, information, and knowledge are used: in our case, <strong>the</strong> field <strong>of</strong> enterprises
and more generally organizations. That leads to conceive how <strong>the</strong> transformation process should be
envisaged using <strong>the</strong> concept <strong>of</strong> commensurability <strong>of</strong> interpretative frameworks highlighted by
(Tsuchiya 1993).
2.3 The concept <strong>of</strong> commensurability <strong>of</strong> interpretative frameworks
2.3.1 Creation <strong>of</strong> individual’s tacit knowledge
Our approach is built upon <strong>the</strong> assumption emphasized by Tsuchiya concerning knowledge creation
ability. He states, “Although terms ‘datum’, ‘information’, and ‘knowledge’ are <strong>of</strong>ten used
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interchangeably, <strong>the</strong>re exists a clear distinction among <strong>the</strong>m. When datum is sense-given through
interpretative framework, it becomes information, and when information is sense-read through
interpretative framework, it becomes knowledge (p.88)”. In o<strong>the</strong>r words, we can say that tacit
knowledge that resides in our brain results from <strong>the</strong> sense given, through our interpretative
frameworks, to data that we perceive among <strong>the</strong> information transmitted to us. Or ra<strong>the</strong>r, Knowledge
exists in <strong>the</strong> interaction between an Interpretative Framework (incorporated within <strong>the</strong> head <strong>of</strong> an
individual, or embedded into an artifact), and data.
In a different way, Wiig (2004) who highlights a discontinuity between information and knowledge
describes this process clearly. He states, “The process, by which we develop new knowledge, uses
prior knowledge to make sense <strong>of</strong> <strong>the</strong> new information and, once accepted for inclusion, internalizes
<strong>the</strong> new insights by linking with prior knowledge. Hence, <strong>the</strong> new knowledge is as much a function <strong>of</strong>
prior knowledge as it is <strong>of</strong> received inputs. A discontinuity is thus created between <strong>the</strong> received
information inputs and <strong>the</strong> resulting new knowledge (p. 73).”
Consequently, we postulate that knowledge is not an object processed independently <strong>of</strong> <strong>the</strong> person
who has to act. So, we can say that formalized and codified knowledge that are independent from
individual, are not more than information. Fur<strong>the</strong>rmore, as emphasized by Haeckel (2000) we must
discern “<strong>the</strong> knowledge <strong>of</strong> knower and <strong>the</strong> codification <strong>of</strong> that knowledge (p. 295).”
2.3.2 Conditions for considering information as knowledge
Tsuchiya emphases how organizational knowledge is created through dialogue, and highlighted how
“commensurability” <strong>of</strong> <strong>the</strong> interpretative frameworks <strong>of</strong> <strong>the</strong> organization’s members is indispensable
for an organization to create organizational knowledge for decision and action. Here,
commensurability is <strong>the</strong> common space <strong>of</strong> <strong>the</strong> set <strong>of</strong> interpretative frameworks <strong>of</strong> each member (e.g.
cognitive models or mental models directly forged by education, experience, beliefs, and value
systems). Tsuchiya states “It is important to clearly distinguish between sharing information and
sharing knowledge. Information becomes knowledge only when it is sense-read through <strong>the</strong>
interpretative framework <strong>of</strong> <strong>the</strong> receiver. Any information inconsistent with his interpretative framework
is not perceived in most cases. Therefore, commensurability <strong>of</strong> interpretative frameworks <strong>of</strong> members
is indispensable for individual knowledge to be shared (p. 89).”
Consequently, information can only be assimilated to knowledge when members having a large
commensurability <strong>of</strong> <strong>the</strong>ir set <strong>of</strong> interpretative frameworks commonly understand it in <strong>the</strong> same way. In
that case, we call it “information source <strong>of</strong> knowledge for someone.” Such is <strong>the</strong> case for members
having <strong>the</strong> same technical or scientific education, or members having <strong>the</strong> same business culture. In
<strong>the</strong>se cases, formalized and codified knowledge make <strong>the</strong> same sense for each member; that
enables to speak <strong>of</strong> knowledge bases, and flows <strong>of</strong> knowledge. However, one must take into account
that interpretative frameworks evolve in a dynamic way: <strong>the</strong>y are not rigid mindsets. Especially, when
considering that, as time is going on, contexts and situations evolve. Thus, <strong>the</strong> contribution <strong>of</strong>
scientific results, techniques and new methods, <strong>the</strong> influence <strong>of</strong> young generations being born with
Web (Y generation or Digital Native), <strong>the</strong> impact <strong>of</strong> identity crisis and multiple cultures, modify <strong>the</strong>
interpretative frameworks, and create a gap between individuals’ commensurability <strong>of</strong> interpretative
frameworks.
3. From data to information, and tacit and explicit knowledge: <strong>the</strong> DITEK
process model
Relying to <strong>the</strong> <strong>the</strong>ories and assumptions set out above, we elaborated a model that attempt to
describe <strong>the</strong> transformation process from data to information, and from information to tacit and explicit
knowledge. This model, called DITEK process model, describes at a first level <strong>the</strong> relationship
between data and information, and at a second level <strong>the</strong> relationship between information, and tacit
and explicit knowledge. Contrary to <strong>the</strong> idea <strong>of</strong> continuum between <strong>the</strong> concepts <strong>of</strong> data, information,
and knowledge induced by <strong>the</strong> DIKW hierarchical model, DITEK process model shows a discontinuity
between <strong>the</strong>se concepts.
At a first level, we have to consider <strong>the</strong> relationship between data and information. This level must be
thought as a basic process where data are discrete raw elements perceived, ga<strong>the</strong>red, and filtered by
a person before to be aggregated, supplemented, and organized into information. Let’s describe <strong>the</strong>
transformation process (Figure 1).
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Figure 1: DITEK process model level 1: From data…to information
A sender P1 is acting in specific context and situation at time T0. P1 has pre-existing interpretative
frameworks, previous tacit knowledge, and intentions. In an information creation phase, P1, has direct
access to a set <strong>of</strong> data outside himself. Then, P1 according to a sense-reading process - that depends
<strong>of</strong> his pre-existing interpretative frameworks activated depending <strong>of</strong> his context, his situation, and his
intentions, filters some <strong>of</strong> <strong>the</strong>se data that take sense for him. At <strong>the</strong> same time, a sense-giving
process using P1’s previous tacit knowledge enables P1 to aggregate, supplement and organize
selected data into information I(P1,T0). Once created this information becomes a static object
independent from P1, and time. It is this information that is passed-on by <strong>the</strong> individuals or by means
<strong>of</strong> <strong>the</strong> digital information system (DIS) where it is stored, treated and transmitted as a stream <strong>of</strong> digital
data. During this process, P1’s pre-existing interpretative frameworks are not changing; previous tacit
knowledge can be reorganized and modified into new tacit knowledge.
At a second level, we have to consider <strong>the</strong> relationship between information, and tacit and explicit
knowledge. This level is in rupture with <strong>the</strong> first one, it presupposes that information already exists
whatever are time and context in which it was created. Let’s describe <strong>the</strong> transformation process
(Figure 2).
At a later stage <strong>of</strong> <strong>the</strong> first level process, at time Tn, when P2 perceives <strong>the</strong> information I(P1,T0) during
a reception, self-reflection and observation phase, this information (P1,T0) is captured by P2, who is in
different context and situation than P1 who elaborates it. P2 has his own intentions. Then, P2
according to a sense-reading process, interprets this information (P1,T0), filtering data through his preexisting
interpretative frameworks activated depending <strong>of</strong> his context, his situation, and his intentions.
At <strong>the</strong> same time, a sense-giving process that uses P2’s previous knowledge operates, and
engenders new tacit knowledge. That’s <strong>the</strong> way that changes P2’s pre-existing interpretative
frameworks, and enriches P2’s previous tacit knowledge enabling P2 to understand his situation,
identify a problem, find a solution, decide, and act. The results <strong>of</strong> this process are modified
interpretative frameworks, and new tacit knowledge.
The process <strong>of</strong> transformation <strong>of</strong> information into tacit knowledge is a process <strong>of</strong> construction <strong>of</strong>
knowledge. Created knowledge, can be very different from one individual to ano<strong>the</strong>r when <strong>the</strong>
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commensurability <strong>of</strong> <strong>the</strong>ir interpretative frameworks is small, whatever are <strong>the</strong> causes <strong>of</strong> it. There are
large risks that <strong>the</strong> same information takes different senses for each <strong>of</strong> <strong>the</strong>m, and consequently
generates a construction <strong>of</strong> different tacit knowledge in <strong>the</strong> head <strong>of</strong> <strong>the</strong> decision process stakeholders.
Unlike <strong>the</strong> information, knowledge is dynamic. Once constructed it cannot be considered as an object
independent from <strong>the</strong> individual who built it, or <strong>the</strong> individual who appropriates it to make a decision
and to act.
Figure 2: DITEK process model level 2: From information…to tacit and explicit knowledge
Later on, at time Tn+1, when P2 as a sender communicates with a receiver P3, during a tacit knowledge
articulation phase, a sense-giving process enables P2 to articulate a part <strong>of</strong> his new tacit knowledge
into explicit knowledge that is no more than information I(P2,Tn+1) for P3.
As a result one can understand <strong>the</strong> importance to clearly distinguish static factual information, which
allows describing <strong>the</strong> context and <strong>the</strong> situation that raise a problem, from <strong>the</strong> tacit knowledge <strong>of</strong> <strong>the</strong>
individual who processes this information to learn and get knowledge he needs to carry out his tasks.
Consequently, paraphrasing (Kautz and Kjaergaard 2008) if technology provides <strong>the</strong> possibility <strong>of</strong>
making information available across time and space (p. 49), we always have to keep in mind <strong>the</strong> role
<strong>of</strong> individual in <strong>the</strong> knowledge sharing process, but we do also pay attention to how individual uses
technology to share knowledge (p. 43). Our approach is inspired by a KM constructivist paradigm. It
induces to consider tacit and explicit knowledge as <strong>the</strong> outcome <strong>of</strong> a sense-giving process that
involves people engaged in actions, and mainly depend <strong>of</strong> <strong>the</strong> organizational context. It implies three
fundamental postulates and leads to a definition a KM focused on activities and processes opening on
Technological, Managerial, and Socio-technical Well-balanced KM Initiative Strategies within
Organizations
4. A constructivist paradigm <strong>of</strong> KM
4.1 Three fundamental postulates
Our observations and experiments within <strong>the</strong> industry, led us to set forth three postulates: (i)
Knowledge is not an object; (ii) Knowledge is linked to <strong>the</strong> action, and (iii) Company’s knowledge
includes two main categories <strong>of</strong> knowledge. We define <strong>the</strong>se postulates below.
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4.1.1 Knowledge is not an object
Knowledge exists in <strong>the</strong> interaction between an interpretative Framework (incorporated within <strong>the</strong>
head <strong>of</strong> an individual, or embedded into an artifact), and data. This postulate comes from <strong>the</strong>
assumption emphasized by Tsuchiya (1993) concerning tacit knowledge creation ability.
4.1.2 Knowledge is linked to <strong>the</strong> action
From an organization perspective, knowledge is created through action. Knowledge is essential for
<strong>the</strong> functioning <strong>of</strong> support, and value-adding processes (Porter, 1985). Activities contributing to <strong>the</strong>se
processes utilize and create knowledge. Thus, <strong>the</strong> actions finalize <strong>the</strong> organization’s knowledge. This
viewpoint takes into account <strong>the</strong> context and <strong>the</strong> situation, which allow utilizing and creating
knowledge. In particular, we must analyze <strong>the</strong> role <strong>of</strong> <strong>the</strong> actors - decision-makers - involved with
<strong>the</strong>se activities in order to achieve <strong>the</strong> organization’s missions. Therefore, knowledge is linked to <strong>the</strong>ir
decisions, <strong>the</strong>ir actions, and <strong>the</strong>ir relations with <strong>the</strong> surrounding systems (people and artifacts).
4.1.3 Company’s knowledge includes two main categories <strong>of</strong> knowledge
Within organizations, knowledge consists <strong>of</strong> two main categories: on <strong>the</strong> one hand, explicited
knowledge includes all tangible elements (we call it “know-how”); and on <strong>the</strong> o<strong>the</strong>r hand, tacit
knowledge (Polanyi, 1966), includes intangible elements (we call it “skills”). Tacit knowledge can or
cannot be articulated into explicit knowledge. The tangible elements are collective knowledge. They
take <strong>the</strong> shape <strong>of</strong> formalized and codified knowledge in a physical format (databases, procedures,
plans, models, algorithms, and analysis and syn<strong>the</strong>sis documents), or are embedded into automated
management systems, in conception and production systems, and in products. The intangible
elements are inherent to <strong>the</strong> individuals who bear <strong>the</strong>m, ei<strong>the</strong>r as collective knowledge - <strong>the</strong> “routines”
that are non-written individual or collective action procedures (Nelson and Winter, 1982) or personal
knowledge (skills, crafts, “job secrets”, historical and contextual knowledge <strong>of</strong> environment, clients,
competitors, technologies, and socio-economic factors).
4.2 Knowledge management perspectives
Relying to <strong>the</strong> postulates mentioned above, it appears that, KM addresses activities, which utilize and
create knowledge more than knowledge by itself. With regard to this question, since 2001, our group
<strong>of</strong> research has adopted <strong>the</strong> following definition <strong>of</strong> KM (Grundstein and Rosenthal-Sabroux, 2003):
“KM is <strong>the</strong> management <strong>of</strong> <strong>the</strong> activities and <strong>the</strong> processes that enhance <strong>the</strong> utilization
and <strong>the</strong> creation <strong>of</strong> knowledge within an organization, according to two strongly
interlinked goals, and <strong>the</strong>ir underlying economic and strategic dimensions, organizational
dimensions, socio-cultural dimensions, and technological dimensions: (i) a patrimony
goal, and (ii) a sustainable innovation goal” (p.980).
The patrimony goal has to do with <strong>the</strong> preservation <strong>of</strong> knowledge, <strong>the</strong>ir reuse and <strong>the</strong>ir actualization; it
is a static goal. The sustainable innovation goal is more dynamic. It is concerned with organizational
learning that is creation and integration <strong>of</strong> knowledge at <strong>the</strong> organizational level.
This definition <strong>of</strong> KM leads towards a technological, managerial, and socio-technical well-balanced
KM initiatives within organizations referring to general model for knowledge management within
organization so called MGKME (Grundstein, 2005a, 2007, 2008), which integrates managerial guiding
principles, ad hoc infrastructures, socio-technical environment, support and value adding processes,
organizational learning processes, generic KM processes, and relevant methods and supporting tools.
Fur<strong>the</strong>rmore, distinguishing information from knowledge leads to conceive what we call Enterprise’s
Information and Knowledge Systems (EIKS).
4.3 The enterprise’s information and knowledge system (EIKS)
4.3.1 EIKS’ brief description
The enterprise’s information and knowledge system (EIKS) consists mainly in a set <strong>of</strong> individuals and
digital information systems (Figure 3).
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Figure 3: The enterprise’ information and knowledge system (EIKS)
EIKS rests on a socio-technical context, which consists <strong>of</strong> individuals in interaction among <strong>the</strong>m, with
machines, and with <strong>the</strong> very EIKS. It includes:
A Digital Information Systems (DIS), which are artificial systems, <strong>the</strong> artefacts designed from
information and communication technologies (ICT)
An Information System (IS), constituted by individuals who, in a given context, are processors <strong>of</strong> data
to which <strong>the</strong>y give a sense under <strong>the</strong> shape <strong>of</strong> information. This information, depending <strong>of</strong> <strong>the</strong> case, is
passed on, remembered, treated, and diffused by <strong>the</strong>m or by <strong>the</strong> DIS.
A knowledge System (KS), consisting <strong>of</strong> tacit knowledge embodied by <strong>the</strong> individuals, and <strong>of</strong> explicit
knowledge formalized and codified on any shape <strong>of</strong> supports (documents, video, photo, digitized or
not). Under certain conditions, digitized knowledge is susceptible to be stored, processed and spread
with <strong>the</strong> DIS. In that case, knowledge is no more than information.
We insist on <strong>the</strong> importance to integrate <strong>the</strong> individual as a user and a component <strong>of</strong> <strong>the</strong> system as
Chua and Brennan (2004) highlighted in <strong>the</strong>ir study on Collaborative Knowledge Management System
(CKMS) design. They emphasize that “One <strong>of</strong> <strong>the</strong> most important components <strong>of</strong> CKMS is <strong>the</strong>
knowledge workers, who are also <strong>the</strong> users <strong>of</strong> <strong>the</strong> system, and <strong>the</strong> workspaces <strong>the</strong>y are associated
with” (p.172). In fact, relying to our assumptions, we argue that knowledge resides primarily in <strong>the</strong>
heads <strong>of</strong> individuals, and in <strong>the</strong> social interactions <strong>of</strong> <strong>the</strong>se individuals.
4.3.2 An example <strong>of</strong> EIKS: The case <strong>of</strong> Community <strong>of</strong> Practice (CoP)
According to Wenger, McDermott and Snyder (2002), « Communities <strong>of</strong> practice are groups <strong>of</strong> people
who share a concern, a set <strong>of</strong> problem, or a passion about a topic, and who deepen <strong>the</strong>ir knowledge
and expertise in this area by interacting on an ongoing basis. …These people don’t necessarily work
toge<strong>the</strong>r every day, but <strong>the</strong>y may meet because <strong>the</strong>y find value in <strong>the</strong>ir interactions. As <strong>the</strong>y spend
time toge<strong>the</strong>r, <strong>the</strong>y typically share information, insight and advice. They help each o<strong>the</strong>r solve
problems. They discuss <strong>the</strong>ir situations, <strong>the</strong>ir aspirations, and <strong>the</strong>ir needs. They ponder common
issues, explore ideas, and act as sounding boards. They may create tools, standards, generic
designs, manuals, and o<strong>the</strong>r documents – or <strong>the</strong>y may simply develop a tacit understanding that <strong>the</strong>y
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share. However <strong>the</strong>y accumulate knowledge, <strong>the</strong>y become informally bound by <strong>the</strong> value that <strong>the</strong>y
find in learning toge<strong>the</strong>r. This value is not merely instrumental for <strong>the</strong>ir work. It also accrues in <strong>the</strong>
personal satisfaction <strong>of</strong> knowing colleagues who understand each o<strong>the</strong>r’s perspectives and <strong>of</strong>
belonging to an interesting group <strong>of</strong> people. Overtime, <strong>the</strong>y develop a unique perspective on <strong>the</strong>ir
topic as well as a body <strong>of</strong> common knowledge, practices, and approaches. They also develop
personal relationships and established ways <strong>of</strong> interacting. They may even develop a common sense
<strong>of</strong> identity. They become a community <strong>of</strong> practice (pp. 4-5). »
CoP can be informal group <strong>of</strong> people as described above, or structured as corporate group in <strong>the</strong> firm
that takes responsibility for some operational activities. Today, one can say that CoP greatly
contributes to KM in our full meaning <strong>of</strong> <strong>the</strong> word. For example, let’s cite O’Dell and Hubert (2011):
“Through more than a decade <strong>of</strong> APQC (American Productivity & Quality Center) research and
experience, we have found that communities: provide <strong>the</strong> means to translate local know-how into
global, collective knowledge; help employees exchange ideas, collaborate, and learn from one
ano<strong>the</strong>r; transcend boundaries created by work flow, functions, geography, and time; enable <strong>the</strong>
speed and innovation needed for marketplace leadership; can integrate into fabric <strong>of</strong> your
organization’s core work and value chains; can successfully align with formal governance structures
(p. 62).”
However, whatever <strong>the</strong> nature <strong>of</strong> CoP is, <strong>the</strong> underlying group effort must be supported by a Digital
Information System, which in that case is a Computer Supported Collaborative Work System. Thus,
CoP can be seen as an EIKS that is group <strong>of</strong> people, interlinked through a digital information system,
sharing information and transferring knowledge within a socio-technical context. Here, knowledge
transfer must be understood as transmission, plus absorption and use <strong>of</strong> knowledge (Davenport and
Prusack 1998 p.101). Consequently, in EIKS, <strong>the</strong> information and knowledge portals have become
essential for <strong>the</strong> knowledge workers who have to share with colleagues disseminated all around <strong>the</strong>
world. Fur<strong>the</strong>rmore, we must consider <strong>the</strong> impact <strong>of</strong> formal or informal groups when integrating CoP in
KM initiative strategy
Knowledge is dependent <strong>of</strong> <strong>the</strong> individual’s interpretative frameworks, and <strong>the</strong> context <strong>of</strong> his action.
Consequently, as mental models and interpretative frameworks are directly forged by cultural factors,
it induces to stress <strong>the</strong> role <strong>of</strong> cultural factors when social interactions, information sharing and
knowledge transfer are essential to enable efficiency in <strong>the</strong> global economy. Therefore, <strong>the</strong> project
manager should consider <strong>the</strong> individual (knowledge worker and decision-maker) both at once as a
user, and a component <strong>of</strong> <strong>the</strong> EIKS. That is achieved by group efforts, notably by CoP organized as
an EIKS.
5. A well-balanced KM initiative strategy within organizations
A general KM initiative shows willingness, at <strong>the</strong> highest level <strong>of</strong> <strong>the</strong> enterprise, to encourage all <strong>the</strong>
steps, and to implement all <strong>the</strong> means leading to capitalize on knowledge to pull strategic advantages
<strong>of</strong> it. Afterwards, we refer to our own studies about general KM initiative (Grundstein, 2005b).
There exist three main development phases: (i) The Strategic Orientation Phase which aim is to
establish KM Initiative outline and agenda; (ii) Operational Management Phase which aim is to design
and specify specific projects linked to capitalizing on knowledge problems; and (iii) Projects
Deployment Phase which aim is to monitor and implement EIKS. For <strong>the</strong> purpose <strong>of</strong> this paper, we
will focus on <strong>the</strong> first phase, <strong>the</strong> strategic orientation phase.
5.1 Strategic orientation phase
The strategic orientation phase <strong>of</strong> general KM initiative leads to establish KM initiative outline and
agenda, taking into account priorities and available resources. It includes four steps (Figure 4): (i)
Elaborating <strong>the</strong> Enterprise’s KM Vision; (ii) Aligning KM Strategy on Enterprise’s Strategies; (iii)
Monitoring KM Maturity Study; and (iv) Establishing KM Initiative Program. Questions which must be
considered focus notably on achieving alignment <strong>of</strong> <strong>the</strong> KM strategy on <strong>the</strong> organization’s strategy:
How to articulate <strong>the</strong> general KM initiative with <strong>the</strong> Enterprise’s strategic orientations?
How to make <strong>the</strong> Enterprise’s members, whatever are <strong>the</strong>ir hierarchical level, aware <strong>of</strong> KM interest for
<strong>the</strong>m, and <strong>the</strong> Enterprise?
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Michel Grundstein
How to assess <strong>the</strong> Enterprise’s KM maturity and its capacity to implement KM projects?
How to identify IS needs, KS needs, and EIKS needs?
How to define <strong>the</strong> KM initiative outline, and <strong>the</strong> agenda?
What are predictable impacts?
How to ga<strong>the</strong>r constructive conditions?
What are <strong>the</strong> activities to develop and promote?
What are <strong>the</strong> indicators to set up?
How to establish relevant organizational structures, and to attribute roles to stakeholders?
How to create and support organizational learning processes leading towards more information
sharing, and knowledge transfer?
Figure 4: The strategic orientation phase
The strategic orientation phase is crucial and can avoid getting KM resources outcomes unused. We
argue that, most <strong>of</strong> time, IT approach leads confusing notions <strong>of</strong> information and knowledge, and
misunderstanding <strong>the</strong> goals: do we have to develop an Information System or do we have to
implement an EIKS that integrate people as users and components <strong>of</strong> <strong>the</strong> system?
Therefore, <strong>the</strong> strategic orientation phase must help to build a general KM vision that makes a clear
distinction between technology as a support to share individual’s tacit knowledge, and technology as
a means to collect, store, and distribute explicit and codified knowledge that is no more than
information. Beyond benchmarking studies, to deal with <strong>the</strong> strategic orientation phase, Enterprises
need a Meta model that is a pattern <strong>of</strong> reference (a template) in order: (i) to integrate KM Governance
principles (Grundstein, 2007, pp. 247-248); (ii) to adapt it to <strong>the</strong>ir own situation; (iii) to monitor KM
Maturity study (Grundstein, 2008, p. 424); and (iv) to envision integrating Information systems and KM
systems in <strong>the</strong> same both digital and human system that we call EIKS..
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6. Conclusions and perspectives
Michel Grundstein
Most <strong>of</strong> time, <strong>the</strong> positivist paradigm <strong>of</strong> KM thought as a means to acquire, codify, store and
disseminate knowledge, considers knowledge as an object, and so disregards <strong>the</strong> importance <strong>of</strong>
individual’s tacit knowledge used in action. Although this paradigm <strong>of</strong> KM is greatly shared, without
awareness, when elaborating KM initiative’s strategy, we can confuse <strong>the</strong> notions <strong>of</strong> information and
knowledge. The constructivist paradigm <strong>of</strong> KM proposed in this paper is founded on <strong>the</strong> DITEK
process model, and three postulates. It brings an open definition <strong>of</strong> KM focused on <strong>the</strong> activities and
processes that enhance <strong>the</strong> utilization and <strong>the</strong> creation <strong>of</strong> knowledge within organizations; in doing so,
it induces a well-balanced technological, managerial and socio-technical KM initiative strategy.
Changing <strong>the</strong> paradigm <strong>of</strong> KM induces an open definition <strong>of</strong> KM that leads to integrate <strong>the</strong> whole
dimensions that should be involved in a KM initiative. Fur<strong>the</strong>rmore, distinguishing Information from
Knowledge opens our mind on a different view <strong>of</strong> information systems: <strong>the</strong>se systems based on
Digital Information System (DIS) integrate people, both at <strong>the</strong> same time, as users and components <strong>of</strong>
<strong>the</strong> system. This pragmatic vision needs thinking about <strong>the</strong> architecture <strong>of</strong> an Enterprise’s Information
and Knowledge System (EIKS), which must be a basis <strong>of</strong> discussion during <strong>the</strong> strategic orientation
phase <strong>of</strong> a general KM initiative.
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210

Intellectual Property Valuation Decision Support System:
Towards Dynamic SMEs in Malaysia
Hezlin Harris, Kamarulzaman Ab Aziz and Mariati Norhashim
Multimedia University, Cyberjaya, Selangor, Malaysia
hezlin.harris@mmu.edu.my
kamarulzaman.aziz@mmu.edu.my
mariati.norhashim@mmu.edu.my
Abstract: One <strong>of</strong> <strong>the</strong> major thrusts <strong>of</strong> NEM is to propel Malaysia into a high income nation through innovation-led
growth by 2020. A vital aspect <strong>of</strong> this innovation-based economy is Intellectual Property (IP) and <strong>the</strong> ancillary
issues that arise from it, such as <strong>the</strong> creation, protection, management and commercialization aspects. These
factors play an imperative role in <strong>the</strong> National Intellectual Property Policy (NIPP)’s ultimate aim which is to
develop an IP industry as a driver for innovation and creativity that is vital to sustain Malaysian’s economic
growth. Hence, <strong>the</strong> key value <strong>of</strong> IP creation is essential in developing a vibrant IP industry. As a subset <strong>of</strong> an
intellectual capital, IP is recognized to be <strong>the</strong> core element <strong>of</strong> an innovation. It is an essential source <strong>of</strong> a firm’s
competitive advantage as well as <strong>the</strong> nation’s economic growth. Strategic business decisions are becoming more
dependent upon knowing <strong>of</strong> <strong>the</strong> value <strong>of</strong> IP and knowing what to value and how should it be valued. SMEs in
Malaysia are <strong>the</strong> backbone in <strong>the</strong> Malaysian economy and <strong>the</strong>y are <strong>the</strong> main engine <strong>of</strong> endogenous growth in
realizing <strong>the</strong> NEM strategic research agenda towards an innovation-led economy and thrusting Malaysia into a
high-income nation in 2020. This is a challenge for SMEs as <strong>the</strong>y are characteristically less sophisticated in <strong>the</strong>ir
management styles, strategic knowledge and skills. SMEs should <strong>the</strong>refore be encouraged to give paramount
importance to <strong>the</strong> creation, management and <strong>the</strong> valuation aspects <strong>of</strong> IP. By providing a support mechanism, <strong>the</strong>
SMEs would be aiding in achieving <strong>the</strong> objective <strong>of</strong> <strong>the</strong> NIPP which is to enhance IP as a new engine for growth
and enhancement <strong>of</strong> economic and social prosperity. This conceptual paper intends to propose a development <strong>of</strong>
a decision support system (DSS) in valuing IP to assist SMEs in <strong>the</strong>ir decision making process. Hence, <strong>the</strong> DSS
for IP valuation is believed to serve as an enabler towards more dynamic and competitive SMEs in spurring <strong>the</strong>
Malaysian economic growth.
Keywords: intellectual property, valuation, decision support system, SME, Malaysia
1. Introduction
In <strong>the</strong> advent <strong>of</strong> <strong>the</strong> New Economic Model (NEM) under <strong>the</strong> Tenth Malaysia Plan (10MP), Malaysia
aspires to achieve a fully developed nation status by year 2020. One <strong>of</strong> <strong>the</strong> major thrusts <strong>of</strong> NEM is to
propel Malaysia into a high income nation through innovation-led growth. The NEM strategic research
agenda strives to elevate <strong>the</strong> nation’s capacity innovation, knowledge and creativity by cultivating an
outstanding mindset. A high income nation would signify higher earnings which is a result <strong>of</strong> not only
capital but through productivity enrichment. It can only be achieved by utilizing on innovation,
excellent skilled labor, superior coordination, stronger branding and compliance with <strong>the</strong> international
standards and IP Rights. A vital aspect <strong>of</strong> this innovation-based economy is Intellectual Property (IP)
and <strong>the</strong> ancillary issues that arise from it, such as <strong>the</strong> creation, protection, management and
commercialization aspects. These factors play an important role in <strong>the</strong> National Intellectual Property
Policy (NIPP)’s ultimate aim which is to develop an IP industry as a driver for innovation and creativity
that is vital to sustain Malaysian’s economic growth. Hence, <strong>the</strong> key value <strong>of</strong> IP creation is essential in
developing a vibrant IP industry. IP as <strong>the</strong> core element <strong>of</strong> an innovation is an essential source <strong>of</strong> a
firm’s competitive advantage. Strategic business decisions are becoming more dependent upon
knowing <strong>of</strong> <strong>the</strong> value <strong>of</strong> IP and knowing what to value and how should it be valued. However,
valuation <strong>of</strong> IP requires a sound knowledge in business strategies which undoubtedly could have an
enormous impact on a firm’s performance. As argued by Davis (2004), <strong>the</strong> role <strong>of</strong> IP has changed due
to <strong>the</strong> fact that intangible assets are now recognized as sources <strong>of</strong> competitive advantage. Hence, this
conceptual paper intends to propose a development <strong>of</strong> a decision support system (DSS) in valuing IP
to assist SMEs in <strong>the</strong>ir decision making process. It is believed that <strong>the</strong> DSS will serve as an enabler
towards more dynamic and competitive SMEs in spurring <strong>the</strong> Malaysian economic growth.
2. Background <strong>of</strong> Small-Medium Sized Enterprises (SMEs) in Malaysia
As stated in <strong>the</strong> SME Annual Report 2009/2010 (SME Corp Malaysia, 2010), SMEs represent 99% <strong>of</strong>
total business establishments and contribute 31% to <strong>the</strong> nation’s Gross Domestic Product (GDP).
Hence, as <strong>the</strong> backbone in <strong>the</strong> Malaysian economy, SMEs are an important driver <strong>of</strong> domestic growth
and will be extremely pertinent in <strong>the</strong> NEM towards propelling Malaysia from a middle-income
economy to a high-income nation. The establishment <strong>of</strong> <strong>the</strong> National SME Development Council
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Hezlin Harris et al.
(NSDC) in 2004 acts as <strong>the</strong> highest policy-making organization which is responsible for shaping <strong>the</strong>
overall SME development in Malaysia. This is followed by transforming <strong>the</strong> Small and Medium
Industries Development Corporation (SMIDEC) into <strong>the</strong> Small and Medium Enterprise Corporation
Malaysia (SME Corporation Malaysia) in 2009 to carry specialized tasks. SME Corporation Malaysia
is <strong>the</strong> Central Coordination Agency that formulates overall policies and strategies for SMEs and
organizes programs across all associated Ministries and Agencies. Based on <strong>the</strong> Census <strong>of</strong>
Establishment and Enterprises conducted by <strong>the</strong> Department <strong>of</strong> Statistics, Malaysia in 2005, <strong>the</strong>re are
a total 548,267 <strong>of</strong> SMEs. They mainly consist <strong>of</strong> services which accounts for 86.6% share <strong>of</strong> total
SMEs in Malaysia. The remaining 7.2% and 6.2% shares <strong>of</strong> total SMEs in Malaysia come from <strong>the</strong>
manufacturing and agriculture sectors.
The strategies for SME development under <strong>the</strong> NEM are incorporated in <strong>the</strong> 10MP. In <strong>the</strong> economy
outlook <strong>of</strong> Malaysia, it revealed that <strong>the</strong>re was an increase in <strong>the</strong> SME contribution to GDP from 29%
in 2005 to 31.2% in 2009. Under <strong>the</strong> 10MP, <strong>the</strong> Government is dedicated to fur<strong>the</strong>r unleash <strong>the</strong>
untapped growth potential <strong>of</strong> SMEs to create a more resilient and competitive players in <strong>the</strong>
international markets. Given <strong>the</strong> fact that SMEs play a leading role in driving Malaysian economy
towards realizing <strong>the</strong> vision 2020, it is imperative that <strong>the</strong>ir strategies are aligned with <strong>the</strong> bearing <strong>of</strong>
an innovation-led economy. SMEs should <strong>the</strong>refore be encouraged to give paramount importance to
<strong>the</strong> creation, management and <strong>the</strong> valuation aspects <strong>of</strong> IP. By providing a support mechanism, <strong>the</strong>
SMEs would be aiding in achieving <strong>the</strong> objective <strong>of</strong> <strong>the</strong> NIPP which is to enhance intellectual property
as a new engine for growth and enhancement <strong>of</strong> economic and social prosperity.
3. Intellectual Property (IP) and SMEs
According to World Intellectual Property Organization (WIPO), IP refers to creations <strong>of</strong> <strong>the</strong> mind:
inventions, literary and artistic works, and symbols, names, images, and designs used in commerce.
IP is divided into two categories:
Industrial property, which includes inventions (patents), trademarks, industrial designs, and
geographic indications <strong>of</strong> source; and
Copyright, which includes literary and artistic works such as novels, poems and plays, films,
musical works, artistic works such as drawings, paintings, photographs and sculptures, and
architectural designs. Rights related to copyright include those <strong>of</strong> performing artists in <strong>the</strong>ir
performances, producers <strong>of</strong> phonograms in <strong>the</strong>ir recordings, and those <strong>of</strong> broadcasters in <strong>the</strong>ir
radio and television programs.
The SME Division <strong>of</strong> WIPO recognizes <strong>the</strong> importance <strong>of</strong> IP as a valuable business and commercial
asset to an SME. WIPO has identified <strong>the</strong> following as <strong>the</strong> benefits <strong>of</strong> IP as an intangible asset:
A source <strong>of</strong> income that could be generated through licensing, sale or commercialization <strong>of</strong> IP
products <strong>of</strong> services.
Enhancement <strong>of</strong> <strong>the</strong> value <strong>of</strong> <strong>the</strong> worth <strong>of</strong> SMEs, in particular to investors and financial
institutions.
Enhancement <strong>of</strong> value <strong>of</strong> SMEs in <strong>the</strong> event <strong>of</strong> sale, merger or acquisition <strong>of</strong> business.
IP is not only an essential source <strong>of</strong> a firm’s competitive advantage, it should be considered when
deciding upon a firm’s investment strategy. Increased competition and shorter product life cycles in
<strong>the</strong> knowledge-based economy has caused firms to become increasingly reliant on <strong>the</strong>ir IP (Roy,
2004). He fur<strong>the</strong>r added that as strategic decisions are gradually dependent upon understanding <strong>the</strong>
economics affecting <strong>the</strong> value <strong>of</strong> <strong>the</strong>se properties, as such <strong>the</strong>re is a need to assess <strong>the</strong> economic
value <strong>of</strong> IP as early as possible in <strong>the</strong> product development cycle. The importance <strong>of</strong> IP for SMEs is
expanding as it directly affecting overall business strategy because it is part <strong>of</strong> <strong>the</strong> core capability <strong>of</strong> a
firm (Stewart, 1999; Smith and Hansen, 2002). Managing IP strategically means leveraging intellect
towards increasing <strong>the</strong> company’s overall performance (Quin et. al., 1996). Although some SMEs
prefer confidentiality for <strong>the</strong>ir innovation outputs for protect <strong>the</strong>ir technical secrets while o<strong>the</strong>rs prefer
safeguarding <strong>the</strong>ir innovations in order to gain control over o<strong>the</strong>r firm and industry characteristics
(Petit et. al., 2010).
There is surprisingly little research on <strong>the</strong> actual use <strong>of</strong> IP Rights (IPR) by SMEs. What has been
carried out is almost unanimous in declaring that, with few exceptions, SMEs make little use <strong>of</strong> IPR
(e.g., Arundel and Steinmuller, 1998; Blackburn, 2003). There is little interest in why this might be.
The problem for government policy is seen to be simply how to help SMEs make more use <strong>of</strong> IPR
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(Burrone and Singh, 2003). Typically this is to be achieved by exhortation, public relations,
advertising, road shows, and so on; and by adapting <strong>the</strong> IPR system to make it more appropriate for
SMEs with petty patents and <strong>the</strong> like. SME owners also prefer to use informal methods to protect <strong>the</strong>ir
IP and allocate <strong>the</strong>ir resources to <strong>the</strong> development <strong>of</strong> new product and process innovations (Kitching
and Blackburn, 1998). WIPO stated that among <strong>the</strong> reasons why many SMEs are sometimes slow to
protect <strong>the</strong>ir IP includes insufficient information on <strong>the</strong> relevance <strong>of</strong> IP in day-to-day business, high
costs associated with obtaining and enforcing IP rights, perceptions that <strong>the</strong> IP system is esoteric, too
cumbersome and time-consuming. It is however, not sufficient that SMEs merely protect <strong>the</strong>ir IP rights
(IPR). SMEs must manage <strong>the</strong>ir IPR advantageously; this includes using IPR to protect innovative
concepts and products (Jackson, 2002). Thus, in order to enhance SMEs competitiveness in <strong>the</strong>
ASEAN, Macdonald, Turpin and Ancog (2005) recommend that <strong>the</strong>re is a need to generate
confidence among SME top management in <strong>the</strong> value <strong>of</strong> IPR for <strong>the</strong> business strategy and <strong>the</strong>
capacity <strong>of</strong> <strong>the</strong> system to safeguard <strong>the</strong>ir IPR.
In <strong>the</strong> ASEAN region, large firms and foreign firms typically dominate <strong>the</strong> IPR world, particularly
patenting. SMEs tend to see little link between any form <strong>of</strong> IPR and <strong>the</strong>ir innovation (Macdonald,
Turpin and Ancog., 2005). It is also <strong>of</strong>ten argued that IPR are both costly to acquire and to enforce as
SMEs are at disadvantage due to <strong>the</strong>ir firm size and <strong>the</strong>ir ability to use IPR to get appropriate returns
from <strong>the</strong>ir innovative efforts (Jensen and Webster, 2006; Cordes et. al, 1999; WIPO, 2003 and
Macdonald, 2004). In ano<strong>the</strong>r study by Macdonald, Turpin and Ancog (2005) found that some SMEs
have integrated various forms <strong>of</strong> IPR into <strong>the</strong>ir marketing and business plans where trademarks and
trade secrets appear to be more valued than copyright and industrial designs. They found that <strong>the</strong>re is
a tendency for SMEs to focus on business development and marketing strategies but less focused on
technological innovation. These findings were supported by Arundel and Kabla (1998) where <strong>the</strong>
findings revealed that small European firms have a lower propensity to patent <strong>the</strong>ir innovations than
large firms.
SMEs faced a number <strong>of</strong> challenges as discussed by Moha (1999), Hall (2002), SMIDEC (2002),
Wang (2003) and Stuti (2005). The challenges included, lack <strong>of</strong> financing, lack <strong>of</strong> managerial
capabilities, poor access to strategic knowledge and technology as well as heavy regulatory burdens.
In <strong>the</strong> context <strong>of</strong> Malaysia, Saleh and Ndubisi (2006) found that SMEs have low levels <strong>of</strong> technological
capabilities, limited skilled workforces, low level <strong>of</strong> ICT penetration, lack <strong>of</strong> research and development,
limited market focus, intense external competitors, and face bureaucracy barriers to incentives and
funds. Govindaraju and Wong (2011) revealed that lack <strong>of</strong> industry alliance, finance, poor structure <strong>of</strong>
<strong>the</strong> technology commercialization <strong>of</strong>fice, poor information process, lack <strong>of</strong> demand oriented research
and poor IP management are <strong>the</strong> major impediments in <strong>the</strong> commercialization process. Ano<strong>the</strong>r major
impediment in implementing strategic technological initiatives such as knowledge management
systems is <strong>the</strong> lack <strong>of</strong> resources (Wong and Aspinwall, 2005).
Motivated by <strong>the</strong> obstacles faced <strong>the</strong> SMEs in Malaysia, this paper attempts to propose <strong>the</strong>
development <strong>of</strong> Decision Support System (DSS); a technological solution in facilitating <strong>the</strong>m to value
<strong>the</strong>ir IP. The proposed DSS is expected to be a stimulant in driving SMEs to not only pursues
innovation activities but to progress forward to commercializing <strong>of</strong> <strong>the</strong>ir innovation outputs. This will
help ensure SMEs to be more engaged in <strong>the</strong> commercializing <strong>of</strong> <strong>the</strong>ir IP, and ultimately enhance
<strong>the</strong>ir capability to exploit, value and commercialize <strong>the</strong>ir IP.
4. Valuation <strong>of</strong> IP
In order to capture and capitalize <strong>the</strong> intellectual property (IP), valuing <strong>the</strong> IP becomes a pertinent
stage in <strong>the</strong> road to exploitation and commercialization. Valuation <strong>of</strong> IP requires a sound background
in marketing, technical and financial knowledge. This is a challenge for SMEs as <strong>the</strong>y are
characteristically less sophisticated in <strong>the</strong>ir management styles and strategic knowledge and skills.
Valuation <strong>of</strong> IP is not simply an accounting procedure but somewhat an effort to consolidate facts and
figures pertaining to a given IP or business project, such as development costs, expectation <strong>of</strong>
income, comparative advantages and market data, for <strong>the</strong> purpose <strong>of</strong> making better strategic
decisions. The valuation process can take into account <strong>the</strong> influence <strong>of</strong> IP not only on projects and
products but also on <strong>the</strong> business operation and on its competitive position as a whole (Roy, 2004).
There is a plethora <strong>of</strong> research concerning methods in valuing IP. Various models can be justified
under many different circumstances. Within each <strong>of</strong> <strong>the</strong> various models, <strong>the</strong>re are different variations
that can be applied. The choice <strong>of</strong> model significantly influences <strong>the</strong> resultant valuation estimates and
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reflects <strong>the</strong> business’ goals and concerns regarding <strong>the</strong> IP (Matsuura, 2004). Below are <strong>the</strong> several
established methods for valuing IP which can be categorized into three main models.
4.1 Cost-based valuation model
Reilly (2009) states that <strong>the</strong> economic principles <strong>of</strong> substitution and price equilibrium are embodied in
<strong>the</strong> cost-based valuation model. According to King (2002), <strong>the</strong> valuation technique is simply taking
into account <strong>the</strong> cost to create <strong>the</strong> IP while Mard, Hyden and Rigby (2000) emphasize that <strong>the</strong> costbased
valuation technique considers some economic principles when valuing <strong>the</strong> IP such as <strong>the</strong>
substitution, supply and demand, externalities, functional, technological and economic obsolescence.
Mard, Hyden and Rigby (2000) and Reilly (2009) also highlight that <strong>the</strong> reproduction (or known as
replication cost by Chaplinsky (2002); <strong>the</strong> cost at current prices, to develop an exact duplicate or
replica <strong>of</strong> <strong>the</strong> IP) and replacement costs (<strong>the</strong> cost at current prices, an asset having identical utility to
<strong>the</strong> IP) should be taken into consideration. In brief, <strong>the</strong> cost approach is <strong>the</strong> cost to create or recreate
or acquire <strong>the</strong> asset (Pitkethly, 2002; Roy, 2004). The company should also look at what we spent on
developing <strong>the</strong> IP and what ano<strong>the</strong>r company might spend if <strong>the</strong>y were to invent it from scratch (Roy,
2004). However, <strong>the</strong> technique suffers one drawback which is it ignores <strong>the</strong> changes in <strong>the</strong> time value
<strong>of</strong> money and ignores maintenance (King, 2002). Fur<strong>the</strong>rmore, <strong>the</strong> method is overly simplistic by
making idealistic assumptions or too complicated to be utilized in many managerial settings in reality
(Ernst, Legler and Lichtenthaler, 2010).
4.2 Market-based valuation model
The market-based valuation model is based on <strong>the</strong> on <strong>the</strong> principles <strong>of</strong> competition and equilibrium
where supply and demand will drive <strong>the</strong> price <strong>of</strong> an IP to a point <strong>of</strong> equilibrium (Reilly, 1996; 2009).
Many scholars concur that <strong>the</strong> value <strong>of</strong> IP assets can be estimated by examining <strong>the</strong> similar IP assets
in <strong>the</strong> market transactions (King, 2002; Roy, 2004; Goldheim et. al, 2005; Chiesa et. al., 2007). Mard,
Hyden and Rigby (2000) outline <strong>the</strong> model by first researching <strong>the</strong> comparable IP in <strong>the</strong> market,
verifying <strong>the</strong> information, selecting relevant unit <strong>of</strong> comparison and construct a comparative valuation
pricing analysis and <strong>the</strong> sales <strong>of</strong> comparable IP. According to Reilly (1996), it is also imperative that
<strong>the</strong> effect <strong>of</strong> <strong>the</strong> market approach in terms <strong>of</strong> <strong>the</strong> average acceptance level for <strong>the</strong> remaining life <strong>of</strong> <strong>the</strong>
asset and <strong>the</strong> remaining life must be different from <strong>the</strong> remaining life <strong>of</strong> <strong>the</strong> IPR. If <strong>the</strong>re is a
difference, adjustments are required or else it may signify that <strong>the</strong>re is a lack <strong>of</strong> marketability <strong>of</strong> <strong>the</strong> IP.
5. Income-based valuation model
The income-based valuation model estimates <strong>the</strong> value <strong>of</strong> IP based on <strong>the</strong> forecast future revenues
that can be generated by <strong>the</strong> IP or <strong>the</strong> cost savings from using <strong>the</strong> IP. Technically, <strong>the</strong> IP value is
based on <strong>the</strong> rule <strong>of</strong> expectation where <strong>the</strong> present value <strong>of</strong> <strong>the</strong> projected economic income to be
gained from <strong>the</strong> IP ownership as indicated by Reilly (1996) and Reilly (2009). According to Reilly
(1996), different measures <strong>of</strong> economic income that may be used include computing incremental
levels <strong>of</strong> income and decremental levels <strong>of</strong> cost, forecasting <strong>the</strong> relief from a <strong>the</strong>oretical royalty or
rental payment, calculating <strong>the</strong> distinction in <strong>the</strong> value <strong>of</strong> <strong>the</strong> overall business between owning <strong>the</strong> IP
and using <strong>the</strong> IP without ownership. Mard, Hyden and Rigby (2000) and Reilly (2009) state that IP
income can be measured from <strong>the</strong> gross or net revenues, gross income (or gross pr<strong>of</strong>it), net operating
income, net income before tax or after tax, operating cash flow, net cash flow or o<strong>the</strong>r kinds <strong>of</strong> income
(such as incremental income). The income-based valuation model however is criticized for focusing
only on <strong>the</strong> expected net present value <strong>of</strong> incomes and overlooks <strong>the</strong> costs <strong>of</strong> developing <strong>the</strong> product
(Ernst, Legler and Lichtenthaler, 2010).
6. Developing a Decision Support System (DSS) model for IP valuation
There is a level <strong>of</strong> subjectivity <strong>of</strong> risks and aspects in deciding which valuation method would best
serve <strong>the</strong> interest <strong>of</strong> <strong>the</strong> organization and <strong>the</strong> IP itself. It is not simply a box-ticking option. Decision
making is not always easy to do, especially when it involves complex problems and <strong>the</strong> decision
makers have limited information, knowledge, experience or abilities (Eirman, Niederman and Adams,
1995). For effective decision making, <strong>the</strong> decision makers must be able to predict <strong>the</strong> outcome <strong>of</strong>
each alternative as well, and based on all <strong>the</strong>se items, determine which alternative is <strong>the</strong> best suited
to <strong>the</strong> particular circumstance (Reason, 1990). According to Simon (1977) decision making is an
essential and crucial function in organizations and good quality decisions lead to higher productivity,
timely problem solving, and better overall performance.
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The need for sound and effective decision making has led to <strong>the</strong> development <strong>of</strong> numerous decision
support systems (DSS). The advent <strong>of</strong> state <strong>of</strong> <strong>the</strong> art technologies has enabled organizations in
decision making and problem solving processes. DSS are <strong>the</strong> technological solutions that evolve from
<strong>the</strong> convergent <strong>of</strong> two areas – <strong>the</strong>oretical studies <strong>of</strong> organizational decision making and <strong>the</strong>
development <strong>of</strong> information systems for decision making (Shim et. al., 2002). It can solve complex
computations quickly and at a minimal cost, reduces dependence on external parties or many support
staff and enhances <strong>the</strong> quality <strong>of</strong> <strong>the</strong> decision made.
According to Turban (1993), a standard DSS structure should encompass <strong>the</strong> following:
it assists but does not replace <strong>the</strong> decision maker, it nei<strong>the</strong>r tries to present <strong>the</strong> “answers” nor to
enforce a predetermined series <strong>of</strong> analysis;
it assists semi-structured decisions, where some elements <strong>of</strong> <strong>the</strong> analysis can be systematized for
<strong>the</strong> computer, but where <strong>the</strong> decision maker’s wisdom and judgment are needed to dominate <strong>the</strong>
process;
it blends modeling techniques with database and presentation mechanisms;
it emphasizes ease <strong>of</strong> use, user friendliness, user control, and flexibility and adaptability; and
it assists all stages <strong>of</strong> decision making.
A DSS is a knowledge integrated computer-based program that analyzes business data as input and
recommend decision making options as output. The input data is processed using algorithms and
modeling techniques designed for specific problems and needs <strong>of</strong> <strong>the</strong> decision makers. Generally,
<strong>the</strong>re are four main components in a DSS architecture which include <strong>the</strong> input (database or <strong>the</strong>
information and characteristics associated to IP), <strong>the</strong> model (data is processed based on <strong>the</strong>
parameters set by <strong>the</strong> user), <strong>the</strong> output (solution generated by <strong>the</strong> system) and <strong>the</strong> user interface (<strong>the</strong>
portal which allows <strong>the</strong> user to interact with <strong>the</strong> computer). The DSS architecture <strong>of</strong> IP valuation is
shown in Figure 1.
Input Valuation Algorithm IP Value
User Interface
Figure 1: The DSS architecture <strong>of</strong> IP valuation
The basic elements in <strong>the</strong> “input” should comprise <strong>of</strong> <strong>the</strong> relevant quantitative and qualitative
characteristics <strong>of</strong> IP and information required for <strong>the</strong> three main valuation methods in this study. The
inputs shall also be known as <strong>the</strong> common valuation elements. Based on <strong>the</strong> reviews <strong>of</strong> literature with
regards to valuing an IP, <strong>the</strong> selected inputs from <strong>the</strong> three common valuation methods should include
for example, <strong>the</strong> estimated income stream over <strong>the</strong> IP’s useful life, estimated <strong>of</strong> <strong>the</strong> duration <strong>of</strong> <strong>the</strong>
IP’s useful life, <strong>the</strong> market value by reference to comparable market transactions, <strong>the</strong> sales <strong>of</strong> similar
IP in <strong>the</strong> past and so forth.
The DSS model will <strong>the</strong>n analyze <strong>the</strong> inputs according to <strong>the</strong> user specifications and provide <strong>the</strong>
solution to <strong>the</strong> user with regards to <strong>the</strong> cost-based, market-based and income-based as <strong>the</strong> outputs.
The DSS model is not merely a compilation <strong>of</strong> information but it can be used to invoke answers to <strong>the</strong>
“what-if” questions which are performed using sensitivity analysis. Sensitivity analysis tests <strong>the</strong> effect
on <strong>the</strong> output variable <strong>of</strong> systematic changes in input variables in <strong>the</strong> form <strong>of</strong> a ma<strong>the</strong>matical
modeling. For a given uncertainty in <strong>the</strong> input variables, sensitivity analysis is utilized to investigate
<strong>the</strong> robustness <strong>of</strong> <strong>the</strong> result. It is also <strong>of</strong>ten referred to as post-optimality analysis. It is study <strong>of</strong> how
sensitive an optimal solution is to model assumptions and to data changes. This allows <strong>the</strong> user to
experiment various scenarios, evaluate <strong>the</strong> inputs and deal with constraints while maximizing or
minimizing <strong>the</strong> objective functions. The essence <strong>of</strong> DSS is that it should be flexible enough for user to
modify or change <strong>the</strong> parameters.
The DSS model should also cater <strong>the</strong> qualitative characteristics <strong>of</strong> <strong>the</strong> IP such as <strong>the</strong> state <strong>of</strong> <strong>the</strong>
economy, <strong>the</strong> uniqueness, functionality or <strong>the</strong> exploitation capability <strong>of</strong> <strong>the</strong> IP to name a few. Hagelin
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Hezlin Harris et al.
(2002) proposes five elements in a valuation approach. The elements comprise <strong>of</strong> factors which
influence <strong>the</strong> IP value (measured by scoring criteria), merits assigned to <strong>the</strong> scoring criteria (known as
<strong>the</strong> scoring system), technique employed by <strong>the</strong> scoring system (measured by <strong>the</strong> scoring scale),
factors to be applied to <strong>the</strong> scoring system in order to distinguish <strong>the</strong> significance <strong>of</strong> <strong>the</strong> scoring
criteria (also known as <strong>the</strong> weighting factor) and finally <strong>the</strong> decision table which is <strong>the</strong> composite score
for <strong>the</strong> IP being analyzed obtained through a combination <strong>of</strong> <strong>the</strong> scoring criteria, scoring system and
weight.
Lagrost et. al. (2010) depicts a comprehensive decision process <strong>of</strong> IP valuation methods for <strong>the</strong>
evaluators to consider. The evaluators have to first go through all <strong>the</strong> questions – “Why, What, For
what, For whom and How” – as <strong>the</strong> basis that would rationalize <strong>the</strong> ultimate IP valuation outcomes.
Those questions include <strong>the</strong> quantitative and qualitative aspects pertaining to <strong>the</strong> global management
strategy and IP management and exploitation, <strong>the</strong> purpose <strong>of</strong> <strong>the</strong> IP valuation, <strong>the</strong> target audience as
<strong>the</strong> shareholders or investors, <strong>the</strong>y type <strong>of</strong> IP being evaluated and <strong>the</strong> form <strong>of</strong> IP right to choose from.
The valuation process algorithm is described as follows. Firstly, <strong>the</strong> valuation elements pertaining to
<strong>the</strong> IP also known as <strong>the</strong> scoring criteria by Hagelin (2002) are ga<strong>the</strong>red. Then, <strong>the</strong> user will set some
parameters on how <strong>the</strong> algorithm should extract <strong>the</strong> valuation elements. The parameters may be <strong>of</strong> a
ranking system <strong>of</strong> <strong>the</strong> valuation elements in terms <strong>of</strong> significance in valuing IP or assigning a
monetary value to each <strong>of</strong> <strong>the</strong> valuation elements. The ranking system is somewhat similar to <strong>the</strong>
weighting factor as suggested by Hagelin (2002). Here, <strong>the</strong> usage <strong>of</strong> a sort function will organize <strong>the</strong>
entered data ready for computation.
The user will <strong>the</strong>n be required to propose a valuation formula on how <strong>the</strong> IP value can be computed
for each valuation model i.e. cost-based, market-based and income-based. For example, <strong>the</strong> IP value
can be an average <strong>of</strong> monetary value <strong>of</strong> selected valuation elements multiplied by <strong>the</strong> ranking order,
as <strong>the</strong> most basic valuation formula. A more sophisticated valuation formula may also be set as
desired by <strong>the</strong> user. After ga<strong>the</strong>ring and assigning <strong>the</strong> scoring criteria to <strong>the</strong> valuation elements and
specifying <strong>the</strong> valuation formula for each valuation model, <strong>the</strong> DSS will <strong>the</strong>n analyze <strong>the</strong> data and
extract <strong>the</strong> solution according to <strong>the</strong> specified parameters. The solution will reveal an IP value based
on <strong>the</strong> three valuation models. Given <strong>the</strong> solution proposed by DSS, <strong>the</strong> user will have to examine <strong>the</strong>
various valuation alternatives. The DSS will generate a report for <strong>the</strong> user and <strong>the</strong> whole process
ends. The proposed DSS must also be flexible enough to accommodate any changes in <strong>the</strong> user’s
parameters. It is also suggested that <strong>the</strong> valuation algorithm incorporates a function to take into
account <strong>the</strong> quality <strong>of</strong> information used, especially in <strong>the</strong> estimation <strong>of</strong> <strong>the</strong> valuation elements.
In brief, <strong>the</strong> basic DSS architecture for an IP valuation is proposed in this paper which comprises <strong>of</strong>
input, valuation algorithm, IP value and user interface. However, fur<strong>the</strong>r studies have to be carried out
in order to develop a more sophisticated DSS which can assist SMEs in valuing <strong>the</strong>ir IP.
It is through this conceptual paper, a literature <strong>of</strong> aspects pertaining to valuing IP is propose in <strong>the</strong>
development <strong>of</strong> a DSS to assist SMEs in <strong>the</strong>ir decision making process. A more in-depth discussion <strong>of</strong>
<strong>the</strong> development <strong>of</strong> DSS for IP valuation can be found in <strong>the</strong> upcoming paper accepted for publication
in <strong>the</strong> <strong>International</strong> Journal <strong>of</strong> Communications <strong>of</strong> IBIMA.
7. Conclusion
In spurring <strong>the</strong> domestic economic growth, SME development must be aligned with <strong>the</strong> NEM strategic
agenda which focuses on innovation, creativity and skilled labor force. Hence, <strong>the</strong> development <strong>of</strong>
DSS for IP valuation is believed to serve as an enabler towards more dynamic and competitive SMEs.
Given <strong>the</strong> complexities in valuing an IP, this paper has attempted to incorporate various potential
valuation elements into a systematic and structured technological solution i.e. DSS for IP valuation to
ease <strong>the</strong> decision making process. The DSS would be a very useful tool in driving more SMEs to
unleash <strong>the</strong>ir untapped potential in creating, valuing, exploiting and commercializing <strong>the</strong>ir IP. It is
however, important to realize that it should not be used as <strong>the</strong> ultimate solution as <strong>the</strong> decision maker
has to exert control on how <strong>the</strong> valuation process is carried out. It requires a thoughtful approach and
a series <strong>of</strong> cross examination among <strong>the</strong> competing alternatives. Not only that, it is imperative for <strong>the</strong>
researcher to consider <strong>the</strong> variation in <strong>the</strong> valuation elements depending on <strong>the</strong> IP and <strong>the</strong> chosen IP
rights. One size does not fit all. An effective decision maker should always evaluate <strong>the</strong> advantages
and disadvantages <strong>of</strong> each solution as suggested by <strong>the</strong> DSS and <strong>the</strong>n choose and implement <strong>the</strong>
best solution.
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Acknowledgements
Hezlin Harris et al.
This research was funded by <strong>the</strong> Special Funding for Social Sciences Research (SFSCR) <strong>of</strong> year
2010 under <strong>the</strong> Research Management Center, Multimedia University, Malaysia.
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218

Managing an Assessment Process <strong>of</strong> Science Educator
Needs in South Africa
Shaheed Hartley
Science Learning Centre for Africa (SLCA), Faculty <strong>of</strong> Education, University <strong>of</strong>
<strong>the</strong> Western Cape, Cape Town, South Africa
shartley@uwc.ac.za
Abstract: There has been increasing pressure on education researchers and practitioners at higher education
institutions to focus on <strong>the</strong> development <strong>of</strong> South Africa’s rural and peri-urban communities and improving <strong>the</strong>ir
quality <strong>of</strong> life. Many tertiary institutions are obliged to review <strong>the</strong>ir outreach interventions in schools. To ensure
that <strong>the</strong> support provided to schools is still relevant, a systemic evaluation <strong>of</strong> science educator needs is central to
this process. These prioritised needs will serve as guide not only for <strong>the</strong> outreach projects <strong>of</strong> tertiary institutions,
but also to service providers in general so that <strong>the</strong> process <strong>of</strong> addressing educators needs become coordinated,
organised and delivered in a systemic manner. This paper describes a pilot study <strong>of</strong> five schools which forms part
<strong>of</strong> a broader knowledge management exercise to collect data regarding <strong>the</strong> needs <strong>of</strong> science educators in a
district <strong>of</strong> 45 secondary schools in <strong>the</strong> Western Cape Province <strong>of</strong> South Africa. This research focuses on <strong>the</strong>
needs and challenges faced by science educators at <strong>the</strong>se schools as articulated by <strong>the</strong> relevant stakeholders.
The objectives <strong>of</strong> this investigation are two-fold: (1) to create a knowledge management platform that will capture
<strong>the</strong> needs and challenges identified by science educators <strong>of</strong> <strong>the</strong> selected secondary schools; and (2) to develop a
needs pr<strong>of</strong>ile for each <strong>of</strong> <strong>the</strong> participating secondary schools that will serve as a strategic asset to be shared with
<strong>the</strong> various service providers as part <strong>of</strong> a community <strong>of</strong> practice whose core business is to support science
educators and science education at large. The data was collected by a means <strong>of</strong> a needs assessment
questionnaire (NAQ. An open-ended questionnaire was also administered which allowed teachers to express
<strong>the</strong>ir views. The categories <strong>of</strong> <strong>the</strong> questionnaire were predetermined by participating researchers, educators and
education department <strong>of</strong>ficials. Group interviews were held with <strong>the</strong> science teachers at each <strong>of</strong> <strong>the</strong> schools. An
analysis <strong>of</strong> <strong>the</strong> data revealed important trends in terms <strong>of</strong> science educator needs and identified schools that can
be clustered around priority needs, logistics and educator pr<strong>of</strong>iles. The knowledge management platform also
provides an opportunity for <strong>the</strong> community <strong>of</strong> practice to strategise and coordinate <strong>the</strong>ir interventions.
Keywords: knowledge management, needs assessment, science educators, community <strong>of</strong> practice, secondary
schools, South Africa
1. Background
The collection, analysis and application <strong>of</strong> information, collectively coined as knowledge management,
are not new to education. Historically education managers, principals and teachers have been
ga<strong>the</strong>ring data for various purposes and shared <strong>the</strong>ir findings to illuminate challenges that schools
face. It may sometimes have happened as a piecemeal process but it has always been central to <strong>the</strong>
educational act. At <strong>the</strong> most basic knowledge management can be described as a set <strong>of</strong> practices that
helps to improve <strong>the</strong> use and sharing <strong>of</strong> data and information in decision making (Petrides & Nodine,
2003). It <strong>the</strong>refore stands to reason that knowledge management is an essential practice for principals
in understanding <strong>the</strong> interactions in <strong>the</strong>ir schools and for teachers to ga<strong>the</strong>r data that will have useful
pointers in how to deal with <strong>the</strong> varied backgrounds <strong>of</strong> learners in <strong>the</strong>ir classes. Knowledge
management is also seen as a problem <strong>of</strong> capturing, organizing, and retrieving information, evoking
notions <strong>of</strong> databases, documents, query languages, and data mining (Thomas, Kellogg & Erickson,
2001). According to Wasko and Faraj (2000), three kinds <strong>of</strong> knowledge exist, namely "knowledge as
object", "knowledge embedded within individuals", and "knowledge embedded in a community".
Communities <strong>of</strong> practice, collectively and individually, are considered a rich potential source <strong>of</strong> helpful
information in <strong>the</strong> form <strong>of</strong> actual experiences; in o<strong>the</strong>r words, best practices. Communities <strong>of</strong> Practice
have become associated with finding, sharing, transferring, and archiving knowledge, as well as
making explicit "expertise", or tacit knowledge, considered to be those valuable context-based
experiences that cannot easily be captured, codified and stored (Davenport & Prusack, 2000; Hildreth
& Kimble, 2002). The term "community <strong>of</strong> practice" can be viewed as that group who share a common
interest and a desire to learn from and contribute to <strong>the</strong> community with <strong>the</strong>ir variety <strong>of</strong> experiences
(Lave & Wenger, 1991). For tertiary institutions that train pre-service teachers whilst also providing
support to in-service, practicing teachers as <strong>the</strong>ir ongoing pr<strong>of</strong>essional development, knowledge
management practices can only enhance <strong>the</strong> way support is provided and to evaluate <strong>the</strong> type <strong>of</strong>
support needed by <strong>the</strong> community <strong>of</strong> practice. Knowledge management in education has also become
a valuable tool in developing and designing supportive interventions that addresses particular needs
indentified through a process <strong>of</strong> data collection. Such information ga<strong>the</strong>red and assessed provides
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Shaheed Hartley
useful direction and trends and adds great value in designing strategies that support education at both
primary and secondary level.
Much has been written <strong>of</strong> <strong>the</strong> political history <strong>of</strong> South Africa. Its impact on <strong>the</strong> education system and
<strong>the</strong> generation <strong>of</strong> learners who have passed through this system has been a great cause for concern.
The illiteracy rate <strong>of</strong> over 50 percent amongst marginalised communities bears testimony <strong>of</strong> this
devastation. The impact <strong>of</strong> science and ma<strong>the</strong>matics outcomes in <strong>the</strong> TIMMS (Howie, 1997) and <strong>the</strong>
TIMMS repeat (Howie, 2001) has brought <strong>the</strong> national spotlight to bear on <strong>the</strong> challenges facing <strong>the</strong>
education system. South Africa is currently undergoing ano<strong>the</strong>r change in curriculum in education at
both primary and secondary level. This is <strong>the</strong> second curriculum change since <strong>the</strong> dawn <strong>of</strong> democracy
in 1994. These changes are effected over a number <strong>of</strong> years, implemented in a staggered approach
to cover Grades 1 to 12 which is <strong>the</strong> extent <strong>of</strong> primary and secondary schooling in South Africa. The
current sphere <strong>of</strong> curriculum change is introduced to teachers through a series <strong>of</strong> training sessions
which are directed to support and equip teachers to deal effectively with <strong>the</strong> new curriculum content.
Many teachers are already daunted by <strong>the</strong> task to teaching <strong>the</strong> current content and now have to face
new content with new approaches and outcomes expected <strong>of</strong> <strong>the</strong>m and <strong>the</strong>ir learners. Two important
areas that require support at primary and secondary level are science and ma<strong>the</strong>matics education
and in South Africa have been declared national priority areas. Tertiary education institutions such as
<strong>the</strong> University <strong>of</strong> <strong>the</strong> Western Cape (UWC) have been requested by <strong>the</strong> national government to
provide support in <strong>the</strong> training and development <strong>of</strong> <strong>the</strong>se two critical areas. The Science Learning
Centre for Africa <strong>of</strong> <strong>the</strong> University <strong>of</strong> <strong>the</strong> Western Cape (UWC-SLCA) has as its core business <strong>the</strong>
training and support <strong>of</strong> practicing teachers in science and ma<strong>the</strong>matics at both primary and secondary
level. To ensure that <strong>the</strong> support provided to schools is relevant, a systemic evaluation <strong>of</strong> <strong>the</strong> support
required is central to this process, that is, a knowledge management exercise is required that will yield
not just <strong>the</strong> challenges and needs <strong>of</strong> teachers but a blue print <strong>of</strong> <strong>the</strong> kind <strong>of</strong> support centres like <strong>the</strong>
UWC-SLCA and o<strong>the</strong>rs have to provide.
2. Objectives <strong>of</strong> <strong>the</strong> study
One <strong>of</strong> <strong>the</strong> key questions that need to be answered in <strong>the</strong> provision <strong>of</strong> <strong>the</strong> service by UWC-SLCA is:
“What are <strong>the</strong> science and ma<strong>the</strong>matics education needs <strong>of</strong> teachers at <strong>the</strong> schools?” This paper
describes a pilot investigation <strong>of</strong> five schools that forms part <strong>of</strong> a wider study to assess <strong>the</strong> needs <strong>of</strong>
45 secondary schools in <strong>the</strong> provision <strong>of</strong> quality science education in <strong>the</strong> Western Cape. The
objectives <strong>of</strong> this investigation are two-fold: (1) to create a knowledge management platform that will
capture <strong>the</strong> needs and challenges identified by science educators <strong>of</strong> <strong>the</strong> selected secondary schools;
and (2) to develop a needs pr<strong>of</strong>ile for each <strong>of</strong> <strong>the</strong> participating secondary schools that will serve as a
strategic asset to be shared with <strong>the</strong> various service providers as part <strong>of</strong> a community <strong>of</strong> practice
whose core business is to support science educators and science education at schools.
3. Methodology
The data collection procedures used both quantitative and qualitative approaches in its endeavour to
gain <strong>the</strong> necessary information from science teachers in <strong>the</strong> selected district. A new instrument (see
appendix A) called <strong>the</strong> Needs Assessment Questionnaires (NAQ) was developed and trial-tested with
a group <strong>of</strong> teachers from a different district. The six scales and eight items <strong>of</strong> <strong>the</strong> questionnaire were
selected after careful consideration and discussion with curriculum advisors, education department
<strong>of</strong>ficials, principals, science teachers and UWC-SLCA colleagues (see Table 1). The following scales
were decided upon namely (i) practical work, (ii) content knowledge, (iii) learning resources, (iv)
training, (v) curriculum support and vi) information technology needs. The NAQ made use <strong>of</strong> a 5 point
Likert scale that extended between practices occurring from Almost Never to Very Often. An openended
questionnaire (OEQ) was developed for teachers to add to <strong>the</strong>ir responses and provided an
opportunity for <strong>the</strong>ir opinions, comments and suggestions after completion <strong>of</strong> <strong>the</strong> NAQ. The areas
teachers were requested to comment in <strong>the</strong> open-ended section <strong>of</strong> <strong>the</strong> questionnaire booklet handed
to <strong>the</strong>m <strong>the</strong> researchers were (1) training, (2) curriculum, (3) Administrative issues, (4) Resources and
learning material and (5) o<strong>the</strong>r areas. The NAQ responses were analysed to identify trends that were
used as areas for probing and discussion during a follow-up round <strong>of</strong> group interviews with science
and ma<strong>the</strong>matics teachers at each school. A group interview was held at each school where teachers
were encouraged to explain some <strong>of</strong> <strong>the</strong>ir answers in <strong>the</strong> NAQ and <strong>the</strong> OEQ, and to get an
assessment <strong>of</strong> <strong>the</strong> overall needs. These needs were prioritised by teachers based on <strong>the</strong>ir collective
understanding and appreciation <strong>of</strong> <strong>the</strong> challenges faced in <strong>the</strong>ir classrooms. The principals <strong>of</strong> each
school were also interviewed to obtain for <strong>the</strong>ir perceptions <strong>of</strong> <strong>the</strong> needs that teachers expressed and
<strong>the</strong>ir perceptions <strong>of</strong> <strong>the</strong> shortcomings that needed fur<strong>the</strong>r support.
220

Table 1: List <strong>of</strong> NAQ scales and items
Practical work
I do all <strong>the</strong> practical/experimental work required by
<strong>the</strong> syllabus.
I develop my own worksheets for practical work
I need support in doing some <strong>of</strong> <strong>the</strong> practical work
I need fur<strong>the</strong>r training in conducting experiments in a
classroom/laboratory
I have access to <strong>the</strong> chemicals and apparatus
required to do practical work
My experiments never work.
I have difficulty in getting <strong>the</strong> large numbers <strong>of</strong>
learners involved in <strong>the</strong> practical work.
I keep learners involved in my practical work
Learning resources
The textbooks is sufficient to teach in this learning
area
I need additional learning material as resource
Not enough curriculum material is available to
support me in this learning area
I need a textbook that would assist me in presenting
my lessons
I develop my own resource material.
I share <strong>the</strong> material that I develop with my
colleagues at o<strong>the</strong>r schools
I need support in developing resource material.
I need a support group to develop resources in this
learning area.
Curriculum support
I have <strong>the</strong> training to manage my laboratory.
I have <strong>the</strong> assistance and support <strong>of</strong> my subject
head
I can count on <strong>the</strong> support and advice from
management at <strong>the</strong> school.
The curriculum advisors provide <strong>the</strong> support that I
need to teach this learning area.
I need fur<strong>the</strong>r support by subject specialists like
curriculum advisors.
I need guidance to management excursions and out<strong>of</strong>-school
events.
I am <strong>the</strong> subject but need fur<strong>the</strong>r training to support
my colleagues.
I need to attend a management course.
4. Findings
4.1 Need trends identified by <strong>the</strong> NAQ
Shaheed Hartley
Content knowledge
I first learn <strong>the</strong> work before I teach it.
I need support to teach some concepts
I am comfortable with teaching all topics <strong>of</strong> <strong>the</strong>
curriculum.
I need assistance to structure my lessons for large
classes
I need to update my teaching methods
I know how to integrate resource material in my
teaching.
I need to attend a course to improve my teaching
I need support to teach large classes.
Training
I teach concepts that are not included as part <strong>of</strong> my
level <strong>of</strong> training in this learning area.
I need to go for regular training courses to help me
understand some <strong>of</strong> <strong>the</strong> concepts that I teach
I teach a subject that was not part <strong>of</strong> my teacher
training
I don’t have <strong>the</strong> <strong>of</strong>ficial qualifications and training
I need to attend a training course to improve my
conceptual knowledge for <strong>the</strong> learning area.
I assist some <strong>of</strong> my colleagues to understand some
concepts
I need support in understanding some concepts that
I teach
I go for additional training courses to teach my
subject
IT
Computers could assist me in my daily teaching
I need support in computer-aided instruction.
I don’t have access to computers and <strong>the</strong> relevant
s<strong>of</strong>tware.
There are not enough computers for learners to use
The computer programs available enable me to
make good use <strong>of</strong> my time in class.
I would need training to include computers as a tool
in my teaching.
I would like to have computers to assist me to teach
difficult concepts.
Computers are not an option I would consider.
The perceptions <strong>of</strong> science teachers at <strong>the</strong> five schools obtained from <strong>the</strong> Needs Assessment
Questionnaire (NAQ) were analysed and is represented in Table 2 and illustrated by means <strong>of</strong> line
graphs in Figure 1. As pointed previously, <strong>the</strong> NAQ had six scales, namely practical work, content
knowledge, learning resources, training, curriculum support and information technology. These scales
represent <strong>the</strong> six broad areas identified by various stakeholders that indicate areas <strong>of</strong> great need. In
<strong>the</strong> practical work scale teachers had to indicate whe<strong>the</strong>r <strong>the</strong>y actually involve practical and
experimental work as part <strong>of</strong> <strong>the</strong>ir daily teaching. Similarly teachers would through <strong>the</strong>ir answers to
<strong>the</strong> o<strong>the</strong>r scales <strong>of</strong> <strong>the</strong> NAQ reveal areas <strong>of</strong> need by responding accurately to <strong>the</strong> items in each scale.
The item’s means ranged from 1 to 5, with 1 for <strong>the</strong> most negative perception that represents almost
never, 2 represents seldom, 3 represents sometimes, 4 represents <strong>of</strong>ten and 5 for <strong>the</strong> most positive
perception, which represents very <strong>of</strong>ten.
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Shaheed Hartley
Table 2: Item means scores for NAQ for <strong>the</strong> five pilot schools
School A
[n = 12]
School B
[n = 9]
School C
[n = 12]
School D
[n = 10]
School E
[n = 10]
practical work 3.375 3.375 3 3.125 3.5
content knowledge 2.375 3.5 3.125 3.125 3.375
learning resources 3.25 3.625 3.25 3.5 3.75
training 1 3.5 2.625 2.875 1.75
curriculum support 2.375 2.875 2.5 3 2.875
IT 2.5 3.75 3.5 3.75 3.125
From <strong>the</strong> mean scores <strong>of</strong> <strong>the</strong> data a number <strong>of</strong> trends were identified that were used as discussion
points in <strong>the</strong> group interviews. It appeared from <strong>the</strong> mean scores that in all 5 schools practical and
experimental work required by <strong>the</strong> curriculum were sometimes done. A similar pattern was identified
by <strong>the</strong> means scores <strong>of</strong> <strong>the</strong> learning resources and curriculum support scales. The mean scores <strong>of</strong> <strong>the</strong>
five schools showed a spread <strong>of</strong> <strong>the</strong>ir needs in content knowledge and information technology scales
while <strong>the</strong> mean scores <strong>of</strong> <strong>the</strong> scale representing training needs at each <strong>of</strong> <strong>the</strong> schools varied <strong>the</strong>
greatest. The means scores for School A indicate <strong>the</strong> most negative graph identifying that teachers
need support in content knowledge, training and curriculum and information technology since all <strong>of</strong>
<strong>the</strong>se mean scores range between almost never and sometimes for <strong>the</strong>se activities.
item means
5
4
3
2
1
0
practical work
content knowledge
learning resources
NAQ pilot
training
needs categories
curriculum support
IT
School A
School B
School C
School D
School E
Figure 1: Comparison <strong>of</strong> <strong>the</strong> item mean scores obtained per scale from NAQ for <strong>the</strong> five pilot schools
The mean scores for School E also highlighted a training need similar to that <strong>of</strong> School A while means
scores <strong>of</strong> School B showed a trend between sometimes and <strong>of</strong>ten doing <strong>the</strong> activities listed in <strong>the</strong>
items <strong>of</strong> <strong>the</strong> scales. The mean scores for School C and D showed a similar trend that indicated that
most <strong>the</strong> items in <strong>the</strong> scales were sometimes done. On <strong>the</strong> whole <strong>the</strong> data for <strong>the</strong> 5 schools indicated
Schools B, C and D showed similarly responses to <strong>the</strong> items in each <strong>of</strong> <strong>the</strong> scales and a deviation
occurred in <strong>the</strong> case <strong>of</strong> Schools and A and E with School A showing areas <strong>of</strong> greater need.
4.2 Needs identified in <strong>the</strong> open-ended questionnaire (OEQ)
As pointed out earlier, <strong>the</strong> OEQ was included in <strong>the</strong> booklet along with <strong>the</strong> closed NAQ that was
handed to teachers to complete in <strong>the</strong>ir own time. An analysis <strong>of</strong> <strong>the</strong> responses in <strong>the</strong> OEQ section
indicated that some teachers used <strong>the</strong> opportunity not only to elaborate on <strong>the</strong>ir responses in <strong>the</strong> NAQ
but to indentify ones that <strong>the</strong>y felt needed to be included. In an attempt to highlight <strong>the</strong> needs at
schools and identify priority areas for discussion in group interviews, <strong>the</strong> teacher responses in <strong>the</strong>
OEQ were clustered per school, represented by Table 3.
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Shaheed Hartley
Table 3: OEQ responses <strong>of</strong> teachers at <strong>the</strong> five schools
OEQ Category Number <strong>of</strong> schools
identifying needs
Training
Setting up, conducting and assessing practicals, experiments and demonstrations
Teaching practical work to large classes
Training courses for technology education
IT course for integration <strong>of</strong> CAL in each learning area
Designing <strong>of</strong> assignments and assessment tools
Management training courses
Curriculum
Support materials for curriculum-aligned teaching
Curriculum-aligned textbooks
Structured lesson plans for all schools
Administrative
Time management (too many assessment tasks, too little time to teach)
IT to improve and reduce admin tasks
Teacher assistants
Resources and Learning material
Various required for each topic in <strong>the</strong> learning area
Curriculum-aligned textbooks a vital requirement
O<strong>the</strong>r
Proposal writing for funding
At each <strong>of</strong> <strong>the</strong> five schools science teachers placed practical and experimental work as a priority
need. The same applied to <strong>the</strong>ir responses that dealt with <strong>the</strong> management <strong>of</strong> teaching and
administrative time and resources and learning material to teach various topics in <strong>the</strong> curriculum.
O<strong>the</strong>r secondary priority needs identified by teachers in <strong>the</strong> OEQ responses include (i) Teaching
practical work to large classes, (ii) training in technology education, (iii) support materials for
curriculum-aligned teaching, (iv) <strong>the</strong> use <strong>of</strong> information technology to support administrative tasks and
<strong>the</strong> provision <strong>of</strong> curriculum-aligned textbooks. A third layer <strong>of</strong> priority needs identified by some schools
training with regard IT, assessment and designing assignments, management training courses, lesson
planning, and a need for teaching assistants to reduce administrative load. Two schools also
mentioned that <strong>the</strong>y needed support in writing proposals that allowed <strong>the</strong>m to generate additional
income.
4.3 Group interviews
The trends and needs indentified by each school were sent to <strong>the</strong>m for discussion and perusal before
<strong>the</strong> group interviews. The interviews were conducted at each school and were generally attended by
all <strong>the</strong> science educators and management staff <strong>of</strong> <strong>the</strong> school.
4.3.1 School A
The staff <strong>of</strong> <strong>the</strong> science department was fairly new to teaching and identified <strong>the</strong>ir need for additional
training as a priority area. A number <strong>of</strong> teachers expressed <strong>the</strong>ir opinions through <strong>the</strong> following
quotes:
I’m not that confident in setting up and actually doing <strong>the</strong> practicals [teacher A3]
Working with chemicals is quite daunting and to let <strong>the</strong> learners also touch <strong>the</strong>se
chemicals is a bit challenging [teacher A4]
I would like attend a structured course like <strong>the</strong> Advanced Certificate in Education (ACE)
that would give a qualification in <strong>the</strong> end [teacher A6]
I have an issue with doing <strong>the</strong> practical work with <strong>the</strong> bigger classes [teacher A7]
There was agreement that some <strong>of</strong> <strong>the</strong> science educators needed additional support through
structured courses and whilst o<strong>the</strong>r required short-term upgrading courses. They identified particular
223
5
4
4
3
3
3
4
3
3
5
4
3
5
4
2

Shaheed Hartley
areas <strong>of</strong> new content in <strong>the</strong> curriculum as well as practical and experimental work. They also
highlighted a need to involve <strong>the</strong>ir learners in science competitions to stimulate <strong>the</strong>ir interest in <strong>the</strong>
learning <strong>of</strong> science.
4.3.2 School B
The members present at <strong>the</strong> interview had on average ten years <strong>of</strong> experience in teaching science at
secondary school level.
There is for example a new approach to determining <strong>the</strong> value <strong>of</strong> ‘g’ which hardly ever
produces <strong>the</strong> same results [teacher B1]
I find it a bit awkward when <strong>the</strong> experiments that you set up in class does not always
work when <strong>the</strong> learners try it [teacher B2]
With change in curriculum we cannot use <strong>the</strong> old textbooks to <strong>the</strong> same extent and new
textbooks don’t always address all <strong>the</strong> content <strong>of</strong> <strong>the</strong> curriculum [teacher B4]
It would also help if we had programmes that learners could participate it in. We have
apathy for science by learners currently. [teacher B7]
The science educators indicated that <strong>the</strong> new content included in <strong>the</strong> curriculum needed attention and
that <strong>the</strong>re was a shortage <strong>of</strong> textbooks that were aligned with <strong>the</strong> new curriculum. They also identified
challenges faced with conducting practicals and experiments prescribed in <strong>the</strong> curriculum.
4.3.3 School C
This school had a new principal who was slowly getting to know his teachers. The principal also
taught science to Grade 10 learners. The head <strong>of</strong> <strong>the</strong> science department <strong>of</strong> <strong>the</strong> school is well
qualified to teach <strong>the</strong> subject but complained about a heavy administrative load which prevented him
from adequately supporting <strong>the</strong> younger science teachers. The following are some <strong>of</strong> <strong>the</strong> priority
needs expressed by teachers:
I was never trained as a technology teacher and am filling in to teach <strong>the</strong> subject. There
are a number <strong>of</strong> areas in <strong>the</strong> technology curriculum that I need support and resources to
be able to teach <strong>the</strong> subject effectively.[teacher C2]
We have some equipment in <strong>the</strong> science lab. I am not sure if <strong>the</strong>y all work. Setting up <strong>the</strong>
apparatus is a problem since one deals with sharing <strong>the</strong> lab. And <strong>the</strong>n I am not sure how
to assess practicals and experiments.[teacher C3]
I think we need to develop a resource base amongst ourselves which can be supported
by centres like yourselves and o<strong>the</strong>r NGOs can add to. Once build up such a resource
base would be a starting point to teach any topic. [teacher C5]
We also need learner friendly experiments and books to guide us to do <strong>the</strong>se learnerfriendly
experiments.[teacher C9]
There was general agreement that some kind <strong>of</strong> supportive intervention was needed assist <strong>the</strong>
technology teacher but also to assist teachers conducting practical work safely, how to assess <strong>the</strong>se
experiments and resources that would provide teachers with a guide on how to teach specific content.
Laboratory safety was also identified as a priority for both teachers and learners. Learner involvement
in science projects was also highlighted as an additional need.
4.3.4 School D
The group interview at School D was very interactive as teachers and principal at times shared a
difference <strong>of</strong> opinion and were allowed to express <strong>the</strong>se difference in a fairly safe environment. The
differences mainly centred around <strong>the</strong> resources made available for <strong>the</strong> science department
compared to o<strong>the</strong>r learning areas. Teachers expressed <strong>the</strong>ir views about a science laboratory that
was used as a classroom and <strong>the</strong> very limited apparatus and chemicals available to teach <strong>the</strong> content.
We need fully functional science laboratories for both life and physical sciences so that
<strong>the</strong> subjects can come to fruition. Even if <strong>the</strong> stock was provided for half <strong>the</strong> curriculum
that we have to teach that would go a long way. [teacher D2]
Learners want to be involved in <strong>the</strong> science practicals. Is <strong>the</strong>re a way that we can get
<strong>the</strong>m more involved in <strong>the</strong>ir own science clubs. [teacher D3]
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Shaheed Hartley
It is very difficult to teach practical work in a classroom. I carry my apparatus along with
me in a box as I move from one class to ano<strong>the</strong>r. [teacher D3]
Our classes are too big and we have so much administrative work. I’m sure we can
reduce <strong>the</strong> amount <strong>of</strong> administrative work through one or ano<strong>the</strong>r IT package. Doing <strong>the</strong>
experimentation in such big classes is a problem. [teacher D7]
In <strong>the</strong> end <strong>the</strong> principal agreed that <strong>the</strong> science laboratories need to be reinstated and that collectively
<strong>the</strong>y will explore opportunities through which this can happen. There was also agreement that
teachers needed to attend courses on doing practical work with large classes and how to use
elementary everyday products to teach physics and chemistry concepts and a greater need for
learner involvement.
4.3.5 School E
At <strong>the</strong> group interview at School E science teachers expressed a need to utilize <strong>the</strong> school’s computer
centre as part <strong>of</strong> a teaching tool. They wanted support on how to make use <strong>of</strong> computer-assisted
learning and teaching but also a need to have curriculum-based s<strong>of</strong>tware that <strong>the</strong>y could as additional
reinforcement through problem solving and testing. There are three new teachers (teaching less than
three years) that expressed a need for additional support in some <strong>of</strong> <strong>the</strong> content in <strong>the</strong> curriculum,
support in terms content knowledge, pedagogical strategies and practical and experimental skills. The
following are excerpts <strong>of</strong> <strong>the</strong> views expressed:
Our school obtained a computer laboratory which allows us to utilise it for science and
ma<strong>the</strong>matics education. We need some advice on how we can use it in our daily
teaching. We also need subject specific curriculum-based programmes that we can use
for testing and reinforcing concepts with learner.[teacher E1]
I am new to teaching science and I am sure <strong>the</strong>re are o<strong>the</strong>r ways <strong>of</strong> teaching <strong>the</strong> subject
that will draw <strong>the</strong> interest <strong>of</strong> learners. I would like to start something for <strong>the</strong> learners as
well.[teacher E4]
I am also in my second year <strong>of</strong> teaching science and I am still very overcautious and
awkward when I set up experiments.[teacher 5]
There was general agreement that <strong>the</strong> science teachers need support in incorporating information
technology for teaching purposes. The science teachers also expressed an interest in short courses,
refresher or upgrading courses and also full qualification like <strong>the</strong> ACE course for science teachers.
These courses should address practical and experimental components, content knowledge and
teaching approaches. The younger teachers were in favour <strong>of</strong> starting a science club at <strong>the</strong> school.
4.4 Collective agreements <strong>of</strong> priority needs amongst five schools
The five schools have identified <strong>the</strong>ir needs in science education in both <strong>the</strong> NAQ and OEQ, and
highlighted <strong>the</strong>ir priority needs in <strong>the</strong> group interviews. There was a general agreement that <strong>the</strong> issue
<strong>of</strong> practical and experimental work in science is a priority since many <strong>of</strong> <strong>the</strong> schools indicated that
<strong>the</strong>se are sometimes done due to <strong>the</strong>ir own lack <strong>of</strong> training, confidence and application. There was a
call for learner participation in <strong>the</strong> form <strong>of</strong> science clubs or competitions to improve <strong>the</strong>ir interest in
science as a learning area. There is also an understanding that some areas <strong>of</strong> <strong>the</strong> content in <strong>the</strong> new
curriculum are lacking and a need exist <strong>of</strong> how to integrate <strong>the</strong> practical and experimental work in <strong>the</strong>ir
daily teaching. Teachers want to be able to use information technology in both teaching and
administration to allow for greater time to spend on areas that learners have difficulty with. Teachers
expressed an interest to join fellow science teachers from surrounding schools in <strong>the</strong> district involved
in <strong>the</strong> short courses, upgrading courses and full qualification courses that would provide <strong>the</strong>m with
some accreditation on completion <strong>of</strong> <strong>the</strong> course. These opportunities would also provide <strong>the</strong>m a
vehicle to share <strong>the</strong>ir experiences with o<strong>the</strong>rs and to build up a network or support base <strong>of</strong> science
teachers. Teachers identified with <strong>the</strong> notion <strong>of</strong> a community <strong>of</strong> practice for science teachers where
knowledge, skills and experiences can be shared. All five principals that took part in <strong>the</strong> process and
agreed that <strong>the</strong> priorities listed for <strong>the</strong>ir schools represented an accurate reflection <strong>of</strong> <strong>the</strong> needs
identified by <strong>the</strong>m. They requested that <strong>the</strong>ir school and especially <strong>the</strong> head <strong>of</strong> <strong>the</strong> science
departments be assisted with raising funds or writing fundraising proposals to assist with addressing
<strong>the</strong> needs <strong>of</strong> highlighted. Figure 2 represents <strong>the</strong> 5 priority needs identified by members <strong>of</strong> each <strong>of</strong> <strong>the</strong>
five schools in <strong>the</strong> pilot project.
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Shaheed Hartley
Figure 2: The priority needs identified by teachers in <strong>the</strong> data ga<strong>the</strong>ring process.
5. Implications <strong>of</strong> <strong>the</strong> pilot study
The five schools selected in this pilot study provided a preview <strong>of</strong> <strong>the</strong> knowledge management
platform created by this study. The needs identified provide an important source <strong>of</strong> information for
service providers as a community <strong>of</strong> practice that support schools in science and ma<strong>the</strong>matics
education. The data ga<strong>the</strong>red not only provide <strong>the</strong> needs that can be addressed as a priority but also
provides information about <strong>the</strong> context <strong>of</strong> <strong>the</strong> school. Issues with regard <strong>the</strong> support provided by <strong>the</strong>
principal and <strong>the</strong>ir management teams, tensions that exist in for example School D between <strong>the</strong>
principal and <strong>the</strong> science department, schools with young and aspiring teachers (Schools A and E),
and a new principal at School C, experienced teachers at School B are all relevant information
ga<strong>the</strong>red that would influence <strong>the</strong> approach adopted by <strong>the</strong> community <strong>of</strong> practice. The needs pr<strong>of</strong>ile
<strong>of</strong> each school would be made available on a database that members <strong>of</strong> <strong>the</strong> community <strong>of</strong> practice
and education authorities have access to in order to coordinate <strong>the</strong> support provided in terms <strong>of</strong>
logistics, priorities and expertise. The pilot study serve as <strong>the</strong> precursor to <strong>the</strong> larger study and <strong>the</strong>
lessons learnt would be invaluable to future research.
References
Davenport, T.H. and Prusack, L. (2000) Working Knowledge. How Organizations Manage What They
Know, 2nd Edition. Cambridge, MA: Harvard Business School Press.
Hildreth, Paul; Kimble, Chris (2002) “The Duality <strong>of</strong> Knowledge”, Information Research, 8 (1).
Howie, S. J. (1997). Ma<strong>the</strong>matics and science performance in <strong>the</strong> middle school years in South Africa: A
summary report on <strong>the</strong> performance <strong>of</strong> <strong>the</strong> South African pupils in <strong>the</strong> third international ma<strong>the</strong>matics and
science study. Pretoria: HSRC.
Howie, S. J. (2001). Third international ma<strong>the</strong>matics and science study repeat (TIMMS-R). Pretoria: HSRC.
Lave, J. and Wenger, E. (1991). Situated Learning: Legitimate Peripheral Participation. Cambridge:
Cambridge University Press
Petrides, L.A.and Nodine, T.R. (2003) “Knowledge Management in Education: Defining <strong>the</strong> Landscape”, [online],
Institute for <strong>the</strong> Study <strong>of</strong> Knowledge Management in Education, www.iskme.org
Thomas, J.C., Kellogg, .A. and Erickson, T. (2001) “The Knowledge Management Puzzle: Human and Social
Factors in Knowledge Management”, IBM Systems Journa,l 40 (4): 863–884.
Wasko, M.and Faraj, S. (2000) ""It is What One Does": Why People Participate and Help O<strong>the</strong>rs in
Electronic Communities <strong>of</strong> Practice", Journal <strong>of</strong> Strategic Information Systems, 9 (2-3): 155–173.
226

A Community Framework for Knowledge Creation
Igor Hawryszkiewycz
University <strong>of</strong> Technology, Sydney
igorh@it.uts.edu.au
Abstract: The paper focuses on knowledge management in large complex adaptive systems and proposes
architectures to support knowledge management in such systems. It sees knowledge capital not only in <strong>the</strong>
explicit or tacit knowledge available in an organization but also knowledge in how to change systems to respond
to changes in <strong>the</strong> environment. Critically important here are <strong>the</strong> communication structures needed to ensure
sustainable knowledge sharing in an organized ra<strong>the</strong>r than chaotic way. It is based on <strong>the</strong> living system metaphor
as <strong>the</strong> basis for sustainability. The metaphor provides guidelines for structuring communities and knowledge
flows between <strong>the</strong>m to adapt to <strong>the</strong>ir environment. The paper proposes a model where communities generate
knowledge. It defines a generic structure for communities. The structure is made up <strong>of</strong> knowledge, coordination,
monitoring and advisory communities. It <strong>the</strong>n defines roles with responsibilities to coordinate communication
between communities in ways that ensure sustainability. It includes roles to manage collaboration, set and
monitor goals and provide assistance when needed. Knowledge flows are modelled using living systems <strong>the</strong>ory
to identify responsibilities for each role and <strong>the</strong> services needed to carry out <strong>the</strong>se responsibilities.
Keywords: knowledge management, communities, living systems
1. Introduction
Contemporary business processes are characterized by greater emphasis on business networking, to
quickly build up competitive advantage through combining expert knowledge and capabilities from
different partners to produce new products and services. These networks include alliances,
partnerships, small business networks using a variety <strong>of</strong> supply chains, and o<strong>the</strong>r collaborative
arrangements. At <strong>the</strong> same time products and <strong>the</strong>ir associated services are becoming increasingly
complex requiring closer involvement between customers, suppliers. Cova and Salle (2000) see
emerging business networks co-creating solutions through collaboration between supplier network
and <strong>the</strong> customer network. Often <strong>the</strong>re is a major supplier, who originated a project, and <strong>the</strong>n builds
and coordinates a network <strong>of</strong> providers and customers to develop solutions for customers. The
general trend is to what are increasingly community or process ecosystems (Vidgen and Wang, 2006)
that emerge to provide continually innovative client solutions.
The paper builds on <strong>the</strong> idea <strong>of</strong> community structures (Mintzberg, 2009) by defining structures and
roles to facilitate community collaboration. Communities in this sense are not informal social grouping
but can include organizational units formed for a specific purpose or strategic planning or policy
groups. The focus is on <strong>the</strong> social perspective (Pralahad, Krishnan, 2008) as social networking will
play an increasingly important role in knowledge creation and community coordination. In many cases
coordination is through <strong>the</strong> exchange <strong>of</strong> knowledge, much <strong>of</strong> it <strong>of</strong> a tacit nature, created by process
participants. The importance <strong>of</strong> social networking is thus increasing and becomes a major component
<strong>of</strong> any design.
The paper describes a community based approach to system design. It sees knowledge creation
predominantly occurring through communities. The paper describes a community structure using
living systems as a metaphor to ensure communities proceed to an agreed upon vision. The paper
<strong>the</strong>n defines ways to identify <strong>the</strong> knowledge flows needed to maintain sustainable collaboration
across communities. This requires clear definition <strong>of</strong> roles responsibilities and interactions, which are
represented by an Enterprise Social Network (ESN).
2. Community structure for sustainability
The community architecture proposed in <strong>the</strong> paper turns to systems <strong>the</strong>ory. It sees progress through a
number <strong>of</strong> knowledge communities each providing its expertise but coordinated through a
coordination group. It includes a feedback loop, which is shown by <strong>the</strong> dotted line, with <strong>the</strong>
coordinating computing agreeing on goals with <strong>the</strong> knowledge communities. Thus for example one
community may focus on population movements, ano<strong>the</strong>r on housing development and still a third on
engineering aspects.
The structure shown in Figure 1 meets <strong>the</strong> requirements <strong>of</strong> changing environment at a broad level.
Here <strong>the</strong> knowledge communities create knowledge that contributes to a common vision. The vision is
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Igor Hawryszkiewycz
determined by a coordinating group, which is composed <strong>of</strong> members from each <strong>of</strong> <strong>the</strong> knowledge
communities to ensure collaboration in choosing an agreed upon vision. The agreement includes
ways individual models will work towards a common goal. There is a monitoring community, or group
<strong>of</strong> people, who monitor progress to <strong>the</strong> agreed upon vision and recommend assistance when needed.
This assistance may take <strong>the</strong> form assisting negotiation to ensure community models are consistent
or providing expertise in managing <strong>the</strong> communities.
Develop vision
Develop guidelines
Develop and monitor
success factors
Ecosystem
memory
Develop vision
Maintain guidelines
Energy
Housing
Health
Education
Coordinating
group
Monitoring activities
Provision <strong>of</strong> assistance
Monitor community activity
against guidelines and
success factors
Report on problems
Feedback loop
Analyze outstanding questions –
prepare new expert groups needed –
Reorganize communication to
facilitate knowledge sharing. Setup
and maintain knowledge brokering
and facilitate transdisciplinary issues.
Knowledge
communities
Develop models and evaluate and
make proposals
Take local actions within global
parameters
Respond to changes in
environment
Monitor external environment
Figure 1: The community architecture
Each community has a particular purpose, defined in <strong>the</strong> boxes in Figure 1. For example,
The knowledge communities create specific domain knowledge,
The coordinating community sets <strong>the</strong> mission,
The monitoring community monitors outcomes from <strong>the</strong> knowledge communities.
The assistance communities assist knowledge communities if needed to work towards <strong>the</strong>
mission.
2.1 An example
Figure 2 is an example for process outsourcing as typical in processes now commonly found in
networked enterprises (McAfee, 2006). Each ellipse represents a community. The black dots
represent <strong>the</strong> main roles in <strong>the</strong> community. The disk shapes are <strong>the</strong> artifacts that are used or
produced in <strong>the</strong> community. The knowledge communities here are:
The customer knowledge community that knows what is needed by <strong>the</strong> customer base. The main
role is <strong>the</strong> client manager and it produces <strong>the</strong> system requirements.
Application s<strong>of</strong>tware that is knowledgeable on ways to create applications that satisfy user needs
by developing application programs.
Vendor s<strong>of</strong>tware knowledge community that is knowledgeable in <strong>the</strong> use <strong>of</strong> vendor s<strong>of</strong>tware, and
provides <strong>the</strong> s<strong>of</strong>tware used to develop <strong>the</strong> application programs.
The infrastructure community that provides <strong>the</strong> network infrastructure for <strong>the</strong> system.
The communities overlap through <strong>the</strong>ir roles. For example <strong>the</strong> coordination community is made up <strong>of</strong>
<strong>the</strong> major roles in each community to set <strong>the</strong> vision, usually <strong>the</strong> quality requirements <strong>of</strong> <strong>the</strong> system.
The vision here is set through negotiations between <strong>the</strong> client and <strong>the</strong> application community, which
will provide <strong>the</strong> outsource service. In this model new knowledge is created through <strong>the</strong> collaboration
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Igor Hawryszkiewycz
between communities. For example, <strong>the</strong> collaboration between application developers and vendor
s<strong>of</strong>tware creates new knowledge <strong>of</strong> how vendor s<strong>of</strong>tware can be used to create applications that
satisfy user requirements.
Customer
knowledge
community
Client liaison
Monitoring
Customer CustomeCommunity
r
System
performance
Infrastructure
knowledge
community
Process
requirements
Client
manager
Infrastructure
manager
Figure 2: Communities in process outsourcing
2.2 Modeling <strong>the</strong> system
Coordination
Community
Operations
manager
Application
knowledge
community
Vendor
manager
Application
program
Vendor
s<strong>of</strong>tware
knowledge
community
Vendor
s<strong>of</strong>tware
Modeling tools in such environments must be able to combine selected concepts to model
relationships between communities. It should be sufficiently flexible to show any <strong>of</strong> any number <strong>of</strong>
selected relationships. The modelling method described here is implemented on <strong>the</strong> open modelling
platform at <strong>the</strong> University <strong>of</strong> Vienna. The method known as MelCa allows models to be set up from
different perspectives and maintains cross references between models as allowed by <strong>the</strong> open
modelling platforms. New objects can be easily added to each perspective. The concepts for each
perspective are shown in <strong>the</strong> center and can be easily selected and plugged into <strong>the</strong> model.
Figure 3 shows <strong>the</strong> high level community structure illustrated in Figure 2. It shows communities, roles
and artifacts that were described in Figure 2. The roles are represented by circles and communities by
organizational symbols. There is a link between <strong>the</strong> roles and communities. Notes can be attached to
all components.
An aggregation feature, shown as <strong>the</strong> shaded areas, can be used to identify <strong>the</strong> coordination or
monitoring communities. For example, <strong>the</strong> roles responsible for <strong>the</strong> four communities all participate in
goal setting. These goals are implemented as contracts between <strong>the</strong> different parties.
The modeling method can <strong>the</strong>n be used to look at knowledge responsibilities within <strong>the</strong> system. It can
also define <strong>the</strong> services needed. To this <strong>the</strong> knowledge communities are described in more detail.
2.3 Expanding to information flows
Figure 4 shows a detailed model <strong>of</strong> <strong>the</strong> application knowledge community. It uses <strong>the</strong> idea <strong>of</strong> an
Enterprise Social Network (Hawryszkiewycz, 2010) to model knowledge flows in enterprises. The
ESN shows <strong>the</strong> responsibilities <strong>of</strong> roles and interactions between <strong>the</strong>m. Figure 4 shows a number <strong>of</strong>
additional roles found in <strong>the</strong> application knowledge community. The main additional roles are:
The fault coordinator to take responsibility for dealing with any fault reports raised by <strong>the</strong> system
clients, and
The development manager who takes responsibility for implementing any agreed changes from
<strong>the</strong> client.
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Igor Hawryszkiewycz
There are o<strong>the</strong>r roles such as <strong>the</strong> document manager to store design documents, change analyst to
analyse <strong>the</strong> impact <strong>of</strong> a making a change fault repair manager who maintains contact with <strong>the</strong> client’s
customers. These roles need services to realize <strong>the</strong>ir responsibilities. This paper suggests that living
systems <strong>the</strong>ory be used to identify <strong>the</strong>se services. The model shows <strong>the</strong> interactions between <strong>the</strong>
roles, with <strong>the</strong> goal <strong>of</strong> developing a collaborative architecture (Pisano, Verganti, 2008) that formally
defines <strong>the</strong> communication paths to be supported for knowledge sharing and creation.
Figure 3: Modeling community structure
Knowledge Flows within a Community
One criterion for design is that a system can deal completely with all messages at its interface. Living
systems <strong>the</strong>ory (Miller, 1978) provides guidelines for structuring information flows identifying
“subsystems” that are needed to process information in arriving messages. This has been used
modelling organizational systems (Lane, Swanson, 1993) or Engineering Systems (Scott Cowan,
2006). Figure 5 provides an overview <strong>of</strong> <strong>the</strong> information processing that needs to be supported based
on living systems <strong>the</strong>ory. Fundamentally each community must be organized to process “messages”
from <strong>the</strong> environments or from o<strong>the</strong>r communities. The subsystems here must include receipt <strong>of</strong> <strong>the</strong>
message (S1), its interpretation (S2) and decoding (S3) into a format useful to <strong>the</strong> community. The
decoding identifies those messages that relate to <strong>the</strong> community. The message is distributed to
relevant roles (S4) associating it with existing knowledge to create new knowledge (S6) and decisions
on what to do with <strong>the</strong> new knowledge (S7). O<strong>the</strong>r subsystems include storing information (S5). The
storage corresponds to organizational learning and takes place when more than two messages are
associated to create new knowledge. This is followed by sending out messages outside <strong>the</strong>
community (S8). Here <strong>the</strong> label Si is used to identify <strong>the</strong> subsystem.
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Figure 4: Modeling knowledge subsystems
S1. Input
conversion
S2. Internal
conversion
Igor Hawryszkiewycz
S3. Decoding –
changing into useful
information
S4. Channeling–
moving information
about
S5. Memory – keep record <strong>of</strong> actions
(learning)
S6. Association –
combining messages
Community
S7. Decider looks at
messages and decides
on course <strong>of</strong> action
S8. Encoder sends
information out
Figure 5: Guideline 2 - information subsystems in living systems <strong>the</strong>ory
These subsystems can now be used as guidelines for <strong>the</strong> completeness <strong>of</strong> information or knowledge
flows. What is <strong>the</strong>n needed is to follow <strong>the</strong> flow <strong>of</strong> each message through <strong>the</strong> system. The message
can <strong>the</strong>n be used in a number <strong>of</strong> ways. These are:
To trace through <strong>the</strong> system to ensure that each message is handled in its entirety
Identify <strong>the</strong> services needed by each role to process <strong>the</strong> message, and
Ensure that learning takes place through <strong>the</strong> storage <strong>of</strong> outcomes <strong>of</strong> interactions between
associations.
Some such flows are illustrated in Figure 4 with messages labeled by <strong>the</strong> identifier. One message in
Figure 4 is a request for change to system requirements. Here a request for a change request is
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Igor Hawryszkiewycz
made by <strong>the</strong> client manager to <strong>the</strong> operations manager by <strong>the</strong> client manager, who decodes it and
transmits it to a meeting to consider <strong>the</strong> request. The request and any decision are recorded by <strong>the</strong>
document manager. It is at <strong>the</strong> meeting that all previous information is associated with <strong>the</strong> request
and where learning on managing change takes place. Similarly a fault report is transmitted to a ‘fault
report analysis meeting’ composed <strong>of</strong> <strong>the</strong> fault coordinator, fault report manager and repairers to
analyze <strong>the</strong> fault and suggest a repair action.
2.4 Extending to complexity
There are now many systems that exist in complex environments that need to deal with unanticipated
messages. System evolution in complex environments has been described systematically using
complexity <strong>the</strong>ory as interpreted in (Kovacs, 2004, Merali, 2006) for information systems and
expressed in terms <strong>of</strong> changes to relationships. Broadly changes to a system can be described as:
Support emergence to deal with complex problems. One example here would be where <strong>the</strong> fault
coordinator finds that <strong>the</strong> fault cannot be repaired using what has been learned earlier and needs
to create a special team to deal with <strong>the</strong> fault. This requires <strong>the</strong> emergence <strong>of</strong> a new activity
‘Transient report activity’.
The ability to self organize at local levels in response to a wide variety <strong>of</strong> external changes which
implies changes to network operations to meet newly negotiated requirements. This <strong>of</strong>ten
requires reassessment <strong>of</strong> responsibilities and rearranging relationships between people in <strong>the</strong>
business. This can mean adding new artifacts, changing people responsibilities and adding new
roles,
Ways to quickly set up new relationships that add to a person’s knowledge (Cross, Thomas,
2011) needed to accomplish <strong>the</strong>ir responsibility.
The community model easily satisfies <strong>the</strong>se as it is possible to create new communities as needed.
Responding to unanticipated events through <strong>the</strong> creation <strong>of</strong> special purpose communities
(Hawryszkiewycz, 2007) – for example to create a team to respond to a system faults requiring
identification <strong>of</strong> <strong>the</strong> cause <strong>of</strong> <strong>the</strong> fault.
3. Summary
This paper described a framework for designing collaborative architectures to maintain collaboration
between communities. It defined a community architecture as a combination <strong>of</strong> knowledge,
monitoring, coordinating and assisting communities. It <strong>the</strong>n defined ways to model such architectures
in detail. The detailed modeled focused on selected relationships. It <strong>the</strong>n defined a way to model
knowledge flows based on living systems <strong>the</strong>ory. This defined message flows through <strong>the</strong> system and
<strong>the</strong> responsibilities for processing for each role. These are <strong>the</strong>n used to define <strong>the</strong> services to be
provided for each role.
References
Cova, B., Salle, R. (2008): “Marketing solutions in accordance with S-D logic: Co-creating value with customer
network actors” Industrial Marketing Management 37, pp. 270-277, Elsevier Press
Cross, R., Thomas, R. (2011): “A Smarter Way to Network” Harvard Business Review, July-August, 2011, pp.
149-153.
Hawryszkiewycz, I.T. (2010): Knowledge Management: Organizing <strong>the</strong> Knowledge Based Enterprise: Palgrave-
Macmillan.
Hawryszkiewycz, I.T. (2007): “Lightweight Technologies for Knowledge Based Collaborative Applications”
<strong>Proceedings</strong> <strong>of</strong> <strong>the</strong> IEEE CEC/EEE2007 <strong>Conference</strong> on E-Commerce Technology, Tokyo, July 2007, pp.
255-264.
Kovacs, A.I., Ueno, H. (2004): “Towards Complex Adaptive Information Systems” <strong>Proceedings</strong> <strong>of</strong> <strong>the</strong> 2 nd
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233

Facilitating Distributed Networks <strong>of</strong> Knowledge: A
Boundary Management Perspective
Eli Hustad 1 and Aurilla Aurelie Bechina 2
1
University <strong>of</strong> Agder, Kristiansand, Norway
2
Buskerud University College, Kongsberg, Norway
Eli.Hustad@uia.no
Aurillaa@hihm.no
Abstract: Today, <strong>the</strong>re is a large recognition amongst academics and practitioners that Innovation capability and
organizational performance can be stimulated by fostering knowledge sharing and creation. Several
organizational initiatives have focused on building communities <strong>of</strong> practice within an organization in order to
create a platform where employees can share experiences and insights. The focus in this paper is on one type <strong>of</strong>
network structure termed Distributed Networks <strong>of</strong> Knowledge (DNoK). This network structure constitutes an intercommunity
formation consisting <strong>of</strong> multiple co-located communities where participants belong to a co-located
community as well as <strong>the</strong> distributed network, and knowledge sharing occurs between dispersed participants
crossing different practices and geographical locations. The last decade has seen a debate whe<strong>the</strong>r <strong>the</strong>
increased formalization can negatively or positively affect <strong>the</strong> creativity <strong>of</strong> communities <strong>of</strong> practice. Communities
<strong>of</strong> practice were originally conceptualized as emerging, self-organizing, and socially constructed systems. In <strong>the</strong>
management literature, scholars have concentrated on how to enable a climate for <strong>the</strong>se groups by exploiting
<strong>the</strong>m more effectively. By cultivating <strong>the</strong>ir activities, <strong>the</strong>y assume that communities <strong>of</strong> practice may stimulate
innovation and organizational performance. Some previous research studies, however, demonstrate that
increased formalization can negatively affect <strong>the</strong> creativity <strong>of</strong> communities <strong>of</strong> practice. Moreover, <strong>the</strong> role <strong>of</strong> <strong>the</strong>
leadership has been extensively discussed in communities <strong>of</strong> practice setting. However, this paper intends to
shed a new light by exploring <strong>the</strong> Boundary Management perspective in order to enable <strong>the</strong> knowledge sharing
and creation within this specific context <strong>of</strong> Distributed Network <strong>of</strong> Knowledge. To this end, we have conducted an
investigation <strong>of</strong> <strong>the</strong> role <strong>of</strong> leadership styles in four different distributed networks <strong>of</strong> knowledge in a multinational
firm. The leadership style as a boundary spanner included motivation <strong>of</strong> geographically dispersed members to be
active participants, ensuring an autonomous environment for knowledge creation, acknowledging contributions,
building trust and identity and bringing necessary resources into <strong>the</strong> networks to provide available time to
participate and <strong>the</strong> required collaboration infrastructure.
Keywords distributed networks <strong>of</strong> knowledge, leadership style, cultivation, boundary spanner, boundary
management
1. Introduction
Researchers and practitioners alike have suggested that communities <strong>of</strong> practice (CoPs) are
significant for knowledge sharing, knowledge creation, learning and innovation within organizations
(Brown & Duguid 2001; Lave & Wenger 1991). The concept <strong>of</strong> CoP describes self-organizing groups
that emerge naturally consisting <strong>of</strong> individuals conducting practice-related tasks. Several
organizational initiatives have focused on building communities <strong>of</strong> practice within an organization in
order to create a platform where employees can share experiences and insights.
The focus in this paper is on one type <strong>of</strong> network structure termed distributed network <strong>of</strong> knowledge
(DNoK). This network structure constitutes an inter-community assembly consisting <strong>of</strong> multiple colocated
communities where participants belong to a co-located community as well as <strong>the</strong> distributed
network, and knowledge sharing occurs between dispersed participants. Within an organization,
DNoKs typically consist <strong>of</strong> weaker ties linking geographically dispersed individuals across an
organization that are working on similar tasks using a similar base <strong>of</strong> knowledge (Granovetter
1973).In distributed work, participants within <strong>the</strong>se distributed communities <strong>of</strong>ten use ICT-based
communication tools such as email, videoconferences, intranet and o<strong>the</strong>r collaboration tools to share
knowledge.
To ‘manage’ organizational groups like communities <strong>of</strong> practice, seem to be somewhat paradoxical
given that <strong>the</strong> most important characteristics <strong>of</strong> such communities are emerging, self-organizing
groups, developing over time, built upon trust and personal relationships (e.g. Brown & Duguid 1991;
Lave & Wenger 1991). Often <strong>the</strong>ir existence and interactions are spontaneous and beside <strong>the</strong> control
mechanisms <strong>of</strong> <strong>the</strong> formal organizations, and thus <strong>the</strong>y have to be distinguished from project teams
which are goal- and deadline oriented (Wenger & Snyder 2000)
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Eli Hustad and Aurilla Aurelie Bechina
However, lately several business managers and researchers have realized a need for embedding
‘communities <strong>of</strong> practice’ as a proactive knowledge management initiative by cultivating <strong>the</strong>m as <strong>the</strong>
keystone <strong>of</strong> <strong>the</strong> knowledge management strategy (Wenger et al. 2002). In this sense, <strong>the</strong> concept
itself is undergoing a change, from being a ‘pull’ informal knowledge initiative from <strong>the</strong> employees to a
‘push’ and formalized knowledge initiative from <strong>the</strong> management’s strategy agenda. Therefore, it is
important to understand <strong>the</strong> role <strong>of</strong> <strong>the</strong> leadership in <strong>the</strong> building and <strong>the</strong> sustainability <strong>of</strong> <strong>the</strong>
communities <strong>of</strong> practice and more specifically in a DNoK. In particular, a distributed setting is
challenging since <strong>the</strong> existence <strong>of</strong> different pr<strong>of</strong>essional cultures and attitudes prevail.
In addition, considering <strong>the</strong> fact that innovation usually happens at boundaries between disciplines or
business units <strong>the</strong>re is a need to investigate fur<strong>the</strong>r <strong>the</strong> potential <strong>of</strong> knowledge flow and <strong>the</strong>ir
challenges across pr<strong>of</strong>essional boundaries (Carlile 2004). The group structure, interaction and
relationship amongst people across boundaries <strong>of</strong> a distributed community need to be redefined by
applying <strong>the</strong> Boundary spanning principles. Boundary spanning involves activities that occur at
internal or external boundaries <strong>of</strong> organizations. The main challenge relies on <strong>the</strong> need to find
adequate leaders who are able to bring toge<strong>the</strong>r people across traditional boundaries and convincing
people who are separated in terms <strong>of</strong> location, division or function to share knowledge and contribute
to a lasting working relationship (Ansett 2005; Stanton & Stam 2003).
Our research study aims to ga<strong>the</strong>r an understanding on to cultivate and facilitate DNoKs to enable
<strong>the</strong>m to share and create knowledge, and <strong>the</strong> following research questions are focused in this
research: How can organizations manage distributed networks <strong>of</strong> knowledge to ensure effective
knowledge sharing and knowledge creation? How should <strong>the</strong> role <strong>of</strong> a “leader” within a community act
to stimulate <strong>the</strong> participants to share and create knowledge across boundaries? To answer <strong>the</strong>
research questions, we intend to explore <strong>the</strong> boundary management perspective in order to better
grasp an understanding <strong>of</strong> <strong>the</strong> community building and how to sustain <strong>the</strong>m over <strong>the</strong> time. More
specifically, we aim to investigate <strong>the</strong> role and <strong>the</strong> style <strong>of</strong> <strong>the</strong> Boundary Spanner in cultivating <strong>the</strong>
DNoKs.
To this end, we investigated <strong>the</strong> leadership styles in four different distributed networks <strong>of</strong> knowledge
<strong>of</strong> a Norwegian multinational company operating in <strong>the</strong> marine insurance industry. We utilize
perspectives <strong>of</strong> boundary management to explain our findings.
The paper is organized as follows. The following section focuses on <strong>the</strong> concept <strong>of</strong> DNoK and
knowledge sharing across boundaries. Section three provides an overview <strong>of</strong> <strong>the</strong> Boundary Spanner
role and its relevance for DNoKs. Section four describes <strong>the</strong> research context and method, and
section five reports <strong>the</strong> main results from this study. In section six, we discuss our findings and finally
in <strong>the</strong> last part we provide our conclusion and implications.
2. Sharing knowledge across boundaries – distributed networks <strong>of</strong> knowledge
Due to <strong>the</strong> current changing business environment, organizations are facing challenges <strong>of</strong> global
competitiveness. The quest for competitiveness and sustainability has led to recognition <strong>of</strong> innovation
as a vital ingredient for survival and pr<strong>of</strong>itability in <strong>the</strong> knowledge-based economy. Knowledge is seen
by many as a key source <strong>of</strong> competitive advantage and innovation in organizations.
In order to cope with those challenges, organizations need to be able to manage <strong>the</strong> highly distributed
diversified knowledge. Companies understanding <strong>the</strong> need to harness knowledge are aware about
<strong>the</strong> decisive issue <strong>of</strong> creating a work environment that foster knowledge sharing mechanisms and
learning capabilities within and across organizations. It is recognized as well that knowledge sharing
and learning mechanisms are highly complex processes to promote in <strong>the</strong> organization (Allix 2003).
With <strong>the</strong> realization <strong>of</strong> <strong>the</strong> value <strong>of</strong> knowledge and learning, organizations have begun looking at how
to increase organizational knowledge to gain competitiveness (Husted & Michailova 2002;
Michailova & Gupta 2005). An important ingredient <strong>of</strong> a rounded knowledge management initiative is
<strong>the</strong> application <strong>of</strong> <strong>the</strong> concept <strong>of</strong> <strong>the</strong> community <strong>of</strong> knowledge where people share expertise and
insights.
A broad typology <strong>of</strong> communities has emerged, ranging from epistemic communities (Haas 1992) to
communities <strong>of</strong> practice (Wenger & Snyder 2000). Several research studies highlighted <strong>the</strong> benefits
and drawbacks <strong>of</strong> building communities <strong>of</strong> practices in order to foster knowledge sharing within <strong>the</strong>
context <strong>of</strong> related discipline or within an organization. However, <strong>the</strong>re is still a need to investigate <strong>the</strong>
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Eli Hustad and Aurilla Aurelie Bechina
challenges in bringing people across boundaries, separated by locations and having different
expertise in a multinational company.
For purpose <strong>of</strong> this paper we will use <strong>the</strong> term distributed network <strong>of</strong> knowledge (DNoK), which we
define as: “a flexible group <strong>of</strong> pr<strong>of</strong>essionals and experts operating in a geographically dispersed
context, sharing common interests and experiences related to business topics, using a suitable
context (‘ba’) for <strong>the</strong>ir knowledge activities, <strong>the</strong>reby building a common store <strong>of</strong> knowledge aiming to
achieve learning and innovation”.
The definition is grounded in Wenger’s (1998) work, and <strong>the</strong> concept <strong>of</strong> ‘ba’ is adopted from Nonaka
and Konno (1998), which symbolize a shared space - physical and/or virtual <strong>of</strong> emerging relationships
and provides a platform for knowledge creation.
Within a multinational organization, knowledge is likely to be more dispersed according to <strong>the</strong> number
<strong>of</strong> locations represented. Thus, a multinational context is challenging for knowledge sharing and
creation within distributed networks <strong>of</strong> knowledge (Barrett et al. 2004). The participants <strong>of</strong> <strong>the</strong>se
networks are located in different geographical business <strong>of</strong>fices, and <strong>the</strong>y are dependent on
information and communication technologies (ICT) to sustain a relationship and for performing
knowledge activities. The development <strong>of</strong> a sense <strong>of</strong> mutual accountability to <strong>the</strong> group may be
hindered since <strong>the</strong> dispersed nature may prevent <strong>the</strong> communities’ members from spontaneously and
frequently interact on a regular basis (Finholt et al. 2002). This may affect <strong>the</strong> group’s ability to
develop <strong>the</strong> necessary degree <strong>of</strong> trust, commitment, and respect (Orlikowski 2002). Thus <strong>the</strong>
facilitators <strong>of</strong> <strong>the</strong>se networks have a challenging task in building strong community relationship and
sustainable networks.
3. The boundary spanner role and DNoK
The term boundary is <strong>of</strong>ten associated with negative connotations because it conveys limitations and
lack <strong>of</strong> access (Wenger 2000). A boundary interaction is usually an experience <strong>of</strong> being exposed to a
foreign competence, which enhances learning. A potential boundary represents both a source <strong>of</strong> and
a barrier to innovation (Carlile 2002). Boundaries can enhance creativity where radical new insights
arise from different perspectives. The dark side <strong>of</strong> boundaries, however, is that <strong>the</strong>y can cause
breakdowns <strong>of</strong> group relations because <strong>of</strong> fragmentation, misunderstanding and disconnection. For
instance, managing relationships in social work practice can present many challenges to pr<strong>of</strong>essional
boundaries (Stanton & Stam 2003).
Boundary spanners have different roles in <strong>the</strong> form <strong>of</strong> ‘organizational translators’ or intermediates
(Brown & Duguid 1998). Boundary spanners in units with complex tasks may act as “communication
stars” (Tushman 1977) since <strong>the</strong>y are contacted frequently because <strong>the</strong>y are perceived to have workrelated
experience. In addition, <strong>the</strong>se “stars” had significantly more communication than “non-stars”
with areas in <strong>the</strong> larger corporation and with areas outside <strong>the</strong> organization.
Individuals who occupy boundary spanning roles do also facilitate communication and sharing <strong>of</strong>
expertise by linking groups who are separated in terms <strong>of</strong> location, division or function (Levina &
Vaast 2005; Pawlowski & Robey 2004). Thus, we see leaders or facilitators <strong>of</strong> DNoK enacting in
boundary spanning roles trying to connect participants across divisions and geographical locations in
a multinational organization. Boundary spanning roles constitute one means for innovative
organizations to deal with <strong>the</strong> necessity <strong>of</strong> cross-boundary communication. These roles evolve in <strong>the</strong>
organization’s communication network to fulfill <strong>the</strong> essential function <strong>of</strong> linking <strong>the</strong> organization’s
internal network to external sources <strong>of</strong> information (Tushman 1977). Boundary spanners, however,
may experience conflicts and stress because difficult negotiations at a boundary may lead to
marginalization and burn out at <strong>the</strong> work place. Fur<strong>the</strong>rmore, it can be difficult to find individuals
willing to perform <strong>the</strong>se roles as <strong>the</strong>y are expected to be sensitive to social cues (Caldwell and
O'Reilly 1982, cited in Levina & Vaast 2005).
A boundary practice represents activities for taking care <strong>of</strong> interactions across different boundaries
within organizations. In distributed settings, this could be urgent for obtaining integration across
geographically dispersed <strong>of</strong>fices and departments. For instance, cross-disciplinary projects may be
efficient boundary practices where participants from various communities contribute with knowledge
from different practices and <strong>of</strong>fices. Facilitators <strong>of</strong> DNoK would typically take part in boundary practice
activities to connect participants from across different geographical locations and functions <strong>of</strong> a
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Eli Hustad and Aurilla Aurelie Bechina
multinational company. Thus, to succeed <strong>the</strong>y would benefit from having competency about <strong>the</strong> most
challenging boundaries within a particular organizational and/or networking context.
4. Case description and method
Insure (pseudonym) is a small multinational firm operating in <strong>the</strong> marine insurance industry. The firm
dates back to 1907 when a mutual protection and indemnity (P&I) association division was formed to
provide liability insurance for regional sailing ships. After an organizational merger between
departments from two o<strong>the</strong>r companies, Insure today has three different business divisions that
provide claims handling and underwriting activities for ships owners (P&I division), <strong>the</strong> hull and
machinery market (Marine division), and <strong>the</strong> oil and gas industry (Energy division). With <strong>of</strong>fices in ten
different locations <strong>of</strong> Europe, Asia and America, Insure has approximately 350 employees comprising
a number <strong>of</strong> knowledge disciplines, e.g., lawyers, financial and maritime experts, engineers, ITspecialists
and knowledge manager. In addition, numerous correspondents assist Insure with <strong>the</strong>ir
local expertise worldwide.
A central objective in Insure has been to ensure integration <strong>of</strong> knowledge across geographically
distributed locations <strong>of</strong> <strong>the</strong> company. This involved integration and optimal utilization <strong>of</strong> <strong>the</strong> overall
organizational expertise across distributed locations. Building communities and teams are initiatives
with high priority.
Through open-ended interviews (in total 35 interviews were conducted in five different locations), field
observations and document analysis, identification <strong>of</strong> several DNoKs became possible throughout <strong>the</strong>
organization. Members <strong>of</strong> <strong>the</strong>se networks were from different types <strong>of</strong> divisions, functional areas,
geographical locations, pr<strong>of</strong>essional specialties, and project teams. These networks interweave and
interact with each o<strong>the</strong>r across various boundaries, independent <strong>of</strong> <strong>the</strong> organization’s hierarchical
structure. While some <strong>of</strong> <strong>the</strong> networks have a stable composition <strong>of</strong> members over time, o<strong>the</strong>rs are
more ad-hoc and fluid regarding topics, purpose and membership. The management did encourage a
networking culture by connecting experts through both media-supported pr<strong>of</strong>essional events and
social face-to-face meetings. In situations where urgent topics needed attention from specialists,
some managers occasionally ‘pushed’ <strong>the</strong> establishment <strong>of</strong> ad-hoc distributed networks. Several <strong>of</strong>
<strong>the</strong> DNoKs identified were geographically dispersed in which participants were located at different
geographical business <strong>of</strong>fices, and thus <strong>the</strong>y were dependent on ICT to sustain a relationship.
The process <strong>of</strong> data collection and analysis proceeded in accordance with <strong>the</strong> interpretive research
tradition and hermeneutic circle (Klein & Myers 1999; Walsham 2006). All <strong>the</strong> interviews were
digitally recorded, and fully transcribed. The empirical material was fur<strong>the</strong>r systemized, and reduced
(Miles & Huberman 1994). Then a meaning condensation was done by compressing long statements
into briefer statements to get <strong>the</strong> main sense out <strong>of</strong> <strong>the</strong> text, and for creating <strong>the</strong>mes by interpreting
<strong>the</strong> natural meaning units (Kvale & Brinkmann 2009). The process <strong>of</strong> data collection and analysis
proceeded iteratively, allowing <strong>the</strong>mes to emerge and <strong>the</strong>n to be examined more deeply as relevant.
Finally, <strong>the</strong> <strong>the</strong>mes were recontextualized within broader frames <strong>of</strong> references. We combined existing
<strong>the</strong>ories and concepts from <strong>the</strong> literature (e.g. communities <strong>of</strong> practice, innovation, knowledge
management, boundary management) with empirical findings to get a broader understanding <strong>of</strong> <strong>the</strong>
phenomenon <strong>of</strong> facilitation and <strong>the</strong> boundary spanning role in DNoK.
5. Key findings
Several distributed networks <strong>of</strong> knowledge were identified during <strong>the</strong> investigation. Findings from <strong>the</strong>
case study demonstrate different characteristics <strong>of</strong> <strong>the</strong> networks identified and made it possible to
divide <strong>the</strong> networks into three main categories 1) problem solving networks; 2) business improvement
networks; and 3) innovation networks. All networks consisted <strong>of</strong> members working geographically
dispersed from one ano<strong>the</strong>r where participants from two or more locations were involved. Table 1
depicts different characteristics <strong>of</strong> <strong>the</strong>se networks in terms <strong>of</strong> structural characteristics, knowledge
activities conducted, <strong>the</strong> communication channels used by <strong>the</strong> networks, key challenges, and
leadership and formalism. In <strong>the</strong> following paragraphs, examples from <strong>the</strong>se findings are discussed.
Distributed knowledge activities. Members <strong>of</strong> DNoK conduct different types <strong>of</strong> knowledge activities
and have different tasks. The contract consultancy network is an expert group for solving problems
related to complex contracts, which require legal competencies. The claims handling network and <strong>the</strong>
underwriting network discuss daily work practices to improve business processes and organizational
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Eli Hustad and Aurilla Aurelie Bechina
practices. Finally, <strong>the</strong> product development network is involved in innovative activities through
development <strong>of</strong> new products and refining existing insurance products.
Table 1: Characteristics <strong>of</strong> distributed networks <strong>of</strong> knowledge in Insure
Characteristics <strong>of</strong>
Distributed
Networks <strong>of</strong>
Knowledge
Structural issues
Number <strong>of</strong>
geographical
locations, members,
business divisions,
business functions,
pr<strong>of</strong>essional
background
Problem solving
networks
2 locations, 12 core
members, lawyers
from
P & I claims, claims
defense and
underwriting
business areas
Business
improvement
networks
6 locations,
approximately 50 core
members, 30 peripheral
members; senior and
junior underwriters from
P & I, Marine and
Energy business
divisions, insurance
education
Business improvement
networks
7 locations 14 core
members, 13 peripheral
members; claims
handlers from all three
business divisions
lawyers and financial
experts
Innovation networks
Geographically
distributed, 5 locations,
10 core members, 35
peripheral members.
Mostly participants from
P & I, Marine and
Energy division became
involved over time
Participants 12 core members 50 core members, 30 14 core members, 13 10 core members, 35
peripheral members peripheral members peripheral members
Number <strong>of</strong>
geographical
locations
2 locations 6 locations 7 locations 5 locations
Business
P&I P&I, Marine, Energy P&I, Marine, Energy P&I, (Marine and
division(s)
Energy – involved over
time).
Business
Claims, claim Underwriting Claims Claims, underwriting
function(s)
defense,
underwriting
Pr<strong>of</strong>essional Mainly lawyers Several; finance, lawyers and financial Several; finance,
background
lawyer, former seafarer, experts
lawyer, former seafarer,
maritime experts,
maritime experts,
financial experts
financial experts
Distributed
Discussing complex Discussing underwriting Discussing plans for Development <strong>of</strong> new
knowledge
contracts questions guidelines, world new business
marine insurance
activities
from clients,
market rumors and establishments,
products, refinements
requests from trends, fresh updates discussing complex and and fur<strong>the</strong>r
underwriters to legal on market dynamics, new claims, loss
development <strong>of</strong> existing
expert group, updating new clients, prevention-, cover- and products
problem solving, discussions, assessing underwriting issues, and
discussion, training risk acceptance, news, exchange <strong>of</strong> legal
and learning
administration
experiences and
information
expertise with <strong>the</strong> goal
<strong>of</strong> creating
improvements
Communication E-mail discussions Videoconferences Telephone conferences E-mail
channels
Intranet portal and E-mail
E-mail
Intranet portal and tools
tools
Intranet portal and tools
Key Challenges Time pressure, Technological
Coordination challenges Limited participation
resources
infrastructure
Different time-zones from experts situated in
Coordination and instabilities,
branch <strong>of</strong>fices.
Responsibility coordination
Dominance <strong>of</strong> co-
challenges, exclusion <strong>of</strong>
located head <strong>of</strong>fice
<strong>of</strong>fices
members. Situational
constraints and socialpsychological
distance
Formalism and Autonomy, informal. Mandated. Fixed Fixed agendas and Informal ad hoc
leadership
No fixed agendas or agendas and meetings. meetings.
meetings. Gradually
fixed meetings
more formalized,
No appointed No appointed leader. Head <strong>of</strong> P & I claims mandated.
leader, different
handling coordinates <strong>the</strong>
participants take
network
Two lawyers coordinate
turns <strong>of</strong>
responsibility
all sub-networks
Formalism and leadership in DNoK. The communities described here have both similarities and
differences in terms <strong>of</strong> leadership and coordination. In <strong>the</strong> contract consultancy group, <strong>the</strong> members
<strong>of</strong> were struggling because <strong>of</strong> missing coordination and time to participate. The consequence was
less spontaneous interaction that negatively affected <strong>the</strong> activity <strong>of</strong> <strong>the</strong> network. The network
dissolved during <strong>the</strong> study after approximately two years <strong>of</strong> existence. Ad hoc coordination, time
pressure, and poor contributions from some <strong>of</strong> <strong>the</strong> participants in <strong>the</strong> email discussions, are
conceivable reasons why <strong>the</strong> network did not sustain. According to some <strong>of</strong> <strong>the</strong> informants, <strong>the</strong>
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Eli Hustad and Aurilla Aurelie Bechina
outcome <strong>of</strong> this type <strong>of</strong> community could be more fruitful if activities had become more structured and
coordinated.
The product development network changed in size, reach, and formality from being a completely
informal, unstructured community <strong>of</strong> practice with ad hoc face-to-face meetings to more formalized,
structured, established networks with distributed meetings that were more fixed. The product
development network became highly acknowledged by management. Since <strong>the</strong> first community <strong>of</strong>
practice created a new successful product, <strong>the</strong> management wants to implement similar initiatives to
ensure continuous innovation, and thus have ‘constructed’ new communities. Since two participants
are members <strong>of</strong> all <strong>the</strong>se communities, <strong>the</strong>y will stimulate cross-community interaction and transfer
knowledge between different communities <strong>of</strong> practice or sub-networks. Thus <strong>the</strong>y act as boundary
spanners and important ‘catalysts’ who ensure continuous discussion, contribution and interaction
between participants.
Recently, however, <strong>the</strong> management has added a new hierarchical level to <strong>the</strong> network. The topmanagement
needs to discuss new ideas that are quite unusual and controversial to ascertain a
defensible investment <strong>of</strong> <strong>the</strong> P&I association’s funds, which represent <strong>the</strong> ship owners’ capital. One
disadvantage <strong>of</strong> increasing <strong>the</strong> formality is that much <strong>of</strong> <strong>the</strong> creative spirit will be lost under <strong>the</strong>se
structural, formalized circumstances. Participants will decline to bring up new ideas because <strong>of</strong> <strong>the</strong>
increased hierarchical and bureaucratic path to bringing it forward. In <strong>the</strong> former practice, a new idea,
draft or refinement could be developed and implemented very quickly, even without going through <strong>the</strong>
committee.
6. Discussion
Previous research indicates that increased formalization can negatively affect <strong>the</strong> creativity <strong>of</strong>
communities (Thompson 2005). In particular, construction <strong>of</strong> communities <strong>of</strong> practice has caused a
dispute since this view diverges from <strong>the</strong> original view <strong>of</strong> communities <strong>of</strong> practice as socially
constructed systems (Lave 1988). In <strong>the</strong> management literature, scholars have concentrated on how
to enable a climate for <strong>the</strong>se groups by exploiting <strong>the</strong>m more effectively (Swan et al. 2002; Ward
2000). By cultivating <strong>the</strong>ir activities, <strong>the</strong>y assume that communities <strong>of</strong> practice may stimulate
innovation and organizational performance. In <strong>the</strong> same vein, Brown and Duguid (1998) emphasize
<strong>the</strong> critical role <strong>of</strong> communities <strong>of</strong> practice in innovative organizations, and that management should
utilize <strong>the</strong>se groups more intentionally through constructing and supporting <strong>the</strong>m.
In Insure, <strong>the</strong> product development network was not “constructed”, since <strong>the</strong> network emerged
naturally in <strong>the</strong> organization and was self-organizing in <strong>the</strong> beginning. In a way, <strong>the</strong> informal network
developed into a unit <strong>of</strong> research and development. The change <strong>of</strong> <strong>the</strong> network in itself represents a
radical innovation in <strong>the</strong> organization that has occurred over time. The central characteristics <strong>of</strong> <strong>the</strong>
network and its boundary practices have changed. The structure has changed involving more
particpants from different locations and division, <strong>the</strong> size and reach <strong>of</strong> <strong>the</strong> network has extended, and
<strong>the</strong> participants’ use <strong>of</strong> ICT has changed with time. According to Orlikowski and Robey (1991), an
organizational process is influenced by <strong>the</strong> structurational premise that human action and institutional
context interact and change over time. The product development network evolved by crossing internal
boundaries <strong>of</strong> <strong>the</strong> organization (divisions, functions, locations), <strong>the</strong> larger organizational boundary
through <strong>the</strong> role <strong>of</strong> boundary spanners (enacting in workshops at <strong>the</strong> branch <strong>of</strong>fices), and <strong>the</strong> external
boundaries (contact with customers and brokers). Hence, both internal and <strong>the</strong> external institutional
rules and culture influenced on <strong>the</strong> network’s practices.
As empirically grounded in o<strong>the</strong>r studies, leadership style and coordination <strong>of</strong> communities and
networks are important to achieve sustainable networks with virtuous development (Magnusson 2004;
Wenger et al. 2002). The coordinators <strong>of</strong> three <strong>of</strong> <strong>the</strong>se networks planned and facilitated events by
connecting links between members across boundaries <strong>of</strong> different organizational units. Findings
indicate that particularly <strong>the</strong> coordinator <strong>of</strong> <strong>the</strong> claims handling network managed to develop trust and
a strong network identity in this network by including new participants from <strong>the</strong> o<strong>the</strong>r divisions just
after <strong>the</strong> merger. The focus on identity and trust building are central research issues represented in
both community and team literature as important conditions for effective knowledge sharing and
collaboration (McDermott 1999). The community <strong>of</strong> practice literature recommends an active
leadership in <strong>the</strong> initial phase <strong>of</strong> <strong>the</strong> establishment <strong>of</strong> a network. As <strong>the</strong> network becomes established,
<strong>the</strong> leading <strong>of</strong> <strong>the</strong> network may be downplayed (Wenger et al. 2002). That does not seem to be <strong>the</strong>
case in this study, since <strong>the</strong> coordinators played active roles over time. However, <strong>the</strong> coordinators
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Eli Hustad and Aurilla Aurelie Bechina
had a supportive role ra<strong>the</strong>r than a controlling style (Highsmith 2000). The claims handling network
had establishing routines in terms <strong>of</strong> frequent weekly meetings, and formalized procedures for
reporting and electronic recording. In addition, <strong>the</strong> coordinator “pushed” <strong>the</strong> participants to contribute
in meetings. The coordinator was respected among <strong>the</strong> members. When <strong>the</strong> network needed specific
competencies, <strong>the</strong> selection <strong>of</strong> new members followed <strong>the</strong> reciprocal principle existing inside a
community <strong>of</strong> practice (Wenger 1998). Fur<strong>the</strong>rmore, <strong>the</strong> coordinator acknowledged contributions from
participants. Recognizing such contributions was also regarded as vital in <strong>the</strong> product development
network. Thus, to develop trust and confidence and to acknowledge each participant’s contribution
was essential. The coordinators characterize <strong>the</strong> meetings and interactions as informal, with
autonomy being highly respected. Acknowledgement from management and allocation <strong>of</strong> resources
made it easier for <strong>the</strong> members to participate.
The Boundary spanner’s role is crucial in organization by creating and cultivating an environment
where people share <strong>the</strong>ir knowledge across boundaries. The Boundary spanner plays as well an
important role in <strong>the</strong> organization by ga<strong>the</strong>ring important information <strong>of</strong> <strong>the</strong> external environment
through <strong>the</strong> distributed community and to turn it into strategic information.
In <strong>the</strong> following, we summarize keys capabilities which are important for a boundary spanner to have
to foster sustainable DNoK. The capabilities are based upon our findings and in particular <strong>the</strong>
challenging issues identified in <strong>the</strong> networks under study (table 1).
Make sure that <strong>the</strong> networks are acknowledged in <strong>the</strong> organization and by <strong>the</strong> leader group
identify issues and opportunities by ga<strong>the</strong>ring <strong>the</strong> relevant internal and external information (e.g.
innovation ideas)
facilitate and respect an autonomous environment for knowledge activities
motivate, build trust and identity in <strong>the</strong> network
acknowledge all contributions
to be a great communicator and listener and to understand <strong>the</strong> verbal and non-verbal
communication in a DNoK (e.g. implicit knowledge)
to possess to a high degree various s<strong>of</strong>t skills such as negotiation, mediation, coaching, openmindedness
to be optimistic, engaged, passionate, positive, and empathic
enable an technological infrastructure and collaboration tools which include participants from
across <strong>the</strong> organization
The effectiveness <strong>of</strong> <strong>the</strong> boundary spanner can be translated in fostering innovation capability within
<strong>the</strong>se distributed communities. It is quite challenging to measure <strong>the</strong> performance <strong>of</strong> a boundary
spanner over a short time. However, it is still possible to grasp an understanding <strong>of</strong> possible influence
<strong>of</strong> <strong>the</strong> boundary spanner have on <strong>the</strong> organization.
7. Conclusion and implications
The paper has focused on DNoKs and how to facilitate and cultivate <strong>the</strong>se kinds <strong>of</strong> networks. We
found that boundary management practices were important to make <strong>the</strong>se networks sustain and
grow.
Informal groups have proved to be important for effective communication and knowledge sharing in
distributed settings (Hildreth et al. 2000). The Insure case study identified several DNoKs influencing
on organizational practices through <strong>the</strong>ir knowledge activities, which enhanced learning (problemsolving
network), incremental innovation (business improvement networks), and innovation (product
development network).
Findings show that coordinators participating in distributed networks <strong>of</strong> practice tackled <strong>the</strong> complex
structure <strong>of</strong> <strong>the</strong> networks (e.g. geographical dispersion, different business functions) by enacting as
boundary spanners to cope with boundaries across insurance practices and locations. Thus, findings
indicate that boundary management demands competency regarding how to acknowledge and
stimulate boundary spanning. Consequently, distributed organizational settings such as multinationals
should put more effort into <strong>the</strong> establishment <strong>of</strong> boundary management practice as an implemented
knowledge management initiative.
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Eli Hustad and Aurilla Aurelie Bechina
Fur<strong>the</strong>rmore, <strong>the</strong> coordinators’ role and leadership style were essential to obtain sustainable
networks. The leadership style as a boundary spanner included motivation <strong>of</strong> geographically
dispersed members to be active participants, ensuring an autonomous environment for knowledge
creation, acknowledging contributions, building trust and identity and bringing necessary resources
into <strong>the</strong> networks to provide available time to participate and <strong>the</strong> required collaboration infrastructure.
This research was exploratory and conducted in one organizational context only and as such has a
number <strong>of</strong> limitations, thus providing possibilities for future research. This study may serve as input for
subsequent qualitative studies focusing on leadership and boundary management in DNoKs. KM
research may generally focus more on <strong>the</strong> role <strong>of</strong> facilitators in DNoKs, e.g. what are <strong>the</strong> criteria for
cultivating communities without disturbing creativity. An interesting area for research is also to
investigate inter-organizational knowledge networks to understand co-creation <strong>of</strong> knowledge e.g.
through social media.
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242

Does Knowledge Stickiness Affect a Firm’s Innovation
Capability? Empirical Evidence From Indonesian Furniture
SMEs 1
Nurul Indarti
Department <strong>of</strong> Management, Faculty <strong>of</strong> Economics and Business, Universitas
Gadjah Mada, Yogyakarta, Indonesia
nurulindarti@feb.ugm.ac.id
Abstract: This study aims to examine <strong>the</strong> relationship between knowledge stickiness and a firm’s innovation
capability (as an indicator <strong>of</strong> a firm’s absorptive capacity) in <strong>the</strong> context <strong>of</strong> developing countries, i.e., Indonesia.
The main research question addressed by this study is: does knowledge stickiness affect on a firm’s innovation
capability? Knowledge stickiness is approached from a cognitive point <strong>of</strong> views and is measured using four
dimensions, i.e., knowledge interconnectedness, sensory, coded, and <strong>the</strong>oretical knowledge. Innovation
capability is measured by considering both initiatives and innovations which are reported using subjective
measurement. Using data from 100 furniture small- and medium-sized enterprises (SMEs), <strong>the</strong> study finds that
product innovations are predominant over process and organizational ones. However, incremental innovations
are <strong>of</strong>ten more preferred than radical ones. This study also finds that <strong>the</strong> firms absorb knowledge from various
sources to undertake innovations. Buyers, Internet, and suppliers are found to be among <strong>the</strong> significant sources
for sensory, coded, and <strong>the</strong>oretical knowledge. Buyers are also <strong>the</strong> source <strong>of</strong> a great extent <strong>of</strong> various knowledge
domains related to product, process, and organizational innovations. In general, <strong>the</strong> furniture firms do not pay a
considerable attention into planning stages when introducing innovations. Not all innovations are preceded by
initiatives, except for new process and organizational innovation whose impact on <strong>the</strong> firms’ revenue is less
visible. Knowledge interconnectedness, sensory knowledge, and coded knowledge are proven to have significant
impact on a firm’s innovativeness. As predicted, knowledge interconnectedness and coded knowledge have a
positive impact, while sensory knowledge influences a firm’s innovation capability in a negative direction. All in
all, this study provides empirical evidence that knowledge stickiness has a significant impact on a firm’s
innovation capability (explains 36% <strong>of</strong> total variance).
Keywords: knowledge stickiness, innovation capabilities, furniture SMEs, Indonesia
1. Introduction
In a stiffer business competition environment, firms need to adapt and improve <strong>the</strong>ir products on a
continuous basis in order to survive. In doing so, businesses need to acquire and utilize <strong>the</strong>ir
existing/new resources to produce innovative outputs. The resource-dependency <strong>the</strong>ory (i.e., Pfeffer
and Salancik, 1978; Ulrich and Barney, 1984) views an organization as an open system which cannot
solely rely on its own resources (knowledge) for its survival, but which must also mobilize means from
<strong>the</strong> environment. Most firms actively absorb and adopt resources (knowledge) from o<strong>the</strong>r companies,
whe<strong>the</strong>r <strong>the</strong>y do it on purpose or by accident.
(New) knowledge has several characteristics, which may influence <strong>the</strong> capability to absorb and utilize
this knowledge in its innovation policies. The degree to which it is easy or difficult for an organization
to absorb information from <strong>the</strong> environment, called <strong>the</strong> stickiness <strong>of</strong> external knowledge. We believe
that <strong>the</strong> stickiness <strong>of</strong> external knowledge in terms <strong>of</strong> its content and its types affects a firm’s
innovativeness. In this study, stickiness is viewed from <strong>the</strong> perspective <strong>of</strong> <strong>the</strong> receiver.
The capability to deal with (external) knowledge and to utilize it, is called a firm’s absorptive capacity
(ACAP) (Cohen and Levinthal, 1990). Examining ACAP i.e., <strong>the</strong> firm’s capability to recognize and
obtain external knowledge as a useful resource in <strong>the</strong> process <strong>of</strong> innovation, is a highly relevant task
in gaining insight into <strong>the</strong> dynamics <strong>of</strong> a firm’s innovativeness. ACAP promotes <strong>the</strong> speed, frequency,
and magnitude <strong>of</strong> innovation(s), which in turn generates new knowledge that again becomes part <strong>of</strong>
<strong>the</strong> ACAP <strong>of</strong> <strong>the</strong> organization (Kim and Kogut, 1996; Helfat, 1997; Van den Bosch et al., 1999). From
this perspective, innovation can be considered as <strong>the</strong> output <strong>of</strong> a firm’s ACAP (Lane et al., 2002).
To our knowledge, most studies <strong>of</strong> <strong>the</strong>se issues were undertaken in <strong>the</strong> context <strong>of</strong> developed
countries. This study aims to examine <strong>the</strong> relationship between knowledge stickiness and a firm’s
innovation capability in <strong>the</strong> context <strong>of</strong> developing countries, i.e., Indonesia. The main research
question addressed by this study is: does knowledge stickiness affect a firm’s innovation capability?
1 Empirical data were based on <strong>the</strong> work <strong>of</strong> Indarti (2010)
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Nurul Indarti
The structure <strong>of</strong> <strong>the</strong> paper is as follows. Section 2 discusses <strong>the</strong>ory and hypo<strong>the</strong>ses. Section 3
explains <strong>the</strong> research methodology. Findings and discussion are presented in Section 4. Finally,
section 5 presents concluding remarks.
2. Theoretical framework and hypo<strong>the</strong>ses
2.1 Innovation capability as an output <strong>of</strong> a firm’s ACAP
Since introduced in 1990, ACAP has been intensively studied and adapted by a fair number <strong>of</strong>
scholars. Zahra and George (2002) redefined ACAP as a set <strong>of</strong> organizational routines and
processes, by which firms acquire, assimilate, transform, and exploit knowledge. The relevance <strong>of</strong> this
construct is reflected by <strong>the</strong> importance <strong>of</strong> external knowledge in <strong>the</strong> stimulation <strong>of</strong> a firm’s innovation
activities. Since ACAP is closely related to external knowledge, this study will particularly pay
attention to external determinants i.e., <strong>the</strong> characteristics <strong>of</strong> external knowledge.
Innovation is <strong>the</strong> application <strong>of</strong> new knowledge by which a firm is better able to meet <strong>the</strong> needs <strong>of</strong> its
customers. It is realized by <strong>the</strong> introduction <strong>of</strong> new/improved products or by providing new/improved
services to customers. In this respect, a better use <strong>of</strong> existing knowledge as well as a more effective
acquisition and assimilation <strong>of</strong> (new) knowledge collected from external sources, are very important
for a firm’s growth. Since knowledge is <strong>the</strong> key to innovation, it is <strong>of</strong> great importance for an
organization to be able to absorb, assimilate, and utilize knowledge from all available sources (Van
den Bosch et al., 1999).
Innovations can in this context be seen as a multidimensional concept (Neely et al., 2001).
Schumpeter (1934) defines innovation as “1) <strong>the</strong> introduction <strong>of</strong> a new good …; 2) <strong>the</strong> introduction <strong>of</strong>
a new production method …; 3) <strong>the</strong> opening <strong>of</strong> a new market … 4) <strong>the</strong> opening <strong>of</strong> a new source <strong>of</strong>
supply … 5) <strong>the</strong> carrying out <strong>of</strong> <strong>the</strong> new organization <strong>of</strong> any industry …” (p. 66). Shortly, innovation
can be considered as <strong>the</strong> introduction <strong>of</strong> something new into an organization (Jorna, 2006).
In addition, business and innovation literature <strong>of</strong>fers various classifications <strong>of</strong> innovations that have
been developed and applied. Some authors (e.g., Avermaete et al., 2003; Johannessen et al., 2001)
discuss innovation from <strong>the</strong> perspective <strong>of</strong> output (e.g. product, process, organizational), while o<strong>the</strong>rs
(e.g., Damanpour, 1996; Jansen et al., 2006; Abernathy and Clark, 1985) describe <strong>the</strong> concept in
terms <strong>of</strong> <strong>the</strong> degree <strong>of</strong> change (i.e., radical and incremental). Yet ano<strong>the</strong>r perspective used in
capturing <strong>the</strong> dynamic process <strong>of</strong> innovation is that <strong>of</strong> <strong>the</strong> various stages <strong>of</strong> innovation (i.e., initiative
and actual innovation).
2.2 Knowledge, its content and its types
Both <strong>the</strong> resource-based and <strong>the</strong> knowledge-based <strong>the</strong>ory stress <strong>the</strong> existence and importance <strong>of</strong>
knowledge as a strategic resource in maintaining a firm’s competitiveness (e.g., Penrose, 1959;
Barney, 1991; Kogut and Zander, 1992; Grant, 1996). Especially new knowledge stimulates business
opportunities, serving as valuable input and output in economic activities, even in poor countries
(Melody, 1985). Several studies indicate a significant effect <strong>of</strong> (new) knowledge on firms’ survival and
innovativeness (Rothwell, 1991; Kristiansen et al., 2005).
Knowledge can be classified on <strong>the</strong> basis <strong>of</strong> its content. Knowledge content represents what <strong>the</strong>
knowledge is about; it can consist <strong>of</strong> domains, fields, and disciplines (Jorna, 2006). The field <strong>of</strong>
management is an example <strong>of</strong> a knowledge domain. Within this field <strong>the</strong>re are several specializations,
such as marketing, operations, human resource, and finance. Additionally, <strong>the</strong>re may be more narrow
segments such as inventory control and quality control within operations management. In this study,
we classify <strong>the</strong> knowledge domain into three: products, process, and organizational aspects
(Kristiansen et al., 2005; Porter, 1985).
In <strong>the</strong> knowledge management literature, types <strong>of</strong> knowledge have been classified in various ways.
Polanyi (1962) has ‘traditionally’ classified knowledge into tacit and explicit knowledge, while Boisot
(1995) has grouped it into coded and un-coded knowledge. This study focuses on knowledge at <strong>the</strong>
individual and organizational levels in <strong>the</strong> context <strong>of</strong> SMEs. Knowledge is embedded in <strong>the</strong>
individual’s mind (e.g. Nonaka et al., 2000). Since a firm may be considered as a collection <strong>of</strong> people
(Davenport and Prusak, 1998) or as a collection <strong>of</strong> humans as information-processing systems
(Jorna, 2006), knowledge <strong>of</strong> each individual in an organization can be regarded as organizational
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knowledge (Nelson and Winter, 1982). This line <strong>of</strong> reasoning implies a cognitive perspective on
knowledge (Nooteboom, 1996; Jorna, 2006). Therefore, we have taken <strong>the</strong> cognitive perspective as
our point <strong>of</strong> departure, using <strong>the</strong> types <strong>of</strong> knowledge as proposed by Cijsouw and Jorna (2003),
namely sensory, coded, and <strong>the</strong>oretical knowledge.
Sensory knowledge
Tacit knowledge has originally been characterized by Polanyi (1966) as personal, context-specific,
and <strong>the</strong>refore hard to formalize and communicate. This type refers to <strong>the</strong> knowledge which is
embedded in <strong>the</strong> mind <strong>of</strong> <strong>the</strong> individual (Nonaka and Kanno, 1998) and which cannot be separated
from this person. Since this knowledge is based on <strong>the</strong> background and experience <strong>of</strong> its carrier, it is
highly personal (Roberts, 2000). From ano<strong>the</strong>r perspective, Cijsouw and Jorna (2003) propose to
divide tacit knowledge into sensory and <strong>the</strong>oretical knowledge. Sensory/behavioral knowledge is
knowledge <strong>of</strong> situations and events expressed in <strong>the</strong> form <strong>of</strong> behavior, procedures, and habits, which
can be observed and imitated. Sensory knowledge is very dependent on its context, it diffuses slowly,
and it is time-bound. It cannot be expressed in words, only in behavior. Sensory knowledge can be
categorized in terms <strong>of</strong> level <strong>of</strong> detail (i.e. rough- and detailed sensory knowledge (i.e. Jorna, 2006).
From <strong>the</strong> perspective <strong>of</strong> <strong>the</strong> recipient, rough sensory knowledge is less accessible, and hence stickier.
Coded knowledge
Knowledge can also be expressed in various kinds <strong>of</strong> codes. Coded knowledge includes <strong>the</strong> use <strong>of</strong>
signs and symbols referring to objects or experiences (Jorna, 2006). By using coded knowledge it is
possible to communicate and exchange information without <strong>the</strong> actual presence <strong>of</strong> <strong>the</strong> object to which
this knowledge refers or even without <strong>the</strong> presence <strong>of</strong> <strong>the</strong> communicating actor him/herself (Jorna,
2006). For instance, we can talk about tables without <strong>the</strong>ir actual presence. The code itself represents
<strong>the</strong> knowledge. Coded knowledge is linked to <strong>the</strong> context <strong>of</strong> <strong>the</strong> code by means <strong>of</strong> language or a
collection <strong>of</strong> pictograms (Jorna, 2006). Therefore, coded knowledge can be transferred quite easily
within a community if its members know <strong>the</strong> codes (Jorna, 2006). Coded knowledge may be
represented by various kinds <strong>of</strong> symbols, which range from weakly- to strongly-coded, i.e. from icons
or pictures, diagrams, schemes, to language/texts and formulae. Each representation has its own
degree <strong>of</strong> ambiguity. A code is ‘better’ if it reduces ambiguity (Cijsouw and Jorna, 2003: p. 220). From
<strong>the</strong> perspective <strong>of</strong> <strong>the</strong> recipient, knowledge with higher codedness (strongly coded) is more
accessible, and hence less sticky.
Theoretical knowledge
Theoretical knowledge refers to <strong>the</strong> understanding <strong>of</strong> a structure or pattern <strong>of</strong> a concept (object, or
event) (Cijsouw and Jorna, 2003). Understanding a concept implies that it can be explained and
reasoned about; one is able to use its terminology correctly and to indicate its relations with o<strong>the</strong>r
concepts. People use <strong>the</strong>oretical knowledge when <strong>the</strong>y answer why-questions. On <strong>the</strong> basis <strong>of</strong> this
knowledge people are able to identify structural (Jorna, 2006) as well as causal relations (i.e. if-<strong>the</strong>nrelations).
Theoretical knowledge is generally found among <strong>the</strong> well-educated people. The more
complicated <strong>the</strong> why-connection or <strong>the</strong> causal relations, <strong>the</strong> more abstract <strong>the</strong> knowledge is. It is
<strong>the</strong>refore stickier.
2.3 Knowledge sources
The stakeholder <strong>the</strong>ory argues that <strong>the</strong>re are various parties involved or that affect or can be affected
by <strong>the</strong> actions <strong>of</strong> <strong>the</strong> business as a whole (Philips and Freeman, 2003). The parties can be classified
into primary and secondary stakeholders. The primary stakeholders are those that engage in
economic transactions with <strong>the</strong> business such as employee, customers and suppliers. The secondary
stakeholders are such as government <strong>of</strong>fices, business associations, communities, universities and
<strong>the</strong> media. Sometimes even competitors are counted as stakeholders. Based on <strong>the</strong> concept <strong>of</strong>
stakeholders, <strong>the</strong> nature <strong>of</strong> interaction and <strong>the</strong> previous studies (e.g. Smeltzer et al., 1988), we
classify 13 knowledge sources: (1) buyers, (2) suppliers, (3) competitors, (4) consultants, (5)
government <strong>of</strong>fices, (6) industry associations, (7) religious affiliations, (8) research
institutions/universities, (9) exhibitions, (10) magazines/newspapers, (11) radio, (12) television, and
(13) Internet.
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2.4 Knowledge stickiness
Nurul Indarti
From <strong>the</strong> neoclassical perspective, knowledge stickiness is viewed in terms <strong>of</strong> money or cost (Arrow,
1962; Von Hippel, 1994). In <strong>the</strong> strategy literature, sticky has been used as a synonym for inert
(Porter, 1994) or difficult to imitate (Foss et al., 1995). Szulanski (1996) uses <strong>the</strong> term <strong>of</strong> ‘internal’
stickiness to indicate a firm’s barriers to transferring knowledge (i.e., best practice) from one part <strong>of</strong>
<strong>the</strong> organization to <strong>the</strong> o<strong>the</strong>r. Discussions about stickiness have primarily focused on <strong>the</strong> movement
or absorption <strong>of</strong> knowledge inside a firm (Brown and Duguid, 2001). In this study, <strong>the</strong> stickiness
(Szulanski, 1996) is redefined, to refer to <strong>the</strong> stickiness <strong>of</strong> knowledge exchange across organizations
or between an organization and its (external) business environment.
The stickiness is a complex concept, which can be approached from different points <strong>of</strong> view. In this
study, stickiness refers to <strong>the</strong> degree <strong>of</strong> accessibility. Knowledge is considered as sticky if its
accessibility is low. Accessibility is a multidimensional concept (Culnan, 1985). According to <strong>the</strong>
Cambridge Advanced Learner’s Dictionary, accessibility is <strong>the</strong> degree to which a piece <strong>of</strong> knowledge
is easy to understand or reach. Culnan (1985) provides a definition, which covers <strong>the</strong> physical access
to <strong>the</strong> source, <strong>the</strong> interface to <strong>the</strong> source, and <strong>the</strong> ability to physically retrieve potentially relevant
knowledge (Culnan, 1985). This study specifically emphasizes <strong>the</strong> cognitive accessibility and does not
deal with its financial accessibility.
Knowledge stickiness in this study is approached from types <strong>of</strong> knowledge, i.e., (a) sensory, (b)
coded, and (c) <strong>the</strong>oretical knowledge. In addition, knowledge interconnectedness is used. The
interconnectedness <strong>of</strong> knowledge refers to <strong>the</strong> degree to which knowledge covers various domains
(e.g. Van der Spek and Spijkervet, 1997). When a piece <strong>of</strong> absorbed knowledge consists <strong>of</strong> several
interconnected domains, it provides a fuller picture <strong>of</strong> specific information, which in turn makes <strong>the</strong>
knowledge as a whole easier to absorb and understand. From <strong>the</strong> perspective <strong>of</strong> <strong>the</strong> recipient, for
example, <strong>the</strong> knowledge obtained from <strong>the</strong> buyers has a higher level <strong>of</strong> interconnectedness than that
provided by <strong>the</strong> competitors, because it contains more domains. Therefore, <strong>the</strong> knowledge from
buyers has a higher degree <strong>of</strong> accessibility. Shortly, <strong>the</strong> more interconnected domains <strong>of</strong> knowledge
are available, <strong>the</strong> higher <strong>the</strong> degree <strong>of</strong> accessibility, hence <strong>the</strong> less sticky.
Based on <strong>the</strong> above <strong>the</strong>oretical framework and arguments, <strong>the</strong> following hypo<strong>the</strong>ses are formulated:
H1: The more sensory <strong>the</strong> external knowledge, <strong>the</strong> lower a firm’s innovation capability
H2: The higher <strong>the</strong> codedness <strong>of</strong> <strong>the</strong> external knowledge, <strong>the</strong> higher a firm’s innovation capability
H3: The more <strong>the</strong>oretical <strong>the</strong> external knowledge, <strong>the</strong> lower a firm’s innovation capability
H4: The higher <strong>the</strong> interconnectedness <strong>of</strong> <strong>the</strong> external knowledge, <strong>the</strong> higher a firm’s innovation
capability
Schematically, <strong>the</strong> relationship between <strong>the</strong> independent and independent variable is depicted in
Figure 1.
Sensory knowledge
Coded knowledge
Theoretical knowledge
Knowledge
Figure 1: The research model
246
H1
H2
H3
H4
Innovation capability

3. Research methods
3.1 Research instrument
Nurul Indarti
The questionnaire we developed consists <strong>of</strong> three parts, i.e. demographical characteristics <strong>of</strong> <strong>the</strong>
owners and <strong>the</strong> firms, items to measure knowledge stickiness and innovation capability. Innovation
capability is measured using 12 items referring to initiatives/innovations for modifications and new
innovations (i.e., product, process, and organizational innovation), by using a 5-point Likert scale
(1=very seldom; 5=very <strong>of</strong>ten) (Johannessen et al., 2001; van Geenhuizen and Indarti, 2005; Jansen
et al., 2006). Knowledge stickiness is operationalized in four variables: sensory knowledge (13 items),
coded knowledge (13 items), <strong>the</strong>oretical knowledge (13 items) (see Cijsouw and Jorna, 2003), and
knowledge interconnectedness (39 items) (see Porter (1985); Kristiansen et al. (2003); Jorna (2006).
3.2 Data collection procedure
The respondents are <strong>the</strong> managers/owner <strong>of</strong> <strong>the</strong> Indonesian furniture SMEs in Yogyakarta.
Yogyakarta is one <strong>of</strong> <strong>the</strong> cities in <strong>the</strong> island <strong>of</strong> Java where many SMEs are clustered (Kuncoro, 2000).
Besides a database from <strong>the</strong> Indonesian Furniture Industry and Handicraft Association, <strong>the</strong> sampling
will also be based on visibility <strong>of</strong> <strong>the</strong> manufacturers and researchers’ knowledge about existence and
development <strong>of</strong> <strong>the</strong> furniture industries in <strong>the</strong> region. In addition, snowballing procedure (<strong>the</strong> previous
respondent points to <strong>the</strong> next respondent) was also used to get more respondents. This strategy was
used to cope with <strong>the</strong> limited database <strong>of</strong> <strong>the</strong> Indonesian furniture available.
Data were collected in October 2007-March 2008, using interviews (about 45-60 minutes) and <strong>the</strong>
“drop and collect” procedure. Out <strong>of</strong> 322 furniture firms on <strong>the</strong> list, 168 were not eligible as
respondents since <strong>the</strong>y were in operation in a period shorter than two years. The rest 154 firms were
contacted, and only 100 <strong>of</strong> <strong>the</strong>m were willing to partake in <strong>the</strong> study, making <strong>the</strong> response rate <strong>of</strong>
64.9% and <strong>the</strong>se entire returned questionnaires were valid for next analysis.
4. Findings and discussion
4.1 Demographic information
Most respondents (86.0%) are male and at average age 40 years old. The majority has university
background (63.0%) and has worked at various working sectors (73.0%). Most firms are independent
(98.0%) and are located in rural situation (73.0%). The initiation to start a venture is mostly (82.0%)
from <strong>the</strong> owner. On average, <strong>the</strong> number <strong>of</strong> employees is 21 and <strong>the</strong> duration <strong>of</strong> operations is eleven
years. Many (37.0%) respondents argue that <strong>the</strong>ir firms start growing after 2 years <strong>of</strong> its
establishment. Domestic markets account for 51.56% <strong>of</strong> firm’s revenue while export markets account
for 48.44%.. The export destinations are such as <strong>the</strong> Ne<strong>the</strong>rlands, Germany, Spain, France, England,
Australia, Japan, South Korea, China, and Malaysia. Majority (94.0%) <strong>of</strong> <strong>the</strong> firms’ monthly revenue is
less than IDR 100 million (USD 10,034 ) and only 6.0% with more than IDR 150 million (USD
14,940). Additionally, personal saving is <strong>the</strong> most dominant (70.30%) sources <strong>of</strong> capital.
www.xe.com, accessed on May 21st 2011.
4.2 Characteristics <strong>of</strong> external knowledge
4.2.1 Domains and interconnectedness <strong>of</strong> external knowledge
The most dominant knowledge sources that provide <strong>the</strong> knowledge content on product are buyers
(mean=3.37), exhibition (mean=2.31), magazines/newspapers (mean=2.25) (Table 1). Examples <strong>of</strong>
knowledge on product domain are new/modification design and new chair/table/bed. Suppliers
(mean=1.40) are <strong>the</strong> most important source <strong>of</strong> process domain. Process domain varies from
knowledge about raw material, production process, equipment/technology. Knowledge on
organizational innovation mostly is from exhibition (mean=1.33), Internet (mean=1.31), and buyers
(mean=1.30).
Moreover, knowledge provided by buyers is <strong>the</strong> most interconnected, followed by exhibitions and <strong>the</strong>
Internet (see Table 1). The radio, on <strong>the</strong> o<strong>the</strong>r hand, scores <strong>the</strong> lowest on interconnectedness,
followed by religious affiliations. In summary, knowledge provided by buyers and <strong>the</strong> Internet is <strong>the</strong>
least sticky, whereas that obtained from <strong>the</strong> radio and religious affiliations is <strong>the</strong> stickiest. It appears
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Nurul Indarti
that with respect to acquiring knowledge, small firms are more inclined to approach and interact with
external parties/sources with which <strong>the</strong>y are acquainted (Fann and Smeltzer, 1989).
Table 1: Knowledge domains and interconnectedness
Source
Product
Knowledge on
Process Organizational
Interconnectedness
Buyers 3.37 1.16 1.30 1.70
Suppliers 0.96 1.40 0.54 0.78
Competitors 1.59 1.08 0.97 1.13
Consultants 0.34 0.27 0.43 0.28
Government <strong>of</strong>fices 0.32 0.29 0.56 0.32
Industry associations 0.93 0.77 1.01 0.84
Religious affiliations 0.23 0.19 0.28 0.20
Research institutions/universities 0.26 0.19 0.19 0.19
Exhibitions 2.31 0.99 1.33 1.43
Magazines/newspapers 2.25 1.17 1.21 1.42
Television 1.07 0.59 0.49 0.61
Radio 0.09 0.11 0.12 0.09
Internet 2.11 1.10 1.31 1.42
Note: 5-point Likert scale (0=not at all, 1=very little, 5=very much).
4.2.2 Type <strong>of</strong> external knowledge
Sensory knowledge
Knowledge from buyers (mean=3.79) is <strong>the</strong> most sensory, followed by knowledge from Internet
(mean=3.66) (Table 2). Sensory knowledge is dependent on its context and can only be obtained
through imitation. For example, when buyers order a particular outdoor table made <strong>of</strong> mahogany
wood, <strong>the</strong>y provide <strong>the</strong> company with a detailed description <strong>of</strong> <strong>the</strong> model, including <strong>the</strong> preferred size,
colors, and shape. They may also provide pictures. Based on this information, <strong>the</strong> furniture firm
manufactures <strong>the</strong> product. However, it happens only seldom that <strong>the</strong>se buyers provide information on
how to process <strong>the</strong> raw material (i.e. <strong>the</strong> mahogany wood). This finding may be explained by <strong>the</strong>
nature <strong>of</strong> <strong>the</strong> knowledge provided by <strong>the</strong>se sources. It is generally perceived that this knowledge
provides only little contextual references and clues for imitation.
Table 2: Sensory, coded, and <strong>the</strong>oretical knowledge
Sensory Coded Theoretical
Source <strong>of</strong> knowledge Mean SD Mean SD Mean SD
Buyers 3.79 0.93 3.90 0.98 3.91 0.88
Suppliers 3.62 1.01 3.88 0.87 3.79 0.97
Competitors 3.22 1.05 3.28 1.04 3.43 0.99
Consultants 3.50 0.97 3.53 1.07 3.71 0.90
Government <strong>of</strong>fices 2.93 0.92 3.25 1.04 3.25 1.16
Industry associations 3.22 1.08 3.50 0.95 3.42 0.97
Religious affiliations 3.38 1.04 3.79 0.80 3.20 0.94
Research institutions/universities 3.13 0.74 3.33 0.98 3.18 1.07
Exhibitions 3.41 0.93 2.69 0.98 3.69 1.08
Magazines/newspapers 3.35 1.00 3.64 1.09 3.66 1.10
Television 2.96 1.11 3.38 1.24 3.41 1.40
Radio 2.13 1.46 2.63 1.60 2.22 1.64
Internet 3.69 0.88 3.89 0.90 3.90 0.87
Note: 5-point Likert scale (1=little sensory/less coded/less <strong>the</strong>oretical; 5=much sensory/more
coded/more <strong>the</strong>oretical)
Surprisingly, <strong>the</strong> external knowledge from <strong>the</strong> radio, government <strong>of</strong>fices, and <strong>the</strong> television is
regarded as <strong>the</strong> least sensory. Knowledge from <strong>the</strong> radio is transferred by sound, while <strong>the</strong> television
sends sounds and images to its receivers (Crisell, 1986). From <strong>the</strong> perspective <strong>of</strong> <strong>the</strong> furniture firms,
<strong>the</strong> knowledge <strong>of</strong>fered by <strong>the</strong>se sources is <strong>the</strong> most accessible compared to that <strong>of</strong> o<strong>the</strong>r providers.
The ubiquitous quality <strong>of</strong> <strong>the</strong>se sources may explain this accessibility. However, in spite <strong>of</strong> <strong>the</strong>
transparency <strong>of</strong> <strong>the</strong> knowledge provided by <strong>the</strong>se sources, this study shows that <strong>the</strong> furniture firms
only rarely address <strong>the</strong>se sources for obtaining knowledge in all domains.
248

Coded knowledge
Nurul Indarti
The firms indicated that <strong>the</strong> knowledge from buyers (mean =3.66) and Internet (mean=4.05) is <strong>the</strong>
most coded (Table 2). The radio provides <strong>the</strong> least coded knowledge <strong>of</strong> all sources. The radio is
considered as a blind medium (Crisell, 1986:3), which means that people cannot see its messages; it
merely consists <strong>of</strong> sound and silence. This characteristic makes knowledge from <strong>the</strong> radio more
difficult to understand and transfer clearly to o<strong>the</strong>rs. The information is more susceptible to ambiguity
and may lead to paradoxical communication (Bateson et al., 1956).
Theoretical knowledge
The finding shows that <strong>the</strong> knowledge from buyers (mean=3.91) is <strong>the</strong> most <strong>the</strong>oretical knowledge,
followed by <strong>the</strong> Internet (mean=3.90) (Table 2). The interviews with <strong>the</strong> owners told us that <strong>the</strong>
production <strong>of</strong> <strong>the</strong> goods is generally based on <strong>the</strong> information from buyers who ordered <strong>the</strong>m (Gereffi,
1999). Often, <strong>the</strong> contents <strong>of</strong> this information lack detail and are not explained properly, which makes
<strong>the</strong> knowledge more <strong>the</strong>oretical. Since <strong>the</strong> knowledge absorbed from <strong>the</strong>se sources is considered to
have a longer why-chain, it is more <strong>the</strong>oretical.
4.3 Innovation capability: Initiatives and innovations
The findings show that product initiatives/innovations are <strong>the</strong> most dominant type <strong>of</strong>
initiatives/innovation (Table 3). Fur<strong>the</strong>rmore, product initiative is lower than product innovation, except
for process and organizational innovations. From interview, in many cases, furniture firms make
innovation on <strong>the</strong> spot in <strong>the</strong> field without going through any planning stages. Productions <strong>of</strong> new
furniture that are <strong>of</strong>ten based on order from buyers are also <strong>of</strong> explanations <strong>of</strong> <strong>the</strong> findings.
Table 3: Initiatives and innovation
No. Type Degree
Initiativesª
Mean SD
Innovationsª
Mean SD
t
1 Product
New 2.87 1.64 3.04 1.51 -1.38
Modification 2.77 1.54 3.12 3.12 -3.07***
2 Process
New 2.00 1.72 1.97 1.56 0.22
Modification 1.93 1.70 2.17 2.17 -1.69*
3 Organizational
New 1.52 1.62 1.31 1.41 2.04**
Modification 1.41 1.57 1.80 1.80 -0.78
Note: ª5-Likert scale (1=seldom; 5=very <strong>of</strong>ten)
*p

Table 4: Results <strong>of</strong> <strong>the</strong> regression analysis
Nurul Indarti
Variable ß t
Knowledge interconnectedness 0.45 5.01 ***
Sensory knowledge -1.98 -1.68 *
Coded knowledge 0.39 3.18 ***
Theoretical knowledge 0.02 0.13
F (4, 83) 12.96 ***
R 2 0.38
Note: * p

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252

Organizational Learning in Pr<strong>of</strong>it and Non-Pr<strong>of</strong>it
Organizations: The Perspective <strong>of</strong> Innovative Culture
Development
Brigita Janiunaite, Gintautas Cibulskas and Monika Petraite
Kaunas University <strong>of</strong> Technology, Kaunas, Lithuania
brigita.janiunaite@ktu.lt
gintautas.cibulskas@ktu.lt
monika.petraite@ktu.lt
Abstract: The focus <strong>of</strong> this paper is on learning in an organization as an important characteristic <strong>of</strong> innovative
culture and its development. The paper addresses <strong>the</strong> following questions: what features <strong>of</strong> organizational
learning prevail in pr<strong>of</strong>it and non-pr<strong>of</strong>it organizations; how <strong>the</strong>se features provide or do not provide preconditions
in <strong>the</strong>se types <strong>of</strong> organizations? The attempts to answer this question are reflected in four parts <strong>of</strong> this paper: <strong>the</strong>
first and <strong>the</strong> second parts reveal <strong>the</strong> concept <strong>of</strong> innovative culture and its characteristics, <strong>the</strong> essence <strong>of</strong>
organizational learning, its types and relationship with a learning organization; <strong>the</strong> third part presents <strong>the</strong>
research methodology. The paper is based on <strong>the</strong> empirical study <strong>of</strong> 30 pr<strong>of</strong>it and non-pr<strong>of</strong>it organizations. The
research was carried out drawing on a quantitative approach. The method <strong>of</strong> written survey was employed to
evaluate <strong>the</strong> features <strong>of</strong> organizational learning. The fourth part <strong>of</strong> <strong>the</strong> paper presents <strong>the</strong> empirical research
results that are discussed to reveal <strong>the</strong> advantages and differences <strong>of</strong> organizational learning in pr<strong>of</strong>it and nonpr<strong>of</strong>it
organizations. The paper seeks to bridge <strong>the</strong> gap in innovatics, which emerges as a result <strong>of</strong> a narrow
approach to learning and innovations regardless <strong>of</strong> sectorial specificity.
Keywords: innovative culture, organizational learning, sectorial dimension, pr<strong>of</strong>it and non-pr<strong>of</strong>it organization
1. Introduction
To be innovative, <strong>the</strong> society and its organizations must possess <strong>the</strong> general characteristics <strong>of</strong>
innovative culture: 1) high tolerance <strong>of</strong> risk, complexity and change; 2) emphasis on flexibility and
mobility, enabled by flat organizational structures, 3) trust-based cooperative relations inside and
inside <strong>the</strong> organization, 4) emphasis on creativity and learning (on individual and collective levels)
(Jucevicius, 2010). The focus <strong>of</strong> this paper is on organizational learning as an important characteristic
<strong>of</strong> innovative culture and its development.
The paper draws on <strong>the</strong> approach that <strong>the</strong> characteristics <strong>of</strong> innovative culture, learning among <strong>the</strong>m,
are treated as universal, but at <strong>the</strong> same time <strong>the</strong>y may have unique features in certain socioorganizational
contexts (Dombrowski et al., 2007; Jucevicius, 2008, 2009; Janiunaite, 2007; H<strong>of</strong>stede,
2001; Inglehart, 1997). Those unique features may also be disclosed when innovative culture is
addressed in organizations <strong>of</strong> different types. Pr<strong>of</strong>it organizations are usually treated as acting in a
competitive environment. They may survive only drawing on innovations. Thus <strong>the</strong>ir innovativeness
and learning are not questioned. Drawing on Thom and Ritz (2004), even though <strong>the</strong> new public
management concept points out <strong>the</strong> productivity and innovativeness <strong>of</strong> public service providers, <strong>the</strong>
public sector contains a number <strong>of</strong> barriers to innovations. For instance, <strong>the</strong>re is a strong dependence
<strong>of</strong> administrative activities and political decisions in this sector. For this reason, this kind <strong>of</strong> institutions
seldom show initiative or try to solve problems by illegitimate decisions. Errors, in principle, are
against a legal performance <strong>of</strong> <strong>the</strong> state. Risky innovations and socially sensitive errors are avoided.
The paper addresses <strong>the</strong> following question: what features <strong>of</strong> organizational learning prevail in pr<strong>of</strong>it
and non-pr<strong>of</strong>it organizations? The research instrument was developed drawing on <strong>the</strong> <strong>the</strong>oretical
model designed as a result <strong>of</strong> <strong>the</strong> involvement <strong>of</strong> <strong>the</strong> authors <strong>of</strong> this paper in <strong>the</strong> project ‘Study on <strong>the</strong>
Pr<strong>of</strong>iles <strong>of</strong> Innovative Culture in Organizations <strong>of</strong> Public and Private Sector.
2. The concept and characteristics <strong>of</strong> innovative culture
The innovative culture is one <strong>of</strong> those frequently used but rarely defined concepts that are
encountered in <strong>the</strong> recently booming literature on innovation. Ulijn (2003) treats <strong>the</strong> innovative culture
as an outcome <strong>of</strong> <strong>the</strong> interaction among <strong>the</strong> pr<strong>of</strong>essional culture (PC) (research, marketing, and
finance), corporate culture (CC) and national culture (NC). According to <strong>the</strong> Wieland (2006),
‘innovation culture is made up from technological visions, research traditions, value systems, etc.,
shared by those who take part in <strong>the</strong> innovation process. It can also serve as a reservoir for ideas
about new and improved products, processes and services. Heindenreich (2001) suggests defining
innovative culture as ‘a relatively stable way <strong>of</strong> reflection, behaviour and social organization taking
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place on <strong>the</strong> basis <strong>of</strong> corporate values’. This definition encompasses <strong>the</strong> stability and dynamism <strong>of</strong>
innovative culture, as it points out that shared values should be directed towards modernisation and
development i.e. should be a source <strong>of</strong> progress ra<strong>the</strong>r than backwardness. Jucevicius (2007) defines
‘innovative culture’ as <strong>the</strong> entirety <strong>of</strong> unique culture values, which are characteristic <strong>of</strong> every society
and organization as well as enables innovative activity specific for that social formation. Schuler
(2003) relates innovative culture to <strong>the</strong> understanding <strong>of</strong> creative potential and creation <strong>of</strong> creative
process support. Sutton (2001) suggests using simple enough explanation that organization’s
innovative culture manifests when organization’s employees are encouraged to experiment and to
implement innovations toge<strong>the</strong>r with organization’s managers, who support <strong>the</strong> process <strong>of</strong> ideas’
incentives. The given spectrum <strong>of</strong> definitions <strong>of</strong> innovative culture concept enables stating that, in
general, organization’s innovative culture can be understood as <strong>the</strong> entirety <strong>of</strong> characteristics <strong>of</strong>
organization culture that enables its innovative activity.
So do <strong>the</strong>se characteristics comprise innovative culture <strong>of</strong> an organization? Referring to <strong>the</strong>
description <strong>of</strong> features <strong>of</strong> organization’s innovative culture by different authors (Rose, 2004; Tidd,
Bessant and Pavitt, 2005), it is possible to note that most authors distinguish <strong>the</strong> following
characteristics: orientation to flexibility, cooperation, teamwork, streng<strong>the</strong>ning <strong>of</strong> trust among
organization’s members, openness to changes, new ideas, inducement <strong>of</strong> creativity, risk tolerance
and orientation to learning. From existing literature on <strong>the</strong> innovation process, management <strong>of</strong> <strong>the</strong>
innovation process, and open innovation, <strong>the</strong>oretically relevant characteristics <strong>of</strong> innovative culture
can be derived (Dombrowski et al., 2007). It is possible to note that most authors distinguish <strong>the</strong>
following characteristics: orientation to flexibility, cooperation, and teamwork, streng<strong>the</strong>ning <strong>of</strong> trust
among organization’s members, openness to changes, new ideas, and inducement <strong>of</strong> creativity, risk
tolerance and orientation to learning. Dombrowski et al. (2007) presented eight elements <strong>of</strong> innovative
culture <strong>of</strong> organization: innovative mission and vision statements, democratic, lateral communication,
collaboration, safe spaces, flexibility, boundary spanning, incentives, and leadership.
Thus smaller, more specific characteristics become constituent elements and features <strong>of</strong> more
general characteristics; for example, collaboration and team-work are characteristic <strong>of</strong> ‘networking’
etc. In this article innovative culture is defined as entirety <strong>of</strong> values, viewpoints, principles and o<strong>the</strong>r
elements, which enables innovative activity at an organization. Basically such organizations refer to
<strong>the</strong> following main characteristics <strong>of</strong> innovative culture (Jucevicius, 2008):
orientation to flexibility and mobility;
orientation to networking;
orientation to learning;
tolerance <strong>of</strong> risk, uncertainties and changes.
Innovative culture may be characterized by both universal and specific to every social
milieu/organization characteristics, attitudes, <strong>the</strong> models <strong>of</strong> performance. A more detailed discussion
about <strong>the</strong> universal and specific nature <strong>of</strong> innovative culture may be found in o<strong>the</strong>r publications
(Janiunaite, 2010; Jucevicius, 2010).
To summarize <strong>the</strong> constituent parts <strong>of</strong> innovative culture that have been distinguished by different
scholars, it may be noted that, to a large extent, <strong>the</strong>y relate <strong>the</strong> organizational culture favourable for
innovations to issues <strong>of</strong> democracy in an organization and a workplace: decentralization, openness,
transparency, high level <strong>of</strong> communication, etc. Still, <strong>the</strong> most important accent is on learning in an
organization as a precondition for <strong>the</strong> innovative culture and innovations as its results; organizational
learning also determines <strong>the</strong> development <strong>of</strong> innovative culture in an organization. For this reason,
this paper refers to organizational learning as a precondition for innovations in different types <strong>of</strong>
organizations.
3. Organizational learning
Innovative processes are inextricable from organizational and individual learning, as individual and
collective learning in organizations empowers attracting and using <strong>the</strong> most recent knowledge.
With reference to learning in an organization, <strong>the</strong> following concepts are frequently employed:
learning organization and organizational learning. However, <strong>the</strong>y are not <strong>the</strong> same. Armstrong (2005)
defines <strong>the</strong> differences between <strong>the</strong>m drawing on <strong>the</strong> <strong>the</strong>ory <strong>of</strong> organizational learning. First <strong>of</strong> all, he
draws on Argyris (1992) that organizations do not learn <strong>the</strong>mselves – it is individual members who
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learn and act to maintain learning processes in organizations. However, organizations need to provide
conditions for this. Organizational learning takes place when people learn toge<strong>the</strong>r by accumulating,
analysing and using sources <strong>of</strong> knowledge and thus contributing to <strong>the</strong> fulfilment <strong>of</strong> organization’s
aims.
Organizational learning takes place when individuals are engaged in learning, but this is possible on
an individual and collective level. Learning on an individual level is related to performance <strong>of</strong> an
individual that is relevant to an organization. Individuals learn on a collective level when members <strong>of</strong>
an organization perform toge<strong>the</strong>r in departments, groups, teams or in all organization. A result <strong>of</strong> this
kind <strong>of</strong> learning is acquisition <strong>of</strong> organizational knowledge that may influence organizational
behaviour.
What is <strong>the</strong> purpose <strong>of</strong> <strong>the</strong> learning organization? Its most important mission is to empower innovative
processes in an organization. Thus <strong>the</strong> learning organization is not only <strong>the</strong> means <strong>of</strong> creating
knowledge but also <strong>the</strong> content <strong>of</strong> an organization. The learning organization is important in itself
because <strong>of</strong> empowering innovative processes. In <strong>the</strong> learning organization learning takes place on
two levels – <strong>the</strong> level <strong>of</strong> cognitive knowledge and cultural level <strong>of</strong> values (Juceviciene, 2007).
Organizational learning may be, depending on different approaches, <strong>of</strong> different types. For instance,
with reference to <strong>the</strong> purposefulness <strong>of</strong> learning, it may be self-directed, self-managed and
experiential learning; with reference to <strong>the</strong> relationship between teaching and learning, formal, nonformal
and informal types <strong>of</strong> learning are distinguished; with reference to performance as aim, method
or by-product, learning-in action, action learning and experiential learning are distinguished; in relation
to <strong>the</strong> criterion <strong>of</strong> independence, independent learning takes place when employees are free to make
decisions, learn, work, set goals and reach for <strong>the</strong>m, whereas ano<strong>the</strong>r variety is learning as a followup
<strong>of</strong> teaching (Juceviciene, 2007). For organizational learning to take place, favourable conditions
are necessary in an organization, for instance, physical environments, management support,
organizing relevant forms <strong>of</strong> learning, aligning <strong>the</strong> aims <strong>of</strong> learning with <strong>the</strong> aims <strong>of</strong> an organization, a
system <strong>of</strong> knowledge management and o<strong>the</strong>r conditions. These issues comprise <strong>the</strong> <strong>the</strong>oretical
background <strong>of</strong> <strong>the</strong> research.
4. Method
The research draws on <strong>the</strong> quantitative research strategy; a written survey has been employed. The
questionnaire <strong>of</strong> <strong>the</strong> survey was designed drawing on <strong>the</strong> criteria <strong>of</strong> organizational learning (forms <strong>of</strong>
learning, organizational preconditions, etc) that were defined by statements (44 in total). The
statements were not specified for pr<strong>of</strong>it and non-pr<strong>of</strong>it organizations, as this would have been an
obstacle for a valid comparison <strong>of</strong> results in different sectors. The format <strong>of</strong> Likert-type scale with fivelevel
items was used in <strong>the</strong> survey.
The research relied on nonprobability sampling. As <strong>the</strong> aim <strong>of</strong> <strong>the</strong> research was to reveal how
organizational learning is manifested and identify some tendencies; <strong>the</strong>refore, senior and deputy
managers <strong>of</strong> 30 pr<strong>of</strong>it and non-pr<strong>of</strong>it organizations were surveyed. They are referred to as experts
because <strong>the</strong>y have sufficient information on <strong>the</strong> research subject and are able to give expert
evaluation.
Different business (engineering, telecomunications, IT, business consulting) (16) and public (schools,
universities, colleges, museums, <strong>the</strong>atres, non-governmental and o<strong>the</strong>r) organizations (14) were
selected. Non-governmental organizations were distinguished from non-pr<strong>of</strong>it organizations in <strong>the</strong>
survey and presentation <strong>of</strong> <strong>the</strong> research results. NGOs involve: a) associations that are initiated and
established by private bodies; b) charity foundations, except for those established by <strong>the</strong> state;
c) some public agencies (depending on <strong>the</strong> nature <strong>of</strong> activity and founders). In <strong>the</strong> case <strong>of</strong> this survey
<strong>the</strong> sample encompassed a women’s crisis centre, public enterprise for organizing festivals, music
foundation, etc. in X city. These organizations were selected because <strong>of</strong> <strong>the</strong>ir specific performance
and analysed separately from o<strong>the</strong>r non-pr<strong>of</strong>it organizations.
The research instrument was validated in terms <strong>of</strong> statement content, construct and statistics.
The research data were processed following this rationale:
As <strong>the</strong> diagnostic block <strong>of</strong> <strong>the</strong> questionnaire involved a quite large number <strong>of</strong> statements (44), it
was necessary to condense <strong>the</strong> information. To reveal <strong>the</strong> extent to which <strong>the</strong> structure described
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by <strong>the</strong> correlation <strong>of</strong> features corresponds to <strong>the</strong> <strong>the</strong>oretic groups and dimensions, a factor
analysis was carried out. Factorization <strong>of</strong> all <strong>the</strong> diagnostic part <strong>of</strong> this questionnaire was
employed to group significant statements. Correlations among statements in a single factor were
also examined, considering <strong>the</strong> internal relationships between statements. The factor analysis
considered only <strong>the</strong> statements with factor loadings L≥ 0,4.
To evaluate <strong>the</strong> processes <strong>of</strong> organizational learning in organizations <strong>of</strong> different types, it was
important to find out <strong>the</strong> coherence <strong>of</strong> responses to <strong>the</strong> statements. Mean values <strong>of</strong> responses
and standard deviation (SD) were considered to evaluate <strong>the</strong> data variance.
Single-factor analysis was fur<strong>the</strong>r carried out to reveal <strong>the</strong> statistically significant differences in <strong>the</strong>
processes <strong>of</strong> organizational learning between organizations <strong>of</strong> different types.
The values <strong>of</strong> all <strong>the</strong> factors were summarized by descriptive statistics.
5. Results and discussion
The factor analysis on <strong>the</strong> diagnostic block <strong>of</strong> <strong>the</strong> questionnaire has come up with 8 <strong>the</strong>oretically
significant factors for a meaningful interpretation <strong>of</strong> <strong>the</strong> information (KMO = 0,753). Eight factors have
explained 77 per cent <strong>of</strong> <strong>the</strong> variance.
The first factor has involved a meaningful set <strong>of</strong> statements that reflect <strong>the</strong> dimension <strong>of</strong> knowledge
creation and dissemination in organizations.
The items in this factor have high factor loadings and correlation: from 0,925 to 0,718 (only one
statement was L = 0,512). The Mean values in different items were from 1, 5 to 3, standard deviation
from 0, 8 to 1, and 83. The quite high value <strong>of</strong> SD is easy to explain, as <strong>the</strong> single-factor analysis has
shown a statistically significant variance between <strong>the</strong> items in this factor in different types <strong>of</strong>
organizations.
Considering <strong>the</strong> statistically significant difference among different types <strong>of</strong> organizations, it was noted
that only one item in this block (‘Some members <strong>of</strong> <strong>the</strong> organization take part in councils for <strong>the</strong>
defence <strong>of</strong> doctoral dissertations’) was given coherent responses. This item also has <strong>the</strong> weakest
correlation with o<strong>the</strong>r items in this factor. This result has a logical explanation: only those researchers
who have relevant qualifications can take part in councils for <strong>the</strong> defence <strong>of</strong> doctoral dissertations.
There is a statistically significant difference in <strong>the</strong> opinions in different types <strong>of</strong> organizations (F = from
8,616 to 13,215; p=0,001).
The statements were strongly supported by <strong>the</strong> respondents from non-governmental non-pr<strong>of</strong>it
organizations. This shows that employees in this type <strong>of</strong> organizations are actively involved in
knowledge creation and dissemination (Mean from 4, 5 to 5; SD from 0 to 0, 54). The responses from
o<strong>the</strong>r organizations show that <strong>the</strong> employees <strong>of</strong> business organizations are <strong>the</strong> least involved in
knowledge creation and dissemination, somewhat more involved in knowledge creation and
dissemination are <strong>the</strong> employees in <strong>the</strong> public sector (Mean from 2,6 to 4; SD from 0,53 to 1,76). The
most coherent responses were given with reference to <strong>the</strong> statement that ‘Members <strong>of</strong> <strong>the</strong>
organization give presentations at different conferences’ (SD from 0 to 0, 54).
But <strong>the</strong>re was variance <strong>of</strong> opinion in business organizations (SD = 1,5). It should be noted that o<strong>the</strong>r
results <strong>of</strong> research on cooperation between universities and business organizations (Janiunaite,
2009) show that <strong>the</strong> most sophisticated knowledge interaction, such as learning from <strong>the</strong> market and
o<strong>the</strong>r system actors, is not being developed. There is a donor-recipient relationship prevailing in <strong>the</strong>
system, where Lithuanian businesses are little involved in creating new technologies.
The second factor reflected <strong>the</strong> forms <strong>of</strong> learning in organizations.
The items in this factor are different in <strong>the</strong> degree <strong>of</strong> correlation. The first and <strong>the</strong> last three items have
low correlation. Thus one may assume that <strong>the</strong> managers’ encouragement to learn and <strong>the</strong>ir support
have a direct influence on <strong>the</strong> organizational learning and qualification development. But this kind <strong>of</strong>
encouragement is not related to a better understanding <strong>of</strong> one’s own activity, analysis <strong>of</strong> success and
failure, implementation <strong>of</strong> strategic innovations.
The mean value <strong>of</strong> responses to <strong>the</strong> statements in this factor is from 2,8 to 4, whereas <strong>the</strong> standard
deviation in different statements is from 0,8 to 1, and 37. This shows that different statements were
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given different evaluations by <strong>the</strong> respondents. Even though <strong>the</strong> statistically significant difference
among different types <strong>of</strong> organizations is present only in one statement, <strong>the</strong> variance <strong>of</strong> <strong>the</strong> responses
in different types <strong>of</strong> organizations implies some differences in o<strong>the</strong>r statements and informs a
meaningful interpretation (Figure 2).
Figure 1: Knowledge creation and dissemination in organizations
It may be noted that <strong>the</strong> most coherent responses to <strong>the</strong> statements came from non-governmental
organizations. The variance <strong>of</strong> responses was <strong>the</strong> lowest: from 0 to 0,9. The variance in <strong>the</strong>
responses from o<strong>the</strong>r institutions was higher. However, it may be noted that <strong>the</strong> same tendencies are
characteristic <strong>of</strong> all organizations: learning and qualification development are encouraged (Mean from
3,75 to 5), but <strong>the</strong> knowledge acquired as a result <strong>of</strong> learning is not very much related to a better
understanding <strong>of</strong> one’s own activity, analysis <strong>of</strong> success and failure, implementation <strong>of</strong> strategic
innovations (Mean from 2,85 to 4,33).
This is <strong>of</strong> particular relevance to business and public sector organizations. The discussion <strong>of</strong> <strong>the</strong>se
results should first <strong>of</strong> all consider that organizations do not pay sufficient attention to experiential
learning which, according to Valkanos and Fragoulis (2007), is a way for learners, through reflection,
to systemically understand <strong>the</strong>ir own actions and reactions to certain situations and thus improve or
even change <strong>the</strong>ir performance. Ano<strong>the</strong>r issue, drawing on <strong>the</strong> social learning <strong>the</strong>ory (Decker, 1986),
is that human behaviour and actions change in relation to <strong>the</strong> model <strong>of</strong> <strong>the</strong> environment which is
formed as an expression <strong>of</strong> behaviour and its consequences.
This coded information determines o<strong>the</strong>r actions <strong>of</strong> a person. Usually people can learn from an earlier
example <strong>of</strong> <strong>the</strong>ir own attempts and mistakes. In innovation creation and implementation, mistakes and
failures are unavoidable. If mistakes are not made, <strong>the</strong> process <strong>of</strong> innovation is impossible. This
results in organizational stagnation.
A statistically significant difference between responses in non-governmental non-pr<strong>of</strong>it and public
sector organizations emerged in one statement: ‘Employees in our organization are encouraged to
raise qualification and develop competence in different courses, seminars, etc.’ (F = 5,196, p = 0, 01).
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The employees from public sector organizations were neutral towards this statement, whereas <strong>the</strong>
employees from non-governmental organizations supported it unanimously.
Figure 2: Forms <strong>of</strong> learning in organizations
Even though <strong>the</strong>re is no statistically significant difference <strong>of</strong> o<strong>the</strong>r statements in different types <strong>of</strong>
organizations, <strong>the</strong> data presented in Figure 2 point out those non-governmental non-pr<strong>of</strong>it
organizations tend to relate <strong>the</strong> acquired knowledge with its application to performance. This may be
explained by <strong>the</strong> specific nature <strong>of</strong> NGOs performance, which is more oriented to specific domains,
subjects and problems <strong>of</strong> social life.
The third factor reflected <strong>the</strong> support <strong>of</strong> learning in organizations.
The variables in this factor have average or low factor loadings. There is a quite strong correlation
between <strong>the</strong> first two items (0,84 – 0,61) and <strong>the</strong> o<strong>the</strong>r four items (0,57 – 0,43). This implies that
collaboration with o<strong>the</strong>r organizations and learning from <strong>the</strong>m are not <strong>the</strong> factors that strongly
encourage employees to apply <strong>the</strong> acquired knowledge in performance and to develop competence.
Collaboration is not natural in resource-constrained environments, and just being part <strong>of</strong> a team would
not make people collaborate (Jassawalla and Sashittal, 1999). Sharing and learning among and
across organizations, business units and alliances can be an effective way <strong>of</strong> promoting collaborative
innovation, if organization culture emphasizes learning already (De Long and Fahey, 2000).
The mean value <strong>of</strong> items in this factor is from 2,63 to 4,16, whereas standard deviation – from 0,13 to
2,6.The analysis <strong>of</strong> responses according to <strong>the</strong> types <strong>of</strong> organizations points out a slight statistically
significant difference (F =3,536; p =0,043) only in <strong>the</strong> statement ‘Our organization is able to learn a lot
from o<strong>the</strong>r organizations’ (Figure 3). The most capable <strong>of</strong> learning from o<strong>the</strong>r organizations are nongovernmental
non-pr<strong>of</strong>it organizations (Mean = 4,66, SD = 0,51). The employees <strong>of</strong> o<strong>the</strong>r
organizations were neutral towards this statement (Mean = 3,5). There were no statistically significant
differences in o<strong>the</strong>r statements, but <strong>the</strong> statement with <strong>the</strong> highest value
‘The organization encourages a creative approach to problem solving’ (Mean from 3,93 to 4,83)
should be pointed out, as well as <strong>the</strong> statement with <strong>the</strong> most coherent response: ‘Employees are
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empowered to apply <strong>the</strong>ir learning results in <strong>the</strong>ir performance’ (Mean from 4,12 to 4,33; SD from 0,35
to 0,51).
Figure 3: Forms <strong>of</strong> learning in organizations
Figure 4: ‘Empowering learning in organizations’
The fourth factor reflects empowering learning in organizations.
The variables in this factor have average factor loadings. There is a quite high correlation among
<strong>the</strong>m (0,69 – 0,55), which implies that this factor reflects <strong>the</strong> dimension ascribed to it quite well.
The total mean <strong>of</strong> responses to <strong>the</strong> items in this factor is between 2,53 and 4,1; standard deviation is
between 0,84 and 1,3.
A statistically significant difference in different types <strong>of</strong> organizations has emerged with reference to
three statements (Figure 4). The statement ‘The management <strong>of</strong> <strong>the</strong> organization encourage learning’
(F = 5,06; p = 0,014) is mostly supported by <strong>the</strong> employees from non-governmental non-pr<strong>of</strong>it
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organizations (Mean = 4,5; SD = 0,54). The employees <strong>of</strong> business organizations do not support this
statement or are neutral towards it (Mean = 3,12; SD = 1,25). Innovations need top management
support and various techniques can be used to create fertile environments for innovations. But top
management must be aware <strong>of</strong> and committed to being leaders and create avenues for <strong>the</strong> nontraditional
types <strong>of</strong> idea management and leadership necessary to encourage innovations. In this
sense, <strong>the</strong> responses may be treated in two ways. On <strong>the</strong> one hand, maybe not sufficient attention <strong>of</strong>
<strong>the</strong> management is paid to organizational learning. On <strong>the</strong> o<strong>the</strong>r hand, it may be that innovations are
encouraged by innovation champions, those who have <strong>the</strong> functions <strong>of</strong> learning facilitators in <strong>the</strong>
organization, ra<strong>the</strong>r than its management. The statement ‘We share our experience with o<strong>the</strong>r
organizations in order to be engaged in learning’ is also characterised by statistically significant
differences <strong>of</strong> <strong>the</strong> responses from non-governmental organizations and o<strong>the</strong>r organizations (F=4,63;
p=0,019). The employees <strong>of</strong> non-governmental non-pr<strong>of</strong>it organizations are quite unanimous in
pointing out that <strong>the</strong>y share experience with o<strong>the</strong>r organizations (Mean = 4,33; SD = 0,51), whereas
<strong>the</strong> respondents from business (Mean = 2,68; SD = 1,19) and public sector (Mean = 3; SD = 1,3) are
<strong>of</strong> a different opinion. This kind <strong>of</strong> response, in particular from business organizations, may be
logically explained, as business organizations function in a very competitive environment; <strong>the</strong>refore,
<strong>the</strong> culture <strong>of</strong> collaboration with o<strong>the</strong>r organizations is not part <strong>of</strong> <strong>the</strong>m. The responses to <strong>the</strong> third
item with a statistically significant difference (F = 4,022; p = 0,030), ‘The employees are encouraged
to acquire multi-skills through rotation <strong>of</strong> tasks...’, show a variance in <strong>the</strong> opinions <strong>of</strong> employees from
<strong>the</strong> public sector and business organizations. The employees in business organizations do not
support this statement (Mean = 2,43; SD = 1,41), whereas those employed in <strong>the</strong> organizations <strong>of</strong> <strong>the</strong>
public sector point out that <strong>the</strong> employees in <strong>the</strong>ir organizations are encouraged to develop multi-skills
by task rotation (Mean = 4,12; SD = 2,03). Innovations necessitate collaboration across various
organizational boundaries. Organizations need to consider <strong>the</strong> practice <strong>of</strong> boundary spanning with
regard to two aspects: how organization can structure and sustain <strong>the</strong> practice <strong>of</strong> boundary spanning;
and how <strong>the</strong>y can keep boundary roles (both boundary spanners and boundary objects) efficient and
effective. For example, <strong>the</strong>re are lead teams for each project, and collaboration across <strong>the</strong> vertical
silos is encouraged within <strong>the</strong> lead team (Dombrowski et al., 2007). In this sense, rotation <strong>of</strong>
employee functions takes place and thus relevant skills are developed, which leads to successful
innovation.
Figure 5: ‘Employees’ individual and collective learning’
The fifth factor is on employees’ individual and collective learning.
The variables in this factor have high factor loadings and correlation: from 0,86 to 0,79. This confirms
that <strong>the</strong> statements in <strong>the</strong> factor reflect <strong>the</strong> dimension identified. The total mean <strong>of</strong> responses in this
factor is very high, from 4 to 4,53, whereas standard deviation is from 0, 68 to 0, 9. This shows that
<strong>the</strong> support to <strong>the</strong> items in this factor is high and coherent.
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A statistically significant difference in responses from different types <strong>of</strong> organizations has not
emerged. This implies that employees in different types <strong>of</strong> organizations agree that individual and
collective learning takes place not only in <strong>the</strong> frame <strong>of</strong> formal studies but also o<strong>the</strong>r environments
(including organizational). On <strong>the</strong> o<strong>the</strong>r hand, new ideas may be not only planned but also
spontaneous.
Factor 6 focuses on learning for innovations.
The variables in this factor have average factor loadings. Only one statement has a weaker
correlation with <strong>the</strong> o<strong>the</strong>r three (0,41). This kind <strong>of</strong> grouping in <strong>the</strong> factor implies that <strong>the</strong> employees
from <strong>the</strong> organizations in <strong>the</strong> survey have opportunities for learning, looking for ideas by different
means, but <strong>the</strong>y do not consider this a system <strong>of</strong> learning.
Figure 6: ‘Learning for innovations’
In this factor <strong>the</strong>re is no statistically significant difference in different types <strong>of</strong> organizations. However,
it may be noted that here <strong>the</strong>re is also a stronger support to <strong>the</strong> statements from non-governmental
non-pr<strong>of</strong>it organizations, in comparison to o<strong>the</strong>r types. It should also be noted that <strong>the</strong> respondents
were quite unanimous in pointing out that <strong>the</strong>y do not feel as if a learning system for reaching <strong>the</strong>
aims <strong>of</strong> innovative activity was functioning in <strong>the</strong>ir organizations (Mean=2,73; SD =1,36).
Still, in general <strong>the</strong> learning conditions in organizations are evaluated quite positively (total Mean =
4,13; SD = 1). This implies that <strong>the</strong> respondents do not relate <strong>the</strong> conditions <strong>of</strong> learning and
development to a targeted system for learning and development.
The seventh factor reflects idea resources in organizations.
The items in this factor have high and average factor loadings (0,83 – 0,49). The first item has a weak
correlation with <strong>the</strong> o<strong>the</strong>r two items. In spite <strong>of</strong> this, <strong>the</strong> statements <strong>of</strong> this factor, <strong>the</strong> factor loadings
and internal correlation inform a meaningful interpretation.
There is no statistically significant difference in <strong>the</strong> responses from different types <strong>of</strong> organizations.
This implies that <strong>the</strong> factor is quite homogenous. It may be noted that <strong>the</strong> respondents are quite
strongly interested in ideas from o<strong>the</strong>r organizations (total Mean = 3,9; SD = 1,1). Their search for
ideas quite <strong>of</strong>ten relies on <strong>the</strong> internet (total Mean = 3,6; SD = 1,1).
Factor 8 reflects risk tolerance in organizations.
Two variables in this factor have quite high factor loadings and very high correlation (0,80 - 0, and
79).
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There is no statistically significant difference in <strong>the</strong> responses from different organizations. The
respondents are quite neutral towards <strong>the</strong> idea <strong>of</strong> tolerating mistakes in organizations (Total
Mean = 3,12; SD = 1,17). Thus one may assume that <strong>the</strong> respondents ei<strong>the</strong>r do not encounter <strong>the</strong>
practice <strong>of</strong> analysing mistakes in <strong>the</strong>ir organizations or <strong>the</strong>y simply do not make mistakes.
Figure 7: ‘Sources <strong>of</strong> ideas’
Figure 8: Risk tolerance in organizations
To sum up <strong>the</strong> research results, <strong>the</strong> Total Mean <strong>of</strong> all <strong>the</strong> statements in <strong>the</strong> factors and Standard
Deviation is presented (Figure 9).
As seen in Figure 9, <strong>the</strong> highest values belong to <strong>the</strong> statements <strong>of</strong> Factor 5, that focus on learning
not only formally, but also in o<strong>the</strong>r (including organizational) environments (total Mean = 4,28; SD=
0,79). The lowest values belong to Factor 1 – knowledge creation and dissemination in organizations
(total Mean = 2,95; SD = 1,03).
These tendencies also confirm o<strong>the</strong>r research results that have highlighted adaptive nature <strong>of</strong>
innovative performance (ra<strong>the</strong>r than oriented to original innovations), absence <strong>of</strong> knowledge
dissemination and sharing in organizations <strong>of</strong> <strong>the</strong> same or different types, etc. For instance, <strong>the</strong>
research carried out in <strong>the</strong> frame <strong>of</strong> <strong>the</strong> project ‘Activating Citizen’s Participation in Creating
Knowledge and Learning City by Developing Innovative Culture’ at <strong>the</strong> Institute <strong>of</strong> Educational
Studies, Kaunas University <strong>of</strong> Technology, in 2003, aimed to identify <strong>the</strong> manifestation <strong>of</strong> learning
organization features in 7 organizations (5 <strong>of</strong> <strong>the</strong>m non-pr<strong>of</strong>it and 2 – pr<strong>of</strong>it organizations). Top-level
managers and employees at <strong>the</strong> organizations were surveyed. The research has shown that a
teaching approach to strategy formation and employees’ involvement in this process is not
characteristic <strong>of</strong> <strong>the</strong> organizations; equal access to learning opportunities and interorganizational
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learning are weakly manifested. The atmosphere <strong>of</strong> self-education is most strongly manifested in all
<strong>the</strong> organizations. The weakest points in educational organizations are teamwork, tolerance <strong>of</strong>
mistakes; mistakes are not treated as learning opportunities, time for learning is not planned and
scheduled for <strong>the</strong> employees. Similar tendencies were disclosed in pr<strong>of</strong>it organizations.
Figure 9: Total Mean <strong>of</strong> all <strong>the</strong> statements in <strong>the</strong> factors and Standard Deviation
In <strong>the</strong> frame <strong>of</strong> <strong>the</strong> above-mentioned project, a research on <strong>the</strong> manifestation <strong>of</strong> citizens’ innovative
culture characteristics in three cities was carried out; 100 <strong>of</strong> employees <strong>of</strong> different levels were
surveyed in every city. The research highlighted <strong>the</strong> following tendencies: even though <strong>the</strong>
respondents have possitive attitudes towards learning, tolerate social mobility, innovations and
changes, orientation to <strong>the</strong> use <strong>of</strong> possibilities, <strong>the</strong>y are also characterized by adaptive, not innovative
behaviour; low risk tolerance, i.e. people are inclined to adapt to o<strong>the</strong>rs, to implement o<strong>the</strong>rs ideas,
but not generate <strong>the</strong>m by <strong>the</strong>mselves, demonstrate non-standart behaviour.
Jucevicius (2009) analysed <strong>the</strong> manifestation <strong>of</strong> innovative culture characteristics (tolerance <strong>of</strong> risk,
uncertainty and change; emphasis on mobility and flexibility, emphasis on learning and networking) in
modern organizations <strong>of</strong> Lithuania. The research results also correlate with <strong>the</strong> tendencies presented
in this paper. These findings indicate that <strong>the</strong> most problematic aspects <strong>of</strong> organizational practices
concern <strong>the</strong> tolerance <strong>of</strong> risk, uncertainty and change, which is usually considered to be <strong>of</strong>
fundamental importance to <strong>the</strong> success <strong>of</strong> innovation-oriented performance.The mobility/flexibility
dimension also faces certain constraints. On <strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong> dimensions <strong>of</strong> networking and
learning are relatively well represented in <strong>the</strong> surveyed organizations.
6. Limitations <strong>of</strong> <strong>the</strong> research
It should be noted that this paper presents <strong>the</strong> results <strong>of</strong> expert survey, which was mainly concerned
with <strong>the</strong> validation <strong>of</strong> <strong>the</strong> research instruments. Therefore, <strong>the</strong> results reveal only certain tendencies.
Fur<strong>the</strong>r research will involve a representative sample <strong>of</strong> enterprises and organizations. The research
will employ not only quantitative but also qualitative research strategy, combine <strong>the</strong>m and analyse <strong>the</strong>
nature <strong>of</strong> innovative activity in separate organizations and <strong>the</strong>ir clusters, also <strong>the</strong> relationship between
organizational learning and o<strong>the</strong>r constituent elements <strong>of</strong> innovative culture.
7. Conclusions
Drawing on <strong>the</strong> premise that organizational learning is one <strong>of</strong> <strong>the</strong> important premises <strong>of</strong> organizational
culture, <strong>the</strong> research has come up with <strong>the</strong> following conclusions:
organizational learning as a system unifying efforts <strong>of</strong> individual and collective learning is absent
in both types <strong>of</strong> organizations; learning is quite fragmentary, learning for innovations is not
highlighted;
<strong>the</strong> ways <strong>of</strong> organizational learning are more oriented to <strong>the</strong> paradigm <strong>of</strong> teaching: learning takes
place when <strong>the</strong>re is teaching. Learning tends to be adaptive ra<strong>the</strong>r than innovative: it supports or
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stabilizes <strong>the</strong> existing structures ra<strong>the</strong>r than initiates change and renewal; this is reflected by low
tolerance <strong>of</strong> risk in organizations, too little learning from mistakes and failures;
some controversial tendencies have been identified: non-pr<strong>of</strong>it organizations are more active in
using knowledge management in comparison to business organizations; this is particularly visible
in terms <strong>of</strong> knowledge dissemination and adoption, change in <strong>the</strong> functions <strong>of</strong> employee
performance, managers as learning facilitators.
This paper was prepared in <strong>the</strong> frame <strong>of</strong> <strong>the</strong> project ‘Study on Innovative Culture Pr<strong>of</strong>iles in
Organizations <strong>of</strong> <strong>the</strong> Public and Private Sector’ (No. MIP-28/2010) funded by <strong>the</strong> Research Council <strong>of</strong>
Lithuania.
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264

Balancing <strong>the</strong> Incentives and Controls in <strong>the</strong> Knowledge
Partnership-Based Business Models
Giedrius Jucevičius
HEC University <strong>of</strong> Lausanne, Switzerland
Kaunas University <strong>of</strong> Technology, Kaunas, Lithuania
giedrius.jucevicius@ktu.lt
Abstract: Some <strong>of</strong> <strong>the</strong> most innovative business models are characterized by a high degree <strong>of</strong> openness, as far
as knowledge partnerships with various stakeholders are concerned. However, <strong>the</strong> inbound and outbound open
business models (à la Chesbrough) are confronted with multiple challenges that are mainly related to <strong>the</strong> issues
<strong>of</strong> inter-actor trust, cooperation incentives and private value appropriation. This paper aims to provide a
<strong>the</strong>oretically and empirically sound overview <strong>of</strong> <strong>the</strong> existing coordination mechanisms in <strong>the</strong> knowledge
partnerships within <strong>the</strong> innovative business models. The analysis focuses on <strong>the</strong> ways <strong>the</strong> incentives enabling <strong>the</strong>
collective knowledge sharing and value appropriation from <strong>the</strong> collective activities, as well as safeguards against
free riding are properly balanced and implemented in different organizational contexts. The paper employs <strong>the</strong>
research methods <strong>of</strong> <strong>the</strong> <strong>the</strong>oretical analysis in <strong>the</strong> fields <strong>of</strong> organization studies, business model design and <strong>the</strong>
empirical case studies <strong>of</strong> several innovative business models. The research paper takes into account <strong>the</strong> variety
<strong>of</strong> knowledge partnerships both on <strong>the</strong> supply- and demand-side. The nature <strong>of</strong> incentives for knowledge sharing
and means for value appropriation may vary depending on <strong>the</strong> type <strong>of</strong> <strong>the</strong> knowledge partnership. On <strong>the</strong>
demand-side, <strong>the</strong> emphasis lies on establishing <strong>the</strong> incentives for participation. On <strong>the</strong> supply-side, <strong>the</strong> most
salient issue is <strong>the</strong> establishment <strong>of</strong> proper safeguards that prevent from abusing <strong>the</strong> trust-based knowledge
transactions, as well as <strong>the</strong> proper value appropriation regimes. The incentives and safeguards should be
properly balanced within <strong>the</strong> organizational system so that safeguards are not turned into <strong>the</strong> disincentives to
engage into <strong>the</strong> knowledge partnership. The paper provides a list <strong>of</strong> incentives and safeguards, and discusses
<strong>the</strong>ir systemic relationships in different organizational contexts.
Keywords: knowledge partnerships, business models, incentives, value appropriation
1. Introduction
The recognition that much <strong>of</strong> <strong>the</strong> valuable knowledge is located outside <strong>the</strong> organization, i.e. outside
<strong>the</strong> hierarchies and direct managerial control, makes businesses rethink <strong>the</strong> ways <strong>of</strong> managing
knowledge in <strong>the</strong>ir innovation processes (Chesbrough, 2005; 2006; Wang et al., 2009). One can
notice a change from <strong>the</strong> internal focus on management towards <strong>the</strong> external focus on governance.
The open business models, however, are confronted with new dilemmas, especially concerning <strong>the</strong>
individual appropriation <strong>of</strong> benefits in <strong>the</strong> group-based innovative activities.
This paper tries to combine two perspectives that are indispensible to any successful open business
model that is based on external knowledge partnerships.
On one hand, it looks into <strong>the</strong> incentive structures that are applied in various collaborative business
models. The incentives are <strong>of</strong> a particular importance for any knowledge partnership to take place,
whe<strong>the</strong>r it involves customers, o<strong>the</strong>r producers or just knowledgeable experts from various fields.
There must be sufficient incentives not only for <strong>the</strong>se actors, but also for <strong>the</strong> company that initiates
knowledge partnership as a basis <strong>of</strong> its business model. It most cases companies have to open up
some <strong>of</strong> <strong>the</strong>ir intellectual (and sometimes financial) resources to <strong>the</strong> external stakeholders. Thus,
strong incentives must be present on all sides <strong>of</strong> <strong>the</strong> partnership.
Ano<strong>the</strong>r important aspect <strong>of</strong> a properly functioning open business model concerns <strong>the</strong> establishment
<strong>of</strong> safeguards against <strong>the</strong> free riding activities as well as <strong>the</strong> ways for appropriating <strong>the</strong> value without
destroying <strong>the</strong> participation incentives (i.e. propriety controls <strong>of</strong> <strong>the</strong> outcome). Whereas knowledge
remains a highly intangible asset, its exchange may be subject to various kinds <strong>of</strong> abuse by <strong>the</strong>
partners. The safeguards largely depend on <strong>the</strong> nature and type <strong>of</strong> <strong>the</strong> knowledge partnership, i.e.
one can expect a different type <strong>of</strong> legal, economic and social safeguards in <strong>the</strong> IT-based
crowdsourcing activities (e.g. Innocentive), R&D partnerships <strong>of</strong> large enterprises (e.g. Nestlé), or
customer involvement in co-creation process (e.g. Zara). Depending on <strong>the</strong> type <strong>of</strong> partnership (e.g.
formal, informal, public, private), <strong>the</strong>re can also be a variety <strong>of</strong> value appropriation regimes.
Any successful open business model that is based on <strong>the</strong> exchange and use <strong>of</strong> knowledge by multiple
partners must effectively balance <strong>the</strong> system <strong>of</strong> incentives and safeguards. This is <strong>the</strong> basic
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assumption <strong>of</strong> this paper. There is quite a sufficient body <strong>of</strong> research in <strong>the</strong> field regarding <strong>the</strong>
incentives and controls in knowledge partnerships, but <strong>the</strong> issue <strong>of</strong> balance between <strong>the</strong> two has still
been somewhat neglected. It is <strong>the</strong> aim <strong>of</strong> this paper to address <strong>the</strong> observed gap in research and
combine <strong>the</strong> two perspectives.
The following chapters are devoted to discussing <strong>the</strong> proper incentive and safeguard schemes in
knowledge partnerships and <strong>the</strong> potential ways <strong>of</strong> achieving <strong>the</strong>ir proper balance.
2. Knowledge partnership-based business models
There are many possible definitions and forms <strong>of</strong> <strong>the</strong> knowledge partnerships. Knowledge
partnerships can be characterised as associations and networks <strong>of</strong> individuals or organizations that
share a common purpose or goal (Serrat, 2010). They are comprised <strong>of</strong> members who contribute, in a
reciprocal way, knowledge, experience, resources and connections. Successful knowledge
partnerships usually have no formal organizational structure, but are characterised by a high degree
<strong>of</strong> strategic, structural and cultural fit <strong>of</strong> its members who participate voluntarily in <strong>the</strong> exchange.
Therefore, knowledge partnerships cannot be managed in a “top-down” way, but are coordinated by
introducing <strong>the</strong> relevant incentive schemes.
The knowledge partnerships may also vary by <strong>the</strong>ir degree <strong>of</strong> formalization: from ad hoc networks
with no formal structure or member obligations to semi-formal networks with governing bodies and
collective identity, and even to <strong>the</strong> institutionalised contractual inter-organizational agreements with
<strong>the</strong> formally defined roles <strong>of</strong> <strong>the</strong> parties. The more informal <strong>the</strong> knowledge partnership, <strong>the</strong> more
flexible and independent <strong>the</strong> behaviour <strong>of</strong> its members (Serrat, 2010). The informal knowledge
partnerships tend to render individual benefits from network externalities, but usually fail to deliver
strong collective identity, group legitimacy and accumulate substantial shared resources. The more
formal knowledge partnerships tend to have more explicit governance bodies and procedures,
possess stronger external legitimacy and build on more extensive institutional resources that are
important in order to collectively undertake <strong>the</strong> complex projects (e.g. joint R&D).
However, <strong>the</strong> more formalized and institutionalized <strong>the</strong> partnership, <strong>the</strong> greater risk <strong>of</strong> <strong>the</strong>
bureaucratization <strong>of</strong> relations, competition for resources and power – all this at <strong>the</strong> expense <strong>of</strong> trustbased
relations. In o<strong>the</strong>r words, <strong>the</strong> knowledge partnerships <strong>of</strong> business organizations <strong>of</strong>ten have to
strike a delicate balance between <strong>the</strong> organizational hierarchy and network forms <strong>of</strong> governance. It
means that <strong>the</strong> open business models possess some inherent tensions that are caused by <strong>the</strong> need
to resolve <strong>the</strong> extremes <strong>of</strong> openness and corporate control, knowledge sharing and knowledge
appropriation. Teece (1986) claims that when “<strong>the</strong> markets don’t work well, <strong>the</strong> pr<strong>of</strong>its from innovation
may accrue to <strong>the</strong> owners <strong>of</strong> certain complementary assets, ra<strong>the</strong>r than <strong>the</strong> developers <strong>of</strong> intellectual
property”. The so-called “weak appropriability regime” may open leeway to <strong>the</strong> free-riders, destroy
incentives for cooperation and contribute to <strong>the</strong> failures <strong>of</strong> innovating firms.
Chesbrough (2006) characterizes <strong>the</strong> open business models as a new division <strong>of</strong> labour where <strong>the</strong>
value is created by leveraging ideas and concepts from outside <strong>the</strong> organization. There are many
different business models that are based on more or less open knowledge partnerships: open source
business models, <strong>the</strong> co-creation platforms involving customers, experts and even competitors. Some
are non-pr<strong>of</strong>it business models where <strong>the</strong> outcome <strong>of</strong> collaboration is owned by <strong>the</strong> community (e.g.
open source s<strong>of</strong>tware, such as Linux). Yet many are privately controlled business initiatives that seek
to use <strong>the</strong> potential <strong>of</strong> “external resources” for firm’s value creation. It is in <strong>the</strong>se semi-public semiprivate
environments that <strong>the</strong> question <strong>of</strong> balance between <strong>the</strong> participation incentives and value
appropriation is particularly delicate.
This paper does not seek to provide a panacea-type <strong>of</strong> solution to <strong>the</strong> tensions that reside in different
open business models. It instead seeks to discuss <strong>the</strong> possible combinations <strong>of</strong> incentives for
knowledge sharing and <strong>the</strong> corresponding appropriability regimes that underlie some <strong>of</strong> <strong>the</strong>
successful open business models.
3. Private and public value in knowledge partnerships: Questions <strong>of</strong> property
The innovation literature (e.g. Stuermer et al., 2009; von Hippel et al., 2009) distinguishes between
two mainstream models <strong>of</strong> innovation – private investment model and collective action model. Private
investment model suggests <strong>the</strong> presence <strong>of</strong> private investor in innovation, who seeks to appropriate
its outcome (i.e. innovative outcome as a return on private investment). In this case, <strong>the</strong> role <strong>of</strong> <strong>the</strong>
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safeguard and deterrent against <strong>the</strong> free-riding is played by <strong>the</strong> intellectual property rights legislation.
If private investment is carried out by an R&D partnership <strong>of</strong> several firms, <strong>the</strong> value appropriation is
usually carried out through formal contracts. The collective action model, on <strong>the</strong> o<strong>the</strong>r hand, suggests
that innovators contribute to <strong>the</strong> public goods innovations, usually on <strong>the</strong> basis <strong>of</strong> public subsidy. The
outcome <strong>of</strong> such innovation (e.g. publicly funded science or Wikipedia) is available to everyone and
poses little conflict as far as “appropriation” <strong>of</strong> benefits is concerned. The only major restraints
concern <strong>the</strong> limitations <strong>of</strong> public subsidy and potentially uneven absorptive capacities <strong>of</strong> different
public and private actors.
However, in recent years we have seen <strong>the</strong> emergence <strong>of</strong> hybrid models <strong>of</strong> innovation, such as <strong>the</strong>
model <strong>of</strong> private-collective innovation. It means investing private resources into <strong>the</strong> production <strong>of</strong>
public goods, while at <strong>the</strong> same time obtaining private benefits for <strong>the</strong> firm despite <strong>the</strong> fact that
knowledge / information is made available to everyone - freely and inexclusively. The open source
s<strong>of</strong>tware, user-generated equipment and product design are just a few examples <strong>of</strong> private-collective
innovation, based on <strong>the</strong> principle <strong>of</strong> free revealing. However, free revealing strongly relies on a
positive motivation <strong>of</strong> <strong>the</strong> parties involved.
One can distinguish six major motives for firms / individuals to open up <strong>the</strong>ir internal knowledge
resources to <strong>the</strong> external communities (Stuermer et al., 2009).
The protection <strong>of</strong> own knowledge in dynamic and volatile environment may turn out to be more
costly than sharing it and co-developing concepts with <strong>the</strong> community. It is particularly true when
“o<strong>the</strong>rs already know something close to your secret” (von Hippel, von Krogh, 2006) and it is just
a matter <strong>of</strong> time when this “substitutable” knowledge becomes available first to <strong>the</strong> competitors
and <strong>the</strong>n to <strong>the</strong> public.
The external community may provide valuable intellectual contribution to <strong>the</strong> development <strong>of</strong> <strong>the</strong>
initial concepts (e.g. open source s<strong>of</strong>tware codes) and provide an excellent base for product
testing. It may also stimulate organizational learning in <strong>the</strong> lead company.
Free revealing streng<strong>the</strong>ns <strong>the</strong> positive reputation <strong>of</strong> knowledge holder among various
stakeholder groups (users, o<strong>the</strong>r producers, government), which may lead to o<strong>the</strong>r related
benefits.
Possibility to pr<strong>of</strong>it from <strong>the</strong> first mover advantage and <strong>the</strong> possible network externalities that stem
from wide acceptance <strong>of</strong> <strong>the</strong> shared concept / s<strong>of</strong>tware / technology, especially if <strong>the</strong> latter
becomes <strong>the</strong> “dominant design” in <strong>the</strong> market.
Free revealing <strong>of</strong> inside knowledge may lead to crowdsourcing <strong>of</strong> <strong>the</strong> ideas, what helps reduce
<strong>the</strong> labour cost within <strong>the</strong> company.
The freely revealed information may save <strong>the</strong> R&D costs for manufacturers, who at <strong>the</strong> same time
refine <strong>the</strong> original product (this incentive is more limited to open source s<strong>of</strong>tware development).
Von Hoppel et al. (2006) draws an interesting conclusion that unlike in private investment model (i.e.
innovation as private good based on private investment) and collective action model (i.e. innovation
as public good based on public subsidy), in private-collective model <strong>the</strong> knowledge sharers are not
too concerned about <strong>the</strong> free-rider effect, which is <strong>of</strong> a key concern in first two cases. For example,
firms, such as Linux, encourage <strong>the</strong> widest possible use <strong>of</strong> its open source s<strong>of</strong>tware. The benefits to
<strong>the</strong> innovators appear to be greater than to <strong>the</strong> free-riders because <strong>the</strong>y receive valuable inputs from
<strong>the</strong> expert community, as well as different positive externalities (e.g. network effect, new business
opportunities, etc.)
On <strong>the</strong> o<strong>the</strong>r hand, Stuermer et al. (2009) acknowledge <strong>the</strong> possibility <strong>of</strong> <strong>the</strong> so-called “hidden costs”
to <strong>the</strong> free revealing party. In order to reap <strong>the</strong> benefits from knowledge partnership, <strong>the</strong> sharing firm
may need to invest into explaining <strong>the</strong> concept to <strong>the</strong> potential contributors, train <strong>the</strong>m, develop online
tutorial (e.g. in <strong>the</strong> case <strong>of</strong> open source s<strong>of</strong>tware development). The knowledge sharing party may
also risk losing control over <strong>the</strong> future development <strong>of</strong> <strong>the</strong> technology that stems from <strong>the</strong> shared
internal information / knowledge.
There are several possible safeguards in this case. The company may choose to share <strong>the</strong> general
information / knowledge, while keeping to itself its more specific aspects. In <strong>the</strong> case <strong>of</strong> open source
s<strong>of</strong>tware development, <strong>the</strong> company may rely on <strong>the</strong> General Public License (GPL) that provides
fur<strong>the</strong>r users with permission to use and modify <strong>the</strong> source code, but not to use in any commercial
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form for own purposes (e.g. incorporate into s<strong>of</strong>tware that is later taken to <strong>the</strong> market). However, in a
well-crafted business model, <strong>the</strong> benefits <strong>of</strong> knowledge partnership outweigh <strong>the</strong> possible free rider
effects because innovators retain o<strong>the</strong>r sources to make pr<strong>of</strong>its.
A distinction should be made between private open innovation and open source innovation (Huizingh,
2011). Both can be characterised by <strong>the</strong> open process (i.e. involving multiple outsiders in product
development), yet differing in terms <strong>of</strong> outcome, which remains open in <strong>the</strong> case <strong>of</strong> open source
innovation (e.g. Linux) and closed in <strong>the</strong> case <strong>of</strong> private open innovation. In <strong>the</strong> latter case, things
usually get more complicated. There is always a potential trade-<strong>of</strong>f situation between <strong>the</strong> public
participation and private appropriation unless “<strong>the</strong> best <strong>of</strong> two worlds” solution is achieved.
Three major models <strong>of</strong> co-creation that have recently emerged in <strong>the</strong> new industrial paradigm <strong>of</strong> peer
production can be distinguished (Bauwens, 2009):
Commons-centred peer production where community plays <strong>the</strong> key role, is strong enough to
sustain its own infrastructure and to cooperate with <strong>the</strong> market players (e.g. Linux open source
s<strong>of</strong>tware). The value <strong>of</strong> such knowledge partnerships remains public (e.g. protected by GPL
licence).
Sharing environment, where <strong>the</strong> platform for knowledge sharing is owned by third party (e.g.
company), which monetizes <strong>the</strong> attention space, while <strong>the</strong> community <strong>of</strong> knowledge sharers has
indirect influence over <strong>the</strong> platform. The value is appropriated by <strong>the</strong> platform owner and <strong>the</strong>
community members (e.g. protected by <strong>the</strong> Creative Commons licence).
Crowdsourced environment, where knowledge providers are isolated from each o<strong>the</strong>r, even
competing against each o<strong>the</strong>r for <strong>the</strong> benefits (e.g. monetary prize) <strong>of</strong>fered by <strong>the</strong> platform owner.
There is no community solidarity and <strong>the</strong> benefits are appropriated by <strong>the</strong> owner <strong>of</strong> <strong>the</strong> platform
(e.g. by providing an award for <strong>the</strong> best “crowdsourced” solution)
So far <strong>the</strong> discussion was more about <strong>the</strong> incentives and safeguards from <strong>the</strong> perspective <strong>of</strong> <strong>the</strong> lead
partner who initiates <strong>the</strong> knowledge sharing. However, any successful knowledge exchange is a twoway
process, thus one should also address <strong>the</strong> main incentives behind <strong>the</strong> partner participation in
knowledge partnership. Understanding <strong>the</strong> incentives behind <strong>the</strong> involvement <strong>of</strong> network actors will
also help envisage <strong>the</strong> appropriate mechanisms <strong>of</strong> control.
The research on <strong>the</strong> open innovation has shown that companies perform more inbound than
outbound activities, i.e. are more willing to attract <strong>the</strong> external knowledge-related resources than to
open up <strong>the</strong>ir own resources to o<strong>the</strong>r stakeholders. Many firms are still largely protective <strong>of</strong> <strong>the</strong>ir own
intellectual capital (e.g. fearing to give away <strong>the</strong>ir “golden goose” in <strong>the</strong> innovation market), while <strong>the</strong>ir
main concern should be about appropriation <strong>of</strong> pr<strong>of</strong>its from innovation (Huizingh, 2011).
One should distinguish between two types <strong>of</strong> methods for capturing value from innovations – formal
and informal (Huizingh, 2011). The formal methods rely mainly on <strong>the</strong> legal means <strong>of</strong> protection, such
as copyright, trademark or patent protection, which are <strong>of</strong>ten hard to enforce while participating in <strong>the</strong>
knowledge partnerships. The informal methods include <strong>the</strong> first mover advantage, <strong>the</strong> lock-in <strong>of</strong>
customers, network and tipping effects.
There is a bulk <strong>of</strong> research showing that formal methods, such as patents, are not quite useful for
capturing <strong>the</strong> commercial value in many industries (except chemicals and pharmaceuticals), while <strong>the</strong>
absolute majority <strong>of</strong> patents remain unused by <strong>the</strong>ir owners. The copyright only protects <strong>the</strong> original
piece <strong>of</strong> work, but not <strong>the</strong> ideas and concepts, which are very easily leaked into <strong>the</strong> outside world. On
<strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong> informal methods seem to be <strong>of</strong> greater use for capturing <strong>the</strong> ultimate value,
especially in <strong>the</strong> open innovation environment. They rely more on <strong>the</strong> social-economic behaviour <strong>of</strong>
actors (e.g. building <strong>the</strong> critical mass <strong>of</strong> customers) than on <strong>the</strong> legal provisions and are more suitable
in <strong>the</strong> environment <strong>of</strong> knowledge exchange. Never<strong>the</strong>less, one can find a plenty <strong>of</strong> networks and
communities <strong>of</strong> knowledgeable stakeholders, which fail to deliver a fully functioning revenue model.
The control and commercialization <strong>of</strong> value out <strong>of</strong> open knowledge partnerships in many instances
still retains its controversies.
4. Monetary vs. non-monetary incentives <strong>of</strong> knowledge sharing
The decision to participate in open collaborations is driven by two sets <strong>of</strong> incentives – monetary and
non-monetary. The role <strong>of</strong> monetary and non-monetary incentives depends to a large extent on <strong>the</strong>
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nature <strong>of</strong> partnership, i.e. pr<strong>of</strong>it-seeking vs. non-pr<strong>of</strong>it seeking, private goods vs. public goods, as well
as on <strong>the</strong> intrinsic motives <strong>of</strong> <strong>the</strong> parties (e.g. goodwill, pr<strong>of</strong>essional development, reputation, money,
etc.). Conventional logic suggests that monetary incentives are more likely to be present in <strong>the</strong> pr<strong>of</strong>itseeking
partnerships, whereas non-monetary incentives should prevail in <strong>the</strong> non-pr<strong>of</strong>it seeking
communities. However, <strong>the</strong> practice <strong>of</strong> knowledge partnerships is not that simplistic.
As far as monetary incentives are concerned, a distinction can be made between direct vs. indirect,
or short-term vs. long-term incentives. The direct monetary incentives imply that <strong>the</strong> knowledge
provider is motivated by immediate monetary gains from knowledge sharing (e.g. <strong>the</strong> financial prize
for providing innovative solution in <strong>the</strong> “idea contest”). The indirect monetary incentives mean that
knowledge provider may expect financial returns in o<strong>the</strong>r forms and contexts <strong>of</strong> participation (e.g.
receiving potential contracts and job <strong>of</strong>fers from o<strong>the</strong>r participants <strong>of</strong> knowledge partnership).
Most limitations <strong>of</strong> monetary incentives are related to <strong>the</strong> intangible nature <strong>of</strong> knowledge (especially,
in cases when knowledge is not codified). At least four major problems with monetary incentives can
be noticed (Ghosh, 2004):
Matching <strong>the</strong> right buyer with <strong>the</strong> right knowledge seller is <strong>of</strong>ten very complicated.
The quality <strong>of</strong> knowledge to be received is very hard to evaluate before establishing <strong>the</strong> market
relationship. One should also add that this might as well be a problem <strong>of</strong> knowledge recipient,
who might fail to appreciate <strong>the</strong> value <strong>of</strong> shared knowledge due to inadequate absorptive
capacity.
Successful output / pr<strong>of</strong>it may be <strong>the</strong> result <strong>of</strong> different pieces <strong>of</strong> knowledge that belong to
different providers so that attributing adequate monetary value to every piece becomes next to
impossible. Besides, knowledge may be only a part <strong>of</strong> ultimate success, with o<strong>the</strong>r key
“ingredients” - efforts, determination and organization - being as important.
Quite <strong>of</strong>ten <strong>the</strong> parties to knowledge exchange have no clear understanding <strong>of</strong> <strong>the</strong> expected
outcomes from <strong>the</strong> knowledge sharing, what makes <strong>the</strong> ex ante evaluation <strong>of</strong> knowledge very
difficult.
Some successful knowledge-intensive business initiatives that are based on monetary incentives,
such as Innocentive, manage to escape most <strong>of</strong> <strong>the</strong> above mentioned limitations. It represents a well
thought-out business model with successfully balanced structure <strong>of</strong> incentives and value
appropriation. InnoCentive acts as an intermediary for crowdsourcing <strong>the</strong> technological solutions,
mainly in <strong>the</strong> field <strong>of</strong> chemical engineering, by building and connecting <strong>the</strong> communities <strong>of</strong> problem
seekers and problem solvers. It helps problem seekers to formulate <strong>the</strong> problem in a way that is clear
to solution providers without disclosing too much “discrete” information about <strong>the</strong> company, as well as
takes care <strong>of</strong> <strong>the</strong> intellectual property issues. Innocentive also builds and engages <strong>the</strong> community <strong>of</strong>
problem solvers, who get <strong>the</strong> financial reward in case <strong>of</strong> success (next to <strong>the</strong> recognition as talented
problem solver). Innocentive revenue is enabled by <strong>the</strong> membership fees and commission from <strong>the</strong>
prize that is awarded to <strong>the</strong> successful problem solvers.
On <strong>the</strong> o<strong>the</strong>r hand, Innocentive cannot be regarded as a true knowledge partnership because it is
more a meeting place <strong>of</strong> providers <strong>of</strong> knowledge-based solutions and providers <strong>of</strong> financial rewards
(ra<strong>the</strong>r than <strong>the</strong>ir internal knowledge). Not surprisingly, in such “virtual marketplace” <strong>the</strong>re is not much
controversy concerning <strong>the</strong> use <strong>of</strong> monetary incentives, as well as IP protection (i.e. <strong>the</strong> solution
seeker fully appropriates <strong>the</strong> IP by paying <strong>the</strong> solution provider <strong>the</strong> agreed financial award).
There are many instances when <strong>the</strong> non-monetary incentives seem to be more effective at
encouraging knowledge sharing. Nei<strong>the</strong>r individual, nor collective pay-for-performance schemes can
be effective at promoting <strong>the</strong> knowledge sharing if <strong>the</strong>y are not supported by “s<strong>of</strong>t” factors, such as
organizational loyalties or strong intrinsic values that constitute <strong>the</strong> basis <strong>of</strong> trust (Ghosh, 2004). The
“s<strong>of</strong>t”, non-monetary factors may also act as strong deterrents from free riding activities in <strong>the</strong>
collective knowledge sharing processes. Although free riding behaviours can be controlled through
extrinsic feelings <strong>of</strong> shame by <strong>the</strong> peers, it is more effective to develop <strong>the</strong> intrinsic feeling <strong>of</strong> guilt,
which is usually present in groups with strong organizational loyalty (Kandel and Lazaer, 1992).
However, such loyalties are more difficult to achieve in <strong>the</strong> open partnerships that may not always
possess common goal or identity.
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The non-monetary incentives include all individual and social benefits from knowledge sharing that
are not directly related with economic gains: personal and pr<strong>of</strong>essional development, academic
interest, community participation, increased status and reputation in peer community, fun and charity.
An extensive study by Gaammelgaard (2007) <strong>of</strong> incentives for intra-organizational knowledge sharing
in different countries and organizations has shown that employees, while sharing valuable
information, feel more motivated by such factors as pr<strong>of</strong>essional / personal development, increased
status and reputation in <strong>the</strong> organization than salary increases and promotion.
In <strong>the</strong> case <strong>of</strong> open source s<strong>of</strong>tware development, one can see a significant pool <strong>of</strong> evidence (e.g.
Gaechter et al., 2010) that many co-developers are driven by <strong>the</strong> potential social rewards, such as
recognition by <strong>the</strong> pr<strong>of</strong>essional community, solidarity, fairness, altruism. The open source
communities (e.g. Linux) in many ways resemble <strong>the</strong> social movements where ideas play a more
important role than pragmatic rationale (von Hippel, 2006). In such cases, <strong>the</strong> social incentives, such
as being part <strong>of</strong> <strong>the</strong> pr<strong>of</strong>essional community, or individual pr<strong>of</strong>essional incentives, such as access to
valuable competence, matter more than <strong>the</strong> economic goals. Never<strong>the</strong>less, <strong>the</strong> reasons behind
unselfish participation in a social movement (e.g. Linux decentralization vs. Micros<strong>of</strong>t centralization)
may easily get distorted once <strong>the</strong> individual pr<strong>of</strong>it motives enter <strong>the</strong> stage. There may be instances
when <strong>the</strong> picture <strong>of</strong> “gift economy” seems to be overoptimistic.
The survey by Lakhani and Wolf (2005) has presented an interesting finding that around 40 percent <strong>of</strong>
contributors to open source s<strong>of</strong>tware projects were paid (!) to participate. Thus, even in <strong>the</strong> “social
movement” type <strong>of</strong> environment <strong>the</strong> monetary incentives do not lose <strong>the</strong>ir importance.
Much <strong>of</strong> <strong>the</strong> non-monetary incentives depend on <strong>the</strong> reciprocity in knowledge sharing, which may not
always be ensured. For example, <strong>the</strong> reciprocity and “shadow <strong>of</strong> <strong>the</strong> future” (i.e. sharing knowledge
today with expectation <strong>of</strong> valuable returns from ano<strong>the</strong>r party in <strong>the</strong> future) does not work in a
codification strategy as <strong>the</strong>re may be asymmetry <strong>of</strong> sellers and consumers <strong>of</strong> knowledge due to <strong>the</strong>
free-riding (Ghosh, 2004). Nor will reciprocity work in <strong>the</strong> situations when experts do not share <strong>the</strong>
same level <strong>of</strong> competence. It is hard to expect an ongoing expert-novice relationship because <strong>the</strong>
expert may find too few incentives to participate. Some <strong>of</strong> <strong>the</strong> open crowdsourcing projects (e.g.
Wikipedia) do not realise <strong>the</strong>ir full potential due to inadequate involvement <strong>of</strong> experts, whose numbers
would boost <strong>the</strong> quality <strong>of</strong> crowdsourcing initiatives. The experts, on <strong>the</strong> o<strong>the</strong>r hand, value a degree <strong>of</strong>
recognition and exclusivity, which goes against <strong>the</strong> spirit <strong>of</strong> “wisdom <strong>of</strong> <strong>the</strong> crowds”. Maybe attracting
<strong>the</strong> “crowds <strong>of</strong> experts” simply calls for <strong>the</strong> new incentive structures that are so far under-used by <strong>the</strong>
crowdsourcing initiatives? Usually, it means establishing <strong>the</strong> expert communities where members
value <strong>the</strong> reciprocal knowledge exchange. However, experts may appreciate different kinds <strong>of</strong>
incentives from <strong>the</strong> ones that mobilise <strong>the</strong> “crowds”. An extensive club <strong>of</strong> experts can be established,
based on reputation, recommendations or membership fee. Again <strong>the</strong> monetary safeguards <strong>of</strong>
participant quality might not be a panacea because it tells little about participant’s competence, while
paying <strong>the</strong> membership fee may also be regarded as ”purchasing <strong>the</strong> ticket to free ride”.
Co-creation: involving <strong>the</strong> expert community. The book <strong>of</strong> my colleagues at <strong>the</strong> University <strong>of</strong>
Lausanne (Switzerland), A.Osterwalder and Y.Pigneur (2009), “Business model generation” is a
valuable case <strong>of</strong> successful knowledge partnership and expert community building for <strong>the</strong>
collaborative book project. The authors <strong>of</strong> <strong>the</strong> book performed <strong>the</strong> role <strong>of</strong> <strong>the</strong> lead partners by
mobilizing 470 experts for co-writing <strong>of</strong> <strong>the</strong> book based on <strong>the</strong> business model design methodology
that was created by <strong>the</strong> lead authors. First <strong>of</strong> all, it was <strong>the</strong> self-publishing effort, which relied on <strong>the</strong>
authors’ own funding. Second, it was not a usual crowdsourcing initiative, but ra<strong>the</strong>r <strong>the</strong> one that
relied on a specialized expert knowledge. The fundraising for <strong>the</strong> publication was based on <strong>the</strong>
subscription fees by <strong>the</strong> community members, which were raised in <strong>the</strong> more advanced stages <strong>of</strong>
collaboration (from 24 USD to 250 USD). The subscription fees have not only helped accumulate <strong>the</strong>
initial funding, but also acted as a participation incentive by establishing <strong>the</strong> exclusivity and authorship
<strong>of</strong> <strong>the</strong> experts ra<strong>the</strong>r than that <strong>of</strong> anonymous “crowd”. Besides, all multiple co-authors were listed in
<strong>the</strong> book, next to <strong>the</strong> two chief editors. The lead partners placed emphasis on quality ra<strong>the</strong>r than
quantity <strong>of</strong> participants (what to some extent contradicts <strong>the</strong> conventional definition <strong>of</strong> crowdsourcing),
who were contributing <strong>the</strong> practical cases on <strong>the</strong> matter and providing critical insights into <strong>the</strong>
chapters <strong>of</strong> <strong>the</strong> book. There were also physical meetings <strong>of</strong> <strong>the</strong> expert community. One <strong>of</strong> <strong>the</strong> main
motivating factors behind <strong>the</strong> participation <strong>of</strong> experts in knowledge sharing is <strong>the</strong>ir reputation in <strong>the</strong>
expert networks and pr<strong>of</strong>essional development; <strong>the</strong>refore keeping <strong>the</strong> exclusivity <strong>of</strong> <strong>the</strong> network was a
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motivating factor in this “business model” <strong>of</strong> <strong>the</strong> book. The book is published under Creative
Commons license, <strong>the</strong>reby acknowledging <strong>the</strong> joint production <strong>of</strong> 470 experts under <strong>the</strong> guidance <strong>of</strong>
two lead authors. This “crowdsourced” self-publishing effort became a bestseller on Amazon.com and
received an <strong>of</strong>fer from John Wiley Press for <strong>the</strong> second updated edition and fur<strong>the</strong>r global distribution.
Co-creation: involving <strong>the</strong> customers. Whereas <strong>the</strong> case illustrated above represents a
collaborative effort by <strong>the</strong> knowledge producers (i.e. experts), we can see <strong>the</strong> increasing involvement
<strong>of</strong> customers in co-creation <strong>of</strong> value. There are enough motives for <strong>the</strong> companies to open up <strong>the</strong>ir
processes <strong>of</strong> value creation to <strong>the</strong> customers, such as cost savings, improved reputation and loyalty
<strong>of</strong> <strong>the</strong> customers, better perception <strong>of</strong> new trends and customer needs, etc.. One can find a variety <strong>of</strong>
forms <strong>of</strong> customer involvement (company-based crowdsourcing, co-design, co-creativity, sharing
communities, peer production, etc.). The above mentioned open source innovations are in many
cases a product <strong>of</strong> co-creation involving <strong>the</strong> passionate customer base. Both Wikipedia and Linux are
non-pr<strong>of</strong>it products that were co-created by <strong>the</strong> communities <strong>of</strong> customers. However, in certain
instances (e.g. Lego Mindstorm) <strong>the</strong> co-creation initiatives may bring revenue to <strong>the</strong> firm without
accruing financial benefits to <strong>the</strong> co-creating customers. The users benefit from company platform or
are motivated by social aspects, such as peer recognition. Bhala (2010) distinguishes three groups <strong>of</strong>
incentives <strong>of</strong> importance to <strong>the</strong> customers: recognition and self-worth, cause and money. The latest
(i.e. monetary incentives) may be <strong>the</strong> most complicated to implement in practice, as shown by <strong>the</strong>
above mentioned examples. Ghosh (2004) notices that <strong>the</strong> distribution <strong>of</strong> <strong>the</strong> financial awards among
a number <strong>of</strong> participating customers may be both very expensive and impractical. One should also
remember <strong>the</strong> findings by Gimmelgaard (2007) that intrinsic incentives to share knowledge play a
stronger role than <strong>the</strong> extrinsic ones.
Knowledge sharing in buyer-supplier relations. Although <strong>the</strong> buyer-supplier relations are not
usually characterised as knowledge partnerships, <strong>the</strong>y quite <strong>of</strong>ten result in diffusing technological and
managerial know-how and <strong>of</strong>fer co-creation opportunities. We have a carried out <strong>the</strong> research
regarding <strong>the</strong> exchange <strong>of</strong> industrial (i.e. management and technological) knowledge between <strong>the</strong>
firms in furniture sector in Lithuania (Puidokas, Jucevicius, 2009). In most cases, it was an industrial
outsourcing partnerships <strong>of</strong> Scandinavian / German companies (mainly IKEA) with <strong>the</strong> Lithuanian
furniture producers. Although <strong>the</strong>se partnerships are mainly characterised by <strong>the</strong> rationale <strong>of</strong> cost
savings ra<strong>the</strong>r than innovation, <strong>the</strong>re have been substantial knowledge spillovers taking place
(especially from <strong>the</strong> lead partner towards <strong>the</strong> local manufacturer). The study has indicated that <strong>the</strong>
lead partners were willing to share technological and managerial knowledge that was meant to enable
<strong>the</strong> adequate realisation <strong>of</strong> <strong>the</strong> order; however, <strong>the</strong>y were reluctant to share <strong>the</strong> high-end knowledge
related with marketing, brand building, strategy, business models and R&D. On <strong>the</strong> o<strong>the</strong>r hand, some
surveyed local manufacturers stated that much valuable knowledge was received without <strong>the</strong> explicit
intent <strong>of</strong> <strong>the</strong> knowledge provider. Apparently, <strong>the</strong> ultimate learning effect to a large extent depends on
<strong>the</strong> absorptive capacity <strong>of</strong> <strong>the</strong> parties involved. Besides, <strong>the</strong> strategic complementarity <strong>of</strong> partners was
regarded as one <strong>of</strong> <strong>the</strong> key preconditions for <strong>the</strong> inter-organizational learning to take place. There was
little learning effect on <strong>the</strong> firms that were focused on <strong>the</strong> short-term economic aspects <strong>of</strong> <strong>the</strong>
relationship (i.e. fulfilling <strong>the</strong> outsourcing orders) instead <strong>of</strong> <strong>the</strong> strategic concerns <strong>of</strong> company growth
and <strong>the</strong> new market development.
Cao (2009) analyses <strong>the</strong> relationship between <strong>the</strong> dynamic capabilities <strong>of</strong> firms and potential value
appropriation from open innovation. The author stresses <strong>the</strong> importance <strong>of</strong> <strong>the</strong> complementarity <strong>of</strong>
resources, achieved both inside and outside <strong>the</strong> organization, for <strong>the</strong> appropriation <strong>of</strong> value from open
innovation. The ultimate success <strong>of</strong> appropriation to a large extent depends on <strong>the</strong> absorptive
capacity, which can be also regarded as a crucial aspect <strong>of</strong> firm’s dynamic capabilities. The
absorptive capacity determines <strong>the</strong> ability to absorb valuable knowledge from external sources, which
is a central aspect in any knowledge partnership-based business model. Companies with a distinctive
dynamic absorptive capacity may gain competitive advantage over o<strong>the</strong>r parties to <strong>the</strong> exchange in
<strong>the</strong> open innovation environment. Firm’s absorptive capacity may represent an important incentive to
participate in <strong>the</strong> knowledge partnerships because it may naturally reap more benefits from <strong>the</strong>
exchange.
5. Conclusions
The discussed cases <strong>of</strong> knowledge partnership-based business models have revealed <strong>the</strong> main
participation incentives <strong>of</strong> <strong>the</strong> parties and <strong>the</strong>ir relationship with value appropriation. The existing
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Giedrius Jucevičius
diversity <strong>of</strong> knowledge partnerships and open business models means that <strong>the</strong>re is no universal set <strong>of</strong>
incentives and value appropriation regimes. However, several concluding remarks can be made.
First, in <strong>the</strong> knowledge partnerships characterized by <strong>the</strong> public process and public outcome, <strong>the</strong> nonmonetary
incentives are overwhelmingly at play. In most cases, such partnerships (e.g. open source
s<strong>of</strong>tware) are not too concerned with <strong>the</strong> free rider prevention.
Second, <strong>the</strong> partnerships characterized by public process and private outcome, need to balance both
monetary and non-monetary incentives, as well as establish <strong>the</strong> corresponding value appropriation
regimes. It is likely that <strong>the</strong> more formal and pr<strong>of</strong>it-seeking <strong>the</strong> knowledge partnership, <strong>the</strong> more legal
instruments will be applied for appropriation <strong>of</strong> co-created value. The more flexible and informal <strong>the</strong>
knowledge partnership, <strong>the</strong> more indirect its pr<strong>of</strong>it motives (e.g. managing <strong>the</strong> platform <strong>of</strong> knowledge
collaboration), <strong>the</strong> more it will rely on <strong>the</strong> on <strong>the</strong> informal methods <strong>of</strong> value appropriation (i.e.
customer lock-in, network effects, etc.). The latter approach seems to be more prospective and
feasible in <strong>the</strong> open innovation environment.
Third, <strong>the</strong> intrinsic, ra<strong>the</strong>r than extrinsic factors, seem to be most crucial to <strong>the</strong> successfully
functioning knowledge partnerships. It holds both for <strong>the</strong> intrinsic incentives to participate in <strong>the</strong>
knowledge exchange (e.g. personal development and contribution over salary and promotion), as well
as for <strong>the</strong> intrinsic controls (e.g. “private” guilt over “social” shame).
The final conclusion concerns <strong>the</strong> balance between incentives for participation and safeguards
against <strong>the</strong> appropriation <strong>of</strong> value by free riders in knowledge partnership-based business models
(especially, in case <strong>of</strong> private-collective innovation). Based on <strong>the</strong> aforementioned examples, we can
assume that in effective knowledge partnerships <strong>the</strong> nature <strong>of</strong> incentives has to be coherent with
<strong>the</strong> nature <strong>of</strong> safeguards. It means that in <strong>the</strong> partnerships where, for example, social incentives for
participation are overwhelmingly important (e.g. status in pr<strong>of</strong>essional community), <strong>the</strong>y would be best
matched by <strong>the</strong> controls, which are also <strong>of</strong> social nature (e.g. reputational monitoring). Accordingly,
when <strong>the</strong> economic incentives prevail (e.g. short or long term financial gain), <strong>the</strong>y should be aligned
with ra<strong>the</strong>r clear rules for future appropriation <strong>of</strong> <strong>the</strong> economic value (e.g. contracts in R&D
partnerships, financial rewards in idea contest in exchange for IP rights). The pr<strong>of</strong>essional incentives
for participation in collaborative knowledge communities (e.g. access to new knowledge) should be
correspondingly matched with formal or informal pr<strong>of</strong>essional agreements (e.g. community control <strong>of</strong>
individual authorship, licenses à la Creative Commons or GPL).
It leads to <strong>the</strong> ultimate concluding remark that any potentially successful open knowledge partnership
must first and foremost present incentives for <strong>the</strong> participation <strong>of</strong> knowledge holders. However, should
an established knowledge partnership evolve into a viable business model, <strong>the</strong> adequate safeguards
and value appropriation regimes have to be present and be in balance with <strong>the</strong> incentive system.
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273

Organization’s Knowing or Organizational Knowing?
Palmira Juceviciene 1 and Vyda Mozuriuniene 2
1 Kaunas University <strong>of</strong> Technology, Kaunas, Lithuania
2 Comfort Heat Ltd., Vilnius, Lithuania
palmira.juceviciene@ktu.lt
wim@comfor<strong>the</strong>at.eu
Abstract: A number <strong>of</strong> researchers have analyzed organizational knowing, referring to it, in general terms, as
explicit and tacit knowledge which is significant for an organization. Stankeviciute (2002) has been among <strong>the</strong>
first researchers making reference to organization’s knowing. In Juceviciene and Mozuriuniene’s earlier research
(2009) on <strong>the</strong> structure <strong>of</strong> organization’s knowing, its two parts have been identified: 1) organizational knowing,
which an organization considers important and, <strong>the</strong>refore, attempts to increase, 2) organization’s informal
knowing, <strong>the</strong> existence <strong>of</strong> which <strong>the</strong> organization does not consider important for its performance. The latter is
usually composed <strong>of</strong> employee’s personal knowledge, obtained by different informal groups within and outside
<strong>the</strong> organization, that <strong>the</strong> organization does not consider important for its performance. However, is
organization’s informal knowing really not important for successful performance <strong>of</strong> an organization? That is, is it
sufficient to refer to organizational knowing or, on <strong>the</strong> contrary, is it more relevant to stress all <strong>the</strong> knowing at an
organization that is organization’s knowing, ra<strong>the</strong>r than only organizational knowing?. The purpose <strong>of</strong> this article
is to ground organization’s knowing as a necessity for employees’ successful work by revealing <strong>the</strong> limitations <strong>of</strong>
organizational knowing. The following research methods have been employed: a) research literature analysis to
highlight specific features <strong>of</strong> organization’s knowing in relation to organizational knowing; b) empirical research,
based on a case study <strong>of</strong> a multinational company; observation, discussion, document analysis, and survey used
for <strong>the</strong> same purpose. The research conducted has allowed providing <strong>the</strong> evidence that successful performance
<strong>of</strong> employees requires not only organizational knowing, but also informal organization’s knowing. This means, no
entire organizational competence, which grants successful organization’s performance, and even no
competencies at particular “work places“ can be completely predicted. It should be admitted that organization’s
knowing is <strong>the</strong> formation which secures organization’s prosperous activity more than organizational knowing
does. This challenges <strong>the</strong> future research on organization‘s knowing creation processes, as well as managerial
practices to perform smarter while developing learning organizations.
Keywords: organization’s knowing, organizational knowing, tacit knowledge, explicit knowledge
1. Introduction
Researchers (Nonaka and Takeuchi, 1995; Tsoukas, 1996; etc.) have analyzed organizational
knowing, generally referring to it as explicit and tacit knowledge, significant for an organization.
Stankeviciute (2002) has been among <strong>the</strong> first researchers to make reference to organization’s
knowing.
In <strong>the</strong> research by Juceviciene and Mozuriuniene (2009) on <strong>the</strong> structure <strong>of</strong> organization’s knowing,
its two parts were identified: 1) organizational knowing, which an organization considers important
and attempts to increase, 2) organization’s informal knowing, <strong>the</strong> existence <strong>of</strong> which an organization
does not consider important for its performance.
Is organization’s informal knowing really not important for successful performance <strong>of</strong> an organization?
That is, is it sufficient to refer to organizational knowing or, on <strong>the</strong> contrary, is it more relevant to
stress all <strong>the</strong> knowing at an organization, that is organization’s knowing? If organization’s knowing is
more sufficient, what kinds <strong>of</strong> tasks arise <strong>the</strong>re for researchers and practitioners in this respect?
The purpose <strong>of</strong> this article is to ground organization’s knowing as <strong>the</strong> necessity for employees’
successful work by revealing <strong>the</strong> limitations <strong>of</strong> organizational knowing.
A conceptual basis <strong>of</strong> this article is <strong>the</strong> approach that knowing is not only knowledge as a process
(Cook and Brown, 1999), as situated in <strong>the</strong> system <strong>of</strong> ongoing practices (Gherardi and Nicolini, 2000);
it is also based on knowledge as a deep understanding (Bennet, 2002).
In this work, <strong>the</strong> following research methods are employed: a) research literature analysis to highlight
specific features <strong>of</strong> organization’s knowing in relation to organizational knowing; b) a case study as a
basis for empirical research; document analysis and observation to introduce <strong>the</strong> researched
organization, a multinational company, headquartered in Finland; a discussion with <strong>the</strong> members <strong>of</strong>
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Palmira Juceviciene and Vyda Mozuriuniene
organizations, meant to develop <strong>the</strong>m as assessors <strong>of</strong> <strong>the</strong>ir own knowledge. A survey was used to get
data from <strong>the</strong> knowledge workers <strong>of</strong> three company subsidiaries in Lithuania, Latvia, and Estonia.
The article consists <strong>of</strong> four parts. The first part highlights specific features <strong>of</strong> organization’s knowing,
related to organizational knowing. The methodology for <strong>the</strong> empirical research on organization’s
knowing is presented in <strong>the</strong> second part. The third part introduces <strong>the</strong> empirical research data. The
fourth part <strong>of</strong>fers a discussion on <strong>the</strong> research results obtained, emphasizing <strong>the</strong> role <strong>of</strong> informal
knowing at contemporary enterprises.
2. Why two parts are distinguished in <strong>the</strong> organization’s knowing?
In general, two groups <strong>of</strong> scholars could be distinguished in <strong>the</strong> research area <strong>of</strong> <strong>the</strong> concept <strong>of</strong>
knowing: a) Polanyj and his successors; b) Nonaka and Takeuchi with <strong>the</strong>ir followers.
Polanyj (1962), referring to explicit and tacit knowledge, indicated that <strong>the</strong> former could be codified,
expressed verbally or in writing. He said, <strong>the</strong> latter was formed in person‘s action and was
unconscious, thus impossible to express; he named it knowing. Besides, when referring to knowing as
embodied in action, in most cases, he used <strong>the</strong> term tacit knowing, but not knowing. Tsoukas has also
noted that (2006).
Nonaka and Takeuchi (1995), on <strong>the</strong> contrary, substantiating <strong>the</strong> spiral model <strong>of</strong> organizational
learning (SECI), claim that tacit knowledge could be converted into explicit. This requires special
conditions, analyzed in more detail by Nonaka in his later works, along with co-authors (Nonaka and
Konno, 1998; Nonaka, Toyama and Byosiere, 2001, etc.).
Tsoukas (2006), having analyzed Polanyi’s works, discovers something that, in his opinion, remained
unnoticed by o<strong>the</strong>rs. Namely, some tacit knowledge, although being used in an uncomprehended
form, could be made explicit, but <strong>the</strong> o<strong>the</strong>r part <strong>of</strong> knowledge, which is impossible to dissociate from
individual’s action – cannot. Tsoukas has noted that Polanyi named <strong>the</strong> latter part tacit knowing. This
explanation allows supposing that <strong>the</strong> ideas, expressed by Polanyi and Nonaka, relating to <strong>the</strong>
possibility to make tacit knowledge explicit, are not quite conflicting.
The representatives <strong>of</strong> both schools agree that all aforementioned types <strong>of</strong> knowledge are
interdependent. This has been particularly emphasized by Choo (2002).
Bennet (2002) claims that knowing is a deep understanding <strong>of</strong>: a) self, b) <strong>the</strong> o<strong>the</strong>r; c) situation.
Emphasizing <strong>the</strong> importance <strong>of</strong> conscious knowledge, <strong>the</strong> author does not deny <strong>the</strong> significance <strong>of</strong>
tacit knowledge. She states that knowing focuses on methods aiming at increasing <strong>the</strong> ability to
consciously integrate sensory inputs with our tacit knowledge.
Leonard and Sensiper (1998) claim that knowledge exists ‘on a spectrum‘, as a continuum: at one
extreme, it is almost completely tacit, at <strong>the</strong> o<strong>the</strong>r end, it is almost explicit. However, o<strong>the</strong>r proportions
<strong>of</strong> this knowledge exist in between <strong>the</strong>se extremes.
Hence, what is <strong>the</strong> widest structure <strong>of</strong> knowing? Generally, it can be stated that knowing may consist
<strong>of</strong>: a) explicit knowledge – articulated; b) implicit knowledge that <strong>the</strong> person is aware <strong>of</strong>, but for some
reason does not disclose to o<strong>the</strong>rs (Baumard, 1999); c) tacit knowledge, which can be made explicit
by putting in special effort; d) knowledge inseparable from action, i.e. tacit knowing, which cannot be
expressed. All <strong>the</strong>se types <strong>of</strong> knowledge are created in various learning processes and interrelate
with each o<strong>the</strong>r.
In fact, <strong>the</strong> researchers (e.g., Sivula, Bosch, Elfring, 2001) have been right, considering all <strong>the</strong>
aforementioned knowledge just <strong>of</strong> two types in respect <strong>of</strong> an organization: explicit and tacit, as <strong>the</strong>
organization is not informed about (b), (c), (d) types <strong>of</strong> knowledge on <strong>the</strong> formal level. Therefore, all
<strong>the</strong> three types <strong>of</strong> knowledge may be regarded as tacit knowledge in respect <strong>of</strong> an organization. This
paper follows such a position, <strong>the</strong> term ‘tacit knowledge’ meaning (b), (c), and (d) types <strong>of</strong> knowledge.
Organizational knowing is formed in <strong>the</strong> organizational learning process. It is considered by <strong>the</strong>
organization (primarily by its management) important for organization’s performance. By realizing its
significance, <strong>the</strong> organization puts in extra effort to have organizational learning that creates this
knowledge.
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Palmira Juceviciene and Vyda Mozuriuniene
The above-highlighted structure <strong>of</strong> knowing helps define <strong>the</strong> structure <strong>of</strong> organizational knowing (in
this work it has been reduced to <strong>the</strong> explicit and tacit knowledge in respect to an organization). Not
only Nonaka and Takeuchi’s (1995) SECI model’s ideas, that enable distinguishing organizational
knowing at group and organization’s levels, are <strong>of</strong> great significance. Significant is also Johnson’s
(2007) approach that employees may create <strong>the</strong>ir knowledge by <strong>the</strong>ir own reflection.The latter
approach allows claiming that <strong>the</strong> organizational knowing is a dimension not only on a collective level,
but also on an individual level. The existence <strong>of</strong> knowledge on <strong>the</strong> collective and individual levels is
supported by Cook and Brown (1999).
Hence, organizational knowing in structural terms can be identified as explicit and tacit knowledge,
recognized by an organization as important for its performance and existing on <strong>the</strong> three levels: a)
individual knowing, required for individual performance at an organization, b) group (units, project
groups, etc.), c) entire organization’s (e.g., knowing <strong>of</strong> <strong>the</strong> mission, vision, goals, etc.).
However, is organizational knowing <strong>the</strong> only entity <strong>of</strong> knowledge that exists at an organization?
Stankeviciute (2002) has considered organizational knowing to be a holistic category <strong>of</strong> a higher
abstraction degree, defining collective knowing which constantly varies in relation to <strong>the</strong> explicit and
tacit knowledge <strong>of</strong> organization’s members and <strong>the</strong>ir groups. One part <strong>of</strong> it is embedded in products,
concepts, strategies, and is an institutionalized form <strong>of</strong> procedures and rules. The o<strong>the</strong>r part remains
at organization’s level as a form <strong>of</strong> tacit knowing. Taking into account Johnson’s (2007) idea that
individuals create knowledge through reflections <strong>of</strong> <strong>the</strong>ir experience, it can be stated that <strong>the</strong>y create
knowledge not only inside, but also outside <strong>the</strong> organization, reflecting <strong>the</strong>ir own life experiences.
They can also learn and acquire informal knowledge in o<strong>the</strong>r ways, formally unknown to <strong>the</strong>
organization, which, in turn, may be a part <strong>of</strong> learning processes on individual and collective levels.
Therefore, organization’s knowing can structurally consist <strong>of</strong> two parts:
Organizational knowing, important to an organization, recognized and encouraged by it (explicit
and tacit knowledge at individual, group, and entire organization’s level).
Informal knowing, existing at an organization and formally not considered by <strong>the</strong> organization as
significant for performance; it is mainly formed during informal learning processes. The
organization is not interested in <strong>the</strong>se processes and does not put efforts to encourage <strong>the</strong>m.
Informal knowing, as explicit and tacit knowledge, can also be determined at <strong>the</strong> organization on
three levels: individual, group, and <strong>the</strong> entire organization. However, <strong>the</strong> existence <strong>of</strong> informal
knowing on <strong>the</strong> entire organization’s level may elicit broad discussions.
At this point, <strong>the</strong> main question emerges: whe<strong>the</strong>r or not <strong>the</strong> informal part <strong>of</strong> knowing, which exists at
an organization, but is not ascribed to organizational knowing, is significant to successful performing
<strong>of</strong> work at an organization? Empirical research is required to answer this question.
3. Empirical research methodology <strong>of</strong> organization‘s knowing
Empirical research on organization’s knowing is a complicated problem, first <strong>of</strong> all, because this
knowing includes tacit knowledge. Considering <strong>the</strong> problems with researching such knowledge, not all
<strong>the</strong> three aforementioned knowledge forms – tacit and implicit knowledge as well as tacit knowing, are
being determined, but only implicit knowledge and some part <strong>of</strong> tacit knowledge which can be
expressed by individuals.
A case study strategy is to be applied to <strong>the</strong> research on organization’s knowing, which allows going
deeper into organization’s context.
A multinational company with <strong>the</strong> headquarters based in Finland, with subsidiaries in 8 countries, was
selected for <strong>the</strong> research. It is referred to as Company X due to ethical considerations. A multinational
company was chosen in order to be able to research several enterprises acting in a commonly defined
context. Company X was not chosen accidentally: a) it applies knowledge and solutions required to
overcome <strong>the</strong> challenges <strong>of</strong> modern business as well as social challenges; b) it pays much attention to
staff development; c) company headquarters that shapes <strong>the</strong> organizational culture and philosophy is
located in Finland, a country that fosters Scandinavian culture in developing high technologies and
innovations; d) one <strong>of</strong> <strong>the</strong> co-authors <strong>of</strong> <strong>the</strong> article has had business relationships <strong>of</strong> 15 years with this
multinational company; thus, <strong>the</strong> activity <strong>of</strong> <strong>the</strong> company and its people could be closely followed within
this period.
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The empirical research that relates to organization’s knowing is a complex research which requires
much time and effort from researchers and informants. Therefore, <strong>the</strong> scope <strong>of</strong> <strong>the</strong> research was
limited to subsidiaries in Lithuania, Latvia, and Estonia.
The best method to analyze knowledge is an interview. However, <strong>the</strong> application <strong>of</strong> this method
requires a lot <strong>of</strong> resources, and in many cases it creates difficulties for researchers. The problem can
be solved by optimized research <strong>of</strong> organization’s knowing, which allows a written survey <strong>of</strong>
company’s employees. In such a case, <strong>the</strong> requirement is that <strong>the</strong> employees have to be competent
and responsible in evaluating <strong>the</strong>ir own knowledge and its creation. Therefore, a case study was
supplemented by developmental research. It is known that during <strong>the</strong> survey employees acquire extra
competence in knowledge evaluating.
Optimized research consists <strong>of</strong> four stages: 1. A multinational company is analysed as <strong>the</strong> context <strong>of</strong>
organization’s knowing (methods: document analysis, observation). 2. Discussions with <strong>the</strong>
employees, who participate in <strong>the</strong> empirical research, are carried out to develop <strong>the</strong> necessary
competences on <strong>the</strong>ir own knowledge evaluation. 3. A written questionnaire is submitted to
knowledge workers <strong>of</strong> <strong>the</strong> selected subsidiaries. 4. The data is processed, analysed, and interpreted.
The questionnaire has been constructed on <strong>the</strong> basis <strong>of</strong> organization’s knowing characteristics,
determined in <strong>the</strong> first part <strong>of</strong> <strong>the</strong> article.
The questions in <strong>the</strong> first section aim at revealing <strong>the</strong> data, based on organization’s knowing. As
organization’s knowing is always its employees’ knowledge, <strong>the</strong> informants are asked to indicate: a)
which knowledge and how much <strong>of</strong> it <strong>the</strong>y need in order to be successful when performing <strong>the</strong>ir work (all
<strong>the</strong> required knowledge makes up 100 percent), b) how much <strong>of</strong> each kind <strong>of</strong> <strong>the</strong> required knowledge
<strong>the</strong>y obtain (approximately, in percent). The questions in <strong>the</strong> second section intend to define <strong>the</strong> type <strong>of</strong>
knowledge, comprising organization’s knowing which is being enhanced by <strong>the</strong> employees. The
questions in <strong>the</strong> third section intend to find out which knowledge, created by <strong>the</strong> employees, remains
tacit (known exceptionally to <strong>the</strong>m) and which is explicit.
The selection <strong>of</strong> informants was purposive: all <strong>the</strong> employees engaged in knowledge-based work at
<strong>the</strong> three Baltic subsidiaries were selected: 29 in Lithuania, 32 in Latvia, and 32 in Estonia. Two thirds
<strong>of</strong> <strong>the</strong> informants had higher (mostly university) education, and one third had secondary education.
The survey participants belong to <strong>the</strong> group <strong>of</strong> young and middle-aged employees.
Statistical Package for Social Sciences 12 s<strong>of</strong>tware was used to process <strong>the</strong> research data. Factors
determining <strong>the</strong> characteristics <strong>of</strong> organization’s knowing were defined through descriptive statistics
and correlation analysis.
4. Company X case study: what else, in addition to organizational knowing,
determines successful performance <strong>of</strong> <strong>the</strong> employees?
Research findings <strong>of</strong> <strong>the</strong> three Company X subsidiaries are reviewed in this part.
4.1 Company X
The researched Company X was founded in 1913 in Finland as a family business. Until 1992 it
operated as a national enterprise. Following successful investments in Estonia in 1992, <strong>the</strong> company
expanded through acquisitions into o<strong>the</strong>r countries.
With multinational operations developing business in nine countries, <strong>the</strong> company still remains under
<strong>the</strong> ownership <strong>of</strong> <strong>the</strong> fourth generation within one family. Company’s headquarters is located in
Finland, with subsidiaries in Sweden, Norway, Poland, Russia, Estonia, Latvia, Lithuania, and
Kazakhstan. Company X has declared <strong>the</strong> following values in its corporate philosophy: working
toge<strong>the</strong>r, respecting people, better than before.
According to Funakava (1997), in <strong>the</strong> process <strong>of</strong> <strong>the</strong>ir own development, multinational companies
evolve through global cooperation and go through four stages <strong>of</strong> cooperation: 1) international
ethnocentric, 2) multinational polycentric, 3) multiregional region-centric, and 4) global geocentric.
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At <strong>the</strong> moment, Company X has reached <strong>the</strong> third stage <strong>of</strong> <strong>the</strong> multinational company development.
At this stage, all <strong>the</strong> subsidiaries and headquarters are a part <strong>of</strong> <strong>the</strong> interrelated network. Such an
organization, according to Chini (2004), has its units <strong>of</strong> unique resources, skills, capacities, and
knowledge. Therefore, <strong>the</strong> head <strong>of</strong>fice does not necessarily have to play a dominating role in <strong>the</strong>
company, <strong>the</strong>reby increasing company’s possibilities to be flexible in reacting to market changes, and
<strong>the</strong> conventional hierarchic management structure is replaced by hypertext management.
The company cares about its employees, respects and values both young and senior employees. It
provides good conditions to work and relax in all <strong>the</strong> outlets. Special attention is given to <strong>the</strong> selection
<strong>of</strong> new employees and staff development. The competence management process is in place,
coordinated by <strong>the</strong> HR unit in Finnish headquarters. The employees <strong>of</strong> <strong>the</strong> subsidiaries also learn
within <strong>the</strong>ir companies and outside.
4.2 Analysis <strong>of</strong> <strong>the</strong> empirical research data
The empirical research data will be used to answer <strong>the</strong> following questions: is organizational knowing
always sufficient to successfully perform work at an organization? What type <strong>of</strong> knowledge is mainly
possessed by employees? What type <strong>of</strong> knowing do <strong>the</strong> employees tend to enhance more:
organizational, i.e. recognized as important by <strong>the</strong> organization, or informal? What type <strong>of</strong> knowledge
(explicit or tacit) dominates in organization’s enhanced knowing, explicit or tacit?
4.2.1 Knowledge required to successfully perform work at an organization: is organizational knowing
enough?
Percentage ratings (PR) are employed to analyze <strong>the</strong> structure <strong>of</strong> organization’s knowing (explicit and
tacit knowledge <strong>of</strong> individual, group, and <strong>the</strong> entire organization’s levels) at <strong>the</strong> subsidiaries in <strong>the</strong>
Baltic States.
The employees <strong>of</strong> <strong>the</strong> analyzed Company X subsidiaries in Lithuania (LV), Latvia (LT), and Estonia
(EE) need to possess ra<strong>the</strong>r extensive organizational knowing on an individual level required to
successfully carry out <strong>the</strong> work (see Figure 1; in this and <strong>the</strong> following figures, <strong>the</strong> word “knowledge”
means explicit and tacit knowledge): up to 34 percent in Lithuania, up to 27.8 percent in Latvia, and
up to 28.4 percent in Estonia. The employees in all <strong>the</strong> three countries admit that this knowledge is
needed most, compared to <strong>the</strong> need for o<strong>the</strong>r types <strong>of</strong> knowledge.
Figure 1: Organization‘s knowing (by different levels) needed to acomplish work successfully in
subsidiary <strong>of</strong> Company X (in percent)
The subsidiaries recognize <strong>the</strong> following knowledge in <strong>the</strong> organizational knowing structure as <strong>the</strong>
most needed: knowledge at an individual level ranks highest, <strong>the</strong> need for knowledge at a group level
is lower, and <strong>the</strong> knowledge at <strong>the</strong> entire organization’s level is <strong>the</strong> least.
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Meanwhile, <strong>the</strong> need for informal knowing at <strong>the</strong> subsidiaries is lower, compared with organizational
knowing (on <strong>the</strong> average <strong>of</strong> 1:2) At <strong>the</strong> same time, both entities demonstrate <strong>the</strong> same downtrend on
individual, groups, and organization’s levels.
4.2.2 What type <strong>of</strong> knowledge is possessed by <strong>the</strong> employees at <strong>the</strong> subsidiaries?
Each <strong>of</strong> <strong>the</strong> subsidiaries has extensive organizational knowing at <strong>the</strong> individual, group, and
organization’s levels (see Figure 2, where percentage values <strong>of</strong> knowledge correspond to <strong>the</strong>
arithmetical estimators M, i.e. 0=1 percent, 1=25 percent, 2=50 percent, 3=75 percent, 4=100
percent). Evidently, <strong>the</strong> differences in <strong>the</strong> knowledge among <strong>the</strong> aforementioned countries are not
statistically significant.
Figure 2: Organization’s knowing (by different levels) used to acomplish work successfully at
Company X subsidiaries
To accomplish work successfully, <strong>the</strong> employees have less informal learning on all levels in
comparison to organizational knowing. The differences among <strong>the</strong> countries are also not statistically
significant.
To sum up, it may be noted that organizational knowing dominates at <strong>the</strong> subsidiaries, declaring both
<strong>the</strong> knowledge required for successful work in <strong>the</strong> company and <strong>the</strong> knowledge available.
4.2.3 Enhancing organizational knowing and informal knowing
All <strong>the</strong> three subsidiaries and <strong>the</strong>ir employees pay attention to improving <strong>the</strong> organizational knowing
(see Figure 3, where M = 0 – „do not improve”, M=1 – „some”, M=2 – „to a moderate extent”, M=3 –
„considerably”, M=4 – „very much”).
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Figure 3: Organizations‘s knowing (by different levels) enhancing at <strong>the</strong> subsidiaries
It may be noted that organizational knowing at individual, <strong>the</strong> group, and <strong>the</strong> organization’s levels is
enhanced more, compared with informal knowing. The employees pay less attention to creating
informal knowing throughout all <strong>the</strong> levels, as <strong>the</strong> organization itself does not make any account <strong>of</strong>
this knowledge improvement. This is particularly characteristic <strong>of</strong> <strong>the</strong> Lithuanian subsidiary.
4.2.4 Explicit and tacit knowledge in <strong>the</strong> enhanced organizational and informal organization’s
knowing
Enhancing formal (recognized as important by <strong>the</strong> organization), explicit knowledge at individual,
group, and entire organization’s levels dominates at all <strong>the</strong> three subsidiaries (see Figure 4).
The produced informal organization’s knowing on <strong>the</strong> individual, group, and organization’s levels at
<strong>the</strong> subsidiaries in Lithuania, Latvia, and Estonia is less explicit, compared to organizational knowing.
Never<strong>the</strong>less, in total, more explicit than tacit knowledge has been created in <strong>the</strong> researched
subsidiaries.
5. Discussion: how significant and problematic is organization‘s knowing?
First <strong>of</strong> all, <strong>the</strong> following questions should be addressed: how reliable are <strong>the</strong> results, received from
<strong>the</strong> empirical research? What generalization degree <strong>of</strong> <strong>the</strong> conclusions can be expected?
The focus on <strong>the</strong> research methodology, questionnaire, and data processing allows expecting quite
reliable results.
In <strong>the</strong> context <strong>of</strong> generalization <strong>of</strong> <strong>the</strong> received data, it seems more reasonable to talk only about
certain trends observed ra<strong>the</strong>r than record specific ‘numbers’, since <strong>the</strong> research has covered only
three subsidiaries <strong>of</strong> one multinational company. In fact, <strong>the</strong> chosen case study strategy and <strong>the</strong>
company context analysis allows expecting that <strong>the</strong> observed proportion between organizational
knowing and organization’s informal knowing may be similar to that at organizations <strong>of</strong> a similar
context.
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Figure 4: Organization‘s knowing (from <strong>the</strong> perspective <strong>of</strong> different levels and explicity or tacity)
enhancing at Company X subsidiaries
What possibilities and problems, related to organization’s knowing, can be observed from
<strong>the</strong> data received?
Successful work performance requires a few times more organizational knowing than organization’s
informal knowing. However, <strong>the</strong> fact that <strong>the</strong> latter is required at each level (individual, group, and <strong>the</strong>
entire organization’s) is a serious basis to go fur<strong>the</strong>r into organization‘s knowing. This does not only
support <strong>the</strong> statement “Knowledge exists on a spectrum“, formulated by Leonard and Sensiper (1998,
p.113), but also raises doubts about <strong>the</strong> existing desire <strong>of</strong> some employers to get an employee <strong>of</strong> a
narrow specialization, able to work productively almost from <strong>the</strong> first employment day. At <strong>the</strong> same
time, one can state, no entire organization’s competence and even no competencies at particular
“work places“ can be completely predicted.
The fact that <strong>the</strong> level <strong>of</strong> informal knowing at <strong>the</strong> organization is much lower than <strong>the</strong> organizational
knowing allows stating that not only <strong>the</strong> surveyed company or its subsidiaries, but also <strong>the</strong> employees
<strong>the</strong>mselves do not pay enough attention to acquiring/creating informal knowing. This has also been
confirmed by <strong>the</strong> data received that indicate how much <strong>the</strong> respective knowledge is enhanced:
organizational knowing “considerably” and “to a moderate extent”, and informal knowing only “to a
moderate extent”, or “not much”. Organizational knowing is at a similar level at all <strong>the</strong> three
researched enterprises, but <strong>the</strong> informal parts <strong>of</strong> knowing in <strong>the</strong>se organizations differ. This once
again confirms that <strong>the</strong> creation <strong>of</strong> <strong>the</strong> informal part <strong>of</strong> knowing is spontaneous. Is this good or bad?
Apparently, it is good, since <strong>the</strong> fact that successful performance requires informal knowing does not
mean that it is possible to foresee in advance what type <strong>of</strong> informal knowledge would be required
when performing work in a particular context. An employee himself/herself, or groups <strong>of</strong> employees,
are <strong>the</strong> actors who use <strong>the</strong>ir informal knowing to compensate <strong>the</strong> lack <strong>of</strong> organizational knowing,
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perhaps incorrectly forecasted at an organization and/or not empowered enough by its learning
environments.
It is also important to consider <strong>the</strong> fact that a) explicit, but not tacit part <strong>of</strong> organizational knowing; b)
tacit, but not explicit part <strong>of</strong> organization’s informal knowing are more enhanced. It can be affirmed that
organizational knowing, more than organization’s informal knowing, is created in such spaces <strong>of</strong> an
enterprise which provide conditions to create explicit knowledge. The assumption that organization’s
informal knowing is created while <strong>the</strong> employees gain experience in various spaces <strong>of</strong> <strong>the</strong>ir lives and
learn incidentally is also ra<strong>the</strong>r convincing. The tacit knowledge collected and/or created <strong>the</strong>reby is
used at an organization. Unfortunately, employees scarcely articulate it to o<strong>the</strong>rs. Are <strong>the</strong>y not willing or
not able to do so? Here we have to remember that <strong>the</strong> research limits itself to determining tacit
knowledge which is implicit (explicit but not articulated, for some reason) as well as <strong>the</strong> one that lies in
<strong>the</strong> sub-consciousness, but can be made explicit by using special methods (e.g., expert help).
Therefore, having in mind that by answering questions <strong>the</strong> employees have meant <strong>the</strong> knowledge
already known to <strong>the</strong>m, it can be stated that <strong>the</strong>re are reasons to stop <strong>the</strong>m from expressing <strong>the</strong>
perceived knowledge that is “kept inside”. Therefore, it seems rational that a person might behave, for
instance, like <strong>the</strong> one under <strong>the</strong> pressure <strong>of</strong> competition or manager’s autocratic behaviour.
Nonaka, von Krogh and Voelpe (2006) emphasize that Japanese and Western companies differ when
coordinating knowledge creation through organizational forms. In <strong>the</strong>ir words, organizational units <strong>of</strong>
Western firms are based on <strong>the</strong> division <strong>of</strong> labour and specialization. Hierarchy and explicit knowledge
dominate here. This creates difficulties in generating innovations. Meanwhile, Japanese organizations
support formal and informal groups and o<strong>the</strong>r activities and both tacit and explicit knowledge is
created in this process. The researched subsidiaries generate not only explicit knowledge (although it
dominates), but also tacit knowledge, including informal knowledge (unfortunately, to a ra<strong>the</strong>r
moderate extent). Thus, <strong>the</strong> aforementioned traits <strong>of</strong> Western companies are not totally typical to <strong>the</strong>
surveyed enterprises. However, <strong>the</strong> researched subsidiaries and <strong>the</strong>ir uniting headquarters, ra<strong>the</strong>r
successful in dealing with organizational learning (especially, in creating <strong>the</strong> explicit knowledge), still
have not become learning organizations as to empower considerable creation <strong>of</strong> informal tacit
knowledge in <strong>the</strong>m. It is <strong>the</strong> task for <strong>the</strong> practitioners seeking <strong>the</strong>ir organizational innovation. How this
is to be implemented, remains <strong>the</strong> task for researchers who should continue getting deeper into <strong>the</strong>
development <strong>of</strong> <strong>the</strong> learning organization, processes and mechanisms <strong>of</strong> <strong>the</strong> creation <strong>of</strong>
organization’s knowing.
6. In conclusion
Organization’s knowing is <strong>the</strong> formation which secures organization’s prosperous activity more than
organizational knowing does.
Organization’s knowing consists <strong>of</strong> two parts: organizational knowing (recognized as important by
organization and supported by it) and informal knowing (not recognized as important by organization).
The empirical study (carried out in <strong>the</strong> advanced multinational company) shows that organizational
knowing is a few times more required than organization’s informal knowing. However, informal
knowing is no less significant than organizational knowing, since it can be used to compensate <strong>the</strong>
knowledge that was not predicted (because <strong>of</strong> extremely rapidly changing environment, on-going
innovation processes, etc.) by organization as necessary for its performance.
The fact that informal knowing is necessary at each level (individual, group, and <strong>the</strong> entire
organization’s) for successful work performance is a serious basis to claim that no entire
organization’s competence and even no competencies at particular “work places“ can be completely
predicted.
The employees enhance organizational knowing (particularly, its explicit part, not tacit) more than
informal knowing (though, its tacit part is created more than explicit). Employees’ insufficient attention
to creating informal knowing may be caused by managers’ failure to understand <strong>the</strong> importance <strong>of</strong>
informal knowing for successful performance. Therefore, creation <strong>of</strong> informal knowing is left without
managerial support.
To sum up, organization’s knowing is a formation, significant for <strong>the</strong> <strong>the</strong>ory and practice <strong>of</strong> knowledge
management. In <strong>the</strong>ory, it is relevant to conduct research, analyzing <strong>the</strong> interaction <strong>of</strong> knowledge,
comprising organizational knowing and organization’s informal knowing which results in creating new
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knowledge. Managers should take into account <strong>the</strong> significance <strong>of</strong> informal knowing at an
organization. They should encourage <strong>the</strong>ir employees to learn “anywhere and anytime”, i.e., even in
<strong>the</strong>ir private lives and also enable <strong>the</strong> development <strong>of</strong> <strong>the</strong>ir company into learning organizations.
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283

Sourcing Knowledge for <strong>the</strong> Cluster or Business System
Robertas Jucevicius
Strategic Management Department, Kaunas University <strong>of</strong> Technology, Kaunas,
Lithuania
rjucev@ktu.lt
Abstract: Knowledge acquisition processes remain an important subject in knowledge management research.
Sourcing knowledge from external sources has become increasingly important not only to a single small
company, which is not able to generate needed knowledge internally, but to <strong>the</strong> big companies as well. Ability to
accumulate external knowledge is seen as a crucial factor to economic success and competitiveness. Employing
different types <strong>of</strong> networks favor to streng<strong>the</strong>ning <strong>the</strong> ability <strong>of</strong> a single company to become more knowledge
enriched. This is one <strong>of</strong> important reasons why a big variety <strong>of</strong> business systems, clusters or business networks
are emerging all around <strong>the</strong> world. The key question in <strong>the</strong> article is: what are <strong>the</strong> preconditions for getting most
use from <strong>the</strong> external knowledge for <strong>the</strong> competitiveness <strong>of</strong> <strong>the</strong> networked businesses. Combination <strong>of</strong> different
<strong>the</strong>oretical concepts and practical approaches will be used to get <strong>the</strong> answer to that question. Firstly, <strong>the</strong> concept
<strong>of</strong> Business system will be presented. Second, <strong>the</strong> importance <strong>of</strong> <strong>the</strong> development <strong>of</strong> knowledge absorptive
capacity <strong>of</strong> a single company or <strong>the</strong> whole network will be discussed. Applicability <strong>of</strong> <strong>the</strong> concept <strong>of</strong> intelligence
will be <strong>the</strong> third dimension <strong>of</strong> <strong>the</strong> research in <strong>the</strong> article. Finally, <strong>the</strong> <strong>the</strong>oretical model <strong>of</strong> creating a knowledgeable
(intelligent) business system by effective use <strong>of</strong> external knowledge will be presented. The business system
could be understood as <strong>the</strong> way that different institutions, organizations or o<strong>the</strong>r structures <strong>of</strong> <strong>the</strong> state, <strong>the</strong> region
or a particular industry are integrated into a social configuration <strong>of</strong> <strong>the</strong> value creation processes. An Intelligent
business system might be described as an organized intellectual capacity <strong>of</strong> such system to perceive emerging
changes in <strong>the</strong> environment, as well as <strong>the</strong>ir reasons and effects for its development. Such business system,
cluster or a network possesses effective mechanisms for creating new understanding, knowing and competence
by integrating new knowledge with <strong>the</strong> intellectual capital <strong>of</strong> individuals, companies and institutions.
Keywords: knowledge, absorptive capacity, cluster, business system, intelligence
1. Introduction
It is commonly agreed that knowledge and innovation is a key to success ei<strong>the</strong>r to a business
company or to <strong>the</strong> region or <strong>the</strong> state. It is a particular concern for <strong>the</strong> so-called “latecomer” countries
that have belatedly entered <strong>the</strong> globalization arena ei<strong>the</strong>r because <strong>of</strong> <strong>the</strong>ir newly restored
independence or due to <strong>the</strong> late industrialization. The key challenge for such counties is to close <strong>the</strong>
gap between <strong>the</strong> developed countries and <strong>the</strong>mselves. In this context, industrial clusters and o<strong>the</strong>r
network-type business systems employing <strong>the</strong> world class productive knowledge look promising.
However, such countries and <strong>the</strong>ir companies <strong>of</strong>ten lack <strong>of</strong> financial and especially intellectual
resources. That is why <strong>the</strong> ability to absorb and to use external knowledge is <strong>of</strong> crucial importance.
Different aspects <strong>of</strong> knowledge absorption are broadly discussed in <strong>the</strong> scientific literature since
Cohen and Levinthal (1990) proposed that concept. It is commonly agreed that no firm can entirely
rely on its own internal knowledge capacities (Volberda, Foss, & Lyles, 2010; Zahra & George, 2002;
Prahalad & Hamel, 1990; Teece, Pisano, & Shuen, 1997). Linkages with <strong>the</strong> external knowledge
holders and sufficient knowledge management system in <strong>the</strong> organization are necessary. However,
very limited number <strong>of</strong> research (Giuliani, 2005; Shu-hsein Liao, 2007; Baptista, 2000, etc.) is devoted
to understanding <strong>the</strong> knowledge management processes in clusters or bigger socio-economic
systems like industrial, regional or national business systems. This paper intends to contribute to
better understanding some important aspects <strong>of</strong> absorption and making use <strong>of</strong> external knowledge for
<strong>the</strong> competitiveness <strong>of</strong> <strong>the</strong> cluster or business system.
M. Porter is generally referred to as <strong>the</strong> “godfa<strong>the</strong>r” <strong>of</strong> clusters. At <strong>the</strong> same time R. Whitley (1992)
might be called <strong>the</strong> “godfa<strong>the</strong>r” <strong>of</strong> <strong>the</strong> business systems. He revealed <strong>the</strong> specificities <strong>of</strong> value
creation in different industries that are determined by <strong>the</strong> variety <strong>of</strong> stakeholders in each industry, <strong>the</strong>ir
culture, technology, type <strong>of</strong> networking, etc. However, <strong>the</strong> essence <strong>of</strong> business system can probably
be best explained by employing <strong>the</strong> concept <strong>of</strong> social systems <strong>of</strong> production (Hollingsworth and
Boyer, 1997).
The business system could be understood as <strong>the</strong> way that different institutions, organizations or o<strong>the</strong>r
structures <strong>of</strong> <strong>the</strong> state, <strong>the</strong> region or a particular industry are integrated into a social configuration <strong>of</strong>
<strong>the</strong> value creation processes. A set <strong>of</strong> interrelations between buyers and suppliers, business
companies and training institutions as well as administrative bodies and <strong>the</strong> whole range <strong>of</strong> o<strong>the</strong>r
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relations should be counted. All this shows that such a business system differs greatly from a single
company and especially from <strong>the</strong> small one. Needs for knowledge and <strong>the</strong> possibilities to obtain it are
quite bigger. Compared to a single big company all <strong>the</strong> internal actors and stakeholders in <strong>the</strong>
business system are independent. It certainly makes all <strong>the</strong> knowledge management processes
different and more complicated.
Cluster is one type <strong>of</strong> business systems. In fact every cluster is a business system but not every
business system is a cluster. Clusters and clustering have become one <strong>of</strong> <strong>the</strong> hot topics in <strong>the</strong>
contemporary studies on competitiveness, industrial policy and regional development. However, <strong>the</strong>re
are very few publications where some aspects <strong>of</strong> knowledge management processes in <strong>the</strong> cluster
are discussed (Giuliani, 2005; Ba<strong>the</strong>lt, Malmberg and Maskel, 2004; Bell and Albu, 1999, etc.).
Cluster is usually less complex and more homogeneous than business system. That is why <strong>the</strong>
knowledge absorption and management processes have a lot in common with those in a big
diversified company.
Even if <strong>the</strong> clusters differ in <strong>the</strong>ir size, maturity, industry specificity, national or regional origin <strong>the</strong>y
have a lot in common. Those commonalities will be taken as a basis while discussing <strong>the</strong> knowledge
absorption and reconfiguring processes in that paper.
The main questions are – what knowledge do cluster organizations need? Where <strong>the</strong> knowledge
rests? Who owns <strong>the</strong> knowledge? What tools and techniques could be most efficient to obtain <strong>the</strong>
needed knowledge are <strong>of</strong> primary importance. The intelligence approach to knowledge sourcing will
be employed in <strong>the</strong> article.
The concept <strong>of</strong> intelligence is more practical ra<strong>the</strong>r than <strong>the</strong>oretical construct. It originates from <strong>the</strong>
military field. This concept has been expanded to o<strong>the</strong>r fields <strong>of</strong> human activities by Dedjer (1987,
1993), who in <strong>the</strong> scientific literature sometimes is named as <strong>the</strong> “godfa<strong>the</strong>r” <strong>of</strong> social intelligence.
Success <strong>of</strong> <strong>the</strong> cluster or <strong>the</strong> business system depends on <strong>the</strong> level <strong>of</strong> advancement <strong>of</strong> <strong>the</strong> most
important systems that determine such success. Accordingly, <strong>the</strong>re may be different types <strong>of</strong>
intelligence: political, technological, economic, business and social intelligence (Hedin, 1992). The
key idea <strong>of</strong> <strong>the</strong> intelligence function is to assure that <strong>the</strong> company or o<strong>the</strong>r social establishment would
feel more or less comfortable in <strong>the</strong> changing environment. Ability to absorb and to manage week
signals coming from <strong>the</strong> environment is becoming an important part <strong>of</strong> organizational competence.
2. The concept <strong>of</strong> business system
Most <strong>of</strong> <strong>the</strong> research in <strong>the</strong> field <strong>of</strong> knowledge management is targeted on such processes in an
organization ra<strong>the</strong>r that on organizational settings such as a cluster, city, region, <strong>the</strong> state or a
business system. However, <strong>the</strong> rules <strong>of</strong> <strong>the</strong> game in competition changes drastically in <strong>the</strong> last
decades. One <strong>of</strong> such new trends is <strong>the</strong> exceptional increase <strong>of</strong> <strong>the</strong> importance <strong>of</strong> networks, clusters
and business systems. Even if <strong>the</strong> knowledge management principles remain <strong>the</strong> same, all <strong>the</strong>
processes become much more complicated. The business system <strong>of</strong> any level consists <strong>of</strong> a number
<strong>of</strong> independent actors – business companies, research institutions, public bodies, etc. It is quite clear
for a single company to know which knowledge is internal and which is external. In <strong>the</strong> business
system such divide is ra<strong>the</strong>r relative. Even if to consider <strong>the</strong> knowledge resting in <strong>the</strong> cluster
organizations as being internal, access to that particular knowledge still is problematic due to different
owners <strong>of</strong> such knowledge. Knowledge that is internal for one company is external for ano<strong>the</strong>r. The
knowledge management system <strong>of</strong> such setting <strong>of</strong> independent organizations is called to help single
organizations to make best use <strong>of</strong> acquired knowledge. Developing <strong>the</strong> effective knowledge
management system in <strong>the</strong> business system or cluster requires good understanding <strong>of</strong> <strong>the</strong> nature <strong>of</strong>
such system.
Whitley (2000) defines business system as a set <strong>of</strong> interlocking structures and institutions in different
spheres <strong>of</strong> economic and social life which are interconnected to create a distinct pattern <strong>of</strong> organizing
economic activity at local or national boundaries. The business system concept comes into some
contradiction with <strong>the</strong> liberal approach concerning <strong>the</strong> coordination mechanisms in <strong>the</strong> economy. It is
more European ra<strong>the</strong>r than American approach. He seeks to understand how distinctive patterns <strong>of</strong>
economic organization become established and effective in different societies and how <strong>the</strong>y change in
<strong>the</strong> relation to <strong>the</strong>ir institutional contexts’.
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Few could argue that <strong>the</strong> self-adjusting market mechanisms are probably <strong>the</strong> most efficient as far as
<strong>the</strong> use <strong>of</strong> economic resources is concerned. However, <strong>the</strong>re are a number <strong>of</strong> arguments that markets
not always are ideal mechanisms for coordinating transactions among businesses especially in <strong>the</strong>
industries with very complex technologies (Campbell, et al. 1991; Hollingsworth, Schmitter, Streeck,
1994; etc.). Of course, <strong>the</strong> size and <strong>the</strong> structure <strong>of</strong> national economy as well as <strong>the</strong> national context
play an important role in establishing <strong>the</strong> coordinating mechanisms. For example, it is difficult to
expect <strong>the</strong> French system <strong>of</strong> production to be applicable in <strong>the</strong> UK or Scandinavian contexts.
The business system could be understood as <strong>the</strong> way that different institutions, organizations or o<strong>the</strong>r
structures <strong>of</strong> <strong>the</strong> state, <strong>the</strong> region or a particular industry are integrated into a social configuration <strong>of</strong>
<strong>the</strong> value creation processes. A set <strong>of</strong> interrelations between buyers and suppliers, business
companies and training institutions as well as administrative bodies and <strong>the</strong> whole range <strong>of</strong> o<strong>the</strong>r
relations should be counted. Such a system develops its own culture, vocabulary and ethics.
In general <strong>the</strong> term business system refers to <strong>the</strong> way a single company or all social and economic
actors located in a certain region or industry conduct <strong>the</strong>ir business. There are three most important
dimensions <strong>of</strong> any business system: organizational structure, organizational processes and
organizational culture. These three dimensions play an important role <strong>the</strong> way any company or
business system enters into relationship with external partners, while acquiring intellectual resources
and knowledge.
During <strong>the</strong> 1990s, a true explosion <strong>of</strong> specialized and popular literature on <strong>the</strong> industrial clusters gave
<strong>the</strong>m an unprecedented coverage across a wide range <strong>of</strong> areas, such as business management,
economic sociology, political economy, economic geography or industrial and innovation policy. There
was also a degree <strong>of</strong> confusion over what various authors mean – and do not mean – by <strong>the</strong> concept
<strong>of</strong> industrial clusters. Despite numerous publications in <strong>the</strong> field, <strong>the</strong> answer is still not clear. Clusters
and clustering have become one <strong>of</strong> <strong>the</strong> hot topics in <strong>the</strong> contemporary studies on competitiveness,
industrial policy and regional development. Never<strong>the</strong>less, a commonly accepted definition <strong>of</strong> cluster
does not exist. One can find different national interpretations <strong>of</strong> <strong>the</strong> ‘cluster’ concept. French literature
features <strong>the</strong> term ‘local productive system’ (fr. système productif local), Italian literature – ‘industrial
district’ (it. distritto industriale), German literature – ‘networks <strong>of</strong> competence’ (ger. Kompetenz-Netz).
Researchers from various countries seek to discover <strong>the</strong> presence <strong>of</strong> cluster-related structures and
<strong>the</strong>ir regional specificity. Various aspects <strong>of</strong> industrial clusters were analyzed by Camagni (1991),
Sternberg and Tamasy (1999), Etzkowitz et al. (2000), Lawton Smith and de Bernardy (2000) and
o<strong>the</strong>rs. But probably <strong>the</strong> most fundamental work that aroused interest in <strong>the</strong> concept was that <strong>of</strong>
Porter (1990).
At <strong>the</strong> dawn <strong>of</strong> <strong>the</strong> 21st century, industrial clusters were taking over entire areas <strong>of</strong> many global
industries, such as manufacturing, R&D and product design. As a result, leading multinationals in
different industries increasingly use industrial clusters for <strong>the</strong>ir benefit. These multinationals would
typically involve industrial clusters ei<strong>the</strong>r as leading suppliers or as key customers and innovators in
<strong>the</strong> key areas <strong>of</strong> <strong>the</strong>ir value chain. All this suggests that companies and <strong>the</strong>ir groups in a single
country will be integrated into <strong>the</strong> global business systems no matter if <strong>the</strong>y understand that and how
to do it, or not. The strategic question is whe<strong>the</strong>r to be a source or a part <strong>of</strong> partnership. And this is
very much about <strong>the</strong> intelligence. Emerging knowledge economy even sharpens <strong>the</strong> situation.
3. The concept <strong>of</strong> intelligence
The socio-economic environment is increasingly defined and described in terms <strong>of</strong> information.
Managers are being overwhelmed by facts and data. Often <strong>the</strong>y are confronted with conflicting
information and, instead <strong>of</strong> acting, <strong>the</strong>y become paralyzed. While <strong>the</strong> external data storage capacity
and data transmission speed have both increased dramatically over <strong>the</strong> past decades, <strong>the</strong> data
storage capacity and data transmission speed <strong>of</strong> <strong>the</strong> human mind have stayed <strong>the</strong> same. In this
situation people are making bad decisions and judgments simply because <strong>of</strong> inability to cope with
data overload. The most advanced organizations understand that <strong>the</strong> key to success in today’s
environment lays not so much in knowledge as in ‘intelligence’.
Intelligence <strong>of</strong> organization or <strong>of</strong> <strong>the</strong> business system/cluster can be defined as capability to adapt to
<strong>the</strong> changing circumstances in order to achieve <strong>the</strong> preferred development objectives.
Underdevelopment is more a state <strong>of</strong> mind than a consequence <strong>of</strong> environment, social or technical
impoverishment. Many <strong>of</strong> <strong>the</strong> less developed organizations, business systems or even <strong>the</strong> countries
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do not know where <strong>the</strong>y are going, or where <strong>the</strong>y wish to go. The tools for <strong>the</strong> development <strong>of</strong>ten are
copied from different contexts and <strong>the</strong> time. Too <strong>of</strong>ten it is assumed that tools, which bring prosperity
to o<strong>the</strong>r organizations or business systems or societies, will succeed in a very different environment.
The disparity in social structures, cultures and values, and ultimate goals is <strong>of</strong>ten ignored. Even when
<strong>the</strong>se tools and <strong>the</strong> economic objectives are compatible, <strong>the</strong>y are not recognized as such by <strong>the</strong>
underdeveloped mentalities, which have deployed <strong>the</strong>m.
‘Intelligence’ combines many <strong>of</strong> <strong>the</strong> most important features <strong>of</strong> many o<strong>the</strong>r concepts. It is at <strong>the</strong> heart
<strong>of</strong> a systemic and continuous process at strategic level dealing with <strong>the</strong> collection, interpretation and
sharing <strong>of</strong> market-related, political, technological and social information in order to assure
developmental processes. Also, it is <strong>the</strong> art <strong>of</strong> monitoring week signals which tell us whe<strong>the</strong>r <strong>the</strong>
social system (institution, organization, region etc.) is on <strong>the</strong> right track or not.
The concept <strong>of</strong> intelligence, as applied here, extends beyond management practices and economics.
It sees <strong>the</strong> world as a shifting variety <strong>of</strong> social systems and each system as a communication network
with its own ‘personality’ and culture, interacting in a variety <strong>of</strong> ways, and exercising its intelligence
function in <strong>the</strong> service <strong>of</strong> its goals (Dedijer 1993). Understanding how to develop an intelligent
institution is becoming one <strong>of</strong> <strong>the</strong> priorities for researchers in many fields <strong>of</strong> social sciences. Most
attention has so far been paid to this concept in <strong>the</strong> business world (Bernhardt 1994, Ettore 1995,
Fuld 1985, 1995, Herring 1998, Quinn, 2005, Underwood 2002, Yangblood 1998). The authors focus
mainly on issues <strong>of</strong> business intelligence or competitor intelligence, trying to develop tools and
approaches, which will allow a company to preserve its competitiveness. Dedijer (1993), Jequeir and
Dedijer (1987), T<strong>of</strong>fler (1991) and o<strong>the</strong>rs stress <strong>the</strong> technological and social aspects <strong>of</strong> intelligence.
Choo (1998) and Friedman (1997) focus on organizational learning as <strong>the</strong> key characteristic <strong>of</strong>
intelligence in an organizational setting. However, both qualities are interrelated and require not just
individual knowledge but also organizational knowledge and well developed internal and external
networks and supporting infrastructure. Organizational intelligence refers <strong>the</strong>refore to many more than
just intellectually competent individuals. The intelligence <strong>of</strong> <strong>the</strong> cluster or business system is more
than intelligence <strong>of</strong> <strong>the</strong> single companies. Moreover this notion <strong>of</strong> organizational intelligence can be
applied at every level from <strong>the</strong> small business to <strong>the</strong> region or even country.
Intelligence is an attitude, which not only provides knowledge, but spurs wisdom, because <strong>of</strong> its
comprehensive view regarding <strong>the</strong> interrelationships <strong>of</strong> all aspects <strong>of</strong> business and, consequently, <strong>the</strong>
behaviour <strong>of</strong> entrepreneur, organization or cluster as a whole. It generates a special kind <strong>of</strong>
information product, which is content-specific and focused towards a decision-making situation and is
highly evolved in terms <strong>of</strong> possessing considerably greater informative value that <strong>the</strong> original data
extracted from <strong>the</strong> information sources. There is an essential difference between information and
organisational intelligence as a quality or capacity <strong>of</strong> cluster. Information can be considered as valueadded
pieces <strong>of</strong> knowledge through meaningfulness for specific person or organizations (Hedin,
1992). At <strong>the</strong> same time, intelligence is about having a skill <strong>of</strong> ‘guessing right’ based on information
and organizational culture. An effectively performed intelligence function will work as an early warning
system. Business intelligence stimulates action.
Managers and entrepreneurs trained to act on facts tend to discount <strong>the</strong> value <strong>of</strong> competitive
intelligence because it is not what has happened, but ra<strong>the</strong>r what might happen. It is about <strong>the</strong>
possibilities as to how and what kind <strong>of</strong> future might occur. In this case, <strong>the</strong> quest for facts hardly
makes sense: <strong>the</strong>re are simply no facts about <strong>the</strong> future – it has not happened yet. Never<strong>the</strong>less, <strong>the</strong>
future can be quite knowable given a rigorous analysis <strong>of</strong> <strong>the</strong> facts (Youngblood, 1998). Establishing
<strong>the</strong> effective system <strong>of</strong> ga<strong>the</strong>ring strategic knowledge and intelligence is becoming <strong>of</strong> big importance
in <strong>the</strong> turbulent and radically changing environment.
4. An intelligence system for knowledge sourcing
An intelligent cluster can also be described as organised intellectual capacity <strong>of</strong> <strong>the</strong> business system
to perceive emerging changes in <strong>the</strong> environment, as well as <strong>the</strong>ir reasons and effects for its
development. Such cluster possesses effective mechanisms for creating new understanding, knowing
and competence by integrating new knowledge with <strong>the</strong> intellectual capital <strong>of</strong> individuals, companies
and institutions. Finally, it is capable <strong>of</strong> making and implementing decisions to achieve its goals by
exploiting resources <strong>of</strong> all kinds in <strong>the</strong> most efficient way. Consequently, three interrelated
subsystems <strong>of</strong> <strong>the</strong> intelligent cluster can be distinguished: understanding <strong>the</strong> context, developing
collective knowing and ‘making things happen’ (see Figure 1). Conceptually <strong>the</strong> model integrates
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ideas <strong>of</strong> intelligence (Dedjer, 1993; Fuld, 1995; Konminos, 2002, etc.), knowing organization (Choo,
1998), business system (Hollingsworth, 1997).The intelligence function is to assure good
understanding <strong>of</strong> <strong>the</strong> context both internally and externally with main emphasis on <strong>the</strong> last. It is based
on establishing <strong>the</strong> mechanisms for getting <strong>the</strong> right information and knowledge and developing <strong>the</strong>
ability to combine it with already existing knowledge in different contexts. It requires ‘knowing what,
why, how and who’. There is no necessity or even sense <strong>of</strong> trying to establish consensus throughout
all actors in <strong>the</strong> cluster. The main reason is to accommodate <strong>the</strong> diversity <strong>of</strong> approaches,
interpretations and to provide a cognitive space for its members to inquire experiment and discover.
The principal activities are scanning <strong>of</strong> <strong>the</strong> political, technological, social, etc., environment, noticing
what is behind and interpreting <strong>the</strong> consequences or challenges.
Productive knowledge creation represents <strong>the</strong> idea <strong>of</strong> <strong>the</strong> innovation system inside <strong>the</strong> cluster. In
order to govern <strong>the</strong> complexity, a cluster has not only to explore and capture what is new, but also
exploit <strong>the</strong> knowledge <strong>of</strong> what has been learned. A well functioning cluster can be characterised by
<strong>the</strong> effectively functioning innovation mechanisms.
Know what?
Know why?
Know how?
Know who? who?
Productive
Productive
knowledge
creating
Intelligence
Shared knowledge
and meanings
New
knowledge
Competence
Decision
Decision
making
making
Value
creation
Figure 1: The system for <strong>the</strong> intelligence knowledge creation
The mission <strong>of</strong> <strong>the</strong> decision-making subsystem is to connect internal knowledge with intelligence
products in order to transform <strong>the</strong> knowledge into value. Both subsystems – productive knowledge
creation and decision making are ra<strong>the</strong>r well discussed in <strong>the</strong> scientific literature on innovation and
<strong>the</strong>re is no big need to deeper.
The role <strong>of</strong> information technologies in developing intelligent business systems or clusters is crucial.
Such technologies enable not only operation <strong>of</strong> economic and social actors <strong>of</strong> a particular system in a
virtual environment, but also creation <strong>of</strong> virtual innovation environments. One <strong>of</strong> <strong>the</strong> key factors for
success in <strong>the</strong> today’s dynamic environment is ability to use global resources faster and smarter than
competitors. Three core components <strong>of</strong> intelligent cluster or business system can be distinguished
(Komninos 2002). First, smart communities serving as a heart <strong>of</strong> innovations, in which government,
business and pr<strong>of</strong>essionals understand <strong>the</strong> potential <strong>of</strong> knowledge and make conscious use <strong>of</strong> that
knowledge and technology in order to improve productivity. This component is a reference point for
intelligent clusters or even <strong>the</strong> whole business system. Probably <strong>the</strong> most simple and commonly
accepted forms <strong>of</strong> such cluster-based communities are technological or science parks. These forms
only have potential for becoming a smart community, but <strong>the</strong>y do not necessarily realise this potential.
The main precondition for success is <strong>the</strong> existence <strong>of</strong> a true community <strong>of</strong> people, scientists and
producers who operate in an environment characterised by <strong>the</strong> social relations that transform
scientific knowledge into new products and where a constant renewal <strong>of</strong> production processes and
exchanges takes place.
The second component <strong>of</strong> intelligent business system or cluster is existence <strong>of</strong> virtual space for
innovation that combines knowledge management tools with ICT. This space can also be called a
virtual innovation system. Komninos (2002) distinguishes two dimensions <strong>of</strong> such space or system –
knowledge management technologies and <strong>the</strong> information system for online execution <strong>of</strong> knowledge
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and innovation functions. The first dimension includes technologies and methods for innovation make
up a part <strong>of</strong> <strong>the</strong> main innovation process supported by rules and conventions built on institutions that
manage knowledge and technology flows. The second one is not just a simple projection <strong>of</strong> real
functions into virtual space but a radical reconstruction <strong>of</strong> those functions. The third component <strong>of</strong> <strong>the</strong>
intelligent or knowledgeable cluster is <strong>the</strong> processes <strong>of</strong> connecting <strong>the</strong> smart communities,
representing real innovation systems with a virtual space for innovations. It suggests <strong>the</strong> development
<strong>of</strong> <strong>the</strong> processes, methods and technologies enabling to combine <strong>the</strong> complexity <strong>of</strong> human
interactions with creativity <strong>of</strong> human thought in handling <strong>the</strong> unexpected circumstances that do not
follow <strong>the</strong> conventional logics.
Most <strong>of</strong> less developed business systems or <strong>the</strong> clusters could be characterized by <strong>the</strong> lack <strong>of</strong>
cooperation. It creates a number <strong>of</strong> practical problems while employing <strong>the</strong> intellectual capital <strong>of</strong>
single companies for <strong>the</strong> common needs <strong>of</strong> <strong>the</strong> whole business system. Most industries are
predominantly characterized by <strong>the</strong> presence <strong>of</strong> SMEs only exhibit a limited R&D intensity and
innovation capacity. The number and qualification <strong>of</strong> <strong>the</strong> employees <strong>of</strong> many <strong>of</strong> <strong>the</strong>se firms fall below
a critical mass necessary to engage in open innovation through absorptive capacity, let alone set up
an independent R&D unit. Exclusively relying on <strong>the</strong>ir limited internal absorptive capacity may cause
firms in such industries to be in a critical situation, given that those firms with higher levels <strong>of</strong>
absorptive capacity manage external knowledge flows more efficiently, stimulate innovative outcomes
and thus obtain competitive advantage. SMEs have to call upon third parties to help <strong>the</strong>m build
absorptive capacity.
One <strong>of</strong> possibilities is establishing collective research centers or concentration particular functions in
one <strong>of</strong> cluster companies. However, <strong>the</strong> concept <strong>of</strong> absorptive capacity also suggests that <strong>the</strong>se
centers have to dispose <strong>of</strong> sufficient absorptive capacity <strong>the</strong>mselves in order to fulfill <strong>the</strong>ir functions.
This way looks promising in ra<strong>the</strong>r big clusters or business systems and less perspective in smaller
one. Employing <strong>the</strong> internal and external competence networks as well as communities <strong>of</strong> practice
could be a possible way. Grant (1996) suggests that knowledge can be integrated externally through
relational networks that span organizational boundaries. Boundary-spanning networks create
opportunities for knowledge sourcing even in institutionalized environments (Wenger, et. al., 2002).
Networks serve as a tool for innovative collaborative strategy for combining working, learning and
innovation. They may be used by organizations to counteract static hierarchies and potentially provide
significant benefits to <strong>the</strong> organization and <strong>the</strong> whole business system in managing change. Networks
and communities <strong>of</strong> practice provide organizations with easier access to knowledge, quicker
responses to problems, and decreased learning. The principal logics how <strong>the</strong> internal networks and
communities <strong>of</strong> practice in <strong>the</strong> business system could be employed in intelligence knowledge sourcing
are presented in <strong>the</strong> Figure 2.
Coordination
Network 1 Knowledge
Network 2
Network 3
Network 4
Innovation infrastructure
Figure 2: Knowledge sourcing in <strong>the</strong> business system
• Technological
•Social
•Markets
•Political
• Economic
• Competition
•Business
•O<strong>the</strong>r
Analysis Knowledge products Users
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Trust and collaboration are <strong>of</strong> crucial importance for <strong>the</strong> networks. The lack <strong>of</strong> trust or collaboration is
<strong>the</strong> key reason why many <strong>of</strong> clusters fail. Creating mutual understanding, sharing <strong>of</strong> knowledge
between networks and single companies or institutions in <strong>the</strong> business system is quite a challenge
without a critical mass <strong>of</strong> trust. That is why establishing a collaboration culture in <strong>the</strong> business system
is a primary task.
5. Conclusions
Knowledge management functions in a business system or cluster are more complicated than in a
single organisation. The business system consists <strong>of</strong> a number <strong>of</strong> independent actors – business
companies, research institutions, public bodies, etc. Their needs for external knowledge are
different and more complex.
Most <strong>of</strong> companies in <strong>the</strong> cluster are quite small with limited absorptive capacity. Structures for
collective research in <strong>the</strong> cluster should be created. Employing <strong>the</strong> internal and external
competence networks as well as communities <strong>of</strong> practice could be a rational solution.
Establishing <strong>the</strong> effective system <strong>of</strong> ga<strong>the</strong>ring strategic knowledge and intelligence is becoming <strong>of</strong>
crucial importance in <strong>the</strong> turbulent and radically changing environment.
Absorptive capacity <strong>of</strong> external knowledge is a crucial precondition for innovation in companies
with limited resources both intellectual and financial. Combining such ability with ability to
perceive emerging changes in <strong>the</strong>ir environments is an important precondition for
competitiveness.
References
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291

Let’s innovate! Should Development Projects be Creating
Learning? A Case Study on Employee and Employer
Perceptions Within a City Organization
Annukka Jyrämä 1 , Pia Bäcklund 2 , Heini Väisänen 3 , and Henrikki Tikkanen 1
1 Aalto University School <strong>of</strong> Economics, Marketing, Helsinki, Finland
2 University <strong>of</strong> Tampere / City <strong>of</strong> Helsinki Urban Facts, Finland
3 University <strong>of</strong> Helsinki, Department <strong>of</strong> Social Sciences, Helsinki, Finland
annukka.jyrama@aalto.fi
pia.backlund@uta.fi
heini.vaisanen@Helsinki.fi
henrikki.tikkanen@aalto.fi
Abstract: In this study, we look at development work from <strong>the</strong> perspective <strong>of</strong> learning. We highlight <strong>the</strong> role <strong>of</strong>
development projects and <strong>the</strong> dissemination and sharing <strong>of</strong> learning within <strong>the</strong>m. To be more specific, we focus
on organizational communities and <strong>the</strong> role <strong>of</strong> <strong>the</strong>ir inherent dominant logic as enablers for and barriers to
sharing learning, especially in <strong>the</strong> case <strong>of</strong> public organizations. The paper reports a large survey conducted
among people employed by <strong>the</strong> city <strong>of</strong> Helsinki. Altoge<strong>the</strong>r 1800 responses were received. The results indicate
that <strong>the</strong> communities and <strong>the</strong>ir inherent dominant logic does play a dominant role in learning and knowledge
dissemination. These communities may act both as enablers and barriers. The role <strong>of</strong> <strong>the</strong> community’s dominant
logic is important enabling knowledge sharing at a local level. Yet, it might impede learning from outside peer
communities, and from development projects as <strong>the</strong>y are <strong>of</strong>ten organized as separate microcommunities,
unconnected to everyday practices. The study’s managerial contribution builds from acknowledging <strong>the</strong> need to
understand <strong>the</strong> differences in communities and development projects on <strong>the</strong> one hand and even more importantly
to create means for disseminating <strong>the</strong> development projects work into <strong>the</strong> communities and <strong>the</strong>ir everyday
practices overcoming barriers such as discrepancies in values and languages on <strong>the</strong> o<strong>the</strong>r. The <strong>the</strong>oretical
contribution builds from connecting discussions on dominant logic to communities.
Keywords: community, learning, dominant logic, city organization, development projects
1. Introduction
The number and intensity <strong>of</strong> development work organized as separate projects has increased
considerably during recent years. Organizing development work in project based microcommunties
has also been criticized, as <strong>the</strong>ir role becomes problematic when learning and new knowledge
created within <strong>the</strong>se projects is not applied and used in everyday organizational practices, or if <strong>the</strong>
continuous projects do not seem to be linked with each o<strong>the</strong>r in time. At worst, development work
becomes separated from <strong>the</strong> organization’s everyday activities and does not create any added value
for <strong>the</strong> organization. Thus, development work does not transform into organizational learning. (e.g.
Bäcklund 2007, Rantala and Sulkunen 2006)
In this study, we look at development work from <strong>the</strong> perspective <strong>of</strong> learning. The importance <strong>of</strong>
organizational knowledge creation and continuous development and learning is well acknowledged
(see e.g. von Korgh 2000, Wenger and Snyder 2000). In extant literature on entrepreneurship and
small business management, <strong>the</strong> importance <strong>of</strong> learning from experience has also been strongly
emphasized (Carson & Gilmore 2000, Cope & Watts 2000, Deakins & Freel 1998).Fur<strong>the</strong>rmore, <strong>the</strong>
organizational capabilities to learn, assimilate, and create knowledge as well as <strong>the</strong> structures behind
knowledge creation have received considerable attention (Zollo and Winter 2002, Jones 2006).
Competencies for firms, not only in <strong>the</strong> sense <strong>of</strong> building <strong>the</strong> capabilities <strong>of</strong> individual managers and
employees, but also in relation to creating <strong>the</strong> ability to exploit <strong>the</strong> resources <strong>of</strong> various actors in <strong>the</strong>
business network around <strong>the</strong> firm have been discussed (e.g. Jyrämä and Äyväri, 2007). Yet, <strong>the</strong>
knowledge creation processes, learning and development work especially in public organizations
have received less attention (e.g. Handizc et al 2008, Bäcklund 2007). Consequently, this study aims
to highlight <strong>the</strong> role <strong>of</strong> development projects and <strong>the</strong> dissemination and sharing <strong>of</strong> learning within
<strong>the</strong>m. We focus on organizational communities and <strong>the</strong> role <strong>of</strong> <strong>the</strong>ir inherent dominant logic as
enablers to and barriers for sharing learning especially in <strong>the</strong> case <strong>of</strong> a public organization, <strong>the</strong> capital
city <strong>of</strong> Finland, Helsinki.
The <strong>the</strong>oretical contribution <strong>of</strong> <strong>the</strong> paper builds on elaborating learning and knowledge sharing in <strong>the</strong>
context <strong>of</strong> development project work. Thus, our paper contributes to <strong>the</strong> discussion on learning and
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knowledge creation by studying <strong>the</strong> role <strong>of</strong> communities <strong>of</strong> practice (see e.g. Brown and Duguid 1991,
2001, Lave and Wenger 1991, Wenger 1998, Wenger and Snyder 2000, Cox 2004) or
microcommunites <strong>of</strong> knowledge (von Korgh et al. 2000) and <strong>the</strong>ir inherent dominant logic (e.g. Bettis
and Prahalad 1995, Von Korgh and Grand 2000) as barriers to or enablers for learning and sharing
knowledge.
The paper reports a large survey conducted among <strong>the</strong> city <strong>of</strong> Helsinki employees. Altoge<strong>the</strong>r 1800
responses were received. The following sections elaborate <strong>the</strong> chosen <strong>the</strong>oretical approaches and
research methodology, and <strong>the</strong> research site, <strong>the</strong> city <strong>of</strong> Helsinki. Consequently, <strong>the</strong> key results and
major findings <strong>of</strong> <strong>the</strong> study are presented. The final sections conclude by presenting key issues to
reflect in future research and by managerial implications.
2. Learning in communities and dominant logic
The <strong>the</strong>oretical discussion underpinning our study consists <strong>of</strong> literature on <strong>the</strong> contextual nature <strong>of</strong>
learning and <strong>the</strong> importance <strong>of</strong> understanding <strong>the</strong> situational and cultural aspects affecting employee
perceptions on learning and development work. (see e.g. Bäcklund, 2007, Bäcklund et al. 2010,
Brown and Duguid, 2001, Lave and Wenger, 1991)
Learning is regarded as an ongoing and dynamic social process, which occurs intentionally or
unintentionally in everyday activities, (see e.g. Araujo 1998, Gherardi, 1999, also Leonard and
Sensiper, 1998: implicit learning -concept). In addition to <strong>the</strong> process nature <strong>of</strong> learning, <strong>the</strong>
contextual and experiential nature <strong>of</strong> learning is emphasized (e.g. Dalley and Hamilton 2000, Gibb
1997, Kolb 1984, Johannisson, 1996). In <strong>the</strong> following, <strong>the</strong> contexts <strong>of</strong> learning and knowledge
creation are discussed.
The concept <strong>of</strong> communities <strong>of</strong> practice, a context for learning and knowledge creation, (e.g. Lave and
Wenger 1991, Wenger 1998, Wenger and Snyder 2000, Brown and Duguid 1991, 2001, Cox 2004)
has traditionally been defined as a freely created community that engages in an activity and <strong>the</strong>n
gradually evolves into a tight community that learns through joint practice. It includes “<strong>the</strong> language,
tools, documents, images, symbols, well-defined roles, specified criteria, codified procedures,
regulations, and contracts that various practices make explicit for a variety <strong>of</strong> purposes” (Wenger
1998: 47). Fur<strong>the</strong>rmore, Wenger (1998: 73) defines <strong>the</strong> dimensions <strong>of</strong> practice as <strong>the</strong> property <strong>of</strong> a
community through mutual engagement, joint enterprise, and shared repertoire. There are
communities <strong>of</strong> people, who share some activity or practice and possess similar values, norms and
language (Lave and Wenger 1991, Wenger 1998).
The boundaries <strong>of</strong> communities <strong>of</strong> practice are blurred. It has been stated that we may have various
ways and levels to participate in a community, we may be active members engaged in <strong>the</strong> creation <strong>of</strong>
<strong>the</strong> shared values and norms, or we may be newcomers only having peripheral access, learning <strong>the</strong>
ways <strong>of</strong> <strong>the</strong> community. The term ‘legitimate peripheral participation’ (Lave and Wenger 1991) points
out two ways in which one can become a part <strong>of</strong> a community. Peripherality refers to <strong>the</strong> fact that one
can experience exposure before becoming a part <strong>of</strong> <strong>the</strong> actual practice. This can be achieved by
assistance, e.g. through lessons. On <strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong>re are big differences between lessons that
concern <strong>the</strong> practice and lessons that occur within <strong>the</strong> practice. Peripheral participation ought to
provide access to all dimensions <strong>of</strong> practice: to mutual engagement with o<strong>the</strong>r members, to <strong>the</strong>ir
actions and <strong>the</strong>ir negotiation practices, and to <strong>the</strong> repertoire <strong>of</strong> practices in use (Lave and Wenger
1991, Wenger 1998). Moreover, in order to become a member, newcomers need to be granted
enough legitimacy to be treated as potential members <strong>of</strong> <strong>the</strong> community.
The concept <strong>of</strong> a microcommunity <strong>of</strong> knowledge has been presented as ano<strong>the</strong>r context for joint
activity, especially as an enabler for <strong>the</strong> knowledge creation process (von Krogh et al., 2000, 1997).
Both <strong>of</strong> concepts imply shared values and norms that underlie <strong>the</strong> shared practices <strong>of</strong> <strong>the</strong> group. A
microcommunity <strong>of</strong> knowledge refers to a small core group <strong>of</strong> participants that engage in knowledge
sharing and creation. The group is characterized by its own rituals, language, practices, norms, and
values. The group may also include people with various backgrounds and expertise; yet <strong>the</strong>y share
<strong>the</strong> group’s aim and participate actively in its activities. A microcommunity <strong>of</strong> knowledge may have
various tasks and aims, e.g. product development, but generally it is created to enhance knowledge
creation and sharing within a company or an organization (von Krogh et al., 2000, 1997).
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The key difference from <strong>the</strong> point <strong>of</strong> view <strong>of</strong> current study is that communities <strong>of</strong> practice are mainly
seen as freely created even though Wenger and Snyder later (2000) propose that <strong>the</strong>y can be
cultivated. According to <strong>the</strong> dominan view, a microcommunity <strong>of</strong> knowledge is a managed entity. This
distinction can be seen as ra<strong>the</strong>r artificial as communities <strong>of</strong> practice are <strong>of</strong>ten used as managerial
tools. However, in this study we find this <strong>the</strong>oretical distinction useful, as it allows us to analyze <strong>the</strong>
differences in managed and naturally born communities. Thus, both concepts are used in this study to
highlight and analyze organizational diversity with multiple practices and siloed departments within a
city context, e.g. including <strong>the</strong> community <strong>of</strong> social workers or <strong>the</strong> community <strong>of</strong> urban planners. In
essence, all <strong>of</strong> <strong>the</strong>se communities share many practices in <strong>the</strong> sense <strong>of</strong> a community <strong>of</strong> practice
(Lave and Wenger, 1991; Wenger, 1998) and <strong>the</strong> development projects as managed knowledge
creating communities, ie. mircrocommunities <strong>of</strong> knowledge.
A community may become a barrier to or an enabler for knowledge creation. As <strong>the</strong> micrommunity <strong>of</strong>
knowledge or <strong>the</strong> community <strong>of</strong> practice shares similar values and similar beliefs, <strong>the</strong>y create a
shared dominant logic. A dominant logic is defined by Prahalad and Bettis (1986: 490-491): “A
dominant general management logic is defined as <strong>the</strong> way in which managers conceptualize <strong>the</strong>
business and make critical resource allocation decisions – be it in technologies, product development,
distribution, advertising, or in human resource management. The dominant logic is stored via
schemas and hence can be thought as a structure. However, some <strong>of</strong> what is stored is process
knowledge. It is expressed as a learned, problem solving behavior.” In <strong>the</strong>ir retrospective article,
Bettis and Prahalad (1995) view dominant logic as an information filter, meaning that attention is
given only to information deemed as relevant by <strong>the</strong> dominant logic <strong>of</strong> <strong>the</strong> firm. On <strong>the</strong> o<strong>the</strong>r hand,
<strong>the</strong>y also argue that <strong>the</strong> dominant logic is an adaptive emergent property <strong>of</strong> a complex organization,
and as such, allows <strong>the</strong> organization to anticipate and adapt to changes in its’ environment.
In a similar vein, von Krogh and Grand (2000) argue that knowledge and learning cannot be seen in
isolation from <strong>the</strong> role that <strong>the</strong> dominant logic plays. The dominant logic influences <strong>the</strong> process <strong>of</strong>
justification or rejection <strong>of</strong> any new knowledge. In a way, it acts as a filter for <strong>the</strong> creation <strong>of</strong> new
knowledge, affecting <strong>the</strong> learning process: which knowledge is returned and which is appropriated
into <strong>the</strong> knowledge “stock” (see also Reuber and Fischer 1999). On <strong>the</strong> o<strong>the</strong>r hand, Lane and
Lubatkin (1998) emphasize that <strong>the</strong> similarity <strong>of</strong> firm’s knowledge bases, organizational structures and
dominant logic plays a crucial role enabling inter-organizational learning. Only when firms
(communities) share a similar dominant logic and, thus, have similar ways to perceive data and to
view <strong>the</strong> learning process, can <strong>the</strong>y successfully learn from each o<strong>the</strong>r. Yet, <strong>the</strong> dominant logic <strong>of</strong>ten
remains unquestioned and unconditionally accepted, since individuals <strong>of</strong>ten cannot even conceive <strong>of</strong>
any o<strong>the</strong>r appropriate alternatives. The role <strong>of</strong> dominant logic, in o<strong>the</strong>r words organizational culture,
affects what kind <strong>of</strong> knowledge is perceived as valid (see also Bäcklund 2007).
In this study, we argue that <strong>the</strong> contexts <strong>of</strong> learning, i.e. communities, may act both as enablers to
and barriers for learning and knowledge sharing simultaneously through <strong>the</strong>ir dominant logic. It is
proposed that within a large organization, in our case a capital city with its organization, <strong>the</strong>re may
simultaneously exists several strong communities, and thus dominant logics, as <strong>the</strong>re exist various
communities <strong>of</strong> practice. Moreover, <strong>the</strong> development projects are seen as microcommunties <strong>of</strong>
knowledge engaged in tasks to “innovate” and create new knowledge. Development work here
consists <strong>of</strong> specific projects established by <strong>the</strong> management to improve <strong>the</strong> city organization and its
services, for example, a project created to improve city’s services for entrepreneurs who organize
events. It involves people from various bureaus, such as city business development, park
maintenance, tourist services, security etc. Any development project work faces dominant logics that
enable knowledge sharing or act as barriers to disseminating new knowledge created. The
development projects might be realized ei<strong>the</strong>r within a community <strong>of</strong> practice or in-between <strong>the</strong>m.
3. Data and methods
3.1 Data collection and description
The paper reports a large survey conducted among <strong>the</strong> employees <strong>of</strong> <strong>the</strong> city <strong>of</strong> Helsinki. The
questionnaire was available to all respondents on <strong>the</strong> city’s intranet during June 2009. Altoge<strong>the</strong>r,
1857 responses were received, which means that almost five per cent <strong>of</strong> <strong>the</strong> employees responded.
Out <strong>of</strong> 37 bureaus, we received answers from 35.
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Respondents were asked questions about <strong>the</strong> atmosphere in <strong>the</strong>ir workplace and ways <strong>of</strong> action, <strong>the</strong>
flow <strong>of</strong> information in <strong>the</strong> bureau, citizen feedback and <strong>the</strong> possibilities to innovate and to share
information. Answers were put on a Likert 5 point scale. They were also asked to report from whom
<strong>the</strong>y receive most support for <strong>the</strong>ir work, whe<strong>the</strong>r <strong>the</strong>y know <strong>the</strong> processes needed to realize
innovations and how <strong>the</strong>y feel about <strong>the</strong> hierarchy in <strong>the</strong>ir workplace and in <strong>the</strong> organization <strong>of</strong> <strong>the</strong> city
<strong>of</strong> Helsinki in general. In addition, <strong>the</strong>re were open-ended questions about <strong>the</strong> support received in
one’s work, citizen feedback and experiences one has had in innovating at work. Background
information about respondents was also collected.
The data were first analyzed to see how <strong>the</strong> respondents represent <strong>the</strong> city <strong>of</strong> Helsinki employee
pr<strong>of</strong>ile. Women responded more frequently than men: 75 per cent <strong>of</strong> <strong>the</strong> city <strong>of</strong> Helsinki employees
are female. In our study, 80 per cent <strong>of</strong> respondents were female. Employees aged from 46 to 55
years were slightly more likely to fill in <strong>the</strong> questionnaire than those who belong to o<strong>the</strong>r age groups.
Thus, our data represent <strong>the</strong> city <strong>of</strong> Helsinki employee pr<strong>of</strong>ile quite well. The greatest differences
were found in <strong>the</strong> education pr<strong>of</strong>ile: <strong>the</strong> more educated an employee, <strong>the</strong> more likely he or she was to
fill in <strong>the</strong> questionnaire; except those who had college-level education were more likely to respond to
<strong>the</strong> questionnaire than employees who had an academic degree.
3.2 Methods and analyses
The data were analyzed using cross tabulation, factor analysis and linear regression analysis. All
analyses were conducted using SPSS-s<strong>of</strong>tware (version 17.0).
Cross tabulation was used in descriptive analysis to find links and connections between <strong>the</strong> key
variables. χ 2 test was conducted on all tables to see whe<strong>the</strong>r <strong>the</strong> results were statistically significant.
Cross tabulation was used as an independent method as well as a tool for discovering which
variables should be tested more carefully. Principal axis factoring (with varimax rotation) was used to
determine which groups <strong>of</strong> variables could be used to create sum variables and factor scores to be
used as independent and dependent variables in regression analysis. Multiple linear regression
analysis was <strong>the</strong>n conducted, using <strong>the</strong>se variables and/or background variables (such as age and
gender). Categorical variables were coded as dummy variables. Factor scores and sum variables
were treated as continuous variables.
Although <strong>the</strong> data is somewhat biased, no weighting was done when <strong>the</strong> results were analyzed. As
<strong>the</strong> questionnaire was open to all employees <strong>of</strong> <strong>the</strong> city <strong>of</strong> Helsinki and no sampling was made, <strong>the</strong>
results are to be seen as indicative only and introductory for future research. Data were analyzed to
see how <strong>the</strong> respondents feel about different subjects, even though <strong>the</strong> data is not statistically
representative in all aspects.
4. Results
The study proceeded, firstly, to analyze <strong>the</strong> workplace atmosphere as this variable describes <strong>the</strong>
characteristics <strong>of</strong> <strong>the</strong> city’s organizational culture and reflects <strong>the</strong> learning context within <strong>the</strong> city
organization.
Most <strong>of</strong> <strong>the</strong> respondents from <strong>the</strong> study felt <strong>the</strong>ir working atmosphere was encouraging. They felt that
it was easy to share ideas and have open discussions. Moreover, <strong>the</strong>y felt <strong>the</strong>ir co-workers were
encouraging. On <strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong>y <strong>of</strong>ten felt that <strong>the</strong>ir directors’ attitude was less encouraging.
Conflicting views did emerge as well. In general, management expressed more positive views than
<strong>the</strong> employees. They clearly viewed <strong>the</strong>ir working environment as more open and had a more positive
perception <strong>of</strong> <strong>the</strong> easiness to share ideas. (See Figure 1).
The work place atmosphere revealed that <strong>the</strong> communities do seem to be open and allow joint
knowledge creation and sharing. Thus, it can be assumed that <strong>the</strong>y create a good context for
learning, reinforced by shared values, a common language and a dominant logic. However, from
answers to <strong>the</strong> open questions, it can be noted that <strong>the</strong>re is more variance in employee perceptions
than <strong>the</strong> statistical analysis shows. Examples <strong>of</strong> both positive open and encouraging communities, but
also <strong>of</strong> less open and hierarchical ones were presented.
When <strong>the</strong> respondents explicitly answered questions related to development work, <strong>the</strong> results were
clearly more negative (see Figure 2.). The respondents’ experiences point out <strong>the</strong> challenges faced in
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development work. Most respondents agreed with <strong>the</strong> statement “<strong>the</strong>re are people within my
workplace that are not at all excited <strong>of</strong> development work”. Thus, it may well be that <strong>the</strong> general
attitude towards development work is not good in <strong>the</strong> city organization. Moreover, it was perceived
that <strong>the</strong> results <strong>of</strong> <strong>the</strong> development work were not applied to everyday work activities. This might be
due <strong>the</strong> fact that <strong>the</strong> development work is mainly organized as separate projects within <strong>the</strong> city that
may have become ra<strong>the</strong>r separate from everyday activities and practices. For example, it was noted
that “once a development project ended, a new one starts with no time nor resources allocated for
implementation and disseminating <strong>the</strong> knowledge and learning created to <strong>the</strong> everyday practices”.
However, it needs to be pointed out that many employees also had positive experiences on
development project work.
I have a good atmosphere at my work place where it is easy to
exchange spontaneously opinions on our work with so-workers
My ideas on developing our work are usually well received and
encouraged by my co workers
I have a good atmosphere at my work place where is is easy to exchange
spontaneously ideas and experiences on work with my superiors
My ideas on developing our work are usually well received and
encouraged by my superiors
The working culture in my work place allows also failures when trying
new activities
My tasks at work as such that I cannot make any mistakes
I have enough time for education and learning in my work
I have enough time for creating new ideas and for innovating
in my work
Agree Not agree or
disagree
0 20 40 60 80 100
%
Have not
thought about
it
Disagree
Figure 1: Work place atmosphere
Many respondents shared <strong>the</strong> view that development projects rarely pass to everyday activities. This
viewpoint might also relate to <strong>the</strong> fact that even though co-workers reacted positively to new ideas,
managers’ attitudes were <strong>of</strong>ten less encouraging, yet <strong>the</strong>ir role is vital in implementing new ideas and
development projects knowledge. The managers generally held more positive views on <strong>the</strong> openness
and on <strong>the</strong> atmosphere <strong>of</strong> <strong>the</strong> workplace than employees. This result might affect <strong>the</strong> practical
activities in development work: if managers have a predominantly positive attitude towards
development projects, <strong>the</strong>y might not realize <strong>the</strong> more negative views held by many employees and,
thus, may not see any need for change in development work practices (Table 3).
Moreover, <strong>the</strong> statement “in my workplace, we actively use o<strong>the</strong>r similar organization’s experience on
developing practices” was perceived as <strong>the</strong> least valid. Thus, learning from peer organizations is seen
as ra<strong>the</strong>r non-existing activity, which might point out that a barrier has been created within <strong>the</strong> joint
dominant logic; whose views are listened to in an organization. This impedes learning from outside
one’s own organization, or from o<strong>the</strong>r communities within <strong>the</strong> city (see Figures 1. and 2.).
The results on development work also show how <strong>the</strong> role <strong>of</strong> communities and <strong>the</strong>ir dominant logic can
act as a barrier to learning and knowledge creation. The results point out that <strong>the</strong>re exists established
ways to assess, for example, who is listened to and how <strong>the</strong> communities might create barriers for
cross -community or peer learning.
The results also seem to point out that within <strong>the</strong> city, <strong>the</strong>re exist some common general
characteristics, but, on <strong>the</strong> o<strong>the</strong>r hand, distinct differences in culture and dominant logic among
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Annukka Jyrämä et al.
various city departments or bureaus. In <strong>the</strong> following, our analysis proceeds to identify key aspects
behind <strong>the</strong> positive and negative attitudes towards development work by factor analysis. The aim is to
discover, which experiences and background characteristics might be linked to each o<strong>the</strong>r. These
factors describe personal’s experiences on development projects and work. On <strong>the</strong> basis <strong>of</strong> our
analysis, three factors were identified and named;
Positive attitude towards development work, which explains 38% <strong>of</strong> <strong>the</strong> variance.
Time in development work, which explains 12% <strong>of</strong> <strong>the</strong> variance,
Negative attitude towards development work, which explain 10% <strong>of</strong> <strong>the</strong> variance.
I have co workers who are not interested in developing our
activities
We seldom put into practice <strong>the</strong> results <strong>of</strong> development
projects
We have too many development projects at my workplace
I would be happy to concentrate on developing my own
work without outside development projects
I feet that work development is well done in my work place
When developing my work and work place we use well
latest knowledge on <strong>the</strong> issues
In my work place we utilize actively <strong>the</strong> experience from
o<strong>the</strong>r similar organizations
Agree Nei<strong>the</strong>r agree
nor disagree
0 20 40 60 80 100
%
Have not
thought
about it
Disagree
Figure 2: Perceptions on development work
Table 1: Management position and attitude towards development work, % (n=1556, p

Annukka Jyrämä et al.
Table 2: Positive developer (1a) and background variables (regression analysis)
*** p

Annukka Jyrämä et al.
example health, social services and education, and <strong>the</strong> smaller ones, for example, park maintenance.
However, no direct departmental comparisons were made due to ethical reasons. Even though <strong>the</strong>
size <strong>of</strong> a department (community) was not found to be significant as an explaining variable for attitude
towards development work, it could be noted that in small departments <strong>the</strong> results were more diverse,
whereas in <strong>the</strong> big departments, <strong>the</strong> role <strong>of</strong> management and <strong>the</strong> closest superior emerge as key
issue.
Ano<strong>the</strong>r indirect way to conduct <strong>the</strong> analysis was to compare departments that have direct contacts
with citizens (customers) and <strong>the</strong> ones which do not. The results highlight that <strong>the</strong> role <strong>of</strong> gender is
important on all occasions, whereas <strong>the</strong> role <strong>of</strong> age and education as well as organizational status
created some differences. However, <strong>the</strong> differences in communities seem to be better captured from
<strong>the</strong> open answers that show more differences on <strong>the</strong> communities’ values and practices.
5. Discussion
In our study, <strong>the</strong> communities were experienced as creating learning environment, as enablers <strong>of</strong>
learning. The communities <strong>of</strong> practice seem to share a dominant logic as enabling learning and
knowledge sharing, as it provides similar values, language, and joint understanding within <strong>the</strong> local
community.( e.g. Lane and Lubatkin 1998). However, <strong>the</strong> role <strong>of</strong> dominant logic as a barrier becomes
more distinct when project work includes people from several bureaus, ie. communities. These can be
seen as distinct microcommunities <strong>of</strong> knowledge.
As our results clearly point out, clear barriers existed for learning and knowledge sharing. The local
enabling culture might not apply in development projects that are managed entities, <strong>the</strong>y may include
participants from various departments, communities <strong>of</strong> practice, and, hence, <strong>the</strong> development project
participants might not share <strong>the</strong> same values, languages and dominant logic. Thus, it <strong>of</strong>ten becomes
problematic to create a shared language and understanding, a common context for learning (see
Lane and Lubatkin 1998). Moreover, even if <strong>the</strong> project team itself is learning and creating new
knowledge, it might not share <strong>the</strong> same practices and values, language and understandings with <strong>the</strong>
local community within which it ought to implement <strong>the</strong> new knowledge (see e.g. Jyrämä and Äyväri
2008, Bäcklund 2007).
Interestingly, managers’ and employees’ views and experiences on development work differed. This
finding might refer to <strong>the</strong> facts that managers are <strong>of</strong>ten more experienced and legitimate members <strong>of</strong>
communities, acting as “gate openers”, opening up <strong>the</strong> local communities for new ideas and learning
ra<strong>the</strong>r than acting as gatekeepers (see e.g. Wenger 1998, Cox 2004). On <strong>the</strong> o<strong>the</strong>r hand, our results
might also imply that managers create sub-communities <strong>of</strong> <strong>the</strong>ir own, somewhat separated from <strong>the</strong>
local community and, hence, do not see <strong>the</strong> difficulties in applying <strong>the</strong> created new knowledge in
practice. Moreover, our results also pointed out that co-workers listened to new ideas more than <strong>the</strong>ir
superiors, hence indicating a role <strong>of</strong> managers as barriers to learning and knowledge creation.
The diversity in perceptions towards development work seems to be linked not to <strong>the</strong> individual but to
<strong>the</strong> community level, even though <strong>the</strong> comparisons showed only small differences between different
departments. However, <strong>the</strong> answers to open questions indicate that <strong>the</strong> role <strong>of</strong> various communities
and <strong>the</strong>ir diversity would benefit from a deeper analysis by qualitative methods, which is proposed as
an avenue for fur<strong>the</strong>r research. Moreover, <strong>the</strong> role <strong>of</strong> mangers as legitimate members in <strong>the</strong> core <strong>of</strong>
<strong>the</strong>ir community raises ano<strong>the</strong>r interesting question for fur<strong>the</strong>r research. Is <strong>the</strong> legitimate knowledge
also <strong>the</strong> critical knowledge needed in innovations and development work, or should ra<strong>the</strong>r <strong>the</strong>
peripheral, more questioning knowledge and views be more valued? Our results also emphasize <strong>the</strong>
need to include employee perceptions on knowledge management studies thus enlarging our
understandings <strong>of</strong> <strong>the</strong> practicalities on knowledge sharing and contributing to knowledge management
literature. This highlights <strong>the</strong> need to reflect on <strong>the</strong> role <strong>of</strong> communities and <strong>the</strong>ir dominant logic both
as enabler and barrier to knowledge sharing and learning.
The role <strong>of</strong> dominant logic as impeding learning and knowledge creation within microcommunties <strong>of</strong>
knowledge, especially in <strong>the</strong> context <strong>of</strong> microcommunties consisting <strong>of</strong> people from various
communities <strong>of</strong> practice, has previously been acknowledge, but as out study point out it is vital to
address <strong>the</strong> issue more thoroughly both <strong>the</strong>oretically and managerially. Thus we argue that our study
contributes both to discussion on communities <strong>of</strong> practice and microcommunties <strong>of</strong> knowledge by
making <strong>the</strong> distinctions on two types <strong>of</strong> communities and <strong>the</strong> role dominant logic plays in <strong>the</strong>m.
However, <strong>the</strong>se results are drawn from a study on single quite specific organization, large capital city,
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Annukka Jyrämä et al.
<strong>the</strong>refore it is needed to compare <strong>the</strong>se results in o<strong>the</strong>r organizations.The study’s managerial
contribution stems from acknowledging <strong>the</strong> need to understand <strong>the</strong> differences in communities and
development projects and to create means for disseminating <strong>the</strong> development project results into <strong>the</strong>
communities and <strong>the</strong>ir everyday practices overcoming barriers such as discrepancies in values and
languages.
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300

Managing Information Overload - Teachable Media Agents
Harri Ketamo
Satakunta University <strong>of</strong> Applied Sciences, Finland
harri.ketamo@samk.fi
Abstract: Social media services, such as YouTube, Flickr and Slideshare, contain enormous number <strong>of</strong> content
valuable for education. If <strong>the</strong> requested <strong>the</strong>me can be effectively searched or recognized, teacher can easily
construct <strong>the</strong> course material from social media sources. However, <strong>the</strong> search engines are not optimal for
educational purposes: Search engines can list numerous pieces <strong>of</strong> content that matches more or less perfectly to
keywords. After search <strong>the</strong>re are thousands <strong>of</strong> pieces <strong>of</strong> content to check manually if <strong>the</strong>y really fit to <strong>the</strong>
requested subject. A common method to increase information accessibility in social media applications is tagging.
However, when tags are used only as single words, we easily end up to information overload. In this study <strong>the</strong>
general aim is to construct teachable agents that can learn conceptual structures in terms <strong>of</strong> conceptual learning.
Problems related to information retrieval or semantics are widely studied, but not from learning point <strong>of</strong> view. By
combining <strong>the</strong>ories about cognitive psychology <strong>of</strong> learning and machine learning, we could make a completely
new approach to decrease information overload. According to results, we can say that simulating human way to
learn fits for this purpose.
Keywords: information overload, data mining, teachable agents, social media
1. Introduction
Social media services, such as YouTube, Flickr and Slideshare, contain enormous number <strong>of</strong> content
valuable for education. If <strong>the</strong> requested <strong>the</strong>me can be effectively searched or recognized, teacher can
easily construct <strong>the</strong> course material from social media sources. However, <strong>the</strong> search engines are not
optimal for educational purposes: Search engines can list numerous pieces <strong>of</strong> content that matches
more or less perfectly to keywords. After search <strong>the</strong>re are thousands <strong>of</strong> pieces <strong>of</strong> content to check
manually if <strong>the</strong>y really fit to <strong>the</strong> requested subject. Recently, e.g. Google had added semantics into its
searches, but many educational subjects require more detailed conceptual models for successful
content personalization. Fur<strong>the</strong>rmore, <strong>the</strong>re are o<strong>the</strong>r personalization and adaptation solutions for
social media (e.g. Ahn, Brusilovsky, He, Grady & Li, 2008).
A common method to increase information accessibility in social media applications is tagging.
However, when tags are used only as single words, we easily end up to information overload.
Fur<strong>the</strong>rmore, in social media, we do not have standardized way to tag content. In fact, tagging <strong>the</strong>
content in an optimal way is a difficult task for several reasons: Cultural background, educational
background, community and its social behavior, as well as context where tagging is constructed
affects enormously to <strong>the</strong> selection <strong>of</strong> tags. Term ‘context’ can be understood in many ways. In this
study, context is understood to cover all conditions, physical, social and mental, which can be
considered as causes or consequences <strong>of</strong> activity.
Tagging is very subjective and numerous research is done in order to improve user experiences and
information retrieval in social media (e.g. Agichtein, Castillo, Donato, Gionis & Mishen, 2008;
Heymann, Koutrika & Garcia-Molina 2008; Sigurbjörnsson & van Zwol 2008). Unclear, or in worst
case misleading, tagging leads to information loss in social media. Especially, constructing storytelling
or narration between pieces <strong>of</strong> user generated content becomes impossible without socially
constructed tagging semantics. Fur<strong>the</strong>rmore, tagging can be seen as a one key element when
building platforms for personalized and adaptive media services.
Probability to choose a tag is only about frequencies. The real challenges are related to explanative
power <strong>of</strong> tags: if some tag is very frequent, its explanative power is low. Fur<strong>the</strong>rmore, when <strong>the</strong> tag is
used rarely, it is not useful for searches. By using complex semantics between tags, we can improve
<strong>the</strong> usability <strong>of</strong> <strong>the</strong> whole tagging system.
Explanative power is currently in many systems based only on matches <strong>of</strong> tags (or in worst case, just
one tag) without any intelligence. The better solution is to use semantics between tags. For example,
we are searching content from YouTube about applications <strong>of</strong> Gestalt psychology in usability
engineering. We use tags ‘usability’ and ‘gestalt psychology’. By typing both tags to search, we get
only 2 videos that match <strong>the</strong> search (tested on 30. April 2009). By using tag ‘gestalt psychology’ we
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Harri Ketamo
get 68 videos and by using tag ‘usability’ we can found more than 2000 videos. Unfortunately, only 1
video presented in first 5 pages was related to original search
Adaptation in web-bases systems can be seen as being high end personalization: In adaptation, <strong>the</strong>
system optimizes <strong>the</strong> navigation paths with technologies that can be divided into two main groups:
static adaptation (indirect) and dynamic adaptation (direct). In static adaptation <strong>the</strong> rules are fixed
beforehand by developers. In dynamic adaptation <strong>the</strong> system tracks <strong>the</strong> user and optimizes <strong>the</strong>
navigation paths according to <strong>the</strong> user's behaviour. Dynamic adaptation <strong>of</strong> system requires at <strong>the</strong>
least a user model, a context model and artificial intelligence. The social dimension should not be
forgotten: In very large samples, <strong>the</strong> most successful navigation paths may contain valuable
guidelines for adaptation. Because <strong>the</strong> idea <strong>of</strong> adaptive educational systems is to produce individual
and optimized learning experiences <strong>the</strong> high end user models as well as methods are relatively
complex (e.g. Brusilovsky, 2001).
In terms <strong>of</strong> constructive psychology <strong>of</strong> learning, people actively construct <strong>the</strong>ir own knowledge
through interaction with <strong>the</strong> environment and through reorganization <strong>of</strong> <strong>the</strong>ir mental structures. The
key elements in learning are accommodation and assimilation. Accommodation describes an event
when a learner figures out something radically new, which leads to a change in his/her mental
conceptual structure. Assimilation describes events when a learner streng<strong>the</strong>ns his/her mental
conceptual structure by means <strong>of</strong> new relations (Mayer 2004). These key components,
accommodation and assimilation are <strong>the</strong> most important concepts behind <strong>the</strong> study. In o<strong>the</strong>r words,
when new concepts are added into semantic network, accommodation takes place. When <strong>the</strong> existing
concepts receive new relations, we discuss about assimilation.
2. Research task
In this study <strong>the</strong> general aim is to construct methods for teachable, adaptive and self-organizing
tagging by applying complex semantic relations between <strong>the</strong> tags. Subtasks are 1) construct methods
for building self-organizing tag clouds, and 2) construct methods for user-based teaching and
refinement <strong>of</strong> <strong>the</strong> semantics.
In this study we have designed teachable agents that can learn conceptual structures in terms <strong>of</strong>
conceptual learning. The agents are based on authors’ previous work, AnimalClass (e.g. Ketamo &
Suominen 2008; Ketamo & Kiili 2010) and Artificial Labor (Ketamo 2008; Ketamo 2010). Preliminary
results <strong>of</strong> this project have been published (Ketamo 2009; Ketamo 2011).
In AnimalClass <strong>the</strong> learner can teach conceptual structures about ma<strong>the</strong>matics, sciences, languages
and arts to virtual characters (teachable agents). Artificial labour is based on complex modelling which
means, that <strong>the</strong>re are several archetypes <strong>of</strong> users as well as variance inside <strong>the</strong> archetypes. The
common denominator for all is that everything is based on human user- and group behaviour.
The main difference between Teachable Media Agents and AnimalClass is in philosophy <strong>of</strong> learning.
When <strong>the</strong> game characters in AnimalClass were taught in terms <strong>of</strong> inductive learning and in Artificial
Labor in terms <strong>of</strong> reinforcement learning, <strong>the</strong> Teachable Media Agents are taught in both deductive
and inductive means.
3. Results
Technologically and computationally <strong>the</strong> Teachable Media Agents are based on Semantic Neural
Networks. The generalized framework <strong>of</strong> Teachable Media Agents is presented at figure 1. At <strong>the</strong>
beginning, <strong>the</strong> end user gets his/her own agent, with which <strong>the</strong> user interacts. This personal media
agent utilizes all <strong>the</strong> o<strong>the</strong>r agents available on <strong>the</strong> system.
There are two types <strong>of</strong> agents. First type <strong>of</strong> agents (figure 1, small agents on <strong>the</strong> left) reads social
media services and organizes <strong>the</strong> information into databases. The first types <strong>of</strong> agents are pre taught:
<strong>the</strong>y cannot learn more. Therefore end user interacts only with second type <strong>of</strong> agents.
Second type <strong>of</strong> agents (figure 1, centered agent) interacts with end users and builds all personalized
semantic networks. These personalized semantic networks consist <strong>of</strong> relations between concepts
found from tags, titles and comments. The pieces <strong>of</strong> contents are connected into one or more
concepts in this high level semantic network. These agents can learn by <strong>the</strong> feedback <strong>of</strong> evaluations
made by <strong>the</strong> end user. In o<strong>the</strong>r words, second types <strong>of</strong> agents tries to match <strong>the</strong> high level
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Harri Ketamo
conceptual structure and user taught conceptual structure. The idea behind <strong>the</strong> search is relatively
close to image recognition with neural networks where images are replaced by concept maps.
Figure 1: Generalized framework <strong>of</strong> teachable media agents
Forming <strong>the</strong> semantics is based on tags retrieved from single piece <strong>of</strong> content. The semantic starts
from empty set <strong>of</strong> concepts and relations and it starts to grow according to <strong>the</strong> tags in pieces <strong>of</strong>
content that are defined as starting point by <strong>the</strong> user. For example, if a YouTube video include tags
‘interface’, ‘fail’ and ‘usability’, <strong>the</strong> starting semantic looks like in figure 2. The assumption is that <strong>the</strong>
tags are related to each o<strong>the</strong>r, because <strong>the</strong>y represent <strong>the</strong> same phenomena or issue.
Figure 2: Semantics with piece <strong>of</strong> content that include tags ‘interface’, ‘fail’ and ‘usability’
If <strong>the</strong> next video is tagged by words ‘usability’ and ‘interface design’ <strong>the</strong> semantic grows by <strong>the</strong> tags
and <strong>the</strong>ir relations (figure 3). In this case, <strong>the</strong> strength <strong>of</strong> ‘usability – interface’ –relation gets a value <strong>of</strong>
2, because this relation can be found from both <strong>of</strong> <strong>the</strong> pieces <strong>of</strong> <strong>the</strong> content. In fact <strong>the</strong> strength <strong>of</strong> <strong>the</strong>
relation is one <strong>of</strong> <strong>the</strong> key factors behind <strong>the</strong> successful modeling.
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Figure 3: Semantics with piece <strong>of</strong> content that include tags ‘interface design’ and ‘usability’
The next piece <strong>of</strong> content do have tags ‘usability’ and ‘graphical user interface’. The semantics grows
(figure 4) and ‘usability – interface’ –relation becomes even stronger. In this example, this relation
describes <strong>the</strong> context <strong>of</strong> <strong>the</strong>se videos with most explanative value. However, context based on only
few pieces <strong>of</strong> content is not relevant at all. According to our experiments, a useful semantics should
be based on more than 200 pieces <strong>of</strong> content; what more content that better semantics.
Figure 4: Semantics with piece <strong>of</strong> content that include tags ‘graphical user interface’ and ‘usability’
In real case, semantics won’t grow only based on relevant tags. There are always tags that are too
frequent and in that sense <strong>the</strong>ir explanative power is poor. For example tags like ‘news’ or ‘web’ are
included in that many tag sets that <strong>the</strong>y will build <strong>the</strong> most strongest relations between almost all
concepts. In figure 5 <strong>the</strong> phenomena is illustrated: ‘web’ and ‘news’ forms strong relations with all <strong>the</strong>
concepts (only some relations are drawn in order to remain <strong>the</strong> readability <strong>of</strong> <strong>the</strong> figure) and this
constructs <strong>the</strong> illusion <strong>of</strong> ‘web’ and ‘news’ as most important tags in this context.
We know that ‘web’ and ‘news’ are irrelevant and <strong>the</strong>y can also easily been extracted out <strong>of</strong> <strong>the</strong>
semantics. If a tag has 1) too many connections to o<strong>the</strong>r tags compared to average tag , 2) <strong>the</strong>
average strength <strong>of</strong> <strong>the</strong>se relations is high compared to o<strong>the</strong>r average strengths and most <strong>of</strong> all 3) <strong>the</strong>
variance in such strengths is relatively small, we can be sure that such tag is irrelevant in terms <strong>of</strong>
semantic search. Ano<strong>the</strong>r irrelevant group <strong>of</strong> tags consist <strong>of</strong> words that have only few relations with
small strength. Both kind <strong>of</strong> tags and relations can be excluded from <strong>the</strong> final semantics and <strong>the</strong>
semantic search is based only on tags that have well enough explanative power.
The use case, in brief, is following: At first user describes <strong>the</strong> subject in focus by typing several key
concepts (tags maybe) into UI’s definition field, for example ‘eyetracking and heatmaps’. Secondly,
<strong>the</strong> first types <strong>of</strong> agents start to search all possible content related to keywords. Currently search is
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limited to YouTube, Flickr and Slideshare but new media services will be added on <strong>the</strong>
list. The data
received from <strong>the</strong>se media services will be indexed and prepared for later use.
Figure 5: Semantics when frequent tags are included in semantics. (only some relations are drawn in
order to remain <strong>the</strong> readability <strong>of</strong> <strong>the</strong> figure)
According to this raw data, <strong>the</strong> personal agent (second type) forms a high level semantics related to
this task. In figure 6, <strong>the</strong> most relevant tags and <strong>the</strong>ir relations are visualized as tag cloud. Additionally
to traditional tag cloud, this one is computed by applying cluster analysis in determining <strong>the</strong> places <strong>of</strong>
<strong>the</strong> tags. This ensures,
that neighbor tags are strongly related to each o<strong>the</strong>r. In traditional tag clouds,
<strong>the</strong> tags are in random order. Fur<strong>the</strong>rmore, <strong>the</strong> tags that have strong explanative power are placed
into red background.
Figure 6: Visualization about context formed by ’eyetracking and heatmaps’ words
The agent constructs a rank ordered list about content according to semantic relations (figure 7). The
user can evaluate <strong>the</strong> search results by clicking + or – symbols. After evaluations, <strong>the</strong> semantics will
be re-computed. In general, <strong>the</strong> computing related to semantics are relatively heavy processes.
Therefore <strong>the</strong> semantics are not necessarily computed after every
evaluation: <strong>the</strong> semantics are re-
computed in every 3-5 minutes if possible. Evaluations are used in order to determine irrelevant tags
and decrease <strong>the</strong>ir importance in semantic and in content rank.
The semantics learned by personal media agent evolves through all assigned tasks: The learned
semantic context is always a background for new tasks. This feature can be used to make effective
agents for a certain limited search domain. On <strong>the</strong> o<strong>the</strong>r hand, when we switch to completely different
search domain, we can receive interesting results.
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Figure 7: Screenshot from Teachable Media Agents UI: Semantically ranked clips from YouTube
In figure 8 we have continued <strong>the</strong> previous tasks by assigning a new task related to ‘contemporary
arts and Picasso’. From <strong>the</strong> visualization we can see that word contemporary is related to words
entertainment and modern while arts -tag is related to context <strong>of</strong> martial arts. Picasso is related to
tags like artist and painter. In <strong>the</strong> visualization, <strong>the</strong> causes <strong>of</strong> <strong>the</strong> previous tasks can be seen, but <strong>the</strong>
red-background area remains <strong>the</strong> same in most cases.
The semantics will evolve during <strong>the</strong> use. Each task and evaluation refines <strong>the</strong> semantics that effects
to rank orders <strong>of</strong> <strong>the</strong> content. If new tasks are form completely different contexts, like in example, <strong>the</strong>
causes can be seen in semantics.
4. Conclusions
Problems related to information retrieval or semantics are widely studied, but not from learning point
<strong>of</strong> view. By combining <strong>the</strong>ories about cognitive psychology <strong>of</strong> learning and machine learning, we could
make a completely new approach to decrease information overload. However, <strong>the</strong> learning approach
is not a perfect solution: Learning requires time and patience – also when machine learns. The
biggest challenges in Teachable Media Agents kind <strong>of</strong> approach are 1) unsupervised learning based
construction <strong>of</strong> <strong>the</strong> semantics and 2) design <strong>of</strong> computationally efficient, fault tolerant and robust
method for (supervised) learning <strong>the</strong> semantics according to users’ feedback. In many cases teaching
an agent takes several minutes and when changing it into new context it should be re-taught. This
requires patience and <strong>the</strong>refore Teachable Media Agents are not for quick ‘entertaining’ information
search.
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Figure 8: Visualization about context formed by previous tasks and ‘contemporary arts and Picasso’ -
task
Teachable Media Agents are currently prototypes and according to studies, we can say that
simulating human way to learn fits for this purpose. Besides harvesting personal information streams,
this method can be used e.g. in futurology for tracking weak signals or discovering wild cards. In
general, if we can understand changes in semantics, we can mine text sources to find answers for
very versatile challenges.
However, <strong>the</strong>re are numerous unsolved research challenges in area <strong>of</strong> information retrieval and
analysis <strong>of</strong> natural language. The full potential <strong>of</strong> Teachable Media Agents can be seen in few years
when <strong>the</strong> system and <strong>the</strong> algorithms are fur<strong>the</strong>r developed according to evaluations and expectations
<strong>of</strong> real users.
References
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California, USA, February 11-12, 2008, pp. 183-194.
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Ahn, J., Brusilovsky, P., He, D., Grady, J. & Li, Q. (2008). Personalized web exploration with task models. In
<strong>Proceedings</strong> <strong>of</strong> <strong>the</strong> 17th <strong>International</strong> <strong>Conference</strong> on World Wide Web, WWW'08. Beijing, China. April 21-
25, 2008, pp. 1-10.
Brusilovsky, P., 2001. Adaptive Hypermedia. User Modeling and User-Adapted Interaction. Vol 11, pp. 87-110.
Heymann, P., Koutrika, G. & Garcia-Molina, H. (2008). Can social bookmarking improve web search? In
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Ketamo, H. & Suominen, M. (2008). Learning-by-Teaching in Educational Games. In proceedings <strong>of</strong> Ed-Media
2008. 30.6.–4.7.2008, Vienna, Austria., pp. 2954-2963. [outstanding paper award]
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Educa Berlin 2009, 2-4.12.2009, Berlin, Germany.
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Technologies, WEBIST 2010, 7-10 April 2010, Valencia, Spain, vol 1, pp. 291-296.
Ketamo, H. & Kiili, K. (2010). Conceptual change takes time: Game based learning cannot be only
supplementary amusement. Journal <strong>of</strong> Educational Multimedia and Hypermedia, vol. 19(4), pp. 399-419
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(ECC '11), April 28-30, Paris, France, pp. 120-125.
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25, 2008, pp. 327-336.
308

Farmers’ Knowledge Management in Fish Disease
Treatment: The Case <strong>of</strong> Smallholder Farmers in <strong>the</strong>
Mekong River Delta, Vietnam
Le Nguyen Doan Khoi
School <strong>of</strong> Economics and Business Administration, Can Tho University,
Vietnam
lndkhoi@ctu.edu.vn
Abstract: Pangasius farm smallholders in Vietnam have to deal with a lot <strong>of</strong> problems in <strong>the</strong>ir production
process. Difficulties in disease management are perceived because <strong>of</strong> <strong>the</strong> BNP disease. Global markets stringent
quality standards hinder <strong>the</strong> smallholders to participate in <strong>the</strong> export chain. Food safety, including health risks,
antibiotic residues and microbial pathogens such as parasites are part <strong>of</strong> <strong>the</strong> quality standards which are
becoming more severe. Antibiotic resistance is a serious problem for human global health and <strong>the</strong>refore
antibiotics should be used in a responsible way. Smallholders face difficulties to control and assure quality for <strong>the</strong>
export market because <strong>the</strong> disease management lacks traceability. This paper focuses on <strong>the</strong> current disease
prevention and treatment knowledge <strong>of</strong> small Pangasius farming and farmers’ willingness to implement new
farming systems to manage diseases and take a needed step in assuring <strong>the</strong>ir disease management quality.
Using qualitative as well as quantitative data gained during a field research in Vietnam, farmers’ current and
needed disease management standards are compared to measure if <strong>the</strong>re is a knowledge gap. Farmers
‘organisation and <strong>the</strong> extension system are examined to see how knowledge is managed by stakeholders.
Results show that small farmers have a lot <strong>of</strong> knowledge about disease management but <strong>the</strong>y do not have <strong>the</strong>
willingness and possibilities to adapt every quality control standard. Implementation <strong>of</strong> Better Managment
Practices combined with clusters is recommended to give farmers <strong>the</strong> opportunity to survive <strong>the</strong> export market.
Though not all farmers can form clusters, it seems to be <strong>the</strong> only way for smallholders to get certified. The
government has to be willing to support farmers by providing access to capital and by creating farmer awareness
<strong>of</strong> <strong>the</strong> benefits. It is unlikely that farmers are willing to change without <strong>the</strong> support <strong>of</strong> stakeholders.
Keywords: smallholders, Pangasius, market access, knowledge management
1. Introduction
Aqua-cultured fish is one <strong>of</strong> <strong>the</strong> dominant export products in Vietnam. Total aquaculture production in
Vietnam covered one million tonnes in 2003 and allegedly will reach over two million tonnes by 2010
(Ministry <strong>of</strong> Fisheries- MOFI, 2003). The total aquaculture production has increased already to 2.2
million tonnes in <strong>the</strong> 2009 (MOFI, 2009). The development <strong>of</strong> this sector is a major source <strong>of</strong> foreign
currency and employment Vietnam has a coastline <strong>of</strong> more than 3,200 km long with over 3000
islands, a wealth <strong>of</strong> natural inland water bodies (lakes and rivers) and seasonal flooded grounds.
Since 2000, <strong>the</strong> fisheries sector is an important contributor to <strong>the</strong> economy <strong>of</strong> Vietnam and fisheries
are identified as a key economic growth sector by <strong>the</strong> Vietnamese Government (MOFI, 2006). The
total area <strong>of</strong> water-surface is approximately 1.7 million hectares (MOFI, 2006). The Vietnamese
government expects a fur<strong>the</strong>r increase <strong>of</strong> <strong>the</strong> aquaculture sector <strong>of</strong> more than 25% in 2010.
Pangasius was cultured in <strong>the</strong> Mekong Delta in Vietnam since <strong>the</strong> 1950s on a small scale. The
farmers collected <strong>the</strong> fish larvae from <strong>the</strong> Mekong River during <strong>the</strong> early flood season. The larvae
were nursed in small ponds and provided to local farmers. They stock larvae in <strong>the</strong> integrated farming
systems which integrate livestock and fish production; and <strong>the</strong> fish were produced for local
consumption. However, since <strong>the</strong> 1990s <strong>the</strong> Pangasius culture developed rapidly because <strong>of</strong> rising
demand in foreign markets and improved production and management techniques like induced
reproduction, feed quality, water management and pond design.
Pangasius is grown in <strong>the</strong> predominantly freshwater central and Nor<strong>the</strong>rn provinces <strong>of</strong> An Giang,
Dong Thap, Can Tho in <strong>the</strong> Mekong Delta. In 2005 <strong>the</strong> economic growth rate for Pangasius
aquaculture in <strong>the</strong> Delta was 24.9% and production reached some 850,000 tonnes in 2006,
contributing to <strong>the</strong> overall growth <strong>of</strong> 19.5% for Vietnam as a whole. This gave <strong>the</strong> Mekong Delta <strong>the</strong>
highest overall economic growth rate in <strong>the</strong> country at 14.4%, 5.4% higher than national figure for
2005 (Loc, 2006). Export <strong>of</strong> Pangasius fillets doubled in 2006 to reach 286 thousand tonnes
representing a 66.5% increase in value to US$1.15 billion (VASEP, 2006 cited in World Bank, 2006).
In 2008 it is estimated 650,000 tones <strong>of</strong> fillets were exported at a value <strong>of</strong> US$1450 million (Dung,
2008). According to MOFI (2005), Pangasius production will reach up to about 1 million tones by 2010
and 1.5 million tones by 2020. However, Pangasius production has increased already to 1.2 million
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Le Nguyen Doan Khoi
tonnes in <strong>the</strong> 2007 (MOFI, 2008). The most remarkable change in <strong>the</strong> Pangasius sector has been <strong>the</strong>
shift to European markets after <strong>the</strong> US anti-dumping case in 2002. Exports to Europe were valued at
US$ 374 million or 26.51% <strong>of</strong> <strong>the</strong> total export value in 2006, having increased 89.4% from 2005. The
export value to EU in particular accounted for 20.86% <strong>of</strong> all exports or US$ 294.3 million, which was
slightly lower than Japan (24.83%)and even higher than <strong>the</strong> US (18.43%) (MARD, 2008). This shift
increased <strong>the</strong> EU share to 17% by 2005, representing a significant change from <strong>the</strong> traditional
seafood export markets <strong>of</strong> Japan and <strong>the</strong> US each with a market share <strong>of</strong> 25%.
In 2008, Vietnam exported 640.000 tons <strong>of</strong> Pangasius at a value <strong>of</strong> USD 1,45 billion. The increase in
Pangasius export, compared with 2007, was 48% in value and 66% in quantity. In reaction to <strong>the</strong>
worldwide economic crisis growth slowed down a bit in <strong>the</strong> last quarter. The total <strong>of</strong> 2008 export
stayed below <strong>the</strong> earlier forecasts (Figure 1)
Vietnamese Pangasius farmers are suffering from reduced prices. The price <strong>of</strong> Pangasius is around
USD 0,92 / kilo in <strong>the</strong> Mekong Delta region. This makes <strong>the</strong> production uneconomic. As a reaction to
this, farmers are refraining from selling fish and restocking <strong>the</strong>ir ponds. Most <strong>of</strong> <strong>the</strong> breeders <strong>of</strong>
Pangasius suffered from losses in <strong>the</strong> year 2008, and between 40 to 50 percent <strong>of</strong> breeding ponds
are lying empty in <strong>the</strong> Mekong Delta region. From here <strong>the</strong> forecasts <strong>of</strong> production in 2009 will be half
<strong>of</strong> what it was in <strong>the</strong> year before. This is in contrast with <strong>the</strong> <strong>of</strong>ficial forecast <strong>of</strong> increase in production
to almost 1,5 million tonnes in 2009.
250
200
150
100
50
0
*1000 tonnes
172,8
224,3
48,7
118,2
23
74,4
33,8
34
18,2 18,5
21,2 24,2 23,2 26,6
14,3
6,3
EU Russia Ukraine Asia China & HK USA Mexico Egypt O<strong>the</strong>rs
2007 2008
Figure 1: Exports Pangasius: Vietnam (source: www.globefish.org)
This research will focus on <strong>the</strong> current disease prevention and treatment knowledge <strong>of</strong> small
Pangasius farming and <strong>the</strong> farmers’ willingness to implement new farming systems to manage
diseases and take a needed step in assuring <strong>the</strong>ir treatment and prevention quality. The focus area is
Chau Phu region in <strong>the</strong> An Giang province, which has <strong>the</strong> best developed Pangasius industry in <strong>the</strong>
Mekong River Delta in Vietnam at this moment.
Little has been said about <strong>the</strong> knowledge management (KM) <strong>of</strong> small Pangasius farmers and
institutions. Whereas <strong>the</strong> current assurance <strong>of</strong> Pangasius production does not seem to work due to
lack <strong>of</strong> traceability, KM <strong>of</strong>fers an approach which could improve quality <strong>of</strong> fish disease treatment
through developing awareness and willingness among farmers about quality control measures. It is
assumed that knowledge sharing and application will lead to improved farming skills on a broader
scale and Pangasius farmers’ quality awareness <strong>of</strong> disease prevention and treatment.
2. Theoretical approach
This section focuses on <strong>the</strong> main <strong>the</strong>ory applied in this research.
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2.1 Farmer knowledge
Le Nguyen Doan Khoi
The knowledge <strong>of</strong> small farmers with limited resources should not be underestimated. For example,
current agricultural disciplines seem unable to handle <strong>the</strong> heterogenic characteristics <strong>of</strong> rain fed
farming under demographic pressure. Heterogeneity does <strong>of</strong>ten impede universal solutions for
farming issues. Scientists tend to prefer universal knowledge over location-specific knowledge
(Brouwers, 1993). According to Brouwers (1993) rural people’s knowledge can be characterised as
integrated across disciplines. A technical aspect as well as a social and cultural aspect seems
essential in rural people’s knowledge. Scientists tend to overstress general universal knowledge
compared to location-specific knowledge. However, rural knowledge alone does not suffice in solving
<strong>the</strong> present problems farmers face. This has been determined by rural people <strong>the</strong>mselves. Rural
farmers <strong>of</strong>ten experiment, which streng<strong>the</strong>ns <strong>the</strong> observation mentioned before (Van der Ploeg, 1991;
in Brouwers, 1993).
Interesting to know is whe<strong>the</strong>r <strong>the</strong> two different groups <strong>of</strong> Pangasius farmers (independent and FA)
also face <strong>the</strong>se kind <strong>of</strong> problems and if <strong>the</strong>y have a lot <strong>of</strong> rural expertise about fish disease treatment.
Fur<strong>the</strong>rmore it is interesting see if <strong>the</strong> local rural knowledge is easy to adapt to or match current
treatment and prevention standards for export products. Brouwers (1993) mentioned rural knowledge
systems that support knowledge processes. Knowledge systems might be individuals as well as
organisations who share one or more qualities.
2.2 Food quality control and quality assurance
During <strong>the</strong> last half <strong>of</strong> <strong>the</strong> twentieth century <strong>the</strong> complexity <strong>of</strong> agro-food supply chains has increased
considerably. Raw materials are obtained from sources worldwide, an ever-increasing number <strong>of</strong>
processing technologies are used, and a broad range <strong>of</strong> products is produced. In addition, consumer
expectations are continuously changing, with customers demanding more convenience and fresher
foods with more natural ingredients. Food quality management has become increasingly important in
<strong>the</strong> agro-food sector (Spiegel et al., 2003), due to changing consumer requirements, increasing
competition, environmental concern, and governmental interests. Higher consumer demands
regarding quality, traceability and environmental friendliness pose challenges for primary producers,
especially smallholders in developing countries (Henson et al. 2000; Humphrey and Oetero, 2000).
* Quality control
Quality control (QC) involves determining what to control, establishing units <strong>of</strong> measurement for
ga<strong>the</strong>ring data, establishing standards <strong>of</strong> performance, measuring actual performance, interpreting
<strong>the</strong> difference between actual performance and <strong>the</strong> standard, and taking action on <strong>the</strong> difference in
order to prevent quality problems in <strong>the</strong> next batch/production. Improvement is a form <strong>of</strong> control in <strong>the</strong>
control process where attention is paid to structural causes and solutions (Luning et al., 2006).
* Quality assurance
Quality assurance (QA) encompasses all planned and systematic actions necessary to ensure that a
product complies with <strong>the</strong> expected quality requirements. It also provides customers and consumers
with <strong>the</strong> assurance that quality requirements will be met. Quality assurance focuses on system quality
instead <strong>of</strong> product quality. The system must be audited to ensure that it is adequate both in <strong>the</strong> design
and use. Food products are not only tested on <strong>the</strong>ir product characteristics, but also on production,
packaging, handling and distribution. Quality control is embedded in quality assurance. Control
activities form <strong>the</strong> basis <strong>of</strong> QA systems, such as HACCP (safety guarantee by using critical control
points). The implementation <strong>of</strong> quality assurance systems, especially in <strong>the</strong> agricultural-food business,
is an issue <strong>of</strong> <strong>the</strong> greatest importance.
2.3 Knowledge and knowledge management
The concept <strong>of</strong> knowledge is a complex one. The differences between data, information and
knowledge are <strong>of</strong>ten confusing. People use knowledge when <strong>the</strong>y do not base <strong>the</strong>ir decisions on <strong>the</strong>
available information only, but also on experiences from <strong>the</strong> past, intuition, ethic, and so on. For
example: somebody knows that <strong>the</strong>re are many taxis in town, but because it is a holiday many people
want to travel by taxi. Based on an earlier experience <strong>the</strong> person will travel by train instead <strong>of</strong> taxi
(Dalkir, 2005).
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Le Nguyen Doan Khoi
Knowledge management (KM) is a field that can be described as bipartite. The first is <strong>the</strong> knowledge
sharing part (or first generation KM) and <strong>the</strong> second is <strong>the</strong> knowledge making part. Frederick Taylor
states that “<strong>the</strong> knowledge sharing side <strong>of</strong> KM (1) is all about capturing, codifying, and sharing
valuable knowledge, and (2) it is all about getting <strong>the</strong> right information to <strong>the</strong> right people at <strong>the</strong> right
time.” The creating and sharing <strong>of</strong> knowledge has been described as <strong>the</strong> second generation
knowledge management. The mission for second generation knowledge management is <strong>the</strong> creation
<strong>of</strong> new knowledge by people in organisations (McElroy, 2003).
In this research we only focus on <strong>the</strong> first generation <strong>of</strong> knowledge management. This is still <strong>the</strong> most
applied form <strong>of</strong> knowledge management by organisations and businesses.
KM consists <strong>of</strong> three variables. These are (1) knowledge acquisition and application, (2) knowledge
capture and/or creation and (3) knowledge sharing and dissemination (McElroy, 2003; Dalkir, 2005).
For individual farmers <strong>the</strong> knowledge acquisition and application is very important, while organisations
like <strong>the</strong> Fishery Association (FA) and governmental institutions like <strong>the</strong> DARD might have to focus
more on <strong>the</strong> capturing <strong>of</strong> knowledge and <strong>the</strong> sharing <strong>of</strong> it with its members. O<strong>the</strong>r possibilities <strong>of</strong>
sharing are between farmers <strong>the</strong>mselves. If <strong>the</strong>re is a local knowledge sharing culture between
farmers more farmers are able to obtain <strong>the</strong> right disease treatment and/or prevention possibilities.
The creation <strong>of</strong> knowledge is done by individuals in universities and research centers but knowledge
is also discovered through <strong>the</strong> experimenting by local farmers (e.g. Brouwers, 1993). These
institutions have to disseminate <strong>the</strong> knowledge to <strong>the</strong> FA and farmers in order to keep fish disease
prevention and treatment up to date.
3. The conceptual framework
The conceptual framework is to stress <strong>the</strong> importance <strong>of</strong> farmers’ knowledge and <strong>the</strong> knowledge
dissemination in relation to <strong>the</strong> awareness and willingness <strong>of</strong> smallholders to close <strong>the</strong> quality gap
(Figure 2)
Dalkir (2005) discusses many KM models in his book (Choo, 1998; Nonaka and Takeuchi, 1995;
Boisot, 1998). Wiig (1993) defines three forms <strong>of</strong> knowledge. These are public knowledge, shared
knowledge and personal knowledge. Public knowledge is explicit, taught and routinely shared
knowledge that is generally available in <strong>the</strong> public domain. Examples are books in a library, noninteractive
information on a public website, or experts and knowledge bases in an interactive manner.
Shared expertise is a proprietary knowledge asset that is exclusively held by knowledge workers and
is shared in <strong>the</strong>ir work or embedded in information system technology. Although Wiig (1993) does not
use <strong>the</strong> term, this knowledge is very common in informal networks or communities <strong>of</strong> practice <strong>of</strong>
likeminded people who typically interact and share knowledge in order to improve <strong>the</strong> practice <strong>of</strong> <strong>the</strong>ir
pr<strong>of</strong>ession. An example for <strong>the</strong> Pangasius sector is <strong>the</strong> knowledge that is disseminated throughout <strong>the</strong>
Fishery Association or throughout a group <strong>of</strong> individual farmers in <strong>the</strong> same village who are
cooperating or attending training given by <strong>the</strong> local government. Personal knowledge is <strong>the</strong> least
accessible but most complete form <strong>of</strong> knowledge. It is more tacit than explicit, and it is used unaware
in work and daily life. These are, for example, <strong>the</strong> memory, habits, skills and procedural knowledge <strong>of</strong>
individuals (in this case: farmers) which are not <strong>of</strong>ten codified.
Farmers’ knowledge is only one factor that could contribute to a better quality among disease
treatment and prevention. Firstly, drugs’ availability and <strong>the</strong> right diagnosing instruments are needed
to effectively prevent and reduce disease impact. Next to that, <strong>the</strong> costs <strong>of</strong> drugs and diagnosis are <strong>of</strong>
importance. When <strong>the</strong> right drugs are unavailable or too costly this would significantly reduce <strong>the</strong>
quality <strong>of</strong> <strong>the</strong> treatment. The findings in 2010 indicated that all interviewed farmers mentioned it was
no problem to get <strong>the</strong> drugs and chemicals <strong>the</strong>y need. The drugs are all accessible through <strong>the</strong> local
vet shops. One farmer said he sometimes buys his drugs by a laboratory after a consult. This
occurred only when <strong>the</strong> farmer suffered from a major disease. When a farmer asks for a consult, <strong>the</strong>
farmer has to buy <strong>the</strong> drugs for treatment from <strong>the</strong> local vet shop technician or from <strong>the</strong> veterinary
service at <strong>the</strong> laboratory. Moreover, if a diagnosis is inaccurate this can lead to a wrong drug
prescription which could affect quality. Fur<strong>the</strong>rmore, <strong>the</strong> availability and use <strong>of</strong> illegal drugs affect
quality <strong>of</strong> <strong>the</strong> product. A laboratory can provide farmers with <strong>the</strong> right diagnosis. The question is,
however, whe<strong>the</strong>r <strong>the</strong>re are sufficient laboratories available for small farmers and whe<strong>the</strong>r laboratory
costs do not raise <strong>the</strong> production price for small farmers. Also, time is <strong>of</strong> importance. If <strong>the</strong> amount <strong>of</strong>
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Le Nguyen Doan Khoi
days needed for diagnosis is high it would affect <strong>the</strong> utility for farmers to use <strong>the</strong> laboratory as a
diagnosing tool.
Secondly, experts and institutions’ (like universities and government) current knowledge affects <strong>the</strong>
smallholders’ knowledge. Current experts’ knowledge concerning all diseases affects smallholders in
<strong>the</strong> sense that if <strong>the</strong>re is no treatment available yet this affects quality. Standards which are set by
experts <strong>of</strong> disease treatment and prevention contain <strong>the</strong> needed knowledge for farmers to control and
assure quality. On <strong>the</strong> o<strong>the</strong>r hand, smallholders’ knowledge could also contribute to <strong>the</strong> experts’
knowledge about Pangasius that Brouwers (1993) defined as location specific knowledge. In this
research <strong>the</strong> experts and institutions’ knowledge can be seen as public knowledge. This means that
farmers, organisations and everyone interested in disease treatment and prevention have <strong>the</strong> ability
to access <strong>the</strong> knowledge <strong>of</strong> <strong>the</strong> experts and institutions. A lot <strong>of</strong> this knowledge is stored in books,
articles, papers and is relatively accessible.
The smallholders’ organization is an important third factor which affects smallholders’ knowledge in
general. A solid smallholders’ organisation is more likely to be able to disseminate knowledge among
farmers and could create scale advantages or o<strong>the</strong>r forms <strong>of</strong> cooperation between farmers. The
smallholders’ organization and extension structure is seen as a place where shared knowledge is
located. Extension systems contain knowledge that is only accessible by <strong>the</strong> farmers who get
extension, and farmer organisations have expertise about technologies that could be shared with
o<strong>the</strong>r farmers. A structured farmers’ organisation makes it easier to reach smallholders by
governments’ extension systems.
Treatment availability
- drug/diagnosis costs
- drug/ diagnosing instruments
availability
- Time for diagnosis
Figure 2: Conceptual framework
4. Research design
Experts and institutions’
standards and knowledge (Public
knowledge)
- Pangasius diseases
- Prevention
- Treatment
Smallholders’ knowledge
(Personal knowledge)
- Prevention
- Treatment
- Track records
Smallholder quality control and
assurance <strong>of</strong> disease prevention
and treatment
Organisation and extension
systems
(Shared knowledge)
- Fishery association
- Extension structure
To collect <strong>the</strong> necessary data, both qualitative (case study) and quantitative (survey) research
methods were utilized. The data collection involved conducting a survey <strong>of</strong> 100 farmers (50
independent farmers and 50 FA members). The Chau Phu district <strong>of</strong> An Giang province was selected
for performing research for several reasons. First, Chau Phu district was one <strong>of</strong> <strong>the</strong> early adopters <strong>of</strong>
Pangasius pond aquaculture. Hence, this district has a large number <strong>of</strong> Pangasius ponds, many <strong>of</strong>
which have been in use for over 15 years. Choosing an established area like Chau Phu gave us an
opportunity to evaluate potentially more established and stabilized farming practices. Second, Chau
Phu was chosen because <strong>of</strong> <strong>the</strong> high percentage <strong>of</strong> small farmers in <strong>the</strong> area. Smallholder farmers
are a major focus <strong>of</strong> this investigation. In <strong>the</strong> Chau Phu district, Vinh Thanh Trung and Thanh My Tay
communes, which house both traditional farmers and FA members, were selected.
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Le Nguyen Doan Khoi
More in-depth interviews for <strong>the</strong> qualitative research were conducted by six farmers in two different
villages in <strong>the</strong> An Giang province. Three independent farmers in were interviewed in Vinh Thanh
Trung and three FA farmers in <strong>the</strong> village <strong>of</strong> Thanh My Tay.
5. Results and discussion
During farmer interviews both independent and FA farmers declared to have enough knowledge to
prevent and treat Pangasius diseases. Consistent to what experts stated, farmers’ got <strong>the</strong>ir
knowledge mainly from neighbours, vet shop technicians, television, training and experiences
obtained through trial and error. FA farmers also get <strong>the</strong> monthly FA magazine. Differences between
farmers are also present. One independent farmer showed some documents about disease
prevention while <strong>the</strong> o<strong>the</strong>r farmer could not show any manual because he ‘lost’ it. No real differences
are noticed between independent and FA farmers when comparing <strong>the</strong> knowledge acquisition.
Therefore <strong>the</strong> best way to measure farmers’ knowledge is to look at <strong>the</strong> knowledge application.
Both farmer groups are using chemicals that are certified for use (Table 1). All six interviewed farmers
used lime and chlorine once a week. Fur<strong>the</strong>rmore most farmers anticipate on sudden wea<strong>the</strong>r
changes by adding additional vitamin C to <strong>the</strong> feed.
Certified or legal drugs are used by 75 percent <strong>of</strong> all farmers. More independent farmers are included
in <strong>the</strong> 25 percent <strong>of</strong> farmers that are still using non-certified drugs. Out <strong>of</strong> 50 independent farmers 30
percent sometimes use non-certified drugs for treatment or prevention. This compared to 20 percent
<strong>of</strong> <strong>the</strong> 50 FA farmers that use non certified drugs now and <strong>the</strong>n. It is uncertain whe<strong>the</strong>r all farmers are
speaking <strong>the</strong> truth about <strong>the</strong> use <strong>of</strong> illegal antibiotics. In most cases local government staff will
accompany <strong>the</strong> interviewer and <strong>the</strong>refore it is difficult to value <strong>the</strong> outcomes <strong>of</strong> such delicate
questions.
Table 1: Farmers perception about drug use
N(Sample) Yes No No opinion
Are certified chemical used for treatment 100 100,0 0,0 0,0
Are certified drugs used for treatment 100 75,0 25,0 0,0
Are drug track records being recorded 100 10,0 90,0 0,0
Are legal drugs are better than illegal
Source: Survey data, 2010
100 43,0 53,0 4,0
Only 10 percent <strong>of</strong> <strong>the</strong> farmers have drug track records. All <strong>of</strong> <strong>the</strong> users are FA members. Farmer
interviews confirm this questionnaire result but even <strong>the</strong> three FA farmers did not have track records.
However drug track records are only available by ten percent <strong>of</strong> <strong>the</strong> farmers. Farmers that are using
track records are all FA members.
Differences between FA and independent farmers are noticed. FA farmers scored relatively better on
almost every question concerning disease treatment and prevention. This streng<strong>the</strong>ns <strong>the</strong> assumption
that <strong>the</strong> FA could play an important role in achieving <strong>the</strong>se results. It could also be that FA farmers
become a member because <strong>the</strong>y are more willing to change. Never<strong>the</strong>less FA members seem to
have more know how to prevent and treat diseases.
The majority <strong>of</strong> farmers are willing to use legal chemicals (100% <strong>of</strong> FA and independent farmers) and
certified veterinary drugs (80% <strong>of</strong> FA members and 70% <strong>of</strong> independent farmers) (Table 2). Most
farmers use chemicals for disease prevention such as lime, salt, yuca, enzymes, pro-biotics, which
are legal chemicals
Farmers are aware that obtaining knowledge about fish disease treatment through training is
achievable. Most farmers (100% <strong>of</strong> FA members and 64% <strong>of</strong> independent farmers) are aware <strong>of</strong> <strong>the</strong>
importance <strong>of</strong> training, and <strong>the</strong>y received training about <strong>the</strong> use <strong>of</strong> chemicals/antibiotics from <strong>the</strong>
veterinary drug companies or local authority. However, proper disease treatment based on laboratory
diagnosis is lacking (10% <strong>of</strong> independent farmers and 16% <strong>of</strong> FA members are aware <strong>of</strong> <strong>the</strong>
importance). Most <strong>of</strong> farmers (88% <strong>of</strong> FA members and 62% <strong>of</strong> independent farmers) are willing to
share knowledge with <strong>the</strong>ir neighbors in term <strong>of</strong> disease symptoms and veterinary drug usage and
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Le Nguyen Doan Khoi
dosage. Moreover, FA members can share knowledge and get more training than independent
farmers. The FA magazine is usually updated with new information on fish disease prevention and
treatment as well as new diseases occurring in <strong>the</strong> crop.
Table 2 : Farmers’ awareness <strong>of</strong> using and willingness to use chemicals/veterinary drugs
Items
Willingness to cooperate
(%)
Awareness <strong>of</strong> chemicals/veterinary drugs used
Farmers
Certified
drugs
are
better
than
noncertified
drugs
Keeping
all records
<strong>of</strong> drugs
used is
considered
important
Diagnosing
fish
disease at
laboratory
is
considered
important
Training in
disease
treatment
and
prevention
Use
certified
chemicals
Use
certified
veterinary
drugs
Share
disease
treatment
knowledge
Independent Yes 30.0 0.0 10.0 64.0 100.0 70.0 62.0
farmers No 64.0 100.0 88.0 36.0 0.0 30.0 30.0
(N=50) No
opinion
6.0 0.0 2.0 0.0 0.0 0.0 8.0
FA Yes 56.0 20.0 16.0 100.0 100.0 80.0 88.0
members No 42.0 80.0 84.0 0.0 0.0 20.0 4.0
(N=50) No
opinion
2.0 0.0 0.0 0.0 0.0 0.0 8.0
Source: Survey data, 2010
To conclude, about half <strong>of</strong> <strong>the</strong> farmers questioned are aware <strong>of</strong> <strong>the</strong> importance <strong>of</strong> using legal
chemicals/ veterinary drugs for fish disease prevention and treatment. This result implies that a large
group <strong>of</strong> farmers is still not yet convinced that <strong>the</strong> use <strong>of</strong> recommended drugs leads to <strong>the</strong> best
outcome. The challenges that small-scale encounter are access to certified veterinary drugs and
proper disease treatment based on laboratory diagnosis. We found that small-scale farmers lack
records <strong>of</strong> brand names and application protocol <strong>of</strong> antibiotics and chemicals/ veterinary drugs used.
Most farmers are willing to cooperate to share knowledge in disease treatment.
Figure 3 shows <strong>the</strong> types <strong>of</strong> farmers’ personal knowledge. The factual knowledge is discussed in <strong>the</strong>
above. These are <strong>the</strong> farmers’ procedures, experiences and know-how about disease treatment and
prevention. Fur<strong>the</strong>rmore farmers have a lot <strong>of</strong> location specific knowledge. Farmers’ concept to
improve <strong>the</strong>ir farming systems is based on trial and error and location specific characteristics
(conceptual knowledge). Farmers’ expectation knowledge concerns investments in quality control.
When farmers invest in quality control <strong>the</strong>y are unsure if <strong>the</strong>y will get a premium price for <strong>the</strong>ir
product. Meanwhile many smallholders think <strong>the</strong> costs to control quality are higher. Short term
investments are needed to control quality. This issue is likely to affect farmers’ willingness to change
<strong>the</strong>ir farming systems and can be qualified as farmers’ expectation knowledge. The methodological
farmers’ knowledge is to be found in <strong>the</strong> focus on disease treatment instead <strong>of</strong> prevention. This
tendency is unlikely to change unless farmers are forced or convinced.
Figure 3: Personal KM matrix
Form <strong>of</strong>
Knowledge
Personal
(Smallholders)
Type <strong>of</strong> Knowledge
Factual Conceptual Expectational Methodological
Farmers’ procedures,
experiences and
knowhow about
disease treatment and
prevention.
Location specific
knowledge.
Farming improvement
through trial and error
and based on location
specific
characteristics.
315
Quality control
costs are high.
Farmers cannot
get a premium
price for <strong>the</strong>ir
product.
Focus on disease
treatment instead
<strong>of</strong> prevention.

6. Conclusion and recommendations
Le Nguyen Doan Khoi
This research is derived from <strong>the</strong> fact that Pangasius smallholders face difficulties in surviving <strong>the</strong>
export market due to increasingly stringent standards concerned with health risks and sustainability.
The quality <strong>of</strong> disease treatment and prevention needs to be controlled and assured as a part <strong>of</strong> <strong>the</strong>
total quality demands for <strong>the</strong> exports market
Treatment availability
Fish quality standards recommend laboratory diagnosis before treatment but this is impractical for
smallholders. There are only two laboratories at Universities in two provinces. Diagnosing time usually
takes up to three days. BNP clinical signs can be spotted just before <strong>the</strong> infected Pangasius die.
Hence, if BNP is spotted in a pond, farmers have to act swiftly to prevent high mortality rates. This is
impossible when first sending a sample to a laboratory for diagnosis. Disease technicians from local
vet shops are <strong>the</strong> diagnosing specialists for farmers. They do not have a lot <strong>of</strong> diagnosing
instruments, but normally have a degree in veterinary studies. The interviewed vet shop technician
and farmers mentioned illegal drugs are relatively easy to obtain. However, in <strong>the</strong> last two years local
government control on drugs and chemicals has become more stringent. Never<strong>the</strong>less it can be
concluded that illegal drugs can still be purchased by smallholders if <strong>the</strong>y want to. All farmers
mentioned it was no problem to get chemicals and drugs <strong>the</strong>y need for treatment and prevention.
Farmer organisation and extension structure
Major farmers’ knowledge sources <strong>of</strong> disease treatment and prevention are <strong>the</strong> neighbour farmers
and disease technicians. Also <strong>the</strong> media have an important role in providing information to farmers. A
television program is used as platform for Pangasius experts to provide information. Many farmers
watch <strong>the</strong> television program about farming practices and learn from it. FA farmers also mentioned
<strong>the</strong> FA as a major source <strong>of</strong> information. Training sessions are organized by <strong>the</strong> DARD, private
businesses, Universities and NGOs. Government strategic focus is to give extension to advanced
farmers. These farmers are expected to share <strong>the</strong>ir knowledge with <strong>the</strong> o<strong>the</strong>r farmers. In <strong>the</strong> field
research experts mentioned <strong>the</strong>re is lack <strong>of</strong> capital and extension <strong>of</strong>ficers to effectively disseminate
new policies and quality standards to every farmer. Results show that around fifty percent <strong>of</strong> <strong>the</strong>
farmers per year get training. This will likely affect <strong>the</strong> knowledge <strong>of</strong> most farmers about new farming
practices and better standards.
Farmers’ disease knowledge
The interviewed farmers all thought <strong>the</strong>y had enough knowledge to prevent and treat diseases. A
great deal <strong>of</strong> knowledge is gained from former experiences, o<strong>the</strong>r farmers’ knowhow and <strong>the</strong> local vet
shop technicians. Also location specific knowledge about <strong>the</strong> climate, soil, and water are established
into farmers’ minds. Most farmers do not perceive a lot <strong>of</strong> problems in raising <strong>the</strong>ir Pangasius and a
lot <strong>of</strong> treatment knowledge was available by farmers. Of <strong>the</strong> diseases BNP is <strong>the</strong> only disease that is
really difficult to treat and is a real threat to farmers. Most o<strong>the</strong>r diseases can be treated with relative
ease. Although some farmers know that some antibiotics are illegal <strong>the</strong>y still apply <strong>the</strong>m when major
diseases occur. The illegal antibiotics are just stronger and more effective. Also, one farmer
mentioned to use antibiotics to prevent diseases. When applying a withdrawal period <strong>of</strong> one month
before harvest it is very difficult to trace any residues. On average, FA farmers seem to know more
about disease treatment than independent farmers. On <strong>the</strong> o<strong>the</strong>r hand a lot <strong>of</strong> differences between
farmers are a result <strong>of</strong> differences in farmer experience, farmer relations with o<strong>the</strong>r farmers, and farm
size.
Quality gaps and possible solution
Smallholders seem to have enough knowledge to treat <strong>the</strong>ir diseases well, and <strong>the</strong>y are still pr<strong>of</strong>itable.
Never<strong>the</strong>less, <strong>the</strong>re is a noticeable gap between current farming practices and quality standards. For
many farmers <strong>the</strong>re are o<strong>the</strong>r factors that influence <strong>the</strong> farming practices besides <strong>the</strong>ir knowledge <strong>of</strong>
disease management. Presently smallholders’ focus lies more on treatment than prevention. This is
caused by <strong>the</strong> farmers’ inability to invest in higher quality inputs and investments like a waste water
treatment system. It is hard to obtain certified fingerlings and, because <strong>of</strong> <strong>the</strong> costs, most farmers still
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Le Nguyen Doan Khoi
use homemade instead <strong>of</strong> industrial feed. Track records <strong>of</strong> feed, fingerlings, water quality, and drugs
were not kept so it impossible to assure quality at this moment. Hence, processing firms do not <strong>of</strong>fer a
fixed price per kilogram <strong>of</strong> fillet. Therefore smallholders cannot risk to investments, and do not see <strong>the</strong>
need to control quality.
Improvement <strong>of</strong> knowledge management matrix
To simplify <strong>the</strong> quality control issue, Public knowledge is known by experts and accessible by o<strong>the</strong>rs.
However <strong>the</strong> degree <strong>of</strong> farmers’ accessibility partially depends on <strong>the</strong> extension system. Here, <strong>the</strong>
shared knowledge is seen as <strong>the</strong> link between farmers and experts. Although it is a simplification <strong>of</strong>
<strong>the</strong> reality, <strong>the</strong> matrix is a nice overview for spotting differences in knowledge.
Figure 4: Knowledge management matrix
Form <strong>of</strong>
Knowledge
Public (Experts,
PAD, MOFI)
Shared (DARD,
FA, advanced
farmers)
Personal
(Smallholders)
References
Type <strong>of</strong> Knowledge
Factual Conceptual Expectation Methodological
BNP is <strong>the</strong>
biggest problem.
Diagnosis in
laboratory before
treatment.
Focus on
prevention
instead <strong>of</strong>
treatment.
FA Market
information.
Government
extension.
Expert lectures
or seminars.
Advanced farmer
experiences.
Farmers’
procedures,
experiences and
knowhow about
disease
management.
The PAD
standards.
Extension system:
- AFA
Advanced farmers
Extension <strong>of</strong>ficers
- Media
Farm improvement
through trial and
error and based on
location specific
characteristics.
PAD
implementation
improves quality
which is essential
for human health
and social
environment.
Advanced farmers’
willingness is key
for knowledge
dissemination and
FA growth.
Quality control
costs are high.
Farmers cannot get
a premium price for
<strong>the</strong>ir product.
BMP as a tool to
implement <strong>the</strong>
PAD standards.
The FA could
succeed as a
platform to
spread BMPs.
Focus on
disease
treatment
instead <strong>of</strong>
prevention.
Belton, B., Little, D., Sinh and L.X. Forthcomin, 2009, The social relations <strong>of</strong> Catfish production in Vietnam.
Ge<strong>of</strong>orum, 35 p.
Brouwers, J.H.A.M.,1993, Rural people’s response to soil fertility decline, Wageningen agricultural University
Papers, 93-4.
Dalkir, K., 2005, Knowledge Management in Theory and Practice, Elsevier, 1 st edition.
Dung, T.T., Ngoc, N.T.N., Thinh, N.Q., Thy, D.T.M., Tuan, N.A., Shinn, A., Crumlish, M., 2008, Common
diseases <strong>of</strong> Pangasius Catfish farmed in Vietnam, Global Aquaculture Advocate, pp.77-78.
Khoi, L.N.D., Wijngaard, J. and C.H.M. Lutz, 2008, Farming system practices <strong>of</strong> seafood production in Vietnam:
<strong>the</strong> case study <strong>of</strong> Pangasius small-scale farming in <strong>the</strong> Mekong River Delta, ASEAN Business Case Studies
No 27, Center for ASEAN Studies and Center for <strong>International</strong>
Management and Development Antwerp, p.72.
McElroy, M.W., 2003, The New Knowledge Management, Butterworth Heinemann, KMCI press.
Ruben, R., Tilburf, A.V., Trinekens, J., and M.V. Boekel, 2007, Linking market integration, supply chain
governance, quality and value added, Tropical food chains, Governance regimes for quality management,
Wageningen academic publishers.
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Sarter, S., Nguyen, H.N.K., Hung, L.T., Lazard, J. & D. Montet, 2006, Antibiotic Resistance in Gram-Negative
Bacteria Isolated from Farmed Catfish, Center de Coopération <strong>International</strong>e en Recherche Agronomique
pour le Développement (CIRAD), Elsevier Sciencedirect, pp.1391-1396.
Wiig, K. M. (1993). Knowledge Management Foundations: Thinking about Thinking – How People and
Organizations Create, Represent and use Knowledge, Schema Press, Arlington, TX
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Zhang, Z.,1997, Developing a TQM quality management method model, PhD <strong>the</strong>sis, University <strong>of</strong> Groningen
318

Developing Human Capital through Neuro-Linguistic
Programming
Eric Kong
School <strong>of</strong> Management & Marketing, University <strong>of</strong> Sou<strong>the</strong>rn Queensland,
Toowoomba, Queensland, Australia
kongeric@usq.edu.au
Abstract: Human capital (HC) represents <strong>the</strong> tacit knowledge that is embedded in <strong>the</strong> minds <strong>of</strong> people in
organisations. HC is important to organisations because it serves as a source <strong>of</strong> innovation and strategic
renewal. Individuals carry HC when <strong>the</strong>y join an organisation, though <strong>the</strong>ir level <strong>of</strong> HC <strong>the</strong>oretically increases with
time in <strong>the</strong> organisation. Individuals also take <strong>the</strong>ir talent, skills and tacit knowledge with <strong>the</strong>m when <strong>the</strong>y leave an
organisation. Thus HC is volatile in nature. It is <strong>the</strong>refore in <strong>the</strong> interests <strong>of</strong> human resource managers to recruit
and develop <strong>the</strong> best and brightest employees as a means <strong>of</strong> achieving competitive advantage. One way <strong>of</strong>
developing HC is through neuro-linguistic programming (NLP). NLP emerged in <strong>the</strong> 1970s from <strong>the</strong> University <strong>of</strong>
California, USA. NLP suggests that subjective experience is encoded in terms <strong>of</strong> three main representation
systems: visual, auditory, and kinaes<strong>the</strong>tic (VAK). NLP practitioners claim that people tend to have one preferred
representation system over ano<strong>the</strong>r in a given context. Relatively less research is conducted using <strong>the</strong> approach
in developing HC in organisations. This paper critically reviews <strong>the</strong> literature and <strong>the</strong>oretically argues that since
NLP primarily focuses on individual internal learning, it may be used as a practical approach to develop HC in
organisations. Examples will be used in <strong>the</strong> paper to illustrate <strong>the</strong> benefits <strong>of</strong> utilising NLP in developing
knowledge in organisations. Future research direction and limitations will also be discussed.
Keywords: Human capital; neuro-linguistic programming; knowledge and learning capability; visual, auditory and
kinaes<strong>the</strong>tic systems
1. Introduction
Individuals carry human capital (HC) when <strong>the</strong>y join an organisation, though <strong>the</strong>ir level <strong>of</strong> HC
<strong>the</strong>oretically increases with time in <strong>the</strong> organisation. A higher level <strong>of</strong> HC is <strong>of</strong>ten associated with
greater productivity and higher incomes or compensation. On <strong>the</strong> o<strong>the</strong>r hand, a loss <strong>of</strong> organisational
memory due to individuals’ departure may be a threat to <strong>the</strong> organisation. Individuals take <strong>the</strong>ir talent,
skills and tacit knowledge with <strong>the</strong>m when <strong>the</strong>y leave an organisation. Thus HC is volatile in nature. It
is <strong>the</strong>refore in <strong>the</strong> interests <strong>of</strong> human resource managers to recruit and develop <strong>the</strong> best and brightest
employees as a means <strong>of</strong> achieving competitive advantage. One way <strong>of</strong> developing HC may be
through neuro-linguistic programming (NLP).
As coined by Bandler and Grinder (1979), <strong>the</strong> title broadly denotes <strong>the</strong> view that a person is a whole
mind-body system with patterned connections between internal experience (neuro), language
(linguistic), and behaviour (programming) (Tosey et al., 2005). It is important to note that despite <strong>the</strong>
title and its connotations, NLP has no direct connection to neuro-science, or to computer
programming, though <strong>the</strong>se were fields <strong>of</strong> interest to its developers (Tosey and Mathison, 2003).
Bandler and Grinder (1979) claimed that working with <strong>the</strong> way in which experience was constructed
through such representations had a wide range <strong>of</strong> practical applications, from a means <strong>of</strong> curing
people <strong>of</strong> phobias in psycho<strong>the</strong>rapy (See e.g. Davis and Davis, 1991) to ways <strong>of</strong> enabling managers
to develop effective strategies that enhance organisational performance (See e.g. Thompson et al.,
2002).
Today, NLP seems most welcomed by informal practitioner networks that encourage direct use <strong>of</strong>
NLP’s strategies while <strong>the</strong> relationship between NLP and academe has been tenuous (Linder-Pelz
and Hall, 2007). Tosey and Mathison (2008) also argue that <strong>the</strong> academic literature on NLP remains
sporadic, scattering across various fields <strong>of</strong> practice such as education (See e.g. Craft, 2001), training
and development (See e.g. Thompson et al., 2002), coaching and personal development (See e.g.
Linder-Pelz and Hall, 2007), counselling and psychophenomenology (See e.g. Tosey and Mathison,
2010), family <strong>the</strong>rapy (See e.g. Davis and Davis, 1991), management auditing (See e.g. Ashok and
Santhakumar, 2002) and marketing communications (See e.g. Mainwaring and Skinner, 2009). NLP
suggests that subjective experience is encoded in terms <strong>of</strong> three main representation systems: visual,
auditory, and kinaes<strong>the</strong>tic (VAK) (Davis and Davis, 1991). As Bandler and Grinder (1979, p.7)
emphasised, ‘... we’re not particularly interested in what’s ‘true’. The function <strong>of</strong> [NLP] modelling is to
arrive at descriptions which are useful’. Thus, NLP has been designed to be more practical ra<strong>the</strong>r
than <strong>the</strong>oretical. The practicality <strong>of</strong> NLP fits well into leaders’ and managers’ primary concern <strong>of</strong> <strong>the</strong>
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Eric Kong
accuracy <strong>of</strong> prediction <strong>of</strong> a concept or model and whe<strong>the</strong>r that concept or model can guide <strong>the</strong>m for
daily decision making.
Despite that NLP has endured across several fields for decades, very little research today has been
conducted to <strong>of</strong>fer a better understanding <strong>of</strong> <strong>the</strong> application <strong>of</strong> NLP in knowledge management and
organisational learning. The study conducted by Tosey et al. (2005), for example, examined <strong>the</strong>
relationships between NLP and management learning. However, <strong>the</strong>ir approach was primarily using
NLP as an analytical method to identify linguistic differences in interviews through a longitudinal case
study. Never<strong>the</strong>less, Tosey et al. (2005) have demonstrated that NLP is a structured and systematic
means <strong>of</strong> mapping subjective experience and constructed reality <strong>of</strong> people experiencing
transformative learning or coaching (Linder-Pelz and Hall, 2007). Despite that NLP has much
potential relevance for, and application to, <strong>the</strong> practices <strong>of</strong> management learning, it would need more
space to explore fur<strong>the</strong>r (Tosey and Mathison, 2003). This paper argues that <strong>the</strong> VAK representation
systems primarily focus on individual internal learning (Yemm, 2006) and thus NLP may be used as a
practical approach to develop HC in organisations. The paper looks how <strong>the</strong> NLP approach,
particularly <strong>the</strong> three representation systems, may be applied as a set <strong>of</strong> strategies in organisations to
assist in developing HC in organisations. In o<strong>the</strong>r words, <strong>the</strong> purpose <strong>of</strong> <strong>the</strong> paper is to identify what
NLP is in <strong>the</strong> organisational context, how <strong>the</strong> representation systems might be useful for individual to
enhance learning and <strong>the</strong>n develop knowledge in organisations, and to explore <strong>the</strong> application <strong>of</strong> NLP
as a conceptual framework to develop HC in organisations.
As very little reliable data on <strong>the</strong> subject <strong>of</strong> developing HC through NLP has been made available for
<strong>the</strong> current investigation, a critical analysis <strong>of</strong> <strong>the</strong> relevant literature is adopted which can provide a
cogent and comprehensive perspective on <strong>the</strong> <strong>the</strong>oretical and practical aspects <strong>of</strong> whe<strong>the</strong>r NLP can
help to develop HC in organisations. Bourguignon et al. (2004) argue that a literature-based analysis
helps to increase <strong>the</strong> level <strong>of</strong> clarity and precision <strong>of</strong> a concept, which is a necessity if we are to
understand <strong>the</strong> constitutive use <strong>of</strong> NLP in developing HC in <strong>the</strong> organisational context. Since <strong>the</strong>
findings revealed from <strong>the</strong> analysis are representative for <strong>the</strong> current state and progress <strong>of</strong> <strong>the</strong> field,
this study provides insights to human resource strategy scholars and practitioners on <strong>the</strong>
appropriateness and usefulness <strong>of</strong> developing HC through NLP in <strong>the</strong> organisational context. This
literature-based analysis is <strong>the</strong> first step towards understanding <strong>the</strong> application <strong>of</strong> NLP in enhancing
HC in organisations. This is essential because it helps to present a call for fur<strong>the</strong>r conceptualisation
and future empirical examination to gain more validity (Serenko et al., 2009).
The paper aims to provide a better understanding <strong>of</strong> NLP, and its application on both individuality in
learning and organisational learning. Also, it aims to extend <strong>the</strong> academic literature on NLP and dispel
some myths about NLP and connotations individuals may already have with <strong>the</strong> approach. After
critically reviewing <strong>the</strong> literature, <strong>the</strong> paper argues that since NLP primarily focuses on individual
internal learning, it may be used as a conceptual framework to develop and nurture HC in
organisations. Examples will be used in <strong>the</strong> paper to illustrate <strong>the</strong> possible benefits <strong>of</strong> utilising NLP in
developing knowledge in organisations. Future research direction and limitations will also be
discussed.
2. Human capital and neuro-linguistic programming
2.1 Human capital
Human capital (HC) subsumes various human resource elements, including competencies,
experience and skills, and <strong>the</strong> innovativeness and talents <strong>of</strong> people (Bontis, 2002, Guerrero, 2003,
Fletcher et al., 2003). It represents <strong>the</strong> cumulative tacit knowledge that is embedded in <strong>the</strong> minds <strong>of</strong>
people in an organisation (Bontis, 1999, Bontis et al., 2002). Thus, even though an individual carries
tacit knowledge which may have significant contributions to <strong>the</strong> organisation, it is <strong>of</strong>ten HC
(cumulative tacit knowledge along with all o<strong>the</strong>r human resource elements) that creates most value to
<strong>the</strong> organisation.
Knowledge, particularly tacit knowledge, can only be created by humans but not by organisations and
thus HC cannot be owned, but only rented (Kong and Thomson, 2009). Individuals bring in HC when
<strong>the</strong>y join an organisation, though <strong>the</strong>ir level <strong>of</strong> HC <strong>the</strong>oretically increases with time in <strong>the</strong> organisation
(Grasenick and Low, 2004). A higher level <strong>of</strong> HC within <strong>the</strong> organisation is <strong>of</strong>ten associated with
greater productivity and higher incomes or compensation (Wilson and Larson, 2002). On <strong>the</strong> o<strong>the</strong>r
hand, a loss <strong>of</strong> organisational memory due to individuals’ departure may be a threat to <strong>the</strong>
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organisation as individuals take <strong>the</strong>ir talent, skills and tacit knowledge with <strong>the</strong>m when <strong>the</strong>y leave <strong>the</strong>
organisation (Kong and Thomson, 2009).
Theoretically, new employees, after a vigilant recruitment process, should replace <strong>the</strong> employees who
departed from <strong>the</strong> organisation and <strong>the</strong> level <strong>of</strong> HC should remain <strong>the</strong> same. However, a full
exploitation <strong>of</strong> <strong>the</strong> HC that embodied in new employees may seem to be difficult, if not impossible
(Kong and Thomson, 2009). This is because when an organisation acquires human resources in <strong>the</strong>
external job market, it must undergo a period <strong>of</strong> dynamic adjustment costs before <strong>the</strong> best uses <strong>of</strong> <strong>the</strong>
human resources can be discovered and tailored to <strong>the</strong> needs <strong>of</strong> <strong>the</strong> new environment (Hatch and
Dyer, 2004). Besides, new employees’ prior industry experience may also affect <strong>the</strong>ir performance in
<strong>the</strong> organisation, preventing <strong>the</strong>m to unlearn and re-learn knowledge in <strong>the</strong> new environment (Hatch
and Dyer, 2004). Thus HC is volatile in nature. Human resource managers should not only pay
attention on recruitment and selection <strong>of</strong> human resources, but also <strong>the</strong> development and deployment
<strong>of</strong> HC as recruitment and selection alone are not sufficient to ensure competitive advantage (Kong
and Thomson, 2009). Human resource managers must ensure that <strong>the</strong>y recruit, develop and retain
<strong>the</strong> best and brightest employees as a means <strong>of</strong> deploying HC and achieving competitive advantage
in <strong>the</strong>ir organisations (Kong, 2008).
HC helps organisations to effectively respond to environmental changes by sensing <strong>the</strong> need for
changes, developing strategies to meet <strong>the</strong> changes and efficiently implementing <strong>the</strong> strategies for
complex and dynamic environments (Kong and Ramia, 2010). This is because HC is <strong>the</strong> collective
knowledge and learning capabilities <strong>of</strong> an organisation, which can be used to extract <strong>the</strong> best
solutions from <strong>the</strong> knowledge <strong>of</strong> its individuals for value creation (Bontis et al., 2000). Accordingly, HC
can be a source <strong>of</strong> organisational innovation and strategic renewal (Kong and Ramia, 2010). HC must
be developed strategically if <strong>the</strong> growth and competitiveness <strong>of</strong> a firm is to be sustainable. One way <strong>of</strong>
developing HC in organisations may be through neuro-linguistic programming (NLP).
2.2 Neurolinguistic programming (NLP)
Neurolinguistic programming (NLP) emerged in <strong>the</strong> 1970s from <strong>the</strong> University <strong>of</strong> California, USA.
Richard Bandler and John Grinder, <strong>the</strong> original developers <strong>of</strong> NLP, were involved in ma<strong>the</strong>matics and
linguistics (Carter, 2001). Much <strong>of</strong> what Bandler and Grinder (1979) identified and developed was
based on <strong>the</strong> work <strong>of</strong> well-known linguistics experts and since <strong>the</strong>n <strong>the</strong> term ‘neuro-linguistic’ has
been widely used (Yemm, 2006). As described by Linder-Pelz and Hall (2007), ‘[t]he ‘neuro’ refers to
<strong>the</strong> way humans experience <strong>the</strong> world through <strong>the</strong>ir senses and translate sensory experiences into
thought processes, both conscious and unconscious, which in turn activate <strong>the</strong> neurological system;
‘linguistic’ refers to <strong>the</strong> way we use language to make sense <strong>of</strong> <strong>the</strong> world, capture and conceptualise
experience and <strong>the</strong>n communicate that experience to o<strong>the</strong>rs; and ‘programming’ addresses <strong>the</strong> way
people code (mentally represent) <strong>the</strong>ir experience and adopt regular and systematic patterns <strong>of</strong>
response’. Thus, <strong>the</strong> title, NLP, broadly denotes <strong>the</strong> view that a person is a whole mind-body system
with patterned connections between internal experience (neuro), language (linguistic), and behaviour
(programming) (Tosey et al., 2005).
NLP began as a means <strong>of</strong> studying how people process information, construct meaning schemas,
and perform skills to achieve results (Tosey and Mathison, 2008). Bandler and Grinder (1979) wanted
to study people who were excellent, identify <strong>the</strong> specific elements that <strong>the</strong>se people could do to
achieve excellence, and <strong>the</strong>n teach or impart <strong>the</strong>se elements to o<strong>the</strong>rs in order to improve <strong>the</strong>ir
performance. As described by Dilts (1998, p.30), ‘[t]he objective <strong>of</strong> <strong>the</strong> NLP modelling process is not
to end up with <strong>the</strong> one ‘right’ or ‘true’ description <strong>of</strong> a particular person’s thinking process, but ra<strong>the</strong>r to
make an instrumental map that allows us to apply <strong>the</strong> strategies that we have modelled in some
useful way’. Thus, NLP aims to replica what works and allows o<strong>the</strong>rs to find evidence within its
practices <strong>of</strong> an eclectic approach that draws from (among o<strong>the</strong>r things) cognitive-behavioural
approaches, gestalt <strong>the</strong>rapy, hypno<strong>the</strong>rapy, family <strong>the</strong>rapy, and brief <strong>the</strong>rapy (Tosey and Mathison,
2008). The principle <strong>of</strong> NLP is to make human capabilities available for o<strong>the</strong>rs to learn (Tosey and
Mathison, 2010). In short, NLP is ‘a set <strong>of</strong> guiding principles, attitudes and techniques that enable
[individuals] to change behaviour patterns as [<strong>the</strong>y] wish’ (Yemm, 2006, p.13).
The NLP approach is interested in how people construct <strong>the</strong>ir experiences through cognitive
processes, ra<strong>the</strong>r than in seeking causal explanations in <strong>the</strong> past for why <strong>the</strong>y experience <strong>the</strong> world
as <strong>the</strong>y do, or in <strong>the</strong> contents <strong>of</strong> a particular experience (Tosey and Mathison, 2008). Linder-Pelz and
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Eric Kong
Hall (2007) also argue that <strong>the</strong> NLP method <strong>of</strong> communication is a useful approach for coaches as it
allows <strong>the</strong>m to codify and respond appropriately to <strong>the</strong>ir own and <strong>the</strong>ir clients’ experience. NLP can be
used as an approach to human communications that combines cognitive <strong>the</strong>ory, split-brain
processing, and sensory perception (Wood, 2006).
The NLP approach suggests that subjective experience is encoded in three sensory representation
systems namely: visual, auditory, and kinaes<strong>the</strong>tic (Davis and Davis, 1991). Sadowski Jr. and
Stanney (2002) describe that <strong>the</strong> visual system includes external images, as well as remembered or
constructed internal mental images; <strong>the</strong> auditory system contains external sounds and remembered or
contrived internal sounds and <strong>the</strong> internal dialogue (i.e., a person talking to <strong>the</strong>mselves on <strong>the</strong> inside);
and, finally, <strong>the</strong> kinaes<strong>the</strong>tic system comprises tactile sensations caused by external forces acting on
<strong>the</strong> body and emotional responses. Practitioners <strong>of</strong> NLP claim that people tend to have one preferred
representation system over ano<strong>the</strong>r in a given context (Ghacmi and Janvier, 2004). According to
Bandler and Macdonald (1988), each <strong>of</strong> <strong>the</strong> NLP sensory representations can be broken down more
finely as ‘sub-modalities’. These sub-modalities are <strong>the</strong> building blocks <strong>of</strong> thought patterns, that is how
each inner sense is composed (Alder, 1992). For instance, individuals with different representational
systems may use different sub-modalities to describe <strong>the</strong>ir inner experiences towards <strong>the</strong> same object
or event. Table 1 below shows examples <strong>of</strong> sub-modalities <strong>of</strong> VAK representation systems when
individuals are describing <strong>the</strong>ir experience <strong>of</strong> a location:
Table 1: VAK representational systems and associated sub-modality distinctions (Adapted from
Tosey and Mathison, 2010).
Representation systems Visual Auditory Kinaes<strong>the</strong>tic
Sub-modalities in VAK
representational systems to
describe experience <strong>of</strong>
‘location’
Size
Distance
Brightness
Focus
Colours (or
monochrome)
Frame
Motion
Volume
Pitch
Tempo
Rhythm
Intensity
Motion
Temperature
Pressure
Intensity
Scope
As shown in Table 1, a person with a preferred visual representation system is likely to focus more on
particular set <strong>of</strong> sub-modalities such as size, colours, and <strong>the</strong> degree <strong>of</strong> lights to describe <strong>the</strong>ir inner
experience towards a location. The same location is possibly described differently by ano<strong>the</strong>r person
who has a different preferred representation system.
NLP provides a visual, auditory and kinaes<strong>the</strong>tic (VAK) framework for individuals to become aware <strong>of</strong>
<strong>the</strong> distinctions <strong>of</strong> <strong>the</strong>ir representation systems as well as <strong>the</strong> o<strong>the</strong>rs (Tosey and Mathison, 2010).
Tosey and Mathison (2003) argue that how people use <strong>the</strong>ir senses internally, and <strong>the</strong> kinds <strong>of</strong>
internal representations <strong>the</strong>y create, are believed to be unique to every individual. NLP concentrates
on how human beings go about making sense <strong>of</strong> <strong>the</strong>ir experience and interacting with o<strong>the</strong>rs (Pollitt,
2010). Techniques in NLP involve <strong>the</strong> study <strong>of</strong> language patterns, patterns <strong>of</strong> motivation, how rapport
is built, and how individuals code data (Thompson et al., 2002). NLP is <strong>of</strong>ten used to help its users—
whe<strong>the</strong>r <strong>the</strong>y are <strong>the</strong>rapists, salespersons, or teachers—more quickly gain rapport with <strong>the</strong>ir subjects
(Taler, 1991).
One presupposition that NLP has is that people act according to <strong>the</strong> way <strong>the</strong>y understand and
represent <strong>the</strong> world, not according to <strong>the</strong> way <strong>the</strong> world is (Tosey and Mathison, 2003). Skills, beliefs
and behaviours are all learnt, and consist <strong>of</strong> sequences <strong>of</strong> representations, <strong>the</strong>refore change and
learning can be achieved through modifying representations and sequences (Tosey and Mathison,
2003). Tosey and Mathison (2003) argue that NLP is firmly systemic, or cybernetic, emphasising on
<strong>the</strong> way people create, act according to, and can change and reconstruct, <strong>the</strong>ir own ‘maps <strong>of</strong> <strong>the</strong>
world’. The creation, action, change and reconstruction <strong>of</strong> such maps, according to Tosey and
Mathison (2003), become central to NLP’s potential relevance to learning <strong>the</strong>ory and <strong>the</strong> processes <strong>of</strong>
education. Pollitt (2010) studied <strong>the</strong> use <strong>of</strong> NLP in Metronet Rail BCV Limited, a company which was
responsible for <strong>the</strong> maintenance and renewal <strong>of</strong> London Underground Bakerloo, Central, Victoria and
Waterloo and City lines, and argued that <strong>the</strong> NLP approach subsequently became a vehicle to drive
and support <strong>the</strong> learning and development team, o<strong>the</strong>r colleagues and customers through Metronet’s
integration into <strong>the</strong> London mayor’s transport organisation, Transport for London.
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As described by Tosey and Mathison (2008, p.5), NLP ‘aims to identify what is distinctive about <strong>the</strong>
strategies <strong>of</strong> exemplars in a given skill, including internal cognitive as well as behavioural elements,
such that o<strong>the</strong>r people can learn to perform <strong>the</strong> same skill’. Indeed, learning is <strong>of</strong>ten emphasised in
NLP as <strong>the</strong> key to personal change and development (Tosey and Mathison, 2008). According to Dilts
and DeLozier (2000), NLP does espouse underlying epistemological principles, concerning <strong>the</strong>
processes through which people perceive, know and learn. As knowledge development is primarily an
internal learning and NLP mainly focuses on individual internal learning to improve self-awareness
and develop greater skills in self-management, communication and interpersonal dealings (Thompson
et al., 2002, Yemm, 2006), it may be used as a practical approach to develop HC in organisations.
Unlike o<strong>the</strong>r NLP studies that focus on techniques and modelling, this paper simply looks at how NLP
may be applied as a set <strong>of</strong> strategies for developing HC in organisations. An analysis <strong>of</strong> <strong>the</strong> relevant
literature identified a number <strong>of</strong> issues in relation to <strong>the</strong> usefulness and limitations <strong>of</strong> developing HC
through NLP in <strong>the</strong> organisational context, and <strong>the</strong>se will be discussed in <strong>the</strong> following section.
3. Developing HC through NLP
As highlighted earlier, NLP has a primarily focus on learning. And learning is <strong>the</strong> first step to
accumulate knowledge, especially tacit knowledge in this case. Accordingly, NLP has a sound ground
on developing HC in <strong>the</strong> organisational context. NLP presupposes that people are inherently creative
and capable. Alder (1992) argued that <strong>the</strong>re was no failure, but only feedback in <strong>the</strong> NLP approach. If
something did not go as planned, one has simply learned <strong>the</strong> results and <strong>the</strong>n changed his or her
behaviours accordingly in order to reach <strong>the</strong> desired outcome. It is this self learning ability that
actually increases effectiveness over time as an upward spiral <strong>of</strong> self-development and personal
achievement is set in motion (Alder, 1992). Accordingly, NLP allows continuous learning to occur in
individuals as <strong>the</strong>y can use information and feedback to improve what <strong>the</strong>y do.
According to Bandler and Grinder (1979), people tended to favour one <strong>of</strong> three representation
systems to receive or access information. Taler (1991) used examples to describe: ‘People who are
visual will tend to use language revealing this preference, such as ‘I see what you mean’ or ‘That is
not clear’. One whose presence is auditory will say ‘I hear you or that sounds right’. The subject
favouring kinaes<strong>the</strong>tic will say ‘I'm in touch with you’ or ‘I just don't grasp it’. A practitioner [or well
trained organisational member] who listens well will be able to determine <strong>the</strong> subject's identified
representational system and respond in a similar representational system in order to gain <strong>the</strong>
subject's confidence’. As a person’s knowledge, skills and experiences will be developed more
effectively if information is ga<strong>the</strong>red and processed through his or her preferred representative system
during experience sharing and interpersonal interaction (Lavan, 2002).
More importantly, as <strong>the</strong> learning in NLP is focused on experience, skills and tacit knowledge, if
individuals know and use <strong>the</strong> techniques that match <strong>the</strong>ir preferred ways <strong>of</strong> learning, <strong>the</strong> individuals
will likely learn more easily, quickly and naturally. Since it is more natural for <strong>the</strong> individuals to learn, it
becomes easier for <strong>the</strong>m to develop, internalise and utilise new knowledge that may create value for
<strong>the</strong>ir organisations. In o<strong>the</strong>r words, NLP motivates individuals to acquire knowledge through an
enjoyable, successful and satisfying experience. Figure 1 below illustrates <strong>the</strong> relationships between
VAK representation systems, learning and human capital.
Figure 1: VAK representational systems, learning and human capital.
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Eric Kong
As can be seen from Figure 1 above, individuals learn <strong>the</strong>ir perceived world through NLP
representation systems, whe<strong>the</strong>r it is visual, auditory or kinaes<strong>the</strong>tic. New knowledge is likely
developed, which will <strong>the</strong>n be internalised and/or utilised for organisational value creation. This value
creation, as a result <strong>of</strong> enhanced HC, assists organisations to be more competitive in <strong>the</strong>ir own
environment (Kong, 2010). As NLP allows an individual to create new knowledge through his/her own
learning style, <strong>the</strong> NLP approach is likely and arguably <strong>the</strong> most effective method to create learning
and knowledge, which helps to enhance HC in organisations.
Despite <strong>of</strong> <strong>the</strong>se promising findings from <strong>the</strong> literature, <strong>the</strong>re is a potential problem with NLP when it is
applied in developing HC. NLP presupposes that people are inherently creative and capable. As
Tosey and Mathison (2003) argue, ‘NLP in our experience concentrates on <strong>the</strong> intrapersonal,
intrapsychic processes <strong>of</strong> reality construction. It attends little, if at all, to <strong>the</strong> social context and
intersubjectivity. If it is a learning <strong>the</strong>ory, it is one that emphasises individual ra<strong>the</strong>r than social
learning’. As highlighted earlier, having organisational members to develop, internalise and utilise
knowledge individually is not sufficient for nurturing HC. It is <strong>the</strong> cumulative tacit knowledge along with
all o<strong>the</strong>r human resource elements that create most value to organisations. In o<strong>the</strong>r words, for NLP to
be effective to develop HC in organisations, it must be used carefully and strategically. Indeed, NLP
concentrates on how human beings go about making sense <strong>of</strong> <strong>the</strong>ir experience and interacting with
o<strong>the</strong>rs (Pollitt, 2010). Techniques in NLP also involve <strong>the</strong> study <strong>of</strong> language patterns, patterns <strong>of</strong>
motivation, how rapport is built, and how individuals code data (Thompson et al., 2002). In o<strong>the</strong>r
words, <strong>the</strong>re is an in-built mechanism in NLP that allows interactions between individuals to occur and
tacit knowledge, skills and experience to be share. However, interactions are not shown explicitly in
<strong>the</strong> NLP approach in order to encourage members in an organisation to interact and share
experience, skills and knowledge with each o<strong>the</strong>r. Leaders and managers must have a very clear idea
<strong>of</strong> what <strong>the</strong>y would like to achieve. External consultations and pr<strong>of</strong>essional NLP trainers may need to
be brought in to emphasise <strong>the</strong> importance <strong>of</strong> sharing and creating knowledge for <strong>the</strong> organisation.
Only active interpersonal interactions allow <strong>the</strong> level <strong>of</strong> HC to increase dramatically. More research is
needed to reveal what strategies are required to develop HC through NLP in organisations.
4. Conclusion
NLP has endured for more than thirty years. As background on my own position and perspective, this
paper is based on <strong>the</strong> discipline <strong>of</strong> knowledge management and organisational learning. It is my hope
that <strong>the</strong> paper has enhanced our understanding <strong>of</strong> NLP and its potential for knowledge management
and organisational learning through scholarly enquiry. NLP aims to develop individuals’ skills in
relation to o<strong>the</strong>r people, by improving understanding <strong>of</strong> <strong>the</strong>ir thought processes, behaviours and
language (Pollitt, 2010). It can help employees to develop skills, knowledge and confidence, which not
only improves pr<strong>of</strong>essional lives but also generalises into improving areas <strong>of</strong> <strong>the</strong>ir personal lives
(Lavan, 2002). It is a field <strong>of</strong> practice and innovation with a wide range <strong>of</strong> tools and techniques that
learners and pr<strong>of</strong>essional trainers can apply within both formal and informal learning settings (Tosey
and Mathison, 2008). More research on strategies that foster <strong>the</strong> development <strong>of</strong> HC through NLP is
needed.
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325

Main Descriptors <strong>of</strong> Pr<strong>of</strong>essional Gestures:Their
Intergenerational Transfer
Sophie Le Bellu and Benoit Le Blanc
Université de Bordeaux, France
Sophie.lebellu@ensc.fr
Benoit.leblanc@ensc.fr
Abstract: Operational knowledge in industries is difficult to capture because <strong>of</strong> <strong>the</strong> tacit nature <strong>of</strong> gestures. The
operators can be equipped with video capture devices. They can also be invited to describe <strong>the</strong> intentions <strong>of</strong> <strong>the</strong>ir
gesture. But <strong>the</strong> bottleneck is in <strong>the</strong> gesture itself. This paper describes an experiment, which was performed at
EDF (Electricité de France). Several categories <strong>of</strong> pr<strong>of</strong>essional gestures were studied, and 10 <strong>of</strong> <strong>the</strong>m were
investigated. For <strong>the</strong> capture phase, <strong>the</strong> protocol aims to approach <strong>the</strong> intentions <strong>of</strong> operators, <strong>the</strong>ir mental
models. We have produced training video material called “MAP” (Multimedia Apprenticeship Platform) for novices
to learn and internalize <strong>the</strong> practice. An anthropocentric three-step methodology was applied. For all <strong>the</strong>
gestures, eight descriptors were used to qualify <strong>the</strong> environment and <strong>the</strong> situation: realism, reproducibility, length,
granularity, mobility, interaction, visual salience and haptic salience. A four-value scale is used on each
descriptor to quantify <strong>the</strong> criticism <strong>of</strong> <strong>the</strong> gestures. Results include <strong>the</strong> perimeter <strong>of</strong> application <strong>of</strong> <strong>the</strong> MAP
methodology, describing pr<strong>of</strong>essional gestures which can be captured, formalized and transmitted. The majority
<strong>of</strong> <strong>the</strong> descriptors have a moderated influence on <strong>the</strong> process, concentrating <strong>the</strong>ir impact on one point <strong>of</strong> <strong>the</strong>
method. Only two descriptors have high-level impact on <strong>the</strong> whole process: interaction between operators and
visual dimension during <strong>the</strong> realization <strong>of</strong> <strong>the</strong> pr<strong>of</strong>essional gesture.
Keywords: Tacit knowledge, video capture, pr<strong>of</strong>essional gesture, Multimedia Apprenticeship Platform (MAP)
Introduction, context
This present work takes place in a knowledge transfer problematic, involving particularities <strong>of</strong> tacit
knowledge applied to industrial context. In France, as many o<strong>the</strong>rs European countries, important
industrial progresses were accompanied by massive employment. In <strong>the</strong> 60’s and 70’s, we observed
<strong>the</strong> emergence <strong>of</strong> technologies for high-speed trains, orbiting satellite or nuclear power plants. Many
realizations by <strong>the</strong> world are testimonies <strong>of</strong> technical gestures performed by operators. Forty years
later, industries as Electricité de France (EDF, French electrical energy producer) are now confronted
to a massive retirement. By <strong>the</strong> way, this demographic transition is creating a sudden and urgent
need for <strong>the</strong> transmission <strong>of</strong> tacit know-how. As made since decades, usual knowledge transfer is
based on journeyman. This implicit intergenerational transfer needs one to one workers contacts and
time to be achieved. Both conditions are now impossible to be satisfied, and this problem leads
industries to solve differently <strong>the</strong> equation.
To consider a usual definition, <strong>the</strong> gesture is a form <strong>of</strong> non-verbal communication, implying
necessarily a movement <strong>of</strong> a part <strong>of</strong> <strong>the</strong> body. There exist gestural codes in any work, in <strong>the</strong> manners
<strong>of</strong> being, <strong>of</strong> behaving, <strong>of</strong> communicating, which are specific to each work environment. The topic <strong>of</strong>
this paper is to approach <strong>the</strong> pr<strong>of</strong>essional gesture as a tacit knowledge <strong>of</strong> industry but it could be
approached as a part <strong>of</strong> an action, implying a communication between operator and machine.
Researches in ergonomics and work psychology on knowledge embodied in gestures impact different
sectors <strong>of</strong> activities: tourism (Sauvage, 1993), automobiles and civil engineering (Chassaing, 2004),
rail (Fernandez, 2001), aviation (Aubert, 2000), surgery (Tomás, 2008), etc. This literature doesn’t
show any consensus about terminology for work gesture analysis: Chassaing (2006) uses <strong>the</strong> terms
"gesture <strong>of</strong> work," or "gestural knowledge". Clot, and al. (Clot, Fernandez, & Scheller, 2007) speak <strong>of</strong>
gesture at work; Aubert (2000) speaks only <strong>of</strong> "gesture". However, all agree in showing <strong>the</strong> difficulties
to understand <strong>the</strong> knowledge underlying pr<strong>of</strong>essional acts by <strong>the</strong>ir specificity. Indeed, this knowledge
belongs to a class <strong>of</strong> very special skills, those that are "encapsulated in <strong>the</strong> action, hard to verbalize,
closely related to <strong>the</strong> context" (Leplat, 1990, 1995). We speak <strong>of</strong> knowledge embodied, that is to say,
"worn and stored by <strong>the</strong> body" (Aubert, 2000), which involves all <strong>the</strong> senses. These are <strong>the</strong> "skillbased
behavior" <strong>of</strong> Rasmussen (Rasmussen, 1983).
In <strong>the</strong> automotive sector, with assembly tasks, and in <strong>the</strong> civil engineering sector, with tasks <strong>of</strong>
formwork, K. Chassaing (2004) attempts to show <strong>the</strong> organization <strong>of</strong> work gestures learned on <strong>the</strong>
job, <strong>the</strong>ir development, structure and implementation. Partly reflected by <strong>the</strong> characteristics <strong>of</strong>
pr<strong>of</strong>essional skills, she characterizes a work gesture in four points. First, <strong>the</strong> gesture is a composition:
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Sophie Le Bellu and Benoit Le Blanc
it "requires a sensory, cognitive and motor activity". Second, <strong>the</strong> gesture is invested: it "is intentional
and is oriented toward different goals: to <strong>the</strong> system, to itself, and to o<strong>the</strong>rs". Third, <strong>the</strong> gesture is
situated, "<strong>the</strong> work activity [...] is in a situation". Last, <strong>the</strong> gesture is built: it "is <strong>the</strong> product <strong>of</strong> a history,
<strong>of</strong> a past, and continues to be expanded."
The purpose <strong>of</strong> this research is focused on <strong>the</strong> capture and transfer <strong>of</strong> pr<strong>of</strong>essional knowledge, and
not on <strong>the</strong> study <strong>of</strong> gesture as such. For this, we use <strong>the</strong>ories <strong>of</strong> work analysis, but from a quite
different perspective from Clot et al. Indeed, our observations and analysis focused not on <strong>the</strong> overall
activity <strong>of</strong> an operator on his job, but on specific segments <strong>of</strong> his activity selected by <strong>the</strong> organization
and based on: 1) <strong>the</strong>ir criticality from <strong>the</strong> perspective <strong>of</strong> <strong>the</strong> organization, and 2) <strong>the</strong> expertise involved
from <strong>the</strong> operator. These segments are called "pr<strong>of</strong>essional gestures" by <strong>the</strong> organization EDF. What
is called in common language an operation (e.g. maintenance), a maneuver (e.g. a seal change) or
broadly an activity, is called "gesture" by <strong>the</strong> training pr<strong>of</strong>essionals because <strong>of</strong> <strong>the</strong> strong physical,
manual component that covers <strong>the</strong> job <strong>of</strong> operators in nuclear power plants.
From our perspective, we define <strong>the</strong> "pr<strong>of</strong>essional gesture" as <strong>the</strong> outward manifestation <strong>of</strong> an activity
segment, carrying expert skills and guided by motives and goals. The notion <strong>of</strong> segment implies that
<strong>the</strong> duration <strong>of</strong> this activity is limited in time. Following Russian Activity Theory (Leontiev, 1978;
Nosulenko & Rabardel, 2007; Rubinstein, 1940) which is our main intellectual framework, studied
gestures are intentional, following a motive, and are determined by a set <strong>of</strong> goals achieved through
actions.
Our work investigates <strong>the</strong> use <strong>of</strong> digital video and activity elicitation to give a guideline and operational
tools for <strong>the</strong> capture <strong>of</strong> knowledge embodied in pr<strong>of</strong>essional gestures. The operators are equipped
with video capture devices. They are also invited to describe <strong>the</strong> intentions (<strong>the</strong> goals) <strong>of</strong> <strong>the</strong>ir
gesture. But <strong>the</strong> main problem for this situation is to understand <strong>the</strong> gesture itself and to know if <strong>the</strong>
gesture can be captured and how. How can it be characterized? Which aspects <strong>of</strong> <strong>the</strong> gesture are
determinant for a good outside perception? How can we access to <strong>the</strong> gesture’s cognition? What is
<strong>the</strong> tacit part in a pr<strong>of</strong>essional gesture?
Material and method
This section presents a brief syn<strong>the</strong>sis <strong>of</strong> <strong>the</strong> Multimedia Apprenticeship Platform (MAP) construction
methodology (Le Bellu, Lahlou, & Nosulenko, 2010) and an overview <strong>of</strong> collected gestures. The MAP
is a tool that allows novices to represent <strong>the</strong>mselves a mental model <strong>of</strong> <strong>the</strong> gesture, hierarchically and
sequentially structured. It illustrates <strong>the</strong> gesture in details, with <strong>the</strong> help <strong>of</strong> video sequences.
To capture
Agreement step
A semi-directive interview brings toge<strong>the</strong>r <strong>the</strong> analyst in charge <strong>of</strong> <strong>the</strong> MAP creation and an operator.
The hierarchy has identified <strong>the</strong> operator and appointed him for his skills and expertise.
This first stage addresses three objectives: 1) inform <strong>the</strong> operator <strong>of</strong> <strong>the</strong> process to which he/she is
committing; 2) arrive at a common mental model <strong>of</strong> <strong>the</strong> gesture by asking <strong>the</strong> operator to mention
his/her goals, and 3) collect information that will enable to plan <strong>the</strong> capture (what, where, who, when).
We present below a set <strong>of</strong> ten pr<strong>of</strong>essional gestures selected by <strong>the</strong> EDF training branch for <strong>the</strong>ir rare
(only a few times performed throughout a career and mastered by a handful <strong>of</strong> people) and/or critical
(i.e. involving safety, security and/or performance <strong>of</strong> <strong>the</strong> company) features. This gestures corpus
constitutes our work material for this study.
G1: Remote operation <strong>of</strong> a tap
The tap is controlled via a “button box” that <strong>the</strong> operator connects to <strong>the</strong> system after have
made <strong>the</strong> control power cell operational.
G2: Manual setting <strong>of</strong> a tap
The operator activates a tap high located and controls <strong>the</strong> adjustments effects on a high
dial located at this level.
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Video recording
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G3: Diagnosis <strong>of</strong> an electrovalve malfunction
By manually activating <strong>the</strong> valve, <strong>the</strong> operator identifies adjustments to be made.
G4: Diagnosis <strong>of</strong> a valve failure
Faced with a valve failure case, <strong>the</strong> operator compares <strong>the</strong> current valve with <strong>the</strong>
representation <strong>of</strong> a correct one.
G5: Control <strong>of</strong> a valve tightness
After a maintenance operation, <strong>the</strong> operator controls pressure and parallelism <strong>of</strong> a valve
tightness made by o<strong>the</strong>r operators.
G6: Condenser closure
Seal installation and valve closing by calibration and checking <strong>of</strong> <strong>the</strong> position <strong>of</strong> a large
condenser horizontally installed.
G7: Consignment <strong>of</strong> a pump
The operator isolates and drains pumps containing superheated water. A first operator
identifies a range <strong>of</strong> key points and organs to be “consignmented” on a map. A second
operator does operations and reports to <strong>the</strong> first through an informal dialogue phase.
G8: Rond <strong>of</strong> safety operator
Check <strong>of</strong> a functioning site.
G9: Tightening <strong>of</strong> a bolted ensemble
Seal changing and bolted ensemble restoration on a valve.
G10: Chargers switching
The operator switches chargers on a 380V electrical board. Two different operators have
performed this gesture.
The operator wears a subjective camera (subcam) (Lahlou, 1998, 2011) – focused on <strong>the</strong> operator’s
activity from his own point <strong>of</strong> view, and ano<strong>the</strong>r external camera filming <strong>the</strong> context <strong>of</strong> <strong>the</strong> scene – a
hand-held camera and/or a camera on a support. For <strong>the</strong> purpose <strong>of</strong> this research, a special subcam
was designed to be embedded on <strong>the</strong> protective helmet <strong>of</strong> operators working in factory environments
(Figure 1).
Figure 1: The “hard hat” worksite version <strong>of</strong> <strong>the</strong> subcam
There are three moments in <strong>the</strong> gesture capture step.
1. The just-before time corresponds to <strong>the</strong> mental preparation. The analyst asks <strong>the</strong> operator to mimic
or perform <strong>the</strong> gesture. It gives <strong>the</strong> operator confidence and enables him/her to specify his/her mental
model by putting what he/she does into words.
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2. The next moment is <strong>the</strong> recording one. The operator must perform <strong>the</strong> real actions <strong>of</strong> its gesture in
<strong>the</strong> most natural way possible. In <strong>the</strong> specific case <strong>of</strong> a collaborative gesture, each operator wears a
subcam. The operator is asked to think aloud, using a goal-directed verbalization protocol (Le Bellu,
Lahlou, & Le Blanc, 2009) to collect <strong>the</strong> operator’s intentions. This is done while accompanying each
<strong>of</strong> <strong>the</strong> goals with explanations answering <strong>the</strong> following questions: For what reason (why) and in what
manner (how) is <strong>the</strong> gesture performed? “The operator is freely allowed to consider what is worthy <strong>of</strong>
comment, in regard to <strong>the</strong> level <strong>of</strong> sophistication in <strong>the</strong> breakdown <strong>of</strong> his/her activity, as well as <strong>the</strong>
moments in time where a specific action begins or ends.” (Le Bellu et al. 2009). Our experiments
show that a goal-directed verbalization protocol aims to externalize tacit knowledge and access to <strong>the</strong>
gesture’s cognition. With <strong>the</strong> mental preparation just before, <strong>the</strong> operator has engaged his knowledge
and has prepared his speech. By <strong>the</strong> way, <strong>the</strong> inevitable disruption <strong>of</strong> <strong>the</strong> gesture is reduced
(Ericsson & Simon, 1979, 1984).
3. The just-after video-recording time is dedicated to an “on <strong>the</strong> spot” debriefing with <strong>the</strong> operator. Did
he run into any problems? What were <strong>the</strong> specific components <strong>of</strong> this situation? What does stay <strong>the</strong>
same, what doesn’t usually change? By this questions, <strong>the</strong> analyst tries to access to <strong>the</strong> intraindividual
diversity <strong>of</strong> <strong>the</strong> gesture.
To analyze and to formalize
Analysis: to study data
One analysis <strong>of</strong> <strong>the</strong> gesture based on activity <strong>the</strong>ory (Leontiev, 1978; Rubinstein, 1940) and perceived
quality <strong>the</strong>ory (Nosulenko, 1988; Nosulenko & Samoylenko, 2001, 2009) is performed in delayed time
<strong>of</strong> <strong>the</strong> capture. Firstly, <strong>the</strong> recorded videos are evaluated considering <strong>the</strong>ir quality, quantity <strong>of</strong>
information, correspondence to <strong>the</strong> capture protocol, etc. Secondly, <strong>the</strong> objective is to plan and to edit
a version <strong>of</strong> a whole video <strong>of</strong> <strong>the</strong> gesture performance that puts toge<strong>the</strong>r subjective and contextual
points <strong>of</strong> view. This video-making must preserve a maximum <strong>of</strong> information about <strong>the</strong> gesture to be
used as a guideline or <strong>the</strong> operator’s commentary during <strong>the</strong> next step.
For this analysis work, <strong>the</strong> analyst uses videos and o<strong>the</strong>rs materials collected during previous steps.
Thus, <strong>the</strong> analysis leads to develop initial hypo<strong>the</strong>ses about <strong>the</strong> importance <strong>of</strong> <strong>the</strong> different operations
and <strong>the</strong> intentional structure <strong>of</strong> <strong>the</strong> gesture according to activity’s components: goals, sub-goals, tasks
and operations (Leontiev, 1978; Rubinstein, 1940).
Self-confrontation interview: accessing to <strong>the</strong> subject’s subjective experience
The self-confrontation interview method (Theureau, 1992; Von Cranach, 1982) re-immerges <strong>the</strong>
operator in his own activity by confronting him with <strong>the</strong> recorded gesture. The explanation interview
(Vermersch, 1994, 2003), <strong>the</strong> crossed self-confrontation techniques (Clot, Faïta, Fernandez, &
Scheller, 2001; Mollo & Falzon, 2004) and <strong>the</strong> re-situ interview (Rix & Biache, 2004) are variations
based on <strong>the</strong> same principle. The variant we are using shares with Cranach’s method <strong>the</strong> fact <strong>of</strong>
resting on <strong>the</strong> activity <strong>the</strong>ory. Considering our previous practices <strong>of</strong> different situations (Lahlou, 2010;
Nosulenko, Barabanshikov, Brushlinsky, & Rabardel, 2005; Nosulenko & Samoylenko, 2009), we tend
to be a little bit flexible in <strong>the</strong> formalization <strong>of</strong> our protocols. The main point is to collect reliable
elements to be able to reconstruct <strong>the</strong> activity.
The self-confrontation interview can be made not only with <strong>the</strong> mobilised operator, but also with
ano<strong>the</strong>r specialist <strong>of</strong> <strong>the</strong> considered gesture. This latter modus operandi has <strong>the</strong> advantage <strong>of</strong> more
easily identifying <strong>the</strong> components <strong>of</strong> <strong>the</strong> knowledge: acquired expertise, lack <strong>of</strong> experience, practice.
Verbal data recorded during that interview enable to emphasise components <strong>of</strong> <strong>the</strong> activity within <strong>the</strong>
meaning <strong>of</strong> Russian activity <strong>the</strong>ory.
Fur<strong>the</strong>r analysis, final video-making and building <strong>of</strong> <strong>the</strong> MAP
Based on data collected during <strong>the</strong> self-confrontation interview, <strong>the</strong> analyst changes <strong>the</strong> first video to
be <strong>the</strong> nearest <strong>of</strong> <strong>the</strong> operator’s gesture mental model. He can add/delete video parts, add a
voiceover, exploit <strong>the</strong> self-confrontation’s soundtrack, add/delete text annotations on <strong>the</strong> video,
adds/removes icons, etc. This fur<strong>the</strong>r analysis gives rise to a Multimedia Apprenticeship Platform
(MAP) is a mode <strong>of</strong> syn<strong>the</strong>tic representation, which aims to present <strong>the</strong> most important components <strong>of</strong>
<strong>the</strong> captured gesture according to <strong>the</strong> operator’s point <strong>of</strong> view (Figure 2).
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Figure 2: G9 gesture MAP printscreen
Sophie Le Bellu and Benoit Le Blanc
To validate and to use: final validation <strong>of</strong> <strong>the</strong> MAP resource
The MAP undergoes three levels <strong>of</strong> validation:
A business validation: to check if <strong>the</strong> MAP is consistent with <strong>the</strong> considered gesture. The operator
begins this validation just after <strong>the</strong> capture, continues during self-confrontation and ends at this
stage;
An institutional and hierarchical validation: to verify <strong>the</strong> compliance <strong>of</strong> <strong>the</strong> gesture in relation to <strong>the</strong>
institutional repository;
An educational validation: to validate <strong>the</strong> relevance <strong>of</strong> educational content carried by <strong>the</strong> MAP.
After this validation process, trainers <strong>of</strong> <strong>the</strong> company’s training department can use <strong>the</strong> MAP in <strong>the</strong>ir
training sessions (Figure 3).
Figure 3: Use <strong>of</strong> <strong>the</strong> MAP during training session
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Results
Sophie Le Bellu and Benoit Le Blanc
Characterize a pr<strong>of</strong>essional gesture: a proposition <strong>of</strong> classification in eight points
All <strong>of</strong> <strong>the</strong> above pr<strong>of</strong>essional gestures were included in a process <strong>of</strong> MAP building. For some <strong>of</strong> <strong>the</strong>m
<strong>the</strong> progression <strong>of</strong> <strong>the</strong> process was easy. It was more difficult for o<strong>the</strong>rs. Considering <strong>the</strong> gesture
itself, we distinguish eight characteristics, giving pieces <strong>of</strong> information for <strong>the</strong> “MAPpability” <strong>of</strong>
gestures. This diagnosis leads to a classification <strong>of</strong> pr<strong>of</strong>essional gestures in eight points. Each feature
has four possible modalities. A bold font is used to indicate terms that were not encountered in our
corpus <strong>of</strong> gestures.
Realism <strong>of</strong> <strong>the</strong> situation
This is <strong>the</strong> degree <strong>of</strong> spontaneity <strong>of</strong> <strong>the</strong> capture situation. At one pole are <strong>the</strong> most artificial situations:
<strong>the</strong> action is performed but <strong>the</strong> result does not occur (e.g. training exercises); at <strong>the</strong> o<strong>the</strong>r pole, are
<strong>the</strong> most natural situations (e.g. performance <strong>of</strong> a maintenance gesture in a working power plant).
Level 1: simulation <strong>of</strong> <strong>the</strong> only highlighted facts related to objects handled outside <strong>of</strong> <strong>the</strong> workplace.
At this level, <strong>the</strong> context is only symbolized.
Level 2: <strong>the</strong> situation is re-created. The environment and work situation are simulated outside <strong>the</strong>
natural workplace.
Level 3: <strong>the</strong> real situation is prepared. The gesture is produced on <strong>the</strong> real workplace. Consequences
are expected, and can <strong>the</strong>refore be anticipated.
Level 4: this is <strong>the</strong> real life mode. The capture is made on-<strong>the</strong>-fly, not provided for.
Reproducibility-flexibility
The more <strong>the</strong>re is a decision-making part in <strong>the</strong> gesture, <strong>the</strong> more <strong>the</strong> operator has latitude in <strong>the</strong>
choice <strong>of</strong> <strong>the</strong> procedure adaptation. This raises <strong>the</strong> problem <strong>of</strong> capture: can we capture a gesture that
is truly "iconic"?
Level 1: <strong>the</strong> gesture is made only once; it’s enough to obtain <strong>the</strong> "example".
Level 2: you have to do <strong>the</strong> same gesture several times to identify <strong>the</strong> example.
Level 3: you must set several conditions to understand <strong>the</strong> mental model <strong>of</strong> <strong>the</strong> gesture.
Level 4: however multiple instances <strong>of</strong> <strong>the</strong> gesture are performed, it can still happen something
different. Each case is unique.
The degree <strong>of</strong> flexibility available to <strong>the</strong> operator can give some answers. For example, in <strong>the</strong> case <strong>of</strong>
a monitoring (G8), <strong>the</strong>re is a procedure to apply (e.g. every day, <strong>the</strong> scaffolding must be checked), but
his flexibility is important. Operator organizes his course as he wishes. Ano<strong>the</strong>r example is <strong>the</strong> G7
gesture in which a failure diagnosis is made following a leakage problem. At <strong>the</strong> opposite, <strong>the</strong> more
<strong>the</strong> environment is controlled (e.g. G2: a procedure application), <strong>the</strong> closer we approach ordinary
daylife gestures. Thus, more a flexibility exists, <strong>the</strong> less <strong>the</strong> gesture is exactly reproduced.
Length
A lot <strong>of</strong> questions exist <strong>of</strong> <strong>the</strong> relationship between perceived time and real time. Our observations
show that <strong>the</strong> acceptable length <strong>of</strong> a film is about eight minutes to obtain a correct usable material.
The length will be accentuated by <strong>the</strong> verbalization. Beyond, <strong>the</strong> perceived duration by <strong>the</strong> end-user
apprentice is too long. This means that <strong>the</strong>re would be levels <strong>of</strong> operability that pass through <strong>the</strong>
cutting <strong>of</strong> a gesture in short sequences <strong>of</strong> less than ten minutes.
Level 1: cases <strong>of</strong> very short gestures (in <strong>the</strong> order <strong>of</strong> seconds).
Level 2: cases <strong>of</strong> short gestures (in order <strong>of</strong> minutes).
Level 3: gestures <strong>of</strong> about ten minutes. Despite <strong>the</strong> reproducibility <strong>of</strong> <strong>the</strong> gesture, we hesitate to
repeat it, due to <strong>the</strong> time <strong>of</strong> capture.
Level 4: gestures that we don’t repeat <strong>the</strong> capture: several decades <strong>of</strong> minutes.
Perceived time is not only linked to real time, it includes perception <strong>of</strong> physical or intellectual effort.
The longer <strong>the</strong> duration <strong>of</strong> <strong>the</strong> gesture is, <strong>the</strong> more it affects <strong>the</strong> ability to concentrate.
331

Granularity-accuracy
Sophie Le Bellu and Benoit Le Blanc
This is a notion <strong>of</strong> precision in gesture: ra<strong>the</strong>r thin ("fingertip") or ra<strong>the</strong>r wide (large arm movements).
We notice that it is possible that <strong>the</strong> visual acuity <strong>of</strong> <strong>the</strong> observer plays a role in granularity definition.
Level 1: very thin.
Level 2: thin.
Level 3: wide.
Movements-mobility in gesture
The mobility in <strong>the</strong> gesture requires sometimes body movements. It depends on <strong>the</strong> area, and if <strong>the</strong>
involved system is or not distributed in space.
Level 1: no displacement. A single confined space.
Level 2: multiple cameras/viewpoints are used to cover several fixed places. Example: in <strong>the</strong> G2
gesture, movement (in height) is sustained by <strong>the</strong> operator. He has no choice; it is a necessary
action for <strong>the</strong> pursuit and realization <strong>of</strong> his gesture.
Level 3: a mosaic <strong>of</strong> places, with a mobile camera to track <strong>the</strong> movements. The movement is a part <strong>of</strong>
<strong>the</strong> gesture and it's something going on during this movement.
Level 4: <strong>the</strong> gesture is a displacement. We must follow up. For example, in <strong>the</strong> gesture <strong>of</strong> monitoring
(G8).
Collaboration and verbal interactions
The problem <strong>of</strong> communication and verbal interactions during <strong>the</strong> gesture is generally correlated with
<strong>the</strong> inter-operator collaboration; this is what we call collaborative gesture.
Level 1: no verbal interaction.
Level 2: from time to time interactions. The interaction must be anticipated; it is expected in <strong>the</strong>
process. Example: a phone call to report <strong>the</strong> situation or to make inquiries. By <strong>the</strong> way, some
verbal interactions may be present in a solitary gesture.
Level 3: in situ and frequent interactions. The conversation is a part <strong>of</strong> <strong>the</strong> gesture and involves
several operators in performing <strong>the</strong> gesture. The gesture is collaborative.
Level 4: interactions strongly linked to <strong>the</strong> task. The gesture is conversation.
Visual salience
This characteristic indicates a visual component in <strong>the</strong> gesture realization.
Level 1: <strong>the</strong> gesture may be performed blind (e.g. as an answer at <strong>the</strong> phone).
Level 2: some visual cues are necessary.
Level 3: a visual control is required for <strong>the</strong> gesture performing.
Level 4: a monitoring activity.
Haptic salience
This characteristic indicates an haptic component in <strong>the</strong> gesture realization.
Level 1: <strong>the</strong> gesture can take place hands in pockets.
Level 2: <strong>the</strong> gesture only requires a few tactile landmarks.
Level 3: touch is necessary for <strong>the</strong> gesture.
Level 4: permanent touch.
Application scope <strong>of</strong> <strong>the</strong> capture method
Figure 4 provides an overview <strong>of</strong> <strong>the</strong> studied gestures pr<strong>of</strong>iles (G1-G10). It shows that most cases
were covered by <strong>the</strong> experiments. On <strong>the</strong> 32 possible items (eight characteristics, each with four
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Sophie Le Bellu and Benoit Le Blanc
terms), six have not been encountered in <strong>the</strong> studied corpus. These are <strong>the</strong> terms notified in bold in
<strong>the</strong> previous section. We have highlighted <strong>the</strong>m by black circles in Figure 4.
Figure 4: Overview <strong>of</strong> <strong>the</strong> captured gestures corpus
Gestures with pr<strong>of</strong>iles located as in <strong>the</strong> periphery <strong>of</strong> <strong>the</strong> diagram, such as G6 and G8, correspond to
"complex gestures"; <strong>the</strong> MAP is difficult to obtain. Those located fur<strong>the</strong>r inside, such as G1, G2 and
G10 are <strong>the</strong> most MAPpable: <strong>the</strong>se are "simple gestures". Between, it is recommended to dwell on
<strong>the</strong> reading <strong>of</strong> characteristics. Figure 5 describes each <strong>of</strong> <strong>the</strong> pr<strong>of</strong>iles.
Discussion, conclusion
Which limits for capturing and transmit pr<strong>of</strong>essional gestures? This question asks whe<strong>the</strong>r all
pr<strong>of</strong>essional gestures can be captured, analyzed, and formalized to be transferred in <strong>the</strong> form <strong>of</strong> a
MAP. Our experiments distinguish between simple and complex gestures.
In <strong>the</strong> presented work, each <strong>of</strong> <strong>the</strong> ten withheld gestures was studied. All <strong>of</strong> <strong>the</strong>m provide a part <strong>of</strong>
tacit knowledge. The eight proposed descriptors give a pertinent way to approach this tacit part.
Intuitively, gestures with small values on <strong>the</strong>ir descriptors are easy to formalize, with a “controlled”
tacit part. Then <strong>the</strong> pr<strong>of</strong>ile <strong>of</strong> each gesture, as shown in figure 5, is a rapid clue to syn<strong>the</strong>tize <strong>the</strong> tacit
component <strong>of</strong> a gesture.
We have also put forward that descriptors do not all have <strong>the</strong> same importance. Items as
collaborative, decision-making and motor/visual characteristics are involved in determining <strong>the</strong>
complexity <strong>of</strong> a gesture. They are present in <strong>the</strong> descriptors F (verbal interactions) and G (visual
component <strong>of</strong> a gesture). High values for <strong>the</strong>se two descriptors imply difficulties to capture, to analyze
and to validate <strong>the</strong> MAP (<strong>the</strong> three steps <strong>of</strong> <strong>the</strong> methodology). High values on o<strong>the</strong>r descriptors lead
to localized difficulties during <strong>the</strong> methodology application: during <strong>the</strong> capture for descriptors A
(realism), D (granularity) and E (mobility), mainly for <strong>the</strong> quality <strong>of</strong> <strong>the</strong> recorded video; during <strong>the</strong>
analyze for descriptor B (reproducibility); or during <strong>the</strong> video edition for descriptor C (length).
Descriptor H (haptic component) is well apprehended due to <strong>the</strong> position <strong>of</strong> <strong>the</strong> camera on <strong>the</strong> head <strong>of</strong>
<strong>the</strong> operator.
The visual component <strong>of</strong> a gesture (descriptor G, i.e. <strong>the</strong> fact that <strong>the</strong> operator needs his eyes to
perform <strong>the</strong> gesture) is present with a high value in <strong>the</strong> majority <strong>of</strong> gestures: level 3 for G1, G3, G4,
G6, G7 and G10; and level 4 for G8. But only G8 leads to real difficulties to formalize and to analyse;
to an extent G6 also gives us some problems. This is due to <strong>the</strong> fact that G8 has a small value for
haptic component (level 1) whereas o<strong>the</strong>r gestures have a higher level (3 or 4). In fact <strong>the</strong> ratio
Descriptor G/Descriptor H seems to be more pertinent than simple values <strong>of</strong> descriptors.
333

Figure 5: Pr<strong>of</strong>iles <strong>of</strong> each captured gesture
Sophie Le Bellu and Benoit Le Blanc
G1 G2 G3
G4 G5 G6
G7 G8
G10
Never<strong>the</strong>less, considering this ratio is not enough. G4 has <strong>the</strong> same big value for ratio G/H, without
<strong>the</strong> same problems to formalize. The area <strong>of</strong> all descriptors must be taken into account. While we
have small values as 16 to 19 for G1, G2, G3, G4, G9 and G10, this area growths to 22 for G7, 24 for
G8 and 27 for G6.
Due to <strong>the</strong> interactions between operators (G6 and G7) or interactions with o<strong>the</strong>r people (G8),
collaborative gestures lead also to difficulties for <strong>the</strong> formalization step. This collaboration must be
synchronous (as for G6 with two operators working in <strong>the</strong> same time on <strong>the</strong> same material) or takes
place during key times (as for G7 with two operators following individual specific goals).
Our work shows that a special attention must be considered on visual component (with G/H ratio);
collaborative form and global descriptor area. These are three important clues to transfer tacit
knowledge from operators to novices.
This repository <strong>of</strong> pr<strong>of</strong>essional gestures could be used as a tool to classify o<strong>the</strong>r gestures, compare
<strong>the</strong>m to encountered cases, and thus ensure <strong>the</strong>y can be transferred. Then, understanding <strong>the</strong>ir
criticality leads to adapt <strong>the</strong> method and anticipate ahead difficulties.
This work on <strong>the</strong> capture <strong>of</strong> many pr<strong>of</strong>essional gestures makes <strong>the</strong> link with <strong>the</strong> tacit knowledge and
its problems <strong>of</strong> capture and transmission. Considering operational acts, we obtain an approach <strong>of</strong>
334
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Sophie Le Bellu and Benoit Le Blanc
expertise. The limitations <strong>of</strong> our approach meet <strong>the</strong> limits <strong>of</strong> <strong>the</strong> distanced course with respect to <strong>the</strong>
journeyman approach. Although this work remains in terms <strong>of</strong> observation, <strong>the</strong> complement given by
<strong>the</strong> perceived quality <strong>the</strong>ory enables to put forward intentions <strong>of</strong> <strong>the</strong> operator by verbalization
techniques.
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335

An Integration <strong>of</strong> Domain Ontology-Based Knowledge
Management and SQuaRE for Thai Local S<strong>of</strong>tware
Companies
Pornpen Lertthasanawong and Nopasit Chakpitak
Department <strong>of</strong> Knowledge Management, College <strong>of</strong> Arts, Media, and
Technology, Chiang Mai University, Thailand
pornpen@neo-nets<strong>of</strong>t.com
nopasit@camt.info
Abstract: The serious problem <strong>of</strong> Thai S<strong>of</strong>tware Industry which has happened for long time is Requirement
Quality which becomes a big hindrance on business expansion because knowledge workers (i.e. Project
Manager, System Analyst) cannot perform productivity and apply <strong>the</strong>ir knowledge in work place. The problem is
significance and importance to s<strong>of</strong>tware industry because unclear s<strong>of</strong>tware requirement is a major factor <strong>of</strong>
s<strong>of</strong>tware Export Income. The research aims to implement new tool at <strong>the</strong> beginning <strong>of</strong> <strong>the</strong> step which is
Requirement Elicitation by using <strong>of</strong> communication tool in s<strong>of</strong>tware elicitation experience. Then <strong>the</strong> output shall
be classified into type <strong>of</strong> s<strong>of</strong>tware requirement. After that put <strong>the</strong> classified data into validation and verification
step by framework <strong>of</strong> ISO 25000 S<strong>of</strong>tware Product Quality Requirement. Because <strong>of</strong> most <strong>of</strong> Thai local s<strong>of</strong>tware
is very small enterprise (VSE) so <strong>the</strong> model like <strong>the</strong> CMMI is not affordable for <strong>the</strong> small organizations. From <strong>the</strong>
initial findings motivate to develop <strong>the</strong> new concept for VSE in term <strong>of</strong> Requirement Engineering and
management to capture, identify and suggest for <strong>the</strong> new concept and tools for Thai local. There are some
specific tool such as ontology-base and SQuaRE which don’t mention for requirement quality in use. So this
project is setting up a set <strong>of</strong> quality guides which have been developed according to <strong>the</strong> VSE characteristics. That
will improve <strong>the</strong> coordination <strong>of</strong> project teams and increase consistency <strong>of</strong> interaction with customers and also
reduce processing risk, errors and time delivery. The assumption <strong>of</strong> this research, “The integration <strong>of</strong>
communication &classification tool and S<strong>of</strong>tware Product Quality Requirement is new effective tool for
requirement elicitation” Because Thai culture is not used to show and share idea and opinion so using tool for
reducing communication gap.
Keywords: ontology-based knowledge management, s<strong>of</strong>tware quality model, requirement engineering
1. Introduction and background
Thai S<strong>of</strong>tware export (2008) was only 4,000 millions baht <strong>of</strong> which are very low comparing with o<strong>the</strong>r
developing countries in Asia and <strong>the</strong> domestic s<strong>of</strong>tware market 6,000 million baht .Therefore <strong>the</strong>re
must be something that some o<strong>the</strong>r countries know and do it right while <strong>the</strong>re must be some wrong
doing in Thailand and block <strong>the</strong> ICT development in Thailand. From <strong>the</strong> observation, <strong>the</strong>re is a similar
key success factor <strong>of</strong> those countries like Singapore, Malaysia, and Vietnam in develop <strong>the</strong> local ICT
industry and that is to partnership with major ICT international companies and <strong>the</strong> national strategy(
National Electronic and Computer Technology Center 2008).
From <strong>the</strong> survey <strong>of</strong> National Statistical Office <strong>of</strong> Thailand (2008) <strong>the</strong>re is found that <strong>the</strong> barriers <strong>of</strong> Thai
s<strong>of</strong>tware industry can be summarized as following (1) Personnel Issue (2) Domestic market (3)
<strong>International</strong> market (4) Source <strong>of</strong> fund (5) Technological Change (6) Copyright Infringement.
Although <strong>the</strong>re are many problems with growing Thai s<strong>of</strong>tware industry and many government
organizations had policy for develop <strong>the</strong>se problems. From literature review and field surveying, I
found that <strong>the</strong> serious problem that has happened for long time is Requirement Quality which is come
from <strong>the</strong> knowledge <strong>of</strong> project manager or system analyst who got high salary but low quality for real
competitive situations. Most <strong>of</strong> Thai local s<strong>of</strong>tware is very small enterprise (VSE) which can’t develop
and/or maintain s<strong>of</strong>tware that is used in larger systems, but <strong>the</strong> recognition <strong>of</strong> VSEs as suppliers <strong>of</strong>
high quality s<strong>of</strong>tware is <strong>of</strong>ten required (ATSI 2008). VSEs have common problems related to <strong>the</strong>
management <strong>of</strong> risk and quality <strong>of</strong> s<strong>of</strong>tware projects. This generates cost overruns, time delay and
cancelled projects. From studies and surveys conducted, it is clear that <strong>the</strong> majority <strong>of</strong> ISO/IEC
standards do not address <strong>the</strong> needs <strong>of</strong> VSEs. Conformance with <strong>the</strong>se standards is difficult, if not
impossible. Subsequently VSEs have no, or very limited, ways to be recognized as entities that
produce quality s<strong>of</strong>tware in <strong>the</strong>ir domain. Therefore, VSEs are <strong>of</strong>ten cut <strong>of</strong>f from some economic
activities. Some model like <strong>the</strong> CMMI is not affordable for <strong>the</strong> small organizations. It has been found
that VSEs find it difficult to relate ISO/IEC standards to <strong>the</strong>ir business needs and to justify <strong>the</strong>
application <strong>of</strong> <strong>the</strong> standards to <strong>the</strong>ir business practices. Most VSEs can nei<strong>the</strong>r afford <strong>the</strong> resources,
in terms <strong>of</strong> number <strong>of</strong> employees, budget and time, nor do <strong>the</strong>y see a net benefit in establishing
336

Pornpen Lertthasanawong and Nopasit Chakpitak
s<strong>of</strong>tware life cycle processes. To rectify some <strong>of</strong> <strong>the</strong>se difficulties, a set <strong>of</strong> guides have been
developed according to a set <strong>of</strong> VSE characteristics. The guides are based on subsets <strong>of</strong> appropriate
standards elements, referred to as VSE Pr<strong>of</strong>iles. The purpose <strong>of</strong> a VSE pr<strong>of</strong>ile is to define a subset <strong>of</strong>
ISO/IEC standards relevant to <strong>the</strong> VSE context, for example, processes and outcomes <strong>of</strong> ISO/IEC
12207 and products <strong>of</strong> ISO/IEC 15289.So Thai Industry Standard Institute (TISI) setting up WG 24S
setting up WG 24S in ISO/IEC SC7 to developing ISO 29110 Standard Model for VSE at <strong>the</strong>
beginning <strong>of</strong> 2009 but not much research mentioned about Personnel Issue which is main factor <strong>of</strong>
success for s<strong>of</strong>tware industry. So <strong>the</strong>re should be some tools for decreasing people Internal and
External Organization problems (Henry Caballero 2003)
2. Problem specification
From <strong>the</strong> survey <strong>of</strong> <strong>the</strong> Association <strong>of</strong> Thai S<strong>of</strong>tware Industry (ATSI) in 2008, <strong>the</strong>re is found that <strong>the</strong>
most factor <strong>of</strong> s<strong>of</strong>tware project fail is “Requirement Quality” even using s<strong>of</strong>tware standardization in
production. The model like <strong>the</strong> CMMI is not affordable for <strong>the</strong> small organizations.
Most <strong>of</strong> Thai local s<strong>of</strong>tware is very small enterprise (VSE) which has common problems related to <strong>the</strong>
management <strong>of</strong> risk and quality <strong>of</strong> s<strong>of</strong>tware projects. This generates cost overruns, time delay and
cancelled projects. As it is known that some model like <strong>the</strong> CMMI is not affordable for <strong>the</strong> small
organizations. So Thai Industry Standard Institute (TISI) sets up WG 24S in ISO/IEC SC7 to
developing ISO 29110 Standard Model for VSE at <strong>the</strong> beginning <strong>of</strong> 2009 but not much research
mentioned about how to capture customer’s requirement in a qualitative manner.
It is true that knowledge management efforts typically focus on organizational objectives by capture,
codify and transfer knowledge across people to improved performance and achieve continuous
improvement for competitive advantage. It involves using <strong>the</strong> ideas and experience <strong>of</strong> employees,
customers and suppliers to improve <strong>the</strong> organization’s performance and also using technology to form
<strong>the</strong> new knowledge which is now importance for creating <strong>the</strong> company values. Is <strong>the</strong>re a way to
improve requirement quality for very small enterprise (VSE)?
Figure 1: Thai local s<strong>of</strong>tware industrial benchmark 2001
The problem is significance and importance to Thai s<strong>of</strong>tware industry because unclear s<strong>of</strong>tware
requirement is a major factor <strong>of</strong> s<strong>of</strong>tware project. It is found “accurately capturing system requirement
is <strong>the</strong> major factor in failure <strong>of</strong> 90%<strong>of</strong> s<strong>of</strong>tware project ”.Not only does a failed system cost money, but
fixing mistakes made at elicitation stage account for 75% <strong>of</strong> all error removal costs ( C.J.Davis, Fuller,
Tremblay, Bernth 2006)
From survey for understanding in requirement quality, I found that <strong>the</strong> problems come from both
s<strong>of</strong>tware developers and Customers such as (Threeasak Thanasankit 2000)
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Pornpen Lertthasanawong and Nopasit Chakpitak
S<strong>of</strong>tware developers Side
Lack <strong>of</strong> methodology for developed information systems for staff to follow. No method for eliciting
and transferring requirements.
Communication gaps exist between customers, engineers and project managers.
Lack <strong>of</strong> Knowledge in <strong>the</strong> project domain. The development team doesn't understand <strong>the</strong> politics
<strong>of</strong> <strong>the</strong> customer's organization.
Many S<strong>of</strong>tware developers want to jump right in before <strong>the</strong>y have a clear understanding <strong>of</strong> what is
needed.
Lack <strong>of</strong> cooperation from users. The users did not have enough spare time to assist <strong>the</strong> system
analyst, <strong>the</strong>refore <strong>the</strong>y only provided <strong>the</strong> system analyst with requirement and necessary
documents only <strong>the</strong> system analyst asks <strong>the</strong>m.
Most <strong>of</strong> Thai local s<strong>of</strong>tware is very small enterprise (VSE) which has character which may causes
<strong>the</strong> problem also
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Pornpen Lertthasanawong and Nopasit Chakpitak
Figure 2: Very small entity s<strong>of</strong>tware house characteristic (Henry Caballero 2009)
Customers Side
Uncertainty and fear <strong>of</strong> failure and responsibility. The users felt <strong>the</strong> statement <strong>the</strong>y gave could be
as evidence if <strong>the</strong> systems did not come out right.
Conflict between users. In <strong>the</strong> Thai context, <strong>the</strong> superior will make decision and every one must
accept <strong>the</strong>m without question.
Constant change <strong>of</strong> requirements. If <strong>the</strong> change were not significant <strong>the</strong>n system analyst <strong>of</strong>ten
allows <strong>the</strong> clients to change, because <strong>the</strong>y needed to build good relationship with <strong>the</strong> clients.
Some customer said that “it is hard to explain all detail and <strong>the</strong> expected need because <strong>the</strong>y don’t
know how <strong>the</strong> s<strong>of</strong>tware is going to work and look like. When see <strong>the</strong> blue print (ER Diagram and
o<strong>the</strong>r documentation) <strong>the</strong>y seem to be right. But when test <strong>the</strong> s<strong>of</strong>tware, <strong>the</strong>re will be some little
add on that both side never talk and it will bring many problem to <strong>the</strong> project.
The key point <strong>of</strong> this research is how to capture, share <strong>the</strong> domain knowledge by using ontology
for identifying <strong>the</strong> right concepts and specifying relation <strong>the</strong>n qualify <strong>the</strong> s<strong>of</strong>tware requirement by
s<strong>of</strong>tware product quality requirement and evaluation model. At this point requirement quality
model will be develop for VSE.
3. Methodology
Requirements engineering is an important aspect <strong>of</strong> any s<strong>of</strong>tware project, and is a general term used
to encompass all <strong>the</strong> activities related to requirements. The four specific steps in s<strong>of</strong>tware
requirements engineering are:
The research aims to implement new tool such as social media at <strong>the</strong> beginning <strong>of</strong> <strong>the</strong> step which is
Requirement Elicitation by using <strong>of</strong> communication tool in s<strong>of</strong>tware elicitation experience .At this stage
ontology <strong>of</strong> domain knowledge driven user for requirements elicitation. If <strong>the</strong>re are no existing domain
knowledge, <strong>the</strong>n construction by extracting <strong>the</strong> concepts and relations <strong>of</strong> familiar to domain user into
domain requirement model. This is called Ontology-based Knowledge Management reused. The
reusability exists in three ways:
Reuse <strong>of</strong> domain ontology knowledge (Domain Analysis)
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Pornpen Lertthasanawong and Nopasit Chakpitak
Reuse <strong>of</strong> concepts and relations <strong>of</strong> ontology (Domain Design)
Reuse <strong>of</strong> domain requirement model (Domain Implementation)
Then <strong>the</strong> output shall be classified into type <strong>of</strong> s<strong>of</strong>tware requirement .After that put <strong>the</strong> classified data
into validation and verification step by framework <strong>of</strong> (David Zubrow 2010) S<strong>of</strong>tware Product Quality
Requirement & ISO9126 Evaluation <strong>of</strong> S<strong>of</strong>tware Quality for traceability and quality process as shown
in Conceptual Framework below.
Research Framework: Integration <strong>of</strong> Domain Ontology-based Knowledge Management and
SQuaRE for Thai local s<strong>of</strong>tware companies.
3.1 Research objective
The research aims to test and validate <strong>the</strong> integration <strong>of</strong> <strong>the</strong> communication tool for elicitation
s<strong>of</strong>tware requirement data and applying ISO25000 S<strong>of</strong>tware Product Quality Requirement for new
model <strong>of</strong> classifying s<strong>of</strong>tware quality attributes. So <strong>the</strong> research objects are:
To set up communication tool and classification s<strong>of</strong>tware for elicitation s<strong>of</strong>tware requirement data
to participate customers for ga<strong>the</strong>ring <strong>the</strong> requirement and information.
To deploy and integrate <strong>the</strong> output from classification s<strong>of</strong>tware with technical standards ISO
25000 S<strong>of</strong>tware Product Quality Requirement & ISO9126 Evaluation <strong>of</strong> S<strong>of</strong>tware Quality for
traceability and quality process.
To investigation <strong>the</strong> result <strong>of</strong> using <strong>the</strong> tools and techniques.
To reused new S<strong>of</strong>tware elicitation tool for new projects.
3.2 Hypo<strong>the</strong>sis
The assumption <strong>of</strong> this research, “The integration <strong>of</strong> communication & classification tool and S<strong>of</strong>tware
Product Quality Requirement is new effective tool for requirement elicitation” Because Thai culture is
not used to show and share idea and opinion so using tool for reducing communication gap.
4. Results
4.1 Initial finding from VSE
The problem from Survey <strong>of</strong> VSE: Case Study S<strong>of</strong>tware company in Samut Saknon. The historical
data was collected for three years for finding <strong>the</strong> problems and survey <strong>the</strong> o<strong>the</strong>r evidences.
Table 1: Information from initial finding
Detail 2006 2007 2008 2009
Employee (Only Production) 8 14 10 8
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Pornpen Lertthasanawong and Nopasit Chakpitak
Total Project 13 23 20 24
Detail 2006 2007 2008 2009
Total Sale (Million) 3.33 5.60 4.20 2.80
Process Standard NO
Add On (Changed
Requirement)
ISO 9001:2000 ISO 9001:2000 ISO 9001:2000
CSPM ISO/IEC15504(TQS) ISO/IEC15504(TQS)
32.0 50.0 34.0 33.0
Average Man /Project 1.6 1.6 2.0 3.0
Average Problem /Project 4.0 3.6 3.4 4.1
Customer Satisfaction 2.80 3.76 3.85 3.85
Total Project 13 23 20 24
Package S<strong>of</strong>tware 12 21 18 23
Customized S<strong>of</strong>tware 1 2 2 1
QA Bug 18 13 14 11
NC Bug 13 30 20 16
Add On (Changed
Requirement)
32 50 34 33
User Error 4 16 12 7
Total Problems 67 109 80 67
Problems / Project 32 25 17 33
The above data show <strong>the</strong> initial findings such as
Most problems (Bugs) come from add on or changed requirement.
The NC Bugs come from lacking <strong>of</strong> Knowledge in <strong>the</strong> project domain.
The QA Bugs come from production process.
Standard such as ISO 9001:2008 or ISO/IEC 15504(TQS) cannot complete <strong>the</strong> process <strong>of</strong>
changing requirement.
The above initial findings motivate for new concept for VSE in term <strong>of</strong> Requirement Engineering and
management to capture, identify and suggest for <strong>the</strong> new concept and tools for Thai local s<strong>of</strong>tware
companies. There are some specific tool such as domain ontology and SQuaRE which don’t mention
for requirement quality in use. So <strong>the</strong> project will develop new Requirement classification s<strong>of</strong>tware
using ontology-base and new S<strong>of</strong>tware Product Quality Requirement Model for VSE.
4.2 Populations and qualified sample
The population in this research are Thai local s<strong>of</strong>tware company project managers or system analyst
who are key knowledge workers <strong>of</strong> <strong>the</strong> project. Quantitative classification criteria will be by size: 11-20
workers/employees (The definition is from <strong>the</strong> WG24)
Number workers/ Employees Type
1-10 V VSE :Vary Vary Small Enterprise or Micro Enterprise
11-20 VSE : Vary Small Enterprise
More than 20 MSE : Medium Enterprise
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4.3 Data analysis
Pornpen Lertthasanawong and Nopasit Chakpitak
The research is used qualitative for <strong>the</strong> result <strong>of</strong> <strong>the</strong> simulation and <strong>the</strong>n used. quantitative for
Verification &Validation step
Steps Too l & Technique Results
Requirement Elicitation
Verification &Validation
Communication Tool
(NEW)
Classification S<strong>of</strong>tware
(NEW)
New S<strong>of</strong>tware Product Quality
Requirement Model
(ISO 25000&ISO 9126)
Latent Requirement
Classified Requirement
Document
Percentage and Mean Reports for
quality requirement
IEEE 830 Requirements specification (SRS)
After field survey and literature review, using Skype for collaboration and reducing communication gap between
S<strong>of</strong>tware House and customer in terms <strong>of</strong> text, voice and video <strong>the</strong>n classified into requirement type and <strong>the</strong>n put
<strong>the</strong>se data into Quality Requirement model for traceability and quality process as conceptual framework. See <strong>the</strong>
characters <strong>of</strong> Quality Requirement model from survey.
Table 2: Characters <strong>of</strong> quality requirement model from survey
5. Conclusion
The assumption <strong>of</strong> this research is “An Integration <strong>of</strong> Domain Ontology-based Knowledge
Management and SQuaRE will be effective tools for Thai local s<strong>of</strong>tware companies” because Thai
culture is not used to share idea, opinion and afraid <strong>of</strong> new decision making. Most <strong>of</strong> Thai trusts in
Seniority and <strong>the</strong> Hierarchy system. After investigation <strong>the</strong> data, <strong>the</strong> project manager/system analyst
does need tools and methods for ga<strong>the</strong>ring <strong>the</strong> information which made <strong>the</strong> connection between <strong>the</strong>
s<strong>of</strong>tware developer and customer.
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Pornpen Lertthasanawong and Nopasit Chakpitak
Research Quality Model: Integration <strong>of</strong> Domain Ontology-based Knowledge Management and
SQuaRE for Thai local s<strong>of</strong>tware companies.
Without a well-written requirements specification, developers do not know what to build and users do
not know what to expect. There should be some identified techniques and tools for enhancing
elicitation in quality. Most activity between <strong>the</strong> customer side <strong>the</strong> Thai local s<strong>of</strong>tware side use face-t<strong>of</strong>ace
interaction and formal process were avoid or ignored while <strong>the</strong>re were delays in decision making
from management so <strong>the</strong> product implementation will be “bottle neck” by s<strong>of</strong>tware developers. But in
global case, where electronic communication is necessary, formal approved are enforced and team
member always provide clarification <strong>of</strong> requirements and prevent fur<strong>the</strong>r misinterpretations prior to
development. It is known that ontology in S<strong>of</strong>tware Engineering can provide a source <strong>of</strong> precisely
defined term that can be communicated across people or organization and also provide shared
understanding concerning. So this research aims to set up new model for requirement quality for VSE
which will be value for both Thai local s<strong>of</strong>tware house and <strong>the</strong> customers.
6. Future work
In 2011, I am <strong>the</strong> second year <strong>of</strong> Ph.D student. For this year I am developing classification s<strong>of</strong>tware
by using Domain Ontology-based Knowledge Management and do <strong>the</strong> experiments. At <strong>the</strong> same
time, I am developing S<strong>of</strong>tware Product Quality Requirement Model for VSE by using ISO 25000 &
ISO 9126 framework.
Acknowledgements
Thank you for all CAMT colleagues and staff especially Pr<strong>of</strong>. Dr. Nopasit Chakpitak who support this
work and more thank for cooperation and information from <strong>the</strong> project managers and system analyst
<strong>of</strong> s<strong>of</strong>tware houses in ECIT Project.
References
Alain Abran and Niji Habra (2005), “An information model s<strong>of</strong>tware quality measurement with ISOStandard”,from
www.info.fundp.ac.be/~nha/Monsite/Rek(Square).
David Zubrow, “Measuring S<strong>of</strong>tware Product Quality: <strong>the</strong> ISO 25000 Series and CMMI ” Retrieved January 2o,
2010,from http://www.sei.cmu.edu/library/abstracts/presentations/esepg.cfm
Dalkir, K. (2005). “Knowledge Management In Theory And Practice. Jordan Hill”, Oxford: Elsevier Inc: 132-133.
C.J.Davis, Fuller, Tremblay&Bernth ( 2006) Requirement Eicilitation issue in informing Science and Information
Technology Volume 5.
Henry Caballero, Jose Calvo-Manzano, Gonzalo Cuevas, Tomás San Feliu.(2009), “Quality and Productivity
Analysis a very small enterprise using TSPI” Retrieved August 01, 2009 from
http://www.foibg.com/ibs_isc/ibs-10/ibs-10-p16.pdf2003.
National Electronic and Computer Technology Center(2008),“Thailand Information and Communication
Technology Marketing Survey 2007”,ISBN 978-974-229786-2,pp.22-31.
S<strong>of</strong>tware Process Improvement for small and medium enterprise:Technique and case studyISO29110 Process
Engineer
The Association <strong>of</strong> Thai S<strong>of</strong>tware Industry meeting “ISO29110Intro-Outsourcing S<strong>of</strong>tware Engineering Life Cycle
Pr<strong>of</strong>le” ,2008,Bangkok.
Threeasak Thanasankit (2000), “Toward understanding mapping requirements ;A case study <strong>of</strong> a Thai s<strong>of</strong>tware
house” from http://www.engineering A portal.acm.org/citation.cfm?id=644417.
343

The Influence <strong>of</strong> Intellectual Capital on Organizational
Performance in two Contexts
Ya-Hui Ling
Department <strong>of</strong> Business Administration, I-Shou University, Taiwan, R.O.C
yahuiling@isu.edu.tw
Abstract: A main purpose <strong>of</strong> our study is to investigate <strong>the</strong> impact <strong>of</strong> intellectual capital on a firm’s global
performance with a longitudinal study. Sample was selected with a type <strong>of</strong> purposive sampling. The selection
criteria were that companies had to locate in Taiwan, but competing globally. Altoge<strong>the</strong>r 324 firms took part in <strong>the</strong>
study. Based on <strong>the</strong> analyses results, some managerial implications are provided. First, it is confirmed that
intellectual capital does enhance a firm’s global initiatives. The importance <strong>of</strong> intellectual capital is highlighted.
Second, it is found that intellectual capital complementarity has positive impact on a firm’s global initiatives
(global innovation and global marketing) in both high and low dynamic context. The impact <strong>of</strong> intellectual capital
on global initiatives, however, is somewhat different in two environmental contexts. That is, some moderating
effects <strong>of</strong> business environment are found between intellectual capital and global initiatives. In low dynamic
context, intellectual capital has no significant impact on a firm’s global innovation, but has positive impact on
global marketing. In high dynamic context, however, <strong>the</strong> influence <strong>of</strong> intellectual capital on global marketing
becomes non-significant, and <strong>the</strong> influence <strong>of</strong> intellectual capital on global innovation becomes significant. Third,
<strong>the</strong> important role <strong>of</strong> intellectual capital complementarity is also identified. It is found that intellectual capital
complementarity has positive effect on global initiatives in both high dynamic and low dynamic contexts. As a
result, <strong>the</strong> value <strong>of</strong> intellectual capital components can mostly be actualized only in terms <strong>of</strong> <strong>the</strong>ir dynamic
interrelationships and conjoint interaction.
Keywords: intellectual capital, organizational performance, business environment
1. Introduction
1.1 Research background
With <strong>the</strong> rapid growth <strong>of</strong> global knowledge economy, <strong>the</strong>re is a need for firms to control and nurture
<strong>the</strong>ir intellectual capital (IC hereafter) (Bose and Oh, 2004; Perrott, 2007). Even though <strong>the</strong>re are
some discussions on <strong>the</strong> influence <strong>of</strong> IC on bottom-line pr<strong>of</strong>it (Roos, Roos, Edvinsson, and
Dragonetti, 1998; Grossman, 2000; Bozbura, 2004), innovation performance (Mavridis, 2005;
Subramaniam and Youndt, 2005; O'Connor, Roos, and Vickers-Willis, 2007; Wu, Lin, and Hsu, 2007),
or exporting tendency (Seleim, Ashour, and Bontis, 2004; Mavridis, 2005), little have been done
concerning <strong>the</strong> relationship between IC and global initiatives. Specifically, most previous studies do
not consider <strong>the</strong> time lag effect between IC performance and firm performance. A main purpose <strong>of</strong>
our study, thus, is to investigate impact <strong>of</strong> IC on a firm’s global initiatives with a longitudinal study
design. Following Juma’s (2005) study, our independent variables data (IC and environment) and
dependent variables data (global initiatives) will be collected at two points in time with a modest lag
period <strong>of</strong> 12 months.
In addition, while <strong>the</strong> relationship between IC and organizational performance have been confirmed
(Mavridis, 2005; Subramaniam and Youndt, 2005; O'Connor et al., 2007; Wu et al., 2007), <strong>the</strong> results
are not consistent concerning how different IC components interact with each o<strong>the</strong>r. In this study, we
are especially interested in knowing whe<strong>the</strong>r different forms <strong>of</strong> IC complement each o<strong>the</strong>r to enhance
a firm’s global initiatives. Specifically, our study will fur<strong>the</strong>r investigate <strong>the</strong> three forms <strong>of</strong> IC (human
capital, relational capital, and structural capital) and discuss how that complementarity associates with
a firm’s performance.
In addition, while some scholars have devoted considerable attention to <strong>the</strong> relationship between IC
and firm performance, most <strong>of</strong> <strong>the</strong>m do not consider <strong>the</strong> moderating effect <strong>of</strong> environment (Juma,
2005). Given that environments have long been considered among <strong>the</strong> most critical contingencies in
organization <strong>the</strong>ory and strategic management (Child, 1972; Dess and Beard, 1984; Zahra, 1996;
Gillely, McGee, and Rasheed, 2004; Juma, 2005), <strong>the</strong> inclusion <strong>of</strong> a moderating variable <strong>of</strong>
environment on <strong>the</strong> IC-global initiatives relationship might enrich <strong>the</strong> existing literature. Specifically,
our study aims to empirically test whe<strong>the</strong>r <strong>the</strong> impact <strong>of</strong> IC and/or IC complementarity on global
initiatives are greater in high as compared to low dynamic environments. In <strong>the</strong> following sections,
efforts are made to pull toge<strong>the</strong>r <strong>the</strong> limited body <strong>of</strong> research that exists to provide <strong>the</strong> detailed
relationship among IC, business environment, and global initiatives.
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2. Literature review
Ya-Hui Ling
2.1 Intellectual capital and global initiatives
The accumulation <strong>of</strong> IC enables a firm to achieve better global initiatives such as innovation (Wu et
al., 2007). For instance, it is generally agreed that human capital, such as top management teams’
(TMTs) visionary leadership, represents an important resource for a firm to achieve global initiatives
(Bartlett and Ghoshal, 1989; Birkinshaw, 1997; Hitt et al., 1998; Wu, Chiang, and Jiang, 2002; Ling
and Jaw, 2006; Banutu-Gomez and Banutu-Gomez, 2007). TMTs (human capital) determine <strong>the</strong>
acquisition and conversion <strong>of</strong> employees’ knowledge or abilities into desirable behaviors to deliver
value to customers (global marketing) (Ling and Jaw, 2006). It is also found that top management
teams’ visionary leadership (human capital) is positively associated with a firm’s innovation
performance (global innovation) (Ling and Jaw, 2006). As a result, human capital plays a significant
role in triggering innovation and performance (global innovation) (Kim and Kumar, 2009).
Moreover, relational capital has been shown to promote global initiatives. In addition, many
researches have proven that establishing relations with all <strong>the</strong> sections from <strong>the</strong> customer to <strong>the</strong>
supplier (relational capital) has an effect on <strong>the</strong> increase <strong>of</strong> <strong>the</strong> market share (global marketing)
(Narver and Slater, 1990; Bozbura, 2004). The social networks among a firm and its international
customers (relational capital) help a firm to understand quickly <strong>the</strong> requirement <strong>of</strong> customer and
provide it rapidly (global marketing) (Goldman, Nagel, and Preiss, 1995). Input from international
customers or suppliers (relational capital) facilitates knowledge generating and sharing and thus
become sources <strong>of</strong> companywide innovation breakthroughs (global innovation) (Spencer, 2003;
Ojeda-Gomez, Simpson, Koh, and Padmore, 2007).
Fur<strong>the</strong>rmore, global initiatives may be achieved through <strong>the</strong> accumulation <strong>of</strong> structure capital.
Customer satisfaction and competitiveness (global marketing) may be achieved by utilizing new
organizational structure(s) or systems (structural capital) to master change and uncertainty (Goldman
et al., 1995; Ling and Jaw, 2006). Structural capital is perceived to be a primary determinant <strong>of</strong>
enterprise performance in small innovative enterprises (Tovstiga and Tulugurova, 2007). The greater
a firm’s structure(s) or systems (structural capital) are, <strong>the</strong> more likely innovations will occur by
improving upon existing knowledge (Subramaniam and Youndt, 2005). Based on <strong>the</strong> above
discussion, <strong>the</strong> following hypo<strong>the</strong>sis is proposed.
Hypo<strong>the</strong>sis 1 Intellectual capital (human capital, relational capital, and structural capital) has positive
impact on a firm’s global performance.
2.2 The moderating effect <strong>of</strong> low vs. high environmental dynamism
While it is proposes that IC might have a positive impact on global performance, this relationship
might be moderated by business environment. The environmental context in which a firm operates
can enhance or impede <strong>the</strong> global performance effects associated with IC. For instance, some studies
do suggest that <strong>the</strong> effect <strong>of</strong> IC on firm performance is dependent on its environmental context (Juma,
2005; Reed et al., 2006), and what creates value for one company does not necessarily create value
for ano<strong>the</strong>r (Stahle and Hong, 2002). Specifically, organizations’ IC investments and performance
outcomes may systematically differ across industries (Youndt, Subramaniam, and Snell, 2004). That
is, <strong>the</strong> impact <strong>of</strong> IC on global performance might be contingent upon <strong>the</strong> environment conditions in
which a business operates. For instance, linking <strong>the</strong> organization with its external environment
(relational capital) may be used as a means to mange external interdependency (by reducing
environmental uncertainty and transaction costs associated) (Pfeffer and Salancik, 1978; Juma, 2005;
Ojeda-Gomez et al., 2007). Volatility in <strong>the</strong> task environment can hinder an organization’s ability to
anticipate <strong>the</strong> potential benefits <strong>of</strong> IC investment (Juma, 2005). It is generally expected that new firms
will invest in collaborative relationships (relational capital) with outside firms so as to quickly gain
access to new ideas, patents, or o<strong>the</strong>r resources (Hitt, Hoskisson, and Harrison, 1991; Juma, 2005).
Dynamic environments also increase a firm’s need to have more qualified senior executives and
researchers (human capital) in order to remain competitive in <strong>the</strong> rapidly changing global market
(Juma, 2005). A highly quailed TMT (human capital) not only enhances <strong>the</strong> reputation <strong>of</strong> <strong>the</strong> firm but
also assists in obtaining additional resources and collaborations from outside associates (global
marketing) (Juma, 2005; Banutu-Gomez and Banutu-Gomez, 2007; Ojeda-Gomez et al., 2007).
Based on <strong>the</strong> above discussion, <strong>the</strong> following hypo<strong>the</strong>sis is proposed.
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Ya-Hui Ling
Hypo<strong>the</strong>sis 2 There is moderating effect <strong>of</strong> environment dynamism on <strong>the</strong> relationship between
intellectual capital and global performance.
2.3 Intellectual capital complementarity and global initiatives
Most previous studies conclude that <strong>the</strong>re are interaction effects among <strong>the</strong> three forms <strong>of</strong> IC. For
instance, structural capital enhances human capital’s productive potential by providing employees
with a supportive, yet socially complex infrastructure (Edvinsson and Malone, 1999; Reed, Lubatkin,
and Srinivasan, 2006). Generally speaking, <strong>the</strong> accumulation <strong>of</strong> structural capital will be associated
with a firm’s stock <strong>of</strong> core personnel (human capital) (Juma, 2005). In addition, human capital
(education, training, skills, etc) will only bring in critical new resources when it is coupled with
relational capital (social networks) (Blyler and C<strong>of</strong>f, 2003; Reed et al., 2006). Relational capital’s
productive potential lies primarily in its ability to leverage <strong>the</strong> productivity <strong>of</strong> human capital (Rosenthal,
1996; Chung and Gibbons, 1997; Hargadon and Sutton, 1997; Kraatz, 1998; Tsai and Ghoshal, 1998;
Florin, Lubatkin, and Schulze, 2002). That is, <strong>the</strong> more a firm’s human capital is enhanced by social
linkages, <strong>the</strong> more employees become attractive to additional informationally enriched and high-status
social ties, and so on (Reed et al., 2006). Accordingly, <strong>the</strong> following hypo<strong>the</strong>sis is proposed.
Hypo<strong>the</strong>sis 3 One or more <strong>of</strong> <strong>the</strong> two-way or three-way interactions (among three forms <strong>of</strong> IC) will
have positive impact on global initiatives.
3. Methodology
3.1 Measurement
3.1.1 Intellectual capital
Three dimensions are identified to measure <strong>the</strong> IC variable: human capital, structural capital, and
relational capital. Human capital refers to <strong>the</strong> human capital which enables a firm to compete in <strong>the</strong>
global markets (Huang, Roy, Ahmed, Heng, and Lim, 2002; Chen and Lin, 2003; Ling and Jaw, 2006).
Structural capital refers <strong>the</strong> knowledge embedded in organizational structures and processes, and it is
<strong>the</strong> sum <strong>of</strong> all assets that make <strong>the</strong> creative ability <strong>of</strong> <strong>the</strong> organization possible (Edvinsson and
Malone, 1999; Guthrie and Petty, 2000; Bozbura, 2004; Seleim et al., 2004; Cuganesan, 2005).
Relational capital refers to <strong>the</strong> relationships with external stakeholders which enable a firm to compete
in <strong>the</strong> global markets (Cuganesan, 2005; Bruton, Dess, and Janney, 2007). Sample questions <strong>of</strong>
intellectual capital include “in my organization, <strong>the</strong> top management teams are able to integrate and
lead cross-cultural work teams”, “in my organization spreads product information to potential
international customers through its business partners”, “in my organization, databases are available to
employees all over <strong>the</strong> world to provide instant solutions or reference information to work-related
problems”, etc.
3.1.2 Global performance
Both financial and non-financial performance (global initiatives) metrics are used to measure a firm’s
global performance. Following Ling and Jaw’s (2006) study, we use a five point Likert scale to
measure a firm’s financial performance. Items include relative average earning per share and average
operation revenue (after-tax net income) for <strong>the</strong> past 3 years. Global initiatives refer to <strong>the</strong> proactive
and deliberate entrepreneurial pursuit <strong>of</strong> a firm which enables it to compete globally (Birkinshaw and
Fry, 1998; Birkinshaw, Hood, and Jonsson, 1998; Ling and Jaw, 2006). Two constructs are identified
to measure a firm’s global initiatives: (1)global marketing, and (2)global innovation (Pucik, 1992;
Birkinshaw et al., 1998; Ling and Jaw, 2006; Ojeda-Gomez et al., 2007). Global marketing measures
a firm’s ability to tap into new opportunities in markets around <strong>the</strong> world, and deliver superior value to
customers (Pucik, 1992; Lado and Wilson, 1994; Birkinshaw et al., 1998; Hitt et al., 1998). Global
innovation measures <strong>the</strong> innovation output and work products, but not on <strong>the</strong> innovation process
(Kuratko and Hodgetts, 1992). Sample questions <strong>of</strong> global initiatives include ““my organization enjoys
higher percentage <strong>of</strong> long-term customers than international competitors”. “my organization has more
new technology or new products than international competitors”, etc.
3.1.3 Environmental dynamism
Environmental dynamism measures environmental instability or volatility, which is characterized by
rapid rates <strong>of</strong> change and innovation in <strong>the</strong> industry as well as <strong>the</strong> uncertainty or unpredictability <strong>of</strong> <strong>the</strong>
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Ya-Hui Ling
action <strong>of</strong> competitors and customers (Miller and Friesen, 1983; Dess and Beard, 1984; Juma, 2005).
Sample questions include “a larger number <strong>of</strong> competitors in this industry”, “high speed <strong>of</strong> new
product/service launching”, “short product (service) life cycle”, etc..
3.2 Sampling procedure and sample pr<strong>of</strong>ile
Sample was selected from <strong>the</strong> Taiwanese top 1,000 companies list published. Following Gergory,
Lumpkin, and Covin’s (1995, 1997) studies, we adopted a type <strong>of</strong> purposive sampling used in
exploratory research in which <strong>the</strong> researcher selects a sample to meet specific criteria (Emory and
Cooper, 1991; Kerlinger, 1986). The selection criteria were companies located in Taiwan, but
competing globally. As a result, only those with foreign subsidiaries were included in our
questionnaire-mailing list. A broad group <strong>of</strong> organizations and industries were included in our study to
increase <strong>the</strong> generalizability <strong>of</strong> <strong>the</strong> findings. Altoge<strong>the</strong>r 324 firms took part in <strong>the</strong> study.
4. Analyses and results
4.1 Confirmative factor analyses
Confirmative factor analyses were first conducted to determine <strong>the</strong> proper dimensions for <strong>the</strong> IC, and
global initiatives instrument. A confirmatory factor model <strong>of</strong> IC was first obtained using AMOS 7.0.
Results from this approach revealed that <strong>the</strong> overall model provided a good fit to <strong>the</strong> data (χ2/df =
1.267, RMSEA = 0.040, NFI = 0.925, CFI = 0.983; RFI = 0.899; IFI = 0.983; TLI = 0.977). It is
confirmed that IC can be separated into three dimensions, namely, human capital (α = 0.8933),
relational capital (α = 0.8097), and structural capital (α = 0.8806). After that, ano<strong>the</strong>r confirmatory
factor model <strong>of</strong> global initiatives was obtained, and <strong>the</strong> results also indicate a good fit to <strong>the</strong> data (χ2 =
116.652, df = 55, χ2/df = 2.121, RMSEA = 0.082, NFI = 0.913, CFI = 0.951; RFI = 0.876; IFI = 0.952;
TLI = 0.931). It is confirmed that global initiatives can be separated into two dimensions, i.e. global
marketing (α = 0.8334) and global innovation (α = 0.8775). The reliability <strong>of</strong> financial performance (α =
0.9535) and environmental dynamism (α = 0.7860) are also acceptable.
4.2 SEM analyses
Several SEM models were <strong>the</strong>n depicted to investigate <strong>the</strong> influence <strong>of</strong> IC and its complementary
effect on global performance (model 1) and <strong>the</strong> moderating effect <strong>of</strong> business environment (model 2
and model 3). Given that looking independently at any one <strong>of</strong> <strong>the</strong> subcategories most certainly results
in an incomplete account <strong>of</strong> an organization’s IC, in <strong>the</strong> following analyses, IC will be depicted as a
latent variable comprised <strong>of</strong> human capital, relational capital, and structural capital. The
complementary effect was estimated with three two-way interaction effects (human capital*relational
capital, human capital*structural capital, and relational capital*structural capital). Table 1 shows <strong>the</strong>
model fit and standardized path coefficients <strong>of</strong> <strong>the</strong> 3 SEM models, and some interesting findings are
revealed as follows.
Table 1: The influence <strong>of</strong> IC and its complementarity on global initiatives (standardized path
coefficients)
IC
→ Global innovation
Model 1: all samples
N=324
Model 2: firms operating
in low dynamic context
N=177
Model 3: firms operating
in high dynamic context
N=146
3.36*** 0.81 0.17**
IC→ Global marketing 3.55*** 0.14** 0.10
IC complementarity
→ Global innovation
IC complementarity →
Global marketing
-2.73*** 0.30** 0.52***
-2.93*** 0.39*** 0.50***
347

* p

Intellectual
Capital
Intellectual
Capital
Complementarity
Ya-Hui Ling
0.81
0.39***
0.30**
0.14**
Global
Innovation
Global
Marketing
Figure 2: The influence <strong>of</strong> intellectual capital and its complementarity on global initiatives in low
dynamic context (model 2)
Intellectual
Capital
Intellectual
Capital
Complementarity
0.17**
0.50***
0.52***
0.10
Global
Innovation
Global
Marketing
Figure 3: The influence <strong>of</strong> intellectual capital and its complementarity on global initiatives in high
dynamic context (model 3)
Secondly, some moderating effects <strong>of</strong> business environment are found between IC and global
initiatives. In low dynamic context, IC has a positive impact on global marketing, but <strong>the</strong> impact <strong>of</strong> IC
toward global innovation is non-significant. On <strong>the</strong> contrary, in high dynamic context, IC has a positive
impact on global innovation, but <strong>the</strong> impact <strong>of</strong> IC on global marketing becomes non-significant. That
is, when business environment is stable or predictability, IC facilitates <strong>the</strong> development <strong>of</strong> global
marketing. When <strong>the</strong>re is rapid rate <strong>of</strong> change and innovation in <strong>the</strong> industry, and <strong>the</strong> actions <strong>of</strong>
competitors and customers are unpredictable, IC enhance a firm’s global innovation. As a result, IC is
important both for those firms pursuing global marketing in a more stable and predictable
environment, and for those firms pursuing global innovation in a more dynamic environment.
Thirdly, <strong>the</strong> important role <strong>of</strong> IC complementarity is identified. It is found that IC complementarity has
positive effect on global initiatives in both high dynamic and low dynamic contexts. Consistent with
Youndt et al.’s (2004) study that IC complement each o<strong>the</strong>r to contribute to a firm’s financial
performance, our results also indicated that <strong>the</strong> three forms <strong>of</strong> IC complement each o<strong>the</strong>r to enhance
a firm’s global initiatives. Such results confirm <strong>the</strong> interconnectedness <strong>of</strong> human, relational, and
structural capital, and imply that human, relational, and structural capital cannot be treated as
completely independent, discrete constructs. As a result, <strong>the</strong> value <strong>of</strong> IC components can mostly be
actualized only in terms <strong>of</strong> <strong>the</strong>ir dynamic interrelationships and conjoint interaction (Rastogi, 2003;
Bozbura, 2004; Cuganesan, 2005). In order to compete in <strong>the</strong> global arena, in addition to investing in
management processes (structural capital), firms should also invest in developing entrepreneurial
leadership (human capital) and developing collaborative relationships with outside firms (relational
capital).
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Ya-Hui Ling
There are several contributions which this study might be able to make: Firstly, <strong>the</strong> study might extend
previous IC literature by investigating <strong>the</strong> influence <strong>of</strong> IC on global initiatives with a longitudinal study.
Specifically, our study may contribute to <strong>the</strong> literature by exploring <strong>the</strong> complementarity <strong>of</strong> <strong>the</strong> three
forms <strong>of</strong> IC. Secondly, <strong>the</strong> study might contribute to <strong>the</strong> literature by studying <strong>the</strong> possible moderating
effect <strong>of</strong> business environment in <strong>the</strong> IC-global initiatives relationship. Finally, <strong>the</strong> study might
contribute to <strong>the</strong> literature by focusing on Taiwan ra<strong>the</strong>r than a developed Western economy as
employed in related work. With global prosperity increasingly dependent on developing economies,
evidence from <strong>the</strong> present study may provide insights into <strong>the</strong> impact <strong>of</strong> IC management in developing
economies.
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351

A Lean Knowledge Life Cycle Methodology in Product
Development
Maksim Maksimovic 1 , Ahmed Al-Ashaab 1 , Essam Shehab 1 and Robert
Sulowski 2
1
Manufacturing Department, SAS, Cranfield University, UK
2
Sitech, Polkowice, Poland
m.maksimovic@cranfield.ac.uk
a.al-ashaab@cranfield.ac.uk
e.shehab@cranfield.ac.uk
robert.sulowski.sitech@volkswagen.de
Abstract: Engineering companies face difficulties to utilise <strong>the</strong> full potential <strong>of</strong> existing knowledge assets in <strong>the</strong>
enterprise to support product development. The Lean Knowledge Life Cycle (LeanKLC) was developed as a
methodology to capture, re-use and create knowledge in <strong>the</strong> Lean Product and Process Development (LeanPPD)
environment. LeanPPD is a project funded by <strong>the</strong> EU-PF7. The project addresses <strong>the</strong> needs <strong>of</strong> European
manufacturing companies for a new model that goes beyond lean manufacturing, to ensure <strong>the</strong> transformation <strong>of</strong>
<strong>the</strong> enterprise into lean environment. The research methodology comprises three main elements: a) literature
review and industrial field study b) <strong>the</strong> LeanKLC development c) action research and d) case study validation. As
opposed to common Knowledge Life Cycle (KLC) methods, <strong>the</strong> LeanKLC does not require a rigid procedure <strong>of</strong>
<strong>the</strong> proposed stages. It provides different knowledge modelling tools and alternative implementation scenarios
specifically in product development. The stages <strong>of</strong> <strong>the</strong> LeanKLC are <strong>the</strong> following: 1) Knowledge Identification, 2)
Previous Projects and Domain Knowledge Capturing 3) Knowledge Representation, 4) Knowledge Sharing, 5)
Knowledge Based Engineering, 6) Dynamic Knowledge Provision and 7) Dynamic Knowledge Capturing. A
dynamic dimension instils <strong>the</strong> practise <strong>of</strong> knowledge capture and provision as a daily routine. This aims to ensure
that knowledge is naturally created without <strong>the</strong> need <strong>of</strong> time consuming documentation. Initial industrial feedback
concludes <strong>the</strong> LeanKLC as a beneficial methodology. Future work will entail <strong>the</strong> conduct <strong>of</strong> industrial case studies
in collaboration with European manufacturing companies in order to enhance <strong>the</strong> present tools and tailor <strong>the</strong>m
based on specific industrial needs.
Keywords: Knowledge Life Cycle, Lean Product Development, LeanPPD
1. Introduction
Product development activities are becoming increasingly complex and require greater depth and
breadth <strong>of</strong> knowledge. This knowledge needs to be modelled in a way that ensures its correct use to
solve real industrial problems. The Lean Product and Process Development (LeanPPD) consortium
believes that product development activities must be formalised and structured in such a way that any
engineering decisions taken are based on proven knowledge and experience, which is referred to <strong>the</strong>
knowledge based environment (Al-Ashaab et al, 2011). Failure to apply proven knowledge and
experience will consequently result in product and process re-design, which would be seen as nonvalue
added activities i.e. waste <strong>of</strong> valuable resource.
The research community addressing lean product development (Morgan and Liker, 2006; Kennedy et
al, 2008; Sobek et al, 1999; Ward, 2007; Mascitelly, 2006; Oosterwal, 2010) is mainly based on <strong>the</strong>
Toyota product development system and commonly agrees that knowledge is a vital piece in <strong>the</strong>
puzzle to realise value creation. However, no systematic approach, method or framework is provided
on how to manage product development knowledge in a lean environment. Researches specifically
addressing Toyota’s knowledge management initiatives were described by Ichijo and Kohlbacher
(2007; 2008) and Dyer and Nobeoka (2000) at a high cooperative level. The literature in lean product
development with regards to <strong>the</strong> actual tools and techniques for knowledge capture, reuse and
creation, which an engineer could potentially use, is very limited. Therefore it is important to consider
and merge research initiative related to a Knowledge Life Cycle (KLC). The terminology <strong>of</strong> <strong>the</strong> KLC
was mainly driven by Nonaka and Takeuchi’s (1995) novel work <strong>of</strong> <strong>the</strong> knowledge creating process.
Borgh<strong>of</strong>f and Pareschi (1997) used <strong>the</strong> term <strong>of</strong> KLC to describe Nonaka and Takeuchi's (1995) four
modes <strong>of</strong> knowledge conversation, transferring tacit to explicit knowledge and vice versa. Firestone
and McElroy (2003) clearly use <strong>the</strong> term <strong>of</strong> a KLC in order to describe "a process that produces
knowledge with a conceptual framework that provides a cognitive map <strong>of</strong> <strong>the</strong>se processes". In
comparison to <strong>the</strong> KLC, <strong>the</strong> terminology <strong>of</strong> <strong>the</strong> Knowledge Management (KM) life cycle or KM
framework is also used to describe a process <strong>of</strong> "how organisations generate, maintain and deploy a
strategically correct stock <strong>of</strong> knowledge in order to create value" (Buckowitz and Willians, 1999). This
352

Maksim Maksimovic et al
paper presents <strong>the</strong> development <strong>of</strong> a Lean Knowledge Life Cycle (LeanKLC) methodology to capture,
re-use and create knowledge in a LeanPPD knowledge based environment.
2. Research methodology
The research methodology consists <strong>of</strong> four main phases. First, an extensive review <strong>of</strong> <strong>the</strong> related
literature, covering a wide range <strong>of</strong> KM and Knowledge Based Engineering (KBE) related topics. It
covered also <strong>the</strong> review <strong>of</strong> different KLC approaches, identification <strong>of</strong> supportive tools and
understanding <strong>of</strong> knowledge in lean product development. Some <strong>of</strong> <strong>the</strong> results <strong>of</strong> <strong>the</strong> literature review
and research gap are presented in <strong>the</strong> following section 3. In addition an industrial field study has
been performed to analyse product development practices with <strong>the</strong> focus on KLC related activities,
such as knowledge capturing and knowledge sharing. The results <strong>of</strong> <strong>the</strong> industrial field study provided
a better understanding <strong>of</strong> industrial practices, as well as a practical research foundation for <strong>the</strong>
development <strong>of</strong> <strong>the</strong> LeanKLC. In total, 32 engineers participated in face-to-face from 11 European
large companies operating in four sectors: automotive, aerospace, home appliances and medical
equipment.
Phase 1: Literature
Review and Industrial
Field Study
Phase 2: LeanKLC
Development
Phase 3: Action
Research
Feedback
Phase 4: Case Study
Validation
Figure 1: Research Methodology
Phase 2 incorporated <strong>the</strong> development <strong>of</strong> <strong>the</strong> LeanKLC methodology as a result <strong>of</strong> phase 1. Phase 2
covered <strong>the</strong> definition <strong>of</strong> suitable stages and tools that can be applied to achieve a knowledge based
environment in lean product development. In phase 3, action research was chosen as <strong>the</strong> approach to
interact with <strong>the</strong> industry to drive <strong>the</strong> development <strong>of</strong> <strong>the</strong> LeanKLC, as shown in Figure 1. Action
research was carried out at fewer companies, four in total, as compared to <strong>the</strong> industrial field study in
phase 1. The reason is <strong>the</strong> necessity to accomplish active interaction among <strong>the</strong> researchers and <strong>the</strong>
product development engineers. This gave <strong>the</strong> opportunity to <strong>the</strong> latter to express <strong>the</strong>ir key concerns
and improvement suggestions during several industrial workshops. In total 30 product development
engineers provided feedback during action research in phase 3 to support <strong>the</strong> development <strong>of</strong> <strong>the</strong>
LeanKLC, which is presented in section 4. Phase 4 validation, is outside <strong>the</strong> scope <strong>of</strong> this paper.
3. Related Literature and Industrial Practice
This section presents a summary <strong>of</strong> <strong>the</strong> literature review and <strong>the</strong> results <strong>of</strong> <strong>the</strong> industrial field study.
KLC approaches relevant to this study were identified in literature as shown in Table1. Four <strong>of</strong> <strong>the</strong>
KLCs represent <strong>the</strong> KM and two <strong>the</strong> KBE discipline. Each KLC corresponds to a sequence <strong>of</strong> different
stages necessary to increase intellectual capital in an organisation (Bukowitz and Williams, 1999;
Dalkir, 2005; McElroy, 2003; Jashapara, 2004) or to develop a KBE application (Rodriguez and Al-
Ashaab, 2007; Stokes, 2001). However, it was observed that <strong>the</strong>re is no commonly agreed use <strong>of</strong>
terminologies to describe <strong>the</strong> stages <strong>of</strong> a KLC. For example <strong>the</strong> stages <strong>of</strong> information acquisition
(McElroy, 2003), discovering knowledge (Jashapara, 2004), get (Bukowitz and Williams, 1999) and
capture (Dalkir, 2005; Rodriguez and Al-Ashaab, 2007; Stokes, 2001) describe <strong>the</strong> activities related to
knowledge capturing, but using different terminologies. In addition, considering <strong>the</strong> KLC as a
methodology <strong>the</strong>re is no consistence in terms <strong>of</strong> <strong>the</strong> focus. For instance, McElroy(1999) focuses on
<strong>the</strong> integration <strong>of</strong> new knowledge claims within people, processes and technology. Whereby,
Buckowitz and Williams (1999) and Jashapara (2004) are addressing key issues and philosophies in
KM within organisations.
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Table 1: Stages <strong>of</strong> reviewed knowledge life cycles
KLCs McElroy
(2003)
Stages Individual and
group learning
Knowledge
claim
formulation
Information
acquisition
Knowledge
validation
Knowledge
integration
Jashapara
(2004)
Discovering
Knowledge
Generating
Knowledge
Evaluating
Knowledge
Sharing
Knowledge
Leveraging
Knowledge
Maksim Maksimovic et al
KLCs in KM KLCs in KBE
Buckowitz and
Williams
(1999)
Get Capture
and/or
Creation
Use Sharing and
Dissemination
Learn Acquisition
and
Application
Dalkir (2005) Rodriguez and
Al-Ashaab
(2007)
Stokes
(2001)
MOKA
Identify Identify
Capture and
Standardise
Justify
Represent Capture
Contribute Implement Formalize
Assess Use Package
Build and
Sustain
Divest
Activate
Organisational Learning is seen by Mc Elroy (1999), Jashapara (2004) and Dalkir (2005) as <strong>the</strong>
process which results in knowledge creation or production. The issue <strong>of</strong> a learning organisation is
also important in lean product development. Morgan and Liker (2006) describe Toyota as a learning
network which develops ways to collect, share and apply knowledge in <strong>the</strong> entire enterprise.
The stages related to knowledge capturing are mainly concerned with <strong>the</strong> capturing <strong>of</strong> explicit
knowledge suggesting techniques such as templates (Bukowitz and Williams, 1999; Dalkir, 2005;
Stokes, 2001) or cognitive mapping tools (Jashapara, 2004). However, <strong>the</strong> idnustrial field study
indicated that in fact, tacit knowledge was rated <strong>the</strong> most important knowledge source in product
development. This results in a big challenge to express <strong>the</strong> inexpressible (Nonaka, 1991) with regards
to knowledge capturing. In this case <strong>the</strong> use <strong>of</strong> figurative language, such as mindscaping (Bukowitz
and Williams, 1999; Jashapara, 2004), could potentially be considered in product development. In
addition <strong>the</strong> literature in lean product development addresses <strong>the</strong> need <strong>of</strong> easy to use visualisation
techniques such as A3 templates and trade-<strong>of</strong>f curves (Kennedy, 2008).
The principle <strong>of</strong> communities <strong>of</strong> practice is regarded to be essential for knowledge sharing (McElroy,
1999; Bukowitz and Williams, 1999; Jashapara, 2004; Dalkir, 2005). In Toyota, as described by
Morgan and Liker (2006), cross functional knowledge sharing is well established, meaning that
knowledge can be retrieved from a seamlessly integrated and centralised know-how database.
In <strong>the</strong> industrial field study 78% <strong>of</strong> <strong>the</strong> interviewed engineers stated that knowledge capture is very
time consuming. Also, 78% <strong>of</strong> <strong>the</strong> interviewed engineers find it difficult to extract already captured
knowledge and 52% expressed that unnecessary knowledge is captured throughout <strong>the</strong> product
development process. The authors are convinced that any solution developed has to address <strong>the</strong> fact
that engineers are not willing to spend time on documentation, which outlines <strong>the</strong> necessity <strong>of</strong> an
integrated solution in <strong>the</strong> day to day tasks <strong>of</strong> <strong>the</strong> product development engineer. In general <strong>the</strong>
industrial filed study showed that KLC activities are not well established in product development. In
addition, <strong>the</strong> literature related to KLC and lean product development lack <strong>of</strong> supporting tools that can
be adopted and used in product development. As a consequence, <strong>the</strong> LeanKLC, as presented in <strong>the</strong>
next section, was developed as a methodology to capture, re-use and create knowledge in a
LeanPPD environment.
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Maksim Maksimovic et al
4. Lean knowledge life cycle methodology
As a result <strong>of</strong> <strong>the</strong> literature review and industrial field study, <strong>the</strong> stages <strong>of</strong> <strong>the</strong> LeanKLC have been
defined as illustrated in Figure 2. For instance, <strong>the</strong> fact that different sources <strong>of</strong> knowledge exist in a
company required a mechanism to identify <strong>the</strong> useful knowledge. Considering that <strong>the</strong> interviewed
engineers, in <strong>the</strong> industrial field study, expressed to rely 71% on average on knowledge from previous
projects when designing new products, outlined <strong>the</strong> importance <strong>of</strong> capturing this knowledge and <strong>the</strong>n
providing it in a preferable format.
Stage 1:
Knowledge
Identification
Stage 2:
Previous Projects and
Domain Knowledge
Capture
Stage 3:
Knowledge
Representation
Knowledge
Creation
Stage 7:
Dynamic Knowledge
Capturing
Static Dimension Dynamic Dimension
Stage 4:
Knowledge
Sharing
Stage 5:
Knowledge Based
Engineering
Stage 6:
Dynamic Knowledge
Use and Provision
Figure 2: Lean Knowledge Life Cycle Stages
The LeanKLC provides knowledge modelling tools and alternative implementation scenarios at <strong>the</strong>
different stages. It is important to understand that knowledge has to be created, captured and
provided dynamically using a tailored set <strong>of</strong> tools. The first implementation <strong>of</strong> <strong>the</strong> LeanKLC considers
one entire loop by following <strong>the</strong> stages 1 to 7. After finishing <strong>the</strong> first loop, <strong>the</strong> company should focus
on repeating <strong>the</strong> stages 3 to 7, which are called <strong>the</strong> “dynamic dimension” where knowledge is
continuously created. The definition <strong>of</strong> each stage as well as <strong>the</strong> modelling tools are presented in <strong>the</strong>
following sections.
4.1 Stage 1- Knowledge Identification
The aim is to localise and identify <strong>the</strong> useful knowledge that a company have and needs. One <strong>of</strong> <strong>the</strong>
tools for identifying <strong>the</strong> useful knowledge in stage 1 is IDEF0. In addition, traditional methods such as
interviews and questionnaires are still common approaches for knowledge identification.
4.2 Stage 2 - Previous Projects and Domain Knowledge Capture
In this stage <strong>the</strong> identified useful knowledge from stage 1 will be captured and structured. It is
important to outline that <strong>the</strong> LeanKLC differs between two types <strong>of</strong> knowledge capturing; which are
<strong>the</strong> capturing <strong>of</strong> a) <strong>the</strong> previous projects knowledge, such as CAD files, lessons learnt and test data,
and b) <strong>the</strong> domain knowledge, which is based on rules, formulas and constraints for a specific domain
such as injection moulding or joining processes. Stage 2 is going to have a passive role after <strong>the</strong> first
implementation loop, because at some point <strong>of</strong> time <strong>the</strong> capturing <strong>of</strong> previous projects should be
completed. Nowadays, Product Data Management (PDM) and Product Lifecycle Management (PLM)
systems are commonly used in companies. In order to address <strong>the</strong> level <strong>of</strong> integration two potential
scenarios are proposed to structure <strong>the</strong> previous projects’ knowledge:
The knowledge capturing will be influenced by <strong>the</strong> current data structure <strong>of</strong> <strong>the</strong> company
database.
The knowledge capturing will influence and guide <strong>the</strong> structure <strong>of</strong> <strong>the</strong> database.
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4.3 Stage 3 - Knowledge Representation
Maksim Maksimovic et al
This stage deals entirely with <strong>the</strong> representation <strong>of</strong> only <strong>the</strong> domain knowledge captured in stage 2. In
order to be able to use KBE, <strong>the</strong> knowledge must be represented in a formal method that will ease <strong>the</strong>
computational use. Examples <strong>of</strong> formal knowledge representation that could be used are object
oriented (e.g. UML) and semantic web.
4.4 Stage 4 - Knowledge Sharing
In this stage <strong>the</strong> captured knowledge from previous projects from stage 2 and also new generated
knowledge from <strong>the</strong> continuous loops <strong>of</strong> <strong>the</strong> LeanKLC are going to be brought toge<strong>the</strong>r and stored in
a database within a clear structure to enable a lean environment. It should be noted that possibly not
all <strong>the</strong> knowledge could be captured and coded into s<strong>of</strong>tware, especially <strong>the</strong> tacit knowledge.
Therefore, <strong>the</strong>re is a need to have a directory <strong>of</strong> those human experts where <strong>the</strong> designer and
engineers could refer to get help. This is done through yellow pages, also known as knowledge
pointers or skills directories.
4.5 Stage 5 - Knowledge Based Engineering
The captured and formal represented domain knowledge model in stage 3 is used to develop a KBE
s<strong>of</strong>tware. The development <strong>of</strong> <strong>the</strong> KBE application is supported by an underlying system architecture
reference model.
4.6 Stage 6 - Dynamic Knowledge Use and Provision
In this stage <strong>the</strong> knowledge should be provided to <strong>the</strong> product development engineers to support <strong>the</strong>
decision taking for a range <strong>of</strong> engineering applications. This could include, for example, <strong>the</strong> provision
<strong>of</strong> <strong>the</strong> most relevant previous project information in order for <strong>the</strong> product development engineers to
initiate a new set <strong>of</strong> product designs and tools. Knowledge provision is mainly driven by easy to use
methods such as design templates, checklists, trade-<strong>of</strong>f curves and A3 problem solving templates.
4.7 Stage 7- Dynamic Knowledge Capturing
Knowledge should be captured dynamically during <strong>the</strong> actual design and development <strong>of</strong> a product. In
this stage, new knowledge is created through new simulation, prototyping and testing <strong>of</strong> <strong>the</strong> product
under development. Stage 7 <strong>of</strong> <strong>the</strong> LeanKLC is <strong>the</strong> most critical one for two main reasons. Firstly, it is
<strong>the</strong> essence in order to keep <strong>the</strong> dynamic dimension <strong>of</strong> <strong>the</strong> LeanKLC running, see Figure 2, by
dynamically capturing <strong>the</strong> knowledge while created. Secondly, <strong>the</strong> dynamic capturing has to be
aligned with <strong>the</strong> tailored tool set and integrated accordingly in <strong>the</strong> product development process.
As soon as new knowledge is acquired <strong>the</strong> LeanKLC loop starts again from stage 3. This can happen
also simultaneously anywhere within <strong>the</strong> defined implementation area regardless time, phase or
function, which means that a continuous loop <strong>of</strong> knowledge creation is in function. Referring back to
<strong>the</strong> lean product development literature, knowledge is regarded as a vital part <strong>of</strong> value creation.
Having established a systematic method <strong>of</strong> knowledge creation equals to a method <strong>of</strong> systematically
contributing to value creation. However, only a well tailored dynamic knowledge environment will
ensure <strong>the</strong> elimination <strong>of</strong> wasteful activities within <strong>the</strong> LeanKLC methodology.
5. Conclusion
The LeanKLC was developed alongside <strong>the</strong> industrial partners within <strong>the</strong> LeanPPD project and
already initiated at an automotive 1 st tier automotive supplier to capture joining domain knowledge to
mitigate it against alternative joining methods <strong>of</strong> laser and adhesive bonding, addressing <strong>the</strong> impact
on manufacturing processes and tooling. The developed methodology addresses both <strong>the</strong> domain
knowledge as well as knowledge from previous projects. In addition it is defining a novel approach <strong>of</strong>
knowledge capturing and provision in dynamic manner. The work is in progress to define <strong>the</strong> detailed
definition <strong>of</strong> <strong>the</strong> LeanKLC, such as <strong>the</strong> IT enabler for modelling and implementation <strong>of</strong> provision <strong>of</strong>
knowledge. More action research is planned within <strong>the</strong> aerospace and ano<strong>the</strong>r automotive company.
6. Acknowledgements
The research presented in this paper has been conducted as part <strong>of</strong> a European project titled ‘Lean
Product and Process Development (LeanPPD)’. The project involves multiple research and industrial
partners from <strong>the</strong> UK, Spain, Germany, Italy and Poland. The project is supported by <strong>the</strong> Commission
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Maksim Maksimovic et al
<strong>of</strong> European Community, contract number NMP-2008-214090) under <strong>the</strong> NMP Programme
(Nanosciences, Nanotechnologies, Materials and new Production Technologies). The authors wish to
acknowledge <strong>the</strong> European Commission for its support as well as <strong>the</strong> o<strong>the</strong>r partners in <strong>the</strong> consortium
(http://www.leanppd.eu).
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357

Knowledge Leadership in Value Networks: The Joint Effect
<strong>of</strong> Trustworthiness Factors and Levers <strong>of</strong> Control
Maurizio Massaro 1 and Andrea Moro 2
1 University <strong>of</strong> Udine, Udine, Italy
2 University <strong>of</strong> Leicester, Leicester, UK
maurizio.massaro@uniud.it
a.moro@leicester.ac.uk
Abstract: The ability to learn, to generate new ideas, to propose new solutions to problems and in general to be
creative, is related to <strong>the</strong> ability <strong>of</strong> <strong>the</strong> company to create a significant network in order to acquire and generate
new knowledge. A value network is <strong>the</strong> network <strong>of</strong> relationships that creates tangible and intangible value through
<strong>the</strong> complex and dynamic exchanges between two or more organizations. According to Holsapple and Jones’
model <strong>the</strong> Knowledge leadership is suggested to be a key factor linked to <strong>the</strong> ability <strong>of</strong> establishing conditions
which could help <strong>the</strong> knowledge chain to generate value. They suggest that knowledge leadership is
characterized by being a catalyst for traits such as inspiring, mentoring, learning, teaching and knowledge
sharing. The level <strong>of</strong> trust between network’s members and <strong>the</strong> tools <strong>of</strong> control implemented within <strong>the</strong> network
can affect <strong>the</strong> development <strong>of</strong> knowledge leadership. Present research analyzes qualitatively 20 Italian value
networks focused on new product/process development. It elaborates a conceptual framework that shows how
different trust factors suggested by Mayer et al (1995) - namely ability, benevolence and integrity - could be used
jointly with <strong>the</strong> levers <strong>of</strong> control (LOCs) suggested by Simons (1995) - namely, belief, boundary, diagnostic and
interactive LOCs - to create a dynamic tension. Such dynamic tension is valued as a key factor to enable
effective knowledge leadership development. The conceptual framework explains when trust and levers <strong>of</strong> control
can substitute each o<strong>the</strong>r, when <strong>the</strong>y reinforce each o<strong>the</strong>r and when <strong>the</strong>y could be used in a dynamic tension in
order to facilitate <strong>the</strong> knowledge leadership process. In addition, <strong>the</strong> conceptual framework suggests how control
tools in a low trust environment can support <strong>the</strong> development <strong>of</strong> trust.
Keywords: knowledge management process, knowledge leadership, levers <strong>of</strong> control, trustworthiness factors,
value networks
1. Introduction and research questions
Acquiring, sharing and generating knowledge are viewed as primary processes in organizational
evolution. These processes help companies to choose and adopt new practices in order to increase
<strong>the</strong>ir competitive advantage (Bijaya and Uday Bhaskar, 2011). Scholars argue that it is imperative for
companies to pay attention to <strong>the</strong> development <strong>of</strong> knowledge process in order to acquire competitive
skills and capabilities (Loermans 2002). In addition, <strong>the</strong> key role <strong>of</strong> networking in this process is also
emphasized (Faems, Janssens and Van Looy, 2010).
Despite <strong>the</strong> importance <strong>of</strong> <strong>the</strong> topic, <strong>the</strong>re is no such thing as a common definition <strong>of</strong> network and
knowledge management. Current work defines value networks as “a network <strong>of</strong> relationships that
creates tangible and intangible value through <strong>the</strong> complex and dynamic exchanges between two or
more organizations” (Timonen and Ylitalo 2008, p. 505). Instead <strong>of</strong> <strong>the</strong> narrow definition <strong>of</strong> knowledge
management (KM) as “a set <strong>of</strong> techniques and practice that facilitates <strong>the</strong> flow <strong>of</strong> knowledge into and
within <strong>the</strong> firm” (Birkinshaw, 2001), current research relies on <strong>the</strong> process perspective (Bijaya and
Uday Bhaskar, 2011). The literature review shows multiple approaches on KM processes identifying
several phases (Bijaya and Uday Bhaskar, 2011). Nold (2011) pointed out that Holsapple and Jones’
model (2005) as well as Nonaka and Takeuchi’s model (1995) seem to be “more robust than many
o<strong>the</strong>r models because <strong>the</strong>y attend to identify enabling factors that drive KM influence and integrate
<strong>the</strong> process”. Present paper focuses on Holsapple and Jones’ model, which defines knowledge
leadership (KL) as <strong>the</strong> ability to establish conditions which could help knowledge to generate value.
They suggest that knowledge leadership is characterized by being a catalyst for traits such as
inspiring, mentoring, example setting, establishing a vision, listening, learning, teaching and
knowledge sharing. Thus, KL process involves planning activities (e.g. creating guidelines for aligning
KM with business strategies) and executing activities (e.g. creating a KM culture for sharing
knowledge). In a network perspective, KL should support network members to work jointly towards
<strong>the</strong> shared target. Typically, control mechanisms are implemented to monitor whe<strong>the</strong>r firms are
pursuing <strong>the</strong>ir shared targets: specific formal control systems could be used in order to verify beliefs
<strong>of</strong> actors and to place limitations on <strong>the</strong>ir actions by verifying <strong>the</strong> progress between planned and
executed activities that create a common knowledge approach. Such control tools are not trustneutral
since <strong>the</strong>y might affect levels <strong>of</strong> trust within <strong>the</strong> network. Interestingly, trust levels impact on
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Maurizio Massaro and Andrea Moro
<strong>the</strong> development <strong>of</strong> a common KL approach by ei<strong>the</strong>r facilitating or reducing it. Irrespective <strong>of</strong> its
relevance, <strong>the</strong> connection between trust, control systems and KL process is definitely underinvestigated.
This research attempts to investigate <strong>the</strong> link between trust and management control
systems (focusing on <strong>the</strong> definition <strong>of</strong> levers <strong>of</strong> control) in order to analyze <strong>the</strong> impact that <strong>the</strong>se tools
could have on KL processes.
2. Literature review
Present research elaborates a conceptual framework that shows how trust factors as described by
Mayer et al (1995) - namely ability, benevolence and integrity - could be used toge<strong>the</strong>r with <strong>the</strong> levers
<strong>of</strong> control (LOCs) described by Simons (1995) - namely, belief, boundary, diagnostic and interactive
LOCs - to create a dynamic tension that enables effective knowledge leadership processes.
2.1 Trust
The importance <strong>of</strong> trust in human relationships is highlighted by various authors, since trust as a
variable is far too important to be overlooked (Nooteboom, 2002). Incorporating trust shifts <strong>the</strong>
attention from <strong>the</strong> traditional approach linked to transaction cost economics and agency <strong>the</strong>ory to a
wider approach where interpersonal ties and relationships are taken into consideration (Barney,
1990). The extensive literature on trust emphasizes that its presence reduces agency problems (e.g.
Ring and Van de Ven, 1992); cuts transaction costs (e.g. Macaulay, 1963); and affects a firm’s
boundaries as defined by transaction cost economics (Langhfield-Smith, 2008). Trust can impact on
control mechanisms by reducing monitoring and control activities (e.g. Zand, 1972); it has been found
to decrease <strong>the</strong> use <strong>of</strong> legalistic remedies (Sitkin and Roth, 1993); it supports cooperation among
firms (e.g. Doz, 1996); and aids decision making when information is scarce (e.g. Luhmann, 2000).
Trust presupposes a situation <strong>of</strong> risk, where <strong>the</strong> potential loss from being involved in a trusting
relationship may be greater than <strong>the</strong> gain. According to Mayer et al., (1995), trust is based on <strong>the</strong>
personal predisposition to trust and on three trustworthiness factors namely: ability; benevolence; and
integrity. Ability consists <strong>of</strong> attributes such as skills and competence and is domain specific. Trust built
upon ability cannot necessarily be generalized to o<strong>the</strong>r situations because <strong>of</strong> <strong>the</strong> domain related
element <strong>of</strong> ability. Benevolence is defined as <strong>the</strong> extent to which a trustee is believed to voluntarily do
good to <strong>the</strong> trusting party: it is relationship specific. Integrity is <strong>the</strong> truster’s perception that <strong>the</strong> trustee
adheres to a set <strong>of</strong> moral/ethical principles considered acceptable to <strong>the</strong> truster: it is person specific.
2.2 Levers <strong>of</strong> control
Simons defines management control systems as “formal, information-based routines and procedures
managers use to maintain or alter patterns in organizational activities” (Simons, 1995, p.5). He argues
that <strong>the</strong>re are"[…] four key constructs that must be analyzed and understood for <strong>the</strong> successful
implementation <strong>of</strong> strategy: core values, risks to be avoided, critical performance variables, and
strategic uncertainties. Each construct is controlled by a different system or lever, <strong>the</strong> use <strong>of</strong> which [...]
creates <strong>the</strong> opposing forces - <strong>the</strong> yin and <strong>the</strong> yang - <strong>of</strong> effective strategy implementation" (Simons,
1995, pp.6-7). Simons defines <strong>the</strong> four systems <strong>of</strong> levers that are used to exercise control as “levers
<strong>of</strong> control” (LOCs) which are usually articulated as: belief, boundary, diagnostic and interactive
systems.
The belief system is “<strong>the</strong> explicit set <strong>of</strong> organizational definitions that senior managers communicate
formally and reinforce systematically to provide basic values, purpose and direction for <strong>the</strong>
organization” (Simons, 1995, p.34). As a consequence <strong>of</strong> <strong>the</strong> correct use <strong>of</strong> <strong>the</strong> belief system,
organizations are able to explore, create and use endeavor-engaging appropriate actions for
coordinating all <strong>the</strong> efforts <strong>of</strong> <strong>the</strong> organization in <strong>the</strong> same direction. The boundary system “delineates
<strong>the</strong> acceptable domain <strong>of</strong> strategic activity for organizational participants” (Simons, 1995, p. 39) and
provides <strong>the</strong> organization with specific behavior constraints. Thus, all <strong>the</strong> parts <strong>of</strong> <strong>the</strong> organization are
able to understand what is permissible and what is not. The diagnostic system is intended to motivate
components <strong>of</strong> an organization to align <strong>the</strong>ir performance with organizational objectives. Feedback
and measurement systems involve actions such as score keeping and <strong>the</strong> analysis <strong>of</strong> deviations from
standards as <strong>the</strong> basis for monitoring employee actions. The collected information actions allow <strong>the</strong>
analysis <strong>of</strong> <strong>the</strong> progress towards goals and to take corrective action when necessary (Mundy, 2010).
Finally, <strong>the</strong> interactive system is forward-looking and characterized by active and frequent dialogue
between top managers and middle managers through debate about organizational strategic problems
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and <strong>the</strong>ir possible solutions. It implies a proactive, non-invasive problem solving approach focused on
strategic uncertainty.
3. Methodology
A sample <strong>of</strong> 20 SMEs located in north-eastern Italy was drawn from an original list <strong>of</strong> 200
manufacturing firms supplied by local SME associations. Selection criteria identified companies that
usually work in a network in order to: i) develop new products, ii) improve process efficiency; iii) share
specific process activities in order to reduce costs. This approach helped us to identify companies that
belong to a "value network". The dimension <strong>of</strong> <strong>the</strong> network <strong>of</strong> our sample is between 2 and 5
companies with revenues between 2 and 25 millions euro for each company. The age <strong>of</strong> <strong>the</strong> network
is between 3 and 30 years. Firm from various different sectors have been included.
Within <strong>the</strong> selected firms, we adopted a multi-method approach that involved collection <strong>of</strong> information
through interviews, public sources such as financial report and also internal reports provided directly
by companies. Interviews were undertaken with <strong>the</strong> CEOs (managers or entrepreneurs) <strong>of</strong> <strong>the</strong>
selected firms that lead <strong>the</strong> network and were managed using a semi structured questionnaire. Main
objective <strong>of</strong> <strong>the</strong> interviews were to collect detailed data about <strong>the</strong> control tools implemented, <strong>the</strong>
importance <strong>of</strong> such control tools for managing and monitoring <strong>the</strong> network approach, as well as <strong>the</strong>
reciprocal relationships in <strong>the</strong> network (level <strong>of</strong> friendship, reciprocal trust, commitment to <strong>the</strong> project,
etc). A case study protocol and specific database were developed in order to establish an audit trail <strong>of</strong>
procedures carried out. Interviews were typewritten.
The firms network have been clustered in high/low trust and high/low level <strong>of</strong> control. Thus, we were
able to: i) cluster firms in high/low control value networks <strong>the</strong> sample <strong>of</strong> firms for each LOC; ii) identify
reciprocal trust level among value partners in each cluster; iii) identify level <strong>of</strong> KL <strong>of</strong> <strong>the</strong> firm/network.
This approach gave us <strong>the</strong> opportunity to identify emerging links between <strong>the</strong> level <strong>of</strong> trust in partners
and <strong>the</strong> intensity <strong>of</strong> control, and between possible evolution <strong>of</strong> trust in <strong>the</strong> relationship and <strong>the</strong>
development <strong>of</strong> KL.
4. Results
4.1 Trustworthiness factors, belief systems and knowledge leadership
According to Holsapple and Jones’s model (2005), KL has to inspire and mentor people. Simons
(1995) suggests that LOC belief systems are focused on sharing <strong>the</strong> basic values <strong>of</strong> <strong>the</strong> firm(s). Thus,
LOC belief systems could become facilitators <strong>of</strong> knowledge leadership. This holds particularly true in
a value network where potential conflict could emerge because <strong>of</strong> different views about <strong>the</strong> objectives
<strong>of</strong> <strong>the</strong> relations; about how to maximize <strong>the</strong> benefits <strong>of</strong> <strong>the</strong> relationship; and about how to avoid
opportunisms. Firms might use tools such as milestone documents and core values documents for
<strong>the</strong> relationship, meetings and so on.
The integrity factor (trust) focuses on values and norms that are at <strong>the</strong> core <strong>of</strong> <strong>the</strong> organization (Mayer
et al., 1995). These values should be shared and constitute <strong>the</strong> ethics <strong>of</strong> relationships and nonegotistic
sources <strong>of</strong> cooperation: thus, <strong>the</strong> higher <strong>the</strong> level <strong>of</strong> integrity <strong>the</strong> lower <strong>the</strong> need to develop
formal tools in order to share values. In addition, formal tools can impact negatively on integrity
development since <strong>the</strong>y implicitly raise questions about whe<strong>the</strong>r <strong>the</strong> trustor trusts <strong>the</strong> trustee.
We have found in our sample that firms that make a less intense use <strong>of</strong> belief LOCs for creating a
common sense <strong>of</strong> KL showed a higher level <strong>of</strong> integrity. For instance, one entrepreneur argued “XY
and KK share my very same ethical and moral principles: we do not need any piece <strong>of</strong> paper on which
to write our values! Knowledge exchange comes naturally” and ano<strong>the</strong>r stated that “we built up <strong>the</strong>
network <strong>of</strong> four firms where everyone has previously established relationships and knows <strong>the</strong> o<strong>the</strong>rs
very well. By sharing values we are aware that we reduce <strong>the</strong> risk <strong>of</strong> misunderstandings”. In addition,
in this cluster <strong>of</strong> CEOs, <strong>the</strong>re is <strong>the</strong> common opinion that values and ethics are embedded in <strong>the</strong>
relationships and that meetings to share core values are meaningless (“Why spend time in meetings
to discuss things [values] that we already know? Everyone knows how to behave, what he is
expected to do and how!”).
We have consequently derived <strong>the</strong> following proposition:
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Proposition 1. In order to develop common KL between network partners, LOCs and trustworthiness
factors are useful but integrity and belief LOCs substitute each o<strong>the</strong>r (substitution role)
4.2 Trustworthiness factors, boundaries systems and knowledge leadership
According to Holsapple and Jones’s model (2005), KL involves planning activities such as creating
guidelines for aligning KM with business strategies. These activities require that managers set
boundaries to partners’ actions in order develop an effective knowledge process. According to Simons
(1995), boundary control systems are focused on avoiding problems linked to undertaking activities
which are incompatible with <strong>the</strong> organization’s objectives and could become an interesting tool for
facilitating <strong>the</strong> KL process. They deal mainly with <strong>the</strong> implicit agency problem when <strong>the</strong> interests and
targets <strong>of</strong> people involved in undertaking projects (agents) differs from those <strong>of</strong> top management or
those <strong>of</strong> <strong>the</strong> o<strong>the</strong>r organization (principals). Agency problems can be particularly relevant in value
networks. Indeed, <strong>the</strong> risk <strong>of</strong> conflict occurs due to different views concerning who is in charge <strong>of</strong>
doing what and when: partners may take decisions <strong>the</strong>y are not supposed to take and <strong>the</strong>y can act in
a way that is not consistent with <strong>the</strong> aims <strong>of</strong> <strong>the</strong> network.
The literature on trust suggests that high integrity implies sharing basic values, ethics and moral
principles and helps to reduce <strong>the</strong> perceived risk in partnerships (Ring and Van de Ven 1992), since
<strong>the</strong> trustee is perceived to be ethically and morally close to <strong>the</strong> trustor: thus, <strong>the</strong> higher <strong>the</strong> level <strong>of</strong>
integrity, <strong>the</strong> lower <strong>the</strong> need to develop formal tools to define <strong>the</strong> borders <strong>of</strong> <strong>the</strong> activities. In addition,
boundary systems can impact negatively on integrity development since <strong>the</strong>y implicitly raise questions
about whe<strong>the</strong>r <strong>the</strong> trustor trusts <strong>the</strong> trustee.
CEOs <strong>of</strong> <strong>the</strong> cluster <strong>of</strong> firms that made reduced use <strong>of</strong> boundary LOCs displayed high levels <strong>of</strong>
integrity. Very <strong>of</strong>ten CEOs argued that contracts and o<strong>the</strong>r legal documents are not considered useful
(“[…] in our partnership values are shared and you know that a handshake is more important than a
long detailed contract” ). Moreover, quite <strong>of</strong>ten <strong>the</strong>y pointed out that “you can save a lot <strong>of</strong> money
avoiding payments to lawyers” (as one CEO put it). At <strong>the</strong> same time, we found evidence <strong>of</strong> low levels
<strong>of</strong> integrity in <strong>the</strong> cluster <strong>of</strong> firms that made intensive use <strong>of</strong> boundary LOCs. For instance one CEO
said: “This is <strong>the</strong> first time that we have worked toge<strong>the</strong>r. We do not know <strong>the</strong>ir ethics and moral
principles. Thus, we’ve decided to create a specific code <strong>of</strong> conduct that we put into our partnership
agreement.” and he added “We have to avoid any leakage <strong>of</strong> information and prevent any selfish
behavior. We established a very stringent partnership agreement.”
Thus, we derive <strong>the</strong> following proposition:
Proposition 2a. In order to develop common KL within <strong>the</strong> network partners LOCs and
trustworthiness factors are useful but integrity and boundary LOCs substitute each o<strong>the</strong>r (substitution
role)
Benevolence is defined as <strong>the</strong> extent to which a trustee is believed to voluntarily do good to <strong>the</strong>
trustor (Mayer et al. 1995). When perceived benevolence is high, partners are perceived to act in a
way that is not detrimental to <strong>the</strong> interests <strong>of</strong> o<strong>the</strong>rs. In o<strong>the</strong>r words, partners are perceived to act
benevolently when <strong>the</strong>y take into consideration o<strong>the</strong>rs’ interests and needs when <strong>the</strong>y take <strong>the</strong>ir own
decisions. In <strong>the</strong> cluster <strong>of</strong> firms that tends to avoid <strong>the</strong> use <strong>of</strong> boundary LOC systems, high levels <strong>of</strong>
benevolence are common. For instance, various CEOs argued “Why should he cheat me? Why
should I cheat him? There is no reason!” or “[…] I know that if I need extra support, XY will provide it”!.
Thus, <strong>the</strong> perception that a partner can cheat or can act simply in pursuing self-interest, exploiting <strong>the</strong>
relationship and overstepping <strong>the</strong> limits <strong>of</strong> what is expected, is reduced. We <strong>the</strong>refore derive <strong>the</strong>
following proposition:
Proposition 2b. In order to develop common KL within <strong>the</strong> network partners, LOCs and
trustworthiness factors are useful but benevolence and boundary LOCs substitute each o<strong>the</strong>r
(substitution role)
4.3 Trustworthiness factors, diagnostic systems and knowledge leadership
According to Holsapple and Jones’s model (2005), KL involves planning activities (e.g. creating
guidelines for aligning KM with business strategies) and executing activities (e.g. creating a KM
culture for sharing knowledge). The diagnostic control approach is focused on comparing
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Maurizio Massaro and Andrea Moro
performance targets with actual performance achieved. Thus, diagnostic approaches could help <strong>the</strong>
KL process by analyzing planned activities, showing results obtained in order to create a common
sense <strong>of</strong> knowledge in <strong>the</strong> value network. Interestingly, diagnostic LOCs shift <strong>the</strong> focus from
evaluating partners’ competence ex ante, to <strong>the</strong> evaluation <strong>of</strong> partners’ performance in itinere and ex
post. Diagnostic LOC also compensate for <strong>the</strong> lack <strong>of</strong> knowledge about partners’ competence, setting
very clear targets and deadlines, thanks to <strong>the</strong> implementation <strong>of</strong> master and operating budgets,
standard costing and variance analysis, project pr<strong>of</strong>itability analysis etc.
Perceived ability is context specific and based on <strong>the</strong> fact that <strong>the</strong> trustor considers <strong>the</strong> partner
competent and capable <strong>of</strong> running its own business. In value networks, when perceived ability is high,
<strong>the</strong>re is no concern about whe<strong>the</strong>r partners will be able to perform as expected and <strong>the</strong>y are
considered capable <strong>of</strong> producing <strong>the</strong> expected outcome on time.
CEOs <strong>of</strong> <strong>the</strong> cluster <strong>of</strong> firms that made reduced use <strong>of</strong> diagnostic tools displayed high levels <strong>of</strong>
perceived ability <strong>of</strong> partners. Very <strong>of</strong>ten CEOs argued that partners are very capable, stressing how
<strong>the</strong> partners have been able to sort out technical problems linked to projects developed within <strong>the</strong>
value network and putting in extra effort to meet deadlines. CEOs pointed out that <strong>the</strong>y considered
detailed budgeting and detailed procedures to authorize expenses unnecessary (for instance: “We
didn’t formalise a budget [...] when someone said he or she needed more time, or an external
consultancy no one asked “why?” or “are you sure?”.)
Thus, high levels <strong>of</strong> perceived ability reduce monitoring since partners are perceived as competent
and hence reliable: we can <strong>the</strong>refore derive <strong>the</strong> proposition:
Proposition 3. In order to develop common KL within <strong>the</strong> network partners, LOCs and
trustworthiness factors are useful but ability and diagnostic LOCs substitute each o<strong>the</strong>r (substitution
role)
4.4 Trustworthiness factors, interactive systems and knowledge leadership
According to Holsapple and Jones’s model (2005), KL is a catalyst for traits such as learning,
teaching and knowledge sharing. In this perspective and according to Argyris (1992), an interactive
control system should be considered a double loop learning system. Previous research suggests that
interactive LOCs require discussion in meetings with superiors, subordinates and peers for focusing
action on strategic success factors. This approach creates a recurrent challenge but it also requires
debate that facilitates learning and knowledge sharing attitudes (e.g. Simons, 2000). The success <strong>of</strong> a
value network depends on sharing information, but when firms disclose confidential information about
<strong>the</strong>ir skills, competences, capabilities, market positioning, strategy etc., <strong>the</strong>y expose <strong>the</strong>mselves to a
very high risk if <strong>the</strong> collector <strong>of</strong> such information misuses it. Thus, on <strong>the</strong> one hand, information
sharing is a key success factor for <strong>the</strong> firm; on <strong>the</strong> o<strong>the</strong>r hand it increases <strong>the</strong> risks <strong>the</strong> firm incurs. KL
process has to create <strong>the</strong> right confidential environment in order to facilitate this process.
High levels <strong>of</strong> perceived benevolence tend to support exchange <strong>of</strong> information since if <strong>the</strong> trustee is
perceived to do good to <strong>the</strong> trustor, <strong>the</strong> trustor will not perceive high risk in sharing privileged and
confidential information with <strong>the</strong> trustee. Thus, a high level <strong>of</strong> benevolence should support interactive
LOCs. Moreover, trust requires familiarity and mutual understanding (Nooteboom et al., 1997). Such
mutual understanding supports <strong>the</strong> idea that shared information will be used in <strong>the</strong> common interest.
In fact, sharing <strong>of</strong> values is <strong>the</strong> basis for <strong>the</strong> strongest form <strong>of</strong> trust, i.e. identification based trust
(Lewicki and Bunker, 1996). Firms that use integrative LOCs are found to have high levels <strong>of</strong> integrity
and benevolence. Various CEOs pointed out that <strong>the</strong> information shared is particularly confidential
and that high levels <strong>of</strong> perceived integrity support clear and effective information exchange (“[…] we
share our knowledge. We are also friends with <strong>the</strong> partners <strong>of</strong> <strong>the</strong> NPD project, because we started
our businesses more or less toge<strong>the</strong>r many years ago”). Moreover, dialogue and information sharing
is supported by <strong>the</strong> perception that partners behave benevolently: good and supportive behavior is
reciprocated (“I’m happy to share information since I know that my partner will use it for common
goal”). Many CEOs emphasize <strong>the</strong> role <strong>of</strong> reciprocal trust in communication and <strong>the</strong> fact that
benevolence and integrity foster frank debate about data, assumptions and action plans. In this
context, criticism is not perceived as a personal attack (“if we trust each o<strong>the</strong>r, <strong>the</strong>re is no problem in
telling it like it is!”). CEOs <strong>of</strong> <strong>the</strong> cluster <strong>of</strong> firms that rely less on interactive LOCs are aware <strong>of</strong> <strong>the</strong>
difficulties <strong>of</strong> implementing interactive control tools when <strong>the</strong>re is a lack <strong>of</strong> trust (and specifically
benevolence and integrity) since in this case <strong>the</strong> risk <strong>of</strong> disclosing information is perceived as very
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Maurizio Massaro and Andrea Moro
high (“we were frustrated by <strong>the</strong> difficulties <strong>of</strong> sharing information with unreliable partners who tend to
pursue <strong>the</strong>ir personal agendas. So we reduced information sharing to <strong>the</strong> minimum and started to
monitor progress solely on facts and figures”). Thus, we can derive <strong>the</strong> propositions:
Proposition 4a. In order to develop common KL within <strong>the</strong> network partners, benevolence supports
interactive LOCs (support role)
Proposition 4b. In order to develop common KL within <strong>the</strong> network partners, integrity supports
interactive LOCs (support role)
4.5 Trustworthiness factors, LOCs and knowledge leadership. a loop effect
According to previous literature, LOCs may help managers to process information and coordinate <strong>the</strong>
network by reducing <strong>the</strong> potential for personal agendas and facilitating management <strong>of</strong> alliances and
relationships (Gulati and Singh, 1998). Moreover, greater information sharing creates and supports
<strong>the</strong> development <strong>of</strong> higher levels <strong>of</strong> trust (Valez et al., 2008). The CEOs we interviewed tended to
emphasize that when information increases reciprocal knowledge, <strong>the</strong> relationship between partners
improves as does reciprocal trust (“By using our control system, we are able to check <strong>the</strong> progress in
<strong>the</strong> network. This allowed us to increase reciprocal knowledge, reciprocal trust as well as increase our
commitment to <strong>the</strong> project.”). Thus, we can derive <strong>the</strong> propositions:
Preposition 5. In order to develop common KL within <strong>the</strong> network, LOCs could support <strong>the</strong> increase
<strong>of</strong> reciprocal knowledge trust (support role)
5. Discussion
Our analysis shows how trustworthiness factors (integrity, benevolence and ability) and LOCs (beliefs,
boundaries, diagnostic and interactive) could affect <strong>the</strong> knowledge process in order to improve <strong>the</strong>
effectiveness <strong>of</strong> knowledge leadership. The conceptual framework suggests that LOCs and trust can
support <strong>the</strong> KL process, identifying reciprocal influences between <strong>the</strong>se variables. Propositions 1, 2a,
2b and 3 suggest a substituting role between trustworthiness factors and LOCs. Proposition 4
stresses <strong>the</strong> joint supporting role <strong>of</strong> interactive LOCs and trust in developing KL. Proposition 5 points
out that proper use <strong>of</strong> LOCs could affect <strong>the</strong> KL process by creating a supportive process that
increases trust among network members. The conceptual framework explains when <strong>the</strong> mix <strong>of</strong> trust
and levers <strong>of</strong> control can support (namely when trust and control “cooperate”) or compromise (namely
when trust and control clash) knowledge leadership development. In addition, <strong>the</strong> conceptual
framework explains when trust and levers <strong>of</strong> control substitute for each o<strong>the</strong>r (high trust/low control
and low control/high trust) and when <strong>the</strong>y work jointly in supporting knowledge leadership (when
information provided by control supports <strong>the</strong> development <strong>of</strong> trust). Finally, <strong>the</strong> conceptual framework
suggests paths for moving from trust/levers <strong>of</strong> control mixes that do not support knowledge leadership
development to mixes that support it by showing how to reduce trust/control conflicting situations. The
conceptual frame work we have derived is diagrammed in <strong>the</strong> following figure.
Table 1: Suggested conceptual framework
Aims <strong>of</strong> knowledge
Tools that could be used for achieving <strong>the</strong> aims
leadership process Levers <strong>of</strong> control Relationship
between
tools
Trustworthiness factors
Inspiring and mentoring
Belief systems - ← +
Integrity
people
P 1
Planning activities for Boundary systems - ← +
Benevolence
aligning KM with strategies
P 2a,b
Integrity
Planning and executing Diagnostic systems - ← +
Ability
activities for allowing <strong>the</strong>
achievement <strong>of</strong> aims
P 3
Helping <strong>the</strong> learning, Interactive systems + ← +
Benevolence
teaching and knowledge
sharing process
P 4
Integrity
Supporting <strong>the</strong> whole KL
Belief systems
+ → +
Integrity
process
Boundary systems
P 5
Benevolence
Diagnostic systems
Interactive systems
Ability
363

Note: Substitution role: - ← +; Support role: + → +
6. Conclusion
Maurizio Massaro and Andrea Moro
The present paper illustrates a conceptual framework that links <strong>the</strong> aims <strong>of</strong> knowledge leadership
process, levers <strong>of</strong> control and trust. Previous research argues that <strong>the</strong>re could be a link between trust
and control but it does not investigate such a link properly, nor does it investigate <strong>the</strong> impact on
knowledge leadership process. This paper argues that trustworthiness factors substitute control
mechanisms in supporting <strong>the</strong> knowledge leadership process when <strong>the</strong> firm implements boundary,
diagnostic and belief LOCs. We point out that integrity could substitute <strong>the</strong> belief systems in inspiring
and mentoring people; benevolence and integrity could substitute boundary systems in supporting
alignment <strong>of</strong> KM with strategies; ability could substitute diagnostic systems in executing activities for
allowing <strong>the</strong> achievement <strong>of</strong> aims. At <strong>the</strong> same time, benevolence and Integrity could support
interactive systems in fostering teaching and knowledge process sharing.
This research also evidences limitations that open <strong>the</strong> door to new and additional research. Firstly, we
investigate a few small firms in Nor<strong>the</strong>rn Italy. This aspect limits <strong>the</strong> possibility <strong>of</strong> generalize <strong>the</strong>
conceptual framework, because <strong>of</strong> <strong>the</strong> role <strong>of</strong> culture in developing trust. Thus, it could be useful to
examine <strong>the</strong> applicability <strong>of</strong> <strong>the</strong> conceptual framework in o<strong>the</strong>r cultural environments. Secondly, <strong>the</strong>
approach is qualitative. Testing <strong>the</strong> conceptual framework quantitatively could be interesting and
could provide some insights into whe<strong>the</strong>r <strong>the</strong> conceptual framework can be generalized. Thirdly, <strong>the</strong>
research is cross sectional. It could be interesting to examine <strong>the</strong> evolution <strong>of</strong> trust through time and
its impact on LOCs and KM.
Notwithstanding <strong>the</strong> stated limitations, this research is a step forward in <strong>the</strong> examination <strong>of</strong> <strong>the</strong> role <strong>of</strong>
trust and control mechanisms on <strong>the</strong> knowledge leadership process.
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365

Generating Wealth Through Innovations: Is it Necessary to
Manage Intellectual Capital?
Helen Mitchell 1 and Dennis Viehland 2
1
Department <strong>of</strong> Management and Marketing, Unitec Institute <strong>of</strong> Technology,
Auckland, New Zealand
2
School <strong>of</strong> Management, Massey University, Auckland, New Zealand
hmitchell@unitec.ac.nz
d.viehland@massey.ac.nz
Abstract: The aim <strong>of</strong> this paper is to discuss <strong>the</strong> management <strong>of</strong> intellectual capital as an avenue through which
organisations can create a culture to encourage <strong>the</strong> sharing <strong>of</strong> knowledge that will lead to <strong>the</strong> emergence <strong>of</strong> ideas
and development <strong>of</strong> innovations. The literature points to <strong>the</strong> intellectual capital <strong>of</strong> an organisation as <strong>the</strong> avenue
through which it can create value and generate wealth. The significance <strong>of</strong> people knowledge within <strong>the</strong>
operational activities <strong>of</strong> an organisation points to <strong>the</strong> importance <strong>of</strong> managing intellectual capital to influence <strong>the</strong>
potential for increasing innovative activity that in turn will provide <strong>the</strong> means for enhancing sustainability and
wealth. A case study approach was taken to investigate <strong>the</strong> degree to which <strong>the</strong> management <strong>of</strong> intellectual
capital was occurring in a New Zealand organisation. Senior managers and staff were interviewed and a survey
<strong>of</strong> additional staff was carried out to obtain a wider perspective <strong>of</strong> <strong>the</strong> views <strong>of</strong> employees. Although recognising
<strong>the</strong> knowledge <strong>of</strong> its people, and having a record <strong>of</strong> innovative activity, no process was in place to manage
intellectual capital. However, it was agreed by senior management that <strong>the</strong> managing intellectual capital provided
<strong>the</strong> potential to fur<strong>the</strong>r encourage knowledge sharing and <strong>the</strong> opportunity to encourage and accelerate <strong>the</strong>
development <strong>of</strong> innovations. The study was undertaken in a large New Zealand corporation and this can be
viewed as a limitation. However, <strong>the</strong> organisation had restructured into a number <strong>of</strong> independent business units
and <strong>of</strong> <strong>the</strong> business units in <strong>the</strong> study six were in New Zealand and three were in Australia. The research
revealed that senior managers were aware <strong>of</strong> <strong>the</strong> importance <strong>of</strong> knowledge but understanding <strong>the</strong> relevance <strong>of</strong>
managing intellectual capital was not immediately recognised as an approach to be taken to encourage <strong>the</strong>
development <strong>of</strong> innovations. An additional outcome indicated <strong>the</strong> value <strong>of</strong> a closer working relationship between
academics and practitioners to develop strategies for <strong>the</strong> management <strong>of</strong> intellectual capital.
Keywords: Intellectual capital, innovations, wealth, culture
1. Background:
Interest in intellectual capital arose during <strong>the</strong> late 1980s early 1990s when it became apparent that
<strong>the</strong> value <strong>of</strong> some company shares did not equate with <strong>the</strong>ir “book value”, raising <strong>the</strong> question about
how this occurred (Sveiby, 1997). The divergence between book value and market value for a long
time puzzled investment analysts, but <strong>the</strong> widening gap became more evident from <strong>the</strong> burgeoning <strong>of</strong>
organisations associated with <strong>the</strong> technology industry. As awareness <strong>of</strong> what was happening
emerged through those interested in <strong>the</strong> financial aspects <strong>of</strong> an organisation, it was inevitable that
early interest in intellectual capital took a financial focus. Authors (such as Sveiby, 1997; Stewart,
1997; Jordan and Jones, 1997; and Klein, 1998) recognised that intangible assets, as with tangible
assets, require to be managed. Previously intangibles appeared on <strong>the</strong> balance sheet under <strong>the</strong>
general rubric <strong>of</strong> goodwill. Intellectual capital (intangibles) available to an organisation is made up <strong>of</strong>
human intellect, experience, expertise, information, problem solving capability, intellectual property
and managerial skills. There is general agreement amongst <strong>the</strong> authors cited above that <strong>the</strong> ability to
generate wealth and enhance value will only be achieved if an organisation manages its intellectual
capital. This has led to greater awareness that intellectual capital makes a significant contribution to
<strong>the</strong> wealth <strong>of</strong> an organisation. However, many organisations, particularly smaller businesses, may not
realise <strong>the</strong> value <strong>of</strong> <strong>the</strong>ir intellectual capital, but if <strong>the</strong>y do, are <strong>the</strong>y managing it?
Managing intellectual capital involves looking to create and extract value. For this to occur it is
necessary to ensure that intellectual capital is focused on providing maximum development and
benefit to meet not only <strong>the</strong> future needs <strong>of</strong> <strong>the</strong> organisation, but also for it to be successful in <strong>the</strong>
constantly changing environment in which it operates. The economist’s perspective is directed
towards focusing on what can be gained from an economic good. Value creation for sustainability
emphasises <strong>the</strong> need to utilise intellectual capital in <strong>the</strong> most efficient and effective manner.
It is stated by Steenkamp and Kashyap (2010) that an organisation’s intellectual capital impacts on its
business performance and ability to innovate, and improves its earnings potential. Wealth is
generated by enhancing <strong>the</strong> value <strong>of</strong> products and services in response to <strong>the</strong> needs <strong>of</strong> customers
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(Penrose, 1963). Historically, manufactured products have been recognised as <strong>the</strong> source <strong>of</strong> wealth,
but <strong>the</strong> proliferation <strong>of</strong> service, technology and research-focused businesses, has drawn attention to
<strong>the</strong> importance <strong>of</strong> intangible assets. The more that is known about an organisation’s resources <strong>the</strong>
greater is <strong>the</strong> opportunity to gain benefit from <strong>the</strong>m (Penrose, 1963). The uniqueness <strong>of</strong> an
organisation’s intellectual capital makes it difficult to imitate and, in <strong>the</strong> case <strong>of</strong> organisational-based
knowledge, difficult to replicate. Intellectual capital provides an organisation with <strong>the</strong> potential to
create value. Therefore, <strong>the</strong> capability <strong>of</strong> an organisation to manage its intellectual capital is critical to
its ability to generate wealth and to attain sustainable revenue. This is achieved through adding value
to <strong>the</strong> products and services an organisation <strong>of</strong>fers to its customers (Ireland et al., 2001). If customers
feel <strong>the</strong>y have received value <strong>the</strong>y will remain loyal to an organisation. However, it is not only
customers who look to an organisation for value, but every stakeholder associated with it.
Intellectual capital is generated from <strong>the</strong> aggregate knowledge <strong>of</strong> <strong>the</strong> organisation. From a knowledge
contributing perspective, it is essential for an organisation to look more critically at this frequently
neglected resource. Too <strong>of</strong>ten <strong>the</strong>re is a lack <strong>of</strong> awareness, not only <strong>of</strong> <strong>the</strong> vast array <strong>of</strong> knowledge
accumulated by an organisation, but more critically <strong>of</strong> <strong>the</strong> lack <strong>of</strong> recognition <strong>of</strong> its value. Intellectual
capital has an essential part to play in an organisation’s strategy. Strategies are <strong>the</strong> means through
which organisations attain <strong>the</strong>ir objectives and <strong>the</strong> value <strong>of</strong> an organisation’s intellectual capital is a
strong determinant <strong>of</strong> its future survival. Taking a holistic view <strong>of</strong> intellectual capital and knowing
where <strong>the</strong> key elements <strong>of</strong> it reside is critical.
An organisation’s capabilities and competencies are vital resources providing <strong>the</strong> means through
which value can be gained. The core competency <strong>of</strong> a business stems from <strong>the</strong> knowledge
contribution <strong>of</strong> its people. This value accrues both from <strong>the</strong> resources and from <strong>the</strong> learning and
knowledge gained through social interaction within an organisation. Building relationships with
external parties through networking is important, <strong>of</strong>fering <strong>the</strong> potential for value as it provides an
avenue to source information and develop opportunities for collaborative activity (Varis and Littunen,
2010).
The individual knowledge <strong>of</strong> people along with collective knowledge developed as a result <strong>of</strong>
employee interaction provides a “knowledge hub” through which <strong>the</strong> organisation is able to operate.
Encapsulated in <strong>the</strong> competencies <strong>of</strong> employees is <strong>the</strong>ir knowledge, skills, and expertise providing <strong>the</strong>
know-what, know-how and know-why so essential to an organisation. However, for organisations to
function, knowledge is <strong>the</strong> “oil” upon which <strong>the</strong>y depend. Knowledge permeates every activity, and to
maximise its value it is necessary to find ways <strong>of</strong> tapping into that knowledge base and to create new
knowledge for <strong>the</strong> development and expansion <strong>of</strong> core competencies.
Research by Barth (2005) examines knowledge types and <strong>the</strong>ir properties and his work is useful for
organisations looking to maximise access to knowledge to build <strong>the</strong>ir intellectual capital.
Consideration is given to explicit, tacit and implicit knowledge, identifying respectively <strong>the</strong> content that
should be valued, how it can be leveraged, and identifying who owns <strong>the</strong> asset. This will provide
organisations with an understanding <strong>of</strong> <strong>the</strong> expectations <strong>of</strong> knowledge and how it can be managed to
enable <strong>the</strong> organisation to take full advantage <strong>of</strong> <strong>the</strong> benefits that can be gained from its knowledge
along with recognising it as a critical contributor to adding value.
Flexibility to respond quickly is critical to <strong>the</strong> wealth creating process. Therefore, knowing what an
organisation is capable <strong>of</strong> undertaking is extremely important in a highly competitive environment as
this provides <strong>the</strong> means through which emerging opportunities open <strong>the</strong> doors for wealth generation.
The wider <strong>the</strong> range <strong>of</strong> knowledge resources and synergistic combinations that can be achieved, <strong>the</strong>
greater <strong>the</strong> likelihood for unique value creation sets to emerge (Rastogi, 2003).
Although managers may recognise that intellectual capital is pivotal to <strong>the</strong> success <strong>of</strong> <strong>the</strong>
organisation, this recognition must lead to action. This is <strong>the</strong> ability <strong>of</strong> <strong>the</strong> organisation to manage that
knowledge, and to use it in a way that will build intellectual capital. Therefore, it is essential that
managers rise to <strong>the</strong> challenge <strong>of</strong> integrating <strong>the</strong> skills, experience and culture <strong>of</strong> <strong>the</strong> organisation to
develop its capabilities and competencies to a point that will make it difficult for o<strong>the</strong>r organisations to
replicate <strong>the</strong>m. The capabilities and competencies <strong>of</strong> an organisation provide <strong>the</strong> foundation for
generating success, because it is through its competencies that an organisation produces its unique
identity. The culture <strong>of</strong> each business is unique as is <strong>the</strong> knowledge that generates <strong>the</strong> capabilities
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within <strong>the</strong> business. Bill Martin (2008, p. 398) states: “Organizational culture is widely regarded as a
key influence on <strong>the</strong> success <strong>of</strong> knowledge management”, and to gain value from knowledge it is
essential that within <strong>the</strong> business <strong>the</strong>re is a culture that encourages <strong>the</strong> sharing <strong>of</strong> knowledge (Tseng,
2009).
Culture influences behaviour and attempting to make a transition from a culture where sharing is not
<strong>the</strong> norm, to one that emphasises <strong>the</strong> importance <strong>of</strong> sharing can be traumatic for those involved (King
and Anderson, 2002). Making cultural changes takes time, but critical elements for being successful
in making change is communicating why change is necessary and this requires giving credence to <strong>the</strong>
importance <strong>of</strong> knowledge and contributing knowledge is valued.
Recognising intellectual capital as a key provider <strong>of</strong> future wealth requires management to have in
place supportive mechanisms enabling cross fertilisation <strong>of</strong> knowledge to occur. However, <strong>the</strong>re is
power attached to knowledge in that it can be sold, or given away. Therefore, it is important
organisations are aware <strong>of</strong> <strong>the</strong>ir vulnerability with regard to <strong>the</strong> selling <strong>of</strong> knowledge, or loss <strong>of</strong>
knowledge through departing employees, because <strong>of</strong> <strong>the</strong> impact <strong>the</strong>se situations may have on <strong>the</strong>
ability to maintain <strong>the</strong>ir competitive position.
The process <strong>of</strong> renewing, organising and transforming knowledge assets enables organisations to
define <strong>the</strong>ir future capabilities and to maximise <strong>the</strong> value <strong>of</strong> <strong>the</strong>ir intellectual assets. It is important to
constantly review what has been done with <strong>the</strong> aim <strong>of</strong> doing things better, abandoning activities no
longer relevant, and replacing <strong>the</strong>m with new ones (Rastogi, 2003). Renewal should be regarded as a
way <strong>of</strong> promoting organisational sustainability through constantly re-evaluating currency <strong>of</strong> knowledge
to determine its ability to sustain <strong>the</strong> organisation’s positioning within <strong>the</strong> marketplace.
Commitment is involved in managing intellectual capital. This begins with an understanding <strong>of</strong> <strong>the</strong>
purpose and direction <strong>of</strong> <strong>the</strong> organisation, and <strong>the</strong> realisation that intellectual capital as a strategic
asset links to <strong>the</strong> organisational performance. This in turn is linked to <strong>the</strong> contribution <strong>of</strong> <strong>the</strong> individual
employee. To gain value from intellectual capital, strong management skills are required to persuade
employees that <strong>the</strong>ir contribution impacts on <strong>the</strong> organisation’s ability to continue to keep ahead <strong>of</strong> its
competitors. Therefore, it is necessary for management to focus on <strong>the</strong> development <strong>of</strong> <strong>the</strong>
organisation’s capabilities and competencies by recognising that <strong>the</strong> intellectual capital within <strong>the</strong>m
will place <strong>the</strong> organisation in a position to compete in a dynamic environment.
Difficulties associated with <strong>the</strong> replication <strong>of</strong> an organisation’s knowledge by ano<strong>the</strong>r organisation
emphasises <strong>the</strong> strategic importance <strong>of</strong> intellectual capital for an organisation’s future development
and prosperity. Previously, manufactured products tended to be recognised as <strong>the</strong> source <strong>of</strong> wealth,
but <strong>the</strong> proliferation <strong>of</strong> service, technology and research-focused businesses is attracting increased
attention. The base upon which such organisations operate can only be assumed to be <strong>the</strong>ir
intellectual capital. However, <strong>the</strong> operational activities <strong>of</strong> a manufacturer <strong>of</strong> products can also be
differentiated from o<strong>the</strong>r organisations through its intellectual capital.
Managing intellectual capital places <strong>the</strong> organisation in a position to understand <strong>the</strong> value <strong>of</strong> <strong>the</strong>
knowledge available to it, and to direct that knowledge to creating innovations. How innovative an
organisation is determines its future. Innovative organisations become recognised as forward thinkers
resulting in respect within <strong>the</strong>ir industries that can lead to fur<strong>the</strong>r opportunities. Many innovations
emerge through incremental progression ra<strong>the</strong>r than as a major breakthrough producing an amazing
new product. Therefore, organisations should be constantly questioning what <strong>the</strong>y are doing, and how
<strong>the</strong>y are doing it because <strong>the</strong> reconfiguring <strong>of</strong> specialist knowledge can lead to new innovations
(Grant, 1996).
An effective management approach identifies where <strong>the</strong> most valuable facets <strong>of</strong> <strong>the</strong> intellectual capital
are positioned, and brings relevant connections toge<strong>the</strong>r to be communicated throughout <strong>the</strong>
organisation as it involves <strong>the</strong> linking toge<strong>the</strong>r <strong>of</strong> all <strong>the</strong> threads <strong>of</strong> knowledge that permeate <strong>the</strong>
organisation. Managing intellectual capital is complex and it is important that <strong>the</strong> management <strong>of</strong>
intellectual capital is developed to provide a framework for maximising <strong>the</strong> leveraging <strong>of</strong> intangible
assets (Saint-Onge cited by Chatzkel, 2000). Rastogi (2003, p. 230) promotes a holistic perspective
“to co-ordinate, orchestrate, and deploy its knowledge resources toward creating value in pursuit <strong>of</strong> its
future vision”. A less controlling and more systems-oriented perspective is suggested by Saint-Onge
(cited by Chatzkel, 2000, p. 103). This can be achieved by reconfiguring <strong>the</strong> organisational structure
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in a way that “places importance on <strong>the</strong> interdependence between individual, structural and customer
capital” thus providing opportunities for greater interaction amongst <strong>the</strong> various groups.
Although it is important for innovation-based organisations to actively manage <strong>the</strong>ir intellectual capital,
to sustain <strong>the</strong>ir position in competitive markets all organisations need to be continually innovating.
Varis and Littunen (2010 p. 128) state, “<strong>the</strong> ability <strong>of</strong> firms to adapt in <strong>the</strong>ir external environment and
to remain competitive is closely related to <strong>the</strong>ir capacity to innovate”. Organisations need to be
sufficiently flexible to respond quickly to emerging opportunities as this is critical to <strong>the</strong> wealth creating
process. However, it is also important that all organisations recognise <strong>the</strong>y are charged with <strong>the</strong>
responsibility for recognising and taking advantage <strong>of</strong> opportunities when <strong>the</strong>y arise.
Innovation does not only mean new products, it also encompasses developing new systems and
processes and organisational restructuring. Therefore it can be <strong>the</strong> way an organisation manages its
business, and how it is structured that it can become more innovative. Isaac, Herremans and Kline
(2009, p. 82) emphasise <strong>the</strong> importance <strong>of</strong> “flexibility found in networks and organic systems and not
<strong>the</strong> inflexibility found in structures <strong>of</strong> a hierarchical nature”. They promote an organic structure as
providing “<strong>the</strong> foundation necessary for management <strong>of</strong> IC” (p. 88). Isaac et al. (2009) also point to
<strong>the</strong> importance <strong>of</strong> management creating an environment that emphasises <strong>the</strong> importance <strong>of</strong> trust and
<strong>of</strong>fers employees <strong>the</strong> opportunity to take part in <strong>the</strong> decision making process.
Research in New Zealand conducted by Darroch and McNaughton (2002) involved 443 organisations
in New Zealand with over 50 employees. It was found that managing an organisation’s intellectual
capital impacts on both incremental and radical innovation. Finding time for innovation, and
encouraging group behaviour supportive <strong>of</strong> innovation, while bringing mixed results, did show a
positive effect. The results <strong>of</strong> <strong>the</strong>ir research illustrate that being aware <strong>of</strong> information changes in <strong>the</strong>
marketplace, working in partnership with international customers, using technology for knowledge
dissemination, and being flexible and opportunistic, positively impacts on innovation.
Organisations do not innovate in isolation. Interaction with <strong>the</strong>ir customers, suppliers, and o<strong>the</strong>r
organisations enables <strong>the</strong>m to add to <strong>the</strong>ir knowledge. Working collaboratively on innovation with
o<strong>the</strong>r organisations has many advantages. Through working toge<strong>the</strong>r both Alcoa (Aluminium) and
Audi created a “revolutionary aluminium frame for automobiles” (Stewart, 1997, p. 155). Alcoa
benefited through ongoing development <strong>of</strong> new alloys and technologies suitable for o<strong>the</strong>r markets.
Audi gained additional prestige and a premium price for <strong>the</strong>ir cars and met <strong>the</strong> requirements <strong>of</strong>
German laws that cars can be recyclable.
Intellectual property has <strong>the</strong> potential for generating greater value than bricks and mortar. The
manufacturing arm <strong>of</strong> <strong>the</strong> organisation can be sold, but <strong>the</strong> rights to <strong>the</strong> intellectual property, if held in
a separate company, can be retained to provide ongoing wealth. Recognising <strong>the</strong> importance <strong>of</strong>
intellectual capital, and <strong>the</strong> wealth that can be generated from it encourages organisations to put in
place a plan for its management.
Managing intellectual capital is about recognising that intangible assets represent a major share <strong>of</strong>
value and that <strong>the</strong>y <strong>of</strong>fer new opportunities for <strong>the</strong> organisation. The very nature <strong>of</strong> intangibles makes
<strong>the</strong>m different from tangible assets and <strong>the</strong>refore, organisations will require a different management
approach. Operating in a constantly changing economic environment that is intensely competitive,
<strong>the</strong>re is a need for organisations to allow for greater agility and flexibility in <strong>the</strong>ir planning. This is
particularly so for knowledge intensive business ventures.
2. Method
From an examination <strong>of</strong> <strong>the</strong> literature relating to business research, <strong>the</strong> case study method was
identified as appropriate for this study. The organisation identified for <strong>the</strong> study was determined as a
result <strong>of</strong> analysing <strong>the</strong> annual reports <strong>of</strong> 38 New Zealand businesses. The case selected for study
was one that in its annual report made reference to knowledge <strong>of</strong> its people, innovation, leadership
and performance. The organisation had restructured its six divisions into approximately 30 business
units with each being set up as a limited company.
The chief executives <strong>of</strong> nine <strong>of</strong> <strong>the</strong> business units were interviewed. Questions asked where <strong>the</strong> value
<strong>of</strong> <strong>the</strong> company resides, whe<strong>the</strong>r <strong>the</strong>re is a strategy for managing intellectual capital, and if through
managing intellectual capital an organisation can become more innovative. The chief executives were
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<strong>the</strong>n asked about <strong>the</strong> use <strong>of</strong> internal and external networks to acquire knowledge, <strong>the</strong> extent to which
knowledge was codified, and plans for creating new knowledge for <strong>the</strong> development and growth <strong>of</strong>
intellectual capital. The final questions asked if <strong>the</strong> restructuring <strong>of</strong> <strong>the</strong> organisation into several
companies had created a more innovative environment, whe<strong>the</strong>r products/services had
increased/changed as a result <strong>of</strong> ideas promoted by staff, and how intellectual property is managed
3. Results and discussion
Asked about where <strong>the</strong> value <strong>of</strong> <strong>the</strong> company resided, <strong>the</strong> chief executives acknowledged <strong>the</strong> central
importance <strong>of</strong> people. However, three respondents also indicated creators <strong>of</strong> value as products,
physical assets, brands and processes. Customers, potential customers and distributor networks,
along with brands were all identified as providing considerable value. Empowering people to take
responsibility and to be accountable were identified as important, as was appropriately rewarding
people. There was a strong focus on staff development. One respondent identified that <strong>the</strong> business
unit has a clear view that if people are its core asset <strong>the</strong>n <strong>the</strong> investment around, and into people, is
essential.
No business unit had a strategy in place for managing intellectual capital. Two respondents did
suggest <strong>the</strong>re may be a strategy implicitly sitting within <strong>the</strong> organisational strategy with ano<strong>the</strong>r
indicating that an intellectual capital strategy would be woven into all parts <strong>of</strong> <strong>the</strong> organisation’s
strategy.
Following a discussion about managing intellectual capital, respondents were in agreement that
through managing intellectual capital an organisation could become more innovative. Two
respondents added qualifiers relating to conditions allowing innovation. One felt <strong>the</strong>re was a tendency
for <strong>the</strong> units to be insular, thus almost creating a silo effect. The second said that although <strong>the</strong>
business unit set <strong>the</strong> outcomes or expectations, and provided <strong>the</strong> appropriate environment, support
and necessary training, ultimately it was <strong>the</strong> individual who had to take responsibility to engage in
innovation. O<strong>the</strong>r comments pointed to <strong>the</strong> organisation providing a good example <strong>of</strong> innovation
through <strong>the</strong> process <strong>of</strong> extracting value from <strong>the</strong> research providers, and one said <strong>the</strong>re was not a lot
<strong>of</strong> time to think about innovation and suggested it might be useful to have a separate structure to work
on innovations. Ano<strong>the</strong>r respondent mentioned that three years previously <strong>the</strong>re was no discussion
about innovation, and that it was not valued. Employees particularly mentioned that <strong>the</strong>
commercialisation aspect <strong>of</strong> innovation was vital, and felt that insufficient focus was given to ensuring
<strong>the</strong>re was a good return when new products were launched into <strong>the</strong> marketplace.
In response to a question about networking, all respondents signalled that <strong>the</strong>y networked within <strong>the</strong>
organisation and with external stakeholders and it was an important way <strong>of</strong> acquiring knowledge
relating to <strong>the</strong>ir industry. Co-operative research and developing relationships with strategic partners
were approaches taken. Several respondents indicated that <strong>the</strong> restructuring had emphasised <strong>the</strong>
importance and value <strong>of</strong> getting alongside <strong>the</strong>ir customers, and <strong>the</strong>y anticipated greater networking
opportunities in <strong>the</strong> future.
Asked about <strong>the</strong> codifying <strong>of</strong> knowledge, responses revealed that <strong>the</strong> level <strong>of</strong> codification varied
considerably across <strong>the</strong> business units, but all agreed this needed to be addressed. Information about
products, particularly brand history, was evident in business units where patenting was involved.
Benchmarking was regarded as an opportunity to raise <strong>the</strong> standard <strong>of</strong> operation, and would also
place emphasis for greater attention to codification. Recording <strong>of</strong> meeting discussion did not always
occur, with a consequent loss <strong>of</strong> knowledge. Only two respondents made reference to <strong>the</strong> availability
<strong>of</strong> a document management system that had been set up by <strong>the</strong> organisation, suggesting little use
was made <strong>of</strong> it.
Views on <strong>the</strong> generation <strong>of</strong> new knowledge for <strong>the</strong> development and growth <strong>of</strong> intellectual capital
brought varied responses. Bringing in better people, investing in people and training, brainstorming,
promoting <strong>the</strong> value <strong>of</strong> ideas, a forum to stimulate cross-pollination <strong>of</strong> ideas and joint ventures were
ways <strong>of</strong> generating new knowledge. Pursuing customer needs, identifying <strong>the</strong>ir problems and finding
a solution generated knowledge.
Although respondents indicated that <strong>the</strong> dividing up <strong>of</strong> <strong>the</strong> organisation into business units had
created a more innovative environment a downside had emerged in <strong>the</strong> form <strong>of</strong> anti-competitive
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behaviour between some business units. However, it was felt this issue could be worked through
relatively quickly.
Accountability featured strongly in responses. In <strong>the</strong> smaller and flatter business units ideas that
would never previously have been recognised were being implemented and returning rewards.
Employees emphasised <strong>the</strong> difference made as a result <strong>of</strong> <strong>the</strong> setting up <strong>of</strong> <strong>the</strong> business units. There
was greater cohesion within each unit, employees had taken on more responsibility and recognised
<strong>the</strong> importance <strong>of</strong> accountability.
Empowerment <strong>of</strong> staff was also pointed to as providing benefit and opportunity, specifically from a
financial perspective. Better behaviours had emerged around <strong>the</strong> use <strong>of</strong> working capital and <strong>the</strong>
requesting <strong>of</strong> capital, e.g. projects costing around a million dollars were being undertaken for
substantially less cost because people were looking more carefully at how to raise <strong>the</strong> funds ra<strong>the</strong>r
than seeing capital as something <strong>the</strong>y could just take from <strong>the</strong> big pool. What was now occurring was
a more collective view <strong>of</strong> what created value and what did not. Ano<strong>the</strong>r financial perspective was <strong>the</strong>
point that money was being saved through examining innovative ways about <strong>the</strong> operation <strong>of</strong> a
business unit, and methods for getting on track by taking ownership. Previously ideas put to <strong>the</strong>
organisation were ranked according to <strong>the</strong> value <strong>the</strong>y would generate, and smaller ideas were
ignored. With <strong>the</strong> dividing up <strong>of</strong> <strong>the</strong> organisation, <strong>the</strong> business unit with <strong>the</strong> smaller idea could now run
with an idea and results were generating considerable value relative to <strong>the</strong> unit. As a result
opportunities to be innovative were stronger and people were becoming more involved in <strong>the</strong>
initiatives. Recognition <strong>of</strong> value created by people in turn led to greater personal development and <strong>the</strong>
restructuring was creating a real drive for success.
Products and services had improved and increased and process changes were made as a result <strong>of</strong>
ideas promoted by staff. Enthusiasm for what was occurring came through very strongly with
considerable support for staff and <strong>the</strong> ideas promoted from all levels, and also from customers. A
respondent provided a good example <strong>of</strong> how a considerable improvement in <strong>the</strong> service it <strong>of</strong>fered was
achieved by addressing <strong>the</strong> problem <strong>of</strong> lead-time. Ideas promoted by staff resulted in reducing <strong>the</strong>
time to customer from weeks to days even in <strong>the</strong> busiest season. The same business unit also
indicated changes had been made to products, and new patents registered. A number <strong>of</strong> innovative
ideas put forward were directed towards processes, and <strong>the</strong>y had led to considerable refinement and
improvement to <strong>the</strong> many operational areas, bringing considerable benefit.
Responses pointed to six <strong>of</strong> <strong>the</strong> nine business units having no process for managing intellectual
property saying that where relevant <strong>the</strong> patent attorneys managed <strong>the</strong> patent process. However, one
business unit had made a start into taking greater control <strong>of</strong> <strong>the</strong>ir intellectual property and daily
contact was made with <strong>the</strong> intellectual property lawyers over patenting issues and renewals and this
had resulted in a management system being put in place to keep track <strong>of</strong> what was happening, and
for checking through existing files to verify currency and use <strong>of</strong> patents. Considerable discussion
around <strong>the</strong> area <strong>of</strong> intellectual property emerged during <strong>the</strong> interviews. Recognition <strong>of</strong> its importance
to <strong>the</strong> business units was acknowledged, but <strong>the</strong>re was uncertainty about what should be done and
how it could be managed. Generally, <strong>the</strong> business units were not recognising <strong>the</strong> value <strong>of</strong> <strong>the</strong>ir
intellectual property and were losing out on <strong>the</strong> opportunity to maximise value from it. Results and
comments are shown below in Table 1.
4. Conclusion
The purpose <strong>of</strong> <strong>the</strong> research was to investigate whe<strong>the</strong>r wealth generation through <strong>the</strong> development
<strong>of</strong> innovations was attributed to <strong>the</strong> management <strong>of</strong> intellectual capital. In <strong>the</strong> Annual Report <strong>of</strong> <strong>the</strong>
organisation selected for <strong>the</strong> study acknowledgement was made <strong>of</strong> <strong>the</strong> knowledge <strong>of</strong> employees and
<strong>the</strong> contribution <strong>the</strong>y make to <strong>the</strong> innovative activities <strong>of</strong> <strong>the</strong> business. A year prior to <strong>the</strong> study <strong>the</strong>
organisation restructured from six divisions into a number <strong>of</strong> business units with a view to enabling
each unit to focus on business opportunities related to its specific domain.
Considerable recognition is given by various authors (e.g. Penrose, 1963; Rastogi, 2003; Steenkamp
and Kashyap, 2010) that value is generated from <strong>the</strong> innovations developed by businesses
responding to <strong>the</strong> needs <strong>of</strong> customers. The organisation in <strong>the</strong> study has a reputation for being
innovative and its strategy was to fur<strong>the</strong>r enhance its innovative <strong>of</strong>ferings not only to meet <strong>the</strong> needs
<strong>of</strong> customers but also to increase its wealth potential. The importance <strong>of</strong> managing intellectual capital
for generating wealth is emphasised by a number <strong>of</strong> authors (e.g. Sveiby, 1997; Rastogi, 2003; Varis
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Helen Mitchell and Dennis Viehland
and Littunen, 2010). Although recognising <strong>the</strong>re was a strong focus on value and <strong>the</strong> need to maintain
a competitive advantage it was acknowledged by <strong>the</strong> chief executives that no consideration had been
given to <strong>the</strong> importance <strong>of</strong> intellectual capital.
The chief executives acknowledge that in general policies and procedures were documented.
However, it was acknowledged <strong>the</strong>re was a need to give greater attention to codifying knowledge and
recognised this was especially evident when employees left <strong>the</strong> business with a resulting loss <strong>of</strong>
knowledge.
Dividing up <strong>the</strong> organisation had a positive effect on innovation and <strong>the</strong> advantages <strong>of</strong> <strong>the</strong>
restructuring appeared to outweigh any disadvantages. Innovation was a strong feature <strong>of</strong> <strong>the</strong>
strategy <strong>of</strong> each <strong>of</strong> <strong>the</strong> business units. Employees were encouraged to put forward ideas, which <strong>the</strong>y
willingly did, and where <strong>the</strong> ideas showed potential opportunities were given to develop <strong>the</strong>m to
marketable products. Empowering and motivating employees to direct behaviour towards innovative
practices had resulted in a positive culture and behavioural changes were creating a good work
environment evidenced by <strong>the</strong> increase in new products and renewal <strong>of</strong> processes.
Table 1: Responses to questions to chief executives
Question No. Response Comment
Where does <strong>the</strong> value <strong>of</strong> 9 People Products, customers, brands, processes that
<strong>the</strong> company reside?
create value.
Does <strong>the</strong> company have a 9 No strategy 2 suggested <strong>the</strong>re may be an organisational
strategy to manage IC?
wide strategy.
Can an organisation 9 Yes 2 said depending on conditions allowing
become more innovative
innovations.
through managing
1 said <strong>the</strong> individual has to take responsibility
intellectual assets?
and accountability to engage in innovation.
Does <strong>the</strong> company use 9 Networking both Undertaking co-operative research, working
internal and external
internally and alongside a complementary company.
networks to acquire
knowledge?
externally.
Socialising at conferences.
To what extent is
9 Varied responses. Information about products. Benchmarking
knowledge codified?
opportunity to codify. Recognition that <strong>the</strong>re
is a need to codify.
What plans are <strong>the</strong>re to 9 Varied responses Moving forward in <strong>the</strong> industry, bringing in
create new knowledge?
better people, investing in people and
training. Forum to stimulate cross-pollination
<strong>of</strong> ideas, customer needs, looking for
opportunities.
Had restructuring created a 9 Yes Flatter structure more accountability,
more innovative
empowerment <strong>of</strong> staff, improved use <strong>of</strong>
organisation?
working capital, greater recognition <strong>of</strong> ideas,
people closer to customers. Need to be more
commercially focused.
Reservation – imbalance in wealth sharing.
Have products/services 9 Yes Enthusiasm came through strongly, new
increased as a result <strong>of</strong>
ideas and initiatives being promoted.
ideas promoted by staff?
Improvement in processes. Lead time
reduced from weeks to days
How is <strong>the</strong> intellectual 6 No processes. There was considerable discussion around
capital <strong>of</strong> <strong>the</strong> company 2 Basic level. <strong>the</strong> area <strong>of</strong> intellectual property, e.g concern
managed?
1 Managed by patent expressed about breach <strong>of</strong> copyright, cost <strong>of</strong>
attorneys.
patenting.
Managing intellectual property was not undertaken although <strong>the</strong> organisation has a legal team to
attend to patenting procedures. However, to generate additional wealth from innovations it is
necessary to go beyond <strong>the</strong> protection level such as gaining income from <strong>the</strong> licensing <strong>of</strong> intellectual
property.
From <strong>the</strong> research, it is evident that some business units were showing success in innovation without
managing intellectual capital thus raising <strong>the</strong> question about whe<strong>the</strong>r it is necessary to manage
intellectual capital. However, it was agreed by <strong>the</strong> chief executives that putting in place a strategy to
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Helen Mitchell and Dennis Viehland
manage intellectual capital would enhance innovation activity and promote even greater success. The
developing <strong>of</strong> a plan for managing intellectual capital would be a positive move and provide <strong>the</strong>
opportunity to identify where key knowledge resided that would be beneficial for <strong>the</strong> development <strong>of</strong>
future innovations. With <strong>the</strong> strong focus on increasing organisational value through <strong>the</strong> development
<strong>of</strong> innovations, along with <strong>the</strong> need to maintain a competitive advantage, it was acknowledged that
managing intellectual capital was essential.
Although a number <strong>of</strong> <strong>the</strong> business units were already working alongside academic institutes in
certain areas <strong>of</strong> research, it was felt by <strong>the</strong> chief executives that working more closely with <strong>the</strong>m
would be beneficial to <strong>the</strong>ir business particularly in assisting with <strong>the</strong> developing <strong>of</strong> a strategy for
managing intellectual capital. With this approach <strong>the</strong>re is benefit not only for organisations but also for
practitioners who gain from <strong>the</strong> opportunity to work closely with businesses.
A limitation <strong>of</strong> <strong>the</strong> research is that only one organisation was involved albeit one that had divided into
business units set up as limited liability companies. However, <strong>the</strong> study has revealed that <strong>the</strong>re is a
need to enquire fur<strong>the</strong>r into determining whe<strong>the</strong>r organisations recognise <strong>the</strong> importance <strong>of</strong>
intellectual capital as <strong>the</strong> key to innovation and is <strong>the</strong> means through which wealth is generated.
Fur<strong>the</strong>r research opportunities point to <strong>the</strong> need to examine <strong>the</strong> relevance <strong>of</strong> existing management
skill sets to determine <strong>the</strong>ir fit with <strong>the</strong> skills required to manage intellectual capital. There is a need to
investigate approaches to be taken to encourage codification <strong>of</strong> knowledge, to compare innovation
activity in small and large organisations, and to more effectively manage intellectual property.
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373

A Knowledge Management System to Manage Knowledge
in a Collaborative S<strong>of</strong>tware Maintenance Environment
Mohd Zali Mohd Nor, Rusli Abdullah, Masrah Azrifah Azmi Murad and Mohd
Hasan Selamat
Universiti Putra Malaysia, Serdang, Malaysia
mohd_zali@my-newstar.com
rusli@fsktm.upm.edu.my
masrah@fsktm.upm.edu.my
hasan@fsktm.upm.edu.my
Abstract: S<strong>of</strong>tware Maintenance (SM) environment is highly collaborative, complex, knowledge-driven and
important. Organizations depend on how quickly, reliably and cost-effective <strong>the</strong> s<strong>of</strong>tware could be changed to
meet business demands. Issue such as problem identifying knowledge resources is still regarded as a major
challenge. A Knowledge Management System (KMS) provides a tool that “enables <strong>the</strong> creation, communication,
and application <strong>of</strong> knowledge”. In a collaborative environment within SM Community <strong>of</strong> Practice (CoP), users and
s<strong>of</strong>tware maintainers interact on regular basis to resolve s<strong>of</strong>tware bugs and new enhancements. Based on our
established and validated KMS framework for collaborative SM, a prototype application was developed, with
emphasizes on <strong>the</strong> domain knowledge, collaborative aspects and SM activities. Named S<strong>of</strong>tware Maintenance
Collaborative Agent Team (SmCAT), <strong>the</strong> prototype uses Multi-Agent System (MAS) technology to automate <strong>the</strong>
information storing and sharing during SM processes. Prome<strong>the</strong>us methodology was used to design <strong>the</strong> MAS.
With SmCAT supporting helpdesk, maintenance request planning and development, version management and
domain knowledge repository, users and maintainers shall benefit from systematic organization <strong>of</strong> knowledge,
automation and integration <strong>of</strong> modules to support maintenance processes. To evaluate <strong>the</strong> success <strong>of</strong> <strong>the</strong> above
tool, SmCAT was implemented, for trial, in an in-house SM department and benchmarked against ano<strong>the</strong>r similar
agent-based KMS tool developed by Rodriguez et al. 15 users and maintainers took part in <strong>the</strong> evaluation. A
questionnaire survey (based on Wu and Wang KMS Success Model) was conducted to gauge <strong>the</strong> success <strong>of</strong>
both KMS tools, which covers system quality, knowledge or information quality, context and linkage quality, user
satisfaction, perceived KMS benefits and system use. Rasch analysis was used to analyze <strong>the</strong> questionnaire
data. Based on t-test comparison on overall Rasch estimated measures, SmCAT KMS is only slightly better than
Rodriguez KMS. However, based on Common Person Equating (CPE) plot, Rodriguez KMS is significantly better
than SmCAT in several important aspects such Content Representation Logical and Fit, Provide Contextual
Knowledge and Decision Making. In future, SmCAT could be enhanced to improve <strong>the</strong>se areas.
Keywords: knowledge management system, s<strong>of</strong>tware maintenance, multi-agent system
1. Introduction
S<strong>of</strong>tware Maintenance (SM) involves complex, knowledge-intensive activities (Rodriguez et al., 2004)
and depends largely on expertise <strong>of</strong> <strong>the</strong> maintainers. Managing knowledge in this area is <strong>the</strong>refore
critical to ensure that maintainers can perform SM activities properly and timely, by sharing and
obtaining vital knowledge. However, <strong>the</strong>re are several major problems which hamper effective
knowledge sharing. It is still <strong>of</strong>ten heard complaints that <strong>the</strong> process from bug report to getting <strong>the</strong>
corrected system is slow due to complexity and time taken collaborating to obtain information, sharing
information, and internalizing information onto knowledge. There are various issues associated with
<strong>the</strong> above knowledge, which makes organizing, storing, sharing and disseminating knowledge
difficult.
Meanwhile, KMS is defined as “an I.T.-based system developed to support and augments <strong>the</strong>
organizational process <strong>of</strong> knowledge creation, storage, retrieval, transfer and application” (Alavi &
Leidner, 2000). In our previous studies, a KMS framework for collaborative SM was established and
validated (see Figure 1). The framework defines <strong>the</strong> KMS and SM components and processes
necessary to effectively manage a collaborative SM environment.
To support <strong>the</strong> above KMS framework, an integrated tool called S<strong>of</strong>tware Maintenance Collaborative
Agent Team (SmCAT) was developed. SmCAT includes <strong>the</strong> management <strong>of</strong> helpdesk, maintenance
request planning, development, and management <strong>of</strong> domain and SM process knowledge. The
process architecture <strong>of</strong> <strong>the</strong> tool is depicted in Figure 2.
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Figure 1: KMS Framework for collaborative SM
Figure 2: SmCAT system architecture
Mohd Zali Mohd Nor et al.
SmCAT uses an agent-oriented approach to support maintainers in <strong>the</strong>ir daily activities. Intelligent
s<strong>of</strong>tware agent is a computer system capable <strong>of</strong> flexible autonomous action in some environments
(Dam and Winik<strong>of</strong>f, 2003; Wooldridge, 2002; Padgham & Winik<strong>of</strong>f, 2004). Being flexible means that
<strong>the</strong> agent is reactive (maintains an ongoing interaction with its environment, and responds to
changes), proactive (taking initiatives) and social (interact with o<strong>the</strong>r agents). Hence, a MAS is a
system consisting <strong>of</strong> a number <strong>of</strong> agents, which interact with each o<strong>the</strong>rs. SmCAT employs MAS to
assist users and s<strong>of</strong>tware maintainers in <strong>the</strong>ir daily activities. Six agent types are designed using
Prome<strong>the</strong>us methodology (Padgham and Winik<strong>of</strong>f, 2004) to automate some <strong>of</strong> SM routine activities.
The agent types are as follows:
User Agent – represents each user to file complaints, check best practices and application
guides, as well as receive MR status from o<strong>the</strong>r agents.
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Mohd Zali Mohd Nor et al.
Domain Knowledge Agent – manages <strong>the</strong> domain knowledge ontology and data. When new
knowledge is added, this agent shall inform relevant users and maintainers. When a new version
is applied, <strong>the</strong> domain knowledge is updated with new best practices and old practices are
deprecated.
Helpdesk Agent – represents <strong>the</strong> role <strong>of</strong> helpdesk staff, by generating new call tickets based on
error reported by User Agent, and assigning <strong>the</strong>m to available helpdesk personnel. If bugs is
valid, Helpdesk Agent shall liaise with MR Agent to create new MR.
MR Agent – O<strong>the</strong>r than creating new MRs, this agent shall also assist planner to approve/reject
MRs, monitor <strong>the</strong> progress <strong>of</strong> MRs and assign MRs to maintainers, via Maintainer Agent.
Maintainer Agent – represents maintainers (analysts, programmers and testers) to monitor MR
statuses and assign to maintainer groups for development. This agent also liaises with Domain
Knowledge Agent and SM Knowledge Agent to obtain information to assist analysts and tester in
<strong>the</strong>ir works.
SM Process Agent – For new artifacts and object changed, SM Knowledge Agent shall update <strong>the</strong>
SM knowledge base, as well as <strong>the</strong> Domain knowledge.
Sample web-based application screen is shown in Figure 3below.
Figure 3: SmCAT sample screen
2. Related works
Agent technology in SM has been used in a few research prototypes such as <strong>the</strong> KM-Mantis (Viscaino
et al.,2003). KM-Mantis uses experience factory concept to capture and reuse knowledge and
expertise generated during SM process. KM-Mantis has five s<strong>of</strong>tware agents (product, activity, client,
user and staff) to support <strong>the</strong> 3 different communities (product, activities and people).
Figure 4: Rodriguez KMS
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Mohd Zali Mohd Nor et al.
Ano<strong>the</strong>r MAS prototype is similar to KM-Mantis, but uses different agents to capture knowledge from
different source documents and activities. Rodriguez et al. (2004) developed a MAS architecture with
5 main agents to monitor KMS activities in SM processes. However, <strong>the</strong> above prototypes do not
cover <strong>the</strong> full spectrum <strong>of</strong> SM processes, especially <strong>the</strong> Helpdesk, Maintenance Request (MR)
planning and Business Domain knowledge repository, to store and share SM knowledge and Domain
knowledge. These are covered by SmCAT.
3. Methodology
To evaluate SmCAT effectiveness as a KMS tool, <strong>the</strong> evaluation method shall need to answer
whe<strong>the</strong>r <strong>the</strong> tools really help users and maintainers to share and access <strong>the</strong> knowledge and
information easier. For this, SmCAT shall be benchmarked against a Rodriguez KMS prototype which
was also developed for SM environment. Users and maintainers were informed to use SmCAT for a
month, followed by Rodriguez KMS. Results on both tools could not be compared quantitatively, due
to different processes used and different Agents activities in SmCAT and Rodriguez KMS. In overall,
<strong>the</strong>re are more Agents’ activities in SmCAT compared to Rodriguez KMS, due to more activities in
helpdesk, MR and development areas. A qualitative method is required to gain a better perspective in
comparing KMS activities for SmCAT and Rodriguez KMS. Based on Wu and Wang’s KMS success
model (Wu and Wang, 2006), five main areas were addressed, as follows:
System Quality – defines how good <strong>the</strong> KMS is in terms <strong>of</strong> its operational characteristics, such as
ease <strong>of</strong> use, user friendly, response time and stable.
Knowledge or Information Quality – how good <strong>the</strong> KMS is in terms <strong>of</strong> its content quality and
Context quality. Content quality includes ease <strong>of</strong> creating document, consistent, logical words and
phrases, important and helpful, meaningful and practical, clear and unambiguous. Meanwhile,
context quality includes applicable to work, complete knowledge portal and good expert directory.
User Satisfaction – overall feelings <strong>of</strong> pleasure or displeasure regarding KMS. This includes
overall satisfaction, meeting knowledge needs, KMS efficiency and KMS effectiveness.
Perceived KMS Benefits - valuation <strong>of</strong> <strong>the</strong> benefits <strong>of</strong> <strong>the</strong> KMS by users. For example, helpful in
acquiring new knowledge, effectively manage and store knowledge, efficient, enhance job
performance and improve life quality.
System Use – The extent <strong>of</strong> <strong>the</strong> KMS being used. This includes helpful in making decision,
recording knowledge/information, communicating information, sharing general knowledge and
sharing specific knowledge.
Wu and Wang’s model provides <strong>the</strong> validated questionnaire constructs and measures. This makes it
easier for future studies to use this model. Questionnaire survey was distributed to <strong>the</strong> 15 users and
maintainers to gauge <strong>the</strong>ir opinion on <strong>the</strong> above areas. Users and maintainers who have used both
SmCAT and Rodriguez KMS were asked to fill <strong>the</strong> questionnaire. Since <strong>the</strong> questionnaire items are
based on Likert scale, Rasch analysis shall be used to estimate <strong>the</strong> probability <strong>of</strong> agreeableness on
each item. Rasch is a probabilistic model that uses ‘logit’ as <strong>the</strong> measurement units, by transforming
<strong>the</strong> ordinal data and raw scores into a linear scale (Bond and Fox, 2007). The data were first
inspected for reliability and fitness, to ensure that <strong>the</strong> data could be used for fur<strong>the</strong>r analysis.
To test if SmCAT is significantly better than Rodriguez KMS, pair-wised t-test shall be used, as
follows:
t =
β − β
S R
2 2
S σ R
σ +
n
Where βS = average measure for SmCAT, βR = average measure for Rodriguez KMS, σS = Standard
deviation for SmCAT and σR = Standard deviation for Rodriguez KMS.
The t-test results are compared against <strong>the</strong> Student’s t-test distribution table. T-test value exceeding
<strong>the</strong> critical value shall conclude that SmCAT is better than Rodriguez KMS. In addition, detail analysis
on each KMS success components could also be a valuable. As such <strong>the</strong> data shall be plotted onto a
Common Person Equating (CPE) chart (Bond and Fox, 2007). CPE plots <strong>the</strong> SmCAT KMS items
measures against Rodriguez KMS Items measures to determine <strong>the</strong> items (KMS success
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Mohd Zali Mohd Nor et al.
components) that are significantly better on ei<strong>the</strong>r SmCAT or Rodriguez KMS. The SmCAT prototype,
being an integrated tool that covers more areas <strong>of</strong> SM, is expected to be better received by
maintainers compared to Rodriguez system. Therefore we hypo<strong>the</strong>size:
H1: The extent <strong>of</strong> overall success <strong>of</strong> SmCAT is better than Rodriguez KMS
4. Results and discussion
The summary statistics provided by Rasch, via Winsteps s<strong>of</strong>tware, are listed in Table 1, Table 2,
Table 3 and Table 4. The summary <strong>of</strong> measured persons are centered with Mean=0, to allow
comparison between items <strong>of</strong> SmCAT and Rodriguez KMS. The summary shall also provide <strong>the</strong>
reliability <strong>of</strong> data (via Person/Item reliability and Cronbach Alpha), Raw Score, Range (Max. measure
– Min. measure), Mean measure, Model errors, Infit MNSQ and ZStd and Outfit MNSQ and ZStd. All
measures are in logit scale, where <strong>the</strong> higher <strong>the</strong> logit value, <strong>the</strong> more difficult for respondents to
agree on <strong>the</strong> corresponding questionnaire items.
Table 1: SmCAT - summary <strong>of</strong> 15 measured persons
Raw
Score
Count Measure Model Error
Infit
MNSQ ZSTD
Outfit
MNSQ ZSTD
MEAN 91 29 0.00 0.47 1.01 0.00 1.00 0.00
S.D. 8 0 1.58 0.04 0.36 1.10 0.47 0.80
MAX. 112 29 4.11 0.58 1.78 2.10 1.92 1.80
MIN. 80 29 -2.44 0.41 0.55 -1.70 0.41 -1.20
REAL RMSE .51 Adj.SD 1.50 Separation 2.95 Person Reliability .90
MODEL RMSE .47 Adj.SD 1.51 Separation 3.22 Person Reliability .91
S.E. OF Person MEAN = .42
Person Raw Score-to-Measure Correlation = 1.00
Cronbach Alpha (KR-20) Person Raw Score Reliability = .92
Table 2: SmCAT - summary <strong>of</strong> 29 measured items
Raw Score Count Measure Model Error
Infit
MNSQ ZSTD
Outfit
MNSQ ZSTD
MEAN 47 15 0.77 0.69 0.95 0.00 1.00 0.10
S.D. 4 0 1.34 0.19 0.37 1.00 0.75 1.00
MAX. 55 15 3.85 1.25 1.74 2.50 3.22 2.20
MIN. 36 15 -2.02 0.49 0.39 -1.60 0.09 -1.50
REAL RMSE .76 Adj.SD 1.11 Separation 1.46 Item Reliability .68
MODEL RMSE .72 Adj.SD 1.13 Separation 1.58 Item Reliability .71
S.E. OF Item MEAN = .25
Table 3: Rodriguez KMS - summary <strong>of</strong> 15 measured person
Raw Score Count Measure Model Error
Infit Outfit
MNSQ ZSTD MNSQ ZSTD
MEAN 79 29 0.00 0.51 0.96 -0.20 0.96 0.10
S.D. 10 0 2.31 0.13 0.28 1.00 0.68 0.80
MAX. 111 29 7.79 1.00 1.55 1.40 3.20 2.30
MIN. 71 29 -1.80 0.46 0.47 -2.30 0.34 -1.00
REAL RMSE .55 Adj.SD 2.25 Separation 4.09 Person Reliability .94
MODEL RMSE .53 Adj.SD 2.25 Separation 4.25 Person Reliability .95
S.E. OF Person MEAN = .62
Person Raw Score-to-Measure Correlation = 1.00
Cronbach Alpha (KR-20) Person Raw Score Reliability = .95
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Mohd Zali Mohd Nor et al.
Table 4: Rodriguez KMS - summary <strong>of</strong> 29 measured items
Raw Score Count Measure Model Error
Infit Outfit
MNSQ ZSTD MNSQ ZSTD
MEAN 41 15 1.51 0.83 0.87 -0.10 0.96 0.20
S.D. 5 0 1.72 0.51 0.39 0.70 0.77 0.90
MAX. 53 15 5.26 2.62 2.06 1.80 3.63 2.40
MIN. 31 15 -2.12 0.48 0.05 -1.40 0.01 -1.20
REAL RMSE 1.00 Adj.SD 1.40 Separation 1.41 Item Reliability .66
MODEL RMSE .98 Adj.SD 1.42 Separation 1.45 Item Reliability .68
S.E. OF Item MEAN = .33
The summary <strong>of</strong> items’ measures for SmCAT and Rodriguez KMS is listed in Appendix A.
4.1 Data reliability and fitness
Based on <strong>the</strong> above summary tables, <strong>the</strong> SmCAT person reliability and item reliability are 0.90 and
0.68, which are very good and fair, respectively. The Cronbach-Alpha person raw score reliability is
0.92. These indicate that SmCAT responses are reliable for fur<strong>the</strong>r analysis. Similarly, <strong>the</strong> Rodriguez
KMS person reliability and item reliability are 0.94 and 0.66, respectively, with Cronbach-Alpha <strong>of</strong>
0.95. The Infit and Outfit Mean Square (MNSQ) for Person and Item means are within <strong>the</strong> limit <strong>of</strong> 0.6
to 1.4 logit (Wright & Linacre, 1994). This indicates that <strong>the</strong> data fits <strong>the</strong> Rasch rating scale model,
and could be used for fur<strong>the</strong>r analysis.
4.2 T-Test
To determine if we could conclude <strong>the</strong> above hypo<strong>the</strong>ses, several t-tests are performed (at 95%
confidence level), with <strong>the</strong> following results:
Table 5: T-Test Results
Mean Mean SD SD t-test df= t-value
Segment
SmCAT Rodriguez SmCAT Rodriguez value (n-1) @ 95%
H1 - Overall 0.69 1.40 1.36 1.72 1.74 26 1.71
Based on <strong>the</strong> above t-test results, SmCAT, in overall, is only slightly significantly better than
Rodriguez KMS. However, since Rasch only provides unidimensional measures, we could not
conclude if SmCAT is also better than Rodriguez KMS in different segments <strong>of</strong> Knowledge Quality,
User Satisfaction, Perceived KMS Benefits, System Quality and System Use.
4.3 Common Person Equating plot
Whilst <strong>the</strong> t-tests may reveal <strong>the</strong> overall and segments results, <strong>the</strong> Common Person Equating (CPE)
plot (see Figure 5) is an alternative method to evaluate <strong>the</strong> individual items distribution for both
SmCAT and Rodriguez KMS. CPE plots <strong>the</strong> items’ measures for SmCAT against items’ measures for
Rodriguez KMS. Two standard deviation upper and lower limits are also drawn. The items outside <strong>of</strong>
<strong>the</strong> limits are considered items with significant differences (at 95% confidence interval). The items
above <strong>the</strong> upper limit are items which Rodriguez KMS are significantly better. Meanwhile <strong>the</strong> items
below <strong>the</strong> lower limit denote <strong>the</strong> items which SmCAT are significantly better than Rodriguez KMS.
Based on <strong>the</strong> CPE plot, Rodriguez excels in four KMS success indicators; KQ2 - Words And Phrases
Are Consistent, KQ3 - Content Representation Logical and Fit, KQB - Provide Contextual Knowledge
and SU1 - Making Decisions. Meanwhile, SmCAT is significantly better in KQ9 - Complete Knowledge
Portal, KQA - Accurate Expert Directory, PB2 - Effectively Manage Knowledge, PB5 – Improves
Quality, US2 - Efficient and SU5 - Share Specific Knowledge.
5. Conclusion and future works
Wu and Wang’s KMS success model was used to evaluate whe<strong>the</strong>r SmCAT really help users and
maintainers to share and access <strong>the</strong> knowledge and information easier. Based on <strong>the</strong> survey results,
SmCAT, in overall, is significantly better than Rodriguez KMS. SmCAT is also significantly better than
Rodriguez KMS in Knowledge Quality, User Satisfaction and Perceived KMS Benefits. In individual
component level, SmCAT is still lacking in several key KMS components such as Content
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Mohd Zali Mohd Nor et al.
Representation Logical and Fit, Provide Contextual Knowledge and Decision Making. In future,
SmCAT shall be enhanced to streng<strong>the</strong>n <strong>the</strong> above areas.
Figure 5: Common Person Equating plot
6. Appendix A – item measures
Item Description
SmCAT
Score
Rodriguez
Score
SmCAT
Measure
Rodriguez
Measure
SmCAT
Error
Rodriguez
Error
SQ1 easy to use. 50 47 0.80 -0.91 0.65 0.64
SQ2 user friendly 50 44 0.80 1.15 0.65 0.75
SQ3 stable 49 49 1.27 1.02 0.72 0.73
SQ4 response time acceptable
easy to create knowledge
53 53 -0.32 -0.6 0.59 0.59
KQ1
documents
words and phrases are
48 39 -0.99 0.93 0.58 0.51
KQ2
consistent
content representation
46 45 3.80 0.8 1.23 0.97
KQ3 logical and fit 46 42 3.80 1.58 1.23 0.61
KQ4 knowledge available
knowledge important and
44 41 0.34 1.75 0.56 0.59
KQ5
helpful
knowledge meaningful,
51 41 0.40 1.75 0.62 0.59
KQ6 understandable
clear knowledge
49 45 1.27 0.8 0.72 0.97
KQ7
classification 44 44 0.34 1.15 0.56 0.75
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Mohd Zali Mohd Nor et al.
KQ8
provide contextual
knowledge 46 44 -0.35 1.15 0.72 0.75
SmCAT Rodriguez SmCAT Rodriguez SmCAT Rodriguez
Item Description
Score Score Measure Measure Error Error
KQ9 complete knowledge portal 55 33 -1.88 2.52 0.71 1.1
KQA accurate expert directory 40 46 -0.67 5.23 0.6 2.57
KQB helpful expert directory 36 48 1.27 -1.02 0.72 0.48
US1 meet knowledge needs 48 35 1.84 2.77 0.81 0.7
US2 efficient 50 45 -1.37 0.8 0.52 0.97
US3 effective 48 35 1.84 2.77 0.81 0.7
US4 overall satisfied 49 38 1.27 2.23 0.72 0.58
PB1 acquire new knowledge
effectively manage
45 38 0.07 2.22 0.62 0.58
PB2
knowledge 52 36 0.03 2.57 0.6 0.64
PB3 accomplish tasks efficiently 50 39 0.80 2.07 0.65 0.57
PB4 enhance performance 48 33 1.84 3.34 0.81 1.02
PB5 improves quality 48 36 -0.99 2.57 0.58 0.64
SU1 making decisions 47 38 2.62 -0.6 0.97 0.59
SU2 record my knowledge 46 36 -0.31 0.54 0.56 0.66
SU3 communicate knowledge 40 39 1.01 -0.95 0.49 0.59
SU4 share general knowledge 45 42 0.23 -2.12 0.81 0.69
SU5 share specific knowledge 42 31 1.14 5.23 0.57 2.57
References
MEAN 47.10 40.8 0.69 1.40
SD 4.00 5.30 1.36 1.72
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Communication <strong>of</strong> AIS, Vol.1.
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Dam, K.H. & Winik<strong>of</strong>f, M., (2003), “Comparing AgentOriented Methodologies”. Proceeding <strong>of</strong> Agent-Oriented
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Kankanhalli, A., and Tan, B.C.Y..( 2005), “Knowledge Management Metrics-A Review and Directions for Future
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Network Security, Vol. 455.
Padgham, L., and Winik<strong>of</strong>f, M. (2004), Developing Intelligent Agent Systems. John Wiley and Sons.
Rodriquez, O.M., Martinez,A.I., Favela, J., Viscaino A., and Piattini, M. (2004), “Understanding and Supporting
Knowledge Flows in a Community <strong>of</strong> S<strong>of</strong>tware Developers”, Lecture Notes in Computer Science, Vol. 2198.
Viscaino, A., Soto, J.P. and Piattini, M. (2003), “Supporting S<strong>of</strong>tware Maintenance in Web Repository through a
Multi-Agent System”, Lecture Notes in Computer Science, Vol. 2663.
Wooldridge, M. (2002), An Introduction to Multiagent Systems. John Wiley and Sons.
Wright, B., and Linacre,M. (1994), “Reasonable Mean-Square Fit Values.” Rasch Measurement Transactions,
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Wu, J.H. and Wang, Y.M., (2006), “Measuring KMS Success: a Respecification <strong>of</strong> <strong>the</strong> DeLone and McLean’s
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381

Measuring Intellectual Capital Performance in <strong>the</strong> Case <strong>of</strong>
Romanian Public Companies
Maria Cristina Morariu
The <strong>International</strong> Accounting and Financial Reporting Department, Accounting
and Management Information Systems, <strong>the</strong> Academy <strong>of</strong> Economic Studies,
Bucharest, Romania
cristina.m.morariu@gmail.com
Abstract: The purpose <strong>of</strong> this paper is to obtain a measure <strong>of</strong> <strong>the</strong> intellectual capital (IC) performance <strong>of</strong> quoted
companies on <strong>the</strong> Bucharest Stock Exchange Market (BSE) in Romania and to test <strong>the</strong> effect <strong>of</strong> <strong>the</strong> intellectual
capital performance on corporate conventional financial performance. A number <strong>of</strong> models have been developed
in <strong>the</strong> attempt to measure IC. <strong>International</strong> literature on IC with specific reference to measurement tools and
techniques are reviewed by this study highlighting <strong>the</strong>ir strengths, weaknesses and reliability. In order to provide
a relevant basis for comparison for both existing and coming studies carried out in <strong>the</strong> same field but for different
developing countries and because it employs existing public financial data, Value Added Intellectual Coefficient
model (VAICTM), developed by Ante Pulic (2000) is applied by this paper for measuring <strong>the</strong> IC performance <strong>of</strong>
<strong>the</strong> sample companies and its components. Annual reports, especially <strong>the</strong> statement <strong>of</strong> comprehensive income
and statement <strong>of</strong> financial position <strong>of</strong> <strong>the</strong> twenty one selected companies have been used to obtain <strong>the</strong> data.
Corporate conventional financial performance is measured through <strong>the</strong> values obtained for pr<strong>of</strong>itability,
productivity, and market capitalisation. It is an empirical paper investigating certain causal relationships
considering <strong>the</strong> IC <strong>of</strong> Romanian listed companies using regression analysis. The paper represents a pioneering
attempt to understand <strong>the</strong> implications on <strong>the</strong> business performance <strong>of</strong> <strong>the</strong> Romanian listed companies from an
IC perspective. Therefore, <strong>the</strong> results will extend <strong>the</strong> understanding <strong>of</strong> <strong>the</strong> role <strong>of</strong> IC efficiency in enhancing <strong>the</strong>
performance <strong>of</strong> companies in <strong>the</strong> developing countries. In addition, <strong>the</strong> literature is enriched with ano<strong>the</strong>r paper
that follows <strong>the</strong> value-added intellectual coefficient methodology for <strong>the</strong> measurement <strong>of</strong> IC. Finally, <strong>the</strong> findings
from this study may serve as a useful input for companies, investors and regulators that can be used for
benchmarking, strategies development process and policy making purposes.
Keywords: IC, VAICTM, performance, Romania, measurement
1. Introduction
The field <strong>of</strong> IC is multidisciplinary, covering among o<strong>the</strong>rs: economics, strategy, accounting, finance,
marketing, human resource. Consequently, <strong>the</strong> concept <strong>of</strong> IC means different things to different
people, being defined and classified in several ways by researchers due to <strong>the</strong> different backgrounds
and perspectives taken (Stanciu, 2008; Feleaga, 2010; Morariu, 2011). As a result <strong>of</strong> a higher IC
recognition, researchers are also keen to assess its impact on <strong>the</strong> companies’ business performance.
There are various articles analyzing <strong>the</strong> relationship between <strong>the</strong> IC performance and companies’
performance. Most <strong>of</strong> <strong>the</strong>m used Value Added Intellectual Coefficient model (VAICTM) as <strong>the</strong> proxy <strong>of</strong>
IC performance (Pulic, 2000; Firer and Williams, 2003; Chen et al., 2005; Tseng and Goo, 2005; Goh,
2005; Tan et al., 2007;Kamath, 2008; Ghosh and Mondal, 2009; Muhammad and Ismail, 2009; Ting
and Lean, 2009; Prabowo and Soegiono, 2010; Yu et al., 2010; Joshi et al., 2010; Zeghal and
Maaloul, 2010; Molodchik and Bykova, 2011, Rahim, 2010), but <strong>the</strong>re are studies using different
models such as IC Index (Buszko and Mroziewski, 2009), a global model (F-Jardon and Martos,
2009).The question <strong>of</strong> what variables explain companies’ IC performance has been also investigated
(El-Bannany, 2008). A pro<strong>of</strong> demonstrating that IC has positive impact on market value, productivity
and pr<strong>of</strong>itability is given by approximatively 67% <strong>of</strong> <strong>the</strong> reviewed studies (Table1). Considering <strong>the</strong>
number <strong>of</strong> studies that have used emerging economies corroborated with <strong>the</strong> lack <strong>of</strong> a study
analysing whe<strong>the</strong>r this resource is being efficiently utilized by <strong>the</strong> Romanian companies challenged us
to <strong>the</strong> present study.
The primary objectives <strong>of</strong> this study are to identify <strong>the</strong> IC performance <strong>of</strong> <strong>the</strong> sample companies
(using VAICTM model developed by Pulic in 1998), to empirically examine <strong>the</strong> association between IC
performance and traditional measures <strong>of</strong> corporate performance, and last but not least to analyze <strong>the</strong>
relative importance <strong>of</strong> various components <strong>of</strong> IC on <strong>the</strong> company’s performance. Data for <strong>the</strong> analysis
presented in this paper is drawn from a sample <strong>of</strong> 21 firms listed on BSE operating into six industry
sectors. Three accounting ratios: market-to-book value (MB), return on equity (ROE) and asset
turnover (ATO) were used for measuring business performance. The statistical tools that are used in
<strong>the</strong> methodology are descriptive statistics correlation analysis and multiple linear regression analysis.
The results from <strong>the</strong> present study can provide insights into <strong>the</strong> impact <strong>of</strong> IC in o<strong>the</strong>r emerging
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Maria Cristina Morariu
economy and will assist to determine if Romanian firms appear to continue to rely on traditional
business practices or are shifting toward a greater reliance on IC factors in determining company’s
performance.
In order to achieve our objectives, <strong>the</strong> remainder <strong>of</strong> <strong>the</strong> present paper is organized as follows. Next
section discusses <strong>the</strong>oretical review and develops a series <strong>of</strong> empirically testable hypo<strong>the</strong>sis. Based
on section 2, Section 3 describes <strong>the</strong> research method. The empirical results and analysis are
discussed in section 4. The final section is by way <strong>of</strong> summary and conclusion and it ends <strong>the</strong> paper
with <strong>the</strong> ideas for future research directions.
2. Literature review
2.1 IC models
There have been developed a variety <strong>of</strong> methodologies for measuring intangible assets that are
classified according to different criteria (Sullivan, 1998; Sveiby, 2010). Herein we shall discuss some
<strong>of</strong> <strong>the</strong> selected approaches in terms <strong>of</strong> <strong>the</strong>ir strengths, weaknesses and reliability.
Balance Scorecard, proposed by Kaplan and Norton (1992), sets financial and non-financial
measures to indicate four perspectives: (1) financials; (2) customers; (3) internal process; and (4)
leaning and growth. It provides for <strong>the</strong> control <strong>of</strong> intangibles while simultaneously monitoring financial
results. It is very company specific and thus does not have general application and make comparison
impossible. Additionally, it is unable to assign a financial value for <strong>the</strong> intellectual assets in an
objective manner.
Skandia Navigator was proposed by Edvinsson and Malone (1997) and provides supplementary
information to annual financial reports. It focuses on non-financial measures covering five
components: (1) financial; (2) customer; (3) process; (4) renewal and development; and (5) human. It
recognizes <strong>the</strong> role <strong>of</strong> customer capital in creating value. Still, it uses proxy measures to track trends
in <strong>the</strong> assumed VA, can be monotonous and suffers <strong>of</strong> subjectivity and thus affecting comparability.
Intangible Asset Monitor was proposed by Sveiby (1997). It provides strategic information <strong>of</strong> <strong>the</strong> firm
concerning: (1) growth; (2) renewal; (3) efficiency; (4) stability; and (5) risk. Invisible assets are
matched on <strong>the</strong> financing side <strong>of</strong> <strong>the</strong> balance sheet by equally invisible finance, most <strong>of</strong> which are in
<strong>the</strong> form <strong>of</strong> invisible equity. Still, it is difficult to assign monetary financial values to <strong>the</strong> final measure
and it suffers <strong>the</strong> problems <strong>of</strong> subjectivity, thus making comparison difficult (Bontis, 2001).
CIV was developed and popularized in <strong>the</strong> year 1997 by Thomas Stewart (Titova, 2011). It is a
standardized and consistent basis <strong>of</strong> measure, <strong>the</strong>reby, better enabling <strong>the</strong> effective conduct <strong>of</strong> an
international comparative analysis, but for its calculation it needs average return on assets in <strong>the</strong>
industry, that sometimes is difficult to find; additionally, subjectitivity associated with <strong>the</strong>ir underlying
indicators and, <strong>the</strong>re are difficulties in verifying information used in calculating indicators comprising
o<strong>the</strong>r IC measures.
VAICTM was introduced by Pulic (2000). VAICTM model provides information regarding value
creation efficiency from company’s tangible and intangible assets. The drawbacks <strong>of</strong> this model are
<strong>the</strong> use <strong>of</strong> basic financial information in <strong>the</strong>ir composition; measurement for SC may be incomplete;
subjectitivity associated with underlying indicators and, difficulties in verifying information used in
calculating indicators comprising o<strong>the</strong>r IC measures.
Considering <strong>the</strong> advantages and limitations <strong>of</strong> <strong>the</strong> above models, it seems that no one model is
“perfect”. Never<strong>the</strong>less, as will be shown below, VAICTM has been widely applied to o<strong>the</strong>r research
studies for measuring IC. According to <strong>the</strong>se researchers, this model produces quantifiable, objective
and quantitative measurements. It can be easily applied by someone external to <strong>the</strong> company. Last
but not least <strong>the</strong> model was used in several studies conducted in emerging economies. Therefore, in
order to allow comparison between studies, <strong>the</strong> selection for this model in Romanian context is
justifiable.
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2.2 Prior research
Maria Cristina Morariu
For <strong>the</strong> first time, VAICTM was tested by Pulic (2000) on UK companies during 1992-1998. He has
found out that <strong>the</strong> average values <strong>of</strong> VAIC and MB exhibited a high degree <strong>of</strong> correspondence.
Regarding UK companies, similar results are obtained by Zeghal and Maaloul (2010) that replicated
<strong>the</strong> study using 2005 data. Investigating UK banks over 1999-2005, El-Bannany (2008) found that
bank’s efficiency, pr<strong>of</strong>itability and risk have positive impact on HCE. These results are in line with
those obtained by: Bramhandkar et al. (2007) in <strong>the</strong> case <strong>of</strong> drugs industry traded on North American
stock exchanges, Joshi et al. (2010) in <strong>the</strong> case <strong>of</strong> Australian banks, Tan et al. (2007) in <strong>the</strong> case <strong>of</strong>
Singapore but opposed to those obtained in <strong>the</strong> case <strong>of</strong> Hong Kong (Yu et al., 2010) where physical
and financial assets are critical when evaluating a company’s business performance.
Taking a cursory look at <strong>the</strong> studies conducted in <strong>the</strong> emerging economies, Firer and Williams (2003)
investigated <strong>the</strong> association between efficiency <strong>of</strong> value added <strong>of</strong> <strong>the</strong> major components <strong>of</strong> a firm’s
resources and corporate performance in South Africa. Empirical findings suggest physical capital
remains <strong>the</strong> most significant underlying resource <strong>of</strong> corporate performance. Similar results are
obtained by F-Jardon and Martos (2009) in <strong>the</strong> case <strong>of</strong> Argentinean wood manufacturers who found
that <strong>the</strong> only dimension <strong>of</strong> IC directly affecting company’s performance is SC.
Moving to ano<strong>the</strong>r continent, Chen et al. (2005) analyze <strong>the</strong> relationship between VAIC and MB as
well as corporate performance for all public Taiwanese companies during 1992-2002. This study
provides empirical evidence that investors place higher value on firms with better IC efficiency, and
that firm with better IC efficiency yield greater pr<strong>of</strong>itability and revenue growth. In line with <strong>the</strong>ir results
are those obtained by Tseng and Goo (2005), as <strong>the</strong>y concluded that IC components positively
influence <strong>the</strong> corporate value <strong>of</strong> listed Taiwanese manufacturers. Several studies were conducted in
Malaysia too. Accordingly, Goh (2005) measured <strong>the</strong> IC performance <strong>of</strong> Malaysian commercial banks
during 2001-2003. The result showed that HCE is higher than CEE for both domestic and foreign
banks. For <strong>the</strong> same country and sector, similar results are obtained by Ting and Lean (2009) who
found that for 1999-2007 period CEE have significant positive effect on pr<strong>of</strong>itability while SCE has
negative effect. Surprisingly, <strong>the</strong> results obtained by Muhammad and Ismail (2009) are somehow
different in that way that HCE and SCE do not influence <strong>the</strong> pr<strong>of</strong>itability. However, CEE shows
positive and significant relationships with company’s pr<strong>of</strong>itability. Prabowo and Soegiono (2010)
analyze <strong>the</strong> association between government ownership and IC performance and found that
Indonesian banks are not optimal in capitalizing <strong>the</strong>ir IC. In India, Kamath (2008) studies <strong>the</strong>
relationship between IC components with traditional measures <strong>of</strong> performance in <strong>the</strong> drug industry
during 1996-2006. The results show that HC has a major impact on <strong>the</strong> pr<strong>of</strong>itability and productivity <strong>of</strong>
<strong>the</strong> firms. In addition, <strong>the</strong>re is no significant association between <strong>the</strong> size and leverage <strong>of</strong> <strong>the</strong> firm with
its MB and secondly, <strong>the</strong>re is no relation between <strong>the</strong> firm’s financial performance and its productivity.
These results are confirmed one year later by Ghosh and Mondal (2009) who replicated this study
considering 1996-2006 period.
Regarding <strong>the</strong> research conducted in <strong>the</strong> case <strong>of</strong> European emerging economies, we can notice <strong>the</strong>
results <strong>of</strong> Buszko and Mroziewski (2009) that developed and applied <strong>the</strong> index <strong>of</strong> IC to construction
companies registered in Poland, during 2000-2005 in relation to <strong>the</strong> growth <strong>of</strong> <strong>the</strong>ir net pr<strong>of</strong>it. They
found <strong>the</strong> quality <strong>of</strong> IC components directly affects companies’ financial performance, pr<strong>of</strong>it growth
rate and competitive position. Similar results are obtained by Molodchik and Bykova (2011) in <strong>the</strong>
case <strong>of</strong> 350 Russian industrial enterprises analysed for 2005-2007 period.
2.3 Research hypo<strong>the</strong>ses
Based on <strong>the</strong> conclusions reached by <strong>the</strong> above reviewed studies, it may be argued that a firm with
higher IC performance is expected to have higher rate <strong>of</strong> pr<strong>of</strong>itability and also it may experience
higher productivity. Thus, in our study we predict a positive relationship between companies’
performance and IC performance <strong>of</strong> <strong>the</strong> related Romanian companies. Accordingly we propose for
examination a total <strong>of</strong> 12 hypo<strong>the</strong>ses:
H1a. VAICTM is positively associated with market valuation.
H1b. VAICTM is positively associated with pr<strong>of</strong>itability.
H1c. VAICTM is positively associated with productivity.
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Table 1: Literature review summary
Maria Cristina Morariu
Year <strong>of</strong>
Measure <strong>of</strong> IC
No <strong>of</strong>
Economy Year <strong>of</strong>
Authors
Publication Result performance Variable Type Companies Country
type analysis
Prabowo and Soegiono 2010 varied VAICTM dependent 69 Indonesia emerging 2008
Rahim et al. 2010 n/a VAICTM independent n/a Malaysia emerging 2000-2009
Shamsuddin et al. 2010 n/a IC Index n/a n/a Malaysia emerging
Yu et al. 2010 varied VAICTM independent 37-avg Hong Kong developed 2005-2008
Molodchik and Bykova 2011 positive VAICTM dependent variable 350 Russia emerging 2005-2007
Firer and Williams 2003 varied VAICTM independent 75 South Africa emerging 2001
Tan et al. 2007 positive VAICTM independent 150 Singapore developed 2000-2002
Chen et al. 2005 positive VAICTM independent 425-avg Taiwan emerging 1992-2002
El-Bannany 2008 positive VAICTM dependent variable 60 UK banks developed 1999-2005
Bramhandkar et al. 2007 positive MB-BV n/a 139 North American SE developed 2004
Buszko and Mroziewski 2009 positive IC Index n/a 32 Poland emerging 2000-2005
Chang 2007 positive VAICTM independent 100-avg Taiwan emerging 2001-2005
Ghosh and Mondal 2009 varied VAICTM independent 80 India emerging 2002-2006
Joshi et al. 2010 varied VAICTM n/a 11 Australia developed 2005-2007
Muhammad and Ismail 2009 varied VAICTM n/a 18 Malaysia emerging 2007
Kamath 2008 varied VAICTM independent 25 India emerging 1996-2006
Ting and Lean 2009 varied VAICTM independent 20 Malay sia emer ging
1999-2007
Tseng and Goo 2005 varied VAICTM independent 81 Taiwan emerging 200
Pulic 2000 positive VAICTM independent 27 UK developed 1992-1999
Goh 2005 positive VAICTM n/a 16 Malaysia emerging 2001-2003
F-Jardon and Martos 2009 varied Global Model n/a 113 Argentina emerging
Zéghal and Maaloul 2010 positive VAICTM independent 300 UK developed 2005
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Maria Cristina Morariu
H2a. VAHU is positively associated with market valuation.
H2b. VAHU is positively associated with pr<strong>of</strong>itability.
H2c. VAHU is positively associated with productivity.
H3a. SCVA is positively associated with market valuation.
H3b. SCVA is positively associated with pr<strong>of</strong>itability.
H3c. SCVA is positively associated with productivity.
H4a. VACA is positively associated with market valuation.
H4b. VACA is positively associated with pr<strong>of</strong>itability.
H4c. VACA is positively associated with productivity.
3. Methodology
3.1 Sample selection
Our initial sample consisted <strong>of</strong> 21 Romanian firms that are listed on BSE selected because <strong>of</strong> <strong>the</strong>ir
market representativeness and <strong>the</strong> practicality in data collection. A preliminary testing <strong>of</strong> <strong>the</strong> sample
companies showed that variables are not normally distributed. Consequently we applied to <strong>the</strong>m <strong>the</strong>
natural logarithm after which some companies were taken out due to null/negative values recorded by
some variables. In conclusion, our final sample consists <strong>of</strong> 14 companies that are classified into
sectors <strong>of</strong> activity and industries. For constructing a comparable framework with o<strong>the</strong>r studies, we
have used for classification <strong>the</strong> definitions provided by <strong>the</strong> Global Industry Classification Standard
(GICS) at June 30, 2010. Fur<strong>the</strong>rmore, for <strong>the</strong> purposes <strong>of</strong> testing our hypo<strong>the</strong>sis, <strong>the</strong> industries are
classified into traditional industries (TI) and knowledge intensive business services (KIBS). Table 2
provides a picture <strong>of</strong> classification results.
Table 2: Companies classification
KIBS Criteria TI KI KI TI TI TI
GICS Criteria Materials H ealthCare Financial Utilities Industrials Energy
Prelim ina ry
Sam ple
3 2 10 2 2 2
Fina l S amp le* 2 2 7 2 0 1
ALRO S.A.*
ANTIBIOTICE
S.A.*
BANCA COMERCIALA C.N.T.E.E.
CARPATICA S.A. TRANSELECTRICA*
SOCEP S.A.
OIL TERM INAL
S.A.
AZOMURES
S.A.* BIOFARM S.A.*
OLTCHIM S.A.
RM.
3.2 Definition <strong>of</strong> variables
BANCA
TRANSILVANIA*
BRD - GROUPE
SOCIETE GENERALE*
IMPACT DEVELOPER
& CONTRACTOR S.A.
S.S.I.F. BROKER S.A.
S.A.*
SIF M OLDOVA S.A.*
SIF MUN TENIA S.A.*
SIF OLTENIA S.A.*
S.A.*
S.N.T.G.N.
TRANSGAZ S.A.*
TURBOMECA
NICA
OMV
PETROM*
3.2.1 Dependent variables
The three traditional financial indicators used as dependent variables are market-to-book value (MB)
for market valuation, asset turnover (ATO) for productivity and return on equity (ROE) for pr<strong>of</strong>itability.
The following general formulas were considered for computation:
MB = Market Capitalization/Shareholders’ Equity = Ln_MkCap/Ln_Equity
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Maria Cristina Morariu
ATO = Turnover/Total Assets =Ln_Sales/Ln_TotalAssets
ROE = Net Pr<strong>of</strong>it/Shareholders’ Equity = Ln_NetPr<strong>of</strong>it/Ln_Equity
3.2.2 Independent variables
The literature review revealed <strong>the</strong> use <strong>of</strong> VAIC as both a dependent and an independent variable. It
will be included in this study as independent variable, in order to test <strong>the</strong> extent to which it may be
related to a company’s performance. Using <strong>the</strong> VAICTM method measures, three coefficients were
selected to measure <strong>the</strong> independent variables under consideration:
(1) VAHU: Value added human capital coefficient
VAHU = VA/HC;
VA = OUT – INPUT = Ln_Sales – Ln_Input
HC = all <strong>the</strong> expenditures for employees (total salaries and wages) = Ln_HC
(2) SCVA: Value added structural capital coefficient
SCVA = SC/VA;
SC = Ln_VA – Ln_HC;
VAIN: <strong>the</strong> value added IC coefficient
VAIN = Ln_VAHU + Ln_SCVA
(3) VACA: <strong>the</strong> value added capital employed coefficient
VACA = VA/CA
CA = book value <strong>of</strong> <strong>the</strong> net assets (or equity) = Ln_Equity
In <strong>the</strong> end, VAIC = VAHU + SCVA + VACA
3.2.3 Control variables
In conducting <strong>the</strong> multiple regression analysis, two control variables (firm size and industry type) are
generally included. Proxy measures are briefly described as follows:
1. Size <strong>of</strong> <strong>the</strong> Firm (Ln_Sales) = natural logarithm <strong>of</strong> total sales;
2. Industry Type: dummy variable representing 2 major industries: KI and TI
3.3 Regression models
Six regression models were used to investigate our 12 hypo<strong>the</strong>ses. The first three models investigate
<strong>the</strong> association between VAIC and <strong>the</strong> three dependent variables; <strong>the</strong> remaining three models
investigate on <strong>the</strong> association between VAIC components and dependent variables.
M1. MB = β1VAICTM + β2FSIZE + β3INDUSTRY
M2. ATO = β1VAICTM + β2FSIZE + β3INDUSTRY
M3. ROE = β1VAICTM+β2FSIZE+β3INDUSTRY
M4. MB = β1VAHU+β2SCVA+β3VACA+β4FSIZE+β5INDUSTRY
M5. ATO =β1VAHU+β2SCVA+β3VACA+β4FSIZE+β5INDUSTRY
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Maria Cristina Morariu
M6. ROE = β1VAHU+β2SCVA+β3VACA+β4FSIZE+β5INDUSTRY
4. Results and analysis
4.1 Descriptive statistics
From <strong>the</strong> output (Table 3 below) we see that most <strong>of</strong> <strong>the</strong> variables have skewness values between -1
and 1, but three do not (VAHU, VACA, MB). Never<strong>the</strong>less, if we consider <strong>the</strong> mean and median for
<strong>the</strong>se three variables we can observe that <strong>the</strong>y are approximately equal so we can assume that <strong>the</strong>
distribution is approximately normal for <strong>the</strong>se variables too. The comparison between VAIN and
VACA values suggests that during 2009 <strong>the</strong> sample companies were generally more effective in
creating VA from <strong>the</strong>ir IC (VAIN = 2.0533) than from physical and financial capital employed (VACA =
.9337).
Table 3: Descriptive statistics
Statistics
N
Std.
Valid Missing Mean Median Deviation Skewness Minimum Maximum
VAHU_LnVA 14 1 1.0869 1.0423 .08879 1.220 1.01 1.30
SCVA_Rec 14 1 .9664 .9699 .02783 -.187 .92 1.00
VAIN_Rec 14 1 2.0533 2.0119 .11328 .881 1.93 2.30
VACA_rec 14 1 .9337 .9332 .03849 1.287 .87 1.04
VAICTM_rec 14 1 2.986964 2.946004 .1072158 .361 2.8495 3.1636
ROE_rec 14 1 .8838 .8968 .06583 -.751 .72 1.01
ATO_Rec 14 1 .9565 .9569 .02725 -.483 .89 1.01
MB_Rec 14 1 1.0072 1.0074 .04243 1.518 .95 1.13
LN_SALES 14 1 20.4010 19.9050 1.75987 .582 18.02 23.53
To compare between groups <strong>of</strong> industries, a one-way ANOVA was conducted on <strong>the</strong> two industries.
Results (Table 4) suggest that both groups were generally more effective in creating VA from its IC
than from physical and financial capital employed (VAIN > VACA). This finding suggests that, even
within traditional industry sectors, <strong>the</strong> conventional underlying factors <strong>of</strong> production such as physical
and financial capital lost much <strong>of</strong> <strong>the</strong>ir importance in favour <strong>of</strong> IC. In addition <strong>the</strong> results shows that KI
sectors were generally more effective in creating VA from <strong>the</strong>ir intellectual, physical and financial
resources (VAICTM = 3.032814) than TI group (VAICTM = 2.904434), F (1, 12) = 6.59, p < .05.
Table 4: ANOVA summary
A one way between groups ANOVA
Knowledge Intensive Traditional Industry Total
Std.
Std.
N Mean Deviation N Mean Deviation F Sig.
VAHU_LnVA 9 1.1196 .09674 5 1.0281 .01324 4.276 .061
SCVA_Rec 9 .9746 .03009 5 .9516 .01684 2.420 .146
VAIN_Rec 9 2.0941 .12305 5 1.9797 .02992 4.052 .067
VACA_rec 9 .9387 .04599 5 .9247 .02073 .401 .538
VAICTM_rec 9 3.032814 .1057652 5 2.904434 .0417484 6.590 .025
ROE_rec 9 .9087 .04883 5 .8389 .07348 4.622 .053
ATO_Rec 9 .9447 .02343 5 .9777 .02095 6.846 .023
MB_Rec 9 1.0212 .04446 5 .9821 .02582 3.196 .099
388

4.2 Correlation analysis
Maria Cristina Morariu
Correlation analysis is <strong>the</strong> initial statistical technique used to analyse <strong>the</strong> association between <strong>the</strong>
dependent and <strong>the</strong> independent variables. Table 7 shows <strong>the</strong> findings from Pearson correlation matrix
analysis. As a start, <strong>the</strong> Pearson’s correlation coefficients were analysed to check for <strong>the</strong> absence <strong>of</strong>
multicollinearity problems. First we can observe that a significant positive correlation exists between
two independent variables VAHU and SCVA, r (12) = .844. This multicolinearity problem was
eliminated after finding <strong>the</strong> results <strong>of</strong> collinearity test that we ran (Table 5 & 6; see VIF < 3).
Table 5: Multicollinearity VAHU
Table 6: Multicollinearity SCVA
Coefficients a
Collinearity Statistics
Model
Tolerance VIF
1 SCVA_Rec .725 1.379
VACA_rec .670 1.493
LN_SALES .517 1.935
a. Dependent Variable: VAHU_LnVA
Coefficients a
Collinearity Statistics
Model Tolerance VIF
1 VACA_rec .698 1.433
LN_SALES .551 1.815
VAHU_LnVA .667 1.499
a. Dependent Variable: SCVA_Rec
Considering <strong>the</strong> correlations between independent variables and dependent variables, only nine are
statistically significant. VACA is significantly positively associated with ROE, r (12) = .615, p < .05 and
with MB, r (12) = .858, p < .01.This means that companies with relatively high VACA were likely to
have high ROE and MB. No significant correlation is identified between VACA and ATO. SCVA is
significantly positively correlated with ROE, r (12) = .563, p < 0.05 but negatively correlated with ATO,
r (12) = -.570, p < 0.05. This means that companies that have efficiently used <strong>the</strong>ir SC were likely to
have recorded a high ROE but a small ATO. No significant correlation is between SCVA and MB.
VAHU is significantly negatively correlated with ATO, r (12) = -.746, p < 0.01. VAHU is not
significantly correlated with <strong>the</strong> remaining two dependent variables (ROE and MB). This means that
when companies used efficiently <strong>the</strong>ir HC <strong>the</strong>y recorded a small ATO. Regarding VAIN, we notice a
negative significant correlation with ATO, r (12) = -.724, p < 0.01 and no significant correlation
between this variable and MB or ROE. Considering VAIC <strong>the</strong> findings show a significant positive
correlation with ROE, r (12) = .621, p < 0.05, but a negative significant correlation with ATO, r (12) =
.666, p < 0.01. No significant correlation is between this independent variable and MB. Overall,
correlation results imply sample firms with a higher-level VACA were associated with higher levels <strong>of</strong>
productivity and higher levels <strong>of</strong> market valuation. Fur<strong>the</strong>r, sample firms with higher levels <strong>of</strong> VAHU
were associated with lower levels <strong>of</strong> productivity and, sample firms with higher levels <strong>of</strong> SCVA were
associated with higher levels <strong>of</strong> pr<strong>of</strong>itability but lower level <strong>of</strong> productivity. Consequently, in
389

Maria Cristina Morariu
accordance with our expectations, <strong>the</strong>se findings appear to entirely support H1b, H1c, H2c, H3b, H3c,
H4a and H4b, while rejecting, at least partially <strong>the</strong> rest <strong>of</strong> <strong>the</strong> hypo<strong>the</strong>ses.
Table 7: Pearson correlation matrix
VAHU_LnVA SCVA_Rec VAIN_Rec VACA_rec VAICTM_rec ROE_rec ATO_Rec MB_Rec LN_SALES INDUSTRY
VAHU_LnVA Pearson Correlation
1 .844** .991** -.382 .910** .307 -.746** -.197 -.571* -.513
Sig. (2-tailed)
.000 .000 .178 .000 .285 .002 .499 .033 .061
SCVA_Rec Pearson Correlation .844** 1 .908** -.098 .924** .563* -.570* .074 -.486 -.410
Sig. (2-tailed)
.000 .000 .739 .000 .036 .033 .801 .078 .146
VAIN_Rec Pearson Correlation .991** .908** 1 -.323 .941** .379 -.724** -.136 -.567* -.502
Sig. (2-tailed)
.000 .000 .260 .000 .181 .003 .642 .035 .067
VACA_rec Pearson Correlation -.382 -.098 -.323 1 .018 .615* .278 .858** .542* -.180
Sig. (2-tailed)
.178 .739 .260 .952 .019 .336 .000 .045 .538
VAICTM_rec Pearson Correlation .910** .924** .941** .018 1 .621* -.666** .164 -.404 -.595*
Sig. (2-tailed)
.000 .000 .000 .952 .018 .009 .575 .152 .025
ROE_rec Pearson Correlation .307 .563* .379 .615* .621* 1 -.342 .731** .008 -.527
Sig. (2-tailed)
.285 .036 .181 .019 .018 .232 .003 .980 .053
ATO_Rec Pearson Correlation -.746** -.570* -.724** .278 -.666** -.342 1 -.085 .321 .603*
Sig. (2-tailed)
.002 .033 .003 .336 .009 .232 .772 .264 .023
MB_Rec Pearson Correlation -.197 .074 -.136 .858** .164 .731** -.085 1 .368 -.459
Sig. (2-tailed)
.499 .801 .642 .000 .575 .003 .772 .195 .099
LN_SALES Pearson Correlation -.571* -.486 -.567* .542* -.404 .008 .321 .368 1 .465
Sig. (2-tailed)
.033 .078 .035 .045 .152 .980 .264 .195 .094
INDUSTRY Pearson Correlation -.513 -.410 -.502 -.180 -.595* -.527 .603* -.459 .465 1
Sig. (2-tailed)
.061 .146 .067 .538 .025 .053 .023 .099 .094
**. Correlation is significant at <strong>the</strong> 0.01 level (2-tailed).
Correlations a
390
*. Correlation is significant at <strong>the</strong> 0.05 level (2-tailed).
a. Listwise N=14

4.3 Regression analysis
Maria Cristina Morariu
Table 8 exhibits <strong>the</strong> results <strong>of</strong> <strong>the</strong> regression coefficients for general explanatory variables using MB
as <strong>the</strong> dependent variable. The model is statistically significant (F (3, 10) = 5.994, p < 0.05). However,
contrary to <strong>the</strong>oretical expectations, <strong>the</strong> results indicate a non significant association between <strong>the</strong>
VAIC and MB and. The adjusted R 2 is .535 indicating that 54% <strong>of</strong> <strong>the</strong> variance in MB was explained
by <strong>the</strong> model. Table 9 below shows <strong>the</strong> results <strong>of</strong> regression coefficients for general explanatory
variables, using pr<strong>of</strong>itability as <strong>the</strong> dependent variable. The model is statistically significant (F (3, 10)
= 4.141, p < 0.05). However, contrary to <strong>the</strong>oretical expectations, <strong>the</strong> results indicate a non significant
association between <strong>the</strong> VAIC, company size and industry type and companies’ pr<strong>of</strong>itability. The
adjusted R 2 is .420 indicating that 42% <strong>of</strong> <strong>the</strong> variance in pr<strong>of</strong>itability was explained by <strong>the</strong> model.
Table 10 exhibits <strong>the</strong> results <strong>of</strong> <strong>the</strong> regression coefficients for general explanatory variables, using
productivity as <strong>the</strong> dependent variable. The model is not statistically significant (F (3, 10) = 3.465, p >
.05).The results analysed up to this point partially confirm <strong>the</strong> findings <strong>of</strong> Firer and Williams (2003),
Ghosh and Mondal (2009) and appear to reject H1a, H1b and H1c.
Table 8: Regression analysis_M1
Coefficients a
Unstandardized Standardized
Coefficients Coefficients
Model
B Std. Error Beta
t Sig.
1 (Constant) .836 .340 2.460 .034
VAICTM_rec -.009 .095 -.024 -.099 .923
LN_SALES .018 .005 .739 3.403 .007
INDUSTRY -.070 .021 -.816 -3.304 .008
a. Dependent Variable: MB_Rec; R Square = .643; F (3,10) = 5.994, p < 0.05
Table 9: Regression analysis_M2
Coefficients a
Unstandardized Standardized
Coefficients Coefficients
Model
B Std. Error Beta t Sig.
1 (Constant) -.333 .589 -.566 .584
VAICTM_rec .342 .164 .558 2.087 .063
LN_SALES .015 .009 .413 1.704 .119
INDUSTRY -.051 .037 -.388 -1.404 .191
a. Dependent Variable: ROE_rec; R Square = .554; F (3,10) = 4.141, p < 0.05
Table 10: Regression analysis_M3
Coefficients a
Unstandardized Standardized
Coefficients Coefficients
Model
B Std. Error Beta t Sig.
1 (Constant) 1.287 .256 5.034 .001
VAICTM_rec -.122 .071 -.481 -1.716 .117
LN_SALES .000 .004 -.027 -.105 .918
INDUSTRY .018 .016 .329 1.136 .282
a. Dependent Variable: ATO_Rec; R Squared = .510; F (3,10) = 3.465, p .059
Table 11 exhibits <strong>the</strong> results <strong>of</strong> <strong>the</strong> regression coefficients for all explanatory variables using MB as
<strong>the</strong> dependent variable. The model is significant (F (5,8) = 28.037, p < 0.05) and explains 91.2% <strong>of</strong>
391

Maria Cristina Morariu
<strong>the</strong> variance in MB (adjusted R 2 is .912). Looking at <strong>the</strong> significance <strong>of</strong> each variable, we can observe
that except for VACA, all <strong>the</strong> variables are significant; that SCVA and companies size are both
positively correlated with MB while VAHU and industry type are negatively correlated with MB.
However, contrary to <strong>the</strong>oretical expectations, <strong>the</strong> results exhibited in Table 11 indicate a non
significant association between VACA and MB and appears to reject H4a. Similar to <strong>the</strong> results
obtained by correlation analysis, <strong>the</strong> results reported in Table 11, show that H3a is verified and
corroborate prior studies conducted by Firer and Williams (2003), Chen et al. (2005). However,
because <strong>the</strong> correlation between VAHU and MB is negative means that H2a is rejected. This finding
(similar to Firer and Williams, 2003) implies that Romanian investors appreciate <strong>the</strong> importance <strong>of</strong> SC
in favour <strong>of</strong> HC.
Table 11: Regression analysis_M4
Coefficients a
Unstandardized Standardized
Coefficients Coefficients
Model
B Std. Error Beta
t Sig.
1 (Constant) .082 .186 .442 .670
LN_SALES .013 .004 .544 3.356 .010
INDUSTRY -.073 .014 -.851 -5.204 .001
VAHU_LnVA -.463 .126 -.970 -3.683 .006
SCVA_Rec 1.251 .338 .820 3.705 .006
VACA_rec .132 .208 .120 .636 .543
a. Dependent Variable: MB_Rec; R Squared = .946; F (5,8) = 28.037; p < .05
Table 12 shows <strong>the</strong> results <strong>of</strong> regression coefficients for all explanatory variables, using pr<strong>of</strong>itability as
<strong>the</strong> dependent variable. The model is significant (F (5, 8) = 6.463, p < 0.05) and explains 67.8.2% <strong>of</strong>
<strong>the</strong> variance in pr<strong>of</strong>itability (adjusted R 2 is .678). Looking at <strong>the</strong> significance <strong>of</strong> each variable into <strong>the</strong>
model, we can observe that none is statistically significant. Accordingly, H2b, H3b and H4b are
rejected. This finding partially confirm <strong>the</strong> findings from Joshi et al. (2010), Muhammad and Ismail,
2009; Kamath (2008).
Table 12: Regression analysis_M5
Coefficients a
Unstandardized Standardized
Coefficients Coefficients
Model
B Std. Error Beta
t Sig.
1 (Constant) -1.353 .553 -2.446 .040
LN_SALES .004 .012 .098 .314 .762
INDUSTRY -.037 .042 -.282 -.898 .396
VAHU_LnVA -.115 .374 -.155 -.306 .767
SCVA_Rec 1.600 1.004 .676 1.593 .150
VACA_rec .887 .618 .519 1.434 .189
a. Dependent Variable: ROE_rec; R Squared = .802; F (5,8) = 6.463; p < 0.05
Table 13 exhibits <strong>the</strong> results <strong>of</strong> <strong>the</strong> regression coefficients for all explanatory variables, using
productivity as <strong>the</strong> dependent variable. The model is statistically significant (F (5,8) = 6.962, p < 0.05)
and explains 69.6% <strong>of</strong> <strong>the</strong> variance in productivity (adjusted R 2 = .696). Table 13 shows a significant
positive correlation between VACA and productivity. No significant correlation is identified between
SCVA, VAHU and productivity. These results support H4c and confirm that CA plays a major role in
productivity variation. Moreover, this finding agrees with previous studies conducted by Zeghal and
Maaloul, 2010. However, contrary to <strong>the</strong>oretical expectations, <strong>the</strong> results indicate a non-significant
association between <strong>the</strong> both VAHU and SCVA and productivity. This result partially confirms <strong>the</strong>
findings <strong>of</strong> Ghosh and Mondal, 2009 and appears to reject <strong>the</strong> H2c, H3c.
392

Table 13: Regression analysis_M6
Model
1
5. Conclusions
(Constant)
LN_SALES
INDUSTRY
VAHU_LnVA
SCVA_Rec
VACA_rec
Maria Cristina Morariu
Unstandardized
Coefficients
Coefficients a
Standardized
Coefficients
B Std. Error Beta
t Sig.
1.022 .222 4.600 .002
-.013 .005 -.822 -2.725 .026
.052 .017 .953 3.130 .014
.024 .150 .080 .162 .875
-.550 .403 -.561 -1.362 .210
.616 .248 .871 2.481 .038
a. Dependent Variable: ATO_Rec; R Squared =.813; F (5.8) = 6.962; p < 0.05
The findings from this study show that a significant positive association exists between SCVA and MB
and between VACA and productivity. This indicates that CA plays a major role in reducing a
company’s production costs and that a firm’s MB can be significantly improved by managing <strong>the</strong> SC
properly. Finally, our results show that VACA has a non significant association with pr<strong>of</strong>itability and
MB. These findings indicate that CA is not anymore important for stakeholders through its insignificant
role in value creation. A significant negative association is identified between VAHU and MB
indicating that firms who are high on VAHU are significantly undervalued in <strong>the</strong> market. Non
significant association were identified between VAIC and any <strong>of</strong> <strong>the</strong> traditional performance indicators.
Regarding <strong>the</strong> control variables, it can be identified a significant positive association between
companies’ size and MB and a significant negative association between size and productivity.
Industry type is negatively associated with MB but positively associated with productivity. No
significant association has been identified between pr<strong>of</strong>itability and any <strong>of</strong> <strong>the</strong> control variables. The
findings <strong>of</strong> this study are partially consistent with <strong>the</strong> studies on Malaysia (Muhammad and Ismail,
2009; Ting and Lean 2009), India (Ghosh and Mondal, 2009; Kamath, 2008), South Africa (Firer and
Williams, 2003) and UK (Zeghal and Maaloul, 2010).
This research is not without limitations. First, <strong>the</strong> results related to <strong>the</strong> impact <strong>of</strong> control factors on
dependent variables are mixed and not significant in most cases. Additional research could eventually
introduce o<strong>the</strong>r control factors to provide clearer results. Second, future research can be undertaken
to investigate associations studied in <strong>the</strong> present paper across time and a study involving a fairly large
sample may be conducted to reassess those relationships. Finally, future research could revisit some
<strong>of</strong> <strong>the</strong> basic assumptions <strong>of</strong> <strong>the</strong> VAIC method and assess <strong>the</strong>ir potential consequences for <strong>the</strong> validity
<strong>of</strong> empirical testing and results. Despite possible limitations <strong>of</strong> using single-period data and a
relatively small sample, it is felt that <strong>the</strong> results from <strong>the</strong> present study provide valuable insights into
<strong>the</strong> association between IC and traditional perceptions <strong>of</strong> corporate performance. Fur<strong>the</strong>r, this is a
pioneering study in <strong>the</strong> case <strong>of</strong> Romanian listed companies enriching IC literature with new empirical
evidence.
Acknowledgements
This work was supported by CNCSIS –UEFISCSU, project number PNII – IDEI code 1859/2008,
contract no. 837/2009.
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394

The Arrival <strong>of</strong> <strong>the</strong> Generation “Y”: The Managerial
Implications for French Health and Social Organizations
Bertrand Pauget 1 and Ahmed Dammak 2
1
Strategy & Management, <strong>the</strong> European Business School (EBS), Paris, France
2
Strategy & Management,Groupe ESC Troyes, Troyes, France
bertrandpauget@ebs-paris.com
ahmed.dammak@groupe-esc-troyes.com
Abstract: Generation “Y” applies to individuals born between 1977 and 1995. The emergence <strong>of</strong> this generation
has brought new rules and values to society. These differences go beyond <strong>the</strong> classic arguments between young
and old individuals and between traditional and modern ideals. More numerous than <strong>the</strong> preceding generation,
this generation will represent between 40 and 50 percent <strong>of</strong> <strong>the</strong> French workforce by 2020. Several items have
been shown to alarm young people who appear rebellious to authority and can rapidly change <strong>the</strong>ir careers or
companies. If this future appears exaggerated, Generation Y” might be able to transform management and
human resources in health because <strong>of</strong> expectations that are different than those <strong>of</strong> previous generations, such as
<strong>the</strong> “Baby Boomers”.This qualitative research study attempted to describe and clarify <strong>the</strong> concept <strong>of</strong> “generation”
before examining <strong>the</strong> various generations currently working in hospitals to better understand <strong>the</strong> particular
characteristics <strong>of</strong> Generation “Y”. The next step was to examine how this generation is likely to fundamentally
change hospital management.
Keywords: generational management, generation “y”, hospital, health and social systems, France
1. Introduction
We traditionally describe Generation “Y”, including people born between 1977 and 1995, as antiauthoritarian.
However, French social and health organizations have been built as pr<strong>of</strong>essional
bureaucracies based on strong leadership and <strong>of</strong>ten have directive management (Grenier 2006;
Pauget, 2006). The arrival <strong>of</strong> Generation “Y” should challenge current hospital management. In effect,
according to OECD figures, Generation “Y” will represent 40 to 50% <strong>of</strong> <strong>the</strong> French workforce by <strong>the</strong>
end <strong>of</strong> this decade. This paper seeks to understand <strong>the</strong> nature <strong>of</strong> <strong>the</strong> managerial impact <strong>of</strong> Generation
“Y” on French social and health organizations.
However, Generation “Y” is not likely to adopt <strong>the</strong> radical posture encountered in <strong>the</strong> pr<strong>of</strong>essional
literature (Tinlsey, 2008; Kimberly, 2009; Reinsewitz & Iyer, 2009). We considered <strong>the</strong> ideas <strong>of</strong>
Meister & Willyerd (2010), who suggested that <strong>the</strong> management <strong>of</strong> Generation “Y” is easier than
expected.
Stereotypes have gradually been formed about Generation “Y”, such as it is a generation that is antiauthoritarian,
objecting, demanding, and that wants everything right away. However, Generation “Y” is
also considered interconnected, innovative, and flexible. However, what defines a generation? The
encyclopedia Hachette views a generation as <strong>the</strong> “length <strong>of</strong> time between two degrees <strong>of</strong> descent
(about 30 years)”. However, generations are not based on biological data, but ra<strong>the</strong>r on sociologic
processes. A generation is defined by <strong>the</strong> distinct habits, idols, or pr<strong>of</strong>ound acts (for example, <strong>the</strong> May
1968 strike in Europe) <strong>of</strong> its predecessors.
Western societies generally distinguish <strong>the</strong> following generations:
The Baby Boomers (<strong>the</strong> generation born between 1945 and 1964)
Generation “X” (<strong>the</strong> generation born between 1965 and 1977; considered a transitional
generation)
Generation “Y” (<strong>the</strong> generation born between 1978 and 1995)
We found that generations have similar natures regarding contrast and opposition (young/old,
modernists/conformists), which allow each generation to be defined. Yet, in many ways, encounters
between <strong>the</strong> Baby Boomers and Generation “Y” appear to provoke difficulties beyond <strong>the</strong> traditional
feuds between generations.
These generations are rooted in conflicting cultural contexts: on one side (Baby-Boomers), a post-war
generation, recklessness, and prosperity; on <strong>the</strong> o<strong>the</strong>r (Generation “Y”), <strong>the</strong> AIDS generation -
globalized, but without <strong>the</strong> safe environment <strong>of</strong> a government protector.
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The values that each generation associates with <strong>the</strong> concept <strong>of</strong> work also appear vastly different.
There is a culture <strong>of</strong> duty, identification with <strong>the</strong>ir company, and a belief in public service on one side
(Baby-Boomers), and on <strong>the</strong> o<strong>the</strong>r side (Generation “Y”), <strong>the</strong>re is identification with <strong>the</strong> project, not <strong>the</strong>
company, centering on satisfaction and immediate retribution, but, at <strong>the</strong> same time, a generation that
is innovative and open to change. This has implications for management.
Our inductive approach used a series <strong>of</strong> questionnaires and interviews based on criteria defined by
Yin (1994) and Hadly-Rispal (2002). We sought to understand whe<strong>the</strong>r Generation “Y” influences
management and how it affects <strong>the</strong> attitudes <strong>of</strong> managers. We established that if <strong>the</strong> effect <strong>of</strong>
Generation “Y” could be verified in all organizations, <strong>the</strong>n this effect has caused management
changes. Faced with this situation, managers display two divergent attitudes: one group socializes
young people in <strong>the</strong> same way as has been done for previous generations, and <strong>the</strong> second group
adopts a resolutely relational stance. In facing <strong>the</strong>se new difficulties and managerial changes, <strong>the</strong>
design <strong>of</strong> organizations as a whole is questioned.
2. What defines a “generation”?
2.1 The idea <strong>of</strong> “generation” in <strong>the</strong> literature
“The biological is not <strong>the</strong> societal”. This assertion has caused a debate (Bourdieu, 1986) that has
never been resolved, leading us to consider <strong>the</strong> realities surrounding <strong>the</strong> use <strong>of</strong> specific words.
Instead <strong>of</strong> preferring <strong>the</strong> term “cohort”, which is used in biology and medicine, <strong>the</strong> twentieth century
saw <strong>the</strong> term “generation” adopted to designate <strong>the</strong> segregation <strong>of</strong> an age around seminal and
powerfully symbolic events, such as <strong>the</strong> May 1968 strike, <strong>the</strong> collapse <strong>of</strong> <strong>the</strong> Berlin Wall in 1989, and
<strong>the</strong> September 11, 2001 attacks. The term “generation” is <strong>the</strong>refore cultural and symbolic.
Created in <strong>the</strong> nineteenth century by August Compte, <strong>the</strong> term “generation” reappears in <strong>the</strong> 1920s
(Manheim, 1928) and is negatively associated in <strong>the</strong> 1930s with <strong>the</strong> problem <strong>of</strong> youth integration
during <strong>the</strong> economic crisis following <strong>the</strong> collapse <strong>of</strong> Wall Street. This is <strong>the</strong>n described in a
functionalist perspective as part <strong>of</strong> <strong>the</strong> cycle <strong>of</strong> life (Eisenstadt, 1956). Each generation follows its
predecessor, forming human destiny.
The term “generation” became unavoidable in <strong>the</strong> 1960s, when young people born after World War II,
more numerous than <strong>the</strong>ir elders, found <strong>the</strong>mselves less supervised than previous generations. A
more individualistic generation than those before <strong>the</strong> war, <strong>the</strong> “Baby Boomers” violently expressed
<strong>the</strong>ir wishes and aspirations in <strong>the</strong> 1960s (Mead, 1979). Research at this time studied those
individuals with <strong>the</strong> most anecdotal ways <strong>of</strong> life: those with a marginal culture (<strong>the</strong> beat generation)
and those that formed a counter-culture (<strong>the</strong> surfers) (Becker, 1963).
2.2 Characteristics <strong>of</strong> different generations
Generation “Y” is a phenomenon that has been frequently studied in pr<strong>of</strong>essional literature. A search
in EBSCO (<strong>the</strong> research engine), yields hundreds <strong>of</strong> studies that have sought to understand
Generation “Y” and its impact on organizations. The Harvard Business Review, for example, devoted
10 articles during 2008-2009 to Generation “Y”. This craze is not new; with <strong>the</strong> arrival <strong>of</strong> Generation
“X” on <strong>the</strong> labor market, many articles were written on <strong>the</strong> subject (e.g., Tulgan, 1997; RelStauffer,
1997; O’Bannon, 2001). This work can be syn<strong>the</strong>sized in various ways. Here, we have chosen to
identify <strong>the</strong> principal characteristics <strong>of</strong> each generation before examining <strong>the</strong> literature regarding <strong>the</strong>
effect <strong>of</strong> Generation “Y” on management.
While increases in life expectancy have allowed six generations to live simultaneously, three
generations currently work toge<strong>the</strong>r in France. The dates used to define <strong>the</strong> generations in <strong>the</strong> United
States (see Strauss and Howe (1997); Egri and Ralston (2004)) broadly correspond to those used in
France (Carol, 2009).. These generations correspond in percentage (with some nuances) to trends in
<strong>the</strong> US (Thunk, 2007). According to Chauvel (2010), <strong>the</strong>re are <strong>the</strong> following:
The Baby Boomers have a post-World War II mentality and are marked by reconstruction because
Europe had been largely damaged by fighting. Even if <strong>the</strong> damage was not as extensive as it was in
Germany (where 90% <strong>of</strong> <strong>the</strong> cities had been destroyed by bombing or <strong>the</strong> use <strong>of</strong> artillery), large
proportions <strong>of</strong> nor<strong>the</strong>rn France and Normandy were affected, and food rationing continued until 1949.
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More numerous than <strong>the</strong> preceding generation (<strong>the</strong> so-called “silent generation”), <strong>the</strong> youth <strong>of</strong> <strong>the</strong>
sixties and early seventies lived in a privileged period due to particularly strong economic growth
(approximately 6% growth per year during <strong>the</strong> 1960s in France).
The Baby Boomers are a readily hedonistic generation that discovered mass consumption related to
<strong>the</strong> development <strong>of</strong> Fordism. Their generation is <strong>the</strong> last great heir to <strong>the</strong> ideals <strong>of</strong> <strong>the</strong> Enlightenment
developed in France during <strong>the</strong> French Revolution (1789), and <strong>the</strong>y believe in <strong>the</strong> idea <strong>of</strong> human
progress. This is based on a contract (related to <strong>the</strong> development <strong>of</strong> <strong>the</strong> bureaucratic ideal, Weber
1963). The phrase “public service” has been invented to describe this choice (Rosanvallon, 1995).
However, this generation is also rebellious to authority (as evidenced by <strong>the</strong> major strikes <strong>of</strong> 1968
against <strong>the</strong> power structures <strong>the</strong>n in place) and more individualistic than its predecessors (Attias-
Donfut, 1988).
Generation “X” is a transitional generation that has <strong>of</strong>ten been poorly discussed in <strong>the</strong> literature. It has
been called “Generation B<strong>of</strong>” (“Generation whatever”) and <strong>the</strong> “cynical generation.” In <strong>the</strong> words <strong>of</strong>
Alexandre Dumas regarding Louis XIII, “it is difficult to be both <strong>the</strong> son <strong>of</strong> Henri IV and <strong>the</strong> fa<strong>the</strong>r <strong>of</strong>
Louis XIV.” Generation “X” is inserted between two generations that are more numerous and
influential (Chauvel, 2010).
Individuals in Generation “X” understand that national and European ideals experience difficulties;
even its most educated members are familiar with economic crisis. At <strong>the</strong> same time, on <strong>the</strong> private
front, Generation “X” discovered its first turmoil related to sexual relations, with <strong>the</strong> AIDS virus.
With <strong>the</strong> collapse <strong>of</strong> political ideals, <strong>the</strong> distressing arrival <strong>of</strong> globalization, and <strong>the</strong> turbulence <strong>of</strong>
private life, Generation “X” finds itself fragmented.
A portion <strong>of</strong> Generation “X” invested <strong>the</strong>mselves in <strong>the</strong> pr<strong>of</strong>essional world, but <strong>the</strong> majority (more than
60% <strong>of</strong> this generation) distanced <strong>the</strong>mselves from organizations. This majority values <strong>the</strong>ir personal
development, investment in <strong>the</strong>ir families, creating new lifestyle habits, and consumption, <strong>the</strong>reby
creating new words that flourished in common parlance, such as “bobos.” More mobile and
individualistic, this generation paved <strong>the</strong> way for Generation “Y”.
Generation “Y” is <strong>the</strong> first generation to be fully interconnected (Prele, 2005). It is not a generation <strong>of</strong>
photographs; it is one <strong>of</strong> <strong>the</strong> emerge <strong>of</strong> computers and electronics. This generation takes for granted
<strong>the</strong> fall <strong>of</strong> <strong>the</strong> Berlin Wall. For it, <strong>the</strong> world is relative and instable; it does not recognize any borders,
and its members have already traveled extensively (Olivier and Tanguy, 2008).
At <strong>the</strong> same time, individualism, which has been pushed to its climax, has introduced new
considerations regarding <strong>the</strong> place <strong>of</strong> humans in <strong>the</strong> world (i.e., interest in sustainable development,
respect for all cultures, and a return to religion affected by personal experiences (Amirou and Pauget,
2011)). This generation combines <strong>the</strong> traits <strong>of</strong> its predecessors: it voluntarily defies authority because
it is accustomed even more than those that were involved in <strong>the</strong> May 1968 strike to change laws and
customs. It is a very flexible, but also impatient, generation.
2.3 The impact <strong>of</strong> Generation “Y” on management as reported in <strong>the</strong> literature
Research articles regarding <strong>the</strong> impact <strong>of</strong> Generation “Y” on management are rare (Murphy et al.,
2010; Baldonado and Spangenburg, 2009). Zemke and coworkers (2001) noted that each generation
has different expectations and values.
Three concepts seem to emerge in <strong>the</strong> French context (IAE, 2009): <strong>the</strong> search for identity and
connection with o<strong>the</strong>rs, <strong>the</strong> questioning <strong>of</strong> authority, and <strong>the</strong> flexibility <strong>of</strong> organizations.
The Baby Boomer generation grew up in a world populated by 2.5 billion humans. In 2010, <strong>the</strong>re were
6.8 billion people. It may be anecdotal to say that this forces <strong>the</strong> younger generation to ask, “Who am
I among almost 7 billion o<strong>the</strong>rs?” The question <strong>of</strong> o<strong>the</strong>rness and <strong>the</strong> recognition <strong>of</strong> individuals in a
system is <strong>of</strong> importance. Young people are readily abandoning television for <strong>the</strong> recreational use <strong>of</strong>
social networks where <strong>the</strong> network <strong>of</strong> relationships <strong>of</strong>fers <strong>the</strong> best support and complicity.
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The question <strong>of</strong> identity fosters <strong>the</strong> questioning <strong>of</strong> <strong>the</strong> traditional relations <strong>of</strong> authority. Over <strong>the</strong>
generations, differences have increased. Even as Baby Boomers challenged <strong>the</strong> brands <strong>of</strong>
established authority to create a new society, Generation “Y” took it for granted that it was possible,
even legitimate, to question authority. More precisely, <strong>the</strong> nature <strong>of</strong> its relationship with authority
changed.
Members <strong>of</strong> Generation “Y” do not have any problems with considering <strong>the</strong>mselves equal to <strong>the</strong>ir
superiors, despite <strong>the</strong>ir inexperience. Only pro<strong>of</strong> by example counts. Authority is not granted; ra<strong>the</strong>r, it
is acquired by example and for a given time only. Generation “Y” individuals are interested in <strong>the</strong>
trajectories <strong>of</strong> lives that are different from <strong>the</strong>irs. Any experience, even one that is not aligned with
one’s career, is worth having. Generation “Y” molds new ideas and practices by combining different
and apparently contradictory worlds. Generation “Y” is also more curious than its predecessors:
individuals in this generation seek to broaden <strong>the</strong>mselves. Recent studies have shown that though
individuals in Generation “Y” process five times more information on <strong>the</strong> internet, <strong>the</strong>y are five times
less in-depth than <strong>the</strong> Baby Boomer generation.
Flexibility is a part <strong>of</strong> <strong>the</strong> priority <strong>of</strong> Generation “Y”. The concept <strong>of</strong> schedules and constraints must be
adjusted to situations that are different than those in <strong>the</strong> past. We cannot expect Generation “Y” to
adapt more easily without expecting <strong>the</strong> o<strong>the</strong>r side (i.e., <strong>the</strong> flexibility <strong>of</strong> <strong>the</strong> organization in its daily
work) to adapt as well. At <strong>the</strong> same time, Generation “Y” seeks to work as a team, but without
necessarily having rules.
Our goal in this study was to understand <strong>the</strong> nature <strong>of</strong> <strong>the</strong> managerial impact <strong>of</strong> Generation “Y” on
French social and health organizations.
This led us to produce three hypo<strong>the</strong>ses:
H1 – Generation “Y” has a problem in positioning itself within organizations.
H2 – Management is challenged by Generation “Y”.
H3 – Organizations struggle to meet <strong>the</strong> expectations <strong>of</strong> Generation “Y”.
3. Methodology
The idea for this research was proposed by individuals in <strong>the</strong> French social and health fields. Three
nursing schools contacted one <strong>of</strong> <strong>the</strong> researchers to organize conferences on Generation “Y” and its
impact on <strong>the</strong>ir organizations. Management has said that <strong>the</strong>y employ a very different generation <strong>of</strong>
student nurses with whom <strong>the</strong>y are struggling to cope. We sought to confirm this perception.
We constructed a questionnaire in three stages. In <strong>the</strong> first stage, we sought to distinguish between
stereotypes and <strong>the</strong> perceptions <strong>of</strong> people working with Generation “Y”. We sought to measure <strong>the</strong>
impact <strong>of</strong> Generation “Y” on management and <strong>the</strong> organization. We based our questionnaire on <strong>the</strong>
three French traits <strong>of</strong> Generation “Y”: questioning identity, questioning authority, and <strong>the</strong> search for
flexibility. The first trait was examined in terms <strong>of</strong> relationships with superiors and colleagues. The
second trait raised <strong>the</strong> question <strong>of</strong> authority and traditional functions <strong>of</strong> control and decision-making
by management. The third included <strong>the</strong> need for personal flexibility (hours, salary, etc.) and
organizational flexibility (<strong>the</strong> use <strong>of</strong> technology tools, information sharing, teamwork, etc.).
We contacted respondents in <strong>the</strong> health and social field training fields. Our respondents were
directors or deputy directors <strong>of</strong> nursing homes, members <strong>of</strong> hospital management, and <strong>of</strong>ficials from
health and social organizations (e.g., organizations that assist <strong>the</strong> sick and disabled). We <strong>the</strong>n
administered qualitative and exploratory questionnaires during April 2011. We subsequently returned
<strong>the</strong> questionnaire results to our respondents to confirm <strong>the</strong> relevance <strong>of</strong> our analysis and ensured that
<strong>the</strong> respondents were informants in <strong>the</strong> ethnographic sense (Mehan, 1978). That is, <strong>the</strong>y were
capable <strong>of</strong> understanding and explaining <strong>the</strong>ir interactions with <strong>the</strong> people and <strong>the</strong> institutions around
<strong>the</strong>m. In an exploratory sense, those with a Master’s Degree in management appeared engaged in a
reflexive attitude with respect to <strong>the</strong>ir pr<strong>of</strong>essions and <strong>the</strong>ir practices.
The challenge was to avoid individuals that were too critical <strong>of</strong> management or <strong>the</strong>ir organizations
because <strong>the</strong>y were seeking to leave <strong>the</strong>ir organization. These people existed in our sample but were
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no more critical than o<strong>the</strong>rs. At each stage <strong>of</strong> this structured questionnaire, we provided <strong>the</strong>
opportunity for people to comment on <strong>the</strong> various <strong>the</strong>mes under consideration, and more than 90% <strong>of</strong>
respondents did so.
Our sample group contained 36 people (out <strong>of</strong> a possible 37) and was constructed based on <strong>the</strong>
recommendations <strong>of</strong> Rispail (2002). Three people belonged to Generation “Y”, and our questionnaire
was modified slightly for <strong>the</strong>m. This was not a representative group because two <strong>of</strong> <strong>the</strong> three had not
worked previously.
Three people were managed by members <strong>of</strong> Generation “Y”. This could have created a different
vision <strong>of</strong> management; however, again, <strong>the</strong> low sample size led us to disregard <strong>the</strong>ir responses.
Of <strong>the</strong> 31 people remaining, 15 had heard <strong>of</strong> Generation “Y” and were <strong>the</strong> most critical. After a closer
examination, it appeared that learning about Generation “Y” resulted from difficulties encountered in
<strong>the</strong> field. Of <strong>the</strong>se 15 individuals, 14 had management positions in <strong>the</strong> French health and social sector
and had to manage members <strong>of</strong> Generation “Y”. These are <strong>the</strong> respondents who formed <strong>the</strong> basis <strong>of</strong>
our results. Their ages correspond to <strong>the</strong> distribution <strong>of</strong> ages <strong>of</strong> <strong>the</strong> French people as a whole.
Following this questionnaire, we developed our initial results and returned to <strong>the</strong> field to present <strong>the</strong>m.
We <strong>the</strong>n completed our questionnaire using secondary data on <strong>the</strong> organizations to which <strong>the</strong>
respondents belonged.
4. Results and generalization
Among <strong>the</strong> selected sample, flexibility, positions, and teamwork appeared to pose a problem.
4.1 Observations on <strong>the</strong> characteristics attributed to Generation “Y”
The results <strong>of</strong> our entire sample show that several assumptions regarding Generation “Y” were not
considered true. Thus, <strong>the</strong> idea that Generation “Y” is less committed to <strong>the</strong> organization than
previous generations was not confirmed.
However, according to <strong>the</strong> majority <strong>of</strong> respondents, members <strong>of</strong> Generation “Y” have <strong>the</strong> following
characteristics:
They put <strong>the</strong>ir personal life before <strong>the</strong> priorities <strong>of</strong> <strong>the</strong> organization. This is summarized by a
questionnaire response as “investing in work is less important, free time and leisure are much more
important” (Respondent 4).
They have a strong desire for flexibility in scheduling, attendance, and leave. They are “sure <strong>of</strong>
<strong>the</strong>mselves and resent constraints (hours)” (Respondent 6), and <strong>the</strong>y are “drawn by attractive aspects
(leave and low unemployment)” (Respondent 7).
The idea that Generation “Y” does not always respect hierarchy or rules is considered to be true, but
with caveats. The latter think that <strong>the</strong>y are less committed than previous generations to <strong>the</strong> teams with
which <strong>the</strong>y work. One person described members <strong>of</strong> Generation “Y” as having “little involvement with
pr<strong>of</strong>essional care practices, lack <strong>of</strong> curiosity, motivation, goals, and team spirit” (Respondent 9).
However, <strong>the</strong> respondents view <strong>the</strong> members <strong>of</strong> Generation “Y” as nothing but critics, stating that
“<strong>the</strong>y are willing to take employment in a business but criticize its operation. Critics within Generation
“Y” can be a positive force for <strong>the</strong> organization if <strong>the</strong>y are properly integrated.
4.2 Observations on adjustments to management and organizations with respect to
Generation “Y”
The relationship <strong>of</strong> Generation “Y” with authority requires us to rethink management.
Of <strong>the</strong> 14 people who constituted <strong>the</strong> majority <strong>of</strong> our sample, eight felt that authority was being
challenged by members <strong>of</strong> Generation “Y”. Eleven people thought that <strong>the</strong> trend regarding <strong>the</strong> control
<strong>of</strong> youth belonging to Generation “Y” was problematic or very problematic. Ten felt that <strong>the</strong>y had to
adapt <strong>the</strong>ir communication techniques to deal with this generation.
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The transcript shows that managers <strong>of</strong>ten link difficulties with placing members <strong>of</strong> Generation “Y” to
<strong>the</strong> fact <strong>the</strong>y that challenge <strong>the</strong> authority <strong>of</strong> management. One respondent declared, “We must adapt
to <strong>the</strong>ir youth and immaturity and explain <strong>the</strong> basics <strong>of</strong> compliance within an organization and
hierarchy.” Is Generation “Y” a generation that has just become integrated and simply needs to be
made fully aware? It appears that this is not <strong>the</strong> only issue because Generation “Y” seems to pose <strong>the</strong>
following particular problems for managers:
“The coaching/mentoring staff is more important than in <strong>the</strong> past” (Respondent 1)
“Generation “Y” requires more controlling actions, more meetings, more listening” (Respondent 8)
“(Generation “Y” ) being more conciliatory about <strong>the</strong> work to be done during <strong>the</strong>ir work shift”
(Respondent 10)
But faced with this need, it appears that this leads to tensions and conflicts within <strong>the</strong> teams for some
managers:
“There is a conflicting relationship with <strong>the</strong> older workers, which increases communication time
and requires defusing conflicts at <strong>the</strong> expense <strong>of</strong> care” (Respondent 14)
“The reporting relationships are complicated” (Respondent 2)
Adaptation <strong>of</strong> management varies between a reserved attitude regarding following <strong>the</strong> rules and an
enthusiastic attitude towards adaptation
In an underlying manner, it appears that this skill needs to be exchanged in this generation but varies
among individuals. Two types <strong>of</strong> managers are apparent. The first type concentrates mainly on
recalling rules (e.g., “remembering <strong>the</strong> rules <strong>of</strong> work is important” (Respondent 14)). If he or she has
difficulty managing members <strong>of</strong> Generation “Y”, <strong>the</strong> traditional method remains to focus on <strong>the</strong>
recollection and incorporation <strong>of</strong> rules. The majority <strong>of</strong> managers interviewed are <strong>of</strong> this type:
“Remember to use constant vigilance and specific goals with good followup; if <strong>the</strong>se are not used,
slacking <strong>of</strong>f may occur” (Respondent 5).
The second type <strong>of</strong> manager, however, tries to adapt to <strong>the</strong> needs <strong>of</strong> listening to and <strong>the</strong>
personalization <strong>of</strong> Generation “Y”. It is this second category <strong>of</strong> managers who are more enthusiastic
about <strong>the</strong> potential <strong>of</strong> this generation: “Generation “Y” imposes itself with its enthusiasm to defend
<strong>the</strong>ir pr<strong>of</strong>ession but also to revamp it” (Respondent 6).
A lack <strong>of</strong> consideration <strong>of</strong> <strong>the</strong> specificity <strong>of</strong> Generation “Y” by <strong>the</strong> organization
Our respondents, even those who appeared to have adopted <strong>the</strong>ir management to this generation,
noted a lack <strong>of</strong> overall monitoring <strong>of</strong> <strong>the</strong> organization. Highly interconnected, Generation “Y” freely
shares information with <strong>the</strong>ir peers. However, <strong>the</strong>se tools are not necessarily beneficial and pose
issues <strong>of</strong> confidentiality. One person surveyed was not comfortable toward a subordinate who
became “friends” on Facebook with a patient. Generation “Y” has a need <strong>of</strong> framing; however, this is
different than a simple hierarchical authority.
In addition, good ideas provided by Generation “Y” are abandoned due to lack <strong>of</strong> follow-up, <strong>the</strong>reby
“slowing down Generation Y’s initiative and, in particular, <strong>the</strong>ir initiative regarding computers.” There
is a true slowdown in organizations that struggle to take <strong>the</strong> aspirations <strong>of</strong> Generation “Y” toward
greater responsiveness and fail to consider lateral thinking.
4.3 Generalization <strong>of</strong> intergenerational management and organizational design
The most recent reports (e.g., Kodatt, 2009) published in <strong>the</strong> US show that Baby Boomers are less
than half as likely as Generation “Y” to call for participatory leadership. Generation “Y” has to be
managed using a subtle blend <strong>of</strong> mentoring and coaching (Eestryn-Béhar et al., 2005). The right
ingredients to permanently challenge and fit with <strong>the</strong> individual must be found.
First, from our results, we found a need for responsiveness and proximity. Generation “Y” seeks a
close management that makes sense to <strong>the</strong>m.
This type <strong>of</strong> management comes as <strong>the</strong> result <strong>of</strong> experience, and it is local and provisionary.
Fur<strong>the</strong>rmore, this management consumes time to <strong>the</strong> detriment <strong>of</strong> care. However, tools currently exist
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Bertrand Pauget and Ahmed Dammak
that can measure <strong>the</strong> value contribution <strong>of</strong> this type <strong>of</strong> management for <strong>the</strong> organization (Pauget and
Cabrol, 2011).
Management change is not a priority because it is not measureable with respect to financial
constraints and immediate objectives. This already has a visible consequence: <strong>the</strong> emergence <strong>of</strong>
organizations “under stress” (Smida and Gomez-Meija, 2005). If French social and health
organizations are able to reduce <strong>the</strong>ir deficits, this will have <strong>the</strong> effect <strong>of</strong> increasing pressure on <strong>the</strong>ir
employees. However, managers have to assess <strong>the</strong> claims made by Generation “Y” because <strong>of</strong> <strong>the</strong>
shortage <strong>of</strong> certain pr<strong>of</strong>essionals, notably nurses. If French hospitals, for example, focus only on
financial goals, <strong>the</strong>y risk losing <strong>the</strong> loyalty <strong>of</strong> <strong>the</strong>ir employees. What does a young member <strong>of</strong>
Generation “Y” bring to <strong>the</strong> hospital (in terms <strong>of</strong> innovation and <strong>the</strong>ir contribution to knowledge
creation)? How much would it cost to replace an individual if <strong>the</strong>y leave <strong>the</strong> organization? These are
questions that social and health organizations will soon have to answer.
The second consequence is that Generation “Y” is pushing <strong>the</strong> creation <strong>of</strong> more crosscutting
organizations. Even if <strong>the</strong> leaders <strong>of</strong> French health and social organizations encourage this, it will
remain insufficient. Indeed, <strong>the</strong>se organizations are built on a vision <strong>of</strong> pr<strong>of</strong>essional bureaucracy and
are not adhocratic (Mintzberg, 1982). What prevents organizations from becoming more flexible in <strong>the</strong>
way that <strong>the</strong> new generations are demanding? We have found that <strong>the</strong> generation Y poses problem
for 50% <strong>of</strong> <strong>the</strong> studied organizations. It is maybe a sign <strong>of</strong> <strong>the</strong> duality <strong>of</strong> <strong>the</strong> <strong>the</strong> French social and
health organizations.
For <strong>the</strong> first, for which <strong>the</strong> generation Y does not seem to pose problem, <strong>the</strong>re could be a hardening <strong>of</strong>
<strong>the</strong> rules. The organizations will become more bureaucratic (Mintzberg, 1982). To add flexibility, it
multiplies <strong>the</strong> project managements. But it remains centered around <strong>the</strong> technique <strong>of</strong> <strong>the</strong> care and
built around a vision taylorist <strong>of</strong> <strong>the</strong> activities. The generation “Y” could be forced to accept <strong>the</strong>
organizations invented by <strong>the</strong> Baby-boomers. The pressure on people would be high and <strong>the</strong> work
would be centered on <strong>the</strong> performance <strong>of</strong> <strong>the</strong> care (but not on people). In o<strong>the</strong>r organizations, under
<strong>the</strong> pressure <strong>of</strong> Generation Y, relational changes will be required. One needs a change <strong>of</strong> prospect,
values and <strong>of</strong> priority for <strong>the</strong> organization. But this change appears difficult to adopt as <strong>the</strong> measuring
instruments <strong>of</strong> <strong>the</strong> relations do not exist. Why?
First, as we have seen, <strong>the</strong>re is some reluctance among management to change. Second, <strong>the</strong>re are
undoubtedly few tools to understand and integrate <strong>the</strong>se new innovations regarding relationships.
One must invent and invest in tools to take <strong>the</strong> value <strong>of</strong> <strong>the</strong> individual and collective relationships <strong>of</strong>
employees to <strong>the</strong> organization into account. The hospitals that will operate only as some form <strong>of</strong>
project management or process to satisfy Generation “Y”, is to believe that advocating better
cooperation in an incantatory manner (i.e., without changing <strong>the</strong> culture <strong>of</strong> organizations) can be
effective. The arrival <strong>of</strong> Generation “Y” on a massive scale in <strong>the</strong> labor market before <strong>the</strong> end <strong>of</strong> <strong>the</strong>
decade in France must encourage organizational thinking about <strong>the</strong>ir processes, including relational
processes. Generation “Y” will continue to challenge not only management but even <strong>the</strong> way that <strong>the</strong>
health and social sectors are constructed in France.
Table 1: Summary <strong>of</strong> <strong>the</strong> impact <strong>of</strong> <strong>the</strong> generation Y on <strong>the</strong> french social & healthcare organizations
Traditionnal organizations driven New organizations driven by <strong>the</strong>
Worker
Management
Organization design
by <strong>the</strong> needs <strong>of</strong> <strong>the</strong> Baby-Boomer
Pressure on Generation “Y” will be
high centered around <strong>the</strong>
peformance <strong>of</strong> <strong>the</strong> care.
Traditionnal management
centered around <strong>the</strong> authority
The organization is getting more
bureaucratic. Relationnal process
are getting constructed by <strong>the</strong>
project management.
The performance is <strong>the</strong> most
important aspect <strong>of</strong> <strong>the</strong>
organization.
401
needs <strong>of</strong> <strong>the</strong> Y generation
The relations have an impact on
<strong>the</strong> creation <strong>of</strong> new relational
innovations. The organizaiton is
centered around <strong>the</strong> needs <strong>of</strong> <strong>the</strong>
patient.
Management centered around
mentoring & coaching
Measurement tools are created to
measure <strong>the</strong> well being & <strong>the</strong>
relationnal aspects <strong>of</strong> <strong>the</strong>
organization. The financial
aspects are as important as <strong>the</strong>
well being <strong>of</strong> <strong>the</strong> workers.

5. Conclusions
Bertrand Pauget and Ahmed Dammak
We studied <strong>the</strong> impact <strong>of</strong> Generation “Y” on <strong>the</strong> French health and social sector. Three items that are
specific to Generation “Y” were examined: <strong>the</strong> need for flexibility, different expectations in terms <strong>of</strong>
relationships (mainly with management), and <strong>the</strong> impact <strong>of</strong> Generation “Y” on organizations. This is a
preliminary study, which we are currently expanding to confirm our initial findings.
We found a consistent correlation between <strong>the</strong> characteristics <strong>of</strong> Generation “Y” in France and those
in <strong>the</strong> US. However, several characteristics appeared as an expected change in French
organizations. Organizations that remain very bureaucratic should evolve in several ways:
Immediate management should be reevaluated. The manager is <strong>the</strong> person who challenges
teams in <strong>the</strong> framework; <strong>the</strong> manager controls <strong>the</strong> changes in relational rules and <strong>the</strong> routines.
Human resources should pay particular attention to <strong>the</strong> trajectory <strong>of</strong> individuals within
organizations. It now appears more difficult to think in terms <strong>of</strong> status or occupation because <strong>the</strong>
members <strong>of</strong> Generation “Y” want more individualization in <strong>the</strong>ir duties.
Organizations should be more crosscutting. However, few tools are available to understand and
integrate <strong>the</strong>se new relational innovations. To integrate <strong>the</strong> younger generation, <strong>the</strong>se different
expectations must be considered. Tools must be developed and invested that take into account
<strong>the</strong> value <strong>of</strong> <strong>the</strong> individual and collective relationships <strong>of</strong> employees to <strong>the</strong> organization.
Generational conflict will not occur (Sabat, 2009), but Generation “Y” will lead to major changes for
management and organizations.
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403

An Activity Based Costing System for Research
Competency Enhancement : A Case Study <strong>of</strong> Knowledge
Workers in Boromarajonani College <strong>of</strong> Nursing, Chiang Mai
Wannapa Pipattanawong, Pitipong Yodmongkon and Nopasit Chakpitak
Chiang Mai University, Chiang Mai, Thailand
berh1@hotmail.com
pitipong@camt.info
nopasit@camt.info
Abstract: The aims <strong>of</strong> this study are to analyze <strong>the</strong> workload <strong>of</strong> knowledge workers using Activity Based
Costing(ABC) and to suggest appropriate management methods and frameworks to remove crucial barriers
preventing research competency <strong>of</strong> nursing instructors (NIs). The subjects <strong>of</strong> this study were 13 nursing NIs who
work at Boromarajonani College <strong>of</strong> Nursing (BCNC), Chiang Mai. ABC and Activity Based Management (ABM)
are applied in this study in order to analyze NIs’ workload and improve BCNC cost effectiveness. Additionally,
testing <strong>the</strong>se two models can facilitate <strong>the</strong> assignation <strong>of</strong> appropriate workloads for each NI who is required to
conduct research. Results show that a lack <strong>of</strong> time and/or a high workload are crucial barriers preventing
research. Investigation through application <strong>of</strong> ABC revealed that executives are over worked and so are <strong>the</strong> NIs
who conduct research.The majority <strong>of</strong> working time at BCNC is used in teaching and learning activities, with <strong>the</strong>
least amount <strong>of</strong> time spent on research. Work overload, also achieved no cost benefit in terms <strong>of</strong> overhead costs
per working hour. The results recommend an appropriate time allocation / workload distribution,with <strong>the</strong> ABC program
providing one solution to enhance <strong>the</strong> administrators’s ability to enforce <strong>the</strong> new policy in conducting research at
BCNC.
Keywords: activity based costing, activity based management, workload, research competency, nursing
instructors
1. Introduction
Higher Education Institutions (HEIs) in Thailand currently have objectives to conduct research and
reach National Education Standards. These objectives emphasize <strong>the</strong> requirement to create a
learning/knowledge society and <strong>the</strong> associated need to develop learning processes, which support
instructors in creating <strong>the</strong> appropriate climate and developing learning media conducive to learning
(ONEC 2002). Thus, teachers must change <strong>the</strong>ir role to become researchers who participate in <strong>the</strong>
development <strong>of</strong> teaching and learning for students as well as to increase <strong>the</strong>ir own pr<strong>of</strong>essional
development (ONEC 2002; Thompson et al. 1999). Therefore, HEIs must enhance <strong>the</strong> research skill <strong>of</strong>
instructors to create quality research and maintain continuous academic productivity.
In Thai HEIs, research activities are frequently neglected and <strong>of</strong>ten regarded as difficult and problematic. The
number <strong>of</strong> Thai HEIs generating new knowledge and research is considered a major concern and
doesnot meet <strong>the</strong> goal <strong>of</strong> Thai HEI policy. Despite this, <strong>the</strong>re is potential to meet <strong>the</strong>ir goals using tools <strong>of</strong>
knowledge management (KM) and <strong>the</strong>y have ‘significant opportunities to apply Knowledge Management
(KM) practices to support every part <strong>of</strong> <strong>the</strong>ir missions’ (Kidwell et al. 2000).
Thompson et al. (1999) stated that <strong>the</strong> challenge for nursing educators is to make research exciting and
integrate it into nursing education and practice. Thus, HEIs should provide time to use library
resources, and time to access online services to promote effective nursing interventions, which reduce
<strong>the</strong> institutions’s costs in terms <strong>of</strong> time and money.
BCNC is a HEI under <strong>the</strong> Jurisdiction <strong>of</strong> Praboromarajchanok Institute <strong>of</strong> Health Workforce Development
(PBRI). It <strong>of</strong>fers a Bachelors Degree in Nursing Science with approximately 440 students, and a
certificate <strong>of</strong> Emergency Medical technician-Intermediate with approximately 110 students. BCNC has 52
nursing instructors (NIs) and also uses Quality Assurance to promulgate educational quality through <strong>the</strong>
Commission <strong>of</strong> Higher Education.Currently, <strong>the</strong> National Educational Standard has set <strong>the</strong> fourmissions
for all HE instructors in Thailand and one <strong>of</strong> <strong>the</strong>se is “Conducting Research (CR).” In order to meet this
goal, HEIs must pay attention to it. This mission is also compatible with BCNC’s vision, which is to be,
“<strong>the</strong> leading institute <strong>of</strong> <strong>the</strong> country focusing on general nursing and health with community based
learning”. The main missions <strong>of</strong> BCNC are to produce and develop health personnel, conduct research
and maintain creative productivity, academic service, and art/culture preservation. Research identity is
focused on Routine to Research and Research and Development (R2R and R&D).However, BCNC
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Wannapa Pipattanawong et al.
cannot currently meet its research goals due to a number <strong>of</strong> factors, especially <strong>the</strong> complaint by NIs that <strong>the</strong>y
are overloaded with work and lack <strong>the</strong> time to conduct research [PBRI 2009; BCNC 2009].
According to internal quality assessment results, <strong>the</strong> amount <strong>of</strong> research at BCNC should be
increased. Action research is as a tool originating in KM that can uplift an organization to meet goals
associated with a knowledge-based and learning society. HEIs could apply KM in education as a
framework to enable people within organizations to develop a set <strong>of</strong> practices to collect information and
share what <strong>the</strong>y know, leading to action that improves services and outcomes (Petrides and Nodine
2003)
Fur<strong>the</strong>rmore, in 2007 to 2009, BCNC conducted a small amount <strong>of</strong> research, achieving only 12.81% in
<strong>the</strong> Thai Nursing Council’s research assessment, which did not reach <strong>the</strong> required standard<strong>of</strong> ≥ 20%.
In corroboration <strong>of</strong> <strong>the</strong>se low figures, BCNC could conduct research <strong>of</strong>only 0.13 articles per year
(BCNC 2009).while nursing colleges under PBRI should complete at least 0.70 articles per year
(Kaewjaiboon 1998). 96.15% <strong>of</strong> BCNC instructors did not get enough experience in writing academic
articles and publications, complaining that barriers were: lack <strong>of</strong> time (workload),incentives, skills, and
experience <strong>of</strong> CR, this was similar to o<strong>the</strong>r Nursing Colleges/HEIs (PBRI 2009; BCNC 2009; Kaewjaiboon
1998; Suwanachat et al 2006; Ouppor et al 2009).
Despite this data, <strong>the</strong> BCNC budgetary report in 2009 showed high personnel costs in research not
consistent with <strong>the</strong> poor productivity <strong>of</strong> research output (overheads were equal to 186,453.55 baht/topic).
In addition, <strong>the</strong> cost allocation for research is very low (4.68%) when compared with administrative and
personnel development, and teaching and learning activities.Therefore, <strong>the</strong> objectives <strong>of</strong> this paper are:
To analyze workload using ABC
To suggest appropriate management methods to remove crucial barriers leading to research
competency enhancement
2. Literature review
Thompson et al. (1999) found that <strong>the</strong> barriers to conduct nursing research are a lack <strong>of</strong> time,
motivation, confidence, research knowledge, interest and value <strong>of</strong> research, awareness <strong>of</strong> current
research, confidence in research findings and a flexibility/willingness to change. In addition, <strong>the</strong> lack
<strong>of</strong> relevance to practice, replication, rigorous methodology, believable findings and appropriate
recommendations are considered as research obstacles. In terms <strong>of</strong> <strong>the</strong> organization, barriers are; a
lack <strong>of</strong> access to journals and research resources, funding to support new technology, expectations for
research participation, rewards/reinforcement for staff, time allocation, staff empowerment, support from
medical doctors or administrators, acceptance <strong>of</strong> risk-taking and change, collaboration between
researchers & clinicians, presentation in practice publications in clinical journals, understandable
research publications, and availability <strong>of</strong> consultants to critique.
In <strong>the</strong> case study <strong>of</strong> Kaewjaiboon (1998) at Nursing Colleges in <strong>the</strong> nor<strong>the</strong>rn region <strong>of</strong> Thailand, it was
found that academic research activities <strong>of</strong> NIs were less than QA key performance indicators (KPIs).
The intrinsic factors influencing research motivation were executive personnel and lack <strong>of</strong> supporting
resources, inadequate facilities, lack <strong>of</strong> reinforcement, academic atmosphere and insufficient research
skill development. The extrinsic factors were <strong>the</strong> technological, political and economic status. Fur<strong>the</strong>rmore,
obstacles were inadequate time and, out <strong>of</strong> date textbooks, research, documents and articles at <strong>the</strong>
college, along with no experience.
In addition, Suwanachat et al. (2006) found that obstacles relating to a lack <strong>of</strong> time and ineffective time
management are significant in conducting research (CR) and/or continuing research. Those in
administrative positions perceived this problem as not serious, but leadership and instructors’ did. The
research environment felt hurried, non-supportive and lacked networks. Findings suggested that CR
obstacles should be solved through workload management and decentralized policy so as to motivate
instructors in CR. It also recommended that <strong>the</strong> result <strong>of</strong> this finding should be followed up to as
certain whe<strong>the</strong>r it had been fully implemented and whe<strong>the</strong>r more research was conducted as a result..
Ouppor et al. (2009) discovered that NIs feel research is difficult to do meaning <strong>the</strong>y sometimes avoid it
and do alternative tasks. Using questionnaires based on Social Cognitive Theory framework, <strong>the</strong>
literature also found that <strong>the</strong> perceived research self-efficacy, and research outcome expectation <strong>of</strong>
NIs from Nursing Colleges under PBRI were at a high level but relationships between <strong>the</strong>m were
405

Wannapa Pipattanawong et al.
Regarding <strong>the</strong> concept <strong>of</strong> Bandura social cognitive <strong>the</strong>ory (Bandura 1986), he believed that a person
who manages and implements actions to achieve goals has a perceived self efficacy with a decision
on <strong>the</strong> person's ability to have self management and behavior necessary to achieve successful goals.
The outcome expectancy is <strong>the</strong> belief that individuals evaluate <strong>the</strong>ir behavior leading to action. The
results <strong>of</strong> <strong>the</strong>ir expected actions are added incentives that will lead to more positive action.
According to <strong>the</strong> literature, Activity Based Costing (ABC) is a tool to analyze workload to discover
whe<strong>the</strong>r it is suitable for individuals or not. It is usually implemented in business, (Kaplan and
Anderson 2007; Dunn (2011) however, <strong>the</strong> implementation might be advantageous for BCNC since NIs
complained about time (PBRI 2009; BCNC 2009). Therefore, ABC will help to analyze <strong>the</strong> workload <strong>of</strong> BCNC
NIs and can control working time in order to <strong>of</strong>fer chances for NIs to conduct research while minimizing
issues related to overwork and time. Udpa (2001) described ABC as an appropriate cost accounting
system to measure and control costs under <strong>the</strong> microstatistical episode <strong>of</strong> care paradigm suggested
by Emery (1999). ABC works well because it focuses on activities performed to provide services in <strong>the</strong>
delivery <strong>of</strong> care. Thus, it is not only possible to accurately cost episodes <strong>of</strong> care but also to more
effectively monitor and improve <strong>the</strong> quality <strong>of</strong> care. Under ABC, costs are first traced to activities and
<strong>the</strong>n traced from <strong>the</strong>se activities to units <strong>of</strong> episodic care using cost drivers based on <strong>the</strong> consumption
<strong>of</strong> activity resources.
3. Results
Based on in depth interview, results showed that some NIs spent ≥ 200 hours on writing research
proposals for each piece <strong>of</strong> research. Despite this, some instructors felt that <strong>the</strong>ir priority should be
teaching and learning (T-L) and considered CR as a waste <strong>of</strong> time. Some NIs wished to pursue
fur<strong>the</strong>r study in relation to research training so, <strong>the</strong>y will understand and know how to begin and
conduct successful research. They wished to learn from NIs who are successful in conducting
research, especially from executives, who act as good researcher role models. They may know <strong>the</strong>ir
self-efficacy and could expect <strong>the</strong> learning outcome and will change <strong>the</strong>ir belief or behavior from
learning and sharing. Detailed results from <strong>the</strong> ABC program, are shown in <strong>the</strong> following section
according to a set <strong>of</strong> key questions.
3.1 Is it true that a lack <strong>of</strong> time or overload <strong>of</strong> work act as a barrier preventing NIs
from BCNC from conducting research?
Table 1 reveals that community health nursing instuctors (CHNIs) have more workload than
pr<strong>of</strong>essional development instructors (PDIs). It can be seen that CHNIs were 83.33% overworked but
PDIs were overworked by 28.57% which are both higher than TNC standard workload.
Table 1: Comparision <strong>of</strong> nursing instructors’ workload
Department
Items Community health nursing
(CHN: n = 6)
Pr<strong>of</strong>essional
development
(PD: n = 7)
Deputy Director: Chief : Lecturer 2 : 2 : 2 1 : 2 : 4
Over loaded work <strong>of</strong>
Deputy Director: Chief : Lecturer
(percentage)
2 : 2 : 1
(83.33 %)
1: 0 : 1
(28.57 %)
Overhead workload/year (hours) 1,689.39 1,381.72
Minimum.workload (hours) 939.17 764.92
Maximum workload (hours) 2,050.25 2,042.36
Note: Thai Nursing council (TNC) standard workload = 1,500 hours
406

Wannapa Pipattanawong et al.
3.2 Do NIs gain cost benefit from <strong>the</strong>ir workload performances?
In Table 2, results showed inappropriate cost benefits for NIs when comparing between planned labor
cost and actual hours and salary, especially in <strong>the</strong> CHN department which had more work overload,
as shown in Table 1.
Having said this, <strong>the</strong> actual result revealed that BCNC gained no effective cost benefit when applying
ABC by comparing between planned labor cost with <strong>the</strong> cost from actual cost.
Table 2: Comparison <strong>of</strong> overhead cost per Hour: Findings from ABC between 2 departments in BCNC
overhead
cost/hour
department
planned labor
cost
(baht)
salary / actual
hour
(baht)
actual cost/
actual hour
(baht)
report result
(baht)
actual result
(baht)
CHN
PD.
230.95
181.63
229.67
223.34
460.45
338.96
1.28
-41.71
-207.89
-157.32
Average total 206.29 226.50 388.90 -20.21 -182.61
Note: plan labor cost = overhead salary /(standard work hour/week) x 4weeks
standard work hour /week = 35 hours./week/head , one year = 40 work.weeks.
salary / actual hour = salary (one year) / total real work hour (one year)
actual cost / hour = overhead actual cost: year / overhead actual work hour :year
In Table 3 <strong>the</strong> ABC method illustrates that personal expense was higher in all dimensions when it was
compared with traditional methods (4,265,505.43 baht) except administrative activity and competency
development. (ABC

Wannapa Pipattanawong et al.
3.3 How to manage time or cost effectiveness to improve organizational
performance?
This study found that <strong>the</strong> CHN and PD departments <strong>of</strong> BCNC spent time in teaching and learning
activities as shown in Table 4 :
Both departments spent inappropriate time focused on <strong>the</strong>oretical T-L methods, ( ≥ 0.5 times is
inappropriate T-L: as shown in bold) when compared with T-L activity ( fixed time : Theoretical T-L has
criteria as: teach 1 hour = workload 3 hours (lecture1 hour, prepare T-L & test authoring 1.5 hours, pro<strong>of</strong>
read /pro<strong>of</strong> report 0.5 hour)
However, <strong>the</strong> research found that T-L in lab practice, ward supervision, field practice and field trip
methods are an appropriate use <strong>of</strong> time (≤0.5 times <strong>of</strong> T-L activity).
Table 4: Comparison <strong>of</strong> spending time ratio among teaching and learning activity between two
departments
Activities/Method
Activities
Teaching &Learning
Teaching &Learning related
Teaching &learning preparation
Administration related
Exam written
Theoretical Teaching & Learning
Method
Teaching &Learning
Teaching &Learning related
Teaching &learning preparation
Administration related
Exam written
Department
CHN PD
1.00
0.43
0.30
0.29
0.15
1.00
2.49
1.64
0.93
0.68
Note: data from interviewing nursing instructors from ABC program in:
T-L activity: T-L operated within time setting, (fixed)
T-L related : e.g., pro<strong>of</strong>read/ invigilation, find answer for <strong>the</strong> test etc.
T-L admin. : e.g., administration to facilitate T-L, conference, meeting, coordinating, scheduling,
block rotation, T-L evaluation etc.
T-L prepare: e.g.,preparation for T-L documents, media, tools, slide etc.
The ABM method (Dunn 2011) should be considered to select value-added activities which enhance T-L
and reduce or eliminate activities that take excess time or encourage sharing <strong>of</strong> activity in each process
where possible. An IT system and coaching from senior managers or expertise from o<strong>the</strong>r facilities can
help staff so <strong>the</strong>y will understand and know how to begin research from successful NIs who conduct
research.
4. Analysis
The three crucial barriers to conducting research at BCNC are; no time or overwork, no incentives or
positive reinforcement to stimulate CR in<strong>the</strong> learning environment, and not enough mentors or coaches
to help in CR.
Due to<strong>the</strong> three trimester system for T-L and students’ vacation in each class (6 weeks/year) combined
with <strong>the</strong> lack <strong>of</strong> NIs: (FTFI: FTES = 10.52; standard TNC = 1:8), it causes NIs to have less time for
research, self development andultimately reduced academic productivity that affects T-L and
productquality.
408
1.00
0.31
0.15
0.17
0.15
1.00
1.41
1.02
0.70
0.71

Wannapa Pipattanawong et al.
Moreover, 21.15% <strong>of</strong> NIs who have health problems, arestudying for an MS or Ph.D, or are in <strong>the</strong>ir
first year as instructors, or are aged over 55 years old will gain 1/3 <strong>of</strong> <strong>the</strong> normal workload under
caring criteria, which added fur<strong>the</strong>r time pressure in CR at BCNC. 5.73% <strong>of</strong> NIs who finish a Ph.D
program will get 2/3 <strong>of</strong> <strong>the</strong> standard workload due to <strong>the</strong> allocation <strong>of</strong> time toconduct research.
Never<strong>the</strong>less, no reduction <strong>of</strong> workload was set for part time study cases who use self funding and
<strong>the</strong> research findings found <strong>the</strong>se cases particularly vulnerable to excess workload.
Results showed cost ineffectiveness in operations <strong>of</strong> most executives and some lecturers who were
overloaded with work and also revealed excess costs in BCNC when comparing between TC and
ABC results. This is especially so for personnel costs (including <strong>the</strong> high salary <strong>of</strong> more than half <strong>of</strong>
Nis: overhead > 30,000 baht). Research allocation costs did not provide benefits when comparing with
<strong>the</strong> low research productivity.
5. Discussion
In earlier research, focus was on <strong>the</strong> barriers <strong>of</strong> conducting nursing research and <strong>the</strong> overworking <strong>of</strong>
NIs. The research showed<strong>the</strong>re was a lack<strong>of</strong> evidence <strong>of</strong> good practices, andno appropriate model for
nursing colleges to manage and release barriers to conducting research. Suggestions for improvement
which focus only on decentralization or organizational policy are not enough to change research output as
issues are also related to personnel behavior. Thus, <strong>the</strong> poor results <strong>of</strong> research still remain in Nursing
Colleges and o<strong>the</strong>r HEIs.
Therefore, this study investigated an effective model to solve crucial problems associated with
personnel behavior in BCNC. Time management <strong>of</strong> nursing instructors that related to costs and
expenses causes concern about <strong>the</strong> effect on personnel behavior for learning and appropriate
change.
The ABC tool is <strong>the</strong> recommended to encourage continuous quality improvement in each <strong>of</strong> BCNC’s
four missions. If effective time workload management is successful, <strong>the</strong> cost related to activities might
be decreased and research competency enhancement will be possible.
However, this study revealed that <strong>the</strong> executives and some NIs who conduct research have selfefficacy
and can predict <strong>the</strong> outcome from <strong>the</strong>ir performance which aligns with Bandura social cognitive
<strong>the</strong>ory Though, <strong>the</strong>y have excessworkload, <strong>the</strong>y can manage time to succeed in research publication.
Additionally, leadership status is very important and should be considered to stimulate and encourage
development <strong>of</strong> personnel competencies.
Thus, if NIs have difficulty with <strong>the</strong>ir time management, cost effectiveness and workload, <strong>the</strong> ABC
program might be one possible solution in facilitating more research in BCNC.
6. Conclusion
The success <strong>of</strong> NIs in conducting research depends on; self-awareness, high responsibility, realization
<strong>of</strong> research benefit, perception <strong>of</strong> self-efficacy and expected outcome as stated in Bandura Social
Cognitive Theory. The social network, good teamwork and leadership are all necessary for research.
The rule <strong>of</strong> constraint for conducting research is one <strong>of</strong> <strong>the</strong> strategies for enhancement to success.
The ABC tool helps to explore evidence regarding inappropriate time management <strong>of</strong> NIs. Moreover, no
effective costs were found in organizational expenses, especially personnel costs. The ABC tool will
be used to select processes focusing on management <strong>of</strong> activities for improvement.
Finally, BCNC should encourage and promote NIs to be researchers regarding educational policy and
in line with BCNC’s vision <strong>of</strong> being a leading institute focusing on general nursing and health. It should
also create its research identity by leveraging routine to research. NIs have high potential in providing
and developing health care personnel. Thus, research competency enhancement is a key solution for
change and <strong>the</strong> ABC tool can act to promote and facilitate this change
Acknowledgements
The author would like to acknowledge <strong>the</strong> advisors involved in this study for valuable suggestions as
well as Dr. Paul Goldsmith who helped <strong>the</strong> author prove English paper. The author would also like to
thank respondents and o<strong>the</strong>rs involved in this project.
409

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410

The Dark Side <strong>of</strong> Social Capital in Thai Culture: an
Obstruction <strong>of</strong> Learning Process within <strong>the</strong> Social Network
Siwarit Pongsakornrungsilp
Consumption and Sustainable Economy Research Group, School <strong>of</strong>
Management, Walailak University, Nakhon Sri Thammarat, Thailand
psiwarit@wu.ac.th
Abstract: This paper aims to investigate whe<strong>the</strong>r and how social capital in Thai culture obstructs <strong>the</strong> continuous
learning process within <strong>the</strong> social network. Netnography and ethnography were employed to collect data from an
online amulet community [http://www.palungjit.com] and its <strong>of</strong>f-line activities. The findings <strong>of</strong> this paper
demonstrate that <strong>the</strong> dark side <strong>of</strong> social capital obstructs <strong>the</strong> continuous learning process. Social capital in Thai
Culture, ‘Arwuso’ [seniority] and ‘Kreng Jai’ [be afraid <strong>of</strong> <strong>of</strong>fending] can solve <strong>the</strong> conflicts among members, but
<strong>the</strong>se cultures may obstruct <strong>the</strong> learning process by limiting internal insights and different perspectives from
outsiders. Younger members tend to surrender to older members without considering <strong>the</strong> truth or rightness. The
findings suggest that arguments among community members in <strong>the</strong> particular issues should be encouraged in
order to enrich <strong>the</strong> resources – knowledge and information. Future researches should focus on formal
organizations and different cultures, in order to generalize <strong>the</strong> findings into different contexts.
Keywords: social capital, social network, learning process, symbolic violence, seniority
1. Introduction
Many scholars (e.g. Pongsakornrungsilp and Schroeder, 2011; Prahalad and Ramaswarmy, 2004;
Grönroos, 2008) have mentioned that continuous learning process (hereafter; CLP) plays an
important role in value creation within organization between company and consumer, and within a
group <strong>of</strong> consumers. This learning process can be found in <strong>the</strong> social network where individual
members interact in <strong>the</strong> particular issues (Morrison, 2002). However, Lave (1991) demonstrates that
learning process is not only individuals’ process <strong>of</strong> knowledge and experience accumulation, but it is
also <strong>the</strong> collective process <strong>of</strong> being community or network members.
As seen from literatures, many scholars have used <strong>the</strong> <strong>the</strong>ory <strong>of</strong> social capital for understanding
social phenomenon and its learning process. Most <strong>of</strong> <strong>the</strong>m (e.g. Adler and Kwan 2002; Bourdieu
1986; Burt 1997; Coleman 1998; Lin 1999; Nahapiet and Ghoshal 1988; Paxton 1999; Portes, 1995;
Tsai and Ghoshal 1988; and so on) have focused on <strong>the</strong> bright side <strong>of</strong> social capital e.g. trustworthy,
social ties, reciprocity, consciousness <strong>of</strong> kinds, moral responsibility, and so on, but <strong>the</strong>se studies have
overlooked how social capital is a threat to <strong>the</strong> learning process within <strong>the</strong> organization. Moreover,
dark side <strong>of</strong> social capital within <strong>the</strong> social network is still unexplored.
In order to provide <strong>the</strong> pathway for this study, <strong>the</strong> concept <strong>of</strong> social capital has been syn<strong>the</strong>sized with
Service-Dominant Logic <strong>of</strong> Marketing (hereafter; S-D logic) in order to understand <strong>the</strong> CLP within <strong>the</strong>
social network. In this study, <strong>the</strong> CLP is related to information, knowledge, and experience (Adjei,
Noble, and Noble 2010), namely collective resources (Pongsakornrungsilp and Schroeder 2011). The
netnography and ethnography have been conducted to observe this phenomenon both online and
<strong>of</strong>fline activities related to <strong>the</strong> CLP in Thai culture. In Thai culture, social capitals (e.g. seniority,
friendly, compromise, saving face, and so on) have been viewed through <strong>the</strong> positive lens as <strong>the</strong>
attraction <strong>of</strong> Thai society (Burnard and Naiyapatana 2004; Prpic and Kanjanapanyakom 2004;
Thanasankit 1999).
Although social network is not <strong>the</strong> formal organization, it provides our understanding how social
capital contributes to <strong>the</strong> CLP (see also Nahapiet and Ghoshal 1988). Therefore, this paper aims to
investigate whe<strong>the</strong>r and how social capital can obstruct <strong>the</strong> CLP within <strong>the</strong> social network. The
findings from this paper provide an additional understanding <strong>of</strong> social capital within <strong>the</strong> social network
by demonstrating an obstruction <strong>of</strong> learning process in Thai culture as a dark side <strong>of</strong> social capital.
2. Theoretical perspectives
The CLP is one <strong>of</strong> important processes within <strong>the</strong> social network required <strong>the</strong> relationship among
members. Payne, Storbacka, and Frow (2007) have purposed <strong>the</strong> three continuous levels <strong>of</strong> learning
process: remembering, internalizing, and proportioning for understanding <strong>of</strong> <strong>the</strong> social phenomenon.
On <strong>the</strong> o<strong>the</strong>r hand, Lave (1991) demonstrates that <strong>the</strong>se processes as separated process. However,
both perspectives are correspondent in <strong>the</strong> output <strong>of</strong> <strong>the</strong> learning process: network members can
accumulate skills and competence from this process.
411

Siwarit Pongsakornrungsilp
As mentioned earlier, works in social capital tend to emphasize on <strong>the</strong> benefits <strong>of</strong> social capital,
especially supporting <strong>the</strong> CLP, but <strong>the</strong>re are a few interest on its dark side. To investigate <strong>the</strong> dark
side <strong>of</strong> social capital, S-D logic has been syn<strong>the</strong>sized with <strong>the</strong> social capital in order to provide us <strong>the</strong>
critical lens <strong>of</strong> Thai culture toward <strong>the</strong> CLP:
3. Social capital: how can it support <strong>the</strong> continuous learning process?
The term ‘capital’ was initially used by Marx ([1867, 1885, 1894] 1995) to explain <strong>the</strong> surplus value
between <strong>the</strong> bourgeoisie and labor through <strong>the</strong> production and distribution <strong>of</strong> commodities. In this
way, Marx’s notion <strong>of</strong> capital can be viewed as <strong>the</strong> surplus value – benefit from social interaction.
Theory <strong>of</strong> ‘capital’ has been used by sociologists and economists to shed light on social relations in
societies, organizations, firms, online communities, and so forth (Adler and Kwon 2002; Burt 1997;
Fukuyama 2001).
Social capital is co-created from <strong>the</strong> interaction within <strong>the</strong> social networks as individuals’ capital, e.g.
reputation, recognition, and so forth, or <strong>the</strong> network’s capital, e.g. trustworthy, sense <strong>of</strong> community,
and so forth (Lin 1999). To understand social capital, perspectives and <strong>the</strong> level <strong>of</strong> social capital
(Adler and Kwan 2002; Nahapiet and Ghoshal 1998) need to be explored in order to provide a
research guideline and to understand <strong>the</strong> benefits <strong>of</strong> social capital. These concepts have been used
to reflect <strong>the</strong> dark side <strong>of</strong> social capital.
Firstly, social capital can be viewed in two forms: bridging and bonding (Adler and Kwon 2002). The
former is <strong>the</strong> capital embedded in <strong>the</strong> network that links all members toge<strong>the</strong>r as members <strong>of</strong> <strong>the</strong>
social network. For example, as a Liverpool Football Club fan, it is easy to connect with o<strong>the</strong>r fans
without any recognition earlier (Pongsakornrungsilp and Schroeder 2011). The latter, as bonding
form, is a social tie which already exists within social networks in forms such as friendship, families,
membership, etc. (Nahiphet and Ghoshal 1998) that draw group members toge<strong>the</strong>r and lead to
solidarity within <strong>the</strong> network.
Secondly, social capital can be viewed as individual and collective resources (Lin 1999). As individual
resource, a member can gain this capital through <strong>the</strong> social interaction e.g. recognition, reputation,
respect, and so forth (Adler and Kwon 2002). Meanwhile, <strong>the</strong> social interaction among individual
members also co-creates <strong>the</strong> collective resources in a form <strong>of</strong> <strong>the</strong> community norms – trustworthiness
and reciprocity (Coleman 1988). These norms play an important role to streng<strong>the</strong>n <strong>the</strong> solidarity <strong>of</strong> <strong>the</strong>
social network. For example, members <strong>of</strong> <strong>the</strong> Liverpool Football Club fan-site have co-created ‘<strong>the</strong>
spirit <strong>of</strong> Liverpool Football Club fans’ to solve <strong>the</strong> conflict among members (Pongsakornrungsilp and
Schroeder 2011).
As mentioned above, many works in social capital tend to focus only one side <strong>of</strong> a coin – bright side
<strong>of</strong> social capital, but <strong>the</strong> obstruction <strong>of</strong> <strong>the</strong> CLP is still unexplored. Both perspectives and levels <strong>of</strong>
social capital help us to understand <strong>the</strong> characteristics and <strong>the</strong> emergence <strong>of</strong> social capital which can
reflect ano<strong>the</strong>r side <strong>of</strong> social capital. To provide additional insights <strong>of</strong> its dark side, ano<strong>the</strong>r concept,
S-D logic, needs to be used for understanding <strong>the</strong> context <strong>of</strong> <strong>the</strong> study – social network.
4. S-D logic: understanding <strong>of</strong> <strong>the</strong> continuous learning process in social
network
S-D logic is one <strong>of</strong> research streams which mention <strong>the</strong> relationship <strong>of</strong> <strong>the</strong> CLP and resources within
network (Vargo and Lusch 2004). It <strong>of</strong>fers a new perspective on marketing and also organization by
viewing service as <strong>the</strong> fundamental basis <strong>of</strong> exchange. It does this by emphasizing how skills and
knowledge provide benefits to o<strong>the</strong>r parties (Vargo and Lusch 2004, 2008).
Since first published in 2004, S-D logic is criticized by many scholars as merely new brand <strong>of</strong>
marketing concept (Cova and Dalli 2009; Peñaloza and Venkatesh 2006). Its critical has averted <strong>the</strong>
focus <strong>of</strong> S-D logic – value creation. Vargo and Lusch (2004, 2008) have emphasized resources as
important components <strong>of</strong> <strong>the</strong> process which require <strong>the</strong> interaction between two parties. Its emphasis
on resources has extended S-D logic as an additional perspective for understanding <strong>the</strong> CLP
(Prahalad and Ramaswarmy, 2004).
S-D logic primarily focuses on operant resources (skills and knowledge) for co-creating resources
between two parties; <strong>the</strong>se resources are used to activate operand resources, which are <strong>the</strong>
collections <strong>of</strong> products and raw materials that need to be activated in order for <strong>the</strong>m to produce
effects (Vargo and Lusch 2004). For example, in <strong>the</strong> hotel business, operand resources like cars,
412

Siwarit Pongsakornrungsilp
vans, rooms, swimming pools, staffs, atmosphere, etc., require operant resources like hospitality and
service management, <strong>the</strong> service skills, and team management etc., in order for <strong>the</strong>m to be used.
Therefore, operant resources are <strong>the</strong> crucial components <strong>of</strong> <strong>the</strong> CLP that participants can employ to
interact with o<strong>the</strong>rs in <strong>the</strong> social network (Vargo and Lusch 2008). In <strong>the</strong> o<strong>the</strong>r words, resources are
employed to produce benefits for both parties and also <strong>the</strong> network (Lusch, Vargo and Wessels
2008). In this way, members have participated in <strong>the</strong> social network by forming ‘a community <strong>of</strong>
practice’ (Lave and Wenger 1991) which share knowledge and learn as social groups. It helps to
unfold <strong>the</strong> operant and operand resources which each entity brings into <strong>the</strong> interaction process. In <strong>the</strong>
o<strong>the</strong>r word, network members have employed <strong>the</strong>ir resources into <strong>the</strong> CLP that <strong>the</strong>y can accumulate
resources (i.e. knowledge, experience, skills) from this social interaction process.
However, works in S-D logic have been criticized by Cova and Dalli (2009) that S-D logic tends to
focus on <strong>the</strong> harmony <strong>of</strong> social interaction. It is arguable that S-D logic has emphasized on <strong>the</strong>
process <strong>of</strong> value creation (or benefit creation); <strong>the</strong>refore, S-D logic has to put more weight on its bright
side (Pongsakornrungsilp and Schroeder 2011). However, in this paper, <strong>the</strong> social interaction process
(as referred to <strong>the</strong> CLP; Prahalad and Ramaswamy 2004) <strong>of</strong> S-D logic has been employed to
understand <strong>the</strong> social resources or social capital co-created by network members. It can contribute
our understanding how resources (i.e. social capital) obstruct <strong>the</strong> CLP within <strong>the</strong> social network.
5. Research context: an online amulet community
The ‘Suggestion <strong>the</strong> Good Amulet for Affection, Richness, and Success’ community (hereafter; SGA
community) is a social network <strong>of</strong> amulet consumption where members have different backgrounds –
gender, age, occupation, experience, and so forth. In May 2011, this forum has been viewed
1,905,010 times, and posted 45,189 threads since May 15, 2010. There are 3,492 members activated
in this community. The SGA community has done different activities both <strong>of</strong>fline and online managed
by members who gain social capital, acknowledgement as a network <strong>of</strong> management groups.
This amulet network has gradually evolved into <strong>the</strong> consumer organization where a leader,
organization structured, management teams, and advocators have automatically formed. As
mentioned by Adler and Kwon (2002), <strong>the</strong>se are individual social capitals which members gain from
<strong>the</strong> social interaction for <strong>the</strong>ir own resource due to reciprocity and voluntarily <strong>of</strong> members. It is
mentioned by McLean (1995) that consumer organization is consumer empowerment through <strong>the</strong>
collaboration among members. She also mentions that <strong>the</strong> conflicts among members are inevitable
within this organization. These conflicts have typically been found in <strong>the</strong> SGA community that provide
us an understanding how members employ <strong>the</strong> social capital to solve <strong>the</strong> conflict (see also
Pongsakornrungsilp and Schroeder 2011), and also provide <strong>the</strong> case study <strong>of</strong> this paper which
focuses on dark side <strong>of</strong> social capital – an obstruction <strong>of</strong> <strong>the</strong> CLP. Additionally, <strong>the</strong> SGA is appropriate
to make understanding <strong>the</strong> dark side <strong>of</strong> social capital because its context <strong>of</strong> community, amulets,
relates to Thai culture. Moreover, as an insider, researcher can observe <strong>the</strong> emergence <strong>of</strong> social
capital within <strong>the</strong> SGA and also consider how it obstructs <strong>the</strong> CLP.
6. Methodology
The data presented in this study were collected through netnography and ethnography methodology.
As mentioned by Kozinets (2007), scholars should not rely to only one research method, but <strong>the</strong>y
should apply different methods to obtain relevant and valid data. Thus, netnography and ethnography
have been employed to collect <strong>the</strong> data. Netnography is recommended by Kozinets (2010) as an
online ethnographic method for understanding <strong>the</strong> cultural phenomenon in online communities.
The CLP have been observed within Palungjit.com [http://www.palungjit.com], one <strong>of</strong> <strong>the</strong> most
popular online Buddhism communities in <strong>the</strong> world with 352,877 members in May 2011 (Palungjit.com
2011). One online community within Palungjit.com is included in this study: ‘The SGA community’
[http://board.palungjit.com/f127/ - - - -
239528.html]. The permission has been permitted by <strong>the</strong> moderator and also members <strong>of</strong> <strong>the</strong> forum
for conducting participant and non-participant observations. Additional inquiries were obtained
through Personal Message (PM) in order to triangulate data.
Additionally, ethnography method has also been employed to make understanding a solidarity group
<strong>of</strong> members’ social capital through <strong>of</strong>f-line activities. Participant and non-participant observations have
also been conducted from <strong>the</strong> <strong>of</strong>f-line activities <strong>of</strong> this community. Like o<strong>the</strong>r online communities (e.g.
MacIntosh community, Harley Davidson community, and so forth; Muñiz and O’Guinn 2001),
members <strong>of</strong> this community usually set up <strong>the</strong> <strong>of</strong>fline meeting in order to have face-to-face
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Siwarit Pongsakornrungsilp
conversations among members. Field notes have been taken after <strong>the</strong> activities in order to avoid <strong>the</strong>
formal conversation and bias, and provide natural setting activities.
Collecting <strong>the</strong> data from netnography and ethnography would be benefit to an understanding on <strong>the</strong>
CLP – <strong>the</strong> dark side <strong>of</strong> social capital and also how it obstructs <strong>the</strong> CLP. All data were conducted in
Thai language and all data were transcribed and analyzed during <strong>the</strong> data collection process in order
to selectively save <strong>the</strong> conversations. Codes were assigned to each important <strong>the</strong>me in order to
interpret <strong>the</strong> data through <strong>the</strong> <strong>the</strong>matical process (Attride-Stirling 2001). The transcripts and <strong>the</strong>mes
were reread and recoded until completing <strong>the</strong> iterative process <strong>of</strong> interpretation (Thompson 1997).
7. Findings
The findings in this paper demonstrate that a dark side <strong>of</strong> social capital obstructs social interaction
process and <strong>the</strong> CLP. Social capital in Thai Culture, ‘Arwuso’ [seniority] and ‘Kreng Jai’ [be afraid <strong>of</strong>
<strong>of</strong>fending] can solve <strong>the</strong> conflicts among members, but <strong>the</strong> real problems have not been removed.
Instead <strong>of</strong> arguing to find <strong>the</strong> solution, older members have involuntarily dominated younger members
through seniority. The findings in this paper have demonstrated that Thais are always afraid <strong>of</strong>
<strong>of</strong>fending o<strong>the</strong>r parties and try to keep quiet ra<strong>the</strong>r than argument. Both Arwuso and Kreng Jai have
provided our understanding <strong>of</strong> how social capital obstructs <strong>the</strong> CLP within <strong>the</strong> online social network in
Thai culture:
7.1 Arwuso: Seniority in Thai Culture
The first <strong>the</strong>me found in <strong>the</strong> SGA community is Arwuso or seniority. Aswuso is <strong>the</strong> social capital in
Thai culture which younger people tend to respect and comply with older people. Seniority has been
found in many works related to Thai Culture (e.g. Burnard and Naiyapatana 2004; McKenna 1995;
Thanasankit, 1999; Thanasankit and Corbitt 2002). In <strong>the</strong> SGA community, Arwuso has been
employed to solve <strong>the</strong> conflict within <strong>the</strong> network:
“...[w]ith my experience, I have ever seen many problems from this issue. Thus, I just
want to share my information...” (Don, SGA community management team)
“…[I]’m sorry that I have posted like that. I would beg for your forgiveness…However, I’m
younger. I am <strong>the</strong> one who have to apologize…” (NP, SGA community member)
So, Don, a senior member in <strong>the</strong> SGA community, has used <strong>the</strong> social capital – Arwuso – to stop an
aggressive argument, because it damages good atmosphere within <strong>the</strong> community and calls o<strong>the</strong>r
members’ interest to <strong>the</strong> argument, ra<strong>the</strong>r than <strong>the</strong> discussion issue. Finally, <strong>the</strong>y can compromise
and stop argument about this issue.
As mentioned above, Arwuso can contribute <strong>the</strong> compromise and relax atmosphere in <strong>the</strong> social
network, but <strong>the</strong> real issue has not been resolved; it is just hidden behind <strong>the</strong> word – ‘seniority’.
However, it has blocked o<strong>the</strong>r members’ opportunity to share and gain social resources, knowledge
and information, from discussion. It is mentioned by Pongsakornrungsilp and Schroeder (2011) that
more participation in <strong>the</strong> community, more knowledge and experience members can gain from <strong>the</strong>
discussion. Additionally, as participating in <strong>the</strong> <strong>of</strong>fline activities, younger members do not dare to
make arguments or warn senior members who are doing something wrong.
In Thai culture, Thais have been domesticated to obey <strong>the</strong> older people e.g. parents, teachers,
leaders, and so forth; <strong>the</strong>refore, arguing or complaining older people is unacceptable. Pop, one
management teams, mentions that he and o<strong>the</strong>r members cannot ask one older member related to
some missing stuffs during <strong>the</strong> <strong>of</strong>fline activity. They give <strong>the</strong> reason that it is impolite to ask and show
<strong>the</strong> distrustfulness toward <strong>the</strong> senior person. This capital may help to create <strong>the</strong> smooth network, but
it destroys <strong>the</strong> chance to discuss and share knowledge and information.
7.2 Kreng Jai: Being Afraid <strong>of</strong> Offending
Second <strong>the</strong>me found in this study is Kreng Jai or being afraid <strong>of</strong> <strong>of</strong>fending. It is considered as a social
harmony process which Thais always concern about <strong>the</strong> felling <strong>of</strong> o<strong>the</strong>r people (Kitiyadisai 2005).
Fur<strong>the</strong>rmore, Klausner (1993) has mentioned ‘Kreng Jai’ as an avoiding <strong>of</strong> <strong>of</strong>fending o<strong>the</strong>rs. So,
Kreng Jai can be generally found in all Thai Culture (Prpic and Kanjanapanyakom 2004). Kreng Jai
tends to be substantially found in <strong>the</strong> network which <strong>the</strong>re is <strong>the</strong> strong relationship or social ties
among members. Network members are also afraid to <strong>of</strong>fend friends, families, organization members,
membership, and so forth.
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Siwarit Pongsakornrungsilp
Kreng Jai is one <strong>of</strong> social capitals that members <strong>of</strong> <strong>the</strong> SGA community employ to avoid <strong>the</strong>
confrontation in three ways: saving face, compromise, and we-ness. These are traditional Thai
Cultures for complying with <strong>the</strong> social harmony (Knutson et al. 2002).
Saving Face As found in <strong>the</strong> SGA community, a leader <strong>of</strong> <strong>the</strong> SGA community has posted
pictures <strong>of</strong> stuffs for one community event which are in <strong>the</strong> prototyping process. In spite <strong>of</strong> <strong>the</strong> fact
that <strong>the</strong>re are too many defects, most members have complied with in order to avoid <strong>the</strong> leader’s
losing face as demonstrated below:
“...[T]hank you very much. These stuffs are perfect.”(San, SGA community member)
“...[V]ery beautiful. You have created excellent stuffs.”(Mint, SGA community member)
“...[T]hanks for cheering me up. However, <strong>the</strong>se prototypes need to be broken down
because <strong>the</strong> shape and components do not correct as we have designed.”(Alex, SGA
community leader)
Most members do not want to <strong>of</strong>fend Alex’s <strong>the</strong> feeling and intention because <strong>the</strong>y think that criticized
comments would make Alex losing face. However, Alex has mentioned that he shares those pictures
because he would like to get comments or suggestions, but no one shares ideas or comments.
Therefore, this social capital, saving face, can provide <strong>the</strong> harmonized community, meanwhile it
impedes <strong>the</strong> brainstorming process – members tend to comply with <strong>the</strong> presenter. It also obstructs <strong>the</strong>
opportunity to gain new insights or utilize resources or experience from network members.
Compromise Ano<strong>the</strong>r Kreng Jai found in <strong>the</strong> SGA community is ‘compromise’ which network
members are sensitive and sympa<strong>the</strong>tic <strong>the</strong> feeling <strong>of</strong> o<strong>the</strong>r members. Therefore, <strong>the</strong>y tend to avoid
<strong>the</strong> confrontation and argument when o<strong>the</strong>r members have proposed a new plan or even some
members have broken <strong>the</strong> rules. As found in <strong>the</strong> meetings <strong>of</strong> community management teams, <strong>the</strong> final
decisions and solutions have been concluded in <strong>the</strong> short time without any arguments. This is in line
with Holmes and Tangtongtavy (1997) who mention that it is a process <strong>of</strong> keeping <strong>the</strong> cooperation
and relationship among members. However, after <strong>the</strong> management teams got <strong>the</strong> harmonized
solutions, plans have been approached, but <strong>the</strong> performance is not as expectation. Management
teams have seen things in <strong>the</strong> same way that <strong>the</strong>y have made a big mistake by accepting and
agreeing with plans without comments or arguments in spite <strong>of</strong> <strong>the</strong> fact that <strong>the</strong>y do not totally agree
with.
We-ness Finally, Kreng Jai has been exhibited through we-ness or sense <strong>of</strong> community which
members always support o<strong>the</strong>r members as found in many works from western culture e.g. Liverpool
Football Club fans (Pongsakornrungsilp and Schroeder, 2011), MacIntosh brand community (Muñiz
and O’Guinn 2001), and so forth. On <strong>the</strong> o<strong>the</strong>r hand, some scholars e.g. Adler and Kwon (2002),
Fukuyama (2001), and so forth have mentioned <strong>the</strong> drawback <strong>of</strong> this social capital that it may affect to
corruption or anti-behavior group. With <strong>the</strong> strong we-ness community, <strong>the</strong> SGA members have taken
sides to o<strong>the</strong>r members without considering <strong>the</strong> fact and truth. The following posts are an example <strong>of</strong>
<strong>the</strong> we-ness:
“...[D]on’t worry. We have been toge<strong>the</strong>r for a long time, and we know each o<strong>the</strong>r well.
Next time please read from first page, and you will see...”(John, SGA community
management team)
“...[I]f you don’t want to join our activity, it’s fine, but please provide creative opinions. We
are volunteers. Should our rewards be like this?”(Ping, SGA community member)
As mentioned above, John and Ping have argued a new member who is disagree with <strong>the</strong> community
plan and has some queries. Many members also support what John and Ping have posted without
considering reasons by new member. At <strong>the</strong> end <strong>of</strong> activity, this plan is fail as been mentioned by new
member who has later become an insider <strong>of</strong> <strong>the</strong> SGA community. This social capital has inhibited new
and excellent resources (e.g. insights, idea, information, knowledge, and so forth) from outside group.
This is similar to <strong>the</strong> recruitment practices in organization that external recruitment would provide new
insights and different resources to organization (Bayo-Moriones and Ortín-Ángel 2006).
8. Discussions
This paper has demonstrated additional understanding how social capital, Arwuso and Kreng Jai,
obstruct <strong>the</strong> CLP within <strong>the</strong> social network. As mentioned above, <strong>the</strong> SGA members have employed
Arwuso in two ways: maturity and exploitation. The former is <strong>the</strong> use <strong>of</strong> social capital to stop <strong>the</strong>
aggressive arguments while some older members have used Arwuso to exploit <strong>the</strong> benefits from o<strong>the</strong>r
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Siwarit Pongsakornrungsilp
members. In <strong>the</strong> o<strong>the</strong>r words, Arwuso has inhibited <strong>the</strong> growth and strength <strong>of</strong> internal members
because senior members dominate <strong>the</strong> community. Ano<strong>the</strong>r social capital, Kreng Jai, can be found
through saving face, compromise, and we-ness. Kreng Jai may contribute to <strong>the</strong> harmonized society,
but it closes <strong>the</strong> opportunity to gain good insights or resources from different perspective. In contrast
with Arwuso, Kreng Jai is a barrier for recruiting externally new intelligent members that may reduce
<strong>the</strong> competitive advantage <strong>of</strong> community.
Both Arwuso and Kreng Jai could be viewed as <strong>the</strong> process <strong>of</strong> exercising power through ‘symbolic
violence’ and ‘miscognition’ (Bourdieu 1989). In symbolic violence, younger members have been
traditionally pressured to obey through <strong>the</strong> social capital <strong>of</strong> ‘Arwuso’ or ‘seniority’, in spite <strong>of</strong> <strong>the</strong>y have
stronger knowledge or information. Like Arwuso, different knowledge and intelligent insights have
been overshadowed through <strong>the</strong> social capital <strong>of</strong> Kreng Jai. Miscognition is defined by Bourdieu
(1989) as <strong>the</strong> misunderstanding <strong>of</strong> power from <strong>the</strong> structure <strong>of</strong> organization. It is correspond with
Holmes and Tangtongtavy (1997) that members have been dominated through <strong>the</strong> hierarchy <strong>of</strong>
society or structural means <strong>of</strong> organization, ra<strong>the</strong>r than competences and skills <strong>of</strong> members.
Therefore, it obstructs both action and also conversation among members.
The findings also contribute to <strong>the</strong> management within organization whereby management should
allow and support <strong>the</strong> social discourses in order to extend knowledge and resources within <strong>the</strong>
organization or encourage <strong>the</strong> continuous learning process among members. The argument among
community members in <strong>the</strong> particular issues should be encouraged in order to extend <strong>the</strong> resources –
knowledge and information. However, this study has conducted from <strong>the</strong> online consumer
organization which is organized through informal structure. Thus, future researches should focus on
formal organizations and different cultures, in order to generalize <strong>the</strong> findings into different contexts.
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