KNOWLEDGE MANAGEMENT
AS A MEANS OF CREATING
COMPETETIVE ADVANTAGES
Arpine Melikbekyan1
The main object of the research is to evaluate the concept “knowledge management” in the Public administration
reforms and to improve the knowledge management skills in public administration services.
The comparative analytical, exploratory and constructive research methods were implemented in the paper.
1.
Concept of “knowledge management”
The appearance of the concept “knowledge management” is connected with modern administrative science. Thus,
knowledge management is considered to be the systematized process of identification which brings to the knowledge
and information transfer and usage created and improved by people.
The preliminary characteristic features of the knowledge management can be seen in Platoon’s works. The serious
changes in the sphere of economics and business, taken place in recent years, have stimulated the interest towards
knowledge management. All the above-mentioned facts are probably conditioned by the following circumstances.

Nowadays knowledge becomes the main resource of the economic growth and development;

The structures based on knowledge become principal in their sphere;

In the process of the price formation of goods and services knowledge forms a specific weight.
Knowledge management is not an independent, autonomous, active process, but an inseparable part of the management
of any organization.
Such a management is a model which unites all the actions connected with the formation, systematization,
dissemination and usage of knowledge, as well as with the development of innovation and education. Knowledge
management can also be characterized as a purposeful process and, why not, an art of creating values from knowledge.
Knowledge management brings to the change of mentality of the managers. The main aim of knowledge management is
the creation of new and more powerful competitive advantages.
In modern conditions knowledge management is the newly acknowledged application of the already known
technologies of management.
Nowadays it has become a leading direction of strategic management, which draws the attention of the non-productive
use of resources.
It is necessary to differentiate knowledge from data and information. The managers of the organization begin to realize
the importance of all this only when effective means are spent on the creation of the data or informative systems.
2.
Data and information management. Knowledge creation process
Thus, the data are the entity of different objective facts. In organizations, for instance, business correspondences about
sale (particularly how much, when and who has bought, how much the purchaser has paid) are considered to be the
data.
It is not clear from these data how the results of the sale must be estimated, why the purchaser has come exactly here
and whether he will come once more and, what is more important, what must be done.
1
PhD Student, Lecturer, Public Administration Academy of the Republic of Armenia, Yerevan, Armenia
1
Information in its turn is a type of a message which usually looks like a document. Here the sender and the receiver are
present. The receiver decides if the message is considered to be information or not. The latter estimates whether the
received message informs him or not.
In organizations information is spread by networks.
Hard and soft networks and their components are distinguished.
Postal services, computers, addresses (as well as electronic) are considered to be hard networks.
The procedures of spreading information, including conferences, meetings, and trainings are considered to be soft
networks.
Thus, the data change into information in several ways.

The formation of the context (we know why these data are necessary);

Grouping or classification (the data are divided into types and components);

Calculation or accounting (the mathematical drafting of the data);

Correction (correction of mistakes and elimination of misprints);

Condensation (condensation of the data).
Knowledge is a deeper and wider concept then the data or information.
Usually while speaking about a person we suppose that he possesses wisdom, life experience, education, the ability of
penetrating into the essence of the object.
We don’t class the concept of the knowledge with a document, book or a base of the data, even if they are considered to
be the result of work of a person or a group of people.
Thus, we can say that knowledge is a unity of experience, definite values, experimental marks and the achieved
information, with the help of which the new experience is included in information. In organizations knowledge is
condensed not only in documents but also in the norms of activity and procedures. Information is formed from data.
Accordingly, knowledge is formed from information in the following ways.

Comparison (the bounds of the sphere of contact are determined, that is we compare them with the information
about similar objects);

Definition of connections (with the information about different objects);

Estimation (how this information can be estimated and how others estimate it);

Definition of the sphere of application of the given information.
Let us view an example where the difference between information and knowledge is seen.
The company “Chrysler” has a system of computer files, which is called “a collection of engineering knowledge” and
includes all the information and data about the production of cars in it. But when the manager got the results of new
tests he refused to place them in the collection as he needed the answers to the following questions

Why have these tests been carried out?;

What are the results of the previously carried out tests of the given company and its competitors?;

What conclusion have they come to connected with mechanical engineering on the basis of the results of the
tests?.
Questions of the same type change information into knowledge. What is more, the answers to these questions add value
to the information. Thus, we can see from this example how information alters or acquires value by means of the
corresponding administrative skill.
The contrary case must be mentioned too, when the addition of unnecessary and vain information devalues the value of
the preliminary information.
2
Devaluation takes place in the flow of “informative noise”. Skill mentioned about it 2,5000 years ago saying that “a
wise man is considered to be not the one who knows much but the one who knows much useful”.
The knowledge forms a part of the product and service. In modern economics the bounds between the transmission of
the product and service, as well as service and knowledge have already been eliminated. Nowadays the knowledge
penetrates into all the spheres and stages of the economic process, therefore it is rather difficult to distinguish it from the
product or service.
This regularity of the development of modern economics can be presented by the following examples. In the last years
the company “XEROX” is considered to be not a “xerox” company but a “document” company. “3 M” company names
itself a knowledge company. “IBM” company produces not only counter techniques but also industry solution units.
“Steelcase” company which produces office equipment, claims that it sells knowledge and it isn’t accidental. What
raises the value of the above-mentioned companies? We can surely say that they are mainly the decisions based on
knowledge, the design of the technical and technological product, marketing surveys, the discovery of real demands of
the purchasers. It is the knowledge which gives a stable, competitive advantage to these companies.
3.
Main components of knowledge management
Thus, knowledge management includes the following components.

Knowledge stimulation;

Collection and working out of information received from outer sources;

Observance, classification and modification of knowledge and guaranteeing of availability;

Exchange and dissemination of knowledge, including the inside of the company too;

The use of knowledge in the process of organization activity, including the process of taking decisions;

Transformation of knowledge into product, services, documents and the base of data;

Evaluation and measurement of knowledge and the use of immaterial actives of the organization;

Knowledge protection.
The investment of knowledge management system has recently begun in large organizations, but it is considered to be
one of the most important factors in the struggle of competitors.
According to the appraisal of “Gartner Group” the American companies of 2001 have spent approximately 5 milliard
USA dollars on the establishment of such systems. Knowledge management is capable of providing the highest
usefulness in the sphere of planning, customers’ service, formation of the staff and cooperation.
The Russian federation has made great success in the establishment of systems of knowledge management, especially in
state structures, which are the Central Bank of the Russian Federation, the Ministry of Internal Affairs, the security
service, as well as a number of Russian large corporations (ЮКОС, ЛУКойл).
One of the main ideas of knowledge management is considered to be the more efficient use of the already existing
knowledge that is there is no need to make a new wheel in the place where the present efficient experience may be
simply used and spread.
Within the scope of knowledge management one of the dangers of realization of this or that project is considered to be
the quantitative approach. The most important is not “the limitless dissemination” of the informative base but the
guaranteeing of availability of general knowledge and the stimulation of team work. Companies often fail to carry out
this or that project, as they don’t differentiate the concepts of “information” and “knowledge”.
Knowledge management is not identified with informative management, because in addition to the management of
informative flows, knowledge management carries out an informative condensation, development, synthesis, training
and retraining of the personnel with the aim of more productive use and the addition of new value on the basis of
already possessed information.
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Knowledge management is also a process, which provides the synergetic interaction of informative technologies, as
well as information and data base development carried out by means of the workers’ stimulation of innovatory activity.
Knowledge management necessarily presupposes the presence of synergy between technological and behavioral
aspects.
Knowledge management system won’t provide efficiency if the corporation culture of the organization doesn’t
stimulate the exchange of ideas and experience among employees. Therefore the investment of the knowledge
management system presupposes the change of the inner structure and culture of the company. Here we find it
reasonable to mention that managers should show that they are ready to contact with employees and they should set up
a special system of rewards for knowledge exchange in the organizations.
For the last years many western organizations have appointed the office of knowledge manager, which has various
names in different companies. For instance, in “Mac-Kinsey” company such an office is called “knowledge director”, in
“Scandia” company –“director of mental capital”, in “Beckmann Labs” company – “director of knowledge transfer”, in
“Dow Chemical” company – “director of mental actives”.
The following functions are included in the duties of the above-mentioned managers.

Creation and application of knowledge transfer system, including libraries, human and computer networks,
survey centers and knowledge base;

knowledge management and relations with outer providers of information;

the stimulation of strategic planning and the process of creating new knowledge in the scope of marketing
survey;

measurement of mental capital and stimulation of addition;

personnel management in the sphere of knowledge management;

the formation and realization of strategy in the sphere of knowledge management.
Nowadays many branches are based on knowledge. Thus, for instance, the aim of pharmacy is not only the production
of pills but also the production and dissemination of knowledge in the form of new features of chemical combinations,
their patent protection and the ensuring of progress in market. The cinema, TV, educational, consultative and medical
services are those institutions which produce and disseminate information. In several productive branches the produced
goods mainly depend on the method of information approach (computers, cellular phones, systemic ensuring).
Knowledge management strategy can be efficiently used both in commercial and non-commercial organizations.
Moreover, the greater part of non-commercial organizations is simply connected with knowledge management.
Governmental management bodies are especially distinguished among them. Here the efficiency of knowledge
management can be rather high. But this side of knowledge management hasn’t been completely developed yet. That is
to say knowledge management technologies in governmental management bodies are not investigated and developed up
to the end.
At the same time the conception of knowledge management for the institutions of governmental and municipal
management is more acceptable. Particularly in the local board of administration those knowledge management systems
are rather efficient which are directed to the efficient co-operation and the application of the best experience.
4.
Knowledge management in the Public Administration
Usually both in theory and practice the regular and callous approaches of the improvement of the employees’
professional skill are limited in state institutions.
The traditional ways of personnel selection, personnel training and personnel distribution belong to them. In its turn, the
conception of knowledge management allows to approach this matter in a new way. Personnel training can be carried
out not only in auditoriums, but also in workplaces during the contact with citizens. Nowadays the most important
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elements of personnel training are considered to be the development and application of systemic mentality, the
technologies and skills of taking joint decisions.
For a number of state institutions the formation of such organizational and corporative culture is considered to be rather
actual which is directed to the knowledge exchange.
In the scope of knowledge management such a direction of work improvement of state institution can be singled out,
which is directed to the formation of informative systems and which allows to carry out the efficient provision and
exchange of necessary knowledge. The investment of the geoinformation monitoring system of the Central Bank of
Russian Federation and its efficient application can serve as an example.
The corresponding strategy of the positive image formation of state organizations and civil service also plays an
important role. Here the development and application of governmental technologies are of great importance, which can
provide efficient co-operation among the consumers of state organizations and state services. The sociological
investigations, the technologies of usage of “hot” telephone lines and data base belong to them. Such matters demand
their further scientific investigation and practical application.
5.
Ethical description of knowledge managers in Public Administration. What reforms we need to carry out?
Speaking about knowledge management in Public Administration services it is important to discuss the ethical aspect of
knowledge management performers-knowledge managers. The question arises if the performers of knowledge
management should be ethically educated and what reforms we need to carry out for ensuring the effective knowledge
management in Public Administration system.
The definitive answer to the above-mentioned question is that the knowledge is the power in the hand of its holders.
Thus, it is highly recommended to pay attention to the ethical image of the knowledge managers for avoiding the
negative consequences of theirs activity.
Actually, different countries adopted the legal acts on ethics of public administrators which could be effective only if
the choice of the public administrator, as well as knowledge managers made by evaluation of characteristic features and
psychologic analyzes of them.
Summing up all the above-mentioned we find it reasonable to mention that the investment of knowledge management
system in state and non-state institutions is considered to be one of the main factors in the struggle with competitors.
Here the right choice of competitive strategy is essential, that is it must create such competitive advantages, which are
long-lasting and stable. Therefore, the main aim of knowledge management is considered to be the creation of more
powerful competitive advantages and their efficient application by taking into consideration the importance of ethical
rules.
References
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Organizations, Summary Record of the High Level Forum held in Copenhagen, 8-9 Feb. 2001, PUMA/HRM
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Prusak, L. 2001. Where did Knowledge Management Come From, IBM Systems Journal, Vol. 40, Issue 4, pp
1002-1007.
3.
Riege, A. and Lindsay, N. 2006. Knowledge Management in the Public Sector: Stakeholder Partnerships in
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