Academic journal article Informing Science: the International Journal of an Emerging Transdiscipline

Value Creation through IT-Supported Knowledge Management? the Utilisation of a Knowledge Management System in a Global Consulting Company

Academic journal article Informing Science: the International Journal of an Emerging Transdiscipline

Value Creation through IT-Supported Knowledge Management? the Utilisation of a Knowledge Management System in a Global Consulting Company

Article excerpt

Introduction

Knowledge management--a set of management activities aimed at designing and influencing processes of knowledge creation and integration including processes of sharing knowledge--has emerged as one of the most influential new organizational practices. Numerous companies have experimented with knowledge management initiatives in order to improve their performance, and the literature advocating the benefits of knowledge management has virtually exploded (e.g. Nonaka & Takeuchi, 1995; Choo, 1998; Boisot, 1998; vonKrogh et al., 2000; Easterby-Smith et al., 2000). Indeed, many writers go so far as to argue that knowledge has taken precedence over traditional organizational resources, such as capital and land in value creation. While this might not be true for all types of companies, in global consulting--the empirical context of the current work--knowledge is certainly a key resource, as consulting services mainly consist of ideas (know what) and methods (know how). Thus, it should come as no surprise, that consulting companies are some of the early adaptors of knowledge management systems that are often supported by IT solutions.

Despite numerous claims in the popular literature, empirical evidence with regards to the performance implications of knowledge management systems remains sparse and inconclusive. With few exceptions (Hansen, 1999; Gupta & Govindarajan, 2000; Szulanski, 2000), evidence is based on qualitative case studies (see, for example, Hansen et al., 1999; Brown & Duguid, 2000; Huysman, 2000; Kautz & Thaysen, 2001) and remains focused on identifying enabling factors for sub-processes of knowledge management systems. The implications for value creation through knowledge management in general, and IT-supported knowledge management systems in particular, however, remain claimed rather than empirically corroborated.

The lack of empirically grounded--theoretical--guidance for managerial practice is the more regrettable the more one realises that, after first attempts to implement IT-supported knowledge management systems, many managers seem to be disappointed with the effectiveness of knowledge management as a managerial instrument to achieve competitive advantage. In a recent study by Rigby (2001), over 214 executives from different North American and European companies evaluated the effectiveness of 25 top management tools. On a scale from 1 (highly dissatisfied) to 5 (highly satisfied), knowledge management ranks 25th. Clearly, knowledge management today is less favourably regarded than in the past. Part of the reason, as we will argue and empirically demonstrate below, is that companies have invested heavily in IT technology to support knowledge management initiatives but, simultaneously, have neglected important issues of transaction costs relating to people's interest and cognition as well as to the transaction infrastructure that impede effective knowledge management systems' utilization. Our explorative empirical study reveals that the majority of users of an IT-supported knowledge management system in a large consultancy are not familiar with the firm's knowledge management framework, lack clear incentives to do so, and face high transaction costs related to the system's infrastructure. Still the knowledge management system is used by 3/4 of all respondents, but mainly to search for general information, much less to participate in competence networks to develop shared knowledge assets. The knowledge management system is not used as the primary repository and communication media for knowledge assets. Based on our explorative study, we argue that adoption of IT-supported knowledge management system requires both attention to people and information technology.

While the relative emphasis on either people or information technology in the design of knowledge management systems may depend on alternative types of potential economies available to the company (Hansen et al. …

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