KNOWLEDGE MANAGEMENT AND THE CORPORATE

NATURE OF LOCAL GOVERNANCE

A Case Study from the Philippines

Kaymart Gimutao, Benjamina Paula Flor and Winifredo Dagli

College of Development Communication, University of the Philippines Los Baños, Laguna, Philippines

Keywords: Knowledge management, Local governance, Corporate nature of local governments.

Abstract: This paper assessed the potential application of knowledge management in local governance in the

Philippines. It is a case study of the Municipality of Cabuyao, a local government unit (LGU) in the country

which extensively utilized the benefits of knowledge management to improve its corporate existence,

subject to limitations of the country’s law regarding the corporate powers of LGUs. The study found that the

said municipality enacted an ordinance that created the organization that will serve as the municipality’s

corporate arm. The municipal government of Cabuyao has many practices and activities to strengthen the

corporate existence of the municipality that fall under the knowledge management field, some of which are

pioneering for a government organization. These include active networking and alliance building with other

organizations such as the private sector, academic and research institutions; tapping experts to come up with

more stable policy; and investing on research and development (R&D) to maximize the corporate

opportunities for the municipality. It is recommended however for the municipality’s corporate arm to set

up its own knowledge management system and to designate a separate unit which will be fully devoted to

its knowledge management activities.

1 INTRODUCTION

It is evident nowadays that business sectors have

already recognized the value of knowledge

management as a business strategy. The private

sector began to adapt the idea that organizational

knowledge can be managed to leverage

competitiveness and assure survival. As Huang

(Huang et al., 2007) claims, knowledge is a critical

factor in business competitiveness and the future

value of a firm. In the public sector, however, the

importance of knowledge management has not yet

been greatly explored. Only few research studies

about knowledge management pay attention on the

application of knowledge management in the public

sector particularly in local governments.

However, although the study of knowledge

management in local governance has not yet been

greatly explored, it is still undeniable that knowledge

management can bring significant benefits in this

sector. Local governments in countries with

decentralized form of governance such as the

Philippines act as frontline service providers. They

ensure that government services such as health,

education, infrastructure, and social safety nets

programs reach the communities who are in need.

Many countries have demonstrated that knowledge

management plays a crucial role in the efficient

delivery of public services and in ensuring

transparency and accountability in the public sector.

In this regard, this paper examined the

application of knowledge management performed by

a local government unit in the Philippines—the

Municipality of Cabuyao. The study paid attention

on how KM can support the corporate nature of a

local government in terms of effective income

generation and greater autonomy from the national

government. The Local Government Code of the

Philippines allows the local governments to act both

as political and corporate entities representing their

inhabitants. The country’s mandate for the local

government units’ corporate power aims to provide

for more efficient services and to address the welfare

of the people by improving their capacity to generate

income on their own. Most of the local government

units in the Philippines acquire the majority of their

income through the national government’s internal

363

Gimutao K., Paula Flor B. and Dagli W..

KNOWLEDGE MANAGEMENT AND THE CORPORATE NATURE OF LOCAL GOVERNANCE - A Case Study from the Philippines.

DOI: 10.5220/0003664803630368

In Proceedings of the International Conference on Knowledge Management and Information Sharing (KMIS-2011), pages 363-368

ISBN: 978-989-8425-81-2

 2011 SCITEPRESS (Science and Technology Publications, Lda.)

revenue allotment (IRA). The Local Government

Code’s consent to exercise the corporate power in

local government units (LGUs) is set to alleviate

LGUs’ too much dependence on IRA and instead

strengthen the local government unit’s fiscal

autonomy.

The study sought to document and analyze the

strategic application of knowledge management at

the local government level to strengthen its

corporate power. Specifically, this article addressed

the following questions:

1. What are the unique knowledge

management practices in the Municipality

of Cabuyao to strengthen its corporate

existence?

2. How do the members of the Municipal

Council of Cabuyao share knowledge

among their colleagues in order to

strengthen their corporate agenda?

3. What are the knowledge management tools

that the Municipality of Cabuyao uses to

enhance its corporate entity?

2 RELATED LITERATURE

2.1 The Corporate Nature of LGUs in

the Philippines

As stated in Section 15 of the Local Government

Code of the Philippines (1991), the local government

units (LGUs) in the country “shall exercise powers as

political subdivisions of the national government and

as corporate entities representing the inhabitants of

its territory”. It implies that LGUs, aside from its

political activities, can also exercise corporate power,

subject to limitations provided in the Local

Government Code and other laws.

It is also indicated in the Section 18 of the

Local Government Code of the Philippines (1991)

that “a local government unit may also establish an

organization that shall be responsible for the efficient

and effective implementation of their development

plans, program objectives and priorities, and to apply

their resources and assets for productive,

developmental, or welfare purposes, in

the exercise

or furtherance of their governmental or proprietary

powers and functions and

thereby ensure their

development into self-reliant communities and active

participants in the attainment of national goals.”

However, only few LGUs in the Philippines

exercise their corporate power and for the first time

in the country, the Municipality of Cabuyao will be

the first LGU to fully exploit this mandate. As

Hoffman (2005) stated, LGUs have received

confusing signals from the national level regarding

the desirable role for LGUs in public economic

enterprises.

2.2 KM in Local Governance

Improved knowledge management (KM) is essential

to governmental agencies at the national, regional or

local levels because governmental organizations are

basically knowledge-based organizations (Yuen,

2007). One of the notable institutions for knowledge

management in local governance is the knowledge

management system (KMS) of Busan Metropolitan

City in South Korea. Busan KMS has opened various

rooms for knowledge sharing among the employees

of the city. This includes encouraging every

employee to register at least one work manual,

holding book reading event and rendering book

summary and research information sharing services.

The organization also seeks better policies by

promoting Communities of Practice (CoPs) within

the organization. In Australia, local government also

shows strong interest in knowledge management as

evidenced by the development of infrastructures and

by concerns with the loss of knowledge and the

deployment of mechanisms for the sharing and reuse

of knowledge (Martin, 2000). Furthermore, the local

government in Australia began to realize the

potential benefits of the local government’s

corporatization and with the advent of new models of

local government in the country based on shared

responsibility between a council and a professional

city manager, local government units have started to

further engage to run their income generating affairs

in a business-like manner. Clearly in what is a much

more business-like and entrepreneurial environment,

those responsible for the administration and

management of local government need access to the

best information and knowledge available. It was

expected that the increasingly corporate nature of the

local government in Australia would be likely to

impact on the uptake of knowledge management

(Martin, 2000).

3 RESEARCH METHODOLOGY

This is a case study of the Municipality of Cabuyao,

a first class municipality in the province of Laguna,

around 45 kms away from Metropolitan Manila. In

2009, the Philippine Commission on Audit (COA)

reported that the municipality has generated an

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income amounting to P681, 671, 773, the highest in

the country.

The study used multiple research methods to

gather the data. These are key informant interviews,

document and research analyses and social network

analysis (SNA).

A series of key informant interviews were done

among the key officials and officers of the

municipality to identify the knowledge management

activities performed by the municipality. The

interview questionnaires were flexible and open-

ended, giving room for follow up questions to the

respondents for elaborations and clarifications.

The analysis of the important documents of the

municipality like the ordinances and resolutions

were able to support the information acquired from

the key informant interviews.

The social network analysis traced the

knowledge sharing relationship of the members of

the municipal council regarding the municipality’s

corporate agenda. As Wang (Wang et al., 2006)

stated, social relationships affects the knowledge

sharing activities of the individuals through their tie

strength—the quality and frequency of interaction

between individuals. A survey questionnaire was

given to each member of the Municipal Council of

Cabuyao.

RESULTS AND DISCUSSION

In accordance with the corporate mandate of the

Local Government Code of the Philippines, the

Municipal Council of Cabuyao legislated the

Municipal Ordinance No. 2008-283, an ordinance

that created the Cabuyao Investment and

Development Authority (CIDA). Although the

municipality has the power to act as a corporate

entity, it is still undeniable that government officials

are usually oriented in political nature of

government thus the Municipality of Cabuyao

created an organization that will support the

corporate existence of the municipality, wherein the

staff and executives to be hired have qualifications

in corporate knowledge. The municipal officials will

only act as ex-officio members of the organization’s

board of directors.

CIDA will serve as the operating and

implementing arm of the Municipal Government of

Cabuyao in the exercise of its corporate powers to

further address the welfare of the citizens of the

municipality.

CIDA will perform two major activities to

strengthen the municipality’s local economy. First, it

will further improve the municipality’s light industry

and small and medium enterprises. It will serve as a

technology business incubator to the enterprises’

development through provision of strategic range of

technology support resources and comprehensive

services (Javier et al., 2009). Second, it will

empower the local entrepreneurship capability of the

citizens of Cabuyao by educating them on how to be

entrepreneurs. Previous studies revealed that the

Municipality of Cabuyao is mainly a consumer

municipality, thus the municipal government created

an opportunity for the people of Cabuyao to be

producers and entrepreneurs. The municipal

government also provides micro-financing as

starting capitals for the people.

4.1

Unique KM Practices for the

Corporate Arm of Cabuyao

Unique knowledge management practices for the

establishment of the corporate arm of Cabuyao

includes the rigid knowledge generation activities of

the members of the municipal council particularly

the municipality’s vice mayor who decided to pursue

a master’s degree in Development Management and

Governance at the College of Public Affairs in the

University of the Philippines-Los Baños.

In the said institution, he was able to grasp some

of the best practices and knowledge in governance

through his professors and his classmates who came

from different government institutions in the country

and abroad. He then came up with better local policy

to strengthen the corporate nature of the

Municipality of Cabuyao. This led to the creation of

CIDA.

He articulated his knowledge to his colleagues in

the municipal council through the regular municipal

session and explained the benefits and opportunities

of having an arm organization of Cabuyao focused

on managing and boosting the corporate potentials

of the municipality. The vice mayor admitted that it

was not easy at first to convince his colleagues,

citing that it was the first major step of a local

government in the country to capitalize on its

corporate nature for income generation. But after

some realizations by the council of the benefits of

creating a corporate arm for the municipality, adding

the fact that Cabuyao is financially capable to invest

as the highest earning municipality in the country,

the council was finally convinced of investing for

CIDA. Notice that careful analysis is still heavily

incorporated in knowledge management in

governance. The members of the organization did

not just easily accept the newly-acquired knowledge

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365

even if it came from their own colleague. Every

decision the government has to make needs a careful

analysis since it will not only affect their own

organization but the public as well.

After capturing the knowledge and learning the

rationality of the proposal of their colleague, it is

only then that the municipal council proceeded to

create a law that will correspond to the proposal of

the municipality’s vice mayor with the knowledge

that he acquired. This was codified in the form of a

municipal ordinance. The municipal ordinance that

created the municipality’s corporate arm reflects the

integrated knowledge of the municipal council about

the corporate nature of the local government unit

and their corresponding actions towards it.

As the policy-creating and decision making

body for pre-operational CIDA, the Municipal

Council also had to generate extensive knowledge

on how to operate a typical corporation to come up

with better internal policies for the municipality’s

corporate arm. In order to do that, the Municipal

Council performed different knowledge alliance

activities like collaborating with multinational

corporations located in the municipality and tapping

partnership with academic and research institutions.

To ensure the stability of CIDA’s operation, the

council decided to include chief executives from

multinational companies in Cabuyao among the

members of CIDA’s board of directors. They also

sought consultations from academic and research

institutions particularly the experts from the Institute

of Development Management and Governance of

the College of Public Affairs in the University of the

Philippines-Los Baños to guide them with policy

creation.

Most importantly, the Municipal Government

tapped a group of researchers to conduct a pre-

operational study about the municipality’s physical,

demographic, and policy environment, the

municipality’s main industry as well as the

appropriate business opportunities in Cabuyao. The

said study about the municipality was able to

determine the strategic directions for CIDA. This

gave the municipal government sufficient

information about the business opportunities of

Cabuyao and serves as a guide for better decisions

in establishing CIDA. The said study also included

extensive recommendations and key strategies for

CIDA start-up. This pre-operational research, along

with the collaboration with the corporate executives

in Cabuyao assisted the Municipal Government to

come up with the master plan of CIDA.

The highlight of the knowledge management

activities of the Municipal Council of Cabuyao in

relation to its corporate plans and agenda depends on

its actual application for the

improvement of the

corporate arm of the municipality particularly the

Cabuyao Investment and Development Authority

(CIDA). In order to properly apply the knowledge

that they have acquired, the municipal council

integrated the practice of strategic management to

come up with better decisions. After making sure

that everything was studied from the demographics

of the municipality to the identification of feasible

opportunities of investment in Cabuyao, the

municipal council then proceeded to rigid evaluation

of the studies’ results which will be the primary

basis of their decision-making.

4.2

Knowledge Sharing

The main room for knowledge sharing among the

members of municipal council of Cabuyao is the

regular session held every week in the municipal

hall. This is where the members of the municipal

council can raise their opinions and introduce their

proposed resolutions or ordinances for legislation.

The municipal council follows a set of rules and

procedures in conducting a session set by the Local

Government Code, making the meeting fall under a

strictly formal setting.

The study also tried to trace

the knowledge sharing relationship of the members

of the Municipal Council of Cabuyao in terms of the

corporate agenda of the municipality through social

network analysis (SNA). As social network

literatures revealed, social relationships affects the

knowledge sharing activities of the individuals

through their tie strength—the quality and frequency

of interaction between individuals (Wang et al.,

2006).

The respondents of SNA are all the members of

the Municipal Council of Cabuyao. This is

comprised of the municipal mayor, the municipal

vice mayor, the eight councilors, the SK Federation

president and the Association of Barangay Captain

president. Social network analysis requires all the

members of the organization since network methods

focus on relations among actors and the network

could not be analyzed if there are missing actors in

the network (Hanneman).

The members of the municipal council were

asked who among their colleagues are the one/s they

approach whenever they have queries about the

municipal agenda and plans to strengthen its

corporate nature.

The Social Network Analysis revealed that the

most prominent nodes in the social network—the

actors who have the most number of in-degrees

are

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M. Gecolea, the municipality’s vice mayor and the

primary author of CIDA with 10 total in-degrees;

and J. Hemedes, the municipality’s mayor with 9

total in-degrees. Other than the two, the rest of the

nodes have either one or no number of in-degree.

The node with the most number of out-degrees

is L. Opiña, a municipal councilor. The node with

the most number of out-degrees is also considered

as advantageous since he/she may have many

alternatives to acquire knowledge. Seven of the

nodes have two total out-degrees; three of the nodes

have only one out-degree while C. Aguillo is the

complete isolate in the group, having neither in-

degree nor out-degree.

The result of the social network analysis for the

members of the municipal council of Cabuyao

reveals that the actors of the said organization are

poorly linked to each other. The network has created

only 22 actual links out of 132 possible links which

only constitute less than 17% of all possible links.

This is dramatically low, considering that 83% of the

possible links are not present. This implies that the

members of the Municipal Council of Cabuyao have

no strong ties to each other. The result also showed

that most of the actors in the network only rely to M.

Gecolea and J. Hemedes as sources of their

information; only L. Opiña relies to actors other than

the two prominent nodes.

4.3 KM Tools

Albeit the pre-operational stage of CIDA, the

municipality already maintains a management

information system (MIS) to keep all the

Figure 1: Social Network of the Municipal Council of

Cabuyao.

in-degree- number of individual/s who approach/es a particular

actor to acquire knowledge/information

out-degree- number of individual/s whom a particular actor

approaches to acquire knowledge/information

transactions of the accounting and income

generating offices of the municipality centralized in

one database. This includes the assessor’s office, the

municipal treasury, the accounting office, the

business permit and licensing office and the budget

and management office.

The study, however, found that the Municipality

of Cabuyao has a very weak information and

communication technology infrastructure which is

supposed to deliver great help to ensure efficiency of

service in the government. Only some portion of the

Municipal Hall of Cabuyao has access to internet

connection. Furthermore, the municipality does not

have its own website which is supposed to be the

local government’s room for reaching out to the

public and serve as a medium for promotion of the

corporate agenda of the municipality.

CONCLUSIONS AND

RECOMMENDATION

The Municipality of Cabuyao performed various

knowledge acquisition activities in order to

strengthen its corporate nature.

These include active

networking and alliance building with other

organizations such as the private sector, academic

and research institutions; tapping experts to come up

with more stable policy; and investing on research

and development (R&D) to maximize the corporate

opportunities for the municipality.

However, in order to apply in full extent the

benefits of knowledge management in the corporate

arm of the municipality particularly in CIDA, the

organization has to set up its own knowledge

management system and designate a separate office

which is fully devoted to knowledge management

operations for CIDA. This is for further

improvement of knowledge management activities

of the organization through regular monitoring and

knowledge audit of the organization’s knowledge.

Moreover, knowledge management system, with the

aid of ICT infrastructures, provides effective storage

and retrieval mechanism of the organizational

knowledge. As Alavi & Leidner (2001) stated, while

organizations create knowledge and learn, they also

forget.

The municipality also has to strengthen its

knowledge management tools such as the ICT

infrastructures since the study found that it is one of

the weak points of the municipality that hinder the

municipality’s knowledge flow to improve its

corporate entity.

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Finally, the municipal council has to improve

their social relationship with each other in terms of

knowledge sharing for the municipality’s corporate

agenda since the study’s social network analysis

revealed their poor linkages to each other in terms of

knowledge sharing for the improvement of the

municipality’s corporate existence.

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