Five critical knowledge management organizational themes

Peter Sun

Abstract Purpose This study is motivated by the question how do organizational routines inuence the three knowledge management processes of acquisition, creation, utilization and sharing? and accordingly it seeks to address this issue. Design/methodology/approach A theoretical framework is rst built by linking absorptive capacity (a routine-based capability) with knowledge management processes. A literature search guided by the theoretical framework, and evidence from two case studies, were used to address the objective of the study. Findings The study elicited the organizational routines that inuence the three knowledge management processes. These routines were then clustered into ve key organizational themes: systemic knowledge; strategic engagement; social networking (external and internal); cultural context; process and structural context. Research limitations/implications Several implications for research are suggested. More specically, the study offers ve propositions that can be further tested. The key limitation of this study is the use of only two case studies for empirical data, and therefore further testing is needed. Practical implications The study shows that, although leadership behavior is critical for knowledge management, its impact depends on the platform of routines and processes built for it. The identied routines and their inuence on knowledge management are invaluable for knowledge management practitioners. Originality/value The paper furthers understanding of how organizational routines inuence the three knowledge management processes of knowledge acquisition, creation, utilization and sharing. This aspect has been little studied and is of value to both academics and practitioners. Keywords Knowledge management, Learning organizations, Organizational processes Paper type Research paper

Peter Sun is based at the Waikato Management School, University of Waikato, Hamilton, New Zealand.

Introduction
Knowledge management as a routine based capability is recently recognized (e.g. Moustaghr, 2009), and is the only source of sustainable competitive advantage for an organization (Grant, 1996; Kogut and Zander, 1992). Gold et al. (2001) and Lee and Choi (2003) show how some aspects of organizational culture, structure and technology are directly related to knowledge management. Similarly, the study done by Nonaka (1994) revealed that some aspects of organizational structure and organizational culture inuence the knowledge creation processes in the organization. These studies collectively reveal that there are some independent organizational routines that directly inuence an organizations capability to manage knowledge (Zheng et al., 2009). However, the exact nature of its inuence, especially the inuence on the specic knowledge management processes, remains unclear. This study seeks to address this by showing which knowledge management processes these routines are likely to inuence the most. Knowledge management is now recognized as a process rather than a product (Moustaghr, 2009). This recognition has resulted in a plethora of knowledge management frameworks that dene the activities that constitute knowledge management in an organization (Heisig, 2009). Most knowledge management frameworks encompasses

Received: 20 January 2010 Accepted: 18 March 2010

DOI 10.1108/13673271011059491

VOL. 14 NO. 4 2010, pp. 507-523, Q Emerald Group Publishing Limited, ISSN 1367-3270

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the activities of identifying, acquiring, creating, storing, sharing and utilization of knowledge by individuals and groups in the organization (Heisig, 2009; Soliman and Spooner, 2000; Zheng et al., 2009). In this study, knowledge management is examined through three processes: Knowledge acquisition, knowledge creation, and knowledge utilization and sharing (Davenport and Prusak, 1998; Gold et al., 2001; Heisig, 2009). Knowledge acquisition refers to the processes by which new knowledge is acquired from outside sources, knowledge creation is the process of transforming the newly acquired knowledge to the context of the organization, and knowledge utilization and sharing is the process of continuously applying (or exploiting) the newly created knowledge and sharing it from individual to individual or group. Grouping utilization and sharing into a single category may appear to be problematic. However, an understanding of what is knowledge will nullify this concern. What is simply learnt (which is a change in cognition but not behavior) and then shared does not constitute knowledge. Such learning gives prominence to only one aspect of knowledge i.e. explicit knowledge. What is learnt becomes knowledge when it is experienced, i.e. when it is utilized and subsequently internalized by the individual and becomes part of their justied belief system (Davenport and Prusak, 1998; Nonaka, 1994). It is this internalized knowledge (consisting of explicit and tacit components) that has to be shared across the organization for organizational effectiveness (Zheng et al., 2009). Knowledge that is either utilized in only one part of the organization, or only residing in certain individuals, does not result in organizational knowledge. This is why knowledge utilization and sharing which are the last activities in the knowledge management process are combined together in our study. It is the recognition that what is utilized is what needs to be shared as it takes into account both explicit and tacit components of knowledge. Evidence from literature and data from two case studies will be used to elicit the routines that inuence the three knowledge management processes. We begin by building a theoretical foundation that knowledge management is a routine based capability.

Knowledge management as a routine-based capability

An organizational routine is a repetitive pattern of interdependent activities, often executed by multiple actors (Feldman and Pentland, 2003). These repetitive activities are a result of learning that is institutionalized and represent an organizations responses to various stimuli (Zollo and Winters, 2002). These organizational routines are not necessarily only formal and documented activities. Some routines may happen within communities of practice in the organization. Organizational routines are therefore the building block of organizational capabilities (Nelson, 1991). An important routine-based capability of an organization is its absorptive capacity (ACAP) capability (Todorova and Durisin, 2007; Zahra and George, 2002). Zahra and George (2002) conceptualized ACAP as consisting of four dimensions: 1. Acquisition, which refers to a rms capability to identify and acquire externally generated information that is critical to its operations. 2. Assimilation, which refers to the rms routines that allow it to analyze, process, interpret, and understand the information obtained from external sources. 3. Transformation, which denotes a rms capability to develop and rene the routines that facilitate the combination of existing knowledge with newly acquired and assimilated knowledge. 4. Exploitation, which denotes the rms ability to consistently use the new knowledge gained for commercial use over an extended period of time. These dimensions are distinct organization capabilities that are routine based (Todorova and Durisin, 2007; Zahra and George, 2002). It gives the organization the collective ability to recognize the value of new external knowledge, assimilate it, and then continuously applying it to commercial ends (Cohen and Levinthal, 1990; Sun and Anderson, 2008).

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Sun and Anderson (2008) argues that ACAP shares conceptual afnity with organizational learning, and they establish this by showing that the nomological nets of these two constructs are similar. They argue that ACAP should be considered as a specic type of organizational learning which concerns an organizations relationship with external knowledge (p. 15). This is further supported by the work done by Lane et al. (2006) and Lichtenthaler (2009) who conceptualized ACAP as drawing on three learning processes. Lane et al. (2006, p. 856) dene ACAP as a rms ability to utilize externally held knowledge through three sequential processes: recognizing and understanding potentially valuable new knowledge outside the rm through exploratory learning, assimilating valuable new knowledge through transformative learning, and using the assimilated knowledge to create new knowledge and commercial outputs through exploitative learning. Because ACAP is a specic type of organizational learning, it deals equally with feed forward ow of learning for new knowledge to develop, as well as feedback learning for continuous exploitation and renement of existing knowledge (Crossan et al., 1999; Moustaghr, 2009; Sun and Anderson, 2008). ACAP can therefore be argued to be specic learning processes that build new knowledge as well as to exploit existing knowledge bases, and therefore underpin knowledge management (McGaughey, 2002; Moustaghr, 2009; Nonaka et al., 2000; Schmidt, 2010). The routines that constitute ACAP are therefore the same routines that underpin the knowledge management processes (see Figure 1). More specically, the ACAP dimension of acquisition and assimilation underpins the knowledge acquisition process. The acquisition and assimilation dimensions enable the organization to recognize new external knowledge that has some degree of similarity with prior knowledge, and then interprets the usefulness of the acquired knowledge to the context of the organization (Lane et al., 2006; Zahra and George, 2002). The transformation dimension underpins the knowledge creation process. This ACAP dimension involves the developing of shared understanding as to how to redene the existing knowledge base and combine it with the newly acquired knowledge. This development of a shared understanding takes place within group interaction (Crossan et al., 1999; Nonaka, 1994; Sun and Anderson, 2008). The exploitation dimension of ACAP underpins knowledge utilization and sharing process. The Figure 1 Theoretical framework showing knowledge management to be a routine-based capability
New External Knowledge (Input)

Knowledge Management Absorptive Capacity Acquisition ACAPbased Routines Assimilation Transformation Knowledge Creation Knowledge Acquisition (Output) New Organizational Capabilities

Institutionalization

Knowledge Utilization and Sharing

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new knowledge that is acquired, assimilated and transformed must be institutionalized into new routines for continuous exploitation and renement. This in turn enables an organization to develop new capabilities to respond to external stimuli. These dynamics are illustrated as a theoretical framework in Figure 1.

Method
The motivation of this study is driven by the question how do organizational routines inuence the three knowledge management processes of knowledge acquisition, knowledge creation, and knowledge utilization and sharing? The above question is answered by triangulating literature with two case studies. The theoretical framework shown in Figure 1 guided our literature search. Articles on knowledge management processes (e.g. Nonaka, 1994) and on ACAP (e.g. Jansen et al., 2005) were used to elicit the organizational routines that inuence the three knowledge management processes. Apart from the evidence from literature, data was also collected from two separate case studies. The rst case study was of a large-scale insurance company (Asia Insurance Limited AIL) based in Asia, and the second was a public sector organization (Environment Bay of Plenty EBOP) dealing with Environment protection based in New Zealand. For a brief description of the two case study organizations refer to the Appendix. In the rst case, the author and two other researchers were tasked by the CEO with evaluating the knowledge management capability of AIL (a consulting assignment). This engagement took place in June 2007 and a total of 380 man hours was spent on this assignment. Data was primarily gathered from interviews and observations. Every interview was led by one team member whilst another observed and took down notes. Each interview ranged from one hour to more than 90 minutes. In total, 28 individuals from various functions, divisions, and across all hierarchical levels were interviewed, and extensive discussions were held with several external insurance agents during the eld observations. The second case study took place in August 2009. Six individuals from the consent department and all individuals from the Maori policy department (i.e. nine in total) were interviewed for this study. In addition, seven individuals from other departments were also interviewed. All interviews were digitally recorded and then transcribed, and each interview lasted about 40-60 minutes. First, all interview transcripts and observations and interview notes were independently read by those involved in the research. In the rst case study, analysis took place from June 2007 to December 2007, over the period of the assignment. In the second case study, discussion and analysis took place from June 2009 to November 2009. In these ongoing debate and discussions, incidents from interviews, observations notes and literature were drawn out, its meaning claried, and links to the knowledge management processes were made. The discussion involved the use of a mind map, and Figure 2 illustrates one part of the mind map. In the rst step, the organizational routines from the case studies and past literature were drawn out. For example, in the EBOP case study the consent ofcers spoke of how they use their technical knowledge of water management to seek for new developments in their industry. When asked how they obtained this technical knowledge, they spoke of how the organization paid for seven days compulsory technical training per year. To conrm if this was true across the organization, question on training was posed to other interviewees and they conrmed the presence of such a training scheme. This type of training is institutionalized and is a routine or practice in the organization. Training was therefore included in the mind map (see Figure 2). Some organizational routines were directly taken from literature, although not evidenced in the case studies. For example, Jansen et al. (2005) found evidence in their empirical study that job rotation positively inuenced knowledge acquisition. Job rotation was thus included in the mind map (see Figure 2). Once all the organizational factors were included in the mind map, the second step involved the researchers discussing and debating the possibility of clustering these organizational routines into key themes. By discussing the meaning of the organizational routines and how are they interrelated enabled the researchers to group relevant routines and provide a

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Figure 2 Mind map used in data analysis (example)

Knowledge Acquisition Process

(LIT) (EBOP) (AIL)

LIT (LIT) EBOP (EBOP) AIL (AIL)

LIT AIL (LIT) (AIL)

Knowledge Creation Process

Knowledge Utilization and Sharing Process

LIT (LIT)

Systemic Knowledge Cross Functional Interfacing Information Sharing

(AIL) AIL EBOP LIT (EBOP) (LIT)

Strategic Engagement

Social Networking (Internal & External) Participatory Decision Making

(LIT) (AIL) (EBOP) LIT AIL EBOP

Clear Strategic Focus

(LIT) (EBOP) (AIL) LIT EBOP AIL

Investing in R&D Job Rotation

(LIT) LIT (LIT) LIT

Creative Gene Pool

(AIL) AIL

Exposure to Internal yet Complementary Sources Training

(EBOP) EBOP (EBOP) (LIT) EBOP LIT

Understanding the EnvironmentOrganization Fitness

(LIT) (EBOP) LIT EBOP

Key:
(LIT) Evidence from Literature (AIL) Evidence from AIL case study (EBOP) Evidence from EBOP case study
Cluster (Theme)

meaningful label for the themes (Strauss and Corbin, 1998). From these discussions, ve key themes were evolved: systemic knowledge; strategic engagement; social networking (external and internal); cultural context; process and structural context. It must be noted that certain organizational routines inuenced more than one theme. For example, as shown in Figure 2, exposure to external yet complementary sources inuenced both the systemic knowledge as well as social networking. This shows that there is an interrelationship between the ve key themes.

Findings and discussion

Table I shows the organizational routines that were identied from literature as well as the two case studies. Routines reect learning that are institutionalized and are often sanctioned by the management in the organization (Crossan et al., 1999; Sun and Anderson, 2008). When leadership in the organization recognizes the need to manage knowledge, and then sanctions the routines that directly inuence it, they collectively create the appropriate context for knowledge management. This context can be viewed as ve key organizational themes, and as shown in Table I they individually and collectively impact the three knowledge management processes of knowledge acquisition, knowledge creation, and knowledge utilization and sharing. The ve key themes derived from this study can be described as context factors that are critical for knowledge management. Heisig (2009), in their review of knowledge management frameworks, distilled four context factors that are critical for knowledge management: Human orientated factors such as culture, people, and leadership; organization processes and structures; technology; management processes such as strategy, goals, and measurements. The ve key themes, to some extent, are seen in the four distilled context factors by Heisig (2009). However, there are key differences. First, this study derives the themes using a bottom-up approach. This means, the study looks at routines that have an immediate inuence on individuals in the organization and then collates these routines into key context themes. Second, this study gives emphasis to external knowledge

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Table I Evidence from literature and case studies

Organizational routines Evidence from case study (examples) U U U-External Systemic knowledge Strategic engagement Social network Cultural context Key organizational themes Process and structure context

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j
We have seven-day compulsory technical training to help us to demonstrate the ability of installing the newly acquired knowledge back into the consent department and some of these trainings are cross-departments (EBOP case study) Outside of the industry, many people perceive us to still be a government organization, lacking professionalism. Attracting talent both from within and from across industry segments is difcult for us (AIL case study) I dont really feel like Im involved in any big decision making. (EBOP case study) We gather lots of sensitive information from iwi and the hapu. We have to be careful in what we say and how we say it (EBOP case study) When ideas are discussed it is mostly with newer employees. We can gain much from the older government employees but little interaction takes place with them (AIL case study) I have designed a fool-proof system and my people only need to follow it. You will do it my way or get out (AIL case study) Denitely my manager encourages us to try out new things and if we need training in any area, we just let her know (the manager) and we can do it (EBOP case study) It was a battle to get money for a much needed change in my department (AIL case study) U U-Internal U U

Knowledge management processes

Evidence from literature

Knowledge acquisition (underpinned by ACAP dimensions of acquisition and assimilation)

Knowledge creation (underpinned by the ACAP dimension of transformation)

Prior knowledge (technological and product-related) of individuals involved in acquisition (Cohen and Levinthal, 1990; Crossan et al., 1999; Lichtenthaler, 2009; Sun and Anderson, 2008; Zahra and George, 2002) Investing in R&D to build new knowledge (Cohen and Levinthal, 1990) Cross-functional interfacing (Jansen et al., 2005) Job rotation (Jansen et al., 2005) Exposure to external yet complementary sources, e.g. suppliers, social networks etc. (Buchel, 2007; Cohen and Levinthal, 1990; Crossan et al., 1999; Zahra and George, 2002) Clear strategic focus (Lane et al., 2006; Zahra and George, 2002; Zheng et al., 2009) Participatory decision making (Jansen et al., 2005) Clear understanding of the environment-organization tness (Chen, 2008) Team interaction and dialogue (Crossan et al., 1999; Jansen et al., 2005; Nonaka, 1994) Social relationship within the organization (within and between functions) (Buchel, 2007; Cohen and Levinthal, 1990; Jansen et al., 2005) Decentralized structure Interactions and communication amongst members (Zheng et al., 2009) The extent to which norms, values and beliefs of the organization are shared (Buchel, 2007; Crossan et al., 1999; Jansen et al., 2005; Zheng et al., 2009) Diverse knowledge of individuals (Cohen and Levinthal, 1990) Learning culture (trust, openness, risk taking) (Nonaka, 1994) Experimentation (Sun and Anderson, 2008) Supportive Leadership (Nonaka, 1994; Sun and Anderson, 2008) Existence of established organizational routines for tasks in the organization (Jansen et al., 2005)

(Continued)

Table I
Organizational routines Evidence from case study (examples) The guidelines set by the Resource Management Act 1991, and by the policies set up by the organization in accordance with the Act helps me to evaluate any new information I receive (EBOP case study) Information is only given on a need to know basis; We do not have a customer-based information system that goes across departments; We spend lots of time collating information from different sources (AIL case study) The company does not have a formal performance management system. The last time we did a performance appraisal for our staff, some managers used it to victimize some staff members (AIL case study) Many people will only do what they are paid to do. No extras (AIL case study) U U-Internal Systemic knowledge Strategic engagement Social network Key organizational themes Cultural context U Process and structure context U

Knowledge management processes

Evidence from literature

Knowledge utilization and sharing (underpinned by the ACAP dimension of exploitation)

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Trust: superiors and subordinates (Hansen et al., 1999; Lin, 2007; Watson and Hewett, 2006) Organizational commitment (citizenship behavior) (Hansen et al., 1999; Lin, 2007; Watson and Hewett, 2006) Distributive and procedural justice (Lin, 2007) Social relationship within the organization (within and between functions) (Buchel, 2007; Cohen and Levinthal, 1990; Hansen et al., 1999; Jansen et al., 2005; Watson and Hewett, 2006) The extent to which individuals share the norms, values and beliefs of the organization (Buchel, 2007; Jansen et al., 2005) Formalization of systems and processes i.e. the extent to which rules, procedures, instructions and communications are formalized (Crossan et al., 1999; Jansen et al., 2005; Zheng et al., 2009) Effective communication technology (Hansen et al., 1999) and effective knowledge repositories for sharing (Watson and Hewett, 2006) A lower hierarchical structure (with less division of labor) helps in communication and therefore the sharing of knowledge (Cohen and Levinthal, 1990) Incentive system to share and utilize knowledge (Hansen et al., 1999) A clear strategic focus people within the organization understand what existing knowledge they need to exploit/utilize

and hence considers systemic knowledge of individuals and external networking capabilities of the organization.

Theme 1 systemic knowledge New knowledge that has similarity/resemblance to existing knowledge is more easily acquired by the individual (Cohen and Levinthal, 1990; Crossan et al., 1999; Lichtenthaler, 2009; Sun and Anderson, 2008; Zahra and George, 2002). The existing or prior knowledge can be categorized as technological related and product related knowledge (Lichtenthaler, 2009), and is collectively referred in this study as systemic knowledge. It is the technological related prior knowledge, more so than product related prior knowledge, that gives the individual the capability of identifying and acquiring new technology which is able to bring in more radical innovation into the organization (Lichtenthaler, 2009). The importance of technological related prior knowledge in new knowledge acquisition was seen in the EBOP case study. The consent ofcers who are involved in water management projects as well as in monitoring the use of the resource consent noted the importance of having technical knowledge in water management. Such knowledge helps them to appreciate new techniques and advances in water management, and is developed through a compulsory training scheme instituted by the organization. Consent ofcers are obligated to utilize seven days technical training which helps them to broaden their technical knowledge. One consent ofcer said we have seven day compulsory technical training to help us to demonstrate the ability of installing the newly acquired knowledge back into the consent department and some of these trainings are cross departments. Formalized training and development is seen as a particular strength of EBOP. However, the ability to assimilate the new technological knowledge and to interpret it in the context of the organization is largely dependent on the extent of product or market related knowledge the individual has (Lichtenthaler, 2009). An understanding of the internal nuances and workings of the organization that brings a product to commercial life, and understandings of the market forces that shape the success/failure of the product, are essential to assimilate the newly acquired technical knowledge. Such product related prior knowledge takes greater time and effort to build in an individual than technological related knowledge (Lichtenthaler, 2009), and requires a more systemic understanding of how the organization works. Such knowledge is usually tacit in nature, giving the individual the ability to intuitively recognize how new technological knowledge can be applied in the organization (Crossan et al., 1999). While literature clearly argues that a systemic knowledge is important for the knowledge acquisition process (Cohen and Levinthal, 1990; Crossan et al., 1999; Lichtenthaler, 2009; Sun and Anderson, 2008; Zahra and George, 2002), only few have recognized that such systemic knowledge is built by certain established routines in the organization. Jansen et al. (2005) established that rms that routinely engage in job rotation and cross functional interfacing builds complimentary product related knowledge that increases the organizations acquisition capability. The building of systemic knowledge was evident in the EBOP case study. In this case study, cross-functional interfacing happens as part of service delivery to customers. This is a routine practice within the consent department. When trying to process a consent application the consent ofcers have to deal with other departments such as scientists and technical ofcers from other units. As a result consent ofcers develop diverse background knowledge. The need to work across departments, in order to provide services to their clients, is a feature within EBOP. Systemic knowledge is important not only for the knowledge acquisition process but also for the knowledge creation process (see Table I). Diverse knowledge of individuals, as well as a more systemic understanding of how they relate to each other, enables different perspectives to be brought in during the knowledge creation process (Nonaka, 1994). This results in new knowledge creation that is novel (Cohen and Levinthal, 1990).

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Theme 2 strategic engagement While it is important that systemic knowledge must be built in individuals through established routines in the organization, it is also important to engage such individuals in the knowledge acquisition process. The type of individual involved and how many of them are involved as prospective receptors in the interface between the organization and the external environment depends on the extent of uncertainty. Cohen and Levinthal (1990) suggests that if the uncertainty is high then a broad range of prospective receptors are required and if the uncertainty is low then few individuals acting as prospective receptors would sufce. How does the organization engage individuals in such a strategic activity? Literature suggests individuals who are involved in participatory decision making, especially in establishing the future direction and focus of the organization, are motivated to seek new knowledge (Jansen et al., 2005). This participatory decision making was seen in the Maori policy department in EBOP. Maoris are early settlers in New Zealand, predating the Europeans. Due to the provision in the treaty of Waitangi (signed between the Maoris and the British Crown in the late 1800s), sensitive issues regarding land and resources exist within the iwi (Maori people or tribes) and hapu (sub-tribes). For this reason, there is a practice in EBOP for the Maori Policy ofcers to frequently update the CEO and the senior management team on the ground sensitivities regarding the treaty issues (this is a routine practice within EBOP). This channel of communication has resulted in the Maori Policy ofcers being involved in decision making, particularly with regards to new policies for EBOP. The Maori Policy ofcers as a result do feel empowered and actively seek external knowledge when devising new policies and practices. Participatory decision making, especially with regards to the strategic direction of the organization, was quite the opposite within the consent department in EBOP. One consent ofcer said Ive been working in EBOP for nearly two year and still I dont have a clear understanding of what our organization strategic focus. Interestingly, management when interviewed felt that they do get individuals involved in providing input for the rolling ten-year plan. However, consent ofcers felt otherwise. They perceived their input to be ad-hoc with no proper structure or established practice to be involved in decision making for the organization. Although the organizational has a low hierarchical structure (only two layers separating the consent ofcers from the CEO), and this type of structure should allow for greater communication and participatory decision making (Gold et al., 2001), the ndings showed otherwise. One consent ofcer said I dont really feel like Im involved in any big decision making. An organizations strategic focus must be clear and transparent (Lane et al., 2006; Zahra and George, 2002; Zheng et al., 2009), be grounded on external reality (Chen, 2008), and be driven by customer values (Hansen et al., 1999). A coherent and clear organizational strategy provides a loose framework to guide search for new knowledge and information (Adams et al., 2006; Zahra and George, 2002). An organization that establishes routines to ensure transparency in their strategic direction motivates people to share what they know and encourages them to see ways of more effectively utilizing and exploiting their existing knowledge base. A lack of transparency hinders knowledge utilization and sharing. This lack of transparency in AIL was noted by the interviewees as an obstacle to their involvement in innovation activities especially in trying to restructure their product and services. Strategy was primarily constructed and discussed by the executive committee and did not ow down the hierarchy. One middle level manager noted:
There has been a recent attempt to build a strategic direction from an off-site workshop (in October 2006). If there is a strategy, I dont know about it.

Sharing of knowledge is also engendered when there is greater commitment by individuals to the organization (Lin, 2007; Watson and Hewett, 2006). An organization where the processes involved in determining reward and recognition are seen to be just and fair engenders greater organizational commitment and citizenship behavior (Lin, 2007). This

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results in greater levels of trust between individuals in the organization and greater sharing and utilization of knowledge (Lin, 2007). Therefore, strategic engagement not only inuences the knowledge acquisition process, but also inuences the knowledge sharing and utilization process (see Table I).

Theme 3 social networking (external and internal) While it is important for prospective receptors to have systemic knowledge and to be strategically engaged with the organization, literature suggests that their social network (external and internal) is important for all three processes of knowledge management (see Table I). Social capital is the intangible value that one can draw from the relationship among people in the social network. The social capital of a social network is dependent on many factors and the two most important measures of a social network are network centrality (i.e. the position of the person in the network) and network density (i.e. the extent to which people in the network are tied to each other) (Buchel, 2007). Members with higher network centrality are able to play a bridging role by linking network members with required knowledge providers. They are the ones who usually bring scarcer and more valuable new knowledge (Buchel, 2007). They are able to broker information ow from different parts of the organization, as well as from their external contacts, which can bring in information that is able to alter existing beliefs and assumptions. Exposure to external yet complementary sources helps in the knowledge acquisition process (Buchel, 2007; Cohen and Levinthal, 1990; Crossan et al., 1999; Zahra and George, 2002). Therefore, it is important for prospective receptors to have external social networks, and to be higher in their external network centrality. Organizations must institute routines to expose such individuals to external yet complementary sources (e.g. suppliers, industry associations and clusters, research institutes etc.), and support them in positioning themselves in a more central position in such external networks. This was seen in the Maori policy department of the EBOP case study. Although New Zealand is becoming a multicultural society, two cultures dominate: the Europeans commonly referred to as Pakehas and Maoris. There is the need to be sensitive to the Maoris spiritual connectedness to the land and to the provisions in the Treaty of Waitangi. For this reason, the Maori Policy ofcers (who are Maoris themselves) have a strong external engagement with the iwi (Maori people or tribes) and hapu (sub-tribes) in the Bay of Plenty region. The external social networks of these Maori Policy ofcers are strong and they obtain information that at times are sensitive and therefore care has to be taken with who they say what to (i.e. with whom they share information a statement from a Maori Policy ofcer). This external social capital built up through many years of interaction with the Maori communities means that external information regarding Maori issues are quite readily acquired by EBOP. The Maori Policy ofcers are also exposed to external forums, meetings with other councils, and conferences and training. This is seen as a continuous practice within EBOP. Higher network density within internal social networks is able to engender a shared understanding, and trust and reciprocity of actions, which aids collective action towards a common goal (Buchel, 2007; Crossan et al., 1999). This inuences the knowledge creation process by quickly enabling a shared understanding to evolve as to how existing knowledge can be rened and how new knowledge acquired can be incorporated (Jansen et al., 2005; Zheng et al., 2009). However, greater network density can create issues such as an ingrained belief system (shared mindset) that does not foster alternative thinking that is necessary for new knowledge creation (Cohen and Levinthal, 1990). Buchel (2007) suggests that this must be balanced with appropriate external contacts and any external information that brings surprising or contradictory values must not be cast aside.

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Internal social capital also inuences the knowledge utilization and sharing process. Greater internal social network density increases trust and reciprocity between individuals, and therefore the greater sharing of knowledge (Lin, 2007). Individuals higher in their network centrality are able to broker information ow from various parts of the organization (Buchel, 2007). This enables improvements and best practices to be shared and therefore a greater utilization of existing knowledge in the organization (Tsai, 2001). A fractured organization with groups having different values and beliefs are an obstacle to knowledge sharing. This was observed in the AIL case study where two distinct social groups were seen, with each having different values and beliefs. Because AIL was privatized in 2003, there was a clear divide between pre-privatization and the new post-privatization employees, with informal social networks being formed around each group. The new management also treats the two groups differently further alienating the two social groups. Employees tend to interact mostly within their group. One pre-privatization employee noted:
When ideas are discussed it is mostly with newer employees. We can gain much from the older government employees but little interaction takes place with them.

Theme 4 cultural context The cultural context of the organization is considered to be one of the most important inuencers in knowledge management (Gold et al., 2001) by enabling the organization to adapt to changing external environment through the creation of new knowledge, and to align an organizations current operations by utilizing its existing knowledge base (Gibson and Birkinshaw, 2004). The cultural context is therefore argued in literature to inuence the knowledge creation and knowledge utilization and sharing processes (see Table I). For knowledge creation, the organization must have a learning culture (Nonaka, 1994). Such a learning culture is characterized by attributes such as psychological safety for risk taking, openness to diverse opinions, participation in decision making, and trust (Nemanich and Vera, 2009). The absence of a psychologically safe environment for experimentation and new knowledge creation was quite notable in AIL. When the organization was privatized in April 2003, in order to stamp out malpractices and cut costs, the organization instituted a practice where any expenditure and any initiative that costs money (irrespective of the amount) must be authorized by a board director. Senior management set up procedures that must be followed and any deviation resulted in punitive behavior by the manager. As one executive committee member stated:
I have designed a fool-proof system and my people only need to follow it. You will do it my way or get out.

It must also be an environment where primacy is given for team interactions and dialogue which is where most new knowledge creation takes place (Crossan et al., 1999; Nonaka, 1994). Leadership support to sustain such a learning culture is recognized in literature with the emphasis that leaders behavioral style should be transformational (Jansen et al., 2009; Nemanich and Vera, 2009; Sun and Anderson, n.s.; Vera and Crossan, 2004). In the EBOP case study, there is supportive leadership within the consent department to acquire and experiment with new ideas. One consent ofcer said:
If you identify anything that is needed for the organization or that you are interested in, the manager will try her best to provide.

Another consent ofcer said:

Denitely my manager encourages us to try out new things and if we need training in any area, we just let her know (the manager) and we can do it.

Supportive leadership has not only generated empowerment but has also built an innovative culture within the consent department. However, such behavior from leadership must be supported by appropriate routines in the organization. For example, cross functional team dialogue with an emphasis on divergent thinking must be an established practice in the organization (Hargadon and Sutton, 1997). Leaders must support risk taking by allowing for experimentation and covering for failure in

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their budgetary process (Sun and Anderson, 2008). The lack of effective routines to support leadership behavior can hinder knowledge creation. In the EBOP case study, the type of idea acquired, the type of knowledge created and utilized, is only restricted to small incremental learning that does not affect processes and the monetary budget of EBOP. Even though the consent ofcers are encouraged and supported by their manager to be innovative in the way they carry out their day-to-day activities, resources such as time and budget are not allocated that allow for this experimentation. Moreover, when the consent ofcers nd new ways of doing things, it takes long time to ofcially change the departments procedures because these new procedures would need to be claried with senior management who has to approve the change. Appropriate cultural context also inuences the knowledge utilization and sharing process. A learning culture values the opinions of individuals in the organization and allows them to participate in decision making (Nemanich and Vera, 2009), and this increases the knowledge reuse in the organization through continuous improvement or incremental adaptation (Watson and Hewett, 2006). Further, trust which is a characteristic of a learning culture increases sharing of knowledge between individuals (Hansen et al., 1999; Lin, 2007). Theme 5 process and structural context Structures and processes of the organization are referred to as repositories of organizational learning (Walsh and Ungson, 1991), and ensure the continuance of historical learning (Crossan et al., 1999). Within the consent department in the EBOP case study, the type of work the consent ofcers are involved in is quite formalized. Because the natural resources of the country are largely governed by the Resource Management Act 1991, strict procedures and practices are instituted in the work roles of individuals in EBOP. Employees of EBOP are required to follow standard practices in executing their work and most systems and processes are formalized and documented. Such formalization, where the rules, procedure, instruction and communication are formalized and documented, helps in continuous knowledge utilization even in the face of staff turnover or redundancies (Jansen et al., 2005). When there are established routines for tasks in the organization, it provides an avenue or path to transform newly acquired knowledge, as well as reducing cognitive load in individuals which helps in creative work (Jansen et al., 2005). This was noted by one employee from the consent department in the EBOP case study. He stated that guidelines set by the Resource Management Act 1991, and by the policies set up by the organization in accordance with the Act, helped him to interpret any new information that he acquires (whether from customers, suppliers or technical consultants he deals with). For these reasons routines positively inuences the knowledge creation process. Jansen et al. (2005) found a moderate positive relationship between formalization and routinization to the capability of the organization to transform newly acquired knowledge. Although the established routines help in the knowledge creation process, the type of new knowledge created is less novel and less radical. Established routines are therefore strongly related to knowledge reuse and in the continuous exploitation of the current knowledge base (Crossan et al., 1999; Jansen et al., 2005). To overcome this issue a learning culture that encourages diverse opinions and divergent thinking, as well as a lower hierarchical and a decentralized structure that improves interactions and communications, will help in more novel knowledge creation (Nonaka, 1994; Zheng et al., 2009). The use of incentive systems to encourage innovation and sharing of knowledge is recognized in the literature (Hansen et al., 1999). However, the structure of the incentive system is dependent on the organizational context. Incentive to share knowledge through personal interaction or to share knowledge by inputting into a data repository depends on the predominant type of knowledge used in the organization whether explicit or tacit knowledge (Hansen et al., 1999). The design of the incentive system must be deemed to be fair by employees; else it affects trust in the organization and is detrimental to knowledge sharing (Lin, 2007).

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The use of an effective communication technology infrastructure for knowledge sharing has been shown to be important in literature (e.g. Hansen et al., 1999; Murray and Peyrette, 2007; Watson and Hewett, 2006). The ease of access of the system, the individuals ability to use the system, as well as the frequency of use, determines the effectiveness of the communication technology infrastructure for knowledge sharing (Watson and Hewett, 2006). Information technology forms part of an organizations structure necessary to mobilize social capital for knowledge management (Gold et al., 2001). Modern information systems such as web 2.0 technologies can be used to foster socialization within and between organizations, and such systems can be referred to as socio-dynamic KM systems. An effective informational infrastructure can therefore inuence knowledge creation (through the use of business intelligence) and knowledge sharing and utilization (through the use of collaborative systems) (Gold et al., 2001). AIL had an ineffective information system and greatly hindered their ability to share information between departments. The information systems are developed to serve individual departments rather than enabling processes to ow seamlessly across departments. A review of the information system revealed that information cannot be accessed using customer code (customer code did not exist as a primary key in AILs in-house developed IT system), and this resulted in the inability of accessing information across departments. These have resulted in poor information ows across departments, and lack of information visibility. One employee interviewed noted, information is only given on a need to know basis; we do not have a customer-based information system that goes across departments; we spend lots of time collating information from different sources.

Implications for future research and practice

As evidenced in this study, when effective routines are instituted for ACAP of the organization, they create the appropriate context for knowledge management. In this study, ve key organizational themes (or context) was derived: systemic knowledge; strategic engagement; social networking (external and internal); cultural context; and process and structural context. These ve key organizational themes collectively increase organizational effectiveness. Organizational effectiveness is the degree to which the organization is effective in capturing market share, its protability, growth rate and innovativeness when compared to its competitors (Zheng et al., 2009). The following proposition can therefore be tested: P1. The organizational context of systemic knowledge, strategic engagement, social networking (external and internal), cultural context, and process and structural context collectively and positively inuences knowledge effectiveness in the organization.

How do the ve key organizational themes inuence the knowledge management processes of acquisition, creation, and utilization and sharing? Evidence from literature and the two case studies points to an inuence relationship between the ve themes and the three knowledge management processes (see Table I). However, a generalized relationship of the inuence cannot be built using just two case studies. Either further testing using more case studies is required, or a quantitative survey-based study on wider sets of organizations can be done. For this, the following propositions are offered for further testing: P2. The organizational context of systemic knowledge, strategic engagement and social networking (external) positively inuences the knowledge acquisition process The organizational context of systemic knowledge, social networking (internal), cultural context and process and structural context positively inuences the knowledge creation process. The organizational context of strategic engagement, social networking (internal), cultural context and process and structural context positively inuences the knowledge utilization and sharing process.

P3.

P4.

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Another interesting avenue for research is to see if the ve key organizational themes take on unique type of orientations for organizations using different strategies. For example, organizations operating in a stable environment where the focus is on standardization and cost leadership, perhaps a greater emphasis on process and structural context and on internal social networking may be more important for greater knowledge utilization. For organizations operating in a more dynamic environment, where the focus is on innovation and differentiation, perhaps a greater emphasis on systemic knowledge and external social networking are more important for external knowledge acquisition. Organizations operating mixed strategies need to balance the acquisition of new external knowledge with the continuous exploitation of existing knowledge. This is referred to as the exploration-exploitation tension (Gibson and Birkinshaw, 2004; Holmqvist, 2004). Such organization may reect a different set of orientation of the 5 key organizational themes. This study has implication for practitioners. It shows the need for organizational leaders to institute the appropriate routines for knowledge management. It is an acknowledgement that the direct impact of leadership behavior, although critical, is not the whole story. It acknowledges that leadership impact also depends on the platform of appropriate routines and processes built for it. Research has recognized the difculty in assessing/measuring the knowledge assets of the organization because of the intangible nature of knowledge (Grossman, 2006). Most assessment instruments deal with tangible measures such as market capitalization, return on assets, score card measure of certain aspects of intellectual capital etc. (Sveiby, 2004). These measures are only output orientated with the premise that an organization that better manages knowledge will show improvement in these measures. There is a glut of Knowledge Management assessment instruments with no clear standards or an agreement on a common approach (Grossman, 2006). This study suggests that instead of being enamored by measurement metrics, managers look for ways to assess how capable they are in managing knowledge. Managers can look for the existence of relevant organizational routines, and how effective they are in managing knowledge. This study provides a framework showing what routines inuence the key knowledge management activities of acquisition, creation, utilization and sharing (see Table I). These routines generate ve key context themes that encompass a more holistic view of the organization.

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Appendix
Asia Insurance Limited (AIL) AIL, incorporated under special act of Parliament in 1961, enjoyed monopoly status up until the 1980s as an end-to-end government-owned insurance provider of both general insurance and Life insurance. During this period its systems and processes were designed and institutionalized for a relatively stable market environment and a culture similar to that of a bureaucratic government organization set in. Following liberalization, and with new players entering the market, the institutionalized business model and ways of working could not cope with the rapidly changing insurance industry. The competitive landscape changed, customers suddenly had choice, were more aware of insurance products, and new technology was introduced to maximize efciencies. By the year 2000 what was still a government owned entity with some 45 percent market share of general insurance (motor and non-motor) and around 35 percent market share in life insurance, was considered the largest insurance provider. The next-largest insurance provider (a private entity) had some 20 percent market share of general insurance and around 23 percent market share of life insurance. In the year 2003 Asia Insurance Corporation was overtaken by its main rival. The organization was privatized in April 2003 and acquired by one of Asias largest groups of companies. Renamed as Asia Insurance Ltd, the company retained a signicant proportion of its pre-privatization employees. At the time of the study it employed in excess of 2000 employees. With privatization, a new Executive Committee (Ex-Co) was formed that reported directly to the board on matters of strategy and operations. In an effort to eliminate the corruption that was endemic during the pre-privatization days, especially in the area of insurance claims, AIL introduced a highly authoritarian type of control where all expenses needed to be authorized by a Board member. Today, some four years after privatization, the highly rigid bureaucratic culture and dominant systems and processes largely continue. AILs market share has continued to decline to 24 percent market share of general insurance and 20 percent market share of life insurance (July 2007 values). This decline is against a backdrop of industry growth of 18 percent in Life insurance and 28 percent in general insurance over the period 2000-2006.

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Environment Bay of Plenty (EBOP) EBOP is a New Zealand regional council that covers the Bay of Plenty region with ofces in Whakatane, Tauranga and Rotorua. EBOP has numerous roles in the region. The primary focus of EBOP is in water management, land management, rivers and drainage, and in people and partnership. Each of these focus area has a group manager, reporting to the group manager are process managers and under the process managers are process ofcers who deal directly with the public. The group manager reports to the CEO. For this study, only two departments were considered: the consent department and the Maori policy department. The consent department consists of ten consent ofcers and a process manager. The consent department forms part of the water management group, and works within the stipulation of the Resource Management Act 1991 to promote the sustainable management of natural and physical resources. Any organization planning to carry out an activity which could have an effect on the environment needs to apply for and obtain consent. The consent is granted by EBOP in accordance with the Resource Management Act 1991. The consent ofcers are responsible for monitoring the use of resource consents and to check that the consent holder is exercising the consent in accordance with its limits and conditions. To do so, they visit the location of the activity. The Maori policy department is a small team comprising two ofcers and a process manager and is part of the people and partnership group. This section of the organization is established to liaise with the indigenous groups (Maori communities) on issues pertaining to the environment. Maoris are early settlers in New Zealand predating the Europeans. New Zealand gives special emphasis to the Maoris and ensures that any dealing with natural resources such as land and environment is in accordance with the Treaty of the Waitangi. The Maori policy ofcers develop policies for EBOP in consultation with iwi (Maori people or tribes) and hapu (sub-tribes) in the Bay of Plenty region. The policy ofcers assist with developing iwi management plans, engagement protocols, and are in charge of fostering a good relationship with the broader Maori community while providing feedback to the organization regarding Maori-related issues. Individuals in this process are more involved with high-level engagement and a signicant amount of strategic planning for the wider organization.

About the author

Peter Y.T. Sun currently serves as a senior lecturer in the Department of Management Systems, Waikato Management School, University of Waikato, in Hamilton, New Zealand. He comes to academia after extensive experience in the industry. His research interests are in the area of knowledge management, organizational learning, learning organization and leadership. He has published in many international refereed journals. Peter Y.T. Sun can be contacted at: petersun@waikato.ac.nz

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