Knowledge Assets: Securing Competitive Advantage in the Information Economy

Citation

Lin, A. (2001), "Knowledge Assets: Securing Competitive Advantage in the Information Economy", Information Technology & People, Vol. 14 No. 4, pp. 406-419. https://doi.org/10.1108/itp.2001.14.4.406.2

It seems to be a fashionable thing these days that we prefix everything from learning to government with the letter “e”. This magic letter “e” symbolises technological advancement and signifies the importance of information within our society. Information has not only become a commodity that can be traded in an open market at any price, but also an asset that allows individuals, companies, and even governments to accumulate wealth and secure competitive advantage. Information or, more fashionably, knowledge management, is therefore a hot topic studying how information can be managed effectively and utilised more strategically industries. Three books examining the topic of information/knowledge management are reviewed here. They each approach the topic from within different disciplines: information studies, economics, and management and each aims at different audiences: student/teacher, academic researcher, and practitioner.

Rowley and Farrow’s Organizing Knowledge: An Introduction to Managing Access to Information will be reviewed first. In this book, information is viewed and treated as an entity and the method of managing it is to catalogue and index it carefully. The second book, Boisot’s Knowledge Assets: Securing Competitive Advantage in the Information Economy, deals with information at a conceptual level. Instead of emphasising the systematic management of information the author stresses the management of information flow within an information space. Different again from the above two books is Davenport’s Mission Critical: Realizing the Promise of Enterprise Systems, in which the author does not explicitly deal with the topic of information/knowledge management but with the system, the enterprise system, which harnesses information for the purposes of coordinating business:

Information is only valuable to the extent that it is structured. Because of a lack of structure in the creation, distribution and reception of information, the information often does not arrive where it is needed and, therefore, is useless.

This quotation opens Rowley and Farrow’s first chapter and sets the scene for the book, Organizing Knowledge, which is written with the aim of investigating how information should and can be organised in order for individuals to access it effectively.

Rowley and Farrow have organised their book into four parts:

1. (1)

   information basics;

2. (2)

   records;

3. (3)

   access; and

4. (4)

   systems.

The first two parts deal with fundamental issues about information, records, documentation, and the means used to organise and retrieve information. These two parts aim to lay the groundwork for the third part which is regarded as the main body of the book. Part 3 concentrates on the issues relating to access to information. The authors work on the principle that the user interface is the point of entry to information and that the way in which information is then organised (i.e. catalogued, indexed, classified, etc.) is vital. Issues such as indexing and searching languages; pre‐coordinate and subject headings, classification and systematic order; bibliographic classification schemes, and access points in catalogues and bibliographies are addressed here. The final part (Part 4) is concerned with the different systems used to support the organisation of information and knowledge and to facilitate information retrieval. The systems include public access systems and CD‐ROMs, the Internet and its applications and manual information retrieval systems.

The title of the current edition (third) is made slightly different from its first edition, Organizing Knowledge: An Introduction to Information Retrieval, in order to reflect the current trend. In fact, this new edition has restructured its contents to accommodate the increased significance of electronic information resources and explain principles relating to hybrid print‐based and electronic, networked environments experienced by users. Rowley and Farrow made it clear that the book is an introductory textbook for undergraduate and postgraduate students of information management and library studies, hence it has taken into account pedagogical issues. For example, learning objectives are clearly stated at the beginning of each chapter so that the readers (students) know what they should expect to learn after reading the chapter. In addition, the concepts and issues are introduced incrementally to ensure that some groundwork is laid down for further discussion. Hence, this book, by any standards, is without any doubt a well‐organised textbook and serves its readers well for that specific purpose.

In contrast to Organizing Knowledge, Boisot’s Knowledge Assets is “an exercise in theorising about the impact of information on firms and the economic process” (p. xiii). Simply scanning the book many may be put off by pages and pages of complicated looking diagrams developed and used by Boisot to illustrate flows of knowledge assets within the information space (I‐space) of companies. However, once one understands Boisot’s framework – the information space (I‐space), those complicated looking diagrams then begin to make sense.

The book is organised around this I‐space framework and has 11 chapters. Chapter 1 is an introductory chapter which outlines the hypothesis that the framework presented later in the book is based on. In the first chapter is to give flavour of what knowledge assets are. Chapter 2 presents a way of thinking about information which brings out the extent to which knowledge assets and physical assets can be substituted for each other in economic processes. After laying down the theoretical foundation, the author introduces a conceptual framework for the analysis of knowledge flows within and between social groups. Through the lens of the framework chapter 4 explores the paradoxical nature of knowledge assets with respect to economic value. This is followed by chapter 5, which examines companies’ coping strategies used to manage the knowledge paradox. Chapter 6 argues that a firm’s strategy to manage knowledge assets can differ from one to another depending on a firm’s culture and organisational process. Through the conceptual model developed in chapter 3, four distinct cultural types are identified and discussed. How a company can utilise their knowledge assets is partly affected by how effectively the company can integrate its knowledge assets at different levels of “resolution”, i.e. at the level of product, technology, and organisation. Chapters 7 and 8 are dedicated to addressing issues and concerns with respect to knowledge asset integration. Chapter 9 looks at the impact of information technology on the patterns of knowledge flows and on the management of knowledge assets at level of the firm and that of the industries in which the firm competes. Chapter 10 illustrates how the concepts discussed throughout the book can be applied in practice.

As its title suggests, the book attempts to deal with the issue which is important to firms and even to governments in the information economy: how do we manage knowledge assets effectively in order to secure competitive advantage? Boisot views that knowledge can be shared by many people but unlike physical assets its value does not decrease when numbers of users increase. In fact, in some cases, its value increases when more people share or use it. “How do we manage this issue?”, asks Boisot.

In addition to this, Boisot concerns about the issue of the changing forms of knowledge assets as from fluid (i.e. readily to flow) to viscous knowledge. As he argues:

Fluid knowledge is knowledge that is well codified and abstract: all extraneous data has been shed. Viscous knowledge, by contrast, is data rich, qualitative, ambiguous. It flows slowly, if at all … Over time, some viscous knowledge can become fluid … Conversely, fluid knowledge, once it has become enriched by individual experience and idiosyncratic interpretations, becomes viscous … (p. xiv).

Replacing the traditional one‐ or two‐dimensional argument, Boisot creates an I‐space through which he demonstrates how information flows and thereby to illustrate how new knowledge could emerge from information flows. It is to assume that codification and abstraction are mutually reinforcing and that both act together to facilitate the diffusion of information. Here, we face paradoxical character of knowledge assets; that is, to make knowledge more diffusible one may have difficulty to appropriate and extract value from it. Boisot discusses this issue by arguing that the paradoxical nature of new knowledge can be dealt with through specific strategies – N‐ and S‐learning strategies. Examples used to explain and demonstrate I‐space are drawn from different industries, and issues discussed and examined are not limited to a business environment but also include the government sectors.

Despite the fact that the I‐space framework discusses the idea of a social learning cycle and culture as a knowledge asset, I feel, as a reader, that the notions of knowledge and process of knowledge creation and diffusion have been dealt with rather simply. Epistemologically‐speaking, knowledge can be seen either as an external entity existing out there to be discovered or a product of interpretation. In both classical and neo‐classical economics information/knowledge is often viewed as given and as an external entity. The issues as to how information/knowledge is created and where it comes from are black boxes to us. Deriving his conceptual model from economic theory, Boisot somehow treats knowledge assets in the very same classical and neo‐classical manner. This approach to knowledge raises an issue as to the role of individuals. If we agree that knowledge is created through interaction between individuals then the conceptual model has, to a large extent, overlooked individual behaviours within information flows. This neglect of human agency in the process of information flow allows Boisot to assume that information flows within I‐space with minimum interruption. This assumption, however, provokes a critique as to his underestimation of human agency.

Knowledge Assets is interesting from an academic point of view, as the framework provides an alternative perspective with which to examine how information/knowledge can be transmitted between different parties and used. Yet, managers and practitioners may find that the ideas discussed in the book may be difficult to be applied in their own business context. Indeed, more work would be required if they wanted to employ the I‐space model.

The third book, Mission Critical, by Davenport, under this review is different from the other two as it is designed to be a management handbook for managers and practitioners who are considering implementation of enterprise systems (ESs). ESs, also known as enterprise resource planning (ERP) systems, are, by definition, packages of computer applications that support many aspects of a company’s information needs, including order entry, inventory level, production schedule, and so on. Investment in ESs needs to be seriously assessed and justified, because implementing ESs can be difficult and costly. This book therefore aims to answer some of the frequently asked questions associated with ESs, such as:

• •

  Who should have ESs?

• •

  What are the issues that companies should be aware of in terms of introducing ESs into the companies?

• •

  How can companies generate competitive advantage through ESs?

• •

  How should companies manage changes introduced by ESs?

The book is organised into nine chapters. Chapter 1 is an introductory chapter that gives readers the idea of the scopes of an ES and its present and future role in an organisation. Chapter 2, which discusses the promise and peril of ESs at a strategic level. After being introduced to the underlying rationale of ESs, the reader (practitioner) is given measurements and guidelines to evaluate situations within their companies so that they can decide whether ES is a solution for them. However, instead of being encouraged to rush into paying out a large lump sum to vendors and consultants, managers and practitioners are also encouraged to consider ESs strategically. Chapter 4 takes on board strategic and organisational issues which focuses on how organisations can use ESs to change the way in which they do their work and how they communicate with common information. Chapter 6 addresses the issues that managers and practitioners need to consider when they are drafting implementation strategy. Chapters 7 and 8 discuss possible changes in organisations introduced by ESs. The book ends with a chapter (nine) considering the future of ESs in business and of how organisations may use them.

Based on his ample management consultancy experience, Davenport has no doubt successfully raised and defined actual and potential challenges that firms may encounter when they are considering, implementing and managing ESs. Davenport goes further than simply raising issues and attempts to provide some practical guidelines and checklists. Davenport mentions that a fundamental rationale behind ESs is to address information integrity in companies. With information integrity, companies are able to cut down inventory costs and serve customers better. This is due to better coordination between each part of their internal as well as external value chains. From this perspective ESs can be described as systems designed to manage business information and its flow.

Davenport’s belief in the future of ESs gives both managers and practitioners some hope and sense of confidence in what they are implementing. Davenport’s optimistic belief in the power of ESs in terms of organisational and business transformation somehow misleads his readers to think, as what the Orange^tm telecoms advertisement claims, “the future is bright, the future belongs to ESs”. Being trained as a sceptical researcher and a pessimist by nature, I found myself having difficulty in agreeing entirely with his views and having some sense of disappointment with his failure to provide a critical view of ESs. For example, the book is keen to sell the idea of ESs but fails to give equal and fair consideration about the possible consequence of adopting the systems. Davenport may argue that this is not an accurate comment since he did discuss the consequences of ESs in his book, but if one examines closely, the discussions were based on the assumption that these would only happen when the management fails to prepare and consider the guidelines listed in the book. In addition to the above the principles and issues addressed in this book are not particularly new (indeed, they appear not to be very different from his earlier work), and adds little to the established IS management literature.

From the established information systems literature we learn that the consequences of an information system adoption do not only rely on the management’s ability to get principles right (i.e. strategy, planning, re‐engineering) but also rely on the management’s ability to act in situ. This is because to be able to plan in advance only promises a relatively smooth implementation process and certain degree of organisational integrity. To ensure organisations can turn any situation in their favour requires that managers use their ability to prepare and act on contingency plans. Such issues, however, were not addressed and emphasised enough in the book.

In conclusion, Rowley’s book is largely concerned with controlling access to information through classification and the use of appropriate information technologies. There is not a specific concern with the human element. Again, Boisot’s text, although presenting a coherent theory, can be criticised for not successfully incorporating ideas of human agency. And while Davenport is noted for his work in human‐centred information management, this text cannot be in that category. In sum, although each of the books succeeds on their own terms and will be of interest for their different audiences, each lacks an explicit focus on the problems associated with the human dimensions of information technology.