The Intelligent Enterprise

The Intelligent Enterprise

Laurence Lock Lee (University of Sydney, Australia)
DOI: 10.4018/978-1-60566-084-4.ch004
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J.B. Quinn’s influential book on The Intelligent Enterprise was published in 1992 and joined a small cadre of scholars and practitioners reacting to the growth in the services sector and the decline of traditional manufacturing as the dominant source of employment. In 1992, the Swedish Coalition of Service Industries1 established a project entitled the “Valuation of Service Companies”, in recognition of the need to develop more appropriate valuation and reporting mechanisms for firms whose major assets were intangible. The genesis of this activity can be traced back to the 1980s and the work on the “invisible balance sheet” by the Swedish KONRAD group, several of whose members are credited with pioneering the concepts behind Intellectual capital (IC) reporting and management. The publishing of the “Valuation of Service Companies” report provided the basic framework on which subsequent researchers and business practitioners developed IC reports2. This report describes a “new annual report” with four key indicators: market position; human resources/knowledge; structural value; and financial indicators.
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Knowledge Management

Perhaps the greatest challenge for KM scholars is the shear breadth of topics that KM influences, or is influenced by. The breadth of literature on KM is overwhelming. For this review, KM will be viewed as a substantial suite of literature located under the umbrella of IC/IA (Wiig, 1997).

For an overview, Jashapara’s integrated approach to Knowledge management (Jashapara, 2004) is selected (see Figure 2). Jashapara approaches the broad topic of Knowledge management through the following knowledge life cycle model: Definitions of KM invariably identify processes like creating, assessing, sharing and leveraging for organisational advantage. KM researchers also invariable acknowledge its multi-disciplinary nature. Therein lays both the power, as an integrating discipline, and the weakness, as a discipline lacking a clear identity. Writings on KM have been drawn from disciplines as broadly spread as anthropology, artificial intelligence, psychology, information science, accounting, philosophy, human resource management, sociology, management strategy and operations research. A framework is necessary to analyse KM, to enable the different disciplinary views to flow through in an ordered fashion.

Figure 2.

Knowledge management: and integrated approach (adapted from Jashapara, 2004)


The Jashapara framework for KM identifies knowledge discovery, knowledge generation, knowledge evaluation, knowledge sharing and leveraging knowledge as the key dimensions. Selected literatures representing these dimensions are discussed in the following sections.


Discovering Knowledge

Fundamental studies of “knowledge” can be traced back to the early philosophers and the “capture” of ideas and knowledge, initially through oration and story telling, and then to evolving forms of written media. While knowledge has always been important to human development the advent of the post industrial age has been the key driver for the intense interest in KM. Management guru Peter Drucker provided a strong impetus in the business world with his writings on the new knowledge based society:

In this society, knowledge is the primary resource for individuals and for the economy overall. Land, labor, and capital—do not disappear, but they become secondary. (Drucker, 1992p.95)

This was supported by rising separation of market values from firm book values from the late 1970s. A new knowledge based theory of the firm has been proposed by several authors (Grant, 1996; Kogut & Zander, 1993; Spender, 1996). Kogut and Zander call for the boundaries of the firm to be defined by the tacitness of the knowledge that is being transferred. In contrast to the traditional hierarchy, they identify firms as:

Firms are social communities that specialize in the creation and internal transfer of knowledge. (Kogut & Zander, 1993, p.625)

Their empirical research results show that the less codifiable the knowledge of the firm is, the more likely the knowledge will be only transferred within wholly owned operations. Spender (1996) argues for knowledge to be seen as a process rather than an object or resource. In addressing the needs of management Spender argues for management as a facilitation of alliances between independent knowledge creating entities, rather than management as rule makers and employees as rule followers. Like Kogut and Zander, the organisational forms emerging look more like networks than hierarchies. Grant (1996) identifies the unique integration of a firm’s specialised knowledge sources as a key competitive differentiator. He argues that the ability to integrate specialised knowledge sources becomes a core competency defining the firm.

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