A Knowledge Management Framework to Manage Intellectual Capital for Corporate Sustainability

Introduction

Knowledge is seen as a major source of competitive advantage and managing knowledge assets or intellectual capital is important. This is increasingly recognised as crucial in many sectors, industries and type of firms, particularly in multinational organisations. Knowledge is vital for business improvement but “it is not the knowledge of the organisational members per se which is of critical strategic importance, it is the firm’s productivity in building, integrating and utilising its intellectual capital which is vital” (Jordan & Jones, 1997 p393).

Multinational organisations recognise the value of knowledge assets as a source of wealth creation. The need to bring knowledge assets to the centre stage in formulating strategic business objectives is critical in creating and maintaining a competitive advantage. Demarest (1997 p383) noted that 'firms without knowledge management systems will be effectively unable to achieve the re-use levels required by the business model implicit in the markets they enter, and will lose market share to those firms who do practice knowledge management'. As multinational organisations transform to global network organisations, they face a number of challenges relating to their human resource policies and practices, strategy and performance (Novicevic & Harvey, 2004). Human capital and knowledge strategy such as advice and knowledge sharing networks plays a pivotal role in the transformation process and in knowledge transfer across organisational boundaries and borders. Knowledge management is therefore important in multinational organisations because of their global networks; and the difficulty to determine 'who knows what' in such geographically dispersed organisations (Robinson et al 2005a). Whilst an increasing number of multinational organisations now perceive managing knowledge assets or intellectual capital as crucial, there are major challenges associated with the implementation of knowledge management activities.

This chapter examines the importance of managing knowledge assets and presents a knowledge management framework to facilitate a structured approach in developing intellectual capital for corporate sustainability. The chapter starts by exploring the relationship between knowledge assets and business performance. The rationale and business logic for managing knowledge assets and measuring intellectual capital is explained. The role of knowledge management in corporate sustainability, the concept of the STEPS knowledge management maturity framework and its application are discussed drawing on the recent experiences of multinational construction organisations. Organisational readiness to implement knowledge management such as identifying the resources required, reform needed and the results monitoring mechanism that underpins the STEPS framework as well as future challenges are also discussed.