Measuring KM and the economics of information

Sue Myburgh
School of Communication, International Studies and Languages
University of South Australia
Australia
St Bernard’s Road, Magill SA 5072

Email: sue.myburgh@unisa.edu.au

Abstract
The question of how to measure Knowledge Management (KM) is a fraught
one, with several layers of problems, which can be roughly categorised into
two areas. Firstly, there is the question of what will be measured – knowledge
in people’s heads or creation of new knowledge? If knowledge itself is not the
object of management effort, then it need not be measured; should we
measure instead the effort of KM itself – the systems and procedures that are
put into place to enable KM? Or, if KM is a means to an end, what are the
ends? The ends are may be competitive advantage as expressed in
innovation, increased profit or development of intellectual capital.

The second major problem is concerned with how these attributes, actions
and characteristics can be measured. Knowledge itself is intangible and
ineffable; increased profit presents few problems as it can be expressed in
numerical financial terms. There are in addition a range of different
methodologies than can be used to ensure that the results have integrity.

The issue becomes more complex when we place KM in the context of the
present ‘Information’ or ‘Knowledge’ economy. The foundation of
industrialized economies has shifted from natural resources to intellectual
assets. What does this mean, and how is the new economy different?

Introduction
KM is widely viewed as a technique which will enable the continued survival
and success of an organisation, against competitors and the characteristics of
the environment. Knowledge Management (KM) is thus related to how
businesses can succeed in the Knowledge Economy (KE). Many enterprises
feel as a result that the knowledge of their employees is their most valuable
asset. They may be right, but valuing such assets, and managing them
appropriately, remains a challenge.

While enterprises introduce strategies for managing knowledge in the belief

that this will reduce costs and increase profits, there still exists a range of
problems associated with measuring the effectiveness of KM approaches.
These are largely associated with the dual problems of determining what to
measure, and how to measure it. It is suggested here that measurement of
KM is a culturally-based problem.

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As knowledge and knowledge production are culturally defined, the ways in
which knowledge can be valued and assessed are associated with culture.
Every market system is affected by social and political realities, as economics
is a matter of culture, and culture a matter of economy. KM must be located
and contextualised within the prevailing economic model. It is problematic to
develop an economic or business model of policy and practice which ignores
the diverse, kinetic, and multidimensional cultural dimension. Neither culture
nor economics can be accepted as a set of privileged, unexamined and
accepted traditions.

While national cultures and industries are affected by and involved in the
processes of global cultural commodification – for example, eco-tourism – no
unique culture should be lost. The realities of global capitalism affect the
development of economic policy; however, simultaneously there is an urge to
recover, restore and preserve non-commodified and non-economic cultural
heritage.

One question that needs to be examined is whether knowledge and KM can

be evaluated and measured in such a way as to accept and value formerly
marginalised knowledge and cultural practices co-existing with the globalised
economy. Can KM take a subversive position and differentiate itself from the
globalised, late capitalist model? Also, what makes a company prosper is not
necessarily knowledge itself, nor even knowledge capital, but the
effectiveness with which knowledge capital is put to use.

Much classic economic theory simply does not apply in the global, networked
world, and therefore a new economic theory is called for, as knowledge plays
a central role as the primary factor for growth and competitiveness.

Knowledge Economy
The importance of information and knowledge and their use to organisations
is indicated by the emphasis placed by investors on intellectual capital1. The
footnote can be viewed in Print Preview. For the last three decades there has
been much discussion of the emerging ‘post-industrialist’ economy, now
known as the ‘Information’ or ‘Knowledge’ economy. These terms are used to
imply that new models of exchange and reward are developing in the market
place, as the means of production and distribution of goods and services
change. One focus of study in economics is how political and social
institutions interact with markets and technology to form an economy. This all
changes in a networked, global economy, where multinationals are key
players.

This phenomenon has been accelerated by the symbiotic effects of

globalisation and Information Communication Technologies (ICTs). The issue
of actually placing a financial value on knowledge or information, as opposed
to artefacts such as documents or technologies, is a very complex issue.
Information and knowledge have unique characteristics which means that an
1
Knoweldge intensive companies such as Microsoft have market values 10 times the value of
their physical assets.

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economy based on these will be fundamentally different from an industrialised
one.

Information and knowledge have no intrinsic or absolute value – value is

based on usefulness and application. Because of this subjectivity, value is
fickle and indeterminate. This means that value is a subjective and changing
entity, depending on a number of variables such as size, scarcity, desirability,
meaning and so on. They are infinitely reusable, and never used up; the
value is not necessarily related to either age or volume. Sometimes it is the
absence of information that is valuable.

A person’s knowledge is accumulated over a lifetime, but only part of it can be

expressed. The proportion that can be expressed is known as information,
and it is this that can be captured and recorded. Employees are therefore
different from documents, as what a person knows can never be completely
communicated or ‘captured’.

The unusual nature of information and knowledge demands that different

economic models be developed. In standard economics the assumption is
made that the value of any goods or services falls as more are produced. But
this is not true for networked goods or services. Email would be of little value
if only a dozen people used it. In standard economics, we assume that the
cost of producing goods or services goes up as we try to produce more;
however, the more people share knowledge, the more valuable it becomes,
until everybody needs to know certain things.

Whether we can sustain an economy based on information alone is dubious.

Much of what drives the present globalised economy is information
technology and information products, rather than information itself. However,
there needs to be a shift to valuing knowledge itself, as well as the work
involved in its creation and communication.

This is clearly a position full of contradictions and challenges. Most financial

models do not portray the dynamic nature of knowledge, nor the ways in
which it might achieve substantial benefits for organisations, even though
knowledge is regarded as a commodity in late advanced capitalism. The KE
is concerned with the commodification of both the content and the
communication of information and knowledge, and the market for such
commodities. As knowledge is inseparable from human beings, employees
are sometimes considered to be repositories of knowledge and there is an
impulse to ‘own’ what is in their heads. Culture and cultural products are
converted increasingly into economic terms, where knowledge and culture are
viewed as industrial products. This view of the KE looks like the Industrial
Economy.

The issue of measuring KM is viewed here from three perspectives: firstly, the
issue of what should be measured; secondly, the issue of how it can be
measured; and associated with these points, whether ‘measurement’ as a
notion is a useful one, or whether wider social, cultural and moral obligations
should be considered.

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Evaluating Information and knowledge
Knowledge is an organic and intangible entity, ever-changing and virtually
impossible to measure, except perhaps in relative, rather than absolute, ways,
or by a philosophical examination of the truth it represents. The value and
importance of knowledge depends on its uses and applications, as much as
its truthfulness or integrity.

One of the central aims of KM is often given as capturing the ‘tacit’ knowledge
of the organisation, and making it ‘explicit’. As noted, at best, this can be only
partially achieved, as all knowledge cannot be converted into information, if
one follows the definitions given above – namely that knowledge is what is
contained by an individual, and information is that part of knowledge which is
able to be shared. Even important knowledge cannot be conveyed in its
entirety – consider the difference between the outcomes achieved by a chef
and a novice cook following the same recipe – even where the same
information is available.

In addition to this, the desired ends of information processes are often

confused with the means; in particular, confusing information with Information
Technology (IT), and often no distinction is made between these two
concepts. “Information Resources” are commonly understood to include not
only the actual information, but all the services, packages, support
technologies, and systems used to generate, store, organise, move and
display information.

In spite of this, we rely on the information itself, and not necessarily its
facilitating mechanisms, to assist our decision making and to guide our
actions. As individuals and as organisations, we need information – the right
information, in the right amount, at the right time – and at the right cost.

Determining the value of corporate information as a resource is complex.

Some of the ways in which information might be valued are noted by Orna
(1990) as:
• Assessing the quality of information itself;
• Examining the utility of information already held by the organisation;
• Evaluating the impact of this information on the productivity of the organisation;
• Assessing the impact on effectiveness of organisation;
• Noting the impact on the organisation’s financial position.

The usefulness of information as evaluated by a user is of course hard to

justify in ‘bottom-line’ terms, even though an integral part of the budgeting
process is budget justification. Implicit in most justifications is the notion of
return on investment, or some value derived from expenditures. Traditionally
accountancy has not dealt with information valuation, because it is difficult to
evaluate the more intangible aspects of information, such as currency and
goodwill.

One way of establishing the dollar value of information might be considering

the output of information of an individual in terms of their hourly rate of pay;
another may be attempting to determine what profit was accrued as the result

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of certain actions, developments or products. Another way of assessing the
value of information is to distinguish between the results of informed actions
and the results of uninformed actions, or no action. We believe that it is
preferable to have an educated, informed population, than an illiterate and
ignorant one - whether in countries or in organisations.

Some ways of defining information offer ways of evaluating it. One of these is
seeing information as a commodity in economic terms. As Mayon-White
(1996) states, “The commodification of information is a silent and nearly
invisible revolution. As information sets grow in size and quality they acquire
the characteristics of a commodity which can be bought and sold.” Broadbent
and Lofgren (1991) suggest the cost-benefit analysis of particular products
and services, and this can be used to complement a qualitative performance
evaluation. The cost-benefit should identify the financial costs and benefits
and alternative ways of providing a product/service, or the costs and benefits
of not providing a certain product/service. They also provide a very detailed
analysis of two methods for qualitative evaluation: Critical Success Factors
and Priority and Performance evaluation.

Taylor (1997) suggests the following exercises to consider how valuable

information might be to an organisation: What is the impact on business if:

• The information didn’t exist;

• Your main competitor got the information?
• Your main competitor got it and you didn’t?
• How much would it cost to create that information at today’s prices?
• How much would you pay to protect the information from loss or theft?
• What would you want in return for selling or licensing it to an indirect competitor, or
your main competitor?

The greatest value that information has is both subjective and qualitative, and
this fluctuates. Information is what economists call an ‘experience good’ – it
has to be experienced in order to be valued. However, because there are
wide variations in perceptions of use, and because relevance is a subjective
element located in individual contexts of time and space, no one piece of
information or knowledge can ever be accurately costed, particularly in
advance. Its value can, in the long run, be best appreciated by items such as
increased productivity, ease of doing work, as well as benefits such as the
continued survival and success of the enterprise.

Knowledge Management
Gupta, Pike and Roos (2002) note that “KM processes are meta-processes
which cannot be uniformly observed like physical processes and differ
according to their means of creation, nature, recording, transmission and
mode of use”. Because knowledge is related to people, KM varies widely
according to the social and organizational culture in which it is located. This
adds extra obstacles: firstly, KM implementations and strategies are seldom
similar because people are so different; secondly, different measurement
techniques are required at different stages of KM implementation, as
suggested by the American Productivity and Quality Center (APQC). This is a

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useful approach, as it allows clarification of the unique version of KM to
mature within a specific organisation.

Financial executives have shown a remarkable reluctance to put numbers on

something many consider to be intangible. However, with the rising
importance of non-financial assets the time has come to place the valuation of
knowledge on the agenda of financial analysts. There appears to be general
confusion about just what ‘business values’ or ‘business outcomes’ are, as a
result of KM, and how they should be measured.

Measurement is nonetheless seen as an important process. Iske and

Mekhilef (2003) give the following as reasons for measuring KM:
• Management wants to know the ROI.
• Employees want to know how they can develop their skills and increase their market
value.
• Clients expect that they will benefit from the collective knowledge of the organisation.
• Financial partners need to know that knowledge is well managed as it is a substantial
part of the company’s value.
• Society is interested in how companies achieve sustainable competitive advantage.

It has been noted that KM measurement is neither well defined nor executed.
Ruggles (1998), quoted by Swaak et al., reports the results of a study of 431
U.S. and European organisations conducted in 1997 by Ernst & Young Centre
for Business Innovation. “Only 4% of the organisations indicate that
measurement in relation to knowledge management is performed well or
excellently” (Ruggles, 1998, p.81 in Swaak, 1999).

How are the results of KM determined? Can one measure the capability of an
organisation to develop and manage knowledge assets? Some writers, such
as Sharp (2003), suggest measurement of features as distinct as email
volume and human capital effectiveness (the revenue and profit generated by
each employee). Other, perhaps more ‘concrete’, knowledge-related items
include patents, inventions, computer programs, publications and the like.
There are many less tangible aspects, however, that are nonetheless worthy
of consideration, such as collaboration, a sense of history and context,
effective judgment, the role and value of the relations between knowledge and
business processes.

In general terms, it can be stated that the value of KM can be measured by

the achievement of organizational objectives, and this is widely taken to mean
both measuring the changes in the intellectual capital of an organisation, and
assessing the relationship between increased profits and human activities
within the organisation. Increased productivity, saving money, achievement of
greater market share and success of specific applications of KM are all noted
as measurable items.

Measuring KM therefore includes issues related to culture, technology,

intellectual capital, competitive advantage, and social capital, amongst others.
It also involves attempting to measure knowledge and its expression,
information – both are considered to have both inherent values, and
commodified values. They are therefore considered first.

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What to measure in Knowledge Management
It is logical to assume that when one sets out to measure something, one
understands the distinctiveness of what it is that one wishes to measure,
before the measuring tools can be selected. It is not possible to measure
volume with a thermometer.

Measuring KM involves the measurement of various aspects of KM, and

therefore a considerable amount depends not only on clarity of objectives, but
agreement on a definition of KM which encompasses the aspects and
outcomes that one wishes later to measure. There is often a lack of
understanding of why KM is introduced, what KM is and how it can be
measured, that causes wasted effort. One only has to consider that KM is
established in the first instance to increase competitive advantage to know
that the ‘bottom line’ – or financial value – of the endeavour will be a
meaningful and useful measurement. However, often the objectives of KM
are often diverse, obscure and fuzzy – it is therefore not surprising that what
must be measured is equally poorly defined. Amongst the desirable
outcomes the following are frequently identified.

Competitive advantage
This is a concept frequently mentioned as the most important objective of KM,
although there is some lack of clarity about what is actually meant.
Competitive advantage exists in the extent to which organisations are able to
develop, manage and use their intellectual capital. The term is used to
describe increased profits as well as increased market share, and is
sometimes even related to quality.

Competitive advantage has two fundamental dimensions, cost and quality.

For cost, operation, support, evolution, and retirement are included as being
of importance to the customer/user. For quality, value exists in the
satisfaction derived. Value is usually dependent in some degree on cost. To
be competitive, a product must have either lower cost or higher value than the
competition.

Innovation and intellectual capital are both strongly associated with the
outcome of competitive advantage.

Innovation
Innovation is an important component of competitive advantage. That there is
a connection between innovation and knowledge is obvious. The term is also
strongly correlated with creativity, and in the organisational environment it
means several things, including the development of new and competitive
products and services, as well as developing new procedures and processes
that enhance organisational capacity and increase market share.

Knowledge or intellectual capital

We are all aware that the value of an organisation is different during working
hours from what it is worth when everybody has gone home. This is called
knowledge or intellectual capital, an intangible asset which is difficult to

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measure. Intellectual capital and knowledge management are sometimes
used almost interchangeably.

Knowledge capital is associated with the worth of the people who possess the
accumulated knowledge about an organisation, and is clearly associated with
human capital. The collective knowledge of an organisation, its intellectual
capital, is embedded in the personal skills, experience and brainpower of its
employees, as well as in its processes, policies, electronic databases and
other information repositories.

The concepts of knowledge capital and intellectual capital are, however,

subtly different. Whereas some include practices and processes of an
organisation into their definition of intellectual capital, strictly speaking it refers
to the commercial value of trademarks, licenses, brand names, formulations,
and patents. Intellectual capital generates economic wealth and value. It is
the creativity of the employees of a firm, combined with the documentation of,
access to and use of the combined information of the organisation, that permit
the growth and development of intellectual capital, which gives a company its
competitive advantage.

Knowledge capital is more difficult to evaluate, share and leverage than

intellectual capital, as it resides in the heads of knowledge workers, and relies
on their trust in order to be used. Intellectual capital is considered as
intellectual property.

Intellectual property
It is expensive to create information – to take data and add knowledge and
produce something that is helpful to others, and to preserve it in a document
and communicate to others. While production of a document costs money, it
is much cheaper than the cost of producing the information which it contains.

This has both an individual and corporate cost, which is often undervalued.
Human capital expects to be provided with a reasonable expectation of a
return on the investment of intellectual skills, as well as the use of such
equipment as is necessary to support such productivity. Financing intellectual
property as property, and exerting property rights of ownership on it is
predicated on the notion that independent workers, researchers and
entrepreneurs gather and process information, and then anticipate that they
will be able to gain financial compensation for their labour on an open market,
where the public and other organisations are seen as consumers.

We need to be able to see the corporate development and documentation of

information as equally important as individual, personal property rights; it is
equally central to be able to distinguish be between personal and corporate
ownership. There needs to be a sophisticated, mature and global legal
system that is able to guarantee such proprietary rights.

Financial advantage
There are several ways in which KM is seen as potentially improving the
financial situation of enterprises related both to reduced costs and increased

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profit, including through revenue enhancements, returns on investment (ROI),
and cost savings. Some of these might be clearly identified through standard
accounting procedures. However, it is not common to measure returns on KM
investments, largely because there is a lack of knowledge of how to do so.

Speed
This includes faster responsiveness of service delivery, faster development
times, response times, accelerated organisational competencies, reduction of
time spent in support activities and in the time spent getting goods to market.

Productivity
This is often associated with speed, and includes both the efficiency and
effectiveness of staff, as well as increased production of goods and services
as tangible outcomes.

Managing staff better

This is associated both with developing a more motivated staff, as well as
compensating for staff attrition. It includes the effectiveness of sharing
communities, such as Communities of Practice (CoPs). This can result in
saved time and effort, as well as increased productivity.

What needs to be measured

This list raises the very distinct problem of identifying what needs to be
measured – as well as how it should be measured. Each item on this list
requires clear definition, as well as unique measurement tools and
methodologies.

Methods of measurement
Generally speaking, there are two classes of collecting and analyzing data:
quantitative and qualitative. While measurement is an important component
of each, the ways in which data is gathered and analysed, and the kind of
information and knowledge that can be derived and understood, differ in each
case.

Quantitative methodologies have for several centuries enjoyed a privileged

position, because of the prevailing Western rationalist, scientific position from
which the world is viewed. The emphasis here is on the construction of tools
to measure various phenomena: both the tools and the measurements almost
become more important than the phenomena themselves. However, this
does ensure clarity of definition and transferability of results.

Qualitative methodologies have become more widely used in recent times,

and the techniques used here to seek understanding are substantially
different. Briefly, there is less emphasis on tools – often the researcher him or
herself is the measuring instrument. Also, the data often cannot be expressed
in numbers or ratios but rather in words. Because of the vagaries of
language, it is felt that the results are often somewhat less precise.

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While it is beyond the scope of this paper to examine each of these classes of
methodology in detail, it should be noted that neither is ‘pure’ – that most
research involves elements of each. This is an important aspect to note when
measuring KM. KM is a multidisciplinary field and, as noted, there are a
range of dimensions, each of which is equally important if one is seeking to
establish, justify and perpetuate a KM strategy. So many different aspects
are measured and each aspect will require a different approach and different
measurement techniques.

Measuring intangibles
In particular, we notice in KM that there is a tension between the quantitative
and qualitative research methodologies as the ultimate aim of KM is to
increase profit, which is, of course, something that can be measured
numerically. However, the nature of knowledge, and indeed KM as a whole,
presents a problem as not only are both knowledge and information
intangible, but so are many of their benefits. Intangibles are a source of
invisible advantage – and are often taken into account by investors. These
include employees, ideas, know-how, relationships systems, and work
processes.

Thus one is faced with the dilemma of attempting to measure a quality in

quantitative terms. As has been stated, if a company scraps 100 forklift trucks
before they are depreciated, that will be recorded as a loss. If 1,000
employees with career-life learning costs leave a corporation, none of the
financial reports will reflect that.

The disciplines and methods of how to account for and safeguard knowledge
assets are either non-existent or at most rudimentary. There is a need to re-
engineer traditional accounting and management reporting processes, as
standard financial models fail to represent the dynamics of knowledge.

Bontis et al. have noted that four measurement systems currently popular:
Human resource accounting; Economic value added; Balanced scorecard;
and Intellectual capital. One notices immediately however that this kind of
listing serves to confuse rather than clarify, as it is a mix of items to be
measured and ways in which measurement can be undertaken. Of these,
probably the most attention is paid to evaluating the development of
knowledge or intellectual capital (I use the terms interchangeably here).

Quantitative approaches
Broadly speaking, there are two ways of measuring intellectual capital. The
first is a component-by-component evaluation, e.g. patents and market share.
The second method is to measure the value of intellectual assets in financial
terms at organisational level – e.g. shareholder value. In essence, the value
of intangible assets equals a company’s ability to outperform an average
competitor that has similar tangible assets.

As Sharp notes, “Ultimately the measures that matter are the ones that can be
combined with financials, that is, those that go to the bottom line” (Sharp,
2003, 33). Various models have been developed, and these include Sveiby

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(1997): The Intangible Asset Monitor; Kaplan and Norton (1992): The
Balanced Scorecard; and Edvinsson and Malone (1997): the Skandia Value
Scheme. Then there is Tobin’s q, which compares the market value of an
asset with its replacement cost, and Swaak (1999) has developed a system
known as KnowMe, which measures both investments and result of
knowledge management in an organisation. The APQC suggests that
intangibles can be measured by determining proxies to represent them. Their
procedure is that multiple measures should be used to maximize validity and
reliability, and these are then benchmarked against the competition.

Each of these defines and measures intangible assets or intellectual capital in

slightly different ways. Strassman (2000) describes a way of calculating this
knowledge capital:

…the annual returns realized on knowledge capital can be isolated after paying a "rental" for
the financial capital and then subtracting that amount from profits as reported by the
accountants.

What remains is what economists call an "economic profit" and what some
consultants call the "economic value-added." It can also be known as the
"knowledge value-added" because it accounts for those missing elements that
represent everything not shown on a conventional balance sheet.

Others use the Key Performance Indicators (KPIs), which can include items
such as the number of best practices, employee satisfaction, the time it takes
to create new knowledge, the proportion of employees making new idea
suggestions and network building. While there are advantages with this
approach from the point of view of offering statistics that might impress senior
managers, there are some problems. Firstly, it will be noted that it is difficult
to provide numerical values for some of these indicators; secondly, any one of
them on their own does not mean much, indicating that a holistic and inclusive
approach is necessary.

As Swaak et al. (1999) have noted:

A disadvantage of the objective and quantitative ‘multiple indicator approach’ is that a huge
number of indicators seem to be needed to get a clear picture of an organisation. Moreover,
from a knowledge-centred point of view, it is doubtful whether the indicators cover knowledge
development and utilization in an organisation. In addition, the ‘multiple indicator approach
does not set standardized instruments, but instead provides frameworks that should guide the
selection of indicators” and there is often overlap (Swaak et al., 1999)

This view seems to support an approach such as the Balanced Scorecard, or

Triple Bottom Line approach, which can take into account such complexities.
In general, however, in spite of the fact that statistics and numbers are often
easily understood and therefore quite impressive, quantitative measures can
be very limiting in measuring knowledge processes, and KM measurement
should really include qualitative measures as well.

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Qualitative approaches
A good example of a qualitative approach is Sveiby’s Collaboration Climate
Index (CCI). Here an intangible quality - a good collaborative climate – is
measured, as it is believed that such a climate will enhance knowledge
sharing and therefore the development of intellectual capital. What is
interesting about the qualitative approach is not so much what is measured,
as we have already established that much of knowledge (and indeed
information) management is concerned with measuring intangible values, but
the variety of techniques and methodologies that are used in this mode. This
may include:

• Ethnography, where communities are observed, interviewed and described.

Essentially, the experience itself guides its progress; the behaviour and responses of
people are gauged;
• The examination of artefacts, such as documents and databases, in order to
establish knowledge bases;
• Questionnaires of various types, which establish people’s opinions and perceptions
of the organizational culture, how knowledge is created, and various other topics of
interest;
• Benchmarking, which involves identifying best practices, including in competitor
organisations;
• Focus groups, where discussions lead to insights. Such groups can also be used
for brainstorming;
• Social Network Analysis (SNA), which uncovers the patterning of people’s
interaction and the information flows within the organisation.

Results of qualitative data gathering can be interpreted in a variety of ways,

which can include discourse analysis, the development of metaphors,
analogies and models, certain types of statistical analysis and description.
The disadvantages of qualitative methodologies include the fact that it is
difficult to ensure objectivity – from the point of view of both the researcher
and the subject. It is also often hard to persuade senior management by
using ‘soft’ data, and to establish their relationship to ‘hard’ data such as
budgets and profit outcomes.

When to measure
Another consideration is deciding when to measure, as this might determine
what will be measured. The APQC has developed an interesting approach
which is interesting to follow. In general, many KM strategies are seen as
starting with a knowledge audit, which essentially measures what is there,
including the existing intellectual capital of the organisation, as well as its
capacity to increase this and use knowledge. Most knowledge audits use a
combination of approaches, including measuring knowledge bases,
questionnaires and SNA. Sources and flows of knowledge can then be
mapped.

Much measurement of KM is, however, concerned with the outcomes of a

strategy, and this is where the APQC identifies a paradox: the more the
organization is successful in mainstreaming knowledge sharing as the normal
way of conducting the business of the organization, the more difficult it will be

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to isolate the impact of an particular actions or expenditures in KM. While it
might be easy to identify to what extent the organisation is achieving success,
the issue then becomes identifying which parts of a KM strategy are
contributing to this outcome, as distinct from other variables. Increasingly, as
noted, the ways in knowledge is managed in the organisation should, if the
KM strategy is successful, become transparent and integrated, making
measurement difficult.

Conclusions
It was noted at the beginning of this paper that there is a relationship between
knowledge and culture, and culture and economy. It was also noted that KM
is a strategy that has developed in a late capitalist, globalised economy, as
organisations struggle to survive and remain successful in a turbulent,
competitive environment. The paradox is also noted that the more successful
a KM strategy is, the more it becomes part of the culture of the organisation
and, arguably, the environment outside of the organisation. The question was
asked: can KM assume a different position within this globalised economy,
which emphasizes values of cultures and knowledges other than those
associated with the globalised economy? Is it possible, through its emphasis
on people and intangible assets, to demonstrate a different and arguably
more equitable approach to such issues? This would seem to be an
important question to answer in a world where some multinational companies
have more power and freedom than many nations.

I believe that some research should be devoted to these issues, as KM can

only be successful through collaboration and teamwork, combined with
innovative corporate culture. People are what matter, as no KM strategy can
be successful without their cooperation and collaboration. Community
building is more important than ICTs in this area. If an organization does not
support a human communication network that operates freely, seeking the
shortest path between knowledge providers and knowledge seekers, a KM
project will never succeed. This entails a distinctive outlook characterised,
inter alia, by some of these aspects:
• Maintaining a degree of informality
• Encouraging conflict and challenges
• Respecting knowledge authority rather than position authority
• Inculcation of a strong sense of co-responsibility
• Self-regulation.

Many of these ideas are embodied in the idea of social capital, which is a
phrase which refers to the institutions, relationship and norms that shape the
quality and quantity of society’s interactions. Social capital is understood to
play an important role in fostering the social networks and information
exchange needed to achieve collective action – and sustaining a social and
institutional environment that is ready to adapt and change.

While there is no question that the construction of collaborative communities

is a desirable objective for both organisations and society at large, care must
be taken that this does not result in elitist alliances due to the privileging of

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certain types of knowledge, and thus the communities who share it. ‘Social
capital’ as a term can be too easily translated into financial and economic
advantage, as the phrase itself indicates. Communities that are parochial or
isolated for various reasons might in fact detract from the positive outcomes
imagined through the development of social capital.

Ultimately, it is the people who create, develop and use knowledges who will
need to ascertain how best this can be shared for mutual advantage. This is
a position that demands inclusivity – of both ambiguity and diversity.
Developing knowledge or intellectual capital cannot rely on developing only
certain types of intellectual capital that might have a present, but transient,
value in the marketplace. This suggests that there is not one globalised ‘true’
knowledge, and that other forms of knowledge creation should be examined.

Whether in an organisation or society, KM strategies needs to recognise the

ownership of knowledges by participants, in order to encourage their
participation and collaboration. The benefits of being knowledge-focused
arise from a fundamental principle – the more knowledge is used the more it
grows. As people use organizational knowledge and apply their own unique
perspective and experience to it, new insights are gained – more knowledge
is generated. Knowledge is thus a resource that increases with use rather
than being depleted.

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