Competitive Advantage Via A Culture Of Knowledge Management: Transferring Tacit Knowledge Into Explicit


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Journal of Knowledge Management Practice, Vol. 9, No. 2, June 2008

Competitive Advantage Via A Culture Of Knowledge Management:
Transferring Tacit Knowledge Into Explicit

Salah Eldin Adam Hamza, SOFCON Consulting Engineering Company, Saudi Arabia


Competitive Advantage is more or less a dream if it is not closely tied to knowledge
management; however many studies have noted that the challenge for knowledge
management remains its tacit portion since by definition tacit knowledge is hard to

articulate and transfer. This paper explores the notion that for competitive advantage,
the transfer of tacit knowledge is essential to the integration of organizational
knowledge within organizational areas such as people, processes and technology

aper commences with principles, concepts and advances of knowledge management,
and emphasizes previous attempts to transfer tacit knowledge into explicit knowledge
management. Subsequently the paper presents an integrated and comprehensive,
empirically tes
ted model to argue that tacit knowledge can be transferred into explicit
knowledge through a structured process of communication, interaction, collection and
circulation in order to achieve competitive advantage.


Competitive advantage, Explicit k
nowledge, Knowledge management
culture, Knowledge management frameworks, Knowledge management models, Tacit



According to Birkinshaw and Sheehan (2002) and Teece (2000), effective knowledge
management plays an increasingly important role in sustaining the competitive
advantage of organizations in the new economy. It is worth noting that competitive
advantage is b
rought about through developing and putting into effect innovative
business solutions that recycle applicable knowledge, and that use newly formed
knowledge. This link between the management of knowledge and the development of a
sustainable competitive ad
vantage in modern organizations is not new, although, the
focus on knowledge characteristics in general and the tacit portion of it, in particular,
has increased within modern organizations, still there is a struggle in this area.

The more communication,
involvement and interaction of people the more chance for
organizations to expose tacit knowledge residing in individuals’ brains. Individuals
maintaining good relationships are more likely to exchange tacit knowledge. Augier and
Vendelu (1999) treated kno
wledge networks and concluded that tacit knowledge is best
transmitted through personal relationships. Several attempts have been made by
organizations to tackle the organizational knowledge as it pertains to competitive
advantage. They have identified th
at developing a society of employees who are open
minded and free opinion may be a more wise approach than the acceptance of a total
structure such as quality or knowledge management

On the contrary, organizations
need to change to a strategy of attractin
g or developing whatever knowledge, capability
and competencies relevant to the opportunities they define and the markets their
imaginations create

In this context, Coulson
Thomas (1997, p. 26) stressed that:

“Boards should be learning and steering rather

than planning and implementing. At the
frontier of exploration there may be little knowledge to manage. The challenge may be
one of discovery and innovation. Boards should anticipate, support and enable. They
should stress the fun of shared learning, and
of future discovery and creation, rather
than dwell on the pain of past restructuring.”

Individuals who are rich of tacit knowledge constitute a wealth of intangible asset to the
organization. As long as they stay on employment with the organization, they continue
playing a competitive figure through effective decision making, communication a
contribution. Once employees leave an organization, knowledge in their heads is also
gone. The problem is that in today’s business environment, there is a high turnover of
human resources. The International Labor Organization (ILO) indicated high lack o
decent work and recommended increasing the chances of finding decent jobs by
providing effective re
employment services, counseling, training and financial
incentives (ILO, 2007).

Many organizations have experimented and utilized various possible option
s of
knowledge management systems including, but not limited to, technological
solutions, information technology, bulletin boards, discussion forms, intranets and
search engines. Several organizations have paid attention to tacit knowledge in
lar, and utilized networks and cognitive frames in managing their corporate
knowledge. Gupta and McDaniel (2002, p. 3) synthesized a framework with five
necessary elements for creating successful knowledge management:
filtering, configuration,

dissemination, and application”
. Gupta and McDaniel (2002)
classified tacit knowledge as existing knowledge to be captured within the firm from
inside the minds of its employees or from databases versus explicit knowledge that can
be acquired from outside

the company as new knowledge.

The basic problem associated with fluctuating organizational competitive advantage
resides with lack of integrated and comprehensive system to create, document, circulate
and update organizational knowledge in general and tac
it knowledge in particular. This
paper develops a framework that encompasses these aspects to bring about
organizational competitive advantage and is organized as follows: in the next section we
will discuss the main features of knowledge management approa
ches and argue each in
the context of tacit management and its relation to create and maintain organizational
competitive advantage; in the third section we will discuss and present an integrated and
comprehensive model to argue that practice of tacit know
ledge management is
culturally based and if implemented in a structured manner will equip organizations
with needed competitive advantage; at the end, the paper provides some conclusions for
future research.


Literature Review


About Tacit Knowledge

The concept of tacit knowledge refers to knowledge which is only known by an
individual and that is difficult to communicate to the rest of an organization. Knowledge
that is easy to communicate is called explicit knowledge. The process of transforming
it knowledge into explicit is known as codification or articulation, Birkinshaw

It has been found that tacit knowledge is a crucial input to the innovation process. A
society’s ability to innovate depends on its level of tacit knowledge on how to innovate.
Rebernik and Sirec (2007) emphasized that tacit knowledge may only be effective

embedded in a particular organizational culture, structure and set of processes and
routines. The difficulty in copying tacit knowledge is why it forms the basis of a unique
competitive advantage. Polanyi (1983) suggested that scientific inquiry cou
ld not be
reduced to facts, and that the search for new and novel research problems requires tacit
knowledge about how to approach an unknown. Nonaka and Takeuchi (1995) brought
the concept of tacit knowledge into the realm of corporate innovation and indi
cated that
Japanese companies are more innovative because they are able to successfully
collectivize individual tacit knowledge to the firm.


Aspects Of Competitive Advantage

Tacit knowledge can be managed through organization’s knowledge processes;
ncluding strategic planning, decision making, marketing and hiring personnel. Leitch
and Rosen (2001) emphasized that understanding and optimizing knowledge
management processes can offer organizations a competitive advantage regardless of
their business s
ector. Moreover, Leitch and Rosen (2001, p. 10) indicated that several
professionals, under the sponsorship of Knowledge Management Consortium
International, had developed a Knowledge Life Cycle model of three


“Acquire information and unverified kn


“Produce new, validated knowledge from the acquired information and
unverified knowledge”,


“Integrate the new knowledge into the organization for improved effectiveness”.

Business leaders understand the strategic significance of knowledge and th
e need to
manage knowledge assets. Nevertheless, their efforts fail to achieve real goals for
several causes: belief that acquisition of the right knowledge automatically generates
benefits, lack of focus on knowledge management initiatives, relying on tec
hnology to
provide solution and benefit, structures that are inappropriate for capitalizing on an
organization’s knowledge assets and lack of proper ownership (Murray, 2002).

Aspects of organizational competitiveness may differ from small medium enterprise
(SME) to large organizations.
Bennett and

Smith (2002) assessed the

factors associated
with the
competitive conditions and competitive advantage and confirmed
that, as businesses expand, SME extend their strategy to seek specialization and
differentiation of their products and services and diversification of their customer base.
Oliver (1997) argued that an organization's sustainable advantage depends on its talent
to manage the institutional framework of its resource decisions. That framewo
rk should
include internal culture in addition to external influences from the government, society
and inter
organization relations that describe communally satisfactory economic


Link Between Knowledge Management And Competitive Advantage

For the last two decades, knowledge management has been a recognized discipline, and
large organizations have acquired dedicated information technology and human
resources accordingly. Recently, a rapid growth for the purpose of performance
excellence and

competitive advantage is clearly demonstrated by researchers who
proposed methodologies for capturing and representing organizational management
(Kim et al., 2003). In this regards, Kim et al. (2003, p. 44) argue that:

“Maintaining knowledge is more diffi
cult than creating knowledge; promotion of
knowledge sharing culture is indispensable; top management support on knowledge
management project is inevitable; reward system is clearly declared to enhance
knowledge sharing; knowledge management system should
satisfy knowledge

Though management executives trust that sustainable competitive advantage relies on
the capacity to generate and utilize new knowledge, they still seek a structured universal
approach for this purpose. Franken and Braganza
(2006) discussed the assumptions of a
standard knowledge management approach and showed that the choice of knowledge
management approach must be closely aligned with the organization’s strategic and
operational form in order to harvest the anticipated bene
fits. In this context, Franken
and Braganza (2006, p. 18) concluded that:

type organizations will tend to adopt bottom
up approaches for
effective knowledge creation”;

type organizations will tend to adopt top
down approaches”; and

nalyzer types will adopt middle
down knowledge creation approaches”.

Individuals usually carry in their minds a huge quantity of knowledge deemed to be
useful to business but unfortunately not stated in an organizations’ procedures, policies
and databa
ses. Crawford (2005) iterates that tacit management is unstated knowledge in
a person’s head that is habitually not easy to explain and convey and includes lessons
learned, know
how, judgment, rules of thumb and intuition. Business studies conducted
a few
years ago revealed that tacit knowledge constitutes 42 percent of corporate
organizational knowledge (Clarke and Rollo, 2001). This indicates that organizations
without serious and well structured knowledge management systems that take care of
tacit knowle
dge are missing basic business tools and are ill organized for achieving
competitive advantage.

Tacit knowledge lies beneath many competitive capabilities. Experience, secured as
tacit knowledge, habitually reaches perception in the form of intuitions, in
sights and
lights of stimulation. The capacity of mind to make sense of past compilation of
experiences and to connect patterns from the past to the present and future is essential to
the innovation process. The inspiration necessary for innovation derives

not only from
evident and noticeable expertise, but from hidden supply of experience, Thus, tacit
knowledge is unrevealed to competitors unless key individuals are hired away.

The talent to capture and exploit corporate knowledge has become vital for fir
ms as they
seek to adjust to changes in the business environment. Whether it be learning from past
successes or failures, identifying opportunities to improve customer profitability, or
simply enabling teams to become more productive, knowledge management
lies at the
heart of any well
managed organization. A study published by the Economist
Intelligence Unit and sponsored by Tata Consultancy Services (The Economist, 2005, p.
2) reported the following findings that confirm relation of knowledge management to

competitive advantage:

“Consolidating information and providing consistent performance indicators
are regarded as the most important steps firms can take to improve the speed
and quality of decision

“Firms are looking for IT tools that allow empl
oyees to prioritize information,
and to extract valuable insights from an ocean of data. For most managers,
having information that they can quickly interpret and analyze is much more
important than, for example, having information on the move. There is al
growing demand for smarter management information systems, with tools like
digital dashboards enabling executives to track their firms’ key performance
indicators on an almost real
time basis,”

“Companies have demonstrated how customer analytics can
support initiatives
to increase customer loyalty and expand markets share, much to the
embarrassment of their competitors,”

“Understanding who knows what, and how people use different types of
information as part of their work, is just as important a part
of good knowledge
management as having the latest business intelligence technology”.


Knowledge Management Models And Frameworks

Organizations need to align their frameworks, structures and processes to a knowledge
management strategy in order to reali
ze the anticipated benefits of knowledge
management. Literature recognizes that knowledge management strategies must follow
competitive strategies for organizations to build up sustainable competitive advantages
through utilization of exclusive knowledge r
esources (Hansen et al., 1999).

Soft measures of knowledge management, including but not limited to enhanced
collaboration, improved communication, improved employee skills and better decision
making, are believed to impact the success and effectiveness of

management. Anantatmula and Kanungo (2006) identified a set of criteria to assess the
effect of soft measures on knowledge management using the Delphi method and to
understand how they inter
relate with each other. Results by Anantatmula and Kan
(2006) showed that better collaboration leverages worker skills for a healthier decision
making and thus more productivity and better quality. However, their results were
limited to for
profit organizations and therefore further research is needed on
profit firms. According to Nonaka (1994), the tight marriage of knowledge management
effectiveness, collaboration and the sharing of best practices can be understood from
notions of internalization (that help convert explicit knowledge into tacit k
and externalization (that involve the expression of tacit knowledge and its translation
into comprehensible forms for others to understand).

Franken and Braganza (2006) proposed a framework that puts the knowledge
management models of Nonaka (19
94) in context in relation to the strategic typology of
Miles and Snow (1978). Franken and Braganza (2006) attempted to assemble Miles and
Snow’s framework and Nonaka’s knowledge creation spiral and management models.

Bellini and Storto (2006, p. 154) con
ducted an explorative research on information and
communication technology on small firms and proposed a framework relating growth
strategies and knowledge structure. The model they developed showed that the
knowledge structure profile affects the growth s
trategy performance of the organization.
Further, their model indicated the following characteristics of small firm business
growth in relation to competitive advantage:

“The negative impact of increasing age of small firms could be explained by the
ssive obsolescence of the initial technical competences of the business

“The low level of renewal of the initial competences probably derives from their
nature, strictly linked to the previous educational, academic or professional
activities of
the founders”,

“The best performances of small firms underline the strategic relevance of the
ability to integrate, on the one hand, emotional and creative elements with an
operative and intentional rationale, and, on the other hand, marketing, business
nd technical capabilities”, and

“The methodological limits tied to the current use of a unique variable (turnover
rate) to measure the growth, because of the variegated aspects of this


Developing An Effective Culture Of Tacit Knowledge Mana

Proposed Model

Organizations can be tempted to occupy a low risk, low reward position, exploiting and
protecting existing stable products, processes and customers. This initially low
strategy evolves into high
risk strategy over time throug
h competition driving the
organization into selling capacity as a commodity. The organization can delay dropping
out of the Paradigm Frame at this point by developing Key Account Management or
partnership approaches to mask the decline in its products (Mil
lman, 1993).
Organizations seeking competitive advantage must instead focus on capturing and
utilizing tacit knowledge, as well as explicit knowledge. World class organizations see
knowledge management as an undertaking around which all staff should congr
They influence employees to embrace knowledge management and become involved in
the goals and results it yields.

The most effective way to utilize tacit knowledge within the organization and to make it
a tool for competitive advantage is through str
uctured organizational behavior
considering all areas of business operations in a consistent and objective manner.
Recent studies reveal that best practice organizations link their knowledge management
practice and results to their quality initiatives orga
wide. In his recent paper on
benchmarking for best practice management, Hamza (2007a) recommended that
organizational knowledge must be shared so decisions are made in the best interest of
the company as a whole. This transforms each system from s
imply an “indicator of
knowledge handling” to an “enabler of excellence”. It is therefore extremely important
to note that tacit knowledge management should not be stressed as a separate activity
but rather as an integrated approach to enhance organization
al and managerial

The road map presented by this paper is drawn from the best practices concluded from
case study analysis. It is important to note that in most organizations there is no separate
knowledge management system. This model therefor
e integrates knowledge
management within the overall management process through establishing a culture of
knowledge management as shown in Figure 1. The model consists of six steps that are
meant to bring together all aspects of business excellence.


tep 1: Launching

Hamza (2007b) indicated that for many organizations, especially in the Arabian Gulf
region, knowledge management is still far from organizational thinking. The first
commitment organizations seeking investment on tacit knowledge management

make is to initiate and launch a culture of knowledge. Figure 2 shows the basic elements
for this step.

: Culture of Knowledge Launching

To handle competition better, this step should consider integration of tacit knowledge
management into business processes, right from the beginning, in order to help maintain
leadership as a competitive advantage enabler.

: Tacit Knowledge
Management Framework


Step 2: Collection

This is the most critical stage in the process of transferring tacit knowledge into explicit.
It should be concerned with identifying, writing, and submitting tacit knowledge
initiatives gained from experience,
successful or otherwise, for the purpose of
improving future performance. The organization needs to set means to stimulate
employees thinking and development by identifying and aligning with knowledge
necessary to support the organization’s strategy and op
erations to achieve the projected
benefits. Further, organizations shall establish a knowledge base to enable their
members to capitalize on verified successes and mistakes, thus producing a cutting edge
competitive advantage. The collection process should

be continuous throughout the life
cycle of the organization. Figure 3 shows various aspects organizations may adopt for
tacit knowledge collection depending on the nature and size of the organization.

: Tacit Knowledge Collection

It is critical
for the knowledge coordinator and knowledge circles to actively create a
motivated and flexible environment by allowing and absorbing tacit knowledge sharing
initiatives. Formal collection workshops can be arranged at regular intervals (based on
onal needs) to keep the organization on its toes in terms of continuous
awareness, commitment and system update.


Step 3: Reviewing

Irrespective of the collection source, the tacit knowledge initiative shall be thoroughly
and promptly reviewed for fit
ness to business use. The organization needs to establish a
formal review process for tacit knowledge initiatives. The outcome of this step could be
one of the possibilities as shown in Figure 4.

: Tacit Knowledge Review


Step 4: Publishing T
he Tacit Knowledge Base

In order to ensure wider applicability and benefit, documented tacit knowledge must be
published for a wider readership and usability within all organizational levels.

Disseminating knowledge is critical for world class organizations as an effective means
of achieving and maintaining operational excellence and competitive advantage. Despite
the help of information technology in online publishing, organizations still stru
ggle with
information management and dissemination, especially when trying to share vast
amount of information. Nadeau, et al. (2004) presented the idea of how large
organizations can plan to move towards greater coherence, bringing standards, tools and
thodologies for information exchange. According to Obaide and Alshawi (2007, p.
“tacit knowledge is distributed and shared through formal and informal
socialization. This takes place in the forms of sharing experiences, spending time with
each other,
apprenticeship, mentorship, meetings, Communities of Practice,
brainstorming sessions and group
work technologies”.

However, this paper emphasizes
formal distribution and sharing through a structured model.


Step 5: Adapt Tacit Knowledge Into Daily Bus
iness Practices

The ultimate goal for collecting tacit knowledge is an effective and accurate adaptation
for the right purpose, at the right situation and at the right time.

et al
. (2005)
emphasized that in order to increase the flexibility of the knowledge structure for
accumulation and adaptation, a non
hierarchical knowledge structure is needed. Koh et
al. (2005) also proposed a knowledge expression method to facilitate the rear
of design knowledge, to promote the flexibility of knowledge structure, and to evolve
the creative knowledge from similar design. Nevertheless, organization members need
to have skills and experience in order to adapt the knowledge they gain, and

to generate
benefit in developing a competitive advantage. It is important for organizations to grow
knowledgeable staff through both developing existing employees and hiring new
workforce. It is also imperative for the knowledge coordinator and knowledge

circles to
ensure progress of the implementation of collected knowledge, to facilitate the
implementation process; and to provide guidance and training to other employees.


Step 6: Update And Archive Tacit Knowledge

Conveyance: individuals with greate
r tacit knowledge will possibly pass their
knowledge to individuals lacking basic knowledge and skills through direct and indirect
communication, interaction and involvement. In general, a significant amount of the
transferred knowledge is also conveyed th
rough face to face discussions, sharing ideas,
consulting one another and instructing our subordinates.



The proposed model discussed is competitive
advantage oriented. It presents a
continuous process of tacit knowledge identification, coll
ection and adaptation through
endless business needs assessment. A key direction for future research will be to apply
the model as discussed, and to evaluate its impact on addressing the development of
organizational competitive advantage.



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Contact the Author:

Salah Eldin Adam Hamza, Quality Manager, SOFCON Consulting Engineering Co., Al
31952, Saudi Arabia; Tel. 00966554500484; Fax. 0096638879524; Email: