Key characteristics of knowledge.

Tekic, Zeljko ; Katalinic, Branko ; Cosic, Ilija 等

1. INTRODUCTION

We live in a globalised world where markets, products, technology, competitors, regulations, and even societies change rapidly. In such a world, continuous innovation, together with the knowledge that enables it, has become an important source of the highest-quality power. The ability to understand, process, and generate advanced knowledge is crucial for the success of organisations at all levels. Endowments of natural resources such as minerals, coal, and oil or other tangible assets, no longer determine the fortunes of economies (Huggins & Izushi, 2007). Firms rely heavily on the production and use of advanced knowledge as a key source of their market and overall success. Bearing all this in mind, it is justified to conclude that we are living in a 'knowledge-based society'.

Knowledge and knowledge based assets are increasingly being recognised as a major source of sustainable competitive advantage (Nonaka & Takeuchi, 1995). The success of companies depends on how well they explore what they "know". The way in which firms recognise, mobilise and utilise their knowledge assets makes the difference between winners and losers.

However, knowledge assets are intangible and different from tangible assets that were the critical input in production and primary source of value in the past. This makes companies inexperienced in understanding and managing knowledge. Therefore, the right way to manage (i.e.: access, store, identify, develop, protect, conserve and share) knowledge in its life cycle is the key strategic challenge for companies (Ichijo, 2007). This challenge is difficult, and firms have few tools available to assist them. As a consequence, in a world dominated by globalisation, deregulation and rapid technological change firms find themselves in the position where their most critical resource (knowledge) is, at the same time, most difficult one to manage.

The purpose of this article is to identify key characteristics and market properties of knowledge by synthesizing principal contributions to this emerging field. Ideally, this should lead to better understanding the role of knowledge within a firm and at the same time to development of tools needed for successful knowledge management.

After a general discussion about knowledge, the paper examines some of the key characteristics of knowledge, introduces concepts of slow and fast changing knowledge and establishes some fundamental assumptions concerning differences in its management and role within the firm. The paper ends with some conclusions and propositions for further research. The first author's PhD thesis should develop and extend some of ideas presented here into a more general and detailed way.

2. KNOWLEDGE--DUALITY AND DYNAMICS

The question "What is knowledge?" has intrigued some of the world's greatest thinkers since the classical Greek era. To explain and understand knowledge and knowledge creation a variety of concepts and approaches are required and have been employed. And yet, there is no a clear consensus or definition of knowledge (Grant, 1996).

Knowledge is a complex, abstract and multifaceted phenomenon. It is by nature dual, dynamic and context-specific. The duality of knowledge is rooted in the epistemological distinction between knowing how and knowing about (Grant, 1996). These two kinds of knowledge are captured by distinctions between tacit (implicit) vs. explicit knowledge, subjective vs. objective knowledge, personal vs. prepositional knowledge, and procedural vs. declarative knowledge.

Explicit knowledge can be expressed in terms of common language (words and numbers) and shared across individuals, formally and systematically, in the form of data, scientific formulae, specifications, or manuals. This ease of communication is fundamental property of explicit knowledge (Grant, 1996). Tacit knowledge, on the other hand, is revealed through its application (Grant, 1996). It is difficult to verbalise, communicate or share with others. Subjective insights, intuitions, and hunches fall into this category of knowledge. Tacit knowledge is deeply rooted in an individual's action and experience, as well as in the ideals, values, or emotions she or he embraces (Nonaka & Toyama, 2002). However, viewing knowledge as a duality means that these two types of knowledge are complementary to each other and that both perspectives are needed and are crucial for knowledge creation (Nonaka & Takeuchi, 1995). Consequently, both types of knowledge must be taken into account in any attempt to manage knowledge.

Knowledge is dynamic as it is created in "a dialectical process, in which various contradictions are synthesized through dynamic interactions among individuals, the organization, and the environment" (Nonaka & Toyama, 2002). According to Nonaka and his colleagues (Nonaka & Takeuchi, 1995; Nonaka & Toyama, 2002), knowledge is created in the spiral that goes through seemingly antithetical concepts such as order and chaos, micro and macro, part and whole, mind and body, tacit and explicit, self and other, deduction and induction, and creativity and efficiency. In the spiral of knowledge creation, the interaction between tacit and explicit knowledge is amplified through the four modes of knowledge conversion and enlarged in scale as it moves up the ontological levels (Nonaka & Takeuchi, 1995).

Knowledge is context-specific in terms of time, space, and relationship with others. Without a context, it is just information, not knowledge. Information becomes knowledge when it is interpreted by individuals and given a context and anchored in the beliefs and commitments of individuals (Grant, 1996).

3. MARKET PROPERTIES OF KNOWLEDGE

Knowledge assets have unique properties. First, knowledge has aspects of what economists refer to as 'public good' or 'non-rival good'. The consumption of knowledge by one person does not preclude its consumption by another. On the one hand, this characteristic helps in developing and advancing scientific knowledge all over the world. On the other, it highly impacts industrial knowledge whose economic value may decline with simultaneous use by multiple entities (Nonaka & Teece, 2001). Imitators can lower dramatically the market value of knowledge by augmenting its supply in the market.

Second, knowledge is 'non-excludable good'. Knowledge becomes subject to non-excludability when its creator makes the knowledge known to others or sells a product embodying the knowledge that will allow others to do 'reverse engineering' (Huggins & Izushi, 2007). Even the mere act of marketing knowledge makes it available to potential buyers. Specific forms of knowledge can be protected by intellectual property rights (patents, trade secrets, trademarks, copyrights). However, every person is free to study the patent and learn the knowledge in order to further develop the knowledge and create a new product (Huggins & Izushi, 2007). Lack of clear property rights results in ambiguity over the ownership of knowledge. This means that knowledge can be possessed but not easily hoarded.

Third, while knowledge does not wear out, as do most physical assets (tractors, trucks, refrigerators and even disk drives), it is frequently exposed to rapid depreciation because of the creation of new knowledge. Thus, leading-edge products in the electronic industry are often obsolete in a matter of months rather than years. The depreciation may be so radical that a technological breakthrough drops the value of current practice technology to zero, or very nearly so (Nonaka & Teece, 2001).

4. SLOW VS. FAST CHANGING KNOWLEDGE

Knowledge is an ever changing phenomenon. It interacts with its environment, reshapes the environment, and even itself, in the process of knowledge creation. The stock of knowledge that exists at any point in time represents combination of fast and slow changing parts of knowledge. Slow changing knowledge is well developed and standardised. It is almost static and presents a base for further development in the related fields. Fast changing knowledge, as its names implies, is more dynamic. It represents the part of knowledge where main scientific and technology breakthroughs have already been achieved. Fast changing knowledge today is mostly rooted in disciplines like biotechnology, aerospace, artificial intelligence, climate modelling, nanotechnology, nuclear physics, optoelectronics, robotics and telecommunications.

Slow changing knowledge is predominantly explicit and well diffused. It is shared in research reports, engineering drawings, conference publications, textbooks, consulting manuals, and classrooms. Often it represents general technical solutions that are well known among competitors and freely available on the market. Slow changing knowledge is developed through benchmark against the industry leader and as a result, it does not offer competitive edge. However, its existence is condition for company's existence.

On the other hand, fast changing knowledge is the dimension in which companies compete today. It is the space for innovating and developing competitive advantage. Fast changing knowledge is often 'sticky' and difficult to transfer, which arises in part from a significant proportion of it being tacit and embodied in individuals as skills they possess. New knowledge of this kind, embedded in new technologies and products erodes the competitive potential of existing knowledge, technologies, and products. This inevitable progress van makes the strategically important knowledge today, completely obsolete tomorrow.

5. CONCLUSION

In order to create and sustain competitive advantage companies should utilise fast changing knowledge for various business opportunities, and protect it from imitation. The competitive advantage from knowledge-based assets is achieved by the firm's ability to effectively apply (i.e., manipulate, store, and distribute) the existing knowledge rather than by the stock of knowledge that a firm possesses at one point in time (Teece et al., 1997). On the other hand, protection is literally about protecting knowledge assets from competitors. Preventing knowledge from being imitated is all about activities that increase complexity, tacitness, and specialty of products or services (Ichijo, 2007). These two aspects of knowledge management are especially important for knowledge-creating companies in order to keep them ahead of competitors.

Slow changing knowledge helps in understanding environment and permits sharing, integrating and creating fast changing knowledge. Therefore, the ability to transfer, integrate and constantly update slow changing knowledge to various areas of a business plays a key role in a company's success.

It is important that companies reflect on whether knowledge that led to innovation is outdated as any technology will ultimately become obsolete. In some cases, it may be necessary to discard the existing knowledge completely and promote creation of new knowledge. In the majority of situations that "outdated" knowledge will become part of the slow changing knowledge base of a company. One of the key challenges for companies that have been leading the industry by developing core technologies is how and when to develop and use new technologies that may replace the existing ones. It is crucial for successful knowledge management to treat fast changing knowledge and slow changing knowledge in different ways. Otherwise, company will lose competitive advantage.

The slow--fast duality of knowledge implies that there should be difference in managing these two types of knowledge inside companies. Every company should develop two sets of routines, one for fast and one for slow changing knowledge.

Further research should deeper explore recognized differences and support findings with case study evidence. This should lead to further understanding of knowledge and development of knowledge management tools.

6. REFERENCES

Grant, R.M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, Vol. 17 (Winter Special), pp 109--122, ISSN 0143-2095

Huggins, R. & Izushi, H. (2007). Competing for Knowledge Creating, connecting, and growing, Routledge, ISBN: 0203-94059-8, New York

Ichijo, K. (2007). Enabling Knowledge-Based Competence of a Corporation, in Knowledge creation and management: new challenges for managers, Ichijo, K. & Nonaka, I. (Eds.), pp 121-145, Oxford University Press, ISBN-13 978-0-19515962-2, New York

Nonaka, I. & Takeuchi, H. (1995). The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. Oxford University Press. ISBN 0-19509269-4, New York

Nonaka, I. & Teece, D. J. (2001). Introduction, in Managing industrial knowledge--Creation, Transfer and Utilization,

Nonaka, I. & Teece, D. J., (Eds), pp 1-12, SAGE Publications, ISBN 0 7619 5498 8, London

Nonaka, I. & Toyoma, R. (2002). A firm as a dialectic being: toward the dynamic theory of the firm. Industrial and Corporate Change, Vol. 11, pp 995-1109, ISSN 0960-6491

Teece, D., Pisano, G. & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, Vol. 18, No. 7, pp 509-533., ISSN 0143-2095