Stutus of knowledge enabling environment in private eduacational companies in viet nam basic for enhancement program of knowledge management

x Constructs 13 Bivariate Pearson Correlation between Construct Scales 14 Bivariate Pearson Correlation of KnowledgeCreating 15 Bivariate Pearson Correlation between Knowledge Enabling C

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ENHANCEMENT PROGRAM OF KNOWLEDGE MANAGEMENT

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A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines

in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam

ENHANCEMENT PROGRAM OF KNOWLEDGE MANAGEMENT

Submitted in Partial Fulfilment of the Requirements for the Degree

DOCTOR OF PHILOSOPHY IN EDUCATIONAL MANAGEMENT

A program offered by Southern Luzon State University,

Republic of the Philippines in collaboration with

Thai Nguyen University, Socialist Republic of Vietnam

has been approved by Oral Examination Committee

WALBERTO A MACARAAN, EdD

Chairman

Accepted in Partial Fulfilment of the Requirements for the Degree

Doctor of Business Administration

_ WALBERTO A MACARAAN, EdD

Date Vice President for Academic Affairs

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This is to certify that the research work /dissertation entitled STATUS

EDUCATIONAL COMPANIES IN VIETNAM: BASIS FOR ENHANCEMENT PROGRAM OF KNOWLEDGE MANAGEMENT, orally defended / presented

under the Doctor of Philosophy in Educational Management Program jointly offered by Southern Luzon State University of the Republic of the Philippines and Thai Nguyen University of the Socialist Republic of Vietnam, embodies the result of original and scholarly work carried out by the undersigned

This dissertation does not contain words or ideas taken from published sources or written works by other persons which have been accepted as basis for the award of any degree from other higher education institutions, except where proper referencing and acknowledgement were made

LE THU HANG

Researcher Date Orally Defended:June 27th, 2014

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The author is most grateful to her adviser and Professor, Dr Cecilia N Gascon, for her valuable academic and moral support, which she shall never forget, during the doctoral program in education management of Southern Luzon State University of the Philippines She also highly appreciates the very helpful suggestions made by Prof Dr Dang QuocBao about the research at

an early stage in its development

She wishes to record my particular thanks to Teresita V Dela Cruz, Apolonia A Espinosa and Walberto A Macaraan,Bella R Muello, Southern Luzon State University, for their constructive and useful pieces of advice to improve the dissertation

While collecting data for this research, she was lucky enough to receive support from a number of colleagues and friends of EduTrust and Vietnam Chamber of Commerce and Industry in Hanoi and Ho Chi Minh City

At the EduTrust, thanks are due to colleagues of the office of the Chairman Vietnam Chamber of Commerce and Industry, special thanks go to Le Thuy, Project Director

In addition, she indebted to leaders and staff of Thai Nguyen University, of ITC for their enthusiastic support during the program as well as

to Dr Judith Narrowe and Dr.Bertil Olsson, Dalarna University, Sweden, for their moral support at the most difficult moments

Also, she would like to express her gratitude to all interviewees and group discussants who took the time to share their lives and thinking with

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dissertation addresses itself

Last but not least, she dedicates this work to her family members, with thanks for all they have done for her over the years

Le Thu Hang (Moon)

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To My Friends & Family Thank you for ALL the Support

LTH

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PAGE

TITLE PAGE ……… i

APPROVAL SHEET ……… ii

CERTIFICATE OF ORIGINALITY ……… iii

ACKNOWLEDGEMENT ……… iv

DEDICATION ……… vi

TABLE OF CONTENTS ……… vii

LIST OF TABLES ……… ix

LIST OF FIGURES ……… xi

LIST OF APPENDICES ……… xii

ABSTRACT ……… xiv

CHAPTER I INTRODUCTION Introduction ……… 1

Background of the Study ……… 3

Objectives of the Study….……… 5

Significance of the Study ……… 6

Scope and Limitation of the Study ……… 6

Definition of Terms ……… 7

II REVIEW OF LITERATURE AND STUDIES Review of Literature … ……….……… 16

Conceptual Framework ……… … 29

Research Paradigm ……… ……… 51

III METHODOLOGY Locale of the Study ……… 52

Research Design ……… 52

Population and Sampling ………….……… 54

Research Instrumentation ……… ….… 56

Data Gathering Procedures ……….……… ………… 58

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IV RESULTS AND DISCUSSIONS ……… 67

V SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS Summary ……….……… 94

Conclusions ……… 101

Recommendations ……… 102

REFERENCES ……… 104

APPENDICES ……… 112

CURRICULUM VITAE ……… 168

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1 Summary of the Aspects within Human Resources and its

2 Summary of the Aspects within the Communication

3 Summary of the Aspects within the Information Technology

4 Summary of the Aspects of the Learning Arenas 44

5 Summary of the Aspects of the Use of Knowledge 48

6 Number of Employees per Company and Contract

10a Number of Companies by Frequency of the General

10b Number of Companies by Scheduled Meetings of

10d Number of Companies by Person in the Gatekeeper

10e Number of Hour Formal and Informal Meetings (Cells

12 Pearson Correlations of the Knowledge Enabling 81

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Constructs

13 Bivariate Pearson Correlation between Construct Scales

14 Bivariate Pearson Correlation of KnowledgeCreating

15 Bivariate Pearson Correlation between Knowledge

Enabling Constructs and KnowledgeCreation Indicators 88

16 Pearson Correlation among Knowledge Creation and

17 Summary of explicit plan of knowledge management 92

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1 Knowledge Management and Lifelong Learning 17

3 Conceptual Framework for Knowledge Management in

Table 2 Number of Employees per Company and Type of

Professional Role (Professional, Supports or Leaders) 131

Table 3 Number of Employees per Company and Contract

Table 4 Number of Respondents by Educational Attainment as a

Table 12 Aspects within the Communication Activities 142

Table 13 Number of Hour Formal and Informal Meetings (Cells

Table 14 Respondent’s Perceived Usefulness of Formal and

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Table 18 Bivariate Pearson Correlations of the Binary Recoded

Indicators of the Stability Construct in the Selected

Table 21 Bivariate Pearson Correlation of the Binary Recoded

Indicators of the Professionalism Construct in the

Table 23 Company Monetary Reward System Indicators 154

Table 24 Bivariate Pearson Correlation of the Binary Recoded

Indicators of the Monetary Reward Aspect Construct in

Table 25 Communication Patterns Indicators by Company 156

Table 26 Information Technology Infrastructure Indicators by

Table 27 Bivariate Pearson Correlation of the Binary Recoded

Indicators of the Information Technology Investment

Table 30 Number of Training Events and Yearly Estimated

Training Time by Purpose of Training and Company 161

Table 31 Average Scores and Standard Deviations of the Informal

Table 32 Total Variance Explained by the Factor Analysis of the

Table 33 Total Variance Explained by the Factor Analysis of the

Table 34 Bivariate Pearson Correlation between Knowledge

Enabling Construct and Knowledge Creation Indicators in

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Title of Research : STATUS OF KNOWLEDGE ENABLING

ENVIRONMENT IN PRIVATE EDUCATIONAL COMPANIES IN VIETNAM: BASIS FOR ENHANCEMENT PROGRAM OF KNOWLEDGE MANAGEMENT

Researcher : LE THU HANG (MOON)

Degree Conferred : DOCTOR OF PHILOSOPHY IN EDUCATIONAL

MANAGEMENT Name and Address

of Institution

: Southern Luzon State University Lucban, Quezon, Philippines and Thai Nguyen University, Socialist Republic of Vietnam

Adviser : Dr Cecilia N Gascon

Year Written : 2013– 2014

The dissertation is an exploration of the ways Vietnamese knowledge intensive companies manage their knowledge By doing analysis in private educational Vietnamese companies providing educational and consultancy services, the study explores the relationship between the knowledge enabling environment and the demand for training These companies have participated

in the program for developing employee competence, financed by the Asian Development Bank As results of the program these companies have evaluated their business activities and determined their training needs in order

to remain competitive

In this study, knowledge is understood not only the structure but also

the content of mental schemas, which embodies in individuals and can be

tacit or explicit It really differs from information and data and it is through the dialectic process that people learn Looking at organizational processes for

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learning as well as informal learning activities which constitute so called

“knowledge enabling environment” It is argued here that through knowledge management, companies are indeed implementing strategies for the promotion of lifelong learning, which has recently been used in policy arena

as a guiding principle for educational policies and reforms

As results of the study, the different aspects of the equally heterogenous “knowledge enabling environment” do not present strong relationships in both education and consultancy companies Each company in those fields is rather unique in organization and promotion of knowledge intensity in their ordinary business activities The companies mainly provide training with the company profile It is interesting to find out that employees demand for training if their engagement in informal learning is low

Chapter I INTRODUCTION

According to the World Bank, the competitiveness index of human resources in Vietnam reached 3.39/10 point and competitiveness of Vietnam economy reached 73/133 among participated countries

Furthermore, the recent social survey showed that the capital scale of enterprises is rather small Nearly 50% of businesses have their capital less than 1 billion VND While nearly 75% of enterprises with capital of less than 2 billion VND, 90% of enterprises have their capital of less than 5 billion VND Due to the small capital scale, enterprises of Vietnam seem to be less competitive The innovation and technology of enterprises are critical

Concerning human resources in small and medium enterprises (SMEs), the number of PhDs accounted for only 0.66% while masters composed of 2.33%; labor graduated from universities and colleges as 41.38% while graduators of vocational schools as 12.33%

It is noteworthy that a part of business owners who got their education from colleges and universities are not equipped with knowledge of economy, business administration and human resource management This has a great influence on the development of strategic planning, direction and management of business enterprises Regarding technology, only about 8%

of enterprises reached advanced level of technology Most of them are FDI enterprises

Domestic enterprises are using less competitive technology In addition, the indicator on ICT use also showed that though businesses (more than 60%) use computers but only 11.55% use internal network - LAN and 2.16% with own websites It is really critical for ability of enterprises to participate in electronic commerce and communication network as expected and desired by the government It showed that technical issues, technology and innovation have not been highly considered by enterprises, which is one

of determining factors of business success in the market

To serve the cause of industrialization and modernization of the country and to foster significant participation in globalization, important legal documents have been issued, especially the economic and social development strategy of 2011-2020 including the Resolution on Vietnam Workforce Development to the year 2020 adopted at the 11th Party Congress

(April, 2011) Following the Resolution are the Decision No 579/QD-TTg of strategy on human resource development approved by the Prime Minister on April 19, 2011 and the Decision 1216/QD-TTg of planning on Vietnam human resource development for 2011-2020 approved by the Prime Minister on July

22, 2011

According to those documents, in the next ten years, it should increase the rate of trained human resource in the economy with reasonable structure The total number of trained manpower in 2015 is expected to be about 30.5 million people and in 2020, there will be nearly 44 million people (representing approximately 70.0% of the nearly 63 million people employed in the economy)

From the total number of trained manpower, the number of trained personnel through vocational training system in 2015 is expected to reach 23.5 million (by 77%) and in 2020 - about 34.4 million people (by 78.5%); the number through the education and training system in 2015 accounts for approximately 7 million people (by 23%) and in 2020 approximately 9.4 million people (by 21.5%)

Background of the Study

In the context of knowledge economy, a lot of workshops and conferences on knowledge management have been held recently in many sectors of Vietnamese economy, both public and private ones

The major comments have been largely agreed that many businesses

in Vietnam are now just focusing on the issues such as production, cost reduction while leaving behind the issue of knowledge management, which can support leadership to solve business problems For example, when a company faces a brain drain, business is interrupted or affected at least until a matching replacement is found

However, the situation could have been avoided if companies perform well the task of knowledge management, which is implemented by collection, storage, sharing and use of information and trade secrets, not only at individual levels but at the level of the enterprise Then a mechanism and a process of creation, storage, sharing and development of knowledge in each business are required so that the knowledge of individual turns into knowledge assets of the enterprise Take a look at another example where a

business leader needs to make a quick business decision In the case the department of business development can assist the board of directors in strategic insights on commercial viability, in consideration of risks and competitors, in analysis of strengths and weaknesses as well as necessary financial resources The above mentioned department plays here the role of a unit of knowledge management with comprehensive information and accurate business lines as well as the knowledge enabling environment It is noteworthy that to promote knowledge efficiency, a few training sessions to transfer knowledge to staff is not enough

Some factors that contribute to the success of knowledge management have been listed in the workshops and conferences mentioned above: (1) the relationship between knowledge and business effectiveness; (2) proper system and infrastructure (data storage, information exchange, knowledge transfer to users…); (3) experts on knowledge management to support both leaders and employees

From the early 1980s knowledge management was typically associated with the use of information technology, knowledge based systems, portals and data repositories in companies Starting around the year 2000, knowledge management has grown to become an integral part of basic management, especially in knowledge intensive organizations and in non-IT related organizational processes

In this incarnation, knowledge management integrates all organizational processes that are directed towards knowledge creation and use, and information distribution and storage Despite the central role that

knowledge creation plays in knowledge management, few references to educational science and learning can be found Therefore exploring how knowledge management is related to training activities in organizations is an interesting and useful endeavor

As studies within the area of human capital theory have found that small companies face more problems in providing training opportunities to their employees than large companies

In addition, it has been found that certain company and work characteristics, such as size of the company, and literacy practices at work, are associated with higher levels of training participations Thus, it seems particularly interesting to explore the relationship between the way small and medium organizations manage their knowledge and their demand for training

Objectives of the Study

The main objectives of the study are to analyze the knowledge enabling environment in selected companies in education and consultancy Specifically, this sought to:

1 Identify the instructional variables that influence the knowledge enabling environment and knowledge management in selected companies in education and consultancy

2 Determine the significant relationship between the company’s perceived needs for continuous competence development and the company’s demand for training

3 Analyze the enhancement program of knowledge management that can be proposed from the results of the study

Significance of the study

This study would be beneficial to the following:

Administrators and leaders It is hoped that the study may contribute

in giving a new dimension in knowledge management The study would provide administrators and leaders with a clear idea and model of knowledge management In the same manner, their practice of knowledge management could give a fresh perfective in terms of its influence to the overall SMEs in education and consultancy

Future Researchers This study could provide references for future

proponents who wish to venture a study similar to the nature of this ongoing research Thus, basic tenets on knowledge management and novel dimensions on instructional variables could serve as resources for other studies

Scope and Limitation of the Study

The study is limited to private educational companies that provide a rich amount of information and constitute interesting cases for the purpose of the dissertation They are small and medium private Vietnamese companies that work within two services that can be considered “knowledge intensive” consultancy and education

The companies are a self-selected sample of a very particular kind All the companies have applied and received grants for competence development This provided an opportunity to gain access to specific information on the demand for training that would be very difficult to obtain in any other sample

However, from initial group of 119 companies agreed to participate in this study, only 18 companies provided a satisfactory amount of information for the case study in the end Thus, it is important to note that the results of this study can only be generalized with caution to other small knowledge intensive enterprises The two services under study present different gender balances, which might affect the way companies approach knowledge

management, although this has not been taken up in the study

Definition of Terms

For clarity and better understanding of this study, the following terms were hereby defined conceptually and operationally:

Collaborative Climate Index The organization’s ability to transfer knowledge

from one unit to another in a collaborative manner has been found to contribute to the organizational performance of companies in both the manufacturing and service sectors The benefits of knowledge sharing have been documented in many settings, but the effectiveness varies considerably among organizations It is presented in the so called Collaborative Climate Index (CCI)

Communication The activity of conveying information through the exchange

of thoughts, messages, or information, as by speech, visuals, signals, written, or behavior It is the meaningful exchange of information between two or more living creatures Communication may be intentional or unintentional, may involve conventional or unconventional signals, may take linguistic or non-linguistic forms, and may occur through spoken or other modes Communication requires a sender,

a message, and a recipient, although the receiver does not have to be present or aware of the sender's intent to communicate at the time of communication; thus communication can occur across vast distances

in time and space Communication requires that the communicating parties share an area of communicative commonality The communication process is complete once the receiver understands the sender's message

Company Size Personnel number or employees margin of company

Besides company size can be considered on industry, ownership

structure and revenue

Dependent Variable Variables used in an experiment or modeling can be

divided into three types and dependent variable is one of them Dependent variables represent the output or effect or is tested to see if

it is the effect In a scientific experiment, you cannot have a dependent

variable without an independent variable

Independent Variable Variables used in an experiment or modelling can be

divided into three types: dependent variable, independent variable, or

other Independent variables represent the inputs or causes, or are

tested to see if they are the cause

Information Technology (IT) The application of computers and

telecommunications equipment to store, retrieve, transmit and manipulate data, often in the context of a business or other enterprise The term is commonly used as a synonym for computers and computer networks, but it also encompasses other information distribution technologies such as television and telephones Several industries are associated with information technology, including computer hardware, software, electronics, semi-conductors, internet, telecom-equipment, e-commerce and computer services

Innovation The application of better solutions that meet new requirements,

in-articulated needs, or existing market needs This is accomplished through more effective products, processes, services, technologies or ideas that are readily available to markets, governments and societies The term innovation can be defined as something original and, as a consequence, new, that "breaks into" the market or society

Knowledge Knowledge is in people’s heads, it differs from information or

data, it is individual, and in some instances it can be made public or shared as information In addition, the difference between various types of knowledge has been explained in terms of content Andriessen (2004, p 97) identifies six different metaphors in his analysis of the treatment of knowledge in key publications of the knowledge management field: knowledge as something physical, as a wave, as a

living organism, as thought and feelings, as a process and as a structure

In the present work, knowledge is understood both as the structure and the content of the mental schemas Therefore, this study uses knowledge as “something physical” and “as a structure” as defined by Andriessen It also includes the idea of knowledge as feelings since the schemas have important emotional components Further, it includes knowledge as a process, as a wave and as a living organism, since these three elements refer to the idea that knowledge

is in a constant dialectic process with the reality it represents The frame and the content are reinforced or change in each action that we perform It is through action that we test our schema in the real world This action will inform us about the schema that in tum will or will not change In this way, action develops our knowledge, and knowledge is therefore a dynamic entity Knowledge as a static entity never changes The optimistic view of science maintains that scientific inquiry looks for objective and universal knowledge, what traditionally has been called Truth with a capital T However, post-optimistic views criticize the idea

of a universal truth and propose the existence of different truths Thus, there is no unique, invariant knowledge but different types of knowledge viewed from different perspectives

The dynamic feature of knowledge is thus related to the idea that knowledge must be translated into and associated with action (Elkjaer, 2003; Hunt, 2003) Further, the action uses knowledge but does not “consume” the knowledge that can be re-used in its modified

form Thus it is important to mention that “knowledge is not ‘consumed’

in a process, it sometimes increases through use” (Hall, 1998, p 13) Through this process of adaptation, or equilibrium in Piaget’s terms, knowledge, action and learning are closely linked together

To conclude, it is important to note that knowledge is related to learning Li et al (2003, p 17) argue: “learning and knowledge mutually reinforce each other in a cycle The act of learning provides knowledge and understanding, which in turn feed further learning” As cited already, learning can be regarded as the adaptation of mental structures to the specific realities that an individual confronts

Knowledge, understood both as content and as schema, will therefore

be constructed during this process of adaptation through its interaction with the environment When we are presented with data (facts, impressions), we examine that specific information which has some meanings and structure for us with the knowledge that we already have In fact, the previous knowledge will guide the type of data that we seek, or beyond that, the information we seek and are capable of understanding If that specific information content (either know-what, why, how or who) appears in adequate conditions of motivation, interest and attention, the content will be “absorbed” into the mental model (or theory) that we are applying to that specific context The new content might not produce much change in the structure of the mental model, it might produce partial modification (beta answer) or it might result in a critical modification (gamma answer, significant learning or

conceptual change) These changes in our schema constitute, in fact,

learning Learning is the process of transforming data into knowledge, making something public (information) into something private knowledge The process of transforming data into knowledge is the process of teaching, understood broadly The information that starts the process of learning is usually the articulation of someone’s knowledge that served to codify and externalize her/his knowledge If the students (or any listener or reader) incorporate the data that has been externalized, then there is learning

Finally, it is important to mention that knowledge can be acquired through different means Knowledge is not only created through theoretical means (such as reading or analyzing information); learning also occurs by doing Thus when we act, our acts “teach” us, providing us with information on our performance This process of learning is not necessarily a conscious one, and can occur implicitly without the individual realizing it; in this way we acquire tacit knowledge

Knowledge Creation Organizational knowledge creation is a part of the

knowledge management process Knowledge creation deals with continuous transfer, combination and conversion of the different types

of knowledge (as users practice, interact and learn) Knowledge creation is a product of the interplay between knowledge and knowing them The shift in condition between the possession of knowledge and the act of knowing - something that comes about through practice, action, and interaction - is the driving force in the creation of new knowledge Furthermore, in order for this interplay to be most fruitful, it

is important to support unstructured work environments in areas where

creativity and innovation are important

Knowledge enabling environment Refers to the organization of company,

the ways of working and the facilities that employees have in order to deliver services and constantly upgrade their knowledge Such an environment constitutes a knowledge intensive organization (where knowledge is produced and sold) The knowledge enabling environment encompasses human resources and its management, communication activities and information technology infrastructure

Knowledge Management The process of capturing, developing, sharing,

and effectively using organizational knowledge It refers to a disciplinary approach to achieving organizational objectives by making the best use of knowledge Knowledge management efforts typically focus on organizational objectives such as improved performance, competitive advantage, innovation, the sharing of lessons learned, integration and continuous improvement of the organization

multi-Learning arena Leaning arena relate to professional development programs,

training and learning activities It focuses on abstract concepts, complex theoretical understandings and interactions across many contexts, such as learning experiences and integrating observation, planning and assessment seem to require long timeframes for new understandings and ways of working to become embedded in pedagogy Intensive opportunities to practice may help sharpen the intensity and effects of the program While opportunities to practice are

important, this does not imply a lack of value in one seminars and conferences, which may play a role in “awakening interest” or ongoing reflection being challenged through exposure to new theoretical insights It is unlikely however, that such opportunities on their own would directly change practice in such a way as to impact on outcomes for diverse learners

Professionalism Defined as one's conduct at work In spite of the word's

root, this quality is not restricted to those in occupations described as

"professions", typically those which require a high level of education and earnings

Profit A financial benefit that is realized when the amount of revenue gained

from a business activity exceeds the expenses, costs and taxes needed to sustain the activity Any profit that is gained goes to the business owners, who may or may not decide to spend it on the business

Recruitment The overall process of attracting, selecting and appointing

suitable candidates to one or more jobs in an organization, either permanent or temporary The term may sometimes be defined as incorporating activities which take place ahead of attracting people, such as defining the job requirements and person specification, as well

as after the individual has joined the organization, such

as induction and on boarding Recruitment can also refer to processes involved in choosing individuals for unpaid positions, such as voluntary roles or training programs

Reward system Employee reward systems refer to programs set up by a

company to reward performance and motivate employees on individual and/or group levels They are normally considered separate from salary but may be monetary in nature or otherwise have a cost to the company While previously considered the domain of large companies, small businesses have also begun employing them as a tool to lure top employees in a competitive job market as well as to enhance employee performance Although employee recognition programs are often combined with reward system they retain a different purpose altogether They are intended to provide a psychological - rewards a financial - benefit Although many elements of designing and maintaining reward and recognition systems are the same, it is useful

to keep this difference in mind, especially for small business owners interested in motivating staff while keeping costs low

Stability of workforce Workplace stability is a major factor in levels of

employee morale People who work together for long duration get to know each other, and a workplace with no paranoia about layoffs and job loss is a much more pleasant place to work in Benefits are an important factor for many people in their choice of jobs Good benefits will entice many people to remain on jobs they might otherwise leave

Work experience Any experience that a person gains while working in a

specific field or discipline, but the expression is widely used to mean a type of volunteer work that is commonly intended for young people to

get a feel for professional working environments

Chapter II REVIEW OF LITERATURE

This chapter presents the relevant readings, related literature and conceptual framework which bear significance and similarities in this study

Before presenting the model for knowledge management defended in this dissertation, it is important to acknowledge where knowledge management comes from and the contribution of other fields in the study of training and skills development in organizations The next sections discuss different management approaches to the promotion of learning at work, such

as human capital theory, organizational learning and intellectual capital It will show the connection between these different fields and knowledge management as well as why knowledge management was chosen as the main field in this dissertation

Learning is the process of creating knowledge that guides the process

of learning Our knowledge is constantly changing; in other words we are continually learning throughout our entire life span and in all different kinds of settings The concept of lifelong learning seems useful in this context It has been used mainly by intergovernmental organizations as a guiding principle for educational policies

The assumption of this dissertation is that knowledge management is indeed an employer strategy for lifelong learning through structuring

“everyday activities” in a way that promotes constant knowledge creation Knowledge management, as will be defined later, refers to the different

business activities directed toward the creation, storage, distribution and use

of knowledge and information Knowledge management creates an environment for constant skills formation and learning, what von Krogh et al (2000) called “the knowledge enabling environment” On the one hand, knowledge management strategies enforce a lifelong perspective of learning through the continuous emphasis on the knowledge creation and skills upgrading On the other hand, knowledge management strategies promote constant opportunities for skills development and learning, both formal and informal Knowledge management includes formal learning activities, such as employee’s training in universities that leads to a specific certification within the state educational system It also includes non-formal learning activities, structured or semi-structured activities such as seminars, workshops or other organized learning sessions And finally it includes the working routines that are directed towards not only the improvement of productivity and innovation but also informal learning

Figure 1 Knowledge Management and Lifelong Learning

As can be seen, knowledge management is related to lifelong learning

as an employer strategy for constant upgrading of knowledge and skills In the last fifteen years, the recognition of knowledge management has increased tremendously in the business and research communities (see Desouza, 2003, p.25; Quintas, 2003, p.30) KPMG (1998) conducted a survey in 1998 of 100 leading United Kingdom companies and found that around 43 percent already had in place a knowledge management strategy A similar survey conducted

in 1999 found the number had increased to 61% The Garnet Group in a survey including 811 companies in North America and Europe found that 90 percent of the companies where aware of knowledge management and were going to put in place a strategy for it within the next two years (Harris et al 1999) Without going into details of the methodological problems that could be attributed to these surveys (see Foray and Gault, 2003), it seems clear that knowledge management is receiving growing attention

Chauvel and Depres (2002) analyzed 59 surveys in the field of knowledge management conducted between 1997 and 2001 They conclude that the field is in its adolescence and that there is no homogeneous definition for knowledge management Wiig (2000) argues that the field of knowledge management has a long way to go in its development For him, it will be integrated into management tools and, in this way, will eventually disappear

as a separate effort Quintas (2003, p.31) has pointed out that knowledge management has existed informally since the “earliest incarnations of organizations” Wiig (1997, p.2) puts it this way: “Clearly, knowledge has been managed implicitly as long as people have thought seriously about their work Nevertheless, systematic knowledge management for business purposes did

not become explicit until about a decade ago”

DiMattia and Oder trace the beginnings of knowledge management to the 1980s when downsizing was a popular business strategy that resulted in the loss of existing company expertise Moody and Duff (2000, p.21) maintain that in order to retain expertise, companies looked for ways of storing employee knowledge A second origin can be found, according to Wiig (1997, p.6), when some American companies began to use Knowledge Based Systems (KBS) to increase their competitiveness in the market Aguirre et al (2001, p.1) maintain that the origin of knowledge management can be traced

to the extensive research on Artificial Intelligence (AI) from the 1960s prior to using KBS Quintas (2003), on the other hand, associates knowledge management with the development of human capital theory and its focus on knowledge Thus, it is clear that knowledge management is nurtured by many different disciplines emphasizing various aspects of the same phenomena: knowledge in organizations and its use

McElroy (2000, p.200) argues that knowledge management has two distinct stages The first generation, concentrated on the “supply” of existing knowledge rather than on the demand for new knowledge Tuomi (2002, p 69-75) maintains that between 1993 to 1996, knowledge management developed from four different disciplines: organizational information processing; business intelligence; organizational cognition; and organizational development The two first would be in line with McElroy’s first generation of knowledge management or what Martensson (2000, p.210) refers to as knowledge management as an information-handling tool, whereas the last two are the basis for the second generation This first generation knowledge

management is interested mainly in using information technology in the workplace, creating knowledge based systems or other so called “knowledge management software” As understood in this dissertation and as some authors have indicated, the first generation of knowledge management mainly deals with information and not with knowledge (Fulmer and Keys, 1998) According to McElroy (2000) the main promoters of knowledge management within this line are software development companies which create databases, research engines or KBS to assist decision making

In the second generation of knowledge management, which would start around the 1995, the field evolves into a broader perspective where it is seen

as a management strategy (Martensson 2000, p.209) The distinction between knowledge and information becomes central The emphasis is placed particularly on tacit knowledge Nonaka (1991, p.97) argues that the centerpiece of knowledge intensive companies approach, “ is the recognition that creating new knowledge is not simply a matter of “processing” objective information Rather, it depends on tapping the tacit and often highly subjective insights, intuitions and hunches of individual employees and making those insights available for testing and use of the company as a whole” In this second generation, thus, the assumption is that knowledge is owned and controlled by individuals Hence, knowledge management concentrates on people rather than on technology In this generation, information technologies are viewed as an enabler of the knowledge management process (Martiny,

1998, p 76; Alavi and Tiwana, 2003; Rao, 2005a) Information technologies are directed towards group activities as well as allowing to a certain degree of personal communication, taking into account the tacit nature of knowledge

In addition further development of knowledge management emphasizes the role of collaboration and culture Chase (1997a) concluded after a survey of different knowledge management initiatives in 143 organizations that a successfully implemented knowledge management system “is mainly linked with ‘soft’ issues” such as organizational culture and people (Hauschild et al., 2001) Bixler (2005, p 61) includes as necessary requirements for building up a knowledge management system conditions such as leadership involvement, developing a sharing culture among employees, and continuous training of employees Davenport, et al (1998) found that culture was a key factor for success in their study of 31 knowledge projects (see Davenport and Prusack 1998, pp 151 -153) They define a culture with positive orientation toward knowledge as “one that highly values learning on and off the job and one in which experience, expertise and rapid innovation supersede hierarchy” (Davenport et al 1998, p 52) Svensson et

al (2002, p 15) concluded after their study of learning environments in knowledge intensive companies in Sweden, Denmark, the Netherlands, the United Kingdom and Ireland that “the most critical aspects could be called the learning culture of the teams and projects One aspect of the learning culture

is the valuing of learning and the support given to each other space for learning” In a similar way, Ahmed et al (2002) in their review of knowledge management initiatives in 17 international companies found that successful knowledge management initiatives are always related to a knowledge sharing culture: “Knowledge management requires organization culture that constantly guides organizational members to strive for knowledge and a climate that is conductive to it” (Ahmed et al 2002, p.48)

One could argue that the field is still in a maturation process Tuomi (2002, p 76) maintains that knowledge management is living its third generation He characterizes it as software that takes into account the dynamic nature of knowledge and the importance of collaboration For the present work, Tuomi’s characterization does not truly differentiate between second and third generation knowledge management It is argued here that the main feature in the current knowledge management field is that the different disciplines are merging and being integrated (see Wei Choo and Bontis, 2002a; Easter-Smith and Lyles 2003b; McElroy 2003; Diakoulakis et al., 2004; Butler and Grace, 2005)

Quintas (2003, p.31) maintains that knowledge viewed from an economic and organizational perspective “has a rather longer history that KM phenomenon suggest” He quotes Penrose (1959, p.77) as follows:

“Economists have, of course, always recognized the dominant role that increasing knowledge plays in economic processes but have, for the most part, found the whole subject of knowledge too slippery to handle”

Human capital theory could be considered the first economic approach that specifically deals with knowledge and skills For the last 50 years or so the theory has been used to study the impact of knowledge and skills formation in productivity, both at the macro and micro level and has influenced company training activities Especially important for this dissertation is the measurement of human capital and how companies justify investment in it In most of the cases, as Desjardins (2004) points out, studies of human capital have been measured in terms of educational attainment Experience has also been considered a proxy for human capital: the more experience one has the

more human capital that one is supposed to have Post-school training activities are usually considered the main vehicle for human capital formation

in adult life (Mincer 1997) Theoretically, following Becker’s (1962, 1993) assumptions, companies would pay for specific training but not general training

Human capital theory is not exempt from criticism, especially in terms

of how and what to measure As Desjardins (2004, p 9) points out, “while the theory has been influential, there is growing concern and dissatisfaction with its treatment” He maintains that not all potential sources of human capital investment are considered in empirical applications In particular, informal learning as a form of human capital formation remains unexplored Brown (2001, pp.13-29) summarizes the criticism to human capital theory in four different categories relating to: (1) the supply side; (2) the demand side; (3) skills measurement; and (4) the global labor market Firstly, within the supply side, Brown (2001, pp.13-16) maintains that human capital theory treats investment in human capital as any other form of capital In this way, the individual worker is reduced to a “bundle of technical skills that are fed into the economy” It fails to account for “soft issues” such as social relationships, corporate culture or the transfer of tacit knowledge that might play a role in investments in human capital (Nonaka and Takeuchi 1995) On the demand side, Brown (2001, pp.16-23) shows how the model of technological progression defended by human capital theorists is not empirically supported For him, the model ignores factors such as existing management practices, attitudes toward women, and industrial relations In relation to measuring skills, Brown (2001, pp.23-26) defends the disinterest of human capital

theorists with certain skills that are difficult to teach formally, such as creativity

or social skills, but that might play a crucial role in increasing productivity In addition, human capital theory assumes “wages to reflect the productivity of labor” which is difficult to explain in a global context without taking into account domestic issues and the power of individuals and occupations Another criticism of skills measurement in human capital theory is the emphasis on measurement of outcomes, thereby ignoring the process of skill formation Finally, in relation to the global market, Brown (2001, pp.26-29) maintains that human capital theory considers a global market and this is an oversimplification of the reality that most workers face in their everyday life

In conclusion, human capital theory is of crucial importance to understanding investment in activities for knowledge creation, such as training However, it fails to look into the process in which this human capital formation takes place In a similar way, it does not take into account the concept that working involves constant learning, which is especially relevant

in knowledge intensive companies Knowledge management provides a framework to construct and study this process of learning while working

The field of organizational learning and the learning organization provide interesting insights into the development of a culture that fosters innovation and constant learning Many authors refer to organizational learning within the framework of knowledge management and consider it as a strategy for knowledge management (see Wiig et al 1997) Others, as McELroy (2000), maintain that knowledge management is an implementation strategy for organizational learning Bontis et al (2002) believe organizational learning introduces behavioral variables into the study of knowledge within

organizations Easter-Smith and Lyes (2003, p.4) argue that knowledge management is more concerned with “the stuff that organizations posses”, in other words knowledge, whereas organizational learning is more interested in the process of knowing In addition, they say that practitioners are the main promoters of knowledge management while organizational learning has a more theoretical basis (see Vera and Crossan, 2003) Butler and Grace (2005, p.56-57) argue that knowledge management and organizational learning “complement each other, in that the learning process is of no value without an outcome, while knowledge is too intangible, dynamic and contextual to allow it to be managed as a tangible resource” They are advocates of a learning management system which combines organizational learning theories with knowledge management In line with Butler and Grace (2005), the present dissertation integrates organizational learning and the learning organization within the broader framework of knowledge management Knowledge and learning are so interrelated that a strategy for managing knowledge necessarily has to take into account learning Further, while knowledge management has a holistic view of company processes, organizational learning and learning organization literature does not include certain important aspects of the these processes such as the role of information technologies and certain key aspects of recruitment

Organizational learning ideas mainly point toward the importance of constant evaluation of organizational routines or, in other words, the continual monitoring of the organizational processes that allow for constant improvement However, although these ideas provide guidelines for individual and managerial actions, they do not provide a clear way of assessing and