moved to and exchanged with an external organization (Bahli & Rivard, 2005). Therefore, changes in the knowledge transfer requirements are viewed as the single most important challenge to knowledge management and knowledge management systems in an outsourcing arrangement. A relevant approach to outsourcing relationships from the knowledge management literature includes intellectual capital management, as presented in the beginning of this chapter. Then, we continue presenting how knowledge transfer might influence outsourcing success. Finally, clients’ and vendors’ need for knowledge transfer and knowledge exchange in IT outsourcing relationships is discussed.
TopIntellectual Capital Management
In an outsourcing relationship, the vendor will need to manage its intellectual capital so that clients experience efficient and effective knowledge transfers. One of the key authors in the area of intellectual capital is Sveiby (2001) who has developed a knowledge-based theory of the firm to guide in strategy formulation. He distinguished between three families of intangible assets with the outsourcing vendor.
The external structure family consists of relationships with customers and suppliers and the reputation (image) of the firm. Some of these relationships can be converted into legal property such as trademarks and brand names. The value of such assets in primarily influenced by how well the company solves its customers' problems, and there is always an element of uncertainty here. The internal structure family consists of patents, concepts, models, and computer and administrative systems. These are created by the employees and are thus generally owned by the organization. The structure is partly independent of individuals and some of it remains even if a large number of the employees leave. The individual competence family consists of the competence of the professional staff, the experts, the research and development people, the factory workers, sales and marketing – in short, all those that have a direct contact with customers and whose work are within the business idea.
Competence is a term introduced here. Competence can be defined as the sum of knowledge, skills and abilities at the individual level. With this definition, we say that knowledge is part of competence, and competence is part of intellectual capital.
These three families of intangible resources have slightly different definitions when compared to the capital elements. The external structure seems similar to relational capital; the internal structure seems similar to structural capital, while the individual competence seems similar to human capital. Given three families of intangible assets, it is possible to identify nine knowledge transfers, within a family and between families, as explained by Sveiby (2001):