Proceedings of the 12th European Conference on Knowledge ...

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Network Management as a way to Manage Intellectual Capital Eva Eckenh<strong>of</strong>er Tomas Bata University, Zlín, Czech Republic Eva_Eckenh<strong>of</strong>er@hotmail.com Abstract: In order to meet <strong>the</strong> information and knowledge demands <strong>of</strong> today’s society, <strong>the</strong>re is a need for <strong>the</strong> development <strong>of</strong> intellectual capital and most especially social capital. Intellectual assets are knowledge, information, intellectual property and experience, while social capital is embedded in social structures and can be accessed as well as mobilized in purposive actions. Social capital is based on shared norms, values and trust which provokes transparency and improves <strong>the</strong> flow <strong>of</strong> information whiles reducing transaction costs. Social capital eventually leads to rationalization; hence, it increases flexibility as well as performance and innovation. As a result, <strong>the</strong>re are formal and informal social networks within firms which serve as leverage for sharing information and knowledge. Factors <strong>of</strong> influence beside norms and values are <strong>the</strong> social skills <strong>of</strong> employees or network members, which is called social maturity in holistic management. Social networks are a source <strong>of</strong> intellectual and social capital, <strong>the</strong>refore, <strong>the</strong>re is a need for <strong>the</strong> development, fostering and controlling <strong>of</strong> <strong>the</strong> networks within firms to achieve optimum results without losing control <strong>of</strong> roles that are played by employees in <strong>the</strong> network. The aim <strong>of</strong> <strong>the</strong> study is to propose a network management model which can be used for managing social networks within a firm with small additional expenses in order to achieve optimum effects from intellectual capital. In this study, <strong>the</strong> author combines models <strong>of</strong> network management from literature review and results <strong>of</strong> an exploratory survey <strong>of</strong> nine Austrian experts in <strong>the</strong> fields consulting, politics and management. This approach was aimed at designing a suitable model for <strong>the</strong> management <strong>of</strong> both formal and informal networks within a company. A suitable network model is that which fulfils <strong>the</strong> criteria <strong>of</strong> practicality in <strong>the</strong> development and fostering <strong>of</strong> intellectual capital within a firm. This paper introduces intellectual capital, social capital and fur<strong>the</strong>r discusses <strong>the</strong> principles for working with and within social networks. The paper proceeds fur<strong>the</strong>r by presenting common network management and network governance models, after which <strong>the</strong> results <strong>of</strong> <strong>the</strong> expert survey are explained. The paper concludes by presenting a practical model based on <strong>the</strong>oretical and empirical analysis. This is followed by a proposal on how <strong>the</strong> model can be adapted in firms. Keywords: intellectual capital, social capital, organisational networks, cluster, network management 1. Introduction Studies have shown that social capital contributes to knowledge sharing (Chow and Chan, 2008), which provides an opportunity for companies to gain value from <strong>the</strong>ir networks. Social Capital is 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, 2000). Social capital can be used to manage intellectual capital. A study by Castells (2000) indicates that, intellectual capital is a need in this current dispensation <strong>of</strong> information and knowledge society and intellectual assets such as knowledge, information, intellectual property and experience are a strategic factor in <strong>the</strong> value creation <strong>of</strong> a firm (Stewart, 1997; OECD, 2007). Moreover, this need lies in <strong>the</strong> human capital, which is considered as a part <strong>of</strong> <strong>the</strong> intellectual capital <strong>the</strong>ory. Human capital is described as all <strong>the</strong> knowledge, skills, talents and abilities <strong>of</strong> <strong>the</strong> company’s employee (Edvinsson and Malone, 1997; Kaplan and Norton, 2006). In <strong>the</strong> same context with intellectual capital is <strong>the</strong> concept <strong>of</strong> knowledge management. Knowledge management is related to activities like creation, coordination and usage <strong>of</strong> knowledge with <strong>the</strong> aim <strong>of</strong> turning individual knowledge into organizational knowledge. This means that, <strong>the</strong> tacit as well as explicit knowledge is important for <strong>the</strong> company. However, nei<strong>the</strong>r <strong>the</strong> initiatives on knowledge databases or network systems nor initiatives to provoke knowledge sharing with incentive rewards have been really satisfactory. Therefore, <strong>the</strong> author proposes a focus on <strong>the</strong> management <strong>of</strong> social networks for initiating and pushing knowledge sharing in a company. This proposal emphasizes <strong>the</strong> role informal networks play as a powerful source <strong>of</strong> collaboration within a company as well as with external stakeholders. The ad-hoc networks build a huge gateway for information and knowledge, hence should be considered by <strong>the</strong> company. However, <strong>the</strong> management <strong>of</strong> <strong>the</strong>se networks is problematic because it is claimed that informal networks cannot be managed directly, but indirectly through <strong>the</strong> establishment <strong>of</strong> formal networks (Bryan et al., 2007). Clusters, a specific type <strong>of</strong> coherent network (Rosen, 2000) or groups <strong>of</strong> geographically concentrated firms <strong>of</strong> different sizes, horizontally and/or vertically linked and operating in <strong>the</strong> same line <strong>of</strong> business (OECD, 2000), occur or are established more <strong>of</strong>ten <strong>the</strong>se days. This is mainly because <strong>the</strong>y are a 240
Eva Eckenh<strong>of</strong>er source <strong>of</strong> innovation as <strong>the</strong>y are based on collaboration, proximity and networks that result in a process <strong>of</strong> mutual learning, emulation <strong>of</strong> positive role models and personal contacts (Ionescu, 2002). The requirements and tasks <strong>of</strong> managing social networks go far beyond <strong>the</strong> basic understanding <strong>of</strong> management as a function as well as an institution within a company, whose tasks and duties is <strong>the</strong> coordination, structuring, planning, organizing, leading and control (Staehle, 1992). Holistic Management Theory takes a step fur<strong>the</strong>r by outlining <strong>the</strong> importance <strong>of</strong> <strong>the</strong> personality qualities <strong>of</strong> <strong>the</strong> management <strong>of</strong> firms and <strong>the</strong>ir social maturity (Porvazník, 2008). This goes in line with <strong>the</strong> importance <strong>of</strong> certain social skills necessary for a successful work in social networks. Such social skills includes, social perception (<strong>the</strong> ability to gauge current moods <strong>of</strong> o<strong>the</strong>rs), impression management (<strong>the</strong> ability to change one’s appearance and image), persuasion and influence, social adaptability (<strong>the</strong> ability to adjust to a wide range <strong>of</strong> social situations) and emotional intelligence (<strong>the</strong> ability to regulate one’s own emotions) (Beugelsdijk and Van Schaik, 2005). These qualities, toge<strong>the</strong>r with <strong>the</strong> unwritten networklaws trust, tolerance, discretion, respect, fairness and cooperativeness (Friedschröder, 2005) are important for successful communication and cooperation in an organizational network. Moreover, <strong>the</strong> success <strong>of</strong> a network is not impacted by only <strong>the</strong> networking abilities <strong>of</strong> a single management unit, but also, <strong>the</strong> networking ability <strong>of</strong> an organization as a whole makes a contribution. The processes, information systems, organizational structure and culture have influence on <strong>the</strong> ability <strong>of</strong> an organization to cooperate with o<strong>the</strong>r organizations in a way that added value emerges out <strong>of</strong> this relation (Payer, 2002). 2. Objective and methodology The aim <strong>of</strong> this paper is to analyze network management models proposed and described in scientific literature, in order to develop a model which is suitable for <strong>the</strong> management <strong>of</strong> formal as well as informal networks within a company. The model has to fulfil <strong>the</strong> criteria <strong>of</strong> being practical and suitable for <strong>the</strong> development and fostering <strong>of</strong> intellectual capital within a firm. The empirical part <strong>of</strong> this paper analysis <strong>the</strong> findings from an expert survey which was held in spring 2008. Due to time constraints, out <strong>of</strong> a total <strong>of</strong> ten Austrian experts contacted, only nine were able to participate in <strong>the</strong> schedule interviews. The interviews were conducted with respondents from firms who on a daily basis work with Strategic Networking and are <strong>the</strong>refore described as experts. According to Gläser and Laudel (2006), experts are individuals who as a result <strong>of</strong> <strong>the</strong>ir experience possess specific knowledge over a specific social issue. Among those interviewed were a head <strong>of</strong> a human resource department, a head <strong>of</strong> a PR Department, two CEOs <strong>of</strong> public affairs agencies, two consultants, two Secretary-Generals <strong>of</strong> organizations listed on <strong>the</strong> stock exchange and a lawyer. The experts were selected to ensure a balanced sample from different sectors (consulting and industrial) as well as sex (5 females and 4 males). As <strong>the</strong> interviews were held in German, <strong>the</strong> analysis was done in German as well (native language <strong>of</strong> <strong>the</strong> author and <strong>the</strong> interview partners) and <strong>the</strong> results were afterwards translated to English. 3. Managing networks Formal and informal networks are strong factors that have tremendous influence on a company’s success. Their usage is advantageous to firms because <strong>the</strong>y form <strong>the</strong> basis for innovation, communication and collective support. Never<strong>the</strong>less, social networks can build a market entry barrier for firms outside <strong>the</strong> network. Hence, <strong>the</strong> barrier to growth for firms with too strong informal networks has to be taken into account and prevented by attentive network analysis and network management (Fuller-Love, 2009). In order to achieve <strong>the</strong> best results and prevent disadvantages, certain conditions have to be fulfilled in a social network. The network members have to complement each o<strong>the</strong>r in <strong>the</strong>ir interests and expectations, which will have to be coordinated. Also, <strong>the</strong> forms and methods <strong>of</strong> working as well as <strong>the</strong> infrastructure <strong>of</strong> a network have to be suitable for <strong>the</strong> objective <strong>of</strong> <strong>the</strong> network. The most important and underlying principles in networks are <strong>the</strong> norms, values, agreements and trust (Becker et al., 2005). The emergence <strong>of</strong> trust, <strong>the</strong> expectations <strong>of</strong> regular, honest and cooperative behaviour (Fukuyama, 1995), requires goodwill, competence and behavioural reliability. Trust influences <strong>the</strong> ability to innovate and to adapt <strong>the</strong> quality <strong>of</strong> network flows for materials, information and human communication. A high level <strong>of</strong> trust enables all process types to operate more efficiently in a selfreinforcing manner (Dervitsiotis, 2006). 241
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Proceedings <stron
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Contents Title Author(s) Picture <s
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Title Author(s) Picture of<
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Volume Two The Influence of
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The Symbolic Innovation of<
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Biographies of <st
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Jan Pawlowski works as Prof
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in academia. He holds the</
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Biomedical Engineering Research Cen
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Mathematics and Ph
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Thi Hai Hang Nguyen is a lecturer a
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Dan Savescu graduate TCM Faculty, p
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Knowledge Dynamics and Organisation
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Eckhard Ammann We distinguish three
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Eckhard Ammann quality dimension ar
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Figure 7: Supervised learning-by-do
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Identifying and Ranking the
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2.5 leadership and strategy Manouch
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4. Results and discussion Pavel Bog
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Table 2: Synthesis
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Strategies for Increasing Knowledge
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Adriana Schiopoiu Burlea 3. ESF rol
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3.2 Discussions Adriana Schiopoiu B
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Simon Cadez and Vlado Dimovski with
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Simon Cadez and Vlado Dimovski scho
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Why Should I Share my new ideas? Cu
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2.3 Knowledge mapping Mohamad Ali F
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Knowledge Workers: A Typology Frame
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Jiří Franek and Eva Grublova Know
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Adoption of Knowle
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References Manel González-Piñero
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Nebojsa Graca and Ana Lucija Gojako
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creating new, added, essential qual
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Receive suggestions Compare suggest
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Understanding Personal Knowledge De
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Developing a Knowledge Strategy Usi
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Facilitating Knowledge Sharing in V
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Modelling Knowledge Sharing Into a
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From Knowledge Acquisition to Knowl
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