Knowledge has become a central part of today’s economy. As a key resource, knowledge changes the production functions and how organizations now approach production functions and uses of production input is largely affected by the knowledge possessed by such firms (Saylor Academy, 2012). Organizations spend billions of dollars on research and development.
A 2020 report by Statista Research Department indicated that the first twenty companies spent a total of 204.7 billion dollars on research and development with Amazon on top of the list spending 22.6 billion USD dollars (Statista Research Department, 2020).
Research and development allow organizations to gain a competitive edge over their rivals as a result of the ensuing knowledge assets resulting in an improved products and service delivery.
When it comes to competing, organizations are well aware of the fact that it is an innovation that leads the way.
Firms have choices on how to gain a competitive edge through innovation. Such choices include acquiring the knowledge externally or investing in the internal R&D to develop technologies and come out with innovations.
Successful organizations have more knowledge capital than their competitors (LEHTIMAKI & LEHTIMAKI, 2016). The ability of an organization to create an environment that supports knowledge creation and its application, to acquire knowledge through recruit, develop and retain such talents to generate value through innovation is key to its success.
Knowledge management provides tools and concepts needed by managers to hone their capabilities to improve how knowledge generally is handled within the organization. It has therefore become so important in many organizations to resort to knowledge management either through research in academia or community of practice.
For most companies, the risk is high and uncertainties are also innumerable. It takes a lot to convince stakeholders and stockholders to invest in new and unproven technologies.
For managers, it is about making wealth for their stockholders (White & Bruton, 2011). Some, therefore, see it fit to pursue technology licensing option (which is less risky) or outright purchase of smaller organizations with the right knowledge asset or simply to seek a partnership or joint venture.
These activities may lead to improving the financial fortunes of the companies involved, thus providing satisfaction to their stockholders. Organizations, therefore, pursue knowledge sources that provide them with the impetus to compete and to meet stockholder expectations.
Such sources may be tacit (Dampney, Busch, & Richards, 2002), explicit (M. Davies, 2001) (Semertzaki, 2011) or implicit (Scheruhn & Fallon, 2015). In the case of tacit, an organization would normally pursue the human capacity rather than the technologies possessed by those companies.
A typical case is reported in the Business Insider Africa where Apple Inc (AAPL) pursues staff of Tesla Inc (TSLA) (Business Insider Africa, 2018 ) because of the formers ambition launch driverless cars (Alistair Barr, 2020,).
In the case of explicit knowledge, organizations pursue patents and copyrights of rival companies and layoff their employees. Layoffs or “rightsizing” are part of doing business today. In the case of implicit, organizations are interested in the business processes, products, and feedback from users and clients, etc.
Depending on the source, a different technique may be required to convert it to value which will then afford a competitive advantage to the organizations involved.
Since the volume of knowledge possessed by firms affects their market value, it is imperative to know the level/volume/magnitude of knowledge available within the participatory firms.
To measure the volume of knowledge within the firms, understanding of knowledge management activities is key. This requires the following processes
1. Defining Knowledge in the context of business operations and activities and categorizing it as stock, flow (Knut Ingar Westeren, 2008,) or enabler
2. Identification of knowledge concerning business processes that results in value creation
3. Setting useful operational indicators that make up organizational knowledge (knowledge capital)
4. Development of a management system that incorporates the objectives of the organization
The study of knowledge capital indicates that knowledge that is being transferred is intangible and this fact is used to study how the business community develops.
Organizational Knowledge capital is a general term referring to the intangible asset comprising of human capital, structural capital, relationships (customer and the external stakeholders), technologies and techniques acquired, processes and procedures, innovation capital, etc., it is the entire body of knowledge that an organization possesses.
In other words, Organizational Knowledge capital is a capital that should be nurtured and leverage for success in organizational services.
