Alavi & Leidner/Knowledge Management MISQ REVIEW REVIEW: KNOWLEDGE MANAGEMENT AND KNOWLEDGE MANAGEMENT SYSTEMS: CONCEPTUAL FOUNDATIONS AND RESEARCH ISSUES1, 2 By: Maryam Alavi John and Lucy Cook Chair of Information Technology Goizueta Business School Emory University Atlanta, GA 30322 U.S.A. Maryam_Alavi@bus.Emory.edu Dorothy E. Leidner Texas Christian University Fort Worth, Texas 76129 U.S.A., and INSEAD 77305 Fontainebleau FRANCE dorothy.leidner@insead.fr Abstract Knowledge is a broad and abstract notion that has defined epistemological debate in western philosophy since the classical Greek era. In the past 1 Richard Watson was the accepting senior editor for this paper. 2 MISQ Review articles survey, conceptualize, and synthesize prior MIS research and set directions for future research. For more details see http://www.misq.org/misreview/announce.html few years, however, there has been a growing interest in treating knowledge as a significant organizational resource. Consistent with the interest in organizational knowledge and knowledge management (KM), IS researchers have begun promoting a class of information systems, referred to as knowledge management systems (KMS). The objective of KMS is to support creation, transfer, and application of knowledge in organizations. Knowledge and knowledge management are complex and multi-faceted concepts. Thus, effective development and implementation of KMS requires a foundation in several rich literatures. To be credible, KMS research and development should preserve and build upon the significant literature that exists in different but related fields. This paper provides a review and interpretation of knowledge management literatures in different fields with an eye toward identifying the important areas for research. We present a detailed process view of organizational knowledge management with a focus on the potential role of information technology in this process. Drawing upon the literature review and analysis of knowledge management processes, we discuss several important research issues surrounding the knowledge management processes and the role of IT in support of these processes. MIS Quarterly Vol. 25 No. 1, pp. 107-136/March 2001 107 Alavi & Leidner/Knowledge Management Keywords: Knowledge management, knowledge management systems, research issues in knowledge management, organizational knowledge management, knowledge management review ISRL Categories: HA, A103, DD07, IB03 In post-capitalism, power comes from transmitting information to make it productive, not from hiding it. Drucker 1995 Introduction A knowledge-based perspective of the firm has emerged in the strategic management literature (Cole 1998; Spender 1996a, 1996b; Nonaka and Takeuchi 1995). This perspective builds upon and extends the resource-based theory of the firm initially promoted by Penrose (1959) and expanded by others (Barney 1991; Conner 1991; Wernerfelt 1984). The knowledge-based perspective postulates that the services rendered by tangible resources depend on how they are combined and applied, which is in turn a function of the firm's know-how (i.e., knowledge). This knowledge is embedded in and carried through multiple entities including organization culture and identity, routines, policies, systems, and documents, as well as individual employees (Grant 1996a, 1996b; Nelson and Winter 1982; Spender 1996a, 1996b). Because knowledge-based resources are usually difficult to imitate and socially complex, the knowledgebased view of the firm posits that these knowledge assets may produce long-term sustainable competitive advantage. However, it is less the knowledge existing at any given time per se than the firm's ability to effectively apply the existing knowledge to create new knowledge and to take action that forms the basis for achieving competitive advantage from knowledge-based assets. It is here that information technologies may play an important role in effectuating the knowledgebased view of the firm. Advanced information technologies (e.g., the Internet, intranets, extranets, browsers, data warehouses, data mining 108 MIS Quarterly Vol. 25 No. 1/March 2001 techniques, and software agents) can be used to systematize, enhance, and expedite large-scale intra- and inter-firm knowledge management. Although the concept of coding, storing, and transmitting knowledge in organizations is not new training and employee development programs, organizational policies, routines, procedures, reports, and manuals have served this function for years (Alavi and Leidner 1999)organizational and managerial practice has recently become more knowledge-focused. For example, benchmarking, knowledge audits, best practice transfer, and employee development point to the realization of the importance of organizational knowledge and intangible assets in general (Grant 1996a, 1996b; Spender 1996a, 1996b). Given the importance of organizational knowledge, our objective is to synthesize the relevant and knowledge-centered work from multiple disciplines that in our view contribute to and shape our understanding of knowledge management and knowledge management systems in organizations. The paper is organized as follows: the next section presents a review of the management literature on knowledge and the firm. This section provides a comprehensive summary of alternative views of knowledge and knowledge taxonomies and their implications for knowledge management. The following section adopts the process view of knowledge management and presents this view in detail with an eye toward identifying the potential role of information technologies in the various stages of the knowledge management process. A broader organizational perspective on knowledge management research is then provided by discussing important research themes that emerge from the review of the literature. The final section provides a summary and presents the discussion of the four general conclusions of our work. Knowledge and the Firm: An Overview and Basic Concepts The question of defining knowledge has occupied the minds of philosophers since the classical Alavi & Leidner/Knowledge Management Greek era and has led to many epistemological debates. It is unnecessary for the purposes of this paper to engage in a debate to probe, question, or reframe the term knowledge, or discover the \"universal truth,\" from the perspective of ancient or modern philosophy. This is because such an understanding of knowledge was neither a determinant factor in building the knowledge-based theory of the firm nor in triggering researcher and practitioner interest in managing organizational knowledge. It is, however, useful to consider the manifold views of knowledge as discussed in the information technology (IT), strategic management, and organizational theory literature. This will enable us to uncover some assumptions about knowledge that underlie organizational knowledge management processes and KMS. We will begin by considering definitions of knowledge. The Hierarchical View of Data, Information, and Knowledge Some authors, most notably in IT literature, address the question of defining knowledge by distinguishing among knowledge, information, and data. The assumption seems to be that if knowledge is not something that is different from data or information, then there is nothing new or interesting about knowledge management (Fahey and Prusak 1998). A commonly held view with sundry minor variants is that data is raw numbers and facts, information is processed data, and knowledge is authenticated information (Dreske 1981; Machlup 1983; Vance 1997). Yet the presumption of a hierarchy from data to information to knowledge with each varying along some dimension, such as context, usefulness, or interpretability, rarely survives scrupulous evaluation. What is key to effectively distinguishing between information and knowledge is not found in the content, structure, accuracy, or utility of the supposed information or knowledge. Rather, knowledge is information possessed in the mind of individuals: it is personalized information (which may or may not be new, unique, useful, or accurate) related to facts, procedures, concepts, interpretations, ideas, observations, and judgments. Tuomi (1999) makes the iconoclastic argument that the often-assumed hierarchy from data to knowledge is actually inverse: knowledge must exist before information can be formulated and before data can be measured to form information. As such, \"raw data\" do not existeven the most elementary piece of \"data\" has already been influenced by the thought or knowledge processes that led to its identification and collection. Tuomi argues that knowledge exists which, when articulated, verbalized, and structured, becomes information which, when assigned a fixed representation and standard interpretation, becomes data. Critical to this argument is the fact that knowledge does not exist outside of an agent (a knower): it is indelibly shaped by one's needs as well as one's initial stock of knowledge (Fahey and Prusak 1998; Tuomi 1999). Knowledge is thus the result of cognitive processing triggered by the inflow of new stimuli. Consistent with this view, we posit that information is converted to knowledge once it is processed in the mind of individuals and knowledge becomes information once it is articulated and presented in the form of text, graphics, words, or other symbolic forms. A significant implication of this view of knowledge is that for individuals to arrive at the same understanding of data or information, they must share a certain knowledge base. Another important implication of this definition of knowledge is that systems designed to support knowledge in organizations may not appear radically different from other forms of information systems, but will be geared toward enabling users to assign meaning to information and to capture some of their knowledge in information and/or data. Alternative Perspectives on Knowledge Knowledge is defined as a justified belief that increases an entity's capacity for effective action (Huber 1991; Nonaka 1994). Knowledge may be viewed from several perspectives (1) a state of mind, (2) an object, (3) a process, (4) a condition of having access to information, or (5) a capability. MIS Quarterly Vol. 25 No. 1/March 2001 109 Alavi & Leidner/Knowledge Management Knowledge has been described as \"a state or fact of knowing\" with knowing being a condition of \"understanding gained through experience or study; the sum or range of what has been perceived, discovered, or learned\" (Schubert et al. 1998). The perspective on knowledge as a state of mind focuses on enabling individuals to expand their personal knowledge and apply it to the organization's needs. A second view defines knowledge as an object (Carlsson et al. 1996; McQueen 1998; Zack 1998a). This perspective posits that knowledge can be viewed as a thing to be stored and manipulated (i.e., an object) Alternatively, knowledge can be viewed as a process of simultaneously knowing and acting (Carlsson et al. 1996; McQueen 1998; Zack 1998a). The process perspective focuses on the applying of expertise (Zack 1998a). The fourth view of knowledge is that of a condition of access to information (McQueen 1998). According to this view, organizational knowledge must be organized to facilitate access to and retrieval of content. This view may be thought of as an extension of the view of knowledge as an object, with a special emphasis on the accessibility of the knowledge objects. Finally, knowledge can be viewed as a capability with the potential for influencing future action (Carlsson et al. 1996). Watson (1999) builds upon the capability view by suggesting that knowledge is not so much a capability for specific action, but the capacity to use information; learning and experience result in an ability to interpret information and to ascertain what information is necessary in decision making. These different views of knowledge lead to different perceptions of knowledge management (Carlsson et al. 1996). If knowledge is viewed as an object, or is equated with information access, then knowledge management should focus on building and managing knowledge stocks. If knowledge is a process, then the implied knowledge management focus is on knowledge flow and the processes of creation, sharing, and distribution of knowledge. The view of knowledge as a capability suggests a knowledge management perspective centered on building core competencies, understanding the strategic advantage of know-how, and creating intellectual capital. The major implication of these various conceptions of knowledge is that each perspective suggests a different strategy for managing the knowledge and a different perspective of the role of systems in support of knowledge management. 110 MIS Quarterly Vol. 25 No. 1/March 2001 Table 1 summarizes the various views of knowledge just discussed and their implications for knowledge management and knowledge management systems. The perspective relied upon most heavily in this article is that implied in the distinction of knowledge from data and information, closely related to the perspective of knowledge as a state of mind. Summary of Knowledge Perspective Three major points emerge from the above discussion: (1) A great deal of emphasis is given to understanding the difference among data, information, and knowledge and drawing implications from the difference. (2) Because knowledge is personalized, in order for an individual's or a group's knowledge to be useful for others, it must be expressed in such a manner as to be interpretable by the receivers. (3) Hoards of information are of little value; only that information which is actively processed in the mind of an individual through a process of reflection, enlightenment, or learning can be useful. Taxonomies of Knowledge Drawing on the work of Polanyi (1962, 1967), Nonaka (1994) explicated two dimensions of knowledge in organizations: tacit and explicit. Rooted in action, experience, and involvement in a specific context, the tacit dimension of knowledge (henceforth referred to as tacit knowledge) is comprised of both cognitive and technical elements (Nonaka 1994). The cognitive element refers to an individual's mental models consisting of mental maps, beliefs, paradigms, and viewpoints. The technical component consists of concrete know-how, crafts, and skills that apply to a specific context. An example of tacit knowledge is knowledge of the best means of approaching a particular customerusing flattery, using a hard sell, using a no-nonsense approach. The explicit dimension of knowledge (henceforth referred to as explicit knowledge) is articulated, codified, and communicated in symbolic form and/or natural language. An example is an owner's manual accompanying the purchase of an electronic product. The manual contains knowledge on the appropriate operation of the product. Alavi & Leidner/Knowledge Management Table 1. Knowledge Perspectives and Their Implications Implications for Knowledge Management (KM) Perspectives KM focuses on exposing individuals to potentially useful information and facilitating assimilation of information Implications for Knowledge Management Systems (KMS) KMS will not appear radically different from existing IS, but will be extended toward helping in user assimilation of information Knowledge vis-vis data and information Data is facts, raw numbers. Information is processed/ interpreted data. Knowledge is personalized information. State of mind Knowledge is the state of KM involves enhancing knowing and understanding. individual's learning and understanding through provision of information Role of IT is to provide access to sources of knowledge rather than knowledge itself Object Knowledge is an object to be stored and manipulated. Key KM issue is building and managing knowledge stocks Role of IT involves gathering, storing, and transferring knowledge Process Knowledge is a process of applying expertise. KM focus is on knowledge flows and the process of creation, sharing, and distributing knowledge Role of IT is to provide link among sources of knowledge to create wider breadth and depth of knowledge flows Access to information Knowledge is a condition of access to information. KM focus is organized access to and retrieval of content Role of IT is to provide effective search and retrieval mechanisms for locating relevant information Capability Knowledge is the potential to influence action. KM is about building core competencies and understanding strategic know-how Role of IT is to enhance intellectual capital by supporting development of individual and organizational competencies Knowledge can also be viewed as existing in the individual or the collective (Nonaka 1994). Individual knowledge is created by and exists in the individual whereas social knowledge is created by and inherent in the collective actions of a group. Both Nonaka and others (e.g., Spender 1992, 1996a, 1995b) rely heavily on the tacitexplicit, individual-collective knowledge distinction but do not provide a comprehensive explanation as to the interrelationships among the various knowledge-types. One potentially problematic aspect in the interpretation of this classification is the assumption that tacit knowledge is more valuable than explicit knowledge; this is tantamount to equating an inability to articulate knowledge with its worth. Few, with the exception of Bohn (1994), venture to suggest that explicit knowledge is more valuable than tacit knowledge, a viewpoint that if accepted might favor a technology enabled knowledge management process (technology being used to aid in explicating, storing, and disseminating knowledge). MIS Quarterly Vol. 25 No. 1/March 2001 111 Alavi & Leidner/Knowledge Management Whether tacit or explicit knowledge is the more valuable may indeed miss the point. The two are not dichotomous states of knowledge, but mutually dependent and reinforcing qualities of knowledge: tacit knowledge forms the background necessary for assigning the structure to develop and interpret explicit knowledge (Polyani 1975). The inextricable linkage of tacit and explicit knowledge suggests that only individuals with a requisite level of shared knowledge can truly exchange knowledge: if tacit knowledge is necessary to the understanding of explicit knowledge, then in order for Individual B to understand Individual A's knowledge, there must be some overlap in their underlying knowledge bases (a shared knowledge space) (Ivari and Linger 1999; Tuomi 1999). However, it is precisely in applying technology to increase \"weak ties\" (i.e., informal and casual contacts among individuals) in organizations (Pickering and King 1995), and thereby increase the breadth of knowledge sharing, that IT holds promise. Yet, absent a shared knowledge space, the real impact of IT on knowledge exchange is questionable. This is a paradox that IT researchers have somewhat eschewed, and that organizational researchers have used to question the application of IT to knowledge management. To add to the paradox, the very essence of the knowledge management challenge is to amalgamate knowledge across groups for which IT can play a major role. What is most at issue is the amount of contextual information necessary for one person or group's knowledge to be readily understood by another. former is not alone in providing both benefits and challenges to organizations. Explicit knowledge may pose a particular challenge related to an assumption of legitimacy by virtue of being recorded (Jordan and Jones 1997). This could lead to decision makers favoring explicit knowledge, at the expense of contradictory tacit knowledge, because it may be viewed as more legitimized and, hence, justifiable. Moreover, given the ephemeral nature of some knowledge, explicating knowledge may result in a rigidity and inflexibility, which would impede, rather than improve, performance. It may be argued that the greater the shared knowledge space, the less the context needed for individuals to share knowledge within the group and, hence, the higher the value of explicit knowledge and the greater the value of IT applied to knowledge management. On the other hand, the smaller the existing shared knowledge space in a group, the greater the need for contextual information, the less relevant will be explicit knowledge, and hence the less applicable will be IT to knowledge management. An understanding of the concept of knowledge and knowledge taxonomies is important because theoretical developments in the knowledge management area are influenced by the distinction among the different types of knowledge. Furthermore, the knowledge taxonomies discussed here can inform the design of knowledge management systems by calling attention to the need for support of different types of knowledge and the flows among these different types. Knowledge management may provide an opportunity for extending the scope of IT-based knowledge provision to include the different knowledge types summarized in Table 2. Tacit knowledge has received greater interest and attention than has explicit knowledge, and yet the 112 MIS Quarterly Vol. 25 No. 1/March 2001 The tacit-explicit knowledge classification is widely cited, although sundry other knowledge classifications exist that eschew the recondite subtleties of the tacit-explicit dimension. Some refer to knowledge as declarative (know-about or knowledge by acquaintance [Nolan Norton 1998]), procedural (know-how), causal (know-why), conditional (know-when), and relational (knowwith) (Zack 1998c). A pragmatic approach to classifying knowledge simply attempts to identify types of knowledge that are useful to organizations. Examples include knowledge about customers, products, processes, and competitors, which can include best practices, know-how and heuristic rules, patterns, software code, business processes, and models; architectures, technology, and business frameworks; project experiences (proposals, work plans, and reports); and tools used to implement a process such as checklists and surveys (KPMG 1998b). Alavi & Leidner/Knowledge Management Table 2. Knowledge Taxonomies and Examples Knowledge Types Definitions Examples Tacit Knowledge is rooted in actions, experience, and involvement in specific context Mental models Best means of dealing with specific customer Cognitive tacit: Technical tacit: Know-how applicable to specific work Individual's belief on causeeffect relationships Surgery skills Explicit Articulated, generalized knowledge Knowledge of major customers in a region Individual Created by and inherent in the individual Insights gained from completed project Social Created by and inherent in collective actions of a group Norms for inter-group communication Declarative Know-about What drug is appropriate for an illness Procedural Know-how How to administer a particular drug Causal Know-why Understanding why the drug works Conditional Know-when Understanding when to prescribe the drug Relational Know-with Understanding how the drug interacts with other drugs Pragmatic Useful knowledge for an organization Best practices, business frameworks, project experiences, engineering drawings, market reports Knowledge Management in Organizations The recent interest in organizational knowledge has prompted the issue of managing the knowledge to the organization's benefit. Knowledge management refers to identifying and leveraging the collective knowledge in an organization to help the organization compete (von Krogh 1998). Knowledge management is purported to increase innovativeness and responsiveness (Hackbarth 1998). A recent survey of European firms by KPMG Peat Marwick (1998b) found that almost half of the companies reported having suffered a significant setback from losing key staff with 43% experiencing impaired client or supplier relations and 13% facing a loss of income because of the departure of a single employee. In another survey, the majority of organizations believed that much of the knowledge they needed existed inside the organization, but that identifying that it existed, finding it, and leveraging it remained problematic (Cranfield University 1998). Such problems maintaining, locating, and applying knowledge have led to systematic attempts to manage knowledge. According to Davenport and Prusak (1998), most knowledge management projects have one of three aims: (1) to make knowledge visible and show the role of knowledge in an organization, mainly through maps, yellow pages, and hypertext MIS Quarterly Vol. 25 No. 1/March 2001 113 Alavi & Leidner/Knowledge Management tools; (2) to develop a knowledge-intensive culture by encouraging and aggregating behaviors such as knowledge sharing (as opposed to hoarding) and proactively seeking and offering knowledge; (3) to build a knowledge infrastructurenot only a technical system, but a web of connections among people given space, time, tools, and encouragement to interact and collaborate. Knowledge management is largely regarded as a process involving various activities. Slight discrepancies in the delineation of the processes appear in the literature, namely in terms of the number and labeling of processes rather than the underlying concepts. At a minimum, one considers the four basic processes of creating, storing/retrieving, transferring, and applying knowledge. These major processes can be subdivided, for example, into creating internal knowledge, acquiring external knowledge, storing knowledge in documents versus storing in routines (Teece 1998) as well as updating the knowledge and sharing knowledge internally and externally. We will return to the knowledge management processes in the framework section and consider the role of IT within each process. Knowledge Management Systems Knowledge management systems (KMS) refer to a class of information systems applied to managing organizational knowledge. That is, they are IT-based systems developed to support and enhance the organizational processes of knowledge creation, storage/retrieval, transfer, and application. While not all KM initiatives involve an implementation of IT, and admonitions against an emphasis on IT at the expense of the social and cultural facets of KM are not uncommon (Davenport and Prusak 1998; Malhotra 1999; O'Dell and Grayson 1998), many KM initiatives rely on IT as an important enabler. While IT does not apply to all of the issues of knowledge management, it can support KM in sundry ways. Examples include finding an expert or a recorded source of knowledge using online directories and searching databases; sharing knowledge and working together in virtual teams; access to information on past projects; and learning about customer needs 114 MIS Quarterly Vol. 25 No. 1/March 2001 and behavior by analyzing transaction data (KPMG 1998a), among others. Indeed, there is no single role of IT in knowledge management just as there is no single technology comprising KMS. Reviewing the literature discussing applications of IT to organizational knowledge management initiatives reveals three common applications: (1) the coding and sharing of best practices, (2) the creation of corporate knowledge directories, and (3) the creation of knowledge networks. One of the most common applications is internal benchmarking with the aim of transferring internal best practices (KPMG 1998a; O'Dell and Grayson 1998). For example, an insurance company was faced with the commoditization of its market and declining profits. The company found that applying the best decision making expertise via a new underwriting process supported by a knowledge management system enabled it to move into profitable niche markets and, hence, to increase income (Davenport and Prusak 1998). Another common application of knowledge management is the creation of corporate directories, also referred to as the mapping of internal expertise. Because much knowledge in an organization remains uncodified, mapping the internal expertise is a potentially useful application of knowledge management (Ruggles 1998). One survey found that 74% of respondents believed that their organization's best knowledge was inaccessible and 68% thought that mistakes were reproduced several times (Gazeau 1998). Such perception of the failure to apply existing knowledge is an incentive for mapping internal expertise. A third common application of knowledge management systems is the creation of knowledge networks (Ruggles 1998). For example, when Chrysler reorganized from functional to platformbased organizational units, they realized quickly that unless the suspension specialists could communicate easily with each other across platform types, expertise would deteriorate. Chrysler formed Tech Cul, bringing people together virtually and face-to-face to exchange and build their collective knowledge in each of the specialty areas. In this case, the knowledge management Alavi & Leidner/Knowledge Management effort was less focused on mapping expertise or benchmarking than it was on bringing the experts together so that important knowledge was shared and amplified. Providing online forums for communication and discussion may form knowledge networks. Buckman Laboratories uses an online interactive forum where user comments are threaded in conversational sequence and indexed by topic, author, and date. This has reportedly enabled Buckman to respond to the changing basis of competition that has evolved from merely selling products to solving customers' chemical treatment problems (Zack 1998a). In another case, Ford found that just by sharing knowledge, the development time for cars was reduced from 36 to 24 months, and through knowledge sharing with dealers, the delivery delay reduced from 50 to 15 days (Gazeau 1998). Summary: Knowledge and the Firm Information systems designed to support and augment organizational knowledge management need to complement and enhance the knowledge management activities of individuals and the collectivity. To achieve this, the design of information systems should be rooted in and guided by an understanding of the nature and types of organizational knowledge. Different perspectives on knowledge and various knowledge taxonomies were discussed earlier. These discussions highlight the importance of assessing and understanding an organization's knowledge position and its existing intellectual resources. Such an understanding is needed for formulating a knowledge management strategy and in analyzing the role of information technology in facilitating knowledge management (discussed in the next section). In the information systems (IS) field, it has been common to design systems primarily focused on the codified knowledge (that is, explicit organizational knowledge). Management reporting systems, decision support systems, and executive support systems have all focused on the collection and dissemination of this knowledge type. Knowledge management systems may provide an opportunity for extending the scope of IT-based knowledge provision to include the different knowledge forms and types shown in Table 2. We are not suggesting that IT applied to the KM efforts of a given organization must provide the means of capturing all types of knowledge mentioned; the specific types of knowledge forming the substance of an IT will depend upon an organization's context. We are suggesting, however, that IT as applied to KM need not be constrained to certain types of knowledge, because the advances in communication and information technologies enable greater possibilities than existed with previous classes of information systems. While the preponderance of knowledge management theory stems from strategy and organizational theory research, the majority of knowledge management initiatives involve at least in part, if not to a significant degree, information technology. Yet little IT research exists on the design, use, or success of systems to support knowledge management. The next section will examine the four basic knowledge management processes and the role that IT may play in each process. Organizational Knowledge Management Processes: A Framework for Analysis of the Role of an Information System In this section, we develop a systematic framework that will be used to further analyze and discuss the potential role of information technologies in organizational knowledge management. This framework is grounded in the sociology of knowledge (Berger and Luckman 1967; Gurvitch 1971; Holzner and Marx 1979) and is based on the view of organizations as social collectives and \"knowledge systems.\" According to this framework, organizations as knowledge systems consist of four sets of socially enacted \"knowledge processes\": (1) creation (also referred to as construction), (2) storage/retrieval, (3) transfer, and (4) application (Holzner and Marx 1979; Pentland 1995). This view of organizations as knowledge systems represents both the cognitive and social nature of organizational knowledge and MIS Quarterly Vol. 25 No. 1/March 2001 115 Alavi & Leidner/Knowledge Management its embodiment in the individual's cognition and practices as well as the collective (i.e., organizational) practices and culture. These processes do not represent a monolithic set of activities, but an interconnected and intertwined set of activities, as explained later in this section. Knowledge Creation Organizational knowledge creation involves developing new content or replacing existing content within the organization's tacit and explicit knowledge (Pentland 1995). Through social and collaborative processes as well as an individual's cognitive processes (e.g., reflection), knowledge is created, shared, amplified, enlarged, and justified in organizational settings (Nonaka 1994). This model views organizational knowledge creation as involving a continual interplay between the tacit and explicit dimensions of knowledge and a growing spiral flow as knowledge moves through individual, group, and organizational levels. Four modes of knowledge creation have been identified: socialization, externalization, internalization, and combination (Nonaka 1994). The socialization mode refers to conversion of tacit knowledge to new tacit knowledge through social interactions and shared experience among organizational members (e.g., apprenticeship). The combination mode refers to the creation of new explicit knowledge by merging, categorizing, reclassifying, and synthesizing existing explicit knowledge (e.g., literature survey reports). The other two modes involve interactions and conversion between tacit and explicit knowledge. Externalization refers to converting tacit knowledge to new explicit knowledge (e.g., articulation of best practices or lessons learned). Internalization refers to creation of new tacit knowledge from explicit knowledge (e.g., the learning and understanding that results from reading or discussion). The four knowledge creation modes are not pure, but highly interdependent and intertwined. That is, each mode relies on, contributes to, and benefits from other modes. For example, the socialization mode can result in creation of new knowledge when an individual obtains a new insight triggered by interaction with another. On 116 MIS Quarterly Vol. 25 No. 1/March 2001 the other hand, the socialization mode may involve transferring existing tacit knowledge from one member to another through discussion of ideas. New organizational knowledge per se may not be created, but only knowledge that is new to the recipient. The combination mode in most cases involves an intermediate stepthat of an individual drawing insight from explicit sources (i.e., internalization) and then coding the new knowledge into an explicit form (externalization). Finally, internalization may consist of the simple conversion of existing explicit knowledge to an individual's tacit knowledge as well as creation of new organizational knowledge when the explicit source triggers a new insight. Figure 1 illustrates the interplay among Nonaka's knowledge creation modes, and hence may be useful in interpreting relationships between the four modes. In Figure 1, each arrow represents a form of knowledge creation. The arrows labeled A represent externalization; the arrows labeled B represent internalization; the arrows labeled C represent socialization; and the arrows labeled D represent combination. It may be useful to consider the conditions and environments that facilitate new knowledge creation. Nonaka and Konno (1998) suggest that the essential question of knowledge creation is establishing an organization's \"ba\" (defined as a common place or space for creating knowledge). Four types of ba corresponding to the four modes of knowledge creation discussed above are identified: (1) originating ba, (2) interacting ba, (3) cyber ba, and (4) exercising ba (Nonaka and Konno 1998). Originating ba entails the socialization mode of knowledge creation and is the ba from which the organizational knowledge creation process begins. Originating ba is a common place in which individuals share experiences primarily through face-to-face interactions and by being at the same place at the same time. Interacting ba is associated with the externalization mode of knowledge creation and refers to a space where tacit knowledge is converted to explicit knowledge and shared among individuals through the process of dialogue and collaboration. Cyber ba refers to a virtual space of interaction and corres- Alavi & Leidner/Knowledge Management Individual A's C Tacit Knowledge Individual B's Tacit Knowledge B B B B A A A A Individual B's Explicit Knowledge Individual A's Explicit Knowledge D Storage (document, e-mail, intranet...) Storage (document, e-mail, intranet...) Legend: Each arrow represents a form of knowledge creation. AExternalization; BInternalization; CSocialization; DCombination Figure 1. Knowledge Creation Modes ponds to the combination mode of knowledge creation. Finally, exercising ba involves the conversion of explicit to tacit knowledge through the internalization process. Thus, exercising ba entails a space for active and continuous individual learning. Understanding the characteristics of various ba and the relationship with the modes of knowledge creation is important to enhancing organizational knowledge creation. For example, the use of IT capabilities in cyber ba is advocated to enhance the efficiency of the combination mode of knowledge creation (Nonaka and Konno 1998). Data warehousing and data mining, documents repositories, and software agents, for example, may be of great value in cyber ba. We further suggest that considering the flexibility of modern IT, other forms of organizational ba and the corresponding modes of knowledge creation can be enhanced through the use of various forms of information systems. For example, information systems designed for support of collaboration, coordination, and communication processes, as a component of the interacting ba, can facilitate teamwork and thereby increase an individual's contact with other individuals. Electronic mail and group support systems have been shown to increase the number of weak ties in organizations. This in turn can accelerate the growth of knowledge creation (Nonaka 1994). Intranets enable exposure to greater amounts of on-line organizational information, both horizontally and vertically, than may previously have been the case. As the level of information exposure increases, the internalization mode of knowledge creation, wherein individuals make observations and interpretations of information that result in new individual tacit knowledge, may increase. In this role, an intranet MIS Quarterly Vol. 25 No. 1/March 2001 117 Alavi & Leidner/Knowledge Management can support individual learning (conversion of explicit knowledge to personal tacit knowledge) through provision of capabilities such as computer simulation (to support learning-by-doing) and smart software tutors. Computer-mediated communication may increase the quality of knowledge creation by enabling a forum for constructing and sharing beliefs, for confirming consensual interpretation, and for allowing expression of new ideas (Henderson and Sussman 1997). By providing an extended field for interaction among organizational members for sharing ideas and perspectives, and for establishing dialog, information systems may enable individuals to arrive at new insights and/or more accurate interpretations than if left to decipher information on their own. Boland et al. (1994) provide a specific example of an information system called Spider that provides an environment for representing, exchanging, and debating different individual perspectives. The system actualizes an extended field in which \"assumptions are surfaced and questioned, new constructs emerge and dialog among different perspectives is supported\" (Boland et al. 1994, pp. 467). As such, the quality and frequency of the knowledge creation is improved. Knowledge Storage/Retrieval Empirical studies have shown that while organizations create knowledge and learn, they also forget (i.e., do not remember or lose track of the acquired knowledge) (Argote et al. 1990; Darr et al. 1995). Thus, the storage, organization, and retrieval of organizational knowledge, also referred to as organizational memory (Stein and Zwass 1995; Walsh and Ungson 1991), constitute an important aspect of effective organizational knowledge management. Organizational memory includes knowledge residing in various component forms, including written documentation, structured information stored in electronic databases, codified human knowledge stored in expert systems, documented organizational procedures and processes and tacit knowledge acquired by individuals and networks of individuals (Tan et al. 1999). 118 MIS Quarterly Vol. 25 No. 1/March 2001 Similar to the knowledge creation process described in the previous section, a distinction between individual and organizational memory has been made in the literature. Individual memory is developed based on a person's observations, experiences, and actions (Argyris and Schn 1978; Nystrom and Starbuck 1981; Sanderlands and Stablein 1987). Collective or organizational memory is defined as \"the means by which knowledge from the past, experience, and events influence present organizational activities\" (Stein and Zwass 1995, p. 85). Organizational memory extends beyond the individual's memory to include other components such as organizational culture, transformations (production processes and work procedures), structure (formal organizational roles), ecology (physical work setting) and information archives (both internal and external to the organization) (Walsh and Ungson 1991). Organizational memory is classified as semantic or episodic (El Sawy et al. 1996; Stein and Zwass 1995). Semantic memory refers to general, explicit and articulated knowledge (e.g., organizational archives of annual reports), whereas episodic memory refers to context-specific and situated knowledge (e.g., specific circumstances of organizational decisions and their outcomes, place, and time). Memory may have both positive and negative potential influences on behavior and performance. On the positive side, basing and relating organizational change in past experience facilitates implementation of the change (Wilkins and Bristow 1987). Memory also helps in storing and reapplying workable solutions in the form of standards and procedures, which in turn avoid the waste of organizational resources in replicating previous work. On the other hand, memory has a potential negative influence on individual and organizational performance. At the individual level, memory can result in decision-making bias (Starbuck and Hedberg 1977). At the organizational level, memory may lead to maintaining the status quo by reinforcing single loop learning (defined as a process of detecting and correcting errors) (Argyris and Schn 1978). This could in turn lead to stable, consistent organizational cultures that are resistant to change (Denison and Mishra 1995). Alavi & Leidner/Knowledge Management Despite the concerns about the potential constraining role of organizational memory, there is a positive perspective on the influence of IT-enabled organizational memory on the behavior and performance of individuals and organizations. Advanced computer storage technology and sophisticated retrieval techniques, such as query languages, multimedia databases, and database management systems, can be effective tools in enhancing organizational memory. These tools increase the speed at which organizational memory can be accessed. Weiser and Morrison (1998) give the example of AI-STARS, a project memory system at DEC (Digital Equipment Corporation) that combines such information as bulletin board postings, product release statements, service manuals, and e-mail messages to enable rapid access to product information for assisting customer problems. Product memory can be facilitated with corporate intranets, so that product and pricing changes can be immediately noted in the system instead of having brochures reprinted. This in turn avoids the lag time resulting from the time a change occurs to the time when the sales personnel become aware of the change (Leidner 1998). Groupware enables organizations to create intraorganizational memory in the form of both structured and unstructured information and to share this memory across time and space (Vandenbosch and Ginzberg 1996). For example, McKinnsey's Practice Development Network places core project documentation online for the purposes of promoting memory and learning organization-wide (Stein and Zwass 1995). IT can play an important role in the enhancement and expansion of both semantic and episodic organizational memory. Document management technology allows knowledge of an organization's past, often dispersed among a variety of retention facilities, to be effectively stored and made accessible (Stein and Zwass 1995). Drawing on these technologies, most consulting firms have created semantic memories by developing vast repositories of knowledge about customers, projects, competition, and the industries they serve (Alavi 1997). Knowledge Transfer Having discussed knowledge creation and storage/retrieval, we now expand Figure 1 into Figure 2 and consider the important issue of knowledge transfer. The arrows from Figure 1 are now represented as two-way arrows. In Figure 2, the arrows labeled D represent the process of knowledge application and those labeled E represent the learning, or new knowledge creation, that occurs when individuals apply knowledge and observe the results. The arrows labeled F represent the transfer of an individual's explicit knowledge to group semantic memory (which can occur, for instance, when individuals place reports they have prepared on a group server for others to view). The arrows labeled G represent the possible transfer from individual tacit knowledge to group episodic memory. Individuals may likewise learn from the group semantic and episodic memories, reflected in arrows F and G. Indeed, the group episodic memory is critical in helping an individual interpret and learn from the group semantic memory. As the figure illustrates, an important process in knowledge management is that of knowledge transfer, with each transfer of knowledge represented by an arrow. Transfer occurs at various levels: transfer of knowledge between individuals, from individuals to explicit sources, from individuals to groups, between groups, across groups, and from the group to the organization. Considering the distributed nature of organizational cognition, an important process of knowledge management in organizational settings is the transfer of knowledge to locations where it is needed and can be used. However, this is not a simple process in that organizations often do not know what they know and have weak systems for locating and retrieving knowledge that resides in them (Huber 1991). Communication processes and information flows drive knowledge transfer in organizations. Gupta and Govindarajan (2000) have conceptualized knowledge transfer (knowledge flows in their terminology) in terms of five MIS Quarterly Vol. 25 No. 1/March 2001 119 Alavi & Leidner/Knowledge Management Individual A's Tacit Knowledge Individual B's Tacit Knowledge D D E E Knowledge Application Knowledge Application Individual A's Explicit Knowledge Individual B's Explicit Knowledge Storage (documents, email) Storage (documents, email) F F G G Group 1's semantic memory Group 1's Episodic Memory Legend: D--The Process of Knowledge Application E--The Process of Learning F--The Transfer of Individual Explicit Knowledge to Group Semantic Memory and vice versa G--The Transfer of Individual Tacit Knowledge to Group Episodic Memory and vice versa Figure 2. Knowledge Transfer among Individuals in a Group elements: (1) perceived value of the source unit's knowledge, (2) motivational disposition of the source (i.e., their willingness to share knowledge), (3) existence and richness of transmission channels, (4) motivational disposition of the receiving unit (i.e., their willingness to acquire knowledge from the source), and (5) the absorptive capacity of the receiving unit, defined as the ability not only to acquire and assimilate but also to use knowledge (Cohen and Levinthal 1990). The least controllable element is the fifth: knowledge must go through a recreation process in the mind of the receiver (El Sawy et al. 1998). This recreation depends on the recipient's cognitive capacity to process the incoming stimuli (Vance and Eynon 1998). 120 MIS Quarterly Vol. 25 No. 1/March 2001 The majority of the literature focuses on the third element, that of the knowledge transfer channels. Knowledge transfer channels can be informal or formal, personal or impersonal (Holtham and Courtney 1998). Informal mechanisms, such as unscheduled meetings, informal seminars, or coffee break conversations, may be effective in promoting socialization but may preclude wide dissemination (Holtham and Courtney 1998). Such mechanisms may also be more effective in small organizations (Fahey and Prusak 1998). However, such mechanisms may involve certain amounts of knowledge atrophy in that, absent a formal coding of the knowledge, there is no guarantee that the knowledge will be passed Alavi & Leidner/Knowledge Management accurately from one member to others. This parallels problems with the recipient's ability to process the knowledge. Learning problems can involve recipients filtering the knowledge they exchange, interpreting the knowledge from their own frame of reference, or learning from only a select group of knowledge holders (Huysam et al. 1998). Formal transfer mechanisms, such as training sessions and plant tours, may ensure greater distribution of knowledge but may inhibit creativity. Personal channels, such as apprenticeships or personnel transfers, may be more effective for distributing highly context specific knowledge whereas impersonal channels, such as knowledge repositories, may be most effective for knowledge that can be readily generalized to other contexts. Personnel transfer is a formal, personal mechanism of knowledge transfer. Such transfers, common in Japan, immerse team members in the routines of other members, thereby allowing access to the partner's stock of tacit knowledge (Fahey and Prusak 1998). A benefit is that learning takes place without the need to first convert tacit knowledge to explicit, saving time and resources and preserving the original knowledge base (Fahey and Prusak 1998). The most effective transfer mechanism depends upon the type of knowledge being transferred (Inkpen and Dinur 1998). Much as the existence of \"care\" may be important to knowledge transfer between individuals, the existence of a close, tight interface is critical at the organizational level. A narrow and distant interface has been found to be an obstacle to learning and knowledge sharing (Inkpen and Dikur 1998). IT can support all four forms of knowledge transfer, but has mostly been applied to informal, impersonal means (through such venues as Lotus Notes discussion databases) and formal, impersonal means (such as knowledge maps or corporate directories). An innovative use of technology for transfer is the use of intelligent agent software to develop interest profiles of organizational members in order to determine which members might be interested recipients of point-to-point electronic messages exchanged among other members (O'Dell and Grayson 1998). Employing video technologies can also enhance transfer. For example, offshore drilling knowledge is made available globally at British Petroleum by desktop video conferencing in which a screen will include images of the participants, windows of technical data, video clips of the physical issue under consideration, specifications, contractual data, and plans (Cranfield University 1998). IT can increase knowledge transfer by extending the individual's reach beyond the formal communication lines. The search for knowledge sources is usually limited to immediate coworkers in regular and routine contact with the individual. However, individuals are unlikely to encounter new knowledge through their close-knit work networks because individuals in the same clique tend to possess similar information (Robertson et al. 1996). Moreover, studies show that individuals are decidedly unaware of what their cohorts are doing (Kogut and Zander 1996). Thus, expanding the individual's network to more extended, although perhaps weaker, connections is central to the knowledge diffusion process because such networks expose individuals to more new ideas (Robertson et al. 1996). Computer networks and electronic bulletin boards and discussion groups create a forum that facilitates contact between the person seeking knowledge and those who may have access to the knowledge. For example, this may be accomplished by posting a question in the form of \"does anybody know\" or a \"request for help\" to the discussion group. Corporate directories may enable individuals to rapidly locate the individual who has the knowledge that might help them solve a current problem. At HewlettPackard, the primary content of one system is a set of expert profiles containing a directory of the backgrounds, skills, and expertise of individuals who are knowledgeable on various topics. Often such metadata (knowledge about where the knowledge resides) proves to be as important as the original knowledge itself (Andreu and Ciborra 1997). Providing taxonomies or organizational knowledge maps enables individuals to rapidly locate either the knowledge or the individual who has the needed knowledge, more rapidly than would be possible without such IT-based support (Offsey 1997). MIS Quarterly Vol. 25 No. 1/March 2001 121 Alavi & Leidner/Knowledge Management Knowledge Application An important aspect of the knowledge-based theory of the firm is that the source of competitive advantage resides in the application of the knowledge rather than in the knowledge itself. Grant (1996b) identifies three primary mechanisms for the integration of knowledge to create organizational capability: directives, organizational routines, and self-contained task teams. Directives refer to the specific set of rules, standards, procedures, and instructions developed through the conversion of specialists' tacit knowledge to explicit and integrated knowledge for efficient communication to non-specialists (Demsetz 1991). Examples include directives for hazardous waste disposal or airplane safety checks and maintenance. Organizational routines refer to the development of task performance and coordination patterns, interaction protocols, and process specifications that allow individuals to apply and integrate their specialized knowledge without the need to articulate and communicate what they know to others. Routines may be relatively simple (e.g., organizing activities based on timepatterned sequences such as an assembly line), or highly complex (e.g., a cockpit crew flying a large passenger airplane). The third knowledge integration mechanism is the creation of selfcontained task teams. In situations in which task uncertainty and complexity prevent the specification of directives and organizational routines, teams of individuals with prerequisite knowledge and specialty are formed for problem solving. Technology can support knowledge application by embedding knowledge into organizational routines. Procedures that are culture-bound can be embedded into IT so that the systems themselves become examples of organizational norms. An example is Mrs. Field's use of systems designed to assist in every decision from hiring personnel to when to put free samples of cookies out on the table. The system transmits the norms and beliefs held by the head of the company to organizational members (Bloodgood and Salisbury 1998). Technology enforced knowledge application raises a concern that knowledge will continue to be applied after its real usefulness has declined. While the institutionalization of \"best practices\" by em- 122 MIS Quarterly Vol. 25 No. 1/March 2001 bedding them into IT might facilitate efficient handling of routine, \"linear,\" and predictable situations during stable or incrementally changing environments, when change is radical and discontinuous, there is a persistent need for continual renewal of the basic premises underlying the practices archived in the knowledge repositories (Malhotra 1999). This underscores the need for organizational members to remain attuned to contextual factors and explicitly consider the specific circumstances of the current environment. A second problem may be deciding upon the rules and routines to apply to a problem, given that over time, the organization has learned and codified a large number of rules and routines, so that choosing which rules to activate for a specific choice making scenario is itself problematic. Shared meanings and understandings about the nature and needs of a particular situation can be used to guide rule activation (Nolan Norton 1998). Although there are challenges with applying existing knowledge, IT can have a positive influence on knowledge application. IT can enhance knowledge integration and application by facilitating the capture, updating, and accessibility of organizational directives. For example, many organizations are enhancing the ease of access and maintenance of their directives (repair manuals, policies, and standards) by making them available on corporate intranets. This increases the speed at which changes can be applied. Also, organizational units can follow a faster learning curve by accessing the knowledge of other units having gone through similar experiences. Moreover, by increasing the size of individuals' internal social networks and by increasing the amount of organizational memory available, information technologies allow for organizational knowledge to be applied across time and space. IT can also enhance the speed of knowledge integration and application by codifying and automating organizational routines. Workflow automation systems are examples of IT applications that reduce the need for communication and coordination and enable more efficient use of organizational routines through timely and automatic routing of work-related documents, information, rules, and activities. Rule based expert systems are another means of capturing and enforcing well specified organizational procedures. Alavi & Leidner/Knowledge Management Individual A's Tacit Knowledge Knowledge Application Individual B's Tacit Knowledge Knowledge Application Individual A's Explicit Knowledge Individual B's Explicit Knowledge H H Storage (documents, email) Storage (documents, email) I I Individual C's Tacit Knowledge Knowledge Application Group 1's Episodic Memory Individual C's Explicit Knowledge J H Individual D's Tacit Knowledge Group 1's semantic memory Individual D's Explicit Knowledge J I Knowledge Application H I Group 2's Episodic Memory J Group 3's Episodic Memory Group 2's semantic memory Group 3's semantic memory Legend: H--An individual drawing upon group memory and applying the knowledge to a situation. I-- The learning derived from an individual in applying knowledge that becomes part of the group's episodic memory. J--The sharing of knowledge across group systems, such as the sharing of best practices. Figure 2. Knowledge Transfer among Individuals in a Group Summary: Organizational Knowledge Management Processes To summarize, this section has described and elaborated on a knowledge management framework based on the view of organizations as knowledge systems. One of the important implications of this framework is that knowledge management consists of a dynamic and continuous set of processes and practices embedded in individuals, as well as in groups and physical structures. At any point in time and in any part of a given organization, individuals and groups may be engaged in several different aspects and processes of knowledge management. Thus, knowledge management is not a discrete, independent, and monolithic organizational pheno- menon. Figure 3 builds upon Figure 2 to illustrate the \"web\" of knowledge management activities in organizational settings. The figure introduces two new groupsGroups 2 and 3to illustrate the potential knowledge transfer across groups. For simplicity purposes, only one member is represented in Groups 2 and 3. Figure 3 depicts the transfer of knowledge among individuals and groups. Once individual A shares (transfers) some knowledge with individual B, individual B's knowledge processes may have been triggered. For example, A's knowledge transfer may lead to B's knowledge creation. B may chose to apply the knowledge, consult with other members, or record the knowledge. Knowledge hence flows between individuals and MIS Quarterly Vol. 25 No. 1/March 2001 123 Alavi & Leidner/Knowledge Management a major challenge of KM is to facilitate these flows so that the maximum amount of transfer occurs (assuming that the knowledge individuals create has value and can improve performance). Individuals in a group or community of practice then develop a group knowledge (the collectivity of their stored memory, be it organized informally in e-mail communications or formally in a knowledge repository). The individual is connected to the group processes through transfer (an individual may share knowledge with the group during a decision-making meeting, for example) or through a centralized storage mechanism (e.g., computer files or regular meetings). Individuals can then call on the centralized memory to make decisions, if needed (arrows H). Individuals learn from the application of knowledge and their learning becomes embedded into their tacit knowledge space and the group's episodic memory (arrows I). Organizational knowledge processes would then consist of the summation of the individual and group knowledge processes. In this case, one group may have acquired and applied knowledge to a given situation and coded this knowledge in the form of a certain routine. This \"best practice\" may then be shared with other groups by allowing access to group memory systems (arrows J) or by facilitating intergroup dialogue. Figure 3 can elucidate some of the major challenges of knowledge management at the individual, group, and the organizational (i.e., intergroups) levels. One primary challenge is to make individual knowledge available, and meaningful, to others (Ackerman and Halverson 1999). At the group level, this means enabling a group's episodic memory to be accessible to other groups, implying an overlap in group membership. The codification of knowledge into semantic memory neither guarantees efficient dissemination nor effective storage (Jordan and Jones 1997). Transfer among groups may be challenged not only by the lack of shared episodic memory, but by the practical issue of informing groups of when the semantic memory of a group has been modified (say, a new important document summarizing a flaw in product design is now available on the group intranet of an overseas R&D unit). Even if one group is aware of, and chooses to access, 124 MIS Quarterly Vol. 25 No. 1/March 2001 another's semantic memory, how does the receiving group validate the information and determine whether to apply it? Group gatekeepers (internal boundary spanners) may act as links between the episodic memory of two groups and, hence, increase the relevance of knowledge transfer. Do certain individuals act as such internal boundary spanners, searching within an extended network for practices that might improve their unit? In short, to improve knowledge management, utilizing information technology implies attention not only to improving the individual and group level processes of knowledge creation and storage, but also to improving the linkages among individuals and between groups. Another implication of this framework is that the four knowledge processes of creation, storage/ retrieval, transfer, and application are essential to effective organizational knowledge management. We