Knowledge codification and organisational ...

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Int. J. Management and Enterprise Development, Vol. 6, No. 1, 2009

Knowledge codification and organisational performance in small and medium enterprises Joanna Olga Paliszkiewicz Warsaw University of Life Science, ul. Nowoursynowska 166, 03 287 Warsaw, Poland E-mail: [email protected] Abstract: Academics and business professionals are currently showing a significant interest in understanding the management of knowledge and the roles to be played by information and communication technology. This article explores the concept of knowledge codification in the context of knowledge management. Codification gives permanence to knowledge that may otherwise exist only inside an individual’s mind. It represents knowledge in the forms that can be shared, stored, combined and manipulated in a variety of ways. The article provides data related to one of the key researched topics in knowledge management – knowledge codification. The research was done in 511 small and medium enterprises in Poland. Questionnaires were administered to managers. According to presented research, the small and medium enterprises do not put enough attention to knowledge codification. Keywords: codification of knowledge; enterprise development; knowledge management; organisational performance; small and medium sized enterprises. Reference to this paper should be made as follows: Paliszkiewicz, J.O. (2009) ‘Knowledge codification and organisational performance in small and medium enterprises’, Int. J. Management and Enterprise Development, Vol. 6, No. 1, pp.80–87. Biographical note: Joanna Paliszkiewicz works in the Warsaw University of Life Science. Her research interests include knowledge management and intellectual capital management. She is in editorial board of Int. J. Innovation and Learning.

1

Introduction

The aim of codification is to put organisational knowledge into a form that makes it accessible to those who need it. It literally turns knowledge into a code (though not necessarily a computer code) to make it as organised, explicit, portable and easy to understand as possible. Knowledge codification is organising and representing knowledge before it is accessed by authorised personnel. Codification in organisations similarly converts knowledge into accessible and applicable formats. Knowledge managers and users can categorise knowledge, describe it, map and model it, stimulate it, and embed it in rules and recipes. Each of these approaches has its own specific set of values and limitations, and they can be applied singly or in combination. Obviously, new technologies play an

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Knowledge codification and organisational performance

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important role in knowledge codification and make the prospects for these activities increasingly promising. The aim of this article is to show the level of codification process in small and medium enterprises in Poland.

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The basic principle of knowledge codification

In the knowledge-based view, knowledge can contribute substantially to an intangible strategic resource. A firm is custodian of a large amount of knowledge that is present (either tacit or explicit) and stored in a variety of sources within the organisation such as in the minds of experts, in database, documentation and knowledge repository (Chow, Choy and Lee, 2007). Information and knowledge integration becomes increasingly important, enabled by technologies to collect and process data dynamically (Li and Chandra, 2007). From a knowledge management view, codification converts tacit knowledge to explicit knowledge in a usable form for organisational members, from an information system view, it converts undocumented to documented information. Codification is making corporate-specific knowledge (tacit and explicit) visible, accessible, and usable for value-added decision making, no matter what form it may take (Awad and Ghaziri, 2004). In most organisations, the difficult and most important type of knowledge to capture is the ‘tacit’ knowledge that people have in their heads (Liebowitz et al., 2007). The work of knowledge codification involves more than codification scheme or tools. It means planning the codification phase, planning the use of specific tools within the framework of a programming environment, and making the most efficient use of the knowledge developer’s and the expert’s time and talent. Companies that want to codify knowledge successfully should keep in mind the following four principles (Davenport and Prusak, 2000): x

Managers must decide what business goals the codified knowledge will serve.

x

Managers must be able to identify knowledge existing in various forms appropriate to reaching those goals.

x

Knowledge mangers must evaluate knowledge for usefulness and appropriateness for codification.

x

Codifiers must identify an appropriate medium for codification and distribution.

Before getting into codification, it is important to note that the knowledge managers must decide on the business goals that the codified knowledge will serve and identify existing knowledge appropriate to the goals. They must also evaluate codified knowledge for usefulness and appropriateness for codification and the medium for codification and distribution. Knowledge can be categories, modelled, described, mapped or embedded in rules and recipes. For example, the tools which enable the codification process are knowledge database. Database stores knowledge entered by staff and members on selected topics of interest and is organised in such a way that it allows staff and members to easily access the

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information they need. Knowledge database can be for example designed to collect, store and use the following five types of information and knowledge: x

Members information – such as member-library staff changes, needs, new information.

x

Internal staff expertise – including answer to frequently asked questions relating to areas of staff expertise such that staff can easily access and share knowledge.

x

Consultation – recorded knowledge exchanged during a staff and member consultation. Informal knowledge might include member requests for products and services, problems and questions that require a more detailed explanation or note, and staff ideas that results from discussions with members.

x

Hot topics – knowledge identified as relevant to organisation and profession and then expanded upon by staff with the intention of pushing it to members via website.

x

External knowledge – knowledge on a particular topic supplied by an identified outside source.

M.A. Evans proposed to use the following solutions to knowledge codification (Evans, 2004): x

Knowledge bases (‘systemised, codified expertise’). Case-based reasoning system, a high-performance knowledge base and a best practice knowledge base.

x

Knowledge directories (‘who, what, where’). Experience Matrices offered over via intranet.

x

Knowledge flows (‘process improvement’). Shared database, after action reviews.

x

Knowledge assets (‘rent-product’). Training curricula, systemic expertise.

x

Knowledge pooling (‘network communities’). Collaborative problem – solving and support systems, knowledge moderators, virtual teams and discussion forums.

x

Knowledge exchange (‘real and virtual spaces’). Virtual break rooms, virtual classrooms, visits, conferences.

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Advantages and disadvantages of knowledge codification

There are many advantages of codification, of tailoring knowledge to one’s organisational needs: it is easier to move knowledge around the organisation: sharing and retrieving it is much simpler; you do not need a person who actually has this knowledge tacitly in their head to be presented. And when the owner leaves the organisation, the knowledge stays behind, in the manuals, the computer, the internet, or wherever the explicit codification is held. The codified knowledge has become an asset; it is now saleable. It can act as the basis for a patent or copyright. The organisation can be granted monopoly rights for a period over the knowledge, and if others want to use it, they will need to purchase a license. Furthermore, codification converts knowledge from what


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economists call a rival good to a non-rival good, i.e. it is now such that many people can use it as the same time. Other advantages of good codification systems are: better organisation and use of institutional knowledge, reduction of staff time used searching for information, less duplication of work. However, when we consider the social, economic and organisational consequences of codification, some disadvantages also appear. In the first place, codification is expensive and it takes time. An expert is tied up during knowledge acquisition. Furthermore, where trade secrets are codified. It can simply be e-mailed to a rival. As a process, knowledge codification is neither easy nor straightforward. There are things for the knowledge developer to remember before beginning to codify: x

Recorded knowledge is difficult to access, either because it is fragmented or poorly organised.

x

Diffusion of new knowledge is too slow.

x

Knowledge is not shared, but hoarded. This has political implications, especially when knowledge cuts across departments.

x

People are oblivious to who has what knowledge.

x

Knowledge is often: not present in proper form, not available when needed, not present where the knowledge process is carried out, not complete.

Tapping employee knowledge or finding out who knows what in a company and collecting and retaining the knowledge has taken on a new sense of urgency in the new millennium. In some fields, project expansions and the lack of qualified applicants have forces companies to do more with fewer resources. As always, the trend is to look for innovations and automation technology to help resolve or minimise the problem (Liu and Koong, 2006). In addition, it is important that construction organisations migrate from a centralised approach to knowledge sharing that empowers management staff, to a user and community centered approach. A knowledge-based organisation needs all of its employees to share a culture that promotes the virtues of knowledge acquisition and sharing (Rezgui, 2007). In this regard, knowledge management has been increasingly seen as a crucial factor in the development of a sustainable source of competitive advantage (Ramachandran, Chong and Lin, 2008).

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Codification of knowledge in small and medium enterprises

The research was done in 511 small and medium enterprises (368 – small and 143 – medium) from Silesian Province in Poland. Questionnaires were administered to managers. An analysis was performed on the 15 items that measure the components of knowledge codification. Each item was based on a five-point scale, from ‘very low’ to ‘very high’. The questions are presented in Table 1.

84 Table 1

J.O. Paliszkiewicz Elements of knowledge codification

No.

Elements knowledge codification

Z1

Workers have knowledge which enable them to proper categorise and use it

Z2

Sharing of knowledge is support by comfortable conference rooms

Z3

Knowledge of leaving workers is transferring to their successors

Z4

Managers promote and appreciate employees because they do not want to lose them

Z5

Before dismissing of people it is check if their skills and knowledge can be used in other departments

Z6

Database are often updating

Z7

Knowledge is checked in connection with it usefulness and the possibility to code

Z8

In organisation there is proper level of confidential information protection

Z9

Information is divided for two kinds, first to have access managers and second to only workers

Z10

Specialised workers are engaged in identification and gathering of knowledge

Z11

Worker’s experiences are coded in computer systems

Z12

In organisation, there are special repositories connected with the best solutions and experiences

Z13

Database store information, which are actual and helpful to realise a lot of tasks

Z14

In organisation, there are formal solution with enable to register and gather information about realised projects and clients

Z15

The key specialised knowledge is in intranet

Source: Strojny (2000) and Probst, Raub and Romhardt (2002). Table 2

Codification of knowledge in small and medium enterprises

Colour Small enterprises Medium enterprises All Source:

A(61–75)

B(46–60)

9.2

32.3

C(31–45) 23.5

D(15–30)

Total

7.1

72.0

7.1

12.5

8.0

0.4

28.0

16.3

44.8

31.5

7.4

100.0

Author’s research.

After summing the points the enterprises were divided into four groups (A–D). To group A were numbered enterprises which have from 61 to 75 points, to group B from 46 to 60 points, to group C from 31 to 45 points, and to group D from 15 to 30 points (Table 2). According to the research, 9.2% of small enterprises and 7.1% of medium were classified to group A. This means that the codification of knowledge in these organisations is in good level. The strategy used in these organisations in proper way support a knowledge codification. Small enterprises (32.3%) and medium (12.5%) were classified in group B. The codification of knowledge in these organisations is good, but there are some week points which should be improved. The place in group C means that there are some aspects of codification of knowledge but it is not enough, so the changes should be made (23.5% of small enterprises, 8.0% medium). Finally, group D shows that there is no knowledge codification (7.1% of small and 0.40% of medium enterprises). The influence of knowledge codification on organisational performance was also researched. The organisational performance was assessed by the use of global output


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measures such as market share, profitability, growth rate, innovativeness, successfulness, and costs in comparison with key competitors. In addition, an important intermediate outcome is organisational creativity, which provides a key to the understanding of organisational effectiveness and survival. This creativity was measured by using such indicators like number of: rewards for people with new ideas, new products, patents and proposals of rationalisation. All these elements were based on a five-point scale, from ‘very low’ to ‘very high’. The regression equation between knowledge codification and organisational performance are presented in Figure 1. The research model illustrates the relationship among variables. To meet the assumptions of the regression analysis, the linearity, constant variance, and normality were examined. Because the scatterplots of individual variables do not indicate any nonlinear relationships, the linearity is guaranteed. In the model were checked: significance (Fisher–Snedecor test (F)), R2, Shapiro–Wilk test, J. Durbin–G.S. Watson test and Test I. The tests approved the correctness of researched models (Table 3). Figure 1

Source: Table 3

The regression equation between codification of knowledge and organisational performance

Author’s research. Regression model tests

YWDS = 16.66682 + 1.80504Z4 + 0.61474Z5 + 0.66843Z10 + 0.99903Z11 + 1.12106Z12 + H R = 0.52198610; R2 = 0.27246949; R2change = 0.26526622; F(5.505) = 37.826; p < 0.0000; stand error: 7.1361

N = 511

B Intercept

Standard errorB

t(505)

p

16.66682

1.203932

13.84366

0.000000

Z4

1.80504

0.314786

5.73418

0.000000

Z5

0.61474

0.256229

2.39916

0.016794

Z10

0.66843

0.242038

2.76168

0.005960

Z11

0.99903

0.275217

3.62996

0.000312

Z12

1.12106

0.281772

3.97860

0.000079

Shapiro–Wilk test N 511

W

p

W = 0.99503

p = 0.09989

I* | 1.965

I < I*

Test I I = 0.00000017 J. Durbin–G.S. Watson test Source:

Author’s research.

2.094214

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J.O. Paliszkiewicz

Items, which positively influence on organisational performance are: managers promotes people to do not loss workers with strategic knowledge (Z4); before dismissing of people it is being checked if their skills and knowledge can be used in other ways (Z5); specialised employees are engaged in gathering of knowledge (Z10); experiences of employees are codified in computer systems (Z11); in organisation are special repositories to gather best solutions and experiences (Z12).

5

Conclusions

According to presented research, the small and medium enterprises do not put enough attention to knowledge codification. Totally in group A, it was 16.3% of all enterprises and in group B were 44.8%, in group C, it was 31.5% and in group D, it was 7.4%. The most important items connected with codification of knowledge, which positively influence on organisational performance are: promoting people with strategic knowledge, before dismissing people checking if their skills and knowledge can be used in other ways, codification of knowledge in computer system (for example in special repositories) by experts. The findings of this study are interesting, but they should be considered in light of its inherent limitations. Firstly the study focuses on small and medium enterprises, the result may differ in large companies. Secondly, the results are limited to Polish firms, the generalisability from a Polish setting to other countries may be questionable. Codifying knowledge is an essential step in leveraging its value in the organisation. Codification gives permanence to knowledge that may otherwise exist only inside an individual’s mind. It represents knowledge in the forms that can be shared, stored, combined and manipulated in a variety of ways. The challenge is to codify knowledge and still leave its distinctive attributes intact.

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Probst, G., Raub, S. and Romhardt, K. (2002) Zarządzanie wiedzą w organizacji (p.231). Kraków: Oficyna Ekonomiczna. Ramachandran, S.D., Chong, S.C. and Lin, B. (2008) ‘Perceived importance and effectiveness of KM performance outcomes: perspective of institutions of higher learning’, Int. J. Innovation and Learning, Vol. 5, p.20. Rezgui, Y. (2007) ‘Knowledge systems and value creation. an action research investigation’, Industrial Management and Data Systems, Vol. 107, p.178. Strojny, M. (2000) ‘Zarządzanie wiedzą – ogólny zarys koncepcji’, Przegląd Organizacji, Vol. 2, p.22.