KNOWLEDGE INTENSITY OF ORGANIZATIONS IN

KNOWLEDGE ECONOMY

Vladimir Bures and Pavel Cech

Faculty of Informatics and Management, Univerzity of Hradec Kralove, Rokitanskeho 62, Hradec Kralove, Czech Republic

Keywords: Knowledge economy, knowledge management, KAM, national level, organizational level.

Abstract: Attention paid to knowledge can be seen at different levels. At the supranational and national levels,

potential of single knowledge economies can be measured. To do this, we can use, for example, the

Knowledge Assessment Methodology. It would also be useful to develop a similar methodology at the

organizational level. The aim of this paper is to present the basics of our project, in which principles of this

idea and an outline of a possible way how to sort out this problem based on the four pillars of knowledge

management in organizations are currently elaborated.

1 INTRODUCTION

Nowadays, knowledge has a significant influence in

many different areas of work and also every day life.

Knowledge society (KS) and related knowledge

economy (KE) are being developed by

implementation of particular knowledge

technologies or an introduction of knowledge

management (KM) into organizations. This new

dynamic global market environment is also known

as a new, post-industrial or digital economy. It is

obvious that KE and a knowledge-based competition

are not theoretical concepts produced by authors of

academic books or articles in scientific journals any

more. It is possible to find essential characteristics of

KE in various resources ((Lengnick-Hall, 2003) or

(Houghton, 2000)). These characteristics are, for

example, the reduced organization’s dependence on

the physical concentration of resources, the

possibilities of interrelation and the creation of

alliances, the integration of particular economic

sectors or a more dynamic price creation. For

example countries such as Korea, Malaysia, Finland

or China illustrate the rapid progress that can be

made over relatively short periods of time by

pursuing coherent strategic approaches to building

their country’s capabilities to create, access, and use

knowledge (WBI, 2006).

2 KNOWLEDGE LEVELS

KE brings not only new opportunities and

challenges, but also obstacles and problems that

have to be overcome. Success of a single knowledge

activity is determined by its support at different

knowledge levels. The basic knowledge hierarchy

consists of four knowledge levels: a supranational

level, a national level, an organizational level, and a

management of knowledge level (see Figure 1).

These basic levels differ in many aspects. It is

important to notice that when increasing the

distinguishing level, further levels can be identified.

An example is a level of clusters. That is why the

borders between individual levels are not clear in

practice.

Figure 1: Levels of the knowledge hierarchy.

210

Bures V. and Cech P. (2007).

KNOWLEDGE INTENSITY OF ORGANIZATIONS IN KNOWLEDGE ECONOMY.

In Proceedings of the Third International Conference on Web Information Systems and Technologies - Society, e-Business and e-Government /

e-Learning, pages 210-213

DOI: 10.5220/0001266002100213

 SciTePress

2.1 Supranational Level

The supranational level is the broadest and most

general one. This level operates with concepts of KE

and KS. Particular knowledge does not play any role

here. This level is represented by activities of

supranational institutions such as institutions of the

European Union (EU) and their strategic documents,

OECD with its orientation to the KE that is visible,

for example, from annual reports (e.g. 2005 annual

report (OECD, 2005)) and the document “The

Knowledge-Based Economy” (OECD, 1996), or

UNESCO, which published, at the end of the year of

2005, a document called “Towards Knowledge

Societies” (UNESCO, 2005).

2.2 National Level

The national level is very similar to the

supranational level, nevertheless, KE and KS gain

the national dimension here (i.e. they are influenced

by the national culture, the national business

environment, the political situation, or the

legislation). This level overtakes the basic principles

and attitudes of the supranational level. Single

national economies struggle to implement basic

principles of KE into their own environment. In the

case of the Czech Republic, the best way to visualise

the current situation is to refer, for example, to the

Strategy of the Economic Growth of the Czech

Republic, the Strategy of the Human Resources

Development for the Czech Republic or the Strategy

of the Government of the Czech Republic in the EU

Framework. This level can also be represented by

particular private institutions. An example is the

association of particular organizations, named the

Association for Information Society and its

document “Manifest of Knowledge Society” (SPIS,

2005).

At the two levels mentioned above, it is already

possible to measure the overall potential of

knowledge development in a given country or

overall level of development of a country or region

towards KE. To realize this, we can apply the

Knowledge Assessment Methodology (KAM).

KAM was designed by the World Bank Institute’s

Knowledge for Development Program to proxy a

country’s readiness to compete in KE using more

then 80 structural and qualitative variables. The

comparison is undertaken for a group of 128

countries, which includes most of the OECD

economies and more than 90 developing countries

(WBI, 2006).

The observed variables are based on the four

pillars of the KE framework (Chen, 2005):

 an economic and institutional regime,

 an educated and skilled population,

 an efficient innovation system of firms,

research centres, universities, consultants and

other organizations,

 information and communication technology.

Several variables that track the overall

performance of a given economy are also included

in the KAM. These variables help to illustrate how

well an economy is actually using knowledge for its

overall economic and social development. Every

country can be assessed and compared with others

on the aggregate performance on each of the KE

pillars or the overall KE Index and Knowledge

Index that are derived from KAM. The KAM also

makes possible customized country analysis and

cross-country comparison. This allows for capturing

various aspects of an ability to generate, diffuse and

apply knowledge for economic development (WBI,

2006).

2.3 Organizational Level

The organizational level is a further level, where

KM is conducted. Here, KM means a knowledge-

based and knowledge-oriented management of an

organization, regardless of the main objective or

type of an organization. Therefore, KM can be

introduced, for example, in business organizations,

educational institutions or in state administration

bodies. The reason for this effort is that a large

number of organizations realize that traditional

resources are not the only sources that should be

managed during the transition to KE. It is necessary

to emphasise that the organizational level has

currently many problems (e.g. KM is generally

perceived in different ways, which leads to obstacles

in communication and cooperation). Knowledge

intensity (KI) is a relatively new concept that is very

important for further development of this level.

Here, the KI means readiness for and performance of

individual knowledge activities in particular

organizations.

There is a strong conviction that the idea of

KAM is transformable to one of the lower levels,

namely, the organizational level. The achievement

of this goal needs a multi-disciplinary and trans-

disciplinary approach. Because of the wide diversity

of single organizations in an economy, it is

necessary to use a general system approach and to

find factors and phenomena that shape the

organizational KI in general. The brief description in

KNOWLEDGE INTENSITY OF ORGANIZATIONS IN KNOWLEDGE ECONOMY

211

the above paragraphs indicates several utilisable

methods and tools. The key roles should be played

by contemporary managerial methods such as

Balanced Scorecard, existing methodologies for

creating complex systems (e.g. software systems),

tools and techniques from object-orientated

modelling of organizational processes, or methods

and techniques for development of individual

knowledge technologies (e.g. CommonKADS).

Therefore, the main goal is to get new theoretical

results for modelling and quantification of the

organizational KI. It would be useful to design and

develop a methodology that will quantify the

organizational KI in a way which will also be

comparable with other organizations.

Contemporary solution is based on methodology

of KM implementation KM-Beat-It, which uses four

main pillars for the assessment of an existing state in

an organization (Bureš, 2005).

First of all, it is necessary to describe, measure

and estimate the potential of organizational

knowledge resources. These can be observed, for

instance, as (Holsapple, 2001) have suggested.

According to authors, it is possible to distinguish

two main groups of organizational knowledge

resources – schematic and content resources. While

schematic resources depend on the existence of an

organization they belong to, content resources are in

this sense independent. Schematic resources contain

Purpose, Strategy, Culture, and Infrastructure,

content resources are comprised of Artefacts and

Participants.

Subsequently, the organizational knowledge

processes have to be described, modelled and

analyzed. To conduct this activity, we can select

from either simple models of knowledge processes

(e.g. (Marquardt, 1996), where knowledge processes

are – acquirement, production, transfer and

exploitation of knowledge) or from a complex one

(e.g. (Beckman, 1999) works with identification

(determination of basic competence or specification

of knowledge domains), capture (formalization of

existing knowledge), selection (assessment of

knowledge relevance or its value and accuracy),

storage (representation of organizational memory in

a knowledge repository), sharing (automatic

distribution of knowledge to users according to their

interest, working position, etc.), application (use of

knowledge in decision making processes, problem

solving, education and training, etc.), production

(discovery of new knowledge by research,

experiments or creative thinking), and sale

(development of new products and services and their

market introduction).

The third pillar is represented by organizational

processes that exist in every type of organizations.

These processes should be already described in

single organizations (for example by usage of

UML). If they are not described or modelled, then it

is obvious that a given organization can not reach

satisfying results related to the KI.

The last pillar is organizational culture that

shapes the overall environment in individual

organizations. It can either support or totally destroy

all efforts related to knowledge activities. That is

why it is important to determine indicators that will

measure this level of its support.

Readiness of particular countries for the KE is

dependent on the readiness of single organizations

for KM and performance of knowledge activities.

With the new methodology and its outcomes,

decisions in the area of KM will be strengthened by

managers’ knowledge or awareness of processes,

resources, departments, etc. of their organizations

that have a weak performance from a KM

perspective. Therefore, they will be able to make

efficient and more effective decisions in

organizational resource allocation, finance

budgeting, etc. Hence, it is obvious that the problem

of quantification of the KI is fundamental.

To be successful, it is necessary to clarify and

describe relationships between KE and single

knowledge activities of particular organizations (i.e.

their KI). More precisely, answers for the following

questions have to be found:

 What is the definition of the organizational KI

and what are the possibilities of its

quantification?

 What kind of relationship exists between the

organizational KI and the KE?

 In which ways is the organizational KI already

perceived (described, modelled)?

 Which methods, techniques and tools are

utilisable for quantification of the organizational

KI and how to design and implement them into a

managerial environment?



How to benchmark the KI of individual

organizations in KE?

 In which way is the quantification of KI able to

contribute to the support of managerial decisions

of higher quality at tactic and strategic levels?

2.4 Management of Knowledge Level

The management of knowledge level (MoK) is the

lowest level, which works with some particular

knowledge. This level consists of two main parts.

The first part is technologically oriented and it is

WEBIST 2007 - International Conference on Web Information Systems and Technologies

212

focused, for example, on data mining from

databases, knowledge systems, multi-agent

technologies, mark-up languages, or semantic web.

The second part includes methods, techniques,

procedures and principles of work with knowledge

from other non-technological disciplines such as

psychology or sociology. Nowadays, it is not usual

to consider these methods and techniques as a part of

this basic level. Nevertheless, they fall into this

level, too. They also work with knowledge, but for

example with different types or in different ways.

3 CONCLUSIONS

The attention paid to knowledge is relatively very

recent, and KE is reality, which influences the life of

everyone in our economic and social system. It

seems meaningful to support the argument that

further advancement of KE is strongly dependent on

the state at the organizational level. Although, for

instance, knowledge processes are performed in

some organizations at a relatively sufficient level

(e.g. research institutions or universities), new

impulses and challenges have to be focused on other

types of organizations. We shall focus our attention,

when studying possibilities of further evolution of

the KE, on the performance of single organizations

in KM activities and on general indicators of this

performance. Generality and future utilization of

achieved results in any organization are the leading

aspects of this effort.

The described knowledge levels create one

coherent system that has its own significant

relations. It is evident from the paragraphs above,

that MoK and other disciplines working with any

type of knowledge represent the basis of all

activities connected with knowledge. Their products

are applied at the organizational level. If this

fundamental level does not work properly, all other

activities at higher levels will not necessarily be

complex and complete. Thus, the organizational

level constitutes the basis of KE both at the national

and supranational level. It is also apparent that the

higher the level, the higher the generality. The basic

level of MoK deals with real knowledge and is

developing instruments and procedures, how to

acquire, process, distribute or exploit this

knowledge. At national and supranational levels

particular knowledge does not play any role. The

main goal and purpose of all these activities is the

creation of an environment and its framework

(economic, political, legislative, etc.), in which

lower levels will successfully operate. All these facts

have to be considered during the creation and design

of the new methodology that will measure and

enable benchmarking of KI among individual

organizations (or economic sectors).

ACKNOWLEDGEMENTS

This contribution is partially supported by GACR

Project 402/06/1325 AMIMADES.

REFERENCES

Beckman, T.J., 1999. The Current State of Knowledge

Management, in Liebowitz, J., 1999. Knowledge

Management Handbook, CRC Press, Boca Raton.

Bureš, V., 2005. KM-Beat-It: Methodology of Knowledge

Management Implementation, E+M Economics and

Management, vol.8, is.7, pp. 36-50, Liberec, (in

Czech).

Chen, D.H.C., Dahlman, C.J., 2005. The KE, the KAM

Methodology and World Bank Operations.

Washington DC: World Bank, [on-line]. Retrieved,

January 20, 2006, from http://www.worldbank.org.

Holsapple, C.W, Joshi, K.D., 2001. Organizational

Knowledge Resources, Decision Support Systems,

vol.31, pp.39-54, Elsevier.

Houghton, J., Sheehan, P., 2000. A Primer on the KE,

CSES Working Paper No. 18, Centre for Strategic

Economic Studies, Victoria University of Technology,

Australia.

Jahn, M. et al., 2005. Strategy of economic growth of the

Czech Republic. Prague, [on-line]. Retrieved October

12, 2005, from http://www.hospodarskastrategie.org.

Lengnick-Hall, M.L., Lengnick-Hall, C.A., 2003. Human

Resources Management in the KE. Berrett-Koehler

Publ., Inc., San Francisco.

Marquardt, M., 1996. Building the Learning Organization,

McGraw Hill.

OECD, 2005. Annual report 2005. Paris, [on-line].

Retrieved January 19, 2006, from

http://www.oecd.org.

OECD, 1996. The Knowledge-Based Economy. Paris,

[on-line]. Retrieved December 27, 2005, from

http://www.oecd.org.

SPIS, 2005. Manifest of Knowledge Society. Association

for Information Society, Prague, [on-line]. Retrieved

January 15, 2006, from http://www.spis.cz.

UNESCO, 2005. Towards Knowledge Societies.

UNESCO Publishing, [on-line]. Retrieved January 2,

2006, from http://www.unesco.org.

World Bank Institute, 2006. Knowledge 4 Development.

Washington DC, [on-line]. Retrieved, October 21,

2006, from http://www.worldbank.org.

KNOWLEDGE INTENSITY OF ORGANIZATIONS IN KNOWLEDGE ECONOMY

213