A Knowledge Management Framework to Manage Intellectual Capital for Corporate Sustainability

A Knowledge Management Framework to Manage Intellectual Capital for Corporate Sustainability

Herbert Robinson (London South Bank University, UK)
DOI: 10.4018/978-1-60566-679-2.ch007
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Abstract

The significant development in knowledge management (KM) literature in recent years is a reflection of the growing interest to academics and practitioners/consultants involved in organisational change and business transformation. Knowledge is a major source of competitive advantage and knowledge assets/intellectual capital has to be managed effectively. The importance of implementing a knowledge management strategy to understand the relationship between physical and intellectual capital, to increase the market value of organisations and achieve corporate sustainability is examined. Using case studies of construction organisations and applying the STEPS knowledge management framework, it was found that there is a greater need for multinational organisations to implement KM. This is because they have knowledge that is diverse and geographically dispersed across a network of organisations. It is concluded that knowledge management has a catalytic role in developing intellectual capital to achieve corporate sustainability. The STEPS framework will enable multinational organisations to identify the reform, resource implications and the results of KM activities.
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Knowledge Assets And Business Performance

The traditional view is that business performance is measured in terms of physical capital such as buildings, plant and equipment. They remain essential for the production of goods and services and the capital required (debt and equity) for financing business operations. Financial measures are normally incorporated in conventional balance sheets and accounting systems enabling managers to provide information on how much a company is worth in terms of cash in the bank, value of its land, plant and buildings, working capital and inventories. The dominance of financial indicators in measuring business performance such as sales and turnover, profit, market share, return on investment, and number of new customers is a reflection of traditional business and accounting practices. However, the emergence of the knowledge intensive organisations such as professional services firms in accounting, engineering, architecture, surveying, law and management consulting has seen intellectual capital replace physical capital. Samuel DiPiazza Jr, Global Chief Executive Officer of PricewaterhouseCoopers, and Robert Eccles, former professor at Harvard Business School, in their book titled 'Building Public Trust: The Future of Corporate Reporting' recognised the need for organisations to provide a broader range of information than financial reporting regulations require (DiPiazza & Eccles, 2002).

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