Knowledge asset value spiral: linking knowledge assets to company's performance

Abstract

AbstractIn today's economy, more and more organisations are realising that they must explicitly manage their knowledge resources to acquire and maintain their competitive advantage. For this reason, managers need to better understand how they can identify and evaluate existing knowledge resources within an organisation and how to manage them in order to achieve competitive advantage.Many organisations frequently embark on Knowledge Management (KM) initiatives without a clear idea of what business benefits they could expect. This is mainly due to lack of understanding of the links between KM and company's business performance. Understanding these links supports the validation of KM investment and can help explain what knowledge should be managed within an organisation to achieve performance improvement. It appears from literature analysis, that there is not straightforward link between KM and company's performance but rather a complex relationship. In such a prospect, the main research question that has inspired this study is: ‘How can an organisation plan and evaluate a KM initiative designed to improve company's performances?’ On the base of this question, this paper provides a framework—the Knowledge Assets Value Spiral (KAVS)—which focuses on how to apply KM initiatives in a step by step process to achieve company's performance improvements. The framework provides guidelines to plan, implement and evaluate KM initiatives that are linked to performance objectives. It is illustrated how organisations can identify their key knowledge assets as well as their interdependencies and better understand their role in causal dynamics in company's value delivering. The application of the Analytic Hierarchy Process (AHP) method is proposed and a case example describing the application of the framework is illustrated. Copyright © 2006 John Wiley & Sons, Ltd.