According to the English Language dictionary, knowledge is defined to be the “Familiarity, awareness, or understanding gained through experience (Lexico, 2002)”. However, knowledge is much more then just what is gained through experience and this idea is explored later on in the chapter. Most often information and knowledge are used interchangeably, however, they have different meanings.
Information is derived from raw data that has been put into a context and given meaning (Davis, 2002). On the other hand, knowledge is what is contained in a person’s head and has been accumulated in the course of time and through their own unique experiences. An example of the difference between knowledge and information is demonstrated by the example of two freshers starting the first week of university. Both students have information about the university that they may have obtained through websites, and from the literature sent to all the freshers. However, one of them might also have knowledge, which they have accumulated from previous visits to campus or they have acquired the knowledge from their friends or family who have been students at the university.
There are several different types of knowledge, for example: explicit and tacit, declarative and procedural, esoteric and exoteric and shallow knowledge. The two significant types of knowledge are: explicit and tacit. The former is knowledge that can be easily articulated, written down and expressed in some kind of a document, for example by using Microsoft Word. On the other hand, tacit knowledge is defined to be within a person’s head, and is difficult to express or write down (Courtney, 2001). An example of tacit knowledge is illustrated by cooking a particular dish for a dinner party; two cooks following the same recipe book to cook the same dish will both cook it in their own unique method.
This is because the manner in which the recipes are followed will depend on the tacit knowledge that the cooks have about cuisine. One of them might be more experienced and will know exactly how to prepare the dish and the best sequence to follow; while the second cook might be a novice and therefore, will not have tacit knowledge to cook the dish as expertly as the first cook. Tacit knowledge is of great significance to organisations because it involves knowledge that leads to more effective policies, practices, and procedures (Courtney, 2001). However, the degree of helpfulness of tacit knowledge to the firm will depend on the organisational culture as well as the tools for the managing the tacit knowledge.
Declarative and procedural knowledge (Courtney, 2001), relate to two important concepts in knowledge management, which are, ‘know what’ and ‘know how’. The former is in essence, facts and statements, for example, knowledge about the firm’s current turnover, while the latter is more specialized knowledge, relating to ‘know how’, e.g. how to analyse a financial statement. This involves putting the ‘know what’ into practice, which is perhaps more important; individuals have the ability to do this because of the experience they have accumulated which gives them the tacit knowledge to deal with ‘know how’ (Little, et al., 2002).
A very basic type of knowledge related to the working of an organisation is core knowledge, i.e. knowledge that is, ‘that minimum scope and level of knowledge required just to “play the game”‘ (Zack, 1999). Having that level of knowledge and capability will not assure the long-term competitive advantage of a firm, but does present a basic industry knowledge barrier to entry. Core knowledge tends to be with members of an industry and therefore provides little advantage, other than over non-members. Advanced knowledge enables a firm to be competitively viable. The firm may have generally the same level, scope, or quality of knowledge as its competitors although the specific knowledge content will often vary among competitors, enabling knowledge differentiation (Courtney, 2001).
A survey by Reuters found that ninety percent of companies that deploy a Knowledge Management solution benefit from better decision making. Eighty percent said it increased productivity (Marwick, 2001). Knowledge management is a diverse issue that emerged in the mid-1990s and has become a much-debated issue. In recent years organisations seem to have evolved and developed and are now concentrating on developing their competitive advantage by concentrating on knowledge management. The reason for this as suggests the article: “The most important issues in KM” is that “We need to connect our people much better so they can, more effectively, meet, team, and share through networks” (King, et al., 2002).
Sharing leads to an increase in company efficiency and saves time because knowledge is not be created anew every time an individual starts a project as they can reuse knowledge that is already available to them. Therefore, knowledge management sees the work force as the most important asset the company owns and research has shown that forty two percent of corporate knowledge is locked in the brains of employees and needs to be extracted and made accessible by implementing effective knowledge management software (Baltazar, 2002).
Several different factors need to be taken into consideration while discussing the issue of knowledge management. Some of the most important ones, as suggested by King (King, et al., 2002) is the fact that knowledge management provides a strategic advantage. For firms to have a competitive advantage the effective management of knowledge is vitally important, because possessing and exploiting the knowledge that their competitors do not have, will lead them to become more innovative and efficient. However, before knowledge is utilised effectively in an organisation there are certain fundamental issues that need to be taken into consideration.
One of the most important points is to get the staff to participate in the exchange of knowledge. This can be problematic, since the idea of sharing knowledge is foreign and therefore incentives have to be set up for people to participate (Hansen, 2002). One of the ways to do so is to get the top management involved. Psychologically, workers on the floor are hesitant to contribute their ideas to their superiors, especially if they are not in constant contact with them. However, this problem can be solved if management are more accessible and maybe even ask for help and advise from their workers. If this type of system is in effect then knowledge will freely flow throughout the organisation and new knowledge will be generated constantly, which in turn will increase the firm’s competitive advantage (Hansen, 2002).