A critical review of creation, diffusion, transfer and application of Knowledge and knowledge value chain Management for SMEs in Taiwan

一個評論性探討之知識創造，擴散，轉移及應用與知識價值鏈管理為中小企業在台灣

作者：國立南澳洲大學企管博士候選人 陳德富

學校：國立南澳洲大學國際管理研究所博士班

Author: Chen Der Fu

Candidate of Doctor of Business Administration, International Graduate School of management, National University of South Australia

Email: promise_future@sinaman.com; ia2001@pchome.com.tw

Abstract

This study deals with a field, which gets little or no attention in the research done into knowledge management for small and medium-sized enterprises (SMEs) in Taiwan. In the first part of the study a conceptual model will be developed. This model can be used to analyse the most important knowledge management processes (from knowledge creation to its application) in corporation, a quantum of knowledge progresses through four primary stages: creation, diffusion, transfer and application of knowledge. The attention that SMEs pay to this progression usually depends on the potential economic return associated with the quantum of knowledge in question. In a knowledge-intensive industry, such as the high-tech industry in Taiwan, incredible variation exists across firms in terms of the systems they have in place to manage the progression of knowledge along this chain. Even in a fiercely competitive industry like the high-tech industry where product life often ranges from one to two years, within an industry, innovation requires a firm to create knowledge and package it into concepts that lead to the development of new products or processes. And we consider these concepts to be useful ideas. This progression can be thought of as occurring through a knowledge chain management (KCM). To help define some of the considerations that firms face when developing their strategy for knowledge management, this paper examines the link of the chain: how knowledge progresses from creation to applications and what is the gaps between them?

In the second part of the study, a new framework for thinking about knowledge creation and application is proposed and evidence of knowledge value chain management is presented through an examination of literature theory citations to practice. The first aim was to provide a framework for the discussion of KM with value chain which will minimize confusion and allow for common understanding among those activities and making KM value added in organizations. The emphasis of this KVC (knowledge value chain) will be on the business applications of the various KM value creation options. The second aim was to provide a checklist of KM applications and technologies, Which can be used to assess an organization's current level of KM performances and then plan and communicate future KM implement in SMEs.

KCM and KVC have been successfully applied in this capacity as an assessment and strategic planning tool. The paper covers the KCM and KVC's theoretical foundation, overviews the major components of the model, discusses how the KCM and KVC can be used as a tool to assess and inventory an organization's current KM-related investments and reviews its use as a strategic planning tool. The KCM and KVC were developed in response to these questions. There are a number of aims in writing this paper and in proposing the KCM and KVC as a framework for understanding KM applications and technologies.

Finally, I propose an integral KM model to use some simple presentations for enterprise to use easy to follow models (input-knowledge process-output) and to illustrate the process of knowledge creation, diffusion, transfer and application. The procedures of all KM implement process are very detail and something new and creative, only to link corporate strategy with KM and practice it into corporate operation process (David J. Collis, Cynthia A. Montgomery, 1997), to form Knowledge capabilities as the focus of organizational development and strategy (Dawson, R., 2000). Thus KM initiative just can implement successfully. The knowledge management processes which have the greatest effect on operational processes are those for the creation of knowledge, diffusion, transfer and sharing of knowledge and the embedding and application of knowledge.

The study develops an integrated KM model for SMEs to further apply KM and to find out what suitable KM strategies and processes can increase productivity, employees’ satisfaction, customer satisfaction, improving quality of service and product, reduce operating cost, accelerating technology & innovation speed and increasing cooperation with suppliers etc. Through this model can create a more detail, practice and completely KM structure and strategy for SMEs in Taiwan.

How to implement an optimal KM strategy and processes are not depending on corporate scale (which is smaller, medium or large enterprise) but depending on corporate core competence (i.e. handling and achieving abilities of customer satisfaction, professional abilities, computerized degree, e-business degree, employees’ learning abilities, etc.) and interaction between technologies, technique and corporate culture.

Keywords: KM, KCM, KVC, KM performance, SMEs

摘要

本研究乃關於一個較少或沒人注意的領域：知識管理為中小企業在台灣，第一部份將發展一個觀念性的模型，此模型可用來分析大部分的知識管理流程 (從知識創造到應用)在企業中。一定量的知識進展經由四個階段：知識的創造，擴散，轉移及應用，中小企業注意到這些進展通常依賴潛在的經濟報酬與知識的量子之關聯在問題中。在一個知識密集的產業中如台灣的高科技產業，難以置信的變化以他們擁有的系統存在跨公司間，在適當的位置上沿著一條鏈去管理知識的進展。甚至在一個猛烈競爭產業如高科技產業，其產品生命週期經常是一到二年之範圍。在一個產業中，創新需要一家公司去創造知識及包裝它進入觀念中，去引領新產品或流程的發展，我們考慮這些觀念將會是有用的構想。這些進展可視為發生經由一知識鏈管理。為幫助定義一些考慮事務當企業面臨發展知識管理策略時，本研究檢驗知識鏈的連結：知識的進展如何從創造到應用與何者是它們之間每一個進展流程的缺口？

 在本研究第二部份提議一個新架構：知識價值鏈管理，呈現經由文獻理論到實務的檢驗。第一個目的是提供一個架構為知識管理與價值鏈的討論，它將最小化困惑及允許為共同的理解在那些活動亦即使知識管理在組織中增值。知識價值鏈的影響將在不同的知識管理的價值創造功能之企業應用。第二個目的是提供一個知識管理應用及科技的檢查表，它能用於評估目前的KM績效與計劃溝通未來的KM實施在中小企業中。

KCM與KVC曾被成功的應用在當成一個績效評估及策略與流程規劃工具之容量，本研究涵蓋這二個範圍的理論基礎，綜述此模型之組成及討論KCM與KVC如何能被用做一個工具去估量及盤存一個組織的目前的KM相關投資及績效與重新探討它的使用當作一個策略規劃工具，此二理論被發展用來回應這些問題。寫此論文還有一些目的是在提議它們當成一個架構去了解KM之應用,科技與實施。

最後，我提議一個整合KM模型去使用一些簡單的展現，成為企業的容易跟隨模型(輸入-知識流程-輸出)，與闡釋知識創造，擴散，轉移及應用之流程。這些KM所有的實施流程的程序是非常詳細且有一些新穎與創意，唯有連結企業的策略、流程與KM及落實它進入企業之營運流程 (David J. Collis, Cynthia A. Montgomery, 1997)，形成知識能力當成組織發展及策略之焦點 (Dawson, R., 2000)。如此，KM的初始實施活動才能成功實行。而這些知識管理流程在組織流程中有最大的結果影響是那些活動為知識的創造，擴散，轉移，分享，栽種及應用。本研究發展一個整合KM模型為中小企業去進一步應用KM及找出何種適合的KM策略及流程能提高生產力、員工滿意度及顧客滿意度、改善服務及產品品質、降低營運成本、加速科技創新速度與增進與供應商的合作等等，經由此模型能創造一個更詳細的，實務與完整的KM架構及策略為台灣中小企業。

如何實施一個最適化的KM策略及流程並非依企業規模大小而定，但是依企業核心能力(如：處理及完成顧客滿意的能力、專業能力、電腦化程度，企業e化程度、員工之學習能力等等)及科技、管理技術與企業文化之互動而定。

關鍵字：知識管理，知識鏈管理，知識價值鏈，KM績效，中小企業

1.  Introduction

When, in the early 1600s, Francis Bacon said: "Knowledge is power", we imagine he was referring to the knowledge and power of individuals. Almost four centuries later, we have begun to recognize how organizations, too, can succeed or fail on their ability to effectively use and manage their "knowledge capital" of data, information and knowledge.

Stepping into 21^st, whatever large or small enterprises all think about how to implement knowledge management for increasing productivity, performance, customer satisfaction and reducing operation cost. While the current literature provides insight into the KM (knowledge management) strategies adopted by some large organizations, most organizations differ from the large multinational corporations (MNCs) from which KM principles have been drawn. Other than differences in the number of personnel, they tend to be regionally or locally focused, have a narrower scope of business, and have less financial and administrative "slack". The management, who are often the owners of these firms, tending to focus on the core business of their organizations and pay less attention to other issues.

Most of these organizations cannot afford (or do not want to commit to) the expensive consultancy services used by larger firms. Few have dedicated information professionals on staff. Many of them may be unaware of the potential of KM since the KM "industry" looks primarily towards those larger organizations with large budgets for consulting and technology. Small organizations can benefit from attention to knowledge management. Their greatest acknowledged need is for effective "knowledge repositories". The owners and managers of many small organizations are just beginning to identify how information and knowledge management may assist them. The availability of appropriate technologies will make the value of knowledge management more tangible, as it has in larger organizations. Small organizations, though, can seldom afford the cost of being leaders in technology adoption, or of trial and error in implementation. They will rely heavily on consultants and information professionals for success, they should have sufficient sensitivity to organizational culture and practices to design and implement systems that can be embedded in daily activities. Finally, they must link and interact between technology, people and technique.

In past, Taiwan created admired economic miracle through superior productive system and management ability. Nevertheless, following large environment and basic conditions changing, recently, Taiwan faces the dilemmas of rising productive cost and corporate moving out, especially after Mainland China a serious of reforming and openness, their market’s quality and quantity all have remarkable raising, and to form future places which most development potential in global corporate development blueprint, furthermore, to make large pressure to Taiwan industries. Therefore, Taiwan must seek actively the new positioning and role in global industrial value chain.

There are 95 % industries in Taiwan are small-medium sized enterprises (SMEs), especially, even there are 80 % of them are traditional industries. Especially now, Taiwan also faces the three mainly problems: 1. The recession of national economic 2.Traditional industries need turn around 3. Industries shift out to Mainland China, Therefore, domestic economy is worse and worse, unemployment problems are serious increasingly. For solving these problems, Taiwan government throws their whole being into advocate knowledge economy to help SMEs turn around to knowledge enterprises and hope the root of enterprises can keep staying in Taiwan, and doing their best to avoid all of enterprises move into Mainland China, because that will cause more serious unemployment problems in Taiwan.

If the SMEs, especially those traditional industries want to sustained management and not to be eliminate through competition, they must turn around from past "labor density" and to  current "technology density" and "knowledge density", and launch to implement Knowledge Management (KM), it seems that is the unique outlet for Taiwan industries. After national economy to be revived again, Taiwan will re-create economic miracle.

Josephine Chinying Lang (2001) proposed five hindrances to knowledge creation and utilization in organizations: First, there may be inadequate care of those organizational relationships that promote knowledge creation. Second, there may be insufficient linkage between knowledge management and corporate strategy. Thirdly, inaccurate valuation of the contribution that knowledge makes to corporation's bottom line renders the value of knowledge management ambiguous. Fourthly, there may be a pervasive lack of holism in knowledge management efforts. Finally perhaps not something ordinarily considered a problem for managers to deal with poor verbal skills may hinder the actual processes of knowledge. The task of knowledge management is to identify such barriers and to overcome them.

For achieve objectives of the study and to solve several barriers for knowledge creation, diffusion, transfer and application in organizations exist when SMEs implement KM. According above reasons and through a preliminary literature review, the study summarizes, reviews and criticizes the literatures to focus on developing two models:

1.The knowledge chain management- the creation, diffusion, transfer and application of knowledge.

2.The knowledge value chain - knowledge management must match corporate operating process and along corporate value chain to create value for customers, thus KM just can achieve end of corporate goal: customer satisfaction, and due to this, corporation can develop a really suitable strategy and process for themselves.

Under these two models, scholars and practitioners argued that the greatest challenge for the manager of intellectual capital is to create an organization that can share the knowledge and measure KM performance. When skills belong to the company as a whole, they create competitive advantages that others cannot match (Stewart, 1997).

Next, the study will emerge a detail literature review from definition and characters of knowledge, various definitions of KM, knowledge chain and knowledge value chain management, integrated conceptual KM models for SMEs and KM performance measurement as following:

Defining knowledge accurately is difficult. However, it is well agreed that knowledge is an organized combination of ideas, rules, procedures, and information. In a sense, knowledge is a "meaning" made by the mind (Marakas, 1999, p. 264). Without meaning, knowledge is inert and static. It is disorganized information. It is only through meaning, information finds life and becomes knowledge.

What is the difference between data, information and knowledge?

This is a term which is very easy to be confused by people so far, Information and knowledge are distinct based on their internal organization. Information is disorganized, while knowledge is organized (Koniger and Janowitz, 1995). The distinction between information and knowledge depends on users' perspectives. Knowledge is context dependent, since "meanings" are interpreted in reference to a particular paradigm (Marakas, 1999, p. 264).

In a sense, knowledge is a "meaning" made by the mind (Marakas, 1999, p. 264). Without meaning, knowledge is information or data. It is only through meaning, that information finds life and becomes knowledge (Bhatt, 2000a).

Beijerse (1999, 2000) define knowledge here as follows: “Knowledge is seen here as the capability to interpret data and information through a process of giving meaning to these data and information; and an attitude aimed at wanting to do so. New information and knowledge are thus being created, and tasks can be executed. The capability and the attitude are of course the result of available sources of information, experience, skills, culture, character, personality, feelings, etc.”

Knowledge are combination of data and information and learning

Cohen and Levinthal (1990) explain this fact in arguing that knowledge expansion is dependent on learning intensity, and prior knowledge. In other words, accumulated prior knowledge increases the ability to accrue more knowledge and learn subsequent concepts more easily. Therefore, we argue that knowledge is an organized combination of data, assimilated with a set of rules, procedures, and operations learnt through experience and practice.

Knowledge are capability and action

Murray (http://www.ktic.com/topic6/13_term2.html) says for instance: "Knowledge is information transformed into capabilities for effective action. In effect, knowledge is action." This aspect of capabilities resulting from information is something we also see at Weggeman (1997), but he adds some other aspects: "Knowledge is a personal capacity that should be seen as the product of the information, the experience, the skills and the attitude which someone has at a certain point in time".

Explicit vs tacit knowledge

This difference was first introduced by the Hungarian chemist, economist and philosopher Michael Polanyi. He stated that personal or tacit knowledge is extremely important for human cognition, because people acquire knowledge by the active (re)creation and organization of their own experience (Polanyi, 1966). Tacit knowledge is that knowledge which cannot be explicated fully even by an expert and can be transferred from one person to another only through a long process of apprenticeship. Polany's famous dictum, "We know more than we can tell", points to the phenomenon in which much that constitutes human skill remains unarticulated and known only to the person who has that skill. Tacit knowledge is the skills and "know-how" we have inside each of us that cannot be easily shared (Lim, 1999).

Tacit knowledge evolves from people’s interactions and requires skill and practice. Nonaka and Takeuchi (1995) suggested that tacit knowledge is hidden and thus cannot be easily represented via electronics. Tacit refers to hunches, intuitions and insights (Guth, 1996), it is personal, undocumented, context-sensitive, dynamically created and derived, internalized and experience-based (Duffy, 2000).

Figure 2-1 shows that one of the main constituents of organizational knowledge is "interactions". In an organization where the number of interactions between organizational members is kept to a minimum, most of knowledge remains in the control of individuals rather than the organization. However, a large part of knowledge is internalized within the organization through informal get-together and interactions between employees (Bhatt, 1998). In this interactive process, not only do individuals enrich their knowledge, but also make a part of knowledge available for the organization that is generated as a result of the interactions. In other words, the knowledge that is internalized within the organization is not produced by any of the organizational members alone, but created through their interactions.

Figure 2-1: Relationship between individual knowledge and organizational knowledge

2.2 What is knowledge management?

Process viewpoint

KM is the process of creating, capturing, and using knowledge to enhance organizational performance; KM is the management of the information, knowledge and experience available to an organization─its creation, capture, storage, availability and utilization─ in order that organizational activities build on what is already known and extend it further (Mayo, 1998).

A common definition of KM is: "The collection of processes that govern the creation, dissemination and leveraging of knowledge to fulfill organizational objectives". KM is a framework within which the organization views all its processes as knowledge processes. (Ching Chyi Lee, Jie Yang, 2000)

Organizational view

KM is about encouraging individuals to communicate their knowledge by creating environments and systems for capturing, organizing, and sharing knowledge throughout the company, Thomas M. Koulopoulos and Carol Frappaolo (2001) used ‘knowledge management is bring collective intelligence influence ability into full play, to increase enterprise response and innovation ability as a concise definition. An organization’s work with KM should focus on transposing tacit knowledge into explicit knowledge and see to it that individual knowledge becomes organizational knowledge. This can be explained not only by a need for organizations to better manage knowledge by establishing core competencies for individuals, judging success and performance indicators via recognition of invisible assets, but also for organizations to strive to become an innovative organization and a learning organization with a knowledge sharing culture

Value viewpoint

Sveiby (http://www.sveiby.com.au/ knowledgemanagement.html) for instance puts the emphasis on intangible assets when defining knowledge. He therefore defines knowledge management as "the art of creating value from an organization's intangible assets". Beijerse (1999) developed the definition of knowledge here puts more emphasis on the importance of tacit knowledge, and he saw this as its added value. He defined knowledge management as follows: “Knowledge management is achieving organizational goals through the strategy-driven motivation and facilitation of (knowledge-) workers to develop, enhance and use their capability to interpret data and information (by using available sources of information, experience, skills, culture, character, personality, feelings, etc.) through a process of giving meaning to these data and information.”

KM is an emerging set of organizational design and operational principles, processes, organizational structures, applications and technologies that helps knowledge workers dramatically leverage their creativity and ability to deliver business value. In fact, KM is about people and the processes they use to share information and build knowledge (Hanley, 1999).

People, technology and knowledge viewpoint

Arthur Andersen consulting group (1999) have defined KM= (P+K) ^S, P is people (knowledge loader), K is knowledge (include data, information, knowledge and intelligence), S is share, + is technology, this formula means KM structure includes organizational co-sharing, application and practice. Information technology (+) can help to construct KM and to accelerate the process of KM.

System view

KM is mean “enterprise build a management system for apply effective knowledge capitals, accelerate products or services innovation, the system include knowledge creation, knowledge circulation and knowledge value added three functions.” (Se-Hwa Wu, 2001)

Strategy, structure, culture and system viewpoint

KM is the management of information within an organization by steering the strategy, structure, culture and systems and the capacities and attitudes of people with regard to their knowledge. KM includes the entirety of systems with which the information within an organization can be managed and opened up (Beijerse, 2000).

Knowledge Management interacts between technologies, techniques and people

Knowledge management shapes the interaction pattern between technologies, techniques, and people. For instance, IT can capture, store, and distribute information quickly, but it has its limit on information interpretation. Organizations which have been successful in obtaining long-term benefits from knowledge management, are found to carefully coordinate their social relations and technologies (Bhatt, 1998).

Technological solutions can be captured and grafted. But to manage knowledge, organizations need to construct an environment of participation, coordination, and knowledge sharing. In general, implementing knowledge management programs requires a change in organizational philosophy.

In sum, KM focuses on "doing the right thing" instead of "doing things right", KM is a framework within which the organization views all its processes as knowledge processes (Ching Chyi Lee, Jie Yang, 2000). Therefore, the study review and criticize knowledge chain management and knowledge value chain as follows:

2.3 Knowledge chain management

Beijerse (1999, 2000) define knowledge here as follows: “Knowledge is seen here as the capability to interpret data and information through a process of giving meaning to these data and information; and an attitude aimed at wanting to do so. New information and knowledge are thus being created, and tasks can be executed. The capability and the attitude are of course the result of available sources of information, experience, skills, culture, character, personality, feelings, etc.” He didn’t point out what detail about “through a process of giving meaning to these data and information” in his definition for knowledge, and Bassie (1997) didn’t propose complete process and how to link gap of each part of knowledge chain flows, Melissa M. Appleyard, Gretchen A. Kalsow (1999) in their study presents a new framework for thinking about knowledge diffusion within an innovative community. They define innovation as the operationalizing of new ideas, and they define knowledge diffusion as the movement of useful ideas between organizations. Within an industry, innovation requires a firm to create knowledge and package it into concepts that lead to the development of new products or processes, and they consider these concepts to be useful ideas. This progression can be thought of as occurring through a knowledge chain management (Figure 2-2).

Therefore, this study deals with a field, which gets little or no attention in the research done into knowledge chain management, In the first part of the study a conceptual model (knowledge chain management (Figure 2-3) will be developed. This model can be used to analyze the most important knowledge management processes in corporation. The model is used for analyzing from knowledge creation to its application, a quantum of knowledge progresses through four primary stages: creation, diffusion, transfer and application of knowledge. The attention that firm pay to this progression usually depends on the potential economic return associated with the quantum of knowledge in question. In a knowledge-intensive industry, such as the high-tech industry in Taiwan, incredible variation exists across firms in terms of the systems they have in place to manage the progression of knowledge along this chain. Even in a fiercely competitive industry like the high-tech industry where product life often ranges from one to two years, within an industry, innovation requires a firm to create knowledge and package it into concepts that lead to the development of new products or processes. And we consider these concepts to be useful ideas.

For more complete to describe knowledge flow in the chain, here I propose a modified model as figure 2-3, from knowledge creation, diffusion, transfer to application, some firms can further to make knowledge innovation, some firms can reuse knowledge to form a feedback to create new knowledge. Thus knowledge will form a cyclic circulation to accumulate knowledge.

In the whole process of KM, the innovation activity fits the product differentiation strategy, which can enable corporation gains the competitiveness, while reusing knowledge fits low cost strategy, by which competitiveness gained again. Generally, managing knowledge assets should, like patents, trademarks and licenses, even add knowledge to the balance sheet.

Figure 2-3: The knowledge chain

Source: modified from Melissa M. Appleyard, Gretchen A. Kalsow, 1999

To help define some of the considerations that firms face when developing their strategy for management of knowledge to increase production, reduce cost and increase customer satisfaction, this study examines the link of the chain: how knowledge from creation to applications and what is the gaps between them? To fill the gaps for the successful management of this knowledge chain becomes a distinguishing characteristic of leading firms, particularly in a knowledge-intensive industry like the semiconductor industry. A firm's stock of useful ideas, its technical prowess, depends not only on its internally generated ideas, but also on the absorption of ideas that originate outside of its boundaries. Therefore, this study also examines the flow of useful ideas between firms and constructs a new framework for the forces that drive knowledge creation, distribution (diffusion), transfer to application.

2.4 The knowledge value chain

Another good example of the link between the definition of knowledge and the way to look at the management of knowledge is the work of Mathieu Weggeman (1997). Central to Weggeman's work is "the knowledge value chain". In the process of knowledge management, Weggeman distinguishes four successive constituent processes (Figure 2-4).

First, the strategic need for knowledge needs to be determined. Second, the knowledge gap needs to be determined. This is the quantitative and qualitative difference between the knowledge needed and that available in the organization. Third, this knowledge gap needs to be narrowed by developing new knowledge, by buying knowledge, by improving existing knowledge or by getting rid of knowledge that is out of date or has become irrelevant. Fourth, the available knowledge is disseminated and applied to serve the interest of customers and other stakeholders.

It is important to notice that knowledge management here does not refer to information technology only. Attention is also being paid to strategic, personal, organizational and cultural aspects, which are at least as important as the technological side of the story. With this in mind, Weggeman defines knowledge management as "arranging and managing the operational processes in the knowledge value chain in such a way that realizing the collective ambition, the targets and the strategy of the organization is being promoted".

Knowledge value chain model

One good more example of the link between the definition of knowledge and the way to look at the management of knowledge is the work of Ching Chyi Lee and Jie Yang (2000). Central to their work is also "the knowledge value chain". In the process of knowledge management, Lee and Yang distinguishes five successive constituent processes (Figure 2-5: Knowledge value chain model).

1. knowledge acquisition: Organizational information acquisition through searching can be viewed as occurring in three forms (Huber, 1991):

(1) scanning; (2) focused search; and (3) performance monitoring.

1.    knowledge innovation:

(1) from tacit knowledge to tacit knowledge, which is called socialization;

(2) from tacit knowledge to explicit knowledge, or externalization;

(3) from explicit knowledge to explicit knowledge, or combination; and

(4) from explicit knowledge to tacit knowledge, or internalization.

3. knowledge protection: (1) legal and IT protection (2) corporations should contract with employees regarding confidential information and their tenure in case of they leave (3)develop other protocols and policy guidelines which recognize and promote rights of knowledge (4) and then implement them by staff awareness and education campaigns.

4.knowledge integration:  This cumulative manufacturing, sales, and service experiences from different departments, together with information gathered from outside sources, can be integrated into the KVC of the organization, which is a inter-sub-KVC integration process, eventually being the base of KM infrastructure.

5.knowledge dissemination: (1) through systematic transfer: to create a knowledge-sharing environment (2) to show its commitment for sharing knowledge (3) to foster the employee's willingness to share and contribute to the knowledge base. (4) Reward structures and performance metrics need to be created which benefit those individuals who contribute to and use a shared knowledge base. (5) Those who excel at knowledge sharing should be recognized in public forums such as newsletters and e-mails. (6) By effective communication.

Differences among competitor value chains are a key source of competitive advantage. In competitive terms, value is the amount customers are willing to pay for what a corporation provides them. Value is measured by total revenue, a reflection of the price a corporation's product commands and the units it can sell. A firm is profitable if the value it commands exceeds the costs involved in creating the product (Porter, 1985). Creating value for customers that exceeds the cost of doing so is the goal of any competitive strategy. Value, instead of cost, must be used in analyzing competitive position since corporations often deliberately raise their cost in order to command a premium price via differentiation. Employing Porter's value chain analysis approach, we developed a knowledge value chain model.

Knowledge value chain consists of KM infrastructure (CKO & management, knowledge worker recruitment, knowledge storage capacity, customer/ supplier relationship) and the KM process's activities and knowledge performance. These infrastructure components and activities are the building blocks by which a corporation creates a product or provides service valuable to its customers. Knowledge performance can be measured in two categories (van Buren, 1999). One is financial performance. However, financial assessments such as ROI are particularly difficult to make for KM activities. The other is non-financial measures including operating performance outcomes and direct measures of learning. Examples of operating performance measures include lead times, customer satisfaction, and employee productivity. Learning measures include such items as the number of participants in communities of practice, employees trained, and customers affected by the use of knowledge.

As the value chain itself implies, each element of activity can create value and then all the value flows to the endpoint of the business value chain and joins together, forming the overall value of business, which is usually expressed as a margin (see Figure 2-6).

Figure 2-6: Relationship between business value chain and KVC

Source: Ching Chyi Lee and Jie Yang (2000)

By analyzing the above, we might note that competence is after all the measurement of each sub-KVC. That is the reason why we feel that the core competence of the corporation should be employed as the key non-financial measure of knowledge performance.

KM is a process that transforms information into knowledge, KM guides the way a corporation performs individual knowledge activities and organizes its entire knowledge value chain. It is suggested that competitive advantage grows out of the way corporations organize and perform discrete activities in the knowledge value chain, which should be measured by the core competence of the corporation (Ching Chyi Lee, Jie Yang , 2000). In the end, we would raise another assumption for further discussion, so that for KM to "open the black box" of a corporation and examine its intricate details. We assumed that the corporation should be treated more or less as a box of tricks producing the predictable outputs of knowledge-based products and services from specific inputs of information or/and knowledge.

For better to understand details of knowledge in knowledge chain management and KVC, there are detailed descriptions (from knowledge creation, distribution, transfer to application) in next sections.

2.5 knowledge creation

       Even though some researchers argue that knowledge creation is basically an individual thought process (e.g. Crossan et al., 1999), some others have recently shown that creativity can be learnt and taught (Marakas and Elam, 1997). In either case, we believe that knowledge creation in the organization is led through individuals, i.e. an organization creates knowledge through its individuals, who learn and generate new “realities” by breaking down rigid thinking and assumption (e.g. Argyris and Schon, 1978).

       Knowledge creation is not a systematic process that can be planned and controlled (Lynn et al., 1996; Mayo, 1959, p. 59). The process is, rather, continuously evolving and emergent. Motivation, inspiration, and pure chance play an important role in knowledge creation. The success of knowledge creation is a chance event, based on the convergence of the world reality and the structure of one's thinking (Horgan, 1996). Creation is only a fearful possibility of finding a meaningful relation in uncovered combinations (Horgan, 1996, p. 153).

The knowledge creation process is evaluated based on its originality and adaptive flexibility to facilitate the solution of a problem in different contexts. The process of knowledge creation and evaluation not only requires organizations to alter their cognitive frameworks (Weick, 1979), but also forces organizational members to view reality in new perspectives (Weick, 1995).

Nonaka & Takeuchi（1995）assume organizational knowledge creation that is a spiral process , call as  ‘knowledge spiral’ (Table 2-1).

Leonard-Barton (1995, 1998) assume there are four items of knowledge creation:

1.       Shared Problem Solving: now

2.       Implementing & Integrating: inside

3.       Experimenting & Prototyping: future

4.       Importing Knowledge: outside

Knowledge creation activity is get through above four activities, and accumulate or create out core competence.

2.6 Knowledge diffusion

Melissa and Gretchen (1999) defined knowledge diffusion as the movement of useful ideas between organizations. Knowledge needs to be distributed and shared throughout the organization, before it can be exploited at the organizational level (Nonaka and Takeuchi, 1995). In reality, distribution and sharing knowledge is not an easy task (Davenport, 1994). To what extent a firm succeeds in distributing knowledge depends on organizational culture and the amount of explicit knowledge available in the firm.

An organization relying on traditional control and authority relationships finds it difficult to distribute knowledge. Because a management mentality on supervision and order often limits the opportunities for the formation of social-units and groups to come together, considered necessary to convert individual knowledge to organizational knowledge (Argyris and Schon, 1978; Huber, 1991). If knowledge distribution channels are informal, developed based on trust and cooperation, knowledge distribution can be quicker and honest, and consequently, it can be put to a higher level of scrutiny.

Easy degree of knowledge diffusion influence by amounts and high and low layers of co-knowledge very large, the more and higher layers of organizational co-knowledge then the easy for organizational knowledge diffusion.

Common knowledge is one of necessary key factor of KM, Grant（1996）assume knowledge diffusion depend on common knowledge. Co-knowledge include common knowledge elements to all organizational members, like Nonaka & Takeuchi（1995）submitted ‘redundancy’, that is overload information need for organizational members operation, make person can enter other’s function border.

Grant（1996）sort five layers for common knowledge style in his study:

1.        Common language

2.        Other style of symbol communication

3.        Expertise knowledge of common base

4.        The meaning of co-sharing

5.        Recognize of personal knowledge domain .

In practice, enterprise can through project-groups, team-cooperation or master-slave way to diffuse individual knowledge to participate more and more, in advance to diffusion into organization-wide. Some enterprises even through internal training way to normalize knowledge diffusion.

Knowledge diffusion strategy

The depiction of the current-like nature of knowledge diffusion is presented in figure 2-7, Melissa M. Appleyard, Gretchen A. Kalsow (1999) assumed that a firm's position depends on its technical prowess, or the aggregation of the experiences of the inventors it employs and other resource commitments. Knowledge diffusion between firms can be thought of as a particle in the current moving from one firm's position to another. Melissa M. Appleyard, Gretchen A. Kalsow (1999) hypothesize that the attractive forces across firms with similar technical prowess overpower the forces attracting companies with dissimilar technical prowess. In Figure 2-7, the arrows demonstrate the internal and external forces at work, and their hypothesis suggests that knowledge should diffuse more readily across organizations with similar attributes, i.e. in the same location of a technological current.

Figure 2-7: The fluid dynamics framework of knowledge diffusion

Source: Source: Melissa M. Appleyard, Gretchen A. Kalsow, 1999

2.7 Knowledge transfer 

According to Marshall et al. (1996), this implies the transfer of knowledge and expertise throughout the organization within departments, plants, and countries and across national borders. As Garvin (1993) suggests, for learning to be more than a local affair, knowledge must be developed, retained and spread effectively throughout the organization, on a national as well as global scale. New knowledge is created by people who share and transfer their knowledge and expertise throughout the organization from individual to individual, individual to a team or group, team or group to individual, or team or group to team or group.

According to Davenport and Prusak (1998, p. 101), the transfer of knowledge then involves both the transmission of information to a recipient and absorption and transformation by that person or group. To be of value to the organization, the transfer of knowledge should lead to changes in behavior, changes in practices and policies and the development of new ideas, processes, practices and policies. This makes it imperative for organizations to secure the efficient use and application of the transferred knowledge. The successful transfer of knowledge and expertise then around a business requires not just the establishment of networks but also the transfer of people. People have to be moved in order to get deep-seated, deep-routed ideas and knowledge into circulation and to understand particular operations in specific locations (Prusak, 1998).

When organization cognize lack of some knowledge within organization, it will produce “knowledge gap”, therefore organization need bring in or transfer into knowledge. Gilbert & Gordey-Hayes (1996)submit five stages mode of knowledge transfer as follow:

1.        Acquisition

2.        Communication

3.        Application

4.        Acceptance

5.        Socialization

Gilbert & Gordey-Hayes (1996) assumed knowledge transfer does not happen statically, it must through constant dynamic learning just can reach goal. Besides, Harem, Von Krogh & Roos (1996) assume knowledge concept of knowledge transfer process can separate as four categories, have or not of these knowledge will affect degree of knowledge transfer:

1.        To understand scarce knowledge

2.        To know knowledge about others’ knowledge

3.        Behavioral knowledge

4.        Task-oriented knowledge.

Nonaka & Takeuchi（1995）from tacit and explicit knowledge interaction gain four different knowledge transfer mode as list below:

1.  Socialization: from tacit to tacit through sharing experience to reach tacit knowledge transfer process.

2.  Externalization: from tacit to explicit, tacit knowledge through metaphor, analogy, concept, assumption or mode to represent.

3.  Combination: from explicit to explicit, systemization concept to form knowledge system process, involve combining different explicit knowledge system.

4.  Internalization: from explicit to tacit, use language, story transmit knowledge or build as documents and manual all help for transfer explicit knowledge to tacit knowledge.

2.8 Knowledge application

To have value knowledge must be applied within a specific business context to create value. This will be done differently depending on the industry, however the underlying processes are often very similar, drawing on people with diverse expertise and knowledge both to enhance existing value chains, and to create new ones. Specific examples where knowledge is applied to create value include product development, process enhancement, marketing, and all client interactions.

Knowledge management as a management tool

        KM is often described as a management tool. More precisely, it is described either as an operational tool or as a strategically focused management tool.

Knowledge management as an information handling tool

Knowledge is often regarded as an information-handling problem. It deals with the creation, management and exploitation of knowledge. Some of the literature fits into a definition of KM that consists of separate but related stages.

Knowledge management as a strategic management tool

KM can be seen as a way to improve performance (Ostro, 1997; Bassi, 1997), productivity and competitiveness (Maglitta, 1995). A way to improve effective acquisition, sharing and usage of information within organizations (Maglitta, 1995). A tool for improved decision-making (People Management, 1998; Cole-Gomolski, 1997a, 1997b); a way to capture best practices (Cole-Gomolski, 1998); a way to reduce research costs and delays (Maglitta, 1995) and a way to become a more innovative organization. (People Management, 1998; Hibbard, 1997)

Innovation/creation KM applications

There is still a role for individual innovation; however, innovations are increasingly coming from the marriage of disciplines and teamwork. This category of knowledge management is best summarized by Nonaka (Nonaka and Konno, 1999) when he says, “Knowledge is manageable only insofar as leaders embrace and foster the dynamism of knowledge creation. The innovation/creation of new knowledge is the most popular topic in today's management literature. The focus of the business and KM applications in this element is on providing an environment in which knowledge workers of various disciplines can come together to create new knowledge. The most common application referenced in the literature is the creation of new products or company capabilities.

2.9 An integral conceptual knowledge management model for SMEs

Definition of SMEs

Small and medium-sized companies, meaning those that employ less than 500 people, are an economic force that should not be neglected. In Germany, for example, much of the recent economic growth has come from organizational form. According to statistics of the Institut für Mittelstandsforschung, 97.9 percent of German companies fall within this boundary, with an estimated 2.7 million jobs (41.6 percent of Germany's current jobs) being dependent upon them. Furthermore, 36 percent of all German industrial investments are being made by small and medium-sized firms (Wimmer and Wolter, 2000).

The forms of knowledge in SMEs

Small and medium-sized companies often experience erosion of knowledge that can have many forms. The most obvious is the leaving of a key employee, whether it is via retirement or leaving to work for a competitor's firm. In these instances, and for smaller firms in particular, Barchan (1999) states that:

... you lose more than that person's knowledge. You also lose any investments you have made in that person's professional development and competence - unless you find ways to capture it.

Other forms of knowledge erosion are particularly threatening to smaller firms. Problems of succession in family-owned businesses can result in the abrupt crippling of a company if its owner decides to quit or dies.

Aside from these life-threatening issues, smaller companies are also often battling the problems associated with acquisition, lay-offs, and other economic factors that can lead to major knowledge erosion when key employees leave the company. Retaining and acquiring knowledge in SMEs Smaller firms can employ many techniques for retaining knowledge, these techniques include:

training; job rotation; maintaining a repository of "lessons learned"; expansion management;

recruiting and human resource management; mentoring; knowledge maps; knowledge databases; best practice sharing; customer relationship management; e-Business; intelligent agents.

Knowledge construction and creation (Figure 2-9) is a key element of effective KM. This aspect of KM identifies what is constituted as knowledge and how such knowledge is developed in the organization and its employees. Sternberg (1999) indicates that successful SMEs are characterized by creating new knowledge within the process of innovation. Embodiment and dissemination of knowledge is seen as important for KM in SMEs as developing tacit knowledge into explicit knowledge and diffusing such knowledge is essential in organizations with scarce resources.

The main objective of KM is its "use" or benefit (Figure 2-9). Demarest (1997) describes "use" as ultimately "the production of commercial value for the customer". However, Wilkinson and Willmott (1994) argue that business improvement methods in general must widen their objectives to embrace the mutually supporting objectives of increased business and employee benefits. Innovation is a key "use/benefit" of KM. Henry and Walker (1991) and Sternberg (1999) link innovation to "new knowledge" or new constructed knowledge by showing how tacit knowledge can become explicit knowledge.

Klobas (1997) illustrated key relationships in a diagram, from which Figure 2-10 is drawn.

Figure 2-10: A framework of characteristics from which to examine KM in small organizations

Source: Klobas (1997)

Several thoughtful practitioners have developed guidelines for successful KM, putting technology into its rightful place as an aid rather than an outcome. If an organization's uniqueness and value are derived from its unique knowledge, there is a need to create new knowledge and share the knowledge that exists. But knowledge is situation-specific, and much knowledge is not shared but held by individuals. Organizations therefore need processes and systems to promote knowledge acquisition and knowledge sharing as well as knowledge creation. Guidelines for KM, based on these needs, assume large, international organizations, but differences in scale and scope of operation of smaller organizations may result in differences in these organizations' needs for KM processes and systems. We will therefore review prominent guidelines before drawing on them, along with theory and practice, to develop a framework of characteristics from which to examine KM in small organizations.

Beijerse (2000) proposed three findings for his empirical study of SMEs:

1. Strategy: hardly any systematic knowledge management policy on strategic level in small and medium-sized companies

2. Structure and culture: hardly any systematic knowledge management policy on tactical level in small and medium-sized companies

3. Systems: 79 different instruments with regard to knowledge management on operational level in small and medium-sized companies

To summarize the findings, can conclude that there is no explicit policy that is targeted at strategic knowledge management within the 12 companies studied. Generally no goals are included in the company strategy - if this is even formulated - with regard to direct monitoring of available and necessary knowledge, nor of the development, acquisition, locking, sharing, utilisation or evaluation of knowledge. This brings with it that there is no explicit policy on a tactical level - that of the organisation structure and company culture - in order to make the structure facilitating to development, acquisition and locking of knowledge or to make the culture motivating with a regard to sharing and utilising knowledge.

In sum, current KM instruments for SMEs is enough, the urgent need of KM for SMEs is how to measure KM performances? Next section will illustrate these measurements as follows.

2.10 The measurements of KM performances 

Organizations generally do not sufficiently recognize knowledge contributions because the conceptualization and measurement of knowledge capital as a primary organizational asset remains rudimentary (Chinying Lang, 2001). Extensive traditional systems allow managers to track their use of economic capital but such systems cannot easily accommodate knowledge capital. Without realistic and robust measures of knowledge capital, managers will revert to economic capital. Corporations that are experimenting with such measures include the Canadian Imperial Bank of Commerce, Skandia, Dow-Corning, and so on. Skandia details information such as quality and quantity of customer relationships, training and development investments to improve operational processes, relationships with partner firms etc. in categories such as human focus, customer focus, process focus, renewal and development focus, and so on. Across units, these categories are tracked in terms of different variables tied to their strategic importance in specific business units. The American Productivity and Quality Center in Houston is similarly trying to track and benchmark such efforts in leading firms (Miles et al., 1998). Suffice to say these efforts are very much in the very earliest stages of development.

If employees are evaluated and compensated based on what they know, it may be difficult to get them to share their knowledge for the common good. Thus, it is important to reward individuals for sharing knowledge and using collective knowledge. Because Burson-Marstellar workers are compensated based on how much they can charge clients, people have to be known across their practices in order to remain sufficiently billable. This culture at Burson-Marstellar is also reinforced through meetings aimed at getting geographically dispersed groups to work together (Schwartz, 1999).

For the measurements of KM performances, Davenport & Prusak (1998) in their study pointed out: there are five criteria can be a successful or failed reference for corporate KM measurement:

1. Growth of plan relative resource includes employees and budget.

2. Content of knowledge and growth of utilization frequency, i.e. document amount in database, user access times, or how many people participate discussion type database.

3. Besides one or two people’s efforts, this plan can sustain or not? In other words, this plan have not personal characteristic. But attribute all employees common mission.

4.all employees can accept ‘knowledge’ and ‘knowledge management’ concept or not?

5. Financial return possibility, like self of KM or corporate whole benefits return.

Knowledge performance can be measured in two categories (van Buren, 1999). One is financial performance. However, financial assessments such as ROI are particularly difficult to make for KM activities. The other is non-financial measure including operating performance outcomes and direct measures of learning. Examples of operating performance measures include lead times, customer satisfaction, and employee productivity. Learning measures include such items as the number of participants in communities of practice, employees trained, and customers affected by the use of knowledge.

A measurement model for knowledge

Businesses are increasingly concerned with knowledge and managing the knowledge that they have within their organization. On the basis of the theoretical insights and understanding of the challenges facing companies worldwide, Lim, Ahmed, and Zairi, (1999) posit a model to facilitate monitoring and tracking of progress so as to allow leveraging of positive effects from managing knowledge. They propose a model founded upon a continuous improvement methodology. The model utilises a Deming type PDCA (Plan-Do-Check-Act) cycle. They explain below what each of these of these terms connotes with respect to managing knowledge:

(1) Capturing or creating knowledge (plan).

(2) Sharing knowledge (do).

(3) Measuring the effects (check).

(4) Learning and improving (act).

In order to operationalise the model it is necessary to define the key areas that an organisation must direct attention so as to capture all aspects for effective knowledge management. These key elements are captured by Ahmed, Lim, Zairi (1999) proposed a COST model (figure2-11), which is elaborated next. In essence there are four perspectives to look at:

Customer: what can we learn from our customers? How can we learn from our customers? How can we become effective in learning from our customers?

Organization: What are the key skills needed to make the business a success? Who has these skills? How are these skills harnessed, and shared? How are we doing compared to other organizations?

Suppliers: how are our supplier links? Does the organization obtain an optimum quality, cost and delivery service from the suppliers? Does the organization conduct supplier quality programs?

Technology: how many computer terminals (which are hooked up for information transfer) are available per employee? And are these links being used effectively within the customer-organization-supplier?

Figure 2-11: COST model

Source: Pervaiz K. Ahmed, Kwang K. Lim, Mohamed Zairi (1999)

Combining the COST model and the four steps for KM, Ahmed, Lim, and Zairi (1999) obtained the matrix outlined in (figure2-12).

This matrix helps in obtaining a deeper understanding of how KM affects the  organization as a whole and it also prompts practitioners to look at all the various aspects of implementing KM. It forces the practitioner to consider all factors, "soft" as well as "hard" factors and it also forces managers to link KM to the overall organization's policy and strategy. It also allows managers to list out the important functions that support knowledge management and to prioritize them. The suggested measures are by no means complete, but we list them as a catalyst for mangers to think of other measures that are suited to their organization's current environment (Ahmed, Lim, and Zairi,1999).

Customer matrix

By comparing horizontally across the matrix, the user can be prompted to think of further measures that would indicate the success or failure of KM activities. These could include:

1.        customer satisfaction;

2.        customer retention;

3.        customer relations.

Organization matrix

Organization matrix is to give people a process to create new knowledge, hence measures could include; number of workers participating in process and number of workers rotated. Other measures that look at the cultural aspect of behaviours and attitudes that support the environment of trust and collaboration, hence a measure to ensure knowledge is being captured and shared effectively is much needed.

Supplier matrix

This is part of the knowledge exchange that very much forms the foundation of knowledge management. Measures which maybe useful include:

1.        supplier meetings;

2.        supplier development programmes;

3.        benchmarking activities between suppliers.

Technology matrix

Is there an overload of information? Is all of it relevant? How can we "police" the information posted out, in terms of the accuracy of information? (Ahmed, Lim, Zairi, 1999)

In sum, measuring knowledge is vital for companies to ensure that they are achieving their goals. Measurement provides an important mechanism to evaluate, control and improve upon existing performance. Measurement creates the basis for comparing performance between different organizations, different processes, different teams and individuals.

A linkage between strategy, actions and measures is essential and unless companies adapt their measures and measurement systems to facilitate compatible introduction implementation will fail to reap the expected benefits (Dixon et al., 1990). Critically, adoption of the wrong measures and wrong measurement system can severely circumvent performance. Thus care and diligence must be excercised in the development of a measurement system for programs such as knowledge management, since dysfunctional penalties of an inappropriate system can be extremely heavy.

3. Research Methodology

In this Paper, the scope of research would be solely on secondary data review. It include reviews of books in libraries, downloaded articles from reputable journals and searches over the Internet for useful websites and information. Through literature review and critique, the study developed some improvement KM model and integral models for SMEs to better implement KM.

4.Critique

4.1 How knowledge is to be managed? What is suitable definition of KM in this study?

Knowledge management is a specification of management as such now we know what knowledge is and we know what management is. It is now time to look at what it means to manage knowledge. Beijerse (1999, 2000) defined management as the strategy-driven motivation and facilitation of people, aimed at reaching the organizational goals, and defined knowledge as the capability to interpret data and information through a process of giving meaning to these data and information. When we look at this definition it becomes clear that knowledge management is somewhat more specific than management as such. Whereas management focuses on motivating and stimulating people, knowledge management focuses on a certain aspect of people, i.e. their knowledge.

A common definition of KM is: "The collection of processes that govern the creation, dissemination and leveraging of knowledge to fulfill organizational objectives". KM is an emerging set of organizational design and operational principles, processes, organizational structures, applications and technologies that helps knowledge workers dramatically leverage their creativity and ability to deliver business value. In fact, KM is about people and the processes they use to share information and build knowledge (Hanley, 1999). Marshall (1997) considered that KM refers to the harnessing of "intellectual capital" within an organization.

KM focuses on "doing the right thing" instead of "doing things right". In my thinking, KM is a framework within which the organization views all its processes as knowledge processes. It is important to notice that knowledge management here does not refer to information technology only. Attention is also being paid to strategic, personal, organizational and cultural aspects, which are at least as important as the technological side of the story. With this in mind, here defines knowledge management as "arranging and managing the operational processes in the knowledge value chain in such a way that realizing the collective ambition, the targets and the strategy of the organization is being promoted".

4.2 Integrated improvement models for KM

In practices of reviewing exist literatures and case studies, what are their strength and weakness. The study derived some useful theories and practices model for SMEs, and try to build some improvement models as following:

The gap fulfilling-COST model of Knowledge chain management

The first model is the gap fulfilling-COST model of Knowledge chain management (Figure 4-1):

Knowledge is like a river, it must be flowed smoothly in corporation just can increase knowledge sharing and further transfer, apply, innovate and reuse knowledge to be a cycle to recreate new knowledge. Therefore, the aim of the study here is to find out the gap and to fulfil it to link knowledge flows to build a bridge and to construct an integrated KM mode for SMEs. I propose five solutions to narrow and fill gaps between knowledge seekers and providers as follows:

Gap1: between knowledge entry and creation (solution: Motivation, inspiration, pure chance, interaction, developing new knowledge, improving existing knowledge or by getting rid of knowledge that is out of date or has become irrelevant and buy-in. I.e. learning, teaching & training, interaction of interpersonal and people-machine, outsourcing)

Gap2: between knowledge creation and diffusion (solution: interaction, collaboration, and communication. I.e. knowledge database and community.)

Gap3: between knowledge diffusion and transfer (solution: communication and trust. I.e. social intercourse and community of practice)

Gap4: between knowledge transfer and knowledge application (solution: commitment and sharing. I.e. partnership, strategic action and sharing best of practice.)

Gap5: between knowledge application and innovation or reusing (solution: independence and cooperation, incentive. I.e. teamwork and a clear & definite incentive measures.)

Furthermore, for creating core competences, knowledge flows need to add value through COST model, then it just useful and helpful to corporations to produce core competences. It also means producing corporate intellectual capital (IC).  "Turning knowledge into action" is a unique way to fill gaps of knowledge creation to diffusion to transfer to application.  Therefore, how to manage knowledge effectively and practice knowledge in corporations first needs to fill knowledge gaps for smoothing and accelerating knowledge flows, second needs to measure KM performances and to reach corporate core competences to through COST (Customer, Organization, Suppliers, Technology) model.

Customer: customer satisfaction; customer retention; customer relations.

Organization: Number of workers participating in process to create new knowledge and number of workers rotated, cultural aspect of behaviors and attitudes, trust and collaboration.

Supplier: supplier meetings; supplier development programs; benchmarking activities between suppliers. 

Technology: overload of information? Is all of it relevant? How can we "police" the information posted out, in terms of the accuracy of information? Reduces the cost of development of a new product/service; increases the productivity of workers by making knowledge accessible to all employees; therefore increasing employee satisfaction.

Figure 4-1: The gap fulfilling-COST model of Knowledge chain management

Because of knowledge flows focus on action and operationalizing knowledge, that notion centers on a starting point for Pfeffer and Sutton: even though we know so much and are smart in developing great concepts we often benefit from it only marginally, because of failure in putting knowledge into action. Perhaps a heritage of the Taylorist distinction between knowing and doing in the organization of labor? Interestingly, Pfeffer and Sutton (2001) explain how typical knowledge management practices may make knowing-doing gaps wider. A focus on technology and transfer of codified information, limited possibility to transfer tacit knowledge using formal systems and lack of understanding of the actual work among knowledge managers (staff department, etc.) are among them. Thus knowledge should be a responsibility of everybody and basic ICT (Information and Communication Technology) infrastructures are not enough.

A central underlying notion from Pfeffer and Sutton is that knowledge is not easily transferred within and across firms. Memory/heritage, fear, measurement, and internal competition hamper putting knowledge into action. Even though the focus is on closing the gap and untapping the human potential the analysis covers somewhat more don'ts and how things go wrong than it offers guidance for KM.

When an employee gets sick, his or her knowledge is unavailable for the company for a certain amount of time. In some cases, especially in small companies that depend on each employee, such situations can become threatening to the overall operation. The only effective way to prevent such knowledge gaps is the systematic training and rotation of employees in complementary divisions. Only if other employees are able to take over, without a long period of "having to figure out how to do the job", can smaller companies survive the unpreventable short-period loss of an employee.

Modified knowledge value chain model

For fill the knowledge gaps, in practice, we can use the four main aspects of the knowledge value chain - i.e. determining the knowledge gap (between needed and available knowledge), developing and/or buying knowledge, sharing knowledge and evaluating (the use of) knowledge As figure 4-7 illustrate in the model: First, the strategic need for knowledge needs to be determined. Second, the knowledge gap needs to be determined. In the third place, this knowledge gap needs to be narrowed by developing new knowledge, by buying knowledge, by improving existing knowledge or by getting rid of knowledge that is out of date or has become irrelevant. Fourth, the available knowledge is disseminated and applied to serve the interest of customers and other stakeholders. It is important to notice that knowledge management here is combine knowledge chain and two kind of knowledge value chain to increase KM performance and form a cyclical continuous process.

Figure 4-2: Modified knowledge value chain model,

Source: modified from Mathieu Weggeman (1997), Ching Chyi Lee and Jie Yang (2000)

4.3 How these mixed together for SMEs to implement KM successfully?

Establish the linkage of management of knowledge and corporate process and strategy in organizational perspective, like knowledge chain, knowledge value chain, and the integral KM models for SMEs developed in literature review, all for smoothing, accelerate and adding value for SMEs to implement KM successfully. Which aspects have been deeply researched from point, line to plane and from theory to practice.

An integral KM model for SMEs 

Figure 4-3: A more complete framework for the KM implement in SMEs

The KCM and KVC have been developed to assist organizations to understand the range of KM options, applications and technologies available to them. The KCM and KVC is a model, which helps organizations understand KM in its broadest sense. It provides a view of the totality and complexity of the various KM theories, tools and techniques presented in the literature. It also provides a framework in which management can balance its KM focus and establish and communicate its strategic KM direction. Whether taking an organizational, national or global view of knowledge management, the question will remain: “What is the right mix of KM-related investments now and for all of our tomorrows?”

Organizational conditions, attitudes, decisions, and activities believed to be crucial for effective knowledge management in organizations can be classified in six categories or factors: the balance between the need for knowledge and the cost of knowledge acquisition; the extent to which knowledge originates in the external environment; the internal knowledge-processing factory; internal knowledge storage; use and deployment of knowledge within the organization; and attention to human resources in knowledge processes (Klobas, 1997).

Obviously it is important to examine what knowledge can relate to in an organization. In principle, one should have knowledge of everything, but from a viewpoint of an analysis of the organization, it is expedient to define a number of so-called knowledge domains in which the entrepreneur can target himself in particular. Five knowledge domains are defined here: organization, marketing, human resource management, technology and R&D.

Knowledge with regard to the organization has to do with things such as management, policy, culture, internal processes, cut backs, best practice sharing, alliances and teamwork. Knowledge with regard to the human resource management, such as personnel, career planning, incentive knowledge sharing mechanism, When thinking of marketing knowledge, one should think of things such as competition, suppliers, customers, markets, target groups, consumers, clients, users, interested parties, sales, after sales, trade and distribution and relation management. When thinking of technological knowledge, one should think of  technological development, information and communications technology, knowledge maps;  knowledge databases and e-Business. When thinking of R&D knowledge one should finally think of knowledge of products, research and development, core competencies, product development and assembly.

5. Conclusions and Recommendations

While many published anecdotes celebrate the success of knowledge-management efforts in large companies, there are clearly many methods for achieving success in SMEs as well. Technology has in many instances leveled the knowledge-management playing field. However, there are also many conventional knowledge-management techniques that afford additional gains for SMEs. On the other hand, SMEs have the overwhelming advantage of being intimate and, since knowledge management initiatives live from the buy-in of knowledge holders within the company, this fact makes SMEs the perfect place quickly and effectively to try some of the techniques because buy-in can be generated without as much effort as is needed in bigger corporations.

Many projects can be started at a grass-roots level, with employees gaining enthusiasm quickly because results can be realized in a short period of time. One key employee can often lead the whole company through an initial knowledge-management project, especially if he or she is the owner of that company. In these SMEs, the owner is then not only the chief operating officer but also the chief knowledge officer, because he or she pushes these initiatives through. Those of us engaged in knowledge management often take for granted the resources needed to establish and run knowledge management efforts. Many companies should see knowledge management, both externally and internally, as a major opportunity to utilize their potential to the fullest degree possible. Utilizing the knowledge the company has about itself and its customers and suppliers, and applying it to the marketplace. Then, these companies, even if very small, have the opportunity to outmaneuver all bigger players and come in ahead of last year's champions. For the limited resources, SMEs especially need step by step to construct their KM framework to link business process and strategy, the study proposed two approaches: KCM and KVC to fit the goal for SMEs.

Summaries

In general, organizations may use technologies or may take an informal approach in knowledge management. But to sustain long-term competitive advantage, a firm needs to create a fit between its technological and social systems. Technologies can be used to increase the efficiency of the people and enhance the information flow within the organization, while social systems such as communities of practice improve on interpretations, by bringing multiple views on the information. Knowledge management is a comprehensive process of knowledge creation, validation, presentation, distribution, transfer and application. The coordination of these phases is critical; because short-circuiting any of the above phases may result in less than optimum outcome of the knowledge management.

The real task of knowledge management is to connect people to people to enable them to share what expertise and knowledge they have at the moment, given that cutting edge knowledge is always changing. The solution is not to try to warehouse everything one's workers ever knew. Instead, the goal is to connect questions to answers, or to people who can help find answers (Stewart, 1997). To enable competencies for building communication in people networks, and to promote on-the-job learning and knowledge sharing, two new architectures will be necessary. First, a new IT architecture is needed that includes new languages, categories, and metaphors for identifying and accounting for skills and competencies oriented toward problem-solving and representation, rather than output and transactions. Second, there needs to be a new organizational architecture that is more social, transparent, open, flexible, and respectful of the individual users ((Josephine Chinying Lang, 2001). That is, both technological and organizational initiatives are needed; if aligned and integrated, they can provide a comprehensive infrastructure to support knowledge management processes productively. Only by balance between technological and social facet of the organization, can an organization gradually change the pattern of interaction between people, technologies, and techniques, because the core-competencies of an organization are entrenched deep into organizational practice.

Outlining the study is from knowledge management to knowledge chain management, knowledge value chain management in advance to an integrated KM model for SMEs, the process is from macro to micro. The procedures of all KM implement process are very detail and something new and creative. How to choose an optimal KM implement framework is not depend on corporate scale (which is smaller, medium or large) but depend on corporate core competence (i.e. computerized and electronically degree, employees’ professional degree, corporate technologies and technique) and business process. The contributions for SMEs to implement KM strategy in the study is described as following:

1.        Linking the creation, diffusion, transfer and application of knowledge to form a complete knowledge chain for SMEs to practice and combine KM in corporate process and strategy.

2.        Fulfilling the gaps of knowledge chain management and making knowledge flow more smoothly to further help corporate KM implement successfully.

3.        Practicing corporate process in knowledge value chain to create value for SMEs and customer in each stage of corporate value chain, final to increase KM performance.

4.        Providing a very detail process of knowledge creation, diffusion, transfer and application for corporate KM implement.

5.        Constructing an integrated KM model for SMEs to introduce, implement and measure KM performance.

Recommendations

1.To successfully create and implement a knowledge management strategy, the study suggested that certain critical elements must be included. The elements of particular importance are the following: The "so what?" question, Support from top management, Communication, Creativity, Culture and people, Sharing knowledge, Incentives, Time, Evaluation.

2.Further researchers can study tend to how to fill the gap of KM chain from creation, distribution, transfer and application by the interaction between technologies, techniques, and people (Bhatt, 2001). Besides over cultural barriers, the more important things are how to eliminate the fetish of IT (Information Technology) and to integrate people, knowledge and technology further. Then the KM system just can be a complete and effective knowledge management and can help corporation to reach sustained management.

3.Because knowledge is largely tacit and individually owned, it is difficult to have charge of and control over the course of knowledge. The literature review suggests that the major contribution from KM concern the effort to transpose tacit knowledge into explicit information, which will lead to greater possibilities to manage and control knowledge effectively. One major issue that has hardly been dealt with and, therefore, in need of further inquiry concerns how this process of translating tacit into explicit knowledge works.

4.Further researches can use KCM and KVC to link suppliers, customers, partners and employees to form a knowledge networking as a holistic solution for leveraging corporate knowledge

5.Further researchers can due to integrated KM model of the study to construct a bigger model to integrate corporate internal and external resources and business process and strategy with suppliers, customers, partners and employees for further increasing KM synergy for SMEs.

Abell, A., Chandler, L., Kibby, P., Martin, N., Oxbrow, N., Parnell, A., Sanderson, F., Stenson, A., 1999, Skills for Knowledge Management: Building a Knowledge Economy, TFPL, London.

Ahmed, Lim, Zairi (1999), “Measurement practice for knowledge management”, Journal of Workplace Learning: Employee Counselling Today, Volume 11 Number 8 1999 pp. 304-311

Argyris, C. and Schon, D.A. (1978), “Organizational Learning: A Theory of Action Perspective”, Addison-Wesley Publishing, Reading, MA</PLOC>.

Arthur Anderson Business consulting, (1999), 'Knowledge Management: Jissen No Tame No best practice', Business Weekly.

Arthur Anderson Business consulting, (1999), 'Zukai Knowledge Management', Business Weekly.

Beijerse, (1999), ‘Questions in knowledge management: defining and conceptualiszing a phenomenon’, Journal of Knowledge Management, Vol.03, No.2, pp.94-109.

Barchan, M., 1999, "Capture knowledge", Executive Excellence, 11.

Bhatt, G. (1998), “Managing knowledge through people”, Knowledge and Process Management: Journal of Business Transformation, Vol. 5 No. 3, pp. 165-71.

Bhatt, G. (2000a), “A resource-based perspective of developing organizational capabilities for business transformation”, Knowledge and Process Management, Vol. 7 No. 2, pp. 119-29.

Bhatt, G. (2000b), “Organizing knowledge in the knowledge development cycle”, Journal of Knowledge Management: Journal of Business Transformation, Vol. 4 No. 1, pp. 15-26.

Bhatt, (2001), 'Knowledge management in organizations: examining the interaction between technologies, techniques, and people', Journal of Knowledge Management, Vol. 5.

Bhatt, (2002), “Management strategies for individual knowledge and organizational knowledge”, Journal of Knowledge Management, Volume 6 Number 1, pp. 31-39.

Beijerse (2000), “Knowledge management in small and medium-sized companies: knowledge management for entrepreneurs”, Journal of Knowledge Management, Vol. 04, pp. 162-179.

Broadbent, M., 1997, "The emerging phenomenon of knowledge management", Australian Library Journal, 46, 1, 6-24.

Ching Chyi Lee, Jie Yang , 2000,  “Knowledge value chain”, The Journal of Management Development, Volume 19 Number 9,  pp. 783-794.

Cohen, M. D. and Sproull, L. S., (ed.), 1996, 'Organizational Learning', Sage, Thousand Oaks, California.

Cole-Gomolski, B. (1997a), “Chase uses new apps to ID best customers”, Computerworld, Vol. 31 No. 35, pp. 49-50.

Cole-Gomolski, B. (1997b), “Users loath to share their know-how”, Computerworld, Vol. 31 No. 46, p. 6.

Cole-Gomolski, B. (1998), “Vendors cram knowledge-ware market”, Computerworld, Vol. 31 No. 5, pp. 55-6.

Cole-Gomolski, B. (1999), “Knowledge 'czars' fall from grace”, Computerworld, Vol. 33 No. 1, pp. 1, 13.

Crossan, M.M., Lane, H.W. and White, R.E. (1999), “An organizational learning framework: from intuition to institution”, The Academy of Management Review, Vol. 24 No. 3, pp. 522-37.

Davenport, T. H. (1994), “Saving IT's soul: Human-centered information management”, Harvard Business Review, Vol. 72 No. 2, pp. 119-31.

Davenport, T.H. and Prusak, L.P. (1998), “Working Knowledge: How Organizations Manage What they Know”, Harvard Business School Press, Boston, MA</PLOC>.

Davenport, T.H., De Long, D.W. and Beers, M.C. (1998), “Successful knowledge management projects”, Sloan Management Review, Vol. 39 No. 2, pp. 43-57.

Davenport, T.H., Jarvenpaa, S.L. and Beers, M.C. (1996), “Improving knowledge work processes”, Sloan Management Review, Summer, pp. 53-65.

David J. Collis, Cynthia A. Montgomery, 1997, 'Corporate Strategy: Resources and the scope of the firm', IRWIN, McGraw-Hill company.

David Lim, Jane Klobas, (2000), ‘Knowledge management in small enterprises, The Electronic Library’, Volume 18 Number 6 pp. 420-433

Dawson, R., 2000, 'Knowledge capabilities as the focus of organizational development and strategy', Journal of Knowledge Management, vol.4, no.4, pp.320-327.

Demarest, M., 1997, "Understanding knowledge management", Journal of Long Range Planning, 30, 3, 374-84.

Dixon, J.R, Nanni, A.J., Vollmann, T.E, 1990, The New Performance Challenge: Measuring Operations for World Class Competition, Business One Irwin, Homewood, IL.

Drucker, P., 1992, "The new society of organizations", Harvard Business Review, 95-105.

Duffy, J. (2000), “Knowledge management: to be or not to be?" Information Management Journal, Vol. 34 No. 1, pp. 64-7.

Edvinsson, L, Malone, M, 1997, Intellectual Capital, Judy Piatkus Ltd, London.

Garvin, D.A. (1993), “Building a learning organization”, Harvard Business Review, Vol. 71 No. 4, pp. 78-91.

Gautschi, T., 1999, "Does your firm manage knowledge?", Design News, 54, 11.

Grant, R. M., 1996, 'Toward a knowledge-based theory of the firm', Strategic Management Journal, vol.17, pp.109-22.

Gregoris Mentzas, Dimitris Apostolou, Ronald Young and Andreas Abecker, 2001, 'Knowledge networking: a holistic solution for leveraging corporate knowledge', Journal of Knowledge Management, Vol. 5.

Guth, R. (1996), “Where IS cannot tread”, Computerworld, Vol. 30 No. 4, p. 72.

Hanley, S.S., 1999, "A culture built on sharing", Information Week, 731, 16-18.

Henry, J., Walker, D., 1991, Managing Innovation, Sage, London.

Hibbard, J. (1997), “Knowing what we know”, Information Week, Vol. 653, 20 October, pp. 46-64.

Hibbard, J. and Carrillo, K.M. (1998), “Knowledge revolution”, Information Week, Vol. 663, 5 January, pp. 49-54.

Horgan, J. (1996), “The End of Science: Facing the Limits of Knowledge in the Twilight of the Scientific Age”, Addision-Wesley, Reading, MA</PLOC>.

Huber, G.P., 1991, "Organizational learning: the contributing processes and the literatures", Organization Science, 2, 1, 88-114.

Josephine Chinying Lang, 2001, 'Managerial concerns in knowledge management', Journal of Knowledge Management, Vol. 5.

Koniger, P, Janowitz, K., 1995, "Drowning in information, but thirsty for knowledge", International Journal of Information Management, 15, 1, 5-16.

Leonard-Barton, D., 1998, Wellsprings of Knowledge, Harvard Business School Press, Boston, MA.

Levett, G. P. and Guenov, M. D., 2000, 'A methodology for knowledge management implementation', Journal of Knowledge Management, vol.4, no.3, pp.258-269,

Lider Perter, 2001, 'The big trend of Knowledge Economy', China Time Publishing Ltd., Taiwan.

Lim, K.K., 1999, "Managing for quality through knowledge management", Total Quality Management, 10, 415, 615-22.

Lim, Ahmed, and Zairi, (1999), Measurement practice for knowledge management, Journal of Workplace Learning: Employee Counselling Today, Volume 11 Number 8, pp. 304-311

Lippman, M, Rumelt, R.P, 1982, "Uncertain imitability: an analysis of interfirm differences in efficiency under competition", Bell Journal of Economics, 13, 418-53.

Lynn, G.S., Morone, J.G. and Paulson, A.S. (1996), “Marketing and discontinuous innovation: the probe and learn process”, California Management Review, Vol. 38, pp. 8-37.

Maglitta, J. (1995), “Smarten up!” Computerworld, Vol. 29 No. 23, 5 June, p. 84(3).

Marakas, G.M, (1999), “Decision Support Systems in the Twenty-first Century”, Prentice Hall, Englewood Cliffs, NJ.

Marakas, G.M. and Elam, J.J. (1997), “Creativity enhancement in problem solving: through software or process?”, Management Science, Vol. 43 No. 8, pp. 1136-46.

Marshall, L., 1997, "Facilitating knowledge management and knowledge sharing: new opportunities for information professionals", Online, 21, 5, 92-9.

Martensson, M., 2000, 'A critical review of knowledge management as a management tool', Journal of Knowledge Management, vol.4, no.3, pp.204-216,

Matsutaro Morita & Tomohiro Takanashi, 1999, 'Knowledge Management practice: Nyuumon KM, Kihon to Jitsurei', Kanki publishing Inc.

Mayo, A. (1998), “Memory bankers”, People Management, Vol. 4 No. 2, 22 January, pp. 34-8.

Mayo, R. (1959), “The nature of creativity”, in Anderson, H.H. (Ed.), Creativity and its Cultivation, Harper & Brothers, New York, NY.</PLOC>

McKern, B. (1996), “Building management performance for the 21st century”, Practicing Manager, Vol. 17 No. 1, October, pp. 13-18.

Melissa M. Appleyard and Gretchen A. Kalsow (1999), “knowledge diffusion in the semiconductor industry”, Journal of knowledge Volume 3. No. 4. Pp. 288-295, MCB ISSN 1367-3270

Nonaka, I., Takeuchi, K., (1995), The Knowledge Creating Company: How Japanese Companies Create the Dynamics of Innovation, Oxford University Press, Oxford.

Nonaka, I., (1991), "The knowledge-creating company", Harvard Business Review, Harvard Business Review on Knowledge Management, 1998, Harvard Business School Press, Boston, MA, 38.

Nonaka, I. and Konno, N. (1999), “The concept of ‘Ba': building a foundation for knowledge creation”, California Management Review, Vol. 40 No. 3, pp. 40-54.

Ostro, N. (1997), “The corporate brain”, Chief Executive, Vol. 123, May, pp. 58-62.

People Management (1998), “The people factor”, People Management, Vol. 4 No. 2, 22 January, p. 38.

Peter F. Drucker, Ikujiro, Nonaka, David A. Garuin, Chris Argyris, Dorothy Leonard, Susaan Strous, Art kleiner, and George Roth, 1998,  'Harvard Business Review on KM', President and Fellows of Harvard College.

Peter Meso and Robert Smith, 2000, 'A resource-based view of organizational knowledge management system', Journal of Knowledge Management, Vol. 4, pp. 224-234.

Peters, T., 1992, Liberation Management, Pan Books, New York, NY.

Pfeffer, J. and Sutton, R. (1999), “Knowing 'what' to do is not enough: turning knowledge into action”, California Management Review, Vol. 42, pp. 92-3.

Pfeffer and Sutton (2001), Supply Chain Management: An International Journal, Volume 6 Number 3,  pp. 142-143

Polanyi, M., 1962, 'Personal Knowledge: Towards a Post-critical Philosophy', University of Chicago Press, Chicago, IL.

Polany, M., 1962, Personal Knowledge: Towards a Post-critical Philosophy, University of Chicago Press, Chicago, IL.

Polyani, M. (1966), “The Tacit Dimension”, Routledge & Kegan Paul, London.

Porter, M.E., 1985, Competitive Advantage, division of Macmillan Press Inc., New York, NY.

Prusack, L., 1997, 'Knowledge in Organizations', Butterworth-Heinemann, Boston, MA.

Rich Mcdermott and Carla O' Dell, 2001, 'Overcoming cultural barriers to sharing knowledge', Journal of Knowledge Management, Vol. 5.

Schröer, E., Freund, W., 2000, Neue Entwicklungen auf dem Markt für die Übertragung mittelständischer Unternehmen, http://www.ifm-bonn.de/ergebnis/136.htm.

Se-Hwa Wu, 2001, 'Knowledge capital in Taiwan', Far-river Publishing Ltd., Taiwan

Sternberg, R., (1999), "Innovative linkages and proximity: empirical results from recent surveys of small and medium sized firms", Journal of Regional Studies, 33, 6, 529-40.

Stewart, T. A., (1991), “Brainpower”, Fortune, Vol.123, No.11, pp.44-60.

Stewart, T., 1997, Intellectual Capital: The New Wealth of Organization, Currency, New York, NY.

Sveiby, K.E. (1997), “The New Organizational Wealth: Managing and Measuring Knowledge-based Assets”, 1st ed., Berrett-Koehler Publishers, San Francisco, CA.

Thomas H. Davenport and Laurence Prusak, (1998), 'Working Knowledge: How Organizations Manage What They Know', the President and Fellows of Harvard College.

Uma Sekaran, (2000), 'Research Methods for business: A skill-building approach', John Wiley & Sons, Inc.

Van Buren, M.E., 1999, "A yardstick for knowledge management", Training & Development, 53, 5.

Von Krogh, G. and Roos, J., (ed.), 1996, 'Managing Knowledge - Perspectives on cooperation and competition', Sage, London.

Von Krogh, G. (1999), “Care in knowledge creation", California Management Review”, Vol. 40 No. 3, pp. 136-7.

Warren, L. (1999), “Knowledge management: just another office in the executive suite?" Accountancy Ireland, December.

Weggeman, M.C.D.P, (1997), Kennis management Inriching en besturing van kennis intensive organisaties,, Schiedam.

Weggeman, M.C.D.P., Cornelissen, V.B.J, 1997, HRM in de praktijk,.

Weick, K.E. (1979), “The Social Psychology of Organizing, Addison-Wesley Publishing Company”, Reading, MA</PLOC>.

Weick, K.E. (1995), “Sensemaking in Organizations, Sage Publications”, Thousand Oaks, CA</PLOC>. Resource Costing and Accounting versus the Balanced Scorecard, a Report to OECD, Working paper.

Wilkinson, A., Willmott, H., (1994), "Making quality critical: new perspectives on organizational change", Routledge, London.

Wimmer, S., Wolter, H., 2000, "Situationen und Perspektiven des indutriellen Mittelstandes in der Bundesrepublik Deutschland", http://www.ifm-bonn.de/ergebnis/77nf.htm.