Information Processing and Management 37 (2001) 335±355
www.elsevier.com/locate/infoproman
From knowledge theory to management practice: towards an
integrated approach
Minsoo Shin a,*, Tony Holden a,1, Ruth A. Schmidt b,2
a
b
Decision Support Group, Manufacturing and Management Division, Department of Engineering,
University of Cambridge, Mill Lane, Cambridge CB2 1RX, UK
Department of Retailing and Marketing, Manchester Metropolitan University, Aytoun Building, Aytoun Street,
Manchester M1 3GH, UK
Received 4 February 2000; accepted 14 June 2000
Abstract
This paper critically contrasts the three main schools of thought on knowledge ± namely, those that
respectively conceptualize knowledge as situated in mind, process, and object ± and assesses the resulting
implications for knowledge management (KM). Against the background of the existing diversity of de®nitions of KM an integrated and holistic view of the KM value chain is put forward. Within this theoretical
framework ®ve main research streams (culture, knowledge location, awareness, evaluation, and absorption)
are identi®ed with a view to devising a practical concept of KM applicable in a business context. With a
focus on knowledge ¯ow and detailed approaches to potential solutions, con¯icts and compatibilities between existing business strategies and KM are examined. A conceptual model is devised to o€er a holistic
integration of the theoretical and practical themes in order to serve as a framework for developing a future
research agenda for the development of theoretically grounded, yet practical, KM business tools and
applications. Ó 2001 Elsevier Science Ltd. All rights reserved.
Keywords: Decision support; Knowledge ¯ow; Knowledge management; Knowledge management systems
*
Corresponding author. Tel.: +44-1223-332769; fax: +44-1223-766400.
E-mail addresses: ms322@eng.cam.ac.uk (M. Shin), holden@eng.cam.ac.uk (T. Holden), r.schmidt@mmu.ac.uk27
(R.A. Schmidt).
1
Tel.: +44-1223-332811; fax: +44-1223-338076.
2
Tel.: +44-161-247-3980; fax: +44-161-247-6305.
0306-4573/01/$ - see front matter Ó 2001 Elsevier Science Ltd. All rights reserved.
PII: S 0 3 0 6 - 4 5 7 3 ( 0 0 ) 0 0 0 3 1 - 5
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M. Shin et al. / Information Processing and Management 37 (2001) 335±355
1. Knowledge
In managerial circles, Knowledge Management (KM) is increasingly viewed as a crucial
factor for competitive success (Ernst & Young, 1997). At the same time, the academic question
of how knowledge should best be de®ned is a subject of a lively epistemological debate. On one
hand knowledge can be seen as a representation of the real world, on the other it can be
conceptualized as a product of the interaction between individual cognition and reality (Krogh,
1998). Arguably the quest for the discovery of `new truth' from the analysis of the literature is
of limited use in evoking researchers' or practitioners' interests in and in helping make progress
in managing knowledge on a practical level. However, an examination of the various perspectives on the de®nition of knowledge and their implications for knowledge management
forms a useful starting point enabling researchers and practitioners alike to understand their
own standpoint in relation to the di€erent positions and directions of knowledge management
research.
All schools of thought agree in presuming that knowledge is something di€erent from information and data. Principally there are two approaches to de®ning knowledge. One uses the
concept of a value chain or hierarchical structure among data, information, and knowledge. The
other focuses on the analysis of the process of knowing. These theoretical perspectives are
complemented by a growing amount of managerially focused practitioner research.
Dretske (1999) regards knowledge as a production that is made from raw material ± information. Zack (1999) de®nes data as observation or facts, with information as data in a meaningful
context and knowledge as meaningfully organized accumulation of information. Greenwood
(1998) suggests that information is raw material and knowledge is information, which is valuable
for a speci®c organization. Kock and McQueen (1998) regard data as carrier of information and
knowledge, information as relating to descriptive and historical fact, and knowledge as new or
modi®ed insight or predictive understanding. Knapp (1997) de®nes information as raw material
and knowledge as selected useful information for certain jobs. Vance (1997) suggests that
knowledge is authenticated information and information is interpreted data. Harris's (1996)
de®nition states that data is known fact, information is analyzed data, and knowledge is a
combination of information, context, and experience. Bohn (1994) suggests that knowledge is
something that prescribes what to do (e.g., prediction), information is organized or structured
data, and data is raw material. Kogut and Zander (1992) de®ne information as factual statement
and knowledge as a statement of how to do (e.g., recipe).
The common factor of those de®nitions is that `knowledge' is located at the top of a hierarchical structure. This indicates that information is one representation of knowledge, but information itself is not knowledge. Churchman (1971) notes that to de®ne knowledge as a collection
of information does not consider the complicated interactions between the users of information
and the collection of information. The implication is that knowledge is a combination of a process
element (such as, e.g., authentication, userÕs perception, or context) and information. Arguably,
this viewpoint implies that knowledge and information are not radically di€erent from each other
but represent di€erent aspects of the same, freely convertible into each other. Once information is
processed through the userÕs brain, it becomes the userÕs knowledge. When the user articulates
knowledge with the intent of transmitting it, it becomes information. Blumentritt and JohnstonÕs
(1999) knowledge±information model describes this viewpoint well, implying that a tool to
M. Shin et al. / Information Processing and Management 37 (2001) 335±355
337
support knowledge management can be developed on standard information technologies. The
information technologies can be the platform for e€ective knowledge management.
However, within the value chain school of thought, there are di€erent views on the status of
knowledge made from information. One group of researchers regards knowledge as an object
(e.g., Zack, 1999; Greenwood, 1998; Knapp, 1997; Hibbard, 1997; Vance, 1997; Tenkasi &
Boland, 1996; Gopital & Gagnon, 1995; Zeleny, 1987) that is stored and manipulated. Once
information has been proved to be true or useful in a context, then it becomes applicable
knowledge and is stored.
The second school of thought de®nes knowledge as a process related to application (e.g.,
McDermot, 1999; Zack, 1999; Frappaolo & Capshaw, 1999; Bohn, 1994; Kogut & Zander, 1992).
Detailed procedures of application or applicability depend on the usersÕ interpretative capabilities.
HarrisÕs (1996) viewpoint can be classi®ed as a belief in mind, i.e., personalized information or the
cognitive status of knowing. This frequently adopted viewpoint coincides with, e.g., Blumentritt
and Johnston (1999), Sveiby (1998), Takeuchi (1998), Marshall (1997), Malhotra (1997), Nonaka
and Takeuchi (1995), and Nonaka (1994). Nonaka and Takeuchi (1995) identify both justi®ed
belief and commitment anchored to the overall epistemological structure of the holder as key
ingredients of `knowledge'. Spender (1996) further adds to this de®nition of Nonaka and
Takeuchi that to know is to be able to take part in the process that makes the knowledge
meaningful. Davenport, Long and Beers (1998a) conclude that knowledge is a high-value form of
information that is ready to be applied to decisions and actions.
Recently, many researchers have been trying to de®ne knowledge in a more managerial context.
KPMG (1998) de®nes knowledge as business information about customers, products, processes,
and competitors. Consequently they argue that knowledge can be ®led on paper or in electric
form. Im and Hars (1998) deconstruct knowledge into its components (e.g., document templates),
frameworks (e.g., ISO 9000), patterns (e.g., best practices), and general principles (e.g., organizational vision). Millar, Demaid and Quintas (1997) suggest ®ve categories: catalogue knowledge
(know-what), explanatory knowledge (know-how), process knowledge (know-how), social
knowledge (know-who), and experiential knowledge (what-was). While less concerned with academic distinctions and de®nition, these debates on knowledge are particularly well placed to
become concerned with managerial initiatives (e.g., better decision making or faster responses to
key issues).
A further key question of knowledge research concerns the relationship and interaction between tacit and explicit knowledge. Tacit knowledge resides in the individual's experience and
action. Explicit knowledge is codi®ed and communicated in symbolic form or language. Nonaka
(1994) posits the notion that knowledge is created by the interaction between tacit knowledge and
explicit knowledge. The boundary between explicit and tacit knowledge, however, is not clear.
Spender (1996) indicates that the boundary is both porous and ¯exible. This means that tacit
knowledge is created by explicit knowledge and vice versa. The other problem of the dichotomy is
an overemphasis on tacit knowledge. Tacit knowledge is presumed to have more value than explicit knowledge because tacit knowledge is very dicult to articulate. The real danger of this
assumption is to regard tacit knowledge per se as a central force of knowledge management. Bohn
(1994, p. 62) de®nes (technological) knowledge as ``understanding the e€ects of input variables on
the output''. He suggests that knowledge is valuable when it can be explicit. Tacit knowledge is
important not because it cannot be articulated, but because it has not been articulated yet. The
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task of knowledge management is to identify and facilitate the utilization of valuable tacit
knowledge that is potentially useful when it becomes explicit, not to elucidate tacitness itself.
There are two main theoretical perspectives of the interaction types of tacit and explicit
knowledge, focusing on taxonomy in character and on the nature of organizational knowledge
respectively. The taxonomists understand organizations as interpretation systems. In this view,
the organization is a system that produces and tests knowledge. Fleck (1997), Spender (1996),
Blackler (1995), and Collins (1993) suggest a matrix of knowledge based on such criteria as tacit,
explicit, individual (created by and resides in individual), and social (created by and resides in
social interaction) knowledge. Taxonomies of knowledge are summarized in Table 1.
Using the analysis provided by value chain school of thought, the taxonomistsÕ knowledge
de®nitions can further be classi®ed into three categories, namely, state of mind, process, and
object. The Automatic/Embodied/Tacit school regards knowledge as situated in the mind. The
Conscious/Embrained/Informal/Contingent and the Collective/Embedded/Encultured/Meta/
Contingent views see knowledge as a process. The Objecti®ed/Encoded/Formal perspective considers knowledge as an object.
In contrast the second theoretical school is concerned with the nature of organizational
knowledge (e.g., Cook & Brown, 1999; Brown & Duguid, 1998, 1991; Shah, 1998; Nicolini &
March, 1995; Krogh, Roos & Slocum, 1994; Gergen, 1994; Weick & Roberts, 1993; Walsh &
Ungson, 1991) and models organization based on human brains or minds. They emphasize the
connectivity of the brain and argue that individual knowledge is developed in response to social
systems which the individual is engaged in. Such individual knowledge becomes a collective
knowledge of social systems. Thus, in this view, the organization is a distributed knowledge
system.
The di€erences in viewpoints on knowledge suggest di€erent implications for knowledge
management (KM) strategies and implementing systems, as summarized in Table 2.
McQueenÕs (1998) research on four views of knowledge integrates the di€erent views by treating
them as di€erent aspects of knowledge as summarized in Table 3.
The above discussion of the underlying characteristics of the hierarchical, taxonomist, and
collective knowledge perspectives points to two shared fundamental core characteristics of the
multitude of knowledge de®nitions which are therefore adopted in this paper. First, knowledge is
Table 1
Knowledge matrix
Type
De®nition
Automatica /embodiedb;c /tacitd;c /instrumentalitiesd
Consciousa /embrainedb;d informald /contingentd /
Instinctive skill, know-how, or technique of individual
Explicit knowledge of individual, syntax of individual
speech
Tacit knowledge of social system, corporate culture
Explicit knowledge of social system, operation manual,
signs
Collectivea /embeddedb enculturedc /metad /contingentc
Objecti®eda /encodedb;d formala /symbolicc
a
Spender (1996).
Blackler (1995).
c
Collins (1993).
d
Fleck (1997).
b
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339
Table 2
Viewpoints on knowledge and implications
Viewpoints
Implications for KM and implementing systems
Belief in mind
Main focus is providing infrastructure that enables individuals to access knowledge and
information
Infrastructure includes organisational culture and information technologies
Information technologies only support access to existing information
Process
Main focus is the development of e€ective process of knowledge creation and distribution
A system/technology is required to link source and recipient of knowledge and support e€ective
understanding of strategic know-how
Object
Main focus is how to gather and manipulate knowledge
A system/technology is required to e€ectively codify, store, and retrieve knowledge
Table 3
McQueenÕs research
Viewpoints
McQueenÕs viewpoint
Belief-in-mind
Process
Object
Knowledge is understanding (p. 610)
Knowledge can be stored in repositories of electronic communication (p. 610)
Knowledge is access to information (p. 609) and knowledge is sets of rules (p. 610)
information validated through a proof against experience either by the individual or the organization. Thus, knowledge is distinguished from opinion or speculation and can be repeatedly
used for e€ective action (e.g., problem solving). Second, tacit knowledge becomes explicit through
both interrelated individual actions and collective organizational activities. Thus knowledge is
transferable when individuals or organizations share the context.
2. Knowledge management
A universally accepted de®nition of KM does not yet exist. Ideally such a de®nition would
bring out the tensions between the emerging knowledge-based view of ®rm and the two most
frequently adopted organizational strategies in the last decade ± process re-engineering and restructuring. Scarbrough (1998) discusses that the knowledge-based view of a ®rm focuses on
fostering specialization of employeesÕ knowledge and on creating internal networks of these human knowledge sources, while business process reengineering focuses on external relationships for
rapidly growing performance complemented by generalization of the knowledge source. A better
understanding of the degree of compatibility between KM and process reengineering and restructuring is needed to aid the reduction of existing tensions and to facilitate the advancement of
the application of KM best practice.
Both restructuring and process engineering can pose problems of implementation which, in
many circumstances, might well be remedied through the application of KM principles.
Typically, restructuring aims at maximizing local utility (e.g., pro®t) through the empowerment
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of organizational fractals with each component part deciding its own behavior. Due to
bounded rationality, however, there may be inconsistent goal settings among fractals. This
may lead to con¯icts with customersÕ preferences. Likewise, process reengineering assumes that
an organization is able to precisely describe and analyze enterprise-wide business process. This
requires a centralized approach or at least a global perspective (Hammer & Champy, 1995).
In contrast, KM assumes that tacit knowledge is highly context-dependent (Tsoukas, 1996),
the transfer of knowledge is problematic and requires an integrating mechanism (Kogut &
Zander, 1992), and knowledge is developed by interactions between individuals and organization. Although all three strategies have many other di€erent characteristics and the complexities are hard to capture in brief, the main relationships between them can be summarized
as in Fig. 1.
While there is debate as to whether knowledge itself is a cognitive state, a process, an object, the
description of KM as a process, based on understanding organization as a knowledge system
(Grant, 1996), dominates. This view examines the nature of individual knowledge and collective
knowledge, and their interactions. While authors di€er in the terminology used in describing the
KM process, the aggregate of their works can be described as a simple KM value chain as depicted in Fig. 2.
The KM value chain re¯ects sociology of knowledge. Tsoukas (1996) indicates that individual
knowledge is built up by social practices engaged in by the individual; therefore the two kinds of
knowledge are highly interdependent. Thus, the value chain can be used to explain to some degree
social knowledge and its interactions with individual knowledge. It is essential that the KM value
chain should be strategically driven in order to realize the objectives of an organization, and
resulting in a continuously cycling process.
Knowledge creation relates to knowledge addition and/or the correction of existing knowledge.
Nonaka (1994) and Nonaka and Takeuchi (1995); Nonaka, Reinmoeller and Senoo (1988) suggest a comprehensive model of knowledge creation. The model emphasizes interactions between
individuals and organizations. Due to the emphasis on interaction, questions of knowledge
overload (Maes, 1994) and limited cognitive capability problems (Skyrme & Amidon, 1997;
Nonaka et al., 1988) arise. A further key question concerns the ontological platform (Nonaka
Fig. 1. Con¯ict and compatible factors among strategies.
M. Shin et al. / Information Processing and Management 37 (2001) 335±355
341
Fig. 2. KM value chain (see Holzner & Marx, 1979; Pentland, 1995; Nonaka & Takeuchi, 1995; Demarest, 1997; Daal,
Hass & Weggeman, 1998; Davenport, Long & Beers, 1998a; Liebowitz, 1999).
et al., 1988) required to make the knowledge creation model operational and to devise suitable
incentive systems.
Knowledge storage relates to individual and organizational memory. While organizational
memory re¯ects the shared interpretation of social interactions, individual memory depends on
the individual's experiences and observations. As an individual represents the fundamental unit of
memory, sta€ turnover and other sources of disorder are organizational barriers to e€ective
memory retention. Other main questions concern the nature of trade-o€s between semantic
(declarative) and episodic (procedural) memory (Hutchins, 1991), the need for search processes
taking context into consideration (Moorman & Miner, 1998), and the con¯ict resolution methodology as organizational memory re¯ects con¯icts between organizational units (Levitt &
March, 1988). Another important question is related to the individualÕs concern about potential
power shifts as he or she shares informal knowledge.
Knowledge distribution is the dyadic exchange of knowledge between source and receiver. As
information technologies advance, the gap between sources and users widens (Junnarkar & Brown,
1997). Thus, identi®cation and transfer of knowledge emerges as one of the most important and
widespread practical managerial issues. This parallels the problems with the user's capability to
process knowledge gained. User capability is determined by both the userÕs own frame of reference
and cognitive ability (Husyman, Creemers & Derkson, 1998). It also relates to the extent of access
to knowledge, as re¯ected in investigations of Ôsticky knowledgeÕ (Von Hippel, 1994; Szulanski,
1996; Pascarella, 1997; Detmer & Shortli€e, 1997). Knowledge application seeks to locate the
source of competitive advantage. Here a major challenge is how to integrate internal knowledge
and the knowledge gained from outside. Studies on teams, feedback mechanism, rewards for integrating knowledge, advice network, and inter-functional climates for internal integration of
knowledge have occupied attention (Lyles, 1988; Moenaert & Souder, 1990; Hamel, 1991; Levinthal & March, 1993). Boundary spanning positions, formal strategy for knowledge acquisitions,
and rewards for attaining knowledge have been investigated for external knowledge integration
(Hamel, 1991; Pisano, 1994; Leonard-Barton, 1995). Grant (1996) adds to that by suggesting other
mechanisms such as ÔdirectivesÕ, Ôorganizational routinesÕ, and Ôself-contained task teamsÕ.
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3. Future research directions
In order to present important research issues the pursuit of which would lead to the enhancement of knowledge usage in an organization, research questions related to each step of KM
value chain can be categorized into ®ve interrelated main research streams.
3.1. The impact of culture on knowledge creation
Krogh (1998) suggests that cultures with a quality of ÔcareÕ facilitate organizational members'
communication and sharing of knowledge. Based on studies of the relationship between R&D
productivity and the information environment in the pharmaceutical industry (see Koenig, 1983,
1990, 1992, 1992a), Koenig (1995) also ®nds that the information environment of the more
productive companies is signi®cantly distinct from that of the less productive companies. Koenig
(1995) argues that the more productive companies are characterized by greater openness and
access to information, both internal and external, and unobtrusive managerial structure.
This thematic area aims at investigating the relationships between knowledge creation and
certain types of organizational culture. The underlying concern of this area is the tacitness of
knowledge. A related area to investigate is organizational design. Nonaka et al. (1988) suggest
that knowledge creation can be in¯uenced by space, which involves availability and accessibility
of knowledge. This suggestion brings out two research streams. The ®rst investigates the extent of
context sharing ± and looks at which environment is best suited to create knowledge (out of tightly
connected in shared space, loosely connected in distant place and other combinations). The
second stream looks at how to implement the operational model Ôaction±re¯ection±triggerÕ (ART)
of socialisation±externalisation±combination±internalisation (SECI) process (Nonaka et al.,
1988).
3.2. Knowledge location and quality management
Hu, Hung, Kuse, Su and Wang (1998) suggest that the quality of information is one of
roadblocks in transforming individual knowledge into organizational knowledge. This problem is
created by the high noise-to-signal ratio of the non-essential content of knowledge repositories.
This problem also arises due to a lack of reliable approaches to the quality measurement of
knowledge. The problem is most serious when the knowledge base is growing and knowledge
seeking needs much time and e€orts. If the problem deepens, it may adversely impact on
knowledge sharing and ultimately on knowledge creation. The question is how to reapply the
individualÕs knowledge and how to ®lter out valuable from less valuable knowledge.
3.3. Knowledge absorption
Individual human agents have their own unique mental representation of the world and, itself is
a subject of representation (Tsoukas, 1996). Tsoukas also suggests that to relate unarticulated
background to human understanding, we have to be equipped with subsidiary particulars, a focal
target, and a person who can link the two. This means that it is not sucient to provide codi®ed
knowledge and to ask individuals to understand it. Another line of concern is to do with the
M. Shin et al. / Information Processing and Management 37 (2001) 335±355
343
potential negative consequences of the possible blind application of existing organizational
memory. If an individual uses existing knowledge without any modi®cation acceptable to a new
situation, it may provoke disaster. The issue is how to support the individual's choices to adapt
knowledge to a given situation.
3.4. Knowledge awareness
Nonaka et al.Õs (1988) ART system suggests that knowledge should be built up by identifying
other individualsÕ knowledge needs as the ®rst stage. The individual level of knowledge management application concerns the factors by which cognitive processing is triggered. The traditional view is that information is distributed as an outcome of a Ôdesire to get informationÕ
approach. The underlying problem of this approach is to assume that a man who has knowledge
already knows what he knows (Davenport & Klahr, 1998). A second problematic assumption is
that the users who want to get knowledge know in advance what they want to have. This is
opposite of the learning viewpoint. Huber (1991) also indicates that one of chief problem in organizational memory is that members who want to ®nd information often are not aware of the
existence of information processed by other members. The issue is how to develop organizational
and technical strategies to generate awareness of what knowledge is needed and known.
3.5. Knowledge evaluation
KPMG (1998) reports that the reasons for the creation of knowledge management initiatives
cited by most companies are facilitating better decision making, increasing pro®t, and reducing
costs. There is a common belief that knowledge management brings a competitive advantage to
the company. One of the most important managerial concerns is which process (e.g., security of
knowledge or rapid knowledge creation) contributes most to the competitive advantage. Another
line of concerns is how to measure the performance outcomes of an implemented knowledge
management process in an organization. These concerns are about the extent to which how
knowledge management e€orts coincide with and support organizational strategies.
The related research questions of the ®ve research streams are described in Table 4.
4. Knowledge ¯ow
KPMGÕs (1998) survey suggests that the biggest barrier to organizational knowledge usage is a
blocked channel between knowledge provider and knowledge seeker. Blockages arise from causes
such as temporal limitations, lack of sta€ motivation and willingness, and lack of incentives.
Ruggles's (1998) study of 431 US and European companies shows that Ôcreating network of
knowledge workersÕ and Ômapping internal knowledgeÕ are the top two Ôshould doÕ missions for
e€ective knowledge management. Knowledge ¯ow is concerned with developing channels or
networks between knowledge provider and seeker and seems to be the most practical area in
KM.
Knowledge ¯ow in an organization is fundamentally driven by communication processes and
information ¯ows. Analyzing communication theories, Krone, Jablin and Putnam (1987) observe
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Table 4
Main research streams and their related questions
Research stream
Related research questions
Culture to build up
knowledge
How to distribute surplus brought out from KM e€orts
Which organisational structure is suitable for KM
How to deal with turnover and loss of knowledge
What kind of incentive mechanism is appropriate to reduce con¯icts from knowledge
ownership
How to measure the value of knowledge
Which type of working place is best for knowledge creation
Knowledge location
How
How
How
How
How
Knowledge absorption
What kind of tool is required to support modi®cation of explicit and tacit knowledge
How to keep records of modi®cation
What is the role of context in understanding knowledge
How to measure trust that individuals have in knowledge
Knowledge awareness
How individual determines what knowledge it needs and where to ®nd
How to codify knowledge e€ectively and in how much detail
Knowledge evaluation
How to measure the ratio of the amount of knowledge create to the amount of
knowledge accessed to use
The role of top management in enhancing knowledge quality
Which knowledge management process contributes most to the competitive advantage
How to measure the performance outcome of an implemented knowledge
management process
to reapply individualÕs knowledge at distance
to distinguish valuable and less valuable knowledge
to develop systematic routine to capture knowledge
much context is to be considered in coding and storing
to reduce knowledge overload
that all communication systems consist of a sender (source), a message, a receiver, a channel, and
coding/decoding schemes. Some researchers (e.g., Von Hippel, 1994; Szulanski, 1996; LeonardBarton, 1990; Rogers, 1983) suggest that knowledge ¯ow is most likely in¯uenced by four factors:
knowledge transferred, source, recipient, and context in which the knowledge ¯ow takes place. On
the other hand, some other researchers exclusively emphasize characteristics of knowledge
transferred as the most in¯uential factor for e€ective knowledge ¯ow (e.g., Zander & Kogut, 1995;
Winter, 1987) or the context (e.g., Arrow, 1969). However, Von Hippel and SzulanskiÕs studies
indicate that all four factors relate to knowledge ¯ow although to varying degrees of statistical
importance. Thus, this paper adopts all four factors as a framework to ®nd barriers, which
prevents e€ective knowledge ¯ow.
These various barriers to knowledge ¯ow identi®ed from a review of the literature, and their
relationships with the main research streams identi®ed on KM value chain are summarized in
Table 5. This summary shows that research in the two ®elds of KM and knowledge ¯ow overlaps
in all thematic areas identi®ed in developing a future research agenda, except for the area of
knowledge evaluation (however, the latter could also be incorporated as a concern over quality
monitoring and evaluation of knowledge ¯ow systems and processes).
M. Shin et al. / Information Processing and Management 37 (2001) 335±355
345
Table 5
Barriers of knowledge ¯ow and corresponding research streams
Framework
Barriers preventing e€ective knowledge ¯ow
Research streams
Source
Fear for loss of hegemony (Pascarella, 1997; Szulanski, 1996;
Von Hippel, 1994)
Lack of up-to-date knowledge (Detmer & Shortli€e, 1997)
Lack of commitment or negligence (Huber, 1991;
Leonard-Barton,1990)
Culture to build up
knowledge
Knowledge location
Culture to build up
knowledge, Knowledge
awareness
Context
Weaker co-location (Doz & Santos, 1997; Appleyard, 1996;
Kogut & Zander, 1993; Gupta & Govindaraja, 1991)
Unfriendly relationships between source and recipient
(Nonaka, 1994; Ghoshal & Bartlett, 1994)
Limitations in individualsÕ network of knowledge or doubt about the
network (Robertson, Swan & Newll, 1996; Kogut & Zander, 1996)
Knowledge absorption
Limitation in interpretative ability (Dougherty, 1992)
Immobility (tacitness) of knowledge (Stopford, 1995; Nonaka, 1994;
Grant, 1996)
Causal ambiguity (Szulanski, 1996; Polanyi, 1962)
Knowledge absorption
Knowledge absorption
Knowledge
Transferred
Recipient
Limited knowledge processing capacity ± Knowledge location
(Madhavan & Prescott, 1995; Simpson & Prusak, 1995;
Cohen & Levinthal, 1990; Dierickx & Cool, 1989; Taylor, 1984;
OÕReilly III, 1982)
No information on knowledge existence or limitations in pre-existing
knowledge (Huber, 1991; Cohen & Levinthal, 1990)
ÔNot invented hereÕ syndrome (Hu et al., 1998; Leonard-Barton,
1990; Katz & Allen, 1982)
Limitations in the capacity to institutionalize new knowledge
application (Szulanski, 1996; Leonard-Barton,1990; Glaser, Abelson
& Garrison, 1983)
Culture to build up
knowledge
Knowledge location,
Knowledge awareness
Knowledge absorption
Knowledge location,
Knowledge awareness
Culture to build up
knowledge, Knowledge
location, Knowledge
absorption
Culture to build up
knowledge, Knowledge
absorption
The following o€ers a critical analysis of the four main research streams from the perspectives
of knowledge ¯ow taking the barriers shown in Table 5 into consideration.
4.1. Knowledge absorption and knowledge awareness
Many researchers have noted the diculties of knowledge ¯ow under conditions of weak colocation (Cohen & Levinthal, 1990; Gupta & Govindaraja, 1991; Appleyard, 1996). Co-location
means sharing of place. Sharing of (working) place implies a high probability of face-to-face
contact and frequent responses to actions. In a co-location environment, individuals meet each
other relatively easily and often purposefully, and enjoy face-to-face communications. As a result
of this interactive communication process, individuals can understand relatively easily each
otherÕs actions and the background. Through shared context, co-location implies common language (verbal and non-verbal) and achieves high levels of understanding (Dougherty, 1992;
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Brown & Duguid, 1991). The relationship between the shared context and the level of understanding highlights the relative immobility of knowledge-based resources (Stopford, 1995).
Many consulting companiesÕ e€orts (e.g., Anderson ConsultingÕs Knowledge XchangeÒ (URL:
http://ac.com:80/careers/location/asg/asg_thought_kx.html)) show how, at least in theory, colocation may be simulated by geographically dispersed ®rms by developing e€ective systems for
the storage and transfer of knowledge. The systems can then function as a virtual place and act as
building blocks of emerging global electronic communities.
However, these theoretical e€orts may be deceptive when it comes to practical application. The
development of communication channels does not necessarily guarantee a full understanding of
knowledge which prevents blind application. A recipient is assumed to understand knowledge
enough to decide upon it. Knowledge, speci®cally tacit knowledge, resides inside the individual or
organizational units. Thus, what ¯ows is ÔrepresentationÕ of knowledge. Knowledge recipients try
to interpret knowledge in their own contexts. Thus, there is no guarantee that recipientsÕ and
sendersÕ interpretations of knowledge would be the same (Brannen & Wilson III, 1996). To
minimize the risk arising from context-dependent knowledge, formal methodology should be
developed, in order to guide matching knowledge with recipient requirements, thus increasing the
probability of a correct interpretation.
One possible direction for methodology development is to investigate how to break down
complex knowledge requirements and map causal relationships among the resultant components.
The same approach can be applied to knowledge awareness. Knowledge awareness may be resolved fundamentally by analyzing the basic building blocks of given problems which are the
elements of collective knowledge. Since human beings have limitations in cognitive processing, a
tool that can enhance analyzing inter-relationships and resolving con¯icts among the building
blocks should be developed.
4.2. Culture and knowledge creation
Knowledge is produced via an iterative process between idea generation brought about by
continuous investment in innovation and idea validation through experiential tests of proof.
Because such investment and tests are costly, the resultant valuable knowledge is unlikely to be
shared, and the ownership of knowledge can potentially earn Ricardian rents (see Perroni &
Whalley, 1998; Montgomery & Wernerfelt, 1988; Winter, 1987; Singer, 1981; Dewey, 1979).
Ricardian rents are earned when a ®rm has more productive factors to carry out an activity
than other ®rms have for the same activity. When Ricardo (1973) studied these rents, he used land
as an example. Good land produces more agricultural outputs per acre, thus at lower unit cost,
than poor land does. In the modern world, most production factors are machinery, workers, and
operational systems, not land. These factors are deliberately created by knowledge. This
knowledge can contribute to developing better machinery or systems, and equipping workers with
better know-how (Spender, 1994). Thus, Ricardian rents in modern ®rms can be generated from
knowledge because a ®rm with superior knowledge can produce unique or better products
(Liebeskind, 1996).
Williamson (1979) emphasizes the bene®ts of control in response to situations in which there
are diculties in writing or enforcing complete contracts (see also Williamson, 1971, 1983; Teece,
1980; Klein, Crawford & Alchina, 1978). The fundamental thought of this argument is that, ®rst,
M. Shin et al. / Information Processing and Management 37 (2001) 335±355
347
transactions will be organized in the ®rm provided that the cost of doing this is lower than the
cost of using the market. Second, the costs of constant re-contracting with an outside ®rm can be
higher than signing a contract with employees inside the ®rm. Third, contractual relationship
between separately owned rights can be plagued by opportunistic behavior in situations in which
there is large amount of surplus but there is no ex ante contract on a clear division of the
surplus.
Grossman and Hart (1986), however, indicate that transaction cost-based arguments do not
exactly address the bene®ts of organizing transactions in the ®rm (see also Barkos & Nault, 1997;
Brynjol€son, 1994; Hart & Moore, 1990). They postulate that, to exactly address the bene®ts,
transaction cost-based arguments should investigate both the scope of behavioral changes of a
self-interested owner according to the contractual relationship (e.g., when the self-interested
owner becomes the employee of the other owner) and also the de®nition of integration (e.g., who
is more committed to the ®rm between employees and sales agents). These arguments are fundamentally based on the fact that real world employment contract is almost always ÔincompleteÕ.
Grossman and Hart (1986, p. 695) presume that integration does not change the cost of contract,
but Ôwho has control over the provisions not included in the contractÕ. There are always some
unforeseen contingencies which are often too expensive to enumerate in detail. Thus, an organization can create only quasi-property rights to govern knowledge. In particular the right to sell
is problematic with regard to knowledge. Because knowledge, in particular tacit knowledge, resides in the individual and is dicult to protect legally, an individual always has a latent incentive
to reject knowledge sharing and sell knowledge by leaving an organization. Therefore there is a
clear need for rewarding knowledge ownership. The question remains how to distribute knowledge ownership between the organization and the individual. The ideal solution must balance the
organizationÕs and individualÕs bargaining positions because such equilibrium guarantees minimal
loss of knowledge value.
4.3. Knowledge location
Sharing all knowledge between all individuals would be inecient, not to say impossible. Even
if the exact knowledge required is transferred to the recipient, there are still numerous potential
barriers to the recipientÕs correct interpretation. Cognitive psychologists have concluded that the
amount of information processed by humans under varying information-processing loads actually
follows an inverted U-shaped curve (Taylor, 1984). As noted in many decision-making studies,
decision-makers often face the trade-o€s between quality information and accessible information.
When there is time pressure, the decision-makers tend to accept lower quality information that is
more accessible (OÕReilly, 1982; Todd & Benbasat, 1991; Ahituv, Igbaria & Sella, 1998). One of
the appropriate goals of knowledge management in an organization would be to provide rapid
access to quality knowledge.
The other challenge of knowledge location is that individuals are seldom aware of the existence
of the knowledge they are looking for. This can be the case regardless of co-location (Kogut &
Zander,1996) and modern geographically distributed organizations, in particular lateral organizations, have similar problems (George, Easto, Nunamaker & Northcraft, 1990). One of solutions
is to build a tool to expand individuals' networks. The solution may be achieved by locating
domains of knowledge and tracing utility of knowledge to given problems.
348
M. Shin et al. / Information Processing and Management 37 (2001) 335±355
5. Discussion and conclusions
Epistemological debates on knowledge have shown the multi-faceted nature of knowledge and
its dependency on organizational settings. Many researchers still regard knowledge as an intangible being and focus on philosophical aspects (e.g., Sveiby, 1998; Malhotra, 1997). However,
increasingly a research perspective is emerging which takes on a more managerial focus and attempts to develop practical KM tools for real-life business application. While the ®rst group
emphasizes the tacit and cognitive aspects of knowledge, as located in the human brain, the latter
group of researchers focus on the process of explicit knowledge creation and the application of
information technologies and other methodologies. At ®rst glance, it may seem that the two
schools have no common grounds and objectives. However, de®nitions from both perspectives do
share the important insight that knowledge is fundamentally di€erent from information and data,
and that it is a competitive resource. This insight implies three important facts. First, knowledge
should be found and used in any form. Second, knowledge resides in human and makes great
contributions to human actions such as decision-making. Third, knowledge is transferred by
interactions such as communication.
The above second implication is supported by the taxonomistsÕ views of inseparable characteristics of explicit and tacit knowledge and the perspectives from collective knowledge that individual action/contribution is based on the belief of validity or usefulness of his knowledge. As
noted before, this implication distinguishes knowledge from speculation or opinion. The concept
also takes knowledge into management dimension because it expresses an ontology of knowledge.
The above third implication is supported by the taxonomistsÕ views on knowledge being articulated by communicating about and analyzing given problems and views from collective minds that
new organizational actions are developed by individualsÕ action enacting collective knowledge.
These concepts emphasize the practical function of KM ± that is, KM is to ®nd and use valuable
tacit knowledge that is useful for speci®c problems and to develop an environment facilitating
communications.
The above discussion has also highlighted the di€erent school of thought present in the current
debate on KM, which was related to other existing business strategies such as restructuring and
process reengineering. The strength of KM lies in its emphasis on knowledge as a core asset, which
it aims to make tangible. Whereas restructuring emphasizes the retention of tacit knowledge and
its usefulness for business, KM gives equal weighting to both tacit and explicit knowledge, thus
counteracting any potential weakness restructuring may have in co-ordinating the two. Process
reengineering focuses on the collective mind, which ± from a KM perspective ± may result in the
loss of tacit knowledge situated in the individual. KM is not suggested as a means of replacing
existing strategies, but as a way of compensating for the above weaknesses. It can contribute as a
unifying tool for bringing together the other strategies by focusing on core competence.
While knowledge can be described as belief in mind, process, or object, most researchers look
on KM as a process. This is rooted in the view of the organization as a knowledge system and
knowledge as competitive resources. As the existence of an organization implies social interactions
with and between the individual who make up the organization, KM also consists of an interaction procedure ± or value chain ± linking up individual knowledge to create social knowledge.
The procedure includes creation, storage, distribution, and application. To deliver value, this
procedure must become a controlled implementation aspect of organizational strategy and vision.
M. Shin et al. / Information Processing and Management 37 (2001) 335±355
349
Knowledge creation is mainly related to ®nding more sources of knowledge, as well as the
extension of the knowledge network. Knowledge storage is about o€ering a wider and deeper
historical knowledge base, and facilitating ease of knowledge retrieval. Knowledge distribution is
about o€ering more communication channels, and enhancing the collective mind. Knowledge
application is about o€ering knowledge integration methods to solve various problems.
As each phase of the value chain is interrelated with the others and, in practical application
terms, based on an organization-speci®c context, they all share the same barriers for e€ective
chain development. The analysis on the value chain reveals ®ve major research streams which
should be pursued in the future to develop managerial tools for more e€ective KM. They have
been discussed under the umbrella headings of ÔcultureÕ (e.g., how to care for good working place),
Ôknowledge locationÕ (e.g., how to ®nd quality knowledge in time), ÔabsorptionÕ (e.g., how to adapt
knowledge gained), ÔawarenessÕ (e.g., how to support ontology of knowledge) and ÔevaluationÕ
(e.g., how to measure the performance of knowledge management e€orts). Because of the direct
relationships between the issues identi®ed under these headings and the value chain, they can also
be conceptually presented as a research circle, as shown in Fig. 3.
Conceptually and managerially, ÔcultureÕ has been identi®ed as the most fundamental issue over
all KM researches. The themes of Ôknowledge locationÕ, ÔabsorptionÕ, and ÔawarenessÕ can be
depicted as the source of cyclic research questions. ÔKnowledge evaluation' should be performed
at each arc to drive the chain toward the right direction for competitive advantage. Thus the
model presented in Fig. 3 serves to integrate the di€erent streams of the current academic debate
on KM and is intended to serve as a holistic theoretical framework to guide both future research
and managerial thinking.
The latter is of particular importance, because even though there are many reports on KM,
there are still some doubts over the viability of KM in real business. Some researchers have expressed concern about it being a mere fad (e.g., Whiting, 1999). To deliver practical value, KM
needs to focus on problems that require immediate solutions. Thus it is clear from the survey
studies discussed above (KPMG, 1998; Ruggles, 1998), that one of the most important research
®elds to be developed is the area of knowledge ¯ow, an issue which penetrates and impacts on all
of the ®ve research streams identi®ed. A likely research agenda would encompass questions of the
minimization of misunderstandings, especially in the context of non-co-location environments;
Fig. 3. Five research streams.
350
M. Shin et al. / Information Processing and Management 37 (2001) 335±355
the facilitation of accessibility of quality information; the generation of a win-win equilibrium in
the distribution of the ownership and ÔrentÕ of knowledge between individual and organization; as
well as issues of reducing the costs of Ôre-inventing the wheelÕ via incentives for knowledge sharing.
In tackling these issues, three research questions in particular should be awarded priority status.
First, to extract context independent knowledge, a common tool is required which will enable the
recipient (e.g., decision-maker) and the source to achieve a shared perception of the given problem
and to identify the knowledge required for the particular area of concern. Second, a method to
support knowledge location is required which will help the decision-maker maximize the utility of
knowledge and to evaluate potential trade-o€s between accessibility and quality. The numerous
knowledge location methods currently in existence (intuitive process (Wegner, 1986), critical
document storage (Kovel, Quirk & Gabin, 1996), organizational intranet (Zorn, Marshall &
Paned, 1997; Senna, 1997), group memberÕs directory (Anand, Manz & Glick, 1998), and taxonomies of knowledge (O€eys, 1997)) are too narrow in their capabilities of supporting the classi®cation of knowledge or providing a truly useful content directory. These methods have only
limited uses, i.e., when there are only a few sets of knowledge and recipients know exactly what
they wants and can therefore estimate the value of knowledge. Third, to reward knowledge
sharing and to prevent sta€ turn-over, there must be a mechanism to analyze the costs and bene®ts
of di€erent patterns of knowledge ownership and control and of establishing the context-speci®c
relative importance of ownership in the context of knowledge ¯ow which can be de®ned as a set of
participants and a portfolio of assets. In conclusion, it is envisaged that the model depicted in
Fig. 3 should be a helpful starting point for developing such tools and laying the conceptual
foundations of an integrated framework for the development of truly useful and e€ective practical
KM tool.
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