Critical Analysis of International Guidelines for the Management of Knowledge Resources

Critical Analysis of International Guidelines for the Management of Knowledge Resources

Federica Ricceri (University of Padova, Italy) and James Guthrie (University of Sydney, Australia)
Copyright: © 2009 |Pages: 18
DOI: 10.4018/978-1-60566-176-6.ch023
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The shift towards a knowledge based economy is at the core of the debate of contemporary management and accounting literature and organisations are challenged by the need to manage their knowledge resources. Several national and international institutions have produced authoritative “guidelines” to facilitate the management and reporting of KR. Many of these guidelines are the result of co-operation between researchers, companies, industry organisations and consultants and have, therefore, been informed by practice. However, to date, there has been no serious critique of these guidelines. The main objective of this chapter is to provide an in-depth analysis of six contemporary guidelines. By reviewing these guidelines, this chapter explores how each of these addresses the MKR and therefore facilitates the management and reporting of KR. Therefore, this chapter will establish some of the key issues involved in understanding MKR. It will also provide an overview of how these issues are addressed or otherwise in the six guidelines. Two key messages of this chapter are the followings: first, MKR and its elements are embedded in various ways into the international guidelines examined; second, that a key policy issue is international harmonisation.
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International Knowledge Resources Frameworks

The challenge of understanding MKR has been addressed by many KR frameworks. One common characteristic of these frameworks is that they use measurement as a way to make IC visible. Sveibyb identifies many frameworks and more have been added to make a comprehensive list of 36.

These frameworks can be collapsed into two different approaches: the ‘stock approach’ and the ‘flow approach’ (see, Guthrie and Ricceri, 2002). Under the ‘stock approach’, KR are thought to be static and able to be assigned a monetary value. Table 1 highlights eighteen ‘stock approach’ KR frameworks that could provide a traditional ‘financial view’ of KR. The underlying assumption of the ‘stock approach’ is that KR are recognised mainly on the basis of their market value or for their contribution to the generation of revenue, earnings or cash flows. Therefore, KR are contextualised within a traditional financial accounting frame.

Key Terms in this Chapter

Reporting: Relates to the construction of the reporting devices which can be used for external and internal communication. A common device used to provide internal and external stakeholders with an extended view of oganisational performance by focusing on the efforts to manage and develop KR is the intellectual capital statement (ICS).

Management of Knowledge Resources (MKR): Refers to the dynamic capability of managing KR in a changing environment for achieving oganisational sustainability. The management of knowledge resources involves addressing four basic issues: (1) considering the relevance of KR and their management when formulating and implementing oganisational strategy; (2) understanding resources interactions via their identification, mapping and assessment; (3) measuring KR to monitor multiple performance perspectives and related drivers; and (4) reporting to internal and external stakeholder an extended view of oganisational performance by focusing on the efforts to manage and develop KR.

Knowledge Resources (KR): Non tangible oganisational resources that can be classified into three main components: human resources; structural resources; and relational resources: Human resources refer to internal stakeholders, such as senior managers and employees, and to their attributes, that is knowledge, abilities, skills, experiences and innovativeness. These are becoming critical resources for oganisations, particularly because they contribute to the ability to respond and adapt to a changing environment. Structural resources consist of all those things that remain in the oganisation when the employees have left the building and are in some way owned or controlled by the oganisation. Structural resources include ‘intellectual property’ and ‘infrastructural resources’. Intellectual property is owned by the company and protected by law and includes elements such as patents, trademarks and copyrights. Infrastructural resources consist of oganisational characteristics such as methods and procedures and the oganisational context provided to individuals to achieve strategic objectives. Therefore, structural resources include, but are not limited to, culture, processes, routines, and information and networking systems.Relational resources include the oganisation’s brand and image in the marketplace, as well as its relationships with external stakeholders (such as government, customers, partners and retailers, suppliers, residents, etc.). Some of these resources are not owned by the oganisation, but are relationships that are significant and require management. This tripartite classification of knowledge resources is known as intellectual capital and is a framing device for understanding KR and related elements. As a result, the concepts of knowledge resources and intellectual capital embrace all kinds of non tangible oganisational resources, either formally owned or used, or informally deployed and mobilized.

Intellectual Capital (IC): A framing device for understanding Knowledge Resources and related elements. See also Knowledge Resources.

Oganisational Strategy: The factor that combines the dynamic context in which the oganisation operates and its resources and capabilities. In this chapter oganisational strategy refers both to the formulation of strategic objectives and to the implementation of plans and actions for acquiring, deploying and maintaining KR in order to achieve oganisational sustainability.

Intellectual Capital Statement (ICS): Provides information via metrics and narratives about how KR are created, developed and applied in the oganisation. Also, it summarises the firm’s efforts to develop and use KR and puts evaluative managerial questions that help managers to change KR and/or direct them towards new strategies.

Guidelines: Best examples of flow approach frameworks developed by national and international institutions as guidelines for oganisations to manage, measure and report IC. Many of these frameworks use intellectual capital statements as a way of embarking on the management of knowledge resources and for understanding the relationship between measurement and management on the one side and operational activities, strategies and context on the other.

Measurement: Refers to the use of KR metrics and narratives to support MKR and, in particular, to assess performance. For KR measurement, the aim is not to assign a financial value to KR but to create a set of metrics (or indicators) based around the individual KR elements within each KR component (e.g. customers’ satisfaction within the relational KR). Many metrics are context-specific and therefore there are no widely accepted standards available to help readers understand the meaning of the reported metrics. Therefore, metrics must be accompanied by narratives which explain the metrics’ meaning and their relationships with oganisational context and performance.

Resources Interactions: Relates to flows within resources and these are also known as resources transformations. Transformations are defined as resources flows that affect different oganisational resources types, being tangible assets or KR. Whilst transformations within tangible resources (physical or financial) are, in most cases, observable and measurable, transformations which involve KR are difficult to identify map, and assess.

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