Knowledge Integration in Strategic Management - Dissertation Example

 Knowledge Integration in Strategic Management Introduction: Knowledge plays a very important role in all aspects of almost every industry. Working together and working as a team is possible only when the knowledge and information is shared among all members within the team. Over the years there has been a wide range of literature that has been developed on the concept of the integration of knowledge and knowledge management. This paper aims at discussing the various issues that are faced by companies in the integration of knowledge and the importance of knowledge integration and management. The next section will provide a brief overview of knowledge management and its meaning. Knowledge and Management of Knowledge: Peter Drucker introduced the first related term ‘Knowledge Worker’ in 1960. Over the years, there has been a significant growth in this field and various authors and scholars have brought a number of different areas of focus on the subject. Carlie (1998) highlighted that several theories were developed to manage the intellectual capital in the 21st century. Graham and Thomas (2008) believed that Knowledge Management is supported as a means of harnessing and utilizing intellectual resources to address challenges, as well as improving innovation, business performance and client approval. Since 1996, there has been immense and rapid growth in terms of knowledge management. Knowledge is the awareness of what one knows through study, reasoning, experience or association, or through various other types of learning (Mcinerney, 2002). Knowledge Management consists of four key processes to include knowledge acquisition, knowledge sharing, scoring knowledge and knowledge use. DeNoni, Orsi, and Pilotti (2009) believed that the implementation of knowledge management needs effective methods of accessing, measuring and controlling information to manage increasing complexity. Integrating knowledge and ensuring that the knowledge is available to all is the most essential element which can lead to the complete growth or decline of a company. Knowledge plays a very important role in the working of any business and for the success of processes within a business. The next section will deal with the importance of knowledge and the importance of the right integration of knowledge for the success of a business. Importance of Knowledge Integration and Knowledge Management: Knowledge Management has been discussed and described by several experts. Ron Young, CEO of Knowledge Associates International has defined knowledge management as, “the discipline of enabling individuals, teams and entire organizations to collectively and systematically create, share and apply knowledge, to better achieve their objectives”(Knowledge Management, 2009). knowledge management is a growing and established discipline and is used in many large organizations. According to Pentland (1995) as cited in Alavi and Leidner (2001), organizational knowledge creation involves developing new content or restoring existing content within the organization’s tacit and explicit knowledge. The start of the knowledge management was mainly in organizations in Northern Europe and North America. However, this concept has grown and has become an essential aspect for companies across the world. Researchers have noticed over the years that almost 75 – 80 percent of all large companies have a strong inclination and formal knowledge management programs. Knowledge Management is slowly becoming a major and crucial issue in companies. It is essential to understand that knowledge is a major economic challenge for companies in the future (Hewitt, 2000). For every innovative and successful organization, there is a high need for creating, capitalizing and sharing the Knowledge capital. It is essential to understand that knowledge management is a program that is more of a long-term effort, and includes a strong need for strategic commitment and involves and includes the analysis of the knowledge and capabilities and tools in the company. Business Driver: Since ages there has been an extremely important and true saying, ‘Knowledge is Power’. Knowledge is the foundation for almost every activity in everyday life. McInerney (2002) believes that knowledge management allows companies to benefit from the knowledge that resides in an organization by using it to achieve the organization's mission. With the attention that is being provided to the products and services alone over the years, the most significant key to value creation has been missed out over the years. It is important to realise that the Knowledge is one element in every business which creates the success within the organisations and is one of the major part of the overall production strategies. It is also essential to note that Knowledge can prove to be very useful if the company has people with a good knowledge and can share with the others within the organisation and thereby improve the overall performance of the organisation. Individuals with highest knowledge have a high potential for high value creation within the organisation. “The only irreplaceable capital an organization possesses is the knowledge and ability of its people. The productivity of that capital depends on how effectively people share their competence with those who can use it” (Carnegie, 2009). Management Types: Knowledge can be bifurcated into two – explicit knowledge and tacit knowledge. The core competencies of an organization incorporate both tacit and explicit knowledge. These need to be conceived as a mix of skills and technologies (Lindgren and Wallstrom, 2000). Both these have been extremely essential and use of these help organisations attain their goals (Marwick, 2001). Explicit knowledge is formal and systematic form of knowledge management. This can easily be communicated and shared (Nonaka, 1991). Stenmark (2000) explained that explicit knowledge can be captured and codified into manuals, procedures, and rules which easily disseminate. Applying to the consultancy firm, the author reckons that examples of explicit knowledge are guidance audit procedure, audit policy, accounting policy and law code since these information and knowledge are easily articulated, codified into words. Tacit knowledge on the other hand, is highly individual and it is relatively difficult to formalize and share (Nonaka, 1991). In addition, tacit knowledge only exists in people’s hands or minds and is apparent through their actions (Stenmark, 2000). Applying this to consultancy firms, the author deems that examples of tacit knowledge is the ability to judge the correctness of financial statement or the individual auditing scepticism since this knowledge is embedded in human’s mind which is difficult to articulate into words. In conclusion, knowledge is an individual’s asset and therefore transformation of individual knowledge into organizational knowledge can bring a great benefit to the organization, thus this becomes the key activity of knowledge management. Many gurus assert that knowledge and its management are critical for organizational success and a key of competitive advantage (Nunamaker et al, 2001; Bartlett and Ghoshal, 1998; Nonaka and Takeuchi, 1995, Rulke et al, 2000; Stewart, 1998; Quintas et al., 1997). Process of Knowledge: Knowledge management is a process to manage and leverage information and knowledge within the organization so as to improve decision-making and gain competitive advantage over rivals (Gupta and Sharma, 2004; Quintas et al, 1997; Nonaka, 1994). The purpose of knowledge management is to make knowledge available throughout the organization when and where employee needed (Alavi and Leidner, 1999). In addition, knowledge management activities have tried to capture the tacit knowledge that people carry around with them, what they learn and observe from experience rather than what is explicitly stated in different forms. People have to be recognized as valuable assets and is much more than merely capturing data or manipulating it to obtain information. Managing intellectual capital requires a change in mindset (Madsen, Mosakowaski & Zaheer, 2002). Nonaka (1991) explained that, knowledge can be created and shared within the organization by four means: socialization, externalization, combination and internalization. First, socialization is tacit to tacit process where an individual directly shared tacit knowledge to one another. For example, individual may learn from others by observation, imitation and practice and then it became his/her own tacit knowledge. However if knowledge does not grow to become unambiguous then it would not be very useful for the organisation and would not create value. Secondly, externalization is tacit to explicit process where tacit knowledge can be articulated and converted to an explicit form, thus it allows knowledge to be shared within teams or the organizations. Thirdly, combination is explicit to explicit process where an individual can combine and create explicit knowledge into a new whole. Even though the new knowledge is synthesized information from many sources, this combination does not actually extend the company’s existing knowledge base. Lastly, internalization is explicit to tacit process where individual begins to internalize the explicit knowledge from the organization and use it to broader, expend and reframe his/her own tacit knowledge. Combining the knowledge management definition with Nonaka theory, the authors believe that knowledge management is not only distributed knowledge or information throughout the organization but is also to distributed from individual to organization and amongst the organizations itself as well. It is important to note that knowledge repository can facilitate the transferring of knowledge from the organization to individual while collaborative support tools can help the transferring knowledge from individual to individual. Then, individual knowledge can be converted and stored into the organizations again. Therefore, knowledge management is the ways to manage and utilize the knowledge within organization which leads to improving the potential of human resource, the utmost precious assets of the organization. Issues Faced For Knowledge Integration Based on Alavi and Tiwana(2003) theory that knowledge integration and management comprised of four processes: knowledge creation, knowledge transfer/retrieval, knowledge storage and knowledge application. In the author’s perspective, each process may cause barriers to the effective use of knowledge management systems therefore the author has grouped the barriers according to knowledge management process. Barriers to Knowledge Integration: Knowledge creation begins with sharing information amongst individual or groups (Alavi and Tiwana, 2003). Inhibitors of knowledge sharing are the key barriers to KM creation. Riege, A.(2005) explained that personal barriers such as lacking time to share knowledge, low awareness of the benefits to KM and lacking of social network, are factors to inefficient contributing knowledge-sharing. Also, Desouza(2003) mentioned that one barrier to knowledge sharing is that people fear to be known as an expert and may jeopardize their job securities. It may disadvantage to their work rather than advance their career since people are allocated to project based on their past experiences and consequently limited those people from learning new things. Ardichvilli et al.(2003) also argues that people hesitate the share knowledge because of fear of criticism and not sure that their contributions are important and completely correct. Moreover, users are reluctant to share their information of knowledge to their peers, supervisors because they believe that what they know is an asset that gives them an inherent advantage in bargaining and negotiation (Malhotra, 2004). AI-Hawamdeh, S. (2003) mentions, that lacking of incentive may inhibit people to share their knowledge. It is also essential to realise that knowledge sharing is based on individual contributions and is complete voluntary. Devenport and Prusak (1998) also highlight that “people rarely share their knowledge without expecting sometime in return”. In summary, factors that are inhibits to knowledge sharing are lacking personal time, low awareness of KM benefits, lacking social network, fearing to losing job, avoiding interpersonal conflict, fearing to lose negotiation power and lacking of incentive. Moreover, other factors that may relevant are age difference, gender differences, difference in experience level, difference in education level, poor communication skills, lacking of trust amongst people (Riege, 2005). In knowledge storage process, the key activity is to capture knowledge into the systems. In order to access contents, search engine is a key tool for this process (Bowman, 2002). Nevertheless, if the search engines provide too much information or irrelevant information each time that users try to search, users may be dissatisfied and prefer not to use the systems. Users may think that the search engine tool is not efficient and effective which leads to a negative perspective to the system and limit users to use the system next time (Meng et al., 2002). Other Issues include, Communication Factor: There is a belief that groupware or computer-supported collaborative work can facilitate the communication amongst individual which leads greater associations (Gupta and Sharma, 2004). Nevertheless, the empirical studies by Vandenbosch and Ginzberg (1996) have shown different results. The research revealed that the introduction of groupware like Lotus Notes does not increase the degree of collaboration among employee in the organization. It is evident that IT alone neither can motivate people to use the system nor automatically increase the collaboration among groups since sharing information and knowledge depends on each personal’s willingness. People who were in contact with each other before introducing Lotus Notes continued to communicate even in the new system of Lotus Notes, but people who never communicated with one another before continued not to communicate even in the new system. Alavi and Tiwana (2003) also supported that communication support systems cannot overcome cultural factors that may prohibit knowledge transfer within the organizations. Examples of cultural barriers are lack of trust, intolerance for mistakes and the not-invent-here syndrome. Similarly, DeNoni, Orsi, Pilotti, 2009 emphasize that technology push or techno-centric approach is neither sufficient to overcome the organizational culture inhibitors nor useful to promote organizational learning. Consequently, changes in knowledge sharing culture are the priority success factors for knowledge management exploitation. Additionally, lacking of adequate communication and action are also barriers preventing effective and efficient knowledge management (DeNoni, Orsi, Pilotti, 2009). Sometimes users do not realize the benefits of KMS or even know what systems are available in the organisation. Lack of communication will result in confusion and negative perception which will severely affect the usage of KMS later on. Culture Factor: Many authors said that culture is the most critical success factor for implementing knowledge management. Having an inappropriate culture is the largest barrier to knowledge transfer. Culture is a shared basic assumption and belief within a group. Nobody can really define the term culture but the members can perceive it different situations. Ford and Chan (2003) have divided the term culture into two perspectives, namely organizational culture and national culture. Organizational culture embedded in a component of the organizational environment while national culture is the similar sets of preferences, which distinguishes the members of one human group from another. Conclusions: As has been understood a business can be successful in cases where there is complete use of knowledge from all areas of the company. Integrating and managing the knowledge from all parts of the company allows the development of a strong knowledge database. It is essential to note that in spite of the high levels of technology that is available in the markets, the integration of knowledge proves to be a very helpful way of dealing with the competition and to sustain a position in the competitive markets. It is safe to say that knowledge has already grown largely and it has become one of the most essential aspects of any business. It has become a major driver and money is now slowly phasing out of the scene and as the old saying of ‘Knowledge is king’, is now being put to use in almost every industry and every company across the world (Carlie, 1998). In addition, businesses and individuals from across the globe have an increase awareness to ensure that they are constantly in the loop and are updated at all times. Hence it is clear that good integration of knowledge in any business permits better overall sustainability of the business and bettered overall competitive advantage. Bibliography Alavi, M., & Leidner, D. E. (2001). Review: Knowledge management and knowledge management systems: Conceptual foundations and research issues. MIS Quarterly, 25(1), 107-136. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=4386667&site=ehost-live&scope=site Carlie, P.R. (1998). Working Knowledge: How Organizations manage What they Know. Human resource Planning, 21 (4), 58 -59. Carnegie, A. (2009). 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