a knowledge-based theory of the firm to guide in strategy formulation

8/3/2019 A Knowledge-based Theory of the Firm to Guide in Strategy Formulation

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Journal of Intellectual Capital,Vol. 2 No. 4, 2001, pp. 344-358.# MCB University Press, 1469-1930

A knowledge-based theory ofthe firm to guide in strategy

formulationKarl-Erik Sveiby

Swedish School of Economics and Business Administration, Helsinki, Finland

Keywords Organizational theory, Information, Strategic management, Intangible assets,Publishing

Abstract This article is seeking to explore the practical implications of an epistemologicalapproach to strategy formulation. In doing so it tries to expand the field of knowledge

management and intellectual capital beyond its operational and often inwardly technological focusto a new theory of the firm. A resource-based perspective is suggested, using autopoieticepistemology to guide strategy formulation. People use their capacity-to-act in order to createvalue in mainly two directions; by transferring and converting knowledge externally and internallyto the organisation. The value grows each time a knowledge transfer or conversion takes place.The strategy formulation issues are concerned with how to utilise the leverage and how to avoidthe blockages that prevent sharing and conversion. Activities that form the backbone of aknowledge-based strategy are to be aimed at improving the capacity-to-act both inside and outsidethe organisation.

Towards a knowledge-based theory of the firmIn the last two decades of the twentieth century the resource-based theory ofthe firm has received attention as an alternative to the traditional product-based or competitive advantage (Porter, 1980) view (Blackler, 1995; Wernerfelt,1995). It is a perspective on organisation and strategy formulation inspired byepistemology and suggesting a knowledge-based theory of the firm.

Venzin et al. (1998) make a distinction between three epistemologies thatmay guide practice and research under such a perspective: the cognitivist(represented by Simon, 1982), the connectionist (represented by Zander andKogut, 1995) and the autopoietic (introduced by Maturana and Varela, 1980).The cognitivist perspective assumes organisations to be open systems, whichdevelop knowledge by formulating increasingly accurate ``representations'' ofthe world. The more data and information organisations can gather the closerthe representation will be. Hence most cognitivist perspectives equateknowledge with information and data. The connectionist epistemology theorganisation still ` represents'' its outside world, but the process ofrepresentation reality is different. As in cognitivist epistemology informationprocessing is the basic activity of the system.

Autopoietic epistemology provides a fundamentally different understandingof the input into a system. Input is regarded as data only. Knowledge is private,

The current issue and full text archive of this journal is available at

http://www.emerald-library.com/ft

This was a plenary presentation at ANZAM conference, Macquarie University Sydney,December 2000. It has been edited slightly to suit a journal publication.


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a notion, which comes close to Polanyi's (1958) concept of ` personal''knowledge. Autopoietic systems are thus both closed and open. Open to data,but closed to information and knowledge, both of which have to be interpretedinside the system. Autopoietic systems are self-referring and the world is thusnot seen as fixed and objective; the world is constructed within the system andit is therefore not possible to ``represent'' reality. An organisation can be seen asa group of individuals who have created an emergent common frame ofreference.

Both Nonaka and Takeuchi (1995) and Sveiby (1997) come close to such anepistemology. Building on Plato et al. (1995) and von Krogh et al. (2000) defineknowledge as a justified true belief: when somebody creates knowledge, he orshe makes sense out of a new situation by holding justified beliefs andcommitting to them (von Krogh et al., 2000). The emphasis in this definition ison the conscious act of creating meaning.

Building on Polanyi (1958) and Wittgenstein (1995), Sveiby (1994, 1997)defines knowledge as a capacity-to-act (which may or may not be conscious).The emphasis of the definition is on the action element: A capacity-to-act canonly be shown in action. Each individual has to re-create his or her owncapacity-to-act and reality through experience a view which is akin toconstructivism (von Glaserfelt, 1988).

Knowledge is dynamic, personal and distinctly different from data (discrete,unstructured symbols) and information (a medium for explicit communication).Since the dynamic properties of knowledge are most important for managers,the notion individual competence[1] can be used as a fair synonym to acapacity-to-act.

A knowledge-based theory for strategy formulationIt follows from the discussion above that strategy formulation should startwith the competence of people. People are seen as the only true agents inbusiness; all tangible physical products, assets as well as the intangiblerelations, are results of human action and depend ultimately on people for theircontinued existence. People are seen to be constantly extending themselves intotheir world by tangible means such as craft, houses, gardens and cars andthrough intangible associations with corporations, ideas, and other people.

McLuhan (1967), calls these intangible extensions ` media''. Inspired by

McLuhan, Sveiby (1997) suggests that people in organisations create externaland internal structures in order to express themselves. The structures are notobjects. Structures should be seen as constructed in a constant process bypeople interacting with each other (Weick, 1977, 1983). If one looks for astructure one will not find it. What one will find are events linked together.These sequences, their pathways and their timing are the forms we tend tomake into objects. Most ``things'' in organisations are such relationships, soverbs such as ``knowing'' and ``organising'' are better descriptions than thenouns knowledge and organisation.


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People in an organisation can use their competence to create value in mainlytwo directions: externally or internally. If the managers of a car or soapcompany direct the efforts of their people internally, they may create tangiblestructures such as machinery and tools and intangible structures such as better

processes and new designs for products. When they direct their attentionoutwards, they can create, in addition to tangible things, such as cars or soap,intangible structures, such as customer relationships and new experiences.

Three families of intangible assetsThe external structure family[2] consists of relationships with customers andsuppliers and the reputation (image) of the firm. Some of these relationshipscan be converted into legal property such as trademarks and brand names. Thevalue of such assets is primarily influenced by how well the company solves itscustomers' problems, and there is always an element of uncertainty here.Reputations and relationships can be good or bad, and can change over time.

They are partly independent of individuals.When people work internally they create an internal structure. The internal

structure consists of patents, concepts, models, and computer and administrativesystems. These are created by the employees and are thus generally ``owned'' bythe organisation. The structure is partly independent of individuals and some ofit remains even if a large number of the employees leave.

Also, the informal organisation, the internal networks, the ``culture'' or the``spirit'' belongs to the internal structure. It is useful to include also the supportstaff, accounting, IT, HR and management in the internal structure family,since they are the keepers of the organisation.

Even if the most valuable individuals leave a company that depend heavily

on individuals, such as a consultancy firm, at least parts of both the internaland the external structures will probably remain intact and can serve as aplatform for a new start (Sveiby and Risling, 1986; Sveiby, 1992).

The individual competence family consists of the competence of theprofessional/technical staff, the experts, the R&D people, the factory workers,sales and marketing in short, all those that have a direct contact withcustomers and whose work are within the business idea.

The distinction between professional/technical staff and support/managerialstaff is made because their different roles determine how they relate to eachother so it is useful for strategy formulation and action planning. The commondivide between professional experts and administrative staff in knowledge-

intensive firms (Sveiby and Lloyd, 1987; Sveiby, 1992, 1997) is, for instance,explained by the theory as lack of knowledge sharing between the two.

Leverage knowledge transfers to create valueTo appreciate why a knowledge-based theory of the firm can be useful forstrategy formulation let us consider some of the features that differentiateknowledge transfers from tangible goods knowledge transfers. In contrast totangible goods, which tend to depreciate in value when they are used,knowledge grows when used and depreciates when not used. Competence in a


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language or a sport requires huge investments in training to build up managerial competence takes a long time on-the-job to learn. If one stopsspeaking the language it gradually dissipates.

The manufacturing and transportation of physical goods from suppliers, via

a factory to a buyer, gave birth to the concept of the value chain. If we see theorganisation as creating value from knowledge transfers together with itscustomers the value chain collapses and the relationship should better be seenas a value network (Allee, 2000); an interaction between people in different rolesand relationships who create both intangible (knowledge, ideas, feedback, etc.)and tangible $-value.

In contrast to the value chain the intangible value in a value network growseach time a transfer takes place because knowledge does not leave the creator.The knowledge I learn from you adds to my knowledge but does not leave you.Thus, from an organisational viewpoint the knowledge has effectively doubled.Knowledge shared is knowledge doubled. The key to value creation lies in how

effective these communications and conversions are and the major issuestrategy for formulation is: how can the leverage be used to create value for thefirm? The value creation is primarily determined by the tacit/explicit transferof knowledge between individuals and in the conversion of knowledge fromone type to another (Nonaka and Takeuchi, 1995), see Figure 1[3].

The choice of the words ``knowledge transfer'' may suggest a one-directionalmovement of knowledge. This is not true. Knowledge transfer betweenindividuals tends to improve competence of both individuals and team worktends to be a team co-creation of knowledge. However, it helps strategyformulation and action planning to distinguish directional components of theactivities, hence the term. Since knowledge cannot be managed the knowledge

strategist looks at enabling (von Krogh et al., 2000) activities rather thancommand-control activities.

An organisation's boundaries become irrelevant if the customers andsuppliers are included as one of the families of the ``firm''. The importance is

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Figure The firm from

knowledge-basperspecti


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placed on how effective the value creation is in the whole system, thus the issueof whether an individual is a formal employee or a customer or a contractor isnot important as long as the relationship generates value. An ex-employee can,for instance, be more valuable as a customer, a fact long exploited by theprofessional services firms.

The nine knowledge strategy questionsGiven the framework above, we can distinguish nine basic knowledgetransfers, which create value for the organisation. Enabling activities that formthe backbone of a knowledge strategy, are to be aimed at improving thecapacity-to-act of people both inside and outside the organisation. Theseinvolve knowledge transfers:

(1) between individuals;

(2) from individuals to external structure;

(3) from external structure to individuals;

(4) from individual competence into internal structure;

(5) from internal structure to individual competence;

(6) within the external structure;

(7) from external to internal structure;

(8) from internal to external structure; and

(9) within internal structure.

The nine knowledge transfers exist in most organisations. However, they tendnot to be coordinated in a coherent strategy, because management lack the fullperspective that a knowledge-based theory may give them. Most organisationsalso have legacy systems and cultures that block the leverage. From anindividual viewpoint, knowledge shared may be opportunity lost if the effect ofthe sharing is lost career opportunities, extra work and no recognition.Therefore many of good initiatives go to waste or neutralise each other.

Investing in a sophisticated IT system for knowledge sharing is, forinstance, a waste of money if the organisation's climate is highly competitive only junk will be shared. Reward systems that encourage individualcompetition will effectively block efforts to enhance knowledge sharing. Lack

of standards and poor taxonomies reduce the value of document handlingsystems. A program for knowledge sharing with customers are neutralised byred tape prohibiting sharing of commercial secrets. Efforts to use ex-employeesfor building marketing relationships are useless if alumni programs aredelegated to the administrative function. Data repositories do not improveindividuals' capacity-to-act unless the databases are made highly interactive.

The Affarsvarlden case (see Figure 2) illustrates how important it is tointegrate all activities in a strategic framework, so they leverage each other anddo not neutralise investments made in other areas.


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1. Knowledge transfers between individualsKnowledge transfers between individuals concern how to best enable thecommunication between employees within the organisation. The strategicquestion is: how can we improve the transfer of competence between people in

our organisation? The most important issue is probably about trust in theorganisation (see, for instance, Huener et al., 1998). How willing are people toshare what they know? Answers to such questions lead towards activitiesfocussed on trust building, enabling team activities, induction programs, jobrotation, master/apprentice schemes and so forth.

One example is Oticon, the Danish hearing-aid manufacturer established in1905, redesigned whole work areas to create an atmosphere of openness,flexibility, and sharing. The company emphasizes ``live'' interaction. Stand-upcoffee bars encourage impromptu meetings, and ``dialogue rooms'' with a tableand chairs help employees relax while solving problems or sharing knowledge.Oticon even locked up elevators so there would be more ``accidental'' meetings

in the stairwell. The company believes that paperwork hampers the exchangeof information because it is slower and more formal than oral communication.The company therefore designated a ``paper room'', the only room where paperis ` safe''. Even electronic mail is discouraged in favor of face-to-facecommunication. These tactics have contributed towards live dialoguebecoming an integral part of Oticon's business, so much so that other forms ofcommunication are almost non-existent (LaBarre, 1994).

Personnel rotation programs expose employees to expertise held locally andtacitly and are common. For instance, every executive including the CEO at

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Figure The nine knowled

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Southwest Airlines spends at least one day every quarter as a baggage handler,ticket agent, or flight attendant. This ` shop-floor'' experience keeps theknowledge of the operation fresh in the minds of all people. It also improvescommunication across all levels (Fambare 1989).

2. Knowledge transfers from individuals to external structureKnowledge transfers from individuals to external structure concern how theorganisation's employees transfer their knowledge to the outer world. Thestrategic question is: how can the organisation's employees improve thecompetence of customers, suppliers and other stakeholders? Answers to suchquestions lead towards activities focussed on enabling the employees to helpcustomers learn about the products, getting rid of red tape, enabling jobrotation with customers, holding product seminars, and providing customereducation. For example, consultants at McKinsey, the US-based consultingfirm, are encouraged to spend time on publishing their research and methods in

order to build the reputation of the firm.Baxter International markets healthcare products and has extended its

offering to include service to hospitals. Baxter employees now mix drugs inintravenous solutions and act as brokers for other vendors (Harari, 1994).

3. Knowledge transfers from external structure to individualsEmployees learn a lot from customer, supplier and community feedback: ideas,new experiences, feedback and new technical knowledge. Knowledge transfersfrom the external structure to individuals concern how the organisation'semployees can learn from the external structure. This is the counterpart ofsection 2. Organisations tend to have systems that capture such knowledge (see

section 7), but they are scattered, not measured and hence not systematicallyinfluencing strategy formulation. The strategic question is: how can theorganisation's customers, suppliers and other stakeholders improve thecompetence of the employees? Answers to such questions lead towardsactivities focused on creating and maintaining good personal relationshipsbetween the organisation's own people and the people outside the organisation.Examples: Adding a knowledge dimension to traditional dollar-based sales andrevenue reporting, enables an organisation to follow up such intangiblerevenues (Sveiby, 1998). Employees at Betz Laboratories, in Trevose,Pennsylvania, frequently participate in its customers' quality managementteams in order to gain a better understanding of, and even anticipate, customerneeds. This knowledge is used to develop products that will boost customersales. Betz measures value added from this knowledge by tracking itscustomers' return on investment, and its own employees receive awards foroutstanding efforts to increase these returns (Garvin, 1993).

4. Knowledge transfers from competence to internal structureHuge investments were made in the 1990s in order to convert (often tacitlyheld) individual competence into data repositories. The idea was thatinformation in such repositories would be shared with the whole organisation.Indeed, the manufacturers of such database software have been so successful


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that many managers believe that such approaches are equal to ``knowledgemanagement''. The strategic question is: how can we improve the conversion ofindividually held competence to systems, tools and templates?

Answers to such questions lead towards activities-focused tools, templates,

process and systems so they can be shared more easily and efficiently. Myargument in this paper is that this is only one of nine possible strategicactivities and to focus one's investments on databases and document handling,etc., will not by far realise the full value of a more strategic approach based on aknowledge-based theory of the firm balancing all nine knowledge transfers.Examples abound and are beyond the scope of this paper: AI systems formedical diagnostics, intranets, document handling systems, databases, etc.

5. Knowledge transfers from internal structure to individual competenceThis is the counterpart of 4, above. Once competence is ``captured in a system''it needs to be made available to other individuals in such a way that they

improve their capacity to act, otherwise the investment is a waste. Thestrategic question is: how can we improve individuals' competence by usingsystems, tools and templates?

Answers to such questions lead towards activities focused on improving thehuman-computer interface of systems, action-based learning processes,simulations and interactive e-learning environments. Examples: IKEA, theSwedish furniture company, uses customised simulations for speeding up thelearning of its warehouse employees. The Copeland Corporation, amanufacturer of compressors, changed its entire manufacturing approach basedon the results of a single demonstration effort, in which a multifunctional teamdesigned a demonstration factory to manufacture a new product line.

Experimentation, whether an ongoing program or a demonstration project,helps individuals move from superficial knowledge to a more basicunderstanding of its processes from knowing about something to learninghow and why. The corporation was able to transform from a high-cost operationwith marginal quality to a 25 percent market share in two years (Garvin, 1993).

6. Knowledge transfers within the external structureWhat do the customers tell each other about the services of an organisation? Aknowledge perspective adds a richer range of possible activities to thetraditional customer satisfaction surveys, by focussing on how the competenceof customers is transferred between the stakeholders in the external structure.

The strategic question is: how can we enable the conversations among thecustomers, suppliers and other stakeholders so they improve their competence?

Answers to such questions lead towards activities focused on partneringand alliances, improving the image of the organisation and the brand equity ofits products and services, improving the quality of the offering, conductingproduct seminars and alumni programs. Examples: Danish biomedicalproducer, Novo, actively engages in building local communities to improve theimage of its products. Book publisher, Berrett-Koehler, runs seminars for itsbook buyers featuring its authors as speakers.


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7. Knowledge transfers from external to internal structureKnowledge transfers from external to internal structure concern whatknowledge the organization can gain from the external world and how thelearning can be converted into action. The strategic question is: how can

competence from the customers, suppliers and other stakeholders improve theorganisation's systems, tools and processes and products?

Answers to such questions lead towards activities focused on empoweringcall centres to interpret customer complaints, creating alliances to generateideas for new products, R&D alliances, etc. Example: Frito-Lay, the US potatochips maker, uses its sales force to collect data about their customers. The dataare analysed and fed back to their sales people empowering them with superiorcustomer knowledge and competitive intelligence.

8. Knowledge transfers from internal to external structureThis is the counterpart of 7, above. The strategic question is: how can the

organisation's systems, tools and processes and products improve thecompetence of the customers, suppliers and other stakeholders?

Answers to such questions lead towards activities focused on making theorganisation's systems, tools and processes effective in servicing the customer,extranets, product tracking, help desks, e-business, etc. Examples: Ernst &Young allows its clients to tap into its own tax and legal database, ``Ernie''. RitzCarlton, the hotel chain renowned for its service, has installed a customerinformation database with global access. All staff are required to fill in cardswith information from every personal encounter with a guest. These data plusguest profiles are stored and printed out to all staff in order to ensure personaltreatment of all guests.

9. Knowledge transfers within internal structureThe internal structure is the supporting backbone of the organisation. Thestrategic question is: how can the organisation's systems, tools and processesand products be effectively integrated? Answers to such questions leadtowards activities focused on streamlining databases, building integratedIT systems, improving the office layout, etc. Example: KnowledgeCurve,PricewaterhouseCooper's intranet integrates several thousands of databasespreviously held individually or locally.

In summary, the nine knowledge questions are now illustrated in Figure 3.To illustrate the application of the knowledge-based perspective and the

concepts discussed above, I will now provide a brief illustration of theapplication of these concepts in which I was personally involved.

Affa rsva rlden: knowledge strategy gives runner-up advantageThe competition between the two weekly Swedish business magazines

Affa rsva rlden (AFV) and Veckans affa rer (VA) offer a vivid illustration of thevalue of a knowledge-focussed strategy in publishing, one of the oldestindustries on earth. There are substantial advantages of scale in the printingprocess, because loading the press with plates and paper and adjusting it


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represents a large fixed cost; after that, the marginal cost of printing the secondcopy is no more than maybe 10 per cent of the average cost. Thus the larger theimprint, the lower the cost per page. The leverage is not as extreme as copyinga CD, but not far from it.

The cost advantage enjoyed by a larger paper enables it to hire goodjournalists and maintain a higher overall level of editorial quality. This can be a

ticket to a virtuous circle of more readers who provide more resources, whichenable better quality, which attracts more readers, etc.

Even if the smaller magazine keeps lower prices than the larger, the largerand (for the magazine) more profitable advertisers tend to prefer to place theiradvertisements in a large magazine, because it gives them access to a largeraudience. Publishers know that, once established, the largest newspaper ormagazine in a market is a licence to print money (see Figure 4).

AFV, being less than one-tenth the size of VA was close to bankruptcy in1977. The printing costs alone were 30 per cent higher for AFV, even though itspages contained only half as much full-color print as VA's. The journal's new

owners in 1978 thus faced a formidable competitive barrier and had noalternative but to try a different strategy than VA. AFV adopted a moreknowledge-focused strategy.

Affa rsva rlden's knowledge strategyThe knowledge strategy gave Affa rsva rlden a distinct competitive advantageon the market for financial information. The strategy and some of the activitieswent against ``common sense'' in publishing, but its ultimate success made it a``cult publication'' in the 1980s and created a following among other journals

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Figure The nine knowled

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and publishers in the country. A summary of Affa rsva rlden's knowledgestrategy is found in Figure 5.

Sveiby (1994) identified two features that contributed most of the difference

in margin during the period 1980-1993:

(1) High editorial productivity. In 1983-1984, the AFV journalists wrotetwice as many pages as their colleagues on the VA staff (133 comparedto VA's 62). This difference in editorial productivity was sustained for15 years. Contributing knowledge strategy initiatives were:

Figure 4.In the 1960s and 1970sVeckans affa rer printedsix times as many pagesas Affa rsva rlden.Towards the end of the1980s the difference had

shrunk to twice as many

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Figure 5.Affa rsva rldenknowledge-focussedstrategy


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. Recruit highly-educated staff. AFV journalists have access to moreexpertise in-house because they all had MBAs or higher, whereasVA's journalists rarely held such degrees. Higher education alsogives know-how in information processing.

. Create collaborative climate. No individual by-lines on the articlesreduced the traditional competitive climate among journalists.Articles written by teams, ` piggy-backing'' at interviews andmaster/apprentice model supported tacit knowledge transfer. Openoffice design (also in sales departments and for managers) supportedinformal information knowledge transfers.

. Build flat organisation. Visible managers, employee ownership andprofit sharing contributed to a shared vision and the collaborativeclimate.

. Invest in new editorial technology. AFV was at least one year faster

than the competitor VA, sometimes two years, in implementing thenew technologies that revolutionised publishing during the 1980s.

. Computerise analytical models. AFV's analysts were early incomputerising their analytical models and basic number crunching.Computerisation freed up time to do more qualified analyses.

(2) Low staff turnover. The financial markets in the 1980s were exploding(such as the IT markets in the 1990s) and AFV's financial analysts wereprime targets of the investment bankers. The ownership model and thecollaborative culture were the strategic initiatives that worked as``golden handcuffs'' and kept the staff turnover at 5 per cent to 7 per cent

throughout the whole period, while VA suffered at least twice the turnover.AFV proved the value of its strategy by being more profitable than VA duringthe whole period (see Figure 6).

When the depression of the 1990s hit the Swedish financial markets, bothmagazines came under heavy pressure. VA was hardest hit because itseditorial concept involved high fixed costs. AFV had lower fixed costs and amuch more flexible concept and was thus able to adjust rapidly by reducing thenumber of pages and cutting down its fixed costs. AFV continued to operate ata profit while VA went into the red.

Veckans affa rer's problems caused its publishers to decide, with effect fromMarch 1994, to split it into two journals: a smaller, cheaper weekly with a

different concept and a more expensive monthly.After 18 years (!) of single-minded head-on competition, AFV had forced the

leader to move out. Affa rsva rlden continues to this day (year 2000) to be one ofthe most profitable weeklies on the Swedish market.

ConclusionsIn the above paper, I have argued that a knowledge-based strategy formulationshould start with ``the primary intangible resource'', the competence of people.People can use their competence to create value in two directions, by


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transferring and converting knowledge externally from or internally to theirorganisation. The external transfer involves intangible relationships withcustomers and suppliers and forms the basis for the reputation (image) of thefirm. Some of these relationships can be converted into legal property such astrademarks and brand names. The value of such intangible resources isprimarily influenced by how well the company solves its customers' problems.The internal transfer relates to explicit administrative processes, internalnetworks, organisational culture and the competences of individuals.

Using this framework then, nine ``basic knowledge transfers/conversions''were identified and a number of questions were created around these transfers.In the final section of the paper, an actual case illustration was provided whichindicated the application of these concepts.

Notes

1. The Latin root competo simply means that an actor has sufficient ability to fulfil his/her goals.Competence is know-how + the ability of reflection. It is the expertise of mastering the rules ofthe profession so well that they no longer need to be obeyed. Competence in Polanyi's senseimplies the ability of know-how within a certain domain and the ability not only to submit tothe rules but also by reflection influence the rules of the domain or the tradition. Competenceis thus not a property but a relation between individual actors and a social system of rules. Aperson is competent within a tradition:

In a competent mental act the agent does not do as he pleases, but compels himself forcibly to act as hebelieves he must.

Polanyi (1958) also makes an illustration of incompetence:We draw here a distinction between two kinds of error, namely scientific guesses which have turnedout to be mistaken, and unscientific guesses which are not only false but incompetent.

An individual is thus not competent per se, rather it is the individual in a role and in a contextwho is competent or not. In order to change the rules a competent individual needs a social orcommunicative knowledge in addition to know-how.

2. The notion ofFamily was designed by Wittgenstein (1954). A family is a grouping basedon common properties. Its contrast is the Category, which is a grouping based on divisionbetween mutually exclusive properties.

Figure 6.Affa rsva rlden's focus onmanaging theintangibles enabled it tomaintain a higherprofitability than themain contender, Veckansaffa rer, during most of

the period


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3. Who first came up with the idea to use a Venn diagram to depict the interactions betweenthe three components is unclear. I would like to acknowledge Hubert St Onge and CharlesArmstrong.

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Further reading

Bertil, R. (1991),Profession Tradition och tyst Kunskap, Doxa.

Hamel, G. and Prahalad, C.K. (1990), The Core Competence of the Organisation, HBR, May-June.

Manasco, B. (1997), ``Some successful cases of knowledge practice'', Knowledge Inc., Vol. 2 No. 7,

p. 3.

Sveiby, K.E. (1990),Kunskapsledning (Knowledge Management), Ledarskap, Stockholm.

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prestigious knowledge management event

KMEurope 2001

DON'T MISS this exciting opportunity to meet and discuss current KM issuesat the Emerald stand with Robert Buckman and Hubert Saint-Onge. Both arekeynote speakers at the event and editorial advisory board members/contributorsto the Emerald Knowledge Management publications the Journal of IntellectualCapital and the Journal of Knowledge Management.

We are pleased to announce our attendance at the world's most popular

knowledge event for the second year running as it returns this year to follow theenormous success of KM2000. Billed as Europe's largest, most informative andprestigious dedicated knowledge event, KMEurope 2001 is set to attract over 100of the top KM companies and will include keynote speakers, companypresentations, an interactive cafe and EC projects under the IST programme.Previous contributors to Emerald Knowledge Management related publicationswho will also be speaking at the event are Dave Snowden from IBM and DebraAmidon from Entovation.

The event is set to take place at The Hague, in The Netherlands, from27-29 November 2001. If you would like to take advantage of this fantastic

opportunity to meet with our Emerald Representatives and to discuss KM issueswith Robert Buckman and Hubert Saint-Onge at stand No. E16, or if you wouldlike further information regarding the event, please contact us at [email protected]

We would also welcome your interest in Emerald and/or your wish to accept afree 30-day full text trial should you be unable to make the event.

a knowledge-based theory of the firm to guide in strategy formulation

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